Housing: Discretionary Housing Payment

Baroness Sherlock Excerpts

Wednesday 9th April 2014 Lords Chamber

[Lord Freud]

My Lords, my noble friend draws attention to the point that we have introduced a cap on the amount of housing benefit to stop the very large amounts that were paid on local housing allowance.

[Baroness Sherlock (Lab)]

My Lords, 500,000 people are affected by the bedroom tax, most of them disabled. If the Minister wants some figures, two-thirds of tenants hit by the bedroom tax are currently in arrears and, of those, 40% have been issued with a notice seeking possession. This is a serious crisis, and I think that the Minister should acquaint himself with all the figures, including those on evictions.

The House knows that a Labour Government would abolish the bedroom tax. The Minister told the House on 12 December that,

“the interim review is due to be published in the spring of 2014. I will be most pleased to discuss the findings of that review with Members of the House, who I suspect will be keen to have that dialogue”.—[Official Report, 12/12/13; col. 907.]

I am very keen to have the dialogue. When does it start?

[Lord Freud]

The noble Baroness need not persuade me about the savings—she needs to persuade the OBR, which has scored down in the Budget £490 million. The noble Baroness talked about the fact that a Labour Government would abolish the spare room subsidy. We will produce an interim report later this year, as I said, and we will bring forward next year the full report on what has been happening with the bedroom tax, as you would call it.

Pensions Bill

Baroness Sherlock Excerpts

Tuesday 8th April 2014 Lords Chamber

[Lord Turnbull (CB)]

My Lords, when I heard mention of the Minister in the other place, two words came to mind: “kitchen” and “sink”. Indeed, the Minister claimed that there were 17 logical flaws in the case the Lords had put forward. However, it was not clear to me which were the objections of substance and which were the makeweight arguments. Of course, the problem is that there are not that many people in this category. Is it a problem that is going to be solved by universal credit, or is it not a problem because people have time to catch up later on? That is a very poor argument because you never know whether you are going to have time to catch up. Is it a problem of information? Is it a problem that in the fixing of it would create other problems? Lastly, there were arguments about drafting. For good measure some bad statistics were thrown in that referred to average numbers of people on average hours and average earnings, when you really need to look at the median if you are trying to calculate the numbers.

However, I welcome the statement from the Minister today because he appears to have conceded that there is an issue to address. As a matter of principle, I think it is not acceptable that someone earning £120 in one job can get credit, while someone earning two times £60 a week cannot. We have a duty to address this issue if it turns out that significant numbers of people fall into that category. I also welcome the review, and like other noble Lords I hope that it will be addressed with some urgency.

I think that one further assurance is needed. If it turns out that the Government do not have the powers, they should be introduced quickly. Opportunities to do that in social security legislation seem to arise every few weeks, so I do not think that it will be a problem.

[Baroness Sherlock (Lab)]

My Lords, as the opposition winder, I have rarely felt more redundant. If the Minister had seen the nodding of heads going on from all Benches, including those behind him, he might begin to think that accepting the amendment would have been the easier path in the long run. I was quite disappointed to find the amendment returning to this House, as it had a number of things to commend it. First, it identified a problem which clearly needed attention. If there were any doubts about that, my noble friend Lady Hollis has cleared them up today. The case is compelling.

When we debated this amendment on Report, Ministers seemed sceptical that there was a problem at all. However, since then, we have had some new figures from the Office for National Statistics, specifically on the prevalence of zero-hours contracts. The figure that was used on Report was 183,000 in 2010. The new ONS report, based on the Labour Force Survey, shows that there are 583,000 people currently employed on zero-hours contracts. I fully accept that some of those people will of course be earning enough to bring them into the system, but the point made by the noble Lord, Lord Turnbull, about the use of average figures when this was debated in the other place is very well made. If some people are earning very high salaries, for example as IT contractors, a mean figure is never going to be any help at all in working out the impact of this.

In addition to those on zero-hours contracts, there is the broader issue of those doing more than one mini-job, as described so effectively by my noble friend. Concern has been expressed across the House throughout the passage of the Bill about the asymmetry of the system crediting-in those who earn all that money in one job or those who are unemployed, including those who are unpaid carers, but not crediting-in people working hard in more than one job.

The other thing the amendment had to commend it was that it was wholly permissive: it simply enabled the Government to take action if and when they were ready but mandated them to do nothing. The amendment also had no financial implications, and I was surprised as well as disappointed to see financial privilege being cited for such a permissive amendment. Frankly, I really find that incomprehensible.

However, the Government still seemed unpersuaded. Ministers, both in the other place and here, have posted a series of objections to the amendment. Some are minor, such as complaints about the drafting, but, as my noble friend Lady Hollis pointed out, those could have been easily resolved by the Government bringing forward their own differently worded amendment at Third Reading, so we have to assume the problem is bigger than that. When we sweep away some of the flannel in the debate in the other place, the options are these: they do not believe there is a problem; they believe there is a problem but do not know the scale; there is a problem but universal credit will solve it; or there is a problem but the Government do not know how best they want to address it.

Both in debates in another place and, indeed, today, we have had smatterings of all of those. The Government seem unpersuaded that there is a problem, or at least not one of a size to merit intervention to tackle it. They want to do research—lots of really thorough and careful research. I am a great believer in research but want to understand what it is the Government think they could learn that would make a difference to the decisions they would take. There are many noble Lords in this House who may not be biologists but who, as mentioned by my noble friend Lady Dean, can spot long grass when they see it. Frankly, I can smell it from here.

As for the universal credit defence, my noble friend Lady Hollis has taken that apart at different stages of the Bill. The Minister said again today that 800,000 people will be credited-in as a result of universal credit. The new pension system is due to come in in under two years, and I am personally not willing to bet the house that UC will be fully rolled out by the time it does. Even if it is, that leaves out all kinds of people. Single people on even very modest incomes will not be covered by universal credit. A married woman affected by this problem could find that her husband’s earnings float her off universal credit but she can no longer, as a result of this Bill, get a pension based on his contributions, so she is cut out both ways.

Finally, it may be that the Government are eventually persuaded that there is a problem, but they want to address it in a different way from that favoured by my noble friend Lady Hollis. Of course, the amendment allowed them to do that. In addition, the Government could have brought back their own amendment, had that been what they wanted to do. But this must leave the House nervous that the Government are not really supportive in the way that they sound at the outset, however warm their words of welcome. The Minister has a job to do to reassure people on all sides of the House.

First, do the Government accept that there is a problem that needs addressing? Secondly—and this was the killer question posed by the noble Lord, Lord Forsyth—are the Government satisfied for any worker to be excluded from the new single-tier pension just because his or her hours are spread across more than one employer? Is it a question of principle? Is it a question of scale? If so, what is the magic number? Thirdly, as the noble Lord, Lord German, said, if the Government do accept that there is a problem, will the Minister confirm that they are committed to taking action to address it? The only outstanding question, therefore, is how best to do that.

Finally, many noble Lords asked about the timescale and the process. If the forum is to be held by the summer, when can the House expect a report back, and what form will the action take? My noble friend Lady Hollis pointed out that even though this Bill has not yet completed its passage through the House, the entire pension system is to be revolutionised still further. If that means further primary legislation, do the Government intend to take advantage of that legislation to enact whatever decisions they take as a result of the review? If not, what other mechanisms will they choose and how will the Minister report back to the House?

Health and Safety Executive

Baroness Sherlock Excerpts

Thursday 3rd April 2014 Lords Chamber

[Lord Bates]

That is a very good point. I certainly endorse what the noble Baroness said about the Olympics. There were 46,000 people working on that site and to have not one fatality is exemplary. That gives me the opportunity to point out that that is one thing that the UK does extraordinarily well. Fatalities in the workplace are much lower in the UK, at 0.71 per 100,000 workers, compared to an equivalent rate of 0.81 in Germany, 1.57 in Italy and 2.49 elsewhere. That is an important record, showing that the HSE is working correctly with contractors in major projects, and this will ensure that that work continues in future.

[Baroness Sherlock (Lab)]

My Lords, one question raised in discussion of the review was the desirability of increasing commercial income for the HSE. Notwithstanding the Government’s view of that, will the Minister take this opportunity to assure the House that they have no plans to privatise the HSE?

[Lord Bates]

Yes, I can very quickly do that. There is absolutely no question of privatising the HSE, but Martin Temple, himself a businessman with a distinguished background in engineering and manufacturing, recognised that there were great opportunities, because the Health and Safety Executive is genuinely admired around the world. A lot of people are coming to look for good-will advice as to how to operate their systems, and I think it is absolutely right for the taxpayer that the HSE ought to be free to exploit those commercial opportunities to enable it to continue doing its excellent work around the UK.

Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014

Baroness Sherlock Excerpts

Thursday 3rd April 2014 Lords Chamber

Moved by

[Baroness Sherlock]

To move that this House regrets that the Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014 are being introduced without Her Majesty’s Government’s full understanding of the numbers of those affected; regrets that confusion and uncertainty are being added to an already unjust policy; deplores that Her Majesty’s Government’s mishandling has resulted in households being unlawfully charged and further pushed into hardship; and regrets the likely disproportionate impact of the Regulations on the most vulnerable (SI 2014/212).

[Baroness Sherlock (Lab)]

My Lords, this Motion relates to an order brought forward by the Government to address a loophole that they have belatedly discovered in enacting what they call the social sector size criteria and everybody else calls the bedroom tax. The loophole means that people claiming housing benefit continuously for the same home since 1 January 1996 are exempt from the bedroom tax. It emerged recently, as noble Lords may remember from the discussion on a recent Urgent Question, that the group may be even wider as it may affect some people who have inherited this protection from a former tenant who enjoyed it.

People covered by this exemption have unlawfully had their housing benefit cut. When this matter was discussed in the other place, a number of examples of people affected were given. For example, there was a widower in Staffordshire suffering from mental health problems who had to find an extra £14 a week to stay in his home. There was a 56 year-old women from Rotherham with health-related problems who paid over £700 in additional rent, which we now know was unlawful. In Greater Manchester, a woman who cares for her granddaughter paid £200 extra in rent as a result of the bedroom tax, fell into arrears and was threatened with eviction from the home she has lived in for 26 years. Incidentally, Grandparents Plus notes that kinship carers like her are more likely to be affected by the bedroom tax, because they are older and more likely to have spare rooms, technically, because their children have grown up and moved on.

These people and many others like them are now due a rebate but, rather than apologise for the distress that they have been caused, the Government now want to apply the bedroom tax again to these people and thousands like them. Because local authorities in most cases do not have electronic records which go back to 1996, they are finding themselves having to waste time and money trawling through paper files looking for affected cases. Meanwhile, the Government have brought forward this order to close the loophole, despite having no idea how many people are affected by it.

The Opposition have tried very hard to find out how many people are affected by asking Ministers. On 13 January, the Employment Minister, Esther McVey, gave a Written Answer in the other place. She said simply:

“This information is not available”.—[Official Report, Commons, 13/1/14; col. 449W.]

On the same day, the Secretary of State for Work and Pensions told the other place that,

“the number is likely to be between 3,000 and 5,000”.—[ Official Report, Commons, 13/1/14; col. 577.]

The very next day, the noble Lord, Lord Freud, told this House that,

“the numbers involved in this anomaly are small and the amounts are modest”.—[Official Report, 14/1/14; col. 106.]

However, early reports coming from the ground suggested that the numbers could be rather higher than that. Therefore, under the Freedom of Information Act, the Opposition asked local authorities how many people they believed would be affected. The resulting figures already show that over 23,000 are likely to be affected, even though a third of councils have still to reply and many said that they could not give complete answers because they could not include housing association tenants. Not only is this a mess, but the Government seem to have no idea how many people are caught up in the mess.

We should not be surprised. The bedroom tax was a bad policy in the first place, incompetently executed, with the heaviest price being paid by the poorest and most vulnerable. More than 500,000 households have been hit. Two-thirds of those affected are disabled. Of those affected, 35,000 disabled people have had their homes specially adapted with, for example, wheelchair ramps, wider doors, stair lifts or accessible bathrooms. If they are forced to move, it is estimated that the cost of repeating those adaptations in new properties could reach £234 million.

Some 60,000 of those affected by the bedroom tax are carers. More than 200,000 families with children are affected. On average, people are paying an extra £14 a week—the equivalent of losing all of your child benefit for the second child. Most depressingly, so many of the problems predicted by noble Lords from all Benches during the passage of the Welfare Reform Act have come to pass. According to the National Housing Federation, on average two-thirds of tenants affected by the bedroom tax are currently in arrears; of those, three-quarters have seen their arrears increase since the bedroom tax came in. Of those tenants hit by the bedroom tax who are in arrears because they cannot make up the shortfall, 40% have been issued with a notice seeking possession.

The impact on landlords is also huge. Nearly three in five housing associations say that they have been affected by the bedroom tax either a great deal or a fair amount. That hides huge regional problems, as I know only too well. About 90% of housing associations operating mainly in the north-east and 80% in the north-west report that they have been significantly affected.

What a mess, and for what? What has been achieved by all this chaos and misery? Has the bedroom tax achieved its aims? Ministers have not been able to explain whether the policy is supposed to reduce overcrowding or to save money; it cannot do both. If tenants stay put and accept a cut in their benefits, the state saves money but no houses are freed up. If tenants are forced to move, no money is saved. The costings assumed that people would not move. During the passage of the Welfare Reform Bill, when the matter was voted on in this House on Report on 14 December 2011, the noble Lord, Lord Freud, explained the Government’s position, saying:

“The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure”.—[Official Report, 14/12/11; col. 1300.]

So it was indeed about savings. The Minister explained that it would save around £500 million per annum.

I wonder whether those savings really are materialising as Ministers had hoped. Last Friday, Esther McVey was asked on a BBC Radio 5 Live programme how much money the Government had saved through this policy. She began by saying:

“It was never all about saving money”.

The interviewer interrupted just to ask how much it would save. She came back to the question. The interviewer asked her repeatedly whether there would be savings and how much they would be but could not get an answer.

There is now a real risk that the bedroom tax will end up costing more than it saves. Research from the University of York suggests that the policy could save significantly less than the DWP predicted. The National Housing Federation has said that the savings claimed by the Government are “highly questionable”, partly because those forced to move to the private rented sector will end up costing more in housing benefits. Housing associations say that tens of millions of pounds are likely to be lost through the build-up of arrears. I ask the Minister today to tell the House precisely how much of that £500 million savings per annum has been realised in the first year of the bedroom tax. After taking into account the cost of discretionary housing payments, the cost to local authorities and social housing providers and the payment of higher housing benefits to those who had to move, what is the net saving to the public purse? If it was not about saving money, as Esther McVey has said, what was it about?

The Government have since changed tack and claimed that it is about tackling overcrowding or dealing with the waiting lists. They say that people need to be pushed to move out if they have spare rooms so that others can have their houses. At various times, noble Lords from all Benches have pointed out that, in fact, many of these are not spare rooms, and, even if they were, there were nowhere near enough spare smaller properties available in the areas hit by the bedroom tax. Now we know what has happened. A recent BBC investigation showed that, after the first year, just 6% of tenants have moved.

This entire episode should shame this Government. Half a million people have been affected, most of them disabled, losing an average £14 a week from their already meagre incomes. Instead of bringing forward an order to make the bedroom tax apply to up to 40,000 more households, the Government should announce today that they will scrap this unfair, cruel and unpopular tax. I beg to move.

[Lord Touhig (Lab)]

My Lords, I thank my noble friend Lady Sherlock for securing this debate. Of all the Government’s reforms to welfare, it is hard to find another more cruel, more callous and more mean-spirited than the bedroom tax. The policy was dreamt up by people who have no need for housing benefit themselves and probably do not even know anybody who depends on it. While it may make sense in theory, in practice it is having a devastating effect on the lives of vulnerable people. Additionally, the very ideas and theory behind the policy are, I believe, wicked and wrong. Ministers have stressed that the policy is designed to fix a broken system of housing benefit and encourage behavioural change among recipients of housing benefit. This is sheer nonsense. The system is broken, though not because of the behaviour of those who use it; the cause is the housing stock itself. In England, there are 180,000 tenants underoccupying two-bedroom homes but only 85,000 smaller homes available.

The Catholic charity Caritas Diocese of Salford has been working with Michelle. She has three children and lives in a three-bedroom home. Originally she cared for her brother, who has now moved into supported accommodation. Her 13 year-old daughter now uses the so-called spare room. Michelle is trying for a home swap, looking for a two-bedroom home, but nothing is available. The £12 she loses each week means that she now regularly resorts to food banks. This is the reality of the bedroom tax. The only economy left for families to make is on food. When that cannot be done, they have to resort to food banks. In Merseyside, social landlords have referred 553 tenants to food banks.

The cost of the bedroom tax is horrific, but the attitude that it displays towards social housing is also wrong. No longer can people regard where they live as their homes. Housing benefit and social housing appear to be something that the Government begrudgingly provide. My local newspaper, the South Wales Argus, recently reported the story of Kevin Reeve, who has occupied the family home for 50 years and cared for his mother and father, who have both now sadly passed away. He is now underoccupying, losing between £35 and £45 a month and has been forced into trying to move.

The local housing association, Bron Afon, has catalogued the effects of this tax on the local community. It discovered that one person affected is a former solider suffering from post-traumatic stress disorder and depression. He lives with his daughter, who is hoping to go to university. They already underoccupy by one room. They are already cutting down on heating their home and eating. His daughter is now questioning whether she should go to university. He is resigned to trying to move. His current home is the one in which he raised his children, the home that he shared with his wife, who, sadly, has now died. He is proud of that home, and we should be proud of him, a veteran who has served our country. Is this the way we repay our servicemen?

The bedroom tax is another example of the chaos, confusion and poor implementation of chronically ill conceived policies by the Department for Work and Pensions. It is clear that this policy is unjustly penalising vulnerable people for something beyond their control. It is causing immense hardship and devastating people’s lives. It shows complete callousness towards those who rely on housing benefit. Many good people who rely on housing benefit feel that they live not in prosperity Britain but in poverty Britain, thanks to this Conservative and Liberal Democrat Government. Those responsible for this policy should hang their heads in shame.

--- Later in debate ---

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I will not test the patience of the House by going over ground that we have covered many times in recent weeks and months. On the general nature of the policy, one issue that is worth my dealing with is the recent BBC estimate that 6% of those affected by the spare room subsidy, or 30,000 people, moved during the first 11 months of its operation. Noble Lords opposite may see this as a sign of failure, but we do not. It is an example of the behavioural response that this policy is successfully driving. We have seen further evidence of this again today in the announcement by Housing Partners Ltd that in the past year it has increased by a quarter the number of successful mutual exchanges for social tenants. Its experience also shows that there is a steady supply of smaller one and two-bedroom properties available, which is at odds with some of the claims made today from the Benches opposite.

There are another couple of points on our general position that I have not dealt with before. One, raised by the noble Baroness, Lady Sherlock, and amplified by the noble Lords, Lord Taylor and Lord Low, was about money-saving, so let me be precise on that. We know, and have stated in our impact assessment, that some people could downsize, some could move into the private rented sector and others could get discretionary housing payments. However, savings remain estimated at £500 million per annum and this did not change in the Budget, so the party opposite will not be able to argue—unless it can persuade the OBR—that this policy should be got rid of on the basis of cost because that is not what the OBR has calculated.

On the point about kinship carers, they will be treated as foster parents where they do not have a child placed with them or the child is not treated as occupying their home. However, where a carer is responsible for a child and the child is therefore treated as a member of the claimant’s household, they will be treated the same as other claimants under the size criteria.

I shall restrict my remaining comments to the Motion and the amendment to the regulations, explaining first what these regulations do. The instrument amends paragraph 4 of Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. These provide transitional protection for certain housing benefit claimants. The amendment removes the transitional protection from social sector tenants. This means that their housing benefit will be determined using Regulation 13 of the Housing Benefit Regulations 2006, which sets out the maximum rent in the social sector.

This transitional protection was provided for private sector tenants when local reference rent rules were introduced in 1996. These restricted the amount of housing benefit that could be awarded through private landlords charging high rents. Currently, fewer than 40,000 private sector claimants, mostly pensioners, are still covered by this protection. In answer to my noble friend Lord German’s question, it was never required by, or intended for, people living in social housing. Transitional support has already been provided for those affected by the removal of the spare room subsidy through discretionary housing payments. Unlike the loophole provision, this is available to those who claimed benefit after 1996.

Let me go through some of the specific issues raised about the loophole. My noble friend Lord German asked about numbers. The cost of the loophole will be so small that it will not impact on our forecast of housing benefit expenditure of £23.9 billion for the year. The claims that our estimates of the size are wrong are based on FoI figures that are at best speculative and at worst misleading. The claimants have 13 months to make their claims.

Regarding who will be expected to meet the costs—a question raised by the noble Baroness, Lady Nye, and my noble friend Lord German—these will be met by the DWP through the normal subsidy arrangements. At the moment, we have £2 million of additional administrative funding to distribute.

My noble friend asked whether those covered by the loophole who received discretionary housing payments would have to repay it. The answer is no; the award was made when there was a need and reimbursing the housing benefit would not change that.

Let me pick up the point on inheritance, which we dealt with at some length during that recent Urgent Question from the noble Baroness, Lady Sherlock. When a claimant dies, anyone living in a household who both takes over the tenancy and is awarded housing benefit within four weeks of the death can inherit the loophole protection. That was a process we already allowed for when we were looking at our costs. As my noble friend inquired, we are working on a major review of this for next year as well as an interim review, and I think I will stick with my “later this year” rather than “soon” at this point.

Turning now to what the Motion itself says, the noble Baroness’s Motion makes a series of unsubstantiated assertions. First, it states that the regulations cannot be amended without the precise number affected by the loophole being known. That simply is not true. It is not about numbers; it is a matter of principle. Parliament never intended that this transitional protection should apply to this group of claimants or to this policy. The regulations have been amended to restore that original policy intention.

Secondly, there is an accusation in the Motion of government confusion and mishandling. There is no confusion. As soon as the loophole was identified, we were clear that we would close it and that is exactly what we have done. Guidance was issued to local authorities. Arrangements were put in place to ensure that central Government met the costs of the loophole—both the benefit costs and the additional administrative costs.

The final claim in the Motion from the noble Baroness is that there is a disproportionate impact from the regulations on the most vulnerable. It is the loophole as it stood that was arbitrary and unfair. This transitional protection was never intended for this policy. As a result, it has protected a random group of claimants without a meaningful test or reason.

The removal of the spare room subsidy has now been operating for a year and it is working. The latest data show that the numbers facing a reduction in their housing benefit dropped by around 50,000 between May and November last year. Discretionary housing payments are funded and working: only £13 million of the £20 million reserve funding that we set aside has been allocated to local authorities. Revised DHP guidance was published yesterday, promoting longer-term awards where appropriate. The Court of Appeal has confirmed that the Government are meeting their human rights obligations and public sector equality duty. This year, we are saving about £490 million a year from the housing benefit bill.

In conclusion, the policy is working. The loophole has been closed. Arrangements are in place to support local authorities and those affected by the loophole. Finally, claimants have up to 13 months to make a claim that the loophole applied to them. For these reasons, this Motion should be withdrawn.

[Baroness Sherlock]

My Lords, I am in the unusual position of saying that I am not sure whether I agree with a single word that the Minister has just said. It was in fact the second most disappointing speech of the day.

The Minister has put forward three broad arguments. First, that it does not matter how many people are affected. But it matters to me, it matters to them and it matters to the local authorities, which have to deal with the mess that the Government have created.

Secondly, there is the question of savings. I noticed that the Minister failed to answer my question on what the net savings would be. Clearly, these savings are vanishing before us like a will o’ the wisp. The Minister also failed to explain how the savings remain the same, despite the Government having had to increase the money allocated for discretionary housing payments from £20 million to £190 million. The Government seem determined to ignore the costs and problems created for councils and other housing providers. If there is any doubt about that, let us remember that the National Audit Office said that the Government’s costings do not take account of,

“the full scale of potential impacts”,

and do not include the additional costs faced by local authorities. We have heard so much about those costs today from my noble friend Lord Beecham and the noble Lord, Lord Taylor.

There is then the question of overcrowding. As my noble friend Lady Hollis pointed out, this argument is frankly specious. There are not enough smaller homes to move into, a point underscored by my noble friend Lord Beecham, and where they are they are in the wrong places. They are not in the places where people are being asked to move. People have not moved because there is nowhere to move to. During the passage of the Welfare Reform Act, the noble Lord, Lord Best, and my noble friend Lady Hollis put an amendment to this House which said that the bedroom tax should not apply if someone could not be offered somewhere else to move to. The noble Lord, Lord Taylor, had the courage to vote for that amendment at the time and I commend him for his consistency. Other noble Lords did not and the government Benches voted it down. Let us not therefore pretend that what the Government are really worried about is overcrowded houses. They had every opportunity to correct that and they failed it.

We have heard so many powerful speeches today about the misery and desperation caused by this policy. If the noble Lord, Lord Freud, really believes that this policy is a success, I would hate to see what his failures look like. If he feels that he is getting the right behavioural effects, what are they? Are they in the family described by the noble Lord, Lord Touhig, who are not eating? Are they the families who are going without or giving up bedrooms needed by carers or disabled people? No: the handful of people who have moved are doing so out of desperation, not because they were responding to a behavioural stimulus.

I found the speech from the noble Lord, Lord German, very disappointing. I was delighted to read the reports of Tim Farron saying that the Liberal Democrats were going to withdraw their support for the bedroom tax.

[Lord German]

When I asked my honourable friend in the other House whether that is what he had said, he said that he had not. I have his speech with me and I can also tell the noble Baroness that my honourable friend was interviewed by ITV on this matter but that ITV news decided not to broadcast his comments because they did not substantiate the allegations that the noble Baroness is now making, nor did they substantiate what the Guardian had said. Both of those sources are incorrect; the source is here in front of me and I invite my noble friends to listen to it.

[Baroness Sherlock]

My Lords, I am very grateful for that clarification. I take from it that the Liberal Democrats are in fact supportive of the bedroom tax and I thank the noble Lord for making that clear. If I have got that wrong again, the noble Lord has a very clear way of demonstrating it. They can join us in the Content Lobby today and the nation will judge them by that. If enough noble Lords were willing to come behind us today to stand up and say that this House does not believe that this is a good policy, or that this cruel, vicious, unfair and inefficient tax should be allowed to stay, a start would be to regret these regulations today. I urge noble Lords to do that and if enough people do, maybe the Government will think again. Maybe this House could start a process that would lead to the bedroom tax being repealed in this Parliament. However, if the Liberal Democrats will not do that and the Minister will not relent, let the country be in no doubt: the Labour Government will repeal this when they come to office. In the mean time, let us send a message today. I beg leave to test the opinion of the House.

Housing: Inherited Social Housing Tenancies

Baroness Sherlock Excerpts

Monday 24th March 2014 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that Answer—I think. Obviously, this House has not discussed the regulations concerned, although a regret Motion is coming up. I want to ask the Minister two questions, the first on numbers. He has told the House previously that the number of people affected by this loophole in the bedroom tax is small—the DWP says 3,000 to 5,000—but figures obtained under FOI by Labour show that, with more than a third of councils still to reply, already well over 23,000 people are likely to be affected. The new guidance, to which I think the Minister referred, may increase the number still further. Can he therefore tell the House precisely how many people will be affected by the loophole?

Secondly, I want to put to the noble Lord the following statement:

“I worry about what Labour chooses to call the bedroom tax, because so often what is a spare room is in fact a vital part of looking after an elderly person. It enables their relatives to come, it enables carers to be there … I think we introduced that rather without thinking it through very well, and I think that’s costing us”.

It is costing all of us, in discretionary housing payments, in rent arrears and in human misery. Surely the Minister agrees.

[Lord Freud]

My Lords, as I have said in this House previously, the numbers involved with this particular loophole are small. This particular inheritance issue does not change our estimates. A figure of around 5,000 has been attributed to the DWP in defining “small”.

On the FOI figures, it is worth making the point that local authorities are now getting to grips with the actual numbers. The Birmingham figures were quoted quite extensively. It was reported that Birmingham alone had 2,100 cases, the significance being that they make up a large proportion of the figure that we have been looking at. More recently, Birmingham put out a clarification, saying:

“We haven’t finished identifying them at Birmingham so can’t give you an exact number, but the number of possible cases has dropped substantially below the 2100 that was reported in the papers.”

So we can see that some of the FOI responses to which the noble Baroness referred—if that was an example—may be clarified.

We have a process for supporting local authorities and people to make the adjustments through discretionary housing payments, which we have increased in recent years from £20 million to £180 million in the current year—indeed, the signs are that that figure will be underspent. The number of people being affected is coming down reasonably rapidly; it is now below half a million.

Employment

Baroness Sherlock Excerpts

Thursday 20th March 2014 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, this is another wonderful debate. It is one of those times when it is impossible to be the opposition person responding because if I responded to all the things I wanted to today I would be here twice as long. I was beginning to wonder if it would be a job better suited to one of the robots my noble friend Lord Giddens told us about. If they can do stand-up comedy, I am sure that they can respond to a House of Lords debate rather better than the average human.

I have a growing list in my back pocket of noble Lords who I want to one day have a cup of tea with and pick their brains about things that are nothing to do with the subject under discussion. The noble Lord, Lord Shipley, puts more passion into exports than anyone I have ever heard. I would love to talk to the noble Lord, Lord Bilimoria, about beer one day or the noble Lord, Lord Holmes of Richmond, about the Olympics. He increasingly has a speaking style so engaging that I forget that half the time I disagree with him—sadly I do—but I commend him on keeping us awake while offering up subjects for disagreement.

The temptation at this point is for all of us to take the latest labour market statistics, cherry pick them nicely and then throw them across the Chamber in suitable fashion. Obviously, I will do a bit of that because noble Lords would be disappointed if I did not but I will try not just to do that. I want to try to pull out some of the ongoing problems that we all—I hope—accept and acknowledge across the House, on which, while we may disagree on the reason for them and the prescription, we are able to send a signal to those listening to this debate or reading about it outside that all of us in this House take seriously the challenges facing British workers and are committed to doing something about them.

I welcome the rise in the employment rate. It might be small but it is a positive move and one in the right direction, and I am glad to hear about it. However, I want to look a bit underneath that rise at some of the issues that remain. First, an unemployment rate of 7.2% means that 2.3 million of our citizens are unemployed. I thank my noble friend Lord Haskel for reminding us that behind these numbers are human stories—there are 2.3 million individual crises that we need to take seriously. We all need to guard against ever sounding complacent even as things improve. I am also conscious that the number of people unemployed for more than two years has risen and we need to think quite carefully about the question of long-term unemployment—of which more in a moment.

We also still have a serious youth unemployment problem, as highlighted by my noble friends Lord Monks and Lady Donaghy. Some 912,000 young people are unemployed. That is virtually one in five of all young people. The Minister offered up the caveat that that includes people in further education. At this point I am tempted to quote from the ONS footnotes which explain that, in accordance with international guidelines, people in full-time education are included in the youth unemployment estimates if they have been looking for work in the past four weeks—I will stop myself there not to bore the entire House. The guidelines are quite clear as to who is included. Even if young people in full-time education are excluded, and even though many of them may actually be looking for work, we still have the significant number of 628,000 unemployed 16 to 24 year-olds. It is really serious. The Minister said that we are not where we should be when we come to NEETs. A million young people are not in employment, education and training. That is a tragedy for our country. The number of young people claiming jobseeker’s allowance for more than 12 months has doubled under the Government, so we have a significant issue. Last year, long-term youth unemployment rose to its highest level for 20 years and there are still more than 226,000 young people unemployed for more than a year.

I, like many noble Lords, worry about the regional variation. I do not want just to look crude north and south but if I go down the road from Durham, where I live, to Stockton, the number of young people claiming JSA for more than 12 months has nearly trebled under this Government. However, it is not the worst. If I go down to Yorkshire or Lancashire, in Dewsbury and Burnley, long-term youth unemployment is 10 times what it was in 2010. It is not just a northern problem. In Wiltshire, the north of Swindon has seen long-term youth unemployment increase more than fivefold. There are areas where there is a really significant problem. If we cannot offer hope to young people then what do we have to offer them? It is a tragedy not just for the country, which misses out on all their gifts, but for each of those individuals. As the noble Lord, Lord Sheikh, described, the depression and mental challenges that can come from being out of work are very serious and we must therefore all take it seriously.

In terms of prescription, is the Minister ready yet to accept that it was a mistake by the Government to abolish the highly successful Future Jobs Fund, established by the previous Labour Government, which helped more than 100,000 young people into work? After all, his own department evaluated it positively, showing that it had produced net benefits of £7,750 a head after taking account of tax and benefit changes. What about the Youth Contract that replaced it? That was supposed to generate 160,000 wage incentive payments by the spring of next year. The scheme started in April 2012 and by last month there had been just 10,030 payments. Can the Minister tell the House what plans the Government have for getting the Youth Contract back on track? The mainstream youth Work Programme, which has been referred to by many noble Lords, is also having some fairly serious problems. New figures out show that just one in five people who has been on the Work Programme for two years finds a job. In fact, people are more likely to end up back in Jobcentre Plus than they are to end up in work.

As for the sick and disabled people that the Minister referred to, performance for people on employment and support allowance is pretty terrible. Today’s figures show that job outcomes at the 12-month stage are consistently around one in 20, or 5%. According to the Work Programme invitation to tender, that is what you would expect if there were no programme at all. Do we have a programme that is no better than doing nothing at all? Can the Minister tell us what the Government are doing to address that?

The second issue I want to focus on, raised by many noble Lords, is the state of the labour market and the rising insecurity faced by many of those who are lucky enough to be in work. Too many people are still stuck in temporary jobs or in short or zero-hours contracts that make it harder to get a mortgage or save for a pension. All these add to pressures on our social security system. My noble friend Lord Haskel mentioned the issue raised by my noble friend Lady Hollis about people in more than one job who cannot get into the pension system. When we debated the Pensions Bill last month the noble Lord, Lord Freud, indicated that there was some uncertainty around how prevalent zero-hours contracts were. Under pressure from the shadow Business Secretary, the ONS has now revised its figures and now estimates that there are 583,000 people on zero-hours contracts, up from 183,000 in 2010, which is a more than threefold increase.

I can confirm that the next Labour Government will outlaw the exploitative use of zero-hours contracts by banning employers from insisting that zero-hours workers be available even when there is no guarantee of work, by stopping zero-hours contracts that require workers to work exclusively for one business and by ending the misuse of zero-hours contracts where employees are in practice working regular hours over a sustained period anyway. We will put in place a new code of conduct for their use. Workers are feeling seriously insecure and I am sorry to say—as my noble friend Lady Turner pointed out—that government action has made them in practice less secure by watering down many of the protections workers have enjoyed in health and safety, against unfair dismissal and in other areas.

We then come to the point raised by many noble Lords: the cost of living crisis and the problems of low pay. This year marks the 15th anniversary of the national minimum wage, which I regard as one of Labour’s great policy successes—it boosted pay at the bottom without leading to a loss of jobs and it has wide support. I was talking to a couple of students in Durham recently over coffee, and when I explained about the days before the minimum wage, they were staggered. They had no idea that relatively recently you could just pay somebody whatever you wanted. They were amazed. In 15 years it has now become so commonplace that no one can imagine what happened previously. I know that the Government have changed their position, and I acknowledge that they have accepted it was a mistake to oppose the introduction of the minimum wage, but it is worth remembering that before the minimum wage people were being paid as little as a pound an hour. The Low Pay Unit found a worker in a chip shop in Birmingham being paid 80p an hour and factory workers earning £1.22 an hour. This was really serious. However, unfortunately, low pay has got worse under this Government. Working people have seen the value of their wages fall by an average of £1,600 a year, while the value of the minimum wage has fallen by 5%.

The challenge here, I suggest, is that the Government have not ensured proper enforcement of the minimum wage. Some 5% of jobs pay below the minimum wage, according to the Low Pay Commission, but only two employers in four years have been prosecuted. What are the Government going to do about that? Labour has called for a tenfold increase in penalties for companies that do not pay the minimum wage, and we want to see better enforcement, including giving local authorities new powers in this area. We have launched a review of low pay, led by Alan Buckle, deputy chairman at KPMG International. A Labour Government would encourage employers to pay the living wage through new “Make Work Pay” contracts, under which firms who sign up to be living wage employers in the first year of the next Parliament will benefit from a 12-month tax rebate of up to £1,000 and an average of £445 for every low-paid worker who gets a pay rise. In replying, could the Minister tell the House what the Government’s strategy is for tackling the problem of low pay in Britain? I would also be very interested to hear his response to the questions from my noble friend Lady Donaghy and other noble Lords on the gender pay gap and those from a number of noble Lords, including the noble Lord, Lord Giddens, on inequality.

We also have the problem of underemployment. Record numbers of people now want to work full-time but can get only part-time jobs. According to the latest statistics, 1.5 million people are approaching that position. That kind of insecure, irregular and low-paid work adds to social security bills, so that the Government are now on course to spend £15 billion more on social security and tax credits than they budgeted for in 2010. In particular, the total cost to the Exchequer of those working part-time but who want to be full-time is estimated to be £4.6 billion. While I am on techy numbers, I have another question for the Minister. I am sure that he, like me, has dug into some of the small print in the new labour market statistics. I would be fascinated to know what he thinks about the reasons for a couple of things. It seems that the number of hours worked by both full-time and part-time workers has fallen, but that the hours worked in second jobs have gone up. As far as I can tell, the increase in employment seems to be accounted for by self-employment. Could the Minister tell the House what he thinks that is telling us? Does it raise any alarm bells, either about people having to take second jobs to be able to feed their families or about the kind of drift to self-employment of the unattractive kind described by my noble friend Lady Donaghy in her excellent speech?

It would be reasonable to ask me to talk about what Labour would do instead, so I will finish by doing that. First and foremost, the challenge is to ensure that everyone who can work and should be working is in a job. The centrepiece of Labour’s economic plan is a compulsory job guarantee for young people and the long-term unemployed. Anyone over 25 who has been receiving JSA for two years or more, or anyone under 25 for a year or more, would get a guaranteed job paying at least the minimum wage for 25 hours a week and training for at least 10 hours a week.

As with the Welsh Assembly Government’s Jobs Growth Wales programme, we expect many of the jobs to be in small firms. Experience there has shown that once a company has invested six months in a new recruit, the chances are they will want to keep them on after the subsidy has ended. I was very interested by the speech made by the noble Lord, Lord Bilimoria, and I encourage him in a sprit of bipartisanship, given his own experience of entrepreneurship, to engage with us to think about how we can make this work best for small firms. I was very struck by the need to help young people as well to think about what their entrepreneurial skills could bring to the economy. When I sat on the commission on the riots, I met a number of young people who were in prison for riot-related offences. Many of them were very entrepreneurial indeed—just not in the way that we would want them to be. It was not directed. There is so much talent out there which we could capture and direct. It is important to give people a chance to be out there and to make sure there is a limit to how long they can spend disconnected from the world of work.

The investment in the compulsory jobs guarantee would be fully funded by repeating the tax on bankers’ bonuses—which, I note from the figures, are rising again—and by a restriction on pension tax relief for those on the highest incomes. We also need those young people to be able to move on and progress in the labour market, so Labour would take action to tackle the serious skills gaps that are holding back individuals and, indeed, our economy. A number of noble Lords made some very interesting points, including the noble Lord, Lord Shipley, and my noble friend Lord Soley about the skills challenge and how that is tacked in schools as well as in the economy. At its very simplest, almost one in 10 people on JSA does not have basic English and more than one in 10 do not have basic maths. If you do not have those skills, you are much more likely to make repeat claims for benefits and we need to do something about that.

I say to my noble friend Lord Soley that we do not have a problem just with coding skills but with IT skills as a whole—nearly half of those on JSA do not have even basic e-mail skills. If they are going to make job applications, not just online but to any employer, they need to have basic IT skills, and it is up to us as a country to make sure that we help them to do that. Labour would require jobseekers to take training if they did not meet those basic standards of English, maths and IT—not down the road when they fail to get a job but alongside their job search. I would also be interested to hear the Minister’s response to the broader and very important issues about productivity and skill levels raised by my noble friend Lord Haskel and other noble Lords.

There are some very serious issues here. We have some good progress being made, at least in headline figures, but some very serious problems in long-term unemployment and youth unemployment and in an economy with insecure jobs, poor pay and instability. We need to tackle these. Labour would pledge to get people into work, guaranteeing jobs for the long-term unemployed and the young unemployed. We will tackle the crisis in living standards and the scourge of low pay, address the skills gap and make work pay. We believe it is possible to get Britain working again, with decent jobs that pay enough to feed a family, not just at the top and in the rich areas but right across the country—in Stockton, Dewsbury, Burnley and Swindon. People deserve nothing less.

Employment: Universal Jobmatch

Baroness Sherlock Excerpts

Wednesday 19th March 2014 Lords Chamber

[Lord Freud]

My Lords, we take security very seriously. One of the reasons that there is a difference between the standard Monster site and that run by the state is exactly to make sure that there is security in our site. We work closely with Monster on that. People have to be careful with their information on the site, as for anywhere else on the internet. We make sure that there is proper support for people and instruction on how to keep their information safe.

[Baroness Sherlock (Lab)]

My Lords, when I asked a Question on this subject last week, the Minister was very reassuring. He told the House that:

“Universal Jobmatch has revolutionised the service of Jobcentre Plus. It is a transformative service”.—[Official Report, 11/3/14; col. 1673.]

He added that, of 500,000 employers, only 179 had been looked at for breach of conditions. However, this week the Daily Mail reported that, at the beginning of March, 125,000 jobs—a fifth of the total—were taken off the site. The Guardian reported that, in fact, the department was going to scrap the site in 18 months because there were so many problems.

I invite the Minister to reconsider the answer he gave to me then. Did he know then that the Universal Jobmatch website had so many problems? If so, why was he so reassuring? If he did not know, why did he not know?

[Lord Freud]

My Lords, I am pleased to say that I do know and can reconfirm what I said last week; I can actually amplify it. We are currently investigating about 17 sites for potentially being in breach of our terms and conditions. That does not mean that they are fraudulent; it just means that they may have mistakes in them, they may be duplicates, they may be from job boards, or there may not be a contract with the end user. That is what we mean by being not in compliance with our terms and conditions.

Universal Jobmatch is a very successful system. We are working closely with Monster and the contract runs to 2016. To the extent that there may be some misunderstanding and misrepresentation, the phrase “extend a contract” has a precise meaning: that you run a contract to a certain point, and do not go on extending but renew. We have a policy to work closely with Monster right up to 2016.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014

Baroness Sherlock Excerpts

Monday 17th March 2014 Grand Committee

[Lord McKenzie of Luton (Lab)]

I am grateful to the noble Lord, Lord Alton, for taking us back to those earlier days and the discussions we had at that time. I have the same question for the Minister: what progress are we planning to make on closing the gap between amounts paid to dependants and to sufferers? From recollection, the first task was to close the gap between the 2008 scheme and the 1979 scheme, but that gap between dependants and sufferers remains open still.

As I recall, the funding for the 2008 scheme was to come from recoveries of civil compensation claims. There was always a bit of a mystery about how you got those claims in what was meant to be a no-fault scheme, but there is no doubt that recoveries were made and that they funded the 2008 scheme. Will the Minister tell us the current recovery level and how it relates to the 2008 scheme expenses?

We have debated extensively the broader issue of the consequences of exposure to asbestos, and I am sure that we will come on to it in the regulations that we are to consider next. Will the Minister confirm that the HSE will switch on its awareness-raising campaign on asbestos? It ran a very effective campaign that was curtailed a couple of years back. My understanding is that it is going to be revived. If the Minister can confirm that, it would be very helpful. In doing so, will he tell us something about the funding for the HSE to make sure that it is not just a nominal effort but a really effective campaign? Asbestos is, sadly, still with us in too many parts of our infrastructure, and we need to keep messages going about all the risks of exposure to it.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his explanation of these regulations, and I thank all noble Lords for their contributions. Like the noble Lord, Lord Wigley, I recognise that there is no statutory obligation to uprate these amounts, and therefore I, too, welcome the Government’s decision to uprate the pneumoconiosis and mesothelioma lump sum payments under the 1979 and 2008 schemes.

A number of the questions that I wanted to raise have been asked, but I want to return to one point, which was raised by the noble Lord, Lord Alton, and my noble friend Lord McKenzie, about the difference between payments made to applicants in life and those made to dependants under both schemes. The noble Lord, Lord Alton, explained the three points of difference between the two. As he reminded us, in 2010 my noble friend Lord McKenzie reduced the differential in lump sum payments between in-life claimants and claims from dependants, but there has been no further narrowing of the gap between the two. When regulations equivalent to those here today were before the Grand Committee on 7 March last year—with a very similar cast, I notice from Hansard—representations on this very point were made by the noble Lord, Lord Wigley, and the noble Lord, Lord Avebury, who is not in his place. In his reply on that occasion, the noble Earl, Lord Howe, to whom it fell to respond, said:

“Ministers have to balance competing priorities, and because of the current financial situation, it is our duty to ensure that all available resources are well targeted. As around 85% of payments made under these schemes are paid to those who are suffering from the disease, I believe that they are currently rightly targeted on the sufferer to help them and their families to cope while living with the stress that illness inevitably brings”.—[Official Report, 7/3/13; col. GC 314.]

I remind the Committee of the point that the Minister made in his opening remarks, which is, in fact, that people live for a very short time knowing that they have the disease. If people on average live only nine to 12 months after diagnosis, I wonder whether the Minister still feels that that argument for focusing resources holds water.

When the regulations were debated in another place on 7 March last year, the then Minister, Mr Mark Hoban, acknowledged the discrepancy and said:

“It is something that we need to keep under review, and if the resources are available, we will see whether we can introduce measures to do that. The point about the difference between payments made to a sufferer and to their dependants is well made”.—[Official Report, Commons, Delegated Legislation Committee, 7/3/13; col. 9.]

I have three questions for the Minister. First, will he tell the Grand Committee whether the Government have indeed kept this issue under review and, if so, what conclusions they have drawn? Secondly, will he tell the Committee what percentage of payments is currently made to dependants rather than sufferers? Finally, what estimate has the department made of the cost of narrowing further or, indeed, eliminating the differential between the two? I look forward to the Minister’s reply.

[Lord Freud]

My Lords, as ever, noble Lords have asked a set of sizzling questions, which I shall do my best to address, although they are getting so technical now, because we have gone round this subject so many times, that I think that I shall end up writing quite a bit of it out, if noble Lords will excuse me for doing so.

On the question from the noble Lord, Lord Wigley, on the breakdown of the figures for the latest year, 2012-13, there is a total of 3,180 cases due to the 1979 Act. That represents the bulk of the expenditure, at £43.6 million. The 2008 scheme figures are 500 cases and £9.6 million of expenditure. I think that we have the breakdown figures that the noble Lord requested from 2002-03 onwards, but not to hand; I shall need to write with them. I did not anticipate that particular run of figures. I think that that will tie up with the recovery figures for the noble Lord, Lord McKenzie, and how they relate to the 2008 figures. I think that I will tie that up—I shall aim to do some tables.

On the split between sufferers and dependants, again, I shall use the latest year. Under the 1979 Act, of the total the bulk were the sufferers—2,900 out of the total—and 280 were the dependants. With the 2008 scheme, 450 were sufferers and 50 were dependants. That testifies to the speed with which the money gets out, given the sad mortality expectation that we were discussing. I am in no position today to move much further on making any progress in closing that gap between dependants and sufferers, but it is something that we keep under review. Clearly, we have been looking very closely at this whole area over the past year, and we will keep it under review. That is the best that I can do, speaking today.

I hope that I have covered everything, except for the HSE questions, with the awareness-raising scheme. I will write on the actual cost of what it would be to close that differential on the figures that I have just provided, which will give a baseline on what we are keeping under review. I shall also need to write on the detail of the HSE awareness-raising campaign. I feel somewhat embarrassed that I have resorted quite so much to the written word. If there is anything else at all, I shall include that in the letter. These are two important schemes. I commend the uprating of the payment scales and ask approval to implement them.

Diffuse Mesothelioma Payment Scheme Regulations 2014

Baroness Sherlock Excerpts

Monday 17th March 2014 Grand Committee

[Lord McKenzie of Luton]

My noble friend is too kind, but I am conscious of the fact that this Bill has been forged in very difficult economic circumstances, and it is a splendid result that we are where we are. Like others, I also welcome the increase in the level of payout. As I remember it, when we were discussing this during the passage of the Bill, there were two versions of the gross tariff: one from the ABI and one from the DWP. I think the difference between them was based on the projections of the age profile of those who contract mesothelioma. We focused on the higher, DWP, one. Will the Minister confirm that this is still the gross tariff that we are working to and that it will be 80% of that?

A number of noble Lords have raised the 3% of gross written premiums. I am not sure that I heard the Minister actually say that this is where the levy is going to start, and it will be helpful if he could confirm the position. I thought his expression was “within that 3%”, but it would be good to know when we will see the levy regulations and whether the expectation is that it will be fixed, initially, and thereafter, as my noble friend Lord Howarth said, at 3% of gross written premiums. Obviously, this is to the extent to which they did not produce more than a 100% payout.

The Minister confirmed that the legal fees at £7,000 per case would be paid on top of that. I am not quite sure that I followed the reasoning of how that will be dealt with in alternative regulations. I would appreciate it if the Minister reiterated what he said. The noble Lord, Lord Alton, has been steadfast on the issue of research. Will the Minister take the opportunity to tell us where he thinks the insurance industry now stands, and what the prospects are of getting extra funding from it one way or another?

I have a couple of technical questions. Can we have an update on the oversight arrangements? I do not think there is a specific reference in these regulations to the oversight committee and whether there should be any obligation on the administrator. I should say that the Minister has been true to his word in terms of the process of appointing the administrator of the scheme, but I do not think there is anything in these regulations which requires co-operation and engagement with the oversight committee. Perhaps the Minister will say how he sees that working.

There was an issue over Schedule 3 to these arrangements, which deals with the application. This sets out all the information that needs to be provided and includes the names of all the person’s employers and the description of the arrangements under which the person was engaged by each employer. One of the issues that cropped up just at the tail end of the Bill’s consideration in the other place was HMRC policy on work histories and the extent to which a court order is now necessary for HMRC to provide them. I hope that this issue has gone away, but I would appreciate an update from the Minister on that point.

On a smaller point, will the Minister clarify where the administrator can impose conditions on a claimant? I think we understand why that would be but, as I understand it, there seems to be some differentiation. Conditions can be imposed where a dependant is an applicant, but where the applicant is deceased and the payment goes to the personal representative I am not sure that the constraints or conditions on that payment would apply. Maybe that is not necessary because it would be the role of the personal representative to make sure that that was effectively dealt with. Can the Minister confirm that?

Finally, I just ask about the Ministry of Justice procedure for reforming mesothelioma claims. In a sense, the Government backed up what was originally proposed but paragraph 39 of their response to the consultation on these proposals states:

“The stated purpose of the Secure Mesothelioma Claims Gateway was to support the proposed Mesothelioma Pre-Action Protocol. As the Government has declined to take forward the MPAP supported by a fixed recoverable costs regime, the ABI will no doubt want to consider whether and how it would wish to take forward its proposal for funding and hosting a SMCG and how claimants and defendants might voluntarily make use of it”.

Could the Minister give us an update on that and what it means in the current situation?

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his explanation of these regulations and all noble Lords who have spoken. I am reminded of what an effective Committee process we had during the passage of the Bill. The Minister must feel a certain sense of déjà vu that he is back here yet again being interrogated quite so effectively about the detail. I join other Members of the Committee in congratulating the Minister on pioneering this and pushing it through. I also thank my noble friend Lord McKenzie. I am grateful that my noble friend Lord Howarth included him for all his sterling work in getting this show on the road in the first place and helping to steer it through Committee.

It is very good to see the progress made towards the introduction of the scheme. I am very pleased by the decision to raise the level of payment to 80% of average civil compensation. I also place on record a tribute to all those who campaigned for a higher payment, not only Members from all sides of this House, including my noble friend Lord McKenzie and many Members of this Committee today, but also victims’ groups, trade unionists and Members of another place such as my honourable friend Kate Green and other MPs, including the late and still very much missed Paul Goggins, who was such a strong fighter on these issues. Many in this field will be very grateful.

Clearly, as we have heard, the amounts of scheme payments in Schedule 4 do not now represent the levels of payments we expect, but I thank the Minister for explaining that we may expect imminently some negative orders to come into force to affect that. The Minister said that the Government are able to increase payments because of savings in administration costs. We are indebted to my honourable friend Kate Green who suggested that in the Public Bill Committee in another place—something acknowledged by the Minister there—but it would be very helpful if the Minister here could explain to the Committee precisely where those savings were found.

The impact assessment produced last November indicated that an uplift in payments from 75% to 80% would cost an extra £11 million in the first four years of the scheme and an extra £22 million over the first 10 years. With payments set at 75%, it also stated:

“The costs of the scheme are split between a levy of £371m on the insurance industry and £17m in government funding. This covers scheme payments direct to individuals (£261.4m), benefit recovery (£72.2m), applicant legal fees (£24.6m) and admin of £30.0m (including case legal fees of £24.2m, set up of £1.4m and running costs of £4.4m)”.

To focus in on that, that impact assessment showed two sets of legal fees provided for: applicants’ fees at £24.6 million and case legal fees at £24.2 million. There was some debate as to what the case legal fees covered but the Minister in another place assured the Public Bill Committee that they were for the benefit of applicants. Originally, claimants’ legal fees were set at £7,000 a case, when payment was at 70% of average civil damages. During the passage of the Bill through this House, that payment rose to 75% and legal fees were reduced to £2,000 per case.

In the Public Bill Committee in another place, legal fees reverted to £7,000. The Minister there said that he had had discussions with the Association of Personal Injury Lawyers and felt £7,000 to be a reasonable figure after all. Crucially, he also said that if cases could be conducted more cheaply, applicants would none the less receive the full £7,000. We now know that extra moneys have been squeezed out of administration costs to fund this uplift but can the Minister explain where they come from? I presume that they do not come from a further squeezing of legal fees. He also confirmed—and this was very helpful—that £7,000 per head remains the sum allocated to applicants for their legal fees. Can he confirm for the record that, if the legal fees in some cases fall short of this amount, applicants will still receive the difference in cash up to £7,000?

Assuming that there are no changes in respect of the position relating to applicants’ legal fees, can the Minister tell us where the additional £11 million or £22 million to pay for the uplift has been found? On the face of it, it must have come in some combination from other administration costs. Can he also say what he assesses the running costs and set-up costs of the scheme now to be? Can he also tell us how much is now allocated for case legal fees as opposed to applicant legal fees? If those case legal fees have been reduced and, as the Minister in another place explained, they were to be for the benefit of applicants, will the applicants suffer in any way as a result of that? If the extra money is not coming from there, where is it coming from?

Can the Minister also confirm that payment at 80% is to be met within the planned levy of 3% on the industry, including in the first four years of the scheme? I will turn in a moment to the levy and the points raised by various noble Lords, but I want to talk briefly about a few other aspects of the scheme.

Regulation 5(4) requires the scheme administrator to ensure that there are sufficient numbers of suitably qualified persons to determine applications under the scheme. Does the Minister have any more information that he could share with the Committee about the likely professional background and qualifications of those people and, in particular, about their independence and how they will be employed? Will they be employees of the scheme administrator or might they work on a freelance basis? In particular, if they are freelance, is there any possibility that there could be a conflict of interest if they have other roles within the industry at the same time? The crucial question is: if that is the case, how will such conflicts be identified and dealt with so that the public and the applicants can be reassured of the independence of the people making the determinations?

I welcome the provisions in Regulation 9(2)(a) regarding time limits for applications. It makes it clear that applicants would have three years from the date of diagnosis or, if diagnosis is after 25 July 2012 but before the regulations come into force, three years from the date they come into force. However, there are still some concerns about time limits when we look across to Regulation 18. Generally, if a claimant dies before the case is determined, a payment may be made to his or her personal representative if the claimant leaves no dependants, but that still leaves a small group, admittedly, of mesothelioma sufferers without dependants who were diagnosed on or after 25 July 2012 but who died before they could make an application simply because the forms to do so were not yet available. I understand that they will be available from April, and perhaps the Minister could confirm that. In those cases, I understand that payment will not be made to the deceased’s personal representative. Can the Minister clarify that? If that is so, it seems unjust. It has been quite clear that the Government’s firm intention was for claims to be backdated to 25 July 2012 in all circumstances, but I should be interested to hear the Minister’s response.

I welcome Regulation 11, which sets time limits for the provision of additional information—a suggestion from my noble friend Lord Browne of Ladyton. I am sure that he will be very glad to hear it, and I shall make sure that I communicate the information to him. I am very grateful to my noble friend Lord McKenzie for raising the question about HMRC and the fact that it needs a court order to release the employment records of deceased claimants. This is really serious. I understand that a letter from the Minister to my honourable friend Kate Green in the other place suggests that progress was not being made very quickly on this. I look forward to hearing whether this can be resolved before the scheme is launched.

I also welcome the provision in Regulation 18 which provides for the applicant to request a review of a determination. That was another suggestion from my noble friend Lord Browne, about which I predict he will be even more pleased.

Finally, two important commitments made by Ministers do not appear in the regulations before us today. The first concerns the levy, which was raised by my noble friends Lord Howarth and Lord McKenzie and others, and, in particular, the absence of any reference at all to it in the regulations. I confess that I was a bit surprised about that, but I may have misunderstood where it is to be dealt with. Will the Minister explain whether there is a reason why the levy and the rate at which it is to be set are not included in these regulations? It is important that people are reassured that 3% is to be the amount, although if the Minister wants to adopt the formulation offered by the noble Lord, Lord James of Blackheath, I am sure we will all be very keen to hear that today.

--- Later in debate ---

[Lord Freud]

Noble Lords could go on about this, but I cannot.

On the other point made by the noble Lord, Lord James, about the crossover between the schemes supporting the Royal British Legion, I am not aware of the issue he raises, but I shall look into it for him.

On the point made by the noble Lord, Lord McKenzie, on the oversight committee, we are not legislating for that, but we have discussed the matter with the AVSG, the TUC, insurers, personal injury lawyers and accident insurance lawyers. We are agreeing with those groups how the committee could operate. We intend that it will look at various aspects of the running of the scheme, particularly in the early period. We envisage it considering complaints against the scheme, redacted claims and decisions. It will then send a report to the Secretary of State, who will include the issues raised by the committee in his published annual report. It will be quite transparent.

On the point made by the noble Lord, Lord McKenzie, about HMRC, we continue to work with other departments to seek a resolution to this issue. Regrettably, that is still ongoing work. We have encouraged the ABI to continue to engage with the MoJ as they look to improve the process for mesothelioma cases in regard to the portal.

In response to the question asked by the noble Baroness, Lady Sherlock, the reason we can increase the payments to 80% is because the scheme administrators have now been selected and the costs have been finalised. Those costs fall well below projected costs, and this allows us to increase the payments while keeping the levy the same.

In the November impact assessment the net benefit to lawyers was expected to be £2.69 million over 10 years. That has reduced to £1.6 million. The reason for this difference is that the original scheme administration costs used in all previous versions of the impact assessment assumed that some legal administration costs would benefit lawyers working on the scheme. These costs were estimated to be £23 million from successful cases, £1.7 million from unsuccessful cases and £1.2 million from ad hoc legal administration costs. Due to further understanding of the way in which the scheme will be administered, it is now recognised that these legal administration costs are not necessary, meaning that overall it is expected that lawyers will benefit by less. I can confirm that applicants will still receive the difference between the £7,000 and the legal costs, if there is a positive difference.

[Baroness Sherlock]

Before the noble Lord leaves that point, can he confirm that the figure that was previously £24.2 million has now either disappeared or is in single figures and that there will be no other loss or additional costs for the applicant as a result of those costs being taken out of the scheme altogether?

[Lord Freud]

Yes, I can confirm that. In the tendering process resulting in the appointment of Gallagher Bassett, the company was required to demonstrate that it had sufficient resources to process the expected volume of claims. We have reviewed its tender to ensure that it is accurate and realistic and have satisfied ourselves that it can deliver as part of our due diligence. The administrators will be employees of the scheme administrator. If the person with mesothelioma dies before an application can be made, their dependant can make the application. If the person dies after making an application but before a payment is made, the payment is made to their personal representative.

--- Later in debate ---

[Baroness Sherlock]

I thank the Minister for clarifying that point. I was talking about people who have died who do not have dependants. It seems that the Minister was saying that the personal representative can receive a payment even in the circumstances that I have described: when people were diagnosed on or after 25 July 2012 but had not made an application because the process was not available to them.

[Lord Freud]

They cannot make one in that period.

[Baroness Sherlock]

Can the Minister please explain why? These are people who the scheme is explicitly designed to cover. They simply had the misfortune to die before the Government had been able to put the scheme in place and give them an application form to fill in. Why should they be excluded?

[Lord Freud]

I think it is because they do not have dependants. However, I will write to justify what that difference is and why we have designed the scheme in that way. Our estimate is that the 80% payment will be within the 3%, but that is clearly based on our figures. As to the final question on the setup and running costs of the scheme, I cannot go into too much detail for reasons of commercial confidentiality. I will write carefully and provide as much information as I safely can.

Pensions Bill

Baroness Sherlock Excerpts

Wednesday 12th March 2014 Lords Chamber

[Lord German (LD)]

I shall say a few words about the two issues raised by this amendment. They are important issues, albeit for a small number of beneficiaries, although that number will increase over time, as the noble Lord, Lord McKenzie, has just said. It strikes me that because of the loss of one part of pension credit, the part that gives this passported benefit for cold weather payments, the Government presumably have to have something in place to ensure that people are in receipt of that payment. Will my noble friend reassure the House that it is not the intention that eligibility for cold weather payments will be reduced so that only a few will be able to receive them for the very important purpose for which they are drawn? Can he tell us about the fuel poverty strategy which I understand the Government are consulting on and whether these issues are rightfully the sorts of issues which could be debated and discussed during the consultation? If that is the case, there is clearly a route forward, but I seek reassurance from my noble friend that both these schemes are intended to continue and that their purpose and scope will not be diminished.

[Baroness Sherlock (Lab)]

My Lords, I am pleased to support Amendment 1 which is tabled in the name of my noble friend Lord McKenzie of Luton. My noble friend has been like a terrier chasing the Minister on the subject of passported benefits and payments. The Minister may have thought he had shaken him off as he left the Moses Room at the end of the Committee stage, but I am sure he knew better. Indeed, it is to the Minister’s credit that he was content to return to this subject at Third Reading, knowing that he would face the onslaught of yet more gentle but expert and determined questioning from my noble friend Lord McKenzie.

I express my appreciation to the Minister for allowing his officials to brief us and to his officials for giving us for the first time a detailed list of all the benefits that are being passported from pension credit. However, that left some clear question marks about the future strategy for passported benefits. If the Minister is in a position to tell us where the Government’s forward plans are taking them, not just on these two, but on any of the other benefits that are not clearly passported from pension credit, I think the House would appreciate that.

My noble friend has set out the case characteristically clearly, and I need add little to it, but the House and the country will want to hear the Minister answer the questions asked by the noble Lord, Lord German. We want to be satisfied that people will not lose out and that there is an alternative plan for arrangements to replace the passporting of cold weather payments and access to the warm home discount scheme.

The point made by my noble friend Lord McKenzie about the role of rising energy prices in the cost of living crisis is visible to all noble Lords at the moment. This is a particular issue in relation to these two benefits in parts of the country that obviously suffer from lower temperatures. I should perhaps declare an interest as a resident of Durham where, despite the fact that we have a world heritage site and much to commend us, with lower rainfall on average, even I have to confess that our temperatures are on average perhaps a whisker below those on the tropical Riviera of Cornwall. On the other hand, this will not affect me until I reach state pension age and that is receding ahead of me at some rate, so perhaps no declaration of interest is needed.

The Government have indicated that they propose to introduce the new single-tier pension above the current level of the guarantee credit in pension credit. But it is clear that that could come in at just a shade above. If Ministers want to carry on asserting that reducing means-testing is an important part of these pension reforms, then they have to have a strategy on passporting—otherwise they will end up with the kind of cliff-edges which anyone who worries about means-testing will know can really be a trap for the unwary.

Maybe the Government have had the opportunity since Report stage to think through how this will be taken forward and can give the House the kind of assurances that have been sought by both noble Lords who have spoken. If they have not, which I will understand, I very much hope that the Minister can accept the amendment. Parliament has a right to know what will happen to these payments, and by the time we get regulations it will be too late. I look forward to the Minister’s reply.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I am glad to have the opportunity to discuss the amendment, which the noble Lord, Lord McKenzie, was understandably unable to move on Report. I hope that I will be able to offer him some reassurance about the current arrangements and the further work that we are planning.

As noble Lords will be aware, pension credit acts as a passport to a number of other benefits, most of which are linked to an individual being in receipt of the guarantee credit element. That element will continue to be available for the poorest, whether they reach state pension age before or after the introduction of the single-tier pension, and will continue to act as a passport to cold weather payments.

I also remind noble Lords that the single-tier pension itself promotes savings, removing the need for savings credit. The full single tier will be set above the level of the basic means test, removing the current problem whereby the state pension has not kept pace with the means test and therefore the need for a complex reward system. Together with other reforms to the pension system over time, the poorest pensioners are also the most likely to have higher incomes than they would have done if the current system had been rolled forward.

While I understand concerns about knock-on effects for vulnerable pensioners, there is actually relatively little in the pensioner welfare system that depends entirely on receipt of pension credit. For example, housing benefit and council tax reductions can already be claimed on low-income grounds, regardless of receipt of pension credit, and this will continue. Other benefits such as free television licences and travel concessions can be claimed on the grounds of age. The only significant benefits that are truly passported from pension credit are cold weather payments and the warm home discount scheme.

Cold weather payments, as noble Lords are of course aware, provide help with the additional costs of heating during periods of severe weather. The scheme runs from 1 November to 31 March each winter. A payment of £25 is made to someone when the average temperature has been recorded as, or is forecast to be, zero degrees or below over seven consecutive days at the weather station linked to their postcode. In some winters there are relatively few triggers, in some years there are many triggers; in fact, there have been very few indeed this year.

Cold weather payments are made to people who receive certain income-related benefits and satisfy the eligibility conditions set out in the Social Fund Cold Weather Payments (General) Regulations 1988. All those who receive pension credit are eligible, whether they receive the guarantee credit or the savings credit element, or both.

The noble Lord, Lord McKenzie, asked about universal credit. Those eligible for cold weather payments are those who are not employed or self-employed and they or their partner receive either a limited capability for work element or a limited capability for work element with a work-related activity element, or who receive a disabled child element within their assessment, or who have a child under the age of five years in the family. Universal credit recipients who are employed or self-employed will be eligible for cold weather payments only if they have a disabled child in the family.

Our predicted expenditure on cold weather payments is based on the average number of payments over the past 10 years. On that basis, while we cannot predict the actual impacts, we might expect around £2 million to have been spent in 2020 on cold weather payments for people who would have received pension credit under the current system, but who would not under the single -tier system. That is based on our calculation of 20,000 single-tier pensioners being raised above the standard minimum guarantee, and 60,000 who would have been entitled to a savings credit under the pre-single tier system.

That expenditure is of course by no means certain, which is why we have not assumed any savings from cold weather payments as a result of the Bill. However, we are not complacent about that issue and that group of people. That is why we are already considering ways in which it might be possible to identify, for cold weather payment purposes, single-tier pensioners whose income will be above but close to the level of the standard minimum guarantee.

In response to the question from my noble friend Lord German, I can reassure the House that it is not our intention to reduce eligibility.

The noble Lord, Lord McKenzie, also asked about the warm home discount scheme. That is a rebate on electricity bills for pensioners aged 75 or over who receive the guarantee credit in pension credit, and for pensioners under 75 who receive the guarantee credit without a savings credit. From 2014-15 it will be extended to all pensioners receiving the guarantee credit. Rebates may also be available for a broader group including those in receipt of the savings credit as well as certain other groups below pension age, but those broader group rebates are subject to a cash limit and to the policies of individual suppliers, as agreed with Ofgem. We have committed to extending the warm home discount scheme into 2015-16, but we have not made plans for 2016-17 and beyond.

On the question asked by the noble Lord about discussions with electricity suppliers, that will be part of the consultation in the spring on extending support for the core group. Access to cold weather payments and the future of the warm home discount scheme are part of a broader set of issues around targeting spending to combat fuel poverty among older people. As I said, we will consult later in the spring on a new fuel poverty strategy, which will include the question of reducing fuel costs for those pensioners in the second income quintile, which is where savings credit recipients are clustered.

For single-tier cohorts, it will not be possible to identify exactly which household might have been entitled to a savings credit without retaining the savings credit assessment itself. We are assessing the cost and capacity issues of doing that, as well as the trade-off for intrusion into pensioner households. However, the department’s initial assessment is that there are likely to be better and more cost-effective ways of reducing fuel costs for that group, especially by using recently developed datasets that allow us to identify poorly insulated homes and the characteristics of the households living there, with a view to making infrastructural as well as cash interventions.

I can reassure noble Lords that cold weather payments and the warm home discount scheme are an important part of our fuel poverty strategy, and major components of our work to improve the well-being of older people. However, that is a separate issue from promoting savings through pension reform, and we are not wedded to particular ways of meshing the two together.

On the question put by the noble Baroness, Lady Sherlock, on our passporting strategy, we will continue to use a mixture of age, low-income and passporting from means-tested benefits to target different benefits and services to different groups. I understand the concerns raised by the noble Lord, Lord McKenzie, and I hope that I have been able to provide him with reassurances.

--- Later in debate ---

I refer, finally, to the issue of European requirements, because it has been raised in the debate on the transparency of transaction costs. I know from speaking to one or two colleagues that there is a little uncertainty about the extent to which European requirements may be brought to bear on any action taken by the Government on the transparency requirements on transaction costs. Can the Minister confirm that the UK Government are free to set requirements on the transparency of transaction costs for occupational and money purchase personal pensions; that the Government will do so; and that they are not constrained from doing so by the EU rules on retail investment products?

[Baroness Sherlock (Lab)]

My Lords, I remind the House of my registered interest as a non-executive director of the Financial Ombudsman Service.

I thank the Minister for explaining his amendments and all noble Lords who have contributed to this debate for their insights. On Report the Government were understandably worried by the alliance building up between the noble Lord, Lord Lawson, and my noble friend Lord Browne, who regrets that he is unable to be here as a result of the date of Third Reading being moved. In order to head off a possible defeat, the Minister made a speech offering strong reassurances. It is against those reassurances that the House should judge the amendments that the Government have brought forward today. Let us remind ourselves what those reassurances were.

The Government were keen to assure the House that whatever their amendment said, their intention was that all costs would be covered by their proposals. On 26 February, the noble Lord, Lord Freud, told the House:

“We are looking for transparency on all charges. We are looking to ensure that that is published”.

He reinforced that point today. I think that I heard him say that there will be full transparency on all costs and charges.

My noble friend Lord Browne then intervened on Report to seek clarification on how transparency would be handled in relation to transaction costs, since it seemed that the Government were proposing to exempt areas where there were existing FCA rules in relation to transparency. The existing FCA rules on transparency exempt transaction costs, he noted, so how would the transaction costs in such cases be dealt with? The Minister replied:

“I am putting it on the record that we will aim to capture all costs, including all transaction costs”.

A little later, he went on to say:

“It is not to do with the EU”.—[Official Report, 26/2/14; cols. 967-68.]

What could be clearer? However, the current government amendments give the Secretary of State the responsibility for regulating disclosure of charges only for occupational schemes, leaving it to the FCA to do so for money purchase schemes.

Therefore, the first and most obvious question to the Minister, touched on by my noble friend Lady Drake, is: why is the Secretary of State divesting himself of the power to set the requirements for securing transparency of transaction costs in relation to money purchase personal pension schemes by giving the responsibility for the requirements on disclosure of information to the FCA?

Secondly, Amendment 3 has the effect of explicitly excluding defined benefit schemes from the regulations on the publication of costs and charges, and the Minister gave some indication of the Government’s thinking on that. However, I was very pleased that the noble Lord, Lord Lawson, raised the questions that he did, supported by my noble friend Lady Drake, because this is indeed not a victimless area. Not only are there costs to the companies that are the employers but there are potential risks to the sustainability of the pension schemes if employers find themselves carrying unreasonable and unnecessary levels of cost. It must be remembered that there are employers who may be well equipped to understand and challenge the nature of the charging structure but there are many others who are not, and they deserve protection as well. Perhaps the Government could explain some more about that. In particular, can the Minister tell the House what the timescale will be for this consultation and, if the Government decide to bring forward regulations, when the House may expect to hear more about that?

My noble friend Lady Drake then raised a series of important questions regarding what this dual regulatory regime will mean in practice, given that the FCA currently does not require transaction costs to be published for DC pensions. Amendment 4 makes it clear that the FCA must consult the Treasury and the Secretary of State before making rules about the disclosure of costs. The supplementary memorandum from the DWP to the Delegated Powers and Regulatory Reform Committee on the Bill reminds us that Section 138(1) of the Financial Services and Markets Act 2000, known as FiSMA, requires the FCA also to consult the Prudential Regulation Authority before making rules and then to publish those rules in draft, to seek representations and not to make rules without having regard to those representations.

Therefore, the Minister is left with the crucial question from my noble friend Lady Drake as to the extent to which the PRA’s concern for the sustainability of financial services companies may constrain the Government’s apparent desire for the FCA to make rules to ensure disclosure of all transaction costs, as again promised by the Minister today. What happens if the Secretary of State believes that the decisions that the FCA takes in this respect are not properly aligned with his or her own decisions on transparency in relation to occupational schemes? As my noble friend asked: what happens then?

Finally, there is the interesting question of the role of the EU. The Minister has said clearly that this is not a matter for the EU but my noble friend has sought clarification. I certainly understand that the publication of transaction costs with respect to retail products is covered by EU rules but that the publication of transaction costs with respect to workplace pensions is not, and I look forward to the Minister confirming that. However, one hears that EU rules may or may not lead to increased transparency of all transaction costs some time after 2016. I should like to test the Minister. Does he think that it would be acceptable if the FCA decided not to do anything about transaction costs but simply to await the decision of the EU? One assumes not, as not only would that not seem to chime with the Government’s general rhetoric about ceding powers to Europe but it is hard to see that the Minister’s words to the House on Report would imply that level of uncertainty, since he made it clear that it was nothing to do with the EU.

In the end, it is up to this House to decide whether it believes that the government amendments brought forward today have the ability to honour the cheque that they wrote to the noble Lord, Lord Lawson, on Report. The Opposition are not, as yet, persuaded. However, it is for the Minister to tell the House how precisely he can guarantee to deliver on the assurance that the Government will capture all costs and charges and, crucially, by what date that will happen.

Finally, and even more importantly, there remains the unresolved issue of a cap on charges. In his extremely impressive speech when we debated these matters on Report, the noble Lord, Lord Turner, put the matter succinctly when he said:

“I do not think that transparency is an alternative to a charge cap”.—[Official Report, 26/2/14; col. 966.]

Nor do I. If the Government really have the interests of consumers at heart, they will take much stronger action right now.

[Lord Freud]

My Lords, let me start by dealing with the question raised by the noble Baronesses, Lady Drake and Lady Sherlock, on the way in which the regulation works between two groups. The Pensions Regulator and the FCA work closely together to ensure that the regulatory frameworks for trust-based pensions under the regulator and contract-based pensions under the FCA are aligned and provide for a robust system of governance and fair treatment for members. The Government are not looking to change the current regulatory structure, as was confirmed in the DWP’s Triennial Review of Pensions Bodies, which was published in December 2013. Structuring the duties in this way is necessary to reflect the dual regulation structure and the fact that the FCA is an independent body in statute. Without this approach, there would be no duty on the FCA to make these rules.

In addition to their existing duties to consult, the amendments mean that both the Secretary of State and the FCA will be under statutory duties to consult one another in making regulations and rules, enabling us as far as possible to ensure consistency of approach with the rules following the regulations. There is absolute commitment from the Government and from the FCA to aim for consistency. The FCA would not propose to deviate from government regulations. The aim of a separate duty is not to provide room for inconsistency—far from it; it is about giving the FCA the flexibility that it needs to use its powers and expertise to respond as an independent regulator.

The noble Baroness, Lady Drake, raised a question on hybrid schemes. The regulations will be able to extend the disclosure rules to the DC element of hybrid schemes. The duty is in addition to the existing power in Section 113 of the Pension Schemes Act 1993.

The noble Baroness also raised a question on the relative position of the PRA—the prudential regulator—and the FCA. The FCA, as per its rules, will be consulting on the development of disclosure and requirements and will work closely with both Her Majesty’s Treasury and the PRA. Treasury Ministers are committed to strong disclosure of member-borne costs and believe that the FCA is best placed to make those rules.

On the question of the SORP code, raised by the noble Baroness, Lady Drake, the Government recognise industry initiatives to improve transparency of pension costs and charges, but as the OFT noted, such measures are voluntary and can be piecemeal. That is why the Government believe that transparency measures should be compulsory and standardised.

--- Later in debate ---

[Lord Freud]

My Lords, I have not carried out a detailed analysis of the SORP code. I can assure the noble Baroness that, under the regulations and rules that we will now develop, we will capture all costs. To the extent that those are not in the SORP code, that would be a wider requirement.

On what will happen if the FCA rules are not found to be adequate, the Secretary of State retains the power in Section 113 of the Pension Schemes Act 1993 to make regulations about both occupational and personal pension schemes disclosure.

On the timescale issue raised by the noble Baroness, Lady Sherlock, assuming that this Bill receives Royal Assent, I believe that regulations will be brought forward later this year. The Government will consult on these regulations before they are laid. The Government’s proposals on charges, transparency and governance will be published soon. I have not changed the position on that after our rather enjoyable debate on the matter on Report.

[Baroness Sherlock]

Is the Minister saying that the Government propose to consult on whether DB schemes should be included and then publish a single set of regulations, or will they go ahead on the basis he has outlined and subsequently consult on DB?

[Lord Freud]

The DB element will be part of the consultation. Depending on that consultation, we will have to decide how to treat that particular aspect.

On the questions around the EU, clearly right now we are free to write these regulations and rules and there are no EU rules to hinder that. However, that might change in the future. One of the attractions of pulling the FCA into this process is that it has technical expertise in this area and is the body negotiating in Europe on relevant EU legislation. It is therefore best placed to work with DWP on determining how costs and charges can be defined, captured, measured and disclosed. By using its own rule-making power, the FCA may be able to respond quicker than the parliamentary process to changes in the market or from the EU.

I think I have dealt with all the issues.

--- Later in debate ---

[Lord Freud]

My Lords, on Report I regrettably said that we had completed the legislation required to cover the change to the Pension Protection Fund compensation cap. Clearly, that was tempting fate because we have noticed that the wording in a particular place is not as clear as it could be, and this amendment addresses that. We made an amendment on Report to the PPF compensation cap measures setting out how the length of pensionable service should be determined for an individual who was a member of connected schemes; that is, for someone who was a member of a multi-employer scheme and who had worked for two or more of the companies attached to that scheme. That amendment allowed for the discrete periods of pensionable service to be added together. Crucially, if the person had worked for two employers at the same time—that is, the periods of employment overlapped—the amendment sought to prevent the overlapping period from being counted twice. Unfortunately, the wording of the amendment could be read as meaning that the period of overlap should not be counted at all. This would clearly not be right. This amendment therefore clarifies the wording to ensure it cannot be read in that manner. As a result, overlapping periods of employment will be counted correctly—in other words, once.

This is the final amendment to which I will speak and so before I sit down, I would like to take a moment to thank all those who have worked so hard on this Bill. Many colleagues across the House have contributed their time and substantial expertise to understanding and improving these landmark reforms. In particular, I am delighted that the Bill now contains measures that will help improve the retirement income of the spouses of service personnel. Preparing a Bill and supporting its passage through both Houses is a significant undertaking. This Bill contains a wide range of measures relating to state pensions, private pensions and bereavement benefits, and so has involved a large number of different policy teams. I estimate that close to 200 policy officials, analysts and lawyers have been involved. Many of them have been directly involved in attending briefing meetings or providing materials that have contributed to the excellent level of debate we have seen.

It has been especially gratifying to hear so many noble Lords mention the assistance of DWP officials in their speeches both in this Chamber and during Committee stage. It is a fitting tribute that their work is recognised in this way. I am grateful to them and to the excellent draftsmen in the Office of the Parliamentary Counsel who have worked so hard on this Bill. The Bill team deserves a special mention and so I would like to take this opportunity to thank Rez Mossavat, Jo Foakes, Megan Rooney, Helen Kelly and the Bill manager, Michael Cordy, for all their work and support. With that, I beg to move.

[Baroness Sherlock]

My Lords, I congratulate the Minister on having spotted the error before Royal Assent and the Opposition have no problem with the amendment.

I, too, would like to take this opportunity to say a few words of thanks to my colleagues for all their wisdom and support. I thank especially my noble friend Lord Browne of Ladyton for doing so much work on this Bill and for being such a constant source of support. I would also very much like to thank the Minister for the way he has handled the Bill—for his openness and his willingness to engage with appeals from all parties and to share the information and knowledge of his department. I thank the noble Lord, Lord Bates, for adopting a similar style and for his engagement. I thank the officials, too, for their helpfulness and their willingness to answer so many questions—in my case, often very stupid ones, which they have answered with graciousness and lots of information. We have all very much appreciated that.

The Bill has benefited from scrutiny in this House and leaves this place a better Bill than when it arrived, as is so often the case. It is the first Bill I have taken all the way through from the Front Bench and I have learnt a great deal from noble Lords on all sides. I have been grateful for the kindness and indulgence of the House as I have learnt on the job—a sort of apprenticeship, as one might have it. As the Minister said, the Bill has now benefited not only from the one victory that the House scored on mini-jobs—we hope very much that the other end will see the wisdom of that but, if not, we stand by our beds awaiting its return should that prove necessary—but from concessions around things such as service wives, auto-enrolment and categories of employer, and in other ways as we have gone through it. I pass my thanks to all noble Lords who have contributed at any point in the process. We all share a common objective of getting people in Britain saving for their retirement and I hope this Bill will help contribute to that objective.

[Lord German]

My Lords, I add thanks from these Benches to my noble friend and to the staff who have been behind all the detailed benefits we have received from having such a deep level of understanding and knowledge of the Bill throughout. I want to mention two particular things. One is the recognition during the Bill’s passage through this House that my noble friend will look very carefully at the needs of children who are in distress. I look forward to seeing that coming forward again in future months as we come to a response to whatever my noble friend is able to deduce from that investigation.

The second piece of thanks that I have to give to my noble friend is for his ability to bring Her Majesty’s Treasury to a meeting with officials of the DWP. That way, there was a coalition not only of Members of your Lordships’ House but of my noble friend’s staff. That ensured that we got a recognition that where pensions in the public sector would be affected by some of the matters in the Bill, they would put an architecture in place for whenever some new money might become available.

While using this opportunity to put this on the record, I want to thank my noble friend for all the support that he has given. The quantity of literature and number of pages that we have received is something that we will weigh with great pleasure during the years to come, because of course the measures which this House is taking in this Bill will affect the population of this country for many generations in the future. It has been very significant to see the Bill pass through the House.