Pensions Bill

Baroness Sherlock Excerpts

Tuesday 3rd December 2013 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that introduction. This Bill builds on the foundations laid by the Labour Government and, for that reason, we support many of its provisions. I hope that with the Minister we can find some consensus around the major direction of travel. I also hope that he will work with me in seeing what we can do during the passage of the Bill to make pensions interesting. I do not promise that my contribution today will advance that cause greatly, but it falls to all of us, if we want to raise the level of saving in this country, to try to raise the level of interest in it as well. So far, when anyone asks me what I am working on and I tell them that it is the Pensions Bill, I find that they have looked at their watch before I finish the sentence. I look forward to all the speeches, including the maiden speech, and to seeing what we can do to advance “Project Interesting”.

Moving firmly away from that agenda, I may say that one reason why we agree with the idea of a single-tier pension is that it is very much the direction of travel that the previous Labour Government took. However, we have some significant questions about the way in which this Government are doing it and about the decision to go with what is known in the trade as a hard/fast transition. We agree, too, with the need to address the way the state pension age is raised, but we have different views on the best way to achieve consensus around that.

The project of overhauling both state and private pension provision is of crucial importance to the future of our country. We on these Benches will do all that we can to improve this Bill to ensure that it is fit for the job ahead. But that job is a tough one, made harder by the climate of mistrust which obtains at present—mistrust of the industry, which we must all address, and, I regret to say, mistrust of government. People can become cynical, and sometimes have, in the welfare area, when something presented as a reform turns out all too often to be really just a cut. It is popularly assumed that with financial services products the bad news and exclusions are buried in the small print. The same may be true here, of course. Parliament does not yet have the small print, or the regulations, as we call them, but I hope that the Minister can tell us how soon we can get them. But we must maintain an appropriate degree of scepticism until we see what the detail is. That is particularly important in the light of the 13th report of the Delegated Powers and Regulatory Reform Committee, to which the Minister referred, which has a great deal to say about how this Bill uses regulations. So I look forward very much to the amendments that will come forward from the Government shortly.

Before moving on to the detail, I, too, would like to say a few words about the context of this Bill and background. When Labour came to office in 1997, we inherited two challenges in relation to pensions from the previous Conservative Government. First, there were disgracefully high levels of pensioner poverty, much of it among generations who worked hard to rebuild Britain after the last war. The second problem was the degree of mistrust in the pensions industry, some of it caused by the mis-selling scandals of the 1980s and 1990s. Labour addressed both challenges head on. We introduced a minimum income guarantee for pensioners, lifting incomes from £68.80 per week in 1997 to more than £132 by 2010. Under Labour, pensioner poverty fell to the lowest level for 30 years. We pegged pensions to increase in line with earnings and brought in pension savings credit to tackle the 100% marginal deduction rate facing many savers. We brought low earners and carers into the state second pension and introduced legislation for auto-enrolment. I pay tribute to the Government for taking that forward and implementing it. Crucially, we reduced the years of national insurance contributions required for a full state pension from 44 years to 30 years for men and from 39 years to 30 years for women. We also set up the Turner commission, to which the Minister referred. I, too, add my congratulations to the noble Lord, Lord Turner, and my noble friend Lady Drake on the excellent work that they did.

Labour supports the creation of a simple state pension system, and we are committed to the goal of encouraging people to save into private pensions in which they can have confidence. But we believe there are three tests that this Bill must pass if it is to achieve those objectives. First, is it fair to all those who have contributed? Secondly, is it sustainable in the long term? Thirdly, does it create a decent standard of living for all and, within that, will it encourage the private pensions saving that the Government are banking on to ensure decent retirement income? We will apply those three tests to the Bill as we scrutinise it over the weeks ahead.

I turn briefly to each part of the Bill. The biggest challenge to understanding the reforms to state pension provision in Part 1 is figuring out who are the winners and losers. The Minister has graciously allowed us access to his officials so we hope to dig down into that before Committee. However, I wish to lay out some big questions, on which I hope he can come back. First, as the Bill goes through the House, the Minister will need to confirm the precise level at which the single-tier pension will be introduced. The reason for that is twofold. First, the Work and Pensions Select Committee recommended that, given the importance of the principle that the STP is above the level of the pension credit guarantee, the level should be on the face of the Bill. Furthermore, paragraph 3 of the DPRRC report said that the Bill is drawn in a way which means that,

“for the first time, the rate of the state pension will be specified only in subordinate legislation”.

Given that, the Minister needs to tell the House what the level of the STP will be.

Secondly, there is the issue of those 700,000 women born between 1951 and 1953 who will have to wait longer to retire but will not get the new single-tier pension, unlike men of the same age. While a line has to be drawn somewhere, I think the House will want to reflect carefully before concluding that, after a reform of this scale, a twin brother and sister should find themselves in such markedly different positions.

Thirdly, some people who are married or widowed will receive a lower pension because the derived entitlements to which the Minister referred have been taken away. In other words, they would have expected to get a higher pension based on their husband’s or wife’s contributions, and they will now not be able to do so. Although state pension rules of course change over time, this is a long-standing provision around which some couples have planned their retirement income. The Work and Pensions Select Committee recommended that women within 15 years of state pension age should retain that right, so I would be very interested to know why the Government decided not to accept that advice.

Fourthly, the move from 30 to 35 qualifying years could mean that a number of people, especially women and the low paid, are less likely to get a full state pension, and someone with 9.5 years of national insurance contributions will get not a penny in state pension. The House will want to understand more about the rationale for that and the consequences of that shift which reverses a significant Labour reform which reduced the number of years to 30. I would also be grateful if the Minister could confirm for the record what the safety net will be for those who do not have 10 years of contributions.

Then we have the issue of the abolition of the savings credit element of pension credit. We are concerned that that will penalise those who have savings and could discourage saving in future. We will want to understand who will lose out and by how much and whether there is an issue about passported benefits which are currently attached to that. I hope that the Minister can tell us more about that either today or as we go through Committee.

Finally in Part 1, we will want to examine the impact on both public and private sector pension schemes of the changes relating to the ending of contracting out. In addition, when these reforms are implemented, national insurance contributions for contracted out workers will rise, as will those for their employers. The Bill allows private pension schemes to amend their terms to take account of the increase in employers’ contributions but public sector schemes cannot do that, presumably to avoid destabilising the public sector pension settlements. That leaves an unfunded cost on the shoulders of public sector employers. Can the Minister tell the House whether the Government have committed to meeting that cost for those public sector employers, perhaps from the £5.5 billion windfall the Treasury will get as a result of increased national insurance contributions?

In Part 2 of the Bill on pensionable age, the major issue relates to the proposal to have regular reviews of pensionable age, at least every six years. We agree with the need for periodic review, but the Minister is right to say that everything around this needs to be consensual. We agree with the principle but we think that, done badly, this could be very bad and could remove certainty for future pensioners and damage trust in the system, undermining incentives to save for the future. It is vital that the way the state pension age is reviewed is not just fair, but seen to be fair, ideally delivering cross-party consensual support for reforms in which the public can then have confidence. We believe that the best way to do that is for the reviews to be overseen by an independent cross-party panel, including a Cross-Bench Member of this House, and for it to have a broad remit. It should be tasked to consider not just the latest trends in life expectancy and the long-range public expenditure issues but also, for example, differences in life expectancy for different socioeconomic groups and the degree to which health and ageing go hand in hand.

I will return to Part 3 on assessed income periods when we get to Committee.

Part 4 is very interesting, proposing, as it does, a complete overhaul of bereavement support. As I understand it, bereaved people under 45 without children will benefit, receiving a flat-rate grant for one year for the first time, but I think that bereaved parents with children will be the losers. At the moment, they can claim widowed parent’s allowance for as long as they claim child benefit, although in fact the average length of claim is just five years. However, in future their support will last for only a year, and that is a major shift. We have received strong representations from charities which work with families with children, particularly bereaved families, and which are worried about the impact of this reform on bereaved parents. It would be helpful if the Minister could explain the Government’s rationale behind this. Although there may be more investment in the short term, I understand that over the long term the measure will save money, or at least be neutral, and effectively it will therefore redistribute money from parents with children who lose a partner to people who do not have children. Understanding why that choice was made would be helpful.

We are also very concerned about the conditionality requirements. The Minister mentioned that society has changed and that people are expected to work. They are, but early widowhood is not just an ordinary time for someone to go out to work. When families lose one parent, the effect on the other parent can be very severe. I hope that the Minister will think again about the conditionality requirements so that a person will not be expected to go out to work just six months after losing a partner. That would be very difficult.

Finally, I turn to Part 5 on private pensions. The Government have explained to us the numbers coming into auto-enrolment. If we think about this, it is clear that the state owes a very serious duty of care to those who have auto-enrolled into the pension system. If we are going to ask people, at a time of wage stagnation and a cost-of-living crisis, to forgo spending on themselves and their family today in order to invest for the future, they absolutely must be able to trust their pension providers.

This is a huge industry in the UK. About £180 billion is invested in trust schemes and £275 billion of assets is invested for DC schemes. Some 180,000 people with assets worth £2.65 billion have money in pension pots with annual management charges of over 1%, and 400,000 people a year buy an annuity. The numbers are eye-watering but the principles are pretty simple: the pension industry has to deliver value for money. However, the OFT study published this year made it clear that there are some serious issues in this industry which need addressing.

We propose a number of ways in which the Bill could address the challenge of building a private pension sector that people can trust. The first is to improve pension schemes. We will argue for the full disclosure of all costs and charges, including the costs extracted by fund managers, and stronger trustee-based governance of savers’ pension money, including the extension of fiduciary duties to all intermediaries who handle pension savings and policies, with the aim of encouraging bigger, better, stronger, well resourced and expert pension schemes which are more able to provide value for money for savers.

The second proposal is better management of pension pots when people move jobs. We absolutely agree about the need to make sure that people do not lose track of pension pots when they move to a new job, but we absolutely disagree with the way that the Government have decided to do this. The Government have chosen “pot follows member”, as it is known in the trade, but that raises some really serious questions. The most important are probably, first, the potential for customer detriment if, for example, the new employer’s pension scheme is worse than the one that the person is leaving, and, secondly, the real concerns about administrative complexity and the cost of this way of doing things. We will need to drill down to that in Committee.

Our preferred solution would be for the pot, by default, to move to an aggregator such as NEST, or one of its competitors, rather than to the new employer’s scheme. That is not just a Labour position; it is backed by many key experts, as we will come back to in Committee. In fact, the DWP went out to consultation on this and, even though a majority of respondents preferred the aggregator model, the Government chose to plough on with “pot follows member” instead. I would be very interested to understand why the Government are so set on this mistaken path. I genuinely cannot see why they are so set on it. None the less, we shall seek to improve the Bill in Committee by bringing the aggregator model firmly into play.

Thirdly, pension charges have to be reasonable if people are to have confidence to invest their hard-earned money. I am sorry to say that it has taken the Government a long time to wake up to this issue. More than one year ago, my right honourable friend Ed Miliband raised the issue of pension charges and Ministers accused him of scaremongering. They said that no action was needed because the market was “vibrant”. In another place, the Pensions Minister ignored the evidence presented by experts. He stonewalled the determined efforts of my honourable friend Gregg McClymont as the Bill went through elsewhere to try to do something about pension charges. I am delighted to say that Ministers have now acknowledged that there is an issue and we are promised a consultation and a cap on charges. I absolutely welcome this change of heart. As I am sure the right reverend Prelate the Bishop of Derby will confirm, there is more rejoicing in heaven for the one sinner who has repented than there is for the 99 who have always been there. I welcome the Minister and the Government to the happy place which Labour has happily occupied for some time. However, we will need to drill down on this in Committee. We will need to understand exactly where the Government are going on this, the right level for the cap, whether the cap will include the full range of charges and deductions, and how soon action will be taken.

Finally, there is the means by which people turn their pension pot into an income for retirement—decumulation, in the jargon. Most people use their pension pot to buy an annuity. We are the annuity capital of the world. More than half of all annuities are sold in the UK but the annuity market has some serious issues and is badly in need of reform. Performance is hugely variable, charges are often unreasonably high and the margins are such as to raise serious questions about whether they are value for money for savers. We will seek to amend the Bill in Committee and on Report to ensure that people approaching retirement receive good quality, independent advice, something that is already best practice and available in many of the larger schemes.

In conclusion, there is much to do to improve the Bill but we very much welcome the direction of travel. At heart, pensions are about trust; trust that the system is fair and sustainable, trust for savers that their contributions are safe, and trust that the market is working fairly and in the interest of savers. People in Britain must trust us to ensure that, having contributed to pensions for their whole life, they will have the income to afford a decent standard of living and to enjoy their later years. We hope that the Minister will work with us in Committee and on Report to provide the House with all the information that it needs and help us all to make the Bill the best that it can be. That is what the pensioners of tomorrow expect and it is what they deserve.

--- Later in debate ---

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, as a number of fellow Peers have said, this is a substantial and important Bill. It deals with the state pension fund, but it also covers elements of private pension funds. After buying their home, most people’s biggest investment in their life is their pension scheme. The Bill will be important for the quality of life of the whole nation at the end of their working life, so it is important that we get it right. We have a chance to get it right because it is very much cross-party; the single-tier pension has general consensus. Compliments have been passed. The Minister was generous enough to recognise the work done by my noble friends Lady Drake and Lord Hutton.

So the Bill has a very good start with a lot of cross-party support. I would like to be the first to sign up for the campaign of my noble friend Lady Sherlock to make pensions interesting. They are very important but, unfortunately, when you mention pensions, people’s eyes go to the ceiling—until they find out just what is wrong with their pension. Then, their interest is alerted but it is too late.

What we are considering today is important, but the Bill is inferior in some respects to the Green Paper which the Government issued. The Green Paper said that the changes would be cost-neutral, but the Institute for Fiscal Studies stated that,

“these proposals imply a cut in pension entitlement for most people in the long run”.

I would welcome the Minister’s comments on that when he responds.

The Bill covers a whole range of issues, all of them in their individual ways important, but I shall concentrate my remarks on its impact on women. There is no doubt that the change to a single-tier pension is one of the biggest and best changes to state pensions for women in this country. In my view, the women who will benefit from it do not want to get those improvements on the back of the women whom the Bill does not treat fairly in the transitional stage. That is where my real concerns arise. I hope that we will propose to amend the Bill to deal with those anomalies.

It is established and generally accepted that women make up by far the largest number of those on pensions living in poverty. The number is substantially different; far more women than men are in poverty on pensions. The Bill does not change that for a whole group of women. It is also true that women pensioners have a lower income than men. The Bill does not change that in the transitional period. We must deal with those issues.

For instance, currently, a woman who has been married or in a civil partnership may be able to use their partner’s record to receive a state pension or increase the amount they receive of their own accord. There are some transitional protections in the Bill, but they do not cover everyone. For instance, in the years ahead, some would reasonably expect to receive either a married woman’s pension or a full basic pension, if they were widowed, or would not have had the time before retirement age to make up the contributions. Are the Government going to change the Bill to protect those people?

The Government said that in 2020, there will be between 20,000 and 40,000 married and widowed individuals affected by a pensions loss. I find that unacceptable. Given the magnitude of what we are dealing with, we could amend the Bill to deal with that. I am joined in that view by the Work and Pensions Select Committee in another place. The committee has asked the Government to conclude a solution by allowing individuals within 15 years of state pension age to be allowed to retain that right. That would be a transitional measure and, in the nature of things, would not be hugely expensive. Will the Government accept the Select Committee’s recommendations?

Another group of women has been mentioned in this debate several times: those born between April 1951 and April 1953. Those women feel that they are being subjected to a double disadvantage. First, their state pension retirement age will increase. That is an issue that would have faced any Government. Any Government would have had the unpalatable task of changing the retirement age; I fully accept that. However, this group of women will face a later retirement age but will not go on to the single-tier pension, as I understand it. Will amendments be brought forward to rectify that situation?

Another issue has come up several times. Because an element in the Bill deals with private pensions, I feel able to raise it. That is the issue of part-time workers. We had a long debate on the previous Pensions Bill about the fact that although part-time workers who do not earn up to the national insurance level cannot join a pension scheme, they may have two jobs which, put together, would take them through that barrier and they would qualify for a pension. Those in that category are predominantly women. It is grossly unfair that we are having a major pensions change in this country which, I think, will put it on the right path for the future—although I think that we will have to make further changes later—without dealing with that issue.

Indeed, the Department for Work and Pensions showed in its own analysis that in 2012-13, some 50,000 employees fell into that category of having more than one part-time job but not being able to have a pension cover because both jobs, or three or whatever it was, fell below that level. Of that 50,000 people, again, 40,000 were women. In a Bill which marks a substantial and improved change on pensions for women in this country, there are those anomalies which I believe we should deal with. It will be our responsibility to try and do that. They are all transitional issues, not issues which will last for ever and a day, and we should be about to deal with them in the nature of things.

There are other aspects of the Bill which obviously cause concern. On the bereavement provision, it is a bit cack-handed to withdraw the pension on the first anniversary of the death of the spouse. After the bereavement of your spouse, the first year is always the most difficult. We need to consider what it would be like to be reminded of it. There are also the pension charges. I congratulate the Government on their announcement this week that they are looking at those. It may be that we will have something to discuss on pension charges during consideration of this Bill. I look forward to taking part in debates on this Bill which, if we get it right, will be a landmark for British citizens.

[Baroness Sherlock]

Before my noble friend rises, my Lords, I should say that I realised after I sat down from speaking earlier, with something of a sinking heart, that I had forgotten to draw the attention of the House to my interests in the register. I am the senior independent director of the Financial Ombudsman Service—a remunerated position. In an unremunerated position, I also chair a charity which has employees in pension schemes that could be affected by the Bill. I apologise to the House both for that omission and for interrupting the debate now to have to rectify it.

Disabled People: Mobility Benefits

Baroness Sherlock Excerpts

Monday 2nd December 2013 Lords Chamber

[Lord Freud]

My Lords, we have had a very thorough consultation on this. I cannot bring to mind right now the exact level of consultation with the transport department. I will need to write to the noble Baroness with that information.

[Baroness Sherlock (Lab)]

My Lords, I wonder whether the Minister realises just how worried disabled people are. The whole transition to PIP has been in chaos. The Atos work capability assessment is a disaster, the bedroom tax is hitting them, disabled kids have had their benefits cut, and 100,000 people have signed a petition demanding a cumulative impact assessment of the Government’s changes. Is the Minister proud of the Government’s record?

[Lord Freud]

My Lords, we are handling an extraordinarily difficult economic and financial position. As noble Lords are of course aware, we have had a decline in GDP of 7.2% from its peak in 2008-09. That is more or less the same level as what happened in the 1930s. Handling that decline has been enormously difficult and one of the most interesting things about the way we have handled it generally is that, unlike every other developed country, we have spread the inevitable difficulties across the whole economy, rather than, as elsewhere, the poor being hit far worse than the rich. That has not happened in the adjustment that we have made in this country.

Scotland: Underoccupancy Charge

Baroness Sherlock Excerpts

Thursday 24th October 2013 Lords Chamber

[Lord Freud]

My Lords, my noble friend is right that the private rented sector basis is the local housing allowance, which is paid on the shape of the family who occupies. It is paid on the basis of how many rooms are required. Until now, there has been an imbalance between the provision in the social rented sector and the private rented sector, which this policy corrects.

[Baroness Sherlock (Lab)]

My Lords, the evidence is mounting. On top of evidence from the University of York and the University of Cambridge, in the past week alone the Archbishop of Wales has slammed the effect on Wales and now we have concerns from the Scottish Government. Perhaps most telling of all is a report I read this week in the Spectator by Isabel Hardman in which she suggested that Ministers were now referring to the spare-room subsidy as “Lord Freud’s idea” in an attempt to distance themselves from it? Would the Minister like to take this opportunity to rebut that outrageous slur?

[Lord Freud]

My Lords, a good idea has many fathers. Clearly, everyone in this Government is responsible for the bedroom tax and I am one of them.

Jobseeker’s Allowance (Domestic Violence) (Amendment) Regulations 2013

Baroness Sherlock Excerpts

Tuesday 15th October 2013 Grand Committee

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

My Lords, the regulations are regarded as being compatible with rights under the European Convention on Human Rights.

We updated the regulations last year with the introduction of the jobseeker’s allowance domestic violence easement, which recognised the challenge that the victims of domestic violence face when making the decision to flee a perpetrator. The easement made provision for jobseeker’s allowance claimants who are victims of actual or threatened domestic violence by a partner, former partner or family member to be exempt from jobseeking conditions for an initial four-week period, which may be extended to a total of 13 weeks where evidence is provided. The period allows those affected by domestic violence the time to focus on important priorities, such as organising new accommodation or arranging alternative schooling for dependent children, without also having to focus on meeting their jobseeking conditions.

Since 31 March 2013, the Government have implemented the revised definition of domestic violence. The Home Office carried out an extensive consultation with stakeholders to establish a definition that captured the full spectrum of what form domestic violence can take. Reflecting the advice of former victims and those professionals who work to support them, the definition goes well beyond physical abuse to incorporate sexual, emotional, psychological and financial abuse. The new definition specifically introduces controlling and coercive behaviour, as well as recognising that those aged 16 and 17 may be victims.

We are seeking to update the definition of domestic violence in the jobseeker’s allowance regulations so that it corresponds with the new cross-government definition. Through our existing regulations, we already give as much weight to a single incident of domestic violence as we do to multiple incidents, and we already include 16 and 17 year-olds under Regulation 14A. However, domestic violence was previously limited to specific types of abuse. We need to ensure that we incorporate the new definition in full.

I hope that the Grand Committee will accept that the change of definition is a positive and important step. For the first time, the definition recognises that victims may be subject to different types of domestic violence and abuse. It makes it clear that domestic violence can be many things, and is certainly broader than physical violence alone. By working to a single cross-government definition, we will enable victims and those who support them to be absolutely clear about what constitutes abuse and what support is available.

We know that the first incident reported to the police or other agencies is rarely the first incident to occur; often, people have been subject to abuse on multiple occasions before they seek help. Promotion of this definition should assist victims in coming forward and seeking help.

We know from the Office for National Statistics that 31% of women and 18% of men interviewed in 2011-12 had experienced domestic abuse by a partner or family member since they were aged 16. These figures are equivalent to 5 million female victims and 2.9 million male victims. This is a substantial issue for our society.

The Crime Survey for England and Wales has estimated that around 1.1 million adults experienced coercive control in 2010-11. That is why it is important to extend the definition of domestic violence to include such behaviour. It has been widely understood for some time that it is a core part of domestic violence. As such, this move does not represent a fundamental change in the definition but a recognition that coercive control is a complex pattern of overlapping and repeated abuse perpetrated within a context of power and control that it is important to highlight.

The introduction of the jobseeker’s allowance domestic violence easement and the destitute domestic violence concession last year was welcomed by external stakeholders and front-line staff. It is the first time that the Department for Work and Pensions has specifically supported the needs of domestic violence victims and their families within the welfare regime. The policies have been designed to give victims the additional support they need to get their lives back together and to put them on a secure footing after leaving a partner.

Having introduced the policy, the department took the decision to research how its implementation had worked in practice, in order to understand how well the policies have been operating and to ensure that we continually improve our service. Work is under way to implement the recommendations from the research that was published in June this year. It includes improving the understanding of the easement and concession among front-line staff through refreshed guidance. Messages will be directed towards these staff, including benefit centre staff, and will focus not only on policies but on supporting vulnerable customers sensitively.

The work also includes the use of management information, and its distribution to different levels of the organisation to give an insight into the use of the policies by location, and work with local partnership managers to promote the benefits of dialogue with local domestic violence stakeholders. We will continue to maintain strong relationships with stakeholders at national level to ensure that those issues are dealt with, that best practice is identified and shared, and that the latest evidence and analysis is used by the policy team to determine future activity.

It is of paramount importance to me that advisers are given the learning and support that they need to help them identify and help vulnerable claimants, not just through the financial support that Jobcentre Plus can offer but by signposting to the many local organisations that support victims at such a critical point in their life.

I hope that noble Lords will agree that these changes are worth while and that applying a common cross-government definition of domestic violence and abuse will make it easier for all to understand. I believe that it is a significant improvement to the help that we offer to victims of domestic violence. On that basis, I hope that the Grand Committee will support these changes.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that very comprehensive explanation of these regulations. We on these Benches welcome the Government’s changes, not least because it is another stage in a process which began with a government amendment to the Welfare Reform Bill in this House in 2008-09.

I agree with the Minister that it is of the highest importance that victims of domestic violence are given the space and support necessary to rebuild their lives at the time that they move away from a situation of abuse. I think that the regulations have the potential to form an important part of that support. However, perhaps the Minister can reassure the Committee on a few points. First, simply in terms of the definition—which seems to be helpfully broader than the one that it succeeds—can the Minister confirm for the record that no one who is covered by the current regulations would be excluded by the extended definition?

The Minister referred to the cross-government definition of domestic violence that is now being used. It clearly makes sense to have a definition in these regulations which is coherent with that but, looking at the cross-government definition, unless I am mistaken, there seems to be a difference between the two. The new cross-government definition of domestic violence and abuse refers to:

“Any incident or pattern of incidents of controlling, coercive or threatening behaviour, violence or abuse”.

I do not think that threatening behaviour is covered in these regulations but I may have made a mistake and perhaps the Minister can point out to me where it is. If there is a difference between what is in the regulations and what is in the cross-government definition, can the Minister explain to the Committee why that is the case?

Next, can the Minister tell us whether the Government are about to bring forward changes to the universal credit regulations? Otherwise, of course, we would be in the deeply unhappy position of having a difference between the regulations affecting those claiming jobseeker’s allowance and the very many people who I am sure will be claiming universal credit any month now. Perhaps he could reassure us as to what is happening with that. Do the Government propose to bring forward amending regulations and, if so, when? How many people will be claiming universal credit at the point at which they will be changed?

I looked at the research that has been done on both the easement and the DDV, which the Minister referred to, and very helpful it was too. The Minister referred to some action that has been taken to follow up the recommendations of that DWP research from June this year. The Committee may wish to note that I counted 15 recommendations specific to the DWP; I have chosen to pass over for the moment the recommendations for further research that are also contained in the report. Can the Minister tell the Committee which of those 15 recommendations to the department have already been implemented in full? If he does not have that information to hand, will he write to me to confirm that? It would seem important that those recommendations are implemented very soon, and the department has had since June to do that.

This matters because the research showed that, despite the fact that we have high levels of domestic violence reporting in this country, the take-up of both the easement and the other policy are actually quite low. The government report said:

“We know from official statistics that DV rates overall are high, affecting one in three women, and that it is particularly prevalent among unemployed women. Yet the Jobcentre Plus offices visited with the highest numbers of JSA DV Easement cases were reporting fewer than 20 cases overall during the course of a year”.

If I read this correctly, only 338 cases of the four-week easement and 115 cases of the full 38-week easement were taken up as part of the JSA domestic violence easement. That seems incredibly low given the levels of reported domestic violence, and the report points out that those domestic violence reported rates are higher among unemployed women. Is the Minister comfortable that the policy has been properly understood and implemented by his officials? If not, how soon does he expect to feel confidence in that situation?

I have one further question. When these regulations were debated in the other place, the question was raised as to whether the position of 16 and 17 year-olds was the same as that of those aged 18 and over. Can the Minister clarify that for the record?

Subject to the answers to those few questions, we on these Benches are pleased to welcome this definition and look forward to hearing what the Minister has to say.

[Lord Freud]

I thank the noble Baroness for that. I know she has a concern in this area. Clearly, domestic violence is a dreadful form of abuse. We as a Government are committed to providing better support for victims. This is the first time that the definition recognises that the victims may be subject to a wide range of domestic violence and abuse.

On her specific question about whether the move from the old to the new has left any form of abuse stranded and not covered, I am happy to confirm that there is no situation covered in the old form which is not covered in the new form. The attraction of having a single definition is that it makes it much clearer to everyone—supporters and victims alike—what constitutes the abuse and that they can go to all government agencies for help with particular types of abuse.

Running through the questions in no particular order, on the 16 and 17 year-old question, our regulations are set out in such a way that they refer to all claimants. Clearly there are 16 and 17 year-olds who are claimants and therefore we do not have to specifically talk about 16 and 17 year-olds because they are automatically covered.

The other point raised about the structure of the regulations concerned why the definition is not replicated exactly. This is just about wording; the practical effect is the same. It needed to be worded in a way which, in drafting terms, was consistent with the powers in paragraph 8B of Schedule 1 to the Jobseekers Act 1995, which talked about domestic violence which is inflicted or threatened. The conduct we are defining must therefore be capable of being inflicted or threatened. In that light, the reference to “threats” and the “threat” of coercive behaviour, and “threatening behaviour”, are in practice surplus to requirements: one does not threaten to threaten. That is the trouble when one has other legislation into which one needs to fit things. That is all it is.

Housing: Under-Occupancy Charge

Baroness Sherlock Excerpts

Wednesday 9th October 2013 Lords Chamber

[Lord Freud]

My Lords, I have not, of course, made any specific recommendations to people. Let me just go through the point. We are monitoring this change very closely. It is in its early stages as people start to adjust. We have put in a lot of discretionary housing payments; the total is £180 million this year. The early returns—and I stress they are early returns—show that local authorities are either managing those well or are underspending at this particular time.

[Baroness Sherlock (Lab)]

My Lords, does the Minister accept that last week the courts ruled that a woman with multiple sclerosis was entitled to have a bedroom separate from her husband because otherwise her human rights were breached? The courts have now ruled that disabled children and disabled adults can have their own rooms. These savings are vanishing before our eyes, and there are no rooms for people to move into because there are no smaller properties. Do the Government accept that the National Housing Federation has described this policy on its six-month anniversary as being a “cruel failure”? Is that not right, and will the Government not change their mind now?

[Lord Freud]

First, I congratulate the noble Baroness on moving to her new position. I look forward to many constructive exchanges with her, although perhaps not this one. We are currently moving to ensure that disabled children who need spare rooms will have them, and regulations on that are going through consultation. In the case of disabled adults where there was a judicial review, the judges decided that the policy was appropriate and did not breach any equalities duty.

Social Security, Child Support, Vaccine Damage and Other Payments (Decisions and Appeals) (Amendment) Regulations 2013

Baroness Sherlock Excerpts

Monday 8th July 2013 Grand Committee

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

My Lords, I am pleased to introduce this instrument, which was laid before the House on 13 June 2013. I am satisfied that it is compatible with the European Convention on Human Rights.

The regulations provide for the introduction of the mandatory reconsideration process for vaccine damage payments, child support maintenance payments, mesothelioma lump sum payments and all social security benefits, save for universal credit and personal independence payment, which have been subject to mandatory reconsideration since April this year.

Currently, a claimant can ask for a decision to be reconsidered by a decision-maker, which may result in a revised decision. In practice, however, many people do not do so and instead make an appeal from the outset. This is more costly for the taxpayer, time-consuming, stressful for claimants and their families, and for a significant number of appellants unnecessary. I say this because the reason that the vast majority of decisions are overturned on appeal is because of new evidence presented at the tribunal.

I hope that noble Lords will agree that we need a process that enables this evidence to be seen or heard by the decision-maker at the earliest opportunity. It is accepted that this does not mean that all decisions will be changed and that appeals will be unnecessary, but we believe we should have a process that at least promotes this possibility. Mandatory reconsideration does just that.

Mandatory reconsideration will mean that applying for a revision will become a necessary step in the decision-making process before claimants decide whether they wish to appeal. Importantly, the intention is that another DWP decision-maker will review the original decision, requesting extra information or evidence as required via a telephone discussion, and, if appropriate, correct the decision. When this happens, there is no need for an appeal—an outcome that is better for the individual and better for the department.

I assure noble Lords that claimants will of course be able to appeal to Her Majesty’s Courts and Tribunals Service if they still disagree with the decision. The means of doing this will be set out in a letter detailing the outcome of the reconsideration and the reasons for it. We would hope that because of the robust nature of the reconsideration and the improved communication, this new process will result either in decisions being changed or, where this does not happen, claimants deciding that they do not need to pursue an appeal.

We undertook a formal consultation before we introduced mandatory reconsideration for universal credit and personal independence payment. A number of respondents suggested that there should be a time limit on the reconsideration process and there have been further representations about this. While we understand the concerns, we are not making any statutory provision for it. Some cases are more complex and require additional time—particularly, for example, cases where extra medical evidence may need to be sought. Others will be completed in days. It will be a case of considering each case on its merits.

However, we are considering the scope for internal performance targets. While these will reflect the requirement to deal with applications quickly, it will not be at the expense of quality. The process will fail if clearance times become the driver. We will be back with unnecessary appeals and all that that entails. It is a balancing act which we must get right. We will monitor developments closely and adjust accordingly. We may in due course learn from the experience of UC and PIP but at this time we have had so few requests for mandatory reconsideration that we have not as yet learnt anything which will inform our future handling of these applications. We will of course continue to monitor the situation ahead of October.

I turn now to the payment of benefit pending reconsideration and appeal. This has caused a lot of concern, particularly in relation to employment and support allowance. First, I want to make the point that there is no change from the current policy. If someone is refused benefit under the existing provisions and they request a revision of that decision, benefit will not be paid pending the consideration of that request. It will be the same for mandatory reconsideration. Secondly, there is no change in relation to appeals. If someone appeals a decision under the existing provisions, no benefit is paid pending the appeal being heard—save for ESA, which I will come to. This must be right. It would be perverse to pay benefit in circumstances where the Secretary of State has established that there is no entitlement to benefit.

I turn now to ESA. At the moment, if someone appeals a refusal of ESA, it can continue to be paid pending the appeal being heard. This is not changing. What is changing is that there can be no appeal until there has been a mandatory reconsideration. There could therefore be a gap in payment. However, during that period—and I repeat my message that applications will be dealt with quickly so that this is kept to a minimum—the claimant could claim jobseeker’s allowance or universal credit. In other words, alternative sources of funds are available. The claimant may choose to wait for the outcome of his application and, if necessary, appeal and be paid ESA at that point. It is accepted that the move from stopping ESA to claiming and being paid jobseeker’s allowance will not happen overnight, but provided that the claimant does not delay in making his claim, the wait for his first payment of jobseeker’s allowance should be short.

Finally, another change to mention linked to the introduction of mandatory reconsideration is that all appeals will be made directly to HMCTS and not as now to this department. This change brings the DWP in line with other departments’ appeals processes. This is a positive move as it will allow HMCTS to book hearing dates more quickly than is possible currently. The department believes that the regulations will result in a clearer, escalating dispute process that will deliver a fair and efficient system for people who dispute a decision. I commend this statutory instrument to the Committee.

[Baroness Sherlock]

My Lords, I thank the Minister for his explanation of these regulations, which will extend the provision of mandatory reconsideration to a range of benefits and payments administered by the DWP. I also thank the Minister for clarifying which benefits the regulations will apply to—I understood him to say that they would apply to all benefits administered by the DWP with the exception of universal credit and PIP. When he comes to respond, can the Minister clarify the way in which these regulations will apply specifically to JSA and ESA? I had thought that they were in some part addressed by earlier regulations. It is possible that only the direct lodgement elements of JSA and ESA are affected by these regulations, the commencement having been done by the previous set. Perhaps the Minister could clarify that when he comes to respond.

Social Security (Disability Living Allowance, Attendance Allowance and Carer’s Allowance) (Amendment) Regulations 2013

Baroness Sherlock Excerpts

Monday 24th June 2013 Lords Chamber

[Baroness Masham of Ilton]

My Lords, I thank my noble friend Lord Alton of Liverpool for tabling this regret Motion. He has spoken so clearly and fully on the worrying situation that the Regulations 2013 may result in the loss of mobility for many disabled people.

The mobility scheme has been a great assistance to many disabled people who would not have otherwise been able to afford a car or an electric wheelchair. This scheme is headed by Her Majesty the Queen. It has given mobility and independence to many people. Can the Minister tell me whether it is really a possibility that many people will lose their cars and the ability to run them?

I would add a few words about the vital need for a car if one lives in a rural area, as I do—even more so if one is disabled. A car enables a disabled person independence to take part in everyday life, getting to a job if they can work, taking children to school, shopping, going to the doctor, and just getting around. Making people mobile is so important. There is very limited public transport, if any, in some rural areas. I cannot understand that the Government are going backwards in penalising disabled people.

Before the mobility scheme existed there were small three-wheeler cars which were maintained by the Government. They were not ideal as a disabled person could not take a passenger, but they were better than nothing. I cannot think the Government could be so cruel to take mobility away from people whose lives are changed when they have it and are isolated if they do not.

[Baroness Sherlock]

My Lords, I should begin by acknowledging all the work done by the noble Lord, Lord Alton, in bringing to the attention of the House, not just today but repeatedly, the concerns of people who are in receipt of mobility payments and who are worried about the effect of these changes and the way they are being implemented.

This debate this evening has made very clear just how important Motability cars and other mobility schemes are to so many disabled people. I was very moved by the account just given by the noble Baroness, Lady Masham, who explained so well the consequences for so many people; of how important it has been to have access to these cars and the fears that would accompany their departure.

The scheme, as Motability itself puts it, gives disabled people,

“the freedom to get to work or college, meet up with friends, enjoy a day trip out with their families, attend a medical appointment, or go shopping; to enjoy the independence that so many of us take for granted.”.

Yes, quite so. One of the things that we have struggled to get to tonight is the game of numbers—a point made by the noble Lord, Lord Alton, the noble Baroness, Lady Thomas, my noble friend Lady Hollis and others. It has proved very difficult to get a clear picture of just how many people will be affected by these changes since the Government have so far been unable to give us precise figures for those who might lose their cars or adapted vehicles. My noble friend Lady Hollis offered up 180,000. In the absence of anything from the Government, I suggest we all adopt that figure tonight. If the Minister will not accept that, please could he give us his own figure?

In past debates, the Minister has contended that because the decision to lease a vehicle is an individual one and the contract between the individual and Motability is a private one, it is not a matter for the Government. In response to that, first, the noble and learned Lord, Lord Hardie, made the very interesting point that if direct payments are made, the Government must know that information. Even if they do not, irrespective of the fact that a number of people will choose no longer to lease a vehicle, a number will automatically lose theirs simply by virtue of the fact that they will no longer be entitled to the enhanced rate when they transfer to PIP. The Government surely must have at least an estimate of what those numbers will be. Could they please share those numbers with us? Could the Minister tell us his best estimate tonight?

Secondly, if the Government intend to press ahead in the way they have announced, those affected will clearly need to make plans about how to manage the effects of the changes. What are the Government doing to publicise the changes and inform people who will be affected? The noble Lord, Lord Alton, and my noble friend Lady Hollis asked what transitional arrangements would be put in place for people losing their cars. The Government have told the House previously that they were in discussions with Motability but could not then give further detail. The noble Lord, Lord Freud, has said previously that he had sympathy with the concerns of the noble Lord, Lord Alton, and he was keen to find a way of supporting people during the transitional period. In the debate on 13 February, the noble Lord, Lord Freud, said in response to my noble friend Lord McKenzie of Luton:

“We are actively exploring what extra support we can give to disabled people to ensure that they can still get to work. We are looking at whether we can use access to work as that particular vehicle. We want to ensure that mobility support remains in place during any transition between the Motability scheme and access to work”.—[Official Report, 13/2/13; col. 740.]

What is the position on Access to Work, an issue also raised by my noble friend Lady Wilkins? Will it be possible to use Access to Work for this? What will happen with transitions? Will the sums of money available be enough to deal with the kinds of things described by my noble friend? Where have the Minister’s conversations got to? Also, where have his discussions with Motability reached? Will he provide more information as to what transitional measures might be put in place? In particular, what opportunities will be given to claimants to either buy or continue to lease adapted vehicles, and at what price? Will he clarify the position of in-patients in hospitals? That point was raised by the noble and learned Lord, Lord Hardie, the noble Baroness, Lady Thomas, and others.

This would also be a good time for the Minister to give the House some more information about the new consultation on PIP criteria and how that will link in with the inception of this new scheme—a point made by many noble Lords, understandably. It might help if the House understood more of the Government’s thinking on questions such as the 20/50 rule and the issues on which other campaigners have been pushing the Government to consult. How will this affect people in receipt of the higher rate of DLA who use Motability cars? What advice would he give them at this stage, looking ahead and trying to plan?

There is then the question of geography, raised by the noble Lord, Lord Wigley, and that of people in rural areas, raised by my noble friend Lady Hollis and the noble Baroness, Lady Masham. Have the Government done any assessment of the variable impact around the country? Can we even have a sense of impact by region, or the difference between urban and rural impact? I am sure that the Government would not have made a change on this scale without having considered that. Will the Minister share that with us?

Finally, at the risk of running slightly wide of the Motion, has the Minister given any thought to the context in which these changes are taking place? We know that support for disabled people wanting to move into work has been in trouble. The Work Programme is struggling generally and is clearly failing to help disabled people into work. The latest report from the Employment Related Services Association suggests that the numbers of people on ESA getting a job start as a result of referral to the Work Programme are terribly low: just 6% of referrals in the ESA flow payment group had a job start, 5% of those in the ESA volunteers group, and just 2% of referrals in the ESA ex-IB group. Given that, will the Minister take this opportunity to give the House some reassurance that the Government are concentrating in a cohesive and integrated way on the kind of support needed to help disabled people into work and to support them when they are there?

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

My Lords, I have some difficulty in framing this answer because the debate was very wide but the regulations we are discussing are actually extremely narrow. What we are actually discussing is bringing the treatment of patients in hospital into line between those who receive Motability and those who stop receiving it after a certain period. There was an exemption for the Motability element and we are just bringing the two into line. I acknowledge that there has been a very wide debate on the whole area but we are talking about something that is actually much narrower. I hope noble Lords will understand as I try to juggle the two. I will try to deal with some of the wider issues but I will deal with the actual issue first.

I will set a little bit of context by saying that even in these hard economic times this Government continue to spend around £50 billion a year on disabled people and services to enable those who face the greatest barriers to participate fully in society. That figure compares well internationally. We spend almost double the OECD average as a percentage of GDP—2.4% against the OECD average of 1.3%. Only two out of the 34 OECD countries spend more. Through the reforms of DLA and the introduction of PIP, we will make sure that the billions we spend provide more targeted support to those who need it most. Three million people will continue to get DLA or PIP and half a million will actually get more under the new system.

While I am on figures, to answer the question from the noble Lord, Lord Alton, about the money flow to Motability, £1.6 billion went through to it in terms of transfer of benefit. My noble friend Lady Thomas asked what happens to the transfer. Clearly we recognise that some people will lose out but we have sought to ensure that those who lose out are those whose disabilities have the least impact on their participation in society. On our sampling of this, many people—more than half a million—will be winners under PIP.

The UK has a proud history in furthering the rights of disabled people and we want to ensure that all people are treated fairly. The provisions under debate, which also apply to claimants of PIP, are a case in hand. They ensure that everyone receiving the mobility component of DLA or PIP in the future will be subject to the same payment rules, whether or not they have a Motability vehicle. The history of this was that when the mobility component of DLA stopped being paid to hospital in-patients in 1996, transitional provisions were built in, including a measure which allowed for payments to continue in order to cover the costs of the lease on a Motability vehicle. These arrangements represented a reasonable adjustment at the time for those in-patients who were committed to a mobility contract when the rules changed. However, noble Lords must understand that any lease held by someone in 1996 will have now long expired and these arrangements are past their sell-by date for the users affected at the time.

In response to the question from the noble and learned Lord, Lord Hardie, about consultation, we clearly signalled our intention to implement this change in our consultation on the detailed design of our reforms to DLA. In that consultation we made clear that this change was not intended to penalise Motability users but to introduce fairness between how we treat those who chose to take out a lease with Motability—some 600,000 people—and the vast, or substantial, majority who do not, which is 1.1 million people.

Unemployment: Young People

Baroness Sherlock Excerpts

Thursday 20th June 2013 Lords Chamber

[Lord Freud]

My Lords, one of the recommendations of the Wolf report, which, as noble Lord’s will remember, I am very enthusiastic about, is to underpin the importance of apprenticeships and vocational training. In the latest year for which I have a record, 2011-12, we had more than half a million apprenticeships—520,000. That is up 86% on the two years before. Clearly this is one of the most important ways in which to get youth back into the workforce in a sustainable way, and it is something that we are pursuing aggressively.

[Baroness Sherlock]

My Lords, the Minister might not realise that one consequence of our very, very slow growth is that 1 million young people are out of work. In the north-east, where I live, a quarter of young people are out of work. We now need something really radical. May I make a suggestion? Labour’s job guarantee would mean that any young person out of work for a year would be guaranteed a job and would have to take it. Will he match that?

[Lord Freud]

My Lords, we have a huge number of programmes in our youth contract to encourage people into work. One thing I need to emphasise is that we have a long-term problem of disengaged youth, which we had right through the longest boom we have ever had. The real measure here is people not in education or work. In 2001, that figure stood at just shy of 1 million and it rose through the boom period. Since the election, we have pulled it down by 60,000. The figure currently is 1.3 million. It is a real problem that cannot be brought down with short-term programmes; it is brought down by fundamentally restructuring how youngsters are supported—through vocational education as a key underpinning to get these kids into meaningful long-term work.

Child Support and Claims and Payments (Miscellaneous Amendments and Change to the Minimum Amount of Liability) Regulations 2013

Baroness Sherlock Excerpts

Wednesday 12th June 2013 Grand Committee

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

My Lords, this instrument was laid in draft before the House on 20 May 2013, and I confirm to the House that I consider it as being compatible with the European Convention on Human Rights.

The minimum amount of liability, more commonly known as the flat rate, is applied to non-resident parents whose gross weekly income is more than the flat rate itself and less than £100 per week. It also applies to all non-resident parents who are in receipt of certain prescribed benefits. The flat rate was set at £5 in 2003 and has not been uprated since. The Child Maintenance and Other Payments Act 2008 made provision for increasing the flat rate of child support for cases dealt with under the rules of any scheme established under the terms of the Act. The change has yet to be brought into force.

The increase provided for in the 2008 Act was from £5 to £7. However, because the 2012 scheme launched as a relatively small-scale pathfinder when it began on 10 December 2012, technical changes were applied to the 2012 scheme calculation regulations to ensure that the flat rate remained at £5. The flat rate for the 2012 scheme will remain at £5 for the duration of the pathfinder and will increase only once the 2003 scheme closes to new applicants. This is to ensure that all new cases will be subject to the same flat rate, regardless of whether they are directed to the 2012 scheme pathfinder or the 2003 scheme.

It is intended that the increase to the flat rate made by the 2008 Act will be brought into force later in the year, when the 2012 child maintenance scheme is opened to all applicants. This instrument makes certain consequential amendments as a result of that increase. The policy intention behind the increase is primarily that the value of the flat rate should be restored to its 2003 real value. This will reinforce the principle that parents have an obligation to support their children where they have the means to do so.

At £7, the increased flat rate will represent broadly the same value as the £5 flat rate when it began. For example, when the flat rate was introduced in 2003, £5 represented 9% of the benefit of a single person over 25 years of age on jobseeker’s allowance. The annual uprating of benefits has meant that the same £5 represents just 7% of the benefit of a single person over 25 years of age on jobseeker’s allowance. A flat rate of £7 represents 10% of the benefit of a single person over 25 years of age on jobseeker’s allowance, restoring the value of the 2003 flat rate.

The proposed flat-rate increase will also amend the percentages applied to the reduced rate of child support maintenance payable if the non-resident parent has an income of less than £200 but more than £100. This will mean that the maintenance liability of parents on the reduced rate will increase in order that the reduced rate continues to smooth increases in liabilities between the flat rate and the basic rate, which is used for those parents earning £200 or more. The Government are also committed to a wider review of the child maintenance calculation formula, with a particular focus on work incentives, once we have delivered the current raft of reforms.

The regulations before us also make miscellaneous amendments in relation to variations, which are those rules that allow for a deviation from the usual child maintenance calculation rules in certain limited circumstances. A variation could increase or decrease a child maintenance liability. For example, if a parent receives unearned income from property, savings and investments or casual earnings, this could increase their liability. On the other hand, if they incur special expenses, such as the cost of travelling to see a child, or boarding school fees, this could reduce their liability. I should make it clear that the changes contained in these regulations affect only those variations that increase liability.

The 2012 scheme is designed to work with historic income information obtained annually from HM Revenue and Customs. The changes proposed will allow that, where the information cannot be obtained electronically from HMRC, we will be able to determine unearned income by reference to information supplied by the parent in relation to the most recent tax year. This change will make for a more efficient means of obtaining reliable unearned income information and therefore allow for a more accurate calculation of maintenance liability.

In addition, the amendments will clarify that where a variation would decrease a non-resident parent’s income for child maintenance purposes to the point that their liability would fall to below the flat rate, even if the variation is agreed, the amount of maintenance that the parent will be liable for will none the less remain at the flat rate. This is in order to strike a balance between reducing liability to take account of special expenses and ensuring that children continue to benefit from some financial support. It puts children first. This will also ensure consistency between a non-resident parent who has their maintenance reduced to the level of the flat rate through a variation and a non-resident parent on the flat rate. A non-resident parent in the latter situation cannot apply for a special expenses variation.

As has always been the practice throughout the development of the 2012 scheme regulations, we have undertaken extensive stakeholder engagement. The proposed increase to the flat rate was subject to a formal consultation in 2011, and stakeholders made it clear that they believe that an increase in the flat rate to £7 is warranted. We have met stakeholder groups since that consultation, and on careful reflection we are persuaded by their arguments and have decided that the flat rate should increase to £7. We will closely monitor the regulations, along with other child maintenance policy changes, to ensure that all the activities in the new 2012 scheme are delivering the intended outcomes.

I hope that that short opening speech reassures the Committee that the changes we have proposed are sensible ones that have been developed with the aim of delivering an efficient statutory child maintenance system. These changes will ensure an appropriate increase in the amount of maintenance flowing to children. They will also make for a more efficient and accurate variations regime. I commend the instrument to the Committee.

[Baroness Sherlock]

My Lords, I thank the Minister for his introduction of these regulations. We could hardly oppose provisions enabling the increase in the flat-rate maintenance amount from £5 to £7, as they flow from the 2008 Act, which was the legislation of the previous Government. The Government were right to listen to stakeholders and to draw back from their original intent of increasing that to £10. As the Minister has indicated, the £7 figure will keep the amount at about 10% of the basic over-25s JSA rate, and the increase should therefore mean more money for children.

I understand from both the documentation and the Minister’s introduction that the regulations are not intended to come into force until the introduction of the 2012 scheme, so the utilisation of gross income in the calculation is used “for all purposes”. Perhaps the Minister could clarify that; otherwise I will have to read the record to see when exactly this is going to come into force. Is it intended to refer to the time when the 2012 scheme is open to all new applicants or the time when the 2012 scheme will have replaced the 1993 and 2003 schemes? If the latter, could he clarify now when the Government expect that to take place?

We have also heard that the regulations cover other “consequential” matters. As the Minister indicated, one of these is the revised rate calculation that applies where the non-resident parent has income of between £100 and £200. The rates in the regulations are lower than those provided for in the 2012 regulations, and perhaps the Minister could explain why. I imagine that it relates to the effect of raising the flat rate but it would be helpful if he could confirm that, as well as setting out the impact on the levels of child maintenance liability for non-resident parents earning between £100 and £200. I would be grateful if he could give some indication of the range of changes—what is the smallest and largest amount by which the future liability will differ from the past? That would give us an indication of whether they are indeed large or small in their impact. I would also be grateful if the Minister could confirm what would happen to someone earning precisely £200. Is there any danger of a cliff-edge when someone moves from below £200, where the reduced rate applies, to £200 where the standard rate will apply?

Mesothelioma Bill [HL]

Baroness Sherlock Excerpts

Monday 10th June 2013 Grand Committee

[Baroness Sherlock]

My Lords, I thank the noble Lord for taking the trouble to look into that and for the gracious way in which he has acknowledged his error. Of course I am happy to forgive him for this and for any similar offences. However, can he reflect for a moment on the consequences of the change? Although I confess to a tendency to pedantry, on that occasion I do not think I was simply being pedantic. I was trying to draw a distinction between whether the matter was a liability for which the insurance company would wish to reserve or a running cost for which it would have to plan, because I understood that the Minister had used the fact that an insurance company would not be permitted to reserve before a certain date as an argument for why the scheme could not start before 25 July. Had that been the case, I would imagine that no such restraint would exist in the case of planning for a payment. An insurance company can plan for a future level of running costs based on its own judgment, not on any auditing limitations. Will the Minister respond to that?

[Lord Freud]

In the interests of time, the best thing I can do today is to accept the fantastic offer of future forgiveness for anything I may say, and in return I promise to reflect on the consequences of the change.

Let me move on to all the other points that have been made. I promised to write to the noble Baroness, Lady Golding, about the Prison Service’s work, to the noble Lord, Lord Browne, on Clause 2, and to the noble Lord, Lord McKenzie, on three counts. A letter is now being sent to Peers and a copy has been placed in the Library. Judging from some side conversations that I have overheard, I am sure there will be further discussion on one or two of those matters. Having dealt with those issues, let me turn to the subject under discussion as set out in Amendment 16.

I understand noble Lords’ wish to ensure that if we are to express payment amounts in relation to civil damages, the data we hold on average civil damages in mesothelioma cases should be current. However, I must reject the proposal to require a yearly review on the grounds that it would not be fruitful due to the volume of mesothelioma cases. Reviewing civil cases on a yearly basis would be too frequent to show any trends or changes in the awards. Indeed, the data that we hold on the initial trawl for the period 2007 to 2012 show this. In this case, it takes a bit longer for meaningful trends to appear.

It should also be said that gathering the data is pretty costly, and in the interests of value for money we need to make sure that they are gathered at intervals that allow us to identify change. One year is too short a period for this, so a review of the data every five years is more appropriate. If we were to accept the amendment, costs would be incurred from gathering data on an annual basis, and further costs would be involved through the requirement for these reviews to be carried out by an independent body. As part of the monitoring planned, civil compensation amounts in mesothelioma cases will be reviewed, but there is no need for a separate body or for annual reports. Furthermore, I can give my assurance that this area will not go ignored.

I also offer the reassurance that we shall not just assign a fixed tariff to this and then ignore it. Far from it. Along with the monitoring of data from civil cases that I have just mentioned, I can confirm for the noble Lord, Lord McKenzie, that we intend to uprate the tariff on an annual basis in line with the consumer prices index. The noble Lord went on to put a vast number of specific questions to me, and we shall touch on quite a few of them later. However, perhaps I may pick up the point about legal fees, although we will deal with them in due course. A figure of £7,000 was mentioned, and more recently £2,000 was mentioned. In practice, it will probably come in at something in between, but we will deal with fees in the fullness of time.

A set of questions was based on what will happen if we collect more or less than we expected. The DWP will underwrite any under levy after the first four years through smoothing. Any over levy will be paid to the Consolidated Fund, as required by HMT.

Clearly, we will be setting a figure initially, then reviewing it. That is our best guess of the right kind of figure that we will be using. We moved the 76% figure to 70% on the basis of what the likely amount was that would minimise the risk of those costs being passed to British industry. This became clearer during the process of negotiation. Rather than go into the specifics about the 2.61% being consistent with the 2.24%, I will add that to a letter.

I hope with the commitments that I have made on how we are planning to set this levy, I reassure both the noble Lord, Lord McKenzie, and the noble Baroness, Lady Sherlock, on this matter, and I urge them not to press their amendment.