(5 years, 1 month ago)
Lords ChamberMy Lords, I thank the Minister for repeating that Statement. We have had a lot of Statements from DWP in the last year, and there is beginning to be a rule of thumb that the gentler and blander they sound at the time, the more they contrast with the story behind them. I will try to unpack what I think has happened to get us to this point, and I invite the Minister to correct me when she responds if I make any mistakes.
I think this is now the fourth version of these regulations, and the plot has thickened with every turn. We have been awaiting a debate on them for months and suddenly, in the very last days of this Session, they have been snatched away and replaced with a negative version. These regs cover two things: the process of moving people en masse on to universal credit—known as managed migration—and the losses faced by people getting the severe disability premium in legacy benefits, who lose out a lot when they go on to universal credit because there is no equivalent in UC.
The Government originally published some draft regs in June last year. These prompted outrage because the process of managed migration turned out not to be managed at all, but meant that millions of people would simply get a letter saying, “Your benefits will stop on date X. It is up to you to apply for universal credit. If you do not apply for that date then you will not get any money, and if you do not apply within a month, even if you get money later, you will lose the right to make sure that you get transitional protection, which stops you being worse off”. That went down very badly. The Government had intended always to pilot these, but the regulations covered managed migration as a whole.
The same month, Esther McVey, then Secretary of State, had announced that nobody else who was getting the severe disability premium would be forced on to universal credit until the managed migration stopped, so they could not lose out on that transitional protection, and that the Government would compensate people who had already gone across for the money they had lost. That statement, as it happened, coincided with a successful legal challenge against the Government by two people who had moved house, had to go on to universal credit and lost out as a result. The Government were then required to pay them damages and ongoing payments of nearly £180 a month. I wonder whether the Government are still appealing the various decisions on this.
The Social Security Advisory Committee then consulted on the regulations, and eventually some slightly revised regulations were tabled on 3 November together with a very critical report by that committee. That version of the regs still covered the whole managed migration process, involving up to 3 million people, even though everybody had urged the Government to take powers only for the pilot and then to come back to Parliament. There was also strong criticism of this approach from voluntary organisations working with claimants, because they were worried that many vulnerable people getting benefits would struggle simply to take responsibility for making the transition to the new system alone. The SSAC report also flagged up that the payments being made to people who had been moved across under UC and had lost this disability benefit were actually only £80 a month, whereas their losses were £180 a month.
Then, Amber Rudd became Secretary of State. She admitted to the Work and Pensions Select Committee that the Government had thus far failed to obtain cross-party support for these regulations. In January, they withdrew the SI laid in November and brought in two new SIs: a negative one, which prevented anyone else getting this disability payment from transferring to UC before managed migration, which came into force in January; and an affirmative SI which was to provide for a year-long pilot for managed migration and set the level of transitional payments for those who had been moved on to UC loss of disability payment. With me so far? Excellent.
We have been waiting since then to debate this affirmative SI. The Secretary of State said in March that the pilot would begin in July, and said again on 1 July that the pilot would definitely begin this month, yet there was no debate on the regulations which would provide for the pilot to take place. That is possibly because the regulations contained provisions for payments to people on this disability benefit which have been found to be unlawful. However, Ministers had promised that the pilot would not start without Parliament having had a debate first. In fact, on 8 January, the Minister for Employment, Alok Sharma, told the House of Commons:
“We will also ensure that the start date for the July 2019 test phase involving 10,000 people is voted on”.—[Official Report, Commons, 8/1/19; col. 175.]
Well, it has not been.
There were serious questions about the pilot. Ministers needed to be clear about the aims and the success criteria and whether or not the nature of the pilot would satisfy people. Those were the questions that Parliament wanted to debate before the regulations were approved. Then, the final twist: yesterday those regulations were withdrawn and a new negative regulation was tabled instead, published in the last week of term to take effect in the same week. The Government are not even abiding by the convention that 21 days should elapse between tabling regulations and their taking effect. Moreover, although it is a wonderful thing that the eyes of the country are on the Palace of Westminster this week, they may not be looking at us primarily for the purpose of considering universal credit and the managed migration pilot regulations.
I am really worried about universal credit and how it is rolling out. The Government should stop rolling it out while they fix it. But that is for another day. These regulations affect two specific but important issues and Parliament has a right to consider them properly. There may be an urgency but it is entirely of the Government’s making; handling it in this way is disrespectful to Parliament.
I ask the Minister three questions. First, can she explain why, having promised that Parliament would debate the regulations before starting the pilot, Ministers have reneged on that commitment? It cannot surely be simply because Amber Rudd admitted that she did not know that she could get them passed in the other place. We surely cannot have come to the point where Parliament will no longer be asked questions unless Ministers are satisfied that the answers will be the ones they want.
Secondly, can she guarantee that everybody who was getting STP and has been moved across to universal credit will be no worse off than they would have been, and that the Government’s new plans satisfy the requirements of all the legal judgments against them?
Finally, will she promise that Ministers will return to Parliament with a full report of the results of the pilot and give us the chance to debate them before laying any further regulations for a full rollout of managed migration?
I do not blame this Minister, but it is the responsibility of her department. I urge her to answer those questions as fully as she can in order to start trying to rebuild some trust.
My Lords, I too am grateful to the Minister for repeating the Answer to the Urgent Question and would like to ask some questions about the pilot.
I am not completely familiar with processes of this kind and am grateful to the noble Baroness for raising a lot of issues that had occurred to me. I would be grateful if we could have more detail of the scope, approach and methodology of the pilot, when the findings are likely to be made public, when there will be an opportunity for external agencies to examine and question the report and, indeed, when there will be a debate here before the Minister comes back to Parliament for permission to carry out managed migration.
I hope that the pilot will look at some of the needs as expressed by the various groups and that they will be taken account of and reviewed: for example, bringing assessments back in-house for people with disabilities, following the whole record of the assessment process; providing split payments to protect vulnerable women; reviewing the work search process requirements, particularly for women with young children or caring responsibilities; and the piloting of different approaches to digital accessibility, particularly for disadvantaged groups and people with disabilities.
I welcome the proposed action on the judgment of the High Court and would like more detail as to how it will communicate to all people who are eligible, with a report back from the Minister on how that is being carried out. I very much hope that the pilot will provide us not only with insight and the chance to review some of the problems that I have been aware of since I have been covering the issue, but the opportunity for debate and external scrutiny before the managed migration process is carried out in full.
(5 years, 6 months ago)
Lords ChamberMy Lords, I too have some questions. In May 2018, the Commons European Scrutiny Committee raised very strong concerns about providing legally binding arrangements to protect existing rights. We have already heard mention of non-emergency healthcare; these regulations apparently do not provide that. There are also issues about EU-wide dealings or the need for bilateral arrangements with EU and third countries.
The noble Baroness spoke about data and information sharing. Again, this is a vexed area of negotiation. Certain laws govern the ability to share information and, unless we have some form of legally binding agreement, I cannot really see how this can happen, having looked at the evidence of various people who have looked into data sharing with the EU after Brexit.
We are talking about removing inoperable clauses, under the withdrawal Bill, in relation to the administrative commission. We have mention of disputes; who will settle disputes? There will be a need for medical assessments if they are not provided by individual countries.
It is not clear what is meant by “evidence”. I know that, in my own city, EU citizens have had a very hard time providing evidence of residence in this country, even though some of them have lived here for 40 years. I would like to know what sort of guidance will be given on the quality of the evidence, and how that will be provided to people.
On disputes and the removal of provisional payments, again it is not clear how and under what authority disputes are to be resolved. What is the final authority? This is left fairly open, and could be open to legal action. How will rulings be managed if we come out without a deal and are not proposing to recognise the European Court of Justice?
I am sure it is important that the Government look ahead to the possibility of no deal, but it seems to me that there are lots of very open areas in these regulations that need to be fleshed out. We are talking about the rights of individuals and how they can manage without benefits—where there are disputes, for example.
I very much echo the calls made by other Members here for an impact assessment. It seems to me that there is a fundamental need, given the potential impact of these systems not working after Brexit day, for an impact assessment to be carried out.
My Lords, I thank the Minister for her introduction and all noble Lords for their contributions. I start with an apology, because I will not be brief. I do not often make lengthy speeches in this House, but I have been through these regulations as best as I can—and there are a lot of them—read the Explanatory Memorandum and listened carefully to the Minister’s introduction, and all that I have read in the Memorandum and the introduction implies that these are simply technical amendments which will not make much difference or have much impact. I must therefore have misunderstood them, so I apologise because I will ask quite a lot of questions, since I can only conclude that my understanding of their impact is in some way erroneous. I look forward to having that corrected.
First, my understanding is that the current rules about social security co-ordination within the EU are based on four principles: the single state principle, which means that at any point in time I am covered only by the social security system of one country and pay contributions only in one country; equal treatment, which means that if I am in another member state then I am treated by it the same way as one of its nationals; aggregation, by which periods of insurance, employment or residence in another member state count when determining my eligibility for benefits; and exportability, which means I can receive benefits from one member state even when I am living in another one.
If we have a deal, the withdrawal agreement will cover the transition period during which EU social security co-ordination will continue to include the UK and our citizens, and the political declaration says that the UK and the EU agree to consider future social security co-ordination in the light of future movement of persons. I guess that the presumption, therefore, is that the UK will seek to strike a single deal with the EU rather than bilateral agreements with member states.
However, if there is no deal, there are no provisional transitions, and in the absence of comprehensive alternative arrangements, problems could arise on all those fronts, including whether you can aggregate contributions, export benefits to other member states, the risk of having to pay double national insurance contributions, a lack of clarity about which country is responsible for paying someone’s benefits, and no mechanism for resolving disputes.
The scale is significant. The House of Commons Library briefing on the immigration Bill said:
“In 2017-18, UK benefits totalling around £2 billion were exported to around 500,000 claimants living in EEA countries. Over 90% … was on State Pensions, and over 90% of the recipients … were UK or Irish nationals.”.
In addition, more than 1 million people will be affected by the aggregation issues, according to evidence given to the Commons committee on the immigration Bill by British in Europe.
My first question for the Minister is this. There were some bilateral agreements between the UK and some EU member states, which predate either their or our entry into the EU. Would any of those still be applicable in a no-deal scenario? Would we seek to update them, would we want to negotiate additional unilateral arrangements with other member states, or is it our intention to seek a whole EU deal in the event of there being no deal?
If we end up with no deal, we could see UK citizens returning to the UK, perhaps in significant numbers, and needing help. DExEU published a policy paper on 6 December called Citizens’ Rights—EU Citizens in the UK and UK Nationals in the EU, which accepted the importance of returning UK nationals being able quickly to access benefits and housing. Paragraph 24 stated:
“Arrangements will be made to ensure continuity of payments for those who return and are already in receipt of UK state pension or other UK benefits while living in the EU. We are considering how support could be offered to returning UK nationals where new claims are made and will set out further details in due course”.
Given that “in due course” is running out, can the Minister tell the House what continuity arrangements have been put in place for those whose benefits are already in payment, and what support will be offered to new claimants?
The European Commission has called on member states to protect citizens by taking account of periods of work or insurance in the UK before Brexit for both EU 27 and UK nationals, by ensuring the aggregation benefits for those who carry on living in the UK, and more crucially, by encouraging member states to carry on exporting pensions to the UK even though it will then be a third country. But we do not know what will happen in practice. The Government’s website has a page entitled “UK nationals in the EU: benefits and pensions in a ‘no deal’ scenario”. However, it tells you very little at all, except that if someone is already getting UK benefits for a state pension transferred to another member state, that can carry on being paid there, and that their entitlement to any in-country benefits will depend on what the EU decides. So we are very much in the dark.
As my noble friend Lord McKenzie said, the whole system of social security co-ordination relies on reciprocity, which cannot be assumed in a no-deal world, so we cannot make other states give us information or co-operate, or require them to apply the current rules to us. The Explanatory Memorandum said—and the Minister has said—
“These regulations aim to address deficiencies in retained law caused by the UK withdrawing from the EU and ensure citizens’ rights are protected as far as possible in a no deal scenario”.
In other words, they are designed to maintain the status quo. I have never liked this language of “deficiencies”, because these are not accidental deficiencies but a direct consequence of the Government refusing to rule out no deal. Those deficiencies are a loss of all kinds of rights, acquired in some cases over decades, which people may experience. This is entirely avoidable—it is simply because we could be in a no-deal situation.
These regulations are intended to maintain the status quo, so I want to try to test the veracity of that claim in a no-deal scenario. The current rules allow you to use periods of insurance contributions elsewhere which can be aggregated together. So someone who has worked in other member states can make one application to the relevant agency in the country in which they live. In the UK, this is the International Pension Centre in Newcastle.
The Commons brief on the immigration Bill gives a really good example, if noble Lords will allow me to describe it. Someone called Jo worked in France, after leaving university, before returning to the UK in 2008. He carried on working here, paying UK national insurance contributions until he reached state pension age in November 2018. As things then stood, Jo did not have to make separate claims to get his French and UK pensions. He had to submit a single claim to the international pension authority, and the centre in Newcastle contacted the French pension authorities. They calculated his entitlement to a French pension and put it into payment. The centre also calculated that Jo was entitled to 9/35ths of a full UK state pension because he had paid nine years of contributions here. That was put into payment as well. The only reason he got it was because his period of insurance in France meant that this tipped him over the minimum of 10 years of national insurance contributions that you have to have to get into the British state system in the first place.
My primary question is: do these regulations preserve the right of UK and EU nationals to aggregate periods working in other EU member states when determining entitlement to UK benefits and the state pension? Where is this spelled out? Is it in domestic legislation? Is it remaining unchanged? Does it include EEA states? Where is it laid out unequivocally?
Secondly, the regulations allow the DWP to ask claimants to provide the relevant evidence where the EU member state cannot or will not. The Explanatory Memorandum says, at paragraph 7.2:
“in the event that the information provided by the claimant is insufficient, the UK will no longer be required to fulfil any obligation under the Coordination Regulations”.
This sounds quite harsh. What would happen to Jo if he retired after a no-deal Brexit? He would have to do two things. First, he would have to access his French pension. Would this be done through the International Pension Centre, as it is at the moment? Or would he have to apply directly to the French authorities? Crucially, would he definitely be able to have that French pension paid to him in the UK? In other words, would France export the pension, as requested by the Commission? If not, Jo could be in an impossible position. He might need to return to the UK to care for elderly parents, but if he could not get the bulk of his pension here, what would he do? What if some of our citizens found that they had no residence rights anywhere else, so were forced back to the UK and yet could not access the benefits or pensions they needed because they had entitlement in other member states? What would happen to them?
Then Jo would need to access his UK pension. To get that, he would need evidence that he had paid national insurance contributions in France, as he would need a minimum of 10 qualifying years to get into the UK system. This would raise other questions. Would the International Pension Centre in Newcastle contact the French pension authorities to get this evidence for Jo, or would he have to get it himself? Either way, if the French did not oblige, what would Jo have to produce? If he did not have documents that the DWP liked, he would get no pension at all in the UK, even though he was legally entitled to it. Would he have to pay to get documents translated and notarised? How long would this all take?
As the noble Baroness, Lady Janke, said, it is crucial to know what would count as evidence. I could not produce payslips from 20 years ago, and I think a lot of noble Lords could not either. So, if the authorities in another EU state refuse to co-operate, what should people do? They could go back to their employer, but firms go out of business or merge. In most countries, they would not be required to keep records dating back decades. So, would other forms of evidence be accepted—for example, witness statements from co-workers, neighbours or doctors? Has the evidential basis been published? If not, will the Minister guarantee to conduct a consultation on it at once, so that we can see what would happen?
If a UK firm posted a worker abroad, could the firm be compelled to provide the necessary information to the DWP? If Jo were legally entitled to a state pension here, but could not prove it because the French Government would not co-operate, who would decide that he would not get that to which he was entitled? How could he appeal a refusal?
I have a few more short questions. The Commons brief points out that these regulations remove entirely article 4 of EU regulation 883/2004 which contains the equal treatment provisions to which I referred at the outset. The Explanatory Memorandum does not explain why this provision has been removed. Can the Minister tell us why it was? UK nationals working in the EU and EU residents working in the UK could be required to pay national contributions here as well as paying contributions in another EU member state, so a worker posted to Germany by her British company could end up paying double national insurance contributions. Did the Government consider waiving NICs for someone in this country, which would of course replicate the status quo rather more precisely that what seems to be in here? If not, as my noble friend asked, how could they then say that there are no costs attached to these regulations?
The regulations abolish provisional payments while a dispute is being resolved with an EU member state. The memorandum says that these provisions are hardly ever used, but since there will not be any resolution mechanisms in the future and there will not be a common rulebook, it is entirely possible that the situations which might require them to be used could be far more numerous. What assessment was made of the likelihood of disputes arising in no deal which would trigger payments of this sort? While these regulations are operational, if they ever come to be, what is the status of post-Brexit contributions in other EU states? Will UK state pensions be uprated when paid in other EU member states after no deal? Ministers have said that they will be for 2019-20, but what happens after that?
I want to say a brief word on the point raised by my noble friend Lady Lister about the Immigration and Social Security Co-ordination (EU Withdrawal) Bill, which has been debated in another place and which in its territory overlaps very much with this instrument. As we have heard, that Bill contains eye-watering Henry VIII powers that basically would allow Ministers to rewrite the social security co-ordination rules at will. I am not a Brexit specialist, so can the Minister can explain this to me? If there is no deal, does that Bill fall? If it does not, how do the Government intend to honour the commitments spelt out by the Minister herself and spelt out in the memorandum when they have the power to rewrite them entirely? Will they commit to use those Henry VIII powers only to replicate the provisions of these regulations?
Finally, if there is a deal, what is the status of these regulations?
I apologise for asking so many questions, but they are all important for the great many people who could be affected. I gave the Minister notice of my technical questions, albeit only yesterday, but my priority is to get things answered on the record. The date of 29 March is only three weeks away. If the Government allow a no-deal scenario, these problems will become a reality for many UK citizens living in the EU and vice versa. They and I look forward to the Minister’s reply.
(5 years, 6 months ago)
Lords ChamberI thank the Minister for his introduction to the orders. The freezing of working age benefits means that tax credits increase benefits only for workers and children who are disabled. This excludes a whole range of benefits which are crucial to many of the poorest people and families. The Resolution Foundation states that the four-year freeze on working age benefits has been,
“one of the most vivid examples of austerity in recent years as it represents a … real-terms cash loss for millions of low-income families”.
Among the poorest families, the average single parent will be £710 worse off, which amounts to between 3% and 7% of their income. The freeze looks set to cost working-age families £4.4 billion in 2019-20.
I noticed from the Explanatory Memorandum that no consultation was thought to be needed. Last year when these orders went through, the Minister was asked about an impact assessment on child poverty but he said that there was no need as this was done when the freeze was announced. However, we are now entering the fourth year of the benefits freeze. Is it not time an impact assessment was made in relation to the most vulnerable and poorest groups? This is particularly important, first, because the circumstances of these groups need to be taken into account when the migration to universal credit takes place and, secondly, in the light of the evidence of so many reports—for example, by the Resolution Foundation, the Joseph Rowntree Charitable Trust, the Trussell Trust and many others—which draw attention to the poverty and suffering being caused to people and working families at the lower end of incomes.
Does the Minister consider that disabled workers who benefit under the second statutory instrument will be at risk when the Government migrate them to universal credit? Will the Government look at the risk of that process to this vulnerable group? Will they use the forthcoming test-and-learn pilot of managed migration to trial a system where benefit claimants are moved automatically to universal credit so that their income is protected?
My Lords, I too thank the Minister for that introduction. As we have heard, the purpose of the first set of regulations is to make changes to the rates, limits and thresholds for national insurance contributions and provide for a Treasury grant to be paid if necessary. Given the impact of inflation on household incomes, coupled with the poor wage growth over the last decade, we are of course supportive of measures that will ensure that NICs thresholds increase in line with inflation.
But I want to spend a bit longer on the second of these measures, whose purpose, as we have heard, is to uprate the guardian’s allowance and the few elements of tax credits fortunate enough to have escaped the brutal benefit freeze which has been applied across the board—that is, the disability elements for families with disabled children who get child tax credit and disabled workers in receipt of working tax credit. These are to be uprated by CPI, the 12-month measure which was 2.4% to last September. Obviously, that increase is welcome but, as we have heard, it does not cover all the major elements of child tax credit or working tax credit. It does not cover the single parent, couple or 30-hour elements of working tax credit or the child or family element of child tax credit, which is the bulk of the money—all these are frozen. Many of the people who get the tax credits that are being uprated are also in receipt of other benefits such as child benefit, JSA, ESA or housing support, which are frozen as well. This is really quite damaging.
We should not allow an occasion like this to pass without establishing for the record that this is not the way that Parliament traditionally goes about doing this business. The reason that social security benefits and tax credits are indexed to inflation is so that they keep their value. Before 2011, they were linked to the RPI or Rossi, a variant on RPI. When the Government decided to shift that and link them to CPI, it saved the Treasury a lot of money; of course, it cost the same amount to those who were on the benefits. That shift was strongly contested, but at least it retained the aim of ensuring that the value of the benefits stayed at the level determined by Parliament. When the Government made the switch, they claimed it was because CPI was a better measure. But the report published last month by the Economic Affairs Committee of this House pointed out that the Government are not above inflation-measure shopping. For example, when the Treasury is paying out benefits and tax credits, it uses CPI; when consumers are paying student loan repayments or facing increased rail fares, it uses RPI. The coalition Government ditched even CPI, limiting most working age tax credits and benefits to a 1% annual increase from 2013-14. The current Government went further still and froze those tax credits and benefits at their 2015-16 levels until 2020.