Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020

Baroness Stedman-Scott Excerpts

Tuesday 19th May 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the Virtual Proceedings do consider the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020.

Motion agreed.

Automatic Enrolment (Offshore Employment) (Amendment) Order 2020

Baroness Stedman-Scott Excerpts

Tuesday 19th May 2020 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That the Virtual Proceedings do consider the draft Automatic Enrolment (Offshore Employment) (Amendment) Order 2020.

The Motion was considered in a Virtual Proceeding via video call.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I shall speak also to the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020. I am pleased to introduce these instruments, which were laid before the House on 16 March, alongside my Written Statement of the same date setting out their purpose and effect. These instruments implement the conclusions of a 2018 statutory post-implementation review. The review concluded that automatic enrolment into workplace pensions should continue for eligible employees in the maritime industries, ensuring them access to a pension in the same way as workers in the rest of the UK economy. Subject to the approval of the House, the instruments will remove the sunset clauses contained in the original 2012 legislation so that it continues in force beyond the current expiry date of 1 July 2020. I am satisfied that the Automatic Enrolment (Offshore Employment) (Amendment) Order 2020 and the Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020 are compatible with the European Convention on Human Rights.

Today’s debate relates to the operation of the automatic enrolment policy framework and will allow the Government to deliver on the conclusions of the 2018 post-implementation review, which recommended that seafarers and offshore workers remain within the scope of workplace pensions. As we are all too well aware, this is a difficult time for our citizens, our country and our economy. Many employers and workers face unprecedented challenges and trying their best to keep going and meet their legal obligations, including those relating to workplace pensions. The Prime Minister and the Chancellor have made clear that the Government will do whatever it takes to support workers and businesses as they deal with the impact of the coronavirus pandemic, and that no-one should be penalised for doing the right thing.

As part of the Coronavirus Job Retention Scheme, the Government have made available dedicated grant payments for the compulsory minimum employer automatic enrolment contributions for furloughed workers. We have prioritised this help so that businesses can better manage their fixed costs and to support the principle of saving for the future, which it is important not to lose sight of during the current crisis.

The Chancellor announced on 12 May that the scheme would be extended to the end of October. It will continue in its current form to the end of July, with changes to allow more flexibility introduced from the start of August. The Government have committed to provide more specific details on the next stage of the scheme by the end of May.

The Pensions Act 2008 and secondary legislation in 2011 brought most employers within the scope of automatic enrolment and placed duties on them with respect to qualifying workers in their employ. At that time, the Government decided to delay the extension of these duties to the maritime industries to allow time for resolution of complex issues relating to the operation of international maritime law and custom, as these impacted how the workplace pension reforms would apply to seafarers and offshore workers.

In 2012, following additional public consultation on the specific impacts of the policy on these industries, the Government introduced regulations and an Order in Council to extend automatic enrolment to all qualifying maritime workers. This legislation included a statutory requirement for a post-implementation review, as well as the inclusion of sunset clauses in the instrument, taking effect on 1 July 2020.

The post-implementation review was carried out in 2018. Based on the available evidence, the Minister for Pensions and Financial Inclusion concluded that automatic enrolment should continue to apply to all qualifying workers in this industry sector. This followed on from our automatic enrolment review in 2017, Maintaining the Momentum, which had confirmed that workplace pensions should be available to all eligible workers, regardless of who their employer is or the sector in which they work.

Looking specifically at the maritime industries, I should make clear that “seafarers” refers to people working on board ships or hovercraft. This does not include share fishermen as they are self-employed and, like all self-employed people, out of the scope of automatic enrolment because they do not have an employer. Offshore workers are, broadly speaking, those working on oil or gas rigs in the North Sea.

I have considered the need to include a review clause in the instruments before the House today. The success of automatic enrolment is based on pension saving being the default option for working people across all sectors of the UK economy. A new review requirement applying to only the maritime industries would be counter to the policy objectives of these reforms and would create uncertainty for employers in those sectors and their workers. I have therefore not included one. The Department for Work and Pensions will of course continue to work closely with employers, workers’ representatives and the pensions industry to keep the policy under regular review, as we do with all our policy initiatives.

I conclude by reiterating the crucial importance of these workplace pension reforms, which are helping millions of employees in the UK to save for their retirement. This includes an estimated additional 26,000 seafarers and offshore workers saving into a workplace pension in 2019 as a result of automatic enrolment. I commend these instruments to the House and I beg to move.

--- Later in debate ---

[Baroness Stedman-Scott]

My Lords, I thank noble Lords for their thoughtful and constructive comments, including those who issued a challenge to the Government. I remind noble Lords that in my opening speech I said that the Prime Minister and Chancellor have made clear that the Government will do whatever it takes to support workers and businesses as they deal with the impact of the coronavirus pandemic and that nobody should be penalised for doing the right thing. As the noble Baroness, Lady Sherlock, just asked, I will endeavour to answer as many points as I can. Where I cannot, I will write to all noble Lords with answers to their questions.

Let me clear up the issue of the Statement to the House. I think the best I can do for the noble Baroness on that is to go back and talk to the Minister for Pensions and the Secretary of State and come back to her.

The noble Baroness, Lady Drake, is so well respected in this field. She spoke about automatic enrolment and our commitment. We have made wage support available to assist all businesses across the regions and sectors of the economy. We believe that this is the best way to support businesses and their workers during the current crisis. The Government will continue to monitor closely the impact of workplace pensions on businesses during the current period. Our objective is to continue to support employers and to balance the needs of businesses and savers, while being mindful of wider economic factors.

The noble Lord, Lord McKenzie, and my noble friend Lord Bourne asked about numbers, as did the noble Baroness, Lady Sherlock. An estimated 29,000 workers in the maritime industries will be automatically enrolled into a workplace pension by their employer as a result of these instruments, and of them 26,000 will not opt out. This breaks down into 18,000 seafarers and 8,000 offshore workers. Across the whole economy, more than 10 million workers have been automatically enrolled into a workplace pension scheme. I will write to the noble Lord, Lord McKenzie, on the other points he raised and to my noble friend Lord Bourne on fiscal relief.

The noble Baroness, Lady Burt, asked why the sunset clause was in the legislation to start with, but the noble Lord, Lord McKenzie, answered my homework there quite well. It was done because there were still complex issues that needed to be addressed and it enabled the legislation to go forward. The noble Baroness also asked about cruise ships, as did my noble friend Lady Fookes. I will go away and get the up-to-date position and write to noble Lords with the outcome.

My noble friend Lady Anelay raised two important points. On the first, the DWP considered stakeholder proposals on the design of a specific ordinary working test for seafarers during the post-implementation review consultation. However, these proposals would have created additional administrative complexity for employers in the maritime industries. Additionally, treating workers in the maritime sector differently from other workers is contrary to the policy design of AE.

My noble friend also asked about employers that are charities and voluntary bodies. The maritime industries are a small sector compared to the overall economy and there is no direct data on the varying size and types of employers in these industries. Therefore, the DWP impact assessment for these instruments makes assumptions about the impact of workplace pension duties across different employer sizes in these industries, based on the broad level of employer contribution across the whole country.

My noble friend Lady Fookes talked about the nationality of some of the people in the maritime industry and the impact of these regulations. The nationality of the worker, and whether their employer is foreign based or owned, is not relevant; it is not an issue. On the point she made about consolidation, no change is taking place. The instrument removed the sunset clause from existing legislation, so it continues to apply. This could not be a more minimalistic approach to legislating.

At this point, I would like to pay tribute to the Seafarers charity, as other noble Lords have done, and to other charities that work in this field. They do excellent work and I place on record our thanks for this.

The noble Baroness, Lady Northover, said that we should put our arms around those who are struggling. That is absolutely what we are trying to do—and we will continue to do so. I cannot answer her question about BP in Angola, but I will write to her.

It would be career-limiting for me to tell noble Lords that nothing is going to change on automatic enrolment. I do not see it happening at the moment, but the fact is that, in these difficult days, we must tread carefully on all these big issues. But we must not lose the good work that we have done on this wonderful system.

My noble friend Lady Altmann raised the issue of women and pension schemes. The Government have taken action to protect people’s jobs and to support and pay wages. We took the decision to help ease the burden of workplace pensions for employers with furloughed staff, and this will help many women impacted by the lockdown to carry on their savings.

My noble friend Lady Altmann also raised pension relief, along with the noble Baroness, Lady Janke. Pension tax relief is a matter for the Treasury—I am not trying to duck responsibility. The Government recognise the different impacts of the two systems in pay and pension tax relief. To date, it has not been possible to identify any straightforward or proportionate means to align more closely the effects of net-pay and relief-at-source mechanisms for this population. However, as announced in our manifesto, the Government will publish a call for evidence on pension tax relief administration to see how we can fix the issue.

Turning to the noble Lord, Lord Blunkett, I think it is no bad thing to sometimes support the opposition if it means that our hearts are beating in concert to carry on with something important. He talked about finding ingenious ways to ensure that the entitlement continues: if noble Lords have ingenious ways, I hope that they will write and let me know what they are.

The noble Lord, Lord Purvis of Tweed, the noble Baroness, Lady Kennedy, and my noble friend Lord Blencathra talked about the oil industry. The noble Lord, Lord Purvis, gave an eloquent and clear overview of the challenges faced in getting the economy on the road as quickly as possible. The best thing that I can do is go back to my colleague the Minister for Employment, who is looking at this sector by sector, and perhaps fix up a meeting for the noble Lord and the Minister. I also challenge the noble Lord: if he has ideas, will he put them on paper and let us have them? We really do need this.

Reducing the trigger to include more women and low-paid workers was raised by the noble Baronesses, Lady Sherlock and Lady Kennedy, and the noble Lord, Lord Foulkes. The automatic enrolment earnings trigger determines the level of earnings at which someone must be automatically enrolled by their employer and is currently set at £10,000. This is reviewed annually, and an equality impact assessment always forms part of the review. We will continue to keep it under review as the country recovers from the impact of the coronavirus pandemic, but I will take the points made back to the department. I also want to put on record that I agree with the points made by the noble Lord, Lord Foulkes.

Regarding the triple lock, the Government are committed to ensuring that older people are able to live with the dignity and respect that they deserve, and the state pension is the foundation of that support.

The noble Lord, Lord Foulkes, again made the point about carbon fuels and alternative jobs. Obviously, this will feature in the work that we do to recover the economy. It is a tribute to those who work in that industry. We must do all we can to get the country working again as quickly as possible.

As my noble friend Lord Wei said, the job is not done. We must not take our foot off the pedal. I will take back to the department his point about people overseas being put off employing British people and will write to him. I believe that the point about multiple pensions will be sorted by the work that we are doing on the dashboard in the pensions Bill.

The noble Lord, Lord Hain, and the noble Baronesses, Lady Janke and Lady Sherlock, talked about the self-employed. We know that the current automatic enrolment framework is not suitable. That is why last summer we commenced trials working with a range of partner organisations to help inform future policy interventions. My noble friend Lord Flight raised many questions; I will answer one now and write to him on the others. The auto-enrolment review set out our ambition to remove the earnings limit and lower the age threshold in the mid-2020s. I am glad that my noble friend Lord Blencathra is pleased that we have brought the sunset clauses back to the House, but on the point about the review in five to eight years, there has never been any discussion on that, but I will find out, as requested. The noble Baroness, Lady Janke, asked about a timetable for pensions work. I will find out about this and write to her. I am sure that I have not answered all the questions, but I have done my best and will write to noble Lords.

Automatic enrolment has been transformational in getting employees into the habit of pensions saving. It has reversed the previous decline, and with over 10 million workers being enrolled into a workplace pension, automatic enrolment has by all measures been a great success. The workplace pension participation rate for eligible employees between the ages of 22 and 29 has increased from 24% in 2012 to 84% in 2018. Automatic enrolment has helped eligible women working in the private sector and raised the level of their participation from 40% in 2012 to 85% in 2018. Our ambition for automatic enrolment remains the same in relation to the 2017 review, but there is a need to reflect carefully on the current economic circumstances. It has been a huge success that we want to build on. As we have seen today, it is also important that we have the consensus to do so, so I welcome the support of noble Lords today.

As announced by the Chancellor on 12 May, the furlough and job retention scheme has been extended until the end of October. It will continue in its current form until the end of July; changes to allow more flexibility will be introduced from the start of August. This scheme is just one part of the Government’s response to coronavirus, which includes an unprecedented package for the self-employed, with loans and guarantees that have so far provided billions of pounds in support, tax deferrals and grants for businesses. The Government will continue to monitor closely the impact of workplace pensions on businesses during the current period. Our objective is to continue supporting employers and balance the needs of businesses and savers, as well as taxpayers, at this difficult time.

These instruments remove the sunset clauses from the existing legislation so that automatic enrolment into workplace pensions continues to cover eligible employees in the maritime industry, ensuring that these workers continue to have access to pension saving in the same way as the rest of the UK economy. I commend these instruments to the House. I beg to move.

Motion agreed.

Universal Credit

Baroness Stedman-Scott Excerpts

Wednesday 13th May 2020 Lords Chamber

The Question was considered in a Virtual Proceeding via video call.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, we monitor the impact of the benefit cap policy and publish these findings every three months. The latest available statistics were published last week, on 7 May, and reflect the position as at February this year. The next publication, scheduled for 6 August, will reflect the current position and the impact of the increases awarded from April of this year.

[Baroness Lister of Burtersett (Lab)]

My Lords, welcome as the increase is, many thousands will not benefit because of the cap, which is already causing real hardship and unfairness, as demonstrated by the Work and Pensions Committee, yet it is not realistic or safe at present to expect people to seek work or reduce housing costs to avoid it. Will the Government now listen to anti-poverty and faith groups, the IFS and others, and urgently fulfil their statutory duty to review the cap and suspend it, or, if operationally easier, raise it significantly?

[Baroness Stedman-Scott]

I must be very clear that it is not the Government’s intention to change the current level of the benefit cap. What I want to point out is that claimants may benefit from a nine-month grace period, where their universal credit will not be capped, if they have a sustained work record. Exemptions will also continue to apply for the most vulnerable claimants who are entitled to disability benefits and carer benefits. I finish my answer by saying that the Government have quickly and effectively introduced £7 billion-worth of measures that benefit those facing the most severe financial disruption.

[Baroness Couttie (Con)]

Many people who have recently found themselves made redundant as a result of the Covid-19 crisis will be struggling on universal credit. Some of these people will have decided to isolate with vulnerable loved ones to provide them with the care that they need to be protected from the disease. This can lead to added expense. Will the Government consider removing the benefit cap for such people?

[Baroness Stedman-Scott]

Claimants who receive certain benefits for caring or for a severe disability or health condition will not have their benefits capped. This ensures that the most vulnerable people are protected. Universal credit households are exempt from the cap if the household earnings are at least £604 each month. Households may also be exempt for a period of nine months, if they have a sustained work history.

[Baroness Meacher (CB)]

My Lords, advances for universal credit claimants have to be repaid when claimants finally receive their benefits—after at least five weeks, and often very much longer than that. But their benefits will be well below subsistence level, due in part to the benefits cap, but also to the two-child limit, and to very tough rent and council tax rules. Could any Minister maintain their mental health in these circumstances? I absolutely could not—and I mean that. Will the Minister plead with her colleagues for urgent further changes—I understand that some have been made—to protect the mental health of universal credit claimants?

[Baroness Stedman-Scott]

The noble Baroness makes an excellent point: these are very difficult times. People are struggling in all sorts of ways, and we are mindful of the impact of mental health issues. I am afraid that I am unable to make any commitments around the points that the noble Baroness made, but I will say that, in these very difficult times, nobody has to wait five weeks. Since 16 March, we have issued 700,000 advances, and the majority have received their money within 72 hours.

[Baroness Sherlock (Lab)]

My Lords, can I bring the Minister back to the point made by my noble friend Lady Lister? The Government’s argument for the benefit cap was that you can always escape it by just going and getting a job or moving to a cheaper house. But that is simply not possible at the moment. The Minister says that the Government are not going to lift the cap. Given the demand from the IFS and over 50 organisations, and given the Commons Library estimates that an extra 18,000 families are being drawn into the benefit cap as a result of the Government’s actions, can she tell the House not merely that they will not do it but why they will not do it?

[Baroness Stedman-Scott]

I draw the noble Baroness’s attention to the fact that, in a repeated Oral Statement and at Oral Questions, the Secretary of State was absolutely clear that this benefit will not be changed. I agree with her that things are very difficult at the moment. That is why we have tried to be as flexible as we can by introducing this £7 billion package which gets to the people who are in the most difficult group, removing the minimum income floor, increasing UC, pausing deductions for historic debts, introducing statutory sick pay from day one and increasing working tax credits from over £1,000 to £3,000. I cannot give her any other answer than that, but I can make a commitment to take her question back to the department and again ask what she and others would like me to ask.

[Baroness Janke (LD)]

Is the Minister aware that 85% of those who have had benefits capped are single parents, many of whom have lost jobs through the current crisis? To ease the severe hardship these families are suffering, will the Government at least consider suspending the benefits cap pending a future review?

[Baroness Stedman-Scott]

The benefit cap is reviewed once in every Parliament. The Secretary of State will do this, although I cannot tell noble Lords when. Until that happens, I am not aware of any intention or plan by the Government to remove the cap.

[The Lord Bishop of Durham]

I thank the noble Baroness for again highlighting how the benefit cap is trapping families in poverty. In light of the report published last week by the Church of England and CPAG which estimates that around 60,000 more families will be affected by the two-child limit due to Covid-19, what assessment have Her Majesty’s Government made of the impact of this limit on families who have made a new universal credit claim since the lockdown?

[Baroness Stedman-Scott]

I will need to go back to the department and ask whether an assessment has been made. I am mindful of the recent Child Poverty Action Group report and was grateful to receive an advance copy. My officials are carefully considering this, and I hope to be able to write to the Child Poverty Action Group and the Church of England this week to cover the point that the right reverend Prelate just made.

[Lord Balfe (Con)]

My Lords, I point out that, as far as I am aware, Labour is not committed to ending the benefit cap; let us start by saying that. It seems that we can never do enough, but would the Minister agree to look very carefully at the situation as it unfolds and confirm that, where we can make minor adjustments, we will? But we have to realise that there is a limit to the amount of money we can spend.

[Baroness Stedman-Scott]

My noble friend makes a very valid point. These days are very difficult and the situation is fast-changing. We are reviewing and considering things on a daily basis. There is nothing at all in our plan that aims to make life worse for people; in fact, it is quite the opposite. When noble Lords look at what we have done, we have moved quickly and effectively to try to bring additional resource and support into the system.

[Baroness Boycott (CB)]

My Lords, one of the drivers of food bank usage identified by Feeding Britain—I declare an interest—is the monthly sums deducted from universal credit to repay advance payments. The Chancellor’s plans to lower the rate of deductions and extend the repayment period are not due to take effect for another 18 months. Would the department not consider bringing them forward immediately for existing claimants and replacing advance payments with targeted grants for all new claimants from now on?

[Baroness Stedman-Scott]

I advise all noble Lords that there is no plan to convert advances to grants. I must be clear about that, although I know that it is not what people want to hear. However, I will take the point back to the department and see whether there is any movement, and I will give a written response to the noble Baroness.

[Lord Liddle (Lab)]

Given that, because of Covid, we are in all likelihood entering a period of much higher unemployment when it will be more difficult for people to get a job, does the Minister agree that there is a case for a review of universal credit and suspending the benefit cap until such a review has taken place?

[Baroness Stedman-Scott]

I think that I have answered the questions about the benefit cap and reviewing benefits quite adequately during the course of the Question. I agree that these are very challenging times. We have launched a job help website and an employer help website. We will turn every stone to ensure that we help people back to work as quickly as possible.

[The Lord Speaker (Lord Fowler)]

My Lords, the time allowed for this Question has, regrettably, elapsed.

Covid-19: People Living in Poverty

Baroness Stedman-Scott Excerpts

Thursday 30th April 2020 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I thank the noble Baroness, Lady Bennett, for securing this very important debate, and for giving us all an opportunity to put forward ideas and recommendations for things that need to be done. It is an important discussion and I am sure that it will continue. I am quite sure that I will not be able to answer everybody’s questions in such a short period, but I give an absolute guarantee that I will write to clarify our position on every question that noble Lords have asked.

This has been an extraordinarily difficult time. The Government are committed to a huge and unprecedented programme of support to mitigate the strain that Covid-19 is putting on households, livelihoods, business and our nation’s economy. The measures we have put in place will help to ensure that everyone, including those most at risk, can get the support they need to pay their bills and put food on the table.

Let me leave all noble Lords in absolutely no doubt that the Government are committed to helping, to doing what they can and to making sure that people do not fall through the net. We have taken swift action to strengthen the welfare safety net with a package of additional support worth £7 billion—one of the largest support packages in the world. The standard allowance of universal credit and working tax credit has been increased by £20 a week for the next 12 months, benefiting 4 million households. I am pleased to say that those who applied for universal credit on 16 March received their first payments last week, and around 93% of all applicants for universal credit are expected to receive their payments on time and in full. As my noble friend Lord Balfe said, that is thanks in large part to the tens of thousands of DWP staff who have been working around the clock to make sure that this happens. It is a great achievement in a very difficult time. The noble Baronesses, Lady Ritchie and Lady Sherlock, and my noble friend Lady Stroud said that whatever we do has to be fair, equal and compassionate. I can tell your Lordships that the Government have compassion by the bucketload. I would not say that if I did not believe it.

To support claimants through this difficult period, we have also suspended the recovery of various government debts, such as tax credit overpayments, benefit overpayments and social fund loans, for a three-month period. The Government continue to support and protect pensioners. The Government have made it clear that nobody should have to be worried about the threat of eviction during these times. We have increased the local housing allowance rates, meaning on average an extra £600 will go into the pockets of those who need it most. We are protecting tenants with almost £1 billion of additional support for renters and have banned rent evictions during the crisis. We have introduced mortgage holidays to protect homeowners and landlords.

We have introduced regulations already that disapply the minimum income floor to all self-employed universal credit claimants affected by the impact of Covid-19, whether they are ill or self-isolating, meaning that a drop in earnings will be reflected in their benefit award. New claim advances are of course available urgently to support those in immediate financial need until their first universal credit payment is made. I have to be straight with noble Lords: I know of no plans to convert an advance into a grant.

Although the benefit cap remains in place, for some of those who are new to benefits but have been employed for the previous 12 months, that cap will not apply for a nine-month period. This exemption will also apply to existing universal credit claimants who have sufficient earnings in the previous year to be exempt from the cap. Exemptions will continue to apply for the most vulnerable claimants, who are entitled to disability and carer benefits. Households are still able to receive benefits up to the equivalent salary of £24,000, or £28,000 in London.

We come now to the question of universal basic income. This Government have focused their measures on things which can be implemented as quickly as possible and target support to those who need it; a universal basic income would not achieve this. Providing a flat payment to everyone would fail to target those who need more support and may not meet the additional needs of those such as disabled people, lone parents and people further from the labour market. I understand that Finland trialled universal basic income and scrapped it early, because it was not working. As other noble Lords have pointed out, it is also far too expensive.

Defra has been undertaking a lot of work to support food banks, while other charitable organisations have worked within the sector and with the supermarkets to get as much food as possible to people who need it. The measures taken also include £3.25 million for food redistribution across England, including through food banks, allowing redistribution of up to 14,000 tonnes of surplus stock to the vulnerable. We have liaised with the food bank fraternity and will continue to do so.

The Government have announced a £500 million hardship fund, as part of the measures to support those affected by Covid-19, so that local authorities in England can support vulnerable people and households. This funding will enable local authorities to increase the local housing allowance for universal credit and housing benefit claims.

On the work that we have been able to do for rough sleepers—Dame Louise Casey has done outstanding work—I say to my noble friend Lord Young that, as well as bringing people off the streets and out of shared communal spaces, we are focused on ensuring that those with a history of rough sleeping who have been accommodated during the crisis have appropriate options for accommodation going forward. It is only responsible that we work with partners to consider how best to support those rough sleepers who have been moved into accommodation once the immediate crisis has been resolved.

Regarding economic support and recovery, today our focus is rightly on helping the vulnerable. However, our ambition remains to build an economy which ensures that everyone, no matter their background, has the opportunities to enter work and progress, while being supported by the welfare system. My ministerial colleagues in the Department for Work and Pensions are already working to ensure that existing vacancies can be accessed easily by people who have lost their jobs, and that we do everything we can to keep those people in good shape while they are waiting for that commercial opportunity for them to work.

Let me try to answer some of the questions raised today. The noble Baroness, Lady Bennett, raised sanctions. UC and both legacy and new-style JSA work preparation for face-to-face interviews and related sanctions have been disapplied from 19 March. This will initially be for a three-month period and claimants will not be sanctioned for not attending interviews after this time.

The noble Baroness, Lady Bennett, made a good point about mothballing schemes so that they are ready to come out if we ever need them again. I will be sure to pass this on to my policy colleagues. The noble Baroness, Lady Drake, talked about reappraising values. I think everybody agrees that once we have passed the damage caused by this virus, things will not be the same again. I hope that we will hold on to and build on some of the values we have seen coming out in communities and in my Government.

The noble Baroness, Lady Bennett, asked for a framework on decision-making. I have no answer for her on that at the moment, but I will write to her. The noble Lord, Lord Oates, talked about grants and writing off advances. I am sorry to tell him that I do not have any information on this or know of any plans to do so. The noble Lord, Lord Best, raised the issue of debt—a major problem before this crisis, let alone now, and one to which the Government are giving serious attention.

The right reverend Prelate the Bishop of Durham and I have had many conversations about the support for a maximum of two children. The Government and I understand where he is coming from and I have no doubt that the campaign for this will continue. We recognise that some claimants cannot make the same choice about the number of children in their family. That is why exceptions are in place. However, I must reiterate that families on benefits should have to make the same financial decisions as families supporting themselves financially. We feel that this is really important.

The benefit cap was raised by the noble Baronesses, Lady Lister and Lady Bowles, and the right reverend Prelate the Bishop of Durham. It is to be reviewed once in each Parliament; I know that it was not done in the last Parliament and we are waiting for the Secretary of State to decide if and when to do it in this Parliament. However, existing and new claimants may benefit from a nine-month grace period when their universal credit will not be capped, if they have a sustained work record. Claimants can approach their local authority for discretionary housing payments if they need additional help.

The noble Baroness, Lady Warwick, raised the housing benefit cap. I will go away, find the answer to her question and write to her. The noble Baroness, Lady Randerson, talked about the ferry industry. Again, I will go to the relevant department and make sure that she gets a letter on that. I am sure that audit trails are in the Government’s plans and will be carried out. I think my time is nearly up. I am a bit lost without the Clock in the Chamber. Am I nearly up?

[The Deputy Speaker]

I am sure the Minister can have a minute or two more.

[Baroness Stedman-Scott]

Okay. I will just build on what was said by the noble Baroness, Lady Falkner, and the noble Lord, Lord Balfe. All of this will have to be paid for. There is no doubt about that. Our colleagues in the Treasury and BEIS will be looking around the world to see who has the best ideas. I will make sure that I write to the Chancellor with that suggestion and that the German example given by the noble Baroness is considered.

In response to the noble Lord, Lord Woolley, I do not know of any plans for a race equality strategy, but I will put the idea forward. I do not know about the idea of the noble Lord, Lord Liddle, of a new leverage, but this Government are open to all ideas that will improve the lives of the people we are in business to serve. If noble Lords have ideas, please let us have them.

Universal credit gets a lot of criticism—it also gets a lot of praise, which I am very pleased about. However, in this terrible time, let us take a moment to think: if the old system were in place, people would be applying for six benefits instead of one and they would be paper-based instead of automated. We are getting people paid on time and in full; at the moment it is at 93%. That is a great credit to the people working on it. As I have said, I will write to all noble Lords after this debate with the answers they are owed.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020

Baroness Stedman-Scott Excerpts

Monday 23rd March 2020 Grand Committee

Moved by

[The Earl of Courtown]

That the Grand Committee do consider the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020.

Household Income

Baroness Stedman-Scott Excerpts

Tuesday 10th March 2020 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the Office for National Statistics’ release Average household income, UK: financial year ending 2019, published on 5 March, and in particular the finding that disposable household income has fallen for the poorest 20 per cent of the population.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, the Government are giving serious consideration to this important report, as they do to all reports on these key issues. We acknowledge that we need to keep monitoring low incomes; indeed, that is why the DWP will publish the annual households below average income statistics on 26 March. The report referred to by the noble Baroness has a relatively small cohort; the DWP report will have a much larger one and it will be interesting to compare the two. Please understand that we realise that people are struggling, and it is our mission to help them.

[Baroness Lister of Burtersett (Lab)]

My Lords, despite increases in the minimum wage and personal tax allowance, which have a limited impact on poverty—in or out of work—the Office for National Statistics report shows that, over two years, there has been a 7% fall in the real incomes of the poorest fifth of people due to the benefits freeze, spelling an intensification of poverty and hardship, especially for women and children. The House appreciates the Minister’s sympathy but how can the Government she represents, who are supposedly committed to levelling up, justify their continued refusal to make good at least some of the loss due to that freeze in the face of this damning new evidence of the results of their policy choices?

[Baroness Stedman-Scott]

My Lords, we had an intensive debate on this issue last week, which I appreciated, when considering the uprating benefits order. I have given and will continue to give all noble Lords the opportunity to raise their concerns with the Government. I appreciate the warms words the noble Baroness uses to refer to me. I am doing everything I can, as are others, but I am afraid that I do not yet have the currency or the pay grade to answer the question in the way the noble Baroness wants.

[Lord Howell of Guildford (Con)]

Does my noble friend agree that one of the heaviest downward pressures on disposable income for the poorest families is the ever-rising cost for households of energy bills? Does she agree that, at a time when primary energy prices are falling around the world and energy is getting cheaper, here in the United Kingdom we seem nevertheless to have the highest energy costs in Europe and the bills keep going up and up, causing particular pressure for single-parent families? Can she assure us that all efforts will be made to mitigate this harsh pressure on such families?

[Baroness Stedman-Scott]

My noble friend makes a very important point. I understand all too well that energy costs are an issue for single parents: my niece is a single parent, and the amount she pays for electric on a key is out of kilter with other methods. My noble friend’s point about energy costs is well made. I will go back to the department—they are going to love me when I get back—and then write to him to answer the specifics of his question, placing a copy in the Library.

[Baroness Meacher (CB)]

My Lords, the Minister will be aware of the number of universal credit claimants who commit suicide every year, and of course these are the poorest people in our society. What steps will the Government take to improve the administration of universal credit and reduce the huge stress levels involved in trying to make a claim in the way required at the moment?

[Baroness Stedman-Scott]

Suicide is a terrible thing in any circumstances. We have all been reminded recently of its impact on various groups in our society. I can tell the noble Baroness and the whole House that the administration of universal credit is reviewed on a daily basis. We have a terrific director, Neil Couling, who looks after the system, and I know for a fact that he is trying to do everything he can to simplify the process without losing the administrative needs within it.

[Baroness Janke (LD)]

My Lords, does the noble Baroness accept that automatic sanctions cause huge stress not only to unemployed people but to working families who are on benefits? What assurances can she give that work coaches will be given sufficient flexibility to take into account the often appalling and tragic circumstances that lead to this action, and will she reassure those families that they will be listened to?

[Baroness Stedman-Scott]

I can assure the noble Baroness and the House that our work coaches receive regular training and development in respect of sanctions, and that sanctions are a last resort. Recent changes have been made to the length of sanctions and they will be used only when absolutely necessary.

[Lord Foulkes of Cumnock (Lab Co-op)]

My Lords, some of the people who are suffering the most are pensioners relying on the basic pension. If the coronavirus outbreak gets worse and more and more people are confined to their homes, they will have to rely on the television for information as well as for entertainment, and yet free TV licences are due to be withdrawn on 1 June. Will the Minister go back to her department with all seriousness and compassion and see whether, at the very least, the withdrawal of free TV licences can be postponed?

[Baroness Stedman-Scott]

I can assure the noble Lord that everything I do at this Dispatch Box is done with sincerity and compassion. The point he has raised about television licences is outside my brief, but I will find somebody to talk to about it.

Pension Schemes Bill [HL]

Baroness Stedman-Scott Excerpts

Committee stage & Committee: 4th sitting (Hansard) & Committee: 4th sitting (Hansard): House of Lords
Wednesday 4th March 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

81: Clause 128, page 120, line 33, after “sections” insert “(Climate change risk) and”
Member’s explanatory statement
This amendment is consequential upon the Minister’s amendment to insert a new Clause after Clause 123.

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[Baroness Neville-Rolfe (Con)]

I look forward to hearing from my noble friend the Minister on this, but I confess that I have a little scepticism about this proposal. We have had many reviews of pensions, including the trailblazing Pensions Commission led originally by Adair Turner—the noble Lord, Lord Turner. Many changes have been made to the law, including auto-enrolment, which I think we in this Committee have all welcomed. Of course, those in the current Bill are important as we seek to tackle the issues raised by the BHS and Carillion cases and to introduce dashboards.

I am not convinced that this is the time for another commission and another review. I feel that this is the job of the Pensions Minister and the DWP. Quite a lot is going on in pensions, and the priority should be to make sense of the sort of issues we have discussed on this Bill or issues that arise on things such as exit from the EU, and to get on with those in a practical manner. I look forward to hearing from my noble friend. If she takes a different view, of course, I am happy to reconsider.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I am grateful for the opportunity to respond to this amendment tabled by the noble Lord, Lord McKenzie. We do not think there is a need for this new clause to be included in the Pension Schemes Bill, as legislation is not needed for a pension schemes commission to be established. The pensions landscape has changed considerably since the 2006 Pensions Commission; there have been major reforms to the UK pensions system. We have successfully rolled out auto-enrolment, introduced the flat-rate new state pension, abolished the default retirement age and raised state pension age.

The first independent review of state pension age was published in 2017, and this Government have committed to undertaking a review of state pension age every six years, in accordance with statutory requirements, to enable consideration of various factors, including the latest life expectancy projections. This Government are committed to maintaining a pension system that enables financial security for current and future pensioners. Further refinement and evolution will no doubt be needed in future to take account of changes in the labour market, home ownership and debt.

However, a commission is not the only way to identify and make recommendations for the future. We continue to engage extensively with key stakeholders, including consumer and employer organisations and the pensions industry, working collaboratively to identify and take forward a robust programme of work that builds on the strong foundations now in place.

For example, the Government carried out a review of the automatic enrolment scheme in 2017. Implementation of the review measures will be subject to learning from the recent workplace pension contribution increases; discussions with employers and others on the right approach; and finding ways to make these changes affordable. Once the evidence on our reforms is clear, we will look again at the right overall level of saving and the balance between prompted and voluntary saving. We are monitoring the impact of pension freedoms and the effectiveness of regulation of the market and information and guidance.

It is right that individuals are trusted with their own hard-earned money and savings. They are best placed to manage their money throughout retirement. While it is not the Government’s role to monitor individual people and the decisions they make, we recognise that it is important to support individuals in making decisions for their retirement. That is why we established the Pension Wise service to provide free and impartial guidance to help consumers make sense of their options.

This Government are focused on delivering and improving aspects of the existing pensions system. We are open to looking at aspects of the current system, but do not feel that an examination of the fundamentals of the pensions system is appropriate at this time.

My noble friend Lord Young made the point that my colleague, the Minister for Pensions, has shown support for a commission. Noble Lords are right to pay tribute to those who were part of the Pensions Commission chaired by the noble Lord, Lord Turner, which was very successful at building consensus around the future of pensions policy. Although several individuals and groups have called for a pensions commission, there is currently little consensus about what the scope and structure of such a commission should be. We believe we can engage effectively with interested parties without needing another commission.

My noble friend Lord Young also mentioned Bright Blue and the Fabian Society calling for a pensions commission. Again, I understand that a number of key stakeholders have demonstrated their enthusiasm for a review of the pensions landscape.

I do not discount future reviews of some element of the pensions system. We have already undertaken some reviews and will no doubt undertake others. However, I believe that the fundamental structure of the pensions system, based on the recommendations from the Pensions Commission, is still valid.

[Baroness Sherlock]

I think I am right in saying that the argument for not proceeding was that there was no consensus around the aims or the remit. What attempt have the Government made to achieve consensus?

[Baroness Stedman-Scott]

The best answer I can give is that I will find out and write to the noble Baroness, because I do not have that information at the tip of my fingers.

The Bill will deliver further improvements, including strengthening consumer protections, improving scheme governance and communications, and facilitating the creation of pension dashboards. We will continue to review these improvements, including a contribution that a pensions commission could make in future. I respectfully ask the noble Lord, Lord McKenzie, to withdraw his amendment.

[Lord McKenzie of Luton]

I thank the Minister for her response on this matter and noble Lords who have spoken in favour of this proposition. For those who have felt unable to support it at the moment, I simply make the point that there is no particular timeline: it does not say that it must happen all at one time, or that it must happen tomorrow. There are clearly aspects of the current system which are unsatisfactory.

If I had to encapsulate that in two or three words, I would say that pensioner poverty and under-saving are still with us, big time. Somehow, we need to address that. Having said that, I beg leave to withdraw the amendment.

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[Baroness Bowles of Berkhamsted]

My Lords, I have added my name to this amendment because the circumstances that have been outlined are distressing and there seems to be no easy way for the affected people to address them. If they were bigger and more powerful, it is certain that they would not be pursued—not least because the instructions for pursuit, if I can call them that, are that you have to be able to recover more than it costs you to do so. It would not take a great deal of litigation for that to be backed off from.

It is another example of how unfair it is when people who have run a business as a partnership, unincorporated, are at a disadvantage compared with those who take advantage of limited liability. You are not doing anything bad by putting yourself and your livelihood on the line. It may be that it has not been done in the way that it should have been in small practices, such as plumbing companies, but when you find yourself in this kind of situation—which you would not be in if you had been incorporated—it has always been difficult to see fairness in the law.

The noble Baroness, Lady Altmann, has produced a tightly composed amendment. I have studied it and it seems to fit the bill. Obviously, if someone can improve on it that would be fine. Otherwise, I do not see how there will be fairness for those who do not have equality of arms with the larger companies, which have sometimes been allowed to leave schemes without necessarily paying up as much as they should. In such cases, the burden falls on smaller firms. The trustees should have taken that into account long ago. If they have not, why should the burden fall on those who cannot find the means to take the matter to court? Basically, that is what this is about. A large employer in the scheme would fight the case and perhaps there would be claims for negligent behaviour for some of what has gone on. This solution avoids quite a lot of unpleasantness and untidiness that might otherwise be the only way. If there is any way that the Government can pursue this amendment, it would be a very good thing.

[Baroness Stedman-Scott]

I thank my noble friend Lady Altmann for tabling this amendment and congratulate her on her tenacity in continuing her campaign to resolve this situation. If we were giving awards for tenacity, she would win, I am sure.

The Government understand the difficulties facing employers in these situations, especially where, in the past, they have taken all reasonable steps to fund the scheme as requested by the trustees. The amendment seeks to amend Section 75 of the Pensions Act 1995 to allow trustees further discretion to cancel a departing employer’s debt in certain circumstances. It raises a number of issues that I will address.

The effect of this amendment would be that every time it is applied, the employer covenant would be weakened, increasing the risk of thousands of members not getting their benefits in full. It is hard to envisage a scenario where trustees could agree to such an arrangement and still be compliant with their fiduciary duty to act in the best interests of scheme members. In particular, the proposals for a new de minimis threshold raise significant issues. Even if the threshold is set at a very low level, it could enable a large number of small employers to depart schemes without payment. The aggregate impact of this could be significant. Passing this level of debt on to employers who remain could make them insolvent.

It is worth noting that some flexibility already exists for trustees to collect reduced employer debts as long as the scheme is funded above a Pension Protection Fund level basis. It is set at this level to ensure that schemes do not place an additional burden on the Pension Protection Fund and, ultimately, the levy payers.

The amendment also proposes that debts could be compromised if the majority of the debt relates to orphan members whose employers no longer remain in the scheme. This would be very difficult for the scheme trustees, who have a duty to ensure that orphaned members’ rights are protected and that their scheme is properly funded. Removing orphan debts from the employer debt calculation would ultimately worsen the scheme’s funding position, putting thousands of members’ pensions at risk.

Further, this amendment would impose different statutory requirements on unincorporated and small employers, creating a number of challenges. For example, if all or the majority of the scheme’s employers were either unincorporated or small, it could mean that none, or very few, employer debts would ever be collected; in the long term, that could create a severe underfunding situation, with all the risks that entails.

The Government’s Green Paper and subsequent White Paper, which was published in March 2018, on defined benefit pension schemes looked very closely at this issue and considered carefully what could be done to relieve the pressure that some employers face from their obligation to pay an employer debt. The White Paper concluded that the existing arrangements in legislation, along with the deferred debt arrangement introduced in April 2018, provide enough flexibility for employers to manage their employer debts. Further, the current full buyout calculation method is the most secure and effective way of protecting members and remaining employers in a multi-employer scheme.

While the Government recognise the difficulty facing companies in managing this debt, they cannot, at this time, offer any easements beyond those already provided for in legislation. However, recognising the many representations that the Government have received supporting a change that would assist employers in this difficult position, we will keep this under review and continue the dialogue.

My noble friend Lady Altmann raised the issue of retired employers triggering a debt and being unable to pass it on. Flexibility in the rules enables retired employers to pass their scheme on to another employer without triggering an employer debt. The scheme has a streamlined, flexible apportionment arrangement, which could help employers in this situation.

My noble friend also made the point that some people find themselves in extreme difficulties, with the potential to lose their home. The employer debt regime is designed to protect employers who remain in a multi-employer scheme. It would be unfair to burden remaining employers with additional unplanned costs to cover the shortfall that would be created by relaxing requirements for one group of employers. The flexible apportionment arrangement currently available in legislation can be used to help unincorporated employers who wish to incorporate.

My noble friend Lady Altmann also asked whether the scheme is fully funded. My noble friend the Minister mentioned that the scheme is fully funded on a technical provision basis. However, I understand that the scheme is underfunded on both a budget basis and a PPF basis. The next scheme valuation is due in April 2020, which will give us a clearer picture of the scheme’s funding position.

I thank my noble friend and other noble Lords for their contributions to the debate on this amendment. I know how important it is to my noble friend, but, on the basis of my response, I respectfully ask her to withdraw the amendment.

[Baroness Altmann]

I thank my noble friend for her response, but I confess to being extremely disappointed with the robust refusal to address the issue. The current easements are not working, otherwise I would not be trying to press this amendment. The deferred debt arrangement does not remove the debt; it just pushes it into the future, so the person will still be made destitute at some point. Trustees are refusing a flexible apportionment arrangement, so clearly that is not an option.

We seem to have lost sight of the materiality issue and of what we are trying to do with the bigger employers. There are already some ways in which trustees can not collect Section 75 debt. I am just trying to extend those very slightly; it will not apply to the majority of employers in the scheme and it will not materially impact on the solvency and survival of the scheme.

I beg leave to withdraw the amendment, but I urge my noble friend to go back to the department to see whether there are any ways in which we might be able to inject some further easement for multi-employer, non-associated schemes, which were never designed to do this to good employers.

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Moved by

[Baroness Stedman-Scott]

98: Schedule 11, page 186, line 16, at end insert—
“11A_(1) The Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22)) is amended as follows.(2) After Article 41 insert—“41A Climate change risk(1) Regulations may impose requirements on the trustees or managers of an occupational pension scheme of a prescribed description with a view to securing that there is effective governance of the scheme with respect to the effects of climate change. (2) The effects of climate change in relation to which provision may be made under paragraph (1) include, in particular— (a) risks arising from steps taken because of climate change (whether by governments or otherwise), and(b) opportunities relating to climate change.(3) The requirements which may be imposed by the regulations include, in particular, requirements about—(a) reviewing the exposure of the scheme to risks of a prescribed description;(b) assessing the assets of the scheme in a prescribed manner;(c) determining, reviewing and (if necessary) revising a strategy for managing the scheme’s exposure to risks of a prescribed description;(d) determining, reviewing and (if necessary) revising targets relating to the scheme’s exposure to risks of a prescribed description;(e) measuring performance against such targets;(f) preparing documents containing information of a prescribed description.(4) Regulations under paragraph (3)(b) may, in particular, require assets to be assessed by reference to their exposure to risks of a prescribed description and may, for the purposes of such an assessment, require the contribution of such assets to climate change to be determined.(5) In complying with requirements imposed by the regulations, a trustee or manager must have regard to guidance prepared from time to time by the Department.41B Climate change risk: publication of information(1) Regulations may require the trustees or managers of an occupational pension scheme of a prescribed description to publish information of a prescribed description relating to the effects of climate change on the scheme.(2) Regulations under paragraph (1) may, among other things—(a) require the trustees or managers to publish a document of a prescribed description;(b) require information or a document to be made available free of charge;(c) require information or a document to be provided in a form that is or by means that are prescribed or of a prescribed description.(3) In complying with requirements imposed by the regulations, a trustee or manager must have regard to guidance prepared from time to time by the Department.41C Articles 41A and 41B: compliance(1) Regulations may make provision with a view to ensuring compliance with a provision of regulations under Article 41A or 41B.(2) The regulations may in particular—(a) provide for the Authority to issue a notice (a “compliance notice”) to a person with a view to ensuring the person’s compliance with a provision of regulations under Article 41A or 41B;(b) provide for the Authority to issue a notice (a “third party compliance notice”) to a person with a view to ensuring another person’s compliance with a provision of regulations under Article 41A or 41B;(c) provide for the Authority to issue a notice (a “penalty notice”) imposing a penalty on a person where the Authority are of the opinion that the person—(i) has failed to comply with a compliance notice or third party compliance notice, or (ii) has contravened a provision of regulations under Article 41A or 41B; (d) provide for the making of a reference to the First-tier Tribunal or Upper Tribunal in respect of the issue of a penalty notice or the amount of a penalty;(e) confer other functions on the Authority.(3) The regulations may make provision for determining the amount, or the maximum amount, of a penalty in respect of a failure or contravention.(4) But the amount of a penalty imposed under the regulations in respect of a failure or contravention must not exceed—(a) £5,000, in the case of an individual, and(b) £50,000, in any other case.(5) In this Article “First-tier Tribunal” and “Upper Tribunal” mean those tribunals established under section 3 of the Tribunals, Courts and Enforcement Act 2007.”(3) In Article 113 (breach of regulations), in paragraph (3)(b), after “10” insert “or under provision contained in regulations made by virtue of Article 41C”.(4) In Article 167 (Assembly, etc. control of orders and regulations), after paragraph (3) insert—“(3A) Paragraph (2) also applies in relation to the first regulations made by virtue of Article 41A or 41C (whether made alone or with other regulations).””Member’s explanatory statement
This amendment makes provision for Northern Ireland that is equivalent to the provision made by the Minister’s amendment to insert a new Clause after Clause 123.

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Moved by

[Baroness Stedman-Scott]

99: Schedule 11, page 186, line 22, after “(d)” insert “, (2A)(a), (b) or (d)”
Member’s explanatory statement
This amendment makes provision for Northern Ireland that is equivalent to the provision made by the Minister’s amendment at page 118, line 11.

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[Baroness Sherlock]

My Lords, I, too, share the aspiration of the noble Baroness, Lady Bowles, to constrain somewhat the use of the extensive powers that the Government are blessing themselves through this Bill. I will not, however, reopen that debate in any great detail, although there is a temptation to say “We have another whole hour of Committee, we can debate this at great length”. The danger of a list is that some noble Lords will have concerns about particular aspects, such as constraining trustee power, while some will be in favour of multi-employer collective money purchase schemes. Most of us, however, would have reservations about the ability to amend primary legislation.

Although it may not feel as though Bills come along in super abundance, in the field of pensions it feels like they come along all the time like the number 19 bus, but I take the point. In fact, if we are going to have a list I would like to add to it: I would start with not allowing dashboards to do transactions without covering that in primary legislation. I have a long list in my notes which I will develop at length should we return to this. What might be helpful is if the Minister, in replying, would tell Committee whether the Government intend to do any of these things.

[Baroness Stedman-Scott]

My Lords, the question of delegated powers has already been extensively discussed in relation to the relevant clauses. My noble friend Lord Howe has already eloquently covered the Government’s position on these powers. As I said before to this Committee, the use of secondary legislation to set out more detailed technical matters, or to amend primary legislation for specified purposes, is consistent with the general approach in pensions legislation.

As with other pensions legislation, the provisions in the Bill embody the fundamental policy, while provisions of a more technical nature, or which are by their nature liable to change, are delegated to secondary legislation. This staged approach has two benefits. First, it enables flexibility to ensure that the legal framework remains appropriately tailored to developments in the pensions industry. Secondly, it enables government to provide legal certainty more quickly. This is important for the pensions industry and for member protection. It is a common feature of pensions legislation, which is by its nature very technical and can be subject to change.

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[Baroness Sherlock]

I am grateful to the noble Baroness for giving way, especially as I am about to abuse her generosity by asking a more general question. It is directed across the table, and is something that I forgot to ask in my own contribution.

The noble Baroness asked for assurance on various points. At various times during the Committee, the Minister has kindly agreed to write to noble Lords. Can the Minister confirm that those letters will come before Report?

[Baroness Stedman-Scott]

I can absolutely ensure that those letters will be with all Committee members before Report. We have debated these issues and I have listened to the concerns raised by noble Lords. We believe that all the powers are suitable and appropriate.

[Baroness Bowles of Berkhamsted]

I am not convinced, but we will await those letters—that was a very useful intervention. This is a matter that, one way or another, we may have to return to in some guise on Report. For now, I beg leave to withdraw my amendment.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2020

Baroness Stedman-Scott Excerpts

Tuesday 3rd March 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2020.

Motion agreed.

Guaranteed Minimum Pensions Increase Order 2020

Baroness Stedman-Scott Excerpts

Tuesday 3rd March 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Guaranteed Minimum Pensions Increase Order 2020.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)]

My Lords, I will start with the Guaranteed Minimum Pensions Increase Order. I will cover this briefly as it is an entirely technical matter that we attend to in this place each year. The order concerns contracted-out defined benefit or final salary occupational pension schemes. It will increase scheme members’ guaranteed minimum pensions that accrued between 6 April 1988 and 5 April 1997 by 1.7%, in line with inflation as measured by the consumer prices index.

I should now like to turn to the Social Security Benefits Up-rating Order. The Government are committed to supporting working families and providing financial security for pensioners, and the provisions in the order reflect this. It will increase the basic state pension and the new state pension in line with the triple lock; increase the pension credit standard minimum guarantee in line with earnings; increase working-age benefits in line with prices; and increase carers’ benefits and benefits intended to meet additional disability needs in line with prices.

The Government’s commitment to the triple lock means that the basic state pension will continue to be uprated by the highest of earnings, prices or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty, so keeping it in place gives pensioners the financial security and certainty they deserve. This year, the increase in earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 3.9%, rising to £134.25 a week for a single person. This increase is at the highest rate for the past eight years. From April this year, the basic state pension will be over £1,900 a year higher in cash terms than in April 2010.

Four years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age from 6 April 2016 onwards. We have also committed to increase the new state pension by the triple lock, so from April 2020 the full rate of the new state pension will increase to £175.20 a week. This year, state earnings-related pension schemes, other state second pensions and protected payments in the new state pension will rise by 1.7%, in line with prices.

We are continuing to take steps to protect the poorest pensioners. This includes through the pension credit standard minimum guarantee, the means-tested threshold below which pensioner income should not fall. The pension credit standard minimum guarantee will rise by 3.9%, in line with average earnings. From April 2020, the single person threshold of this safety-net benefit will rise to £173.75, over £2,100 a year higher than it was in 2010.

I would like to turn now to working-age benefits, which will increase by 1.7%, in line with prices. This includes people receiving jobseeker’s allowance, employment and support allowance, income support, housing benefit and universal credit. Benefits linked to child tax credits and working tax credits will also be uprated in line with those benefits. This reflects the Government’s ongoing commitment to help working-age people get on. Work remains the best route out of poverty. Those in receipt of working-age benefits will see their payments rise at the rate of inflation, with the Government spending an additional £1 billion supporting working-age claimants. Universal credit work allowances will also rise in line with prices. This measure raises the amount that someone can earn before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.

Finally, let me turn to disability benefits. This year, the Government will continue to make sure that carers and people who face additional costs as a result of their disability will get the additional support they need. Disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment will all rise by 1.7%, in line with prices, from April 2020. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits, the employment and support allowance support group component and the limited capability for work and work-related activity element of universal credit, will also increase by 1.7%. This Government are committed to supporting the most vulnerable in society.

The Guaranteed Minimum Pensions Increase Order provides for scheme members to receive their annual guaranteed minimum pension increases for pensions in payment, or increases guaranteed minimum pensions that have been postponed as a result of continued employment.

The Government propose to spend an extra £5 billion in 2020-21 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock, helping the poorest pensioners who count on pension credit and spending an additional £1 billion on working-age benefits, ensuring that we continue to support working people and providing essential support to disabled people and carers. I commend both orders to the House.

[Baroness Lister of Burtersett (Lab)]

My lords, at last, after four years we finally have an uprating order that actually uprates working-age benefits. But it is very disappointing that it does nothing to start making good the serious losses sustained by an estimated 27 million people, in and out of work, who rely on those benefits, amounting to an average loss of nearly £400 a year for families with children. That will be the focus of my contribution this afternoon.

According to the House of Commons Library briefing, the real value of affected benefits has been cut by about 6%. Taking account of all uprating restrictions across the decade, they are about 9% lower than if CPI indexation had applied since 2010. A cut of nearly 10% in the real value of benefits that were already far from generous represents a shameful attack on the living standards of many of the poorest in our society.

Although the department has done nothing to assess the actual impact on those affected, civil society organisations have provided some evidence, and I thank them. For instance, Citizens Advice reports that from April to August last year,

“four in 10 of the people we helped with debt to claim income-related benefits didn’t have enough money to cover their living costs. This is up from 32% in 2016-17—a 25% increase since the benefits freeze came into effect”.

In contrast, the proportion of households with what it calls a “negative budget” who are not in receipt of those benefits has remained largely unchanged. StepChange, too, identifies the benefits freeze, alongside other social security cuts and changes, as key factors in high levels of problem debt and as

“undermining financial inclusion policy goals”.

The Heriot-Watt University/Trussell Trust State of Hunger report and last week’s Marmot report likewise identify the low level of benefits as a key factor in growing food insecurity and reliance on food banks. The latter argued that benefit and taxation policies since 2010 have largely been responsible for the worsening socioeconomic situation underlying widening health inequalities. The Government’s own statistics show an increase in levels of severe income deprivation. It is worth noting that the impact of the benefit freeze will probably be seen as much, if not more, in the intensity of poverty as in the numbers in poverty, given that many of those affected will already have been in poverty. According to the CPAG, an average family in poverty is now £73 below the poverty line, compared with £56 below in 2012-13, adjusted for inflation. As the Joseph Rowntree Foundation put it, the largest single driver that has “tightened poverty’s grip” in the past few years has been the freeze.

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I am glad to have this debate happening here. My noble friend mentioned the debate in the Commons. I was shocked when I read it. Eight MPs contributed and the Minister’s response was 202 words, half of which were simply to thank Members and to tell them that his door was always open and that he did not want to answer everything in the Chamber. Just 202 words, half of which were introductory, were said on something as important as this. I am grateful that noble Lords have turned out to do it more justice than that and I look forward to the Minister doing so, too.

[Baroness Stedman-Scott]

My Lords, I thank noble Lords who have spoken for the honesty, clarity and passion with which they champion those people whom we all come here to serve. I thank the noble Baroness, Lady Lister. I still cannot argue with her, so I am not going to try—I shall not take 202 words to do it either—but the door and our ears are open, and I am not alone in the department in raising these things. At the risk of driving everyone mad, I ask Members to keep coming to us and telling us things. Be assured that we are passing them on, and that real debate is going on about them. I assure noble Lords that I will take all their points back to the department and the Treasury, particularly the profound one about levelling up: it is about not just geography, but people. If we make it work for people, we make it work.

We have had an open discussion in the department about the benefit freeze. I take all the points raised by noble Lords. We are continuing to try to support families and those who we exist to serve. There is a raising of the national living wage and a reduction in the UC earnings taper. The income tax personal allowance has been raised and tax-free childcare introduced. On balance, while there are many things we are unhappy about, these reforms are working and making sure that there are more people in work than ever.

I take the point raised by the noble Baroness, Lady Lister, about the Citizens Advice report and the request for an extra 2% rise. This is well understood in the department and everybody is aware of it. I wish I could tick it off, but it is just above my pay grade. I remind noble Lords that the Secretary of State has a statutory obligation to conduct a review each autumn of pension and benefit rates for the following year. Decisions about the uprating for next year, to take effect from April 2021-22, will take place from October.

The noble Baronesses, Lady Janke and Lady Lister, and the right reverend Prelate the Bishop of Durham raised the two-child limit. Their points were well made. I can make no promises, but we are keeping on; who knows what will happen. I am not trying to lie low on this, but we were trying to get a benefits structure that did not automatically adjust to family size; that was unsustainable. We recognise that some claimants are not able to make the same choices about the number of children in their family and we have exceptions to protect certain groups. Child benefit continues to be paid for all children, as well as an additional amount for disabled children.

[Baroness Lister of Burtersett]

Could the Minister explain why it was unsustainable? People are not having larger families. What was unsustainable about benefits reflecting family size and meeting people’s needs?

[Baroness Stedman-Scott]

My understanding is that this is a purely fiscal situation. People who are working make choices about the size of their families and others should too. I can tell by the look on the noble Baroness’s face that she profoundly disagrees with that. I understand, and if there is anything she wants me to take back to the department I will do so, but that is the reason for the Government’s decision.

The noble Baroness, Lady Janke, raised points about women’s pension outcomes and poverty. While women’s pension outcomes have, historically, been worse than men’s, mainly due to a difference in labour market participation, women’s pension outcomes are increasing and the gap with men is narrowing. On average, women live longer than men and the average weekly amount that women on the new state pension receive is 95% of what men receive on it. At least 80% of women reaching state pension age before 2030 stand to receive more under the new state pension than they would have done under the previous one.

The noble Baroness, Lady Sherlock, raised some points about the GMP equalisation situation. It remains our view that the existing GMP conversion legislation allows schemes that wish to use the DWP’s methodology for equalising to do so now. It is not absolutely necessary to wait for further changes to the GMP conversion legislation to take place first. Schemes that have any concerns over how the DWP’s methodology is supposed to be used can access the department’s guidance published in April 2019. This is a question-and-answer section to address many of the issues that schemes may face when they equalise.

I note what my predecessor said in the answer given last year. My answer to noble Lords is not quite the same: we intend to make further changes to the GMP conversion legislation to facilitate the methodology consulted on. We will look to make those changes in due course.

--- Later in debate ---

[Baroness Stedman-Scott]

The best thing is that I write to the noble Baroness, rather than put my neck in the noose again.

The noble Baroness, Lady Sherlock, also asked whether the £1 billion was in real terms or an increase. It is a cash increase; there is no increase in real terms. She mentioned equalisation. HMRC has recently published guidance for schemes which compare benefits on an annual basis. We are working closely with HMRC to update this guidance for schemes which choose to use DWP’s method of equalisation.

On the choice of the RPI or the CPI, the RPI is no longer an official national statistic due to concerns over its methodology. The Government and the UKSA will consult on whether the proposed change should be made prior to 2030. The department has no plans at this time to deviate from the CPI and its measure of inflation when uprating benefits.

These provisions reflect the Government’s commitment to supporting working people, while protecting the most vulnerable in society. The Guaranteed Minimum Pensions Increase Order provides for scheme members to receive their annual guaranteed minimum pensions increases for pensions in payment.

To reiterate, through the Social Security Benefits Up-rating Order this Government are: increasing the basic state pension and the new state pension in line with the triple lock; increasing the pension credit standard minimum guarantee by earnings to support the poorest pensioners; increasing working-age benefits in line with prices; increasing the universal credit work allowances, so that claimants can earn more before their payments are reduced; and increasing benefits to meet additional disability needs and carer benefits in line with prices.

I know that I have disappointed many noble Lords with my answers, but I hope that I, and my colleagues in the Government, do not disappoint in our efforts to try to make things better. I commend both orders to the House.

Motion agreed.

Social Security Benefits Up-rating Order 2020

Baroness Stedman-Scott Excerpts

Tuesday 3rd March 2020 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Social Security Benefits Up-rating Order 2020.

Motion agreed.