Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022

Baroness Stedman-Scott Excerpts

Wednesday 23rd February 2022 Grand Committee

Moved by

[Baroness Stedman-Scott]

That the Grand Committee do consider the Occupational Pension Schemes (Collective Money Purchase Schemes) Regulations 2022.

Relevant document: 28th Report from the Secondary Legislation Scrutiny Committee

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

My Lords, this statutory instrument will implement the authorisation and supervisory regime for collective money purchase schemes. These are commonly known as collective defined contribution, or CDC, pension schemes. These will be the first schemes of their type in the United Kingdom pensions market. A further statutory instrument, the Occupational Pension Schemes (Collective Money Purchase Schemes) (Modifications and Consequential and Miscellaneous Amendments) Regulations 2022, will be laid shortly to implement further consequential amendments required for existing pensions legislation to accommodate CDC schemes. These further regulations will be laid using the negative procedure.

Before I move on to the detail of this instrument, I will remind noble Lords of the purpose of this new type of pension. The United Kingdom pensions market we see today has been built around defined benefit schemes, where the employer underwrites the pension benefits paid to employees, or defined contribution schemes, where individual members bear all the investment and long-term risks and where there are no employer guarantees regarding what the member might receive at retirement.

CDC schemes provide an alternative approach in which member and employer contributions are pooled and invested with a view to delivering benefits at the level to which the scheme aspires. They offer potential benefits in economies of scale and the opportunity for greater investment in higher-returning assets than are usually associated with defined contribution occupational pension schemes. Their collective nature means that investment and longevity risks are shared across the whole membership, and as these schemes provide an income for pensioner members there is no need for members to make complex financial decisions at the point of retirement. The Government believe that this new type of pension provision will be more sustainable for employees and employers alike, and has the potential to offer better outcomes for pension scheme members.

I turn now to the statutory instrument itself. Noble Lords will appreciate that this is a necessarily detailed set of regulations. As a new type of pension scheme, it is critical that employees and employers can have confidence in CDC pension schemes. These regulations set out requirements for the process of applying for authorisation and further detail on the criteria that need to be met by CDC schemes in order for them to be authorised to operate.

The authorisation criteria include that the design of a CDC scheme must be sound and that it has sufficient financial resources to operate and deal with particular issues that may arise. There is also a requirement that only fit and proper persons are involved in particular capacities to do with making key decisions about the scheme. If the Pensions Regulator is not satisfied that all the authorisation criteria are met, it cannot authorise the scheme.

These regulations also set out requirements relating to the Pensions Regulator’s supervisory role. It can withdraw authorisation if it is no longer satisfied that the authorisation criteria are met. The regulations set out further detail on information to be provided to the regulator while the scheme is running, which will help it consider whether it is satisfied that the authorisation criteria for schemes continue to be met.

These regulations also provide more detail about the actions trustees must take if a scheme experiences a “triggering event”. These are certain events, set out in the primary legislation, that can pose a threat to the future of the scheme and the interests of members. If a triggering event occurs, the trustees must take certain actions or continuity options. A triggering event may lead to a scheme being wound up. Schedule 6 provides a detailed framework for winding up a scheme.

These regulations amend the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 to allow for an alternative automatic enrolment quality requirement for CDC schemes. They also amend the Occupational Pension Schemes (Charges and Governance) Regulations 2015 to implement an annual charge cap set at 0.75% of the value of the CDC fund, or an equivalent combination charge. Finally, they amend the chair’s statement requirements in the Occupational Pension Schemes (Scheme Administration) Regulations 1996 to reflect that CDC schemes will not have a default arrangement.

I now wish to acknowledge the considerable interest expressed in both Houses on CDC schemes during the passage of the Pension Schemes Act 2021. Many valuable contributions were made at that time regarding aspects of CDC schemes. A key concern was ensuring that CDC schemes treat their members fairly and, in particular, respect the interests of different generations. To help achieve this, Regulation 17 sets out requirements for CDC scheme rules to ensure that there is no difference in treatment when adjusting benefits between different cohorts or age groups of scheme members, or between members who are active, deferred or receiving a pension.

The importance of good communications to members of these new schemes was debated here and in the other place. Concerns were expressed that members should be given access to enough information to give them confidence to make informed decisions about their savings. Much of this is provided for in the negative regulations which have been published in draft and will be laid shortly. Alongside the regulations we are debating today, these will provide for transparency to allow for scrutiny of how a CDC scheme is operating.

The forthcoming negative regulations package will set out the disclosure requirements for scheme providers, with requirements to provide information relating to target benefits, including the actuarial valuation and a statement informing members and prospective members that benefits may be adjusted based on the actuarial valuation and are not guaranteed. CDC schemes will also be required to publish their scheme rules, including details of benefit design.

Debates on the Act also covered the powers of the Pensions Regulator to specify the requirements that should be met in respect of the financial sustainability of the scheme. Schedule 3 to the regulations sets out in detail the financial sustainability requirements for new 213CDC schemes, including the information required on application for authorisation and what the regulator must take account of in deciding whether it is satisfied that a CDC scheme has sufficient financial resources to meet the costs of establishing and operating the scheme, as well as sufficient resources to deal with the costs, as required by the Act, if a triggering event occurs.

Finally, concerns around the diversity of trustee boards, and what may be done to improve diversity, were raised during the passage of the Act. The Pensions Regulator has published a draft code of practice, which sets out that trustee boards should have policies on diversity and inclusion, including objective selection criteria, and that they should demonstrate that they have the ability to capture and monitor data on diversity and inclusion. I beg to move.

[Baroness Janke (LD)]

My Lords, I thank the Minister for her presentation, which was clear and to the point. I would like to raise two issues for consideration.

The first is the possibility of widening the scope for CDCs to smaller companies and how the Government view that. The current legislation has been written very much with Royal Mail in mind but if the CDC scheme goes well, others might want to follow suit, including smaller employers. But they would want to join something bigger; for example, a multi-employer or industry-wide CDC scheme or master trust CDC scheme. Will this require new primary legislation to allow multi-employer schemes, or does the Pension Schemes Act give the DWP sufficient power to do this? If it would require new secondary legislation, how long does the Minister think this might take? Does she share the view that multi-employer schemes are key to unlocking CDC? Not everyone has the resources or scale of the Royal Mail to do it for themselves. Please can she explain the process for multi-employer CDCs?

Secondly, can the Minister say something about retirement-only or decumulation CDCs and the position of the DWP on these? One of the discussions over the new pensions freedoms is that individuals take all the risk of managing a DC pot for themselves, including the longevity risk. In a pooled CDC retirement scheme, this is shared with others, so it is an attractive option for people to join at retirement. What is the scope for these and what is the position of the DWP on this? NEST has hinted that it might be prepared to look at it, but it would be helpful to know whether the Government look on these suggestions favourably. I look forward to the Minister’s response.

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[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her introduction to these regulations and all noble Lords for their contributions. As some noble Lords will remember, we spent a long time debating the Pension Schemes Act in this House. We asked lots and lots of questions about the establishment of CDC pension schemes. When we asked questions of the Minister, at least some of the time the answer came back: “The detail will be in the regulations”. Now here we are; here are the regulations and they will implement the authorisation and supervisory regime for CDC schemes. It is not surprising that so many questions have come from my noble friend Lady Drake and other noble Lords, and I am afraid I have more to add to the list. I very much hope the Minister can answer them, because this is our last chance before the scheme is created and it is incredibly important.

Here are my questions, starting with the future of CDC schemes. In his foreword to the consultation document in 2019, the Pensions Minister, Guy Opperman, said:

“There were encouraging signs of a growing interest in CDC amongst employers and commercial providers, outside of the Royal Mail and CWU. I expect this will increase further”.


It is three years down the road, and still only Royal Mail has committed to establishing a scheme. The Government admit that future take-up is still unknown.

In her contribution, my noble friend Lady Drake highlighted some of the concerns that flow from devising the details of a scheme with only one employer in mind. The future will not be the same, of course. The noble Baroness, Lady Janke, and my noble friend Lord Davies of Brixton asked what happens if other employers want to join in future. It is my understanding that we would need additional legislation if we got developments such as unconnected multi-employer schemes or commercial master trusts operating CDC schemes. The Minister can confirm that.

In such scenarios, different risks would need to be considered. One would expect the regulations and the code of practice provisions on things such as financial sustainability and trustee discretion to be more robust. For example, I would expect to see a definite requirement to ring-fence reserves to meet the costs of a triggering event or implement a continuity option; or, for example, a strengthening of trustee discretion over things such as opening new sections or the appointment of the chair of trustees. Can the Minister confirm that these regulations and the draft code of practice under consultation will not be considered fit for purpose for unconnected multi-employer and commercial master trust schemes?

The Government have acknowledged that there is considerable uncertainty as to the impact of the CDC proposal. I take the point made by my noble friend Lord Davies that, when one starts something, of course one will never fully know until it is out there. However, it is probably because of that uncertainty that the regulations and the draft code are long and complicated —because they are trying to cover for a range of circumstances. In turn, I suspect that that will mean that the CDC scheme rules are likely to be long and require a high level of understanding by trustees and their advisers. That complexity adds to the importance of clear member communications, and good systems and processes.

However, because of the way in which the rules are framed—my noble friend Lord Davies is right—a lot of responsibility will have to be borne by the regulator on some complex technical issues. If CDC schemes grow in number, as is hoped, how will the regulator, given its increasingly complex pensions remit generally, build and maintain the necessary capacity and capability to authorise and supervise such schemes? This is highly technical stuff but with a lot at stake. How is the regulator going to be able to manage it?

Next, I want to turn to the fit and proper person test for trustees. These regulations, in Regulation 8 and Schedule 1, together with the code of practice, set tough fit and proper person requirements for assessing whether a person can be a trustee of a CDC scheme, especially around skills, knowledge and experience. I am clear about the importance of ensuring that members’ interests are protected by an informed, knowledgeable and balanced team of trustees. However, the detail in the draft code leads me to ask a couple of questions. Is the Minister at all worried that the bar is perhaps set too high for committed and conscientious member-nominated trustees to meet? Is it perhaps the policy intention to squeeze out member-nominated trustees from single or connected employer CDC schemes? Is it perhaps the intention to have CDC schemes run only by professional trustees?

I realise that the scheme rules are complicated but, if schemes end up relying increasingly on professional trustees, that potentially brings a different risk: groupthink. Corporate trustees are more likely to come from the industry and may be more concerned with compliance than looking beyond it to see emerging risks. Further, a single employer or connected employer CDC scheme is established under an irrevocable trust by an employer. Could the terms of such a trust fetter the discretion of the trustees to a point and remove the chair of trustees?

Then there is the key issue of financial sustainability, about which my noble friend Lady Drake asked some crucial questions to which the Committee needs clear answers today. I am going to go back a little in history and remind the Minister of a couple of exchanges during the passage of the Bill. I must say, I was a lot more articulate in my head at the time than I was when I read it in Hansard afterwards; it is amazing how much less impressive it is when one reads it later, but bear with me. In Committee, I put this to the Minister:

“I think I understood her to say that the regulator would not approve a scheme unless the sustainability criteria had been met and that they could be met only if an adequate amount of money was placed in, for example, escrow. Is she saying that a scheme would be approved only if the regulator was satisfied that enough money had been provided up front by the sponsoring employer to fund the continuity options in the event of a triggering event?”


She replied:

“The answer to the question asked by the noble Baroness, Lady Sherlock, is yes, the money would be in an escrow account if needed.”


I pressed her further and asked:

“So could it never be the case that in the event of a triggering event, such as a wind-up, an employer pulling out or an employer downsizing, money would have to come from members’ contributions to fund the continuity option?”


The Minister’s answer was clear. She said:

“The answer to that question is no, it should not be.”—[Official Report, 24/2/20; col. GC 18.]


How can we be assured of that?

My noble friend Lady Drake had an exchange with the Minister on the same issue on Report. I hope that the Committee will bear with me if I quote again briefly. The Minister said:

“For the financial sustainability requirement at Clause 14 to be met, the trustees must provide evidence that they can access sufficient financial resources to cover the costs associated with setting up and running the scheme, as well as those associated with dealing with triggering events. If the regulator is not satisfied about the security of these resources and that they can be accessed as needed, the requirement will not be met and the scheme will not be authorised. It may well be that, in the early days of a CDC scheme, initial funding comes from the employer, but our approach does not just rely on employer-provided financial support; it enables trustees to draw on other options, including funds held in escrow, insurance policies or contingent assets. These should be available to cover any costs arising from a triggering event.”—[Official Report, 30/6/20; cols. 604.]


That raises a key question: how can the Minister assure the Committee that there will always be enough money available to meet the cost of a triggering event and implement the continuity strategy without recourse to members’ funds, as she promised on Report? Despite all our pressure, the Government chose not to require the reserves to be more obviously ring-fenced, as in a master trust. As my noble friend Lady Drake has pointed out, the requirements in the regulations and the draft code are pretty soft and unspecific. I look forward to hearing the Minister’s answer to her question as to whether there will be hard triggers—such as ratios—when we come to make those assessments.

I have gone on quite a bit but I think this is incredibly important. A lot of people will read this record—more than the number in this Room—because huge amounts of money will be at stake. If the Minister is asking the House in due course to pass these regulations, it is really important that we get some concrete reassurances on the safety of those members’ assets.

Finally on this issue, can the Minister assure the Committee that, when moves are made to extend the CDC authorisation to unconnected multi-employer schemes or commercial master trusts operating CDC schemes, the financial sustainability requirements will be more robust, given the nature of the risks and the increased scale that would bring?

The Pension Schemes Act 2021 created a whole new kind of pension scheme. That does not come along very often. These regulations are the only chance that the House of Lords will have to gain clarity on how those schemes will operate and how members’ assets will be protected. I therefore really hope that the Minister has come armed with some detailed answers. I look forward to her reply.

[Baroness Stedman-Scott (Con)]

My Lords, I thank all noble Lords for their helpful contributions to this debate. Before the noble Baroness, Lady Sherlock, raised it, memories came flooding back of our discussions on the Bill, which were lengthy and in depth.

I start by raising the points made by all noble Lords; I will try to answer at the level and detail for which the challenge has been set down. The noble Baronesses, Lady Janke and Lady Sherlock, asked how we will ensure that the CDC scheme has sufficient financial resources to cover the cost of operating the scheme if things go wrong. As part of the financial sustainability and continuity strategy authorisation criteria, the scheme must show how members will be protected against impacts, including costs, if a triggering event occurs, and must satisfy the regulator that there are sufficient protections. The financial sustainability requirements include demonstrating that there are sufficient financial resources to cover the cost of establishing and operating the scheme as well as costs arising from addressing a triggering event. This must be available to be used as and when needed.

If the regulator is not satisfied that the criteria are met, it must not authorise the scheme. The scheme will also need to satisfy the regulator on an ongoing basis that it continues to meet the authorisation criteria; for example, if the costs associated with addressing a triggering event change, the scheme must be able to show that it has sufficient resources to cover this. The regulator can require information relevant to the authorisation criteria to be included in a supervisory return. It is a significant event if the scheme is unable or unlikely to be able to meet the cost of a triggering event occurring.

Again, the noble Baronesses, Lady Janke and Lady Sherlock, raised the appointment of trustees and asked how we will ensure diversity on the board of the trustees. Our primary focus is on ensuring that trustees in all occupational pension schemes meet the standards of honesty, integrity and knowledge appropriate to their role. The regulator’s draft code of practice, published in January, sets out that trustee boards should have policies on diversity and inclusion, including objective selection criteria, and should demonstrate that they have the ability to capture, process and monitor data on diversity and inclusion. This would need to be demonstrated to the regulator for it to be satisfied both that the scheme satisfies the authorisation criterion and that the scheme’s systems and processes are sufficient to ensure that it is run effectively. The regulator will continue to supervise trustee action in this area and has established a working group to look at data, research, best practice, practical tools and employer engagement. We will look at the outcomes from the working group and consider what measures are needed.

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[Baroness Sherlock (Lab)]

I apologise, I was not clear enough. My question is not about diversity in the sense that it is mostly understood; I was specifically asking whether the requirements had been framed in such a way as to be too difficult for member-nominated trustees to meet, with the effect that they would be driven out in favour of corporate trustees, which would lead to us not having a diversity of views. I was not referring to the other, more traditional, understanding of diversity.

[Baroness Stedman-Scott (Con)]

The point is very well made. We will have to work with member trustees to make sure that they are trained and that they understand the requirements prior to taking on responsibilities. I will consult my colleagues and answer in more depth in writing.

The noble Baroness, Lady Sherlock, asked whether the policy intention is to squeeze out member-nominated trustees from single or connected employer CDC schemes. The answer is no. She also asked whether the intention is to have CDC schemes run wholly by professional trustees. Again, the answer is no. She also asked a further question: “A single employer or connected employer CDC scheme is established under an irrevocable trust by an employer. Could the terms of such a trust fetter the discretion of the trustees to appoint and remove the chair of trustees?” I am advised that this is not the case and that there is no change from other schemes.

The noble Baroness also asked whether I can assure noble Lords that there will always be enough money available to meet the cost of a triggering event. As part of the financial sustainability and continuity strategy authorisation criteria, the scheme must show how members will be protected against impacts, including cost, if a triggering event occurs and satisfy the regulator that there are sufficient protections. The financial sustainability requirements include demonstrating that there are sufficient financial resources to cover the cost of establishing and operating the scheme, as well as costs arising from addressing a triggering event. They must be available to be used as and when needed. If the regulator is not satisfied that the criteria are met, it must not authorise the scheme.

The scheme will also need to satisfy the regulator on an ongoing basis that it continues to meet the authorisation criteria. For example, if the costs associated with addressing a triggering event change, the scheme must be able to show that it has sufficient resources to cover them. The regulator can require information relevant to the authorisation criteria to be included in a supervisory return. It is a significant event if the scheme is unable or unlikely to be able to meet the cost of a triggering event.

The noble Baroness asked about member-nominated trust rules applying to CDC schemes. Generally, trustees are required to ensure that arrangements are in place and implemented that provide for at least one-third of trustees or at least one-third of directors at the trustee company to be member-nominated.

The noble Baroness, Lady Sherlock, asked would— I apologise, I am struggling to read this piece of paper. I will write to the noble Baroness and place a copy in the Library so all noble Lords understand.

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[Baroness Drake (Lab)]

Before the Minister sits down, I am conscious of not going back to a supplementary question, so will be quick. On the small pots problem, I understand why it was said that it is not anticipated with, for example, nursery schemes, but we do not know what every scenario will be. I was seeking an assurance that these regulations do not set a precedent for removing de minimis protection for small pots, where needed. That is what I was looking for. I can see why a nursery scheme would address that, but it may not be the only solution.

I think I heard the Minister say that the regulator can consider the impact on existing sections when considering the authorisation of a new section, but could that be made clear in any letter? It is inevitable, as night follows day, that employers will want to change their pension arrangements at some point. This is just to be clear about the consequences, not to argue against what she was saying.

[Baroness Stedman-Scott (Con)]

On the two points just raised by the noble Baroness, Lady Drake, the answer to the first is no, and we will write to the noble Baroness on the regulator and the sections and place a copy of that letter in the Library. I commend these regulations to the Committee and ask for approval to implement them.

Motion agreed.

State Pension Underpayments and Arrears for Women

Baroness Stedman-Scott Excerpts

Monday 21st February 2022 Lords Chamber

[Baroness Altmann]

To ask Her Majesty’s Government what progress they have made in correcting State Pension underpayments and arrears for women; what is their latest estimate of (1) the number of women who have had their State Pension increased so far, and (2) the proportion of the total affected by underpayments that this represents; and what steps they are taking to ensure such errors do not occur again.

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

Between 11 January 2021 and 30 September 2021, 38,507 cases were reviewed, 9,491 underpayments identified and arrears of £60.7 million made. We cannot break this down by gender. A further update will be published around the time of the next fiscal event. The department has undertaken steps to prevent future error, including changes to the checking approach, additional learning for staff and, as a failsafe, regularly running a scan to pick up any cases that may have been missed.

[Baroness Altmann (Con)]

I thank my noble friend for her helpful response and for her department’s work. I have two questions: please could she explain why interest is not being added to back payments, as it was earlier for women whose underpayments were corrected after these official errors? Also importantly, I understand that the poorest women are at risk of losing benefits or social care funding when an arrears lump sum exceeds, for example, the £23,250 social care capital disregard. Most of these pensioners probably needed higher pensions and would also almost certainly have spent the money in past years but now risk the arrears being taken back in care fees straight after finally receiving the money. Will the Government consider introducing regulations—as happened after the Manchester bombing—requiring local authorities, to disregard these specific state pension back payments, not future higher pensions, from financial assessments for social care funding or means testing?

[Baroness Stedman-Scott (Con)]

Consistent with other large-scale LEAP exercises, special payments under the DWP discretionary scheme are not routinely made to those who have been underpaid state pension. However, under exceptional circumstances, such as where severe distress has been caused by the way an individual case has been handled, a case may be referred for consideration of a special payment.

On the point that my noble friend raises on social care and the impact of back payments, where a local authority charges a person for their care and support, regulations set limits below which a person’s income and capital must not be reduced by changes. Local authorities may take most of the benefits people receive into account unless it is specifically required to be disregarded by regulations. The responsibility for interpreting and applying the regulations and guidance tests rests with local authorities. I will take the point about legislation back to the department and write to my noble friend.

[Baroness Smith of Basildon (Lab)]

My Lords, that was quite a long response, but I think the short version is no—the Government are not going to make any special arrangements. The point was made very clearly by the noble Baroness, Lady Altmann, that these people, particularly women, were in very straitened circumstances and suffered and paid a high price for not receiving the pension to which they were entitled. Can the Minister reconsider this? This is a case where the Government got it wrong. Surely some special action should be taken to properly correct the errors that were made.

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a very good point. All I can say at the moment is that the Government do not have any plans to change. However, I will take the point back to the department, because it is a very fair one.

[Lord Forsyth of Drumlean (Con)]

My Lords, should my noble friend not be taking the point back to the Treasury? Is this not an example of the Government hiding behind the skirts of local government? The Government provide guidance to local authorities; why can they not provide guidance saying that they should disregard these payments?

[Baroness Stedman-Scott (Con)]

I am very happy to take the point back to the Treasury, although I would not hold my breath—I will probably get told off for saying that. But again, I will take the point back to the department. My noble friend has made the point very clearly, as has the noble Baroness.

[Lord Rooker (Lab)]

Let us get some gender into this. The noble Baroness talks about “people” and “persons”, but we are talking about women. When was the last time tens of thousands of men were short-changed with their pension? I do not recall that happening. When the Government took their long-term holiday from paying into the National Insurance Fund, they deprived hundreds of thousands of women of the pension that they were entitled to. Why cannot that be redressed?

[Baroness Stedman-Scott (Con)]

My Lords, I have no idea about underpayments to men. In terms of underpayment to women, we are doing an exercise; we are going through the whole system to work out who should have had the money and we will get it to them as quickly as possible.

[Baroness Janke (LD)]

My Lords, the Government have explicitly ruled out divorced women from this exercise, yet divorced women’s pensions are really complex and the scope for error is huge. Does the Minister agree with me that to discriminate against divorced women in this way is indefensible? When will the Government act on this, as the Public Accounts Committee recommends, and put an end to such obvious injustice and discrimination?

[Baroness Stedman-Scott (Con)]

Even if somebody is divorced, their ex-husband’s contributions to NI will still be taken into account when deciding their pension award. That has always been the case and it will be the case on this.

[Baroness Wheatcroft (CB)]

My Lords, when more than £60 million that should have been paid has not been paid, surely somebody should be held responsible in the end for that error. In the private sector, the sum of £60 million would be taken very seriously. Can the Minister tell us, therefore, who was ultimately responsible for this failure to pay such a large sum of money?

[Baroness Stedman-Scott (Con)]

The shortfall or underpayment was identified as a result of a marker on the computer system not working correctly. We put it right and we are doing our best to pay people what they should have. It should not have happened, but ultimately the Government must take responsibility.

[Baroness Fookes (Con)]

My Lords, given that many of the people involved are particularly vulnerable and poor, what steps are the Government taking to ensure that those people are prioritised? Government departments do not have a good historical record in ensuring that people who suffer at the state’s hands get redress very speedily.

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[Baroness Stedman-Scott (Con)]

I would like to take the opportunity to wish my noble friend a very happy birthday. To answer her question, resolving these errors is a priority for the department. We are committed to doing so as quickly as possible. We have started by reviewing cases where the individual is alive; in doing so, we are initially focusing available resources on older cases and on those people whom we believe are most likely to be vulnerable.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, in her response, the Minister indicated that various steps had been taken by the department to put things right. That was welcome, except that the Public Accounts Committee made a series of very specific recommendations to the department in its very damning report. Can the Minister tell us exactly how much progress has been made specifically on those recommendations? If enough progress has not been made, will she ensure that she reports to the House on just how much the department is monitoring them?

[Baroness Stedman-Scott (Con)]

The department is considering the content of the report, including the recommendations. As is the case for reports such as this, the Government will provide their response to the House in due course through the publication of a formal Treasury minute. Until then, it is not appropriate for me to comment any further on the report, but I am prepared to make a commitment that, when such a decision is made and the response is ready, I will make sure that all noble Lords are appraised of it.

[Baroness Ludford (LD)]

My Lords, one of the points made in this very critical report last month by the Public Accounts Committee was that the DWP lacked any plan to contact the next of kin of deceased pensioners who were shamefully short-changed. Can the Minister tell me what is happening on that score? On the question from the noble Baroness, Lady Altmann, will the Government ensure that any sum ever paid—we live in hope—is not taken into account for, for instance, inheritance tax purposes?

[Baroness Stedman-Scott (Con)]

My understanding of the situation is that, where people have died, a payment will be made to their estate to make up for the underpayment. I cannot tell the noble Baroness when that will happen, but the department will be communicating with and contacting the various people. I have already given an answer in relation to the underpayment and the impact on other benefits and costs.

Benefit Sanctions on Jobseekers

Baroness Stedman-Scott Excerpts

Thursday 3rd February 2022 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the impact of their policy to impose benefit sanctions after four weeks rather than three months if an unemployed jobseeker fails to seek or take work in any field; and whether they will publish their evaluation of the effectiveness of such sanctions.

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

No assessment has been made. We are not changing the reasons why we may apply a sanction, including refusing to take a job that has been offered, nor the rates applied. As part of the Way to Work campaign, we are changing the period in which a claimant can limit their job search to their usual occupation to promote wider employment opportunities, supporting people into work more quickly. As the noble Baroness knows, we no longer plan to publish a report.

[Baroness Lister of Burtersett (Lab)]

My Lords, given the general view that tougher sanctions will have only a limited impact on labour supply in today’s market, the inability of the Government’s evaluation to assess their deterrent effect, the independent evidence that they typically push people out of the formal labour market or into poor jobs at the cost of longer-term better-quality jobs, and that they are associated with serious hardship and ill health, what justification is there for introducing a significantly harsher policy now without even public consultation?

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[Baroness Stedman-Scott (Con)]

I make it absolutely clear that we are not having tougher sanctions. We are reducing the period for which people can look for usual work, as I said. I went to Hastings jobcentre last week, and it was busy helping people to look for work. There were employers in there doing interviews, not rubbing their hands saying, “We can sanction more people”. The whole Jobcentre Plus network is enthralled by this new opportunity. We will be helping people to get a job quicker, but we will not stop helping them to get a job in the field they want to be in.

[Lord Lamont of Lerwick (Con)]

My Lords, I appreciate what the Minister said—the Government are altering not the sanctions, merely the period of time—but I confess to being surprised when I heard this. A month seems a very short period in which to expect somebody to find work in their usual area. Could it not be extended a bit?

[Baroness Stedman-Scott (Con)]

The decision about the four-week period has been made. I can go back and say that noble Lords would like it to be longer, but that will probably not come as a surprise to the Secretary of State. The other factor is that we are inundated with employers wanting to recruit people to their workforce. In my experience, you are much more able to get the next job if you are in a job, than if you are sitting looking for jobs that do not exist at the moment.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, as my noble friend Lady Lister said, there is no evidence that sanctions are effective in encouraging people into sustained long-term work. As universal credit statistics show, new claimants flow quickly off. In view of this, will the Minister ensure that the Government adopt the safety valve of preparing people with independent advice before bringing in these sanctions? What action will the Government take to publicise and inform claimants of the easement regime, which can protect people from such sanctions, notwithstanding what the Minister has said already? A month is a sanction.

[Baroness Stedman-Scott (Con)]

Sanctions apply only if claimants do not comply with their agreed requirements for no good reason. That is not changing at all. If claimants refuse to apply for roles, attend interviews or take up paid work without good reason, they can be referred for a sanction. If a claimant disagrees with the sanction decision, they can ask for it to be reconsidered. We have a well-established system of hardship payments available as a safeguard if a claimant demonstrates that they cannot meet their immediate and most essential needs due to a sanction.

[Baroness Fookes (Con)]

My Lords, if a sanction is applied, what arrangements are there for someone who feels unfairly treated to ask for redress? In particular, is it simple or will they have to run through a whole series of bureaucratic hoops?

[Baroness Stedman-Scott (Con)]

Building on the answer that I just gave the noble Baroness on the opposite Benches, if a claimant disagrees with their sanction, they can ask for the decision to be reconsidered and can subsequently appeal against it. There are hardship payments. To emphasise the point, I rang a district manager this morning and said, “Tell me about this Way to Work”. She said, “We love it. We’re very excited about it, we’ve never had so many jobs, and the last thing in the world we want to do is sanction somebody in this environment”—and I believe her.

[Baroness Meacher (CB)]

My Lords, the Minister referred to the inundation of employers, and I can imagine that, but has any work been done to assess the willingness of employers in different sectors to take on people with no experience in that sector? It is very important that workers on the front line understand.

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a very good point. The work coaches are well trained and their relationship with employers is gathering momentum. In fact, I heard today that employers are more prepared to take people with no experience in their industry and in fact are also considering taking people they would not normally have taken, such as ex-offenders and those with autism. So, yes, I agree.

[Baroness Sherlock (Lab)]

My Lords, let us take a step back. What the Government are doing is saying to somebody who has lost their job, “If you don’t get back into your own field within four weeks, you should go and find any job and get in there fast”. The Government put out a massive press release last week saying, “We’re going to get half a million people into over a million vacancies”, and the centrepiece was the idea that you could be sanctioned within four weeks—ironically, before you even get your first universal credit payment, which takes six weeks.

Given that only 3% of universal credit claimants are even in this category—and given that all the evidence shows that most of them get back into work really quickly anyway—rather than blaming people who have lost their jobs, why not focus on long-term unemployment, people leaving the labour market and people retiring early? Let us concentrate on the real problems. Would that not be a better idea?

[Baroness Stedman-Scott (Con)]

I am afraid that on this occasion I cannot quite agree with everything that the noble Baroness said, or indeed the sentiment in which it was said. That will come as no surprise to people. The fact is that we have been working with long-term unemployed people to try to overcome their barriers and put solutions in place. I say again that when someone does not have a job and they cannot get one within the field that they are used to and skilled in, their skills can be applied to other sectors, so they can take jobs and be in work and then, when a job comes up in the field they want, we can help them apply for it. So I do not hold with what the noble Baroness says.

[Baroness Pinnock (LD)]

Putting pressure on people to take jobs with the threat of benefit sanctions has a known link with deteriorating mental health. Indeed, some medics have pointed to a link between benefit sanctions and suicide. In the past, the Government have refused to assess that impact and publish the results. Will the Minister now look at that evidence and make sure, for transparency’s sake, that we all see it?

[Baroness Stedman-Scott (Con)]

Let me go to the point about the publication of the evaluation and so on. We committed to using UC administrative data to look at the impact that a sanction has on an individual. However, durations could not be compared as we did not have robust legacy data and could not develop counterfactual information without legislative changes to allow for the testing of different approaches. Therefore, we were not able to do it and come up with a meaningful comparison.

I understand exactly the point that the noble Baroness made about mental health. Our work coaches are trained in mental health and to watch out for people. As I say, the last thing they are going to do is threaten people. It is only when there is no good reason for turning down an opportunity that a sanction will be imposed. Sanctions are running at 0.78%, which is lower than pre pandemic.

[Baroness Seccombe (Con)]

My Lords, some people seem to find great difficulty in securing a job, so what has been done by the Government to help these people to secure employment?

[Baroness Stedman-Scott (Con)]

I am pleased to say that the Government have doubled the number of work coaches. They are spending more time with people, finding out in more depth the issues that are stopping them working and putting interventions in place to help them overcome their barriers. We have our plan for jobs programme. More and more employers are coming into jobcentres to interview people, understanding the barriers that people face. When all is said and done, we are doing a lot for people.

Underpayment of Benefits: Compensation

Baroness Stedman-Scott Excerpts

Tuesday 18th January 2022 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, a vulnerable person with multiple health needs recovering from a heart bypass was left for years living on half the money she was entitled to when the DWP moved her on to ESA, which also stopped her getting free prescriptions and other passported benefits. The ombudsman looked into her case and reported that Ms U, as she is known, could not afford to eat properly or heat her home, and that:

“Her mental and physical health declined drastically”.


Over 118,000 other people were similarly affected. The DWP eventually paid arrears but is refusing to pay compensation. The ombudsman recommended it paid compensation

“in recognition of its error and the potentially devastating impact it has had on people’s lives.”

When this matter was debated in the Commons last week, the Minister in the other place said that the Government had published the previous Thursday an update of these cases on GOV.UK. I have searched GOV.UK, as has the Library, and have found no such documentation, so I am dependent on the Minister to answer these two questions. First, can she say whether the DWP has now complied fully with the ombudsman’s recommendation to pay Ms U £7,500 in compensation and interest on her £19,832 of arrears? Secondly, will the Government also follow the ombudsman’s recommendation to provide remedies to the others who have suffered injustice or hardship as a result of the same maladministration?

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

I will go back to the department and check the first point that the noble Baroness raised. This situation is appalling and awful, and I apologise to all those affected on behalf of the Government and the department. I can confirm that Ms U has had a £7,500 compensation payment and a further payment of interest on the benefit arrears payment of £19,832. There is little more that I can say about her, other than that we have complied completely with the PHSO’s point.

On others affected—and I understand the depth of feeling on this—the department has a discretionary scheme that allows special payments to be made to customers to address any hardship or injustice caused by DWP maladministration. Consistent with other large-scale LEAP exercises, special payments under the DWP discretionary scheme will not routinely be made. There is no legal requirement to make special payments as the scheme is discretionary. However, as the Minister for Welfare Delivery said in the other place on Thursday, if anybody believes that they are a special case, they are quite free to make representation to the department.

[Baroness Janke (LD)]

My Lords, as has already been said, this woman has suffered appallingly through maladministration. The Minister did not really address the point about compensation, which the ombudsman’s report specifically asked the DWP to reconsider. Would she look at that again and perhaps come back to us on it? The report also points out that the DWP has put aside its own guidance in the remedy it is offering—so it does seem that the DWP needs to look at this report again.

The noble Baroness, Lady Sherlock, mentioned the very many others affected by these circumstances. Mention was made in the other place of the DWP not having had time to consider this report fully. Will the Minister take back the points we have made here and address in particular the point about compensation, and will she come back to us with a considered response from the DWP to the recommendations in the ombudsman’s report?

[Baroness Stedman-Scott (Con)]

I really thought that I had confirmed the situation about Ms U. She has had an unreserved apology. We made a £7,500 compensation payment. We paid the benefit arrears of £19,832.55 and gave money for interest. I think that I have been very clear about that. On the issue of compensation to others, again, it is a discretionary scheme, but I re-emphasise that if anybody believes that they have a special case, they can make representation. I think that clears the way.

[Lord Cormack (Con)]

My Lords, should it not be axiomatic that where somebody suffers as a result of maladministration there is automatically compensation? This is not a criticism of my noble friend, who is the most kind-hearted of people, but we must have compensation if maladministration is the cause of suffering.

[Baroness Stedman-Scott (Con)]

I thank my noble friend for that intervention. I have shared with the whole House the legal position on compensation when it is a LEAP scheme. The PHSO has let the department know what he thinks should happen. I have told noble Lords what the legal position is, and I know that the department needs to respond to the PHSO. When it does that, I am sure that the whole House will be made aware.

[Baroness Ritchie of Downpatrick (Lab)]

My Lords, of equal distress to people is the issue of overpayments in the benefits system, which is allied to the issue of underpayments. What measures will the Minister take, along with ministerial colleagues in the DWP, to restore confidence in the benefit overpayment recovery waiver system—a write-off system that would help people so that they are not forced to pay back money they do not have?

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a very fair point about overpayments. When letters arrive in the post saying, “You owe me X and you’ve got to pay it back”, they do cause distress. I do not argue with that point at all. We have a team that deals with customer interface. It is trying to make the system better all the time. I will go back and speak to the official responsible for that particular sphere of our work and, if it is acceptable to the noble Baroness, I will write to her to see what comes of that discussion.

[Baroness Drake (Lab)]

My Lords, I refer to the Minister’s comment about payment of compensation to others being discretionary with a quote from the ombudsman:

“If Ms U’s decisions were typical, DWP will have declined to make others special payments on wrongly applied grounds, will have told them they could not complain to its Independent Case Examiner and will not have told them about the Ombudsman. That means that likely routes for such evidence were closed off.”


In the face of that clear statement from the ombudsman, how can the Government continue to refuse to commit to paying compensation to all other victims of the same maladministration?

[Baroness Stedman-Scott (Con)]

I can only tell the House the position of the department. I understand completely the situation and the depth of feeling about compensation for others, and I have to leave that to the Minister for Welfare Delivery and others in the department to consider, although there is no need to. As I say, if people feel that they are a special case and have experienced the same things as Ms U, we would want them to make their case.

[Baroness Fookes (Con)]

My Lords, when something terrible happens, the cry goes up: “This must never be allowed to happen again.” Is the department making investigations to see how the error occurred in the first place and how it can be avoided in the future?

[Baroness Stedman-Scott (Con)]

When things like this do happen, they are awful and nobody is proud of them, but I am very pleased to say to my noble friend that the team responsible is looking at what happened and putting in place processes that will ensure that, God forbid, this never happens again.

[Lord Davies of Brixton (Lab)]

My Lords, I take this opportunity to remind the Minister, the noble Baroness and the House of the underpayment of pension to widows and widowers. This is representative of some systematic problems within the department. Will the Minister be reporting to the House on the issue?

[Baroness Stedman-Scott (Con)]

I am not aware of the facts of the underpayment of the widows’ and widowers’ pension, but as I always try to answer in full, I will go back to the department, find out if there is any correlation and write to the noble Lord.

State Pension Age

Baroness Stedman-Scott Excerpts

Tuesday 18th January 2022 Lords Chamber

[Baroness Bryan of Partick]

To ask Her Majesty’s Government what consideration they will give to the latest Office for National Statistics’ projections for (1) life expectancy, and (2) healthy life expectancy, when reviewing the state pension age.

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

The department launched the second review on state pension age in December 2021. It must be published by May 2023, in accordance with Section 27 of the Pensions Act 2014. The review will be informed by two independent reports and will consider a wide range of evidence. This will include consideration of the latest Office for National Statistics projections for life expectancy and healthy life expectancy. Tempting though it is, we must wait for the report to come out before we comment.

[Baroness Bryan of Partick (Lab)]

I thank the Minister for that response and the point she makes that the ONS projections seem to confirm that life expectancy is no longer increasing. As it is, the people most dependent on a state pension are more likely to have a shorter life expectancy than those with additional pension provision. Many will die before they reach retirement age or will receive their state pension for only a few years. Does the Minister accept that a fair pension scheme must take account of the life expectancy and healthy life expectancy of people in deprived areas—not just a broad average across the board? Can she assure us that the Government’s review of the state pension age will take that into account?

[Baroness Stedman-Scott (Con)]

The noble Baroness makes a number of important points. We want a fair pension system, and her points about life expectancy, particularly in some of the poorer areas of the country, are valid. On the review, I know that my noble friend Lady Neville-Rolfe will want input from Members of this House who are concerned and who have expertise, and I encourage the noble Baroness to make sure that those points are made to my noble friend when she carries out her review.

[Lord Lilley (Con)]

Has my noble friend considered the conclusion of the Office for National Statistics that:

“Over a 20-year period the estimated change in deaths associated with warm or cold temperature was a net decrease of 555,103 … A decrease in deaths from outcomes associated with cold temperature greatly outnumbers deaths associated with warm temperature”?


Is it not good news that climate change has prolonged or saved the lives of more than half a million of our fellow citizens—

[Lord Lilley (Con)]

—a laughable matter to the Liberal Benches over there—and how long does she expect this beneficial effect to continue?

[Baroness Stedman-Scott (Con)]

My noble friend has again given us some interesting facts and data. I am afraid that the impact of climate change is way outside my brief, but I am sure everybody notes the points made.

[Lord Davies of Brixton (Lab)]

My Lords, the Minister quite rightly referred to the ongoing reviews, but I simply ask, as a matter of logic, that, if the policy is that because people are living longer, retirement age should increase, is it not the necessary corollary that if people are not living as long as previously expected, retirement age should not be increased in the same way?

[Baroness Stedman-Scott (Con)]

I will not argue with logic; that would not get me anywhere. On the noble Lord’s point about the state pension age, I know that people are sceptical of government reviews, but I ask all noble Lords to approach it in a positive way, make their points—particularly the one raised by the noble Lord—and get them into the review.

[Baroness Janke (LD)]

My Lords, around 1.5 million low-paid workers pay a 25% penalty for their pension savings. When will the Government publish the outcome of their call for evidence on pensions tax administration to enable low-paid workers, who are typically women, to receive pensions tax relief on their contributions?

[Baroness Stedman-Scott (Con)]

Many noble Lords have made this point, including the noble Baroness, Lady Drake, and my noble friend Lady Altmann. The truth is that I do not know when they will do it, but I will go back and find out, and will write to the noble Baroness.

[Baroness Jenkin of Kennington (Con)]

My Lords, women are disproportionately affected by pensioner poverty. What are the Government doing to support and help them?

[Baroness Stedman-Scott (Con)]

Since 1994-95, rates of female pensioners in poverty, by all measures, have fallen by a larger amount than rates of male pensioners in poverty over the same period. The proportion of pensioners in absolute poverty, after housing costs, has halved since 2002-03. Pension credit is the safety net—I know that will open the floodgates for a raft of other questions—and we must make sure that as many people as possible apply for that benefit.

[Baroness Sherlock (Lab)]

My Lords, I cannot let that go: relative poverty among pensioners is on the rise again, having fallen considerably for years. However, controversially, I will come back to the Question. The latest ONS tables show that life expectancy at birth in the UK is 79 for men and 83 for women. But life expectancy is lower in Wales and Northern Ireland, and especially Scotland, than it is in England. What are the Government doing to engage with the devolved Administrations, and how might pension policy take account of that?

[Baroness Stedman-Scott (Con)]

I hope that, during the review, the devolved Administrations will be consulted. I will certainly go back to the department and speak to the Secretary of State to make sure that that is included in the review. The review will then report, and the noble Baroness will get the answers that she is looking for.

[Baroness Altmann (Con)]

My Lords, I am delighted that my noble friend Lady Neville-Rolfe will be leading an independent inquiry. Can my noble friend the Minister assure the House that some flexibility in state pension age will be considered for those who are not healthy and wealthy enough to wait for the ever-rising state pension age? With a significant, 20-year difference in healthy life expectancy across the country, perhaps very long national insurance records might be considered for early access to the state pension.

[Baroness Stedman-Scott (Con)]

As I have said many times, I cannot give any guarantees, but I am absolutely sure that the points my noble friend raises about flexibility and age will be included in the review. I urge her to take part in that consultation.

[Lord Sikka (Lab)]

My Lords, poorer people tend to die at a younger age than richer people. Each increase in the state pension age effectively results in a wealth transfer from the poor to the rich, who will receive the pension for many more years. Can the Minister tell the House why the Government have pursued pension policies that penalise the poor and transfer wealth to the rich? Why this reverse socialism for the rich?

[Baroness Stedman-Scott (Con)]

I doubt I will be able to convince the noble Lord, but nobody wants pensioners to be in poverty and nobody wants to run a book on transferring wealth from one place to the other. The noble Lord raises a valid point. I know I am repeating myself, but it is one that I expect will be in the review; knowing how much knowledge the noble Lord has, especially on how to pay for these things, I look for him to have input into the review.

[Lord Flight (Con)]

My Lords, in the last two years, life expectancy has been below the expectancy of the industry. If that continues to be the case, does it mean that slight pension increases could be afforded?

[Baroness Stedman-Scott (Con)]

I imagine that, if things go as my noble friend has just said, that is a possibility, but I am not able to confirm it. Again, I urge my noble friend, who has a raft of experience in this field, to get his point into the review.

[Lord Watts (Lab)]

My Lords—

[Baroness Hayman (CB)]

I am grateful to the noble Lord and declare my interests as set out in the register. Referring to the points made by the noble Lord, Lord Lilley, does the Minister agree that the interaction between health and climate change really warrants a more sophisticated analysis of all the factors involved, rather than the assertions made by the noble Lord in his intervention?

[Baroness Stedman-Scott (Con)]

I can assure the House that my noble friend Lady Neville-Rolfe will pay due attention to the seriousness of the interaction between the points the noble Baroness has raised. I have no doubt that will happen.

Sick Pay

Baroness Stedman-Scott Excerpts

Monday 17th January 2022 Lords Chamber

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

The CIPD report makes a number of interesting points on SSP, many of which had been raised previously by other stakeholders and continue to be assessed by officials. Last year, the Government made clear that the pandemic was not the right time to introduce changes to the rate of SSP or its eligibility criteria. However, as we learn to live with Covid-19, we are able to step back and take a broader look at the role of statutory sick pay. I can confirm to noble Lords and the House that this work is ongoing, but I am not able to give a timescale for when it will be completed.

[Lord Hendy (Lab)]

My Lords, I am most grateful to the Minister for her Answer, but the fact is that nobody can live on £96.35 per week—the rate of statutory sick pay—and the lower earnings limit excludes 2 million workers from receiving even this. Both features pose a public health risk by disincentivising those sick or who should be self-isolating from staying away from work. The report of the CIPD, a highly respected body representing human resource professionals, is formidable. It finds that 62% of British employers think that SSP is inadequate. In the light of that, will the Minister agree to look into increasing the rate of SSP and at the other recommendations? There are too many to summarise now, but they include removing the lower earnings limit, improving employer compliance and including the self-employed.

[Baroness Stedman-Scott (Con)]

I understand exactly the sentiment the noble Lord raises his question with. I can confirm again that work is ongoing to look at the role of SSP and all the CIPD recommendations. As I said, I am not able to give a timeline for this, but I will go back to the department and stress the noble Lord’s keenness to do this work.

[Baroness Fookes (Con)]

My Lords, since we cannot look at this long term, many look at it short term, and in particular at the plight of many businesses, especially small ones, which find it difficult to keep their heads above water in any case and then find that they have workers isolating for Covid-related reasons. Can any help at all be given to firms in this parlous position?

[Baroness Stedman-Scott (Con)]

Throughout the pandemic the Government have demonstrated that they can respond proportionately to the changing path of the virus, in particular through supporting jobs and businesses, and we will continue to do that. As increasing numbers of Covid-19 cases means that more workers take time off and there is an impact on business, the Government are reintroducing the statutory sick pay rebate scheme. That will mean that small and medium-sized businesses can be reimbursed for the cost of SSP for Covid-related absences for up to two weeks per employee.

[Lord Sikka (Lab)]

My Lords, statutory sick pay is around 27% of the minimum wage. Can the Minister please explain why it is set at such a low amount, and can she say whether it is tested on Ministers to see whether they can survive on it? At the very least, that would generate some sympathy for the poor.

[Baroness Stedman-Scott (Con)]

The noble Lord is very eloquent in the way he holds the Government to account. I cannot say that it has been tested on Ministers, but I will go back to the department to understand how that figure has been arrived at and then write to the noble Lord and place a copy in the Library.

[Baroness Sherlock (Lab)]

My Lords, I am glad that the Government are thinking about this, but they have been doing so for a very long time. They have consulted more than once on this but they simply say, yet again, as they did last year, that it is not the right time. If the pandemic taught us anything it is that if you are on low wages, in insecure work or self-employed, you cannot afford to get sick and you cannot afford to do the right thing. Rather than wait for the next pandemic, the next bout of flu or the next difficult infectious disease to hit our country, can we please do something to enable people to do the right thing? We are a rich country; surely people should not have to go to work when they are sick.

[Baroness Stedman-Scott (Con)]

I completely agree with the noble Baroness that people should not be forced to go to work when they are sick, especially with Covid, given the danger of it spreading. I know it probably will not go down very well, but I can confirm that this is in train, and I am dreadfully sorry that I cannot say when it will be done. When I go back and talk to the department about the keenness and urgency of Lord Hendy, I shall certainly add that to the shopping list.

[Baroness Janke (LD)]

My Lords, could the noble Baroness tell us her response to the postcode lottery of the test and trace support payment, revealed in the CIPD report, where 75% of Camden applicants received payments but only 23% did so in Liverpool and just 16% in Sandwell? Could she comment on whether she thinks people in hard-pressed poorer areas are being doubly disadvantaged by the Government’s scheme?

[Baroness Stedman-Scott (Con)]

I can confirm to the noble Baroness that there is no intention on the Government’s part to penalise anybody for where they live. The noble Baroness has asked quite a detailed question and, if it is acceptable to her, I will go away and find out the answer and write to her with it.

[Baroness Blower (Lab)]

My Lords, new analysis from the TUC today estimates that a quarter of a million private sector workers were self-isolating last month with no decent sick pay or with no pay at all. Will the Minister commit to meeting with some urgency with the TUC to move forward on the ideas already expressed from these Benches?

[Baroness Stedman-Scott (Con)]

I am always happy to meet people to learn more and find out exactly the points they are making. I want to find out exactly who in the department is best to do that, and I will come back to the noble Baroness—but a meeting will happen.

[Baroness Lister of Burtersett (Lab)]

My Lords, the Minister said that the pandemic is not the right time to improve statutory sick pay. Given everything we have heard, when is the right time?

[Baroness Stedman-Scott (Con)]

While the pandemic was going on, with businesses under pressure, individuals sick and the NHS understandably struggling, we did not feel it was the right time. I think the noble Baroness is saying to me that the time has come, and that is supported by the noble Baroness, Lady Sherlock, the noble Lord, Lord Hendy, and anyone else who is really worked up about this. I can only go back to the department and do my best.

[Lord Watts (Lab)]

My Lords, the Government say they are committed to levelling up. Given the fact that most high-paid workers will receive their salary when they are off sick but low-paid workers are left with £90-odd a week, is this not a prime example of where the Government could introduce something to level up in this area?

[Baroness Stedman-Scott (Con)]

I am sure the Government appreciate the point that the noble Lord makes. I cannot today give any commitment. I am very sorry, but, as I have said before on numerous occasions, I will go back to the department, where I am sure they will read Hansard with great interest and, I hope, act upon it.

[Lord Lexden (Con)]

My Lords, why not set a deadline for the completion of this important work? Would not that be a measure of the efficient and successful government that we are entitled to expect?

[Baroness Stedman-Scott (Con)]

I really do not think there is any more I can say on the deadline. I cannot give a deadline today, but I will do as I have promised.

DWP: Support for Larger Families

Baroness Stedman-Scott Excerpts

Tuesday 11th January 2022 Lords Chamber

[The Lord Bishop of Durham]

To ask Her Majesty’s Government what assessment they have made of the adequacy of support offered by the Department for Work and Pensions to larger families.

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

No assessment has been made as every household has different requirements. While there is no objective way of deciding what an adequate level of support should be, the department will spend more than £110 billion this year—4.8% of GDP—on working-age benefits. Additionally, the Government offer a wide range of support to families with children depending on their circumstances, including free school meals, childcare, Healthy Start vouchers and the household support fund.

[The Lord Bishop of Durham]

I thank the Minister for her response. According to the benefit changes and large families research carried out by the Child Poverty Action Group with the Universities of York and Oxford and the LSE, the increase in child poverty since 2012-13 has been sharpest among families with three or more children at 47%, compared with 24% for families with one or two children. These families are deeply affected by the two-child limit. They have been severely affected by the £20 cut to universal credit last September and they are less able to increase their working hours due to childcare demands. What are the Government planning to do to address the levels of poverty among larger families while the cost of living is rising steeply?

[Baroness Stedman-Scott (Con)]

The right reverend Prelate is always consistent in raising these important points. To start with, let me say that I quite understand, as do others, the issue of childcare. We must do what we can to try to improve opportunity and facility. The right reverend Prelate asked me what we plan to do. Let me say what we have done. We continue to take action to support living standards by increasing the national living wage and reducing the universal credit taper rate, which has more than compensated for the £20 uplift in UC. We also recognise that some people will need extra help this winter as the economy recovers, so we have made £500 million of funding available across the UK to help. Rather than read out a whole list of things that we have done, let me say that I am sure the Government are doing everything they can to help people in these circumstances.

[Baroness Sherlock (Lab)]

My Lords, I am not so sure. The Government may not have made any assessment of the position of families, but let me give the Minister one assessment. The director of the IFS has said that the cost of living crisis we are facing right now could hit someone on average earnings harder than the financial crash of 2008. Taxes are rising, inflation is soaring and energy prices are going through the roof. Earnings and benefits simply cannot keep up. If the average worker is in trouble, what of larger families? The two-child limit caps what they get and they have already been hit by the £20 limit. They are in the position right now of having to decide whether to feed the meter or feed the kids. What are the Government going to do about that?

[Baroness Stedman-Scott (Con)]

On the two-child policy, families can claim for up to two children and there may be further entitlement for other children if they were born before 6 April. There are also exceptions, but at the end of the day we are trying to make it possible for people who are working to make decisions about how many children they have over affordability. We have no intention of changing the Government’s two-child policy.

[Baroness Fookes (Con)]

My particular concern is with those vulnerable households who are unable to work at all and therefore cannot benefit from the welcome improved take-up. What is my noble friend doing to help that group?

[Baroness Stedman-Scott (Con)]

We recognise that some people may require extra support over the winter as we enter the final stages of recovery. That is why vulnerable households across the country will now be able to access the new £500 million support fund to help them with essentials. We have provided £670 million in 2021-22 for local authorities to support these people. We are investing over £200 million per year in holiday activities. We are increasing healthy-start vouchers. We are establishing a 60-day breathing period and, as I have said before, without reading out a long shopping list, I will say that we are doing a lot to help people.

[The Lord Privy Seal (Baroness Evans of Bowes Park) (Con)]

My Lords, the noble Lord, Lord Jones of Cheltenham, wishes to speak virtually, and I think this is a convenient point to call him.

[Lord Jones of Cheltenham (LD) [V]]

My Lords, every child deserves decent food, shelter and care, and an equal opportunity for good education and healthcare, whatever the size of their family. Leading environmentalists, including Sir David Attenborough, say that the world’s greatest problem is an ever-increasing human population. Do the Government believe that vasectomies provide part of the answer and do they think that male sports stars, celebrities and politicians who have six, seven or eight children should have a vasectomy to set an example and help save the planet?

[Baroness Stedman-Scott (Con)]

Now there is a question—a rather cutting one, if I may say so. It is very important that children have an equal opportunity to healthcare, to education and to opportunities to thrive. I assure the noble Lord and the House that we are doing all that we can—but we know we need to do more.

[Baroness McIntosh of Hudnall (Lab)]

The Minister made an uncharacteristically harsh observation in her response to my noble friend Lady Sherlock when she said that the Government had no intention of changing. She has had put to her a number of ways in which the world has changed since this policy was developed. Does she really think that it is appropriate for the Government to take such an intransigent view at this point?

[Baroness Stedman-Scott (Con)]

I am sorry if my response was harsh. That would never be my intention in this Chamber. However, I believe in being absolutely truthful and I am reporting that the Government at the moment will continue with the two-child policy. But, as ever, if people have other ideas and things they want to talk about, the door is open.

[Lord Bird (CB)]

My Lords, not supporting children in the early stages of their lives will cause a ricochet through the years. We should take into account that fact. I also have to say that my snip came too late as I have five children.

[Baroness Stedman-Scott (Con)]

We do seem to be sharing today, do we not? The noble Lord’s serious point is that unless we deal with things before they become a problem, we bank up problems for the future. That is why early intervention is critical, and why we are working with the Early Intervention Foundation on reducing parental conflicts so that young children can have a better start in life, and the family hubs network is coming in. However, I understand the noble Lord’s point and it is well made.

[Lord Farmer (Con)]

My Lords, the benefit cap level appears the same whether a couple or a single parent heads a household, yet two adults cost more than one. While there are more opportunities to avoid the cap by working if there are two adults, given strong evidence for the health and societal benefits of stable two-parent family structures, what measures are in place to ensure that the benefit cap does not create a couple penalty and discriminate against couple families and children?

[Baroness Stedman-Scott (Con)]

My noble friend again makes a very good point. We understand that where children grow up with parents and healthy support, they do much better and they thrive. But the Government firmly believe that, where possible, it is in the best interests of children to be in working households, and the benefit cap provides a clear incentive to work. Household earnings of only £617 a month provide an exemption from the cap, and exemptions apply for the most vulnerable claimants who are receiving disability benefits or are entitled to carer benefits.

[Baroness Bennett of Manor Castle (GP)]

Following on from the Minister’s answer to the noble Lord, Lord Bird, in which she talked preventing problems, is she aware of the report in Community Care last week on research by academics from Huddersfield and Liverpool which found that, between 2015 and 2020, benefit cuts meant that 10,000 more children had been taken into care and an additional 22,000 children were placed on child protection plans? This disproportionately affected poorer boroughs. In light of levelling up and the desire for prevention, will the Minister look at this report, and are the Government counting the actual cost of these policies in terms of children in care?

[Baroness Stedman-Scott (Con)]

I will certainly look at the report if the noble Baroness will send it to me. We have a grave sense of concern about children going into care and child protection, and I can assure her that we are looking at early intervention. I am very happy to speak to the noble Baroness outside the Chamber.

Gender Pay Gap

Baroness Stedman-Scott Excerpts

Tuesday 23rd November 2021 Lords Chamber

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

I assure the noble Lord that we are continually looking at and assessing the gender pay gap. The national gender pay gap has fallen significantly under this Government and by approximately one-quarter in the last decade. The gap is caused by a range of factors, and reporting regulations have helped to motivate employers and focus attention on how improving equality can happen in the workplace. However, to continue making progress we need to understand in even more detail the real barriers that women face in the workplace and then take action to ensure that everyone has the opportunity to fulfil their potential.

[Lord Sikka (Lab)]

My Lords, the gender pay gap continues to blight the lives of many women, denying them access to good food, housing, education, healthcare, pensions and economic freedoms. I ask the Minister to commit to two things: first, not to award public contracts to organisations that have failed to eradicate the gap and, secondly, to give women a statutory right to know the pay of male colleagues doing equivalent work, with appropriate confidentiality.

[Baroness Stedman-Scott (Con)]

As ever, the noble Lord is very incisive and focused on the things he wants to change. I note the two points that he makes. While I cannot commit to doing them, I will go back to the ranch, tell them that the noble Lord, Lord Sikka, is on the prowl again, and see what they say.

[Baroness Jenkin of Kennington (Con)]

My Lords, I take this opportunity to wish the Minister a very happy birthday.

[Baroness Jenkin of Kennington (Con)]

Guidance from the Government Equalities Office states that employers reporting on the gender pay gap should record their employees’ gender identity, not their biological sex. Some argue that for the vast majority of people, gender identity matches birth sex and that recording employees’ gender identity would therefore have no significant impact on an organisation’s gender pay gap. However, in male-dominated professions such as telecommunications, where fewer than 5% of the workers are female, even a small number of misclassifications can have a significant distorting effect on the data. Does my noble friend agree that this is the case? Will she now review the GEO guidance so that it makes it clear that employers must record employees’ birth sex, not their gender identity?

[Baroness Stedman-Scott (Con)]

Let me be very honest and straight with my noble friend: the Government have no plans to change the guidance. Gender pay is not supposed to be a data-collecting exercise, and to make it so would increase the burden on employers.

[Baroness Stuart of Edgbaston (CB)]

My Lords, the world of work is changing. One of the effects of the pandemic has been more working from home, which I think will continue. There is a real danger that the gender pay gap, rather than being diminished, will actually increase because we will have more people working from home with caring responsibilities, and this will disproportionately affect lone parents and women. What will the Government do, not just to reduce the gap but to prevent it widening?

[Baroness Stedman-Scott (Con)]

The gender pay gap is something that the Government take very seriously. The point that the noble Baroness makes about flexible working and working from home, and the impact that those have on women in particular, is well noted. Flexible working is wide-ranging and includes part time and flexitime, and it can be crucial for opening up opportunities, particularly for women. I cannot give a categorical answer about what we will do other than to say that we are mindful of this in everything we do in the Government Equalities Office. It may be that I come back to the noble Baroness with a bit more detail.

[Lord Davies of Brixton (Lab)]

My Lords, my supplementary question handily spans both parts of the Minister’s multitasking portfolio—an opportunity too good to miss, and a sort of birthday present. Will the Minister acknowledge that one of the biggest consequences of the gender pay gap is the gender pensions gap? Can she therefore outline what steps the Government are taking to address that specific dimension of the problem? When will action be taken to address the acknowledged shortcomings in the benefits that accrued from automatic enrolment for the many women on low pay in broken employment?

[Baroness Stedman-Scott (Con)]

I thank the noble Lord for that wonderful birthday present. Let me just say that auto-enrolment has been a fantastic success, and we want that to continue. On the point he raises about net pay and the pensions gap, the Government are absolutely going to rectify the anomaly. We published a call for evidence. The Government will pay a top-up to low earners, making contributions to pensions schemes using a net pay arrangement, from 2024-25 onwards.

[Baroness Burt of Solihull (LD)]

My Lords, I wonder if the Minister has heard of the book The End of Bias: How We Change Our Minds, by Jessica Nordell, on the incremental, cumulative effect of unconscious bias. Her model found that only a 3% unconscious bias in performative evaluation resulted in 87% of men in the top jobs. It is a shocker, but it explains a lot. If the Minister has not seen it, could she have a look and consider its implications for government policy?

[Baroness Stedman-Scott (Con)]

I wish I had known about this before, because somebody could have bought it for me for my birthday. I will go out and find that book, and I will read it. As for changing bias and the distortions in salaries between men and women, no one needs to push our door on that—we are there. As the good man Sir Winston said, those people who can change their mind can change anything.

[Baroness Thornton (Lab)]

I join other noble Lords in wishing the noble Baroness a happy birthday. Research by the Fawcett Society found that three out of five women who had been asked about salary history believed it damaged their confidence in negotiating better pay and believed a low past salary was coming back to haunt them. Does the Minister recognise that, when companies ask about salary history, it can mean that past pay discrimination follows women, people of colour and people with disabilities throughout their working life? Does she share my concern that this issue means new employers replicate pay gaps from other organisations? Could the Government consider this matter and allow it to be part of the influencing of their policy?

[Baroness Stedman-Scott (Con)]

I completely agree with the noble Baroness. You can sit in front of an employer and tell them what your salary is, and then they think they can get away with paying you just a little bit more. That is not on. I share the noble Baroness’s concerns, and I will feed those back into the policy-making process.

[Baroness Altmann (Con)]

I declare my interest as in the register, and I echo the birthday wishes to my noble friend. Following on from the question from the noble Lord, Lord Davies, I am delighted that Her Majesty’s Treasury will introduce measures to top up the pensions of those women who are receiving lower net pay each week due to the pension choice of their employer. The gender pensions gap is an urgent issue; it is twice the size or more of the pay gap. What measures are the Government taking to ensure employers help to close the gender pensions gap?

[Baroness Stedman-Scott (Con)]

My noble friend has been a long-term campaigner on the gender pensions gap and the net pay issue, and I am glad that we have some good news on the horizon. It was a Conservative Government who introduced mandatory gender pay gap reporting, in 2017, which means that all large employers—those of more than 10,000 employees—have to calculate it publicly. This has placed the gender pay gap at the top of the agenda and prompted conversations with business. Employers are now focused on understanding and tackling the causes of the gaps in their own organisations.

[Lord Dubs (Lab)]

Does the Minister agree—and I ask her to be bold in this instance—that complete transparency of income is the best way of dealing with the gender pay gap and discrimination on the grounds of race and disability? Surely the only answer is that we should have all incomes in the public domain through the tax system; that way we would know who is earning what and where discrimination takes place, and we would also see who is on the fiddle.

[Baroness Stedman-Scott (Con)]

You cannot argue with that. On transparency, I am absolutely with the noble Lord, but the issue of publishing everything on tax and salary is well beyond my pay grade. I will talk to my friends in the Treasury.

[The Senior Deputy Speaker (Lord Gardiner of Kimble)]

My Lords, that concludes Oral Questions for today.

Social Security (Up-rating of Benefits) Bill

Baroness Stedman-Scott Excerpts

Consideration of Commons amendments
Tuesday 16th November 2021 Lords Chamber

Moved by

[Baroness Stedman-Scott]

That this House do not insist on its Amendment 1, to which the Commons have disagreed for their Reason 1A.

1A: Because Lords Amendment 1 would alter the financial arrangements made by the Commons and Lords Amendment 2 is consequential on that Amendment; and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

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

My Lords, I know it will be a disappointment to my noble friend Lady Altmann and others in this House that the Commons has disagreed with Lords Amendments 1 and 2. I ask that this House does not insist on its amendment for two reasons.

First, we have discussed at length the reason why the Government do not believe that they should set a precedent for uprating benefits or pensions using a methodology that is not robust and for which there is no consensus. That would be the position with an adjusted measure of earnings growth, which is why the Government decided to apply a double lock, underpinned by the established consumer prices index, which is published by the ONS. This approach was also recommended by the Social Market Foundation.

Secondly, Royal Assent is needed by 22 November 2021. This will allow the Secretary of State to conduct her statutory review using the new powers in time for the DWP to meet its hard deadline of 26 November for reprogramming its computer systems. This will ensure that the new rates of benefits and pensions are payable from April 2022. While I welcome the intentions behind the amendment, we cannot accept it. That is why I ask that the House does not insist on Amendments 1 or 2. I beg to move.

[Lord Davies of Brixton (Lab)]

My Lords, it is a matter of real regret that the Commons has not accepted the amendments to the Bill proposed by your Lordships’ House, but it is worth taking this opportunity to stress that not only have the Government broken a freely given promise to the electorate but, as has been clearly explained, they have done so totally unnecessarily. They could have lessened, if not avoided, the concern caused by breaking their promise by taking this opportunity to reaffirm clearly their commitment to the earnings element of the triple lock. It baffles me why they failed to do so.

I will not repeat all the arguments, despite the importance of the issue, but I have one more question for the Minister. The problem is that the Government are trying to have it both ways. On the one hand, they say they remain committed to all three elements of the triple lock—prices as measured by the CPI, average earnings and the 2.5% minimum. They want us to believe that this was an exceptional case that justified special rules being applied, and that they still deserve the electoral kudos that comes from standing by their promises. On the other hand, they have in practice made it clear that there are exceptional circumstances in which they can break the commitment.

We know they are prepared to break the triple lock, but we do not know under what conditions. We know what they were in this case; Ministers in this House and in the Commons have explained on several occasions the special circumstances which they believe applied. The noble Baroness the Minister said at Second Reading that

“the effects of the Covid-19 pandemic have caused distortions in the labour market, which have been reflected over two years in highly atypical trends in earnings growth.”—[Official Report, 13/10/21; col. 1847.]

We know the Government believe that highly atypical trends in earnings growth are sufficient justification for breaking the earnings link. We do not know how atypical earnings growth needs to be in future before they decide again to break the link. Can the Minister tell us more about what counts as atypical earnings growth? How atypical does it need to be to justify breaking the promise?

However, it is not just earnings growth that might be considered atypical. What counts as atypical growth in prices? This is not a hypothetical issue. Most of us here have become familiar with what many in this House might regard as consistently low rates of inflation, but who knows what is to come, with the unwinding of quantitative easing and other pressures on the economy? How do we know that the Government, when faced with a significantly higher rate of inflation than we have experienced in the last 25 years, will not decide that this too is atypical?

As I say, this is not hypothetical. Based on the OBR forecast for the Budget, it looks likely that the state pension increase in April 2023, which we will discuss next November, will be based on price increases rather than earnings or the fixed 2.5%. The latest Bank of England forecast, released earlier this month, suggests that next September—the relevant month for measuring the CPI—the increase will nudge 5%. Perhaps it will be higher, given this Government’s lack of economic competence. We do not know. In any event, an increase of this order would be significantly higher than the experience of the last few years. Earlier this year, not long ago, the September 2022 increase was expected to be only around 2%—it could be argued that this is more typical. I do not want to put ideas in the Minister’s mind, but I must ask how atypical the CPI increase next September has to be before it too will be considered atypical enough for the Government to decide that it justifies breaking the Conservative Party’s manifesto commitment to the triple lock?

The Minister needs to tell us that this year’s broken promise is truly a one-off and that the commitment to the CPI-linked increase will be adhered to, whatever next September’s increase. If we are not given such a commitment—which I suspect we will not be—then, in truth, we must conclude that we have a return to decisions about increases in the state pension being made on an ad hoc annual basis. History tells us that the inevitable outcome is that pensioners will suffer.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for introducing her Motion and all noble Lords who have spoken. I am going to get a new T-shirt for Christmas: “Proud to Be an Irritant”. Perhaps they should start selling them in the House of Lords gift shop; they might sell quite well. A nice note for the noble Lord, Lord Desai.

I must say that I am disappointed. The House voted by a healthy majority for the amendment in the name of the noble Baroness, Lady Altmann, which would have kept the link between pensions and earnings. It is worth noting that the amendment won support from around the House, whereas the Government were able to persuade only 13 Members who do not take the government Whip to vote against. The reason is clear: the case was unpersuasive.

The Government came to power on the back of a manifesto commitment to the triple lock, which we also supported at the last election, as did the Liberal Democrats and other major parties. The Government now want to ditch it for next year on the grounds that the rise in earnings over the year to last summer was artificially high as a result of Covid. We accept that earnings growth was distorted as a result of the pandemic, but that does not mean that the Government should just ditch their promises. They could and should have found a way to maintain the earnings link in pensions while adjusting for the Covid effect.

I will not relitigate this but, during the passage of the Bill, we looked at lots of ways we could do it, and lots of constructive suggestions emerged, and in the end the House coalesced around a very reasonable amendment in the name of the noble Baroness, Lady Altmann, with cross-party support, which simply said that the Government should use a figure for earnings chosen

“in the light of reasonable adjustments to take account of the impact of the COVID-19 pandemic based on the Office for National Statistics reported earnings figure.”

It could not have been more reasonable, and it left the Government considerable latitude: we were not telling the other place what to do but simply giving them a chance to think again.

But the Government flat out rejected that. The Pensions Minister in the other place did comment on the merits of the amendment, but he caricatured it by saying that it

“invites the Secretary of State to measure earnings as if they were not actually growing by 8.3%.”—[Official Report, Commons, 15/11/21; col. 359.]

So are the Government now saying that earnings growth actually is 8.3%? If so, why are they ditching the triple lock? And if it is not 8.3%, why did they not take the chance this House afforded them to look at alternatives?

The Minister again mentioned time pressure, so I put to her again a question I put at an earlier stage in the Bill. She told noble Lords there were two reasons why it was so time-critical. The first was that the computers have to be changed by a date—I think it was 26 November, or another date late this month that was the last date that computers could be changed to adjust the rates for next year. She also said that the House will then have to approve the uprating order, which we normally do in the spring. So what happens if they change the computers deep in the bowels of DWP and then the House chooses to reject the uprating order? What happens then?

While we are here, by refusing to look again, we are left with a Bill which will uprate pensions by the CPI inflation rate prevailing last September. Meanwhile, we all know that the costs of things that all pensioners use—food and fuel, for example—are spiralling up. Pensioner poverty is on the rise again. The last Labour Government managed to bring it way down, but it started to rise again in 2012. It is now on the rise and it will get worse yet.

I am sorry to say that this short Bill is a mistake. It steps away from the earnings link and, in walking away from their manifesto commitment for the third time, the Government are breaking trust with the electorate. Why are they so determined to do it? Ministers tell us that it is for one year only. Great, but I worry that their refusal to be creative in finding a way to deal with the fallout from the pandemic raises fears that they really are planning to walk away from this longer term.

My noble friend Lord Rooker is, as always, right. We have done what we can. We have asked the elected House to think again. The Government whipped their people to say that they did not want to do so. I think they are wrong. Pensioners will pay the price for this and they will not likely forget this breach of trust. I hope the Government think it was worth it.

[Baroness Stedman-Scott (Con)]

My Lords, I thank all noble Lords for their contributions. To answer the question put by the noble Lord, Lord Davies, about the Government believing in the long-term earnings link, yes, this Bill is for one year only. After that, it will revert to the current legislation, and state pensions will increase at least in line with earnings. The triple lock will be applied in the usual way for the remainder of the Parliament. We believe that 8.3% is atypical growth, just as we considered minus 1% to be atypical last year, which is why we increased state pensions by 2.5% instead.

Again, to the noble Lord, Lord Davies, inflation is forecast to be higher than 3.1%. Do pensioners not need a higher increase? The uprating order for all benefits will take effect from April 2022 and, last year, pensioners saw an increase of 2.5% when CPI for the uprating review period was 0.5%. Average actual CPI over the first six months of this financial year was lower, at 2.4% at the Budget, and the OBR forecast that CPI would average 4.1% for the second six months of this financial year. If this turns out to be the case in September, the CPI figure will be a good reflection of average inflation over whole of 2021 and 2022.

The noble Lord, Lord Sikka, said that the state pension is the lowest in the developed world and is still below the 1979 level relative to average earnings. This comparison is misleading. There are many factors to take into account: tax systems, healthcare systems, pension ages, cost of living, access to occupational pensions and the availability of other social security benefits, as well as the provision of services and goods free to pensioners or at a concessionary rate. The Government provide considerable additional support for pensioners. People over state pension age are entitled to free winter fuel payments worth £2 billion every year, free eyesight tests, NHS prescriptions worth around £900 million every year, and free bus passes worth £1 billion every year. In addition, the BBC has made provisions so that those aged 75 or over who are in receipt of pension credit are eligible for free TV licences.

To answer the question put by the noble Baroness, Lady Sherlock, if there is no Royal Assent, we need to use the current legislation at 8.3%.

Motion A agreed.

Motion B

[Baroness Stedman-Scott]

Moved by

That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.

2A: Because Lords Amendment 1 would alter the financial arrangements made by the Commons and Lords Amendment 2 is consequential on that Amendment; and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.

[Baroness Stedman-Scott (Con)]

My Lords, I have already spoken to Motion B:

“That this House do not insist on its Amendment 2, to which the Commons have disagreed for their Reason 2A.”


I beg to move.

Motion B agreed.

Social Security (Up-rating of Benefits) Bill

Baroness Stedman-Scott Excerpts

3rd reading
Monday 8th November 2021 Lords Chamber

Moved by

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

That the Bill do now pass.

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

My Lords, as this is a two-clause Bill and the main clause was an amendment, I will use this opportunity to thank all noble Lords for the positive engagement and feedback they have provided thus far. We have had some truly wide-ranging debates, and I deeply appreciate the House’s passion for and knowledge of social security and pensions. I am enormously grateful to my noble friend Lady Scott, who has supported me at each stage of the Bill’s progress, both on and off the Floor of the House. I extend my thanks to the noble Baronesses, Lady Sherlock, Lady Janke, Lady Altmann and Lady Stroud, and the noble Lords, Lord Sikka and Lord Davies, for their amendments, ensuring thorough scrutiny of the Bill. I extend my thanks to the countless other noble Lords who have provided an abundance of constructive support and knowledge, and I thank all noble Lords for taking part.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her remarks and thank all noble Lords who participated in the debate on the Bill. For a short Bill, its impact is quite wide, affecting millions of people. Our debates have raised some crucial issues around approaches to uprating and the government strategy for retirement saving, and especially around the position of pensioners on lower incomes as we enter a season of spiralling prices. Not for the first time, it is possible that our deliberations may have a broader impact in parts of Westminster and Whitehall than perhaps we realise or will ever know—at least until the autobiographies of the future come to be written.

On the matter of memoirs, these proceedings have also been notable for the return to the fray of the former Minister for Welfare Reform, the noble Lord, Lord Freud, whose frank demolition of the Government’s case for social security cuts and policies such as the benefits cap will, I predict, turn out to have a half-life somewhere around that of uranium.

I thank the Minister for her concession on Report, in response to my amendment on pensioner poverty, that an impact assessment should be published. That happened on Friday. I look forward to having the opportunity, if we can, to discuss that with her and her officials in due course. Most importantly, we have amended the Bill to require the Government to find a way to adjust pension uprating and to maintain the earnings link, while making allowance for the pandemic. I urge the Government to take that seriously and to use the time they now have to find a better solution than that offered by the Bill.

Public trust in politics has taken a bit of a hit in recent times. If there were a way of pursuing this objective without dumping a manifesto commitment, we would all want that. In the meantime, I thank the Minister and her officials, colleagues across the House for their thoughtful contributions, and Dan Harris of our staff team for his marvellous support. We send the Bill back to the Commons with our best wishes, hoping that it will embrace it and hold on to it as it is.

--- Later in debate ---

[Lord Sikka (Lab)]

My Lords, I echo the words of the previous speakers. I hope that the Government will act on the recommendations of this House. I am also grateful to the Minister for the impact analysis, which I received on Friday night. I should be grateful if in future we could have a better quality of data. For example, it refers to weekly mean benefits, which do not tell us much about the societal impact or distribution. It would be very helpful, for example, to know the median figure and to have some further analysis in the appropriate financial brackets. Table 4 refers to the number of people eligible, pre-2016, for the new state pension but does not tell us how many actually receive the full amount. Once again, could I please request a fuller analysis, which would not only provide greater transparency but enable us to call the Government to account? It could be in the form of a statement of the number of individuals receiving, for example, a pension of less than £100 per week, those receiving between £100 and £120, and so on in other brackets. A better quality of analysis would enrich the debate.

[Baroness Stedman-Scott (Con)]

My Lords, I am grateful for the remarks made by all noble Lords today. Our discussions have been thoughtful and powerful. Above all, they have demonstrated the commitment across your Lordships’ House to protect the income of pensioners and to bear down on pensioner poverty. The Bill now goes to the other place to consider the amendments put forward by this House. I look forward to our consideration of its reasons on the Bill’s return. As always, I note the challenge of the noble Baroness, Lady Sherlock. I will take the observations of the noble Lord, Lord Sikka, on the impact assessment back to the department, as I have done with all the other points he has raised. Finally, I thank all noble Lords who have spoken today and at earlier stages. I also thank the officials who have supported me in our discussions.