Pension Schemes Bill

Baroness Warwick of Undercliffe Excerpts

Committee stage
Thursday 22nd January 2026 Grand Committee

My time has come to an end—I said that this was a busy group—but, with the leave of the Committee, I would like to continue for a few more minutes. Amendment 74 would place a duty on the Secretary of State to lay within 12 months of Royal Assent the regulations establishing the value-for-money framework and it would require those regulations to set out clearly how schemes will be assessed, the standards that they must meet, how they will be held to account and what happens when they fall short. That matters for three reasons: first, certainty; secondly, coherence; and, thirdly, accountability. This amendment would ensure that the powers that Parliament is being asked to confer are exercised in a timely and comprehensive way. In short, this is an amendment about delivery. It reflects the reality that value for money is not achieved simply by legislating for powers but by ensuring that those powers are used, that standards are clear and that regulatory expectations are understood across the system. I look forward to the Minister’s response.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I am sympathetic to the probing amendments in the names of the noble Baroness, Lady Altmann, and the noble Viscount, Lord Younger—Amendments 47 and 51 respectively—on value for money, which I alluded to at Second Reading. With any Bill or set of regulations, it is important to have clarity on the intentions and in minimising any unintended risk. That is particularly so when looking at the protection of citizens’ lifetime pension savings.

The FCA, the DWP and TPR have just published their consultation on their detailed proposals for the new value-for-money framework for DC schemes. These proposals come with real bite. When introduced, all relevant DC schemes will have to report on the value that they provide to members across a range of metrics. That assessment report will provide the basis for comparing the value that the scheme provides against other schemes. If a given scheme offers poor value, the firms and trustees must deliver improvements or otherwise transfer their members to a scheme that does provide good value. The framework requires an online central database to capture the disclosure of value-for-money data.

The Bill mandates the framework for contract-based schemes regulated by the FCA. The DWP and TPR will consult on draft regulations for the trust-based schemes. The first value-for-money assessments are expected in 2028. The framework provides for consistent measurement and disclosure on investment performance, costs and service quality; objective and consistent comparison against the market; transparency and disclosure; and action to be taken where a scheme is not delivering value. However, there are clearly concerns—we see them expressed in the briefings that noble Lords have received—that the framework could give rise to problems, which I, too, would like to probe.

The VFM framework provides for forward-looking metrics to be considered alongside backward-looking metrics, with the stated aim of allowing for

“a holistic approach to investment to deliver the best possible long-term outcomes”.

There is a risk that the value-for-money framework could result in herding, as others have alluded to, as schemes seek to avoid poor value assessments. There is also a risk of forward-looking metrics being used to game a scheme’s assessment. I ask the Minister: what guardrails are explicitly allowed for in this Bill to control these risks?

On quality of service, the recently published VFM framework takes a more limited approach to quality service and administration metrics. Furthermore, metrics on how members engage with their pensions have not been included in the framework, but they will be important in informing schemes’ responses to changes, such as guided retirement and the targeted support regime.

Looking ahead, how will these concerns be addressed? Poor-performing schemes that are rated “red”—meaning that they cannot be improved—must transfer out members where it is in their best interests. This is stronger than the originally proposed wording to consider a transfer. It is made possible by the Bill’s provision for a contractual override to allow transfers for contract-based arrangements without members’ consent. However, it is worth noting that some members will have safeguarded benefits. My final question to the Minister is: what will happen to those benefits? It is not clear what mitigations this Bill provides to protect members.

[The Minister of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, I am grateful to all noble Lords for introducing their amendments and for the debate that followed. The amendments rightly seek an assurance that the VFM framework is strong and effective and they try to clarify how it will take account of a range of important factors that can affect the value that a scheme provides. I regret that I cannot accept them, but I am going to go through the reasons why, as some interesting issues are being raised. Obviously, if I told the Committee that I was going to accept them, noble Lords would all fall over in shock, but this is a good opportunity to get these issues out there.

Let me say at the outset that the aim of the VFM framework is simple: we want to ensure that all savers are in schemes that deliver the best possible long-term outcomes for their retirement. The framework seeks to raise standards across the DC market by driving transparency, comparability and competition on genuine value rather than just on cost—a point made by the noble Baroness, Lady Stedman-Scott.

Clause 11 is deliberately drafted to provide enabling powers that allow the regulations establishing the VFM framework to be developed in consultation with industry and to be adapted as markets evolve. However, the VFM framework must be able to adapt to future financial market developments and to align with the FCA requirements for contract-based schemes. The risk is that hard-wiring any detailed technical criteria or rigid deadlines into primary legislation takes away the flexibility that is genuinely needed. It could get in the way of effective regulation and risks locking in concepts that could become outdated. However, I accept that there is a question around how Parliament gets to scrutinise the detail.

Clauses 11 and 14 set out key features of the VFM regime and provide enabling powers for the Secretary of State to make regulations on how VFM assessments will operate, including the metrics, the benchmarks and the processes that they will have to follow. The regulations will be subject to formal consultation with industry and regulators before being laid in draft for parliamentary approval under the affirmative procedure. In our view, this strikes the right approach: the Bill has the overarching framework in primary legislation while the technical detail is developed transparently through secondary legislation.

However, the noble Baroness, Lady Coffey, made an important point: Parliament needs to be able to understand what the assessment process will look like. A joint consultation was launched in early January by the FCA and the Pensions Regulator; it will run until 8 March. This consultation is the next step in the process of consultation on the technical-level detail of the framework, which will help to inform development and consultation on draft regulations and draft FCA rules—those are, of course, legal instruments.

I am conscious that some of the amendments were tabled before that consultation was launched. Those noble Lords who are up to their ears in the pensions world will no doubt have read the consultation in detail, but I will make sure that we send any noble Lord who has not done so a summary of, as well as a link to, it. I would be happy to answer any questions, if that would be helpful, but I will unpack the basics of this now.

The consultation sets out updated proposals and detailed draft FCA rules for implementing the VFM framework in the workplace DC pensions market and it reflects stakeholder feedback from the previous FCA consultation. FCA rules will apply to contract-based schemes, whereas regulations made under the powers in the Bill will apply to trust-based schemes. By bringing them together, responses to the consultation will help to inform both the draft DWP regulations and the FCA rules, with the obvious aim of ensuring consistency across trust-based and contract-based schemes. We do not want to end up with any kind of regulatory arbitrage in this or any other area. It is important that we do not pre-empt the outcomes of that process to make sure that we get the details right. Draft regulations will be consulted on.

Pension Schemes Bill

Baroness Warwick of Undercliffe Excerpts

Committee stage
Monday 12th January 2026 Grand Committee

[Lord Davies of Brixton (Lab)]

I emphasise that this is not about mandation. Mandation is a big issue, but this is not about that; it is about the possible ways in which Local Government Pension Scheme assets could be invested. It is a probing amendment and I am sure that it is not word perfect in achieving its objective.

It arises under subsection (4) of this clause. It mentions various issues with how the strategy that is set out should be implemented. It is a probing amendment that seeks to explore how, and to what extent, Local Government Pension Scheme assets might be used to provide social housing as an investment. The oddity about this debate is that I am sure we all share the belief—tell me if I am wrong—that housing is an ideal investment for a pension fund. What I want to know from the Government is the extent to which that will be possible within the structure being established by this Bill.

I start with the fund, which is a long-term defined benefit pension scheme with inflation-linked liabilities. Social housing assets provide long-dated stable income streams that closely match this profile, so the sheer logic of these funds investing in local housing is clear. This issue has been debated extensively, within the relevant field, among the think tanks and so on that support local authorities and are interested in the investments of the Local Government Pension Scheme. For example, a think tank called Localis produced a report recommending that council pension assets should be a funding solution to the UK’s affordable housing crisis; that issue is widely discussed and widely supported.

Of course, that has already happened and is already happening. The London CIV has a substantial investment on behalf of the London pool of investments in social housing. I refer to social housing; personally, I have a preference for council housing, but the issue is broader and includes all forms of social housing. For example, the head of real estate at the London CIV says:

“Our UK Housing Fund is designed to help increase the supply of good quality affordable housing while delivering income-driven returns to our Partner Funds”.


Again, in the heart of the industry and the sector, the value of this approach is strongly supported.

More specifically, are funds investing in local housing? They might be investing in housing, but it could be anywhere. However, the synergy with a local fund investing in local housing has a massive attraction in terms of both the councils involved and the members of a scheme seeing how their funds are being invested in the local community. That is a very attractive perspective on how the funds should be decided.

At the same time—this point does not need spelling out—we face a severe housing crisis. There is a need for extensive housebuilding. We have the resources and the need, so why do we not just get on and do it? Council pension funds are, by their nature, patient, long-term investments; that is such a good match for housing delivery. Of course, it is accepted, from the number of funds that have already gone this way, that the fiduciary responsibility is suitable. The committees managing these funds see that investing in housing matches their fiduciary responsibility.

Everyone agrees that there is a great deal of synergy here. Local pension schemes investing in social housing is financially prudent and low-risk, provides a long-term strategy and delivers clear public value. What is there not to like? Can my noble friend the Minister assure the Committee that this synergy will be recognised in the forthcoming regulations and the accompanying statutory guidance?

We are debating this matter in terms of the Bill here, but, as the previous debate made clear, it is the regulations that count. The regulations that will govern how these pools can invest are currently being discussed—an extensive consultation is taking place—but, alongside that, is a closed consultation on the statutory guidance that will accompany the regulations. There may be a debate as to why it is not a public consultation on the statutory guidance, because the two things—the regulations and the guidance—mash together closely.

The problem is that the draft statutory guidance limits the extent to which local funds can set requirements on the actual decisions that will be taken by the pools. I am getting into the detailed structure of how the administering authorities and the investment pools will work together. The point relates generally to all forms of local investment but it is particularly acute in this area, where we are talking about building houses for local people. More specifically, does the proposed pooling framework act as a potential barrier to Local Government Pension Scheme investment in social housing?

There is a broader, more general issue here; I am gear-shifting. The specific issue is whether the pooling arrangements interfere with local investments, particularly in housing, but there is the general issue of whether administering authorities—local councils, in effect, for these purposes—can pass their ESG considerations, for example, on to the pooling arrangements. We need to be clear at this stage. I have raised this issue specifically in relation to housing—it would be good to get a clear answer on that—but there is a wider point around the other ways in which these funds should be investing in the local community. Are the new structures going to stop that happening in practice?

On the other amendments in this group, I think that I agree with Amendment 9, but I will listen to my noble friend the Minister’s response on it. I look forward to hearing the reasons for Amendment 10; I do not understand it, but I shall listen carefully. I do not really understand Amendment 11 either, so, again, I look forward to the explanation from the noble Viscount. In the meantime, I beg to move the amendment standing in my name.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I have no extant interests to declare—my interest in pension schemes is in the past—but I have considerable sympathy with my noble friend Lord Davies’s Amendment 7.

We suffer from chronic underinvestment in genuinely affordable and social housing, which is undermining the social fabric of this country and limiting the opportunity for the growth that we so badly need. The Government have vowed to build 1.5 million homes by the end of this Parliament, with a longer-term aim of resolving the housing crisis; other Governments have attempted to do the same. The Government have already committed substantial sums towards that aim, but demands on public funding are increasing and more resources will clearly be needed to deliver it.

I had a particular interest in housing associations in the past. These raise private debt to put alongside public grant to fund social housebuilding, and currently have more than £130 billion of debt facilities in place. The social housing sector is a great example of harnessing public and private investment to drive economic growth and build the homes that we need. Net additional dwelling figures for the 2024-25 financial year showed that 208,600 homes were added to England’s stock—well short of the 300,000 homes a year needed to meet the Government’s target of 1.5 million homes by the end of this Parliament. With the right funding, investment and financial capacity in place, social and affordable housing can play a key role in boosting supply and meeting that ambitious homes target.

There is a general recognition of the need to increase institutional investment in the UK and that pension schemes, with their long-term characteristics, could and should be part of that solution. This part of the Bill refers specifically to the LGPS. The Chancellor has already cited the LGPS as a means of achieving that necessary level of investment. In fact, several LGPS funds already have a strong track record of co-investment in affordable housing, and that potential needs to be maximised. I hope that the Government will ensure that all large pension schemes have the right incentives and strategic tools, coupled with an effective regulatory regime, to provide returns to the scheme while protecting scheme members’ interests and ensuring enduring social impact.

Pension Schemes Bill

Baroness Warwick of Undercliffe Excerpts

2nd reading
Thursday 18th December 2025 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I too look forward to the maiden speech of the noble Baroness, Lady White of Tufnell Park. I was delighted to discover that we are both honorary alumni of the University of Bradford.

An adequate pension must be the goal for everyone to ensure a happy and secure retirement. This Bill aims to achieve higher returns for pension savers. As many millions more people are now in pension schemes through automatic enrolment, it is imperative that we ensure they get good value for the money they are saving from their hard-earned incomes. At the same time, those savings must provide the best possible support in their retirement.

Both the previous and current Governments recognised that, if we are to achieve the growth our country needs, domestic markets must be stimulated to invest in the UK. This inevitably led to a review of the pension system. The pension sector is a major allocator of capital, which has a direct impact on the efficiency of the wholesale financial markets in driving innovation and investment in our economy.

The pension systems in most other advanced economies invest significantly more in their domestic economies than does the UK, as has already been said, where pension savings, as we should remind ourselves, are also supported by tax relief of over £70 billion per annum. The UK has deep savings pools, yet we have seen a reduction in domestic investment in the UK. The UK has one of the largest pension systems in the world. As the parliamentary Under-Secretary of State for Work and Pensions reminded us in another place, it is our largest source of domestic capital, underpinning not just retirement of millions of people but the investment on which the country’s future prosperity depends. It makes so much sense to seek better to harness that capital, to invest in a more diverse range of assets that would benefit the UK economy, but also not to place savers at risk. This Bill is a serious and most welcome attempt to address both issues of concern: domestic capital investment in the UK and improving the outcomes for millions of workers saving for their retirement.

The pension sector’s role as a major allocator of capital will come increasingly from defined contribution schemes. There is momentum behind the need to focus on the DC pension sector’s ability to deliver good value for pension savers. In addressing these twin challenges of improving the outcomes for pension savers and achieving sustainable economic growth, there is general agreement that we need market consolidation, to see fewer pension providers operating at scale, and to deliver higher returns to savers and greater investment in UK productive assets. The Bill introduces the enabling powers to achieve that structural reform and greater consolidation in the market. But that raises major issues in respect of regulation and the governance standards required in both the management and administration of those schemes and the oversight of them by those with the fiduciary duty to protect the scheme members.

The case for consolidation is compelling, but will the Government give further consideration to the governance and regulatory requirements that need to be placed on those fewer scale pension providers managing billions, even trillions of assets over time so that downside risks are controlled and the desired outcome is achieved?

On the specific issue of trustees in these consolidated schemes, in another place, Liam Byrne MP called out the risk that in creating scale through fewer and bigger pension funds, there would still be a failure to deliver desired levels of investment in the UK. He called for greater legal clarity on trustees’ fiduciary duties, their ability to consider systemic factors and their impact on members pension savings when taking investment decisions. The Minister, Torsten Bell, advised that the Government will bring forward legislation to clarify that trustees can take systemic factors into account. Can the Minister advise the House as to the timescale for bringing forward that legislation?

The Bill aims to improve the returns workers receive on their retirement savings. We know that the DWP, the regulator and the FCA are working together to create a disclosure framework for assessing value for money that is to apply across the whole DC market, enabling consistent and comparable assessments of workplace pension schemes. To fully implement that framework, however, will require primary legislation in addition to the provisions in this Bill. When do the Government anticipate fully rolling out a new framework for assessing value for money?

I turn to the issue of accessing pension savings on retirement. In a DC world, UK savers are not well supported at retirement in making the complex decisions they face. They must manage their own longevity, inflation, and investment risk, and many struggle. Which? rightly points out that these decisions may have severe consequences and can mean that an individual outlives their savings. So it is good news that the Bill requires trustees of pension schemes to provide their scheme members with default retirement solutions that are relevant to their needs, and to help them manage the risks they face when they move into retirement. But we have to ensure that those solutions are fit for purpose. Are the Government actively considering additional guidance and regulation on the assessment of the value and benefit for members of the default retirement solutions to be provided by the schemes?

There are now many millions of small pension pots, as workers move from employer to employer, and the numbers are increasing. It is a major inefficiency in the pension system, as the Minister herself pointed out. The welcome advent of the pensions dashboard will help savers to take action to consolidate their pension pots. Characteristically, however, inertia means that many will not. The Bill provides for very small pots to be automatically transferred into qualifying consolidator schemes, which should reduce administration costs and deliver better returns for consumers through lower costs and charges. Can the Minister say what the Government’s current thinking is on the timetable for implementing the necessary regulation to allow this to happen?

There are several other important changes in the Bill which other noble Lords have already raised, but I finish by highlighting one of the changes to the PPF—the Pension Protection Fund—compensation. The decision to introduce legislation to enable prospective annual increases on pre-1997 compensation to PPF and FAS members is welcome. It could benefit more than a quarter of a million PPF and FAS members, but I am concerned that it will leave an unfairness, because no retrospective increases are applied to pre-1997 accrued pensions. The prospective increases will not apply to those members whose schemes did not provide increases to pre-1997 pensions prior to entering the PPF, and there is no recognition in any form of the major past loss of pension value, particularly given the incidence of high inflation and the acute financial impact on those affected. In its foreword, a recent PPF levy policy document concludes:

“The likelihood of the PPF encountering significant funding problems in the future … is low and is expected to continue to reduce over time … if funding problems did arise, these could be resolved over a multi-year period with our investment returns likely to be the most significant contributor”.


I go back to the points made by my noble friend Lady Drake on 23 April, when she raised this issue. Taking into account the considerable confidence in the funding level and investment returns, that £32.2 billion of assets, £19 billion in liabilities and reserves of £13.2 billion are held by the PPF, and the reduction in the levy to zero, the level of fairness set in the striking of the balance between levy payer and PPF/FAS member does not appear right. As my noble friend said:

“Not only has the levy in quantum declined hugely; the levy has also declined as a proportion of the PPF’s funding mix. Roughly one-third of the funding comes from the assets transferred to the PPF from those members’ pension schemes. Similarly, another third comes from the investment returned on assets, and 11% comes from assets recovered by the PPF on behalf of those schemes. Less than a quarter—23%—of the funding comes from the levy, and that is going to fall”.—[Official Report, 23/4/25; col. GC 32.]


Can the Minister take back to the Government consideration of an ad hoc payment to those members of the PPF with pre-1997 service, in recognition of the considerable real loss of pension that they have experienced? Such a payment should be well within the funding levels of the PPF. Payment of the prospective increases to pre-1997 pensions accrued to those whose original scheme may not have made provision for such increases.

Housing Benefit: Temporary Accommodation

Baroness Warwick of Undercliffe Excerpts

Wednesday 28th February 2024 Lords Chamber

[Viscount Younger of Leckie (Con)]

The subject that the noble Baroness has raised is to do with temporary housing, and we appreciate that these remain difficult times and that local authorities are subject to many pressures. We will continue to review the situation with housing benefit subsidy rates, but perhaps I can help the noble Baroness by saying that, following the Autumn Statement back in 2023, the Government announced additional funding of £120 million to help councils address in particular the Ukraine situation and homelessness pressures looking ahead to 2024-25. Today, I am pleased to say that it has been announced that England’s share of the £120 million is £109 million, which is to be paid via the homelessness prevention grant top-up for the year 2024-25.

[Baroness Warwick of Undercliffe (Lab)]

My Lords, the undersupply of social housing has meant that spending on temporary accommodation has increased by a staggering 62% over the last five years. Yesterday, Shelter and the National Housing Federation published new research by the CEBR on the economic impact of building social housing. It showed the massive economic and social benefits of building 90,000 new social rented homes and found that delivering social housing at this scale would save nearly £250 million a year on the benefits budget, result in £4.5 billion in housing benefit savings and save local authorities £245 million a year on homelessness services. What action can the Government take to urgently improve delivery of social housing and reverse this vicious cycle?

[Viscount Younger of Leckie (Con)]

The noble Baroness is right that building more houses and finding more houses, including social housing but also in the private rented sector and for homeowners, is incredibly important. We remain committed to our target of delivering 300,000 homes a year in England. We also recognise that the planning system can be complex. The levelling up White Paper marked an important moment, making clear the scale of our ambition to address the inequalities for communities right across the country, which I think was the gist of the noble Baroness’s question.

Pension Scams

Baroness Warwick of Undercliffe Excerpts

Wednesday 14th October 2020 Lords Chamber

Asked by

[Baroness Warwick of Undercliffe]

To ask Her Majesty’s Government, further to the report by the Police Foundation and The People’s Pension Protecting People’s Pensions: Understanding and Preventing Scams, published on 7 September, what action they are taking to protect people from pension scams.

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

The Government are committed to safeguarding consumer savings. We have introduced measures that assist all pension savers to understand their choices and alert them to possible risks through advice and guidance. To help protect people from scams, the Government have banned cold calling and tightened the tax registration procedures, and, via the Pension Schemes Bill, are limiting the statutory right to transfer. We also continue to raise awareness of scams through ongoing communications directly from the DWP and through other organisations.

[Baroness Warwick of Undercliffe (Lab)]

That reply was encouraging—I thank the Minister. However, I hope that we can persuade the Government of how vital it is that even more specific actions are taken. Tragically, some scams make the victim complicit in the crime, so they lose all their money to the scammer and are pursued by HMRC for tax payments for pension liberation which they cannot meet. The police described HMRC’s approach as “unrelenting and uncompromising”. What action will the Government take to give some relief to these victims?

[Baroness Stedman-Scott (Con)]

I am sure that everybody feels sympathy for an individual placed in this position. HMRC collects the taxes that Parliament decides are due and seeks to treat each case sympathetically and on its own facts. I have talked to the Minister for Pensions about this issue and he is quite happy to meet the noble Baroness to talk further about it.

Covid-19: People Living in Poverty

Baroness Warwick of Undercliffe Excerpts

Thursday 30th April 2020 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I declare my interest as chair of the National Housing Federation, representing not-for-profit housing associations in England. This crisis cannot be allowed to entrench inequalities for generations to come. The OBR predicts that the crisis will cause the UK economy to shrink by 35%, with 2 million job losses—a potential economic disaster.

There are so many examples of organisations, including housing associations, working flat out to provide immediate support to soften the financial impact of this pandemic, but some people will still be in dire hardship. The Government have acted swiftly to secure incomes in the short term, but Ministers must do more to support people on the very lowest incomes.

I have two questions: will the Minister commit to suspending the housing benefit cap, and, echoing the noble Lord, Lord Young of Cookham, to ensuring that all rough sleepers have a permanent home once social distancing is ended?

Pension Schemes Bill [HL]

Baroness Warwick of Undercliffe Excerpts

2nd reading & 2nd reading (Hansard): House of Lords & 2nd reading (Hansard)
Tuesday 28th January 2020 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I declare my interest as a board member of the Pension Protection Fund, which protects the pensions of employees in defined benefit schemes when their employers go bust and cannot pay their pensions.

Looking at this Bill from a defined benefit perspective, I find much to support. I shall touch on four topics: the DB scheme funding code; TPR’s anti-avoidance powers; the pensions dashboard; and some areas that I believe require further consideration.

Before diving into the detail, it is worth stepping back for a moment and making two broader observations. First, the Bill looks to build on and improve the defined benefit landscape rather than radically reshape it. In broad terms, it confirms that the settlement established by the Pensions Act 2004, which created the regulator and the PPF, has stood the test of time.

Secondly, it is of course right that we need to focus on how we can further improve outcomes and strengthen member protections, but it is worth saying loudly that, compared to pre-2004 days, DB scheme members are considerably better protected today, thanks to the Pension Protection Fund. Before 2004, your holiday was better protected than your pension. There was no safety net for DB scheme members in the event of employer insolvency. In some cases, that meant heavy reductions on their promised benefits; some faced real hardship in retirement. In some ways, it is a shame that memories of the pre-PPF days have now largely faded, but it speaks volumes for the quiet achievement of the PPF. BHS is an example: if PPF had not existed, members of the pension scheme would have faced dramatic reductions on what they had been promised. Today, PPF provides safe harbour for over 250,000 members and its compensation can make a huge difference to many people’s lives. I hope the Minister will join me in recognising the valuable protection that it provides and its role as a force for good.

Turning to the Bill itself, I welcome the measures to review and improve the DB scheme funding regime. Striking the right balance between sponsor affordability and member protection is of course easier to say than do, and as we go through the Bill we will undoubtedly find that the devil is in the detail. Having said that, we should be careful in guarding against the new scheme funding code being seen as an opportunity to increase flexibilities or to ease up on closing down funding shortfalls. The majority of DB schemes still remain in deficit. Flexibility is of course essential, given the range of circumstances facing schemes and employers in the DB universe, but recent experience has shown that, if anything, that very flexibility has in some cases been inappropriately used. Take Carillion: senior managers apparently viewed contributions to the pension schemes as a “waste of money” to be ranked below dividends to shareholders.

If we are to ensure members are not exposed to unnecessary risks, now is not the time for schemes and sponsors to take their foot off the gas. It is vital that the new code results in schemes closing their deficits within reasonable timeframes, prevents excessive recovery plans on the basis of current covenant strength and ensures schemes are given equitable treatment with other financial stakeholders.

I also welcome the provisions to further enhance TPR’s anti-avoidance powers. The regulator must have the right tools in its armoury so it can be proactive in preventing detriment to pension schemes. While it already has an array of powers, these targeted enhancements may help deter potential wrongdoing and are useful for TPR to have in its back pocket. I suspect that these provisions are likely to be needed only in extremis, if at all. They are, one would hope, for use in only exceptional cases, not in relation to the vast majority of sponsors and schemes which do the right thing by their members.

As other speakers have said, the pensions dashboard is an important innovation. For too many savers, pensions can be confusing and difficult to understand. Added to this, many savers have multiple pension pots and keeping track of these can be difficult. Therefore, I welcome the underlying ambition to enable people to better engage with their pension savings through digital channels, while very much endorsing the cautionary points made by my noble friend Lady Drake.

Having welcomed a lot in this Bill, I cannot help but identify some notable omissions. There are two areas which are not currently covered by the Bill but which are important to draw out briefly in the context of this debate. First, in relation to commercial consolidation vehicles, the current DB legislative and regulatory framework as set out in the 2004 Act was predicated on a continuing link between scheme and sponsor. The emergence of the consolidator model challenges this. Well-run consolidators could be beneficial, offering a route to improved security for scheme members. Equally, they also present significant new potential risks, particularly to PPF members and levy payers. To manage these, a new legislative and regulatory framework will certainly be required. However, I recognise that this is relatively new and fast-evolving territory and it is important to get it right, so it is understandable that provisions are not currently contained in the Bill.

The second area relates to PPF compensation. The Bill contains measures intended to address the outcome of the Beaton case. I would appreciate it if the Minister could say whether she expects there will similarly need to be legislative clarity in relation to the Hampshire case in due course.

Pension freedoms are a further area of interest for us as policymakers and for scheme members. Since 2015, something like 160,000 members have opted out of their DB schemes. Some were required to take independent legal advice. There are growing concerns about the advice they received. For example, in the case of British Steel in 2017, it is clear that some members were given poor advice. It may not be a matter specifically for this Bill but, given its scale and impact, it is something we must address.

Benefits: Reductions

Baroness Warwick of Undercliffe Excerpts

Thursday 1st November 2018 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I congratulate my noble friend Lord Bassam on securing this debate and on his words about Lady Hollis. I wanted to speak in this debate as a tribute to our wonderful colleague, who died just a couple of weeks ago and who always fought to bring justice to our social security and pensions systems. Had she still been here, she would be leading this debate, forensically focusing on the facts so graphically and soberly presented in the Library briefing, while forcing us to face up to their human costs. I want to look at those costs in terms of housing. I declare an interest as chair of the National Housing Federation, the trade body for housing associations in England.

Patricia was a very effective member of the federation’s Peers network. She fought hard to amend the housing benefit impact of the social sector size criteria—the bedroom tax—to ensure that a bereaved family was not affected in the first year after a child’s death. She pressed for people who have just lost their job not to be immediately affected. It is disappointing to see that this level of sensitivity has not been carried through to universal credit: under universal credit the exemption for a bereaved family is just three months and there is no exception for people who have just lost their job. Since 2010, social security reform, restriction on access to benefits and the reduction in entitlements have made life more difficult and have left those on the lowest income with less money.

The housing sector’s ability to continue to facilitate access to good-quality affordable housing has become increasingly difficult, with many of our members citing the impact of some social security changes as a barrier. The impact of these reforms, combined with an acute shortage of socially rented homes, has seen numbers, costs and pressures rise in the private rented sector. Now, more money goes to private landlords in the form of housing benefit than is invested in the root cause—a lack of truly affordable housing. We now see cases where low-income households are struggling to access the private rented sector.

A report by Shelter and the National Housing Federation found that five of England’s leading letting agents actively discriminate against tenants on housing benefit. As of May 2018, 1,092,000 claimants rely on housing benefit to help with expensive housing rents. The majority are women, especially single mothers with childcare responsibilities. People who receive disability benefits are also three times more likely to need a housing benefit top-up. Homelessness has increased dramatically, as has rough sleeping, and 123,000 children are living in temporary accommodation. The Minister told the House, in response to my question on the rough sleeping strategy, that the model to assess the effects of government policy would be ready in December. Can the Minister today confirm that this is on track?

Housing associations’ experience of universal credit so far has shown that the five-week waiting time, payment delays, mistakes made by the system and a lack of support and information are causing considerable distress and financial difficulties for many tenants. Housing associations invest a great deal of their own resources in supporting people to make and manage a universal credit claim. Yet our evidence shows higher levels of arrears for those in receipt of universal credit, compared to those on housing benefit. There needs to be a far more effective partnership between DWP and social landlords so that this support for vulnerable people can be provided more effectively.

I support the original aim of universal credit, of providing an adequate income for all households whether in work or not—Lady Hollis supported it, too—but to ensure that universal credit meets its original aim there needs to be real improvement in the design and the administration of the system.

The £1 billion promised in Monday’s Budget must be used urgently to resolve these problems, although I fear that it will not be enough. The promises to increase work allowances by £1,000 is welcome, but the Government must ensure that people receive the money that they desperately need, when they need it, before even more people are moved on to the system. There must be an understanding of how DWP policies, or those from the Treasury, align with the Government’s housing ambitions. I echo my noble friend Lord Bassam’s comment about cross-departmental policies. Housing policy must be co-ordinated across all departments and over a longer period of time. The only way to sustainably bring down housing costs and cut homelessness is to increase capital investment in social housing, alongside creating a social security system that is fair and delivers for those on low incomes. That is the only way to create a secure environment for tenants and families.

Universal Credit

Baroness Warwick of Undercliffe Excerpts

Wednesday 21st December 2016 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I thank the noble Lord, Lord Farmer, for securing this important debate. I too pay tribute to the noble Lord, Lord Freud, soon to retire from his ministerial role. He has been instrumental in developing and delivering universal credit. I also want to offer my condolences to the noble Baroness, Lady Jenkin, on the sad loss of her father-in-law, whom I worked with years ago and whom we all respected in this House. Of course, I congratulate the noble Lord, Lord Macpherson of Earl’s Court, on a very witty maiden speech.

I declare an interest as chair of the National Housing Federation, the trade body of England’s housing associations. Although I share some of the concerns expressed by other noble Lords, particularly my noble friend Lord McKenzie and the right reverend Prelate the Bishop of St Albans, I want to focus on the role of housing associations in universal credit. Thousands of association tenants are eligible for universal credit and, over the past three years, the federation and sector have worked with the DWP and the noble Lord, Lord Freud, on the design and implementation of the pilot and then the rollout. We all support its principles of simplifying the benefits system and incentivising work. Housing associations have worked with the department to ensure that these principles are achieved and that unintended consequences are, I hope, avoided.

Our joint working has resulted in the setting up of a specialist team to tackle the challenges that housing claims entail. It has also improved the alternative payment arrangements system whereby the housing element of universal credit is paid directly to the landlord. These arrangements are vital for those who currently lack budgeting skills and would be at risk of going into arrears and losing their home. The sector is keen to help ensure that new claimants are protected by reducing the risk of arrears as much as possible. We know from the pilot that sharing information between the DWP and social landlords is vital. It helps landlords take pre-emptive action to prevent arrears and gives the DWP valuable claimant information. I understand that the DWP is currently looking into an online portal to make this information sharing easy and free from bureaucracy. Associations would certainly welcome this, along with further information on timescales, and I wonder whether the Minister can give the House an update on progress. Similarly, associations would be keen for the DWP’s “trusted status” pilot to be extended, allowing it to grant alternative payment arrangements before arrears build up. Again, that would reduce the risk of eviction and keep vulnerable tenants in their homes.

Finally, I want to emphasise the role that associations can play in helping to reduce the benefits bill and boost affordable homes. As I said in the debate on the Autumn Statement, associations could do more if given the freedom to set their own rents. I believe that both tenants and the Government would benefit from that. It would allow associations to better meet the needs of the communities they serve, improve affordability and therefore prevent upward pressure on housing-related benefits. Housing associations have proved to be helpful and trusted partners in the design and implementation of universal credit. Is the Minister prepared to build on this trust and support discussions to support freedom for the sector to set its own rents?

Poverty

Baroness Warwick of Undercliffe Excerpts

Thursday 14th July 2016 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I thank the noble Lord, Lord Bird, for providing this timely opportunity to grapple with this huge and complex issue. The political events of the last few weeks have led to much soul searching about the growing gulf between the haves and the have-nots in our society. I want to focus my remarks on education and housing. Getting these right is key to avoiding further misery, saves greater costs in the long term and strikes at the heart of the social inequalities that were given voice, I believe, in the outcome of last month’s referendum. I should declare an interest as chair of the National Housing Federation.

I believe passionately in the redeeming, transformative power of education. It is key to social mobility. Because of my interest in higher education, I am encouraged to see the most recent figures from the Universities and Colleges Admissions Service, which show that the least advantaged young people in England are now 65% more likely to go to university or college than they were in 2006. This is vital for social mobility and social justice. Can the Minister tell us what is being done to continue the investment in getting those from the most disadvantaged backgrounds into higher education?

However, in tackling the causes of poverty, we have to start with early education. Evidence shows that high-quality early education is one of the most important determinants of a child’s life chances. It is key to tackling the attainment gap that emerges early among disadvantaged children, and is fundamental if we are to transform the economic and social potential of future generations.

Graham Allen MP, whose work in this area I admire greatly, has made persuasive arguments for meeting the cost of early intervention, to avoid the greater costs later when things go wrong. Can the Minister tell us whether any progress has been made in simplifying childcare funding to make it easier for parents to understand and access it?

For children to thrive from their earliest years, they need a secure home environment. We know that families in persistent poverty are often struggling with high living costs, with low-quality and insecure housing the only option available to them. The Social Mobility and Child Poverty Commission notes that 1.5 million children are in poverty because their working parents do not earn enough to secure a basic standard of living.

The problem is that we are not building enough houses. As the pressure on our limited housing stock grows, so rent and house prices rise. Insecure or bad-quality housing has a direct impact on all other areas of people’s lives, including on the ability to get and keep a job, and on health. Poor-quality housing and overcrowding damages health. Pressure on local authority housing lists means families are stuck in temporary accommodation, often unsuitable for children, and tensions rise over housing allocations.

The statistics speak for themselves. According to the Government’s own figures, with housing costs excluded, 15% of people in this country are living in poverty. Once housing is added, the figure rises to 20%. That is 12.9 million people. In the first quarter of this year, some 71,540 households were in temporary accommodation arranged by local authorities—a rise of about 11% on the same period last year. In the same quarter, around 14,780 households in England were accepted as homeless—an increase of about 9%. Housebuilding starts in England for the first quarter of the year were 9% lower than the same time last year, and completions are also down.

We can do something about this. I contend that to tackle poverty we need to solve the housing crisis. To do that we must significantly increase the number of new homes we build each year. The right housing and support enables vulnerable families to break chaotic patterns of living and gain the benefits of settled accommodation in the longer term. When this happens across communities, it has a multiplier effect, creating safer neighbourhoods, boosting social capital and reducing demands on acute health and care services. Providing affordable, secure and good-quality rented accommodation can have a positive impact on people’s lives and help lift them out of poverty.

The case for investing in affordable housing is overwhelming. The housing associations I represent are ready and willing to work with the Government to deliver the homes this country needs. In 2014-15, they built 50,000 homes. That is more than one in three of the new homes in England. Their declared aim is to build 120,000 homes each year across all tenures by 2033.

Our new Prime Minister has recognised this need, acknowledging that we must do far more to get more houses built. Will the Minister urge the Prime Minister to look to housing associations as the sector which has both the desire and the capability to build our homes—the homes we need to tackle poverty across the country? What is being done to meet the targets for increasing our housing stock?

Two-thirds of poor children are in working families, and it is these same families who will be hit by the cuts to universal credit announced in last year’s summer Budget. Given that the latest figures show that there are 200,000 more children in poverty than in the previous year, I am deeply concerned that we seem to have lost track of the Government’s proposed life chances strategy. Can the Minister shed any light on its current status? Now, more than ever, we need in place a clear and adequately funded commitment to tackle the causes of poverty, reduce social inequality and heal the divisions in our society.

Finally, I congratulate my friend, the noble Baroness, Lady Sharp of Guildford, on her heroic championing of higher and further education during her hugely successful parliamentary career, and wish her all the best in her retirement from this House.