Pension Schemes Bill [HL]

Debate between Earl Howe and Lord McKenzie of Luton

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

[Lord McKenzie of Luton]

My Lords, this issue has been rumbling around for far too long and it is time to try to get a solution to it, particularly, as many noble Lords have explained, because of the pressure that the NHS would have been under anyway but for the recent crisis. My noble friend Lord Warner made a strong case with his proposition and we would certainly like to reflect on it. I know that the problem is that lots of people have reflected from time to time on a possible solution. That reflection goes on, but we do not yet have a solution. But Report on this Bill will be coming up shortly, and of course we have a Budget of some sort not far in the distance.

I have a couple of questions. I do not know whether my noble friend Lord Warner or the Minister can help with them. Was the one-off payment that the NHS made to cover the annual allowance taxable, and what might the consequences of that be? Under the scheme-pays arrangement, as the noble Baroness, Lady Altmann, hinted, if the problem is the penal interest rate then what is to stop those rates being adjusted, and who controls them?

We also need to bear in mind in all this is that these rules, unless I misunderstand them, have general application in the tax system. We need either to find a way of having some special arrangements or to accept that the adjustments we make here would have to be run for the tax system generally. We will need to work through the consequences of that. I am conscious that this contribution has not added one bit of sense to a practical solution, which is what we need to reach. Maybe, at the end of the day, we simply need to rank the solutions that we have on the table and choose the best, even though that may not be optimisation.

I am sure we all remember the pressure about this—I certainly remember pressure from the old Luton and Dunstable Hospital about it—and the real adverse effect that it causes on the delivery of services. We cannot continue to allow that to go forward; we simply have to drive through a solution to this. That is the challenge; presumably, the Treasury has ultimate responsibility for meeting it. But if it will not then we should, with the help of my noble friend Lord Warner and his expertise in these areas.

[Earl Howe (Con)]

My Lords, the amendment from my noble friend Lady Neville-Rolfe would commit the Secretary of State for Work and Pensions to review the tapered annual allowance on tax-relieved pension savings and require the Secretary of State to set out how pension schemes could mitigate any adverse effects of the taper. On the other hand, the amendment from the noble Lord, Lord Warner, would commit the Secretary of State for Work and Pensions to make regulations to require the NHS pension schemes to reimburse members for pension tax charges and, in particular, annual allowance charges.

I will set out where matters currently stand on this. First, in recognition of the impact that the tapered annual allowance is having for some doctors this year, NHS England has announced—as has been mentioned —a special arrangement for 2019-20 only, which doctors in England can use to ensure that they will not be worse off as a result of taking on extra shifts this tax year. This arrangement allows senior clinicians to defer an annual allowance charge through scheme pays. Their NHS employer will make a contractually binding commitment to pay a corresponding amount on retirement, ensuring that they are fully compensated in retirement for the effect of the scheme-pays deduction on their retirement income.

Health is a devolved matter. This special arrangement applies only to England, but we are aware that the Welsh Government and NHS Scotland have also put arrangements in place for the current tax year.

The Government most certainly recognise that urgent action is needed to resolve the pensions tax issue, which has caused some doctors to turn down extra shifts for fear of high tax bills. We are committed to ensuring that hard-working NHS staff do not find themselves reducing their work commitments due to the interaction between their pay, their pension and the relevant tax regime. That is precisely why the Government are taking forward their manifesto commitment to carry out an urgent review of the pensions tapered annual allowance, to make sure that doctors spend as much time as possible treating patients. This builds on the Treasury’s review into the effect of the tapered annual allowance on public service delivery, announced last August. The Government have announced that these reviews will report at the Budget on 11 March.

I understand that the ongoing reviews have received evidence from the British Medical Association, the Academy of Medical Royal Colleges and other representative organisations from across the public and private sectors. The Economic Secretary to the Treasury has held round-table discussions with key health sector stakeholders, as well as representative organisations across the public sector. The evidence provided will ensure that the Government can consider fully the impact of the tapered annual allowance and its effects on the NHS and other public services.

The amendment from my noble friend Lady Neville-Rolfe would have the Government commit to yet another review of matters relating to the tapered annual allowance. I hope she will accept that there is no need for a further exploration of this matter when the two reviews are ongoing and have not yet concluded, especially as those reviews will report shortly.

The amendment proposed by the noble Lord, Lord Warner, would commit the NHS pension scheme administrators to reimburse their members to the extent they had incurred an annual allowance tax charge. The practical difficulty with this, which I am sure the noble Lord does not intend, is that reimbursement from the scheme for tax charges could trigger an unauthorised payments tax charge for the member and a scheme sanction charge for the scheme. Noble Lords will appreciate that this is a very complicated area of tax law and, as I have said, could result in further unforeseen tax charges arising.

The noble Lords, Lord Warner and Lord McKenzie, referred to the interest rate being applied in this area. Perhaps I could just explain the background to this. HMRC rules require that when scheme pays is used to pay a tax charge, an actuarially fair reduction is made to the value of the pension. The discount rate used to value this reduction for public service pension schemes is the SCAPE discount rate plus CPI. The SCAPE discount rate reflects the Office for Budget Responsibility’s forecasts for long-term GDP growth in line with established methodology. Due to recent changes to the SCAPE rate and the CPI, the scheme-pays discount rate has fallen in 2019 to 4.8%.

My suggestion to my noble friend and the noble Lord, Lord Warner, is that it is preferable to wait for the outcome of the two reviews, which are ongoing but have not yet concluded. As I mentioned, they will report shortly, on 11 March. Ultimately, this is a matter for my right honourable friend the Chancellor. I am sorry to have to leave matters in the air, but I hope that my noble friend and the noble Lord will take away from this a good degree of reassurance that the Government are taking seriously the question of what impact the tapered annual allowance is having on NHS pension scheme members and that reviews into this matter are already under way.

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[Lord McKenzie of Luton]

My Lords, I, too, support this amendment. We should congratulate the noble Baroness, Lady Altmann, on the diligence with which she has persisted on this matter for quite a long while. As she hinted, she was responsible for convening an industry group that spent a lot of time digging into this to make sure its focus was right.

The reality is clear. There are two systems giving tax relief and no reason in principle why they should not both deliver the same result. One does not for low earners at the moment. Which of the two systems you are in depends on your employer’s choice. That simply cannot be right. As the noble Baroness said, there are ways of dealing with this. I understand that the Treasury has set its face against that to date. Of course, for the Treasury, the downside is that providing a bit more tax relief means having a little less revenue. However, we are talking about the lowest paid, who are being disadvantaged by this. It is about time that this was brought to a halt.

[Earl Howe]

My Lords, I am grateful to my noble friend Lady Altmann for her amendment. I am well aware that she is a passionate and long-standing campaigner on the issue of lower-paid workers automatically enrolled into a workplace pension who may not benefit as much as other lower-paid workers for their pension saving.

As my noble friend will know—I hope she will not mind my saying this en passant—pensions tax relief is a matter for the Treasury, with the differing treatment of people in net pay arrangements and relief at source pension schemes determined by the Finance Act 2004 which, strictly speaking, is outside the scope of the legislation before us. That does not prevent me giving her as full an answer as I can.

Automatic enrolment legislation defines which qualifying workers are to be put into workplace pensions by reference to their age, earnings level and their being working or ordinarily working in the UK. I appreciate that this is essentially a probing amendment and that the precise wording is of secondary importance, but its reference to the low paid is not a definition recognised in the Pensions Act 2008. It would make it very complex and burdensome for employers accurately to identify the group to be covered by the proposed regulation-making powers.

Automatic enrolment has always sought to balance its core aim of helping working people build up their retirement savings with an implementation approach that recognises the costs and administrative burdens that will inevitably fall on employers. We are mindful that those duties must be proportionate and restricted to the minimum necessary to achieve our policy objectives. That is why pension scheme choice under automatic enrolment is reserved to the employer, who is required to use a scheme that meets minimum quality standards set out in legislation. Tax relief is only one of the factors that an employer should be considering when choosing a scheme for its employees, alongside whether it will accept all its staff, how much it will cost for the employer to administer and whether it will work with the existing payroll systems.

The employer’s decision will be informed by detailed guidance provided by the Pensions Regulator via its automatic enrolment compliance website, including information about the tax implications of different types of scheme. We should remind ourselves that there is guidance on the Pensions Regulator’s website to help employers understand the impact of scheme choice on lower earners below the personal allowance. I am well aware of how much assistance my noble friend gave on this when she was Pensions Minister.

Consequently, the current legislative framework is not set up to allow government to impose broad, undefined requirements on pension scheme trustees, managers or administrators in the way proposed by the amendment. Employers have duties under automatic enrolment, and they select a pension provider from the marketplace, based on their legal obligations towards qualifying workers and the commercial needs of the organisation.

The suitability of an automatic enrolment scheme is determined primarily through statutory quality requirements. Many employers will choose a master trust scheme, which is subject to an additional regulatory framework. All automatic enrolment schemes are registered pension schemes and their members are further protected by the broader legislative framework for occupational and personal pension schemes.

--- Later in debate ---

[Lord McKenzie of Luton]

I heard the Minister’s reply, which seemed a recipe for no action—not this year or next. Given all the hard work that has gone into developing thoughts on this, that does not seem fair. If we are saying that the legislation—or the regulation—is not fit for purpose as it is, why do we not change it? Whatever happened to taking back control?

[Earl Howe]

I promise that nothing I said was intended as a recipe for no action. The problems that my noble friend articulated well relates to how we solve this problem, not whether we are committed to doing so. Unfortunately, it does not admit of a straightforward answer. If it did, we would have solved it long ago.

Pension Schemes Bill [HL]

Debate between Earl Howe and Lord McKenzie of Luton

Committee stage & Committee: 3rd sitting (Hansard) & Committee: 3rd sitting (Hansard): House of Lords
Monday 2nd March 2020 Grand Committee

[Lord McKenzie of Luton]

My Lords, this amendment goes to the heart of protecting people’s pensions. We have touched upon a number of issues surrounding the same sort of concepts during debate on the Bill and in other legislation, such as financial guidance provisions. We should see whether we cannot get together a comprehensive note of how these things are covered. I am bound to say I am unclear as to what is and is not covered in all circumstances, so it seems that would be beneficial.

Concerning the specifics of the amendment, we clearly give it broad support. It raises practical issues, as I am sure the noble Lord, Lord Sharkey, would identify, particularly on responding to approved questions. I am not sure who is on hand when the questions are being asked. We have seen what happened with taxi licences and such things in the past. The provision could give rise to challenges but the thrust is right: it is another attempt to make sure that people are aware of the consequences of what they do, to the fullest extent possible. As I say, I am not sure whether we have a comprehensive arrangement yet across all pensions and circumstances. It seems that it would be worth some effort to try to get that into place. With those words, I am happy to it give broad support. When the Minister replies, I am sure there will be some stumbling blocks in it but if we do not keep pushing and shoving, we are not going to make progress on this.

[Earl Howe]

My Lords, I am grateful to the noble Lord, Lord Sharkey, and my noble friend Lady Altmann for tabling this amendment because it provides me with an opportunity to update the Committee on the progress that the Department for Work and Pensions, the Financial Conduct Authority and the Money and Pensions Service have made on delivering the stronger nudge to pensions guidance. As noble Lords are aware, this is a requirement of Sections 18 and 19 of the Financial Guidance and Claims Act 2018.

Before that, however, I would like to talk briefly about the take-up of Pension Wise guidance, which is a very positive story. The service is on target to exceed 200,000 guidance sessions this financial year, more than tripling those in its first year of operation. Recent Financial Conduct Authority data suggests that 52% of personal and stakeholder pensions accessed for the first time in 2018-19 received either regulated advice or Pension Wise guidance. That clearly demonstrates that the work the Money and Pensions Service, Government and the industry are already doing to promote both Pension Wise guidance and regulated financial advice is working.

I would like to talk about the measures in the Financial Guidance and Claims Act 2018 which were designed to further increase the take-up of Pension Wise guidance. Sections 18 and 19 require the Government to deliver a stronger nudge to pensions guidance. As the Committee is aware, MaPS is testing options for the best way to do that, in a way that complements the suggestions made by the noble Lord, Lord Sharkey, during the passage of the Act that his amendment was

“designed to be a nudge, rather than any kind of probably unenforceable or counterproductive compulsion.”—[Official Report, 31/10/17; col. 1294.]

As noble Lords are also aware, the drafting of Sections 18 and 19 was influenced by the Work and Pensions Select Committee. Following trials, those sections will deliver a final nudge to consumers to consider taking guidance prior to accessing their pension.

The Government firmly believe that, to effectively prompt more people to take guidance before accessing their pension where it is appropriate, we need to understand the impact of the nudge, and ensure that we avoid creating perverse incentives. We do not disagree with the principles of the amendment—work is already under way to establish how best to ensure that people thinking about accessing their pensions are encouraged to take guidance. We believe it is essential to use the evidence base that the trials on a stronger nudge will provide, and to consult before implementing the primary legislation in the Act. We would welcome the thoughts of the noble Lord and my noble friend on the proposals in the consultation.

The trials to test the most effective way to deliver on Sections 18 and 19 are due to conclude shortly, and an evaluation report is expected to be published by MaPS this summer. We are working to deliver on the requirements of the Act as quickly as possible, and as such we are already preparing for a public consultation this year. The Financial Conduct Authority will also consult on rules that have regard to these regulations, to make sure that there is consistency between occupational pensions and personal and stakeholder pensions.

The noble Lord seeks to require a member to provide responses to questions before a transfer can proceed. The effect of the amendment is that trustees would have the power to refuse a transfer should members’ responses not meet the conditions which the amendment proposes should be set in regulations. I assure him that the Government are already introducing conditions that seek to safeguard members against the risk of being defrauded. That change will strengthen trustees’ discretion in respect of transfers. Transfers were discussed in the earlier debate on Clause 124. The Government are amending members’ statutory right to transfer, to allow conditions to be imposed for transfers between schemes. That is aimed at ensuring that transfers are made to safe destinations. Non-statutory transfers can still take place, if the scheme rules allow. However, the amendment puts responsibility on members, not trustees, to assess the appropriateness of the receiving scheme. If the questions to be asked of members are specified in regulations, as proposed new subsection (1)(c) requires, an unintended consequence could be that fraudsters will be enabled to game the system. Members could be coached to provide answers that lead to transfers that should have been refused.

As noble Lords will recall, we have banned cold calling on pensions in legislation and established Project Bloom: a joint task force between government, regulators and law enforcement to share intelligence, raise awareness of scams through communications campaigns, and take enforcement action when appropriate. The FCA and the Pensions Regulator launched the latest ScamSmart advertising campaign on 1 July 2019, which has targeted those approaching retirement, as they were identified as being most at risk from scammers. There is also an FCA warning list, an online tool that helps investors check if a firm is operating with the right authorisation and find out more about risks associated with investment.

The noble Lord raised a specific concern about transferring out of DB schemes. Since January 2018, following its work on the British Steel pension scheme, the FCA has been working closely with both the Pensions Regulator and the Money and Pensions Service to ensure that it monitors pension transfer activity in DB pension schemes that might be subject to increased transfer activity. Also since January 2018, the FCA has issued tripartite letters to over 50 defined benefit pension scheme trustees. The tripartite letter reminds scheme trustees of their responsibilities when issuing transfer values to members and requests them to provide data that allows it to monitor scheme activity. On 21 January 2019, the FCA published a new protocol for how the three organisations—the FCA, TPR and MaPS—will work together to share information and work with pension scheme trustees, and that protocol addresses many of the recommendations made in the Rookes report.

I want to touch on one other point raised briefly by the noble Lord, Lord Sharkey. He suggested that the new pension freedoms might be encouraging people to draw down savings too fast, putting them at risk of scams. In fact, the Financial Conduct Authority’s Retirement Outcomes Review did not find significant evidence of consumers drawing down their savings too fast. The study’s findings, published in June 2018, found that most of those withdrawing had some other form of retirement income or wealth.

Clearly, it is of the utmost importance that information and guidance are available to people and that they are aware of it. That is why there are now more opportunities for people to access guidance earlier in the pensions journey. Alongside the stronger final nudge trials, Pension Wise continues to run successful advertising campaigns across multiple channels, as well as working with employers nationally and locally to encourage them to engage with their employees at their place of work. The Financial Conduct Authority’s “wake-up” packs also encourage people to think about their pension options and include signposting to Pension Wise.

I reassure noble Lords that we are very aware of the importance of the need to make progress with implementing the requirements placed on government, the Money and Pensions Service and the Financial Conduct Authority, as set out in the Act. Our aim is to find an effective and proportionate way to do this.

To conclude, I accept that this work might not have progressed as quickly as perhaps noble Lords would like, but that is for a good reason. I believe it is very important to get this right and ensure that the policy is developed based on evidence. We always talk about evidence-based policy and this is a classic example of that. The trials will conclude very shortly and will be followed by an evaluation report. We will consult this year and will seek to lay regulations as soon as possible after that, alongside the rules that will be made by the Financial Conduct Authority.

For the reasons I have explained, I hope that the noble Lord will feel able to withdraw the amendment.

Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015

Debate between Earl Howe and Lord McKenzie of Luton

Monday 26th October 2015 Lords Chamber

[Earl Howe]

The evidence was in the Budget analysis, which I am sure the noble Baroness has read—the distributional analysis that came out at the time of the Budget.

[Lord McKenzie of Luton (Lab)]

My Lords, is the Minister saying that eight out of 10 people currently on tax credits and subject to these cuts are similarly to be better off?

Care Sector

Debate between Earl Howe and Lord McKenzie of Luton

Tuesday 25th November 2014 Lords Chamber

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con)]

My Lords, I begin by congratulating the noble Baroness, Lady Kingsmill, on securing debating time for this Motion and on her opening speech. I thank all noble Lords for their excellent and thoughtful contributions.

I say immediately that working conditions in the care sector are very important for the well-being of our nation. We know that there are issues of concern and the Government are taking action. The White Paper, Caring for our Future: Reforming Care and Support, and the Care Act set out clearly what care and support system we want to achieve. Everything we want to achieve will depend on the competence, commitment and sensitivity of care workers. The positive relationships that are formed with people needing care are essential to providing good care.

The Department of Health is committed to ensuring that there are the right numbers of people with the right skills, knowledge and behaviours to deliver the quality, compassionate care that people need. We know that the recruitment and retention of care workers is fundamental to this. In that connection, I listened with great care to the noble Lord, Lord Curry. We published the recruitment and retention strategy in May 2011 in conjunction with Skills for Care, which worked to address the issue of how we attract and retain more people in social care. A refreshed recruitment and retention strategy was launched in September this year. Skills for Care leads the DH recruitment and retention working group, which will progress the implementation of the recommendations in the new strategy.

We have done three things straightaway. We have doubled the number of social care apprenticeships starts; we have launched a new care ambassadors service; and we have launched and piloted a values-based recruitment toolkit for the sector. Our aim is to continue this important work by supporting employers.

Registered managers, referred to in the noble Baroness’s report, have a vital front-line responsibility, and it is imperative that they are supported and do not feel isolated. We have worked closely with the National Skills Academy for Social Care to launch a national programme of support for registered managers.

The noble Baroness, Lady Kingsmill, proposed that we should introduce a licence to practise. I am afraid I need to make it clear to her that we do not think that a licence to practise is necessary or desirable. The idea of compulsory statutory regulation can seem an attractive means of ensuring patient safety, but our view is that regulation is no substitute for a culture of compassion, safe delegation and effective supervision. Putting people on a centrally held register does not guarantee public protection. Instead, the key is for employers, commissioners and providers to make sure that they have the right processes in place to ensure that they have the right staff with the right skills to deliver the right care.

Systems and processes are already in place to provide public assurance, including Care Quality Commission registration requirements and the Disclosure and Barring Service, which are being enhanced with the new chief inspectors. Under the leadership of the Chief Inspector of Adult Social Care, the CQC has put in place specialist inspection teams that subject care providers to more effective scrutiny and result in a rating that celebrates outstanding care as well as identifying where there are problems. Therefore, I cannot agree with the noble Baroness’s contention that the CQC’s requirements are somehow weaker than they were.

Better skills and training are an important part of raising standards overall. Camilla Cavendish told us that social care support workers and healthcare assistants do not have consistent training and do not have a clear status or standard job titles. I can tell my noble friend Lady Gardner that we are on track to introduce a care certificate for new healthcare assistants and social care support workers from 1 April 2015. This means that there will be specific standards for the training of new care workers.

My noble friend Lady Gardner expressed concern that employers and agencies train only for their own organisations and my noble friend Lady Brinton asked about the support that exists to enable staff to build their qualifications. Skills for Care has produced a range of training materials that are recognised across the sector. I mentioned the care certificate that we are introducing. In general, I would say that we are committed to working with employers to ensure that this part of the workforce receives high-quality and consistent training to enable them to deliver the best standards of support and care to patients and service users.

My noble friend Lady Brinton asked specifically about BME staff. The department has worked with the National Skills Academy for Social Care to produce training and development support for BME staff to enable them to progress to higher levels within the sector. As regards incentives for small businesses to train staff, which my noble friend also asked me about, small social care businesses are able to apply to Skills for Care for funding to help train their staff. The department provides £12 million to Skills for Care for this very purpose. However, it is incumbent on small businesses to ensure, like bigger enterprises, that their staff are appropriately trained and competent to carry out their role.

The noble Baroness, Lady Kingsmill, called for a care contract to be held between local authorities and care providers setting out working conditions and employment law. The statutory guidance to the Care Act which we launched recently is clear that when local authorities commission services they should make sure that care providers comply with national minimum wage legislation. The statutory guidance is also clear that, in most circumstances, very short home care visits are not appropriate to deliver intimate care needs. In addition, new fundamental standards will come into force next year. These new standards cover staffing and will allow the CQC to prosecute those providers that are responsible for the most serious failings in care. The CQC has an enormously challenging task in transforming its approach to the regulation and inspection of providers of social care.

We are also asking employers and employees working in care to sign up to the social care commitment, pledging to improve the quality of the workforce. My noble friend Lady Brinton once again asked what can be done to improve rates of pay in the sector, a concern also raised by the noble Lords, Lord Lipsey and Lord Kennedy. Under the Care Act, local authorities will be required to shape their whole local markets to ensure that they are sustainable, diverse and offer high-quality care and support for people in their local area. The Act is clear that a local authority’s own commissioning is a key driver in shaping the market. Ultimately, local authorities, not the Government, are responsible for the commissioning of services. However, when commissioning, a local authority must ensure that it promotes a sustainable market that delivers high-quality services for all local people. The department has developed statutory guidance to support local authorities to meet these new duties when commissioning and we are working with the Association of Directors of Adult Social Services, the Local Government Association and other partners to develop a set of commissioning standards which will, again, help local authorities to improve in this area.

The noble Lord, Lord Lipsey, asked specifically what we are doing to make sure that local authorities pay fair fees, while the noble Lord, Lord Birt, drew attention to the disparity in some instances between the actual costs of care and the fees paid by local authorities. We are clear that local authorities should have regard to the cost of care when setting prices. The Care Act sets out a duty on local authorities to have regard to the importance of sustaining the market as a whole, as I mentioned earlier, to meet the needs of local people. That will include where the local authority commissions services itself, considering the impact of how it contracts with individual providers, including the price it pays in fees. Contracting is of course a local matter, with fees paid to providers best left, in our view, to local negotiations in an open market that reflects local conditions.

My noble friend Lady Chisholm spoke powerfully and knowledgeably about the role of unpaid carers. I would say to her that the Government fully recognise the role of unpaid carers, who do an invaluable job in providing care for their loved ones. My department agrees that unpaid carers need support in the form of breaks. There are examples being provided by local authorities and charities, but as my noble friend knows, the Care Act is ushering in a significant new set of rights, effectively putting—for the first time—their needs on an equal footing with those of the individuals they look after.

We agree with the noble Baroness, Lady Kingsmill, that low pay can be a concern for some working in this sector. It was a concern also raised with particular emphasis by the noble Lords, Lord McKenzie and Lord Curry. The Government do not directly employ care workers, but let me be clear: non-compliance with the national minimum wage is not acceptable. That is why we are working across government on enforcement activity. I can tell the noble Baroness, Lady Andrews, that HMRC is responsible for ensuring that staff receive the minimum wage and it takes that role seriously. It has set out the action it has taken in the care sector in a report published last November. While the CQC does not itself enforce national minimum wage legislation, where its inspections uncover evidence that suggests the employer may not be paying the minimum wage, we would expect the commission to pass that intelligence to HMRC for its consideration. HMRC is continuing to carry out enforcement action in the social care sector. It will investigate all complaints made by care workers that their employer is not paying them the national minimum wage. Between April 2011 and March 2013, HMRC undertook a targeted enforcement exercise in the care sector. The work investigated complaints relating to 224 employers. Evidence of non-compliance was found in nearly half the cases and resulted in payments of more than £1 million in arrears to care workers.

I can tell the noble Lord, Lord McKenzie, and the noble Baroness, Lady Andrews, in particular that we are taking a tough approach to naming and shaming any providers who do not comply with our national minimum wage laws, with a more robust scheme now in place for cases opened after October 2013. Cases involving care workers often take longer to investigate than comparable cases in other sectors for a number of reasons, but we anticipate that the first examples of care providers to be named under the new scheme will appear in the next few months. Social care providers who have not paid the national minimum wage previously will be required to pay workers the money owed to them, to pay a penalty for failing to meet their legal obligations, and to change their practices to ensure future compliance.

The terms and conditions of employment for social care workers are essentially a matter for local employers within the existing requirements of employment legislation. However, it is important that the Department of Health continues to work with local authorities to ensure that the providers they commission services from have a high-quality workforce with fair terms and conditions. That brings me to zero-hours contracts. These contracts, when used responsibly, may be appropriate in some circumstances and can offer flexibility and opportunities to both the employer and the individual. The Government are committed to ensuring that zero-hours contracts are used fairly and have included provisions in the Small Business, Enterprise and Employment Bill banning exclusivity clauses in employment contracts that do not guarantee any hours. The Bill was introduced into Parliament on 23 June. Following feedback from stakeholders on the ban on exclusivity clauses, the Department for Business, Innovation and Skills is consulting further on how to prevent unscrupulous employers evading the exclusivity ban.

The noble Lord, Lord McKenzie, spoke powerfully about 15-minute visits. Short care visits are not normally adequate for the needs of service users. We know that care workers find 15-minute appointments demotivating because they are unable to complete their tasks within the time and develop meaningful relationships. We will continue to learn from the best employers and commissioners about how this situation can be improved. A focused peer challenge that will use elements of the commissioning standards will be piloted with two reviews by ADASS and the LGA in the coming months. We agree that in most cases very short visits are incompatible with high-quality care and the Care Act sends a clear message: commissioning services without properly considering the impact on people’s well-being is unacceptable.

However, it would be inappropriate to introduce a blanket ban on 15-minute home care visits since they may be appropriate in certain circumstances; for instance, when checking medication has been taken. A more fundamental culture shift towards a focus on outcomes through guidance and support is, we think, the way forward. Ultimately, local authorities are responsible for the commissioning of services, as I have indicated, but we agree, as does ADASS, that inappropriately short home care visits should be discouraged.

My noble friend Lady Brinton asked about the repatriation of foreign workers. I will need to write to her about that. Turning to a point raised by the noble Baroness, Lady Kingsmill, in relation to Southern Cross, the new Care Act establishes the CQC as the financial regulator for the largest social care providers. It will look at the finances of these providers and, where financial failure is likely, it will warn the affected local authorities to ensure that there is no gap in care services. The regime will not prop up failing providers but ensure continuity of care services for those affected, which surely is the most important consideration.

In response to some of the remarks made by the noble Lord, Lord Birt, with which I agree for the most part, it is worth reflecting that an effective market has been operating in social care for the best part of 20 years. Increasingly, private providers and third-sector organisations have provided services. They have done so effectively but, as in any market, some providers leave and others join. Exits can happen for any number of reasons but what we do not want to see is the kind of disruption to the market that the Southern Cross debacle could have led to had it not been managed successfully.

Delivering high-quality care is dependent upon a range of factors and uppermost is having a workforce that has the right attitudes, values, skills and qualifications. I hope that noble Lords will accept from my remarks that we have a programme of work in hand that is aimed at improving working conditions. We are working across government to tackle non-compliance with the national minimum wage. We are also making it clear that commissioners of services should ensure fair pay, terms and conditions and compliance with the national minimum wage when commissioning services, and we are ensuring set standards of training are introduced. These are surely the key pillars on which to ensure an attractive and fulfilling career can be built for this vital sector of the workforce.

[Lord McKenzie of Luton]

I apologise for interrupting the Minister. Is it the Government’s view that in determining whether or not the national minimum wage has been paid, the time spent travelling between client visits should be included?

Mesothelioma Bill [HL]

Debate between Earl Howe and Lord McKenzie of Luton

Wednesday 17th July 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, this has been a wide-ranging debate. I do not think I will be drawn into issues of hypothecation, although it is a tempting subject for debate. Throughout our deliberations on the Bill and before, the noble Lord, Lord Alton, has been passionate and convincing about the case for funding mesothelioma research. He has been supported in this by many noble Lords, including those who have added their names to his amendments, particularly the noble Lords, Lord Walton and Lord Pannick.

The case that the noble Lord makes is thorough and incontestable. Despite knowledge of this terrible disease and its long latency over many decades, research spending by Governments has been derisory. The noble Lord contrasted the levels of research on diffuse mesothelioma with other cancers to reinforce his point but he acknowledges, as does the noble Lord, Lord Walton—and as indeed do we—that the insurance industry has funded such research in the past. The ABI has made it clear to us in discussion that it stands ready to do so again in the future, if the Government are prepared to play their part. They had said that they would match-fund. I hope that we will hear from the Minister in a moment that the Government will play their part, and how they will do so.

We all recognise that the noble Lord, Lord Alton, has made his case about the need for a national research effort, so the issue is not whether but how this outcome is to be achieved. His approach is focused on the insurance industry’s contribution, which, as he explained, is set down by Amendment 24 as a “Research supplement” raised under regulations under the levy provisions. That supplement could not exceed 1% of that required for payments under the scheme. The proposed regulations must cover how such amounts are to be applied and the role of the scheme administrator. Of itself, the amendment makes no reference to the Government’s obligations. I think that we will hear a different approach from the Minister about the plans that he would wish to develop to attract quality research funding for mesothelioma. If this is right, we need to understand the parameters of this: how much is involved and what is expected of the insurance industry. We also need to understand whether the approach is inconsistent with that of the noble Lord, Lord Alton, which is to raise a levy on insurers.

We have thought long and hard about this and which is the best way forward. Our shared objective is, I believe, to get properly funded research under way as quickly as possible and on a sustainable basis. We all acknowledge the commitment and integrity of the Minister and his desire to fulfil this objective. After hearing the Minister again, the noble Lord, Lord Alton, may consider that he has sufficient reassurance that his objectives will be met, albeit by the administrative route rather than the legislative one. Perhaps he has already concluded that from the extensive discussions he has had to date. If the noble Lord, Lord Alton, is not reassured, and presses his amendment, we are minded to support him in the Lobby.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, it may be a slight surprise to see a Minister from another Department of State responding to this amendment. However, my noble friend Lord Freud has asked me to speak to it as a reflection of the importance that he and I place on promoting research into mesothelioma. We are both sympathetic to the view that more money should be put into research on this disease. Indeed, before this amendment was tabled, my noble friend and I spent some time exploring possible routes for funding. It is the fruits of those discussions that I shall now cover. However, the mechanism proposed in this amendment is not the best way to achieve the objective that the noble Lord, Lord Alton, is aiming at.

There are a number of reasons for this. In Committee, my noble friend set out some technical but none the less important arguments as to why the Government are resistant to the idea of a supplementary levy for mesothelioma research. I will not rehearse those arguments again and my noble friend Lord Deben need not worry as I am not going to rely on them at all. I need to stress that any additional research charge of the kind proposed by the noble Lord, Lord Alton, would, like all taxation, have to be paid into the Consolidated Fund and, if hypothecated, would then have to be paid out by the Treasury for a specific purpose. The Treasury does not normally handle tax income in this way, and there would need to be more convincing arguments before it could consider doing so for mesothelioma research.

The more substantive problem with the amendment is to do with research policy. As noble Lords will be aware—and the noble Lord, Lord Howarth, pointed to this—there is a fundamental, widely accepted principle that the use of medical research funds should be determined not just by the importance of the topic but by the quality of the research and its value for money. There is a good reason for this. There will always be more proposals for high-quality medical research overall than there are resources available for funding, and it is arguably unethical to support second-rate work in a particular area at the expense of higher-quality work in another equally important one. Noble Lords will understand that this is why, as a rule, public sector funders of research do not ring-fence funds for particular diseases. It was the same principle that prompted Dame Sally Davies to restructure the research funding that the Department of Health was putting into the NHS over many years, so that funds would flow, as they now do, to the most important, highest-quality research.

In the case of mesothelioma, the real issue is not just the money; it is the quality of the research being proposed. How can we try to ensure that the research proposals in this field reach the quality threshold required to secure funding? If that threshold is reached, funding is much less of a difficulty; indeed there is no need to think about the forcible gathering of funds from insurers. If noble Lords agree, the goal is how we stimulate high-quality research proposals without undermining the country’s strategic research mechanisms.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2013

Debate between Earl Howe and Lord McKenzie of Luton

Thursday 7th March 2013 Grand Committee

[Earl Howe]

I am advised from the highest authority that the answer to that question is no. If I can supply the noble Lord with any further information, I would be happy to do so. The noble Lord, Lord McKenzie, asked me whether I could give him any further information on the progress for the new meso scheme. The Department for Work and Pensions is actively working with stakeholders, including the Asbestos Victims Support Group to develop this scheme. Unfortunately, I am not in a position to say anything ahead of the gracious Speech—but we might or might not hear something to our advantage on that occasion.

However, I can say that we fully understand that people who develop diffuse mesothelioma as a result of their negligent exposure to asbestos at work and who are unable to trace a relevant employer or their employers’ liability insurance policy to claim against would be eligible to claim from this scheme. We appreciate the urgency of the situation. As I have mentioned, eligible claimants diagnosed with diffuse mesothelioma from 25 July 2012 onwards will be able to receive a payment once the scheme commences.

I am aware that there may be one or two questions I have not been able to answer, some of which I have already referred to. However, I hope that in the main I have covered the issues raised and I commend the regulations to the Committee.

[Lord McKenzie of Luton]

Before the noble Earl sits down, I should like to thank him because he has gone through a lot of detail for us today. As regards the potential impact of the debate we are having generally about changes to the Health and Safety at Work etc. Act, civil liability and negligence, has there been any assessment of the relevance of that to compensation recoveries that are factored into the funding of the schemes that we are talking about today?

[Earl Howe]

My answer to that would be expressed in general terms. It is a longstanding principle that people should not be compensated twice. Usually, where social security benefits have been paid, they are recovered from compensation where people have been successful in a subsequent civil claim. That is the underlying thinking that is guiding us. But again, if I can enlighten the noble Lord further, I will do so in a letter.