Employment and Support Allowance
Esther McVey Excerpts(6 years, 9 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
On 14 December 2017 my predecessor provided a statement to the House on how the Department will be undertaking work to correct underpayments that may have occurred as a result of how a proportion of incapacity benefit claims were transitioned to employment and support allowance between 2011 and 2014. I wanted to take this opportunity to update the House on how this work is progressing.
My Department will be reviewing close to 300,000 cases, of which just under a quarter have been underpaid. We have begun contacting individuals and making payments. We are actively recruiting staff and have scaled up the team undertaking the work from 10 to 50 in December last year, which will grow further to 400 from April, allowing us to deal with the situation at pace.
I know many Members will want to provide reassurance to their constituents who think they may have been affected. I can assure the House that my Department will be contacting all those identified as potentially impacted. We have been engaging with external organisations that often provide support and advice to our claimants, so that they too can be confident that we have a robust process in place, and can provide individual advice should they be contacted.
Today I can confirm that, based on departmental analysis, we will be prioritising any individuals whom we know from our systems to be terminally ill. Thereafter we will work through the cases identified as most likely to have been underpaid according to our systems. We have also undertaken an equality analysis to support this prioritisation approach.
Once an individual is contacted, and the relevant information gathered, they can expect to receive appropriate payment within 12 weeks. I can also confirm that once contacted, individuals will be provided with a dedicated free phone number on which they can make contact with the Department.
Like my predecessor, I am committed to ensuring that all cases are reviewed and paid by April 2019.
[HCWS549]
Universal Credit
Esther McVey Excerpts(6 years, 9 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
As the hon. Member for Wirral West (Margaret Greenwood) is on the Opposition Front Bench, may I start by congratulating her on her promotion? I am sure that she would have liked to have got it in happier circumstances, but none the less I welcome her to her role. I hope that she does not fall victim to the bullying culture of the Leader of the Opposition’s office, as the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) has.
Well, well, well, what a strange old topsy-turvy world we find ourselves in. Measures so strongly fought for and won by claimants, MPs, stakeholders and charities only months ago are now being opposed by the Opposition. These changes were proposed by the most vocal defenders of benefits, and they are now being obstructed. We in the Chamber should not be giving the public misinformation, but unfortunately that is what has been happening so far.
Last month, stories emerged from Opposition Members—particularly the hon. Member for Ashton-under-Lyne (Angela Rayner)—that have been repeated today: namely, that our plans for entitlement to free school meals would deprive more than a million children. It took a “Channel 4 News” FactCheck to point out that no child who currently receives meals would lose their entitlement and that, in fact, some 50,000 more children would benefit under our proposals when compared with the previous system.
I understand that it is the nature of the Opposition to oppose, but the scaremongering and misinformation from the Opposition has surely reached a new low as today they seek to annul regulations that consist largely of changes that were introduced purely to support benefits claimants—changes that Opposition Members have themselves called for. All this after a recent intervention by the UK Statistics Authority, which made it clear that the claims made by Opposition Members about universal credit causing poverty, debt and eviction were not supported by the evidence.
Of course, the scale and nature of the change represented by universal credit means that scrutiny is inevitable and important, and I welcome that, but unsubstantiated and exaggerated claims about widespread problems caused by universal credit amount to nothing less than scaremongering. They cause claimants alarm and, in the worst cases, stop them getting the money that they are entitled to, yet we find ourselves here again, debating universal credit, with the same false alarms coming from the shadow Cabinet—only this time we are debating the very regulations that we have designed to address the legitimate concerns of Opposition Members and our stakeholders.
Ruth George (High Peak) (Lab)
The Secretary of State has said that claims should not be made when they are unsubstantiated. I have been asking parliamentary questions about the £50,000 increase that is in the consultation response, and I have received no facts about how the figure has been arrived at—none whatsoever. Will that be published, please?
Maggie Throup (Erewash) (Con)
Will my right hon. Friend dispel some of the myths and scaremongering that have been put out by the Opposition and reassure my constituency, where universal credit is being fully rolled out, that those already in receipt of free school meals will not lose that eligibility?
Several hon. Members rose—
Ms McVey
I will carry on for a bit, and then I will gladly take some more interventions.
We are not just debating these regulations today, but trying to save them from the Opposition, who would be happy to destroy this extra support for our benefit claimants. Perhaps I should remind the House of some of the changes that are in these regulations and what benefits they will bring to claimants. After all, the policy underpinning these regulations has been widely debated and supported both inside and outside this Chamber. The regulations abolishing waiting days will help many claimants by, on average, £160, while reducing the time taken to receive the first monthly payment. These regulations bring into effect the housing benefit transitional payment, which amounts to two weeks of housing benefit at the start of the claim. That is worth, on average, £233 towards helping claimants stay on top of their housing costs as they move into universal credit. These regulations increase the work allowances and are worth around £68 a year in further support for those who are striving to enter work.
Neil Gray (Airdrie and Shotts) (SNP)
The Secretary of State is attempting to provide a stout defence of the impact of universal credit. Why is it then that, only last month, her colleagues on Stirling Council proposed three years’ worth of mitigation against the impact of universal credit, worth more than half a million pounds?
Ms McVey
Actually, if the hon. Gentleman looks at what this Government introduced in the Budget, he will see that it was a package of support worth £1.5 billion for the country. What we are doing is supporting people as best we possibly can. Additionally, these regulations fund temporary accommodation through housing benefit, which has been widely called for and unanimously welcomed by local authorities.
These regulations follow on from a host of other changes that we have already implemented, including making our telephone lines Freephone numbers, extending the maximum repayment period for advances from six months to a year, increasing the maximum advance that claimants can receive to up to 100%, changing the guidance to ensure that, when private sector housing claimants come on to universal credit, we know whether their rent was previously paid directly to the landlord and can ensure that that continues.
Clive Lewis (Norwich South) (Lab)
Meaner even than the master in Oliver Twist’s workhouse, the Secretary of State seeks not just to stop the second helping, but to stop any meal at all. I ask her to come to Norfolk. If these changes go through, 12,500 children will be denied a hot midday meal. How does that square the circle in relation to making work pay? Please, can she tell us —anything?
Ms McVey
Unfortunately—I think that I was taught this as a child—when someone has totally lost the argument, they make up the facts, and that is what we are hearing from the Opposition. Although we have brought in all the requests that they wanted to support more people into work—I have just read out the list—they just scaremonger and make things up as they go along. I hope that it is clear to the whole House that these regulations will bring in real and tangible benefits for claimants and that, as promised, we are making the changes necessary to continue to deliver universal credit safely and securely, with all the necessary support that claimants need.
I want to be clear about another thing, too, because Members have stood up during past universal credit debates to recount stories of cases where their constituents have reported difficulties with universal credit. Where that has happened, we have immediately sought to address the concerns, because it is vital to us all that we get this right, so that we can deliver the most modern, forward-thinking, flexible benefit in the world, and that is what this Government are seeking to deliver. This benefit will be at the cutting edge of support throughout the world—that is what this Government are delivering.
Stephen Timms (East Ham) (Lab)
On problems with universal credit, the Secretary of State will, I think, recognise that the last thing that families earning a bit less than £7,400 a year will want is a pay rise, because if they get it, they will immediately lose their free school meals and be much worse off as a result. That is a very serious problem for work incentives, which used to be a big priority for her Department. Does she recognise that major problem?
Ms McVey
The right hon. Gentleman raises a fair point that I would like to address. By contrast, the other points that we have heard so far have been fabrication. He mentioned people earning £7,400. Actually, with universal credit, we are talking about people who will be bringing home somewhere between £18,000 to £24,000. He is quite right—[Interruption.] If Members will kindly let me finish this answer to the very pertinent question asked by the right hon. Gentleman, as this is now a personalised benefit where people will have their own work coaches, we will not seek to put someone in a less advantageous situation. Therefore, if people look at the money that is coming in and the extra support that is coming from school meals, they can see that we will not seek to do that to an individual. A work coach will be working with individuals to help them to progress in work, so that they are in a better situation.
Chris Philp (Croydon South) (Con)
On work incentives, can the Secretary of State confirm that there have been two studies—one in December 2015 and another in September 2017—both of which showed that people on universal credit were more likely to get back into work than those people on the predecessor benefits? Therefore, this is helping to get people back into work.
Ms McVey
My hon. Friend is quite correct. Further studies show that people on universal credit are much more likely to look for work than people on jobseeker’s allowance—86% of those on universal credit, compared to 34% of those on jobseeker’s allowance. Under the legacy benefits came things that I am sure we all remember, such as the 16-hour rule, which trapped people on benefits. That will not happen under universal credit because it pays people to work, every hour that they work.
Mr Duncan Smith
My right hon. Friend is doing a fantastic job. She has pointed out the absurdity of the Opposition’s position, whereby they will now vote against the changes that will benefit those who most need them. Alongside that, they are now voting for a policy that would deliver free schools meals to families earning £40,000 a year. Does not she think that the Opposition are for the few, not for the many?
Ms McVey
My right hon. Friend makes a very good point. Perhaps these are honest mistakes by the Opposition; I am not sure. Under universal credit, people can be in work and not in work. Perhaps the Opposition do not understand the complexities of this system, which is helping people into work and then to progress at work. As my right hon. Friend said, if we allowed free school meals in every family on universal credit, those families could include parents earning £40,000 a year. As has always been the case, we support people on free school meals from families who are either not in work or in low amounts of work.
Several hon. Members rose—
Madam Deputy Speaker (Dame Rosie Winterton)
Order. Again, can we listen to the Secretary of State? It is fine if she wants to take interventions and she has indicated that she will take some more, but I do think that hon. Members should be a bit calmer.
Helen Whately (Faversham and Mid Kent) (Con)
Jobcentres in my constituency tell me with some passion that universal credit is really helping them to get more people into work. The Government have also listened to concerns about universal credit and are making improvements. Does it not baffle the Secretary of State and is it not bizarre that the Labour party is trying to block those improvements, when the Government are doing exactly the right thing?
Ms McVey
My hon. Friend is spot on, and the incredulity with which she says what the Opposition are stopping points out the ridiculousness of their position. Not only have we helped an extra 3.1 million people into work, but these regulations help the most vulnerable and will bring in an extra £1.5 billion of support.
Several hon. Members rose—
Ms McVey
I will carry on for a little bit more before taking more interventions from Opposition Members.
I turn to the Free School Lunches and Milk, and School and Early Years Finance (Amendments Relating to Universal Credit) (England) Regulations 2018. The Government have recently published their responses to two consultations on the earnings thresholds to receive free school meals under universal credit. The scope of these consultations includes entitlement to free school meals, the early years pupil premium and free early education provision for two-year-olds. The intention of these regulations is to replace the transitional criteria introduced in 2013. These transitional measures made all families on universal credit eligible for these entitlements—a move that was necessary so that no household should lose out during the early stages of the universal credit roll-out. Having fully considered all the responses to the consultation, the Department for Education laid these regulations before the House on 7 February to replace the temporary criteria with the new earnings threshold. This is what much of the debate has centred on so far. I hope that we have given clarity and the Opposition now understand why accepting these regulations would be so helpful to their constituents.
Catherine West
This change to benefits shows how untrusted the Government are on benefits. If they are trying to sell something good, they cannot, because they are so untrusted on benefits. If the system is so fantastic, why do 80% of people who come to see MPs get their benefits? Why should not the system just work? [Hon. Members: “What?”] Some 80% of appeals for universal credit—
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. May I help a little bit? Would hon. Members make short interventions? I want to ensure that all Members get in. The sooner we get this speech over, the sooner we can get to the Back Benchers.
Ms McVey
It would be helpful if hon. Members did not just make up statistics and facts as they went along, as we just heard from the hon. Lady. Hon. Members should listen to us regarding the support that we are now providing to claimants. As I said, it is a topsy-turvy world. There was a ding-dong when the Opposition were calling for the changes. Now that we are introducing the changes, we are back to another ding-dong and they do not want the changes—but never mind.
I turn to the regulations concerning national insurance contributions and childcare. These regulations align the tax and national insurance treatment of employer-supported childcare, where parents opt into the new tax-free childcare scheme. They remove the national insurance disregard to new entrants to the scheme, once the relevant day has been set. They are vital to ensure that the tax system operates fairly and consistently and that the Government can target their childcare support effectively.
For many parents, being able to afford good-quality childcare is essential for them to work and support their families. That is why we are replacing the childcare vouchers with tax-free childcare, which is a fairer and better-targeted system. Tax-free childcare is now open to all eligible parents, who can get up to £2,000 per child per year to help towards their childcare costs. More families will be able to access support through tax-free childcare because only about half of employed working parents can access vouchers, and self-employed parents were excluded from vouchers. Therefore, 1.5 million families are now eligible for tax-free childcare compared with about 600,000 families currently benefiting from vouchers.
Mr Ivan Lewis (Bury South) (Ind)
Will the Secretary of State clarify something she said in relation to people getting pay increases that then perversely lead to them being worse off? She appeared to say that she would instruct personal trainers to put that right financially. I can hear a shudder going around benefits offices up and down the country at the idea that she has unilaterally said that if any constituent of ours faces being worse off as a consequence of a pay rise, perversely, her personal trainers will compensate them for that loss.
Ms McVey
I thank the hon. Gentleman for that intervention, because it allows me to explain that universal credit works on a tailor-made basis, so that the claimant will always be in contact with their work coaches to work out what is better, how progression would be better and why they would be taking reasonable work because it makes them better off. I am not saying this unilaterally. I ask all Opposition Members please to go to their local jobcentre and meet the work coaches, who can then explain how the system works.
In 2013, the Government announced the introduction of tax-free childcare as the successor to childcare vouchers. The passing of the Children and Families Act 2014, which legislated for tax-free childcare, had cross-party support. Tax-free childcare is now fully rolled out, and the date for the closure of the voucher scheme to new entrants is April this year. This was set out in the 2016 Budget, giving two years’ notice. Parents receiving childcare vouchers can continue to use them while their current employer continues to offer the scheme.
Mr Marcus Jones (Nuneaton) (Con)
Is not the bottom line that under the previous tax credits system people got 75% of their childcare costs but under universal credit they get 85% of their childcare costs, and they can work all the hours that they want to?
Ms McVey
Universal credit is far more generous, as my hon. Friend points out. Up to 85% of childcare costs will be given to people who need it.
Under the childcare voucher scheme, the estimated cost to the Exchequer of forgone employers’ national insurance contributions is £220 million per year. This is paid to employers and voucher providers to administer the schemes, so it is not surprising that voucher providers are lobbying hard to keep the scheme open. However, we are focused on delivering a better childcare offer for working families. Tax-free childcare is simpler to administer for childcare providers, who will not have to deal with multiple voucher providers. These regulations will bring the national insurance contributions relief in line with the income tax treatment. They are an essential step in reforming Government childcare support to provide a fair and well-targeted system. Closing the childcare voucher scheme to new entrants will ensure that more Government support goes directly to parents and helps working families to reduce their childcare costs.
Dr Philippa Whitford (Central Ayrshire) (SNP)
With the consultation that the Government are carrying out on abuse of women, does the Secretary of State recognise the threat of financial control and abuse posed to women by the single payment? Would she be willing to consider making individual payments of child tax credits to the mother, and so on, the norm? Charities have demonstrated that women who are being abused will not apply for exception because they feel they will come under physical abuse.
Ms McVey
The hon. Lady makes a good point, and that is why it is possible to split payments according to need. The devolved Administration in Scotland have the right to alter these rules and provide extra support, should they wish to, but it is safe to say that payments can now be split, and we have listened to those concerns.
We are also listening to colleagues in Northern Ireland, who have raised specific circumstances relating to certain public sector service employers, and have committed to ongoing engagement with them to look at these issues, as tax-free childcare continues to roll out to replace employer-supported childcare. We have seen the success of 30 hours’ free childcare for three and four-year-olds in England, so we are committed to working with the Northern Ireland parties to administer childcare support of that kind in Northern Ireland, in the absence of an Executive.
For the reasons I have set out, annulling these regulations would deprive families and their children of the important and positive support that this Government are determined to offer and would have a range of very negative effects, so I call upon the House to oppose the motions.
Universal Credit
Esther McVey Excerpts(6 years, 9 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
On 8 February 2018, the Work and Pensions Select Committee, published a report into the universal credit project assessment reviews. From this publication, the House will be aware that my Department has been involved in a request under the Freedom of Information Act, for the release of the project assessment reviews conducted between March 2012 and October 2015 on the universal credit programme.
Project assessment reviews are an assurance tool used to assess major projects and programmes. The reviews are conducted by project professionals and subject matter experts drawn from across the public and private sector. The effectiveness of the reviews relies on confidentiality: information within the reports is non-attributable to encourage candour and a frank exchange of views. The reports act as advice to the senior responsible owner on the delivery aspects of their programme—they are not advice to Ministers. They are intended to give the senior responsible owner a project delivery perspective on their programme, independent of the programme management function. They represent perspectives for the senior responsible owner to consider and not absolute truths. The senior responsible owner, not the review team, is accountable to Parliament.
It should be noted that the reviews I will place in the Library are historical, conducted between March 2012 and October 2015. Come 2018, the universal credit programme is in a very different place since those reports were written. Universal credit is in every jobcentre and we are rolling it out safely and securely to all categories of claimant. We are focusing on the continued safe delivery of universal credit, so people continue to be helped to improve their lives.
In recognition of the confidential nature of these reports, the Work and Pensions Select Committee viewed the full set of project assessment reviews up to 2017 and published a report on 8 February 2018. The Work and Pensions Select Committee agrees that the historical issues have now been addressed and “substantial achievements” have been delivered since 2013. In the Committee’s report, they commended the Department for running the universal credit programme
“more professionally and efficiently with a collective sense of purpose”.
The universal credit programme does not lack scrutiny as the ongoing Work and Pension’s Select Committee inquiries demonstrate. Given the Select Committee has seen the reports subject to the freedom of information challenge, and commented upon them publically I can see no point in continuing to argue that case. Accordingly my officials will be writing to the Information Commissioner and to the first-tier tribunal to advise them of my decision to release copies of the requested project assessment review reports to the requestor.
With regard to future reports, I emphasise that the steps I have decided to take today, to disclose the material subject to proceedings, are exceptional. I remain of the view that it is critical to the effectiveness of the Infrastructure and Projects Authority assurance framework for participants to be confident that their comments will be non-attributable and that review reports will be treated as confidential.
I accept that this House and the wider public have significant interest in major Government projects. I support the principle of transparency, and the universal credit programme regularly publishes independent research and analysis into the effectiveness of universal credit. I believe that there are better ways of addressing this concern, rather than undermining the mechanism that provides senior responsible owners with an independent external perspective on the programmes they are responsible to Parliament for.
Universal credit is a flexible benefit, which has simplified the welfare system and ensures that people are always better off in work. We know that the legacy system trapped people in benefit dependency. We needed a new approach to reflect the 21st-century work environment. The evidence shows universal credit is working, with people getting into work faster and staying in work longer than under the old system.
I am sure this House joins me in recognising the great progress we have made since 2010, with 3 million more people in work and unemployment at a near record low. Universal credit builds on this success, delivering welfare reform that works for everyone.
[HCWS524]
Work and Pensions
Esther McVey Excerpts(6 years, 10 months ago)
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Mr Philip Hollobone (Kettering) (Con)
Financial directors must not cause detriment to any private sector pension scheme. Will my right hon. Friend ensure that the rules and regulations regarding the investigation of this sort of practice are toughened up, because we cannot allow this to happen in future?
Ms McVey
My hon. Friend is absolutely right. The Government are seeking to ensure that the regulator will—our new Bill will come out later in the year—have more rights to fine, follow criminal procedures and look into mandatory clearance. Those of us who have studied corporate governance realise that the rules changed in 1991—the Cadbury report and the OECD corporate governance rules—and were strengthened in 2002. I believe that now, under this Conservative Government, we will be strengthening the corporate governance rules again. [Official Report, 5 February 2018, Vol. 635, c. 1187.]
Letter of correction from Ms McVey:
An error has been identified in the response I gave to my hon. Friend the Member for Kettering (Mr Hollobone).
The correct response should have been:
Ms McVey
My hon. Friend is absolutely right. The Government are seeking to ensure that the regulator will—our White Paper will come out later in the year—have more rights to fine, follow criminal procedures and look into mandatory clearance. Those of us who have studied corporate governance realise that the rules changed in 1991—the Cadbury report and the OECD corporate governance rules—and were strengthened in 2002. I believe that now, under this Conservative Government, we will be strengthening the corporate governance rules again.
Motability
Esther McVey Excerpts(6 years, 10 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
John Mann (Bassetlaw) (Lab)
(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on executive pay and cash reserves held at Motability.
The Secretary of State for Work and Pensions (Ms Esther McVey)
I am here today to address the concerns that have been raised about the structure of the Motability scheme. Let me first say that the scheme provides important support for more than 600,000 disabled people and has improved and extended its offer over the past few years. For example, in 2013, in my role as Minister for disabled people, I summoned the chief executive and chair to explain the excessive pay and bonuses of Motability scheme staff and the sums of money held in reserves. Despite being told that the charity needed such money for capital reserves, and the Charity Commission agreeing with that, I pursued the matter with the Department and ensured that the funds were used to benefit disabled people. The result was that £175 million was used for transitional support for claimants.
In April last year, after firm encouragement from the then Minister, my right hon. Friend the Member for Portsmouth North (Penny Mordaunt), Motability extended that transitional support. After direction from the Department, the charity is now piloting a Motability scheme to help children under the age of three who are not eligible for the mobility component of child disability living allowance but who rely on bulky medical equipment. The scheme has the potential to help up to 1,800 families.
I must emphasise that Motability is an independent charity that is wholly responsible for the strategic direction of the Motability scheme. It has oversight of Motability Operations, the commercial partner that operates the scheme under contract to the Motability charity. As a company, Motability Operations is an independent commercial business regulated by the Financial Conduct Authority. Although the remuneration of its directors and managers is a matter for Motability Operations to decide, from the outside one has to question whether it is really right. That view is endorsed by the Charity Commission, which said yesterday that the Motability trustees may wish to consider the reputational issues raised by the salaries being paid to its commercial partner’s executives.
Motability was set up 40 years ago, with cross-party support. It has done much good in that time, but today, anybody who looked at the size of the reserves and pay packages would question the direction that Motability has taken in allowing that to happen. Motability must listen to the criticisms it has faced, not only in the media this week but over the course of several years, and be receptive to change. As Secretary of State, I want to see a clearer commitment from Motability that it will maximise the use of funds to support disabled people’s mobility and independence.
As we have seen in so many instances, what was deemed correct in the 1970s is not necessarily correct by today’s standards. In the light of the current focus on corporate governance issues and the use of public money, I have today asked the National Audit Office to consider undertaking an investigation into this matter. I am keen for the NAO to look at how Motability is using taxpayers’ money.
John Mann
I thank you, Mr Speaker, for granting this urgent question, and the Secretary of State for her initial response.
It is grotesque that this registered charity, which is funded by the taxpayer through a direct grant from Government, is carrying cash reserves of £2.4 billion and has been underspending its budget by £200 million a year, and it is grotesque that this charity is paying its chief executive £1.7 million a year. Will the Secretary of State commit to an urgent review of executive pay at Motability and to publishing its results? Will she commit to urgently examining the finances of Motability and the audit arrangements made by her Department in previous years, and again, will she publish that review?
The point is that there is no risk; this is a no-risk situation. It is a very good scheme for the disabled, but there is no risk. The reserves are only half the picture—the banks are also profiting, possibly to the tune of billions over the years, because they are bearing some of the risk. Will the Secretary of State commit to reviewing the lack of competition in the financing arrangements with the banks, which see the large four banks making huge amounts of profit out of this scheme? How can the banks be allegedly covering the risk, when Motability has £2.4 billion in reserves allegedly to cover that risk? It is the same risk, yet in fact there is no risk at all because the taxpayer is guaranteeing the scheme.
Will the Secretary of State also make it abundantly clear to the disabled people in receipt of Motability that they need fear nothing and that the scheme and the service that they get will continue as is? What we as Members of Parliament are interested in is the finances behind the scheme, the excessive profits and the scandal that a no-risk scheme has banks profiting so much and the charity itself quite unnecessarily holding £2.4 billion in reserves.
Ms McVey
First, I thank the hon. Gentleman for his work and for his courage in pursuing the matter. I also thank the media for exposing the situation. Now that I am back in the House as Secretary of State for Work and Pensions, I can say that the situation needs to come under the spotlight. I would like to work with him on that, to bridge the divide of party politics and do what is right. We need to uncover what is happening in the Motability scheme and to ensure that the money held in the company’s reserves goes to the people that it should be supporting. He quite rightly says that having such an amount of money in reserves is grotesque, and that it should really be going to support disabled people.
As for where we go next, an urgent request has gone to the National Audit Office to ensure that if disabled people choose to spend money on the Motability package, that is a good use of the benefits that they get, and to check how taxpayers’ money is being used. Motability has been a lifeline for many disabled people who have chosen to take part in the scheme. As I have said, it is helping more than 600,000 people, and we must not throw the baby out with the bathwater. For those whom the scheme is helping, it is an essential lifeline, but if it could be helping many more disabled people then that is exactly where the money should be going.
Philip Davies (Shipley) (Con)
May I commend the hon. Member for Bassetlaw (John Mann) for his customary tenacity in pursuing this issue? Is it not the case that not only has the taxpayer been overpaying over the years, but disabled people have been overpaying from their benefits for this scheme? Surely those disabled people could be getting exactly the same benefits from it for a lower amount per week. The money saved could then be given back to them to help pay for their other living costs. Will my right hon. Friend consider allowing the scheme to progress, but at a lower cost to disabled people so that they can retain more of their benefits? Motability seems to be losing sight of what it was set up to do in the first place.
Margaret Greenwood (Wirral West) (Lab)
I congratulate my hon. Friend the Member for Bassetlaw (John Mann) on securing this urgent question. I also thank you, Mr Speaker, for granting it.
The news that the chief executive of Motability Operations Group plc took home £1.7 million last year and that the group is sitting on reserves of £2.4 billion has shocked people around the country. Particularly shocked are disabled people, 51,000 of whom, according to Motability’s own figures, lost access to the scheme last year after being reassessed for their personal independence payment. More than 3,000 were reinstated on appeal, but many lost their car in the meantime.
From Carillion to Motability, excessive executive pay is completely out of hand. With Motability Operations Ltd paid about £2 billion a year directly by the Department for Work and Pensions on behalf of disabled people in receipt of social security support, there are serious questions for the Secretary of State to answer. When did she or her officials last meet with either Motability or Motability Operations Group? The National Council for Voluntary Organisations’ “Report of the Inquiry into Charity Senior Executive Pay and Guidance for Trustees on Setting Remuneration”, published in April 2014, says that charities should include their highest earners in their accounts, regardless of whether they work for a subsidiary company. Does the Secretary of State agree?
Motability Operations Group is sitting on a surplus of £2.4 billion. That is a staggering amount given its VAT exemption from the Treasury, which means that it does not compete on a level playing field.
When the National Audit Office last examined Motability in detail in 1996, it found that the then £61 million reserves
“exceeded the necessary margin of safety”.
What assessment has the Secretary of State made of the current necessary margin of safety, and what assessment has she made of the £200 million annual underspend that has allowed such a large surplus to accumulate? Given that the funding of Motability effectively comes from the taxpayer via social security payments, what assessment has she made of value for money for disabled people who rely on their cars for independence? Finally, value for money for taxpayers is not currently one of the criteria for Motability’s remuneration committee. Does the Secretary of State believe it should be?
Ms McVey
The Department has worked closely with Motability to ensure that disabled people get good value for money for the cars that they choose to spend their money on. The Charity Commission, which recently undertook a detailed review of the charity’s financial accounts and its relationship with the non-charitable company Motability Operations, said:
“That review did not identify regulatory concerns about the charity’s governance or its relationship with the commercial company. It is not for the Commission to comment on the pay of the CEO of a large non charitable commercial company. However, we have made clear to the trustees of the charity Motability that the pay of the CEO of its commercial partner Motability Operations may be considered excessive and may raise reputational issues for the charity.”
It also found
“the level of operating capital held by the company in order to guarantee the scheme to be conservative”,
but said that it should be “kept under continuous review.” I would say that that review needs to start again. The Charity Commission should again look into what has happened.
It is the Government who permit disabled people to have a benefit, but where that money is spent is always the choice of the people who receive it. When the scheme was originally set up in the 1970s, with cross-party support, that was deemed the best way forward, but as I said, the NAO must now look into the matter. When I personally looked into it in 2013, I ensured that Motability paid £175 million more to disabled people, and I will continue with that direct action from my new elevated position.
Bob Blackman (Harrow East) (Con)
Only a third of those who can get grants from this operation currently do, so will my right hon. Friend ensure that the eligibility criteria are reviewed? Will she also look into the marketing to those who are eligible, so that people who are disabled and who can get this service actually get it and use the money?
Ms McVey
That is exactly what we want to ensure. My hon. Friend is right that the people who could benefit from this scheme should be benefiting from it, but obviously it is their choice whether they want to do so. If we could widen the scheme by allowing the money held in reserves to go to those disabled people, surely that would be right.
Chris Stephens (Glasgow South West) (SNP)
These reports of taxpayers’ money being held unused in charity accounts are extremely concerning. It is not the first time that the accounts of Motability Operations have been questioned. Will the Secretary of State launch an urgent investigation into the status of this estimated £2 billion of taxpayers’ money? Will she lay out what discussions she has had with the Charity Commission to determine whether this matter requires further investigation? Will she report her findings back to the House as a matter of urgency?
Michelle Donelan (Chippenham) (Con)
Does my right hon. Friend agree that it is essential that private companies that indirectly receive taxpayers’ money to operate their services have a particular duty to limit executive pay and excessive reserves? What more can the Government do on that?
Ms McVey
My hon. Friend is directed by true compassionate Conservative beliefs. The Government are bringing forward a new review and new law on corporate governance to cover all these matters. We want transparency—that is what will drive correct behaviour. We want accountability, and we want people to do the right thing. If that takes shining a sharper spotlight on their actions, then that is what we should do.
Frank Field (Birkenhead) (Lab)
The Work and Pensions Committee will be undertaking an urgent inquiry into this issue. We will be seeking your support, Mr Speaker, so that we can co-opt my hon.—very honourable—Friend the Member for Bassetlaw (John Mann) on to our Committee to pursue the issue. As we are drawing up our agenda over the next few days, will the Secretary of State say which questions she would find most helpful for us to seek answers on?
Jeremy Quin (Horsham) (Con)
I am pleased to follow the Chairman of the Select Committee. In the recent past, with regard to BHS, his Committee and this House have raised grave concerns about corporate governance in private companies. Does my right hon. Friend agree that those concerns are particularly pertinent when private companies are so reliant on the public sector? If she shares those concerns, will she ensure that that is included in the remit of the NAO report?
Liz McInnes (Heywood and Middleton) (Lab)
Yesterday I raised the issue of my constituent, Natasha, who was in receipt of lifetime DLA. That was removed following a PIP assessment, and she was threatened with having her vehicle taken from her on Boxing day—I am sorry, Mr Speaker, but this is particularly pertinent for me. I am grateful that the Secretary of State is having an investigation. Will she pay particular attention to the conduct of the trustees?
Nigel Huddleston (Mid Worcestershire) (Con)
Does the Secretary of State agree that while the Government Benches may be full of people who are instinctively pro-free market and respect commercial operations, we have no qualms whatsoever about interfering or raising questions when things have gone wrong? Does she believe that things have gone wrong in this case?
Ms McVey
We have to get the results from the NAO, from the Select Committee, and from the Charity Commission. However, my hon. Friend is right. This scheme, which was set up with the best intentions and good purposes, and has helped people, appears to have lost its way. It is only right that we help it to get right back on track to help the people it was set up to support.
Alan Brown (Kilmarnock and Loudoun) (SNP)
The Secretary of State says that she got a concession five years ago, but nothing has changed in five years on executive pay and concerns about reserves. Why is the National Audit Office only now being asked to do this, five years late? Is it just because of newspaper publicity?
Ms McVey
It is because of the tenacity of certain Members, for sure, and the freedom of our press, which has aired the case. This has been looked at for quite a few years, and I got concessions from Motability, as did my right hon. Friend the Member for Portsmouth North, but now we need to take the matter further.
Nick Thomas-Symonds (Torfaen) (Lab)
Motability has been a lifeline, but it is obscene that this money has not been going to the neediest in our society. I appreciate the Secretary of State’s urgent request to the National Audit Office, but what steps will she take to monitor the level of reserves, to ensure that they are not hoarded in this way again?
Ms McVey
We have to bring in the correct people to do the oversight, whether that is the FCA or the NAO, and those are the parameters we will use in a cross-party way to make sure we check out what reserves are needed, what reserves are not needed and what reserves need to go back to disabled people.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
Given the shocking news of Motability’s £2.4 billion in reserves, does the Secretary of State agree that Motability’s policy of removing cars before constituents’ PIP appeals have taken place is even more reprehensible? Will she urge Motability to reverse that policy with immediate effect?
Oral Answers to Questions
Esther McVey Excerpts(6 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
The Secretary of State for Work and Pensions (Ms Esther McVey)
Where all sponsoring employers of a defined-benefit pension scheme have declared insolvency, they will enter a Pension Protection Fund assessment period. The Pension Protection Fund will actively work with the scheme administrator to assess whether it is able to buy out the pensions at a higher level than the PPF benefits. Where a scheme cannot do this, PPF will provide compensation. Defined-contribution schemes do not need PPF help, because they do not promise a level of pension—the member keeps the pot they have built up.
Mrs Ellman
The Government have presided over a regulatory scheme where a deficit of about £1 billion has been allowed to build up in the pension fund at the same time as shareholders were receiving dividends. Can the Secretary of State guarantee that all former Carillion employees will receive in full their due pension?
Ms McVey
What the Government did successfully back in 2004 was set up the Pension Protection Fund, which is there to compensate people should their businesses become insolvent. This is what the fund will be doing: affording protection at 100% for those who have a pension. Those not yet on a pension will be getting 90%. The Government are ensuring that businesses are responsible to their employees and their pensions. We will be bringing in stronger corporate governance rules to make sure that boards, trustees, shareholders and stakeholders hold company executives to account.
Mr Philip Hollobone (Kettering) (Con)
Financial directors must not cause detriment to any private sector pension scheme. Will my right hon. Friend ensure that the rules and regulations regarding the investigation of this sort of practice are toughened up, because we cannot allow this to happen in future?
Ms McVey
My hon. Friend is absolutely right. The Government are seeking to ensure that the regulator will—our new Bill will come out later in the year—have more rights to fine, follow criminal procedures and look into mandatory clearance. Those of us who have studied corporate governance realise that the rules changed in 1991—the Cadbury report and the OECD corporate governance rules—and were strengthened in 2002. I believe that now, under this Conservative Government, we will be strengthening the corporate governance rules again.[Official Report, 8 February 2018, Vol. 635, c. 8MC.]
Nick Thomas-Symonds (Torfaen) (Lab)
My constituents who have paid into pension funds deserve to have those moneys protected. Will the Secretary of State be a bit more specific? What specific changes to corporate governance does she want to see to ensure that high risk behaviour towards pension funds does not happen again?
Ms McVey
We are getting feedback from various businesses on how they think we can best enable and support them. Any knee-jerk reaction might result in unintended consequences. Shining a spotlight on one area could close down loopholes, only for others to open up. This has to be looked at in the round, but, as I said, stakeholders, shareholders and the executive team should be held to account. We will make sure that that happens.
Alex Burghart (Brentwood and Ongar) (Con)
Can my right hon. Friend reassure my constituents that the UK’s pension protection system has responded effectively to the Carillion situation?
Ms McVey
I can indeed reassure my hon. Friend that what it is doing, and the avenues it is pursuing, are correct and thorough. I met the regulator last week. It is making sure that it investigates these key matters and provides the necessary pension support. Where we need to strengthen in future, we will do so. Equally, I would like to make Members aware of what the pension regulator has done in the past. With regards to the British Home Stores fiasco, which is totally different from this situation, it employed an anti-avoidance measure and got Philip Green to pay his pensioners £363 million. Further prosecutions are coming forward for Chappell, who bought that company for a pound. That is the kind of good work the pension regulator is doing.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
As the Government have responsibility for the pensions regulatory framework, how would the Secretary of State describe a regulatory framework that allows the administrator of a pensions scheme to help to bring about the downfall of the company and the employees it represents, and to profit from that downfall?
Ms McVey
When I hear some of the hon. Lady’s comments, particularly those that are out of context, I think about the letter that she has received in the past two days from the UK Statistics Authority, which states that many things she has said are not accurate. The letter said that her remarks—whether about children waking up in poverty at Christmas or linking universal credit with poverty—were not supported, that they were not true statistics and that the sources could not be relied upon. If you will allow me to ask this, Mr Speaker, will the hon. Lady make a statement straightaway about the letter from the UK Statistics Authority?
Debbie Abrahams
I will indeed do just that, Mr Speaker, especially as there was absolutely no answer to my original question. Hundreds of thousands of ordinary working people including my constituent, Philip Wild, have lost half their retirement income because of the Government’s failure to tackle pensions governance—from Carillion to Capita, and BHS to the British Steel Pension Scheme. How many more pensions scandals does the Secretary of State need to see before she introduces the robust regulatory oversight needed to protect people’s pensions for the future?
Ms McVey
Obviously, in the light of the letter from the chair of the UK Statistics Authority to the hon. Lady, it needs to be put on the record that the vast majority of defined-benefit pension schemes are working very well indeed. When we do see instances of abuse or illegal goings-on, they are investigated and the people responsible are brought to account. We have a strong Pension Protection Fund, supported by other businesses that are looking after pensioners across the country.
Gillian Keegan (Chichester) (Con)
Colin Clark (Gordon) (Con)
The Secretary of State for Work and Pensions (Ms Esther McVey)
Universal credit has had a positive impact since its start, as shown through published research and analysis. Independent research shows us that people are spending more time looking for work, applying for more jobs and even doing jobs they would not have considered doing before.
Colin Clark
Constituents in Gordon will face longer waiting times for payments due to the Scottish Government’s policy of fortnightly payment. What support can my right hon. Friend offer the devolved Administration in Edinburgh to help reduce those times?
Ian Austin (Dudley North) (Lab)
The introduction of universal credit is not helping to keep 250 highly skilled HMRC staff working on tax credits in Dudley in work. They were told they would be transferring to the Secretary of State’s Department to work on universal credit. Last week, they were told that her Department has cancelled that, their office will close and they will be made redundant. Will she ensure that the transfer goes ahead as originally planned, so that my constituents can keep their jobs, and will she meet me to discuss it?
Ms McVey
I will indeed meet the hon. Gentleman to discuss that. Back in 2016, HMRC announced that move and transfer of jobs. It now seems that as many jobs were not needed for UC. I know that it wants to retain the staff and their skills and knowledge, but I will meet him to discuss the best way forward.
Luke Hall (Thornbury and Yate) (Con)
Does the Secretary of State agree that universal credit is helping all those people who are stuck in a situation where they are only paid to work 16 hours a week and that it is fairer to those employees, the other employees in those businesses and taxpayers, who end up supporting the bill?
Ms McVey
My hon. Friend makes a very good point. The reason we are making this significant change from the legacy system is to ensure that every hour of work counts. We will not have a situation where people are stuck not working or paying punitive rates of income tax of 90% and above if they take work after 16 hours. This is cutting-edge technology. The UK is leading the way on flexible benefits that accompany flexible working, which nowhere else has.
Lucy Powell (Manchester Central) (Lab/Co-op)
May I welcome the Secretary of State to her position? Perhaps she might think to show a little more humility when answering some of these difficult questions on universal credit. Has she considered some of the other benefits that are not included in universal credit, such as free school meals, free uniforms, free bus passes and so on? Many low-paid working families will lose out on those benefits under universal credit, which will make them worse off in work than if they were still on benefits.
Ms McVey
These are precisely the things that have been considered in bringing forward universal credit. What support are we giving? The extra childcare support. What is the extra support? Tailor-made career advice and support. We all need humility, but, equally, we all need to hand out and deliver the correct facts to people, not embellish them, resort to sound and fury or drama, or provide obviously incorrect information, as the UK Statistics Authority has levelled against the Labour party.
Martin Vickers (Cleethorpes) (Con)
Last month, I visited Grimsby jobcentre, which serves my constituency, and it is very clear that the staff are handling the changeover to universal credit very efficiently. Will the Secretary of State join me in complimenting the staff, including the work they do in motivating claimants and improving their self-confidence so that they can seek employment?
Ms McVey
My hon. Friend makes a very good point, and I have actually met the tremendous work coaches in his constituency. I go out to speak to work coaches all the time, and they are saying to me that the change we are delivering through universal credit is the best thing they have ever delivered. The support they can give—[Interruption.] Rather than Opposition Members laughing, they would be well advised to come and join me or others in meeting work coaches. I will tell them how we know this is working: if it were not working, we would not have an extra 3.1 million people in work.
Neil Gray (Airdrie and Shotts) (SNP)
Contrary to the “SNP bad” broken record from the hon. Member for Gordon (Colin Clark), will the Secretary of State join me in welcoming the Scottish Government’s recently introduced flexibilities for universal credit payments, and will she consider implementing Scotland’s model down here, especially as her colleague in the Scottish Parliament, Adam Tomkins, has said he is “very much in favour” of them?
Ms McVey
The underlying principle of how we get people into work is working right the way across the United Kingdom. It is working in Scotland, and that is correct. Equally, we agree with giving extra powers to devolved Governments, and Scotland has the right to do things in its own way. As we pointed out earlier, however, some of the changes taken on board in Scotland have actually resulted in slower payment to people who need their benefits.
Vicky Ford (Chelmsford) (Con)
The Secretary of State for Work and Pensions (Ms Esther McVey)
The UK has the joint fifth lowest unemployment rate in the EU—better than France, the Netherlands and Denmark. The UK’s unemployment rate, at 4.3%, is the lowest in 42 years. It is less than half that of the euro area, which is 8.7%, and 3 percentage points below the EU28 average of 7.3%.
Vicky Ford
Unemployment in my constituency of Chelmsford is now less than 1.5%, and those who are able to work are finding jobs, but will the Secretary of State reassure my constituents who need our financial support that they will continue to be supported when universal credit is rolled out later this year?
Ms McVey
I congratulate my hon. Friend on the work she is doing as a new MP, and her constituents on the work they are doing to find employment, getting on in their careers and moving forward. As I have said, this Government believe in hand-up support and opportunity. The support of universal credit—a benefit that supports people in and out of work—will continue not only for her constituents, but for people right across the country.
Tony Lloyd (Rochdale) (Lab)
Will the Secretary of State confirm that of those who have gone into work as a result of this Government’s policies—and that is a good thing—many are living in poverty because of low pay and the inadequacy of our benefits system?
Ms McVey
It is interesting how differently people measure getting into work, poverty and life chances. Children born into workless households are actually five times more likely to be in poverty than those in working households. Under this Government, we have seen 3.1 million more people in work, and the number of workless households has gone down by over 600,000. We are helping people out of poverty: we are helping them get a job.
Philip Davies (Shipley) (Con)
Earlier the Secretary of State mentioned dodgy statistics from the Opposition. I have heard people say that lots of the new jobs created are on zero-hours contracts and for part-time work. Can she say what the actual figures are for the number of jobs created that are full-time, permanent jobs?
Ms McVey
It was not me talking about dodgy statistics, it was the chair of the UK stats authority who said that, but I thank my hon. Friend for pointing that out. The overwhelming majority of jobs are full-time and permanent jobs, and the vast majority of those in part-time jobs have chosen to be in part-time jobs.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
On job searching, has the Secretary of State had the opportunity to review the very helpful and generous offer made by Liverpool City Council to her predecessor to provide office space for closure-threatened jobcentres? There are two jobcentres in my constituency—not one, but two—that her Government wish to close, leaving my constituency with zero jobcentres. They are due to close in just a few weeks’ time. Has the Secretary of State had an opportunity to review that offer, to ensure that my constituents continue to receive employment support?
Ms McVey
It is really important that everybody gets the support they need, and a lot of the support going forward will be outreach work, so that people do not need to go to Jobcentre Plus, thanks to further support in the community. Obviously I am pleased that in the Liverpool city area—and in the north-west area—which is my hometown, employment is now far higher than it was in 2010. The unemployment rate under the Labour party was 2.8 million in 2008, even before the banking crisis, but now it is 1.4 million, so we are supporting people and we will continue to support people, because that is what this Conservative Government do.
Thelma Walker (Colne Valley) (Lab)
Bridget Phillipson (Houghton and Sunderland South) (Lab)
The Secretary of State for Work and Pensions (Ms Esther McVey)
We had a record-breaking 2017 for employment, and I am delighted to see the trend continue as we enter the new year. The proportion of people in work is at an all-time high at 75.3%—so 32.2 million people are now in work, 415,000 more than were working last year. Figures also show that there are a record 810,000 vacancies in the economy at any one time, which proves that the Government are delivering on our promise to build a strong economy.
Bridget Phillipson
No child in modern Britain should grow up in poverty, but figures from both the End Child Poverty coalition and the Secretary of State’s own Department reveal that we face a growing crisis. Does she seriously believe that ploughing ahead with universal credit will do anything to help the millions of children who are trapped in avoidable poverty in our country or will bring that number down?
Ms McVey
One thing on which both of us will agree—on which, indeed, Members in all parts of the House will agree—is that no child should be growing up in poverty. If we take action to ensure that families are working, those children will not be in poverty. We know for certain that if a child’s family are working, that child is much less likely to be in poverty when it grows up and is more likely to attain higher school qualifications. That is the action that this Conservative Government are taking.
Kevin Hollinrake (Thirsk and Malton) (Con)
Maria Eagle (Garston and Halewood) (Lab)
Ms McVey
The first decision I made was to make sure we did not appeal that question about PIP and what we on this side of the House were going to do to live up to the expectations of PIP, and I think it is a very true, honourable and correct thing that we have done. However, to make sure we deliver it correctly and give the correct amount of money to the people who need it, it will take time for us to thoroughly research what needs to be done.
Andrew Bowie (West Aberdeenshire and Kincardine) (Con)
The attractiveness to many of the two-weekly payments of UC are obvious, but does my right hon. Friend share my concerns that the Scottish Government’s decision to offer this to my constituents and other people across Scotland will leave those who choose it to be worse off than claimants in the rest of the UK?
Stephen Morgan (Portsmouth South) (Lab)
Alex Burghart (Brentwood and Ongar) (Con)
We had a very interesting session on assistive technology in the Select Committee on Work and Pensions recently. Will the Government commit to looking at how assistive technology can be used to help more disabled people into work?
Lucy Allan (Telford) (Con)
The GKN takeover proposal announced last Thursday seeks to pay a £1.4 billion sweetener to shareholders, despite a £2 billion pension deficit. Does the Minister agree that the Government should act to protect the interests of GKN pension fund members?
Ms McVey
Of course the Government agree that we have to look after the concerns of the GKN workers. Here we have actually seen the trustees of the pension fund coming out, being bold and wanting reassurance from the other company that it can indeed pay for the pension scheme. We can look at the argument from two sides. GKN has to be strong and robust, but also Melrose should voluntarily ask the regulator to look into the implied costs in that benefit scheme to make sure that it can afford to take over the other company.
Thelma Walker (Colne Valley) (Lab)
Vicky Ford (Chelmsford) (Con)
I am a mathematician and a mother, so I am concerned that the head of the UK Statistics Authority had to write to a shadow Minister to point out that statements that they made were not based on real sources or real statistics. Does my right hon. Friend agree that the shadow Minister should apologise?
Mr Speaker
Even mothers and mathematicians have to respect the method, and the method in the House is that Members question Ministers about the Government’s policies. I do not blame the Secretary of State for taking the opportunity to ram home her point with force and alacrity, but Members must understand that this is not Question Time about the policies, tactics or preferences of the Opposition; this is Question Time about the policies of the Government. Even if there is some Whip handout saying, “Ask the Minister about the behaviour of the Labour party,” that does not make it in order. It is not in order—end of subject.
Mr Speaker
I think not. [Interruption.] The Secretary of State for Work and Pensions is gesticulating at me in a mildly appealing fashion, but she has made her points with considerable force and requires no further opportunity now.
Mr Speaker
That is a perfectly reasonable course of action for the Secretary of State to take, but it is not a point of order. It might be called a point of information that some colleagues will find helpful.
Personal Independence Payment
Esther McVey Excerpts(6 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Peter Grant (Glenrothes) (SNP)
(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on the recent ruling by the High Court over the judicial review on the application of personal independence payments to persons with mental health problems.
The Secretary of State for Work and Pensions (Ms Esther McVey)
After careful consideration, I took the decision not to appeal the High Court’s judgment on this case. I informed the House of my decision immediately by tabling a written statement on Friday last week. The written statement set out my decision and the steps that my Department will now take to implement that judgment, although I welcome coming to the House today in addition to that.
I repeat once again my commitment to implementing this judgment in the best interests of our claimants and through working closely with disabled people and key stakeholders over the coming months. The Department for Work and Pensions will undertake an exercise to go through all affected cases in receipt of PIP and all decisions made following the judgment in the MH case to identify anyone who might be entitled to more as a result of the judgment. We will then write to the individuals affected and all payments will be backdated to the effective date in each individual’s claim.
In accepting the outcome of the High Court judgment, the Department does not agree with some of the details in it. The 2017 amending regulations were introduced in response to an upper tribunal case that broadened the interpretation of eligibility for mobility 1—the ability to plan and follow a journey. Our intention has always been to deliver the original policy intent through clarifying how symptoms of overwhelming psychological distress should be assessed. We are not appealing the outcome of the recent High Court judgment to provide certainty to our claimants.
Our next steps will build on the positive work that the Government are already undertaking: spending on the main disability benefits—PIP, the disability living allowance and the attendance allowance—has risen by £4.2 billion since 2010 and real terms spending on disability benefits will be higher every year to 2020 than in 2010. The Government have commissioned two expert-led reviews and invested a record £11.6 billion in mental health services. Access to Work’s mental health support service has been expanded with a two-year trial of targeted support for apprentices with mental health conditions. We have also accepted all the recommendations in the independent review by Lord Stevenson and Paul Farmer, including establishing a framework for large employers to voluntarily report on mental health and disability within their organisation.
With regard to the next steps following this judgment, the DWP will write to those who may be entitled to a higher rate of PIP. Where relevant, all payments will be backdated to the effective date in each individual claim.
PIP is a modern, dynamic and fairer benefit than its predecessor, DLA, and focuses the most support on those who are experiencing the greatest barriers to living independently. At the core of PIP’s design is the principle that awards of the benefit should be made according to the claimant’s overall level of need, regardless of whether they suffer from physical or non-physical conditions. The Government are committed to furthering rights and opportunities for all disabled people and we continue to spend over £50 billion a year to support people with disabilities and health conditions.
Peter Grant
I am grateful to the Secretary of State for attending the House today and welcome her to her recent appointment. It seems that Secretaries of State for Work and Pensions change with astonishing regularity, but the Government’s callous and chaotic attempt to attack the rights of the poor, sick and disabled continues unabated. Although the Secretary of State said that she is pleased to come to the House to make this statement, she did not take the two or three opportunities she had over the past few days to do so, without waiting for an urgent question. Instead, she waited for a month after the High Court decision and then submitted a written statement on a Friday morning, when she knew nobody would be here to read it.
The High Court has ruled yet again that the Government have been acting unlawfully in their incessant attack on the very people the DWP should be seeking to protect. We now know that up to 164,000 people will get higher disability payments—or, to put it another way, that the Government have unlawfully been seeking to withhold benefits from up to 164,000 people who are not only entitled to them but who need them if they are to have anything like the normal life that the more fortunate among us take for granted.
This is not the first time the Government have been overturned in the courts. We have previously seen the courts ruling against the Government on the imposition of benefits sanctions, where the Government were acting unlawfully, and before that on the iniquitous bedroom tax. That one is particularly poignant for my constituents just now because the man who stood up to the DWP over the bedroom tax and won, Davie Nelson, a Glenrothes man through and through, sadly died very suddenly last week. His family and friends will be pleased that others are continuing the campaign for social justice that Davie fought so bravely.
The Secretary of State has promised that her Department will now seek to identify anyone who should be receiving higher benefits. My office has estimated, on the basis of preliminary constituency casework, that there could be 71 people in my constituency alone not getting the money they are entitled to. Will she update us on how many people she now thinks have been underpaid? How long will it take to carry out the review? How much longer will these people have to wait to receive the money that they rely on and which is rightfully and lawfully theirs? Will she explain why her Department is amassing such an appalling record of defeats in the courts? Does that not tell the Government something about how they are making these cuts to benefits? Finally, will she now commit to delivering a social security system whose fundamental principle is not to work down to a budget but to protect and respect the dignity of those who rely on it, and not continue to punish people for having disabilities?
Ms McVey
There have been changes in the DWP. Some people have come back, having previously worked here and seen what the changes were, and I am back here, several years later, and hence was probably a good person to say that we would not be appealing the court case.
On the timetable, I made the judgment just a week and a half after being made Secretary of State. It took up most of my time. It was a Friday—and could not have been any other time—because that was the deadline I had to meet for the legal judgment. At the same time, I made sure, following all protocol, that there was a written statement on exactly what had been done.
The benefit was always intended to be a dynamic benefit. Hon. Members on both sides of the House understood that DLA was focused on physical disabilities, and all parties decided there needed to be a more dynamic benefit that reflected invisible disabilities, which we all know are very difficult to assess. The extra money and support went into acknowledging that.
There has been massive change, and also massive understanding, in terms of what is going on. When I stood here all those years ago in 2013 talking about what the budget would be, people said we were cutting it. I explained the matter very clearly, though it fell on deaf ears, and I was often vilified. People still said it was being cut, but it was not. When I arrived, the budget was just over £13 billion, and it has gone up every year since, and will continue to go up. That is in real terms. Much of the vilification, therefore, was not only unnecessary but deeply untrue, and that again is why I welcome the opportunity to come to the Dispatch Box to explain what is going on.
Changing benefits is not always easy. Expanding support is not always easy. We knew at the time we were taking on a very difficult change and that there would no doubt be legal challenges. When there are legal challenges, however, we must look at them, make a true and fair judgment and carry on along that path, and I believe that in this instance I made a fair judgment. Today, the Glasgow Herald welcomed the decision—although I accept that the piece in question picked on various other issues—and it was also welcomed by Paul Farmer, the chief executive of Mind. My hon. Friend the Minister for Disabled People, Health and Work has met her Scottish counterpart; they, too, welcome the decision and look forward to establishing closer working relationships and making plans for its implementation.
I hope that what I have said explains what we have done, and I hope that what we have done is welcomed by Members on both sides of the House. If the hon. Member for Glenrothes (Peter Grant) would like to talk to me about a specific case or constituent, my door is open, and I will meet him.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I welcome my right hon. Friend to her post, and I welcome her knowledge in making this decision. In supporting her, I remind the House that it was our predecessor Labour Government who put off changes in disability living allowance deliberately before the election and that afterwards we were faced with the decision to make those necessary changes. More money is now spent on disability benefits year on year, and more people, including those with mental health conditions, will receive them. DLA never delivered that to those people before.
Ms McVey
I thank my right hon. Friend. He spent many years working on social issues and cases, and established the Centre for Social Justice. The change that he brought about was not just about changing the benefits, but about reaching out to people who are sometimes left alone. Some of those people did want to be helped to get back into work. They did want to talk about their hopes and aspirations. There are now over 600,000 more disabled people in work, because they chose that path towards self-determination and the fulfilment of their ambitions and hopes.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Thank you for granting the urgent question, Mr Speaker, and I congratulate the hon. Member for Glenrothes (Peter Grant).
Any disabled person who listened to what was said by the Secretary of State will have been gobsmacked by the suggestion that there is a commitment to disabled people. The United Nations Committee on the Rights of Persons with Disabilities has described the Government’s action as a “human catastrophe”. The cuts that they have wrought on disabled people are an absolute disgrace.
As my hon. Friend the Member for Battersea (Marsha De Cordova) said when she raised a point of order yesterday, the Government sneaked out a written statement late on Friday, announcing that they would not appeal against the High Court judgment of 21 December, in effect reversing the emergency PIP regulations that they had introduced in February last year. Those regulations were introduced without a vote or a debate, despite two urgent questions and an emergency debate, and despite widespread concern about their impact. The Government’s own Social Security Advisory Committee was not consulted. I warned at the time:
“The move to undermine and subvert independent tribunal judgments is unprecedented, and ... marks very troubling behaviour by the Government on cases they lose that could weaken such social security tribunal judgments’ reach, influence and effectiveness in making independent decisions.”—[Official Report, 28 March 2017; Vol. 624, c. 145.]
I am pleased that the Secretary of State and her Department have finally seen sense, but there are a number of questions that the Secretary of State must answer—questions that have already been put by my hon. Friend the Member for Battersea. How many people does her Department estimate have been affected? How quickly will her Department be able to identify affected claimants, and by what process? Given the issues relating to letters from that Department, it is a little worrying if that is the only means.
How soon after identification will the Department make back payments? Will there be an appeal process for PIP claimants who are not contacted by the Department and who believe they should receive such payments? Will the Department compensate claimants who have fallen into debt and accrued interest charges? Will applicants be entitled to a reassessment if they were given the standard rate of the PIP mobility component after the February 2017 changes to PIP regulations, when the cause of the claim was “psychological distress”?
Finally, just how much public money has been spent by the Department on lawyers and legal advice seeking to defend the indefensible in the initial tribunal and the more recent court case?
This sorry debacle should serve as a warning to the Government of the dangers of seeking to undermine and subvert the decisions of our independent judiciary and the House of Commons.
Ms McVey
Can we start the dialogue on a firm and factual footing, which I set out before, and dispel the myth about the spend on disabled people? The facts speak for themselves: in real terms, the money has gone up. In this place, we are supposed to have the definitive facts of an argument, so I seek to give those here.
This was not about a policy change; it was about implementing the correct regulation after a court case. It came about after taking advice from and working with experts in the field on how to help people with severe psychological disorders. It was about support by prompting and by aid and assistance; at the time, it was not deemed to be something for people with severe learning disabilities, who might want a constant companion. That was how the regulations were set down, after advice was sought on the best approach, because this is a tailor-made benefit. However, the judgment in the case went the other way. We will work with MIND and with charities and stakeholders in the field to implement this as quickly as possible, but it is not just about speed; it has to be right and effective and to work for the people it is made for. That will take some time, but we will do it as quickly as possible.
Up to 220,000 people could be affected. That is why we are taking the process very seriously. We as a Department will reach out to those people, once we know exactly what we are doing. I reiterate that, according to figures from 27 October, 66% of PIP recipients with mental health conditions get the enhanced daily living component, compared with 22% who received the highest DLA care component; and 31% of PIP recipients with mental health conditions get the enhanced mobility rate, compared with just 10% of DLA recipients. Those facts speak for themselves. We know that this is a highly emotive issue, but it would be helpful if all MPs when working with their constituents offered them the help and guidance they need, and not ramp up some of the rhetoric and incorrect information we have heard here.
Finally, I was asked about legal costs. The cost in these cases was £181,000, but a Department as big as the DWP expects the costs of court cases to be that high, and they are comparable with those of other Departments engaged in similar judicial review cases.
Heidi Allen (South Cambridgeshire) (Con)
I am so pleased the new Secretary of State has decided to accept the court ruling, and I thank her very much indeed. As I and colleagues said last year, we should have listened to the message the courts were giving us. Accepting their ruling will be a significant step forward in achieving parity of esteem for mental and physical health. The Select Committee on Work and Pensions, of which I am a member, is about to publish a report on PIP and employment and support allowance. Will the Secretary of State seriously consider our recommendations on how to improve both those benefits? We all want the same thing—the best possible support for people who need it.
Ms McVey
I thank my hon. Friend, who is a vocal champion of people with disabilities, as is every other Conservative Back Bencher—and Members in all parts of the House. That is why this is sometimes such an emotive issue—everybody wants to be heard. I will indeed listen to her and take on board the recommendations of the Select Committee.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you, Mr Speaker, for granting this important urgent question. I congratulate my hon. and assiduous Friend the Member for Glenrothes (Peter Grant) on securing it.
The High Court ruled that the UK Government’s PIP regulations were “blatantly discriminatory” against people with mental health impairments. That follows the damning report from the UN Committee on the Rights of Persons with Disabilities, which found “systematic violations” of disability rights. Although I welcome the Secretary of State’s acceptance of the High Court ruling—a position I hope the Government will adopt more regularly in response to High Court defeats on social security policy—I was worried by an aspect of her written statement, which was sneaked out on Friday. She said on Friday and again today that
“Although I and my Department accept the High Court’s judgment, we do not agree with some of the detail contained therein.”—[Official Report, 19 January 2018; Vol. 634, c. 30WS.]
Will she clarify that she will implement the ruling in full? Will she make an oral statement on the Floor of the House, so that we can consider whether the response follows the High Court ruling? Will she answer the pertinent questions put by my hon. Friend regarding the timescales—a matter she has not covered? Finally, in the light of the ruling and other external interventions, will the Government admit that their policies are causing harm and commit to widescale review of the social security system in the United Kingdom?
Ms McVey
We will implement the judgment in full, but we will work with stakeholders and charities to understand and implement what was said. When we said we did not agree with the detail, it was a reference to the language and terminology that went above and beyond a legal ruling and judgment, but we saw through that to the facts and that is why we decided not to appeal.
I reiterate that I am not the kind of person who sneaks anything out. I have come to this House and answered every question. I set out the timetable. The matter had to go to the Court for a decision on Friday. The House was not sitting by the time I made the decision, so I put out a written statement. I hope that all hon. Members understand that it is better to get a decision right than to rush just to answer in a different way. Nothing was sneaked out.
Again, I reiterate the support the Government give and have said they will give to people with mental health conditions. The Prime Minister has made that a key issue that she wants to deal with, and she and I came to that decision to do so.
Alex Burghart (Brentwood and Ongar) (Con)
I strongly welcome the Secretary of State’s decision, which will benefit a lot of disabled people. We all know that DLA was a far worse benefit for people with mental health problems than PIP. Will my right hon. Friend confirm that, even before the ruling, far more disabled people were receiving PIP than had ever received DLA?
Frank Field (Birkenhead) (Lab)
I welcome the right hon. Lady to her place and I welcome her statement. Given the size of the task before her, with up to 220,000 people affected, may I again press her to give some sort of timetable for meeting that objective? Might she start by writing to the oldest claimants first, and might she put a monthly report in the House of Commons Library on progress to that end?
Philip Davies (Shipley) (Con)
I very much support the Secretary of State’s decision, and I am sure that she is delighted that the Opposition parties called for an urgent question so that they could tell her how much they support her decision on the court case. Or at least I think that is what they were saying. I also very much welcome the fact that we are now spending far more money on people with disabilities than the last Labour Government did, which probably explains the anger with which the shadow Secretary of State gave her performance. Will my right hon. Friend look at measures to try to get the decision making on PIP right first time? In too many cases, the right decision is not made the first time, and I hope that she will look at that urgently, and early in her time in office.
Ms McVey
I thank my hon. Friend the Member for his comments. He always likes to see things in his own inimitable way, and he is quite right. Both sides of the House are meant to be supporting this decision, but listening to the tone and the noises coming from the Opposition Benches, it is difficult to believe that. He makes a fair point about getting the decisions right first time and helping the decision makers to get it right. There was an independent review—the Gray review—and we will be taking its advice on board.
Ruth George (High Peak) (Lab)
I, too, welcome the right hon. Lady to her post. I also welcome the decision that she has made. Bearing in mind the fact that many disability benefit claimants with mental health issues struggle to get out of the house, does she share my concern and that of the Work and Pensions Committee about the great discrepancies between contractors and between regions? There are discrepancies relating to the number of people being allowed a home visit for their benefits assessments. Will she please review this, to ensure that those people can get the benefits they deserve and not be sanctioned because they cannot leave their house?
Ms McVey
The hon. Lady has raised a good point about how some people are visited while others have to go in for assessment and support. That was part of the freedoms of contracting, so that we could get best practice. Were some people better seen at home? Were other people better seen in their local community? We constantly gauge and value that, and we will continue to do so.
Justin Tomlinson (North Swindon) (Con)
Building on this very positive announcement, we all need to do more to support people with mental health conditions, and one of the biggest challenges is identifying people with those conditions. The PIP process can play a crucial role in that. Will the Secretary of State therefore bring forward plans to enable us to signpost those identified for the additional targeted support that is available across all parts of the Government, so that they can get the maximum amount of help?
Steve McCabe (Birmingham, Selly Oak) (Lab)
How many staff in the Department for Work and Pensions will be directly deployed on the rectification process? I ask because the evidence is that the number of staff in the DWP used to complete any kind of task involving a complaint or a rectification is directly relevant to how long it takes them to complete the process.
Sir Desmond Swayne (New Forest West) (Con)
As for the comments from the United Nations, how do the figures that my right hon. Friend has given compare internationally?
Ms McVey
My right hon. Friend raises another good point. The UK is one of the most generous countries in the world when it comes to supporting its disabled people. In the G7, only Germany spends more. We spend what is deemed appropriate and available, which is more than £50 billion. I reiterate that we are one of the most generous countries in the world.
Ben Lake (Ceredigion) (PC)
Vulnerable people with severe mental health problems in my constituency have had to resort to a distressing appeals process in order to secure the support they are entitled to. This is wholly inappropriate. Pursuant to the answer that the Secretary of State gave to the hon. Member for Shipley (Philip Davies), may I ask when we can expect to see some progress from her Department to ensure that individuals are assessed for psychological conditions by mental health clinicians in the first instance?
Richard Drax (South Dorset) (Con)
I welcome my right hon. Friend to her place. We are all right behind her, whatever some people might say. From my experience as an MP in South Dorset, I suspect that the main problem relating to people slipping through the net is the lack of home visits. I agree with the hon. Member for High Peak (Ruth George) on this point. I suspect that such visits are more expensive, but I think that they would save money in the longer term because the assessment would be more accurate. Will my right hon. Friend look into this, to ensure that we hit the targets smack on, first time?
Chris Stephens (Glasgow South West) (SNP)
We on the DWP Select Committee heard some alarming evidence and unconvincing answers from contractors about the number of staff who had specialist knowledge of mental health. Can the Secretary of State confirm that she will take this up with the contractors and carry out a review of the assessment process?
Ms McVey
I have indeed got a date in the diary to be on a PIP decision-making process. I met the contractors last week. I had obviously done that when I was last in the House, but I need to be updated to see exactly what is going on. I have had meetings on this, but the hon. Gentleman is right to suggest that there is nothing quite like going through the process myself.
Mary Robinson (Cheadle) (Con)
I am grateful to the Secretary of State for her statement. I recently visited my local jobcentre in Stockport and met the great work coaches there who are doing so much to help people back into work. Will she join me in congratulating them, and perhaps explain how this is going to help us in our quest to help a further 1 million people into work?
Ms McVey
My hon. Friend and neighbour rightly acknowledges the work that the work coaches do in her constituency and right across the country. The aim of the Government in carrying out this transformation was to get a tailor-made benefit service, whether through PIP or universal credit, so that the work coaches know who they are dealing with and therefore how they can help and support them in the best possible ways. The Government should be proud of what they are aiming to do.
Stephen Timms (East Ham) (Lab)
This was an ill-advised attempt to reduce the amount of benefit payable to people with mental health problems, and I am glad that it has been abandoned. Will the Secretary of State take steps to ensure that, in future, her Department complies with its obligations under the Equality Act 2010?
Ms McVey
The right hon. Gentleman is very knowledgeable on this subject, and we spent hours debating these issues across the Dispatch Box when I was last in the House. He knows as well as I do that we always aim to fulfil all obligations. If we do not, this is what happens: we get a court case and we have to deal with the consequences. I hope that I have dealt with them correctly today and received support across the House. I will not be seeking leave to appeal, and that is right on this occasion.
Michael Tomlinson (Mid Dorset and North Poole) (Con)
I, too, warmly welcome the Secretary of State to her post. I am visiting my local jobcentre in Poole on Friday, so will the Secretary of State set out how our new jobcentres will support my constituents and others across the country with mental health challenges into work?
Ms McVey
As I said to my hon. Friend the Member for Cheadle (Mary Robinson), this is about tailor-made and flexible support. We are putting in place more training so that people understand mental health conditions, and we are giving our work coaches and mental health assistants as much support as possible. As I say, this is about tailor-made and flexible support.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
The Secretary of State talks about the unnecessary vilification of her policies, but her Government were responsible for the vilification of so many mentally disabled people by presenting them as applying for benefits to which they were not entitled. I have seen the misery that such decisions caused many of my constituents, including those suffering from post-traumatic stress disorder as a consequence of sexual abuse. Will the Secretary of State now confirm the maximum amount of time that they will have to wait to have their cases reviewed?
Ms McVey
It is unfortunate when Opposition Members try to ratchet up the level of emotion in the Chamber, especially when the situation is as emotional as it is. Nobody has ever sought to vilify anyone, and we should get it on the record now that this is not about vilifying anybody—it is about the giving the right support to those who need it. Surely all of us want to focus resources and money on the most disabled people and on the disabled people who need that money. I hope that I can end on that note. The facts speak for themselves: we have spent more than Labour ever did.
Johnny Mercer (Plymouth, Moor View) (Con)
I welcome the Secretary of State’s decision. Does she agree that it is simply nonsense to suggest that the Government are not interested in this agenda? More money is going into the programme than ever. The life chances agenda, which has significantly challenged the welfare state that previously kept a lot of people out of work, is fundamentally changing our country, including communities such as Plymouth, for the better.
Ms McVey
My hon. Friend hits on an important point. The Conservative party and the law that it is bringing in are all about life chances. That is how we view the world. Social mobility, life chances, a foot on the ladder and a career ladder are what we aim to provide all the time.
This will sound like a bit of an advert, but I want to highlight the fact that the Minister for Disabled People holds PIP sessions that all MPs can attend. If anybody has anything that they want to bring to her, they can go to one of those sessions. The sessions take place regularly, and she is holding one today.
Gareth Snell (Stoke-on-Trent Central) (Lab/Co-op)
What we are hearing about today is a court judgment that found the Government’s policy wanting, but the Secretary of State has come to the House seeking plaudits for now not appealing that decision, and that is frankly unacceptable. While it is right for those who were not given the help and support that they needed to get a backdated payment, that payment does not remedy the trauma that they faced during the years when they did not have support. Will the Secretary of State offer an unequivocal apology from the Dispatch Box for the consequences of her Department’s policy? Whether intended or not, it was her Government’s decision that led to people struggling at home, and that is simply not right.
Ms McVey
That was another reason for making a written statement, as well as the time constraints and what we had to do to adhere to the legal ruling. I have not come here today for plaudits. I have come here to do what is right and to explain what is right. That is what I have done, and that is the key thing for all our constituents and the people who are watching this closely at home. We have made a decision. I believe that it has been accepted on both sides of the House, and we are going to get things right.
Peter Heaton-Jones (North Devon) (Con)
I warmly welcome this decision, and it is worth noting that this new Secretary of State made it after only eight working days in her role, which represents a decisive course of action. Is it not the case that the entire focus of the Department, which I know well, is on ensuring that those with mental disabilities and challenges have opportunities to access the workplace and lead independent lives? In making this decision, the Secretary of State has shown that that is her focus.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Glenrothes (Peter Grant) for securing this urgent question, but I also thank the Secretary of State for her response and promise of action. In my office, transfers from DLA to PIP occupy a large proportion of my staff’s time. For people with severe anxiety, depression and emotional and mental health issues, some of whom are suicidal, the system has pushed them to the very edge, even when there has been copious evidence and information from consultants, GPs and family members. I ask that the staff who process applications do so with more knowledge, more understanding and certainly more compassion.
Michael Fabricant (Lichfield) (Con)
The shadow Secretary of State said that she was gobsmacked by my right hon. Friend’s response. I am gobsmacked by the vilification of my right hon. Friend on social media and by the threats from Opposition Members to string her up, which are more unacceptable. Just for clarification, will she let the House know precisely by how much disability payments have risen since this Government came to power?
Ms McVey
I am glad that “gobsmacked” has become part of the language of the House. My hon. Friend is gobsmacked, but I was obviously greatly dismayed by the comments from the Opposition and by the personal attacks that I have suffered. However, I know that people make personal attacks only when they do not have workable policies to put forward, so that shows that the Opposition have no workable policies. We do not need to link politics with violence.
In answer to my hon. Friend’s question, the increase has been £4.2 billion.
Stephen Lloyd (Eastbourne) (LD)
I thank you, Mr Speaker, for allowing this urgent question, and I also thank the hon. Member for Glenrothes (Peter Grant) for requesting it. The Government have decided not to appeal only now, after putting many claimants with mental health problems through a year of hell. Does the Secretary of State really believe that that was a kind or fair way of treating people with mental health issues?
Ms McVey
This is a key issue for the Government. The Prime Minister has made supporting people with mental health issues a key pledge, and we have put in an extra £11 billion. Coming to the House with this decision is a step in the right direction towards helping people as best we can.
Tom Pursglove (Corby) (Con)
I welcome my right hon. Friend’s appointment, and my constituents, including those who come to my weekly advice surgeries, will welcome her announcement. Will she update the House on what steps are being taken to disseminate information about what all this means to local advice services so that they can best advise their clients about the next steps and the way forward?
Ms McVey
I thank my hon. Friend, because the point really is about the practicalities of getting this right. It is about engaging with stakeholders and charities. It is about working with our Department to get this right. Mind has welcomed the decision, as have other charities, and it is working with us. Once we have worked through that, obviously we will disseminate it through the whole system.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
The Secretary of State says that the Department will now be identifying the 164,000 disabled people who were wrongly denied the help to which they are entitled. Her Department also recently announced it is scrapping a target it previously denied existed—that of upholding 80% of initial decisions. When will the DWP be contacting the 83,000 disabled people who were potentially wrongly denied help under that equally dodgy practice?
Mr Philip Hollobone (Kettering) (Con)
I welcome my right hon. Friend to her post and congratulate her on her response to the urgent question. My constituents in Kettering would like to know whether there are more or fewer disabled people in work in 2018 than in 2010.
Ms McVey
There are considerably more people with disabilities in work than ever before, and particularly more than in 2010. That is true not just for people with disabilities but for all sorts of people, including young people and women. This Government have fundamentally achieved what we set out to do on life chances, social mobility and opportunities.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
I refer the House to my entry in the Register of Members’ Financial Interests. I welcome both the judgment and the response. However, this process has been extremely stressful for my constituents, many of whom have been plunged into poverty and absolute despair, with their mental health problems exacerbated along the way. What will the Secretary of State do to ensure that cognisance is taken of the opinion of professionals such as psychiatrists, who know what people are capable of doing and what support they need? How will she ensure that any further process does not add additional stress to those who have already been affected?
Ms McVey
As I have said in reply to many questions, we are actively recruiting more people, and we are doing more training on mental health conditions with our caseworkers. We have to make sure that we understand the judgment and that we work with partners to make sure that we can help people who come forward. I have heard the hon. Lady and, again, I would be happy to meet her if she would like to speak to me about anyone in particular.
Paul Scully (Sutton and Cheam) (Con)
It must be through gritted teeth that the Opposition have to rely on citing the views on human rights of Saudi Arabian, Russian and Chinese members of the UN Committee on the Rights of Persons with Disabilities. Meanwhile, Conservative Members do not want bluster; they want action and support. Will my right hon. Friend confirm the proportion of PIP recipients with mental health conditions who receive the higher rate of benefit compared with the figure under the DLA regime it replaced?
Ms McVey
I reiterate that 66% of PIP recipients with mental health conditions got the enhanced rate of the daily living component in October 2017, compared with 22% who were on the highest rate of the DLA care component in May 2013. Some 31% of PIP recipients with mental health conditions got the enhanced rate of the mobility component in October 2017, compared with 10% who received the higher rate of the DLA mobility component in May 2013. I hope that that is clear.
Chris Ruane (Vale of Clwyd) (Lab)
Two hundred sufferers of motor neurone disease have been interviewed by the Department in the past 18 months alone. In addition to their physical disability, many will have mental ill health, which is increased by the stress and anxiety of the interviews. Some MND sufferers die within a year of diagnosis. Will the Secretary of State prioritise this group of sufferers when reviewing those cases?
Julian Knight
Thank you, Mr Speaker. I had a one-in-two chance.
I warmly welcome my right hon. Friend the Secretary of State to her place and welcome her talk of engagement. Will she commit to providing specific guidance to MPs’ offices and council contact centres at the earliest possible opportunity?
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
Many disabled people in the highlands, particularly those with mental health conditions, are often refused PIP appeals, despite overwhelming evidence from their doctors. Does the Secretary of State agree it is wrong and discriminary—[Interruption.] Does she agree it is wrong—[Laughter]—to accept a private company’s decision over that of highly trained medical professionals who know their patients, and their conditions, well?
Jeremy Quin
And finally, Mr Speaker.
Will my right hon. Friend confirm that PIP claimants, including those who will benefit from her decision, which I warmly welcome, will not be subject to the benefit cap in respect of these payments, and that payments will continue to be untaxed and, indeed, will rise by the rate of inflation?
Financial Guidance and Claims Bill [Lords]
Esther McVey ExcerptsMonday 22nd January 2018
(6 years, 11 months ago)
Commons ChamberRead Full debate Financial Guidance and Claims Act 2018 View all Financial Guidance and Claims Act 2018 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 70-I Marshalled list for Third Reading (PDF, 106KB) - (20 Nov 2017)
The Secretary of State for Work and Pensions (Ms Esther McVey)
I beg to move, That the Bill be now read a Second time.
The Bill will reform the current financial guidance service landscape to improve outcomes for people in their everyday lives. It will bring about two changes. First, it will restructure the financial guidance landscape for members of the public by creating a new single financial guidance body and providing funding to the devolved authorities for locally commissioned debt advice. Secondly, it will move the regulation of claims management services from the Ministry of Justice to the Financial Conduct Authority. Both measures will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the future regulation of claims management companies.
Ensuring that people, especially those who are struggling, are easily able to access free and impartial financial guidance to help them to make more effective financial decisions and to improve their confidence in dealing with financial service providers is an important step towards improving people’s financial capability. In addition, ensuring that people are able to access high-quality claims management services speaks to the Government’s commitment to ensuring that action is taken when markets work against consumer interests.
The provisions in part 1 of the Bill follow three consultations, conducted by the previous Conservative Government, on the provision of pensions and money guidance and the provision of advice on debt management. In particular, the consultations examined the demand for such services, how their provision should be structured and how to make that provision more effective for consumers. The final consultation revealed a broad consensus for a single body for financial guidance. As a result, the Bill will bring together the important work done by the Money Advice Service, the Pensions Advisory Service and Pension Wise to create a single financial guidance body. The relevant measures have received strong support from industry, stakeholders, charities and consumer groups.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
It is vital that we all work across party lines on financial guidance. I encourage the Secretary of State to place on the new financial guidance body a duty to promote financial resilience. Every year in Britain, 2 million people have unforeseen sickness absence. They cannot cope as their income suddenly falls. Eight out of 10 people in this country have very little savings, or none at all. It would be a real step forward to have a body that promotes financial resilience.
Ms McVey
The hon. Gentleman makes an important point. Once the new body is set up, it will be able to see what is needed in the public arena and shape and craft what it does. That is important, as is debt advice for vulnerable people, who need to be able to plan a path for their future.
Rebecca Pow (Taunton Deane) (Con)
The fact that household debt in this country now stands at £1.9 trillion shows just how important it is to give people knowledge and understanding about the management of their finances. I welcome the Bill. Will the Secretary of State assure us that it will help constituents such as mine in Taunton Deane, who currently have to go to a plethora of bodies to get advice, to make the decisions that we hope will prevent them from getting into debt?
Ms McVey
My hon. Friend raises a very good point about how to help those who are most vulnerable—how to help them to get out of debt. Debts are at high levels, but they are lower than they were in the first quarter of 2010. The latest figures, for the third quarter of 2017, showed that they had gone down, but they are still high, and we need to help people understand their finances. Understanding really is key to this—they need to understand what is going out, what is coming in and how to get life on a firmer footer, so that they can go forward with confidence.
Ms McVey
If I can make a bit progress, I will take some more interventions.
Old Mutual Wealth has noted that consolidating the Money Advice Service, the Pension Advisory Service and Pension Wise into a single financial guidance body presents an opportunity materially to improve the quality and reach of Government-led primarily industry-funded services to encourage consumer engagement. Accordingly, the new body will ensure that people have access to the information and guidance needed to make the necessary and effective financial decisions that we all have to make throughout our lives. This information, guidance and, in respect of debt, advice will be not only independent and impartial, but free at the point of use, making it accessible to all those who need it. By merging those services into a single body, we will remove duplication of services, increase the efficiency of the service and ensure that those who require information, financial guidance and debt advice know exactly where to find it.
A single body also gives us the opportunity to provide a more seamless customer journey, doing the joining up behind the scenes. Importantly, it provides a hook back into the customer for follow-up support. The Government are concerned about low levels of financial capability in the UK. We recognise that not enough people know how to manage their money effectively, which is why we are taking decisive action through the Bill.
Steve McCabe
I am very grateful to the Secretary of State for giving way. As she seems to be acknowledging, the evidence suggests that too many people do not have sufficient knowledge to make the best choices about their pensions. On that basis, does she agree that it is important that the new body concentrates on trying to provide as much face-to-face active support and guidance as possible, and does not simply rely on websites, which are a much more passive form of assistance?
Ms McVey
The hon. Gentleman raises a very good point. Different people glean information through different channels, so a website works for some and telephones work for others, and there will be a need for face-to-face advice. At the moment, that is being offered through the citizens advice bureaux. Therefore, he is right in saying that face-to-face advice is important, too.
Mr Jim Cunningham (Coventry South) (Lab)
One big problem with information for ordinary people is that it is complex. Will right hon. Lady give us an assurance that any information or advice that is being given is in simple language that people can understand? That is always the big difficulty with lots of forms—people just do not understand them.
Ms McVey
Again, a valid point—the advice has to be impartial, free and in a language that people understand. Sometimes people might not feel confident to say that they do not understand the terminology, because they think that there is a presumed knowledge that might not be there. I concur with what the hon. Gentleman says.
The new body will have a number of statutory objectives: to improve the ability of people to make informed financial decisions; to support the provision of information, money and pensions guidance and debt services in areas where it is specifically lacking; to ensure that information, guidance and debt advice is clear, cost-effective and not duplicated elsewhere; to ensure that information, guidance and debt advice is available to those most in need, particularly people in vulnerable circumstances; and to work closely with the devolved authorities.
Gareth Thomas
Further to the question asked by the hon. Member for Taunton Deane (Rebecca Pow) about the rise in household debt, does the Secretary of State accept that there is a particular problem with household debt generated by high-cost credit lenders, such as BrightHouse? Under clause 10, the Financial Conduct Authority can levy to cover the costs of the new single financial guidance body. Can she reassure me that high-cost credit companies such as BrightHouse will be covered by such a levy, and will she tell the House what this body will do to encourage the take-up and awareness of the products offered by credit unions—a far lower cost of debt provision?
Ms McVey
First, debt is not rising. It has actually fallen over the past eight years, but it is still too high. This new body will offer guidance and advice, so that people understand what loans they are taking out and, fundamentally, what paying them back will mean for them. Secondly, we are today putting in place the legislative framework to set up the body, but it will determine the key things it wants to pursue. I am convinced that it will listen to the advice that the hon. Gentleman and others put forward.
The new body will also provide advice on a breathing space scheme, providing additional support to the Government’s policy development. The scheme will allow an individual in problem debt to apply for a period of protection from further fees, charges and enforcement action, alongside establishing a statutory debt management plan. One of the new body’s key functions will be to support over-indebted consumers, ensuring the provision of high-quality debt advice that is free at the point of use. Last year, the Money Advice Service spent £49 million to fund 440,000 debt advice sessions. We want the new body to build on that good work.
Kevin Hollinrake (Thirsk and Malton) (Con)
Further to the point that the hon. Member for Nottingham East (Mr Leslie) made about financial resilience, is the Secretary of State aware that household debt as a proportion of household income rose from 93% to a peak of 157% in 2008, under the previous Government? Does not that demonstrate that these kinds of measures are essential in helping people to make sensible choices about their finances?
Ms McVey
My hon. Friend makes a good point. Household debt rocketed under the previous Labour Government, and we are now ensuring that it comes down, because it is still too high. I particularly appreciate that the Bill has cross-party support, because we all know that we need to help people who are in debt.
As a result of a range of broader reforms and initiatives, such as automatic enrolment, which has increased the number of people saving into pension schemes and the pension freedoms that allow anyone aged 55 and over to take their whole pension as a lump sum without paying tax on the first 25%, the number of people looking for high-quality, impartial financial guidance continues to rise. We look forward to the new body meeting those challenges, building on the existing good work of the Money Advice Service, the Pensions Advisory Service and Pension Wise.
Yvonne Fovargue (Makerfield) (Lab)
Has the Minister considered whether the breathing space will apply to public as well as private sector debts, because many people find that they are pursued more vigorously by those creditors?
Several hon. Members rose—
Ms McVey
I will make a little progress before taking any more interventions, because otherwise I will never get through this, and I need to.
The second part of the Bill makes provision to strengthen the regulation of claims management companies. As many hon. Members will be aware, there is evidence of malpractice in the claims management sector in the form of disproportionate fees, nuisance calls, poor service, and the encouragement of fraudulent claims.
Following an independent review of claims management regulation led by Carol Brady, the Government announced in the 2016 Budget their commitment to clamping down on malpractice in the sector. Part 2 delivers this commitment in two key ways. First, it transfers regulatory responsibility for claims management regulation from the Claims Management Regulator, a unit based in the Ministry of Justice, to the Financial Conduct Authority. Secondly, it introduces new measures to ensure that consumers are protected from being charged excessive fees. Those measures include a duty on the Financial Conduct Authority to make rules restricting fees charged for services provided in relation to financial services and products such as payment protection insurance claims, and a power for the FCA to introduce caps in other claims sectors should the need arise.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is great to see you back in your rightful place, Mr Deputy Speaker.
May I take the Secretary of State back to the first part of the Bill and the devolved functions in terms of debt advice? How will they be funded? Will it be based on a percentage share—a population share—of expenditure in England? Will it be based on Welsh need, or, as I read the Bill, will the Welsh Government send the Treasury a bill for its functions and then that will be levied by the FCA?
Ms McVey
I reiterate what the hon. Gentleman said by welcoming you, Mr Deputy Speaker, to the Chair.
The money will be collected. At the moment, what is spent and how it is spent is down to the new body being formulated. However, it will be done by Government grants and then money will be taken back—financial bodies will be paying in. Obviously, going forward, where there is most need is where most money will be going. That is how it will be viewed.
Robert Neill (Bromley and Chislehurst) (Con)
I very much welcome part 2, which does improve protections. Is my right hon. Friend aware that the Justice Committee looked at this issue in relation to changes to the small claims limit in personal injuries matters? Will she bear in mind the very strong evidence suggesting that, because the likely increase in the small claims limit will mean more litigants in personal injuries cases, the current cap in relation to payment protection insurance should be extended to personal injuries cases in order to extend consumer protection? Will she consider a “fit and proper person” test in relation to claims management companies operating in this area?
Ms McVey
My hon. Friend always provides wise words. I can assure him that those matters will be taken into consideration.
This is not to say that claims management companies should be regulated out of existence. The Government believe that these firms provide a valuable service to consumers who may be less likely or unable to bring claims themselves. A well-functioning CMC market can also benefit the public interest by acting as a check and balance on business conduct. The measures therefore aim to strengthen claims management regulation in the round in order to enhance both consumer protection and professionalism in the sector.
The Bill ensures that those who use claims management services to make claims in relation to PPI are protected in the interim period before the FCA exercises its duty to introduce a fee cap. The Bill does this through the provision of an interim fee cap on PPI claims management services during the period between Royal Assent and implementation of the FCA cap. The Bill will cap these fees at 20% of the final compensation amount. The Association of British Insurers welcomed the claims management regulation measures, stating:
“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts.”
Andy Slaughter (Hammersmith) (Lab)
One thing that the Bill was silent on, until it was amended by the Opposition in the other place, is cold calling. In the seven years since the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the Opposition have been pressing to have cold calling and spam texts outlawed. Is the Secretary of State going to say anything about that? Does she agree that there is no defence for having this blight on the lives of almost everyone in this country, and that it should not just be regulated but banned?
Patricia Gibson (North Ayrshire and Arran) (SNP)
Will the Secretary of State give way?
Ms McVey
If I may, I will continue a little bit further and then I will take another question.
I will reflect on the passage of the Bill through the Lords. There was overwhelming support in the other place for the measures originally contained in the Bill. The amendments in the other place sought to include a Government manifesto commitment—a debt respite scheme—because noble Lords were concerned about legislative space. Some amendments made explicit in the Bill what was always implicit in policy, including making it clear that the single financial guidance body’s services are free at the point of use, and ensuring that the information, advice and guidance are impartial.
Other changes were more substantial, but none the less welcome. These ranged from the inclusion of a clause making it a criminal offence to impersonate the body to safeguarding clauses for its wind-up and requiring the FCA to create rules on signposting individuals to the body. Further additions include an interim fee cap for PPI claimants, which will ensure that CMCs charge fair and proportionate fees in relation to financial services claims during the interim period between Royal Assent and the introduction of the FCA’s fee cap, and making provision for the establishment of a debt respite scheme, which I will expand on shortly.
Patricia Gibson
Does the Secretary of State share my concern about the UK Government’s intentions with regard to adopting the provisions in my ten-minute rule Bill to do with director-level responsibility for unsolicited marketing communications? The Government have on two occasions set themselves a deadline to adopt this legislation, and on two occasions the deadline has passed. I hear what the Secretary of State has said about the provisions in this Bill, but is she concerned, like me, that it will be confined to protecting consumers with regard to pensions, not in a whole host of areas right across the marketplace?
Ms McVey
We are of course looking at pensions today, but other rules, regulations and laws are in place to protect people from unsolicited, unwanted cold calls and the Department for Digital, Culture, Media and Sport is looking at how to strengthen them further. I now want to address some of these issues.
Several hon. Members rose—
Vicky Ford (Chelmsford) (Con)
I listened very closely to what the Secretary of State said about the breathing space, which is a really welcome period to help individuals —she mentioned individuals—to sort out their debts without getting into more problems. Will she confirm that that also covers households and families so that it helps the whole family, not just the individual?
Mr Edward Vaizey (Wantage) (Con)
May I welcome my right hon. Friend to her new position? As the former Minister with responsibility for telecoms, I was involved in trying to stamp down on cold calling. It may not be necessary to ban cold calling entirely, but I certainly welcome the fact that the Bill has been amended to take account of the knock-on effects of claims management companies on cold calling. I hope that the Secretary of State will comment on the need to make it explicit that the new regulator must consult Ofcom on some of these issues. Ofcom is the body charged with cracking down on cold calling. We often forget that when we introduce measures that are consumer-friendly—rightly, to allow people to have redress—that can, unfortunately, inspire some of the less scrupulous to up their game in terms of cold calling.
Chris Philp (Croydon South) (Con)
On the question of cold calling raised by my right hon. Friend the Member for Wantage (Mr Vaizey), the cold calling provisions appear in clause 4 in part 1 of the Bill. Could the Secretary of State clarify whether those powers to prohibit cold calling will apply not just to financial guidance but to claims management companies, which are the topic of part 2? I hope that the answer is yes.
Ms McVey
That is our intention and that is what we will do, but those finer points will be worked out by the body as it works responsibly on behalf of UK citizens.
I want now to address issues that I know will be of interest to hon. Members. The Government have been clear that we will not stand for unlawful, persistent cold calling made by companies in the claims management sector. Cold calling is already illegal under certain circumstances. Under the privacy and electronic communication regulations, we have forced companies to display their numbers when they call, made it easier to take action against those involved in making the calls, and strengthened the powers of the Information Commissioner’s Office to impose fines.
That being said, a number of companies continue to act disreputably, so it is only right that the Government continue to take steps to further regulate the sector. That is why the Government committed in the other place to introduce measures to tackle those issues. The Department for Digital, Culture, Media and Sport is currently working through the details of an amendment to prohibit CMCs from making live, unsolicited calls unless the receiver has given prior consent. That step, combined with the Government’s previous actions in this area, should act as a warning to those acting unlawfully that we will not rest until the problem has truly been eradicated.
Ms McVey
If I can continue for a little longer, I will take some more interventions.
The Government welcome the findings of the report of the Select Committee on Work and Pensions exploring how to protect pensions from scammers. We remain committed to protecting savers from pension scams. We have already announced that we are banning pensions cold calling, tightening HMRC’s rule to stop pension scammers and fraudulent schemes, and preventing the transfer of money from occupational pension schemes into fraudulent ones.
The Government are currently reviewing the alternative proposals for banning cold calling under the Bill. We have also listened to concerns about the risks of not receiving sufficient guidance or advice prior to taking advantage of the pensions freedoms, and we are currently considering the amendments recommended to ensure that members of the public are aware of the importance of receiving guidance.
Hon. Members will also be interested in the addition of the provision for a debt respite scheme, which includes a breathing space period and a statutory debt repayment plan. We understand the valuable additional support that the scheme could provide for thousands of vulnerable individuals and want to implement a breathing space scheme as quickly as possible.
The Government are pressing on with policy development. We have already set out a firm timetable for consultation and are continuing to work closely with a wide range of stakeholders. The call for evidence on breathing space was published in October last year and has now closed. After responding to that call for evidence, we will consult on a single policy proposal. The Bill gives us an enabling power to lay regulation to establish the scheme after receiving advice from the single financial guidance body on the design and certain aspects of the scheme. It is important that we take time to get this right. The scheme will achieve its intended benefits for indebted individuals only if it is properly designed. I look forward to the Government working constructively with hon. Members so that we can enable a scheme to benefit vulnerable families as quickly as possible.
Neil O'Brien
One of the important things that the Bill does is to regulate nuisance cold calling. It is sometimes tempting to dismiss it as merely a nuisance, but it is more than that for some vulnerable people. A constituent has emailed me to say:
“All my friends and family have signed up to the TPS, but are still bombarded by these parasites. Our friend who suffers from dementia seems to get several a day, as I check his phone calls each time we visit. These vulnerable people…say yes to anything”,
even if they have not had an accident. My constituent adds that
“TPS does not work…The only way to stop this abhorrent practice is for the regulator to hand out punitive fines”.
Will my right hon. Friend both maximise the scope of the Bill and encourage the regulator to clamp down hard on that kind of behaviour?
Ms McVey
I thank my hon. Friend for raising that important point. I bet that many constituents could bring forward similar cases. The maximum penalty for breaches will remain the same; that is up to half a million pounds. We must make sure that people do not abuse the system, which is why, particularly in this Bill, we are looking at ways to ban pension cold calling.
Andy Slaughter
The Secretary of State is being extremely generous. I sense some puzzlement on both sides of the House that the Government are pulling their punches on cold calling. There is to be greater regulation; that is to be extended in some areas. Apart from the cold callers themselves, the consensus is that this should be banned. That includes claimant organisations such as the Association of Personal Injury Lawyers. Why will the Government not undertake now to ban spam texts and cold calls?
Ms McVey
We have brought that forward. That will be for this Bill. For pensions, there will be a ban. It is about working out how that is done, how we deliver it and how it is possible, but that is the intention.
Hon. Members will no doubt be aware that in October the DWP took on responsibility from the Treasury to work with regulators, the industry and other sectors to create a pensions dashboard. That digital interface would allow individuals to see all their pension savings in one place by collecting information about pensions held with different providers. We are conducting a feasibility study to explore the key issues and determine a path towards implementation. We expect to be able to report on that in March.
The Government believe that the needs of the consumer must be at the heart of the dashboard’s design. We want to maximise people’s engagement with their pensions while maintaining their trust. We will ensure that people’s interests are properly safeguarded and their information protected. As part of the study, we are also considering what role, if any, the single financial guidance body may have in relation to the dashboards.
I firmly believe that the Bill is useful, fair and has the individual at its heart. Its goal is to ensure that people are easily able to access free and impartial financial guidance to help them to make more effective financial decisions. Having access to guidance will boost their confidence when dealing with financial service providers and it is a crucial step towards improving their financial capability. The Bill sends a clear message to CMCs by transferring regulatory responsibility to the Financial Conduct Authority, providing a stronger framework to ensure that individuals are accountable for the actions of their businesses, and by introducing fee-capping powers to protect consumers from excessive fees.
This lies at the heart of Conservative philosophy. It is about understanding how an individual can be stronger by understanding their finances and, where possible, by not allowing themselves to get into debt. It is about supporting the individual, the family and the community, and they can best do that by understanding their finances. I look forward to having a constructive and positive dialogue in this House.
Points of Order
Esther McVey Excerpts(6 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
I am grateful to the hon. Lady for her point of order. In short, I have received no notification from the Secretary of State for Work and Pensions of an intention to make a statement on that matter. As the hon. Lady will know, the Secretary of State is in her place; she is welcome to come to the Dispatch Box and respond if she wishes, but she is under no obligation to do so.
Mr Speaker
She does not wish to do so at this time. The hon. Member for Battersea (Marsha De Cordova) should table questions and see where she gets. If she and her colleagues judge that they wish to seek a debate on the matter, it is open to them to do so. For now, she has aired her concern and it will have been heard by those on the Treasury Bench.
Private Sector Pensions
Esther McVey Excerpts(6 years, 11 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on the Government’s plans to stop private sector pension abuse.
The Secretary of State for Work and Pensions (Ms Esther McVey)
The vast majority of employers do the right thing by their pension schemes, and members can expect to receive the pension benefits they have paid for throughout their working lives. The Pensions Regulator and the Pension Protection Fund were set up in 2004 to provide pension scheme members with a safety net to ensure pension benefits receive some protection when things go wrong—it is a fact that some businesses will fail. The PPF approach has been supported on a cross-party basis since 2004.
To prevent irresponsible employers from off-loading pension liabilities on to the PPF, the regulator was given a range of powers, including the ability to recover significant assets where employers failed to take account of the scheme. There are about 6,000 defined benefit schemes, however, and such cases are very few and far between. It is the responsibility of the regulator to strike a balance between protecting members and PPF levy payers, and minimising any adverse effects on the sustainability of employers and businesses when it comes to the regulation of defined benefit funding.
The regulator does not have the power to stop businesses paying out bonuses to executives or dividends to shareholders, but if it believes that a scheme is not being treated fairly, it will investigate to see whether the use of its powers is appropriate. The Government are clear, however, that where sponsoring employers can meet their pension promises, they should and must do so. That is why we have suggested ways of strengthening the current scheme to enable the regulator to be more proactive. In fact last February we published our Green Paper, “Security and Sustainability in Defined Benefit Pension Schemes”, which included suggested measures that could strengthen the powers of the Pensions Regulator by introducing punitive fines for actions that harm a pension scheme. We also set out powers to enhance the regulator’s ability to demand information to ensure effective governance and spot issues before damage is done.
Our manifesto in June 2017 reaffirmed this intent by proposing to give the regulator the power to impose punitive fines alongside contribution notices so that pension scheme members are fully protected. The details of the fine would be worked through with all the relevant stakeholders, but it would represent a significant strengthening of the deterrent. We also intend to make certain corporate transactions subject to mandatory clearance by the Pensions Regulator, but we must take care to ensure that these measures do not have an adverse effect on legitimate business activity and the wider economy.
I should tell colleagues that we have received 800 responses to the Green Paper, and they are being reviewed by the Department. The White Paper is in progress and will be published in the spring. Effective regulation is dependent on a prompt flow of information between the parties concerned, and on compliance with rules and processes. Following the publication of the White Paper, we will introduce new regulation to ensure that the regulator gets the information it requires to conduct investigations and casework effectively and efficiently. It remains the case that the Government support free markets, enterprise and businesses, but this has to be conducted responsibly.
Debbie Abrahams
Yesterday, the Prime Minister chose to announce via the media, in part in response to the collapse of Carillion, that the Government planned to introduce tough new rules to stop private sector pension abuse. Carillion had 13 defined benefit schemes in the UK, with 28,500 members and a combined pensions deficit of £587 million. Between the end of 2015 and last year’s interim results, the difference between Carillion’s assets and liabilities almost doubled, from £317 million to £587 million. We know that profit warnings started to be issued in the summer of 2017. Given the severity of the financial problems facing Carillion, why did the Government not act then, rather than attempting to close the stable door after the horse had bolted?
We have argued for years that the Government should take better action to protect people’s pensions. The Government had the opportunity to act in 2013 and again in 2015, by supporting Labour’s amendments to pensions governance in legislation. More recently, the Work and Pensions Committee warned the Government of the need for protections and for more powers for the regulator. Although we welcome the Green Paper, the urgency has just not been there. Why did the Minister choose to ignore those warnings?
The Committee made a number of recommendations, including that the Pensions Regulator should have mandatory clearance powers for corporate activities that put pension schemes at risk, and that it should have new powers to impose fines at a level that would genuinely deter such dangerous and irresponsible behaviour. Why did the Government refuse to implement those recommendations at the time? Are the Government now ready to commit to implementing them fully? If the Government had taken action, Carillion’s massive debt accrual might have been arrested.
Given the scale of the liabilities and the concerns for other defined benefit schemes, what does this mean for the adequacy of the Pension Protection Fund? The collapse of Carillion has already led to a rise in pension scammers targeting those with pension pots. What about the defined contribution schemes that are not covered by the Pension Protection Fund? Will the Secretary of State investigate the apparent conflict involved in BlackRock being responsible for those schemes while simultaneously betting against their employer? Finally, can she advise the House what measures will be proposed in the White Paper, and when, exactly, they will be brought to the House?
Ms McVey
As Members on both sides of the House know, the regulator is an independent, arm’s length body. It was set up in 2004 after much discussion about how it should work and how it could best support pensioners when they needed its help. What it never did was to interfere with the running of a business; that was what was decided. We said that we needed to make sure that we could go further if we had to. That is why we have set about introducing a Green Paper—as I said, we have had 800 consultation responses—looking at where it is best to intervene, to make sure that we get the balance right. We do not want to tip the edge and unnecessarily cause harm to a business.
Profit warnings mean that a company will not get the profit that it expected—no more than that. We have to make sure that the Government do not precipitate anything that could be seen as negative from business. That is why we are looking at all these 800 responses, looking carefully and considering how to protect companies’ employees, protect pensions and move forward in the most conducive and careful manner. The new White Paper will be coming forward later this year.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
May I draw my right hon. Friend’s attention to the way the British public are reacting to this issue? They are seriously repelled by the notion that executive directors and even ex-directors should carry on drawing large payments at the same time as there is a mounting pension deficit. If this was what capitalism was really like, people would not want it. What are the Government going to do to draw the attention of businesses and executive directors to their governance responsibilities in these situations in the future, although this is nothing like as bad as the Maxwell scandal?
Ms McVey
I completely agree with my hon. Friend. This is about strengthening the corporate governance of organisations. This is about giving power to the boardroom. This is about giving shareholders responsibility. This is about having responsible businesses doing the right thing. Where we can ensure that that happens, and where we can look into investigating what is going wrong—should things be going wrong—it is right that we do. As I said at the beginning, most businesses—the vast majority of businesses, and there are over 6,000 defined benefit schemes—are doing the right thing, but where they are not, it is right that there is fury from the public to make sure that they do the right thing. That is why the Insolvency Service carries out investigations in this regard and gets money back where it can.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you, Mr Speaker, for granting this urgent question, and I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing it.
That we are talking about private sector pensions again highlights the fundamental need to address the regulation of the pensions industry—something that the SNP has been calling for for years, but that has until now fallen on deaf ears. The BHS pension scheme was in deficit by more than £500 million. Carillion is estimated to be up to £900 million in the red, and there are over 5,000 other private sector defined benefit schemes in deficit, to the tune of £900 billion—a ticking time bomb for savers.
However, the real issue is that, while top executives make bad decisions and are rewarded for it, 11 million people who rely on a final salary pension could still be at risk of having the rug pulled from under their feet and of facing reduced entitlements should cases such as BHS or Carillion continue to be repeated.
The SNP has long called for the establishment of an independent pensions commission to ensure that employees’ savings are protected and that a more progressive approach to fairer savings is considered. Alongside that, will the UK Government make sure that the Pensions Regulator is now given the appropriate authority to step in and protect the interests of savers and pensioners before cases such as those of BHS and Carillion happen again?
Ms McVey
The Pension Protection Fund is there to do just that: to support pensioners. It does step in and support them where necessary. The hon. Gentleman is quite right: where businesses have not worked responsibly, we should be getting involved, and we did that when we saw the conditions with British Home Stores. What happened there is that anti-avoidance enforcement did take place, and £363 million was got back, so we did not have to use the PPF. Also, a prosecution did take place. All these instances have been different, but the hon. Gentleman is quite right: where there has been an abuse of the system, we will carry out an investigation and bring people to account.
Rachel Maclean (Redditch) (Con)
What action is my right hon. Friend taking in working with the Secretary of State for Business, Energy and Industrial Strategy to look at the conduct of the directors of Carillion in this regard? Specifically, following on from the point raised by my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), what can be done now to recover any of this money for the people affected?
Ms McVey
I thank my hon. Friend. An investigation is going on. Not only is there one that has been initiated by the Business Minister, but the Insolvency Service will also be investigating what went on. If there is any evidence that untoward things have been done, a prosecution will follow. That is what we are about: we want businesses to act responsibly. They employ the majority of people in this country, so it is only right that we support them when they need our support and bring them to account when they are doing things wrong.
Stephen Timms (East Ham) (Lab)
I welcome the right hon. Lady back to this Department. The Government, of course, are responsible for the regulatory framework for pensions. Will she respond to the point raised by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) about defined contribution schemes? Are the Government looking at possible changes to the rules for those, as well as for defined benefit schemes, which the Minister has said the Government are looking at?
Ms McVey
We are not currently considering changing the rules on defined contribution schemes. In that instance a contribution has been made which will be protected and moved to another pension, whereas a pension in a defined benefit scheme is what someone was expecting to receive at the end, and will therefore be protected. They are very different schemes, and different protections and rules apply to them.
Mrs Pauline Latham (Mid Derbyshire) (Con)
Can my right hon. Friend confirm that constituents with existing Carillion pensions will receive 100% recovery through the Pension Protection Fund?
Helen Goodman (Bishop Auckland) (Lab)
The Secretary of State does not seem to have grasped the fact that the decision to carry on paying dividends and to boost the bonuses of the board while running up a pensions deficit was made by the board itself. What will she do to prevent that from happening again?
Ms McVey
I do understand the gravity of what happened, but there is one thing that we never seek to do in the House. In 2004, after much discussion, we asked an independent arm’s length body to look into these matters. When there have been misdemeanours and irresponsible behaviour and things have gone wrong, we announce that investigations are under way, but we are not the investigator. What we do is legislate to ensure that people are brought to account—and if they have done something wrong, my goodness, we need to bring them to account.
Mr Marcus Jones (Nuneaton) (Con)
A number of my constituents have been affected by the Carillion situation. What will the Pension Protection Fund do to support those who have pensions through Carillion, and what more will the Government do to ensure that people with private pensions can be confident that investing their savings in a company pension fund is the right thing to do?
Ms McVey
I can reassure my hon. Friend that the Pension Protection Fund is there to provide a lifeboat. Those who have retired will receive 100% support, while those who have not will receive 90% support, with a cap. That is what we are here to do: to protect the people who have done the right thing in saving for their future and to look after them in a responsible way, while also ensuring that regulations and processes exist to bring to account those who have done the wrong thing.
Cat Smith (Lancaster and Fleetwood) (Lab)
BlackRock was responsible for Carillion workers’ pensions, while simultaneously betting against their employer on the stock market. What measures will the White Paper contain to ensure that such a conflict of interests cannot happen again?
Sir Desmond Swayne (New Forest West) (Con)
What impact would renationalisation below the market have on pension funds?
Tonia Antoniazzi (Gower) (Lab)
My constituent Michael Evans, a retired employee of Barclays, has raised serious concerns about the future of its pension fund. Given the £7 billion shortfall, is Barclays moving its liability to its investment branch in the hope that it can avoid having to cover the deficit?
Alex Burghart (Brentwood and Ongar) (Con)
I welcome the Government’s commitment to do more to protect the pensions of private sector workers. Does the Secretary of State agree that it is absolutely necessary to have private sector providers of public services, and that the Government should continue to support them?
Stephen Kinnock (Aberavon) (Lab)
The creation of the British Steel pension scheme mark 2 created fertile territory for unscrupulous pension advisers to swoop in like vultures and exploit vulnerable people. What lessons have been learned from the British Steel experience, and what will the Secretary of State do to ensure that we do not see the whole sorry tale of Carillion leading once again to the privatisation of profit and the socialisation of risk?
Ms McVey
What we have learned from that is that straight away, eight companies were banned from doing what they had done in any kind of pension scam. We are also going to bring together all the advice under a single body so that people are well aware of what they can and should be doing and whether they have done the right checks to ensure that they are dealing with a positive organisation for their pension.
Mrs Anne Main (St Albans) (Con)
Workers have been encouraged to take part in buying their pensions, and they need to have confidence in their scheme. My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) mentioned the fact that fat cats are seen to bear no risk in this process. What more can we do to achieve greater transparency in how private pensions work within companies? What can we do to enable people to get the best possible information to ensure that they are not being sold short while other people seem to float high above all the risk?
Ms McVey
My hon. Friend raises a key point. There does need to be transparency. A pension is something that people invest in all their lives and hope to recoup when they retire, so transparency is key. Our White Paper will seek to determine best practice and, in parallel, to set out stronger corporate governance within pensions organisations.
Stephen Lloyd (Eastbourne) (LD)
I should like to thank you, Mr Speaker, for granting an urgent question on this important issue. I should also like to welcome the Secretary of State back to the Front Bench. Is she aware that, under the current rules, pension obligations are unsecured, meaning that insolvent companies fund their pension schemes only when they have compensated their other, supposedly more important, secured creditors? If so, has her Department considered carrying out a review of those rules so that employees with private pensions can be given a justifiably higher priority in future?
Maggie Throup (Erewash) (Con)
The whole subject of pensions is very complex. In the context of providing advice for people who are looking for a pension, or who already have one, what action are the Government taking to ensure the better delivery of financial and debt advice?
Ms McVey
The Financial Guidance and Claims Bill, which we will be debating straight after this urgent question, deals with the advice and support that people can get in order to understand what options are on the table. That represents a positive move by this Conservative Government to allow people to control and understand their finances, because they need to know where to put their money and be assured that it will come back to them in a good pension.
Diana Johnson (Kingston upon Hull North) (Lab)
Further to the question asked by my hon. Friend the Member for Bishop Auckland (Helen Goodman) and in the light of Carillion’s board members rewarding themselves with bonuses while allowing the pension deficit to grow, does the Secretary of State agree that she needs additional powers to bring such executives to account for their corporate greed and irresponsible behaviour?
Ms McVey
The situation is being assessed at the moment, and what happened is being investigated. The regulator already has the power to look into anti-avoidance measures and enforcement, which could be utilised to do precisely what the hon. Lady talks about. Strengthening the regulator’s hand was in our manifesto, and we will be bringing that forward in the White Paper.
Jeremy Quin (Horsham) (Con)
Hon. Members are understandably focusing on the directors of Carillion but, having been through the BHS investigation conducted by this House, I encourage my right hon. Friend to look closely at the expertise, advice and powers available to pension trustees.
Mr Jim Cunningham (Coventry South) (Lab)
Over the past 30 years, successive Governments have made promises from time to time about strengthening the rules around pension schemes, but nothing happens. The Carillion situation will have a major impact on the west midlands supply chain. When are we going to get tough on directors and get some tough legislation? The White Paper will not be worth the paper it is written on unless the Government do something positive.
Ms McVey
The hon. Gentleman is right that we are looking for ways to bring to account those who have not acted scrupulously. The regulator has taken measures, and they have proved successful. For example, BHS was prosecuted and we recouped £363 million. We have to adapt to situations as they arise and try to pre-empt other things, because none of the cases that have been mentioned today resulted from the same action. The hon. Gentleman is right that we have to ensure that unscrupulous businesspeople are brought to account, because we need good private business and good entrepreneurs.
Rebecca Pow (Taunton Deane) (Con)
I applaud the Prime Minister’s call for tougher new rules for executives who put workers’ pensions at risk. My constituents want to be confident that private pensions are secure and sustainable. After all, we have encouraged them to take them out. To put my constituents’ minds at rest soon, will my right hon. Friend please give an assurance that the Government are taking matters seriously?
Ms McVey
My hon. Friend is right to raise that point. The people watching at home who have a pension or are thinking about investing in one want to know that they are safe. They also want to know what the Government are doing to ensure that they will be safe going forward. That is exactly what we in intend to do with the White Paper by reinforcing corporate governance measures and making them tougher.
Alan Brown (Kilmarnock and Loudoun) (SNP)
As Carillion owes millions of pounds to subcontractors such as small plumbing companies, it is inevitable that there will be other insolvencies. If a plumbing company goes under, its nominal liabilities transfer to fellow employers through a multi-employer pension scheme. That is clearly unfair, but it happens because the PPF refuses to act as guarantor of last resort for multi-employer schemes. When will the Government end that anomaly? If they will not, will they support my ten-minute rule Bill that would sort out the situation?
Paul Masterton (East Renfrewshire) (Con)
The best form of pension protection that anyone can have is a sustainable employer. While the Pensions Regulator has wide-ranging powers, they are rarely used and it is often a bit toothless. Is the Secretary of State satisfied that any new powers, welcome though they may be, will be backed by proper resources?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As part of the Tata Steel-Thyssenkrupp merger, workers faced the slashing of their pension funds if they joined the PPF or if they joined a new scheme with reduced benefits. Others opted for personal plans, leading to a feeding frenzy of mis-selling. Does the Secretary of State think the steelworkers of Wales were treated fairly, considering that the new company’s annual sales are estimated at £15 billion?
Ms McVey
We have to make sure that we look after people with pensions. We also have to ensure that we keep companies going as a viable concern. At the time, this was deemed to be the best option for the future. We always have to make sure it is the best solution at the time, and we have to secure future legislation to ensure that we have better regulation and better law in place.
Nigel Huddleston (Mid Worcestershire) (Con)
Even this weekend I heard and saw some commentators, who really should know better, say things such as that Carillion pensioners risk losing their pensions. Can the Secretary of State confirm what percentage of their anticipated pension many Carillion pensioners can now expect to get through the PPF?
Ms McVey
My hon. Friend raises a good point. Those who are in receipt of a pension will receive 100%, and those who receive a pension in the future will get 90%, subject to a cap. People who are concerned about their pension should rest assured, and they can always go to our free helpline.
Lucy Allan (Telford) (Con)
I warmly welcome the Secretary of State to her new position and thank her for the reassurances she has given the House this afternoon. GKN employs 340 people in Telford and is currently the subject of a proposed hostile takeover. Will she confirm that the safety of pensions at GKN will be a priority for her Department if the takeover proceeds?
Mr Philip Hollobone (Kettering) (Con)
How is it that some of these private sector pension fund deficits are allowed to get so large before any action is taken?
Ms McVey
We allow businesses to run themselves without interference from Government, and therefore we do not know the complete structure of their profit and loss, and of their assets and liabilities. Should anyone wish to raise a concern about their business, they are free to do so with the regulator. With our combined corporate governance review and new legislation, we will make sure that pensions are on as firm a footing as possible. We will make sure that such abuses do not happen.
Kevin Foster (Torbay) (Con)
I am sure the Secretary of State will agree that the recent prosecution of Dominic Chappell by the Pensions Regulator should put directors who take decisions that might endanger their employees’ pensions on notice of the liabilities they could face. But will she reassure me that the role and powers of the Pensions Regulator, particularly how much further we can go in attaching personal liability to those responsible for disastrous decisions, will be part of the White Paper?
Ms McVey
I reassure my hon. Friend that that is exactly what we will be doing. We are looking at how we empower the Pensions Regulator and, if need be, how we allow it to levy fines. It has to be a balanced response, not a knee-jerk response, and we have to make sure it works for both pensioners and businesses.
Richard Graham (Gloucester) (Con)
When a major UK business collapses it is incredibly important that both existing and future pensioners are given reassurances about their situation. In the case of BHS, this House elected to constitute a joint Select Committee inquiry to consider aspects of both the pensions and the business. Does she agree that a joint Select Committee inquiry looking into both the pensions and business aspects of the collapse of Carillion would be welcome?
Secondly, in the worst-case scenario, existing pensioners will get 100% of what is due to them through the Pension Protection Fund, and future pensioners will get 90%. The PPF, with assets of some £29 billion, is extremely well funded and capable of looking after the worst-case scenario.
Ms McVey
My hon. Friend, who has a lot of experience in these matters, is right in saying that the Pension Protection Fund is robust. It has a lot of resources, so people are safe and will be protected. That is what they need to know now. The Government have very clearly, from the moment this happened, set out the support for pensioners, so that they knew that their pensions were safe and they could go to work knowing that they were being looked after. He is quite right: we have to make sure that we are taking the right approach going forward.