Oral Answers to Questions

Harriett Baldwin Excerpts

Thursday 22nd November 2012 Commons Chamber

[Esther McVey]

I agree with my hon. Friend—I referred to that in my previous answer. We need to get the statistics right. As I said, 9% of the total 16 to 24-year-old population are unemployed. We have put more in place than ever before to help that group of people.

[Harriett Baldwin (West Worcestershire) (Con)]

May I declare an interest in the employment of women aged between 50 and 64? Will the Minister join me in welcoming the fact that the unemployment rate in that group is, at 3.5%, the lowest rate of unemployment for any group of women? Some 3.5 million women in that age group are employed, which is the highest number ever, and 60.6% is the highest rate of employment for the group.

[Esther McVey]

I agree with my hon. Friend—that is obviously a very talented group of women. She is correct that 3.5% is lower than before. It is half the total unemployment rate, which is 7.8%.

Specialist Disability Employment

Harriett Baldwin Excerpts

Tuesday 10th July 2012 Commons Chamber

[Maria Miller]

Again, I understand the strength of feeling; the hon. Gentleman is trying to ensure that the people in his constituency are supported in the way that they need to be. I gently remind him that the estimated average redundancy of somebody in a Remploy factory will be about £19,000, which is more than double the average that would be received under the statutory scheme. It is important that people get the right level of support, so we are making £8 million available to support individuals into mainstream employment. [Interruption.] The hon. Gentleman asks what jobs are available. I remind him of the many hundreds of jobs that the employment services have found for disabled people in his constituency.

[Harriett Baldwin (West Worcestershire) (Con)]

When the Select Committee looked into Remploy, we took evidence from union bosses who had enlisted some of the people in the factories. Does the Minister think they have helped the difficult situation by giving leaflets to employees saying, “If you lose your job, you will lose your humanity”?

[Maria Miller]

I commend the work of the Select Committee in highlighting that. I agree that it is unfortunate, but I do not know whether it is surprising. It is certainly saddening to hear of a trade union taking such action. I have to say, I have had a number of constructive meetings with the unions over recent months. I would point out also that it is estimated that as a result of our redirecting funding to Access to Work, an additional £200 million of value will be realised from the specialist disability employment programme. Perhaps the Committee might want to examine that.

Oral Answers to Questions

Harriett Baldwin Excerpts

Monday 25th June 2012 Commons Chamber

[Mr Duncan Smith]

The hon. Lady knows that we are not yet responsible for tax credits, although under universal credit they will eventually come in. I will certainly relay her comments to the Treasury and ensure that that does not happen. I agree with her that everything we do to promote work, even part-time work, is very important.

[Harriett Baldwin (West Worcestershire) (Con)]

Can the Minister confirm that over 800,000 new jobs have been created in the private sector since the election and that one of the fastest growing sectors in the sector is cyber-security, as it is in my constituency, where there is an insatiable desire to hire young people who have skills, particularly in ethical hacking?

[Mr Duncan Smith]

My hon. Friend is absolutely right. The point she should make, quite rightly, is that these are new and growing industries where there are real threats to computers and people using them, and that is why the industry is growing. More than that, in the past three months we have seen a fall in unemployment and a rise in private sector employment, even though we have been moving more people from incapacity benefit, ESA and lone parent benefits to jobseeker’s allowance, so it has been a success in difficult times and we should applaud that.

Disability Benefits and Social Care

Harriett Baldwin Excerpts

Wednesday 20th June 2012 Commons Chamber

[Mr Byrne]

I will believe it when I see it. As for the fiscal position, the hon. Gentleman will know that the Chancellor had to confess to the House that he was borrowing £150 billion more than would have been needed under Labour’s plans.

The truth is that there is no plan to get disabled people back to work. The reform of ESA is being so botched that 40% of people are winning their appeals, and those appeals are costing us £50 million a year. Charity after charity is saying that the descriptors used in the work capability assessment are failing. This is the point about reform: if we introduce changes, we have to adapt. We have to be flexible, and move as we learn. This Government are not doing anything. The charity Mind has so little confidence in the Government’s ability to get the reforms right that it has resigned from the advisory group. The Royal National Institute for the Blind has told me that someone who is totally blind can be found fit for work and put straight on to jobseeker’s allowance. That is why our motion, which I hope the hon. Member for Wimbledon (Stephen Hammond) will support, calls for the right reform of the work capability assessment.

Comments reported in The Guardian say that the Secretary of State has been warned by his civil servants running job centres that people are being pushed to suicide by the botched reforms of employment and support allowance—a system that costs us £50 million a year and in which 40% of people are winning their appeals. How can that reform be right?

[Harriett Baldwin (West Worcestershire) (Con)]

rose—

[Mr Byrne]

Perhaps the hon. Lady can tell us.

[Harriett Baldwin]

Would the shadow Secretary of State like to remind us who was the Chief Secretary to the Treasury when the work capability assessment was introduced and who it was that refused to listen to the arguments of the disability lobby to improve that test? This Government brought in the Harrington review, and they are implementing it.

[Mr Byrne]

Actually, Mr Harrington was appointed by the previous Government. The reform of ESA is right, but the point about reform is that we need to adapt and show flexibility. What the House needs to know this afternoon is that charities such as Mind have so little confidence in the Government’s ability to get it right that they are resigning from the process. I put it to the hon. Member for West Worcestershire (Harriett Baldwin) that that is not a vote of confidence.

Work Experience

Harriett Baldwin Excerpts

Tuesday 13th March 2012 Westminster Hall

[Mr Jones]

I totally agree with my hon. Friend. There is a cohort of people who have perhaps looked after children but are willing and able and capable of returning to the labour market although they may lack confidence. In time, the Work Experience scheme could be widened in the way that she suggests.

I also wish to focus on some of the ladies and gentlemen of Her Majesty’s press who have perhaps not given this issue the fairest of hearings. I appeal to them to dismiss any rhetoric or old-fashioned and outdated views from the far left that they may have, and to think about young people and look to support this policy. By setting out to try to destroy work experience, all they will do is destroy a route to work and an opportunity for our young people. Work experience is not the be-all and end-all for young people, but it is a route into employment nevertheless, and Members of this House should seek to provide as many such routes as practicable to help our young people into work.

[Harriett Baldwin (West Worcestershire) (Con)]

As I am sure my hon. Friend will agree, it is welcome that many media outlets, notably the BBC, ITV and The Guardian, offer work experience to young people.

[Mr Jones]

I think that is absolutely fantastic. It is a shame, however, that some of those who work for the publication to which my hon. Friend referred may not share the same view as that taken by their employer. That is sad, and I hope that people will think a little more carefully before making the sorts of comment that may destroy the life chances of the most vulnerable young people in this country.

Safeguards must be in place and we must ensure that we protect young people who may be vulnerable. No hon. Member would want any young person to be exploited, but that does not detract from the fact that employers need positive support and encouragement to be offered through the leadership of this House and its Members. It is, therefore, incumbent on Members of Her Majesty’s Government and Opposition to do all they can to encourage employers to offer work experience, and to fight against the small minority of people who seem intent on putting their ideology before the needs of the most vulnerable people in society who need a little extra help to get on the work ladder and into a job.

I will conclude by saying that we must move this debate away from the discussions of the past couple of weeks and towards the political centre ground and a sensible viewpoint that is shared by most people in this country. Most people are supportive of this policy, and I look forward to hearing from the Minister about how the Government intend to support it and ensure robustly that we do not give in to that small minority. I also look to the Opposition Front-Bench spokesman to back the policy to the hilt and do the right thing for young people in our country.

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[Harriett Baldwin (West Worcestershire) (Con)]

Thank you for calling me to speak, Mr Howarth, despite the fact that I have an awful cold. I hope to get through my speech without coughing too much.

I congratulate my hon. Friend the Member for Nuneaton (Mr Jones) on securing the debate. I asked for a debate on the same matter in business questions recently. It is important to use this opportunity to clarify the terminology, which I shall do in the form of a media guide, as it were. I hope the Minister will confirm my understanding of the categories. The three that get most confused are Work Experience programme, the Work programme and workfare.

My experience of the media confusion came when, like my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who is a colleague on the Select Committee on Work and Pensions, I was invited on to “Newsnight”. The producer said to me, “We are going to have one young person with a good experience of work experience, and one with a bad experience, and we would like you to come and debate it.” I thought it seemed sensible, but when I turned up there were three people, one of whom was a young person who had had a positive experience of work experience. However, there was also a 48-year-old gentleman who was clearly either in some form of the Work programme, or had some other experience, and a 40-year-old gentleman. It did not help—I do not know whether it was deliberate or accidental—that the producer had accumulated three people with experience of different aspects of back-to-work activity.

It would be helpful to use the debate to clarify the fact, which does not seem to have got through loud and clear to certain segments of the media, that the Work Experience programme is a voluntary one for people under 24. It changes the unfortunate situation that existed under the previous rules. We have heard that the BBC, ITV and The Guardian offer work experience, often in four-week tranches. Under the previous rules, a young person looking for work who was fortunate enough to be offered work experience by one of those organisations would have to give up jobseeker’s allowance for taking work experience that lasted longer than two weeks. That is profoundly unfair, because we all know, as my hon. Friend the Member for Great Yarmouth said, that many perhaps more middle-class families can afford to subsidise their young person under the age of 24 to take that kind of work experience. It is extremely progressive that the Government have changed the rules, so that now a young person whose family relies on their jobseeker’s allowance can take the work experience opportunities that have been largely the preserve of sharp-elbowed middle-class people.

The Work programme is completely different. It is not age-dependent. The Government put out contracts, which became live last June. The Work and Pensions Committee is looking forward to hearing from the Minister next Monday some of the early indications of the results of the contracts. Obviously, there is regional variation in providers and who won the contracts. The important thing about the Work programme is that, rather than being prescriptive about the contracts, the Government have for the first time created a black box: the providers can do what they find works to get people back into work. It is a completely different kettle of fish from voluntary work experience for young people. Yes, participation in the Work programme comes about when someone has either spent a period on incapacity benefit or been out of work on jobseeker’s allowance for an extended time, and those activities do tend to be mandatory in many cases. That is the second thing that gets confused when it is brought into the picture.

I would like to ask the Minister for clarification about workfare. My understanding is that the Department’s use of workfare—having to work while on benefits—is quite limited, particularly where it is mandatory. However, it is a tool that jobcentre advisers have in their armoury. If they suspect, for example, that someone is working and claiming benefits, they can use workfare to identify those situations. It would be helpful to hear from the Minister whether that is the correct way to define workfare.

I think that there has been media confusion. I hope that in my speech I have created a helpful media guide for any producers out there who may be doing programmes on the subject, and I look forward to clarification of the definitions from the Minister.

CPI/RPI Pensions Uprating

Harriett Baldwin Excerpts

Thursday 1st March 2012 Commons Chamber

[John McDonnell]

I am pleased that the National Pensioners Convention supports the quadruple lock, because that is what I have proposed in the House when we have debated this matter previously. It would come as a bit of a surprise if the NPC were to support the switch to CPI, given that a number of its members handcuffed themselves and blocked the road outside Parliament last week in protest against the measure. That is a form of direct action that I support.

The switch has had an impact on millions of people, as I have said. That is because, historically, the difference between CPI and RPI has been between 0.7% and 0.9 %. When the Government introduced their statutory instrument to force through the change, the Office for Budget Responsibility assessed that the difference would be 1.1%. Since then, in November, the OBR published a working paper that indicated that the gap would widen, and so increased its forecast for the long-run difference between CPI and RPI to 1.4%. What that means in practical terms for people’s pensions is that after 15 years a CPI-indexed pension would be 17.4% lower than an RPI-indexed pension, and after 20 years it would be between 23% to 25% less. That is a significant amount. That was confirmed by the much-cited Hutton report on pensions, which stated:

“This change in the indexation measure, from RPI to CPI, may have reduced the value of benefits to scheme members by around 15% on average. When this change is combined with other reforms to date across the major schemes the value to current members of reformed schemes with CPI indexation is, on average, around 25% less than pre-reform schemes with RPI indexation.”

Many hon. Members will have received representations from people working in different jobs about what the switch means to them. Let me cite some examples to give the House a flavour of why there is such depth of feeling out in the country on this issue. Let us take the case of Jim Singer himself, the creator of the e-petition. Jim has worked for the Department for Work and Pensions as a partnership development manager in the east of Scotland, based in Aberdeen. He has worked for the civil service for 35 years. He has just turned 60, and he will retire on a salary of £29,000.

As a result of the pay policy imposed by his Department and the Government, Jim has had a pay increase of only 3% in the last five years. That has had the effect of reducing the value of his final salary by around 25%, as against RPI inflation over the past five years. Even if his pay had kept pace with the Government’s favoured indicator, CPI, his final salary would have been 13% higher. That in turn means that his pension will start at a level of over £3,000 a year lower than if his pay had kept pace with RPI, and that his lump sum will be cut by over £9,500. So, he will have a £1,600 pension loss and a £4,960 lump sum under CPI. In addition, the switch from RPI to CPI is likely to cost Jim nearly £23,000 in pension over a normal retirement. Jim’s wife, Sheena, worked for British Telecom and has a pension which is also affected by the switch from RPI to CPI. She stands to lose £9,000 over a 20-year retirement.

[Harriett Baldwin (West Worcestershire) (Con)]

I thank the hon. Gentleman for giving us the range of examples. Is it his understanding that it is not his party’s policy to fight the next general election on a promise to revert to RPI?

[John McDonnell]

I scoured the Welfare Reform Bill Committee discussions on that point, and as I understand it, those on the Labour Front Bench made it clear that they were not going to write their manifesto in advance of 2015. The hon. Lady can be assured, however, that I shall be pressing for that policy to be adopted.

Let me press on with Jim’s example. The guide to his pension—the “principal civil service pension scheme, classic”, as it is called—was published by the civil service in 2009. It explained that his pension would be “index-linked”. On page 24, the guide explained that this index-linking meant that

“your pension is guaranteed to increase in line with inflation, as measured by the retail price index”.

When he heard that the Government had changed the index-linking of his pension to CPI, he wrote to the Minister for the Cabinet Office and Paymaster General, the right hon. Member for Horsham (Mr Maude). He received the following reply:

“In hindsight, because the Minister has the discretion to decide which indicator best reflects the general level of prices, perhaps the booklet should have been drafted differently”.

That gives no satisfaction to Jim, who has lost so much money. He worked for 35 years with a guarantee of RPI, then, within a year of reaching his 60th birthday, the Government reneged on that guarantee. Over his retirement, the switch from RPI to CPI will not just be a minor change to an inflation indicator. For him, the switch will cost thousands.

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[Harriett Baldwin (West Worcestershire) (Con)]

Thank you for allowing me to speak in this important debate, Madam Deputy Speaker. I congratulate the hon. Member for Hayes and Harlington (John McDonnell) and the Backbench Business Committee on organising the provision of parliamentary time for discussion of this topic. Having been a professional pension fund manager myself, I leapt at the opportunity to speak today. It is not often that, on a Thursday afternoon, we experience the excitement of discussing the difference between the geometric and the arithmetic mean in indexing. I thought I would put in a few words, as I also represent a constituency that is inhabited by a higher than average number of pensioners.

As a former pension fund manager, I recall the days when Britain had a pension fund system that was the envy of the world. We had a terrific private sector-led system, and workers in the public sector were also in very good schemes. I believe that Britain’s leadership in that regard began to unravel in the first Labour Budget after the general election in 1997, when the then Chancellor imposed a tax on pension schemes. It was pretty apparent at the time that that would undermine a private sector pension system which, as I have said, used to be the envy of the world.

[Jeremy Corbyn]

I think the hon. Lady is in danger of misreading history. The Social Security Act 1986 promoted the destruction of occupational pension schemes, promoted personal private pension schemes, and eventually led to a gross mis-selling of pensions which had to be corrected by the incoming Government in 1997. I think the hon. Lady needs to take her historical narrative a little further back.

[Harriett Baldwin]

The hon. Gentleman has clearly forgotten the imposition of a tax on private pension schemes in that first Labour Budget of 1997, which I think many people realised at the time would be a recurrent year-on-year tax that would lead to the erosion of private pension funding over time. Private companies then acted very rationally. Many of them ceased to offer defined benefit pension schemes.

Let me give some figures which I take to be rough estimates. There are approximately 29 million people in Britain’s work force today, 23 million of whom are employed in the private sector. I was shocked to learn that only 3.2 million of those 23 million were currently active members of a pension scheme in which the employer makes any contribution. That contrasts with the position in the public sector, in which about 5.5 million of the 6 million employees are members of pension schemes. That is the proportion that we should aspire to in terms of pension provision throughout the work force. I know that our pensions Minister aspires very much towards movement in that direction.

[Andrea Leadsom]

Does my hon. Friend agree that, many years ago, public sector salaries were lower and therefore pension provision was always higher, but over the last decade or more salary levels have equalised, and in many cases the lowest-paid public sector worker now earns more than the lowest-paid private sector worker and has a pension that the private sector worker can only dream of?

[Harriett Baldwin]

Personally, I aspire to a future in which all Britain’s pensioners can rely on a secure retirement income, which will come from three main elements.

I welcome measures taken by the pensions Minister and the Chancellor to provide a triple-lock guarantee: the linking of the basic state pension, and increases in that pension, to CPI, average earnings or 2.5%, whichever is the highest. That, I think, is an extremely robust foundation. As the Minister knows, I look forward to the inclusion in the Queen’s Speech of further legislation simplifying the state pension system, eliminating the means-testing deterrent to saving and creating a stable, predictable and inflation-linked state pension that will be the foundation for a basic level of income in retirement.

Of course, we need to aspire to be a country where everyone has an additional employment-related pension. About 12 million people are already pensioners, and we welcome the fact that their inflation-linked increase will rise by over 5% this year: I believe that that is the largest cash increase in the history of the state pension. This Government’s budgeting decisions are therefore focusing on the needs of current pensioners, and for future pensioners the largest employers will from October start to auto-enrol their employees into employment-linked schemes. That measure enjoys cross-party support, and it will mark the beginning of a savings programme that is estimated to bring in a further 5 million to 8 million pension savers and add a substantial sum to the savings of this country. Otherwise, we will be woefully under-pensioned in future. We are currently a very under-pensioned country. It is tragic that our country has eroded its position in respect of pensions so much. In 1997, we were one of the leading pension countries in the world, but we now have a lot of catching up to do. I welcome all the steps the pensions Minister is putting in place to improve the situation.

Having mentioned the triple lock and auto-enrolment, I shall now make a few points about the difference between CPI and RPI. We all know that inflation is the big enemy of the pensioner, as nothing erodes retirement income more. Lower inflation results in less erosion of retirement income, of course, but all pensioners must understand that they need to protect their fixed retirement income from inflation.

CPI is the inflation measure that we have instructed the Bank of England to target and to average out over time. I therefore think the Bank of England should, perhaps, consider moving its own pension scheme on to a CPI link. That scheme is currently linked to RPI, but it would increase everybody’s confidence in the Bank’s long-term ability to meet its CPI target if it were to adopt that measure for its pensions. That is a cheeky aside, however.

Neither the RPI nor the CPI measure will ever accurately reflect the inflation that pensioners experience. We have talked about the fact that mortgage interest is not included in the RPI basket. Interest rates fell dramatically in 2008 and that led to the RPI being negative in 2009—it was minus 1.4%. Do we want to follow an index that results in people having reduced income in some years? In that instance, we decided that we did not want that so we maintained a zero rate, but people still complained to me that their pension had not increased that year.

[Mr John Leech (Manchester, Withington) (LD)]

Does the hon. Lady agree that people might have more confidence in the Government’s decision to move to CPI if we were to use CPI for all other calculations, such as train fare increases?

[Harriett Baldwin]

I do not think that either the CPI or the RPI basket accurately represents inflation as experienced by pensioners. Most of them will have paid off their mortgage by the time they retire. Also, the CPI basket does not include council tax. Following the 100% increase in council tax under the previous Government, many council taxes have been frozen for the past few years. That is helpful for pensioners, as council tax represents a substantial proportion of their outgoings.

Food also represents a significant element of pensioners’ costs, and food inflation has been very high recently. Over the past 20 or 30 years, however, it has been largely on a downward trend, and food now represents a smaller proportion of overall costs than it did in the past. The cost of fuel and of heating the home is also an important factor for pensioners. That has also been rising sharply. Neither CPI nor RPI accurately represent pensioners’ experience of inflation.

[Grahame M. Morris (Easington) (Lab)]

Does the hon. Lady therefore support the GMB proposal for a bespoke pensions index that more truly reflects the cost of living of pensioners? As my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, they are not generally active shoppers who can readily switch between electricity and gas supply companies, for instance.

[Harriett Baldwin]

I certainly accept the point that CPI implies that people are active shoppers. Most of the pensioners I have come across are extremely good active shoppers, however.

Every individual faces a unique rate of inflation. We have given the Bank of England the task of managing the CPI rate. It is therefore sensible to use that measure for assessing pension increases.

We have talked about the high proportion of Britons who do not have any pension savings for retirement, the fact that many private companies have closed down their pension schemes, and the fact that Britain has become woefully under-pensioned. Giving private sector companies the flexibility to shift their index and linking pensions to CPI are both wise policies. They serve to put the overall public sector pension liability on a more sustainable footing, which is important for all future public sector workers. They also make the bargain between those with no pension provision and those who enjoy final salary, inflation-linked pensions fairer.

The Chancellor and the pensions Minister have faced a series of difficult choices, and they have made the right decisions. I believe the new measures will lead to more people across the work force saving for a comfortable retirement, which is an objective we all want to achieve.

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[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The debate has been interesting so far, with the temperature raised a little at the end by the hon. Member for Aberconwy (Guto Bebb). [Interruption.] My pronunciation of the hon. Gentleman’s constituency is almost as good as the attempt by the hon. Member for Gloucester (Richard Graham) to pronounce Kirkcaldy and Cowdenbeath.

I pay tribute to my hon. Friend the Member for Hayes and Harlington (John McDonnell) for securing the debate, which has covered several matters. I want to touch on four in particular. The first is the notion of a broken promise, which was mentioned by my hon. Friend, as well as by my hon. Friends the Members for Easington (Grahame M. Morris) and for Bolton North East (Mr Crausby).

Before the general election, the then shadow Chief Secretary to the Treasury, the right hon. Member for Runnymede and Weybridge (Mr Hammond), stated in a letter on 27 April 2010 that the Conservative party

“has no plans to change the current index-linking of public sector pensions in payment. We agree with the view that the right to indexation of pensions already accrued is part of the accrued pension rights and those rights will be protected.”

That is at the heart of the debate and of the legal challenge by the trade unions. My hon. Friend the Member for Hayes and Harlington emphasised that point and also the cost to 16 million pensioners—12 million in the public sector and 4 million in the private sector. He rightly paid tribute to Mr Jim Singer, who played such a big part in pushing the e-petition. I note that Mr Singer’s pensions booklet referred to indexing by RPI and that, according to my hon. Friend, he is likely over the course of a normal retirement to lose up to £23,000. Clearly, that is a lot of money, and it shows why there is such interest in the matter.

Much of the debate revolves around whether CPI is an accurate measure of inflation for pensioners. The subject was debated as recently as last week and the Minister made it clear that the Government view CPI as the most appropriate measure of price inflation for the purpose.

[Harriett Baldwin]

Will the hon. Gentleman confirm my understanding that it is not the Opposition’s current policy to restore the link to RPI?

--- Later in debate ---

[Gregg McClymont]

Alas, the hon. Gentleman must wait for the next Labour party manifesto to satisfy his curiosity.

Clearly, the issue is whether CPI is an accurate measure of inflation. The Government and the Minister are clear that it is, but some important authorities, including the Royal Statistical Society, have emphasised that CPI fails to reflect the spending patterns of pensioners and the rising costs they face, especially housing costs, which were mentioned by some of my hon. Friends. The UK Statistics Authority has indicated that it does not believe that CPI should become the primary measure of data inflation until housing costs are included.

I know from our previous discussions that the Minister will look closely at the consumer prices advisory committee proposals on adding housing costs to CPI. We await that with great interest. Heating, which was also mentioned by a number of my hon. Friends, is also important in that context. Heating costs have been rising fast, which could mean that pensioners face higher inflation on average than other groups in society, which is significant given the removal of £100 from the winter fuel allowance.

In the end, this is a political decision. The UK Statistics Authority observed last year:

“Questions about compensation, who to compensate and what for, are straightforwardly political questions, not for statisticians.”

We cannot support adopting that approach in the long term. In just five of the last 20 years has RPI been lower than CPI. As was mentioned by my hon. Friend the Member for Hayes and Harlington, the Office for Budget Responsibility November economic and fiscal outlook states that the long-run difference between RPI and CPI is likely to be 1.4% rather than the current 0.7%.

[Harriett Baldwin]

On the hon. Gentleman’s last point, can I therefore clarify that it is a 2015 Labour manifesto pledge to restore the link to RPI?

[Gregg McClymont]

The hon. Lady’s desire to write the Labour party manifesto three years before a likely general election is admirable, but I cannot advance on the answer I gave to the hon. Member for Gloucester.

Whether CPI is an accurate measure of inflation is an issue—the hon. Lady made important points on heating and housing—but in the few minutes remaining, I want to raise some broader questions. We can talk about CPI or RPI pensions uprating in isolation. The uprating of the state pension using CPI, which happened for the first time this year, is one thing, but as was indicated in the debate, the flat-rate, single-tier state pension, to which the Minister is committed, is important to the debate, as is the future of NEST.

I do not want to misquote the hon. Member for West Worcestershire (Harriett Baldwin), but I believe she said that she was looking forward in the Queen’s Speech to legislation on a single-tier, flat-rate state pension. The Opposition are hopeful that the Minister can move in that direction quickly. I wonder whether the Treasury has a significant role in that. Perhaps negotiations must continue before we can get there. The Opposition will be keen to consider very closely such proposals when they come to the House.

NEST, which has been mentioned throughout the debate, has a huge role to play in moving towards a more sustainable pension system. The Opposition are disappointed at the delay in the staging dates for the move to auto-enrolment. It is not just a question of the companies: contributions from both the Treasury and employers will be lost for those saving into a pension for the first time.

Finally, the hon. Member for Aberconwy emphasised the private pension system. Both he and the hon. Member for West Worcestershire suggested that all the difficulties in the private pensions world have arrived since 1997.

Welfare Reform Bill

Harriett Baldwin Excerpts

Wednesday 1st February 2012 Commons Chamber

[Jenny Willott]

I was going to come on to that. If the hon. Lady will bear with me, I will hopefully answer her question.

[Harriett Baldwin (West Worcestershire) (Con)]

The hon. Lady is making many interesting points. Does she agree that when a person has a degenerative illnesses such as multiple sclerosis, their condition may change during any finite period, so it is important to emphasise that people can be reassessed and put into the support group if their condition deteriorates?

[Jenny Willott]

The hon. Lady is right, and many conditions get worse at varying rates—very slowly for some people, and very quickly for others. It is important to make sure that people get the benefit that they should, and that the assessment is right, as the hon. Member for Banff and Buchan (Dr Whiteford) said.

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[Chris Grayling]

We need to be clear about what has happened. We have been through months of debate. The Labour party has got itself on to an almighty hook on the issue of the benefit cap—it is on the wrong side of the argument—and is desperately trying to wriggle free. The Government are having none of it. We are standing by our proposal. The benefit cap that we propose is the right thing and we will press ahead.

[Harriett Baldwin]

My right hon. Friend is right that in the 26 sittings of the Welfare Reform Bill Committee, which I had the pleasure of attending, we did not hear once about the regional benefit cap. Fifty-seven per cent. of those affected live in London. Does the timing of the Opposition proposal have anything to do with the London mayoral elections?

[Chris Grayling]

There might be an element of that—it is difficult to escape that conclusion. The Opposition proposal would have more credence had it not been made at the 59th minute of the 11th hour. We should not take them seriously when they make such ill-thought out, last-minute proposals.

The Government are clear that average earnings are the right way to determine the level of the cap. We do not need the Opposition’s proposed independent body—another quango, I hasten to say—to tell us otherwise. The cap needs to be a single, national one for the policy to make sense. The Government will lay before the House a report on the policy’s impact evaluation after a year of operation.

--- Later in debate ---

[Mr Byrne]

I am going to do exactly that. The Minister makes an important point about regionalisation and localisation, but the point has already been made that we have a local component to the benefit system, and we have had it for 70 years. It was such a big feature of the benefit system that in 1942 William Beveridge devoted an entire section of his report to “the problem of rents”, as he put it. I know that the Conservative party tried to block the Beveridge report back then and that Conservative Members do not want to admit this problem now, but I am afraid that it is a problem that bedevils their policy.

[Harriett Baldwin]

I am glad that the right hon. Gentleman enjoyed my recently published Centre for Policy Studies policy that mentioned regional benefits. On that subject, for the most expensive part of the London would he set the benefit higher or lower than £26,000?

--- Later in debate ---

[Mr Byrne]

My hon. Friend is right, and what has been noticeable by its absence this afternoon is any argument from any Government Member relating to what we should do about private landlords.

[Harriett Baldwin]

rose—

[Mr Byrne]

I promise that I will give way to the hon. Lady in a moment.

A one-cap-fits-all approach will not work in London, and it will not work elsewhere. As has been pointed out by many Members representing all parts of the United Kingdom, the cap that the Government propose may not send people the signal that they are better off in work. Our argument is in our amendment, which says that the cap should reflect differences in housing benefit costs in different parts of the country. That has always been an element of our benefits system, but we would add a couple of extra safeguards. There should be a safeguard against homelessness and the kind of costs that the Minister has had to fix this afternoon, and—in my view—there should also be a safeguard against child poverty. Heaven knows, that is worsening enough under the present Government, and we do not want it to become worse still.

[Harriett Baldwin]

Will the right hon. Gentleman answer my second question? Would the regional benefit cap in central London be set higher or lower than £26,000?

[Mr Byrne]

The hon. Lady will have read our amendment, so she will know that we propose to take politics out of the issue, and to establish an independent commission to set the level of the cap. As has been demonstrated this afternoon, when it is left to politicians, they make a pig’s ear of it.

--- Later in debate ---

[Mr Redwood]

This is rightly difficult territory. I am relieved to hear that Ministers have reconsidered the transitional arrangements, and I am pleased that the Opposition welcome that. In the noise and heat of the debate, important truths are getting lost or ignored. We are not generous enough towards the disabled, and I was pleased to hear that they are completely exempted from the proposals, which should be widely welcomed across the House. The exemption of war widows, who often have very little to live on and whose former husbands sacrificed so much to help our country, is extremely welcome, as both parties in government have asked their loved ones to go into battle on our behalf.

I am also pleased to hear that anybody in work is exempted. The Government’s case revolves around something with which I believe the Labour party normally agrees: working should always be worth while. In today’s debate, there has been more heat than light. If the Labour party, the Conservative party and the Liberal Democrat party all believe that it should be more worth while to work, we need such a provision to achieve the desired effect. It comes down to the last-minute proposal that there should be some regional differentiation of the cap. We are no longer arguing for or against caps—we all now believe in that type of headgear—but Labour believes that there should be different fashions of cap across the country whereas, on the Government Benches, the passion is apparently for uniform caps.

[Harriett Baldwin]

Does my right hon. Friend agree that it is difficult to set a cap if one is not prepared to name a level for it?

[Mr Redwood]

My hon. Friend is ahead of me in my argument. So far, I think I have carried an expectant and worried Labour party with me. Labour agrees with all the exemptions, agrees with the delayed transition and agrees that we need to make working worth while.

Benefits Uprating

Harriett Baldwin Excerpts

Tuesday 6th December 2011 Commons Chamber

[Steve Webb]

I am glad that the hon. Gentleman has raised that point, because it is a selective quotation from the autumn statement. As well as making the changes to tax credits, we are over-indexing benefits relative to average incomes. As poverty is measured in relation to average income and we are putting up benefits according to CPI, which is about twice the rise in average income, child poverty will be reduced compared with the figure that he gave. There is more to this than meets the eye.

[Harriett Baldwin (West Worcestershire) (Con)]

The Minister will be aware that many more women than men are on pension credit and that about 60% of pensioners are women. Does this increase not therefore disproportionately help women?

[Steve Webb]

My hon. Friend is quite right. Not only does the pensions boost help women, but the pension credit boost helps women. Reflecting on the Opposition’s question about the combined effect of our measures, it is worth saying that the one measure excluded from that question was the VAT rise. They excluded that because men, on average, have higher incomes and higher spending. In particular, they have higher spending on VATables, so the impact of the VAT rise hits men more than women. For some reason, the Opposition did not count that measure.

Oral Answers to Questions

Harriett Baldwin Excerpts

Monday 28th November 2011 Commons Chamber

[Sajid Javid (Bromsgrove) (Con)]

7. What steps he is taking to ensure that individuals are able to build up pension pots under automatic enrolment.

[Harriett Baldwin (West Worcestershire) (Con)]

10. What steps he is taking to ensure that individuals are able to build up pension pots under automatic enrolment.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am pleased to confirm that we will go ahead with the introduction of auto-enrolment next year as planned, and I can confirm further that all businesses remain in scope. We have, however, decided to extend the reform’s current five-year implementation, so that small businesses will not have to start enrolling their workers until the start of the next Parliament. The revised plans will, nevertheless, still result in more than half of all workers being enrolled before the end of this Parliament. This is a positive programme, and there will be no exemptions.

[Steve Webb]

As my hon. Friend points out, certain pension schemes but not others currently allow people to take money out within the first two years, and that is an anomaly. We need to ensure that money put into pension savings stays there, and that is why short-service refunds for defined contribution schemes will not be part of the long-term landscape under automatic enrolment.

[Harriett Baldwin]

Does the Minister agree that auto-enrolment will bring into pension savings for the first time millions of low-paid workers in the private sector, both men and women, and that they can begin to look forward to the same kind of retirement income that we rightly offer our public sector employees?

[Steve Webb]

As my hon. Friend points out, at the moment not only do literally millions of people in the private sector not have a moderate pension; they have no pension at all. Auto-enrolment remains key to our policy goals, and as I just observed, more than half the work force will have been auto-enrolled by the next election.

Pensions Bill [Lords]

Harriett Baldwin Excerpts

Tuesday 18th October 2011 Commons Chamber

[Gregg McClymont]

After the hon. Gentleman’s previous intervention, he did not listen to the answer; given that intervention, he did not listen to the answer I gave the hon. Member for East Dunbartonshire. He just does not seem to get it.

[Harriett Baldwin (West Worcestershire) (Con)]

Will the hon. Gentleman give way?

[Gregg McClymont]

I am happy to give way to the hon. Lady, who I know is an expert on these issues.

[Harriett Baldwin]

I thank the hon. Gentleman for giving way, welcome him to his post and declare an interest also as a woman whose state pension age was increased to 66 under the previous Government. Given the £10 billion—

[Mr Duncan Smith]

Eleven billion.

[Harriett Baldwin]

Eleven billion, that’s right.

Given the £11 billion commitment that the hon. Gentleman is making, and the £12.5 billion commitment that the shadow Chancellor has made, at what point do these billions of pounds add up to real money in the minds of Labour Front Benchers?

[Gregg McClymont]

The hon. Lady talks about real money, but the situation is clear: we are proposing £20 billion of savings starting in 2016; her Government are proposing £30 billion of savings. This measure would involve £1 billion a year over 10 years.

I understand that the hon. Lady has some actuarial experience, so she must understand that no sensible Opposition or, indeed, Government would put down in law that five years down the line they will still be committed to the same proposal. That is just common sense.

--- Later in debate ---

[Malcolm Wicks]

Yes, hence my introduction, when I argued that pensions policy in this country has always been at its best when it goes with the grain of how people live and makes long-term decisions that individuals can plan around. It is the acceleration of the process that we are now discussing. It is extraordinary that, having taken so much money out of the pensions system, the Conservatives—and, I suppose I have to say, the Liberals—now want credit for putting some of it back. That is a bit of Tory arithmetic that I am not terribly impressed by.

[Harriett Baldwin]

Does the right hon. Gentleman not welcome, as I do, the additional £25 billion going into the triple lock of the state pension, which, as of today, will protect pensioners from the rise in inflation?

[Malcolm Wicks]

That issue—how the shift from the retail prices index to the consumer prices index will affect the real value of pensions in future—is a subject for another day, although colleagues might want to touch on it today. My guess is that that shift, which seems quite dry and technical, will become the big pensions swindle of the 21st century. I am therefore not quite as impressed by the triple lock as the loyalist hon. Lady is.

[Harriett Baldwin]

rose—

[Malcolm Wicks]

However, I will give her another chance.

[Harriett Baldwin]

Does the right hon. Gentleman not acknowledge that whereas his proposal was to uprate the state pension in line with average earnings, which would mean an increase of 1.8%, the triple lock chooses the best of the three? That is an incredibly important reinforcement of our state pension.

[Malcolm Wicks]

Yes, but I hope that the hon. Lady will consider my point about CPI and RPI, because we are talking about billions of pounds that could be lost to British pensioners when that change is implemented over coming decades.

Let me reach my conclusion. We suffer from over-generalisations in this field. I am fed up with macho commentators, often from the political, professional and business class, who somehow assume that everyone will live to a ripe old age and that those in their 60s will have portfolios full of all sorts of opportunities—a directorship here, writing a book or doing a television programme there. Many people, not least those on the Government Benches, talk about a world of that kind—I do not want to get the hon. Lady over-excited: she has had many chances to respond, but she knows who I am talking about. Given the typical life cycles for the late 20th and early 21st centuries, more and more of our children and grandchildren will effectively not get started in their careers until their early 20s or even their mid-20s. With the rise of university education, the pattern of many people’s working lives will be like that.

However, that pattern is not at all typical of everyone in our society. When we recall the question that the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) asked about the mortality of those people, let us remember that there are still many working people coming up to retirement who started their working lives as 15 or 16-year-olds. They are the packers, the cleaners, the van drivers, the heavy manual workers and the care workers. By the time they reach retirement they are worn out. They are physically knackered, if I am allowed to use those words. They are tired, they are exhausted and what they need, in an old-fashioned sense, is a rest. They need to retire. They are not people like the hon. Gentleman, who I suspect will still be sprightly in his late 60s and 70s, with his portfolios and all the rest of it; they are physically worn out. They have been working since they were children, and they need a rest.

--- Later in debate ---

[Dame Anne Begg]

It is not a solution for the 90%, because they will still have to work for an extra year, on top of the extra years for which they were already having to wait for their state pensions. I believe that Age UK made that comment at the time of the Government’s announcement. Of course all Members agree that the position is better than it was before, but it is still not good enough. If my inbox is anything to go by, women who thought that their problems would be solved when they first heard the announcement have now made their calculations and discovered that for a large number the goalposts have not been moved at all, and that they have been moved by only a small amount for others.

In my view, it is a pity that the Government ever went down this route. They could have begun the accelerated rise in the pension age to 66 after the completion of the equalisation, between 2020 and 2022, rather than in the period before 2020. Obviously some wonk at the Treasury thought “What a good idea this is—it will save billions of pounds”, without recognising the anomaly that it would create and the difficulty that it would cause for this group of women. If Conservative Members want to know why their stock among women is falling rapidly, I will tell them. The fact that the Tories do not understand that decisions such as this suggest that they imagine women can somehow cope with reductions in their income has made women realise that many of them simply do not understand their lives or appreciate their problems.

The Government’s proposal may be better than what was in the original Bill, but if we vote for it tonight our decision will be final, because that will then be the timetable for the acceleration of women’s pension age to 66. Labour Members believe that certainty is necessary when it comes to pensions and that we must allow people to plan in advance, but whoever wins the next election, the last thing that any Government will be in a position to do is start fiddling with the system. What is fundamental to our argument is that a group of women have had no chance to plan, and I see no way in which any Government will be able to deal with that.

[Harriett Baldwin]

Is the Chair of the Select Committee confirming that a pledge to reverse the position, in line with the amendment, will not feature in the next Labour manifesto?

--- Later in debate ---

[Harriett Baldwin]

I should like to discuss auto-enrolment in general, and new clause 1 in particular. The new clause has been tabled in my name and those of my colleagues on the Work and Pensions Select Committee and several other hon. Friends. This part of the Bill enjoys much greater cross-party consensus than the matters that we were discussing earlier.

Auto-enrolment will improve the pensions landscape in this country for ever. For the first time, millions of ordinary workers will be brought into personal pensions. Between 3 million and 4 million women will begin pension savings, and a total of 10 million pension savers could be created by the massive nudge that they will get from this part of the Bill.

For a typical worker on an average income, the expectation is that, from the age of 22 until their retirement at, say, 67, there is much more likely to be a persistency of saving. For example, a woman earning £25,000 who is saving 5% of her income would save £100 a month. Her employer would make up a similar amount and, with tax breaks over her working lifetime and reasonable investment growth, that regular savings habit could create a pot worth some £200,000 in today’s money. Pessimists have said that that would provide an income of only about 45% of that person’s earnings in retirement, but I say that that is 45% more than they would have had without this enormous nudge. I welcome this step, which I believe will, in the fullness of time, reduce the number of my constituents who as pensioners really worry about making ends meet.

--- Later in debate ---

[Dame Anne Begg]

Does the hon. Lady accept that there might also be a nudge to the pension providers? If they know that they will not automatically get the business from those who have saved with them throughout the lifetime of their pension savings scheme and that that group of people is likely to shop around, those pension providers might improve the annuity on offer to individuals.

[Harriett Baldwin]

That is an excellent point, and I hope we all fervently agree that competition in this area would be an excellent improvement. Locking in your retirement income is the second most important financial decision that you will ever make. I apologise; I do not mean you, Madam Deputy Speaker, but an individual. Unlike buying a house, however, it is a completely irreversible decision—one that will last for the rest of the individual’s life.

The different rates offered by different providers could mean one’s retirement income being as much as 20% lower if one does not shop around. If we are unlucky enough to suffer from high blood pressure, diabetes, a heart condition, kidney failure, certain types of cancer, multiple sclerosis or chronic asthma or if we smoke, the one bright side is that a 40% higher retirement income could be achieved by shopping around. People who have enjoyed good health in their career but been in a hazardous occupation such as mining might find someone who will offer them a better retirement income. The right hon. Member for Croydon North (Malcolm Wicks), who is no longer in his place, knows that this does not apply to the state pension, but for the pensions we are talking about that involve the insurance market, those factors do apply. My fellow Select Committee members and I thus feel strongly about the value of this particular approach.

[Kate Green]

I am pleased to welcome the hon. Lady’s new clause. Does she agree that many people are reluctant or even in denial when it comes to facing decisions about their pensions and that there is a real opportunity here to spread a good news message about both the value of saving and making positive decisions about how to invest the product of that saving, thus providing an opportunity for the pensions industry to get on the front foot in engaging people in their long-term financial security?

[Harriett Baldwin]

I welcome that sensible intervention. I think this will completely transform the landscape. I spoke about an individual with a £200,000 lump sum at retirement. If we multiply that by the up to 10 million additional savers that we could be looking at, it shows how this country’s savings culture is going to be transformed. The scale of the issue to which new clause 1 refers will get much bigger over time.

The Minister reassured us in his earlier comments that there is a cross-departmental working group. I certainly hope that that group will move quickly to come up with some firm recommendations. I know that all who are signatories to this particular new clause look forward to that. We look forward, too, to seeing the action that will come about as a result.

[Teresa Pearce (Erith and Thamesmead) (Lab)]

I strongly support the principle of auto-enrolment. As was pointed out by the hon. Member for West Worcestershire (Harriett Baldwin), it means that from 2012 onwards, millions of people will save for a pension for the first time. We need a low-cost, trustworthy system in the United Kingdom if we are to begin to lift future generations out of pensioner poverty.

I fully support the establishment of NEST, as currently only 50% of employees contribute to a private pension, and for many of those on lower incomes the current system is poor. Research has shown that if a typical British and a typical Dutch person save exactly the same amount for their retirement, the Dutch person will end up with a 50% larger pension under the current scheme. I believe that that is because in the UK it is often not clear how high pension charges can be. For instance, a person who is sold a pension and charged at 1.5% per annum may not realise that over the lifetime of the pension, 38% of their possible income could be lost to fees.

In the past, pension companies were unwilling to provide the low-cost pensions of the type needed under auto-enrolment, as they felt that the ordinary low-paid workers had what the industry deemed “unattractive lives”—a somewhat derogatory term which simply meant that it was not easy to make money out of those policies. Indeed, it was because of the failure of the current structure to provide such pensions that it was necessary to establish NEST.

I welcome auto-enrolment, I welcome NEST and I welcome new clause 2, but three points cause me concern. My concern about auto-enrolment was prompted by some of the evidence given to the Work and Pensions Committee relating to a lack of regulation. I was troubled to hear that there would be no restrictions on how workplace pension savings are invested, and no record-keeping requirements for providers. The meeting between the Select Committee and the Pensions Regulator gave me very little reassurance. It appears that during the drafting of the Bill, many interested parties gained concessions. Employers, whether large, small or micro—along with the pensions industry—have been pleased to note that restrictions will be placed on NEST, but not necessarily on other alternative providers.

I believe that the restrictions placed on contributions to NEST, a vehicle for workers whose employers have no pension provision, may push some employers who are new to the pensions arena towards less scrupulous pension providers, I realise that NEST is aimed at lower earners, but some of the restrictions placed on it may nudge employers who are baffled by the choices facing them towards a pension provider that does not have such restrictions, but may well provide an unattractive pension scheme for the employee. It appears that the industry and employers have been around the negotiating table, but that the employees’ voice has not yet been heard.

If employers reject NEST because of the contribution limit, or other limits, they may place employees in schemes with unfairly high charges. I am deeply concerned about the apparent lack of a quality test for schemes that would be deemed to be a qualifying alternative to NEST. We know from past mis-selling scandals that too few people understand how charges, and pensions, work, and that—as in the case of the mis-selling of endowment policies—it can take many years for such practices to come to light. I ask the Minister to consider, with the benefit of hindsight in regard to previous mis-selling problems, what measures he intends to take to ensure that we do not store up similar troubles with auto-enrolment outside NEST.

My second point, which the Minister has touched on, relates to the ban on transfers to NEST, which resulted from lobbying from the pensions industry and which will benefit that industry at the expense of employees in the scheme. Under the current rules, people who are auto-enrolled in a scheme and go into NEST will not be able to move existing pots into the scheme. Such a ban cannot benefit the very employees and future pensioners whom we are trying to assist; it can only support the industry. I believe that a modern pension in a modern age should be portable, and that provisions for transfers in and out of NEST should be included in the Bill even if they cannot be implemented immediately. I welcomed some of the reassurances given by the Minister in his opening remarks.

My third reason for concern is the three-month waiting period. Although I understand the need to balance the administrative burden for businesses, it means that half a million fewer people will be automatically enrolled. As has been pointed out twice already today, nowadays many people have 11 different employers over their lifetimes. I would support a reduction to one month. Nevertheless, employees are currently able to opt in to the system from the first day of their employment, but they need to know that they have that right. I urge the Minister to amend the measures to require employers to ensure that employees are aware from when they start their employment that they can opt in from day one and receive employer pensions contributions.

The pensions cap combined with the three-month opt-out and the inability to transfer into NEST will prevent casual workers and part-time workers—mainly women—from building a decent pot, even though that is our aim. I ask the Minister to consider these concerns and in his closing remarks to give the House further assurances as to how they can be addressed.