Covid-19: Child Maintenance Service
Karen Buck Excerpts(3 years, 10 months ago)
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Ms Karen Buck (Westminster North) (Lab) [V]
This has been a welcome, albeit brief, opportunity to consider an essential service, and I thank the hon. Member for Motherwell and Wishaw (Marion Fellows) for securing it. We have heard some important contributions, all of which stressed two critical things: first, our thanks to the staff who have continued to work hard during these challenging months to keep the show on the road; and, secondly, the critical, real-world experience of parents who are looking after their children in very difficult circumstances and on very low incomes.
We know only too well that the pandemic has had an impact on the delivery of a whole range of public services. Child maintenance is easily forgotten, but it is very important that we understand the scale of the impact and learn lessons from the experience of the past year, particularly—hon. Members reinforced this point—in the light of the predicted rise in unemployment, and the wider economic fallout from the pandemic, which will inevitably disrupt maintenance arrangements for some time to come.
The Child Maintenance Service manages more than half a million arrangements for child support, affecting three quarters of a million children. To underline the importance of that, I am happy to quote the words of the Minister in the other place, Baroness Stedman-Scott:
“It’s a truth not well known that the work of the Child Maintenance Service lifts hundreds of thousands of children out of poverty by making sure payments are made and received.”
Indeed, it is estimated that one in five single-parent families on benefits is lifted out of poverty by maintenance payments. That means that the redeployment of CMS staff to the processing of universal credit claims should not be seen as simply moving people from back-office functions to frontline services. I am sure the Minister will agree that ensuring that those obligations are met, and that parents who care receive the support to which they are entitled, is not a service that can be paused without immediate consequences for family incomes, especially at a time when, in thousands of cases, maintenance obligations are being impacted by sudden changes of circumstances.
The point has been well made by Gingerbread. The decision to run a skeleton service during the initial outbreak of covid-19 led to CMS allowing non-resident parents to reduce or withdraw their financial obligations to their children without any evidence. I therefore ask the Minister what assessment the Department has made of the impact of the pandemic on maintenance entitlements, and of the risk of paying parents evading their responsibilities due to the changes in evidence requirements.
This is a matter of priorities and also of resilience. Yes, the pandemic has required us to reprioritise in all sorts of ways, but the impact on services also depends on how resilient they were in the first place. If we cut services to the bone, we will be faced with even harder choices when the unexpected strikes. Unfortunately, the evidence suggests that the CMS was already struggling to carry out its functions before the pandemic.
According to the National Audit Office, in 2011-12 the Department for Work and Pensions employed 100,250 people on a full-time equivalent basis. By the time the pandemic struck, the Government had cut DWP staff numbers by 28% to 72,186. The Government now find themselves scrambling to reverse the cuts to staff numbers that they made over the past 10 years, with 7,000 new recruits between April and August and a further 17,000 planned by March.
Child maintenance was not spared when the Government were cutting staff numbers. According to the Department’s workforce management statistics, in 2010-11 there were 8,246 full-time equivalent staff employed in child maintenance and enforcement. In February 2020, there were just 4,745. Nearly a third of those staff were then redeployed to manage the surge in universal credit claims. So by the time the pandemic struck the CMS was already trying to fulfil its mission with little more than half the staff complement in place 10 years earlier.
How well was the CMS performing? For collect and pay arrangements, despite the range of collection and enforcement powers available, compliance was only 68%, and the bar for compliance in the official statistics seems to be set pretty low, defined as paying some child maintenance over the previous three months. I recognise that the performance data show improvements in compliance since 2015, but these are improvements on a very poor baseline. Meanwhile, for direct pay arrangements, more than two thirds of caseload compliance is not even monitored by the Department. Research commissioned in 2016 showed that just under half of caring parents had an effective arrangement after three months, and this rose to only 53% after 13 months.
Ironically, the pandemic has led to an increase in compliance with collect and pay arrangements, but only because so many paying parents are now on benefits, making it easier for the CMS to deduct payment. It is striking and sobering to note that the percentage of collect and pay arrangements where the paying partner is on benefits rose from 21% to 40% from the start of the pandemic to September 2020.
I fully recognise that some of the impact of the pandemic has been unavoidable. It was inevitable that much enforcement activity would have to be paused given that courts were closed, but the pandemic does not explain why DWP staffing levels had been cut so much over the previous 10 years or why the performance of the CMS has for so long left much to be desired. Decisions taken years earlier made managing the impact of the pandemic harder than it needed to be both for the Department and for parents bringing up and looking after their children.
Draft Social Security Co-ordination (Revocation of Retained Direct EU Legislation and Related Amendments) (EU Exit) Regulations 2020
Karen Buck Excerpts(3 years, 11 months ago)
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Ms Karen Buck (Westminster North) (Lab)
It is a pleasure to serve under your chairmanship this afternoon, Mr Gray. As I think is reasonably obvious, the Opposition will not oppose the draft regulations. Social security with the EU and EEA countries will be vital post Brexit, and the temporary unilateral measures that are ended by the regulations are clearly not a basis for that ongoing co-ordination. We support bringing forward the changes to the Social Security Administration Act 1992 to the extent that that facilitates agreement on ongoing social security co-ordination. However, I have to note the absurdity of the circumstances under which we are discussing the statutory instrument. It is now 7 December 2020. On the 31st, the transition period will come to an end, and we still do not know whether there will be a deal between the UK and the EU—
The Chair
Order. The hon. Lady’s remarks must be strictly in the context of the draft SI.
Ms Buck
—let alone whether that deal will include social security co-ordination or whether it will replace the regulations being ended by the draft SI. It is testimony to the Government’s entire approach to the negotiations that the draft instrument has come before the Committee so late in the day and under such continuing uncertainty. The time to discuss these measures is when a deal has been secured and the future framework of co-ordination that will replace the regulations that are being ended is a known quantity, but that is not the situation that we are in.
We therefore need clarification of the implications of the draft regulations in the event of a deal and in the event of no deal. First, I am sure that the Minister will be happy to confirm that in the event of no deal, nothing in the draft regulations will in any way alter the social security protections afforded to resident EU, EEA or European Free Trade Association citizens under the withdrawal agreement.
Ms Buck
Secondly, can the Minister clarify the implications of the draft regulations for EU citizens living in the UK who are not covered with the withdrawal agreement provisions, in relation to such matters as accidents at work, maternity pay, state pension contributions, access to the NHS and benefit entitlement? Will they enter a legal no man’s land until future reciprocal agreements are negotiated? What are the implications for UK social security expenditure in the event of no deal?
The draft regulations will be made under the Immigration and Social Security Co-ordination (EU Withdrawal) Act 2020. The Home Office’s explanatory notes on the Bill note:
“The power to make regulations under Part 2 of the Bill has the potential to be used in a way that could change the cost to the public sector in terms of social security co-ordination. It is not possible to quantify precisely what those costs may be at this stage, but there is the potential for costs that are more than merely notional.”
Why have the Government not provided an impact assessment to enable us to assess that?
On part 4 of the draft regulations, which brings forward the date on which changes to the Social Security Administration Act 1992 come into effect, the explanatory memorandum states that
“subject to the outcome of the negotiations with the EU, and the details of any agreement, it may be necessary to use the powers in section 179 of the SSAA 1992 and section 155 of the SSAA(NI) Act 1992 to make a reciprocal agreement with the EU prior to the end of the transition period. This instrument brings forward the changes as a precaution given that the amendments in the Social Security (Amendment) (EU Exit) Regulations 2019 and the Social Security (Amendment) (Northern Ireland) (EU Exit) Regulations 2019 only take effect from the end of the transition period, as a consequence of the EU (Withdrawal Agreement) Act 2020.”
I read this as saying that if there is to be an agreement on social security as part of a deal, the necessary amendments to the 1992 legislation will need to already have come into force beforehand. The question is, have the Government only just realised this? Have they have been negotiating on social security all year without noticing that they did not have the powers to do a deal until after the transition period? Some clarity on this important point would be welcome.
Oral Answers to Questions
Karen Buck Excerpts(3 years, 12 months ago)
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Dr Coffey
Last year we actually increased benefits by inflation, and we have made sure that that has happened again so that there are no cuts in that regard. I am keen to continue to do what we can to encourage people to move across to universal credit. There is only one group of claimants who are effectively barred from doing that, and that will change in January next year. I genuinely want to put across how important it is; by using things such as Help to Claim and getting support directly, people can often see that they will be considerably better off under universal credit.
Ms Karen Buck (Westminster North) (Lab)
The Secretary of State announced that the local housing allowance would again be frozen in cash terms in 2021, having only moved out of the previous freeze in March. That means, as the Office for Budget Responsibility has pointed out, that LHA rates will fall back below the 30th percentile. The Government have cut local housing allowance consistently since 2010-11, including freezing it from 2016 to this year. Will the Secretary of State tell us what estimate the Department has made of the effect on children in poverty of pushing the LHA back below the 30th percentile?
Dr Coffey
The decision made last year was to increase to the 30th percentile in cash terms—that is around £1 billion of welfare support that has been added. On consideration, we felt it was right to continue the cash freeze as we recognise that around the country we are seeing rents potentially going down, although I recognise that in some places they may continue to rise. Overall, people have certainty in the amount of cash that they have. It is certainly not going back but about making sure that this is a permanent change and was not just a temporary one.
Ms Buck
The fact is that the number of children in poverty in the private rented sector rose by half a million between 2010 and 2019, so whatever uplift has been put in over the past year is in that context and we will see more children plunged into poverty as a result. Will the Secretary of State tell us exactly what steps she will take to ensure that more children do not fall into poverty as a result of the re-freezing of housing allowances?
Dr Coffey
I think I have already answered the hon. Lady. We have not reduced the LHA back to pre-covid arrangements; we decided to make that change a permanent fixture but to freeze it at cash levels, recognising that, as I said, nearly £1 billion had been injected into welfare support. We will continue to work on this issue throughout the country and I am keen to see what we can do on aspects of housing, which is why I am in regular conversation with the Ministry of Housing, Communities and Local Government about how we do things such as bring empty homes back into use as accommodation. I want to make sure that people have as much affordable housing as possible, and the increase to LHA of nearly £1 billion is one way to achieve that.
Coronavirus Outbreak: DWP Response
Karen Buck Excerpts(4 years ago)
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Ms Karen Buck (Westminster North) (Lab)
I will start by congratulating the Select Committee on a superb report, as always, and on the introduction by the Chair of the Committee, my right hon. Friend the Member for East Ham (Stephen Timms). It will not be a surprise that I agree with everything he has said. In the middle of a crisis of this kind, it is very tempting to not welcome rigorous scrutiny and, indeed, challenge of the policies that are brought forward in response to it. However, it is even more important at these times that we hear that kind of scrutiny, which draws particular strength from being cross-party: we have heard contributions from both sides of the House on these important points.
Getting this right makes the difference when it comes to people having food on the table and being able to warm their homes, and being able to have a roof over their heads and communicate with each other—essentials of a basic but decent standard of living. It also means offering people security and dignity at a time of personal crisis, when their worlds are crumbling around them. Getting it wrong means debt, hunger, homelessness, and the fears, stresses and insecurities that can and do trigger mental and physical ill health. It is entirely possible for two things to be true at the same time: that the system has indeed handled, and handled well, a soaring number of claims for benefits, and that too many people are left in desperate need and, in some cases, total destitution. It is true that more money has been spent this year in response to this crisis, but also that the level of need is outstripping it, and it is certainly true that—as we learned yesterday—the temporary nature of so much of that assistance is leaving us with some profound concerns for what happens next.
It is absolutely right, as I think has been said by everybody who has spoken so far, that a debt of thanks is owed to the DWP staff, locally and nationally, supported by the work of voluntary organisations and other public bodies. People have gone above and beyond what is required of them, as they did during the financial crisis 10 years ago, when the system also rose splendidly to the challenge it was put under. As always, we owe our thanks to those dedicated staff.
It is no reflection on the work of the Department’s public servants to say that the effectiveness of the policy response itself has been more mixed. In part, that is because of the austerity policies pursued by the Conservative Government since 2010, which left the benefits system woefully unprepared for the impact of this crisis. Ministers like to boast about the £9 billion they have allocated to social security in response to the pandemic, but the Office for Budget Responsibility has confirmed that £9 billion is the amount taken out of social security by the Government in the 2015 Budget alone. The long history of failing to uprate benefits—the benefit freeze that we had for so many years—meant that between 2010 and the onset of the pandemic, the value of the main income replacement benefits—JSA, ESA, income support and universal credit—fell by 9% in real terms. We cannot ignore that this is the context of what we are now dealing with.
That is why it is also so concerning that we are hearing about measures that have been adopted since the start of this crisis being temporary. Several hon. Friends have made reference to the £20 uplift for universal credit. It is absolutely essential that the Government lift the threat that is hanging over millions of people who are reliant on a low income, and ensure that this uplift is made permanent. It is also essential, as my hon. Friend the Member for Luton South (Rachel Hopkins) in particular referred to, that the Government continue to increase the support available for people who have a housing need and are reliant on local housing allowance, which has also drifted further and further away from meeting real housing costs. The Government cannot ignore the relationship between that failure to meet genuine housing costs in many parts of the country and homelessness, which has soared over recent years. The local housing allowance must be related to real rents in the real world, in all parts of the country. We only just came out of a period of freeze of local housing allowance, and now we are told that we are going back into it.
In short, the social security system has been falling further and further away from living costs as a matter of Government policy for a long time. The increases in funding that we have seen this year are no more than a partial reversal of policy. As the Committee has stressed, the Government have taken a completely different approach to universal credit and working tax credit on the one hand, and to other legacy benefits on the other—a point also made by several hon. Friends—with the latter receiving only a 1.7% uprating after years of real-terms cuts. This affects 1.8 million people on ESA, nearly 300,000 people on income support, nearly a quarter of a million people on JSA, and more than 1 million working families receiving child tax credit but not working tax credit. On present trends, next year they can look forward to a 37p a week uplift in their benefits.
The Committee rightly condemned this unjustified disparity in the treatment of people in similar circumstances depending on whether or not they are receiving the Government’s flagship benefit. To argue, as Ministers have done, that this disparity is due to the greater flexibility of universal credit is particularly galling, as the Government are simultaneously pleading the inflexibility of universal credit as an excuse for not addressing the issue of advance repayments and the five-week wait. I can only echo the words of the Committee:
“We were astonished to hear that the Universal Credit system has been built in a way that makes it all but impossible for repayments of Advances to be suspended in a crisis situation.”
The Government’s response has been undermined by a failure to join up policy across Government. The pandemic has meant that the Department for Work and Pensions now plays an essential role in supporting public health policy, which is—or should be—a major shift in the Department’s priorities. If people are to comply with Government rules on social distancing and self-isolation, we need to ensure that they are able to do so and that the DWP is up to this task. That is why we have consistently called for the suspension of the no recourse to public funds rules for DWP benefits for the duration of this pandemic—a point that was stressed by my hon. Friends the Members for Leicester East (Claudia Webbe) and for Brentford and Isleworth (Ruth Cadbury).
The DWP has proved its operational ability to deal with unprecedented demands, but that effort has been severely hampered by the impact of austerity over many years, by the inflexibility of universal credit and by a failure to co-ordinate policy across Government Departments. Above all, the Government must ensure that the measures that have been taken over recent months in response to this crisis are not ended next April, and that they give security to millions of people who are looking to them.
Pension Schemes Bill [ Lords ] (Fourth sitting)
Karen Buck ExcerptsThursday 5th November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 5 November 2020 - (5 Nov 2020)
Neil Gray
It is good to see you back in the Chair, Mr Robertson. I wish to speak to the remaining clauses that stand in the name of the Scottish National party, and to support those tabled by other Members as part of this group. My hon. Friend the Member for Gordon will speak to proposed new clauses 3 and 4.
As we have repeatedly said, we are fully supportive of automatic enrolment. We think it has been a big success in getting people saving for their retirement who otherwise would not have, and it does so earlier, which has a compound impact on those people’s ability to save for a dignified retirement. That said, there are issues, some unintended and others relating to the speed of roll-out, that we wish to see addressed. Our new clauses in this group build on the success of automatic enrolment by seeking to expand eligibility to those who were left out earlier and to address issues related to small or micro-sized pension pots.
This Bill is a clear opportunity to address inadequate lifetime savings and inequalities such as the gender pension gap by building on the successes of automatic enrolment. While we wholeheartedly support the premise, far too many have been left behind and still cannot benefit from this important measure, so we want to see the UK Government remove the lower earnings limit and the lower age limit well before the mid-2020s, so that contributions are payable from the first pound earned at the earliest opportunity for savers. We also want to see the Government have much greater ambition in raising contributions beyond 8%, but we understand, in deliberations with the excellent Clerks to the Committee, that that is not within the scope of this particular Bill.
Our amendment would lower the age threshold for auto-enrolment from 22 to 18 and remove the lower limit of the qualifying earnings band so that contributions are payable from the first pound earned. While we welcome the Pensions Minister’s commitment on Second Reading that the UK Government have set a mid-2020s timetable to implement these changes, our new clause would require the Secretary of State to lay this timetable before Parliament. Automatic enrolment should be available to those currently left out at the earliest opportunity. The UK Government need to be accountable to Parliament in implementing these changes to prevent further delays.
As women disproportionately populate low-income and part-time jobs, they would disproportionately benefit from the Government’s getting on with reaching more people with auto-enrolment. Similarly, by removing the qualifying earnings band, low-income workers, who otherwise have little prospect of having a decent private pension, will also benefit. We additionally support Labour’s new clause, which would require the Secretary of State to implement the recommendations of the automatic enrolment review and require a further review of automatic enrolment within two years. That would do a similar job to our new clause 1 and would keep the pressure on Ministers to be far more ambitious. Why wait? We know and have trumpeted the benefits of auto-enrolment as enthusiastically as the Minister himself. Why wait for women and low-income workers to benefit?
As I alluded to earlier in the Committee’s deliberations, we also recognise that an unintended consequence of auto-enrolment is the increasing number of people who move jobs frequently, such as agency workers, and therefore build up a number of small or micro-sized pension pots. Some of those pots might be small as £50 or £100, in which case hard-earned savings could be quickly wiped away by charges, fees and levies.
The Pensions Policy Institute reports that the number of deferred pension pots in the UK defined-contribution master trust market is likely to rise from 8 million in 2020 to around 27 million in 2035, but member charges often erode small deferred member pots over time and small pots can be uneconomic for providers to manage. Extra management charges and costs may eventually be passed on to members through increased charges, and financial instability in master trust schemes arising from too many small ports could, in extreme circumstances, result in trustees’ triggering an event to wind up the scheme.
Our new clause 11 proposes a solution to that by providing for individual pension accounts for people to invest in their own schemes with DC providers. Where someone has earned from more than one employer, rather than having multiple employers make contributions to different schemes on behalf of the worker, the worker could set up an account with a provider and request that their employer allocate their auto-enrolment contributions to that account. That would stop their multiple plots being eaten into by charges and give greater control to the person in whose name the investments are actually being made.
We hope that the Government review pushed for by the Select Committee on Work and Pensions will come up with an answer, not just to the problem of charges that we had an opportunity to address earlier in this Committee, but also with regard to micro-sized pots. This could be an answer, and we look forward to hearing the Minister’s considered perspective.
I briefly referred earlier to our new clause 2, which would see a commission established to cover the terms of this Bill. Hon. Members will know, as they have heard it long enough from SNP parliamentarians, that we support the establishment of an independent standing pensions and savings commission. At another time, when the Minister did not have a majority behind him, he may have looked at versions of some of our suggestions throughout the Bill. We are in a different place, and reasonable cross-party amendments put forward to support stakeholders across the market are being voted down. We reiterate our call for the establishment of an independent pensions and savings commission to look holistically at pension reform, focus on existing inequalities and pave the way for a fair universal pension system.
The entire pension landscape is in need of fundamental reform, particularly given the pressing need to review and enhance automatic enrolment. We ask that the commission start its work by reviewing parts 1, 2 and 4 of the Bill and their impact on different parts of the UK, equal treatment of men and women, and persons with protected characteristics—that is where our attention is focused in new clause 2—and when commercial dashboards should enter the market. That would be the responsible way to take these issues forward.
As I said earlier, time is the wisest counsellor of all, and by taking the time on commercial dashboards, the Minister could consult and take stock with independent experts to ensure that they work for all. We want to see the Money and Pensions Service dashboard as quickly as possible. The Minister seemed to suggest the other day, when we said he needed to take time, that we wanted him to slow down the MaPS dashboard, but that is just not true. The success of the MaPS dashboard is not dependent on commercial dashboards entering the market or arriving at the same time—quite the contrary, unless there has been a deal done or a quid pro quo whereby commercial providers are incentivised to provide their data for the MaPS dashboard in return for them being allowed to develop their own commercial dashboards independently and immediately.
New clause 2 would allow us to take the time to ensure that people are protected. That would ensure that we get it right, and would bring people in on a cross-party basis. That is how the best policy is developed.
Ms Karen Buck (Westminster North) (Lab)
It is a pleasure to conclude our consideration of the Bill under your chairmanship, Mr Robertson. As the Committee has agreed, I will make a short contribution on new clauses 5, 6, 7 and 8. New clause 5 is on the theme of auto-enrolment, and I will echo a number of the comments of the hon. Member for Airdrie and Shotts. The new clause would require the Secretary of State to implement the recommendation of the 2017 auto-enrolment review and conduct a further review three years on.
It is a source of great pride that the previous Labour Government introduced auto-enrolment, which transformed the pensions landscape and reversed a long-term decline in pension savings. We now have 10 million more people saving into a pension at work. The policy is widely agreed to have been a success and is praised on both sides of the House. It is a model of good policy making, rooted in consensus.
However, it is always essential to keep such schemes under constant review and develop them if they are to keep pace with changing patterns in the workplace. We are therefore concerned that, even after 10 years, there are an estimated 12 million people under-saving for retirement. To look at the reasons for that and potential solutions, it was welcome that the Government commissioned a review of the policy in 2017. The review found that:
“Current saving levels risk a significant proportion of the working-age population not meeting their retirement expectations. In addition the current structure of automatic enrolment means there are gaps in coverage, in particular for those in low paid part-time jobs and younger workers”.
The review made two recommendations: that the age threshold for auto-enrolment be lowered from 22 to 18, and that the lower limit of the qualifying earnings band be removed so that contributions are payable from the first pound earned by an employee. They are yet to be implemented, so I would welcome some indication from the Minister as to whether he has a timetable in mind for these significant changes.
There is also the question of contribution rates and whether it will ultimately be necessary for them to be increased to ensure that individuals have adequate savings for their retirement. The 2017 review noted that the contributions of 8% are unlikely to give individuals the retirement to which they aspire. As my hon. Friend the Member for Birmingham, Erdington (Jack Dromey) said,
“8% cannot be the summit of our ambition.”—[Official Report, 4 May 2020; Vol. 675, c. 471.]
I would welcome the Minister’s comments on what further work he hopes to do on contribution rates and when he will bring the matter forward to the House.
Guy Opperman
I rise briefly, Mr Robertson, to thank you and your fellow Chair; thank the Clerks, who have worked with all colleagues to a massive degree, which is extraordinarily difficult in times of covid; and thank the Hansard team. I would normally thank the Doorkeepers, but they have not had to listen to us—lucky them. I particularly want to thank colleagues who have proceeded to pass a 132-clause, 200-page Bill in under a day and a half.
Guy Opperman
With proper parliamentary scrutiny where it particularly mattered, while working on a cross-party basis on other things. I also thank my team at the Department for Work and Pensions, who have put in Herculean efforts to produce this Bill, and it would not be inappropriate to thank the Whips for keeping us in due order throughout this wonderful process.
Pension Schemes Bill [ Lords ] (First sitting)
Karen Buck ExcerptsTuesday 3rd November 2020
(4 years ago)
Public Bill CommitteesRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 3 November 2020 - (3 Nov 2020)
Ms Karen Buck (Westminster North) (Lab)
I ask my right hon. Friend to confirm my understanding, which is that when we talk about diversity, we are not simply talking about it being a good thing to have a range of different experiences and backgrounds; all the evidence from across the commercial sector is that diversity increases performance because of the range of perspectives that it brings to bear.
Stephen Timms
My hon. Friend is absolutely right. She and I took part in a debate on a similar issue around 10 years ago, on the Welfare Reform Bill. She is right on this point, and that is an argument that I want to come to in a moment.
I hope the approach that I am advocating will be applied to other pension trustee boards in the UK in due course, because according to a report on diversity published in March by the Pensions and Lifetime Savings Association, which we used to call the National Association of Pension Funds, 83% of pension scheme trustees are male; 50% of chairs of trustee boards are over 60; a third of all trustees are over 60, while only 2.5% are under 30; 25% of pension schemes have trustee boards that are entirely male; and only 5% of schemes have a majority of female trustees. This is a particularly stark picture if we look at the make-up of pension scheme trustee boards at the moment.
As the Pensions and Lifetime Savings Association comments:
“It seems clear that occupational pension scheme trustee boards have generally not implemented robust diversity policies as effectively as FTSE 100 boards”.
Oral Answers to Questions
Karen Buck Excerpts(4 years, 1 month ago)
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Will Quince
The two-child policy in universal credit is one of fundamental fairness, and it means that those who are in receipt of benefits should be in the same position as those who are not. I am not a particular football fan, but I certainly know Marcus Rashford’s name now, and I congratulate him on his MBE. We welcome the establishment of the taskforce and will carefully consider its recommendations as we approach the spending review.
Ms Karen Buck (Westminster North) (Lab)
We already know that child poverty rates have been rising across north-west England, and that is before the economic impact of the restrictions consequent upon tier 3. The Chancellor talks about the way that the job support scheme and universal credit protect income, saying that it leaves households with 90% of their income, but many households will get nothing like that, and those who lose their jobs entirely sometimes go on to universal credit at 30% of income. What assessment has the Minister made of the impact of the restrictions on child poverty in the north-west and how that compares with a local furlough scheme that protects all jobs that are at risk?
Will Quince
I will look carefully at the points that the hon. Lady raises, but I stress that this Government have implemented an unprecedented support package, including the job retention scheme and the self-employment income support scheme, which has helped families to cope with the financial impact of covid-19. For those most in need, we strengthened the welfare system with an additional £9 billion this year. That is in addition to the around £5 billion increase to benefit rates as part of the 2020-21 uprating, including around £400 million more on children’s benefits.
Pension Protection Fund (Moratorium and Arrangements and Reconstructions for Companies in Financial Difficulty) (Amendment and Revocation) Regulations 2020
Karen Buck Excerpts(4 years, 1 month ago)
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Ms Karen Buck (Westminster North) (Lab)
It is a pleasure to serve under your chairmanship, Mr Robertson, and I apologise on behalf of my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), who is unable to be here today.
The Opposition supported the measures in the Corporate Insolvency and Governance Act to help struggling businesses remain open and viable and to strengthen the role of the Pension Protection Fund in the process, protecting the pension schemes of companies in financial difficulty. Today, we are happy to support these further regulations to support the Pension Protection Fund, granting similar powers to safeguard the pension schemes of co-operatives, community benefit societies and credit unions. The Minister is right to note the important role of the Pension Protection Fund in the UK pensions landscape.
I would like to ask the Minister a couple of questions. As we know, the country faces a dire economic outlook, with severe shocks being inflicted on many employers and many pension schemes. Will the Minister say a little more about what assessment the Department has made of the resilience of the Pension Protection Fund? What measures will be undertaken to ensure that the fund is ready and capable when it comes to absorbing the potentially thousands more pension scheme members who will require security over the coming year? Although the regulations are welcome, they do not entirely restore the position that the Pension Protection Fund occupied in restructuring situations before the Corporate Insolvency and Governance Act. Will the Minister keep that under review?
It is vital that the Government make changes to the law to protect and support companies and the jobs reliant on them during these times, but the Pension Protection Fund must also be protected to ensure its continued security for the thousands of scheme members who rely on it. Although we welcome the widening scope of the Pension Protection Fund to protect more scheme members, I urge the Minister to be constantly vigilant as to what safeguards are in place to protect the fund itself.
During this unprecedented time, we are all agreed that the hard-earned retirement income of workers must be protected. Every worker deserves nothing less than the simple assurance that their pensions must be protected for retirement, and we must all work to deliver this goal and ensure that the legislation we are considering today is well equipped to deliver it.
Universal Basic Income
Karen Buck Excerpts(4 years, 1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
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Ms Karen Buck (Westminster North) (Lab)
It is a pleasure to contribute to this debate under your chairmanship, Mr Davies. I congratulate the hon. Member for Inverclyde (Ronnie Cowan) and others for securing the debate. We have heard strong contributions from Members who have critiqued the existing social security system and shown how its weaknesses have been exposed during the pandemic. That is absolutely right, for reasons that I will come on to, but we have heard not only about the pandemic, but about a recognition that the current social security system has a number of fundamental problems.
We have rehearsed the problems with the universal credit system on many occasions in the past and will no doubt do so again, 10 years on. Many problems have arisen from the fact that many people have been excluded from receiving help and the restrictions that apply, ranging from the five-week wait to the benefit cap and many other problems.
It is also true that there is a very long-term and fundamental issue with social security that those who support versions of universal basic income recognise. No system stands still. The world has changed fundamentally, particularly the world of work and the extent to which we are increasingly in a world of flexible employment, income volatility and fundamental demographic change.
Even the principles that Beveridge set out as the basis of the post-war social security system, starting with the concept of a flat-rate system, soon had to change as the world changed—as women went into the workplace and different pockets of disability emerged. The interaction between those at work and the nature of the jobs they were doing also changed and increasingly became a system that topped up the basic, flat-rate insurance-based systems, so we have ended up with a complex hybrid.
It is also true—I will come on to this in a minute—that whatever system we end up with will have to accommodate a variety of different approaches. Members have stressed this morning, and I agree, that if we want to build an argument for a form of universal basic income, the Government have done a lot of the work for us by introducing a system that has embraced conditionality and sanctions with vigour in recent years. If we want to convince people of the merits of a basic income, we could not do much better, given that the DWP seeks to micromanage so much of people’s lives, whether they are out of work or in work conditionality, where interaction with job centres often feels like an obstacle course of booby-traps designed to trigger sanctions. Those sanctions are wildly disproportionate including, until last year, cutting people off without support for up to three years. The social outcomes of all those policies include what many refer to as the soaring numbers of people whose destitution is such that they are dependent on food banks.
I do not want to cover all the points that have been made, but I will refer to two areas where the basic income argument is particularly relevant. The first is income volatility and the ability of the social security system to deal effectively with the fluctuations in income that have become characteristic of the labour market. Again, the problem is not new but, as self-employment, sometimes very dubious forms of self-employment, the gig economy and zero-hours contracts have become more prevalent, it is particularly pertinent.
The ability of the social security system to react in a timely manner to sudden drops in income is stretched to the limit. Despite the use of realtime information from the tax system, the monthly cycle of universal credit payments does not correspond to real-life volatility in many household incomes, as John Hills of the London School of Economics has certainly shown. There is a strong case for mitigating that volatility through payments that do not respond to changes in income, which is precisely what child benefit—the nearest thing we have to an element of basic income—does. The stability of child benefit has been shown to be one of the most valued components of the social security system. Whatever happens to earnings from other benefits, child benefit can always be counted on.
The second point concerns the basis on which benefits are awarded, whether to individuals or households. Our personal taxation system is overwhelmingly based on individuals, but our benefits system is increasingly based on the assessment of household income. Universal credit has reinforced that disparity. It is a benefit designed around an out-of-date model of a single breadwinner and it disadvantages second earners in the household, who can find most of their earnings lost to household means-testing. We should not be comfortable about the fact that people in lower-income households face a completely different set of implicit tax rates from the better-off.
Jim Shannon
I want to underline the issue. It is not just about finance, but about health, and the physical and mental responses to that. Does the hon. Lady feel that that has to be taken into consideration when it comes to support in such a scheme?
Ms Buck
I totally accept that security is fundamental to people’s physical and mental wellbeing. That is implicit in the idea of recognising the weaknesses of the existing system and how it responds to volatility, most obviously demonstrated during a crisis such as the pandemic, but consistent over the long term.
Basic income as a fully individual entitlement could go some way towards addressing that problem, although it must be recognised that it is not a complete solution, because most of the proposals for basic income retain large parts of the existing social security system, most critically, housing benefit. Beveridge was defeated by the disparity in housing costs across the country, and that remains now—if anything, it is probably more pronounced than it was. A basic income is not the only imaginable way to improve the current situation, but the argument for it sets out the problem with great clarity.
Some contributions to the basic income debate, however, suggest that the reform could be easily implemented—“oven ready”, to coin a phrase—and that all that is necessary to deliver it is political will and progressive values. I do not want to drown the debate in figures, but it is important to get a sense of the scale of change involved in even modest basic income proposals. I will refer briefly to two important studies that address the issue of how to fund basic income. Both show incredible clarity and are from people who are sympathetic to the idea.
The first is a paper by the late Tony Atkinson, who was a towering figure in the study of inequality. The paper was published after his death in 2017. Tony Atkinson favoured what he called a participation income, which would be conditional on some form of social contribution, but not unpaid work. As those conditions do not influence the modelling, we can take the results as relevant to basic income in general. The adult participation income in his model scheme is £75 a week. Child benefit is raised to £52.60 and £89 for the first child. The scheme prioritises children, and is certainly not extravagantly generous to adults. Other social security benefits would be retained, so it is essentially a partial basic income scheme. The modelling shows that it would not eliminate poverty, but would lead to significant reductions.
How is the model funded? The personal tax allowance is abolished, so income is taxed from the first pound. The basic rate of income tax rises from 20% to 30% from the first pound of earnings, rising to 40% of gross income at £25,000 to 50% at £45,000 and 60% at £90,000 and beyond. An earned income tax discount is introduced to avoid excessive taxes on lower-income groups.
Members will appreciate that those are not trivial changes to the system of personal taxation. My hon. Friend the Member for Brighton, Kemptown (Lloyd Russell-Moyle) said that a basic income would require a total restructuring of the taxation system. That is not something that we can enter into lightly. The scale of what is needed to accommodate such changes is considerable. A doubling of the marginal tax rate on gross incomes of £25,000 a year would surely make even the most ardent supporter of basic income hesitate.
Any basic income scheme faces the problem that spreading payments out over the entire population will require either cuts to other expenditure programmes or increases in tax revenue. The Compass basic income model, which is widely quoted, does not offer a blueprint for immediate reform. The other scheme is intended as a policy that could be adopted immediately. Therefore, the basic income for adults and children is lower, at £60 and £40 a week respectively. To balance the books, the income tax personal allowance is abolished, as is the primary threshold for national insurance contributions, so all income is subject to tax and national insurance. A new lower rate of 15p in the pound is introduced for the first £12,000 of income to avoid successively disadvantaging the lowest earners. All other marginal rates are increased by three percentage points, so the basic rate would be 23% in England, Wales and so on. That gives an indication of what the implications would be for changes to the tax system. In both cases, marginal rates of income tax increase not just for the rich, but for middle and lower earners, and income that was never taxed before becomes liable for income tax and/or national insurance contributions.
Although I accept a number of the arguments about the positivity of changes to the social security system that give people security, we cannot dismiss the fact that we will either have to find significant additional contributions to make it work or look at how the changes to the taxation system will affect people and ensure that is part of the debate. It is worth pointing out that the pilot studies that have been conducted in other countries do not have the advantage of being able to do all this in realtime, precisely because to make a full basic income work requires social security and tax to be fully integrated as part of the model; it cannot simply be about testing some aspects of the scheme.
I welcome this debate, and I certainly do not dismiss the idea of basic income. I recognise and support the contributions made this morning. People are saying that a basic income can address long-term problems that are poorly handled by existing social security models. As Labour develops our proposals for replacing universal credit with a more generous and less stigmatising system, I hope we will rise to some of those challenges.
Oral Answers to Questions
Karen Buck Excerpts(4 years, 2 months ago)
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Will Quince
I thank my hon. Friend for that question. He is a passionate and knowledgeable advocate on housing issues, and I always listen carefully to his representations. Alternative payment arrangements such as direct payment to landlords can be requested by the tenant, landlord or work coach, but if there is more that we can do, I am happy to explore it. I regularly meet my counterpart at the Ministry of Housing, Communities and Local Government to discuss these issues, and I am happy to meet my hon. Friend.
Ms Karen Buck (Westminster North) (Lab)
Direct payments to landlords can help vulnerable tenants, but the issue remains that the design flaws in universal credit leave many tenants at risk. We now know that on average, new claimants of universal credit see a net fall of 40% of their income, one in eight tenants have built up arrears and there is a £440 million gap between what landlords believe they are owed and what tenants have paid. What immediate steps can the Minister take to deal with these structural problems, particularly the waiting period for universal credit, so that when the eviction ban is lifted next week, tenants are not at risk of losing their homes?
Will Quince
First, I welcome the hon. Lady to her place. I am afraid that I have to start by disagreeing. It is wrong to attribute a rise in rent arrears solely to universal credit. We know that many tenants are arriving on universal credit with pre-existing rent arrears, which universal credit actually appears to be helping to clear over time. There is no wait for universal credit; people can get an advance immediately. We recognise that this has been a very difficult time for people on low incomes, and that is why we have injected more than £9.3 billion into our welfare system.