Women and the Economy
Kate Green Excerpts(8 years, 11 months ago)
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Kate Green (Stretford and Urmston) (Lab)
I beg to move,
That this House notes with concern the disproportionate impact of this Government’s policies on women; further notes that, according to the Library’s data, measures in the Summer Budget and Autumn Statement have hit women three times harder by tax and benefit changes than men; notes that proposals for infrastructure investment outlined in the Autumn Statement are predominantly focused in sectors that typically employ more men than women; notes with concern that the UK gender pay gap stands at 19.2 per cent, higher than the EU average, and that the Government’s introduction of tribunal fees means that women have to pay £1,200 in order to bring forward an equal pay claim, preventing many from pursuing legitimate claims; notes concerns raised by the Scottish Trades Union Congress and the Scottish Older Women’s Commission regarding the proliferation of low-paid part-time work among women; notes that levels of maternity discrimination have almost doubled in recent years; notes the alarming rate of closures of services supporting victims of domestic violence, particularly services for BME women; and calls on the Government to affirm its commitment to ensuring that women and protected groups do not bear the brunt of Government measures, to conduct an urgent cumulative assessment of the impact of its policies on women since 2010, to take the necessary remedial steps to mitigate any disproportionate burden on women and to develop and publish a gender equality strategy to improve the position of women over the remainder of this Parliament.
At his party’s annual conference this year, the Prime Minister nailed his colours to the mast of gender equality. He said:
“I’m a dad of two daughters…you can’t have true opportunity without real equality.”
That is right. That is why Labour has called this debate to put his party’s record under the microscope, and to assess the extent to which his words are matched by the actions of his Government and his Chancellor. It is a record that is found wanting.
Whether we are talking about fiscal measures such as taxes and benefits; the labour market and women’s employment rights and chances; public spending on services and infrastructure; women’s safety; or women’s voice and influence, women of all ages and backgrounds face an insecure and worrying future as a result of Government policy. That is far from the security that the Chancellor promised would be at the heart of his spending decisions.
I suppose that we should not be surprised. After all, this is the Prime Minister who regards equality impact assessments as “tick-box stuff” and “bureaucratic nonsense”. We all know, all too well, what happens when the Government do not carry out full and proper equality impact assessments. Just two weeks ago, the Chancellor rose to deliver his autumn statement. His track record in power has been shameful. Since 2010, more than 80% of tax and benefit savings have been taken from the purses of women.
Joan Ryan (Enfield North) (Lab)
Is my hon. Friend aware that, according to the United Nations, on the current rate of progress, it will take Britain another 70 years to close the gender pay gap? Sadly, the Prime Minister’s daughters may be disappointed. Does she agree that that is totally unacceptable?
Kate Green
My right hon. Friend is right. I suspect that neither of us has 70 years to wait for the gap to be equalised. I shall return to that point later.
John Redwood (Wokingham) (Con)
Why did not the last Labour Government solve this problem?
Kate Green
We did an awful lot better than the coalition Government and this Government. [Interruption.] Yes, we did! The speed of reduction under the Labour Government in the past decade meant that the gender pay gap came down by around a third, but that progress has sadly not been maintained under Conservative-led Governments.
Kate Green
I will give way to the hon. and learned Lady later, if she will forgive me. I want to make a little progress.
We knew that the Chancellor had been forced to listen, and that he would have to back down on the tax credit cuts he announced in the summer, which would have hit women disproportionately hard. We have to wonder why on earth he thought they were a good idea in the first place, knowing that 70% of the savings to the Treasury from that policy would have come from women.
Dawn Butler (Brent Central) (Lab)
Women have borne the brunt of more than 82% of all the Chancellor’s cuts. Does my hon. Friend agree that he is every woman’s worst nightmare?
Kate Green
I shall not presume to speak for every woman’s attitude towards the Chancellor, but his policies have certainly been damaging for a substantial number of women.
Mr Alan Mak (Havant) (Con)
Figures show that around 60% of women will benefit from the new national living wage. Does the hon. Lady accept that it was wrong of her party to oppose it in the summer Budget?
Kate Green
The hon. Gentleman is wrong to say that my party opposed it; we did not. We did say that it would not be sufficient to compensate for the cuts to tax credits and benefits. He might also like to know that analysis has shown that the people who will benefit from the national living wage are not the same ones who will lose out from the cuts to tax credits and benefits. This nonsense, this sleight of hand, about the figures does Conservative Members no credit. They should be prepared to come clean about who will benefit from their policies and who will not.
In the autumn statement, under pressure from Opposition Members, the Chancellor was forced to make changes to his plans. The cuts to tax credits have not been abandoned, however; they have merely been delayed. The same savings will still be made elsewhere in the system, and women will still lose out. According to a Library analysis commissioned by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), women will be hit three times as hard as men by the cuts in this year’s summer Budget and in the autumn statement. That is three times as hard in six short months, and in just two spending announcements. Many of the Chancellor’s policies that are inimical to the interests of women remain firmly in place.
Alex Chalk (Cheltenham) (Con)
Does the hon. Lady recognise that the Government’s proposal to force companies to publish details of salaries and bonuses is a welcome step towards reducing the gender pay gap? Does she also acknowledge that it is a measure that this Government are introducing and that hers did not?
Kate Green
I must correct the hon. Gentleman: it was a Labour Government who left that measure on the statute book. It took Conservative-led Governments another five and a half years to put that into action. Even now, what is being put into action is insufficient. It does not, for example, provide for a full breakdown of grades and job roles, so there is more to do. Of course it is a welcome measure, and we are proud to have brought it forward, but I hope the Government will not rest on their laurels and will be prepared to go further.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is absolutely right to raise the issue of the impact on women of the Government’s policies. She will be aware that there have been huge reductions in public services, and that women constitute 75% of the local government workforce, 77% of the NHS workforce and 80% of the workforce in social care. Does she agree that these reductions are having a huge impact on the employment prospects of women in the public services?
Kate Green
My hon. Friend is right about that. Of course the public services, too, traditionally have had a better record in many respects on promotion for women and other groups with protected characteristics, such as black and minority ethnic workers. There is certainly a concern that cuts to public sector spending will have an impact on women’s employment, and on their employment prospects, and that those cuts are part of the reason why unemployment has remained higher among women than men.
As I say, many of the Chancellor’s policies that are harmful to the interests of women are still, sadly, in place: the freeze and cuts to child benefit, universal credit, local housing allowance and tax credits; the cuts to the family element of tax credits; the changes to disregards, tapers and thresholds; the disincentive for second earners, often women, in universal credit; the benefit cap; the two-child policy in child tax credits; increased parent conditionality; and an alarming rise in lone parent sanctions. Even the free childcare offer is shrouded in complexity and uncertainty, is delayed and is apparently more limited in scope than had previously been planned for.
Alison McGovern (Wirral South) (Lab)
As ever, my hon. Friend is making a persuasive case; very few people know about family incomes like she does. May I draw her back to local government—not just the local government workforce, but those who work in services commissioned by local government? I am referring to care, where women work and are low paid.
Kate Green
My hon. Friend is absolutely right to say that care is one of the sectors in which low-paid women’s jobs are concentrated, whether we are talking about direct employment through our public services, or commissioned services for local government. It will of course be helpful over time to see the national minimum wage—the so-called living wage—increased for those workers, but if local authorities are not funded to meet the costs of that welcome pay increase, we can expect to see pressures elsewhere in the system and, most likely, on the quality of care provided. That, too, will have an impact on women, because they typically provide that family care.
Debbie Abrahams
Was my hon. Friend as concerned as I was to hear the Secretary of State for Work and Pensions state on the BBC on Sunday that people on universal credit would not lose a penny, given that we know that a lone parent with one child, working 20 hours per week on the lowest pay, will lose about £2,800 a year from next April?
Kate Green
Yes, my hon. Friend is right about that, and I believe that even the Work and Pensions Secretary has now acknowledged that what he said at the weekend was not entirely correct.
As we have been discussing lone parents, the House will be interested to know that the Library says that a lone parent with two children, working 20 hours per week on the so-called national living wage, will lose £2,800 by the end of this Parliament. That is a substantial amount for a family who, by definition, can have only one earner—and often a part-time earner, working part time to enable care to be combined with employment responsibilities. The introduction of the so-called national living wage and free childcare places simply cannot compensate wholly for these benefit cuts; the Institute for Fiscal Studies has said that that is arithmetically impossible. In any event, as I pointed out to the hon. Member for Havant (Mr Mak), the people who gain from the increased minimum wage are not the same people who are losing out.
Kate Green
Yes, of course. I beg the hon. and learned Lady’s pardon; I had promised to give way to her.
Lucy Frazer
I am grateful to the hon. Lady for giving way. What does she say about the fact that 53% of apprenticeship starts in 2014-15 were for women? That is a policy that the Government are very much pushing.
Kate Green
I will return to that point in my speech. The hon. and learned Lady is right in what she says, but we will be looking shortly—[Interruption.] The hon. Member for Hexham (Guy Opperman) may wish to wait for this part of my speech, as I know he is looking forward to it: we will look at how those apprenticeships are distributed between women and men; the sectors in which they work; how their employment destinations are not equal; and, sadly, at how those apprenticeships contribute, in both the short term and the long run, to the inequality that women still experience in the labour market. I think the right hon. Member for Wokingham (John Redwood) is acknowledging that point. It is a concern, and I hope that the Minister can say something about the Government strategy for addressing it.
It is not just women of working age who are losing out as a result of Government policies; older women face a situation that is equally serious. Single female pensioners lose most, according to the Women’s Budget Group, while the Fawcett Society points out that in 2017, the full £155-a-week state pension will be paid to only 22% of older women. The difficulty that women face because of working part-time, or because of not being able to fulfil the requirement for an increased 35 years of contributions, puts them at further disadvantage. Women are also less likely to have access to a good occupational pension.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
My hon. Friend is making a powerful speech. Just a short time ago, in Prime Minister’s Question Time, the Prime Minister declared himself a feminist, but that does not seem to correspond with his party’s policies. Just as he once forgot his daughter in a pub, his party seems to have forgotten about equality for women.
Kate Green
Certainly, I am unable to describe the policies of the Government as pro-female, or indeed feminist. Perhaps the Minister will seek to defend the Prime Minister’s record.
Those women who saw their pension age increase as a result of the Pensions Act 2011, particularly those born between April 1951 and April 1953, have been hit especially hard. Not only do they have to wait longer for their pension, but unlike a man of exactly the same age, they are not eligible for a single-tier pension.
Andrew Gwynne
My hon. Friend will know the work that my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) and I have done in raising this issue. On Saturday, I was at Denton Morrison’s with the Women Against State Pension Inequality—WASPI—campaign group. It made that point to many of my constituents who were completely unaware of the changes and the acceleration in the state pension age, so those women who were expecting to get their state pension will be sorely disappointed. They said that the Government’s communications on this have been absolutely abysmal.
Kate Green
My hon. Friend is right. I, too, have met the WASPI women. Just the other day, my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) held a Westminster Hall debate on this very subject in which she pointed out the lack of notice to these women. That point was also made by my hon. Friend the Member for Leeds West (Rachel Reeves) and others when the legislation was passed by this House in 2011.
Barbara Keeley (Worsley and Eccles South) (Lab)
Since that debate, the former Pensions Minister, Steve Webb, has admitted that the Government made a bad decision over these increases in state pension age equalisation. He made the excuse that his Department had not been properly briefed, and he went into crisis talks with the Prime Minister and the Chancellor to try to claw back billions. Those women are suffering because of that mistake and that departmental failure.
Kate Green
We heard the then Pensions Minister, and other Ministers, assure us that there would be transitional protection for those women. We have seen no sign of that protection, and women are suffering as a result.
We already know that women are twice as likely as men to live in poverty, yet this Chancellor has a blind spot when it comes to gender. He is either unaware or disinterested in the gendered nature of poverty. It is not just the short-term injustice of this policy that is of real concern, but the long-term impact on our country’s future.
Women are more likely to manage household budgets. They are more likely to be the main carers of children, and poor mothers have poor children. Women’s continued economic disadvantage means more children growing up in poverty, which means long-term damaging effects on those children and on our future economic potential.
James Cartlidge (South Suffolk) (Con)
Does the hon. Lady accept that debt does not discriminate, and that it is in the interests of every member of society, whether male or female, that we run sound public finances, which is the reason behind many of the measures that she was describing earlier? Unless we reduce our deficit and get back into the black, we will leave every member of this society in massive debt.
Kate Green
We on the Opposition side of the House of course agree about the importance of prudent management of the public finances. I would just point out that the Chancellor promised to eliminate the deficit by the end of the last Parliament. What he actually achieved was to halve it, which is exactly what the previous Labour Chancellor, Alistair Darling, had suggested. This Chancellor has presided over a rise in public debt, and he is substituting once again—one might have thought that he was learning—private debt for public debt. The Office for Budget Responsibility is now forecasting that by the end of this Parliament private household debt will be back at recession levels, which should alarm all of us.
Simon Hoare (North Dorset) (Con)
My memory is failing me. I wonder whether the hon. Lady could remind me which Chancellor ended boom and bust.
Kate Green
I will remind the hon. Gentleman of two things. First, the 2008 crash was a global crash that began in the United States of America; it was not caused by the spending plans and policies of the then Labour Government. Secondly, it was the action taken by the then Prime Minister and Chancellor that rescued the economy when we could have seen the entire financial system crash, which would have left families with no salaries, no incomes, no ability to pay their mortgages—
Kate Green
I have not finished giving the hon. Gentleman his history lesson, since he says his memory is faulty. It was the Labour Government who steered the economy through a desperately dangerous period. At the time the current Prime Minister and Chancellor said that the best thing was to do nothing and not to rescue the banks, which would have caused absolute financial disaster for families across this country. While I am reminding the hon. Gentleman about the track records of the previous Labour Government and the previous Conservative Opposition, of course I regret that we did not regulate the banking system more tightly, as I think everybody accepts, but let me remind Government Members once again that it was the current Prime Minister and the current Chancellor of the Exchequer who said that Labour was being too restrictive in our regulation of the financial services sector. The history lesson does not entirely favour the hon. Gentleman’s party, but I will give way to him again.
Simon Hoare
Hearing the hon. Lady talk about the Labour party and financial regulation is like hearing that Herod should have been a bit kinder to the first-born. Perhaps I will give her another go. Does she not accept that her right hon. Friend the Member for Doncaster North (Edward Miliband) failed back at the election? Did not the Labour party borrow too much and spend too much, and as a result Britain, when faced with that international financial difficulty, was in a very precarious place?
Madam Deputy Speaker (Natascha Engel)
Order. Before the hon. Lady answers, I remind Members of the topic of the debate, because we seem to be wandering a million miles from it. The shadow Minister might wish to answer the hon. Gentleman’s question, but she is perfectly entitled to choose not to do so.
Kate Green
I am certainly not frit, Madam Deputy Speaker, because what I know from my constituency, as I think hon. Members across the House know from theirs, is that the investment we made in housing, hospitals, policing and schools benefited families and women. It grew the economy, created jobs and lifted 1 million children out of poverty, and I am proud of that record.
The Chancellor’s gender blindness is not confined to his fiscal decisions. The investment in infrastructure announced in the summer Budget and the autumn statement is of course welcome, but the investment in the social infrastructure that supports women to work, learn and care is sadly lacking. Where was the labour market strategy to help women prosper and progress in the workplace? I recognise—before hon. Members jump up to tell me—that there are more women in work, not least because the increase in the state pension age and inward migration means that there are more women of working age who must work, but women’s unemployment remains higher than pre-recession levels. For women over the age of 50 unemployment is 7% above the 2008 rate, and the Young Women’s Trust says that twice as many young women as young men are considered to be economically inactive.
Toby Perkins (Chesterfield) (Lab)
My hon. Friend is making the case—this is ironic when we hear the contributions from Conservative Members—that inequality is hitting our economy, and that far from Britain not being able to afford gender equality, we cannot afford not to get this right.
Kate Green
That is absolutely right. Our economy is losing out through women’s under-participation in the labour market. They are underperforming in earnings and therefore in their ability to provide the financial means to support themselves and their families and to contribute to the local economy. That leads to a drain on our public spending.
For women in work, low pay remains a significant issue. Since 2010, over half the jobs growth for women has been in low-paid sectors. In Scotland, six out of 10 jobs have been created in low-paid, more insecure sectors over the period of the majority Scottish National party Government. Seventy-eight per cent. of women work in low-paid social care, but 86% of workers in the STEM—science, technology, engineering and maths—industries, which pay much better, are men. According to the Young Women’s Trust, 20% of young women have been offered jobs paying less than the minimum wage. Meanwhile, as has been noted, the overall gender pay gap stands at 19.2 %—considerably higher than the European Union average—and has been falling more slowly than under the previous Labour Governments. That reflects a downward convergence between women’s and men’s wages, not women’s earnings rising to close the gap.
Chris Stephens (Glasgow South West) (SNP)
On women being paid less than the minimum wage, another factor is that the Government are making cuts to Her Majesty’s Revenue and Customs, which will stop the enforcement of the minimum wage in many sectors of the economy.
Kate Green
The hon. Gentleman is right. These cuts are false economies. “Penny wise and pound foolish” underlies the Government’s whole economic strategy, and that is a very good example of it.
Lucy Frazer
The hon. Lady is absolutely right that we need to invest in our young women going through school so that they study STEM subjects, and that is exactly what the Chancellor is doing. Through investment in STEM, a record number of girls are taking A-levels in science and maths, with 10,000 more STEM A-level entries for girls. We must be ambitious and aspirational for our next generation.
Kate Green
The hon. and learned Lady is right. Perhaps we can open up some of that when we look at what is happening to young people’s career destinations.
Part-time and temporary work is exacerbating the gender pay gap. Seventy-four per cent. of those working part-time are women. One in five young women have been offered zero-hours contracts. The disproportionately high number of women in low-paid, part-time work means that in-work poverty remains a real issue. Cutting in-work benefits makes life worse, not better, for those women. I can discern no Government strategy to address areas of the economy such as cleaning, retail, care and hospitality where there is chronic and persistent low pay and where women typically work.
In 2013, to follow the point made by the hon. and learned Member for South East Cambridgeshire (Lucy Frazer), the Government published their action plan on women and the economy. Indeed, I think that the right hon. Member for Basingstoke (Mrs Miller) was responsible for it. That action plan set out Ministers’ ambitions for women’s increased participation. It contained welcome words about increasing girls’ participation in STEM subjects, as noted by the hon. and learned Member for South East Cambridgeshire; encouraging women into higher-paid careers; and supporting women as entrepreneurs. In practice, however, we have fallen very far short of those ambitions. The CBI reports that 93% of young people are not getting access to adequate careers advice, and girls are still too often pigeonholed into traditionally female career routes.
Paula Sherriff (Dewsbury) (Lab)
In 2013, the percentage of women in senior management roles in the private sector was 19%, ranking the UK in the bottom 10 countries globally, behind Botswana, Lithuania and the Philippines. Does my hon. Friend agree that that is completely unacceptable?
Kate Green
It is certainly not a record to be proud of.
Worryingly, the Young Women’s Trust says that young women are considerably more likely than women over the age of 31 to think that many traditionally male roles are out of their reach. Just 15% of university places for computer science and engineering are taken by women students. Although, as the hon. and learned Member for South East Cambridgeshire noted, the majority of apprenticeships are taken up by women, two thirds of women apprentices are in the five lowest paid industry sectors, and after completing an apprenticeship, 16% of women are out of work, compared with only 6% of male apprentices.
The Parliamentary Under-Secretary of State for Women and Equalities and Family Justice (Caroline Dinenage)
Does the hon. Lady agree that those ladies who are today starting apprenticeships and completing university are the women who were educated or who started their education when her party was in government, and that it is actually Labour’s lack of careers advice and lack of engendering ambition and aspiration that has resulted in some of the statistics she has cited?
Kate Green
No, I do not accept that at all. The CBI did not ask about the careers advice offered under the Labour Government, who had a proper careers system in schools. The CBI asked about the careers advice that is on offer now, at a time when the Government have scrapped a decent careers service and are leaving it to the discretion of schools and asking people to go online to get it.
Siobhain McDonagh (Mitcham and Morden) (Lab)
I am sure my hon. Friend is aware of the Education Committee report that pointed to the complete collapse of the careers service because of short-term cuts made by the coalition Government.
Kate Green
Exactly. I hope the Minister will take a little more time in her speech to explain which part of the present Government’s apprenticeship strategy addresses gender inequality.
In 2013, the Government also said that they wanted to encourage more women to become business owners or entrepreneurs. There has been a significant increase in the number of self-employed women—between 2008 and 2011, more than 80% of the newly self-employed were women—but that may not always be by choice. Increased conditionality and lack of suitable employment mean that self-employment is an economic necessity for some, and yet the average income of a self-employed woman is just £9,800 per annum, according to the Women’s Budget Group, compared with £17,000 for a self-employed man. Self-employment is not a route out of poverty for those women.
Kate Green
I will make some progress, if my hon. Friend will forgive me, but I hope that she will speak in the debate, because her contributions are always useful.
Overall, the Government’s strategy for women at work is simply insufficient. That is not just bad for women; as my hon. Friend the Member for Chesterfield (Toby Perkins) noted, it is bad for our economy. The Government’s own consultation report, “Closing the Gender Pay Gap”, which was published this year, states that equalising the level of women’s productivity and employment with men’s could add almost £600 billion to our economy, while equalising participation rates could add 10% to the size of the economy by 2030. Action is urgently needed.
Meanwhile, women are also seeing their rights in the workplace attacked and eroded. The introduction of tribunal fees means that few can now afford the £1,200 to pursue an equal pay claim. The number of maternity discrimination cases has nearly doubled, while the number of cases going to tribunal has fallen by 80%. So much for the Government’s commitment to economic equality.
Cuts to spending on public services also hit women hardest. There are 763 fewer Sure Start centres than in 2010. The care sector has been affected badly by the 31% cut in local council budgets. The additional £3.5 billion earmarked in the autumn statement fails to compensate for the drastic cuts that have already taken place, let alone adequately meeting future need.
Kate Green
I will make some progress, if the hon. Gentleman will forgive me.
It is women who will lose out from the lack of paid-for care, as they so often have to step in to fill the gap.
Terrifyingly for women at risk of or fleeing sexual or domestic violence and abuse, there have also been substantial cuts to services and access to justice that protect women’s safety. Research for Women’s Aid in 2014 showed that a third of women were being turned away from refuges because there was no room for them. Thirty-two specialist services closed between 2010 and 2014 due to lack of funds. The Chancellor’s short-term proposal to fund domestic violence services from the unfair tampon tax makes their funding symbolically and literally the responsibility only of women. Two women a week are killed as a result of domestic violence, and that must be the responsibility of everyone in society.
Why does all this happen? Why are women hit the hardest? It happens because we are not present where decisions are taken. Our voices are not heard. The Fawcett Society has shown that 80% of stories in the media about the economy are about men or quote men. Although there has been a welcome improvement in the number of women on company boards following the Davies report, the proportion of women in executive positions on FTSE 100 boards remains lamentably low.
Kate Green
I will make some progress, if my hon. Friend will forgive me.
As for the Government’s own track record, the Women and Equalities Minister’s own Department for Education’s management board contains just two women out of 12 members. It is clear from such circumstances and recent announcements that the Government have a blind spot when it comes to gender. Ministers are ignorant, indifferent, or deliberately targeting women for the worst effects of their cuts. That makes a mockery of the Prime Minister’s words about his commitment to gender equality.
In conclusion, let me make a few suggestions about what Ministers could start to do to address the inherent gender inequality that runs right through this Government’s agenda: carry out a full cumulative impact assessment of all Government policy since 2010 to analyse the impact on women; act now to address any disproportionately damaging effects; commit to introducing—and publishing immediately—cumulative equality impact assessments across Government and remedial action wherever policy is found to be inimical to equality, as the Labour Government in Wales are already committed to doing; and ensure that women are at the heart of decision making at every level. And is it not time the Government published a full, comprehensive, cross-Government gender equality strategy that addresses the economic and social discrimination and disadvantage that have become the hallmark of this Government? That is what the Opposition are calling for this afternoon and I commend our motion to the House.
The Parliamentary Under-Secretary of State for Women and Equalities and Family Justice (Caroline Dinenage)
It is an enormous pleasure to respond to this debate on an incredibly important subject. I start with a note of sadness, which I direct to the Opposition spokesperson, the hon. Member for Stretford and Urmston (Kate Green). Nothing that she said this afternoon, not a word that came out of her mouth, championed or celebrated the achievements of women every day throughout the country. Even those who start their own businesses, create jobs and generate the economic recovery that we are seeing, she could not celebrate. She sees that as a negative, which underlines how Labour sees small businesses up and down the country.
Caroline Dinenage
I will make progress, if I may.
A vibrant economy, where everyone can fulfil their potential and play their part, is at the heart of this Government’s mission to govern as one nation. As the Prime Minister said,
“you can’t have true opportunity without equality”.
That message goes to the heart of what the Government want to achieve for women.
This year marks the 40th anniversary of the Sex Discrimination Act and I am very pleased to say that we have seen significant economic progress for women during those 40 years. Over the past five years in particular, we have made huge strides. We have more women in work than ever before. Female employment has increased, with 14.6 million women now working. There are over a million small businesses with women at the helm. We have helped to achieve the lowest ever gender pay gap on record, and we have more than doubled women’s representation on FTSE 100 boards since 2011.
Caroline Dinenage
Give me a couple of minutes to make a little progress.
I want to talk about the motion. Where do I start? The evidence is deeply flawed. Unfortunately—I am sad about this—it is the typical back-of-a-fag-packet stuff we have come to expect from Labour Members. Frankly, they have made bizarre and outdated assumptions about how households divide their money. There is even an implication that lower fuel prices somehow do not help women. The pink battle bus may have run on something other than petrol, but the rest of us fill up in the normal way.
Caroline Dinenage
I will make a little more progress. [Interruption.] I will give way in a moment.
Labour Members assume that any savings will immediately mean a poorer service, which we know is not true. They have made bizarre and outdated assumptions about how households divide their money, and we know it is not true that savings will immediately mean a poorer service. What they do not understand is that the British public know that too.
Kate Green
The Minister is making assertions, but I am sorry to tell her that the academic research belies what she is saying. It is true that women manage the household budget in many households, but increasingly, it is not their income to manage. With the married couple’s tax break, more money is being put into the wallets of men, and women are dependent on men to fund them. Moreover—this point relates to what she said about fuel—the number of women who own and drive cars is significantly lower than the number of men. That is why it matters that benefits and tax policies should address what actually happens and the way in which families live their lives.
Caroline Dinenage
The hon. Lady makes a number of sweeping assumptions. The fact is that child tax credits and child benefit all go into the pockets of women. Her assumptions are very outdated. Families work as a unit: they work together and pool their income. Frankly, it is quite a sexist allegation.
Harriett Baldwin
I will, of course, come on to address some of the points raised in the debate. Although there is political consensus that we must make progress on women’s economic issues, our parties will approach that progress differently. My party will stress more equal opportunity, more aspiration, higher skills and higher standards in education, while the Labour party will seek to tax women more, borrow more debt on behalf of women, their children and their grandchildren, and create more welfare poverty traps for women.
Today’s Opposition motion shows why the Labour party can never again be trusted to run our economy. In their motion on the Order Paper, the Opposition assume that mixed-gender households do not share incomes. That is quite an assumption. They assume that spending less on public services invariably leads to poorer services—something that we have comprehensively disproved over the past five years. They even imply that the billions and billions of pounds of tax cuts that have led to lower petrol prices at the pump do not help women. I have heard it said before that Labour wants to take us back to the 1970s, but this is more like the Harry Enfield sketch about the 1930s. I will try to imitate him: “Women, know your limits and, for pity’s sake, don’t drive!”
At best, the motion shows unconscious bias. At worst, it shows the latent sexism of a sexist Labour leadership. The motion says, “Don’t invest in infrastructure, because it’s not women who build things.” Where do I start with that?
Kate Green
Of course women drive cars and of course income is shared in many households, but we know that when income is in the hands of women, they make different choices in the interests of their families and their children. The Minister must recognise that fact. It is asserted by the United Nations and has been understood by social policy research going back many decades. I wish she would acknowledge it.
Harriett Baldwin
I wish the hon. Lady would acknowledge a few of the facts that I am about to share about women in the economy. The calculations that she has been citing all afternoon do not include these basic facts. There are more women in work than ever before in this country. We have the highest female employment rate ever. We also have the lowest gender pay gap since records began.
Welfare Reform and Work Bill (Third sitting)
Kate Green Excerpts(9 years, 2 months ago)
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The Chair
Thank you very much indeed. We have until five minutes to 11 for this sitting. There will be plenty of questions, starting with Kate Green.
Kate Green (Stretford and Urmston) (Lab)
Q 130130 Good morning. Thank you very much for coming. My first question is probably for all of you. Would you give the Committee your views on the proposal in the Bill to require a yearly 1% reduction in social housing rents?
The Chair
Just before you answer, may I correct a mistake? We have until 10 o’clock, of course, not five to 11.
David Orr: I think the fundamental problem from our point of view is that rents are set, effectively, by the Government, and have been for a period of time. It is 16 or 17 years since Governments first started to be involved in rent setting in the housing association sector. The combined impact of Government intervention over that period of time has been to leave a suite of rents that make no sense at all. There is no consistency. In the evidence that we have provided I have called it a shambles, and I think that that is a fair description of it. You have neighbours living in identical homes, whose financial circumstances are broadly identical, paying vastly different rents. This is not of our making.
The specific proposal to cut rents by 1% per annum for four years, depending on the rate of inflation, means a difference to people’s legitimate business planning expectations of a reduction of around 13% or 14%, or £3.8 billion taken out of housing association business plans. This is because the rate settlement from May 2014 was 10 years at CPI plus 1%. It was a rent settlement agreed with Government and introduced by Government—not by us, but by Government.
As a result of that settlement, designed to give long-term certainty in business planning, a number of associations have organised long-term debt on an assumption of what would happen with rates. Large-scale voluntary transfer organisations entered into contracts to buy the stock, and contracts with the selling local authority, based on rental assumptions signed off by Government. The decision to reduce rents by 1% per annum breaks all of these commitments. Although inevitably sometimes Governments do things we like and sometimes they do things we dislike, we have always been able to rely on commitments made by Government. On this occasion, those commitments have been broken and are causing very considerable difficulty for some housing associations.
I have one further point. This is one of these occasions where a single measure imposed on everyone does not have the same impact on everyone, because of all of those rent changes and that rent thinking. I will give you one example. There is a housing association whose target rent is £86 a week. Their present rent is £48 a week, and this will take them back down to £46 a week. If your rent is already 25% above target rent, it means that you can do less, but it is a manageable proposition. For that housing association it is an existential crisis.
Kate Green
Q 131 Can I just pick up on one thing that Mr Orr said? You said that you had been living in a world where effectively rent has been set by Government, so is it wrong for the Chancellor to have suggested, therefore, that social rents have risen out of control?
David Orr: The extent to which social rents have risen is specifically and precisely because of a series of decisions made by Government. These decisions have been made in consultation and negotiation with the sector, unlike this present proposal, but these decisions are Government decisions, not decisions made by individual housing associations, which is why our evidence proposes that at the end of the four years Government should legislate to withdraw from rent setting altogether and relocate responsibility where it belongs—with the boards of housing associations.
Mike Donaldson: From our point of view, next year we will have £11 million less because of the decision to reduce rents by 1%. By year four that will be a £60 million gap, which we will have to plug to carry on with our plans to build homes. We based our business plans on the deal—it was described as a deal with Government, which was a 10-year deal—and of course, as David said, we have funding lines in place to build homes based upon that income. Now we are going to have to plug the gap, and we have to do that in short order because, obviously, we have building expectations; we have a plan to build 50,000 homes. As a result of this, that will be reduced by 18,000 homes, unless we can plug the gap. Our intention is to plug the gap. We want to get back to 50,000 homes, and the intention is to build as many social homes as possible.
Our concern is also that, although there is an expectation in the Bill that this is a four-year deal, there is no promise going forward. There is uncertainty about what the rent regime will be beyond 2020. For us, and for our funders, need a bit more certainty. We have already had one deal ripped up; we do not know what is going to happen in the future.
Gary Porter: The local government perspective is pretty much the same as David’s. Obviously, we fully support the Government’s aim to drive down the cost of the housing benefit bill. It has grown like Topsy over the last 10 years and is definitely unsustainable. The trouble is, this is probably the least sustainable way of bringing it down. It will cost—as we have heard from other people—a lot of new homes being built.
The only way of sustainably bringing down housing benefit is to build new homes. We do not have a sufficient supply of affordable homes; we are pushing more and more people into the private sector, where rents are considerably higher—about £50 a week more expensive than in the state sector—and we need to be able to build more homes. We think, across local government, that this is probably going to cost us about 19,000 homes, which is 19,000 times £50 extra a week on housing benefit. That will cost the country more money in the long run.
I can understand, in the short term, why it sounds like a good idea. The Treasury is right, rents have gone up considerably in the last few years but, as David said, that is as a direct result of Treasury policy. We were told how much we had to put our rents up, and we did it—most of us. You can’t blame us for it being that. As David said, people’s business plans are built on an assumption that rent will be at a certain level. Councils across the country that still retained their council houses were compelled by the Treasury to buy them back a few years ago, which we did, but that was based on a business model with rents being the way they were. We are now in danger, probably in four or five years, of most of those councils coming in with a big box of all the keys to their houses to give them back to the Treasury, because we will not be able to sustain the mortgage payments that we have on them.
The whole thing is counterproductive to what the aim needs to be. We have a vast disparity in rents. I think the average council rent is £82, registered social landlord rent is £90-something and the private sector is £137. It is no good just attacking one part of the problem; we need to tackle the cause of the problem, which is not enough housing. If I had a magic wand, or at least the ability to get the Treasury to do what we need it to do, I would take council houses off the public sector debt book. Let us borrow against the value of the stock that we have. We can build you more homes, which will bring down your housing benefit bill.
Alastair Graham: From our point of view, there are really two main areas where we are very anxious about this. We provide housing for people with a learning disability, and the fear is in respect of both existing tenants and potential new tenants.
Unless there is an exemption for supported housing, it will mean that for the several hundred of our properties that we currently lease from a head landlord, when those leases come up for renewal and the head landlord wants the same or an increase in the head landlord rent, we simply will not be able to afford to pay that, because our income will be reduced by the amount set out in the Bill unless we get that exemption. It means that these people will face a very uncertain future and may even have to be housed in very inappropriate, and probably much more expensive, accommodation elsewhere.
The second impact is in respect of new tenants. Some MPs will know that we have successfully launched two bonds over the past couple of years; they have raised £21 million, and we have invested all of that in new housing for people with a learning disability. It has not cost a penny of central Government grant. We had exciting proposals to expand and develop that to provide much more housing through private investment. It is going to be practically impossible to get that private investment with these proposals, because people are not going to want to invest in a business plan that shows the rental income going down year on year over the next few years.
What is really needed is an exemption for supported housing, which would not in any way detract from the Bill’s main thrust to reduce the housing benefit bill. In fact, it would almost certainly save money overall to the public sector, because it would enable us to house people in community-based settings, which is where they will typically want to live. It is usually where their parents want them to live—often just round the corner from them—rather than in expensive, remote institutional settings, far away, that cost the public purse more money. So we would really urge an exemption for supported housing.
Kate Green
Q 132 Could I ask for your comments on a suggestion made to me that if this legislation precedes as currently proposed, there should in fact be a choice for some housing associations to accelerate the increase and take it in the first year or two, rather than it being 1% per annum? Have you any comments on the pluses and minuses of that suggestion?
David Orr: That would be even more destabilising for most business plans, because what you do is bring forward the reduction in rent, and once that reduction is in, it is there in perpetuity. That would just add to the amount being taken out of business plans, so it is not a helpful proposal.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
Q 133 Good morning, gentlemen. I just have a few brief questions. For those who are on low incomes, would you agree that the reduction will be beneficial?
Gary Porter: For those who are on low incomes but above housing benefit level, yes, by about 80p a week. For those who earn money but not enough to take them out of housing benefit, no, it will not make any odds. For council tenants, the biggest savers will save about 84p a week. Obviously, if you do not have a lot of money, that extra £1 a week will be a benefit, but there are better ways of doing it.
Mike Donaldson: In L&Q terms, 54% of our residents will not see any benefit at all, because the benefit is to the Treasury—the taxpayer.
Anna Turley (Redcar) (Lab/Co-op)
Q 153 I would like to go back to the points about the financial robustness of housing associations and surpluses and so on. David, could you tell us a bit more about the geographical disparity in that? It is my understanding that, particularly in terms of assets, housing associations in London will be substantially better off than housing associations in, say, Teesside in my area. Could you say something more about what that geographical picture looks like, and the different geographical implications of this policy?
David Orr: Yes, of course, you are quite right that the basic financial strength of organisations varies hugely. If they are in an area where assets are very high value, their business has a greater degree of financial robustness underpinning it than an organisation in an area where the asset value is very low. It is more possible in some parts of the country to trade assets, and therefore maintain financial stability, than it is in others.
The impact goes back to one of the things I was saying earlier. This is a measure that sounds simple, single and straightforward, but it has a profoundly different impact for organisations in different parts of the country. In my introductory remarks I said that for some organisations, not because they are inefficient but because of accidents of history and geography, this decision could mean that they will collapse.
Having an efficiency challenge is one thing, but imposing a new measure that has the direct effect of making it impossible for good, well-run, well-managed, efficient organisations to survive is not helpful.
Kate Green
Q 154 There are other measures in the Bill that will have an impact on housing associations and local authorities in relation to rent. I am thinking particularly of the four-year freeze and the reduction in the household benefit cap. Can I start by asking Councillor Porter your assessment of the overall effect of those measures in the Bill on local authorities and, in particular, pressure on discretionary housing payments?
Gary Porter: For the purposes of what we have been saying today, we have put the freeze and the reduction in the same space. So, all the numbers that we have used have been like the £2.6 billion that we are going to be light because of the freeze and the reduction. They are not different numbers; they are the same numbers.
In terms of the impact of discretionary payments, I am afraid that I cannot answer that at the moment, but I will ensure that one of the members of staff who are supposed to be minding me today has made a note of it, and we will give you that back in writing.
Kate Green
Q 155 What has been your experience of managing the household benefit cap since its introduction in the previous Welfare Reform Act?
Gary Porter: It has been a variable picture across the country. Some areas have been affected more than others, as you would expect. Any national measure applied equally across the whole country is bound to have a different effect, depending on where it lands.
Kate Green
Q 156 Do you think that what is introduced in this Bill, which has a different level of cap for London and for the rest of the country, is a useful measure? Do you feel that these levels are about right?
Gary Porter: I would leave London councils to argue the case for or against issues for London. I am not very well versed in the specific impact on London. Again, our office will give you an answer to that in writing.
The Chair
Yes, it would be helpful. Mr Orr, I think you want to come in on this one as well.
David Orr: For me, there are two major challenges with the benefit cap. First, of course it is right that there should be a limit on how much the state is prepared to pay. You cannot have open chequebooks, and we do not argue with that, but the way that the cap is introduced does not reflect the reality of the costs that people have. For most people, the cost of feeding, clothing, transport is broadly similar across the country, but housing costs are hugely different. So a single cap, once again, is a single measure that has very different impacts in different parts of the country. I think I am right in saying that the cap has the biggest impact in the midlands.
The second thing, which we are very concerned about, is that the level of cap now means that for a household with three children or more, dependent on benefit for whatever reason, there is nowhere in the country that the rent will be covered within the cap. Nowhere. So, for any household that has three children or more, this is a particular and specific problem.
Kate Green
Q 157 And that, of course, will be exacerbated for those families by the child tax credit measures.
May I ask one final question on this point? What might be the impact on personal household housing debts? Will we see households going into debt to meet their rent as a result of the freeze and the cap?
David Orr: We already know that there are some households who have had to do that. I was in Cornwall yesterday, which is an area that has been particularly badly hit by the bedroom tax because there are very few alternative places with smaller accommodation for people to move to. We know that some people there have really struggled to pay the rent and some of them have gone into debt to pay the rent.
Emily Thornberry
Q 158 I believe that 70% of households in social housing in some London boroughs are affected by the cap. The benefit cap has particular implications for London councils, so it would be interesting to have some additional evidence on that.
Can we also hear from housing associations about the benefit cap’s effect and what the future for housing associations in London is, given the level of the cap? Are we looking at a future where housing associations will only be able to risk renting out to young professionals without children and will not be able to build accommodation appropriate for families?
Mike Donaldson: We are already seeing the impact of the previous benefit cap in terms of the households we can house in larger accommodation, so it is obviously going to get worse as it reduces to £23,000. The other thing we are concerned about is that there is an assumption that rents drop dramatically once you leave the Greater London area, and that is not true. The area around London has equally high rents, because there is a lot of commuting and so on. So there is a real concern that the £20,000 cap also has a detrimental impact on our residents.
Although we do not know for sure, because obviously we have not got all the information from the DWP, we estimate that another 300 of our residents will be affected by the benefit cap when it is introduced. The history so far has been that we have had to engage heavily with those individuals to ensure that they do not face losing their homes. The extra costs that we incur to employ staff, to get people jobs—we employ staff to give financial advice—is money that we have had to find from elsewhere in the past four years. Going forward, of course we will not have so much money, because we will be facing reduced income from rents, so there is a bind. Most of these people have never worked or have not got an engagement with the jobs market—they are starting from scratch. You have to do an awful lot of work with them to get them into paid employment.
The Chair
Colleagues, we will make a start. We have one witness yet to arrive, but we hope he is on his way.
It is wonderful to welcome witnesses from the Child Poverty Action Group, the Centre for Research in Social Policy and the Centre for Social Justice. Could you kindly read yourselves into the record?
Dr Callan: I am Samantha Callan, associate director for families and mental health at the Centre for Social Justice.
Alison Garnham: I am Alison Garnham, chief executive of the Child Poverty Action Group.
Matt Padley: I am Matt Padley, senior researcher at the Centre for Research in Social Policy at Loughborough University.
Kate Green
I should put it on the record that I think I am a life member of the Child Poverty Action Group, and I am certainly a former chief executive, but I will not be asking the questions in this session.
The Chair
Thank you, Kate; that is good to know. I know that Stephen Timms has three questions for the panellists.
British Airways (Pensions Uprating)
Kate Green Excerpts(9 years, 2 months ago)
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Kate Green (Stretford and Urmston) (Lab)
Thank you, Mr Speaker. I am grateful for the opportunity to raise this issue, which affects a substantial number of British Airways pensioners. There are two matters. One, regarding discretionary payments, is sub judice. The other arises in relation to British Airways pensions. Obviously, I shall not be discussing the matter that is before the courts. The focus of this debate is the decision by the trustees of BA’s pension schemes to increase pensions by the consumer prices index rather than the retail prices index, as had been the case previously, following the emergency Budget in summer of 2010 which switched the increase in state benefits from RPI to CPI.
The change affects approximately 95,000 pensioners across two schemes: the airways pension scheme and the new airways pension scheme. I am grateful to Association of British Airways Pensioners and its representative, Captain Mike Post, to my constituent, Mr Len Jones, and to Nikki Jones of Unite—in which connection I draw the House’s attention to my entry in the Register of Members’ Financial Interests—for the briefing for this debate. I am sorry not to have had the benefit of any contact from British Airways.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I congratulate the hon. Lady on obtaining this Adjournment debate. She may be interested to know that several of my constituents are affected by these developments, and I hope that she will address the issue I have been contacted about: the inequity of the position in which they find themselves because of BA’s behaviour. Once again, I hope she will reflect that and that we will hear from the Minister in a positive way.
Kate Green
I am grateful to the right hon. Lady for her intervention and I hope to do justice to the concerns of her constituents, my constituents and indeed, as is very evident from the turnout for this debate, those of right hon. and hon. Members from right across the House. I had intended to mention a number of the hon. Members who have approached me about this evening’s debate, but I can see that so many are interested and so I will curtail that part of my speech.
As I have indicated, on 31 March 2014 there were 95,486 pensioners in two separate BA pension schemes—28,144 in APS and 67,342 in NAPS. The matter before us tonight therefore affects a substantial number of people, some on very modest pensions—the average pension in APS is about £14,000 per annum and in NAPS it is about £12,000 per annum—and has what Captain Post has described as a “complex history”, going back to 1948, when APS was established. That scheme contained several unique features, including a unilateral trustee power of amendment and a no-worsening clause. Six trustees were appointed by the employer and six were elected by the members. Amendments required two thirds of trustees to ratify them; employer approval was not required.
In 1973, in return for substantial increases in contributions, members were invited to transfer to APS part 6 to enjoy unlimited inflation protection. In 1984, APS closed to new entrants, pending privatisation of BA, and NAPS was established.
Jim Shannon (Strangford) (DUP)
The interest here in the House gives an indication of the interest among our constituents, too. Does the hon. Lady agree that given BA’s financial position with its pension scheme, with liabilities of £29.2 billion and assets of £29.3 billion, a move to de-risking would have made more sense and may have provided a greater surplus for the company and for the pension?
Kate Green
The hon. Gentleman is absolutely right, and I shall be developing that point further in my speech.
As I say, in 1984, pending privatisation, APS was closed and NAPS was established. BA went to considerable trouble at that time to inform existing APS pensioners of their options. I have here a copy of a staff newsletter from January 1984, which my constituent Mr Jones, an APS pensioner, has given to me. The newsletter, which includes a personal statement from Colin Marshall, then chief executive of BA, describes the details of the new scheme compared with the existing APS. It explains that APS pensioners can either choose to join NAPS, and receive a cash payment or extra pensionable years if they choose to do so, or to remain in the existing scheme. It states that the two schemes will be independent of one another, will not subsidise one another and will each be governed by their own scheme rules. It then describes the differences between the two schemes in relation to contribution rates, pension age, pensionable pay and, crucially for this debate, index linking.
Henry Smith (Crawley) (Con)
I congratulate the hon. Lady on securing this debate and on being appointed to the shadow Cabinet today. Many of my constituents are affected by this issue. Will she join me in calling on BA to play fair with those pensioners, be it in respect of those from 1984 or those from 2015?
Kate Green
I thank the hon. Gentleman and I very much hope that, seeing the strength of feeling around the House tonight, BA most certainly will realise that it must play fair.
Ruth Cadbury (Brentford and Isleworth) (Lab)
I, too, congratulate my hon. Friend on securing this debate and on her new appointment today. Does she agree that as BA was controlled by the Conservative Government in 1984, when the undertaking was given, it is reasonable for BA pensioners, of whom I have a lot in my constituency, to expect some support from the current Conservative Government in order to ensure that undertakings given should be honoured? As she said, many of these people are on low incomes.
Kate Green
It is for Government—I am talking about any Government as this is not a party political matter—to honour commitments to these pensioners, and I will outline their obligations in this regard.
In relation to index linking, let me quote from the newsletter of January 1984. It says that the new scheme NAPS
“will be index linked in line with the cost of living index, up to a maximum of 5% in any one year. But it will not offer unlimited ‘inflation proofing’ like the present scheme”—
which is APS.
“If the rise in the cost of living index is below 5%, the pension will be raised by the actual amount, as it is under the existing scheme.”
Clearly, there is no specific reference there to which cost of living index was meant. But ABAP argues that it must have meant the retail prices index because the consumer prices index was not then in existence. Up to that point, it had indeed been the practice of the trustees to increase pensions in line with the annual review orders, which had adopted the RPI.
In any event, NAPS was set up, with approximately half of existing APS pensioners electing to move to the new scheme and the rest remaining in the APS. This must have disappointed BA, because Marshall openly acknowledged the existing scheme was an expensive one for the employer, though he also stated quite categorically that there would be no pressure on existing pensioners to move to the new scheme.
In 1996, a new attempt was made by BA to persuade APS members to transfer to NAPS. Interestingly, pensioners were told that their pension increase would be “broadly in line with RPI.” Then, in 1999 and 2000, attempts were made to merge the schemes, but that was overwhelmingly opposed by members, and the initial decision to do so was reversed by the trustees.
Meanwhile, a number of other changes to the trust deed governing the APS did take place, the most important being to replace so-called rule 13A with rule 34 in February 1986. This change, which was taken by an inquorate meeting of the trustees, dealt with the ability of trustees under rule 13A to pay augmented pensions, provided that BA gave the trustees the necessary funding to do so within four weeks.
Rule 34, which later became clause 24, did away with the requirement for BA to fund such increases if in effect the actuary agreed the fund was in surplus. Apparently, the reason was to bring APS in line with NAPS. Despite the fact that this decision was taken at a meeting of the trustees that was not quorate, the company used the power obtained at that meeting to order a further £330 million to be paid from the emerging surplus without being required to provide the funding. As a result, BA enjoyed a substantial contribution holiday from 1999 to 2003.
The pattern of poor governance—between 1986 and 1990 at least 11 trust deed and rule amendments were made without a quorum of trustees being present according to ABAP, and the chair of trustees was frequently absent—is the backdrop to the situation in summer 2010 when we come to the emergency Budget. Following the Chancellor’s decision to increase state benefits in line with CPI rather than RPI, the trustees announced that they too would abandon RPI as the index by which pensions were uprated and switch to the CPI. In its results statement on 25 Feb 2011, BA acknowledged that there would be a long-term gap of 0.5% between the two indices, amounting to £770 million. The benefit of this saving would accrue to BA’s Spanish shareholders.
Suella Fernandes (Fareham) (Con)
I thank the hon. Lady for securing this debate. I speak on behalf of British Airways APS pensioners in my constituency. What action can we take as individual Members of Parliament to urge British Airways to honour its clearly stated and express promise to pay RPI on these pensions every year? It is clear that CPI was not even invented when the original promise was made.
Kate Green
It is rare for so many Members to stay so late at night for an Adjournment debate on such a specialist subject. I very much hope that our presence here will be one of those steps that we can take collectively to put that pressure on British Airways.
Throughout the life of the pension schemes there had been regular revaluations of the pension fund, which consistently showed the APS to be in surplus, in contrast to the NAPS. In the triennial valuation that took place in 2012, one of the assumptions—it must in law have been agreed by British Airways—was stated to be that to allow for discretionary increases, pension increases were assumed to increase linearly from CPI in 2013 to RPI from 2023 onwards. ABAP argues that this demonstrates that British Airways has effectively recognised all along the force of its claim for RPI increases—it is the discretionary increases that are subject to the separate legal action.
In 2013 approximately 300 APS pensioners complained to the pensions ombudsman about the switch to CPI, while 25 pensioners launched action in the county courts claiming lost pension increases since CPI had been used to uprate their pensions in 2011. BA retaliated by elevating those cases to a test case in the High Court, the costs of which forced the claimants to withdraw their cases.
The result of all this is that British Airways pensioners today feel extremely and understandably aggrieved. They point to inquorate decisions, broken promises and, most recently, the removal of the independent chair of trustees by the company. Moreover, the willingness to consider the interests of shareholders ahead of pensioners creates a deep worry that British Airways’ long-term agenda might be to close its final salary schemes, to the benefit of shareholders. While they recognise, of course, that British Airways is now an independent company and no longer state-owned, they feel strongly, as my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) has suggested, that the Government have a responsibility to ensure that undertakings given before privatisation of the company and in connection with it are honoured.
Kate Green
If hon. Members will forgive me, I will not give way, because time is tight and I have several questions to put to the Minister.
What discussions have Ministers had with British Airways since the emergency Budget? What is the Minister’s view of British Airways’ high-handed—some might say bullying—behaviour? What steps are the Government taking to ensure satisfactory governance of pension schemes, including the British Airways schemes, in the light of this history of inquorate decisions, the recent firing by the company of the chair of trustees, repeated non-attendance at trustee meetings by a previous chair and the interests of the company apparently being put before those of the pensioners?
Can the Minister explain the inconsistency in approach to uprating pensions in line with RPI or CPI in state and ex-nationalised bodies? The BBC, the National Coal Board, the Lloyds Bank part of Lloyds TSB and the Bank of England all continue to uprate pensions by RPI, but British Airways does not, and neither apparently does the TSB side of the former Lloyds TSB.
Does the Minister recognise that the Government have a moral responsibility to ensure that promises made at the time of the privatisation of former state bodies are honoured? Does he agree that it would be right to infer that the commitment to uprating given to pensioners in 1984 referred to RPI, since that was the index in existence at the time, the index that trustees had in effect been applying to increases previously, and the index used to arrive at the fund valuation in 2012?
Most importantly, what assessment has the Minister made of the impact of the broken promises, the governance failures and the betrayal of British Airways pensioners on public confidence in pensions regulation and pensions policy? In 2007 the noble Baroness Altmann gave a talk to ABAP called, “How safe is your pension?” She talked about the integrity of pension promises and expressed her concern that people had been lied to about the security of their pensions by Government.
The noble Baroness is now the Pensions Minister. She has been writing to APS pensioners recently stating that it is inappropriate for Ministers to comment on the running of a private pension scheme. Surely that is not correct, when it is the scheme of a former state-owned company, and when the Minister herself has pointed in the past to pensions security being Government business. Does the Minister here this evening now agree that it is the Government’s business to ensure that undertakings given by what was at the time a Government-controlled company as part of a Government privatisation programme are properly honoured? Will he assure the House tonight that he will take steps to put pressure on British Airways to ensure that this is done in the case of the APS pensioners?
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
May I start by congratulating the hon. Member for Stretford and Urmston (Kate Green) on her promotion to the shadow Cabinet, which I am sure will bring her much excitement, as well as much busyness? I also congratulate her on securing this debate. It is clear from this evening’s turnout, on both sides of the political divide, that this is certainly a popular issue, and one that affects many people, and therefore many Members of Parliament, in a wide variety of constituencies.
I trust that the hon. Lady, and colleagues throughout the Chamber, will appreciate that it is not appropriate for a Minister to comment on the running of individual schemes or individual trustee decisions. Moreover, I hope she will appreciate that it is not appropriate for me to comment on matters that are subject to ongoing legal proceedings, as is the case here. She will be aware, as will other Members, that the case brought by British Airways against the trustees is scheduled for a hearing for 25 days in February next year.
Kate Green
As I explained, there are two separate matters. I am not discussing the matter that is before the courts—it would be wholly inappropriate to do so in this House tonight—but raising a separate matter that is not the subject of litigation.
Mr Vara
The trust and British Airways—the whole organisation—have been the hon. Lady’s subject in this debate. Both are taking part in a debate concerning the trust that was originally set up in 1948. I think it is inappropriate to comment, because there is a huge overlap. She has been in the House for long enough to know, as have other Members, that in such a situation where there is pending litigation it is inappropriate and wrong for Ministers to comment. However, I can speak in a general way and, I hope, address some of the issues she has raised.
Mr Vara
I am sure that British Airways is keeping a watchful eye on the Chamber and has noted the presence of not only those who have had the opportunity to speak, but the many others who support them.
Having explained the switch to CPI, I would like to return to the role of trustees in running pension schemes, including setting pension increases. I have explained that any increases above the statutory minimum are a matter for scheme rules and the trustees. In some cases, the increases will be at the discretion of the trustees; in others, the rate will be written into the rules. The House will appreciate, however, that in view of the issues in the ongoing High Court proceedings, I cannot comment on either the ambit or use of powers by the APS trustees.
Trustees of pension schemes are the same as those of any other trust, and much of what they do is governed by trust law. They have to act in line with the trust deed and scheme rules and they have to act impartially, prudently, responsibly and honestly, and in the best interests of beneficiaries. Those obligations apply regardless of whether trustees are nominated by the employer or by members. That means that trustees may have a potential conflict of interest, and the Pensions Regulator issues guidance on how trustees should manage them should they arise.
Trustees are also required, under pensions legislation, to undertake certain actions to ensure that the scheme is funded to meet its liabilities and that it can pay the right amount of benefits to the right people at the right time. Having set those parameters, the Government do not interfere in the running of individual schemes. Regulation of occupational schemes is undertaken by the Pensions Regulator. If it appears that trustees are not carrying out their duties correctly, the regulator may intervene. Alternatively, members may have recourse to the pensions ombudsman or the courts, which is the route being taken at present.
However, another party is involved: the sponsoring employer. The employer is ultimately responsible for putting enough money into the scheme to pay the benefits due under its rules, which is why it is essential for trustees and sponsoring employers to work together when agreeing the level of employer contributions—even more so if the scheme is in deficit and the employer has to pay in extra contributions to make good the shortfall. Inevitably, employers and trustees sometimes cannot resolve disputes, so it falls to the courts to determine the outcome. Sadly, that is the case here.
Kate Green
Will the Minister comment on the appropriate balance between the responsibility to the interests of the company and the trustees’ fiduciary responsibility to scheme members?
Mr Vara
It is a complex legal matter. There certainly are responsibilities, but they extend to trying to build a good working relationship with all concerned, as well as relationships that are in law. Having such a working relationship—it is not defined in law, but is common sense—is critical if we are to reach a proper solution. Sadly, that has not worked out in this instance, so we have this 25-day hearing, which is a significant amount of time. It is a very complex case about which much will clearly have to be said in due course. However, much has already been said.
I have but a few seconds in which to speak, so I simply say to the hon. Lady and colleagues that it is good to see so many Members in the Chamber for an Adjournment debate. Given that we were threatened with up to four votes, it is fortunate that we will all be able to get away this side of midnight. I commend the hon. Lady again for raising this matter. We await the result of the court case in due course.
Question put and agreed to.
Assisted Dying (No. 2) Bill
Kate Green Excerpts(9 years, 2 months ago)
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Kate Green (Stretford and Urmston) (Lab)
I shall make a few brief points in the light of the many conversations I had over the summer with disability organisations and disabled people. They are well aware that I support the Bill and will vote for it this afternoon, but I want them to know that I have listened very carefully to some of the concerns that they have expressed.
Of course, not all disabled people are terminally ill—we should not equate the two—but it is true that when we become terminally ill, we will almost all by definition fall within the terms of the Equality Act’s description of disability. It is also true that the social context in which disabled people live their lives today means that they suffer inequalities and injustice, and that accompanying the Bill must be a whole-hearted commitment by the House to address that structural inequality and to make the right to an assisted life equal to that of assisted death.
I was a little horrified to hear the Second Church Estates Commissioner, the right hon. Member for Meriden (Mrs Spelman), for whom I have enormous respect, imply, I think, that she would prefer such deaths as already take place to do so outwith the law, rather than to shed the light of regulation on a situation that we live with today. I would prefer to see this difficult situation governed by legislation—legislation for which we as legislators take responsibility.
To the disabled people who have raised issues with me, I would say that I am very open to hearing suggestions for further safeguards to be placed in the Bill. Having listened to the debate this morning, I am sceptical about the role of the High Court in this matter and we may have to look at this again. I invite the proposers of the Bill to amplify what sort of audit process and regulatory framework they think can properly protect people, and I echo the calls all around the House for proper investment in both palliative care and mental health care to address the very important point that at the end of their lives many people will suffer also from severe depression.
Welfare Reform and Work Bill (Second sitting)
Kate Green Excerpts(9 years, 2 months ago)
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The Chair
Thank you. We will now, if we may, engage you with some questions. We turn to Kate Green for the first set of questions.
Kate Green (Stretford and Urmston) (Lab)
Q44 1 Good afternoon and thank you for coming. I want to start by asking you if you support the change that the Government are proposing in relation to support for mortgage interest, and if you agree with their contention that the cost of the existing scheme has become unsustainable?
Paul Smee: Lenders have taken the view that the mortgage interest scheme has worked well in the past. We appreciate, particularly at a time of rising house prices, that the need to reflect on how that support is provided becomes important. Lenders can understand the rationale behind the decision to move to a loan-based system.
Paul Broadhead: I would echo what Paul said. I think it is a vital part of the safety net, as it has proven to be in the past few years of the financial crisis. One area about which we have some concerns is the change of the waiting period from 13 weeks back to 39, but we are relatively supportive of making it a loan.
Kate Green
Q 2 Why is there a problem around the 39 weeks?
Paul Broadhead: What we have seen over the past few years, in terms of the 13-week waiting period, is that the earlier people can engage with their lender, the more tools there are at the lender’s disposal to help them. A waiting period of 39 weeks seemed a bit odd once. If it has been moved off the Government’s balance sheet and the Government expect that they will get 75% of it back, it also seems odd to give the double-whammy of moving the support from 13 weeks back out to 39. Clearly, there may well be the situation after 39 weeks that somebody has missed nine months of mortgage payments, which have been added to their debt. There are far fewer tools available at that time than at 13 weeks, so we believe that 13 weeks is the right time to engage people with this process.
Kate Green
Q 3 That is very helpful. Thank you. One of the things we are obviously concerned about is the way in which, after somebody has taken advantage of such a loan, the Government are eventually repaid. Obviously, that would not be required while the person is not working. It would be when they return to work or when the asset is sold. Do you have any observations on whether there is a risk to people’s ability to retain their homes, given the model that the Government are proposing?
The Chair
Just before you answer that, one or two of us older folk are having a bit of trouble hearing, and we are told that they cannot turn the sound up. Could you speak directly into the microphone and be as clear as you can? It is not your fault at all; it is the age of some of us at this end.
The Chair
My apologies.
Paul Smee: And the age of some of us at this end, too. Sorry, I lost the thread after that intervention. Would you mind repeating the question?
Kate Green
Q 4 The question is about the way in which the Government seek to restructure their ability to recoup loans made. One way they could do that is when the house is disposed of. Do you have any concerns about people’s ability to keep their house? Is there a risk of repossession, and what analysis have you made of that?
Paul Smee: From what we see at the moment—we have not yet seen the entire detail of how the Government will go about recouping the loan once somebody returns to work—the charge that the lender has over the property will remain in place. Incidentally, during all times, when somebody goes into arrears, they will be handled in accordance with usual practice and they will be given the sort of support that lenders offer to anybody who is behind in their mortgage payments.
We will want to look very closely at how payments will be recouped. I do not believe the intention is that it will be done in such a way that the continued ability of the householder to make mortgage payments will be jeopardised, so I think there will be some planning around that.
Kate Green
Q 5 I did not hear that, Paul. I beg your pardon.
Paul Smee: I do not believe that there is any intention that the way in which loan payments are recouped will impact on somebody’s ability to keep up with their mortgage once they are back in work. That will be taken into account, but we will be looking at the detail of that very closely.
Paul Broadhead: Very briefly, the mortgage lenders charter remains in place and remains prior to any security of this loan. In the current market, if a borrower has a second-charge loan, which is how this will be structured as we understand it, repossession can be instigated by the second-charge lender, and the first-charge lender will have the remainder. For this to threaten people’s ability to remain in their homes, it would require the Government to commence repossession proceedings, not the first-charge lender. As long as the Government do not do that, the first-charge lender will deal with it in accordance with the way they do today.
Kate Green
Q 6 May I ask one last question? It has been suggested that some people who do not return to work—perhaps people who are on long-term sickness or disability benefits and do not become well enough to return to work—will never make repayments of the loan as a result of returning to employment, but will be able to do so when the house is sold. For some of those people, the sale is likely to take place at the point when they become so disabled that they need to make adaptations and perhaps downsize to release equity to do so. How will the market respond and what are the risks of those people being unable to fund a move to more suitable supportive housing?
Paul Smee: I think that any lender would want to talk to the borrower about the circumstances in which they found themselves. There might be ways, using conventional lending instruments of one form or another, to find a way through. Whether the Government at that point decide to exercise their second charge and in effect demand repayment of the loan would be up to them, but I believe the lending industry would want to work with the borrower to come to some sort of acceptable outcome.
The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
Q 7 Welcome, gentlemen. It would be the Government’s intention to have comprehensive advice for claimants who are in the position of having interest that is to be converted into a loan—by way of advice on the accrual of interest and on the impact of the second charge. It could be a third or fourth charge depending on how many debts they have. It is our intention to give comprehensive advice. Is there anything that we should be mindful of when considering the advice to give? What would you emphasise that we should make clear to claimants?
Paul Smee: The first point I would make is that the advice that you will be giving will not be regulated advice within the regulatory framework to which my lenders are subject.
Kate Green
Q 14 I want to follow up on something that was said a moment ago about both existing and, once the legislation is in place, new claimants. I was struck by the statistic that more than half of claimants are in receipt of pension credit, which I suppose means that they are much less likely to achieve repayment by going back to work, as opposed to the eventual disposal of the property. What is your critique of that as commercial lenders, both in the abstract and in relation to SMI?
Paul Smee: Right across the population, we are increasingly seeing people borrowing into later life. The industry is now working on new ways to approach that sort of borrower. There are ways in which the value in a house can be unlocked. It depends on careful advice and helping people to understand the implications of what they are doing, but I think we are going to see more and more people borrowing into retirement, so the industry is getting itself into a position where it can help them to make the right choices. Bearing in mind that at some point people may well want to downsize, or an estate may well dispose of a property, in which case the funds become available.
Kate Green
Do you wish to add anything, Paul?
Paul Broadhead: No—I agree with all that. We should remember about the quantum of debt here, and the payments. For most of these people, we are looking at very low levels of debt and very low levels of support—perhaps £20 or £30 a week. There may well be other options for them, rather than taking it as debt. If they are looking at leaving the asset to a family member, it may well be that they will step in and give them the necessary support at the time. In the past, I do not think people considered other options that might be better for them, but this change might focus them on those options.
Kate Green
Q 15 Given those drivers and the nature of the case load—the fact that many of them are on pension credit; the likelihood that their borrowing at that point will be quite low so the amount of SMI that they might need to acquire through a loan would be low, and the fact that there are other options for them to repay the loan—do you think that the Government’s anticipated savings of £255 million a year are realistic?
Paul Broadhead: It is difficult to say whether that is realistic. The Government expect to get about three quarters of that back. If that figure is about three quarters of the money that is spent now, that shows you. Clearly the majority of people on pension credit will have lower amounts, but the others have not insignificant amounts of debt because of what we have seen happen to house prices in recent years. It is difficult to say yes or no, but if the Government calculate that they will recoup three quarters, I have no reason to doubt those numbers.
Paul Smee: I suspect that the main driver will be the way in which the Government are able to recoup the loans. That will be the real determinant of the figure. Many people in this position have equity within their houses, so they have a source there.
Kate Green
Q 16 Do you expect any customer backlash from people who expected to be able to retire and leave a house to a child? This will be their property. Do you expect any consumer reaction?
Paul Smee: Some of the reaction in other bits of the market has been that it has changed some of the dialogue within families and the conversations about how an older person can be supported by other members of the family. There is a big question about how people view their home and the fact that they can only use the money within it once, as it were. I have no evidence of a backlash, but we have to say that such issues raise emotions within families as well as in society.
The Chair
There are no further questions and we are drawing to the conclusion of our half hour, so I thank Mr Smee and Mr Broadhead for some clear and concise answers, which are much appreciated. Thank you for taking the time to give us evidence today.
Examination of Witnesses
Charlotte Pickles, Kirsty McHugh, Octavia Holland and Tony Wilson gave evidence.
The Chair
A warm welcome to our six experts. We have people from Remploy, the Social Market Foundation, the Shaw Trust, Mind, Scope and Parkinson’s UK. Would you please like to read yourselves into the records by telling us who you are?
Sophie Corlett: I’m Sophie Corlett, director of external relations at Mind.
Matt Oakley: Matthew Oakley from the Social Market Foundation.
Gareth Parry: Gareth Parry, director of strategy at Remploy Ltd.
Laura Cockram: Laura Cockram, policy and campaigns manager at Parkinson’s UK.
Roy O'Shaughnessy: Roy O’Shaughnessy, chief exec of Shaw Trust.
Elliot Dunster: Elliot Dunster, group head of policy research and public affairs at Scope.
Kate Green
Q 62 I would like to focus my initial questions on the provisions in the Bill that relate to work incentives and the work-related activity group. Some of you may have more of an interest in this issue than others. We heard in the last evidence session—I am not sure if you were able to follow it—that there is international OECD evidence to suggest that there would be a significant work incentive by reducing the amount of payment in the WRAG. What is your comment on the impact on individuals and work incentives of people losing £30 a week? Shall we start with Parkinson’s UK?
The Chair
By the way, don’t all feel you have to answer every question, but do chip in if you have something to say.
Sophie Corlett: We have a real concern about that, as far as mental health is concerned. If you have been assessed as being in the WRAG group, you have been assessed as being unfit for work—not that you should be looking for jobs, and not that you are ready to work and are just not in a job yet, but that you are not fit for work and that you are able to do some work-related activity. This is a group of people who it is acknowledged are not ready. It is not acknowledged that they lack motivation. In fact, we know that people with mental health problems are highly motivated to get back into work, so we do not think that the argument about incentives is at all appropriate.
The other thing we know about people in the WRAG group, and certainly people with mental health problems, is that they spend a lot of time in that position, on that benefit. To reduce it to a level that is really just bumping along at the bottom of survival is hugely detrimental to not just their ability to get by but their mental health problem and their ability to have enough in order to recover. We feel it is a massive undermining of their ability to get back into work, rather than the reverse.
Laura Cockram: In terms of people with Parkinson’s, we believe that the Government currently fundamentally misunderstands the term “progressive condition”, which Parkinson’s is, along with a number of other neurological conditions. Putting people into the work-related activity group in the first place, we believe, is not correct, and 30% of people with Parkinson’s have been put into that group since 2008.
In terms of your question, Kate, we do not believe it is an incentive. If people have been found to be unfit for work—particularly with a progressive condition, they will have been found unfit for work by independent assessors and will potentially have been given some information from their neurologist or healthcare physician that they are unwell and not well enough to go into the workplace—we feel it is quite unfair to say that there is some kind of incentive. It is cruel, in some respects. Most people with Parkinson’s would like to or are eager to continue working for as long as they can, and there is evidence that the average length of time people stay in work following a diagnosis of Parkinson’s is between 3.4 and 4.9 years. We know that people want to stay in work, but cannot, potentially, because of their condition.
Elliot Dunster: I would just like to add a few more thoughts from Scope about how we think the change might act as a disincentive. We very much support the Government’s aim of halving the disability employment gap, and we really want measures that will see us progress towards that goal, but we do not think that this will do that, and I will explain a bit more about why.
First, there are half a million disabled people in the WRAG, and there is a very real risk that by making a slightly more binary distinction between jobseeker’s allowance and employment and support allowance, you will create a disincentive for people in the WRAG to move into work, because if they fall out of work—and we know that disabled people are more likely than non-disabled people to fall out of work because of the barriers of their condition—they may fear that they will be reassessed and placed back in the WRAG at a lower financial award. So we have a concern there.
Similarly, in the support group, we are concerned that people in the support group who may want to work may feel that it is a big leap for them to enter the world of work. They may fear that once the change takes place, if they do fall out of work, they will be put back into the work capability assessment and reassessed, and if they are then placed in the WRAG, they will be £30 a week worse off than they were before.
We hear at Scope some examples of that happening already in the existing system. I can think of a lady I spoke to recently who had fought quite hard for her further education and had got a master’s degree. She was in the support group and receiving employment and support allowance. She had been offered a full-time job for a fixed period, and she came to us because she was concerned about what taking the job for the first time—a full-time, paid job—and then falling out of work again might mean for her, and whether she might end up being placed in the WRAG. If that happened, although financially she would be in the same situation as she was at that time, she would be subject to some of the conditionality that is placed on people in the WRAG. We know that that is happening a bit at the moment, and we fear that this change might exacerbate some of that.
Hannah Bardell
Or, indeed, not cutting them at all.
Sophie Corlett: Yes, definitely. The Work programme is not successful for people with mental health problems: 8% of people with mental health problems are helped back into work through the Work programme; that is not a great result. Other methods that people use include IPS—individual placement and support—which is a voluntary scheme. It works with people on their aspirations. In a very key way, it looks at what the other barriers are that stop them getting to work, and it works with employers to help them to overcome the stigma of employing people with mental health problems, because employers are not keen to take people on. It looks at all these things. It works with people in a voluntary way, without all the threat of sanctions, which can be very worrying for people.
If you have really good systems, people who want to get back into work can get back into work, but to have a system that is both punitive on people as if it is their fault and then does not actually help them is grossly unfair.
Gareth Parry: The Department did lead a pretty comprehensive review in 2013, when it produced the disability and health employment strategy. There is quite a lot of good content in that strategy, but it does seem to have lost the focus a little bit over the last 18 months. Our organisation would recommend going back to that strategy and seeing what was in there that could still be progressed, because that was sort of the review you are talking about.
Matt Oakley: I was there for a speech the Secretary of State made a couple of weeks back, and it seemed very much to be the start of a new discussion about how we can help disabled people and people with illnesses first of all to stay in work where that is appropriate, and secondly, when they leave work, to get back in more quickly—when they are out of work, to get back to work. I would be a huge advocate of significant changes to the Work programme to make sure it is putting more money into those people who need the greatest help. At the moment, it is not targeted enough; it is not personalised enough. We need to make sure we are targeting as much money as possible at those people furthest away from the labour market, of which this is one of those groups.
Kate Green
Q 66 The Government had hoped that the number of people on long-term incapacity benefit and employment and support allowance would be reducing. In fact, it has been increasing, and particularly the numbers in the support group have been increasing. What is your analysis of the impact of a very sharp distinction between the level of benefit that you will receive in the support group and the level of benefit that you will receive if you are not in the support group? Is there any incentive, perhaps, to present yourself as more severely unwell or disabled, and therefore having to go into the support group?
Elliot Dunster: We have to look at the confidence in the WCA as well. The speech that the Secretary of State made a few weeks ago, which has been mentioned already, talked a little bit about that. Disabled people are concerned about the WCA and how accurate it is. In Scope’s view, this will mean that people will continue to appeal those decisions because of this slightly more binary distinction.
We agree with the Secretary of State’s assessment that it is not very helpful to think about people being fit for work or not fit for work. That is not a particularly helpful way of looking at things, but of course we have an assessment in which we have to try to draw lines, effectively, about what support people receive. We would like to see the WCA reformed along a number of principles that we have submitted to the Committee, which would make it much more about back-to-work support. However, we think that making a slightly binary distinction between jobseeker’s allowance and ESA will make people more likely to appeal decisions if they think they should have been awarded the support group rather than the work-related activity group, because there is a financial incentive for them to appeal.
Emily Thornberry
Q 67 Eighty-five per cent. Islington Law Centre has an 85% success rate for people who are appealing ESA assessments, when they take them to tribunal. That means that people who are assessed as being fit for work are then being reassessed by the tribunal as not being fit for work, or are put into an employment support group. Would it not be important for the Government to iron out clearly unfair decisions in the work assessment before changing the goalposts?
Elliot Dunster: I have probably covered most of that in my previous answer. We do think that the WCA should be reformed, and it feels like there is starting to be more of a consensus around that. It seemed as though the Secretary of State was talking along those lines as well. Yes; it needs to be reformed, more accurate and more focused on what someone can do. At the moment it is too medical, and that is where it feels like those decisions have not been made in the right way. Whether someone can pick up a pound coin is not necessarily a good indicator of whether they can do a job or not.
Laura Cockram: On the work capability assessment, we would echo the comments from Elliot and Sophie about it not being fit for purpose. The assessment is a snapshot on a particular day. You have mentioned the success rate of appeals. I believe that the figure is that 38% of all fit for work decisions have been appealed across the UK from 2008 to 2013—that is the June 2015 figure from the DWP—and 51% of decisions from January to March last year were overturned. That is a good demonstration that we are putting unwell people through unnecessary assessments and tests. If they are not well enough to work, they should not be forced or, potentially, bullied back into work, which these kinds of assessments are doing.
Gareth Parry: It is hugely difficult to generalise on so many things. We could ask ourselves, “What is work in the 21st century?” Technology has made a difference—people can work from home now, and do flexible working and different hours. There are so many different interpretations of what work constitutes that to have a relatively black-and-white regime around benefits is not flexible enough. If we have a direction of travel, the right way must be to have a direction of travel that is more of an assessment of needs-based support as opposed to labelling people with a particular benefit. The labour market is so versatile and changeable these days that there is no simple threshold at which you say somebody is fit for work or not fit for work. The world does not work like that any more.
Sophie Corlett: Could I just add a really important point? That is absolutely true, but if you are assessed as being fit for work because you could do a very particular type of work in a very particular setting, the person who works with you to find that job needs to be aware of that very particular need of yours. And there is no real link in terms of your assessment and how you are then helped to get a job; you might be expected to get just any job, when you have very specific needs.
Gareth Parry: We completely agree with that; personalised employment support needs to link in to a needs-based assessment. The problem at the moment is that everybody focuses on the benefits infrastructure rather than on the objective of attaining and sustaining employment.
Kate Green
Q 68 We have slightly lost sight now of the effect that you think cutting £30 a week will have on people’s propensity to go into work and on the disability employment gap.
Sophie Corlett: I can answer some of that. I think there is a complete misunderstanding of what keeps people with mental health problems out of work. It is not that they find it financially beneficial; it is that if they are in the ESA group—the WRAG or the support group—they have been found not fit for work. They are not well enough for work; the money is neither here nor there. Having less money will merely make you more likely to be debt-ridden, and depressed and stressed and unwell.
Elliot Dunster: I have been quite clear from Scope’s perspective that we think it will be a disincentive, for the reasons that I have already explained. Also, building on what Sophie said, we know that disabled people have less financial resilience than non-disabled people; we know, for example, that disabled people have on average over £100,000 less in savings and assets than non-disabled people. So they are less able to cope with big financial shocks and long periods of time out of work. Because of the lower financial resilience of disabled people, a long period of time on a very low income will have a very serious effect, which we are concerned about.
Helen Whately
Q 69 Mental health is a particular issue of interest or concern to me. In my constituency, I recently visited the local Mind and I saw really effective delivery of parts of the Work programme by it. I joined in a session and spoke to one client who told me very openly how enormously helpful she found Mind’s support, even though she was clearly some way off being able to get back into work. So, because I think the conversation about the support for people with mental health problems has been relatively negative, I just wondered whether there are any positive experiences you could talk about regarding the support that people are receiving.
Sophie Corlett: There are some very successful mechanisms for supporting people to get back into work. Some of our local Minds are involved in individual placement and support, which is quite different from the Work programme. Individual placement and support works with people on a voluntary basis, so it starts from the point of view that you want to get back into work, which, in fact, is the case. So it works with people; it is not saying, “We’re sanctioning you because we’re assuming you don’t want to get back into work.”
IPS works with the flow of where people are going; it encourages them to aspire to work. So, as Gareth said earlier, it is about helping people to boost their confidence, rather than assuming they do not want to get back into work and actually undermining their confidence. It is working with people, working with their aspirations and helping them unravel the things that are stopping them getting to work, whether that is transport, debt, caring responsibilities or other things going on in their life. It helps them to get those things in order, which might be very difficult if they are not well and cannot really organise those sorts of things.
Then it is working with the employer, which is very important from the point of view of mental health problems, both to unravel the employer’s potentially discriminatory attitudes and to support the employer if the employee is not necessarily going to be working at full throttle initially. So you can say to the employer, “It’s all right. We’ll work with you and we’ll stick with you, so that if things aren’t good initially we will still be there to help you.” So, very importantly with IPS, the support carries on.
Some of our local Mind projects have a 32% rate of getting people back into work, which is phenomenal. I think that 82% or 85% of people are still in work after six months, which is a very good success rate. So there are ways of doing that, but importantly they are individually tailored, they understand mental health, they work with the employer and they work on the positive model, not the negative one.
Kate Green
Q 81 I thought we were going on for hours yet. Sorry, Mr Streeter.
I want to ask about something entirely different that has not come up at all today. It relates to the disability employment gap. Ministers have spoken positively about self-employment as an important opportunity for disabled people. Others have also said that that could be seen as lacking ambition for disabled people and that self-employment is a disguise for something of quite poor quality in some cases. Can you reflect on the role of self-employment for disabled people in reducing the disability employment gap? We could perhaps start with Roy, because I see that you are taking a bit of interest in this question.
Roy O’Shaughnessy: Wherever there are legitimate opportunities for a person to be self-employed, that is fantastic. We have been leaning more towards a social enterprise model for individuals who, because of their particular challenges, may not fit into certain types of work. We could create a national social enterprise structure with 50,000 or 100,000 people running local coffee shops, for example, but with all the support services provided behind that. We need a couple more years to see how self-employment develops.
We know that most small businesses struggle with financial planning, book work, tax things and all of that, so we are looking to create an entity for individuals with a particular skill who have a disability and who want to work. It would almost be like a franchise model that could be replicated exponentially with some serious structures around it. We believe that that is the future for creating new jobs above and beyond what the economy can create in a normal way.
Kate Green
Q 82 How can the Government support that?
Roy O'Shaughnessy: We have been having some discussions. First, the Government could support it by being unequivocal in our joint commitment to halving the disability unemployment rate. Secondly, they must be realistic about the challenges that many of the individuals face when dealing with their life situations and circumstances while they are moving into that journey of employment. We like this model, because whether you can work three or four hours a week or whether you can only work a day a week, this allows us to structure something that is fair and equitable that would hopefully bridge the gap of the four to five hours’ decrease in the benefits in a way that would work.
This is us just putting our thinking caps on and saying, “Hey, how can we contribute to this debate?” We will have to put some significant funding into it, but we also believe that business and Government will come together to help us get a disability-confident approach. We completely agree that making Disability Confident much more centre to this whole discussion about halving the unemployment rate for disabled individuals is the way to go.
Gareth Parry: Just a brief point. Our experience is like everything that Roy said. Self-employment is a really important tool, particularly for people who have fluctuating or episodic conditions, who may be able to work more on some days, weeks or months than they are on other days, weeks and months. It gives them control over when they are able to work. Self-employment is a really important part of the overall solution.
Elliot Dunster: Self-employment can absolutely be brilliant for some disabled people, particularly those with fluctuating conditions, but it is also worth reflecting on some thoughts about the health benefits of work. We know that good jobs are good for people’s health and that poor jobs are not very good for people’s health, particularly disabled people’s health. We also know that disabled people are more likely to take up lower-paid and more insecure jobs. Let us think about how we can progress disabled people when they are in work, so that they are in good, secure, stable jobs.
I would add one other word of caution, about the danger of isolation. I do not think that we would want to self-employment to mean isolation. One of the great things about going to work, and one of the big health benefits, is the fact that you work alongside colleagues, you are out of the house and you are participating fully. There is a danger that lots of disabled people working at home in isolation would not necessarily be a good outcome for all disabled people.
Emily Thornberry
Q 83 I want to pick up on the point about isolation, but it is also important to bear in mind how completely inappropriate it is for a lot of people with mental health problems to become self-employed. My concern and experience is that I have constituents who have been pushed into self-employment whose mental health is not sufficiently robust to be able to be effectively self-employed, and they get into all sorts of debt as a result. I hate to say this, but I get the impression that the people in the jobcentre are happy that they have been signed off as employed, but it is reckless for these people to be setting up cake-making businesses, or there was another case where someone was supposed to be designing websites. Their mental conditions were such that it was really difficult for them to be able to think through what setting up a business would mean. I suspect that my experience with my constituents is not isolated. I am very concerned about pushing people into self-employment, particularly those with mental health problems. I do not know whether that is right, Sophie.
Sophie Corlett: Yes, I know many people with mental health problems who are self-employed and it is the perfect thing for them, but it depends. I suspect you are talking about people who are perhaps affected by stress or bipolar disorder and so at certain periods do not engage with bills, or who will in certain periods—
Kate Green
Q 84 I have two more questions on two other subjects. First, I would like to explore Disability Confident a little further, because a number of you have been positive about that initiative. Indeed, I am about to experiment with it and host a Disability Confident event myself in a couple of weeks. I am concerned that there currently appears to be no tracking of the effectiveness and impact of the programme. How would you measure its role and contribution to improving disability and employment rates?
Roy O'Shaughnessy: That is a really good question. I suppose that if we did it at the macro level we would tie it in with the goal to halve the disability unemployment rate over the five-year Parliament and come up with a step-by-step, quarter-by-quarter approach, similar to what we are doing with Whizz-Kidz, to assess it. Several of our events have been tied in with that, in the sense of monitoring and evidence-basing what we are doing. In my view, if Disability Confident is used as the central sphere of many of the issues we are discussing, and if there is a really fair, evidence-based reporting mechanism, it will hold us all on track, quarter by quarter and year by year, so that we can celebrate having done it in five years.
Gareth Parry: Part of the question depends on what resources can realistically be made available, but there is something about a journey that an employer goes on. They may start at a point of ignorance—I do not mean that in a critical sense, but they just might not know anything, or there might be fear there. The next point of the journey might be about how you get that employer to a point where they say, “Okay, I’m starting to change my mind and am prepared to give it a go.” How do you then translate that into them starting to access services? How do you translate that into them starting to employ disabled people, becoming advocates and then becoming exemplar employers? There is almost a journey, and if you could measure where various employers were on that journey and the progress they made over a period of time, and relate that to Disability Confident, that might give you a pipeline of how many employers you would take on a process.
One big challenge for Disability Confident—we are all scratching our heads on this—is that it is not so much about when you hold your events, because you often get employers coming along who are already engaged with the agenda, and who are already interested and want to employ disabled people. It is about how we get Disability Confident out to all those other employers who have never heard about it, do not have the interests and do not have the same opinions at this stage. That is the challenge for Disability Confident: how can we break through to those employers that do not know about it?
Kate Green
Q 85 I would just like to go back to something that Neil Coyle raised about Access to Work. How important is it and how well is it working by contributing to reducing the disability employment gap?
The Chair
Let us have an answer from everybody, and this will be our final flourish.
Sophie Corlett: It is hugely important and much underused in mental health, and it could be much more widely understood as being really useful, particularly if people are able to use it before they apply for a job so that they can take a package with them. That would be the ideal, really, so that they could go to an interview and say, “This is what I can bring with me.” That would be the best use of it.
Matt Oakley: I will defer to delivery colleagues.
Gareth Parry: It is a fantastic programme. I would massively advocate mental health support services, because we deliver one. It is a great programme, which is significantly underused, at creating awareness and promoting not only mental health service support but all of Access to Work. It remains a challenge, but overall it is a fantastic programme. I should declare that I already gave evidence at the Select Committee last year, and I do not want to repeat any of that evidence.
Looking forward, it is probably the one area in the employment arena where personalisation could be looked at to a much greater degree. It is as close as we have got in the employment agenda to personalised budgets. It is not personalised budgets—it is not personalisation as we know it today—but it could be, and it could be a really interesting arena just to take the next step towards giving more choice and control over people’s employment journeys.
Oral Answers to Questions
Kate Green Excerpts(9 years, 5 months ago)
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Kate Green (Stretford and Urmston) (Lab)
The prison service is housing an increasing number of older prisoners. What steps are being taken to rehabilitate prisoners who are too old or too ill to work?
Andrew Selous
We cannot require older prisoners to work, but I would certainly want those opportunities to be available to older prisoners, just as they are to many older people in society who want to carry on working. All our educational opportunities are, of course, open to older prisoners. We recognise the challenge, which the hon. Lady rightly raises, of an increasingly elderly prison population.
Safety in Prisons
Kate Green Excerpts(9 years, 5 months ago)
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Rachael Maskell
I thank my hon. Friend for raising that important issue. Overcrowding is affecting safety in prisons, and I will set out how it is having an impact. The sharing of cells is one of the problems being faced in our prisons today.
Kate Green (Stretford and Urmston) (Lab)
I, too, congratulate my hon. Friend on securing this important debate. Does she agree that another issue that is increasing risk in prisons is the change to the conditions relating to earned privileges and the crackdown on release on temporary licence? Such changes make prisoners feel more stressed, which affects behaviour and risk.
Rachael Maskell
My hon. Friend makes an important point about the opportunities prisons have to rehabilitate people and enable them to reform their lives. I will pick it up later in the debate.