Universal Credit

Lord Bishop of Chester Excerpts

Tuesday 7th July 2015 Lords Chamber

[Lord Freud]

One of my purposes today is to find a forum where I can update noble Lords in this Chamber about what is happening in a somewhat more sensible atmosphere than is perhaps seen elsewhere in the Palace of Westminster. On the point about timing we have reset this programme, as I am sure all noble Lords here well remember, and will not be going on to the rather sharp upgrades in the volumes that we were initially looking at. We are now designing it in such a way that we will test different groups and make sure that we roll it out sensibly. That was what the reset was about and, interestingly, it is exactly what the NAO and MPA are saying is the way to roll out big programmes.

[The Lord Bishop of Chester]

My Lords, in his Answer the Minister referred to universal credit as incentivising people to work. Can he give a bit more detail on just what that incentivisation involves? What is the typical marginal effective tax rate for someone who is on universal credit, given that I read recently that it can be more than 70%?

[Lord Freud]

The marginal rate—the rate at which one withdraws benefit—is 65%. In practice, among the incentive effects are that all the constraints about taking temporary jobs or trying part-time jobs have disappeared, as have some of the constraints against people who may be disabled with fluctuating conditions. They would not normally dare take on a job because if their condition came back, they would have to restart the process of getting on benefits. Because universal credit is both an out-of-work and in-work benefit, it means that there is no risk element to being in work.

Construction (Design and Management) Regulations 2015

Lord Bishop of Chester Excerpts

Thursday 26th March 2015 Lords Chamber

[Lord Stevenson of Balmacara (Lab)]

My Lords, I declare an interest that my wife is a practising lawyer who deals with construction contracts.

I should make it clear that we support the important work that the HSE does and we are obviously very keen to do what we can to support it and further improve the safety record of the construction industry. As the Olympics project showed, we can and do undertake major projects without fatalities, but 45 fatalities a year in the sector is too many and too high a price to pay.

I am grateful to the noble Lord, Lord Freud, for agreeing to take this short debate at unreasonably short notice, which is entirely my fault. I want to use the opportunity to invite him to respond to a couple of points raised by the Secondary Legislation Scrutiny Committee, which I think will be helpful in getting the message out about the changes that are being made.

I understand that the HSE policy objectives with these regulations are, according to its own documentation, to:

“Maintain or improve worker protection … Simplify the regulatory package … Improve health and safety standards on small construction sites … Discourage bureaucracy … Meet better regulation principles”.

Of course, we support all those laudable objectives.

My first point relates to the inclusion from 6 April of all domestic construction within the scope of the CDM regulations. These are negative regulations, which stem from powers in the 1992 EU directive. The Secondary Legislation Scrutiny Committee notes that the 2015 regulations remove the exemption previously given under the 2007 regulations to domestic home owners—what the committee calls “domestic clients”. The point is made that the way in which the regulations are framed and the Explanatory Memorandum rather conceal the fact that it is slightly unusual to make this major change, involving quite a large number of people across the country—who are going to be brought for the first time into a regulatory structure which, after all, has criminal penalties when things go wrong—through the negative procedure, which means that of course Parliament has no opportunity directly to discuss it, other than through this sort of format. The noble Lord may feel that I am being unnecessarily bureaucratic in that—perish the thought—but I wonder whether he might reflect on the possibility that a change of this order might better have been done either by primary legislation or through an affirmative resolution, which would have given us a chance to discuss it.

In some sense, there is no need to panic. However, I left in my house this morning two tradesmen—who amazingly turned up on time—doing some work; one a joiner and one a plumber. Long may they continue to work there and I hope that they are still there when I get back. The point I make is that I left them without any requirement to enforce any form of regulatory environment because my house, being a domestic premise, is excluded from the arrangements. However, it occurred to me as I left that, after 6 April, the situation will have changed.

Will the situation have changed or will it not? I think that it will have changed. Persons who are currently excluded under the regulations will be included; for example, all householders and anybody involving themselves with domestic work on their premises. The reason it may not have an impact, as I am sure the Minister will come on to, is that the approach taken by the HSE in dealing with the very large number of additional persons concerned with the CDM regulations is that they will be deemed to have had a process undertaken under which the responsibilities that they would have accepted under the regulations have been deemed to have been passed to the contractor. Whether the contractor knows that or not is another matter. The issue—one should be quite open about this—is that the requirements on the client which apply in commercial situations are mainly ones of organisation, notification and information, and therefore are not onerous. It would be, in ordinary parlance, quite acceptable to expect that a competent contractor would understand the issues that are raised by taking on a domestic contract and would be expected to undertake the deemed responsibilities that are going across. We arrive, as the Secondary Legislation Scrutiny Committee says, in a not unreasonable place.

I have a slight worry, however, and wonder whether the Minister might respond to this. Whereas before, 23 million or so households were excluded, they are now included, and I am not quite sure why that has happened and would be grateful if he could explain why we should not be concerned about that.

The second point I want to raise is a sector-specific concern. The Minister will be aware of the considerable concerns expressed by the creative industries and the entertainment sector. The argument is made that the creative industries engage in the construction of temporary demountable structures—for ease, I will call them TDS—which are a small but integrated part of their normal production processes and mainly involve the building of theatre and TV or film sets and the erection of marquee structures and stands within conference facilities. It is well understood within the sector that the construction of a new studio or a permanent production facility falls within the directive and should therefore be considered within the CDM 2015 regulations. However, the sector does not apply the CDM regulations to smaller scale, very temporary works and relies on a well understood risk management process and procedures that are deemed proportionate and suitable to manage the risks arising from these activities. The sector argues that it has a good safety track record and good risk management processes in place. The point at issue is that the HSE, on reviewing the situation, has decided that the CDM regulations must be applied to the construction of all temporary dismountable structures, regardless of size, scope or scale. The HSE has argued that it has no discretion on this because the UK has obligations under the EU directive. That directive is the 1992 EU directive and has not changed, so why is this happening? It would be interesting if the Minister could explain why there has been an alteration in this.

I would like to end by saying that the Minister is, I think, aware that the sector has been in quite detailed correspondence and meetings with the HSE. Indeed, I have a copy of a letter, dated 19 March, from the chairman to Pact, one of the leading bodies in the sector, acting on behalf of many of the companies involved. In the letter, the chairman says that she understands the sector’s concerns and the strength of feeling that underpins them—she certainly would not be able to miss it because there has been quite vigorous correspondence, I understand. She goes on to say, and this is the point that I want the Minister to respond to, that she shares the sector’s,

“unease about how this Directive, which fits well with mainstream construction work, is interpreted by those for whom construction work is only a small and occasional part of their business”.

In other words, she seems to be saying that she rather agrees with the sector that maybe it is not proportionate to require the CDM regulations in their full force to be applied to temporary structures, particularly film sets and the like.

We are in a bit of an odd situation here. On the one hand, the HSE is certain that it has no discretion and that the regulations have to be applied. On the other hand, it says that it sympathises with those who are concerned about having to implement the full process. They cannot both be right, so I hope that the Minister will give his interpretation. We have uncertainty looming on 6 April. Uncertainty is clearly not good for safety, and it would be great if the Minister could make a statement which reassured all the sectors concerned. I beg to move.

[The Lord Bishop of Chester]

My Lords, I have just one brief question for the Minister on the regulations. Paragraph 20 of the impact assessment refers to financial impact. It states that the deemed approach—which is much the better one, I am sure—will cost £1.3 million to homeowners and £4.6 million to contractors. All my experience is that costs to contractors get handed on to the people for whom they are providing their services, so how do we know that the £4.6 million will not simply be handed on to the homeowners to whom the services are being provided? How can one make that distinction?

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I thank the noble Lord, Lord Stevenson, for raising this issue and giving me the opportunity to reassure him and others on both the key points that he raises, which are the implications for domestic owners and for the entertainment industry. In particular, I reassure his plumber and joiner that their responsibilities in practice will not change as a result of the introduction of the regulations.

Since their first implementation in 1994, the Construction (Design and Management) Regulations—let us shorten them to CDM—have facilitated widespread culture change, improved ownership of risk, and a reduction in fatal and major incidence rates by two-thirds. That is a good news story in everyone’s book, and I welcome the chance to spell that out.

The CDM 2015 regulations are reformed and simplified. They retain technical standards to be achieved on sites, enable reduction in industry bureaucracy and improved compliance in small businesses, and address two areas of underimplementation of the temporary or mobile construction sites directive. Overall, the regulations are estimated to generate net savings to business of £121 million over 10 years. CDM 2015 is thus a significant enabler of growth in an industry employing more than 2 million people.

Despite the numerous benefits that the revision brings, the Government recognise that some businesses have raised concerns arising from the consequences of implementing certain requirements of the directive. The Government had no realistic option other than to implement these measures to comply with our European obligations and avoid the consequences of failing properly to transpose the directive, but we have done so in a way that minimises overheads, and at the same time have taken the opportunity to make the significant reforms to the regulations that I mentioned.

Those concerns relate to lower thresholds for health and safety co-ordinator appointments and written health and safety plans, and in application to domestic clients for the first time. The regulations have always applied to construction work wherever it is undertaken and whatever its scale, complexity and risk. Some stakeholders in the entertainment industry have been particularly exercised that unduly burdensome administrative requirements will now arise for minor construction work that is part of their day-to-day business.

The Government and HSE are aware that there is a sometimes a tendency in parts of the entertainment sector for overcompliance with health and safety requirements. Indeed, the HSE’s Myth Busters panel has dealt with a number of cases from the entertainment sector where a disproportionate approach or decision has been made. The guidance supporting the CDM regulations 2015 stresses the need for a proportionate and practical approach to the management of risk, and this of course is the Government’s goal, too. The industry needs to respond appropriately, and I am encouraged that the HSE is fully engaged with entertainment industry stakeholders to produce sector-specific guidance. This will help the industry to understand how its current management arrangements can be applied to comply with the CDM regulations 2015, and avoid overcomplicating matters which could incur unnecessary cost.

The right reverend Prelate the Bishop of Chester raised issues on costs added to homeowners. Clearly, in the end the costs will be added to homeowners—that is how it works. Contractors do work for people and add on the costs but those costs are extraordinarily small in an economy of—what are we, £1.5 trillion? Costs of £4.6 million are extremely small, particularly compared with the costs that homeowners would otherwise have had if they were not able to deem the issue down to the contractor, which is what this structure does.

To pick up the point of the noble Lord, Lord Stevenson, on the way in which this legislation was introduced through the negative resolution procedure, all health and safety legislation is made in this way. As I have explained, this change to the domestic client provisions was required to comply with EU law obligations and, as I say, that is the way that we always do these changes in HSE.

I think that I have dealt with all the questions raised. Let me thank the noble Lord again because I hope that I have provided reassurance all around that this provision is proportionate, saves money and makes sure that we are actually complying with our obligations.

Architecture and the Built Environment

Lord Bishop of Chester Excerpts

Monday 28th July 2014 Lords Chamber

[The Lord Bishop of Chester]

My Lords, reference to the Tower of Babel earlier stimulated me to speak in the gap, and I believe that there is time to do so. Skyscrapers are quite ambiguous—they work in some places but not in others. Why does the Shard work but the Cheesegrater look completely out of place? Maybe that is just my own subjective judgment. Why do some cities that have no need of skyscrapers feel they want them? Some cities in Australia that have all the space they could possibly want still have an instinct to build skyscrapers. It indicates how important the environment is for us. We see no skyscrapers in Paris or Rome. The urban planners there do not allow them.

Buildings have a huge impact on us. We are very conscious in the church that we are responsible for nearly half the great listed buildings in the country. As the noble Lord, Lord Cormack, said, they have an impact on the spirit. Over the years I have had a lot to do with architects in connection with these buildings. I have always thought that the architectural profession in our country is to some extent the poor relation to other professions. A huge amount of work goes into training an architect, but they are not valued, as was mentioned earlier. There is a role for more proactive planning and involvement of architects but I would think it a danger if we thought that all the creativity will be decided in advance. We need a combination of planning and allowing initiative.

I sometimes think that in this country our whole planning regime is too constricted. We need only look at the modern housing that has been built in the last 20 years. I fear that we have the slums of the future. Houses are squashed together because of rules on density that were introduced. They are often on three floors so it is very difficult to put in stair lifts, and so forth. They have very small gardens. Is this really the environment in which people will want to live in the future? Buildings affect the spirit and a planning that involves architects who have a real sensitivity for space and place is important. Alongside that, we should ask people what environment they want to live in rather than decreeing it through some over-rigid planning regimes.

I read the summary of the report this afternoon. It is very important and I hope that the dignity of the architectural profession will be enhanced in the years to come.

Welfare: Cost of Family Breakdown

Lord Bishop of Chester Excerpts

Tuesday 4th March 2014 Lords Chamber

Asked by

[The Lord Bishop of Chester]

To ask Her Majesty’s Government what is their estimate of the cost of family and relationship breakdown to the welfare budget.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

My Lords, I am unable to give an official figure. A number of organisations have produced estimates—for example, the Relationships Foundation, at £45 billion-odd—but there is no consensus. The social security spend on lone parents and collecting child maintenance is just under £9 billion, but we must acknowledge that there are wider societal costs. Government have an important role to play in supporting families and working to ensure stable futures for children.

[The Lord Bishop of Chester]

My Lords, if the figure of £45 billion or £46 billion given by the Relationships Foundation is even remotely accurate, that illustrates the cost of family and relational breakdown, which cashes out at about £1,500 each year for each taxpayer in our country. What more do the Government propose to do to support and strengthen family life and relationships in our country, which must somewhere include supporting the institution of marriage?

[Lord Freud]

My Lords, the Government place the importance of sustaining relationships and families high up on their agenda and have a number of programmes to encourage that, which include extending childcare, tax-free childcare, and flexible working for both parents. We have worked on support for relationships and for parenting and have introduced a marriage tax break. We are looking at this whole area in our family stability review, which will be published later this year.

Pensions Bill

Lord Bishop of Chester Excerpts

Monday 20th January 2014 Grand Committee

[The Lord Bishop of Chester]

My Lords, I warmly support both these approaches. Although they are contrasting—the noble Lord, Lord Lawson, emphasises transparency while the other approach offers appropriate consumer protection through some degree of regulation—I do not think that they are incompatible with each other.

In approaching this matter I follow what the noble Lord, Lord Bates, said in response to an earlier amendment: the overall aim is to engage people so that they save for their retirement. As I said earlier in the passage of the Bill, the lack of provision in retirement for future generations is a time bomb. The Bill, which in general I warmly support, attempts to address that.

The sheer complexity of this area is a problem, as we have discovered in this Committee. If we find this issue complex, how does a member of the public find it when they are making a decision about whether to put additional contributions into their scheme? The money-purchase schemes that are now predominant will work only if people add contributions of their own and do not just rely on the employer contribution. I think that we need transparency in this area—not only the details set out by the noble Lord, Lord Lawson, but an overall figure of costs bringing together all the different costs discovered by the Which? report. Transparency over overall costs is necessary or people will feel disengaged.

One of the problems in our society is disengagement with politics in general, partly caused by the sheer amount of legislation turned out by Parliament. No one really understands what is going on and so people disengage from it. With all the jargon in the investment industry, not least in relation to pensions—terms such as “bid/offer”, “revenue splits” and so on—the average person in the street simply would not know what is being referred to. We need an overall figure that helps people to understand how much of the money that they are investing is actually invested, and investment returns, in a way that is transparent and where the consumer is generally protected. A few years ago, stakeholder pensions were an attempt to achieve this, but I am not sure what happened to them. As far as I can see, these amendments are entirely consonant with the broad push of Schedule 17. I conclude my remarks.

--- Later in debate ---

[The Lord Bishop of Chester]

I am not used to being interrupted in my perorations, but I was coming to an end. Schedule 17 says that the Government,

“may impose duties on the trustees or managers of a relevant scheme”.

These amendments spell out what those duties might be, in the interests of transparency, with a view to try to encourage people to invest in these products with some certainty as to how much of their money is going to be invested. I hope that the Government will look sympathetically on the issues that have been raised.

[Lord German (LD)]

My Lords, I am grateful to the noble Lords, Lord Browne and Lord Lawson, for raising these issues, because they allow us to examine the approaches which might be taken in the regulations which may follow and to ask the Government to describe which of these approaches, or what combination of these approaches, they might take. It is quite clear, in my view, that there are two separate approaches: one based on regulation and the other based on openness, transparency and disclosure. There is no reason why you cannot have some of one and some of the other; where the balance is drawn is a matter for debate and discussion. Ultimately, this matter goes to the heart of the success of our pensions industry for savers. The saver must have trust in a system which has a long tail behind it to understand that his or her money is being invested wisely and will return on that investment to provide a pension.

Auto-enrolment will, in the long run, be a success only if the schemes into which people are enrolled are well run and invest people’s savings responsibly. This is particularly important in DC schemes because, in the end in those schemes, the saver bears the investment risk of that complex decision process, which is more often than not made entirely without the saver’s knowledge or input. I was very interested in the chain described by the noble Lord, Lord Lawson, which stretched from Manchester to Monte Carlo. I dare say that if you started to plan these chains out around the world, you would probably find that these decisions were taken in all sorts of places and the connections very wide. That helps demonstrate the length of the chain in investment decisions, particularly if you start with the saver.

Of course, auto-enrolled savers do not choose their own pension provider. Poor pension companies might not become immediately evident to the saver. The best governance of the system would ensure robust oversight of savers’ interests and, most importantly, open communication with savers. It is not always obvious that those in the investment chain place the obligation to protect the best interests of savers at the heart of their decisions, particularly if they are in Monte Carlo. Fundamentally, that means improving transparency and promoting the disclosure of clear and relevant information to savers, as well as ways in which savers can easily find out information about their own savings.

I hope that the Government will tell us a little bit today about how they propose to deal with these very important issues and which approaches they intend to take that might guide the legislation that is to follow in regulations. Could my noble friend say something about how they intend to make the application of the UK stewardship code applicable to all pension schemes into which people are auto-enrolled?

--- Later in debate ---

[Lord Bates]

Okay, I have the right answer now: £20,000 is needed for flexible draw-down but not for capped draw-down or trivial commutation of benefits. There are different elements of it. My point, from which I have probably strayed into a trap—I should have stuck to the script—was that there is a range of choices, not simply the annuity rate which people face. That is why it is vital that all members engage early. That is the reason for the wake-up programme which is now being organised, to encourage people to engage with what they should be considering later on.

Also, making brokers the first port of call for all would create a captive market for one part of the industry, without effectively adding to consumer protections. Another risk to consumers is that they could fail to engage with options other than annuities that are more appropriate to them.

The noble Lord’s amendment suggests that a brokerage service would have to provide information on alternative at-retirement services, but it has to be recognised that brokers are not impartial. They make their money if the member buys an annuity, but not if they choose to draw down or defer, or to commute. While it is right that schemes should play a central role in informing consumers of their options, we would be wary of making this part of the qualifying criteria for automatic enrolment. The duty to enrol into a qualifying scheme does, of course, fall on the employer, and so to require them to take this step would be an unwelcome, additional burden.

I make it clear that we are committed to ensuring that consumers have the information they need to make good choices and that the annuities market works effectively for consumers and so, in this respect, we welcome the debate. The noble Lord, Lord Browne, has perhaps chided my honourable friend Steve Webb for raising this matter on annuities but, in many ways, he was doing just what the noble Lord is doing: saying that this is an area which needs to be discussed and debated. In many ways, this debate enables us to do that, but so do the reviews which are taking place and to which I have alluded in my response. I trust that, as part of that, the noble Lord will feel able to withdraw his amendment.

[The Lord Bishop of Chester]

My Lords, briefly, I listened to the Minister with great interest. I regard the amendment as important because, in a sense, the proof of the pudding is in the eating; it is when you are taking the benefits of the saving.

The Minister’s reply, it seems to me, says that in addition to all the complexities which the noble Lord, Lord Browne, set out, there is actually a whole load of other complexities about whether you should be having an annuity at all. My question is simply as follows. Until now, when we have often had final-salary schemes around, these decisions have been largely managed. However, we are increasingly moving into a position where most people will be on money-purchase schemes, and this will become normal; we will have to engage with these issues. Given the complexities which the Minister has so helpfully set out, is the Government’s view that the obligation to work this out is on the consumer—the person taking the pension—with some information provided somewhere, or is the obligation on the pension provider to provide information which covers all these options? Where does the responsibility primarily lie to advise the person at the point of retirement? I thought it was not quite clear enough as to where that lies in what the Minister said.

[Baroness Hollis of Heigham]

I will ask another question associated directly with that. To what extent does the Minister expect the Money Advice Service to take on some of this responsibility, given the slightly bumpy ride it has had so far? Or do the Government—and here I declare an interest—expect an organisation like the Pensions Advisory Service to take on some of this responsibility? It has to be free, independent, impartial and professional. Those are the only two organisations of which I am aware which might fit that role at the moment.

Pensions Bill

Lord Bishop of Chester Excerpts

Wednesday 8th January 2014 Grand Committee

[Baroness Hollis of Heigham]

It does not matter. I am grateful for the additional statistics on this issue provided by the Bill team. That has been very helpful. In 2004, the previous Administration sought to encourage people to stay in work longer by offering attractive arrangements if they deferred taking the state pension for several years, or at least for more than one year. About 9% of pensioners did so—1.2 million people—three-quarters of them women, usually because they were younger than their husbands and worked longer hours, particularly given that their retirement age was earlier than the husbands’ and this way they could retire together. These arrangements had several advantages: they kept people in work for longer; they allowed husband and wife to synchronise their retirement if they wished; and they offered them a higher pension income once retired, with interest rates—until this Bill comes into effect—of 10.4% per annum, or to roll it up into a lump sum, where instead they received the basic rate plus 2%.

The vast majority of the 1.2 million pensioners who deferred their state pension for more than a year chose income. Some 60,000 preferred to take a lump sum. I do not know how many of those are women, but my hunch would be, again, a very high proportion. If by any chance the Minister had that figure, that would be helpful. Some 60,000 preferred to take the lump sum, which on average was £13,700 for GB residents—a considerable sum.

The Bill proposes to remove the option of a lump sum so that in future, if you defer taking your state pension, all that you can do is add to your income. Why? I have to say that the arguments offered by the Minister in the other place did not persuade me. He said that, first, it was a less financially attractive proposition to take the lump sum than to take the money as increased pension, even at the proposed new rate for income deferral of 5.2%. Secondly, drawing their pension rather than deferring it and then putting it into a building society account would give much the same return. And, thirdly, by removing choice, you are giving people something more valuable—that magic word “simplicity”, as though a lump sum payment is really hard to understand.

I think this approach is incomplete at best and, in policy terms, wrong in terms of what we know about pensions income and capital. Why would one want a lump sum when the alternative of income is, in terms of return, more financially attractive, which I accept that it is? The answer, it seems to me, is simple. It may be the only opportunity a couple or an individual—but more likely a couple—get of acquiring any capital before they go into full-time retirement. If they have an occupational pension, they are likely to get perhaps the capital of a 25% tax free lump sum. If they are reliant only on the state pension, they have no such access to capital at all. The problem for pensioners now, and future pensioners, as they face their retirement, is not so much lack of income, thanks not only to what the previous Administration did but what the current Administration are doing, on which I congratulate them—it is above all lack of capital. I do not think that the Government or the Minister in the other place gave the impression of understanding that that is the problem coming up in the lift.

Let us remind ourselves that in 1997 the percentage of pensioners below 60% of median income was 41%. As of now, it is about 14%. Pensioners, as we know, have rightly done relatively well in terms of income. As my noble friend teased earlier on, we now know that the current Administration propose to continue this until 2020, should they return to office. As a result, pensions have already risen three times faster than wages and pensioners will continue to do well. The big problem for pensioners is not income but the lack of savings or capital. That has, if anything, worsened over the past decade: 21% of all pensioners have no savings at all; 37% have less than £3,000—not enough to pay for one funeral, let alone two—and 50% of all pensioners have less than £8,000, which would just about cover two funerals with a bit left over for the high tea. For those able to defer, bringing in an extra £13,000 to £14,000 of capital is magic. It transforms their situation. I repeat that the struggle for pensioners is not so much lack of income, which was how it was treated down the other end, as lack of capital, and the Government are going to close down one of the easiest and simplest routes to acquiring it.

A couple, for example, could make the entirely sensible judgment that one of them—possibly him—adds their deferred pension to their pension income and, as a result, his state pension increases. The other—it may well be her—brings in the lump sum to build some savings for a rainy day or replace the car, build the conservatory, help their grandson with tuition fees at university, and, above all, in time, to help pay for social care and eventually, perhaps, to fund funerals. Yes, they could save that sum out of income instead, as Steve Webb suggested. However, as with auto-enrolment, where we are structuring choice, ring-fencing it into a deferred lump sum may be the most helpful way to build those savings. To assume that people will voluntarily put their income aside into a building society is the exact opposite of what we are doing with auto-enrolment, where we know that we need the nudge theory of inertia to get people to save, not to leave it to a voluntary choice. They can, of course, do as the Minister suggests, but if that is the case, and if we can rely on them to do that, frankly, we do not need auto-enrolment at all because people will look after themselves with private occupational provision. But, of course, we know that they do not and that is why we are introducing auto-enrolment. The same cast of mind applies to deferred state pensions, I suggest.

In my experience, pensioners seldom spend their full income. They cope. Whatever the level of pension—whether it is £60, £80 or £100—pensioners spend £1 or so underneath their ceiling. Indeed, as a result of past and current government policies, including the triple lock, the income from the new state pension for future pensioners will be increasingly adequate. However, what pensioners are badly short of is capital, and that capital, as a proportion of their future, is reducing. They have little or no reserve cushion and the Government are taking away the easiest way in which pensioners can choose to build that up.

Why are we taking this choice away? No one has to opt for a lump sum but, as long as it is an informed choice, it may be absolutely the right choice for them. Government should not second-guess them and deny them a choice. It is very silly. Contrary to what the Government believe, we do not know what is best for all pensioners in all situations and we should allow them to make the decisions they want and which work best for them. In moving this amendment, I hope very much that the Government reconsider their position on this as they are failing to see the issues that are going to affect pensioners in the future, particularly as we move into the field of social care and the need for individual pensioners to pay for it. I beg to move.

[The Lord Bishop of Chester]

My Lords, I support this amendment. The background seems to be one of a general lack of provision for pensions for older people in the future. There is a major shortage of pension savings, and my impression is that that is getting worse rather than better, for all sorts of reasons. My experience of young people—I use the word “young” to include people in their 30s—is that they do not think about pensions as much as they should. Anything we can do to encourage people to take a long-term view and think for the future must be a good thing. The principle, therefore, of deferring taking the state pension until you really need it seems a healthy principle to encourage in our circumstances. My anxiety is that, in the future, a lot of people are going to be very short of money when they are older. It seems fundamentally right to do anything we can to encourage that culture of not taking the pension until you need to.

If you are going to encourage people to do that, maintaining the flexibility so that they can either take additional income when they do take their pension, or a lump sum in lieu of the money they save, seems to be a sensible inducement. If you just look on it as an issue of encouraging savings, one of the lessons of the last decade or so is that we need to encourage the thought of saving in our culture. It may be just as easy to take the pension and put it into a building society account or whatever but why not offer the option of the Government allowing the lump sum to be taken? Another reason for supporting the amendment is the principle that if it ain’t broke, why do you need to change it? What is wrong with the current arrangements that means that we want to change them?

My third reason for supporting this is that, in principle, I think there should be parity with how we relate the state provision of pensions to private provision, which normally allows the option of taking part of the pension as a lump sum. That is an important principle of flexibility and, indeed, defined benefit schemes now typically make that option more available than they used to. There seems to be a simplicity—to use the Minister’s point—in treating state pension and private pension arrangements in broadly similar ways.

[Lord Hutton of Furness (Lab)]

My Lords, I do not want to detain the Committee for any length of time here but my noble friend has raised a very important issue of principle that the Committee should consider very carefully. I hope that at some later point the whole House might as well.

In relation to the Amendment 31A moved by my noble friend Lord Browne, the Minister, quite sensibly, prayed in aid the existing rules and said that the provisions simply reflected that. In essence, that was his argument for continuity. Here, he is proposing something quite different—he is proposing to take away a freedom and a choice that have existed for some considerable time from people who want to defer claiming their state pension. We should not do that unless there is a compelling reason for so doing. The principle of choice for people retiring should be preserved. They might want to, for whatever reason—and maybe the Minister would not agree with the reason—take their deferred pension as a lump sum. I cannot think of any good reason why we should not allow them to continue to do that. It cannot have any overall implications for public spending so there cannot be any cost to the Treasury.

--- Later in debate ---

[Lord Freud]

That is the standard position whereby, if you are in arrears for a year, you can take the provision at the end of that year and that is treated as arrears of pension rather than a lump sum. Some noble Lords are very concerned about the issue of the nest egg. If we drop the distinction between arrears and lump sum, there is a nest egg opportunity in that £7,500, which may go a long way to satisfy the concerns that have been expressed with some vigour this afternoon.

[The Lord Bishop of Chester]

My Lords, I invite the Minister to comment on the more general point as we are getting into specifics, which I recognise are complicated. Do the Government agree that it would basically be a good thing if deferral was encouraged? Is it the Government’s position that in the great scheme of things and income in old age it would be a good thing if the principle of people being encouraged to defer was affirmed?

[Lord Freud]

I am not sure that parliamentary privilege covers me for giving financial advice. Perhaps the noble Baroness, Lady Drake, could advise me on what I should say on that matter.

--- Later in debate ---

[Lord Freud]

I must thank the noble Baroness for keeping me out of jail. Many a seminar that I have been to would have told me that. It is a matter for people to judge.

[The Lord Bishop of Chester]

If I may have another little bite of the cherry, I do not wish the Minister or the Government to give any specific advice to any specific person. I am inviting a general comment upon the desirability of people looking to the longer term, given the parameters around old age and pensions in our society. If in some general terms that is a desirable object, without making any comment about specific cases, surely the more flexibility we build in, the better.

[Lord Freud]

I actually have very strong views on this matter but I think they are personal. I am going to utterly resist putting them on the record in this Committee but I would enjoy having tea with the right reverend Prelate and giving vent to my personal views at full force.

[Baroness Drake]

Could we come too?

[The Lord Bishop of Chester]

My Lords, very few people on the Committee will know that the last time that I had tea with the Minister was in his rooms in Merton College when we were both first years in 1969, so it would be good to have another cup. Given the nature of this discussion, I wonder whether the Minister could at least agree to take the issue away and think about it. There are issues here that may need a bit of teasing out other than in the circumstances of this Committee.

[Lord Freud]

I have to accept that the right reverend Prelate is on a very important and interesting point, on which one could write many a financial essay. I will go back and think about whether there is any generalised approach that we as a Government should take on this. I will resist any indulgence in doing so off the top of my head, though, because this is a huge and difficult issue.

Housing: Under-occupancy Charge

Lord Bishop of Chester Excerpts

Monday 21st October 2013 Lords Chamber

[Lord Freud]

My Lords, my noble friend is right. Our very early soundings are that some local authorities are not spending all their DHP. Clearly, we provide that funding in order that vulnerable people are protected through this transition period and we have been monitoring that very closely.

[The Lord Bishop of Ripon and Leeds]

My Lords, is the Minister aware of the evidence that people who are leaving accommodation to avoid the under-occupancy charge are being rehoused in private accommodation at greater cost? What steps are being taken to monitor this?

[Lord Freud]

My Lords, as I have just pointed out, we are undertaking an elaborate set of research programmes to understand this. If a family moves into private accommodation, which is more expensive, it does not necessarily mean that there is a net cost, because it frees up larger accommodation in the social rented sector to which a family can move from the expensive private sector.

Universal Credit, Personal Independence Payment, Jobseeker’s Allowance and Employment and Support Allowance (Claims and Payments) Regulations 2013

Lord Bishop of Chester Excerpts

Monday 21st October 2013 Lords Chamber

Finally, I reiterate the point about the rollout of universal credit. This is something in which we have all invested our support because it is a crucial change to the way in which we make more efficient and effective ways to support people. It is concerning that we are having to extend that rollout. May we have the latest information on how that will be projected into the future and when we can expect the regime to be fully in place?

[The Lord Bishop of Ripon and Leeds]

My Lords, I am very grateful to the noble Lord, Lord McKenzie, for bringing this matter to our attention again, and for the three powerful speeches which we have already heard. First, I want to emphasise my concern about that part of the Motion which speaks of the way in which universal credit awards paid in respect of children will not necessarily by default be paid to the main carer of the children and the disproportionate impact this will have on women. Through my work, I have become increasingly aware of the mother’s crucial role in the sorts of situations that we have been discussing over the past few minutes and indeed over the past few years. The mother needs to have proper control of the money which is coming for the benefit of the family and in respect of her children. I hope that in our discussions and the way in which the regulations and the whole universal credit system are worked out we shall be able to pay attention to the mother’s role, which in many circumstances is crucial when the whole family is under severe stress.

Secondly, I share the concerns which have been expressed by all previous speakers about the impact of the monthly payments system. It is already beginning to make it more difficult to control the finances of the family and, as the noble Lord, Lord McKenzie, said, there is the danger of opening the way for payday lenders. We are already seeing considerable growth in the work of payday lenders. That in itself is not yet due to universal credit but my fear is that universal credit will become a factor as the monthly payment system comes into being.

I wanted to take up one particular detail of the regulations which fits in with the monthly payment concerns but is also specific. Regulation 26 of Part 2 speaks of the back-dating of universal credit and limiting that back-dating to some very narrow categories. This contrasts with the present situation for tax credits, which can be back-dated for up to 31 days so long as the claimant meets the rule of entitlement throughout that period.

I raise that question for two reasons. One is that many people will become eligible for universal credit at the birth of a new child—a particularly difficult moment to be making your claim. Secondly, the regulations acknowledge the possibility of the failure of systems. However, it will be hard to prove that failure if a claim is delayed or not made until three or four weeks after the claimant is entitled to make it, especially if that reason involves the inability of the claimant to access the system, whether due to a fault in the system itself or due to the claimant’s online skills.

What I would like the Minister to say to us is that one-month’s back-dating would be legitimate without a particular reason needed for it. That would reduce bureaucracy and would reduce the complexity of making claims. If he cannot do that, then at least there should be a back-dating for families who have become eligible for universal credit because they have had a new child and are busy with the celebration of its birth. That should happen without the requirement for “medical evidence” to demonstrate the incapacity to claim. Not getting online at the point when you are having a child seems to me to be a self-evident reason for delay in making your claim. There are far more important things to be doing on the day of the birth of your child, are there not?

Can the Minister clarify the circumstances under which a claimant is considered unable to make a claim online as a result of system failure, and whether that can include not just a direct failure of the system but also the difficulties that individuals are facing and will face in getting online to make a claim? I hope that the Minister will be able to give some reassurance so that people do not miss out on credits to which they are entitled by the regulations.

Marriage (Same Sex Couples) Bill

Lord Bishop of Chester Excerpts

Wednesday 10th July 2013 Lords Chamber

[Lord Alli]

I understand that. However, the noble and learned Lord is trying to break the notion of civil partnership as we understand it. I say to him that the issue of the churches being able to bless civil partnerships should be taken on board when considering the labour laws.

[The Lord Bishop of Chester]

My Lords, the noble Lord, Lord Alli, raises the standard of debate on this issue. We on these Benches have enjoyed his contributions and deeply appreciate his commitment and share many of the things that he wants to achieve. However, just as he sometimes disagrees with me, I am going to have to slightly disagree with him over this. I do not know what the Church of England will do about services of dedication or blessing in relation to same-sex marriages. It is not entirely clear to me that extending civil partnerships to other dependent relationships might not actually increase the likelihood that the church would be able to move in this area. It is arguable both ways. Indeed, if you have two people whose lives are intertwined in a sort of covenantal way, as the amendment of the noble Baroness, Lady Deech, indicates, they may well want some sort of blessing or dedication upon that interdependence, without the sexual relationship.

The issue for me is partly that when civil partnerships were introduced, they mirrored marriage too much. Many people on these Benches were in favour of legal arrangements to support and protect in every way people whose lives were interdependent. We had a problem precisely because it was all narrowed down too much, to same-sex couples. There has, however, always been support from these Benches for a proper legal arrangement to support people whose lives, for one reason and another, are interdependent.

Moving on, we have not heard the word “justice” mentioned much, although the noble Lord referred to the situation as being “unfair”. There is a deep issue of justice here, across our society, which, given what the equal marriage Bill is trying to achieve we ought at least to acknowledge.

Another issue has not been mentioned at all so far. In our society we now have an increasingly diverse range of family structures and patterns. Allowing some form of legal support between people who find themselves not in marriage, and not wanting to be civil partners in that sense, would have a deep civilising effect upon society. We have a lot of single parents now. Maybe a single mother is bringing up one child, and that child may not marry. They may find themselves sharing a home as they have done since that child was a baby. We have increasingly diverse patterns of family life. Something ought to be there to provide support and, indeed, blessing in every sense for those who find themselves in that situation.

I hope that the review of civil partnerships will be able to look at the issues which are specified in the amendment. Certainly, I, in those terms, would be delighted to support the amendment.

--- Later in debate ---

[Baroness Kennedy of The Shaws]

The point of my opposing the suggestion that that should even be considered in the review is that we know that it will continue the debate that has taken place in this House over the past weeks, and because it is intended to undermine the Bill, the purpose of which is to end discrimination against gay people. The Bill is about civil rights. The right reverend Prelate on the Bishops’ Benches suggested that this would all be about recognising important relationships that are somehow on a par with a couple who choose to be with each other because of their sexual attraction to each other, their love for each other and their desire to stay together. I cannot imagine that the church would think that that was a good thing.

I cannot imagine it because we know that this is about choosing a partner whom you intend to be with. It is about the yearning among human beings to choose someone as your love, to be with your beloved and to share your life with them. That is very different from the relationships between brothers and sisters, and fathers and daughters. We should think of the implications of a civil partnership being extended to a father and daughter. Are we going to put an age limit on it? Is the father going to be able to enter into such a civil partnership with his 22 year-old daughter, or his 18 year-old daughter? We have to be conscious that this is yet another way of trying to scupper the Bill. The intention is to continue the debate and the argument long after the Bill has passed. Therefore, I urge everybody who cares about making sure that there is an end to discrimination towards gay people in this nation to vote with those who are against the amendment.

[The Lord Bishop of Chester]

My Lords, I did not want to speak again, but given the way in which—

[Baroness Stowell of Beeston]

As my noble friend pointed out earlier in the day, we are on Report, so the only basis on which we are allowed to speak twice is if we are asking a specific question of the person who is speaking. The right reverend Prelate has already spoken.

[The Lord Bishop of Chester]

The guideline is that a Member is allowed to explain himself on an important point. That is what the guidelines say, and that is all I wish to do. I want to make it clear that I do not wish to extend civil partnerships as they are now to the sorts of relationships that are in the amendment. Clearly, if family relationships and carer relationships came into civil partnership, it could change the nature of civil partnership. I understand that that would be within the terms of the review.

[Baroness Kennedy of The Shaws]

I will respond very briefly to the right reverend Prelate. Over the weeks I have listened to people of strong religious faith saying that extending marriage would undermine a social institution. What could undermine the social institution of committed sexual relationships more than the idea of fathers and daughters entering into a contractual partnership? If we care about social institutions, we should recognise that that would be a good way of undermining them.

Marriage (Same Sex Couples) Bill

Lord Bishop of Chester Excerpts

Monday 8th July 2013 Lords Chamber

[Lord Harrison]

My Lords, as mover of the original amendment in Committee, along with my noble friend Lady Massey, I rise not to detain the House but, first, to thank the noble Baroness, Lady Meacher, for so cogently presenting the case this evening. For all those who spoke in Committee, I think we have universal support. I reserve my particular thanks for the Minister for working so hard behind the scenes to bring to fruition today the amendment that she moved this evening. I thank her on behalf of all humanists.

[The Lord Bishop of Chester]

My Lords, I add a few words from my own perspective and possibly from the perspective of these Benches, which may not be exactly the same. The Church of England was caught on the hop slightly by this issue in the Commons. A lot of time was given to an amendment on this matter, whereas all our energies had been around the quadruple lock and associated issues.

A couple of years ago, in your Lordships’ House, I made clear my own commitment in principle to humanist marriage. It might have been one of my periodic jousts with the noble Lord, Lord Alli. I cannot remember the precise details of it, but I made it clear. The honourable Member for the Rhondda immediately said that I was completely in favour of his amendment in the House of Commons. This then goaded the Second Church Estates Commissioner to state that the Church of England was actually opposed to humanist marriage. It was all rather on the hop. In Committee, the right reverend Prelate the Bishop of Guildford said here in your Lordships’ House that he was, in principle, open to this development. Speaking for myself—I cannot speak more widely than that—it would make eminent sense for this consultation to take place.

There has been quite a lot of discussion of the Bill as if the objection to same-sex marriage was because of a particular religious understanding of marriage. I understand why that perception has been raised. However, it is important to say that, in Christian terms, marriage is not a possession of the church. It has always been seen as part of the creative order and for the good of creation as a whole. That has always been the position of the churches. I see no reason at all why the consultation should not lead to permission for humanist marriage and indeed for other belief organisations that meet the necessary criteria for doing this.

The Government’s amendment is important because it allows for time for consultation. One of our complaints has been that this process has been rather telescoped in relation to same-sex marriage. We need time to think through some of the implications. I said at Second Reading—I will not repeat my points—that many of the issues before us would be resolved if we went towards a more continental separation of a civil preliminary and then had other organisations celebrate marriage in this dual way. That would iron out a lot of our problems. That may not be part of the consultation, but at least it would give us time to think through some of the issues.

I would rather regret it if humanists were forced to register all sorts of premises, which is one solution that may arise because at the moment we have a premises-based system in England and Wales. In Scotland, there is a celebrant-based process. That needs some careful thought because there may be some hybrid. However, I welcome the consultation. Certainly for my own part, and I believe more generally from these Benches, I very much welcome the Government’s amendment because it gives time for a proper process of consultation.

[Lord Cormack]

As a lay man who is glad and proud to be a Christian, I should like to associate myself with most if not all of the right reverend Prelate’s remarks. I am not sure about those that touched on establishment because I am a strong believer in the established church and I wish it to retain its position as far as marriage is concerned. However, this is clearly a fair and sensible amendment and I am glad to give it my support.

--- Later in debate ---

That is the object of the Bill. If the Government reject the amendment on grounds of drafting, I ask them to put the drafting right. If they reject it on the grounds that it is unnecessary, I honestly think that I have demonstrated that it is not. If there is no difference between a civil partnership and a marriage, what on earth is the Bill for? I wait with bated breath. I trust that your Lordships will be friendly to this because it is a friendly offer.

[The Lord Bishop of Chester]

My Lords, I support the principle of the amendment. No doubt the detailed wording will be subject to criticism.

When civil partnerships were introduced, there was always an ambiguity. It was stated very strongly that it is not marriage and yet every provision on the statute book relating to marriage was trawled and reproduced in the Civil Partnership Act, which is a great big thick Act as a result. That ambiguity is what we are confronting at this point. Is a couple in a civil partnership almost essentially married? The language of marriage has been used in popular terms for civil partnerships in recent years—I acknowledge that—but we must remember that when the civil partnership legislation was put in place the view expressed was, “This is not marriage”.

Marriage is a commitment of two people to each other. That is the centre of the same-sex marriage Bill, but marriage is also a public and social institution. I am not suggesting that people around the Chamber who are in favour of the Bill deny that at all. As we go forward, measures that strengthen that sense of the social institution of marriage will be good for marriage in every sense. Vows that are essentially strong promises made between the couple are a vital part of creating that institution.

I have never been to a civil partnership; I have never been to a civil wedding. I have led a sheltered life, no doubt. However, the making of vows to one another in a personal way in the presence of representatives of the wider community is an essential part of the dynamic. When regulations for converting civil partnerships to marriage are drawn up, while we should not make any onerous requirements, I hope that we take matters seriously and reflect the social institution that must be at the heart of marriage.

[Lord Alli]

I understand the motivation behind the noble Lord, Lord Elton’s amendment, and I did not view it with huge suspicion. I understand that a conversion of civil partnership to a marriage should be marked by a ceremony to convey the solemnity of the occasion. I completely accept that. In other circumstances, I would be with him on this amendment, but I am afraid that the past is the past and the future is the future. We have to start the journey from where we are. Many same-sex couples will have already had big celebrations when they entered their civil partnerships. They will have had family and friends witness their civil partnerships, and they will have made vows and speeches. For them, I suspect, it was the nearest they probably thought they would get to a marriage and they would not wish to repeat that whole process. There will be others who simply went to the registry office and had a small civil partnership in the expectation that one day they would be able to marry. For them, this would provide the opportunity to recommit their vows in the way in which the noble Lord, Lord Elton, wants them to do. There may indeed be others who wish to wait until the right reverend Prelate, and his colleagues, sanction same-sex marriage, or even permit civil partnerships in their churches, mosques and temples.

I am afraid that I do not think it is up to us to place an unnecessary hurdle in the conversion of civil partnerships in the way in which the noble Lord suggests. There is a further point. We should remember that many of those ceremonies are for the young, and we should also respect the financial burdens that another ceremony might place on those who are just starting off in life. While it is a lovely idea, I do not believe that it is necessary or that in the end will help those in civil partnerships who want to convert their civil partnerships into weddings. I am sorry, as I wanted to agree with the noble Lord, Lord Elton, and I am sure that we will find a way of doing so in future. However, I cannot support the amendment, although I commend the sentiments behind it.