Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014

Lord Freud Excerpts

Thursday 3rd April 2014 Lords Chamber

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

My Lords, I will not test the patience of the House by going over ground that we have covered many times in recent weeks and months. On the general nature of the policy, one issue that is worth my dealing with is the recent BBC estimate that 6% of those affected by the spare room subsidy, or 30,000 people, moved during the first 11 months of its operation. Noble Lords opposite may see this as a sign of failure, but we do not. It is an example of the behavioural response that this policy is successfully driving. We have seen further evidence of this again today in the announcement by Housing Partners Ltd that in the past year it has increased by a quarter the number of successful mutual exchanges for social tenants. Its experience also shows that there is a steady supply of smaller one and two-bedroom properties available, which is at odds with some of the claims made today from the Benches opposite.

There are another couple of points on our general position that I have not dealt with before. One, raised by the noble Baroness, Lady Sherlock, and amplified by the noble Lords, Lord Taylor and Lord Low, was about money-saving, so let me be precise on that. We know, and have stated in our impact assessment, that some people could downsize, some could move into the private rented sector and others could get discretionary housing payments. However, savings remain estimated at £500 million per annum and this did not change in the Budget, so the party opposite will not be able to argue—unless it can persuade the OBR—that this policy should be got rid of on the basis of cost because that is not what the OBR has calculated.

On the point about kinship carers, they will be treated as foster parents where they do not have a child placed with them or the child is not treated as occupying their home. However, where a carer is responsible for a child and the child is therefore treated as a member of the claimant’s household, they will be treated the same as other claimants under the size criteria.

I shall restrict my remaining comments to the Motion and the amendment to the regulations, explaining first what these regulations do. The instrument amends paragraph 4 of Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. These provide transitional protection for certain housing benefit claimants. The amendment removes the transitional protection from social sector tenants. This means that their housing benefit will be determined using Regulation 13 of the Housing Benefit Regulations 2006, which sets out the maximum rent in the social sector.

This transitional protection was provided for private sector tenants when local reference rent rules were introduced in 1996. These restricted the amount of housing benefit that could be awarded through private landlords charging high rents. Currently, fewer than 40,000 private sector claimants, mostly pensioners, are still covered by this protection. In answer to my noble friend Lord German’s question, it was never required by, or intended for, people living in social housing. Transitional support has already been provided for those affected by the removal of the spare room subsidy through discretionary housing payments. Unlike the loophole provision, this is available to those who claimed benefit after 1996.

Let me go through some of the specific issues raised about the loophole. My noble friend Lord German asked about numbers. The cost of the loophole will be so small that it will not impact on our forecast of housing benefit expenditure of £23.9 billion for the year. The claims that our estimates of the size are wrong are based on FoI figures that are at best speculative and at worst misleading. The claimants have 13 months to make their claims.

Regarding who will be expected to meet the costs—a question raised by the noble Baroness, Lady Nye, and my noble friend Lord German—these will be met by the DWP through the normal subsidy arrangements. At the moment, we have £2 million of additional administrative funding to distribute.

My noble friend asked whether those covered by the loophole who received discretionary housing payments would have to repay it. The answer is no; the award was made when there was a need and reimbursing the housing benefit would not change that.

Let me pick up the point on inheritance, which we dealt with at some length during that recent Urgent Question from the noble Baroness, Lady Sherlock. When a claimant dies, anyone living in a household who both takes over the tenancy and is awarded housing benefit within four weeks of the death can inherit the loophole protection. That was a process we already allowed for when we were looking at our costs. As my noble friend inquired, we are working on a major review of this for next year as well as an interim review, and I think I will stick with my “later this year” rather than “soon” at this point.

Turning now to what the Motion itself says, the noble Baroness’s Motion makes a series of unsubstantiated assertions. First, it states that the regulations cannot be amended without the precise number affected by the loophole being known. That simply is not true. It is not about numbers; it is a matter of principle. Parliament never intended that this transitional protection should apply to this group of claimants or to this policy. The regulations have been amended to restore that original policy intention.

Secondly, there is an accusation in the Motion of government confusion and mishandling. There is no confusion. As soon as the loophole was identified, we were clear that we would close it and that is exactly what we have done. Guidance was issued to local authorities. Arrangements were put in place to ensure that central Government met the costs of the loophole—both the benefit costs and the additional administrative costs.

The final claim in the Motion from the noble Baroness is that there is a disproportionate impact from the regulations on the most vulnerable. It is the loophole as it stood that was arbitrary and unfair. This transitional protection was never intended for this policy. As a result, it has protected a random group of claimants without a meaningful test or reason.

The removal of the spare room subsidy has now been operating for a year and it is working. The latest data show that the numbers facing a reduction in their housing benefit dropped by around 50,000 between May and November last year. Discretionary housing payments are funded and working: only £13 million of the £20 million reserve funding that we set aside has been allocated to local authorities. Revised DHP guidance was published yesterday, promoting longer-term awards where appropriate. The Court of Appeal has confirmed that the Government are meeting their human rights obligations and public sector equality duty. This year, we are saving about £490 million a year from the housing benefit bill.

In conclusion, the policy is working. The loophole has been closed. Arrangements are in place to support local authorities and those affected by the loophole. Finally, claimants have up to 13 months to make a claim that the loophole applied to them. For these reasons, this Motion should be withdrawn.

[Baroness Sherlock]

My Lords, I am in the unusual position of saying that I am not sure whether I agree with a single word that the Minister has just said. It was in fact the second most disappointing speech of the day.

The Minister has put forward three broad arguments. First, that it does not matter how many people are affected. But it matters to me, it matters to them and it matters to the local authorities, which have to deal with the mess that the Government have created.

Secondly, there is the question of savings. I noticed that the Minister failed to answer my question on what the net savings would be. Clearly, these savings are vanishing before us like a will o’ the wisp. The Minister also failed to explain how the savings remain the same, despite the Government having had to increase the money allocated for discretionary housing payments from £20 million to £190 million. The Government seem determined to ignore the costs and problems created for councils and other housing providers. If there is any doubt about that, let us remember that the National Audit Office said that the Government’s costings do not take account of,

“the full scale of potential impacts”,

and do not include the additional costs faced by local authorities. We have heard so much about those costs today from my noble friend Lord Beecham and the noble Lord, Lord Taylor.

There is then the question of overcrowding. As my noble friend Lady Hollis pointed out, this argument is frankly specious. There are not enough smaller homes to move into, a point underscored by my noble friend Lord Beecham, and where they are they are in the wrong places. They are not in the places where people are being asked to move. People have not moved because there is nowhere to move to. During the passage of the Welfare Reform Act, the noble Lord, Lord Best, and my noble friend Lady Hollis put an amendment to this House which said that the bedroom tax should not apply if someone could not be offered somewhere else to move to. The noble Lord, Lord Taylor, had the courage to vote for that amendment at the time and I commend him for his consistency. Other noble Lords did not and the government Benches voted it down. Let us not therefore pretend that what the Government are really worried about is overcrowded houses. They had every opportunity to correct that and they failed it.

We have heard so many powerful speeches today about the misery and desperation caused by this policy. If the noble Lord, Lord Freud, really believes that this policy is a success, I would hate to see what his failures look like. If he feels that he is getting the right behavioural effects, what are they? Are they in the family described by the noble Lord, Lord Touhig, who are not eating? Are they the families who are going without or giving up bedrooms needed by carers or disabled people? No: the handful of people who have moved are doing so out of desperation, not because they were responding to a behavioural stimulus.

I found the speech from the noble Lord, Lord German, very disappointing. I was delighted to read the reports of Tim Farron saying that the Liberal Democrats were going to withdraw their support for the bedroom tax.

Housing: Inherited Social Housing Tenancies

Lord Freud Excerpts

Monday 24th March 2014 Lords Chamber

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

My Lords, with the leave of the House, I shall now repeat a Statement made by my right honourable friend the Minister of State for Employment, Esther McVey, in the House of Commons earlier today. The Statement is as follows.

“Mr Speaker, the Urgent Question called by the honourable Member for Rhondda is not a new one but part of the 1996 provisions which impacted on the spare room subsidy legislation in 2012 and one that we have debated in the House before.

Upon investigation early this year, it would appear that some claimants may have been unintentionally protected from the effects of the removal of the spare room subsidy, including those who have been in receipt of continuous housing benefit since 1 January 1996 and have lived in the same property since that date, unless the move was due to a natural disaster, fire, flood and so on. A grace period of four weeks—or 52 weeks if the claimant or their partner is a welfare-to-work beneficiary—applies. For example, housing benefit would be classed as continuous if the break is less than four weeks, or 52 weeks for welfare-to-work recipients. Where a claimant dies, the partner or an adult child can inherit the protection, but it must be in respect of the same dwelling and they must qualify for housing benefit.

The issue about inheritance of housing benefit has always been part of our understanding about what the loophole meant. This was also part of the guidance issued to local authorities some weeks ago. The loophole derives from a very narrow but complex set of regulations dating back to 1 January 1996, when local reference rent rules were introduced.

In January 1996, transitional protection was offered to existing claimants, which could, and still can, be inherited if the claimant dies; for example, by a partner, or, where there is no partner, by adult children, and the protection only applied in respect of the same dwelling. Therefore, partners or adult children must continue to live in that property and only if they qualified for housing benefit. This protection ends if housing benefit ceased or they moved address.

With hindsight, the protection offered by the regulations could have been time-limited, but it was not; it has lain dormant for 17 years. The effect is that it has now unintentionally been applied to a group of people who were not financially affected by the local reference rent rules. In fact, in the previous debate, my honourable friend for Hitchin and Harpenden, who was Secretary of State at the time, said clearly that this exemption was never intended to be the case. This matter was fully debated and voted upon on 26 February 2014 to approve amendment regulations to close the loophole. Clearly, the House has already spoken on this issue.

As guidance was sent out a few weeks ago, I would suggest that this is not the appropriate time or place to discuss any questions local authorities may have, and that there are clear channels for them to do so. However, our experience with local authorities at the moment is that they know what they need to do, and are just getting on with it”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for that Answer—I think. Obviously, this House has not discussed the regulations concerned, although a regret Motion is coming up. I want to ask the Minister two questions, the first on numbers. He has told the House previously that the number of people affected by this loophole in the bedroom tax is small—the DWP says 3,000 to 5,000—but figures obtained under FOI by Labour show that, with more than a third of councils still to reply, already well over 23,000 people are likely to be affected. The new guidance, to which I think the Minister referred, may increase the number still further. Can he therefore tell the House precisely how many people will be affected by the loophole?

Secondly, I want to put to the noble Lord the following statement:

“I worry about what Labour chooses to call the bedroom tax, because so often what is a spare room is in fact a vital part of looking after an elderly person. It enables their relatives to come, it enables carers to be there … I think we introduced that rather without thinking it through very well, and I think that’s costing us”.

It is costing all of us, in discretionary housing payments, in rent arrears and in human misery. Surely the Minister agrees.

[Lord Freud]

My Lords, as I have said in this House previously, the numbers involved with this particular loophole are small. This particular inheritance issue does not change our estimates. A figure of around 5,000 has been attributed to the DWP in defining “small”.

On the FOI figures, it is worth making the point that local authorities are now getting to grips with the actual numbers. The Birmingham figures were quoted quite extensively. It was reported that Birmingham alone had 2,100 cases, the significance being that they make up a large proportion of the figure that we have been looking at. More recently, Birmingham put out a clarification, saying:

“We haven’t finished identifying them at Birmingham so can’t give you an exact number, but the number of possible cases has dropped substantially below the 2100 that was reported in the papers.”

So we can see that some of the FOI responses to which the noble Baroness referred—if that was an example—may be clarified.

We have a process for supporting local authorities and people to make the adjustments through discretionary housing payments, which we have increased in recent years from £20 million to £180 million in the current year—indeed, the signs are that that figure will be underspent. The number of people being affected is coming down reasonably rapidly; it is now below half a million.

[Lord German (LD)]

Can my noble friend tell the House roughly how many people in this country are living in overcrowded conditions or are on housing waiting lists? Can he also put on the record the number of new social houses being built by this Government and compare that with the number built by the previous Government, because, clearly, housebuilding and social housebuilding are crucial?

[Lord Freud]

My noble friend draws the comparison between the amount of capacity that we have in this country and the demand for it. The number of people on the waiting list is 1.8 million, with the figure for overcrowding running at 250,000 on some estimates and 400,000 on others.

When this Government took office, we were left with the lowest level of peacetime housebuilding that this country had seen since the 1920s. Since then we have delivered nearly 400,000 new homes and put in very substantial investment. There is £11.5 billion public investment to boost housing supply over the four years of the spending review, and this is meant to lever in more private investment. The volume of housebuilding is now picking up. The starts in the quarter to December were up 20% compared with the same period last year.

[Baroness Hollis of Heigham (Lab)]

My Lords, every stat I have heard from the Government is either misleading or wrong. The bedroom tax will not help the waiting list because they too want smaller accommodation. It will not much help overcrowding as most families who are overcrowded do not live in the places where there are underoccupied houses. It will not make government savings. As we see, the GHP figures keep going up but the savings stay the same—false. Had the Government followed their own precedent of 1996 of transitional protection for the private rented sector, or had they followed what we did in 2008 by protecting existing tenants in the private rented sector, we would not have the calamity, misery and distress facing so many vulnerable and disabled people in this country. It is shameful.

[Lord Freud]

My Lords, the figures show that there is a reasonable balance around the county; there is not one place with overcrowding and another with waiting lists. We are staying with the estimate of roughly £500 million a year in savings. On transitional protection, we have given even more notice on the changes coming through than we gave on the LHA changes at the emergency Budget of 2010.

[Baroness Quin (Lab)]

My Lords, will the Minister tell us when the review on the bedroom tax will be published? In the mean time, will he undertake to meet many of the people who have been personally affected by this tax, and whose lives have been turned upside down as a result?

[Lord Freud]

We are conducting a review on the spare room subsidy; those figures will be published in the final review next year, and we have an interim publication later this year. I meet a lot of people all the time on this issue—in particular, I am seeing a large number of local authorities and holding discussions with them.

[Lord Campbell-Savours (Lab)]

The Minister says that he is seeing a large number of local authorities. Is he actually meeting people who have been affected by this tax? If he has, where has he met them—in what part of the country, in what boroughs? Perhaps he might tell us when. Also, he refers to 400,000 houses built since the last election in 2010—he mentioned 400,000 in his brief, which he read to the House. How many of those were started under the previous Labour Government? It was the Minister who was playing politics with the stats.

[Lord Freud]

I do not have to hand the number of starts. All I can say is that the number of completions in that last year—the handover year—was the lowest level of building in peacetime since the 1920s, which is a pretty shameful performance from a Government who saw a very long boom. I would like to be able to answer the question, but if I am not allowed to I will not.

[Lord Martin of Springburn (CB)]

There are communities where, unfortunately, the housing estates are known as hard-to-let properties. If the noble Lord, through legislation, is forcing families out of those houses, it is not necessarily the case that those who are on the waiting list will take up those houses. There is a danger that the people who are fighting hard to keep up the morale of the community in hard-to-let housing areas will see empty property vandalised, will despair and will leave the housing estate where they have worked so hard to keep up appearances.

[Lord Freud]

Local authorities clearly have a duty here and interest in their local areas to manage them. We are making sure that they have those resources in discretionary housing payments. Indeed, I have been very keen to spend the extra £20 million of funding on discretionary housing payments. It is a balance of maintaining the housing stock and the people in it with the right people in it. There are always isolated cases where the management of particular estates is tough; those are issues for the local areas.

Employment

Lord Freud Excerpts

Thursday 20th March 2014 Lords Chamber

Moved by

[Lord Freud]

That this House takes note of the level of employment in the United Kingdom.

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

My Lords, it is appropriate that we should be debating the labour market today after yesterday’s figures showing record numbers of people in work and unemployment down again.

I believe that we will benefit from having a frank and open discussion. We have seen exceptional progress in recent months, but we know there is more to do and we must not be complacent. Indeed, the performance of the labour market in the recent recession can be seen as something of a puzzle. Previous recessions saw dramatic falls in employment. Yet despite this being, on some estimates, a deeper recession than in the 1930s, we did not see the number of people in work fall anything like as much as the experts predicted. GDP fell by more than 7% but the number of people in work fell by only one-third of that. I have yet to see a full and convincing explanation for why employment did not see the fall expected. There probably is no single reason. Active labour market policies and the flexibility of our modern labour market, as well as the bitter experience of those who went through past recessions, may all have played a part.

The resilience of the labour market in the recession has been matched by robust improvement now that we are getting the economy back on track. There are 1.3 million more people in work since the election, and more than 30 million people are working—more than ever before. In fact, if you exclude full-time students, the employment rate is now back to the peak that we saw before the last recession, and we have had further good news, with the female employment rate now at an all-time high.

I am often struck by what appears to be a widening gap between the impression that people have about the labour market and the reality of these figures. Many predicted that the fall in public sector jobs would not be matched by an increase in the private sector. They were right, but not in the way they expected. The rise in private sector jobs has not just matched the fall in the public sector but has far exceeded it—up nearly 1.7 million, with total employment up by 1.3 million as a result. Recently, there were reports that most of the growth in private sector jobs since 2010 has been in London. When I asked my officials whether that was true, I received a surprising response. Using already published and easily accessible data from the Office for National Statistics, the true position is almost the complete opposite. Nearly 80% of the rise in private sector employment has been outside London.

We are regularly challenged on the rise in long-term unemployment, particularly among young people. Long-term unemployment is a scourge, and through the Work Programme and the Youth Contract we have put in place just about the most comprehensive response that has ever been seen. Yet what those who criticise our record fail to mention is that the previous Government hid long-term unemployment by artificially removing people from the claimant count. They shifted people about to become long-term unemployed on to training allowances or into short-term job schemes, taking them off benefit in the process. We have put a stop to those methods, so now the figures are a true count of the number of long-term claimants. What really worries me is that the Opposition’s proposed jobs guarantee would result in the exact same problem, with long-term unemployment misrepresented as people are shifted off the claimant count.

People are rightly concerned about the effect the recession has had on young people. However, if we are to tackle youth unemployment, we need to have an understanding of where the real problem lies. When people talk about a “lost generation” of 1 million young unemployed, they are including those in full-time education, who make up nearly a third of the total. In fact, one young person in every 10 has left full-time education and is unemployed, and this proportion is the same for all under-25s and for those from an ethnic minority. This means that youth unemployment remains significantly lower than after past recessions: 9% of young people have left full-time study and are looking for work compared with 12% in 1993 and 14% in 1984. When it comes to NEETs—young people not in any form of education or work—we are not where we want to be, with a higher NEET rate than in many other EU countries. This is mostly due to lower participation in education in the UK. Although the NEET figures are now improving, this is something that the Government will continue to address. The other side of the picture shows that, among 20 to 24 year-olds who have left education, our employment rate outperforms the US and the EU average, and that, of the large EU economies, we are second only to Germany.

I should like to move on to some of policy responses we are making to the main labour market challenges that this country has been facing. It is unheard of for inactivity to fall in a recession, yet that is what has happened. Excluding students, inactivity is currently the lowest on record. The number of people claiming inactivity benefits has fallen by nearly 350,000 since 2010. People are better off in work and we did not want to repeat past mistakes by allowing people to drift into inactivity. Maintaining an active labour market policy ensures that people do not become detached from the world of work and are well placed to benefit as the economy picks up. We are changing the culture. People who can work are expected to work and, with our support, employment is rising. But challenges remain. Although falling, there is still a working age inactivity rate of more than 22%.

We have been successful in getting lone parents into work and have a record lone-parent employment rate. Before November 2008, lone parents could claim income support until their youngest child reached 16 years of age. This child age threshold has been progressively reduced and now stands at age five, and we are introducing additional measures best to support parents to prepare for work when their child is old enough. As noble Lords will be aware, the Prime Minister and Deputy Prime Minister announced further measures to help hard-working families. These included bringing forward a childcare package that will provide tax-free childcare for almost 2 million families. This will help parents go out to work and provide more security for their families.

Our reforms to the benefit system are a key part of the Government’s long-term economic plan to build a stronger economy and secure a better future. Much of our effort has been focused on improving the support available for people who are on sickness benefit but able to work to enter or rejoin the labour market. We are not just writing off people on long-term sickness benefits, as happened in the past. We believe it is only fair that we look at whether people can do some kind of work with the right support—support offered by Jobcentre Plus, specialist provision or through the Work Programme. We need to ensure that the longer-term unemployed do not drift away from the labour market. That is what happened in past recessions, with worrying consequences. It is because we are not going to allow that to happen again that we are investing in the Work Programme. That is expected to provide personalised support to more than 2 million claimants over the life of the contract.

The Work Programme is the largest employment support programme that Britain has ever seen, with far more financial risks sitting with the provider. Payment is by results, with higher payments for getting those with the biggest barriers to employment into sustained work. The Work Programme is better designed than previous employment programmes and is supporting more people into sustained work. Industry figures show that the Work Programme has already helped nearly 500,000 people into work and, of these, more than 250,000 have escaped long-term unemployment and got into lasting jobs. While all contracts are on track to hit their contractual JSA targets, there is significant variation in performance. The worst performing providers are being tightly managed to ensure that they up their game. One contract has been terminated. For the first time, a government employment programme is harnessing the disciplines of the marketplace so that only those providers who succeed are retained to help claimants into work.

Of course, young people still face many challenges, particularly in making that important transition from school to work. Youth unemployment is falling but we need to continue working to bring it down in the aftermath of the recession. We need to ensure that young people have the experience and skills that they need to succeed in the labour market. The Government are raising the participation age so that all young people are now required to continue in education and training beyond the age of 16. We are also implementing wide-ranging policies to improve standards in schools, reform post-16 academic and vocational education and ensure that apprenticeships continue to meet the needs of a modern labour market. We have a wide range of programmes, including those funded by the European Social Fund, and the Youth Contract, to support young people who are NEET to return to full-time education, training or employment.

In a recent report commissioned by Tesco, 60% to 70% of young people said that they had concerns about lack of experience. Many said that they wanted more help from business and struggled with CV writing. That is why it is so important that, through Jobcentre Plus, young unemployed people are given the opportunity to be referred to a careers interview with the National Careers Service. They can also work with local employers who offer work experience and pre-employment training to give them the chance to build up their CVs and job skills.

Apprenticeships play a vital role for many young people, helping them at the outset of their working lives to progress their careers, and the Government offer a £1,500 grant to smaller businesses to take on their first apprentices. Yesterday, the Chancellor announced an extension of this scheme. The Government will now be making more than 100,000 additional incentive payments for employers to take on young apprentices aged 16 to 24, providing a major boost to their job prospects. Traineeships are a new programme to help young people aged 16 to 23 to develop the skills and vital experience that they need to secure apprenticeships and other sustainable jobs.

This Government continue to support economic growth across the regions and help to create the conditions for businesses to feel more confident in hiring more people. Private sector employment has been rising across the UK, and we need to ensure that this continues. To satisfy the recruitment needs of employers, Jobcentre Plus and Work Programme providers use their local labour market knowledge and expertise to improve claimants’ skills and readiness for work. Local enterprise partnerships, in England, provide the vision, knowledge and strategic leadership needed to drive private sector growth and job creation in their areas. Through our strong local offer, Jobcentre Plus district managers work with local enterprise partnerships to ensure that their strategic economic plans make the important link between growth, unemployment and social exclusion. In Humber, Jobcentre Plus and the local enterprise partnership have mapped local and national employment support services and identified where they need locally to plug the gaps.

Developing City Deals has provided a blueprint for working together and co-designing local initiatives. Cities are being given greater freedom to invest in growth and enterprise and being given greater powers, including the power to boost skills and jobs. In Leeds, DWP supports the city region to achieve its aim of being a NEET-free city. Its plan is to enable small businesses to provide apprenticeships when they would not normally have the capacity to do so. The aim is to deliver 680 apprenticeships over three years.

My 2007 independent report on the future of welfare, Reducing Dependency, Increasing Opportunity: Options for the Future of Welfare to Work, came on the back of a long-term aspiration to secure an employment rate of 80%. On the basis that the ONS now defines it—looking at those aged between 16 and 64 rather than between 16 and 59 for women—today this would be equivalent to an employment rate of around 78%. Clearly, a lot has happened since then, not least the deepest recession in nearly a century. Our first aim must be to regain the ground lost in the recession, which would mean a rate of 73% against the current level of 72.3%. It is interesting to speculate that, because most students are outside the labour market, rising participation in education makes it harder to achieve higher levels of employment. But, of course, it is no bad thing to see more young people in education. So, adjusted for that higher participation in education, that 80% employment rate probably translates today into a level some three percentage points higher than the 72.3% that we are currently looking at.

[Lord Giddens (Lab)]

My Lords—

[Lord Bates (Con)]

My Lords, I understand that, by convention, the mover of the Motion is given the opportunity to be uninterrupted and then can respond to questions in the wind-up.

[Lord Freud]

My Lords, that is three percentage points higher than the figure of 72.3% that was reported yesterday. That gives a feeling of the factors that we have been looking at over the past seven or eight years. As I said, that extremely challenging outcome implies that any employment strategy would need to target all of the inactive groups. Noble Lords will be pleased to see that, since 2007, the number of people on inactivity benefits has fallen by around half a million. The economy is now recovering and creating new jobs, making this a once-in-a-generation opportunity to help those who have been trapped on welfare to return to work. It is in that light that I would ask noble Lords to view the Government’s welfare reform ambitions. I beg to move.

--- Later in debate ---

[Lord Freud]

My Lords, I have really enjoyed the debate. I thank noble Lords for the energy and effort they have put into some of these complicated issues. I particularly enjoyed the noble Baroness, Lady Sherlock, stealing the “Get Britain Working” slogan that we used in the last election, but that is a compliment. I enjoyed the first two sentences from the noble Baroness, Lady Donaghy, but the next sentence, about where my personal support lay in the Chamber, was incredibly dangerous so I did not like that. The rest of her speech I did not like at all.

To start dealing with the issues, at the core of what the noble Baroness, Lady Donaghy, and the noble Lord, Lord Haskel, said—the real attack on this—is, “Forget the quantity, feel the quality”. However, according to the figures, in the past three years, three-quarters of a million of the extra employment has come from managerial, professional and associate professional occupations. That is 70% of the rise in overall employment. The noble Lord, Lord Shipley, made a point about the importance of having quality jobs that come from the efforts on exports, having the most competitive export finance in the country and reducing the costs of energy. Those are the fundamentals and they create real business and quality jobs.

The noble Lord, Lord Monks, spoke about different parts of the country and the north-west in particular. Clearly, the Budget announcements work in that respect: the business energy package, for instance, helps firms in the north-west, including 27 CHP plants, while the SME package helps 481,000 SMEs in the north-west. The noble Lord, Lord Haskel, cavilled at the numbers going up, pointing out that the population is also going up, but the underlying employment rate is moving up to 72.3%. The most interesting thing is that, if the people in full-time education are taken out of the figures, we are now back in rate terms to the peak point that we reached before the recession. According to the projections of the OBR, we are now moving into new ground, at least on the quantity side.

I tried to go for the fundamentals in my speech and I think noble Lords might find it interesting to read it; it can be hard to take something in when you are listening to it. I was trying to say what was really happening. Productivity is really very interesting and I do not think we understand exactly what has been happening in our labour market in the past five years. We had a crash, the like of which we had not had in a very long time, so there are peculiar things happening. One of the things that was happening with productivity was that, clearly because of the impact on the financial sector, there were some odd moves. There are now forecasts from the OBR that productivity will pick up. Clearly, one of things that will happen as a direct result of that is that wages and take-home pay will start to move in the right direction.

The noble Lord, Lord Giddens, made a lot of interesting points, but one simple one was on income inequality. There is a figure, but the figure is the lowest now—as the Chancellor said—for 28 years. More fascinating were his technological issues and what we need to do about those if they happen. Clearly, as the noble Lord, Lord Bilimoria, said, there have been predictions like this regularly. The noble Lord, Lord Giddens, said that we were now really at a discontinuity, so perhaps it would be different this time. I think that was—in the jargon—such a shocking or disruptive event, however, that it is hard for us to expect the Government to sit down and be able to plan it through. When we see it really start to happen, we will have to work on it. We are getting jobs up, so we have not seen it yet. To respond to him, we have got, in universal credit, something effectively close to a negative income tax. We can actually make the adjustments. On the point made by the noble Lord, Lord Giddens, on the displacement of wealth, the interesting study that came out a few months ago from UBS showed that we were the only major country where the impact of the crash was seen evenly right the way along the income spectrum.

On the gender pay gap, there is a long-term downward trend for full-time employees, falling from 17.4% in 1997 down to 10% and it narrowed in all regions between 1997 and 2013. The noble Lord, Lord Monks, said youth unemployment was too high. On the other hand, it has been falling: the JSA claimant count has now been falling every month for 21 months: it peaked at 480,000 in December 2011 and is now at 295,000, so it is going in the right direction.

Turning to apprenticeships, the point raised was that demand exceeded expectations. That is why the Budget announced funding for more. As for the concerns of the noble Baroness, Lady Donaghy, about their low quality, all first-time apprenticeships will now involve a job and low-quality provision has been ended. My noble friends Lord Shipley and Lord Holmes said that we needed to ensure that youngsters were better equipped with career guidance by schools. Ofsted is also concerned that schools need to meet their duty better and it will give higher priority to guidance in school inspections. The effect of the increase in participation is coming through now and the latest data indicate that the proportion participating is still going up.

The noble Lord, Lord Haskel, simply said that I was wrong on the job guarantee, a point echoed by the noble Baroness, Lady Sherlock. I happen to have a pretty long memory about these schemes from various places. I can, and will, have a go at what is really wrong with that scheme, but I am more concerned about the people who are unemployed. We can help them—we know who they are—but we do not know about the youngsters who just disengage, who are called “inactive”. We all find it very difficult to do anything about that. It is probably where the most serious problem is, because if they are coming into the jobcentre, you have got them and can put them on any scheme you like. If they are not engaging, however, you have a problem.

The guarantee scheme—the one we have got hold of—is fine: it is very like the Future Jobs Fund, which I never liked at the time; instead, we put in work experience. The outcomes of work experience are virtually the same as those of the Future Jobs Fund and the guarantee strategy, but it costs one-20th, and that is how to waste money. Even then, on the sums that I can see, there is not enough money put aside. We cost this policy from Labour at £2.6 billion every year, and very considerably less has been put aside. I am not going to make the joke much about how often the Labour leadership has spent the bank bonus taxes. It spent them on reversing the VAT increase, it spent them on more capital spending, it spent them on reversing child benefit saving and it spent them on reversing tax credit savings. It says that it is not going to do any of that now—it is going to spend them on this. Let us see how long that lasts.

[Lord Haskel]

We can keep spending the bonuses because the bonuses keep going up.

[Lord Freud]

Not by that much—not by a factor of 30, or whatever it is.

The noble Baroness, Lady Turner, spoke of her concerns about childcare. We have also been concerned about childcare. Clearly, not only will she have seen the announcement yesterday about the money for taxpayers but she will have also spotted that within universal credit the rate will now be 85%. I know that she and a lot of other noble Lords will welcome that.

My noble friend Lord Soley mentioned skills. I am sorry, he is not my noble friend: I quite like the noble Lord, Lord Soley, but cannot call him a noble friend. On skills, our priority must be to get English and maths training first. One of the things we are doing with universal credit is ratcheting up the requirement for getting people to the basic level of digital involvement. We are doing a lot of work currently to work out how to help people to get to that basic level. The noble Lord is looking at a slightly higher level—into coding. That would be something separate.

[Lord Soley]

I understand what the Minister is saying. However, many people who are not good at reading, writing and arithmetic actually have quite good keyboard skills, but that does not get picked up. You can see that with kids. My noble friend on the Front Bench leading for the Opposition referred to ex-prisoners. If you look at their digital skills they are actually very good but they are not targeted in a way that enables them to do jobs.

[Lord Freud]

That is a very good point. I looked a couple of years ago at a scheme that went very specifically for youngsters who had failed in the conventional exams-based syllabus. They were given a chance by various companies to work on computers. Actually, some of them did very well and it was a new recruitment line because they were just tuned that way. There is something very real there that one could probably expand.

My noble friend Lord Shipley—he is indeed my noble friend—raised procurement. That is a matter for the Cabinet Office. I will not predict anything for the next year.

On zero hours, people are more likely to be satisfied than dissatisfied with their hours, mainly because the flexibility suits their current circumstances. While there has been an increase in the estimate, that does not mean there has been a recent increase over that period in the number—as the noble Baroness, Lady Sherlock, would accept. The implication is that, even using the very largest estimate, we are talking about only three in every 100 workers. We are looking currently at making sure that the zero-hours system is appropriate and not abused. That is in hand at BIS.

We accept the point on the enforcement of the minimum wage. Employers who fail to pay can now be publicly named and shamed. That is on top of financial penalties, and civil and criminal proceedings for the most serious offenders. The minimum wage will rise by 3% from October this year to £6.50. That will produce a pay increase for more than 1 million people—the largest cash increase in the minimum wage since 2008.

It is clear, as my noble friend Lord Shipley said, that the Government inherited a very damaged economy, with high levels of unemployment and inactivity. We are now getting back on our feet. The better news on the economy is feeding through to an improving picture in the labour market. As a result, the number of people in work has now exceeded 30 million. We have record numbers of men and women in work and the highest female employment rate on record. As I said earlier, excluding students, we are now at an all-time peak in the employment rate and inactivity is the lowest on record. Given the context of what we have been handling in terms of the recession, that is an extraordinary achievement.

Despite the difficult global economy, over 1.3 million people more now have a job than in 2010—600,000 more than at the peak before the last recession. There are 1.7 million more people working in the private sector. Despite contrary perceptions, the rise in employment—both over the year and since the election—has been dominated by full-time permanent jobs. Things are still looking up. According to the OBR, the economy is expected to grow by 2.7% this year and the number of people in work is expected to increase by 3.3% by 2018. That does not take us quite to the figures I was working with when I wrote my report in 2007, but it does not leave them that far short.

Motion agreed.

Employment: Universal Jobmatch

Lord Freud Excerpts

Wednesday 19th March 2014 Lords Chamber

[Lord Dubs]

To ask Her Majesty’s Government what are their plans for the Universal Jobmatch website.

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

As I stated last week, our plans are to continue to make improvements to the Universal Jobmatch site based on feedback from employers, jobseekers and staff.

[Lord Dubs (Lab)]

My Lords, is the Minister not just a bit embarrassed that the official government job website has about a third of a million bogus jobs on it, such as “MI6 target elimination specialist” or “International courier for CosaNostra Holdings”? If the Government are anxious to tackle fraud, should they not put their house in order immediately?

[Lord Freud]

My Lords, there is a great deal of confusion around this. I am pleased to be able to straighten it out, because there has been a lot of misrepresentation. There is a small amount of fraud on the site, as there is on other sites. It is less than one in 1,000. We clear them off. This is a hugely successful site. It has more than 500,000 employers on it and nearly 6 million job searches a day. It has transformed the service of getting people back into work, which is of course now at record levels.

[Lord German (LD)]

My Lords, despite the extremely good news today of the trend once more being employment up and unemployment down, there will always be a need for a website of this sort which matches the jobseekers with the job vacancies—and not just Mafia couriers. Can my noble friend tell us whether the security issues around this site are the responsibility of the aptly named Monster Worldwide Inc, which runs it on behalf of the Government? Can he also tell us, under his commitment under his department’s privacy policy, what security measures he has taken to avoid people’s personal details being circulated widely to those who should not have them?

[Lord Freud]

My Lords, we take security very seriously. One of the reasons that there is a difference between the standard Monster site and that run by the state is exactly to make sure that there is security in our site. We work closely with Monster on that. People have to be careful with their information on the site, as for anywhere else on the internet. We make sure that there is proper support for people and instruction on how to keep their information safe.

[Baroness Sherlock (Lab)]

My Lords, when I asked a Question on this subject last week, the Minister was very reassuring. He told the House that:

“Universal Jobmatch has revolutionised the service of Jobcentre Plus. It is a transformative service”.—[Official Report, 11/3/14; col. 1673.]

He added that, of 500,000 employers, only 179 had been looked at for breach of conditions. However, this week the Daily Mail reported that, at the beginning of March, 125,000 jobs—a fifth of the total—were taken off the site. The Guardian reported that, in fact, the department was going to scrap the site in 18 months because there were so many problems.

I invite the Minister to reconsider the answer he gave to me then. Did he know then that the Universal Jobmatch website had so many problems? If so, why was he so reassuring? If he did not know, why did he not know?

[Lord Freud]

My Lords, I am pleased to say that I do know and can reconfirm what I said last week; I can actually amplify it. We are currently investigating about 17 sites for potentially being in breach of our terms and conditions. That does not mean that they are fraudulent; it just means that they may have mistakes in them, they may be duplicates, they may be from job boards, or there may not be a contract with the end user. That is what we mean by being not in compliance with our terms and conditions.

Universal Jobmatch is a very successful system. We are working closely with Monster and the contract runs to 2016. To the extent that there may be some misunderstanding and misrepresentation, the phrase “extend a contract” has a precise meaning: that you run a contract to a certain point, and do not go on extending but renew. We have a policy to work closely with Monster right up to 2016.

[Lord Dobbs (Con)]

Will my noble friend clear up some confusion? Every Labour Government there have ever been have promised to reduce unemployment —of course, because they believe in doing it. Yet every Labour Government there have ever been, from Ramsay MacDonald through Clement Attlee—if my noble friend will forgive me—Wilson, Callaghan and of course Blair and Brown, have left office with unemployment higher than when they came in. Does my noble friend think that there is anything on the website that might explain why that is?

[Lord Freud]

My Lords, to run a successful economy you need to make sure that you do not run it into the ground. I am very pleased to say that with today’s figures the employment rate, if you exclude full-time students, is now running at the same high level it peaked at before the crash. Therefore we have managed to put the right structural changes in place to get employment up to as high a level as it has ever been.

[Baroness Lister of Burtersett (Lab)]

My Lords, Stephen O’Donnell, who runs the National Online Recruitment Awards, said:

“I think it’s criminally unfair to sanction jobseekers for not using such a clumsily built website, rife with spammers … identity thieves and anonymous job ads”.

Will the Minister give a firm assurance that no jobseeker will be sanctioned for failing to use that hopeless website?

[Lord Freud]

My Lords, I make absolutely clear that it is not a hopeless website; it has been hugely misrepresented. Noble Lords in this House would not take criticism from a competitor interest quite as seriously as criticism from more disinterested sources. However, I can assure the noble Baroness that to the extent that anyone is sanctioned, that sanction does not stand. At the moment we are down to a vanishingly small number.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014

Lord Freud Excerpts

Tuesday 18th March 2014 Lords Chamber

Moved by

[Lord Freud]

That the draft regulations laid before the House on 3 and 12 February be approved.

Relevant documents: 21st and 22nd Reports from the Joint Committee on Statutory Instruments, considered in Grand Committee on 17 March.

Motions agreed.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014

Lord Freud Excerpts

Monday 17th March 2014 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do consider the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

Motion agreed.

Diffuse Mesothelioma Payment Scheme Regulations 2014

Lord Freud Excerpts

Monday 17th March 2014 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do consider the Diffuse Mesothelioma Payment Scheme Regulations 2014.

Relevant document: 21st Report from the Joint Committee on Statutory Instruments

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

My Lords, I thank all those who worked so closely with me while the Bill was being considered by the House. We had a series of valuable debates and I am indebted to all those who followed and studied the Mesothelioma Act with such great dedication and focus on the detail. It was a collaborative act to get this legislation on to the statute book. Noble Lords will remember that there were quite a few significant adjustments made as a direct result of those debates. I was pleased to receive those ideas and to apply them in real time. Without the efforts of everyone the Act would be in poorer shape. To the extent that I did not do everything that noble Lords asked, I apologise, but I suspect that they all know how these things work.

As Members of the Committee will know, the problem of untraced employers or insurers in mesothelioma cases has for many years left sufferers and their dependants without recourse to the compensation that should be their due. It is a huge step forward that we now have concrete provision for those people who fall foul of the insurance industry’s market failure to keep proper records. The Act finally guarantees that they will be able to access payments that will support them in a most difficult and distressing time. The Mesothelioma Act represents a huge achievement and I hope that noble Lords will share my pride in that achievement.

We are here today to debate the substance of the regulations that dictate how the scheme will be run. I will briefly outline what the regulations set out but, first, I would like to mention the recent announcement that payments have been increased from 75% to 80% of the average civil damages. On 6 March, the DWP announced that payments would move from 75% to 80% and that this was possible because scheme administration costs were now confirmed to be lower than expected. This means that we can afford to pay people more while keeping to a levy of no more than 3% of employers’ liability gross written premium. I hope that noble Lords will welcome this good news.

This announcement posed a slight problem in timing. The draft regulations had already been laid in Parliament, including a payment tariff of 75%. I give my commitment that as soon as these regulations come into force a negative instrument will be laid to amend that tariff. For the purposes of today’s debate, however, I hope we can continue as normal.

The payment tariff is a schedule of these regulations and has no material impact on the substance of the regulations, which deal with how the scheme operates. To withdraw and relay amended draft regulations at this stage would simply rule out the possibility of having the scheme operational by April of this year. I know that noble Lords are sympathetic to the need to get the scheme running as soon as possible and I hope they are assured that our debates will not be affected by the increase in payments. I will of course share with noble Lords a copy of the revised table that we intend to bring forward with the higher tariff.

I come now to the reason why we are here: the regulations. These regulations deal with the duties of the scheme administrator and with the duties of the applicant. They set out details relating to making an application, how that application will be decided on, and the right to ask for a review and a subsequent appeal. They also deal with slightly more specific issues that may arise during the scheme’s running, such as repayments in the case of misrepresentation of information in an application and imposing certain conditions on a payment—for example, requiring it to be put into a trust fund for a person who cannot manage their own financial affairs. I am sure that we will go into much more detail on the key points during our debate but, before that, I hope to clarify a couple of possible questions and mention three points.

First, noble Lords who have kindly commented on draft versions of the regulations will notice that they no longer deal with the £7,000 contribution towards legal fees. I give an assurance that successful applicants will still receive a fixed contribution of £7,000 included in their payment. Following internal legal checks, we have removed mention of the legal fees payment and will instead include these in the regulations that deal with compensation recovery.

Secondly, I wish to mention the date of commencement. Regulation 2 explains that Regulation 7(2)(c) will not come into force at the same time as the other regulations. This is simply because that regulation refers to another enactment—the third parties Act 2010, which has not yet come into force. This does not affect the rest of the regulations or the commencement of the scheme.

Finally, I should like to give a little more detail relating to the chosen scheme administrator. The commercial process to select the administrator was a topic that occupied much debate in this House last summer. I assure noble Lords that a full and open tender process was conducted—indeed, I distinctly remember giving assurances on a number of occasions that that would be the case. Gallagher Bassett won the contract because, of all the bidders, it scored highest against the published commercial criteria. Gallagher Bassett is a claims-handling company well used to delivering government contracts and it has been carrying out personal injury claims-handling on behalf of the MoD for several years. I am confident that it will deliver the high-quality service that this scheme requires, and I am delighted that, as a result of its appointment, we are able to raise scheme payments.

I hope that I have helped a little here with my introduction, and I will endeavour to answer as many questions as I can as we have this debate. Of course, where I cannot do so from the Dispatch Box, I commit to write with a full account. I commend these regulations to the Committee.

[Lord Alton of Liverpool (CB)]

My Lords, the Minister has been generous in thanking Members of the Grand Committee for the work they put in when the 2014 Bill was being considered on the Floor of the House. However, it would be churlish at this juncture if Members of the Grand Committee did not pay tribute to the Minister for the work that he did tirelessly throughout. Although we had our differences on details of the Bill, we all committed to seeing it through its stages here and in the other place because we knew that this legislation was long overdue. It sets in place a scheme that will respond compassionately to people who are given a death sentence when they learn that they have mesothelioma. It is also based on justice, and I know through the contact that I have had with the Minister that he is always keen to see that things are dealt with expeditiously. He deserves warm thanks for the personal efforts that he has made. It is not easy to get legislation through Parliament, and he has done that deftly, while also working with the insurance industry. I think that all of us are sufficiently worldly wise to know that balancing all of those things at once is no mean achievement.

The United Kingdom, as we have heard, has the highest rate of mesothelioma in the world, with a further 60,000 people in the UK predicted to die from this disease in the next 30 years—as the Minister said, more than 2,000 people annually. The need is paramount constantly to urge greater attention to how we assist victims and keep focus on the insurance industry as well as how we better fund and pool research in finding causes and cures for this lethal disease. I was struck by a reply that the Minister gave to me in response to Parliamentary Question HL3144, where he said:

“The statistical model suggests an uncertainty range of 55,000 to 65,000 deaths on that estimate. However, the true uncertainty range may be wider as longer-range predictions are reliant on assumptions about asbestos exposures that cannot currently be fully validated”.—[Official Report, 19/11/13; col. WA194.]

We can add to that the trends in many of the developing BRIC countries, which are going through many of the same experiences that we have gone through, although the figures worldwide are not collected; in answer to another Question that I tabled asking for worldwide statistics, I was told that none were available. Given our own experience as the country with the worst rate of mesothelioma in the world, we should be at the cutting edge or, to mix my metaphors, in the driving seat in insisting that there is a collaborative global approach to this horrendous problem.

The Minister will be aware that I have tabled a Private Member’s Bill, the Mesothelioma (Amendment) Bill, on research. Today gives the Minister the opportunity to say whether the Government intend to facilitate the Bill’s progress and accept the principles that underpin it. The Bill mirrors the all-party amendment defeated here on a whipped vote by a mere seven votes, which was tabled again in the House of Commons by the late Paul Goggins and the Conservative Member of Parliament, Tracey Crouch. On 7 November, the Minister in reply to a Parliamentary Question recognised the importance of research, saying:

“As you are aware there is a cross-Government commitment to support more quality research into mesothelioma. The work that the Department of Health are taking forward on this issue is designed to encourage researchers to pursue projects that will hopefully benefit sufferers of this terrible disease”.—[Official Report, 7/11/13; col. WA69.]

Can we be told today how that work is progressing? Inter alia, I commend to the Minister Early Day Motion 995, moved by Tracey Crouch in another place, which has now been signed by more than 60 Members of the House of Commons. It says:

“That this House notes with concern that mesothelioma is an invasive form of lung cancer caused primarily by prior exposure to asbestos”.

It goes on to give the kind of statistics that I have just given and ends by paying tribute to the,

“great work of the former hon. Member for Manchester, Wythenshawe and Sale East, the late Paul Goggins, to raise the profile of the need for long-term investment into mesothelioma research; and calls on the Government to facilitate the establishment of a long-term sustainable mesothelioma research scheme funded by the insurance industry”.

I would simply add to that the point that I made in the previous debate. Given that some £71 million will come into the Government’s coffers in the next 10 years, less the £17 million that will be given to insurers, surely it will be possible to use some of that money to create a pound-for-pound research fund, where we work collaboratively with the insurance industry.

On the Floor of the House, I recently asked the noble Earl, Lord Howe, about a breakthrough in mesothelioma research which has taken place in Canada. In reply, he said:

“Mesothelioma is a devastating disease, and I certainly undertake to look at the material that the noble Lord has sent me”.—[Official Report, 27/2/14; col. 1005.]

This is probably the most hopeful small breakthrough that I have seen over the years that I have been following this and I wonder, having spoken privately, very briefly, to the Minister, whether he is in a position today to tell us what follow-up has been done by the Department of Health in looking at that breakthrough and what the initial conclusions are. Will he say whether his department and the Department of Health are not only collaborating across government in the United Kingdom but working with others to try, not to duplicate work that has already been done or to reinvent the wheel, to bring together the best practice and knowledge that there is worldwide?

Perhaps I may ask about a reply that the noble Lord gave to me to Parliamentary Question 14/5095, which concerned the extensive tables he produced for the House about the occupations of people who die from mesothelioma. In that reply he said:

“The latest available analysis of citizens dying from Mesothelioma in Great Britain is based on deaths between 2002 and 2010 at ages 16-74. Only the last occupation of the deceased is routinely recorded”.

It is not the last occupation that we need but the data on all the occupations that someone has had. If we are going to get any kind of idea about tracking the causes of mesothelioma we need to know where the hot spots are with this disease.

The Minister continued:

“It is important to note that, for those Mesothelioma cases that are caused by occupational exposure, the last occupation of the deceased which is recorded on the death certificate may not reflect the source of exposure due to the long latency of the disease.—[Official Report, 11/2/14; col. WA 122.]

That begs the question of what use are the tables in those circumstances. Would it not be better to acquire data that would help us?

I was about to turn to the Questions from the noble Lord, Lord Wigley, but as he is about to intervene, perhaps he will save me doing so.

--- Later in debate ---

These Benches remain very supportive of this Act. We welcome the progress towards the establishment of the diffuse mesothelioma payment scheme. I look forward to hearing the Minister address the outstanding issues today.

[Lord Freud]

My Lords, I thank noble Lords for a highly informed debate and for the kind words that were addressed to me personally, which I appreciate. I thank the noble Lord, Lord McKenzie. Without the little present that he left me on my arrival, things would perhaps not have been sorted out with quite such alacrity.

A number of noble Lords asked about the timing. The noble Lord, Lord Wigley, was the first. Our intention is that applications will be accepted from April with the first payments in July. These regulations will come into force on 6 April, subject to this process. We intend to lay the negative instrument the next day, 7 April.

I shall now deal with research, on which we spent a lot of time. Noble Lords around the Room are very sympathetic to the point made by the noble Lord, Lord Alton, about improving it. That debate, which I shall not replay because it is a long and complicated situation, as noble Lords know, stimulated a substantial increase in research activity in this country on mesothelioma. I shall go through the four things that we committed to do. First, we set up a partnership to identify the priorities in research. A survey has now begun and is currently open, asking patients, families and healthcare professionals for their unanswered questions about mesothelioma treatment. The partnership will then prioritise the questions, and the end result will be a top 10 list of mesothelioma questions for researchers to answer. It is planned that that list will be ready by the end of this year, when it will be disseminated and work will begin with the National Institute for Health Research to turn the priorities into fundable research questions.

Secondly, the national institute will highlight to the research community in the spring of this year that it wants to encourage research applications in mesothelioma. Thirdly, the national institute’s research design service continues to be available to help prospective applicants to develop competitive research proposals. Finally, the National Cancer Research Institute has made excellent progress in planning a workshop for leading researchers to discuss and develop new proposals for mesothelioma studies. This event will take place on 2 May.

I know that we are not going along with the specific structures suggested by the noble Lord, Lord Alton, but I want him to feel that we are really pursuing this with energy, getting results and getting this focus within the structure of how research is managed in this country. Just because his specific proposals may not have been accepted, he should not feel that we have not taken his point thoroughly on board or that we are not grateful to him for keeping up that pressure.

[Lord Alton of Liverpool]

I urge the Minister to add a fifth point to his four other points with regard to the remarks that I made earlier about the importance of global collaboration through the World Health Organisation, also looking at best practice and innovations being promoted elsewhere in the world and the need to draw that information together. We may have the highest rate of mesothelioma in the world but many other countries face the same challenges as we do.

[Lord Freud]

That is a very powerful point from the noble Lord. I have not yet had a chance to talk to my colleagues in the Department of Health but I shall pick up that issue specifically.

On the suggestion as to where to spend the recoveries money, it is the same core point. There is a process for funding research, and it does not work to direct other moneys around in that mechanical way. The money will go into research as the right propositions come up. That is the reason why, fundamentally, we will not be able to provide support for his Private Member’s Bill. It is a difference not in aspiration but in the structures that we can accept. I know that he will be disappointed in that, but he may not be surprised.

The point that the noble Lord raised on the causes of mesothelioma and the last occupation is one that requires reflection, and I shall write to him on that particular set of points. I will also pick up the related point from the noble Lord, Lord Wigley, on the technical issue of the MoD advising tenants. On the noble Lord’s point about widening the coverage of the 2014 Bill, clearly we will continue to operate the 1979 scheme, but I have dealt in enormous detail with why we would not widen this scheme and why we are in no position to make any such commitments now.

[Lord McKenzie of Luton]

I gather that the noble Lord has moved off the research issue, but will he say whether there is any commitment from the insurance industry, the ABI, to continue contributing, as it has in the past?

[Lord Freud]

I have been in discussion with the insurance industry. There is currently no commitment to go ahead with its funding, but I do not think that this is the end of the story. We are still talking about various options.

[Lord Alton of Liverpool]

Before the noble Lord leaves that point, I do not want to return to the arguments that we had on the amendment that I moved in the House, but he will recall that the noble Earl, Lord Howe, in replying to those debates, made a number of substantive remarks about the important role that the industry was playing in supporting research into mesothelioma through financial contributions. If we had been aware at that time that the industry was not going to step up to the plate and provide those resources, I wonder whether some noble Lords might have voted in the way they did having been given those assurances.

I shall not press the Minister further today but I hope that he will return to the intervention from the noble Lord, Lord McKenzie, perhaps by writing to keep us informed about the progress he has made. Certainly, I know from my own meetings with the industry as recently as last week that it would much rather have a scheme where the cost is shared beyond the six companies that previously funded research. Those six companies feel that the whole burden should not just fall upon them.

[Lord Freud]

We are in danger of rerunning the debate. Clearly, we were not able to help the insurance industry to spread the burden using this mechanism, for complicated reasons which are on the record. Discussions are going on with those companies that have a sense that contributing to research is desirable and we shall see what comes out. On the question raised by the noble Lord, Lord Alton, about the extent of recoveries, over 10 years according to the impact assessment we are expecting £72.2 million.

In response to the leading and very clever question from the noble Lord, Lord Howarth—I would expect nothing less from him—we have committed to keeping the tariff under review and we will carry out a review of it after four years, once the smoothing period has finished.

[Lord Howarth of Newport]

Allow me to emphasise once again that it is imperative that the Minister, his department and successors maintain the pressure on the industry. We have just heard the noble Lord, Lord Alton, describe how there is no assurance that there will be continuing funding from the industry for research. We have seen the whole history of the neglect of the legitimate interests of mesothelioma sufferers by the employers’ liability insurance industry. Sadly, we cannot take it on trust. I am sorry that the Minister has not written that requirement of 3% of gross written premiums into these regulations—though I can perhaps understand why not. It would be very helpful and really the least that the Minister could do if he expressed this afternoon very strongly on behalf of the Government and mesothelioma sufferers his expectation that we will continue to have the substantial contribution from industry to fund this scheme and that he expects industry to continue to provide not less than 3% of gross written premiums after the moment of peak claims passes in 2018, for all the reasons that noble Lords indicated earlier in this debate.

[Lord Freud]

My Lords, I am not in a position to bind a future Government over what happens in four years’ time. However, as the noble Lord appreciates, there is now a context for that Government to take a view at the right time on what should happen beyond then. The figure we have at the moment, which is publicly on record, is 3%. In response to the question asked by the noble Lord, Lord McKenzie, that is based on DWP forecasts. Clearly, to that extent, we are committed to a tariff level. If those forecasts are wrong for one reason or another, there could be variation round that 3%. That is the best we can do to set the level today. However, when that process has gone through—we thought the right point for that was after four years because we will have done the smoothing and seen how it actually works and if people change behaviour as a result of the scheme—we will clearly know exactly what is happening. We can then have a much more specific forecast of expectations, once the scheme is in and has been rolling for some time.

[Lord McKenzie of Luton]

Are we to see some regulations come forward round the mechanics of that levy? There is an absence of a reference to that here, but that does not mean that that is the end of it. Something could come forward to explain how it must all work, who will be levied and on what basis.

[Lord Freud]

I am sorry but I am confused: Schedule 4 has the levy rates. That was also a question from the noble Baroness, Lady Sherlock, who said that they were not in there. There will be further regulations to come, and there will be negative regulations adjusting these figures.

[Lord McKenzie of Luton]

Schedule 4 sets down the tariff, which is based on the gross starting point, but presumably there is a separate starting point for the levy on the insurance companies. Is that going to come forth? On the four-year review of the tariff, must we not have regard to the fact that civil compensation claims are likely to rise over a period anyway because of changes in the claims process?

[Lord Freud]

Yes, that is one of the moving features here. We are moving the tariff up. We have committed to moving it up by CPI in this interim period. That is a sensible enough period after which to take a new look at where civil compensation has moved, if indeed it has, and to reset. However, at that stage other factors could also be looked at. Although the noble Lord, Lord Howarth, is enticing me in his skilful way, that is all I can say on the review. I am deeply impressed.

[Lord James of Blackheath (Con)]

The noble Lord, Lord Howarth, was enticing the Minister into a quicksand. We need to get this matter clearly understood. There is no such thing as a pot containing the premiums that were originally paid for this cover. All those moneys were taken by the companies who then went bankrupt. It is not there. The only pots that exist are the reinsurance pots. Basically, with our £6 billion liability, we took £3 billion to Zurich Re and £3 billion to Swiss Re, and that is where it stands today. If you go for those and can negotiate that they are allowed to reduce their balance sheet liability by the 3% you get each year, they will be very interested. However, you will not get the 3% and the reduction in their balance.

[Lord Freud]

My Lords, we are moving now into the arcana of the insurance industry, which the noble Lord, Lord James, knows better than anyone in the Room. When I first had discussions with the insurance industry, they centred around something that would have affected its balance sheets. It was a structure which went to the historic issues. However, for reasons that are too complicated to go into, they ended up with this scheme which, as the noble Lord, Lord Howarth, pointed out, affects the current writers of liability insurance, who may or may not be the villains of the piece. It is not perfect, but it is the best we can do. This is where we are.

To pick up on the point made by the noble Lord, Lord James, much as it would be attractive to go after reinsurers, we simply do not have the information to do so. Even the noble Lord, Lord James, I am sure, could not find that information.

[Lord James of Blackheath]

Do you want phone numbers, my Lords? They are there. They have the money and, in the case of the Swiss Re, it is backed by the Swiss Government, who have not yet gone bankrupt. They are working on it, but not yet.

[Lord Freud]

Noble Lords could go on about this, but I cannot.

On the other point made by the noble Lord, Lord James, about the crossover between the schemes supporting the Royal British Legion, I am not aware of the issue he raises, but I shall look into it for him.

On the point made by the noble Lord, Lord McKenzie, on the oversight committee, we are not legislating for that, but we have discussed the matter with the AVSG, the TUC, insurers, personal injury lawyers and accident insurance lawyers. We are agreeing with those groups how the committee could operate. We intend that it will look at various aspects of the running of the scheme, particularly in the early period. We envisage it considering complaints against the scheme, redacted claims and decisions. It will then send a report to the Secretary of State, who will include the issues raised by the committee in his published annual report. It will be quite transparent.

On the point made by the noble Lord, Lord McKenzie, about HMRC, we continue to work with other departments to seek a resolution to this issue. Regrettably, that is still ongoing work. We have encouraged the ABI to continue to engage with the MoJ as they look to improve the process for mesothelioma cases in regard to the portal.

In response to the question asked by the noble Baroness, Lady Sherlock, the reason we can increase the payments to 80% is because the scheme administrators have now been selected and the costs have been finalised. Those costs fall well below projected costs, and this allows us to increase the payments while keeping the levy the same.

In the November impact assessment the net benefit to lawyers was expected to be £2.69 million over 10 years. That has reduced to £1.6 million. The reason for this difference is that the original scheme administration costs used in all previous versions of the impact assessment assumed that some legal administration costs would benefit lawyers working on the scheme. These costs were estimated to be £23 million from successful cases, £1.7 million from unsuccessful cases and £1.2 million from ad hoc legal administration costs. Due to further understanding of the way in which the scheme will be administered, it is now recognised that these legal administration costs are not necessary, meaning that overall it is expected that lawyers will benefit by less. I can confirm that applicants will still receive the difference between the £7,000 and the legal costs, if there is a positive difference.

[Baroness Sherlock]

Before the noble Lord leaves that point, can he confirm that the figure that was previously £24.2 million has now either disappeared or is in single figures and that there will be no other loss or additional costs for the applicant as a result of those costs being taken out of the scheme altogether?

[Lord Freud]

Yes, I can confirm that. In the tendering process resulting in the appointment of Gallagher Bassett, the company was required to demonstrate that it had sufficient resources to process the expected volume of claims. We have reviewed its tender to ensure that it is accurate and realistic and have satisfied ourselves that it can deliver as part of our due diligence. The administrators will be employees of the scheme administrator. If the person with mesothelioma dies before an application can be made, their dependant can make the application. If the person dies after making an application but before a payment is made, the payment is made to their personal representative.

[Baroness Sherlock]

I thank the Minister for clarifying that point. I was talking about people who have died who do not have dependants. It seems that the Minister was saying that the personal representative can receive a payment even in the circumstances that I have described: when people were diagnosed on or after 25 July 2012 but had not made an application because the process was not available to them.

[Lord Freud]

They cannot make one in that period.

[Baroness Sherlock]

Can the Minister please explain why? These are people who the scheme is explicitly designed to cover. They simply had the misfortune to die before the Government had been able to put the scheme in place and give them an application form to fill in. Why should they be excluded?

[Lord Freud]

I think it is because they do not have dependants. However, I will write to justify what that difference is and why we have designed the scheme in that way. Our estimate is that the 80% payment will be within the 3%, but that is clearly based on our figures. As to the final question on the setup and running costs of the scheme, I cannot go into too much detail for reasons of commercial confidentiality. I will write carefully and provide as much information as I safely can.

[Lord McKenzie of Luton]

On one last point, can the Minister say when we are likely to see the levy rate because, presumably, if people are to start to make payments under the scheme, the cash will have to be obtained from the insurers? That will not necessarily be a straightforward process.

[Lord Freud]

It will be within the next Session. In the initial period the DWP will be putting in funding, so we do not have a funding issue because we are the underwriters of the scheme and are managing the smoothing process which, I can assure the noble Lord, is more complicated than it might appear to be from outside.

I am confident that these regulations will underpin a robust and fair scheme which all noble Lords agree has been needed for some time. This Government are committed to improving the situation faced by mesothelioma sufferers, and the establishment of the diffuse mesothelioma payment scheme is a huge achievement. I commend these regulations to the Committee.

Motion agreed.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014

Lord Freud Excerpts

Monday 17th March 2014 Grand Committee

Moved by

[Lord Freud]

That the Grand Committee do consider the Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

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

My Lords, in moving that the Grand Committee do report to the House that it has considered the Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2014, I will also speak to the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2014. These two regulations increase the lump sum amounts payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and the mesothelioma scheme set up by the Child Maintenance and Other Payments Act 2008. These new amounts will be paid to those who first satisfy all the conditions of entitlement on or after 1 April 2014.

These two schemes stand apart from the main social security benefits uprating procedure and there is no legislative requirement to review the level of payments each year. None the less, I am happy to increase the amounts payable for 2014 by CPI—that is, by 2.7%, which is the same rate as that applied to some social security disability benefits and the industrial injuries disablement benefit under the main social security uprating provisions which were recently debated in the House.

The Government recognise that people suffering from diseases as a result of exposure to asbestos or one of a number of other listed agents may not be able to bring a successful claim for civil damages in relation to these diseases. That is mainly due to the time lag between exposure and onset of the disease, which could be as long as 40 years. Therefore, we fulfil an important role by providing lump sum compensation payments to people suffering from certain asbestos-related diseases through these two schemes. These government schemes also aim to ensure that sufferers receive compensation while they can still benefit from it, without first having to await the outcome of civil litigation. Improved health and safety procedures have restricted the use of asbestos and provided a safer environment for its handling. However, the historic legacy of the common use of asbestos is still with us. That is why we are ensuring that financial compensation from both these schemes is available to those affected.

I will briefly summarise the specific purpose of each scheme. The Pneumoconiosis etc. (Workers’ Compensation) Act 1979—for simplicity I shall refer to it as the 1979 Act—provides a lump sum compensation payment to those who suffer from one of five dust-related respiratory diseases covered by the scheme and who are unable to claim damages from employers because those employers have gone out of business and who have not brought any action against others for damages. The five diseases covered by the 1979 Act scheme are diffuse mesothelioma, bilateral diffuse pleural thickening, pneumoconiosis, byssinosis, and primary carcinoma of the lung if accompanied by asbestosis or bilateral diffuse pleural thickening.

The 2008 mesothelioma lump sum payments scheme was introduced to provide compensation to people who contracted mesothelioma but were unable to claim compensation for that disease under the 1979 Act, perhaps because their exposure to asbestos was not due to their work. The 2008 scheme means that payments can be made quickly to mesothelioma sufferers at their time of greatest need. Under both schemes, a claim can be made by a dependant if the sufferer has died before being able to make a claim.

Payment levels under the 1979 Act scheme are based mainly on the level of the disablement assessment and the age of the sufferer at the time that the disease is diagnosed. The highest amounts are to those diagnosed at an early age and with the highest level of disablement. All payments for mesothelioma under the 1979 Act scheme are made at the 100% disablement rate—the highest rate of payment. Similarly, all payments under the 2008 scheme are made at the 100% disablement rate and are based on age, with the highest payments going to the youngest sufferers.

I would like to give some detailed figures on claims and moneys paid out under the two schemes before us today. In the last full year, April 2012 to March 2013, over 3,500 payments were made in respect of both schemes, totalling just over £53 million.

I know that the occurrences of mesothelioma are of particular concern to Members, with the number of deaths from mesothelioma in Great Britain continuing to rise. In 1968, 153 people died from mesothelioma. By contrast, over 2,000 deaths occur each year from that disease now. Mesothelioma is a fatal disease caused almost exclusively by exposure to asbestos. Those diagnosed with mesothelioma usually have a short life expectancy—generally between nine and 12 months—with the sufferer becoming severely disabled soon after diagnosis. This rise in the number of deaths reflects the long latency period of the disease, which can take decades to become apparent. Latest available information suggests that mesothelioma deaths will continue to increase to a peak of around 2,500 in 2018, and then start to fall—thus reflecting a reduction in asbestos exposures following its peak use in the 1960s and 1970s. Just under a half—47%—of payments made under the Government’s 1979 scheme are in respect of mesothelioma.

I remind noble Lords that immediately following this debate we will be debating the Diffuse Mesothelioma Payment Scheme Regulations 2014, and I would ask that any questions about that scheme, and how it interacts with these older schemes, be raised in that debate.

These regulations increase the levels of support through the government compensation schemes. I am sure that we will all agree that, while no amount of money can ever compensate individuals and families for the suffering and loss caused by mesothelioma, those who are suffering rightly deserve some form of monetary compensation. The government schemes go some way to ensuring sufferers receive it as soon as possible. It is a requirement that I confirm to the Committee that these provisions are compatible with the European Convention on Human Rights, and I am happy to do so. I commend the increase of the payment scales and ask for approval to implement them. I beg to move.

[Lord Wigley (PC)]

My Lords, I shall certainly follow the Minister’s suggestion that we leave consideration of the new mesothelioma provisions until the next debate, which makes a lot of sense. I shall want to contribute then, if I may. Perhaps I may ask a couple of questions particularly on the regulations made under the 1979 pneumoconiosis Act. In doing so, I welcome, of course, the upratings that are taking place. They should not lose their value as time goes on.

As the Minister and others may know, I have an interest in the 1979 scheme, particularly from the point of view of slate quarrymen. The issue was not, of course, related only to slate quarrymen; it also affected those working in the kiln and cotton industries, and a number of other conditions came under the purview of that Act. Over the period since 1979 there was initially a surge of applications, which reduced in 1986 to just 95. A decade later, in 1995, this had built up to 900, and was running at a level of 1,000 to 2,000 by 2002-03. I believe that some of the cases leading to that surge arose from coal-mining pneumoconiosis, which had not been covered under the coal-mining scheme—there was originally a tripartite scheme between the NUM, the NCB and the Government, in 1975, for that purpose.

I have been trying to ascertain the breakdown of the figures since 2002-03, and would be grateful if the Minister would give some undertaking on this. My colleagues in the House of Commons have been unable to get from the House of Commons Library the breakdown with regard to industry and to the regional spread of those cases. I imagine that the information must be available in the department because it was available 10 years ago. I hope that it might be possible, by letter or some other way, for this to be disclosed. It would be interesting to see how the pattern has changed from the point of view of the sustainability of the scheme itself, which is an important factor.

The second thing I want to ask the Minister is the breakdown of the figure that he has just given us for 2012-13. He mentioned 3,500 payments and £53 million. That figure covered both the 1979 scheme and the 2008 mesothelioma scheme. Presumably there is again some breakdown between those two at the very least, and perhaps the Minister is in a position to give it today, so we can see where this is going. There will be questions about the interplay of the schemes, but I am content to leave those until the subsequent debate.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for his explanation of these regulations, and I thank all noble Lords for their contributions. Like the noble Lord, Lord Wigley, I recognise that there is no statutory obligation to uprate these amounts, and therefore I, too, welcome the Government’s decision to uprate the pneumoconiosis and mesothelioma lump sum payments under the 1979 and 2008 schemes.

A number of the questions that I wanted to raise have been asked, but I want to return to one point, which was raised by the noble Lord, Lord Alton, and my noble friend Lord McKenzie, about the difference between payments made to applicants in life and those made to dependants under both schemes. The noble Lord, Lord Alton, explained the three points of difference between the two. As he reminded us, in 2010 my noble friend Lord McKenzie reduced the differential in lump sum payments between in-life claimants and claims from dependants, but there has been no further narrowing of the gap between the two. When regulations equivalent to those here today were before the Grand Committee on 7 March last year—with a very similar cast, I notice from Hansard—representations on this very point were made by the noble Lord, Lord Wigley, and the noble Lord, Lord Avebury, who is not in his place. In his reply on that occasion, the noble Earl, Lord Howe, to whom it fell to respond, said:

“Ministers have to balance competing priorities, and because of the current financial situation, it is our duty to ensure that all available resources are well targeted. As around 85% of payments made under these schemes are paid to those who are suffering from the disease, I believe that they are currently rightly targeted on the sufferer to help them and their families to cope while living with the stress that illness inevitably brings”.—[Official Report, 7/3/13; col. GC 314.]

I remind the Committee of the point that the Minister made in his opening remarks, which is, in fact, that people live for a very short time knowing that they have the disease. If people on average live only nine to 12 months after diagnosis, I wonder whether the Minister still feels that that argument for focusing resources holds water.

When the regulations were debated in another place on 7 March last year, the then Minister, Mr Mark Hoban, acknowledged the discrepancy and said:

“It is something that we need to keep under review, and if the resources are available, we will see whether we can introduce measures to do that. The point about the difference between payments made to a sufferer and to their dependants is well made”.—[Official Report, Commons, Delegated Legislation Committee, 7/3/13; col. 9.]

I have three questions for the Minister. First, will he tell the Grand Committee whether the Government have indeed kept this issue under review and, if so, what conclusions they have drawn? Secondly, will he tell the Committee what percentage of payments is currently made to dependants rather than sufferers? Finally, what estimate has the department made of the cost of narrowing further or, indeed, eliminating the differential between the two? I look forward to the Minister’s reply.

[Lord Freud]

My Lords, as ever, noble Lords have asked a set of sizzling questions, which I shall do my best to address, although they are getting so technical now, because we have gone round this subject so many times, that I think that I shall end up writing quite a bit of it out, if noble Lords will excuse me for doing so.

On the question from the noble Lord, Lord Wigley, on the breakdown of the figures for the latest year, 2012-13, there is a total of 3,180 cases due to the 1979 Act. That represents the bulk of the expenditure, at £43.6 million. The 2008 scheme figures are 500 cases and £9.6 million of expenditure. I think that we have the breakdown figures that the noble Lord requested from 2002-03 onwards, but not to hand; I shall need to write with them. I did not anticipate that particular run of figures. I think that that will tie up with the recovery figures for the noble Lord, Lord McKenzie, and how they relate to the 2008 figures. I think that I will tie that up—I shall aim to do some tables.

On the split between sufferers and dependants, again, I shall use the latest year. Under the 1979 Act, of the total the bulk were the sufferers—2,900 out of the total—and 280 were the dependants. With the 2008 scheme, 450 were sufferers and 50 were dependants. That testifies to the speed with which the money gets out, given the sad mortality expectation that we were discussing. I am in no position today to move much further on making any progress in closing that gap between dependants and sufferers, but it is something that we keep under review. Clearly, we have been looking very closely at this whole area over the past year, and we will keep it under review. That is the best that I can do, speaking today.

I hope that I have covered everything, except for the HSE questions, with the awareness-raising scheme. I will write on the actual cost of what it would be to close that differential on the figures that I have just provided, which will give a baseline on what we are keeping under review. I shall also need to write on the detail of the HSE awareness-raising campaign. I feel somewhat embarrassed that I have resorted quite so much to the written word. If there is anything else at all, I shall include that in the letter. These are two important schemes. I commend the uprating of the payment scales and ask approval to implement them.

[Lord Alton of Liverpool]

When the Minister comes to write his epistles to the Members of this Grand Committee, I wonder whether he will also be good enough to come back to us about the three anomalies that I specifically raised with him.

[Lord Freud]

Yes, my Lords. As I understand the questions, they concern, first, dependants being paid less, on which I have already committed; secondly, the age between 67 and 77; and, thirdly, the 10% enhancement. I shall be pleased to deal with those as well. With that, I ask for approval to implement the regulations.

Motion agreed.

Pensions Bill

Lord Freud Excerpts

Wednesday 12th March 2014 Lords Chamber

[Baroness Sherlock (Lab)]

My Lords, I am pleased to support Amendment 1 which is tabled in the name of my noble friend Lord McKenzie of Luton. My noble friend has been like a terrier chasing the Minister on the subject of passported benefits and payments. The Minister may have thought he had shaken him off as he left the Moses Room at the end of the Committee stage, but I am sure he knew better. Indeed, it is to the Minister’s credit that he was content to return to this subject at Third Reading, knowing that he would face the onslaught of yet more gentle but expert and determined questioning from my noble friend Lord McKenzie.

I express my appreciation to the Minister for allowing his officials to brief us and to his officials for giving us for the first time a detailed list of all the benefits that are being passported from pension credit. However, that left some clear question marks about the future strategy for passported benefits. If the Minister is in a position to tell us where the Government’s forward plans are taking them, not just on these two, but on any of the other benefits that are not clearly passported from pension credit, I think the House would appreciate that.

My noble friend has set out the case characteristically clearly, and I need add little to it, but the House and the country will want to hear the Minister answer the questions asked by the noble Lord, Lord German. We want to be satisfied that people will not lose out and that there is an alternative plan for arrangements to replace the passporting of cold weather payments and access to the warm home discount scheme.

The point made by my noble friend Lord McKenzie about the role of rising energy prices in the cost of living crisis is visible to all noble Lords at the moment. This is a particular issue in relation to these two benefits in parts of the country that obviously suffer from lower temperatures. I should perhaps declare an interest as a resident of Durham where, despite the fact that we have a world heritage site and much to commend us, with lower rainfall on average, even I have to confess that our temperatures are on average perhaps a whisker below those on the tropical Riviera of Cornwall. On the other hand, this will not affect me until I reach state pension age and that is receding ahead of me at some rate, so perhaps no declaration of interest is needed.

The Government have indicated that they propose to introduce the new single-tier pension above the current level of the guarantee credit in pension credit. But it is clear that that could come in at just a shade above. If Ministers want to carry on asserting that reducing means-testing is an important part of these pension reforms, then they have to have a strategy on passporting—otherwise they will end up with the kind of cliff-edges which anyone who worries about means-testing will know can really be a trap for the unwary.

Maybe the Government have had the opportunity since Report stage to think through how this will be taken forward and can give the House the kind of assurances that have been sought by both noble Lords who have spoken. If they have not, which I will understand, I very much hope that the Minister can accept the amendment. Parliament has a right to know what will happen to these payments, and by the time we get regulations it will be too late. I look forward to the Minister’s reply.

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

My Lords, I am glad to have the opportunity to discuss the amendment, which the noble Lord, Lord McKenzie, was understandably unable to move on Report. I hope that I will be able to offer him some reassurance about the current arrangements and the further work that we are planning.

As noble Lords will be aware, pension credit acts as a passport to a number of other benefits, most of which are linked to an individual being in receipt of the guarantee credit element. That element will continue to be available for the poorest, whether they reach state pension age before or after the introduction of the single-tier pension, and will continue to act as a passport to cold weather payments.

I also remind noble Lords that the single-tier pension itself promotes savings, removing the need for savings credit. The full single tier will be set above the level of the basic means test, removing the current problem whereby the state pension has not kept pace with the means test and therefore the need for a complex reward system. Together with other reforms to the pension system over time, the poorest pensioners are also the most likely to have higher incomes than they would have done if the current system had been rolled forward.

While I understand concerns about knock-on effects for vulnerable pensioners, there is actually relatively little in the pensioner welfare system that depends entirely on receipt of pension credit. For example, housing benefit and council tax reductions can already be claimed on low-income grounds, regardless of receipt of pension credit, and this will continue. Other benefits such as free television licences and travel concessions can be claimed on the grounds of age. The only significant benefits that are truly passported from pension credit are cold weather payments and the warm home discount scheme.

Cold weather payments, as noble Lords are of course aware, provide help with the additional costs of heating during periods of severe weather. The scheme runs from 1 November to 31 March each winter. A payment of £25 is made to someone when the average temperature has been recorded as, or is forecast to be, zero degrees or below over seven consecutive days at the weather station linked to their postcode. In some winters there are relatively few triggers, in some years there are many triggers; in fact, there have been very few indeed this year.

Cold weather payments are made to people who receive certain income-related benefits and satisfy the eligibility conditions set out in the Social Fund Cold Weather Payments (General) Regulations 1988. All those who receive pension credit are eligible, whether they receive the guarantee credit or the savings credit element, or both.

The noble Lord, Lord McKenzie, asked about universal credit. Those eligible for cold weather payments are those who are not employed or self-employed and they or their partner receive either a limited capability for work element or a limited capability for work element with a work-related activity element, or who receive a disabled child element within their assessment, or who have a child under the age of five years in the family. Universal credit recipients who are employed or self-employed will be eligible for cold weather payments only if they have a disabled child in the family.

Our predicted expenditure on cold weather payments is based on the average number of payments over the past 10 years. On that basis, while we cannot predict the actual impacts, we might expect around £2 million to have been spent in 2020 on cold weather payments for people who would have received pension credit under the current system, but who would not under the single -tier system. That is based on our calculation of 20,000 single-tier pensioners being raised above the standard minimum guarantee, and 60,000 who would have been entitled to a savings credit under the pre-single tier system.

That expenditure is of course by no means certain, which is why we have not assumed any savings from cold weather payments as a result of the Bill. However, we are not complacent about that issue and that group of people. That is why we are already considering ways in which it might be possible to identify, for cold weather payment purposes, single-tier pensioners whose income will be above but close to the level of the standard minimum guarantee.

In response to the question from my noble friend Lord German, I can reassure the House that it is not our intention to reduce eligibility.

The noble Lord, Lord McKenzie, also asked about the warm home discount scheme. That is a rebate on electricity bills for pensioners aged 75 or over who receive the guarantee credit in pension credit, and for pensioners under 75 who receive the guarantee credit without a savings credit. From 2014-15 it will be extended to all pensioners receiving the guarantee credit. Rebates may also be available for a broader group including those in receipt of the savings credit as well as certain other groups below pension age, but those broader group rebates are subject to a cash limit and to the policies of individual suppliers, as agreed with Ofgem. We have committed to extending the warm home discount scheme into 2015-16, but we have not made plans for 2016-17 and beyond.

On the question asked by the noble Lord about discussions with electricity suppliers, that will be part of the consultation in the spring on extending support for the core group. Access to cold weather payments and the future of the warm home discount scheme are part of a broader set of issues around targeting spending to combat fuel poverty among older people. As I said, we will consult later in the spring on a new fuel poverty strategy, which will include the question of reducing fuel costs for those pensioners in the second income quintile, which is where savings credit recipients are clustered.

For single-tier cohorts, it will not be possible to identify exactly which household might have been entitled to a savings credit without retaining the savings credit assessment itself. We are assessing the cost and capacity issues of doing that, as well as the trade-off for intrusion into pensioner households. However, the department’s initial assessment is that there are likely to be better and more cost-effective ways of reducing fuel costs for that group, especially by using recently developed datasets that allow us to identify poorly insulated homes and the characteristics of the households living there, with a view to making infrastructural as well as cash interventions.

I can reassure noble Lords that cold weather payments and the warm home discount scheme are an important part of our fuel poverty strategy, and major components of our work to improve the well-being of older people. However, that is a separate issue from promoting savings through pension reform, and we are not wedded to particular ways of meshing the two together.

On the question put by the noble Baroness, Lady Sherlock, on our passporting strategy, we will continue to use a mixture of age, low-income and passporting from means-tested benefits to target different benefits and services to different groups. I understand the concerns raised by the noble Lord, Lord McKenzie, and I hope that I have been able to provide him with reassurances.

[Baroness Hollis of Heigham (Lab)]

I am slightly puzzled, but I think that the Minister is saying that if you could devise a way in which to find out that those who are on the new state single pension were in the very bottom decile, that or a similar group would be an appropriate one to be eligible for a cold weather payment, because it would be the group that under the previous regime would have got pension credit. I would have thought that anyone getting the new single state pension without any other supplementary income coming their way, whether through savings or an occupational pension, would, in the past, have automatically qualified for pension credit—in which case, he already has his population.

[Lord Freud]

I am always grateful to the noble Baroness when she comes up with solutions for us, and I can see her yearning to be on this side—perhaps not in this particular coalition but in this particular ministry—sorting out these issues. She has gone to the issue of what the best way might be in which to help this group, which, clearly, we will look at precisely when we consider that matter. I shall pass on her thoughts to the consultation in the hope that it will speed it up.

As I say, we will consult on our strategy, and that will cover the two schemes referred to in the amendment of the noble Lord, Lord McKenzie, as well as broader approaches to combating and preventing fuel poverty, which the noble Baroness, Lady Hollis, indicated. On that basis, I urge the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I certainly intend to withdraw the amendment. I am grateful to my noble friend Lady Sherlock for her support and for raising the wider issue of the impact of the new pension arrangements on passporting. I am grateful, too, to the noble Lord, Lord German, for probing the same points in seeking reassurance on the continuation of the cold weather payment scheme and the warm homes discount scheme. I am grateful, as ever, to my noble friend Lady Hollis for providing a solution to the Minister.

I took comfort from what the Minister said, but I would like to read the record on precisely where he has ended up in looking at some sort of definition of low income—whether it is somebody just on the basic single -tier pension—and at a broader review of fuel poverty strategy. I am confident that there will be an opportunity going forward to address and, I hope, influence those issues. Accordingly, I beg leave to withdraw the amendment.

--- Later in debate ---

Moved by

[Lord Freud]

2: Clause 44, page 24, line 26, leave out “this section” and insert “subsection (1)”

[Lord Freud]

My Lords, in moving Amendment 2, I shall speak also to government Amendments 3, 4 and 5.

As I have said in previous debates, the Government are committed to ensuring that costs and charges in defined contribution workplace pension schemes are made as transparent as possible. This is one part of the programme to ensure that consumers, especially those who are automatically enrolled, receive value for money from their pension savings. The full programme of measures will be published soon.

These amendments build on those made on Report to require regulations to be made providing for the disclosure of transaction costs. Following the points raised by my noble friend Lord Lawson during that discussion, I agreed to consider how to make explicit the Government’s commitment to publishing the information on transaction costs. I am pleased to say that these amendments would require the information about costs and charges to be made publicly available. We will have further work to do to establish the best way to enable this publication, not least to ensure that we do so in a way that allows for meaningful and helpful comparisons. However, I can confirm that we will work to achieve publication in a way that enables scrutiny and comparison by any interested member of the public.

As noble Lords have said in previous debates, it is clear that for disclosure of information on costs and charges to be meaningful the full range of costs and charges that may be borne by members must be made transparent, and that this must be done in a way that enables scrutiny of the total amount that may be deducted from an individual’s pension pot. It is particularly vital that those with a fiduciary duty—namely, the trustees and independent governance committees who will have a role in representing members’ interests—can see both itemised and total costs and charges borne by members.

As I assured the House in our previous discussion on this matter, the “some or all” formulation in the drafting of this provision has been used to future-proof the legislation and provide flexibility to amend it as new types of cost and charge become apparent over time. This flexibility, and our existing powers to require disclosure of information, will enable us to provide for full transparency of all pension scheme costs and charges.

These amendments also make a technical change to this provision since the issue was last considered by noble Lords. The amendments now place a corresponding duty on the Financial Conduct Authority to that which we have placed on the Secretary of State. In this way, it provides a better fit with the shared approach to regulation of pensions that exists between the Pensions Regulator and the Financial Conduct Authority. It provides for regulations and rules to be made that apply in a consistent way across both trust and contract-based provision. The duty on the Financial Conduct Authority mirrors the duty on the Secretary of State requiring both disclosure and publication of information about costs.

These duties apply only to defined contribution schemes. As I touched on in our latest discussion on this subject, this is narrower than the provision of our existing power. This focus reflects the Government’s concerns about the failures in the defined contribution workplace pensions market that have been identified by the Office of Fair Trading. The nature of defined benefit schemes means that members are effectively shielded from the impact of costs and charges. As for employers and trustees, both have a keen interest and ability to achieve value for money in the administration and governance of their schemes.

However, as I said during our debate on Report, the Government do have the power to require transparency of costs and charges in defined benefit as well as defined contribution schemes, and I indicated that we would continue to consider whether this is necessary. Having begun to consider the question, we think that it merits further examination and consultation with a range of interested parties. It may be that such a measure would enable trustees of defined benefit schemes to better discharge their fiduciary duties.

We will formally consult before making regulations for disclosure of information about costs and charges in defined contribution schemes. When we carry out that consultation, we will also examine whether some form of disclosure requirements should be extended to defined benefit schemes.

As I have said previously, this Government are committed to ensuring that consumers receive value for money from their pension savings and we will publish our full programme of measures soon. I am pleased that these amendments build on the commitments made on Report and will ensure there is full transparency and publication of costs and charges. I beg to move Amendment 2.

[Lord Lawson of Blaby (Con)]

My Lords, I need not detain the House long because, I am glad to say, my noble friend the Minister has met pretty well in full the points that we made at earlier stages of the Bill. I am extremely grateful to him for that. There is a real mischief in the huge range of costs which bear no relation whatever to investment performance incurred in different pension schemes. It has always been known, but it was documented fully by the Pensions Commission some time back. That we have been able to improve the Bill in this way is a tribute to this House, but particularly to my noble friend the Minister, who has listened carefully, accepted the need to deal with that mischief, and put forward a practical and sensible way of doing it.

There is only one loose end, and although the Minister dealt with it I would like to spend a minute or two on it. The amendment says “some or all” costs, but that is purely a legal technicality and in fact it means all costs, itemised. That is the firm intention. They will be published generally, not just given to the members of the schemes, so that all can see. However, as the Minister said, the provision deals exclusively with defined contribution schemes and not with defined benefit schemes. I understand his reason for that—because it is only in the defined contribution schemes that pensioners are, in effect, from time to time ripped off by investment managers who charge far too much in the way of costs. There are five times as many people in defined benefit schemes as in defined contribution schemes, however, and the money in defined benefit schemes is well over £1 trillion.

Of course, if the same kind of ripping off goes on—obviously it does; there is no difference in the investment manager’s behaviour from one to the other—it is not a victimless crime. The pensioners may not be the victims, but the shareholders in the companies certainly are. The Government cannot desire to see shareholders ripped off when it can so easily be prevented by extending to defined benefit schemes the disclosure and transparency requirements that the Minister will put in place for defined contribution schemes. He says that he will consult on that. I am delighted to hear it, but I very much hope that the result of the consultation will be to require the same disclosure and transparency for defined benefit schemes as for defined contribution schemes.

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, I remind the House of my registered interest as a non-executive director of the Financial Ombudsman Service.

I thank the Minister for explaining his amendments and all noble Lords who have contributed to this debate for their insights. On Report the Government were understandably worried by the alliance building up between the noble Lord, Lord Lawson, and my noble friend Lord Browne, who regrets that he is unable to be here as a result of the date of Third Reading being moved. In order to head off a possible defeat, the Minister made a speech offering strong reassurances. It is against those reassurances that the House should judge the amendments that the Government have brought forward today. Let us remind ourselves what those reassurances were.

The Government were keen to assure the House that whatever their amendment said, their intention was that all costs would be covered by their proposals. On 26 February, the noble Lord, Lord Freud, told the House:

“We are looking for transparency on all charges. We are looking to ensure that that is published”.

He reinforced that point today. I think that I heard him say that there will be full transparency on all costs and charges.

My noble friend Lord Browne then intervened on Report to seek clarification on how transparency would be handled in relation to transaction costs, since it seemed that the Government were proposing to exempt areas where there were existing FCA rules in relation to transparency. The existing FCA rules on transparency exempt transaction costs, he noted, so how would the transaction costs in such cases be dealt with? The Minister replied:

“I am putting it on the record that we will aim to capture all costs, including all transaction costs”.

A little later, he went on to say:

“It is not to do with the EU”.—[Official Report, 26/2/14; cols. 967-68.]

What could be clearer? However, the current government amendments give the Secretary of State the responsibility for regulating disclosure of charges only for occupational schemes, leaving it to the FCA to do so for money purchase schemes.

Therefore, the first and most obvious question to the Minister, touched on by my noble friend Lady Drake, is: why is the Secretary of State divesting himself of the power to set the requirements for securing transparency of transaction costs in relation to money purchase personal pension schemes by giving the responsibility for the requirements on disclosure of information to the FCA?

Secondly, Amendment 3 has the effect of explicitly excluding defined benefit schemes from the regulations on the publication of costs and charges, and the Minister gave some indication of the Government’s thinking on that. However, I was very pleased that the noble Lord, Lord Lawson, raised the questions that he did, supported by my noble friend Lady Drake, because this is indeed not a victimless area. Not only are there costs to the companies that are the employers but there are potential risks to the sustainability of the pension schemes if employers find themselves carrying unreasonable and unnecessary levels of cost. It must be remembered that there are employers who may be well equipped to understand and challenge the nature of the charging structure but there are many others who are not, and they deserve protection as well. Perhaps the Government could explain some more about that. In particular, can the Minister tell the House what the timescale will be for this consultation and, if the Government decide to bring forward regulations, when the House may expect to hear more about that?

My noble friend Lady Drake then raised a series of important questions regarding what this dual regulatory regime will mean in practice, given that the FCA currently does not require transaction costs to be published for DC pensions. Amendment 4 makes it clear that the FCA must consult the Treasury and the Secretary of State before making rules about the disclosure of costs. The supplementary memorandum from the DWP to the Delegated Powers and Regulatory Reform Committee on the Bill reminds us that Section 138(1) of the Financial Services and Markets Act 2000, known as FiSMA, requires the FCA also to consult the Prudential Regulation Authority before making rules and then to publish those rules in draft, to seek representations and not to make rules without having regard to those representations.

Therefore, the Minister is left with the crucial question from my noble friend Lady Drake as to the extent to which the PRA’s concern for the sustainability of financial services companies may constrain the Government’s apparent desire for the FCA to make rules to ensure disclosure of all transaction costs, as again promised by the Minister today. What happens if the Secretary of State believes that the decisions that the FCA takes in this respect are not properly aligned with his or her own decisions on transparency in relation to occupational schemes? As my noble friend asked: what happens then?

Finally, there is the interesting question of the role of the EU. The Minister has said clearly that this is not a matter for the EU but my noble friend has sought clarification. I certainly understand that the publication of transaction costs with respect to retail products is covered by EU rules but that the publication of transaction costs with respect to workplace pensions is not, and I look forward to the Minister confirming that. However, one hears that EU rules may or may not lead to increased transparency of all transaction costs some time after 2016. I should like to test the Minister. Does he think that it would be acceptable if the FCA decided not to do anything about transaction costs but simply to await the decision of the EU? One assumes not, as not only would that not seem to chime with the Government’s general rhetoric about ceding powers to Europe but it is hard to see that the Minister’s words to the House on Report would imply that level of uncertainty, since he made it clear that it was nothing to do with the EU.

In the end, it is up to this House to decide whether it believes that the government amendments brought forward today have the ability to honour the cheque that they wrote to the noble Lord, Lord Lawson, on Report. The Opposition are not, as yet, persuaded. However, it is for the Minister to tell the House how precisely he can guarantee to deliver on the assurance that the Government will capture all costs and charges and, crucially, by what date that will happen.

Finally, and even more importantly, there remains the unresolved issue of a cap on charges. In his extremely impressive speech when we debated these matters on Report, the noble Lord, Lord Turner, put the matter succinctly when he said:

“I do not think that transparency is an alternative to a charge cap”.—[Official Report, 26/2/14; col. 966.]

Nor do I. If the Government really have the interests of consumers at heart, they will take much stronger action right now.

[Lord Freud]

My Lords, let me start by dealing with the question raised by the noble Baronesses, Lady Drake and Lady Sherlock, on the way in which the regulation works between two groups. The Pensions Regulator and the FCA work closely together to ensure that the regulatory frameworks for trust-based pensions under the regulator and contract-based pensions under the FCA are aligned and provide for a robust system of governance and fair treatment for members. The Government are not looking to change the current regulatory structure, as was confirmed in the DWP’s Triennial Review of Pensions Bodies, which was published in December 2013. Structuring the duties in this way is necessary to reflect the dual regulation structure and the fact that the FCA is an independent body in statute. Without this approach, there would be no duty on the FCA to make these rules.

In addition to their existing duties to consult, the amendments mean that both the Secretary of State and the FCA will be under statutory duties to consult one another in making regulations and rules, enabling us as far as possible to ensure consistency of approach with the rules following the regulations. There is absolute commitment from the Government and from the FCA to aim for consistency. The FCA would not propose to deviate from government regulations. The aim of a separate duty is not to provide room for inconsistency—far from it; it is about giving the FCA the flexibility that it needs to use its powers and expertise to respond as an independent regulator.

The noble Baroness, Lady Drake, raised a question on hybrid schemes. The regulations will be able to extend the disclosure rules to the DC element of hybrid schemes. The duty is in addition to the existing power in Section 113 of the Pension Schemes Act 1993.

The noble Baroness also raised a question on the relative position of the PRA—the prudential regulator—and the FCA. The FCA, as per its rules, will be consulting on the development of disclosure and requirements and will work closely with both Her Majesty’s Treasury and the PRA. Treasury Ministers are committed to strong disclosure of member-borne costs and believe that the FCA is best placed to make those rules.

On the question of the SORP code, raised by the noble Baroness, Lady Drake, the Government recognise industry initiatives to improve transparency of pension costs and charges, but as the OFT noted, such measures are voluntary and can be piecemeal. That is why the Government believe that transparency measures should be compulsory and standardised.

[Baroness Drake]

The Minister’s response on the SORP is helpful to a point. The Minister is making a distinction between a compulsory and a voluntary regime. My more detailed point was about the proposals as to what there should be transparency on, and the costs involved. I was asking whether the Minister could give an assurance that he accepts that the range of costs proposed in SORP would not be sufficient to meet a full transparency criterion.

[Lord Freud]

My Lords, I have not carried out a detailed analysis of the SORP code. I can assure the noble Baroness that, under the regulations and rules that we will now develop, we will capture all costs. To the extent that those are not in the SORP code, that would be a wider requirement.

On what will happen if the FCA rules are not found to be adequate, the Secretary of State retains the power in Section 113 of the Pension Schemes Act 1993 to make regulations about both occupational and personal pension schemes disclosure.

On the timescale issue raised by the noble Baroness, Lady Sherlock, assuming that this Bill receives Royal Assent, I believe that regulations will be brought forward later this year. The Government will consult on these regulations before they are laid. The Government’s proposals on charges, transparency and governance will be published soon. I have not changed the position on that after our rather enjoyable debate on the matter on Report.

[Baroness Sherlock]

Is the Minister saying that the Government propose to consult on whether DB schemes should be included and then publish a single set of regulations, or will they go ahead on the basis he has outlined and subsequently consult on DB?

[Lord Freud]

The DB element will be part of the consultation. Depending on that consultation, we will have to decide how to treat that particular aspect.

On the questions around the EU, clearly right now we are free to write these regulations and rules and there are no EU rules to hinder that. However, that might change in the future. One of the attractions of pulling the FCA into this process is that it has technical expertise in this area and is the body negotiating in Europe on relevant EU legislation. It is therefore best placed to work with DWP on determining how costs and charges can be defined, captured, measured and disclosed. By using its own rule-making power, the FCA may be able to respond quicker than the parliamentary process to changes in the market or from the EU.

I think I have dealt with all the issues.

[Baroness Drake]

I hope the Minister does not think I am being pushy, but this is probably the last chance we will have to question him on this before we complete this stage of the Bill. On the issue of EU regulations, the Minister has confirmed that at the moment there are no EU rules constraining the Government from pushing for full transparency on transaction costs. Hopefully, any product from the EU in favour of transparency would work to the Government’s remit. However, one of the underlying concerns is that the earliest there could be any impact from any change that comes out of the European Parliament and from the EU would be 2016, maybe later. People are looking for an assurance—I certainly was asking for one—that the FCA would fulfil its duty without being constrained to await the outcome of any EU discussions and would push ahead to an early timetable consistent with the spirit of the point the Minister made on Report.

[Lord Freud]

I am pleased to be able to confirm that it is not tied to the EU in any way. We will be pushing ahead with this at the speed I indicated, which is—

[Noble Lords]

Soon.

[Lord Freud]

I thank noble Lords for helping me with my vocabulary.

I should finish by thanking my noble friend Lord Lawson, whose help I found immensely useful in thinking through these issues and working out responses in what is actually quite a complicated environment, as I suspect noble Lords fully appreciate.

Amendment 2 agreed.

--- Later in debate ---

Moved by

[Lord Freud]

3: Clause 44, page 24, line 28, leave out “work-based money purchase schemes” and insert “a relevant scheme”

--- Later in debate ---

Moved by

[Lord Freud]

6: Schedule 20, page 110, line 39, leave out “(ignoring any period of overlap)” and insert “(counting any period of overlap once only)”

[Lord Freud]

My Lords, on Report I regrettably said that we had completed the legislation required to cover the change to the Pension Protection Fund compensation cap. Clearly, that was tempting fate because we have noticed that the wording in a particular place is not as clear as it could be, and this amendment addresses that. We made an amendment on Report to the PPF compensation cap measures setting out how the length of pensionable service should be determined for an individual who was a member of connected schemes; that is, for someone who was a member of a multi-employer scheme and who had worked for two or more of the companies attached to that scheme. That amendment allowed for the discrete periods of pensionable service to be added together. Crucially, if the person had worked for two employers at the same time—that is, the periods of employment overlapped—the amendment sought to prevent the overlapping period from being counted twice. Unfortunately, the wording of the amendment could be read as meaning that the period of overlap should not be counted at all. This would clearly not be right. This amendment therefore clarifies the wording to ensure it cannot be read in that manner. As a result, overlapping periods of employment will be counted correctly—in other words, once.

This is the final amendment to which I will speak and so before I sit down, I would like to take a moment to thank all those who have worked so hard on this Bill. Many colleagues across the House have contributed their time and substantial expertise to understanding and improving these landmark reforms. In particular, I am delighted that the Bill now contains measures that will help improve the retirement income of the spouses of service personnel. Preparing a Bill and supporting its passage through both Houses is a significant undertaking. This Bill contains a wide range of measures relating to state pensions, private pensions and bereavement benefits, and so has involved a large number of different policy teams. I estimate that close to 200 policy officials, analysts and lawyers have been involved. Many of them have been directly involved in attending briefing meetings or providing materials that have contributed to the excellent level of debate we have seen.

It has been especially gratifying to hear so many noble Lords mention the assistance of DWP officials in their speeches both in this Chamber and during Committee stage. It is a fitting tribute that their work is recognised in this way. I am grateful to them and to the excellent draftsmen in the Office of the Parliamentary Counsel who have worked so hard on this Bill. The Bill team deserves a special mention and so I would like to take this opportunity to thank Rez Mossavat, Jo Foakes, Megan Rooney, Helen Kelly and the Bill manager, Michael Cordy, for all their work and support. With that, I beg to move.

[Baroness Sherlock]

My Lords, I congratulate the Minister on having spotted the error before Royal Assent and the Opposition have no problem with the amendment.

I, too, would like to take this opportunity to say a few words of thanks to my colleagues for all their wisdom and support. I thank especially my noble friend Lord Browne of Ladyton for doing so much work on this Bill and for being such a constant source of support. I would also very much like to thank the Minister for the way he has handled the Bill—for his openness and his willingness to engage with appeals from all parties and to share the information and knowledge of his department. I thank the noble Lord, Lord Bates, for adopting a similar style and for his engagement. I thank the officials, too, for their helpfulness and their willingness to answer so many questions—in my case, often very stupid ones, which they have answered with graciousness and lots of information. We have all very much appreciated that.

The Bill has benefited from scrutiny in this House and leaves this place a better Bill than when it arrived, as is so often the case. It is the first Bill I have taken all the way through from the Front Bench and I have learnt a great deal from noble Lords on all sides. I have been grateful for the kindness and indulgence of the House as I have learnt on the job—a sort of apprenticeship, as one might have it. As the Minister said, the Bill has now benefited not only from the one victory that the House scored on mini-jobs—we hope very much that the other end will see the wisdom of that but, if not, we stand by our beds awaiting its return should that prove necessary—but from concessions around things such as service wives, auto-enrolment and categories of employer, and in other ways as we have gone through it. I pass my thanks to all noble Lords who have contributed at any point in the process. We all share a common objective of getting people in Britain saving for their retirement and I hope this Bill will help contribute to that objective.

Employment: Universal Jobmatch

Lord Freud Excerpts

Tuesday 11th March 2014 Lords Chamber

[Baroness Sherlock]

To ask Her Majesty’s Government what steps they are taking to ensure that all vacancies advertised on Universal Jobmatch are genuine.

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

The vast majority of employers post genuine jobs, and we do not hesitate to take action against those who do not follow our rules. We regularly monitor Universal Jobmatch to ensure that accounts comply, including that vacancies are genuine. If there is any cause for doubt, we will remove the vacancies until we have investigated. We continuously improve the service and are working with the provider to enhance our validation of employer accounts and vacancies.

[Baroness Sherlock (Lab)]

I thank the Minister for that very reassuring Answer. How does he then explain the fact that the media are reporting that a third of a million jobs on that website are ghost jobs? The Government were warned. The site has been found to be vulnerable to hackers. In the National Online Recruitment Awards, it won the wooden spoon for being a,

“mongrel of a recruitment website”,

that,

“commits almost every online recruitment crime, and then some”.

Channel 4 investigated last month. It found that one in 50 jobs had been placed by one man in Coventry. He could not prove that they existed, but it turned out that he made money every time he passed on a CV to a real agency. Channel 4 found out that, of the 600,000 jobs there, 118,000 were from one door-to-door catalogue company. This is a disgrace. You could not make it up. Will the Minister tell the House two things: first, when did the Government first know that there were problems with ghost jobs on this site; secondly, can he assure the House that no jobseeker has been sanctioned for refusing to apply for a ghost job or a job which they feared was there just to harvest their personal details?

[Lord Freud]

My Lords, Universal Jobmatch has revolutionised the service of Jobcentre Plus. It is a transformative service. We have many people registered on it on a paperless basis. Half a million employers are on that service. As I said, we monitor it the whole time. We are now looking at 179 employers who may be in breach of our conditions and will suspend them if they prove in breach. I can assure noble Lords that no jobseeker will be sanctioned for not applying for a job that does not exist.

[Lord German (LD)]

My Lords, this website is crucial to people seeking to find a job, and many tens of thousands of people have found jobs as a result of it, but obviously there are concerns about people’s personal information and the security of it. What action has been taken against hackers, particularly those who seek to spread individuals’ personal information in their CVs to people to whom they have not applied for jobs?

[Lord Freud]

We have a thorough communication exercise to jobseekers to make sure that they look after their information online, just as anyone else needs to be careful with their information online, and we are currently looking to enhance our service through Universal Jobmatch to make sure that we do not have this kind of problem.

[Lord Davies of Stamford (Lab)]

My Lords, there is quite a lot of anecdotal evidence, certainly in Lincolnshire and I suspect elsewhere, that it is disproportionately difficult for older people in their 50s and early 60s to get jobs through the jobcentre system. In the event that there is evidence of age discrimination against applicants, it is very unreasonable to expect the applicant, who may be a man or woman without means or with very slender means, to pursue his or her own legal redress. Is it the Government’s policy in such circumstances to pursue the case and if possible to prosecute? Have there been any prosecutions for age discrimination instigated by or supported by the department?

[Lord Freud]

The Government do not support age discrimination of any kind, particularly in looking for jobs and we are vigilant to make sure that people do not experience such discrimination.

[Lord Lea of Crondall (Lab)]

Does the noble Lord recognise that some jobs advertised at the minimum wage do not get the minimum wage—not because of national insurance but because of deductions of commission or something like that? What steps are the Government taking to investigate practices along those lines?

[Lord Freud]

That is one of the specific areas in which our terms and conditions rule out going on to Universal Jobmatch. We will look at those jobs and employers and suspend them and withdraw those jobs.

[Baroness McIntosh of Hudnall (Lab)]

My Lords, the Minister did not answer my noble friend Lord Davies on the subject of prosecutions for age discrimination. Does he have that information?

[Lord Freud]

I do not have to hand how many prosecutions we have made, but I will of course write when I know that information.

[The Earl of Listowel (CB)]

My Lords, as more people are being encouraged into work, is the Minister aware that unidentified mental health needs are becoming more apparent? How can these people be helped to address their mental health needs so they can benefit from the services of the kind he is discussing?

[Lord Freud]

The greater intensification of the relationship between the jobcentre and claimants as a result of universal credit and the claimant commitment has begun to unpick some of the challenges and barriers that claimants face. One of those, clearly, is mental health and we are undertaking an exercise to look at how we can help such claimants. That is not easy. No one in the world has managed to achieve this. We are currently looking at doing a series of pilots to find out how best to help people with mental health problems.