Pensions: British Pensioners Overseas

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 11th March 2015 Lords Chamber

[Lord Freud]

I regret I cannot give my noble friend any comfort. Full uprating to today’s levels would cost us more than £0.5 billion and while partial uprating—in other words, just starting to move current levels of pensions up by the increases—would start off being much less than that, those costs would rise in the medium term to a level similar to the full uprating.

[Baroness Turner of Camden (Lab)]

My Lords, is it not really rather unfair? I have a relative who retired to South Africa, where there is no reciprocal agreement. He is very upset that he paid the appropriate contributions before leaving this country and his pension will nevertheless be frozen. Should not people who have made some contribution at least have some gesture from the Government in favour of fairness, which is, apparently, not available at the moment?

Housing: Underoccupancy Charge

Debate between Lord Freud and Baroness Turner of Camden

Tuesday 24th June 2014 Lords Chamber

[Lord Freud]

There are some 200,000 smaller premises in the social rented sector available through each year. We are now seeing a good increase in the number of home exchanges. Some systems are going up and the housing partners’ HomeSwapper scheme, for instance, has now had a 25% increase partly because of the effect of this change.

[Baroness Turner of Camden (Lab)]

Is the Minister aware of disputed cases being referred to the Local Government Ombudsman for decisions? If so, have there been any decisions in favour of the claimant as I understand that some people have disputed the charges that have been made under the bedroom tax?

[Lord Freud]

I am not aware of the ombudsman process. The process of which I am aware is when people appeal to the tribunal; there have been more than 100 such cases, which have gone one way or the other—some have gone to appeal and some have been accepted.

Pensions Bill

Debate between Lord Freud and Baroness Turner of Camden

Monday 24th February 2014 Lords Chamber

[Lord Freud]

My Lords, as your Lordships know, the purpose of the review of state pension age is to inform the Government. The reports from the Government Actuary and the independently led review, which will feed into the review, should collect and analyse the latest data, and give the Government of the day the information they need to make what will always be a difficult and contentious decision.

We are all keen that the Secretary of State receives a report that is impartial. Because we are requiring that all reports compiled as part of the review are published and all future changes to state pension age continue to go through primary legislation, any proposal based on a report that is not impartial, credible and comprehensive will quickly fall apart when scrutinised by stakeholders and both Houses of Parliament.

Turning first to the substance of the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, if one thing is apparent it is that there is no clear consensus on who should sit on the review, what they should look at, or how they should collect the necessary evidence. We have been clear in Grand Committee and in the other place that this Government’s vision of the review is one similar to the independent review of public service pensions. That review was run by the noble Lord, Lord Hutton, a member of the opposition Benches and an expert in his field. It was transparent, comprehensive, independent and established a consensus.

Noble Lords will also be aware that the Pensions Commission, set up by the previous Government, had three commissioners from the areas of business, trade unionism and academia: not a single politician or Cross-Bencher. That commission gained support through comprehensive and open debate about the issues and trade-offs, rather than being based on the inherent characteristics of the commissioners’ backgrounds.

In short, the amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, would preclude these two successful models. It would result in a body of at least six individuals from stakeholder groups, the other place and this House. It would not necessarily have the expertise to review the relevant data and would effectively create a mini parliamentary process before the parliamentary process proper. We do not think that is the right way to run a review designed to inform the Government. In the Bill as currently drafted there is nothing to prevent a future Government running the review in whatever way they think best. That is a key point underpinning our approach to the review—getting future Governments to take active ownership of and responsibility for all aspects of the review, instead of just going through the motions.

Turning to the factors to be considered as part of any review, I must note that in response to the recommendation made by the noble Baronesses, Lady Turner and Lady Sherlock, we do not have the data regarding the relationship between specific occupations or types of work and life expectancy and healthy life expectancy. Beginning to collect such data would be both burdensome and, I imagine, for some professions simply impossible. More generally, we do not think it is necessary to specify any factors to be considered in legislation. We have already consulted stakeholders on what factors they think are important, and stated the factors we expect to be considered in the White Paper. The Opposition are worried that by not specifying the factors in legislation, future reviews simply will not consider important variables. However, what kind of support would such a review generate?

We want to encourage all interested parties to feed in their thoughts and contributions to better involve them. Specifying factors in the Bill could send out the message that we have already thought of everything important, and that future Governments do not need to consider additional factors as they are not set out in primary legislation. Such an approach could lead to a tick-box mentality, with Governments simply going through the motions instead of taking a proper, considered approach to each review. My point is illustrated by the fact that another factor has been added to the Opposition’s amendment since its predecessor was tabled only a month or so ago. Other noble Lords have also previously suggested additional factors, including life expectancy of the lowest income decile, prevalence of smoking and quality of diet. This demonstrates that the determination of relevant factors should take place after a thorough and extensive consideration and on an iterative basis for each review.

I turn now to the review’s remit. We believe that the Government should maintain control of this to keep it focused on the task at hand. There is nothing in the Bill to prevent the Secretary of State of the day updating the remit of the review, and we—or, more importantly, stakeholders—would fully expect him or her to do just this if new and compelling factors were identified during the course of the review.

The amendment of the noble Baroness, Lady Sherlock, also requires evidence to be gathered in public sessions. Although there is nothing in the Bill to prevent some evidence being taken orally—rather as Select Committees do—noble Lords will be aware that the nature of the analysis around state pension age, such as the myriad tables, charts and graphs, does not lend itself well to public sessions. Underpinning our approach is the idea that each Government will fully own and be responsible for the review. Setting out membership and factors to be considered restricts rather than increases that responsibility. It would instead limit the scope of reviews and reduce engagement by stakeholders. I therefore urge the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank the Minister for his response. It does not surprise me, but, on the other hand, I still think that the type of work that people do is very important. There are, of course, already industries in this country in which there are different ages of retirement for different types of work. It is not unusual for that to happen; indeed, it is quite a common practice, if an industry is particularly stressful or difficult, for there to be a lower retirement age for that kind of work. It is not an unusual state of affairs but one that is highly regarded where it applies—and people accept it. They think, “Oh well, that sort of work is very tough, but at least you go a bit early for it. You don’t have to stay and work there—after a certain time you can go”.

My husband, who was a pilot in the war, tried to stay in the Air Force because they were recruiting people to fly civil aircraft when the war ended. He tried to get into civil aircraft because he was a pilot, with decorations, but he was disappointed to find that he could not do so. He wanted to get into the civil air force because they had an early retirement age; he thought that he could retire at 50 and start becoming a full-time artist, which is what he had always wanted to do. But he did not manage to do that. I give that as an example, because the age of retirement was different than for general people. So it is not an unusual situation.

I still think that it is quite sensible to have a provision under which it is possible for a review to take seriously into account the type of work that is involved. However, I note what the Minister has said this evening and I shall study it with interest. In the mean time, I beg leave to withdraw the amendment.

Pensions Bill

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 8th January 2014 Grand Committee

[Lord Freud]

My Lords, it was not my intention that the noble Lord should be worried about it. I ask the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank the Minister for that response but he will not be surprised to learn that I am not terribly happy with it because I cannot envisage a situation in which any element of pension provision could be linked to prices rather than anything else, and rather than the triple lock which we have all talked about. Therefore, although I thank the Minister for his detailed response, we will have to look at it very carefully because I am not happy about any element of pension provision where there is revaluation based on prices. It is out of kilter with the rest of the thinking in relation to pensions generally and we will certainly have to think about this and come back to it on Report. However, in the mean time, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Freud]

Well, my Lords, I was responding to the comments of the noble Baroness, Lady Drake, on the negative procedure generally. It is fairly odd to have two separate procedures going on within one process. That is the point.

I will try to deal with government Amendments 48 and 49. Schedule 14 currently provides that regulations can create exceptions to the limits set out in paragraph 2(2). This was originally provided to deal with unusually funded schemes, such as fixed cost-share schemes, which I hope goes to the issue raised by the noble Baroness, Lady Drake. The Delegated Powers and Regulatory Reform Committee raised concerns about the power. In light of this and our ongoing discussions with the pensions industry, we no longer believe that we need this power—we believe that something different is required—so Amendment 49 removes it. Amendment 48 then makes specific provision for employers with atypical scheme-funding arrangements, such as cost-share schemes. It allows those employers to recover their increased costs without affecting the safeguards provided by Schedule 14.

In the statutory override we have designed a process whereby employers can continue to sponsor defined-benefit schemes without losing the rebate. We have included provision to allow for a pivotal role for actuaries in signing off any changes but we have not restricted the ability of trustees, and indeed members, to express their views to the employer. We have ensured that trustees are not forced to decide whether to accept scheme changes or risk closure of the scheme. I hope that this reassures noble Lords and I urge the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank everyone who has contributed to the debate. I agree, of course, that it is a complicated matter but, on the other hand, the complications take place within the context of what is in the Bill. The Bill makes it clear that in future employers will have the right to change the provisions of pension contributions and benefits. That is what most of us are concerned about. I do not think that the Minister’s response has dealt with the fear that people have that they are now facing a possibility that DB schemes could be under attack. They have been under attack in the past. Although I agree with everything that has been said about the necessity of involving trustees—of course I believe in that—when in the past employers have changed from a DB scheme to something less good, which has happened, the trustees have been consulted but have made no attempt to disrupt what the employer had intended to do. I therefore still do not think it is sufficient to say that the trustees have to be consulted. There has to be general consultation. The problem is, of course, that it is in the general context of the Bill, and the general context of this clause, which gives the employer power to change the benefits system through the DB scheme that may exist.

People are concerned about the continuation of their DB schemes. As I have said in the past, DB schemes which have been negotiated in the past have been responsible for improving benefits for a whole generation of pensioners. They want to continue with those schemes and to ensure that the unions to which most of them belong will have the right to ensure that negotiation will properly take place before anything can be done to remove those benefits that they all value so highly from them.

In those circumstances, while I have listened very carefully to what has been said, particularly to what the Minister has been saying this afternoon, I will look again at what he said. However, concerns still exist about Schedule 14 and the wording of this clause, and we shall certainly return to it on Report. Personally, I have not been satisfied with what I have heard and am quite certain that a number of other people will not be either. There has to be much more of a debate. Unfortunately, a number of our Members have left because we are running rather late tonight. A number of people who have tabled amendments have not had the opportunity to speak to them and so on. I beg leave to withdraw the amendment.

Pensions Bill

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 18th December 2013 Grand Committee

[Baroness Turner of Camden]

I support what my noble friend has just been saying; nobody likes being dumped. I do not know whether noble Lords have seen from the newspapers lately that there has been a rise in the number of older women divorcing. It is quite remarkable; people who are quite elderly and approaching pension age are getting divorced, whereas formerly they simply put up with it. It can be quite a problem.

[Lord Freud]

My Lords, I will avoid the issue of divorce rates because I am aware of the quagmire in which I will incredibly rapidly end up if I say anything at all.

The final amendment tabled by the noble Baroness on the issue of derived entitlement focuses on the impact upon divorcees and people whose civil partnerships have been dissolved. Under the current system, divorcees can—through a somewhat complex mechanism colloquially known as “substitution”—use their former spouse’s or civil partner’s contribution record to qualify for a full, or enhanced, basic state pension. With the ability to derive a pension ending for post-2016 pensioners, we accept that some divorcees may be affected, and they are likely to be those divorced relatively late in their working life. We estimate that these individuals could number about 70,000 up to 2031.

Turning to the specific situation of divorced women, it is likely that single individuals who themselves have not achieved a record sufficient to build up a full basic state pension will be eligible to claim guarantee credit, which is considerably higher than the maximum a divorcee could derive from a former spouse through the current, complex substitution arrangements.

These provisions are extremely complex and, as with the married woman’s and widow’s pensions, there is no longer any substantial need for these arrangements because the vast majority of women will receive a pension in their own right.

I repeat that in designing the transition to single tier, we have had to make decisions about the way that we spend the money we have available and about how to achieve the simplicity needed for people to make decisions about their retirement plans. A safety net will remain in place and absolute losses will, on average, be relatively small. I therefore urge the noble Baroness to withdraw the amendment.

Pensions Bill

Debate between Lord Freud and Baroness Turner of Camden

Monday 16th December 2013 Grand Committee

[Lord Freud]

My Lords, I shall respond where I can. I think that I shall have to write on the future of the savings credit as a result of an earnings increase of guaranteed credit, as it is quite complicated. At this stage, I shall also have to write to confirm exactly where we are on the question of whether the figure is gross or net. In practice, I think that I will end up writing quite often on these figures because they are quite complicated and one wants to double-check them carefully. Offering responses on the hoof may be a little dangerous and I shall be reduced to writing more often than would be the case with some of the other things that we discuss. With those issues raised and with a process to deal with them, I again ask the noble Baroness to withdraw her amendment.

[Baroness Turner of Camden]

I thank everybody who has participated in this debate, which has been very interesting. It has demonstrated that there really is a bit of a problem here with current pensioners who feel that they have been neglected, and I think that they have some justification for feeling that. I am very interested in what the Minister had to say, particularly on pension credit. I shall look at that very carefully when we have the opportunity to read what he has said this afternoon.

I am surprised that there has not been a rather better reception for the amendment tabled by the noble Baroness, Lady Greengross. Quite frankly, I cannot see what there is for the Government to lose by having an annual review of pensioner poverty. I should have thought that it would be a very good idea, and it would certainly ease some of the concerns that pensioners have at the moment. In the mean time, I shall withdraw the amendment—

[Lord Freud]

I want to make it absolutely clear, if I did not do so in my answer, that that information is provided annually. I was by no means not accepting that amendment; I was just making the point that it was a good idea and, as such, had already been implemented.

[Baroness Turner of Camden]

I accept that the Government have the information and I am very grateful for that. On the other hand, we were hoping that there would be an opportunity in Parliament to discuss the results of a review annually. That would give us the opportunity, as parliamentarians, to see what the position was annually as far as poor pensioners were concerned. That was one of the aims of the noble Baroness’s amendment. However, I am very grateful for what the Minister has said this afternoon. We will look at it with a great deal of concern because we are still worried about what happens to existing pensioners. We know that some of them are upset and worried that they have been missed out in the pension review, which is what this Bill is all about. Therefore, I will certainly have a look at what has been said not only by the Minister but by everyone else in this very interesting debate. In the mean time, I beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Freud]

My Lords, under the single-tier pension we will be merging two schemes: the basic state pension, which requires 30 qualifying years for the full rate, and the state second pension, which you can contribute to for up to nearly 50 years.

Requiring 35 qualifying years for the full single-tier pension strikes the right balance. It will enable the majority of people who contribute to achieve a full state pension through either work or the comprehensive system of credits available to people unable to work, while still retaining the contributory principle. This leaves considerable leeway for people to have gaps of up to around 15 years in their working life and still qualify for the full rate. In 2020, the significant majority of single-tier pensioners—around 85%—will have 35 qualifying years or more. Our analysis suggests that in 2020 around 90% of male and 80% of female single-tier pensioners will have 35 or more qualifying years.

There is a simple response to the point that the noble Lord, Lord Browne, raised about expectations. In the existing system, we have no such thing as a full state pension. We have £110 basic, plus who knows how much additional pension. It is complex and people do not know what to expect. That is exactly the point that the single-tier pension will address.

In the early years after implementation, people in Great Britain with between 30 and 34 qualifying years are just as likely as those with 35 or more qualifying years to have a higher state pension under single tier than under the current system. The transition calculation provides for a “better of” comparison at April 2016 so that the person receives the higher of their national insurance valuations based on old and new scheme rules, with the old rules being based on 30 qualifying years.

That will, in fact, advantage some people because, where someone does not have the 35 years needed for the full level of single-tier pension, they will receive a pro rata amount according to the number of qualifying years that they have built up, provided that they meet the minimum qualifying period. Someone with 30 qualifying years would therefore get a single-tier valuation of 30-35ths of the full rate, or around £123 per week, as my noble friend Lord Stoneham pointed out, less any adjustment for contracting out based on the illustrative single-tier rate of £144. In many cases, the single-tier valuation will be higher than the valuation that people would get under the current system, as 30 qualifying years of basic state pension gives an income of £107 a week in 2012-13 terms.

Furthermore, where someone’s foundation amount in 2016 is below the full single-tier rate, people will have the opportunity to increase this amount by gaining additional single-tier qualifying years before reaching state pension age through work, paying voluntary contributions or receiving national insurance credits. The current broad range of credits will be mirrored under single tier, and when universal credit is in place, it will extend credits to an additional 800,000 people who do not receive them under legacy benefits.

These arrangements recognise people’s contribution records in the existing scheme and allow people to have significant gaps in their national insurance record while still ensuring that 80% of new single-tier pensioners reaching state pension age by the mid-2030s receive the full rate of the single-tier pension.

The amendment tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord Browne, would require the Government to conduct a review of a phased transition for the move between 30 and 35 years for a full pension. I hope that I have reassured noble Lords that there is little evidence that such transitional arrangements are needed. However, I need to point out that, if a review were to recommend a single-tier pension based on a 30-qualifying-year requirement, this would carry with it cost implications. The estimated cost of such a system, compared to a 35-year model, would be around £700 million per annum in 2030 and £2.9 billion per year by 2060.

Furthermore, to reinforce the point about uncertainty raised by the noble Lord, Lord Browne, a delay in defining the qualifying requirements for the new system, which a review would necessitate, would introduce uncertainty for those closest to retirement. The period following Royal Assent will be a crucial time for the delivery of single tier, and making fundamental changes at that point might well delay implementation. This moves back to the amendment raised by the noble Lord, Lord McKenzie, about the importance of communicating the reforms and a clean communication. The point on the move from 30 years to 35 seems more of a communications issue than one of principle. To this end, helping people to understand how they may be affected, we have been conducting field work on communicating the impacts of the policy. I therefore ask noble Lords to withdraw these amendments.

[Baroness Turner of Camden]

I thank everyone who has participated in the debate because it has been very interesting. However, I have listened very carefully to the Minister and I remain unconvinced. Many people will wonder why on earth there is the change to 35 years when they were used to 30 years for the basic state pension that they have in operation now. They do not understand why there should be this difference and neither, in fact, do I. The Government have produced some information about costs, as has the Minister this evening, that seem quite fantastic to me. I will look at them very carefully because I will probably want to come back again, perhaps in a different way, when we look at the whole thing on Report. I will look carefully at what everyone has said in the debate because it is an issue that is of interest and concern to many people, otherwise I would not have put it down. However, in the mean time I beg leave to withdraw the amendment.

Housing Benefit

Debate between Lord Freud and Baroness Turner of Camden

Monday 4th March 2013 Lords Chamber

[Baroness Turner of Camden]

To ask Her Majesty’s Government what steps they will take to assist families facing homelessness as a result of housing benefit changes due in April this year.

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

My Lords, this Government are committed to tackling homelessness, and we do not accept that our housing benefit reforms will increase the level of homelessness. The changes do not necessarily mean that people will have to move, but claimants will have to make the same choices about affordability as those not on benefits. Reforming the welfare system in an effective manner is necessary not only to improve the wider fiscal position but to help to get people off benefits and into work.

[Baroness Turner of Camden]

My Lords, I thank the Minister for that response. However, is he aware that more than 600,000 households could be affected by this change in benefits, that many people who are unable to meet the requirements under the new benefit arrangements will have no alternative but to get into arrears, and that, if they get into arrears, they will face eviction, which will result in homelessness, despite what the noble Minister has said?

[Baroness Turner of Camden]

What steps are the Government taking to try to deal with the consequences arising from these new arrangements in regard to housing benefit cuts?

[Lord Freud]

My Lords, we are expecting a number of responses by people affected by what is effectively the removal of a spare-room subsidy. Clearly some will find that they are capable of paying to retain that extra room, some will look to work, some will look for lodgers and some will look for shared tenancies. Where the options are more limited than that, apart from downsizing, we have had substantial discretionary housing payments transferred to local authorities in order to ameliorate those situations.

Employment and Support Allowance Regulations 2013

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 13th February 2013 Lords Chamber

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

My Lords, I can confirm that in my view the statutory instrument is compatible with the European Convention on Human Rights.

As with the JSA regulations we have just considered, these provisions are designed to work alongside the introduction of universal credit by removing all the existing income-related provisions from ESA. From April 2013, the income-related elements of ESA will gradually be phased out for any cases where universal credit has been rolled out. These regulations will introduce new conditionality and sanctions regimes into ESA benefits to align them with universal credit. The ESA sanctions regime is, following reforms made last year, already significantly aligned with the UC sanctions model. However, beyond these changes, people will find that the effect of the existing employment and support allowance regime is unaltered.

Noble Lords may find it helpful if I provide more detail on how these changes will be applied. ESA is a benefit with which all noble Lords will be familiar and is payable to people on the basis that they have a disability or health condition that affects their ability to work. As with the changes that we are making to JSA, these regulations provide new claimant responsibilities and sanctions for claimants who fail to comply with the conditionality regime.

The requirements placed on ESA claimants are also based on the universal credit model. For example, where appropriate, ESA claimants can be required to prepare for work and attend work-focused interviews. These requirements are broadly equivalent to those placed on claimants in the universal credit work preparation and work-focused interview-only conditionality groups. Therefore, ESA claimants will not be required to look, or be available, for work. I should also stress that ESA claimants can be subject only to the lowest levels of sanctions. These sanctions have an open-ended element that stops building when the claimant complies, so the quicker the claimant engages the shorter the sanction will be.

The two levels of sanctions broadly work in the same way as the equivalent sanctions for universal credit claimants in the work-preparation and work-focused interview requirement groups. The high and medium-level sanctions in JSA and universal credit, which are for longer, fixed periods, do not apply to ESA claimants. Our aim is not to impose sanctions. We want claimants to comply with the reasonable requirements that will prepare them for work. Therefore our focus is on ensuring that the requirements expected of claimants are reasonable and clearly communicated to them. Only if claimants fail to meet a suitable requirement without a good reason will a sanction be imposed.

As with the JSA provisions, these regulations were subject to statutory formal consideration by the Social Security Advisory Committee. The committee decided that formal referral was not necessary, but raised a number of points, which were all considered, and changes were made where appropriate. For example, the committee questioned Regulation 46 of the ESA regulations, which originally provided that the purposes of a work-focused interview included the five things in the list. The committee questioned whether this meant that the interview had other purposes that were not included in the list. We decided that the list should be exhaustive, and therefore amended the wording of the regulation to remove the word “include”.

As the sanctions and conditionality rules for both benefits were being brought broadly into line with universal credit, both sets of regulations were included as part of the Social Security Advisory Committee’s wider UC consultation exercise. We firmly agree with the committee that the key to an effective sanctions regime is clear communication with claimants, delivered by well trained advisers. In line with assurances sought during the passage of the Act, stakeholders were keen to ensure that the sanctions regime incorporates sufficient safeguards for vulnerable claimants.

Noble Lords will know that I share concerns that the sanctions regime incorporates robust safeguards. I would like to assure noble Lords that a number of protections will be in place, for example visiting or calling claimants with a mental health condition or learning disability before a sanction is considered.

In closing, I reiterate to noble Lords that beyond the changes I have outlined, the rules for the new style ESA will be very similar to the existing rules for the contributory element of ESA. I would also like to thank the Secondary Legislation Scrutiny Committee for its earlier consideration and analysis of these regulations. I seek noble Lords’ approval of the regulations here today, and I commend them to the House.

[Baroness Turner of Camden]

My Lords, very briefly, I wish to raise with the Minister the issue of appeals and appeals mechanisms. Where I live, I am often approached by people for advice, particularly by those on DLA. Of course, DLA will be transformed into the personal independence payment under the new system. At present, when people come to me to complain that they do not have the amount of DLA they thought they ought to have, I always advise them to appeal. I tell them what they ought to do, and I advise them to consult the local authorities and to proceed accordingly. The notable thing about appeals against DLA assessments is that 40% of them are successful. That raises a number of questions in my mind about the people who carry out the assessments.

What will happen under the new system? Will a private firm do the assessments, as happens with DLA, and how will the Government ensure that the private firm doing the assessment is capable of doing the job effectively? I have doubts about the way in which the present system operates when so many people are dissatisfied and so many people are successful at appeal. That is very unsatisfactory. From the point of view of those concerned, it makes them feel that the system works not for them but for the Government on behalf of people who want to diminish the amount of money that is spent in support of people who are on benefits.

As regards legal aid, after April that will not be available for anyone who is concerned to contest an appeal. There may be people who are very aggrieved because they are not getting the benefit assessment that they ought to have, even under the new system, but what course will they have to follow, and how can they follow it? Are the Government satisfied that the people doing the assessments are capable of doing them?

Personal Independence Payment

Debate between Lord Freud and Baroness Turner of Camden

Thursday 13th December 2012 Lords Chamber

[Baroness Turner of Camden]

My Lords, the noble Lord will no doubt remember that I have raised the issue of Remploy on a number of occasions in the past. My current information is that most of the people who were made redundant as the result of the closure of the Remploy factories remain unemployed now. So getting rid of them has not increased opportunities for them to become independent—quite the contrary. I am sure the Minister knows that the unions involved are still protesting about it and still believe that the closure of the Remploy factories has certainly not helped the disabled people who once worked there and had the opportunity to make some sort of living. There are also, of course, the people who supervised their work—looking after disabled people is a specialist kind of supervision which requires a bit more training perhaps than ordinary supervision—and they also have been made redundant.

I am glad to note that the Government are continuing with their consultation and paying some attention to the way in which the transition from DLA to PIP will take place. That is very important because I have received a number of letters from disabled people expressing a great deal of concern about the transition. Although it is very nice to talk about independence and so on, one of the first things one loses when one becomes at all disabled is a feeling of independence. I speak from some knowledge because I am partially, although not very, disabled myself. Things that you used to do for yourself you have to rely on other people to do for you. It is all very well if you can afford to pay someone else to assist you but that is not the case for very many people. I am fortunate enough in that I can pay for others to assist me, but if I were not able to and relied on DLA, I would be very concerned about whether my independence would continue to be looked after if I had to rely on a different kind of benefit. So it is going to be very important to look at the transition because, as far as I can see, people who are disabled are very worried about moving from one benefit to another.

I ask the Minister: is there an appropriate system of appeal? If people are assessed in a way that they feel is not correct and does not maintain their independence, it is very important that there is a system of appeal. My understanding is that, in the current situation where there are appeals, roughly 40% have been successful. This indicates that the people doing the assessing have not been very skilled in their assessment. It is, therefore, necessary to have an appeal system.

[Lord Freud]

On the noble Baroness’s key question, clearly there will be an appeals system, as there is for the WCA. The reason behind the 40% success rate for those who go to appeal—and that figure is roughly right—is usually that there is new information, either oral or written, which was not originally available. On that basis, I do not think it is fair to say that the original WCA and Atos were at fault. Clearly that is not an appropriate charge if one is looking at a different set of information. The real question is whether all the relevant information can be made available at an early stage. We are looking to make sure that there is not additional information which would mean a claimant going to appeal, as that is expensive. The question is whether we can ascertain that earlier in order to truncate the process.

Unemployment: Older Women

Debate between Lord Freud and Baroness Turner of Camden

Tuesday 16th October 2012 Lords Chamber

[Lord Freud]

My Lords, the crude facts of the matter are that more older women are employed than ever before—3.5 million—and the rate of employment is also at an all-time high of 60.6%. Older women are doing extraordinarily well in the workforce and the reason for that is that they are very valuable employees. Even the BBC seems to have got round to recognising that.

[Baroness Turner of Camden]

My Lords, does the Minister not appreciate that many older women have not only the job of going out and trying to build up the family income but a valuable role as carers in many families? What can be done to assist women who have this double responsibility, both of working to boost the family income and providing much-needed carers in the family?

[Lord Freud]

My Lords, this is clearly of great concern to this Government and all Governments. We are taking significant steps to help carers. About one in six of older women who are inactive are inactive because they have caring responsibilities. Creating a far more flexible carer’s allowance and a universal credit element is one of the ways in which we are looking at that issue. We are also introducing flexibility in our conditionality regime at Jobcentre Plus.

Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) (No. 3) Regulations 2012

Debate between Lord Freud and Baroness Turner of Camden

Monday 15th October 2012 Grand Committee

[Lord Freud]

My Lords, I think I will end up writing a letter, but I ought to try to answer the questions in general terms, thus saving a little effort in terms of letter writing. The first point made by the noble Lord, Lord McKenzie, concerned the potential changes to CPI and RPI. About a year ago we had the most glorious debate on this matter, for which I enjoyed researching probably more than any other topic. I think I am pretty comfortable in saying that the authorities are looking at these two measures and that there are likely to be some changes. RPI has had a very bad press lately, as some noble Lords who are aficionados will have noticed. If and when that change happens, we will have to take a decision, but it is pretty premature to take two hypotheticals and jump to a conclusion ahead of time. We will engage closely with the ONS to ensure that the potential impact on pension re-evaluation is fully considered.

On relying on trustees, my noble friend is absolutely right that there will be trustees here. This is just a technical change. The way it was drafted would have excluded these particular schemes, so that is the way that that has been addressed. This is moving into where schemes go into deficit and the question from the noble Lord, Lord McKenzie. They will be required to find funds for the minimum revaluation rate. Section 75 debt will continue to be calculated on the basis that the minimum revaluation rate will apply. The sums go on, even though the scheme has a problem which needs to catch up.

On the schemes that revalue benefits by reference to earnings, we are committed to considering further how that kind of revaluation could be allowed for. Historically, earnings have gone up faster than inflation so it is a lower risk, although that has not necessarily happened in recent years. On the question of whether the provision for discretionary revaluation would be required to be at least that necessary to meet the minimum rate—CPI, RPI or whatever is lower—the answer is yes. Regulation 36(3)(a) stipulates that a scheme with benefits to be revalued on the exercise of the discretionary power can be a qualifying scheme if,

“the funding of the scheme takes account of the exercise of the discretionary power and does so on the assumption that accrued benefits would be revalued at or above the minimum rate”.

That figure is CPI or RPI, whichever is the lower.

I may have answered all the questions without the need for a letter. That would be one of the miracles of our time. I will make sure and, to the extent that we have not absolutely locked this down, I will send a letter over because it is a very technical area.

[Baroness Turner of Camden]

I have a question. There has been a report in the newspapers recently that a number of small employers have no idea how to operate the new scheme. Of course, the problem is that if it is not operated, a lot of people will not get the choice of whether to go in, opt out or whatever. I am interested to know whether the Government are taking on board the problems with smaller employers who really do not understand what is actually involved in getting people into the automatic scheme.

[Lord Freud]

Yes, I can pick that up. Clearly, there is a staging going on. Smaller employers are towards the end of that, and are two or three years out from now. It would clearly be hugely counterproductive to send them an early letter which tells them that in two years’ time this or that will happen because they will tend not to look at it. It is really important in a communication exercise that we time it right. It is somewhat encouraging that quite a few knew that this was coming. A communication exercise is integral to us launching this properly. That is a key point.

To sum up, the point of this measure is to make sure that good-quality career-average pension schemes can be used for automatic enrolment. It allows flexibility without compromising individual protection and closes a particular gap in the legislation that we would not have wanted to see. On that basis, I commend the instrument to the Committee.

Motion agreed.

Future of Specialist Disability Employment

Debate between Lord Freud and Baroness Turner of Camden

Tuesday 10th July 2012 Lords Chamber

[Baroness Turner of Camden]

My Lords, the Minister will not be surprised that I protest about the decisions which have been made in relation to Remploy, because I have raised the issue previously in debate in this House. He will be aware, of course, that the unions representing their members in Remploy have already protested very strongly against the decisions that have been taken.

Although I understand what the Minister says about it being much better for workers to work with other people and not to be segregated, for many people segregated employment is the only work available and appropriate for them, particularly in the neighbourhoods in which they live. The local siting of Remploy factories is very important.

I believe that the decision has been taken on a number of grounds, not necessarily in favour of the individual workers. There is an ideological attitude here on the part of the Government, who prefer privatisation to publicly owned enterprises. This was a publicly owned enterprise, a government enterprise, which everyone felt for many years was entirely successful. Many of the workers do not seem to have the organisation to effectively protest, although apparently they all belong to unions.

There is also the question of the people who supervise these workers. Supervising disabled people often requires a great deal more skill than supervising in ordinary circumstances, and the people concerned are trained to deal with the disabled people for whom they are responsible.

This is an entirely bad decision. I challenged it when I understood that it was in the process of consultation, and the unions protested at the time. I very much regret that the Government have taken this decision. As my noble friend on the Front Bench said, I hope there will be an opportunity for reconsideration, because there should be reconsideration. This is an important matter to the people who are directly involved, and I would like to protest on their behalf.

[Lord Freud]

My Lords, the first claim of the noble Baroness, Lady Turner, about segregated employment being the only employment available, is undermined somewhat by the fact that many of the jobs provided by Remploy Employment Services are in the areas where the factories are situated. Indeed it is having a great deal of success in getting jobs for disabled people in non-segregated employment—I think that the figure is roughly 12,000 jobs in those areas in the past few years. Clearly it is tough to get jobs for disabled people but Remploy Employment Services’ remarkable performance shows how, with the right strategies and policies, one can be successful in getting people into non-segregated employment—which is, of course, our central strategy.

I do not think that the noble Baroness really believes that this is an ideological public/private issue. It is about segregated and non-segregated employment and trying to spread money as efficiently as possible among the disabled community. When you compare an operation which lost £70 million in 2010-11 and cost £25,000 year-on-year for each worker supported with Access to Work’s one-off investment, in many cases, of just under £3,000 to help people into non-segregated employment, you have to take these basic value-for-money considerations into account. I therefore commend this approach, which is being done with great concern and care for the individual workers involved, as a far better way of spending our budget for disabled people in work.

Youth Unemployment

Debate between Lord Freud and Baroness Turner of Camden

Monday 14th May 2012 Lords Chamber

[Lord Freud]

My Lords, my colleague Chris Grayling is responsible for unemployment generally, and of course youth unemployment within that.

[Baroness Turner of Camden]

My Lords, what are the Government doing to stimulate the introduction of apprenticeship schemes in the private sector to make sure that such schemes are available to young people who otherwise would not have appropriate training?

[Lord Freud]

Apprenticeships are one of the key things to help youngsters into the market. There were 457,000 starts in apprenticeships in 2010-11, and 60% of those are for the age group that we are talking about, the 16-24 year-olds. We are pushing apprenticeships very hard, and we have put in a programme to reinforce that with incentives to SMEs: for each apprentice they take on, they get £1,500 a year. That is being financed for 40,000 youngsters.

Workers’ Memorial Day

Debate between Lord Freud and Baroness Turner of Camden

Monday 23rd April 2012 Lords Chamber

[Lord Freud]

Yes, my Lords, the Prime Minister is right: legislation must be comprehensible to people if it is to be useful. That process is currently under way, and we aim to reduce the legislation by up to half by 2014. We are confident that that can be done in a way that actually enhances the effectiveness of our health and safety regime.

[Baroness Turner of Camden]

My Lords, I thank the Minister for his sympathetic response. However, is he not aware that there is one organisation which represents organised employees in this country that has a system of training and of safety representatives that is well worth considering? I am, of course, talking about the TUC. Does he not think it a good idea to have some consultation with the TUC on these matters?

[Lord Freud]

My Lords, I am pleased to say that alongside my colleague Chris Grayling I wrote to the general-secretary of the TUC on the matter of Workers’ Memorial Day. We are in regular contact with him on a large number of matters, and this is one of them.

Welfare Reform Bill

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 14th December 2011 Lords Chamber

[Lord Freud]

I think what I am saying is that you can take away the discretionary elements of support for this community, and that is already in the bag. I would like to add more to that, and that is what I mean when I say that there is value in legislative exemption. Then I move on to say that I am working on it. I am seeing some noble Lords who are familiar with government having a good giggle because they know exactly what is happening and they giggle with reality.

The way I have to express this—again, some noble Lords will recognise this better than others—is that doing more for this group may come at a cost, and we are operating in difficult financial times. I repeat that I have a real interest in this area, and when I am able to give firm answers, I will do so. This is a matter with which we will deal in regulations rather than in primary legislation. On that basis I urge the noble Baroness not to press her amendment.

[Baroness Turner of Camden]

My Lords, I thank the Minister for his response to my amendment on the requirement to attend work-focused interviews and for his promises. As for domestic violence, I did not get around to speaking to my amendment mainly because it was grouped with a number of other amendments and was not called. However, I am very obliged to the Minister for what he said about domestic violence. I beg leave to withdraw the amendment.

--- Later in debate ---

[Baroness Turner of Camden]

My Lords, I would like to speak very briefly to Amendment 36, which is in this group. This relates, again, to sanctions, and is an attempt to amend Clause 46, talking about high-level sanctions, which says that it is a failure sanctionable under this section if a claimant,

“through misconduct loses employment as an employed earner”.

Not all allegations of misconduct are accurate; sometimes the employee may claim that he is being discriminated against, or perhaps that he has blown the whistle on some unsafe practice and has not been guilty of misconduct. He therefore attempts to institute proceedings to try to demonstrate that the dismissal is unfair.

In such circumstances it seems that it is in line with employment rights if the employee is not sanctioned under this provision, because he has disputed whether or not his dismissal was fair, and has instituted appropriate proceedings. It is quite a simple amendment, designed to protect people’s employment rights, and I hope that the Minister will be prepared to look favourably upon it.

[Lord Freud]

My Lords, I will also try to be as brief as possible. We had a very good discussion on this area in Committee, and I can make clarifications which have been informed by some of that discussion. One of those clarifications is that we will limit the sanction amount to three years, so we will not have it compounding above that level.

The second relates to the parable of the prodigal son. From the argument of the noble Lord, Lord McKenzie, there has got to be a way back into the system. We are trying to change behaviour: where someone has come back and got a job for six months at his job goal level, we will take away his sanctions at that point. I thank noble Lords for the very informed debate that we had.

Welfare Reform Bill

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 14th December 2011 Lords Chamber

[Lord Freud]

My Lords, Amendment 13—and Amendment 48, which is a repeat of Amendment 13 but relates to Clause 68—tabled by the noble Baroness, Lady Turner, seeks to make a number of changes. I spoke earlier about how I propose to address the noble Baroness’s valid concerns about those living in adapted accommodation, and I hope that that has satisfied that particular position. On the related point raised by my noble friend Lady Thomas, the disabled facilities grants are quite separate from this; they are administered by local authorities to meet those costs. It is a separate pot, if you like, run by local authorities and not by the DWP.

Amendment 13 would create a new Section (3A). Proposed new paragraph (b) deals with the availability of work in an area and seeks to exempt claimants from the underoccupation measure by their not being relocated to an area where there is no suitable employment, or from a reduction if there is no suitable employment near their current home. We are not in the business of dictating to people where they can or cannot live and we have no intention of doing so. We expect that most people will choose to stay where they are and meet the shortfall. This was supported in the research from the housing futures network, which we have already discussed.

Let me put into perspective the numbers of people who are looking to increase their hours of work. We are talking about between two and four hours per week at the national minimum wage to meet these shortfalls. The amendment links an exemption to the availability of suitable employment, which would be hugely complicated to administer. We would need to define suitable employment and easy access, and in our view those are decisions for the tenants themselves to make, just as those people who live in the private rented sector or who are buying their own properties make such decisions. The labour market is constantly evolving. From a practical point of view, the exemption would be unworkable.

Proposed new paragraph (b), which would be inserted by Amendment 13, would appear to ensure that claimants are not forced to downsize against their will. The amendment would achieve that, but in practice it would go even further. It would enable claimants to block relocations by their landlord regardless of the circumstances. It is unusual for a social landlord to relocate a tenant without their consent, but they can do so in some circumstances, such as where they plan to redevelop the area. We do not intend to interfere in the relationship between landlord and tenant, and nothing in our legislation would force a tenant to move against their will.

On the size criteria measure, we are not seeking to force people to move, but we are asking people to consider the affordability of their accommodation where it is larger than they require, and I beg the noble Baroness, Lady Turner, to withdraw her amendment.

On Amendment 14ZA, which was tabled by the noble Lord, Lord McKenzie, I have set out our intention to increase the DHP budget with the specific aim of helping foster carers as well as disabled people in adapted accommodation. We very much value the work done by foster carers who care for and welcome children into their homes. That is why the benefit system already treats them more favourably by not taking those children, and, as a result, any fostering allowances, into account in their assessment. However, we recognise that there might be circumstances in which a reduction in the housing element of their benefit might act as a disincentive to fostering, and in such circumstances a local authority will have additional funds to award a DHP.

I should make the point here that local authorities will have a direct interest in applying those discretionary funds because they will make a saving by keeping the fostering market open. This is not one of the areas where one worries about discretionary funds being used in other ways; this is an incentive for the local authority. Just to reinforce that natural incentive, we are going to make sure that children’s services within local authorities will be made aware of the availability of DHPs and will input locally on their priorities. I know there are many concerns in this area, but I really think that we have closed the circle.

This amendment seems to go further and would not allow any deduction to the housing element, thereby prohibiting deductions for other income or non-dependant deductions. It also does not cover foster carers who are between placements and who therefore have no income from fostering allowances. The flexibility of DHPs will allow for such circumstances, if it is felt necessary.

The noble Baroness, Lady Wilkins, raised a point on the JCHR. We have just received that report and will be considering it very closely.

I consider that we are meeting the needs of this group through the increase to DHPs, and I therefore beg the noble Lord, Lord McKenzie, not to move his amendment.

[Baroness Turner of Camden]

I thank the Minister for that response. He seems to have made a number of concessions in response to me. He outlined some of the practicalities, which I understand. I intended the amendment to acknowledge that this is a very complex and difficult area. I was seeking to give a certain amount of guidance to the Government about the way in which it should be handled; otherwise a number of people are going to be very badly hurt, and there could be a few human tragedies on the way, which one would not like to have. I accept that the Minister has made a number of concessions this afternoon. This is a very complex area, so I would like to have the opportunity to study it again. It is unlikely that I will come back with this at Third Reading because we have been over the ground fairly comprehensively. In the mean time, I thank the Minister for the concessions that he has made and beg leave to withdraw the amendment.

Amendment 13 withdrawn.

Amendment 14

Pensions Bill

Debate between Lord Freud and Baroness Turner of Camden

Monday 31st October 2011 Lords Chamber

[Baroness Drake]

My Lords, I can see the purpose of Amendments 18 to 23, particularly the need to address the consequences of the Government’s decision to use the CPI for the statutory revaluation of pension benefits, yet not proceeding to introduce a statutory override to pension schemes whose rules explicitly provide for the revaluation additions to be calculated by reference to the RPI. I recognise that where the statutory method uses the CPI, there is an inconsistency for schemes that apply the RPI in the very infrequent event that the CPI exceeds the RPI in a particular year. In such a situation, schemes paying the RPI would, without these amendments, be faced with a statutory underpin of CPI. In effect, the rules of schemes that apply RPI would be interpreted to mean that revaluation is calculated by reference to the CPI or the RPI, whichever is the greater.

This amendment would remove that underpin requirement and allow schemes to continue to revalue by reference to the RPI, which would seem sensible and reasonable. While the Government are to be congratulated on not imposing a statutory override on pension scheme rules to apply the CPI rather than the RPI, where the rules so explicitly provide, the need for these amendments occur in part because of the open-ended decision by the Government to substitute the CPI for the RPI in the uprating of most benefits. It is with some regret that the Government did not put a time limit on that switch from RPI to CPI. There is scope for a review because I am sure that over the long term, when the economy returns to strong growth and earnings outstrip prices, and the price of key items is excluded from the indexation, the Government will need to revisit this matter.

That is particularly so for pensions, although I doubt that the Government will revisit this now. The change to the CPI from the RPI for evaluation effects a switch of assets and benefits from scheme members to scheme sponsors and does not directly impact the public deficit. None the less, it is clear that these amendments are a necessary flow-through from the Government’s decision, and I can see no reason to oppose them.

Amendments 24 to 28 are technical in nature and address matters relating to the indexing of the guaranteed minimum pension. Again, I see no reason to disagree with them.

[Baroness Turner of Camden]

My Lords, during our discussions on the Bill, one of the issues that raised a lot of controversy was the report that the Government intended to tell occupational pension schemes that in future they must apply the CPI rather than the retail prices index. That certainly led to a lot of opposition from people in occupational schemes. It also led to a lot of opposition from people in public sector schemes, because I gather that the Government are applying the CPI to public sector schemes instead of the retail prices index, which of course produces—currently, anyway—much larger increases than the CPI. I should therefore be grateful for confirmation from the Government that if an occupational scheme desires to continue with the RPI it will not be forced to apply the CPI, and that if it wishes to apply the retail prices index it will be able to do so, even though that is likely to produce—and will continue to be likely to produce—larger increases than the CPI.

[Lord Freud]

My Lords, this group of amendments cover Part 3 of the Bill. I am most grateful to the noble Baroness, Lady Drake, for her remark that the amendments are technical in nature and that she has no problem with them.

Perhaps I may pick up the point made by the noble Baroness, Lady Turner, on private occupational pension schemes. I can confirm that these underpin arrangements are about the ability of such schemes to maintain their own arrangements. There is no legislative pressure on them in that way.

Welfare Reform Bill

Debate between Lord Freud and Baroness Turner of Camden

Thursday 6th October 2011 Grand Committee

[Lord Freud]

Let me just make it absolutely clear what the Prime Minister was saying in the slightly more technical language that we understand in this Committee. The Prime Minister was making the point that we had created a series of inactive benefits onto which people were put and then left without any route back into the workplace. That was a dereliction of duty by Government. Our understanding has now transformed. We know that work is part of the solution for people with disabilities, not part of the problem. A key thing that we are trying to do in this Bill is to integrate the work process for people, whether they have disabilities—whoever they are. That is what the Prime Minister was saying. We are making an enormous effort to get people back into the workforce, and we are spending a lot of money—up to £14,000—on the people who are hardest to help, many of whom will have a disability. Underneath the political rhetoric, I think all noble Lords would agree with that sentiment.

[Baroness Turner of Camden]

Was the Prime Minister not speaking in support of the continuation of Remploy?

[Lord Freud]

I think we had the discussion about Remploy yesterday, and I will not go on about it again today.

Remploy

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 5th October 2011 Lords Chamber

[Baroness Turner of Camden]

To ask Her Majesty’s Government what action they propose to take regarding the future of the Remploy factories.

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

My Lords, no decision has been made on the future strategy for Remploy. The Government are currently consulting on the recommendations of the Sayce report. This consultation closes on 17 October 2011.

[Baroness Turner of Camden]

I thank the Minister for that response, but is he aware that hundreds of disabled people who rely on Remploy to provide them with employment are very worried about the continuation of their employment prospects? Remploy has a reputation for, and experience of, providing supportive work for people who want to work but who otherwise have difficulty in doing so. Would the Government please give support to this worthwhile enterprise?

[Lord Freud]

My Lords, we are aiming to support disabled people in employment, and we have to do that in the most cost-effective way that we can find. There is a remarkable difference emerging between the support to get disabled people into mainstream employment, which, when Remploy Employment Services does it, costs £3,600 a time on a one-off basis—the company is now getting 20,000 people in a year—and the cost of more than £25,000, year on year on year, to keep them employed in the factory services.

Health and Safety at Work

Debate between Lord Freud and Baroness Turner of Camden

Monday 4th April 2011 Grand Committee

[Baroness Turner of Camden]

The noble Lord has not mentioned trade unions once and yet this is a major part of all unions’ work. For many years it was one of my responsibilities within my union to run a scheme that provided assistance to people who had accidents at work. The TUC is very much involved with the prevention of accidents and so on and it is a major part of unions’ work. The Minister did not mention that. Although he referred to the register of people who are giving professional advice and so on, he did not mention unions at all.

[Lord Freud]

I apologise. That was an inadvertent miss-out. Clearly where there is a more responsive, not so proactive system, the unions would have a role in alerting the HSE where there were concerns. Clearly, the role of education and training in reducing health problems in many of these areas will be important.

One area in which I am most interested is what we will find from the sickness absence review. This has now been launched and will be looking at periods of sickness absence of 28 weeks. Stress-related and mental health-related issues account for around 40 per cent of such absence, and it will be very interesting to see whether we can use the new arrangements for managing sickness absence to ratchet up how employers look after their staff. I know that the sickness absence review team is actively looking at that. Therefore, there is a health and not just a safety angle here.

Pensions Bill [HL]

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 30th March 2011 Lords Chamber

[Lord Freud]

Let me accept that that is the intention behind the noble Baroness’s amendment—although when we costed it, we had to make an assumption about how we then bring it back up to pension age. We need not be technical. It is important when we debate these matters that we debate the underlying intention and not worry about precise things.

I reinforce my point: if we divorce the minimum qualifying age for pension credit from the state pension age, with the exception that the noble Baroness pointed out, the minimum age for pension credit becomes arbitrary, and people would well ask why it is at that age, not one year sooner or one year later. As life expectancy increases, more and more people will want to improve their incomes by working for longer. We should celebrate and encourage that. The amendment goes completely against that principle. We are clear that we want people below state pension age to work if they possibly can. The point of the proposals is not to take money away from people, as some noble Lords have said, but to encourage people to go on working longer, which should leave them with more income. We cannot give up on those people. They deserve our help and support in their endeavours to support themselves.

The other misapprehension is that there is inadequate provision in the universal credit for those who cannot work—people in ill health or people who have worked in manual jobs, who may not be able to continue working as state pension age increases. Again, that is simply not the case. Universal credit is intended to provide appropriate levels of support for those of working age, including those who, for whatever reason, are unable to work or have limited capacity for work.

The amendment will give no comfort to those who want to make entitlements much clearer and more transparent in an effort to ensure that they reach those who need them. It would mean providing complex and confusing information to customers. Unfortunately, it would come into place just when we are introducing universal credit, which is designed to have a pure, simple messaging to people to convince them of how they need to interact with the state. By producing this new, complicated system, we would undermine that simple messaging.

Quite apart from the messages, it would also add significantly to the complexity of the benefits system, confusing the people it is designed to help and the organisation delivering it. In order to deliver that confusion, which would obscure entitlements and potentially discourage people from working in the years before they get their state pension, the amendment would present the taxpayer with an unaffordable bill. For the financial years 2016-25, we estimate that it would be around £1.9 billion, and there would be further costs in the years to follow, depending on when it is withdrawn.

The amendment would add complexity to the system and have the effect of withdrawing valuable in-work support for people below state pension age. It would obscure entitlements for those who need them most and incur a very substantial increase in expenditure. I think I have clearly set out the rationale for the Government’s position. It is simply impractical to assume that the system will be improved by adding further complications to an already complex beast. For these reasons, I urge the noble Baroness to withdraw the amendment.

[Baroness Turner of Camden]

My Lords, I thank the Minister for his response. I think he agrees that there is a problem here, but what he is telling me is that it is too complicated to resolve in the way that I have suggested. I will read very carefully what he said about it because I got the impression that he understands that there are problems about people who do dangerous and difficult work—people on whom we all depend in a modern environment. We do not notice that they are doing it until they cease to be there to do it, and we are not expecting that to happen very soon.

I thank my noble friend Lady Drake for what she said about pension credit. It is quite clear that her amendment on pension credit is intended to deal with the less well off. In that respect, it has to do with my amendment, which is concerned with poorer people. I therefore support what she said.

On my amendment, as time goes on, we may well see, although I hope it does not happen, that if you have accidents or incidents at work, there will be pressure for changes in that respect. I do not think we have finished with the argument about dangerous and difficult work. People do not expect to have to go on working in that kind of environment without any reasonable prospect of an earlier retirement. I shall read with interest what has been said about my amendment. What my noble friend does about her amendment is, of course, entirely up to her. I think it should be supported. I beg leave to withdraw the amendment.

Disabled People: Employment

Debate between Lord Freud and Baroness Turner of Camden

Monday 21st March 2011 Lords Chamber

[Baroness Turner of Camden]

To ask Her Majesty’s Government what is their response to the decision of Remploy Ltd, the largest specialist employer of disabled people in the United Kingdom, to make redundancies among the workforce.

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

My Lords, voluntary redundancies are a matter for Remploy management and employees. Remploy will continue to examine how best to deliver its businesses within the existing five-year modernisation plan funding and will continue to fulfil its mission of transforming lives by providing sustainable employment opportunities for disabled and disadvantaged people.

[Baroness Turner of Camden]

I thank the Minister for that response. However, is he aware that I have received information from the unions that Remploy has been told by the Government to make 1,500 people redundant? They are very concerned about this because they fear that it may mean the closure of certain locations. As I said in my Question, Remploy is the largest specialist employer of disabled people in the country, working at 54 different locations. Surely it is in the interests of everyone, including the Government, to ensure that this facility is maintained because, in the light of the Government’s own policy, it is very important that disabled people should be able to work if they want to do so.

[Lord Freud]

My Lords, I can categorically reassure the noble Baroness that there is no such plan as has been suggested by the unions; we are looking at a voluntary redundancy plan. The next stage of what happens to Remploy will depend on the review that Liz Sayce is conducting into disability employment programmes, which is due to report in the summer.

Pensions Bill [HL]

Debate between Lord Freud and Baroness Turner of Camden

Tuesday 15th March 2011 Grand Committee

[Lord Freud]

The consultation exercise informs how we do these things in some detail in regulatory terms, but it does not affect the decision and direction of travel.

[Baroness Turner of Camden]

I beg leave to withdraw the amendment.

Pensions Bill [HL]

Debate between Lord Freud and Baroness Turner of Camden

Thursday 3rd March 2011 Grand Committee

[Baroness Turner of Camden]

My Amendment 33 is in this group. I was prompted to table an amendment to this clause by the TUC. It wrote to me to point out that the trigger of £7,475 at 2011 is in excess of the national insurance threshold, which at present is £5,715. It points out that that is likely to affect a number of part-time workers, mainly women. They are the majority of those earning between the NIC limit and the personal allowance. The TUC believes that if the Government were to take forward the proposals, which they have voiced, to raise the basic personal tax allowance, the numbers excluded from auto-enrolment will grow. We have all said that we are in favour of auto-enrolment, and that we want to get as many people auto-enrolled as possible because they will then get the benefit of the employer’s contribution. As the gap between the contribution and enrolment thresholds grows, there is a danger of a sort of cliff-edge and that the newly auto-enrolled may decide to opt out as they see a noticeable chunk of their earnings going in pension contributions.

There may be various other ways of dealing with it, but the gap is not a good idea. It tends to make the whole thing less simple. People are caught up in the gap and do not receive what is intended to be of benefit to them, which is auto-enrolment. I hope that the amendment moved by my noble friend Lady Drake receives favourable consideration by the Government because there is a serious point to be made. I shall not press my amendment.

[Lord Freud]

Uprating and revaluation measures, especially for pensions, can be challenging to get right and hotly debated. The uprating arrangements for automatic enrolment are proving no exception. However, before going into those arrangements, I need to make clear to the noble Baroness, Lady Drake, that nothing in the Bill introduces a power to change the age criterion of 22. The flexible uprating power in Clause 8 applies only to the earnings trigger and thresholds. It does not apply to age criterion. We agree with her that 22 is the right age for automatic enrolment to kick in.

--- Later in debate ---

[Baroness Turner of Camden]

My Lords, I support the notion behind these amendments. At Second Reading I drew attention to the possibility of people arriving at retirement with lots of little pension pots and not knowing what they would be entitled to. That sometimes happens now; people phone up and say, “Am I in your pension scheme? I just don’t know”. They reach retirement and, if they have been working for around 40 years, they do not know what they have. It seems sensible to have some mechanism whereby one’s pension entitlement is, as it were, collected as a cumulative amount of money. People would then know that they have access to this cumulative amount and the pension that is generated from it. In this sort of system we have the opportunity to do something like that. It would be a very good idea and I congratulate my noble friend Lady Hollis on what she has come up with in Amendment 35. The noble Lords, Lord Stoneham and Lord German, certainly had something similar in mind with Amendment 34. The notion is a good one, whichever amendment is acceptable to the Government.

[Lord Freud]

My Lords, I must start by declaring an interest. I think I have one of these infuriating little stranded pensions. It is the most annoying thing. You look at the file, look at the headline and close the file because dealing with it is unendurable. I am far too polite to complain to the noble Lord, Lord McKenzie, for not doing anything about it. If I thought about it I would resent him deeply every time I looked at the file.

I take the opportunity to let the Committee know, through these amendments, what we are doing to consider how transfers across the industry, particularly of small pension pots, can be made easier. The Making Automatic Enrolment Work review, carried out last summer, recognised that facilitating transfers was critical to the success of the workplace pension reforms. It believed, however, that the issues went beyond NEST. When automatic enrolment becomes the norm, there is a much higher risk that pension savings, particularly for lower earners and people who move jobs frequently, will become fragmented in several small pots—a point made so eloquently by the noble Baroness, Lady Hollis, just now.

The Government are already acting on the recommendation of the review to consider how transfers across the industry can be made easier. The DWP is working alongside the Treasury, HMRC, the Financial Services Authority, the Pensions Regulator, employers and pension providers to understand better the burdens employers and schemes face when administering small pots, and to identify any barriers facing members.

In addition, the DWP recently published—on 31 January—a call for evidence on the regulatory differences between occupational and workplace personal pension schemes. We are seeking to address existing rules which could impact on the success of the reforms, such as rules on early scheme leavers and disclosure. The call for evidence is likely to consider actions better to manage small pension pots. This call for evidence closes on 18 April. Our response will be released later this year after we have considered stakeholder views and evidence of burdens and costs.

Her Majesty’s Treasury recently held a call for evidence on early access. This reflects the Government’s commitment to consider ways to boost individual saving and to foster a culture of personal responsibility over financial choices, particularly in encouraging saving for retirement. The document sets out the available evidence on early access to pension savings, some potential models for early access and the potential benefits and risks, and sought further evidence from interested parties. It included a specific question on ways to improve the transfer process and on whether there is a case for introducing further flexibility in the trivial commutation rules. The call for evidence closed on 25 February. HMT is currently considering the responses and will publish its findings in due course. So, across all three of these areas, we are seeking to identify options to improve transfers so that individuals can get the most out of their savings.

I appreciate the interest that noble Lords have indicated in the overall issue of transfers, which is much wider than the restrictions that are currently placed on NEST. The restrictions on transfers into NEST are intended to focus the scheme on its target market, particularly as the reforms are staged in, enabling its administrative processes to be simple, leading to lower running costs and creating safeguards against levelling down. NEST can already accept certain transfers in—for example, where a member with less than two years’ service has the right to a cash transfer. This allows jobholders who move from an employer not using NEST to one offering NEST to transfer their cash transfer sum into NEST. The Pensions Act 2008 commits the Secretary of State to review the effect of NEST transfer restrictions in 2017. But we are doing work now, before 2017, that will bring together evidence and analysis from a broad base.

As I know noble Lords appreciate, there is no straightforward solution and the outcome of any quick fix may not provide the universal remedy for individuals and pension schemes that we might hope for. Aggregating small pots by transferring them into another pension scheme is not necessarily a good thing to do for individuals, as the noble Lord, Lord Flight, just pointed out, as it will depend on the merits—the risk, charges and growth—of the fund they are transferring into compared to those of the fund they are transferring from. It is not necessarily a good thing for pension schemes either, which, though they would no longer need to pay for the maintenance of a potentially smaller pot, would need to pay to transfer the fund out. Hence, the work we are already doing to see what measures we can sensibly take to minimise industry burdens while delivering the best possible protection of individuals’ retirement outcomes. We want to ensure that any solution will stand the test of time and meet the needs of all pension schemes and their members.

I do not want to prejudge the outcome of our considerations, but I can see the merit in a number of your Lordships’ arguments, including that of the noble Lord, Lord Boswell, that we should take into account giving the individual a choice, where they have very small pension funds, to take the cash. It is, of course, the very smallest pots that cause the biggest problems, as even if transfers can be facilitated, the frictional administrative costs have a proportionally higher impact. The noble Lord talked about sums of £20 and £30—I shudder to think of the proportion of administrative costs involved in doing anything with them.

Our ambition is that NEST will complement rather than replace existing good-quality pension provision. Changing the provisions now to allow NEST to accept transfers in during the critical implementation period could undermine that aim. By 2017 the reforms will have been fully implemented. We will have more evidence on the effect of the reforms as a whole, including the impact of NEST on the market. While I appreciate the principle behind these amendments, I urge the Committee to bear with us while we get to the heart of this difficult and complex matter. On that basis, I urge noble Lords not to press their amendments.

Unemployment

Debate between Lord Freud and Baroness Turner of Camden

Wednesday 26th January 2011 Lords Chamber

[Lord Freud]

My Lords, I think that it is important that we do not get cheap on the movements: this is, as always, a very complicated set of movements. During the last month, for instance, the claimant count went down a little for the youngsters. It went up by 30,000 or so, but has been broadly flat since 2009. There will be reasons for the figure being up a bit, but I do not think that is the point. The point is that we have a serious underlying structural problem. We have about 600,000 youngsters who have not managed to get sustained employment after education. Within that figure, I do not have the exact number about whom we should be seriously worried. Of the 16 to 17 year-olds, it is about 50,000. These are youngsters who may never make the transition into proper economic activity. It is vital that we have structures to help them make that transition.

[Baroness Turner of Camden]

My Lords—

--- Later in debate ---

[Lord Freud]

My Lords, I thank my noble friend for that question. Essentially, we are going to rely on the work programme and differential pricing to help the hardest to help.

[Baroness Turner of Camden]

My Lords—

Welfare Reform

Debate between Lord Freud and Baroness Turner of Camden

Monday 11th October 2010 Lords Chamber

[Lord Freud]

I thank my noble friend Lord Skelmersdale for his question on the work capability assessment. He will be aware that there has been an internal review of the work capability assessment and that four changes have been made to it. In practice, these changes will come into the work capability assessment next spring. On top of that, in June we employed Professor Malcolm Harrington to review how the work capability assessment worked on an annual basis. He is supported by a scrutiny group, which includes Paul Farmer, the chief executive of Mind, and three others. I mention Paul Farmer in particular because of the importance of mental health and the fluctuating conditions to do with mental health. We are determined to make sure that the work capability assessment does the job it needs to do.

[Baroness Turner of Camden]

My Lords, I welcome the Statement made by the Minister to the effect that we have to make work pay. I agree—but does that mean that the Government will be inclined to bring pressure to bear on low paying employers to ensure that they are prepared to pay a living wage? I do not see why the taxpayer should subsidise employers who are paying extremely low wages.

As to unemployment, I suggest that there may be particular difficulties in certain areas of the country where manufacturing industry used to exist and does not exist any more and there is a decline in suitable work for people. What steps can be taken in such areas to ensure that there is work available for people who can demonstrate a capacity to work but where there are no jobs available because of what has happened to local industry? Where the local industry does not provide jobs, because there are no jobs, people are simply resigned to spending the rest of their lives on benefit.

[Lord Freud]

I thank the noble Baroness for that. She makes the real point that if we do not get the universal credit right we could encourage underpaying employers. We are fully aware of that and are looking into the situation. On her other point about unemployment black spots, it is always a tragedy when an area loses its economic rationale. However, what makes the inevitable adjustment process worse—and perhaps stops it—is a benefit system which hides people away. The shocking story of Merthyr Tydfil is an example. When the steel plant there closed—I do not have the exact figures—there were approximately 4,000 people working in it; two years later there were 3,800 people on incapacity benefit. That meant that no potential entrepreneur or employer would go to that part of the world thinking there was labour there to be used because the system had locked that labour away. If we can get people back on active benefits, we will at least encourage the necessary, and sometimes painful, adjustment process to happen at the fastest speed possible.