Pensions

Lord McKenzie of Luton Excerpts

Wednesday 19th July 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for repeating the Statement and for advanced sight of it. We have been waiting keenly to see how and when Ministers would finally respond to the Cridland report but, frankly, the response is disappointing. Only yesterday Sir Michael Marmot described how a century-long rise in life expectancy was,

“pretty close to having ground to a halt”.

John Cridland himself acknowledged in his report that inequality in pension outcomes remains, with certain groups in particular at risk of lower incomes in retirement. There are significant variations in life expectancy across socioeconomic groups.

Yet in this Statement, the Government have confirmed their intention to accept the headline recommendation of the Cridland report: that the state pension age should rise to 68 over a two-year period between 2037 and 2039. Astonishingly, there is nothing whatever in the Statement to acknowledge the issue of inequality in income and life expectancy. There is nothing in it about the huge variations in life expectancy in our country, or about how the Government will address improvements in morbidity—people’s general health—not keeping pace with people’s life expectancy. There is nothing about the wide variations in retirement income.

I would like to ask the Minister some questions. The Conservative Party election manifesto promised that it would,

“ensure that the state pension age reflects increases in life expectancy, while protecting each generation fairly”.

How does the Minister justify that promise, given this Statement? The Statement says that the Government will carry out a further review before legislating to increase the state pension age to 68, in order to consider the latest life expectancy projections and evaluate the effects of rises in state pension age already under way. Does that mean that Ministers may not enact the rise in state pension age to 68 after all? Is this a policy or just an aspiration?

What is the Government’s position now on the triple lock? Cridland recommended that it be abandoned; Labour pledged to keep it; the Tory manifesto pledged to ditch it from 2020 and move to a double lock, but the DUP rather likes it. Can the Minister clarify the Government’s position on the future of the triple lock? What is her response to the Cridland recommendation that those with caring responsibilities and ill health should be able to access pension credit a year earlier than the state pension age?

Labour has pledged early access to pension credit as a way to protect the WASPI group of women, who found themselves suddenly facing an increased state pension age without enough notice to enable them to plan. I hear that the Prime Minister was looking for ideas. Would she perhaps like to adopt this one? What is the Government’s plan to communicate with people who will be affected by the change in the state pension age? What lessons have they learned from the debacle of their previous repeated accelerations of changes in the state pension age, resulting in so many WASPI women struggling in their final years of working life? What assurances can they give the House that this will not happen again?

The Minister referred to plans for the single financial guidance body and its support for consumers, but is not the state pension excluded from its operations, subject to amendments we will be considering later?

What is the Government’s stance on the other Cridland recommendations? Will they commit to not raising the state pension age by more than one year in any 10-year period? Do they agree that conditionality in universal credit should be adjusted for those approaching state pension age to ease the transition into retirement? Do they accept the idea of statutory carers’ leave along the lines of SSP? What about the proposal that those over state pension age should be able to part draw down the pension, deferring the rest?

This Statement raises more questions than it answers. We can only hope that the report, when we have had a chance to study it in detail, will elucidate some areas. Labour want a different approach to this pensions crisis, which means more work for millions and absolute chaos for 50s-born women who have already had their state pension age quietly pushed back. In our manifesto, we committed to leaving the state pension age at 66 while we undertake a review into healthy life expectancy, arduous work and the potential for a flexible state pension age which recognises years of work and contribution, as many other countries currently do. This would be an evidence-based approach that looks to understand the varied experiences of working people across the country and to respond to their needs.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am grateful to the Minister for robustly repeating the Statement. My eye was drawn to the last phrase, which she read with a flourish: “and this is what the Government are doing today”. What are the Government going to do next week on some of these matters, particularly in relation to the triple lock? I support the questions addressed to the Minister by the noble Lord, Lord McKenzie. Most importantly—this was also addressed by the noble Lord, Lord McKenzie—if the Government are to secure dignity and security for retirement, at their next review they will need to look not just at average income data but at latter-day morbidity data as well.

The one thing that is missing from the Government’s Statement and response is the fact that the totality of the policy is missing. The Government need to move in a way that releases and uses the £74 billion that we will save by this move in the public policy field between now and 2045-46 to mitigate, as Cridland suggests, some of the transitional protections and to make it easier for those who are reaching retirement but who are less able to work—the disabled, carers and people of that kind. I hope the Minister will be able to say that by the next review these transitional and support questions will be addressed using some of the savings that we are obviously making from this important policy announcement this afternoon.

Financial Guidance and Claims Bill [HL]

Lord McKenzie of Luton Excerpts

Committee: 1st sitting (Hansard): House of Lords
Wednesday 19th July 2017 Lords Chamber

Moved by

[Lord McKenzie of Luton]

1: Clause 1, page 2, line 6, at end insert—
“( ) As soon as is practical after the completion of the transfer schemes referred to in subsection (7), the single financial guidance body must produce a business plan which must—(a) outline its business plans for a minimum of three years;(b) follow consultation;(c) be informed by a comprehensive assessment of consumer need; and(d) be updated annually.”

[Lord McKenzie of Luton (Lab)]

My Lords, I shall speak also to Amendments 2 and 3. Amendment 1 is a probing amendment designed to give the Government the opportunity both to expand on the process of creating the SFGB and, more importantly, to offer a greater understanding of the intended scale of the operation initially and going forward.

The amendment requires the production of a three-year business plan as soon as possible after the transfer schemes are completed. It requires that this be done following consultation, updated annually and informed by a comprehensive assessment of consumer need. At present, there appears to be no formal requirement in the Bill for there to be a business plan, although the response to the consultation of this month reminds us of the proposed publication of a framework document, which will provide further details of the governance arrangements under which the body will operate, including requirements for preparing, securing approval for and publishing its corporate and annual business plan. We know that SFGB will not be operational before autumn 2018, but perhaps the Minister might take the opportunity to expand on the timetable and say when the framework document is expected to be published.

As things stand—and we are grateful for a further meeting with officials on Monday—we have no information about the timing or sequencing of the transfer processes in Schedule 2, or certainty about what even the initial corporate and business plans might look like. Neither the response to the consultation, the impact assessment or the policy statement give any definitive information about the proposed initial scale of the operations of SFGB. Will SFGB have to commence within a funding envelope that reflects the existing arrangements? When will the SFGB levy components be set and how will they be consulted on? To what extent is it planned that efficiency savings arising from the amalgamation will be made available to the new body or applied to a reduction in the levies?

Is it envisaged that the Secretary of State will issue any initial directions or guidance to the SFGB in connection with the set-up arrangements? What parameters are to be given to the chair and chief executive on their appointment? At what stage in the process will they be in a position to influence the starting position of the new body?

There is a requirement in the Bill to make services available to those most in need. What initial assessment has been made of what this means in practice? Will the Minister outline for us how the transition is to be organised from the existing position to the introduction of the new body, and how smooth signposting can be secured?

Going forward, the NDPB will not be able to carry any reserves. So what will happen to the reserves and cash surpluses of MAS, which at March 2016 amounted to nearly £10 million—although they may have reduced since? Will these be available to the new body?

We know that MAS is to be dissolved, presumably at a point when a transfer scheme to the SFGB has been completed. Is it anticipated that any residual assets will be available at this point? If so, to whom will they accrue?

The landscape is changing for pensions and money advice. On pensions, we see the growth of auto-enrolment, provider signposting and pension freedoms; on money advice, the growth of those struggling with high levels of over-indebtedness and negligible savings. They amount to nearly 23% of the UK adult population— 11.6 million consumers. The Bill may have a technical framework to deal with all this, but we are seeking to understand how it is to be resourced to meet these challenges.

Amendments 2 and 3 are minor matters. Amendment 2 relates to the non-executive members of the NDPB. At present, the Secretary of State must be satisfied that a person does not have a conflict of interest before being appointed. The amendment would require the Secretary of State to be so satisfied also from time to time in future. I think this is a fairly routine approach to these matters that would not cut across any obligation on members to declare their interests in the usual way.

Amendment 3 deals with executive member appointments. Under paragraph 6 of Schedule 1, the chief executives and other executives must be appointed before the SFGB provides services to the public. The amendment requires that this also must be the case before any of the Schedule 2 transfers are put into effect.

We are seeking to understand the scale of this body and how it will look. At the moment, we are lacking a lot of information and we hope that the Minister can help us on this matter. I beg to move.

[Baroness Coussins (CB)]

My Lords, I support Amendment 1, and remind the Committee of the interest I declared at Second Reading as president of the Money Advice Trust, the national charity that provides free debt advice to individuals and small businesses through the National Debtline and the Business Debtline.

Amendment 1 corrects a notable omission in the Bill. Although the Bill requires the SFGB, as one would expect, to produce an annual report on its activities each year, there is no such provision for it to publish its business plan. Amendment 1 rectifies this quite effectively—and, perhaps more importantly, requires the body to consult on the preparation of this plan.

The Government have stated their intention that the SFGB should work in a consultative and collaborative way. Indeed, there are references to working with others elsewhere in the Bill. Amendment 1 would simply embed this consultative approach in the organisation, from the business plan down, and help set the appropriate culture in what will be, after all, a new organisation. I hope that the Minister will agree that this is a helpful amendment and give it serious consideration.

--- Later in debate ---

[Baroness Buscombe]

I accept what the noble Lord says but I am also saying that what is necessary is already either in the Bill or, as I explained, in the requirements reflected in Her Majesty’s Treasury guidance which apply to all arm’s-length bodies across government. As for other DWP sponsor bodies, those requirements will be written into the framework document that will be developed in the run-up to launch and agreed with the CEO of the body. It will be reviewed regularly thereafter and published by the body.

[Lord McKenzie of Luton]

I thank the Minister for that reply and all other noble Lords who have participated in this debate. I thank the noble Baroness, Lady Coussins, for her support—in particular for the concept that this is a chance to embed in the culture of the new entity good practices around consultation and proper planning. I think that the noble Viscount, Lord Trenchard, also supported the broad thrust of what the amendment is trying to do. Ultimately, we are trying to get on to the record some clarity about the process. That was a key objective in tabling the amendment in this form.

The Minister said that the Bill is a high-level framework document and although I thank her for putting on to the record some comforting remarks about the things we were pursuing, I am still at a loss to understand the scale or scope of the new body and whether, on day one, it will look like an aggregation of the three existing operations. Will it be half that size or twice that size? We have no sense of that from this debate and it is a germane issue. As she says, this is a very high-level framework Bill and our one chance to address it in this House will come over the next few months, and then it will be gone. There are no parliamentary processes genuinely attached to the processes that the Minister outlined. I do not know whether any more could be said on that, but the other part of moving this amendment was to see what the concept was.

Again, is it expected that the new body will have to operate within the levy base at the moment, or will it be constrained in any way? Can the Minister give us some sense of what the new body will look like in terms of scale?

[Baroness Buscombe]

I again thank the noble Lord for these amendments. It is helpful to have on the record a little more detail about how the three bodies will transfer into one. It is important to emphasise that we cannot predict exactly what the new body will look like, and it would be wrong to try to do so. Initially we will bring the three bodies together but, over time, the three will evolve into one. It is important to protect current services during transition. We do not want to pin down, constrain or compromise the CEO and his board in their ability to produce the most effective single body out of these three bodies. Therefore, we must trust in them to some degree, although there has to be a lot of consultation during the process to produce something that will be much more efficient and, we hope, practical, particularly for the consumer, than what we have at the moment.

It is hoped that we will have sufficient finances to cover the transfer. The money currently held in reserves when MAS closes down, and the SFGB, could be used for some of the set-up costs if that is necessary. At the point of transfer, the reserves will be transferred to the new body and should be used up in year. The new body will be a non-departmental public body of central government and will not hold reserves. It is impossible to predict exactly how large the funds will be, but that is something that the board and the department will stay in touch with as the transition takes place.

[Lord McKenzie of Luton]

I thank the Minister for that further explanation—I think we are almost there. Only that big question remains unanswered.

Regarding the appointment of the chair and the chief executive, will they go before the Select Committee in the other place?

[Baroness Buscombe]

That is a good question. I do not have the answer, so I will write to the noble Lord.

[Lord McKenzie of Luton]

I am grateful for that. I think we have taken this as far as we can go this afternoon. I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

--- Later in debate ---

[Baroness Kramer]

My Lords, we support the amendments in this group. I start from the assumption that they are remedying a momentary lapse in the energy of the team that was drafting the Bill, because I cannot believe that the Government are not fully signed up to the principles that advice should be free at the point of use, and also both independent and impartial. So I, too, suggest that these amendments are surely uncontroversial and are useful to the Bill to make sure that the point is not lost, as they remedy those moments when long hours of work and not enough coffee made it difficult to remember every single issue that had to be grasped in the general drafting of a Bill of this complexity.

[Lord McKenzie of Luton]

My Lords, it may come as no surprise that we on the Front Bench support my noble friend Lady Drake, for all the reasons that she and others mentioned this evening. Certainly, if advice was not free at the point of use, it would undermine the function and could create conflicts of interest, as my noble friend said. Issues around independence and impartiality are absolutely crucial. I am delighted to hear that HMRC had to cough up for a fridge—it is not a usual occurrence and I congratulate my noble friend on engineering that.

I say to the noble Baroness, Lady Coussins, that we entirely agree with the point about the self-employed. We have tabled an amendment on that later in the Bill and I hope that we will be able to make common cause on that as well.

[Baroness Buscombe]

My Lords, I thank the noble Lords, Lord McKenzie and Lord Stevenson, and the noble Baroness, Lady Drake, for putting their names to the amendments in this group. They seek to amend the existing functions and objectives in the Bill to ensure that the body’s services are free at the point of use, that the guidance, information and advice provided is independent and impartial, and that the body provides its services broadly rather than focusing support in areas where provision is lacking.

Amendment 6, tabled by the noble Lords, Lord McKenzie and Lord Stevenson, specifies that any information, guidance or advice delivered by the new body or its delivery partners must be free. I note that this point was raised by the noble Baroness, Lady Coussins, as well. The Government absolutely agree that any help funded by the new body should be free at the point of use. The Government’s intention is to ensure that information and guidance are available to those who need it. We would not wish to prevent members of the public accessing help on the grounds of cost.

Pension Wise, the Pensions Advisory Service and the Money Advice Service currently offer free-to-client help and, as the Government noted in their consultation, the new body will do the same. Indeed, by bringing together pensions guidance, money guidance and debt advice in one organisation, the Government expect that savings will be made. As a result, we expect a greater proportion of levy funding to be made available for the delivery of front-line services to members of the public. I am grateful for the opportunity to address noble Lords’ concerns and will observe that Clause 5 confers on the Secretary of State powers of guidance and direction that may be used to prevent the new body entering into arrangements with fee-charging providers in the unlikely event that it should wish to do so.

Amendment 29, tabled by the noble Baroness, Lady Drake, would alter the wording of the Bill to remove the requirement for the body to focus its support for the provision of information, advice and guidance on areas where it is lacking. I understand the concerns that the noble Baroness raised, and it is right to make the point that the new body’s responsibilities and functions are not relinquished simply because provision of some kind is already delivered by a third party. That is a very important point to stress. However, with respect, I do not think that the amendment is required in this instance.

It is important that the new body uses the funds it receives in a cost-effective way, thereby achieving maximum impact for members of the public. The current wording of the Bill aims to achieve this by ensuring that the body targets its activities towards those areas where information, advice and guidance are lacking. It would be helpful to explain what we mean by “lacking”. For example, provision may said to be lacking where it is not of the right quality, lacks impartiality—or, indeed, where it is absent altogether. As such, the Bill’s current wording ensures that the body carries out its functions in the most effective way possible, delivering value for money from public funding and avoiding unnecessary duplication.

As noble Lords will be aware, duplication of services with other providers was a key criticism of the Money Advice Service, both from the Treasury Select Committee and from Christine Farnish’s independent review. The Government are keen to ensure that the new body avoids this issue and have drafted legislation to reflect this. However, the proposed amendment could increase the likelihood of the new body duplicating existing and already adequate provision rather than complementing it, thereby compromising its ability to deliver value for money. Not focusing its activities on areas where support is lacking would increase the risk of leaving gaps in provision, to the detriment of members of the public.

Amendments 28, 30 and 32, tabled by the noble Baroness, Lady Drake, would alter the wording of the Bill to include a requirement for the information, guidance and advice delivered by the body to be independent and impartial. The Government agree with the intent behind the amendments. Of course, it is important that information and guidance provided by the body is both impartial and independent from commercial interests. Members of the public must be confident that information and guidance provided by the body or on its behalf is trustworthy and accurate, and that it is not designed to sell particular financial services products—a point stressed by the noble Baroness.

--- Later in debate ---

[Baroness Buscombe]

My Lords, I understand entirely and accept what the noble Baroness is saying. Indeed I understand that that is the purpose of all noble Lords who have spoken this evening. However, I take issue with the idea that there is no legislative opportunity over the next two years. The Government have made it very clear that we will not be confining ourselves to Bills relating to our departure from the European Union. There will be other opportunities to legislate in these important areas, but we want to make sure that when we do it, we get it right. It is important that I address—

[Lord McKenzie of Luton]

Can the noble Baroness particularise for us the Bills mentioned in the Queen’s Speech for the next two years that might be used to this effect?

[Baroness Buscombe]

No, I cannot do that at the moment and I think it is unfair to ask me to set out the Bills that could be used at this time. What I am saying, though, is that noble Lords should not presume that there are no other opportunities to bring forward legislation over the next two-year period, other than those relating to the departure from the European Union—

Financial Guidance and Claims Bill [HL]

Lord McKenzie of Luton Excerpts

Committee: 1st sitting (Hansard - continued): House of Lords
Wednesday 19th July 2017 Lords Chamber

Tabled by

[Lord McKenzie of Luton]

9: Clause 2, page 2, line 20, after “occupational” insert “, state”

--- Later in debate ---

[Baroness Kramer]

My Lords, I very much support the amendments moved and spoken to by the noble Baroness, Lady Drake, and the pressure they create on the Government to come up with some coherent answers to the very significant questions which have been posed. We are great supporters of the dashboard, as is, I suspect, almost everybody in this House who is engaged in pensions, savings and investment issues. However, I also spend quite a bit of time now trying to understand where artificial intelligence is taking us. The first question that is always asked is: who controls the data? Secondly, who controls the best analytics to be able to turn the data into a marketing opportunity?

The data will clearly become dominated very quickly by a limited number of companies. That in itself will become a mechanism that limits options for individuals and makes it extremely difficult for them to compare the options that they could source from a variety of providers. It tends to tie them back to a single, dominant provider. The Government surely have an interest in preventing the development of either those quasi- cartel or monopolistic structures, but early intervention is needed to make that possible. Who controls the dashboard will be an issue of real significance and there is a strong argument that it cannot be one of the commercial players, in whose interests it would always be to manage that dashboard to the advantage of their own proprietary products. I hope that the Minister will engage with this opportunity, because events are taking over in this area and government has a relatively limited scope in which to intervene to shape the framework.

[Lord McKenzie of Luton]

My Lords, briefly, I support my noble friend Lady Drake and the powerful case she has made for the public service dashboard. I will also speak to the proposal that pension guidance functions should include the state pension.

Decisions around receipt of the state pension are not necessarily a straightforward matter. As we know only too well, there has been some confusion over the age at which some—particularly women—reach state pension age and are entitled to access their pension. Reaching state pension age does not of course necessitate giving up employment. Deferring the state pension can generate a higher rate of pension and therefore possibly tax, albeit no longer with a lump sum. But deferral will not earn an income uplift in weeks where certain benefits might be in payment, for example for carer’s allowance. The deferral increase is not inheritable. There are transitional rules for those reaching state pension age before 6 April 2016. As entitlement depends on a person’s national insurance record, paid or credited, there may be decisions about the appropriateness of buying extra years. These are just some of the intricacies surrounding the state pension.

It is accepted that the Pension Service will provide details, including forecasts of entitlement, but should these matters not be considered in the round, particularly with the person’s broader retirement planning? After all, for many people the state pension will constitute their biggest single risk-free income source for the rest of their lives. In their response to the final SFGB consultation, on page 10, the Government stated:

“the government believes people would benefit from access to joined up information and guidance to help them develop the financial capability they need”.

Surely an understanding of what might flow from the state pension system is as important as an understanding of choices around pension pots. Indeed, given the recognition that the service should be directed at those most in need, are they not likely to be those for whom the state pension represents a significant part of their income?

My noble friend Lady Drake made, as ever, a powerful case for the pensions dashboard, and in collecting together details of all of a person’s pension pots it is important that it should include the state pension. To be clear, we do not argue for SFGB to replace the Pension Service but for it to be able to feed its choices into how it might fit together with other pension opportunities.

[Baroness Buscombe]

I thank noble Lords for their contributions to this debate about the pensions guidance function. I shall begin by focusing my response on the questions around the state pension and shall then move on to the dashboard.

On Amendment 9, the noble Baroness, Lady Drake, and the noble Lord, Lord McKenzie, raised a question about information and guidance in relation to the state pension. It is, of course, vital that people have access to information about their state pension. Noble Lords will be aware that the Department for Work and Pensions is responsible for the policy and administration of the state pension. DWP offers a range of information and guidance through a variety of contact channels for people wanting to know about their state pension. The GOV.UK website is a key source of that information and guidance. It includes links which take people to the online services. For those who prefer to access information offline, DWP also provides leaflets, letters and other guidance on the state pension. All these forms of communication contain telephone numbers and the addresses of pension centres.

People seeking information about their state pension age or wanting a forecast of their state pension are able to contact DWP via telephone, textphone or email or, alternatively, they can write if they prefer. DWP also offers a digital service called “Check your State Pension” where customers can check a version of their state pension statement. Customers using this service can ask questions or raise queries by completing an online form. However, as with the current services, it is not appropriate for the body to become involved in specific issues relating to the detail or the handling by DWP of an individual’s state pension entitlement, for example, where a person has not received their state pension. These are matters that only DWP can properly respond to. As it has access to national insurance contribution records, DWP is the right organisation to deal with state pension-related questions, information and guidance. It would be inappropriate to expect pension schemes or the financial services sector to fund guidance on the state pension.

The single financial guidance body will be able to provide general guidance on the state pension in the same way as the existing services do now, for example, as general information on its website or as part of discussions with people. It will also direct people to the correct part of the GOV.UK website or provide the relevant telephone number or leaflet if a state pension query is raised during a face-to-face discussion, call or web chat or online inquiry. We expect the single financial guidance body to look for opportunities for a more seamless customer journey in the future as part of its programme of transformation across all its delivery functions.

I hope that I have clarified, in relation to state pensions, what the single financial guidance body can do and also the extensive service the DWP already provides to the public. Of course one of the key issues is the huge challenge which the noble Baroness, Lady Drake, referred to with reference to dashboards, and the same applies to the state pension in detail. The priority has to be around consumer protection safeguards, as she quite rightly said.

--- Later in debate ---

Moved by

[Lord McKenzie of Luton]

14: Clause 2, page 2, line 24, leave out “provide” and insert “ensure provision of”

[Lord McKenzie of Luton (Lab)]

My Lords, I shall speak also to Amendments 15 and 20 in this group. Amendment 14 is straightforward and clarifies that the money advice function must ensure provision of advice as opposed to providing it—an issue over which we have already ranged. Amendment 15 spells out some of the aspects of the money guidance function. Amendment 20 adds to the strategic function,

“the awareness of scams and frauds relating to financial products”—

again, an issue we have touched upon already.

The Bill is drafted in somewhat general terms and states that the function is to provide information and guidance,

“to enhance people’s understanding and knowledge of financial matters and their ability to manage their own financial affairs”.

When exercising these functions, the SFGB must have regard to its objectives, which include improving,

“the ability of members of the public to make informed financial decisions”,

and focusing on where information, guidance and advice is lacking and is most needed, and where it can be provided in the most cost-effective way. This must be set in the context of the acknowledgment that financial capability—what this is all about—in the UK is low, and many people face challenges when it comes to managing money.

In July 2017, in the response to the consultation, the Government recognised the importance of providing information and guidance by delivering, or signposting to, information on all money matters, including budgeting and saving, insurance, financial advice, bank accounts, protection from fraud and scams, planning for retirement and debt solutions. Therefore, it seems that a broad remit is anticipated, and we would support this. However, there seems to be no good reason why these functions could not be spelled out in more detail in the Bill. Can the Minister say whether any of the matters set out in the amendment are considered outwith the Government’s intended scope of the money advice function and, if so, which?

Financial scams are, unfortunately, many and varied. We have already heard about that matter, so I will be brief. The people who perpetrate them are inventive and merciless. According to the Economic Crime Directorate of the City of London Police, financial crime has cost the UK a staggering £50-plus billion. Techniques encompass scams such as phishing, bogus investment opportunities—particularly for pensioners—intercepting home deposits, freebie scams, fake websites and many more. They can devastate people’s lives, and, as we have heard, can destroy a person’s retirement. Given the so-called pensions freedom, people around the age of 55 are being bombarded with investment opportunities. Citizens Advice calculates that nearly 11 million consumers have received calls about their provision since 2015. Given the hour, I do not propose to go further into that, because we have discussed it already. I beg to move.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I thank the Minister for that reply. I think we are in agreement on where the Government are on this issue. However, I would like to clarify one point. Can she say whether any of the money guidance functions listed in the amendment are now off the table?

[Baroness Buscombe]

At this time of night I want to be absolutely clear that I give the right answer, in which case I will write to the noble Lord.

[Lord McKenzie of Luton]

My Lords, I beg leave to withdraw the amendment.

Amendment 14 withdrawn.

--- Later in debate ---

[Lord Sharkey (LD)]

My Lords, I shall speak to Amendment 18 in this group which is tabled in my name and that of my noble friend Lady Kramer. I agree with everything that has been said so far except perhaps for one thing. If the Government accept the amendment tabled by the noble Baroness, Lady Altmann, we will have a universal obligation as regards financial education. I can see the appeal of that in theory, but in practice I wonder how it would work out. Children and adults constitute the whole of the population, but I think that the intention of the Government in Clause 2(7)(c) is to identify groups where particular emphasis on the provision of financial education is needed. That is probably why they specifically mention “children and young people”. I agree with the approach of putting an emphasis on the groups that most need or will most benefit from financial education.

However, there are other critical target groups in need of special attention, and the noble Earl, Lord Listowel, has identified such a group. That is what our amendment is aimed at. It seeks to extend the group of special targets beyond a couple of age demographics to major financial events in the course of people’s lives. It would extend the group of special targets to those who are about to make major financial commitments. It specifies the obvious ones such as mortgages and pensions, and nowadays vehicle finance plans, but leaves it open to the SFGB to decide what other major financial commitments it may want to include in its overall strategy.

The Bill is drawn a little too narrowly on this issue and would benefit from our proposed changes and those proposed by the noble Earl, Lord Listowel. I hope that the Minister will feel able on this last amendment of the first day to break the habit of the day and accept a modest and uncontroversial amendment.

[Lord McKenzie of Luton]

My Lords, we would support a proposition which broadens as widely as possible the provision of financial education, but the issue that arises is how it will be delivered. I say to the noble Viscount, Lord Brookeborough, who was the leading voice on the committee in favour of financial education and led the charge on it, that if he is around September he will see that we have tabled a couple of amendments which deal specifically with two of the recommendations in the report about making it part of the curriculum in the primary sector, because we are behind the devolved Administrations in that regard. Latching on to the Ofsted framework is a means of getting some leverage, but, even with that, we know that it will be a challenging task. However, it is hugely important.

The data show that by getting to young people at school you can embed those ideas early, and they stick. Of course, a framework is there within which it can be delivered. Notwithstanding that it has been a requirement of the secondary sector for a number of years, as the noble Viscount said, we know of its patchy delivery—and there are clearly funding issues. I have pre-empted a little the amendment which we will come back to in September. We will perhaps pick up this important issue again then. Certainly, making sure that such education is available to the most vulnerable is important, and we support it.

[Baroness Buscombe]

My Lords, Amendments 16A, 17, and 18, tabled respectively by the noble Earl, Lord Listowel, my noble friend Lady Altmann, the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey, would alter the strategic function on matters relating to financial education. However, I thank all of them for highlighting the important issue of financial education. While I appreciate the points that they make, the amendments as drafted simply do not work and are not appropriate.

Financial education is a specific area under the body’s strategic function targeted specifically at children and people of a young age to ensure that they are supported at an early stage on how to manage their finances—for example, by learning the benefits of budgeting and saving. I entirely agree with what the noble Viscount, Lord Brookeborough, said in this regard. It is crucial to “capture them young”, as I think the expression goes. Perhaps it would be more useful if I set out more fully what is covered by the body’s strategic function and the financial education element within that.

Through its strategic function, the single financial guidance body will bring together interested partners in the financial services industry, the public and voluntary sectors, and the devolved Administrations with the aim of improving the ability of members of the public to manage their finances. To deliver that, the body will support and co-ordinate a strategy. The premise of the strategy is that one organisation working independently will have little chance of greatly impacting financial capability, but many working together will—a point referenced by the noble Lord, Lord Sharkey. It is question of delivery. One body cannot deliver to all; it simply would not be practical for that one body to be in charge of every stage in life. The strategy should therefore be seen as a collective effort by multiple parties. The role of the new body will be to drive the process forward and oversee implementation.

More specifically, financial education is a subsection of that effort under Clause 2(7)(c). The SFGB will have a co-ordinating role to match funders and providers of financial education projects and initiatives aimed at children, and will ensure that they are targeted where evidence has shown them to be more effective. This falls within the wider strategic financial capability work of the body and should form part of a national strategy to enhance people’s financial capability. The Money Advice Service has been undertaking that role, which is one of the aspects that respondents to the Government’s consultations overwhelmingly agreed the new body should continue working on.

Amendment 16A would alter this function so that a strategy for the provision of financial education was extended to care leavers. I thank the noble Earl for raising this important issue. The Money Advice Service in its financial capability strategy recognises that more needs to be done to address care leavers’ financial needs and skills for independent living. The Government agree, and we expect the new body to consider further initiatives to support care leavers, but also other young people from marginalised backgrounds—for example, those leaving youth detention or with learning difficulties. The Government believe all these segments of the population are already covered in this section under the provision for young people. Specifying a provision for care leavers would create a specific requirement for the body and remove its discretion to target those most in need.

Amendment 17 would alter the wording of the Bill so that the strategy for the provision of financial education extended not to children and young people but to children and adults. Amendment 18 would make provision specifically for adults contemplating difficult financial decisions, such as mortgages, pensions and vehicle finance plans. As my noble friend Lady Altmann stressed, it is important that adults are informed and educated throughout their lives about how to manage their money well and avoid falling into problem debt. However, this is the role of the SFGB as a whole, as it delivers money and pensions guidance and debt advice. Also, the strategic function under Clause 2(7)(a) already gives the body a specific responsibility to work to improve the financial capability of adult members of the public, including in relation to the areas highlighted in the amendment tabled by the noble Baroness, Lady Kramer, and the noble Lord, Lord Sharkey.

We believe that it is unwise to give the new body a requirement to advise the Secretary of State on explicit issues, as worthy as those issues are. There are several topics that the body may wish to look into as part of its strategic function. Choosing a few could risk limiting the body’s ability to look widely at the sector and have regard to emerging issues in future.

I want to make further reference to what the noble Viscount, Lord Brookeborough, said this evening. I entirely support much of what he said on teaching basic skills in managing finances. I am aware that the Lords Select Committee on Financial Exclusion raised the primary school curriculum in its recent report on financial inclusion. The Government will address the committee’s recommendations on this issue when they publish their response in due course. I just add that the first recommendation made in that report proposed that we should have a Minister for financial exclusion. We preferred to refer to “inclusion”, and my honourable friend Guy Opperman MP is the first Minister for Pensions and Financial Inclusion. I have already been in discussions with him about how we can work with the Minister for Education in another place to take forward some of the recommendations in the report and discuss in further detail the concerns raised in it, particularly about primary school education. For those reasons, I hope noble Lords will accept that the amendments are not necessary. I urge the noble Earl to withdraw the amendment.

Pension Protection Fund and Pensions Regulator

Lord McKenzie of Luton Excerpts

Thursday 13th July 2017 Lords Chamber

Asked by

[Lord McKenzie of Luton]

To ask Her Majesty’s Government when they intend to review the Pension Protection Fund and the powers of the pension regulator, as set out in their 2017 manifesto.

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

My Lords, the Government are determined to ensure that the entitlements of occupational pension scheme members are protected from the actions of unscrupulous employers. We published the Green Paper, Security and Sustainability in Defined Benefit Pension Schemes, in February this year, and consulted on changes to pension protection legislation, including those set out in the manifesto. I am pleased to tell noble Lords that the Department for Work and Pensions is today announcing plans to launch a White Paper on the future of defined benefit final salary pension schemes in the near future.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for that reply. We agree with the importance of sustaining confidence in the pension system, particularly DB schemes, and ensuring that the pension promises of employers are honoured. We look forward to seeing the White Paper in due course, whenever that might be. But, given the experience of U-turns on the triple lock and the lack of reference to the issue in the Queen’s Speech, we are entitled to check the status of what was promised to the electorate, especially as it is branded as a component of the strong and stable leadership and said to be protection from “irresponsible bosses”—not usual Tory language, but we know who they mean. Can the Minister confirm that it is government policy—which would have our support—to introduce for the Pensions Regulator a notification scheme for certain mergers and acquisitions; powers to block certain takeovers; punitive fines for those wilfully under-resourcing schemes; and powers to restrict dividends of irresponsible employers? Can she also say what changes the Government consider necessary to the powers of a pension protection fund?

[Baroness Buscombe]

My Lords, as the noble Lord will know, the Green Paper covered four key areas: funding and investment, employer contributions and affordability, member protection, and consolidation of schemes. It looked to examine and build on the discussion already taking place on what, if anything, should be done to ensure that the system remains sustainable while ensuring that members’ benefits are protected. It is really important to say that issues such as powers to block certain mergers and acquisitions should be thought through extremely carefully, not least because we want to ensure that any changes to the powers of the regulator do not trigger unintended consequences and act as an impediment to business and growth.

Financial Guidance and Claims Bill [HL]

Lord McKenzie of Luton Excerpts

2nd reading (Hansard): House of Lords
Wednesday 5th July 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I start by thanking the Minister for her introduction of this Bill and for the meetings that she and her colleagues have facilitated. We look forward to further engagement as we make progress.

As we have heard, this is a two-topic Bill, the first of which concerns the establishment of a new arm’s-length entity to replace three existing publicly funded consumer bodies, the Money Advice Service, TPAS and Pension Wise, which variously provide free-to-client and impartial information, guidance and advice. The SFGB will have responsibility for a strategic function also to support and co-ordinate the development of a national strategy. The Bill’s stated aim, which we can support, is to increase levels of financial capability, reduce levels of problem debt, and improve public understanding of occupational and personal pensions. We accept that having three existing organisations with overlapping remits but different brands, independent strategies and business plans, generates inefficiencies, although we should acknowledge the effectiveness of some of the work they currently do. In particular, we should recognise TPAS, which with a small budget and no marketing handles some 200,000 customer contacts each year. We can also see the challenges of fitting together three hitherto separate organisations.

The Bill also separately introduces a tougher and welcome regulation regime to tackle conduct issues in the claims management market, which we can also support. The Bill is a high-level framework Bill, with little detail of precisely what is to be delivered and how. It is understood that the Government consider that a mixed delivery model should apply to the SFGB, with some services delivered directly and others commissioned externally by specialist providers. Other than debt advice, there will be no support for regulated financial advice. I believe that the Minister made that point. There can be more than one tier of provider, with a third tier needing SFGB consent, and delivery partners will have to provide information for monitoring and enforcing standards. We have no problem with this, but what safeguards will be available to ensure that lower tier providers are not disadvantaged in this treatment, as happened sometimes under the Work Programme arrangements?

The Bill gives us no specifics on delivery channels, which will have to be designed by the new body, but the expectation is that these will include a customer-facing website, a telephone service and some face-to-face support—the components of the existing separate arrangements. How is it expected that arrangements will allow appropriate consumers who are not currently effectively reached to be catered for? Do we expect the SFGB to handle increased volumes?

The five areas that SFGB is expected to concentrate on are provision of debt advice, provision of information and guidance relating to occupational or personal pensions, accessing DC pots and retirement planning. I believe that the Minister suggested in her introduction that it would cover state pensions. We thought that that was not the case—but perhaps she could clarify that in her response. It is also to help consumers avoid financial fraud and scams, to give information on wider money matters and to co-ordinate and influence efforts to improve financial capability, along with co-ordinating non-governmental financial education programmes for children. The SFGB also has a strategic function to support and co-ordinate a national strategy but, especially given the appointment of a Minister for Financial Inclusion, this could be strengthened to a “develop and deliver” function, despite the SFGB perhaps having limited leverage in some areas.

We agree that these are important and relevant areas, but will test these against the existing remit of the separate bodies. It appears that a number of statutory functions of the MAS are not currently included, and we will need to know why. While we can support these areas of focus, we consider that there is scope to go wider and deeper if, as a country, we are to secure a step change in the financial capability of the nation.

Coincidentally, as has been referred to, with the introduction of this Bill, we have the benefit of the recent publication of the House of Lords Select Committee report, Tackling Financial Exclusion. I declare an interest as a member of that committee, which was ably chaired by the noble Baroness, Lady Tyler of Enfield. We will pursue a number of its recommendations in Committee, particularly on the importance of financial education, where we believe this Bill is too timid. There are also issues about the role of the FCA and whether its remit should be expanded to have a duty to promote financial inclusion. I know that my noble friend Lady Drake is on the case of consumer versus market issues on this matter.

More generally, as part of our work in Committee, we will seek to confirm that there is clarity on the boundaries between information, guidance and advice and that consumers are clear as to what is available and relevant to them. We also need to ensure that the SFGB can provide impartial information, notwithstanding that others may be operating in the same space. We welcome the focus on the provision of financial education for children and young people, although this appears to be restricted, as I have said, to non-governmental programmes. The Government should be bolder, as the Select Committee proposes.

The new body will have to cope with a changing economic environment. So far as debt is concerned, the latest data show that, against a backdrop of rising prices and stagnant wage growth, real incomes have fallen for three successive quarters and savings levels have crashed. Evidence provided to the Select Committee referred to fears expressed by debt agencies about the rise in queries covering rent arrears, energy and water bills, telephone bills and council tax. Consumer credit is on the rise again. Quite apart from the obvious question of what the Government are going to do about their austerity policies, which are driving much of this, how will they approach the capacity and resource issues of the new body? When will the Government recognise that their own policies on universal credit and council tax support are directly fuelling some of this debt? Can the Minister tell us what is happening to manifesto commitments on providing breathing spaces for debt?

The SFGB will also have to cope with an increasingly complex pensions sector. The growth of auto-enrolment brings more and more people within the scope of occupational pensions, with the 2017 review potentially—and hopefully—expanding its scope. The other major change has been the introduction of pension freedoms, giving much greater choice over when and how individuals access their entitlement. As the ABI points out, there is the prospect of a pensions dashboard being operational in 2019, with individuals being able to see all their pension pots, including the state pension, in one place online. Not having access to the dashboard as part of the guidance service would seem a missed opportunity. Have the Government given any thought to this? There is a strong argument also that retirement opportunities more generally should be within the remit of the SFGB. Of course, with pension flexibilities come financial fraud and pension scams, exacerbated by the precipitate manner in which the pension changes were introduced. A recent Citizens Advice report calculated that some 10.9 million consumers have received unsolicited contact about their pensions since 2015. These are alarming numbers and the SFGB will have a major task in promoting awareness of scams, not just those that are pension-related.

There is much more that we must explore in Committee, including the process for the setting of standards—on which we believe there should be consultation—the FCA review, reporting to the Secretary of State, and the arrangements for the various transfer schemes. Clause 12 of the Bill sets out arrangements for the disclosure of information between, variously, the SFGB, the Secretary of State, the devolved authorities and the FCA. We need reassurance that these are appropriate. As for the reach of the SFGB, noble Lords will be aware of the proposition that it should be extended to micro-businesses. Do the Government agree?

As for changes to claims management companies, we agree that the current arrangements regulating the industry, intended in 2007 as an interim measure, have not delivered a satisfactory situation despite a number of incremental reforms to the regulation powers in the interim. The current situation has been characterised by poor value for money, information imbalances, nuisance calls and texts and the progression of speculative and fraudulent claims. We accept the proposition that there is a public interest in having an effective claims management market operating in the interests of consumers, as this can provide access to justice for those who are unwilling or unable to themselves bring a claim for compensation. Further, as the Carol Brady review asserts, a well-functioning CMC market can act as a check and balance on the conduct and complaint-handling processes of individual businesses. We note that the Brady review rehearsed a number of options for taking regulatory responsibility, including bolstering the MoJ arrangements, but considered that a move to the FCA would represent a step change. This seems the right decision, especially as some 99% of turnover relates to financial services—PPI, packaged bank accounts or insurance.

We support the proposition that CMCs be subject to a rigorous reauthorisation process, and that there be a senior manager regime of personal accountability. How much of the detail of this will be available for our scrutiny before the Bill leaves this House?

The Bill enables the FCA to introduce a cap on charges, as we have heard. A consultation has already been carried out under the existing MoJ regulatory arrangements but we believe that no government response has yet been forthcoming. Can the Minister say when we might expect one, or is there to be a further consultation under the new arrangements?

In evaluating the Bill, especially the single financial guidance body, we need to determine whether what is on offer is essentially just a reordering of what we have at the moment, with some efficiencies built in, or a step change in our approach to enhancing financial capability. We should want it to be the latter and will seek to strengthen it to that effect where we can.

Pension Schemes Bill [HL]

Lord McKenzie of Luton Excerpts

Ping Pong (Hansard): House of Lords
Wednesday 5th April 2017 Lords Chamber

Given the wide variety of master trust scheme structures and arrangements with scheme funders, the department will work closely with key stakeholders, as part of our ongoing consultation, to develop the first set of regulations. We will strike an appropriate balance between minimising the burdens on business and providing the Pensions Regulator with the appropriate level of transparency for its ongoing supervision of the financial sustainability of the master trust scheme. I beg to move.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for introducing this first group of Commons amendments—Amendments 1, 3, 4 and 20. By way of background, we should acknowledge a degree of consensus emerging on the Bill, which has indeed been helped by the amendments before us today, which deal directly with some of the concerns we raised earlier in the parliamentary process.

This does not mean that we consider, as should have been evident in the other place, that the Government are on top of the entirety of the pensions landscape. There is more to do on the level and transparency of charges; governance; extending the benefits of auto-enrolment; and addressing the lingering injustice felt by those women whose state pension age was raised quicker than expected. Of course, the Government will need to consider John Cridland’s analysis of the state pension age, emerging issues from the DB Green Paper, and the need to make progress on proposals for the Money Advice Service, not to mention the continuing combating of pension scams.

The Bill deals with a specific and technical issue and is important to protecting millions of savers and billions of pounds of savings, and we have sought to address it in these terms. One of the criticisms of the Bill is its heavy reliance on secondary legislation, although that has now been changed to affirmative on first use, as we have just heard. The aspiration, as we understand it—and the Minister may confirm—is for this process to be completed during 2018 to enable all the provisions to be commenced. Doubtless this timetable was contemplated without due regard to Brexit. What is clear now is that an enormous amount of legislation, mostly secondary, will be required to give effect across government to our exiting the EU. Can the Minister say what assessment has been made of the capacity of government—indeed, of Parliament—to cope with all of this? Will he undertake to publish a current timetable for implementation of the Pension Schemes Bill?

We support Amendments 1 and 20, which as we have heard deal with an unintended effect of the original drafting. It would have required the scheme funder’s activities to relate only to the money purchase benefits aspect of each scheme that is a mixed-benefit scheme.

As the Minister has outlined, Amendments 3 and 4 deal with Clause 11 and the scheme funder requirements. This clause generated considerable debate in your Lordships’ House and in the other place, as the Minister again acknowledged. This was not about challenging the policy, which quite properly seeks to ensure that the financial position of scheme funders and their financial arrangements with master trusts are transparent and clear to the regulator. The concern raised by a number of noble Lords as well as stakeholders was that the original requirement for separate legal entities and activities relating to just one master trust scheme were too restrictive, could force costly corporate restructuring and could detract from market opportunities to consolidate.

The remedy proposed is to allow the scheme funder to carry out activities that relate to more than one master trust and for the Secretary of State to have power to make regulations to except a scheme funder from the requirement that it must carry out only activities directly related to master trust schemes for which it is a scheme funder. The power can be used where a scheme funder meets additional requirements relating to its financial position, its arrangements with the master trust involved and its business activities. The regulations can also enable application by the relevant master trust scheme to seek to satisfy the regulator that the scheme is financially viable.

On the face of it, these amendments potentially enable concerns about shared services, FCA-regulated entities and consolidation opportunities to be addressed, but it would be helpful if the Minister put further flesh on the bones of how he sees these relaxations being used. As we expected, he has addressed the Delegated Powers and Regulatory Reform Committee’s requiring a more convincing explanation of why these regulations should be subject to the affirmative procedure on first use—bearing in mind that this is the case in a number of places in the Bill. Subject to any final matter the Minister may raise, we are inclined to support these amendments as they demonstrate that the Government have been listening to the genuine concerns about what the original Clause 11 would have generated.

[Lord Henley]

My Lords, I am most grateful to the noble Lord, Lord McKenzie, for the constructive approach he has taken to this group of amendments. I hope that this will continue for the rest of this consideration of Commons amendments. He raised various points about Cridland and the state pension age, which go wider than the Bill at the moment. I will not respond to those points but he made an important point about the degree of secondary legislation that will come forward not purely from the Department for Work and Pensions but from across government—he meant later this year, I presume, and throughout next year. He wondered whether we hoped to get all of it completed by 2018. I believe that we do but it will obviously be quite a trying matter. We will want to continue to engage with the regulator, the pension industry and other stakeholders throughout the year. That will be followed by formal consultation on those draft regulations, which we currently hope to get early next year so that we can get them coming into force from 2018.

What pressure there will be on this House and another place from all the various primary and secondary legislation coming before us is probably beyond the noble Lord’s pay grade, and certainly beyond mine. However, I am sure that the usual channels will discuss that and ensure that we give appropriate coverage to all these matters.

As to the detailed timetable of all that consultation with the regulator and pension stakeholders, the noble Lord asked for a table, but it might be helpful it I write him a short letter setting that out, if there is anything that I can add to what I have said. We aim to have those regulations coming into force from 2018, and nothing that I have seen so far seems to suggest that we will not be able to meet that. I think we can go ahead and agree these amendments. I hope the noble Lord will accept that.

--- Later in debate ---

[Baroness Altmann (Con)]

My Lords, I welcome much of the thrust of the Bill. I am also delighted to see Amendments 3 and 4, which, I hope, ensure that insured master trusts will not be forced to separate from their insurance parent, which would have forced them to face higher costs and reduced the security of their members. I am very grateful to my noble friend for taking on board the comments made during the Bill’s passage through this House.

It strikes me that Amendment 2 should be considered separately from those to which it has been joined. I reiterate my strong concern—notwithstanding the reassurances from my noble friend—about leaving out Clause 9. I understand that there is a view that it is unnecessary and that the new regime will ensure that master trusts have sufficient resources, are financially sustainable and have capital adequacy in place. However, even with new schemes and the best will in the world, capital adequacy tests may prove inadequate. No provision in the Bill would cover members of a very large pension scheme that suffered a catastrophic computer failure and lost member records. The cost of restoring that could be well above the capital adequacy put in place, and nothing in the Bill explains where the cost of restoring those records would be covered. The only place might be the members’ pots themselves, which is not supposed to happen.

I vividly recall assurances given by Ministers on defined benefit schemes during the 1990s, when the minimum funding requirement was supposed to ensure that schemes would always have enough money to pay pensions. No one foresaw the problems evident in the early 2000s, when schemes that had met MFR legislation wound up and ended up without enough money to pay any money to some members on the pensions that they were owed.

Even more concerning than that is that the Bill is being introduced when 80 or so master trusts are already in existence in the market with a huge number of members across the country already saving in a pension. These trusts have not been subject to the capital adequacy test or other tests that the Bill will rightly introduce. What is the protection for members of existing schemes who are saving in good faith? They are not protected at all. That was why I was very pleased that we passed the amendment concerning the scheme funder of last resort. I echo the question of the noble Baroness, Lady Drake: what discussions have taken place with the industry to find a solution to cover the eventuality—we do not expect it and it is, I admit, a small probability—that an existing master trust winds up without enough funding to cover the costs of administration to sort out its records and transfer them over to another scheme? I should be grateful for some information from my noble friend about whether there are ongoing discussions and how the department sees that eventuality being covered: where would the money be found?

On Amendments 5 to 19, I share some of the reservations mentioned by the noble Baroness, Lady Drake, such as the regulatory disparity between a master trust, which would be regulated by the Pensions Regulator—and therefore under its control, if you like —and a master trust transferred under the amendments to a pension scheme regulated by the Financial Conduct Authority. How would the regulatory systems work together when they are under different legislation?

I have other concerns, but I may raise them under the next group.

[Lord McKenzie of Luton]

My Lords, let me start by expressing our regret that the requirement for there to be a funder of last resort—successfully pressed by my noble friend Lady Drake on Report—has been deleted from the Bill. That concern was also expressed by the noble Baroness, Lady Altmann. We of course accept that the whole purpose of the Bill—its protections, including capital adequacy, financial sustainability, systems requirements, scheme funder and transfer regime—is to secure people’s pension pots, militate against scheme failure, and ensure good order when difficulties arise. But as my noble friend asserted on Report, notwithstanding this, it cannot be guaranteed that a master trust will not fail and when it does there will be an available master trust to step into the breach so that members’ funds are protected. The noble Baroness, Lady Altmann, has just expressed similar concerns with vivid potential examples.

In seeking to resist the funder of last resort proposition, the noble Lord, Lord Freud, claimed that it would be costly and a disproportional response to the issue and with moral hazard implications—arguments deployed by the Parliamentary Under-Secretary of State for Pensions in the other place. We remain unconvinced of these arguments when put in the balance against the importance of protecting people’s savings. Nevertheless, we need to examine how the Commons amendments to Clauses 25 and 34 contribute to ameliorating this risk, which at least potentially they do.

We acknowledge the amendments to Clauses 25 and 34 which potentially widen the scope of continuity option 1 and expand the prohibition on increasing administration charges or imposing new administration charges. In particular, they raise the prospect of the accrued rights and benefits under a master trust scheme being transferred to an alternative pension scheme which is not a master trust. No detail is offered in the amendment about the likely characteristics of an alternative pension, other than the fact that it must be a pension scheme under the 1993 Act. This of course will include both personal and occupational pension schemes. Regulations will spell out the circumstances when the alternative might be available, and the characteristics of an alternative scheme. Regulations will also spell out how such an option is to be pursued.

While we can see the benefits of a potentially wider pool of pension schemes which could be available in the event of a master trust failure, it begs a number of questions about how any alternative scheme would be regulated and what protection it would offer members. My noble friend Lady Drake, in particular, as ever has produced some forensic questions to seek at least some clarity on key issues: further actions and discussions that have taken place; whether a receiving alternative scheme is sustainable and well governed; how such a scheme can operate a prohibition on increasing charges and preventing members’ funds from being accessed; and consideration of how bulk transfers would work. The noble Baroness, Lady Altmann, joined in the same sort of inquiry.

It remains to be seen how much these amendments provide a real opportunity to add a layer of protection and whether the market will offer up alternative schemes which can assist. We look forward to the Minister’s reply, but we are not minded to oppose these amendments.

[Lord Henley]

I start by offering my thanks to the noble Lord for making it clear that he is not minded to oppose these amendments. I understand that noble Lords felt quite strongly about their amendments and for that reason wanted them in the Bill to be considered by another place. The other place has considered those amendments and we now have this opportunity for further debate. We can then get on with seeing the Bill on to the statute book.

Before dealing with the questions, I shall respond to the brief point made by my noble friend Lady Altmann about not being happy with the groupings. The groupings are a largely informal matter, sorted out by the usual channels. To my knowledge—and I think that it was probably done in discussion with the Opposition—they have changed a number of times, but that is not unusual. Very often we get it wrong in how things are grouped. But as is made clear on the bit of paper that comes to the House every day, groupings are an informal matter, and it is always open to all noble Lords to intervene on any appropriate amendment at the appropriate stage.

--- Later in debate ---

[Lord McKenzie of Luton]

I can confirm that it was me who suggested that Amendment 2 should be added to the list.

Personal Independence Payment Regulations

Lord McKenzie of Luton Excerpts

Wednesday 15th March 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for repeating that Answer. The Social Security Advisory Committee expressed the view that outside the DWP there is indeed some confusion regarding the original policy intent of the measures, and that the department had made errors about its intent in submission to an Upper Tribunal. The committee further expressed concern about unintended operational and legal consequences arising from the changes to the mobility descriptors in the regulations that have been made. It drew attention to circumstances where multiple factors make it impossible for someone to follow a journey without help, and where it would be difficult to strip out and exclude psychological distress from other factors.

How does the Minister respond to this issue and to the recommendation that these proposed changes and those relating to managing therapy should be tested with healthcare professionals and decision-makers? Will he commit to doing this before implementation of the regulations that have been laid? Further, can the Minister explain how regarding the consequences of psychological distress is consistent with fostering parity of esteem between those with physical and mental health conditions?

[Lord Henley]

My Lords, the original policy intentions were set out quite clearly during the passage of the legislation. The noble Lord will remember that far better than I do. That was then set out in the legislation—and in secondary legislation. However, as he is aware, the Upper Tribunal made it clear that there was, as I think it put it, a lack of clarity in the regulations as we set them out. That is what, I hope, we put right in the regulations we laid a week or so ago and which come into effect tomorrow.

The noble Lord asked whether there would be further consultations on that. Obviously, my honourable friend the Minister for Disabled People and others within the department will continue to keep an open dialogue with all those involved to make sure that our policy intentions are correctly applied and that these things are dealt with as clearly as possible.

The noble Lord also doubted whether there was the appropriate parity between mental and physical conditions. He alleged that there was a lack of parity, which we want to achieve. I believe that there is parity because we are looking not at the conditions but at the overall needs of individuals. In other words, it is not some specific complaint that the individual suffers from but how it affects how they get on with their lives. That applies equally—hence the parity—to those with mental and physical conditions.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2017

Lord McKenzie of Luton Excerpts

Thursday 9th March 2017 Grand Committee

The review of auto-enrolment this year provides an opportunity for the Government to indicate the future direction of policy. They have confirmed that the scope of the review will look at existing coverage and consider the needs of those not benefiting from auto-enrolment, and examine the thresholds for the earnings trigger and the qualifying earnings bands. I ask the Minister: as part of that review will the Government explicitly consider the benefit to a large number of workers of reducing the earnings trigger below £10,000?

[Lord McKenzie of Luton (Lab)]

My Lords, automatic enrolment has been a hugely successful example of public policy and once again I pay tribute to the role of my noble friend Lady Drake in helping to formulate its development and implementation.

The success of auto-enrolment has been built on rigorous research and assessment of the data, engagement with the industry and the building of a political consensus—legislated for by a Labour Government, implemented by the coalition Government and now sustained by the Conservative Government. Of course, that does not mean that we share an identity of view on every aspect of its implementation, as this discussion has already indicated. I will say more on this later. But it has undoubtedly been successful because it addresses a fundamental issue of chronic undersaving for pensions.

To date we are told—we have new figures today, I think—that some 7.3 million workers have been automatically enrolled by nearly 400,000 employers. The DWP review suggests, and we agree, that with all large and medium-sized firms having reached their staging times, the rollout for small and micro-sized employers is the most challenging phase. Of course, we are still in the 1%/1% contribution phase. DWP analysis suggests that by 2019-20 there will be an extra £17 billion of workplace saving per year as a result of automatic enrolment—a considerable achievement.

Of course, the success of auto-enrolment has run ahead of the necessary regulatory framework as it spawned the growth of master trusts. But this is being addressed in part by the Pensions Schemes Act, as I think it now is. Perhaps the Minister can give us an update on implementation plans for this legislation and its multitude of regulation-making powers.

The Minister will be aware that there are obligations on employers not only to automatically enrol workers but periodically—every three years—to re-enrol those who have not taken up the opportunity thus far. It is understood that there is a six-month window in which to do this. Given an October 2012 start date for automatic enrolment, employers will increasingly face this obligation. Can the Minister give us some data on how this is all going? How many workers have been re-enrolled and how many have opted out?

The order addresses the earnings trigger, which determines who is eligible to be automatically enrolled, and the qualifying earnings band, which determines the minimum level of contributions. The particular bone of contention with this order, as the Committee heard from my noble friend Lady Drake, is the earnings trigger, which is retained at this year’s level of £10,000. While it represents a modest lowering of the threshold in real terms, it does not go far enough, as my noble friend asserted. Bringing within scope a further 70,000 individuals, 75% of whom are women, is to be welcomed. But if the trigger rate were just set at the national insurance primary threshold, as the papers before us show, a further 750,000 would be in scope and 70% or more of those would be women.

My noble friend has highlighted research, some of which came from Scottish Widows. Although it shows improvement in the number of women saving for retirement, there is still a gender gap. That reflects the fact that women are more likely to be in part-time work and lower-paid jobs—it is they who bear the brunt of having an earnings trigger that is too high.

In making the judgment as to the appropriate level of the earnings trigger for 2017-18, the Government assert that the overriding factor should be ensuring that people have sufficient retirement income savings. We agree with this. However, they then use the broader upcoming 2017 review to settle for the status quo on the basis of stability and affordability, without, I suggest, any detailed analysis, at least on the latter. Perhaps the Minister will take the opportunity to expand on this justification for the record.

So far as the qualifying earnings band is concerned, we note the continued alignment of the starting point with the LEL and the retention of an overall cap on employer contributions. The Government acknowledge that using a trigger below income tax personal allowance level does not preclude the benefit of effective tax relief if net pay schemes are used. Reliance on those below the income threshold opting in ignores the key principle of inertia on which auto-enrolment is built. Can the Minister give us any data on the numbers who opt in to schemes voluntarily and obtain the benefit of the employer contribution? Nevertheless, as my noble friend said, we look forward to the upcoming review and trust that it will include a focus on such matters as mini-jobs—mentioned by the noble Baroness, Lady Bakewell—and the self-employed.

The self-employed have of course caught the attention of the Chancellor this week. So, too, have those who operate through their own companies. When the legislation was introduced, excluded from its scope were sole-director companies, generally on the basis that such individuals were officeholders rather than workers. Given the growth of such arrangements, are there any plans to review this situation?

The order represents a modest advance in expanding the reach of auto-enrolment and we will obviously not oppose it. The 2017 review is an opportunity to take stock of matters more widely to ensure that the full benefits of this policy are obtained and that there are better outcomes, in particular for women and the low-paid.

[Lord Henley]

I am very grateful to the noble Lord for his offer not to oppose the order. I am even more grateful for the generally constructive approach that all noble Lords have taken to it. As we know, it is very simple and deals merely with automatic enrolment and raising the lower qualifying limit and higher qualifying limit in line with the lower earnings limit and the upper earnings limit of NICs, at the same time leaving the £10,000 figure where it was.

As I made clear in my opening remarks, we are conducting the 2017 review, so I have to be fairly circumspect in what I say in response to noble Lords because I do not want to prejudge that. However, many of the speeches, in particular that of the noble Baroness, Lady Drake, will be taken into account in that review, and we will consider in due course any further comments that she wishes to put forward. I will answer one or two of the more detailed questions put to me in the course of this short debate.

Perhaps I may deal first with the question of multiple jobholders, which was raised by the noble Baroness, Lady Bakewell, by making it clear that for some multiple jobholders, one of their jobs will earn in excess of £10,000. They will therefore be automatically enrolled on that job. But it is the case that they can choose to opt into schemes if they earn under £10,000 but more than the lower earnings limit so if they have a number of jobs, one of which is paying at least £5,876 a year, they can obviously do that. We think that around 500,000 multiple jobholders meet the age criteria for automatic enrolment and that of these, some 330,000 earn more than £10,000 in at least one job, so they would be automatically enrolled in it.

This may deal with the point raised by the noble Lord, Lord McKenzie, when he asked about the numbers of those seeking to voluntarily opt in who are below the £10,000 trigger and above the upper earnings limit. I understand that the survey we conducted in 2015 suggested that some 5% of those ineligible workers had chosen to opt in, which probably shows the benefit of the whole idea behind automatic enrolment—that you are automatically opted in and have to opt out. If we compare a 9% dropout rate there with a 5% enrolment rate for those who can, we see that leaving these things to a voluntary process would have led to a very different take-up from what we have seen so far with the automatic enrolment introduced by the 2008 Act. As I think I made clear in my opening remarks, we have seen a dropout rate among those who were automatically enrolled of only 9%. That rate might go up as the contributions go up but, at the moment, it is way below what was originally estimated by the then Government who introduced this measure and in other measures by us.

The noble Baroness, Lady Drake, expressed some concern about the £10,000 limit. She would like to reduce it still further. She certainly agreed that it was preferable to keep it at £10,000, though, rather than linking it to the personal income tax threshold. I think she would also agree that the arguments are finely balanced on both sides as to whether to increase or decrease the limit. I can see the case for a degree of simplicity by aligning it with the personal income tax threshold, but that would obviously exclude many more people. There is also the argument on the other side: if one lowers it—below £10,000—yet more people who are not paying income tax will be eligible for automatic enrolment. Having listened to the noble Baroness and said that the arguments are finely balanced, these matters can be looked at in the 2017 review, which I stress will look at the overall operation of the policy in the round, including the balance between catching the lower earners and other factors that determine the overall numbers who will be subject to automatic enrolment. Again, the concerns that she has put forward will be taken into account.

The noble Lord, Lord McKenzie, also asked about the Pension Schemes Bill, which is close to my heart. It was just disappearing from this House with all its detail as I arrived back in DWP and is awaiting its Report and Third Reading in another place.

--- Later in debate ---

I repeat my gratitude for the generally positive contributions to today’s discussion and stress that all comments will be taken into account in the review.

[Lord McKenzie of Luton]

Before the Minister sits down, may I comment on his comment on the opt-in rate, which is 5%? That means that 95% of people who could take advantage of an employer contribution, for example, are missing out. A 5% opt-in rate is not great, and reflects the fundamental architecture of the scheme. Causing people to do something generally does not work with pay and pensions: you need to do something. Inertia keeps them in. On the issue of mini-jobs and whether any of them reaches a £10,000 threshold, even if one of them did, it would not give relief or benefit on the full aggregate of a number of mini-jobs that people may have, so it is not equivalent. It is difficult: we have debated and agonised over the issue of how effectively to aggregate these disparate jobs and get the same result as if it were one job. If that came out of the review, it would be a real success.

[Lord Henley]

What it reflects—to use a fashionable modern word—is the power of nudge. By means of automatic enrolment, we are achieving those high rates, whereas if one asks individuals whether they wish to join, one gets the relatively low rate of 5%. That 5% compares very interestingly with what I think is a rather low rate of opt-outs: 9%, which is far lower than we originally expected.

Having said which, I would still say that one has to get the right balance between administrative simplicity and ensuring that people will ultimately benefit. It is important to remember administrative simplicity for the employer, particularly the very small and micro-employer. That said, all those factors can be taken into account in the annual review. We all have the same desire: to increase enrolment in pensions as far as possible, but in the best way. This has been working very well since the 2008 Act. There are just questions such as whether to bring the trigger lower. They are best looked at in the review, where they will be taken into account.

I think I have dealt with most matters, other than those on which I promised to write to the noble Lord, Lord McKenzie. I commend the Motion.

Universal Credit

Lord McKenzie of Luton Excerpts

Thursday 9th March 2017 Lords Chamber

[Lord Henley]

My Lords, the right reverend Prelate is right to draw attention to the problems some people have in knowing how the system works. He will find that how work coaches explain the administration of universal credit to people coming to them is completely different from how it used to operate. I recommend that the right reverend Prelate takes an opportunity to visit one of his local jobcentres to see how it works in practice. He might find that things have moved on a great deal since, say, his time in the diocese of Sheffield. If he wishes to take up my offer, I will be more than happy to make the arrangements.

[Lord McKenzie of Luton (Lab)]

My Lords, is it not the case that it is not just the architecture of universal credit that is creating problems but its administration, as the Select Committee in the other place determined? I understand that, when asked about the sometimes fractious relationship between the DWP and the Treasury over universal credit, the noble Lord’s predecessor said that,

“there were times when one’s view about the Treasury was totally unprintable”.

Does the current Minister have any such inhibitions?

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2017

Lord McKenzie of Luton Excerpts

Tuesday 28th February 2017 Grand Committee

[Lord James of Blackheath (Con)]

My Lords, I am sorry to interfere again but when I read this I got a nasty jangle in the back of my head which said that this does not necessarily fit with what we discussed before, in the days when my noble friend Lord Freud was bringing the Bill through. I remind your Lordships that at that time, I initiated direct discussions with the Royal British Legion on exactly this subject because it is the expert on what is happening, who is suffering and what their state is.

Sadly, the Royal Navy is the principal biggest culprit. Worst affected of all are those who served on the Royal Yacht “Britannia”, which is a terrible scandal. Nearly everybody who served or did anything in the engine room of the Royal Yacht “Britannia” is now either dead or dying from diffuse mesothelioma. The Royal British Legion set up a special department to deal with this, because the tragedy is that people’s wives and children have got it, too, because you have only to wash the coat of somebody who has this to be a condemned person from that moment on. The Royal British Legion has gone to great lengths to make sure that it is monitoring and looking after the wives, families and dependants of these dreadfully stricken people.

At the end of that debate, my noble friend Lord Freud gave an undertaking that he would not do anything that initiated payment structures which interfered with or were diminished by the presence of the Royal British Legion payments, so that people would get the maximum benefits for their hugely distressed situations; that he would look after things to ensure that nothing we did cut across the Royal British Legion’s process, and vice versa; and that it would be wholly co-ordinated. The jangle I got in my head was because I have never heard whether that has happened, and that is why I am asking for some assurance that my noble friend’s undertaking was fulfilled. What is its status today, please? It really matters.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the noble Lord, Lord Henley, for his introduction and explanation of the regulations. I am sorry that the noble Lord, Lord James, has had a nasty jangle in the back of his head. Clearly, he is concerned about undertakings made in respect of the Royal British Legion. I worked on this—not alongside the noble Lord, Lord Freud, but on the opposite side—and I do not think that anything has arisen in the course of lots of changes to these provisions over a number of years which would be in breach of the undertaking he gave the noble Lord, but it is not for me to defend a former Minister.

[Lord James of Blackheath]

My Lords, I will put the noble Lord’s assertion to the test with one simple question: can we say with absolute certainty that not one penny from the Royal British Legion has been withheld or interfered with by us through the conflict between its initiatives and ours, and that everybody has gone ahead with the full funding under both arrangements?

[Lord McKenzie of Luton]

No, I cannot possibly say that. It is not my role as a shadow Minister. If anybody is going to give those undertakings, it is the noble Lord, Lord Henley, and I wish him well.

As we have heard, the regulations cover various compensation schemes, including the ones for pneumoconiosis and other dust-related diseases covered by the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, and, separately, mesothelioma. The payments are uprated by 1%, which is the September 2016 CPI rate of inflation. One might say that this is a meagre sum, just missing the surge in inflation generated by the decline in the rate of sterling post the referendum, although we acknowledge that there is no statutory obligation to uprate the compensation schedules and that the 1% aligns with the uprating of industrial injuries benefits, as we have heard. Obviously, we support the regulations but I have some questions.

We have no impact assessment for the instruments, although the Explanatory Notes indicate that in the year to March 2016 some 3,520 people made a claim under the 1979 Act, including 310 claims for dependants. I think my question may already have been answered. Can the Minister tell us how many of these claims were successful and can we have an analysis of the various categories of dust-related diseases? I think the noble Lord referred to 3,592 payments. The explanatory memorandum talks about claims. Maybe it is a question of nuances of terminology, but it would good to know the actual number of successful claims. Can we also be provided with an analysis of the amounts of the various claims, how these were funded and the extent to which there has been or will be clawback of social security benefits?

So that we can get the overall picture of the numbers suffering from these dust-related diseases—other than mesothelioma—can we have some detail on what has been covered by employer liability insurance? The ELTO 2015 annual report—when will we get an updated one?—shows an improvement in successful inquiries but apart from mesothelioma itemises only asbestosis and asbestosis-related illnesses. Further, the ELTO report does not cover successful claims which might be made directly to insurers outside of ELTO. Can we be provided with a complete picture of the number of workers entitled to lump-sum compensation arising from the 1979 Act for the latest period available? Can we also be provided with details of how many are missing out on compensation?

The position concerning mesothelioma is different, as we have heard. Diffuse mesothelioma is a fatal cancer of the lining of the lungs or abdomen caused almost exclusively as a result of exposure to asbestos. Symptoms and diagnosis may not emerge until 30 or 40 years following exposure—it is a long-tail disease—and this obviously exacerbates difficulties in identifying relevant employers and employer liability insurers. A number of steps have been taken in recent times to improve access to compensation for sufferers of this terrible condition. In 2008 the previous Labour Government introduced the scheme which is the subject of the regulations before us today. It is a no-fault scheme, so does not require a work-related nexus or proof of negligent exposure to asbestos. It has tended to be illustrated, as the noble Lord, Lord James, said, by exposure caused by washing somebody’s work clothes.

After an initial differential, the rates of compensation under the 2008 Act—for sufferers and dependants—have been separately aligned with the 1979 Act amounts for those with 100% disability, although, as the noble Lord said, there is still the differential between payments in respect of dependants and sufferers. Again, we have no impact assessment, although the Explanatory Note tells us that some 400 people made a claim in the period ended March 2016, including 10 dependants. How many of these claims were successful? How were they were funded? I seem to recall that the original concept was for funding to come from civil claim recoveries. What is the current position? If we are to see the overall picture here, albeit not strictly covered by these regulations, we should consider the further important developments led by the noble Lord, Lord Freud, with the co-operation of the insurance industry. These include the Employers’ Liability Tracing Office, which focuses on assisting claimants to identify an appropriate employer liability insurer. While the 2015 report shows the inquiry success rate improving, it is far from 100%. For mesothelioma, it is just below 77%.

So onward to the diffuse mesothelioma payment scheme—a scheme of last resort—which started making payments from July 2014. It seeks to compensate those negligently exposed to asbestos while at work but who cannot trace the responsible employer or insurer. The scheme is funded by a levy on the gross written premiums of those insurers writing employer liability insurance. It was acknowledged that the insurers could not commit to a levy level above 3% of gross written premiums. In its first year, net payments of £24 million were made, with an average amount of £122,000. The tariff payments, originally at 75% of average civil claims, have risen from 80% to 100%. There is an oversight committee, which my noble friend Lady Donaghy chairs.

In respect of mesothelioma entitlements with an employment nexus, can the Minister let us know for the most recent period available the total number of successful compensation claims and the amounts achieved via employers or insurers, either directly or using the tracing office, and the total number of tariff payments made under the payment scheme? Has the DWP made an assessment for the most recent period of the number of mesothelioma sufferers who have not been able to access either compensation or a tariff payment? What do we understand the reason to be for the shortfall between the expected claims to the payment scheme and outturn for the most recent period? The Minister did give us an updated forward projection of the incidence of mesothelioma: 2,500 cases for the rest of the decade. The Minister is probably aware of the extensive debates we have had on this issue and of the focus on funding for research for sufferers. That has been a positive development.

As a final point, ELTO has made good progress in tracing policies. It is suggested that better access to the employer reference number from HMRC would assist in this. There was an attempt to amend a recent Bill to try to secure that, but it was unsuccessful. Will the Minister tell us what is happening on this issue?

[Lord Henley]

My Lords, I thank the noble Lord, Lord McKenzie, and my noble friend Lord James of Blackheath for their comments. The noble Lord, Lord McKenzie, asked a number of fairly detailed questions, a great many of which will, I suspect, be far better dealt with in correspondence, if the noble Lord will accept that. The answers will come down to rather detailed figures because he asked about the analysis of the levels of claims, which obviously depends on the age of the complainants. I have a sneaking suspicion that a table setting out such details might be of greater use to the noble Lord and other noble Lords who have taken a great interest in the matter.

I appreciate that we did not have a debate on this last year because the CPI was where it was and so there was no uprating. One could say that one of the benefits of this being normally uprated in line with inflation, because it is separate from the others and at the discretion of my right honourable friend the Secretary of State, is that we manage to have some debate on this important matter each year, with the exception of last year. That way, these matters can be exercised, rather than subsumed in the general uprating debates that happen—for example, last week. Having made that broad point, let me try to answer a number of the questions that noble Lords have raised.

The first is one on which, again, I will have to offer to write to my noble friend. He asked about the support that the Royal British Legion might be offering to former Navy servicemen, particularly from HM Yacht “Britannia”, who have suffered from this, and whether they were going to lose out as a result of payments being made by the Royal British Legion. I will take advice on that and will write to my noble friend.

--- Later in debate ---

Broadly speaking, with regard to the number of claimants, my noble friend Lord Bourne, dealing with these regulations in 2015, talked about them possibly reaching a peak in 2018. I would not want to be quite so specific but we are seeing that the figures will probably level out towards the end of this decade and then, because of the era that we are dealing with— very largely, 1950 to 1980 saw a high use of asbestos, but I appreciate that some other forms of asbestos were not banned until somewhat later—we should begin to see a decline because of the nature and demographic of those concerned and the very long period for which these conditions can lie dormant. So, broadly speaking, we are talking about a levelling out and then a decline but, very sadly, I suspect we will have to continue with this annual debate for a number of years to come.

[Lord McKenzie of Luton]

If the Minister will allow me to intervene, it is not just a question of looking at the total numbers of people who are new sufferers, particularly in relation to mesothelioma; it is the extent to which they are able to access compensation—as the Minister put it—speedily, whether it is through systems such as ELTO, the payments scheme, or indeed any other scheme. Given the nature of these conditions, we should not be looking at the growing trends, but at whether the mechanisms we have in place are delivering and enabling those people to get access to compensation with tariff payments.