Covid-19: Support for the Self-employed

Debate between Lord McNicol of West Kilbride and Earl of Courtown

Tuesday 24th March 2020 Lords Chamber

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for reading that Answer, which was quite scant on detail. In response to this pandemic, Norway immediately committed to paying the self-employed 80% of their three-year average earnings, obviously with an upper limit. Denmark and Belgium have brought in similar schemes. We are happy to work with the Government to look for solutions, but these solutions need to be delivered quickly. Many self-employed people are in desperate situations in these desperate times. What timescale are the Government looking at to bring in these new measures? Can the Minister encourage them to do so as quickly as possible?

[The Earl of Courtown]

I thank the noble Lord, Lord McNicol. I am in total agreement that these things must be advanced as soon as possible. As I said in the Statement, my right honourable friend the Chancellor will provide a further update on support for the self-employed in the coming days.

The noble Lord mentioned other countries. As he will be aware, the situation has unfolded in different countries around the world at different paces. Her Majesty’s Treasury is keeping a close watch on what is happening elsewhere in Europe and in other countries. We will keep all these matters under review.

Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2020

Debate between Lord McNicol of West Kilbride and Earl of Courtown

Monday 23rd March 2020 Grand Committee

[Lord McNicol of West Kilbride (Lab)]

My Lords, I thank the Minister for his introduction and echo the comments of the noble Lord, Lord Clement-Jones. Again, I will raise a number of issues so if the Minister would like to write a letter following this debate I would be more than happy to receive one.

The success of auto-enrolment is testament to the previous Labour Government, with tens of millions of workers saving for a pension under the scheme. In a recent report, the Pensions Regulator found that the overall proportion of eligible staff saving into a workplace pension was 87% in 2018. This has massively increased over recent years and decades. It also found that the largest increase in participation was from the youngest age groups. In the private sector, the largest increase was seen among 22 to 29 year-olds, increasing from 24% in 2012 to 84% in 2018.

We welcome the Government’s continued commitment to auto-enrolment but acknowledge that it is not perfect. Average contributions remain too low and, as the noble Lord, Lord Clement-Jones, said, the threshold too high. Department for Work and Pensions statistics show that, as a result of pensions inequality, 37% of female workers and 28% of black and minority ethnic workers are still not eligible for the scheme.

The exclusion of the self-employed from auto-enrolment also needs to be addressed. Some 15% of the workforce is now self-employed, but the numbers of such workers saving into a personal pension fell by a third between 2014 and 2018. With the current coronavirus crisis, the pressure on the self-employed will only increase, as we are seeing. I know that discussions are taking place around a number of possible changes to the Bill in the other place to try to protect the self-employed.

Today’s statutory instrument keeps the current earnings trigger of £10,000, and that is to remain into 2020-21. However, The People’s Pension found that, by reducing the trigger to £6,240, an additional 1.2 million people would be helped to save for their retirement. Why have the Government decided to keep the trigger at £10,000, given that it excludes some of the most vulnerable from saving into a pension scheme? The Explanatory Memorandum states:

“The Secretary of State decided not to consult on the amounts of the qualifying earnings band and earnings trigger for 2020/21”.


I understand that the Minister will need to write to me, but I ask: why not? Did the Secretary of State not want to take on board the concerns that the unions and others involved in this area were raising?

The Government have said that they will address issues with auto-enrolment, as the noble Lord, Lord Clement-Jones, said, by the mid-2020s, once it has bedded down. We would prefer that to be brought forward, especially given the many issues that will arise out of the current crisis. We see no reason for delay.

It is impossible to ignore the current national crisis of coronavirus. Are the Government looking into support for people who will be affected by a drop in their income over the coming months and years? That drop in income will have an effect on their pension. Are the Government also looking to develop long-term support for the defined benefit schemes, which will be massively affected by the market turmoil?

[The Earl of Courtown]

My Lords, I thank both noble Lords for their contributions. I will cover as many of the points raised as possible and will of course provide both with more detail in writing.

The noble Lords, Lord Clement-Jones and Lord McNicol, talked about the impact of automatic enrolment on young people. Automatic enrolment has been a quiet revolution, getting employees into the habit of pensions saving. It has reversed the previous decline in workplace pension participation that we saw in the decade before the reforms. As the noble Lord, Lord McNicol, said, since 2012, the workplace pension participation rates for eligible employees in the private sector aged 22 to 29 has increased from 24% to 84% in 2018.

Both noble Lords concentrated their remarks on the effect on women. Automatic enrolment has helped millions more women save into a pension, many for the first time. Workplace pension participation among eligible women working in the private sector rose from 40% in 2012 to 85% in 2018. Women are more likely to face financial instability later in life as a result of their experiences in the labour market. That is why this Government are committed to tackling the structural inequalities in the labour market that lead to the private pensions gap.