Pensions Bill [HL]

Debate between Lord Stoneham of Droxford and Lord Boswell of Aynho

Thursday 3rd March 2011 Grand Committee

[Lord Stoneham of Droxford]

My Lords, we have had a discussion on some of the main reasons for the move in the threshold. We are understanding of that move. There are a number of reasons for it. The documentation that we have received from a number of organisations questions the rate of return on the savings of people at these levels of earnings.

We have heard mention of the replacement-to-income argument. It is almost certainly true that at these levels of earnings a lot of individuals are less prepared to save. Of course, there is also the burden of administration. I take the noble Lord’s arguments on the threshold being linked to the tax threshold. You would expect us to be committed to raising the tax threshold to £10,000. We want neither a deterrent to doing this nor a deterrent to those who are trying to improve their savings and pensions. I hope therefore that we will have a commitment to look at this each year and that it will not be related necessarily to the raising of the tax threshold, as that would take a lot of people out of the net, which is not what we are trying to do.

I accept that there is an increase in these thresholds, but I want to go back. I apologise for repeating some of the earlier arguments, but I want to make the point that there are a number of things that we need to do—or the Government need to look at—which would be helpful to people who could be vulnerable to these changes. I have mentioned the tax threshold and I hope that we will have a firm commitment on that.

Secondly, we will discuss later the pots of savings and what people will be able to do with them. If they can be brought into NEST, and if we can encourage that process, that would be a most helpful change. It would make the overall change more acceptable.

I was very supportive of the arguments on multiple earnings. It is a big issue that will grow. I am pleased that there was a commitment to 2017. We underestimate the number of women in this position and, even though we may not be able to act now, we could be saying that it is an issue that we will try to address as the new system beds in. We also want to see a degree of commitment to encouraging people to stop opting out. We will address that matter in later amendments. In the context of raising the threshold, these are a number of points that we think are important to make that acceptable. I accept that, ultimately, running through this Bill is a trade-off with the Treasury on all kinds of aspects. We must make sure that we get a good trade-off.

[Lord Boswell of Aynho]

Perhaps I may briefly invite my noble friend to consider one particular point about the raising of the threshold. There is no need for a commitment at this stage, although it has been implied that it will be considered. Can my noble friend give some thought to, and discuss with his Treasury colleagues, the way in which this might be introduced annually into the national consciousness? I hesitate to dangle another red herring before the Committee in the shape of the national minimum wage, on which I have some prior form. However, if we are beginning to look at the impact on labour markets of a number of items, and some of the misguided or inappropriate claims that are made, or the fact that people say, “I don’t think I can afford that anymore and I want to pull out”, it would be useful to have a national economic snapshot. Although this is strictly about the labour market and within the Minister’s remit by definition because he is legislating on it, it is part of a national economic snapshot. Some people may have noticed today in relation to the national minimum wage a suggestion with which I do not agree—that we should announce it and defer it for 12 months. I merely make the point that probably on the occasion of a Budget it would be useful to have an annual appraisal that was keyed in and could be related by the commentators to tax rates, take-home pay and so forth. It would add to clarity and transparency.

Pensions Bill [HL]

Debate between Lord Stoneham of Droxford and Lord Boswell of Aynho

Tuesday 1st March 2011 Grand Committee

[Lord Boswell of Aynho]

My Lords, I shall respond briefly to the noble Baroness, Lady Hollis, who has performed a service to the Committee in raising this issue. My immediate reaction, not least as a former small employer in the agricultural business employing casual labour and the kinds of people who she rightly described from her Norfolk experience, is that we need to think about how this burden should fall on employers if we are to do it. I shall come in a moment to the other side of the argument, but the Minister will have to tell us how this can be done. He will also need to reassure us that, even if perhaps it should not, it will not in practice act as a disincentive to employers employing these people. That is partly on the administrative side, as well as being the effect with regard to cost uplift. I am not for a moment suggesting that the right thing is for people to go into the irregular economy or that in some way we should find some kind of special deal for them because that is not what the noble Baroness is saying. However, we need to have at least some assurance that it is not going to create problems for employers, that it is manageable and that it will not have malign economic effects.

On the other hand, the noble Baroness is very much on to a point of substance. We have mentioned the word “problem”; I appreciate that that was not the context of what she said, but we should not regard part-time employment as a problem. It is a problem only if, when people would choose to be working for longer hours, it does not escalate into being able to do so, or they have not got the right bag of skills or their remuneration package is too low. We should welcome part-time employment with open arms, along with the flexibility that it brings. That is important and positive, which is why I hope that the Minister can come up with a solution.

I have one more thing to say, which is not meant to be threatening to him or anyone else. My knowledge of employment law has somewhat faded over the years and I am not too good on the equal treatment directive, but, looking at this from the perspective of human rights law, which I know a little more about from recent experience, and equality, if we do not come up with a system that provides the same functional opportunity for people who are working the same number of hours but for a number of employers as compared with those who are working for one employer, we are at some risk of being accused of discrimination. The Minister has to find a workable answer to this.

[Lord Stoneham of Droxford]

I support the amendment. It is related to the amendment that we will discuss in a moment about including part-time earnings to qualify for NEST. This is an important issue, and we need the Minister to look at it with a view to recognising the fact that part-time work is growing and is going to grow. There is a lot more out there in the unseen economy than we probably realise, which should be revealed as we move towards the universal credit system. We must therefore address it. As an employer myself, I have seen discrimination happen over the years. People deliberately keep employment below a certain limit so that they can avoid national insurance, and in future they will be doing this on pension contributions as well. This needs to be addressed.

I accept that there is an administration problem, but systems are improving. We should be trying to address this problem in the light of that. Because it is linked to the problem that we will be discussing on a later amendment, I am very sympathetic to this one.