Amendment of the Law

Richard Graham Excerpts

Monday 23rd March 2015 Commons Chamber

[Rachel Reeves]

We have said that there should be a cap on fees and charges—not just for the annuities products, but for the new drawdown products. We think it should be at the same level as the Government have set out, but then reduced over time. In that way, we will ensure that savers get value for money. Unless we do that, more people will be ripped off. Unfortunately, despite all the Government’s rhetoric, they have not taken action to protect people’s retirement incomes.

What we have heard from the Secretary of State today is the same complacency and self-congratulation. Yes, of course we welcome any fall in unemployment, but it was this Government who allowed unemployment to soar to record levels in the first place, peaking three years ago in February 2012 at 1.7 million. Under this Government, the number of long-term unemployed, abandoned to a life on the dole, has risen by 49%. That is why Labour will have a compulsory jobs guarantee.

[Richard Graham (Gloucester) (Con)]

The hon. Lady made a number of comments about the prices and charges that should be levied on pensions. Will she confirm that the price cap that has been levied on auto- enrolment pensions is, in fact, half that of the amount levied on stakeholder pensions when her Government were in power?

[Rachel Reeves]

We introduced a cap on charges for stakeholder pensions and the automatic enrolment brought in policies for which Labour had already legislated. We are proud of automatic enrolment, but we disagree with the changes that this Government introduced, which mean fewer people are benefiting from automatic enrolment —1.5 million fewer, two thirds of them women. That is a real lost opportunity to ensure that those people who should be saving are actually saving.

What this Secretary of State and the Government he speaks for simply do not understand is that their failure to make work pay and to deliver a recovery that raises living standards for all is the root cause of their failure to control social security spending and balance the books as they promised. They have spent £25 billion more than they planned and their receipts from income tax and national insurance have, as has been pointed out, fallen short of forecasts by a staggering £97 billion over the life of this Parliament.

It is because of that failure that, in order to deliver his objective of a large surplus in the next Parliament, the Chancellor has now committed to even deeper spending cuts over the next three years than we have seen over the past five years. The Office for Budget Responsibility confirms that these plans will mean

“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything seen over the past five years”,

and

“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.

My right hon. Friend the Member for Morley and Outwood (Ed Balls)and my hon. Friend the Member for Nottingham East (Chris Leslie) have highlighted the threat this poses to police, defence and social care. Is it not the truth that the Chancellor’s extreme fiscal plan can be delivered only by putting our NHS at risk or imposing yet another Tory rise in VAT? Although it is hard to see how this Government can make the extra £12 billion-worth of cuts to social security spending when they have failed to deliver any savings in social security so far, these cuts could not be delivered without inflicting unimaginable hardship on low-paid workers, children in poverty, disabled people or carers.

So for this Government, this empty Budget will be a fitting epitaph. What of this Secretary of State who wanted to take his place in history as the compassionate Conservative who reformed welfare? His time is up and his record is clear: major reforms undelivered or descending into costly chaos; food banks in every town and child poverty back on the rise; more and more spending on in-work benefits as more and more working people find their wages do not cover the rent. No wonder the OBR says that the Government are guilty of “optimism bias”.

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[Richard Graham (Gloucester) (Con)]

Today’s debate focuses on work and pensions—the two issues that are at the heart of this Government’s mission to ensure that everyone is better off working and everyone is better off saving. Neither of those things was remotely true in 2010 and both are much closer to being true today. It is vital that Britain allows this Government to finish the job of making both those crucial philosophies true.

The first part is about ensuring that universal credit is rolled out and implemented effectively everywhere. That means that, finally, the tax credits that have prevented so many people from working for longer than 15 hours will no longer prevent people from doing so and that many of my constituents will have the chance to benefit from having full-time jobs.

At the same time, we need to get the spirit of the triple lock, which has brought security so effectively to those on the basic state pension by giving everyone £950 more than they were getting in 2010, into the world of annuities, which have been liberated, so that those who need and want them can have them, but those who do not want them do not have them. The small income that many of my constituents generate from their savings should not be taxed, so that there is an incentive to save. The means-tested pension prevented many people from saving, because they could see that their neighbour was better off not saving. We must not allow that world to continue.

That is our mission. It is what my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) called free market economics with a social conscience. In my words, it is getting the economy right in order to improve lives. That is the mission that this Government have been on for the past five years and it must continue.

How does it feel on the ground in my Gloucester constituency? Youth unemployment went up by 40% under the previous Government and it has gone down by almost 60% under this Government, from 760 to 345. There were too many families with two generations, if not three, in which no one was working, meaning that there was no role model. Some 2 million children across the country were growing up in those households.

Today, we have 5,900 new apprenticeships in Gloucester, which is more than double the pace under the previous Government. That is not about statistics, but about opportunities for individuals. People who come from backgrounds that meant that they never imagined they would be able to get a job and that they faced a future on benefits are getting the skills that they need for a lifetime of opportunities. In terms of social justice, there is no better individual story than that of Beauty—a Nigerian woman who was trafficked to this country and who, with help from a number of us, was given the chance to stay in this country and is now training to be a nurse in a hospital in Gloucestershire. That is the mission.

Interestingly, only today, I read the best indicator I have come across of business confidence in the south-west of England. It stated:

“Turnover and profit growth are expected to remain steady”.

It said that there were good prospects for jobs. However, there was a but: the prospect of a new Government makes many business leaders nervous about their long-term prospects. It is no surprise that businesses are nervous. They should be, and so should parents because the shadow Business Secretary announced recently that the Labour party would axe the level 2 national vocational qualification from being considered an apprenticeship. That would be a disastrous blow for the many people who leave school at 16 or 17, start with a level 2 and go on to improve the level of their apprenticeship.

We need a Government who are fiscally responsible—as the Budget was—and who produce specific instances of improving the lives of our constituents. I was delighted with the encouragement for tidal lagoon power and its first historic opportunity to develop marine energy from Swansea bay. The company is headquartered in Gloucester and is a £1 billion project. Opportunities in the future with three or four further tidal lagoons will offer thousands of jobs in south Wales and around Gloucestershire. There was also encouragement for my plan for the redevelopment of Gloucester railway station. That was confirmed by the announcement this morning by the Department for Transport that we will be getting a new station car park with up to 240 new places and a new entrance to our station on Great Western road, linking our hospital and the station directly for the first time. That will come in 2016.

I also welcome the announcement by the Chancellor—we await the full details—that the campaign that I and my hon. Friend the Member for Winchester (Steve Brine) have been running for justice for police widows has been accepted by the Government. That is a good example of where a stronger economy allows for social justice and for the Government to make decisions that improve the lives of those who, through no fault of their own, were victims of an historical injustice.

Some things remain to be done, and we await the details of the retirement guidance on savings. That is critical and we must work to ensure that it is good. We must continue with auto-enrolment and to reverse the decline of those with pensions and savings. We might consider a new ISA for care. I say yes to 3 million apprenticeships—deeper, broader and perhaps more for the over 50s. The hon. Member for Leeds West (Rachel Reeves) said there have been five wasted years, but they were not wasted. We must now build on those years to ensure that we go forward with an even better, stronger economy, helping those who have less.

Pensions and Benefits Uprating

Richard Graham Excerpts

Thursday 4th December 2014 Commons Chamber

[Steve Webb]

Yes, my hon. Friend is right that the measures we have applied to those with spare rooms in social housing do not apply to pensioners. We have specifically prioritised the poorest pensioners. Under the law, the link to earnings would have meant relatively small cash increases. We did not feel that a rise of less than £1 a week was acceptable and that is why we have passed through the full value of the cash increase in the basic state pension to the poorest pensioners—those only on the guaranteed credit.

[Richard Graham (Gloucester) (Con)]

I absolutely welcome what the Minister has had to say about the increase in the basic state pension: £950 more than in 2010 is a remarkable achievement by the Government. As he points out, it is £7 a week more than Labour policy would have paid.

In terms of some of the other remarkable comments made by the shadow Minister, the Minister might be interested to know that I was in Hammersmith Jobcentre Plus this morning. Paul, who has worked in benefits for 27 years, told me that this is the real deal. Dawn, who works there, says that what is happening is a revolution—it is the best thing happening. Does the Minister agree that there is a wonderful opportunity for the shadow Minister and all four of his Back-Bench colleagues present to visit Hammersmith Jobcentre Plus and learn for themselves what universal credit is doing for the country?

[Steve Webb]

My hon. Friend is highly expert in these matters, and he will know that the Hammersmith jobcentre has become something of a tourist attraction in demonstrating the excellence of universal credit. What is so exciting is that in previous years we would talk about something hypothetical, whereas now we are talking about something real that thousands of people are already receiving. We are rolling it out more extensively as the months and years go by. It is a very profound change in our welfare state—one that we can all be proud of.

Pension Schemes Bill

Richard Graham Excerpts

Tuesday 25th November 2014 Commons Chamber

[Steve Webb]

I am not sure whether the House will be thrilled to know that I have a slightly fuller note on this second group of new clauses and amendments. They are clearly very important, because they relate to the 2014 Budget freedoms that have been so widely welcomed in the House—and, particularly, outside it.

In the 2014 Budget statement, the Government announced that individuals with defined contribution pensions would be able to access their entire pensions flexibly from April 2015 if they wished to do so. This is the most radical reform of how people access their pensions for almost a century, and it returns choice to individuals by trusting them with their own finances. The Government believe that people should be free to make their own choices about how to use their savings, and our reform will give the 320,000 individuals who retire with defined contribution pension wealth every year choice as to how to access those savings.

We have committed ourselves to supporting the pension flexibilities through free, impartial guidance to help people to make informed and confident decisions about how to use their defined contribution pension savings in retirement. The new clauses and amendments cover a number of topics relating to the new flexibilities, and we notified members of the Public Bill Committee that they would be forthcoming. They include new clauses that provide safeguards for individuals who want to transfer to pension schemes to which the flexibilities apply; restrictions on transfers from public service pension schemes; a number of changes to pensions legislation to ensure that the flexibilities work as they are intended to; and further amendments relating to guidance to ensure that the arrangements run smoothly.

[Richard Graham (Gloucester) (Con)]

Will “appropriate independent advice” include consideration of financial assets other than defined contribution pensions? Does the Minister expect the Financial Conduct Authority to clarify in due course what constitutes “appropriate independent advice”?

[Steve Webb]

The issue that my hon. Friend has raised is covered by amendment 73, tabled by our hon. Friend the Member for Reigate (Crispin Blunt). If the House will allow me, I intend to allow our hon. Friend and others to make their points and then to respond to them, rather than trying to pre-empt that debate now. However, the FCA will indeed have more to say on these matters in due course.

New clauses 7 to 12 and new clause 13 create a safeguard to ensure that those who transfer from defined benefit to defined contribution schemes have received appropriate independent advice before doing so. That is important, because continuing membership of a DB scheme is likely to remain most people’s best option. However, the Government recognise that the attractiveness of transferring from DB to DC may increase for a limited number of people as a result of the reforms to DC savings.

New clause 7 creates a requirement for trustees and managers of a scheme to check that a member has received appropriate independent advice before converting a “safeguarded benefit” to a “flexible benefit”, or making a transfer payment in respect of safeguarded benefits to a scheme in which the member will acquire flexible benefits. In this context, the term “member” extends to any current or former employee, and any survivor of a member with subsisting rights to “safeguarded benefits”.

Subsection (2) enables the Secretary of State to set out in regulations the exact details of the regime that trustees or managers must abide by in checking that advice has been taken. Subsection (3) allows the Secretary of State to make regulations to allow exceptions to be made to the advice requirement, which will allow us, for example, to exempt those with a small amount of defined benefit wealth from the requirement to take advice. That approach was set out in the Government’s response to the consultation on freedom and choice in pensions, which was published in July this year.

Subsection (6) establishes that should a trustee or scheme manager fail to carry out a check, the scheme member will not be disadvantaged if the conversion or transfer of his or her benefits is ruled invalid. To ensure that trustees and scheme members carry out the required check, subsection (5) provides for certain civil penalties already used in the regulation of pensions to apply.

New clause 8 enables the Secretary of State to make regulations that set out the circumstances in which employers must pay for advice that is required by the advice safeguard. As we say in our response, we intend these circumstances to be, first, when a transfer is as a result of an employer-led transfer exercise, and secondly when a transfer is between DB and DC sections within the same scheme.

Subsection (2) allows the Secretary of State to ensure that the arrangement is fair for the employer by making regulations that can cap the amount that the employer must pay for advice on behalf of the member. It also allows the Secretary of State to take fairness to the member into account by making regulations preventing employers from attempting to pass the costs of advice back to members. Subsection (3) enables the Secretary of State to make regulations ensuring that employers will have to pay for the advice of former employees who continue to hold accrued DB rights in the employer’s scheme, as well as current employees.

New clause 9 is consequential to new clause 7. It ensures that trustees or scheme managers are not penalised for failing to comply with the provisions in new clause 7 for reasons outside their control—for example, when a check has been carried out, but it has not been possible to establish whether the member received appropriate independent advice. New clauses 10, 11 and 12 and amendments 82, 83 and 84 make provision parallel to that in clauses 7, 8 and 9 for Northern Ireland.

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[Stephen Timms]

I fear my hon. Friend is right. If in practice only a tiny proportion of people, or even a modest proportion, take up the guidance being offered, there is every chance of very serious problems in this market in the future. The House cannot be satisfied with that likelihood.

A number of organisations have pressed vigorously for a second line of defence requirement and they make a telling case. Proceeding without that safeguard will leave many consumers exposed—we should bear in mind that this is all supposed to happen from next April—making people guinea pigs and opening up the real possibility of another mis-selling scandal in the coming months.

[Richard Graham]

The right hon. Gentleman raises an issue that may not technically arise from the amendments that we are debating, but in which all hon. Members have some interest. What could a possible second line of defence look like?

[Stephen Timms]

That is a good question. I do not have a proposition to make. I would hope that those who are reflecting on these matters, particularly in the FCA, will be giving that some thought. There is time for it to incorporate something else and to put that second line of defence in its conduct rules. What it would look like, I am not in a position to propose this afternoon, but the need for it is clear. If the hon. Gentleman is about to propose something, I would welcome that.

[Richard Graham]

The right hon. Gentleman is being very generous and Madam Deputy Speaker is indulging us gently so I will be brief. I guess—perhaps the Minister might nod sagely at this stage—that this is an issue primarily for the FCA, but I hope that the message has gone out from us today that we are interested in it.

[Stephen Timms]

I am grateful to the hon. Gentleman. I hope that those who follow these debates will take that as an endorsement of the need for that second line of defence to be devised and put in place. If it was not there, there is a real risk of exposing consumers to risk of a kind that we have all seen before, and which would undermine these important reforms from the outset.

As the Minister explained, independent financial advice amendments are set out in new clauses 7 to 13. New clause 7 requires that when a member requests a transfer of safeguarded benefits, which are anything other than the cash balance or other money purchase benefits, with a view to acquiring flexible benefits, which are anything that is not safeguarded, the trustees

“must check that the member or survivor has received appropriate independent advice”.

I want to pick up a number of issues. What exactly are the trustees being required to do? Are they being asked to evaluate the appropriateness of the advice that was given to the scheme member? It does not seem right that they should be called upon to do that. It is quite a big undertaking for them and they are probably not in a position to do it. That wording could be understood to mean that that is what they are being asked to do. I would be grateful if the Minister commented on that.

We are seeing the creation of two new categories of benefits—safeguarded benefits and flexible benefits. I gather that the use of these terms is completely new; they are not used elsewhere in the statute. We have three new categories of scheme set out in the Bill, but this is the first time that we have had reference to safeguarded and flexible benefits. The use of those terms seems unfortunate, because safeguarded rights has a particular meaning, which was familiar when, admittedly now rather a long time ago, I was in the office that the Minister now holds. In the context of contracting out, safeguarded rights had a particular meaning. That term is now being introduced in the amendments before us to mean something completely different. The term “flexible” also has a specific meaning in pensions tax terms. Again, there is a real risk of confusion in reusing that particular term to mean something very different from the one people familiar with pensions tax arrangements understand it to mean.

The National Association of Pension Funds has argued that the statute should state that where the member has requested a transfer of his or her benefits, other than cash balance or other money purchase benefits to a scheme in which they will be paid a cash balance or money purchase benefits, the trustees should require appropriate proof from the member that he or she has received independent financial advice from a person authorised by the Financial Conduct Authority to give such advice. The regulations could define “appropriate financial advice” in that way. The NAPF makes the point that the language in front of us is rather ambiguous about what exactly is envisaged. Perhaps the Minister could comment on the alternative wording proposed by the NAPF, which it thinks would make it clearer and would not give the impression that trustees were being called upon to do something that is actually very difficult for them.

New schedule 1, as the Minister has told us, deals with the detail of the calculation of the cash equivalent transfer valuation, replacing the current CETV provisions under the 1993 Act. I fear that the tangle gets worse here. The distinction is between money purchase benefits, flexible benefits that are not money purchase benefits—in other words, cash balance benefits—and benefits that are not flexible benefits, previously defined as safeguarded benefits. There are also transferable benefits, which are benefits

“by virtue of which this Chapter applies to the member.”

This is all quite complicated stuff. One of the fears is that the changes in terminology, and the reuse of previously familiar terms to mean completely different things, significantly increase the amount of confusion being created. Instead of just removing the current statutory requirement that all benefits be transferred if a member wants to transfer any benefits, the effect here is to prohibit schemes from having rules that require transfer of other categories of benefits if the member wants to transfer only one category, or that

“prevent a member who exercises a right under this Chapter in relation to a category of benefits from accruing rights to benefits in another category.”

Again, the NAPF makes the point that that last provision is “incredibly wide”. It points out that schemes do not let members participate in various sections willy-nilly; there are all sorts of rules about who can accrue what sorts of benefits and under what circumstances. The fact that somebody has asked for a CETV in one section of the scheme should not entitle them to benefits in other sections, but that is the way that this provision has been written. Perhaps the Minister could comment on whether that is what he really intends.

New clauses 14 to 16 seem to allow the Secretary of State to forbid draw-down from schemes that give members a guaranteed return, because draw-down can only be from money purchase benefits. That seems odd as well. Perhaps the Minister could tell us whether he or his officials discussed that with anybody before producing these new clauses. Certainly, the NAPF tells me that it is not aware of any discussions about that with it, or with anybody else. It well understands that schemes with guarantees must comply with the funding regime, but it does not understand why they should not be allowed to do draw-down or UFPLS—uncrystallised funds pension lump sum. Perhaps the Minister could comment on that.

The Bill requires members of defined benefit schemes to have received independent financial advice before being permitted to transfer into a defined contribution arrangement, unless they have pension wealth amounting to less than £30,000. The NAPF is concerned that that will impose a requirement that it would be very difficult, if not impossible, to meet. People will be required to prove that they do not have pension wealth in excess of £30,000, which will be very difficult for the average saver. There is the potential for a lot of confusion for savers attempting to assess their level of pension wealth. They might not realise that previously crystallised pension assets will be counted towards that threshold. They might find it difficult to assess the current value of such assets.

The average person may well not understand—nor should they be expected to understand—that the £30,000 will be measured not by the current CETV system but using the methodology created to measure benefits against the lifetime allowance, information that members are not currently entitled to get from other schemes. As a result, many defined benefit members will not be able to exercise their rights in the way that the Bill intends. The NAPF urges that savers should be able to access a total of £30,000 of defined benefit benefits calculated on a CETV basis, regardless of any additional defined contributions savings that they may have. Will the Minister respond to that point?

As with the previous group of amendments, I ask the Minister to set out his intentions on the regulations that are envisaged. He gave a clear and helpful response to my earlier question, but as he is well aware, it is good practice where regulations are referred to in primary legislation for Members who are scrutinising that legislation at least to have a draft in front of them when determining whether they support the provisions. The Minister said that it was not possible to give the costs for trustees because there was not yet a draft of the regulations. I think he will accept that it is very difficult for Members to decide whether to support these provisions if the House has not been told the cost for those who have to operate the regulations. Telling Members that the Government have no idea, at this stage, of what the cost of all this will be for everybody makes it impossible for us to do the job that we are required to do in properly scrutinising the costs and benefits that the legislation provides.

I was rather down-hearted by the content of the Minister’s previous answer, but I will ask the question again as regards these measures. Does he anticipate bringing forward the regulations on the same sort of time scale as the one he indicated earlier? Is there any prospect at least that draft regulations might be available to Members in the other place when they scrutinise the Bill? Does he expect that, as he said before, the majority of the regulations will be subject to the negative rather than the affirmative procedure? Will he draw the House’s attention to any exceptions, as he did last time, and point to those that will be subject to the affirmative procedure?

I am not going to urge the House to vote against any of the measures before us. I look forward to hearing the hon. Member for Reigate (Crispin Blunt) speak about his amendment. I have to tell the Minister that the House is being placed in a pretty unsatisfactory situation. I hope that even though we have not been able properly to scrutinise these measures because of the lack of information to support that scrutiny, he might encourage us by saying that those in the other place will have a better chance to do so.

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The Government’s commitment to the guidance guarantee has, of course, been well received by the industry and consumers, but widespread consumer ignorance of the pensions market is well documented. The Department’s own 2012 “Attitudes to Pensions” survey found that 49% had no knowledge of the requirement to annuitise.

[Richard Graham]

My hon. Friend is making some good points on an important issue, but does he agree that the providers and creators in financial companies have missed a trick over the years with regard to product innovation, and that they have depended too much on the monopoly of annuitisation, which has inhibited them—in effect, it has prevented them—from creating new products more suited to many of our constituents?

[Crispin Blunt]

My hon. Friend is absolutely right. That is the market in which Just Retirement and Partnership, as two smaller companies, identified the need for better, value-for-money products for individuals such as smokers and others with more limited life expectancy so that they could get greater annuity rates. They tried to promote those products in the market, but their problem was inertia in the market. People simply did not evaluate the options open to them and simply rolled over their pension pot provision in order to get an annuity from their existing provider, without looking at what was available in the rest of the market. What we are trying to do with the guidance—this is why I wholeheartedly support the reforms—is make sure that we create a much more active, liberal market whereby people are aware that they have choices to exercise and are able get the information in order to do so in an informed way.

[Richard Graham]

Some Opposition members of the Bill Committee raised concerns about guidance, but does my hon. Friend agree that the fundamental point of the changes that this Bill and the Treasury’s Taxation of Pensions Bill will introduce is recognition that annuitisation as was will undoubtedly lead to some scandals and mis-selling, which this Bill should put right and prevent in the future?

[Crispin Blunt]

That was the exact result of the paternalistic way in which we legislated to require annuities. Frankly, it led to market failure as a result of inertia in the market and people not exercising the choices available to them, because we seemed to be telling them precisely what they had to do. Now that we are liberalising the system and giving people the responsibility to manage the money they have saved, we obviously have to deal with the vexed issue of guidance to make sure that people make sensible decisions, by and large, but at least they should be informed decisions about the resources they have saved. These market reforms are founded on a belief in consumer empowerment, but without the effective implementation of the guidance guarantee, they may fail. That is why the guidance guarantee is so important.

We have already heard about the detail of and debated the need for a second line of defence, in that the Financial Conduct Authority must protect the estimated 8% to 96% of people—rather a wide estimate—who might not take up the guidance. That, however, is not the purpose of amendment 73.

The industry and consumers need the Treasury to take a lead and confirm the contents of the guidance. Why the Treasury continues to maintain its conspiracy of silence is a mystery to me. It is of some concern that four and a half months before the start date, the FCA, Citizens Advice, the Pensions Advisory Service and providers have no concrete clue about exactly what the guidance will entail, including whether it will consider sources of income that are alternatives to defined contribution pension schemes.

Dominic Lindley, an author and consultant at Which?, gave evidence in Committee suggesting that as little as 4% of a saver’s wealth is tied up in defined- contribution schemes. The over-55s have an average of £271,000 invested in property, and it is natural that such assets should increasingly form a component of retirement income. The average amount lent through an equity release scheme jumped 12% to £67,000 last year, while defined contribution pension pots remain stagnant at £20,000 on average.

The Conservative party and I presume our allies—including the right hon. Member for Sutton and Cheam (Paul Burstow), who supports my amendment 73—have always believed in the value of property ownership, and the Government must reflect that in their pensions policy. That is why we must recognise that equity release will be a critical part of future retirement provision. When we appreciate that £1.4 trillion-worth of property assets are held by older people, that puts into perspective the scale of the assets that have the potential to give older people a more comfortable retirement, if they can properly access them.

In Committee, the Minister said that he anticipated—he repeated this in an intervention—that the information that consumers would be encouraged to gather in a standardised format before they received the guidance would include state pension rights and assets such as housing equity. He also remarked that the more they put into the guidance session, the more they would get out of it.

The Equity Release Council is pleased by the recognition that assets other than defined contribution pension savings should be taken into consideration. However, that has not been explicitly stated in the Bill, and so far it relates only to the initial phone call to set up the guidance session. I support the Equity Release Council’s wish for the Government explicitly to recognise that housing wealth represents a significant source of potential retirement income, and for that to be considered during the delivery of pensions guidance.

I will therefore listen very carefully to the Minister before I invite the massed ranks of Opposition Members and, I hope, Government Members to support my amendment 73. I am reasonably hopeful that the Minister will give me a satisfactory response.

[Crispin Blunt]

I am trying to suggest what is in the amendment:

“Individuals delivering the pensions guidance must ask those receiving the guidance about other potential sources of retirement income in addition to defined contribution pension schemes; this must include an assessment of assets such as housing wealth, savings and investments.”

It is not meant to be prescriptive, but if someone has a tiny portfolio as their defined contribution scheme, relative to their whole portfolio, why are they not directed to their major asset, which is likely to be their house? What consideration might they give to using that asset to make their retirement more comfortable than it would otherwise be?

Pension reform seeks to give people sensible access to their assets, and for them to make sensible decisions. With equity release, for example, does it make sense to sell and downsize and give the estate agent a whack of money while being forced to move in order to release assets, or rather to stay in the house and release assets through an equity release scheme?

[Richard Graham]

It is an interesting point, and I am sure my hon. Friend would agree that the difficulty in the wording is because it is up to the individual to explain their circumstances and list their own assets, if indeed they have any. The vast majority of my constituents—and, I suspect, those of many other Members—have little in the way of assets, other than what they have been encouraged or able to save through their pension.

[Crispin Blunt]

Everybody’s position will be different. There will be people with small pensions sitting in quite large houses, and they will have limited income but a significant capital asset. When they receive advice on pension provision on retirement, what is their plan to be? We must try to get such people into the best possible place and to make sensible decisions about their future. It is not only the Equity Release Council saying that.

Parliamentary Under-Secretary of State for Welfare Reform (Disabled People)

Richard Graham Excerpts

Tuesday 28th October 2014 Commons Chamber

[Kate Green]

I do think that it is difficult for someone who expresses such views to remain in government and in that role.

Let us examine the policy record of the Government. Let us start with the bedroom tax—Lord Freud’s brainchild. Everyone knows that it is a disaster for disabled people. Many disabled people have lived in their homes for years. They have invested in adaptations, as have their families and local councils. Some people need an extra room for equipment or so that an overnight carer can stay. Some people have a condition that means that they cannot share a room with their partner. Many people are settled in their community, with care and concerned family and neighbours close to hand so that they can call for help when they need it. Now they are being forced to move, to cut back on other expenditure to pay the rent or to go into debt.

We all know of cases in our constituencies, such as that of a disabled grandfather, Paul Rutherford, who cares for his severely disabled grandchild, Warren. Extra space is needed in the family home to cope with all of Warren’s equipment. Paul has to rely on discretionary housing payment to pay the rent. Why should he have to go through the anxiety and indignity of pleading for the support that he and his family need? Have we lost all compassion? Have we lost all sense of people’s dignity?

Not only is the bedroom tax exceptionally cruel; it is failing to meet its objectives. Only about 7% of those who have been hit by the tax have been able to move to a smaller home. It is not saving the money that the Government said it would, either. Is it not time that Ministers admitted that this Freud tax is not working and got rid of it, as Labour has pledged to do?

[Richard Graham (Gloucester) (Con)]

Having served with the hon. Lady on the Work and Pensions Committee, I applaud her commitment to these issues. She made an important point about the tone in which this debate must happen. Does she agree that what matters most is what all of us are doing as individuals and as part of the Government or the Opposition to support people with disabilities to get back into work? In that context, Gloucestershire county council is one of the best rated authorities in the country. Through its Forwards programme, it is working closely with the Government on a Disability Confident event that I am hosting on 14 November, which the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Forest of Dean (Mr Harper), will attend. Will the hon. Lady join me in saying that that is precisely the sort of thing that we need to do around the country to help people with disabilities to get into jobs and find ways of taking their lives forward helpfully and productively?

[Kate Green]

Of course, I welcome any initiatives such as those that the hon. Gentleman describes. I am looking forward to hosting a Disability Confident event shortly with my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) in our local authority. However, I think that we need to look a little more broadly than just at what we all do as individuals. It is the collective responsibility of Ministers and the collective policies of the Government that are under examination this afternoon.

When the Under-Secretary of State for Welfare Reform questions whether disabled people are worth a full wage, does he forget that under his Government, hundreds of thousands of disabled people are right now sitting in queues, waiting to be assessed for the financial support that they should be receiving from the Government? More than 300,000 people are awaiting an assessment for personal independence payment, which is the Government’s replacement for disability living allowance.

Can Members imagine what it must be like to become disabled as a result of a catastrophic event such as a stroke or a terrible accident; to have to spend a fortune on adapting your home, on transport to get to appointments, on new equipment and on adjusting to your new life; to have to give up work and to have less money coming in; for your partner to have to give up work as well to care for you; and then for your PIP award, which should be helping with the additional costs associated with your impairment, to become stuck in an enormous backlog?

Affordable Homes Bill

Richard Graham Excerpts

Friday 5th September 2014 Commons Chamber

[Mr Raynsford]

I intend to make some progress, because many hon. Members want to speak. I may give way later, but for the moment I intend to make some progress.

I have made it clear that I regard the premise on which the policy was promoted as fraudulent because the Government’s real objective was to cut £500 million of public expenditure out of housing benefit. As the hon. Member for St Ives has clearly said, that could not be achieved if the policy’s ostensible objective—to encourage movement by tenants in social housing into smaller accommodation—was successful, because there would be no saving in public expenditure. The Government have been in the tortuous position of trying to justify the policy on the basis of making better use of the social housing stock when in practice they were after cuts in public expenditure that could not be delivered if the ostensible objective was met.

[Richard Graham (Gloucester) (Con)]

The right hon. Gentleman has made the point that some people in social housing provided by local councils want a spare room to enable their children or friends to stay. We all recognise that that is the case, but his Government changed the rules about that for the thousands and thousands of people in private accommodation in every constituency. Why should there be one rule for one lot of people and another rule for another lot? It is rank hypocrisy.

[Mr Raynsford]

The hon. Gentleman has clearly not been listening to the debate. My hon. Friend the Member for Dumfries and Galloway (Mr Brown) very forcefully made the point that the policy introduced by the previous Labour Government was not retrospective and did not penalise people on the basis of their existing circumstances. Quite simply, given the higher cost—[Interruption.] Perhaps the hon. Gentleman who asked the question would like to listen. He will know that private rented housing is generally very much more expensive than social housing. Social housing is allocated by landlords on the basis of how many bedrooms people need. If people who take private rented housing—they are not subject to allocation, but can choose their property—were able to select much more expensive properties that are larger than they need, that in itself would be reasonable grounds for a restriction. However, that applies only when people move into such housing, not retrospectively. Finally, I put it to him that if he and the Government were really concerned to make better and more efficient use of under-occupied social housing, they would not have exempted elderly people because it is predominantly that group whose properties are under-occupied. That point absolutely goes to the heart of the process: this is not about better use of the social housing stock; this is about trying to make cuts in public expenditure, which has been the Government’s objective from the outset. I now want to make some progress.

This whole ghastly process, which has caused anxiety, misery and hardship on a very large scale to hundreds of thousands of our fellow citizens, was based on a false premise, without any proper evidence to justify what was done. It was a truly dreadful example of the worst type of policy making. Ideally, the whole policy should be consigned to the dustbin immediately, and it will be if the Labour party forms the Government after the next general election.

In the meantime, the hon. Member for St Ives has given us an opportunity significantly to limit its negative impact by restricting its application in three specific ways. The first way is by excluding cases where significant adaptations have been made to a property to meet the needs of a disabled tenant or a close relative who lives in the house. Quite why the Government did not accept the need for such an amendment from the outset is difficult to understand. It is clearly wasteful of public expenditure to drive disabled people out of properties that have been adapted for their needs if, as a consequence, they move into unadapted properties that have to be adapted at considerable expense to make them fit for them to live in. That is yet another illustration of the perversity of the whole policy. The exemption is long overdue and will remedy one of the blatant injustices and endemic nonsenses that are inherent in the bedroom tax policy.

Secondly, an exemption is proposed for tenants and close relatives who are in receipt of disability living allowance or personal independence payments and who, because of their disability, are not able to share a bedroom with someone with whom, under the bedroom tax regulations, they would be expected to share a bedroom. Again, that is a sensible, humane exemption that ought to have been agreed from the outset. Instead, the Government argued that discretionary housing payment could be made in such cases, ignoring three principal objections.

First, not everyone who might qualify for discretionary housing payment will apply for it. The Government’s own review has demonstrated that that is the case. Secondly, not every local authority will approve DHP in all appropriate cases. Thirdly, the DHP regime is temporary. The Government have not confirmed that it will continue to be available beyond 2014-15, despite being pressed by the Work and Pensions Committee to give such a guarantee. It is far better to exempt those who are in receipt of DLA or PIP from the bedroom tax than to depend on the vagaries of DHP.

I do, however, have an anxiety about the precise wording of clause 2(1)(b). I have mentioned this point to the hon. Member for St Ives and I hope that, if necessary, the provision can be amended in Committee. As hon. Members will know, there are two levels of bedroom tax: it is 14% when the tenant is deemed to have one bedroom more than is strictly required and 25% when the tenant is deemed to be occupying two or more bedrooms more than they need. The exemption in the Bill is qualified by clause 2(1)(b)(v), so that it does not apply when the tenant has two or more bedrooms more than is strictly needed, even when the tenant has established that he or she cannot share a bedroom and so needs one bedroom more than their strict entitlement. The provision appears, therefore, to leave the tenant exposed to a 25% benefit reduction in such cases, rather than the more limited 14% reduction, which would appear to be fairer. I may be wrong in seeing that as a potential loophole that needs closing, and I would be delighted to hear from the hon. Gentleman if that is the case. If not, I hope that he will consider an amendment in Committee.

Oral Answers to Questions

Richard Graham Excerpts

Monday 1st September 2014 Commons Chamber

[Mr Harper]

The hon. Lady will know that the spare room subsidy is about making sure that people have the size of home that they are entitled to, and that if people regularly need carers to stay overnight, that is considered an acceptable reason for having an extra bedroom. She will also know that we have made considerable funds available to local authorities through the discretionary housing payments, many of which have not even been spent.

[Richard Graham (Gloucester) (Con)]

T3. I welcome the Minister’s commitment to reducing the waiting times for processing benefit applications. At a recent meeting that I organised for Atos, the DWP, citizens advice bureaux and MPs’ caseworkers in Gloucestershire, representatives of the CABs expressed their suspicion that DWP contractors were paid according to how many people they could take off benefits. Will my hon. Friend confirm that that is absolutely not the case? Will he also encourage CABs to work closely with MPs’ offices so that we can intervene sooner to help our constituents who have problems?

[Mr Harper]

I can confirm to my hon. Friend and constituency neighbour that contractors are not paid based on any sort of incentive arrangement to get people off benefits. They are paid to make an accurate assessment, which they then provide to departmental decision makers. Citizens advice bureaux should continue their work with MPs’ offices, which is incredibly helpful.

Universal Credit

Richard Graham Excerpts

Wednesday 9th July 2014 Commons Chamber

[Mr Duncan Smith]

The right hon. Lady knows that I respect her hugely. I am very happy to look at the points that she raises. In Wales, we inherited a peculiarly difficult problem. There were very high levels of unemployment and a very high number of people on incapacity benefit. I believe that our reforms are working. We have seen unemployment fall dramatically and employment levels rise in Wales. Is there more that we can do? Absolutely. My door is open and I would be very happy to discuss anything that she thinks we could do.

[Richard Graham (Gloucester) (Con)]

The hon. Member for Rhondda (Chris Bryant) suggesting that he would like to help the Secretary of State implement universal credit is a bit like his friend, President Putin, offering to help the Ukrainians with their elections—and, I should think, almost as welcome. Does my right hon. Friend agree that when the business case has been signed off, we can get back to what really matters, which is discussing how we can allow my constituents who are offered jobs to work as many hours as they like without having to worry about whether they will lose more in benefits than they will gain in salary?

[Mr Duncan Smith]

My hon. Friend is exactly right. That is what universal credit will deliver, and that is why delivering universal credit safely and securely is the key to the plan. The approvals have been signed off. All the work that is being done in this Parliament is approved by the Treasury, and the long-term strategic business case should be approved very shortly as well.

DWP: Performance

Richard Graham Excerpts

Monday 30th June 2014 Commons Chamber

[Richard Graham (Gloucester) (Con)]

I hope my contribution to the debate will be the calm after the storm. I had enormous respect for the hon. Member for Hampstead and Kilburn (Glenda Jackson) when, aged 13, I first saw her on television playing Queen Elizabeth I, but her contribution today was over the top and largely unwarranted.

That is not to say that there are not problems that all of us in every constituency across the land have heard about from our constituents. Often the problems are to do with disabilities and with moving from one benefit system to another. Very often they are to do with work capability assessments that have been carried out by a contractor whose contract has been terminated. Let us not forget that that contractor was originally given a monopoly contract by the Opposition.

To some extent we all share in the problems that some of our constituents have had. We all have to recognise that, as individual constituency MPs, we have to do our bit to raise those issues with the Department where necessary, as well as with Atos, and to fight the corner for individual constituents to make sure that their problems are resolved as quickly as possible. My experience certainly has been that the system does respond. The Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Hemel Hempstead (Mike Penning), has listened. I have had meetings with him and telephone conferences with Atos, and am bringing Atos to meet the citizen’s advice bureau in my constituency precisely to go through particular outstanding unresolved cases.

I come back now to the nature of the debate. When I stood for Parliament, my main motivation was to try to make real two simple and uncontroversial goals: first, that work always pays; secondly, that saving always pays. I am afraid that neither was true after 13 years of the previous Government. Arguably the country had moved further from both, because the relationship between work and benefits was made much more complicated by the introduction of things such as tax credits and because we had a system in which the effective marginal tax rate was strongly disincentivising people from coming back to work. Savings did not pay in many cases because a lot of pensioners were better off not through having small amounts of savings but, as they still are, by getting means-tested pensions. I should be grateful to the Opposition, because those two particular goals, which were not truths in 2010, inspired me to get involved and eventually brought me to this House.

Interestingly, in the motion there is absolutely no mention of pensions whatever. I cannot help wonder whether that was precisely because what this Government have done on pensions has been so important and so right, and has been well supported across the House. The motion therefore focuses on the other aspect of what the Department does, which is work and, in particular, welfare benefits.

Let me touch briefly on a few specific points. As I said, we have all had to deal with issues about work capability assessments and some constituents with disabilities. But as I have also mentioned, the Government and Ministers have tried their best to resolve those problems when they have been raised.

The Work programme is not perfect—let us not pretend that everything has been solved—but it is working. People are getting back to work, and the numbers are increasing: I think the figure is now one in 17 people in work as a result rather than one in 26 as it was only a few months ago. The new work experience places, which are mostly in business and so give a greater opportunity for a sustainable future job, are costing one twentieth of the cost of the future jobs fund.

Compassion is incredibly important, but money matters in this game, because there is no social justice in bankrupting the public finances. Neither should there be any pride in the predecessor of the hon. Member for Leeds West (Rachel Reeves), the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), saying that he was sorry there was no money left, as if this were some form of teddy bears’ picnic. It is a lot more serious than that. The hon. Member for North East Derbyshire (Natascha Engel) mentioned some of her constituents. She is absolutely right that when there is no money left, creative and innovative solutions have to be found.

In the time that remains to me, I want gently to question the origins of the motion. I sense there is an attempt to rewrite the situation as a new dawn. Opposition Front Benchers have no clear policy. I am still not sure whether they support the reforms being made to social welfare, which their entire party opposed, whether they are trying to achieve more savings, in which case I am not quite clear how, or whether they are trying to cast aspersions about waste, especially in universal credit. There have been some problems with that but they are tiny by comparison with the problems with IT in the NHS that the previous Government had.

Let us not pretend that implementing complicated IT programmes is a simple matter: as the Chairman of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), said, these are complicated matters. Some mistakes have been made, which have been discussed and debated in this House many times, and I believe that we are firmly on the right track. I support the reforms, and want universal credit to be rolled out as quickly as possible.

Jobs and Work

Richard Graham Excerpts

Wednesday 11th June 2014 Commons Chamber

[Vince Cable]

The same sanctions apply to all forms of employment.

[Richard Graham (Gloucester) (Con)]

My right hon. Friend has taken several questions on zero-hours contracts, but may I ask him a slightly different question? One of the most interesting statistics that has come out today is from the south-west Manufacturing Advisory Service, which serves as a leading indicator: 49% of all small and medium-sized enterprises manufacturing in the south-west have said they expect to employ more people over the next six months. Does my right hon. Friend agree that when we look at the forward leading indicators—whether for zero-hours or full-time employment in a great industry like aerospace in the corridor between Bristol and Cheltenham or other manufacturing industries around my constituency of Gloucester—we see there are huge indications of really positive jobs growth in really good growth industries?

[Vince Cable]

Yes, there are, and that is a very good example. We had an earlier exchange on the aerospace industry. One of the major accomplishments of the industrial strategy is that we now have a partnership stretching between Parliaments, guaranteeing large-scale investment by the Government as well by industry, and that is one of the factors contributing to the confidence that my hon. Friend described.

In my concluding remarks, I want to refer to the specific measures introduced in the small business Bill, which will support small business. Let me say at the outset that I fully accept the shadow Secretary of State’s point that one of the central issues affecting small business is access to bank credit. It remains a very big issue, and it is not difficult to understand why. We had the biggest banking crisis in our history going all the way back to the beginning of the 19th century. We have never had anything on this scale, and Britain was uniquely affected because of the scale of banks in the UK relative to GDP—it is higher, I think, than in any other country except Iceland—and, again, the Labour Government had responsibility at the time. The effect of the bank collapse and the subsequent deleveraging that has taken place, particularly in RBS, have been deeply damaging to business. We understand that and are taking steps to deal with it.

The British Business bank is now playing a significant part. Over the past year, I think there have been net flows of £660 million into the small business sector. That is a mixture of new flows to organisations such as Funding Circle and to the challenger banks, together with the guarantee schemes, which have increased by a factor of 75% since they came under the Business bank.

We are running up a downward-moving escalator, but the Government accept that we have a responsibility to intervene heavily to support like lending in the wake of an extremely damaging banking crisis. That is the context in which we are operating. The Bill will contain a series of measures that will help further. Late payment is a massive issue for small businesses, with something in the order of £30 billion in outstanding payments. The legislation will introduce a requirement on companies to be much more transparent in how they deal with late payments.

We also want to introduce much more competition in banking, to ensure that banks will come forward and lend to small businesses. Within the last year, we have seen the creation of a whole set of new banks, supported by the Business bank. The big obstacle—which I recall describing in the House 15 years ago at the time of the Cruickshank report—is the fact that the four leading banks had a stranglehold over the process through the payments system. We have introduced a new form of regulation of the payments system, opening it up to competition and preventing the kind of stranglehold that the existing banks have. The Bill will enable that to happen. In addition, we want to ensure that we have a proper system of data sharing. The lack of such a system is one of the obstacles to new banks coming in and competing. There are also problems with export finance, but the new Bill will enable us to extend export finance into new areas.

The shadow Secretary of State talked about the small business measures having taken a long time, and we accept that. There has been a massive consultation on pubs, for example. It has gone on for many years—indeed, it started long before this Government came into office—but we are now taking action. There will be a statutory code and an arbitration body. There will also be an option for an independent, market-based rent review. I am sure that we will discuss this legislation extensively, but it does represent action after many years of pressure from the Select Committee and from other Members.

Other business measures will include those relating to public procurement. This Government have opened up public procurement in central Government to small business in a way that has never happened before, but that has not always happened throughout the wider public sector, including local government. The measures that we are introducing in this big Bill will considerably improve practice in public procurement, opening up the rest of the public sector.

Pensions Strategy

Richard Graham Excerpts

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

Yes. My hon. Friend is quite right. Many countries have different systems, but the presumption that as soon as someone has a pension pot, they are forced to take annual income is far from universal. We clearly need to make sure that people have proper guidance before they do so, but giving people freedom is what my right hon. Friend the Chancellor’s announcement was all about.

[Richard Graham (Gloucester) (Con)]

I welcome the further detail given by the Minister on the savings and pensions elements of yesterday’s Budget. By contrast, we have had the bizarre spectacle of the shadow Pensions Minister chuntering—yak, yak, yak—like an excited tourist on a Tibetan plateau. Clearly, there are huge elements that will help savers in all our constituencies. Will the Minister say a little more about one of the most important of those elements, which is the axing of the 10p tax rate on savings income of up £5,000, which I believe will affect 1.5 million low earners in all our constituencies?

[Steve Webb]

Gladly. My hon. Friend is quite right. The Opposition have asked, “Where are the measures for savers in the Budget? How does it help savers?” We have already gone through a list, and he has kindly added another element, which is the abolition of the 10p tax rate. As my right hon. Friend the Chancellor said yesterday, when this Government abolish a 10p tax rate, we take it to zero, not double it as others have done.

BILL PRESENTED

Wales Bill

Presentation and First Reading (Standing Order No. 57)

Secretary David Jones, supported by the Prime Minister, the Deputy Prime Minister, Mr Chancellor of the Exchequer, Secretary Alistair Carmichael, Secretary Theresa Villiers, Danny Alexander, Mr David Gauke and Stephen Crabb, presented a Bill to make provision about elections to and membership of the National Assembly for Wales; to make provision about the Welsh Assembly Government; to make provision about the setting by the Assembly of a rate of income tax to be paid by Welsh taxpayers and about the devolution of taxation powers to the Assembly; to make related amendments to Part 4A of the Scotland Act 1998; to make provision about borrowing by the Welsh Ministers; to make miscellaneous amendments in the law relating to Wales; and for connected purposes.

Bill read the First time; to be read a Second time on Monday 24 March, and to be printed (Bill 186) with explanatory notes (Bill 186-EN).