Pensions Bill

Richard Graham Excerpts

Monday 17th March 2014 Commons Chamber

[Steve Webb]

I usually sound grateful to the hon. Gentleman for his interventions, but I am not sure I am for that one. There is a bit of a pattern here. Labour has already called one vote on an amendment that was flawed, but it decided to vote for it anyway in order to make a point. I am explaining why amendment (a) is flawed, even according to the terms of what the Opposition want it to achieve, and it is obvious that the message has hit home, given the tenor of the hon. Gentleman’s response.

[Richard Graham (Gloucester) (Con)]

On the charges that will be outlined later and the requirement for them to be disclosed, how does the Minister envisage that process being taken forward? Will there be a consultation? Within what sort of time frame does he imagine the charges being outlined?

[Steve Webb]

I am grateful to my hon. Friend who, as chair of the all-party group on pensions, has great knowledge and expertise on these issues. We need to take forward the matter in partnership with the FCA. As he knows, the Pensions Regulator regulates defined benefit and occupational defined contribution schemes, while the FCA works on group personal pensions, for example, but we want to make sure that, as far as possible, parallel regulations apply to both. We will, indeed, consult on exactly what should be included. We certainly want to get a move on with it all, so we will move as fast as we can, but we want to do so in partnership with other regulatory bodies. I hope that that offers him the assurance he seeks.

--- Later in debate ---

[Gregg McClymont]

The Minister made that point in his speech, as he has done repeatedly, and he has now put it on the record again. Let me pick him up on something he said. In what has become his quite common style, he suggested that it was rather peculiar to give the Secretary of State powers to ensure that transaction costs are disclosed. However, he must be aware—in fact, he alluded to this—that the FCA already has powers to require transparency of transaction costs, but has never exercised them. Making the Secretary of State responsible does not mean that the Government should not use the FCA’s expertise. Indeed, the Government’s amendment states that the Secretary of State must consult the FCA when setting transaction costs for those pensions over which he wishes to retain responsibility, so why could the same model not be maintained for contract-based pensions? Of course it could be so maintained.

On the Minister’s suggestion that it is somehow peculiar in his world to list the transaction costs that must be disclosed in amendment (a), I have to tell him that we used Lord Lawson’s amendment in the House of Lords, where it was commended by Members on all sides, including by the Government spokesman, Lord Freud. [Interruption.] The Minister is mumbling, but he suggested that the amendment was peculiar, although Lord Lawson’s amendment was along exactly the same lines. I am afraid that the Minister is disagreeing not just with the Opposition, but with Government Members.

Let me say a little about our additions to Lord Lawson’s list. I make it very clear that our list of transaction costs is the same as that tabled by Lord Lawson in the Lords, with two additions—transaction costs in underlying funds; and interest on client cash balances or profits from stock lending retained by the fund manager. The reason for including such additional transaction costs is that it needs to be strongly signalled to the body setting the rule—whether the FCA or the Secretary of State—that those items should be declared.

Let us remember that the Investment Management Association has deliberately failed to include those items in its draft statement of recommended practice. Amendment (a) should be discussed in that context, not the diversionary trail thrown up by the Minister. It is important that transaction costs in underlying schemes are disclosed because a transparency regime can otherwise easily be bypassed by any fund manager that operates multiple funds. The fund receiving moneys can simply use them to purchase units in another house fund. The IMA SORP recognises that the fixed charges in underlying funds should be reported, but it fails to apply the same principle to transaction costs, which is why they are laid down in the amendment.

The House should be aware of the wider context. The Government have previously left it to the fund managers’ trade association to decide what, if any, transaction costs should be declared. The IMA has put forward a draft statement of recommended practice, which would require fund managers to declare some transaction costs in their annual accounts. The SORP must be agreed by a Government quango called the Financial Reporting Council. The concern that the SORP failed to include significant types of transaction costs led a cross-party group of MPs and peers to write to the FRC to say that it would be inappropriate for it to agree to a statement of transaction costs that omits significant types of transaction costs. That was widely reported at the time. It is common knowledge that a number of critical submissions were made to the FRC. Unusually, those submissions were not released at the end of the consultation period, and we still await them.

[Richard Graham]

Will the hon. Gentleman give way?

[Gregg McClymont]

I am always delighted to hear from the hon. Gentleman, but I must make progress.

It is worth adding that the FCA sits on the working group that reviews the IMA’s SORP.

To put the SORP of the IMA—the fund managers’ trade association—in context, the Government refused to accept Labour amendments in Committee and on Report that specified a non-exhaustive list of transaction costs that needed to be made transparent. The noble Lord Lawson then made it clear that the Government’s position was not acceptable. He said that it was like putting the fox in charge of the hen coop. He added that there is a reason why fund managers meet in Monte Carlo and pension fund trustees meet in Manchester. That was the context in which Lords amendment 9 appeared. Lord Lawson, who sits on the Government Benches, made it clear that he agreed with the Opposition, rather than the Minister, who has failed to get to grips with the disclosure of transaction costs. That is the context in which this debate has been taking place for the past year and a half.

Lords amendment 9 does not state which transaction costs will be included. It gives the Secretary of State the right to include

“some or all of the transaction costs”.

It also allows the Secretary of State to not require full transparency in contract-based defined contribution schemes—those that are provided by insurance companies —if the transparency regime is “equivalent”. Lord Freud, speaking for the Government, emphasised that those words were intended to ensure that no costs were missed and that they were not an attempt to water down the regime for contract-based DC pensions.

Lords amendment 9 removes the responsibility to set transparency rules for workplace DC pension schemes from the Secretary of State and gives that power to the FCA. The FCA does not currently require the publication of transaction costs for workplace pension schemes. Its view is that any transparency requirements should be identical to those for retail investment products.

[Richard Graham]

Is not the key point that is under discussion whether the list of charges to be covered should be included in the Bill? We agree that there are many issues of detail, especially on the transaction side, that should be consulted on. The Minister has said that that will happen. The hon. Gentleman has not answered the central question of why the list should be included in primary legislation.

[Gregg McClymont]

The answer to the hon. Gentleman’s question is that nobody who looks at this matter reasonably can have confidence that the Government will deliver the disclosure of any transaction costs. The only reason we have the inadequate Lords amendment 9 is that there was a rebellion among Conservatives in the House of Lords that was supported by Cross Benchers. Before that, the Government had no intention of disclosing transaction costs, as far as one could see. To answer his question, amendment (a) is a way of ensuring that the Government deliver what they say they want to deliver.

To sum up, the Government have brought forward in the Bill a hard, fast, rapid wind-up of the state second pension. If that is to be successful for those who can no longer accrue into the state second pension, there must be similarly speedy action to ensure that there is an adequate, meaningful pensions cap as quickly as possible. Alongside that pensions cap, all transaction costs must be disclosed. Before the campaign by the Opposition and, more recently, Lord Lawson, the Government had been very slow to get to grips with the disclosure of transaction costs, never mind the pensions cap. The intervention of Lord Lawson has led the Government some of the way down the necessary path towards ensuring that there is disclosure of transaction costs, but they have got to that stage only because of the threat of a rebellion in the other place.

Atos

Richard Graham Excerpts

Wednesday 12th February 2014 Westminster Hall

[Richard Graham (Gloucester) (Con)]

My hon. Friend is making an important case, which should be heard, and we all have examples from our constituencies, as he says. Does he agree that the situation is difficult, given that the contract was a monopoly one—awarded by the previous Government—and is therefore awkward and possibly expensive for this Government to get out of?

[Mr Williams]

My hon. Friend is right. I am not approaching the subject on a particularly partisan basis, because the problems are experienced in all constituencies, but he is right to talk about the circumstances in which this Government are dealing with the legacy of decisions taken under the previous Government. He is right to highlight that. I have every sympathy with many of the campaigning groups, on behalf of which I will talk in my later remarks, but we need to remember the origins of the decision, which the Labour Government made.

I want to talk specifically about delays. I met Atos representatives yesterday, so I know that they recognise the length of time taken to complete the process. One of my constituents, who I will call Mr P, had his Atos assessment two years ago and was failed. He appealed, and the appeal took eight months to be heard. The appeal judge took only three minutes to uphold the appeal. His backdated benefits were paid, but two months later he received a letter summoning him to another Atos assessment, because the process had taken so long from start to finish that the 12-month period before reassessment was almost up. At the second Atos assessment, my constituent was unable to complete some of the tests without causing himself considerable pain and anguish, so they were stopped halfway through. This went down on his medical report paperwork as a refusal.

The case, now complete, has gone to the ombudsman, and I would like to quote a section from my constituent’s letter to the ombudsman:

“I have paid my NI contributions and taxes all my life believing I would be protected by the welfare system should anything untoward happen to me. For 2 years I was afraid to open my post in case it was another letter stopping money...or another assessment. During this time I have been in pain, had needles...surgeons knives, ligaments removed, bones cut and metal plates inserted into me but I am still made to look like some kind of scrounging criminal by a system that was meant to protect me.”

I condemn certain sections of the press for the way in which they have characterised benefit claimants. A gentleman who is genuinely seeking support from the welfare state, into which he has paid all his life, is seemingly being let down.

In many cases, our constituents want to get on with the process of recovery and do not see benefit claiming as a long-term situation, but the delays make their condition worse. Another constituent who I am dealing with—she, too, will remain anonymous—said:

“I am currently receiving treatment and therapy and my therapist is not keen to discharge me yet. My health is not improving and is in fact being made worse by the anxiety caused from this void of information. I was feeling quite positive at one time that I may be put into the Work Related Activity Group…as this would be a great stepping stone to getting back into work from sickness, but I currently feel so low because instead of being helped forward towards getting back into work, I am stuck in an uninformed place that is not helping me recover at all.”

That indicates to me that the process for some conditions —by no means all of them—is making situations worse and adding anxiety to something that is already causing considerable stress to people.

In developing the debate, I am talking about some of the principles that I believe—I am sure people in all parties believe—should be governing our assessment system. My concern in addition to the delays is that the work capability assessment is not fit for purpose. Indeed, the charity Mind informs me that around 40% of people who are found fit for work appeal against the decision; of those who appeal, almost 40% win their appeal. As we know, capability to work is about not only those suffering with physical disabilities—it might be easier for ATOS assessors to see and report on a tangible factor—but those suffering with an invisible illness. This is true in particular of constituents who are suffering with mental health issues, or conditions relating to autism, which is an especially interesting example.

In my constituency, I was pleased that an excellent charity, Autism Cymru, developed a project to train people in the DWP to have greater understanding of the condition of autism. I used to be a primary school teacher and we had minimal training on this, but one thing that impressed itself on me was one particular feature of autism: asking a direct question gets a negative response. That is the nature of the condition, and it needs to be borne in mind in the assessments. The charities Rethink, Mind, the National Autistic Society and Citizens Advice have all made that point to me. I therefore ask the Minister to reiterate the Department’s concern and to ensure that, whichever providers undertake the work, the assessors are appropriately trained in complex conditions such as autism and mental health, so that the clients may be—and see themselves to be—assessed fairly and comprehensively.

Last autumn, with other Members, I undertook a mock assessment organised by the charity Rethink, to give MPs the experience of taking a work capability assessment. At that meeting was a Rethink campaigner, the retired vicar Dick Acworth, whose son has bipolar disorder and yet was deemed fit for work. People such as Dick’s son with a supportive family are lucky to be able to face the appeals process together, but there must be concern about the number of people who do not appeal, because they cannot face it, or simply do not know how to go about it, and they are very much left to struggle alone.

[Mr Williams]

I thank the hon. Gentleman for making, once more, that point. It is critical that all due consideration is given. I do not agree with the characterisation of constituents as simply going down to their doctor’s surgery, presenting a letter to the doctor and saying, “Sign this”, and then that letter being presented as part of a package for an assessment, or indeed a tribunal. Doctors are the experts. They know their patients and the situations in which they operate, and we need to give them all due consideration.

Concerns have also been expressed about people suffering from progressive illnesses such as cystic fibrosis, multiple sclerosis, Parkinson’s disease and rheumatoid arthritis. It has been asked whether the work capability assessment is fit for purpose for them. I am not sure whether the Minister has received it yet, but I recently signed a letter to him from colleagues from across the House—it is on its way—raising that concern. Organisations working on behalf of people with progressive conditions have found that that 45% of people with those conditions who put in a new claim for ESA between 2008 and 2011 were placed in a work-related activity group and deemed able eventually to return to work. The placement of those individuals represents the Department’s recognition that they were unable to work at the time of the assessment, yet some were given a recommendation for a return to work in few months’ time. But that directly contradicts the definition of a progressive condition, which of course can get worse over time. The letter is on its way, and I am sure that the Minister will respond to it even if he does not do so today.

I will move on to the flexibility of descriptors. I understand that Atos and Capita are under contract to the Department—I was going to raise at this point the point made by my hon. Friend the Member for Gloucester (Richard Graham) about the origins of those contracts—but Atos does not set the descriptors; they are set by Government. Given the concerns that many organisations in the third sector have about the descriptors, will the Minister tell us—I suspect I know the answer—what dialogue he has had with the third sector and what opportunities the third sector has to raise such concerns?

[Richard Graham]

On that precise point, does my hon. Friend agree that Citizens Advice is probably the charitable organisation that has the greatest experience of dealing with the most serious and, often, heartbreaking experiences of people who have really struggled with the assessment and appeal process for WCA?

[Mr Williams]

I agree, and I am sure that the Gloucester citizens advice bureau is as affected as the Ceredigion citizens advice bureaux in Cardigan and in Aberystwyth—although I am sadly not sure how much longer that CAB will remain open. Citizens Advice has that body of expertise, which is hugely important.

I have received an almost endless series of representations. I am mindful of the time, and that I have already spoken for 18 minutes—albeit that I have been generous with interventions—so I will simply make the general point that there are concerns about the extent to which the employees of assessment providers are being wholly sympathetic, about the huge backlog of cases that is leading to delays and, frankly, about the instances there have been of administrative incompetence.

I will give a final case study. One constituent I have been dealing with was assessed recently. He felt that the Atos assessor was completely apathetic to his conditions, and also felt under immense pressure to complete tasks put before him. He self-harmed considerably following the assessment. Several of the tasks he was unable to perform have now been put down as “refusals” on his medical report form. He gets very angry, has suicidal thoughts and is prone to paranoia—I am not being emotive in presenting such cases, as I think that they are replicated more generally. Shortly after the initial assessment, he got in touch with me to start the appeals process. Someone from the DWP phoned him to tell him that his appeal of the Atos decision had been unsuccessful, but we had not even started the appeals process at that point. They then called 10 minutes later to say they had made a mistake and he could appeal.

A simple mistake like that can have huge ramifications for people’s lives. A section of the decision maker’s letter to my constituent, whom I will call Mr Z, says that although it is accepted that Mr Z

“experiences pain and discomfort it should be remembered that activities do not have to be performed without any discomfort or pain.”

It goes on to say that the decision maker had chosen the descriptor that reflected Mr Z’s

“level of functioning for the majority of the time.”

If we look at the Government’s website, there is a contradiction, as that site says:

“The approved healthcare professional will consider all the information and exercise clinical judgement to reach an opinion on the nature and severity of the effects of the disabling condition. They will also take full account of factors such as pain, fatigue, stress and of the possible variability of the condition.”

My constituents—people such as Mr Z, Mr P and the lady I mentioned who is desperate to get back into work—are being let down by the system.

Finally, I reiterate the point mentioned by the hon. Member for Strangford (Jim Shannon). A number of my constituents have failed Atos assessments, but, after a long appeals process, that decision has been overturned by tribunal judges. The judges involved in the appeal are given the same descriptors as the Atos assessor, the same reports and the same medical information from the person’s GP, so why is it that judges who are upholding appeals and the Atos assessors are reaching such wildly different conclusions? For example, a constituent of mine had her Atos medical last March. She was given zero points, but her appeal was upheld and full points were awarded.

To me, that sounds like a system that is making those in our society who are vulnerable and unwell, sadly, more vulnerable and unwell. I look to the Minister for reassurance. I know that his role is in a tentative phase at the moment, but I hope that I have established some of the principles that some of us expect to see in our system of assessment.

Job Insecurity

Richard Graham Excerpts

Wednesday 5th February 2014 Commons Chamber

[Mr Umunna]

I have said this before and I will say it again: I think we should keep our families out of this place. The hon. Gentleman would do well to reflect on that. If he wants to make another contribution that is perhaps a bit more intelligent and adds something to the debate, I am happy to give way, but clearly he has nothing to add.

The Government have failed to tackle the cost of living crisis. Family energy bills have been allowed to rise by £300 since the general election. As I said, they have given a huge tax cut to people earning millions of pounds a year while increasing VAT and cutting support for working families. They have failed to act on transport prices. What is certainly clear is that this Government have heaped further insecurity on people at work with their attacks on their fundamental rights and protections. The other week, the Business Secretary said in his speech to the Royal Economic Society—I thought it was a good speech—that he has “resisted moves” in the direction of attacking people’s rights at work. That simply does not reflect the reality.

When people have been treated unjustly or discriminated against and wish to seek redress, he and his ministerial colleagues have put up a barrier in the form of tribunal fees of up to £1,200, which the Minister for Skills and Enterprise referred to as “moderate” despite the fact that £1,200 is about two weeks’ average earnings. I do not think that is moderate: it is a barrier against access to justice.

[Richard Graham (Gloucester) (Con)]

The hon. Gentleman raises an important point about being ambitious and asks whether things have got better. In my constituency, unemployment has fallen by 20% and youth unemployment by 45%, and the number of new apprentices starting every year is more than double what it was in 2009. Does he agree that that is significant evidence that things are better?

[Mr Umunna]

Of course it is good that more people are in work in the hon. Gentleman’s constituency, but what is the nature of that work? Is it temporary or permanent, and what wages are people earning? That is the question I have posed.

--- Later in debate ---

[Ben Gummer]

I am well acquainted with the hon. Lady’s constituency, as it is where my family is originally from. There are certainly differences between her constituency and mine, but Ipswich has significant areas of deprivation and its long-term unemployment is above the national average. These are precisely the issues that I am concerned about, just as she is. I recognise the point she is making, but to claim—this is where the shadow Secretary of State really lets himself down—that this is something new immediately debases the debate.

When we look at the movement of wages over the past 10 to 15 years, we see that a far more subtle change has been going on, which we need to address. Middle-income earners have seen their wages, in real-terms, first plateau and then decrease slightly from 2003-04, even up until the point of the crisis, as a result of increased tax and increased costs of living. That might indicate that we need to have a rather fuller debate about why that is happening in our country—and was even before we hit the extraordinary circumstances of the great recession. Some claim that this has been on the Opposition’s lips for a long time, but I find that problematic, because I was speaking about the cost of living before my election in 2010 and in the days afterwards. It was immediately of concern to everyone, on almost every income, in my constituency.

I am talking about not just those who are most hard pressed, but those people, often on middle incomes, who have not much wiggle room because they have a mortgage. They are at the most expensive stage in their life. They are bringing up children and saving for a pension. The things that make life bearable for them—sometimes they are in jobs that they do not particularly enjoy—are the holiday and the curry every fortnight. Those things have now gone by the wayside, but that happened not in 2013 but in 2007-08. People’s lifestyles have changed over that period, and we need to address that in the long term. To claim that that change is a result of specific Government policies is profoundly misleading. We are addressing the problems identified on every line of the motion, up to the last one, as the Secretary of State made quite clear,

The motion mentions the changes to employment regulations. In 2011, an owner of a major cleaning company in my constituency came to see me, saying that she wanted to hire more people on permanent contracts. Admittedly she was offering just above the minimum wage—I am afraid that is what most cleaners in this country are paid—but they were jobs none the less. She said that she was prevented from taking on those people because of the labour regulations. As a result of the changes we made in 2011-12, she has hired dozens more people who otherwise would have been without a job. I want to see those people on a living wage. I also want to see them keeping more of their money, which is partly why I am so proud of what we did with income tax relief for the lowest paid and why, through changes to national insurance, we are making it even easier for companies to hire. It is a good thing to see people employed who otherwise would not have been employed. Those changes have meant that unemployment has come down in my constituency.

Let me now take the example of zero-hours contracts. In a Public Bill Committee, the hon. Member for Slough (Fiona Mactaggart) made an important point about why for her, at a time in her life when she had just had children, zero-hours contracts were useful. There are many people on zero-hours contracts who would prefer to be on a permanent contract. The Chartered Institute of Personnel and Development suggests that it is only a minority of people who are on zero-hours contracts. Like the hon. Lady, there might be many people who value them at a particular moment.

Just this weekend, I met a constituent who made an interesting point. Before the great recession, he was employed as a construction worker. He was laid off in 2009-10. Recently, he has been getting a lot more agency work, much of which is zero hours, but he is earning considerably more than he did when he was in full-time employment. I asked him whether he preferred the security or the money. He said that, obviously, he would like both, but given a choice at this moment, he preferred the money. He said, “I know that as the economy begins to improve and construction gets a proper foothold, I will have the security, too.” These are difficult choices. I wish that, rather than making a litany of complaints, the hon. Member for Streatham (Mr Umunna) had concentrated on the meat of the discussion, which he outlines in the last sentence of the motion. We need to talk about skills and education levels, all of which were left in a terrible state by the previous Government and which we are having to unpick and undo. I am afraid that that in itself will take several generations to take effect.

We are talking about the result of decades’ worth of negligence by Governments of both colours. Let us have a proper discussion about that. I hope the Labour party will show itself to be worthy of being not just the Opposition but the potential Government.

[Richard Graham (Gloucester) (Con)]

My hon. Friend quite rightly highlights the last sentence of the motion, which calls on the Government

“to adopt a proper industrial strategy to help create more high-skilled, better paid jobs.”

Does he agree that Government policy on apprenticeships is absolutely key, and that there are two small areas in which they could do even more to highlight the opportunities for young people: funding apprenticeships for the over-25s, and funding employers directly rather than through the training intermediaries?

[Ben Gummer]

I agree with my hon. Friend, but the news on apprenticeships is very good. Between 2010 and 2013, 370,000 additional apprenticeships were created, bringing the number up to nearly 1 million, which is an extraordinary achievement by this Government. We are again showing ourselves to be the true party of labour. I am proud of that and of what we have achieved, but let us think about the long term and the reforms to education and skills that we need to achieve to compete with those very ambitious and aspirational young men and women coming out of schools and colleges in Mumbai and Shanghai. At that point, we will have a proper debate about job insecurity and the future of this nation.

Food Banks

Richard Graham Excerpts

Wednesday 18th December 2013 Commons Chamber

[James Morris]

I will not give way, because many other hon. Members want to take part in the debate.

The Black Country food bank gives food only to people referred to it by an approved agency, including social services. When I volunteered there, I met people who had been identified as suffering from serious mental health problems; I met women who had been victims of domestic violence and who had been abruptly removed, or wanted to be abruptly removed, from their homes; and I met victims of family breakdown. Every single person I met had been referred to the food bank with a unique set of circumstances.

The Black Country food bank plays a vital role in fighting poverty in my constituency. It is true that usage of it has increased, but that is partly due to increased awareness of what it does. Inevitably, when people get to know that it is providing a vital resource, linked in with other agencies within the welfare system, they will start to use it more. Better links are also being created between food banks and local agencies. Local health services are aware that the food bank is on hand to help people who have serious mental health issues. As people are more aware of the vital service it provides, it is not surprising that its use has risen.

[Richard Graham (Gloucester) (Con)]

My hon. Friend is paying handsome tribute to the Black Country food bank. Will he join me in paying tribute to his own food bank and many others, including mine in Gloucester, run by the excellent Anneliese Sterry and her volunteers, which provide a fantastic service for many people? My office hands out vouchers and appreciates the help they are giving.

[James Morris]

My hon. Friend makes a good point about the valuable work being done in his constituency.

The Black Country food bank does other vital work in the community. Like the food banks that other hon. Members have mentioned, it helps families learn how to prepare cost-effective and nutritious meals. Such courses and information can have a greater impact in the medium term than the three-day supply of food it initially provides to those referred to it. Like other poverty-fighting organisations in my constituency, such as the Hope centre and the charity Loaves ’n’ Fishes, it provides vital work experience and apprenticeship opportunities for many people in my constituency, particularly those in long-term unemployment. That, too, is linked to jobcentres and the whole welfare system. Such organisations provide valuable skills and work, and not just on a voluntary basis; they provide real work experience and apprenticeship opportunities that are helping the local economy.

The food bank is providing not just essential food support, but community facilities and skills that are vital to my local area. I agree with other hon. Members that to try and make political capital out of, and fight political battles over, groups such as the Black Country food bank and the work they do in my community is very disappointing. Those who run such food banks deserve our respect and support for the committed and dedicated work they do for some of the most vulnerable in my community.

Universal Credit

Richard Graham Excerpts

Tuesday 10th December 2013 Commons Chamber

[Mr Duncan Smith]

Quite the contrary; I have made it very clear that by 2016 universal credit will be the benefit that people go on when they apply for employment and support allowance. The people who were on it—we know them as the stock—are the most vulnerable. [Interruption.] Well, that is the term used—those are people who are on the benefit at present. [Interruption.] How pathetic is that? The Opposition used the term themselves when they were in government, and now they try to pretend that they have discovered a new way of referring to such people. Those who are on employment and support allowance will be migrated to universal credit over a period so that we can bring them in safely, securely and to their benefit. Would the hon. Lady want us to rush them in, or does she think we ought to take care over how we do it?

[Richard Graham (Gloucester) (Con)]

The mission of universal credit has always been to make work pay. I have never entirely understood what it is about that principle that the Opposition find so distasteful. Many of my constituents constantly remind me of the problem that they have under the current system. Surely all Members should be backing the roll-out of universal credit. Today we have heard that there are some problems, that they are being tackled and that the size of the gain is enormous. Will my right hon. Friend confirm for everyone, but particularly for Opposition Members, who seem so opposed to universal credit, what the total economic gain to the people of this country will be over the next 10 years?

[Mr Duncan Smith]

The gains will be enormous. The roll-out has already begun. The question is not whether it will begin; it has already begun. We have already rolled out universal credit to pilot centres in the north-west. We are rolling out to a further six centres. That will be complete early in the new year, then we will bring in couples, couples with children, and eventually the tax credits. We will roll out completely in the north-west, then every region after that. It will be complete by 2016. This will bring huge benefits to all those who struggle under the existing system to make work pay. If they lose 6p in every pound, it is hardly worth while. That is the system that the Opposition left.

Pensions Bill

Richard Graham Excerpts

Tuesday 29th October 2013 Commons Chamber

[Gregg McClymont]

Thank you for that wise advice, Madam Deputy Speaker. I was somewhat sidetracked by the excellent intervention—[Interruption.] That is another intervention from the Parliamentary Private Secretary. If Members want to stand up and say something, I am happy to take an intervention. If they want to heckle from the back row, I will continue to respond to those heckles.

Where are we? The Minister wants to be seen to be taking decisive action on pension charges but today he has called for yet another consultation. He has moved on during the past year, as he had said that Labour was scaremongering and he could see no need for a cap. The consultation is a development, but we need action now. Our amendment (a) to new clause 1 would ensure full disclosure of all costs and charges and our other proposals would ensure a private pension system that would mean that everyone who was auto-enrolled would get value for money. The Minister is right that auto-enrolment started well, but he knows as well as I do that the key is the smaller employers. We are determined that everyone should get a good deal from auto-enrolment and I therefore commend our new clauses and amendments to the House.

[Richard Graham (Gloucester) (Con)]

This is the first time I have made a speech while you have been in the Chair, Madam Deputy Speaker, so let me add my warm congratulations to the many that you have already been given.

Our debate today has been a pretty specialist affair so far, in a different language from that which many of our constituents speak. It has no doubt been a struggle for many in the Public Gallery to remain awake throughout. As we dive into the detail, let us not forget the goal: the Bill’s aims are simplicity, clarity, a reduction in the flaws in means-testing and, above all, to ensure that it always pays to save. Some of that was rather lost in the 85 minutes for which the shadow Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) spoke, so let me try to bring us swiftly back to the main points of detail.

Earlier we tackled auto-enrolment, small pots, aggregators, charges, scale and annuities. No doubt that would be enough to put many people off listening to any more, but let me add my thoughts briefly on each in turn. First, on auto-enrolment, the Minister outlined the success so far—1.7 million people already enrolled and 90% of them staying in. The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East said that he was cautious and that that percentage might not be sustainable as we started enrolling those in smaller firms across the country. He may well be right about that. The Minister will be acutely aware of that, which is why he is right to tackle some of the detail now, ahead of the smallest companies enrolling.

The important thing in the section on auto-enrolment was the changes outlined today—two opt-outs: one for those who have already given notice of leaving their employer and one for those who would suffer negative tax penalties because they had already accumulated more than the maximum allowed for tax-free savings. The Minister confirmed that there is absolutely no intention of excluding small and medium-sized enterprises, the lifeblood of every Member’s constituency. That is important, and he rightly summarised Labour’s amendment 53 as unnecessary, unclear and ineffectual.

The discussion of small pots, importantly, covered the differences between the pot follows member approach recommended by the coalition Government and the aggregator approach proposed by the Opposition. The precedent of Australia is relevant. Those 5 million lost accounts worth some 20 billion Australian dollars are not a small matter. Millions of our constituents are affected. Those of us who have accumulated small pots at different periods in our life know that it is extremely hard to keep track of them and to have any idea of what our savings really are. The whole business of pensions is ultimately about savings. It is about accumulating a pot of money which will see us safely through retirement, ensuring that we can live after retirement without having to fall back on savings.

[Mr Donohoe]

Does the hon. Gentleman also consider that a pension pot is a deferred income and should be treated as such? The problem is that not many people do so.

[Richard Graham]

The hon. Gentleman is right in the sense that all savings are ultimately deferred income. If he is trying to differentiate capital and income from investments, which I do not think he is, that is a separate issue. I accept his point that ultimately everything is deferred income, though I would prefer the word “savings”, as we will all need savings at some point. There is no significant difference between us on that.

The Opposition approach is towards an aggregator, which is an uncomfortable world where there is no choice and our savings pot is shunted off in a Thomas the tank engine-like way to God knows where. We will not get into alluding to the names of the engines in “Thomas the Tank Engine”. That would be unfortunate and arguably inappropriate. The important thing, as the Minister rightly said, is that we must not have small pots that follow the member into a bad scheme. We must focus on all schemes being good. That is why it is important to legislate for quality schemes, as the coalition Government are doing.

I welcome the amendment that the Minister mentioned whereby those who have been in a scheme for less than 30 days will get a refund, but it is important that the practice which has grown up over time of people being in schemes for less than two years and being bought out for a not very significant sum comes to an end. I welcome that, as will many people across the land.

After small pots and aggregators, we come to the rub of the issue—charges. The Minister rightly observed that 1% compounded over time amounts to a huge amount of money paid out in charges to fund managers and administrators, and that it is important to follow the recommendations of the Office of Fair Trading report, which noted that pension savings is one of the worst sectors for charges, that the demand side is weak and that there is the contradiction between the employer choosing the manager, but the member effectively paying for that choice.

I welcome, and many Members across the House and others outside this place should welcome, the opportunity to look objectively and constructively at the issue of charges through a consultation. The option of 0.7% is no doubt at the lower end of options out there. That gives this Government and Members a chance to see what might be the most practical options, bearing in mind always that we do not want to limit the management of those funds to a handful of very large providers—the equivalent of supermarkets in a world where sometimes a delicatessen tailoring their investment to what members need can be an attractive and practical option.

The process of a consultation on charges clearly needs to include a definition of those charges. I was disappointed to hear so little of substance from the shadow Minister on the subject of charges. He did not even mention the total expense ratio or any of the other aspects and acronyms that comprise charges, which are beloved of my hon. Friend the Member for Warrington South (David Mowat) and others of us who have previously worked in the sector. There was no detail at all from the Opposition spokesman and, at the end of his 85 minutes of speaking, I am none the wiser about the charge that the Opposition are recommending

On charges generally, I think I can summarise the shadow Minister’s speech for Members and especially for those in the Gallery, whose concentration may understandably have wandered during those 85 minutes. There were four messages that he wanted to get out: first, highlight the fact that the coalition will do nothing for living standards; secondly, accuse the Government of sticking up for big business, not small pensioners; thirdly, sound as if the Opposition are offering an energy price freeze; and fourthly, do not give a precise figure. The approach behind all that is not to let the facts get in the way of the narrative. That, in about 12 seconds, broadly covers what the shadow Minister said in 85 minutes on the issue of charges.

The approach of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East to the Government’s recommendation of a consultation amounted to a simple slogan: consultation, not action. This, I thought, was a curious approach by the shadow Minister. He earlier intimated that he is very cautious about the implementation of auto-enrolment—the results might not be as good as they have started out to be and it was too early to celebrate. He gave the impression of being a very cautious driver, one who was unwilling to take unnecessary risks and who wanted the Minister to make sure that he keeps the car on the road.

Such analogies were built into the hon. Gentleman’s approach, but caution is precisely why, after 13 years of the previous Government, auto-enrolment had not been implemented. It is precisely why they did not pursue universal credit. As the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), admitted, it was too difficult. It is precisely why the previous Government were unable to make decisions—no nuclear power stations, no changes to the schools funding formula, no privatisation of Royal Mail, too little stimulus to apprenticeships, very little impact on manufacturing. It was all too difficult.

The approach of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East today is to try to take credit for his party for the idea of auto-enrolment, and then to snipe at the detail offered by the Minister. The hon. Gentleman coupled that with something close to an apology for the previous Government not having done enough in the world of pensions, but it was a little like the policemen on Plebgate recently—it was not a wholehearted apology, but rather a nudge towards an apology. That was disappointing, because the central issue of charges is precisely what the debate is likely to focus on.

The shadow Minister alluded seven times, I think—I tried to keep count—to what he called the policy paper, “40 Policy Ideas from the 40”. He wrote me a charming letter about it:

‘Dear Richard… The policy paper entitled “40 ideas from the 40”, to which you were a contributor’—

I was not a contributor. I fear that he might not have read it in sufficient detail to understand who was and who was not a contributor. However, he was absolutely right that my hon. Friend the Member for Warrington South was a contributor and that he mentioned the lack of transparency in costs and charges in almost exactly the same language, as he confirmed today, as the Minister used when he called for the consultation on charges, which I think we all welcome and look forward to.

--- Later in debate ---

[Gregg McClymont]

There is a joke in that somewhere, but I will not go there. I was just struck that the hon. Gentleman—we have debated this in Committee—said that he was not a member of the Forty Group. I have in front of me a copy of “40 Policy Ideas from the 40”, which states that the group

“consists of the forty most marginal Conservative seats”,

and he is one of the Members listed.

[Richard Graham]

The shadow Minister must learn to be more precise in what he says. His letter referred to

‘“40 ideas from the 40”, to which you were a contributor’

but I did not contribute. When I have good ideas, which is rarely, I either keep them to myself or share them with colleagues verbally. I do not put them down on pieces of paper for him to read, or not read as the case may be. I hope that he will take on board that correction. I am a member of the Forty Group, but I was not a contributor, and there is a difference.

[Gregg McClymont]

This is all very curious, because the front cover of the document refers to “40 Policy Ideas from the 40”, and its states:

“The Forty Group consists of the forty most marginal Conservative seats”.

One of the MPs listed is the hon. Gentleman—

[Madam Deputy Speaker (Mrs Laing)]

Order. We are straying somewhat from the amendments and new clauses before us. If there is a difference of opinion, it will have to remain as such. I urge hon. Gentlemen on both sides of the Chamber please to stick to the points before us on private pensions.

[Richard Graham]

I welcome your advice, Madam Deputy Speaker.

Before the shadow Minister intervened, I had been referring to scale. I touched briefly on the fact that size is not everything when it comes to the management of pension funds, as with so much else in life, Madam Deputy Speaker. In order not to delay you further on that point, I will move swiftly on to annuities.

Annuities matter. We are in a new world, as the Minister said, because we are living longer and we need more options. There is more to annuities than simply a need for more competition, choice and help, although that is important and the code of conduct from the Association of British Insurers is a promising start. I agree with the Minister, though, that we should go further. At the heart of the matter is transferability—being able to trade annuities at different periods of life when different circumstances crop up and when there is different pricing in the marketplace. What we certainly do not want is a single product solution. I was lobbied heavily at the Conservative party conference by an annuity provider who was keen to impress on me the importance and relevance of their single product solution, but my instinct—I hope that the Minister is with me on this—is that such solutions are precisely what we do not need in the world of annuities.

Those were the six main points I wanted to cover—auto-enrolment, small pots, aggregators, charges, scale and annuities—and I have done so in about seven minutes. There is no need to go on for much longer, but I will try to bring my speech to some sort of rounded conclusion by asking the Minister to note three queries that constituents have raised with me.

The first query, which I think is important for Members across the House, relates to bereavement support payment. It is clearly an emotional issue, as all families who have had to deal with tragedy will understand, particularly when it comes to bereaved children. Winston’s Wish is a charity headquartered in the constituency of the hon. Member for Cheltenham (Martin Horwood), but it has a significant presence in mine. It has made a number of points, not all of which I agree with, but one is that the tax status of bereavement support payment is slightly unclear. I would be grateful if the Minister could say more about that and whether it will be tax-free, because that would be hugely appreciated. Given that the trend of his proposals on bereavement support payment is effectively to increase the amount of money but have it paid for a shorter time, having that payment tax-free would be hugely helpful for families affected. There is a second point from Winston’s Wish that I want to raise with the Minister. I understand that unmarried partners are currently ineligible for BSP, so perhaps he will confirm whether people in civil partnerships are eligible.

The second query from a constituent relates to changes to occupational schemes, which my constituent believes can be done under the Bill without agreement from either members or trustees; currently trustees would have to approve it. My instinct is that long-standing defined benefit schemes, such as that of the major nuclear power operator headquartered in Barnwood in my constituency—formerly British Energy but now EDF Energy—are most unlikely to close without any form of consultation or discussion with members or trustees, but I would be grateful if the Minister would comment on that.

[Steve Webb]

It might benefit the House to know that the measure in the Bill to which my hon. Friend refers is the statutory override, which simply allows employers to recoup the loss of national insurance rebate. The state pension changes imply a change to the national insurance regime, so his constituency employer would lose some money. The Bill simply allows them to recoup that cash and nothing else, for example by changing the accrual rates in the scheme. It is designed to help employers cushion the blow of the loss of the rebates.

[Richard Graham]

I am grateful to the Minister for that clarification. If I understand it correctly, the employer will recoup the cost of the national insurance but nothing else.

[Steve Webb]

indicated assent.

[Richard Graham]

I am glad to see the Minister nodding on that.

[Katy Clark]

Like the hon. Gentleman, I have nuclear power stations in my constituency—Hunterston A, which is being decommissioned, and Hunterston B. Has he, like me, been contacted by numerous employees who are incredibly concerned about the protections that will be taken away from them by this Bill?

[Richard Graham]

That is an interesting point. The answer is yes, but they are not in the hundreds. They come in two types. One type number those who are either still working there and are concerned about possible changes to the defined benefit scheme and exactly the issue I have just gone through with the Minister. I hope that that will be reassuring to the hon. Lady’s constituents as well as to mine.

The second type of person who has been in touch relates to the third constituency query I was going to raise: those members who are covered by the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990. I see the hon. Member for North Ayrshire and Arran (Katy Clark) nodding and suspect that she has been contacted by people in a similar situation. The issue is that their pensions might be affected by changes to their pension schemes to reflect these higher national insurance costs. I understand that the Government have still not responded to their own consultation on whether to exempt protected persons from these changes. The Minister might care to comment on that later. It might be something that the Treasury is involved in, alongside the Department for Work and Pensions, but I think that it would be right to express concern on behalf of some of the pensioners involved. However, I understand that there is an argument that both existing pensioners and current members of a pension scheme should be treated with consistency on that. I raise the issue so that the Minister can respond. Those were the three queries on bereavement, change of occupational schemes—which has been answered—and the protected persons scheme.

In conclusion, what the Government are proposing in the Pensions Bill is important and will make a difference. The changes will enable people to save and that saving will pay. The technical details, which the Minister covered earlier, are important for smoothing out some of the small but niggly details that will affect our constituents in due course.

At the risk of repeating myself, I am disappointed by the approach taken by the shadow Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. For him and his party to fall back on a slogan of “consultation not action” really was disappointing; after 86 minutes we would have hoped for a great deal more clarity on his precise proposals. What exactly does he intend to do on charges? In the absence of such clarity, I hope that he and Members from all parties will make substantive contributions to the consultation so that we can agree on the charges, make changes to the annuity details and say with pride to all our constituents that this Pensions Bill will make a difference to all our lives in retirement.

[Caroline Lucas]

I have tabled new clause 12 and amendments 54 and 55 to highlight the need for the Department for Work and Pensions to address the systemic risks posed by climate change and natural resource depletion to pension schemes as a whole, and to suggest some positive solutions.

The Minister has already mentioned the report launched today as part of the new green light campaign by ShareAction, in partnership with the trade unions and environmental groups, which highlights the urgent need for reforms to the pension industry to ensure that it takes greater account of climate and environmental risks. I am glad that the Minister was able to be present to launch it.

Obviously, pension funds use the money paid into them every month to make investments in shares of companies, bonds, properties and other assets, which makes them enormously powerful players in shaping the economy, especially as they have significant investments in fossil fuel companies. However, if we want to keep climate change below dangerous levels, we need pension funds to fund and support a low-carbon economy by, for example, investing in clean technologies and low-carbon infrastructure projects. Moreover, today’s report shows that the UK pension funds have £3 trillion at risk from so-called unusable fossil fuel investments—fossil fuels which, if we are serious about keeping to our climate change commitments, we simply cannot afford to burn. That is a huge threat to the incomes of future pensioners.

In the UK an increasing number of voices are speaking out about the need for pension funds and others to divest themselves of fossil fuel assets. Operation Noah has launched “Bright Now”, a church divestment campaign whose first success came early this month when Quakers in Britain announced that they will disinvest from companies engaged in extracting fossil fuels, which made them the first UK Christian denomination to do so.

UK university students are increasingly engaged in divestment campaigns, as evidenced by the work undertaken by People & Planet. To date, there are 19 active divestment campaigns across the UK, including universities with large endowments: Cambridge, Oxford and Edinburgh.

Looking further afield, 70 of the largest pension funds in the US and the world issued a statement last week setting out their view that major fossil fuel companies may not be as profitable in the future, precisely because of efforts to limit climate change. They are asking for details on how the firms will manage a long-term shift to cleaner energy sources.

Here at Westminster, the recent Business, Innovation and Skills Committee report on the Kay review of the UK equity market and long-term decision making, which was produced earlier this year, recommended that the stewardship code should do more to address environmental, social and governance factors and systemic financial risks, as well as calling for more robust reporting on conflicts of interest.

I agree with the Minister’s comments this morning about the need for a fiduciary duty to consider climate and environmental risks to our pension system and for this to be in the mainstream, first, because that is important to reduce the risks to pension holders themselves, and secondly, in order to harness the huge contribution that pension funds can make to the massive investment that we need in clean energy infrastructure. New clause 12 and amendments 54 and 55 make modest proposals of ways in which the Department could make that happen.

New clause 12 would require the Secretary of State to

“commission an independent review of the implications of climate change and natural resource constraints for the sustainability of private pensions.”

The review should

“consider the implications for long-term investment outcomes for members of work-based pension schemes of potential…systemic risks posed by high levels of exposure to fossil fuels and other carbon-intensive assets…economic and physical impacts of climate change under various climate mitigation scenarios; and…constraints on the availability of non-renewable resources”,

such as food, land and water resources.

That proposal builds on a landmark paper by the actuarial profession that modelled the implication of resource constraints for private pensions and found that, even in the best-case scenario, pension outcomes are likely to be worse than predicted because the industry is not factoring in risks associated with those constraints on food, water and land. In the worst-case scenario, savers in the model of a defined-contribution pension scheme were only half as well off, while the defined-benefit pension scheme became insolvent. The new clause also builds on work by Carbon Tracker on unburnable carbon, which shows that if the aim is to secure long-term returns, divesting from fossil fuel assets would be a pretty sensible thing to do.

Pensions Bill

Richard Graham Excerpts

Monday 17th June 2013 Commons Chamber

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

It is a great pleasure to follow the Secretary of State. I shall attempt to do justice to his succinct speech. As he will know, yesterday was a very difficult day in Birmingham, and I know that the whole House will join me in sending thanks and good wishes to PC Adam Koch, who was so badly hurt on Saturday night. His extraordinary courage, together with that of local residents, helped keep worshippers safe at one of our local mosques. He is doing well in hospital. I know that the whole House will want to wish him a speedy recovery.

I am grateful for the note of consensus that the Secretary of State sought to strike in his remarks. As is appropriate for a Second Reading debate, this afternoon I would like to set out the principles on which we agree with the Government and then get stuck into a few of the details of some important matters that we think are still to be settled. We genuinely hope that the Government will listen during this debate and in Committee, not least because many of the issues I wish to raise touch greatly on the need for a comfortable and well-earned retirement for millions of people in this country.

I think that it is fitting to start my remarks with a quick word about history and the road to this afternoon’s debate. One of the chief reasons why the Labour party will not stand in the Bill’s way today is that we recognise the genuine effort to build on the strong foundations that we left. Indeed, our only disappointment today is that we think the Secretary of State is proposing to build only a halfway house on those strong foundations. We think that the Bill is merely half a reform. Therefore, the Opposition’s job during the course of the Bill’s passage will be to ask him not simply to fix some of the deficiencies we can see, but to be bolder and more radical and to seize the moment that we think is there for the taking. I want to set out a number of areas where I think he can do more to seize that moment.

I am glad that we bequeathed the coalition Government a strong foundation—an inheritance very different from what we found in 1997. The link to earnings had been snapped back in 1980, there were pension holidays for employers and the state pension had fallen from 20% of earnings down to just 14%. The pensions Minister himself said:

“Pensioners, rightly, do not trust the Conservatives on pensions.”—[Official Report, 6 November 2000; Vol. 356, c. 34.]

I am glad that he is working so closely in the coalition Government with the Secretary of State on their difficult task.

I have described the legacy that we tried to sort out. We genuinely wanted to leave the Government a different state of affairs. There is no better summary of our work than the research published by Her Majesty’s Government confirming that pensioner poverty had fallen to the lowest level for 30 years.

[Richard Graham (Gloucester) (Con)]

The right hon. Gentleman talked about building on the strong foundations left by the previous Government. If my memory serves me correctly, the last increase in the basic state pension was 75p. The coalition Government’s new increase in the state pension was worth £234, building on a new foundation of a triple lock, which will increase pensions by a significant amount. Will he comment on the difference between my interpretation of a strong foundation and his?

[Mr Byrne]

The hon. Gentleman will be as familiar as I am with the research published by the Institute for Fiscal Studies showing that, under Labour, £11 billion more was spent than if we had pursued the policies that we inherited in 1997. We lifted gross income for pensioners by more than 40%; 2.4 million pensioners had been lifted out of absolute poverty and nearly 2 million out of relative poverty by 2010-11. It was the IFS that confirmed that both the absolute and relative measures of income poverty fell markedly among pensioners. We inherited a tragic and grotesque state of pensioner poverty in 1997 and we set about dealing with it with focus and alacrity. We are proud of the inheritance and legacy that we left the Government.

[Mr Byrne]

We are very proud of the reforms that we set in place. They tackled the grotesque pensioner poverty that we inherited in 1997. That is not simply my conclusion; when the pensions Minister spoke in the House back in 2000, he pretty much confirmed the same line of argument and the same thesis. The job we did on pensioner poverty was important and we made great progress. The foundations that we left are those that the Secretary of State has built on.

The purpose of the Bill is, in essence, to address one of the matters flagged by Lord Turner in his report and one for which we legislated in 2007. As the Secretary of State mentioned, the noble Lord recommended a new pension supplement for the 21st century—one that is universal and, crucially, one that reduces means-testing, an important part of the Secretary of State’s argument. As the Secretary of State also rehearsed, the noble Lord recommended a system that provides clear incentives to save.

The commission proposed an approach different from that proposed by the coalition. It was in the interests of preserving the consensus that Lord Turner had so assiduously constructed that we chose to follow his approach rather than the one set out by the coalition today. Indeed, at the time Lord Turner flagged a number of risks in the strategy that the Government are now pursuing. The Government have taken an approach different from Lord Turner’s. That comes at the price of some big notional losses for state second pension members. The goalposts on the state pension age have now been moved three times in three years. However, there has been some improvement in means testing and potentially something about incentives to save. I want to touch on those.

Let us take means testing first, however, as it was an important part of the Secretary of State’s argument. Today, about 80% of people are free of the pension credit means test; that pension credit is now available for 20% of people. By 2020, that would have fallen to about 16% anyway. Under flat-rate pensions, there will be a further fall of about 8%. If we put savings credit to one side, the improvement is just 2%, and of course about 35% of pensioners will still be eligible to access council tax benefit, which is about 238,000 people, and 12% will be able to access housing benefit—84,000 people. We are still an awfully long way from the end of means testing, but none the less a small step forward has been taken and we welcome it.

The Secretary of State was anxious to stress the point about savings. The judgment of the IFS was that the effect of proposals on the incentive to save were complex and varied. As the Bill reduces the long-run generosity of the pension system—that is one reason why we support it—it should increase the incentive to save. However, although some will see lower effective marginal tax rates when pension credit and savings credit are withdrawn, some will see higher marginal tax rates. The IFS says, therefore, that the direction on the effect of savings is ambiguous.

Under the proposals, some pensioners who have saved absolutely nothing will be better off in real terms each week than those who have saved substantial sums. A pensioner who has saved nothing will enjoy the flat-rate pension of £144 a week and will be entitled to housing benefit and council tax benefit, which is another £94 a week. That is a total of £238 a week, which is considerably more than what someone who has saved £24,000 will receive. They might enjoy a notional income from savings of about 30 quid a week, plus the flat-rate pension, which is a total of £174 a week. That is much less—36% less—than what the pensioner who has saved nothing will get. In fact, the pensioner who saves nothing will be better off than someone who has put £50,000 away in the bank. So there are still problems and disincentives to save, but none the less, we think that, on balance, the Bill represents progress, which is why we support it in principle.

[Richard Graham]

Did I hear the right hon. Gentleman right when he said that the Bill’s move to axe the means-tested pension credit was a small step forward? This is a huge and significant step forward that recognises that the means-tested pension credit was deeply flawed and was not implemented for many of the people who were eligible for it. A single-tier pension will set our pensions on the right track. Will he confirm that the Labour party now accepts that this is the right way forward and that it is a huge step?

[Mr Byrne]

I will leave it to the hon. Gentleman to provide his own definition of the word “huge.” He will have read chapter 4 of “The single-tier pension: a simple foundation for saving”, published by the Department for Work and Pensions, which clearly says that under the current system, the number of people reaching state pension age after 2016 who will be eligible for means-tested benefits for pensioners will fall to 16%, and that the figure will fall to 11% by 2060. Under the single tier, eligibility for means-tested benefits will fall by 7.5%. The hon. Gentleman will also have read, as I have, Age UK’s evidence, which states, strikingly, that the great bulk of that change results from the elimination of savings credit, rather than from any increase in generosity. If we put savings credit to one side, we will see that the change in the percentage of pensioners eligible for means-tested benefit is just 1% or 2%. If he chooses to define that as huge, that is his right.

I want to flag concerns in three further areas and I hope this will provide us with material for debate and amendments—some probing and some to be voted on —in Committee.

--- Later in debate ---

[Richard Graham (Gloucester) (Con)]

It is a great pleasure to speak in this debate. The Bill is a major piece of legislation that is ready to make us more fit to face the challenges facing pensioners in the 21st century. Of course, the complexity of the subject is responsible for the reduction in the normally large number of Members in the Chamber—it also baffles most of our constituents. Therefore, the major goals of this Bill must surely be to make pensions simpler and clearer, to reduce the amount of means-testing, which is responsible for much of the complexity, and, above all, to implement the pledge that it always pays to save. That mirrors the other important work of the Department for Work and Pensions: implementing the promise that it will always pay to work. Those two pledges, I believe, are the two most important things the Government are trying to achieve. It is a great shame that the Labour party, which was in power for so long, contributed to a system in which it certainly did not always pay either to work or to save. Surely the major goal of this Bill is to put that dire situation right.

I welcome the entirely new state pension system outlined by the Secretary of State, which has a single state pension that is much easier to understand, and the contracting out of defined-benefit pensions, which takes away one area of complexity that is potentially open to abuse. I also welcome the new state pension age, which incidentally is lower than those of four other European Union countries and a great deal closer to the reality of life expectancy, which is that we all need and expect to work longer.

That raises the interesting issue of intergenerational fairness, which has not yet been mentioned in the debate. As many of us here draw closer to retirement age, and access to a pension, than to our time at school, college or university, it is vital that we do not inadvertently preside over a system that is grossly unfair to our children and to the next generation. It is also valid to remember Age UK’s response when the new state pension age was first raised in the House, which was to focus on the opportunities available to older people as well as the reassurance needed by those who feared that they would have to work longer in demanding occupations.

Another aspect of the Bill that I think deserves a brief comment is the new framework on the retirement age for the state pension, which gives clarity. Some Members have asked whether that inadvertently raises an expectation that the retirement age will be increased every five years at the reviews, but I am sure that that is not the intention of the provision. Perhaps the Minister will clarify that.

The Bill also covers bereavement, focusing more on short-term support and the 40,000 recipients—those with children—who will benefit from a one-off payment of £5,000, following an injection of £120 million. There is a longer-term issue in that regard that I will return to later when I will refer to a letter from a constituent.

On the consolidation of the so-called small pots—the defined-contribution pots—I think that many people will welcome the auto-transfer proposed in the Bill. Clearly some of the bodies representing pension schemes fear that some of their members might lose out as a result of being transferred into weaker schemes, but it seems to me that, in general, that provision, which is broadly welcomed by the National Association of Pension Funds, the Association of Consulting Actuaries, the Association of British Insurers and the CBI, will benefit many of our constituents, because at the moment there are too many pots that are unlooked at and unknown. The provision will make it easier for our constituents to engage with the whole business of saving and to have a greater understanding of what their savings really are.

The Bill also provides for the abolition of refunds for short-service membership of defined-contribution funds, which means that someone who has been in a scheme for less than two years will not be able to demand that the employer refunds their contributions. I think that that will be welcomed, because it reduces complexity for future pensioners and ties in with the consolidation of the small pots that I mentioned earlier.

The details of the Bill’s provisions complement the earlier introduction of the auto-enrolment scheme, which in itself should be responsible for introducing an additional £11 billion in savings and between 6 million and 9 million new savers. The object of the exercise is clearly to widen the pool of those constituents who are saving and make it easier for them to have savings that they can later draw on in their retirement. The Bill complements that earlier work in helping to meet the challenges of a century in which we will all live significantly longer than our parents, let alone our grandparents.

An important point that I would like to highlight, in particular, is the improved situation for many women. The right hon. Member for Birkenhead (Mr Field) suggested that those born between April ’51 and April ’53 appear to be disadvantaged. I would be grateful if the Minister could confirm some of the figures, because they are complex and, as several Members have mentioned, need to be communicated. My understanding is that there are currently 2.8 million women receiving less than £80 a week in pension—the comparable figure for men is 474,000—so there are huge numbers of women on low pensions. My understanding is that 750,000 women who will reach pension age in the decade after the introduction of the Bill—after 2016—will get an extra £9 a week. Over a lifetime, that is a significant amount of money. I would be grateful if the Minister could confirm that.

Will the Minister also confirm that 90% of the women born between April ’51 and April ’53 will actually get more than the “men’s deal”—men at the moment reaching retirement age later—and up to £26,000 more over the average retirement period? Those are quite difficult figures, but I would be grateful for confirmation. I think that the point made by right hon. Member for Birkenhead was that a group of women appear to be worse off, but actually they are being considerately treated, not least as a result of the coalition Government’s earlier amendments, and that needs to be communicated, particularly through bodies such as Age UK.

Today we have heard what I would describe as a “glass half full” response from the Opposition, and about an issue on which it should surely have been possible to achieve consensus.

[Mark Reckless]

Does my hon. Friend not mean that we have heard a “glass half empty” response?

[Richard Graham]

My hon. Friend is probably right, in the sense that the overwhelming response from the Opposition was one of ambiguity. It was ambiguous because they would neither oppose, nor strongly support. It was ambiguous because the shadow pensions Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is in his place, said in February 2013 that the triple lock

“was a triumph of rhetoric over reality”

and that, three years into its operation,

“the increase in the state pension is less than it would have been if the uprating method used by the previous Government was still in place.”—[Official Report, 13 February 2013; Vol. 558, c. 1002.]

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

The hon. Gentleman has enticed me from my sedentary position. Can he confirm what his colleague the pensions Minister, the hon. Member for Thornbury and Yate (Steve Webb), said in the Financial Times this morning—that the triple lock is guaranteed only for the lifetime of this Parliament and that neither the Conservative party nor the Liberal Democrat party is committed to it beyond 2015?

[Richard Graham]

Alas, I was not at the pensions Minister’s meeting with the Financial Times. However, the hon. Gentleman has raised a rather different question from the one I asked; I had mentioned his description of the current triple lock as a triumph of rhetoric over reality. Most of my pensioner constituents would describe it as a triumph of financial reality for their pensions.

[Sheila Gilmore]

The hon. Gentleman’s history appears to be slightly at odds with reality. The infamous 75p increase—nobody would say that it was particularly happy—was based on certain rules. It happened, I think, in 2000, so it was not the last time that the previous Labour Government raised pensions. The arrangement applied in every year of the Conservative Government after the earnings link had been broken. If inflation had provided for a 75p increase in 1996, doubtless that increase would have been given. Nothing was particularly different from what had been in place during the 18 years of Conservative Governments.

[Richard Graham]

I read modern history, not ancient history, at university. My clear recollection of recent and modern history is that the hon. Lady’s party contributed three things to the evolution of pensions. First, there was the abolition of the advance corporation tax on dividends, which has been estimated to have cost occupational pension schemes about £100 billion. Secondly, although the hon. Lady’s Government made great play of criticising the breaking of the link between pensions and earnings by an earlier Conservative Government, over 13 years her Governments failed to do anything at all about it.

Thirdly, the contrast between the 75p increase and the £234 that I have just described represents, by any standards, a pretty compellingly disappointing story for the Labour party. I will not dwell on the Labour party’s shame on the matter of pensions, because it is well known to the House. However, the shadow Minister, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, recently described his Government’s approach over 13 years as “evolutionary”. Evolving an approach towards a single state pension over 13 years is different from putting forward a Bill and implementing a single state pension, which is what this coalition Government are doing today.

[Gregg McClymont]

rose—

[Richard Graham]

The shadow Minister rises again from his place. I welcome him.

[Gregg McClymont]

I thank the hon. Gentleman. I note that he did not clarify whether the pensions Minister had indeed said in the Financial Times this morning that neither party is committed to the triple lock beyond 2015.

Let me take the hon. Gentleman up on a specific point. He is a reasonable man, so does he not accept that the breaking of the link with earnings meant that by 1997, when Labour came into office, there was a genuine crisis of pensioner poverty for a significant section of the pensioner population? Pension credit was a significant and substantial response targeted on those most in need. Given the hon. Gentleman’s comments today, that would seem to fit his own approach to pensions more generally.

[Richard Graham]

The hon. Gentleman is correct. The break between pensions and earnings caused considerable upset across the country and was the reason why the Gloucestershire Pensioners Forum was founded some 30 years ago during that earlier Conservative Government. However, let us imagine the forum’s disappointment that nothing at all was done about the matter in 13 years of Labour Governments. The Gloucestershire Pensioners Forum had to continue into a coalition Government to see the wrong righted. The hon. Gentleman’s party had a great opportunity to resolve that disappointment from ancient history, but, as with so much, it has been left to us.

I move on to other aspects of the Opposition’s response today. Many of us will recall that the shadow Secretary of State has promised us a laser-like approach to public expenditure, but it was not clear today whether he was advocating that the 700,000 women born between April ’51 and ’53 should be given the additional £4.5 billion that it would cost to put them on precisely the same footing as those born later. Perhaps in his winding-up speech the shadow Minister will confirm whether the laser-like approach to public expenditure will revert to the “Sorry, there’s no money left” approach for which the shadow Secretary of State is so renowned.

What we have heard from Members across the House today is an extraordinary amount of unanimity and consensus on the fact that, although means-tested pension credit was well intentioned, it is not the solution and should be replaced. Many Members, including the distinguished Chair of the Work and Pensions Committee, have welcomed the approach of a single state pension and the doing away with the means-tested pension. For many of us, the means-tested pension has caused sad arguments between neighbours, some of whom have small amounts of savings. Someone needs only more than £10,000 not to qualify for the means-tested pension credit; the income generated from £10,000 is tiny in a low-interest-rate environment. The consensus has been encouraging, but some things have clearly not been covered in the Bill today. It is worth touching on those; perhaps the Minister will address some of them in his summing up.

I start in no particular order. In the creation of a new single-tier state pension, it is clear, as always, that there will be losers as well as winners. Some members with private sector pension funds will be affected and it would be interesting to hear more from the Minister on who those losers will be. Then there is the question of the defined ambition pension, which the pensions Minister has advocated. We are promised a Government paper on that soon. Will the Minister confirm when it will come? Sometimes “summer” is taken to extend all the way through to November; it would be helpful to have an idea of what stage of the summer is meant.

I understand from some of the professional associations that the business of contracting out requires a statutory override, so there is a question of when that will come in secondary legislation. Will the Minister say something on that? One or two Opposition Members rightly raised the National Employment Savings Trust, the restrictions on it and its competitiveness against other products in the marketplace. None of us would wish NEST to be penalised as the Post Office was inadvertently by the previous Government in respect of private sector competition. NEST must not be prevented from succeeding as we all wish it will.

On the small pots, there is an issue about a cost assessment of bundling them all together. What sort of safeguards might there be in moving from a strong scheme into a weaker one?

On the issue of bereavement, I would like to read a small part of a letter I have received from a constituent. She raises the question of whether the regular income available to widows from the widowed parents allowance, which will be replaced by a bigger but shorter-term amount, could

“leave future widows and widowers worse off than most other single parents who can claim child maintenance from the other parent in the case of a relationship breakdown.”

She goes on:

“It seems so unfair that in future someone like my husband who has worked for 20 years will never claim a state pension but the government would not support his children either.”

Perhaps that issue can be raised in Committee and a discussion had on the potential unintended consequences of the changes for those affected by bereavement.

Lastly, there is the new objective laid down for the pensions regulator

“to minimise any adverse impact on the sustainable growth of an employer”.

That raises the question of the definition of an employer. Charities and non-governmental organisations with pension schemes, for example, do not necessarily focus on growth. Perhaps some clarity on precisely what changes are implied by the new objective for the pensions regulator could be discussed in more detail.

The Chair of the Select Committee and the right hon. Member for Birkenhead—both of whom have huge experience of this sector and the world of pensions—welcome the Bill and I welcome it, too. I think that there should be consensus on pensions and that this is a great opportunity for the Opposition to say, as my hon. Friend the Member for Rochester and Strood (Mark Reckless) has said, that the glass is not half empty, as I mistakenly suggested, but half full. They should be enthusiastically supportive of the fact that there is a lot in the glass and we want more: we want a single state pension and we want it to succeed.

I am delighted that Opposition Front Benchers are wriggling—some more comfortably than others—towards a recognition that this coalition Government are taking the right steps to simplify and clarify pensions and, above all, to enable all our constituents to believe that it will always pay to save. The value of that is enormous and it is this Government’s duty to return us to that principle and remind the whole House of why we should endorse this Bill and its objectives.

Pensions and Social Security

Richard Graham Excerpts

Wednesday 13th February 2013 Commons Chamber

[Stephen Timms]

We have made it plain, in all the three uprating debates since the election, that in our view there would have been a case for a temporary move from RPI to CPI uprating, as a contribution to reducing the deficit. Unfortunately, the Government decided that this should not be a temporary move, but a permanent move—or so we thought. Now it turns out that they are not even uprating in line with CPI for a large part of the benefits, but the position is the one that I have set out.

[Richard Graham (Gloucester) (Con)]

Will the right hon. Gentleman confirm whether the change from RPI to CPI, for the pension indexation of Labour party agents, is temporary or permanent?

[Stephen Timms]

I think the hon. Gentleman is asking me a question about the administration of the Labour party on which, I am afraid, I am unable to assist him.

It is worth reflecting on the history of the triple lock. In its first year, it was announced but not actually implemented. If it had been implemented, it would have produced, from the Government’s point of view, an embarrassingly small pension increase. The Minister, sensibly, chose to override it and instead apply a larger increase that in that year was in line with RPI. At its first outing, therefore, it failed. In its second year—last year—it was actually implemented, and delivered an increase in line with CPI, along with working-age benefits. This year it is being applied again, and for the first time it is delivering something better than CPI uprating—a point made by the Minister.

The increase in CPI, as measured last September, was 2.2%, and the uprating amount in line with the triple lock is 2.5%. So that is it: in comparison with the CPI uprating, which until recently was the Government’s policy for working-age benefits, the triple lock has delivered a higher pension by a paltry 0.3%. Of course, if it had been applied in the first year, it would have been less than the CPI uprating. The triple lock has delivered a higher pension of 0.3% over three years—a rather derisory achievement. It is clear that the triple lock has been something of a damp squib. Of course, if it was something other than a damp squib, the Chancellor would have vetoed it long ago.

Welfare Benefits Up-rating Bill

Richard Graham Excerpts

Monday 21st January 2013 Commons Chamber

[Caroline Lucas]

I think the answer is probably both of the above. Recently, the RPI has been higher. I would have been happy to look at an amendment—no such amendment exists, unfortunately—that combined the work that the hon. Gentleman’s party has been doing on earnings with my effort to get a link back to the RPI and prices. We should look at whichever is the most generous. I stuck to the RPI link in my amendment because I wanted it to be realistic enough to get more support across the House. I fear that I might have been a little over-ambitious.

It worries me that instead of seeking to restore the link to prices, the official Opposition have not sought to protect people who are seeking work, but appear to have picked out one or two benefits, such as employment and support allowance and maternity benefit, for proper protection. They have ignored, for example, those on jobseeker’s allowance, as long as some sort of workfare system is brought in for people who have been looking for work for two years. Do the Opposition think that it is okay for the link to be broken for JSA recipients in the meantime? The Opposition amendments offer an improvement to a nasty Bill, and for that I support them, but I believe they expose a certain cowardice in not confronting the stereotypes and myths that the Government continue to perpetrate. Why are the Opposition not standing up for unemployed people and restoring the link to RPI? I do not accept that they could not consider that principle today, and it is disappointing that they will not. A link to prices is an absolute minimum, a safety net red line.

[Richard Graham (Gloucester) (Con)]

Will the hon. Lady confirm that she is advocating a return to a link between all benefits and the retail prices index from now on? In 2012-13, benefits went up by 5.3% and the Office for National Statistics labour statistics show that the pay of all those in work went up on average by 2.1%. What impact does the hon. Lady think that would have over a few years on the morale of people in work? Would it act as an incentive to work, or to retreat back to benefits as fast as possible?

[Caroline Lucas]

The hon. Gentleman’s intervention shows the different beliefs that he and I have about the great British public. I do not believe that most people have to be pushed into work by cruel incentives; I believe that the vast majority want to work, contribute and feel part of a wider society. That is where he and I differ.

--- Later in debate ---

[Richard Graham]

I am with the hon. Lady; I do believe that most people want to work. I am asking her about the impact it will have if somebody off work continually gets double, if not more, the increase that working people get. Surely she understands that there is a link.

[Caroline Lucas]

The proposition is spurious. First, it happens very rarely; secondly, we ought to look at the actual amounts of money involved. The Government talk glibly about percentages, but the percentage of something very small is still very small. The amounts that we are talking about do not make that much difference. What does make a difference is social solidarity and the sense of people really being in it together. If this Government cared more about making that a reality than just having the rhetoric, we might stand a chance of securing a happier and better-off society.

[Richard Graham]

rose—

[Caroline Lucas]

I should like to make some progress because I have let the hon. Gentleman in twice.

--- Later in debate ---

[Richard Graham]

rose—

[Toby Perkins]

I am pleased to see the hon. Gentleman in his place. The past two times that he has been billed to appear he has not actually been present, so now that that he is here I will definitely allow him to intervene. However—perhaps he will reflect on this—the central point of the whole debate seems to be that benefits claimed by someone on £71 a week can be compared with the earnings of a school teacher or a doctor in a hospital, and that a 1% rise is the same to someone on jobseeker’s allowance as to someone working in the public sector. Will the hon. Gentleman at least accept that they are not the same thing?

[Richard Graham]

I am very grateful to the hon. Gentleman for letting me intervene and I will come straight to his specific point. It would be interesting if he came to meet some of my constituents who work in the public sector in Gloucester. We have over 20,000 people working in the public sector—as I used to—and most of them are seeing no increase in their salary whatsoever, with a cap at a maximum of 1%. The hon. Gentleman appears to be supporting an increase of 2.2%—more than double what those in work will be getting—for those who are out of work. I would like him to respond to a constituent of mine who wrote to me. She is a retired nurse—

[The Temporary Chair (John Robertson)]

Order. Will the hon. Gentleman make his point?

[Richard Graham]

I am making my point as fast as I can. My constituent has two daughters who are nurses and who are receiving a 1% rise. She is asking why so many people in the House of Commons are desperate to increase the benefits of the unemployed by more.

[The Temporary Chair]

Order. Will the hon. Gentleman sit down?

--- Later in debate ---

[Toby Perkins]

My hon. Friend makes a valuable point. Perhaps Government Members’ strategy is to follow Mitt Romney, who said that anyone who receives any welfare should be written off because they will never vote for the right-wing party. It did not work particularly well for Mitt Romney, but perhaps that is the electoral strategy of the hon. Member for Gloucester.

[Richard Graham]

rose—

[Toby Perkins]

The hon. Gentleman is about to tell us what he will do for the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight.

[Richard Graham]

I thank the hon. Gentleman for his generosity in allowing me to intervene a second time, but the answer to him and the hon. Member for Clwyd South (Susan Elan Jones) is that, on the question we are debating, I have not heard their proposal. Does he agree with the hon. Member for Brighton, Pavilion (Caroline Lucas) that the solution is to peg those benefits for ever to the retail prices index, so that people who are out of work can continue to have annual rises three times higher than those who are in work? While the hon. Gentleman is advocating that my public sector workers should continue to lose out relative to people who are on benefits, I am proud that the Conservative party has left 35,000 people with lower tax bills.

[Toby Perkins]

The hon. Gentleman was silent on the 8,600 people in his constituency who will be worse off as a result of the vote he will cast tonight, but the Opposition’s proposals are clear in the amendment. I will touch on this in more detail, but one interesting thing is the extent to which the Chancellor, for reasons best known to himself, has chosen to handcuff himself to a level of benefit increase for year after year when he has no idea what the level of inflation will be—the hon. Member for St Ives made that point.

--- Later in debate ---

[Helen Goodman]

It is a great pleasure to follow the right hon. Member for Ross, Skye and Lochaber (Mr Kennedy), who made some telling points about the problems with the Bill.

I rise to speak in support of amendment 12, moved by my right hon. Friend the Member for East Ham (Stephen Timms). The proposals to cut the real income of the poorest are ugly and unjust. I am pleased that the Secretary of State is in his place on the Front Bench. He frequently parades his Christian beliefs, so I shall begin by quoting from the Churches Regional Commission report, “Am I My Brother’s Keeper?”, which states that the switch in indexation

“represents an on-going erosion…effectively ratcheting up poverty long into the future.”

By 2015, the effect of 1% indexation compared with indexation in line with the CPI to a person on JSA or ESA will be a loss of £156 a year; that is a 4% cut in real terms for those least able to afford it. If the Office for Budget Responsibility’s inflation forecast is wrong, the situation could be even worse.

As we consider the Bill we need to look across at all the changes that the Government are making—we cannot look at this measure in isolation. To see the impact it will have on people, we need to look across the board. I now receive a lot of correspondence from constituents on ESA, who are particularly badly hit. I want to tell the House about one person. Her £66 a week rent is paid by housing benefit. In April, her benefit will go up to £71.70. Out of that, she pays £10 a week for electricity, and £6 a week for water rates. Like many of my constituents, she still uses coal for heating, and three bags of coal—just to inform the Minister, because I do not suppose he is up with coal prices—will cost her £19.50 a week. Her return bus fare to the town—she lives in a village—is £4 a week, and her bedroom tax is £9.24 a week. All of that will leave her with £22.96 for food, cleaning, all household goods and clothes. I submit that even the hon. Member for Gloucester (Richard Graham) could not live on £22.96 a week. If he actually considered the sums of money that ordinary people will be expected to live on, he would understand the outrage we on this side of the House feel at the continuous erosion of the social security net.

[Richard Graham]

I am grateful to the hon. Lady for giving way after her passionate outburst. Yes, of course I share her concern about people on not very much money. My issue with the speech made by the hon. Member for Chesterfield (Toby Perkins) was his assumption that we were talking about people earning £35,000 a year. I do not think he understands that the average wage in my constituency is less than £25,000. We are talking about young nurses—people whose salaries are capped and who are seeing people on benefits get significantly larger increases. That is the issue at stake this evening.

[Helen Goodman]

I am sorry, but the hon. Gentleman evidently does not understand the Bill. He evidently does not understand that people on those low wages will also lose out through the cuts to working tax credits and housing benefit. In fact, the whole point about the Government’s strategic, political mistake is that more people in work will lose out from the Bill than those who do not work. Furthermore—if he will allow me to do a little more arithmetic for him—a person currently on ESA will get a 70p increase in April, but a person earning £25,000 and receiving a 1% increase will get a £5 a week increase. Can he not understand that 70p is quite a lot less than £5?

[Richard Graham]

rose—

[Helen Goodman]

I am not going to give way to the hon. Gentleman again, because other Members want to speak.

I want to address the Minister. When, in the previous Parliament, we introduced the Bill that became the Child Poverty Act 2010, he gave a great deal of evidence from the Family Budgeting Unit in York and the people at Loughborough about the minimum income standard—the minimum income guarantee. He said that what the Labour Government were doing was absolutely shameful and that benefits were not high enough. Now, however, we see that he is prepared to cut benefits in a way that we never did. The testimony to the great success of this Government’s benefit policy is the expansion in the number of food banks: in Durham last year, the food bank fed 4,455 people, of whom 1,390 were children. That is utterly shameful. To demonstrate that it is not possible to live on £22.96 a week, I am going to try to do so during the February recess. Neither I nor, I believe, any other hon. Member seriously believes that they could live on £22.96 a week. We have to look at this in context.

The Bill is unjust because it is simply not fair in the treatment of people in work and those out of work, and the treatment of people on high incomes and people on low incomes. When the dole was introduced in 1912, it was approximately a fifth of average earnings, and so it stayed until 1979, as the hon. Member for Brighton, Pavilion (Caroline Lucas) said. By 1989, it was 15.8% of average earnings; by 1997, according to the House of Commons Library, it was 13.2%; and by 2015, it will be 11.1%. It is absolutely clear that the Government are trying to take it back to the very lowest point at the very bottom of the recession, irrespective of the impact on people’s normal standards of living. Everything the Prime Minister has said about those with the broadest shoulders bearing the biggest burden is seen to be utterly empty and fallacious when the Government introduce such a Bill.

There has been an ugly attempt to divide the poor between the “deserving” and the “undeserving”—taking us back to the 19th century—between sheep and goats, between strivers and shirkers, and between with those with their curtains closed and those with their curtains open. In my constituency, if people’s curtains are closed at 9 o’clock in the morning, it is probably because they are on nights and they are trying to catch up with their sleep. The Churches Regional Commission states that

“of all the words to describe those who depend on welfare, “feckless” has to be the one that rankles most.”

This attempt to divide has failed, however, on the factual ground that two thirds of those affected by the Bill are in work. The housing benefit and tax credit changes will affect far more people.

The right hon. Member for Wokingham (Mr Redwood), who unfortunately is no longer present, tried to tell us that these changes will improve work incentives. As the noble Lord Freud said in the other House,

“there is an inevitable trade-off between the level of benefits and incentives to work. Raising benefit levels would undoubtedly hamper the work-incentive”.—[Official Report, House of Lords, 13 October 2011; Vol. 730, c. GC498.]

Obviously, that is setting to one side the fact that in order to work harder the poor must be made poorer, but the rich can be made richer.

Let us look at the impact of the changes and the context. In my constituency, 7,200 people will lose out as a result of the Bill, by an average of £500; that will take £3.5 million out of the local economy. If the International Monetary Fund is correct, the second round effect will be even greater, at £4.5 million, so the net upshot is an £8 million loss to the economy of my constituency. It is no wonder shops are closing and small business are folding. That is absolutely illogical, and it goes against what the Chancellor of the Exchequer said about the need to let the fiscal stabilisers work.

--- Later in debate ---

[Helen Goodman]

Yes, I can. It is absolutely obvious: we were in the middle of a very deep recession, which the hon. Gentleman seems conveniently to have forgotten. Of course the number of unemployed people has gone up, but the previous Labour Government helped all sorts of other people back into work—365,000 lone parents, for example. If he would care to look at a map of where incapacity benefit and ESA claimants live, he will see that it looks like a map charting the industrial revolution in the 18th century. Those benefit costs clearly reflect the overhanging legacy of the decline of heavy industry. It is totally unreasonable and unfair to punish the people who happened to work in heavy industry.

Once again, we come to the issue of unemployment. We in the north-east have the highest rate of unemployment in the entire country—9.9%. We have seven people chasing every job vacancy. Whether the gap between the increase for a person on £25,000 a year and the increase for a person on JSA is £4.30 or £4.20 will make no material difference to people’s capability or willingness to find a job, which is why we need a completely different approach to job creation. My constituents want to go back to work.

[Richard Graham]

Will the hon. Lady give way?

[Helen Goodman]

No, I will not. The hon. Gentleman will have a chance to make his own speech. Many hon. Members have given way to him in the course of the debate.

The Chancellor of the Exchequer has broken another promise he made in 2011. He said:

“I also want to protect… those who, through no fault of their own, have lost jobs and are trying to find work”.—[Official Report, 29 November 2011; Vol. 536, c. 802.]

He is patently failing to protect those people. By definition, people on statutory sick pay, statutory maternity pay, statutory paternity pay or statutory adoption pay are not going out to work, but they, too, are seeing their incomes fall, and that is at a time when they have new children coming into the family and need more support.

--- Later in debate ---

[The Temporary Chair (Mr David Amess)]

Order. I thank the right hon. Gentleman for his brevity. May I remind the Committee that three hon. Members are still seeking to catch my eye, that our Committee proceedings finish at 9 pm and that we still have to hear from the Minister and the Opposition spokesman? I call Mr Richard Graham.

[Richard Graham]

Thank you, Mr Amess, for calling me to speak in this debate. I will follow your advice and try to be as brief as I can.

Tonight I came to listen to different views on options for this Bill, and we have heard an interesting mix of practical ideas, impractical ones and vacuums. Much of the debate has been wrapped in an argument about, on the one hand, who can claim the moral ground as the more compassionate and, on the other, who can claim to be more practical on economics.

We have just heard from the right hon. Member for Birkenhead (Mr Field), for whom I have enormous respect. He made the argument that this is ultimately all about fairness, but given that Labour Members wanted to retain child benefits for all higher-rate taxpayers, no matter how many millions they earn, I find it hard to take that argument at face value. I also reject the bizarre argument about taxing the richest by more than his party ever did in its 13 years in power—that raising £7 billion less in tax revenue for services that all our poorest constituents most value is somehow beneficial to our poorest and most vulnerable members of society.

On the proposals that have actually been made, the only person who emerges with real credit for honesty is the hon. Member for Brighton, Pavilion (Caroline Lucas). She has the guts to say that these benefits should be uprated now and for ever by the retail prices index, at a preliminary cost of some £7.6 billion. She might have some idea where that money will come from—I am sure she does not, as certainly none of the rest of us does—but at least she has tried to put a value on her compassion. Personally, I think that it is as practical as some of her efforts to spread wind farms across the country, in a passion for green energy for which our constituents will also pay heftily through their energy bills, but that is a separate matter. At least she has put a mark on the ground.

In contrast, Opposition Members, including the hon. Member for Bishop Auckland (Helen Goodman), disappearing from her seat after speaking at great volume, and the hon. Members for Glasgow North East (Mr Bain) and for Chesterfield (Toby Perkins) were unable to say with what they would replace the Government’s proposed uprating of 1%. It was as if they would offer a happy vacuum in which we would depend on the munificence of the shadow Secretary of State—he who famously apologised for having no money left—who would somehow find the money to fill it.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

rose—

[Richard Graham]

On that note, I am happy to give way to my great friend, who was unable to recommend his proposals on tax credits to the Communist party of China last week.

[Mr Byrne]

I am grateful to the hon. Gentleman, who is giving way with characteristic generosity. He will accept that hitherto in this country, and for many years, the proposal to uprate benefits has been presented annually and much closer to the time at which uprating should take place, so that the Chancellor can take account of the latest economic circumstances and the latest level of inflation. It is only now that the House of Commons is being invited to set in stone a strategy that will stretch ahead for many years to come. That is the unusual situation.

[Richard Graham]

My friend—for he is my friend— the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) would make a valid point if it was not for the fact that this provision is set for only three years and it is set in the context of what he and his colleagues achieved during the extraordinary runaway period between 2003 and 2010, when they unleashed £170 billion of tax credits and raised welfare spending by 60%, so that, as we know, it is now a third of all Government expenditure. That is the bill that all our constituents are having to pay today.

It is not surprising that the Government are having to take the risk—I accept that there is an element of risk—of pre-setting the uprating of these benefits without knowing what the level of inflation will be. That is why my right hon. Friend the Member for Wokingham (Mr Redwood) was right. Hon. Members on both sides of the Committee gave him credit for flagging up the two crucial ingredients—control of inflation and energy—so that some of the less well-off in our constituencies do not suffer from the effective freeze over the next three years.

[Mr Byrne]

The hon. Gentleman is incredibly generous in giving way. Does he think the Bill is unconnected to the OBR’s decision to uprate the claimant count by a third of a million over the next few years, lifting its forecast for spending on unemployment and other out-of-work benefits by £6 billion? The Bill is needed to pay the price of economic failure. Surely that is the arithmetic.

[Richard Graham]

The right hon. Gentleman, with his great experience of these matters, asks a technical question which I am fully confident the Minister will answer in detail in due course.

I promised I would be brief, Mr Amess, so let me come to the point. In effect, tonight we have debated in practical terms the benefits of tax credits against the benefits of tax allowances. I argue that tax credits, the chosen policy of the previous Government, were flawed by their cynicism, having been increased by 58% just before the 2005 election and by 20% just before the 2010 election. I am sorry to say that those were giant electoral bribes that led directly to the greatest bust of all times. The hon. Member for Glasgow North East spoke about moral divisions, and to hear that from a Member whose Government created pension credits, which divided pensioner from pensioner, discouraged saving, enabled arguments between—

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Richard Graham]

I am sorry, but we have no more time for further interventions—

[Andrew Bridgen]

Will my hon. Friend give way?

[Richard Graham]

The hon. Lady will have to wait, and so will my hon. Friend.

I reject completely the idea of moral divisions. This is not an argument between what the hon. Member for Gateshead (Ian Mearns) called a compassion-bypass Government and an economic-car-crash Government. It is about what is fair for the people who pay the taxes that pay for the services and benefits and what is fair for those who receive them. Many of us will have had letters from constituents who work for not very much money, contrary to what the hon. Member for Chesterfield implied, and who point out that their motivation for working suffers when they realise that those who do not work have received more than double the increase in their wage over the past year.

Measuring social justice entirely by how much we spend of other people’s money to generate a system where we now pay more in interest on our debt than we spend on the entire education budget—that is not moral compassion. It is wrong, and that is why we must make practical decisions that are sometimes tough. One of them is being presented to us this evening and I shall support the Bill.

Oral Answers to Questions

Richard Graham Excerpts

Monday 10th December 2012 Commons Chamber

[Mr Duncan Smith]

I must tell the right hon. Gentleman that our unemployment figures are better than those originally forecast by the OBR. I remind him—as if he needed reminding—that he left this Government with a 6% fall in GDP, an economy that was on the rack, and debt that was higher than that of any other country in northern Europe and rising every year, with £120 million a day being spent on the interest. Let me remind him of one other thing: he has voted against every single change and every cut we have made to deal with that debt. The Opposition are irresponsible and not fit for government.

[Richard Graham (Gloucester) (Con)]

T3. I welcome the introduction of universal credit next year. However, will the Secretary of State outline how my constituents without bank accounts will in practice be able to access universal credit? Does he agree with the suggestion made by Westgate ward Councillor Paul Toleman that Post Office accounts could be a useful alternative mechanism?

[Mr Duncan Smith]

It is correct that Post Office accounts would be a useful measure in ensuring that we can give people the right kind of choice and the right kind of places for their accounts. Under universal credit, people will be given an opportunity to begin to live their lives in the same way as they would live them if they were back in work. That is a critical and huge change that will allow them to get back into work rather than not have to make the changes that could change their whole outlook.