Oral Answers to Questions

Stephen Timms Excerpts

Monday 19th October 2020 Commons Chamber

[Rosie Cooper (West Lancashire) (Lab)]

What recent discussions she has had with the Chancellor of the Exchequer on extending the £20 additional universal credit payment during the covid-19 outbreak.

[Stephen Timms (East Ham) (Lab)]

If she will increase jobseeker’s allowance by £20 per week in line with universal credit.

--- Later in debate ---

[Mr Speaker]

I call the Chair of the Select Committee on Work and Pensions, Stephen Timms.

[Stephen Timms]

The Select Committee’s report published today calls for new starter payments to claimants of universal credit to help tide them over the very difficult five-week wait for their first regular benefit payment, and for the £20 a week increase, which the Secretary of State has referred to, to be made permanent. How can it possibly be justified for people claiming jobseeker’s allowance and employment and support allowance to receive £20 a week less than people in identical circumstances who happen to be claiming universal credit?

[Dr Coffey]

On what happened with legacy benefits and universal credit, I think the rationale was set out clearly at the time; in particular, it was also about having a rate that was quite similar to statutory sick pay. We will look carefully at the report that the right hon. Gentleman and his Committee have issued to us today, but I remind him that of course people do not need to wait five weeks for a universal credit payment; they can get a payment within a matter of days, and that payment is then spread over the entire year.

Pension Schemes Bill [Lords]

Stephen Timms Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Dr Coffey]

I understand exactly the point my hon. Friend makes. My understanding is that the Financial Conduct Authority is changing its guidance or approach to make sure that asset managers are also getting on board. We are trying to ensure that asset managers, as well as trustees, are aware, so we have that collaborative arrangement to make sure we can make progress on this important use of pension funds.

One big concern people have relates to scams. Clause 125 further protects savers from falling victim to unscrupulous scammers when considering transferring their pension pots. The measures allow us to place conditions on a scheme member’s right to transfer their pension savings to another pension scheme. This will protect members from pension scams by giving trustees of occupational pension schemes a level of confidence that transfers of pension savings are made to safe, not fraudulent, schemes. Regulations will proscribe the circumstances where there is a high risk of a transfer to a fraudulent scheme and could require scheme members to obtain information or guidance before transferring.

[Stephen Timms (East Ham) (Lab)]

I welcome this measure in the Bill, reflecting changes in the other place. As the Secretary of State said, the intention is to require, in certain circumstances, savers to take advice before they move their pension savings into what might be a scam. I wonder whether she agrees with me that we should go further and allow trustees to prevent a transfer where it looks as though the savings are going into a scam.

[Dr Coffey]

I know that the right hon. Gentleman and his Select Committee are looking at this matter carefully, and I appreciate that he has been in discussions with my hon. Friend the Under-Secretary of State for Work and Pensions, who I believe wrote to the right hon. Gentleman yesterday. It is certainly an issue on which we want to continue to work to identify circumstances that could raise red flags, and legislate to enable trustees to act when they appear. The powers in the clause are broad enough to cover some of the scenarios about which the right hon. Gentleman is concerned.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

As has already been widely said, there is much to welcome in this Bill. Some important changes were made in the other place, and I pay tribute to the work that it did. I also appreciate the efforts that the Minister has made to work with my hon. Friends on the Front Bench, with me and the Work and Pensions Committee, and with others across the House to secure broad support for the measures in the Bill.

Pensions dashboards should be an important step forward in enabling savers to understand their pension position, allowing them more readily to make good decisions in planning for retirement. The Select Committee, under its former Chair, Frank Field, to whom I pay tribute, said in 2018:

“The case for a publicly-hosted pensions dashboard is clear cut”

because

“consumers want simple, impartial, and trustworthy information.”

In 2019, the Committee observed:

“A non-commercial pensions dashboard will be a welcome, if overdue, additional tool to provide transparency to individuals and help them plan how they use their pension funds.”

We have heard that it was agreed in the other place that the dashboard provided by the Money and Pensions Service should be up and running for a year, and the Secretary of State should report to Parliament on its operation, before other commercial dashboards are set up, and that commercial dashboards should not have facilities for engaging in financial transactions. Like others, I hope that those changes stay in place.

The former Committee reported in 2016 on defined-benefit pension schemes in between reports that it published on the BHS and Carillion scandals, and its recommendations at that time are reflected in the new powers provided to the Pensions Regulator in this Bill. The Committee recommended, for example, that the Government should consult on proposals to give trustees powers to demand timely information from sponsors, and I welcome the new offence created by the Bill of “knowingly or recklessly” providing false information to trustees.

The Committee also highlighted, in 2018, the attractions of collective defined-contribution pensions. I echo the observation of the hon. Member for Amber Valley (Nigel Mills), whose contribution to the Select Committee I am grateful for, that the pooling of risk offers better pensions than standard defined-contribution saving and avoids the large potential liabilities that have made defined-benefit schemes less popular than they were. I welcome the legislative framework provided in the Bill, and I hope that this new model will be widely taken up.

However, I want to focus my remarks on the issue of pension scams, echoing a number of points that have already been made. As we have heard, the Select Committee has started an inquiry on pension scams, which the Secretary of State referred to. That is the first strand of three in an assessment of the pension freedoms five years on from their introduction by George Osborne.

Losing one’s pension savings to a scam is devastating. The Select Committee has heard of lives that have been ruined by scams—of people who have worked hard all their lives and were looking forward, as they were entitled to, to a comfortable retirement, finding suddenly that their savings have all been stolen; husbands not daring to tell their wives what has happened, or of the shame or dread of the future that they are suffering.

We do not know the scale of this issue. Many scams are never reported, partly because people are ashamed of what they have done and partly because they know that the chance of ever retrieving any of the money is slim. There are grave concerns about the effectiveness of Action Fraud in investigating and ensuring the pursuit of scams, given the low rate of success in retrieving scammed pensions.

The pension scams industry group, to which I pay tribute, estimates that scams could account for anything between 0.5% and 12% of all transfers out of employer pension schemes in the last five years. If we take the middle figure—say 5%—that would mean that over the last five years £10 billion of pension savings have been stolen. There are certainly well-informed reports of named individuals living in the lap of luxury in homes in exotic locations around the world on the proceeds of pensions out of which they have defrauded hard-working savers.

I am bound to say that these awful problems should have been foreseen when pension freedoms were introduced five years ago. Indeed, as I remember well, they were foreseen, but the coalition Government did not adequately prepare for them. I do not know why—they should have done, but they did not. Charles Randell, chair of the Financial Conduct Authority, said at the 2020 annual public meeting of the FCA that

“the manner in which the pension freedoms were introduced leaves a number of lessons to be learnt, including about the importance of coordinating changes in government policy with regulatory and industry preparedness and the speed with which major changes are introduced.”

He was absolutely right—those things were not done, and thousands of hard-working people have had their lives ruined as a result.

The pension scams industry group has thought long and hard about this, and the pensions industry has every incentive to worry about the reputational damage that it suffers as a result of the impact of scams. If people cannot trust what will happen with their money they will not save. The industry group has identified red flags to assist in establishing whether the destination for a proposed transfer is likely to be a scam. It has suggested three main flags, any one of which, most people would agree, should mean that the transfer should not go ahead: first, if the receiving scheme is on the FCA warning list or some other internal list of schemes, entities or individuals of concern; secondly, if advice on the proposed transfer has been provided by firms or people who do not have appropriate regulatory permissions; and, thirdly, if the provider or self-invested personal pension operator is not registered with the FCA. The industry group has identified a number of other flags that may not in themselves show that the transfer ought not to go ahead, but do suggest that further checks need to be made before it does.

As I mentioned in my exchange with the Secretary of State, an amendment to the Bill was tabled in the other place to ensure that if a proposed transfer raised red flags it should not go ahead until the saver had taken financial advice. The problem graphically reported by the pension scams industry group is that only about a quarter of would-be scam victims would be deterred from proceeding after receiving advice telling them not to do so. The scammers win people’s confidence—they become their friends, as we heard in the Select Committee this morning. The scammers tell people, “Yes, they will say that, but that is because they do not want you to move your money.” People trust scammers until the moment they find their pension has gone.

I want to table a proposal enabling trustees to refuse to make the transfer altogether if one of the major red flags is raised. In my view—and I know that other Members support such an amendment—the statutory right to transfer conveyed in pension freedoms legislation should not apply in such cases. We heard this morning from scheme trustees not only that they had an obligation to transfer even if they knew perfectly well that the destination was a scam but that if they did not do it quickly enough they would be fined for not getting a move on under the arrangements that are in place. It is hard to argue that the statutory right of transfer should apply, for example, if the destination is a firm that is listed on the FCA warning list. If the trustees of a scheme know that a particular transfer is going to a firm that is on the warning list, they should surely not have a legal obligation, as they do at the moment, and will still have under the Bill, to hand the money over to crooks if the saver has taken advice but still, despite that advice, wants to go ahead. If the receiving firm is a above board, it must show that to the FCA and get itself off the warning list.

[Guy Opperman]

I am grateful to the Chair of the Work and Pensions Select Committee with whom I have had, I think, three separate meetings over the summer specifically to address this point. Clearly we are all keen to ensure that clause 125 and the powers within it address the issues that he rightly raises and that are of concern to fellow members of the Select Committee.

The right hon. Gentleman will be aware that I wrote to him yesterday and have given evidence in a more detailed document to the Work and Pensions Select Committee. With his permission, I will put both those documents in the Library of the House, so that all colleagues, including the hon. Member for Airdrie and Shotts (Neil Gray), have an opportunity to be aware of them. I am very happy to continue working with the right hon. Gentleman, and he will be well aware that the view of my Department is that the matters he raised can be addressed fundamentally by clause 125. The FCA has particular views of the red-flag list warning list point, but I am sure we can continue the dialogue.

[Stephen Timms]

I am extremely grateful to the Minister for those points and for the work that he has done, the responsive way that he has looked at the issue over the past couple of months and for the information that he has now provided. I will be very keen to hear from the Pensions Scam Industry Group whether it feels that the proposal that the Minister has now tabled will meet the points that it has been raising. However, I am grateful for the progress that we have been making on this issue and that will no doubt be further explored in Committee in the weeks ahead.

The determination by the pensions ombudsman in 2015 allowed trustees to decline a transfer request when there were concerns about a scam but the Hughes v. Royal London court case in 2016 overturned that determination and established that the trustees do have an obligation to go ahead even when they know the receiving scheme is a scam. That must be changed, and I am very encouraged by the Minister’s point that he believes that it will be possible to bring forward regulations under the Bill as it stands to have that effect. It is important that that change is made.

Mr R complained to the pensions ombudsman about the decision of the London Pensions Fund Authority and Newham Council, which is my local authority, to allow him to transfer his pension to the Gresham pension scheme. That transfer went ahead and he has lost his entire pension valued at £64,000. He has been awarded £1,000 in compensation since then. His view now is that the trustees should have refused to make that transfer but, under the 2016 Hughes v. Royal London decision, the trustees are legally obliged to go ahead with the transfer in a case of that kind. I think Mr R is right that the transfer that he requested should have been blocked by the trustees, and I very much hope that in future that will be possible. Very few people would today argue that the pension freedoms should be repealed but pension savers are entitled to expect protection. The change that I have described is designed to provide it.

My final point has been touched on by the shadow Secretary of State. Clause 123 was amended in the other place. As the Minister knows, there is very strong support for the amended clause on the part of current defined-benefit schemes, such as the railways pension scheme and the BT scheme, that remain open. If that amendment were to be removed, those schemes fear that they would be treated unfairly by the regulator and in the same way as schemes in very different circumstances. Their future would be threatened as a result. It could be the final blow for private sector defined-benefit schemes. There is great nervousness about the Minister’s intentions on that clause, as he well knows, and about the fact that if he removes the amendment, he may make those schemes unsustainable. I wonder if, in closing the debate, he might comment on his intentions on clause 123.

Social Security (Up-rating of Benefits) Bill

Stephen Timms Excerpts

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons
Thursday 1st October 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I agree with the case that the Secretary of State has made: that the Bill is needed because in all likelihood there will be no growth in earnings this year. In those circumstances, it is right for the Government to take the action needed, as we are doing this afternoon, to increase the state pension and linked benefits, including the standard minimum guarantee in pension credit.

Like other Members, I want to say a few words about pension credit, because it has proved a very effective tool for reducing pensioner poverty since it was introduced in October 2003. The hon. Members for Glasgow South West (Chris Stephens) and for Delyn (Rob Roberts) were quite right to ask about the take-up of pension credit. I heard the answer that the Secretary of State gave the hon. Member for Glasgow South West, and I would be interested to know what the outcome of those efforts has been. She made an interesting point about what the BBC has done. Does the Minister have any information on whether those changes have led to increased take-up of pension credit? The most recent figures, for 2017-18, show that only six in 10 of those eligible were claiming it, and only 70% of the total amount of pension credit that could have been claimed was in fact being claimed.

Beyond the measures in the Bill, it would be helpful to hear a little more about what further plans the Government have to tackle pensioner poverty. The Social Metrics Commission, chaired by the noble Baroness Stroud in the other place, estimated in its 2020 report that 1.3 million pension-age adults are living in poverty, and the Government’s own figures for pensioners living in relative poverty after housing costs is higher still, at 1.9 million.

The number of pensioners living in poverty had fallen substantially, thanks largely to the introduction of pension credit. However, as others have rightly reminded us, over the past five years or so those numbers have started to go in the wrong direction. That is reflected in the Social Metrics Commission’s measurements. The Joseph Rowntree Foundation—the hon. Member for Delyn drew attention to its “UK Poverty 2019-20” report—makes the point that:

“For years, pensioner poverty decreased across the UK, but now those that are single, have non-white ethnicity or have a landlord, are seeing increases.”

The hon. Member for Delyn quoted the troubling rate of pensioner poverty that we are seeing at the moment, with about 2 million UK pensioners living in poverty, with the highest rate of pensioner poverty in London, at 23%. The Bill will ensure that pensioners’ incomes rise during a period of no increase in earnings, or possibly even a fall in the value of earnings.

I welcome the fact that the Government are taking these steps, but it is not only pensioners we need to be concerned about, as other Members have mentioned already. What will the Government be doing for people of working age who are facing rising unemployment and loss of income? Is there a risk that, on its own, the Bill will exacerbate existing intergenerational unfairness? We are debating the Second Reading of the Social Security (Up-rating of Benefits) Bill, but there are some benefits up-rating matters that the Bill does not address. The Social Metrics Commission’s 2020 report estimated that 8.5 million people of working age are living in families in poverty, and concluded:

“The older you are, the less likely you are to be in poverty. 33% of children aged four and under are in poverty, compared to 23% of those aged between 40 and 44 and 10% of those aged 75 and over.”

The Select Committee, in its first report in this Parliament—on the DWP’s response to the coronavirus outbreak—welcomed the £20 a week increase in the rate of universal credit at the start of the pandemic. The Secretary of State has already referred to that increase, which was introduced to last for a year. The Committee recommended:

“now that the initial surge of Universal Credit claims has mostly been handled, the Department should immediately seek to increase the rates of relevant legacy benefits by the equivalent amount. This increase should be backdated to April 2020, as recommended by the independent Social Security Advisory Committee.”

Sadly, that recommendation on a unanimous basis by the Select Committee, and the recommendation by the Social Security Advisory Committee, have not been adopted by the Government. It is quite unusual for the Government to ignore a recommendation, which is largely technical in character, brought forward by the Social Security Advisory Committee. In their response to the Select Committee, the Government simply made the point that those other benefits

“were increased by 1.7% in April 2020 as part of the annual up-rating exercise”.

They went on to say that the Department has

“no plans to increase these benefits further at this stage.”

The Secretary of State does have the power to uprate those benefits at her discretion and I very much hope that she will.

I welcome the provisions in the Bill, but pensioners must not be the only people we are concerned about. We need to consider the interests of working age people as well. After such a long freeze in working-age benefits, there is a very strong case for making the £20 a week increase permanent, as was pointed out by over 50 organisations brought together by the Joseph Rowntree Foundation yesterday. The Select Committee has been reflecting on that in its current inquiry on the five-week wait for universal credit, on which we will be publishing a report in the coming weeks.

Whatever the Government’s conclusions on that, I put it to the Secretary of State at the Select Committee yesterday that it would surely be inconceivable for Ministers to cut everybody’s benefit by £20 a week in April before the pandemic was even over. The Secretary of State told me that she is still in “active discussions” with the Treasury over this subject. I suspect that everyone in the Chamber wishes her well in those discussions. We will certainly all be eager to learn the outcome.

Let me reiterate the call made unanimously by the Select Committee that the £20 a week increase should also apply to legacy benefits such as jobseeker’s allowance, and employment and support allowance. In our view, it is wrong to have a big discrepancy between the incomes of two people in otherwise identical circumstances based merely on the historical accident of which benefit they happen to be claiming. The rates were the same at the start of the pandemic; they should be the same now.

The main argument at the time for not increasing the legacy benefits was that it would take some time to implement on the rather creaking computer systems through which those benefits are administered. I understand the difficulty, but if work to do that had started in April, the increase could have been implemented around about now. There should certainly be no delay in getting on with implementing it now.

I welcome the measures in the Bill to address the uprating of benefits, but there are some other benefit uprating matters not in the Bill that also require urgent attention.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 14th September 2020 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Mims Davies)]

First, no one will get away with giving false information. Those who are found to have been abusing the system are subject to the full extent of our enforcement powers. The Child Maintenance Service will pursue those people where appropriate. Parents were asked to report any changes via the self-service portal to ensure that receiving parents did not lose out in the long run. Cases will be updated and people will be notified of any changes. Where payments have been missed, the service will take action to re-establish compliance and collect any unpaid amounts that have accrued.

[Stephen Timms (East Ham) (Lab)]

The National Audit Office told the Work and Pensions Committee two weeks ago that the “sophisticated” analysis of the Trussell Trust has established an association between universal credit roll-out on the one hand and rising food bank demand on the other. Association is not the same as causation, so what plans do the Government have to commission research, as the National Audit Office recommends, into the impact of universal credit on food bank demand?

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I thank the Chairman of the Select Committee for his question. As he knows, I gave evidence to the Committee recently on this very matter. I have worked closely with food bank providers—the Trussell Trust and others—over the course of the pandemic to ensure that our support has got to those who need it quickly. We continue to better understand the reasons for food insecurity. That is why we have put additional questions in the family resources survey. We keep all policies under review, and of course we listen to the findings of reports such as that of the Trussell Trust.

Kickstart Scheme

Stephen Timms Excerpts

Thursday 3rd September 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I opposed the closure of the future jobs fund in 2011. The Work and Pensions Committee, in its report in June, highlighted what a great job that scheme did 10 years ago, and I warmly welcome and applaud its return. Will the Secretary of State encourage charities, as happened last time, to take full advantage of the scheme, because they can create jobs that will give many young people a great start to their working lives? What will she do to ensure that disabled young people can take full advantage of it? Will she ensure the collection of sufficient data to allow a thorough evaluation subsequently, like the one published by her Department in November 2012?

[Dr Coffey]

I welcome the endorsement of the Select Committee Chairman. He will recognise some similarities to the future jobs fund, but ours is a much more ambitious programme and we are opening up more gateways into making sure that young people can access work and support. Of course the scheme is open to charitable organisations, which have been part of aspects of our engagement in considering the design of the programme and can be a very useful source here. My ministerial colleague in the Lords, Baroness Stedman-Scott, has great experience from her previous organisation and is already being an active ambassador with not only a variety of companies but other institutions, as is the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Mid Sussex (Mims Davies).

Oral Answers to Questions

Stephen Timms Excerpts

Monday 29th June 2020 Commons Chamber

[Will Quince]

Our focus today is rightly on what the Government can do to support people financially through these unprecedented times. However, our broader ambition remains to build an economy that ensures that everyone, no matter their background, has opportunities to enter and progress in work where possible, while being supported by the welfare system in their time of need. I just gently remind the hon. Gentleman that, in this financial year, we have spent more than £120 billion on benefits for working-age people.

[Stephen Timms (East Ham) (Lab)]

I welcomed the Minister’s confirmation last week of no appeal in the universal credit court case that the Department lost, but has he yet grasped the full scale of the problem that that issue has raised? He said in the House last week that, at most, 1,500 people were affected and suggested that 85,000 was a figure that had come from the Opposition. I wonder whether he has now had the chance to see that that 85,000 figure comes from the decision of Lady Justice Rose in the Court of Appeal last week. Did he also see that Lord Justice Underhill said:

“It is not simply a matter of uneven cash-flow…affected claimants will receive substantially lower payments”.

[Will Quince]

I answered an urgent question on this matter on Thursday for some 45 minutes, as the right hon. Gentleman has mentioned. I confirmed that we would not be appealing the decision of the court. As I made clear to him, I am now considering options to address the issue and will keep the House updated on progress. The 85,000 figure, which he references, from the judgment, came, in my understanding, from the Opposition. It is referenced in the judgment, but it came from the Opposition and we do not recognise those figures.

Universal Credit: Court of Appeal Judgment

Stephen Timms Excerpts

Thursday 25th June 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on her Department’s response to the decision of the Court of Appeal of 22 June 2020 in the case Johnson, Woods, Barrett and Stewart v. the Secretary of State for Work and Pensions.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

I can today confirm my Department’s intention not to appeal against the judgment of the Court of Appeal of 22 June 2020 in the case of Johnson, Woods, Barrett and Stewart v. the Secretary of State for Work and Pensions. The judgment relates to an appeal made in January 2019 by the Department against the High Court decision.

As we told the court, identifying claimants is hard; it is a difficult issue. To date, we are aware of around 1,000 claimants who have disputed their earnings and fall within the relevant cohort. We are looking at how we can further identify people in this group. I stress that many people affected by two salary payments will not suffer a financial loss, as their universal credit award will increase in the following month to balance the reduction. However, we do recognise the budgeting issues that may have been caused, and we are now assessing the remedial options. That is not straightforward—it is not the simple click of a switch—particularly at a time when the Department is focused on meeting the challenges of unprecedented demand for its services.

I hope Members will appreciate that as the judgment was passed down on Monday, it would be remiss not to afford more consideration before we press on, particularly when the Court has not called for immediate action. We will now begin the process of carefully considering possible solutions, and we will keep the House updated as progress is made. There are, however, immediate actions that can be taken. We are already working closely with Her Majesty’s Revenue and Customs to work with employers on how to report their employees’ earnings correctly. HMRC has issued updated guidance for employers which, if followed correctly, will further reduce the small numbers affected.

[Stephen Timms]

Thank you very much, Mr Speaker, for granting this urgent question.

If a universal credit claimant is in work and is paid monthly, but those monthly payments do not align precisely with universal credit months—for example, if the claimant works for the NHS and gets paid on the last day of every month—that claimant will, from time to time, be paid twice in a single universal credit month. The universal credit computer system treats that claimant as if they had had a 100% pay rise; their benefit is cut, quite likely to zero; they have to reapply for the benefit; and their income is severely disrupted.

One of those involved in this case says that she was more financially stable out of work than in work. Another turned down an NHS job for which she was expertly qualified because she knew that universal credit would wreck her finances. Surely, nobody will dispute the view of the Appeal Court that the policy is “irrational”. I am grateful that the Minister has accepted the inevitable and is not going to be paying out for even more expensive lawyers to appeal the case. Surely the Department should have given up the fight last year, not waited until the Appeal Court reached this conclusion.

May I ask the Minister to tell us more about how many people are affected? I think the Court heard figures of around 80,000. It is a very significant problem for a lot of claimants. In his keeping the House updated—I am grateful to him for his assurance on that—will he tell us much more about the numbers who are affected, and will he fix the universal credit computer system as soon as possible?

[Will Quince]

I thank the right hon. Gentleman for his question and the constructive way in which he has put it. I will, of course, keep him updated as the Chairman of the Work and Pensions Committee as our work in this area progresses.

The case was before my time as a Minister, but several legal points were considered, and it was on only one of those points that the Department lost. We face and recognise the decision of the Court, and we recognise that some people may face budgeting difficulties. That is why we are working as quickly as we possibly can to identify the solutions and to address the matter in line with the court order.

The scope of this case is limited and we believe the cohort, as I briefly mentioned, to be in the region of 1,500, but I am looking to identify that claimant cohort very carefully. I understand that fewer than 1,000 UC claimants have notified us over the past 18 months that they may be affected by this, and it is important to keep that in the context of the 5.2 million claimants to universal credit.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 11th May 2020 Commons Chamber

[Will Quince]

I thank the hon. Gentleman for his question. We have increased the universal credit and working tax credit standard allowance by more than £1,000 a year, and we have increased local housing allowance rates, putting an average of £600 into people’s pockets. On the benefit cap, it is important to stress that those with sustained work records may benefit from a nine-month grace period in relation to the cap. Exemptions continue to apply, and I feel many people would agree that the equivalent of £24,000—or £28,000 in London—is fair and reasonable.

[Stephen Timms (East Ham) (Lab) [V]]

From the 1940s on, we had a social security system based on handwritten forms that was capable of making the first regular benefit payment within a few days of a person applying; now, after the Government have spent several hundred million pounds on what we were assured was agile technology, that job takes five weeks. That long delay is the main reason why people on universal credit are so much more likely to need a food bank than people on the legacy benefits. Surely the Minister must recognise that that problem must be fixed.

[Will Quince]

I thank the right hon. Gentleman, the Chair of the Work and Pensions Committee, for his question. He knows that we introduced an agile, dynamic online system because the legacy benefits system, which was largely paper-based, was fraught with issues and errors. That is why we moved over. Notwithstanding the points that he has made, I stress that the previous, paper-based system, which relied on face-to-face contact, would not have coped in this situation. It is because of universal credit that we have been able to process more than 2 million claims since mid-March.

Covid-19: DWP Update

Stephen Timms Excerpts

Monday 4th May 2020 Commons Chamber

[Dr Coffey]

The UC approach remains the same: we make an assessment of people’s incomes, and those already on UC whose income fell substantially will have seen their UC payment increase as a result. So it is working for new claimants once they have got through the initial claim. That is straightforward. I appreciate that there were difficulties early on in getting online identity verification, but the process should be very smooth now, and for those people who cannot make ends meet the advance option is there, and people can get that money very quickly.

[Stephen Timms (East Ham) (Lab) [V]]

I join the Secretary of State and others in commending the Department’s staff for handling the recent surge. I also welcome higher UC, working tax credit and local housing allowance, and it sounds from the Secretary of State’s earlier answer that she agrees that jobseeker’s allowance and employment and support allowance should have been increased as well; it is unfair that they have not been. The unchanged benefit cap is now blocking increased support the Government have decided people should receive, and that is having a particular effect in London. It could be increased, so will the Government now be more consistent in supporting people’s extra costs during this crisis?

[Dr Coffey]

I should point out to the right hon. Gentleman that we were trying to make a short-term increase, we went through with the Treasury how we could do this quickly, and the quickest ways were by increasing the local housing allowance and UC, rather than other benefits, as I have mentioned. On the situation in London, I am conscious that aspects of the housing benefit regulations went through a month ago, but not all councils have applied them. What we have done with the thresholds means that people in London should be able to see an increase in the amount of money they get in housing support, but otherwise it is not the Government’s intention to change the current threshold of the benefit cap.

Statutory Sick Pay and Protection for Workers

Stephen Timms Excerpts

Wednesday 18th March 2020 Commons Chamber

[Justin Tomlinson]

Let me make a little progress, because I think I am about to cover some of the things being asked about. I promise that I will take more interventions.

Extraordinary times call for extraordinary measures, which is why we have extended statutory sick pay to those who are self-isolating in line with the latest Government health guidance. The guidance is available online on gov.uk and ensures that eligible individuals, whether they are sick or self-isolating, will be entitled to statutory sick pay if they are unable to work because they are following Government advice.

The upcoming emergency Bill will mean that for people affected by coronavirus, statutory sick pay will be payable from day one, instead of day four, and currently it will be backdated to 13 March. We removed those waiting days to get support to people as quickly as possible. These are crucial measures to ensure that employees do not attend work when they should stay at home to help to keep themselves and others safe. The circumstances are exceptional and we urge employers to do the right thing, use their discretion and respect the medical need to self-isolate.

Statutory sick pay is a legal minimum, and employers can offer more. Where possible, employers should support their employees to work from home to help to slow the spread of the virus. If employers do feel the need to require evidence, people who are advised to self-isolate for coronavirus will soon be able to obtain an alternative to the fit note by contacting NHS 111 rather than visiting a doctor. We are all aware of the need to protect GP surgeries so that they can concentrate on key areas of work.

Accordingly, the Government will ensure that businesses are supported to deal with the temporary economic impact of the outbreak of coronavirus. Small and medium-sized enterprises are at the heart of our economy, symbolising the hard work and enterprising spirit of our nation. To support such employers with the increased costs of sick pay, the emergency Bill will provide that employers with fewer than 250 employees can reclaim up to two weeks’ statutory sick pay for sickness absences related to coronavirus. That includes those who are required to self-isolate in line with Government guidance. The measure could provide more than £2 billion of support for up to 2 million businesses, and will be crucial to ensure that our economy keeps running.

The measure on statutory sick pay is in addition to others to support businesses that were outlined by the Chancellor yesterday: £330 billion of Government-backed and guaranteed loans; additional cash grants of up to £25,000 for businesses in the retail, hospitality and leisure sectors with a rateable value of less than £51,000; and cash grants of £10,000 to 700,000 of our smaller businesses. The Government will do whatever it takes to support our economy.

Of course, not everyone is eligible for statutory sick pay, which is paid by employers. Gig workers and those on zero-hours contracts may be entitled to sick pay, and should check with their employer, but millions of hard-working people who are self-employed or in the gig economy will need our help, too. That is why we are making it easier to access benefits during this period.

The shadow Secretary of State talked about disability benefits and the announcement that we made earlier this week. The first decision was to remove face-to-face assessments, because we recognise that a significant proportion of those who could be claiming disability benefits are vulnerable. We want to avoid them needing to travel unnecessarily and to sit in busy waiting rooms, so we decided to stop face-to-face assessments. However, we do not want to stop new people gaining access to the support that they are entitled to, so we are seeking to continue to do paper-based and telephone reviews, but prioritising those who are new claimants, and looking at the workforce on a daily basis.

[Stephen Timms (East Ham) (Lab)]

I very much agree with the policy that the Minister is setting out. Will he clarify the intention for reassessments? He will know that Mind and one or two others have suggested that reassessments ought not to go ahead at the moment, partly because it is very difficult for people to get medical evidence in support of their reassessment claim at a time when doctors are very busy with something else.

[Justin Tomlinson]

I absolutely understand that point, and the right hon. Member and I discussed it when we first made the announcement. The absolute priority has to be new claimants who are seeking to get support through the disability benefit system, so we are looking on a daily basis at what we can do. I do not envisage that we will be able to do much beyond that, but I want to make sure that new claimants can get support. That was why, at the beginning of my speech, I paid tribute to the fantastic work of those who are working on the frontline, who—like all people—are anxious about events, but are still, when they can, coming in to make sure that the vulnerable people in society can access the support that they are entitled to.

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[Stephen Timms (East Ham) (Lab)]

The hon. Member for Airdrie and Shotts (Neil Gray) mentioned in passing that the Work and Pensions Committee met this morning. We took evidence from five organisations: the Royal National Institute of Blind People, Mind, Scope, Citizens Advice and the Zacchaeus 2000 Trust representing the Disability Benefits Consortium. The main purpose was to take evidence about disability benefit assessments, but of course we took the opportunity to raise some of the current issues that we are discussing in this debate. I thank the members and staff of the Committee, and the witnesses from all those organisations, for being willing to take part in that useful session this morning, despite the current difficult circumstances.

I welcome the announcements that the Government have made. As the Minister for Disabled People, Health and Work, the hon. Member for North Swindon (Justin Tomlinson), has recognised, there is going to be a good deal more to do to protect individuals through this very difficult time; that is underlined by the examples from other countries that we have heard today. I very much hope, with others, that those additional announcements will happen very soon because we need them very fast.

I want to raise a couple of issues about universal credit. I put the point to the Chancellor yesterday that somebody who is self-employed and who self-isolates very often will have to forgo their income as a result. The advice is to apply for benefits, but if people apply for universal credit, they do not get any help for the first five weeks other than a loan that has to be repaid. It seems to me that people in that position are not going to be willing to give up their income if all they are going to get is a loan.

In answering my question, the Chancellor correctly said that people can apply for the new contributory employment and support allowance. I welcome the fact that that is now available not only to people who are sick, but to people who are having to self-isolate because others in their household are sick. However, as the Minister will recognise, there are going to be quite a lot of people in that position who do not meet the contribution criteria for ESA because they have not paid 26 weeks’ worth of contributions, having earned above the lower earnings limit, within the last two years. The only opportunity those people will have is to apply for universal credit. However, if they only get a loan, many will feel that they have no alternative but to carry on working—even though they know that they really ought to self-isolate.

The attraction of the proposal made by the hon. Member for Airdrie and Shotts—and which has been made by Citizens Advice and others—is that these advances should be made as non-repayable grants for the duration of this crisis. That is something that the Department could readily do. I recognise that expecting the Department very quickly to make big changes to its IT systems for supporting universal credit may not be practical, but it could quickly make the advances non-repayable.

I am pleased to see both the Minister for Disabled People, Health and Work and the Under-Secretary of State for Work and Pensions, the hon. Member for Colchester (Will Quince), on the Front Bench. They are very familiar with the Select Committee’s concerns about the five-week delay in universal credit anyway. There is growing evidence—including a striking article published in The Lancet this month—that people are being pushed into clinical depression due to being on universal credit rather than on legacy benefits. The Trussell Trust has found that many more people on universal credit need to go to a food bank compared with those on the predecessor benefits. Looking at what it is about universal credit that is causing those problems, the only big structural issue is the five-week delay. As the Ministers know, the Work and Pensions Committee will shortly begin an inquiry on that particular topic. That is a broader issue but, for the duration of the crisis, there is a powerful case for making the advances non-repayable.

I appreciate that this will not be the case everywhere, but it is the case in constituencies like mine. There are many working families who have leave to remain in the UK but do not yet have indefinite leave to remain. They are on what is called the 10-year pathway to securing indefinite leave, which means that every two and a half years they have to apply again for leave to remain. If they are working, they obtain leave to remain, but—I do not know whether this is universal, but it is certainly the case for a lot of my constituents—the card they receive making it clear they have leave to remain and are permitted to work in the UK also says they have no recourse to public funds. They are not allowed to claim any benefits at all, which in the current circumstance puts them in an extraordinarily difficult position. They are not allowed to claim ESA or universal credit at all. If they are in a position where they should self-isolate in accordance with the Government’s guidance, they will find that they suddenly have no income at all if they self-isolate.

There is a related issue with the habitual residence test, which is often applied, perfectly properly, to make sure people are habitually resident in the UK and are therefore entitled to benefits. I wonder whether there is a case for suspending the test, at least in some circumstances, because we want those who are working to be able to self-isolate when it is important that they do so. If they do not have access to public funds for one of those two reasons, they will find it practically impossible to self-isolate. I hope the Ministers and their Home Office colleagues will look at that.

Citizens Advice has argued that there should be a temporary repayment pause for claimants, which is a strong point in the current crisis. People currently have to repay their universal credit advances, or perhaps their past tax credit overpayments, through their universal credit, so there is a case for suspending those repayments.

The Minister for Disabled People, Health and Work said in his opening speech that “Everybody will be supported to do the right thing.” He is right to underline the importance of that but, as things stand, those who do not have recourse to public funds, because they do not meet the requirements of the habitual residence test, will not be supported to do the right thing, and it is very important that they should be.

In his Budget statement, the Chancellor said he is

“temporarily removing the minimum income floor in universal credit.”—[Official Report, 11 March 2020; Vol. 673, c. 280.]

When we came to read the Budget documents, we found that the position, as the Minister set out a few minutes ago, is that the removal applies only to those directly affected by covid-19 or by self-isolation according to Government advice. I think the Government should stick with what the Chancellor of the Exchequer actually said, which is that the minimum income floor will be suspended altogether, because a lot of self-employed people—my hon. Friend the Member for Harrow West (Gareth Thomas) gave us such an example—will see a big fall in their income because of what is happening in the wider economy, not because they are directly affected, as yet, by covid-19. Universal credit provides an opportunity to increase support where their income from self-employment falls. That could work very well, I think, if the minimum income floor was suspended altogether, as the Chancellor of Exchequer appeared to indicate would be the case in his Budget speech last week. I do hope that that will be looked at again, that the caveats that have been added to that commitment since might be taken away, and that the minimum income floor will be suspended altogether for self-employed people for the duration of this crisis.

I echo the point that was made a few moments ago by the hon. Member for Airdrie and Shotts (Neil Gray) about the tax credit disregard. As things stand at the moment, if someone’s income falls by less than £2,500, their tax credits do not increase at all. There is, in the tax credit system, a mechanism that can be used to provide people with help when their income falls, but to get the full benefit of that we would need to remove that £2,500 disregard. I appreciate that that is a matter for the Treasury, rather than for the Department for Work and Pensions, but I hope that it will be done.

Statutory sick pay is a big focus for this debate. The Government consulted last summer on extending statutory sick pay to those who are lower paid—to those who are earning below the current threshold—but the Government have not yet responded to that consultation, which was carried out several months ago. Surely now is the time to act. It was proposed then that statutory sick pay should be paid to people earning less than the lower earnings limit at 80% of their wage. That, I think, was the proposal on which the Government consulted. This is surely the time to fast-track that proposal—to bring it forward and put it in place. I appreciate that it will need legislation to do that, but it is very important that it is done, and I hope that it can be picked up in the legislation that will be published tomorrow.

[Stephen Kinnock (Aberavon) (Lab)]

On this point about statutory sick pay, there are two additional points on which the Government really do need to act. One is that this should be done in advance, up front, rather than making businesses reclaim, which is putting massive pressure on them. The other is that it is vital for the self- employed. Businesses in my Aberavon constituency are really under the cosh and they need both of these measures to be included in the rethink on statutory sick pay.

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[Stephen Timms]

My hon. Friend makes a couple of very important points. I very much agree with him on the first, but on the second, my understanding is that self-employed people in this position can apply for this new employment and support allowance if they meet the contribution conditions, which, of course, some will not. That is where universal credit needs to be changed. One of those routes is likely to be a solution for them, rather than statutory sick pay, because that depends on there being an employer in place.

My final point is about the argument that has been made by many, and I am sure that will be made again in this debate, that the overall level of benefits should be higher, at least for the duration of this crisis, than it has been up until now. I just want to make one argument in favour of that proposition. We always say, and we have said it on both sides of this House, that work is the best route out of poverty, and the system is designed to encourage people to seek and find work but, at the moment, there are lots of people—and it will be a growing number over the coming weeks—whom we do not want to work. We do not want to force people into jobs. For many, the position will continue to be the same in the next few weeks as it has been in the past, but there is this large and very important group whom we really do not want to be working, and we want them to be at home. That, in particular, makes the case for Ministers who are looking temporarily at raising the levels of benefits—statutory sick pay and universal credit and the others.

I welcome what the Minister said about the suspension of face-to-face assessments

for disability benefits. I think he suggested that, in practice, his Department will not conduct reassessments for disability benefits either. If that is the practical reality, it would be helpful if he stated that explicitly. I think that would be reassuring to a lot of people who are in receipt of disability benefits at the moment and expect to have to be reassessed in the next few months. That is always quite an anxious time for people in that position. If the reality is that they will not be reassessed for several months because everybody is busy with everything else, it would be helpful for that to be made explicit so that reassurance can be provided.

Of course, if it turns out that there are ways of doing the new assessments that do not require face-to-face meetings, and if that works well for new applications, hopefully lessons can be learned for the system in the longer term. However, if it was possible to make it clear that there will not be any disability benefit reassessments in the next few months, I think that would be widely welcomed.

[Several hon. Members rose—]