Pension Freedoms

Stephen Timms Excerpts

Wednesday 6th July 2016 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

It is a pleasure to serve under your chairmanship this morning, Mr Gray. I thank the hon. Member for Leeds West (Rachel Reeves) for setting out her case. She speaks with considerable experience, given that she was the shadow Work and Pensions Secretary. I am glad to see the right hon. Member for East Ham (Stephen Timms) also joining us for this debate.

Pension freedoms, which have been widely welcomed, have raised interest and engagement in pensions significantly. The freedoms give people the opportunity to take responsibility for their own retirement. In the first nine months we saw nearly 540,000 pensions being accessed. People are clearly taking control, but, as the hon. Member for Leeds West said, they need to do so after receiving the appropriate information at the right time so that they can make decisions that suit their circumstances.

The Government recognised that in order for people to make the most of the new freedoms they needed to equip them with the tools to make decisions that suit their circumstances, so Pension Wise was launched. This service provides free and impartial guidance to those aged 50 and over to help them to understand what they can do with their defined-contribution pensions following the reforms. I am happy to say that it has been very successful. I hope to give some information to the hon. Lady during the course of this debate that will give her some comfort.

[Stephen Timms (East Ham) (Lab)]

I agree that Pension Wise is providing a good service, but does the Minister acknowledge that, as my hon. Friend the Member for Leeds West (Rachel Reeves) pointed out, take-up of the service has been very low? In my area there is certainly evidence of skilled advisers sitting around twiddling their thumbs quite a lot of the time because the demand has not yet come through.

[Mr Vara]

The right hon. Gentleman makes a good point. I accept that we have more to do. I hope my comments will give him and the hon. Lady some assurance that we are doing things and we recognise there is more to be done. The hon. Lady referred to the number of appointments—73,000 so far—but 2.7 million visits have been made to the Pension Wise website. It is important to look at the two together, rather than just the appointments, because the information provided in the appointments is all available on the website. Many people are accessing the website and finding that they do not need an appointment. That needs to be borne in mind.

I appreciate that, as the right hon. Gentleman said, there is concern about take-up. It is important to remember that the service is not compulsory for everyone who wants to access their pension pot. Using Pension Wise is a voluntary option and people should be given the choice to plan for their retirement in the manner they see fit. However—I emphasise this point—it is important that people know the service is there to support them if they wish to use it.

Pension Wise has already run three national marketing campaigns across TV, radio, print and digital media. Those campaigns complement the current requirement for all pension scheme providers to signpost to Pension Wise whenever a wake-up pack is sent out to a member.

[Stephen Timms]

I am grateful to the Minister for giving way again. As he said, Pension Wise is a voluntary service. Has he noticed the point made by the Association of British Insurers that guidance for people transacting in the secondary annuity market, where the pitfalls are particularly troubling, should be mandatory?

[Mr Vara]

The right hon. Gentleman raises another good point. This is something we are looking at, although he will forgive me for not making any instant decisions. The secondary market is a broad market, with a huge amount of rules and regulations. We started with the initial concept of providing access to pension pots. That is now leading to other issues that rightly need to be looked at, but he will forgive me if I do not comment on those right now.

We have had three national awareness campaigns and we are working on a fourth. This is not an area where we feel we have done enough. There is more to do and we recognise that. The subject of pensions is complex and the Government recognise that there is more to be done.

Last year we consulted on how the provision of free, impartial financial guidance could be structured to make it more effective. The review confirmed that the current guidance offer can be confusing to the public. There is also an overlap in some services. That is why we have consulted on our plans to restructure the delivery of public financial guidance to make it more effective, by directing more funding to the frontline and providing more targeted support.

The latest consultation outlined our proposal for a new guidance model, which involves setting up a new pensions guidance body where individuals can get all their queries on private pensions answered in one place. There will also be a new, slimmed down money guidance body, to ensure people can access the debt advice and money guidance they need. The two bodies will work together to ensure that people who need both pensions and wider financial guidance are directed to the right place. The consultation ended last month and we are currently considering all the responses with a view to publishing our response this autumn.

Most people who seek information on pensions do not distinguish between guidance and advice; they simply want help. Regulated advice will be appropriate for some people, so there is still a need to make sure that affordable and accessible financial advice is available for those who want it. That is why the Government intend to consult, over summer 2016, on introducing the pensions advice allowance, whereby individuals will be able to withdraw up to £500 tax-free from their defined-contribution pension pot to redeem against the cost of financial advice before the age of 55.

Employees often look to their employers for help when it comes to pensions. To further encourage employer involvement, the Government will increase the current £150 tax and national insurance contributions relief to £500 for those employers who arrange pension advice for their employees. It is our view that that proposal and the pensions advice allowance could be complementary, so it would be possible for those who are able to use both to access up to £1,000 of tax-advantaged advice. Such initiatives can give people an understanding of their options, but no one knows their customers better than the pension providers themselves, and I know that organisations within the industry are starting to look at new and innovative ways of engaging with their customers. I hope we can work with the industry so that information and guidance is provided in a way that meets the individual’s needs.

The hon. Member for Leeds West spoke eloquently of the need to increase the take-up of Pension Wise. As well as the fourth awareness campaign that we are working on, Pension Wise delivery partners also promote the service locally in businesses and libraries, for example. A concern was also raised about getting proper advice. Pension Wise offers guidance on how to spot a scam, how people can protect themselves and what to do if they think they have been scammed, on its website and in appointments. If someone suspects they have been scammed, the service will signpost them to the Pensions Advisory Service and Action Fraud. In addition, Pension Wise is a member of Project Bloom and works with other members to raise awareness of scams.

The right hon. Member for East Ham spoke about the secondary market. I can tell him that Pension Wise guidance will be available to those selling their annuity, once the market launches in April 2017.

[Stephen Timms]

I thank the Minister for that answer. May I raise one other issue with him? The ABI says that it

“would like to see the new guidance arrangements enhanced so that providers who want to block transfers to protect their customers (because of concern about the receiving scheme) can refer their customers to the new body to receive impartial guidance on the risks from transferring funds to potential scams and fraudulent investments.”

Is that proposal from the ABI also something that he is reflecting on?

[Mr Vara]

Let me assure the right hon. Gentleman that we are keen to make sure that this works. We are not in any way restricting the stakeholders with whom we speak. We are working with all of them, including the ABI and a whole host of other organisations and people, to make sure that whatever guidance and regulations we put in place are right. We want to get it right as best as possible first time round. I assure him that we are very much taking on board the views of others out there.

To conclude, the hon. Lady was right to raise this important issue. I thank and commend her for doing so.

Question put and agreed to.

Oral Answers to Questions

Stephen Timms Excerpts

Tuesday 8th March 2016 Commons Chamber

[Mr Vara]

The hon. Lady refers to a recent case. She will be aware that the court did confirm that the Lord Chancellor has the power to set domestic violence evidence requirements. As for the other issues, we are considering the outcome of the case and will clarify our decision on the way forward in due course.

[Stephen Timms (East Ham) (Lab)]

In his latest annual report, the Lord Chief Justice makes an astonishing admission. He said:

“Our system of justice has become unaffordable to most.”

Does the Minister accept that that is a wholly unacceptable state of affairs?

[Mr Vara]

May I say to the right hon. Gentleman that we work very closely with the senior judiciary? On access to justice, he knows only too well that, despite the reductions that we made to the legal aid budget, it remains, at £1.6 billion, one of the most generous legal aid budgets in the world.

--- Later in debate ---

[Andrew Selous]

I have listened carefully to what my hon. Friend has said, and we will give careful consideration to any transfer application from his constituent that is referred to us by the US authorities.

[Stephen Timms (East Ham) (Lab)]

T5. It surely cannot only be Opposition Members who are dismayed that, to quote the Lord Chief Justice again: “Our system of justice has become unaffordable to most.”Has the Secretary of State discussed this dreadful situation with the Lord Chief Justice, and is there a plan to do something about it?

[Michael Gove]

I have discussed this issue with the Lord Chief Justice, the Master of the Rolls and other members of the senior judiciary. It is a complex matter. One of the key things that is problematic is the level of costs in the justice system, and we need to bring about reform, particularly to the civil justice system. That is why the report by Michael Briggs, which lays out particular reforms, including more justice being transacted online, is a powerful way forward, but much remains to be done.

Oral Answers to Questions

Stephen Timms Excerpts

Tuesday 26th January 2016 Commons Chamber

[Mike Penning]

One of the ways in which we can improve the situation for prison officers is by listening to them. They categorically asked for the ban. At the moment such substances are legal, but they will be banned once the Psychoactive Substances Bill receives Royal Assent, so from April possession in prisons will be a criminal offence. That is what prisoner officers asked for, and that is what we have given them.

[Stephen Timms (East Ham) (Lab)]

5. What steps he is taking to ensure that access to justice does not depend on ability to pay.

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

We are committed to ensuring that our justice system delivers faster and fairer justice for all our citizens. Reform of our courts and tribunals will bring quicker and fairer access to justice and create a justice system that reflects the way people use services today. We have also ensured that legal aid remains available for the highest priority cases, for example where people’s life or liberty is at stake, where they face the loss of their home, in cases of domestic violence, or where children might be taken into care.

[Stephen Timms]

The result, as the Lord Chief Justice extraordinarily reported two weeks ago, is that:

“Our system of justice has become unaffordable to most”.

Two constituents were sacked unfairly. One went to tribunal but was unable to afford legal representation and therefore lost. The other immediately gave up. With justice now available to only the well-off, does the Minister have any serious proposals to open up access to justice to ordinary people?

[Mr Vara]

I am grateful to the right hon. Gentleman for raising the issue of employment tribunals, because it allows me to say that this Government’s aim is to ensure that people do not have to go to court or tribunal in the first place, and therefore do not have to incur the legal expenses or experience the stress. In the case of employment tribunals—he might not be aware of this—the ACAS early conciliation service, which is free, was used by 83,000 people in its first 12 months. I very much hope that when constituents bring problems to his surgery in future, he will point them towards that free service.

State Pension Age (Women)

Stephen Timms Excerpts

Thursday 7th January 2016 Commons Chamber

[Nick Thomas-Symonds (Torfaen) (Lab)]

I commend the hon. Member for Paisley and Renfrewshire South (Mhairi Black) for securing and opening this debate. It is perhaps an irony, however, as we are discussing pensions, that she is further from retirement age than any other Member of this House. I also want to pay a warm tribute to WASPI on its campaign and the dignity with which it has conducted it. It is a measure of the campaign’s success that every Member of this House knows the meaning of the acronym WASPI. I also pay tribute to the other groups and individuals who have been advocating the cause of women born in the 1950s.

The level of interest in this debate is summed up by the fact that we have had 26 Back-Bench contributions from Members from all parts of the United Kingdom. I want to pick out two contributions: that of my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), who has done so much work on this in recent years, and that of my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), whose deep commitment to this is known across the House.

I also want to pay tribute to my Labour colleagues who in 2011, when the Pensions Act was going through this House, pressed the issue of transitional provisions as hard as they could. It is a shame the Government did not listen to many of our proposals set out at the time.

[Stephen Timms (East Ham) (Lab)]

At that time, the Secretary of State said in debate said he would consider transitional protection. Has my hon. Friend seen any evidence of that consideration being given?

[Nick Thomas-Symonds]

That points to what has happened here. In previous debates on this matter the Minister has talked about the cap on the increase being reduced from 24 to 18 months, but that was as far as it got, and we see the Government today have no positive proposals. They keep asking the Opposition about their proposals, but it is the Government whose mind has gone completely blank on this issue.

Let us not forget the fundamentals of this debate. Many women born in the 1950s will have started their working lives without even the protection of the Equal Pay Act 1970. Many of those women will have been paid at a lower rate than men for no reason other than that they were women. The gender pay gap is at its widest for many of the women under discussion today. Also, let us not forget the time that many of them took to work part-time or bring up children when they have not even had the chance to contribute to occupational pensions.

The Pensions Act 1995 increased the state pension age from 60 to 65 for women between April 2010 and 2020, to bring it into line with the state pension age for men, but the coalition Government moved the goalposts. They decided to accelerate the increase in the women’s state pension age from April 2016 so that it reached 65 by November 2018. As my right hon. Friend the Member for East Ham (Stephen Timms) has pointed out, in the Second Reading debate in this House on 20 June 2011 the Secretary of State made it absolutely clear that the Government would “consider transitional arrangements.”

The much vaunted reduction in the cap—capping the maximum increase at 18 months—that the Minister has pointed to in recent debates simply is not enough. Do the Government understand the anger at the fact that more transitional provisions have not been considered—over 100,000 signatures for a debate in this House, the online campaign and the great response to it in the media? Recently I was told by the Sunday Post that a feature on this subject brings an unprecedented response from the hundreds of thousands of women who are affected.

Let us ask ourselves what the Pensions Minister in the coalition Government at the time thinks. This is what he told the Institute for Government:

“There was one very early decision that we took about state pension ages, which we would have done differently if we’d been properly briefed, and we weren’t.”

He added:

“We made a choice, and the implications of what we were doing suddenly, about two or three months later, it became clear that they were very different from what we thought.”

He then said:

“So basically we made a bad decision. We realised too late. It had just gone too far by then.”

Welfare Cap

Stephen Timms Excerpts

Wednesday 16th December 2015 Commons Chamber

[Owen Smith]

I thought I was doing rather better than that. I thought the House might enjoy a bit of Christmas spirit.

The real crime that Macavity is hiding from today is not the breach of the welfare cap, however embarrassing that may be. The real larder that has been looted is universal credit. Opening the debate, the Minister said several times that the Government would meet the welfare cap in 2019-20 and he is right that the OBR confirms that, but he signally failed to tell the House how they would do it. I suspect that that is because of the other reason that the Secretary of State did not wish to address the House today. We know precisely how he will meet the cap: through the £10 billion cut to the work allowance that we will see by 2020; a cut of £3 billion a year, nearly making up for the £3 billion that was to be taken away in tax credits, butchering the work incentives that are supposed to make universal credit worth while.

Who are the victims of this crime? The Secretary of State is for one, because he has had his budget raided once more—the seventh time, I believe. However, the true victims are the millions of constituents in Labour and Tory seats who will still lose thousands of pounds as a result of the Chancellor’s cut to universal credit. Some 500,000 people will be on UC by next April, and according to the independent Institute for Fiscal Studies, 2.6 million households will lose £1,600 by 2020. They are the victims of this crime, the people who are paying for the Chancellor’s hubris with £3 billion of their own money in 2020 and every year thereafter. They are the people being fleeced by the postcode lottery that is being created in support for low-wage workers, whereby those lucky enough to stay on tax credits will be massively better off than their neighbours on universal credit.

A single mother working full-time on the new national minimum wage with two children will be £2,981 worse off than another mother, perhaps living next door in precisely the same circumstances but still on tax credits. [Interruption.] The Secretary of State says from a sedentary position, “What about child care?” Yes, if that mother has children who are three or four, she may be better off, but if her children are one, five, seven or 12, they will not be. That is the reality and we should not be misleading the House, from a sedentary position or otherwise.

That disparity cannot be fair and cannot be right. It may not even be legal. We are seeking advice as to the legality of that move. I suspect that is not what the Chancellor told the hon. Member for South Cambridgeshire (Heidi Allen) or other Tory Back Benchers when he reassured them that he was making good the tax credit cut, even if it meant breaching the welfare cap.

[Stephen Timms (East Ham) (Lab)]

My hon. Friend is making some important points. Is it the case—I have seen the suggestion that it may well be—that the small number of people who are currently receiving universal credit will see the enormous reductions in their income that were to have been imposed on tax credit recipients? There has been a U-turn on tax credits, but is it the case that those who are getting universal credit will be hit?

[Owen Smith]

I think that is precisely the case. My right hon. Friend is right. There are currently around 140,000 recipients of tax credits, not all of whom get the work component; we do not know that precise number—it may be around 40,000. There are predicted to be 500,000 people, on the Government’s own numbers, in that circumstance by next April. When I put it to the Secretary of State at Work and Pensions questions last week that those people would lose out precisely as my right hon. Friend suggested, he said that the flexible support grant would more than make up for those losses.

I have looked at the flexible support grant and, as far as I can see, it is a £69 million grant that is available to local Jobcentre Plus managers to help people who are close to the workplace, perhaps for a new suit or a ticket to get on the bus to the interview. Even if it were permissible to use the money in that way, £69 million would in no way make up for the £100 million shortfall next year, the £1.2 billion shortfall the year after, and certainly not the £3.2 billion shortfall in 2020. It is impossible, and I fear it is also misleading for the public.

I will bet a pound to a penny that the Secretary of State and the Chancellor did not also mention that offsetting the cuts to universal credit will hit precisely the same Tory and Labour constituents just before the next election, in 2019-20. I would also wager that they still do not appreciate that the Chancellor cannot U-turn on this issue. The reverse-ferret is not available any longer, because if he does not make good his promise to make those cuts to universal credit, he will not be able to keep the promise that the Minister just made again on maintaining the welfare cap in 2020, and he will certainly not be able to deliver his other promise of a £10 billion budget surplus in the same year.

Perhaps the lesson we should all take from today’s U-turn on the welfare cap, snuck in shamefacedly at the fag end of the Parliament, is that no one should take this Chancellor’s traps and tricks, his games and gimmicks, terribly seriously any more. He can meet them or breach them—he does not mind which, because what he is really about is not sound management of the public finances but the political games of public schoolboys. That is why he cut universal credit seven times before it had even started, making a mockery of any claims to make work pay or support for the low-paid. That is why he continues with his fantastical claims, repeated by the Minister, that welfare spending is under control, even as the housing benefit bill went up by £30 billion in the previous Parliament, and even as Ministers breached £1 trillion on welfare spending for the first time.

We will back the Government in voting to secure Labour’s demand to reverse the tax credit cuts, and we will continue to press them for the same reversal for the victims of universal credit. But we should not pay too much attention to the Chancellor’s tricks and traps in future, because his flagrant breach of the welfare cap, deemed so essential just a few months ago, has exposed the true extent of his stunts. The welfare trap has caught him. Eliot’s detectives could not catch Macavity, but he has been rumbled.

Welfare Reform and Work Bill (Third sitting)

Stephen Timms Excerpts

Tuesday 15th September 2015 Public Bill Committees

[The Chair]

Thank you, Kate; that is good to know. I know that Stephen Timms has three questions for the panellists.

[Stephen Timms (East Ham) (Lab)]

Q 162 Welcome to the witnesses.

Obviously, in the background to what this Bill does in relation to the Child Poverty Act is the controversy about how child poverty should be measured. Everyone recognises that it is quite a difficult subject. Indeed, the Prime Minister himself has argued both in favour of and, more recently, against the use of a relative poverty measure.

I wanted to ask each of the three witnesses to comment on three particular points. First, the Bill deletes all the targets around child poverty—there will be no targets left if the Bill is enacted in its current form—and I am interested to know whether each of you thinks that there should be some target around child poverty set by Government, or do you agree that removing every target entirely is appropriate?

Secondly, the Child Poverty Act requires tracking four measures, all of them related to poverty—relative poverty, absolute poverty, persistent child poverty and material deprivation—but this Bill replaces that with a requirement to publish data on children in workless households and educational attainment. I wonder what each of you thinks about the validity of those alternative indicators for assessing and measuring what is happening to children, compared with the measures in the Child Poverty Act. Thirdly—

[The Chair]

Shall we come to the third one in a moment? Professor Gordon has just arrived. If we ask the first two questions first, then everyone can answer the third one—or are they so linked that they must be taken together?

[Stephen Timms]

No, I can come back to the third one.

[The Chair]

Professor Gordon, welcome.

Professor Gordon: Thank you. Sorry, I went to the wrong Committee Room.

[The Chair]

Well, you have come to the right place now, and we are very grateful. I think you will catch up on what the questions are, then you can give your answers and we can have the third question. Mr Padley first, please.

Matt Padley: Taking the first question—should there be a target—from my point of view, that relates to whether or not there is a strategy through which to reduce child poverty, and targets related to that. If targets prevent or get in the way of doing things that actually reduce child poverty, then they are not useful. What I am saying is that the targets have to be useful and have to measure the right things.

If I can answer the second question at the same time, the measures of related worklessness and educational attainment as proposed are not necessarily measures of child poverty. It is entirely possible for households to move from worklessness to work, for instance, without necessarily moving out of low income. It is important to stress that they are not necessarily measuring what they purport to measure. I think that that relates to the first question, so my view would be that if there are targets, they need to be part of a plan of how to tackle child poverty. That is missing from the Bill as proposed.

[Stephen Timms]

Q 163 I think the Government’s argument would be that if you want to measure the life chances of children, you are better looking at measures of worklessness and educational attainment at key stage 4 instead of the poverty indicators in the Child Poverty Act. If you want to get to life chances, do you think that that is the right approach?

Matt Padley: I do not see why it needs to be either/or—I think both in combination. What looking at educational achievement at the end of key stage 4 will tell you or what looking at the proportion of children who have grown up in workless households will tell you is useful information, but still there is so much evidence to suggest that children growing up in low-income households have poorer outcomes that measuring the incidence of low income remains important. I am not saying don’t measure worklessness or educational attainment at the end of key stage 4; I am saying, don’t wholesale abandon income measures, just because of the recent broader economic climate that has meant that relative income measures are showing some very perverse results.

Alison Garnham: What I would like to say is that the basket of measures that we currently have is an attempt to operationalise a definition of child poverty. The most well known one that we have is the one that Peter Townsend came up with back in the 1970s. He said:

“Individuals...in the population can be said to be in poverty when they lack resources to obtain the...diet, participate in the activities and have the living conditions and amenities which are customary, or...widely encouraged and approved, in the societies in which they belong.”

No indicator is perfect, which is why, in order to try and triangulate this problem, there are about five measures in the Child Poverty Act. Some of them relate to low income and some relate to deprivation—things you cannot afford because you lack resources. Some of them relate to the persistence of poverty. If all of those go, we do not know what we are tracking these other life chance events against. If you were to add all those life chance measures to the core set of indicators in the Child Poverty Act, that would be a good thing. In fact, we have always said, why not add more indicators? That is a perfectly sensible thing to do.

The problem with what has been proposed is that by taking away all the income measures, you are no longer really measuring child poverty; you are measuring something else. Also, you are completely missing out on one of the main causes of child poverty today, which is low-paid work. Two thirds of poor children live with working parents, so if all you measure is worklessness and educational attainment, you are completely sweeping aside that group.

[Stephen Timms]

Q 164 The other question is: do you think there should be a Government target around child poverty?

Alison Garnham: Yes, I do. It keeps the Government honest. I think it is really important. In fact, in 2010 there was a cross-party consensus that we needed to tackle and drive down child poverty, so it is very disappointing that we are now arriving at a point where we are not even going to track it any more. It should continue to be tracked, and there need to be targets, because in that way there is something to aim at. Child poverty was reduced by 1.1 million between the baseline year of 1998 and 2010, so we were on course. We were halfway towards the target of elimination, which was 10%, even though we were not halfway to zero, which was the target the Government had set itself. So we were actually doing rather well. The problem now is that policies are driving us away from reducing child poverty, rather than that the target should go.

Dr Callan: The problem with having income targets is that they will always drive effort towards tackling symptoms and not causes of child poverty, so I would be much more in favour of a more rounded set of measures. Currently, we have only got measures to tackle what we would call two of the five pathways to poverty: poor educational attainment in children and parents, and worklessness. We know that family breakdown drives poverty. We know that serious personal debt and addictions, including gambling addictions, drive poverty, so I think we need more measures. The only thing I would say about income is simply that we need to be measuring the numbers of children who live in households where parents are not earning a living wage, or where parents have not earned a living wage for the last two years. Again, that puts the focus on earnings.

My understanding of the Government’s welfare reforms is that they have a very dynamic approach, which is what the CSJ asked for in 2009, that will help drive people into behaviour that will mean they increase their income through earnings. In international development, our approach for a very long time has been to not just give people money, but to give them the tools to increase their own life chances.

[The Chair]

Professor Gordon, have you picked up on what the questions are?

Professor Gordon: I think I have.

[The Chair]

I thought you might have done. Your answers, please.

Professor Gordon: There has been 400 years of research into the measurement of poverty in general, and child poverty in particular. The UK is arguably one of the world’s leading experts in these kinds of measures, which have been developed and have, over the years, spread across the world. They have been adopted by the European Union, by the OECD, and even by the World Bank. So we have a lot of expertise in the measurement of child poverty. The targets are very useful in terms of seeing whether resources are being allocated efficiently and effectively, and in seeing if the policies are working. So targets can be useful from that point of view.

The low income measures were originally introduced by Margaret Thatcher’s Government. The measures proposed in this Bill were originally introduced by the last Labour Government, although they were abandoned in 2007. They are all good measures, but the worklessness and education measures are not direct measures of child poverty. Child poverty is important because it is very expensive; it is not cost-neutral. Conservative econometric models have shown that the long-term consequences of child poverty cost about £25 billion, about 2% of GDP. Eradicating child poverty would be a boost to the economy and would, of course, create a much better society and much better life chances for children.

As I say, the measures of worklessness have been used before. They are part of a package of measures to which I have no objection. I support them and I always have, but they are not very specific measures of child poverty. Approximately two thirds of children in workless households are not poor: they do not live on a low income and the worklessness is temporary.

[Stephen Timms]

Q 165 I have one more question. You may not all be in a position to comment, but I would be interested to hear any of your opinions. One element of the Child Poverty Act was the requirement on local authorities to work with others in their area to develop a child poverty strategy for that area. There is no similar proposal in the Bill—for example, there is no requirement for a life chances strategy. In practice, were those strategies useful? Or do you think that the fact we are not going to have them in future is not a problem?

Alison Garnham: I think they were incredibly useful. They drove a lot of action and activity locally. Many local authorities set up their own local child poverty commissions and worked out what they could do to address child poverty. One of the biggest losses in losing the Child Poverty Act is that there will no longer be anything driving action at a local level. It would be a big improvement if something like that was introduced into the Bill to require local authorities to have local child poverty or life chances strategies.

[Stephen Timms]

Q 166 Can you give us any examples of where particularly good work was done in developing a strategy?

Alison Garnham: There were a number of local authorities, such as Leicester, Birmingham, Milton Keynes and so on. They tended to take on different characteristics in different areas. For example, in Liverpool they focused on early years strategies to improve early childhood education and care. In other areas they looked at things such as how they could manage their own benefits authority for discretionary housing payments and ameliorations of the council tax benefit scheme. In other areas, they looked at other kinds of projects and services. There was a wide variety of activity, which was very positive.

Dr Callan: Again, if we had something in the Bill that recognised that, alongside work and education, family breakdown—or boosting family stability, if you want to put it more positively—is such an important area for Government activity, then local authorities would have a lot more to get their teeth into at a local level. The use of children’s centre stock is very important. The opportunity would be created for children’s centres to do far more around a whole-family package of support, which is something the Prime Minister has talked about. The Bill could help to put some teeth on to that.

[Stephen Timms]

Q 167 Are you suggesting that there ought to be a requirement for local strategies to be in place, albeit perhaps that they would look rather different from the ones we have had in the past?

Dr Callan: Local strategies around life chances. As I say, if it is just education and worklessness, there are not necessarily enough levers at a local level to get local authorities working together more than they are already. Obviously a lot of local authorities already work very closely with the whole school estate in their areas, going right up to further education and universities.

I do not think that family support is a niche issue. It should be universal, in the same way that we have universal health and universal education. That is why it has to be in the Bill. I do not think it is beyond the wit of well intentioned people to come up with a measure for family stability, which would really strengthen the Bill.

[The Chair]

Eight colleagues have caught my eye, so we will have concise questions and concise answers, please, although it is all good stuff.

--- Later in debate ---

[The Chair]

We now welcome colleagues from the Institute of Economic Affairs and the Joseph Rowntree Foundation. Will you kindly read yourselves into the record, so that we know who you are for Hansard? Then Mr Stephen Timms will ask a series of questions.

Julia Unwin: I am Julia Unwin, chief executive of the Joseph Rowntree Foundation.

Dr Niemietz: I am Kristian Niemietz, head of health and welfare at the Institute of Economic Affairs.

[Stephen Timms]

Q 194 First of all, may I ask you both whether you think that the Government ought to have some target on child poverty, or whether that is not an appropriate thing for the Government to have?

Julia Unwin: I run an evidence-based organisation. I find it very hard to understand how you can receive evidence, measure things and then not establish some sort of target. Across government, we have stretch targets for a whole range of issues. Given the importance of this for our growing economy, I do not understand how the Government can receive the information without having at least a stretch target in mind.

Dr Niemietz: I think there should be a target. There is a problem if you use a bundle of measures that can move in opposite directions. That undermines the idea of using a target to strengthen accountability. With the four measures that we had, that did happen for a while—one indicator showed that poverty was rising, another showed that poverty was falling, and another showed that poverty was flatlining. So I think there should be a single measure and a single target, and that should be a sensible one, maybe close to the Joseph Rowntree Foundation’s minimum income standard. You can debate the technicalities—how exactly this basket is assembled—but a target can be built around a measure that reflects the living standards of people on low incomes .

[Stephen Timms]

Q 195 Can you develop that idea a little bit further? The thinking in the Child Poverty Act was that you had four different indicators. As you say, sometimes they move in different directions, but that means that you end up with a rounded understanding of what is going on. You are suggesting that one could devise a single figure that told you everything you needed. Can you tell us a little bit more about how you think that should look?

Dr Niemietz: Well, I wrote a paper a while ago in which the poverty line was based on the poverty and social exclusion survey. People were asked to identify what they thought were the necessities of life in a modern developed country, and it turned out there was a fairly stable consensus on that. If you convert that list into a consumption basket, and collect the prices of those goods at a regional level, then you have a poverty line that reflects a consensual understanding of what poverty means. You can still use complementary measures—say plus or minus a few items for sensitivity analysis—but you have one central measure that is internally consistent, and you do not get these contradictions.

If you use a bundle of measures, and if they can give you contradictory information, you have to have a way of trading them off against each other. It would not be a problem if you could say, “I don’t mind an increase in relative poverty as long as it is accompanied by an x% reduction in absolute poverty, or something else”, but we did not have that kind of trade-off with the four measures that were previously used.

Julia Unwin: I am very pleased to hear Kristian talk about the minimum income standard, on which we have done some joint work in the past. I would still argue for a number of different measures, because of the complexity of what we are dealing with; and I think in our modern, more complicated, world we are dealing with poverty that looks rather different from the way it looked in the past. Clearly the disposable income of any household is a very important measure, and how we understand that and determine what that is matters; but so, too, do the other measures, and I believe that the old income measure mattered alongside the others. The fact that they are contradictory, I think, does not give you a binary response; it amplifies what the Government need to do, because the tools are not all with Government. They are with local authorities; they are within the market; they are with employers, and actually we need a public discourse about that. That is what a complex target allowed us to have.

[Stephen Timms]

Q 196 May I ask one more question? This is really to Julia. In your written evidence to us you have commented on and welcomed both the full employment report that is proposed in the Bill and the apprenticeships reporting obligation; but you have argued for some more detailed information to be provided. Could you just tell us a little bit about what you think should be in those reports?

Julia Unwin: I think we have to understand that the world of employment has changed in the last decade. Since the global financial crisis, employment at the bottom end of the labour market, which is what we are talking about, is more precarious than it was when some of the legislation was drafted in previous decades. People are in and out of work and rarely out of poverty, and our indicators are that four out of five people who get into work are still in low-paid work 10 years on. There is very little progression; so an employment report needs to look at progression, certainty, security. Those are the measures that really matter when you are looking at the nature of employment. It is no longer simply a good thing in itself to be in work, although that may be right for all sorts of other reasons.

[Stephen Timms]

Q 197 You had some comments, I think, about what the apprenticeships report should tell us. Could you say a few words about that?

Julia Unwin: Apprenticeships clearly matter. We can learn from other countries about how to do them so much better, but we need to understand in fairly fine-grained detail the impact of apprenticeships and what they do for people’s life chances, as opposed to thinking that they are a process through which people go and that there are automatically positive outcomes.

[Peter Heaton-Jones]

Q 198 I want to move on to discuss clauses 9 and 10, which put in place measures to freeze certain elements of benefits and tax credits over a four-year period. I am keen to get your knowledge and experience on how, since roughly 2008, average earnings have risen by about 11% while average benefits have risen by—depending slightly on how it is measured; I agree that there is a grey area—about 21%. Do you think that the measures in the Bill to freeze certain elements are welcome in that they would get a bit of equalisation in the system? We should bear in mind the Government’s stated intention that they are trying to bring more people closer to work, and to make work pay—to use the slogan.

Dr Niemietz: The problem with an across-the-board freeze is that you do not really incentivise work, because you freeze out-of-work incomes and also in-work incomes, or at least that part of the transfer that is supposed to top up low incomes and thereby incentivise people to enter the workforce. If you freeze both, you lose that effect because the gap remains the same. It would have made more sense to freeze only out-of-work benefits, or even to uprate them at a rate below inflation, but not to touch the work-related top-ups, especially the 30-hours element of working tax credit, which was meant to give people an incentive not only to move into some work but, once they were in work, to move further—to move from minor employment towards something closer to full-time employment.

Julia Unwin: The benefits freeze is a huge risk for the Government to be taking, and to have taken in advance in this way. The basket of goods on which poorer households spend their income has been subject to more inflation than the rest because the cost of essentials has gone up. We are currently in a period of lower inflation, but we cannot predict what will happen. I would recommend, as we did in our submission, that the Government review the rate of inflation annually. The outcome might well be a freeze, but actually, what the Government are doing is removing the one buffer that the poorest households, both in and out of work, have against inflation. That is hugely risky.

Assisted Dying (No. 2) Bill

Stephen Timms Excerpts

Friday 11th September 2015 Commons Chamber

[Rob Marris]

I want good quality, widely available palliative care and I want people to have the choice, but I do not think the House should be holding terminally ill people hostage until we get good palliative care. The availability and funding of palliative care are not in my hands.

[Stephen Timms (East Ham) (Lab)]

Will my hon. Friend give way?

[Rob Marris]

No, I must make some progress. I am sorry.

The European Association of Palliative Care says there is no correlation between the quantity and quality of palliative care in any jurisdiction and whether or not that jurisdiction has legislation like or similar to the Bill. The legislation I am proposing today, as many Members will know, is broadly based on the Oregon Death with Dignity Act, which came into effect in 1997. It has been in operation for 18 years. My Bill has the additional safeguard of judicial oversight.

When the Act was passed in 1994, the Oregon Hospice Association was strongly opposed to it. It has reversed its position, and it now recognises—in my view correctly, although I am not an expert—that assisted dying is one of the choices that ought to be available to dying people. In Oregon, 90% of people who have an assisted death—0.25% of those who die each year—are enrolled in hospice care, and Oregon is ranked among the best states in the United States of America for palliative care provision.

Welfare Reform and Work Bill (Second sitting)

Stephen Timms Excerpts

Thursday 10th September 2015 Public Bill Committees

[The Chair]

Thank you. We have a good hour for this session, so we have quite a lot of time, but there are four of you. I ask for concise and fairly loud answers, but do not feel that you all have to answer every question unless it is specifically your bag or you have something to say. We will start with a number of questions from Stephen Timms.

[Stephen Timms (East Ham) (Lab)]

Q 17 I have three questions to ask at the beginning. I think the first one is mainly to Octavia. We heard this morning from Women Like Us that the agreed flexibilities in the conditionality around lone parents at the jobcentre are being withdrawn. What is the experience of people who have been in touch with Gingerbread about the application of the lone parent flexibilities? I do not think that there has been any change of policy. Are there things that could be done to ensure that lone parents can benefit from the flexibilities that they should benefit from?

Octavia Holland: The feedback that we have had through our advice line and through our membership body, which is now some 60,000 single parents, is that there is huge variability in how the lone parent flexibilities are applied. To put that in context, the lone parent flexibilities were traditionally in secondary legislation—in regulations. With universal credit, they are being taken out of secondary legislation and put into guidance. The feedback from single parents is that they have felt pressure to take jobs at hours that do not fit with their caring responsibilities, such as night shifts at the weekends or working in the evenings, and that sufficient consideration has not been given to the childcare that is available or to the type of jobs that they might be able to take. We are having an ongoing discussion with officials at the Department for Work and Pensions about this but it is difficult to get any clarity about the steps that are being taken to ensure that the flexibilities are applied consistently.

That presents a particular concern about the proposals around conditionality. Without those lone parent flexibilities, single parents, with three and four-year-olds, who are required to work, have fewer safeguards to be able to say, “It is not reasonable for me to work at the weekend because there is not any childcare at the weekend.” Our feedback through the advice line is definitely that it is a growing concern; that the flexibilities are not being applied consistently.

The other thing I would add quickly is that there are now far fewer lone parent advisers than previously. There are some left but the trend is that work coaches should have expertise in lone-parent issues. The feedback we have had is that that is contributing to the issues. Obviously, single parents have a number of factors that need to be considered. When you had lone parent advisers, the evidence was that they were really helping to get single parents into sustainable employment. That expertise does now seem to be lacking. That is certainly a concern.

[Stephen Timms]

Q 18 To clarify, in your discussions with Department for Work and Pensions officials, there is still the intention that those flexibilities will be available but your experience, in practice, is that they are quite often not?

Octavia Holland: Yes, absolutely. To clarify, it is even quite difficult to establish where in guidance those lone parent flexibilities are now. They are in disparate pieces of guidance that are given to jobcentres and work coaches. It is not like you can get your hands on one piece of guidance that says, “Look, if you want to support a single parent into a decent job, these are the kind of things you want to consider.” There is a real lack of clear information.

[Hannah Bardell]

Q 19 Thank you very much for coming to speak to us. On that point about lone parent flexibilities, do you not believe that those important flexibilities should therefore be brought into statute, so that they are very clear and people can understand them?

Octavia Holland: At Gingerbread, we absolutely feel that the lone parent flexibilities should be in regulations, as they were previously, because that makes it very clear to jobcentres and work coaches the best way they can support single parents into employment. Single parents are generally very keen to work and over 60% of them do, but you do need to consider the fact that they are not going to have childcare in the evenings or the weekends. You do need to think about that kind of thing. Yes, we do support that they should be back in regulations.

[Stephen Timms]

Q 20 This is a question mainly for Tony. We are told that there is evidence that the benefit cap has encouraged some people to go into work who would not otherwise have done so. Can you tell us how compelling you think that evidence is, and how big an effect there appears to have been from the application of the benefit cap?

Tony Wilson: The Department published some ad hoc analysis about a year ago on the estimated impacts of the benefit cap. That was peer-reviewed by the Institute for Fiscal Studies. That was a good piece of work and it did show a statistically significant positive impact on some people in households affected by the benefit cap, on the likelihood of their moving off benefit and in to work. It showed some interesting things. It showed that those impacts were greater where the financial impact of the cap was greater. They were greater in London than in other parts of the country, so things you would intuitively expect to see.

However, there are a couple of points. One is that the total numbers moving into work are very low. This is a group where the likelihood of entering work, where you have been capped, is very low. A percentage increase in the likelihood of moving into work, you might see a 30% or 40% increase in likelihood of entering work. But if your likelihood was originally one in 20, then that might increase to only about one in 15 and still look like a very large impact. The research found percentage points. If you like, the absolute impact of the cap on the likelihood of entering work was pretty small—it was three or four percentage points. In other words, out of every 100 people capped, an additional three or four may move into work. That was the average. It was greater where the financial impacts were greater, which is what one would expect.

The benefit cap is probably one of the only measures in the last Parliament that created a really strong financial incentive to move into work. Out of all the welfare reform measures, if you move into work, you get your benefit back, essentially. You get your £200 or £300 income back. To some extent, it might be surprising that there was not a greater impact. The impact in terms of actual numbers was relatively small.

More interesting still, we evaluated a programme called the Brent Navigator. Brent Council invested in adviser support to help capped households back into work. We used a statistical technique to try to find the additional impact of that, and we estimated that that had about a 50% positive impact. Having intensive, adviser-led support to help people move back into work led to a larger-again impact on the likelihood of people moving into work. It highlights the importance of joining up the support you deliver and ensuring that those who are affected by reforms also get access to appropriate support to move back into work.

With the lowering of the cap, there will be more people with quite small losses compared with what happened under the previous cap. In those groups with small losses, the evidence found a far smaller impact. It was a negligible—pretty much a zero—impact on people whose losses were £10, £20 or £30 a week. That is consistent with the impacts of many of the other reforms such as the spare room subsidy, or the bedroom tax, or the lower uprating of benefit, which add quite small impacts and probably did not have a behaviour effect.

[The Chair]

I wonder whether the other witnesses would like to comment on that question as well. Is there any evidence out there in your world about what has happened in relation to the benefit cap?

Kirsty McHugh: Not dissimilar to Tony in many ways. In terms of our members, obviously the work incentives are increased. The differential between being out of work and in work has increased. That has come through in some of the anecdotal evidence from the provider base. At the moment, it is anecdotal. I do not think we have hard figures that could be shared. Many providers are investing more and more in the off-benefit calculators. They are being very clear with individuals what their options are and how much better it is going to be for them to move into the workplace. Generally, we find that it is about other barriers stopping people going into work, which is more around skills and health and so on, so concentrating on those is the way to make the bigger uplift.

[Stephen Timms]

Q 21 A final question from me to Kirsty. The note we had from the Clerks tells us that the proportion of Work programme participants who have secured sustainable job outcomes has been almost 25% for people on jobseeker’s allowance, but less than 10% for people on employment and support allowance. Looking back on the experience of the Work programme, why do you think performance has been so poor for that particular group? What are the lessons for the future design of the Work programme to try to do a better job next time round?

Kirsty McHugh: The first thing to bear in mind is that the majority of people on ESA who are put into the Work programme have not received any support before at all. The targets put in place were best guesses by the officials, based on a far better economic scenario than we had at the beginning of the Work programme. Performance has been improving in relation to ESA. In fact, all targets have been met across all the providers—it is quite difficult to say bad performance or good performance, because we did not actually know what to expect in relation to performance. We need to do things differently next time in relation to people on employment and support allowance. We know that, once they get into work, they stick in work. We have far more information about their distance from the labour market, so there is some real learning about how we put in place a financial model that means we are able to invest more up front and perhaps less in the sustained employment element, because ESA people do stick in employment once they are there.

[The Chair]

Charlotte, do you want to come in on that point?

Charlotte Pickles: The only thing I would add is that there is a common perception that the Work programme is failing ESA claimants, which I think is a little unfair. In its last report, the National Audit Office said it was broadly in line with previous programmes. One of the challenges, which Kirsty touched on, is that we really do not know very well what works for these cohorts. I think it is less about saying the Work programme has not worked. Broadly, it has, as Kirsty has said, met expectations. We need to be investing, looking at and experimenting in what will actually help quite a diverse group of people.

[Stephen Timms]

Q 22 One of the interesting things about this discussion in the context of the Bill is the Government’s objective to halve the disability employment gap. Is it not clear that we would have to do much better than the 10% that has come out of the Work programme if we were to get anywhere close to halving that gap?

Kirsty McHugh: It is a hugely positive move from the Government to say that they want to do that. It is hugely ambitious. At the moment that means an additional 1.1 million people with disabilities into work. That means looking at the assessment regime, the interaction of the assessment regime with the employment support regime and the finances. It also means looking at the demand side from employers. There is some interesting work going on with the behavioural insights unit and others about how we actually change the mindset and de-risk it, potentially, in their minds—it should not be risky but sometimes it is perceived as being so—so that they are more likely to take on people with disabilities. It is not just one thing, but a whole series of things. It is a huge cultural shift but I am very pleased that the Government have said that they want to do it.

[The Minister for Employment (Priti Patel)]

Q 23 Kirsty, you have touched on a broad range of themes, in particular on the Work programme and ESA. I know from discussions within the Department and, you will be aware, with Work programme providers, that this is a challenging area but one that we are ambitious about. Do you have any learnings or thoughts from the providers that your organisation represents? For ESA claimants in particular, what are those game-changing interventions? What else do you think the Government could focus on in terms of spending for support—bringing people closer to the labour market but, importantly, helping them to continue their journey of long-term sustained employment, not just getting them into work? What kind of health interventions could we look into? Do you have any insight or experience of seeing fruitful outcomes?

Kirsty McHugh: We did a piece of work for the Department bringing together a range of our members looking at ESA. We have actually done that more than once over the course of the past few years, as you can imagine. We have a lot of the big disability charities in membership—last year it was two-thirds not-for-profit—but we also have all the Work programme primes and Work Choice primes. A lot of the best practice comes from the other programmes, not just the Work programme.

The big thing is staff skills and confidence. For somebody who is presenting to them, it is them knowing about that right mix of support and challenge as a front-line adviser. They may have been out of work for 11 or 12 years so their confidence is on the floor. They have a huge gap in their CV and the mindset is not there in terms of, “I want to work and I can work.” Often, the providers say that once you switch that mindset it is almost job done.

How do you get to that attitudinal change so that people feel really positive about themselves and want to change their lives and those of their families and communities? It takes a while. It is about one-to-one relationships with front-line staff—none of this is rocket science. It is about long-term relationships and trust. Therefore, lower case load is really important for people with disability and health conditions. There has been a lot of investment in cognitive behavioural therapy-type approaches and talking support. Group therapy seems to work very well. There is never one magic bullet. A lot of this will be quite familiar to you. The good adviser will have a personalised referral to a range of different services in that area but staff skills are more important than anything else.

It is then about selling in—a horrible term—that individual to an employer. If somebody has a big gap in their work history, that can be quite an ask of an employer. Therefore, getting them work experience, or something that fills the hole in the CV that proves to them and to the employer that maybe they are a bit less of a risk, is really important. We know a lot now about the prevalence of mental health difficulties, which often co-exist with other physical conditions. It is often not just one condition. Often, the barrier to work is not health but the fact that they have got a lack of work history and a lack of skills.

I think there is a good consensus between the officials and the sector about what has worked and what has not worked and what we want to do going forward. As I said, there is quite a lot of evidence that the sustainment rates for people on ESA who get into work are high. What we definitely need to do is bring more money up front, which then means the specialist providers, charities and so on can do more up front with that individual and maybe we will have less on sustainment payments than we have currently. It is not about increasing the overall unit cost but about remodelling it.

--- Later in debate ---

[The Chair]

Let us have an answer from everybody, and this will be our final flourish.

Sophie Corlett: It is hugely important and much underused in mental health, and it could be much more widely understood as being really useful, particularly if people are able to use it before they apply for a job so that they can take a package with them. That would be the ideal, really, so that they could go to an interview and say, “This is what I can bring with me.” That would be the best use of it.

Matt Oakley: I will defer to delivery colleagues.

Gareth Parry: It is a fantastic programme. I would massively advocate mental health support services, because we deliver one. It is a great programme, which is significantly underused, at creating awareness and promoting not only mental health service support but all of Access to Work. It remains a challenge, but overall it is a fantastic programme. I should declare that I already gave evidence at the Select Committee last year, and I do not want to repeat any of that evidence.

Looking forward, it is probably the one area in the employment arena where personalisation could be looked at to a much greater degree. It is as close as we have got in the employment agenda to personalised budgets. It is not personalised budgets—it is not personalisation as we know it today—but it could be, and it could be a really interesting arena just to take the next step towards giving more choice and control over people’s employment journeys.

[Stephen Timms]

Q 86 Can you give us an example of the use of Access to Work for people with mental health problems? What are the kinds of things that you are able to do to help?

Gareth Parry: A whole range of things. I am just wondering, in the interests of brevity, whether that is something that I should do outside this meeting. We can send you a whole load of case studies and examples of what we did.

[The Chair]

If you could write to the Committee, that would be great.

Laura Cockram: Personally, we have some examples of where it has been really useful, but it is not something that is widespread in terms of people with Parkinson’s. It has been positive where we have heard about it.

Roy O'Shaughnessy: I have heard of many positive experiences. It is underutilised by individuals who could make use of it, and it is virtually unknown by the employers. Matching those two things up is important.