Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023

Viscount Younger of Leckie Excerpts

Tuesday 28th March 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023.

Relevant document: 30th Report by the Secondary Legislation Scrutiny Committee. Special attention drawn to the instrument.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, these draft regulations were laid before the House on 30 January. Good investments are central to well-run pension schemes and decisions made by the trustees of those schemes have a significant impact on growing savers’ pension pots. Subject to approval, these regulations will help occupational defined contribution pension schemes—the so-called DC schemes—make greater use of performance-based fees, which are payable to investment fund managers when they deliver healthy returns on their investments. This will put DC schemes on an even playing field with other institutional investors such as insurers, investment companies, defined benefit pension schemes and overseas investors when it comes to accessing the same range of investment choices that come with fees.

The regulations also place new duties on the trustees of most DC schemes to disclose additional information about their investments. They are designed to ensure that trustees reflect on the investment decisions they make, as part of their ongoing fiduciary duty to create a diversified investment strategy that delivers for savers. These regulations continue the Government’s commitment to ensure that millions of hard-working savers in occupational DC pension schemes are receiving the best possible value. I am satisfied that these regulations are compatible with the European Convention on Human Rights.

Let me take a step back and put this in a bit of context. Over the past decade, there has been a significant increase in the use of illiquid asset classes such as infrastructure, real estate and private equity within institutional investment portfolios globally. Meanwhile, DC schemes in the UK have relied on public markets to generate returns and diversify portfolio risk. Pension scheme trustees’ primary focus must always be on delivering an appropriate return to members. But by investing almost wholly in liquid investments such as publicly listed equity and debt, pension savers can miss out on the potential to achieve better returns from being invested for the long term. This is a particular concern in DC schemes, where decisions which reduce long-term returns will affect member incomes in retirement.

Currently, less than 10% of UK DC investments are estimated to be in illiquid assets. The Pension Charges Survey 2020 evidenced that two-thirds of DC schemes had no direct investment in illiquid assets within their default fund arrangements. This is at a time when the UK DC market is growing in scale and in ambition. DC pension schemes currently hold over £500 billion of assets, a figure that is set to double to £1 trillion by 2030. The Australian DC market, in comparison, invests somewhere in the region of 20% of assets, on average. This includes investment in major UK assets such as the King’s Cross redevelopment project and Manchester, Stansted and East Midlands airports.

The DWP has run several consultations to understand the reasons why DC schemes have largely avoided investing in private markets. The feedback received highlighted concerns that performance fees, typically associated with illiquid assets and levied by fund managers, would put schemes at risk of breaching the existing 75 basis-point regulatory charge cap. While the charge cap has successfully reduced costs, it has arguably led to more focus on costs than on the returns that different asset classes can provide. In January, the Minister for Pensions launched a consultation on proposals for a value-for-money framework, which aims to address this. These regulations continue that value-for-money theme. The essence of what we are trying to do here is to make it easier for DC schemes to access a broader range of investment opportunities that could generate higher return outcomes.

I will now say a bit more about the issues highlighted during the consultation. We listened carefully to earlier concerns raised during the consultation that this change to the cap could weaken existing saver protections, and we have acted on this feedback. Regulation 2 of this instrument sets out the criteria that “specified performance-based fees” must meet to be considered outside the charge cap. These include a requirement that fees must be paid only once returns to the scheme have exceeded a pre-agreed rate or amount agreed by trustees and the fund manager prior to investment.

The criteria include additional safeguards that trustees must also agree in advance, and that performance-based fee structures include mechanisms to guard against excessive risk-taking or fund managers being paid repeatedly for the same level of performance. The regulations provide for the use of high-water marks and fee caps, for instance, which are commonly applied in the investment market to give investors this extra level of protection.

The regulations are purposefully silent on what rate of returns or type of fee structure mechanisms must be applied. This is to allow trustees and fund managers to develop and negotiate terms that are in the best interests of savers. Provided that trustees and their advisers apply these terms, such performance fees will not erode retirement pots because they should arise only when savers have received a favourable return on their investments.

The DWP received positive responses to this change, particularly from larger DC pension schemes which said that the ability to remove these fees from their charge cap calculations will make it easier for them to consider new asset classes. The DWP has published statutory guidance to assist trustees with determining the criteria for performance-based fees that can be considered outside the charge cap. The guidance is very clear that trustees should seek professional advice on their investments where performance-based fees are prevalent.

To ensure transparency to members, performance-based fees incurred are required to be disclosed, and the value to members assessed, in the scheme’s annual chair’s statement. To be clear, these changes place no obligation on schemes to agree to investments that come with performance-based fee arrangements if this is not in their members’ best interest.

With any investment there is no guarantee of higher returns. In accordance with existing legal requirements, trustees must invest in a manner calculated to ensure security, liquidity and profitability, and have regard to the need to diversify investments. This provides that trustees are guided on assessing the risk of portfolios and, with this, managing the risk of lower as well as higher returns.

Regulation 3 of this instrument sets out new duties on DC trustees to include an explanation of their policy on investing in illiquid assets in their statement of investment principles. These explanatory statements, covered in the regulations, include whether investments in illiquid assets are held, the types of illiquid assets and why this policy is of advantage to members. Where investments will not include illiquid assets, trustees are expected to give reasons why, along with whether they have plans to invest in the future.

While some of our bigger DC schemes already provide this information, this is not the approach taken by all. Some master trust schemes also disclose information on the asset classes in which the scheme holds investments, but this is not commonplace and most members are not in receipt of this information. The regulations address this by placing a duty on trustees to disclose the percentage of different classes of assets held in the scheme’s default funds. Asset classes covering liquid and illiquid are prescribed in the regulations.

Greater understanding and accountability of the investment decisions made by trustees on behalf of their members will be key to improving value for members across all schemes. The industry’s response to these new duties was that the regulatory burden is reasonable and proportionate while still retaining the wider benefits these changes will bring. It is worth noting that asset allocation disclosure is already mandatory for Australian pension schemes.

The DWP will work with the Pensions Regulator to ensure that trustees are supported with the new duties. Information contained in chairs’ statements and statements of investment principles are monitored by the Pensions Regulator as part of its wider strategy on regulatory compliance.

We will also look closely to monitor the impact of our changes on investment performance. In addition, Regulation 7 of these regulations requires that a review of these regulatory provisions must be undertaken and published within five years of the regulations coming into force.

These regulations also correct a drafting error at cohort 1(b) of the staging profile in Part 1 of Schedule 2 to the Pensions Dashboards Regulations 2022. The error relates to the staging deadline for master trust schemes that provide money-purchase benefits only. While we are not aware of any schemes being affected by this minor error, it is none the less appropriate to amend the Pensions Dashboards Regulations 2022 to resolve this issue as soon as practically possible. With that, I commend this instrument to the Committee and beg to move.

[Lord Sharkey (LD)]

My Lords, as the Minister has said, this statutory instrument contains seven regulations. The first is to do with timings and commencement. We have no comment on this, except to ask why there will be a delay of 21 days in bringing the correcting dashboard regulation into effect.

Regulation 2 excludes specified performance-based fees from the charge cap, and the Explanatory Memorandum sets out the rationale. In paragraph 10.5, the Explanatory Memorandum speaks of

“sufficient safeguards for schemes and members to protect them from excessive charges”

consequent upon this regulation. This is clearly a critical area. The possibility of excessive charges is an obvious concern and was highlighted in the recent SLSC report on this instrument. Can the Minister set out what these safeguards are and on what basis and by whom they were judged to be satisfactory?

Regulation 3 will require schemes to include an explanation of their policy about investing in illiquid assets in their default statement of investment principles, as the Minister said. The taxonomy of asset classes is explained in detail in paragraph 25 of the statutory guidance and is given in Regulation 4(5). This has eight categories and does not attempt to define “illiquid”. In fact, I could find nothing in the instrument and its accompanying documents that approaches a definition. Of course, it may be that I have overlooked it somewhere; I would be grateful if the Minister could guide me on the matter, point to a definition and perhaps explain how it was arrived it and by whom. The chief purpose of this instrument is to remove barriers to investments in illiquid assets, and it would be rather odd if there were no criteria for assessing whether an asset was to be counted as illiquid.

Regulation 4 also requires trustees or managers to report on specified performance-based fees incurred by the scheme.

Regulation 5 requires such disclosures to be made public. This all seems very sensible, but nowhere is there any sense of an upper bound on these specified performance-based fees. In its report, the SLSC made this point.

Since the EM was produced, the DWP has published extensive statutory guidance—22 pages—which states that the rate or amount of these fees is for the trustees and managers of the scheme with support from their advisers and their fund manager to agree based on the nature of the investment proposed. At first reading, this seems a bit like an invitation to a fleecing. The Government were happy to install the charge cap in the first place. What consideration was given to capping these special performance-based fees? Paragraph 76 of the statutory guidance, “Volatility of returns and performance based fees”, states:

“The 2023 Regulations require that specified performance-based fees structures must include mechanisms that offer protections to pension schemes and their members. This is so fund managers are not taking excessive risk or being paid twice for the same level of performance or for performance which turns out to be impermanent.”


I cannot see where that is spelled out in the instrument as a must, and I would be grateful for the Minister’s help in clarifying the matter.

Regulation 6 corrects an error in the pensions dashboard, and we have no comment on that.

Regulation 7 provides for a review of the impact of Regulations 2 to 5 every five years, which seems sensible. We are particularly interested in seeing whether the modification of the charge gap and the disclosure requirements lead to an increase in investment in illiquid assets. The SLSC made this point in its formal recommendation to the House:

“As the fee changes made by these Regulations aim to encourage pension schemes to increase their investment in illiquid assets, the House may wish to ask the Minister how schemes’ subsequent exposure to an increased risk of lower, as well as higher, returns is to be monitored and how trustees are to be properly guided on assessing the risks to the portfolio.”


Those are very good questions, and I would grateful if the Minister could address them.

--- Later in debate ---

However, that is only advice. Can the Minister tell the Committee whether he is confident that this will not erode the protection for savers that was provided by the introduction of the charge cap in the first place? If he is confident that trustees can be relied on to make judgments of this complexity now, why was the charge cap needed in the first place? If they cannot be relied on, why is it safe to exclude these fees from the cap? I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

My Lords, I thank the Committee for its input and for the lucid remarks made by the three Peers who spoke. I also thank noble Lords for their interest in this brief debate; I realise that all three Peers have taken a great interest in this issue in the past and are experts at different levels in this sphere. If I may say so, I also thank them for their general support for these regulations. However, I am aware that a number of quite specific and detailed questions have been asked, and I will, as ever, do my best to answer them.

I will start by answering the question about the definition of “illiquid” raised by the noble Lord, Lord Sharkey. Illiquid assets are defined in Regulation 3(2)(d) as those

“which cannot easily or quickly be sold or exchanged for cash”.

I hope that gives him some comfort.

The noble Baroness, Lady Drake, asked about the intention to mandate pension schemes in terms of how they must invest. Throughout the development of these regulations my department, DWP, has been clear that investment decisions, including whether illiquid assets are suitable investments for schemes, remain a matter for trustees, in line with their fiduciary duty to manage risk and reward in their members’ best interests. I alluded to that in my opening speech.

The noble Lord, Lord Sharkey, was the first to delve into the detail of the charging. I hope that I can answer all his questions and the follow-up questions from the noble Baronesses, Lady Drake and Lady Sherlock. The first question was: why amend the charge cap, which has been successful in ensuring that savers are not charged high fees? The charge cap remains an important protector. Our reform is intended to give pension schemes the opportunity to access a wider range of those investment opportunities that can come with fees. We believe that, where higher fees also bring higher total returns, the overall effect will be to grow pension pots—which is surely in the interests of savers.

The noble Lord, Lord Sharkey, further asked how one prevents fund managers taking excessive risk or, as he put it, being paid twice for the same level of performance. To come within the definition of specified performance-based fees in the regulations, a fee structure must be designed between the fund manager and the scheme trustees to mitigate the effects of short-term fluctuations in the investment performance or value of the managed investments. Different mechanisms can be in place within a fee structure that protects from excessive risk or repeated payment, such as so-called high-water marks, whole fund structures, clawback mechanisms, escrows and caps. Statutory guidance explains these mechanisms and trustees are encouraged to seek professional advice on them before they agree to invest. I will come on later to answer the question about protections for trustees. In fact, it was about guidance for trustees, which I will come back to.

The noble Lord, Lord Sharkey, asked further about how performance-based fees might be measured and apportioned fairly, which is linked to the question raised by the noble Baroness, Lady Sherlock, about smaller schemes. We recognise that this is a challenge, and trustees should work with fund managers to consider how performance-based fees should be charged to ensure fair allocation for members. This is particularly important in open-ended funds, where members can enter or exit at various points and may not always benefit from periods in the investment cycle where there is positive performance. Trustees are thus encouraged to review industry guides published in 2022, which provide useful help on member fairness and other challenges for DC pension scheme decision-makers when investing, or considering investing, in illiquid assets.

The noble Lord, Lord Sharkey, asked how the regulations ensure that members are protected against paying high fees for moderate performance, which is an interesting point. The regulations are clear that, for performance-based fees to fall outside the charge cap, scheme trustees must agree with fund managers methods to mitigate the risk of fees increasing due to market volatility and the time period by which any fee will be measured. To ensure transparency to members, payments of performance-based fees are required to be disclosed and the value to members assessed in the scheme’s annual chair’s statement, as I mentioned in my opening speech.

The noble Baronesses, Lady Drake and Lady Sherlock, asked an important question about how the Government will ensure that savers close to retirement or who exit a scheme do not pay higher fees without additional returns from illiquid investments. As I said before about another matter, this is a challenge. DWP statutory guidance sets out that trustees should work with fund managers to consider how performance-based fees should be charged to ensure fair allocation for members. As mentioned earlier, trustees are encouraged to review industry guides published in 2022, which provide useful help in this respect.

The noble Baroness, Lady Drake, asked what the value would be for members in terms of how it is assessed, and how it could be altered in the light of new risks arising from these regulations. Trustees who pay specified performance-based fees will be required to assess the extent to which these represent good value for members. This builds on existing requirements on all DC schemes to assess values for all costs and charges for members. Schemes with under £100 million in assets will not be required to include this as part of their extended value for member comparison against larger schemes. This may help to answer a question raised by the noble Baroness, Lady Sherlock. Moving forward, it is proposed that specified performance-based fees will be included in the costs and charges metric for the new value-for-money framework.

The noble Baroness, Lady Drake, asked further what new initiatives the Government expect the FCA to take up to regulate for fairness and consumer duty in all the private markets that these regulations cover, which is an important question. Existing FCA duties to authorise investment providers and vehicles, and regulate private markets, will apply. The Government expect trustees and their advisers to seek detailed confirmation—

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

My Lords, as I was saying, I will conclude my remarks, although there are a number of questions that I still wish to address.

The first was from the noble Baroness, Lady Drake, concerning what new initiatives the Government expect the FCA to take on to regulate for fairness and consumer duty in all the private markets that these regulations cover. I started to answer this, but I will cover it again. The FCA’s existing duties to authorise investment providers and vehicles and regulate private markets will apply. The Government expect trustees and their advisers to seek detailed confirmation from fund managers as to how a proposed product complies with the charge cap regulations, including in relation to any specified performance-based fees, before assessing whether it is in the best interests of the scheme to invest.

I now turn to the question asked by the noble Baroness, Lady Sherlock, on guidance for trustees, which was a good point. It will be for trustees of pension schemes, considering professional advice, to determine their allocations to illiquid assets subject to their cash-flow obligations and subject to their duty to act in the best interests of their members. Many pension schemes are comfortable with the notion of segmenting their portfolios into a liquid component and an illiquid component. This allows separation of the portion of their assets that will not be needed for liquidity purposes for many years. The Pensions Regulator’s code of practice contains guidance for trustees on their investment approach. This includes how they should evaluate performance, and risk and reward profiles.

The noble Baroness, Lady Drake, asked why we should legislate so soon after the 2021 regulations came in, which gave schemes the option to smooth over multiple years of the presence of performance fees with the charge cap. Feedback from the industry suggests that changes introduced in 2021 would go only so far and were unlikely to move pension schemes away from a focus on cost to one of value, which is one of the key principles of what we are doing in these regulations. We want trustees to have the confidence to invest in illiquid assets that come with fees where it is in their members’ best interests, safe in the knowledge that, in targeting higher returns, they will not fall foul of this charge cap.

The noble Baroness, Lady Sherlock, asked about other challenges that DC schemes face when considering investment in illiquid assets. It is fair to say that our change removes a regulatory barrier. At the same time, we recognise there are other non-regulatory challenges for DC schemes, such as those relating to lack of scale, liquidity and regular pricing. We continue to discuss these with the industry and believe that, with government encouragement, it will be incentivised to come up with solutions to meet those particular challenges.

The noble Lord, Lord Sharkey, asked why there are 21 days before the dashboard regulations are brought into effect. He might know this, but for the benefit of the Committee, this is commensurate with Regulation 1 of the Pensions Dashboard Regulations 2022.

The noble Baroness, Lady Sherlock, asked a number of questions about the timing of dashboards legislation. We are considering legislative options to amend the connection deadlines and will update Parliament, if this is of help, before the Summer Recess. I hope that is not too far away.

The noble Baroness also asked whether the dashboards will ever happen. I was perhaps expecting that question, so I will use this opportunity to say that pensions dashboards will be a vital tool to help savers plan for their retirement, and the Government remain thoroughly committed to their delivery. I know that this commitment is shared across the pensions industry, but it is vital that the foundation upon which the dashboards ecosystem is built is safe, secure and works for both the pensions industry and individuals searching for their pensions. As the noble Baroness knows, more will be coming out on this shortly and I have also pledged to update Members when we think it is right. This could be in advance of the summer, as I think I have said in the past.

Illiquid investments have the potential to bring strong returns, and exempting specified performance-based fees from the charge cap will help to remove a barrier to investment in this area. Placing new duties on trustees to disclose their illiquid investment strategy and their asset classes will also ensure ongoing consideration of a diverse range of assets as part of a more balanced portfolio. Considering the financial challenges that many are facing, it is vital that decision-makers are continually reviewing investment propositions that can deliver the best possible outcomes for the millions of savers in occupational pension schemes. With that, I commend this instrument to the Committee.

[Baroness Sherlock (Lab)]

I thank the Minister for taking the time to answer those questions. I just want to ask him to explain the definition of an illiquid asset a bit more. He is right to point to Regulation 3(2)(d), which says that they are

“assets of a type which cannot easily or quickly be sold or exchanged for cash”.

I suppose most things can be sold or exchanged for cash reasonably quickly if you do not mind how much you get for them at a fire sale. I have two questions. If that means

“cannot easily or quickly be sold or exchanged for cash”

at a reasonable price, or at least at the price one had paid for them, would that apply to UK gilts last autumn? Secondly, the reason this matters is that there is a lot of money to be made from this definition. Where that is the case, the definition is likely to end up being the subject of some dispute. What is the mechanism to resolve this? Whose decision is it? Does someone just get to do it? Will the regulator push them, or will it end up in court? How will this be litigated?

[Viscount Younger of Leckie (Con)]

I hope I can be of some help. I think I should write a letter on this quite detailed question, as it takes us further from the question originally asked by the noble Lord, Lord Sharkey. Part of the answer could be—I will need to follow up with a letter—that we do not want to prescribe our approach too much. As I mentioned earlier, it will be very much up to the trustees and pension funds to decide for themselves. It might not be right to have too much prescription here, but I will go no further than that. The noble Baroness, Lady Drake, may know more than me, as one can go only so far with a definition. I will write to clarify further what we mean.

[Baroness Drake (Lab)]

Trustees cannot make investment decisions now without taking advice. These regulations may be adding a bit of extra detail, but that principle is already there. The department and regulators can mandate trustees to provide more information, and transparency is a great thing; I do not demur from that. The Minister has identified all the other things that need to be done and discussions that are going on.

However, there is an issue about which there is still not a clear answer. Organisations such as the PLSA, which is a trade body representing pension schemes and their administrators, do not think that this is the correct thing to do—and that is not the only one. I do understand why, in the absence of evidence and the presence of many other significant barriers, the Government have chosen to weaken a fundamental consumer protection in the as-yet-unverified belief that it will be a major driver of increased investment in illiquid assets.

That is the bit I cannot find anywhere. I can find assertions of views but the reasoning is, I am afraid, quite weak. What worries me is that this will start encroaching on what was such a fundamental protection. Most schemes come in way below 0.75%—there is so much headroom—and we know that leverage can come from the scale of the scheme master trusts that are coming. So why are you doing this when you cannot yet have confidence—because you have not tested it —that it will actually benefit the saver?

[Viscount Younger of Leckie (Con)]

I thank the noble Baroness for her further question. I will add some further detailed comments to the letter that I am going to write to the noble Baroness, Lady Sherlock, but let me say this: I am aware of the natural scepticism of the noble Baroness, Lady Drake, for what we are doing in bringing in performance-based fees. Her question is one that we have asked ourselves. I clearly have not managed to convince her about the consumer protections that we believe are there. I spent some time spelling out what those protections are, including the role of trustees, what is expected of trustees, the guidance for trustees and the role of the FCA and the regulator in all this. There is a lot that I would prefer to put down in writing. I am not sure whether I am going to be able to convince the noble Baroness but I hope that I have given her some comfort that I will at least try my best.

Motion agreed.

Charitable Sector: Food Provision

Viscount Younger of Leckie Excerpts

Monday 27th March 2023 Lords Chamber

[Baroness Jones of Moulsecoomb]

To ask His Majesty’s Government, given the increased use of food banks, what assessment they have made of ways of reducing dependence on the charitable sector for the provision of food.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, food banks are an example of the generosity of spirt of giving across communities in Britain. This Government are committed to understanding and addressing poverty. Last week, for the first time, we published official estimates of food bank use. This April, we are increasing benefits and benefit cap levels by 10.1% and making further cost of living payments. The Government have provided total support of more than £94 billion over 2022-23 and 2023-24.

[Baroness Jones of Moulsecoomb (GP)]

I thank the noble Lord for this Answer. One of the real concerns about the increase in the use of food banks—which has gone up phenomenally, by a third in the last year—is that they are being used more by the working poor: people in full-time employment who still cannot afford to feed their families and heat their homes. Is it not time for the Government to be even more creative than they have been already and perhaps introduce a wealth tax of 1% on the richest, so there can be pay rises for the poorest workers?

[Viscount Younger of Leckie (Con)]

Well, it is helpful to have some innovative solutions from the noble Baroness, but she will know of the huge amount of support that we have given, of which the House is very aware. There are other measures as well: for example, the Government will provide £100 million of support for charities and community organisations in England. This will be targeted towards those organisations most at risk due to the increased demand from vulnerable groups, and targeted in particular to support critical front-line services.

[Baroness D’Souza (CB)]

My Lords, the Trussell Trust recently piloted a study for the APPG on ending the need for food banks on the provision of cash grants instead of food handouts: 94% of the recipients preferred cash to food and said that their finances improved as a result. The survey showed that the cash was used to buy only essential items. What are the Government doing to promote cash responses to local crises?

[Viscount Younger of Leckie (Con)]

I fully understand that some people prefer to use cash, and that is certainly possible. I will have to write to the noble Baroness on the spread of where cash can be used.

[Baroness Altmann (Con)]

My Lords, I do congratulate the Government on all the work that they have done in this area to try to help the most disadvantaged. I know that my noble friend cares deeply about these issues. Of course, the working poor have a real need, but can my noble friend tell the House what evidence there is that pensioners are using food banks, and what action the Government are taking to address pensioner poverty?

[Viscount Younger of Leckie (Con)]

My noble friend will not be surprised to hear me say that we are committed to action that helps alleviate levels of pensioner poverty. In answer to one of her questions, the HBAI statistics recorded that fewer than 100,000 pensioners were living in households where a food bank had been used. However, despite those figures, there is more to do.

The figures show that there are 200,000 fewer pensioners in absolute poverty than in 2009-10. Pension credit provides a vital financial support to pensioners. This is one of the actions that has been and is being taken by the Government, and it is proving to be very successful, with a 73% uptake in the last 12 months.

[Baroness Sherlock (Lab)]

My Lords, I am delighted that we are now asking about food bank use in the annual HBAI survey. That is great. But the results are really pretty shocking. For example, they showed that one in six of all people on universal credit used a food bank in the last financial year. When we think that, in the first half of that year, universal credit was £20 higher, furlough was still in place, inflation was 4% and energy bills were half what they are now, it begins to show the scale of the problem.

On 9 January, I asked the Minister what the Government were going to do about the shocking increase in food banks. He said that they needed to know more. Now that they do, what will they do about it?

[Viscount Younger of Leckie (Con)]

First, I welcome the noble Baroness back. It is good to see her in her place. To pick up on what she was saying, our newly published statistics on food bank use, alongside the broad suite of poverty data, will indeed help us to shape future policy considerations. There is much in these statistics—some good, some less good—and I assure the noble Baroness that we will look very carefully at them and use them to help us inform and impact on our policies.

[Baroness Barker (LD)]

My Lords, will the Government commit to the full sharing of full universal credit datasets with local authorities so that they can better co-ordinate their poverty relief programmes with the Government?

[Viscount Younger of Leckie (Con)]

Yes, I can certainly follow that up. The noble Baroness will be aware that there is a very strong link with the housing support that I say that “we” but in fact local authorities are giving through the DHPs. There is certainly more that we can do to work even more closely with the local authorities in this respect.

[The Lord Bishop of Derby]

My Lords, 80% of our churches currently support food banks. The Food 4 Thought Alliance was set up to respond to the immediate needs of people in Derby at the start of the Covid pandemic. It reports a 30% increase, already mentioned here, in the distribution of food parcels since last year.

The National Farmers’ Union cautioned last year that we were

“sleepwalking into a food supply crisis”.

What is being done to ensure that problems with supply chains do not push yet more people to rely on food banks?

[Viscount Younger of Leckie (Con)]

The right reverend Prelate is right. We recognise that charities and community organisations have been hit by a triple threat of rising demand, rising costs and declining income over recent months. I applaud the role the Church plays in this respect. I am also very aware of the rising costs of certain food items from places such as Morocco and Spain due to climate change. But the funding we are giving broadly supplements the intervention to support households and businesses. The Government also support some of these vulnerable groups through other funding, such as through DLUHC.

[Baroness Boycott (CB)]

My Lords, have the Government considered properly the role of the social supermarket? I speak as the chair of Feeding Britain. We have opened 260 of them, which you join as a club. You can then shop at around 30% to 40% off in the pound. You also get taught to cook and you get community help, which has been so stripped out over the years of austerity. For instance, in the Wirral, where I was on Friday, we have six such social supermarkets. Every Monday they have an adviser on benefits. In the course of 18 months, 1 million quid has been returned to people because they do not understand the complexities of the benefit system. These set-ups work to put back things that used to be in before the age of austerity. Will the Minister agree to come and look at one with me and consider how the Government can take them forward?

[Viscount Younger of Leckie (Con)]

I would certainly be very pleased to join the noble Baroness to look at social supermarkets. She will be aware that the main supermarkets do offer some help in this respect. For example, Morrisons offers an average 13% price cut on more than 500 goods, including eggs, beef and rice. Children get a free meal at Morrisons cafés when their parent buys an adult meal worth £4.99.

[Lord Farmer (Con)]

My Lords, how convinced are the Government that the data on food bank use reflects the number of those who would genuinely go hungry without them? About one-third of all food is wasted, with the UK a leading culprit internationally. Increased use of food banks therefore also underlines the need to cut food waste, which we have heard already. How can we better redistribute food that is reaching its sell-by date to those most in need?

[Viscount Younger of Leckie (Con)]

The figures that have just come out help us with a regional focus. For example, 4% of households in the north-east and north-west use a food bank, which is 1% higher than the average for households in England. To answer my noble friend’s question on food waste, we support a broad and holistic approach, with £2.7 million per annum grant funding to the Waste and Resources Action Programme. Crucially included in this programme is the food waste reduction road map and the push for food businesses to follow this tool to target, measure and act on waste, including to redistribute more. It is very important to make the connection between where there might be waste, particularly with foods at their sell-by date, and distributing to those most in need.

[Lord Hain (Lab)]

My Lords, why do half the NHS trusts in England have food banks for their staff?

[Viscount Younger of Leckie (Con)]

This question has cropped up before in this House. I deeply regret the anecdotal evidence that we have of those in the NHS who are minded to go to, or need to go to, food banks. It is certainly something that the Government are very aware of and are looking to take action on in a number of ways.

Rent Officers (Housing Benefit and Universal Credit Functions) (Modification) Order 2023

Viscount Younger of Leckie Excerpts

Wednesday 22nd March 2023 Lords Chamber

[Lord Kennedy of Southwark (Lab Co-op)]

My Lords, like others, I thank the noble Baroness, Lady Thornhill, for tabling her Motion and wish her a speedy recovery. I also thank the noble Lord, Lord Shipley, for moving the Motion on her behalf. I say at the outset that I think I agree with every word that every noble Lord has said so far in this short debate on the regulations before us.

When local housing allowances were introduced in 2008, the aim was to reach up to the 50th percentile of all rents in a broad rental area. In other words, people on benefits could afford to live in the cheapest half of rented properties in the area that they live in. However, from 2011, that all changed. First, LHA rates were downgraded to the cheapest 30% of local properties. Then, rather than moving with rent levels, LHA rates were uprated by inflation, then by just 1% and, finally, they were frozen in 2016. The result was that, by 2020, LHA rates bore no connection to the actual rents in local areas. In 2020, the Government restored them to the 30th percentile, only to then freeze them in cash terms. This year, although Ministers finally agreed to raise most benefits by inflation, they excluded LHA rates. The effect of this freeze is seen in a growing gap between the actual rents that people pay and the amount of housing support that they can receive—an approach that the Institute for Fiscal Studies said was

“arbitrary and unfair, and its consequences will only become more bizarre over time.”

There is deep and widespread concern in the housing world about the effects of this policy. The Northern Housing Consortium told Ministers that

“a continued freeze on LHA would make it even harder for existing private renters to make ends meet, risking homelessness and making it increasingly difficult for local authorities to discharge their homelessness duties effectively.”

It reported in the Northern Housing Monitor 2022 that only 7% of rental adverts were affordable to those reliant on LHA in the north. The National Residential Landlords Association says that the LHA rate freeze has

“led to the proportion of landlords letting to tenants in receipt of benefits falling over the past decade.”

If supply falls, demand does not, if only because there is no alternative. The Levelling Up, Housing and Communities Committee, in its report on the private rented sector in February—my noble friend Lady Lister made reference to this report—concluded that the failure to ensure LHA rates keep pace with market rents

“is quite obviously making the private rented sector even less affordable for many people who are only there because the social housing sector has been cut back and can no longer accommodate them.”

That is the problem.

Unsurprisingly, given high inflation and the pressure on supply, while LHA rates are frozen in cash terms, private sector rents have continued to rise, so the gap is getting bigger year on year. The Institute for Fiscal Studies says that, compared with uprating LHAs to match local rents, the freeze will reduce support for nearly 1.1 million households by an average of £50 per month, saving the Government more than £650 million in 2023-24. That is on top of the amount that people were already having to find as a top-up. Over 800,000 households in the private rented sector face a shortfall between their rent and their local housing allowance, including over half of all universal credit households who rent privately. The Institute for Fiscal Studies further says that

“two-thirds of lower income privately renting households must cover at least a quarter of their rent from sources other than housing support.”

The House of Commons Library briefing, which has been referred to in this debate, says that, from April 2023, on average, households will need to top up their rent by

“just under £750 a year.”

People in households with a disabled person are more likely to be hit by LHA shortfalls. Paul Sylvester, head of housing operations at Bristol City Council, told the Work and Pensions Select Committee in 2021 that half the households they saw with a shortfall included a disabled person. They were increasingly seeing disabled people forced to use their disability benefits to cover the rent top-up, rather than what the benefits were meant for. Can the Minister say whether the Government have looked at the impact of this policy on disabled people specifically? And the problems are not equally distributed. The IFS cites the example that, while the 30th percentile of rents in Bristol is £100 more than in Newbury, the amount of housing support that those who live in Bristol can receive is £12.50 less than those who live in Newbury can receive. How can this be right? Can the Minister please explain?

I have no doubt that the Minister will try to suggest that there is not a problem, because anyone who is struggling can always request a discretionary housing payment: other noble Lords referred to this in their contributions. But let us be clear: a discretionary fund for one-off payments is not the answer. In any case, a report by Shelter published in February—again, this has been referred to—found that the Government’s own data showed that councils were already struggling to keep up with demand. It says:

“Some were on the brink of running out of funding—31 English councils had spent three quarters or more of their allocation before the winter started”.


It points out that the problem is especially bad in certain regions. Take the north-east: Sunderland, Gateshead and Northumberland spent more than 90% of their allocation by the end of September 2022, and none of this is surprising given that DHP funding was cut by £40 million in this financial year. At a time when inflation is dangerously high and food bank use is at record levels, how do Ministers expect those on low incomes to find ever larger sums to top up their rent?

We see from the figures that homelessness is soaring. Rough sleeping is up by 74% since 2010 and by 26% in the last year; there has been an 83% rise in the number of children now living in temporary accommodation as a result of homelessness. One in 23 children in London is now homeless. The squeeze on local housing allowance is undoubtedly a major driving factor in this situation. It is also hitting local authorities and the taxpayer, as evidence suggests that more people have been forced into expensive temporary accommodation. Can the noble Viscount tell the House what assessment the Government have made of this wider cost to the public purse of the LHA freeze?

Investment in social housing is by far the best solution to this crisis. That is the way to ensure that low-income families can have a secure and affordable home to live in, and a better-managed private rented sector would also be good for tenants. Ministers have promised action for years, but what have we seen? Not a lot. All these things would be better for the public purse too. In the meantime, freezing the local housing allowance makes no sense whatever and serves only to make a bad situation worse.

I ask the noble Viscount whether he might like to join me one day and go out to some of the London boroughs to look at the quality of the accommodation we are asking people to live in. As the noble Lord said, people are being asked to live in the most appalling accommodation, so I hope he will join me. The noble Lord, Lord Young of Cookham, came out with me a couple of years ago. It is quite shocking where we expect families to live, so I hope the noble Viscount will accept the invitation to come out with me some day in the next few months. Anyway, I look forward to what he will say in response to this debate.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I start by taking up the offer of the noble Lord, Lord Kennedy. This is a fairly straightforward answer: it is a yes. I would very much appreciate the opportunity to join him and whoever else he might care to bring along to see for myself what is happening. It is very much what I would like to do—genuinely.

I thank the noble Lord, Lord Shipley, for initiating this debate on the Rent Officers (Housing Benefit & Universal Credit Functions) (Modification) Order 2023. This annual legislation informs rent officers in the Valuation Office Agency, the VOA, and rent services in Scotland and Wales of the level at which to set local housing allowance, LHA, rates from April 2023. I also add my voice to those of other noble Lords in wishing the noble Baroness, Lady Thornhill, a speedy recovery from her illness—as the House is aware, the debate was down in her name.

--- Later in debate ---

[Lord Kennedy of Southwark (Lab Co-op)]

I am glad the noble Viscount mentioned fairness to the taxpayer, as it is not only about the sums of money—our whole point is that the Government are not spending it very wisely. If they looked and listened a bit more, they could spend it more effectively and get better value for money for the taxpayer. It is no good saying that they want to spend money wisely. They are not spending money wisely and that is causing huge grief for people. I do not understand why they will not address that. They need to work across departments, address the issues and spend the money better.

[Viscount Younger of Leckie (Con)]

I absolutely have listened to the noble Lord, but how Governments spend money and whether they spend it wisely is a subjective issue wherever it is spent. We want and need to spend it wisely and on the most vulnerable.

Health and Disability White Paper

Viscount Younger of Leckie Excerpts

Monday 20th March 2023 Lords Chamber

[Baroness Thornton (Lab)]

My Lords, I thank the Minister for taking this Question. The PIP assessment is designed for a totally different purpose from the work capability assessment, so my first question is this: how will the Government reconcile those two completely different systems? What will happen in future to people who do not currently receive PIP—those on the limited capability for work and work-related activity element of universal credit—and particularly those with short-term and fluctuating conditions? Unless it is the Minister’s intention that some 750,000 people will lose £350 a year, an alternative needs to be in place. What would that alternative be and what would it look like? Finally, do the Government believe it is fair that the hundreds and thousands of people with disabilities that prevent them even engaging in work-related activity should receive less financial support through universal credit than people who are entitled to PIP? If so, what is the basis for that justification?

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

I will attempt to answer the noble Baroness’s questions. However, I start by saying that, as she will know, these reforms are the biggest undertaken in a decade and have been years in the making, with our initial paper having gone out for a consultation in 2021.

The main answer is that we are very much focused on ensuring that more people are supported into the workforce so that they can enjoy the positive impacts of work, through a more simplified system. I turn to improving our services, which is probably at the heart of the noble Baroness’s question, in focusing on PIP. Putting aside the delays, which I realise we are making progress on, employment and health discussions, which are being tested at the moment, are led by healthcare professionals and focus on how we can help people to overcome their barriers to moving towards work. Furthermore, we have the enhanced support service and the severe disability group for those with the most severe health conditions, and we are developing the skills of our assessors to match people’s primary health conditions. These are game-changers and mark a significant change from the current system.

[Baroness Brinton (LD)]

The Minister said that this White Paper has taken a long time to get here, but the rollout will not start until 2026-27, so I really hope that the Minister will provide assurance that a lot of the concerns raised by the disabled community will be addressed before it starts to roll out. Plenty of people would fall through the cracks—they are currently not receiving PIP but they are going through the WCA process—so what happens to them? The Chancellor said, with a great flourish, that sanctions will be “applied more rigorously” to people without a health condition, but many disabled people do not have a health condition, so what happens to them? The current level of sanctions causes distress and worse: the Government know that Jodey Whiting killed herself after her benefits were wrongly cut off, and the DWP was found guilty of five serious failings in her case. What will the Government do to ensure that benefits are not cut off from disabled and vulnerable people?

[Viscount Younger of Leckie (Con)]

I will quickly pick up on the noble Baroness’s point about the Jodey Whiting case. Our sincere condolences remain with Ms Whiting’s family. The department is ready to assist the coroner with their investigation, but, as the noble Baroness will expect, I am not able to comment on active legal proceedings.

On the noble Baroness’s point about timings, we are deliberately rolling out this new definitive programme over a number of years, which will allow us to look at those who might fall through the cracks, as she put it. There is a lot of work to be done between now and 2027-28. The main thing is that we are investing in employment support for disabled people and people with health conditions, and we are stepping up our work-coach support across the country. That perhaps plays into another question: this takes time to put into place, but we are already recruiting for new work coaches, we are extending the work and health programme, and we are rolling out our new in-work progression offer to help people in work on universal credit.

[Lord Bellingham (Con)]

My Lords, occupational health services up and down the country obviously play a vital role in helping disabled people to stay in work and in their quest to get back into work. However, large firms that have HR departments and other resources find it much easier to access occupational health services than small businesses and micro-businesses, so what can the Government do to help them? Also, am I right in saying that there is a national shortage of occupational health professionals? If so, what will the Government do about it?

[Viscount Younger of Leckie (Con)]

My noble friend makes a good point: small employers are five times less likely to provide access to occupational health services than large employers. Only 19% of SMEs provide occupational health services for their staff. Bearing in mind that, as I said, this must be a game-changer, we have a number of supporting initiatives in place: developing the test for a financial incentive and market navigation support for SMEs and self-employed people; working with the occupational health sector to identify better ways to support development; and delivering a £1 million fund to stimulate innovation in the occupational health market.

[Baroness Lister of Burtersett (Lab)]

My Lords, the noble Baroness, Lady Brinton, asked about sanctions, but I do not think that the Minister answered her, so perhaps I will ask the question in a different way. Can the Government guarantee that work-related activity will be voluntary for those receiving the health element?

[Viscount Younger of Leckie (Con)]

It will be, but, as I mentioned to the noble Baroness, Lady Brinton, we have a number of matters to work through, which is why I have said that it will take time. Sanctions are part of this: for example, in November 2022, the universal credit sanction rate was 6.51%. Sanctions underpin conditionality and are a key part of a fair and effective welfare system, so it is right that a system is in place to encourage claimants to take reasonable steps to prepare for and move into work. We need to keep our eye on this.

[Lord Addington (LD)]

My Lords, this is an odd White Paper because it misses out a whole chunk of the system: the link between education and benefits. The Government have just produced a paper that says they are going to do much better at identifying special educational needs. Here, I should remind the House of my interests. Reference is made on page 12 to all the neurodiverse groups. You would expect these to manifest in the education process. How are they going to go through? Are the Government requiring an education and healthcare plan? Will there be some other form of identification? How is this to be done? This is a long-standing problem that means assessors and lawyers make money. Can the Government tell me how they will disappoint these groups?

[Viscount Younger of Leckie (Con)]

The noble Lord is right that this is another area we need to focus on, particularly those with neurodiversity issues or, indeed, autism. We have made progress in seeing more disabled people in employment but, as he will know, progress is not even. Groups such as autistic people are still showing very low employment rates—for example, only around 26% of working-age autistic people are in employment—so there is much work to do. This will be a factor in what we look at over the next few months and years as part of these new initiatives.

[Baroness Hollins (CB)]

I am glad that the Minister mentioned autistic people. How will the proposals in this White Paper impact on people with learning disabilities? They probably have the lowest rate of successful employment of any group, with some 6% fewer adults in employment, and it is difficult to see how such a complicated system is going to help them. Can the Minister help?

[Viscount Younger of Leckie (Con)]

I hope I can help the noble Baroness by saying two specific things. She will know that we have the national autism strategy, which was launched in 2021. As to what we are doing now with the recent announcements, it is very important to highlight our Disability Confident programme. It is incredibly important that we work ever harder to persuade employers to take on those with these conditions, because there is no doubt that many of them are able to work and can offer huge benefits to employers. This disability gap needs to be closed.

[Baroness Bennett of Manor Castle (GP)]

My Lords, having spent years of my political life supporting disabled people campaigning against the dreadful Atos and its application of the work capability assessment, I find myself with some surprise echoing the concerns we have heard from all sides of your Lordships’ Chamber about this proposal. My question to the Minister is a fairly simple one. James Taylor, chief executive of Scope, said in responding to this White Paper:

“The Government has got a mountain to climb to win back the trust of disabled people.”


Does the Minister agree with that assessment?

[Viscount Younger of Leckie (Con)]

I certainly do not. Having said that, we are not complacent. There is an awful lot we have done, some of which I have mentioned already, for the disabled cohorts, and it is incredibly important that we do even more to encourage those who are disabled to come into work. Having produced some surveys, we know already that 20% of those who are disabled want to work, and actually, 4% of that 20% want to work right now. So there is an awful lot we can do, but the picture the noble Baroness has painted is neither fair nor accurate.

Social Security (Additional Payments) (No. 2) Bill

Viscount Younger of Leckie Excerpts

2nd reading & Committee negatived
Monday 20th March 2023 Lords Chamber

Moved by

[Viscount Younger of Leckie]

That the Bill be now read a second time.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

I am delighted that we have the opportunity today to discuss this important legislation, which will make a huge difference to millions of families. This Government fully understand the pressures that households across the UK are experiencing as we continue to face the challenges of high inflation brought about by global issues such as the war in Ukraine and the legacy of Covid. The Prime Minister has set out our ambition to see inflation halved this year, easing cost of living pressures and increasing financial security for families. The Office for Budget Responsibility is now forecasting that CPI inflation will fall to 2.9% by the end of 2023.

Nevertheless, short-term challenges remain, so it is vital that the Government continue to take a responsible and disciplined approach to public spending while supporting vulnerable people and protecting vital public services. This is why we are taking this further decisive action, as announced by the Chancellor last November, to help families through this difficult period. The measures we have taken over the last year demonstrate that this is a Government who will always protect those who are the most vulnerable to changing economic conditions.

To give some context before I turn to the specific provisions of the Bill, it is our firm belief that the best way to help people to improve their family’s financial circumstances is to support them to move into and progress in work. The measures we took to protect millions of jobs over the pandemic are just one example of the extraordinary interventions by this Government to maintain a strong labour market. There are almost 1 million fewer workless households compared with 2010, and unemployment is close to a 50-year low at 3.7%. But with 1.12 million vacancies, our focus remains firmly on helping people take advantage of these opportunities. The core support provided in our jobcentres, including the new in-work progression offer, builds on these priorities.

Noble Lords will have heard the Chancellor announce a range of employment measures in last week’s Budget that will provide further support to help people enter work and increase their working hours. This includes extending childcare support so that eligible working parents in England will be able to access 30 hours of free childcare per week for 38 weeks of the year from when their child is nine months old. For those on universal credit, childcare costs will be paid in advance when parents move into work or increase their hours, with an increase to the childcare cap to £951 for one child and £1,630 for two children.

To further support low-paid workers, we are making the largest ever cash increase to the national living wage from April: an increase of 9.7% to £10.42 an hour. This represents an increase of over £1,600 in the annual earnings of a full-time worker. Also, from April more than 10 million working-age families will see their benefit payments rise by 10.1%, nearly 12 million pensioners will see a 10.1% increase to their state pension, and we will increase the benefit cap levels by 10.1%. Helping people to improve their living standards through work will always be our overriding priority, but it is also right in these challenging times for the Government to step in and provide additional support, especially for our most vulnerable citizens.

In 2022-23 our substantial package of cost of living support provided help through the energy price guarantee, the household support fund and the initial tranche of cost of living payments for those on eligible means-tested and disability benefits. The energy price guarantee offered much-needed support for rising energy bills. As noble Lords will have heard last week, the Chancellor announced that we will maintain the energy price guarantee at £2,500 for a further three months from April 2023. We made over 30 million cost of living payments to those who needed them most in 2022: £650 was made available to households on means-tested benefits; £150 payments were made available to those on eligible disability benefits; and there was a £300 top-up to winter fuel payments to more than 8 million pensioner households.

The household support fund, distributed by local authorities in England to help households with the cost of essentials, has been providing support since 2021. We have announced a further extension for the next financial year. Local authorities have accountability for supporting households in the most need, particularly those who may not be eligible for the other support the Government have recently made available. The devolved Administrations will receive Barnett consequentials to spend at their discretion and with their local knowledge.

I turn now to the specific details of the Bill. Noble Lords will note that this is a narrowly defined Bill with one very simple aim: to get financial support to those most in need. It gives the Government powers to make vital cost of living payments of up to £900 for more than 8 million households on eligible means-tested benefits and £150 payments for more than 6 million people on qualifying disability benefits—worth around £8.6 billion in 2023-24. These are tax free and not subject to the benefit cap, so people will receive every penny of these payments, which will be made automatically, so no one will need to apply.

These payments will be made across the UK. We are legislating on behalf of Northern Ireland, as we did with the 2022 payments; this approach has been noted in an exchange of letter by the respective Permanent Secretaries. The Secretary of State has obtained formal Cabinet clearance to legislate without the consent of the Northern Ireland Assembly, given that there is currently no sitting Assembly or caretaker Minister for Communities.

This Bill replicates the successful and straightforward approach that enabled the Government to make cost of living payments this financial year while maintaining core benefit delivery. We recognise that keeping the policy simple means that some people may miss out. This is one of the reasons for making three separate payments: to reduce the chance of somebody missing out completely. There is also the wider package of support that I have touched on already, including the household support fund.

These payments are a crucial measure of support, demonstrating this Government’s commitment to helping those most in need. This Bill gives much-needed financial security and support for the most vulnerable during this period of higher inflation, through hundreds of pounds given directly to millions of families around the United Kingdom, and I commend it the House.

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

My Lords, I thank all noble Lords for their contribution to today’s debate. This is significant legislation that will provide support to low-income and vulnerable households across the country, and I am delighted at the progress we have made today to move this Bill forward. I start by echoing the words of the noble Baroness, Lady Thornton, about the noble Baroness, Lady Sherlock; I too wish her a very swift return.

I am grateful for the support—perhaps qualified support would be a better way of putting it—from Peers for today’s Bill. The cost of living payments we are providing for will make a significant difference to the lives of low-income families across the country. Millions of people on means-tested benefits will soon gain from the first payment, in the spring. I will pick up on the point made by the noble Lord, Lord Shipley, and the noble Baroness, Lady Lister, as to when the first payments will be made. They will both be disappointed because, although I cannot give more detail today, I can assure both Peers that we will release details of when we plan to make payments to the vast majority of recipients on GOV.UK when these are available. Perhaps I can be helpful by saying that we aim to do this very soon.

I recognise that we may not always agree on the detailed design of the payments, but I know that we are united on the need to take action to support people with the increased costs of living. Our priority has always been to safeguard the swift and accurate delivery of these payments to those who need them. I will pick up on some points made by several Peers, in particular the noble Baroness, Lady Thornton, who asked about the adequacy of what we are doing. She will know that inflation is forecast to remain high in the next few months, which means that many people will continue to need additional support with the cost of essentials. The Bill will enable the delivery of very significant additional support worth almost £9 billion in 2023-24.

It is important to remember that these payments are just one element of the measures announced by the Chancellor in November and in the Budget last week. We intend to uprate benefits and the state pension by 10.1% from April and to increase the benefit cap by 10.1%, as the House will know. In the Spring Budget the Chancellor set out a package of measures designed to support people to enter work and increase their working hours, including an increase in childcare support and doing more to close the disability employment gap, which I alluded to earlier this afternoon.

The noble Baroness, Lady Thornton, raised the £900 payment, and I want to follow up on that. The cost of living payments are one part of the package of support, as I have mentioned, which includes, as I have not said yet, maintaining the energy price guarantee at £2,500 for a further three months from April, and the extension, as mentioned earlier, of the household support fund.

The noble Lord, Lord Shipley, asked an important question about those with fluctuating earnings and who are assessed monthly. Whichever eligibility period is chosen, there will always be some people who will not qualify during that period. That is why we decided to deliver the cost of living payments for means-tested benefit claimants in three separate payments over the 2023-24 period, to reduce the chance of households missing out altogether, which is a theme I may well return to.

We have carefully considered the position of those with fluctuating earnings. Unfortunately, it is not feasible to distinguish between people with permanent changes to their earnings and those with temporary fluctuations due to non-monthly earnings; for example, those who are paid on a four-weekly basis.

My noble friend Lord Dundee and the noble Baroness, Lady Thornton, raised a number of issues relating to the payments. On the flat-rate payments, it may be helpful for me to explain that these payments are being made using the department’s ad hoc payment system, which has some limitations, including that it can make only one payment “type” at a time, of a single value. In practice, staggering payments according to household size would be administratively challenging and would delay making payments to millions of vulnerable people. Of course, families on means-tested benefits will gain from our planned uprating by 10.1% from April. This includes families who are subject to the benefit cap, which is also increasing by 10.1%, as I mentioned earlier. As I have said, for families who need additional help, we are extending the household support fund in England throughout 2023-24.

I will touch briefly on carers, raised, I believe, by the noble Baroness, Lady Lister. I, too, recognise the vital contribution made by those who care for some of the most vulnerable in our society. We are focusing support on those carers who need it most. Around 480,000 carer households on universal credit already receive around an extra £2,000 a year through the carer element. I therefore encourage all carers on a low income to check that they have applied for all the benefits they are entitled to, including means-tested support. Although carer’s allowance is not a means-tested benefit, we know that 60% of working-age carers who receive carer’s allowance also claim an income-related benefit; this means that they should also be eligible for the cost of living payment.

The noble Baroness, Lady Lister, raised the issue of communication. The household support fund guidance makes it mandatory for local authorities to make public their plans for the scheme, including how and when they will deliver the application-based element of their provision. As she may know already, it is also mandatory for local authorities to establish a dedicated and accessible webpage on their main authority website which sets out the details of their local scheme. I hope this helps the noble Baroness.

On the point raised by the noble Baroness, Lady Lister, and alluded to by the noble Baroness, Lady Thornton, about addressing the so-called hard edges, noble Lords said that we have had plenty of time. They will know that in 2022, we delivered tens of millions of payments successfully by keeping the rules for these payments as simple as possible. Although we have carefully considered our position on these issues for 2023-24, any major changes would introduce complexity, risking delays to payments, or introduce unacceptable levels of fraud or error. That is a really important point to make.

The noble Baroness, Lady Lister, stated that our support is too late. I acknowledge that many families have struggled this financial year with the 3.1% uprating, but the Government have made substantial support available to households this winter. This includes, as mentioned earlier: the energy price guarantee, which has been extended; the £400 discount provided through the energy bills support scheme; the £324 means-tested cost of living payment made in November; the £300 top-up to winter fuel payments; and, as mentioned—I will mention it once more—the household support fund.

The noble Baroness, Lady Lister, raised some other points about the payments. I think I have answered this point, but there is a very good reason why we are splitting the three payments for people on means-tested benefits, which is—as I mentioned to the noble Lord, Lord Shipley—to ensure that we cover those who are missing out. That is an incredibly important point to make.

The noble Baroness, Lady Lister, asked about extending the eligibility period. Extending the window extends the amount of time between eligibility and payment. In this period, some people will experience changes of circumstance, including some who will permanently increase their earnings and will now be ineligible for means-tested benefits unless they are in need of support. That is the answer I would give to her.

I have answered the question on flat-rate payments.

The noble Baroness, Lady Lister, asked why we are excluding those with no universal credit award due to a sanction; I think that the noble Lord, Lord Shipley, also raised this issue. They will both know that people are sanctioned only if they fail, without good reason, to meet the conditions that they agreed to. These sanctions can often be resolved quickly by claimants getting in touch and attending their next appointment. If someone with no universal credit award due to a sanction re-engages with us, they may get one of the later cost of living payments. I should make the case, however, that it is down to individuals to be in touch on a regular basis and to make sure that they can keep their appointments.

The noble Baroness, Lady Lister, asked about the evaluation. I know that she has asked about it before in previous debates in this House; I note her eagerness to see it. We are still in the planning stages of our evaluation. We will come back to the House as soon as possible with further detail; I am afraid that that is the very best I can do this evening.

My noble friend Lord Dundee and the noble Baroness, Lady Lister, asked about splitting the payments; my noble friend indicated that this was suggested by the Treasury Select Committee. I may have covered this earlier, but we need to balance spreading support across the year with ensuring that we have enough time to deliver each payment without compromising core benefit delivery. As mentioned earlier, these payments are being made using our ad hoc payment system; that is perhaps a different way of saying the same thing, but I appreciate noble Lords’ questions.

I hope that I have covered the majority of the questions that were asked. As ever, I will look closely at Hansard to make sure, as I always like to do, that answers have been given to all the points that were raised.

To conclude, let me say that, as I said at the outset, I believe that this Bill provides substantial cost of living support, as announced by the Government over the past year, and the additional support announced at the Budget. It demonstrates our ongoing commitment to supporting the most vulnerable in our society. I am very pleased that we can now move quickly to start making these vital payments. Once again, I commend this Bill to the House.

Bill read a second time. Committee negatived. Standing Order 44 having been dispensed with, the Bill was read a third time and passed.

Pension Schemes: Guidance

Viscount Younger of Leckie Excerpts

Monday 13th March 2023 Lords Chamber

[Baroness Altmann]

To ask His Majesty’s Government, further to the report by Pensions For Purpose One year on—TCFD reporting for pension funds, published on 1 February, whether they intend to produce guidance for pension schemes in relation to their fiduciary duties.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, by October 2022 occupational pension schemes with assets above £1 billion fell into scope of DWP’s requirements to report in line with the task force on climate-related financial disclosures, the so-called TCFD recommendations. The department published guidance alongside the requirements to help pension schemes improve the quality of governance and manage climate risk. DWP committed to review the requirements in late 2023 and will consider whether pension schemes require additional guidance in relation to their fiduciary duties.

[Baroness Altmann (Con)]

My Lords, I thank my noble friend for that Answer and declare my interests as set out in the register. The Pensions for Purpose report highlighted a dilemma, in which some say that considering the real-world impacts of pension fund investments, including green or net-zero assets, infrastructure and housing, could be portrayed as trading off risk-adjusted returns against doing good. But does my noble friend agree that this is a false dichotomy? A failure to consider the climate and nature impacts of investments is likely to increase long-term risks and reduce returns, as opposed to pension funds that typically look at short-term performance measures. Can my noble friend ask relevant Ministers in the Treasury whether they will consider accepting relevant amendments that have been laid to the Financial Services and Markets Bill?

[Viscount Younger of Leckie (Con)]

Well, I will not be drawn on that by my noble friend, but the comments that she makes are broadly correct. It is very important that pension schemes, particularly those for purpose, encourage investments that align with the environment and society, and that includes climate change. I believe that the report, One Year On, outlines some pointers, insights or challenges. For example, most funds are using their investment consultants, while some are not yet using or including carbon offsets in their TCFD reports, but nothing in the findings so far is unfamiliar to DWP. We know there is work to do to improve the reports and build an element of expertise across the industries more generally.

[Lord Davies of Brixton (Lab)]

My Lords, I welcome the report. The question is whether the advice can effectively come from the Government against the background—I hope the Minister will agree—that it is the members’ money that is intended to provide them with a retirement income and should be used in accordance with their wishes and views. Can the Minister confirm that that is his view of how money in pension funds should be used?

[Viscount Younger of Leckie (Con)]

I think it is important that the right advice is given. I start by saying that this is pretty ground-breaking, because the UK is the first country in the world to make occupational pension schemes consider, assess and report on the financial risks of climate change. In terms of what I would call “the push”, we have consulted with the pensions industry and certainly think it is right that guidance is given. For example, my department has introduced guidance alongside the TCFD requirements to help pension schemes understand how to identify, manage and assess climate-related risks and opportunities.

[Lord Teverson (LD)]

My Lords, actually, I think we were second after New Zealand; we were the first in the G20. The Financial Conduct Authority recently surveyed TCFD returns and found weaknesses in two areas: data or metrics, and targets. These are key areas. How will the Government try to put that right? Secondly, will the Government move forward, as I think they have said they will, with external assurance—in other words, audit—of those returns, to make sure that we banish greenwashing in this area?

[Viscount Younger of Leckie (Con)]

The noble Lord makes a good point. He has pointed out a few issues that were in the initial outlines. He mentioned data, which is an issue. Metrics and the use of implied temperature rises—for example, carbon offsetting and scenario planning—are definitely challenges that are being worked on domestically and internationally. As I said, we are the first country in the world to do this. It is good work, which needs to be built on.

[Lord Naseby (Con)]

My Lords, I declare an interest as a trustee of the Parliamentary Contributory Pension Fund. I hope that those who are members have received the annual report and will recognise the performance of our fund, which grew from 104.3% in April 2020 to 130% in April 2022. However, that is not really the key point. My key point is that a fair number of pensions—though not our pension—have suffered from LDI and the chaos in the financial markets in September last year. Against that background, I suggest to my noble friend on the Front Bench that all those who are affected have more than enough on their plate at this time tackling those challenges, without having any further advice from anywhere else.

[Viscount Younger of Leckie (Con)]

Well, I do not really agree with the general points my noble friend has made. The main thing is that the regulator has a particularly strong role here, and it plans to publish its findings on what we are doing soon to provide schemes with examples of good practice. The regulator has found so far that most reports were published on time. This is to do with the publishing of reports. Almost all were substantial documents showing trustee engagement. In terms of my noble friend’s point about LDI, he will know that much progress has been made, led largely by the independent Bank of England working closely with the Treasury.

[Baroness Drake (Lab)]

My Lords, I declare my interest in the register as a trustee. The report raises key questions about fiduciary duty. In summary, we need clearer guidance from the Government on three key issues: the extent to which environmental and social factors form a core component of investors’ fiduciary duties; the fact that pension scheme fiduciary duties are not a substitute for what government should do; and the fact that government desire for more pension fund investment in UK productive investment has to align with pension trustee fiduciary duties. Can the Minister confirm that, when issuing more guidance on the fiduciary issue, they will address these particular three issues where the contours of fiduciary duty need clarity?

[Viscount Younger of Leckie (Con)]

As I have said before, it is the case that more progress needs to be made, and the noble Baroness has much experience in this field. Let us start with climate change, which poses major financial risk to pension schemes and savers’ returns, with almost £2 trillion in assets under management. I reassure her that pension schemes in scope of the DWP’s requirements, as I think she will know, must produce the annual TCFD report, which is based on four key pillars: governance, strategy, risk management, and metrics and targets. That might be five, but I think it is four.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. Has this afternoon’s discussion not illustrated that there is a lack of clarity about how fiduciary duties are interpreted in terms of the long-term risks and possibilities of climate change-related investments? Therefore, would the Minister reconsider having a conversation with his colleague, the noble Baroness, Lady Penn, about the amendments on this point to the Financial Services and Markets Bill?

[Viscount Younger of Leckie (Con)]

I can certainly pass the message on to my noble friend. On fiduciary duty, the noble Baroness will know that trustees have a duty to act overall in the best interests of members. This has been traditionally interpreted as covering risk-related returns as well. We made clear in our 2022 stewardship guidance, perhaps as an assurance, that trustees should be considering whether climate change risk is financially likely to be a material risk.

[Baroness Sherlock (Lab)]

My Lords, the report has said that, since the law was changed to require pension funds to do climate reporting as a way to nudge the companies and assets in which they invest to do better, two broad problems have emerged. First, the data out there are not consistent in timeframes or formats, or across asset classes or managers. Secondly, the regulatory regime seems to focus more on positioning pension funds than on the climate transition plans of the companies; as the report puts it,

“the world needs greening, not the pension fund”.

So will the Government look again at this?

[Viscount Younger of Leckie (Con)]

Not only will we be looking again, but this is an iterative process. As I have said, we are yet to come back on the report, One Year On, but we will come back soon. I also reiterate the fact that we are the lead in the world; I will have to check the figures from the noble Lord, Lord Teverson. For example, since our department introduced TCFDs, over 70% of occupational pension schemes—a value of £1.4 trillion—are now subject to climate disclosure, and over 80% of scheme members, some 20 million people, will be able to access their pension schemes’ disclosures on climate risks and see how they are being managed. That is being published for the first time.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2023

Viscount Younger of Leckie Excerpts

Monday 13th March 2023 Lords Chamber

Moved by

[Viscount Younger of Leckie]

That the draft Regulations laid before the House on 12 January be approved.

Considered in Grand Committee on 6 March.

Motions agreed.

Employment: Disabled People

Viscount Younger of Leckie Excerpts

Monday 6th March 2023 Lords Chamber

[Lord Touhig]

To ask His Majesty’s Government what plans they have for new initiatives to encourage business and industry to employ disabled people.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, a range of government initiatives are already supporting disabled people to start, stay and succeed in work. The Government are working to improve and better integrate resources for businesses, helping them to support and manage health and disability in the workplace. The Government are looking in detail at workforce participation, including discussions with business and industry, whose role is key to making the most of the talents of disabled people in the workforce.

[Lord Touhig (Lab)]

I thank the Minister for his helpful Answer; I will follow up on some of the points that he just made. Just 5% of adults with a learning disability are in work. One way to change this is by offering more supported internships; the charity Hft tells me that this helps business better understand the benefits of employing someone with a learning disability. However, the problem is that supported internships are available to people only up to the age of 25. Will the Government consider extending this scheme to include learning-disabled people over the age of 25, which would enable many more to get into work?

[Viscount Younger of Leckie (Con)]

I appreciate the noble Lord’s question and the work that he does in this area. I can assure him that the Government are committed to reducing the disability employment gap, including in relation to the young and interns. It is important that those who have a disability are given every chance to start on the path to a career. What I cannot do, I am afraid, is commit to the noble Lord’s point about extending the scheme beyond the age of 25, but I have noted it and will take it back to the department.

[Baroness Deech (CB)]

My Lords, what happened to the Government’s national disability strategy, which was declared illegal by the Court of Appeal a while ago? It does not seem to have been renewed. Moreover, many of the recommendations made by the committee on disability that I chaired have still not been implemented by the Government. When are the Government going to be proactive?

--- Later in debate ---

[Viscount Younger of Leckie (Con)]

We have a disability action plan, but it is separate from the noble Baroness’s point about the national disability strategy. We are disappointed by, and strongly disagree with, the High Court’s finding that that strategy was unlawful; as the noble Baroness may know, the Secretary of State has been granted permission to appeal the court’s declaration. In order to ensure compliance with the court’s declaration, we are obliged to pause a limited number of policies referred to in the strategy or directly connected with it, which is a disappointment.

[Lord Addington (LD)]

My Lords, I declare my interests in this field as set out in the register. What are the Government doing to make sure that businesses, particularly small ones, know that, if they employ a disabled people, they have somebody who is less likely to take time off work and less likely to change jobs frequently—both those things are proven—than a non-disabled person? This sort of information would certainly help to break down perceptual barriers.

[Viscount Younger of Leckie (Con)]

Indeed, and this is very much a matter for Jobcentre Plus. Further training is being given to job coaches in jobcentres. It is very important that those with health conditions or disabilities receive the support and advice that they need to move into or to stay in employment.

[Baroness Thornton (Lab)]

My Lords, last December, research conducted by the economic and social inclusion unit revealed the huge benefits and the challenges regarding the working conditions, employment and retention of personal assistants for working-age disabled people to allow them to be economically active. This is the third time that I have raised this issue in the House, so hopefully it will be third time lucky. Has the Minister taken account of this useful evidence on service user need and experience? Will it inform improvements and, if so, how and when?

[Viscount Younger of Leckie (Con)]

Yes, indeed, I am aware of the question. Although I do not have an answer to that point, I will certainly write to the noble Baroness about it. I am not sure that she has asked it three times, but maybe she did so with my predecessor.

[Baroness Altmann (Con)]

My Lords, employment figures show that a significant number of older people have left the labour market. There is a large differential in healthy life expectancy across the country. Many people in their fifties and sixties are not well. Some may have left work due to ill health or disability but would be able to work part time. What more can the Government do to encourage flexible working to provide more help in this area?

[Viscount Younger of Leckie (Con)]

As my noble friend will know, all employees have the legal right to request flexible working provided they have worked for the same employer for at least 26 weeks. As she will know, under the Equality Act, employers must make reasonable adjustments to ensure that workers with disabilities are not substantially disadvantaged when doing their jobs. This could include a flexible working arrangement; for example, a change to the timing, hours or location of work. I assure her that in December 2022 the Government responded to a consultation that considered changes to this legislation to provide employees with better access to flexible working arrangements.

[Lord Wigley (PC)]

My Lords, given that a major challenge to the UK’s economic recovery is a significant labour shortage, not least because activity rates for the over-50 age group remain low, is it not in everyone’s interest that those labelled as disabled people should be looked upon for their abilities rather than their disabilities, and helped into the active workforce by the availability of every positive assistance that the state can provide?

[Viscount Younger of Leckie (Con)]

The noble Lord is right. This is why we have the disability action plan, which, as I said to the noble Baroness, Lady Deech, is distinct from the strategy. A new disability action plan will be consulted on and published this year. It will set out the action that the Government will take this year and in 2024 to improve disabled people’s lives. The noble Lord is right that ensuring that the voice of disabled people is properly heard is a priority for the Government. We will run a fully accessible public consultation on the plan this year.

[Baroness Brinton (LD)]

My Lords, on 12 January, the Disability News Service reported that neither the Secretary of State, Mel Stride, nor Tom Pursglove, the Minister for Disabled People, had signed up to become members of Disability Confident, unlike many previous Ministers. On 23 January, Mel Stride said that

“we have to ensure that employers see disabled people with eyes wide open—their abilities and the contribution they can make. That is why we promote Disability Confident”.—[Official Report, Commons, 23/1/23; col. 735.]

Have the Secretary of State and the Minister for Disabled People now signed up to Disability Confident?

[Viscount Younger of Leckie (Con)]

I can certainly confirm that a whole range of departments have signed up to this, including the Department for Work and Pensions. Although I cannot answer the noble Baroness’s question in terms of the individuals concerned, the department at least has signed up.

[Lord Sterling of Plaistow (Con)]

My Lords, for a number of years, the noble Lord, Lord Touhig, and I have worked together to improve the lives of disabled people. Motability has over 650,000 people. Importantly, what has changed is that now many of them are computer literate. What is more, instead of loneliness, they can work at an office. Many whom I know would love not only to do that but to feel that they can put something back into society, which has helped them over the years. How can we encourage employers to realise that, as was just said, this would help the economy?

[Viscount Younger of Leckie (Con)]

I hope that I can help my noble friend by talking about the work that we are doing on communication. It is very important that a digital service is organised for employers and offers tailored guidance on health and disability. This is a key outcome of the “health is everyone’s business” consultation, which was rolled out in 2019. It is very important to use this as a vehicle to allow the people to whom my noble friend referred to move forward in their careers.

[Baroness Bull (CB)]

My Lords, following the original Question about the low number of adults with learning disabilities in the workforce, what are the Government doing to ensure that schools have adequately funded programmes available, so that young people with learning disabilities can have work experience opportunities and, therefore, develop their aspirations to be part of the future workforce?

[Viscount Younger of Leckie (Con)]

The noble Baroness again raises an important point, which would go to the Department for Education, but I will answer on behalf of the Government. I have no doubt that there are some initiatives within that department that would help in this area. As I said earlier to the noble Lord, Lord Touhig, it is very important to ensure that those with disabilities can, as soon as possible, move seamlessly from school into work and can stay in work.

[Baroness Fookes (Con)]

My Lords, several gardening charities do wonderful work with people with disabilities, whether mental or otherwise. Would my noble friend look at the opportunities that are offered in horticulture, which range from simple to degree-level qualifications?

[Viscount Younger of Leckie (Con)]

I will certainly look at that. My noble friend raises a very good point and I happen to know somebody with disabilities who works in the gardening sector. I agree that this is a useful area, particularly for young people to start out in.

Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2023

Viscount Younger of Leckie Excerpts

Monday 6th March 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2023.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I will speak also to the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2023. I am pleased to introduce these statutory instruments, which were laid before the House on 12 January 2023. These instruments will increase the value of lump sum awards payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, and the diffuse mesothelioma scheme, which was established by the Child Maintenance and Other Payments Act 2008.

As many noble Lords will be aware, these two schemes are not included in the main social security benefits uprating procedure and their uprating is not a statutory requirement. However, through these statutory instruments, we will increase the amounts payable by the September 2022 consumer prices index of 10.1%. These new amounts will be paid to those who satisfy all the conditions of entitlement for the first time on or after 1 April 2023.

Many noble Lords will be aware of friends and close colleagues from your Lordships’ House who have lost their lives as a result of these dreadful diseases. We must remember the great impact that these diseases have on people and their families. The Government recognise the tremendous suffering that diseases such as mesothelioma and pneumoconiosis cause to those who are diagnosed. The conditions covered by these schemes can be debilitating and life limiting and often involve very long latency periods, with symptoms starting to show many years, often many decades, after exposure. Mesothelioma, for example, is an aggressive type of cancer strongly associated with exposure to asbestos and is usually terminal. Life expectancy from diagnosis is poor.

I will now outline the purpose of the two schemes we are debating. The Pneumoconiosis etc. (Workers’ Compensation) Act 1979, which, for simplicity, I shall refer to as the 1979 scheme, provides a single lump sum compensation payment to individuals who suffer from one of the prescribed diseases covered by the scheme, including mesothelioma, pneumoconiosis and three other dust-related respiratory diseases. This scheme was designed to cover people who are unable to claim damages from employers because they have gone out of business and who have not brought any action against another party for damages. To be eligible, a claimant must be in receipt of industrial injuries disablement benefit for a disease covered by the 1979 scheme.

The 2008 mesothelioma lump sum payments scheme, which I will refer to as the 2008 scheme, was introduced to provide compensation to people who contracted diffuse mesothelioma but who are unable to claim compensation under the 1979 Act. This may be because they were self-employed or their exposure to asbestos was not due to their work. The 2008 scheme allows payments to be made quickly to people with diffuse mesothelioma at their time of greatest need. Under both schemes, a claim can be made by a dependant if the person with the disease has sadly died before being able to make a claim. These schemes aim to ensure that, where possible, the people who suffer from the diseases they cover receive compensation within their lifetime.

The rates payable under the 1979 Act scheme are based on the disease sufferer’s assessed level of disablement and their age at the date of entitlement. The highest awards are made to individuals with the highest assessed level of disablement and those who become entitled to a payment at an earlier age.

All payments for diffuse mesothelioma under the 1979 Act scheme are automatically made at the 100% disablement rate—the highest rate of payment—reflecting the serious nature of the disease. Similarly, all payments for this condition under the 2008 scheme are made at the 100% disablement rate. The highest payments from both schemes are made to the youngest sufferers of the disease. Between April 2021 and March 2022, the latest financial year for which data is available, 3,080 awards were made across both schemes, totalling £44.7 million. Between 2022-23 and 2027-28, expenditure on these schemes is forecast to fall by 8% in real terms.

I will now touch on the legacy of Covid-19. As the Committee will be aware, the Covid-19 pandemic presented unprecedented challenges. I am mindful of the impact it has had on sufferers of respiratory diseases in particular. As my predecessor set out in last year’s debate, the department made the decision to suspend all face-to-face assessments between March 2020 and April 2021 to protect the health of our claimants, and of course our staff. Some assessments were further suspended beyond April 2021 due to the additional risks of undertaking them face to face. Inevitably, this has led to delays in some customer journeys for claims to industrial injuries disablement benefit and the lump-sum schemes.

In response, the department and its assessment provider, the Centre for Health and Disability Assessments, introduced several innovations to ensure that claims for IIDB, the 1979 scheme and the 2008 scheme continued to be processed as quickly as possible. We increased the use of paper-based assessments and introduced video assessments where appropriate. I am pleased to say that we continue to assess some customers via these routes where possible.

I will now touch on one specific, important and sensitive theme linked to these regulations, which is asbestos removal and schools. Tremendous strides have been made to restrict the use of asbestos and introduce safe environments for its handling in this country. However, the legacy of its widespread use, including in schools, is still with us today.

The Health and Safety Executive has a mature and comprehensive regulatory framework to ensure that the legacy asbestos risks in Great Britain are managed, which aligns with the best evidence currently available. Correct implementation of the Control of Asbestos Regulations 2012 not only ensures management of the risks of exposure but will eventually lead to the elimination of asbestos from the built environment. I understand that some noble Lords have previously raised the issue of asbestos in schools in these debates. I assure them, and this Committee, that the Government take the safety of children and those who work with them incredibly seriously.

The Department for Education is committed to working collaboratively with the regulator, the HSE, to support schools and duty holders. As part of this, the Department for Education published bespoke guidance on asbestos management for schools in 2020 and is working with the HSE and the sector to look at further ways to help them and to build on existing guidance and support. Well-maintained and safe school buildings are a priority for this Government. That is why over £13 billion has been allocated for improving school buildings since 2015, including £1.8 billion committed for the financial year 2022-23.

I will conclude on a positive and—I hope noble Lords will agree—hopeful note. While there is always a degree of uncertainty in predicting future disease incidence, current projections by the Health and Safety Executive suggest that total annual mesothelioma deaths in Great Britain are expected to decline in the coming decades. For males, a decline is projected over the course of this decade, and for females, deaths are projected to start falling shortly after. These figures offer some hope that, one day, no more families shall have to endure the suffering caused by these dreadful diseases.

Medical research into treatment options is ongoing, particularly in the field of immunotherapy. While these treatments are not currently curative, a recent trial has shown clear evidence of benefit to advanced mesothelioma patients, equivalent to an additional three to four months of life.

I am sure that all noble Lords here today will join me in recognising the continued importance of the compensation provided by the 1979 and 2008 schemes and the importance of maintaining the value of these payments at this time. I am pleased to say that these regulations were considered in the other place on 8 February 2023.

Finally, as part of my role today, I am required to confirm—which I am pleased to do—that these provisions are compatible with the European Convention on Human Rights. I commend to the Committee the increase of the payment scales for these schemes and ask approval to implement them. I beg to move.

[Lord Alton of Liverpool (CB)]

My Lords, I thank the noble Viscount for the way in which he introduced these regulations. Just before we began, a group of us were recalling how we have discussed this year in, year out. We were also recalling some of his illustrious predecessors and others in all parts of the House who contributed to some of the changes that he has referred to.

I am thinking particularly of the late Lord Newton of Braintree, who was a Secretary of State. He was a great supporter when I moved amendments in your Lordships’ House seeking to change the Criminal Justice Bill and to bring about what then became a full-scale Act of Parliament, the Mesothelioma Act. The noble Lord, Lord Freud, was decisive in making that happen. He also once shared in this Committee how his father had died of mesothelioma. On this side of the Committee, I think of Lord McKenzie of Luton, who died at the end of 2021. It will seem a strange debate without his voice. His attention to granular detail was extraordinary and his knowledge of pneumoconiosis and mesothelioma admirable, demonstrating the very best of your Lordships’ House.

The noble Viscount referred to the removal of asbestos from schools, which I was very pleased to hear about. It has been a recurring theme that we have raised in these Committees over the years. On a hopeful note, he said that mesothelioma might be plateauing. I will come back to the data a bit later. He also talked about advances in medical treatments. He will know that the Mesothelioma Act was specifically about providing government funding toward the work of the British Lung Foundation and others on the causes and consequences of mesothelioma and on looking for cures. Can the noble Viscount tell us more about whether that funding is being sustained and what progress is being made in that area?

One of the things that has struck me is the number of noble Lords who have shared personal stories of loved ones, family or friends who have died of this disease, which, over the distance, has claimed more than 30,000 lives. That is the same number of deaths still estimated to be caused globally every year. As I have done on previous occasions, I pay tribute to John Flanagan and the Liverpool-based charity, the Merseyside Asbestos Victims Support Group, for keeping a candle lit for all those afflicted by mesothelioma. In 2020, I noted that people in Liverpool are more than 18% more likely to die of mesothelioma. I know that we will hear from my noble friend Lord Wigley and the noble Lord, Lord Jones, during our proceedings; we have heard from them previously about the situation in Wales. However, this disease is no respecter of geographical boundaries or class. Indeed, the noble Lord, Lord Allan of Hallam, and I were discussing this just before the Committee met. We were talking about some of those who have talked about the loss of loved ones.

My noble friend Lord Freyberg talked in the House about his sister, a journalist, who had died of mesothelioma. The noble Lord, Lord McNally, talked about his sister, who had simply been washing overalls and had died of mesothelioma. The noble Lord, Lord Giddens, told us about his wife, who had died of mesothelioma. We also heard from the noble Lord, Admiral Lord West, the story of how young men training for the Navy played snowballs with asbestos. Indeed, Jeremy Hunt, the Chancellor of the Exchequer, described how his father, Admiral Hunt, had also died of mesothelioma. So this is not something that is remote. It is something we know about, but sometimes it is regarded almost as having Cinderella status.

--- Later in debate ---

I was very pleased to hear the good news from the Minister about work being done in schools and about progress in using the benefits of the pandemic time—finding novel ways to take evidence remotely from applicants, for example, which is very welcome. I will be interested also to hear what is happening with research and welcome again the improvements on the medical front, such as immunotherapy, which at least help to prolong by some small amount the lives of those suffering from mesothelioma. We are, as always, very happy to support the uprating of these lump sum payments in line with inflation. I look forward to the Minister’s reply.

[Viscount Younger of Leckie (Con)]

I thank the Committee and all noble Lords for participating this afternoon, and for their general support for these regulations. I noticed that the noble Lord, Lord Jones, described our approach as humane; I might think that was a little bit of an understatement, but I appreciate the comments that he made.

I will pick up on some of the comments made by the noble Lord, Lord Alton. He did the Committee a huge service by reminding us about the historical context of this. We should remember, as he rightly said, Lord Newton of Braintree, who I remember—just, as a much younger person—as Tony Newton. I think he was an ex-Health Secretary. It was helpful to hear the noble Lord’s comments there and to remind ourselves, as we do need reminding, of my noble friend Lord Freud, who did so much in this area. We should particularly remember Lord McKenzie of Luton—the noble Baroness, Lady Sherlock, is completely right on that—who was so active in this House and did so much for it.

On a personal note, I also want to mention a very dear friend who died of mesothelioma about 18 months ago. He was a quite remarkable individual who survived for eight years. He told me that he knew the longest surviving period of time was seven years and he managed, through thick and thin, to survive for eight. He was an incredible individual who gained an MBE for the work that he did in prisons, so I always remember that.

A number of questions were asked and I will start by saying that the Government recognise that the two schemes we are debating are a crucial part of the support available to people suffering from these dust-related diseases. It is right that we maintain the value of these payments at this time. In addition to the compensation awarded through these schemes, the department provides specific support for those who have industrial injuries, or diseases caused by occupational exposure, through industrial injuries disablement benefit, a weekly payment based on the assessed level of disablement. Other state benefits may also be available to claimants of the schemes to cover other needs, such as income replacement and caring costs, as well as further costs arising from their disability.

I want to pick up an important point raised by the noble Lord, Lord Alton of Liverpool, which was followed up by the noble Lord, Lord Allan of Hallam, on the question of funding. Research is crucial in the fight against cancer and the Department of Health and Social Care invested £98.3 million in cancer research in 2021-22, through the National Institute for Health and Care Research. For several years, we have been working actively to stimulate an increase in the level of mesothelioma research activity from a pretty low base. This includes a formal research priority setting exercise, a National Cancer Research Institute workshop and a specific call for research proposals through the National Institute for Health and Care Research—so those are important points to be made.

The noble Lord, Lord Alton, asked about schemes comparable with civil damages claims. When the DMPS was introduced in 2014, the payment tariffs were based on 80% of the average damages award in the civil courts. As a result of the Diffuse Mesothelioma Payment Scheme (Amendment) Regulations that were laid on 27 February 2015 and came into effect on 31 March 2015, the tariffs increased from 80% of average civil claims to 100%. Since then, the tariff payments have remained the same. However, in line with commitments made during the passage of the Mesothelioma Bill, working collaboratively with the insurance industry and other key stakeholder groups, the department has now started to progress the tariff review to ensure that the expectations of the stakeholder lobby groups are managed and that, fundamentally, the payments are still commensurate with damages awarded in civil cases for occupational mesothelioma.

The noble Lord also raised equalisation. I hope that I can give him a reasonably comprehensive answer on this, because there is often much interest in the Government’s position on equalisation of payments made to dependents with those made to the sufferers of these diseases. I have listened carefully to the concerns raised today by the noble Lord. The Government remain of the view that available funding should be prioritised for those currently living with the disease to support them in dealing with the challenges that these illnesses bring in life. It is therefore right that available funding should be targeted where it is needed most. Indeed, around 90% of payments made under both schemes are paid to the sufferers of the diseases covered by them. However, it is of course clear that whole families can be devastated by the diseases covered by the lump sum schemes, which is why dependants are still entitled to some compensation under the schemes.

The noble Lords, Lord Jones and Lord Wigley, asked a number of specific questions on the figures involved. I will do my best to answer them, although I fear that there may be a letter arriving after my comments. As a generic response to the noble Lord, Lord Wigley, on the numbers per sector, data on mesothelioma deaths in Great Britain is published on the Health and Safety Executive website, on the health and safety statistics page under the sub-heading “Ill health”. These statistics include analyses of the relative frequency of recording of different occupations on mesothelioma death certificates, which are more useful as an indication of potential past sources of occupational asbestos exposure than absolute numbers recorded for particular occupations.

The noble Lords, Lord Wigley, Lord Jones and Lord Allan, asked about the breakdown of costs by region. The noble Lord, Lord Jones, also asked about quarrymen and those working in the slate industry. I feel that I will need to write to him on that. Volumes of awards through the 1979 and 2008 schemes, broken down by region, are now published. Unfortunately, information on the occupational breakdown of these awards is not published or readily available. This would require analysis of multiple datasets for the 1979 scheme and the industrial injuries disablement benefit scheme to determine industry information. Information on IIDB assessments is published on Stat-Xplore. I will write to see what more I can do to help all noble Lords on this point.

However, I might be able to help in one respect. The noble Lord, Lord Allan, asked, perhaps more as an aside, whether I could give some figures on the sex of those who have suffered. It is fairly simple: in 2017-18, the breakdown was 5% female and 95% male; the overall figures from then until 2021-22 are 7% female and 93% male. I hope that is of some help.

The noble Lord, Lord Allan, and the noble Baroness, Lady Sherlock, asked why statutory uprating should not be done on a regular basis—and this may be asked every year. Perhaps I can make some reassurances to this Committee that, although there is no statutory requirement to review the level of these payments annually, DWP Ministers have agreed to uprate payments under both the 1979 and the 2008 scheme together in line with inflation each year since 2010. A change of this nature is unlikely to make any monetary difference to those who receive awards under these schemes. Making this a statutory requirement would require amendments to primary legislation and, even with amended primary legislation, it is probable that statutory instruments would still be required to uprate the schemes annually. As such, parliamentary debates on this subject would continue. I add that these debates provide a valuable avenue to raise awareness of the lump sum schemes and, more broadly, support for people with respiratory diseases. That point was raised by the noble Baroness, Lady Sherlock, and I very much appreciated that.

Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2023

Viscount Younger of Leckie Excerpts

Monday 6th March 2023 Grand Committee

Moved by

[Viscount Younger of Leckie]

That the Grand Committee do consider the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2023.

Motion agreed.