Pension Credit and Cost of Living Support Grant

Alex Burghart Excerpts

Wednesday 26th October 2022 Westminster Hall

[The Parliamentary Under-Secretary of State for Work and Pensions (Alex Burghart)]

It is a real pleasure to serve under your chairmanship, Mr Dowd. I hope that hon. Members will forgive me; I am losing my voice, but I will try to speak as clearly as I can into the microphone. I thank the hon. Member for Glasgow North East (Anne McLaughlin) for securing this important debate on an important subject. I pay tribute to her campaigning work, because helping people to realise the benefits to which they are entitled helps everybody in society. I know she understands that.

My Department will always welcome opportunities to explain what we are already doing to support pensioners. We know the importance of ensuring that people up and down the country are looked after, post retirement. This topic is particularly pertinent given the recent increase in the cost of living. We are taking this challenge incredibly seriously, which is why we have spent more than £37 billion this year on cost of living support, as well as delivering on the energy price guarantee.

This financial year, total expenditure on benefits for pensioners will be well over £134 billion, which represents about 5.4% of GDP. This high investment ensures that the basis of our safety net for pensioners—the full yearly basic state pension—remains strong. It has brought the British state pension in line with that in other OECD countries. The amount that we provide is higher than it is in countries such as Switzerland, Norway and Germany. One of the major successes of this Government, auto-enrolment, has led to over 10.7 million extra employees paying into a workplace pension, so that they can save for a safe and secure future. The issue is particularly pertinent today, because it is the 10th anniversary of auto-enrolment.

[Matt Rodda]

Would the Minister like to pay tribute to the last Labour Government for designing the policy?

[Alex Burghart]

I certainly pay tribute to the last Labour Government, as well as the Pensions Commission, which had cross-party support, and the support of organisations such as the Centre for Social Justice, which I used to work for. Steve Webb, formerly of the Liberal Democrats, also contributed to that work. It was, however, the coalition Government, led by the Conservatives, and my right hon. Friend the Member for Chingford and Woodford Green (Sir Iain Duncan Smith), when he was Secretary of State for Work and Pensions, who made it happen. All that good work has had a demonstrable effect: in 2021, 400,000 fewer pensioners were in absolute poverty than when the Conservatives came to power. That is a remarkable achievement of which we are rightly proud.

To complement the state pension, pension credit—mentioned a number of times in this debate—offers an extra layer of support for people over state pension age and on a low income. Pension credit provides an invaluable top-up to a person’s state pension, ensuring that single pensioners receive a minimum of £182.60 per week and couples receive at least £278.70 per week. Crucially, as other hon. Members have mentioned, pension credit acts as a passport to other help, including for rent, council tax and heating.

A comprehensive benefit package including pension credit is only worth while if claimants access the support. We are aware that, historically, take-up of pension credit has been too low. To increase pension credit awareness, in April we launched a comprehensive paid advertising campaign, including a promotional video fronted by Len Goodman of “Strictly Come Dancing” and my predecessor, my hon. Friend the Member for Hexham (Guy Opperman), who did so much in his five years in the job to improve opportunities for people planning for their pensions and claiming them. That campaign has now been viewed well over a million times. The campaign further focused on encouraging the private sector to help drive up claims and reach those who may be reticent about claiming pension credit.

As the hon. Member for Glasgow North East said, no one should feel ashamed about claiming this money. The reason why we have it is so that people can come forward and take it. We want them to have it. Success for us is 100% of people claiming it. I do not think she was implying that the Government sought to stigmatise people who claim benefits—we absolutely do not. We have created a benefits system that is designed as a safety net to support the most disadvantaged in society, but also to help people who are capable of work to move into work.

[Anne McLaughlin]

To clarify, I was blaming individual politicians and sections of the media for besmirching the character of people in receipt of social security payments. I am not suggesting that the UK Government are doing that. What was the increase in the number of people applying for pension credit after that campaign? What was done in the run-up to the crucial deadline of 19 August, and what will the Government do in the run-up to December, because that is an important incentive for people. It is not enough to have the £324, but it will act as an important incentive.

[Alex Burghart]

I thank the hon. Lady for her clarification. I have not heard any colleagues use that sort of language. I will answer her point in my speech.

We continue to work closely with a whole range of stakeholders, including Age UK, Independent Age and Citizens Advice, which have reach and expertise to identify other practical initiatives that will help encourage eligible pensioners to claim. On 15 June, the DWP had a second pension credit day of action with the media, in which we encouraged the media to reach out to pensioners, their family and friends. Thanks to that day of action, we recorded a 275% increase in claims in the week of 13 June this year, compared with the same week in 2021. The DWP has received unprecedented volumes of new claims for pension credit. Weekly claims tripled between December 2021 and August 2022, so we are seeing a genuine increase in traffic. Obviously, the quoted figures for uptake are about 70%, and the uptake for guarantee credit, which is the main safety net within pension credit, is 73%. Those figures are from 2019-20, before the current days of action and the campaign push, so we very much hope the next set of figures will be some way above that.

Prior to that campaign, the previous Minister for Pensions, my hon. Friend the Member for Hexham, wrote to all MPs to request their support. It has been heartening to hear all the Members who have spoken today give evidence of how they responded to that request. I know there is still work to do. The latest available estimates show that there are still substantial numbers of people who may be eligible for pension credit but are not claiming it. That is why we continue to encourage everyone to reach out to their own networks and use resources such as the pension credit calculator on gov.uk. By working together, cross-party, we can ensure that those eligible for pension credit receive the support they need.

It is particularly important that we encourage those eligible to make a claim because for those above state pension age, eligibility for the means-tested benefits cost of living payments is determined through pension credit entitlement. The £650 cost of living payment will help to ease the pressures that pensioners are currently facing. The payment was designed to target those on low incomes, which is why a household will automatically receive a cost of living payment if they are eligible to receive a pension credit payment during the qualifying period. We did this because we needed to get a big system up and running at high speed. We found it was the quickest and most effective way to deliver support to more than 8 million people on the lowest incomes.

[Anne McLaughlin]

I appreciate the Minister taking another intervention—I am doing so to help his throat and give him the chance to have a glass of water. If he is saying, “It was set up quickly because we had to help people as a matter of urgency,” that is good. However, we have now had time to think about it. I have written several times and been campaigning on this, but he has not yet answered the question: will he extend the deadline to 31 March, or will he consider extending it? Will he not say no today? Will he give people a little hope that they might get it? He is making the clear point that it is for households in absolute need. Well, they are still in absolute need—

--- Later in debate ---

[Peter Dowd (in the Chair)]

I appreciate that. Will you respond, Minister?

[Alex Burghart]

Thank you, Mr Dowd. I am grateful to the hon. Member for Glasgow North East for her lengthy intervention, which enabled me to get another bottle of water.

In answer to the hon. Lady’s question, this is a complex system that was set up at pace in order to reach about 8 million people. I understand the point that she is making: if the deadline were extended, more people would have a chance to apply. We are looking into a range of measures to encourage people to take it up before the final deadline. She asked earlier when that deadline would be. I am pleased to tell her that it is 19 December.

The £650 payment has been split into two payments with different qualifying periods to reduce the chance of someone missing out completely. If a household did not receive the first payment of £326 in July, it might still receive the second payment of £324 in November. To qualify for the second cost of living payment, individuals must be entitled to a payment of pension credit for any day in the period 26 August to 25 September 2022.

As pension credit claims can be backdated up to three months, however, if the person is eligible for the three-month period, it is not too late to qualify for the second cost of living payment. We therefore urge people to get their applications in as soon as possible and by no later than 19 December, as I said. That will ensure that, if they are eligible for pension credit for the previous three months, they will also qualify for the second cost of living payment. In that way, we can ensure that those eligible will receive the support they need at the earliest opportunity.

We are not changing the qualifying dates for the second tranche of the cost of living payments for any of the means-tested benefits. The eligibility period must remain consistent, so it is simple to deliver the payments quickly and on a scale to support millions of people on low incomes.

I remind Members that cost of living payments are just one part of the welfare support available to pensioners this winter. A key part of the support that we offer is the energy price guarantee, which will reduce energy bills significantly this winter. Also, owing to the impact of higher energy costs on pensioners, the Government will pay an additional £300 in a pensioner cost of living payment as a top-up to the winter fuel payment. Those payments of £500 or £600 per household will be sent out from mid-November. That is in addition to the cold weather payments, which helped more than 4 million people last year. Also, we must not forget the £150 council tax rebate earlier this year.

Finally, for those who need additional support, we recently extended the household support fund, which will now run until the end of March 2023, bringing total funding for that support to £1.5 billion. In England, that will take the form of an extension to the household support fund, backed by £421 million. The devolved Administrations will receive £79 million through the Barnett formula, with Scotland allocated £41 million of that.

As a Department, we will continue to work to increase take-up of pension credit to ensure that vulnerable pensioners receive the support they need this year and beyond. I am happy to talk to the hon. Member for Glasgow North East about it again in future.

Pensions Dashboards (Prohibition of Indemnification) Bill

Alex Burghart Excerpts

Committee stage
Wednesday 26th October 2022 Public Bill Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Alex Burghart)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I hope Committee members will forgive me if I keep my remarks relatively short; as they will be able to hear, I am losing my voice. This is my first speech as Minister for Pensions and Growth, and it may be my last. If I survive the day in post, I will have two further speeches to give, and I would like to have the voice to give them.

Luckily, my hon. Friend the Member for Cheadle has said just about everything that there is to say about this excellent and uncontentious Bill, which strengthens the great work that my venerable predecessor, the hon. Member for Hexham, did in his five years in office. It is fair to say that under him and his predecessors, a veritable quiet revolution in pensions has been taking place, to the benefit of tens of millions of people.

The revolution began with auto-enrolment, which, I am pleased to say, celebrates its 10th birthday today. It is difficult to overstate the success of auto-enrolment: it is one of the greatest examples of nudge theory ever seen in public policy. New figures released today show that, in the 10 years that auto-enrolment has been in place, the number of employees participating in workplace pensions has increased from 10.7 million to 20 million, which is an increase of 86%—a truly remarkable achievement. Last year alone, British people saved nearly £115 billion into workplace pensions and pension pots—a 40% increase on where we were before auto-enrolment.

The pensions dashboard is the next step in that revolution. If the first job was to help people to save, the second is to help them to understand what they are saving. We believe that that will create a further nudge of its own, as people understand what they have accumulated in their pots throughout their working life, and what they can expect to have in their retirement. This Government are helping more people to save more so that they can do more in their retirement years. I am very proud to support the latest chapter in that work today.

[Nick Smith]

I congratulate the hon. Member for Cheadle on introducing this important Bill, and I join the Minister in recognising the fantastic success of auto-enrolment, which has changed saving across our country. But I hope the Minister can help me on two points.

First, the hon. Member for Hexham has—for sure—done all the heavy lifting on introducing the pensions dashboard, but when does the Minister anticipate its proper introduction to the marketplace to support pensioners across the country? It is a great idea, but it has been in development for a long time. Secondly, I note that there is no impact assessment or consultation on the introduction of the Bill. I am sure that there are fair reasons for that, but have the FCA and the other regulators involved had any input on the development of the Bill?

[Alex Burghart]

I thank the hon. Gentleman for his intervention. We expect that, during the course of next year, all the requisite data will be pulled together from pension funds and assembled on the dashboard, and that the public will have access to it for the first time in the middle of 2024. As he says, it is major work, and it is important that we get it right. Through the passage of legislation such as this Bill, we will be able to ensure that our pensions system and dashboard are fit for the future. This is a major change, involving a great deal of work by a huge number of outfits, and it will make a major difference to the way people see and participate in the world of pensions.

The hon. Member for Blaenau Gwent had a further question about the FCA. Based on information gathered by sample providers, the regulatory impact assessment considers the costs of all relevant pension schemes and providers in scope of dashboards, connecting to the dashboard digital architecture and supplying pensions information. Although FCA-regulated personal and stakeholder schemes fall outside the scope of Department for Work and Pensions regulation, the Pension Schemes Act 2021 requires the FCA to make corresponding rules covering the requirements of these schemes in relation to pensions dashboards. Therefore, the impact assessment takes into account the costs for both these providers and the occupation scheme trustees.

I turn to the detail of the Bill. Clause 1, as my hon. Friend the Member for Cheadle said, will prohibit trustees and managers of occupational personal pension schemes from being reimbursed out of scheme assets in respect of penalties imposed on them for non-compliance with the pension dashboard regulations. That is obviously an important safeguard for pensions savers. It is achieved by amending section 256 of the Pensions Act 2004, under which if a trustee or manager were to be reimbursed or knew or had reasonable grounds to believe they had been so reimbursed, they would be guilty of a criminal offence, unless they had taken all reasonable steps to ensure they were not so reimbursed. We are talking about a serious crime. The provisions will allow for a maximum sentence of up to two years in prison or a fine or both.

Additionally, were any amount to be paid out of a pension scheme’s assets in such a way, the pensions regulator would have the power to issue civil penalties to any trustee or manager who failed to take all reasonable steps to secure compliance. Section 256 of the 2004 Act already prohibits reimbursement of penalties issued under a number of other pieces of pensions legislation, so the proposed amendment to the 2004 Act is a logical change that the Government welcome.

Clause 1 also makes corresponding changes to article 233 of the Pensions (Northern Ireland) Order 2005. As hon. Members know, all aspects of pensions policy are transferred to the Northern Ireland Assembly; however, there is a convention that the pensions legislation made in Northern Ireland stays in lockstep with that of England, Wales and Scotland, to ensure parity across the whole United Kingdom. The usual procedure in the instance of Parliament making provision of a transferred policy area would be to obtain a legislative consent motion from the Northern Ireland Assembly.

However, as hon. Members will be aware, the Assembly has thus far failed to elect a Speaker, so it is not in a position to grant this consent. I am pleased to say that Deirdre Hargey MLA, Minister for Communities in Northern Ireland, has written to the Department for Work and Pensions and confirmed that she would, in principle, be content to seek agreement for the provisions in the Bill to extend to Northern Ireland. That was, however, conditional on the agreement of a functioning Executive, but there will be further opportunity for this issue to be considered by the Assembly if the current impasse in Northern Ireland is resolved before the Bill has completed its journey through Parliament.

Clause 2, as my hon. Friend the Member for Cheadle stated earlier, sets out the standard information needed for all Bills and includes detail of how provisions will come into force and their territorial extent. The Government are committed to protecting pensions savers and agree that the safeguards in the Bill provide a welcome deterrent against rogue trustees or managers exploiting pension assets for which they are responsible. We commend the Bill to the Committee.

[Mary Robinson]

I thank the Minister for his remarks and am pleased his voice held out. I thank all Members here for their support, in particular the Minister, who has had a short time to become familiar with this subject. I also thank the officials for their invaluable support over the past few months. I thank my colleagues for their contributions and for being here to support the Bill.

As my hon. Friend the Member for Erewash said, this is about protecting our financial futures, and it is a very worthy cause. It is important for the up to 52 million people the Bill will cater for. My hon. Friend the Member for Gloucester rightly pays tribute to the former Minister for Pensions, my hon. Friend the Member for Hexham, who has done so much over the years and has been pivotal in everything he has brought to this place.

[Alex Burghart]

I am worried that I did not pay fulsome enough tribute to my predecessor in my speech. Stepping into a large brief such as this is a daunting exercise, but to have handed over to me such a well-ordered series of policies and such a clear sense of direction is a testament to the work he did over five years. As my hon. Friend the Member for Gloucester said earlier, there have probably been no Ministers who have held the brief for so long or have done so much to contribute to this essential part of the way we support citizens in later life.

[Mary Robinson]

I am grateful to the Minister, as I know everyone here will be. He has succinctly echoed all our thoughts. My hon. Friend the Member for Gloucester also said he thought it was the shortest and least contentious of Bills, but I hope it is one of great importance to millions of pension savers. I commend the Bill to the Committee.

Clause 1 accordingly ordered to stand part of the Bill.

Clause 2 ordered to stand part of the Bill.

Bill to be reported, without amendment.