Oral Answers to Questions

Debate between Alex Burghart and Guy Opperman

Monday 26th March 2018 Commons Chamber

[Alex Burghart (Brentwood and Ongar) (Con)]

12. What progress her Department is making on implementing universal support.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

Funding has been agreed for local authorities to implement universal support to help claimants with transition to universal credit. That partnership working is fundamental to the successful implementation of universal credit, which is of course part of the 1,000 jobs a day that we have seen under this Government since 2010.

[Alex Burghart]

Will the Minister ensure that as universal support is rolled out, it helps people to overcome the two most pernicious barriers to work—addiction and mental health problems?

[Guy Opperman]

I agree that it is vital to ensure that people can overcome the barriers to work, including mental health problems and addiction. We are already investing in the skills and capability of the work coaches, but we have also trained 1,800 universal credit work coaches in how to support claimants with specific mental health issues.

Financial Guidance and Claims Bill [ Lords ] (Second sitting)

Debate between Alex Burghart and Guy Opperman

Thursday 1st February 2018 Public Bill Committees

[Guy Opperman]

I am grateful. I will therefore attempt to answer the points made by the hon. Member for Paisley and Renfrewshire South as well. I will take her points first, because there is a sequential approach.

Effectively, we are all dealing with three drafts. The House of Lords, in its wisdom, produced clause 5(2). Subsequently, the Work and Pensions Committee, of which my hon. Friend the Member for Brentwood and Ongar is a member, assessed that and produced what is in reality Labour’s amendment 33—the amendment is a straightforward lift from that Select Committee. The Government then went away and produced new clauses 1 and 2 to see if we could improve on it.

I take on board everything that the hon. Member for Birmingham, Erdington said. It is manifestly the case that we all want to see the full guidance. We are about to have a precise discussion as to which is the best way to get to the objective we all seek. The Work and Pensions Committee was sure, as are the Government, that clause 5(2) is not good enough and we can improve it massively. Therefore, with no disrespect to the hon. Lady, we will reject her amendments because they are to clause 5(2).

The principle is the same: how can we best improve the drafting from the House of Lords? There are a variety of points, and I hope the Committee will bear with me as I set out a little detail. The Government amendments are specifically in keeping with the intent of the Work and Pensions Committee, and go further. They make provision for all schemes providing flexible benefits, including all defined-contribution schemes regardless of whether they are personal, stakeholder or occupational pension schemes, including in Northern Ireland.

I will make two points at the outset. First, the Work and Pensions Committee’s recommendation does not include occupational pensions, so in any event it is fundamentally deficient, because one would definitely want that. Secondly, Northern Ireland is not included. While there is no representative from Northern Ireland on the Committee—the hon. Member for Strangford (Jim Shannon) has not intervened like he normally does—we are in a situation where I have due respect to our good brethren from Northern Ireland, and we are including Northern Ireland in the provisions, which neither of the other provisions had done.

The Government amendments will ensure that there is what we consider proper consideration and co-operation between the Financial Conduct Authority, the Secretary of State and the single financial guidance body so that the FCA rules and regulations are effective, workable and consistent. This is a discrete, important point. The Work and Pensions Committee amendment would require the FCA to impose rules on pension scheme members, but the FCA’s general rules do not entitle that, so the amendment is defective in that way. It also sets out delivery channel exclusions, which would not be appropriate for primary legislation.

The proposal is that there regulations should be informed by consultation. I think all parties agree on that but suggest different mechanisms to get there. Before the hon. Member for Birmingham, Erdington jumps to his feet, I get that such a consultation needs to be speedy—this is not something for the long grass. The regulations will then reflect informed consultation, with all bodies working together to create the right integrated form, allowing for updates and changes in technology, current user needs, best practice and research on existing rules and regulations as well as taking into account potential exceptions.

It is a brave Minister who starts to give exceptions to the rule, but I will give an example that may assist the Committee. If an individual has very, very small pots, as many people do—perhaps of £10 or £12—and wishes to transfer them or consolidate them, the nature of the advice, guidance and default in relation to that person will possibly be very different to the British steel worker we are dealing with in south Wales or Scunthorpe.

On the specific amendments, we with the broad consensus that we can do more. I have set out new clause 1, which is the effective replacement of clause 5(2). The specifics are that we believe that there are greater criteria and tests in the Government amendments than there are in the Work and Pensions Committee amendment.

[Alex Burghart (Brentwood and Ongar) (Con)]

I speak as a member of the Work and Pensions Committee. As we set out, clause 5(2) is an improvement on the original legislation. I believe that the amendment made by the Opposition—it is very flattering to see the wording from the Work and Pensions Committee report—was an improvement on that, but new clause 1 and 2 are an improvement on that amendment for the reasons the Minister has set out. All schemes are involved, and the Opposition amendment places the onus on the individual, whereas the Government’s amendments place the onus on trustees or management, which is a preferable way of proceeding. Does the Minister agree?

[Guy Opperman]

My hon. Friend is right to make that point. The provider will be required to ask members and other beneficiaries looking to access or transfer their pension benefits if they have received either pensions guidance or independent financial advice. If the member indicates that they have not received guidance or advice, the provider will have to recommend that they seek it. The provider will also have to ask the member whether they want to wait while they access guidance or advice, or, crucially, to confirm that they want to proceed without receiving it.

That will do two things from a behavioural nudge perspective—I suspect we will talk about behavioural nudges at great length. First, asking the scheme member if they would like to wait before accessing their pensions benefits so that they can receive guidance will give a clear steer that receiving guidance is the default option. Secondly, asking people to confirm that they want to access their pension without first receiving guidance ensures that the scheme member has to take an active decision to opt out. We believe that that strikes the right balance. It ensures that people are encouraged to take guidance without removing the element of personal choice. It also does not inconvenience those who have already accessed appropriate guidance or independent financial advice.

I could give a number of different quotes, but I will cite Tom Selby, the senior analyst at AJ Bell, who described the original auto guidance idea as weak and said that our proposal represents an improvement. He said:

“Automatically enrolling members into guidance for each transfer or every time they took money from their own pension pot—when they have already decided what they want to do—would have caused massive delayed and huge complaints.”

It was by no means clear, previously, that

“it would have a material impact on the take-up of guidance. It therefore risked being…ineffective.”

He added:

“The new amendment is a vast improvement and, in the short term, should help increase awareness of the importance and value of advice and guidance. It also gives the Financial Conduct Authority breathing room to consult on alternative nudges towards guidance that have been shown by research to be effective.”

The amendments also ensure that the occupational pension schemes that provide flexible benefit are covered—they are not covered by the Work and Pensions Committee’s suggestion—including those in Northern Ireland. Our proposals seek to ensure consistency of approach between personal and stakeholder pension schemes, which are regulated by the FCA, and occupational pension schemes.