Work Capability Assessments

Anne Begg Excerpts

Monday 16th June 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

As the previous debate wound up earlier than expected, I have the chance to say a few words on this subject.

I do not think anyone is saying that a reconsideration process in deciding whether someone should receive a benefit is a bad thing. I do not think anyone would complain if it cut the number of appeals, caused less stress on the claimant, could be done very quickly—in less than a month—and benefits were secure during the process, but that is not what is happening. People are having to face very long delays before they get a decision the other side of the mandatory reconsideration and that is probably causing the most anxiety.

On top of that, people are never very sure to which benefit they are entitled. Will the Minister confirm that we are talking not only about people who were on incapacity benefit and have been found to be fit enough for work and should therefore be on jobseeker’s allowance, and it is to that that the appeal applies, but about those who in the original assessment were awarded employment and support allowance in the work-related activity group and are appealing because they think that they should have been in the support group? In other words, someone has been found eligible for ESA, appeals to go into the support group but still has to go through the mandatory reconsideration, at which stage their benefit stops and they are expected to apply for JSA. I have heard anecdotal evidence from a number of different people that those who have gone through the mandatory reconsideration find themselves in the support group, so no longer need to visit a personal adviser in Jobcentre Plus. During the period of the mandatory reconsideration, however, they were expected to be signing on for JSA, but were so ill in the meantime—that is why they ended up in the support group—that they could not make the weekly signings, as a result of which they and their benefits have been sanctioned. I would like the Minister to clarify that position.

The other problem is the interrelationship between the benefit someone receives and other benefits. Sometimes, a person undergoing the mandatory reconsideration who is not yet in payment of JSA might find that their housing benefit or council tax rebate has been stopped because the council has been told that they are no longer eligible for ESA, which they are not, but because of some of the problems highlighted by my hon. Friend the Member for Edinburgh East (Sheila Gilmore) they have not yet put in an active claim for JSA. As a result, their housing benefit might be disrupted, even though they are entitled to it on the basis of their overall household income. There should not have been a break in the claim, but that is not how the system works.

If the changes could be made smoothly and very quickly, with the person being very clear about the benefits to which they are entitled and being able to remain on them without a break in the claim, the reconsideration might be acceptable. So far, however, that is so far from the reality of what is happening that it is no wonder that people are so anxious.

[Julie Hilling (Bolton West) (Lab)]

Does my hon. Friend share my concern about other anecdotal evidence that crops up all the time—about people who during this period of reconsideration and upheaval, end up taking their own lives, dying or making themselves much more ill? Financial worries are not the only ones at stake, because people’s health and lives can be put at risk, too.

[Dame Anne Begg]

We know that people can get incredibly anxious about any kind of health assessment that they are put through. We know, too, that people are not only anxious at the time of the mandatory reconsideration; they will have been anxious much earlier, perhaps when they first received an ESA50 form through the door to fill in. That may be followed by the worry of the work capability assessment, after which they might be found fit for work when they do not think they are fit for work; and they may be put in the WRAG when they think that they are ill enough to be in the support group. There is a whole range of pinch points at which people feel extremely anxious.

Let me give an anecdotal example. Two community psychiatric nurses came to see me in my surgery a few months ago. They were very concerned about their clients, whom they had fostered and helped, and who were almost reaching a stage at which they could start thinking about work and how they might return to the workplace. At that very point, however, the ESA50s dropped through the door, and their health suffered a setback.

The nurses were particularly concerned about a very vulnerable group of people who found the whole process—which was not helped by all the publicity surrounding it—terrifying and worrying. The extra burden imposed by the mandatory reconsideration is yet another reason for the deterioration in people’s health as they go through that process. It is not a zero-sum game. A whole range of external forces can worsen the condition of people who are in ill health, who may have mental health problems, and whose condition may fluctuate. People can be made to feel very ill, and we know of cases in which the process of applying for ESA has been cited as the reason for suicides. That is a tragedy. I am not suggesting that mandatory reconsideration is entirely responsible for it, but it constitutes yet another pressure on people who are already vulnerable, already quite ill, and already finding it difficult to cope with illness or disability.

I hope that the Minister will examine the process, and how it is working in practice. I cannot believe that it is working in the way he would like it to work. I am pretty sure that long delays, failures to reach a determination, and the fact that people may not know to which benefit they are entitled and may end up with nothing as a result—perhaps with huge rent arrears because of problems with housing benefit claims—are not part of the Minister’s plan, and I hope that, if they are not, he will be able to give us some idea of how he will improve the process.

Bedroom Tax (Scotland)

Anne Begg Excerpts

Thursday 8th May 2014 Westminster Hall

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

In speaking on the report and the Government response, it is appropriate that I indicate at the beginning that unusually, the report was not unanimous. It is the product of a Division in the Committee: four Labour members voted for the report, one Liberal and one Conservative voted against, four other members were absent and I as the Chair was unable to vote except in the event of a tie.

It is clear that the bedroom tax is, as we describe it in the report, cruel and unfair, and we remain in favour of its abolition. We believe that the tax was introduced not so much because of anything to do with housing as because of the Government’s desire to cut public expenditure. It has been levied in a way that has hurt the poorest in our society and has placed burdens on them that many have been unable to bear. It has forced many people into deeper poverty. It has forced many people to move house, or to run up debts.

We recognise that in Scotland, the tax has often been levied in circumstances where there are no other homes for people to move to. People are being taxed for having what are described as spare bedrooms and being urged to move, but no alternative accommodation is available.

[Dame Anne Begg (Aberdeen South) (Lab)]

This report is specifically about Scotland, but the Select Committee on Work and Pensions, in its report on housing costs, said that the victims of the so-called bedroom tax were often not the intended targets—those who could move. Instead, many were people who needed the extra space and who were therefore not over-housed in the first place. Is that the case in Scotland too?

[Mr Davidson]

Absolutely. Substantial numbers of disabled people who require an additional bedroom due to their condition have been hit by the bedroom tax. We heard the absurd proposal that people should mitigate the effects of the tax by taking in lodgers, as well as the suggestion that people should earn more by working longer hours when, as most of us are well aware, that is not a realistic option available to many of those affected.

Incapacity Benefit Migration

Anne Begg Excerpts

Thursday 3rd April 2014 Westminster Hall

[Chris Bryant]

I do not go to Starbucks any more because of tax issues, but my hon. Friend is absolutely right.

I do not want to stereotype the Rhondda, but my surgery is held in a room with thin walls and by the end of the encounter with my constituent we were shouting at one another. When he left the room saying he was going to report me to the police—I was not sure what for—everyone queuing outside applauded me, not him, because they had the same attitude as everyone else: stealing from the system is fraud, and it is theft from other people. There is no innocence, and in one sense it is the worst form of theft. However, the level of such fraud is small, and such stories are sometimes blown up out of all proportion so people get the impression that everyone is at it, which is not true.

[Dame Anne Begg (Aberdeen South) (Lab)]

The Select Committee on Work and Pensions has just embarked on an inquiry into fraud and error in the benefits system, and I would say that the extent of that is fairly small. However, may I give my hon. Friend another example? Somebody came to my office as a cleaner through the new deal for disabled people. There are people who have been out of work for 10 years, as she had, with mental health problems. She thought she would never work again, but the correct support—with a job broker, with someone just building up her confidence—got her into work and she ended up expanding from that job into other jobs as well. As it turns out, she had Parkinson’s disease, not mental health problems, and I have never seen anybody so relieved to get a diagnosis of Parkinson’s disease, because she knew what that was and she could cope with it. However, the key was the specialist, detailed help that she got as an individual, and my concern is that that is perhaps what is lacking in some of the new areas that the Government have introduced in order to try and get people with disabilities into work.

[Chris Bryant]

I would go further—I think that sometimes the organisations that are most fleet of foot, most sensitive and come without some kind of governmental sanctions regime, such as those in the voluntary sector, can be the most successful at enabling somebody to gain the self-esteem that enables them to get into work.

I remember working with the Prince’s Trust in my constituency with kids who are at risk. People there were saying that they could not understand why kids who really enjoyed coming on some of the courses that they were doing, which were all about confidence building and so on, all turned up uniformly late—not uniformly late in the sense that they all arrived at the same time, but that they always arrived late. It was only when they worked out that the kids could not tell the time that they realised what the problem was: because the kids were in families where nobody was in work, nobody was used to getting up in the morning to go to work. That is why a basic skills assessment is vital.

Of course, schools should be dealing with all these issues, but sometimes that does not happen. It is a fact that we still have a significant number of people who are, to all intents and purposes, innumerate and illiterate, and tackling those basic skills and providing an assessment very early on is one of the important changes that we need to bring in. I worry that the voluntary sector, which has had a very tough time since 2010, certainly in my patch, is not able to provide the support that leads to people being able to get into jobs, as it was able to do historically.

[Dame Anne Begg]

Will my hon. Friend give way?

[Chris Bryant]

I will, but I am conscious that I have now gone on for quite a long time.

[Dame Anne Begg]

I thank my hon. Friend.

It has become an afternoon for anecdotes. When I was teaching, there was a young boy who could not turn up to school on time. I was his form teacher, and I discovered that the rest of his family had all been schoolphobics, that his parents did not work, and that although they did have a clock at home they could not work out how to set the alarm. I got him to bring it in and that is exactly what we did. We were able to keep him in school a bit longer than we managed with his siblings.

[Chris Bryant]

I cannot set the alarm on nearly any of the things in my house and I have not got children to be able to do it for me—they are basic skills. I will move on, if I may.

It is also true, as I think we all agree, that poor initial decisions end up being expensive for everyone. I think Governments of whatever stripe would like to be able to improve the quality of initial decisions. As was found in the run-up to 2013, £26.3 million had been spent on the tribunal service. The Government have changed the way in which that operates, and I shall come to that later, but when 19% of appeals are still overturning the initial decision, a lot of money is effectively going down the drain on behalf of the taxpayer. I suppose some lawyers would say that paying them is not money going down the drain, but if we could improve the quality of initial decisions, whether that is down to form-filling, ensuring that the correct information is available from the very beginning, or whatever it is, we would be saving ourselves time and energy, and most importantly, saving a great deal of heartache for a considerable number of people.

I shall move on to some of the problems that exist at the moment. It is uncontested that Atos has not been a great success. I think Atos itself would say that—in fact, it has done. It has effectively put its hand up and said that it has not been a great success. We note that the Government are now ending the deal; that is an established fact, but I would like to ask the Minister a few questions and if he is not able to answer fully now, I completely understand, because the questions are relatively technical, but I should be grateful if he would write to me.

The Minister referred, I think in questions on Monday, to the fact that Atos will be paying him—

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[Chris Bryant]

I think that we always have to keep the matter under review; otherwise we are wasting time and energy on a process that is just injurious to the health of people whom we are trying to help, and at a cost to the taxpayer that does not provide a dividend. So, yes, of course the Government should do that. I was just hoping that the Government would be able to say whether the £800 million relates to the people who would have been reassessed. How many people will continue to receive benefits even though the Government have basically decided that they should not?

I want to talk about access to mental health services, because one of the issues that arose in Health questions earlier this week was that there has been a significant fall-off in the availability of talking therapies, and there is clear evidence that talking therapies, whether cognitive behavioural therapy or others, are predominantly concentrated in areas where there are fewer people on the various kinds of incapacity benefit. That is rather unhelpful to the process of trying to get people with mental health needs back into work, so I wonder what strategy the Government have to try to ensure that it is addressed.

Incidentally, one other thought occurs to me in relation to the point that my hon. Friend has just made. There are only so many doctors in Britain. If the Government decide to take a lot of doctors into Atos to make assessments of people’s fitness for work, there is a danger that they will simply be taking doctors out of the national health service, and that may have an impact locally on whether people are being helped back into work by getting better, rather than being forced back into work by being assessed by Atos. Of course, that is where there has to be a joined-up Government approach.

I want to ask the Minister about the Work programme, because, as my hon. Friend rightly said, there is a significant problem in that respect. The Secretary of State effectively admitted that in Work and Pensions questions on Monday. I think that he had hoped and expected that a much larger percentage of people would have been helped into work through the Work programme. Of those with disabilities, it is something like 5%, which is a very low level.

Of course, we all know from our constituency case load that some people need dramatic intervention to be able to get into work. Drug and alcohol abuse, leading to and coming from chaotic lifestyles, often makes it very difficult to assist people, even though there are many people with addictions of various kinds who are fully functioning in a work environment—we have only to look at the history of Parliament to see that. What assessment have the Government made of how the Work programme could be improved to enable more people with disabilities to get into work, or do the Government believe that the situation is not improvable and that 5% is what the level is going to be?

[Dame Anne Begg]

Is my hon. Friend aware that the specialist employment programme for people with disabilities is called Work Choice? One would expect that the majority of the people on Work Choice, if not all, would be in receipt of ESA and be in the WRAG group, but actually almost all of them are on jobseeker’s allowance; they have been found fully fit for work. That might explain why Work programme providers are not being successful in getting ESA claimants into work—that specialist help is not for them; it is for people who are closer to the labour market than they are.

[Chris Bryant]

Which is the next paragraph on my sheet of paper. We just managed to hear it from a different voice, and I am grateful to my hon. Friend.

I want to move on to the issue of discretionary housing payments. The Papworth Trust has found that over three quarters of councils include disability living allowance in assessing people’s eligibility for discretionary housing payments. That is against Government advice. Of course, because the system is discretionary, it is not Government-enforced, but that is one of my concerns about the discretionary system. People can be living on either side of a street, and just because one council decides to include DLA in the assessment and the other decides not to, they are treated differently.

My anxiety about that is that it leads to people not trusting the system in the end, because people do not know the specifics of who is in charge of deciding what. They just think, “He’s got it; I haven’t got it. That seems unfair.” When that is alive in the system, confidence in the whole of Government and the welfare or social security system falls apart, especially because the clear evidence now is that people with disabilities are less likely to be granted an award under the discretionary housing payment system than people without a disability. That seems to be at odds with what I presume the Government would like to achieve, so I wonder whether their advice needs to get stronger, whether we need to lose the word “discretionary” or whether the system needs to be restructured.

[Dame Anne Begg]

The Work and Pensions Committee’s report that was published yesterday on support for housing costs states:

“We recommend that the Government issues revised guidance to local authorities which advises them to disregard disability benefits in means tests to assess eligibility for DHP awards.”

--- Later in debate ---

[Mike Penning]

I am not certain that that would work, not least because decisions that had been made would also have to be reversed. The decision must be based on the evidence that is before the decision makers. I agree with many of the things that the shadow Minister has said, but it is crucial that we remember that this is not about diagnosis. The diagnosis has been done by the clinical experts. In response to the shadow Minister’s concern about a drain on NHS doctors, a lot of the assessments are done not by doctors, but by trained clinicians.

Like other hon. Members, as a constituency MP I have had correspondence about the matter, so when I took on this portfolio a couple of months ago I desperately wanted to dig down and look at it. Dr Litchfield’s report came out almost simultaneously with my arrival in post. One of the first things I did was to go off to a tribunal and listen, as a member of the public can do, to two cases being put before the tribunal judges. As I left the building, I said to my officials—I have said this in the House before—“Clearly, we are not getting decisions right.” The first case that I listened to should not have been at the tribunal; we should have sorted it out before. In the second one, interestingly enough, the Department had not seen the evidence until the morning of the hearing. Extra evidence was produced, and the judge had used his autonomy to waive the four-week rule and allow it to be presented.

I have been urgently looking at how we get the right decisions by ATOS professionals being sent to our decision makers. The final decision is made by the Department, not by Atos; Atos makes a recommendation and we look at it. I looked carefully at the quality of the decisions that were coming from our contractor, which in this case was Atos. I have said on the record several times that I was not happy at all about the quality of the decisions. Before I arrived, the Department had been putting pressure on Atos to improve quality, so we were also starting to get an ever-increasing backlog. So many cases that could have been decided through paper assessments were instead being assessed face to face. Even then, people were appealing, and because we were getting the assessments wrong, we were losing the appeals.

We will always lose some appeals, as the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), knows. It is for judges to weigh up what the will of Parliament was in making regulations, and apply that to the case before them. I was keen to make sure that we got this right, because we are talking not only about taxpayers’ money, but about individuals. The shadow Minister described the welfare system as a safety net. For some people, it will be there from birth onwards, and for others it will come into play because of circumstances, events, traumas and illnesses over the course of their lives.

The shadow Minister was quite right to say that there will be things that I will be unable to answer, and other things that I will not be able to discuss because of confidentiality within contractual obligations. Regarding Atos’s decision to exit its contract early, I was pressurised by colleagues from both sides of the House to remove or sack Atos. One of the shadow Minister’s colleagues said that I should sack Atos. The problem with that was that because of the form of the contract, we would almost certainly have had to pay compensation to Atos, and I do not think that anybody inside or outside the House would have wanted us to do that. We have negotiated an early exit for Atos and have arranged for a team to work alongside its management as it continues to do the work while we exit it. I cannot simply turn off the tap, because we would have no capacity. The biggest issue with Atos has been with its management controls, rather than with its front-line decision making.

[Dame Anne Begg]

Under the original time scale, the migration from incapacity benefit to ESA was meant to have been completed by now—I believe the date was the end of March 2014—but a sizeable number of people have yet to be migrated from IB to ESA. The original contract must have worked to the original time scale, so Atos surely was not still contracted to carry out the migration, even though it was contracted to do the reassessment. Surely, an automatic break must have been built into the contract; otherwise, Atos would still have been employed even when there was no work to be done, because it was meant to have been finished by now.

Sanctioning of Benefit Recipients

Anne Begg Excerpts

Thursday 3rd April 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

This is obviously a day for my Select Committee’s reports. My right hon. Friend the Member for Oldham West and Royton (Mr Meacher) referred to the report that we published a few months ago called “The role of Jobcentre Plus in the reformed welfare system”, in which we had a whole section on sanctions. Very helpfully, the Government published their response to that report today, so the debate is timely.

Sanctions as we know them today have probably existed from the 1980s, although there has always been conditionality as part of the rules for getting unemployment allowance. I suppose the question today is to what extent the use of sanctions has increased in recent years. Certainly there has been a huge increase since the Welfare Reform Act 2012 was passed. Dr David Webster of the University of Glasgow, the leading academic authority on benefit sanctions, told my Committee that

“the severity of the regime has increased drastically under the Coalition Government and is increasing further.”

He also highlighted the common misconception that benefit sanctions affect only a small minority of benefit claimants. In the period 2008 to 2012 around one fifth of JSA claimants were sanctioned, approximately 1.4 million people. Official data show that, since the introduction of the new rules which have already been referred to, the proportion of JSA claimants sanctioned every month is around 5%, which is approximately 60,000 people. In the period from the introduction of the new JSA rules to June 2013 there were 553,000 sanctions, an increase of 11% on the same period a year earlier. There were 860,000 JSA sanctions in the year to June 2013, the highest number in any 12-month period since records began in their current form, and probably the highest number ever. The number of employment and support allowance sanctions—it is a new development that people on a disability benefit can be sanctioned—in the period December 2012 to June 2013 was double that in the same period a year earlier.

Despite all this, by May 2013 the report to the Secretary of State found

“no evidence of a secret national regime”

to set targets for the number of sanctions imposed. However, the Public and Commercial Services Union told my Committee that the expectations placed on Jobcentre Plus staff to sanction claimants were “targets by another name”. The argument about whether such targets exist continues to this day.

Both Members who have already spoken talked about inappropriate sanction referrals. We received evidence of quite a number of those, but in the light of Mr Deputy Speaker’s strictures, I will not detail them. Suffice to say that many were silly and inappropriate. With the application of common sense—that was the phrase that we used in our report—they could have been avoided or should have been picked up at review stage. About 50% of sanctions are overturned on review by a decision maker.

Many hon. Members will have received postcards from constituents that were probably sent to them by Church Action on Poverty and Oxfam, which asked my Select Committee to hold an inquiry into the use of food banks. Those postcards arrived in my office when we had already embarked on our inquiry into Jobcentre Plus. We had already decided that that would form part of the inquiry. Church Action on Poverty and Oxfam, in their report, “Walking the breadline”, found that sanctions were a significant factor in the recent substantial rise in referrals to food banks. They estimated that some half a million people in the UK were “reliant on food aid”, and that “up to half” of people who are referred to food banks need help

“as a direct result of having benefit payments delayed, reduced, or withdrawn”.

DWP was unable to provide information on the number or proportion of JSA claimants who chose to sign off benefit during a sanction period, or for longer, which is the reason that they would come off the claimant count. That might explain why there is some disparity between the figures for the number of people looking for work and the official unemployment figures.

The Committee recommended that Jobcentre Plus should look at the impact of sanctions on the use of food banks, but the Government have effectively rejected that in their response.

The Committee was also keen to see a second independent review of the sanctions regime, in addition to the one already being conducted by Matthew Oakley. Indeed, we thought that we had got the Employment Minister, the right hon. Member for Wirral West (Esther McVey), to agree to that when she gave oral evidence. Matthew Oakley is considering the clarity of DWP’s communications with claimants, the whole issue of sanctions, the appeals process and the availability of hardship payments.

We had wanted that second independent review to examine: whether sanction referrals were made appropriately, proportionately and fairly across the jobcentre network; whether there is a the link between sanctioning and the claimant count that could explain some of the disparities in the figures; and whether the regime was achieving its aim of encouraging claimants to engage more effectively with employment support. There is no point having sanctions if we do not know whether they work. Are they making people look for work more thoroughly than they otherwise would? That is our question. We do not think that Matthew Oakley’s inquiry will answer that, because it is not in its remit.

The Committee thought that the Employment Minister had promised that second review, which is why our report states that we welcome that commitment. Unfortunately, that is not what she meant, because the Government’s response states that there will be no second review along the lines we were asking for, and which we thought the Government had agreed to.

I appeal again to the Government to consider setting up a second independent review, and not just of the administration of sanctions, but of their effectiveness. Do they actually work? Do they change the behaviour of the people affected? If they are not changing people’s behaviour and so are purely punitive, the Government should be honest about that, because they must be saving money as a result. I do not think that most people would accept the application of sanctions that are purely punitive. If they are changing people’s behaviour, that is a different matter.

[Stephen Timms (East Ham) (Lab)]

Does my hon. Friend share my puzzlement about the Government’s about-turn, given that the Minister wrote to my right hon. Friend the Member for Oldham West and Royton and referred to the second review’s terms of reference? It is therefore very surprising now to be told that it will not happen at all.

[Dame Anne Begg]

I share my right hon. Friend’s disappointment, because we honestly thought, even before we published the report, that we had got the Minister to agree to such a review. I hope that the Government will think again, because they need to be satisfied, just as everybody else does, that the regime is not intended simply to save money in the welfare system through punitive sanctions, but has a real purpose in ensuring that people who are not fulfilling their obligations under the agreements they signed and who are trying to play the system should be sanctioned in certain circumstances. Sanctions should certainly not be applied if there is no reason other than to punish the individuals concerned.

I know that my time is up, Mr Deputy Speaker. I hope that the Minister, who is listening patiently, will take that back to the Department and that we can get a second independent review of the workings of the sanctions regime.

Oral Answers to Questions

Anne Begg Excerpts

Monday 31st March 2014 Commons Chamber

[Mr Duncan Smith]

The innovation fund, which started with £30 million put in by my Department, has helped to build up the concept for social impact bonds, which will help to invest in the sort of projects that my hon. Friend is talking about. The trials have been to help children from the ages of 14 to 16 to get remedial education and to be job-ready. That has been a huge success and we will in due course publish the figures, but it opens the marketplace to new money from private investors and trusts.

[Dame Anne Begg (Aberdeen South) (Lab)]

Last week, the Select Committee on Work and Pensions published a report that recommended that the backlog for the PIP assessment should be cleared before the Government continued with the migration from the disability living allowance to PIP. Will the Government accept that? Will the fact that Atos has now lost the contract for the WCA have an impact on PIP? What action has the Minister taken to speed up new claims for PIP?

[Mike Penning]

Atos leaving the WCA contract will have no impact on the PIP part of the contract. We are making sure that we speed it up as we go. Interestingly, as the Chair of the Select Committee knows, I have turned off the tap on reassessments so that we get the initial backlog done first. The backlog is taking too long, in my own Department as well as in the two providers, but we will get it right.

Quality Workplace Pensions

Anne Begg Excerpts

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

I certain will, and it was very much the savers of Suffolk Coastal we had in mind. Active member discounts have been going on far too long. They are one of the hidden charges, and people are ignorant enough already of the charges in their pension schemes, through no fault of their own, even when they are active members, but when they move on to a new firm and a new scheme they probably have no clue what the charges are in the scheme they have left. Therefore, from April 2015 even schemes that retain active member discounts will be unable to go above 0.75%, which will stop many of them, and by April 2016 they will have to have been worked out of the system altogether.

[Dame Anne Begg (Aberdeen South) (Lab)]

The shadow Minister failed to persuade the Minister that the Opposition might have been responsible for some of these changes, but I wonder whether he will acknowledge that many of the measures he has announced today were recommended by the Work and Pensions Committee. In particular, we hope that we have played some part in ensuring that costs and charges are capped and transparent. He said that transaction costs will not be part of the cap but that there is some action on them. How likely is it that transaction charges will be part of the cap at some time in the future?

[Steve Webb]

I am grateful to the hon. Lady and hope that I acknowledged in my statement the contribution her Committee has made to some of the measures. On transaction costs, from this time next year trustees and governance committees will have a legal duty to obtain information about all costs and charges; we will be working with the Financial Conduct Authority, staring immediately, to try to define them all. The shadow Minister came up with a list the other day, but there will be things missing from it. As soon as a phrase appears in an Act of Parliament, the industry will change the name of it. We must therefore ensure that we are as comprehensive as possible. We are certainly open to the possibility that that should go in a charge cap. We would not want to do that in a way that discourages transactions that are in the interests of members, but clearly we want to avoid gratuitous transactions intended only to generate charge income, rather than to further the interests of members. It is certainly something we will return to, particularly in the light of the transparent information that will become available for the first time because of these measures.

amendment of the law

Anne Begg Excerpts

Tuesday 25th March 2014 Commons Chamber

[Dame Anne Begg (Aberdeen South) (Lab)]

If the hon. Gentleman waits, he will hear that I will be asking the Government Front-Bench team rather a lot of questions. Perhaps at the end of today’s debate, Ministers will be able to answer them.

[Mr Harper]

All I said is that the hon. Lady is not as enthusiastic about our changes as the hon. Member for Leeds West suggested. It is clear that we on the Government Benches, as the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb) set out clearly, trust people to save their own money and we trust them to make sensible decisions in retirement about how to spend it. The idea that somebody who has spent their entire lifetime working hard and building up a pension pot is going to throw the money away when they reach retirement age is nonsense.

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[Mr Mike Weir (Angus) (SNP)]

The changes to pensions and annuities have caused a great deal of interest in my constituency, but many constituents are unsure what it means for them. This is dangerous, because the changes are being introduced quite quickly and many people will have to decide whether to defer taking their pensions until the changes come into play.

At one of my surgeries on Friday a constituent who had already bought an annuity asked me whether he could now take a lump sum instead. I fear that the answer to that is no as he had already entered into an annuity contract, but it shows that there may be some ill feeling about the sudden change among those who have only recently bought annuities.

It is also not clear to many constituents that the changes apply only to defined contribution schemes. Many are unsure what type of scheme they are in. Another constituent asked me how the changes affected his company scheme, but it seemed to me that that scheme was a hybrid, with elements of both defined contribution and defined benefit. Again, my understanding of the changes is that they would not apply to such schemes, at least at the moment. Have the Government given any thought to whether hybrid schemes will be affected? Will the possibility of taking a lump sum from such a scheme be limited, and if so, what impact is that likely to have on the scheme as a whole?

While I appreciate that anyone who is considering what to do would be well advised to seek professional advice, these are serious issues that require a clear answer to allow constituents in such schemes to determine what is in their best interests. They may have to do so fairly quickly. The changes could mean a huge change in how people save for their future, but I suspect that it will also mean a huge change in how such savings are viewed, both by the general public and, crucially, by future Governments.

[Dame Anne Begg]

The hon. Gentleman has rightly challenged the Government about the uncertainties caused by the changes proposed in the Budget. Can he enlighten the Scottish people as to the attitude of a Scottish National party Government on the proposals if, heaven forfend, there is a vote for independence?

[Mr Weir]

I may as well ask the hon. Lady what a future Labour Government would do, given that Labour has flip-flopped on the proposals since they were announced last week. When we achieve our independence, we will inherit these proposals, and a future Chancellor will improve them.

There is evidence from other countries that when such changes are made, a substantial number of people take their savings as a lump sum, rather than buying an annuity. There are very good reasons why people might choose to do so, and I accept the argument that we should allow them more choice over how they use their own savings. On Thursday, during the statement by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), I raised the question of whether these new pensions vehicles will be truly different from other forms of savings. That is important, because we have traditionally given greater tax incentives to allow savings for retirement that are not available for other savings products. If, however, someone entering a pension scheme can in future take the whole sum as a lump sum rather than as an annuity, what exactly makes that pension scheme any different from other long-term savings schemes? Will a future Government look at that and decide to end any tax reliefs, which could have a significant impact on future savings? In his response the Minister said:

“One of the differences between workplace pensions and other forms of saving is the employer contribution. Whereas someone of working age can save through any savings vehicle they like, it is only through workplace pensions that they get not only tax relief but the employer contribution.”—[Official Report, 20 March 2014; Vol. 577, c. 956.]

That is true to some extent, but it does not really address the question, as defined contribution pension schemes are not necessarily workplace schemes, so they do not all have an employer contribution. For example, many self-employed people may use such schemes. They get tax relief, but will that continue should the pension element of the scheme effectively be removed? Is it therefore the Government's intention to make a distinction between those schemes that have an employer contribution and those that do not? Do the Government intend to have a process for determining which schemes are pension savings and which are just ordinary savings? Again, some clarity on these points is much needed.

I also asked the Minister how someone, say in their late 50s, who comes to claim means-tested benefits would have their defined contribution scheme treated. I did not really get an answer to that point, so I shall put it again to the Exchequer Secretary. I put the question to the House of Commons Library, and it responded:

“Income from a defined contribution pension is treated as income for the purposes of means-tested benefits”.

So far, so good, and that is no surprise, but what is the position if someone has a defined contribution scheme and has the ability either to withdraw their money or take it as income? Up to now, that has not been an issue, as most people cannot get access to their funds until they reach retirement age, but the changes, as I understand them, will mean that anyone over 55 will have access to their fund.

A clue to what might happen is to be found in the rules for pension credit, where a person can be treated as having pension income for which they have not yet applied. The leaflet from the Pension Service “A detailed guide to Pension Credit for advisers and others”, which was issued last September, states:

“Notional income is income your customer does not actually get but is treated as getting. We may treat them as having notional income when they have: not claimed state pension but are entitled to it; not taken income available to them under a personal pension plan or a retirement annuity contract; deferred payments from an occupational pension; given up their rights to an income (from a trust fund for example) because they wanted to get Pension Credit”.

At present, such rules do not apply to means-tested benefits for people of working age. In this case, the present rules specify that income from a personal pension should not be treated as income available on application. Will that remain the case once it is possible for anyone who has reached 55 to take their funds from their pension plan?

It may well be that some Government Members will be of the view that any potential income should be treated as income for the purpose of assessing state benefits, but the implications of that are that someone who has done what we all wish people to do and has saved towards their retirement but is then made redundant at a late stage in their working life, could have their whole retirement fund wiped out because of a period of unemployment. Again, clarity is needed on that point. Similar concerns arise over those who are in care and meeting care costs, which is a point raised by the hon. Member for New Forest East (Dr Lewis) on Thursday and also by Age UK and the Joseph Rowntree Foundation.

Of course, the situation in Scotland is slightly different from that in England, but Jane Vass of Age UK is quoted in The Guardian as saying:

“The pension pot is protected from means testing. So when it is in a pension it can’t be touched but there is a risk when it comes out of that wrapper.”

It is possible that many of those who have been saving for retirement find that they have to use the fund to meet care costs, or perhaps a substantial part of their pot will go on meeting the costs of an insurance policy to meet future care costs.

Those are real issues concerning the whole set of changes to annuities, pensions and pension pots. People who are thinking of what to do with pension schemes that are coming to an end—do they take an annuity or do they defer until the new changes come in?—need that information now. Although the Government have said that advice will be available, it is not yet available, and it will probably be some time before it is. Clarity is needed now; otherwise, many people could make the wrong decision. It may be that they should take an annuity, or maybe they want to take the lump sum. They need proper advice now before the changes come into effect, possibly in 2015.

--- Later in debate ---

[Richard Fuller]

That is a fair comment, but we would hope for critical thought—a thoughtful Opposition going through the Budget and finding good reasons to oppose what is in it. Again, however, we heard nothing from the Opposition. It is all very well trotting the shadow Chief Secretary into the media studios to claim—despite the fact that growth is up, unemployment is down and inflation is down—that everything is going badly, like a latter-day Chemical Ali, but the truth is the Opposition have no coherent response to what will prove to be one of the strongest foundations for long-term stability in our economy.

That foundation is based on the sensible principle that people know best how to spend the money they have earned. This Government recognise that and, more importantly, in this Budget we recognise that people understand that when they have spent a lifetime saving money from their earnings, they are in the best position to decide how best to spend it. They do not want to be artificially constrained by someone else telling them how best way enjoy their retirement. This Budget delivers that freedom to them and should be applauded. It comes after years of socialist trickle-down, taking money from working people to put into Labour’s big bureaucratic plans—out of touch with the realities of people—to find out whether their Highgate polices are somehow going to deliver from the socialist graveyards in Highgate to the people of Bedford and Kempston. We have dismissed all that top-down, trickle-down, socialist rhetoric, in order to give people back the money they earned. This is a Budget for working people, and I am proud to support it.

The Budget also shows that the Government recognise that as we were so highly leveraged—with so much debt—in 2010, it will take a long time to recover. A few years ago, I would have urged the Chancellor to go further and cut expenditure more, but he chose a middle path on reducing public expenditure. We have made progress in bringing the deficit down, and sometimes we are now joined by people who said a few years ago that we were going too far, too fast. The Chancellor has found a middle way with that.

The Opposition’s level of coherence on this Budget is most starkly demonstrated by their position on the benefit cap. May I say to the shadow Chief Secretary—if he has the time—that I understand from the speech of the hon. Member for Leeds West (Rachel Reeves) that the Opposition are going to support the benefit cap? Page 88 of the Red Book contains a helpful listing of the benefits that will be included in the benefit cap, which include housing benefit, other than housing benefit passported from jobseeker’s allowance. I presume that that includes the spare room subsidy. So my question to the shadow Chief Secretary, who, let us face it, ought to have some economic competence, is: if the spare room subsidy is included as a benefit, how can he keep referring to it as a tax? Does he understand the difference between a tax and a benefit? If he does not, and if he is going to vote on this, will he stop—[Interruption.] He is saying from a sedentary position that it is not just him, but he is charged with coming up with economic policies. One core feature of economic policy is understanding the difference between a benefit and a tax.

[Dame Anne Begg]

I just want to make sure that the hon. Gentleman is clear about this. The reference is to housing benefit but not JSA, but most working people who get housing benefit do so as a result of their being on JSA, which does not fall under the cap. Most people on housing benefit in their old age might fall under the cap, but they are not subject to the spare room subsidy—the bedroom tax.

[Richard Fuller]

I am grateful for that clarification. I hope the hon. Lady also understands that when people turn an important issue such as the spare room subsidy into political slogans it makes it much harder to engage on where the policy perhaps is being applied too aggressively or not aggressively enough. I have found that a tremendous barrier to engaging with people about how we can make sure the Government are getting that policy right. I hope we can use language in a way that people can understand.

Youth unemployment has been mentioned by many Opposition Members, including the hon. Member for Darlington (Jenny Chapman). I agree that youth unemployment should be a priority not just for Government but for each of us as Members of Parliament. That is why I am so proud of Government Members and some Opposition Members, who have proactively gone out and encouraged local employers to give young people a start in their careers—whether it is in an apprenticeship, part-time work or work experience. We should not always look to Government to achieve changes in youth unemployment, particularly now with the national insurance changes that are coming in. There has never been a better time than today to get a young person into work.

It is important that we thank the Government for sticking with their long-term economic plan, for finding a course in the division of pain so that all people, regardless of their background, contribute and that those who have the broadest shoulders make the largest contribution of all. Most importantly, I encourage Ministers to recognise that the task is only half done and that many difficult decisions remain ahead. Will they maintain the same steadfastness of approach in the future as they have shown in the past?

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[Dame Anne Begg (Aberdeen South) (Lab)]

There was a lot in the Budget that I would like to talk about this afternoon, including on the issue of welfare, but in the short time that I have, I will concentrate on the pensions announcements. The only thing that leaked out about the Budget was that a rabbit would come out of the hat. I suspect that the rabbit was the announcement about the annuities market.

Everybody has said that annuities need to be reformed. I have said that annuities need to be reformed, my Select Committee has said that annuities need to be reformed, Opposition Front Benchers have said that annuities need to be reformed, the shadow pensions Minister has said constantly that annuities need to be reformed and even the Government have said that annuities need to be reformed. Indeed, the industry itself has said that annuities need to be reformed. The rabbit that came out of the hat was the reform of that important market. However, what the Chancellor said in his Budget went far further than anyone had been calling for or expected—particularly the industry, and also the stock market if its reaction to the announcement is anything to go by.

Why do annuities need reforming? They lack flexibility, and people are often tied in to an inappropriate amount and an inappropriate time and do not shop around. We want a system that is much more flexible, perhaps with an open-market option so that people have different choices available to them when they reach their pension age and the time comes for them to buy an annuity. We must also consider the high costs and charges that have existed, and the fact that people have needed a lot of advice.

As Government Members have emphasised again and again today, we need consumer choice so that people can make the right decision about how they will spend their own money. For some people who still have a high mortgage when they draw down their pension, paying it off might be the most sensible thing to do. Paying off another debt might be the most sensible thing to do. However, the best thing for many people to do is to buy an annuity. Annuities are an excellent principle—someone saves into a pot and then buys something that lasts them to the end of their life. We do not know how long we will live after reaching pension age, so an annuity provides insurance: we know it will not run out before we reach the end of our life. It insures against old age.

All of that is right. However—this is the big but—what if there is no annuity market? What will the many people for whom an annuity is the right choice do then? That is the question that I have for the Government. Did they intend to undermine and destroy the annuity market, or did they hope that a new form of annuity would rise phoenix-like out of the flames of their announcements last week? If the annuity market were to collapse, the choice that they say they want to give consumers will not be there for those for whom an annuity is absolutely the right choice. Do the Government anticipate that the annuity market will be undermined or strengthened?

The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), has talked a lot recently about his “defined-ambition” pensions—his collective defined contribution schemes. Where does the Budget leave his great defined-ambition scheme? Collective schemes for investing money during the investment period might be possible, but I cannot see how the defined-ambition system can pay out on a collective DC scheme given the proposals in the Budget.

I wonder whether the Government have done any cost-benefit analysis of the increased benefits bill for older pensioners. If people go down a different route from annuities and then run out of money before they reach the end of their life, they will become dependent on more than just the basic state pension. I know that the Government have made great play of the fact that the basic state pension will be high enough to lift people out of means-tested benefit, but that is not true of housing benefit or council tax rebates, so there will be a cost. How much work has been done on that?

Annuities have got a bad name because there have been low interest rates and low returns, but other products have the same problem. Some of them might actually give a worse return than annuities. What guarantee can the Government give that people who buy another product will not get a worse return than if they had chosen an annuity? We know that high charges and costs need to be dealt with.

I wonder whether the Government thought about just rebranding annuities because they have such a bad name. Perhaps they could have called an annuity a pension for life, which might have changed people’s attitude. I wonder whether the Government intend to turn the UK private pension system into a saving system, and if they do, will tax reliefs remain? Was that the Government’s intention, or is it an accidental consequence of last week’s proposals?

I was going to say a great deal about the need for independent advice, because I am not sure that the guidance guarantee comes anywhere near what is required. There are a number of such questions, and I hope that the Government can answer them, because if they cannot, people will not perhaps be as keen about the Government changes as they may at first have appeared.

Welfare Reform (Sick and Disabled People)

Anne Begg Excerpts

Thursday 27th February 2014 Commons Chamber

[John McDonnell]

Members have brought forward example after example like that one. We are simply looking for some compassion and logic in the governance of the system. The Government have ignored that, tragically.

Many people report that, as a result of sanctions, they are dependent on doorstep loans and are using credit cards for everyday items. Some people have fallen into long-term debt. Some Members met a representative of Disability UK on Monday. He described all this as a route into destitution for many people.

Disabled people who are on ESA are placed on the Work programme and offered support from Work Choice. The latest figures on the success rate of the Work programme in finding employment for disabled people show that only 5.3% of them secured employment. That is a 95% failure rate. Work Choice is meant to assist those with complex needs, but it has helped only 58 people since 2011. The forced closure of the Remploy factories under this Government has taken away the opportunity of sheltered work for many thousands of disabled people.

[Dame Anne Begg (Aberdeen South) (Lab)]

I visited my local Work Choice provider the other week. I was amazed to discover that everyone who was there to participate was on jobseeker’s allowance. They were not on a disability benefit, even though they had disabilities. I did not think that that was what Work Choice was meant to be about.

[John McDonnell]

That is exactly what is reported by constituency Member after constituency Member after their visits. I am concerned about time, so I will press on and take no further interventions, if Members do not mind.

Let me turn to the personal independence payment. Some 3.2 million disabled people receive disability living allowance. DLA is not a work benefit; it is meant to help with the additional costs caused by disability. It allows disabled people to get by and to overcome some of the restrictions that are forced upon them by their disability. From April 2013, DLA was supposed to be replaced gradually by PIP. I urge Members to read today’s National Audit Office report that assesses the roll-out. It states:

“Backlogs have developed at each stage of the claimant process. Both the Department and assessment providers have processed fewer claims than they expected”.

It states that by October,

“the Department had made only 16% of the number of decisions it expected, over 166,000 people had started new claims for Personal Independence Payment and 92,000 claims had been transferred to the assessment provider and not yet returned to the Department”.

Who is the assessment provider? After the WCA debacle, it is hard to believe that the Government allowed Atos to share the contract with Capita.

The report goes on to say:

“Claimants face delays, and the Department is not able to tell them how long they are likely to wait, potentially creating distress and financial difficulties.”

It states:

“Citizens Advice has found that claimants are concerned about paying for their care, covering housing costs and having enough money to pay for necessities such as heating, electricity and food.”

The Demos-Scope study calculates that 600,000 people will be impacted by the introduction of PIP, with a total loss of £2.6 billion.

Among the many eligibility changes, there have been changes to the eligibility for the mobility component. That means that 148,000 people will lose out on that additional benefit. It also potentially denies access to a Motability vehicle, and we know today that many people are having their Motability cars removed. The irony is that, as a result, they cannot get to work.

Disabled people are especially vulnerable to other benefit changes, and they will be disproportionately hit by the bedroom tax. Some 72% of affected households include someone with a disability or major health problem, and 420,000 disabled people will lose on average £14 a week in housing benefit. One in three disabled people is refused the discretionary housing payment. Shockingly, local councils have rejected applications from disabled people living in adapted properties who are unable to downsize. Last week, it was also revealed that the £347 million local welfare assistance fund to local councils had quietly been cut by the Government.

The Welfare Reform Act 2012 also changed the uprating of benefits basis from the retail prices index to the consumer prices index, costing some families receiving DLA and the carer’s allowance £80 a week. It has been estimated that 142,500 disabled people will be hit by the benefit cap, costing £2 billion. Universal credit looms over all of this. Research by the National Association of Citizens Advice Bureaux estimates that 116,000 disabled people could lose £40 a week; that 230,000 severely disabled people who live alone or with only a young carer will get between £28 and £58 less a week; and that 100,000 disabled children will lose £28 a week.

What do all these figures add up to? Although the Government have refused to undertake a cumulative assessment of the effect of all the benefit changes on disabled people, others have done so. The Demos-Scope study calculated that disabled people will lose £28.3 billion by 2018. Dr Simon Bamber concludes that disabled people in poverty, who make up 4% of the population, will bear 13% of the cuts and lose £4,660 a year. People using social care who make up 3% of the population will also bear 13% of the cuts, and lose £6,409 a year.

In conclusion, what do these changes mean in reality? They mean poverty for many. They mean not enough income for someone to heat their home adequately—there are nearly 1 million disabled people now in fuel poverty. They mean someone choosing not to eat so that their children can do so, and their feeling shamed and humiliated by having to rely on the generosity of others and support from the food bank. I urge people to look at the website, Calum’s List. For some it is all too much and they become another in a coroner’s report whose suicide is associated with the loss of benefits. Many of the disabled people I have met say the same thing. They tell me they feel hounded by the media, by politicians and by this Government, just for being disabled and claiming the benefits they are entitled to receive.

What the War on Welfare campaigners are demanding today is the truth. They want a cumulative impact assessment of all welfare changes, so that the truth of their plight can be revealed. They believe—perhaps naively—that if the truth is told, no decent society would allow its most vulnerable members to be treated in this way. That is why I supported the petition and tabled the motion before the House, and why I will be pressing it to a vote.

--- Later in debate ---

[Dame Anne Begg (Aberdeen South) (Lab)]

I too, pay tribute to the WOW campaigners not only for securing more than 100,000 signatures to the petition, but for securing today’s debate. If anything could be said to illustrate the effectiveness of social media in opening up the lives of disabled people and allowing them to connect with other people throughout the country, it is an event such as this, inspired by the ability to connect with others who may be experiencing similar trials and tribulations—in this instance, at the hands of the Department for Work and Pensions.

The Government say that they are not picking on disabled people and those with severe health problems. Let us look at the evidence. The main benefits that are paid to people with disabilities and health problems are ESA, benefits paid following work capability assessments, and the new personal independence payment which will replace the disability living allowance. Every one of those benefits is currently undergoing enormous changes and reforms, initiated by the Welfare Reform Act 2012.

We know that those reforms are not going well. Only this week, we learnt that the work capability reassessments had been suspended, and that Atos, the company delivering them, wants to end its contract. We are hearing rumours that a face-to-face work capability assessment in the home is taking up to six months to arrange. We know that those who are lucky enough to receive ESA, if they are in the work-related activity group and claiming the contributory element, will receive the benefit for only a year.

Also, as has been mentioned, the people who are in the contributory ESA group are the ones who have worked all their lives—who have paid their national insurance and who thought they were paying into an insurance scheme that would look after them if the worst came to the worst and they were not able to work any more. Interestingly therefore, it is not just those who come from the poorest backgrounds, and whose whole families have perhaps depended on benefits, who are suffering under this Government—although that group most definitely is—but it is also people who thought they had done the right thing. It is people who have done what previous Governments asked and have worked and contributed and have done as well as they could.

The National Audit Office report published today shows that the roll-out of PIP seems to be in chaos as well. There are huge backlogs, and there are constituents of mine who have been waiting for over six months to get a determination after they have had their face-to-face interview.

[Caroline Lucas]

The hon. Lady is making a powerful point. These delays in PIP payments in particular are causing so much stress. Does she share my horror that, for example, in Brighton some front-line services have been doing their own surveys of how long people have been waiting, and the advice centre in Brighton and Hove found that only three of 60 clients—fewer than 5%—have actually been assessed? Does she agree that that causes massive uncertainty and stress?

[Dame Anne Begg]

Yes, and it is particularly difficult for people who have quite progressive diseases. For those with terminal illnesses, there is an attempt to get payments out quite quickly, but even then it takes longer than normal. I have a constituent who has very aggressive multiple sclerosis who is desperate for this help but who cannot get it because he does not fall under the special measures category.

The benefits I have mentioned are those that everybody knows are specifically for disabled people and people with health problems, but there are other benefits, too, and other changes to benefits that fall disproportionately on that group. Which single group is hardest hit by the changes to housing benefit and local housing allowance? It is disabled people and those with health problems. Which single group is hardest hit by the bedroom tax? Surprise, surprise, it is disabled people and those with health problems. Which group is hardest hit by the removal of the full council tax relief? Again, it is disabled people and people with health problems. That is because all these changes fall on people of working age, and the people of working age who are most likely to be on these benefits are people who cannot work because of a disability or a health problem.

Who is the hardest hit by the overall benefits cap? The Government said it would not be disabled people, and it probably is not them, but it is their carers, particularly if they are family carers. Who is hardest hit by the social care cuts that mean that local authorities are not able to provide the social care that people need? Of course, it is disabled people and those with health problems. If universal credit ever comes in, severe disablement premium goes, which was paid to people who are single and living alone.

Because it is not just the obvious benefits that go to disabled people that are being cut or are in chaos or not working, but all these other benefits and changes that are also affecting people who have a disability and their families, there is an absolute need for a cumulative impact assessment. I have been calling for a cumulative impact assessment for a number of years now and that is because no one knows precisely the full force of everything that may be falling on individual families and individual households. Unless we do that cumulative impact assessment, we will never know, and in the meantime those families and households are struggling to make ends meet, falling into debt and having to make the choice between eating and heating. They are having to make choices we should not have to make in 21st century Britain. That is why I am very happy to support this debate this afternoon.

Housing Benefit

Anne Begg Excerpts

Wednesday 26th February 2014 Commons Chamber

[John Hemming]

With the charges for a spare room, it has taken some time to identify those people who are willing to transfer. Discretionary housing payments have been made available to people. I have seen payments for DHP go through. People come and talk to me about their personal problems, and I work to get them resolved. I do not think I voted for that amendment, but I have not checked the records so I do not know. It is important to remember that the quantum of DHP is critical. The Government have recently announced DHP for the next two financial years, and that is how we protect people with disabilities who need a spare room for one reason or another. However, it is not possible to achieve that and give this exemption or that exemption.

[Dame Anne Begg (Aberdeen South) (Lab)]

The hon. Gentleman makes great play of saving money, but if it were a perfect world and there were properties to move into, according to the Government’s impact assessment that would not save any money. If people cannot move and they get DHP, that does not save money either. How will all the money be saved unless it is taken from those who have no choice?

[John Hemming]

I did explain that point, looking at examples of those who take in family members. Cases in Redcar have been cited where, because of the interplay between the non-dependent deduction in housing benefit and the spare room rent, it is now in parents’ financial interests to keep their adult children in the property, which it was not previously. That is a way to reduce the overall cost to the housing benefit budget without reducing quality of life.

Pensions and Benefits Uprating

Anne Begg Excerpts

Tuesday 25th February 2014 Commons Chamber

[Gregg McClymont]

My hon. Friend makes an important point. The level at which the Minister appears set to place the new flat-rate state pension is just above pension credit. It is that framework, which was set for the poorest pensioners to ensure they would no longer live in poverty, that is so important. My argument is not that the hon. Member for Argyll and Bute is entirely wrong; it is that he must take account of the difference that pension credit made to the poorest pensioners in his constituency, my constituency and around the country.

That brings me to the question that I wanted to ask the Minister, which is about pension credit. Of course it is welcome that the basic state pension is rising by £2.95, and he was very clear that pension credit will also rise by £2.95, but of course as a percentage rise, the rise for pension credit is less. The danger is that those on pension credit will fall behind relative to those on the basic state pension.

The term that the Minister used was over-indexation. A little alarm goes off in my head when Ministers resort to using such terms. A more straightforward way to put things is to say that pension credit, which the poorest pensioners rely on, is not being uprated by the same percentage as the basic state pension. There may be an excellent reason for that, but I would like to hear it.

There is also a more fundamental point about the new pension system that the Minister and the Government are introducing, which relates to the point that my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. It is that, as the Pensions Bill proceeds, the new flat-rate state pension—as I understand it—is being set just above pension credit. If pension credit loses its value relative to the basic state pension in the run-up to the introduction of the new system, there is a danger that the flat-rate state pension will be pegged at a lower rate than would otherwise be the case. We must be clear not only about the implications for the poorest pensioners of a lag in the uprating of pension credit, but about the implications for the flat-rate state pension system for which the hon. Member for Argyll and Bute is such an enthusiast. We must ask these legitimate questions. If we are to have a reasonable debate, we need to recognise the progress that was made over the past decade—certainly until 2010—and consider how that will interact with the flat-rate state pension system that the Minister is so keen on creating.

[Dame Anne Begg (Aberdeen South) (Lab)]

Following its pre-legislative scrutiny of the draft Pensions Bill, my Work and Pensions Committee thought that there should be a larger gap between the flat-rate state pension and pension credit to ensure that there would be a cut in means-testing, which the Government claim will be the effect of the flat-rate pension’s introduction. However, that will not happen if the two are kept together, or if one is lower than the other.

[Gregg McClymont]

My hon. Friend is widely acknowledged as an expert in this area, and questions arise when pension credit is not uprated by the same percentage as the basic state pension. As I said, I start to get worried when I hear the phrase “over-indexation” because the Minister is actually saying, “We have decided that pension credit will be uprated by earnings unless we decide otherwise, and we have decided otherwise, so it will be uprated by the cash equivalent of the uprating to the basic state pension.” However, that represents a smaller percentage increase, so we need to be aware of the wider implications of that.

I made it clear that I would not detain the House for too long. My right hon. Friend the Member for East Ham (Stephen Timms) asked the Minister a number of important questions, to which I shall add my own. First, does the Minister agree that pension credit made a real difference to millions of poor pensioners in this country? Secondly, does he agree that it provides the basis on which the flat-rate state pension will be pegged under his new system? If that is the case, it is important that we debate the lesser uprating of pension credit, and I hope that the Minister accepts that I ask my questions in the spirit of co-operation and inquiry.