Disabled People

Anne Begg Excerpts

Wednesday 10th July 2013 Commons Chamber

[Greg Mulholland]

I pay tribute to the work of the Work and Pensions Committee, of which I was proud to be a member in the last Parliament. It has a vital role to play and I look forward to its ongoing reports, which should be part of the review of these policies.

The hon. Lady knows, having listened to me in debates on more than one occasion, that I personally felt unable to support the under-occupancy penalty precisely because there were not the sort of exemptions that I believed should be included. I thank Ministers for listening to at least some of my points and introducing further exemptions before the policy was introduced, but I would like more exemptions and I will continue to press for them.

During our last debate on the subject, I stood in this exact place—the hon. Member for Edinburgh East (Sheila Gilmore) was probably very near where she is now—and said that the Government must and should commit to a review on the specific policy. We did get that commitment. There must be a review, which should be done not only through the Department for Work and Pensions but in conjunction with councils up and down the country, so that we get an open and honest assessment of how the policy is affecting disabled people.

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

Will the hon. Gentleman give way?

[Greg Mulholland]

I will give way one more time, as it is the hon. Lady.

[Dame Anne Begg]

I thank the hon. Gentleman for being so generous. People living in a house specifically adapted for them have to pay the bedroom tax and therefore often have to apply for a discretionary housing payment. In most cases, they will get that payment into the future, which suggests that the payment should not be discretionary but automatic. Could the hon. Gentleman use that fact in his argument with Ministers about why those living in specifically adapted houses should be exempt?

[Greg Mulholland]

It is always a pleasure to hear from the hon. Lady and it was a pleasure to serve with her on the Work and Pensions Committee in the last Parliament, before she was Chair.

The hon. Lady knows that I have said that we should be discussing cases in which rooms deemed to be spare have not been spare. Some of those issues were dealt with in respect of the equipment needed and so on, and I was pleased with that. However, I feel that if discretionary payments are needed again and again and categories are established, those categories should warrant an exemption. I will continue to make that case and to push for a review.

In the limited time that I have left, I should look at some of the other issues covered in this broad debate, which the House should revisit regularly. It should discuss the issue at least twice a year because the situation is in a state of flux, which has been brought about, in part, by the economic situation and the need to look at the overall welfare budget, which all parties, including the Labour party, very clearly said needs to be reformed. We should also do so, however, to check on the positive reforms and make sure that these policies are indeed doing what we collectively want them to do. The Opposition were clear that DLA needed reform; indeed, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who opened the debate for the Opposition, said that.

To respond to a point made earlier, it is very important that the wrong messages are not given out today, because the reality is that overall spending on personal independent payments and DLA will be higher in real terms in every year up to 2015-16 than spending was on DLA to 2009-10. This is not about seeking to reduce the welfare budget, therefore; instead it is about directing it at people who need it, and looking in particular at what people can do and genuinely empowering them, rather than judging people on what they cannot do.

Does that mean PIP will be absolutely perfect in a way that DLA was not? Of course not, and we all have to accept that every single change to any benefit will have implications and consequences, and it is right that we should look at them, but simply to use this debate as an opportunity to bash the Government on policy fails to achieve what I hope is the Opposition Front-Bench team’s intention: to say we must be looking on an ongoing basis at the impact of these policies.

I want to hear from Ministers today that they are not in any way afraid of having a review and that there must be a constant review of all policies in this area. My position on the motion is that I believe we should have a proper assessment, but that we should have one next year. That is my position simply because the big change from DLA to PIP is being introduced this year. I do believe we should have a review, however, and I hope we hear that from the Minister, too, so we do not send out the false message that we do not want a review.

Remploy

Anne Begg Excerpts

Thursday 4th July 2013 Commons Chamber

[Esther McVey]

I entirely agree. We must proceed with care and consideration, and we must also listen to the views of disability groups, advisers and experts, all of whom say that they would like to see more disabled people in mainstream work. That is what we must do: provide proper, sustainable, full-time jobs.

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

Today’s announcement will not affect the Remploy factory in Aberdeen, because it has already closed, although a social enterprise has been running the textiles business very successfully, which suggests that the factory had the potential to be more successful than the Minister has suggested. However, the social enterprise was formed by the more able workers, and those who have remained unemployed are the most disabled. Do the Government think that there is still a need for sheltered workplaces in this country?

[Esther McVey]

I agree with what the hon. Lady has said about what happened in Aberdeen. People have come together, and some of the workers involved have made progress. However, the most severely disabled need to be helped into work and supported while they are there. We have therefore announced a £350 million strategy, on which we shall be working over the summer. Moreover, in July we shall be launching a two-year awareness campaign at an employment conference, bringing together employers, employees and disabled entrepreneurs

Oral Answers to Questions

Anne Begg Excerpts

Monday 1st July 2013 Commons Chamber

[Mr Hoban]

My hon. Friend is right. Although performance has improved significantly, more progress is needed. We aim to reward the best providers by shifting more referrals to them, and that will start happening on 1 August. At that time, at least 14 market share shifts will take place to encourage good performers and to send a message to those who are performing badly.

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

The Minister must be disappointed by the figures relating to employment and support allowance. The people concerned were not abandoned by the last Government; there was a programme called Pathways to Work, and the figures were far better then than they have been during the two years of the Work programme. Will the Minister please look into what is happening to this cohort with a sense of urgency? These people are being let down.

[Mr Hoban]

I disagree with the hon. Lady’s presumption that they are being let down. I have ensured that each provider has an action plan. We have also set up a “best practice group” to share information about what is working well, and to ensure that each provider gives the best possible service to this important group of people.

Pensions Bill

Anne Begg Excerpts

Monday 17th June 2013 Commons Chamber

[Mr Duncan Smith]

I hear my hon. Friend, and I would simply say to him that that would cost a sum knocking on the door of between £650 million and £700 million a year. Other Governments have considered it. I would be happy to discuss the matter with him, however, and to reflect on it. I am sure that those sitting further down the Bench will have heard his desire to serve on the Committee, although whether my hon. Friend the Minister of State would want that is another matter altogether.

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

If the Secretary of State is not prepared to go as far as the hon. Member for Worthing West (Sir Peter Bottomley) requests, will he perhaps look again at the Select Committee’s recommendation that the anomaly could be changed for those who reach pension age after April 2016? I appreciate that it would be expensive to change the system for those who are historically already in payment, but that might not be the case if the change related only to new pensions.

[Mr Duncan Smith]

Whenever the hon. Lady speaks, I always want to help her, particularly as I am due to appear in front of her Committee shortly. I really want to be as nice as possible to her, but I am not sure how much hope I can give her. My hon. Friend the Minister of State and I are certainly always happy to look at these proposals, but I come back to the point that it is difficult to do anything about them at the moment, because these things cost significant amounts of money. I recognise the concerns that are being raised, but these are expensive items and, right now, I do not think that we could possibly schedule in such changes. I am happy to discuss the matter further with the hon. Lady, however, as is my hon. Friend.

The regular review of the state pension age will ensure that the issue is considered in every Parliament, which will avoid the necessity for future Governments to have to take emergency action, as we did earlier. Men and women retiring at 67 in 2028 can expect to receive a pension for roughly just as long as those retiring at 65 today. The review will work on the same principle—namely, that people should spend a given proportion of their lives drawing a state pension. By regularly considering the state pension age in the light of changing life expectancy, we can ensure that our pension system remains on firm foundations. That will ensure a continuing and fair social settlement between young and old.

Another long overdue element of reform in the Bill relates to bereavement benefits. As we bring our pension system into the 21st century, we must do the same with our bereavement benefits. They form an important part of our state safety net, but they have remained unchanged for too long. They now reflect a time gone by, in which the life of a widow was quite different from what it is today. The conclusion, after long discussion, is that we have an outmoded system of complicated payments and contributions that, at worst, can harm people’s long-term job prospects by distancing them from the labour market.

While protecting existing recipients, the Bill makes provision to simplify the system through a lump sum payment followed by 12 monthly instalments. The new system will help spouses and civil partners to deal with additional costs in the critical time immediately after a bereavement when that help is most needed, as well as giving them the space and time to settle and resolve most of the other issues that require financial support. Those with dependent children will receive a £5,000 lump sum and £400 a month for 12 months. Those without children will receive a £2,500 lump sum and £150 a month for 12 months. This is not a saving measure. I can absolutely guarantee that the money being applied to this will go back into it, although it will be more narrowly focused over a particular time scale.

I believe that the Bill has the general support of both sides of the House, by and large. It is a genuinely good example of coalition politics coming together to find a solution for people who are unable to change their circumstances following retirement and who want simplicity and the certainty of a commitment by whichever Government are in power that their income will remain at a level that allows them to sustain their position in life.

--- Later in debate ---

[Nigel Mills]

I agree wholeheartedly. I think we have all had people come to us with calculations saying, “What will I get under this new pension? What would I have got?” When trying to talk them through it, there is an especial problem with people who do not understand that those who have contracted out for most of their working life will not get the full £143. They think a bonus is coming—that they will be £35 a week better off—whereas they might just miss out. We need to write to people before the change, saying, “Here’s what you’ve accrued”, “Here’s what will happen after the change”, “It looks like you’ll get your full £143 a week”, “It look like you won’t get the full £143 a week”, “Here’s what you can do”, “Are you due any credits for periods spent caring for children or other things?”, “Have you missed any years’ contributions?” We have to communicate all that clearly so that people have the information in time to make those decisions.

[Dame Anne Begg]

Does the hon. Gentleman agree that a remarkable number of people do not know that they have been contracted out or qualify for credits through the home responsibilities protection and other things and that it will come as a surprise to them that they might have more credits than they had anticipated?

[Nigel Mills]

I absolutely agree. The system is so complicated that it is hard for any of us to know exactly what we are entitled to. It is scary when a constituent says to me, “You were on that Committee. Explain how this will work.” From my days as an accountant, I know how to write lots of caveats, so I e-mail them back saying “I think it might be this, but I’m not an adviser, I don’t know your actual circumstances,” and so on. Key to this reform being successful and retaining support, therefore, is how we tell people what they are entitled to, what they can do, what they need to do and when to do it by.

There are some useful things in the Bill, including the tweaks to auto-enrolment, which I think we all welcome. It is right to cap consultancy fees for auto-enrolled schemes, because if the state is, if not quite forcing people into a savings system, certainly encouraging them strongly to do so—through the opt-out—the auto-enrolled scheme must be a fair and decent one, and that means not being ripped off by excessive charges. We should be saying, “This is the most you can charge people. You cannot add unnecessary and expensive consultancy fees”. Therefore, the provisions in the Bill are a welcome change, even to a free-market, non-regulatory person such as me. It is the right direction to head in.

The provisions on the transfer of dormant pots are also a step in the right direction. When starting to think what retirement might bring, one wants to know how much pension income has been accrued, but that can be hard. If someone has changed jobs a few times, they will have lots of small pots, which means they will get those strange, complicated documents once a year that they do not understand. Even if they read them, they will not be able to work out the income it will equate to in retirement. If those pots were moved into a single pot, they would get only one statement. If we made that information clear, they might find out that they have accrued only a third of what they want and that they need to take action several years before retirement.

That is a welcome step. I asked the Secretary of State earlier whether we could use this Bill to make changes to the National Employment Savings Trust so that those who choose to use the scheme or their employers who use it can make those transfers. I am not quite sure what the situation will be for those who think they can transfer their pot but cannot, even though their employer might have chosen one of the best schemes out there. We need to get that clear in the system as soon as we can, so that people understand how that will happen. As the Bill proceeds in Committee and on Report, I hope those changes to NEST can be sneaked in, once the consultation ends. I suspect that some attempts to table amendments to that effect might be made in Committee, if the Government have not quite got there—not that I am saying I will draft them or am in any way qualified to achieve that, which I suspect is well outside my skills.

One issue leading on from auto-enrolment and NEST is the fact that the regulator responsible for auto-enrolment is the Pensions Regulator, yet most auto-enrolment is into contract-based defined contribution schemes, for which the Pensions Regulator has no responsibility. We are in a slightly strange situation. Everyone out there thinks, “There’s a Pensions Regulator,” yet most people’s pension schemes are probably not caught by it. They have no redress to that regulator and instead have to go to the Financial Services Authority, or the Financial Conduct Authority or whatever it is called now—the organisation that did such a good job with the banks that we entrusted it with pensions as well.

I am not entirely convinced that that is the right place, partly because when the FCA gave evidence to us, it did not seem to be giving pension schemes quite the focus that such an organisation ought to give them, as I suspect members of the Committee who were present would agree. There is real confusion out there about who does what in the pensions regulatory system. There is an attraction to having the role of supervising individual pension schemes all in one place—that place being the Pensions Regulator. I accept that the Minister recently replied to the Committee with some sensible reasons why he comes down on a different side of that line, but this issue is worth exploring, to ensure the right protections as more and more people move into contract-based defined contribution schemes, which is a hugely important sphere.

While we are on the Minister’s response to the Select Committee, may I welcome the fact that the start date for the change has made its way into the Bill? I questioned him quite strongly about that on the Committee, because this is a fundamental change to the pension that millions of people can expect, and to have the date slip by some accident or change of policy after the election would be hugely disadvantageous. If the date changes by even six months, that is six months’ worth for people who retired thinking they were getting £143, but who would then drop back into the old system. That would be disastrous, and all those women we have taken out would be dropped back in. I suspect that none of us would fancy that, so having the start date firmly in primary legislation in this Bill has to be right. I welcome the fact that the Minister listened, although I also hope that his power in the Bill to change the date by order is not one that he plans to use. I would have thought that the power should lapse—maybe in March 2015—so that it cannot be changed once we are a year from the start date. It would be awful if less than a year’s notice was given of a slip by six months or something like that.

We also welcome the fact that the Government listened and capped the minimum qualification period. We all accept that it is not right for our taxpayers to provide pensions to people who had a short stay here or to spouses who have never come here and who, by the time they retire, have had 40 years in a different state and have a pension there. It is not right to give them a small state pension that we have to administer. It is right to say, “If you haven’t paid in for this number of years, then you get nothing.” For that period to be more than 10 years would have been unfair—someone who has paid into a system for 10 years probably deserves something back out. It is right that the Bill has a cap at 10 years and we will see whether the Government choose seven years, 10 years or somewhere in between as the process continues.

I have had a gentle canter through what is in the Bill and some of the things I might have liked to see in it to improve things for people paying into private pensions. I am sure we can explore those as the Bill proceeds.

I am reluctantly content with the idea of increasing the state pension age—I suspect that future Governments might be grateful for this one. However, some kind of mechanism should be put in place to force a review every Parliament or every five or six years to see what the decision has to be. Increasing the state pension age by another year will never be politically popular, as a few hundred thousand people will then be retiring later than they wanted to. However, it would be right and fair to have a transparent mechanism—or transparent-ish: it would only force a review, not be a real power—so that we said to people, “As life expectancy increases, we have to accept that you retire later, and we have to try to keep a sensibly fixed proportion of your life that you can expect to be in receipt of a pension.” If people can understand that principle—“This is the proportion of your life for which you will receive a state pension”—or if it is at least there for them to try to understand, that will be powerfully clear. Rather than suddenly saying, “Actually, we’ve got a big financial problem again; let’s make a change that no one was expecting,” let us set that within some kind of trend.

I welcome the Bill and look forward to it passing through this House. There are some questions about the detail that I am sure we will all want to understand, such as how precisely the calculations will be made, how people will know when they have been contracted out and where people who have been contracted out for part of their working lives will fall between £108 and £143. That will be difficult to understand, but it is important that the Government make that clear. There is clearly a huge role to play outside this place in making people understand what pension they will receive and what they can do about it, which will probably be more important than the debates we have in this place or the agonising over commas and full stops that is to come. I welcome the Bill and look forward to the chance to serve on the Public Bill Committee.

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

It is important that any pension reform has support in all parties across the House, because the last thing we want is for pension reform to keep changing every time a new Government come in. Up to now, the reforms introduced by the Labour Government in 1997 and later have not been changed by the present Government—I will talk about pension credit later. The proposals we are discussing in this Bill build on a number of those reforms, particularly auto-enrolment and changes to the occupational or second-tier part of a pension.

It is right that we should support the principle of this Bill. It is crucial that people know what pension they can expect from the state; I am glad that they will be able to expect a state pension in future. There has been a lot of debate in various media and elsewhere about whether future Governments will be able to sustain the whole principle of a single-tier pension or even the first tier of a state pension. I pay tribute to the Government for nailing the fact that this is what the future will hold. There will be an element that is not quite universal, because people will have to pay in, but everybody who has lived, worked and cared in the UK for more than 10 years—and up to 35 years—can expect a basic pension from the state, and everybody will know how much it will be.

There is a huge mismatch between what people expect on their retirement and what they are saving. The Scottish Widows report published the other week showed that most people want an income of around £25,000 in retirement, yet less than 20% of the population are saving at a level that would take them even remotely close to that. Even with the reform of the state pension and the introduction of auto-enrolment, people’s income in retirement will still not come close to the £25,000 that they might expect or aspire to. However, it will come a bit closer as a result of these reforms, because establishing a single-tier pension—a flat-rate pension—will make it easier for those giving advice to people saving for their retirement to say that it will always pay to save.

My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) provided an example of where savings might not necessarily give someone a larger income in retirement, but the measures in this Bill will generally make it easier for those kind of calculations to take place and will make it easier and more understandable for people to realise just how much they are going to have to contribute to get an income that comes close to what they desire.

The introduction of the single-tier pension will also reduce means-testing, but only if the flat-rate pension is set above pension credit level. One of the Select Committee’s recommendations in our pre-legislative scrutiny report was that there should be clear blue water between the level of the single-tier pension and the pension credit—a bit more than the £1 and something that is there now. We had hoped that that principle would be built into the Bill and we are disappointed that the Government did not see their way to doing that. The principle is important —that the single-tier pension will always lift someone out of the basic means test.

Pension credit has come in for some criticism today, but at the time, it was absolutely the right thing to do, because the biggest issue that needed addressing in 1997 was that of pensioner poverty. Thanks to a level of success, the pension credit has managed to lift 2 million pensioners out of poverty. It means, too, that pensioners are not generally living in poverty; being old no longer equates to being poor. There are still people who are old and poor, but not in any different proportion than can be found in the general or working-age population.

[Ian Swales]

Does the hon. Lady regret the fact that two out of every five people who qualify for pension credit do not claim it, and does she welcome the measures in the Bill that will reduce the number of people who have to face the issue of means-testing?

--- Later in debate ---

[Dame Anne Begg]

I welcome the reduction in means-testing, but the hon. Gentleman should be aware that there are two different types of pension credit. There is the savings credit, which the Bill is abolishing completely; that means that someone with savings but no other income might be worse off than someone who has no savings. The savings credit tended to be more complicated, and people found it difficult to judge whether or not they qualified for it. The people eligible for savings credit were generally those who had a little saved or were a bit above the minimum, but those people tended to believe that they did not qualify for anything because they had never qualified for anything before. The take-up among those who qualified for just the minimum income guarantee part of pension credit, on the other hand, was well over 90%. I do not want the hon. Gentleman to be confused over the fact that large numbers of people were not claiming what they were entitled to in pension credit. Very often, the savings credit might have qualified people for only about 50p a week, so they thought that it was not worth going through the bureaucracy. I know this from conversations I have had with my constituents.

The hon. Member for Amber Valley (Nigel Mills) mentioned that the Work and Pensions Committee undertook pre-legislative scrutiny, but we scrutinised only part 1 of the Bill. That was our remit. I shall say no more about the fact that the start date was accelerated, as I recall laying into the Minister for that when we last debated the issue on the Floor of the House. We took no evidence on the later parts of the Bill, the most controversial of which is probably the issue of raising the pension age. The many briefings I have received from various organisations have focused their criticisms mainly on that issue.

The impression has been created that, if there is to be a review every five years, the pension age will increase every five years, which has frightened quite a number of people, as it seems to underpin a never-ending increase in the pension age. That is why my hon. Friend the Member for Amber Valley—I call him my hon. Friend because he sits on our Select Committee—was wondering, given his present age, how old he will be before he receives any kind of state pension. I know how he might feel. I have said here before that as someone born in 1955, I have been hit by all the increases. I was of the generation of women who, under the Pensions Act 1995, would not receive a state pension until 65. I had accepted that and was planning for that, but the Government then introduced an acceleration up to 66 for 2020, so I can well understand why some women feel that they never seem able to reach their state pension age because the Government are continually moving the goalposts. That thinking may well be behind some of the anxieties expressed in many of the briefings I have received on the pension age provisions.

Other issues concerning not just the state pension but the pensions landscape are not covered in the Bill, even though the Select Committee produced reports on them. The hon. Member for Amber Valley mentioned that we published a report on the governance of pension schemes, in which we recommended that the Government should consider making a single regulator responsible for pensions. He has also set out some of the Select Committee’s concerns about the present regulatory framework, particularly regarding the gaps or confusion about exactly which body is responsible for which parts of the regulations.

Ultimately, pensions must be well regulated, because we have to rebuild trust in them so that people know that if they invest in a pension they will get a good income from it and not be ripped off by a pension company. They want to know that the charges they pay for their pensions are fair, that there are no hidden charges and that nothing pertaining to their pension has not been properly explained to them. It is really important for people to have that faith in the pensions industry and for the pensions industry to step up to the plate and ensure that it offers very good, well-regulated products that are not overly expensive.

We also produced a report about the lifting of restrictions on the National Employment Savings Trust. If the Government are to make sense of auto-enrolment and if indeed they are to get rid of what was the state second-tier pension in SERPS, or S2P, it is crucial that a state-backed second-tier pension is available, and that default option should always be NEST. In saying which restrictions should be lifted, we said only that the transfers in and out and the cap should be lifted; we did not say that the restriction on NEST always to have a public service duty should be lifted, as we thought that was absolutely right. There has to be a default scheme that cannot turn anyone away. If NEST is to undertake that important work, it will be unfair if some of the restrictions have not been lifted. I hope that, as the Bill goes through its stages here and in the other place, the Government will come up with some proposals to change the present restrictions that are hampering NEST’s ability to do business.

The Government have accepted some other elements of the Select Committee’s report. The implementation date is now in the Bill and it has also been specified that the minimum qualifying years should be no more than 10 years. It was the hon. Member for Amber Valley again who argued for exactly that, and we were happy to accept it as one of our recommendations.

During today’s debate, it has become clear that a good communications strategy is crucial. There is no doubt that when the single-tier pension was first mooted, everyone thought that those who were born on the day before the relevant date would receive £107 a week, while those who were born the day after would receive £144. I think that people still have that impression, and that it is still felt that the new system will be more generous to everyone. Well, it will be more generous to some—the self-employed will probably do slightly better out of it—but those who have assumed that all their second tier of pension will be covered by the state earnings-related pension scheme or by the state second pension may be worse off in the long term.

It is incumbent on the Government to try to deal with some of those misunderstandings. I assume that they have sent a letter to every woman who is within 10 years of pension age, because I received such a letter, but the letter that I received was very vague, and—as has already been pointed out today—not everyone knows how many years of credit they have in their state pension, because not everyone understands what work qualifies for credit and what work does not.

It is crucial for us to warn people who are close to retirement that they must have made national insurance contributions for 35 years rather than 30. Some have already retired under the misapprehension that they have contributed the full amount. It must be made clear to them that they can buy back national insurance years, they must be told how they can do that, and it must be ensured that they do not buy back years that will give them no extra income.

[David Mowat (Warrington South) (Con)]

I have been reflecting on what the hon. Lady said about the National Employment Savings Trust. It is clear that NEST is directionally right and that a passive, low-cost investment vehicle is needed, but there are a great many restrictions that will prevent it from competing fairly with the existing industry in the marketplace. Did the Select Committee give any thought to what could be done about some of those restrictions?

[Dame Anne Begg]

We did indeed. We did not consider it during our pre-legislative scrutiny, because the issue is not covered by the Bill—there is some regret about that—but we did consider it in our governance report. We also published a separate report recommending the lifting of the cap on NEST and the removal of restrictions on transfers in and out of it. If the Government’s “pot follows member” proposal—which is in the Bill—is to work, the restriction on transfers must go, because otherwise anyone who has or is about to have savings in NEST will not be able to be followed by their pension pot when they move from one employer to another.

[David Mowat]

The “pot follows member” proposal interests me as well. Did the Select Committee give any thought to the use of NEST as a vehicle for aggregation? That strikes me as a natural way of going down a different route.

[Dame Anne Begg]

We did indeed. In fact, that was the favoured option of many of our witnesses. The Government did not listen, and opted for “pot follows member”, but we, and a number of witnesses, thought that NEST would be ideal as the source of an aggregated fund.

The communications strategy must also make it clear that savings credit will end when the single-tier pension is introduced. However, one of the main issues dealt with by the Select Committee was the issue of women—for it is usually women who are affected—who currently depend on the pension contributions of a partner or husband and whose pensions are therefore based on derived rights, because that system will end. The Committee recommended that women within 10 years of pension age should continue to enjoy those rights, because in less than 10 years they would not have time to build up a contribution record that would enable them to receive any kind of state pension in their own right. That, we thought, was very unfair, given that all the household planning might depend on the assumption that the wife would receive 60% of the husband’s basic pension.

[Jackie Doyle-Price (Thurrock) (Con)]

I share the hon. Lady’s concern. In their retirement, a group of people who have depended entirely on a single income and have not imposed any burden on the taxpayer are now being robbed of what they had every legitimate expectation of receiving.

[Dame Anne Begg]

Indeed. We talk a great deal about how women’s lives have changed. Younger women may have built up contributions in their own right, either through caring responsibilities or through their own work, but there is a generation of women who may not have retired or reached pension age, who have stayed at home throughout their lives, and who expected at least to receive that 60%, although they did not expect more.

I accept that, ultimately, that system should probably end, but I think it unfair to take the 60% away from people who are too close to pension age to build up contributions in their own right. I also accept what the Government have said about people who do not live in the United Kingdom, but some of those affected will be living here, and that group may include a number of people who have been in work but have not qualified for national insurance credits, because their income has been too low to register, or because they have had a number of very small jobs and have therefore not made NI contributions that would have covered those years.

We have already discussed the group of women who were born between April 1951 and 1953. Some of their fears have been allayed—I think they initially believed that they would suffer a major change in their pension income—but some issues still need to be addressed, partly through the communications strategy. The Government must deal with that group first, and give them the information that they need.

There will be cliff edges, as there are bound to be when any change is made, and there may be some groups whose cliff edges will be worse than the one facing that group of women, although we have not spotted them yet. I hope that those who give evidence in Committee will make the Government aware of any other cliff edges, because the last thing we want is to discover in April 2016 that there are unexpected problems affecting certain groups. There will also be a great deal of complexity in the new system. Nothing will be simple, particularly the migration from the old system to the new system and the calculation of accrued rights. That was never going to be easy, which may be why it has taken the Government so long to come up with a solution.

We know that in the long term the Government will be spending less money. There obviously cannot be more winners than losers overall, because the pensions bill will be lower in 30 years’ time—which, I suspect, is why the Government managed to get the legislation past the Treasury. I hope that that will make the situation more sustainable, but I believe that this will be an election issue in years to come. The level at which the single-tier pension is set will be in the gift of Governments, and it will be up to them to decide whether to increase it or not.

However, overall the Bill is to be welcomed. It is the right step in the right direction, and it will build on the good work that is already being undertaken. It is also important that people realise that the subject of pensions affects not just those of pensionable age, but everyone, and especially those of working age, because if they do not start making provision for their pensionable age now, they will find that they do not have enough money to be able to have the quality of life they expect in retirement.

--- Later in debate ---

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I have followed this debate closely and it is important to say from the outset that simplification of the state pension system is an entirely laudable aim and that I think there is a great deal of consensus throughout the House on the move towards a more inclusive pension system.

It is also important to appreciate, however, that our starting point is one of the lowest levels of state pension provision anywhere in Europe. We have relatively high levels of pensioner poverty and pensions have consistently fallen behind and failed to keep pace with earnings over a number of decades. We also still have deep and persistent inequality not just between women and men, as has been mentioned, but between those who have occupational pensions and those who have not. Far too many people who worked very hard throughout their working lives still end up living on the breadline in later life. Meanwhile, the challenges of an ageing population and increasing life expectancy drive the need for reform.

I have talked in the House a number of times about the dramatic social and geographic disparities in life expectancy and healthy life expectancy, and I do not plan to rehearse those arguments again this evening. The bottom line, of course, is that we need pensions that are affordable and sustainable and fair to pensioners. Our pension system also has to provide us with long-term stability and security. When people look decades ahead, they need to know what they are likely to get back and that the sands will not shift every time we play musical chairs in the House of Commons.

In his opening remarks the Secretary of State made much of his so-called triple lock, but those of us who saw the Financial Times this morning could be forgiven for thinking that the pensions Minister has let the cat out of the bag by acknowledging that the triple lock is a short-term fix and that there is no certainty that it will continue beyond the life of this Parliament or that the value of the single-tier pension will keep pace in the longer term, given that all the modelling that has been done is predicated on the triple-lock guarantee.

Although today’s debate has focused heavily on those people who will gain in the short term—some certainly will gain in the short term, particularly, as has been said, the self-employed and those receiving a pension for the first time—there will be losers as well as winners in the transition. It is extremely difficult to work out which are which, because the side of the line on which an individual will fall depends on a wide range of factors, including how long they live after retirement, which few are able to predict.

We have heard a lot less this afternoon about the longer-term impact of the scheme, yet most commentators agree that it is less generous than that which it replaces and that many people, including most of those born since 1970, will lose out. The most positive claim that has been made for the single-tier pension is that it is undoubtedly less complex than the scheme it replaces, but if the new scheme has the virtue of simplicity, the transition process certainly does not.

Last week, the Association of Consulting Actuaries, the National Association of Pension Funds and the Association of Pension Lawyers briefed the all-party group on pensions at a meeting chaired by the hon. Member for Gloucester (Richard Graham). One of their chief concerns was the complexity of the transition process and, in particular, the extremely tight time scales within which the Government are seeking to enact the Bill and its attendant regulations. Establishing the foundational amount for everyone with a national insurance contribution record who has not retired by 6 April 2016 will be a huge and challenging project in itself, and there are real concerns about how the end of contracting out will be managed within the proposed time scale.

[Dame Anne Begg]

I am interested in the hon. Lady’s comments on the complexity of the transition. Will she clarify for those us who live in Scotland what that complexity would mean for the SNP’s plans for the state pension, should there be a vote for independence?

[Dr Whiteford]

The most important point I can make in response to the hon. Lady is that Scotland is spending a lower proportion of its GDP on social protection than the UK as a whole, and that has been the case for every one of the past five years. Moreover—I have made this point several times in the House—Scotland has lower life expectancy by almost two years, and that is not simply a geographical disparity; it goes across every social class. To my mind that means that we have to look at tailored solutions for Scotland and understand that the scheme will not result in equal benefits for people who are likely to live two years less than the average in the UK.

[Dame Anne Begg]

The hon. Lady said that it would be complex to find out people’s national insurance contributions in the UK, but surely it would be even more complex for Scotland to negotiate that as an independent country. Does she envisage that happening easily?

[Dr Whiteford]

I do not think that that is beyond the wit of Members in this Chamber or those in Holyrood. We have a lot of able people who will be able to do that. In fact, as we move into a new system, actuaries and pension fund managers are raising pragmatic questions about how the change will be managed. A new, simpler system will be significantly easier to unravel and manage than the current one, which is why I have said that I welcome the general direction of travel.

On the fundamental issue of uncertainty, the key thing arising from the pensions Minister’s intervention in this morning’s Financial Times is that there is no certainty. We do not know how the modelling will play out or what our decisions will mean for the future.

Oral Answers to Questions

Anne Begg Excerpts

Monday 20th May 2013 Commons Chamber

[Esther McVey]

At the moment, we are considering working age people and that is where the changes are happening, so we would not be specifically considering the case my hon. Friend mentions. However, if she is talking about what happens at the end of a fixed-term period for which the child has entitlement, the assessment would be the same as it always was for DLA. The focus of the reforms is to ensure that the billions of pounds we are spending every year—a figure that is going up over this Parliament—will be focused on those who most need it.

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

The Minister really needs to look at the specifics of this. Her regulations have changed: a person in hospital will now lose their higher mobility rate after four weeks, instead of 13 weeks. Their Motability car will have to go back, even though they may have spent thousands of pounds on adaptations to it. The Minister really has to look at how her regulations have changed.

[Esther McVey]

Obviously, I do indeed look at those regulations, but, as I said, every case is looked at on a case-by-case basis, to see what is required in that specific instance.

Oral Answers to Questions

Anne Begg Excerpts

Monday 11th March 2013 Commons Chamber

[Mr Duncan Smith]

As I have just explained, one of those categories—severely disabled children—is covered and the guidance coming out tomorrow will make it very clear that we will apply that judicial judgment across the board to children with severe disabilities who need that extra room as they are unable to share. I shall keep everything under review and I guarantee to my hon. Friend that we will ensure that the intent of the change is bound up in how it takes effect in so far as the spare rooms will be kept for those who need them. Honestly, however, when so many houses have spare rooms and when so many people are in queues to get housing, it would seem wrong to go on subsidising everybody to stay the same.

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

Is it fair to penalise someone who had wanted a one-bedroom property, had asked their local authority for a one-bedroom property, but instead was given a two or three-bedroom property because there simply were no one-bedroom properties available?

[Mr Duncan Smith]

The purpose of the policy is to readjust the disparity that exists and that lay there under the previous Government. Local housing allowance for social tenants in the private rented sector does not and did not allow people to have spare rooms. In the social sector there are a large number of houses that people occupy without occupying all the rooms, so the purpose is to get that smoothed out. A number of councils have people waiting for housing, people in overcrowding, while others are subsidised to have spare rooms in housing that they do not need.

Universal Credit

Anne Begg Excerpts

Wednesday 6th March 2013 Commons Chamber

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

On 22 November last year I was privileged to launch in the Chamber a Work and Pensions Committee report entitled “Universal Credit implementation: meeting the needs of vulnerable claimants”. That day I was the only one officially allowed to speak. As a result there are a number of hon. Members who are—I was going to say frustrated—itching to speak. I hope they will have the opportunity to do so now.

That day showed that there was huge interest in various aspects of universal credit and its implementation, so it is excellent that we have the chance to have this debate today, especially as the Government have now published their response to that report and we can look in more detail at the issues raised by the Select Committee. I expect hon. Members will also raise their own issues that we did not examine. It is a good time to revisit the findings of our report to see whether, three and a half months on, the Government have made progress in addressing some of our concerns. This has become more urgent because the first claimants in the pathfinder areas will begin to be assessed for universal credit in just over a month, and the roll-out for new claimants begins in October this year.

Universal credit is the Government’s flagship welfare reform. Everyone of working age who claims one or more of the many income-related benefits will, over the next four years, be moved on to universal credit. Some 8.3 million households will be affected once it is fully rolled out. Not all of them will be on the new universal credit, but they will be affected in some way, so if universal credit does not work in the way that it is designed to do or if the IT fails to deliver, it has the potential to cause a great deal of stress and anxiety in families who depend on the state for some or all of their income.

The size of the Government’s ambition in introducing universal credit became clear to the Select Committee as we began to receive evidence. Such a large-scale reform of the benefits system has so many aspects to it that we realised we would not be able to cover all the provisions in detail. We did not have time to explore fully all the incentives and disincentives to see which families would be better off and which would be worse off, who would lose money and who would manage to survive. Other questions were raised with us that we did not deal with in as much detail. Would families with high child care costs be better or worse off, for instance?

We did not have time to interrogate properly how robust the Government’s often repeated assertion is that under universal credit all people would be better off in work than not in work under all circumstances. Some doubt has been cast on whether that will be true. We know that under the system there will be notional losers, although the Government have promised that there will be some cash protection. We were aware, for instance, that second earners in the family may not mean that the family is better off under universal credit. We were aware also that families with particularly high child care costs might not be better off once those are factored in.

The reason it is often very difficult to reform a complex welfare system, of the kind we have in this country, is that there can often be unintended consequences, and I am sure UC will be no different. I am fairly sure that Ministers will admit that that is bound to be the case. Even if everything goes incredibly well, there will be unintended consequences. The real test for the Government will be how adept and quick the Department for Work and Pensions is in dealing with the inevitable blips; how it irons out the kinks, how it ensures that families do not face difficulties while it sorts out any problems and how quickly it responds when the inevitable difficulties arise.

It would have been impossible for the Committee to give detailed consideration to every aspect of universal credit, so we decided to concentrate on its implications for vulnerable claimants, which explains the report’s title. Not all benefit claimants are vulnerable; far from it. It is worth remembering that most people of working age who receive benefits are in work and are not dependent on the benefits system for all their income. However, it is probably true to say that all vulnerable people are benefit claimants. It is therefore imperative that the Department takes account of that and does not design a system that can be accessed only by people who can manage their lives fairly well. It must also be easy to navigate for someone who finds life a struggle. I mean someone who struggles to pay their bills, struggles to follow basic written instructions, struggles with poor health, struggles to use public transport, struggles to heat their home or struggles to put a nutritious meal on the table—someone who just struggles with daily living. Those are the people who face a complete overhaul of the benefits they receive. It was to those who might find the introduction of universal credit a real challenge that the Committee paid most attention.

The biggest barrier a vulnerable claimant might face is making a claim in the first place, because the Government are determined that universal credit will be an online benefit—“digital by default” is the phrase they use. The application will be made online, any change in circumstances or other information will have to be reported online, as will any change of earnings, but the sting in the tail is that the information might come from Her Majesty’s Revenue and Customs, so obviously the information has to get from HMRC to the DWP computers.

The most important aspect of universal credit’s delivery will be the IT. If it goes wrong, the whole system will grind to a halt. However, a digital system, in order to work, requires users—in this case the claimants—to have access to, and be able to use, the internet. There is still great concern that the people who need to apply for universal credit will not have access to the internet, or indeed to a computer, in order to make the claim in the first place and that, for those who are not computer literate, there might not be sufficient help for them in the right place.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The hon. Lady makes an important point about accessibility. Does she share my concern that 36% of low-income households in Scotland do not have internet access at home?

[Dame Anne Begg]

The figures the Committee received vary greatly. We were told that as many as 80% of claimants might struggle with some of the IT and that as few as 20% would not have internet access. Although some people might be able to use Facebook and other social media sites, that is quite different from making a claim that, by its nature, has to include very personal information. Many people who do not have a computer at home might not be able to use computers in the public domain, such as those in internet cafes, because of security issues. There are many questions about access to computers and IT.

[Hywel Williams (Arfon) (PC)]

Does the hon. Lady share my concern about the difficulties that people in extremely rural areas might experience, because their rural deprivation will be compounded by the introduction of the IT system?

[Dame Anne Begg]

Perhaps the Minister would like to answer on that point. The Government said in their response to the Committee’s report that there will be a telephony system, which is good to know, although I understand that there will be no paper application form, so no one can phone up to request one. They expect about 45% of initial claimants to use that system to complete their claim. However, the person at the other end of the line will be using the same interface that online claimants see, so it will have to be designed in a way that works and is easy to understand. Access to a computer is one thing, but the customer-facing interface must also be easy to understand.

[Ms Margaret Ritchie (South Down) (SDLP)]

Does my hon. Friend agree that there is a particular concern for those in rural communities who might not have the necessary access to broadband and therefore do not have internet access, which will place them at an extreme disadvantage?

[Dame Anne Begg]

That is a problem in rural areas, but some urban areas, such as Glasgow, do not have superfast broadband either. Around 50% of claimants will be claiming at home on the internet, so that is really important.

[Jane Ellison (Battersea) (Con)]

The Committee, of which I am a member, identified those real concerns, but does the hon. Lady not agree that there are also opportunities? In my constituency, where English is a second language for many, digital by default offers the opportunity for translation and other services that will in many ways make a digital interface easier to use than a paper form.

[Dame Anne Begg]

The Government’s whole point in doing this is to make the system easier, so hopefully it will be. If it is not easier at the end of the process, we really will have got everything wrong. In the process of introducing this fully, the Government will obviously have to address some of the concerns that hon. Members have raised.

The Government’s response indicates that they expect only 50% to claim online and about 5% to get face-to-face interviews, which means 45% will claim through the telephony system. Perhaps the Minister can explain the wording in the Government’s response. It states:

“Our target is that 50% of claims which can be made online will be made online in October 2013 when Universal Credit is launched nationally.”

I am not sure that I understand that sentence. Does it mean 50% of the total number of people who will make a claim, or 50% of those who can make it online, which will not be everybody. I am not exactly sure what proportion the Government are talking about.

The Government’s response mentions face-to-face interviews, which is good, but they are still for only 5% of cases, and they give not a hint about where the interviews might take place and what proportion of them are likely to be home visits. After all, a large number of people in the universal credit cohort will have severe disabilities. They might receive other benefits that they have claimed previously, but they will also be in the universal credit cohort.

I am also glad to see that jobcentres are to have IADs—internet access devices—which sounds great. The Government response trumpets the fact that there will be computers in Jobcentre Plus offices. However, if we divide the number of computers by the number of Jobcentre Plus offices, we find that it works out at about three terminals per office, and I am not sure whether that will answer some of the questions about access to computers. Also, it appears that wi-fi is not yet available in Jobcentre Plus offices, although that is planned, as it should be available. Many people do not have a computer at home and will need to access their claim form through a public-access computer, whether in Jobcentre Plus or not. They will need help, and the Government’s response is not very clear about that. It does say that staff will be available, but it is very vague: it does not say how many or how much time they will have. Jobcentre Plus staff are already overworked. Will they have the time to sit down alongside someone until they have filled in their whole claim, or will they just get the screen up and leave them to it? For many people, that would not be enough help.

The Government say in their response that they are liaising with local authorities to supply help. However, we all know that local authority budgets are already being squeezed year on year, and that a lot of welfare rights officers, where councils have them, are disappearing, if they have not already done so. There is also a squeeze on organisations such as Citizens Advice. This is such a big undertaking that it is incumbent on the Government to make sure that this help, of the necessary quantity and quality, is there and that people know how to access it. It has occurred to me that as some local authority staff will no longer be employed in administering housing benefit, they might be an experienced resource that the Government could call on to act as advisers in providing the help that many people will need to make an online claim.

Another big area of concern about UC is that it will be paid once a month into a single bank account for each household. The Government’s response says that the Secretary of State has powers to vary the frequency of payments, but this would be time limited. It also says that the Department for Work and Pensions will try to identify claimants with, for instance, mental health or addiction problems who might not manage monthly payments, but suggests that help will be provided for only a limited period. The Government seem to think that a drug addict will somehow be able to learn how to budget properly after a couple of months. The essential problem is that getting a whole month’s money in their hand at once might be too tempting. I do not think that what the Government describe as “transition to monthly payments” after

“getting help with monthly budgeting”

is going to work in practice. Will the Minister clarify that?

[Sheila Gilmore (Edinburgh East) (Lab)]

As the Chair of the Select Committee, my hon. Friend knows, but I suspect that other people do not, that we have been hearing evidence about the apparent lack of information held by Jobcentre Plus about people’s circumstances in relation to being placed in the Work programme. Jobcentre Plus may therefore be unaware that people are homeless or have other difficult circumstances. What confidence does she have that it will be any better for the purpose of working out which people need this additional help?

[Dame Anne Begg]

I am worried that the Government say bluntly in their response to our report that they are not going to provide a definition of a vulnerable claimant. Without that, it will be difficult for Jobcentre Plus to identify the individuals who need help. This is our biggest area of concern. We do not know whether someone will need to get into trouble before they can get help rather than already having been identified as needing it.

[Kate Green (Stretford and Urmston) (Lab)]

I do not know about my hon. Friend or other right hon. and hon. Members, but I get paid monthly and my main outgoing, my mortgage, is taken on the day that my salary goes into my bank account. I think that I have had that arrangement ever since I first had a mortgage. Most banks and mortgage companies tend to arrange things with their customers in that way. They ask on what day people are paid and then arrange that that is the day on which they take the mortgage payment. Has the Select Committee considered whether there is anything the Government could do to help landlords, particularly social landlords, to collect rent in that way on the day that universal credit is paid?

--- Later in debate ---

[Dame Anne Begg]

We did not specifically consider that, but my hon. Friend has placed it on the record as something that the Government need to address. We do not know, either, to what extent they will allow direct payments into landlords’ hands. I hope that they are still considering that.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Is it not the case that many of the people we discussed when we exercised our inquiries in the Select Committee have no access whatever to bank accounts, so that issue does not arise? Is it not also the case that social landlords are already extremely reluctant to accept housing benefit claimants, and that the idea that they will not be paid directly will reduce even further the already lamentable stock of affordable housing?

[Dame Anne Begg]

I thank my hon. Friend. I was about to come to some of those issues.

In our report we drew attention to the lack of suitable bank accounts. Again, there is not much detail in the Government’s response as to what progress has been made in persuading banks that they need to cater for this part of the market. Perhaps they need to be able to have some kind of direct debit facility. That would deal with the point made by my hon. Friend the Member for Stretford and Urmston (Kate Green) about people being able to manage payments, particularly the bulk of money that needs to come out of their account every month. Also, the payment must come out on the day after the money goes in, not the day before; that is another potential problem. Banks will need to be sensitive to this market. So far they have been very reluctant to provide products that will cater for these people, simply because there is not a lot of money in it for them. I hope that they do have a social conscience and will realise the importance of this, but the Government will need to do a bit of prodding.

The monthly payment regime involving almost the whole of a household’s income makes it imperative that the Government get the delivery right. If something goes wrong with a claim or there is a delay, that could lead to real hardship for anything up to a month, or perhaps even longer. For some families, only child benefit and council tax benefit will sit outside universal credit, and all other payments will depend on the right amount of UC being paid at the right time into the single bank account.

The move away from paying housing benefit directly to landlords and to the claimant instead is causing a great deal of alarm among social housing providers, and it may be acting as a barrier to the social rented sector renting to people who are on UC. This, alongside the introduction of what has become known as the bedroom tax, could mean that many housing providers will have a large shortfall in their rental income.

In its response, the DWP says that it does not intend to define “vulnerability” in case someone with complex needs falls outside the prescribed definitions and so does not get the help they genuinely need. Instead, full guidance will include

“financial vulnerability factors that would trigger a conversation with a claimant about their budgeting needs”.

I do not know how that is going to work in practice. We fear that the person who is struggling will be picked up after they have begun to struggle and are already in debt rather than at the early stages of their claim—or, rather, before the claim is made. There is a good chance that the people who struggle with their monthly payments will be the same people who find it difficult to pay their rent in full and on time, who do not have access to a computer, who are not computer literate, and who need face-to-face help in making a benefit claim because they do not have basic literacy. The DWP is unwilling to provide a definition of who is a vulnerable claimant, yet there is a whole list of things that would act as a pointer to the fact that someone may be vulnerable. I am really concerned about the danger that claimants will get into financial difficulties before any help is provided.

It seems from the Government’s response that the first solution will be budgeting support, rather than an alternative payment method. Perhaps the Minister could clarify that. How long will somebody have to wait before their rent is paid directly to the landlord or their benefit is paid more frequently? For how long will those solutions last? I understand that the DWP is running six direct payment demonstration projects that are due to run until June 2013. How are those demonstration projects going and how will their findings be incorporated into the roll-out of universal credit?

Our report points out that there is a need to decide how passported benefits will be dealt with under UC. I do not think that things have moved on much. Apart from the temporary solution for free school meals, the Government do not seem to have any ideas about how they will deal with that matter. Again, the Minister might be able to shed some light on that today. It is important that passported benefits operate effectively because for many people, they make the difference between a bare income and one on which their family can live.

One of the problems with passported benefits is that the Government have not managed to iron out the cliff edge that might be involved. The whole point of universal credit was to smooth away all the cliff edges. However, once passported benefits are put into the equation, a lot of the cliff edges come back.

It is important for other Departments to know how passported benefits will operate. They have always used the payment of social security benefits as proxies for certain qualifications, which has made it much easier and cheaper for them to administer their benefits. If there is nothing in universal credit that signposts a claimant as someone who should receive other things, such as free prescriptions, it could land the Department of Health, the Department for Education, other Departments and local authorities with a large administrative burden in order to work out who qualifies for other benefits.

[Glenda Jackson]

Free school meals are linked directly to the pupil premium. If there is a reduction in free school meals, it is entirely possible that there will also be a reduction in funding for schools. The implications of universal credit are infinitely greater than just the effects on the actual claimant.

[Dame Anne Begg]

That is why it is important that the Government get it right. I appreciate that it has been very difficult, but before the first claimants go on to UC, which is in just over a month, they need to start answering these questions. They certainly have to have an answer before it is rolled out to other claimant groups in October. They do not have very long.

This morning, when the Select Committee was taking evidence on the Work programme, we heard that universal credit has implications for the Work programme. There are questions about how people will be labelled when they go into the Work programme because the predecessor benefits, such as jobseeker’s allowance and employment and support allowance, will disappear under universal credit as people move on to the single benefit.

There is one benefit change that flies in the face of all of this and undermines what UC was intended to do. The localisation of council tax support will add complexity back into the system and introduce local variations, which could undermine the withdrawal rates that should make work pay. I have already talked about computer programmes. I have said that the customer-facing screens must be right and that, behind that, the programmes must calculate what a claimant should get and pay it into the bank. Those computers will have to speak to the HMRC computers so that the real-time information can be fed in. However, because of the proposals on council tax support, they must also interface with the local government computer system, which apparently is called ATLAS. I do not know whether that just applies to England and Wales. That is another potential IT difficulty that could cause problems for people. On top of that, it will be more difficult for claimants to work out whether they will be better off in work than it would have been if council tax support had been included in universal credit. That will rely on working out the tapers and the disregards.

To come back full circle, the delivery of universal credit will depend on the smooth delivery of the IT—not only the IT controlled by the Department for Work and Pensions, but that controlled by HMRC and local authorities. That is a big ask. My final question to the Minister is: how is that going?

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

When the Welfare Reform Bill was in Committee, the Minister’s predecessor was fond of the bookcase analogy. We were constantly told that what we were dealing with at that time was an empty bookcase, which would shortly be filled. Ministers and some Government Members who have intervened in the debate today, rather than those who have spoken at length, tend to feel that because most commentators, interest groups and parties think a unified system that will take people from unemployment to employment is in itself a good thing, that somehow means we should not be critical of the policy or its contents.

We have reached a point where some of the books have appeared on the bookcase, but there are still large gaps, some of which may not be filled until the roll-out takes place. We should realise, and the Minister should appreciate that, as I understand it—he may correct us—the initial pathfinder will deal only with very simple cases and people who do not have any complicated family situations, so it will test only some elements of the system. After that, more books will doubtless appear. However, one can have the same bookcase as someone else yet disagree radically about what books to put in it. We need to have that debate.

We must be careful not to oversell the reform. Although we talk about universal credit as though it will be simple, in reality universal credit will have lots of arms and legs. It is an umbrella, so to speak, with lots of arms and legs, because there will be different categories of people who fall under this umbrella, who will have to meet different eligibility criteria, who will receive very different payments and elements of payments, and who will be subject to very different conditions in order to get their benefits.

There will be a series of different types of universal credit. I would not be at all surprised if, in a couple of years, for convenience, particularly those who work in the field will refer to employment support allowance universal credit applicants or unemployed universal credit applicants. Otherwise it will be difficult to explain the situation. Universal credit will not be and perhaps cannot be simple. We on the Opposition Benches have said repeatedly that simplification is not the be-all and end-all when one is dealing with people who have complicated lives.

We have to put the financial capacity to deal with monthly payments in place. The Minister may remember that during his previous incarnation in the Treasury we had a debate about basic bank accounts. One of the issues I raised with him in his previous role was the need to extend basic bank accounts and to make it compulsory for banks to provide them. He resisted that move at the time. He may come to regret that in his new role in the DWP because it might have been better if there were a better raft of basic bank accounts that people could access. The number of banks offering basic bank accounts has not grown in the past nearly three years; it has diminished. Where will people be able to have the moneys paid to? Will they be able to get such bank accounts? There are people who cannot access basic bank accounts, either because there is no bank in their vicinity that offers them, or because they are not allowed to have such an account for one reason or another.

[Dame Anne Begg]

There are indeed difficulties getting a basic bank account, but does my hon. Friend accept that there are also people who have had a bad experience with banks, particularly with direct debits, and found themselves overdrawn and incurring lots of charges, and who therefore do not want to use a bank account to manage the money they get through universal credit?

[Sheila Gilmore]

My hon. Friend raises another important aspect. People have run up large bank charges, often inadvertently, on a very limited income. They might decide not to use the bank account any longer because that is easier, or the account may even be suspended.

Many warm words have been spoken about credit unions, but if we are honest about it, in most parts of the UK—the situation might be slightly different in Northern Ireland—credit unions are pretty small and cover only a relatively small part of the population. If we seriously wanted to increase their use, we would have to fund that properly and give them some ability to expand to the extent required. I would be more than happy to direct constituents in that sort of difficulty to a credit union, but I know that the credit union serving the local area currently has very limited capacity to expand. We have to think about that extremely seriously.

Another question considered today was that of the direct payment of rent. There are six demonstration projects, and indeed a report was published some time ago, but it was what the researchers called a baseline project report. In other words, it effectively looked only at people’s attitudes and capacities before the project got going; it proves nothing about whether it is working. Further data published by the DWP in December 2012 showed that in four months 8% of rent had not been collected. At that stage, 316 tenants had already been switched back to direct payment to the landlord, and the range of collections was actually greater than the 92% would suggest. In one project in an Edinburgh housing association, 63 of the 1,832 tenants were switched back to direct payments in the first four months, which I think is a substantial portion in a relatively short period.

It also appears—this will have to come out in the research very clearly—that some of the pilots have excluded some of the people most likely to fail. The pilot in Oxford apparently excluded those considered to be vulnerable, and the one in Wakefield excluded those who did not already have a bank account, so some of the difficult cases have not been included. That is fair enough in a pilot, but those cases must be taken into account before it can be claimed that all will be fine when this is rolled out more fully.

Members have spoken at length about the “digital by default” approach. I am not a luddite. I think that moving towards online claiming, wherever possible, is a good idea. In fact, when I was the convenor of housing on City of Edinburgh council we started a choice-based lettings system. It was possible to apply through a newspaper, people could fill in a form in the more traditional way, or they could apply online. Some people, including tenants’ groups, told us that we could not do it online because people would not be able to access it. We replied that we were giving people the choice. The online take-up was actually higher than many people had feared. Some of them will be getting help to do that, and that is the distinction we have to see.

There is a problem with the top-line figure, which is constantly quoted, of 78% for the proportion of claimants who already use the internet. It is drawn from research done for the DWP. It revealed that 78% have used the internet, but only 48% said they used it everyday, and that includes people in work, on tax credits and right across the whole spectrum. When we break the figures down, we see, for example, that 60% of people who are in receipt of incapacity benefit said that they had used the internet, but only 31% used it every day. There are some important distinctions within these groups.

If the new system frees up more adviser time, that can only be a good thing, but we need to know that that is really going to happen and where it is going to happen. The current situation appears to be quite stressed already. I have been told, and claimants’ experiences tend to back this up, that in Jobcentre Plus in my city people barely get four minutes with an employment adviser. Time is very stretched as it is.

--- Later in debate ---

[Mr Hoban]

I have only just started making this point, so let me make a bit more progress.

Research suggests that 92% of advertised vacancies require applicants to have basic IT skills. Therefore, those without such skills are considerably limited in their employment prospects. By using the digital channel as the default, we will be able to identify individuals who are struggling to manage or who lack the basic skills to use online systems. In doing so, we will be able to target support so that they can learn these essential skills, thus improving their prospects of finding work. Work done by the Cabinet Office on internet usage demonstrates that 78% of existing benefits and tax credits recipients already use the internet. Our latest figures show that more than 51% of jobseeker’s allowance claims received by the Department are now made online. I think that that demonstrates that people will be able to do it. We need to encourage more people to go online and find ways to give that support. For those who cannot use the internet, telephony and face-to-face access will be available. Rather than accepting that people cannot use the internet, we should try to help them get on to it and use telephony and face-to-face access as a fall-back mechanism.

The hon. Member for Bishop Auckland (Helen Goodman) said that 10% of people do not have access to superfast broadband with a speed of more than 2 megabits per second. She will be pleased to know that people will not require broadband at that speed in order to access universal credit and make claims.

[Dame Anne Begg]

The Minister might not know the answer, but will there be a real person at the end of the telephone, or will people have to enter all their details by pushing buttons and never get to speak to anyone?

[Mr Hoban]

I assure the hon. Lady that a lot of real people answer telephones at the Department. I am sure that she has visited some of our contact centres and seen them in the flesh. It is important that that human support is available either locally or over the telephone.

[Dame Anne Begg]

In my experience of the disability living allowance, it takes some time to speak to a real person because the caller has to push lots of buttons, and that in itself acts as a barrier.

[Mr Hoban]

Indeed, but we also need to triage people so that they can get to the person with the right expertise and ensure that we focus our resources on the more difficult and challenging enquiries, which requires some triage through the telephone system.

--- Later in debate ---

[Dame Anne Begg]

Thank you, Mr Deputy Speaker, and I would like to thank everyone who has contributed to today’s debate, which has been extremely worth while in teasing out what the Government have done and the questions they needed to address. Some fairly meaty questions are still to be answered—not least the one about passported benefits, which I noticed the Minister did not answer, probably because it remains a thorny issue.

I suspect that the Select Committee will return to this subject in the coming months or years—depending on which side of the House is believed on the timetable for the roll-out. Issues will arise once things are up and running and once real live people are claiming the benefit. Because so much about the universal credit will depend on behavioural changes, it is impossible to say at this stage which side of the argument is correct as to how people will behave when people are faced with the reality of claiming the new benefit. On behalf of the Select Committee, let me say that this debate has provided a great opportunity for us to explore what we thought would be the most important challenges for the Government in the future.

Housing Benefit (Under-occupancy Penalty)

Anne Begg Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

I will not give way.

Although the mismatch between the housing stock and tenants’ needs is the glaring flaw in this ill-thought-through and unworkable policy, the under-occupancy penalty will have serious unintended consequences for social landlords who depend on reliable and steady flows of rent to maintain their credit rating, keep rents low, and reinvest in new and existing properties. I have repeatedly raised with Ministers the impact of welfare reform on social landlords, but to date Ministers have repeatedly failed to take seriously the concerns of housing associations and others about the impact that the bedroom tax and the shift to universal credit will have on social landlords’ finances. Last week, in response to a question from the hon. Member for Glasgow North (Ann McKechin), the Under-Secretary of State for Scotland said that he had met social housing providers in Scotland and satisfied the concerns of housing associations and local authorities. However, since then, the Convention of Scottish Local Authorities and the Scottish Federation of Housing Associations have written to him to make it abundantly clear that they are not satisfied, and that their concerns have in no way been assuaged. The president of COSLA has made it absolutely clear to the Government that all local authorities in Scotland continue to have deep concerns about the 14% and 25% penalties associated with under-occupying. Those key stakeholders recognise that the bedroom tax penalises people on low incomes who cannot move to smaller properties. They are concerned that no safeguards are in place to protect the finances should tenants fall into arrears.

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

The hon. Lady is right to point out the mismatch between housing stock and housing need. Many people who are building houses in both the private and social sectors build two-bedroom or larger houses because that makes more sense economically than building one-bedroom properties. What are the Scottish Government doing to encourage house builders in Scotland to build one-bedroom properties to address that mismatch?

[Dr Whiteford]

The hon. Lady makes a good point about the practicalities of building one-bedroom houses as opposed to two-bedroom houses. On the Scottish Government’s record on building houses, 19% of the socially affordable houses built in the UK in the past five years have been built in Scotland. The Scottish Government have built 34,000 affordable homes since they came to power. Given the lack of progress in the past, that is important.

--- Later in debate ---

[Steve Webb]

I have given way three times to the right hon. Gentleman, and I want to make further progress.

[Dame Anne Begg]

Will the Minister give way?

[Steve Webb]

Before I do, I shall give way to the hon. Lady.

[Dame Anne Begg]

The Minister seems hell-bent on introducing this policy, but he might be able to protect some people. I think he accepts that some people will not be able to move because no suitable property is available. They will not be able to afford the shortfall and will therefore fall into housing rent arrears and could be evicted. At that stage, they become “intentionally homeless” and end up at the bottom of any housing list. Will the Minister look at that further to see whether he can do anything to ensure that someone in that position because of housing debt is not deemed intentionally homeless? Otherwise, such a person stands no chance of getting social housing again.

[Steve Webb]

I am grateful to the hon. Lady. The point of the policy is not for people to be evicted, which would raise costs for the Exchequer and for the individual, but to ensure that existing housing stock is fully occupied.

Let me try directly to address the issue of the shortfall. There were two ways in which we could have approached the matter, one of which was blanket exemptions, which is what we did for pensioners. I am grateful to the hon. Member for Banff and Buchan for making it absolutely clear in opening the debate that pensioners are not covered by this change.

It is clear that we wanted to protect another set of people. Let me deal with the example of foster children, whom my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned. The position on foster families is, I think, shared across the House. If people need a spare bedroom for a foster child, we want to make sure that they have one, and we want to support fosterers. The question is whether that is done better by some blanket exemption or by what we have done in costing what it would take to meet the shortfall for those families and giving the money to local authorities so that a foster family for which this was an issue—it might not be an issue for all of them—can approach the authority and have the shortfall made up.

My right hon. Friend the Secretary of State and I are entirely open to discussing whether that is the most effective way of delivering that support. Our judgment was that discretionary housing payments gave local authorities the discretion we would want them to have. If for any reason that message is not getting through and is causing anxieties to foster families who do not know about DHPs, for example, or if local authorities have not communicated well enough, we would be happy to look at whether this is the most effective way of supporting families. Where there is a shortfall, discretionary housing payments for this and other measures are available. We want to make sure that people use them when they are in genuine need. Eviction is clearly not something that we are seeking to achieve.

Pensions and Social Security

Anne Begg Excerpts

Wednesday 13th February 2013 Commons Chamber

[Stephen Timms]

That is undoubtedly the case. The rhetoric and the reality are quite different.

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

Does my right hon. Friend acknowledge that the bedroom tax will also come into effect on 1 April? That means that a large group of people whose income has not gone up by very much will have to subsidise their housing costs to a far greater extent than they are doing at the moment.

[Stephen Timms]

My hon. Friend is absolutely right. It is fair to say that the bedroom tax is increasingly being seen as a hated tax across the country, as its impact becomes clearer and the date on which it will be applied approaches. It will make life a great deal harder for those people who have no option to move into a smaller place because there are no smaller places available in the council or housing association stock.

I commend to the Minister the speech made by the Bishop of Leicester in the other place in the Second Reading debate on the Welfare Benefits Up-rating Bill on Monday. He said of the Bill:

“It will depress hard-working families even further, remove much needed support for the vulnerable and unable to work, and potentially take us in the wrong direction for a generation, condemning countless children to poverty. It is a proposal that I cannot support.”—[Official Report, House of Lords, 11 February 2013; Vol. 743, c. 471.]

He was speaking for Britain. The Resolution Foundation has pointed out that the measure is a strivers tax, and that well over half the savings from uprating working-age benefits by just 1% over three years will be taken from people in work, because tax credits are being cut in real terms.

My hon. Friend the Member for Stretford and Urmston (Kate Green) has pointed out that the provisions will hit women particularly hard. The House of Commons Library has calculated that two thirds of those hit will be women. The real-terms cut of £180 to statutory maternity pay has already been dubbed the “mummy tax”. Taking into account all the cuts that will affect a woman during pregnancy and the first year of her baby’s life, including maternity pay, pregnancy support, tax credits and child benefit, the loss adds up to an average of £1,700. So, on the day when the highest paid are getting a massive tax cut and the rich are getting a £3 billion tax giveaway, people who are striving will be hammered.

Housing Benefit Entitlement

Anne Begg Excerpts

Wednesday 23rd January 2013 Westminster Hall

[Phil Wilson]

My hon. Friend is absolutely right, and I will come on to foster carers in a little while.

The lack of mobility in this sector—between two-bedroom properties and one-bedroom properties, for example—is a product not of tenants needlessly under-occupying larger homes, but of the logjam created by a national shortage of affordable homes, particularly two and one-bedroom properties.

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

I spoke to the Glasgow Housing Association last week, which is the largest provider of social housing anywhere in the UK. It reckons that the shortfall that it will face could mean that 700 houses that it would have built each year will now not be built. So, rather than helping with the housing shortage, the proposal is making things worse.