Occupational Pension Schemes (Master Trusts) Regulations 2018

Baroness Buscombe Excerpts

Wednesday 18th July 2018 Grand Committee

Moved by

[Baroness Buscombe]

That the Grand Committee do consider the Occupational Pension Schemes (Master Trusts) Regulations 2018.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, subject to Parliament’s approval, the regulations will introduce a new approach to how some occupational pension schemes are regulated. From 1 October, both existing and new master trust pension schemes will be required to be authorised by the Pensions Regulator and will be subject to ongoing supervision by the regulator to ensure that they are maintaining the standards required at authorisation. Any scheme that opts out of applying for authorisation, or which fails to meet the required standards upon application, will be required to wind up and transfer its members to an authorised scheme. These regulations will fully commence the authorisation and supervision regime for master trust schemes under the provisions of the Pension Schemes Act 2017. I am satisfied that the Occupational Pension Schemes (Master Trusts) Regulations 2018 are compatible with the European Convention on Human Rights.

The past eight years have seen a significant growth in the master trust pensions market. Membership has grown from 200,000 in 2010 to approaching 10 million today. This market now accounts for assets of over £16 billion and will continue to grow over the coming years. The rapid increase in both membership and assets is irrefutably linked to the phenomenal success of auto-enrolment. As a result of this success, we are introducing the new authorisation and supervisory regime, which will ensure that these new savers have assurance that they are saving into quality schemes where their money is well managed and protected.

We have always been clear that our expectation is that a significant number of schemes are unlikely to meet these standards and will need to leave the market. The regulator has worked closely with master trusts over the last two years to help them to prepare for these changes, including offering readiness reviews, which have been taken up by 33 schemes. As a result, it has a good understanding of those schemes that are most likely to close. Where this is the case, it is likely to be because they will not meet the quality standards being introduced, for example, because of poor administration or doubts about long-term financial viability.

I know that a number of noble Lords recently met with the regulator and raised concerns about what will happen to the members of those schemes that opt to close. The Pension Schemes Act 2017 introduced some retrospective measures to help to support the market and to protect members through the transition to full authorisation. These applied from the Bill’s introduction in October 2016 and came into effect on Royal Assent in April last year. They require that any scheme which is facing a triggering event, which is one that is likely to lead to it winding up, must immediately report the fact to the regulator, and charges made by schemes to members are fixed at October 2016 rates until the full regime comes into force.

During discussions on the Bill, noble Lords were clear that our expectation is that the market will respond to these changes. The emerging evidence shows that this is the case. The retrospective measures mean that the regulator is currently working closely and effectively with 20 schemes that have already either closed or signalled their intention to leave the market. This includes assisting them with finding appropriate destinations for their members. The introduction of new provisions earlier this year to ease and speed bulk transfers into and out of defined contribution schemes offers further support to members. In addition, where a scheme has started to wind up, the disclosure regulations ensure that members are made aware, allowing them to decide individually whether to accept the trustees’ default destination or make their own arrangements.

We expect that there will continue to be further consolidation of the market as we approach the October deadline. With this in mind, we are already aware of a number schemes that plan to promote their claim as a potential destination of choice for closing schemes by applying for authorisation at the earliest opportunity. In addition to the pull from schemes looking to expand their presence in the market by taking on members from closing schemes, there is a strong push from employers participating in those schemes as, regardless of the decisions made by the scheme, they remain obligated to meet their automatic enrolment responsibilities by ensuring that their employees are actively contributing to a pension scheme. We have always known that there would be a period of flux and change for the market, requiring close and active management by the Pensions Regulator, and the regulator is delivering.

I turn briefly to the policy. My officials have been working closely with both the Pensions Regulator and the industry to develop the detailed policy design for these regulations. This culminated in a public consultation on the draft regulations which was launched by my right honourable friend in another place, the Minister for Pensions and Financial Inclusion, in November last year. The consultation was well received and generated a number of supportive suggestions for technical improvements, which were most welcome. The only real issue of concern at that time was that we were not in a position to confirm the level of the authorisation fee. This was resolved by the time we published our response to the consultation in March this year, where we confirmed that existing schemes would be charged £41,000 and new schemes will pay £23,000. We recognise that this information may have an influence on a scheme’s decision whether to seek authorisation.

Your Lordships will be aware that the regulations have been the subject of scrutiny by the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee, neither of which found reason to draw the special attention of your Lordships’ House to these regulations.

I turn to the substance of the regulations. When the Pension Schemes Bill was before the House—ably stewarded by my noble friends Lord Freud, Lord Young and Lord Henley—the scope of the new regime was the subject of considerable debate. Our aim was always to design a regulatory regime that meets the needs of a very diverse market, ranging from long-established schemes, including many not-for-profit organisations, to new schemes set up in the wake of automatic enrolment.

However, during the passage of the Bill we were not able to confirm the details of how the powers to apply the regime to schemes that arguably fall outside the definition set out in the Act and to disapply it to schemes that otherwise would fall within the definition would be used. I can now confirm that the regulations will bring certain types of non-master trusts within scope—for example, what are often known as “cluster schemes” where schemes may have single employers but are run by the same people and are subject to the same rules. They also disapply the authorisation regime to some types of scheme which have specific characteristics that mean they meet the definition but do not face the same risks as master trusts—for example, certain small schemes where all the members are trustees and the majority of the trustees are members of the scheme. The intention remains to provide member protection proportionately.

To bring clarity to the application process, the regulations specify that the scheme must have a business plan approved by the trustees and the scheme funder. This will include detailed information about the ambition and financial strategy of the scheme, as well as providing details relating to the scheme funder, the systems and processes that are used and information on trustees and others in a position of influence over the running of the scheme. In addition, schemes and scheme funders will need to provide their audited accounts and the accounts of any third party funder.

The Act identified the five authorisation criteria that schemes must meet. First, fit and proper: the regulator will need to be satisfied that everyone running a scheme has the appropriate integrity and is competent. Secondly, financially sustainable: the regulator will need to be satisfied that the scheme can fund the operating costs, as well as the additional costs should it get into difficulty and possibly wind up. Thirdly, scheme funder: the regulator also needs to be satisfied that an appropriate entity is standing behind the scheme and is able to meet certain costs. Fourthly, systems and processes: when assessing whether the IT and wider systems and processes are sufficient to ensure that the scheme is run efficiently, the regulator must take account of the scheme’s need to provide an effective service to its members and to deliver the ambitions set out in its business plan. Fifthly, continuity strategy: prepared by the scheme strategist and signed off by the scheme funder, this will need to set out how the scheme plans to respond to and protect the interests of its members in the event of a triggering event. These are circumstances that could lead to the closure of the scheme.

It has always been our intention that once schemes have met the authorisation standard, the regulator’s role will turn to ensuring that standards are maintained. In extremis, the powers in the 2017 Act will enable the regulator to initiate a triggering event and require a scheme to wind up. This is an appropriately robust backstop for the most extreme cases. However, our intention is to avoid such extreme interventions through a supervisory process that supports high standards and encourages schemes to seek support when any difficulties are first identified. The regulator will require schemes to update their business plans regularly, including when significant changes occur, when there is a change to key personnel, or failure to meet a previously declared key milestone, target or planning assumption. The regulator will also be able periodically to request a supervisory return from any scheme. This will inform the regulator’s ongoing risk assessment of schemes and will be based on the five authorisation criteria. While the regulator can only request this return at most once a year, it will have some discretion over how regularly returns are requested, based on an ongoing assessment of the level of risk each scheme is carrying.

The master trust market is growing and vibrant and it is not our intention to interfere in it. We expect schemes to continue to join and exit the market over time. I have set out the process for those entering the market; I now turn to how the regulator will support the members of schemes that exit the market.I have previously described “triggering events”, which are those likely to risk the scheme being closed and wound up. When this occurs, the scheme is required to convert its continuity strategy into an implementation strategy, including setting a clear timetable for either resolving the issue or closing the scheme. The regulator will work with the scheme to ensure that appropriate action is taken at each stage, including notifying employers and members about what has happened and what their options are if the scheme is going to wind up. The financial sustainability requirements will mean that there are sufficient funds to see the scheme through the transition period. Restrictions on charges in the Act mean that additional costs cannot be passed on to members.

In conclusion, we are ensuring that master trust scheme members—particularly members of schemes that are opting to wind up—are protected and supported before the new regime is fully rolled out in October. This new approach is widely accepted and supported by the industry, which in turn is being ably supported in its preparation for the changes by the Pensions Regulator. These regulations introduce a robust new regime for master trust pension schemes that will provide added protection for millions of people saving towards their retirement, most of whom are doing so as a result of automatic enrolment. These changes are necessary, and I commend the regulations to the Committee.

[Baroness Drake (Lab)]

My Lords, I welcome these regulations, and I thank the Pensions Regulator for its courtesy in providing a briefing on master trusts to interested Peers. With approximately 10 million members and £16 billion of assets under management in these trusts—which will increase even further, particularly given the rise in automatic enrolment statutory contribution levels—the need for a robust authorisation, supervision and resolution regime to protect individual savers is compelling. The risks of not having such a regime were fully aired during consideration of the Pensions Act 2017.

These regulations cover the five criteria which authorised master trusts must meet, and I will refer to two in particular. The first criterion is that the scheme is financially sustainable. This requirement expects master trusts to hold sufficient financial resources in sufficiently liquid assets to cover certain costs and is at the heart of protecting individual savers from financial detriment in the event of a triggering event such as scheme failure or wind-up. However, nearly £6 billion of assets is currently held in master trusts which do not even have a voluntary master trust assurance. I also note that the impact assessment assumes one triggering event each year after “steady state” is reached in 2019. This seems high given the regulator’s assumption that only 56 master trusts will be authorised.

The master trust authorisation regime has, understandably, the flexibility to accommodate a wide range of financing requirements and different scheme funders. That also means, however, that the public need a high level of confidence that the financial sustainability requirement will be robust throughout that wide range. In setting the financial sustainability requirement covered in Schedule 2, what assurance—or further assurance—can the Minister give about the level of prudence expected in any estimates and strategy for meeting those relevant costs?

The definition of “prudency” has become somewhat loose in the DB funding regime and the regulator is taking steps to tighten up what is expected, so reassurance on prudency in the master trust financial sustainability regime is welcome. Will the Pension Regulator’s financial sustainability regime be benchmarked, for example against the Prudential Regulation Authority’s regime for capital adequacy? If an authorised master trust subsequently closes to new business but continues to run as a closed scheme, how will that impact on the financial sustainability assessment and will the trust automatically be required to transfer the members to another scheme?

--- Later in debate ---

The 2017 Act and these regulations provide an important regulatory framework for master trusts and they deserve—and receive—our full support.

[Baroness Buscombe]

My Lords, I thank all noble Lords for their considered contributions to this short debate. A number of issues were raised, which I will attempt to address—I say “attempt”, thinking of the noble Baroness, Lady Drake, who I have huge respect for, given her considerable expertise in this area.

The need for financial sustainability of the scheme must be at the heart of what we are doing to protect savers. We must be sure that the scheme is financially secure. We have always been clear that we expect that some master trusts will decide to exit the market. Also, over time the market will consolidate as many of the schemes are designed to work best when operating at scale. The regulator has been working closely with schemes, whether to support them to prepare for authorisation or to leave the market. We have always known that some schemes would not meet the standards because they would not be financially viable over the longer term. There are also schemes where the administration is not of an acceptable standard or where the people running them would not meet our requirements. It is important that members’ saving schemes are financially robust and of high quality, and we believe that the measures we have introduced are proportionate responses to the risks in the market. We also expect that new schemes will enter the market over time.

I have been asked whether we can be confident that the risk of a master trust failing in a catastrophic manner, if I can put it that way, is low. The system has been designed to protect against failure to the best of our ability. Measures such as the financial sustainability requirements and the need for an implementation strategy aim to make master trust closure as orderly and well-managed as possible. As the noble Lord, Lord Kirkwood, said, this is new territory, so it is critical that, through this process and going forward, we work closely with all stakeholders and ensure that the Pensions Regulator can work closely with master trust schemes and continue proactively to assess the level of risk in the master trust market so that it is alert to any significant changes in a particular scheme. One of the important points I made at the outset is that maintaining strong oversight to the best of our ability while continuing in a sense to maintain a light touch is an important balancing act for the regulator in this market.

The noble Lord, Lord Kirkwood, asked about inaccuracy of data and what processes are in place to ensure that the correct contributions are being paid if providers do not know the pensionable salary of an employee. As we know, automatic enrolment has been a great success and we have put in place a robust compliance framework, overseen by the Pensions Regulator, on how to abide by the law. An employer is required to select a qualifying pension scheme, enrol qualifying staff into that scheme and deduct any contributions payable under automatic enrolment. Employers are also required to pay those contributions across to their chosen pension provider by a set deadline. Although the deadlines for contribution payments vary depending on the type of scheme being used, there is an overall legal deadline of the 22nd day of the following month, which aligns with the HMRC deadline for paying tax and national insurance.

Qualifying pension schemes for automatic enrolment are subject to the same regulatory framework as all trust-based pension schemes, also overseen by the Pensions Regulator. There are published codes of practice on its website setting out how the trustees of defined contribution pension schemes and the managers of personal pension schemes should monitor the payment of contributions and report payment failures to the regulator.

The noble Lord, Lord Kirkwood, also asked how we can ensure that consumer interests are properly safeguarded and their information protected. We are talking about data in this context. Governance and security were considered as part of the pensions dashboard prototype project and subsequent interim phase. The recent Which? report, published in February 2018, also looked at and stressed the importance of regulation in this area to protect consumers. The Government will examine those findings alongside industry and the regulator as part of their feasibility work.

For many people, the state pension will form an important part of their overall retirement income, so people can access the online Check your State Pension service through GOV.UK to get a forecast of their state pension and information about how they might improve it, and to view their national insurance contribution record. We are considering the industry group project’s recommendation that state pension data should be available alongside private pension information from day one.

Schemes are required to provide details of the systems and processes used or intended to be used in running their scheme as part of the application. This applies whether the systems and processes used are devised, applied or maintained by the scheme or service provider. Schedule 4, on systems and processes requirements, sets out the information required, which includes the features that will be part of the system.

The noble Lord, Lord Kirkwood, referenced the pensions dashboard; I think he referenced a particular press item. We do not comment on press leaks, but I can say that the Government are working with the regulators, wider industry and other sectors on the options for the development of a pensions dashboard. We are in the concluding phase of the feasibility study and will share our findings in due course. I add to that something my honourable friend in another place said today before a Select Committee. To remind noble Lords, he said that,

“the chancellor, in 2016, set out … an enthusiasm for a dashboard”,

but,

“how it is then provided and what … form it takes, is … a matter for ongoing debate”.

There is an acceptance that there is a proper and legitimate debate as to whether this is a single, uniform dashboard. Indeed, I remember the level of detail that, for example, the noble Baroness, Lady Drake, referenced in Committee on the single financial guidance Bill, saying that we have to learn to crawl before we can walk and to walk before we can run. We have to get this right. That is as much as I am able to say.

There was also a question about the code of practice from the noble Lord, Lord Kirkwood. There is an eight-week consultation on this. The general consensus from industry is that this is an important part of the authorisation and supervisory role, but we very much have a strong eye on the application of the code of practice.

A number of questions were asked by the noble Lord, Lord McKenzie. For example, on the fraud compensation fund, he asked what happens about the levy if a scheme is waiting for authorisation under the Pension Schemes Act 2017, and why 1 April. Any master trust schemes authorised during the financial year 2019-20 can benefit from the lower levy cap of 30p per member for the whole of the year, irrespective of when during the year they are authorised. This is a transitional measure that applies only to the year 2019-20. New master trust schemes established after that financial year will be subject to the existing rules on the fraud compensation fund levy. They will pay for the portion of the year that they were registered.

It is important to reference the need for consistency when approving master trust applications. Of course, the Pension Schemes Act 2017 sets out the criteria that must be met for the scheme to be authorised. The regulator will take a risk-based approach based on the evidence provided. The evidence presented will be assessed objectively, with specialists assessing specific aspects of evidence. For example, IT specialists will be deployed to assess objectively the system schemes will use. For existing master trust schemes, the decision to authorise sits with the determinations panel—an independent committee of the regulator. For new master trust schemes, the decision to authorise will be made by the executive arm of the regulator.

--- Later in debate ---

[Lord McKenzie of Luton]

Perhaps the Minister will agree to write to me.

[Baroness Buscombe]

I am grateful to the noble Lord. I will write to him and share what I write with all noble Lords who have taken part in the debate.

I want to touch on the kind words of the noble Lord, Lord Kirkwood, in reference to my noble friend Lord Trefgarne. All too often, committees that are not on the Floor of the House or in the Moses Room are quietly proceeding on the more technical and difficult issues and we do not pay them due regard in a public manner. I want to do that now. I thank the noble Lord, Lord Kirkwood, for complimenting the department on getting it right in terms of our consideration of and the detail in the regulations. That is important because we are protecting people’s lifetime savings. We want to do this to the best of our ability while allowing many more people to take part in the scheme.

I am sure I do not need to persuade your Lordships that with millions of hard-working people now saving towards their pensions, it is only fair and proper that their savings are protected and that the schemes they are saving with are of a high quality and offer good value. The regulations will help to achieve this by bringing into effect a new regulatory regime which will ensure that schemes are well run. For the past couple of years, the Pensions Regulator has been working closely with master trusts to help them prepare for these changes. Following the introduction of the regulations, my officials and staff at the Pensions Regulator will continue to work closely with the industry—that is an important point to make—to support it in its preparations for making an application for authorisation and going forward.

I wish to thank all noble Lords again for their excellent contributions. Some of their questions were very difficult, I have to say.

Motion agreed.

Universal Credit

Baroness Buscombe Excerpts

Thursday 5th July 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, with the leave of the House, I shall repeat as a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Secretary of State for Work and Pensions on the National Audit Office report.

“I had information on the Question being the letter I received yesterday, so that is obviously where we will be going on the letter that I received yesterday. Opening up on that letter was about a meeting that the Comptroller and Auditor-General had asked to have with me on 27 June, when he wrote, and our department got back at the end of the week. That meeting will be on Monday. There was possibly an inference from that that I had not accepted the meeting, or that there was not going to be one, but that had not been the case and it is diarised for Monday.

The next bit was about the information we received and accurate, up-to-date information being shared with the department, to which we agreed information had been shared up to 6 June. But what we talked about is when we signed off the factual information contained within it, raising the concern about the context and the conclusions drawn from that information and where we went from there. That goes on to the impact of those changes and if we look at the impact of those that were brought through—the waiting days being abolished on 14 February, the housing benefit being run on 11 April and the advance payment of 3 January—as I said in my apology yesterday, the impact of those changes is still being felt. Therefore the definition could not or cannot be that they have been fully taken into account by the NAO.

The Auditor-General also talked about slowing down the process, which we always agreed with, which is about the test-and-learn process. We will learn as we go along; that is what we agree with, too. But when he said,

‘I am also afraid that your statement in response to my report … has not been proven’—


the case for universal credit—that is where we differ in the conclusions. So while the NAO had the same factual information either way, depending on where you looked at it and how you then come to conclusions, we then came to very different conclusions because of the impact of those changes that we had brought in at the end of that period, which are still being felt.

That is where I would like to leave it. It said that you cannot measure the exact number of additional people in employment—we will agree with that. You cannot measure the exact number of additional people but we knew there was a plausible range which we had support on. There is a plausible range of people going into employment and we know that employment is increasing. Those are the key pertinent points from the letter and included with my apology yesterday for the phrasing of the words that I got wrong, which I fully accept, hence I came to the House. I will end that bit of the Statement there”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that deeply unsatisfactory Statement. This is quite extraordinary. The Comptroller and Auditor-General has been forced to issue an open letter to the Secretary of State for Work and Pensions to point out that she repeatedly misrepresented to Parliament the content of the highly critical NAO report on the rollout of universal credit. She has now apologised, up to a point, for one of the errors, in which she wrongly claimed that the NAO wanted UC rolled out more quickly.

However, Sir Amyas challenged two other misleading claims for which she has not apologised. The Secretary of State claimed that the NAO report had not taken account of the impact of recent changes to universal credit, even though her department had agreed the report just one week earlier, based on the latest information, and she repeated her unfounded claim that universal credit is working. Sir Amyas pointed out that the DWP has not even measured how many UC claimants are facing difficulties and hardship. I was particularly disappointed to see her repeat the claim that universal credit will help an extra 200,000 people into work, even though the NAO said:

“The Department will never be able to measure whether Universal Credit actually leads to 200,000 more people in work”,


because it is not able to separate other factors.

Anyone can misspeak—goodness knows, I have done it myself—but if the NAO says there is not and never can be evidence for a claim, you cannot simply say that it is a matter of interpretation. This is dangerous ground. The Secretary of State is entitled to her own opinion; she is not entitled to her own facts. The Government have told this House too many times that all is well with universal credit when manifestly that is not the case, so I have just two questions for the Minister. First, will the Government stop pretending that all is well and will they, in particular, stop using the misleading 200,000 figure and start telling the House how things really are? Secondly, will they implement all the recommendations in the NAO report? The DWP needs to put things right before anybody else is put through the misery of universal credit.

[Baroness Buscombe]

My Lords, first, I make it absolutely clear to your Lordships’ House that right from the start, when the report was published, there has been no issue with the factual information that the National Audit Office has used. In collating that information, there has been and continues to be a strong relationship between the National Audit Office, the Department for Work and Pensions and the officials. That is important. It is the interpretation of these facts and the conclusions drawn as a result that the department questions, as I said in the Statement. A lot of it is about context rather than saying that there is any issue with the facts.

We are absolutely clear that, as the report says, the National Audit Office completed its independent review of the universal credit programme after analysing evidence that we collected between August 2017 and April 2018. The issue we have is that we are still not able to judge, and nor is anyone, the full impact of significant policy changes that we have announced and implemented since the Budget last autumn. They include extending advances, which was implemented in January 2018, removing waiting days in February 2018 and the housing benefit run-on. The report makes it clear that it is referencing evidence up to April 2018. On the housing benefit run-on, it was impossible for us to measure the extra two weeks’ additional cash to cover people transferring from the old legacy benefit on to universal credit, which they would not have to repay. Each of these measures will take time to impact on the experience of claimants and stakeholders. Although some of these measures were mentioned in the report, their impact would not have been felt during the evidence-gathering period.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, I am absolutely in agreement with the noble Baroness, Lady Sherlock. This is a quite extraordinary state of affairs. I have been following social security since 1986. I have never seen such an explicit letter of correction from such a distinguished public servant as the Comptroller and Auditor-General, Sir Amyas Morse. Two things follow from it. First, I hope the noble Baroness can give the House an assurance that the Secretary of State will take whatever steps are necessary to repair the relationship between the political leadership of the DWP and the Comptroller and Auditor-General’s office. That is essential for the good conduct of the universal credit programme in future, and that work needs to be done.

What I find extraordinary, because I know how much trouble goes into negotiating reports—and this one was signed off on 8 June—is that if the Secretary of State is founding her defence on the fact that she does not think that the NAO knows about the recent changes to waiting days, advance payments and HP run-ons, she is demeaning the value of the historical analysis that is so valuable to the prosecution of public policy. That must be put right too. This is serious territory that needs to be addressed urgently.

[Baroness Buscombe]

My Lords, it is important for me to make clear that my right honourable friend the Secretary of State for Work and Pensions has already apologised, and that apology has been accepted by the House of Commons and the Speaker of the House of Commons. Following Oral Questions on Monday, my right honourable friend was afraid that she had mistakenly used a term that was not an accurate term reflected in the report. My right honourable friend therefore went to see the Speaker. This was entirely independent of the letter produced on Wednesday, so there is no question that my right honourable friend has tried to avoid, evade or do anything untoward. My right honourable friend was very clear that she was mistaken, she was wrong and she was very keen to put that right at the earliest opportunity. Hence, the Speaker accepted that apology yesterday.

The meeting on Monday will of course be extremely important. We accept the facts in the report. We do not deny the facts; we support the facts. In a sense, we are saying, “Please, please, National Audit Office, we want to demonstrate that the impact of the changes undertaken, particularly those made last autumn, is yet to be proven”. She will want to make that absolutely clear.

There is no question but that we will look with care at what has been said in the report. I am sure that we will implement those recommendations that we feel able to from the report.

[Lord Cormack (Con)]

My Lords, I do not think the House can ever have heard a less clear Statement than the one repeated today. I appeal to my noble friend to ask the Secretary of State—although I am not impugning her good faith in any way—to realise that it is important that when she communicates with either House of Parliament, directly or through another Minister, she does so with clarity and in plain English. Perhaps it would be a good idea if Sir Ernest Gowers’s book on plain English was circulated to all Ministers and civil servants before we have that gobbledegook reported from the Dispatch Box ever again.

[Baroness Buscombe]

I say to my noble friend that, given his extensive years in another place, he will appreciate that the job my right honourable friend is doing is very tough. She is involved with the most important, fundamental and huge piece of welfare reform that has taken place for many years. It is close to her heart, as it is to all of us in the department. We absolutely accept that it is important that we reflect the need to be agile. Indeed, one of the incredibly positive aspects of the NAO’s report is on page 15, which is all about the development of the full-service system. It talks about the department using an agile approach for the full service and the need to constantly test and learn, test and learn. We are doing this continuously.

I am sorry if my noble friend feels that my right honourable friend has been less than clear, but the reality is that we are very keen to explain to all noble Lords and Members of another place that what we are doing is the right thing. We just want to stress that it is important to reflect the impact of changes that are still coming through the system.

Disabled People

Baroness Buscombe Excerpts

Thursday 28th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, let me begin by joining all other noble Lords in congratulating the right reverend Prelate the Bishop of London on her inspirational maiden speech. We look forward to many more contributions from her in the future.

This has been an excellent, thoughtful and—I feel in so many ways—a positive debate. I thank, in particular, the noble Baroness, Lady Thomas, very much for this opportunity for all of us to share information, and indeed to discuss, as she said right at the beginning, a debate that is widely drawn. I want to make it clear straightaway that I shall share this debate with our Minister of State for Disabled People because so many different issues have been raised, and I apologise in advance if I cannot address everyone on the Floor of the House this evening. I make it clear, too, that in those areas that are the responsibility of the Minister for Health or the Minister for the Department for Education, I will make sure that the concerns are passed on.

The Government are fully committed to making sure that disabled people can overcome the barriers they face in their day-to-day lives. With 13.9 million people in the UK—that is 22% of our population—reporting a disability, it is very clear we must do everything we can to break down the barriers so that disabled people can be empowered and achieve their aspirations. There are more than a few disabled role models in this House—both past and present—who have overcome those barriers to achieve great things in their careers. Indeed, as the noble Baroness, Lady Masham shows—I think she has been here even longer than me—it can be done. But this will not happen overnight; there will be no mythical day or year when disabled people will wake up and everything will be accessible and inclusive.

With reference to my noble friend Lady Wyld, we are making real progress and I feel strongly—I am an optimist, of course—that this is generational. Her children will wonder why there is a review. My children, who are older than hers, will feel that too. With an ageing society, where most people acquire a disability as they grow older, this is becoming even more important. We know that currently 45% of people at state pension age have a disability. I say to the noble Lord, Lord Bruce of Bennachie, that we are not separating the young from the old but we need to recognise that different people have different needs and we need to be as bespoke as possible.

Although we have made good progress, we are not complacent and know we all need to do more. This is not just about my department but about every department making sure that their policies and services are accessible and inclusive. Nor is this just about the public sector—the private and third sectors must play their parts as well to ensure that we all live in a country that is accessible and inclusive. We all know that there is no point in building accessible housing if the disabled tenants or owners cannot access the transport system. An accessible transport system does not help if disabled people cannot access their employer’s business or their school, college or university. And how do disabled people spend their money if they cannot access shops, leisure facilities or online services?

Numerous noble Lords raised very good points on a number of issues during this debate. I thank the noble Baroness, Lady Thomas, for raising the important issue of personal independence payment assessments and appeals in this House on 19 June in an Oral Question. I agree with her. We need to be more holistic in our approach, which is why I must commend the hard work that my colleague in another place, Sarah Newton MP, the Minister of State for Disabled People, has been doing to ensure that disabled people can meet their aspirations. I have to tell noble Lords that I have never seen a Minister work so hard.

As my honourable friend announced in May, she is setting up an inter-ministerial group which will drive forward co-ordinated action across government. It will be chaired by the Secretary of State and will focus this Government’s approach to breaking down the barriers that disabled people face. The inter-ministerial group will ensure that disabled people are at the centre of decisions that are made about their lives. We will be reinvigorating the way we work with disabled people and their representatives to inform the IMG. We are keen to ensure that more disabled people can be involved and we are exploring how we can maximise the use of technology to reach every region in England.

My noble friend Lady Wyld made the excellent point that diversity and inclusion make for better and inclusive decision-making across all protected characteristics. Since the 2012 Paralympic Games, we have seen a marked increase in disabled people on television in drama, comedy and current affairs. But it is not only visible impairments that are being discussed—Susan Calman’s “Mrs Brightside” podcast discusses depression, for example. The old attitudes that disabled people face are being eroded, albeit not as fast as we would all wish.

The next area to see an increase in participation for disabled people will be public appointments. I am pleased that my noble friend Lord Holmes will be using his vast knowledge and expertise to lead the review that will make recommendations on how to encourage more disabled people to apply for public appointments. This was a point also raised by noble friend Lady Wyld. Inclusive leadership is not just about our own country, but sharing that leadership with countries that have not achieved the level of access and inclusion we have achieved so far, a point made by my noble friend Lord Shinkwin. The Secretary of State for International Development will be hosting a global summit to galvanise the global effort to address disability inclusion in the world’s poorest countries.

A number of noble Lords asked what the Government have done to improve access for disabled people. This Government understand that to achieve real access and inclusion, departments need to work together where their interests overlap. We have set up the Work and Health Unit, a joint venture between the Department of Health and Social Care and my department. Its aim is to create a society where everyone is ambitious for disabled people in respect of work and to understand and act positively upon the important relationship between health and work, something that was touched on by a number of noble Lords and most particularly the noble Lord, Lord Luce. We published the Improving Lives Command Paper in November 2017. We have set a target of 1 million more disabled people in employment by 2027 and we really mean to meet that target.

The number of working-age disabled people in employment in the UK reached around 3.5 million in the second quarter of 2017. This was an increase of 104,000 since the second quarter of 2016 and an overall increase of nearly 600,000 since the second quarter of 2013, when the series started. I say to the noble Lord, Lord McKenzie, that I disagree entirely; we are not failing the disabled community. We are working to support disabled people to stay in work as well as supporting them into employment. We are prioritising interventions on mental health and musculo- skeletal conditions.

So many points were raised around the whole issue of learning disabilities, most notably by the noble Baroness, Lady Jolly, who spoke with real authority on the subject. We are encouraged by the early evidence of the impact of the implementation of our SEN reforms, improving the lives of children and young people with learning disabilities. But we are not complacent—far from it. There is much more to do and we are committed to seeing this through. As the SEN reforms continue, we are confident that they will make a significant difference to the life chances of children and young people with special educational needs. The noble Baroness referred to Easyread documents. Where appropriate, we provide these, but I will take back her concerns on the extent to which such documents are available.

The noble Baroness also referred to hate crime, as did my noble friend Lady Eaton in her passionate speech, which presented a different angle but one of equal importance with regard to this issue. I will certainly ensure that we look at what the Ruderman Family Foundation is doing to help people from different communities who also happen to have a disability, if I may put it that way. It is a double challenge that we need to confront. In terms of hate crime itself, we launched an action plan in July 2016 with five different criteria. Those criteria are Home Office-led and I understand that they will be refreshed with the hate crime action plan in 2018. We will work closely with our wide network of stakeholders to make sure that the action plan remains fit for purpose, is cross-governmental and absolutely respects those issues raised by noble Lords today.

I also listened with care to what the noble Lord, Lord Patel, had to say about the tough issue of care of children with life-threatening illnesses in hospices. I assure him that I will pass his questions and concerns to my noble friend Lord O’Shaughnessy, Minister for Health. The noble Baroness, Lady Brinton, also raised these issues. I am sure my noble friend will want to respond in writing, as will my noble friend the Minister for Education, on some of the issues raised by other noble Lords.

With reference to the speech by the noble Baroness, Lady Uddin, I have enormous sympathy—which I am sure all noble Lords will share—for her son and the appalling experience he endured. I am glad that, since that time 20 years ago, we have introduced—as the noble Baroness will well know—strong safeguarding measures across the public, private and third sectors. But of course, there is always more that we can do.

I turn now to the question from the noble Lord, Lord Luce, about progress on the evaluation that my department commissioned on the Fit for Work service. On 21 June, we published a report online presenting findings from the evaluation. We remain committed to that and will use our learning from Fit for Work to inform our thinking. We are also working closely with the new occupational health expert group established this year. This group is chaired by Professor Gina Radford and consists of clinicians, employers groups, academics and representatives of charities. My officials would be pleased to discuss this work further with the noble Lord.

One might ask what the point of having a job is if you cannot get to work. The Department for Transport consulted on a draft accessibility action plan last year and will publish an inclusive transport strategy later this year. It will set out our key policy and investment priorities for improving disabled people’s access to transport. This document will also confirm our timeframes and proposals for monitoring delivery.

Since 2006, around 200 railway stations have been made step-free, and 75% of rail journeys are now through step-free stations. This compares to only 50% in 2005. I am looking to the noble Baroness, Lady Ludford; I hope she and her husband will accept that this is progress. It is not perfect, but it is progress. Where toilets are provided on a train, an accessible toilet that meets the requirements of modern accessibility standards needs to be provided by 31 December 2019.

The noble Baroness, Lady Masham, referred to the blue badge. We consulted on introducing new blue badge eligibility criteria for people with hidden disabilities. The Department for Transport is currently considering the responses.

Before we can get to work, we need to be able to get out of our home and move into the built environment, a subject covered by a number of noble Lords. The Government’s National Planning Policy Framework, which is currently being revised, defines “inclusive design” as:

“Designing the built environment, including buildings and their surrounding spaces, to ensure that they can be accessed and used by everyone”.


However, the Government understand the concerns visually impaired people have about navigating around shared spaces. The Chartered Institution of Highways and Transportation’s review of shared space was published in January this year, and we are considering its recommendations.

We launched the Built Environment Professional Education Project in 2013, which was inspired by the 2012 Paralympic Games—the most accessible Games ever. The aim of the project is to make inclusive design an important part of the education and training of built environment professionals. To ensure a smooth transition from a Government-driven project to an industry-owned and led project, in 2016-17 the Construction Industry Council assumed responsibility for the project, but this Government are not just about new initiatives; they are also about improving what is already being done. An example of this is disabled students’ allowances, where we have commissioned an evaluation to seek disabled students’ views on support received from DSAs, as well as views from the higher education providers. This evaluation will report later this summer.

We are committed to ensuring that our welfare system is a strong safety net for those who need it. That is why we are spending £54 billion this year, noted by my noble friend Lord Shinkwin, on supporting disabled people and those with health conditions. That is a real-terms increase of £10 billion since 2009-10. This is around 2.5% of GDP and over 6% of all Government spending—up more than £7 billion in real terms since 2010.

We have also increased the amount of help an individual may receive from Access to Work. This is important in relation to some of the concerns raised by noble Lords. It depends on their individual needs and personal circumstances, but an individual can now have up to a maximum of £57,200 a year, which is an increase from £42,100 in April 2017. The grant is in addition to the Motability scheme and all other disability benefits. In September 2016 we launched the Access to Work digital service, so people can now apply online. In addition, we are continuing to develop our online offer and have introduced other channels to improve accessibility, for example through video relay service to assist BSL users.

I say to the noble Lord, Lord Bruce of Bennachie, that the Government are committed to ensuring that deaf people are enabled to fulfil their potential and play a full role in society. We fully support initiatives aimed at improving understanding of the needs of deaf people, giving them more say in how they access services and how the barriers they face can be removed or overcome. Deaf people are the largest group of customers supported by the Access to Work grant and their awards in general tend to be higher than those of other groups.

Technology has moved on. There are solutions that help both deaf and deafened people. Those in the deaf community have always been early adopters of new technology, email phones and video phones, as referenced by both the noble Lord, Lord Bruce, and also my noble friend Lord Borwick. The video relay service is an easy option for service providers to communicate with their deaf customers where that is reasonable. But we must not forget that in the deafened community, the majority of people with a hearing impairment are elderly, and that for the most part they do not use sign language. They need adjustments such as lip-speakers, speech to text, or note takers.

The noble Lord, Lord Addington, and other noble Lords, referenced technological solutions, which will continue to break down barriers, not only for the deaf community but for other impairment groups as well. We know about help for the visually impaired to navigate the London Underground, such as Wayfindr, and about Microsoft Seeing AI, which can read text and tell the user what is going on and can be downloaded by anyone.

But technology is not the only way: business can break down barriers. The Government continue to work with business to increase our understanding. The Disability Confident programme is part of that. We are challenging employers’ attitudes to disability, removing the barriers and ensuring that disabled people have opportunities to realise their aspirations. We are working with employers in this way to ensure a substantial contribution towards seeing 1 million more disabled people in work. Over 70% of local authorities are Disability Confident. The Government are leading by example: all main government departments have now received Disability Confident leader status. I could list a number of well-known companies that are already very supportive. However, the Government understand that disabled people still face innumerable barriers, and yes, the Government will continue to break those barriers down and drive all the sectors to do the same.

Several noble Lords, and in particular my noble friend Lord Holmes and the right reverend Prelate the Bishop of London, mentioned the Paralympics, as I did a few months ago. One of my proudest moments was representing Her Majesty’s Government at the Paralympics this year in South Korea. Indeed, I gave up trying to contain myself when the mother of one of our seven gold medallists hugged me and thanked me for being there. I was privileged to be there. Sport is one of the most brilliant catalysts for overcoming barriers.

The Government understand that there will always be more to be done, always another item on the access and inclusion shopping list. The Government will continue to take responsibility, working through that list. We understand that there will always be people who do not think that access and inclusion is happening quickly enough. Indeed, in contrast, at the Department for Work and Pensions we are lucky enough to share a brilliant special adviser with No. 10, Jean-Andre. He happens to have cerebral palsy, and he is ensuring that we constantly question, so that the list of what to do and what to do better is assessed.

In conclusion, the Government will continue to work with the public, private and third sectors to keep breaking down barriers until everyone, whether disabled or non-disabled, can participate in their community and aspire to and achieve their life goals. One of the most important words used in this entire debate is “talent”. There is plenty out there, and we want to make sure that we involve everyone with talent.

Automatic Workplace Pension Enrolment

Baroness Buscombe Excerpts

Monday 25th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, I thank the noble Lord, Lord McKenzie, for securing this debate, and thank all those who contributed to this evening’s discussion of this important issue.

The Government are proud of the progress of the automatic enrolment reforms, with over 9.7 million people enrolled into a workplace pension since the reforms began in 2012. In the last 12 months alone, hundreds of thousands of everyday employers have begun to offer a pension to their staff for the first time, helping their employees build up dedicated savings for a more secure retirement. I am especially pleased that all this good work has been achieved due to the commitment, support and collaboration between government, employers, the pensions industry and many other delivery partners. I should add that we welcome the cross-party support that has been evident throughout the delivery process. Given the scale of the technical challenges, the hundreds of hours of freely given time to help inform the most practical policy solutions and the sheer good will are a tribute to all those who have played their valuable part in successfully getting nearly 1.3 million employers to provide workplace pensions.

This year has seen the successful conclusion of the planned rollout of automatic enrolment duties to employers that existed prior to October 2017, known as the employer staging profile, which started with the largest employers in October 2012 and, following two extensions to help SMEs better prepare, saw the last cohort of existing micro-employers—those with only one or two staff—complete their declarations of compliance this spring. We are now delivering automatic enrolment as business as usual, with an estimated 180,000 to 210,000 new employers each year needing to comply with their automatic enrolment duties. We have also seen the first of two planned increases in contribution levels for automatic enrolment in April this year, with the latter increase following in April 2019.

I do not take lightly the challenge for employers in funding their share of these increases, and we are carefully monitoring the impact of this first upward shift in contributions for employers and their workers. I should stress, however, that these increases are essential to move savings rates up and will deliver more security in retirement. It is also important to note that many employers have chosen to pay contributions above the planned statutory increases, so faced no additional costs in April. It is important to add that, as automatic enrolment has been rolled out, the Pensions Regulator has been responsive to the need to help employers understand what they need to do. That included launching a simplified and much shorter step-by-step guide on its website, which has been adapted to the needs of small and micro-employers, which have less familiarity with pensions matters.

I turn now to the December 2017 review of automatic enrolment, Maintaining the Momentum, which sets out a clear direction for the future of workplace pension saving, and to which all noble Lords who have taken part in the debate have referred. Our ambition is bold and clearly builds on the success of automatic enrolment to date, with a comprehensive and balanced package of proposals which, crucially, recognises that costs will be shared between families and businesses and that they will need time to plan for change. Importantly, we are confirming that automatic enrolment should continue to be available to all eligible workers regardless of who their employer is. These reforms are focused on ensuring that retirement saving continues to be available to the widest possible number of workers in the UK.

We believe that the retirement saving habit needs to be established at the start of a working life. That is why we are going to make saving the norm for young people by lowering the age for automatic enrolment from 22 to 18, to bring an extra 900,000 people into workplace pensions. I can confirm for the noble Lord, Lord McKenzie, that research has shown that 18 year-olds are very keen for automatic enrolment to start—they care about their future and their retirement, which is very welcome.

We want to broaden and deepen the benefits of automatic enrolment, particularly for those with low earnings and multiple jobs, to which all noble Lords have referred. We want to help them to save more for retirement by removing the lower earnings limit so that their contributions are calculated from the first pound of earnings.

We intend to deliver on our manifesto commitment to use the principles and learning from automatic enrolment to improve retirement provision for the self-employed. We recognise the diversity of the 4.8 million people who classify themselves as self-employed, and the review highlighted—supported by the available evidence—that no single or straightforward saving intervention has been shown to bring self-employed people into pension saving. We are therefore moving quickly to find out what might actually work by testing targeted interventions aimed at the self-employed to identify the most effective options to increase pension saving among this group. In addition, as we set out in the 2017 review, many of those working in atypical or non-standard forms of employment potentially already come within the automatic enrolment framework and will be able to save into a workplace pension. We are working with the Pensions Regulator to ensure sufficient clarity for them and those who engage them, so that the automatic enrolment compliance regime continues to operate effectively.

In addition, the Government have responded to Matthew Taylor’s review of modern working practices and have been consulting on employment status with the aim of making it clearer and more certain for both individuals and business what their status is. The consultation has now closed. The Government are currently considering the submissions received and will respond in due course. We will ensure that any changes are also considered with care in relation to automatic enrolment so that there is sufficient coherence and certainty about the enforcement of automatic enrolment duties.

Noble Lords have raised several important points. I respect all their concerns and will do my best to address as many of those as possible this evening. The noble Lord, Lord McKenzie, raised the question of attrition. I can confirm that employers estimated that 16% of employees who had been automatically enrolled in the last financial year had ceased active membership. However, there is hope that a certain amount of those who ceased membership when they left one employer will start again with a new employer.

Other noble Lords, including the noble Lord, Lord McKenzie, asked about the earnings trigger. They suggested that too many of those on low incomes were still excluded from AE because of the earnings trigger, which determines who is eligible to be automatically enrolled by their employer into a pension. Freezing the trigger at £10,000 continues to strike a balance so that those who can most afford to save are automatically enrolled into a workplace pension. We fear that lowering the trigger could result in diverting income away from the day-to-day needs of the lowest earners, and that risks impacting significantly on their living standards. For those low earners who are in a position to contribute, the option remains to opt into automatic enrolment.

Considerable reference was made to women, particularly by the noble Baronesses, Lady Primarolo and Lady Drake. The question is, of course, whether automatic enrolment is helping women in work to save. There have been large increases in pension saving for women since the introduction of automatic enrolment. The private sector has seen the largest increases in participation in workplace pensions. In 2012, 65% of women employed full-time in the private sector did not have a workplace pension. By 2017 this had fallen to 24%.

The question also relates to multiple job holders—women who are juggling different jobs and caring duties—what are we doing about that and whether we should remove the lower earnings trigger. The proposal to remove the lower earnings limit and the entitled worker status in legislation will ensure that multiple job holders who are eligible for automatic enrolment, or who choose to opt in, will qualify for employer contributions in all jobs and will be able to pay their own contributions from the first pound of earnings. This will give multiple job holders the opportunity to build the same retirement savings as individuals who have only one job.

Over the coming year, we will work to build a renewed consensus to deliver the detail, design and implementation of our proposals. We recognise the importance of giving employers and savers sufficient time to plan for changes. There will be some people, particularly those on low incomes, for whom it makes little sense to divert income away from their working life, but for those low earners in a position to contribute, as I have said, the option remains to opt in. The earnings threshold is reviewed every year to ensure that it continues to strike the right balance between maximising the savings incentives for individuals and minimising costs for employers.

The Secretary of State has decided to freeze the earnings trigger this year at £10,000, which will bring an extra 100,000 people into automatic enrolment, of whom around 72% are women. It should also be noted that the IFS, in a 2016 report, found that automatic enrolment had also significantly increased workplace pension membership among those outside the eligible group, particularly those with incomes under the earnings threshold, whose membership has increased by 28 percentage points.

To answer a question asked by the noble Lord, Lord McKenzie, the analysis underpinning the automatic enrolment earnings threshold review suggests that freezing the trigger has no adverse effect on the proportion of black and minority ethnic individuals in the group eligible for automatic enrolment. Of the 100,000 people estimated to be newly saving as a result of freezing the trigger, 23,000 are black and minority ethnic individuals.

The noble Baroness, Lady Drake, asked about carers and how they are supported. The 2017 AE review concluded that there should be no change to the way that carers are currently treated through AE. Those who provide informal care are not subject to automatic enrolment as they have no employer to enrol them. However, bringing in individuals not subject to a contract of employment would be a fundamental change to the framework of AE, which works through an employee-employer relationship. Individuals who provide informal care for 20 hours per week are entitled to apply for carer’s credit, which helps to protect future entitlement to state pension. Alongside the wider work to address the challenges of social care for our ageing population, the Government are considering how to further support families and individuals who provide invaluable informal care.

I turn now to the net payment arrangements versus relief at source. Pensions tax relief is a matter for Her Majesty’s Treasury. The Government recognise the different impacts on pension contributions for workers earning below the personal allowance, but to date it has not been possible to identify any straightforward or proportionate means to align the effects of the net pay and relief at source mechanisms more closely for this population. However, alongside further work on the AE changes outlined in the review, the Government will examine the processes for payment of pensions tax relief for individuals to explore the current difference in treatment to ensure that we can make the most of any new opportunities that emerge, balancing simplicity, fairness and practicality while engaging with stakeholders to seek their views. It is important that employers are free to choose a scheme that best suits the needs of their businesses and workers.

I was asked why we did not look at increasing the contribution rate as part of the 2017 review. As I have said, millions of people are now saving or saving more as the result of AE. As noble Lords may be aware, the first planned increase in contribution rates took place this year. As such, it is important that we understand the effects that the planned increases will have and to carry out further work on the adequacy of retirement incomes. We will look again in due course at the right overall level of saving and the balance between prompted and voluntary saving. It is important that this should be evidence-based. We are testing targeted interventions to identify the most effective options to increase pension saving among self-employed people during 2018. We are harnessing the ideas and enthusiasm that exist in addition, as I have just said, to developing the evidence base as our work goes forward.

The noble Lord, Lord Kirkwood, referred to the pensions dashboard among many other issues. The Department for Work and Pensions is leading the development of the pensions dashboard. We have carried out a feasibility study, the main conclusions of which we will share in due course. How we achieve increased engagement is not straightforward and it will not be solved by the use of a single tool such as a pensions dashboard. We need to make people feel confident about managing their finances and able to make informed decisions. The noble Lord also referred to the single financial guidance body, which we believe and trust will be a huge support in that direction.

Finally, all noble Lords have commented that progress is too slow. I shall start with the noble Lord, Lord McKenzie, who asked why nothing is being done until the 2020s. The review sets a clear direction to build a more robust and inclusive savings culture, specifically supporting younger generations with the opportunity to save for a more secure retirement. Our review proposes a comprehensive and balanced package which recognises that the costs will be shared between individuals, families and businesses, and we will need time to plan for change. We are working to deliver detailed design and implementation. The support of employers and their advisers has been key to the success of AE and we want to make sure that we recognise their situation as well as that of savers. We want sufficient time to take those decisions with care.

Testing targeted interventions to identify the most effective options is critical. It is our ambition to implement changes to the AE enrolment framework in the mid-2020s, subject to learning from the contributions increases this year and in April 2019. There will be discussions with stakeholders around detailed design this year into next year, in order to find ways of making the changes affordable, and this will be followed by formal consultation with a view to introducing legislation in due course.

Noble Lords who know me know that I am always impatient for advancement in areas that will help everyone. I am looking in particular at one proposal made by the noble Lord, Lord Kirkwood. He knows that I am very keen on this, as is the Pensions Minister, my honourable friend in another place Guy Opperman. But we need to do this with care. We have to consult. We will work with stakeholders to build consensus on the shape and design, and that will help us to develop our detailed plans and an implementation timetable.

I hope that I have managed to answer most questions put by noble Lords, and again I thank the noble Lord, Lord McKenzie, for introducing this debate.

House adjourned at 8.50 pm.

Bereavement Benefits

Baroness Buscombe Excerpts

Monday 11th June 2018 Lords Chamber

[Lord Polak]

To ask Her Majesty’s Government what assessment they have made of the impact of changes made to bereavement benefits on 6 April 2017 on parents with dependent children.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

Bereavement support payment focuses support in the immediate months following a bereavement, when it is needed most. It is intended to meet the additional costs associated with bereavement, rather than providing an ongoing income replacement. Unlike its predecessors, it is not taken into account for income-related benefits, thus helping those on lowest incomes. We intend to assess the impact of these reforms once sufficient evidence is available.

[Lord Polak (Con)]

I thank the Minister for her response. At the most welcome announcement a few weeks ago of the establishment of the children’s funeral fund, following the brilliant and emotional campaign led by Carolyn Harris, the Prime Minister said this:

“In the darkest moment of any parent’s life there is little light—but there can be support”.


While I agree with the Government’s aim of cutting dependency and making work pay, in April 2017 the law changed and I argued then, as I do now, that the support for children of school age who have lost a parent should continue throughout their schooling and not be cut and limited to 18 months. I ask the Minister to urge her colleagues to restore the full amount for bereaved children. Clearly if a child loses a parent the child will experience dark moments, there will be little light and there should be continued support.

[Baroness Buscombe]

My Lords, my noble friend asked a Question about bereavement support payment and I have the greatest sympathy with people in this situation. However, we are talking about a system that was set up over 90 years ago to support women following World War I who would never be expected to work again and support their family, and who had no other means of support. This change restores fairness to the system by focusing on the 19-month period after a loved one dies. Unlike its predecessor, it applies to both men and women. It is not taxed and is not taken into account for income-related benefits to support children when in need, thus helping those on low incomes the most.

[Baroness Thomas of Winchester (LD)]

My Lords, how will Brexit affect the payment of this benefit to eligible EU nationals living here and British people living in the EU?

[Baroness Buscombe]

My Lords, Brexit will have no effect on this.

[Lord Elton (Con)]

My Lords, we have so far been considering the very young, but bereavement is a disabling condition that makes it very difficult for elderly people to manage their affairs. Can my noble friend assure us that people who qualify will be notified in simple language about the amount of their entitlement and the time it will last? Furthermore, would it not be a good idea to issue a warning notice or a reminder for those who may have lost track of what is happening, say a month before it ends?

[Baroness Buscombe]

My Lords, when an individual registers the death of their spouse or civil partner, the registrar provides information on how to contact the Department for Work and Pensions bereavement service. That includes giving advice on what benefits will be available, including the bereavement support payment. The time limit for claiming the initial lump sum is now more generous, at 12 months from the date of death—that is £2,500 for those who do not have dependent children and £3,500 for those who do. The time limit is three months from the date of death for claiming the additional monthly bereavement support payment, which is £100 a month for 18 months for those without children and £350 for those with dependent children. We take every opportunity to encourage claimants to make a claim for bereavement support as early as possible.

[Baroness Sherlock (Lab)]

My Lords, when the Government brought this in, they said that it was not about saving money—although, as it happens, it will cost less than half what the old system did. They said that the aims were to be simple and encourage self-dependency, but we are talking about people who got married, had children and thought that they would be looking after themselves as a family until the worst possible thing happened. We end up then with somebody becoming a single parent; they are themselves bereaved and having to raise children who are bereaved. That is surely the situation for which the welfare state was pretty much invented. If the Government are going to think again, would they please think really hard, recycle some of those savings and do the right thing?

[Baroness Buscombe]

The noble Baroness will know that those in need of additional income-related benefits will receive them, as well as child benefit for those with dependent children, for example. This is not a cost-cutting exercise. We are investing an extra £40 million in each of the first two years after the reform. This is a modernisation of an outdated system, which relates to a time when women were not expected to work and, indeed, there were not jobs available for them. We are spending more than £95 billion on working-age benefits to help those in need. People in receipt of the bereavement support payment can access other parts of the welfare system if they need it. With regard to being a lone parent, it is important to add that the problem with the old system was that, if one remarried or went into a civil partnership, one lost that entitlement altogether. People do not lose it under this system.

[Baroness Altmann (Con)]

My Lords, I understand that my noble friend has her brief from the department, but I urge her please to go back to her officials and question them about what they perceive as the fairness of these changes. Money is being taken away from families with young children, three-quarters of whom will lose out and 90% of whom will receive support for less time. That money is being recycled to families without children, while the 21% of families whose parents choose not to marry or decide to cohabit receive absolutely nothing. Overall, by 2020, the cost savings will be in the tens of millions of pounds. Before the 18 month-period expires around November this year, I urge her to look into the possibility of devising a bereavement payment specifically designed for children, so that their parents can be there for them. The damage to their mental health and educational attainment has been well documented.

[Baroness Buscombe]

My Lords, I will not be going back to the officials because—

[Noble Lords]

Oh!

[Baroness Buscombe]

My noble friend does not have the facts correct. May I make it absolutely clear that this payment is designed for people after the terrifically difficult loss of a loved one? It is not intended to be equivalent to the period of grief following spousal bereavement: it is designed to support people with the additional costs associated with bereavement rather than to provide an income replacement. Income-based benefits are more suited to provide that longer-term assistance with everyday living costs. With this benefit, the Government are therefore seeking to provide financial support through the acute period to facilitate the process of readjustment. This is nothing to do with families losing money. Noble Lords should take care before seeking to scaremonger in this way.

[Lord Tomlinson (Lab)]

In reply to an earlier question, the noble Baroness suggested that Brexit would make no difference to the circumstances that have been discussed. As the Minister responsible for Brexit has failed to give us clear answers on almost every aspect of Brexit, can she now spell out for us the specific basis on which she gave the House that assurance?

[Baroness Buscombe]

I thank the noble Lord for his question, as indeed I am advised that we cannot be absolutely sure, and I therefore apologise to the House for initially saying that.

[Noble Lords]

Oh!

[Baroness Buscombe]

To the best of my knowledge—it was and still is my understanding—through the whole process of leaving the EU, we seek to transport into UK law all those laws that impact on EU citizens and on British citizens living abroad. During that process, there is no question of us impacting on this important payment.

Personal Independence Payment

Baroness Buscombe Excerpts

Monday 4th June 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, by the leave of the House I shall repeat as a Statement an Answer given to an Urgent Question in another place by my right honourable friend the Secretary of State for Work and Pensions on the withdrawal of her appeal—Secretary of State for Work and Pensions v AN & JM CPIP/1882/2015 CPIP/1159/2016—in relation to personal independent payments:

“I am absolutely committed to ensuring that disabled people and people with health conditions get the right support they need. PIP is a modern, personalised benefit that assesses claimants on needs, not conditions. It continues to be a better benefit than its predecessor, DLA, for claimants with chronic conditions. Under DLA, only 16% of claimants with diabetes received the top rate, whereas under PIP 29% receive the top rate.

I carefully considered these historic cases and decided to no longer continue with these appeals in order to provide certainty to the claimants. Since withdrawing the appeals, I have provided instructions to operational colleagues to put these claims in payment urgently. These claimants will receive any backdated moneys owed and should receive their first payment within the coming days.

These cases were decided prior to the March 2017 amending regulations, where the Government clarified their policy for managing therapy under PIP daily living activity 3. These regulations are not affected by our decision to withdraw these appeals”.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for repeating that Answer. This refers to the fact that the First-tier Tribunal ruled that two claimants with chronic conditions were entitled to PIP. The Secretary of State appealed but withdrew the appeals shortly before the Upper Tribunal was due to hear them on 21 May. The appeals concerned the meaning of daily living activity 3. One claimant needed watching at night in case urgent treatment were needed to prevent him falling into a fatal diabetic coma. The tribunal decided that he should qualify for PIP. According to the lawyers representing him, the Government argued in the appeal that he should be awarded only one of the minimum eight points needed to qualify for PIP.

This is the second time in a year that we are debating a serious error of judgment by the DWP in lawfully implementing the benefit it created. Noble Lords will remember that the High Court previously ruled against the Government on mobility payments, and in January the Government said that they were no longer appealing that judgment, either.

Normally when we ask questions on the meaning of judgments—and in the past when I have raised questions—Ministers stand up and say, “We are really generous to disabled people”, and the same thing has happened in another place. That is not a conversation. So I urge the Minister today to listen carefully to the questions and to try to answer them as best she can, and to write to us if she cannot. I have two. First, will she tell the House how many other cases are potentially affected by this ruling, and over what period and by what means her department will identify these people and notify them? Secondly, have Ministers taken legal advice on whether the regulations rushed through in March 2017 are definitely lawful?

[Baroness Buscombe]

My Lords, it gives me pleasure to respond to the noble Baroness. First, let me make it clear that, in our amendments to the regulations in March 2017, we were responding not to an error in the policy or in the PIP system but to a lack of clarity. The March 2017 amendments clarify the department’s position going forward, and further litigation is therefore unnecessary. The Secretary of State made it clear when she first arrived at the department that she wanted to withdraw these appeals on the basis that she wanted to provide these claimants with certainty. I want to be clear that this Urgent Question relates to the withdrawal of two appeals on 18 May and is about two specific cases. Therefore, there is no question about how many other cases it is concerned with and over what period.

On legal advice, we always confer and consult with lawyers to ensure that we are, to the best of our ability, making the right decisions on the regulations. We are clear in our minds that the regulations as they stand are lawful.

[Baroness Thomas of Winchester (LD)]

My Lords, presumably the department had advice before it brought in the descriptors that have been found not to be right, so I am not sure whether the legal advice is worth the paper it is written on. Can the Minister tell us whether there was any consultation on the amended regulations? After all, there are many rare and ultra-rare conditions. The people who needed watching over at night may be just two people from a cohort of many who need that kind of support when they are taking therapy. Will the Minister tell me about the consultation?

[Baroness Buscombe]

My Lords, I can confirm that the PIP assessment criteria were extensively consulted on prior to their introduction and were developed in collaboration with disabled people and independent specialists. The 2017 amending regulations did not represent a policy change. They were introduced to restore the original policy intent and to clarify the distinction between the needs of claimants who require assistance to manage therapy and those who require assistance for medication or in monitoring a health condition under daily living activity 3.

For the benefit of all noble Lords, let me explain that what we are talking about is, unlike DLA, a very personalised system of support. It is not based on condition; it is based on need. The important point is that it focuses on managing the condition at one end of the scale and actually requiring extensive therapy at the other end of the scale within the particular 3b criteria that have to be followed. Each case has to be considered on its individual merits. That is one of the flexible and important aspects of PIP. Of course, the outcome of that is that many more people are receiving the highest rate of award under PIP than under DLA.

[Baroness Primarolo (Lab)]

My Lords, in the interests of clarity for the Government and certainty for the claimants, can I return the Minister to the question raised by my noble friend Lady Sherlock? Will the Minister explain to the House how the Government intend to move forward in ensuring that they have identified other cases that are potentially affected by this judgment and the lack of clarity—some might call it error—in the regulations originally drafted by the Government?

[Baroness Buscombe]

My Lords, it is important to re-emphasise the fact that this Urgent Question is about two specific cases that occurred before the regulations were amended in March 2017. It is about a five-month period. We are focusing on support for those two particular claimants and will ensure that any loss will be recovered and paid to them, literally within the coming days.

I sense that the House is perhaps referring to a judicial review decision that was made in the sense that the Secretary of State decided not to appeal a judgment towards the end of 2017 in relation to mobility activity 1, which is different from today’s Question. However, in relation to that, we will be carrying out an administrative exercise to identify claimants who may be eligible for more support under PIP and we need to screen the whole PIP caseload of 1.6 million to identify those people as a result of that JR judgment. The actual number of people whose award will be affected is much smaller. The judgment relates to people who suffer from overwhelming psychological distress that affects their ability to plan and follow a journey. Anyone who is identified as affected will be contacted by DWP and their payments will be backdated to the effective date in each claim.

[Baroness Browning (Con)]

My Lords, I declare a personal family interest. While I appreciate the constraints of this particular Question and judgment, my noble friend referred to the judicial review that was debated in this House. There have been many changes since the initial legislation came in. Can she tell the House how many existing people remain on DLA and are still waiting for their PIP assessment from DLA to PIP?

[Baroness Buscombe]

My Lords, I apologise. I hope that my noble friend will appreciate that this was given to me as an Urgent Question. I know that since PIP was introduced, 3.1 million decisions have been made, which will include some who were on DLA as well as new applicants for PIP, 9% of which have been appealed and 4% overturned. I am struggling to give the exact figure of the number of people who have moved from DLA to PIP. In that case, I am happy to write to my noble friend.

British and Irish Sign Language

Baroness Buscombe Excerpts

Thursday 3rd May 2018 Lords Chamber

[Lord Bruce of Bennachie]

To ask Her Majesty’s Government what practical support they plan to provide to enable the establishment of a nationwide video relay service for users of British and Irish sign language.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, video relay services are currently available from organisations that buy into the service. It should be possible for these privately operated services to be extended to allow deaf people to communicate with friends and family, but the end user would have to pay. BSL users already have a well-established VRS network, allowing accessible communication with a range of private, public and voluntary organisations. These bodies purchase the service from several established providers to enable their deaf customers to access their services.

[Lord Bruce of Bennachie (LD)]

My Lords, the Minister’s answer falls far short of what deaf sign language users feel is their right—both what they are entitled to and what they actually need. This is their preferred technology and can give them access to interpreters any time, anywhere. At the moment, its availability is time-restricted and, as the Minister said, it is a chargeable service. VRS is available for free in Scotland for access to public services nine to five, Monday to Friday. But sign language users want access 24/7 for all purposes—private services and public services at work, and contacting their family and friends. The US provides this, as does Australia, Canada, France, Switzerland and even Thailand: why can Britain not do the same?

[Baroness Buscombe]

My Lords, first, I pay tribute to the noble Lord, Lord Bruce of Bennachie, for the enormous amount of work he has done in this area over many years. It is important to recognise that access to assisted hearing is available in a number of ways. We have assessed that of approximately 2 million people with hearing impairment, about 25,000 use sign language. Where VRS is not provided, we are ensuring bespoke support—for example, through the disabled students’ allowances and our Access to Work support, whereby the cap on grants for every individual who qualifies for Access to Work has just been increased to £57,000 per person per year to ensure that more people can receive the support they need in a bespoke way to help them stay and progress in work. There is always more to be done. However, we do not believe that enshrining this in statute and focusing all our resources in one area would be right, given the speed of technological advances.

[Lord Borwick (Con)]

My Lords, I declare my interest in the register as a trustee for about 20 years of the Ewing Foundation for deaf children, a registered charity. Does my noble friend the Minister agree that communication of every form is vital to deaf people of every age but that the majority of people who have hearing loss are elderly and do not use sign language? Does she agree that the great work of the NHS in fitting cochlear implants to deaf babies and children, together with the expensive training that is required to make full use of them, and the development of new high-tech digital hearing aids enable a large number of people to use their residual hearing effectively? Does she agree that the new technology of cameras fitted to smartphones and Skype calls enables the creation of what is in effect a worldwide video relay service, not only for the users of British Sign Language but for all deaf people and at far lower cost?

[Baroness Buscombe]

My Lords, I thank my noble friend. I entirely agree with him that in supporting access to communication for everyone, the exciting work of the NHS in fitting cochlear implants to babies and children is one example of why, as the Minister of State for Disabled People has said, it is clear that there is now a wealth of technological solutions with the power to make a real difference to someone’s ability to progress in education and also to find and keep a job. This means that we can use more of our devices. It offers more opportunities and a wider range of ways in which people can break down the barriers of hearing impairment. Of course, the majority of people with a hearing impairment are elderly and for the most part they do not use sign language.

[Baroness Sherlock (Lab)]

My Lords, I am sure the Minister would not in any way mean to suggest that people who use BSL should be thinking about other ways of communicating. I want to bring her back to the fact that in 2016, the Department for Work and Pensions introduced VRS for some of its services as a result of a recommendation from the DWP Select Committee that the department ought to be more accessible to BSL users. The Government said at the time:

“In the future, it is hoped that VRS can be rolled out across DWP’s complete range of services”.


I have had a look at the website and some services, such as applying for ESA or PIP, do seem to be available via this mechanism. But I looked on the universal credit website and could find no reference to it at all. Are the Government now saying that they no longer wish to do this at all and will therefore not be rolling it out, or that they will be rolling it out but have not got round to it yet?

[Baroness Buscombe]

I assure the noble Baroness that there is no question of our not supporting the use of BSL services. In fact, good, accessible services are the best way to remove or overcome barriers that BSL users and people with hearing loss face. We have worked closely with deaf people and their organisations on delivering improvements across a wide range of services, including those provided by the Department for Work and Pensions and across much of the public sector; this is also the case in private companies such as Barclays, Lloyds, Sky and Virgin Media. The reality is that a growing number of organisations in the private, public and voluntary sectors are providing access to their services for deaf BSL users via the video relay services. With respect to the Department for Work and Pensions, I reassure her that there is no question of our not considering this service for UC rollout, but I will certainly take that point back to the department to ensure that that is the case.

[Lord Elystan-Morgan (CB)]

Can the Minister assure the House that the Welsh language will be given full parity with the other languages of the United Kingdom in this matter?

[Baroness Buscombe]

My Lords, BSL is a devolved matter so, with regard to Wales and the Welsh language, there were no particular recommendations on the provision of BSL. However, a parliamentary Statement in 2003 recognised BSL as a language and the Lords Select Committee was clear that this should be extended to the devolved regions. It is also important to make it clear that there are a number of different sign languages, not just one particular sign language.

Financial Guidance and Claims Bill [HL]

Baroness Buscombe Excerpts

Ping Pong (Hansard): House of Lords
Tuesday 1st May 2018 Lords Chamber

Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendment 1.

1: Clause 1, page 2, line 6, at end insert “and the devolved authorities.”

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, throughout the passage of this Bill, the importance of increasing the number of people taking Pension Wise guidance has been debated and recognised on all sides. We all want people to make more informed decisions and to make it the norm to use Pension Wise before accessing their pension.

Amendments 4, 7, 8 and 36 place new duties on managers and trustees of all defined contribution pension schemes. They build on proposals put forward by noble Lords who introduced an amendment seeking to give those accessing pension flexibilities a stronger, last-minute nudge towards Pension Wise. They also draw on the proposals put forward subsequently by the Work and Pensions Select Committee in another place to require that people should have to make an active decision to opt out, rather than be able to opt out passively.

I want to stress that the guidance given under these amendments can be provided only by the single financial guidance body. This is by virtue of the interaction between Clauses 3 and 5 and Amendments 7 and 8. Subsection (7) of the new clause inserted by Amendment 7 and subsection (6) of the new clause inserted by Amendment 8 define the pensions guidance referred to in the amendments as the information or guidance provided in pursuance of Clause 5. This clause requires the new body, as part of its free and impartial pensions guidance function in Clause 3, to deliver what we know as Pension Wise guidance.

Throughout this process, discussions with Members of both Houses and key stakeholders brought out two core issues. The first was that any requirements should be based on the presumption that people have not already accessed Pension Wise guidance. The second was that, if people are to opt out of accessing such guidance, it might be desirable for that opt-out decision to be made and communicated to a body other than their own pension scheme. These amendments to the Bill provide a workable way to achieve the consensus position that was reached in those discussions. When an individual seeks to access or transfer their pension pot, these duties will ensure that members are referred to Pension Wise guidance, that members receive an explanation of the nature and purpose of that guidance, and that before proceeding with an application, subject to any exceptions, schemes must ensure that members have either received Pension Wise guidance or have explicitly opted out.

Rules and regulations must specify how, and to whom, the member must confirm that they are opting out. This allows for the opt-out process to be separated from schemes. Rules and regulations will set out the detail of the opt-out process based on evidence of what helps people take up Pension Wise guidance. This approach is completely aligned with the Select Committee in another place. The committee recommended that the details of how an individual could expressly turn down the opportunity to receive guidance should be set out in FCA rules following public consultation.

It is important that new requirements introduced in this area are operationally deliverable for schemes and the new guidance body. Detailed rules and regulations should be based on evidence of what delivers the outcome we all want: more people taking up Pension Wise guidance and a robust opt-out process. These amendments provide scope to test what works best and to update the approach as the pensions landscape, technology and the needs of the users change. This might be through direct hand-off of the member from the scheme to Pension Wise, including for the purpose of conducting an opt-out process, or through providers booking Pension Wise appointments for their members.

Further, these clauses also require the FCA, the Secretary of State and the new body to work together to develop and deliver these new requirements. As is customary, before making the rules and regulations the FCA and the Secretary of State will need to consult, providing the proper opportunity for public scrutiny of proposals before they are commenced.

--- Later in debate ---

[Baroness Buscombe]

I thank all noble Lords who have taken part in this brief debate, and in particular the noble Lord, Lord McKenzie, for his very warm words of support for these amendments and for the Bill, and for the way in which we have worked collaboratively and have, collectively, improved the Bill. We have sought to do so with care not to impose requirements where they are not necessary or where they could box the new body into a corner in terms of its ability to be flexible. Default guidance is an example of an area where we want to be extremely careful. That is why so much time and care has been taken to make sure that we have come to a situation where we are managing that balance sufficiently.

I absolutely understand the concerns of the noble Baroness, Lady Drake, in relation to the scheme being free and impartial. To reassure her, and my noble friend Lady Altmann, I will refer back to a part of my speaking note where I made it absolutely clear that that is the case and stressed that the guidance given under these amendments, as the noble Lord, Lord McKenzie, said,

“can only be provided by the single financial guidance body. This is by virtue of the interaction between Clauses 3 and 5, and Amendments 7 and 8. Subsection (7) of Amendment 7 and subsection (6) of Amendment 8 define the pensions guidance referred to in the amendments as the information or guidance provided in pursuance of Clause 5 of the Bill”.

This sounds rather convoluted, but I reassure noble Lords that it actually creates clarity.

I fear that my noble friend Lady Altmann is looking for mandatory guidance, but we simply do not believe that that is right. As the Work and Pensions Select Committee in another place observed in its report, Clause 5(2) does not require individuals to participate in or expressly turn down guidance before being granted access to their pension pot. Opting out could be passive for a significant proportion of people. It also risks making routine transactions, and those in which the individual has already taken advice, unnecessarily cumbersome. Further, the clauses which relate to the rules and regulations that will be developed require the FCA, the Secretary of State and the new body to work together —this is very important—to develop these new requirements. Respecting the concerns of my noble friend Lady Altmann, we are talking about a strong final nudge. As is customary, before making the rules and regulations the FCA and the Secretary of State will need to consult, providing the proper opportunity for public scrutiny of proposals before they are commenced.

My noble friend referred to a vote that took place on default guidance. However, it is important to stress that it did not reference mandating the guidance. All our research, including talking to stakeholders, shows—

[Baroness Altmann]

I thank my noble friend for giving way. I am not in favour of mandatory guidance: I have always supported the idea of default guidance.

[Baroness Buscombe]

On that basis, I hope that I have—at least to some degree—reassured noble Lords that we have found the right balance, having worked very closely with all noble Lords and the Select Committee in another place to ensure that we hit the right mark in developing default guidance.

Motion on Amendment 1 agreed.

Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendment 2.

2: Clause 3, page 3, line 12, leave out subsection (7) and insert—
“(7) The consumer protection function is—
(a) to notify the FCA where, in the exercise of its other functions, the single financial guidance body becomes aware of practices carried out by FCA- regulated persons (within the meaning of section 139A of the Financial Services and Markets Act 2000) which it considers to be detrimental to consumers, and
(b) to consider the effect of unsolicited direct marketing on consumers of financial products and services, and, in particular—
(i) from time to time publish an assessment of whether unsolicited direct marketing is, or may be, having a detrimental effect on consumers, and
(ii) advise the Secretary of State whether to make regulations under section (Unsolicited direct marketing: other consumer financial products etc) (unsolicited direct marketing: other consumer financial products etc).”

[Baroness Buscombe]

My Lords, let me now turn to the Government’s action to further protect consumers from harmful cold calls. This Bill has been agenda-setting in relation to cold calling, as well as in respect of our close co-operation across the House on this important issue. I have been delighted to engage closely with the noble Lords, Lord McKenzie and Lord Sharkey, on these important issues.

The measures introduced in the other place enable us to restrict pensions and claims management cold calls—two of the most pressing areas of need for consumers—and to bring forward measures that enable the Government to keep the issue under review and act further in relation to consumer financial products when it would be appropriate. Indeed, I was delighted to hear that in the other place, the honourable Member for Birmingham Erdington described our commitment to ban pensions cold calling as a “wholly welcome step”, and the honourable Member for Eastbourne noted that the Liberal Democrats “welcome the amendments” that the Government have made on these issues.

Let me turn to our specific amendments. Amendments 10 and 11 allow us to protect consumers from harmful cold calls by enabling us to lay regulations to ban pension cold calling, and to introduce bans for other forms of cold calling if we consider it appropriate. Amendment 10 builds on the proposed approach of the Commons Work and Pensions Select Committee to banning pensions cold calling. The new clause enables us to ban pensions cold calling both quickly and effectively. Our proposed ban has a wide scope, meaning that we can ban all pension-related calls. Crucially, unlike the existing Clause 4, we do not need to wait for advice from the new body before laying a ban. Let me be absolutely clear that we are going to make regulations to ban pensions cold calling as soon as possible. This is a commitment we have made repeatedly. We know the detriment that pensions cold calling can cause and we are going to protect consumers. Indeed, I hope noble Lords are further reassured on this point by the fact that the Economic Secretary to the Treasury will have to lay a Statement before both Houses if we have not made regulations by the end of June 2018.

Turning to Amendment 11, it is clear to the Government that too often significant consumer detriment arises because of cold calling. If the Government, supported by the new body, find that there is evidence that people are experiencing detriment as a result of cold calling on consumer financial products, we will not hesitate to use this power to take action to protect consumers.

I am now pleased to be able to confirm the final part of our approach to protect consumers from cold calling when speaking to Amendment 2. The amendment expands and improves the consumer protection function, and gives the new body powers to publish assessments of consumer detriment resulting from cold calling on a regular basis, and advise the Secretary of State on where further bans should be implemented. The body’s core purpose is to provide high-quality support on all money matters, so we believe that specifying that the body must complete a two-yearly review would not be the correct use of its resources. Instead, the Government expect the body to be flexible and responsive to emerging issues, and we expect it to report promptly as and when such evidence of detriment is available. I, alongside Ministers in the other place, will work closely with the body to ensure that consumers are firmly protected from nuisance calls.

Alongside these changes, we also introduce Amendment 5, which strengthens the information-sharing provision in the Bill with respect to the consumer protection function.

Having replicated much of the existing Clause 4, but in a more effective way that helps to better protect consumers, we are committed to removing the existing Clause 4 through Amendment 3. I beg to move.

Motion on Amendment 2A (as an amendment to Amendment 2)

Moved by

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I start by acknowledging the role played by the noble Lord, Lord Sharkey, in our deliberations—particularly on cold calling, which he has been focused on. I am not sure that we are meant to, under the rules, but I also welcome the Minister from the other place, who is with us and hoping not to get the Bill back for another round of ping-pong. We will see.

The consumer protection function of the single financial guidance body is part of the armoury to build a case for banning cold calling and unsolicited direct marketing for consumer financial products. It adds to the abolition of cold calling for pensions and CMCs that is now in the Bill. As sent back from the Commons, the Bill requires the SFGB to consider the impact of unsolicited direct marketing on consumers, publish from time to time an assessment of whether such activity has a detrimental effect on consumers and advise the Secretary of State whether to make regulations under the cold calling provisions of the Bill.

The amendment in the name of the noble Lord, Lord Sharkey, seeks to add a requirement for the SFGB to additionally publish an assessment,

“not less than once every two years”.

Given where we are in the process, I frankly doubt that this requirement would add value. Surely the key is to have flexible arrangements so that the body can respond to emerging issues and report expeditiously as and when evidence of detriment is available. If the noble Lord’s concern is that the SFGB will somehow let this function lie fallow, I am sure that the Minister can put something on the record in her response.

Amendment 10A—also in the name of the noble Lord, Lord Sharkey—seeks to ban,

“the use by any person of data obtained in contravention of the prohibition”,

of cold calling for pensions and,

“determine the penalties for any such contravention”.

A further amendment seeks a parallel prohibition on data from cold calling for claims management services. It is understood that through measures in this Bill—which will be complemented by existing and forthcoming data protection legislation—where personal data is obtained through an unlawful cold call, further use of that data would be contrary to the Data Protection Act 1998. I understand that fines for such abuse are about to be raised significantly. Through the general data protection regulation and the Data Protection Bill going through Parliament, these matters will be addressed and prohibited. The issue is important and it is certainly important that we hear from the Minister on the second amendment of the noble Lord, Lord Sharkey.

[Baroness Buscombe]

My Lords, I thank all noble Lords who have taken part in this brief debate. I thank the noble Lord, Lord Sharkey, for his amendments, which give us an opportunity to reiterate some of the assurances that I hope I have already made, both through the passage of the Bill and about where we go now. It is a pleasure to echo the words of the noble Lord, Lord McKenzie: although we appreciate the sentiments of the noble Lord, Lord Sharkey, and understand where he is coming from, the Government expect—I stress this—the body to be flexible and responsive to emerging issues. We expect it to report promptly as and when evidence of consumer detriment in relation to cold calling is available. Our concern is that as soon as one says, “It’s every year” or “It’s every two years”, the situation in departments and bodies such as the new one can so easily become a box-ticking exercise. We do not want it to be that. We want to be sure that the body will be able to respond as issues emerge, particularly real evidence of consumer detriment. Having been through the process of the Bill and talked to all those currently working in the three existing bodies that will be transferred shortly into the one single financial guidance body, I have great trust that the level of expertise and experience we will be able to transfer to the new body is such that they will have a strong eye on this. I assure noble Lords that there is strong feeling in support of what we seek to do both in your Lordships’ House and way beyond. We have listened to noble Lords on these issues and we will act firmly to protect consumers where appropriate.

--- Later in debate ---

Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendments 3 to 5.

3: Clause 4, page 3, line 35, leave out Clause 4

--- Later in debate ---

Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendment 6.

6: Page 14, line 26, leave out “Data Protection Act 1998” and insert “data protection legislation”

[Baroness Buscombe]

My Lords, this group contains a number of technical and consequential amendments necessary to enable the other government amendments to operate as intended.

I will start with Amendments 6, 37 and 38, which relate to changing references to the Data Protection Act 1998 to a reference to “data protection legislation”. These amendments prepare the Bill for the forthcoming data protection legislation currently before Parliament.

Amendments 9, 22, 25, 31, 32, 39, 40 and 41 make minor drafting changes to both clauses and consequential amendments. Amendment 12 inserts a reference to the “consumer protection function” introduced in Amendment 2. It also references the change in definition to the new data protection legislation that I mentioned earlier. Amendment 13 aligns our definition of direct marketing with the existing data protection legislation that I mentioned.

Amendments 14 and 15 are small and consequential amendments, extending the FCA’s financial promotions regime to claims management activity. They also bring claims management activity into line with the amendments already made in the Bill to Section 21 of the Financial Services and Markets Act 2000, which covers restrictions on financial promotions.

Amendment 23 inserts a new subsection (3A) into Clause 29, “Extent”, so that amendments to the Pension Schemes Act 1993 proposed by Amendment 8 extend only to England, Wales and Scotland. It also provides that the corresponding power in Amendment 8 for the Department for Communities to make regulations will extend to Northern Ireland.

Amendments 24, 26, 27, 28, 29, 30, 33 and 34 make consequential changes to both the extent and commencement clauses. They amend Clause 30 to ensure that the pensions cold calling ban comes into force on Royal Assent so there is no unnecessary delay to making regulations.

Amendments 42 and 43 make changes to the Long Title of the Bill to ensure that it correctly reflects the changes in respect of unsolicited direct marketing. Finally, Amendment 34 removes the privilege amendment inserted previously by your Lordships’ House. I beg to move.

Motion on Amendment 6 agreed.

Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendments 7 to 9.

7: After Clause 18, insert the following new Clause—
“Personal pension schemes: requirements to refer members to guidance etc
(1) Section 137FB of the Financial Services and Markets Act 2000 (FCA general rules: disclosure of information about the availability of pensions guidance) is amended as follows.
(2) After subsection (1), insert—
“(1A) The FCA must also make general rules requiring the trustees or managers of a relevant pension scheme to take the steps mentioned in subsections (1B) and (1C) in relation to an application from a member or survivor—
(a) to transfer any rights accrued under the scheme, or
(b) to start receiving benefits provided by the scheme.
(1B) As part of the application process, the trustees or managers must ensure that—
(a) the member or survivor is referred to appropriate pensions guidance, and
(b) the member or survivor is provided with an explanation of the nature and purpose of such guidance.
(1C) Before proceeding with the application, the trustees or managers must ensure that the member or survivor has either received appropriate pensions guidance or has opted out of receiving such guidance.
(1D) The rules may—
(a) specify what constitutes appropriate pensions guidance;
(b) make further provision about how the trustees or managers must comply with the duties in subsections (1B) and (1C) (such as provision about methods of communication and time limits);
(c) make further provision about how, and to whom, a member or survivor may indicate that they have received or opted out of receiving appropriate pensions guidance for the purposes of subsection (1C);
(d) specify what the duties of the trustees or managers are in the situation where a member or survivor does not respond to a communication that is made for the purposes of complying with the duty in subsection (1C);
(e) provide for exceptions to the duties in subsections (1B) and
(1C) in specified cases.”
(3) In subsection (2), for “this section” substitute “subsection (1)”. (4) After subsection (2) insert—
“(2A) Before the FCA publishes a draft of any rules to be made by virtue of subsection (1A), it must consult—
(a) the Secretary of State, and
(b) the single financial guidance body.”
(5) In subsection (3), for “the rules” substitute “rules to be made by virtue of subsection (1)”.
(6) After subsection (3) insert—
“(3A) In determining what provision to include in rules to be made by virtue of subsection (1A), the FCA must have regard to any regulations that are for the time being in force under section 113B of the Pension Schemes Act 1993 (occupational pension schemes: requirements to refer members to guidance etc).”
(7) In subsection (4), for the definition of “pensions guidance” substitute— ““pensions guidance” means information or guidance provided by any person in pursuance of the requirements mentioned in section
5 of the Financial Guidance and Claims Act 2018 (information etc about flexible benefits under pension schemes);”.”

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Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendment 10.

10: After Clause 22, insert the following new Clause—
“Unsolicited direct marketing: pensions
(1) The Secretary of State may make regulations prohibiting unsolicited direct marketing relating to pensions.
(2) The regulations may—
(a) make provision about when a communication is to be, or is not to be, treated as unsolicited;
(b) make provision for exceptions to the prohibition;
(c) confer functions on the Information Commissioner and on OFCOM (including conferring a discretion);
(d) apply (with or without modifications) provisions of the data protection legislation or the Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) (including, in particular, provisions relating to enforcement).
(3) The regulations may—
(a) make different provision for different purposes; (b) make different provision for different areas;
(c) make incidental, supplementary, consequential, transitional or saving provision.
(4) Regulations under this section are to be made by statutory instrument.
(5) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.
(6) If before the end of June in any year the Secretary of State has not made regulations under this section (whether or not in that year), the Secretary of State must—
(a) publish a statement, by the end of July in that year, explaining why regulations have not been made and setting a timetable for making the regulations, and
(b) lay the statement before each House of Parliament.
(7) In this section, “OFCOM” means the Office of Communications established by section 1 of the Office of Communications Act 2002.”

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Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendments 11 to 15.

11: Insert the following new Clause—
“Unsolicited direct marketing: other consumer financial products etc
(1) The Secretary of State must keep under review whether a prohibition on unsolicited direct marketing in relation to consumer financial products and services other than pensions would be appropriate.
(2) If the Secretary of State considers that such a prohibition would be appropriate, the Secretary of State may make regulations applying regulations made under section (Unsolicited direct marketing: pensions) to other consumer financial products and services (with or without modifications).
(3) In considering whether to make such regulations, the Secretary of State must take into account any advice received from the single financial guidance body under section 3(7)(b)(ii) (consumer protection function: advice on effect on consumers of unsolicited direct marketing).
(4) The regulations may—
(a) make different provision for different purposes; (b) make different provision for different areas;
(c) make incidental, supplementary, consequential, transitional or saving provision.
(5) Regulations under this section are to be made by statutory instrument.
(6) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by a resolution of, each House of Parliament.”

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Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendments 16 to 20.

16: Clause 26, page 21, line 17, leave out “and 28” and insert “to (PPI claims: interim restriction on charges imposed by legal practitioners after transfer of regulation to FCA)”

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[Baroness Buscombe]

My Lords, Amendment 19 places a duty on the Law Society of England and Wales to cap fees in relation to financial services claims management activity, as well as giving a power to the Law Society of Scotland to restrict fees charged for this activity. It also gives a power for some legal services regulators in England and Wales to restrict fees charged for broader claims management services. Alongside this, Amendment 20 gives the Treasury a power to extend the Law Society of Scotland’s fee capping power to broader activity in future.

Amendments 16, 17 and 18 ensure that the interim fee cap provisions, introduced as a concessionary amendment in your Lordships’ House, work together with the fee capping powers for legal regulators. Taken alongside the fee restriction powers for the FCA that we have already agreed should form part of the Bill, these provisions will ensure that consumers are protected, no matter which type of claims management service provider they use, and whether it is regulated by the legal service regulators or by the FCA.

They will also ensure that the relevant regulators are able to adapt to any future changes in the market and that there is continuity of coverage for the interim fee cap throughout the transfer of regulation. Indeed, the honourable Member in another place Jack Dromey MP put it well when he said:

“The clauses are sensible because they go beyond claims management companies. … Of course it is about not only CMCs, but legal service providers”.—[Official Report, Commons, Financial Guidance and Claims Bill Committee, 6/2/18; col. 95.]


I hope that noble Lords will agree with this sentiment and will accept Amendments 16 to 20, as made in the other place. I beg to move.

[Lord McKenzie of Luton]

My Lords, if my honourable friend Jack Dromey is happy with these, I have to be as well.

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Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendment 21.

21: Insert the following new Clause—
“Cold calling about claims management services
(1) The Privacy and Electronic Communications (EC Directive) Regulations 2003 (S.I. 2003/2426) are amended as follows.
(2) In regulation 21 (calls for direct marketing purposes), after paragraph (5) insert—
“(6) Paragraph (1) does not apply to a case falling within regulation 21A.”
(3) After regulation 21 insert—
“21A Calls for direct marketing of claims management services
(1) A person must not use, or instigate the use of, a public electronic communications service to make unsolicited calls for the purposes of direct marketing in relation to claims management services except in the circumstances referred to in paragraph (2).
(2) Those circumstances are where the called line is that of a subscriber who has previously notified the caller that for the time being the subscriber consents to such calls being made by, or at the instigation of, the caller on that line.
(3) A subscriber must not permit the subscriber’s line to be used in contravention of paragraph (1).
(4) In this regulation, “claims management services” means the following services in relation to the making of a claim—
(a) advice;
(b) financial services or assistance;
(c) acting on behalf of, or representing, a person;
(d) the referral or introduction of one person to another; (e) the making of inquiries.
(5) In paragraph (4), “claim” means a claim for compensation, restitution, repayment or any other remedy or relief in respect of loss or damage or in respect of an obligation, whether the claim is made or could be made—
(a) by way of legal proceedings,
(b) in accordance with a scheme of regulation (whether voluntary or compulsory), or
(c) in pursuance of a voluntary undertaking.”
(4) In regulation 24 (information to be provided for the purposes of regulations 19 to 21)—
(a) in the heading, for “, 20 and 21” substitute “to 21A”; (b) in paragraph (1)(b), after “21” insert “or 21A”.”

[Baroness Buscombe]

My Lords, Amendment 21 implements the commitment I made to your Lordships’ House that the Government would table an amendment restricting cold calls made in relation to claims management services. We are all aware that calls about claims management services are not just a source of irritation; for the most vulnerable in our society, being bombarded by these nuisance calls can be highly distressing.

The Government have already taken forward a number of measures to tackle this issue, but debates in your Lordships’ House clearly demonstrated that more action was needed. That is why the Government tabled Amendment 21, which will insert a provision into the Privacy and Electronic Communications (EC Directive) Regulations—the regulations which govern unsolicited direct marketing calls—to ban such calls in relation to claims management services, unless prior consent has been given. This amendment takes the onus away from the individual to opt out of such calls being made to them and puts the responsibility back on the organisation to do its due diligence before making such calls. As I have mentioned previously, there are complexities in legislating in this area, including issues relating to EU frameworks. But I am confident that the amendment will have the effect of making unwanted calls about claims management services unlawful.

Concerns were also raised in your Lordships’ House about the commercial use of illegally obtained data, and I have been having further discussions with the noble Lord, Lord McKenzie, on this issue. The measures in the Bill will be complemented by existing and forthcoming data protection legislation. Where personal data is obtained through an unlawful cold call, the further use of that data—for example, to make further calls in the future—would be contrary to the Data Protection Act. The ICO can issue fines of up to £500,000 for breaches of the Data Protection Act, although this will be raised significantly—to approximately £17 million or 4% of a company’s turnover—through the forthcoming general data protection regulation and the Data Protection Bill that is currently going through Parliament.

Overall, we believe that Amendment 21 is another robust proposal to add to our package of measures to tackle unsolicited marketing calls, and one that will be gratefully received by consumers across the UK.

As we have heard, Amendment 21A, tabled by the noble Lord, Lord Sharkey, seeks to prevent the use of data obtained by illegal calls. I completely agree with the sentiment behind this amendment and, as I said, government Amendment 21 on cold calling will be complemented by data protection legislation, which includes requirements for data to be processed fairly and in accordance with the law. I repeat the assurances I gave earlier, that where personal data is obtained through an unlawful cold call, the further use of that data—for example, to make further calls in the future—would be contrary to the Data Protection Act 1998. I therefore encourage the noble Lord, Lord Sharkey, not to move his amendment, and I beg to move the Motion on Amendment 21.

[Baroness Altmann]

My Lords, before the Bill passes into law, I would just like to welcome the Bill, as well as the debt respite scheme and the help for those with unsecured debt. It includes some very important measures. I thank my noble friend the Minister and the Bill team for all the hard work they have done on these measures. I thank the noble Lords, Lord Stevenson, Lord McKenzie and Lord Sharkey, the noble Baronesses, Lady Drake and Lady Kramer, and the noble Earl, Lord Kinnoull, who have all been so instrumental in getting this through. On this particular amendment, I am most grateful to my noble friend the Minister for listening to the concerns expressed in this House.

[The Earl of Kinnoull]

My Lords, I can be even briefer, but I want to thank particularly the Minister for living up to her commitment because, having read through the comprehensive Amendment 21, it does precisely that and I thank her.

[Baroness Buscombe]

I once again thank very much all noble Lords who have taken part in the many debates in your Lordships’ House on the Bill. We have come a long way and there has been huge consensus. We have improved the Bill, along with our honourable friends in another place, and I hope that all noble Lords can wish it well. In particular, on the future of the new body, I hope that we will know its name soon so that we can start calling it something in our future debates on this subject.

[Lord McKenzie of Luton]

My Lords, if it is time to say our thank yous, I will add mine to those of all noble Lords who have participated in these debates. There have been robust exchanges on what was initially quite a narrow Bill, but its coverage has been expanded, quite appropriately. I certainly thank the Bill team. I know that, on our side, we have probably put them through some misery with our questions from time to time, but when we have had the opportunity to touch base in that way, it has been really helpful to the passage of the Bill in this place. I wish the Bill well on its passage into legislation.

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Moved by

[Baroness Buscombe]

That this House do agree with the Commons in their Amendments 22 to 43.

22: Clause 29, page 25, line 32, leave out from beginning to “extends” and insert “Part 1, other than the provisions mentioned in subsections (2) to (3B),”

Benefit Cap: Child and Family Well-being

Baroness Buscombe Excerpts

Monday 30th April 2018 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government what assessment they have made of the impact of the benefit cap on child and family wellbeing since that cap was lowered in 2016-17.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, since 2013, the benefit cap has provided a strong financial incentive for those who can work to come off welfare and so improve their child and family well-being. While 134,000 households had their benefits capped, figures for February 2018 show that around half are no longer capped because they are working at least part time, and so qualify for their full benefit entitlement and therefore a considerable boost in income and well-being.

[Baroness Lister of Burtersett (Lab)]

My Lords, a new study by Policy and Practice, which was founded by one of universal credit’s architects, highlighted the human costs of the cap, arguing that it should be applied only to those who are actively required to seek work. Can the Minister explain what purpose is achieved by imposing this measure, which is designed to get people into paid work, on lone parents of infants, who are not required to seek paid work because of their caring responsibilities, thereby causing, in the words of a High Court judge,

“real misery … to no good purpose”?

[Baroness Buscombe]

My Lords, I beg to differ from the noble Baroness. I would call it not “imposing” but “empowering”. Our research shows that the best way to lift children out of poverty is by supporting parents into work. Record numbers of lone parents are now working: 1.2 million, with 1 million fewer people living in absolute poverty compared to 2010, including 300,000 children. We know that 75% of children in poverty leave poverty altogether when their parents move into full employment. We have doubled free childcare to 30 hours a week for nearly 400,000 working parents of three and four year-olds, and a parent need work only one hour a month to be eligible for childcare costs.

[The Countess of Mar (CB)]

My Lords, the noble Baroness has not responded to the question from the noble Baroness, Lady Lister, who was referring particularly to mothers of infants. There is no special nursery care for those, and mothers should be with their infants in the early stages.

[Baroness Buscombe]

I respond to the noble Countess by saying that many women, however young their children are, want to work. We are encouraging jobcentre staff to help people to find work that fits around their caring responsibilities. We are also giving those people extra discretionary housing payments. I add that those who are not working at all are still in receipt of what amounts to a gross salary outside London of £23,000 a year and in London £29,000 a year.

[Baroness Thomas of Winchester (LD)]

My Lords, does the Minister accept that many local authorities are now having to pick up the pieces of this policy, particularly in high rent areas, where two and three-child families are now being hit? Discretionary housing payments are supposed to be only a temporary sticking plaster, not the complete answer.

[Baroness Buscombe]

My Lords, we welcomed recent external research on the benefit cap, working with local authorities. We are finding that there is a positive employment impact from the lower benefit cap, even at such an early stage in a child’s life. This supports our evidence that the cap is increasing work incentives for previously workless households.

[The Lord Bishop of Portsmouth]

My Lords, welfare reform was predicated on the principal that work should pay, but that principal is being undermined, not least by the two-child limit. In future, a family with three or more children seeking to avoid the cap by moving into work will find themselves subject to the two-child limit instead. They could end up losing out by going to work. What assessment have the Government made of the impact of this perverse incentive?

--- Later in debate ---

[Baroness Buscombe]

My Lords, I would not call it a perverse incentive. Our reforms of support for children make sure that people on benefits and those supporting themselves solely through work have the same choices, including whether or not they can afford to have another child. Our policy is about fairness and incentivising work. Of course, child tax credits were not available before 2003, and, no matter how many children someone might have, they continue to be paid child benefit for each and every child.

We welcome last week’s decision by the High Court in relation to kinship carers. We have considered that part of the judgment, which I referred to during a Question last week, pertaining to non-parental carers, alongside internal reviews that the Department for Work and Pensions carried out in parallel to the legal case. We are pleased to announce that it is right that this change should be extended, not just to those in non-parental caring arrangements but also to include children who are adopted who would otherwise be in local authority care. We can respond positively to all noble Lords who have been pressing us on this point.

[Baroness Sherlock (Lab)]

My Lords, I am grateful to the Minister for that and I commend the Government for having made the right decision, but will she think about what the next stage is? My honourable friend Anna Turley has raised the case of a constituent who had two dependent children in her care and was then asked by social services to take in two of her grandchildren. As a result, the household was hit by the benefit cap. Will the Minister think about that for a moment? There is not much point in exempting kinship carers from the two-child policy if, in practice, they cannot claim those benefits because the benefit cap then kicks in. Might the Government either review who is affected by the benefit cap or, at the very least, consider exempting the benefits given on behalf of the children that a kinship carer has taken in when the benefit cap is considered?

[Baroness Buscombe]

My Lords, I cannot assure the noble Baroness that we will consider this any further. It is right that I articulate the fact that we are already spending £95 billion a year on benefits for people of working age. We have a budget in our department of £200 billion, which is 25% of the whole of the budget for government. We have to think about affordability before we can continue to extend our policies, notwithstanding that each and every individual case is of great importance to us. Our concern is to ensure that we help those who are genuinely in need.

[Lord Watts (Lab)]

My Lords, is it not the case that children come out of poverty only if the two parents get excellent, well-paid jobs, and the vast majority in this category do not do that?

[Baroness Buscombe]

My Lords, perhaps I can also explain that, not only is universal credit giving so much further support and really making work transform lives that, in a family with three children, for example, the couple need only work up to 24 hours in total a week to be exempt from the cap. So the cap comes off and they receive benefits to the equivalent of a salary of £35,000 gross a year, and that does not include housing benefit. Noble Lords should accept that such a salary compares extremely favourably with the income of the many thousands of families who do not call upon the welfare system.

Universal Credit

Baroness Buscombe Excerpts

Monday 23rd April 2018 Lords Chamber

[Baroness Sherlock]

To ask Her Majesty’s Government what progress they have made in rolling out Universal Credit.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)]

My Lords, we continue to roll out universal credit in a safe and controlled way, with an expected completion date of December 2018. Any changes to the rollout schedule are carefully considered, and we work together with local authorities and stakeholders to deliver universal credit. Universal credit is working and transforming lives across the country; it continues to deliver real improvements to people’s lives and strengthens the UK economy.

[Baroness Sherlock (Lab)]

My Lords, I thank the Minister for her Answer. The Welfare Reform and Work Act introduced the two-child limit to universal credit and most other benefits and credits. Noble Lords may recall the case I raised in December of Alyssa Vessey. She was 18 when her mother died suddenly and gave up college to raise her three younger siblings. When she later had a baby of her own, she applied for support and was turned down under the two-child policy. This House had secured an exemption for kinship carers, but Ministers applied it in such a way that, if Alyssa had had her own baby and then taken on her siblings she would have got help, but doing it the other way round she did not. Last Thursday, in a case taken by the Child Poverty Action Group, the High Court ruled that to be perverse and struck it down. Will the Minister confirm to the House today that the Government will act immediately to extend the exemption from the two-child policy to all kinship carers?

[Baroness Buscombe]

My Lords, the Government acknowledge the immense value of care provided by kinship carers. We are working to ensure that they are supported by enabling them to access benefit entitlement in the same way as parents. We have introduced a number of exceptions to the two-child policy—providing support for a maximum of two children—to protect claimants who are unable to make the same choices about the number of children in their family. These already protect certain groups, including kinship carers. Regarding the court case to which the noble Baroness referred, the department is now closely looking into the impact of this policy on kinship carers.

[Baroness Meacher (CB)]

My Lords, under universal credit, claimants with mental health problems who are waiting for their work capability assessment and who may, therefore, be proved unfit for work, are nevertheless being required to look for work during that waiting period, and will be sanctioned if they fail to do so. Does the Minister accept that this is an entirely unacceptable and grossly unfair system? Will she assure the House today that the Government plan to take action to bring this system to an end? If she cannot do that today, will she write to me to explain what action the Government will take to give fair treatment to mentally ill people waiting for their work capability assessment?

[Baroness Buscombe]

I thank the noble Baroness for her question; I know that she has great interest in this area. As I have said before, we are continually working to improve the work capability assessment. As a result of our Budget announcements last autumn, it is now possible for people to have a 100% advance on their universal credit while they are waiting for that assessment. I emphasise that those with severe disability do not now have to go through further work capability assessments. I assure the noble Baroness that we are constantly looking at this, working to improve the training of our work coaches and all the professionals involved in work capability assessments, to make sure that we minimise the number of people for whom we fall short in terms of support and protection.

[Lord Kirkwood of Kirkhope (LD)]

My Lords, coming back to the rollout of universal credit, surely the Minister’s department’s priority in the short term should be to improve the quality of services available to vulnerable applicants for universal credit at a local level. Will she commit to working with her local authority colleagues to establish a more widespread network of multi-agency hubs, which have proved so effective in getting people from disadvantaged families through the transition process? Does she agree that multi-agency hubs are a much better form of support than food banks?

[Baroness Buscombe]

My Lords, it is right to say that our focus is not necessarily on multi-agency hubs but on proper signposting by our work coaches to make sure that, working with local authorities, we protect those vulnerable groups. A particular example is prison leavers. We have made sure that they can now have up to 100% advances on their universal credit the moment they leave prison. Vulnerable groups are at the forefront of our minds.

[Baroness Couttie (Con)]

My Lords, many of those on universal credit also struggle with debt, sometimes involving expensive payday lenders, because of their credit standing. Are the Government doing anything through universal credit to support people who find themselves in such difficulties?

[Baroness Buscombe]

Yes, they are, I am pleased to say. The Government have taken a number of steps to reduce the risk of problem debt, including capping payday lending costs and promoting savings. In addition, we have outlined a firm timetable for taking forward the breathing space scheme, and we are progressing with policy proposals for this and a statutory payment plan, all through the single financial guidance Bill, under which overindebted individuals will continue to be protected from creditor action.

[Baroness Primarolo (Lab)]

My Lords, will the Minister explain why the universal credit sanctions regime imposes multiple sanctions on claimants with mental health problems, damages individuals’ health, causes unnecessary suffering and hardship, and does absolutely nothing to improve their ability to find paid work?

[Baroness Buscombe]

My Lords, I have to disagree with the noble Baroness. Putting aside the raft of additional support and improvements that come with universal credit, we can demonstrate that universal credit is a far better route than the old legacy system to giving much better support to the people to whom she referred. Sanctions are used only in a minority of cases where claimants fail to meet their conditionality requirements without good reason.

[Baroness Hayman (CB)]

My Lords, I want to take the Minister back to the Question raised by the noble Baroness, Lady Sherlock. The Minister said that the department is “closely looking into” this grossly unfair and unjust case. Those are almost exactly the same words she used when this issue was raised some months ago. Since then, I raised it with the Minister, her noble friend Lord Bates, who promised that the Treasury would look at it. Given that we have now had a court ruling, and given the great interest in this issue on the part of Members on all sides of this House, who have written to the Secretary of State about it, can the Minister undertake to let us know within the next week what the department will do?

[Baroness Buscombe]

I well remember the noble Baroness asking me this very question probably about two months ago. I reassure all noble Lords that I continue to press on this point. However, as the result of last Friday’s judgment, I am now able to say that we are again looking at this point. I cannot confirm within the week, but I can confirm whether we will be able to go forward and support these people, who rightly deserve our particular attention, within the month.