Employment Levels of Older People
Baroness Greengross Excerpts(9 years, 7 months ago)
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Baroness Greengross
To ask Her Majesty’s Government what is their assessment of the effect on the youth unemployed of a potential increase in the employment levels of older people.
Baroness Greengross (CB)
My Lords, I have tabled this debate largely to illuminate the employment challenges faced by the over-50s in our society. I am privileged to head up a think tank, the ILC-UK, or International Longevity Centre, one of 17 around the world. Through it, we try to help people plan for the future in the light of demographic change and look at the challenges, as well as some of the advantages, of our increased longevity.
Recently, the ILC published two new reports called The Missing Million. These illuminate the employment challenges of people who are over 50, demonstrating that, of the 3.3 million economically inactive people aged 50 to 64, approximately 1 million have been made “involuntarily workless”. We know that the plight of people aged 50-plus is worse than that of those aged 60-plus in a country where there has been very important legislation to ban age discrimination for some years. This really is bad and economically stupid.
The ILC research also shows that if people aged 50 and above are helped back into employment, it does not mean that younger people are crowded out of the labour market. Helping older people into the labour market, or back into it, could also lead to a potential £88 billion boost to UK GDP. As we know, these people create jobs in the consumer sector if they are working because they create the need for more things for other people to buy as those people have more money to spend. If they work and are caring for older relatives, grandchildren or even their own children, then other people are employed in caring. They are a boost to the economy, not a drain on it. This is creating more wealth.
We also know that people who are denied access into the labour market through discrimination, or for whatever reason, will tend to disappear into the black market and the black economy. They will do that because very often they need the money and they have some skills. That is the rather sad result of inadequate policies and safeguards to ensure that they can get work.
The Government created a business champion for older workers, Dr Ros Altmann, who argued recently that if everybody retired one year later, it would add 1% to this nation’s GDP. We know that chronological age has now become rather irrelevant; what we are talking about is capacity and the will to work and to contribute to society and in most cases—because we do not force people into scaffolding or something at the age of 50-plus—people who are in work have a better health record, a better social life with mates or friends and feel that they have more self-worth because they are contributing to the nation’s economy and to society at large. I share Ros Altmann’s belief that retirement should be a journey rather than a one-off event. No employer should make an assumption that employees should be on the work scrapheap because they have reached an arbitrary milestone in their lives.
One common argument against greater labour market participation in older age is that it will prevent younger people entering or staying in paid employment because it takes the jobs away from them. We know, however, that that argument is built on the false assumption that there is a fixed number of jobs in an economy—the lump of labour argument. It has been demonstrated over and over again that that is a fallacy: there is no lump of labour. Creating jobs for people creates a market for more jobs. It is nonsense to assume the opposite, but that assumption goes on.
An increasing number of older people in employment can also support employment across all ages. Older and younger people in a job in a firm can work together. You have the experience of someone who knows the history of the company and young people who may have more vibrant or new ideas to introduce. Together, they are stronger than if there is just one age group. That is a good sign in an economy, and it needs to be encouraged.
Saga carried out some research on that, which showed that the extension of people’s working lives has enhanced employment opportunities for people of all age groups, in particular for younger people. Using data spanning about 50 years from 22 countries, some very good OECD research in 2010 found that old and young workers complement each other rather than substitute for one another, so encouraging later retirement will not have an adverse effect on youth employment. At an individual level, there are also potential benefits—earnings gains, pensions saved and improved financial well-being—but there are also benefits to individuals’ health and well-being. There is a reason to get up in the morning. There is a reason to meet your friends, social interaction, having a part in society and feeling that you have self-worth. Those are all excellent things.
It is encouraging that as part of the DWP’s Age Positive initiative, the Government announced in December an older workers’ champion scheme to combat age discrimination offering targeted support for older jobseekers. I welcome that and hope that the Minister will tell us how well it is doing and how we can all encourage it to do more.
Looking at other good examples, everybody in this field has heard of B&Q, because it led the way in employing older people. Barclays recently launched a new apprenticeship scheme for the over-50s who want a career in the City. We know of the success of Teach First. I have been promoting the idea of “mentor later”. We are looking at how we can do something on those lines with older people.
There are many things that one can do. Paid employment is one thing, but there are other opportunities for older people to play a full role in society. As for stimulating youth employment, the best way to achieve that is through targeted measures that will make young people better prospects for employers, such as improved training and supporting the growth agenda. Young people often benefit from mentoring at work from their older colleagues.
The employment of older people does not keep younger people out of the job market. Rather, by the means outlined above, all our adult citizens, irrespective of their age, who want to work should and could be helped not only to fulfil their aspirations but to contribute to the economy at large, our economy, our society and the benefit of us all.
Underoccupancy Charge: Carers
Baroness Greengross Excerpts(9 years, 11 months ago)
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Lord Freud
About 40,000 couples in which one is looking after the other were covered by the spare room policy when it was introduced. That is about 6% of the total. The discretionary housing payment system was set up precisely to look at circumstances in which the couple could not share a room—because, of course, many of them could, even though there was a disability.
Baroness Greengross (CB)
My Lords, a lot of people are looking after severely disabled children, or older adults with long-term conditions—particularly dementia. In order to get some sleep, they have to chop and change, and need additional carers such as other members of the family coming in. They desperately need the extra room. Can those sort of carers usually get an exception to the rule and be allowed to have an additional bedroom?
Lord Freud
This is precisely the kind of circumstance for which the discretionary housing payment is designed. It has not been found possible to have a general rule, and that is why this system, which has gone through the courts in quite some detail, has been found to supply support where necessary.
Pensions Bill
Baroness Greengross Excerpts(10 years, 9 months ago)
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Baroness Greengross (CB)
My Lords, under my Amendment 2, the deletion of Clause 1(2) would extend the single-tier pension to all pensioners from 2016. My proposed new subsection would require the Government to publish details of measures which would end pensioner poverty. As the noble Baroness said, current pensioners and others due to reach state pension age before 6 April 2016 have been excluded from the single-tier pension. Current pensioners should also benefit from the single tier. A number of options are available to achieve this. For example, the Government could consider extending the single-tier pension to current pensioners. Another approach would see the level of pension credit guarantee increased to the level of the single tier for current pensioners, who will otherwise miss out.
We know that pensioner poverty has fallen over time from 2.9 million in 1998-99 to 1.6 million, of whom nearly 900,000 are in severe poverty, with incomes of less than half median income. Proposed new subsection (2) would make the Government set out a timetable and a strategy for reducing and eventually abolishing pensioner poverty.
Lord Flight (Con)
My Lords, I have encountered more upset in relation to this aspect of the Bill than what I would hope was support for having a state pension above the level of income support. Quite simply, we are talking about individuals who have paid their national insurance, who are too old to benefit from the 2016 changes, whose pensions are less than that, and who feel somewhat aggrieved that many people who have not paid their national insurance will qualify for the increased pension after 2016 when they will not. I appreciate that it is all about money, but I wonder whether a full calculation has been done of the net real costs of putting everyone who is entitled to a pension on to the new arrangement in 2016; I suppose that is unless they have qualifications that exceed that. However, I can only think that there would be a significant net-off in terms of other welfare payments if people’s pensions were slightly larger. This is a fundamentally good piece of legislation on which there is relatively cross-party support. However, I slightly warn the Government that this issue—that those who are too old to benefit from the 2016 reforms will often be worse off than those young enough to benefit—is rather spoiling the welcome to these changes.
Lord German (LD)
My Lords, I shall have to speak very quietly because I have lost my voice, so if anybody fails to hear to me, I will shout a bit louder after a few days. I just wanted to add to the important points made by the noble Lord. I can always remember receiving my state pension statement. It was a bit of a shock, because I always thought that I was so young that I would never receive one, but it did happen.
The most important aspect of this legislation is clarification of the words as they are written out, because this is a very complex set of arrangements and they need to have clarity of language. Those statements which I have seen are quite clear. I do not hold so negative a view as to how people will see the future world of their pensions. Just today, we have heard that we have now reached 2 million people enrolling in auto-enrolment for pensions—that is, 2 million more than there were 12 months or so ago who know about a pension because they have got into it. We have 3,500 employers. I welcome the British Heart Foundation, which has recently enrolled all its staff. So we know that people are becoming more involved and engaged with their pensions.
The second thing relates to something which happened to me last Friday. I was doing Lords outreach with two schools and the pension question came up. I do not know whether it had been planted by a teacher in advance but it came up. It is quite clear that when these matters are scrutinised, young people are beginning to realise that if we do not put those matters right they, too, will be having to pay more. I always save for my grandchildren, who are enthusiastic to hear that they will be paying to sustain me into older life—but, of course, I am not a recipient of the new single-tier pension. However, when we talk about this issue I wonder whether we should also try to include in it education from a younger age, so that when people receive any financial education within their school life, they can understand that pensions are not a matter for tomorrow or for when you are retiring; they are a matter for the day on which you start to pay and earn. This is a probing amendment but it is very important that, along with other measures which are going on, pensions are seen as an issue for all from now on and not one for when you are retired.
Baroness Greengross
My amendment is about a public education programme, which is necessary as so many people are in the same position, as has been outlined in noble Lords’ statements. Amendment 30 seeks to ensure that individuals are made aware of both their responsibilities and expected outcomes here; for example, in terms of state pension contribution years and amounts, and what outcomes they can expect and when. Given longer life expectancy and extended working patterns, it is not unreasonable to increase the number of national insurance contributory years from 30 to 35. People who have contributed for less than 35 years but for at least the minimum qualifying period of seven to 10 years are going to receive a proportion of the pension. However, it is absolutely critical that this change is clearly communicated to all individuals so that they can ensure that any years outside of work—for example, because of ill health or caring responsibilities—are counted as years of contribution and so that they can make appropriate private pension arrangements, should they wish to do so.
Baroness Sherlock
My Lords, these amendments relate to the crucial question of information. The Government have stressed at different stages of the Bill the move to reduce the complexity of the state pension to make sure that people understand their likely entitlement and are therefore incentivised to save enough to complement the support that they can expect from the state. This came up a lot when the Work and Pensions Select Committee looked into the matter. Citizens Advice, in its written evidence to the Select Committee, noted that a considerable complexity would remain in the system, mainly as a result of transitional provision. It accepted that as being unavoidable but said that:
“A commitment to a sustained communications programme could improve outcomes, manage expectations, minimise misinformation, promote action on NI contributions, and support personal saving for retirement”.
I think that was nicely put. The ABI said this to the Select Committee:
“Adequate communication of the change will be essential, or the clarity and simplicity of the new system could be undermined … No-one should feel unclear about the amount they will receive—and therefore need to save personally themselves”—
—a common view between the ABI and Citizens Advice.
The Select Committee noted that various witnesses focused on that issue. Sally West of Age UK said that,
“we are finding a lot of people are understandably confused”.
I think that that is an understatement. The Select Committee reported considerable confusion about the reforms. Many people wrongly believed that the introduction of the STP would mean that everyone would get £144 a week in state pension, because they did not understand the eligibility criteria. Others thought that there would be no means-testing at all; others thought that if they were due more under the current system, they would lose all that and get only what was due under the new system. The implications of having been contracted out or of not knowing whether you were contracted out or in was another area of confusion. It was noted that it was therefore important to,
“ensure that people have full information about their own future entitlement as well as a reasonable understanding of the reforms”.
Queen’s Speech
Baroness Greengross Excerpts(11 years, 4 months ago)
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Baroness Greengross
My Lords, as a member of the scrutiny committee on the Bill, I welcome the inclusion of the Care Bill in the gracious Speech. The fact that the Bill was published so quickly afterwards gives me confidence that at last we will see some long overdue progress made in improving the well-being of some of the most vulnerable among us, particularly disabled and older people.
I also welcome yesterday’s announcement of the first ever system-wide shared commitment in which 12 national health and care leaders have indicated how they will help local areas to integrate services. I hope that will include housing and prevent the most vulnerable among us being passed around health and care systems in the future. I have also heard that the Government plan to launch a review into all aspects of later life care, which is very welcome. However, without being too cynical, we have had lots of reviews over the past 20 years or so and none of them has resolved the key problem that there is not enough money in the system to provide even a basic level of acceptable quality care, as the Association of Directors of Adult Social Services has confirmed.
Regarding the Care Bill, can the noble Earl tell us when the new care funding eligibility criteria framework will be published? In the new framework it is most important that having moderate care needs is recognised as being relevant and appropriate for initiating the provision of preventive services. The care Bill mandates that a local authority has to exercise its functions with a view to ensuring the integration of care and support provision with health provision and health-related provision. Does the noble Earl agree that encouraging local authorities to lengthen their budget cycles to at least four years would encourage the necessary investment in prevention and intervention in year one? That will pay back only later, with delayed and reduced care needs and costs, and perhaps compressed morbidity.
The annual report from the Prime Minister’s “challenge on dementia” is also due soon. Then we will learn how much progress is being made on making the quality of care as important as the quality of treatment. The prevalence of dementia is growing, and there is often a need for its management to be part of public health responsibility. It should include well-being, the design of the built environment and preventive care. If we are to get dementia-friendly communities, all those aspects need to be looked at. Public health inclusion would be welcome.
I support the view of Macmillan Cancer Care that, at the end of life, social care should be free and appropriate. People dread being in an inappropriate care setting, with a loss of dignity and respect as their final days approach. I get so many heartfelt pleas from the family and friends of people in care, both young and old, about the difficulties they have in finding out who is responsible for their care and, above all, how they can make a complaint. I know that the new clinical reference groups are supposed to meet regularly with patient representative groups but it is most important that dementia and end-of-life care are not forgotten.
On the new CCGs, I am concerned that in some localities, with their smaller management teams, they will not have the resources to fulfil their twin responsibilities of transactional management—such as A&E, NHS 111, contract negotiation and so forth—and the transformational relationship management, in areas like long-term improvement in dementia and end-of-life care, that they need to take on board; and that a disconnect may develop in terms of accountability for both these important areas.
We are seeing increasing costly bed-blocking as older people wait for care home places and clog up acute hospitals. I hope this can be dealt with, but Age UK has today reported that many patients have a 30-day wait to leave hospital. This is totally unacceptable. We need to look across the board at many types of initiatives and bring them together to solve some of these problems. Perhaps, in the end, innovation will be the key. Could we not look, for example, in quality and provision of services, at something like the “patient hotel”-type concept which is de rigueur in Scandinavia? I stress that I see this as an extension of NHS-provided services, and not privatisation.
In another initiative, the think tank with which I am involved, the International Longevity Centre, is coming forward in the next few weeks with a proposal for a more affordable savings product which might appeal to people of modest means who would not normally be able to afford an insurance product, and about whom the noble Lord, Lord Hunt, has understandable concerns.
Perhaps we could think more broadly about how we organise our services. For example, perhaps it would make sense if the social care elements of the DWP were merged with the Department of Health—a bit like the old DHSS but with the pension element hived off to employment. We look across the board at all sorts of ideas. Obviously, the DCLG would have to be involved because of local authority care-funding responsibilities. I believe that the current cross-departmental arrangements for the oversight of care funding and provision are one of the main reasons for the lack of joined-up thinking that we see all the time. It seems impossible to bridge these divides, so why not move some of them together and see if that works better? It is only by people with differing skills and sectoral responsibilities coming together that we can benefit from the necessary transformational plans to meet the needs of our ageing population in the years to come.
Enterprise and Regulatory Reform Bill
Baroness Greengross Excerpts(11 years, 8 months ago)
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Baroness Greengross
My Lords, listening to the Minister, I felt rather sad that I was going to stand up and say what I intend to say. It is because these primary authority partnerships are such a good thing and have not been around very long that I want to oppose Clause 60 being part of the Bill.
I spoke briefly about this at Second Reading to say exactly that; that they need to be encouraged and that they should not be overturned, through this Bill, by central government when they intervene in local partnerships by directing councils to follow inspection plans. I declare an interest as a vice-president of the Local Government Association and I speak in that capacity. In these difficult times, we know that councils use a wide range of tools to ensure that businesses receive the tailored support that they need. The primary authority is one of the key tools that councils can use when they want to provide individual businesses with tailored support, and when they want to reduce red tape, promote consistent advice from councils and ensure that the limited enforcement resource is risk-based and focused on priorities. I would like to see the removal of this clause, which would make it compulsory for enforcing authorities to abide by the content of inspection plans, which I know is the opposite of what the Minister was saying.
The LGA—I declare an interest—recognises the important role that inspection plans can have in informing enforcement activity but councils are already required by law to have regard to these plans. There are many examples of inspection plans being used to inform the work of councils with companies that have multiple business outlets. Primary authority has only been running since 2009 and has only very recently gained a critical mass of business involvement. It is therefore far too early to identify more than initial findings about the scheme and certainly too early to make wholesale legislative changes. In fact, the evaluation of primary authority involved discussions with only 24 businesses and there are only 11 inspection plans in place.
Furthermore, the evaluation showed that of those councils that had used inspection plans, fewer than 50% found that they enabled a more targeted inspection. It is therefore simply not necessary for central government to intervene in these local partnerships by directing councillors to follow inspection plans. Central direction will reduce flexibility and innovation at a local level. More than that, it will introduce a layer of bureaucracy for both primary authorities and enforcing authorities that fails to accommodate local circumstances and the judgment of competent enforcement officers.
This step also contradicts the Government’s commitment to reduce red tape for councils. It might mean many more delays, in spite of what the Minister suggested. It is an unnecessary use of legislation. I know that the Local Government Association would be happy to discuss opportunities for increasing awareness of inspection plans and how they can be used to achieve more focused and targeted inspections, which would help to achieve the intended outcome without tying councils in unnecessary red tape.
Lord McKenzie of Luton
My Lords, I look forward to the Minister’s response. I am bound to say to the noble Baroness, with whom I normally agree wholeheartedly, that I remain unconvinced of the case that has been made. There is an easement for local authorities that want to go down a different route to that provided for in the Bill. As the Minister said in response to my previous amendment, local authorities are free to react to emergency situations or local complaints should they arise. The inspection plans apply only to routine and proactive inspections. I wait to hear the Minister’s response, but this is not a proposition with which we can align ourselves.
Baroness Greengross
My Lords, I thank the Minister, who has reassured me to some extent. I am not brave enough to argue with the opinion of an authority such as John Lewis—nobody can. However, there are quite a lot of questions for the Local Government Association to consider carefully. The views that I presented to the House were directly received from that body, and I know that it has some further concerns. I will come back later on this if necessary. I thank the Minister and the Committee.
Enterprise and Regulatory Reform Bill
Baroness Greengross Excerpts(11 years, 9 months ago)
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Baroness Greengross
My Lords, I appreciate the passion and commitment that my noble friend Lady Campbell brought to this amendment and I share her absolute commitment to the aims and objectives of the commission. I have just finished a six-year stint as a commissioner. I was there from the beginning, when the noble Baroness was a co-commissioner with me.
The commission’s aims are beyond dispute and I support them completely, but I share the view of the noble Lord, Lord Lester, that removing Section 3 is not of any great significance. There are things that are much more important in ensuring that the commission’s work will continue, improve and be clearer in the future. I do not think that the section does any harm, but I also do not think that it is terribly important if it goes.
A sad thing is the overriding view that seems to be around now, perhaps in government and perhaps everywhere else, that the commission has failed. I challenge that, as I think that the commission has done some excellent work during the six years that I have been there, in spite of enormous difficulties in trying to meld a whole lot of additional categories of people to be protected, as well as the original protected groups, with the people representing those groups feeling that they were going to be in some way diluted. That has made life very difficult in the commission, but I think that many of those difficulties have been overcome.
Society as a whole still has huge problems—I agree with the noble Lord, Lord Ouseley, about that. We still have racism and there is still a stigma attached to disability and so on. However, there have been major achievements in the recognition of that, in the ability to speak about it and in the protection of many people who were not protected before. There have been a lot of improvements. The work of the commission should not always be criticised as vague and not achieving anything, as there have been some significant achievements. I say that on behalf of colleagues and former colleagues who have done the majority of that work, which I think needs to be recognised.
The fact that the Joint Committee on Human Rights will in future scrutinise the commission’s business plan and there will be increased parliamentary involvement—for example, the pre-appointment scrutiny of the new chair—is a big improvement. We have been looking at all the things that still need to be done as if everything is totally negative, but having experienced six years of the commission I think that quite a lot has been very positive, including greater transparency about the Government’s funding decisions.
It will be sad if the general duty goes, as removing it is not a huge priority, but I do not think that it will affect the work of the commission. To that extent, I do not think that the Government have to worry too much. We have to work hard to ensure that the commission’s aims are met in the future. More specific duties and responsibilities ought to be useful in improving the situation and making sure that the aims are met. I am sorry if I am in a minority here, but I am passionate about what the commission stands for and I want to acknowledge some of the good things that have happened in the six years during which I have been involved in its work.
Baroness Hollins
My Lords, despite the legal view presented by the noble Lord, Lord Lester, I refer us back to some of the words spoken by my noble friend Lady Campbell of Surbiton. She said that the inclusion of dignity in the commission's general duty provides the glue to bind together anti-discrimination and human rights. I think I got that right. I agree with that and other important points that she made in her eloquent speech. Such an approach underpins the accepted goal of living with dignity and independence. As such, Section 3 is critical in providing coherence to the commission’s duties to promote equality and human rights. I was involved with one of the commission’s predecessor organisations, the Disability Rights Commission, in a major inquiry conducted into discrimination in access to health services by people with learning disabilities or mental illness. It indeed found discrimination; it was very effective and led to some improvements in access to healthcare for those groups. It is very important that such issues continue to be seen as a priority and investigated.
I worry that, without Section 3, that priority may be lost. I oppose the removal of Section 3. It has an important role in focusing the commission’s various duties, and I add my support to the amendments tabled by my noble friend.
Small Pension Funds
Baroness Greengross Excerpts(11 years, 10 months ago)
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Baroness Greengross
To ask Her Majesty’s Government what action they are taking to ensure access to good advice for people with small pension funds, and to maximise such people’s retirement income.
Baroness Greengross
My Lords, I start by declaring an interest. I head up the ILC-UK and the International Longevity Centre Global Alliance, which look at the impact of demographic change on all our services as we plan the future. I am really pleased that we have an opportunity to discuss what I want to look at—people with small pension pots—and the impact of the Financial Services Authority’s retail distribution review, which will be implemented on 1 January 2013. I support the principles underpinning the RDR; they are excellent. But there is at least one unintended consequence that might well follow, which really results from the fact that advisers will no longer be paid by commission but will charge a fee for the work that they do. I and others think that people on modest incomes will either be priced out of or excluded from the advice market. I have a deep concern that lots of people will not get the advice that they need. There will be an advice gap, with a detrimental effect on their incomes that will continue throughout their retirement, which as we know is likely to last much longer than they think it will last. These tend to be the people who have the least knowledge about what is going to happen to them regarding their pension when they retire.
The DWP estimates that by 2050 there will be 4.7 million pension pots of £2,000 or less, with many more than today expected to reach retirement with these small pots. The National Association of Pension Funds has said that there are currently 1.1 million retained DC pension funds with less than £5,000 in them; collectively these hold £2.3 billion of pension assets. A recent survey by KPMG of more than 3,000 customers found that only 31% would be prepared to pay for financial advice; 54% would pay no more than £50 for an hour’s advice; and only 1% would pay more than £200. There is a big risk here. These are exactly the sort of people who will receive no advice at all. Deloitte has recently found that more than 5 million clients may be left without advice as a result of RDR, as costs are made transparent and independent financial advisers focus, inevitably, on higher-net-worth customers.
Partnership Assurance has given us figures that tell us that 78% of annuities sold in the UK in 2011 were for fund sizes of under £40,000. For people with impaired health or lifestyle conditions, the difference between the best and worst rates can be up to 40%. At the same time, very few people exercise or even understand the benefits of exercising the open market option. Figures from the Association of British Insurers report that while joint annuities accounted for 42% in 2011, up from 29% in 2008, only 46% of annuities were bought via the open market option in 2011, up from 35% in 2008. But more people with larger pension funds choose this route than those with smaller pots—the people that I am really concerned about.
Ways of improving the situation might be to narrow the advice gap so that those with very small incomes have access to advice and do not miss the retirement income that they could have, and avoiding an information overload for people who just do not understand what all this is about anyway. Much more needs to be done to ensure that customer information is developed—and it must be from a consumer, rather than compliance, perspective, because people are just not interested, do not understand and then suffer later on. Urgent steps need to be taken to halt the continued erosion of the culture of saving that we used to have in this country. Inevitably, at the moment, we have lost a huge amount of trust in the industry, which is very sad and adds to this inevitable problem. The Government could also perhaps provide a much clearer distinction between the provision of information and the giving of advice, making it much clearer to what extent providers are able to guide customers without it being deemed advice, and joining up the public policy agenda on financial advice, which would enable saving.
In terms of the industry, I very much welcome the ABI’s recent consultation to increase transparency in the annuity market by publishing annuity rates, as part of its code of conduct on retirement choices. I also welcome the fact that PICA, the Pensions Income Choice Association, is working with other industry participants to build a directory of advisers and shopping around brokers who can help investors, particularly people with small pots, to shop around when they retire. This will help customers to understand the decisions they need to make, the products that are available, and how they can shop around. We know that there are several annuity “interface portals” for people who have sufficient IT skills, but our real worry are those who are excluded from all this, because they just do not have the knowledge that is necessary.
The mechanics of the pensions industry have made it very difficult for retirees to get good annuity rates, as we know. Annuity advisers and providers should explore greater uses for technology in delivering advised and non-advised services to help people understand their options at retirement and help them to make the right decisions.
I will end by sharing a real concern I have that lack of cohesion and policy fragmentation created by silos between the Financial Services Authority, leading on RDR, HM Treasury, with the policy lead on financial advice, and the DWP, leading on retirement outcomes for pensioners, will result in the poorest and least well-off people receiving sub-optimal retirement outcomes. Perhaps something can be done to raise awareness of the challenges and responsibilities that individuals have, particularly those over 50, who need to focus on a multitude of retirement decisions and have far fewer pensions and savings assets at their disposal than they actually need. Nobody really believes that they are going to live for as long as they will, and nobody really calculates what they are going to need over all these years, with the need for care, and so on. Explicit government support and signposting would help to ensure that these people—the small pension pot holders—have as easy a time as possible in getting help with their shopping around. Will the Minister consider creating some kind of forum so that the industry, the regulator, the DWP and HM Treasury can get together to meet and discuss how better to work together to improve customer outcomes?
Unemployment: Older Women
Baroness Greengross Excerpts(11 years, 11 months ago)
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Lord Freud
My Lords, as my noble friend will know, we are making big strides on pension provision. We have introduced the triple lock and we are talking about introducing a single tier of pensions, which will massively simplify the overcomplex pension provision in this country.
Baroness Greengross
My Lords, have Her Majesty’s Government looked at not just the salaries of those older women who are in work but at the terms and conditions of their employment—for example, the use of zero-hour contracts? Is there full recognition among government inspectors and so on that for many this is the primary, not secondary, source of income in the family?
Lord Freud
My Lords, the crude facts of the matter are that more older women are employed than ever before—3.5 million—and the rate of employment is also at an all-time high of 60.6%. Older women are doing extraordinarily well in the workforce and the reason for that is that they are very valuable employees. Even the BBC seems to have got round to recognising that.
Pensions Bill
Baroness Greengross Excerpts(12 years, 11 months ago)
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Lord Boswell of Aynho
My Lords, I should like to speak briefly in support of the amendments offered to us by the House of Commons and against any further amendment thereto. In doing so, I speak as one of the instigators of the initial expressions of concern in this House, which were taken up so well by the noble Baroness, Lady Greengross, and others, and have led to the kind of compromise that the Minister has offered us today. It is a compromise; it is not perfect and certainly not what everyone wanted. However, the alternative would be unconscionable and unachievable.
The Minister has had to labour in devising this scheme with the aid of tremendous care and iteration. He has had to operate under two major constraints. The first, which he has set out more clearly than anyone else could have, is that of cost. I shall turn back to that in a moment. The second is the equal treatment directive. Although the measure of generosity or beneficence that he has been able to offer is welcomed by members of the male gender, the directive has attenuated some of the things that he would have done—if he had not been constrained by it—for persons of the female gender, who initiated the element of concern. He has had to live with that.
I say that as the author of an amendment that the Minister briskly dismissed in Grand Committee by pointing out that it would, somewhat beyond my intention, have been likely to incur an Exchequer cost of some £6 billion, which would have been out of court to the expenditure that he has been able to undertake on it. However, the Minister has done the right thing. In particular, I emphasise the importance of having a sound and viable medium-term strategy. It is quite easy for us, even those who are more expert in the public finances than I currently am, to look at issues in the deficit reduction programme without realising or acknowledging that it is equally important that we should have a credible medium-term financial stance; and that we should show that we are prepared to keep a rein on rising expenditure. The Minister has been able to soften that slightly but he has not been able to take away the constraints.
The Minister also had a third area to think about: how we should deal with this. I am very glad that the Government have not come back with a compromise that was a kind of lash-up—another set of discretionary concessions for a limited number. That would have been better than nothing, I am sure. However, as I advocated in Committee, he has come back with what I call an architectural solution: delaying the full impact of these changes, rather than just a series of slightly unfortunate and perhaps awkward-in-precedent changes.
I have one final point for the Minister. In praising him for his measure of controlled beneficence, I also remind him that it will be equally important for long-term assurance—given the longevity factors that are not really in dispute across this Chamber; we understand how people’s longevity is rocketing—that it may be necessary to return to some of the long-term milestones and a further increase in the pension ages. When that happens, future Ministers will not be constrained by the equal treatment directive because we will have got to parity before we start. However, I would not like anyone here to feel that that issue will have to go away unattended indefinitely.
Baroness Greengross
My Lords, I thank the Minister, particularly for his amendment. However, I want to emphasise that the real winners here are the half million or so men and women who are going to get their pensions earlier than they would have done without this amendment. I was not the only Member of your Lordships’ House who felt that this was very unjust, but I congratulate the noble Lord because he recognised this with great sensitivity. I agree with the noble Lord, Lord Boswell, that this is a compromise and that there were various constraints. It is not what we all wanted; it has not gone as far as we would have liked, but there were constraints that made that very difficult.
I tried in the amendment that I put forward to do something about what those of us who tried to change things we saw as a tremendous injustice to 300,000 older women—those who found they had to wait an extra 18 months or even more to get their pensions and 33,000 who had to wait an extra two years. Now, because of this amendment, 245,000 of those women, and a similar number of men, will see their pension age reduced between one and six months. It was not all that some of us, including Age UK, would have liked, but I am pleased to support the amendment as a victory for common sense and I thank the Minister for his sensitive approach.
With regard to going further, at this stage I just hope that no further changes will occur without due notice to everybody concerned and appropriate time for people to prepare for a huge change in their circumstances. That is very difficult to cope with at that stage in one’s life—particularly for women, who find it hard to get into the job market at all at that age or even to remain in the job market. I very much support what the Government have done, and thank the Minister again.
Lord German
My Lords, I also add my congratulations to the Minister and the Government for recognising what was the most important part of this Bill—certainly the most controversial part. When it left this House it left it unamended but, if one had taken the temperature of your Lordships’ House, it would have been quite clear that the Government had to do something to ameliorate the problem which was so well put in very many amendments. The Government have listened, and taken on board that message. They went away and came up with a compromise for which we have to be grateful. I pay tribute to the noble Baroness, Lady Greengross, who put down the amendment that paved a way, in a sense, for the sort of direction that the Government have adopted; it might have cost another £1 billion, but, as they say in musical terms, it was close enough for jazz.
The key issue here is that we have to recognise that, though the Government have taken this on board, it will mean a substantial improvement for women who might otherwise have been expected to work for an additional two years. As we have heard, these changes will cost £1.1 billion and affect 250,000 men and just under 250,000 women. I do not regard that as a sticking-plaster solution. It has not been put in place simply to hold the breach in the dam. Another part of the Age UK statement says that it is a big step forward. It states:
“We can’t emphasise enough the great achievement”—
the great achievement—
“that this change represents as it will cost the government £1 billion in lost cuts to expenditure”.
In fact, it will be just over £1 billion.
Welfare Reform Bill
Baroness Greengross Excerpts(12 years, 11 months ago)
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Baroness Greengross
“( ) the fact that a claimant has reached the qualifying age for state pension credit.”
Baroness Greengross
My Lords, unsurprisingly, this is primarily about people who have reached, or have nearly reached, retirement age. We know that for a long time the means-tested benefit system has supported, and given greater support, to people who have reached retirement age. However, under this Bill, unless couples where one person has reached retirement age receive some additional support, the older person who might be, say, 80, who happens to have a partner of 59, could be worse off financially than someone with a partner of the same age. My amendment seeks to remedy that anomaly.
Not allowing couples, when one has reached state pension credit age, to get working age benefits is an important change from the current rules because the way in which couples have been treated in the past for benefit entitlement has been based on the age of the youngest partner. In the Bill as it stands, one of the basic conditions for entitlement to universal credit set out in Clause 4 is that someone is under the qualifying age for state pension credit, which, by the way, is gradually increasing in line with rises in women's state pension age. However, Clause 12(2) allows for exceptions to that. The Government have said that the age limit will not apply where one of a couple is above the qualifying age for state pension credit and the other is younger. That is necessary because Schedule 2 to the Bill will prevent pension credit claims in the future from couples where one is under the qualifying age.
In some situations, couples where one is above and one is below pension credit age may be better off financially receiving universal credit and I am really pleased about that. That could apply, for example, where one is working, as an important aim of universal credit is to make work pay, and benefits will gradually be withdrawn. However, by contrast, a couple receiving the pension credit guarantee have only a £10 disregard from earnings. After that, any earnings are counted in full as additional income, which will reduce benefit entitlement. If neither partner is working, a couple relying on universal credit will receive a lower level of payment than a couple receiving the pension credit guarantee.
I fully accept and agree with the fact that the Government want younger partners who are claiming benefits to be seeking work, but I believe that when neither partner is able to work or, if able, is unsuccessful in finding work—we know it is rather difficult for people who are near retirement age—the basic level of benefit should reflect the fact that one of the partners is older. The addition of this minor age exception to the list in Clause 12(2) would achieve that aim. I trust that this amendment will be acceptable to the Minister. I beg to move.
Baroness Drake
I support Amendment 50A. I am very concerned about the implications of the change of the rules on pension credit because the effect of the proposed change is a severe restriction on the availability of pension credit. The most recent impact assessment which updates that provided in February to take account of a more recently announced policy confirms that the number of households with lower entitlements under universal credit has increased relative to the previous version of the impact assessment. That is primarily due to the announced policy changes to disability payments and the treatment of couples with one partner under and one over the qualifying age for pension credit under universal credit.
I find this change in policy a peculiar form of couples penalty, when the Government are on record, I understand, as being against such a penalty. It is a couples penalty that disproportionately impacts on the poorest of couples because the recent impact assessment reveals that the number of households with lower entitlements under universal credit will increase as a result of this particular treatment of couples with one partner under and one over the qualifying age for pension credit. As a consequence of these changes, although not wholly attributable to this one, 70 per cent of the lower entitlement is concentrated in the bottom and lower quintile.
Although the figures in the impact assessment do not separately show the impact of the pension credit changes, the impact assessment states quite clearly that:
“Some of the heaviest notional losses … are in cases where one member is of working-age and one is currently eligible for Pension Credit”.
I see in response to a question from Stephen Timms in the other place, Steve Webb answered that as of February 2011, 93,200 pension credit recipients had a partner aged below 60. A not insignificant group of people, no doubt in low-income groups, will be impacted by this change.
When one looks at previous impact assessments that the department has released, in many of these couples when one is a pensioner and one is not, the partner below state pension age may well be caring for children or somebody with a disability or who is ill. Now those households would be subject to the new in-work conditionality requirements. We know that older women are less likely to be employed outside the home, so this is another example of a policy that will impact on women—exactly the kind of policy upsetting the Women's Institute according to this weekend's papers. I am sure that it will be onto the case with this one as well
I notice that the Minister, Mr Grayling, commented in Committee in the other place that it should be acceptable to say to someone:
“‘Your household is on a low income, you need more money, get a job’”,—[Official Report, Commons, Welfare Reform Bill Committee, 28/4/11; col. 553.]
as a defence of this change to the pension credit rules. Perhaps he should have reflected on the characteristics of the community affected by this change, such as the number of older women in such households who are undertaking valuable non-wage caring work or the fact that disabled people are more likely to be reliant on pension credit at minimum qualifying age. Those facts and figures are freely available in impact assessments from the department.
We now have a policy that is discriminating between pensioners on the basis of their spouse’s age and producing some quite arbitrary outcomes with poorer households having significantly different experiences because of what could be quite moderate differences in the age of their partners. Let us be clear: the effect of this policy is to disentitle someone under the current rules who would otherwise receive pension credit and place them, because of the age of their partner, into universal credit.
This policy will impact on a lot of low-income households. The noble Baroness, Lady Greengross, detailed that when she moved the amendment. I know that Age UK is particularly concerned. If, for example, a couple received an amount of universal credit equivalent to the basic level of income-related jobseeker’s allowance that would be just £105.95 compared with pension credit for a single person of over £137 and £209-plus for a couple.
The other point that causes me concern is that pension credit provides an automatic passport to benefits such as health benefits, Christmas bonus, home improvement grants and free school lunches—I was looking the list up—and any cared-for children’s access to school lunches. Will all these fall away now for these couples, even though one of them reaches the qualifying age?
The other impact is that this change in policy will also mean that these older couples, with one at the PC qualifying age, will find that any savings that they have are now subject to the more aggressive capital rules, rather than the gentler rules under pension credit. That strikes me as particularly harsh as a consequence of this change. I feel that this Bill is being used to change the rules on pensions, yet it is not a pension Bill, because the population most impacted on by the change in this policy will be subject to a series of government policy changes, the accumulative effect of which would be quite significant. They face an accelerated increase in the pension credit qualifying age, consequent on the state pension age changes, and the impact of that has been clearly detailed. The savings credit element of pension credit has been frozen until 2015, and now a new policy of disentitlement has been introduced, whereby a qualifying age of entitlement to pension credit will be dependent on the age of the partner. When one stands back and looks at the cumulative impact of this on these individuals, the impact of the rules on their savings and the characteristics of this demographic, one can see that this is a very harsh change of rules. Yet the Government’s own impact assessment for the Pensions Bill shows that women under 55 on low incomes, who are most likely to be the people under the qualifying age, whereas their male partners may be at it, are the hardest hit by any changes in pension credit policy because of caring responsibilities, ill health or availability of work. They are now going to be caught up in the conditionality requirements under universal credit.
Pension credit is a very effective policy for targeting pensioner poverty, which was confirmed by the recent PPI research commissioned by Age UK and launched at an event supported by the Minister, Steve Webb, who came to speak. Here we are, tampering with the rules of pension credit when it is probably the most effective mechanism that we have for immediately addressing pensioner poverty. The effect that it will have is simply to disentitle people who have previously been entitled to pension credit and put them through a discretionary work conditionality process when we know that the characteristic of this particular group should not be subjected to those kinds of policies. The amendment tabled by the noble Baroness, Lady Greengross, will allow the Government to address my concerns on this issue.
Lord Freud
That is the nub of the change. When we looked at it, we thought that the appropriate policy was to put everyone below working age in that category. On looking at the noble Lord’s question of why do it when there is not work conditionality, there we have support in universal credit through the additions and the ability to keep a rather simple set of definitions working. That is the rationale.
Baroness Greengross
I thank the Minister for responding. Obviously, I am disappointed because I think that it would work in a society where at the age of 55 one could just go and get a job, but we know that that is not the case. Unfortunately, there is a still a lot of discrimination and barriers to older people who try to get a job. More flexibility would be very welcome. I think that the noble Lord said that he cannot do more but that he is still looking to see if things can be improved for these couples. I have hopes that he will look at this again and try to improve on something that seems fairly minor but which would help a lot of people.
Lord McKenzie of Luton
Perhaps I may come back on a point with the Minister to make sure that I understood an answer to an earlier question. In relation to the proposed changes to capital limits for pension credit, did the noble Lord say that that would apply only—I am not sure how it would be worked out—to the housing component or that it will apply to the totality of the package?
Lord Freud
I am happy to send a letter around. We should deal with capital limits in its entirety when we come to Clause 74, which we may get to if we hurry along.
Baroness Greengross
My Lords, I apologise for the fact that I am about to chair a meeting on health and rather rudely have got to go. I hope that noble Lords will excuse me for rushing off to Millbank. I beg leave to withdraw the amendment.