Pension Schemes Bill [HL]
Baroness Stedman-Scott ExcerptsWednesday 15th July 2020
(4 years, 4 months ago)
Lords ChamberRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 104-I Marshalled list for Report - (25 Jun 2020)
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, before we move to the technicalities of closing our debates on the Bill in this House and it moves for consideration in the other place, I want to take a moment to reflect on the Bill and its passage through your Lordships’ House.
This is important legislation that will benefit members of the public and will help people plan for their future. As I said at Second Reading, the Bill will have a far-reaching impact for people saving into pensions for their retirement. It ensures that reckless bosses cannot gamble with people’s savings; it transforms the way people get information about their retirement savings; and it introduces a whole new type of pension to the market.
It is clear from the excellent contributions and speeches made as the Bill progressed through this House that many of your Lordships agreed with its principles. Contributions and questions from all sides have been thorough and searching. I would not have expected anything different.
The Government listened to your Lordships’ arguments and concerns as the Bill progressed and made a number of amendments both in Committee and on Report— 73 in total, which I think you will agree have strengthened the Bill. We recognised the concerns of the DPRRC and this House in respect of delegated powers; we listened to your thoughts about a public dashboard; we introduced measures in respect of climate reporting and the Paris Agreement; and we have responded to the threat of scams by tightening the rules on transfers.
Your Lordships made further amendments to the Bill on Report concerning intergenerational fairness, consumer protection and scheme funding. We will look at these carefully along with the strong arguments made in support of them as the Bill progresses in the other place.
I thank all those who have engaged on the Floor of the House and in the many meetings that we have had outside, which I hope you found helpful. I thank my noble friends Lord Howe and Lady Scott for all the help and support they have given me throughout this process. This was my first Bill, and they have helped enormously to keep me on the straight and narrow. I thank the Whips office, the House staff, my private office, led by Vanessa Drury, and all those involved in helping us through the hybrid proceedings. These have been very testing times for everyone, and the fact that we are here at all bears testimony to the work they have put in.
Finally, I want to thank the Bill team and all the officials across DWP. I thank them for the extensive engagement programme that they helped me with. I thank Jo Gibson, Jane Woolley, Mike Jewell and Debbie Bullen—to name but four—but there are many support people behind them, and I would not want to miss anybody out in trying to name them all. They have put in incredibly long hours to support my noble friends and me during debates, to facilitate briefing meetings, and to provide the updates, letters and briefings that noble Lords have received. They have done this at a time of great uncertainty, with many teams reduced to help support front-line services. I hope that they will manage to get some well-deserved time away over the summer.
On that note, I thank you all again for your patience and support. I beg to move that the Bill do now pass.
Baroness Sherlock (Lab) [V]
My Lords, I thank the Minister for those remarks and concur with them. We have agreed on so much about this Bill: we support the new CDC pension schemes; we all want to see financial technology harnessed to benefit consumers and to make the financial markets work more efficiently; and we are keen to work constructively with the Government to bring innovations such as the dashboard to fruition.
Where we have differed is on the extent of the protections needed to mitigate the risk of consumer detriment and poor outcomes. We still believe that the weight of evidence is with our arguments, as are reports from various regulators. I hope that by the time the Bill is debated in another place, the reasoning behind our Report amendments on the head start for the public dashboard, on the risks of dashboard transactions and on questions of fairness will find favour.
The pandemic has pushed many consumers into digital engagement far faster than they may naturally have adapted to it. While that has kept our economy and society functioning, it has also exposed some consumers to greater risk of detriment. We might not see any consequential increase in the number scams until later in the year, but that means that the provisions in this Bill will be timely and welcome. More risks will emerge, including new ones as a result of Covid, so I urge Ministers to keep the House informed as regulators scan the landscape and the Financial Ombudsman monitors new kinds of complaint. Although they are not covered in this Bill, we wait with interest to see how the Government will regulate the newly emerging superfunds, given the economic impact of Covid.
Pensions are very long term, and it will take decades for the full effects of public policy decisions by any Government to be seen. That is why it is so desirable that pensions policy be built on the foundations of political consensus, and it is why I am grateful for the significant concessions that have been given during the passage of this Bill.
I pay tribute to my noble friend Lady Drake, whose expertise and determination underpinned our campaign for the Government to commit to a public dashboard and have it operating from the start. I am grateful for support from across the House for that and for all the shared support for moves to secure commitments on governance, including ensuring that dashboard services will be regulated by the FCA. It was great to see cross-party working on climate issues, led by my noble friend Lady Jones of Whitchurch and the noble Baroness, Lady Hayman, result in an agreed position with government and the first ever reference to climate change in domestic pensions legislation. I am grateful to the Minister for yielding to pressure from many quarters for amendments on transfers and on delegated legislation.
This is a better Bill than the one which entered the House, and I give thanks to all who made that possible. I thank my noble friend Lord McKenzie of Luton, but I am sad that it will be my last time sharing the Front Bench with him. He has given so much to this House and to our country in his decades of public service. I look forward to his continued contributions from the Back Benches.
I am a grateful to Dan Harris of our staff team, who has done sterling work on this Bill and is a joy to work with, as are all my colleagues who joined in during our proceedings. I am grateful to House officials and the broadcast teams. I am very grateful to the Bill team and all the officials who have met us repeatedly and patiently answered our many questions. I am grateful, too, to colleagues across the House for intelligent and thoughtful debates. I am grateful also to the Ministers: to the noble Earl, Lord Howe, for his gentle engagement and to the noble Baroness, Lady Stedman-Scott, for her co-operative spirit and her willingness to engage and to concede. This may have been her first Bill; I am sure that it will not be the last. I look forward to joining in and occasionally doing battle yet again.
We did the Committee stage of this Bill before Covid, crammed into the Moses Room with not a hint of social distancing. We did the Report stage in hybrid mode. To be honest, I will never get to love voting on my phone or get used to making passionate speeches to my iPad, but it has shown that this process can work. We have thoroughly scrutinised a vital and highly technical Bill, and we have made it better than it was. That is the job of the House of Lords in a nutshell. I am so glad we can still do it.
Lord Flight (Con)
My Lords, I add my congratulations to my noble friend, who has managed a complex and important territory most constructively. I also thank the Opposition for collaborating in a constructive way. I could not help thinking, as we come to the end of this bit of legislation, that if we look forward 30 years, we will then be in a very different age where people will live much longer and will retire later. There will have to be an adaption of their pension saving between now and then but, for the present, this Bill has done a very good job of addressing a difficult territory.
Baroness Stedman-Scott
I thank everybody for their comments and supportive remarks. What has really come out of this is that we collaborated, we talked, we listened and we made the Bill better. For that, I thank everybody.
Pension Schemes Bill [HL]
Baroness Stedman-Scott ExcerptsTuesday 30th June 2020
(4 years, 5 months ago)
Lords ChamberRead Full debate Pension Schemes Act 2021 View all Pension Schemes Act 2021 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 104-I Marshalled list for Report - (25 Jun 2020)
Member’s explanatory statement
This amendment and the Minister’s amendment at page 7, line 18, make all regulations under Clause 11(3)(a) subject to affirmative resolution procedure (see Clause 51(5)).
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, perhaps I may start by addressing the government amendments. I recognise that in Committee and in subsequent meetings, some noble Lords expressed concern over the regulation-making powers in Part 1 and how they might be used. I have considered those arguments carefully and am persuaded that your Lordships are, in many instances, right. Following your Lordships’ helpful comments, I am now persuaded that it would be more appropriate to make certain regulation-making powers subject to the affirmative procedure on all usages. I recognise that CDC schemes are a totally new form of pension provision in the UK and it is right that Parliament is, as a matter of course, able to debate changes to key parts of the regulatory framework surrounding them.
Your Lordships will recall that Clauses 11 to 17 set out the authorisation framework that all CDC schemes must meet. I know that the House was concerned by the delegated powers in respect of these clauses, as they provide for the core foundations of the authorisation regime. I am pleased, therefore, to announce that those delegated powers which were subject to the affirmative procedure only on first use will now be subject to the affirmative procedure on each use. In addition, the transfer-related regulations for CDC schemes, introduced by Clause 25, will now always be subject to the affirmative procedure rather than the negative procedure.
The relevant provisions contain two powers to amend the timeframes set out in primary legislation which govern when action must be taken by trustees once a transfer out of the scheme has been requested. First, there is a power to extend the time in which trustees must facilitate a request to transfer out of a CDC scheme to a period longer than the specified six months. Secondly, there is a power to amend the three-week “cooling-off” period, during which trustees may not facilitate the requested transfer unless they receive written instruction from the member to do so. Given the importance a decision to transfer out of a CDC scheme may have for a member, it is right that regulations in respect of the timeframes for related action are debated in Parliament under the affirmative procedure as a matter of course.
Amendments 35 to 38 make changes to Clause 47 to make it clearer that this power is not as wide as it may have appeared on first reading. I understand noble Lords’ concern about this clause: it contains a Henry VIII power and as such it should be as clear as possible when and for what purpose it can be used.
Our amendments make it very clear that the power can be used only to provide for non-employer established schemes, such as master trusts, and other non-connected multi-employer CDC schemes as and when concrete scheme designs come to light over the next few years. Noble Lords may recall that the Work and Pensions Select Committee in its report on CDC schemes called for our legislation to be extended to provide for CDC master trusts at the earliest opportunity, and organisations from commercial pension providers to trade unions and even the Church of England have made similar requests.
However, there are clear administrative differences between a scheme with one closely involved employer and a master trust with many more distant employers. The authorisation and supervision legislation will therefore need to be tailored to reflect the risks posed by such schemes and providers so that members and participating employers are to be adequately protected.
This is what Clause 47 seeks to do. It is intended to allow us to make the necessary changes via regulations in a timely fashion so that master trusts and other non-connected multi-employer CDC schemes can be up and running as soon as possible, and employers and employees can benefit at the earliest opportunity. Without this clause, it is likely that the extension of CDC provision to master trusts and other non-connected multi-employer models would be delayed.
However, I assure noble Lords that any such changes required would be considered carefully and consulted on thoroughly before being brought before the House to ensure that they covered the right ground. Such changes would also be subject to the affirmative procedure, which would give the House opportunity to scrutinise the regulations.
The amendments before the House are intended to address concerns in key areas— authorisation, transfers and the provisions relating to the future expansion of CDC—and I am grateful for the informed and thoughtful comments that have led us to this point. The points that I have made also apply to the corresponding Northern Ireland provisions in Part 2 of the Bill. I hope that noble Lords are reassured by the amendments. I beg to move.
Lord Sharkey (LD) [V]
My Lords, I shall speak briefly to government Amendments 1, 3 to 7, 9 to 12 and 14 to 31, as well as to my related Amendment 2. First, I thank the Minister and her team for their close engagement with us on the Bill and their time, patience and occasional willingness to change their minds.
The government amendments are a good example of mind-changing. As the Minister said, they remove the instances in Part 1 of first-use-only affirmative procedures; that is a very good thing. The DPRRC’s report on the Bill in February this year was concerned about the use of these procedures. It pointed out that the powers in the regulations remain exactly the same on subsequent use. In Committee, I strongly urged the Government to remove this type of procedure; I very much welcome the fact that they have now done this. All the subsequent uses of the negative procedure have been withdrawn by these amendments.
However, one negative procedure remains: what is left of Clause 11(8) in line 18 on page 7. This is the subject of my probing Amendment 2. Subsection (8), as amended by government Amendment 3, prescribes the negative resolution procedure for regulations under Clause 11(2)(e). Subsection (2)(e) seems a little opaque. It seems to allow the Secretary of State to add persons or categories to those whose fitness and propriety TPR must assess. On 22 June, the Government confirmed to me in writing that this was the case. They believed that this was largely an operational matter and that the negative procedure provided
“appropriate scrutiny as well as opportunity for debate if desired”.
This is a mischaracterisation of the negative procedure, which in practice barely merits the label “scrutiny” at all. Possibly because I did not ask them to, the Government did not address why subsection (2)(e) was necessary at all or give examples of what kind of persons or categories of persons are envisaged in subsection (2)(e) and what role they may play in the schemes themselves. Any additional involvement of these persons or categories of persons may give them significant influence over the conduct of the schemes.
It is obviously desirable to have these new entrants assessed for fitness and propriety. The issue here is the Secretary of State’s decision to add persons or categories to the list without constraint, restriction or proper scrutiny. I would be grateful if the Minister could address these points when she replies.
Baroness Stedman-Scott
I start by responding to some of the points that noble Lords have made, for which I thank them. On the point raised by my noble friend Lady Altmann, who questioned whether it should be for Ministers to decide who is running a scheme under negative procedures, let me clarify that the power in Clause 11(2)(e) does not determine who is running a scheme. It simply means that such people as prescribed are subject to regulatory scrutiny.
My noble friend Lady Fookes is obviously highly regarded on the issue of delegated powers. The “made affirmative” procedure is for use where there is a need to legislate in an emergency; here, we are talking about acting urgently, so the negative procedure is appropriate. I also thank her for the bouquet.
I agree with the noble Lord, Lord Hain, about getting regulations right, especially on authorisation. On the points made about the recent market changes and the impact on pension schemes, we will have to keep that under constant review but his support for CDC schemes is much appreciated. He also raised how pension members’ benefits would be impacted by the recent downturn—I have already referred to this—in asset values during the coronavirus pandemic under Royal Mail’s proposed CDC scheme. Like the noble Lord, I welcome the fact that the latest modelling conducted by Royal Mail’s actuaries, based on market performance during the first quarter of 2020, indicates that the downturn in the value of its anticipated asset portfolio would not have resulted in cuts to pension benefits and had only a small impact on next year’s inflation increase.
My noble friend Lord Naseby is not in favour of the negative procedure. This point was made by many noble Lords across the House and I can say only that we have listened. This brings me to the contribution of my noble friend Lord Holmes. The Bill team has been outstanding—they have been very patient with me—and I liked his reference to two ears and one mouth. We have definitely used our ears on this. On the comments of my noble friend Lady McIntosh of Pickering, we would of course urge everybody to take advice before committing to a pension scheme.
I am really pleased that my noble friend Lord Blencathra is pleased, and I am grateful for the increased mark of nine out of 10. I am sorry that I have not pleased the noble Lord, Lord Foulkes, this week but I promise to try harder.
My noble friend Lord Blencathra and other noble Lords raised the point about Clause 47 still being a Henry VIII power and asked why we have not changed it. A Henry VIII power to amend the CDC framework through regulations is necessary if we wish to see CDC provision opened up to master trusts and other non-connected multiple employer schemes sooner rather than later. I can confirm to the House that all regulations made under this power will be subject to the affirmative procedure. We would not want to make any regulations under this clause without proper debate.
My noble friend Lord Blencathra referred to Clause 124. As the supplementary delegated powers memorandum explains, the Government need to be able to respond to the constant development of industry best practice. It is expected that the Government will periodically amend requirements to ensure that they reflect those developments. These updates will focus not on a fundamental redesign of the policy, but evolution in light of emerging methodologies. We therefore believe that the negative procedure is appropriate.
The noble Baroness, Lady Bowles, mentioned Clause 11(2)(e) and queried the power for people to be excluded from regulatory scrutiny. No—the power can be used to include people but not to exclude them from scrutiny.
The noble Baroness, Lady Sherlock, asked whether there is enough urgency about increasing the diversity of boards. I will talk in my concluding remarks about the work that we want to do on diversity. We must inject as much energy as we can.
The amendment tabled by the noble Lord, Lord Sharkey, to Clause 11 is intended to enable discussion of the Government’s retention of the negative procedure in relation to regulations made under its subsection (2)(e). I have already demonstrated our willingness to listen to and address the concerns expressed about delegated powers in Part 1 of the Bill. We are confident that the list of persons, as set out in Clause 11(2), will capture necessary persons who should be subject to this test. However, should it become evident during live running that a person who has a significant role in the scheme is not captured, we would want to address this omission promptly so that members and their pensions are not put at risk. The power in subsection (2)(e) allows regulations to extend the reach of the “fit and proper persons” requirement to other people acting in a specified capacity in relation to a CDC scheme. It is in the interests of members for the regulator to have the power to assess the fitness and propriety of such persons without unnecessary delay. Time may be critical, and it is right that the fit and proper requirements apply effectively. We therefore consider that the negative procedure is appropriate in this instance.
My noble friend Lord Balfe raised the issue of the quality of trustees. The Government’s primary focus is on ensuring that trustees in all occupational pension schemes meet the standards of honesty, integrity and knowledge appropriate to their role. However, the Government are aware that the regulator plans to establish a working group aimed at developing additional guidance and supporting material to help the diversity of trustees. We welcome this development and look forward to seeing the outcome of this work.
Amendment 33, tabled by the noble Baroness, Lady Bennett, and supported by the noble Lord, Lord Foulkes, and my noble friend Lord Balfe, is intended to promote diversity in trustee recruitment. As I mentioned in Committee, the Pensions Regulator will look at trustee board diversity across all schemes and, as I have said, is planning to set up an industry working group to help pension schemes and employers improve the diversity of scheme boards. Unfortunately, the launch of this working group has been interrupted by Covid-19, as the regulator’s resource has had to be diverted quickly to deal with emerging issues from the pandemic.
I believe it was my noble friend Lord Balfe who talked about a study to see how trustees were performing and how they were doing. I will certainly take that back to the department and I endorse the point raised by the noble Baroness, Lady Bowles, about independent and objective trustees. I hope noble Lords will understand this delay to the working group, given the unprecedented situation we find ourselves in. However, I have been assured by the regulator that it intends to move forward with the working group as soon as is practical. I recognise the importance of diversity; however, it would be premature to pre-empt the outcome of the regulator’s work in this area. We will of course consider any outcomes from the working group as the CDC regulations are developed.
Finally, I turn to Amendment 45, tabled by the noble Baronesses, Lady Bowles and Lady Janke. This amendment seeks to ensure that regulations in Part 1 of the Bill cannot be used to set up a new regulator. I recall that the noble Baroness, Lady Bowles, was concerned that the powers in Clauses 47 and 41 in particular could be used for this purpose. I hope that the amendment to Clause 47 that I have just discussed has reassured both the noble Baronesses, Lady Bowles and Lady Janke, on this point. Clause 47 cannot be used to establish a new regulator. Clause 51 cannot be used to create a new regulator. The power it gives to confer a discretion on a person cannot be used for the purposes of setting up a regulator. The powers in Clause 51 are intrinsically linked to the specific powers in the Bill under which the regulations are made, and they do not permit an unrestricted power of delegation. This power is commonly found across pensions and other legislation; it is not wider than normal. More widely, I repeat the assurance I gave the noble Baroness in Committee: there is no need to rule out the creation of a regulator through regulations, as there are no powers in this Bill to create a regulator.
I apologise for the length of my response and hope that the explanations I have provided will help noble Lords not to press their amendments.
Member’s explanatory statement
See the explanatory statement for the Minister’s amendment at page 7, line 16.
Member’s explanatory statement
This amendment and the Minister’s amendment at page 7, line 32, make all regulations under Clause 12(2)(b) subject to affirmative resolution procedure (see Clause 51(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 8, line 30, make all regulations under Clause 13(3) subject to affirmative resolution procedure (see Clause 51(5)).
Baroness Stedman-Scott
My Lords, I begin by addressing the amendment to Clause 14 tabled by the noble Baronesses, Lady Sherlock, Lady Bowles and Lady Drake. In doing so, I want to stress that ensuring members are treated fairly has been a central part of our work on CDC schemes since we began. As I explained in Committee, and in more detail in the letter sent to your Lordships on 5 March, the financial sustainability requirement will mean that CDC schemes are established on a sound financial basis and members are adequately protected from unfair and excessive administration charges.
I understand the intention behind this amendment but I do not consider it to be a necessary addition. For the financial sustainability requirement at Clause 14 to be met, the trustees must provide evidence that they can access sufficient financial resources to cover the costs associated with setting up and running the scheme, as well as those associated with dealing with triggering events. If the regulator is not satisfied about the security of these resources and that they can be accessed as needed, the requirement will not be met and the scheme will not be authorised. It may well be that, in the early days of a CDC scheme, initial funding comes from the employer, but our approach does not just rely on employer-provided financial support; it enables trustees to draw on other options, including funds held in escrow, insurance policies or contingent assets. These should be available to cover any costs arising from a triggering event.
The noble Baroness, Lady Drake, asked who can be required to meet the cost of triggering event. The regulator will work with the trustees, employees and others connected to the scheme to ensure that the scheme always has secure access to sufficient assets so that members’ funds are not affected. My noble friend Lady Altmann made the point that transfer values should be adjusted for future risk. Our legislation will require benefits and transfer values to be calculated based on long-term factors such as longevity, inflation and investment returns. This has the effect of smoothing outcomes and will mean that transfer values will not suddenly rise and fall, making cashing-in not as attractive as my noble friend suggests.
Once authorised, the scheme will need to continue to have access to sufficient financial resources so that it continues to meet the financial sustainability requirement. The regulator will monitor this through ongoing dialogue between the trustees, intelligence work and the significant events framework in Clause 28. This will ensure that it can intervene if it is concerned about a scheme’s financial sustainability and that, where necessary, a scheme could be de-authorised and wound up using the financial reserves. Our approach means that a CDC scheme must remain financially sustainable and able to deal with situations such as an employer withdrawing from the scheme or becoming insolvent.
As we set out in the letter that we sent to noble Lords, we are also taking additional steps to protect members. The CDC charge cap will help to protect members from excessive administration charges if the usual running costs of a scheme increase significantly for any reason. In addition, the continuity strategy at Clause 17, the implementation clause at Clause 39, and the prohibition on increasing charges during a triggering event at Clause 45 are all designed to protect members’ interests when things go wrong.
I now move on to address Amendment 32, tabled by the noble Lords, Lord Sharkey and Lord Vaux, and the noble Baroness, Lady Bowles, which is about intergenerational fairness—a matter raised by many noble Lords and the subject of extensive discussions. We have been mindful of the problems that other countries have experienced, for example in their approach to adjusting benefits. We have learned from these. That is why envisaged regulations under Clause 18 will mean that the CDC’s scheme rules must require that there is no difference in treatment between different cohorts or age groups of scheme members when calculating benefits and applying benefits adjustments.
The noble Baroness, Lady Janke, raised a point about issues experienced by CDC schemes in the Netherlands. We have been mindful of the problems that other countries have experienced. UK CDC schemes will not be required to have a buffer to smooth out fluctuations in the value of the benefits. Members’ benefits will be adjusted each year in light of the most recent actuarial valuation. This protects members from the need to fund a surplus and means that adjustments to benefits are provided for each year rather than hidden and stored up.
I welcome the sentiment behind the proposed amendment; it is something to which we want to give further consideration. We need to give careful thought to how such reporting might work in practice and would want to work with trustees, administrators and the regulator to ensure that any such requirement is proportionate, appropriate and clear. We would also want to consult on any such approach to make sure that it is effective. I reassure all noble Lords that we will give this matter careful consideration. Should we need to bring forward such a requirement in regulations, we already have sufficient powers in existing legislation to require schemes to report on fairness in CDC schemes if warranted. This includes powers under Section 113 of the Pension Schemes Act 1993 and Clause 46 in Part 1 of the Bill. There are also equivalent Northern Ireland provisions. For the reasons that I have set out, I ask the noble Baroness to withdraw the amendment.
Baroness Drake [V]
My Lords, I support Amendment 32, but I shall direct my comments to the Minister’s response to Amendment 8. The Minister has been very courteous in the face of my persistence on this issue and I have listened carefully to what she has said. In listening, I noted four things: first, that the powers in the Bill mean that the regulator can require initial funding from employers in the setting up of a CMP scheme; secondly, that those funds can be used to buy an insurance policy or be put into an escrow account; thirdly, that they can be available to fund triggering-event costs; and fourthly, should a triggering event occur, the regulator will work with both the employer and the trustees to ensure that sufficient financial resources are available to meet the costs of a triggering event. That is my understanding of what the Minister has said; I would, of course, expect the final regulations presented to Parliament to reflect that. On that understanding, I shall not push Amendment 8 to a vote. I beg leave to withdraw it.
Member’s explanatory statement
This amendment and the Minister’s amendment at page 9, line 12, make all regulations under Clause 14(3) subject to affirmative resolution procedure (see Clause 51(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 9, line 43, make all regulations under Clause 15(4)(a) subject to affirmative resolution procedure (see Clause 51(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 10, line 31, make all regulations under Clause 16(2) subject to affirmative resolution procedure (see Clause 51(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 11, line 20 make all regulations under Clause 17 subject to affirmative resolution procedure (see Clause 51(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 47, line 8, make all regulations under Clause 62(3)(a) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 47, line 22, make all regulations under Clause 63(2)(b) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 48, line 21, make all regulations under Clause 64(3) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 49, line 3, make all regulations under Clause 65(3) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 49, line 33, make all regulations under Clause 66(4)(a) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 50, line 22, make all regulations under Clause 67(2) subject to confirmatory procedure (see Clause 102(5)).
Member’s explanatory statement
This amendment and the Minister’s amendment at page 51, line 8, make all regulations under Clause 68 subject to confirmatory procedure (see Clause 102(5)).
Baroness Stedman-Scott
My Lords, government Amendments 75, 76, 77 and 78 seek to amend new Sections 41A and 41B of the Pensions Act 1995, which are to be inserted by Clause 124, introduced by the Government in Committee. The amendments would allow regulations to require that the trustees and managers of occupational pension schemes explicitly consider climate change goals, including the Paris Agreement temperature goal, for the purpose of ensuring the effective governance of their schemes with respect to the effects of climate change. The UK Government and others are committed to the Paris Agreement’s goal of holding the increase in the average global temperature to well below 2 degrees above pre-industrial levels. In fact, the UK is leading the way globally and has committed in law to the target of net-zero greenhouse gas emissions by 2050. We are completely committed to that.
The Covid-19 emergency has triggered the devaluation of many assets across the globe, affecting many investors. Climate change has the potential to bring about a greater, more permanent devaluation that pension schemes need to be prepared for. The Government intend to deliver a recovery from the current Covid-19 emergency that results in an economy that is more sustainable and resilient. Tackling climate change will be a win-win, as many of the actions we need to take to reach our UK climate targets, net zero included, will also support our economy as we emerge from the Covid-19 emergency. The ultimate achievement of the Paris Agreement goal and other climate goals, along with the steps taken by the Government and others to achieve them, are now of greater importance for pension schemes to consider in their overall governance of risk. These amendments would enable regulations to require that scheme trustees and managers take climate change goals and the steps taken to meet them into account.
Amendment 75 makes a minor change to subsection (4) of new Section 41A to make explicit provision for two types of assessments that may be required under subsection (3)(b). Amendment 76 inserts new subsections (4)(a) and (4)(b) into Section 41A. Subsection (4)(a) makes explicit that regulations may require scheme trustees and managers to take into account the different ways in which the climate might change and the steps that might be taken because of those changes. This allows for the assessment of physical and transitional risks respectively—the typical description of risk used by industry. Subsection (4)(b) provides that regulations made under subsection (4)(a) may require trustees and managers to adopt prescribed assumptions about achievement of the Paris Agreement goal and other climate change goals, or the steps that may be taken to achieve them.
The third amendment, Amendment 77, defines the meaning of “the Paris Agreement goal” by specific reference to Article 2.1a of the Paris Agreement. I would like to assure the noble Baroness, Lady Hayman, that Amendment 78 does not limit publication to the effects of climate but includes the effects of assets that contribute to climate change. Pension schemes already have a fiduciary duty to steward their assets, and all schemes have a duty to report on their stewardship policy, including engagement and voting, while from October of this year they will be required to report on how they have implemented their policies.
Finally, Amendment 78 to Section 41B would ensure that trustees and managers may be required to publish information relating to the assessments they make by reference to the Paris Agreement goal or other climate change goals under Section 41A. This includes publication of the contribution of schemes’ assets to climate change referred to in Section 41A(4)(b) as a way of measuring the extent of Paris alignment. Amendments 85 to 88 make corresponding changes to paragraph 12 of Schedule 11 for Northern Ireland.
I turn to Amendment 80. We believe that it is inappropriate to limit the scope of the legislation in this way. I should like to talk about the points made by my noble friend Lord Balfe about smaller schemes. I have been given assurances about such schemes and I can also reassure my noble friend that none of these measures would prevent pension scheme trustees investing in index trackers or seeking to drive schemes towards higher-cost active management. Innovation in the market has led to a blossoming of index-tracking products that take account of climate change risk in different ways. If the trustees of schemes of any size wish to take advantage of these, they can. Members of occupational schemes rarely have a choice of where they save, and they have a right to benefit from the effective governance and reporting of climate change risk, regardless of their employer’s chosen scheme. However, I can reassure my noble friend that these measures are intended to protect benefits through better consideration and management of climate risk.
Member’s explanatory statement
This amendment and the Minister’s other amendments to Clause 47 are intended to make clear that regulations under the Clause may only be made in connection with collective money purchase schemes established by non-employers, or used by multiple employers not all of whom are connected with one another.
Member’s explanatory statement
This amendment and the Minister’s other amendments to Clause 98 are intended to make clear that regulations under the Clause may only be made in connection with collective money purchase schemes established by non-employers, or used by multiple employers not all of whom are connected with one another.
“3A_ In section 186 (Parliamentary control of orders and regulations), in subsection (3) (statutory instruments subject to affirmative resolution procedure), after paragraph (f) insert “, or(g) regulations under section 99(2)(c), or(h) regulations under section 99A(2)(b),”.”Member’s explanatory statement
This amendment makes regulations under sections 99(2)(c) and 99A(2)(b) of the Pension Schemes Act 1993 (inserted by Clause 25(4)(c) and (5) of the Bill) subject to the affirmative resolution procedure described in subsection (3) of section 186 of that Act, subject to the exceptions in subsection (4) of that section.
“3A_ In section 181 (Assembly, etc. control of regulations and orders), in subsection (2) (regulations and orders subject to confirmatory procedure), after “20B(5)” insert “, 95(2)(c), 95A(2)(b)”.”Member’s explanatory statement
This amendment makes regulations under sections 95(2)(c) and 95A(2)(b) of the Pension Schemes (Northern Ireland) Act 1993 (inserted by Clause 76(4)(c) and (5) of the Bill) subject to the confirmatory procedure described in subsection (1) of section 181 of that Act, subject to the exceptions in subsection (3) of that section.
Member’s explanatory statement
This amendment is consequential upon the Minister’s amendments at page 117, lines 6 and 25.
“(1A) The single financial guidance body may carry out other functions relating to pensions dashboard services, including functions for which provision is made by—(a) regulations under section 238A of the Pensions Act 2004 or Article 215A of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (qualifying pensions dashboard services),(b) regulations under section 238D of the Pensions Act 2004 or Article 215D of the Pensions (Northern Ireland) Order 2005 (S.I. 2005/255 (N.I. 1)) (information from occupational pension schemes), or(c) general rules under section 137FAA of the Financial Services and Markets Act 2000 (information from personal or stakeholder pension schemes).” Member’s explanatory statement
This amendment enables the Money and Pensions Service to carry out functions relating to pension dashboard services, including functions for which provision is made by the regulations or general rules, whether relating to pension scheme information or state pension information.
Member’s explanatory statement
This amendment is consequential upon the Minister’s amendments at page 117, lines 6 and 25.
(a) that assets are assessed by reference to their exposure to risks of a prescribed description, and(b) that an assessment includes determining the contribution of the assets of the scheme to climate change.”Member’s explanatory statement
This amendment makes separate provision about assessing pension scheme assets’ exposure to risk and their contribution to climate change.
“(c) the member obtaining information or guidance about exercising the option conferred by subsection (1) from a prescribed person in a prescribed case;(d) providing the trustees or managers with evidence that—(i) the member has complied with a prescribed condition about obtaining such information or guidance from a prescribed person, or(ii) the member is not subject to such a prescribed condition.”Member’s explanatory statement
This amendment enables regulations under inserted section 95(6ZA) of the Pension Schemes Act 1993 to prescribe conditions about obtaining information or guidance from persons such as the Money and Pensions Service, before the trustees or managers may act on a member’s application under section 95.
(a) that assets are assessed by reference to their exposure to risks of a prescribed description, and(b) that an assessment includes determining the contribution of the assets of the scheme to climate change.”Member’s explanatory statement
This amendment makes provision for Northern Ireland corresponding to the Minister’s amendment at page 118, line 33.
Universal Credit: Court of Appeal Judgment
Baroness Stedman-Scott Excerpts(4 years, 5 months ago)
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Baroness Sherlock (Lab) [V]
My Lords, universal credit works on fixed assessment periods. But if, like NHS workers, you get paid at the end of the month, you can find two pay days falling in one universal credit period. The system then assumes that you have had a 100% pay rise and slashes your benefit, or even stops it altogether, thinking that you are now too rich to need it. We have raised this with Ministers repeatedly, but to no avail. It should not take four single mums going all the way to the Court of Appeal to have this obviously daft policy declared irrational. How will the Government find and compensate all those who have lost out? When will the system be changed to stop this happening in future?
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con) [V]
I can advise the noble Baroness that, during our consideration of the outcome of the court’s verdict, we will consider any necessary retrospective payments.
Baroness Janke (LD) [V]
Will the Minister confirm that as many as 85,000 claimants are affected by this judgment? Will she confirm that the Government will publish an action list, detailing when and how the claimants affected by this ruling will cease to be subject to these wild fluctuations in income? Will she also undertake to look into the support available to people in arrears with their rent, or suffering from other financial penalties, as a result of this “irrational and unlawful” action, to use the words of the judge who delivered the verdict, Lady Justice Rose?
Baroness Stedman-Scott [V]
I am pleased to say that the figure of 85,000 that the noble Baroness refers to is not one that resonates with us. We believe that the number of people impacted by this judgment is in the region of 1,000. We are assessing the situation. We got the judgment only on Monday, but we will keep the House fully up to date with decisions made in relation to it.
Baroness Stroud (Con) [V]
Will my noble friend the Minister outline what assessment has been made of the resilience and ability of the universal credit system to process such significant increases in applications in recent weeks? Has the digital design of universal credit enabled it to support an unprecedented number of people in recent months?
Baroness Stedman-Scott [V]
I can tell my noble friend Lady Stroud that we have been amazed and pleased that the universal credit digital system has shown enormous resilience. We have had a 600% increase in claims, and the vast majority of people have been paid in full and on time. Without wishing to be disrespectful in any way, this would never have happened under the legacy system.
Baroness Lister of Burtersett (Lab) [V]
My Lords, last week, the Minister promised MPs that
“everything is on the table”,—[Official Report, Commons, 25/6/20; col. 1462.]
except, it would seem, the monthly assessment itself, even though it does not align with the reality of the working lives of the many claimants paid more frequently, and bases a month’s entitlement on personal circumstances from a single day. This is another example of irrationality and inflexibility. As well as fixing the immediate problem urgently, will the Government undertake a longer-term review of the monthly assessment?
Baroness Stedman-Scott [V]
It may be helpful if I repeat for the House the Answer that my friend the Minister for Welfare Delivery gave in the other place last week. He said:
“I am absolutely determined to find a fix to this issue … a number of items are in the pipeline, ready to be changed on universal credit. Despite criticism from Opposition Members, we have made significant changes to universal credit, and much more is to come, such as the roll-on of legacy benefits next month, which will benefit people to the tune of £200. Those are all in the pipeline to be done, and this will be added to that. I will try to expedite it as much as I possibly can”.—[Official Report, Commons, 25/6/20; col. 1460.]
Baroness Ritchie of Downpatrick (Non-Afl) [V]
My Lords, will the Minister, along with her ministerial colleagues in the DWP, use this opportunity to have a root and branch review of social security policy, to ensure a refocus on the needs of people—many of whom have been reliant on food banks for a long time—a financial uplift of universal credit benefit and caution on the use of the digital system?
Baroness Stedman-Scott [V]
I assure the noble Baroness that the issues and successes coming out of universal credit are continually under review. However, I will take her specific question back to the department and will write to her with an answer.
Baroness Neville-Rolfe (Con) [V]
My Lords, it is clear that the department should put right the particular matter identified by the Court of Appeal. I note that the Minister thinks that some 1,000 cases are involved. However, does she agree that the universal credit system has stood up very well to the severe challenges posed by the consequences of coronavirus?
Baroness Stedman-Scott [V]
I assure my noble friend and the whole House that the universal credit system has stood up well to the increased demand of 600% additional cost. I have repeated the Answer that my ministerial colleague gave in the other House. We are determined to find a fix for this. We will keep the House updated, but we will need time to consider the judgment, which was issued only last Monday.
Lord Foulkes of Cumnock (Lab Co-op) [V]
My Lords, the Minister, who is usually very helpful on these kinds of questions, has not answered the questions put by my noble friend. If the computer system is as agile as she and her colleagues keep claiming it is, why can it not resolve this single issue quickly and give these people the justice they deserve? When will she answer the single, simple question: when will it be resolved?
Baroness Stedman-Scott [V]
I say again to the noble Lord that we are considering the judgment. We are working at pace to find a fix. The universal credit system, which has dealt with a massive increase in applicants, who have been paid, has been agile and flexible to do so. Some issues need to be overcome. They need a digital solution rather than a manual one. We have concentrated on paying people in these very difficult times, but I assure the noble Lord that a digital fix will be found as soon as it can.
Lord Balfe (Con) [V]
My Lords, people made severe criticism of the digital system of universal credit when it was introduced, but it seems that this design has enabled it to support an unprecedented number of people in recent months—the huge increase the Minister referred to. Would she agree that we could not possibly have done this without the digital changes made by this Government?
Baroness Stedman-Scott [V]
I completely agree with my noble friend. We would never have coped with the increase in demand in universal credit claimants had we not had the digital UC system.
Baroness Bennett of Manor Castle (GP) [V]
My Lords, the problem has been evident for years, so the Government have yet to explain why they kept fighting to defend this “unlawful” and “unfair” system, in the words of the judge. Crucially, would the Minister accept that whenever you have a conditional payment scheme, some people will unfairly miss out? No system can be “agile and flexible”, in her words, to ensure that everyone has a fair, secure payment. Only a universal basic income would do that.
Baroness Stedman-Scott [V]
The noble Baroness makes a good point. We have never, ever suggested that the universal credit system is 100% perfect, but it has absolutely delivered in terms of paying the increased numbers we have. She has raised universal basic income on previous occasions. Our position has not changed: we have no plans to bring it in because it would disincentivise people to look for work and the cost would be astronomical.
Baroness Altmann (Con) [V]
I congratulate my noble friend on the tremendous work of her department in coping with the unprecedented number of new universal credit claims. Could she confirm that more than 1 million people have been able to receive an advanced first payment, giving them support in just a few days? Does she agree that this has been vital to prevent hardship during this crisis period?
Baroness Stedman-Scott [V]
The Government have worked at pace to ensure that money gets to people in a timely manner to avoid hardship and as many difficulties as we can. I can confirm that 1 million applications for advances have been made available to people who need them quickly. The advances are interest-free and repayable over 12 months at the moment, but as of next year this will go up to 24 months.
The Deputy Speaker (Lord Bates) (Con)
My Lords, that completes all the supplementary questions on the Urgent Question repeat.
Covid-19: Child Poverty
Baroness Stedman-Scott Excerpts(4 years, 5 months ago)
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Baroness Lister of Burtersett
To ask Her Majesty’s Government what steps they are taking during the COVID-19 pandemic to prevent any increase in child poverty.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con) [V]
My Lords, in addition to the £5 billion increase in benefit rates from April 2020, this Government have introduced an unprecedented package of support of over £6.5 billion to help families on benefits cope with the financial impact of Covid-19. This has increased universal credit and benefited over 4 million of the most vulnerable households; it has increased the local housing allowance rate, putting an average of £600 into people’s pockets; there is a £16 million grant to provide food for those struggling; Defra has put £3.5 million into food charities; and on 10 June the Prime Minister announced a £63 million fund to local authorities for a local welfare assistance programme. The Government are doing everything they can in these difficult times.
Baroness Lister of Burtersett (Lab) [V]
My Lords, the pandemic is nevertheless having a disproportionate economic impact on low-income families, as child poverty grows and deepens. Last week, the official Social Mobility Commission warned that the Government urgently need to recognise that benefit cuts to families with children are increasing child poverty. On top of these cuts, including the two-child limit and the benefit cap, there is no extra weekly financial support for children during the crisis. Can the Minister therefore explain how these policies, which effectively discriminate against children, will help meet the manifesto goal to reduce child poverty?
Baroness Stedman-Scott [V]
I accept that the Social Mobility Commission report has highlighted some important poverty issues and gaps, but compared with 2010—notwithstanding the Covid-19 virus—there are 100,000 fewer children living in absolute poverty. We are taking action in 20 targeted areas to open up more opportunities and investing £90 million in activities to address disparities in youth unemployment. As for the benefit cap and all the important points that the noble Baroness has continued to make—and I have done everything I can to give her access to people to talk about it—I have no update other than has previously been given.
Baroness Verma (Con) [V]
My Lords, sadly, my home city of Leicester has communities among the poorest in the country. Will my noble friend look at how she, with her colleagues in local government, can help support hard-working families who are furloughed and struggling to provide basic needs to their children by looking at reducing their council tax bills for 12 months after the pandemic has ended? It does not help that we have seen a more than 4% increase in council tax bills in Leicester, alongside other utility increases.
Baroness Stedman-Scott [V]
I am well aware of the situation in Leicester; there has been much in the press about it. The Government are absolutely committed to supporting hard-working families. While any reduction in council tax relates to MHCLG, I am pleased that the Government have provided significant funding to reduce council tax bills for a short period. I will write to the noble Baroness on that.
Baroness Lane-Fox of Soho (CB) [V]
There are currently about 700,000 children with no access to internet facilities at home. On 20 April, the Education Secretary announced a £100 million fund to ease this problem. Can the Minister please tell me what percentage of this fund has been distributed and how many families there are left to help?
Baroness Stedman-Scott [V]
I completely understand the point the noble Baroness is making. To answer her question, I will need to go away, get the facts and write to her.
Baroness Sherlock (Lab) [V]
My Lords, as well as the Social Mobility Commission, the Minister could have cited the IPPR calculations that the pandemic could put 200,000 more children in poverty this year, the Trussell Trust figures showing the numbers of families with kids needing emergency food parcels twice as high as this time last year, or even the powerful open letter from Marcus Rashford today highlighting child hunger. I am sure the Minister is doing her best, but if the Government will not buy our proposals to suspend the two-child limit and the benefit cap, what is the Government’s alternative to stop more kids in Britain going hungry?
Baroness Stedman-Scott [V]
I am aware of the letter and the Trussell Trust figures the noble Baroness refers to, but we have put more money into helping with food poverty, as I have said before. We had an all-Peers briefing about universal credit at which the two-child limit and benefit cap were talked about at great length. I am sorry that I cannot add anything to that at the moment.
Baroness Janke (LD) [V]
Half the total number of children in one-parent families are in poverty; the pandemic is disproportionately affecting these families. What specific measures will the Government take to improve the circumstances of these doubly disadvantaged children?
Baroness Stedman-Scott [V]
My Lords, our current focus is on supporting people financially through these unprecedented times. We are actively reviewing all measures at our disposal to identify how we can best support the economic recovery and ensure that the best possible employment support is in place. We will continue to look at these things. We understand the impact on single parents and lone parents, and I assure the House that the Government are doing everything they can at the moment to help in these difficult times.
The Lord Bishop of Durham [V]
My Lords, children in families with no recourse to public funds are at increased risk of facing poverty due to the pandemic. The increases the Government have announced do not offer support to the thousands of children whose parents have “no recourse to public funds” attached to their immigration status, making them extremely vulnerable to the pandemic’s effects. Will Her Majesty’s Government consider lifting the NRPF condition to protect children from poverty?
Baroness Stedman-Scott [V]
The changes we have made to the welfare system are part of a broader range of measures brought in across government to meet the need of those affected by Covid-19. We are doing all we can. The Home Office recently lost a judicial review case—not entirely on the subject of NRPF—but we continue to review the situation.
Baroness Stroud (Con) [V]
My Lords, we know that families in which two parents are working full-time are the least likely to be in poverty and that over the last few years there has been significant progress in supporting lone parents out of poverty, with a reduction in the number of lone parents in poverty. What steps are the Government taking to support lone parents during this time, when many on low incomes have been furloughed or had their hours reduced, and to protect fragile couple relationships—which we know have been under strain during Covid—to prevent a future impact on child poverty?
Baroness Stedman-Scott [V]
I have already mentioned the unprecedented fiscal package we have at our disposal to deal with this, but I would also like to talk about the Reducing Parental Conflict programme, which has a key role in supporting families during this challenging time. We are working with local delivery partners to ensure that the programme continues to be delivered during social distancing restrictions and being flexible and innovative in the ways we can reach families that require support to minimise the negative impacts of conflict on outcomes for children.
Lord Whitty (Lab) [V]
My Lords, others have referred to the troubling consequence of child poverty on children’s diets. The Minister says nothing more can be done, but the free school meal vouchers system ends in July, whereas the prolonged lockdown is now turning into the prolonged holiday. We need provision of free school meals and support for access to food, such as brunch clubs and breakfast clubs, all the way through to September. Why cannot the Government do what has been done in Wales and provide more such facilities for children in deprived areas here in England?
Baroness Stedman-Scott [V]
We are aware that the free school meal vouchers scheme is working for thousands of schools. I am pleased to say it has been reported that more than £120 million-worth of vouchers have been used. Under the benefits-related criteria, 1.3 million of the most disadvantaged children are eligible for and claiming free school meals. It is a matter for the DfE, so I will get my noble friend Lady Berridge to respond to that important point.
Universal Credit
Baroness Stedman-Scott Excerpts(4 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
The universal credit assessment period and payment structure are fundamental parts of its design. An assessment period must run its course, which includes a feed of earnings data from HMRC, before an award reflecting actual household circumstances can be calculated. This can be achieved only by having a model based on paying in arrears, and we have no plans to change that.
Baroness Sherlock (Lab)
I thank the Minister for that Answer. There have been 2.8 million claimants for universal credit since lockdown, and I fear many more will come. They are all being hit by the five-week wait. The Resolution Foundation found that on average, people going on to universal credit see their disposable income almost halved. All Ministers will offer is an advance, but that pushes people into debt and asks them to live on less than universal credit for a whole year to repay the debt. The Government have steadfastly resisted a deluge of calls from across the board to abolish the five-week wait or at least to turn advances into grants that do not have to be repaid. Why will they not do it?
Baroness Stedman-Scott
Non-repayable advances cannot be implemented without significant development of the universal credit system. No one has to wait five weeks. Advances are available urgently. The repayment schedule is to be extended to 24 months in 2021. Repayment can be delayed by three months in certain circumstances, and we removed the seven-day waiting period. This is all backed up by support from work coaches.
Baroness Fookes (Con)
My Lords, given the greatly increased burden on the DWP, can my noble friend indicate what measures are being taken to ensure that the benefits system can cope?
Baroness Stedman-Scott
I am pleased to be able to tell the House that we have seen unprecedented hard work and dedication by the staff of the DWP to make sure that the unprecedented number of claims have been paid in a timely and efficient manner. Our system is standing up to the challenge, and I am pleased to say that we have redeployed staff and introduced more IT equipment. Our highest priority is to pay the benefits that people need, and we are coping with that.
Baroness Boycott (CB)
My Lords, I declare an interest as chair of Feeding Britain, which has found that the poorest groups in our society are the only ones who have suffered a reduction in disposable income. They cannot afford to wait these five weeks. Will the Minister set a long-term target of reducing this wait and a short-term goal of introducing, with immediate effect, the department’s policy, which is not due to take effect until October 2021, of further easing the rate of repayment of advances?
Baroness Stedman-Scott
The noble Baroness makes a very good point and I understand where she is coming from, but I must tell her that there are no plans to do as she requests. Bringing forward the October 2021 easement is not something I have heard discussed, but I am happy to go back to the department and find out.
Baroness Lister of Burtersett (Lab)
My Lords, according to a recent Resolution Foundation survey, two-fifths of new UC claimants had not asked for an advance because they feared getting into debt—and debt it is, albeit interest-free. Will the Government therefore follow the foundation’s advice and at the very least suspend repayments for some months, following the welcome precedent set with other debt repayments, which shows that it is administratively possible, and if not, why not?
Baroness Stedman-Scott
Non-repayable advances cannot be implemented without significant changes to the system; this is not currently our policy intent. Funding to do it would be needed from the Treasury, costing an estimated £2 billion to £2.7 billion. With an advance, there are 13 payments over a year instead of 12, and as of next year the period over which advances have to be repaid will be extended from 12 months to 24 months.
Baroness Janke (LD)
People who are suddenly faced with zero income are unable either to wait five weeks for funds or to repay an advance by receiving lower payments, as required by universal credit. Will the Government consider providing an additional dedicated hardship fund via local authorities to provide immediate relief for people in urgent need?
Baroness Stedman-Scott
The issue of a local hardship fund has been raised and there is a recommendation for it to be put in place. I am afraid that we will have to wait for the outcome of those deliberations.
The Lord Bishop of Chelmsford
My Lords, the problems of the five-week wait have already been highlighted by other noble friends, and we should not underestimate their seriousness, but perhaps I may draw attention to some other temporary changes in universal credit. There has been an increase of £20 per week, which Ministers have stressed is a temporary, emergency measure, but the IPPR has calculated that if this had been in place since 2015, the UK would have entered this crisis with a pretty staggering 500,000 fewer people in poverty. Do Her Majesty’s Government plan to make this increase in universal credit a permanent feature, particularly as it would be such a help to children?
Baroness Stedman-Scott
My answer to the right reverend Prelate is that I know of no intention to make it a permanent arrangement.
Baroness Eaton (Con)
My Lords, can my noble friend explain the measures that are in place to support claimants with their housing costs?
Baroness Stedman-Scott
We have increased the local housing allowance to cover the lowest 30th percentile of the local market, and alternative payment arrangements to landlords have been put in place. If claimants have great difficulties, they can speak to their work coach or client adviser, who, if there is a way to help them, will do their best to find it.
Baroness Coussins (CB)
My Lords, the five-week wait has significantly increased household debt and anxiety as a result of council tax arrears. Will the Minister please press the Government to issue clear guidance to local authorities that collection and enforcement activity on council tax arrears, including all bailiff contact, should be suspended for a minimum of three months?
Baroness Stedman-Scott
I am happy to take that point back to the department and will write to the noble Baroness in due course.
Lord Desai (Lab)
Given that the Chancellor has shown flexibility in designing his deal for the unemployed, will the Government consider suspending, at least temporarily, all the cuts which people on universal credit have had to suffer and which, in any case, should have been removed? Will they suspend them for, say, another 18 months?
Baroness Stedman-Scott
I do not wish to be negative in any way but I have no knowledge of the Government considering that. Therefore, I am unable to say more than I have already said.
Baroness Bowles of Berkhamsted (LD)
Does not the mechanics of the whole-month approach to changes in circumstances create arbitrary fluctuations in income that are hard for those on low incomes to manage?
Baroness Stedman-Scott
I am not sure that I agree with the noble Baroness about the complexities of the changes. As we have made clear all along, we are trying to make the universal credit system replicate the world of work. However, I am aware that people on low incomes have difficulties, and I assure the noble Baroness that the Government want to do all they can to help them.
Baroness Altmann (Con)
My Lords, can my noble friend expand a little on the previous question and explain how the structure of monthly payments compares with the legacy system, which had much shorter time- scales?
Baroness Stedman-Scott
Universal credit is simpler and fairer than the legacy system. It is designed to target resources at those who need them the most and to provide support for people who cannot work. There is a monthly reconciliation, which we are absolutely clear is better than the annual reconciliation.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has elapsed. I offer my congratulations to all concerned, as we have got through all 10 questions. We come to the second Oral Question, from the noble Baroness, Lady Randerson.
Unemployment: Support
Baroness Stedman-Scott Excerpts(4 years, 6 months ago)
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
Without wishing to denigrate the size of the issue that we are facing, I make the point that although we have 2 million new claims to universal credit, this does not equate to the number of people who are becoming unemployed. Some are claiming because they are on part-time hours or their pay has decreased. Government employment Ministers are engaging with all government departments, businesses, stakeholders and front-line staff, to hear their views, learn from them, listen to ideas and make sure that we can provide the best possible support in this difficult time. I can assure all noble Lords that much is going on across government and that, in time, we will update the House with our progress.
Baroness Sherlock (Lab)
My Lords, those 2 million claims are up 856,000 in a month, and with one-quarter of the workforce on furlough this could get a lot worse soon. I welcome the changes that the Government have made but they do not match the scale of the crisis. People are losing jobs and hours but finding that the standard rate of universal credit is only £94 a week and the JSA just £74. When will the Government remove the savings threshold for universal credit and level up legacy benefits? Crucially, what is their plan to stop rising unemployment leading to home repossessions and widespread poverty?
Baroness Stedman-Scott
I am unaware of any plans to change the savings threshold at present, nor indeed to level up legacy benefits. The noble Baroness is right to keep us focused on the potential size of the problem that could be coming down the road, and I assure the House that we are closely monitoring the evolving labour market and the public health situation to identify and implement the most effective way to help people to stay in work and stay close to work.
Baroness Lister of Burtersett (Lab)
My Lords, many unemployed workers will not benefit from the additional financial support that has been announced because of the benefit cap, despite the grace period. Last week the Minister failed to answer my noble friend Lady Sherlock’s question as to why the Government are refusing to lift the cap during the crisis. Could she therefore answer it now and explain what purpose the cap serves when the labour market has “collapsed”, to quote the IFS, and moving home is not a realistic option?
Baroness Stedman-Scott
As it stands, the Government are not going to change the benefit cap, but it will be reviewed at some point. The noble Baroness’s point about people’s circumstances in terms of loss of income and not being able to move house is a very fair one; I thank her for raising it and I will take it back to the department. Tomorrow we have the all-Peers briefing with the Minister for Welfare Delivery, and I urge the noble Baroness to raise this point yet again.
Baroness Janke (LD)
What will the Government do to address the needs of under-25s and care leavers who find themselves on zero income and are currently treated unfairly under universal credit?
Baroness Stedman-Scott
The issue of care leavers is very important. We are providing a range of support. I am not aware of any changes to our position on universal credit regarding them, but I will take the matter back to the department and write to the noble Baroness.
Lord Blencathra (Con)
My Lords, I am concerned about young people, so I ask my noble friend what tools are available to help young people looking for employment to match their skills to current labour market vacancies.
Baroness Stedman-Scott
The Government have announced a National Skills Fund of £2.5 billion so that we can continue to upskill young people. Jobcentres are continuing to support them through these difficult times: they have started to re-engage with new and existing claimants and are reviewing all measures at their disposal. The DWP is in discussions with local partners, national partners and the Youth Employment Group set up by the Prince’s Trust. More importantly, we are working with all departments across Whitehall to make sure that a range of appropriate support is available to young people, including those from complex backgrounds, as raised by the noble Baroness, Lady Janke.
Baroness Uddin (Non-Afl)
My Lords, what assessment is being made of those currently unemployed and those facing imminent unemployment, particularly people with disabilities and autism? Can the Minister assure the House that her department, particularly post lockdown, will ensure that adequate financial support is made available to NGOs specialising in preparing specifically young disabled people for work and supporting them in it? Will she consider meeting the All-Party Parliamentary Group for Disability on this issue once she is available?
Baroness Stedman-Scott
I will answer the noble Baroness’s last point first: of course, I am prepared to meet groups that are trying to help people in this very difficult position. I am sorry that I am not in a position to make financial commitments, but I can say that the Prime Minister and the Chancellor have made it clear that we will do whatever it takes to help those affected by Covid-19. We are keeping the situation under continuous review.
Baroness Blower (Lab)
My Lords, the level of unemployment that we are confronting is, frankly, unthinkable. We know that even before this crisis many individuals and families were literally one pay cheque away from financial disaster. Noble Lords may not know just how low benefits are and how impossible they are to live on. We as a society have to find the resources to ensure that people can keep a roof over their heads, food on the table and clothes on their backs. Will the Government therefore convert universal credit advances into grants and end the five-week wait?
Baroness Stedman-Scott
The noble Baroness asks about converting advances into grants. I am sorry to say that the Government have no plans to do that. On the five-week period, no one has to wait five weeks for their money, but the five-week wait is an integral part of the design of universal credit. The Government are cognisant of the difficult situations that people find themselves in and are doing everything they can to support them in this difficult time.
Baroness Tyler of Enfield (LD)
My Lords, does the Minister agree that it is essential that government regulators and creditors work together to ensure that unemployed people who fall behind on essential bills and credit commitments are protected from falling into unsustainable debt by an immediate pause on all forms of collection and enforcement activity?
Baroness Stedman-Scott
I agree with the local Baroness that we must all work together to support those who are in debt. When it comes to suspending enforcement, there are very difficult questions and answers. I would like to go away and write to the noble Baroness after this Question on the specific point that she raises.
Lord Haskel (Lab)
Like other noble Lords, I am concerned about young people. Will the Minister be more specific about extra support, such as the transitional funding for training, support for the many disrupted apprenticeship schemes and perhaps reintroduction of Labour’s Future Jobs Fund, with guaranteed offers of work for, say, six months? Surely she will agree that improving their future careers would help us all through higher productivity, higher standards and fewer benefits paid.
Baroness Stedman-Scott
I completely agree with the noble Lord that we must invest in young people’s future careers, and I take his point about the Future Jobs Fund. I can only reiterate what I have said: we are doing everything that we can to help young people re-enter the labour market.
Baroness McIntosh of Pickering (Con)
My Lords, many of the self-employed in the hospitality and tourism sectors in rural areas such as North Yorkshire have suffered great losses. What support is being given to the self-employed in situations where they might have lost the greater part of the season, which is comparatively short? Are the Minister and the department braced for the next wave of major losses when the furlough scheme comes to an end?
Baroness Stedman-Scott
With regard to the hospitality sector, I assure the noble Baroness and the whole House that the Department for Work and Pensions is looking at what can be done to support people in it. With regard to a second wave, we will continue to respond in the way that we have done up to now.
The Lord Speaker (Lord Fowler)
My Lords, I regret that the time allowed for this Question has elapsed. I sincerely thank noble Lords and Ministers today. That concludes the Virtual Proceedings on Oral Questions. The Virtual Proceedings will resume at a convenient point after 12.45 pm for the Motion in the name of the noble Lord, Lord Dobbs, but for the time being proceedings are adjourned.
Automatic Enrolment (Offshore Employment) (Amendment) Order 2020
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That the Virtual Proceedings do consider the draft Automatic Enrolment (Offshore Employment) (Amendment) Order 2020.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, I shall speak also to the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020. I am pleased to introduce these instruments, which were laid before the House on 16 March, alongside my Written Statement of the same date setting out their purpose and effect. These instruments implement the conclusions of a 2018 statutory post-implementation review. The review concluded that automatic enrolment into workplace pensions should continue for eligible employees in the maritime industries, ensuring them access to a pension in the same way as workers in the rest of the UK economy. Subject to the approval of the House, the instruments will remove the sunset clauses contained in the original 2012 legislation so that it continues in force beyond the current expiry date of 1 July 2020. I am satisfied that the Automatic Enrolment (Offshore Employment) (Amendment) Order 2020 and the Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020 are compatible with the European Convention on Human Rights.
Today’s debate relates to the operation of the automatic enrolment policy framework and will allow the Government to deliver on the conclusions of the 2018 post-implementation review, which recommended that seafarers and offshore workers remain within the scope of workplace pensions. As we are all too well aware, this is a difficult time for our citizens, our country and our economy. Many employers and workers face unprecedented challenges and trying their best to keep going and meet their legal obligations, including those relating to workplace pensions. The Prime Minister and the Chancellor have made clear that the Government will do whatever it takes to support workers and businesses as they deal with the impact of the coronavirus pandemic, and that no-one should be penalised for doing the right thing.
As part of the Coronavirus Job Retention Scheme, the Government have made available dedicated grant payments for the compulsory minimum employer automatic enrolment contributions for furloughed workers. We have prioritised this help so that businesses can better manage their fixed costs and to support the principle of saving for the future, which it is important not to lose sight of during the current crisis.
The Chancellor announced on 12 May that the scheme would be extended to the end of October. It will continue in its current form to the end of July, with changes to allow more flexibility introduced from the start of August. The Government have committed to provide more specific details on the next stage of the scheme by the end of May.
The Pensions Act 2008 and secondary legislation in 2011 brought most employers within the scope of automatic enrolment and placed duties on them with respect to qualifying workers in their employ. At that time, the Government decided to delay the extension of these duties to the maritime industries to allow time for resolution of complex issues relating to the operation of international maritime law and custom, as these impacted how the workplace pension reforms would apply to seafarers and offshore workers.
In 2012, following additional public consultation on the specific impacts of the policy on these industries, the Government introduced regulations and an Order in Council to extend automatic enrolment to all qualifying maritime workers. This legislation included a statutory requirement for a post-implementation review, as well as the inclusion of sunset clauses in the instrument, taking effect on 1 July 2020.
The post-implementation review was carried out in 2018. Based on the available evidence, the Minister for Pensions and Financial Inclusion concluded that automatic enrolment should continue to apply to all qualifying workers in this industry sector. This followed on from our automatic enrolment review in 2017, Maintaining the Momentum, which had confirmed that workplace pensions should be available to all eligible workers, regardless of who their employer is or the sector in which they work.
Looking specifically at the maritime industries, I should make clear that “seafarers” refers to people working on board ships or hovercraft. This does not include share fishermen as they are self-employed and, like all self-employed people, out of the scope of automatic enrolment because they do not have an employer. Offshore workers are, broadly speaking, those working on oil or gas rigs in the North Sea.
I have considered the need to include a review clause in the instruments before the House today. The success of automatic enrolment is based on pension saving being the default option for working people across all sectors of the UK economy. A new review requirement applying to only the maritime industries would be counter to the policy objectives of these reforms and would create uncertainty for employers in those sectors and their workers. I have therefore not included one. The Department for Work and Pensions will of course continue to work closely with employers, workers’ representatives and the pensions industry to keep the policy under regular review, as we do with all our policy initiatives.
I conclude by reiterating the crucial importance of these workplace pension reforms, which are helping millions of employees in the UK to save for their retirement. This includes an estimated additional 26,000 seafarers and offshore workers saving into a workplace pension in 2019 as a result of automatic enrolment. I commend these instruments to the House and I beg to move.
Baroness Stedman-Scott
My Lords, I thank noble Lords for their thoughtful and constructive comments, including those who issued a challenge to the Government. I remind noble Lords that in my opening speech I said that the Prime Minister and Chancellor have made clear that the Government will do whatever it takes to support workers and businesses as they deal with the impact of the coronavirus pandemic and that nobody should be penalised for doing the right thing. As the noble Baroness, Lady Sherlock, just asked, I will endeavour to answer as many points as I can. Where I cannot, I will write to all noble Lords with answers to their questions.
Let me clear up the issue of the Statement to the House. I think the best I can do for the noble Baroness on that is to go back and talk to the Minister for Pensions and the Secretary of State and come back to her.
The noble Baroness, Lady Drake, is so well respected in this field. She spoke about automatic enrolment and our commitment. We have made wage support available to assist all businesses across the regions and sectors of the economy. We believe that this is the best way to support businesses and their workers during the current crisis. The Government will continue to monitor closely the impact of workplace pensions on businesses during the current period. Our objective is to continue to support employers and to balance the needs of businesses and savers, while being mindful of wider economic factors.
The noble Lord, Lord McKenzie, and my noble friend Lord Bourne asked about numbers, as did the noble Baroness, Lady Sherlock. An estimated 29,000 workers in the maritime industries will be automatically enrolled into a workplace pension by their employer as a result of these instruments, and of them 26,000 will not opt out. This breaks down into 18,000 seafarers and 8,000 offshore workers. Across the whole economy, more than 10 million workers have been automatically enrolled into a workplace pension scheme. I will write to the noble Lord, Lord McKenzie, on the other points he raised and to my noble friend Lord Bourne on fiscal relief.
The noble Baroness, Lady Burt, asked why the sunset clause was in the legislation to start with, but the noble Lord, Lord McKenzie, answered my homework there quite well. It was done because there were still complex issues that needed to be addressed and it enabled the legislation to go forward. The noble Baroness also asked about cruise ships, as did my noble friend Lady Fookes. I will go away and get the up-to-date position and write to noble Lords with the outcome.
My noble friend Lady Anelay raised two important points. On the first, the DWP considered stakeholder proposals on the design of a specific ordinary working test for seafarers during the post-implementation review consultation. However, these proposals would have created additional administrative complexity for employers in the maritime industries. Additionally, treating workers in the maritime sector differently from other workers is contrary to the policy design of AE.
My noble friend also asked about employers that are charities and voluntary bodies. The maritime industries are a small sector compared to the overall economy and there is no direct data on the varying size and types of employers in these industries. Therefore, the DWP impact assessment for these instruments makes assumptions about the impact of workplace pension duties across different employer sizes in these industries, based on the broad level of employer contribution across the whole country.
My noble friend Lady Fookes talked about the nationality of some of the people in the maritime industry and the impact of these regulations. The nationality of the worker, and whether their employer is foreign based or owned, is not relevant; it is not an issue. On the point she made about consolidation, no change is taking place. The instrument removed the sunset clause from existing legislation, so it continues to apply. This could not be a more minimalistic approach to legislating.
At this point, I would like to pay tribute to the Seafarers charity, as other noble Lords have done, and to other charities that work in this field. They do excellent work and I place on record our thanks for this.
The noble Baroness, Lady Northover, said that we should put our arms around those who are struggling. That is absolutely what we are trying to do—and we will continue to do so. I cannot answer her question about BP in Angola, but I will write to her.
It would be career-limiting for me to tell noble Lords that nothing is going to change on automatic enrolment. I do not see it happening at the moment, but the fact is that, in these difficult days, we must tread carefully on all these big issues. But we must not lose the good work that we have done on this wonderful system.
My noble friend Lady Altmann raised the issue of women and pension schemes. The Government have taken action to protect people’s jobs and to support and pay wages. We took the decision to help ease the burden of workplace pensions for employers with furloughed staff, and this will help many women impacted by the lockdown to carry on their savings.
My noble friend Lady Altmann also raised pension relief, along with the noble Baroness, Lady Janke. Pension tax relief is a matter for the Treasury—I am not trying to duck responsibility. The Government recognise the different impacts of the two systems in pay and pension tax relief. To date, it has not been possible to identify any straightforward or proportionate means to align more closely the effects of net-pay and relief-at-source mechanisms for this population. However, as announced in our manifesto, the Government will publish a call for evidence on pension tax relief administration to see how we can fix the issue.
Turning to the noble Lord, Lord Blunkett, I think it is no bad thing to sometimes support the opposition if it means that our hearts are beating in concert to carry on with something important. He talked about finding ingenious ways to ensure that the entitlement continues: if noble Lords have ingenious ways, I hope that they will write and let me know what they are.
The noble Lord, Lord Purvis of Tweed, the noble Baroness, Lady Kennedy, and my noble friend Lord Blencathra talked about the oil industry. The noble Lord, Lord Purvis, gave an eloquent and clear overview of the challenges faced in getting the economy on the road as quickly as possible. The best thing that I can do is go back to my colleague the Minister for Employment, who is looking at this sector by sector, and perhaps fix up a meeting for the noble Lord and the Minister. I also challenge the noble Lord: if he has ideas, will he put them on paper and let us have them? We really do need this.
Reducing the trigger to include more women and low-paid workers was raised by the noble Baronesses, Lady Sherlock and Lady Kennedy, and the noble Lord, Lord Foulkes. The automatic enrolment earnings trigger determines the level of earnings at which someone must be automatically enrolled by their employer and is currently set at £10,000. This is reviewed annually, and an equality impact assessment always forms part of the review. We will continue to keep it under review as the country recovers from the impact of the coronavirus pandemic, but I will take the points made back to the department. I also want to put on record that I agree with the points made by the noble Lord, Lord Foulkes.
Regarding the triple lock, the Government are committed to ensuring that older people are able to live with the dignity and respect that they deserve, and the state pension is the foundation of that support.
The noble Lord, Lord Foulkes, again made the point about carbon fuels and alternative jobs. Obviously, this will feature in the work that we do to recover the economy. It is a tribute to those who work in that industry. We must do all we can to get the country working again as quickly as possible.
As my noble friend Lord Wei said, the job is not done. We must not take our foot off the pedal. I will take back to the department his point about people overseas being put off employing British people and will write to him. I believe that the point about multiple pensions will be sorted by the work that we are doing on the dashboard in the pensions Bill.
The noble Lord, Lord Hain, and the noble Baronesses, Lady Janke and Lady Sherlock, talked about the self-employed. We know that the current automatic enrolment framework is not suitable. That is why last summer we commenced trials working with a range of partner organisations to help inform future policy interventions. My noble friend Lord Flight raised many questions; I will answer one now and write to him on the others. The auto-enrolment review set out our ambition to remove the earnings limit and lower the age threshold in the mid-2020s. I am glad that my noble friend Lord Blencathra is pleased that we have brought the sunset clauses back to the House, but on the point about the review in five to eight years, there has never been any discussion on that, but I will find out, as requested. The noble Baroness, Lady Janke, asked about a timetable for pensions work. I will find out about this and write to her. I am sure that I have not answered all the questions, but I have done my best and will write to noble Lords.
Automatic enrolment has been transformational in getting employees into the habit of pensions saving. It has reversed the previous decline, and with over 10 million workers being enrolled into a workplace pension, automatic enrolment has by all measures been a great success. The workplace pension participation rate for eligible employees between the ages of 22 and 29 has increased from 24% in 2012 to 84% in 2018. Automatic enrolment has helped eligible women working in the private sector and raised the level of their participation from 40% in 2012 to 85% in 2018. Our ambition for automatic enrolment remains the same in relation to the 2017 review, but there is a need to reflect carefully on the current economic circumstances. It has been a huge success that we want to build on. As we have seen today, it is also important that we have the consensus to do so, so I welcome the support of noble Lords today.
As announced by the Chancellor on 12 May, the furlough and job retention scheme has been extended until the end of October. It will continue in its current form until the end of July; changes to allow more flexibility will be introduced from the start of August. This scheme is just one part of the Government’s response to coronavirus, which includes an unprecedented package for the self-employed, with loans and guarantees that have so far provided billions of pounds in support, tax deferrals and grants for businesses. The Government will continue to monitor closely the impact of workplace pensions on businesses during the current period. Our objective is to continue supporting employers and balance the needs of businesses and savers, as well as taxpayers, at this difficult time.
These instruments remove the sunset clauses from the existing legislation so that automatic enrolment into workplace pensions continues to cover eligible employees in the maritime industry, ensuring that these workers continue to have access to pension saving in the same way as the rest of the UK economy. I commend these instruments to the House. I beg to move.
Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020
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That the Virtual Proceedings do consider the draft Occupational and Personal Pension Schemes (Automatic Enrolment) (Amendment) Regulations 2020.
Universal Credit
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, we monitor the impact of the benefit cap policy and publish these findings every three months. The latest available statistics were published last week, on 7 May, and reflect the position as at February this year. The next publication, scheduled for 6 August, will reflect the current position and the impact of the increases awarded from April of this year.
Baroness Lister of Burtersett (Lab)
My Lords, welcome as the increase is, many thousands will not benefit because of the cap, which is already causing real hardship and unfairness, as demonstrated by the Work and Pensions Committee, yet it is not realistic or safe at present to expect people to seek work or reduce housing costs to avoid it. Will the Government now listen to anti-poverty and faith groups, the IFS and others, and urgently fulfil their statutory duty to review the cap and suspend it, or, if operationally easier, raise it significantly?
Baroness Stedman-Scott
I must be very clear that it is not the Government’s intention to change the current level of the benefit cap. What I want to point out is that claimants may benefit from a nine-month grace period, where their universal credit will not be capped, if they have a sustained work record. Exemptions will also continue to apply for the most vulnerable claimants who are entitled to disability benefits and carer benefits. I finish my answer by saying that the Government have quickly and effectively introduced £7 billion-worth of measures that benefit those facing the most severe financial disruption.
Baroness Couttie (Con)
Many people who have recently found themselves made redundant as a result of the Covid-19 crisis will be struggling on universal credit. Some of these people will have decided to isolate with vulnerable loved ones to provide them with the care that they need to be protected from the disease. This can lead to added expense. Will the Government consider removing the benefit cap for such people?
Baroness Stedman-Scott
Claimants who receive certain benefits for caring or for a severe disability or health condition will not have their benefits capped. This ensures that the most vulnerable people are protected. Universal credit households are exempt from the cap if the household earnings are at least £604 each month. Households may also be exempt for a period of nine months, if they have a sustained work history.
Baroness Meacher (CB)
My Lords, advances for universal credit claimants have to be repaid when claimants finally receive their benefits—after at least five weeks, and often very much longer than that. But their benefits will be well below subsistence level, due in part to the benefits cap, but also to the two-child limit, and to very tough rent and council tax rules. Could any Minister maintain their mental health in these circumstances? I absolutely could not—and I mean that. Will the Minister plead with her colleagues for urgent further changes—I understand that some have been made—to protect the mental health of universal credit claimants?
Baroness Stedman-Scott
The noble Baroness makes an excellent point: these are very difficult times. People are struggling in all sorts of ways, and we are mindful of the impact of mental health issues. I am afraid that I am unable to make any commitments around the points that the noble Baroness made, but I will say that, in these very difficult times, nobody has to wait five weeks. Since 16 March, we have issued 700,000 advances, and the majority have received their money within 72 hours.
Baroness Sherlock (Lab)
My Lords, can I bring the Minister back to the point made by my noble friend Lady Lister? The Government’s argument for the benefit cap was that you can always escape it by just going and getting a job or moving to a cheaper house. But that is simply not possible at the moment. The Minister says that the Government are not going to lift the cap. Given the demand from the IFS and over 50 organisations, and given the Commons Library estimates that an extra 18,000 families are being drawn into the benefit cap as a result of the Government’s actions, can she tell the House not merely that they will not do it but why they will not do it?
Baroness Stedman-Scott
I draw the noble Baroness’s attention to the fact that, in a repeated Oral Statement and at Oral Questions, the Secretary of State was absolutely clear that this benefit will not be changed. I agree with her that things are very difficult at the moment. That is why we have tried to be as flexible as we can by introducing this £7 billion package which gets to the people who are in the most difficult group, removing the minimum income floor, increasing UC, pausing deductions for historic debts, introducing statutory sick pay from day one and increasing working tax credits from over £1,000 to £3,000. I cannot give her any other answer than that, but I can make a commitment to take her question back to the department and again ask what she and others would like me to ask.
Baroness Janke (LD)
Is the Minister aware that 85% of those who have had benefits capped are single parents, many of whom have lost jobs through the current crisis? To ease the severe hardship these families are suffering, will the Government at least consider suspending the benefits cap pending a future review?
Baroness Stedman-Scott
The benefit cap is reviewed once in every Parliament. The Secretary of State will do this, although I cannot tell noble Lords when. Until that happens, I am not aware of any intention or plan by the Government to remove the cap.
The Lord Bishop of Durham
I thank the noble Baroness for again highlighting how the benefit cap is trapping families in poverty. In light of the report published last week by the Church of England and CPAG which estimates that around 60,000 more families will be affected by the two-child limit due to Covid-19, what assessment have Her Majesty’s Government made of the impact of this limit on families who have made a new universal credit claim since the lockdown?
Baroness Stedman-Scott
I will need to go back to the department and ask whether an assessment has been made. I am mindful of the recent Child Poverty Action Group report and was grateful to receive an advance copy. My officials are carefully considering this, and I hope to be able to write to the Child Poverty Action Group and the Church of England this week to cover the point that the right reverend Prelate just made.
Lord Balfe (Con)
My Lords, I point out that, as far as I am aware, Labour is not committed to ending the benefit cap; let us start by saying that. It seems that we can never do enough, but would the Minister agree to look very carefully at the situation as it unfolds and confirm that, where we can make minor adjustments, we will? But we have to realise that there is a limit to the amount of money we can spend.
Baroness Stedman-Scott
My noble friend makes a very valid point. These days are very difficult and the situation is fast-changing. We are reviewing and considering things on a daily basis. There is nothing at all in our plan that aims to make life worse for people; in fact, it is quite the opposite. When noble Lords look at what we have done, we have moved quickly and effectively to try to bring additional resource and support into the system.
Baroness Boycott (CB)
My Lords, one of the drivers of food bank usage identified by Feeding Britain—I declare an interest—is the monthly sums deducted from universal credit to repay advance payments. The Chancellor’s plans to lower the rate of deductions and extend the repayment period are not due to take effect for another 18 months. Would the department not consider bringing them forward immediately for existing claimants and replacing advance payments with targeted grants for all new claimants from now on?
Baroness Stedman-Scott
I advise all noble Lords that there is no plan to convert advances to grants. I must be clear about that, although I know that it is not what people want to hear. However, I will take the point back to the department and see whether there is any movement, and I will give a written response to the noble Baroness.
Lord Liddle (Lab)
Given that, because of Covid, we are in all likelihood entering a period of much higher unemployment when it will be more difficult for people to get a job, does the Minister agree that there is a case for a review of universal credit and suspending the benefit cap until such a review has taken place?
Baroness Stedman-Scott
I think that I have answered the questions about the benefit cap and reviewing benefits quite adequately during the course of the Question. I agree that these are very challenging times. We have launched a job help website and an employer help website. We will turn every stone to ensure that we help people back to work as quickly as possible.
The Lord Speaker (Lord Fowler)
My Lords, the time allowed for this Question has, regrettably, elapsed.
Covid-19: People Living in Poverty
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The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Stedman-Scott) (Con)
My Lords, I thank the noble Baroness, Lady Bennett, for securing this very important debate, and for giving us all an opportunity to put forward ideas and recommendations for things that need to be done. It is an important discussion and I am sure that it will continue. I am quite sure that I will not be able to answer everybody’s questions in such a short period, but I give an absolute guarantee that I will write to clarify our position on every question that noble Lords have asked.
This has been an extraordinarily difficult time. The Government are committed to a huge and unprecedented programme of support to mitigate the strain that Covid-19 is putting on households, livelihoods, business and our nation’s economy. The measures we have put in place will help to ensure that everyone, including those most at risk, can get the support they need to pay their bills and put food on the table.
Let me leave all noble Lords in absolutely no doubt that the Government are committed to helping, to doing what they can and to making sure that people do not fall through the net. We have taken swift action to strengthen the welfare safety net with a package of additional support worth £7 billion—one of the largest support packages in the world. The standard allowance of universal credit and working tax credit has been increased by £20 a week for the next 12 months, benefiting 4 million households. I am pleased to say that those who applied for universal credit on 16 March received their first payments last week, and around 93% of all applicants for universal credit are expected to receive their payments on time and in full. As my noble friend Lord Balfe said, that is thanks in large part to the tens of thousands of DWP staff who have been working around the clock to make sure that this happens. It is a great achievement in a very difficult time. The noble Baronesses, Lady Ritchie and Lady Sherlock, and my noble friend Lady Stroud said that whatever we do has to be fair, equal and compassionate. I can tell your Lordships that the Government have compassion by the bucketload. I would not say that if I did not believe it.
To support claimants through this difficult period, we have also suspended the recovery of various government debts, such as tax credit overpayments, benefit overpayments and social fund loans, for a three-month period. The Government continue to support and protect pensioners. The Government have made it clear that nobody should have to be worried about the threat of eviction during these times. We have increased the local housing allowance rates, meaning on average an extra £600 will go into the pockets of those who need it most. We are protecting tenants with almost £1 billion of additional support for renters and have banned rent evictions during the crisis. We have introduced mortgage holidays to protect homeowners and landlords.
We have introduced regulations already that disapply the minimum income floor to all self-employed universal credit claimants affected by the impact of Covid-19, whether they are ill or self-isolating, meaning that a drop in earnings will be reflected in their benefit award. New claim advances are of course available urgently to support those in immediate financial need until their first universal credit payment is made. I have to be straight with noble Lords: I know of no plans to convert an advance into a grant.
Although the benefit cap remains in place, for some of those who are new to benefits but have been employed for the previous 12 months, that cap will not apply for a nine-month period. This exemption will also apply to existing universal credit claimants who have sufficient earnings in the previous year to be exempt from the cap. Exemptions will continue to apply for the most vulnerable claimants, who are entitled to disability and carer benefits. Households are still able to receive benefits up to the equivalent salary of £24,000, or £28,000 in London.
We come now to the question of universal basic income. This Government have focused their measures on things which can be implemented as quickly as possible and target support to those who need it; a universal basic income would not achieve this. Providing a flat payment to everyone would fail to target those who need more support and may not meet the additional needs of those such as disabled people, lone parents and people further from the labour market. I understand that Finland trialled universal basic income and scrapped it early, because it was not working. As other noble Lords have pointed out, it is also far too expensive.
Defra has been undertaking a lot of work to support food banks, while other charitable organisations have worked within the sector and with the supermarkets to get as much food as possible to people who need it. The measures taken also include £3.25 million for food redistribution across England, including through food banks, allowing redistribution of up to 14,000 tonnes of surplus stock to the vulnerable. We have liaised with the food bank fraternity and will continue to do so.
The Government have announced a £500 million hardship fund, as part of the measures to support those affected by Covid-19, so that local authorities in England can support vulnerable people and households. This funding will enable local authorities to increase the local housing allowance for universal credit and housing benefit claims.
On the work that we have been able to do for rough sleepers—Dame Louise Casey has done outstanding work—I say to my noble friend Lord Young that, as well as bringing people off the streets and out of shared communal spaces, we are focused on ensuring that those with a history of rough sleeping who have been accommodated during the crisis have appropriate options for accommodation going forward. It is only responsible that we work with partners to consider how best to support those rough sleepers who have been moved into accommodation once the immediate crisis has been resolved.
Regarding economic support and recovery, today our focus is rightly on helping the vulnerable. However, our ambition remains to build an economy which ensures that everyone, no matter their background, has the opportunities to enter work and progress, while being supported by the welfare system. My ministerial colleagues in the Department for Work and Pensions are already working to ensure that existing vacancies can be accessed easily by people who have lost their jobs, and that we do everything we can to keep those people in good shape while they are waiting for that commercial opportunity for them to work.
Let me try to answer some of the questions raised today. The noble Baroness, Lady Bennett, raised sanctions. UC and both legacy and new-style JSA work preparation for face-to-face interviews and related sanctions have been disapplied from 19 March. This will initially be for a three-month period and claimants will not be sanctioned for not attending interviews after this time.
The noble Baroness, Lady Bennett, made a good point about mothballing schemes so that they are ready to come out if we ever need them again. I will be sure to pass this on to my policy colleagues. The noble Baroness, Lady Drake, talked about reappraising values. I think everybody agrees that once we have passed the damage caused by this virus, things will not be the same again. I hope that we will hold on to and build on some of the values we have seen coming out in communities and in my Government.
The noble Baroness, Lady Bennett, asked for a framework on decision-making. I have no answer for her on that at the moment, but I will write to her. The noble Lord, Lord Oates, talked about grants and writing off advances. I am sorry to tell him that I do not have any information on this or know of any plans to do so. The noble Lord, Lord Best, raised the issue of debt—a major problem before this crisis, let alone now, and one to which the Government are giving serious attention.
The right reverend Prelate the Bishop of Durham and I have had many conversations about the support for a maximum of two children. The Government and I understand where he is coming from and I have no doubt that the campaign for this will continue. We recognise that some claimants cannot make the same choice about the number of children in their family. That is why exceptions are in place. However, I must reiterate that families on benefits should have to make the same financial decisions as families supporting themselves financially. We feel that this is really important.
The benefit cap was raised by the noble Baronesses, Lady Lister and Lady Bowles, and the right reverend Prelate the Bishop of Durham. It is to be reviewed once in each Parliament; I know that it was not done in the last Parliament and we are waiting for the Secretary of State to decide if and when to do it in this Parliament. However, existing and new claimants may benefit from a nine-month grace period when their universal credit will not be capped, if they have a sustained work record. Claimants can approach their local authority for discretionary housing payments if they need additional help.
The noble Baroness, Lady Warwick, raised the housing benefit cap. I will go away, find the answer to her question and write to her. The noble Baroness, Lady Randerson, talked about the ferry industry. Again, I will go to the relevant department and make sure that she gets a letter on that. I am sure that audit trails are in the Government’s plans and will be carried out. I think my time is nearly up. I am a bit lost without the Clock in the Chamber. Am I nearly up?
Baroness Stedman-Scott
Okay. I will just build on what was said by the noble Baroness, Lady Falkner, and the noble Lord, Lord Balfe. All of this will have to be paid for. There is no doubt about that. Our colleagues in the Treasury and BEIS will be looking around the world to see who has the best ideas. I will make sure that I write to the Chancellor with that suggestion and that the German example given by the noble Baroness is considered.
In response to the noble Lord, Lord Woolley, I do not know of any plans for a race equality strategy, but I will put the idea forward. I do not know about the idea of the noble Lord, Lord Liddle, of a new leverage, but this Government are open to all ideas that will improve the lives of the people we are in business to serve. If noble Lords have ideas, please let us have them.
Universal credit gets a lot of criticism—it also gets a lot of praise, which I am very pleased about. However, in this terrible time, let us take a moment to think: if the old system were in place, people would be applying for six benefits instead of one and they would be paper-based instead of automated. We are getting people paid on time and in full; at the moment it is at 93%. That is a great credit to the people working on it. As I have said, I will write to all noble Lords after this debate with the answers they are owed.