Benefit Sanctions

Debate between Chris Stephens and Stephen Timms

Tuesday 13th December 2022 Westminster Hall

[Chris Stephens]

I thank my good and hon. Friend for that intervention. I will mention similar specific case studies, and there are clear questions for the Department to answer on this matter.

Going back to the Work and Pensions Committee 2018 report, it criticised the fact that a sanction incurred under one conditionality regime continues to apply even if the claimant’s circumstances change and they are no longer able or required to look for work. The report said that the sanction serves no purpose in such circumstances, and the Work and Pensions Committee recommended that it be cancelled. It further criticised the fact that the decision to impose a sanction is made by an independent decision maker

“who has never met the claimant and who cannot be expected to understand fully the circumstances that led to them to fail to comply.”

It therefore recommended that work coaches should be able to recommend

“whether a sanction should be imposed”.

The Government responded to the report and each of the Work and Pensions Committee’s recommendations in January 2019. They agreed to evaluate the effectiveness of reforms to welfare conditionality and sanctions, and said that it would be focused on whether sanctions within the universal credit regime are effective at supporting claimants to search for work. The Government said they would look to publish the results in spring 2019, but that did not happen, and DWP Ministers were still saying in July 2020 that the Department was committed to conducting an evaluation and that it would look to so by the end of 2020. In January 2022, however, The Guardian reported that the Department for Work and Pensions had refused a freedom of information request from Dr David Webster to release a copy of the evaluation.

In February, it was reported to the Lords that the Department had not published its evaluation of the effectiveness of universal credit sanctions because it lacked robust legacy data. The former Secretary of State told the Work and Pensions Committee—in fact, it was in answer to the Chair, the right hon. Member for East Ham (Sir Stephen Timms), who is present—that she had noted that the evaluation had been commissioned by a previous Administration, and she explained that the notion of a sanction acts not only through its imposition on a claimant but, importantly, through its effect as a deterrent. That raises a couple of questions.

[Sir Stephen Timms (East Ham) (Lab)]

I am grateful to the hon. Gentleman for his points about the Select Committee’s report, and I pay tribute to him for his work on this subject. I understand that his membership on the Committee will shortly come to an end, but I thank him very much for all his work.

The hon. Gentleman will have heard the new Secretary of State say that he will want to have a fresh look at whether some of the things that the Department has refused to publish in the past should have been published. Does the hon. Gentleman agree that this particular report should be high on that list of priorities?

Pensions Guidance and Advice

Debate between Chris Stephens and Stephen Timms

Tuesday 1st March 2022 Westminster Hall

[Stephen Timms (East Ham) (Lab)]

I start by congratulating the hon. Member for Amber Valley (Nigel Mills) on securing the debate and on his opening speech.

There was a serious flaw in implementing the pension freedoms. They were announced by George Osborne in his Budget speech in 2014 and implemented the following year. He said in his announcement that

“no one will have to buy an annuity. We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have.”—[Official Report, 19 March 2014; Vol. 577, c. 793.]

It was a very clear recognition of the risks involved in people having much more latitude over their pension savings—often the largest sum of money they will ever have access to—and that the Government needed to ensure that everyone had guidance to help them make sound decisions. However, that guarantee has never materialised, and the hon. Member for Amber Valley was absolutely right to say that hundreds of thousands are accessing their pension pots without understanding what they are trying to do.

We do have the Pension Wise service, which is excellent. It is free and impartial, as George Osborne promised, and as the hon. Member for Amber Valley said, it gets very good ratings from those who use it—the problem is that very few people do. As my hon. Friend the Member for Kingston upon Hull West and Hessle (Emma Hardy) rightly said—I apologise to her for being absent for some of her speech—one of the reasons why Pension Wise is important is so that people can avoid being scammed. In June 2015, I received from the Treasury the answer to parliamentary written question 2227, which said that

“Pension Wise was launched to help people understand their options when taking advantage of the pension freedoms, including how to spot and avoid scams.”

Over the past seven years, there has been a very big phenomenon of pension scams that it is in everybody’s interest to prevent. So the default should be that people get a Pension Wise appointment.

[Chris Stephens (Glasgow South West) (SNP)]

Is the Chair of the Select Committee as concerned as I am that, despite Pension Wise being an excellent service, the number of Pension Wise appointments is actually falling? There is real concern here, which is why many of us want to see auto-appointments.

[Stephen Timms]

The hon. Gentleman is absolutely right.

The importance of guaranteeing guidance was stressed repeatedly, not just in George Osborne’s announcement but by the Government in the couple of years afterwards. The Treasury’s public financial guidance review, published for consultation in March 2016, said:

“Guidance is vital to ensure that individuals are fully aware of their options before they make a decision on what to do with their retirement savings”.

The hon. Member for West Worcestershire (Harriett Baldwin), who was then Economic Secretary, said in April 2016 that the Government were introducing

“a requirement that, in effect, ensures that consumers with a high-value annuity receive appropriate financial advice before making the decision to sell their annuity”.—[Official Report, 19 April 2016; Vol. 608, c. 876.]

In April 2018, her successor—the current Economic Secretary—the hon. Member for Salisbury (John Glen), said that before proceeding with an access or transfer application,

“subject to any exceptions, schemes must ensure that individuals have either received Pension Wise guidance or have opted out.”—[Official Report, 24 April 2018; Vol. 639, c. 831.]

That commitment, which the Minister appeared to believe he was delivering four years ago, has never been delivered.

The Treasury has very good reason to be concerned that people should make sound decisions in this area, but so does the Minister’s Department. Baroness Buscombe, when she was a Minister at the Department for Work and Pensions, said in May 2018 that

“We all want people to make more informed decisions and to make it the norm to use Pension Wise before accessing their pension.”—[Official Report, House of Lords, 1 May 2018; Vol. 790, c. 1995.]

Let me quote back to the Minister what he said in a debate on the Pension Schemes Act 2021, that Pension Wise should become the norm. He has since distanced himself a bit from that view, but he did express it: on Third Reading, I said that I was sorry he had not followed Baroness Buscombe and expressed the view that Pension Wise should become the norm, and he intervened on me to correct me. He said:

“I do—I said so.”—[Official Report, 16 November 2020; Vol. 684, c. 136.]

I responded to his intervention by welcoming the apparently universal agreement that taking up Pension Wise guidance should be the norm. Everyone agreed, but in October 2020, the Department published the “Stronger Nudge to pensions guidance” statement of policy intent, which said that the new nudges that would be introduced would increase take-up from one in 33 to one in nine. The most recent figures quoted by the Social Market Foundation last week suggest that take-up now stands at about one in seven.

As the hon. Member for Amber Valley said, the expectations at the start were way higher than that. Michelle Cracknell, the then head of the Pensions Advisory Service, which was subsequently absorbed into the Money and Pensions Service, said in evidence in October 2014 that

“ambition is that the take-up rate will be very high, with over 75% of people taking the guidance”,

but that it might only be 25% to start with. In fact, it has never got anywhere near 25%, let alone 75%.

The Committee’s concern about Pension Wise take-up is long-standing and goes back well before I became Chair, to the period years ago when the hon. Member for Amber Valley was a member of the Committee. The Committee’s 2017 report stated:

“Free and impartial Pension Wise guidance, provided by telephone or face-to-face appointment, is greatly valued by those who use it. Take up, however, is not high enough.”

The report went on to point out that

“the existing Pension Wise promotion regime”

had

“proved insufficient.”

It is a very good service: nine out of 10 of those who use it report high or very high satisfaction—that is a pretty impressive—but it is hidden away from most people. The default ought to be that people get an appointment. That is why the Committee has recommended at least trialling automatic Pension Wise appointments.

Sir Hector Sants, the chair of the Money and Pensions Service, told the Committee in March that 72% of people change their mind about what they will do with their pensions savings as a result of talking to Pension Wise. As he pointed out,

“that tells you that the vast majority of people, left to their own devices, will probably make a poor decision.”

As far as I can see, the Government’s current policy will leave the great majority of savers in exactly that position.

We need to do more. Government and regulators need to end their indifference on this. We need at least a trial of auto-enrolment into a service that enables better outcomes from pensions savings. There will no doubt be difficulties, but let us at least try it out. The Money and Pensions Service has told the Committee that it would be very happy to support a trial.

The Committee recommended that

“the Government sets a goal for the Money and Pensions Service for the combined use of Pension Wise and paid-for advice when accessing pension pots for the first time”

of

“at least 60 per cent”.

The Minister suggested in his intervention that he thinks use might not be far from that level at the moment, so let us use that as a clear goal. The Committee also recommended

“that automatic Pension Wise appointments are trialled.”

We suggested

“two trials: one with an appointment when a person accesses their pension for the first time and another at the age of 50, before they can access their pension savings.”

I commend those proposals and recommendations to the Minister.

Department for Education

Debate between Chris Stephens and Stephen Timms

Tuesday 26th February 2019 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

I want to raise one topic, which has already been touched on by my hon. Friend the Member for High Peak (Ruth George) in her excellent speech opening the debate: namely, the current five-week delay between claimants applying for universal credit and being entitled to their first payment. Like the hon. Member for Edinburgh West (Christine Jardine), I welcome the change of tone from the Secretary of State and her frank acknowledgment of the fact, long denied by her predecessors, that the roll-out of universal credit has increased demand at food banks.

The theory of the five-week delay was explained to us by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) during the coalition period. He explained that people leaving a job will have their last monthly pay cheque in the bank, which will keep them going for a month. In addition to the normal waiting days, which have always been part of the benefits system, that results in a delay of five or six weeks.

There are some obvious problems with that justification. For example, what about those who are paid weekly? The hon. Member for Bexhill and Battle (Huw Merriman) told us that 75% of people are paid monthly—that may well be right; I think it is about right—but what about the 25% who are not? According to the latest annual survey of hours and earnings, 16.2 % are paid weekly and 2.9% are paid fortnightly. What are those people supposed to do during this five-week gap? The Government’s justification for the five-week gap clearly does not apply to them.

I have repeatedly pressed Ministers on this subject. They are not capable of providing a justification for the five-week delay for people who are not paid monthly. I do not blame them, because there is no justification. I confidently predict that we are not going to hear a justification that works for them when the Minister winds up this debate. What about people on zero-hours contracts? They cannot be confident of having had a monthly pay check when they left their last job either. Even more starkly, the five-week gap will also apply to the millions of people about to be transferred from legacy benefits to universal credit.

[Chris Stephens (Glasgow South West) (SNP)]

On zero-hours contracts, does it alarm the right hon. Gentleman that someone on universal credit who comes out of a zero-hours contract job could be sanctioned, whereas if they were on a legacy benefit, they would not be sanctioned?

[Stephen Timms]

The hon. Gentleman is absolutely right. On JSA, people could not be sanctioned for that and on universal credit they can. I agree with him that that is wrong. That was revealed in a very recent written answer.

Another written answer to a question I asked last week told us that 57% of new universal credit claimants are taking an advance. The proportion of those applying for universal credit who have a month’s savings, as the policy assumes, is less than half. Most applicants have to go into debt to the DWP and take an advance to stay afloat in the first five weeks. Having been forced into debt in that way by the Department, far too many people find it impossible to get out of it. That is why we have seen the big increase in demand for food banks.

The Secretary of State suggested that the problem was temporary, because of early glitches in the roll-out of universal credit. No doubt it is true that the extraordinary delays that were experienced at the start of the universal credit roll-out did make things even worse, but the fact that over half of applicants are forced into debt by taking an advance, because they do not have the money in the bank that the policy assumes they will have, is why so many people have to use food banks and why so many get into arrears with their rent. This problem is hard-baked into the Department’s current policy.

The Trussell Trust made the point that it found the increase in referrals to its food banks was 52% in areas where universal credit had been rolled out for 12 months or more, compared with a 13% increase for areas where it was, at most, three months since universal credit had been rolled out or it had not rolled out at all. In other words, when universal credit is well-established and has been there for at least 12 months, the increase in referrals to food banks is greater than when universal credit has just been introduced. The Trussell Trust has been pointing that out for a considerable length of time.

Another change of tone I welcome came in another written answer last week. It told us that the Department is now working with the Trussell Trust to see if it is possible to develop—I think this is how it referred to it—a “shared conclusion” about the impact of universal credit on food bank demand. I shall certainly be very interested to see that shared conclusion when it is published. The Trussell Trust briefing for this debate highlights the five-week delay as among the

“urgent problems causing significant hardship”.

It goes on to say that Trussell Trust food bank referrals due to benefit delays are increasingly driven by this initial wait. It is a huge problem that needs to be fixed.

Draft Important Public Services (Health) Regulations 2017 Draft Important Public Services (Border Security) Regulations 2017 Draft Important Public Services (Fire) Regulations 2017

Debate between Chris Stephens and Stephen Timms

Wednesday 1st February 2017 General Committees

[Stephen Timms]

I hope the hon. Gentleman also shares a passion that many in the House have for freedom and for being reluctant to legislate to curtail people’s freedoms and rights. As parliamentarians we are obliged to protect the rights of individuals and to be extremely reluctant to legislate to reduce and curtail those rights. Sadly, that is exactly what we are being encouraged to do this afternoon.

[Chris Stephens]

Will the right hon. Gentleman confirm that in his experience, after a ballot result has been provided a trade union will then make an assessment of the likelihood of successful industrial action? On occasion, for ballots with low turnouts, trade unions have decided not to proceed further.

[Stephen Timms]

The hon. Gentleman is absolutely right; that is the normal practice. When opening the debate for the Opposition, my hon. Friend the Member for Sheffield, Brightside and Hillsborough gave the example of the Royal College of Midwives. I think I heard her correctly when she said that it recently had its first strike since its creation in 1880-something. Why on earth are we legislating to make it harder for them to strike in future? Unless we believe a huge zeal for industrial action that we have not seen in the past is about to hit us, why on earth are we legislating? I am genuinely puzzled.