Oral Answers to Questions

David Mowat Excerpts

Monday 11th July 2016 Commons Chamber

[Mr Vara]

As I said, the result of the referendum came only some few days ago, but I can assure the hon. Gentleman that detailed conversations are going on in the Cabinet unit. Let me provide him with the further assurance that Britain still remains a member of the EU. I want to reassure British people living in EU countries and those EU citizens who are living in the UK that there will be no immediate changes in their circumstances.

[David Mowat (Warrington South) (Con)]

3. What progress his Department has made on auto-enrolling people into workplace pensions.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

Automatic enrolment has been a great success with nearly 6.3 million people automatically enrolled into a workplace pension by almost 143,000 employers. We will continue with our programme to get many more people enrolled.

[David Mowat]

Auto-enrolment has met or exceeded all initial targets. However, to maximise pensions in the long term, we need to bear down on charges. Two years ago, the Government put in place a cap of 0.75%, which is half that permitted by the Opposition when they had one for stakeholders. The Government said they would review the level of the cap, with a view to it being lower in future. Will the Minister update us on the status of that review?

[Mr Vara]

I am grateful to my hon. Friend for raising this very important issue. I can give him an assurance that, in 2017, we will review whether the level of the charge cap should change, and whether to include some or all transaction costs in the cap.

Oral Answers to Questions

David Mowat Excerpts

Monday 9th May 2016 Commons Chamber

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

Since PIP was introduced 22,000 more people have accessed the Motability scheme, so I do not recognise the hon. Lady’s account.

[David Mowat (Warrington South) (Con)]

T6. The business case for universal credit identifies savings of £80 million a week in steady state after implementation. These come both from IT simplification and from the removal of barriers to getting back into work quickly. Will the Secretary of State confirm that there is a focus not just on delivering the technology, but on ensuring that those benefits will be delivered when the time comes?

[Stephen Crabb]

Since I was made Secretary of State for Work and Pensions I have made a number of changes to the way in which the roll-out of universal credit is overseen in the Department, stressing the importance of a careful and controlled roll-out. The one outcome that matters for everyone is that people get their benefits paid on time and correctly, and our approach is making sure that that happens.

Under-occupancy Penalty

David Mowat Excerpts

Thursday 28th January 2016 Commons Chamber

[Justin Tomlinson]

Not at all, because these people have been given the money that shows that discretionary housing payment works.

[David Mowat (Warrington South) (Con)]

When the Labour party introduced the spare room subsidy for the private sector, there was no discretionary housing payment to go with it. Have we made an assessment of whether we could extend discretionary housing payment to the spare room subsidy introduced by Labour?

[Justin Tomlinson]

Why was no additional support provided to vulnerable people when Labour introduced it for the private sector? That was not fair.

Oral Answers to Questions

David Mowat Excerpts

Monday 22nd June 2015 Commons Chamber

[Justin Tomlinson]

I thank the hon. Gentleman for raising that issue—I know he has been a real champion for the cause. I am happy to meet him, but he should remember that the reason we do reassessments, where appropriate, is that sometimes conditions get worse and support for them will therefore increase. We would not want people to miss out, as they did under DLA.

[David Mowat (Warrington South) (Con)]

Earlier, the Minister pointed out that we have brought in a 0.75% cap on private pensions that are subject to auto-enrolment. That is excellent news. However, there is also abusive behaviour more widely in the industry. Do we expect that cap to be extended to non-auto-enrolled pensions?

[Mr Duncan Smith]

At the moment, the cap sits with automatic enrolment, but I am happy to hear the case for extending it. As I said earlier, we will consult on this issue in July and I am happy for my hon. Friend to make some kind of report or submission.

Oral Answers to Questions

David Mowat Excerpts

Monday 26th January 2015 Commons Chamber

[Mr Harper]

As the hon. Lady will know, this Wednesday I shall publish some properly verified statistics. I shall also engage in a lengthy session before the Work and Pensions Committee, when I shall set out the facts in full, as I have been requested to do.

[David Mowat (Warrington South) (Con)]

The Independent Project Board, which was set up by the Office of Fair Trading, recently established that more than £8 billion-worth of private pension assets were subject to charges of between 2% and 3%. That makes it almost impossible for such schemes to grow. Will the Minister tell us what action he will take to deal with that?

Universal Credit

David Mowat Excerpts

Tuesday 25th November 2014 Commons Chamber

[Mr Duncan Smith]

That is a really important question and I thank the hon. Lady for being positive. Two things should be understood about universal credit. First, in-work allowances, which are rather like tax allowances, allow different groups of people—such as those with disabilities and single parents—to earn a certain amount of money before the taper comes in. That gives them a real step up, which is why the bottom 40% with regard to income will benefit to a greater degree than anybody else.

Secondly, I am fully prepared to accept that there is a debate about the taper, but when any future Government budgets they will be able to say, “We want to lower the taper because we want people to be able to up their hours quicker.” Alternatively, if there is full employment, they may say that the taper is not so relevant. That is a debate for Governments. We have instituted a very simple process whereby Back Benchers and others can say whether they want a higher or a lower taper. We have set it at what we think we can afford, and that still makes it better for those claimants going into work. There will always be a debate, so the hon. Lady will be able to argue whether the taper should be raised or lowered.

[David Mowat (Warrington South) (Con)]

The Secretary of State must have been relieved to hear the Opposition reiterate their support for universal credit, even though they are concerned that it is being rolled out too slowly. Has he had a chance to review their four-point plan, which I presume is designed to address the issue? The first point is to stop the roll-out and lay-off about 1,000 people while Labour reviews the programme, and the second and third points are uncosted, significant scope increases, introduced at a late stage in the programme, which will almost certainly mean much higher costs.

[Mr Duncan Smith]

I think my hon. Friend has a point. The Opposition think that the programme is rolling out too slowly, so they want to roll it out even slower or stop it and not roll it out at all. They are caught in a classic Opposition trap—we have all been there; I spent some time in opposition—which is that they know that what the Government are doing is right, but they do not want to say so because that would make it look like they had nothing to say. Therefore, they are talking about little bits and pieces and nit picking, instead of saying that it is a good programme. When I was in opposition, if something was really good I used to say, “Let’s get behind it and support it, and we can deal with the detail later.”

Pension Schemes Bill

David Mowat Excerpts

Tuesday 25th November 2014 Commons Chamber

[Crispin Blunt]

Everybody’s position will be different. There will be people with small pensions sitting in quite large houses, and they will have limited income but a significant capital asset. When they receive advice on pension provision on retirement, what is their plan to be? We must try to get such people into the best possible place and to make sensible decisions about their future. It is not only the Equity Release Council saying that.

[David Mowat (Warrington South) (Con)]

I have been reflecting on the wording of the amendment and the use of the word “must”. Had adequate guidance been provided, it would have taken into account the whole gamut of somebody’s circumstances. If that question was not asked, however, what remedy does my hon. Friend suggest? Is he saying that the guidance would void future contracts? If an advisor or guider had not asked the question suggested in the amendment, would any contract subsequently entered into be voided?

[Crispin Blunt]

Those would be matters for the FCA. It would regulate the guidance and say how it should be implemented, and state the consequences if people are misguided in the process. The point about putting “must” into the Bill is to be clear that the rather basic duty to assess everybody’s assets would be a requirement. What the consequences would be if misguidance was delivered would be a matter for the FCA. I do not want to get into that territory—it is a rather more expert territory than I would want to address to provide the solution my hon. Friend seeks.

I will conclude with a quote in support of my arguments from the director of policy and deputy director general of the Association of British Insurers, Huw Evans. He made it clear today that:

“While the Treasury is responsible for deciding the content of the guidance and delivering the online service, other critical partners also need certainty soon including the pension providers who have to signpost their customers to it, the FCA which needs to regulate it and the Government’s formal delivery partners, Citizens Advice and the Pensions Advisory Service…It is critical for the success of the reforms that the vast majority of customers use their new-found freedoms to make a choice that is right for them…It is very important at this stage that Ministers hold their nerve and stick to their original plan of a broader based guidance service that can genuinely help people approaching retirement to consider everything they need to be thinking about to take decisions about their finances…The Chancellor was right to think a guidance service was a necessary ingredient in the new world of pension freedom; now he needs to ensure it is worth having.”

That is what amendment 73 seeks to assist in doing.

Pension Schemes Bill

David Mowat Excerpts

Tuesday 2nd September 2014 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

It was striking to hear the Minister refer to a “revolution” and a “war”—not terms one usually associates with Liberal politicians. Clearly, the excitement of pensions has overwhelmed his Liberal temper.

This is the third pensions Bill of this Parliament, and I note that the Minister spent the first 15 minutes of his half-hour speech talking about the first and second pensions Bills, and the fourth one still to come. There is no doubt that much has changed in the pensions landscape, but let me first pick up the Minister on some of the things that he suggested. He painted a picture of a pension policy—a revolution, indeed—that is coherent in every respect and said that the first pensions Bill begat the second, the second begat the third, and of course the fourth is still to come. There is, however, another way to look at aspects of the Government’s pension policy, and I ask the Minister to reflect on these points.

The Minister referred to auto-enrolment. As is characteristic of him, he took all the credit, leaving aside the fact that—as was pointed out by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), the Chair of the Work and Pensions Committee—auto-enrolment emerged out of the Turner commission and the consensus built by the last Labour Government, and was rightly taken on by the Pensions Minister. Leaving aside that lack of generosity in the Minister’s reflections on auto-enrolment, there is a more fundamental point. The Turner consensus, which the Labour Government built and the Minister has continued, operated on the assumption of pensions being complex, long-term and difficult to navigate for anyone other than a financial professional. That necessitated a default-based approach whereby individuals employed without a pension were defaulted into a pension scheme. They did not exercise a choice to go into a pension scheme; they were defaulted into a good pension.

That was the Turner commission’s judgment and the consensus taken on by the last Labour Government, and indeed the Minister. However, the Government’s policy on budget reforms is predicated on a different approach and the assumption that at the point of retirement, when individuals come to turn their pension pot into an income—the whole point of a pension is to get as great a pension income as possible—they will be able to navigate that jungle of financial products successfully and maximise their retirement income. There is surely a tension between those two aspects of pension policy, and the Government’s approach to building up a pension pot and to turning a pension pot into retirement income.

That tension must be reflected on by the House, not because the Government’s policy for retirement income stage is necessarily wrong, but because there is a tension between the two poles of policy. If auto-enrolment policy was correct to assume that individuals need to be guided, helped and encouraged into better pension decisions, why do we no longer think that is the case at retirement? That is absent from the Government’s pension policy. The Minister would have us believe that everything fits together neatly, but it does not in that regard.

[David Mowat (Warrington South) (Con)]

The shadow Minister’s point would be stronger if in the past when people purchased annuities that had been done with the correct annuities and financial advice being given. We know, however, that 80% of people were buying the wrong annuities. At least in the model now coming in, there will be some compulsory advice, which is a step forward from what existed previously.

[Gregg McClymont]

The hon. Gentleman is a doughty fighter for better pensions and I respect that, but I ask him to reflect on what he has just said. The annuities market was broken because people did not shop around. They found annuities confusing and complex, and they defaulted into the option offered by their insurance company. Why do we think that that behaviour will suddenly change in a system that continues to be predicated on individuals making a choice?

Oral Answers to Questions

David Mowat Excerpts

Monday 1st September 2014 Commons Chamber

[Mr Harper]

She nods to say that she is. We have made inroads into the backlog of claims, and it is worth remembering that ESA claimants will normally be in receipt of benefit while they are waiting for the work capability assessment to be looked at.

[David Mowat (Warrington South) (Con)]

2. What steps he is taking to ensure that employees will not be auto-enrolled into high-cost pension schemes.

[The Minister for Pensions (Steve Webb)]

As part of our strategy to ensure value for money in pension savings, we announced earlier this year that we would protect members of pension schemes used for automatic enrolment by introducing a default fund cap of 0.75% from April 2015. We will shortly publish more details on the implementation of the charges measures.

[David Mowat]

I thank the Pensions Minister for that answer, and I congratulate him on introducing that cap, which is half the level of the one introduced by the previous Government for stakeholder pensions. Over time, our cap will save pensioners £1 billion a year. Can he confirm, for the avoidance of doubt, that the cap will also apply to older, legacy pension schemes, some of which currently charge up to 2% per annum?

[Steve Webb]

I am grateful to my hon. Friend for his supportive comments. Focusing on automatic enrolment, I am pleased to tell him that we aim to protect as many members of automatic enrolment qualifying schemes as possible, regardless of when they started contributing. From April 2015, the cap will therefore apply both to members of schemes newly set up for automatic enrolment and existing qualifying schemes for auto-enrolment.

Universal Credit

David Mowat Excerpts

Wednesday 9th July 2014 Commons Chamber

[Mr Duncan Smith]

That is pretty much what the hon. Lady says whenever she stands up on any question to do with welfare. The reality is that she is opposed to absolutely everything that we have done. If it was left to her and some of her colleagues on the Select Committee, they would repeal everything we have done, and welfare would be in the sort of chaos that Labour Members left us when they left Government.

[David Mowat (Warrington South) (Con)]

The Secretary of State may have seen Labour’s recent four-point plan for universal credit. Points 3 and 4 amount to significant uncosted scope increases, with no benefits applied to them. Given that, does he agree that it might be better for Labour to stay off the whole subject of business cases?

[Mr Duncan Smith]

I agree with my hon. Friend. The truth is that the Opposition do not want to talk about any of their welfare proposals because all of them would cost more money and deliver less. If we were to apply a business case to the Opposition, they would not exist any more.