Private Sector Pensions
Esther McVey Excerpts(6 years, 3 months ago)
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Debbie Abrahams (Oldham East and Saddleworth) (Lab)
(Urgent Question): To ask the Secretary of State for Work and Pensions if she will make a statement on the Government’s plans to stop private sector pension abuse.
The Secretary of State for Work and Pensions (Ms Esther McVey)
The vast majority of employers do the right thing by their pension schemes, and members can expect to receive the pension benefits they have paid for throughout their working lives. The Pensions Regulator and the Pension Protection Fund were set up in 2004 to provide pension scheme members with a safety net to ensure pension benefits receive some protection when things go wrong—it is a fact that some businesses will fail. The PPF approach has been supported on a cross-party basis since 2004.
To prevent irresponsible employers from off-loading pension liabilities on to the PPF, the regulator was given a range of powers, including the ability to recover significant assets where employers failed to take account of the scheme. There are about 6,000 defined benefit schemes, however, and such cases are very few and far between. It is the responsibility of the regulator to strike a balance between protecting members and PPF levy payers, and minimising any adverse effects on the sustainability of employers and businesses when it comes to the regulation of defined benefit funding.
The regulator does not have the power to stop businesses paying out bonuses to executives or dividends to shareholders, but if it believes that a scheme is not being treated fairly, it will investigate to see whether the use of its powers is appropriate. The Government are clear, however, that where sponsoring employers can meet their pension promises, they should and must do so. That is why we have suggested ways of strengthening the current scheme to enable the regulator to be more proactive. In fact last February we published our Green Paper, “Security and Sustainability in Defined Benefit Pension Schemes”, which included suggested measures that could strengthen the powers of the Pensions Regulator by introducing punitive fines for actions that harm a pension scheme. We also set out powers to enhance the regulator’s ability to demand information to ensure effective governance and spot issues before damage is done.
Our manifesto in June 2017 reaffirmed this intent by proposing to give the regulator the power to impose punitive fines alongside contribution notices so that pension scheme members are fully protected. The details of the fine would be worked through with all the relevant stakeholders, but it would represent a significant strengthening of the deterrent. We also intend to make certain corporate transactions subject to mandatory clearance by the Pensions Regulator, but we must take care to ensure that these measures do not have an adverse effect on legitimate business activity and the wider economy.
I should tell colleagues that we have received 800 responses to the Green Paper, and they are being reviewed by the Department. The White Paper is in progress and will be published in the spring. Effective regulation is dependent on a prompt flow of information between the parties concerned, and on compliance with rules and processes. Following the publication of the White Paper, we will introduce new regulation to ensure that the regulator gets the information it requires to conduct investigations and casework effectively and efficiently. It remains the case that the Government support free markets, enterprise and businesses, but this has to be conducted responsibly.
Debbie Abrahams
Yesterday, the Prime Minister chose to announce via the media, in part in response to the collapse of Carillion, that the Government planned to introduce tough new rules to stop private sector pension abuse. Carillion had 13 defined benefit schemes in the UK, with 28,500 members and a combined pensions deficit of £587 million. Between the end of 2015 and last year’s interim results, the difference between Carillion’s assets and liabilities almost doubled, from £317 million to £587 million. We know that profit warnings started to be issued in the summer of 2017. Given the severity of the financial problems facing Carillion, why did the Government not act then, rather than attempting to close the stable door after the horse had bolted?
We have argued for years that the Government should take better action to protect people’s pensions. The Government had the opportunity to act in 2013 and again in 2015, by supporting Labour’s amendments to pensions governance in legislation. More recently, the Work and Pensions Committee warned the Government of the need for protections and for more powers for the regulator. Although we welcome the Green Paper, the urgency has just not been there. Why did the Minister choose to ignore those warnings?
The Committee made a number of recommendations, including that the Pensions Regulator should have mandatory clearance powers for corporate activities that put pension schemes at risk, and that it should have new powers to impose fines at a level that would genuinely deter such dangerous and irresponsible behaviour. Why did the Government refuse to implement those recommendations at the time? Are the Government now ready to commit to implementing them fully? If the Government had taken action, Carillion’s massive debt accrual might have been arrested.
Given the scale of the liabilities and the concerns for other defined benefit schemes, what does this mean for the adequacy of the Pension Protection Fund? The collapse of Carillion has already led to a rise in pension scammers targeting those with pension pots. What about the defined contribution schemes that are not covered by the Pension Protection Fund? Will the Secretary of State investigate the apparent conflict involved in BlackRock being responsible for those schemes while simultaneously betting against their employer? Finally, can she advise the House what measures will be proposed in the White Paper, and when, exactly, they will be brought to the House?
Ms McVey
As Members on both sides of the House know, the regulator is an independent, arm’s length body. It was set up in 2004 after much discussion about how it should work and how it could best support pensioners when they needed its help. What it never did was to interfere with the running of a business; that was what was decided. We said that we needed to make sure that we could go further if we had to. That is why we have set about introducing a Green Paper—as I said, we have had 800 consultation responses—looking at where it is best to intervene, to make sure that we get the balance right. We do not want to tip the edge and unnecessarily cause harm to a business.
Profit warnings mean that a company will not get the profit that it expected—no more than that. We have to make sure that the Government do not precipitate anything that could be seen as negative from business. That is why we are looking at all these 800 responses, looking carefully and considering how to protect companies’ employees, protect pensions and move forward in the most conducive and careful manner. The new White Paper will be coming forward later this year.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
May I draw my right hon. Friend’s attention to the way the British public are reacting to this issue? They are seriously repelled by the notion that executive directors and even ex-directors should carry on drawing large payments at the same time as there is a mounting pension deficit. If this was what capitalism was really like, people would not want it. What are the Government going to do to draw the attention of businesses and executive directors to their governance responsibilities in these situations in the future, although this is nothing like as bad as the Maxwell scandal?
Ms McVey
I completely agree with my hon. Friend. This is about strengthening the corporate governance of organisations. This is about giving power to the boardroom. This is about giving shareholders responsibility. This is about having responsible businesses doing the right thing. Where we can ensure that that happens, and where we can look into investigating what is going wrong—should things be going wrong—it is right that we do. As I said at the beginning, most businesses—the vast majority of businesses, and there are over 6,000 defined benefit schemes—are doing the right thing, but where they are not, it is right that there is fury from the public to make sure that they do the right thing. That is why the Insolvency Service carries out investigations in this regard and gets money back where it can.
Neil Gray (Airdrie and Shotts) (SNP)
Thank you, Mr Speaker, for granting this urgent question, and I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing it.
That we are talking about private sector pensions again highlights the fundamental need to address the regulation of the pensions industry—something that the SNP has been calling for for years, but that has until now fallen on deaf ears. The BHS pension scheme was in deficit by more than £500 million. Carillion is estimated to be up to £900 million in the red, and there are over 5,000 other private sector defined benefit schemes in deficit, to the tune of £900 billion—a ticking time bomb for savers.
However, the real issue is that, while top executives make bad decisions and are rewarded for it, 11 million people who rely on a final salary pension could still be at risk of having the rug pulled from under their feet and of facing reduced entitlements should cases such as BHS or Carillion continue to be repeated.
The SNP has long called for the establishment of an independent pensions commission to ensure that employees’ savings are protected and that a more progressive approach to fairer savings is considered. Alongside that, will the UK Government make sure that the Pensions Regulator is now given the appropriate authority to step in and protect the interests of savers and pensioners before cases such as those of BHS and Carillion happen again?
Ms McVey
The Pension Protection Fund is there to do just that: to support pensioners. It does step in and support them where necessary. The hon. Gentleman is quite right: where businesses have not worked responsibly, we should be getting involved, and we did that when we saw the conditions with British Home Stores. What happened there is that anti-avoidance enforcement did take place, and £363 million was got back, so we did not have to use the PPF. Also, a prosecution did take place. All these instances have been different, but the hon. Gentleman is quite right: where there has been an abuse of the system, we will carry out an investigation and bring people to account.
Rachel Maclean (Redditch) (Con)
What action is my right hon. Friend taking in working with the Secretary of State for Business, Energy and Industrial Strategy to look at the conduct of the directors of Carillion in this regard? Specifically, following on from the point raised by my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), what can be done now to recover any of this money for the people affected?
Ms McVey
I thank my hon. Friend. An investigation is going on. Not only is there one that has been initiated by the Business Minister, but the Insolvency Service will also be investigating what went on. If there is any evidence that untoward things have been done, a prosecution will follow. That is what we are about: we want businesses to act responsibly. They employ the majority of people in this country, so it is only right that we support them when they need our support and bring them to account when they are doing things wrong.
Stephen Timms (East Ham) (Lab)
I welcome the right hon. Lady back to this Department. The Government, of course, are responsible for the regulatory framework for pensions. Will she respond to the point raised by my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) about defined contribution schemes? Are the Government looking at possible changes to the rules for those, as well as for defined benefit schemes, which the Minister has said the Government are looking at?
Ms McVey
We are not currently considering changing the rules on defined contribution schemes. In that instance a contribution has been made which will be protected and moved to another pension, whereas a pension in a defined benefit scheme is what someone was expecting to receive at the end, and will therefore be protected. They are very different schemes, and different protections and rules apply to them.
Mrs Pauline Latham (Mid Derbyshire) (Con)
Can my right hon. Friend confirm that constituents with existing Carillion pensions will receive 100% recovery through the Pension Protection Fund?
Helen Goodman (Bishop Auckland) (Lab)
The Secretary of State does not seem to have grasped the fact that the decision to carry on paying dividends and to boost the bonuses of the board while running up a pensions deficit was made by the board itself. What will she do to prevent that from happening again?
Ms McVey
I do understand the gravity of what happened, but there is one thing that we never seek to do in the House. In 2004, after much discussion, we asked an independent arm’s length body to look into these matters. When there have been misdemeanours and irresponsible behaviour and things have gone wrong, we announce that investigations are under way, but we are not the investigator. What we do is legislate to ensure that people are brought to account—and if they have done something wrong, my goodness, we need to bring them to account.
Mr Marcus Jones (Nuneaton) (Con)
A number of my constituents have been affected by the Carillion situation. What will the Pension Protection Fund do to support those who have pensions through Carillion, and what more will the Government do to ensure that people with private pensions can be confident that investing their savings in a company pension fund is the right thing to do?
Ms McVey
I can reassure my hon. Friend that the Pension Protection Fund is there to provide a lifeboat. Those who have retired will receive 100% support, while those who have not will receive 90% support, with a cap. That is what we are here to do: to protect the people who have done the right thing in saving for their future and to look after them in a responsible way, while also ensuring that regulations and processes exist to bring to account those who have done the wrong thing.
Cat Smith (Lancaster and Fleetwood) (Lab)
BlackRock was responsible for Carillion workers’ pensions, while simultaneously betting against their employer on the stock market. What measures will the White Paper contain to ensure that such a conflict of interests cannot happen again?
Sir Desmond Swayne (New Forest West) (Con)
What impact would renationalisation below the market have on pension funds?
Tonia Antoniazzi (Gower) (Lab)
My constituent Michael Evans, a retired employee of Barclays, has raised serious concerns about the future of its pension fund. Given the £7 billion shortfall, is Barclays moving its liability to its investment branch in the hope that it can avoid having to cover the deficit?
Alex Burghart (Brentwood and Ongar) (Con)
I welcome the Government’s commitment to do more to protect the pensions of private sector workers. Does the Secretary of State agree that it is absolutely necessary to have private sector providers of public services, and that the Government should continue to support them?
Stephen Kinnock (Aberavon) (Lab)
The creation of the British Steel pension scheme mark 2 created fertile territory for unscrupulous pension advisers to swoop in like vultures and exploit vulnerable people. What lessons have been learned from the British Steel experience, and what will the Secretary of State do to ensure that we do not see the whole sorry tale of Carillion leading once again to the privatisation of profit and the socialisation of risk?
Ms McVey
What we have learned from that is that straight away, eight companies were banned from doing what they had done in any kind of pension scam. We are also going to bring together all the advice under a single body so that people are well aware of what they can and should be doing and whether they have done the right checks to ensure that they are dealing with a positive organisation for their pension.
Mrs Anne Main (St Albans) (Con)
Workers have been encouraged to take part in buying their pensions, and they need to have confidence in their scheme. My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) mentioned the fact that fat cats are seen to bear no risk in this process. What more can we do to achieve greater transparency in how private pensions work within companies? What can we do to enable people to get the best possible information to ensure that they are not being sold short while other people seem to float high above all the risk?
Ms McVey
My hon. Friend raises a key point. There does need to be transparency. A pension is something that people invest in all their lives and hope to recoup when they retire, so transparency is key. Our White Paper will seek to determine best practice and, in parallel, to set out stronger corporate governance within pensions organisations.
Stephen Lloyd (Eastbourne) (LD)
I should like to thank you, Mr Speaker, for granting an urgent question on this important issue. I should also like to welcome the Secretary of State back to the Front Bench. Is she aware that, under the current rules, pension obligations are unsecured, meaning that insolvent companies fund their pension schemes only when they have compensated their other, supposedly more important, secured creditors? If so, has her Department considered carrying out a review of those rules so that employees with private pensions can be given a justifiably higher priority in future?
Maggie Throup (Erewash) (Con)
The whole subject of pensions is very complex. In the context of providing advice for people who are looking for a pension, or who already have one, what action are the Government taking to ensure the better delivery of financial and debt advice?
Ms McVey
The Financial Guidance and Claims Bill, which we will be debating straight after this urgent question, deals with the advice and support that people can get in order to understand what options are on the table. That represents a positive move by this Conservative Government to allow people to control and understand their finances, because they need to know where to put their money and be assured that it will come back to them in a good pension.
Diana Johnson (Kingston upon Hull North) (Lab)
Further to the question asked by my hon. Friend the Member for Bishop Auckland (Helen Goodman) and in the light of Carillion’s board members rewarding themselves with bonuses while allowing the pension deficit to grow, does the Secretary of State agree that she needs additional powers to bring such executives to account for their corporate greed and irresponsible behaviour?
Ms McVey
The situation is being assessed at the moment, and what happened is being investigated. The regulator already has the power to look into anti-avoidance measures and enforcement, which could be utilised to do precisely what the hon. Lady talks about. Strengthening the regulator’s hand was in our manifesto, and we will be bringing that forward in the White Paper.
Jeremy Quin (Horsham) (Con)
Hon. Members are understandably focusing on the directors of Carillion but, having been through the BHS investigation conducted by this House, I encourage my right hon. Friend to look closely at the expertise, advice and powers available to pension trustees.
Mr Jim Cunningham (Coventry South) (Lab)
Over the past 30 years, successive Governments have made promises from time to time about strengthening the rules around pension schemes, but nothing happens. The Carillion situation will have a major impact on the west midlands supply chain. When are we going to get tough on directors and get some tough legislation? The White Paper will not be worth the paper it is written on unless the Government do something positive.
Ms McVey
The hon. Gentleman is right that we are looking for ways to bring to account those who have not acted scrupulously. The regulator has taken measures, and they have proved successful. For example, BHS was prosecuted and we recouped £363 million. We have to adapt to situations as they arise and try to pre-empt other things, because none of the cases that have been mentioned today resulted from the same action. The hon. Gentleman is right that we have to ensure that unscrupulous businesspeople are brought to account, because we need good private business and good entrepreneurs.
Rebecca Pow (Taunton Deane) (Con)
I applaud the Prime Minister’s call for tougher new rules for executives who put workers’ pensions at risk. My constituents want to be confident that private pensions are secure and sustainable. After all, we have encouraged them to take them out. To put my constituents’ minds at rest soon, will my right hon. Friend please give an assurance that the Government are taking matters seriously?
Ms McVey
My hon. Friend is right to raise that point. The people watching at home who have a pension or are thinking about investing in one want to know that they are safe. They also want to know what the Government are doing to ensure that they will be safe going forward. That is exactly what we in intend to do with the White Paper by reinforcing corporate governance measures and making them tougher.
Alan Brown (Kilmarnock and Loudoun) (SNP)
As Carillion owes millions of pounds to subcontractors such as small plumbing companies, it is inevitable that there will be other insolvencies. If a plumbing company goes under, its nominal liabilities transfer to fellow employers through a multi-employer pension scheme. That is clearly unfair, but it happens because the PPF refuses to act as guarantor of last resort for multi-employer schemes. When will the Government end that anomaly? If they will not, will they support my ten-minute rule Bill that would sort out the situation?
Paul Masterton (East Renfrewshire) (Con)
The best form of pension protection that anyone can have is a sustainable employer. While the Pensions Regulator has wide-ranging powers, they are rarely used and it is often a bit toothless. Is the Secretary of State satisfied that any new powers, welcome though they may be, will be backed by proper resources?
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
As part of the Tata Steel-Thyssenkrupp merger, workers faced the slashing of their pension funds if they joined the PPF or if they joined a new scheme with reduced benefits. Others opted for personal plans, leading to a feeding frenzy of mis-selling. Does the Secretary of State think the steelworkers of Wales were treated fairly, considering that the new company’s annual sales are estimated at £15 billion?
Ms McVey
We have to make sure that we look after people with pensions. We also have to ensure that we keep companies going as a viable concern. At the time, this was deemed to be the best option for the future. We always have to make sure it is the best solution at the time, and we have to secure future legislation to ensure that we have better regulation and better law in place.
Nigel Huddleston (Mid Worcestershire) (Con)
Even this weekend I heard and saw some commentators, who really should know better, say things such as that Carillion pensioners risk losing their pensions. Can the Secretary of State confirm what percentage of their anticipated pension many Carillion pensioners can now expect to get through the PPF?
Ms McVey
My hon. Friend raises a good point. Those who are in receipt of a pension will receive 100%, and those who receive a pension in the future will get 90%, subject to a cap. People who are concerned about their pension should rest assured, and they can always go to our free helpline.
Lucy Allan (Telford) (Con)
I warmly welcome the Secretary of State to her new position and thank her for the reassurances she has given the House this afternoon. GKN employs 340 people in Telford and is currently the subject of a proposed hostile takeover. Will she confirm that the safety of pensions at GKN will be a priority for her Department if the takeover proceeds?
Mr Philip Hollobone (Kettering) (Con)
How is it that some of these private sector pension fund deficits are allowed to get so large before any action is taken?
Ms McVey
We allow businesses to run themselves without interference from Government, and therefore we do not know the complete structure of their profit and loss, and of their assets and liabilities. Should anyone wish to raise a concern about their business, they are free to do so with the regulator. With our combined corporate governance review and new legislation, we will make sure that pensions are on as firm a footing as possible. We will make sure that such abuses do not happen.
Kevin Foster (Torbay) (Con)
I am sure the Secretary of State will agree that the recent prosecution of Dominic Chappell by the Pensions Regulator should put directors who take decisions that might endanger their employees’ pensions on notice of the liabilities they could face. But will she reassure me that the role and powers of the Pensions Regulator, particularly how much further we can go in attaching personal liability to those responsible for disastrous decisions, will be part of the White Paper?
Ms McVey
I reassure my hon. Friend that that is exactly what we will be doing. We are looking at how we empower the Pensions Regulator and, if need be, how we allow it to levy fines. It has to be a balanced response, not a knee-jerk response, and we have to make sure it works for both pensioners and businesses.
Richard Graham (Gloucester) (Con)
When a major UK business collapses it is incredibly important that both existing and future pensioners are given reassurances about their situation. In the case of BHS, this House elected to constitute a joint Select Committee inquiry to consider aspects of both the pensions and the business. Does she agree that a joint Select Committee inquiry looking into both the pensions and business aspects of the collapse of Carillion would be welcome?
Secondly, in the worst-case scenario, existing pensioners will get 100% of what is due to them through the Pension Protection Fund, and future pensioners will get 90%. The PPF, with assets of some £29 billion, is extremely well funded and capable of looking after the worst-case scenario.
Ms McVey
My hon. Friend, who has a lot of experience in these matters, is right in saying that the Pension Protection Fund is robust. It has a lot of resources, so people are safe and will be protected. That is what they need to know now. The Government have very clearly, from the moment this happened, set out the support for pensioners, so that they knew that their pensions were safe and they could go to work knowing that they were being looked after. He is quite right: we have to make sure that we are taking the right approach going forward.
Points of Order
Esther McVey Excerpts(6 years, 3 months ago)
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Mr Speaker
I am grateful to the hon. Lady for her point of order. In short, I have received no notification from the Secretary of State for Work and Pensions of an intention to make a statement on that matter. As the hon. Lady will know, the Secretary of State is in her place; she is welcome to come to the Dispatch Box and respond if she wishes, but she is under no obligation to do so.
Mr Speaker
She does not wish to do so at this time. The hon. Member for Battersea (Marsha De Cordova) should table questions and see where she gets. If she and her colleagues judge that they wish to seek a debate on the matter, it is open to them to do so. For now, she has aired her concern and it will have been heard by those on the Treasury Bench.
Financial Guidance and Claims Bill [Lords]
Esther McVey ExcerptsMonday 22nd January 2018
(6 years, 3 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
I beg to move, That the Bill be now read a Second time.
The Bill will reform the current financial guidance service landscape to improve outcomes for people in their everyday lives. It will bring about two changes. First, it will restructure the financial guidance landscape for members of the public by creating a new single financial guidance body and providing funding to the devolved authorities for locally commissioned debt advice. Secondly, it will move the regulation of claims management services from the Ministry of Justice to the Financial Conduct Authority. Both measures will benefit members of the public and provide a sustainable legislative framework for public financial guidance and the future regulation of claims management companies.
Ensuring that people, especially those who are struggling, are easily able to access free and impartial financial guidance to help them to make more effective financial decisions and to improve their confidence in dealing with financial service providers is an important step towards improving people’s financial capability. In addition, ensuring that people are able to access high-quality claims management services speaks to the Government’s commitment to ensuring that action is taken when markets work against consumer interests.
The provisions in part 1 of the Bill follow three consultations, conducted by the previous Conservative Government, on the provision of pensions and money guidance and the provision of advice on debt management. In particular, the consultations examined the demand for such services, how their provision should be structured and how to make that provision more effective for consumers. The final consultation revealed a broad consensus for a single body for financial guidance. As a result, the Bill will bring together the important work done by the Money Advice Service, the Pensions Advisory Service and Pension Wise to create a single financial guidance body. The relevant measures have received strong support from industry, stakeholders, charities and consumer groups.
Mr Chris Leslie (Nottingham East) (Lab/Co-op)
It is vital that we all work across party lines on financial guidance. I encourage the Secretary of State to place on the new financial guidance body a duty to promote financial resilience. Every year in Britain, 2 million people have unforeseen sickness absence. They cannot cope as their income suddenly falls. Eight out of 10 people in this country have very little savings, or none at all. It would be a real step forward to have a body that promotes financial resilience.
Ms McVey
The hon. Gentleman makes an important point. Once the new body is set up, it will be able to see what is needed in the public arena and shape and craft what it does. That is important, as is debt advice for vulnerable people, who need to be able to plan a path for their future.
Rebecca Pow (Taunton Deane) (Con)
The fact that household debt in this country now stands at £1.9 trillion shows just how important it is to give people knowledge and understanding about the management of their finances. I welcome the Bill. Will the Secretary of State assure us that it will help constituents such as mine in Taunton Deane, who currently have to go to a plethora of bodies to get advice, to make the decisions that we hope will prevent them from getting into debt?
Ms McVey
My hon. Friend raises a very good point about how to help those who are most vulnerable—how to help them to get out of debt. Debts are at high levels, but they are lower than they were in the first quarter of 2010. The latest figures, for the third quarter of 2017, showed that they had gone down, but they are still high, and we need to help people understand their finances. Understanding really is key to this—they need to understand what is going out, what is coming in and how to get life on a firmer footer, so that they can go forward with confidence.
Ms McVey
If I can make a bit progress, I will take some more interventions.
Old Mutual Wealth has noted that consolidating the Money Advice Service, the Pension Advisory Service and Pension Wise into a single financial guidance body presents an opportunity materially to improve the quality and reach of Government-led primarily industry-funded services to encourage consumer engagement. Accordingly, the new body will ensure that people have access to the information and guidance needed to make the necessary and effective financial decisions that we all have to make throughout our lives. This information, guidance and, in respect of debt, advice will be not only independent and impartial, but free at the point of use, making it accessible to all those who need it. By merging those services into a single body, we will remove duplication of services, increase the efficiency of the service and ensure that those who require information, financial guidance and debt advice know exactly where to find it.
A single body also gives us the opportunity to provide a more seamless customer journey, doing the joining up behind the scenes. Importantly, it provides a hook back into the customer for follow-up support. The Government are concerned about low levels of financial capability in the UK. We recognise that not enough people know how to manage their money effectively, which is why we are taking decisive action through the Bill.
Steve McCabe
I am very grateful to the Secretary of State for giving way. As she seems to be acknowledging, the evidence suggests that too many people do not have sufficient knowledge to make the best choices about their pensions. On that basis, does she agree that it is important that the new body concentrates on trying to provide as much face-to-face active support and guidance as possible, and does not simply rely on websites, which are a much more passive form of assistance?
Ms McVey
The hon. Gentleman raises a very good point. Different people glean information through different channels, so a website works for some and telephones work for others, and there will be a need for face-to-face advice. At the moment, that is being offered through the citizens advice bureaux. Therefore, he is right in saying that face-to-face advice is important, too.
Mr Jim Cunningham (Coventry South) (Lab)
One big problem with information for ordinary people is that it is complex. Will right hon. Lady give us an assurance that any information or advice that is being given is in simple language that people can understand? That is always the big difficulty with lots of forms—people just do not understand them.
Ms McVey
Again, a valid point—the advice has to be impartial, free and in a language that people understand. Sometimes people might not feel confident to say that they do not understand the terminology, because they think that there is a presumed knowledge that might not be there. I concur with what the hon. Gentleman says.
The new body will have a number of statutory objectives: to improve the ability of people to make informed financial decisions; to support the provision of information, money and pensions guidance and debt services in areas where it is specifically lacking; to ensure that information, guidance and debt advice is clear, cost-effective and not duplicated elsewhere; to ensure that information, guidance and debt advice is available to those most in need, particularly people in vulnerable circumstances; and to work closely with the devolved authorities.
Gareth Thomas
Further to the question asked by the hon. Member for Taunton Deane (Rebecca Pow) about the rise in household debt, does the Secretary of State accept that there is a particular problem with household debt generated by high-cost credit lenders, such as BrightHouse? Under clause 10, the Financial Conduct Authority can levy to cover the costs of the new single financial guidance body. Can she reassure me that high-cost credit companies such as BrightHouse will be covered by such a levy, and will she tell the House what this body will do to encourage the take-up and awareness of the products offered by credit unions—a far lower cost of debt provision?
Ms McVey
First, debt is not rising. It has actually fallen over the past eight years, but it is still too high. This new body will offer guidance and advice, so that people understand what loans they are taking out and, fundamentally, what paying them back will mean for them. Secondly, we are today putting in place the legislative framework to set up the body, but it will determine the key things it wants to pursue. I am convinced that it will listen to the advice that the hon. Gentleman and others put forward.
The new body will also provide advice on a breathing space scheme, providing additional support to the Government’s policy development. The scheme will allow an individual in problem debt to apply for a period of protection from further fees, charges and enforcement action, alongside establishing a statutory debt management plan. One of the new body’s key functions will be to support over-indebted consumers, ensuring the provision of high-quality debt advice that is free at the point of use. Last year, the Money Advice Service spent £49 million to fund 440,000 debt advice sessions. We want the new body to build on that good work.
Kevin Hollinrake (Thirsk and Malton) (Con)
Further to the point that the hon. Member for Nottingham East (Mr Leslie) made about financial resilience, is the Secretary of State aware that household debt as a proportion of household income rose from 93% to a peak of 157% in 2008, under the previous Government? Does not that demonstrate that these kinds of measures are essential in helping people to make sensible choices about their finances?
Ms McVey
My hon. Friend makes a good point. Household debt rocketed under the previous Labour Government, and we are now ensuring that it comes down, because it is still too high. I particularly appreciate that the Bill has cross-party support, because we all know that we need to help people who are in debt.
As a result of a range of broader reforms and initiatives, such as automatic enrolment, which has increased the number of people saving into pension schemes and the pension freedoms that allow anyone aged 55 and over to take their whole pension as a lump sum without paying tax on the first 25%, the number of people looking for high-quality, impartial financial guidance continues to rise. We look forward to the new body meeting those challenges, building on the existing good work of the Money Advice Service, the Pensions Advisory Service and Pension Wise.
Yvonne Fovargue (Makerfield) (Lab)
Has the Minister considered whether the breathing space will apply to public as well as private sector debts, because many people find that they are pursued more vigorously by those creditors?
Several hon. Members rose—
Ms McVey
I will make a little progress before taking any more interventions, because otherwise I will never get through this, and I need to.
The second part of the Bill makes provision to strengthen the regulation of claims management companies. As many hon. Members will be aware, there is evidence of malpractice in the claims management sector in the form of disproportionate fees, nuisance calls, poor service, and the encouragement of fraudulent claims.
Following an independent review of claims management regulation led by Carol Brady, the Government announced in the 2016 Budget their commitment to clamping down on malpractice in the sector. Part 2 delivers this commitment in two key ways. First, it transfers regulatory responsibility for claims management regulation from the Claims Management Regulator, a unit based in the Ministry of Justice, to the Financial Conduct Authority. Secondly, it introduces new measures to ensure that consumers are protected from being charged excessive fees. Those measures include a duty on the Financial Conduct Authority to make rules restricting fees charged for services provided in relation to financial services and products such as payment protection insurance claims, and a power for the FCA to introduce caps in other claims sectors should the need arise.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
It is great to see you back in your rightful place, Mr Deputy Speaker.
May I take the Secretary of State back to the first part of the Bill and the devolved functions in terms of debt advice? How will they be funded? Will it be based on a percentage share—a population share—of expenditure in England? Will it be based on Welsh need, or, as I read the Bill, will the Welsh Government send the Treasury a bill for its functions and then that will be levied by the FCA?
Ms McVey
I reiterate what the hon. Gentleman said by welcoming you, Mr Deputy Speaker, to the Chair.
The money will be collected. At the moment, what is spent and how it is spent is down to the new body being formulated. However, it will be done by Government grants and then money will be taken back—financial bodies will be paying in. Obviously, going forward, where there is most need is where most money will be going. That is how it will be viewed.
Robert Neill (Bromley and Chislehurst) (Con)
I very much welcome part 2, which does improve protections. Is my right hon. Friend aware that the Justice Committee looked at this issue in relation to changes to the small claims limit in personal injuries matters? Will she bear in mind the very strong evidence suggesting that, because the likely increase in the small claims limit will mean more litigants in personal injuries cases, the current cap in relation to payment protection insurance should be extended to personal injuries cases in order to extend consumer protection? Will she consider a “fit and proper person” test in relation to claims management companies operating in this area?
Ms McVey
My hon. Friend always provides wise words. I can assure him that those matters will be taken into consideration.
This is not to say that claims management companies should be regulated out of existence. The Government believe that these firms provide a valuable service to consumers who may be less likely or unable to bring claims themselves. A well-functioning CMC market can also benefit the public interest by acting as a check and balance on business conduct. The measures therefore aim to strengthen claims management regulation in the round in order to enhance both consumer protection and professionalism in the sector.
The Bill ensures that those who use claims management services to make claims in relation to PPI are protected in the interim period before the FCA exercises its duty to introduce a fee cap. The Bill does this through the provision of an interim fee cap on PPI claims management services during the period between Royal Assent and implementation of the FCA cap. The Bill will cap these fees at 20% of the final compensation amount. The Association of British Insurers welcomed the claims management regulation measures, stating:
“Confirmation of tougher regulation of claims management companies cannot come soon enough for people who are plagued by unsolicited calls and texts.”
Andy Slaughter (Hammersmith) (Lab)
One thing that the Bill was silent on, until it was amended by the Opposition in the other place, is cold calling. In the seven years since the Legal Aid, Sentencing and Punishment of Offenders Act 2012, the Opposition have been pressing to have cold calling and spam texts outlawed. Is the Secretary of State going to say anything about that? Does she agree that there is no defence for having this blight on the lives of almost everyone in this country, and that it should not just be regulated but banned?
Patricia Gibson (North Ayrshire and Arran) (SNP)
Will the Secretary of State give way?
Ms McVey
If I may, I will continue a little bit further and then I will take another question.
I will reflect on the passage of the Bill through the Lords. There was overwhelming support in the other place for the measures originally contained in the Bill. The amendments in the other place sought to include a Government manifesto commitment—a debt respite scheme—because noble Lords were concerned about legislative space. Some amendments made explicit in the Bill what was always implicit in policy, including making it clear that the single financial guidance body’s services are free at the point of use, and ensuring that the information, advice and guidance are impartial.
Other changes were more substantial, but none the less welcome. These ranged from the inclusion of a clause making it a criminal offence to impersonate the body to safeguarding clauses for its wind-up and requiring the FCA to create rules on signposting individuals to the body. Further additions include an interim fee cap for PPI claimants, which will ensure that CMCs charge fair and proportionate fees in relation to financial services claims during the interim period between Royal Assent and the introduction of the FCA’s fee cap, and making provision for the establishment of a debt respite scheme, which I will expand on shortly.
Patricia Gibson
Does the Secretary of State share my concern about the UK Government’s intentions with regard to adopting the provisions in my ten-minute rule Bill to do with director-level responsibility for unsolicited marketing communications? The Government have on two occasions set themselves a deadline to adopt this legislation, and on two occasions the deadline has passed. I hear what the Secretary of State has said about the provisions in this Bill, but is she concerned, like me, that it will be confined to protecting consumers with regard to pensions, not in a whole host of areas right across the marketplace?
Ms McVey
We are of course looking at pensions today, but other rules, regulations and laws are in place to protect people from unsolicited, unwanted cold calls and the Department for Digital, Culture, Media and Sport is looking at how to strengthen them further. I now want to address some of these issues.
Several hon. Members rose—
Vicky Ford (Chelmsford) (Con)
I listened very closely to what the Secretary of State said about the breathing space, which is a really welcome period to help individuals —she mentioned individuals—to sort out their debts without getting into more problems. Will she confirm that that also covers households and families so that it helps the whole family, not just the individual?
Mr Edward Vaizey (Wantage) (Con)
May I welcome my right hon. Friend to her new position? As the former Minister with responsibility for telecoms, I was involved in trying to stamp down on cold calling. It may not be necessary to ban cold calling entirely, but I certainly welcome the fact that the Bill has been amended to take account of the knock-on effects of claims management companies on cold calling. I hope that the Secretary of State will comment on the need to make it explicit that the new regulator must consult Ofcom on some of these issues. Ofcom is the body charged with cracking down on cold calling. We often forget that when we introduce measures that are consumer-friendly—rightly, to allow people to have redress—that can, unfortunately, inspire some of the less scrupulous to up their game in terms of cold calling.
Chris Philp (Croydon South) (Con)
On the question of cold calling raised by my right hon. Friend the Member for Wantage (Mr Vaizey), the cold calling provisions appear in clause 4 in part 1 of the Bill. Could the Secretary of State clarify whether those powers to prohibit cold calling will apply not just to financial guidance but to claims management companies, which are the topic of part 2? I hope that the answer is yes.
Ms McVey
That is our intention and that is what we will do, but those finer points will be worked out by the body as it works responsibly on behalf of UK citizens.
I want now to address issues that I know will be of interest to hon. Members. The Government have been clear that we will not stand for unlawful, persistent cold calling made by companies in the claims management sector. Cold calling is already illegal under certain circumstances. Under the privacy and electronic communication regulations, we have forced companies to display their numbers when they call, made it easier to take action against those involved in making the calls, and strengthened the powers of the Information Commissioner’s Office to impose fines.
That being said, a number of companies continue to act disreputably, so it is only right that the Government continue to take steps to further regulate the sector. That is why the Government committed in the other place to introduce measures to tackle those issues. The Department for Digital, Culture, Media and Sport is currently working through the details of an amendment to prohibit CMCs from making live, unsolicited calls unless the receiver has given prior consent. That step, combined with the Government’s previous actions in this area, should act as a warning to those acting unlawfully that we will not rest until the problem has truly been eradicated.
Ms McVey
If I can continue for a little longer, I will take some more interventions.
The Government welcome the findings of the report of the Select Committee on Work and Pensions exploring how to protect pensions from scammers. We remain committed to protecting savers from pension scams. We have already announced that we are banning pensions cold calling, tightening HMRC’s rule to stop pension scammers and fraudulent schemes, and preventing the transfer of money from occupational pension schemes into fraudulent ones.
The Government are currently reviewing the alternative proposals for banning cold calling under the Bill. We have also listened to concerns about the risks of not receiving sufficient guidance or advice prior to taking advantage of the pensions freedoms, and we are currently considering the amendments recommended to ensure that members of the public are aware of the importance of receiving guidance.
Hon. Members will also be interested in the addition of the provision for a debt respite scheme, which includes a breathing space period and a statutory debt repayment plan. We understand the valuable additional support that the scheme could provide for thousands of vulnerable individuals and want to implement a breathing space scheme as quickly as possible.
The Government are pressing on with policy development. We have already set out a firm timetable for consultation and are continuing to work closely with a wide range of stakeholders. The call for evidence on breathing space was published in October last year and has now closed. After responding to that call for evidence, we will consult on a single policy proposal. The Bill gives us an enabling power to lay regulation to establish the scheme after receiving advice from the single financial guidance body on the design and certain aspects of the scheme. It is important that we take time to get this right. The scheme will achieve its intended benefits for indebted individuals only if it is properly designed. I look forward to the Government working constructively with hon. Members so that we can enable a scheme to benefit vulnerable families as quickly as possible.
Neil O'Brien
One of the important things that the Bill does is to regulate nuisance cold calling. It is sometimes tempting to dismiss it as merely a nuisance, but it is more than that for some vulnerable people. A constituent has emailed me to say:
“All my friends and family have signed up to the TPS, but are still bombarded by these parasites. Our friend who suffers from dementia seems to get several a day, as I check his phone calls each time we visit. These vulnerable people…say yes to anything”,
even if they have not had an accident. My constituent adds that
“TPS does not work…The only way to stop this abhorrent practice is for the regulator to hand out punitive fines”.
Will my right hon. Friend both maximise the scope of the Bill and encourage the regulator to clamp down hard on that kind of behaviour?
Ms McVey
I thank my hon. Friend for raising that important point. I bet that many constituents could bring forward similar cases. The maximum penalty for breaches will remain the same; that is up to half a million pounds. We must make sure that people do not abuse the system, which is why, particularly in this Bill, we are looking at ways to ban pension cold calling.
Andy Slaughter
The Secretary of State is being extremely generous. I sense some puzzlement on both sides of the House that the Government are pulling their punches on cold calling. There is to be greater regulation; that is to be extended in some areas. Apart from the cold callers themselves, the consensus is that this should be banned. That includes claimant organisations such as the Association of Personal Injury Lawyers. Why will the Government not undertake now to ban spam texts and cold calls?
Ms McVey
We have brought that forward. That will be for this Bill. For pensions, there will be a ban. It is about working out how that is done, how we deliver it and how it is possible, but that is the intention.
Hon. Members will no doubt be aware that in October the DWP took on responsibility from the Treasury to work with regulators, the industry and other sectors to create a pensions dashboard. That digital interface would allow individuals to see all their pension savings in one place by collecting information about pensions held with different providers. We are conducting a feasibility study to explore the key issues and determine a path towards implementation. We expect to be able to report on that in March.
The Government believe that the needs of the consumer must be at the heart of the dashboard’s design. We want to maximise people’s engagement with their pensions while maintaining their trust. We will ensure that people’s interests are properly safeguarded and their information protected. As part of the study, we are also considering what role, if any, the single financial guidance body may have in relation to the dashboards.
I firmly believe that the Bill is useful, fair and has the individual at its heart. Its goal is to ensure that people are easily able to access free and impartial financial guidance to help them to make more effective financial decisions. Having access to guidance will boost their confidence when dealing with financial service providers and it is a crucial step towards improving their financial capability. The Bill sends a clear message to CMCs by transferring regulatory responsibility to the Financial Conduct Authority, providing a stronger framework to ensure that individuals are accountable for the actions of their businesses, and by introducing fee-capping powers to protect consumers from excessive fees.
This lies at the heart of Conservative philosophy. It is about understanding how an individual can be stronger by understanding their finances and, where possible, by not allowing themselves to get into debt. It is about supporting the individual, the family and the community, and they can best do that by understanding their finances. I look forward to having a constructive and positive dialogue in this House.
Welfare
Esther McVey Excerpts(6 years, 4 months ago)
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The Secretary of State for Work and Pensions (Ms Esther McVey)
Supporting people with mental health conditions is a top priority for this Government. We are committed to ensuring our welfare system is a strong safety net for those who need it. That is why we spend over £50 billion a year supporting people with disabilities and health conditions—more than ever before.
Disabled people and people with health conditions, including mental health conditions, deserve the very best support. Personal independence payment (PIP) replaced the out dated disability living allowance (DLA) system, with 66% of PIP recipients with mental health conditions receiving the higher rate of the benefit, compared with just 22% under DLA.
On 21 December 2017 the High Court published its judgment in the judicial review challenge against regulation 2(4) of the Social Security (Personal Independence Payment) (Amendment) Regulations 2017 S.I. 2017/194. The regulations reversed the effect of the upper tribunal judgment in MH.
I wish to inform the House that, after careful consideration, I have decided not to appeal the High Court judgment. My Department will now take all steps necessary to implement the judgment in MH in the best interests of our claimants, working closely with disabled people and key stakeholders over the coming months.
Although I and my Department accept the High Court’s judgment, we do not agree with some of the detail contained therein. Our intention has always been to deliver the policy intent of the original regulations, as approved by Parliament, and to provide the best support to claimants with mental health conditions.
The Department for Work and Pensions will now undertake an exercise to go through all affected cases in receipt of PIP and all decisions made following the judgment in MH to identify anyone who may be entitled to more as a result of the judgment. We will then write to those individuals affected, and all payments will be backdated to the effective date in each individual claim.
I hope that by making this statement it is clear that the Government are committed to improving the lives of people with mental health conditions.
[HCWS414]
Social Security Advisory Committee
Esther McVey Excerpts(9 years, 1 month ago)
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The Minister for Employment (Esther McVey)
My noble Friend the Under-Secretary of State for Work and Pensions, Lord Freud, has made the following written statement:
Today, I will publish the outcome of the review of the Social Security Advisory Committee (SSAC). I am pleased to announce that the Government support the continuation of the committee in its current form. The Department for Work and Pensions has completed a robust examination of the committee’s functions, delivery arrangements and governance structure. The review was carried out in line with the Cabinet Office’s key principles for reviews of non-departmental public bodies (NDPB). The SSAC is a cost-effective advisory NDPB whose functions are integral to improving the quality of policy making and of secondary legislation in the Department for Work and Pensions. I attach a copy of the review report to this statement and will place a copy in the Library of the House.
[HCWS456]
Employment, Social Policy, Health and Consumer Affairs Council
Esther McVey Excerpts(9 years, 2 months ago)
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The Minister for Employment (Esther McVey)
The Employment, Social Policy, Health and Consumer Affairs Council met on 9 March 2015 in Brussels. Shan Morgan, Deputy UK Permanent Representative to the EU, represented the UK.
The Council held a policy debate on the European semester 2015. The UK, supported by Poland, the Netherlands, Slovenia and Czech Republic, welcomed the early publication of the country reports and the additional time for engagement ahead of the publication of the country specific recommendations (CSRs) in May. The UK with the support from Hungary and Austria stated that the Commission should not be prescriptive on policy implementation and should recognise the role of member states in deciding the best course of policy action. Within this, the Council adopted both the JER and Council conclusions on the 2015 AGS.
Ministers agreed two revised Council decisions aimed at strengthening the roles of both the Employment Committee (EMCO) and Social Protection Committee (SPC) in the European semester process.
The Council adopted draft Council conclusions on moving towards more inclusive labour markets; and the EU strategic framework on Health and Safety at Work 29014-2020: adapting to new challenges.
Ministers endorsed the key messages on financing, effectiveness and efficiency of social protection systems in the joint SPC and Commission report.
Under any other business, the Latvian presidency outlined details of the Tripartite Social summit and the Commission outlined the success of the re-launching of the social dialogue. The respective Chairs of the EMCO and SPC presented their annual work programmes for 2015. Finally, the Commission presented details of its proposal on the Youth Employment Initiative, which would see the Commission pre-finance up to €1 billion to help ease budget constraints, which had stopped the initiative fully getting off the ground.
[HCWS418]
Remploy Employment Services
Esther McVey Excerpts(9 years, 2 months ago)
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The Minister for Employment (Esther McVey)
The commercial process for the exit of Remploy employment services as announced to the both Houses in July 2014 is now complete.
The Remploy board and DWP have agreed that Remploy employment services will be established as a new company, free from Government control in partnership with Remploy’s employees and Maximus.
The exit has been led and shaped by Remploy and has the full support of Remploy’s trade unions and their key stakeholders. Over the last few years Remploy employment services has gone from strength to strength in the support it provides to disabled people to find and remain in work. It is one of DWP’s key providers of specialist support for disabled people. Since 2010, Remploy employment services has supported over 100,000 disabled and disadvantaged people into work. This opportunity, based on a strong partnership, provides the freedom and flexibility the business needs to continue to grow and increase the support it already provides disabled people to find and remain in work.
Remploy’s employees will be a fundamental part of this new partnership with 30% of shares held in an employee benefit trust. Employees will positively influence the operation of the company through the board and through an employee council. This will enable employees to have more direct control and influence on the operation of the company, and for the first time give employees a significant ownership stake in the business which will help to increase the quality of the services and protect and expand the delivery of Remploy’s social mission.
Remploy’s national delivery of Work Choice and other departmental contracts and agreements will transfer into the new company as a part of this process.
Remploy, Maximus and the Department will now work together to establish the new company, which we expect to be fully operational during April. The priority will be to transition the service smoothly and to deliver the best service possible for customers in partnership with Remploy. Current Remploy employment services employees and contracts will transfer to the new company.
The Department will also work with the current Remploy board to manage the remaining activities of Remploy Ltd as a non-trading company.
The Department will ensure that the Remploy pension scheme continues to be funded and that the accrued benefits of members are protected.
This is an historic moment that Remploy has been working towards with its staff and stakeholders and which we are pleased we have been able to deliver by working with them, which will enable the company to continue to help disabled people to find and stay in work for many years to come.
[HCWS373]
Oral Answers to Questions
Esther McVey Excerpts(9 years, 2 months ago)
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Mr Henry Bellingham (North West Norfolk) (Con)
1. What change there has been in the level of unemployment in North West Norfolk constituency since 2010.
The Minister for Employment (Esther McVey)
The claimant count in my hon. Friend’s constituency has fallen by nearly 60% since 2010, to just over 900.
Mr Bellingham
That is encouraging and unemployment in my constituency has come down by a staggering 908 in the past year, giving hope to a large number of families. Following the story in The Sunday Times last weekend, will the Minister tell the House what support her Department is giving to people seeking employment?
Esther McVey
I read the article in The Sunday Times about an episode of “Dispatches” that is being filmed in contact centres. Contact centres do not handle emergency hardship payments, as those are dealt with by Jobcentre Plus. Jobcentre Plus staff are fully trained and no one is sanctioned without being told about hardship payments. Awareness about benefit advances is being raised at the moment, and new posters and leaflets will be coming out in March once claimants have passed on their opinions and worked with the Department to get them right.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
2. What support his Department provides to young people seeking employment or education.
Rehman Chishti (Gillingham and Rainham) (Con)
11. What support his Department provides to young people seeking employment or education.
The Minister for Employment (Esther McVey)
Work coaches offer all claimants tailored support from day one of their claim. Claimants in need of experience are guided towards work experience or sector-based work academies, and those who require more focused training are supported through traineeships and apprenticeships.
Stephen Metcalfe
One barrier to young people seeking employment is that they do not necessarily have the correct skills required to take up the opportunities on offer. Will my right hon. Friend work with colleagues in the Department for Education and across the Jobcentre Plus network to ensure that local schools and colleges are aware of the skills that local employers need?
Esther McVey
My hon. Friend is right and we must make sure that young people are properly equipped for the world of work. I know of an ex-business man who ran a family business in printing. He knew who came through his door, which included young people who he wanted to give a job to, but they needed what people call “soft skills” and I like to call “core skills” for employability. We are working with the Department for Education on a new careers and enterprise company, and through the Inspiring The Future initiative young people are meeting business people to get a feel for what business and employment is all about, and we must support them as best we can. As my hon. Friend will know, we have increased work experience considerably and introduced sector-based work academies to that end.
Rehman Chishti
Will the Minister welcome the initiative that has been set up in my constituency with support from DWP and the local Gillingham football club, along with Medway Watersports, to provide young people with skills and positive experiences to assist them in securing employment or further training?
Esther McVey
I welcome the fact that my hon. Friend is working closely with Gillingham football club and its chairman, Paul Scally, who recently launched that help for young people, which is key. Various community and sports groups up and down the country are helping young people through the flexible support fund, and that should be highlighted. As many people as possible coming together to support young people into employment is key.
Mr David Hanson (Delyn) (Lab)
If things are going so well, will the Minister explain why youth unemployment has risen by more than 33,000 in the last two months, including a 10% rise in my constituency, which is not too far from hers?
Esther McVey
I would like to get the record straight for the right hon. Gentleman because youth unemployment has fallen on the year, and has fallen considerably since 2010 by nearly 200,000. That is down to the work of this Government. There was a small rise of 3,000 in the last month, but the trend for unemployment is consistently downwards and the claimant count has fallen every month for the past 38 months—the Opposition would die to be able to deliver youth unemployment like that.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
This week, at an event in my constituency, young people will be talking about how the world can improve for them, especially in terms of access to work. Why does the Minister think that youth unemployment has been rising while overall unemployment has been falling in recent months?
Esther McVey
Again, I need to correct the record. It would be helpful if Opposition Members looked at the true youth unemployment numbers, which are down on the year and down nearly a fifth since 2010. Opposition Members delivered an increase in youth unemployment of 45%. Please stop scaremongering, get the facts right and go and help young people into jobs.
Stephen Timms (East Ham) (Lab)
I hope the Minister will at least take some note of her own UK Commission for Employment and Skills, which points out that the UK now has German levels of adult unemployment, but eurozone levels of youth unemployment. Some 40% of unemployed people in the UK are under 25. Youth Contract wage incentives failed and were scrapped eight months early last summer. Does she have any new plans to tackle the very high level of youth unemployment—nearly three times the level of adult unemployment—which, as my hon. Friends have rightly pointed out and contrary to what she has been telling us, has gone up in the past couple of months, not down?
Esther McVey
What can I say to Opposition Members? They seem blind to the truth. The fact of the matter is that youth unemployment was going through the roof—there was an increase of 45%—and this Government have brought it down by nearly 200,000 since 2010. Working with businesses, we brought in an array of support, from work experience to sector-based work academies and wage incentives. We brought in a whole plethora of support. Some worked better than others—that is correct—but the aim and the outcome remains: youth unemployment is down by nearly 200,000 since Labour left office.
Stephen Timms
There is not much evidence of soft skills in that answer. The part of the UK where we have seen real progress on youth unemployment has been Wales. Youth unemployment used to be higher in Wales. Thanks to Jobs Growth Wales it is not higher any longer. Is it not now clear that for young people to benefit fully from the recovery that is under way, we need the young people’s job guarantee right across the UK?
Esther McVey
I am afraid it is the right hon. Gentleman who has soft skills. I have core skills in telling the truth: youth unemployment is down 200,000 since he left office. We do not need a job guarantee scheme, which does not work and costs an incredible amount of money. The work experience scheme we brought in is delivering better results at a twentieth of the cost. You bring in Labour, you pay a lot more for a lot less results.
Adam Afriyie (Windsor) (Con)
3. What assessment he has made of the effect of the benefit cap on long-term unemployment.
Mr Frank Field (Birkenhead) (Lab)
4. What the average monthly value has been of benefit sanctions imposed since May 2010.
Esther McVey
The Department does not make an estimate of the amount of benefit withheld as a result of sanctions. The sanctions system is in place to ensure claimants comply with reasonable requirements in order to move off benefits and into work.
Mr Field
Although the Department might not make estimates, outside experts do, and they now calculate that the amount of sanctions applied is greater than all the fines that magistrates courts in this country impose, but a fine in a magistrates court is imposed only after someone has been able to put their case. Might not the Government consider something like a yellow card system so that before a fine is exercised, people have the chance to bring in outside advisers to help them put their case more effectively?
Esther McVey
The Government do not make estimates because they would be wildly inaccurate, like the figures that the right hon. Gentleman has given. That is because only a maximum figure could be given that did not take into account hardship payments, which could be 80%, or that people already had a job, and there would be so many inconsistencies. The last Government—he was a Minister in the Department—did not make such estimates either.
Andrew Bridgen (North West Leicestershire) (Con)
Does the Minister agree that it is important for us to acknowledge the role that sanctions play as the ultimate backstop in support of our welfare system, particularly as 70% of claimants say that they are more likely to abide by the rules when they know that their benefits are at risk if they do not?
Esther McVey
Sanctions have been around since the benefit came into being, to ensure compliance, to enable the Government to have a backdrop to the social security they provide, and to enable the support to be matched by work to enable people to go into a job. As the secretary-general of the OECD said:
“The United Kingdom is a textbook case of best-practice on how good labour and product markets can support growth and job creation.”
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Freedom of information requests to the Department for Work and Pensions have revealed that of the reviews of 49 deaths of social security claimants, 33 called for improvements into how the DWP operates nationally and locally. What changes have been introduced, and how have they been associated with sanctions on claimants?
Esther McVey
As the hon. Lady will know, we are always improving what we do and always making things better. We brought in the Matt Oakley review to look at better communications, and we work with claimants always to ensure that sanctions are applied only correctly. We know that the vast majority of people work within the system. For employment and support allowance claimants, over 99.4% work within the rules, and with jobseeker’s allowance claimants, it is over 94%. It has to work, but we always look to see how we can get it better.
Paul Burstow (Sutton and Cheam) (LD)
Given how poorly served people with mental health problems are by the Work programme, and given the fact that the Minister told me in an answer that the Department does not currently have available to it information about the proportion of people with a mental health problem who are sanctioned, is it not time that the Government did that research and made sure that we had back-to-work programmes to help people with mental health problems?
Esther McVey
We know that over 99.4% people on ESA and with a mental health condition are not sanctioned, so only 0.6% are. Again, we look to see how we work with people; and for very vulnerable people there is clear guidance on what counts as good cause, so they would know how and why they would not be sanctioned. We always know we need to do more. We have various pilots going on that seek better to understand people with mental health conditions.
Mr Speaker
I am reminded of the feeling when one thinks the washing machine will stop—but it does not!
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Over 143,000 benefit sanctions were imposed in Scotland in the two years from October 2012, and one in four food bank users is using them because of delays in the benefit system. Yet today we read in the Financial Times that the Tories are planning to cut 30,000 jobs from the Department for Work and Pensions if they win the next election, most of them in the nations and regions. Is this not a recipe for further chaos and misery? Do not both claimants and DWP staff deserve better?
The Minister for Employment (Esther McVey)
With record employment and vacancy levels, the “Not Just For Boys” campaign is intended to encourage young girls and women to consider a career in an industry where they are traditionally under-represented. After just under a month, some of the UK’s and the world’s leading businesses are on board, as are schools, business women, companies such as BT, Microsoft and Diageo and organisations including Opportunity Now, the Construction Industry Training Board and Be Onsite. I could continue, but for the sake of brevity, I will sit down.
George Hollingbery
A recent OECD report made it clear that gender differences among high-performing students remain stubbornly high in science, technology, engineering and maths—the STEM subjects. In 2012, only 12% of women entering university chose to study in science-related fields, compared with 39% of men, with all that that entails for women’s long-term job security and levels of pay. Does my right hon. Friend agree that this simply underlines how incredibly important it is that campaigns such as her “Not Just For Boys” campaign should succeed?
Esther McVey
I do indeed agree with my hon. Friend. The campaign came about after we looked at where the jobs were going to be over the next decade. There will be 12 million jobs in fields such as IT, engineering and manufacturing, yet only 7% of girls were going into those subjects, so we knew that we had to do more—hence the campaign. Businesses came on board, as did women wanting to be role models. The Department for Education should also take some credit here, because there are now 10,000 more girls studying STEM subjects at A-level than there were in 2010.
Nigel Mills (Amber Valley) (Con)
10. What progress his Department has made on the roll-out of universal credit.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
12. What proportion of people over the age of 50 who have been referred to the Work programme have found work as a result.
The Minister for Employment (Esther McVey)
The objective of the Work programme is to move more people into sustainable employment, and so the available data relate to people’s job outcomes, not starts, which means they have been in work for three or six months. To September 2014, there were 300,410 referrals of people aged 50 and over, resulting in 42,750 job outcomes.
Bridget Phillipson
The Work programme is failing older people, with the figures the Minister has just given meaning that only 13% of people aged 55 to 59 have found a lasting job as a result of the programme. What would she say to the constituents I meet, who are desperate to work and doing all that is asked of them yet feel badly let down by her Government?
Esther McVey
The Work programme is the largest programme of its kind, helping people into work on an unparalleled scale. It is superseding all the expected levels and targets; it is better than anything that has gone before it.
Sir Tony Baldry (Banbury) (Con)
With the Banbury and Bicester job clubs, we seek to help people who are out of work to get back into the world of work, irrespective of age. Am I not right in thinking that 50,000 over-50s who are in work now were not in work last year? So 50,000 over-50s have found work in just the past year, and it is right that we should not write anyone off simply because of their age.
Esther McVey
My right hon. Friend is correct about that. We are seeing what extra support we can give to the over-50s, which is why, with my right hon. Friend the Minister for Pensions, we have brought together the “Fuller Working Lives” document. It is also why we are looking at: how we can do extra IT; how we can do extra CVs and résumés; and how we can have older worker champions going into business to really sell the benefits of older employees, because it is key that they should be there to share their experience.
Fiona Mactaggart (Slough) (Lab)
Can the Minister explain why the Work programme works less well for women over 50 than for any other group in the community? According to her Department’s own figures, just over one in 10 women over 50 actually finds work as a result of the Work programme.
Esther McVey
I am not really sure where the hon. Lady has got her figures from. I have the figures in front of me and the one in 10 would refer to the number of employment and support allowance new claimants who found lasting work—that compares to a figure of one in 25 when they first joined and is well above the expected average, which would have been about one in 14. But we must remember that these people are some of the most difficult and hardest to help into work, which is why we have put this in place to support them. [Laughter.]
Nick de Bois (Enfield North) (Con)
When the Minister joins me on Wednesday in my constituency for her meeting with employers at my jobs fair, she will learn that many of them have started and wish to continue apprenticeships for the over-50s. Does she see a role for the Government in extending the programme to over-50s, with sufficient demand?
Esther McVey
I do indeed, and what my hon. Friend is doing there is incredible, supporting people of all ages through job fairs. As there were peals of laughter from Opposition Members, they obviously do not understand how the Work programme works and who goes on it, because it is there specifically to help those who are the hardest to help into work and to give them extra help and support.
Mrs Mary Glindon (North Tyneside) (Lab)
13. How many disabled people have moved into work as a result of the Work programme.
The Minister for Employment (Esther McVey)
The objective of the Work programme is to move people into sustainable employment, and so the available data relate to people’s job outcomes, not starts, which means they have been in work for three or six months. As of September 2014, there were 596,640 referrals for people with a disability indicator and 78,480 job outcomes paid.
Mrs Glindon
What does the Minister have to say in response to the recent Mind report, which stated:
“Current government back-to-work schemes are failing people with mental health problems because they are not built on a proper understanding of why people have ended up out of work and what support they will need to move closer to work.”?
Esther McVey
Mind also looked at the fact that all previous job schemes did not do enough for those with mental health conditions, who are the hardest to help and support. The Work programme tailors support to the individual, looking at an individual’s barriers into work. We have helped thousands of people with mental health conditions into work, instead of writing them off. There is more to do, so we are working and doing extra pilots to see how we can better engage with people with mental health conditions.
Henry Smith (Crawley) (Con)
I was very grateful to the Secretary of State for visiting Crawley last month to see how successfully the Work programme was operating. Will my right hon. Friend join me in paying tribute to the staff of Royal British Legion Industries who deliver the Work programme in my constituency for paying great attention to getting disabled people and people with mental health conditions back into work?
Esther McVey
Indeed I will join my hon. Friend in celebrating the work of the Royal British Legion and all the other charities and voluntary groups up and down the country as they try to ensure that there is a personalised plan and support for people looking for work. They do an invaluable job, and the people who go into such a field have a passion for getting people into work.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
19. One of the greatest disabilities that stops young people getting a job is autism. Is the Minister aware that autism is predicted to cost this country £32 billion a year? Will she stop for a moment being the “hard-hearted Hannah” of the Front Bench and be a little more compassionate about disabled young people looking for work?
Esther McVey
I understand a lot about autism and the extra support, help and work that we need to do. That is why the Secretary of State and I introduced the campaign, Disability Confident, which reaches out to employers and says, “Listen to the needs of the people and find out what we can do and how we can best work with these people.” I do hope that the hon. Gentleman’s comment was not sexist, as I have had very many such comments from the Opposition Benches.
Stephen Mosley (City of Chester) (Con)
One highlight from my first term in Parliament was meeting a gentleman who had spent 10 years out of work on disability benefits because of depression. Through the Work programme, he got a full-time job. Does my right hon. Friend agree that the Work programme can give disabled people hope and opportunities for the future, whereas, in the past, they were left on benefits for life?
Esther McVey
I totally agree with my hon. Friend. What this is all about is understanding how we can help people, especially those with disabilities, and getting them into work. I am glad to say that, over the past year, employment for people with disabilities has risen by 141,000. Nearly half a million people with disabilities have set up their own business. That is what a Conservative Government and a coalition Government can do.
Kate Green (Stretford and Urmston) (Lab)
A moment ago, in response to my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson), I heard the Minister say that the Work programme was exceeding all its targets. Just 7% of those on employment and support allowance in the Work programme have got into jobs, compared with the tender document that said that, by year two, a 15% success rate would be achieved. The programme is not achieving even half that. Meanwhile, hundreds of thousands of people are stuck in a queue waiting for a work capability assessment with no idea when they will be reassessed. The Access to Work programme, which should help people get into work and get on at work, is supporting fewer people today than when Labour left office in 2010. It is no wonder that the bill for disability benefits is set to be as much as £10 billion higher, according to the Office for Budget Responsibility. Is the Minister satisfied with that catalogue of failure and waste?
Esther McVey
Once again, let me give the Opposition the latest and correct figures. One in 10 of ESA new claimants has found lasting work, which is above anything achieved in the past. What we expected was a level of one in 14, which was already there. Disability employment is up by 141,000 in the past year, and it now stands at more than 3.1 million. We are supporting disabled people into work and into education, and we are proud of our record.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
14. What assessment he has made of the performance of the Health and Safety Executive in reducing road traffic accidents at work.
Mr Philip Hollobone (Kettering) (Con)
T4. Since 2010, unemployment has halved in Kettering. Which Minister is responsible month on month for announcing the big reductions in unemployment we have seen and will she step forward to the Dispatch Box to accept the thanks of a grateful nation?
The Minister for Employment (Esther McVey)
Obviously, I would like to thank my lovely assistants, who are sitting behind me, in a bit of a role reversal. We are led by the Secretary of State, who 10 years ago wrote about “Breakdown Britain” and “Breakthrough Britain”, and about what a compassionate Conservative Government would want to do by providing a ladder to help people who might have been left in despair to come forward, get a job and prosper. So, to him!
Rachel Reeves (Leeds West) (Lab)
Since our last oral questions, the time it will take fully to roll out universal credit on the basis of the latest figures has increased from 1,571 years to 1,605 years, an increase of 34 years in just 42 days. Let me ask about the effect of the policy. In its original impact assessment, the Department for Work and Pensions said that 2.8 million households would be worse off when the policy is fully rolled out. Will the Secretary of States give us his latest assessment of how many households will be entitled to less support under universal credit?
Mr Russell Brown (Dumfries and Galloway) (Lab)
Responding on the issue of youth unemployment, the Minister for Employment painted a rosy picture, but she needs to take additional action in rural areas, especially those such as mine, where youth unemployment continues to rise month on month and the whole economy is based on agriculture and tourism. What additional support does she think she can genuinely give to areas such as mine?
Esther McVey
We have provided a whole array of support. We measured what was working best and asked how we would roll that out. By working with businesses, we found that the answer was work experience, the sector-based work academies, and apprenticeships; we have introduced 2 million of those—and it is national apprenticeship week. Getting young people into a job is about skills, including employability skills, and we are doing as much as we can.
Andrew Griffiths (Burton) (Con)
T8. My constituents in Burton and Uttoxeter welcome people coming to this country who want to work hard, pay their taxes and contribute, but they are concerned about those who come to take advantage of our benefits system. Will the Secretary of State reassure my constituents that this Government take that seriously, and will he outline what we will do about it?
Andy McDonald (Middlesbrough) (Lab)
Some 35% of appellants succeed in overturning erroneously imposed JSA sanctions, yet the Minister denies setting sanction targets or expectations. If that is true, how does she explain such appalling performance statistics—a 35% failure rate that masks untold misery and grinding poverty for thousands of our fellow citizens?
Esther McVey
I have repeatedly made it clear that there are no limits, no levels and no targets for sanctions. That is the case. We ensure that quality is correct so that people get this right. There will be quality assurance targets and measures that are put in place. The figures that the hon. Gentleman quotes are not correct. Somebody might be told that they have a doubt raised against them, and from that doubt, though they have not been sanctioned, 50% will end up never having a sanction, less than 10% will go on to reconsiderations, and much less than that will go to appeal.
Chloe Smith (Norwich North) (Con)
T10. Very good progress has been made both nationally and locally in getting unemployment and youth unemployment down. The answers today show that we should not stop there and put all that at risk. Instead, we should go further. Does the Minister agree that we should be doing even more to help, in particular, young people with disabilities or mental health conditions into work?
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
For international women’s day I visited Westgate community college to see the fantastic work that it is doing to improve the skills of women of all ages and backgrounds, but I was told that this Government’s sanctioning policy means that many women cannot feed their children, and also that some women have to come to mandated courses within two weeks of giving birth for fear of losing benefits. Is this how the Government treat women?
Esther McVey
I would like to meet the hon. Lady about these cases because I do not believe they are true. They certainly should not be true because if people had good reason, they would not be sanctioned. People have to take reasonable steps to get a job. We will need to get to the bottom of these cases because that would not be the case. We would not preside over a system where that was the case.
Steve Brine (Winchester) (Con)
The jobless count among 18 to 24-year-olds in my constituency is down 79% since 2010. Does the Employment Minister agree that a degree from a good university is one route into work—and someone who goes to the university of Winchester will be among the 92% who are in employment or further education six months after graduating—but just one route, because one of this Government’s great achievements has been to give young people hope that there are other routes?
Esther McVey
My hon. Friend is quite right. University is one route into work, and if it works for people that is great, but apprenticeships are another route, and this Government have done more than any other to get young people into apprenticeships—there are now more than 2 million apprentices—and into work. I know that my hon. Friend works closely with his university and local businesses to make that happen.
Mr Speaker
We are running late, but this is the last Work and Pensions Question Time of the Parliament and there are two colleagues I wish to accommodate.
Points of Order
Esther McVey Excerpts(9 years, 2 months ago)
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Mr Speaker
Order. All I need say is twofold. First, the hon. Gentleman has put his point on the record. Secondly, the way I would prefer to characterise it—I am not arguing with the hon. Gentleman—is that the Minister of State is an extremely robust character who can make her own case with force and skill, as she has done on several occasions today, and indeed at all times. If the Minister, who felt aggressed against and to an extent aggrieved, wishes to speak briefly on the matter, I would of course give her that opportunity.
The Minister for Employment (Esther McVey)
Further to that point of order, Mr Speaker. The reason I want this put on the record is that it is not the first time Opposition Members have been like this to me. John McDonnell came to my constituency and asked people—I know this is unparliamentary language—to “lynch the bitch” live in Wirral West. That is what Labour Members ask people to do in other people’s constituencies. The Opposition have form. [Interruption.]
Mr Speaker
Order. My role is to seek to defuse this. There are strongly held views on both sides. I asked the hon. Member for Huddersfield (Mr Sheerman) to raise his point of order and he did, and I thought it right that the Minister of State should have a right of reply and she has had it. I understand there are strong feelings. Let us try to preserve the courtesies as best we can in the days and weeks ahead. In all sincerity, I thank—and I mean that—both Members for having made their contribution. We will leave it there.
Armed Forces (Service Complaints and Financial Assistance) Bill [Lords] (Programme) (No. 2)
Ordered,
That the Order of 2 February 2015 (Armed Forces (Service Complaints and Financial Assistance) Bill [Lords] (Programme)) be varied as follows:
(1) Paragraphs (4) and (5) of the Order shall be omitted.
(2) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, two hours after the commencement of proceedings on the motion for this order.
(3) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion, at today’s sitting, three hours after the commencement of proceedings on the motion for this order.—(Anna Soubry.)
Employment, Social Policy, Health and Consumer Affairs Council
Esther McVey Excerpts(9 years, 2 months ago)
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The Minister for Employment (Esther McVey)
The Employment, Social Policy, Health and Consumer Affairs Council will take place on 9 March 2015 in Brussels. Shan Morgan, deputy permanent representative to the EU, will represent the UK at the meeting.
There will be a policy debate on the European semester 2015; As part of the discussion, the Council will seek the Adoption of Draft Council conclusions on the 2015 Annual Growth Survey and Joint Employment report; and will also seek Adoption of the Draft Joint Employment Report. The commission will present a proposal for a Council decision on guidelines for the employment policies of the member states; and seek endorsement of key messages on the social situation in the EU: SPC report.
The Council will seek a general approach on the proposals for a Council decision establishing the Employment Committee and repealing decision 2000/98/EC; and establishing the Social Protection Committee and repealing decision 2004/689/EC.
The Council will also seek to adopt draft Council conclusions on moving towards more inclusive labour markets; and the EU strategic framework on Health and Safety at Work 29014-2020: - Adapting to new challenges.
Ministers will be asked to endorse key messages on financing, effectiveness and efficiency of social protection systems in the Joint SPC and Commission report.
Under any other business, the Latvian presidency will inform on the tripartite social summit; the respective Chairs of the EMCO and SPC will provide information on their work programmes for 2015. The Commission will provide information on the re-launching of the social dialogue, presentation of country reports from the European 2015 semester, and the Commission proposal on the youth employment initiative.
[HCWS353]