Pensions (Special Rules for End of Life) Bill

Greg Knight Excerpts

Committee stage
Wednesday 24th April 2024 Public Bill Committees

[Mr Laurence Robertson (Tewkesbury) (Con)]

It is a pleasure to serve under your chairmanship, Dame Siobhain. I thank you, the Minister and all Committee members for attending. I also thank the Department for Work and Pensions legislative team, who have been a great asset and a source of useful assistance throughout the process. I thank the Opposition for their support and my hard-working staff for their efforts.

As I said on Second Reading, the Bill is small and narrow in focus, consisting of just the three clauses. It seeks to amend existing legislation that covers the definition of terminal illness for the Pension Protection Fund and the financial assistance scheme, which is currently a life expectancy of only six months. We seek to increase that definition to 12 months. The extension would allow people with a terminal illness to receive terminal illness payments when they are likely to have 12 months or less to live. Such payments are a one-off lump sum from the PPF scheme or an early payment from the FAS.

I am sure we would all agree that when someone receives the devastating news that they have a terminal illness, they should receive any and all financial help possible during their final days. The constant advances in medical science—treatments, drugs and palliative care—make this Bill that much more important, because things are rather difficult to predict. This extends to the pension schemes as well. Most private pension schemes already provide cover in the form of serious ill health payments.

As will be explained, the Government passed legislation two years ago to ensure the same outcome for individuals receiving certain social security benefits such as universal credit, employment and support allowance, and personal independence payments. I came to understand, however, that two aspects of pensions legislation lacked updated coverage. That legislation relates to the Pension Protection Fund and the financial assistance scheme—the focus of the Bill—which retained the six-months definition. The Bill seeks to rectify that.

In case any right hon. or hon. Members present in Committee were not at the Second Reading debate, I shall explain briefly what exactly the PPF and the FAS are. The Pension Protection Fund was established by the Pensions Act 2004. It pays compensation to individuals when the sponsors of their defined-benefit pension schemes—usually their employers—become insolvent and lack the necessary assets to pay pensions to the level that the Pensions Protection Fund would ordinarily pay. That applies for insolvencies that take place on or after 6 April 2005. The financial assistance scheme applies to individuals whose pension schemes were unable to meet their pensions liabilities in full when those schemes started to wind up between 1 January 1997 and 5 April 2005.

Currently, the PPF can make a one-off lump sum payment to someone who has not yet drawn their PPF compensation but is terminally ill. The FAS makes similar provision by allowing the early payment of financial assistance. Both the PPF legislation and the FAS regulations use the same definition of terminal illness. As I alluded to earlier, the Bill will bring the Pension Protection Fund and the financial assistance scheme in line with the Department for Work and Pensions’ definition of terminal illness, which, following the Social Security (Special Rules for End of Life) Act 2022, was likewise extended up to 12 months when calculating certain benefits. Therefore, the Bill seeks to harmonise the legislative definition of terminal illness such that following its commencement all legislation will use the extended 12-month definition.

I repeat that I hope that by harmonising the legislative definition we can encourage all pension providers that do not already have provision for considering serious ill-health payments when the member has a life expectancy of 12 months or less to consider putting that in place or updating or extending their scheme rules. Yes, the Bill has a narrow scope, but it might act as a prompt and as encouragement to other pension providers.

The Bill is legally tight, consisting of just three clauses. Clause 1 amends the current definition of “terminally ill”, normally referred to as “end of life”, from six months to 12 months in all relevant legislation; clause 2 covers the territorial extent and commencement of the Bill; and clause 3 establishes the short title of the Act: the Pensions (Special Rules for End of Life) Act 2024.

[Sir Greg Knight (East Yorkshire) (Con)]

Is my hon. Friend entirely happy with the wording of clause 2(4)? Has he had an undertaking from the Minister that the Government will bring the Bill into force as soon as possible? I ask because I was lucky enough to take the through Parliament Parking (Code of Practice) Act 2019, which had a similar clause. Some five years later, we are still waiting for the Government to introduce the parking code of practice, which is outrageous. If my hon. Friend has not had an undertaking from the Minister, does he think he should obtain one?

[Mr Robertson]

I am grateful to my right hon. Friend for reminding me that the Bill’s introduction depends on the Minister taking action. It was not this Minister who spoke on Second Reading but one of his colleagues, and we did receive an assurance that the legislation would be in place as soon as possible. As I understand it, we need to make sure that the situation in Northern Ireland is brought together with our legislation, because it is a devolved matter. I will come on to that in a minute. The Minister on Second Reading assured me that it would be brought in as soon as possible; I do not know exactly when that will be, but I am sure that the Minister will confirm it today. If he does not confirm it as strongly as we would like, maybe we can intervene on him, but I am satisfied that, given the Government’s support for the Bill, they will seek to introduce it as soon as all the ducks are in a row—that is how I can best describe it. But my right hon. Friend’s point is very important.

The Bill’s territorial extent is slightly complicated, given that aspects of the Pension Protection Fund are covered by devolved legislation in Northern Ireland, as seen in clause 1(3) and (4) and clause 2(2). However, officials are working with the devolved legislature on that matter, and as I understand it our colleagues in Northern Ireland are keen to see the alteration happen as soon as possible.

As explained, the Bill focuses on only the Pension Protection Fund and the financial assistance scheme. Thus, clause 1 and its subsequent subsections seek to amend relevant legislation and provisions connected to the Pension Protection Fund and the financial assistance scheme. Specifically, subsections (1) and (2) amend the definition of terminal illness by changing the period of life expectancy from the current six months to 12 months, in respect of Pension Protection Fund compensation.

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[The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)]

It is a pleasure to serve under your chairship, Dame Siobhain. I thank my hon. Friend the Member for Tewkesbury for bringing forward this legislation; I should also thank my right hon. Friend the Member for Suffolk Coastal, the former Secretary of State for Work and Pensions, for paving the way.

This may seem a small and discrete piece of legislation, but it is very important. As my hon. Friend the Member for Tewkesbury explained, the Bill extends the definition of terminal illness for compensation payments made under both the Pension Protection Fund and the Financial Assistance Scheme. Members will be able to claim their compensation on the grounds of terminal illness if a medical professional confirms that they have less than 12 months to live, rather than the current six months. That will enable eligible members to receive the vital support of payments at an earlier point in their illness. The change restores the original policy intent of alignment between the social security special rules provisions and both the PPF and FAS. It will also bring those two schemes into line with the tax definition of “serious ill health”, which allows private pension schemes to make payments where the member has less than 12 months to live.

I will try to cover some of the issues raised today and on Second Reading. There was a particular concern on Second Reading as to whether people whose schemes were not in the PPF or FAS would have a similar opportunity. Although I cannot provide definitive numbers—I do not believe they actually exist—for serious ill health payments, one of the leading independent trustee firms, Dalriada, has confirmed that:

“Trustees may only make such payments in accordance with the provisions of their scheme’s trust deed and rules. In practice, most scheme rules do allow for such payments.”

Officials have also contacted the Association of Pension Lawyers, which collectively acts for many schemes of all sizes. It has confirmed that, in the experience of its members, most occupational pension schemes will have an option of a serious ill health lump sum payable on a discretionary basis.

We have also heard questions today, and as we did on Second Reading, about who would be making the decisions on terminal illness, and the range of those illnesses. I can confirm that those decisions will be made by healthcare professionals, such as clinicians and medical practitioners, who have had direct oversight of the individual concerned. Although there is no definitive list of what constitutes a terminal illness, I imagine that the provisions would certainly include illnesses such as advanced cancer, dementia, motor neurone disease, and other neurological diseases, such as Parkinson’s. However, in my view the definition does not exclude any particular range of conditions, because one’s lived experience of a condition is not determined by the label that we hang around our necks. I find that I have been saying that for 48 years of my life, frankly. We do not determine someone’s lived experience just by the name of their particular condition.

My hon. Friend the Minister for Employment was also asked on Second Reading whether fixed time limits were the right way to go, and whether there would be adequate training for clinicians and communication to make people aware of the changes. The Department engaged widely on time limits ahead of the Social Security (Special Rules for End of Life) Act 2022, and chose the 12-month approach specifically to align with the NHS definition of “end of life”, and to link up with existing initiatives for clinicians that encourage the identification of people in their final year of life. This Bill simply aligns the definition used for the PPF and the FAS with that used more widely by the DWP and the NHS.

As part of the preparations made ahead of the 2022 Act, the Department engaged extensively with senior clinicians from key medical organisations and hospices, as well as representatives from multiple charities and networks of welfare advisers. DWP bulletins were sent out by the British Medical Association, the Royal College of General Practitioners, the Royal College of Physicians, the Association for Palliative Medicine, Hospice UK and NHS England networks across the country. The Department also initiated plans to create a learning module for clinicians to raise awareness among the clinical community of the financial support available for those who are nearing the end of life. That learning module went live in February.

Assurances were also sought that the definition of a terminal illness would be consistent across the DWP. I can provide that assurance today. As the Minister for Employment said on Second Reading, this Bill builds on the previous legislation—which we have just heard about—which changed the special rules for social security benefits. The scope of that legislation limited the changes that we could make to social security benefits administered by the DWP, as they involved the fast-tracking of benefit claims. This final change brings payments made by the PPF and FAS into alignment with those changes.

As I mentioned a little earlier, this Bill aligns the PPF and FAS definition with the tax rules for serious ill health. That will ensure that the payments made by the PPF do not trigger unauthorised payment tax charges on either the PPF or the individual to whom the payments are made. If the definition was to be amended beyond 12 months, as some have suggested, members could have faced significant tax charges on their payments, which I am sure no one wishes to see happen.

I have noted the comments today from my right hon. Friends the Members for East Yorkshire and for Suffolk Coastal about the commencement of the provisions in the Bill. I can confirm today that the intention is for that to happen as soon as practicable after Royal Assent. I see no reason for delay or obfuscation. We have all agreed today that this is a vital piece of legislation that will benefit many of the most vulnerable in our society at the time they need help most, so I have no intention at all of delaying it.

[Sir Greg Knight]

I am most grateful to the Minister for what he has just said. Can he confirm that that is an undertaking that he has given, and that it is unequivocal?

Draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024

Greg Knight Excerpts

Wednesday 13th March 2024 General Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)]

I beg to move,

That the Committee has considered the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024.

It is a pleasure to serve under your chairmanship, Dame Maria. The regulations introduce new measures that will support trustees and sponsoring employers of defined-benefit occupational pension schemes to plan and manage their scheme’s funding over the longer term. The regulations will require trustees to send a statement of the scheme’s funding and investment strategy to the Pensions Regulator, alongside the three-yearly actuarial valuations already required. This will articulate the trustees’ approach to long-term planning and risk management.

The regulations will work with the regulator’s revised funding code of practice, aiming to strike a fair and lasting balance between providing security for members of defined-benefit schemes and affordability for the sponsoring employer.

[Sir Greg Knight (East Yorkshire) (Con)]

The explanatory memorandum states on page 7:

“There were concerns that the new regime would result in a disproportionate governance burden for small schemes”.

Does the Minister intend to address that concern?

[Paul Maynard]

My right hon. Friend makes the very fair point, which I have always been conscious of in this brief, that small schemes may occasionally get out-shouted by some of the larger schemes. Alongside the Pensions Regulator, we have engaged extensively not just with industry but with the professional bodies that are often more involved in the running of smaller schemes. I am confident we have struck the right balance between providing the clarity and assistance that trustees of smaller schemes need, and the interests of members in ensuring that they get the benefits that are due to them. It has been quite a long process to come up with this particular set of schemes and, in my view, we have struck the right balance.

As many will know, DB schemes have around £1.4 trillion of assets under management. In a world where most DB schemes are closed and maturing, it is more important than ever that sponsors and trustees work together, are clear how their promises will be met, and agree how to manage the funding and investment decisions involved. These regulations will support them to do that.

DB funding levels have indeed improved in recent years. It is important that schemes take advantage of the opportunities that that brings, and crystal-clear funding standards enable that. This package of measures aligns with the Government’s policy on investing in productive finance and the consultation on options for defined-benefit schemes.

Pensions (Special Rules for End of Life) Bill

Greg Knight Excerpts

2nd reading
Friday 2nd February 2024 Commons Chamber

[Mr Robertson]

I thank my hon. Friend for his intervention. As I understand it, the assessment is made by a health professional. What illnesses he or she is entitled to take into account goes beyond the scope of this Bill, and I do not think that I can list those illnesses. The Bill is about the length of time someone is expected to live. If he will allow me, I will leave my explanation there.

[Sir Greg Knight (East Yorkshire) (Con)]

On that point, is there provision for a second opinion to be obtained in cases where there is doubt? If my hon. Friend cannot answer that today, will he write to me?

[Mr Robertson]

I thank my right hon. Friend for that intervention. I am not aware of the process that someone would have to go through when being assessed. The assessment of the time that someone has to live, which is a technical legal point, is particularly concerning, but I am certainly happy to look into that.

The definition of “terminal illness” is a disease that can reasonably be expected to bring an end to somebody’s life within six months. The Department for Work and Pensions used that definition for calculating benefits, but in the Social Security (Special Rules for End of Life) Act 2022, that six months was extended to 12 months. It therefore seems logical to change the definition of “terminally ill” applied by the Pension Protection Fund and the financial assistance scheme, so that it is consistent with the definition that is applied when considering social security payments. The Bill seeks to make that extension from six to 12 months.

It is hard to know how many people would benefit from this legislation. I suppose, paradoxically, we do not want people to benefit from it, because that would mean that the sponsors of their pension fund had become insolvent, which we do not want to happen. However, the Bill will help terminally ill people where that is the case.

While the Bill’s scope is technically limited to the Pension Protection Fund and the financial assistance scheme, I hope that my bringing it forward will encourage any workplace pension scheme that does not have provision for members with a terminal illness who have a life expectancy of 12 months or less to consider putting that in place. Many private pension schemes can already make what are called serious ill health payments under tax law to a member who has up to a year to live. That would be a change well worth making.

--- Later in debate ---

[Mr Robertson]

I thank my hon. Friend for that. Yes, I spoke in particular to the Marie Curie charity, which told me of some very sad cases. It is important to stress that the Bill refers to occasions when the pension fund or its sponsoring company becomes insolvent, so the Bill is narrow in scope. However, he makes a good point. The charity gave me a number of examples, and there are many others. That brings us back to my point that we should look to extend the 12-month provision beyond the Bill to other pension schemes. The last thing that someone given a terminal illness diagnosis needs is more financial problems. If there is anything we can do about that, I am happy to take it forward with the Minister and the Government. I thank my hon. Friends for their interventions.

Determining the length of time that someone has to live falls to health professionals, and it is a heartbreaking and difficult judgment to make. Modern medicine, surgery and palliative care—such as that provided by the excellent Sue Ryder hospice in my constituency—and the general care provided by our NHS staff make that judgment even more difficult. I therefore feel that it is right to extend the definition of “terminally ill” from the very narrow band of six months to the more accommodating threshold of 12 months. That is fairer not only to the people who are ill, but to those who have to make that very difficult judgment—a judgment that it is especially difficult for health professionals to make when they know that a person’s pension payments may rest on it.

The Bill extends throughout the United Kingdom, and would come into force in England, Scotland and Wales

“on such day or days as the Secretary of State may by regulations appoint”,

and in Northern Ireland when the Department for Communities appoints by order. I am about to wind up, but I think my right hon. Friend the Member for East Yorkshire (Sir Greg Knight) wishes to intervene again.

[Sir Greg Knight]

My hon. Friend is generous. I think he is referring to clause 2(4). Is he entirely happy about the wording of that subsection? The Bill could be passed with unanimous support from all parts of the House, but under that subsection, a Minister could later decide not to implement the measure. We would be unable to do anything about that.

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[Philip Davies]

My hon. Friend raises typically astute points that need to be considered. The short answer is yes, I have. If he will bear with me, I will come to that, because I have sought professional advice on the implications for those funds. I promise my hon. Friend that I will come to that; if he feels that I have not done so sufficiently, he can feel free to have another bash, so to speak.

Since the special rules were introduced, there have been significant advances in how the NHS treats and cares for people nearing the end of their lives, meaning that many terminally ill people now live for longer with their illness. Given the advances, the then Secretary of State for Work and Pensions announced in July 2019 that the DWP would undertake an in-depth evaluation of how the UK benefit system supports those nearing the end of their lives.

As part of that consultation, the Department sought feedback from the terminally ill, those who support them and clinicians. Much of the reasoning and findings from that report are directly applicable to the Bill.

The purpose of the evaluation was to consider the policy and implementation of the special rules relating to people defined as “terminally ill”. It aimed to take a holistic view of the support provided, and took into account direct contributions from people nearing the end of their life, who shared their first-hand experiences of accessing support via the special rules, as well as from charities and organisations supporting them. As well as receiving written evidence, the evaluation team held engagement sessions, including an event for people living with or affected by motor neurone disease; conducted telephone interviews with people nearing the end of their life; and met charities that provide support for people nearing the end of their life.

The study also took into account the views of healthcare professionals who work with and support people approaching the end of their life, through national expert palliative and end-of-life care clinical groups; and nearly 1,000 clinicians from a range of professions, in England, Scotland, Wales and Northern Ireland, also had a chance to respond through a survey. Their views should not be underestimated, as they play a large part in respect of access to financial benefits under the special rules, which is the bit I want to look at in a little more detail.

The Department’s findings agreed with the purpose of the Bill, showing that there was a consensus across all groups that the Government should extend the current six-month rule and support for the Department for Work and Pensions to adopt a 12-month end of life approach that would allow people in the final year of their life to claim under the special rules. An added benefit of the 12-month approach was that it would also bring greater consistency with the definition of “end of life” used by the NHS and right across Government.

The overwhelming evidence of medical advances in the past 30 years, since the special rules were first implemented in 1990, demonstrates that the law in its current state is no longer fit for purpose. In general, public health has changed dramatically, both with the pandemic, and with the advances in pain relief and other trial drugs that now make living with a terminal illness for longer more likely. The leaps and bounds made in both the care for terminal patients, and the identification and diagnosis of these patients, have progressed extensively. All forms of palliative care have progressed, from how people nearing the end of their life are treated and cared for, and how their conditions are managed, to how clinicians define people nearing the end of their life. That is why the questions from my hon. Friend the Member for North East Bedfordshire (Richard Fuller) are so important: it is because of these huge changes that have taken place.

New approaches in care have been developed using the Gold Standards Framework and the Daffodil standards. The “Ambitions for Palliative and End of Life care: a national framework for local action 2021-2026” NHS guidance has also led the way in reforming caring for people nearing the end of their life. The Gold Standards Framework is a registered charity and has been the UK’s leading training provider for generalist frontline staff in caring for people in the last years of life for more than 25 years. Its aim is to enable a gold standard of care for everyone with any condition, in any setting, given by any care provider, at any time in a person’s last years of life. That is focusing on the medical side of things, and this Bill hopes to provide the equivalent standard in terms of pensions. Both frameworks have been integral to the improvement in palliative care and the greater life expectancy of terminally ill patients, because with better care and treatments, the longer people will live, and hence the need for the amendment proposed by the Bill.

One of the largest issues relating to the Bill is how clinicians define who should be eligible for the special rules. The DWP survey showed a consensus across all groups that the current definition is not fit for purpose, for several reasons. Some patients who have fluctuating conditions or uncertain life expectancy found it difficult to access the special rules, as their life expectancy was indeterminable. Many conditions progress rapidly and then plateau, and some conditions do that regularly. Two groups of patients who struggle with that are motor neurone disease sufferers and cancer patients. In preparing for today’s debate, I contacted the Motor Neurone Disease Association to ask how it feels about the change and how it will affect people diagnosed with MND. I am sure everyone in the House is familiar with the “Scrap 6 Months” campaign, led jointly by the MNDA and Marie Curie, which my hon. Friend the Member for Tewkesbury (Mr Robertson) mentioned and which is supported by thousands of campaigners across the country. They told me:

“This Bill will ensure that a greater proportion of people living with MND will be”—

able to receive—

“terminal illness payments from the Pension Protection Fund and Financial Assistance Scheme...

This is important given the context of the financial impact of living with MND, especially as symptoms of the condition increase”.

So, on that basis, they very much support the Bill.

Macmillan Cancer Support plays a large part in end-of-life care and has its national call centre based in my constituency in Shipley. It told me that it was supportive of the decision to widen the criteria from six months to 12 months, ensuring that those with a terminal diagnosis have timely access to financial support when they need it most.

In some cases, the six-month rule forced clinicians and patients to have very distressing conversations about life expectancy either too early or at the wrong time for them. There are two ways in which this issue can be tackled. The first is the 12-month rule, which is where we are with the Bill, mirroring the end-of-life approach used by NHS England. The second is taking out the timescale and instead using a clinical recommendation supported by guidance, which does not have an explicit timeframe attached to it—in effect, looking at the nature of somebody’s condition.

The first option is an increase in the term of life expectancy to 12 months, which is what the Bill would do. Obviously, this approach aligns the welfare state with the work of the NHS, and so would make it easier for organisations across the UK that support people nearing the end of their lives to understand the application of the special rules, because it makes them all consistent. Clinicians have many difficult conversations when discussing end-of-life care, and this could be added into those conversations instead of being had separately, also saving the NHS time.

However, I just want to point out that any time-bound rule could be subject to the same problems, as life expectancy can fluctuate and nothing is certain—even within a year. There is therefore an argument for basing it on a clinical diagnosis, rather than a fixed term, which by definition is always going to be slightly arbitrary.

[Sir Greg Knight]

Will my hon. Friend just clarify the position? Is he saying that he would prefer the Bill to be amended, or is he happy with it as it stands?

[Philip Davies]

I am grateful to my right hon. Friend for his question. I support the Bill, because it is far better than the status quo, and it sensibly evens up those situations, which is what my hon. Friend the Member for Tewkesbury intends with the Bill—in effect, to ensure that the rules for benefits and pensions are the same and that one does not diverge from the other. My point is that this should not be the last word on the matter, because it may not necessarily be the best outcome. It is a sensible measure to take, but there is a bigger issue here about whether—across benefits and pensions—this is the right approach to take. My point is that we should not be wedded to the idea that a time limit is the right way to do it. This matter therefore warrants consideration as to whether fixed-time limits are the right way to go.

The benefits of an open-ended time period clinical recommendation is that it would allow greater access to pensions under special rules for those who have an uncertain prognosis, many of whom still have difficulty accessing benefits, whether it be six months or 12 months. The drawback of that approach is that a broader definition of terminal illness would make it difficult for clinicians to make decisions about who is eligible, which could lead to people missing out.

The aforementioned survey of clinicians’ views on this matter relating to the benefits system found that, when asked what they thought the time criteria should be under special rules, 38% of respondents preferred a 12-month model, 34% preferred a model without reference to a time limit, and only 10% supported the existing six-month model. That goes to the heart of what my right hon. Friend the Member for East Yorkshire was saying, which is that, whereas everyone agrees that the six-month rule should be changed, and that therefore my hon. Friend the Member for Tewkesbury is absolutely right to bring forward the Bill, there is not much in it between whether people think it should be 12 months, or there should not be a specific time limit. Those views should be expressed in this debate for further consideration, given the subject we are debating.

The conclusion on this point from the Department was to make a legislative move to the 12-month rule, which is a perfectly reasonable decision to make based on that survey. That is now codified in the Social Security (Additional Payments) Act 2022, and the exact same reason has been applied in my hon. Friend’s Bill. Changing the six months to 12 months is clearly the most popular option, based on that evidence, and it brings it into line with the rest of the benefits system. It would maximise the opportunity to improve awareness of the special rules and provide consistency in their application. We should be making it easier for people nearing the end of their lives to access their pension benefits and any other financial aid they are entitled to under the special rules system.

The second argument taken into consideration for access to special rules was awareness and communication. The DWP evaluation showed that much more could be done to improve awareness, and respondents felt that the information and guidance regarding access to special rules could be improved. Again, we might want the Bill to say something about making people aware of the change in the rules, because it is no good having those changes if nobody is aware of them. That is something else that needs to be considered.

Of course, charities are vital in helping people to make a special rules claim, as people are often unaware that there is financial assistance and support available from the Department for Work and Pensions for people nearing the end of their lives. However, clinicians can also play their part. Apparently, as written in a DWP report, some are not aware of special rules or have limited knowledge of them. When the Department aligned benefits with the 12-month end of life approach, it expected to be able to improve awareness among clinicians by taking advantage of training and educational resources and that, through those resources, the language should also be simplified. That was the Department’s conclusion and I assume the same will be valid in this case too.

On the point about the report, I should also mention that the clinicians raised concerns over the term “terminally ill”, which is used in the Bill. They say that the term is being used less and less these days, and patients are now more commonly referred to using terms such as “end of life.” That is a change within the field of palliative care, and one that maybe could be taken into account with the language in the Bill and in the rules that the Government use.

What actually happens when someone tries to submit a special rules claim? Is that something the Bill could make easier too? People nearing the end of their lives, or those who support them, provide the DWP with medical evidence that provides details of their clinical condition, treatment and response to treatment. That is most commonly done by a clinician completing an SR1 form. That form can be completed by GPs, by hospital doctors, or by registered nurses working in roles such as advanced nurse practitioner, Macmillan nurse, clinical specialist nurse, or practice nurse with expertise in long-term conditions management. That form can be submitted in either paper or electronic copy, and, in England, by NHS staff using an online tool.

As I said, some clinicians are not aware of the special rules or have limited knowledge of them. Therefore, the clinicians who provide SR1s do not always fully understand the special rules and what needs to be included in them. That means some patients find getting an SR1 or other medical evidence more challenging than it should be. In the DWP’s survey of the clinicians who had completed an SR1 form, the majority believed it was of value; 73% of respondents agreed or strongly agreed with the statement that the form is

“an effective way of providing evidence to support a patient’s benefit claim under the Special Rules criteria”,

but 12% disagreed or strongly disagreed. When asked to explain their reasons for their views, the majority said the form was perceived as easy and clear to use, but some considered that it failed to capture certain information that they felt was important, particularly where the patient meets the definition but is receiving active treatment, or where it is necessary to explain the details of a condition other than cancer.

If the Bill succeeds, as I hope it will, and the change is made from six months to 12 months, that will offer an even bigger chance to develop a more cohesive approach between the Department of Work and Pensions and clinicians, to ensure that the right people are claiming special rules. In order to get benefits, there must be requirements for claims and ways to claim. The Department found that more support around making a claim would improve the experience. It also received feedback on what happens once a special rules claim is made. There was a consensus from those who fed back into the evaluation that having access to an online portal or some information on the progress of their claim would be helpful.

I promised my hon. Friend the Member for North East Bedfordshire that we would talk about the fiscal side of the Bill. I contacted Tim Middleton, the director of policy and external affairs at the Pensions Management Institute, about that—I thank him for giving up his time. Two questions must be considered about the financial repercussions of the policy. First, how many applications for full commutation on the grounds of serious ill health are received by the Pension Protection Fund scheme each year? I was told that the number is in double figures—it is really not many. I should say that Tim Middleton has been working in the pensions industry since 1987, and he has only ever encountered three cases of a special rule being applied to a Pension Protection Fund scheme, so we can safely say that it is not a big number.

The second question, which my hon. Friend the Member for North East Bedfordshire rightly asked, is were the application period extended from six months to 12 months, as the Bill anticipates, what additional costs would the Pension Protection Fund incur? A member being able to apply within the extended 12 months of a diagnosis, rather than six months, would be a change. Tim Middleton, who is an expert in the field—of course, if the Government have any different figures, we would all be delighted to hear them— has said:

“Whilst there is likely to be an increase in cost, it does not seem likely that this would be significant, and, in any event, for a scheme as large as the PPF, it is expected that these costs could be easily absorbed.”

That should give my hon. Friend some comfort that the scheme will not be burdened beyond its means, but it certainly needs to be considered. It would be helpful if the Minister let us know whether her assessment is the same as the one I have been given. By way of context, in the European Court of Justice judgment in the Hampshire case in 2018, it was estimated that the additional annual cost to the Pension Protection Fund would be £215 million, and that it would affect approximately 1,200 members. The Bill changes would see nothing like that figure.

For completeness, I looked at whether anything other countries did could be usefully included in the Bill, based on their practices and experiences. Comparing the terminal illness definitions of countries with comparable systems, I found that Belgium uses the phrase “palliative status”, which is defined as

“expected survival of a maximum of 2 months, due to one or more irreversible disorders and with the intention of dying at home”.

The Netherlands defines it as

“with an expectation to die within 12 months”.

Australia and New Zealand use an “average life expectancy of less than 2 years”. In Canada, a terminal medical condition is a disease that

“cannot be cured or adequately treated and is reasonably expected to result in death within 6 months”.

Spain refers to people who will

“benefit from palliative care for example, those with an incurable, advanced and progressive disease; limited life forecast; low possibility of response to specific treatments… frequent crisis of needs; intense emotional and family impact; impact on the care structure; high demand and use of resources”.

From those definitions, we can see that there is no clear international definition of what constitutes a terminal illness for the purposes of a welfare system, whether that is a benefit system or a pensions system. Some countries, as we can see, have taken a time-based approach, and others have gone for a clinical definition. This is a wider area that needs more consideration generally, but my hon. Friend the Member for Tewkesbury’s Bill is exactly right to make the point that the two systems—the benefit system and the pension system—should be exactly the same. There is absolutely no reason why they should not. Whatever system we have in future, I very much hope that we will always be able to keep a consistency of approach, because otherwise it is not fair.

On the Bill’s commencement, my right hon. Friend the Member for East Yorkshire was absolutely right—to be fair, my hon. Friend the Member for Tewkesbury set it out clearly in speaking to the Bill, so it is not as if anything was being hidden—to focus on the fact that the measures

“come into force on such day or days as the Secretary of State may by regulations appoint.”

I share his concern. We all think something is a good idea, the House of Commons passes a Bill, as does the House of Lords, but lo and behold, nothing happens. I think most of our constituents will find that to be an intolerable situation.

Can the Minister explain why we must have such a woolly starting point in the Bill? I cannot see the need for it. Why can we not have a specific starting date? Surely, at the least, a “no later than” date—based on the reasons any delay might be needed—could be inserted. It is important that the Minister explains why we cannot have a specific date, why there might be a delay, and why we cannot have a “no later than” date added to the Bill. I am pretty sure that we will all want to consider that again either in Committee or the subsequent stages.

[Sir Greg Knight]

Has my hon. Friend examined clause 2(7), which gives the Secretary of State the power to make transitional arrangements, so that a nine-month period could be introduced for a specific time. I do not understand why we are giving the Government that flexibility. If the House and the other place approve the Bill, and the monarch signs it, it should become law and be implemented.

[Philip Davies]

My right hon. Friend makes a good point. One duty of Members in scrutinising legislation and holding the Government to account is to ensure that on a day like today, when people are anxious to get through as much as possible, the Government do not sneak into the Bill a few powers to change things more easily in future—powers that perhaps the House might not otherwise want to give them. At the moment, this House passes far too many things that give the Government of the day sweeping powers to change things without coming back to the House for meaningful scrutiny. My right hon. Friend is absolutely right to be wary of those measures.

This is a fairly short Bill, but the most extensive part is clause 2, which basically gives the Government powers to vary this and that, introduce the measures when they want, and so on. We should always be nervous about legislation that is a convenience for the Executive rather than a benefit for our constituents. It is incumbent on the Minister to explain why the Government need those powers. Is there a specific reason that each of those powers has been added to the Bill, or is it a typical catch-all—“Let’s shove the lot in there just in case we might need it at some point in the future”? We should always be wary of such measures. If there is a good reason that each subsection in clause 2 is needed, let us hear it so that we can all make our own minds up about them. If they are not needed and have just been shoved in for a bit of convenience in case the powers are needed at a later date, perhaps the House might want to say, “Well, we don’t think you should have those powers. If you want to do something different, you should come back at a later date and make that case.” I look forward to hearing the Minister’s response on that.

Those are perhaps things that we could come back to in the Bill’s remaining stages, but in the meantime, I certainly support the thrust of what my hon. Friend the Member for Tewkesbury is doing. He should be commended for focusing on something that is important to many people and will make a massive difference to their lives, and he will be thanked by many in my constituency and beyond. On that basis, I support the Bill’s Second Reading.

Coastal and Rural Communities: Employment

Greg Knight Excerpts

Thursday 1st February 2024 Westminster Hall

[Virginia Crosbie (Ynys Môn) (Con)]

I beg to move,

That this House has considered the employment of people living in rural and coastal communities.

I thank the Backbench Business Committee for allowing me a debate on this important subject, the employment of people living in rural and coastal communities. I am grateful to the Minister for being present to respond on behalf of the Department for Work and Pensions. Before the debate, there was some discussion about which Department should respond, because there is a strong argument that this is not just—perhaps not even—a DWP matter. Arguably, it is for the Department for Levelling Up, Housing and Communities, because the problems with employment in rural and coastal areas are entrenched in long-term social and economic patterns. It could be a matter for the Department for Transport, because one of the greatest barriers to employment in rural and coastal areas is physical connectivity—roads, rail and public transport. Or we could have put to the Department for Science, Innovation and Technology our questions about the barriers to employment caused by poor digital connectivity in rural and coastal communities. How about the Department for Business and Trade? There are issues to tackle in nurturing supply chains and implementing enterprise zones to enable businesses to thrive.

In places such as my constituency of Ynys Môn, I would add the Department for Energy Security and Net Zero to the list and ask when that Department will act on bringing new nuclear to Wylfa, because that would be a game changer for our local employment market. Similarly, I could ask the Wales Office to liaise with colleagues in Cardiff about the impact that decisions made by the Welsh Labour Government are having on employment in my constituency—decisions such as the 20 mph blanket speed limit, which has shredded our public transport timetables; cancelling road building and leaving us with no hope of a much-needed third Menai crossing; and increasing business rates, putting local employers at risk. I am sure that many of my colleagues representing English constituencies would want to include the Department for Environment, Food and Rural Affairs, the Department for Education and the Department of Health and Social Care in the list.

In no way do I wish to put my hon. Friend the Minister under any pressure, but in this debate on employment in rural and coastal communities, there is a huge amount to unpick and a clear case for some joined-up Government and intergovernmental action. I will take Ynys Môn as my basis for explaining the unique issues that such communities face—issues that, in the cut and thrust of London, can be very easy to forget. London is just over twice the size of my constituency and has 73 MPs fighting for it; Ynys Môn has just one—me.

Ynys Môn is a coastal, rural and island community as far in the north-west of Wales as one can get, and is joined to the mainland by not one but two bridges. Over the past 20 years, it has lost 2,400 jobs as a direct result of local employers closing. Hundreds of jobs went when Wylfa nuclear power station was decommissioned, 500 when Anglesey Aluminium closed, 100 when the Octel plant shut down, and 700 only last year, when 2 Sisters closed its poultry-processing factory in Llangefni. That is a lot of jobs, a lot of skilled people and a lot of opportunities for our island’s youngsters. We are not alone in facing that problem: between 2009 and 2018, 50% of coastal towns had a decline in employment, compared with 37% of non-coastal towns.

The large-scale employers have not been replaced. The island’s largest employer is now Isle of Anglesey County Council. Our largest employment sector is tourism and hospitality, with more than 33% of local people employed in retail, accommodation and food-related businesses, compared with a 22% average across the UK. It is a sector renowned for offering seasonal, insecure and often low-paid jobs. It was also the first sector to be hit by covid and the last to recover.

[Sir Greg Knight (East Yorkshire) (Con)]

I congratulate my hon. Friend on securing this debate. Is it not the case, however, that this problem has two sides? There is lack of employment in some areas, but in other areas there are unfilled vacancies. For example, in my coastal town of Bridlington, we cannot get NHS dentists to fill the vacancies. Does she agree with me that we hope the Government will address this problem when they release their dental plan shortly?

[Virginia Crosbie]

I thank my right hon. Friend for the intervention. We on Anglesey also have a dramatic problem with dentists and getting dental appointments, because of the Welsh Labour Government’s approach to dentistry.

Only 9.5% of people on Anglesey work in traditionally higher paid sectors, such as IT, finance, technical, professional and administration, compared with 25.8% across the UK. When I announced this debate, one of my constituents, Kevin McDonnell, contacted me to say that in his household of three working people, the one working closest to home is working in Portsmouth. When people have to commute 330 miles just to get a decent job, we know there is a problem. That may go some way to explaining why the average salary on Anglesey is £27,000, a good £5,000 less than the UK average.

When we relate lower salaries to the additional costs of living in rural and coastal communities, the inequalities become even more stark. Research shows that people in rural communities spend 10% to 20% more than their urban counterparts on everyday items such as fuel. That is hardly surprising, when we consider the context. For someone who lives in Llanrhyddlad, a quick pop to the shops takes 40 minutes driving time, costing £6 in fuel. Some 5,000 households on Anglesey are considered to be in fuel poverty; that is 17% of all households, compared with 12% in England. An estimated 52% of our properties are off the gas grid, compared with a UK average of 15%. We are reliant on alternative fuels such as liquefied petroleum gas, which costs around twice as much as gas.

Interestingly, an internet search on the cost of living in coastal communities does not return that information but instead gives details of how affordable it is to buy property by the sea. Herein lies another problem for our native young people. Ynys Môn has one of the highest rates of holiday home users in England and Wales, with 63.3 users per 1,000 usual residents. Some 2,236 properties on Ynys Môn—an island with a population of just under 70,000—are registered as second homes. That activity pushes house prices up. The average home on Anglesey costs £250,000. With average salaries at £27,000, local homes are clearly becoming more unaffordable for local people.

There is another long-term consideration in relation to holiday homes. There is a correlation between second-home ownership and retirement, and 19.1% of the island’s population is retired, compared with 12.7% across the UK. Therein lies another challenge: in Wales, there are 64 dependent persons for every 100 people of working age; on Anglesey, there are 77. When we also take into account the fact that 6% of our 16 to 64-year-olds are economically inactive due to long-term sickness, compared with 4.5% in inland constituencies, the inequalities start to stack up. A glance at the population data for Ynys Môn shows that we have a pretty average percentage of births and under-18s, but drop significantly below average between the ages of 18 and 50, then rise steeply to above average over the age of 50.

The data is clear. People of working age on Anglesey leave the island to find decent employment and affordable homes. That decimates our communities and leaves behind people earning poor salaries who need to support an above-average elderly and economically inactive population. It is no wonder that Anglesey Council struggles to make its books balance.

I have worked hard along with Anglesey Council and Stena Line to get freeport status for Anglesey and I continue to work hard to establish new nuclear operations at Wylfa. It is a challenge, though. I have personally taken dozens of companies around Anglesey to look at Wylfa and our freeport sites like Prosperity Park in Holyhead. They ask me questions such as, “What is the local workforce like?”, to which the honest answer is that we haemorrhage our local workforce every year because there is no work here for them. “What is the local transport infrastructure like?” Well, it is fine, unless someone wants to cross the Britannia bridge in the summer holidays, when the queues back up for miles, or at rush hour, when people leave the island to go to work, or when the bridge is closed due to high winds. As for, “What is the internet connectivity like?” let us just not go there.

Businesses face real practical challenges, such as how to make their products affordable and competitive when Ynys Môn is so far removed from supply chains and large consumer markets. I stress to them how great the opportunities are in Ynys Môn but also talk to them about how important our unique heritage and culture is to us. I explain how supportive and enthusiastic our local population is, but also how concerned they are that they will be overlooked for new jobs and so pushed further and further away from their communities. I explain that Welsh is the first language of many local people and that these people are fearful that it will be side-lined if new businesses come here.

I explain the challenges around aspiration, skills and education for our young people, as well as our local workforce, and I ask businesses to sign up to my “Local jobs for local people” campaign, which means that they commit to ensuring that, where possible, jobs will be prioritised for local people, they will respect and use the Welsh language, and they will work with schools and training providers, such as Grŵp Llandrillo Menai, WOW Training and Môn CF, to give local people the skills they will need to take available jobs. This is just one approach to ensure that potential new employers understand and work to address the issues we face.

I know that my hon. Friends in other rural and coastal communities will have similar challenges and stories. This problem needs a systemic, whole-Government and inter-Government approach. How do we attract high-quality employers to an area where the workforce has left and the infrastructure frankly is not up to scratch? How do we teach young people the science, technology, engineering and maths skills they will need if those employers come, when all that they see ahead of them currently is working in the summer season cleaning rooms? How do we convince a community that bringing in new employers will not mean that local people get further pushed out by “outsiders”?

In short, how can this Government give Ynys Môn and other rural, coastal and island communities the special support that they desperately need to facilitate new, sustainable and high-quality local employment? Will the Minister will work with me to ensure that employers who want to move to Ynys Môn receive every possible form of support to do so? Diolch yn fawr.

Pension Schemes Bill

Greg Knight Excerpts

Tuesday 25th November 2014 Commons Chamber

[Steve Webb]

I am not sure that I follow the hon. Gentleman’s reasoning. The thing that would cost money would be poorly drafted, ambiguous legislation. What we are doing at the moment is listening and talking to people as the Bill goes through the House. We talk a lot to trustees, pensioners’ lawyers and pensions professionals, as well as to representative bodies of scheme members and so on, to ensure that we pick these things up in real time. I think the hon. Gentleman can take heart from the fact that, rather than stubbornly insisting that the first version of the Bill we published was immaculate, we are saying that we are creating new categories of pension scheme. There have to be rules on wind-ups, divorce and so on. Let us get them right now by further amendment, rather than by stubbornly insisting on our Bill and later discovering that we have a problem. I hope he will be reassured that that is what we are doing this afternoon.

Amendment 22 ensures that trustees or managers of schemes providing collective benefits can be required to seek actuarial advice before making any specified decisions or taking any other specified steps.

Government new clauses 4, 5 and 6, and amendments 14 to 21, all relate to the issue of winding-up schemes with collective benefits. This group of amendments is the result of continuing development of policy on creating the right legal framework for collective benefits. Winding up a pension scheme can be a difficult and complex process, and we need to ensure we have the necessary legislative framework in place. Collective benefits are different, so we need broad regulation-making powers to allow us to work with the pensions industry and others to get the detail right and to respond to developments.

This group of amendments covers: new clause 4, which provides for regulations to set out circumstances where a scheme, or part of a scheme, providing collective benefits must be wound up; and new clause 5, which requires trustees or managers to have and follow a policy about winding up a scheme that provides collective benefits. New clause 6, which is also part of this group, provides a power to make regulations setting out how to work out which assets are available for which benefits. This is not specific to winding up, as it may be used for other purposes as well. There are also a number of amendments that will ensure we can make regulations to ensure schemes providing collective benefits wind up effectively.

Amendments 14 to 17 provide for additional powers to enable regulations to make provision about the winding up of a pension scheme containing collective benefits and to make it clear how collective benefits will be treated when a scheme winds up. Amendments 18 and 19 ensure we can amend existing legislation that might need to change to cater for winding-up schemes providing collective benefits. Amendments 20 and 21 remove the limitation that changes to existing legislation relating to wind-up are only in relation to collective benefits.

Amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. Part 1 of the Bill contains provisions for three mutually exclusive categories of pension scheme, as I have mentioned. Government amendment 2 provides for regulations to specify additional requirements which must be met in order for a scheme to fall within the defined benefits scheme definition. It is appropriate for this to be dealt with by regulations and in consultation with the industry rather than on the face of the Bill, because this is about being able to respond to future scheme design and a theoretical risk. The regulations enable additional clarification to ensure policy intent is delivered in respect of future scheme design.

Amendment 2 has been made in response to discussions with industry and testing of the definitions, specifically in relation to theoretical and potential avoidance risks in new scheme designs, which would undermine the delivery of the policy intent for part 1. For example, we would not want a scheme that shared investment risk with the member to be categorised as a defined benefits scheme. Therefore, this regulation-making power provides that regulations can ensure that, as we intended, only schemes that provide members with certainty throughout the accumulation phase about the level of retirement income to be provided will fall within the defined benefits scheme definition.

We are confident that all existing scheme shapes we know about are covered by the definition of a defined benefits scheme in the Bill as it stands, but this does not preclude the possibility that a scheme might be designed in the future satisfying the requirements but also including an element of risk that could be passed on to members. We would not want such a scheme to be included in the defined benefits category. The power is therefore intended as a belt and braces measure to ensure that the policy intent behind the categorisation is not undermined. This is only about which category schemes will fall into; it is not to disallow or prevent forms of scheme design and has no effect on scheme funding commitments or member rights within a given scheme design.

Continuing my canter through this group, amendment 3 addresses the meaning of

“at a time before the benefit comes into payment”,

where a defined contributions scheme might find itself mis-categorised as a shared risk scheme. Clause 5 explains what is meant by the term “pensions promise”, including that it must be made at a time before the benefit comes into payment. Amendment 3, which amends clause 5, is in response to a point raised by the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), when referring on Second Reading to a document from the Law Society of Scotland. The query was about the precise meaning of references to “at a time” and the intended application and effect. Amendment 3 addresses that point by excluding certain promises from the definition of pensions promise—if they are made at a particular point in time and conditional on coming into payment by a particular date—and enables the Secretary of State to make regulations on this matter.

We want to capture promises made in relation to income or saving while the member is saving—that is broadly what clause 5 already does—but the amendment caters for defined contributions schemes that also provide an income stream in retirement. Technically, such schemes will need to discuss and make a commitment to the member about that retirement income before the first payment is made. The schemes will usually only make the promise in relation to income that may be derived from the final pot and only in the immediate run-up to the retirement date. This means, in effect, that it provides no more certainty to the member than other defined contributions schemes and so should fall within the defined contributions scheme definition. However, the phrase

“at a time before the benefit comes into payment”,

in the meaning of “pensions promise”, might mean that it would be defined as a shared risk scheme. The amendment and the regulation-making power therefore make an exception in relation to this type of promise and ensure that this type of scheme falls within the defined contributions scheme definition.

We are on the home straight, Madam Deputy Speaker. Clause 49 makes amendments to bring the Bill within the scope of existing references to “pensions legislation” in the Pensions Act 2004 for specific purposes. The purpose behind amendments 32 and 51 to 55 is to move the text of clause 49 into schedule 3. This is sensible because of structural changes made to the Bill as amended in Committee. Having made several structural changes to the Bill in Committee, it makes sense to move what are essentially consequential amendments out of part 6 and into schedule 3. We believe that these changes sit better in schedule 3, which deals with amendments to existing legislation related to parts 1 and 2.

Finally, on judicial pensions, we have a minor amendment required to ensure that fee-paid judges who are subsequently appointed to the salaried judiciary are extended the same transitional protection rights as members moving between existing public service pension schemes. The clause provides that service as a fee-paid judge prior to 1 April 2012 has the transitional protections derived from the Public Service Pensions Act 2013 and the Public Service Pensions Act (Northern Ireland) 2014 applied to it, if that judge subsequently moves to salaried office. Following the O’Brien and Miller judgments in respect of fee-paid pension entitlement, the Lord Chancellor is required to establish a fee-paid judicial pension scheme. In order to ensure no less favourable treatment in the provision of pensions for fee-paid judges, the intention is to provide for transitional protection to apply to members of the fee-paid scheme. Transitional protections are a feature of both the 2013 Act and the 2014 Act. Regulations establishing new public service pension schemes may provide for transitional protection, extending the availability of pension benefits for certain members under existing schemes beyond 31 March 2015.

[Sir Greg Knight (East Yorkshire) (Con)]

Before the Minister sits down, will he tell the House whether steps are being taken within his Department to reduce the number of Government amendments introduced during the passage of future Bills?

[Steve Webb]

I am grateful to my right hon. Friend. The Bill was originally much shorter and obtaining the approval of, originally, the Government to bring it forward took place before the Budget. Therefore, the Budget measures, which both sides of the House welcomed, required substantial additional legislation. The entire second group of amendments relates to measures that were not envisaged when the Bill was published but which implement Budget measures. In other circumstances, there would have been a separate Bill but as we are in the final Session of a Parliament, everything has been on an accelerated timetable.

I can reassure my right hon. Friend that although these amendments have been tabled at a relatively late stage, they reflect extensive consultation over a period of years. The world that will have to deliver these things, as it were, has been extensively involved. In most cases, they are not new policies but are simply technical changes to implement a policy intent that has been well known for some time. But I entirely accept my right hon. Friend’s point; it would be better if these things were brought forward earlier. That is absolutely my view.

I commend to the House the new clauses and amendments. Throughout the Bill we have sought to try to alert members of the Public Bill Committee ahead of time when we knew that we had to table amendments on Report. I hope that the House will agree that the Bill is made much better by these new clauses and amendments, which I commend to the House.