Pension Schemes Bill

Debate between Gregory Campbell and Steve Webb

Tuesday 25th November 2014 Commons Chamber

[Steve Webb]

I do not agree that it is either unusual or unsatisfactory. It is clearly important that the House accepts and is familiarised with the basic principles of approach and that we set out what will be in the regulations and what we are going to try to achieve through them, but often the regulations will be subject to separate consultation exercises. There is an awful lot of scrutiny; I can assure the right hon. Gentleman that these things are never knowingly unscrutinised.

The right hon. Gentleman asked about the timetable. Let us put it this way: our lawyers are not taking Christmas holidays. We are working as fast as we can.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Minister talks about the lawyers not taking Christmas holidays. We are almost in December, so how certain can those people across the United Kingdom who are preparing for retirement in April, May or June of next year be in the weeks that follow the autumn statement and the non-holiday taking of the lawyers that they will have clarity, and that it will come before April?

[Steve Webb]

I think that the grouping of the amendments means that we are muddying together two completely separate things. The guidance guarantee and the budget freedoms will be in place on 6 April and the legislative framework will be in place—period.

Also in this group are regulations about defined ambition pensions, risk sharing and so on and they must be in place by April 2016. I think perhaps our conversation has been slightly at cross purposes. What has to be in place by April 2015 will be. There has been lots of consultation and a lot of it is not about regulation but about FCA rules. The FCA has already been consulting extensively and will publish more shortly. Separately, we will have many regulations to produce on defined ambition and so on. That will take longer and there will be further consultations on all that. I do not think there is anything particularly unprecedented about any of this.

Let me move on, finally, to amendment 73, tabled by my hon. Friend the Member for Reigate and my right hon. Friend the Member for Sutton and Cheam (Paul Burstow). They obviously raise an important point about the context of the guidance guarantee and the fact that DC pension pots these days, although hopefully not in the distant future, might be only a small part of people’s overall retirement wealth. I would not dispute for a moment the premise that decisions have to be made in context and that, as far as possible, we want well-informed consumers making the best decisions in their own interests.

I do not want to over-promise what this relatively limited conversation can cover or achieve. It clearly is not regulated financial advice. It is not a fact check or a fact finder. It will not lead people to say at the end, “It’s equity release for me.” I am not saying that that is what my right hon. and hon. Friends are saying, but we must be absolutely clear that we will not stretch this thing to achieve other goals, laudable as they might be, when they are not what it is being set up to do. For example, people who do not have DC pension pots might also want to think about equity release, but they will not access the guidance guarantee because they will not have a pot. If we think people should be accessing equity release more often, we need policies to deliver that. Shoehorning them into the guidance guarantee inappropriately will hit some people and not others. We must ensure that the guidance conversation delivers what it is meant to do and if we try to cram too much into it, we risk undermining that. That is one of the things we are testing through the surveying we are doing and through behavioural testing. If we bombard people with lots of products, issues and options, one of the worries is that they will just buy an annuity with their own provider and we will almost go back to where we started. So we are trying to strike that balance, and I wanted to put the caveat in first.

Let me now try to be a little more positive. My hon. Friend the Member for Reigate asked for more detail on the guidance guarantee. Our colleagues at the Treasury have committed to providing further information in an update on progress on implementation that will be published before the end of the year on 31 December. That deals with the guidance guarantee.

To be clear, I would welcome the opportunity provided by my hon. Friends to clarify that the objective of the guidance is to ensure that consumers are empowered to make effective decisions about their retirement income options. While the focal point for the guidance session will be an individual’s DC pot, the guidance will cover the range of issues that affect an individual’s financial decision-making. That includes their wider financial circumstances—debts, others assets including their home and their personal motivations and goals, including attitudes to risk, desire for an income and so forth.

This is all provided for in the FCA’s proposed standards, which will be published in final form very shortly. They require that the guidance service encourages people to provide relevant information about their financial and personal circumstances and their objectives to ensure that they can get maximum value from their guidance. The financial information might include pension pots or benefits, other sources of wealth or income, including where the individual has a spouse or partner, tax status and debt position.

Our colleagues at the Treasury, along with the delivery partners, are working up the detail of the guidance in line with FCA standards, including scope and what it should cover. I hope my right hon. and hon. Friends will accept that it is not appropriate to hardwire those things directly into the Bill. My hon. Friend the Member for Reigate said during the course of the Taxation of Pensions Bill:

“It will have to be capable of being improved in the light of experience”.—[Official Report, 29 October 2014; Vol. 587, c. 340.]

I agree with him on that point. Stipulating these things in legislation does not allow us to adapt the guidance in this way. We want to give people context, but not try to hardwire things into primary legislation when we are trying to evolve the best possible guidance offer.

I should stress, as I have said, that we are not talking about regulated financial advice. Guidance will help consumers consider their assets such as housing, wealth, savings and investment in the context of their retirement decision, but it is not a fully holistic financial planning service, such as one might get from multiple sessions with a professional regulated financial adviser. We are clear that the guidance will not replicate the services of professional financial advice, but will complement it. We will ensure that the consumers know both the value of seeking financial advice and where to go next. Referring again to Second Reading of the Taxation of Pensions Bill, my hon. Friend made the point:

“If the guidance can push people in that direction, to properly regulated and properly informed independent financial advisers, we will have properly informed consumers making proper choices.”—[Official Report, 29 October 2014; Vol. 587, c. 341.]

I am happy to reassure him that the guidance will do just that.

My right hon. Friend the Member for Sutton and Cheam asked about social care. I can assure him that our Treasury colleagues are working on how to hand individuals on to the right place after using guidance. On social care, we are in discussions with a range of organisations, including Age UK, while we are discussing with the Department of Health how to link in to the statutory duty on local authorities, in which I believe my right hon. Friend might have had some involvement, to refer people to local care and advice services. I can assure both my hon. Friend and my right hon. Friend that we take these issues seriously. This is not advice; it is guidance, but it is guidance in a financial context. We want to equip consumers to make the best choices they can. I hope the House will leave us with flexibilities to go on evolving that, while recognising that greater certainty is needed as soon as possible.

Quality Workplace Pensions

Debate between Gregory Campbell and Steve Webb

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

My hon. Friend raises a number of important points. On kitemarks and the like, we are placing a legal duty on firms to use for auto-enrolment only schemes of a requisite quality, so it will not be a matter of individual employees wondering whether their scheme is good enough—they will know it is good enough because their employer will not be allowed to enrol them into a scheme that is not so. All schemes will be of the requisite standard. He is right that people need places to go for advice in amongst the complexity. Our Department sponsors a body called the Pensions Advisory Service. I encourage all Members of the House to refer their constituents to TPAS, which is a free, expert and very good service. I must confess that I occasionally ring it myself.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I welcome this move. The Minister said, in effect, “We are going to put charges in a vice and we will tighten the pressure.” That sounds as though it might bring tears to the eyes of some of the pension providers, which may be no bad thing. He also talked about shining “sunlight into the dark recesses”. Those are good clichés and this is a good, progressive move forward. However, what is he going to do to ensure that instead of the eyes of people who are enrolling, and will enrol in future, glazing over whenever they think about pensions, they know there is transparency and know what is the likely outcome whenever they come to retire?

[Steve Webb]

I assure the hon. Gentleman that so far the response to automatic enrolment has been excellent. Despite predictions to the contrary, nine out of 10 of those who have been enrolled have stayed enrolled, which is a tremendous vote of confidence. In general, people have more trust in their employer than in financial services providers or even—dare I say it?—politicians, so we are using the employer route such that employers will ensure that the schemes they are using for their workers are of requisite quality. I also assure him that the language I used in the statement, though designed to be colourful, is also backed up by some hard reality.

Pensioners and Winter Fuel Payments

Debate between Gregory Campbell and Steve Webb

Tuesday 22nd November 2011 Commons Chamber

[The Minister of State, Department for Work and Pensions (Steve Webb)]

May I first thank the Democratic Unionists for bringing this subject for debate before the House? It is an important and significant issue. As we have heard from the contribution of the right hon. Member for Belfast North (Mr Dodds), particular aspects of the issue have particular resonance in Northern Ireland. I shall make some reference to the specific circumstances of Northern Ireland, but it is worth setting the UK-wide context for the decisions taken about the level of the winter fuel payment and the cold weather payment. The right hon. Gentleman is correct that the Government had choices to make, and they made a choice about the cold weather payment, but I do not know whether he is aware that that choice was a significant one—one that I believe has proved to be correct.

The backdrop was as my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) described it a few moments ago. Initially, the winter fuel payment was only for people on means-tested benefits, or a higher rate went to those eligible for means-tested benefits, but eventually, some years ago, it got up to its full universal rate of £200 and it stayed at that level year after year; it was not indexed. Then we reached two years before a general election when the public finances were looking good and the then Chancellor decided to make a one-off increase to £250 and £400. As I say, when it was announced, it was announced as a one-off. Then we reached the year before the general election and the Government of the day thought that cutting the winter fuel payment would look bad so near to the election, so they announced a further one-off increase to £250 and £400. They stressed again that it was a one-off.

Then we reach the March Budget of 2010, and it became apparent in March that the Government would have to announce the rate for winter 2010. Funnily enough, six weeks before a general election did not seem like the right time to reverse a one-off increase, so a further one-off increase was announced again for the winter of 2010. We know it was a one-off increase because the public spending plans of the previous Government were published into the new Parliament. We thus know that the plans we inherited were to cut the winter fuel payment back to its core level of £200 for the winter we are now going into and for succeeding winters. That was the baseline against which we made our decisions.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Minister is outlining what happened under the previous Government and stressing that the single or “one-off” payment as he has described it on several occasions was maintained just before an election. Given that my right hon. Friend the Member for Belfast North (Mr Dodds) alluded to the Government’s statement that they would keep faith with the previous Government and in conjunction with what the Minister has just said, does it mean that in three years’ time he will reinstate the cold weather payment?

[Steve Webb]

Well, obviously, cynicism would be well beyond this Government. The rates of public spending are published through a comprehensive spending review period and for the rest of this period the figure we inherited was £200. That, as I say, was our baseline.

Another strange thing that went on was to do with the cold weather payment. That is the money paid when it is freezing cold to the poorest and most vulnerable people—the poorest pensioners and the poorest disabled people. Temporarily, pre-election, that was increased from the regular £8.50 to £25 a week. Temporarily, too, for the year after the election, as announced before the election, it was to be maintained at £25 a week. You will not be surprised to learn, Mr Speaker, that beyond that, it was planned to be slashed back to the £8.50 a week level. In other words, had we done nothing and taken no action, the winter fuel payment would have reverted to its £200 level and the cold weather payment paid to the most vulnerable when it is most cold would have reverted to £8.50 a week.

Let me remind Members that that was the baseline from which we were trying to find something in the order of £70 billion to £80 billion-worth of savings, so the question was not whether we should cut the winter fuel payment or the cold weather payment, but whether we could find the money to reverse the planned cuts, and thus have to find still further cuts from across the budget.

I agree with the right hon. Member for Belfast North on one point—that Governments have to make choices about priorities. He listed some of the priorities of this Government: ring-fencing the NHS, for example, about which I suspect the pensioners of Northern Ireland will be glad. He also mentioned the penny on petrol duty. I was not aware that it was his policy that we should not have reversed that, but I am happy to be corrected.

--- Later in debate ---

[Steve Webb]

I will give way in a moment. There is a recognition that, wherever we put the cold weather stations to try to capture some of the variation in climate, such as the seven stations that serve Northern Ireland—

[Mr Gregory Campbell]

rose—

[Steve Webb]

I will give way to my hon. Friend the Member for West Aberdeenshire and Kincardine (Sir Robert Smith) first and then to the hon. Gentleman. No matter where we put the cold weather stations, somebody, somewhere says, “Hang on a minute, it is in the wrong side of the postcode” and so on. We keep these things under constant review because we want the system to work.

[Steve Webb]

Indeed. I feel that I am acquiring an encyclopaedic knowledge of the remoter parts of Scotland through this role, but I am grateful to my hon. Friend for reminding the House that we listen to representations that are made and take them seriously.

[Mr Gregory Campbell]

Just two weeks ago, the Northern Ireland Assembly was informed of a change in my constituency, whereby the existing station in Ballykelly, which is a few miles inland, is to be replaced by a new station in Magilligan, which is right on the coast. The Minister will be aware that it is inevitable that coastal stations will be a degree or two warmer than those inland, so 3,500 people might or might not get a cold weather payment on the basis of a reading from a slightly warmer cold weather station.

[Steve Webb]

As I said a moment ago, we work closely with the Met Office on these matters. I do not claim expertise on meteorological matters, but the Met Office does. Where changes are made to metering stations it is always with a view to being more accurate, rather than less. There is certainly no attempt made to move them to where the sun shines. We will examine that issue this winter. If the hon. Gentleman’s impression from this winter is that that change is causing problems, I will be happy to hear from him.