Automatic Enrolment: Lower Earnings Limit

Guy Opperman Excerpts

Tuesday 12th March 2019 Westminster Hall

[Angela Crawley]

I wholeheartedly agree. The Government have been remiss in their responsibilities to address those epidemic concerns that have increased during their stewardship in government.

I will turn to the concerns that I have outlined, including those of women, low-paid workers and the WASPI women, on whom the Government have a shambolic record. Low-paid workers, including those who have multiple jobs that do not meet that threshold, are more often than not below the earnings threshold and do not therefore meet the criteria for auto-enrolment. There is no mechanism for auto-enrolment for the self-employed.

Another group of individuals has also been completely forgotten in this programme. There is a duty to enrol for those aged between 22 and the state pension age. Those in the six-year gap between the ages of 16 and 22 will therefore be adversely impacted by that decision. The Government acknowledged that problem, but addressed it by saying that many people in that age group tend to move jobs a lot, so it is not administratively worthwhile to account for them in the programme.

What do the Government say, however, to a young person who goes into a full-time permanent job at 16? Are they not entitled to pension contributions? The UK Government have said that they will lower the age to 18 by the mid-2020s. Can the Minister tell us exactly when that will happen?

The contribution is currently set at £6,032, going up to a threshold of £46,350. That has been on a phased increase since 2012. In reality, the minimum recommendation that is currently estimated for pension savings is 15% to 18%. If the Government were to remove the lower earnings limit, it would add £2.6 billion to the annual pensions pot. That would still account for only 8% of the estimated required pension savings. That means a shortfall of 12%, on average, for each individual of working age in the UK. The Government have to address that.

The Minister himself, however, has admitted that 8% is not a sufficient contribution for a long-term retirement, and the Government’s own figures suggest that approximately 12 million people are under-saving for retirement. I hate to take words out of the Minister’s mouth, but he will probably point to the pensions dashboard to support better planning for retirement. However, for women, low-paid workers, those in multiple low-paid jobs, those aged from 16 to 22 who are in full-time permanent employment, the self-employed, and those on zero-hours contracts who fall below that threshold, can the Government say that they are serving them? For society as a whole, does the existing lower earnings limit sufficiently

“support better planning for retirement”,

to use the Government’s own words? The Government record on WASPI women alone proves that, more often than not, the evidence is that in most instances the most vulnerable in society are an afterthought.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I hesitate to interrupt the hon. Lady’s flow—but I am also allowing her to take a sip of water. Of course I will cite the pensions dashboard, which I am sure that the SNP very much support and in reality will make a significant difference, but there is also the Single Financial Guidance Body, which was set up under legislation passed last year. It is there specifically to cater for the vulnerable and to assist those who require greater ongoing access to pension advice. I hope that she will accept that such matters, passed on a cross-party basis, are evidence of ongoing assistance to people she and I genuinely care about.

[Angela Crawley]

I thank the Minister for that intervention. He might well remember that the SNP supported the concept of a pensions dashboard, but the Government rejected a number of key amendments in which we argued for the protection of vulnerable individuals. We are singing from the same hymn sheet about our ambitions and aims, but the fact of the matter is that the Government have the responsibility to introduce the scrapping of the lower earnings limit and the introduction of auto-enrolment pensions contributions, at the very least for those aged 18 and over, and at present they have not made a commitment to do so. He must act on his own words.

Women are often the primary parents or carers for loved ones. They are often the ones who take career breaks and part-time or flexible work to fit in with their responsibilities. They also live longer and work more hours to make ends meet. They are the most likely to be impacted by this Government’s decisions and will bear the long-term impact of the changes. Why is the Minister delaying, and to what end? Is he hoping to kick the issue further down the road so that this Government do not have to deal with it, and a future Government will, or will he give a cast-iron commitment today that he will do something to address the issue on lower earnings limits and for each of the vulnerable groups that I have mentioned?

Ultimately, ensuring that every pound earned by every worker counts towards their pension should be an ambition that we all strive for. If the estimated savings of a pension ought to be 15% to 18%, the Government’s ambition to reach 8% already falls short. The whole low-paid workforce should predominantly be recognised for their hard-earned contributions. I hope that the Government will answer the questions that my hon. Friend the Member for Paisley and Renfrewshire South and I have asked today, and that they will commit to deliver on this policy.

[Neil Gray (Airdrie and Shotts) (SNP)]

It is a pleasure to take part in this debate with you in the Chair, Sir Gary.

I congratulate my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black) on securing this debate and once again leading the agenda in this place on pensions matters. Frankly, as the youngest Member of the Commons, she is an example and a role model to speak so well with authority and eruditeness on an issue that more young people should embrace and engage with. As I approach my 33rd birthday, I include myself and my peers in that youthful bracket—

[Guy Opperman]

indicated dissent.

[Neil Gray]

We are going for consensus in this debate, Minister, so we should continue on that ground.

The SNP supports and has always supported auto-enrolment but, as my hon. Friend the Member for Paisley and Renfrewshire South highlighted, we remain critical friends. Only last month, I raised the delay in scrapping the lower earnings limit threshold when the Minister brought the relevant statutory instrument to the Floor of the House. My hon. Friend mentioned a number of benefits if only the Government would scrap the threshold, and during the SI debate the Minister said that auto-enrolment was a success story. I agree, but we could make it so much more successful if we only got on with it.

I hope that we can build on what my hon. Friend rightly said in arguing for the lower earnings limit to be scrapped and that, in summing up, the Minister will provide us with a clear and concrete timetable for the UK Government to meet and achieve their policy promise. I would also appreciate him clarifying whether implementation of the commitment to scrap the lower earnings limit will require a submission to the comprehensive spending review and, if so, is that being prepared by his Department?

I am sorry that I do not have more contributions to the debate to sum up. It is obviously an important debate and I am sorry that no one other than the Minister—I look forward to hearing from him—and his Parliamentary Private Secretary, the hon. Member for Gordon (Colin Clark), managed to drag themselves away from the unfolding Brexit mess going on in the main Chamber.

I am grateful to those who have contributed to the debate, including my constituency neighbour, the hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), for being present and for his speech. He also spoke in favour of the Government’s policy being implemented, and he rightly reiterated much of the information and statistics that my hon. Friend the Member for Paisley and Renfrewshire South provided to the House in her speech. He was also right to refer to the age restrictions; he mentioned the WASPI women, and I am sure he would agree that no one outside the WASPI campaign has done more to raise the profile of those women, argue their case, or represent them in this place than my hon. Friend.

My hon. Friend the Member for Lanark and Hamilton East (Angela Crawley) made a powerful, fact-based speech. She was right to say that the delay in implementing the policy in full is preventing people from being able to plan adequately for their future. I know that is not the Minister’s intention, but he must acknowledge that the longer that the delay is allowed to continue, the more that will be the case. She was also right to ask whether a 16-year-old working the same full-time job as a 26-year-old colleague should continue to be discriminated against by not receiving pension contributions when their colleagues do.

In conclusion, I once again congratulate my hon. Friend the Member for Paisley and Renfrewshire South. She was right to say that things are moving in the right direction and that that is what we want to see, but we want greater and swifter action. The delay, the problems with making progress on realising the pensions dashboard, the WASPI women issues, and the lack of a concrete pensions policy all highlight, in our view, the need for an independent pensions commission. In summing up, on an otherwise troubling day for the Minister and his colleagues in Government, I hope that he will bring some joy and set out a clear, concrete timetable for scrapping the lower earnings limit. I look forward to hearing from him in that regard.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I congratulate the hon. Member for Paisley and Renfrewshire South (Mhairi Black) on securing the debate. It is a fair and legitimate comment that some hon. Members are a little distracted by other matters taking place in the House of Commons, but I make the point that although we may have our differences on Brexit and all the difficult issues that are being debated in the main Chamber, the House is still debating and considering other matters, such as legislation on female genital mutilation, which was passed on a cross-party basis last night, and auto-enrolment, which is crucial to the long-term retirement future of all our constituents from all different backgrounds.

I genuinely welcome the debate. When I saw it on the Order Paper, I felt pleased to have the opportunity to debate auto-enrolment and to address this particular issue. The hon. Members for Paisley and Renfrewshire South and for Lanark and Hamilton East (Angela Crawley) have raised the issue in a series of parliamentary questions. I answered those questions at reasonable, but clearly not sufficient, length on 20 and 21 February, and I will attempt to address them in more detail today.

It is right to celebrate, as other hon. Members have done, the fact that in the constituency of the hon. Member for Paisley and Renfrewshire South, 6,000 men and women are benefiting from auto-enrolment. Thanks are due to the 1,130 employers that have genuinely stepped up to the plate and are in the position to make that contribution through their payroll deduction to employees up and down her constituency.

I should also say that it is a pleasure to serve under your chairmanship, Sir Gary. Given that I have a little time, I make the point that in your Devon constituency, you have 6,000 employees who are benefiting on an ongoing basis, and 1,350 very good employers that should be thanked.

It is embarrassing how often I agree with the hon. Member for Birmingham, Erdington (Jack Dromey), but he is right that this is a cross-party success story that, in my view, all political parties have got behind. I will turn to the points of the hon. Member for Paisley and Renfrewshire South in a second, but the hon. Member for Birmingham, Erdington is right to say that the process was started under a Labour Government with the Turner commission. It was then brought forward under the coalition, when my position was held by a Liberal Democrat, Steve Webb, late lamented of this House—although I think we took his seat, so he is not that lamented.

More particularly, I am the latest in a long line of pensions Ministers and Secretaries of State for Work and Pensions—including the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who is married to the hon. Member for Birmingham, Erdington—who have brought forward these very positive changes. They were developed by the coalition Government, and we have expanded on them.

The key issue in relation to this is the automatic enrolment review of 2017, which, as Members can see, is not a small document. It addresses the issues and was independently commissioned by the Government. A number of experts took a great deal of evidence and addressed what should be done in considerable detail.

In answer to the questions asked by the hon. Member for Paisley and Renfrewshire South, the issue is not whether we will lower the earnings limit; we will do that. Nor is it whether we will lower the age limit from 22 to 18; we will do that. The question is when. I accept that there is a legitimate and real debate to be had in this House when legislation is brought forward as to when those changes should take place. I do not want anyone to be in any doubt: there is no question but that our policy, as set out in the 2017 review, made clear in the House previously and confirmed today, is to bring the age limit down from 22 to 18, and to bring the threshold down to the first pound earned.

I accept that there will be pressure today, as Members have made clear, to do this much sooner. I take the point that the SNP, individually as Members of Parliament and collectively through their shadow Minister, is urging the Government to act sooner. There is a serious point that the House needs to consider; we all celebrate the successes of auto-enrolment but it would be naive and wrong to say that it is an utterly done deal yet.

[Neil Gray]

We accept and are grateful for the Government’s continued commitment to scrapping the lower earnings limit and reducing the age limit. We welcome that commitment today. It is not just the SNP and the official Opposition who have been putting pressure on the Minister. The Minister has put pressure on himself, because he committed that this would be done by the mid-2020s. Is that still likely? If so, my previous question stands: where is the timetable for that to be achieved?

[Guy Opperman]

I will give a long answer to the hon. Gentleman’s question, but I promise that I will answer it. Some 1.4 million employers have met their duties and are now offering members of staff a pension as a right. That is a significant change for those employers, and a significant burden for them. Raising the threshold, from 2% to start with, up to 5% last year and going up to 8% in April, is a significant burden. We are not talking about just the bigger employers, who can cope with it much better and have advanced payroll systems. Some of them have been paying over the odds from the word go and, to their great credit, some companies up and down the country immediately went to 5% or above. There are two key impacts that need to be assessed. We have only just got the information about the April 2018 increase and the opt-outs that took place then. The hon. Gentleman will be aware that there was just under 1% opt-out out because of the increase to 5%.

One of my main jobs in this position, which, contrary to popular belief, I actually asked to do and enjoy doing, is to take the 1.4 million employers and the 10 million employees in this country up to 8% with the minimum number of opt-outs, and the minimum impact on the economic outlook of the country. The harsh reality is that there will be a significant change to the deductions made from individuals’ pay packets, but also to the burden on businesses, whether they are large FTSE 100 businesses or coffee shops or corner shops in our local communities. Dealing with how things go this April is one of the most important, if not the most important, job I have, given the massive impact of this on all our communities. We have only just raised the threshold to 5%. We have the most important rise—a double jump—this April. It would be wrong if the Secretary the State and I, and the wider Government, talked about changing the basis for auto-enrolment before assessing how the 8% rise had gone.

This is quite a complicated process; it will genuinely take the best part of 9 months to go through all the data and get a definitive understanding of where we are on the 8%. At best, I will not know the degree of opt-outs until Christmas. It seems utterly wrong for me to seek to change the nature of the legal basis until I have a real understanding of the impact of the 8% increase.

[Mhairi Black]

The Minister says that we have to wait for more evidence. As I said in my speech, the DWP assumed that roughly 25% of those eligible would opt out, and the 2017 average was 9%. The Minister has talked about getting updated figures, but the participation among 22 to 29-year-olds increased from 35% in 2012 to 79% in 2017. The evidence already suggests that we are heading in the right direction and that the changes are working. Further to that, the logic of the lower earnings limit being set was that some people will not earn enough to get value for money out of their pension towards the end. Would it not be an easier answer just to pay people more, and to introduce a real living wage?

[Guy Opperman]

We are getting slightly off topic, but I am very happy to make the point that in 2010, when the coalition came into government, the living wage—the minimum wage as it was then—was £5.80. It is now £8.21, going up to £9, as the hon. Lady will be aware. I am happy to have a discussion about the tax threshold, which means that individual members of our communities have a huge amount more in their pockets. The tax threshold was £6,500 in 2010. It is now going up to £12,500, which will make a massive difference to the individual take-home.

All those things are good things. There is also the benefit of free childcare. We have gone from having no free childcare available whatever, up to 15 and 30 hours. It depends on how one values childcare, but taking it even on a very low basis, individual low earners would have the benefit of 30 hours a week free childcare, in those circumstances where that applies. If they have 30 hours a week childcare, that is a benefit of £150 a week minimum. I have worked it out on a £5 basis, but other statistics could give the rate.

My point is that if one looks solely at individual earnings on a long-term basis, taken in isolation that is one thing, but we also have to look at the impact of the rise in wages. It may not be as high as the hon. Lady would like, but she is making my point, so I will stop being partisan and saying, “Aren’t we doing well on the living wage, the tax threshold and childcare?” Park that for a moment. Some of those matters are burdens on individual employers.

The harsh reality is that the corner shop in the hon. Lady’s Paisley constituency, or the coffee shop—forget about the big employer—is now paying a considerably larger wage bill, because the low earners who were previously on the minimum wage are now on the living wage. The larger employers are also potentially paying the apprenticeship levy, and in April will pay up to 3% on auto-enrolment. The engagement that took place in the 2017 review indicated that time should be allowed before we reassess the way ahead. I am absolutely sure that there should be consideration of that. I accept that there is pressure on that.

I will try to address the other couple of points that the hon. Lady made, before moving on to some of the other questions. She asked about the reduction of pensions tax relief and the difference between net pay and relief at source. It is entirely right to raise those matters; she will understand that they dealt with by the Chancellor and the Treasury.

The idea that I have full control over the spring statement or the Budget, as the hon. Member for Airdrie and Shotts (Neil Gray) suggested, is something that I think we all understand is not the case. I do not have advance sight of the spring statement, but if he wishes to push for my promotion, I would be very keen for that—not that I want to be promoted, because I actually enjoy this brief.

The reality of the situation is that there is clearly a difference between relief at source and the net pay arrangement. It is acknowledged; there is no question but that something must be done on an ongoing basis. HMRC and the Treasury are aware, and there is ongoing discussion with them on that particular point.

While I am dealing with the Treasury, the question was raised about where we are in relation to long-term tax relief on pensions. Again, that is a matter for the Chancellor, but although I accept that there was some discussion about it in some comments made before the last Budget, hon. Members will be aware that there was no fundamental change to the tax relief on pensions.

I have rather disregarded my speech, but I will go back to a couple of key points. First, hon. Members will be aware that we debated this matter briefly in January, and the House debated and then agreed that the lower and upper limits of the qualifying earnings should be aligned with the national insurance earning bands in 2019-20, at £6,136 and £50,000 respectively. Not only does that provide stability and harmonisation on an ongoing basis, but we maintained the earnings trigger at £10,000, meaning a real-terms decrease due to anticipated wage growth, which brought an additional 40,000 savers into automatic enrolment, three quarters of whom were women.

I will address a couple of the other points raised. The hon. Member for Lanark and Hamilton East, whose constituency I know very well, having ridden at the Overton point-to-point far too many times—not very well; I did not win there—will be pleased to know that there are 14,000 individual employees in her constituency who benefit from the automatic enrolment. She specifically raised the issue of somebody aged between 16 and 22 who was earning but not able to get access to a pension. It is not often known—I have the great delight of telling the House this and urge the hon. Lady to tell others—that that individual aged between 16 and 22 can opt into an automatic enrolment pension with their employer. They have the ability to do that. Similar comments apply to the self-employed; they can opt in and be addressed on an ongoing basis.

The hon. Member for Airdrie and Shotts called for a pensions commission. With respect, we had that: it was called the Cridland report, an independent pensions commission to which all political parties, including the SNP, along with trade unions and the Labour party, made submissions. Whether they agreed with it or not, it was definitely the case that they made submissions.

On the self-employed, the reality is that we are continuing to expand in a great deal of detail the trials that are going on. We are considering the Taylor review, and it is my strong view that we should expand that more. I am certainly pressing to ensure that the self-employed have greater access to a pension.

[Angela Crawley]

I thank the Minister for enlightening me on his experiences of his jockey career in my constituency; I am sure that will be a treat for my constituents to learn. Going back for a second to the point about 16 to 22-year-olds and the opt-in, ultimately there is an emphasis on young people opting into that process and no requirement for the employer to contribute to their contributions. Does he agree that even if the Government bring forward this change for 18-year-olds and make it mandatory for employers to contribute, “mid-2020s” is a vague definition? I would be keen to hear exactly how the Minister defines “mid-2020s”, and when 18-year-olds can be guaranteed to get the same matched back from their employers.

[Guy Opperman]

The hon. Lady will understand that there is a big lead-in time between the passing of a parliamentary Act—this applies particularly in pensions—and when that Act kicks in. The reality is that I cannot give a definitive date today, nor do I intend to do so. I do not believe it would be appropriate to do so. I am not just giving what some would describe as a politician’s answer; I am giving my strong belief, which is that, until we have got through the 8%, we should not make a decision, because the impact on employers and employees needs to be measured on an ongoing basis. There is no dispute between us in any part of the House, I believe, that this needs to be done; the only question is when that process should take place.

I am keen to try to address the points of the hon. Member for Coatbridge, Chryston and Bellshill (Hugh Gaffney), who has 10,000 employees in his constituency who have had the benefit of auto-enrolment. He raised individual points in relation to the state pension. I make the point that the state pension is up more than £1,000 in real terms since 2010. There is no evidence for his assertion that the state pension could not be afforded post 2020 as per the Chancellor. That is simply not the case. It is most definitely not the indication from the Chancellor, and it is definitely not Government policy whatsoever. We have committed to the triple lock.

I am conscious that I need to wrap up very shortly. The reality is that, for women, pensions enrolment has gone from 40% to 80% by reason of auto-enrolment; enrolment in the private sector has risen from just over 40% up towards 80%; 22 to 29-year-olds have dramatically improved enrolment to above 75% from a very low base; and low earners from the £10,000 to £20,000 bracket have gone from 20% enrolment up to nearly 70%.

At the same stage, we are doing things such as the pensions dashboard, on which I hope to report back to the House within a matter of weeks. We are doing the Single Financial Guidance Body, which is now up and running, with the former chair of StepChange, Sir Hector Sants, in charge. We are also pioneering things like the midlife MOT, which has a public sector angle, with what we are doing at the Department for Work and Pensions, but is also private sector-led as well, to get a greater engagement. We are also doing simpler statements for those with private sector pensions. It is my intention that all private sector businesses that provide pensions will be giving a simple two-page statement to all their customers. Whether that is done on a voluntary basis or by statute is a matter to be decided.

It is definitely the case that we are, I believe, in glorious agreement about what the position is going forward. It is not the case that there is much dispute between us. I accept that this is something that we will have to return to in the future. For the moment, I cannot give the definitive date that the hon. Member for Lanark and Hamilton East seeks, but I am very happy to continue the debate as we go forward.

Oral Answers to Questions

Guy Opperman Excerpts

Monday 11th February 2019 Commons Chamber

[Alison Thewliss (Glasgow Central) (SNP)]

10. What assessment she has made of trends in the level of debt repayments by people in receipt of universal credit.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government have recently reviewed the maximum rate of deductions, which will be reduced from 40% to 30% from October 2019. We are also taking action through the introduction of a Breathing Space scheme and the setting up of the Single Financial Guidance Body, which will consider the needs of people in vulnerable circumstances.

[Alison Thewliss]

The Minister will be aware that I recently met the Minister for Employment regarding my constituent Georgina Woods, whose historical repayments soared from £11.12 a month to £79.46 a month when she moved from tax credits to universal credit—a situation that she cannot get resolved because she tried to save the Government money by not applying for tax credits. It is really difficult to resolve this case due to a lack of communication between the Treasury and the DWP, and that issue will only get worse as universal credit rolls out and it is more difficult for constituents to get this resolved. Why is the Minister’s Department treating people more harshly than the Treasury is?

[Guy Opperman]

I know that the hon. Lady has met my hon. Friend the Minister for Employment on the issue of her constituent and that the Department awaits more details to investigate it in more detail. The wider point is that the Minister for Employment is looking into this issue with Her Majesty’s Treasury and will, I am sure, update her.

[Kevin Foster (Torbay) (Con)]

I welcome the reduction in the maximum deduction rate, but what analysis has the Minister done of what that may mean for the poorest households and how will he communicate the impact of the change?

[Guy Opperman]

We believe that it is a positive step in the light of the review that took place. I draw my hon. Friend’s attention to the Breathing Space scheme that is being introduced by Her Majesty’s Treasury to assist people on an ongoing basis. That scheme came in in the legislation that we introduced last year.

[Mr Jim Cunningham (Coventry South) (Lab)]

Why does the Minister not stop universal credit until such time as the Government get the result of the pilot scheme? Anywhere else, if people have a pilot scheme, they wait to implement it and learn the results from it before rolling the system out. You would do that in the private sector. Why not do it here?

[Guy Opperman]

With respect, the answer is twofold. First, there has been a gradual introduction of universal credit and, secondly, the pilot scheme is in respect of managed migration.

[James Cleverly (Braintree) (Con)]

11. What steps she is taking to increase employment opportunities for care leavers.

--- Later in debate ---

[Alex Cunningham (Stockton North) (Lab)]

15. What plans the Government have to include debts owed to her Department in its new Breathing Space scheme.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I helped to introduce Breathing Space as part of the Financial Guidance and Claims Act 2018. The Department for Work and Pensions is fully supportive of the Breathing Space policy. We also recognise the importance of ensuring that people can access advice in identifying solutions to their debt problems, and we have set up the Single Financial Guidance Body.

[Alex Cunningham]

That is very good to hear, but both the Treasury Committee and the Work and Pensions Committee have said that Departments take a disproportionate and often aggressive approach to the recovery of debt. A single person over 25 claiming universal credit could have £127 deducted from their benefits each month to pay existing debts. If the Government are determined, as the Minister says, to help people manage their debts, why is his own Department making deductions that push claimants further into poverty?

[Guy Opperman]

The hon. Gentleman will be aware that, in relation to Breathing Space, the Government are considering the responses to our recent consultation and will respond in due course, and that the standard deduction rate for the repayment of a non-fraud overpayment of universal credit is 15%.

[Mrs Kemi Badenoch (Saffron Walden) (Con)]

16. What criteria her Department uses to determine where jobcentres are located.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The reality is that the absolute poverty rate for pensioners has fallen to a record low, with over 200,000 fewer pensioners in absolute poverty before housing costs. The state pension has also increased by over £1,000 in cash terms since 2010 by reason of the triple lock, as well as many other reasons.

[Damien Moore (Southport) (Con)]

T9. Will the Minister explain how today’s announcement will deter reckless bosses from mismanaging pensions?

[Guy Opperman]

My hon. Friend’s constituents in Southport will be reassured that the Government are cracking down on the mismanagement of existing defined benefit pensions, so that his constituents can ensure they get the pensions they deserve and have saved for.

[Wera Hobhouse (Bath) (LD)]

T2. European Union citizens who have worked in this country primarily through agencies are at risk of failing the habitual residence test although they have lived here for many years, because their employment might not have been continuous. Will the Minister meet me to outline what protections are available for those EU citizens?

--- Later in debate ---

[Guy Opperman]

This year, we continue to spend more than £120 billion on benefits for pensioners, including £97 billion on the state pension, which goes up. Mixed-aged couples already claiming pension credit or housing benefit for pensioners will continue to receive those benefits and will not be affected while they remain entitled to either.

[Justin Madders (Ellesmere Port and Neston) (Lab)]

On 2 November, my constituent won his ESA appeal—the DWP did not even bother to attend—but three months on, it is still arguing about whether he should get the full back pay. At what point did the Department become above the law?

Work and Pensions

Guy Opperman Excerpts

Thursday 7th February 2019 Ministerial Corrections

The following is an extract from an Adjournment debate on Thursday 31 January 2019.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I want to address briefly the point about the national insurance fund that the hon. Lady raised. It is simply not true that the national insurance fund is used purely to reduce national debt. It is financed on a pay-as-you-earn basis with receipts collected in one year used to pay for certain benefit payments, including the state pension paid out in the same year.

[Official Report, 31 January 2019, Vol. 653, c. 1073.]

Letter of correction from Guy Opperman:

An error has been identified in my response to the debate.

The correct response should have been:

[Guy Opperman]

I want to address briefly the point about the national insurance fund that the hon. Lady raised. It is simply not true that the national insurance fund is used purely to reduce national debt. It is financed on a pay-as-you-go basis with receipts collected in one year used to pay for certain benefit payments, including the state pension paid out in the same year.

Pensions Dashboard

Guy Opperman Excerpts

Wednesday 6th February 2019 Westminster Hall

[Paul Masterton (East Renfrewshire) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Ryan. I congratulate my hon. Friend the Member for Hendon (Dr Offord) on securing this debate; I thought he did a brilliant job of explaining why the dashboard is so welcome and so necessary, so I will not take up too much time going over old ground, but I want to comment once again on why the dashboard is so important and so necessary.

While it is true that we have 9 million new people coming into the workplace pension scheme through auto-enrolment, and those people can hopefully be more engaged in their pension savings throughout their working life, historically that is simply not what has happened. Quite frankly, many people have absolutely no idea what sort of pension savings they have built up over 20, 30 or 40 years of work. Many companies that they have worked for will no longer exist, and the insurance companies that held their pension schemes may have been amalgamated or no longer exist at all.

Those people will suddenly find themselves coming up to their retirement not really having any idea of what sort of pension savings they have, other than those savings made with a main employer that they were with for a long time. It is not particularly surprising that research shows that one in five adults will admit to having lost at least one pension pot. I think that probably understates it, because there will be people who will not admit that they cannot remember what pension savings they have, and there will be people who do not know that they do not know what pension savings they have.

The Pensions Policy Institute research suggesting that consumers have lost track of about £19.5 billion in pension pots really reinforces why we need the dashboard, why it needs to be all-encompassing and, as was said, why we need to make sure that all providers are properly committed to providing the information. The dashboard will not be much use if whether it is any good depends on which provider a person was linked with in the workplace; what would be the point? It needs to work for absolutely everybody.

I thought it was perfectly sensible that the Government decided to take a slightly different approach and push the private sector to lead more on the dashboard’s development; it had been doing most of the running on that, anyway. However, whatever the final dashboard or various dashboards look like, it is vital that the state pension element be included in it, to give people that full picture of their retirement saving. I liked the idea from my hon. Friend the Member for Solihull (Julian Knight), who is no longer in his place, of looking at ways to link up the dashboard with broader financial products, but we should probably walk before we can run, and make sure that the dashboard is up and running before we start making it more complicated.

I have a couple of questions for the Minister. First, the hon. Member for Strangford (Jim Shannon) raised the issue of data security and identity risks, which I think are very real. The Government Gateway is doing a lot of good stuff to protect against those risks, but we will need to be pretty satisfied, through the regulatory framework, that data is secure, and that there will be no danger.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

It may help the House if I address the point raised by my hon. Friends the Members for East Renfrewshire (Paul Masterton), and for Hendon (Dr Offord), and the hon. Member for Strangford (Jim Shannon). For those who have not had the opportunity to see it, chapter 4 on page 29 of the consultation sets out in quite a lot of detail the efforts we propose to take on data security. The matter is clearly subject to consultation, but without any shadow of a doubt, it will not be proposed that the dashboard be a data storage device. Pension companies will provide one individual’s data back to that individual, rather than it going through a conglomerated site, which would be eminently more hackable, for obvious reasons.

[Paul Masterton]

I thank the Minister for that intervention, which was very useful and clarifies the point nicely. My other questions are on the industry delivery group. Is the Minister in any kind of position to explain the process for setting that up, and when it is likely to be set up? The main point is to make sure that the members of the group have the right mix of experience and backgrounds to deliver.

The pensions dashboard is another example of good pensions policy built on a consensual, cross-party basis. As more people come into the pension system because of auto-enrolment, it will be absolutely critical that they are able to keep track of what they have saved in the long term, over their working life.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

Thank you, Ms Ryan, for chairing this debate. I thank the 16 colleagues who have supported my hon. Friend the Member for Hendon (Dr Offord). He has brought forward a debate that is clearly topical and important. In times when some might argue that Parliament is not debating matters, here is an example of a cross-party approach, to try to address a problem for our times with a modern, FinTech solution. I believe that has application to one and all.

There is no doubt that the pensions dashboard will be part of the FinTech revolution. It is a reform that can harness innovative technology to tech-charge pensions. It will provide accurate, secure and easy-to-understand information about people’s pension pot in one place. Fundamentally, it is a democratiser. It will bring a traditional 20th-century—some would say 19th-century—industry into the 21st century, so that the information is available to one and all on an iPad, smartphone or tablet. That is surely the right thing to do at a time when, as hon. Members have outlined, auto-enrolment has been transformational. Nearly 10 million people have auto-enrolled, and 1.4 million businesses are in a position to provide auto-enrolment to their workers.

I accept the point made by my hon. Friend the Member for Hendon, and I will put the auto-enrolment statistics in the Library for all Members. I will also see whether I can make a short written ministerial statement about putting it there. In his constituency, 14,000 people are benefiting from auto-enrolment, thanks to more than 2,000 employers on his patch who are supporting individuals in that way. The stats on how many individuals have the benefit of auto-enrolment, and how many business are supporting it, are available to hon. Members for each and every constituency.

As was rightly outlined by hon. Members, there is cross-party consensus. That is the right way forward, because pension policy works on a cross-party basis. The consultation closed on 28 January, and we hope to respond to it by approximately mid-March. It answers some of the points made by hon. Members. We hope that the dozens of responses submitted will provide further answers, and that the Government response will also provide some answers. Hon. Members will understand that I am constrained in how I can respond to matters raised today by the fact that I am making a live, formal response, but I will endeavour to respond to the best of my ability.

On the point about compelling individual providers, paragraph 180 of the consultation clearly sets out that it is the Government’s intention to proceed to compulsion. My hon. Friend the Member for Gloucester (Richard Graham) and the hon. Member for Blaenau Gwent (Nick Smith) raised the issue of the timetable for data provision by providers. I was interested to hear the suggestion of the hon. Member for Blaenau Gwent of a robust three-year time limit. Several providers responded to the consultation, and we will go through those responses in some detail.

There can be no doubt, however, that compulsion is coming, and that the only issue is the timeline. Certain providers could provide the data quite quickly. By and large, they know who they are, because they are the modern master trust providers that are already up to speed. Others will take longer. There is a legitimate debate to be had in this House, as we introduce the Bill, about whether we put in place a specific time limit for data provision, or whether that is done in secondary legislation, and with merely indicative outlines.

I will briefly deal with the Financial Conduct Authority. I am conscious of the evidence given at the Work and Pensions Committee today, and I have spoken to the Chair, the right hon. Member for Birkenhead (Frank Field). I accept that there must be a better way to regulate pension transfers, and to give individuals advice on how they handle their money; there was examination of that point by the all-party Work and Pensions Committee. I welcome its views.

The hon. Member for Coventry South (Mr Cunningham) said that simple is good. There is no doubt that the view of the Government, and of the vast majority of providers, is that simple is the way ahead. If the dashboard cannot be accessible on a laptop or mobile phone, and give an understanding of what assets an individual has in their pension, there will be difficulties. We need to make a traditional, paper-based business accessible to the individual, and that is certainly what we will seek to do.

I do not have time to go into the detail of the difference between commercial and non-commercial providers of the dashboard. As set out in some detail in the consultation, however, it is definitely the Government’s view that there should be a commercial and a non-commercial provider; they would provide individual dashboards. To harness industry innovation and maximise consumer engagement, the right way forward is to have an open standards approach that allows for multiple dashboards in the future.

However, the delivery body—it should be the single financial guidance body, as we set out in the consultation—should be the provider of a non-commercial dashboard that is effectively state-run through a third party. Such provision is obviously dependent on the delivery model and the delivery group that is set up. That works hand in hand with the response to the consultation, so I cannot give more detail, given where we are at this stage. I hope to update the House in the formal consultation response in March.

[Nick Smith]

The Minister did an elegant soft-shoe shuffle around my question about whether the FCA had sufficient capacity to deal with financial scammers. It would be unfair to press him on it now, but I ask him to challenge the FCA privately about whether it has enough people working for it to ensure that rogues are held to account.

[Guy Opperman]

We all wish to ensure that the difficulties that the hon. Gentleman’s constituents went through with the British Steel pensions scheme do not happen again. I assure him that I met the FCA on Monday. It had an interesting time today in front of the Work and Pensions Committee. The views of the right hon. Member for Birkenhead are clear, and I will liaise with him on an ongoing basis. We know what direction we are going in, but with regard to how we proceed, the devil is in the detail. That relates to not just the transfer, but the advice to the individual thereafter, which is complex. There are various versions of a way ahead on that.

Several other issues have been raised. My hon. Friend the Member for North Warwickshire (Craig Tracey) made the point about funding. In other countries, funding has been provided through a levy system on the pensions business, as has traditionally been the case in this country. I will take away his point about occupational pensions, but I certainly anticipate that we will go down the levy route, unless others persuade me otherwise.

On my hon. Friend’s other point about the timings of the non-commercial and the commercial dashboards, again relates to the response to the consultation, and is that a matter for the delivery organisation. There is no question but that we desire all organisations to be up to speed as soon as possible. As for how we do the non-commercial and commercial dashboards at the speeds that we are talking about, that is something that we genuinely cannot say at present, but I take the point on board.

My hon. Friend knows that I am a passionate advocate of the mid-life MOT, and I am happy to discuss it in the House on an ongoing basis, because it is definitely the right thing for the future. Various companies, particularly Aviva and Hargreaves Lansdown, are pioneering it; more specifically, the Department for Work and Pensions is considering conducting one for some of its staff.

I am conscious of the time, and that I must give my hon. Friend the Member for Hendon a minute to respond to the debate. I thank hon. Members for their many recommendations. I hope that the dashboard can be used across all financial products, so that our banking apps, and information about our pension providers and our savings, all become available to us in that way in the longer term. I welcome the cross-party support that clearly exists in the House for it, and I look forward to developing it with hon. Members.

Social Security

Guy Opperman Excerpts

Monday 4th February 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I beg to move,

That the draft Guaranteed Minimum Pensions Increase Order 2019, which was laid before this House on 16 January, be approved.

[Mr Speaker]

With this, it will be convenient to discuss the following motion:

That the draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2019, which was laid before this House on 16 January, be approved.

[Guy Opperman]

Thank you, Mr Speaker—what an introduction. I will not take the departure personally. With your permission, I will address both the orders at the same time.

The reality is that automatic enrolment is one of this country’s biggest and quietest success stories. It is a cross-party success story that has reformed private pension saving, with nearly 10 million people now signed up to a private pension. Our thanks are due to the 1.4 million employers up and down the country that have supported automatic enrolment.

[Paul Masterton (East Renfrewshire) (Con)]

I am very pleased by the development of automatic enrolment in East Renfrewshire, but while the Minister is at the Dispatch Box, will he take the opportunity to update me on the progress in relation to collective defined-contribution schemes?

[Guy Opperman]

The good news is that approximately 5,000 jobholders in East Renfrewshire are now benefiting from a workplace private pension, and our thanks are due to the 1,270-plus employers in my hon. Friend’s constituency.

On collective defined-contribution schemes—I know the hon. Member for Birmingham, Erdington (Jack Dromey), who speaks for the Opposition, is very passionate about them as well—I can confirm that, following the closure of the Government consultation on CDCs last week, the Government intend to proceed with CDC legislation, subject of course to the formal response to that consultation. It is right that I recognise on the Floor of the House the fantastic work my hon. Friend has done in bringing forward a ten-minute rule motion and then a private Member’s Bill to prompt and trigger the consideration of CDCs. This will play a massive part for the Royal Mail postmen and women who work in all weathers—I know there is interesting weather in East Renfrewshire—to support local businesses and the local economy.

The guaranteed minimum pensions increase order is a technical matter that is debated by this House on an annual basis. It provides for defined-benefit occupational pension schemes that are contracted out to increase members’ guaranteed minimum pensions that accrued between 1988 and 1997 by 2.4%, in line with the increase in the consumer prices index to the previous September.

The automatic enrolment order reflects the conclusions of this year’s annual review of the automatic enrolment earnings thresholds, as required by the Pensions Act 2008. In conducting the review, the Secretary of State has considered both the automatic enrolment earnings trigger, which determines the point when someone becomes eligible to be automatically enrolled into a qualifying workplace pension, and the qualifying earnings band, which determines those earnings on which the enrolled employee and their employer have to pay a proportion into a workplace pension.

[Christine Jardine (Edinburgh West) (LD)]

The Minister will know that the upper threshold is linked to the higher rate threshold for income tax. Will he explain to the House why the Government are prioritising this £1.3 billion tax cut for higher earners over reversing cuts to universal credit or ending the benefits freeze a year early?

[Guy Opperman]

The hon. Lady will understand that the trigger and the earnings limit are in line with national insurance figures. The level was £6,032 in 2018-19, which has gone up to £6,136. The upper limit was £46,350, which has gone up to £50,000. There will be more people saving by way of automatic enrolment by reason of these changes, and those enhanced by this will be numbered in the tens of thousands.

With respect, automatic enrolment is supported on a cross-party basis. It is a successful policy, with 10 million people in various constituencies up and down the country now benefiting from it. In February last year, the last group of smallest employers took on their duty to enrol all staff, and we now have 1.4 million employers. In April this year, we go to 8%, and individuals and employers will therefore be saving a substantial amount. The crucial statistic is that only 9% of individuals have opted out of, or ceased to have, an automatically enrolled pension on an ongoing basis.

[Nigel Mills (Amber Valley) (Con)]

I welcome the order. In considering the earnings trigger staying at £10,000—I note that that brings about another 40,000 people in, with an inflationary reduction—did the Minister think about the auto-enrolment review and the various recommendations that the trigger should be reduced to the lower earnings threshold, or should at least be extended so that someone could add up all their jobs to determine whether they qualified over that trigger? Is he tempted to make a change down to £6,000 or to a cumulative total, or is he thinking that next year, when we do not have to do the escalation, would perhaps be a better time to do that?

--- Later in debate ---

[Guy Opperman]

My hon. Friend asks his customary astute question, with his deep knowledge of this issue. The reality of the Government’s approach is that we wish to address the increase to 8%, get to April 2019, address the degree of opt-outs that follow from the increase to 8% and, at that stage, consider where we are. We have already had the 2017 automatic enrolment review, which agrees that the limit will go down to the first pound, and that we will go down from 22 to 18 in terms of the working population. The key point is that we should get to 8%; we should get this country up to a situation where we have ever larger numbers of people being not only part of automatic enrolment, but in a situation where they are up to 8%. That is possibly not the entirety of where we should be going, but, without a shadow of a doubt, it is a massive step forward.

[Frank Field (Birkenhead) (Ind)]

If I may follow the hon. Member for Amber Valley (Nigel Mills), who is a member of the Work and Pensions Committee, the Government clearly should be worried about people opting out when there are big changes. However, would the Minister and his Department argue to his colleagues from the Treasury, who are sitting just by him, that we could more profitably use some of the huge subsidies that go to higher rate taxpayers for their pensions to pay the contributions of those who are low paid?

[Guy Opperman]

I am in absolutely no doubt that my esteemed colleagues from the Treasury will be taking due note of the right hon. Gentleman’s advice and recommendations on pension tax relief, as he is the Chair of the Work and Pensions Committee. [Interruption.] They have encyclopaedic memories; they do not necessarily need to write particular words down, and they also have the benefit of Hansard. However, I am sure that the Chair of the Select Committee would agree that the primary purpose of auto-enrolment is to get to 8% and then to gain a proper understanding of where we are at that stage. There is a perfectly legitimate debate to be had across the House, on what is a cross-party policy formulated over 10 years, about where we then go in terms of employer contribution, employee contributions, the rates that one must go to and the tax relief that applies. That, I would suggest, is for another day. In those circumstances, I commend the orders to the House.

State Pension Age: Women

Guy Opperman Excerpts

Thursday 31st January 2019 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I congratulate the hon. Member for Gower (Tonia Antoniazzi) on securing the debate. It is an opportunity for me to address some of the points that she raised, as far as I can, given that a judicial review is ongoing. There are obviously a number of key drivers behind the decision to make these changes by successive Governments, dating back well over 25 years. It is important to briefly restate them before I turn to her points.

This change was part of a wider trend towards gender equality. The decision was taken partly as a result of European and equality legal cases in the early 1990s relating to occupational pension provision. Life expectancy and state spending were also key factors in the changes to state pension age. Following the passing of the Pensions Act 1995, the actual and projected growth in the pensioner population continued faster than anticipated as a result of increasing longevity. As a result, it was clear that a state pension age fixed at 65 was no longer affordable, fair or sustainable.

The Labour Government between 1997 and 2010, and the hon. Lady’s predecessor who was the Member of Parliament at the time, took action in the form of the Pensions Act 2007, which introduced an increase in state pension age to 66, 67 and 68 for men and women. Further changes were brought in under the Pensions Act 2011, which accelerated the equalisation of women’s state pension age and brought forward the increase in men and women’s state pension age to 66 to complete by 2020.

The Pensions Act 2014 brought forward by eight years the increase in state pension age to 67 to complete by 2028, and introduced regular, independent reviews of the state pension age—the first of which was published by John Cridland in 2017—to ensure that the system remains fair, sustainable and affordable for taxpayers. It cannot be overstated how much life expectancy was one of the key drivers of the decisions of the Labour Government between 1997 and 2010, the coalition Government between 2010 and 2015, and the Conservative Government since then.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

I thank the Minister for giving way. I recognise the point he is making with regard to the equalisation of pensions between genders and increasing life expectancy, and we are all grateful to be living longer. But does he recognise that these mainly working-class women did manual and physically oppressive work, often starting at the age of 15, and they are not sharing in the benefits of longer life expectancy because of health inequalities? Does he recognise that inherent unfairness?

[Guy Opperman]

There are a number of points to be made, and I will try to address them. There are two key issues to look at: life expectancy as a nation, as assessed by the Office for National Statistics or reviewed independently by John Cridland, and healthy life expectancy. In terms of general life expectancy, after the second world war, a girl born was expected to live to 81 years and a boy to 77 years. By 2019, those figures had increased by more than 10 years for newly born girls and by more than 12 years for boys, to 92 and 89 years respectively. The hon. Lady made a point about healthy life expectancy.

[Chi Onwurah]

Health inequalities and class.

[Guy Opperman]

I accept those points. That was specifically reviewed by John Cridland on an independent basis, as ordered by Parliament, in 2017. His report, a copy of which is in the Library, addresses those points.

I will make a couple of points on Cridland’s report before I come to the issue of period life expectancy. Cridland sets out the figures on the first page of his report. In 1917 only 24 people reached their 100th birthday. In 2016 6,000 did. The expectation is that by 2015 56,000 people will reach this milestone. He estimates that by approximately 2047 life expectancy could be 98 for women and 95 for men. Given that when the state pension was introduced in 1908 it had a retirement age of 70, only one in four people were expected to reach that age and life expectancy thereafter was nine years, there has been a dramatic improvement in life expectancy.

[Chris Stephens]

Will the Minister give way?

[Guy Opperman]

I will move on to the particular point about healthy life expectancy.

I had prepared specifically for the south Wales example. I do not have the north-east examples, but they are broadly analogous. I may be able to provide the north-east examples before I sit down. The Office for National Statistics releases period life expectancy by local area of the United Kingdom, but not by parliamentary constituency, as I explained earlier to the hon. Member for Gower. Life expectancy at birth in Swansea is 77 for men and 82 for women, but it has increased for both men and women in that area since 2001 and 2003 by two years. It has increased in every local area of the UK over the same period. In the hon. Lady’s region, life expectancy is 17 years for men at 65 and 20 years for women, and this has increased again since 2001 and 2003.

[Tonia Antoniazzi]

I thank the Minister for the personalised data for Swansea on life expectancy. While all of us will not disagree with the principle behind state pension equality, can we have an inquiry into the state of the nation—the state of the 1950s women currently in the United Kingdom, by area, including the north-east, so that we know what the impact has been on working women from mining families and similar backgrounds to mine in Swansea? For me, that would be a useful inquiry to have the results of.

[Guy Opperman]

With respect, the point about individual cohorts and the deprivation point are answered in the Cridland report—an independent report published in March 2017. I was going to come to the hon. Lady’s specific point about the assessment by the Women and Equalities Committee and address the point about difficulties faced by older workers and their ability to get employment.

The Government are committed to improving the outlook for older workers affected by the state pension age and removing the specific barriers. Some of this has involved taking practical action such as changing legislation. Other aspects involve a culture change. The latest figures show that employment rates for older workers have been increasing, with 10.3 million workers aged 50-plus in the UK. That is an increase of 1.3 million in the past five years, and 2.3 million in the past 10 years. The number of workers over 65 has now more than tripled, from 0.4 million 20 years ago to 1.3 million now.

The specific work changes have been removal of the default retirement age, and extension of the right to request flexible working to all, meaning that people can discuss flexible working requirement to suit their needs.

[Tracy Brabin]

Will the Minister give way?

--- Later in debate ---

[Guy Opperman]

Bear with me. I will try to answer the point made by the hon. Member for Gower and then I will let the hon. Lady question me.

In October 2018 the Department for Work and Pensions published the “Economic labour market status of individuals aged 50 and over, trends over time.”—a catchy title. Those official statistics provide analysis of the headline measures that the Government use to monitor progress on the fuller working lives programme. The hon. Lady specifically mentioned the programme, which was published a couple of years ago. As for data, the estimates of paid hours worked, the weekly, hourly and annual earnings of UK employees by gender, and full-time and part-time working by age group are already publicly available. They are published as part of the Office for National Statistics’ “Annual Survey of Hours and Earnings” statistical bulletin, which can be found online.

[Tracy Brabin]

Is there any impact assessment or data concerning young women who can no longer go back to work because their mum, auntie or grandma is having to find a job, so they cannot take up the job that they want because their mum, for example, can no longer provide free childcare?

[Guy Opperman]

I can only refer the hon. Lady to the specifics that I have given: the Department for Work and Pensions’ assessment, “Economic labour market status of individuals aged 50 and over”, which contains the official statistics that we use for the fuller working lives programme, and the survey by the Office for National Statistics. I do not have a specific answer to her specific question, but I expect a consideration of that point to be within the ambit of the work that those two organisations have done.

[Chris Stephens]

Will the Minister give way?

[Guy Opperman]

May I finish this point? Then I will, perfectly properly, allow the hon. Gentleman, who is a member of the Select Committee, to intervene. I am keen to deal with the issue of the judicial review, which I have not yet addressed.

We have appointed Andy Briggs as the business champion for older workers. Along with the Business in the Community Age at Work leadership team, he spearheads the Government’s work in helping employers to retain, retrain and recruit older workers, actively promoting their benefits to employers throughout England, both strategically and by means of practical advice.

I will now give way to the hon. Member for Glasgow South West (Chris Stephens).

[Chris Stephens]

I am grateful to the Minister. I will be brief, because I want to hear what he has to say about the judicial review. Is he saying that it is Government policy, as well as his view, that there is a difference between an individual’s working life expectancy and an individual’s life expectancy?

[Guy Opperman]

I shall try to respond to the hon. Gentleman’s question in writing in order to be specific, but my understanding is as per the Cridland report, which was fundamentally adopted by the Government. As the hon. Gentleman will know, the reviewers assessed the position on an individual, independent basis, having heard copious evidence, travelling all over the country taking representations from trade unions and devolved Administrations and producing in the fullness of time, a very comprehensive report.

Let me now turn to the complex issue of the judicial review. Members will be aware that the High Court has ruled that a judicial review on these matters will go to a full hearing. The case is listed to be heard in the Divisional Court on 5 and 6 June. It would clearly be inappropriate for me, or any other Minister, to comment further on live litigation.

Members will also be aware that complaints of maladministration have been made about the Department’s handling of the communications relating to the state pension age changes. The Parliamentary and Health Service Ombudsman has decided to suspend consideration of those cases until a final decision has been made in the judicial review. Separately, the Department for Work and Pensions has suspended work on the complaints until a final decision has been reached by the courts. We have sent—and are sending—letters explaining that to individuals who have sent complaints to the Department in order to ensure that they are properly informed of the suspensions, and information has been added to the gov.uk website.

We have also undertaken to follow up individuals who already had active complaints in the DWP system, and to give them further information on next steps following the reaching of a final decision in the courts. It is right of course that we communicate those next steps as and when they are clear.

Matters outside the scope of the judicial review will continue to follow the normal DWP complaints procedure. Separately, the independent case examiner closed all the live maladministration complaints when they became subject to legal proceedings, as is required under its governance contract. When the legal proceedings are concluded, the independent case examiner could consider reopening the cases at the request of the Department.

The actions taken by the Department in respect of the maladministration complaints is consistent with the approach of the Parliamentary and Health Service Ombudsman’s office. As I pointed out in my letter to the Chair of the Work and Pensions Select Committee on 15 January, this approach is fundamentally consistent with any situation where the Government are subject to a judicial review, as in this case, whether in relation to their actions or the actions of another Government—I stand here defending the actions not just of this Government but of the coalition Government, the Labour Government of 1997-2010 and the preceding Government, all of whose actions are effectively the subject matter of the judicial review.

[Tonia Antoniazzi]

I am trying to get my head around this. The subject matter of the judicial review is not an issue of maladministration, so does the Minister not accept that there is no reason for these complaints to be on pause, as he put it?

[Guy Opperman]

I am conscious that I have limited time, so I will write to the hon. Lady and the Chair of the Select Committee to expand upon my answers. As I am sure she understands, I am constrained in what I can say about a live judicial review case, but I think I have set it out in quite a lot of detail. The DWP cases are currently paused, but we would aim to ensure that these complaints are completed without a complainant necessarily reapplying. That said, I will go into more detail in writing and seek to amplify my answer in respect of the independent case examiner and the ombudsman system.

I want to address briefly the point about the national insurance fund that the hon. Lady raised. It is simply not true that the national insurance fund is used purely to reduce national debt. It is financed on a pay-as-you-earn basis with receipts collected in one year used to pay for certain benefit payments, including the state pension paid out in the same year.[Official Report, 7 February 2019, Vol. 654, c. 3MC.] It is important that the working balance of the national insurance fund remain positive, as this ensures there are always enough funds to pay for these benefits and allows the Government to deal with short-term fluctuations in spending or receipts.

If the balance of the fund is expected to fall below one sixth of the forecast annual benefit expenditure, the Government will transfer a Treasury grant paid for by general taxation into the national insurance fund. This ensures that benefits such as the state pension can always be paid as necessary. It is inaccurate to suggest there is a surplus in the fund that can simply be drawn upon. The balance of the fund is managed as part of the Government’s overall management of public finances and reduces the need for them to borrow from elsewhere, so any additional spending from the national insurance fund would represent an increase in overall Government spending and, without cuts in other areas of spend or additional taxes, an increase in Government borrowing. This is a policy that has been continued by successive Governments since the 1980s, and it simply is not correct to state that, had the supplement continued to be paid at the same level as previously, the fund would have the capacity to satisfy the claim of the ladies.

I will briefly touch on the issue of pensioner poverty to make the point that, since 2010, there are 200,000 fewer pensioners in absolute poverty, which is a record low. The hon. Lady will be aware that we spend £121 billion on benefits for pensioners, including £97 billion on the state pension this year—2018-19. The overall trend in the percentage of pensioners living in poverty shows a dramatic fall over several decades, from 40% in the 1970s to 16% in relative poverty now. Clearly, more needs to be done, but the direction of travel is quite clear. Between April 2010 and April 2018, the basic state pension has risen substantially, by £1,450 in cash terms.

The fact remains that the key choice any Government face when life expectancy is increasing is whether to increase the state pension age or to pay lower pensions, with an inevitable impact on pensioner poverty. The only alternative is to ask the working generation to pay an ever larger share of their income to support pensioners. I believe that successive Governments have made the appropriate but difficult decisions to equalise and increase the state pension age.

Question put and agreed to.

Contingent Liability Notification

Guy Opperman Excerpts

Tuesday 22nd January 2019 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

Today I will lay before Parliament a departmental minute describing a contingent liability of £329 million associated with the National Employment Savings Trust (NEST) Corporation.

Confidence in the long-term stability of the pension system is a prerequisite for effective participation and achieving secure incomes in retirement, which are at the core of Government policy in this area. For this reason, there is a distinct body of legislation about private pensions and a number of public bodies play important roles, including the NEST.

NEST was established by Government to support the policy of all employers being obliged to automatically enrol their eligible staff into a workplace pension scheme. NEST ensures that all employers have access to a low cost, high quality pension scheme.

The Pension Schemes Act 2017 introduced the definition of a “master trust” and the introduction of a robust new authorisation and supervision regime to ensure that master trusts being used for automatic enrolment are safe for the nearly 10 million people now saving in these schemes.

To be able to operate in the pensions market as a master trust, schemes, of which NEST is one, are required to meet five authorisation criteria prescribed in the Pension Schemes Act 2017.

One of the criteria is that the scheme must be financially sustainable and that in the event of a triggering event, an event that would put the scheme at risk of needing to wind up, the scheme must hold sufficient financial reserves to cover its gradual closure without putting these additional costs on to the scheme members.

As NEST is currently funded through a Government loan and, therefore, holds no financial reserves, the Pensions Regulator, which oversees the authorisation process, has suggested a “letter of comfort” from Government could provide a solution, which for Government accounting purposes is described as a contingent liability.

The letter confirms that, in the remote possibility of a triggering event occurring, Government would fund NEST through to closure and meet any one-off associated closure costs. This gives a remote contingent liability of £329 million. The expected loss as calculated by the Department is £16.45 million (based on the liability multiplied by risk).

DWP as sponsoring Department will manage the governance and risk associated with the contingent liability.

[HCWS1260]

Draft Occupational and Personal Pension Schemes (Amendment Etc.) (EU Exit) Regulations 2018 Draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018

Guy Opperman Excerpts

Wednesday 16th January 2019 General Committees

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

I beg to move,

That the Committee has considered the draft Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018.

[The Chair]

With this it will be convenient to consider the draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018.

[Guy Opperman]

It is a pleasure to serve under your chairmanship, Mr Robertson. These regulations make changes to domestic legislation that would otherwise no longer operate effectively once the UK withdraws from the European Union. Given that Parliament has voted against the withdrawal agreement, these regulations will help to ensure that we have a functioning statute book in the event that the UK exits the European Union without a deal. It is important to prepare for every eventuality, but I want to stress to the Committee that if we were to get a deal, these regulations would be scrapped, providing that all matters were agreed.

The UK is not reliant on any European institutions or agencies for essential functions in respect to private pensions, such as approvals, licences, decisions or rates. The Pensions Regulator’s powers are derived from UK law. This means that the UK does not need to create any legislation to replicate domestically any EU-level activities relating to occupational and personal pensions after the UK’s exit from the European Union. However, we must ensure that domestic legislation relating to occupational and personal pensions does not rely on any definitions, obligations or reciprocal arrangements that will no longer apply once the UK is no longer an EU or EEA member state.

UK domestic legislation contains various instances of reference to EU law and to the UK as a member state of the EU, which would no longer be the case once the UK exits the European Union. This includes where distinctions have been made between EU or EEA member states and overseas entities that will no longer apply, where the UK is referred to as an EU or EEA member state, or where the UK is obliged to share data with EU agencies or member states under reciprocal agreements that will no longer apply.

Northern Ireland’s occupational and personal pensions legislation broadly mirrors legislation in Great Britain. We are therefore making regulations that make analogous amendments to the corresponding Northern Ireland legislation. The Department of Communities in Northern Ireland has helped to develop and agree the text of the regulations, which I commend to the Committee.

--- Later in debate ---

[Guy Opperman]

I will answer hon. Gentleman’s question about the Work and Pensions Committee first: by all means, I will do so. I will undertake to write to explain not only the content of these particular regulations, but any other matters that arise. My understanding is that we are not taking forward any other specific pension-related EU Brexit no-deal situations, but I will get that confirmed in writing and send it to the Chair and the members of the Committee.

In relation to the point by the hon. Member for Birmingham, Erdington, the regulations ensure that pension schemes can continue to invest in regulated markets not only in the United Kingdom, but in the European economic area and overseas, on an ongoing basis. These regulations apply where an employer is using an EU base for its pension scheme, or has done so already. It is about the location of the scheme. We genuinely believe that fewer than 1,000 people will be affected by such a situation because, as he will be aware, the vast majority of schemes have a UK base. He raised specific points on passporting. I am sure my Treasury colleagues, who are taking responsibility for that, will be delighted to write to him and give a due assessment of the wider investment issues relating to passporting but, in the circumstances, I commend the regulations to the Committee.

Question put and agreed to.

Draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) Regulations 2018

Resolved,

That the Committee has considered the draft Occupational and Personal Pension Schemes (Amendment etc.) (Northern Ireland) (EU Exit) Regulations 2018.—(Guy Opperman.)

Pensions Age and Working Age Benefits

Guy Opperman Excerpts

Monday 14th January 2019 Written Statements

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government’s reforms to the welfare system are designed to support those who need it and help people into work. We have reduced pensioner poverty to close to historically low levels and the triple lock on the state pension has helped lift the incomes of millions of pensioners. Since 2010, we have increased the annual level of the basic state pension by £1,450. In 2018-19 we will spend £121.5 billion on benefits for pensioners and by 2023-24 this rises to £143.5 billion.

In 2012, Parliament voted to modernise the welfare system to ensure that couples, where one person is of working age and the other person is over state pension age, access support, where it is needed, through the working age benefit regime. This replaces the previous system whereby the household could access either Pension Credit and pension age Housing Benefit, or working age benefits.

Pension Credit is designed to provide long-term support for pensioner households who are no longer economically active. It is not designed to support working age claimants. This change will ensure that the same work incentives apply to the younger partner as apply to other people of the same age, and taxpayer support is directed where it is needed most.

I set out to Parliament last year that this change would be implemented once Universal Credit was available nationally for new claims. Today I can confirm that this change will be introduced from 15 May 2019. The change is being brought into effect in Great Britain through a Commencement Order^[1] under the Welfare Reform Act 2012. There will be an equivalent Order to introduce the change for Northern Ireland.

Couples with one partner under state pension age who are already in receipt of Pension Credit or pension-age Housing Benefit at the point of change will be unaffected while they remain entitled to either benefit.

In February 2017, Government published an employer-led strategy “Fuller Working Lives: A Partnership Approach”, which sets out the importance of fuller working lives for employers and individuals. It also sets out action Government are taking to support older workers to remain in the labour market.

^[1] The Welfare Reform Act 2012 (Commencement No. 31 and Savings and Transitional Provisions and Commencement No. 21 and 23 and Transitional and Transitory Provisions (Amendment)) Order 2019.

[HCWS1249]

Oral Answers to Questions

Guy Opperman Excerpts

Monday 7th January 2019 Commons Chamber

[Huw Merriman (Bexhill and Battle) (Con)]

7. What steps the Government are taking to support ex-offenders into employment.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

We know that employment is the best way to avoid repeat offending. I should declare that I wrote a book on prisoner rehabilitation called “Doing Time” so I am particularly passionate about the work being done at both the Ministry of Justice and the Department for Work and Pensions with the “See Potential” campaign, which contains guidance to encourage the recruitment of ex-offenders.

[Huw Merriman]

Happy new year, Mr Speaker.

--- Later in debate ---

[Guy Opperman]

I represented hundreds of people as a criminal legal aid barrister, and the vast majority of my clients deserved rehabilitation and a fresh start, so I wish my hon. Friend’s constituent well. I can confirm that the Government will issue clearer guidance for the Rehabilitation of Offenders Act 1974 on that precise point.

[Chris Elmore (Ogmore) (Lab)]

The Minister will be aware that the Ministry of Justice recently introduced the female offender strategy, so will he set out what work the DWP is doing to support women ex-offenders back into work, which is one of the biggest causes of social breakdown and why they cannot integrate back into the community?

[Guy Opperman]

The reality is that the Ministry of Justice’s education and employment strategy allows each prisoner to be set on a path to employment when they arrive in prison, and the Ministry is working hand in hand with the more than 100 job coaches working inside our prisons.

[Hugh Gaffney (Coatbridge, Chryston and Bellshill) (Lab)]

8. What assessment she has made of the effect of universal credit on self-employed people.

--- Later in debate ---

[Rachel Maclean (Redditch) (Con)]

13. What steps the Government have taken to deliver the pensions dashboard.

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

We published the pensions dashboard feasibility report in December, and the consultation closes on 28 January. We will shortly thereafter draft legislation, which will unquestionably benefit the 16,000 men and women in my hon. Friend’s constituency who have an auto-enrolled pension at present.

[Rachel Maclean]

I thank the Minister for that answer, and I am delighted to hear of my constituents who are benefiting. What more can the Department do to encourage more women to save for their financial futures?

[Guy Opperman]

We believe that the dashboard will be a crucial part of that, but my hon. Friend will be aware that female participation in a workplace pension has increased by 3 million since 2012, thanks to auto-enrolment. In the private sector, female participation in a workplace pension has jumped from 40% to 80% in the last five years.

[Mike Hill (Hartlepool) (Lab)]

In Hartlepool, one in five claimants lose their disability benefit, and we have an estimated nine food banks. We were one of the pilot areas for universal credit. Will the Secretary of State, as part of her investigations, please come to Hartlepool to see for herself the effects of universal credit on my constituents?

[Guy Opperman]

I am not sure that that has much to do with the pensions dashboard, but I can certainly say that universal credit is something that the Government support wholeheartedly, and that the individual matters will be looked into.

--- Later in debate ---

[Jack Dromey (Birmingham, Erdington) (Lab)]

Nearly half a million senior citizens living abroad, who have paid in all their life, currently enjoy the guarantee that their state pension will be uprated annually. The same is true for pension entitlement built up working in another European Union state. With 81 days to go until Brexit, does the Minister recognise that the Government’s total mishandling of Brexit means that we might crash out with a no-deal Brexit, and that in those circumstances it would be not just our jobs and economy that would be put at risk but the security and dignity of a whole generation of pensioners?

[The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)]

The Government have a cross-departmental strategy on Brexit. The reality is that the policy for overseas pensioners has continued since the second world war, was endorsed by the previous Labour Government and is continued by this Government.

[Huw Merriman (Bexhill and Battle) (Con)]

T2. I have seen at first hand the benefits that universal credit can bring by giving people a job and helping them to turn their lives around, and I have also heard the frustrations of work coaches that there are still many people on legacy benefits who do not get that same good service. May I therefore welcome the latest test and learn approach, but ask the Secretary of State to ensure that we still move towards change and deliver?

--- Later in debate ---

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

T8. How are the Government supporting my young constituents to get into gainful employment?

[Guy Opperman]

It was a pleasure to visit my hon. Friend’s constituency last summer and see the fantastic work and the jobs revolution that is taking place in Basildon. It was also a pleasure to meet dBD Communications, one of his top companies, which has done a fantastic job in creating new employment and getting new training work done, and has an expanded order book that is enhancing job opportunities in Basildon.

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

T9. On 19 December, I received the observations of the Secretary of State in response to a public petition that I had submitted on behalf of my constituents calling for a halt of universal credit and for the problems to be fixed. Her response concluded that“we can see no reason to halt the rollout of Universal Credit”.So what, if anything, has changed in the past three weeks?

[Andrew Selous (South West Bedfordshire) (Con)]

While some employers do fantastic work to help ex-offenders into work, do Ministers agree that we now need some disclosure, to show up employers that blatantly discriminate against ex-offenders for no good reason to stop them getting jobs?

[Guy Opperman]

I agree with my hon. Friend, and I applaud his campaign to “ban the box”. More companies should be like Timpson, which has been an outstanding employer and has conclusively proved that employing ex-offenders is good policy and that they make great employees.

[Melanie Onn (Great Grimsby) (Lab)]

We have been told time and again that people will not be worse off under universal credit, but my constituent is £463 a month worse off after transferring from tax credits in work to universal credit. Is that something the Government are proud of?