Oral Answers to Questions
Guy Opperman Excerpts(7 years, 2 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Secretary of State has regular discussions with the Chancellor on a range of issues. The Department has had specific discussions with both the Treasury and the Financial Conduct Authority on the FCA’s proposed remedies in this area, and our plans to ensure that details of these costs and charges are published and given to pension scheme members.
Kelvin Hopkins
Is not the reality that for millions of ordinary people the only way to guarantee a sufficient income in retirement is a good state pension together with a state earnings-related pension scheme for all, with defined contributions and defined benefits?
Guy Opperman
I am grateful to the hon. Gentleman for his question. He will be aware that auto-enrolment has reversed the decline in work-based pension saving, with 8.5 million people signed up and further progress to be made. The reality is that, by reason of the coalition and this Government, we have a new state pension that is worth £1,250 more than in 2010.
David Hanson (Delyn) (Lab)
Patricia Gibson (North Ayrshire and Arran) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
The Secretary of State has regular discussions with the Chancellor, but the Government will not be revisiting the state pension age arrangements for women born in the 1950s that are affected by the Pensions Acts of 1995, 2007 and 2011.
David Hanson
My hon. Friend the Member for Swansea East (Carolyn Harris) and I, Members of the Minister’s own party, and all Opposition parties in this House, including the Democratic Unionist party, have introduced a Bill, to be debated on 27 April, to provide for transitional arrangements to be put in place. Will the Minister support the Bill? If not, will he tell the House why not?
Guy Opperman
I can only repeat the answer I just gave: the Government do not intend to revisit the state pension age arrangements for women born in the 1950s who are affected by the Pensions Acts of 1995, 2007 and 2011. The cost would be in excess of £70 billion.
Patricia Gibson
The Minister will be aware that, following the Brexit vote, bond yields dropped by 30%, increasing the public sector pensions bill by a hefty 30% to £1.8 trillion over the last year. Is this latest example of Government ineptitude the real reason WASPI women are being ignored, penalised and denied their pensions?
Guy Opperman
I am grateful to the hon. Lady for her question, but if her Government in Scotland disagree with any aspect of the UK Government’s welfare reforms, they have the powers to do something about it. I refer her to the letter of 22 June from Jeane Freeman, my opposite number, which specifically discusses the uses of Scotland Act powers to address individual cases.
Wendy Morton (Aldridge-Brownhills) (Con)
Will the Minister clarify whether, if the law on the state pension age were changed to favour women over men, it would be discriminatory or illegal?
Guy Opperman
The reasons for the original changes were the changes in life expectancy and equality law. If the law proposed by Labour were to approach men and women differently, it would—with respect—be highly dubious as a matter of law.
Julian Knight (Solihull) (Con)
Will the Minister further clarify that point? Labour says that the previous pension age could come back and that we could return to a situation where men are discriminated against. Does he agree that such discrimination might be profoundly against the law?
Guy Opperman
Those who seek to make the case for such a law would need to satisfy themselves that men would not bring a case against the proposers, because it would unquestionably create a new inequality between men and women.
Alex Cunningham (Stockton North) (Lab)
The ombudsman’s first rulings on whether the Government are guilty of maladministration for failing to give 50s-born women sufficient notice of their earlier retirement age are due soon. Maladministration or not—it will take years to resolve that matter—can I ask the new Minister to take this back, think again, tell us what he is prepared to do, and what research he is prepared to do, to alleviate their misery, and perhaps even consider our proposals on pension credit and allowing them to retire up to two years earlier?
Guy Opperman
The Government strongly believe that there has been no maladministration by the Department for Work and Pensions, including during the 13 years when Labour was in charge of the Department.
Andrew Bridgen (North West Leicestershire) (Con)
Is the new state pension not in fact removing injustices that have persisted for far too long, and are not the main beneficiaries women and low earners?
Guy Opperman
My hon. Friend is correct. The new state pension is much more generous for the many women who were historically worse off under the old system. More than 3 million women stand to gain an average of £550 extra per year by 2030 as a result of these changes.
Kate Green (Stretford and Urmston) (Lab)
State Pension Age for Women
Guy Opperman Excerpts(7 years, 5 months ago)
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Grahame Morris
I am grateful for that intervention; indeed, every constituency is affected. I believe my hon. Friend the Member for Jarrow (Mr Hepburn) said that 4,000 women are affected in his constituency; almost 5,000 are affected in my constituency of Easington. The women deserve both recognition of the injustice that they have suffered and some kind of financial help to alleviate the poverty that many of them are now suffering. I know that we are short of time, but I have heard some harrowing stories from women who have worked all their lives and now, through change of circumstance, have found themselves in the dire situation of having to sell their homes. They are facing enormous financial pressures because of changes in legislation that they were not aware of. That really needs to be put right.
The Labour party intends to extend our commitment to pension credit to hundreds of thousands of the most vulnerable women. I know that my hon. Friend the Member for Stockton North (Alex Cunningham) will go into a little more detail about exploring the options for further transitional protections to ensure that all the women have security and dignity in old age.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
Will the hon. Gentleman give way?
Grahame Morris
I will give way, Sir Edward, but just because it is the Minister.
Guy Opperman
I accept that I am to be brief, Sir Edward. I want to clarify the hon. Gentleman’s position. I looked at his blog from June 2016, which maintained that the Pensions Act 1995
“timescales were such that they gave sufficient time for people to plan”.
The impression from that blog is that the hon. Gentleman had no criticism of the Act. Is that still the case?
Grahame Morris
I do not think that is necessarily a fair reflection. The changes were accelerated in 2011 and, for the record, I do not think that women were given adequate time. In fact, they were not given individual notification that the legislation had changed, and I think that Parliament and Government had a duty to notify all those affected at the earliest opportunity.
The Parliamentary Under-Secretary of State for Work and Pensions (Guy Opperman)
We are from different sides of the political fence, but the hon. Member for Easington (Grahame Morris) and I are united by one key thing: we have both beaten cancer. I would like to start by saying how pleased I am to see my fellow tumour survivor back in his place. I wish him well with his future treatment. He can imagine my joy when, on day three of my new job as Minister for Pensions and Financial Inclusion, I was told that he had secured a debate on women’s state pensions—the first debate I would have to answer here in this House.
Guy Opperman
Not yet, no—I am not going to. All of us here, as constituency MPs, have met women who have been affected by the state pension age rises. I have met them ever since my election as Member of Parliament for Hexham in 2010, and during the passage of the 2011 Act. Whether they are affiliated to the WASPI campaign or not, I have seen them in and out of my surgeries, like all colleagues have done. Like many, I have answered correspondence on the issue. I make it clear that I will be delighted to meet the all-party parliamentary group when it is re-formed, as I am sure it will be, and will be in a position to sit down with them to discuss their ongoing situations.
The hon. Member for Paisley and Renfrewshire South (Mhairi Black) said that she expected me to speak only about the 1995 Act, the 2011 Act, all the transitional arrangements and so on. I accept, and she will understand, that I have to make the case on those matters, not least because of what has been said, but I want this debate to be done in a different way. I want to say two things at the outset.
If individual Members of Parliament have specific cases where they feel their individual constituents are affected by state pension age changes and find themselves in financial hardship, whether they are people who have to reduce their hours because of sickness, disability or caring responsibility, I and the London DWP team will look into those individual cases. As Members pass them on to us, we will do what we can to provide assistance, whether that is understanding of the availability of carer’s allowance, housing benefit, tax credits, income support, employment and support allowance or other benefits. However, the essence of what I want to address the House on is this.
Guy Opperman
No, I will not. It is not the Government’s position that we will make further concessions by the 1995 or 2011 Acts. The fundamental point—at this point I really wish to address the hon. Member for Paisley and Renfrewshire South—is that the Government have done a massive amount on a progressive basis to get people back into employment or retraining in their pre-pension years.
First, we created, and we have now extended, a network of older claimant champions in all 34 Jobcentre Plus districts in the country. The champions work with Jobcentre work coaches to provide advice and best practice on skills provision, digital and social support and job-search support, which leads into the “Fuller Working Lives” strategy issued by the Government on a cross-Government basis in February this year.
Secondly, we have committed massively to lifelong learning. The reality is that more than 200,000 people aged over 60 have entered further education since 2014-15. [Interruption.]
Sir Edward Leigh (in the Chair)
Order. Everybody else was heard in silence, so let us please listen to the Minister.
Guy Opperman
Thirdly, we have also extended apprenticeship opportunities—one of the best routes into skilled employment—for people of all ages and gender. For example, in England in 2014 to 2015, 12% of those starting apprenticeships were aged over 45.
Guy Opperman
I am going to set out these matters; please bear with me. In the 2017 Budget, the Chancellor allocated £5 million to increase the number of returnship schemes. We are working with employers across the public and private sectors to understand how returners can be supported back into permanent employment, building on successful examples run by companies such as Centrica.
I realise it is not going down well, but the point I am trying to make is that the Government are actually doing a significant amount to address the individual difficulties for those persons attempting to enter the labour market. Last year, the Government appointed Andy Briggs, CEO of Aviva, as the dedicated business champion for older workers, to spearhead work with employers on a business-to-business basis. I met Mr Briggs two days ago. He is clearly passionate about his mission to persuade employers to increase the number of older workers they employ by 12% by 2022. [Interruption.]
Sir Edward Leigh (in the Chair)
Order. The Minister is entitled to give way or not.
Sir Edward Leigh (in the Chair)
The hon. Gentleman is very experienced and knows that that is not for me.
Guy Opperman
In May 2017, Mr Briggs launched the “Commit and Publish” campaign, challenging employers to monitor the age of their workforce and publish figures by the end of 2017. A significant number of companies have already bought into that, including Aviva, Barclays and the Co-op. I assure colleagues that I will be assisting Mr Briggs in pursuing that campaign with all the rigour that I brought to my campaign for the introduction of the living wage.
In February 2017, the “Fuller Working Lives” strategy was launched on a cross-Government basis. I urge colleagues to read it, because if we are frank, an assertion has been made in the debate that the Government are doing nothing to try and encourage persons who are prior to pensionable age into employment. There are a number of different matters, which I have set out, and those are particularly set out in the “Fuller Working Lives” strategy.
Guy Opperman
I will not, because I have a lot of points to make. The strategy aims to increase the retention, retraining and recruitment of older workers, and bring about a change in employers’ perceptions and attitudes—surely something that we would all endorse and wish for. We know that many people approaching the state pension age want to continue working or would like to be in work, and we have changed the law to abolish the default retirement age. I do urge colleagues to read the strategy.
After extensive debate, the 1995 Act changed the 55-year-old status quo by equalising pension ages for men and women at 65, with that change taking place between 2010 and 2020, depending on age. That statute was debated at length, and the changes were then the subject of widespread advertising, debate, leaflets, letters and 16 million state pension forecasts.
I am not here to criticise the 1995 to 1997 Conservative Government, nor the 1997 to 2010 Labour Government; I suggest that they made real efforts to communicate the change passed by Parliament in 1995. I rely in support of that on what the hon. Member for Easington said when he wrote of the 1995 Act in his blog in June 2016:
“The timescales were such that they gave sufficient time for people to plan for their new circumstances, and legislation was already in place that would have seen the equalised State Pension Age rise…in gradual stages”.
Grahame Morris
I ask the Minister to recognise that the issue was not the timescale; everyone agrees that 15 years is enough time. I was trying to highlight in my blog that the individuals were not given notice.
Guy Opperman
With great respect to the hon. Gentleman, the whole thrust of what he said in June 2016 was that there was no objection to the 1995 Act, due to the passage of time. He has now changed that position. I am only pointing out that the 1995 Act had a 15-year time limit. He knows full well that that is the case, and that that was his position at the time.
Sixteen years later, the coalition Government changed the approach in the Pensions Act 2011. The change was in a context where the impact of the post-war baby boom years is clearly still being felt. The number of pensioners is going up dramatically; notwithstanding any of the changes made by the 1995 and 2011 Acts, there will be around 25% more pensioners in 2050 than today. That is an extra 4.5 million pensioners compared with now.
Life expectancy has increased massively. In 1940, Government policy making indicated a retirement age at 60, and our forebears looked at a life expectancy of three score years and 10. Those days are long gone. A girl born today has an average life expectancy of 93. Those changes in life expectancies are significant, and the reality cannot be ignored. It is not ignored, and is set out in greater detail in the Cridland report, which looks at the future situation in relation to long-term pension age changes.
Guy Opperman
I have a minute and a half to finish, so I will culminate on this point. In 2011, there was extensive debate on those changes in the House of Commons. The matter was debated on a number of occasions between February and November 2011 in both the Commons and the Lords. Subsequently, the Department for Work and Pensions and the coalition Government made efforts to notify those affected, with 5 million letters sent out and a range of information provided, to make individuals aware of their state pension age.
I will make three final points. In relation to the transitional provisions, it is the case that the position was different in the original 2011 Act. Following extensive parliamentary debate in both the Commons and the Lords, that Act was changed such that no woman affected by the 2011 Act would have to wait more than 18 months from the date that they might have been expecting their pension. For some, the time will be much less. I also make the point that the new state pension introduced in 2016 is better and much more generous for many women than that which existed under the old system.
I congratulate the hon. Member for Easington on securing the debate. It is not the Government’s proposal to repeal or ameliorate the 1995 or 2011 Acts, but I accept that we must do all we can to assist everyone affected into retraining and employment, and to provide support if that is not possible. The commitment to provide support is clear, unequivocal and ongoing.
Welfare Cap
Guy Opperman Excerpts(8 years ago)
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Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is always a pleasure to be here when you are in the Chair, Madam Deputy Speaker.
As Members will probably gather, I take a slightly different view from the Minister, and I will go on to the details in a moment. However, as the Minister acknowledged, this is the second year the Government have been forced to come to the House to explain their failure not just in breaching their own social security cap but on the economy.
As a quick point of clarification, the Government spent £130 billion more between 2010 and 2015 than the previous Labour Government spent between 2005 and 2010. So this Government have spent more. That is absolutely—[Interruption.] It is very interesting that Government Members should take that approach, but I will go on. It turns out that the long-term economic plan is really nothing more than a slogan, and that probably “long-term economic failure” would have been slightly more apt.
Debbie Abrahams
I will come on to the record number of jobs. The hon. Gentleman is trying to—
Welfare Reform and Work Bill (Eleventh sitting)
Guy Opperman Excerpts(9 years, 2 months ago)
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Hannah Bardell
It is pleasure to serve under your chairmanship again, Mr Streeter. As I will be changing brief for the Scottish National party, this will be the last opportunity I have to speak on this subject. I will be moving to Business, Innovation and Skills, where I hope to continue the work that I have done.
Hannah Bardell
Indeed; what can I say?
The SNP fully supports the intention behind Labour’s new clause, and we seek to prevent any young person from being locked out of the housing system due to age. We heard our youngest Member of Parliament, my hon. Friend the Member for Paisley and Renfrewshire South (Mhairi Black), speak passionately in her maiden speech about the fact that she would be the only 18 to 21-year-old in the UK who would be supported in housing under the Conservative Government’s proposals. We have already said that we will support Labour’s new clause 10, because we share the concerns of the hon. Member for Islington South and Finsbury.
The SNP is concerned that the Government’s intention to remove young people’s access to support with their housing costs could lead to an increase in youth homelessness. According to Crisis, youth homelessness is already on the rise, with 8% of 16 to 24-year-olds recently reported as homeless. In four years, the number of young people sleeping rough in London has more than doubled. In a written answer on 14 September the Government confirmed they would restrict 18 to 21-year-olds from access to housing benefit. Their rationale, which we believe is deeply flawed, was cited as a wish not to allow young people to slip into a lifetime of benefits. The Government may not realise that it is not simply a matter of people deciding to have to rely on housing benefit to keep a roof over their head; many young people are not able to live at home with their parents for a variety of reasons. The fact that the Government are already squeezing the pockets of working families and families with more children will make it even harder for parents to afford to keep their children at home for longer.
Of the 19,000 18 to 21-year-olds who will be affected by the change, 60% are in social housing, all of whom will have been subjected to the stringent eligibility test and only deemed a priority by the local authority because they are in need. The remainder of those eligible for help live in the private rented sector and receive the shared accommodation rate—the lowest rung of housing benefit, according to Shelter, barely enough to cover a room at the bottom end of the market.
We have seen the increase in housing costs across the UK, which has locked out this sector of society. That is frankly wrong. The Government have failed young people by failing to provide economic opportunities and stability in the workforce. Growing numbers of talented young people are left unemployed. The Minister cannot simply say, “Stay at home, and your parents will look after you”, because that is regressive and smacks of a lack of vision. Many young people cannot live at home and housing benefit is the only thing that stands between them and homelessness. Between 2010 and 2014 Crisis helped to create 8,120 tenancies in the private rented sector for people who are homeless or at risk of homelessness, with support from the Department for Communities and Local Government.
The SNP believes it is unfair to restrict entitlement to a benefit based solely on age rather than on evidential grounds. We support Labour’s wish for a blanket ban on the Government restricting entitlement based on age, but as the answer to a written question on 14 September confirmed, it looks likely that the Tories are intent on locking young people out of this lifeline. That is why we have tabled new clause 12, which would provide restrictions related to vulnerable people who may be impacted. I recognise that the Government have said that they will bring forward exemptions for particularly vulnerable young people, but the full details of that proposal are not in the Bill. We tabled the new clause to ensure that young people in the circumstances that I have described are protected.
Welfare Reform and Work Bill (Fifth sitting)
Guy Opperman Excerpts(9 years, 3 months ago)
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Guy Opperman (Hexham) (Con)
On a point of order, Mr Owen. With respect, I believe that may be a miscount. I think that you meant 10 not 11.
The Chair
I will repeat the figures. The Ayes were three, the Noes 10. The noes still have it.
Oral Answers to Questions
Guy Opperman Excerpts(10 years, 1 month ago)
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Steve Webb
The right hon. Gentleman deserves great credit for his promotion of the living wage. My right hon. Friend the Secretary of State inherited a situation in which some of the Department’s employees were not receiving the living wage. Our Department has committed to it, and we have had that dialogue with our subcontractors as well.
Guy Opperman (Hexham) (Con)
I also welcome the rise in the living wage announced today. The Minister will be aware that jobseeker’s allowance claimant numbers are falling across the board in every single constituency in the north-east, and by 31% in my Hexham constituency over the last year. Does he agree with me that coming off JSA and into employment is surely the way forward?
Steve Webb
My hon. Friend is quite right. It is entirely welcome that we are ensuring not only that more people get into work, but that work pays through the universal credit reform, which this coalition Government are proud to have introduced.
Pension Schemes Bill
Guy Opperman Excerpts(10 years, 3 months ago)
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Steve Webb
I do not think that my hon. Friend can intervene on an intervention, but I will give way to him in a moment if he so wishes.
I agree with my hon. Friend the Member for Reigate (Crispin Blunt) that we want to see innovation. The industry is talking about a decade of innovation, so although this system will be up and running next April, it is widely assumed that the market will develop and new markets will indeed be brought forward. I have seen no evidence that the envisaged level of levy will hamper entry into the market. As he well knows, the financial services industry is a big industry, and this is a huge opportunity. We are also talking about the auto-enrolment of between 8 million and 9 million new pension savers. These are huge additional sources of revenue for the pensions industry. Relative to that, the scale of the levy for the guidance is modest, so I think that I can reassure him about that issue of scale.
To move on to the substance of the Bill, I will make my remarks in two sections: the first on the pension schemes and the defined-ambition proposition, and the second on freedom and choice in pensions.
First, what is defined ambition? Essentially, it is a radical reshaping of pensions legislation to ensure that it remains relevant for future generations, and to reflect, recognise and, to quote the coalition agreement, “reinvigorate” innovation in consumer-focused product design in either shared-risk or, as we are calling them, defined-ambition pensions.
The Bill will introduce three categories of pension scheme based on the type of promise that they provide to savers during the saving phase about the benefits that will be available to people on retirement, including a new defined-ambition or shared-risk category of pension scheme. The Bill will enable collective benefits to operate in the UK, as they do successfully in many other countries. We have very much tried to focus on pension members’ experience of what their scheme offers. The new Bill will apply and refocus existing legislation in relation to the new terms.
The first category is for salary-related pension schemes—for example, traditional final or average-salary schemes—where the pension is specified in relation to the person’s salary. They have been in decline since the 1970s, and the majority of them are now closed to new members. They are often known as defined-benefit pension schemes, in which the employer bears the risks of longevity, investment returns and inflation.
The switch has been to the other extreme—schemes commonly known as defined-contribution or, more technically, money purchase schemes. The number of defined-contribution schemes established per year has generally increased since 2007, with 1,060 new schemes in 2013. Membership of such schemes increased by 15% to 2.7 million in 2013.
As you can clearly see, Mr Deputy Speaker, we have a binary model: people get either a money purchase or a non-money purchase benefit. Although both types of pension will be the right product for many people, is it right that the only future for pensions that is encouraged by our legislation is one in which either the individual consumer or the employer takes on all the risk? We do not believe so. Many employers have found the increasing costs of longevity and investment risk too heavy to bear, but if defined-contribution schemes are the only alternative, outcomes for savers will be less certain and more volatile than for earlier generations, making it much harder for future generations of savers to plan for later life.
Consumer trust in the pensions industry is low. As I have said, we can protect people against the risks of high charges or poor governance, but our research has shown time and again that many individuals want more stability and certainty. They want to know something about what their savings will give them and have some protection from the worst vagaries of the market. That is why the Bill provides new definitions for private pensions, including the new defined-ambition category of pension scheme, and for collective benefits.
The new shared-risk definition describes a middle ground between the more polarised money purchase and non-money purchase definitions. It will create a distinctive space to encourage innovation in pension design, and it will provide more certainty for individuals than defined-contribution schemes by sharing risks among employers, employees and third parties.
The collective benefit definition will enable a new form of risk pooling among scheme members that is able to provide greater stability in outcomes for members. Collective pension schemes are often recognised internationally as high quality, and it is only right that the United Kingdom should have access to pensions viewed as being among the world’s best. We also have the advantage of providing protections at the outset that address issues to which the more mature schemes overseas are now turning their attention.
We have engaged extensively with stakeholders across the pensions industry and found that there is an appetite for legislation that allows greater risk sharing and risk pooling. There are employers who will welcome the greater flexibility to create pension schemes that suit the needs of their work force. Pension providers want the flexibility to design and offer pensions that provide greater certainty. Individuals value the option to have greater certainty than that provided by DC pension schemes, as well as the greater stability that collective schemes may provide.
I am pleased to share with the House the warm welcome that the proposals have had. Age UK says that it
“welcomes the overall intention of the Bill”.
The National Association of Pension Funds says that it has
“long supported enabling greater risk-sharing in pensions arrangements”
and welcomes the creation of a framework that enables greater innovation and risk sharing. The TUC says that it has long supported collective pensions
“as a means of improving the income available to workers in retirement. The legislation will bring the UK into line with countries such as the Netherlands, Denmark and Canada where such schemes already operate.”
I welcome the fact that the Opposition have sort of, vaguely-ish welcomed our proposals. The more stability and consistency we have on pensions, the better, because pensions are not just for Christmas but are a long-term business. The fact that there is a degree of common ground in this area is entirely welcome.
Guy Opperman (Hexham) (Con)
On behalf of my constituents in Northumberland, I wholeheartedly welcome this reform, which has been massively welcomed by those who currently have a pension. However, how will the Government ensure that most small and medium-sized enterprises offer defined-ambition pensions? There is a degree of concern, which is legitimately held, that the safer defined-contribution pensions, in which there is little or no risk, will continue to be offered, thereby reducing the impact of the defined-ambition pension. What are the incentives?
Steve Webb
I am grateful to my hon. Friend for raising that important point about the potential market and demand for such schemes. We have undertaken research not only among consumers but among employers. We have found that about a quarter of employers say that they would be interested in providing shared-risk schemes and that another quarter are waiting to see. To be honest, if I were surveyed at this point, I would probably be in the waiting-to-see quarter because the legislation is yet to go through and the regulations that this framework Bill provides for have yet to be tabled. Understandably, firms are not queuing up to declare for this form of pension provision.
On the whole, such schemes are unlikely to be provided by SMEs. In general, we anticipate that just as with final salary and DB pensions, it is larger employers who will tend to go for shared-risk schemes—not exclusively, but largely. The reason is that, beyond the bare legal minimum of auto-enrolment, providing a workplace pension is not a legal requirement but an option. It tends to be larger employers who see pension provision as part of a package, perhaps including a company car or a workplace crèche, and who offer additional benefits. A risk-sharing scheme is, to my mind, a fringe benefit. However, it is a very valuable benefit where the employer says, “I want to do more for my employees than the legal minimum.”
My hon. Friend the Member for Hexham (Guy Opperman) asked what the incentive is. Although the best pension schemes may have gone, the best employers have not. There are therefore good employers out there who want to do more than the bare legal minimum. They will find that their employees want a pension scheme that reduces the risks and uncertainties of this very uncertain world. They will therefore find that this is an attractive part of their package.
Once the schemes are up and running, small employers may well choose to join them. We will probably need scale before we get to that stage. I am guessing that larger employers will use them first, but once there is the infrastructure—a regulatory regime or governance regime—one can imagine a scenario in which smaller employers would join.
Gregg McClymont
The hon. Gentleman is a doughty fighter for better pensions and I respect that, but I ask him to reflect on what he has just said. The annuities market was broken because people did not shop around. They found annuities confusing and complex, and they defaulted into the option offered by their insurance company. Why do we think that that behaviour will suddenly change in a system that continues to be predicated on individuals making a choice?
Gregg McClymont
I will give way to the hon. Gentleman in a moment. Let me make the point again in case it has been misunderstood by Government Members. The annuities market was broken because individuals did not exercise choice effectively. Why do the Government believe that individuals will now exercise choice effectively in a complicated marketplace? That is presumably why the Government put such emphasis on the guidance guarantee. They are right to do that because if this scheme is to work effectively, guidance must be of the highest quality. The hon. Member for Warrington South (David Mowat) mentioned advice, but this is not advice; it is guidance. There is a significant difference and the Government must reflect on that.
Gregg McClymont
I will give way to the hon. Member for Hexham (Guy Opperman) and then to the Secretary of State.
Guy Opperman
I am grateful to the hon. Gentleman for allowing me to intervene before the Secretary of State, but he is dancing on the head of a pin because he has not indicated whether he approves or disapproves of this measure, which I take implies implicit approval. Does he agree with my constituent whom I met barely a month ago and who said:
“I am delighted with these reforms. It’s my money. I saved it. Why do I have to give it away in annuities and charges for low returns?”
Gregg McClymont
I will come back to the hon. Gentleman’s point after letting the Secretary of State come in.
Mark Field (Cities of London and Westminster) (Con)
I paraphrase the Minister when I say that it is probably fair to say that like holy matrimony pensions reform is probably best entered into—or not entered into—advisedly, soberly and discreetly. For good reason the final year of a Parliament is often not the best time to embark on radical reform in the sector. It simply becomes all too easy for political adversaries wilfully to misrepresent some far-reaching proposals. Yet there is no disguising that the notion of pensioners being able to unlock their life savings during an uncertain retirement is a revolutionary change, and one I support.
As deficit reduction remains more straightforward to explain than achieve, these pension reforms also allow for some considerable fiscal loosening. Once implemented the proposals will release a vast dollop of cash for those over the age of 55 to pump into the economy, rather than being forced to buy an annuity at a woefully uncompetitive rate. Make no mistake—this is not an unintended consequence of the proposals. The Red Book to last spring’s Budget made it clear that the reforms anticipate a boost to aggregate pensioners’ spending to the tune of £320 million in 2015-16, rising to over £1 billion in 2018-19.
Guy Opperman
Is it not fundamental that, given the failures of annuities, the Government provide extra flexibility? Fundamentally, they are doing one thing: trusting people with their own money.
Mark Field
I confess that I wholeheartedly support the Treasury’s belief in the principle of freedom to which my hon. Friend refers. It is right that we as Conservatives trust those who have worked hard and saved throughout their adult life to make their own decisions on their savings. Nevertheless, we must accept that the generous tax relief that attaches to private pension savings has always been predicated on the basis that, by providing for their old age, pension savers will not be a drain on the state. It will become ever more difficult to justify reliefs at the generous levels we have all been used to over the past few decades if the compulsion that goes with annuities or restrictions on access to savings is consigned to history.
I am also pleased that the coalition has consulted a little more widely on these plans, albeit somewhat belatedly. One hopes that some technical issues will be ironed out, but I wanted at this stage to make some more general observations. The Government have been commendably vigorous in reforming the pensions system since 2010. As the Minister pointed out, we are already on the third pensions Bill and he already has another in his sights. Eligibility for a state pension will only kick in at a later age. That has to be the right move forward. The earnings-related element of the pension has been abolished. We now have a system of automatic enrolment for employees. Many of these reforms have been undertaken for one simple reason: we could not go on as we had. Our understanding of retirement has changed beyond all recognition and comprehension since the state pension was introduced in 1909. Life expectancy then was lower, so there was no point in continuing the pretence that the state could adequately sustain decent incomes for generations that will now live for 20 or 30 years after retirement.
If the emphasis is now firmly on self-reliance and the ever greater involvement of private providers, the most crucial ingredient will be trust. If the law is essentially to compel citizens via auto-enrolment to hand over an unspent surplus of their hard-earned cash to what they may regard as the unqualified or incompetent, there is little incentive for anyone to save. Central to addressing all this must be a pensions industry in which there is universal public confidence and which willingly recognises a collective responsibility. As we know, we are a hell of a long way from that point. The regulator, encouraged by the Government, now needs urgently to engender a culture among the major institutions in the sector akin to that prevailing among the leading banks during the 1970s.
Universal Credit
Guy Opperman Excerpts(10 years, 5 months ago)
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Mr Duncan Smith
I will give two answers. First, the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Wirral West, stated what is factually correct: that the strategic business plans for this Parliament have all been approved. That is an absolute fact. Secondly, it was I who was not happy with the way the development was taking place nearly two years ago, and who instigated the first process through my red team report. That is correct and I stand by that. Working with the Cabinet Office, we changed the plan. The plan is now being delivered exactly as the Public Accounts Committee, on which the hon. Lady sits, wanted us to deliver it, with all the necessary checks and balances. I would have thought, therefore, that she would congratulate us.
Guy Opperman (Hexham) (Con)
Companies in the north-east provide some of the computer and IT support for universal credit, providing welcome jobs there. I have met the staff at those institutions, and they are committed to the project, which is getting people back into work and training, and they are supportive of the slow, careful and measured way in which we are rolling out universal credit, which, after all, is something that the whole House supports.
Mr Duncan Smith
Again, we hear reason from the Government Benches. My hon. Friend is absolutely right. It is necessary to roll out the programme carefully so that it works, and so that we do not end up, as we did with tax credits, with 400,000 people not getting any money and going off to food banks and getting food parcels. That is the shambles that the Labour party created. We will not repeat it.
DWP: Performance
Guy Opperman Excerpts(10 years, 5 months ago)
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Rachel Reeves
Eight months is far too long for anyone to have to wait and, clearly, any further delay is totally unacceptable.
On the work capability assessment, the Government spend £100 million a year on the contracted assessors, as well as tens of millions more on decisions that are appealed. Now, the process has almost reached “virtual collapse”, according to the senior judge overseeing the trials, with Atos walking away from the contract, the Government yet to identify a replacement and a backlog of more than 700,000 assessments in a queue. As a result of the disarray, we are seeing spiralling costs to the taxpayer, with the latest report from the Office for Budget Responsibility showing an £800 million increase in projected spending and leaked documents revealing that the Government now see this as one of the biggest fiscal risks, with spending on course to breach their own welfare cap.
Guy Opperman (Hexham) (Con)
This debate is also about employment, so will the hon. Lady welcome the rise in employment, not least in her constituency, where, according to the House of Commons Library, the number of jobseeker’s allowance claimants has reduced by 23% in the past year, with youth unemployment down 26% and unemployment among those who are 50 and over down by 17.6%?
Rachel Reeves
But what we have also seen in my constituency is that average wages in Yorkshire and Humber have reduced by £26 a week since the coalition came into government and employment and support allowance claims have increased by 0.9 percentage points during the same period.
Mr Duncan Smith
I think that I have been pretty clear about the end-state solution. It is universal credit completely delivering to everybody in the UK. That is the end-state solution—live, online and fully protected. Perhaps I need to spell it out to the hon. Lady again. On PIP, I will simply say that we did not rush it. We have kept control of the level and scale of the roll-out. As we have learnt what the difficulties are, we have made changes, working with the providers. I will demonstrate in a moment that we are driving those numbers down to reasonable levels, as expected.
Guy Opperman
Government Members welcome the rise in job numbers, which have improved by 30%-plus in Hexham. I also welcome the transformation in universal credit, which is fixing a broken system. The pathfinders, the pilots and the reform are necessary and we must stick to our guns. My right hon. and hon. Friends are behind the Secretary of State.
Oral Answers to Questions
Guy Opperman Excerpts(10 years, 8 months ago)
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Mike Penning
We may be cutting it a bit fine, but we want to get it right. We do not want people to try to apply before it is possible for them to do so. I find it difficult to understand why any Opposition Member should deny that this is a wonderful scheme that gives hope to people with a disgusting, horrible disease. Those people received nothing previously, which is why the scheme is so important.
Guy Opperman (Hexham) (Con)
In a previous profession I represented many victims of this terrible disease and I welcome the fact that the coalition has managed to get approval for the mesothelioma fund on the statute and also secured enhanced damages. Does the Minister agree not only that this will make a very big difference in the north-east, where there is a high prevalence of this disease, but also that the focus now must be on enhanced publicity so all the victims know just what they have to do to get the compensation?