Department for Work and Pensions

Debate between Guy Opperman and Stephen Timms

Tuesday 4th July 2023 Commons Chamber

[Guy Opperman]

No, I will not. I have already given way to the hon. Lady.

Let me say something about cost of living payments. We are building on, and extending, the one-off cash payments that we provided in 2022-23, when we made more than £30 million worth of cost of living payments, including the £150 disability payment to 6 million people, £650 for more than 8 million households on means-tested benefits, and an additional £300 on top of the winter fuel payment for more than 8 million pensioner households. That put hundreds of pounds directly and quickly into the pockets of millions of people.

Criticism was made of universal credit as a principle. The first—and simple—point that I would make, which I think was acknowledged by the Chair of the Select Committee, is that the legacy system would in no way have been able to provide the degree of support that universal credit provided during covid, and it would in no way be able to provide an ongoing degree of cost of living support. Universal credit, as we see, provides a massive amount of support on an ongoing basis, which is targeted to help those most impacted by rising prices throughout this financial year.

[Sir Stephen Timms]

Will the Minister give way?

[Guy Opperman]

There are about a dozen points made by the right hon. Gentleman to which I was going to respond, but I will give way once again.

[Sir Stephen Timms]

I am grateful to the Minister. When does he expect to make a decision on whether the cost of living payments will continue for a further year? When, this year, is that decision likely to be made?

[Guy Opperman]

Because the right hon. Gentleman and I have worked together for many years—and I emphasise “together”—he will know that I have been a humble junior functionary at the Department for Work and Pensions for a very long time, never to rise any higher. Let me also say to the hon. Member for North East Fife (Wendy Chamberlain) that I have had the privilege of serving under three female Secretaries of State before the present Secretary of State. I think I am now on my seventh Secretary of State.

These matters are monumentally above my pay grade, and, as I am sure the right hon. Gentleman knows, having done my job and many other jobs in the Government, they will be decided by the Chancellor and the Prime Minister at some stage over the course of the coming year. [Interruption.] I have much to be modest about, to be honest. As I have said, these matters are above my pay grade and beyond my knowledge, but they will be considered. There will be an autumn statement in November, which will be the obvious time for decisions to be telegraphed, if not made.

The right hon. Gentleman raised a number of points, and I will try to answer some of them in the time that I have. He mentioned prison leavers. The Department recognises the need for prisoners and carers to be able to make advance claims for universal credit, and there is a working process in place to support that. I have met the prisons Minister, my right hon. Friend the Member for East Hampshire (Damian Hinds), who will welcome any questions that will follow during the justice debate, and the social mobility Minister, my hon. Friend the Member for Mid Sussex (Mims Davies), who looks after most aspects of matters relating to prisoners, on several occasions to try to drive forward universal credit take-up. However, it requires the individual to desire to do that, and that is clearly complicated and not easy. It is a work in progress, but it is very much something that we are aware of.

I know that the social mobility Minister is giving evidence to the Select Committee tomorrow, so I will not address in too much detail the issues the right hon. Member for East Ham raised on the Health and Safety Executive, which is one of the few briefs I have not held in the last few years. He rightly raised the issue of transparency, and I would respectfully say that I agree with him. The present Secretary of State has transformed the position in that regard. The right hon. Gentleman knows my strong view that, save where we have to provide data on a monthly basis under labour market statistics, we should have six-monthly provision of the vast plethora of data, linked to the two fiscal events of the year, but that is a work in progress. The Department is definitely reviewing all aspects of those things.

The right hon. Gentleman raised the flexible support fund and particular issues about people taking buses to work. I want to take issue with that, because there is absolutely no doubt that a jobcentre can use the flexible support fund to support bus or other transport fares for agreed work-related activity. If it is for a work-related activity, that support can be provided as it is in other contexts—childcare being the one of which he will be particularly aware. I would certainly very much hope that the individual jobcentre that he referred to would be aware of that.

On fraud and error, the right hon. Gentleman will be aware that huge amounts of effort are being made by the Minister for Disabled People, Health and Work, who takes control of that particular part of the portfolio, and by the Secretary of State in a multitude of different ways. We have a large number of extra staff who have been brought in to address fraud and error. According to the latest national statistics, it has fallen to 3.6% from 4%, and overpayments from fraud are down to 2.7% compared with 3% in 2021-22. Universal credit losses have fallen by nearly 2% over a similar period. Bluntly, we are trying to crack down on those who are exploiting the benefit system, and we want to make it very clear that we are coming after those people. We want to ensure that the maximum amount of support goes to the people who need it.

The targeted support includes support for people on means-tested benefits such as universal credit, with up to three cost of living payments totalling up to £900. We have delivered the first £301 payment to 8.3 million households in support worth £2.5 billion. The two further payments of £300 and £299 will be made in the autumn and next spring. To help with additional costs, we have paid the disability cost of living payment to 6 million people as well as paying the winter fuel support payment. A huge amount is being done in jobcentres, whether that is through the in-work progression offer, the support of extra work coaches, the over-50s support, the administrative earnings threshold support or the 37 new district progression leads who are working with key partners, including local government, employers and skilled providers, to identify and develop local opportunities and to overcome barriers that limit progression.

The hon. Member for North East Fife raised a number of pension matters. Clearly, I continue to defend the actions of the Labour Government and the coalition Government on the rise in state pension age. She referred to both the LEAP exercise and what has happened at HMRC, and they are both works in progress. I do not believe there is any fundamental change to that of which she has been previously advised. On pension credit, she will be aware that there has been an increase in excess of, I think, 170% in applications. There is a slight backlog, but that is coming down dramatically. On the gender pensions gap, she will be aware of the changes to the new state pension, which are massively advantageous to women, and of the fact that successive Governments—starting with the Labour Government and the Turner commission, and then the coalition—have brought in automatic enrolment specifically to address that particular issue.

The hon. Lady raised a final point about those who change jobs in later life. I cannot overstate the importance of the project for which I have been pressing for only five and a half years now, which is the mid-life MOT. I am delighted to say it is now being rolled out across the country, whether that is online, in jobcentres up and down the country or, more particularly, in the three private sector bodies that are trialling particular processes. If she is not yet acquainted with that, I would strongly urge her to become so, particularly because in her area of Scotland in North East Fife there are, I know, providers that are offering that process. I can provide her with the details. Aviva and others are doing very good stuff there.

I am conscious that I have been speaking for some time, but the practical reality is that we believe we are removing the barriers that prevent people from working. We believe that we are reducing the number of people who are economically inactive, with a fifth consecutive month when inactivity has declined. I accept that there is more to do, and I am determined to leave no stone unturned in taking the decisive action needed across Government to see that downward trend continue.

In conclusion, I believe that we are tackling inflation to help manage the cost of living. We are providing extra support. The economic trends, as shown by the labour market statistics, are heading in the right direction and, with the Government’s ongoing significant package of cost of living support, that is worth over £94 billion in excess of the rises to state pension and benefits. We are protecting those most in need from the worst impact of rising prices by putting more pounds in people’s pockets, and I commend these estimates to the House.

Oral Answers to Questions

Debate between Guy Opperman and Stephen Timms

Monday 19th June 2023 Commons Chamber

[Sir Stephen Timms (East Ham) (Lab)]

Very little data is being published on the outcomes of the restart programme in Don Valley or anywhere. There was a one-off statistical release last December, but nothing regular at all. In the past, we have had monthly data from the Work programme, and we still have regular updates from the Work and Health programme. Does the Minister recognise the value of regular publication of outcome data for the flagship restart programme?

[Guy Opperman]

With great respect, I think we do publish data on all aspects of the Department for Work and Pensions’ programmes, and I addressed this matter in great detail in front of the right hon. Gentleman and the Select Committee recently.

Oral Answers to Questions

Debate between Guy Opperman and Stephen Timms

Monday 6th June 2022 Commons Chamber

[Mr Speaker]

I call Sir Stephen Timms, Chairman of the Select Committee, whom I congratulate on his knighthood.

[Sir Stephen Timms (East Ham) (Lab)]

Thank you very much, Mr Speaker. I welcome the efforts on pension credit take-up. The Chancellor’s additional payments are very welcome, but the need for them highlights the failings of the current pensions and benefits uprating system. The Select Committee will be looking at this, but does the Minister agree that now is the time to review how we uprate pensions and benefits each year and the level at which they are set?

[Guy Opperman]

You got there first, Mr Speaker, but I also congratulate the former Pensions Minister, the Chair of the Select Committee, on his knighthood, which is genuinely deserved. The whole House wishes him well when he goes to meet the Queen for his investiture.

The right hon. Gentleman is a former Pensions Minister and will recall that the present uprating policy started in April 1987 and has continued under successive Governments, including the 13 years of Labour Government. I will, of course, come to the Select Committee to listen to its suggestions, but the same process has been in place for the best part of 35 years. The level is set between September and November, and the uprating takes place thereafter.

Oral Answers to Questions

Debate between Guy Opperman and Stephen Timms

Monday 21st March 2022 Commons Chamber

[Mr Speaker]

We now come to the Chair of the Select Committee Stephen Timms.

[Stephen Timms (East Ham) (Lab)]

The Minister could have a busy summer ahead. Take-up of pension credit remains low: an estimated 850,000 pensioner households across the country are not receiving the help that they are entitled to. The Department could feasibly work out who those households are and simply make them an award of pension credit. Given the scale of the current cost of living crisis, will the Department commit to an ambitious target for increasing the take-up of pension credit across the country and to a much more ambitious campaign to promote it?

[Guy Opperman]

I hate to disagree with the Chair of the Select Committee but he is wrong. As he knows, because he did this job in 2007-08, the Department does not know the exact numbers of a means-tested benefit that was set up by Gordon Brown specifically for circumstances where there is not the capability of saying exactly who can apply. The right hon. Gentleman is also wrong, however, that the stats are going up, not down, because they are up on the main income element.

[Stephen Timms]

indicated dissent.

[Guy Opperman]

The right hon. Gentleman is shaking his head, but he is wrong: they have gone up from 70% to 73%.

Huge efforts are also being made by the Department in the form of the work with the BBC and the utility companies, the pension credit taskforce, and all the letters that were written only this morning. I wrote to the right hon. Gentleman’s local paper and to that of the shadow Secretary of State, the right hon. Member for Leicester South (Jonathan Ashworth), to set out what we are doing to try to get people to take up pension credit and why we want everybody to do so.

--- Later in debate ---

[Stephen Timms (East Ham) (Lab)]

The Minister referred earlier to the modest reported percentage increase in take-up of pension credit. Does he recognise that that increase is a consequence of the removal of mixed-age pensioner couples from eligibility for pension credit, rather than of any actual increase in take-up? Is it not high time that the Department set an ambitious take-up target and published an action plan to deliver it?

[Guy Opperman]

With great respect to the right hon. Gentleman, with whom I have repeatedly debated this matter, we already have an action plan. We are already engaging with all the key organisations, whether that is the energy companies, television companies or media in the normal way. I respectfully say to him that pension credit take-up is increasing. It is up by 3%, which is definitely not for the reason he asserts, and we continue to make the case for pension credit to the wider population. We want not just individuals to claim; we want carers or people on behalf of their mum or dad to put in a claim.

Social Security (Up-rating of Benefits) Bill

Debate between Guy Opperman and Stephen Timms

Consideration of Lords amendments
Monday 15th November 2021 Commons Chamber

[Guy Opperman]

The Social Security (Up-rating of Benefits) Bill is a one-year Bill by reason of the pandemic. Last year, as you will be aware, Madam Deputy Speaker, we changed the law for one year to increase state pensions by 2.5% at a time when average earnings had fallen and consumer price inflation had increased by half a percentage point. If we had not taken this action, state pensions would have been frozen.

This year, average earnings growth is estimated to be unusually high, distorted by the cumulative effects of a natural economic reaction to the coronavirus pandemic and the response to the supportive measures introduced by the Government to protect livelihoods. The figure for average weekly earnings from May to July—the measure used for uprating earnings-linked benefits—has grown at 8.3%, which is over two percentage points higher than at any time over the past two decades. Recognising this covid-related distortion, the Government are setting aside the earnings link for one more year, 2022-23, and continuing the double lock of at least inflation or 2.5%. The triple lock will be applied again in the usual way for the basic and new state pensions from the following year.

[Stephen Timms (East Ham) (Lab)]

Of course I understand why the Government have decided not to increase the state pension by 8%, but is it still their intention that the value of the state pension should, over time, at least keep track with earnings?

[Guy Opperman]

The right hon. Gentleman will be aware that we remain committed to the triple lock. This is a one-year-only Bill. This will be a continuation of the policy that the Government introduced as part of the coalition in 2010 and have continued to pursue on an ongoing basis since then. There is no intention to change that.

[Stephen Timms]

rose—

[Guy Opperman]

I will make some progress.

It is right that I address these Lords amendments, Madam Deputy Speaker, because, as you rightly outlined, they engage financial privilege in that they interfere with the financial arrangements made by the elected House of Commons. That alone, I respectfully submit, is sufficient reason to disagree with the Lords amendments. However, it is also right that I address directly the point that was made by the House of Lords that invites the Secretary of State to measure earnings as if they were not actually growing by 8.3%. I assure the House that there is no robust way of calculating them as if they were not.

The independent Office for National Statistics has responsibility for producing economic statistics to the highest possible standards. ONS experts investigated whether it was possible to produce a single robust figure for underlying earnings growth that stripped out impacts from the pandemic, and concluded that it was not possible. Alongside the actual earnings growth figures, the ONS suggested a possible indicative range of 3.6% to 5.1%. These figures do not have national statistics status. Indeed, the ONS itself includes heavy caveats on the issue and advises caution in approaching it. The Bank of England also cast doubt on identifying a figure that could be relied on. The ONS said:

“There are a number of ways you can try to strip out these base effects, but no single method everyone would agree on. We have tried a couple of simple approaches…Neither approach is perfect…Our calculations of an underlying rate are there to help users understand base and compositional effects, but…there remains a lot of uncertainty about how best to control for these effects.”

It said that the statistics therefore “need to be” treated “with caution”.

We believe it would be reckless in procedure and in law for this or any other Government to set a precedent for uprating benefits or pensions using a methodology that is not robust and for which there is no consensus. That is why the Government have decided to suspend the earnings link in this year of exceptional and anomalous earnings growth. Instead, we decided to apply a double lock underpinned by the established consumer prices index published and approved by the ONS. This approach was also recommended by the Social Market Foundation and other commentators, and very strongly by this House on Second Reading, Report and Third Reading. That is the legislation that this House passed to the Lords, and that is the legislation I would urge this House to send back to the Lords.

I remind the House that over the two years of the pandemic the Government will have ensured that the pensions covered by this Bill will have increased by much more than prices, by reason of the 2.5% increase last year and the link to CPI this year. In those circumstances, I commend this House to reject the House of Lords amendments and agree that we proceed with this one-year Bill by reason of the pandemic.

--- Later in debate ---

[Guy Opperman]

rose—

[Stephen Timms]

I will gladly give way to the Minister. Hopefully he will clarify the position.

[Guy Opperman]

I think the right hon. Member misheard or misunderstood me. This is a one-year-only Bill; after that, we revert to the current legislation and state pensions will increase at least in line with earnings. That is what I thought I made clear.

[Stephen Timms]

The Minister did indeed say that in response to my intervention, but that does not answer the question. The question was: do the Government intend the value of the state pension, over time, at least to keep track with earnings? I was hoping that he would reaffirm that. I do not think that is controversial—it is a policy long held by the Labour Government, the coalition Government and this Government—and I hoped that he would say that that was still their intention, even though in the current year, for reasons that we all understand, the value of the state pension will fall significantly behind the increase in earnings.

As I hope I made clear in my intervention, I think it is entirely reasonable not to increase the state pension by 8% this year; I completely understand the case for not doing that. It looks as though we will get an increase of around 3%, in line with CPI. The hon. Member for Glasgow East (David Linden), who spoke for the SNP, talked about the likely rates of inflation, and, depending on increases in prices and earnings next year, it is quite likely that the state pension will never catch up with earnings unless there is a catch-up initiative of some kind. The Lords amendments would provide such a mechanism. If there is not a catch-up at some point, that would be contrary to the Government’s long-held intention that the state pension should at least keep track with earnings. The fact that—as the Minister has now told the House twice—it will get back in line with the triple lock next year does not solve the problem, because there is a significant backwards move this year. Will there be a catch-up initiative at some point? It looks and sounds as though there will not.

Keeping the value of the state pension going up in line with earnings was a key pillar of the new pensions framework set out in the report by Adair Turner and his fellow commissioners John Hills and Jeannie Drake, published in 2005 and 2006. The settlement’s key elements were that the state pension should keep track with the increase in earnings over time, and auto-enrolment. It was accepted by the Government then and by every Government since.

The importance of that needs to be spelled out. It is not just about being more generous to pensioners and helpful to older people. It is important because it ensures a sound foundation for pension saving, so that people auto-enrolled into pension saving through that successful initiative, which we have all celebrated, are not being encouraged by the state into a bad deal. If the value of the state pension will no longer at least keep track over time with earnings, some people will be better off spending their money now, rather than saving into the pension pot that they are being auto-enrolled into, and later relying on the means-tested safety net of pension credit.

If the state pension slips behind earnings, modest pensions accrued through auto-enrolment will become worthless, because those who claim them in due course will not get above the means-tested threshold and they will still have to depend on pension credit for their income in retirement, and the fact that they have saved into a pension will do them no good at all. That will be a growing problem if the level of the state pension is allowed to slip behind the increase in earnings.

If that does happen, people who are looking forward and saving but are going to end up with fairly modest pensions should instead spend the money at the time they earn it, rather than save it in a pension that, in the end, is not going to take them above the means-tested threshold and so will not give them any additional income. That is why what the Minister is arguing for is such a threat to the success of auto-enrolment. Auto-enrolment will no longer be a sound basis for pension saving if the level of the state pension is allowed to drift below the level of earnings.

People must be able to trust in the state pension under the policies of the Government. They have been able to do so up to now, and now they will not. That raises a pretty fundamental question about the future of the Government’s pensions policy. There is a real danger in allowing, almost by sleight of hand albeit for reasons that we all understand and sympathise with, the state pension to fall permanently behind the increase in earnings and weakening the pension framework that, as far as we all know, is still the basis of the Minister’s policy.

We should not allow that to happen. We need either a measure, and the Minister needs to reassure us that there will be, such as a catch-up initiative to make sure that the state pension over time—not this year, but by next year or the year after—will keep track with the increase in earnings, or the House needs to accept the amendment agreed with a significant majority in the other place, because that keeps the pension framework in place and keeps it effective. There is a real worry if there is a significant falling behind. If there is a 3% increase in the state pension at a time when earnings have gone up by 8%, that will be a one-off 5% fall in the state pension behind the level of earnings. Depending on what happens to earnings growth, which will certainly not carry on at 8%, and on inflation rises next year, that fall could well be locked in for good and the pension framework will have been weakened.

I hope that I have made it clear why this is actually quite important. It is not just about whether we are being generous enough to pensioners. The question is: are we keeping in place a robust and reliable framework for pension saving based on which people can plan with confidence for the future?

--- Later in debate ---

[Guy Opperman]

It is in the Bill that it only lasts for one year. The hon. Gentleman should really read the Bill. It is not that difficult; it only runs to two pages and two clauses.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

No. I have given way once already to the right hon. Gentleman, and I have answered his point on two occasions.

The Bill is for one year only. After that, it will revert to the current legislation, and state pension will increase at least in line with earnings. The triple lock will, I confirm, be applied in the usual way for the rest of the Parliament. I would point out to the House that last year, earnings fell by 1% but we still legislated to allow state pensions to be increased by 2.5%. As a result of the triple lock, as I say, the full yearly basic state pension is £875 more than if it had been uprated solely by earnings. The increase is £2,050 in cash terms.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

No. This is a two-clause Bill introduced by reason of the pandemic. The law will last for only one year before reverting. I commend the progress made by the Government on this issue, and I invite the House to reject the Lords amendments.

Question put, That this House disagrees with Lords amendment 1.

Social Security (Up-rating of Benefits) Bill

Debate between Guy Opperman and Stephen Timms

2nd reading
Monday 20th September 2021 Commons Chamber

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

I thank the 13 colleagues who have contributed to a wide-ranging debate. The Bill makes technical changes to set aside the earnings link for 2022-23. We will instead increase the relevant pensions and benefits by at least the higher of inflation or 2.5%. This approach will ensure that pensioners’ spending power is preserved and that they are protected from the higher cost of living, but it will also take into account the difficult decisions elsewhere across public spending.

The practical reality is that many issues were raised tonight, not least pensioner poverty. I would respectfully remind the House that pensioner poverty is going down, not up. As a result of the triple lock since 2010, the full yearly basic state pension has increased by £2,050 in cash terms. There are 200,000 fewer pensioners in absolute poverty, both before and after housing costs, as compared with 2009-10, and material deprivation—an alternative way of measuring poverty—is at an all-time low of 6% of pensioners.

[Stephen Timms]

Will the Minister give way?

[Guy Opperman]

One second.

It is worth reminding ourselves that the spending on state pension used to be £99 per person, and less than £60 billion in total—when in fact the right hon. Gentleman was the Pensions Minister under the Labour Government. Those figures are now up to £137 or to £179, and to £105 billion.

[Stephen Timms]

I am very grateful to the Minister for giving way, and I am delighted he is still in his post. He talked about pensioner poverty, but rather idiosyncratically, he is using the absolute measure. The much more widely used measure is the relative measure of poverty, on which the analysis of Independent Age is based, and on that much more widely used measure, pensioner poverty is of course going up.

[Guy Opperman]

I am not going to repeat the points I have made, but I manifestly disagree with the right hon. Gentleman. I would point out that we could add on the £24 billion of top-ups that this Government put forward over and above the £105 billion of state pension, so with respect we are in disagreement. There is also a significant degree of support for winter fuel, NHS prescriptions, free eye tests, the over-75s free TV licence and a variety of other matters.

Pension Schemes Bill [Lords]

Debate between Guy Opperman and Stephen Timms

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Monday 16th November 2020 Commons Chamber

[Stephen Timms]

My hon. Friend is absolutely right, and that is precisely what new clause 1 is intended to deliver.

Monthly data used to be published on the usage of Pension Wise. The Government committed to monthly publication in December 2015 in their response to the Work and Pensions Committee’s report “Pension freedom guidance and advice”, but monthly publication stopped in January 2019. Now the data is only published annually. I tabled a question about that, asking for monthly publication to be resumed. The Minister answered no, and said:

“The annual reporting allows for wider analysis and commentary against the figures rather than that previously published month by month.”

However, nothing is lost by publishing every month.

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

I am grateful to the right hon. Gentleman for our conversation in the Library beforehand, during which he flagged this point to me. Subject to the powers that I have, given that Pension Wise is an arm’s length body, I am very happy to review the annual publication, to go back to a monthly publication. I would simply make the point that the “Stronger Nudge” is happening as a result of the Work and Pensions Committee’s 2018 recommendation. We are enacting what the Committee asked us to do.

[Stephen Timms]

I am very grateful to the Minister for that assurance, and I look forward to monthly publication resuming.

To answer my hon. Friend the Member for Wallasey (Ms Eagle), who I am delighted to see in her place, at the Treasury Committee a couple of weeks ago the chair of the Financial Conduct Authority spoke about defined-contribution pension savers. He said:

“This issue about people making poor choices when exercising the freedoms…is probably the one that I worry about most of all.”

He went on to say that safeguards need to be

“as strong as they humanly can be”.

The FCA has had a go. As the Minister pointed out in Committee, last November the FCA introduced new rules requiring clearer signposting and promotion of pensions guidance. However, it has not worked. FCA data shows that just 14% of pension pots were accessed after guidance was taken in the six months from October 2019 to March 2020—exactly the same proportion as before the new rules.

It was not just George Osborne who had the ambition that everybody should benefit. The Treasury’s public financial guidance review, published for consultation in March 2016, said:

“Guidance is vital to ensure that individuals are fully aware of their options before they make a decision on what to do with their retirement savings”.

The then Economic Secretary, the hon. Member for West Worcestershire (Harriett Baldwin), said the following month that the Government were introducing

“a requirement that, in effect, ensures that consumers with a high-value annuity receive appropriate financial advice before making the decision to sell their annuity”.—[Official Report, 19 April 2016; Vol. 608, c. 876.]

Today, unfortunately, there is no such requirement. Two years later, in April 2018, her successor, the hon. Member for Salisbury (John Glen), who is the current Economic Secretary, said that, before proceeding with an access or transfer application,

“subject to any exceptions, schemes must ensure that individuals have either received Pension Wise guidance or have opted out.”—[Official Report, 24 April 2018; Vol. 639, c. 831.]

That aspiration has simply not been delivered. Today, the Government are taking steps that their own investigation says would make it true in 11% of cases. New clause 1 would finally deliver on the commitment that the Economic Secretary thought he was delivering on two years ago.

It was not just the Treasury. The noble Baroness Buscombe, who was a Minister in the Department for Work and Pensions at the same time as the current Minister, said in the other place on 1 May 2018:

“We all want people to make more informed decisions and to make it the norm to use Pension Wise before accessing their pension.”—[Official Report, House of Lords, 1 May 2018; Vol. 790, c. 1995.]

Everybody agreed that it should be the norm. Today, the Minister has set his ambition at 11% take-up. How can it be that ambition in his Department has shrunk so far? New clause 1 would resolve it using auto-enrolment to increase the take-up of guidance, just as it has been used so successfully to increase pension saving.

--- Later in debate ---

[Stephen Timms]

The great strength of the Pension Wise approach is in providing appointments that deliver guidance to a very large number of people. The issue that the hon. Gentleman talks about will need to be managed in the context of a national service that already exists—one that is helping a significant number already and ought to be helping a lot more. The default should be that people get an appointment.

The chair of the Money and Pensions Service told the Work and Pensions Committee in March that 72% of people change their mind about what they are going to do as a result of talking to Pension Wise. He pointed out that

“that tells you that the vast majority of people, left to their own devices, will probably make a poor decision.”

However, the Government’s current policy will leave eight out of nine savers in exactly that position.

Last week, the Minister received a four-page letter from Age UK and other organisations that said:

“The DWP should rightfully be proud of Pension Wise, but usage is still worryingly low, and it is a great concern that the ‘Stronger Nudge’ trials report published by the Money and Pensions Service shows that only a marginal improvement in take-up is likely to result from this approach.”

We have to do much better; they are quite right. The letter goes on to argue that non-advised savers should be opted in automatically, as proposed in new clause 1. It also provides detailed rebuttals to the arguments that the Minister used against this new clause in Committee, which are on the record.

Of course, Age UK is quite right: the Department’s plans are currently inadequate. The letter goes on to point out that the Minister’s suggestion in Committee that the FCA’s introduction next year of its investment pathways might deal with the problem is not going to work either. We cannot sit back while Pension Wise continues to be an excellent service taken up by a very small minority. The Government and regulators need to end their indifference on this. Aspiring to 11% take-up is not enough. We need auto-enrolment into a service that enables better outcomes from pension savings.

One of the reasons for the importance of Pension Wise is that it equips people to avoid being scammed. The Pension Scams Industry Group estimates that 40,000 savers have been scammed out of their savings in the five years since pension freedoms were introduced. Some of them do not yet know about it. A significantly higher number of Pension Wise users than non-users say that they are very or fairly confident about avoiding pension scams, having had an interview with Pension Wise. The default ought to be that people are given an appointment. I hope that the Minister will accept the new clause, but if he does not I hope that the House will have a chance to vote on it.

Amendments 2, 3, 4 and 5 address the scam problem. They are probing amendments, because the Minister has helpfully explained that he intends to introduce regulations under powers in the Bill that have the same effect as the regulations that would be introduced if the amendments were added to the Bill.

I was in touch—the Minister has heard me say this before—with a nurse who works in a health centre in my constituency. Her husband drives a black cab. Some years ago, a financial adviser whom they knew well and who had given them good advice previously called to tell them about an opportunity to realise their pension savings early with no real downside. They took up his offer, and the upshot is that all their savings have gone, and they face a massive tax bill of about £60,000 with no means to pay it. The financial adviser, I gather, is living on a yacht off Tenerife.

All of us can understand how devastating is the impact on hard-working families of being robbed of their life savings in that way. People who have worked hard, who have done the right thing and who are entitled to look forward to a secure retirement suddenly find that their hopes have been destroyed. The Transparency Task Force, one of the groups that urged the Select Committee to undertake its current inquiry on scams, reports cases of spouses who, sometimes for years, have not dared tell their partners what has happened, so awful are the consequences. People wake up every day in dread of the future, often ashamed and embarrassed to have fallen for such bare-faced lies. Scammers groom people and make themselves trusted family friends. They warn savers that schemes will advise them not to transfer their money, and they claim that that is because the schemes want to hang on to it for their own gain. If the saver becomes aware that the receiving scheme has fallen foul of regulators, they say that that was just because someone was late filling in some forms.

It seems absurd that, as the law stands, trustees are compelled to make a transfer if a member demands it, even if they know that the money is going to crooks. Even if the receiving scheme is on the warning list published by the Financial Conduct Authority of firms known to be suspect, the law requires trustees to go ahead with the transfer. If they are slow about it, they can be fined. The Select Committee has launched a three-part inquiry looking at scams. There have been lots of calls for the Committee to look at the issue, because there is widespread revulsion at the scandals that have occurred and fear of the damage to individuals and to the industry as a whole. There is a particular worry that pension freedoms, plus the financial pressures of the pandemic, could create what the Pensions Regulator has called a golden age for pension scams, as people are anxious to get hold of their money.

[Guy Opperman]

I am grateful to the right hon. Gentleman for giving way again. He knows that I have exchanged a series of letters with the Work and Pensions Committee and with him, having met him and the all-party parliamentary group on financial crime and scamming, and that I have placed in the House of Commons Library letters of 6 October and 22 October. Following his suggestion in Committee, I clarified an extra point in a letter dated 11 November, which I placed in the Library. We share his revulsion on these particular points, and believe that clause 125, with suitable regulation, can address these issues.

[Stephen Timms]

I am grateful for the assurances that the Minister has given. One of the problems is that the responsibility for responding to scams cuts across many different bodies. The court ruling last week that the fraud compensation fund could be used to compensate some pension scam victims is a significant development.

The Police Foundation published an important report in September called “Protecting people’s pensions: Understanding and preventing scans”, and that recommends a coherent set of principles for law enforcement and regulators, including: the facilitation of a more co-ordinated and consistent response across the various agencies; a specialist fraud victim support service; regulation for introducers, who are not regulated at the moment; and, new digital technology for the police to support and speed up analysis of the large volumes of evidence collected in investigations.

--- Later in debate ---

[Guy Opperman]

With no disrespect, that is a matter for the trustees. The hon. Gentleman can make the case to the trustees as to whether it would be too costly or too lengthy to receive a recovery.

In respect of new clause 5, the deferred debt arrangements were introduced as an easement to help employers struggling to manage their section 75 debts in an open non-associated multi-employer scheme. The new clause, I am afraid, offers only a temporary respite at best. The debt would still exist and would have to be paid in the future. The employer would have to pay potentially a larger section 75 debt in future if the scheme’s funding position declined further. The employer would also remain liable for deficit repair contributions. The amendment would not, I suggest, help sole traders who want to retire, or who have retired, and want to completely end their liability of the scheme.

In respect of new clause 2 and the Pensions Commission, I am afraid, as I have repeatedly made clear to the hon. Member for Airdrie and Shotts (Neil Gray), that this is not something that the Government can support.

I finally turn to new clause 1, which was proposed by the right hon. Member for East Ham (Stephen Timms) and the Chair of the Select Committee. It is quite clear that there is a common intent across the House to improve guidance to individuals. I cannot support his amendment, not least because it would potentially apply, so I am advised, to defined benefit as well as defined contribution. It is something that would massively enhance the workload of Pension Wise by at least 10 times. He will be aware that there are more than 4.4 million individuals with unaccessed DC pension wealth aged 45 to 54 in the UK. In 2019-20, Pension Wise processed 200,000 transactions. I respectfully suggest—

[Stephen Timms]

Will the hon. Gentleman give way?

[Guy Opperman]

I will give way for the last time.

[Stephen Timms]

On his point about the shared intent, I quoted in my speech what Baroness Buscombe said in the other place on 1 May 2018. She was speaking, I think, for him. She said:

“We all want people…to make it the norm to use Pension Wise before accessing their pension.”—[Official Report, House of Lords, 1 May 2018; Vol. 790, c. 1995.]

Does that remain the Government’s intention?

[Guy Opperman]

I stand by section 19 of the Financial Guidance and Claims Act 2018, which specifically sets out that where a scheme member makes an application to transfer pensions rights or start receiving flexible benefits, they have to be referred to appropriate pensions guidance and provided with an explanation of the nature and purpose of the guidance. Before proceeding with an application,

“the trustees or managers must ensure that the beneficiary has either received appropriate pensions guidance or has opted out of receiving such guidance.”

What we are proposing as a result of section 19 and the stronger nudge proposals is what the Work and Pensions Committee asked us to do. I mean no disrespect to the right hon. Gentleman, but our esteemed colleague who sadly is not with us anymore, Mr Frank Field, the former Member for Birkenhead, made the case very robustly in documents I am happy to disclose to the House—documents that the right hon. Gentleman will have as Chair of the Committee—that what the Government are doing is the right way forward. Because of that, we changed the previous Bill to do exactly what we are proposing to do now.

However, I am very keen to work with colleagues across the House and with the Work and Pensions Committee to take forward the proposals to enhance and improve the guidance that is available. I hope that the right hon. Gentleman will work with me and the Government to ensure that that takes place. I may not have responded to some colleagues, for which I apologise, but I thank all colleagues for their support of his groundbreaking Bill.

[Stephen Timms]

I welcome the debate we have had on this set of new clauses and amendments, and I welcome many of the things that the Minister said. On new clause 1, I am not sure whether he does still stand by what his noble Friend said on his behalf two years ago about the use of Pension Wise becoming “the norm”. If that is still his intention, I have not heard anything this evening to make me think that there is a plan to deliver on that intention. New clause 1 would deliver on that intention. I think it is widely agreed across the House that we should make access to that guidance the norm, so I would like to press new clause 1 to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Stephen Timms]

I echo the thanks that have been expressed by all three Front-Bench spokespeople. I welcome the content of the Bill and the progress made on collective defined-contribution schemes and the pensions dashboard. I was looking back at a report of the Work and Pensions Committee published before I became the Chair, which said:

“A pensions dashboard is long overdue”—

then I looked at the date of the report, and it was 2015. It will still be another three years before we get that dashboard, but the Bill is undoubtedly a very important step forward in that journey.

I welcome the commitments that the Minister made on scams and addressing the changes that are needed. I was disappointed that when I intervened on him on Report, he was not able to reaffirm the commitment that the Department appeared to have, and which was expressed on his behalf in the other place on 1 May 2018, that Pension Wise should become “the norm”.

[Guy Opperman]

I do—I said so.

[Stephen Timms]

That is welcome. We agree, then, that taking up Pension Wise guidance should be the norm, and I look forward to working with him on making that a reality from the very distant place we are in at the moment. I welcome the progress that the Bill represents, and I look forward to it being firmly on the statute book.

Pension Schemes Bill [ Lords ] (Fourth sitting)

Debate between Guy Opperman and Stephen Timms

Committee stage & Committee Debate: 4th sitting: House of Commons
Thursday 5th November 2020 Public Bill Committees

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

It is a pleasure to serve under your chairmanship, Mr Robertson. I am beginning to regret agreeing to address 11 separate new clauses at once—it seemed like a great idea before lunchtime. Given the multitude of speeches I have heard and the multitude of notes to which I have to refer, I am sure that the next 15 minutes will be entertaining. Here goes. I will try to address the new clauses in sequential order to assist colleagues in their understanding, and at least then my notes will prove relatively useful.

On new clauses 1 and 5, the former Secretary of State, David Gauke—he is much missed in this place—set out provisions for the automatic enrolment review to be enacted by this and future Governments. There is a cross-party approach, particularly on automatic enrolment, that was started by the Labour Government, continued by the coalition Government and brought forward on an ongoing basis by the Conservative Government. In my view, the DWP’s single biggest achievement on pensions in the last couple of years has been the double jump to 8% of automatic enrolment in 2019. Opt-outs were very low and the increase in savers has been massive, with well over 10 million people now saving. Savings by young people and women have increased from approximately 40% to well above 80%.

Our thanks are due to all the businesses who provide support on that. That goes to the heart of the issue: even though it is a defined-contribution system, contributions are not made purely by the individual concerned; a 3% contribution is made by businesses, with some assistance from the Chancellor and tax rebates.

We will unquestionably implement the automatic enrolment review, as previously stated, by the mid-2020s. As I said earlier, my view is that there will be a further pensions Act in this Parliament with a view to implementing that. It will, without a shadow of a doubt, require primary legislation both to institute the short points necessary for automatic enrolment and to give an indication of its direction. Primary legislation is also needed for superfunds. I was told that CDCs would need relatively little legislation until, after a lot of work, our 52 clauses were drafted, but I believe that automatic enrolment would require a relatively small Bill. However, there is no doubt that superfunds would need a large Bill, and I will come to that later. The mid-2020s remain our target.

Clearly, we have to balance the current fiscal situation and the fact that this Government, with the support of all Members of the House, have put additional burdens on business, whether by raising the living wage—the rate of which has been massively increased for low-income workers since the days of the minimum wage—or other costs. For certain larger businesses, there is the apprenticeship levy among other things. Unquestionably, the Chancellor, the Prime Minister and the Secretary of State for Work and Pensions have to look at the fiscal framework, and they will have to decide how to do that and whether there should be an increase above 8%.

To the question about whether we will reduce the lower earnings threshold and raise the age groups, the answer is yes, we will. I have made and continue to make that point repeatedly in Parliament.

[Stephen Timms]

I welcome the Minister’s commitment to legislate in this Parliament. Can he give us some indication of when in the next four years that Bill might be introduced? December 2024 would be rather late to legislate for something to take effect the following year. Will he reassure us that it will be done a little earlier than that?

[Guy Opperman]

I am always nervous about saying that the legislation will come in on this or that particular date because—as the right hon. Gentleman will understand, having held my current job—it is way above my pay grade. I have been trying to get this Bill into this House for a considerable time: well over a year, in fact. The election got in the way of the first attempt, and clearly other things are taking place—whether relating to covid or other legislation.

All I can say is that we will, I hope, have time for such legislation at some stage. It is a matter for the Prime Minister, the Chancellor and the Cabinet, and the usual write-around process that applies, to decide when there will be a further piece of pensions legislation. I cannot be any more specific. Frankly, if I gave a date, the Whip, my hon. Friend the Member for Halesowen and Rowley Regis, would wrestle me down and say that it is not for me to make Government policy and announce a specific date.

I can only say that our intention is that what we are discussing should take place in the mid-2020s. As we all know, summer can be a very long month when one is defining things in Parliament; I take the point that, if it is to happen in the mid-2020s, legislation has to be in order at some particular stage.

The great advantage of the Government’s review of automatic enrolment, “Maintaining the Momentum”, is that it sets out the procedures through which the Government are going to proceed in terms of the lower earnings rate and the change of age. Because of the way payroll works and the sophistication of payroll now that we have automatic enrolment up and running, I am advised that the changes are relatively easy to make. I accept that businesses will need some time, but it will not be like the original version of automatic enrolment, when we had to completely invent a system; this is an expansion of a pre-existing system. The right hon. Gentleman can remind me of that when things do not necessarily go like a Swiss watch, but that is my confidence on the matter. I hope that that provides assurances.

I will touch on one particular point: expansion of 8%. I endorse the comment that 8% is not sufficient—there is common belief about that. We are looking at international models, and Australia is the best example of the way forward. Clearly, I hope that in the longer term we would increase automatic enrolment, but there has to be a balance as to who is going to contribute to that. Will the employer have a larger role, paying more than the 3% that they do at present? Alternatively, will it be solely down to the individual? How can one offset that in respect of tax rebates and other such things?

Such policy work needs to be done on an ongoing basis and will take a little time. We have to be mindful of the fact we are in the middle of particularly difficult fiscal times because of covid. Imposing further burdens on businesses has to be balanced with the desire, which all of us have, to ensure that people have greater savings on an ongoing basis. This is a work in progress. I do not have any difficulty in being held to account for that: quite right, too—I would like to make progress as well. How we make progress is complicated.

The next amendment that the hon. Gentleman for Airdrie and Shotts brought forward was new clause 11, regarding automatic enrolment again. On the simple point about small pots, I should say that the matter is already a work in progress. I endorse so much of the broad thrust of what the amendments are saying. I totally endorse the principle the issue of small pots needs to be examined. The Work and Pensions Committee, to be fair to it, is beginning to look into that, as we discussed earlier. We have convened at the Department. I have asked all the industry sector and some of the third sector people, who clearly matter in this light, to come together and give me a report before the end of November, on a very provisional basis, about what they see as the key challenges and approaches going forward.

I would clearly be surprised if I were not summoned before the Work and Pensions Committee in due course to discuss these matters, in order to try to formulate policy. It seems to me that there is great scope, and a desire, to address a small problem on a long-term basis. In my view, that has to be wrapped up with a consideration of costs and charges as a whole. I would not want to deal with the issue in a bite-sized piece; if I can do it, I will attempt to do it in the round.

Pension Schemes Bill [ Lords ] (Third sitting)

Debate between Guy Opperman and Stephen Timms

Committee stage & Committee Debate: 3rd sitting: House of Commons
Thursday 5th November 2020 Public Bill Committees

[Guy Opperman]

I thank the right hon. Member for East Ham who leads the Select Committee for his kind words and heartfelt speech. I echo the comments in terms of his constituents, who clearly have had a terrible time. My thoughts are with them.

I will try to address the points raised. In respect of clause 125, the objective of the Government is quite clear. We wish to bring forward measures that will significantly and realistically prevent future scams. We believe that transfers will not go ahead if the conditions set out in the regulations are not met. These conditions can relate to both the destination of the transfers, meaning transfers can be prevented to schemes that do not have the right authorisation, and cases where the member has not supplied the evidence of, say, employment or residency. Importantly, those conditions can also include other red flags, such as who else is involved in a transfer. If those red flags are apparent, the regulations will enable the trustees to refuse to transfer. If the red flag is significant, it will direct the member to guidance or information that they must take prior to being allowed to transfer. Trustees will need to undertake due diligence to establish whether those conditions are met or not. Clause 125 puts trustees in the driving seat in relation to permitting transfers to proceed.

The right hon. Gentleman raised a number of specific issues, which I will try to address. The first relates to the scope of clause 125 in respect of DB and DC pension schemes. I take his point on master trusts, but I assure the Committee that the conditions to be met in relation to safe destinations, red flags and guidance before a transfer can proceed will be applicable to members of DB and DC schemes. Those conditions will be in addition to the current advice requirements for DB members seeking to transfer over £30,000 cash-equivalent value.

I have had discussions with the right hon. Gentleman, both in writing and in person, and with other colleagues on the Work and Pensions Committee, stakeholders, interested parties and other parliamentary colleagues. I have also engaged at great length, sadly by Zoom, with the all-party parliamentary group on pension scams, and then followed that up individually.

Colleagues who are concerned about the extent to which the PSIG requirements of red flags are being met should read the exchange of correspondence in the Library, following the right hon. Gentleman’s agreement that I could disclose it, in respect of the background of our meetings in September on two occasions, the letter that I wrote on 6 October, which included the Financial Conduct Authority’s approach of 5 October, and the follow-up letter of 22 October. If that second letter is not in the Library, which I am not totally sure it is, I will ensure that it is by close of business today. I wish also to put on record my thanks for the efforts of the PSIG, Margaret Snowdon and the various other parties who are all working for the common good to ensure that scams are prevented.

I will speak about guidance in a second, but first I will make two points. Clearly we wish to prevent, as far as possible, any scams or misdemeanours taking place, but that will have to be done through primary legislation and secondary regulations. It seems to me, as this process has been developing, that there is a degree of symmetry between the work that stakeholders—the PSIG and others—are doing, the work that this House is doing by passing primary legislation, and the specific drafting and codification of the regulations, which will be the nuts and bolts that will take this forward.

My objective is that we pass clause 125, which provides the statutory framework. My hope is that Royal Assent is received speedily and I suspect that my civil servants, who obviously have nothing else to do in these difficult times, will be able to progress the regulations very soon. I am hopeful that the Work and Pensions Committee report will have been published by then, and the ongoing dialogue that we have had with the Select Committee, cross-party, will continue, so that we frame the regulations that flow from clause 125 to accord with all our stated objectives.

I accept that the devil is always in the detail. We are all trying our hardest to be as precise as possible, without the regulations having been drafted already, but with regard to the four red flag objectives that are set out and that the right hon. Gentleman has rightly brought to my attention on Second Reading and in correspondence, I am confident that the answers that I have given to him in writing, and that the FCA has given, constitute a basis upon which we can regulate to prevent those matters.

The right hon. Gentleman is trying to tease out the extent of the amendments that he has tabled and the extent to which the Government can address them. We are able to address those matters within the confines of clause 125. I stress that we want to ensure that the powers can be applied quickly. I accept that time is of the essence in ensuring that the regulatory powers come forward as a matter of urgency.

[Stephen Timms]

I am grateful for the Minister’s perceptiveness in our discussions. May I check that he accepts the point that I made, that there should not be a carve-out for all FCA-registered schemes? FCA-registered schemes have been part of the problem in quite a lot of the scams that have arisen over the past few years.

--- Later in debate ---

[Guy Opperman]

The simple answer is that this is not something that could be in primary legislation and then enforced; primary legislation is the framework, and it is has to be in the subsequent specific regulations that follow. I can give the hon. Gentleman an assurance on that point, as I have given it to the Chair of the Select Committee.

We accept these matters and believe that clause 125 already addresses the points made by the amendments, but we still have to draft specific regulations to deal with the specific problems, and those will be much larger than clause 125 and way more comprehensive. The process of dealing with a transfer, what particular points apply, how it is a trustee operates due diligence and how it is that that process works, is genuinely a complex process. Detailed provisions have to be gone through, working with the various parties going forward. The point I am trying to make is that we agree with the principle of the amendment, but it should not be on the face of the Bill; we should accept that clause 125 provides the framework, and we then need to deal with the regulations going forward.

In the time remaining, I will try to address the points about guidance and see if I can assess that in a particular way. Briefly, it is entirely right that people should be supportive of the good work that Pension Wise has done. Demand for the service has grown year on year since we launched it in 2015. The service delivered 205,642 transactions in 2019-20, which was a combination of face to face, telephone and online—more than triple the sessions in the first year of operation—and has had 10 million visits to the website since 2015.

I would push back on the argument for new clause 10, which is that there is no previous engagement. The DWP’s work should also be seen in the context of the work that the FCA does. There is already a multitude of interventions at an earlier stage. Within two months of their 50th birthdays, members receive a single-page summary document that points to the pensions guidance, as required under the Financial Services and Markets Act 2000. Wake-up packs, which were developed in association with all of industry and the interested bodies and are a requirement of the 2000 Act, are received at the age of 55. They include the single page summary document and they point specifically to pensions guidance.

At a later stage, as the individual gets closer to accessing their pension savings and enters the drawdown phase in contract-based pensions, the FCA investment pathway requires that they be presented with four options as to how they want to use their drawdown pot, so it is not the case that there is no engagement prior to the drawdown. That is proposed by the FCA policy statement, which will come into force in 2021.

Although I fully accept that I should be pressed on DWP guidance, the FCA policy statement will come into force in 2021, and, between now and Report, detailed explanation of what that statement entails should be provided to the right hon. Member for East Ham. If it has not been provided to the Select Committee as part of its inquiries on scams, that is a lacunae that needs to be addressed, because it seeks to ensure that all arms of government are working together. The FCA policy statement, and the incoming changes, will definitely make a difference.

Briefly, on the stronger nudge towards guidance, which arose from the Financial Guidance and Claims Act 2018, it is fair to say that where there is transfer from one scheme to another to continue to accumulate and no risk is identified, the transfer can be acted on in accordance with the current requirements. Where a risk is identified, the member must be notified that they will be required to prove that they have taken information or guidance before the transfer can proceed. That is the appropriate effect of what we are legislating for in clause 125 and in the Bill.

Where there is transfer from one scheme to another to access pension freedom with no risk identified, there is the nudge towards guidance and the member is notified that they will need to prove that they have taken guidance or opted out. Where a risk is identified, the points that we have gone through on clause 125 and the prevention of scams come into play. The member must be notified that they are required to prove that they have taken information or guidance, and the amended requirements under clause 125 continue to apply.

There is a graded system depending on the identification of risk to the individual trustees as they proceed. In addition, work has been done to prevent pensions cold calling, and there has been a tightening of the rules to prevent fraud of registered pension schemes. I accept that more needs to be done to bring various departments together. I know that the Select Committee has looked at this area, assessing whether Project Bloom, the multi-agency partnership, and the ScamSmart campaign, are working sufficiently well, and that is something that I have undertaken to improve. The regulator’s evidence to the Select Committee on that exact point argued that a much more beefed-up effort was needed to bring all those particular parties together. Yes, the two arms of government need to work better together, and I hope I have explained how we are doing, but we also need much greater interdepartmental and interorganisational co-operation.

Finally, there has been criticism. I will not go into detail about whether the stronger nudge is a good behavioural insight trial. I support what has been done, but that is a matter of ongoing regulation as well. The appropriate approach would be that we work with the Select Committee on making that as effective as possible on an ongoing basis. I invite the right hon. Gentleman to withdraw his amendment.

[Stephen Timms]

I am grateful to the Minister and to everyone who has taken part in this debate. I welcome a lot of what he has said. On guidance, he told us that the FCA writes to everyone at age 50, but it seems to me that what it should do is say, “Your appointment with Pension Wise is at the following time and place”, taking advantage of that opportunity to increase significantly the likelihood of the guidance being taken. I am grateful to him, however, for saying that further information will come forward before Report and that the discussions and deliberations on the four amendments will also carry on between now and Report. At this stage, therefore, I do not propose to press any of the amendments to a vote.

Pension Schemes Bill [ Lords ] (Second sitting)

Debate between Guy Opperman and Stephen Timms

Committee stage & Committee Debate: 2nd sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Guy Opperman]

I will press on, because I am going to answer some of the points that the hon. Lady made. I am mindful that we have spent some time on this particular point and we have a lot to get through.

On matters related to the state pension and triple lock, I leave the triple lock to the Chancellor with good blessing and understanding. I will not get into a rehash of many arguments over the state pension changes made from 1995 and which continued over 13 years of Labour Government. The policy was supported by certain Labour Ministers, including in the DWP. Then, obviously, there was a change of Government and the policy was not necessarily supported. When the hon. Lady talks of the way that people have been treated by the Government, that means all Governments since 1995.

I have persistently defended the actions and the civil servants of the DWP throughout the period between 1997 and 2010. Interestingly enough, so have the courts, because we have recently had the Court of Appeal decision in the BackTo60 claim, which found comprehensively in favour of the Government—not just this Government, but previous Governments—in respect of all matters that apply, including notice.

[Stephen Timms (East Ham) (Lab)]

It is worth putting on the record that the worst problem was what happened with the Pensions Act 2011, as I think the then Pensions Minister, Steve Webb, has since recognised.

[Guy Opperman]

Steve Webb has buyer’s remorse about many things.

Pension Schemes Bill [ Lords ] (First sitting)

Debate between Guy Opperman and Stephen Timms

Committee stage & Committee Debate: 1st sitting: House of Commons
Tuesday 3rd November 2020 Public Bill Committees

[Guy Opperman]

I agree that large employers, such as Royal Mail, which employ nearly one out of every 200 full-time working employees in this country, will look at that and say it is a potential way forward.

Before I come to the hon. Lady’s point, I want to address DB briefly and make it clear that CDC is intended to offer a further pension-saving option for employers and their workers, should they wish to make use of it: it is for the employers and the workers to decide the type of benefit they wish to have via their occupational pension scheme. That has always been the right of the employer fundamentally, but also engaging with the employee. We specifically amended the subsisting rights provisions via clause 24 to prevent existing DB benefits in the scheme from being converted into CDC benefits. I hope that I have addressed in full the DB issue, which was also raised separately by the right hon. Member for East Ham.

[Stephen Timms]

I am grateful for the Minister’s reassurance on communications. Will good communications be a consideration for the regulator in determining whether a proposed CDC scheme should go ahead?

[Guy Opperman]

The short answer is yes.

--- Later in debate ---

[Guy Opperman]

I would like to provide some reassurance on that particular point. I am acutely aware of it and have engaged at length with many different organisations. It is certainly not the intention to frustrate legitimate business activities where they are conducted in good faith. It is important, however, that where the elements of offences are met, no matter who has committed it, the Pensions Regulator should be able to respond appropriately. Any restriction of the persons would create a loophole for these people to potentially act in such a way.

The new criminal offences proposed in the Bill make it clear that an offence is committed only if the person did not have a reasonable excuse for doing the act or engaging in the course of conduct. Crucially, what is reasonable will depend, obviously, on the particular circumstances of the act, but the burden will be on the regulator to prove that the excuse was not reasonable. The regulator will be publishing specific guidance on these powers after consulting industry, but ultimately it is for the courts to decide that an offence has taken place, and, if so, the appropriate punishment.

The amendments also seek to remove the reasonable excuse defence—as set out in sections 58A and 58B—and replace it with a narrower concept of negligence. The existing defence of reasonable excuse is wider in definition than that proposed by the amendments. Therefore, the current defence provides more protection and a greater safeguard to potential targets. What is considered negligent is, in fact, specific and relies on case law—the law of tort, as I am sure the hon. Member for Airdrie and Shotts is aware—therefore introducing the concept of negligence would not help individuals to determine if what they were doing would be deemed negligent.

[Stephen Timms]

I have a real worry about this. Is the Minster saying that, for example, if a trade union successfully called for a higher pay rise than was initially offered, the company subsequently failed and there was a problem with the pension scheme, that the trade union would have to say that it had a reasonable excuse for pressing its pay demand? That seems a strange arrangement for us to be entering into.

--- Later in debate ---

[Guy Opperman]

I am happy to write to the hon. Gentleman and set out the position in more detail. I come back to the simple point. If a trade union has a reasonable excuse for asking for a pay rise for its members, given their circumstances in an organisation, there is no reason why it should have any concern whatsoever. The starting point is whether someone has a reasonable excuse to progress a particular thing. If it is clearly part of normal business activities, I would not anticipate a problem.

[Stephen Timms]

I wonder whether the Minister would agree that it does seem very odd that a trade union making a legitimate pay claim might have to worry about whether it is committing a criminal offence because of some future damage to the pension scheme. I am very surprised that the Minister is putting in place measures that would have that effect.

[Guy Opperman]

This is in the context of the offence of avoidance of employer debt. We start with the very eloquent exposition that the hon. Member for Airdrie and Shotts gave on where employer debt arises and contributions are not made to pension schemes. One has to then look at the individuals and their approach. I do not believe that including a reasonable excuse defence will in any way hold back normal, traditional business activity. I can give that reassurance: traditional business activity would clearly include union work. This is clearly an issue that the regulator is very conscious of. On the one hand, we want a more robust approach. On the other hand, we want to ensure that normal business activity goes ahead. I believe that this is the appropriate way forward.

Pension Schemes Bill [Lords]

Debate between Guy Opperman and Stephen Timms

2nd reading & 2nd reading: House of Commons & Money resolution & Money resolution: House of Commons & Programme motion & Programme motion: House of Commons
Wednesday 7th October 2020 Commons Chamber

[Stephen Timms (East Ham) (Lab)]

As has already been widely said, there is much to welcome in this Bill. Some important changes were made in the other place, and I pay tribute to the work that it did. I also appreciate the efforts that the Minister has made to work with my hon. Friends on the Front Bench, with me and the Work and Pensions Committee, and with others across the House to secure broad support for the measures in the Bill.

Pensions dashboards should be an important step forward in enabling savers to understand their pension position, allowing them more readily to make good decisions in planning for retirement. The Select Committee, under its former Chair, Frank Field, to whom I pay tribute, said in 2018:

“The case for a publicly-hosted pensions dashboard is clear cut”

because

“consumers want simple, impartial, and trustworthy information.”

In 2019, the Committee observed:

“A non-commercial pensions dashboard will be a welcome, if overdue, additional tool to provide transparency to individuals and help them plan how they use their pension funds.”

We have heard that it was agreed in the other place that the dashboard provided by the Money and Pensions Service should be up and running for a year, and the Secretary of State should report to Parliament on its operation, before other commercial dashboards are set up, and that commercial dashboards should not have facilities for engaging in financial transactions. Like others, I hope that those changes stay in place.

The former Committee reported in 2016 on defined-benefit pension schemes in between reports that it published on the BHS and Carillion scandals, and its recommendations at that time are reflected in the new powers provided to the Pensions Regulator in this Bill. The Committee recommended, for example, that the Government should consult on proposals to give trustees powers to demand timely information from sponsors, and I welcome the new offence created by the Bill of “knowingly or recklessly” providing false information to trustees.

The Committee also highlighted, in 2018, the attractions of collective defined-contribution pensions. I echo the observation of the hon. Member for Amber Valley (Nigel Mills), whose contribution to the Select Committee I am grateful for, that the pooling of risk offers better pensions than standard defined-contribution saving and avoids the large potential liabilities that have made defined-benefit schemes less popular than they were. I welcome the legislative framework provided in the Bill, and I hope that this new model will be widely taken up.

However, I want to focus my remarks on the issue of pension scams, echoing a number of points that have already been made. As we have heard, the Select Committee has started an inquiry on pension scams, which the Secretary of State referred to. That is the first strand of three in an assessment of the pension freedoms five years on from their introduction by George Osborne.

Losing one’s pension savings to a scam is devastating. The Select Committee has heard of lives that have been ruined by scams—of people who have worked hard all their lives and were looking forward, as they were entitled to, to a comfortable retirement, finding suddenly that their savings have all been stolen; husbands not daring to tell their wives what has happened, or of the shame or dread of the future that they are suffering.

We do not know the scale of this issue. Many scams are never reported, partly because people are ashamed of what they have done and partly because they know that the chance of ever retrieving any of the money is slim. There are grave concerns about the effectiveness of Action Fraud in investigating and ensuring the pursuit of scams, given the low rate of success in retrieving scammed pensions.

The pension scams industry group, to which I pay tribute, estimates that scams could account for anything between 0.5% and 12% of all transfers out of employer pension schemes in the last five years. If we take the middle figure—say 5%—that would mean that over the last five years £10 billion of pension savings have been stolen. There are certainly well-informed reports of named individuals living in the lap of luxury in homes in exotic locations around the world on the proceeds of pensions out of which they have defrauded hard-working savers.

I am bound to say that these awful problems should have been foreseen when pension freedoms were introduced five years ago. Indeed, as I remember well, they were foreseen, but the coalition Government did not adequately prepare for them. I do not know why—they should have done, but they did not. Charles Randell, chair of the Financial Conduct Authority, said at the 2020 annual public meeting of the FCA that

“the manner in which the pension freedoms were introduced leaves a number of lessons to be learnt, including about the importance of coordinating changes in government policy with regulatory and industry preparedness and the speed with which major changes are introduced.”

He was absolutely right—those things were not done, and thousands of hard-working people have had their lives ruined as a result.

The pension scams industry group has thought long and hard about this, and the pensions industry has every incentive to worry about the reputational damage that it suffers as a result of the impact of scams. If people cannot trust what will happen with their money they will not save. The industry group has identified red flags to assist in establishing whether the destination for a proposed transfer is likely to be a scam. It has suggested three main flags, any one of which, most people would agree, should mean that the transfer should not go ahead: first, if the receiving scheme is on the FCA warning list or some other internal list of schemes, entities or individuals of concern; secondly, if advice on the proposed transfer has been provided by firms or people who do not have appropriate regulatory permissions; and, thirdly, if the provider or self-invested personal pension operator is not registered with the FCA. The industry group has identified a number of other flags that may not in themselves show that the transfer ought not to go ahead, but do suggest that further checks need to be made before it does.

As I mentioned in my exchange with the Secretary of State, an amendment to the Bill was tabled in the other place to ensure that if a proposed transfer raised red flags it should not go ahead until the saver had taken financial advice. The problem graphically reported by the pension scams industry group is that only about a quarter of would-be scam victims would be deterred from proceeding after receiving advice telling them not to do so. The scammers win people’s confidence—they become their friends, as we heard in the Select Committee this morning. The scammers tell people, “Yes, they will say that, but that is because they do not want you to move your money.” People trust scammers until the moment they find their pension has gone.

I want to table a proposal enabling trustees to refuse to make the transfer altogether if one of the major red flags is raised. In my view—and I know that other Members support such an amendment—the statutory right to transfer conveyed in pension freedoms legislation should not apply in such cases. We heard this morning from scheme trustees not only that they had an obligation to transfer even if they knew perfectly well that the destination was a scam but that if they did not do it quickly enough they would be fined for not getting a move on under the arrangements that are in place. It is hard to argue that the statutory right of transfer should apply, for example, if the destination is a firm that is listed on the FCA warning list. If the trustees of a scheme know that a particular transfer is going to a firm that is on the warning list, they should surely not have a legal obligation, as they do at the moment, and will still have under the Bill, to hand the money over to crooks if the saver has taken advice but still, despite that advice, wants to go ahead. If the receiving firm is a above board, it must show that to the FCA and get itself off the warning list.

[Guy Opperman]

I am grateful to the Chair of the Work and Pensions Select Committee with whom I have had, I think, three separate meetings over the summer specifically to address this point. Clearly we are all keen to ensure that clause 125 and the powers within it address the issues that he rightly raises and that are of concern to fellow members of the Select Committee.

The right hon. Gentleman will be aware that I wrote to him yesterday and have given evidence in a more detailed document to the Work and Pensions Select Committee. With his permission, I will put both those documents in the Library of the House, so that all colleagues, including the hon. Member for Airdrie and Shotts (Neil Gray), have an opportunity to be aware of them. I am very happy to continue working with the right hon. Gentleman, and he will be well aware that the view of my Department is that the matters he raised can be addressed fundamentally by clause 125. The FCA has particular views of the red-flag list warning list point, but I am sure we can continue the dialogue.

[Stephen Timms]

I am extremely grateful to the Minister for those points and for the work that he has done, the responsive way that he has looked at the issue over the past couple of months and for the information that he has now provided. I will be very keen to hear from the Pensions Scam Industry Group whether it feels that the proposal that the Minister has now tabled will meet the points that it has been raising. However, I am grateful for the progress that we have been making on this issue and that will no doubt be further explored in Committee in the weeks ahead.

The determination by the pensions ombudsman in 2015 allowed trustees to decline a transfer request when there were concerns about a scam but the Hughes v. Royal London court case in 2016 overturned that determination and established that the trustees do have an obligation to go ahead even when they know the receiving scheme is a scam. That must be changed, and I am very encouraged by the Minister’s point that he believes that it will be possible to bring forward regulations under the Bill as it stands to have that effect. It is important that that change is made.

Mr R complained to the pensions ombudsman about the decision of the London Pensions Fund Authority and Newham Council, which is my local authority, to allow him to transfer his pension to the Gresham pension scheme. That transfer went ahead and he has lost his entire pension valued at £64,000. He has been awarded £1,000 in compensation since then. His view now is that the trustees should have refused to make that transfer but, under the 2016 Hughes v. Royal London decision, the trustees are legally obliged to go ahead with the transfer in a case of that kind. I think Mr R is right that the transfer that he requested should have been blocked by the trustees, and I very much hope that in future that will be possible. Very few people would today argue that the pension freedoms should be repealed but pension savers are entitled to expect protection. The change that I have described is designed to provide it.

My final point has been touched on by the shadow Secretary of State. Clause 123 was amended in the other place. As the Minister knows, there is very strong support for the amended clause on the part of current defined-benefit schemes, such as the railways pension scheme and the BT scheme, that remain open. If that amendment were to be removed, those schemes fear that they would be treated unfairly by the regulator and in the same way as schemes in very different circumstances. Their future would be threatened as a result. It could be the final blow for private sector defined-benefit schemes. There is great nervousness about the Minister’s intentions on that clause, as he well knows, and about the fact that if he removes the amendment, he may make those schemes unsustainable. I wonder if, in closing the debate, he might comment on his intentions on clause 123.

Oral Answers to Questions

Debate between Guy Opperman and Stephen Timms

Monday 27th January 2020 Commons Chamber

[Guy Opperman]

My hon. Friend is right to raise that important point. We already publicise pension credit as much as we can, but we are working hard to get material into jobcentres and local authority premises to ensure that take-up is as high as possible.

[Stephen Timms (East Ham) (Lab)]

T2. Benefit claimants are two and a half times more likely to need a food bank if they are on universal credit than if they are on one of the predecessor benefits, and the main reason is the five-week delay after applying for universal credit compared with seven working days in the past. Will the Minister look at significantly shortening that delay, which is doing such harm?

Youth Obligation

Debate between Guy Opperman and Stephen Timms

Friday 26th October 2018 Commons Chamber

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

I congratulate the right hon. Member for East Ham (Stephen Timms) on securing this debate. I have been asked to respond because the Minister for Employment sadly cannot be here.

Everyone on the Government Benches acknowledges that the right hon. Gentleman should be on the Opposition Front Bench, given his massive experience at the Department for Work and Pensions, and I welcome this opportunity both to debate this matter and to discuss in the more detail the subject of youth employment, which I think motivates every single Member of Parliament. We all want to improve the life chances of those whom we represent.

Nationally, the employment rate for 18 to 24-year-olds not in full-time education is 77%, which is up eight percentage points from 69% in 2010, and only 4.3% of young people aged 16 to 24 are unemployed or not in full-time education, which is a fall of 350,000 since 2010. Moreover, the national unemployment rate for this age group is 10.8%, as the right hon. Gentleman set out, which is a record low. It is worth commenting briefly that the decrease in youth unemployment is markedly better than that in the EU. When one compares our record low youth unemployment rate with that in Spain, at 34%, Italy, at 32%, France, at 21%, and Greece, at 39%, one realises that there has genuinely been a transformation, and one that I believe is among the driving successes of this Government. We all accept, I believe—I think the right hon. Gentleman accepts this—that the single biggest driver of social mobility and improvement of life chances is work, and the reality is that the universal credit programme and the Government reforms since 2010 are helping to create an employment revolution in this country, which is a massive improvement on the old system.

The statistics reflect a real achievement, but while this is worth celebrating we must not be complacent. That is why the Government have introduced a wide range of support for younger people. The principle of support for young people is well known to the right hon. Gentleman; it has dated back through many different Governments and generations and has been developed by the DWP in collaboration with a variety of organisations. We recognise that providing early targeted help at the start of a young person’s adult life helps them secure work and avoid unemployment. It is in that context that we introduced the youth obligation support programme.

The programme is for people aged 18 to 21 who make a new claim in a UC full service jobcentre. It is worth understanding how this programme came into being, and I will briefly outline that. We believe it takes the best types of support that previous individual evaluations have shown to work and puts them together in a single programme. The support starts with the intensive activity period. In 2016, the Department published an evaluation of this approach by the Institute for Employment Studies. It reported that it had an immediate positive behavioural effect on participants. It increased their confidence, and meant they engaged in a wider range of job search activities and made job applications to a higher standard. Earlier this year, the Work and Pensions Committee recognised in its youth employment report of 2018 that the Department had conducted a good quality trial of intensive activity. It said that the intensive activity element of the youth obligation should help young people overcome key barriers to work. We believe it encourages young people to think more broadly about their skills and job goals and identify any training they may need.

An example that applies to both the programme under discussion and the traditional model for younger people are sector-based work academies, which last for up to six weeks and include work experience, some bespoke training and a guaranteed interview for a real apprenticeship or other job. The Department published a quantitative impact assessment in 2016 that showed that young people who took part in this type of support spent on average considerably more days in employment and considerably fewer days on benefit than those who did not take part, and I know it had some success in the right hon. Gentleman’s constituency of East Ham, particularly utilising the work of his local colleges.

[Stephen Timms]

I am grateful for the way the hon. Gentleman is answering my questions. Does he have any information about how many participants on the youth obligation programme had the opportunity of the sector-based work academy to which he refers?

[Guy Opperman]

I am going to come to the specific points the right hon. Gentleman raises on numbers and data, but let me make a quick point before returning to my speech. We are in utter agreement that data and statistics are needed on a long-term basis—no one is disputing that—and he will know from his knowledge of the DWP that it likes to focus on long-term figures. However, I am not in a position to give individual numbers in answer to that specific question.

However, the right hon. Gentleman surely accepts that sector-based work academies, which occur in many different types of profession but in particular teaching, retail, hospitality, transport and logistics, social care, manufacturing and engineering, are one of the most successful innovations that apply to all young people whether on the YOSP or the traditional support provided by jobcentres.

In addition, there are traineeships. Like the right hon. Gentleman, I have visited a multitude of jobcentres. In the last year, I have been from Hastings and Chichester in the south to Banff in northern Scotland, from Basildon to Blackpool last Friday, to Birmingham and Lambeth in London, and in the last four years I have hosted a jobs fair in Hexham and worked with my jobcentre, and I have seen the impact of traineeships, which are another part of the YOSP that are utterly key. I must mention Release Potential in my constituency, which provides these traineeships for younger people on an ongoing basis up and down the country, and I have seen their success.

The right hon. Gentleman will realise that this programme began only in April 2017 and that it is still being rolled out around the country. More than 500 jobcentres are now offering this support, but some started only this week. I accept that others started in April 2017, but I believe that the programme still has to be rolled out to 22 jobcentres before completion takes place at the end of this year. In his own area, jobcentres have strong links to Barking and Dagenham College, and there is also specialist guidance on training, apprenticeships, the Prince’s Trust, the movement to work programme, the construction skills programme and English language classes.

I want to address a couple of points that the right hon. Gentleman raised. I take on board his suggestions, which have been noted, on statistical evaluations and pathways. He will understand that the Department takes these matters very seriously, and I will ensure that they are taken back to the Minister for Employment. As I have said, the programme is still being rolled out, and the automated management information process is still being developed as we speak. He raised the matter of young people in particular, and there is one point on which I want to push back. He said that the was no other programme for young people, but he will surely know that the Department is committed to providing targeted support for all young people, including those who are still claiming jobseeker’s allowance or claiming through the universal credit live service. The traditional JSA includes basic skills training, traineeships and support funded through organisations such as the Prince’s Trust. There are also opportunities involving sector-based work academy placements for those individuals. It would therefore be wrong to suggest that there is no other programme over and above the youth obligation support programme.

I repeat that we collect information on each individual claimant, but there is not at this stage an aggregated assessment of the kind that the Department traditionally produces. However, the right hon. Gentleman will under- stand that this programme started only in April 2017, that it has not finished being rolled out and that in some jobcentres it started only in the last week. With respect, therefore, I would say to him that we believe the programme is becoming more mature every day, that we are continuing to test and learn and that we are holding workshops with work coaches to get their insight into what works well and into the local barriers that 18 to 21-year-olds can face in the labour market. We are also collating and sharing good practice, and we will obviously take on board the reports that he has outlined today, including the one that came out just this morning. We are genuinely committed to ensuring that any 18 to 21-year-old, whether they are from East Ham or Hexham, Carlisle or Cardiff, has the ability to work towards securing an income, to develop their skills and to improve their life chances. After all, that is what this is all about.

Question put and agreed to.

Oral Answers to Questions

Debate between Guy Opperman and Stephen Timms

Monday 15th October 2018 Commons Chamber

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

Some 10,000 of my hon. Friend’s constituents are benefiting from automatic enrolment, with thanks to the 1,800 employers involved, and nationally workplace pension provision for women and young people has now doubled in the last five years.

[Stephen Timms (East Ham) (Lab)]

T8. Ministers defend the five-week wait for universal credit on the basis that employees will have had a month’s pay in their bank account when they left their previous job. Does the Minister accept that that case simply does not apply to employees paid weekly or those on zero-hours contracts?

Living Wage

Debate between Guy Opperman and Stephen Timms

Thursday 6th November 2014 Commons Chamber

[Guy Opperman (Hexham) (Con)]

I wholeheartedly congratulate my hon. Friend the Member for Warwick and Leamington (Chris White) on securing the debate and I thank the Backbench Business Committee. Some would say that Parliament does not often have important debates, but with the debate on Iran and now this debate on the living wage, I cannot think of a more important day to be in Parliament. I am delighted to be here to support my hon. Friend.

I was delighted, too, to have been part of a briefing that took place with the all-party group on poverty this morning with the good people from the Living Wage Foundation and Citizens UK, who came to the House of Commons and met several hon. Members, from many different political parties, to brief them on the living wage and to hear some of their experiences. I thank Emma Kosmin and Stefan Baskerville for coming in, along with the Rev. Angus Ritchie, Mike Kelly and Nana-Ben, who is the cleaner I mentioned earlier from the Department for Transport.

This is not just a debate about the living wage but a debate about tax thresholds and tax credits, but one must start with the wonderful news that the living wage has risen again this week. I was pleased to see the Mayor of London going to Kaffeine, a coffee shop in Great Titchfield street, to celebrate and support it. The Evening Standard pictured him with a large cake, which I am not sure is quite the message we are trying to get across, but the point is that he has been an enthusiastic and vocal supporter of the living wage, and quite right too.

I am sure the Minister will make the point that it is fantastic that it is this Government—acting as a coalition, to be perfectly fair—who have raised the tax threshold, which makes a massive difference to the pennies and pounds in the pockets of people earning a living wage or a minimum wage. That is the first direct impact. Clearly, there is a legitimate and correct debate about tax credits and how one takes them forward. I will leave others to discuss that in more detail, although I did set out my views on that in fairly lengthy detail in an article for the New Statesman in July 2013.

[Stephen Timms (East Ham) (Lab)]

I enjoyed reading that article, in which I think the hon. Gentleman described himself as an old-fashioned left winger. I think he would acknowledge that the advantages of an increase in the tax thresholds he describes are significantly undermined for people on the lowest incomes by the fact that tax credits are withdrawn to such a large extent.

[Guy Opperman]

I am delighted that the right hon. Gentleman, who sits on the Opposition Front Bench, is taking advice and instruction from me, a humble Back Bencher in this House since only 2010, but I take his point. The Government clearly need to address how taxing the individual is dealt with to avoid the problems he identifies so eloquently. I do not think it is quite as simple as he sets out. I accept and endorse the approach of the Chancellor: I think the fundamental is the tax threshold and then how we deal with tax credits. The harsh reality, as the right hon. Gentleman will know from the article he read, is that we have the bizarre situation where the Government step in and provide tax credits to the tune of approximately £4 billion for a variety of individuals when they should be encouraging an increase in wages and taking away tax. I will, however, leave that debate for another day.

We can provide local leadership. I am proud to wear the badge of the Living Wage Foundation, and I am a living wage employer in the House of Commons. I would like the foundation to accredit MPs who pay the living wage in order to incentivise us not only to talk the talk but to walk the walk. In addition, particularly in living wage week, I would urge all Members, if they have not done so already, to visit the living wage employers in their constituencies. I have met several of mine.

My hon. Friend the Member for Aberconwy (Guto Bebb) asked about small employers, particularly in rural locations, but, as is well known, the Federation of Small Businesses supports payment of the living wage on a voluntary basis. I can give some local examples. Aquila Housing, in Gateshead, and several churches in my constituency have shown the benefits, and Mike Joslin, an employer in the north-east and across the country, would eloquently set out the benefit it has brought to his relatively small business. However, my best example is the fine coffee shop Tea and Tipple, in Corbridge, which has barely three or four members of staff. When the snows fell—they fall through to May in Northumberland—his staff fought through the snow to get to work and open the coffee shop. There was clearly a sense of camaraderie, loyalty and commitment to the business that he might not have seen had he not been a living wage employer. He went the extra mile for his staff, and they went the extra mile for him.

Of course, we should be pushing the large employers too. Today, I met Mike Kelly of KPMG, and the human resources directors of companies such as Barclays. We need to ask the large employers in our cities and regions why they are not living wage employers. When KPMG did the transfer in 2005-06, it found that approximately 700 members of staff were not being paid the living wage, but when it compared the turnover of non-living wage staff with that of living wage staff, it found that the turnover dropped from 47% to 24% in one year.

In my New Statesman article, I cited the example of Costco. Craig Jelinek, its chief executive, who pays the living wage in America, said:

“We know it’s a lot more profitable in the long term to minimise employee turnover and maximise employee productivity, commitment and loyalty.”

I think he is right. Last year, when I spoke to Dominic Johnson, Barclays’ HR director, he was clear that it made sense for business.

When I go to my local Barclays in Hexham or any other branch, I am told that when cleaning staff are paid the living wage—traditionally it is the cleaning staff who slip through the net—capitalism takes over and, market forces being what they are, everyone wants to be a cleaner for Barclays, staff turnover drops through the floor, everyone feels much more valued and the offices are cleaned faster. Bizarrely, therefore, paying people more ends up costing the business less, and the quality of the product—the cleanliness of the offices—is improved.

There are, then, examples from big businesses and small businesses, and I am pleased that the public sector and the various Government Departments are leading the way. Some are quick to criticise Departments for not moving quickly enough, but it is extraordinarily difficult for some—the NHS, for example, has a vast array of subcontractors and private finance initiative contracts—to change.

But if I can move on, in the limited time we have, to allow others to speak—

Church of England (Women Bishops)

Debate between Guy Opperman and Stephen Timms

Wednesday 12th December 2012 Commons Chamber

[Guy Opperman]

I am happy to take that guidance and clarification, because some people will have interpreted some of our debates and the questions that have been asked over the past month or so as giving the impression that we wish to get involved, rather than allowing the Church itself to make those decisions. I endorse entirely my hon. Friend’s point that the Church has bravely taken the step to expedite matters as fast as possible. Tomorrow, some of us will meet Bishop Justin Welby, who I understand is anxious to resolve the matter as quickly and efficaciously as possible.

It is right that we discuss this issue. We should take this opportunity to celebrate the role of women in the Church. It is patently obvious in my constituency that their presence has transformed the Church and improved it immeasurably. The Church is much more open and is much enlivened by the presence of females leading the congregation. That can only be a good thing.

[Stephen Timms (East Ham) (Lab)]

I broadly agree with the hon. Gentleman’s argument that it would be better if the Church resolved this matter itself, but does he not accept that there will be limitations on that, given, for example, that there is currently a bloc of Members in the other place, all of whom happen to be men? There is a limit to how long that can continue.

[Guy Opperman]

I would go further. I see it as the natural progression from this debate that there will be women bishops, that there will be women bishops in the other place and, ultimately, that there is the potential for women archbishops, although I have no doubt that that will not happen speedily. I endorse what the right hon. Gentleman says and he moves me on to my next point, which is that there cannot be partial equality. Eventually, equality must be total. In that respect, what goes on in the other place must follow what is taking place in this debate.

As one of my female priests put it to me, the Church is not actually about the House of Laity, but about the work that it does locally in its parishes. That is the most important part of its work. In my constituency and across Northumberland, I am certain that it is providing a fantastic service. Although I may have been a lapsed sinner in respect of the vices of horse racing, bookmaking and being a poor jockey, I am happy to now be in the right place.

Social Security

Debate between Guy Opperman and Stephen Timms

Thursday 17th February 2011 Commons Chamber

[Stephen Timms]

The whole country eagerly awaits the next Labour party manifesto, but I must urge the hon. Lady to be patient on that front.

We welcome the 4.6% increase in the basic state pension this year, for which the order provides, in line with RPI for next year, not the triple lock or the lower CPI. But this is something of a smokescreen to cover up the true nature of the Government’s intentions, which we have been able to smoke out a little in this debate.

Why does the Minister think that CPI would be a better measure of inflation for pensioners than RPI? I am yet to be convinced of that. For pensioners and low-income families, a strong argument can be made that average inflation is more than either RPI or CPI, because of fuel and food. That point was certainly made in the representations that many of us will have received in recent weeks. In opening the debate, the Minister mentioned the views of the Royal Statistical Society. In its letter to my hon. Friend the Member for Leeds West, it said:

“while the consumer price index (CPI) is acceptable for macroeconomic purposes and for international comparisons within the EU we do not believe its coverage is generally appropriate for inflation compensation purposes”.

That looks like a strong criticism by the society.

[Guy Opperman (Hexham) (Con)]

When answering the question asked by my hon. Friend the Member for Poole (Mr Syms), you said you would—

[Guy Opperman]

The right hon. Gentleman mentioned “a period of time”. How long would that be?

[Stephen Timms]

If that were the proposition, we would be happy to debate it and consider it, and perhaps work with the Government on it. Sadly, that proposition has not been made. The proposition before the House is that the change should be made for ever, and that is what I object to. It is not just me: the Civil Service Pensioners Alliance—