Access to Pension Credit

Jack Dromey Excerpts

Wednesday 24th July 2019 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Ms Buck. The people who built Britain are entitled to expect but the best in retirement. As my hon. Friend the Member for Merthyr Tydfil and Rhymney (Gerald Jones) put it, they paid in throughout their lives in the expectation that they would be supported in the twilight of their years. The sense of grievance was brilliantly brought to life by the outstanding speech given by my hon. Friend the Member for Ogmore (Chris Elmore). I pay tribute to him for securing this debate and for everything that he is doing.

Let us look at the history of pensioner poverty. In 1994-95, 28% of pensioners lived in poverty. That fell to 13% in 2011-12 as a consequence of action taken by a Labour Government: a fall achieved by offering extra help for poorer pensioners. However, that progress has been slammed into reverse, partly because of the chaos over pension credit, but also because of the changes to welfare policy. Pensioner poverty is now rising—back to 16% in 2017—suggesting that the previous progress has indeed been slammed into reverse. The sense of grievance about that was encapsulated by the excellent contribution from my hon. Friend the Member for Newport West (Ruth Jones).

Some 14 million people now live in poverty in the UK—over one in five of the population—and they include 1.9 million pensioners. Reference was made to the excellent work done by Independent Age. I pay tribute to that remarkable organisation, which found that a more than a million pensioner households across Great Britain are forced to live in poverty owing to the Government’s failure to act on pension credit—these are the pensioner households missing out, or PHoMOs. Since the last general election, that has meant that the Government have held on to a staggering £7 billion—£3.5 billion each year—in unclaimed pension credit that should have gone to pensioners, a figure that will increase to a staggering £17 billion by 2022, equating to £10 million every day.

That is why my hon. Friend the Member for Glasgow North East (Mr Sweeney) was absolutely right to point to the sense of anger at the situation. His is an organisation called Alive and Kicking and mine is called Elders with Attitude, but the message is the same. In fact, I have their T-shirt.

Getting pension credit is all the more important now because of what is happening with TV licences, about which I will say more later on. Forgive me if I stress once again that, as an initiative, pension credit was a landmark achievement of the last Labour Government. They cut pensioner poverty consistently, and at the heart of that achievement was the strategy relating to pension credit, but it has been slammed into reverse.

As hon. Members will know, the origin of pension credit was as an income-related benefit specifically designed to lift pensioners out of poverty. Introduced in 2003, it was created to ensure that all older people receive a minimum amount of income and has played a major role over the years in the reduction of pensioner poverty, until now. It is all the more important that pension credit is paid and that the people who deserve it get it.

On the one hand, there is a stereotype that all older people own their own homes, but, sadly, this is against a background of decreasing home ownership and rising rents in the private sector. Independent Age’s research shows that more than half a million older people in England now live in private rented accommodation, and that more than half of the 330,000 pensioners who have moved into poverty since 2013 are either private or social renters. Pension credit is all the more important for them.

On the other hand, pension credit is essential—for example, to pay for transport costs. Particularly in rural areas and for people with health or mobility issues, a car or taxi can be the only way to reach necessary services. Pension credit can also mean that older people are able to take part in social activities, reducing the risk of loneliness.

Pension credit is important for all those reasons and an additional one, which my hon. Friend the Member for Leeds North West (Alex Sobel) mentioned: it is a gateway to accessing other benefits. People missing out on pension credit could also be losing out on up to £7,000 a year in additional help. Pension credit can act as a gateway to housing benefit up to £5,020, to council tax support up to £1,670, to the warm home discount at £140, and to NHS costs, including dental treatment or eye care, up to £296. So it is all the more important that people who are entitled to pension credit get it.

To add insult to injury, it was announced earlier this month that free TV licences for the over-75s will now be means-tested. Several hon. Members have referred to that, and rightly so. The Library’s research shows that more than 3 million people will be affected by that move. It is estimated that 1.3 million poorer over-75s are eligible for pension credit but do not claim it. They will lose their free TV licences due to the proposal to tie licences to pension credit.

It is also estimated that 1.6 million pensioners living alone will lose their free TV licences in a means-tested system. That is absolutely wrong. In my experience, television can indeed be a friend to a lonely pensioner. The Tories’ idea to increase take-up of pension credit is, as is often mentioned, an “online toolkit”, but the problem is that its track record of achievement is lamentable. Pension credit is an online toolkit, but that has shown drastically declining usage since 2014. More than half of over-75s in the UK say that they have not used the internet in the past three months, and the amount of people accessing the toolkit fell by 84% between 2014 and 2018, with only 2,078 people using it last year. The fact that more than 1 million households in the UK are not claiming the pension credit to which they are entitled shows that the Government’s efforts simply are not working. It was therefore right that my hon. Friend the Member for Ogmore secured this debate to focus on that.

I will refer to one other outrage, to be frank: the changes to pension credit slipped through on the same night as the first Brexit meaningful vote: from 15 May, new pensioners whose partners are younger than the state retirement age of 65 may no longer claim a means-tested top-up called pension credit. Instead, they will be forced to claim the much less generous universal credit alongside their younger partner. The couple rate of universal credit is £114.81 a week, compared with £255.25 a week for a couple on pension credit. That amounts to a potential loss of £7,320 a year—an absolute outrage.

The crucial question is what the Government will now do about that. I strongly support my hon. Friend’s recommendations on targets and his call to hear the Government’s action plan to right an undoubted wrong. As my hon. Friend the Member for Cardiff North (Anna McMorrin) said, the aims set out by Independent Age are eminently achievable over a five-year period, with targets being incrementally increased to get us to a position where 100% of those entitled to pension credit actually get it.

I will close with the point that I started with. We have a sacred duty to those who built this country. They endured so much not only in the world of work, but in conflict defending this country. The scale of the problems they had to overcome throughout their lives is sometimes unimaginable. They paid in throughout their lives. In retirement, they expected to be looked after for the rest of their years. It is absolutely wrong that pension credit is not working and, as a consequence, hundreds of thousands if not millions of pensioners are not getting that to which they are entitled. I say to the Government in all earnestness: Ministers should be ashamed of that.

--- Later in debate ---

[Guy Opperman]

I will not give way again, because I have a lot of points to cover.

I want to deal with the point that the hon. Lady and other Members made about the state pension age increase. The hon. Member for Birmingham, Erdington (Jack Dromey) is married to a former Minister, now Mother of House, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), who was in favour of the state pension age in the dim distant past in 1997, when she was Secretary of State for Work and Pensions. Hon. Members will understand that I am the latest in a long line of Ministers who have continued the policy of successive Governments to increase the state pension age by reason of equality legislation and the increase in life expectancy, which is light years away from the three score years and ten of our grandparents.

The hon. Member for North Ayrshire and Arran (Patricia Gibson) raised the situation of the Scottish Government in answer to my hon. Friend the Member for Cheltenham; I refer the House to the letter of 22 June 2017 from my opposite number Jeane Freeman to my hon. Friend the Member for Watford (Richard Harrington), in which she explains the section 26, 28 and 24 powers under the Scotland Act 1998, which provide opportunities for the Scottish Government to intervene should they so choose, particularly in respect of the section 26 discretionary payments.

I now turn to the issue of the BBC. Its decision to limit free TV licences only to those aged 75 and over and in receipt of pension credit is disappointing. We expected it to continue the concession, and we want it to look at other options to help more elderly people who rely on TV to stay connected to the world. The BBC has indicated that it will write to all existing TV licence holders, advising them of how the new policy will work and when they need to act.

The Government look forward to hearing more from the BBC about its detailed plans for communicating and implementing that change. That is clearly a matter for the Department for Digital, Culture, Media and Sport; Government officials continue to engage with the BBC, but it would be wrong not to point out that in 2015, when the decision was made, the director-general at the time stated:

“I think we have a deal here which is a strong deal for the BBC. It gives us financial stability...The government’s decision here to put the cost of the over-75s on us has been more than matched by the deal coming back for the BBC…I think being in control of our income…is a very grown-up response for the BBC and a grown-up response for any organisation”.

The House can draw its own conclusions from what Lord Hall said in 2015 and the consequent decision that it has made. I hope that the BBC will think again once it has reflected on the comments that it made in 2015 and the nature of the pushback that there has been.

[Jack Dromey]

Is the Minister seriously suggesting that the Government bear no responsibility whatsoever for the BBC’s decision? Does that not sound like the Government are washing their hands of responsibility?

Oral Answers to Questions

Jack Dromey Excerpts

Monday 1st July 2019 Commons Chamber

[Mr Speaker]

The hon. Member for Birmingham, Erdington (Jack Dromey), who is a keen young pup in the House, is perched as though he is about to expatiate. However, I had him down as coming in on the next question. [Interruption.] He wishes to expatiate now. Well, our delight is unanimous.

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

The pensioners who built Britain deserve nothing but the best in retirement, yet there are 1 million households in poverty because, according to research conducted by Independent Age, the Government have held on to a staggering £7 billion since the general election in unclaimed pension credit, increasing to over £17 billion by 2022— £10 million a day. What has been the Government’s response? An online toolkit used by 2,000 people last year. How do the Government begin to justify plunging 1 million pensioners into poverty? What will they do to ensure that all pensioners get the security and dignity they deserve?

[Guy Opperman]

The hon. Gentleman will know that, actually, pension credit applications are up significantly. It is also the case that successive Governments have attempted to promote pension credit. I share the frustration of colleagues that it is not higher than it presently is, but I want to emphasise that the DWP uses a variety of means to communicate and we urge all pensioners to apply for pension credit through the usual manner, whether through trusted third parties, jobcentres, local authorities or the like.

Oral Answers to Questions

Jack Dromey Excerpts

Monday 13th May 2019 Commons Chamber

[Guy Opperman]

My hon. Friend raises several points, but unquestionably the situation in relation to overseas pensions has been consistently enforced by every Government of every persuasion since the second world war, and there is no anticipation of changing that.

Of course, we will ensure that individual members of DWP staff up and down the country are able to go to their line managers and then to Members of Parliament or individual members of the Government on an ongoing basis.

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

Pensioner poverty halved under the most recent Labour Government; it has increased by 400,000 under this Government, with one in six pensioners living in poverty. Having broken one manifesto pledge on TV licences, Ministers are now breaking a second one, as mixed-aged couples are no longer being paid pension credit if one of them is under retirement age. How can the Government begin to justify the breaking of a solemn promise, particularly in circumstances where it will cost the couple concerned a staggering £7,320 a year?

[Guy Opperman]

The hon. Gentleman will be aware that the overall trend in the percentage of pensioners in poverty is a dramatic fall over several decades. The rates of material deprivation for pensioners are at a record low at this stage.

On the hon. Gentleman’s second point, couples who currently receive pension credit or housing benefit will not be affected by the change, as long as they remain entitled to either benefit. Claimants who would be eligible for pension credit or housing benefit for pensioners under the current rules but have not claimed before 15 May have until 13 August to make a backdated claim.

[Jack Dromey]

From Carillion to BHS, workers’ pensions are being put at risk by bad bosses, sloppy practices and poor enforcement. We have campaigned against that injustice. The defined benefit White Paper has proposed stronger powers and penalties. Ministers have promised to introduce such legislation, which we would support. Will the Government keep at least this promise so that we can send out a joint message that says, “Never again a Philip Green”?

[Guy Opperman]

We are agreed across the House that there must be action on defined benefits so that we stop what took place with Philip Green, and to address that the Secretary of State has brought forward proposals in the defined benefit White Paper. We propose to bring forward a Bill, when parliamentary time allows, to address the DB White Paper, collective defined contributions, Dashboard and a number of other matters, and I look forward to working with the hon. Gentleman on a cross-party basis to make that happen.

Oral Answers to Questions

Jack Dromey Excerpts

Monday 18th March 2019 Commons Chamber

[Guy Opperman]

If the hon. Lady sends that case to the Department, I and the Minister concerned will look into it specifically.

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

In legislating to allow 140,000 Royal Mail workers to benefit from the CDC scheme, will the Government also legislate as soon as possible to compel employer contribution with the pensions dashboard and to strengthen powers and criminal penalties available to the regulator, to provide a better pension for tens of thousands of workers, to help all workers to plan for their retirement, to protect workers and to send an unmistakeable message to the Philip Greens of this world that those who rob workers of their pension security will end up in the dock?

[Guy Opperman]

The hon. Gentleman and I are united in our desire for a Bill that addresses collective defined-contribution, compulsion on dashboards and the defined-benefit reforms that we all agree are both required and necessary. I am confident that with a constructive, cross-party approach, over the next few months, with the hon. Gentleman and other political parties, we can introduce those measures very soon.

Automatic Enrolment: Lower Earnings Limit

Jack Dromey Excerpts

Tuesday 12th March 2019 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Sir Gary.

I pay tribute to the hon. Member for Paisley and Renfrewshire South (Mhairi Black) for initiating the debate. I strongly agree with her that however central Brexit is to the future of our country, we run the risk of issues of immense importance and concern to the general public not being properly addressed here. I therefore commend her for bringing forward the debate.

The Minister will forgive me if I say what I have said on previous occasions: auto-enrolment is a testament to the previous Labour Government. I played a bit part in the process by chairing the policy commission that led to the appointment of Adair Turner. It was his genius and the team he brought together that ultimately produced the proposals for auto-enrolment. That was at a time when there were great strengths in the pensions system, such as many more defined-benefit schemes than, sadly, there are now. However, it was clear then, as it is now, that millions of people were simply not covered, or not covered adequately, by the existing pensions arrangements, so auto-enrolment was an important step in the right direction.

I welcome the fact that there has been continuity of policy. There is also cross-party consensus about the importance of auto-enrolment and of building on it at the next stages. There is no question but that a better pension landscape has been created; 10 million more workers are estimated to be newly saving, or saving more as a result of auto-enrolment into master trusts. That has led to an additional £17 billion and rising of pension savings put away, mostly by lower-income workers. We welcome the Government’s direction of travel, yet to be delivered on in practice, for those who are 18 and over; but I support the representations made that however welcome the direction of travel, it has to be acted on urgently at the next stages. I, too, look forward to the Minister’s response.

Although auto-enrolment is a landmark achievement, it is not a perfect system. Over and above the issue of the age threshold, there are other issues that crucially need addressing. First, the threshold for which workers are automatically enrolled is simply too high. In previous debates we have referred to the statistics, which speak for themselves. Department for Work and Pensions statistics show that 37% of female workers, 33% of workers with a disability and 28% of black and minority ethnic workers are not eligible for master trust saving through auto-enrolment.

Secondly, auto-enrolment does not cover the self-employed or workers in the gig economy. The Government are undertaking pilot projects, and we support that crucial initiative. Sadly, because of the nature of work as a whole, female workers, workers with disabilities, and black, Asian and minority ethnic workers are over-represented among low earners, the self-employed, those with multiple jobs and carers.

On the gig economy, we strongly believe in, have argued for and will continue to press for the redefinition of those employed as workers, to make them eligible for auto-enrolment. The problem is that self-employment and bogus self-employment are increasingly prominent in the modern economy. Figures released last year suggest that the number of self-employed workers in the UK rose by 23% between 2007 and 2017, from 3.8 million to 4.7 million. That represents a shift in the nature of the world of work and the way in which the British economy works. The self-employed represent about 15% of the workforce, and 91% of businesses say that they hire contractors. Of course, there are many people for whom self-employment is their employment of choice, and who welcome it, but too many are increasingly conscripted into self-employment against their will, with no alternative. That is why it is so important that we change the definition of employee.

To return to pensions, the latest figures from the Office for National Statistics show that only 19% of the self-employed are saving into a personal pension. The Government need to address that as a matter of urgency. The pilot projects are a step in the right direction, but the sooner they are completed and action is taken, the better. It is wrong to combine decreased security in the world of work with decreased security in retirement as a consequence of bogus self-employment.

The Minister mentioned that more workers have access to a pension pot; that is welcome, but the public’s awareness of and knowledge about their pensions need to increase at the same time. He made reference to the Single Financial Guidance Body, established as a consequence of the Act of Parliament passed last year. That was an important step in the right direction. The SFGB is rightly tasked with ensuring that more of the public are properly educated about their financial issues, including their pensions. Crucially, the new body needs to be adequately resourced, but it is a strong step in the right direction. The almost parallel move towards a pensions dashboard is welcome, but urgent action must be taken to bring it into being, although the steps thus far are welcome.

The hon. Members for Paisley and Renfrewshire South, for Lanark and Hamilton East (Angela Crawley) and for Airdrie and Shotts (Neil Gray) spoke about the lower earnings figure; we first raised that important issue in Parliament back in 2014. We proposed lowering the automatic enrolment earnings trigger to the same limit as the threshold for paying national insurance—£5,773 at the time. That would have brought 1.5 million more workers into saving for their retirement. Two thirds of the extra savers would have been women; that would have gone a long way to tackling the 37% of women who are not automatically enrolled into saving.

Not bringing lower earning workers into auto-enrolment risks leaving a ticking time bomb for the state to deal with when those workers retire. Scrapping or lowering the lower earnings limit for auto-enrolment and reducing the minimum age to 18 will introduce many more savers into auto-enrolment, and will welcome workers into saving for their pension as soon as they start work. The earnings trigger and the lower limit are crucial issues, and we hope that the Government will act on them. We look forward to the Minister’s response.

In conclusion, a number of issues have arisen from this debate. Auto-enrolment is a strong step in the right direction, but we always ought to see such steps as the first, and not the last, word.

Oral Answers to Questions

Jack Dromey Excerpts

Monday 11th February 2019 Commons Chamber

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

That more are in work is welcome. That one in eight are the working poor, with working parents struggling to clothe and feed their children, is shameful. Does the Secretary of State recognise that working poverty consigns millions to a hand-to-mouth existence and, because people fall beneath the threshold for auto-enrolment, working poverty is all too often followed by a retirement in poverty? That cannot be right.

[Justin Tomlinson]

Auto-enrolment is a success, with 10 million new savers, and we intend to lower the starting age from 22 to 18 and remove the lower earnings limit.

Pensions Dashboard

Jack Dromey Excerpts

Wednesday 6th February 2019 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Ms Ryan. I congratulate the hon. Member for Hendon (Dr Offord) on raising this crucial debate at a crucial moment. To state the blindingly obvious, pensions are about a decent income in retirement, and ensuring security and dignity. To achieve those objectives, it is crucial that people know precisely what they have saved thus far, and what they need to do at the next stages to ensure that they are saving enough to enjoy a decent standard of living, and security and dignity in retirement.

The pensions landscape has been troubled, most recently through scandals around British Steel. My hon. Friend the Member for Blaenau Gwent (Nick Smith) was absolutely right. I will never forget the story of the shift supervisor in south Wales who wept as he told how he had been mis-sold a bad deal. Not only would he suffer as a consequence, but the 20 people he was responsible for supervising all followed his lead and all stood to lose. Pension cold-calling was an utter outrage. I will come back to that in a moment.

Are there still problems? Yes, there are. However, it is also right that we record that welcome progress is being made, cross-party, on four fronts. First, progress is being made on auto-enrolment. The Minister has heard me say before that I was proud to chair the policy discussions when Labour, then in government, appointed Adair Turner to carry out his inquiry, leading to the establishment of auto-enrolment. I welcome the continuity of that policy under this Government.

Is auto-enrolment perfect? The hon. Member for Hendon raised this issue earlier. No, it is not. There remain problems. Because of the threshold, 37% of female workers, 33% of workers with a disability and 28% of black, Asian and ethnic minority workers do not qualify. Auto-enrolment does not cover the self-employed or workers in the gig economy. Having said that, 10 million more people are now saving for their pension, and that is a thoroughly good thing.

Secondly, the Act that the Minister and I took through the House last year, which established the single financial guidance body and banned cold-calling, was a welcome step in the right direction. Thirdly—again, we have been working cross-party on this—the ground-breaking notion of collective defined contribution schemes marks significant progress. The historic agreement reached by Royal Mail and the Communication Workers Union, covering 143,000 workers, delivered a pension outcome infinitely better than if the workers concerned had had to fall back on DC schemes.

Fourthly, the dashboard is a sign of progress. As the hon. Member for Clacton (Giles Watling) said, the dashboard is important, because to enjoy a decent income in retirement, one needs to know what one needs to save. There have been some fascinating initiatives taken within the industry. NOW: Pensions provided three examples for consumers: “If you want an old banger for the rest of your life in retirement, choose this one; if you want to buy a new car in five to 10 years’ time, choose this one; if you want to go somewhere exotic on holiday, choose this one.” That is very interesting information, which helps to guide people, so that they know what they need to save. Crucially, in the first place, they need to know what they are entitled to, so the dashboard is absolutely key.

The hon. Member for East Renfrewshire (Paul Masterton) was right when he said that there are billions of pounds locked away and unclaimed, which people are entitled to. Hopefully, the dashboard will help to overcome that problem, too. There is no question but that this is a welcome step in the right direction. I stress that we stand ready to work with the Government to give effect to primary legislation as quickly as possible. Yesterday, we spoke about the importance of progress on CDC pensions. The sooner a pensions Bill can be brought forward that focuses on those two areas in particular, the better. While the devil is in the detail, there is such substantial cross-party agreement that we want to get this legislated on, acted on, and taken to the next stage.

The dashboard is a welcome step in the right direction. There has been a great degree of dialogue and an extensive consultation, which is now closed. Some useful points were made in that consultation. The plans for the SFGB-run dashboard are welcome. I agree with the hon. Member for Strangford (Jim Shannon) that a non-commercial approach would be preferable. Indeed, one dashboard would be preferable. Against the background of what the Government are proposing, will legislation to compel providers to supply data be in place before the SFGB-run dashboard is live? That is key to ensuring that savers are not given a half-baked product at launch. Will the regulations that compel providers to comply cover all dashboards, or just the SFGB one? When will the state pension data be available to view on the dashboard? Will the Minister reassure us about the point made by the hon. Member for East Renfrewshire in relation to data security?

In conclusion, this is a historic and welcome step in the right direction. The Government need to listen to the concerns that have been raised, including in the consultative process, in order to get this right. The sooner that we can move forward to legislate and bring the dashboard into being, the better.

Social Security

Jack Dromey Excerpts

Monday 4th February 2019 Commons Chamber

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

First, in relation to the Guaranteed Minimum Pensions Increase Order 2019, we note it. Secondly, in relation to the Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2019, I would like to speak to it briefly.

I am the first to accept that, as the Minister has said, there has been cross-party support over the past 10 years for auto-enrolment, but he will forgive me a commercial for the last Labour Government. It was the last Labour Government who commissioned the 2006 Adair Turner review—I actually chaired some of the policy discussions that led to that decision. The review produced an excellent report, and I was one of those who was pleased indeed that our Government acted on it. However, the success of auto-enrolment subsequently could not have been achieved had it not been for the cross-party approach to which the Minister referred.

There is no question but that auto-enrolment has led to a significantly better workplace pensions landscape, with an additional 10 million workers estimated to be newly saving or saving more as a result of auto-enrolment into master trusts. That has led now to almost £20 billion of pension saving, mostly by low-income workers. The Opposition also welcomed the moves by the Government to reduce the age of eligibility, which was an important step in the right direction.

However, for all the immense benefits attached to auto-enrolment, it is not a perfect system, and there are many issues that need to be acted on at the next stage if we are to make the pensions landscape better. First, the threshold at which workers are automatically enrolled is too high. According to the latest figures from the Department for Work and Pensions, 37% of female workers, 33% of workers with a disability and 28% of black and minority ethnic workers are not eligible for master trust saving through auto-enrolment.

Secondly, auto-enrolment does not cover the self-employed or workers in the gig economy. It is welcome that the Government are now taking steps in relation to pilot projects to seek to identify the problems and overcome them. It is particularly welcome that, as part of that, they are including at least one or maybe two joint initiatives with trade unions representing workers in sectors where there are large numbers of self-employed.

Thirdly, 8% cannot be the summit of our ambitions—of that there is no doubt. Labour commenced down this path when in government, and this Government have done things subsequently, so of course we have moved step by step. The Minister was right to say that, as we reach 8%, we need to take stock of where we go from there. We will need to build on that at the next stages, and, commensurate with getting the balance right, we will need, dare I say it, more of an emphasis on employer contribution, although employee contributions will of course continue to be crucial as well.

I have just one final point. I was grateful that the hon. Member for East Renfrewshire (Paul Masterton) raised the matter of CDC. A wider point in relation to auto-enrolment is that it has been a positive move towards many more workers saving. We have always said that we do not want, in any way, to threaten good DB schemes, and we always defend good DB schemes first and foremost, but I am afraid that the direction of travel on that has been depressing in recent years. If one falls back on a defined contribution arrangement, however, the problem is, all too often, the inadequacy of such arrangements. The hon. Gentleman was therefore right that the agreement reached by Royal Mail and the Communication Workers Union was a significant breakthrough. I pay tribute to them, because it is a groundbreaking agreement, which covers in excess of 140,000 workers.

I also welcome the Government’s preparedness, having consulted, to legislate. The Opposition will certainly work with the Government—on other issues, we may have differences, but on this we will work with them—to give effect to this groundbreaking agreement as soon as possible. That is not least because it will offer significantly better savings and a significantly better standard of living in retirement than would be the case if the workers concerned fell back on simple DC schemes. That, for us, is a particular landmark. I confirm that the Opposition stand ready, whenever the Government are ready, to bring forward the necessary legislation in this House. Some 143,000 workers will benefit, so the sooner we can introduce the legislation, the better.

State Pension Age: Women

Jack Dromey Excerpts

Thursday 31st January 2019 Commons Chamber

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

First, let me congratulate my hon. Friend on securing this debate. There are 30,000 WASPI women in Birmingham and they are Birmingham’s best. They helped Birmingham and Britain, and they deserve justice and not to have their plans for retirement completely jeopardised by the Government’s shameful behaviour thus far. Does she agree not only that they deserve justice in terms of transitional arrangements, but that everyone should do everything they can, and that if Andy Burnham can introduce free fares in Greater Manchester for WASPI women, Andy Street can do the same in the west midlands?

[Tonia Antoniazzi]

My hon. Friend is absolutely spot on. Loneliness and mobility are big issues for all people. I feel very strongly about loneliness in particular. Women need to be mobile, whether to continue work or to achieve further training. As my hon. Friend points out, if that is the case in Manchester, it should also be the case in the west midlands.

As I have said, the campaign is not about scrapping the equalisation of the state pension age, but about the way in which changes were implemented. It was unfair, and women are now suffering. Letters about pension age changes were only sent out 14 years after the Pensions Act 1995. Those 14 years would have allowed women to make alternative plans. Having a year’s notice or five years’ notice—

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

Jack Dromey Excerpts

Wednesday 16th January 2019 General Committees

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

It is a pleasure to serve under your chairmanship, Mr Robertson. The statutory instrument, which is not objectionable, makes technical changes to pensions legislation to ensure that retained EU law continues to operate as it has previously, but with us outside the EU.

However, we have to raise certain concerns relating to the prospect of no deal in respect of investing, including whether passporting rights will continue regardless. The biggest impact could be felt at the next stages by those in defined contribution schemes, whose pension is dependent on market value. For some the impact could be very serious indeed.

Aside from the likely chaos and economic damage, the technical implications of no deal for pension fund investing could impact asset values. First, as a member state of the EU, we can operate within the single market, which gives UK investors access to other members states’ financial services via what is known as the passport arrangement. Secondly, that is because services, particularly financial services, are covered by the general agreement on trade in services, which is the first and only set of multilateral rules governing international trade in services, and which is inferior to single market operations. Thirdly, under the GATS, the UK’s financial services sector would lose a number of benefits it currently enjoys under EU law, especially passporting rights, resulting from the financial services single market.

That is why discussions about future trade relationships with the European Union have centred on an equivalence regime, which means terms of trade equivalent to those we enjoy in the single market. Fund managers and banks can get around no deal by establishing and operating an arm in the EU, and many already have. It is likely that the EU will allow investing between the UK and the single market to continue to ensure that there is no significant disruption to the banking and investing sectors of the economy.

Significant issues then arise for asset managers, who manage 98% of our pension assets, in the Brexit negotiations. Those issues include the continued ability to delegate management of European funds to UK managers so that the UK can continue to manage assets for clients and funds from across the EU; a clear timetable for UK withdrawal so that asset managers can plan effectively; and whether the UK Government will maintain broad regulatory equivalence with its EU counterparts in future so that, whatever the ultimate shape of Brexit, investors on both sides can maintain confidence in the asset management regime in the UK.

No deal presents significant risks for all pension fund investors and, more significantly, for defined contribution scheme members who, by the very nature of those arrangements, bear all the risks of investing. Falls in asset value reduce the value of the individual’s investment pot. Those who are in retirement and who are drawing down money from their pots could see them reduced to insufficient levels.

Because financial services are covered by World Trade Organisation rules, technically, continued trading and management of pension assets would cease between the UK and the EU member states, because the UK would become a third country with no passporting rights. A no deal would have a significant impact on relationships with the EU and would raise significant questions about the nature of any future trading relationship for financial services. In those circumstances, we would be relying on the EU to maintain equivalence all through the period post no deal only on the basis of grace and favour, due to the severe impact on the EU member states’ financial services sectors and the fact that their own pension funds use UK asset managers, who manage £2.5 trillion of clients’ money from outside the UK.

UK financial institutions could establish subsidiaries and apply for national licensing in the EU27. The host countries’ authorities would then supervise their EU27 branches in matters of reorganisation and winding up. National licensing schemes are, however, more limited, complex and costly because of the differences between them. Alternatively, the UK could ask the Commission for equivalence treatment. However, the equivalence regime is very limited in its scope and can be withdrawn at any time.

In conclusion, the regulations before us are not in themselves objectionable, but there are some very significant issues raised for pensions more generally, and for defined contribution schemes in particular.