Disability Benefits and Social Care

Jim Shannon Excerpts

Wednesday 20th June 2012 Commons Chamber

[Maria Miller]

I do not think that it can be a false economy to make a change that will see the end of £600 million going out in overpayments. The change is long overdue. We need a benefit that supports disabled people in a flexible, non-means tested way that is not related to their work status, with a firmer gateway to ensure that we get the money to the people who need it. That will mean that we are not left in the situation we are in now, where 70% of people have a benefit for life and there is no inbuilt way of reassessing that. We need to see an end to that inaccurate use of much-needed money.

[Jim Shannon (Strangford) (DUP)]

Will the Minister give way?

[Maria Miller]

If the hon. Gentleman will forgive me, I will make a little progress. I want to move on to an issue that I think he will find very important: the role of universal credit in our commitment to supporting disabled people. We know that universal credit is a vital part of how we will support disabled people in the future, delivering a welfare system that people finally understand.

Under the current system, some people face losing up to 96p in every pound they earn through tax and benefit withdrawals. There are seven different components associated with disability, paid at different rates with different qualifying conditions. It is little wonder that disabled people have been put off moving into work for fear of losing out under the benefit system. Under universal credit, support for the most severely disabled will remain unconditional, as it rightly should, but we will also see a more generous system of earnings disregards for disabled people and carers. When people are able to work, or choose to work in spite of their disability or health condition, work will pay. The Labour party had 13 years to make those changes, but again it dithered and failed to make the right decisions for disabled people. I hope that the hon. Member for Strangford (Jim Shannon) agrees that it would have been better if Labour had voted with us on welfare reform so that we had strong support for these important reforms.

[Jim Shannon]

May I cast the hon. Lady’s mind back to the issue of the appeals process, particularly for those on ESA? Can she assure us, and me as the Member for Strangford, that when people attend ESA appeals those on the tribunal will totally understand the issues of mental, intellectual and cognitive behaviour? I perceive that they do not and that because they do not a great many people are turned down. Is it not unusual that 40% of those who are turned down for ESA win their appeals? Perhaps that is proof of the need for change.

[Maria Miller]

The hon. Gentleman is absolutely right to bring up the challenges in ensuring that the right support is in place for people with fluctuating conditions, particularly those with mental health problems. That is why so much emphasis has been put on that in the reform of how the work capability assessment works and in other areas, too. In the reform of the DLA, we are focusing on that issue—

--- Later in debate ---

[Ms Margaret Ritchie (South Down) (SDLP)]

In supporting the Opposition’s motion, I should like to bring to the debate the perspective of Northern Ireland, where there are separate but basically parallel social security systems.

Our society owes an enormous debt to individuals and organisations that care for friends, family and loved ones. That does not just make our society richer, but in Northern Ireland alone unpaid carers are worth more than £4 billion to the local economy. However, although the Government pay lip service to the work that our voluntary sector does, they are undermining it at every turn through their welfare policies, including the new work capability assessment for employment and support allowance and the move to personal independence payments from the existing disability living allowance.

In Northern Ireland, it has been estimated that some £500 million will be removed from the welfare budget as a result of the Government’s policies. That is clearly a move designed to cut expenditure rather than a constructive reform of the benefit system. By taking away financial support and introducing more stringent qualifications for personal independence payments and the work capability assessment, the Government will take a degree of freedom away from many people. That will only increase the pressure on the thousands of carers who will be left to carry the slack on top of their already demanding role.

[Jim Shannon]

In Northern Ireland, we have more disabled people and more carers than elsewhere. Does the hon. Lady feel that the impact will be greater on people in Northern Ireland than on those in any other part of the UK?

[Ms Ritchie]

I agree, and when I was a Minister in Northern Ireland with direct responsibility for benefits, I saw every day of my working life the high proportion of people in receipt of benefits, particularly disability living allowance. That was a result of our divided and conflicted society and a legacy of the conflict itself, because we had a high proportion of people with mental illness. The new policies do not take that on board.

The Department’s subtext is clear—a presumption that many people receiving benefits do not need them. The Government claim that they are restricting the new benefit arrangements to those who need them most, but surely benefits should be granted simply to those who need them, without qualification. That is what any notion of the big society should be based on.

One of the main problems with the work capability assessment for employment and support allowance is the reasonableness of the mobility test. The test is whether a person can mobilise

“unaided by another person with or without a walking stick, manual wheelchair or other aid if such aid can reasonably be used.”

I know of constituents who have arthritis in their back, hips, legs and feet but are physically able to use a wheelchair. The test is hypothetical; even if a person has never been assessed for such a mobility aid, and such an aid has not been considered by their medical professional, they can be considered able to mobilise, despite their having a serious medical condition that would prevent them from mobilising without a wheelchair.

The incongruous element of the test is that, in many cases, a medical professional would not recommend a manual wheelchair for a condition such as arthritis, as it is a hugely life-changing and extreme intervention on someone’s mobility. Frustratingly, without the wheelchair element of the mobility test, many people with a physical illness would meet its criteria.

I am aware from constituents’ experiences at appeal tribunals that legal professionals also struggle with the lack of clarity on “reasonableness”. Such serious problems have left many facing uncertainty, which can cause severe stress to people who already face incredibly challenging circumstances.

[Jim Shannon]

I congratulate the hon. Lady on the comments she makes on behalf of those who are disabled. One issue with appeal tribunals is that doctors do not appear when they should, another is that people are asked whether they are mobile enough to get out of the building if there is a fire. If they say they cannot, they have to return home. Like me, the hon. Lady believes that those simple matters should be sorted out beforehand. Does she agree that a straightening of the appeal process is needed to make the process easier for applicants?

[Ms Ritchie]

Like me, the hon. Gentleman would agree that that is not the responsibility either of the Department for Work and Pensions in England or of the Department for Social Development in Northern Ireland; it is the responsibility of the Appeals Service in Northern Ireland. That is a separate organisation, and those questions need to be directed to it for a resolution.

The Government must acknowledge that the introduction of personal independence payments might have a different impact in Northern Ireland. Approximately 100 people per 1,000 currently receive disability living allowance, compared with 50 people per 1,000 in Britain. We simply cannot ignore the fact that Northern Ireland society is emerging, as I have said, from decades of conflict, which have left many people emotionally and physically scarred.

Northern Ireland also faces a common transition difficulty with Scotland, England and Wales. In Northern Ireland alone, some 117,000 people will have their cases reviewed on the introduction of PIPs, which will require the testing of more than 1,000 applicants a week. How will so many people be re-tested in a manner that is just, reasonable and fair? That is an enormous concern. It is especially worrying given the aforementioned fiasco of the introduction of the work capability assessments for ESA. As I have seen in my constituency, the number of successful appeals demonstrates what happens when the Government make ill-advised and poorly thought-out changes to the welfare system. I am extremely concerned that we will face exactly the same problems when PIPs are introduced.

Although it is important to pay tribute to carers this week, we must remember that they are carers for 365 days of the year. They are at the heart of our families and our society, and the Government should help them rather than introduce ill-considered and ideologically motivated welfare cuts that will do nothing more than simply increase financial stress and burdens, and many other burdens within the family and the community. I urge—even at this late hour—the Government to reconsider. The Social Democratic and Labour party firmly supports the Opposition motion.

Health and Safety Executive

Jim Shannon Excerpts

Wednesday 20th June 2012 Westminster Hall

[Meg Munn]

My hon. Friend makes an important point. That situation will be properly investigated and whatever was wrong put right, which is exactly what the Health and Safety Executive does, and does extraordinarily well. That is something of which we should all be proud.

Many of our major companies take great pride, not just in reducing accidents to a minimum but in seeking to carry out their business without any accidents at all. That is not just good for their employees but saves on business costs, making sense for everyone. Unfortunately, that approach does not extend sufficiently to those who employ drivers for a living. Astonishingly, when I first wrote to the Secretary of State for Work and Pensions about the matter, he replied that obstructive sleep apnoea in lorry drivers was not a health and safety issue. When I wrote again, he replied in more detail:

“medical fitness to drive is a matter on which the DVLA rightly takes the lead...HSE generally maintains that meeting DVLA requirements will satisfy the test of what is reasonable”.

I do not accept that meeting Driver and Vehicle Licensing Agency requirements is enough to meet the Health and Safety Executive’s aim of requiring employers to take steps to reduce risks to as low a level as is reasonably practicable. In addition to the work that the DVLA and the police do on road safety, the Health and Safety Executive has an important role to play in influencing more employers and trade union safety representatives not only to be aware of the dangers of undiagnosed sleep apnoea, but actively to encourage screening.

I suspect that the Minister will tell me that the police, the DVLA, the Department for Transport and the Vehicle and Operator Services Agency adequately ensure enforcement of the legislation, but I do not accept that. Given the cost of driving accidents, in lives and money, I ask the Minister to take this matter to her Department and look at it again.

Currently, employers have the legal responsibility, and I will continue—with, I am sure, Members such as the hon. Member for Orpington (Joseph Johnson)—to press more companies voluntarily to adopt the approach of Allied Bakeries, but the Government can make a positive change and ensure that the Health and Safety Executive’s expertise is brought to bear.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this matter to Westminster Hall. Does she feel perhaps that the findings of the report that she has presented today should be made known to the devolved Administrations, for example the Northern Ireland Assembly, where the matter is a devolved one? The findings of the report would be important for those Administrations, so that they could also bring, or enable, legislative change, to prevent such tragedies.

[Meg Munn]

The hon. Gentleman makes an important point. Nowadays, lorry drivers increasingly drive not just in their own countries but abroad, and we know that the European Union has been considering this matter. It is absolutely right that the devolved Assemblies should consider the issue in their Parliaments and ensure that they, too, address it.

Before I allow the Minister to respond, I want to make my fundamental point, which is that the Health and Safety Executive is a great body, which does a good job. It could do so much more in addressing the nearly two thirds of fatalities at work that happen not in the areas that the executive currently covers, but on the road.

My strong representation is that although other organisations, the police, the DVLA and the Department for Transport consider certain aspects of the matter, no one is doing the kind of proper forensic investigation of such accidents that would mean that information could be fed back into guidance and really begin to make a difference. The consequences of lorries crashing into people are horrific, as our constituents would testify, and I would like the Government seriously to consider the matter. I do not expect the Minister to wave her magic wand today, but I urge her to go back to her Department and have a good look at this.

Universal Credit

Jim Shannon Excerpts

Wednesday 9th May 2012 Commons Chamber

[Maria Miller]

As I was saying, the hon. Gentleman rightly picked up on the importance of the online aspect of universal credit. It is designed to be an online service, providing access and support to claimants 24 hours a day. Importantly, it will also provide the service where constituents are, as opposed to where jobcentres are.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for giving way, and I apologise for not being here for the beginning of the debate. I was at another engagement down below, and I did not realise that the Adjournment debate had started.

I feel that certain people in the middle class are going to fall into the child poverty bracket as a result of the introduction of universal credit. What assurance can the Minister give me that such people will not be adversely affected by the changes that the Government are proposing?

[Maria Miller]

I welcome the hon. Gentleman’s intervention. At the point of transition to universal credit, we want to ensure that people will continue to receive the support that they were receiving before, if there have been no changes to their circumstances. It is important for everyone to understand that, as a result of universal credit, we will be making work pay. We will ensure that more people can stay close to the labour market, which will help them not only to get out of poverty but to stay out of it. We all know that families can cycle in and out of poverty; it does not affect a static group of people. It is therefore important that we have that support in place.

I want to get back to the digital nature of universal credit. We make no apology for the fact that this is designed to be an online service. It is designed to be available 24 hours a day, and to be available where claimants are and when it is most convenient for them to use it. The hon. Member for Nottingham East is right to say that that will not be the right approach for absolutely everyone, but let me stay with the group for which it will be the right approach. Estimates show that about 80% of individuals are already accessing services in an online scenario. We are not assuming that 80% will use the online service at the outset; we have always recognised that not everyone will be able to claim online. However, we expect that the proportion who do so will grow over time. We will supplement all of that with a face-to-face and telephone service that will always be available, for just the kinds of groups of people whom the hon. Gentleman referred to.

To ensure that we resolve any issues in advance of the system going live, and that we have the right kind of support in place, we are already working with local authorities on a number of pilot schemes. I urge the hon. Gentleman to look at the work that we are doing with the Local Government Association. We have also recently issued a joint prospectus calling on local authorities to deliver pilots to support residents in preparation for the introduction of universal credit in 2013. The pilots are expected to start in the autumn of this year and to end by September 2013. We will focus on delivering the kind of face-to-face support that individuals might need when claiming universal credit. I hope that he will agree that we will have a wide range of support available. It will be available online, as well as face to face and on the telephone.

The hon. Gentleman is right to say that it is important to get the IT right for this, and we are well under way in our designs and in testing the system to ensure that universal credit is introduced in 2013. Our ambition will, of course, always be to move the majority of people on to use of the online system, and we are working closely with other Government Departments and beyond to ensure that the best possible support is there to enable access to the internet for many people, supporting claimants to get even more value from being online.

The hon. Gentleman expressed an interest in the issue of fraud and the work being done to ensure that safeguards are in place. It will come as no surprise to him to hear that we take the issue of fraud very seriously indeed. Its prevention has been built into the heart of all policy and service design development. Universal credit will be protected by comprehensive and sophisticated cyber-defence and counter-fraud systems, which are currently under development with leading suppliers. I am sure that the hon. Gentleman will want to stay close to the sorts of issues that we are dealing with, but he will understand if I do not go into the details of those systems, as they are sensitive and not for open discussion.

The hon. Gentleman raised the issue of monthly payments, which I have touched on a little already. To be absolutely clear, we believe it important for universal credit to reflect what people experience in the workplace when they are working full time. For the most part, that means being able to budget around a monthly payment, a monthly salary or a monthly amount of money coming in. We will ensure that there is flexibility in the system for those who find that exceptionally difficult, but we believe that this will be an exception and not the rule.

[Jim Shannon]

I can see the logic behind the change to monthly payments, but it is clear that some who get weekly payments are not knowledgeable enough to know how to manage their moneys. Will the Government give any help to those who will depend on single weekly payments to start with, who will then have to manage on monthly payments, on how best to manage their money?

[Maria Miller]

The hon. Gentleman will be reassured to know that my noble Friend Lord Freud is looking at exactly those issues. We know that changing people’s behaviour cannot happen overnight. People need support and we will make sure that we understand the sort of support that will prove the most effective, as the hon. Gentleman would expect us to do.

The hon. Member for Nottingham East talked about the importance of banking in this process. Direct payments to bank accounts are an important part of helping people to prepare for work. We will encourage claimants to use bank accounts, and we are discussing this very issue with the British Bankers Association. We recognise, however, that it will not be suitable for everybody, so we expect to continue to pay rent directly to landlords in some cases and we will continue to ensure that suitable payment arrangements are in place for everybody. The hon. Gentleman is right that we need that nuanced approach for some individuals. The bulk of individuals, we believe, should be able to cope with the sort of monthly payments that I mentioned earlier.

Women’s Aid

Jim Shannon Excerpts

Wednesday 14th March 2012 Westminster Hall

[Mr Clarke]

I agree absolutely with the hon. Lady, but if—as I saw at Monklands Women’s Aid—staff at centres are compelled to contemplate the financial circumstances that they are facing as an organisation, that might take away some of the time that they would like to allocate to the wider objectives that she quite properly identifies.

For many women, the fact remains that refuge is desperately needed in emergency situations when their lives and their children’s lives are at risk. I hope that I have convinced the Minster that Women’s Aid is indeed a special case.

[Jim Shannon (Strangford) (DUP)]

Just 10 days ago, I had the opportunity to visit the Women’s Aid centre in Bangor; it is in North Down, but it is also responsible for Strangford, which is my constituency. The staff there very clearly indicated the financial squeeze that faces them. They illustrated it by talking about the future not only of the centre in Bangor, which is responsible for a large catchment area, but of the staff. If the Government do not address those issues, I fear that the future of Women’s Aid will have a question mark over it, not only in the right hon. Gentleman’s constituency but in mine.

[Mr Clarke]

Again, the hon. Gentleman speaks from experience and I passionately believe that we should not ignore such experience. He is dealing with what he sees in his constituency, day after day, and also reflecting our experiences in our own constituencies elsewhere.

Frankly, life and death issues are at stake here, and children can be victims of abuse too. We need to ensure the provision of free and safe refuge, which is crucial to the safety of women and children who are suffering abuse. That is an inviolate principle. At a time of desperation, people in Monklands, across Scotland and—as we have heard—throughout the United Kingdom must be afforded the opportunity to seek refuge. Most regrettably, domestic abuse is a considerable problem across our country.

Women’s Aid also performs a major role in the continued development of the children who are affected by abuse. In many families, children are often caught in the centre of a storm, and thus Women’s Aid focuses its attention on providing continuity for such children.

I urge the Minister to reconsider the current proposals on housing benefit. My plea today is that she reflects upon the comments that I and others make. Later, other hon. Members will undoubtedly make valuable contributions to the debate, and it is more than likely that they will be based on the kind of experiences that we have already heard about from hard-working, conscientious constituency MPs.

This subject and the real people who suffer domestic violence are too important for there to be a partisan Government. I am leaving an escape route for the Government when I refer to the unintended consequences of their proposals. If the Government ignore my representations, that could have a devastating impact on women across the country, leading to more women and children walking the streets.

We need the continuation of the marvellous back-up services that are provided by Women’s Aid and—lest we forget—managed by outstanding, caring people. Today I want not only to convince the Minister but to gain support from all parties. We cannot and we must not abandon women who are seeking refuge. In the words of the late Mother Teresa of Calcutta:

“Being unwanted, unloved, uncared for, forgotten by everybody…is a much greater hunger, a much greater poverty, than the person who has nothing to eat.”

Pension Industry

Jim Shannon Excerpts

Tuesday 21st February 2012 Commons Chamber

[David Mowat]

I agree. The key word that the hon. Gentleman used in that intervention was “transparency”. If the market is to work, there must be transparency and comparability, but it seems to me that there are people in the industry who do not want the market to work. The market might work better if independent advice were freely available, but in the past the industry has effectively controlled advisers by treating them as paid intermediaries with a commission structure that compromised their independence, and between 2002 and 2007 its payments to such intermediaries for their advice rose by 50%. Hopefully the RDR—the retail distribution review will deal with the problem, and I give the Government credit for that.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on raising this matter tonight. My hon. Friend the Member for North Antrim (Ian Paisley) mentioned people who have taken out small pensions and who also fall into a tax bracket. Does the hon. Gentleman agree that their position should also be reviewed by the Government?

[David Mowat]

I shall be making a number of suggestions to the Minister later, and I certainly agree with what the hon. Gentleman has said.

I also give the Government—in fact, the last Government —credit for setting up the National Employment Savings Trust, without which auto-enrolment would be entirely untenable. Given its low charges and what appears to be a sensible investment policy, the organisation has an important contribution to make. However, as I shall make clear later, I think that the Government could be more radical about what NEST can achieve.

Let me summarise the position by saying that the fund management part of the industry has evolved into a mess. The market has failed owing to asymmetry of information and lack of transparency, and we are about to impose auto-enrolment on top of that mess. The £35 billion of tax subsidy that is currently provided will increase, and will be supplemented by employer and employee contributions which will also run into the billions. Those cash flows ought to be finding their way into better pensions rather than into the Chelsea property market.

I ask the Minister to assure us that before any of this happens, he will take the following steps. First, there should be a template for charge structures that will facilitate transparency, comparability and reporting. An analogous debate is taking place in the Department of Energy and Climate Change about energy suppliers, who are being required to introduce tariffs that allow comparison. Exactly the same should happen in this industry: indeed, it is more important for it to happen in this industry than in energy.

Secondly, there should be a charges cap on any supplier who becomes involved in auto-enrolment. I was staggered to read in a written answer that the Minister did not consider that necessary. A 1% cap was applied to stakeholder pensions, and the same should apply in this case.

Thirdly, some of the restrictions on NEST should be removed. The philosophical basis of the contribution limit of £4,400 and the restrictions on transfers in and out was that the purpose of NEST was not to compete with the market, but to operate in the parts of the market in which organisations do not wish to operate. That is an inadequate approach, and I think that the Government should be more proactive. Finally, the Government must ensure that there is no further slippage in the introduction of the RDR. Unbiased investment advice is sorely needed, and needed soon.

I fear that unless those measures are adopted, auto-enrolment will compound a failure that could easily become our next mis-selling scandal.

Let me now say something about annuities. It is possible for people to take their pension pots and then purchase annuities that will support them for the rest of their lives. However, the background is already tough—quantitative easing and life expectancy have driven down annuity rates—and the solvency II requirements may make the position even worse. It is clearly critical that the public obtain the best value possible. This means shopping around, but that is exactly what the big players in the industry do not want to happen. They want to stop it because it is their belief that they “own” that customer relationship, and they want to turn that ownership into more profit using two techniques. The first is the attempt to make the transition from savings into annuity seamless. That means putting an application form in with the final pension statements along with their own quotes. This, combined with a relationship sometimes developed over decades, is often enough to trap retirees into unsuitable and inadequate products. The second technique is using the asymmetry of information that we have seen in other areas to ensure that the retiree would need a maths qualification and a lot of intellectual self-confidence to sort out a better deal.

I have mentioned complexity, and I found the following sorts of annuities on the web—enhanced, fixed, guaranteed, immediate needs, impaired, income, index-linked, joint life, lifetime, lump sum, protected rights, purchase life, single life, variable life, with profits and smokers. For the average punter to work out intelligently what is best for him and his family using that lot is very tough indeed. The fundamental business objective is simple, but that is not how the market has evolved. The consequence has been mis-selling on an epic scale. A recent report from the CASS business school mentioned an existing provider offering £3,600 for an annuity pot and then a subsequent provider offering £26,000. That may be an outlier, but the facts are that 90% of retirees buy pensions from their existing fund manager and a very high number of those get below what the open market would offer. This matters to the Government—or it should do—because those massive profits siphoned off by the industry are resulting in hardship and an increased reliance on state benefits.

What should we do? I have five suggestions for the Minister. First, the Government should consider setting up an equivalent of NEST, specialising in the low cost provision of annuities. The IT and business process challenges around annuity provision are easier, as the cash does not need to be collected. At a stroke, the Government could provide an organisation that was a hallmark for fairness and best practice. Lord Myners has suggested that the Government allow people to purchase Treasury bonds direct, which would fit in with my proposal.

Secondly, the Government should consider making it illegal for the organisation that administers the saving regime to also provide an annuity. The advantage of this is that it keeps the Government out altogether while helping to make the market work. At a stroke, we would get new entrants to the market who are likely to be smaller, hungrier and more efficient. There are many precedents for this in the private sector. I used to work in the IT industry and it was not uncommon for those who designed an application to be forbidden to bid for implementation, because the procurement people wanted to ensure that the relationship advantage that had developed did not affect the pricing for the final step.

Thirdly, if the Government continue the existing system, in which providers attempt this seamless transition, there should be a rule that an annuity provided should be signed off by an independent financial adviser. That is a simple step and would ensure that the lethal combination of asymmetry of information and “relationship abuse” do not combine to rip off the retiree.

The fourth measure is a similar regime for annuities as I have suggested for charges for investment funds. We should insist on a few, relatively simple categories, and that would force transparency and comparability, also forcing the market to work properly. I believe in the market, but in this industry it has not worked. The industry will say that standardisation will limit choice, but they would say that, wouldn’t they? This is a simple transaction that needs to be made easier.

Finally, the Government should implement a system in which retirees approaching the annuity purchase point are much better informed about their options. They should be able to go to the open market and it should be forbidden for application forms to be put in with the actual pension round-up statement. The National Association of Pension Funds has a number of sensible measures in this regard, but I am of the view that that fifth one, on its own, is not enough.

In summary, it is vital that our people in our country save more than they are saving at the moment, but we do not wish to continue saving if the tax relief on that is channelled off for the property market in Chelsea and does not go to the savers themselves. Ordinary families continue to be penalised by an industry that has made supranormal profits by creating and exploiting a market failure, and the Government need to address that. If the Minister allows auto-enrolment to go ahead without reform, we are setting the scene for the next mis-selling scandal. I understand that it is tough for him to resist the lobbyists, who will be all over him on this, but self-regulation is not enough and the time to act is now.

Work Capability Assessments

Jim Shannon Excerpts

Wednesday 1st February 2012 Westminster Hall

[Tom Greatrex]

I entirely agree with my hon. Friend. Such issues were among those identified. My contention is that those problems should have been dealt with before the system was rolled out further, and we are now dealing with the consequences of those decisions.

The Atos half-yearly report for 2011 was very upbeat. It noted that operating margins had increased year on year to €166 million—an 11% increase from the first half of 2010. Its operating margin in the UK in 2011 was a healthy €34 million. The outlook for the second half of 2011 was similarly rosy: Atos expected profits to increase by 6.2%. I say all that not to congratulate Atos and marvel at how successful it has been, but to preface my next remarks.

Recommendation 13 of Professor Harrington’s first review was

“better communication between Decision Makers and Atos healthcare professionals to deal with borderline cases”.

In their initial official response to Harrington’s 2010 review, the Government accepted that recommendation, noting:

“Decision Makers already contact Atos healthcare professionals to discuss individual case issues in some instances… we will ensure this happens more often… Agreed measures will be adopted nationally during 2011.”

In a letter that I received from the DWP dated 1 November 2011, I was advised that good progress had been made on that key Harrington recommendation. The DWP letter claimed that

“Atos Healthcare Professional deployment in Benefit Centres has been trialled and has proven to be an effective way of improving communications to discuss borderline cases.”

However, on 20 December 2011, just over six weeks later, in answer to a written question that I had tabled, the Minister advised that

“at the end of the trial, Atos health care professional capacity pressures meant that the initiative could not be continued. From the start of December, DWP and Atos have agreed the implementation of a telephone helpline so that Decision Makers can speak directly to health care professionals to obtain medical advice in specific cases. This is an interim arrangement until Atos are in a position to reintroduce the deployment of health care professionals in benefit centres.”—[Official Report, 20 December 2011; Vol. 537, c. 1082W.]

That is a hugely significant development. This may have been due to when I tabled the question or when the Minister chose to answer it, but he slipped that answer out just before the Christmas holidays. The fact that Government policy is not being followed by a company in receipt of £100 million of taxpayer funding a year will startle many of my constituents and, I am sure, the constituents of many other right hon. and hon. Members.

I should be grateful to the Minister if he gave me answers to a number of questions. What exactly does the phrase “capacity pressures” mean? Does it mean that Atos cannot recruit the right number of health care professionals to undertake its work? Is it unable to fulfil its contractual obligations because of the amount of work that it has to get through? What discussions has he had with Atos about those capacity pressures? Does he believe that they undermine the ability of Atos to fulfil its responsibilities under the contract? What other services have been withdrawn as a result of capacity pressures in Atos? I am sure that if he is not able to answer, I will find a way of crafting written questions to get the answers from him.

To me, the phrase “capacity pressures” implies an undermining of the way in which the Government sought to deal with these issues, which was by saying that Harrington’s recommendations would be implemented in full. If that is not happening in the instance to which I have referred and perhaps in other instances because of capacity pressures in Atos, is that not a damning indictment of the failure of the system as it is currently set up?

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to the House. No one decries the need for profit, but is it not time that we got away from profit and on to service delivery? Does the hon. Gentleman share my concerns about many patients who go through the process of a work capability assessment and particularly those with cancer, whose health deteriorates when they experience more stress? There should be an emphasis on people’s health, rather than on the profit at the end of the year.

[Tom Greatrex]

I thank the hon. Gentleman for his intervention. He puts his finger on a very important point. I am referring to the anxiety and concern that the process causes people, particularly if they are waiting for an assessment. If they enter the appeal process when they have had an assessment, they could wait up to eight months for an appeal. There is an issue about the whole of that process. Long time scales are involved because of the sheer number of people who are being dealt with—or not being dealt with. At the same time, we should never forget that those individuals are trying to deal with the process, and they are feeling huge anxiety. Particularly if they are already unwell, that could well affect their health. That is an important point.

Inflammatory Bowel Disease

Jim Shannon Excerpts

Tuesday 31st January 2012 Westminster Hall

[Chris Evans]

I agree completely with the hon. Gentleman, and I will develop that point about workplaces further as I go through my speech. I am glad that he has raised it. Very often in this place, we quote statistics and sometimes we use them to bash the Government, but in the middle of all those statistics there are real human tragedies and stories that are taking place. As I have said, I am glad that the hon. Gentleman raised that point and I hope that his mother is dealing with life a bit better now.

I want to return to the point that I was making about young people with IBD. At a time when more and more of our young people are struggling to find work, the last thing that we need is for them to rule out career options. Since becoming involved in the campaign to raise awareness of IBD, I have heard story after story from young people who are unable to fulfil their potential because of the problems that the condition causes. This story is particularly common:

“Leanne is a full time foundation degree student from Crewe and has a part time job in a local pub. As a 19 year old she finds it especially hard having an illness which isn’t highly understood or visible. Having a condition which includes side effects like fatigue means not all employers or educational institutions understand the challenges she faces, and she even says that most people mistake this fatigue for laziness. She has had bad experiences in the past with employers and teachers who do not fully understand her condition and what it can mean on a daily basis. She describes herself as a passionate individual who wants to commit to jobs and her education, but finds it difficult on bad days. She has in the past been called “unreliable” during a flare-up of her illness. This ignorance can be damaging and can have a lasting effect on someone so young.”

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Islwyn (Chris Evans) for bringing this matter to the House. The hon. Member for Brigg and Goole (Andrew Percy), who spoke earlier, has illustrated very clearly the issues involved. As elected representatives, every one of us has to deal with these issues every day with our constituents.

The hon. Member for Islwyn has referred to work. The civil service in particular seems to have issues with its “early warning scheme”, as it calls it, and there is no flexibility in that system. Does the hon. Gentleman feel that it is time for the civil service to address that issue, so that people who want employment in the civil service can stay in it and not have to leave?

[Chris Evans]

Yes, absolutely, and that is really the crux of the issue. IBD is not a condition that causes symptoms all the time; there are flare-ups, and then the condition goes back down and people go back to normal life. If there is a problem in the civil service, I hope that the Minister will address it when he responds to the debate.

In today’s economic climate, with youth unemployment at the level that it is, we cannot allow someone with IBD to believe that their condition bars them from the job market. I heard another story of a young person, James, who was diagnosed with IBD in his early teens. James is currently studying for a degree at the university of Sheffield, but he is worried about managing his symptoms in the workplace when he graduates and begins to look for work in what is already a challenging job market. James has said:

“I think the use of the toilet without restrictions has to be paramount. I also think employers should give employees the opportunity to confidentially declare any illnesses which may affect the efficiency of their work. I think employees, regardless of what illness they have, should be allowed to use the facilities, so people who are ill do not feel isolated. Also, I think there should be no stigma attached to having the sudden urge to use the toilet. This is often the case, I would have thought, if you work/live with the same people for a long time. I am concerned that, after having worked so hard to get my first job after I graduate, if I have to have time off for illness or procedures I will be under more pressure in my job. The job market is so competitive and if someone is less ill than me, I will be placed under more pressure due to a situation beyond my control. It is pretty inevitable that I may need time off while working, but due to the competitiveness of the job market there will always someone who will be able to take my place.”

--- Later in debate ---

[Chris Evans]

That was the point that I was trying to make. All we are looking for is a little understanding from employers. We are not asking for a great change in legislation. We want them to foster an environment where people do not feel embarrassed about going to their employers about their condition and that, when they do have to take medication, they are allowed time to do so. That will not affect anyone’s productivity; if anything, it will improve it.

As I have said, I do not want anyone to think that only young people face this problem. Some are forced to take early retirement due to the unpredictable nature of their disease. Until last year, John was a university lecturer. He found that working and living with a chronic condition such as inflammatory bowel disease was too much to cope with. He was unable to rely on the stability of his bowels while giving lectures. He chose to take early retirement without much of a fight. It took 18 months to get his pension released early on partial incapacity grounds, which took a toll, as his condition was going through a flare-up. Even though he has come to terms with his current medication, in order to help keep his symptoms under control, the IBD is difficult to live with and dictates how much travel he can do on a daily basis. It has been financially tough on John and his family, as he was the sole source of income, which has now been halved. The majority of his lump-sum payment made on retirement had to be used to fit a downstairs toilet.

I do not have to tell anyone how important it is to keep people in work, particularly in this economic climate. However, we have to accept that people with fluctuating health conditions may be in or out of work, and employers have to adapt to the different needs of those with the illness.

[Jim Shannon]

One clear issue is the disability living allowance and the benefits system. Does the hon. Gentleman feel there are occasions—I am aware of them—when the benefits system is not flexible enough to enable someone to achieve disability living allowance and to return to work later, if they have to?

[Chris Evans]

That is why we need flexibility in the benefits system. When people have this debilitating disease that very often stops them from working—they cannot do anything, they cannot leave the house—they cannot claim benefit. They do not even slip into the system or anything like that. That has to be borne in mind.

In the week that we are debating the remaining stages of the Welfare Reform Bill, it is important that the benefits system reflects the different needs and requirements of those with fluctuating health conditions. It is crucial that those with IBD do not struggle to cope at work through illness, or live in poverty when they are unable to work. I have heard stories about people with the disease having no income, which forces them out to work. Take this testimony:

“As my symptoms are not regular, I do not qualify for any benefits. So when I am actually too ill to work, I must simply either choose not to work or lose money. It is stressful having to explain the situation without going into too much detail.”

The Government need to recognise the disabling elements of long-term fluctuating conditions such as IBD and include provision for those in the benefits system. The importance of that is underlined by the Government’s introduction of universal credit, and the need to attend back-to-work interviews. The unpredictable nature of IBD means that people with the condition, who are required to attend interviews and undertake other work-related activities, may at times require flexibility, should they experience a flare-up of their condition.

Ultimately, IBD does not have to hinder someone’s work potential. People live with the condition and make a positive impact in the world of work every day. All they ask for is sensitivity and understanding. I do not think that is too much. Therefore, I believe that employers, health professionals and policy makers have a duty to ensure that there is a greater understanding for those with fluctuating conditions such as IBD.

Unemployment

Jim Shannon Excerpts

Wednesday 14th December 2011 Commons Chamber

[Chris Grayling]

I regret every single redundancy in any sector in any part of this country. It is a terrible blow for the people concerned. I do not know about the case, but if the hon. Gentleman wants to talk to me afterwards, I will ensure that Jobcentre Plus support from a rapid response team is available to his constituents. I regret any such situation. However, we are having to get to grips with the challenges of the public sector because of the mess we were left. If we did not do that, unemployment would be higher, not lower. I stress that we will do everything we can to help the hon. Gentleman’s constituents and those elsewhere who are in a similar position. Any unemployment is too high, and we will do all we can to help tackle it.

Let me briefly consider the youth contract because questions have been asked about it. It was announced shortly after our debate a month ago and I think that it will enhance the programmes that we are already delivering. It builds on the programmes that are already in place and will involve doubling the work experience programme so that we should be able to guarantee every single young person who has been out of work for three months a work experience place. Through the Work programme, it provides a subsidy to employers to take on a young person who has been unemployed for a longer time. The CBI proposed it to us, but it is more generous than the programme that the CBI requested. The shadow Minister made the point about the previous Government’s scheme in 2009, but the difference is that we are delivering something to a template that leading business groups requested. They say that it will make a real difference to the likelihood of an employer taking on a young person. I hope and believe that will make a genuine difference.

[Jim Shannon (Strangford) (DUP)]

One of they key factors throughout the United Kingdom that perhaps the Minister has not mentioned yet is small and medium businesses. In Northern Ireland, 90% of those in employment are employed through small and medium businesses. What help does the Minister intend to give small and medium businesses to create jobs and thereby address youth unemployment?

[Chris Grayling]

I agree that small and medium-sized enterprises are crucial. I hope that the subsidy that is paid to employers through the youth contract will be attractive to large and small employers. We are clear that the role that small businesses play is important. Opposition Members raised issues about unemployment among the older generation and I believe that our new enterprise allowance, which is proving successful in the areas where it has been operating so far and is now available throughout the country, will provide a real route for people who want to build their own SME in future.

Mr Deputy Speaker, do not listen to what you hear from the Opposition about the Government doing nothing about unemployment. We have a comprehensive range of support, which I believe can make a real difference to the unemployed. We face huge economic challenges and some of the most difficult economic circumstances that any Government have faced. However, unemployment is and will remain a priority for the Government. We will do everything that we can to tackle it.

--- Later in debate ---

[Alex Cunningham]

I agree. My hon. Friend provided an illustration of that earlier when he mentioned the job losses that have been announced in a company in his constituency. For some time the Tories said that we did not have a plan for jobs. They may have systematically dismantled our investment programmes for job creation, but it is not too late for them to adopt our five-point plan for jobs and growth.

Like others who have spoken, I shall concentrate on the subject of young people. The acceleration in the number of young unemployed people will help this Tory-led Government to go down in history as the Government who could not care less about our country’s most important asset.

[Jim Shannon]

It has been suggested that businesses should be given an incentive to employ people aged between 16 and 24, in the form of a £1,500 tax relief which would cover national insurance contributions for a year. Does the hon. Gentleman believe that such initiatives are capable of providing employment for unemployed people?

Pension Plan Charges

Jim Shannon Excerpts

Wednesday 7th December 2011 Westminster Hall

[Brandon Lewis]

The hon. Gentleman makes a good point, and I will touch on it later. I fully agree that one of the issues that people do not understand is that a figure that seems small now can have a huge impact on how a pension pays out later on—up to 25%, as I will touch on later. The hon. Gentleman is absolutely right. That is exactly the clarity and understanding that we need.

Provident Financial’s clients are low earners, who often borrow just £100 or less to get through to the end of the month. The company told me recently that the issue for many of them is not so much about whether they can save. They may be able to save only a small amount; I know that the Minister appreciates that, because we have had a conversation about it. In some cases, it could even be just a few pounds a week or month. However, all that money can add up to mean something later.

The hurdle that those customers find is psychological. The company said to me that people who are on the lowest incomes understand and learn how to manage their money and how to get their family through a week or a month. Within that, they will still do certain things—£1 or £2 a week on sweets for the children, or something like that. What they do not do is trust an unnamed and unknown big organisation with some of their money, because it is complicated and there is no face to it. That is why they use organisations such as Provident Financial rather than high street banks.

By dealing with the issue of transparency, we may well be able to break through that psychological barrier and get more people saving. If the industry is clearer and puts things across more simply, it will instil more confidence in the customers that it is looking to pick up. I will return to that with a clear example in a moment.

The system is complex. People’s underlying attitude is unsurprising, given that we have such a diverse and complex pensions industry, with a wide range of schemes and options alongside an array of different regulatory regimes. A wide range of items may be included in pension charges—and alas, with no clear industry standard at the moment, providers often differ on what is included. Just to name a few, any or all the following may be included: product management, communications, services, administration, regulatory requirements, some investment management and, possibly, the cost of providing advice. How can any consumer find an easy way to compare like with like when there is such a range of options and figures printed on a statement? It is simply not possible.

[Jim Shannon (Strangford) (DUP)]

I, too, congratulate the hon. Gentleman on bringing the matter to the House today. We need clarity about hidden charges—charges that people do not know are being made and which are removed from people’s funding regularly—and about sales commission. There are often hidden charges before someone can leave a scheme.

There is also excessive trading in respect of those who are trying to keep on top of the portfolio; there is a charge every time that happens, and customers do not know that. There are a lot of hidden charges that customers do not know about. Does the hon. Gentleman think that such charges should be made known to the pension holder, so that they are aware of the costs involved?

[Brandon Lewis]

It is absolutely right that as much as possible should be transparent—potentially, everything should be as transparent as possible. The hon. Gentleman is right. As I will come on to say, people do not necessarily understand that when they come out of certain schemes or change jobs, the potential cost to them can as much as double. The costs are effectively hidden, because they are not clear or transparent at the time of entry, let alone of exit. That is why we need regular transparency. I will touch on that further in a moment.

It does not seem possible to find an easy way of comparing like with like. Just last week, the Work and Pensions Committee was taking evidence on pensions and it became very clear from looking at different operations that there are major variations in style between companies. What highlighted the issue of transparency for me more than anything was the fact that one company said that the simplicity and transparency of its charges is its single biggest marketing advantage. If Members will bear with me, I will read a short quote from that session. Adrian Boulding of Legal & General, which I congratulate for having this kind of transparent operation, said to the Committee:

“We compete on price in the market place and we are able to do that because we have invested heavily in technology. If I look at pension schemes that we have sold this year, they have all been sold within a price range of 0.3% at the bottom to 0.8% at the top. 90% of them have been sold at 0.5% or less.”

Again, that is a range of figures that many people will struggle to understand. However, Mr Boulding went on to say:

“One of the particular features of our pitch to the market is that we charge just a single charge for the scheme, whereas some providers now want to charge £1.50 in addition to a fund management charge. NEST charges a contribution charged at 1.8% in addition to a fund management charge. Some insurance companies charge higher fund management charges when people leave the scheme. We charge a simple, straight fund management charge and it is the same for all members whether they are in the scheme or whether they have left, and there is only the one charge. We find that gives us an edge in the market place.”

It was interesting that a company specifically said that the simplicity of its charging—it only has a single charge—was its marketing edge.

What is included in the charge element of a pension fund varies, but the inconsistency in how charges are communicated is an additional complicating factor. In fact, the wide range of approaches is needlessly complicated. Some pensions are regulated by the Financial Services Authority and require an illustration of the effects of charges. Other pensions, mainly those that are trust-based, have no requirement for such disclosure. The stakeholder pensions were introduced in 2001 and I credit the previous Government for introducing something that provided some simplicity and clarity. Stakeholder pensions require disclosure of individual deductions.

The lack of comprehensive and consistent information prevents effective monitoring by the FSA, the pensions regulator, and, potentially, by the Department of Work and Pensions itself. We risk creating a regulatory black hole if we fail to create a clear communications framework. That is why there is also a need to specify which regulator covers which area and to define regulators’ powers to avoid market confusion over which regulator covers which issue—let alone confusion among consumers or among the employers that are implementing a scheme.

The approach taken by different pension providers and schemes also varies widely, as the National Association of Pension Funds has helpfully highlighted. Some providers quote an annual management charge as a percentage; others illustrate the effect in cash terms. Some present information in a personalised form, where charges are illustrated in a very varied way over different periods, whereas others provide information with a generic example. In some cases, the information is prominent, but in others it can be hard to find. In some cases, there are even charges for different parts of the process—for example, fund management prices can be shown separately.

We should compare the pensions sector with the banking sector, in which statements now clearly show what bank charges are on a weekly or monthly basis. The example of the banking sector is certainly one that the pensions sector should look at.

There is also financial jargon, which is unhelpful in any industry. If the range of charges and the communications about those charges are inconsistent, a pensions fog is created, and the impenetrable financial jargon that consumers must navigate has created a further consumer whiteout. In fact, I have used much of that jargon in my opening remarks today. I want to illustrate that point by giving two real-life examples, courtesy of the National Association of Pension Funds. They highlight how difficult it is for any consumer or business to understand what they are taking on with pensions. The first example is taken from a handbook provided to employees on a trust-based scheme. The handbook says:

“The manager’s charges differ according to the type of fund. The charges are made within the fund and are reflected in the price of fund units. With some funds, two unit prices are shown - the “bid” price, at which units are sold, and the “offer” price, at which units are bought; the difference - the “bid/offer spread” - reflects the manager’s dealing costs. The bid/offer spread on these funds vary.”

Then there is an impenetrable table listing six funds, showing for each one:

“a percentage annual charge on fund and a percentage bid/offer spread”.

Just looking around the Chamber now, I can see that Members are already somewhat glazing over with the difficulty of trying to understand what we ask ordinary people to understand in their daily lives.

Living Standards

Jim Shannon Excerpts

Wednesday 30th November 2011 Commons Chamber

[Ian Mearns]

I could not agree more. If we want an economic race to the bottom, that is exactly the sort of policy to follow.

In September 2010 the BBC published a report that demonstrated clearly which regions would suffer most. Spending cuts were “to hit north harder”, it reported. BBC-commissioned research showed that industrial areas in the north-east and the midlands are least resilient to economic shocks. It showed that Middlesbrough is ranked as the most vulnerable, followed by Mansfield in Nottinghamshire, and Stoke-on-Trent. The Experian research suggests how England’s regions may cope or not cope with further public sector cuts. The study looked at the ability of each local authority area to withstand sudden changes in the economy, and a clear north-south divide is evident in the research. Elmbridge and Waverley in Surrey and St Albans in Hertfordshire are the most resilient places, and places such as those I mentioned are the least resilient.

[Jim Shannon (Strangford) (DUP)]

Clearly, the changes in working tax credit and child tax credit will also affect people, and those who are not on the poverty line but are close to it will be pushed towards it. Does the hon. Gentleman believe that the Government’s changes in working tax credit and child tax credit will have a harsh impact on those people who can least afford it?