Valedictory Debate

Julian Knight Excerpts

Friday 24th May 2024 Commons Chamber

[Julian Knight (Solihull) (Ind)]

It is a pleasure to follow the right hon. Member for Harlow (Robert Halfon), who has been a tireless and unflinching worker for motorists, as I know. I am glad that, in his valedictory speech, he gave a nod to the legendary Howard Cox, who has been a friend to me over the last two difficult years. I did not follow the advice that the right hon. Gentleman offered to candidates about standing by the side of the road with a sandwich board, but I did get in a cab and ask lots of questions.

I put on record my thanks to my constituents, who have been a source of comfort, support and enlightenment over the past nine years. I also thank my wonderful staff, past and present, who have been unstinting in their support, but who have been well and truly put through the mill—more on that later.

The best thing about being an MP is the interaction with constituents. It has been a privilege to represent the wonderful communities of Solihull and Shirley. Privilege seems such an inadequate word, but it is the only one we have, and I truly feel it. My chief wins include securing a £60 million investment in the local hospital, getting a fairer deal for our superb schools that do so much with so little, and fighting the outrageous plans to strip the borough of police services. In Parliament, it was a huge honour to be the Chair of the Digital, Culture, Media and Sport Committee from 2020 to 2023. The Committee made a real contribution, particularly post pandemic, in helping the industries and on head injuries in sport.

Until December 2022, I would have encouraged anyone to become a Member of Parliament. Sadly, I would not do so now, due to the toxicity of the working environment. Be assured at this juncture, Mr Deputy Speaker, that I will be careful, as a wide-ranging criminal investigation into conspiracy to pervert the course of justice, fraud, and forgery involving multiple individuals, is ongoing.

Against all precedent, I was named in December 2022 in connection with an allegation by the Conservative party. Why was I named when multiple Members who have actually been arrested were not? A special case was made for me. I believe that that was for the following reasons. First, there was the pressure from hon. Members about my work to combat racism at Yorkshire county cricket club. It is no coincidence that this occurred three days prior to Mr Rafiq giving evidence once again to the Committee. He testified to exactly the same dirtying of his name that I have faced over the past two years. It was exactly the same modus operandi.

Secondly, I lack friends in high places. I played a major role in the current Prime Minister’s failure to win the leadership. In addition, I made two complaints to two different Chief Whips about drunken bullying and harassment by a Government Whip. All I wanted was an apology and for it to stop. That bullying was witnessed by an independent female friend, who has supplied an affidavit that is currently with the police in order for them to take action. What is more, I blew the whistle on two occasions about the Islamophobia and racism that I had seen in my party, and nothing was done. In fact, one of the culprits is standing at the next election.

Finally, I think those in the party wanted to make an example of me. They had had their fingers burned over the issues relating to Mr Pincher, and the new Prime Minister wanted to be seen to be getting tough, regardless of the fact that I had told the Whips Office about the allegation back in February, and kept them informed throughout the time until my suspension. When I was cleared by the Met police without an interview, I became aware of a horrendous campaign of lies emanating from certain people within my own party. A boycott of my Select Committee was arranged, and I felt compelled to resign. Friends were pressured to drop their association with me. There is an allegation on the Byline Times website that an investigation that had been closed by the Met was moved to Essex at the behest of Government Ministers. That is utterly unprecedented. I think that my being cleared by the police so soon after the Government had taken the unprecedented step of naming me publicly was deemed a serious political embarrassment. The vultures were already circling around my seat, and hon. Members know exactly who they are.

Let me briefly outline the effect that this has had. I think of myself as a real Conservative, and I have been driven from my party—I am sitting on the Opposition Benches rather than the Government Benches. I have contemplated suicide on multiple occasions. Every night, I wake at 3 am—every night. I have lost my position and my future. My family has been placed under unbearable toll and misery. We are ordinary people: I drove to my selection night in a Skoda Fabia; I did not take a helicopter. Staff, both past and present, have been made ill by the barrage of innuendo contained in a malicious dossier and by relentless press harassment.

Hon. Members, we must be very careful for our future. I am actually irrelevant in this—I will go off somewhere else—but if what has happened to me is allowed to pass, it will happen again, and it could change the course of this country’s history. An hon. Member could be removed from a hung Parliament by unfounded accusations and disgusting rumours—just imagine what that would have done in 2019.

Now I will retire to private life, relieved but saddened. I hope that one day we will see a real Conservative party again—a party that does not tax until the pips squeak, that believes in liberty and a small state, that does not hang innocent men out to dry. The last 14 years will, I am really sad to say, prove to have been a bit of a waste. Our legacy will be a Labour Government with bankrupt ideas and uninspiring leadership. Only true conservatism has the answer that this country needs, and my only hope is that the crucible of this election will lead to a rebirth of real free-market conservatism. Thank you, Mr Deputy Speaker.

[Mr Deputy Speaker]

Thank you very much. I call Colonel Bob Stewart.

Pensions Dashboard

Julian Knight Excerpts

Wednesday 6th February 2019 Westminster Hall

[Dr Matthew Offord (Hendon) (Con)]

I beg to move,

That this House has considered the pensions dashboard.

It is a great pleasure to serve under your chairmanship, Ms Ryan. For many people—particularly younger people—pensions are not a priority. In the early years of anyone’s career, their financial demands usually concern paying off student debt and paying for accommodation, mortgages and travel, no doubt with a bit of socialising thrown in. Only when people gain responsibilities such as a partner, a spouse, a mortgage or children do their minds turn to providing for the future.

Some people are fortunate enough to be provided with a pension through the terms of their employment. That is particularly true for those who work in the public services. Unfortunately, in the past, those who worked for private employers and the self-employed were unable to access the same financial products. There were a variety of reasons for that, including affordability, knowledge of pension products and simple ignorance about how to start a pension. I am pleased that the Government have addressed those problems and that in order to allow employees—our constituents—to understand the level of their pension contributions, the Department for Work and Pensions has proposed the pensions dashboard, which we are speaking about today.

A pensions dashboard is an online service that allows people to see information from multiple pensions all in one place. It is a welcome step towards better financial awareness for everyone.

[Julian Knight (Solihull) (Con)]

I congratulate my hon. Friend on securing the debate. The fact that it is so well attended shows exactly how important the subject is to our constituents. My hon. Friend will probably recognise that when the pensions dashboard was first suggested, it was seen as something that might not happen, but now we are on the cusp of it. Does he agree with me that it would be good to see such data sharing across the whole financial services industry? It benefits consumers and gives them power over their own information.

[Dr Offord]

My hon. Friend is entirely right. I certainly would like to see that across a range of financial instruments. Recently, I was required to find the level of my ISA trust fund. In the past I would receive a statement only every six months, but nowadays I can go online and use my PIN to verify my identity and see my daily amount. I can see the value of my trust fund here today. When I say trust fund, I mean the one I have paid into over the years, rather than one that was provided by my parents.

The Secretary of State’s Handling of Universal Credit

Julian Knight Excerpts

Wednesday 11th July 2018 Commons Chamber

[Julian Knight (Solihull) (Con)]

When the Government first announced their intention to implement universal credit, it was past the time when we should have grasped the nettle of welfare reform. The existing system was simply failing claimants. It was difficult to navigate—people missed payments to which they were entitled because of the complexity and the myriad different benefits—and it created perverse incentives that locked people out of work. It was truly time for change.

Universal credit was introduced to do several things. First, it was intended to simplify the complex system of different benefits, allowances and tax credits that had preceded it. Streamlining services will not only make them easier to administer, but, crucially, will make the system much more transparent for the user. That is further reinforced by the Government’s decision to invest £200 million in budgeting and digital support to help claimants, as we heard earlier from the Secretary of State. I am sure nobody ever intended to create the strong disincentives to work which ended up being baked into the previous system; it was simply very difficult to keep track of how many different welfare systems would interact with each other in the real world and over such a long period of time.

Creating a system that makes sure that work pays was the second goal of UC. I hope Members on both sides of the House agree that it was not right that some of the poorest people in our society faced some of the highest de facto marginal tax rates as a result of the previous system. Nobody should have to face a pay cut to move from welfare into work. A good job is about so much more than money: employment boosts our independence, our self-respect and our mental health. All claimants deserve the best possible chance of fulfilling their potential and building a strong, long-lasting career.

I am pleased that the Government have recognised that implementing such sweeping reform is a complex and sensitive task, and have adopted an incremental approach that allows Ministers and civil servants to adjust the roll-out—recalibrate at certain times—based on the feedback on the ground. That stands in sharp contrast to the chaos, which I remember from having worked in consumer affairs in the early 2000s, of the sudden “big bang” of tax credits. It is to the Secretary of State’s credit that she has listened since coming into office and has made so many crucial changes.

To sum up, UC is a fantastic idea and the implementation is coming along—we are getting there. We understand that not everything is perfect, but we are making the effort, and we need Members in all parts of the House to recognise that the system is crucial to moving people from a dependency culture into the world of work, not just for them, but for their families and our society.

Defined-benefit Pension Schemes

Julian Knight Excerpts

Tuesday 10th July 2018 Westminster Hall

[Laura Smith]

I apologise to the hon. Gentleman—it was hard to hear him because of the sound of the fans. I will come on to those points.

Basing assumptions on gilts may artificially inflate deficits and future service costs for the sponsoring employer and scheme members. That may lead to the unnecessary closure of schemes to new members and future benefit accrual. Unison’s experience is that some employers would rather pay more and use the increase in costs as an excuse to close their DB scheme, saving money by transferring members into a DC scheme with lower employer contributions, which results in reduced pension benefits for scheme members.

Not only are DB schemes desirable, but they can be affordable and good value for money. We should do everything we can to protect them. The Government’s role should be to provide an adequate regulatory framework, meaningful enforcement and appropriate incentives to help encourage sound decision making and ultimately to provide decent pensions. I welcome the Government’s White Paper and the regulator’s ambition to be clearer, quicker and tougher.

I hope that the Minister can provide me with a little more clarity or reassurance about three issues. First, there appears to be no new relief for employers struggling with DB liabilities. Although I welcome the suggestion that there should be penalties for directors who do not take sufficient care of scheme members’ interests, without support for struggling employers, tougher rules may simply incentivise more of them to close DB schemes in favour of DC schemes with inferior pensions for workers. Secondly, what additional resources are being provided to ensure TPR has the capability and capacity to effectively regulate the sector?

Thirdly, encouraging consolidation over alternative options would not prioritise the protection of members’ benefits, which should be the Government’s primary focus. I understand that insurance buy-out remains the best solution for guaranteeing member benefits in DB schemes. Securing member benefits should be paramount. With an insurer, members are almost certain to receive their benefits in full. The Association of British Insurers believes that prices are the best consultants have ever seen, and that that option is available to smaller schemes.

Although I understand there is a need to provide options for employers that simply cannot secure a buy-out, any new framework should not incentivise consolidation purely on the basis that it is a cheaper option. The risk of investment failure was highlighted by the Pension Protection Fund in a submission to the Select Committee on Work and Pensions. In the absence of a substantive employer, the security of members is entirely dependent on the investment performance of the fund and the associated buffer. Consolidation is therefore less secure than buy-out, and profit withdrawal in years of good investment returns may lead to scheme failure by preventing a strong build-up of reserves.

Consolidation also means that risk, rather than being dispersed across several schemes, becomes focused on one investment strategy. Different consolidators may be inclined to pursue the same investment strategy, resulting in a high correlation of risk in the DB sector. Obviously, that may lead to all schemes failing at the same time. I am also concerned that younger members may shoulder the risk of commercial consolidators collapsing. We should not pursue any policy that leads to greater intergenerational unfairness.

To put it plainly, I am concerned that the option to consolidate or transfer into a super-fund may be seen by some employers as another bolthole to escape their liabilities on the cheap.

[Julian Knight (Solihull) (Con)]

I thank the hon. Lady for securing this important debate. She is making a very good speech in many respects, but one of the concerns about DB schemes is that some that have existed for a long time have few members but a large legacy. A scheme may have only 100 employees, for example, but a very large legacy behind it. I wonder whether she recognises that super-consolidation may be an option for such schemes.

[Laura Smith]

I touched on why I have concerns about that.

As I said, securing member benefits should be paramount. What reassurance can the Minister give me that the eventual framework will ensure that employers’ decisions are focused on that objective? If an employer has the means to get a buy-out and that is the best way to guarantee scheme members’ benefits, it should get a buy-out. We need a framework that incentivises decision making on that basis.

Will any legislation that is enacted be applied retrospectively to cover commercial consolidators formed in the intervening period? I am concerned that a two-tier system of regulation would provide loopholes for those willing to exploit them. Directors of sponsoring employers must have personal liability—there must be criminal offences and heavy fines.

I support the White Paper’s push for clearer, quicker and tougher regulation. I commend the Minister’s efforts and I hope that the White Paper leads to measures that further protect defined-benefit pensions. However, I remain concerned that over-zealous prudence and assumptions threaten otherwise affordable DB schemes. There should be additional support and relief for struggling schemes. I would like to be confident that TPR will be given the resources it needs to have the capability and capacity to regulate effectively in the light of any changes. I am concerned that consolidation—although it may be the best option for some schemes—will be seen as an acceptable cheaper option that does not prioritise protecting scheme members’ benefits when more secure alternatives, such as buy-out, are available and within the means of the employer.

We must endeavour to build a framework that incentivises workers to save responsibly and deters directors from behaving irresponsibly. Paying dividends must not be prioritised at the expense of protecting pensions. I would be grateful if the Minister responded to the issues I have outlined and committed to looking into the ongoing matter at Bentley Motors, which is of concern to more than 1,000 people in Crewe and Nantwich who work for the company, and to working with me to promote a dialogue that has the protection of scheme members’ benefits at its heart.

--- Later in debate ---

[Paul Masterton]

I am pleased to hear that, because the Pensions Regulator performs a vital role in overseeing occupational pension schemes. One of the big frustrations on the trustee side—not usually on the employer side—was that the regulator did not seem to have the time or resources to get stuck in or do anything serious to encourage or require an employer to change course. Some of the suggested improvements are very good.

In the past, pension schemes operated in a world of high interest rates and good equity returns. We now live in a different world. Investment decisions reflect ongoing uncertainty and volatility, which has led to widespread de-risking and a preference for investing in bonds and gilts. That has been a huge loss to the UK economy, with funding being taken out of equities. We could do more to look at how to unlock some of the vast sums that sit behind pension schemes.

[Julian Knight]

Does my hon. Friend share my frustration that often UK infrastructure is owned by overseas pension schemes and that, despite exhortations from the Government for schemes to invest more in the UK and in these stable, high-producing assets, they still seem reluctant to do so?

[Paul Masterton]

I do. Big pension funds—Canadian pension schemes and many others—invest a lot, and those investment projects provide good returns. We could unlock huge amounts of money.

Final salary pension schemes will end up in one of two places. They will either be successful and be bought out with an insurance company or fail and end up in the PPF. The hon. Member for Crewe and Nantwich was right that deficits have been pushed up by low gilt yields and low interest rates. Many employers, pushed by their trustees, and to a certain extent by the regulator, have prudent assumptions in their valuation setting, which increases the amount they have to pay in. That can provide a false picture of the deficit, but it does match the reality of trying to buy on the market. There is flexibility in the system, and one thing the regulator is looking at is being more akin to employer affordability in the valuation assumption setting, which should help with some of these problems.

Fundamentally, this drives to a system that is completely linked to the employer covenant. The stronger the employer, the more flexibility there is, which gives much more leverage to play around with assumptions. A weak employer cannot afford to take as much risk, so it is much tighter with its assumptions. That pushes the deficit up, which means more money has to be paid in. It is a self-perpetuating cycle where the weakest schemes, which need the greatest support, do not get it. They need the breathing space, but they have to pay high levels of deficit repair contributions. As my hon. Friend the Member for Solihull (Julian Knight) said, we should consider that many such schemes are legacy schemes, predominantly in old-school manufacturing industries, and many of those companies are shells of what they were in the ’70s and ’80s when their schemes were brought in. Those employers already provide weak covenants, and that situation may only get worse as we move forward.

It is remarkable that “The Purple Book” from the PPF estimates that 3 million DB members have only a 50% chance of seeing their benefits paid in full. The PPF is a fantastic lifeboat scheme to ensure that people still get decent payment of pensions, but we do not really want people to be reliant on it.

I disagree with the hon. Lady about consolidation. What the Government have been looking to do on that is sensible. Lack of scale is crucial. Two thirds of the UK’s defined-benefit schemes have fewer than 1,000 members, and small schemes cannot access the same sophisticated investment opportunities as bigger schemes. Even costs such as advisory fees, accountancy fees, actuarial fees and legal fees are disproportionately high for small schemes. There is a good place for consolidation, but she is right to worry about governance and ensuring that we do not go from a situation under an employer scheme with high levels of governance to one under a bigger scheme where that gets lost. That can probably be worked through in a scheme’s design and set-up. Ultimately, the solution to protecting DB schemes is not governmental but in the economy and the strength of the sponsor or, where available, the parent company. One of the big difficulties is volatility and the lack of certainty around risk.

The Government continue to take steps to pick apart the issues faced by the DB sector. They are doing good work, but fundamentally we need a clear understanding that governance, funding and covenants are intrinsically linked. I look forward to hearing the good story the Minister has to tell on what the Government are doing.

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate the hon. Member for Crewe and Nantwich (Laura Smith) on securing this important debate. I was heartened by it. I had thought that cross-party working and the recognition that we are all trying to do something in a positive space had been lost to a certain extent, but her speech was incredibly positive in that regard. I am sure the Front-Bench speaker, the hon. Member for Birmingham, Erdington (Jack Dromey), will reflect that later. I also want to say that the speech by my hon. Friend the Member for East Renfrewshire (Paul Masterton) was the speech I wanted to give. We have just been discussing that. It was absolutely top drawer and very thoughtful.

My career as a financial journalist spanned what I would call the sharp decline of private workplace DB schemes. I remember all too well speaking to people at the Allied Steel and Wire steelworks in Cardiff, who had effectively lost their pensions when their company was wound up almost overnight. The same was true for Maersk, probably one of the worst examples of corporate acts in this country in the last generation. Under the laws at the time, retired members were understandably protected first, which meant that those who were even just a few weeks from retirement ended up with virtually nothing. I can remember the heartbreak in their voices.

That decline comes from many issues. In that instance, it came from poor company governance and the fact that the economics of DB schemes have been fundamentally undermined over time through demographics and investment returns. Frankly, for the last 15 years, DB schemes have been effectively dead in terms of new members for the private sector. They have existed in the public sector and have morphed and developed over time—we will see how that goes and whether the current models are sustainable.

In response to those issues at Maersk and ASW, we had the Pensions Act 2004, which helped to set up the PPF. Mr Rubenstein’s management of that has been pretty exceptional. The PPF has been well managed, but frankly it can take only so much. A lifeboat can take only so many passengers. The difficulty is, as my hon. Friend the Member for East Renfrewshire noted, that 3 million members face potentially only a 50% chance of having their pension. The more we load into a lifeboat and the greater the burden on other funds, the more likely they are to collapse in turn.

We need a longer-term solution, and we need to focus on the 2,000 schemes with fewer than 100 members. I believe conversion is a good idea. However, I take the point of the hon. Member for Crewe and Nantwich that perhaps the current models of conversion, which to a certain extent are zombie funds, are not the way we want to go. What we need is to transfer to scale, so that the returns come through back office. More than that, potentially, there is my big idea—I have written to the Minister about this before and he will not be particularly surprised that I mention it—of rebasing some work-based pensions over time, so that we end up putting everything on a sustainable footing. We could also adapt schemes to the modern world in terms of spousal pensions and, I would suggest, the potential provision of social care.

The tail is wagging the dog. We have a statutory architecture built for a system where people had jobs for life and DB schemes were ongoing entities. For increasing numbers of schemes, retired and deferred members far outweigh active members. Employers are not members, and members are not employees. In that context, the direct link between the employer and the scheme makes diminishing sense. Of the £80 billion or so paid into workplace pensions, around three quarters of which is in respect of DB schemes, nearly half goes to the public sector, yet active membership of DB schemes is now down to just 7 million workers and is falling daily.

We need to break the link. First, we should establish a universal benefit structure, or a kind of common denominator pension, based on a common structure—for example, a one-sixtieth or one-eightieth scheme, with 50% spousal pension and consumer prices index inflation-proofing up to 5%. We would then go through the time-consuming and laborious process of valuing existing DB schemes by reference to that universal scheme on an actuarially neutral basis. For example, in my 20s I contributed a negligible amount into a final salary pension scheme on a one-fiftieth accrual basis. As a result, I was guaranteed a pension of nearly £4,000, with RPI and a two-thirds widow’s pension. The scheme is now in the PPF, but that is because the promises were far too great for the contribution levels.

It would have been better if, at an earlier stage, those considerable benefits had been converted to, say, a £5,000 pension in a new scheme. People would not lose their pension initially, and hopefully not at all. Instead, it would be simplified and moved on to a surer footing. That is one point for the hon. Member for Crewe and Nantwich, who talked about consolidation schemes. We could invest in very large schemes indeed. Some of the governance in some of the smaller schemes with fewer than 100 members is frankly very amateur. It is pitiful and almost mothballed.

If we were to have larger schemes, privately run by something such as a type of National Employment Savings Trust, with Government involvement on the board and oversight by regulators, we could move to a situation where we all feel more invested and know exactly what we are getting. Crucially, we could rebase to enable us to provide better futures for spouses.

Another area I will mention is that we could offer a social care option. If I had a very large scheme involving maybe 500,000 to 1 million members, I would have the scale to offer a social care option. I could say to someone, “At the moment you will get a pension of £10,000 per year. What we will do is to give you a pension of £8,000 per year, but we will invest through our scheme, because we have scale and can do so.”

--- Later in debate ---

On resuming—

[Julian Knight]

I apologise. We were so rudely interrupted by the Liberal Democrats.

The effective remodelling of these almost-zombie DB schemes could be a means by which we ostensibly kick-start a different approach to social care and allow people to choose whether to supplement their social care in the long term by actively deciding to put away a certain amount of pension in order to receive a certain amount of social care insurance. There are all sorts of options for that.

I conclude by saying that the Green Paper and White Paper were refreshing and thoughtful. We have an opportunity to do something that the Turner report did not do—it dealt mostly with public finances and the state pension—which is to shift the balance and the focus on to private sector workplace pension schemes. We need them to play a role, but we also need to repair the problems of the past.

[Mr Philip Hollobone (in the Chair)]

We now come to the first of the Front-Bench speeches. The new finish time for the debate, because of the Division, is 5.40 pm.

Personal Independence Payment

Julian Knight Excerpts

Tuesday 23rd January 2018 Commons Chamber

[Ms McVey]

We will absolutely go via the people who are most in need.

[Julian Knight (Solihull) (Con)]

rose—

[Jeremy Quin (Horsham) (Con)]

rose—

[Mr Speaker]

I call Julian Knight.

[Julian Knight]

Thank you, Mr Speaker. I had a one-in-two chance.

I warmly welcome my right hon. Friend the Secretary of State to her place and welcome her talk of engagement. Will she commit to providing specific guidance to MPs’ offices and council contact centres at the earliest possible opportunity?

[Ms McVey]

That is another good point about how people are going to know about the changes. We will indeed take that suggestion forward.

Financial Guidance and Claims Bill [Lords]

Julian Knight Excerpts

2nd reading: House of Commons
Monday 22nd January 2018 Commons Chamber

[Julian Knight (Solihull) (Con)]

I shall keep my comments relatively brief, Madam Deputy Speaker, mainly because I have a chest infection and I do not think my voice will hold for too long.

The Government’s decision to move ahead with a much-needed overhaul of the financial guidance system is welcome. Likewise, it is important to put in place protections for pension savers. My hon. Friend the Member for East Renfrewshire (Paul Masterton) mentioned £8 million being lost to scamming in one month. That is just the tip of the iceberg, because that is just what is reported. Scamming is a serious and ongoing problem, so I really welcome the moves in place to help to alleviate it.

As a former personal finance journalist, I have seen at first hand the terrible consequences—not only financial but social and even medical—that can follow when people fall into problem debt or are preyed on by fraudsters. Bringing the various money advice services together will help to ensure joined-up support, and to make sure that fewer people fall through the cracks in the system.

The Bill represents welcome progress, but more needs to happen through the financial services and financial advice sectors. They need to step up to the plate. Unfortunately, in recent decades the market has not properly served what I call middle earners. It is right that this debate has focused on the most vulnerable, as the Minister said earlier and has said on other occasions. However, the financial advice wasteland that has been created serves our society very ill indeed.

Insurance and advice products used to be sold on a commission basis. Going back in time, we can remember the man from the Pru, who would effectively mass sell financial products. Companies had a clear incentive to cater to everybody. There are good reasons why we moved away from that system. As a young man, after leaving university, I worked at a now-defunct organisation called the Joseph Nelson group. As part of that job, I had to fill in client ledgers. I had no idea what their particular business was, but I noticed that, no matter whether they were in their 20s or their 80s, every client was being sold the same product. The thing that linked it all was the level of commission, which was many percentage points.

I saw at first hand organisations such as the David M Aaron group, which is also now defunct, selling swaps and other very risky investments to people to whom they should not have been sold. I have seen these high-cost, high-margin products being pushed on customers, regardless of their personal circumstances. As a personal finance journalist, I covered the implosion of Equitable Life, which saw thousands lose their life savings. It is not acceptable that a huge part of the population has subsequently been left without access to affordable advice.

Advisers have effectively migrated upwards to cover what they call high-net-worth clients. It can now be very expensive indeed to get good independent financial advice. The sector has a responsibility to step up and to find new ways to serve customers. Modern technology, from data-sifting algorithms to remote advisers, offers ways to provide personalised and accessible advice that were unimaginable when I was filling out hand-written ledgers at the Joseph Nelson group many years ago. We need more life-event advice, because the break-point of annuitisation no longer applies to most people.

The Bill is not an end in itself; it is a challenge to the financial services advice industry to do more. The huge increase in the number of self-employed people has profound implications for the personal finance landscape. For a sole trader, the line between personal and business finance is not nearly as clearcut as it is in larger, more traditional companies. Many self-employed people who fall into personal debt do so while trying to support their business. According to the Money Advice Trust, fully seven in 10 of its business debtline clients had taken out a personal loan and were using at least part of it to prop up their enterprise.

Finally, I wish to touch briefly on my work as chairman of the all-party group on financial education for young people. School offers an unparalleled opportunity to impart good habits and vital life skills to the next generation, but we still have a huge distance to travel to ensure that young people are properly equipped to navigate today’s fast-changing and complex financial landscape. The development of key skills and knowledge about money matters helps pupils and, indeed, their parents to make wise choices in later life, when innovations in financial technology and online consumer tools—not to mention the march towards a cashless society—will make previous experience and the advice of their elders an unreliable guide.

Oral Answers to Questions

Julian Knight Excerpts

Monday 18th December 2017 Commons Chamber

[Mr Gauke]

What I would say to anyone—Members of Parliament, newspapers, advisory bodies and food banks—is that we need to make sure that the facts are set out to new claimants: if they need to get access to support, they can get it quickly; they need to get in contact with their jobcentre; and they are able to access an advance, and they can get that money before Christmas.

[Julian Knight (Solihull) (Con)]

Does the Minister agree that auto-enrolment has been a success to date and it is right to lower it to the age of 18, but that politicians—of all hues—and the pensions industry must work together to meet the savings and pension challenges facing this country?

[Guy Opperman]

I could not agree more with my hon. Friend. I am delighted with the fact that we now have 9 million people signed up to auto-enrolment, utterly transforming workplace pension savings. In his constituency, 8,000 employees and 680 employers have signed up—and great credit to them.

State Pension Age: Women

Julian Knight Excerpts

Wednesday 29th November 2017 Commons Chamber

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

Since world war two, we have seen a dramatic change in life expectancy. We are living longer, staying healthier, fighting diseases that previously would have killed us and leading a more active lifestyle, regardless of age. Faced with demographic pressures and increased life expectancy and costs, successive Governments have acted. We must be realistic about the demographic and fiscal challenge that these changes create for us as a society.

Taking forward-looking action is critical to protecting the long-term sustainability of the state pension not only for today’s taxpayers, but for future generations. In July, the Government published their first review of the state pension age, which sets out a coherent strategy targeted at strengthening and sustaining the UK state pension system for many decades to come. It accepts the key recommendations of John Cridland’s independent review, which consulted a variety of people and organisations, including the Scottish National party—the bringing forward to 2037 to 2039 of the increase in state pension age from 67 to 68.

[Julian Knight (Solihull) (Con)]

Will the Minister explain to the House the potential debt impact on future generations of spending up to £39 billion reverting to the 1995 timetable, as well as of Labour’s plan to freeze any increases in the state pension age, which would cost hundreds of billions?

[Guy Opperman]

I am grateful to my hon. Friend for his intervention. I recognise that he has more than 25 years’ experience of working in the pensions industry through his previous journalistic work. The reality is that if the Pensions Acts 1995 and 2011 were to be revoked, it would cost well in excess of £70 billion. If we were to follow the path set out in the Labour party manifesto, which would keep the state pension age at 66, it would cost approximately £250 billion compared with the itinerary set out by the independent review commissioned by the Government and produced by John Cridland.

The Cridland review is very clear on that point. It says:

“In 1917 King George V sent the first telegrams to those celebrating their 100th birthday. 24 were sent that year. In 2016 around 6,000 people will have received a card from Her Majesty the Queen. In 2050, we expect over 56,000 people to reach this milestone.

Three factors are at play here: a growing population; an ageing population as the Baby Boomers retire; and an unprecedented increase in life expectancy. A baby girl born in 2017 can expect to live to be 94 years and a boy to be 91. By 2047 it could well be 98 and 95 respectively…The world of the Third Age is now a very different one, in which those lucky enough to get the State Pension will on average spend almost a third of their adult life in retirement, a proportion never before reached.”

It was clear that the Government had to act.

Universal Credit Roll-out

Julian Knight Excerpts

Tuesday 24th October 2017 Commons Chamber

[Julian Knight (Solihull) (Con)]

I am pleased to follow the hon. Member for East Ham (Stephen Timms), who has great experience as a former Pensions Minister. I am sure that he is aware that the idea behind universal credit is to change what has become a very dysfunctional welfare system that not only drains public finances and is very inefficient, but is a huge waste of human potential. Deeply flawed as the old welfare system was and remains, however, it is still a lifeline for many of the poorest and most vulnerable people in our society, and we have to be cognisant of that. Ministers must handle it with extreme care, even when acting with the very best of intentions.

I am sure that by now we are all familiar with the shortcomings of the old system. Not only was it very complex and difficult—both to navigate as a claimant, and for the Government and jobcentres to operate—but it created huge disincentives to work, as my hon. Friend the Member for South Suffolk (James Cartlidge) said. Many would-be jobseekers found themselves facing marginal tax rates not seen in this country since Denis Healey sat in No. 11. The idea of universal credit is that it rewards work: people can work the hours that they want, effectively. It brings in that flexibility and ensures that people will not face the very difficult decision, which has been mentioned by some hon. Members, of basically turning down work in order to keep benefits.

[Ruth George]

Does not the hon. Gentleman agree that under the last Labour Government’s tax credit system, the clawback of wages was 39%, whereas under universal credit it is 63%? The individual keeps only 37% of what they earn. If they pay tax, the clawback rises to 75%—they keep a quarter of it.

[Julian Knight]

I thank the hon. Lady for her intervention. I am about to discuss tax credits and my experience of dealing with that area as a personal finance journalist in 2003, when the credits were launched.

Work is the only long-term route to financial independence. Not only does long-term unemployment sap an individual’s self-confidence and erode their employability, but children who grow up in workless households are far more likely never to enter employment themselves. Generations of people do not get into work, and therefore poverty beds down. By acclimatising claimants to the rhythms of working life and being designed to ensure that employment always pays, universal credit not only supports today’s claimants, but is helping to steer many of the next generation away from the welfare system altogether, which is a very good thing indeed.

This is, undoubtedly, an enormous change, and Ministers have been wise to choose to proceed cautiously. The full roll-out of universal credit will not be completed until 2020, a whole nine years after the policy was first trialled and enacted. That involves many dry runs, and the process is in very stark contrast to the introduction of tax credits in 2003, when I remember very well that there was huge disruption to millions of people’s lives.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

Is the hon. Gentleman aware that 2017-18 was supposed to be the final year for the roll-out of universal credit under the initial plan, but that the Government had already accepted that they needed to improve the process? Does he wonder why the Government are being so stubborn now?

[Julian Knight]

I applaud the Government for taking the roll-out to 2022—it shows they are listening. They want to get this right so that we do not end up with the situation we saw in 2003 with tax credits when, frankly, there was a dead ear from the then Government.

I will conclude as I am aware that many Members wish to speak. It is only right that we acknowledge the measures that the Government have put into place to protect vulnerable users, to provide an advanced payment system for claimants who cannot afford to wait for six weeks for new payments, and to ensure that people who are transferred on to universal credit see no loss in their entitlement in cash terms. The Government have rightly announced a review of DWP phone lines, which is a welcome and positive development. I hope that all Government Departments are cognisant of such situations and people in need are not charged excessively for using phone lines.

Oral Answers to Questions

Julian Knight Excerpts

Monday 9th October 2017 Commons Chamber

[Guy Opperman]

The reasons for the original changes were the changes in life expectancy and equality law. If the law proposed by Labour were to approach men and women differently, it would—with respect—be highly dubious as a matter of law.

[Julian Knight (Solihull) (Con)]

Will the Minister further clarify that point? Labour says that the previous pension age could come back and that we could return to a situation where men are discriminated against. Does he agree that such discrimination might be profoundly against the law?

[Guy Opperman]

Those who seek to make the case for such a law would need to satisfy themselves that men would not bring a case against the proposers, because it would unquestionably create a new inequality between men and women.