Intergenerational Fairness

Julian Knight Excerpts

1st reading: House of Commons
Tuesday 28th February 2017 Commons Chamber

[Mr Stewart Jackson (Peterborough) (Con)]

This has been an excellent debate, which was brilliantly introduced by the right hon. Member for Birkenhead (Frank Field) and has included thoughtful and intelligent contributions from all hon. Members.

This debate is about poverty, wealth, the accretion of assets and life chances. My grandmother, Kathleen Woodman, was one of 13 children born in County Wexford in Ireland. Eleven of those children died of tuberculosis before Kathleen was taken to England in the late ’40s to live out the rest of her life. I mention that because it is impossible not to remember that the reality of life for so many of our fellow citizens for so many hundreds of years was brutal, grinding poverty. We have come an enormous distance. I say to the right hon. Member for Birkenhead that, yes, there is much to be done, but we have done a great deal to right the wrong of the grinding poverty that afflicted so many people over so many years.

It is important to remember that the modern welfare state was debated after Lloyd George’s 1909 people’s Budget, which brought in social insurance, pensions and the pre-Beveridge foundations of the welfare state. For that reason, we ought to recognise that we have gone in the right direction over the years. To use another statistic, it is impossible to believe that 44% of the world lived in absolute poverty as recently as 1980. In 2015, that figure was 9.6%. We have done an enormous amount—through technology, science, innovation and advances in healthcare—to lift the burden of destitution, misery and poverty from our fellow man, and we should accept the importance of that.

I will confine my remarks to the specific issues raised in the report. The debate between the so-called millennials and the baby boomers does not have to be acrimonious and adversarial. None of us can do anything about the societal change inherent in it, which is essentially demographic. The number of over-85s will double in the next 25 years, and that is a fantastic piece of news. As recently as 30 years ago, people worked incredibly hard—often in manual work. They reached 70 and had a few years tending their plants or their budgie, and then they fell off their perch. That was the reality of our life then. People now are richer, happier and healthier, generally speaking, than they have ever been, and that is a good thing.

It is also true to say, though, that we have not always done the right thing in response to that significant demographic change. To go back to the points made by my hon. Friend the Member for North Swindon (Justin Tomlinson), we have made some policy mistakes. We had a fetish in the 1980s and 1990s for university education—academic education. We did not consider the importance of technical and vocational education to young people who were not necessarily academically gifted. We drove the target of 50% of 18-year-olds going to university, which is great if someone goes to Harvard, Oxford or Cambridge, but not if they go to a less prestigious university and end up earning £7.50 an hour in a call centre, with £40,000 of student debt. We have to really consider whether we made the right decision. For instance, we turned polytechnics, which did a great job in providing technical education for young people, into universities. Was that the right thing? We are doing our best now to ameliorate those issues by, for instance, creating university technical colleges and a brilliant apprenticeship programme across the country, but I am not sure that is enough.

Housing is an important issue, and it was raised by the hon. Member for Hornsey and Wood Green (Catherine West)—I think she got her figures the wrong way round, unless Muswell Hill has gone downhill a lot since I last visited it, compared with Wood Green. It is absolutely right to point up the issue of older people, who are, in any case, better off, hoarding capital assets and, particularly in the planning system, preventing younger people from having what they themselves had. When someone who wants to buy a home has to be 37 years of age and to have something like £25,000 for a deposit, that cannot be right, and it distorts the system. We must build more homes, release more land and liberalise the planning system to address the specific issue of housing and intergenerational fairness.

We have to look at the triple lock, and we need a national debate about it. I am indebted to the Resolution Foundation for the paper it produced last year—“Stagnation Generation: the case for renewing the intergenerational contract”—and for the work of Lord Willetts, among a number of people. It is scarcely believable that the Resolution Foundation could say:

“Millennials are at risk of becoming the first ever generation to record lower lifetime earnings than their predecessors”.

That is the political inheritance we are potentially giving to people who are under 30 at the moment.

[Julian Knight (Solihull) (Con)]

Does my hon. Friend therefore agree that we should reform pensions tax relief to enable younger people to save more? Three quarters of pensions tax relief goes to higher earners, who are often older. If we reformed it—moving to, say, 28p or 30p in the pound—lower-income people would have more bang for their buck.

[Mr Jackson]

I absolutely agree. In terms of fairness and social equity, that is an excellent fiscal policy, which we should look at.

As the Select Committee report said, we also need to look at the information gap. We need qualitative and quantitative data on what goes in and comes out across both generations. We need to publish that analysis and study it independently.

We need to look at universal pension benefits, such as the winter fuel allowance. With demographic change, it is inevitable that we need to make sure we marshal our public resources in the best way we can. We need to look at a smoothed earnings link—a nuance in terms of prices-related indexing of benefits to pensioners. Life expectancy is increasing and health outcomes are getting better.

It is not that we have not done a good job, with automatic enrolment, changes in tax allowances, the national living wage, record employment of 74.6%, apprenticeships, and real incomes now rising by 2.6%. As we have heard, the number of those not in education, employment or training is reducing. Youth unemployment in my constituency has seen one of the biggest falls in any constituency in England—about 70%. Work means wealth. Work is the biggest determinant of getting out of poverty. Albeit that it might be low-paid and low-skilled work at the beginning, it is the No. 1 determinant of breaking the cycle of intergenerational welfare dependency. It is hugely impressive that the Government have taken 865,000 people out of workless households since 2010, although obviously they need to do more.

Before I conclude, may I be a little disobliging to the Scottish National party? The hon. Member for Motherwell and Wishaw (Marion Fellows), who is an excellent representative of her constituency, was rather churlish in the partisan point that she made. If we are talking about ideology, perhaps she can explain the £2,000 gap per head in public expenditure as a result of the Barnett formula, as between my constituents and hers. I will leave that in the air for her to think about.

My hon. Friend the Member for Weston-super-Mare (John Penrose) made a superb speech. In fact, we do not have an approach where we just put money in a biscuit tin and take it out when we are 68 or 70—we have a pay-as-you-go system. We must have a national consensus and a proper debate on this issue, because we cannot kick it into the long grass any longer. As I said at the beginning, grinding poverty, destitution, ill health and hidden mental illness are all things that we never want to go back to. The system we have is a price we are paying for a civilised society.

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[James Cartlidge (South Suffolk) (Con)]

It is a real pleasure to follow the hon. Member for Birmingham, Selly Oak (Steve McCabe), who is a very good member of the Select Committee on which we both serve. I will echo one of his key arguments, which is that we need to reform the triple lock and other pensioner benefits and to use the savings for adult social care and the NHS, given how much of those savings would go to those who are pensioners.

The key word used by the hon. Gentleman was “honesty”. We must level with the British people about the financial situation we are in. The way to look at it is to ask: if we had a blank canvas today, what would we keep of what we have now? No one starting a pensions system today would come up with the triple lock. No one would suggest a winter fuel allowance, costing £2.1 billion, which is paid to everyone regardless of their income or their national insurance record. In my view, no one would suggest a free bus pass, which costs £1.2 billion. No one would even suggest the £10 Christmas bonus, which Ted Heath introduced in 1972, costing £124 million at Christmas, at a time when the NHS is in crisis and needs more funding.

The essence of my argument is that 2020 is way too late. To have such a date is to use an arbitrary political timetable to enforce policy, at a time when the national interest requires us to look at the state of adult social care and the NHS and to find the money needed for them in a fair way. To me, the proposition that we are about to put more money into adult social care and the NHS but that none of it will come from existing pensioners is extraordinary. We have to look at pensioner benefits and the triple lock.

When it comes to the triple lock, we must remember that by 2050 the number of pensioners—the number of people over 65—will not be 10 million as it is today, but 19 million, which is almost twice as many. Look at the pressure our services are under today, let alone when there are almost twice as many pensioners. If we keep the triple lock, it will cost an extra £15 billion by 2050. My view is that we should recognise that the most vulnerable pensioners—those who need help from the state the most—are in the care system or in the NHS and in need of care.

I think we should look very hard at the winter fuel allowance. I would capitalise it for a year to invest in remediation measures, provide help with heating and so on, and move people on to more competitive energy tariffs, and then I would wind it down and spend the money on the care system, because that is what pensioners need, particularly in the winter.

We should look at the free bus pass. We could put a nominal charge on the pass and allow pensioners to travel at peak time. According to my county council, that would be a huge saving. It is actually what many pensioners want, bearing in mind how many do not take advantage of the free pass, which costs the Exchequer £1.2 billion a year.

I have to add that we should look at free prescriptions. In England, we say that we pay for our prescriptions, but 90% of prescriptions in England are not paid for, because so many of them go to the over-60s. The cost of free prescriptions in England for the over-60s is £4.8 billion. I recently went to a pharmacy in the beautiful village of Clare in my constituency. Most of the over-60s there are relatively well-off and probably own their properties outright—of course, there are pensioners there who are not well-off—but the fact is that they receive free prescriptions while many far less well-off people of working age do not. That is the sort of moral issue we must talk about.

What would I use the savings on? People should be as open and honest about this as I and our Committee have been prepared to be.

[Julian Knight]

My hon. Friend is slaughtering sacred cows in such a steady fashion that I am wondering whether he is also considering looking at free BBC TV licences. Is that an expense we cannot afford?

[James Cartlidge]

My understanding is that the BBC will be asked to pick up the tab for that shortly, which I think is fair enough.

As I say, none of us would introduce such things today. They were political measures that bear no relation to contributions to the national insurance system or to the incomes of the recipients. That is the sort of politics we simply cannot afford today. Instead, we should be prepared to look at these measures, and use the savings to support a fair deal for those who have assets and need the care system, as well as to support those in the care system who cannot support themselves. Raising money to support the care system offers the possibility of another aspect of intergenerational fairness. The care sector is desperately short of staff and too many are badly paid. If we raise the money to support the social care sector, which will not be hit by the robot employment era, we have a way to give better paid work to young people and to provide a better career structure to those who might otherwise be on relatively low pay.

I want to finish on the key point made, in an excellent speech, by my hon. Friend the Member for Weston-super-Mare (John Penrose). I strongly agree with him on the issue first raised by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley) in relation to the basic pension plus in April 1997 that we should move to a funded system. All our constituents who are pensioners will make the point, “Why should you take this stuff away from me when I have paid into this all my life?” And quite right. Pensioners come to my surgeries worried about having low interest rates on their savings when council tax is going up. They are affected by that. I accept that many of them are not wealthy. In fact, many are struggling. I accept that, but the root of the problem is that we have a pay-as-you-go system. We have vast freebies, such as prescriptions, and nobody feels any link to them. My hon. Friend is right that this is about the contrast between a Government who would be doing the right thing, even though it is not popular, of building towards a funded system, and those in the past who have given out vast freebies at the expense of future generations. The former is the model we should move towards. It may not be popular, but I think the public know that tough decisions have to be made. We should not shy away from them. If we want inter- generational fairness, we will have to have a little bit of intergenerational honesty.

Pension Schemes Bill [ Lords ] (Fourth sitting)

Julian Knight Excerpts

Committee Debate: 4th Sitting: House of Commons
Thursday 9th February 2017 Public Bill Committees

[Craig Mackinlay]

I oppose new clause 2 just as I opposed new clause 1, not least because of practicality. Let us go back to the example of NEST, which could have millions and millions of members—and I envisage that it probably will. How on earth could an investment strategy be decided by 3 million members? That would probably lead to three million and one different investment strategies.

I do not see anything in the Bill that would prevent a scheme such as the one the hon. Gentleman proposes from coming to the market if there was demand for it from several employers and members in those employers. The market could then decide, “I like the look of that scheme, with its huge member involvement.” I see no reason why such a scheme could not evolve if one was called for.

The hon. Gentleman speaks about an ethical investment policy. That is all very well, but I remind him that the Co-op bank took a similar route, and it is not exactly in great shape. I put it to him that when I go to a doctor, I like to see the doctor; I do not particularly want to see the lay members of the NHS trust as well. I feel comfortable leaving this with investment professionals, because they will be judged on their performance. If they do not achieve, employers may look at an alternative master trust.

[Julian Knight (Solihull) (Con)]

Surely when picking a pension fund employers interact with funds and many of these issues are raised in those interactions.

[Craig Mackinlay]

As my hon. Friend says quite clearly, the results will speak for themselves. I come back to the principles that I mentioned earlier: the fund has to have good returns and be well run and focused, because it has one function—to deliver good pensions. Again, I do not see that the new clause would achieve any of those principles, and if nothing else, it is unworkable because of the size of funds.

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[Julian Knight]

Is it not true that many of the auto-enrolment schemes are vanilla in their investment outlook? Many of them—or a high proportion—are based around direct savings accounts and passive investment funds. They are not the high-risk, high-octane investments that would perhaps need the approach in the new clause.

Pension Schemes Bill [ Lords ] (Third sitting)

Julian Knight Excerpts

Thursday 9th February 2017 Public Bill Committees

[Craig Mackinlay]

I do not disagree with what the hon. Gentleman says; ultimately, it is the employees’ funds, and it is important that they should take the greatest interest in them. I think that employee involvement in occupational schemes has generally been worthy and a great success, but I am more concerned about the practicalities of how the form of democracy he advocates could possibly work when there will be millions of employees in a single master trust.

[Julian Knight (Solihull) (Con)]

With regard to the potential for an administrative nightmare, is it not also true that companies will switch between different master trusts? If the requirement of having elections and so on is put upon them, that will make administration even more difficult, if not impossible.

Pension Schemes Bill [ Lords ] (First sitting)

Julian Knight Excerpts

Tuesday 7th February 2017 Public Bill Committees

[Richard Harrington]

As I explained before, the two are covered by separate regulation and separate rules. I do not see how combining the two together under the same regime would help to give protection.

[Julian Knight (Solihull) (Con)]

Is not the truth that the two types of regulation will slot alongside each other? There will be a symbiotic relationship between money purchase and defined benefit.

[Richard Harrington]

My hon. Friend makes a good point. That is very common in other systems of regulation, sometimes to the chagrin of employers and people involved, but for many companies in other financial fields there are different systems of regulation for the different products they offer. That is not uncommon. As to what we must avoid, the hon. Member for Stockton North will accept that Governments must try to think how things work in practice, which is not to say that he has not considered it. However, we must have workshops of interested parties and consult widely. How things work in practice is important.

The end product for all hon. Members is predominantly consumer protection—the Bill is a consumer protection Bill. We have different views, but we are discussing the extent of consumer protection provided. I and my officials have considered Opposition amendments respectfully. They are not spurious and have been thought through. In fact, many were quite properly put to us—it is a democratic system—by groups such as the Association of British Insurers. They are not created out of thin air. However, we have had to think about whether in practice they will add to consumer protection. That is the test. Alternatively, will they just increase the regulatory burden? We have also been lobbied about that—again, quite legitimately—by those concerned. It is the Government’s job to try to come up with something in the middle.

My hon. Friend the Member for Amber Valley, who tabled amendment 32, discussed self-employed people, and attempted to ensure that I have in fact read the Bill. I do not think I should have the arrogance to stand here if I had not, but it is perfectly proper that he should ask. I certainly accept that my hon. Friend, given his years of experience and attention to detail, has read it. I shall try to answer his general and specific points.

On the question of the role of self-employed people, not just in the master trust schemes but generally, my hon. Friend is correct to identify that the number of self-employed people has grown exponentially in the past 10 to 20 years, even more than in the days of the Turner commission, of which Baroness Drake was a member. She has been most helpful with the Bill. I acknowledge her role and that of Lord McKenzie in helping both the Opposition and the Government very constructively.

The commission perceived self-employed people as those with their own business, who, by implication, would have an accountant or, at least, an adviser or someone similar. My hon. Friend was saying that, with the big growth in self-employment over the period, the people in question are typically not very high earners. Like him, I make no comment as to whether they should be self-employed—the fact is that legally they are. They do not have an accountant and the things necessary for someone who is running a business and employing people despite being self-employed. They are at the moment outwith the auto-enrolment scheme. I know we are here to discuss that from a regulatory point of view but, as politicians, we also want those people to have pensions, because the House agrees that that is a good thing.

I want to answer the hon. Member, who is going to be cross with me again, for Loch—

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The Bill requires that, to be authorised, a scheme must satisfy the regulator that its systems and processes are sufficient to ensure the effective running of the scheme. The amendment would create a new requirement for those running schemes, which would have to develop a policy on those matters, as well as meet the requirements under clause 12. It is not clear to me, though, how placing that additional requirement on the industry would necessarily increase protection for the members of the master trust schemes or the provision of information on those matters to the regulator.

[Julian Knight]

I am in clear agreement here: although the engagement strategy sounds worthy and laudable in many respects, that phrase is open to interpretation. All I can see it doing is creating a whole new industry—extra costs—and opening up the potential for legal challenges down the line, in a way similar to what happened with Equitable Life. As the Minister will remember, the Government issued certain brochures through the Financial Services Authority that became the basis of action further down the line.

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What would the role of the Pensions Regulator be in the event of a failure? There are high risks, with high immediate costs associated with those risks, and somebody will have to pick up the pieces. Will it be the Pensions Regulator? Will it have the resources to do so? We must remember that history dictates that there are always possibilities of large-scale failure with anything related to financial services.

[Julian Knight]

The hon. Gentleman is making some interesting points. Surely the point of the legislation is to ensure that, on start-up and on an ongoing basis, the fund and the pension scheme are sustainable. That is the job of the Pensions Regulator. He also mentioned the return of the entire capital. Even in the Pension Protection Fund, it is still only 90% return on capital.

[Alex Cunningham]

Yes, it is the responsibility of the regulator to ensure that whatever trusts are set up are stable and ready to go. My point is that, as we have seen, whether we are talking about defined-benefit schemes just looking at the failure of the banks in recent years, there is always an opportunity for catastrophic failure in our master trusts, with perhaps 1 million or 2 million members. I am not convinced that there is provision to protect their interests. Lord Freud referred to this clause as a sledgehammer to crack a nut, considering all the mitigations against the risk that are already in the Bill, but what if those mitigations are not enough?

Again, will the Minister provide the Committee, and people all over this country, with a 100% assurance that the Bill without this clause is enough to protect members? Will he guarantee that no master trust will be in a situation whereby it has failed and has insufficient resources to meet costs? I believe—he has already said it, and I have said it as well—that he cannot guarantee that 100%, which is why the clause needs to stand part of the Bill. By seeking to remove it, the Government continue to go back to the argument that there are enough conditions in the Bill without the clause, such as the Pensions Regulator needing to be satisfied that the master trust has sufficient financial resources to comply with its continuity strategy. There are too many unknown factors out there in master trust world for us to know that for certain.

How can we encourage ordinary, hard-working people to save for retirement and put their trust in a scheme that their company bosses have picked for them when the Government are consciously acting against the clause that could be the safety net? We have seen all manner of pension schemes get into trouble and pensioners have been the losers, so we need systems to be much more robust. Workers need to be confident and assured that the money they have faithfully put aside is given the greatest possible protection.

Another mitigation in the Bill that the Government use to support their argument that the clause is not needed is the regulation of our record management, which will be regularly monitored.

Pension Schemes Bill [Lords]

Julian Knight Excerpts

2nd reading: House of Commons
Monday 30th January 2017 Commons Chamber

[Damian Green]

I acknowledge the problem faced by the hon. Gentleman’s constituent and others in the same scheme. The Parliamentary Under-Secretary of State for Pensions, my hon. Friend the Member for Watford (Richard Harrington), has met the hon. Gentleman’s constituent. We are looking, with representatives of the employers and the scheme, to see what we can do about the issues that they have raised, and we are exploring alternative methods to help employers in such schemes to manage their employer debt. The hon. Gentleman will be aware that this is a complex area of legislation, so it is important that we get it right. As I hope he knows, we are on the case.

[Julian Knight (Solihull) (Con)]

I really welcome this legislation, but I am not the only one. I do not know whether the Secretary of State is aware of the comments of Morten Nilsson, the CEO of NOW: Pensions, a huge master trust. He has said:

“When we entered the market we were shocked at how easy it was to set up a master trust. It was simply a case of sending a form off to HMRC and The Pensions Regulator, nothing more.”

I am very glad that the Government are looking to address that serious issue.

[Damian Green]

My hon. Friend raises an important point, which is at the heart of the legislation. The strong and quick growth of master trusts in response to the success of automatic enrolment has been in danger of running ahead of the regulatory system. In the Bill, we are catching up and making sure that the regulatory system is adequate to deal with these trusts, which will be hugely important in 20 years’ time. We hope and expect that auto-enrolment will carry on, so the funds under management will increase hugely in the decades to come. It is really important to have the regulation right from the early days of the new system.

Automatic enrolment requires employers to provide a pension for their workers. It is, as I have said, helping to ensure that tomorrow’s pensioners have greater security and an asset base. Many employers have selected master trust pension schemes because they offer scale, good governance and value for members.

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[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the hon. Member for Oldham East and Saddleworth (Debbie Abrahams). It is probably a fair sum-up to say that we might have liked the Bill to address most of the things that she complained about and most of the things that I might not like, rather than the measures actually in it, which I think get a broad and generous welcome. None the less, this is a necessary Bill that contains the right measures, and we hope it will have a speedy passage through this House.

I want to start by saying that the master trusts, or the more extensive use of them, are a welcome development in the pension landscape. It is hard to see how auto-enrolment would have worked if we had not had the extensive use of master trusts, because what we would not have got is especially small employers setting up their own pension scheme and trying to manage and administer it, or at least act as trustees of it. What we had to see in this situation was much larger trusts in the market that employers could effectively sign up to but not incur the ongoing costs and complexity of trying to be involved in their day-to-day running. So these things are attractive, but it is right that we make sure they are well regulated and we do not create situations where savers are disadvantaged by them.

It is probably quite brave in the pension world to have tried voluntary regulation or self-regulation, but that is effectively what we have had since 2014 with the master trust assurance framework. I perhaps should declare a sort of interest. The framework was drawn up by the Pensions Regulator with the Institute of Chartered Accountants in England and Wales, of which I am a member. It is disappointing that, having had that assurance framework in place, so few of the master trusts in the market signed up to it and followed all the requirements. Indeed, very few of them went through the full audit process required. So it was clear that we had to move to full and proper regulation set out in statute for these master trusts.

This is particularly important in a situation where effectively we in Parliament and the Government are perhaps not quite forcing people to save into these trusts, but strongly encouraging that, and two thirds of those who have been auto-enrolled have ended up in one of these trusts. It is therefore key that we make sure they are in high-quality schemes that look after their interests and we do not let them either be ripped off or just be a victim of a poor-quality trust that delivers poor returns. While there has perhaps been no sign of that from the major master trusts, anyone who has experience of the pensions industry will know that if we do nothing they will eventually become a problem. So it is absolutely right that the measures in this Bill ensure that trusts are set up and operated by people who have the skills and expertise to do that, and that there is a process for managing trusts, checking their performance, and making sure no issues arise as the years go on. That is because it is not realistic to think that either the employers that have signed up their employees for these schemes or the members themselves will have the skills, the ability, the time or the inclination to be doing that ongoing monitoring. That needs to be done by qualified people. That again is an advantage that master trusts have over insurance-based products. There are some skilled people here whose job is to represent the members. The advantage of having a trust is that there is at least that protection: when decisions need to be taken, there are some people who should have the right skills to act in the savers’ interests.

It is timely to be moving forward with these proposals as we suspect that by the time we get them fully in place we will have completed the first phase of auto-enrolment. We might find in the industry that people have set them up but do not have the number of members they thought and therefore not the level of income they thought. Perhaps the charge cap means that they do not have the income to be sustainable, or perhaps the changes that give people choice when they retire mean that they will not hit retirement date and then move their money into an annuity—that they will just leave the pot and not draw it down for a while. That would still be a cost on those schemes which needs to be addressed.

[Julian Knight]

My hon. Friend is making the important point that we have to avoid zombie funds being created as a result of the master trusts, and one way of doing that is through the role of the Pensions Regulator. Does my hon. Friend agree that the fact that a master trust will have to prove that its business model is sustainable is key to that interaction with the Pensions Regulator?

[Nigel Mills]

Yes, that is the point I was trying to make. Even master trusts that have been set up entirely properly and with the best of intentions could find, by the end of auto-enrolment, that they were not going to be viable in the long run. We need to ensure that there is a clear, well managed route so that, rather than having zombie funds sitting around delivering a poor return, we can get them moved into the higher quality, better performing ones. We need to ensure that this market works for everyone.

One element that people might not have considered is that we have not yet found a solution for people who end up with multiple very small pots spread across the landscape. I suspect that that could present a cost to the system that we will want to manage our way out of in order to create a sustainable situation. Overall, master trusts are a good thing, but they will need to be well regulated if they are to create confidence in the system and ensure that savers do not get a bad deal.

There are a few other things that I think I can just about sneak in as being within the scope of the Bill. We have ended up with slightly different arrangements for master trusts and insurance-based products, and I wonder whether it is sensible to have so many different regulators in the industry trying to do the same thing. Should the Pensions Regulator really be responsible for regulating all pension schemes, however they are structured, rather than letting the Financial Conduct Authority do some? Should we try to get equivalence between schemes that are trying to do the same thing but end up having subtle differences? Perhaps it would be better to say to all savers and all members of pension schemes, “Your scheme is regulated by the Pensions Regulator. Yes, there will be a cut-off with the FCA at some point.” That would be better than having uncertainty about who is responsible for which scheme.

Looking at master trusts more generally, there is a need to think through the position in the decumulation phase. The market might already be seeing that master trusts can be used for decumulation as well as accumulation. Decumulation is a very different model, and it is perhaps harder to see the business case for that than for the accumulation phase, with its ever-growing pots and more income. With decumulation, we have ever-dwindling pots and seemingly less income from the fees. We need to think through whether master trusts are intentionally aimed at the decumulation phase where members treat them as a kind of bank account from which they can draw money when they want to. The secret will be to ensure that savers have access to the right advice, and it is a pity that the Bill does not address the future of the various advice schemes, but I am sure that we will get to that at some point. In summary, this is a welcome and necessary Bill, and I am sure that it will be very effective. I look forward to its making progress in the House.

Supported Housing

Julian Knight Excerpts

Tuesday 29th November 2016 Westminster Hall

[Neil Coyle]

It is an absolute contradiction. Since 2010, we have seen a shocking rise in homelessness across the country, particularly in my constituency. I did a sleep-out for the Robes Project there last Friday evening, in very cold temperatures, so if Members have not already done so I urge them to sponsor if not me the project more generally.

In the 2015 spending review the Government outlined plans to cap the—

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Gentleman on securing this important debate. He seems to be a bit stuck in a time warp from several months ago. Does he not recognise that the situation has changed and that there is a commitment to a new funding model based on localism, which should help with the allocation of resources so that those most in need will get the most help?

[Neil Coyle]

I am about to run through how the Government have ended up where they are now, but when it comes to localism, this Government have a record of devolving responsibility without the resources to meet the demand. That point should not be lost, as it is an important factor in how many organisations see the current consultation.

Coming back to last year’s announcement, the Government said that they would cap the amount of rent that housing benefit will cover to the relevant local housing allowance—the LHA—for supported housing, with a top-up paid by local authorities. Initially, they announced that the measure would apply to those who had signed a tenancy since April 2016. There was an immediate backlash, and it was clear that the Government had not properly thought through the plans or considered very well whom they would affect. They then announced a delayed roll-out of the change, initially for one year.

The hon. Member for Solihull (Julian Knight) alluded to the fact that there is now a consultation on further plans for a 2019 roll-out, including of the new funding model, but it should not be forgotten that the cap poses a considerable risk to supported housing as it might be insufficient to cover full costs for the people affected. Management costs for supported housing are significantly greater than generic housing costs. The limbo period has already caused some damage.

Alongside the delays to 2019 for both the change and the proposed new funding model, the Government have announced further damaging changes in addition to the proposals that they outlined last year. They have now included suggestions that will affect all universal credit claimants when the change is rolled out in 2019, not just those who have signed a tenancy since April 2016. There is concern among many organisations that the universal credit system is too clunky and inflexible to take into account what the Government had originally planned. It would be useful if the Minister indicated whether it is a “computer says no” approach rather than the flexible model that perhaps is needed. In another damaging change, the Government are applying a rent reduction to supported housing, with rents decreasing by 1% a year for three years up to and including 2019-20. That was not in the original plans and it has caused much dismay among the organisations and people affected.

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[Neil Coyle]

It is the individuals who need the accommodation who suffer, and also the taxpayer in the longer term, for reasons I will come on to.

I want to give some national and local statistics. It is estimated by the House of Commons Library, which I thank for the figures, that there are 651,000 supported accommodation places across the country. That is not a massive number, as accommodation goes. Across my borough of Southwark, there are 1,200 places in a range of schemes.

I want to flesh out a bit more who is affected, by citing a couple of anonymised case studies from AmicusHorizon. The first is Mrs W, who is disabled and lives on her own in sheltered accommodation. She has no close family, and has mobility problems, a visual impairment and a learning disability. That is who the Government are targeting. She lives in sheltered housing, which means that she is in an accessible and supportive community with unobtrusive support from a scheme manager who operates as a kind of warden. That support enables her to live independently. Her combined rent and applicable service charge is £123.10, which is £57.44 more than the applicable LHA rate.

The second case study is that of Mrs P, who lives in an extra care scheme. She lives on her own and does not have contact with her children. She moved to the scheme after a spell in hospital because of a fall. In the accommodation her health has improved and the staff provide support to ensure that she stays well and is able to get out more and attend social activities. Without that support she would be in residential accommodation at potentially higher cost. Her combined rent and applicable service charge is £174.71, which is £64.04 more than the applicable LHA rate. Golden Lane Housing, which is a Mencap subsidiary, provides homes for people with very complex needs in my constituency, including people with learning disabilities. I visited its accommodation in Rotherhithe, and the people being supported there do not just have severe learning disabilities; they also have communication impairment. One was deaf and could not speak, and that is who the Government are targeting with the change. The wraparound support that those people need is absolutely essential, and by its very nature it is more expensive than routine housing costs.

St Mungo’s is another brilliant local provider of emergency and supported housing in Southwark. It helps people out of homelessness, and helps people with high support needs. In its client group, as it calls them, in Southwark, 53% have slept rough; 73% have mental health needs; 44% have a significant physical health condition; and 55% have or have had a substance misuse problem. As well as providing shelter for those people, St Mungo’s runs workshops that improve life skills and help many residents to avoid more intensive NHS services and to stay out of the criminal justice system.

The Government’s plans from last year and from before that simply do not take into account the broader benefits of supported housing. First, there is the social benefit. Supported housing gives people who would otherwise struggle to live independently control and choice over their lives while allowing them to receive essential support. There is the human, personal benefit of supported housing. There is also a financial benefit. The cost of supporting people in specialist supported housing can be half the gross cost of residential care placements. Lifeways estimates that the average net saving achieved by moving from residential care to supported accommodation is at least £185 a week.

There is a clear cost saving available if we get the policy right, but the Government have failed to do that. The lack of specialist supported housing is pushing people with learning disabilities, dementia and a range of conditions into more expensive residential care, including hospitals. The National Housing Federation states that stable and certain funding for supported homes and services reduces pressure on public services such as the NHS, saving the taxpayer around £3.5 billion a year. That is the potential saving from getting this right.

I thank all the organisations that have given me briefings or meetings on the issue, including the National Housing Federation, Golden Lane Housing, Lifeways, AmicusHorizon, the London Borough of Southwark, St Mungo’s, the Salvation Army, which I think is here today, and London Councils. Their involvement and all the supported accommodation that they provide has built up in the years following the extensive shift in public policy to enable disabled people to live more independently. In particular, that shift was meant to support disabled people to live outside NHS accommodation and residential care. That reflects a demographic shift, and we need to be aware that we have an older disabled population. We should celebrate the fact that more young disabled people are surviving into adulthood, but that comes at a cost. They need more support. In Southwark, the fastest growing cost group to social services is 18-year-olds with learning disabilities. Mencap estimates that that group alone requires the provision of 1,000 new places a year in supported accommodation.

There are some worrying statistics on how things will be directly affected by the Government’s proposals. Golden Lane Housing has suggested that 82% of local authorities agree that there is a shortage of supported housing for people with a learning disability. More worryingly, 41% of current schemes could be at risk of closure if the Government do not shift their plans. Some 80% of schemes due to be built to support that group would cease and not go ahead, leaving many disadvantaged people unable to access the homes and support they need and directly undermining Government efforts to provide supported housing in the community as part of the Transforming Care programme.

All of that has been put at risk by the mess, limbo and confusion from Government on the issue. There has been a clear lack of co-ordination across Government, with a rush to continue the squeeze on budgets without thinking more strategically or for the longer term. In September, the new Secretary of State said:

“The Government values the role supported housing plays and is committed to protecting and boosting the supply of supported housing”.

However, DWP policies have put existing and planned supported accommodation at risk. For example, Golden Lane Housing had to postpone a £100 million five-year bond to provide supported housing. It would not have relied on a penny of public funding. It is also likely to have to turn down a £500,000 grant from the Homes and Communities Agency it applied for under the care and specialised support initiative to develop new homes. Accommodation has been put at risk as a direct result of the Government’s confusion on the issue.

Unable to meet higher needs, the executive director of operations at AmicusHorizon said:

“The impact of the cap will be more than £1 million of annual rent and service income being put at risk. It will also have a significant impact on our residents. None more so than those living in extra care schemes. We’ve calculated they will have to fund an average shortfall of £41.00 per week”.

The Government have said that

“from 2019/20 core rent and service charges will be funded through Housing Benefit or Universal Credit up to the level of the applicable LHA rate…For costs above the level of the LHA rate, Government will devolve in England an amount of funding for disbursement locally.”

Very little detail has been provided, and there is an ongoing consultation on the issue.

Lifeways is based in my constituency and provides accommodation for more than 5,000 people with learning disabilities across the country. It has commented on the uncertainty that the Government have created and the lack of clarity in the funding model:

“The current uncertainty about the future funding of specialist supported housing is putting at risk our ability to deliver high quality, permanent homes in local communities...The new funding model currently been consulted on needs to ensure that the money devolved is sufficient and gets passed on to the right people. People with learning disabilities must not be overlooked.”

[Julian Knight]

I thank the hon. Gentleman for giving way again; he is most generous. We have had lots of detail from him on what he sees as wrong and so on. I am a member of the Select Committee on Communities and Local Government, and we have heard quite a lot of evidence on this, but I wonder what he proposes to do about the matter. Does he think that the status quo is the way to progress ad infinitum, or does he have any concrete proposals?

[Neil Coyle]

As I have outlined, if the Government introduced concrete proposals and knew what they were doing, we would not be in this position. I have some specific recommendations for how the Government might go forward, even though I fundamentally disagree that this group of people should be targeted for a reduction in support.

Lifeways has expressed concern about the fact that providers need confidence to invest and build. The Government’s position since September last year has undermined that confidence and caused some schemes to be put on hold or cancelled altogether. Some providers of supported accommodation have said that they will pull out of the sector if the policy is not done in a way that reflects actual costs. The pressure is on the Government to get it right. While it is welcome that the Government have made exemptions for some groups—in particular, people fleeing domestic violence—Lifeways’ concern about people with learning disabilities should not be overlooked. Sadly, there is a clear history in public policy of people with learning disabilities often being left behind or neglected in policy initiatives. It would be useful to hear from the Minister whether there are plans for other groups to be offered specific protections.

Many organisations expressed concern about the difference between supported accommodation and sheltered housing. It would be useful to hear how the Government see the difference between supported accommodation and sheltered housing for older people and the homeless.

As a London MP, I wanted to speak about the higher costs in London. I am grateful to London Councils for the information that they have provided. Its figures are based on applying LHA rates to the current total weekly costs eligible for housing benefit. It should be remembered that most providers cannot reduce rents in reaction to lower housing benefit entitlements set by Government due to the higher cost of provision, because of the nature of the needs of people in supported accommodation. If the Government plans go ahead as on paper, it is estimated that the London Borough of Ealing could have an annual shortfall of £528,000 a year. “Red” Kensington and Chelsea has forecast an annual loss of £440,000 a year. My borough of Southwark could have a shortfall of £167,000 a year. It would be useful if the Minister outlined how the Government will ensure that those additional costs are recognised and met. There is a lack of detail on the local top-up fund that forms part of the consultation. An indication of how the Government intend to operate that would be useful.

Conservative Back Benchers are keen to suggest that discretionary housing payments will always cover any housing shortfall from the Government. I hope that we do not hear a lot of that this morning. It is an insufficient answer and only a temporary solution, even when such payments are possible. For Greater London, there was a £23 million cut in DHP between 2013-14 and 2015-16. My borough regularly spends well over what the Government provide for DHP. It would be useful to know how the Minister intends to meet that need without relying on discretionary housing payments.

I have some questions on the operation of the new scheme and funding model. Is there an intention to pilot the new funding model rather than rolling it out nationally? The changes proposed are significant. The National Housing Federation and others are keen to work with the Government to ensure a successful pilot, not just for the individuals but in terms of value for money under any new model.

The Government have suggested an element of ring-fencing, but ring fences do not always work; people are looking for an iron-clad ring fence on this issue. How will the Government give certainty that any ring fence would last in the longer term? If housing associations and others are to be able to plan to meet the higher level of need for supported accommodation that we know we will see, the ring fence must be iron clad, not just for current demand but into the future. The Government need to be clearer about how funding will keep pace with the level of demand. How do they intend to measure and monitor the level of need and the level of funding required?

I conclude by repeating that this policy change is very poorly targeted. It was ill thought-through last year, it has been poorly developed since and the limbo period has caused considerable discomfort. There is still a very poor level of information available on how the Government plan to take the policy forward from 2019.

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[Derek Thomas (St Ives) (Con)]

It is a pleasure to be able to speak under your chairmanship, Mr Howarth. I congratulate the hon. Member for Bermondsey and Old Southwark (Neil Coyle) on securing this urgent and important debate.

I agree that it is important that we put supported and sheltered housing on a secure footing for the long term, but I am not comfortable with the idea that we are targeting a particular group. I have some experience in this area and we have not been doing as well as we could have; this is an opportunity to improve the service that we provide for vulnerable people in this housing situation, because it is absolutely right that people deserve to be supported to live independently and with dignity.

There are many organisations and people who support vulnerable people, including older people, people with learning disabilities and vulnerable young people. Examples of all those types of organisations exist in my constituency and I am familiar with them. They need the confidence that any changes that the Government make will ensure that they can continue to deliver those essential services for those who need them and that money ring-fenced for supported living is spent on supported living.

[Julian Knight]

Will my hon. Friend reflect on the fact that there have been some successes in this area, despite what the Labour party has been saying? Between 2011 and 2015, the Government delivered more than 18,000 new supported homes in England alone.

[Derek Thomas]

Certainly. I will come to the work that the YMCA is doing in my constituency to increase the amount of housing it provides for vulnerable young people, even in these supposedly uncertain times. There is a real opportunity to do something significant. There is work to be done, but the Government are heading in the right direction. What the people who provide the housing solutions need is confidence and a secure footing, and this is an opportunity to achieve that.

Universal Basic Income

Julian Knight Excerpts

Wednesday 14th September 2016 Westminster Hall

[Ronnie Cowan (Inverclyde) (SNP)]

I beg to move,

That this House has considered universal basic income.

It is a pleasure to serve under your chairmanship, Mr Davies. I am grateful for the opportunity to introduce this debate.

If I asked people what a universal basic income is, I would get many and varied answers. It is even referred to with different titles, as universal, unconditional, basic or citizen’s income. That is not a bad thing, because it highlights the fact that we do not have one clear-cut, complete, top-to-bottom definition. Until we do, we cannot decide if universal basic income is a solution or not, but I hope we can agree that the current welfare system has failed.

If we were all given a blank sheet of paper and asked to design a welfare system, nobody—but nobody—would come up with the system we have now. They would need thousands of sheets of paper and would end up with a mishmash of abandoned projects, badly implemented and half-hearted ideas and a system so complicated that it lets down those who need it the most. We need only look at the personal independence payment and at tax credits to see recent examples of people being punished by a system that is supposed to support them. At the same time, the current system allows those who would abuse it to do just that. The expected expenditure on UK social security and tax credits in 2016-17 is forecast to be more than £218 billion. We are spending 28% of our total public expenditure on social security, but it is still not clear whether our welfare system is helping or hindering the most vulnerable people in our society.

Inequality in the UK continues to get worse as we tinker around the edges of our welfare system. The richest 10% of households in the UK hold 45% of the nation’s wealth; by contrast, the poorest 50% own just 8.7% of that wealth. We have seen that inequality manifest itself in different ways, across gender, age and nationality. For instance, the average household in the south-east of England has almost twice the amount of wealth as the average household in Scotland.

Despite attempts to improve the current system, in-work poverty has vastly increased, with the Institute for Fiscal Studies estimating that two thirds of children living in poverty in the UK are in working families. The rapid increase in food bank usage also reflects the failure of our system. In 2008-09, the Trussell Trust issued almost 26,000 three-day emergency food supplies; by 2015-2016, that figure had grown to more than 1.1 million, with almost one in three of recipients being referred to food banks because of a delay in their benefit payment.

Unfortunately, my constituency has some of the worst rates of deprivation in Scotland. Of the thousands of cases that my office has handled, I would conservatively estimate that at least one in 10 are related to benefits. I am seeing people who are left confused and anxious by a system of mystifying complexity. It lacks compassion; it processes people as if they were mere numbers going through a machine; and its rigid inflexibility prevents people from accessing the support to which they are entitled. I believe that it leaves people feeling less and less empowered.

Sharon Wright, a senior lecturer in public policy at the University of Glasgow, has said:

“Received wisdom dictates that benefit receipt is the outcome of making ‘wrong choices’. Welfare reforms have become increasingly punitive, on the rationale that strong disincentives and coercion are required to prompt the ‘right choice’.”

As she points out, claiming benefits is not a life choice; it is the result of unforeseen circumstances in a person’s life, such as unemployment, sickness or disability. However, welfare recipients still face hostility and a strong social stigma that defines them as being workshy or lazy, or as having given up on a sense of personal responsibility. I could spend the entire debate highlighting the failings of the welfare system, but I can summarise them by simply stating that our welfare system is not working.

A universal basic income could be a solution to this problem. In the words of Malcolm Torry, the director of the Citizen’s Income Trust:

“Technology lying idle, human creativity frustrated, wealth flowing from poor to rich, and finite resources uncontrollably exploited …we are still waiting for the next new key concept. A Citizen’s Income might be just what is required.”

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Gentleman on securing this debate. He mentions the EUROMOD report by Mr Torry, and I wonder whether he saw the part of the report in which it is stated that, in order to support a universal basic income, the basic rate of income tax would have to rise to 48 pence in the pound. Can he say how on earth that is supportable in a modern economy?

[Ronnie Cowan]

As I said at the very start of my speech, there are many and varied approaches to this issue; no one has worked up the complete solution at this stage. What we are aiming for is acknowledgement of the fact that our current system is not fit for purpose, and the people of the United Kingdom should be looking for “best of breed”. If we are not prepared to take on that challenge, then we are not in the right job.

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[Ronnie Cowan]

Yes, we are going there. I believe that it is called the “gig economy”, in which people share jobs and try to find a better work-life balance. People do not want to have to put in all those hours of work in simply to make money if it is not within them that they want to spend all that money. That chasing of the capitalist dream is hopefully something that is confined to the past.

If we genuinely want to create a more effective system of state support, we need to be prepared to address the difficult questions. Part of the challenge will be to bring together the patchwork of individuals and organisations that have expressed an interest in pushing forward the UBI agenda. Groups such as Citizen’s Basic Income Network Scotland and the Citizen’s Income Trust have helped me to outline what options are open to us in defining a basic income.

It is argued that the benefits of introducing a basic income include: reducing poverty and boosting employment; providing a safety net from which no citizen will be excluded; and creating a platform upon which all people are able to build their lives. More generally, it could be argued that a basic income would bring about increased social cohesion and mark the end of incentives that discourage work and saving.

In the time available to me today, I can only touch on the wide range of questions that will need to be answered in order to implement such a scheme. Who will be eligible for basic income? What will be the rate of payment? Over what timeframe will it be implemented? Most important, can the affordability of such a scheme be demonstrated? Having clear answers to these questions is vital, but that will not be enough; we will also need the political will to make changes.

The Irish Government published a Green Paper on a basic income as far back as 2002. It concluded that a basic income would have a substantial positive impact on the distribution of income in Ireland and would reduce poverty in a more effective way than the existing welfare system, but 14 years later the concept has not managed to evolve into a fully formed Government policy.

[Julian Knight]

I thank the hon. Gentleman for giving way to me again; he is being most generous with his time. The Irish Government came up with this proposal in 2002, but 14 years later they have still not been able to implement it. Also, would he reflect on the fact that in Switzerland this idea was actually put to a referendum and two thirds of voters voted against it? Is not the real reason that these people have gone against a basic income is that they realise it destroys the incentive to work?

[Ronnie Cowan]

I am not here to speak on behalf of either the Irish Government or the Swiss Government, but there is absolutely no indication that providing somebody with a basic income removes the incentive to work. Instead, what it does is to put life choices in front of people, so that if they want to study part time, work part time or work on a farm voluntarily they will not be penalised for doing those things, and therefore it is more likely that people will be prepared to take on work at a level that suits them.

If policy makers regard the basic income idea as simply an academic or abstract economic concept, we will never see it being used to break down the worrying levels of poverty and inequality that we have in the UK. The United States, Canada, Namibia and India have all piloted basic income schemes, while Finland and the Netherlands plan on trialling limited local schemes.

Many Members will be aware that Switzerland has already held a referendum on the implementation of a basic income. Although the proposal was rejected, that shows that other nations already have a more developed understanding of the concept. The charity GiveDirectly has announced that it will launch a full basic income trial. The project will involve at least $30 million and academic support from leading researchers. The trial will fully adopt the basic income model by making regular cash payments to every resident in several villages in Kenya.

I secured this debate with the humble notion that I do not have all the answers to the questions. I hope to facilitate discussion, to debate with my parliamentary colleagues and to consult the relevant organisations about the benefits and feasibility of the basic income concept. I believe it was first proposed by Thomas Paine in his 1797 pamphlet “Agrarian Justice” as a system in which at the “age of majority” everyone would receive an equal capital grant—a “basic income” handed over by the state to each and all, no questions asked, to do what they wanted with. Could this be an idea whose time has finally come?

On 25 May 1961, President John F. Kennedy announced before a special joint session of Congress the dramatic and ambitious goal of sending an American to the moon before the end of the decade and returning him safely. Not for one minute did he intend to design the rockets himself, and he had no ambition that I know of to be on the flight. His not unrealistic and ultimately correct proclamation was built on the premise that he knew America had the time, the money, the brain power and the will to achieve the goal. He challenged the American people to succeed and they rose to that challenge. I stand here in front of the Chamber today and I challenge all of us to work together to create a fairer welfare system—one that does not trap people in poverty, but instead acts as a platform from which the citizens of the United Kingdom can build better lives for themselves.

Supported Housing: Benefit

Julian Knight Excerpts

Wednesday 20th July 2016 Commons Chamber

[Grahame M. Morris]

Perhaps I am mistaken and it was one of the Minister’s colleagues.

My right hon. Friend asked how many elderly people, how many women fleeing from domestic violence, how many people with mental health problems and how many young people leaving care would be affected, but, incredibly, the then Minister for Housing and Planning was not able to provide an answer. If the Government do not know how many people in supported housing are in receipt of housing benefit, how can we expect them to make a decision? It is absolutely vital to have such information to hand to make an informed decision. Ministers did not know what a profound impact their decision would have on providers and on the people who depend on these services, and it seems that they still do not know, unless they are just not answering questions on this.

To be fair, Ministers did commission an evidence review, but that was back in January 2015. Even though the review had not reported on its findings at the time of the last autumn statement, the then Chancellor still ploughed on regardless. Six months ago, my right hon. Friend was assured that the review would be ready later this year. The Under-Secretary of State for Communities and Local Government, the hon. Member for Nuneaton (Mr Jones), teased us in the Adjournment debate last week by suggesting that the review would be published imminently.

Did Ministers know what the impact would be when the Chancellor included this decision in his autumn statement? They did not know what the impact of their decision would be—that is for sure—when the issue was debated in this House six months ago. That raises the question: what is happening, and when will we know?

When it comes to making policy, Ministers are old hands at making policy in an evidence-free zone. The use of evidence to develop policy seems to be an alien concept to the Government, but I would have thought it was in the natural order of things. This is something of a travesty. Although the Government’s evidence review seems to have ground to a halt, Ministers cannot claim to be completely ignorant. After all, the providers of supported housing have made their feelings known. I am sure that Ministers—even those in the new ministerial team—have met housing associations, charities and providers. We have met them regularly, and they have made their views absolutely plain.

I have mentioned the views of David Orr. He has said that housing

“providers across the country will be forced to close schemes.”

He has described the difference between supported housing and general needs social housing and explained why rents in supported housing are higher. He has pointed out that

“the uncertainty about the future approach is already leading to supported housing under development being delayed or cancelled because of the long lead times involved in investment and development.”

[Julian Knight (Solihull) (Con)]

The hon. Gentleman is being most generous in giving way. He mentioned an “evidence-free zone”, but all I have noted so far from his speech are continual references to David Orr of the National Housing Federation. There are more voices in this industry than his. Is not the process the Government are going through about taking on those voices, and about gathering and discussing the information? There is not therefore an evidence-free zone.

[Grahame M. Morris]

I am grateful to the Minister—[Interruption.] I am sure it is just a matter of time. This is a terribly confusing time.

I am grateful to the hon. Gentleman. He is absolutely right that there is a plethora of housing providers. I have met and received evidence from Mencap, Golden Lane Housing, Rethink Mental Illness and Changing Lives, as well as various housing associations, such as North Star and the Durham Aged Mineworkers Homes Association, and the National Housing Federation itself, all of which have raised concerns about supported housing in particular sectors. I have not listed those supporting members of the forces, but there is a similar thread and strand bringing this all together.

--- Later in debate ---

[Damian Green]

Absolutely, I will. I am coming up, in a minute, to the six-day anniversary of my occupation of this post, so I apologise if I have not taken all the representations in person yet, but my Ministers and I are certainly trying very hard to do so.

As everyone on both sides of the House knows, the supported housing sector provides important support to a diverse range of groups and individuals across the country. It supports those with learning difficulties, allowing them to live as independently as possible; it provides a safe refuge for those escaping domestic violence; it helps ex-offenders make a successful transition back into mainstream society; and it supports those who have experienced homelessness. The sector helps to transform lives and it allows people to live as independently as possible, to move into work where possible, which is hugely important, and to be safe, healthy and happy. It is a very important sector.

As constituency Members, we all have examples of that kind of support being provided. I have visited the Porchlight project in my constituency, which helps vulnerable and isolated people get support with housing, mental health issues, education and employment. Vital work is done by this sector. From my previous experience in government, I have seen the value of the sector in the criminal justice system. A stable and supportive environment can be the key to reducing reoffending. For example, Stonham BASS provides accommodation for people who have been bailed by the courts or released on home detention curfew after they have served a prison sentence. The service reduces unnecessary imprisonment and the negative effects that it has on family life, employment and housing, and so helps to deter people from reoffending.

[Julian Knight]

I have discussed this matter with Solihull Carers, which has concerns. It understands that this is the first review of these things for 20 years. It also understands that the total bill for housing benefit in this country is some £25 billion, and that it is right that we take our time, explore all the options and try to come to the best resolution.

[Damian Green]

My hon. Friend is exactly right and the representations he has received are very wise. A huge sum of taxpayers’ money is being spent and it is important to spend it in the right way, not just in the taxpayers’ interest but so that it helps the particularly vulnerable groups that I have referred to as much as possible.

The Government have a strong track record in protecting supported housing. In the last Parliament, we found that many hostels and refuges were treated as “supported exempt accommodation” even though they did not fit the precise technical definition. We acted swiftly to introduce regulations to regularise the position and, vitally, to protect their income streams. We exempted supported housing from the benefit cap. We have continued to meet the housing costs for universal credit claimants through housing benefit. That is hugely important, because it means that providers do not have to adapt processes to accommodate the new arrangements while we work towards a more sustainable funding model that works for all parts of the sector.

I assure the House that I am prepared to listen carefully to the concerns of the supported housing sector regarding the application of local housing allowance rates. I will pray in aid as evidence of the flexibility with which I will approach this issue the written statement about welfare reform that is on the Order Paper today, which the hon. Member for Easington and others may have noticed. It deals with changes that I am making to and flexibilities that I am introducing into the universal credit regime. I hope people will take that as a sign that I am prepared to be as flexible as possible in making sure that these vital welfare policies actually work.

This issue is high on my list of priorities, so I am keen to ensure that the decisions I make do not unduly affect the sustainability of provision, the commissioning of new services or, particularly, the individuals who receive support. It is worth noting that the local housing allowance cap will not affect any benefit recipient until April 2018. My Department is working hard with colleagues at the Department for Communities and Local Government to resolve this issue. It is better to get this right than to rush to make a decision.

To answer the question from the right hon. Member for Wentworth and Dearne (John Healey) directly, I expect to make an announcement on the way forward in the early autumn. We will spend the summer looking at the evidence and I will make an announcement in the early autumn.

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[Maggie Throup]

I think it is important that the Government have already put more money into support for domestic abuse victims.

[Julian Knight]

Should it not also be recognised that we will reach a decision in the early autumn?

[Maggie Throup]

I completely agree. As I said earlier, we need to come up with the right decisions and produce sustainable outcomes. There is no point in a review that does not get to the bottom of the issue.

I am also proud that this Government have actively helped people with disabilities—and those are the people we are talking about: people with disabilities, and people who are particularly vulnerable—to play their part in our communities. In the last two years alone, 365,000 disabled people have moved into employment, and I am definitely proud of that.

--- Later in debate ---

[Julian Knight (Solihull) (Con)]

Supported housing provides a hugely valuable service to many of our most vulnerable citizens: elderly people in need of care; vulnerable young people who need support and supervision; those fleeing domestic abuse or recovering from addiction; and more besides. The different types of supported accommodation are as varied as those who need them, ranging from hostels and refuges to more specialised residential units built around the specific needs of their residents. What they have in common is that they provide people with not only a safe place to live but a platform from which to embark on a more empowered, independent life than their circumstances might otherwise allow.

I iterate these points in order to make it absolutely clear that the Government’s approach to the supported housing sector is rooted in a deep appreciation of the help that it provides for the vulnerable and an understanding of the challenges that it faces. The Solihull Care Centre, an organisation in my constituency that assists and represents carers, told me recently that some of its members were worried by the uncertainty created by the current one-year delay in the implementation of some of the coalition’s planned reforms to funding. I note that there are no Liberal Democrat Members in the Chamber taking part in the debate today.

The entire reason for the delay in implementing the proposals outlined in the coalition paper is to allow proper time to examine the concerns expressed by other parts of the sector about their impact. It would be wrong to proceed without paying careful attention to those on the frontline. The Government must weigh the arguments of any lobby against the wider needs of the nation and the public purse. We cannot abandon the reform effort. I feel that the wisest course of action was to delay the changes while the sector’s concerns are explored and examined in detail. I was pleased to hear the Secretary of State commit today to reach a final decision in the early autumn. I will be writing to the Solihull Carers Centre on my return to the office to let it know that timeline.

Complications are part of what makes reform so daunting, and sticking with an unsustainable status quo is always tempting. It is too often easier to patch and mend, to avoid the hassle and to pass the problem on to the next generation of politicians. I am proud to be part of a reforming Government that have led a decisive break with the buck-passing of the past. Government Members recognise that only by adapting to changing circumstances do we make sure that such important institutions are maintained for the future.

Bringing down the welfare bill is essential if we are not to pass on an unsustainable debt to our children. Let us not forget that it was under Labour that housing benefit ballooned into one of the largest and fastest-growing parts of our welfare system. At the start of this year, the annual cost stood at a staggering £25 billion—more than we spend on roads, the police, and equipping the military put together and equivalent to about 8p on income tax. Our reforms recognise that the old system had become overly complicated to administer and contained blind spots as a result of how it classified landlords, for example. It would also have become increasingly incompatible with the changing landscape of welfare provision as other reforms, such as universal credit and individual budgets, come into force.

I am confident, particularly after listening to the Secretary of State today, that the Government will move forward after the current review with proposals that will provide security to tenants, certainty for providers, value for money to taxpayers, and a sense of fairness to renters in the unsupported housing sector.

--- Later in debate ---

[Kevin Hollinrake]

But does the right hon. Gentleman accept the number of times it has been said by Ministers that this is subject to a policy review, which is due out in the autumn? Therefore, to say that this is going to happen is absolutely wrong.

I do accept that uncertainty is being caused by this policy decision, and we should think through a policy before we announce it. This does disincentivise investment. The National Housing Federation has said that 1,200 new units are on hold because of this policy—this potential policy. It is vital that we deliver these units to meet the overall need to build more homes. We are building many more homes—the figures are almost double those from 2009. We built 166,000 in the most recent year, whereas 90,000 were built in 2009. We need to get to 250,000 homes a year, but we will do that only by allowing either national Government or local government to build more affordable rented homes. The last time we built 250,000 homes in a year was in 1977, when local authorities built 108,000 homes. We absolutely feel that affordable homes to rent must be part of the solution.

[Julian Knight]

Does my hon. Friend recognise that the Labour party has nothing to lecture us about on building social housing, as it built next to no social housing in its 13 years in government?

[Kevin Hollinrake]

My hon. Friend is absolutely right.

As others want to speak, I will move on to one other point, which is the disincentive for the young people in these facilities, which do a fantastic job. Recently, on a visit to Arc Light in York, I met two young men in their 20s: one was a brickie and the other a joiner. They were perfectly capable of working, but were totally deterred from working, because they felt that if they were in work, they would have to pay the full costs of that accommodation—£250 a week—which is a huge disincentive. That may not be quite true. Lord Freud wrote to the Communities and Local Government Committee for clarification, but the Chair of the Select Committee was not quite clear on the point.

Housing Benefit and Supported Housing

Julian Knight Excerpts

Wednesday 27th January 2016 Commons Chamber

[Brandon Lewis]

My hon. Friend, as ever, makes a powerful point about the way the Labour Government worked to trap people in dependency. We want to work with people to drive aspiration, while giving a fair deal to the British taxpayer.

[Julian Knight (Solihull) (Con)]

Does my hon. Friend agree that the contribution from the Opposition Front Bench was long on flannel but short on facts? The independent Institute for Fiscal Studies predicts that despite small initial savings, there will be long-term benefits from capping housing benefit. My hon. Friend may wish to comment on that.

[Brandon Lewis]

My hon. Friend highlights the weakness of the Opposition’s position. They never look at the entire picture; they just want to make short-term political points.

Access to Jobs: Disabled People

Julian Knight Excerpts

Tuesday 12th January 2016 Westminster Hall

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to serve under your chairmanship, Mr Chope. Given the number of people wanting to speak, I will keep this as brief as I can.

When I saw the name of the hon. Member for Wrexham (Ian C. Lucas) leading on this debate, I rather suspected that we might dwell a bit on Remploy, because he has a long track record of campaigning on the issue. He is, however, right to draw attention to the plight of his constituent. Personally, I take a much wider view of disability employment. On many occasions I have said that I regard Remploy as but one model, and a model that harks back to a different era of how we saw disabled people fitting into the workplace.

I know that people rarely read election manifestos—I make the effort to read my own at least, if not the Opposition’s—but one of the proudest moments of my life was to see in the Conservative manifesto for the 2015 election a commitment to halve the disability employment gap. Such a commitment cannot be seen in any other party’s manifesto—only in the Conservative party’s. I for one am proud of that fact. I am equally proud of the fact that, over the past two years, we have got 340,000 more disabled people into employment, although I recognise that there are individuals who have not benefited and that there are always detailed reasons for how things can be done better.

[Julian Knight (Solihull) (Con)]

I congratulate the hon. Member for Wrexham (Ian C. Lucas) on securing this important debate, which should be not only about what has happened over the past two years, but about what is in the spending review. As I understand it, the spending review included a real-terms increase in the Access to Work budget for disabled people. Will my hon. Friend reflect on that for a moment?

[Paul Maynard]

I certainly will. I served with the shadow Minister on the Select Committee on Work and Pensions, where we looked at the Access to Work scheme in some detail. I am sure we had different interpretations of what we heard, because we normally do, but that is a really important project that the Government have at their disposal—it is often described as their best-kept secret.

We could do far more on Access to Work, which is one of the few uncapped Government benefits in the sense that no artificial cap has been placed on the overall amount spent. It is really important that we realise that and understand what else it could do. It is not just for critical adaptations any more. The number of people with mental health conditions who benefit from Access to Work has increased by 202% since 2010—it has more than doubled.

That demonstrates a really important point that I want colleagues on both sides of the House to understand. Once upon a time, disability employment was about physical access: the nuts and bolts of equipment, doorway widths, desks and chairs and so on. While that remains important, today, mental health issues are just as important, but they do not get sufficient attention.

I hope Opposition Members will join me in paying tribute to the Minister’s commitment. He is working tirelessly to pursue the goal of halving the disability employment gap. The Disability Confident campaign occupies a great amount of his time and I know that he is personally committed to it. We should welcome that. In the previous Parliament, we saw frequent changes in the identity of the Disability Minister. I sincerely hope that our current Minister stays in his post for the entire Parliament—he may not wish that, but I do, because he is doing a superb job.

To return briefly to Access to Work, while one may think that the entire picture is rosy based on what I have said, it is far from that. Certain groups in the disability community are really struggling to get on to the employment ladder, such as those with learning difficulties and autism in particular. The hon. Member for Wrexham quoted the labour force survey and, I think, the 47.6% figure in it, which I saw in the Mencap briefing, too. There are arguments about the starting point, but, while the overall employment gap is 19%, for groups such as those with autism it is significantly greater than that and much more challenging.

If I had to give one recommendation to the Government, it would be to ensure that Access to Work is available at the pre-employment stage when people are looking for work. The employer needs confidence that Access to Work will be available. It cannot be something for them to discover after they have made a leap of faith to take a person on. That would be one way in which Access to Work could benefit a new group of people.

I am fortunate enough to chair the all-party parliamentary group for young disabled people and, when a few months ago the muscular dystrophy campaign Trailblazers did a short report on the right to work, it found that much more support was needed at the job-seeking phase of engagement with employment. That cannot all occur after employers have decided to employ someone, because only then can they start solving some of the practical problems.

There is a wider reason to increase disability employment not just for the sake of human dignity and equality, but, I am afraid to say, for fiscal reasons, too. If we can halve the employment gap, the gain to the Treasury, according to Scope, is somewhere in the region of £12 billion. That is a sizeable sum of money that should not be ignored by any Chancellor of any political persuasion.

I also want to make a plea. To go back to my point about Access to Work, one of the avenues I pursued in the Select Committee’s inquiry was the similarity between the ultimate purpose of disabled students’ allowance and Access to Work, which are both about allowing people to participate in their place of work, be that a college, university or workplace. I still struggle to understand why they are managed by two different Departments on different sets of procedures and with different criteria. It would be far better to bring them together, because they both seek to equip people to function in everyday life. I urge the Minister to look at that.

I will move on to my final point, because, while there is much more I could say, I want others to be able to contribute. No one should underestimate the difficulty of halving the gap. That will not be easy. I know that policy makers like to use the cliché “low-hanging fruit.” That is a disrespectful way to talk about individuals, but some will be closer to the workplace than others and it will be easier to get them into it. The difficulty will come when those with much more complex needs that are more costly to address come into play in terms of meeting the goal.

No one should underestimate the courage, ambition and confidence that young people need to try to seek work. A young person in their teens is probably still in the family home and in the school environment that they have always been in. To a certain extent, they are in a safe environment. It is not until one gets out there and tries to find a job that one really discovers the existence of prejudice against the disabled in society. That can be quite a shock to many young people—it certainly came as a shock to me. I was not expecting to encounter it when making job applications, yet I rapidly ran into it and I do not consider myself to have a particularly severe form of cerebral palsy at all.

When we discuss disability employment overall, it is worth remembering that we need to encourage young people. They do not aspire to a lifetime of supported employment and their families do not aspire to that on their behalf, either. They want full equality in the workplace and we must do all we can to make that happen. It is not easy. I do not doubt that it is a very ambitious target. We are making progress now, but there is no guarantee that that will continue for ever. I therefore thank the Minister for what he is doing. I have offered a few helpful suggestions and I look forward to hearing what other Members have to say.

--- Later in debate ---

[Mrs Flick Drummond (Portsmouth South) (Con)]

It is a pleasure to have the chance to speak on this incredibly important topic. I congratulate the hon. Member for Wrexham (Ian C. Lucas) on securing the debate.

As my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) mentioned, the Conservative party committed in its election manifesto to help open up opportunities for the disabled, which I was very pleased about. The Prime Minister’s speech yesterday repeated the theme that the Government must be the enabler of people and the destroyer of prejudice. It is not just about providing this or that service.

Many great national third sector organisations such as Mencap, Scope, the Royal National Institute of Blind People and Action on Hearing Loss do so much to help those with disabilities, and we all welcome and appreciate the work they do. We are fortunate in Portsmouth to have some great work being done to support those with disabilities by the Beneficial Foundation—I declare an interest as patron of that organisation. It is a great organisation that works with people with a variety of needs, and I had the pleasure of showing the Prime Minister the work it does in 2014 when he visited Portsmouth.

I know from discussions I have had with the Beneficial Foundation’s chief executive, Jenny Brent, that finding a job or placement is just the first step in a journey back into secure and rewarding work for anyone with a disability. It is vital that there is support for that disabled worker in terms of adaptations so that they can do their job and have equal access to facilities.

[Julian Knight]

Will my hon. Friend reflect on the Disability Confident events that are run around the country, which bring together charities, employers and potential employees and help to bring people into the workforce?

[Mrs Drummond]

We have had examples of that in Portsmouth too. It is extremely important, as with any job fair, that people know exactly what opportunities are out there.

It is equally important that others in the workplace understand the needs of disabled workers and what disabled workers do not need. There is a difference between treating someone with respect and perhaps unintentionally adopting patronising attitudes. Organisations such as the Beneficial Foundation offer in-role support to both the disabled employee and their colleagues, ensuring that everyone makes the most of the opportunity.