Pensions Bill

Lindsay Hoyle Excerpts

Tuesday 29th October 2013 Commons Chamber

[Greg Mulholland]

I had the great pleasure of living in Scotland for three years—two years in Glasgow. When I moved up there, I was more able to understand French than a broad Glaswegian accent, but I rectified that. He will be pleased that I know how to pronounce the name of his constituency in its entirety—[Interruption.] Gloaming—the word he utters from his seat on the Front Bench—is an excellent Scottish word.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I suggest we move on to new clause 1 at some point.

[Greg Mulholland]

Thank you, Mr Deputy Speaker. May I remind the House what the improvements to auto-enrolment will do, which has not come out in the debate? Let us look at the figures. Some 1.6 million people have signed up for auto-enrolment. Of course, the ability to opt out remains, but rather than the expected one in three opting out, the figure is only 10%. Many millions of people are not currently saving for their retirement, but auto-enrolment will lead to between 6 million and 9 million people saving for the first time by 2018. That is crucial.

It is important to remember—this, too, has not been mentioned in the debate—that, as well as employee contributions, there will be support from employers and the Government. People aged 22 or over who are earning more than £9,440 a year will be automatically put into the pension scheme. Individuals who choose to save 4% of their income will benefit from an employer contribution of 3% and tax relief of 1%. It is important to welcome and emphasise that—it should be welcomed and emphasised by all hon. Members.

The key debate is on charging. The Minister referred to the OFT report that raised concerns about standards, particularly in legacy schemes. The Government have rightly amended the Bill to take that into account. I warmly welcome amendment 30 and his announcement of the consultation. I believe the consultation should be welcomed and not criticised.

I should gently make one point to my namesake, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East. He gave the impression that he was critical of the Government’s approach on consultation, but in amendment (a), which he has tabled, proposed new subsection (3) to Government new clause 1 states:

“Before making regulations under subsection (2), the Secretary of State must undertake a public consultation”.

It is odd that he is critical of the Government’s approach while calling for the very same consultation in black and white.

The hon. Gentleman was slightly wrong, or he misplaced his emphasis, in his suggestion that the Government are consulting rather than taking action. He knows—his proposal shows this—that consultation is a necessary precursor to legislation. It is important in getting legislation right. Without daring to put words into the mouth of the Minister, I think it is important to say that the intention is clear—that there should be a charge cap and that one will be introduced. The point of the consultation is not whether to introduce one: it is to find out the best way to do so. We should be clear about the subject of the consultation.

I have one question for the Minister, which he may be able to answer. The announcement on the consultation is imminent, although it is not happening as part of the Bill, so will we see him back at the Dispatch Box soon to make it? He is clearly the right and proper person to make the announcement, given his involvement in the Bill. I hope that he will be back, perhaps even in the next 24 or 48 hours, to announce it, and I and others look forward to welcoming that and the details that I am sure he will wish to lay out.

Despite this being a complicated subject in terms of the figures, the construct of the Bill and the pension sector as a whole, we all know that in the end this is about people’s future incomes and ensuring that they have a reasonable standard of living in their retirement, as well as more certainty in their retirement. The figures that the Minister provided about the current impact of the 1.5% and 1% charges were startling in showing just how much money people lose over the course of saving for their pensions. That is why a cap is right.

I say gently to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East that in his 78-minute speech—at least, I made it 78 minutes, not 86 minutes—[Interruption.] I am being generous: perhaps the hon. Member for Gloucester (Richard Graham) thought it felt like 86 minutes. In any case, the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East showed his knowledge of his brief, and I commend him for that, but it is slightly strange to hear his many recommendations for auto-enrolment when the previous Government would not even countenance those suggestions at the time of introduction. Nor did he acknowledge the problems with the 1% and 1.5% charges.

This has been a long and challenging process. Hon. Members on both sides of the House have made contributions that have been listened to and addressed. I look forward to the consultation. All of us with an interest in this issue should watch it closely and take part in it. We should also encourage others to take part. I shall end by congratulating the Minister, his team and his colleagues on what they have done to get this important Bill to this stage. It will lead to more certainty and fairer retirement incomes for the people of this country.

--- Later in debate ---

[John McDonnell]

On a point of order, Mr Deputy Speaker. There comes a time when accuracy is important in this House. John MacGregor, as Secretary of State, gave assurances that when British Rail was privatised pensions would be protected. He said not that they would have the same protections as private companies but that pensions would be protected. There is a point of accuracy, so that Ministers do not attempt to mislead this House.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am sure that nobody would deliberately mislead this House—let us clear that one up. That is not a point of order but it has certainly been corrected for the record, which will be read tomorrow.

[Steve Webb]

Further to that point of order, Mr Deputy Speaker. That was not a correction, because what I said was not incorrect.

[Mr Deputy Speaker]

I did not say that. I also said that the first point was not a point of order, and neither is the Minister’s.

[Steve Webb]

Let me reiterate: Jarvis and the other firms paid the pension protection fund levy.

[Steve Webb]

It is not irrelevant—

[Mr Deputy Speaker]

Order. I understand that tensions are running high, but we will have an orderly debate.

[Steve Webb]

Jarvis, as an employer, was paying an insurance policy. It was paying into a fund so that if it became insolvent its employers would get the payout, and that is exactly what has happened.

The pension protection fund was created nearly a decade ago and every year Jarvis paid in on behalf of their employees so that in the event of insolvency those employees, and those of the other two former nationalised rail industry firms who were spun off, would get protection. That is exactly what has happened. In other words, to come along in 2013 and say, “Oh no, we did not expect this to happen. We should get special treatment and we should get 100% protection,” when other people who work for private firms do not get that when they pay the protection fund levy and get a payout—[Interruption.]

[Mr Deputy Speaker]

Order.

[Steve Webb]

Other people who work for private firms get a payout according to how the pension protection fund works.

The hon. Member for Edinburgh East, who is not in her place, talked about annuities. She seemed to think that requiring people to go to an annuity broker was the answer to the problems and I think she missed the point. We want to see a much wider range of options for people when they want to turn their pension pot into a pension income. Rather than putting into primary legislation a single model for a single product, we must ensure that people have choices so that they can choose an annuity, consider draw-down products or consider deferring and so that they can try to ensure that they get the best value for money. I certainly accept that the annuity market is not working as well as it should.

This debate has gone on for the best part of four hours and the recurrent theme has been that when the coalition Government took power in 2010, there was a huge amount of unfinished business on automatic enrolment. What happened with small pots, charge caps, decumulation and governance had not been dealt with. The Opposition have spent the past however many hours asking how we could possibly not have acted on all the issues they failed to address in 13 years, but we are addressing them. We have taken effective action and tomorrow we will take a further step when, for the first time, we consider capping the charges on automatic enrolment pension schemes. This Parliament will be seen to implement vital pension reform in the state and private sectors and to be doing the job properly and I commend our amendments to the House.

Question put and agreed to.

Clause read a Second time.

Amendment proposed to new clause 1: (a), at end add—

‘(2) In this section—

(a) “charges”; and

(b) “transaction costs”

shall be defined in regulations by the Secretary of State.

(3) Before making regulations under subsection (2), the Secretary of State must undertake a public consultation, which must include the views of—

(a) the Financial Conduct Authority; and

(b) the Pensions Regulator.

(4) With reference to paragraph (2)(a), any public consultation must consider the different elements which comprise charges and not just the annual management charge.

(5) Such charges, together with any transaction costs incurred by the funds in which qualifying schemes are invested, shall be declared on an annual basis to the Pensions Regulator, which shall maintain a public register thereof.

(6) The Secretary of State shall by regulations set the standards by which pension schemes must declare charges and transaction costs for the purposes of the register and for declaration to their members and their members’ employers.

(7) The standards set out in regulations under subsection (6) shall be reviewed every three years.

(8) The Secretary of State shall have power to make regulations ordering other disclosure arrangements on administration charges.

(9) Regulations under this section may not be made unless a draft has been laid before and approved by resolution of both Houses of Parliament.’.—(Gregg McClymont.)

Question put, That the amendment be made.

The House proceeded to a Division.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

--- Later in debate ---

[Greg Mulholland]

I thank the hon. Lady for giving way and for the contribution that her Committee continues to make. Let us face it, those of us who have been in this place for more than one Parliament have been hearing about frozen pensions for all that time—some of us for many years. Rather than our trying to solve it today through this Bill, is it not time that all the parties sat down together to discuss what commitment could be made for the next Parliament, regardless of who gets in, rather than the next Government being able to say “Well, the last Government didn’t do it, so we’re not going to either”?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We need short interventions.

--- Later in debate ---

[Sir Peter Bottomley]

On a point of order, Mr Deputy Speaker. Am I right in saying that, under the procedure of the House, amendment 1, which would remove clause 20, will not be called because of the guillotine?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I am not calling it. Unfortunately, that is the procedure of the House, as the hon. Gentleman well knows.

--- Later in debate ---

[Martin Horwood (Cheltenham) (LD)]

Like my hon. Friend, I welcome the Bill, which is an important, historic and long-overdue change in the pension system, but will he acknowledge that charities such as Winston’s Wish, based in my constituency, and the Childhood Bereavement Network have expressed concerns about the bereavement support arrangements in the Bill, particularly for parents who still need that support after one year—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. This is meant to be an intervention, not a speech. It is unfair on the other Members waiting to speak. In fairness, Mr Horwood, you ought to give a little more consideration and make shorter interventions.

[Steve Webb]

The charity in my hon. Friend’s constituency, Winston’s Wish, was referred to earlier by the hon. Member for Gloucester (Richard Graham), and we take its concerns seriously. I stress that what we have put in place is a structure of reform that will involve us actually spending slightly more over the coming years on support for bereaved families, but there is a debate to be had about how long the support should last. For various reasons, going beyond a year raises difficult issues. For example, a short-term benefit can be disregarded for universal credit, whereas a long-term income replacement benefit almost certainly would not be. By delivering the money in this way, therefore, the lump sum is tax free and the short-term payment is not counted against people’s universal credit, whereas a long-term payment would be, meaning that bereaved families might end up getting less support were we to extend the period. So there are trade-offs and reasons why these balances have been struck.