Personal Independence Payments

Debate between Lord German and Lord Freud

Tuesday 10th March 2015 Lords Chamber

[Lord German (LD)]

My Lords, the reliability criteria used for the personal independence payment assessments —that is, whether people can undertake tasks safely, acceptably and repeatedly—are crucial for people with fluctuating conditions. In their response to the Gray review the Government say that everybody involved in assessing those criteria should have training, yet later they say that the DWP will undertake training separately from Atos and Capita, which will do their own training. Does my noble friend not think it would be much better if all three worked together on the training so that we have consistency of outcome and avoid outcomes such as the inappropriate loss of a Motability car?

[Lord Freud]

We have been working very closely with the providers to make sure that there is an identity of approach in training, right the way through the two different providers and DWP.

Universal Credit

Debate between Lord German and Lord Freud

Monday 24th November 2014 Lords Chamber

[Lord Freud]

We have put out some statistics on the level of housing arrears, which show that, right at the start, 16% of people were in arrears. That compares with 7% for JSA equivalents. In the second wave of research, that 16% figure had come down to 12%. We have put in a lot of measures to ensure that we get that figure right down and give people the support that they need to manage their finances.

[Lord German (LD)]

My Lords, universal credit is paid monthly and usually includes rent, which is quite a substantial slab of money. Can my noble friend tell us what progress he has made with the banks and credit unions to ensure that transactional bank accounts are available to people, so that they may take advantage of direct debits and standing orders?

[Lord Freud]

We have a very active programme working with the banks to ensure that they provide services for the clients who are on universal credit. An exercise is currently going through to expand the ability of credit unions to provide these kinds of facilities by giving them a common banking platform.

Underoccupancy Charge: Carers

Debate between Lord German and Lord Freud

Monday 10th November 2014 Lords Chamber

[Lord Freud]

We clearly value carers greatly, and we have put support into the system at different levels for them. In this case we have given local authorities some guidance to make it absolutely clear that they can make longer-term determinations of discretionary housing payments. We have also made it clear that DHPs will be paid next year as well as this year.

[Lord German (LD)]

My Lords, the Government’s own review of the spare room subsidy shows that discretionary housing payments are inconsistent, short-term and temporary. Indeed, the evidence is that most of the applications for those payments are made by the very groups who should be exempt—carers and those who have had adaptations made to their homes. Many local authorities are now means-testing the disability benefits of people in receipt of those allowances. Regardless of what may happen to this policy next year, is it not now time for the Government to fully exempt people in those groups, such as carers and those with adapted homes, so that they are not subject to this inconsistent approach to government funding and can get certainty in their lives?

[Lord Freud]

As I said, we have made sure that long-term discretionary housing payments can be made. We have also provided guidance to make it clear that where claimants are using their disability payments for needs caused by their disability, such as paying for care or Motability schemes, those would not be included in the calculation.

Work Capability Assessment

Debate between Lord German and Lord Freud

Wednesday 5th November 2014 Lords Chamber

[Lord Freud]

The service that we provided is not where we want it to be—we have been clear about that. We are pulling down the backlog; it is down by 20% since February. We announced in March that Atos would be leaving the contract, and we were able to announce last week that Maximus Health and Human Services is taking it up from that date.

[Lord German (LD)]

My Lords, we now have a new supplier of these work capability assessments. Most of the staff are being transferred using the transfer of undertakings. May I and the House be reassured that the transfer of undertakings will not include a transfer of working practices? In particular, perhaps my noble friend can tell us whether he agrees with the recommendation from the Government’s own assessor of this policy, Dr Litchfield, that less emphasis should be placed on the number of points attained in the test and that the calculation should be used,

“simply to determine whether the threshold for benefit has been reached”.

Surely that is a much fairer way of doing these assessments. Does the Minister agree?

[Lord Freud]

We are not changing the actual assessments, but we are improving the quality of those assessments; expanding the number of medical professionals, particularly in mental health; understanding how fluctuating conditions work, and so on.

Employment

Debate between Lord German and Lord Freud

Thursday 23rd October 2014 Lords Chamber

[Lord Freud]

As the noble Lord knows, that is an extraordinarily complicated economic question. The Chancellor has clarified that the target around full employment is a better employment rate than other countries are seeing. We are currently not far off the full employment rate, at 73%, that we have seen in the past.

[Lord German (LD)]

My Lords, as the unemployment levels fall, the focus naturally shifts towards in-work progression, with people wanting to earn more money and have more hours. Can my noble friend tell me whether we should in fact incentivise the Work Programme so that after someone being 26 weeks in work, when a company gets paid, there should be further incentives to help people earn more money and get more hours, so we can move people into better work in their lifetime?

[Lord Freud]

My Lords, we now have the real-time information system working, whereby we know what people are paid every month. That gives us a new opportunity with the Work Programme in its next stages to look not just at sustainment in work, which was the key new feature of the original Work Programme, but at progression in work. It will be entirely possible to devise ways to encourage providers to help people make that important progression.

Universal Credit

Debate between Lord German and Lord Freud

Wednesday 30th July 2014 Lords Chamber

[Lord Freud]

I do not have a review of all the business cases, but I know that we have 44 separate business cases for change programmes in my department, the DWP, and that this is the most reviewed. What we have said—and I have said it in this House—is that the plans in the strategic outline business case for the remainder of this Parliament have been cleared, and that we are looking to get formal full clearance for the case shortly.

[Lord German (LD)]

My Lords, the universal credit is providing great opportunity for people and is being rolled out slowly. It is also giving Jobcentre Plus advisers an opportunity, for the first time, to advise customers so that they get comprehensive support. Most of the problems seem to be about the future. Can my noble friend therefore reassure the House that it will be rolled out to and engage a large number of people by May 2015? What milestones does he anticipate we will have passed by the time that we get to May 2015?

[Lord Freud]

My Lords, we are rolling out universal credit on a careful basis right the way through the north-west. We are currently at 38 jobcentres across the country, the bulk of which—32—are in the north-west. On Monday we moved from singles to couples as well, and that will be introduced right the way through the north-west as we finish this rollout this year. In the autumn we will move to families; so there will be a substantial number as we do that rollout. I must emphasise that we are not doing this rollout in the same way as past programmes have been brought in, on a big-bang basis; we are making sure that we understand what is happening and we go at the pace at which we can do it safely.

Jobseeker’s Allowance

Debate between Lord German and Lord Freud

Monday 21st July 2014 Lords Chamber

[Lord Freud]

Since 2010, 1.8 million people have got jobs. Nearly 80% of that growth was outside London, with all regions being up in that period. As for the role of benefit reforms in our economic recovery, my view—this is something that statisticians will work on for some time—is that we are beginning to move into some of the structural problems that we have had for many years now, and are moving through the cyclical effects into those structural requirements.

[Lord German (LD)]

My Lords, the jobseeker’s allowance is being subsumed into universal credit. Universal credit is being moved along and rolled out slowly; it is much better to get it right than hastily to put something in place that goes wrong. However, it is having a significant impact on the number of people who are being helped and getting into work. Will my noble friend help the House by identifying what the impact would be of the Labour Party’s proposal to hold up and stop the rollout of universal credit on those who are seeking jobs in this country and those who are getting help from joining universal credit?

[Lord Freud]

I think it would be pointless to slow down universal credit, which is now rolling out smoothly. This year, we are rolling it out right the way through the north-west, moving through couples and families. Any delay to that process withdraws support from the people who need it. We have, however, rolled out the claimant commitment, which is part of universal credit, right through the country. The whole drive of that reform is to help and coach people into work, and that seems to be having a good effect.

Benefit Cap

Debate between Lord German and Lord Freud

Wednesday 2nd July 2014 Lords Chamber

[Lord Freud]

There are two ways in which the cap works to incentivise people to go to work. One is that people who qualify for working tax credit are exempt from it, but there is another way, in that anyone doing even small amounts of work will be capped by a lesser amount because it serves to reduce the level of the cap and effectively allows them to keep their earnings. Clearly, one always has to be very careful to distinguish causation from correlation, but in a survey conducted by MORI a quarter of capped claimants said that they had looked for work because of the cap and 45% said that they would look for work in the next 12 months because of it.

[Lord German (LD)]

My Lords, the dignity of work is probably the best way in which people can escape from the cap. However, the figures to which my noble friend has just referred indicate only a trend in the direction of travel. From the figures which the DWP is now collecting, will the Minister have formed a view by the end of this coming recess as to the whole period? Will he know many people have moved into work and whether the trend that we have seen in the initial figures has been carried through, so that we can say that this initiative has really borne fruit into work?

[Lord Freud]

The cap is doing quite a lot of things. It has an influence on the people who are capped but it also sends out a message. The total number of people who have been capped at one time or another stands at just over 42,000; the current number is just over 27,000. A substantial proportion of those who have moved out of the cap, which they might do for various reasons, have gone into work and taken working tax credit. Others will have taken advantage of the effect that I have just referred to, whereby doing even small amounts of work reduces their cap.

Housing: Underoccupancy Charge

Debate between Lord German and Lord Freud

Tuesday 24th June 2014 Lords Chamber

[Lord Freud]

My Lords, some of my more sharp-eyed colleagues here will have seen the information we put out on the discretionary housing payments for last year. That showed that there was a £13 million underspend by 240 councils and that of the £20 million bidding fund, £7 million was not spent. The £20 million was not applied for in its entirety. However, we allocated that money on the basis of parity of requirement. There was an extensive process to make sure that we gave the appropriate amounts of money to those councils.

[Lord German (LD)]

My Lords, the Ipsos MORI review, of course, is much awaited, not least by the Master of the Rolls who, in making a judgment in favour of the Government, said that the DWP had informed him that,

“the scheme may need to be modified in the light of experience”.

When the independent review comes out and my noble friend sees it before the Summer Recess, will he agree to act upon it and take decisions to make changes to the scheme so that it fits the experience shown by his independent review?

[Lord Freud]

My Lords, we always look very closely at any research that is done and we will do no differently with this research.

Housing: Inherited Social Housing Tenancies

Debate between Lord German and Lord Freud

Monday 24th March 2014 Lords Chamber

[Lord German (LD)]

Can my noble friend tell the House roughly how many people in this country are living in overcrowded conditions or are on housing waiting lists? Can he also put on the record the number of new social houses being built by this Government and compare that with the number built by the previous Government, because, clearly, housebuilding and social housebuilding are crucial?

[Lord Freud]

My noble friend draws the comparison between the amount of capacity that we have in this country and the demand for it. The number of people on the waiting list is 1.8 million, with the figure for overcrowding running at 250,000 on some estimates and 400,000 on others.

When this Government took office, we were left with the lowest level of peacetime housebuilding that this country had seen since the 1920s. Since then we have delivered nearly 400,000 new homes and put in very substantial investment. There is £11.5 billion public investment to boost housing supply over the four years of the spending review, and this is meant to lever in more private investment. The volume of housebuilding is now picking up. The starts in the quarter to December were up 20% compared with the same period last year.

Employment: Universal Jobmatch

Debate between Lord German and Lord Freud

Wednesday 19th March 2014 Lords Chamber

[Lord Freud]

My Lords, there is a great deal of confusion around this. I am pleased to be able to straighten it out, because there has been a lot of misrepresentation. There is a small amount of fraud on the site, as there is on other sites. It is less than one in 1,000. We clear them off. This is a hugely successful site. It has more than 500,000 employers on it and nearly 6 million job searches a day. It has transformed the service of getting people back into work, which is of course now at record levels.

[Lord German (LD)]

My Lords, despite the extremely good news today of the trend once more being employment up and unemployment down, there will always be a need for a website of this sort which matches the jobseekers with the job vacancies—and not just Mafia couriers. Can my noble friend tell us whether the security issues around this site are the responsibility of the aptly named Monster Worldwide Inc, which runs it on behalf of the Government? Can he also tell us, under his commitment under his department’s privacy policy, what security measures he has taken to avoid people’s personal details being circulated widely to those who should not have them?

[Lord Freud]

My Lords, we take security very seriously. One of the reasons that there is a difference between the standard Monster site and that run by the state is exactly to make sure that there is security in our site. We work closely with Monster on that. People have to be careful with their information on the site, as for anywhere else on the internet. We make sure that there is proper support for people and instruction on how to keep their information safe.

Employment: Universal Jobmatch

Debate between Lord German and Lord Freud

Tuesday 11th March 2014 Lords Chamber

[Lord Freud]

My Lords, Universal Jobmatch has revolutionised the service of Jobcentre Plus. It is a transformative service. We have many people registered on it on a paperless basis. Half a million employers are on that service. As I said, we monitor it the whole time. We are now looking at 179 employers who may be in breach of our conditions and will suspend them if they prove in breach. I can assure noble Lords that no jobseeker will be sanctioned for not applying for a job that does not exist.

[Lord German (LD)]

My Lords, this website is crucial to people seeking to find a job, and many tens of thousands of people have found jobs as a result of it, but obviously there are concerns about people’s personal information and the security of it. What action has been taken against hackers, particularly those who seek to spread individuals’ personal information in their CVs to people to whom they have not applied for jobs?

[Lord Freud]

We have a thorough communication exercise to jobseekers to make sure that they look after their information online, just as anyone else needs to be careful with their information online, and we are currently looking to enhance our service through Universal Jobmatch to make sure that we do not have this kind of problem.

Pensions Bill

Debate between Lord German and Lord Freud

Monday 24th February 2014 Lords Chamber

[Lord German (LD)]

Will my noble friend allow me a moment’s intervention? I was present at that meeting, and I found it very interesting to have a representative of HMRC there. One of the principal conclusions I drew from that meeting was that there was an agreement between the LGA and HMRC that they would examine up front any arrangement for the distribution of additional funds from HMRC to local government pension funds, and would get the process sorted out in advance so that if money became available the method of distribution would be quick and would help them in their procedure. Can my noble friend confirm my understanding that HMRC is onside with this?

[Lord Freud]

My noble friend is probably way ahead of everyone in this Chamber at this moment on this matter, but I think I can simply answer yes to his understanding. As he says, whereas final decisions tend to get taken at a relatively late moment, if the processes are well organised, that matters less and they can be effectively activated.

The ending of contracting out is an inevitable consequence of the state pension reforms. We want to manage this as smoothly as possible and to minimise impacts on employers, schemes and individuals. I have set out why the override is necessary and why the amendments tabled by the noble Baroness and the noble Lord would make the override unworkable. Amendment 11 would in many cases allow trustees to block changes to the scheme and would increase the risk that employers would simply close their schemes. That is why I urge the noble Lord to withdraw his amendment.

Pensions Bill

Debate between Lord German and Lord Freud

Wednesday 8th January 2014 Grand Committee

[Lord Freud]

My Lords, as the noble Baroness, Lady Hollis, pointed out, the policy on the uprating of state pensions for pensioners abroad is a long-standing one. It has been regularly debated over the years. Clause 20 provides an enabling power for regulations to restrict the availability of annual uprates, as now, in the new state pension where the recipient is living overseas. The Government’s intention is that there will be no difference in treatment between the new and old state pensions as to overseas uprating, either generally or with regard to the UK’s various bilateral agreements. I can reassure noble Lords that all our existing legal obligations with regard to uprating of pensions under bilateral agreements—along with the European co-ordination regulations—will continue to be honoured. To treat the new single-tier pension differently from the current pension would clearly go against the spirit of these agreements. However, I should make it clear that there are no current plans to enter into any new social security bilateral agreements.

There are a number of factors to be considered behind that decision. These are the number of people moving between countries, the benefits available under the other country’s scheme, the compatibility of systems and how far and to what extent reciprocity can be achieved. Future costs are also considered in both the implementation and future operation of any agreement. A bilateral agreement with Australia existed in 2001 when Australia ended it because of a dispute around the current UK policy on uprating UK state pensions paid overseas. There are no plans to enter into a new bilateral agreement with Australia, as any agreement would not achieve reciprocity between it and the United Kingdom.

I shall pick up the Canadian point. Bilateral agreements cover social security matters only, rather than matters beyond this scope which might be described as mutually beneficial. DWP officials are not aware of a discussion or correspondence on this wider scope of mutually beneficial arrangements. I cannot confirm the figures provided by the noble Baroness, Lady Hollis, on whether four times more go to Australia than come back, but she is normally well informed.

I need to make information available on the numbers. We are in the process of updating and quality assuring our estimate of the cost of unfreezing pensions for 2014-15. The department has moved from modelling change to the case load at a population level to a more complex methodology, which takes account of individual characteristics and provides a more accurate estimate when applied to historic data. As a consequence, we now estimate that the cost of extending the uprating of pensions currently paid overseas is slightly reduced but it will still represent a substantial cost to UK taxpayers of more than £0.5 billion per annum. My noble friend is right in saying that this is somewhat below the previous estimate, based on general populations, of £700 million. The department has recently released a statistical publication that clarifies this matter, to which I can refer noble Lords if they need more information.

On the point of the noble Baroness, Lady Hollis, on whether people have full information, the department issues the following leaflets which include information on the impact of living outside the UK and the annual uprating increase for UK state pensions: leaflet BR 23, leaflet DWP040 and leaflet DWP026. The 040 leaflet is sent out with the state pension statement, for instance. Information is available on the government website and Social Security Abroad, leaflet NI138, issued by HMRC, also includes similar advice.

The amendment in the name of the noble Lord, Lord Browne, on reviewing overseas residents’ provision assumes that we would be able to identify and assess the behavioural link between uprating policy and migration patterns. The question about a review is whether it would raise expectations. The noble Lord posed the question about whether we would uprate if we had the money. The noble Baroness, Lady Hollis, was spot on when she raised the issue about making very difficult decisions on payments. Finding £500 million is not an easy business. Clearly, there will always be different priorities for £500 million per annum, as indeed the previous Government decided at a time when there appeared to be more money floating around than there appears to be today. I will not step on anyone’s grave in the collegiate atmosphere of this Committee.

The final question raised by the noble Lord, Lord Browne, was on the numbers of pension-age people moving abroad. That comes from the document from the ONS called Emigration from the UK, November 2012, which states:

“Only two per cent (or 6,000) of those emigrating were over the state pension age of 60 for women and 65 years for men”.

The report also interestingly indicates that 10% were aged between 45 and 59/64 years.

We are aware of research that suggests that a theoretical and economic case can be made to support the uprating of state pensions for all recipients abroad. However, it is notable that this analysis has not been able to provide evidence of a proven behavioural link between uprating and pensioner migration. In fact, we think it unlikely that any review would demonstrate that. In any case, the decision to emigrate abroad remains a personal choice for individuals. In the absence of that kind of evidence, we know that the cost of extending the uprating of pensions currently paid overseas remains significant at more than £0.5 billion per annum. The Government, like their predecessors over the past 60 years, believe that they must put the interests of pensioners living in the UK over the interests of those living overseas by restricting the availability of uprates to those living here or in a country where we have a legal or treaty obligation to provide them. I therefore ask the noble Lord to withdraw his amendment.

[Lord German]

My Lords, I thank noble Lords who have taken part in this debate. It is an interesting one because in the words, I think, of the noble Lord, Lord Browne, it is one that will not go away and will continue to raise its head. I am grateful to the noble Lord, Lord Browne, for reminding noble Lords that at Second Reading I did preface my remarks quite clearly by saying that I was not seeking to pay huge amounts of money to deal with this matter in the manner that many people have demanded or asked. It is a question of trying to find an alternative approach, which is what I was seeking to do with this amendment and in my earlier statements at Second Reading.

As many noble Lords have mentioned, people are putting pressure on noble Lords and Members of the other House to come up with some solutions. The challenge is to think of a way in which an approach might be developed, and I put one before noble Lords in this amendment. I hope it was quite clear that the amendment was not seeking any approach beyond a quid pro quo with another Government so that the message would be clear to any other Government seeking to approach the United Kingdom on this issue. Quite a number have approached the United Kingdom over the years, including some quite surprising places such as Mongolia. If we are going to go down this route, we need to ensure that there is a clear message that there will be no additional costs to United Kingdom plc.

I note what my noble friend said about reciprocity only being looked at from a social security angle. However, that raises another point, on which I echo some thoughts back to the noble Baroness, Lady Hollis. If income comes to UK plc, providing the UK Government can redistribute it accordingly, there may well be opportunities in any agreement beyond just simple social security. I think that has been consistently looked at as the approach for all these reciprocal arrangements, right back to the very beginning.

Housing: Underoccupancy Charge

Debate between Lord German and Lord Freud

Thursday 12th December 2013 Lords Chamber

[Lord Freud]

My Lords, you have to look at the whole transaction, a bit like a housing chain. If a single person moves into the private rented sector out of a large social sector home, clearly that frees up room for people to move into that home from the private rented sector. That is where either you get a much more efficient allocation or you get the savings.

[Lord German (LD)]

My Lords, in Questions to the Prime Minister on 27 November on the spare room subsidy clawback, Mr Cameron said that,

“what we have done is to exempt disabled people who need an extra room”.—[Official Report, Commons, 27/11/13; col. 254.]

For families with a disabled child, there is a blanket exemption. However, households with a disabled adult are subject to the vagaries of local councils using the discretionary housing payment, which has not been great. Does my noble friend agree that now is the time to make a clear exemption, as we do for disabled children, for households with a disabled adult who need a spare room, so that the Prime Minister’s statement of 27 November can be carried out?

[Lord Freud]

My Lords, the difference between children and adults is that adults can adapt their circumstances in a way that children cannot. We have gone through a judicial review of this policy as it relates to disabled adults. The judges found that it was impossible to reach a coherent definition and that the discretionary housing payment system was created to look after people in those circumstances.

Universal Credit

Debate between Lord German and Lord Freud

Tuesday 10th December 2013 Lords Chamber

[Lord Freud]

I thank the noble Lord for that. We have spent a lot of time bottoming out this issue. Clearly, incorporating housing benefit into universal credit is an absolutely central part of what we are trying to do, but it was essential that we did not get to a position that undermined the finances of the social housing industry. That is why we ran the demonstration housing projects. From those, we have created a system which means that we will have switchbacks after two months and an early alert after one month. There is a very effective underpinning for the finances of housing associations.

[Lord German (LD)]

My Lords, I share the disappointment that this programme has slipped. Quite frankly, I am sure all noble Lords would have liked it to be on time. However, there has been an appalling record in the introduction of very large-scale IT systems. In the past—I point to the record of the previous Government—they have hurt many people and cost many, many more millions of pounds than this. Surely my noble friend can identify now that this is something with which we need to take the greatest care. We must ensure that we move forward in a step-by-step way, being safe, not harming anybody and not putting anybody at risk. We must share the disappointment of it not being as quick as we wanted but in the end it must be the right service for the right people at the right time doing the right job.

[Lord Freud]

My Lords, as the Secretary of State mentioned in the other House, one thing that influenced us a lot was what happened with tax credits, which was why we took the decision to move in early and do this reset. Tax credits were announced in 2001 and rolled out from 2003. In the first three years of operations, £6 billion was overpaid and 400,000 claimants received their payments late, a third of cases monitored by Citizens Advice had their payments reduced below the poverty line, and IT systems were deemed unstable and not fit for purpose by the PAC. We have not done that. We have moved in early and made sure that we go safely and securely, and that when we introduce a system it is one that will not let people down.

Universal Credit: National Rollout

Debate between Lord German and Lord Freud

Monday 28th October 2013 Lords Chamber

[Lord Freud]

My Lords, first, I take the opportunity to congratulate the noble Lord on taking up a slightly more relaxed lifestyle on the Back Benches with this portfolio. I pay tribute to him for his formidable contribution over many years from the Front Bench. To deal with his latest and just as formidable contribution, I remind noble Lords that the NAO said in its report:

“Spending so far is a small proportion of the total budget … and it is still entirely feasible that [universal credit] goes on to achieve considerable benefits for society”.

[Lord German (LD)]

Would my noble friend agree that the introduction of universal credit represents one of the largest system changes we have ever seen in the public sector in this country, sitting as it does on a hugely complex IT platform? Given the significance of universal credit in that it will always make work pay more than being on benefits, does my noble friend agree that getting it right is more important than making mistakes as we go along? But, if he will forgive my impatience, when will we see the first families with children being able to receive universal credit?

[Lord Freud]

My Lords, I entirely agree with the sentiment. When you are introducing a large cultural change like this, it is important to do it in a careful and controlled way, and to make sure that it is safe and secure. That is how we have been introducing our series of changes, such as child maintenance, PIP and benefit cap. I am not in a position, until we announce Howard Shiplee’s plans later this year, to give a timetable of when couples and children are brought into the migration strategy.

Mesothelioma Bill [HL]: Impact

Debate between Lord German and Lord Freud

Tuesday 25th June 2013 Lords Chamber

[Lord Freud]

My Lords, I know that everyone in this House would agree with the proposition that we want to get as much money as we possibly can to mesothelioma sufferers, particularly those who, through no fault of their own, have not been able to trace the insurer that should be paying them the employers’ liability compensation. The reality is that we cannot trace the insurer in roughly 10% of cases. We are trying to make sure that we trace as many as possible. They will get the full amount, and then get a payment—not quite as much as I would want, but a safe, sustainable payment, for this group of people, and that is a lot better than the nothing they are getting currently.

[Lord German]

My Lords, I congratulate the Minister on bringing the good insurance companies to provide compensation for this fatal industrial disease for those who are non-traceable or wayward in their insurance. Will my noble friend tell me what guarantees he has that the insurance companies will not simply pass on the costs to their customers in their bills? If he has no guarantee of that, it might well happen anyway. Surely it would be worth the little extra it would cost to bring that 70% closer to 100% in order to be able to give compensation and help to sufferers and their suffering families.

[Lord Freud]

My Lords, as my noble friend pointed out, this scheme is based on a levy on insurers who are active in the market today, not those who may have actually been responsible for the historic liability. It is very difficult to assess who takes the real burden of the cost. I have been very anxious to get to a position where I am as assured as I can be that the bulk of that cost is carried by the insurance industry, not by British industry as a whole. The risk is that if the levy is too high, the amount would have to be passed on by the industry.

Mesothelioma Bill [HL]

Debate between Lord German and Lord Freud

Monday 10th June 2013 Grand Committee

[Lord German]

Following that point, I will quote from a House of Commons document, Mesothelioma: Civil Court Claims, dated 22 March 2011. Under the section marked, “Claimants other than employees”, it reads as follows:

“In a number of cases, claims have been made by those, including family members, who have contracted mesothelioma following secondary exposure to asbestos. Each case is determined on its own facts”.

I dread to quote the following fact:

“For example, the Ministry of Defence admitted liability for the transmission of mesothelioma to Mrs Debbie Brewer, whose father died from small-cell lung cancer … after a career as a lagger at the Devonport Dockyard. He had greeted his daughter each evening whilst wearing dusty overalls from which she is believed to have inhaled the fibres that caused her disease”.

It goes on to cite another case. There have obviously been some cases. The one I have quoted admittedly has the Government as the employer, but there is one involving another company further on.

[Lord Freud]

My Lords, I am grateful for those observations. I am sure that we will have a chance to discuss this in more detail later. I now move to—

Housing Benefit

Debate between Lord German and Lord Freud

Wednesday 15th May 2013 Lords Chamber

[Lord Freud]

My Lords, we are looking to protect people in difficult circumstances by looking to the local authorities to apply the discretionary housing payments, which have gone up enormously. Overall, they are running at £150 million this year, and at £360 million for the SRS. Our expectation is that these hard cases will be looked after locally.

[Lord German]

My Lords, as my noble friend the Minister has just explained, there are a large number of exemptions which are made through local authority discretion. The Government have, however, insisted on a certain number of exemptions, and one of the most welcome is the recent exemption given to a disabled child who was unable to share a bedroom. Will the Minister extend that commitment to include a disabled adult who is unable to share a bedroom, and so put this matter beyond doubt, rather than leave it to the discretion of local authorities?

[Lord Freud]

My Lords, we are looking for local authorities to deal with this matter with adults. We think that there is a difference between disabled children and disabled adults in that disabled children cannot know whether they pose a risk to themselves or to another child whereas adults and couples are able to exercise choice in how they run their lives.

UK: Poverty

Debate between Lord German and Lord Freud

Monday 25th March 2013 Lords Chamber

[Lord Freud]

My Lords, we have a benefits system that is designed to provide the basic needs of people who are poor. Clearly, there is increasing local provision of food banks. Actually, it expanded very dramatically under the previous Government. Interestingly, the really big expansion has been since September 2011 when jobcentre advisers were allowed for the first time to direct people towards them.

[Lord German]

My Lords, relative measures of poverty sometimes have bizarre consequences. An example has happened recently. As the economy contracted, hundreds of thousands of children were notionally lifted out of poverty. What credence does the Minister give to a better and wider form of measurement of poverty that looks at interventions and at ways of removing barriers for children, such as that proposed by Save the Children, which would allow things such as the pupil premium to be included in the measure so that we fully understand the impact that these things have on child poverty?

[Lord Freud]

My noble friend makes an important point. I should make it clear that I believe in the relative poverty measure, which is a way of measuring what happens over the medium-term period, although there have been some rather perverse impacts in the past couple of years in the current recession. What is really important is that we drive our attention to the underlying causes of poverty. That is what the current consultation is about. We will be reporting on how to tackle it in the spring/summer.

Loss of Tax Credits Regulations 2013

Debate between Lord German and Lord Freud

Monday 18th March 2013 Grand Committee

[Lord German]

My Lords, I, too, welcome these regulations, but again they are a round two as they match the Social Security (Loss of Benefit) (Amendment) Regulations 2013. I have a number of questions. The first relates to what happens under universal credit to the various sets of regulations that we have been discussing today, which also have their mirror in regulations brought forward by the DWP. It may be a bit of a heresy to say this, but if we are to have separate regulations from separate departments, might it not be a little more useful if we were to back to back them in the same slot so that we could at least look at them together and perhaps save a fair bit of time and effort? Universal credit gives us that opportunity, since we will be looking at these regimes in the round.

My second question relates to the three-year sanction, which is the heaviest of all the sanctions, and the use of the words “deliberative or organised offences”. Has that definition of what is a deliberative offence and what is an organised offence been codified in the handbook and regulations given to decision-makers—both those in the Treasury and obviously those who are to be responsible for universal credit—in order that the level of understanding is of a high nature? When someone goes to court and gets a sentence, we can see that being clearly identified. However, there may be occasions when this is dealt with outside the court through an administrative procedure, in which case there needs to be a clear understanding of when these heavier sanctions will be applied.

I understand that the decision-makers will also be given a level of discretion about the boundaries between some of these sanction periods. Can my noble friend say a little more about the nature of that discretion and whether a framework will be given to the decision-makers in each of these cases, so that we have some certainty that the worst and most difficult offenders will be given the heavier sentences? Will there be any form of appeal internally, apart from the normal tribunal case, where someone has appealed against their sanction? Perhaps my noble friend could give us some idea of how that mechanism will work.

[Lord Freud]

My Lords, let me try to deal with the points raised. There was a rather interesting question from the noble Lord, Lord Eatwell, about the division between what I think he would call the crooks and the desperate. The best way I can approach that is to look at the way in which fraud develops. I think it is right to say that 80% of the fraud develops out of people not informing of a change of circumstance. There is a drift there that indicates that we are not talking about that many who are desperate because, in one circumstance, people were clearly functioning at a certain level of benefit or tax credit. They then got supplemental income elsewhere and kept the extra, to which they were not entitled. That is quite a typical fraud, so on balance we are talking about crooks here. That is the best figure that I can give the noble Lord. I certainly have not seen anything better, and as your Lordships can imagine I see quite a lot of data.

One of the points that my noble friend made at the end of his last question was about discretion. I must make the point that we are now talking not about the conditionality sanctions, which this can often be confused with, but about people who have committed fraud, have usually gone to court and have had a punishment laid down by the court. There is no doubt about that and it is not in the discretion of our decision-makers. That is not true at the margins, where people accept an administrative penalty, which is at a much lower level. However, as you move up the scale, with repeat offences and the serious offences that we are most concerned about, it becomes a court matter and, to that extent, is not a matter of our codification. The serious offences that I am talking about are laid down in regulations. I speak from memory but I think we are talking about £50,000 offences, serious identity fraud such as trying to pass yourself off with a different identity: that kind of thing.

On my noble friend’s last point, we are bringing the regulations on working tax credit closely together with what happens to today’s benefit system, with a view to pulling both of those into the UC sanction regime. They are being pulled together with a view to there being relatively little change in the overall approach and amount when UC comes into effect for particular people.

I think that covers all the issues that have been raised. The amount of money, £1.9 billion, is substantial, and we want to make sure that it is fully realised that this is not acceptable or safe behaviour. I do not have to hand a comparison with our estimates on tax evasion and tax avoidance. Tax avoidance, as the noble Lord, Lord Eatwell, will be fully aware, is a different matter from tax evasion, but our concern about tax evasion is at absolutely the same level—it is the same offence as defrauding the benefits system.

We need to send out a strong message that this type of fraud is not tolerated. We also believe that, although fraudsters must be promptly and severely dealt with, innocent parties should be protected, which is why this relates only to working tax credit and not to child tax credit, and why we will only reduce working tax credit by 50% in households where one member of a couple has not committed an offence.

I seek the support of noble Lords for these regulations. Indeed, I hear that I have it and I commend them to the Committee.

Health: Atos

Debate between Lord German and Lord Freud

Monday 26th November 2012 Lords Chamber

[Lord Freud]

My Lords, over the past month Atos has been running at about 200,000 assessments; its average is about 100,000. There are 962 full-time-equivalent healthcare professionals working on them. We inherited this review and have now had four subsequent reviews: one internal and three from Professor Harrington. We have basically accepted and largely implemented 40 of the recommendations from Professor Harrington, who said in his latest review, last week, that significant and lasting improvements are coming.

[Lord German]

My Lords, is it not terrible that one in four of the premises that Atos uses for its assessments does not have flat-level disabled access and that wheelchair users cannot access these assessments? Can my noble friend tell the House whether the original specification for the Atos assessment centres contains any references to disability access? In view of the terrible circumstances in which many people in wheelchairs now find themselves, when will the Government be able to complete ensuring that all people needing wheelchair access have access to these assessment centres?

[Lord Freud]

I am not aware of the fine print of that particular contract, as it was done under a previous Government. A proportion of the assessment centres—currently 31, I believe—are not on the ground floor and lifts must be used. If there is then an emergency, such as a fire, those people will have to go down the stairs, which is obviously not satisfactory. To the extent that people are concerned about that, we make other arrangements: they are visited on the ground floor, somewhere else or at home.

Housing Benefit (Amendment) Regulations 2012

Debate between Lord German and Lord Freud

Tuesday 6th November 2012 Lords Chamber

[Lord German]

My Lords, I apologise to your Lordships’ House for missing the first few minutes of this debate. I was involved in another debate in the Moses Room at the time and it was difficult to shift sufficiently speedily between that Room and the Chamber.

I can well understand why many noble Lords want to reprise our lengthy debates on the Welfare Reform Bill. I also understand why people still have major concerns in this area. I do not think that any noble Lord present would say that these changes will be easy to accommodate. Difficult decisions will have to be made. As we all know, the changes are intended to relieve some of the strain on the housing benefit budget. However, the only fair element is that the benefit we are discussing will be brought into line with the local housing allowance.

Some noble Lords share my concern about the future of housebuilding. As the noble Lord, Lord Smith of Leigh, said, the previous Government did not meet housing demand. I only hope that the present Government will be able to build extremely quickly the number of houses that are needed to cope with society’s demand for them. We await action as regards achieving the number of houses that are needed.

There are two major concerns about the way these regulations will be implemented. The first is the ability of the housing stock to adapt and provide accommodation of the size needed in each area in order to allow those who wish to move to a different sized property to do so. The second issue relates to the changes affecting specific groups of people. I would like to ask some questions in relation to both those issues. I preface my remarks with mention of behavioural change. I have heard it said frequently in your Lordships’ House and in Committee that people’s behaviour in this area is of the worst kind. However, people do not always behave in a way that leads to the worst outcome for them. Some people behave differently.

There are two key issues I would like to ask questions about. My first question to my noble friend is: what assessment has the Department for Work and Pensions made, given the contact it now has had with people who will be affected by this measure, about the likely outcomes and the directions people will take as a result of what is happening? There undoubtedly will be, of course, some people who will wish to move. The issue then is the ability of the housing stock to be adapted very swiftly. Can my noble friend tell us what discussions there have been with housing associations, local authorities and private landlords to see whether adaptations can be made for people to move, probably into smaller properties, where house building has moved onto larger properties? Where are we in readiness for the sort of behavioural changes? I hope my noble friend the Minister can tell us.

I also wanted to ask about the £30 million of DHP—the £25 million for adapted properties and the £5 million for foster carers. This was an issue we pursued at some length during the course of the passage of the Welfare Reform Act. This was a very welcome area but I would like to really understand the Government’s dynamic on adapted properties. Will £25 million be provided over a longer period and what assessment has been made of the need for that length of time? Will £25 million be sufficient to cope with what it is thought will be the behavioural arrangements for people who live in adapted property where it would make no sense whatever for them to be moved on?

The second area I would like to investigate is rurality and rural housing, mentioned by the right reverend Prelate the Bishop of Norwich. Having spent some considerable time as an elected Member trying to get more social housing into rural communities, I do not underestimate the difficulties there have been in building social housing in rural communities. It is very much more difficult if people want to move to have to move away from a rural community into a quite different environment altogether. What estimate has my noble friend the Minister made of the demand and the pressures there will be on rural housing? Has he taken into account the community shift that would have to take place given the shortage of accommodation in rural areas and often the very high price of private sector rented accommodation there?

I also want to examine the issue of redesignation of properties. This is also one of the approaches that some housing associations are looking at. For example is a bedroom really a study or is a partition wall not really a partition wall? Have there been any discussions with housing associations and social landlords about the role and about designation, and about who has the authority to redesignate housing in this area? There is undoubtedly some scope for action for here. There is no national register of what is a room size. It would very difficult and probably a bureaucratic nightmare to try to create such a reference document. However, is it possible to look at the way in which housing associations can define their property differently where the circumstances provide and who would have the authority to undertake the redesignation, which may take some of the pressure off the ability to find appropriate housing? I do not envy the job of the Government and my noble friend the Minister in undertaking this obviously difficult task and I would be grateful if he could give me some answers to those questions.

[Lord Freud]

My Lords, this has been a powerful debate and I will do my best to answer the questions. We dealt with an enormous number of questions in Grand Committee and so, rather than me going on for a very long time, I would like to suggest that I confine my responses to the new issues that I have not already dealt with and then leave my responses on the other matters that are on the record in Hansard.

The noble Lord, Lord McKenzie, referred to the NAO report and to 2 million households receiving lower benefits. That assumes that claimants will not adjust their behaviour by doing the things that we are hoping they will do, such as taking on work, moving to more affordable or more appropriate accommodation, and so on. We are beginning to see evidence from local housing associations that with the change from 50% to 30% people are changing their behaviour.

As regards the point about the pressure on the supply of affordable housing, the early signs from the LHA are that there is no discernable impact on the levels of homelessness, which have remained steady. The housing benefit claims from people renting in the private rented sector are increasing, which suggests that people are able to find affordable accommodation.

The noble Baroness, Lady Lister, referred to the NAO report and to its observations on the monitoring of discretionary housing payments. We are currently considering the recommendations in the report and will look at how feasible it is to monitor the way that DHPs are used.

I have dealt with the point raised by the noble Lords, Lord McKenzie and Lord Smith, about movements. There are movements of people from underoccupied homes, presumably to smaller homes, which will allow larger families, if they are being supported in the private sector, to have cheaper accommodation and gain from making that exchange.

As regards the issue of room sizes, raised by the noble Lords, Lord McKenzie and Lord Best, and whether there should be an adjustment for single bedrooms, we wanted to keep the system simple and did not want to introduce something that might require landlords to go around measuring rooms. Indeed, the stakeholders, including the National Housing Federation, have welcomed that. It is therefore up to landlords and tenants to decide between them whether a property is appropriate for their needs.

When it comes to designation of what exactly constitutes a property, it is up to landlords to take that decision. They are unlikely to do that on a wholesale basis, but there will be individual properties where it makes sense for landlords to redesignate them as not being appropriate. There may be an individual property for which it is straightforward to do that. To be honest, we are not expecting there to be a massive effect, but there may be some instances of that.

The noble Baroness, Lady Turner, asked about temporary changes of circumstances. There are housing benefit rules to protect households from either temporary absence, such as going into hospital or being on remand, or where the death of a member of the household would result in the reduction of housing benefit. For example, housing benefit provides up to 12 months’ protection from rent restrictions if there is a bereavement in the family.

The right reverend Prelate the Bishop of Norwich asked about non-resident children. Where the tenant has non-resident children, housing benefit may already be paying for a room for the child or children in the place where they usually reside. It would be double provision potentially to fund an additional room in both parents’ properties.

The issue of rural impact was raised by the right reverend Prelate and my noble friend Lord German. The use of the percentage reduction, rather than a flat rate, means that the impact, because it is proportionate, is likely to be lower because rents are likely to be less in rural areas. On the specific question asked by my noble friend Lord German on the approximate amounts, roughly 10% of the impact is likely to be seen in rural areas.

As to my noble friend’s question on what evidence we have received so far, the responses by local authorities and housing associations indicate that there is a lot of activity—whether you are talking about the West Midlands making best use of a stock partnership that brings together seven local authorities and 11 housing associations in finding people the right number of bedrooms, speed dating in the London Borough of Southwark, or the Stockport homes initiative to look for joint tenancies. Indeed, Wigan Council, the council of the noble Lord, Lord Smith of Leigh, and Wigan CAB have developed Wigan Housing Solutions, which acts as a social lettings agency and is a natural progression from the existing bond-guarantee scheme. It is a bridge between the private and social sectors, with Wigan Housing Solutions helping to relieve pressure on the housing waiting list. There is a lot of activity.

Social Security (Civil Penalties) Regulations 2012

Debate between Lord German and Lord Freud

Thursday 12th July 2012 Grand Committee

[Lord German]

My Lords, may I explore one item and ask a cheeky question at the end, related to the universal credit demonstration that some noble Lords were able to hear earlier on? Very welcome it was, too.

Paragraphs 9.1 and 9.2, which the noble Lord, Lord McKenzie, has already referred to, are about the guidance that is to be issued. In response to my questions to my noble friend about the way in which decision-makers behave, the answer has invariably been that we must encourage the empowerment of decision-makers. Of course, written guidance does not necessarily help people to use their discretion.

The other problem that is painfully obvious to many observers of the situation is that, when discretion is used, it may not necessarily be uniform throughout Jobcentre Plus offices. There have been a number of occasions, and some of these have reached the media, when decisions have been made on the basis of what may appear to be fairly flexible guidance but has been interpreted in a very literal way. If these penalties are to be most effective, then they are a weapon that has to be used with great discretion. Is my noble friend prepared to outline a little more about the nature of the work that will go on with Jobcentre Plus decision-makers to advise and empower them but also to train them in a method that does not simply consist of reading written materials from the department, and whether he has put in place a reviewing or monitoring mechanism—some way of judging whether that discretion is being used in a fairly uniform way? Nothing could be worse than if people were to rigidly apply rules in one office while next door someone was being treated with discretion and therefore differently. Noble Lords will know that it is difficult to strike a balance between discretion and uniform application. I wonder how that circle is being squared by the department, particularly in relation to paragraphs 9.1 and 9.2.

One of the problems found in the employment support allowance process is that claimants often fail to provide full evidence of their condition until perhaps after the decision has been taken and their appeal is on its way or reaches the tribunal stage. Does my noble friend see any use in the threat of these penalties that might assist people to come back earlier and give their full position and provide all the details in evidence that may be relevant to their claim up front in order that decision-makers might help to get the claim right at the first attempt?

This is a minor and very cheeky question. Under the universal credit, where real-time information is to be provided, is there a double banking system—does the claimant of universal credit also have to report these matters to the department? Is there a double check or, if there is a failure at one end of the system, will the claimant be blamed for what may have gone wrong in, say, information being inputted wrongly by his or her employer? Will any form of double-checking take place? Does the claimant stand any liability for what might happen in that respect?

[Lord Freud]

My Lords, I shall try to deal with as many questions and to avoid writing as many letters as possible. The noble Lord, Lord McKenzie, asked about the latest figure on official error. The latest figure is £0.8 billion. As regards making sure that one civil penalty will apply, we have put in place processes for decision-makers to check whether a penalty has already been applied for the same failure or error resulting in the overpayment. Only the JCP and the decision-makers, PDCS, are dealing with the non-housing matters. The way in which we ensure that we do not get a double whammy with local authorities and DWP is for local authorities to apply their penalties only when the standard housing benefit or council tax benefit is the only benefit in payment. In that way, there is no possibility of an overlap.

We are drafting the guidance and we hope to share the final draft guidance with SSAC by the end of this month. We will look to share it with other relevant stakeholders at that time to take on board their comments. The guidance will cover the obvious examples of negligence, reasonable steps and reasonable excuses. As one would expect, there will be intensive training, which will explore definitions of the penalty criteria. I do not think that the figures have changed from the impact assessment that we discussed when we were looking at the Bill. The cost is £19 million over 2014-15. The appeals estimate, which we discussed, remains purely an estimate.

In response to my noble friend Lord German’s question on the difficult mix of discretion and consistency, it is important that we have clear guidance about what constitutes the penalty criteria. Each case will be individually considered by a decision-maker. They will have general duties, such as to look at only what is relevant and to explain their decisions to claimants. My noble friend’s idea had not occurred to me. He is more devious than me about using this process to make sure that we do not have different information going to decision-makers and later to tribunals. I think that I shall take that away and think about it, as it is rather clever. That is a design issue that we shall explore.

I say in answer to the noble Lord, Lord McKenzie, that we will monitor the new penalty to ensure that it is effective—and to what extent—and that there is equality of treatment. We will use evidence from a range of sources such as administrative data and wider data sets. In practice, one of the main success criteria will be that we impose fewer penalties as time goes by.

We talked in the past about the fact that we now have a framework for conducting trials much more coherently right through the system. Clearly, we will pick out the key behavioural impacts of different aspects of the policy. How sanctions will work in that area is something that we will look at with randomised control trials. It is a very obvious test and there will be mechanisms for conducting it. We will look at the results very closely, and rather earlier than at the results of other tests, once UC has come in. I hope that I have dealt with all the issues.

Workers’ Memorial Day

Debate between Lord German and Lord Freud

Monday 23rd April 2012 Lords Chamber

[Lord Freud]

My Lords, it is possible, depending on the outcome, that we will need primary legislation on mesothelioma. However these things take time and we will have to structure any solution in consultation with the various stakeholders in order to get there. There is not time at the moment to attach any relevant legislation quite as rapidly as the noble Lord suggests.

[Lord German]

My Lords, Professor Löftstedt said in his report that there needs to be general community support as regards an understanding of risk. I therefore welcome the Government’s establishment of the independent challenge committee which allows the public to make a challenge when they see a risk that they believe is not appropriate. Can the Minister tell us how that body will be independent given that its chair is also the chair of the HSE, and whether it will not require a wider reporting mechanism than that currently envisaged?

[Lord Freud]

My Lords, my noble friend is absolutely right in the sense that it is often not so much what the regulation says as the way in which it is applied and used, and often those who are most shocked by how the regulations are applied are those in the HSE. This is a really valuable element of our society which has led to our having the lowest level of fatalities from workplace accidents in Europe. It is important that we concentrate this effort on where it really does save people’s lives. I think that the HSE does have an interest in making sure that that happens.

Employment: Work Programme

Debate between Lord German and Lord Freud

Wednesday 29th February 2012 Lords Chamber

[Lord Freud]

My Lords, I must point out that the NAO acknowledged that the Work Programme addressed significant weaknesses of previous programmes; that key elements within it improved affordability and drove value for money; and that it was a significant achievement to introduce it in a year. It is expected to help more people more effectively and for less money than previous programmes. As for information, ERSA has put out some information about what happened to the first cohort. It said that people got into jobs at a rate of between 18 per cent and 23 per cent, which was more or less in line with the expectations of the industry.

[Lord German]

My Lords, up and down the country there are third sector and charitable organisations supporting the Government in delivering this Work Programme as subcontractors. However, the National Audit Office report shows that many of these subcontractors are concerned about the way they are being treated by the prime contractors, and recommends that the Government should institute a programme of spot checks to ensure that they are fulfilling the standards which I know the Government have put in place. Can my noble friend tell me whether these spot checks have taken place yet, and if not, when are they likely to take place, and will he report to the House?

Child Poverty

Debate between Lord German and Lord Freud

Tuesday 24th January 2012 Lords Chamber

[Lord Freud]

My Lords, we have a large number of measures to deal with unemployment in the short, medium and long terms, but the really important area here is to look at the long-term unemployed who have been excluded from economic activity. That is one of the most important areas of effort that we are undertaking to try and get those families back into the economic activity of the country.

[Lord German]

My Lords, the work programme is one of the cornerstones of the Government’s action to alleviate child poverty. Today’s NAO report on the work programme reports that harder-to-help people are not being referred to the programme in the numbers expected. Surely, as the Minister has said, this is the most important group to help to get back into work. What response does my noble friend have to the NAO report in that respect?

[Lord Freud]

My Lords, we are concerned about the slow way that people on ESA are moving into the work programme and we are looking closely at how to accelerate that process. Clearly, one of the ambitions of the programme is to get the hardest-to-help people back into the workforce, and there has been a rather slow start in that area.

Welfare Reform Bill

Debate between Lord German and Lord Freud

Monday 23rd January 2012 Lords Chamber

[Lord German]

My Lords, I start by making it clear that the concerns that have been expressed from these Benches are not around there being a cap. It is essential that there should be a cap; people find it manifestly unfair that claimants can receive in benefits more than the average working family gets in wages. The concerns expressed within the amendment are about two crucial issues: homelessness and housing; and the vulnerability of children. We are looking for discussion and reassurances from my noble friend the Minister on the issues raised by the cap. Our concern is about how those policies will be ameliorated—how to find a cap that fits.

I remind my noble friend the Minister that in Committee he said:

“The Government are looking at ways of easing the transition for families and providing assistance in hard cases. We recognise that there are households for which it would be inappropriate to restrict the amount of benefit that they can receive”.—[Official Report, 21/11/11; col. GC 346.]

The Government have already announced in another place and here that transition arrangements are to be made. This is the opportunity for my noble friend to express the Government’s views on those two crucial issues contained in the amendment. These details should emerge at this stage because it is appropriate that people know the Government’s direction of travel. It is not simply a question of us accepting that you need flexibility for the future. I understand that the Government’s regulations will follow from these debates, that there will be affirmative resolutions and that the House will have the opportunity to hear and vote on the detail. We need reassurances now in the broadest terms about the issues raised in the amendment.

I appreciate that by DWP standards—the noble Lord, Lord Fowler has said this already—the numbers captured by this policy are small. However, they are small only in respect of the DWP’s overall workload, not in terms of the 67,000 families or the 220,000 children who will be affected. We cannot put aside the fact that there is personal impact.

First, I turn to the issue of homelessness. I understand—we heard it this morning in a broadcast by the Secretary of State, and it has also been referred to in this debate—that the numbers of potential reported homeless households is based not on rooflessness but on the structure of how this is measured by the Department for Communities and Local Government. I wonder what reassurance my noble friend can give that we will not find families out on the street, that we will find homes for people and that they will be accommodated. If the numbers who are classed as homeless are those who are sharing rooms, which I heard from the Secretary of State, what methodologies and transition arrangements are being put in place? After all, if people are entitled to be classed as homeless by virtue of that definition, and are sharing a room, what is to prevent them presenting themselves to a local authority as homeless, thereby generating further cost to the public purse and creating no savings whatever? What transition arrangements will be put in place to ensure—what this House is asking for—that no one should be made roofless as a result of this policy. Any savings if they were to come by having to throw the balance to another department might be illusory. I am seeking reassurance from my noble friend the Minister. We want to hear the outline of the arrangements to be put in place to ensure that we do not sustain expenditure by simply passing costs from one department to another.

We are told that the department now has extensive information on the households that will be affected by the cap. I seek reassurance that there will always be a property available—not necessarily close to the same street in which the people have lived—for the people who will be displaced and that they will always have somewhere to live. Crucially, what help will be provided in the transitional period between now and April 2013 and perhaps, beyond, given the Minister’s comments in Committee. I also ask him to outline the processes to be put in place during this transition period and to provide the reassurances needed to demonstrate that rooflessness and overcrowding are not options that the Government are considering.

A second issue, which we will come back to in another debate, is that of children. This issue is mentioned in this amendment and has been raised before. It is indeed a powerful statement that children are not responsible for the decisions of their parents, but in workless households the worst disincentive is not to aspire to work. Those of us with experience representing the poorest areas—in my case, the poorest area—within our country know that it is a dreadful stigma which we place upon our young people. I wonder whether the Minister can provide some reassurance and tell us what arrangements he is making. What support will be given to the longer term aspirations towards work for our younger people? Alongside this is the impact of a parent becoming unemployed without suitable transition arrangements.

Perhaps all these issues need to be outlined in principle now, so that my noble friends on these Benches and noble colleagues around this Chamber can decide whether the Government are keen to ensure that the impacts are going to be ameliorated by this cap.

[Lord Freud]

My Lords, the noble Lord, Lord McKenzie, closed his remarks on Amendment 58D by saying that it is designed to prevent a slide into poverty, particularly for those who are young. The benefit cap is about changing psychology. It is about trying to get a change of circumstances in those families. Let me remind noble Lords—I know that they do not need any reminder—that the worst thing for youngsters is to be in a workless household. We need to change behaviours, and this benefit cap is designed to do that.

We need to move towards the cap in a highly organised way, and we will have a year to work with those families that are going to be affected. As my noble friend Lord Fowler pointed out, this affects around 1 per cent of the population that we deal with and we know exactly who they are. In the new impact assessments, we were working on the particular families. We can spend a year with those families making sure that they respond in advance to what the cap implies for them. It is a very simple answer for the bulk of them: we need to get you into work.

Welfare Reform Bill

Debate between Lord German and Lord Freud

Wednesday 14th December 2011 Lords Chamber

[Lord German]

My Lords, I have two groups of people to whom I want to refer. My noble friend Lady Thomas referred to them in Committee, and I referred to one of them. What does the Minister anticipate doing for foster carers? We have already been told that we have a shortage of foster caring in this country, and foster carers need to keep a bedroom to be able to host and look after children in foster care. It is very important indeed—and I think that the Minister acknowledged this in his response in Committee—that something needs to be done to accommodate the needs of that group of people.

The second group of people are those who have had adaptations to their properties. Those adaptations probably cost the public purse quite substantial sums of money, so it does not make sense, for example, to require people to move from one property that has a stair lift to another where a stair lift has to be put in place. Can my noble friend tell us what he anticipates doing for both those groups?

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, I need to thank noble Lords to start with for a thoughtful and insightful debate.

The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure, which without reform would reach £25 billion in cash terms by 2014-15. With savings from this measure estimated to be around £500 million per annum, it will play a key role in our efforts to control housing benefit expenditure and to tackle the budget deficit. In these difficult economic times, we cannot avoid having to make these choices. I assure noble Lords that these decisions have not been taken lightly.

In case there is any doubt, let me remind noble Lords that the size criteria measure will affect only working-age housing benefit claimants living in the social rented sector who are underoccupying their accommodation. For a family of four, with two adults and a teenage boy and girl, we are proposing that they will be entitled to housing benefit for a three-bedroom property with a living room, kitchen, bathroom and possibly even other rooms, such as an extra bathroom and study. This is the same as we allow for people living in the private rented sector. Those in a property that has more bedrooms than the size criteria allow will receive a percentage reduction in their eligible rent, meaning, on average, a shortfall of around £14 per week.

It is only fair that everyone plays their part, but we will, of course, ensure that we maintain safeguards for those in the most vulnerable circumstances. However, even with the reforms that we have started making to housing benefit, we are still expecting to spend nearly £23 billion on housing benefit this year. By the end of the spending review, we expect to achieve £2 billion in annual savings from the package of housing benefit reform. That is £2 billion off the £25 billion that I referred to. The Government believe that it is right that those living in oversized properties in the social rented sector contribute to those savings. Claimants in this sector make up over two-thirds of all housing benefit claimants, although most of the £2 billion in annual savings will still come from claimants living in private rented accommodation.

In England, approximately 420,000 households in the social rented sector underoccupy their accommodation by two bedrooms or more, while over a quarter of million households are overcrowded. What is more, 1.8 million households are currently on the housing waiting list in England. Over 700,000 of these households belong to reasonable preference groups, which means that they are treated as having a higher priority on the waiting list. This includes the homeless, people living in insanitary or overcrowded housing, and those needing to move because of a medical condition.

This measure is necessary to control spending. It is necessary because spending was allowed to spiral out of control under the previous Government, but we also believe that it will encourage greater mobility among households living in the social rented sector. It will help local authorities and other social housing providers to make the best use of their existing housing stock. It runs alongside and in support of measures introduced as part of the Localism Act, such as increased flexibility for local authorities to manage their housing waiting lists and the development of the national home swap scheme.

We have discussed this measure in detail and I have listened to and thought at length about the important issues that have been raised. We have various amendments to get through, but it might be helpful if I first set out what conclusions the Government have arrived at and what we intend to do. Noble Lords will understand that there is limited scope for manoeuvre within such a tight fiscal context, but I am pleased to announce today an additional £30 million that we will add to the discretionary housing payment budget from 2013-14, in support of the introduction of the size criteria into the social rented sector from April 2013. We believe that the amount made available is reasonable, based on what we know about the numbers likely to be affected by the measure. We think that £30 million could assist around 40,000 cases. It could help even more if local authorities choose to use DHPs to make up some, but not all, of a claimant's shortfall.

My noble friend Lord German asked what that funding is for. It is specifically aimed at two groups. The first group is disabled people who live in significantly adapted accommodation, and the funding is to enable them to remain in their existing homes. I hope that goes some way to satisfying the noble Lord, Lord Wigley, as well on that matter. The second group, which a number of noble Lords mentioned, is that of foster carers. We have carefully assessed the number of foster carers who will need to keep an extra room for when they are in between fostering, and we have an amount for them. I hope that goes some way to satisfying my noble friends Lord German and Lord Kirkwood on that matter, and indeed the right reverend Prelate the Bishop of Ripon and Leeds, who I hope feels that there is some room at the inn for this very vulnerable and important group.

The case for providing some mitigation for these two groups is clear, but we have decided that the way to do it is through the discretionary housing payment route rather than through specific amendments. We need rules in the benefit system that do not increase administrative complexity. We need to be able to make and deliver effective legislation not just within housing benefit but within universal credit. Such exemptions might, for example, include those who would otherwise have met the shortfall themselves, and might miss others who would have had a stronger case for additional support. I am convinced that a more localised, discretionary approach is the best way forward. It means that the limited resources that we have can be efficiently targeted at those who need them most. Of course we would like to do more, but there is simply no more money available.

Discretionary housing payments can be paid only where there is a linked claim to housing or council tax benefit. This is in effect, therefore, ring-fenced funding, although we cannot tell local authorities precisely who they should spend it on or how much they should spend. That is for local authorities to decide. However, we provide further guidance for local authorities through the DHP good practice guide. We have an illustrative draft of that, which I can share with noble Lords this evening, and we look forward to refining that with the input both of noble Lords and key stakeholders.

Benefits: EU Nationals

Debate between Lord German and Lord Freud

Monday 7th November 2011 Lords Chamber

[Lord Freud]

My Lords, we are moving in two directions. First, we are looking hard at the Commission’s opinion and considering whether we should go to court. We have two months in which to take that decision and the likelihood is that we will take it through the full legal process. The second area is the political one. We are talking to other countries which are also deeply disturbed about this. Some 13 countries have signed a motion calling for a minute statement and for a policy debate on this matter.

[Lord German]

My Lords since some 900,000 UK citizens are migrants in other European Union countries, I am sure my noble friend the Minister would like to protect the reciprocity which exists for both EU citizens and others coming here, as well as our citizens in other countries. Will he comment on the information we have received from the European Commission about the intention to extend reciprocity to North African countries? Can he tell us what line he will take with the European Commission on this matter?

[Lord Freud]

My Lords, we are going to take a pretty robust line on this matter. We have an opt-out from the Lisbon treaty which we have been using for African nationals where there are third-country agreements, in particular Morocco, Algeria and Tunisia. Again, currently we have legal differences with the Commission on this matter, which is looking for ways to get around our opt-out, but we are determined that we will retain it.

Retirement Age

Debate between Lord German and Lord Freud

Monday 5th September 2011 Lords Chamber

[Lord German]

My Lords, a woman born this year will have a one in three chance of living to the age of 100, whereas a woman born in 1931 would have had only a one in 20 chance. Given the acceleration of the change in life expectancy and the results of the consultation that the Government have just concluded, is it not right that there should be an accelerating change in the connection between the state age of retirement and life expectancy, which is growing all the time? We cannot expect this to be something that is predicted for 20 or 30 years hence. It has to be predicted on a much more regular basis.

[Lord Freud]

My Lords, clearly that is the issue: life expectancy is growing rapidly. It is hard to set the figures many decades in advance. The responses to the consultation show that most people think that a period of around 10 years seems appropriate, although other countries have used shorter periods. It is right that we should look at a number of factors when we move the retirement age. These include not just longevity but healthy life expectancy and regional and other variations.

Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) (No. 2) Regulations 2011

Debate between Lord German and Lord Freud

Monday 27th June 2011 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

I shall set out the general context for these draft provisions. Contracting out of the additional state pension was first introduced in 1978. Initially, contracting out was restricted to defined benefit or salary related occupational pension schemes but, in 1988, it was extended to pension schemes contracted out on a defined contribution or money purchase basis. The scheme members and, in the case of occupational pension schemes, their employers, receive a national insurance contributions rebate in place of the state benefits forgone.

At this point I should explain to noble Lords the terms “money purchase” and “defined contribution”. A money purchase scheme is defined in legislation as one where all the benefits that may be provided are money purchase benefits, which in turn are calculated by reference to payments made by the member or by any other person in respect of the member and which are not average salary benefits. The term “defined contribution scheme” is not one defined in legislation but is the term commonly used throughout the pensions industry for money purchase schemes.

In 2005, an independent pensions commission, chaired by the noble Lord, Lord Turner, recommended the abolition of contracting out on a defined contribution basis. The commission’s view was that the contracting-out/contracting-in choice added complexity to the UK pension system and was poorly understood. Its application to personal pensions helped to generate the pensions mis-selling problems of the 1990s. The then Government accepted the commission’s recommendation and the Pensions Act 2007 provided for abolition, with some further consequential changes in the Pensions Act 2008.

During the passage of the legislation, there was widespread support in Parliament for abolition. In March 2010, the then Government announced that abolition would be on 6 April 2012, and that date has been confirmed by the present Government. For the purposes of this debate we are only concerned with contracting out of the additional state pension via a defined contribution pension scheme. We are not proposing changes here to contracting out via salary-related schemes.

In the case of a defined contribution occupational scheme, both the member and the employer pay lower rates of national insurance contributions. The employer pays a minimum payment to the scheme which is equal to the member’s and employer’s reduction in national insurance contributions. In a defined contribution contracted-out personal pension scheme, the full rate of national insurance contributions is paid by the employer and employee, and the rebate is provided by HMRC through an annual payment into the pension scheme at the end of the tax year. These reductions and payments are collectively known as the contracted-out rebate.

Under the current defined contribution contracting out system, special rules are applicable to protected rights, the collective term for the rebate, tax relief and investment return which abolition will remove. These rules include restrictions on the type of scheme in which protected rights can be invested or to which they can be transferred, a requirement to purchase a unisex annuity, and a requirement to make provision for a survivor benefit where the member is married or in a civil partnership at the point of annuitisation.

The affirmative draft order and regulations now before the Committee make consequential changes to the primary legislation by amending or revoking various pieces of legislation that will be redundant following abolition. They amend or repeal, where appropriate, all references to “contracted-out money purchase schemes”, “appropriate personal pension schemes” and “protected rights” in existing legislation. The order and regulations are part of a package of consequential changes and should be read in conjunction with the negative statutory instruments that were laid on 16 June 2011; namely, the Pensions Act 2007 (Abolition of Contracting-out for Defined Contribution Pension Schemes) (Consequential Amendments) Regulations 2011, and the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) Order 2011.

Turning to the affirmative provisions which are the subject of this debate, I do not propose to explain the minor amendments contained within these statutory instruments. I will, however, highlight the main provisions. The Pensions Act 2008 (Abolition of Protected Rights) (Consequenial Amendments) (No. 2) Order 2011 is split into three parts. Part 1 contains commencement provisions. Part 2 introduces a de minimis or minimum payment provision for late rebate payments and recoveries, and a transitional period that is necessary for the administrative tidying-up of late rebates. Part 3 deals with rebate payments made after the transitional period. By way of background to late rebates, rebate payments are made by HMRC to contracted-out DC schemes at the end of each tax year by means of automated payments.

In some instances, HMRC may need to amend an individual’s national insurance record because of the changes notified to them after the end of a tax year— for example, where an employer discovers an error in the amount of earnings paid by an employee in an earlier tax year or where an incorrect date of birth is recorded and has to be revised. These adjustments to the national insurance records can sometimes result in an additional contracted-out rebate payment, or overpayment, becoming due. Analysis shows that the bulk of late rebate payments fall to be paid in the three tax years following the tax year to which the rebate relates. The transitional arrangements in this legislation will ensure that adjustments to rebates for periods prior to April 2012 are paid to individuals’ pension schemes up to April 2015 by an automated process. Following the end of the transitional period of three years, payments will be made from 6 April 2015 to individuals who will be advised to pay the amount into a pension scheme.

The de minimis provision introduced by the order makes provision for a limit below which HMRC will not be required to make a rebate payment. This limit will correspond to the cost of paying the rebate clerically by HMRC—that is, the rebate will not be paid where it costs more to administer the rebate payment than its actual value. The limit is expected to be in the region of £15 where the payment is made clerically. Payments which are made during the transitional period through the automated payment system will, as now, not be subject to a minimum limit.

We have been working closely with the pension industry in developing the abolition legislation, including the transitional period. The legislation was subject to a full consultation and the industry is satisfied generally that it can all be implemented. However, there is one point that I need to draw to the Committee’s attention. Article 3 of the Pensions Act 2008 (Abolition of Protected Rights) (Consequential Amendments) (No. 2) Order 2011 makes a minor consequential amendment to the Insolvency Act 1986 but it has recently become apparent to us that it will not be possible for this provision to have practical effect. The article amends provisions which currently provide that any pensions payments which derive from protected rights are not taken into account as income when a court considers making an income payments order for a debtor. The amendment seeks to provide that any pensions payments which give effect to protected rights before the abolition date will continue to be exempt from counting as income for these purposes.

We now consider that it will not be possible for schemes post-abolition to be able to identify such protected rights payments as schemes will no longer be required to track protected rights. As such, this part of the amendment will have no practical effect as the courts would not be able to identify pension payments which give effect to protected rights. While we have discovered this issue, we consider that it does no harm. We will therefore press ahead and make these sets of amendments to provide the industry with certainty over the substantive changes to be made to implement the abolition of DC contracting out. We will undertake to amend Article 3 of the order before 6 April 2012—the abolition date—to clarify the intention on that particular point.

To conclude, I am satisfied that the order and the regulations are compatible with the European Convention on Human Rights and I commend them to the Committee.

[Lord German]

My Lords, I welcome these statutory instrument. It is important to note that the so-called amendment instrument No. 1—I will not read the whole title out—have been laid by negative resolution at virtually the same time as these instrument for affirmative resolution. That is good practice for the House because it means that noble Lords will be able to understand and see the whole picture, and be able to work on them together. I commend that action from the Government.

Secondly, concerning the transitional arrangements, clearly this is a commitment made by the last Government being enacted by the present Government and so has a great deal of political support right across the boundaries, as it did when it first came before your Lordships’ House at the time of the Pensions Act in 2008. I wonder, though, what would happen should there be an amendment needed or an error found outwith the three-year period. It might be, for example, that something was discovered beyond the three-year period. Is there any measure by which that can be dealt with?

I am pleased that the Government are introducing this measure because it will of course mean that small amounts of money will not need to be paid where the cost of administration is greater than the amount paid out. I hear what my noble friend says about the online methodology that will not be affected. However, when it comes to mechanical methods by which sums below £15 would be encountered, I dread to think what it will cost to administer a payment of £15: I am sure that it will be considerably more than the cost. Therefore, it is welcome that that area is covered.

Social Mobility and Child Poverty Commission

Debate between Lord German and Lord Freud

Thursday 23rd June 2011 Lords Chamber

[Lord Freud]

We are not weakening the commission’s independence in any way; we are strengthening it by requiring the commission to hold the Government to account. The fact that we are not insisting that the commission sets the strategy for the Government means that the Government now have that responsibility and the commission can then hold them to account. I shall of course meet the group at any stage; I am sure that it is in my diary anyway.

[Lord German]

My Lords, the OECD report, which places the UK 28th out of 35, paints a picture of poverty of aspiration for many of our people, particularly our young people. It suggests, however, that peer mentoring and mentoring of all sorts are a way of improving that position. Will my noble friend ensure that mentoring of all types will be part of the work of the commission that is being established?

[Lord Freud]

My Lords, there needs to be a massive programme to improve both poverty and social mobility. It needs to be done right the way from foundation years, through school years and the transition period, and even to adulthood. The particular programmes that we will see will come out of this general approach. I cannot give any assurances on any particular approach at this stage, although I am personally most sympathetic to the concept of mentoring.

Disabled People: Disability Living Allowance

Debate between Lord German and Lord Freud

Wednesday 11th May 2011 Lords Chamber

[Lord Freud]

My Lords, let me take this opportunity to make absolutely clear what is happening, in particular to DLA funding. The funding for all DLA, in real terms on 2011-12 figures, was £12.1 billion in 2009-10—the last year. At the end of this Parliament in 2015-16, the funding will be slightly higher—£12.3 billion. The talk of cuts relates to the projections on a benefit that was rising very sharply. What we are doing is bringing it under control. As I say, in absolute terms—in real terms—it is not being reduced; it is roughly the same. There is a slight decline in the working-age DLA from £6.7 billion to £6.5 billion. I am talking real terms.

[Lord German]

My Lords, I welcome the news that the budget will not be reduced over the lifetime of this Parliament, but I am sure that my noble friend understands that many recipients of DLA are very worried about the proposed changes before them. Further to the question asked by the noble Lord, Lord Low, what words of comfort does the Minister have for those who are about to be reassessed, to ensure that the assessment process treats them fairly and honestly, and that those who are in need of help will get it?

[Lord Freud]

My Lords, we are going through a very complex and thorough process this summer to examine what is the right test for receiving the personal independence payment. A lot of things are coming out of the early research, and one of those is that people who have done less well out of DLA are those who have various mental conditions and learning disabilities, and we are trying to recast it so that those people who need support will get it. There will be some changes; it is not going to be the same as DLA; but it is going to be a far more transparent, clear and consistent test.

Housing Benefit

Debate between Lord German and Lord Freud

Tuesday 3rd May 2011 Lords Chamber

[Lord Freud]

My Lords, I am pleased that we have a stunning consortium to do this work. It is led by Ian Cole from the Centre for Regional Economic and Social Research at Sheffield Hallam University, with other key team members being Peter Kemp of the Oxford Institute of Social Policy, Carl Emmerson of the Institute for Fiscal Studies and Ben Marshall from IPSO Mori. It is a stunning group and is going to build an understanding of the impacts of the housing benefit changes right the way through from people who move to those who stay—the noble Lord was concerned about them—at national and local levels, and it will integrate that with wider housing and labour-market evidence. A lot of this will be econometric analysis. The group will report the findings to me finally, as agreed, in spring 2013, but there will be interim reports next year.

[Lord German]

My Lords, I congratulate the Minister on such a comprehensive independent review. Will he indicate the geographic spread of areas which will be covered? Will it include hard-to-let difficult areas as well as rural and urban areas in the whole of the country?

[Lord Freud]

My Lords, I am really pleased that we will have a lot of review for the amount of money that we have. We will cover no fewer than 19 carefully selected case study areas, which will include three each in Scotland and Wales, and 13 in England. Clearly, there will be a concentration on the key area of London and the south-east but we will cover representative areas right through the country.

Autism: Disability Living Allowance

Debate between Lord German and Lord Freud

Thursday 10th March 2011 Lords Chamber

[Lord Freud]

My Lords, that is a key point. One of the main changes we are making to the work capability assessment is exactly about this sensitivity. Professor Paul Harrington, who is conducting the reviews, made a series of recommendations as to how we should adjust this assessment that we inherited to make it more sensitive. We will have learnt those lessons, and will ensure that we pull that over into the personal independence payment.

[Lord German]

My Lords, is my noble friend the Minister right to say that the previous scheme used for the migration to the employment and support allowance would not be appropriate for this form of assessment in the future successor programme to the DLA? Given that so many people were assessed and then went on successfully to appeal against their assessment, we surely now need a different system. Can the Minister tell us whether we have cracked the nut about how we assess people with the sorts of disabilities that autism presents over such a wide spectrum?

[Lord Freud]

My Lords, I thank my noble friend for what is actually a very complicated question to answer briefly. This is a different assessment. The personal independence payment is looking at what people need to function in their daily lives, whereas the work capability assessment is designed to look at whether people are capable of working. They are different. We need to make sure that we do not have too many tribunal cases. At the moment, under DLA, tribunal cases are at 11 per cent, which is too high. One of the attractions of going to a consistent, coherent new personal independence payment is that we can have criteria which make it much less obvious that people need to go to tribunal.

Pensions: Britons Living Abroad

Debate between Lord German and Lord Freud

Wednesday 9th March 2011 Lords Chamber

[Lord Freud]

My Lords, I am happy to congratulate the noble Lord opposite on those changes, which I know that he was involved with. I think they have been valuable. The point about costs in the current environment is that this change to uprating in the frozen areas would cost us £620 million a year, and in the context of the austerity position that we are in—all noble Lords will be very familiar with the terrible dilemmas that we face as we look to get the budget under control—we should consider how much that £620 million represents.

[Lord German]

My Lords—

Women: Assistance in Pregnancy

Debate between Lord German and Lord Freud

Tuesday 8th March 2011 Lords Chamber

[Lord Freud]

My Lords, I share the noble Earl’s great concern for children in care and take his point about the relatively much higher rate of pregnancy. I shall look closely at what we can do in that area.

[Lord German]

My Lords, there will be a moment of time between the outgoing regulations and the incoming regulations in respect of budgeting loans to which the Minister has just referred. Given that most people will be looking for low-cost, low-interest loans to buy such things as a buggy, a pram or a cot, what advice is the Minister giving to his department on exercising flexibility in this regard to ensure that the current regulations may be as widely accessible as possible so that people are not disadvantaged during the short period between the old and the new regulations?

[Lord Freud]

I thank my noble friend for reinforcing this important point. There will be a gap, probably of around nine months, before we can formally change the budgeting loans. We are making the very firm point—I made that firm point formally in the Chamber yesterday—that we are encouraging people to use the scheme to the utmost extent that they can and to apply it to slightly wider items than those around budgeting for the baby.

Pensions Bill [HL]

Debate between Lord German and Lord Freud

Thursday 3rd March 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, the noble Lord, Lord German, has raised an interesting point, which I hope the Minister can clarify. I assume that the situation is that, if you have got to month 3 and you do not have qualifying earnings, there is nothing at that point to trigger automatic enrolment. When you next have your qualifying earnings is presumably when you would be automatically enrolled. Certainly, if you had to start again, that would add injustice to something about which we are already not very happy.

[Lord Freud]

My Lords, I thank my noble friend Lord German for this amendment, which would restrict an employer to using one waiting period per worker and would ensure that automatic enrolment would take place once a worker’s earnings had reached the earnings threshold for three months, whether those three months were consecutive or not. Thus the single three-month waiting period could be accrued over a far longer period of time where the individual’s earnings fluctuate. I should take this opportunity to clarify for the noble Lord, Lord McKenzie, how it would actually work. If you had low earnings for the first two months and hit the target at the third month, you would be auto-enrolled. However, if you did not hit it in that third month, you would effectively be back to your dinner problem and have to start again. That is how it would work.

As I explained, Clause 6 introduces the concept of an optional waiting period into the automatic enrolment process. This is central to our commitment in this Bill to rebalance the administrative burdens on employers while ensuring workers’ access to pensions saving. The waiting period is designed to meet employers’ requirements by being simple and easy to understand and use. This is clearly crucial to its success. At the point at which the employer applies a waiting period, they will not be required to undertake a check on whether the worker is eligible for automatic enrolment. The employer must check eligibility at the end of the waiting period and we are keen to avoid them having to check it twice or more.

The waiting period consists of a single block of time, regardless of whether the individual’s eligibility for automatic enrolment fluctuates during that period. If the worker satisfies the automatic enrolment eligibility criteria at the end of the period, they will be enrolled into the employer’s scheme on that date. If not, the employer will monitor the worker’s status until they satisfy the eligibility criteria. At that point, the employer may apply a further waiting period if they wish. It need not be for the full three months.

We recognise my noble friend’s concern that workers with fluctuating earnings could miss out on pension saving due to the use of multiple waiting periods. While it is difficult to estimate the likelihood of this occurrence, our analysis suggests that few people are likely to have fluctuating earnings around the level that they traverse in and out of automatic enrolment eligibility. Are we, therefore, devising something very complicated for a problem that is pretty small, which is what our analysis suggests? It is also the case that, for those on sustained low earnings throughout their working life, state benefits can replace most income in retirement. Common sense suggests that it would not be rational to lever such people into private savings. It is important to remember that they will have the right to opt in at any point during the waiting period.

This amendment would add a substantial additional burden and complexity to the waiting period process and would not be easy for employers to understand and use. It would require the employer to monitor an individual’s automatic enrolment eligibility continuously throughout the waiting period and to keep a record of the period of eligibility accrued during the waiting period.

Employers requested the waiting period as an administrative easement. To make the process so burdensome would negate its value. At this stage, it is crucial that we get the reforms bedded in and that we ensure that employers find it easy to comply with these new duties. It is therefore critical that the processes are simple for employers to understand and use. In the absence of any persuasive evidence of a problem, we feel that it would not be right to introduce greater complexity and a significant burden to a process whose very purpose is to offer administrative easements to employers.

I offer noble Lords my assurance, however, that we are committed to fully evaluating the effects of the reforms and how they are delivered. As part of this, we intend to monitor employers’ use of waiting periods and the effects on workers’ savings. I urge the noble Lord to withdraw this amendment.

[Lord German]

My Lords, I am still a little confused over the explanation. I understand fully the point about somebody hitting the relevant target in the third month. However, my question was the other way round—where someone hits the target in months one and two but does not hit it in month three. In seasonal worker terms, this could happen if someone was picked up and employed in May, perhaps worked through May, June and July and found a bad—wet or something—August, for which they could not get the money in. The important issue is simplicity but also understanding. It may be that a three-month period applies, but it was not absolutely clear from the Minister’s reply when, once you have a first waiting period, the second test would occur. What if you fail to meet the criteria that he has just described in that first three-month period? You will then need to have another piece of information made available to the employee to say, “You have not quite done it but this is the way you go next”. It seems to become far more complex if you cannot have it in some way accumulatively worked out. I will obviously withdraw the amendment. However, I hope that the Minister will come back at some stage with some further explanation of the anomaly of the people who are in the position that I have described, in which they pass the threshold in months 1 and 3 but not in month 2, yet wish to maintain their position within the company.

--- Later in debate ---

[Lord Freud]

I repeat that we are committed to looking at waiting periods and there is a general duty on the Pensions Regulator to look at compliance. If we suspect any kind of systemic abuse, our aim will be to find it in our monitoring. For example, we might look at it from the other end and survey individuals, perhaps those in the low-paid environment, who are at risk. However, this is an issue that we are alive to, and this debate has made us even more so. I therefore need to thank the noble Lord for raising it.

[Lord German]

My Lords, I would normally be swayed by the persuasive eloquence of my noble friend the Minister, but the more that I ponder the issue, the more it seems to me that there are routes for escape that do not err on the side of the rights of the employee. My amendment proposes a simple solution: that, in relation to the threshold, the three months of the waiting period should be cumulative. It is as simple as that. It would then be quite easy for a jobholder who believed that they should be enrolled to prove it, because the information would be there in front of them. We are going into a cycle of repetition. On this issue, I am afraid that I am not quite as convinced as I should be by the Minister’s argument—although I am convinced that he will reflect on it further, because the discussion around the Committee has raised more questions than answers.

The whole point of the auto-enrolment process is to challenge inaction, to get people saving and to make it the right thing for everyone to do, both employers and individuals. In withdrawing the amendment, I express the hope that my noble friend will reflect on the words that have been spoken around the Committee today and perhaps give us some sense of security when he comes back with any further changes that he wishes to make to the Bill at the next stage.

[Lord Freud]

Perhaps I could just interrupt. What I have not made adequately clear, for which I apologise, is how big this problem might be. The universe of people who earn between £7,000 and £7,475 is 140,000 people, so we are talking about very small numbers. Moreover, they would have to be fluctuating at the wrong time. We could be setting up a very complicated system to look after a very small number of people. We cannot quantify this exactly but I give an order-of figure to give noble Lords a feel for it. We are talking about between 8 million and 9 million extra people going into pensions, so this may be just too much of a burden relative to the potential number of people whom we are protecting.

--- Later in debate ---

[Lord Freud]

I thank the noble Baroness, Lady Drake, for her market insight here. I choose my words carefully. It is clear that the capping has had an effect on charges. We are concerned that the pressure on charges should be maintained. That is why we have committed to monitoring levels of charging in the marketplace as automatic enrolment is introduced. We will publish guidance on default investment options in automatic enrolment schemes later in the spring. This sets out guidance for suitable charging structures. The guidance encourages appropriate charges, which match members’ interests, and protects individuals from charges that are excessive in relation to the product they are paying for.

Let us not forget, as the noble Baroness has just pointed out, that we are introducing a major change to the pensions landscape. NEST is being set up to offer low-cost pension provision to individuals on low to moderate earnings. We expect this, as does the noble Baroness, to act as a benchmark across the pensions industry, as well as to help millions of low to moderate earners to save. We are also looking seriously at how transfers can be facilitated across the industry so that savers can shop around for better charge rates more easily. As I described in my response to a previous amendment, HMT recently held a call for evidence on early access, including a specific question on ways to improve the transfer process. The DWP, as I have already described, has recently published a call for evidence on the regulatory differences between occupational and workplace personal pension schemes. In this, we are seeking solutions to address existing rules that could impact on the success of the reforms. Those include rules on early scheme-leavers and disclosure.

We are actively seeking to identify ways to facilitate the best possible deal for savers across the areas of charging and transfers. Therefore, I do not believe that regulations to make guidance are necessary at this time. I urge the noble Lord to withdraw the amendment.

[Lord German]

I am grateful for the statement that the Minister has just made. Apart from the actions that he has described, I should be interested to know how in future you can actively promote to the companies and individuals concerned the sort of changes that the Government wish to see. I do not suggest that the DWP should set up its own confused.com-type of operation, but it may well be that we need some form of open process by which both employers and employees can see the benefits of different levels of charging by the different companies and whether there is transparency in the operation. I welcome the Minister’s statement on that and beg leave to withdraw the amendment.

Pensions Bill [HL]

Debate between Lord German and Lord Freud

Tuesday 1st March 2011 Grand Committee

[Lord Freud]

I thank my noble friend Lord German for tabling the amendment. We have covered a lot of the ground in relation to it already, so I shall try not to be repetitious. We are talking about what has been variously described as an acceleration bubble, a moving horizon or a squidgy balloon—as the noble Baroness, Lady Drake, said. We are effectively looking at concessions for women born between July 1953 and September 1955.

I am not in a position at this stage to provide any additional information about discussions on a single tier, which I referred to at Second Reading, but one of the issues here is clearly that when one looks at the complexity of the architecture, one has to have an eye to whatever might or might not emerge from those discussions. We have already talked about freezing or delaying the increase in the pension credit qualifying age for people affected by the changes in state pension age. We are not going to make a song and dance about technical drafting here, although the noble Baroness, Lady Drake, made the point about the application of the amendment to women, when it would actually have to apply to men. However, let us put that to one side.

The issue that I aimed to emphasise in the previous discussion was that pitching the pension credit qualifying age at a point below the state pension age for a specific group would undermine fundamental welfare reforms. However, it is not about just the structure—and I accept that this is about a temporary change—or purely the money; it is complex for customers and complex to administer. That is one of the reasons why that solution is difficult, if not undesirable.

In response to the request of the noble Baroness, Lady Hollis, for me to write to her on the costs of paying people in between the old and the new pension ages, I am happy to look at those costs and to write to interested noble Lords. I imagine that that includes most of us in the Room.

I move on to the issue of serious illness and emphasise that we have great sympathy for those with ill health, including those in this particular cohort of women. However, I must point out that help and benefits are already available for people with health problems and I do not therefore accept that we need to provide additional financial support, whether that is in the form of a payment above what we already pay out or some bespoke pension age arrangement.

The final option suggested by the amendment is slowing the acceleration of the pension age increase for these women.

I can assure noble Lords that, when we were considering how to bring forward the increase to 66, we looked at whether we could start that change for men slightly earlier than for women, to avoid altering women’s state pension age before 2020. The reason that we have not done this is because it would be unfair to increase the difference in treatment between men and women. It would also be unfair to prolong the difference in treatment beyond the period already agreed. I will take this opportunity to explain why, and I am picking up the question raised by my noble friend Lord Boswell earlier in the afternoon. The equal treatment directive allows the setting of the state pension age to be a limited exception to the overarching rule that men and women must be treated equally in social security matters. This exemption, or exception, is only temporary to give member states time to adjust their state pension ages so as to bring women’s state pension age into line with men’s. As we know, the legislation in 1995 set out a timetable for equalising the state pension ages between 2010 and 2020, so anything we do now will be measured against that timeline. That is why we decided that we must increase the state pension age to 66 only after women’s state pension age has reached 65. I therefore urge the noble Lord to withdraw his amendment.

[Lord German]

My Lords, when I started writing this amendment, I was trying to answer what seemed to me a fairly straightforward and simple question. There is a group of women, born between these years, who will suffer financially more than those who are roughly the same age on either side of them. The question I was seeking to answer was whether the Government will find a way of helping them. It is as simple as that. I was seeking to give the Government as much of an open hand as they wished, in order to say that they recognised that some of the people in this cohort will be suffering financially more than others, simply because of the date of their birth, which was the factor I wanted to take into account. I was not wanting to dwell on the method of operation, but I was seeking to find a way in which the Government might come forward with some opportunity for making sure that they redressed that financial imbalance in a way which they thought was reasonable, effective, and did not cost as much as the £7 billion or £10 billion which the Minister has already adhered to. I hope that, during the course of the future weeks before we reach Report, the Minister will reflect on that matter. There has been a widespread agreement around this Committee, from all sides, that there needs to be some form of redress for a particular group of women in a particular way which needs to be defined, and perhaps the department can look at that. I hope that the Minister will think of coming back to that matter by Report, with a view on how that might be addressed.

Disabled People: Disability Living Allowance

Debate between Lord German and Lord Freud

Monday 7th February 2011 Lords Chamber

[Lord Freud]

My Lords, I disagree entirely with that premise. The personal independence payment is a new assessment of people’s needs and is designed to help people to live independent lives and to give them mobility. To that extent there can be no presumption about what is happening to existing rates. We will set these rates based on people’s requirements to live independent lives.

[Lord German]

My Lords, it seems to me that the consultation paper can be read in one of two ways. Can the Minister tell us whether the purpose of the PIP is to extend the level of adaptations and aids that will be available to people—to facilitate greater access and ensure that everyone who needs the payment can get it?

[Lord Freud]

My Lords, I can respond to that question positively in the sense that times have moved on: adaptations and aids have moved on since the DLA was introduced, and we are looking at a different environment in which people can be helped to live pretty normal lives with those adaptations. It is important that we have an assessment process and a personal independence payment that reflect what is really happening to people’s lives.

Unemployment

Debate between Lord German and Lord Freud

Wednesday 26th January 2011 Lords Chamber

[Lord German]

My Lords, in the year 2009-10, there was a 99 per cent increase in the number of people who were taking the job seekers allowance for more than 24 months. Among that group, who are the hardest to get into work, there must be a significant number of young people without qualifications. What actions are the Minister and the Government taking to deal with many of these people who were parked by training providers because they were too difficult to deal with?

[Lord Freud]

My Lords, I thank my noble friend for that question. Essentially, we are going to rely on the work programme and differential pricing to help the hardest to help.

Benefits

Debate between Lord German and Lord Freud

Monday 20th December 2010 Lords Chamber

[Lord German]

To ask Her Majesty’s Government what are their proposals for tailoring the benefits system to individuals’ needs.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, the Government’s reforms to the welfare-to-work system will make it more responsive to the needs of individuals. Jobcentre Plus advisers and providers of the work programme will have flexibility to tailor support to customers’ needs, rather than having support prescribed by central government. Under our plans for a universal credit, individuals will keep more of their benefits when working and will see a clear gain in working compared to not working at all.

[Lord German]

I thank my noble friend for that Answer. The whole purpose of the benefit reforms that the Government are undertaking is to provide those who can with the dignity of work and those who need support with the knowledge that they have the full support of the state behind them. The experience of government so far has not been too good in some cases. The Harrington review found that the system was,

“impersonal, mechanistic and lacking in clarity”.

Will my noble friend tell us when the recommendations of the Harrington review will be implemented and when changes will be brought into effect that will give people that dignity and the support that the state can provide?

[Lord Freud]

My Lords, I thank my noble friend for that question. The work capability assessment has been looked at once internally and now by Professor Harrington. We are committed to bringing in those reforms as quickly as possible—ideally, all of them by the time we have all the existing IB claimants reassessed with a view to going over to ESA.

Housing Benefit

Debate between Lord German and Lord Freud

Monday 6th December 2010 Lords Chamber

[Lord Freud]

My Lords, the Government are fully aware that some people will have to make adjustments in their living arrangements. That is why we have put a large amount of resource into helping that transition process. The current figure, which we announced last week, has been increased by another £50 million to a total of £190 million over the SR 2010 period.

[Lord German]

My Lords, the Government have told us how many people will be affected in the private rental sector by the changes that they have laid. On the other side the argument now seems to be that, if you take out issues around London, no one will see their rent reduced and they will therefore be turfed out on their ear. Meanwhile, the Government believe that the private sector will reduce its rents. Why is the Minister so convinced that the private sector will reduce its rents?

[Lord Freud]

My Lords, I thank my noble friend for that question, which gets to the heart of the issue. There are three reasons why we think there will be an adjustment in the marketplace. First, we as taxpayers represent 40 per cent of the private rental market. Secondly, there have been some surveys of landlord attitudes; roughly half say that they are prepared to reduce rates. Obviously, they are sending a message back to the main buyer. Thirdly, last week we put in place a mechanism to help that adjustment process. We are prepared to pay direct rents to landlords where they are prepared to show flexibility in helping people to stay in their homes.

Welfare Reform

Debate between Lord German and Lord Freud

Tuesday 16th November 2010 Lords Chamber

[Lord Freud]

My Lords, if I have forgotten what is in the White Paper, I stand reprimanded. In practice, we are looking to take elements of the hardship payments and the Social Fund generally and to localise them, including some of the loans. We are also looking at putting other elements into the universal credit. No hard decisions have yet been taken in this area. We are looking to finalise the restructuring of the Social Fund as we go into the next few weeks and introduce the Bill.

[Lord German]

My Lords, I am not surprised that the Minister has found that the ILO agreement suits the welfare reform proposals before us. However, does he agree that a symbol of a good welfare system is not how many people are locked and trapped within it but how many can be helped to get out of it? Is that not the reason why the welfare reform proposals are before us?

[Lord Freud]

My Lords, I thank my noble friend for putting his finger right on the point of these proposals: this is a measure to help people back into work. I should point out that a very similar measure, the Work for your Benefit scheme introduced by the previous Administration, was looked at by the Human Rights Joint Committee in the light of Article 4 of the ECHR, and it was found that it in no way went against people’s human rights or constituted forced labour.

Welfare Reform

Debate between Lord German and Lord Freud

Thursday 11th November 2010 Lords Chamber

[Lord German]

I congratulate the Minister on the Statement, particularly on him and his team securing £2.1 billion of expenditure to overhaul a system that has had many epithets, including “complex”, “cumbersome” and “inefficient”. I am sure that if we wrote a dictionary of the problems of the current system, we would see the need for making progress towards change.

I am keen to explore the key area of the Statement—that 850,000 people in our land will be lifted out of poverty as a result of these measures. That would be a tremendous achievement for the Government, one which we have not seen in the past. Can the Minister explain how that figure is arrived at and the Government’s direction of travel? It is an aim worth achieving in itself, although it is not the only ambition they have.

Given that there will be a long period of transition, how will the existing benefit structure begin to look to the new benefit structure? Clearly you do not want to continue the old system and change rapidly; you will need to ensure that the sense of direction is towards the new structure. I am sure the House will wish the Government every good speed in doing this, but “crawling” is not the epithet that I would use at the moment.

[Lord Freud]

I thank my noble friend Lord German for raising the issue of the impact on poverty. I have a much shorter word on record: it is not “complex”, “cumbersome” or “inefficient”; I call it a mess.

How will this work? In effect, by having more generous tapers and disregards we are putting money into the pockets of people doing small amounts of work. So there is the direct economic impact of that money going in. There will be a second order impact, which will be twice as large because we will simplify the system and have only one form. This will encourage a much higher take-up rate and, in practice, will almost eliminate the scourge of in-work poverty. So that is where the figure of 850,000 comes from.

There will also be the dynamic or incentive effect of always knowing that it is worth working, and being incentivised to work will reduce the number of workless households by about 300,000. We have not put that poverty impact in the Statement; it is in addition to it. Some households will be pulled above the artificial 60 per cent median line, and we expect the poverty impact to be even greater than the 850,000 we have referred to. These are big figures. I remind the House that, on conventional analysis, the reduction in child poverty during the 13 years of the previous Government was about 600,000 children, so we are looking at making a big relative effect in one go.

Welfare Reform

Debate between Lord German and Lord Freud

Monday 11th October 2010 Lords Chamber

[Lord German]

I thank the Minister for his Statement. I am particularly interested in the work programme and the way he announced that it will bypass the jobseeker’s allowance. Can he give us an estimate of the prospects for lifting people out of poverty as a result of this new programme? Will a big attempt now be made to ensure that that happens as a fundamental principle? The Minister mentioned expressions of interest from providers. Will they include people from the third sector or people who can deal with people who are further from the job market? There is a fear that those who are closest to the job market are the easiest to deal with and will be dealt with by private contracts.

[Lord Freud]

The core difference between the work programme and past programmes is that we are determined to put price differentiation into it because otherwise, as the noble Lord pointed out, the financial incentive for providers is to concentrate on the easiest people. To neutralise that effect, we need to give providers a higher reward for helping the more difficult people. That also has the effect of encouraging the consortia which are formed to be rather rich in terms of their capability. As the noble Lord pointed out, the third sector has some of the greatest expertise in the most difficult people to help. Once you pay for that, it encourages consortia to form which include them. That price differentiation mechanism is one of the most powerful aspects of the work programme for lifting people out of poverty into jobs.

Pensions Regulator (Contribution Notices) (Sum Specified following Transfer) Regulations 2010

Debate between Lord German and Lord Freud

Wednesday 21st July 2010 Grand Committee

[Lord German]

My Lords, I, too, intend not to keep the Committee long. I shall raise a few further questions on both these orders, particularly on the levies order, just for explanation purposes.

I declare an interest: my daughter works for BT and is a member of its pension fund. I recognise that this set of regulations on the levy is still subject to legal actions, and those have not been exhausted. I also note, of course, that the regulations themselves apply more universally to the Crown guarantee, and those who would be affected are not exclusively in the name of that one company. Could we have some indication of the existing companies that may already be entrapped or changed by this regulation? I am particularly interested to note that there are former railway pension schemes that may be caught in this regulation, but it would be useful to know who else would be affected and whether they would be affected in both the partial and the full sense.

I recognise that these regulations affect only the administration levy and that the House has already dealt with the regulations in respect of the levy as a whole. The state aid recommendation, as expressed by the European Commission, applied only in respect of BT. I note the Government’s comments that they expect other bodies in the same field that have been caught by this change to be encompassed in the regulation. I wonder whether and how the Government are going to move with the other companies who will be affected by it, and whether they will be expected to pay a backdated administration charge, because the impact on the pension schemes is important—especially as that is a contemporary issue for occupational pension schemes. Have the Government made any assessment of the impact that these regulations and the preceding regulations that affected the whole of the levy payments will have on those schemes? Will that make a substantial difference to the benefits that they can offer within those occupational schemes?

Can my noble friend indicate how other bodies that are currently in receipt of the Crown guarantee, and which then move into a situation whereby they would not naturally receive that under the European direction that we have been given, would be affected? What tests would be applied to determine whether the regulations would kick in? Would such a test be whether they are privatised, to use an old-fashioned word, or whether they are in a competitive situation? Or do both tests apply? It is probably the case that the determination will have to be based on one or both of those tests and I should be grateful if the Minister could tell me which of those apply.

In respect of the regulations on contribution notices, there is only one area on which I should like to ask my noble friend a question—in relation to paragraph 7.3 of the Explanatory Memorandum, which states:

“The policy intention … is to provide a calculation which offers equivalent protection”.

Does that mean, in effect, that if there was a move from one scheme to another, the benefits that would be received by members of that pension scheme would therefore be the same? Or is there a different definition of equivalence which I perhaps do not understand?

On that basis, the Government are absolutely right to pursue both sets of regulations.

[Lord Freud]

My Lords, I thank noble Lords for their contributions and I am glad that we were able to take the noble Lord, Lord McKenzie, on such a romantic trip down memory lane, although I sensed a little bitterness in his observation.

The first set of regulations addresses a fairly narrow issue relating to state aid. They are intended to address the rare situation where a reduction in the PPF levy for a pension scheme with a Crown guarantee, sponsored by a commercial entity, provides an unfair advantage. The regulations will ensure that the UK Government have complied with the European Commission’s decision and met their obligations. The second set of regulations provides the means for the regulator to calculate the amount of a contribution notice in certain cases, but only where the grounds for the use of this power have been met.

I turn to the points raised in the debate, and first to those made by the noble Lord, Lord McKenzie. He asked whether insurance contracts can be used. They may indeed qualify as contingent assets for the purposes of calculating the PPF levy, although there have been no recent representations on this matter and no changes in the law are currently planned.

The noble Lord asked what the experience of the Act had been in practice. As he said, these are early days, but I have pleasure in assuring him that, so far, the Act, which I acknowledge he was responsible for, appears to be working well. The noble Lord asked about activity in terms of emerging avoidance schemes. There are none that the Government are currently aware of. As he will know, the department and the Pensions Regulator work together closely in order to monitor the effectiveness of the legislation and ensure that it remains robust. He also drew our attention to paragraph 7.2 of the Explanatory Memorandum and the phrase,

“and only pay an administration levy in respect of the non-guaranteed part”.

I have pleasure in confirming for him that he has not found a flaw in the regulations because that is exactly—