Employment and Support Allowance Payments
Lord McKenzie of Luton Excerpts(5 years, 9 months ago)
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Baroness Buscombe
My Lords, let me make it very clear that those with complex needs will not suffer from a hard stop during the managed migration process. As I have said to your Lordships in previous debates, we are working hard to ensure that we work with stakeholders to pilot the whole scheme of managed migration. On the noble Baroness’s very good question about lessons learned, the key point is that through these errors in migrating people from incapacity benefit to ESA, we have learned that the big mistake made was that we did not make contact with individual claimants. We thought it was great to have an automatic transfer, but the issue was that we did not have all the right, real-time, up-to-date information on claimants. Therefore, some of those who were eligible did not receive these payments.
Lord McKenzie of Luton (Lab)
My Lords, the Minister explained that the number of staff included in this exercise has increased from 400 to 1,200. Can she tell us from where those staff have been deployed and what training they have had?
Retirement Age: Women
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Baroness Buscombe
My Lords, since 1995, successive Governments, including the Government of the party opposite, have gone to significant lengths to communicate these changes using a range of formats, communication methods and styles, including communication campaigns, leaflets and information online. But it is also important to emphasise that there is no link between the balance of the National Insurance Fund and the decision to introduce changes to the state pension age. Changes to the state pension age have been introduced by successive Governments since 1995 to address a long-standing inequality in the state pension age.
Lord McKenzie of Luton (Lab)
My Lords, the Government have stated that they are committed to supporting people aged 50 and over to remain in or return to work, which is in part in mitigation of the changes to the state pension age. Can the Minister say what in practice is on offer under that heading and how many older persons’ champions are now in post in Jobcentre Plus districts?
Baroness Buscombe
My Lords, given that people are living longer, which of course we welcome, it is right that arrangements for the state pension system reflect changes in average life expectancy. We are doing much to focus on the need to ensure that we support people who are working longer. The Government are committed to improving the outlook for older workers, including women, affected by increases in the state pension age. The latest figures show that the employment rates for older workers have been increasing: there are 10.4 million workers aged 50-plus in the UK, which is an increase of 1.3 million over just the last five years, and 2.4 million over the last 10 years. But to enable people to work for longer, we have removed the default retirement age, meaning that people are no longer forced to retire at an arbitrary age, and have extended the right to request flexible working to all, which means that people can discuss a flexible working requirement to suit their needs.
Guaranteed Minimum Pensions Increase Order 2019
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Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for explaining the purpose of the orders. On the face of it, the GMP issue is straightforward. As we heard, GMPs are designed to provide a minimum weekly pension broadly equivalent to the amount of additional state provision accrued if not contracted out. Has any assessment been undertaken of the value for money of the GMP system? My noble friend Lady Drake raised an important issue around the Lloyds judgment and the decision to equalise pension benefits. I believe she wanted to know what would happen to the guidance and how soon it could be forthcoming. Is it a question not of the GMPs themselves generally having to be made more equal but, rather, of other components of the package?
On auto-enrolment, there was a brief but good debate in the Chamber—the contributors being women—the main thrust of which, not unreasonably, was the role of women. We praise auto-enrolment but all too often overlook the fact that it still has a job to do. I could recite the roll of honour of those who made auto-enrolment happen, but you know who you are.
Specifically, the legislation requires that the Government do two things: renew and, if necessary, amend the upper and lower thresholds of the qualifying earnings bands; and review the level of the earnings trigger, adjusting for roundings where appropriate. As the Minister explained, the order proposes to freeze the latter at £10,000 but align the former with the lower and upper earnings limits for national insurance purposes. This widens the earnings band by some £3,500.
The supporting analysis for this included a DWP review document of December 2018, which sets out the three principles adopted for the review. Subject to challenge from my noble friend Lady Drake, those principles are: will the right people be brought into pension saving; what is the appropriate minimum level of saving for people who are automatically enrolled; and are costs and benefits to individuals and employers appropriately balanced?
As for raising the qualifying earnings band to the UEL, this increases total pension savings by £179 million, employer contributions by £68 million and employee contributions by £85 million. Retaining £10,000 as the earnings trigger represents a real-terms decrease, which brings an additional 40,000 individuals within the target population. According to the DWP analysis, of that 40,000 some 75% of the additional savers are estimated to be women.
How have the Government made the judgment that costs and benefits to individuals and employers are appropriately balanced? What are the tests? The above apart, what specific additional factors have influenced the proposal before us today? Subject as always to the Minister’s reply, we have no difficulty in supporting the proposals in the order.
I was pleased to hear what the Minister said on tax relief and trying to address the thorny issues of relief at source and net pay arrangements. These issues have been long outstanding, certainly over more than one Government.
I am conscious that we are addressing these issues in the wake of the 2017 review, which involves a wider focus on auto-enrolment. It is also at a point where most of the transitional introductory phases have been accomplished. March 2018 saw staging completed for small and micro employers, while minimum contribution levels rose to 5% in April last year and are heading for 8% this April. Can the Minister say something about re-enrolment and opt-out levels?
As that review identified, despite its success, individuals are still not saving enough. An estimated 12 million are undersaving for their retirement and some 5.7 million are mild undersavers. The broader review, Maintaining the Momentum, charts a path for the future that will help to address some of the shortfall. Its recommendations include: reducing the lower age limit from 22 to 18; calculating pension contributions from the first pound earned; removing the lower earnings limit; and working to increase saving among the self-employed. These may be matters for another day but, like my noble friend, I do not see why they have to wait until the mid-2020s. Is the Minister satisfied with this framework?
Nevertheless, we continue to be enthusiasts for auto-enrolment in one of the most important public policy initiatives of recent times, bred of a consensus.
Baroness Buscombe
My Lords, this has been an important and helpful debate and I will do my best to respond to as many questions as possible. I thank all noble Lords who have spoken in support of automatic enrolment. It was a cross-party initiative. It seems only five minutes ago—but it was a year—that the noble Lord and I were debating this subject in very similar terms. There is support for auto-enrolment, which is a success story, but we are never complacent. There is always more to do to improve the system.
I shall start with questions on the guaranteed minimum pension. I thank the noble Baroness, Lady Drake, for giving me early notice of her question about the recent Lloyds Bank case. That case endorsed the Department for Work and Pensions’ long-held position that schemes must equalise for the effect of inequalities caused by guaranteed minimum pensions. The principle of equal pensions was established by the European Court of Justice in 1990. The requirement on schemes to equalise is not a new cost; they have been aware of it and should have been planning for it for many years. My department has put forward a method that schemes can use to equalise pensions which, because of its “once and done” nature, should limit costs resulting from additional administration requirements. The department will provide guidance in the near future for schemes wishing to use the method upon which the department consulted in November 2016. The Department for Work and Pensions intends to make further changes to the guaranteed minimum pension conversion legislation to facilitate the methodology on which we consulted. We are looking to make those changes as soon as a suitable opportunity presents itself. The representative beneficiaries in the Lloyds case sought leave to appeal on two points of the judge’s decision concerning the methodology favoured by them and the requirement to provide back-payments. Leave to appeal was refused, as I am sure the noble Baroness knows.
The noble Lord, Lord McKenzie of Luton, asked about the assessment of the guaranteed minimum pension system. I am unable to answer a couple of those questions and will write to him. Guaranteed minimum pensions were abolished in 1997, but those which accrued before that time must be honoured by schemes which had contracted out while GMPs were accruing.
On auto-enrolment uprating, the noble Lord, Lord McKenzie of Luton, asked why the Government do not tackle the inequality in the tax system which means that individuals automatically enrolled into a pension scheme use net payment arrangements or are losing out on tax relief. My noble friend Lady Altmann is not in her place but I know she is particularly concerned about this. The Government recognise the different impacts of the two systems of paying pension tax relief on pension contributions for workers earning below the personal allowance. The Government will look at the current differences and explore how to make the most of any new opportunities to balance simplicity, fairness and practicality. The Department for Work and Pensions has worked and is working with the Pensions Regulator to issue guidance to highlight to employers the differences between the NPA and RAS schemes and the potential disadvantage for low earners who are not eligible for tax relief if their employers opt out of NPA schemes.
The noble Lord also asked how many individuals have opted out. A total of 9% did so during the implementation of auto-enrolment. The 2018 evaluation report showed initial evidence of opt-out rates having fallen since the programme was fully implemented. Of course, the department will continue to monitor re-enrolment.
Lord McKenzie of Luton
I am sorry to interrupt the Minister. My specific question on that point was about the obligation to re-enrol people after a period.
Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2019
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Lord McKenzie of Luton (Lab)
My Lords, this has been a full debate, and many contributors to it have had at least indirect experience of this wretched condition. I will comment on a few contributions before going on to my script.
The noble Lord, Lord Freyberg, referred to the historically long-latency circumstances and the need to make sure people understand that occupational lung disease is not a thing of the past—I agree with that. The noble Baroness, Lady McIntosh, asked how people get information about what is available. The short answer is through campaign groups, trade unions, and people like the noble Lord, Lord Alton, who has been involved in this for a long time; they are a good and reliable source of information about what is going on, as is, I am sure, the HSE. The noble Lord, Lord Wigley, talked about quarrymen; this has cropped up in the past from time to time, but as yet there has been no resolution. I am grateful to the noble Lord, Lord Alton, whose knowledge of where we are on this and the history of it is second to none; I know some of it but have nothing like the wealth of experience that he brings. My noble friend Lady Donaghy asked about cross-departmental spend, and reminded us that we are dealing with heart-breaking circumstances. This is perhaps not the usual sort of debate we have.
We thank the Minister for introducing these two regulations, which we are discussing together. Obviously we will be supporting each of them. One is specifically concerned with mesothelioma and the 2008 regulations, and the other with the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, which encompass other dust-related diseases.
As we have heard, they each make provision for lump sum compensation to people suffering from these diseases or for compensation for their dependants. I am not sure whether many noble Lords are aware of some very recent publicity about a situation local to me. Vauxhall Motors in Dunstable was prosecuted successfully for the death of a spouse; her husband worked at the plant, and because she hugged him when he came home at night, that—the nexus—was enough to give her mesothelioma. It is a tragic situation, but one of many. I am sure that Vauxhall will be properly dealt with.
Another point arises from that. It has sometimes been suggested that knowledge of mesothelioma is relatively modern—it is not. Some of the press reports on this refer to the fact that it goes back to the 1960s, if not earlier. Frankly, we were faced with circumstances where employers, and certainly those involved in liability insurance, did not do what they should have done with regard to their responsibilities.
In the case of the workers’ compensation Act 1979, the provisions apply to one of a range of diseases we have heard about which have been caused through accident or exposure in employment. These must have generated a claim to IIBD and not have given rise to a civil action against a former employer. The diseases in question are pneumoconiosis, byssinosis, diffuse mesothelioma, bilateral diffuse pleural thickening and primary carcinoma of the lung when accompanied by asbestosis. I understand that it may still be possible to get compensation for an asbestos-related disease under the 2008 scheme even if it is ineligible under the 1979 scheme. The later scheme does not require a work nexus: the oft-cited example of a family member washing clothes is now made much more poignant by the press reports to which I just referred.
The 2008 payments scheme is for no-fault compensation and includes coverage of the self-employed. Although monetary compensation is no substitute for a life, it can help with practical issues, especially if available speedily. We should note at this point that the diseases covered very much reflect our industrial past and a careless approach to matters of health and safety. Unfortunately, we have not heard from my noble friend Lord Jones, who normally contributes powerfully to these debates, but we have heard from others.
I note with approval the point made by the Minister in the other place in praise of the Health and Safety Executive—in stark contrast to the prior contribution of David Cameron on such matters, who determined that Britain’s health and safety culture would be killed off for good by the Government. It is a pity that, notwithstanding the Minister’s intervention, the HSE has seen dramatic budget cuts.
Mesothelioma is a type of cancer that covers the lining of the body’s organs. It is invariably caused by exposure to asbestos and results in death. It is a long-latency condition, as we have identified, and can emerge 40 to 50 years after contact with asbestos. To be fair, in introducing the regulations, the Minister let us know how many individuals have died and the forward projections.
As was debated in the other place, asbestos is still present in many structures, particularly in our schools—not to mention in this building. The Government used to have in place robust communications about the dangers of asbestos and messages about how it should be treated. What is the current position?
The level of compensation payable has been increased by 2.4% in accordance with the September 2018 consumer prices index. Can the Minister confirm that indexing of the 1979 and 2008 Acts compensation amounts has been routinely carried out, notwithstanding that there is no statutory obligation to do so? Several noble Lords, including the noble Baroness, Lady Thomas, at this end, pressed the Government on why the uprating had not been made statutory—on reflection, that is an entirely reasonable point.
A key difference between the two sets of regulations is that the mesothelioma regulations have a schedule only for sufferers and dependants. The pneumoconiosis schedule is for both, and also reflects the degree of disablement. The noble Lord, Lord Alton, introduced some very important data about the differential between those two scales. In the case of mesothelioma, the compensation schedules reflect the fact that it has been treated as invariably fatal.
I have some questions for the Minister, the first of which she has already answered. When the 2008 scheme was devised, it was determined that levels of payments would be funded from recoveries from civil action until such amounts matched levels of payment under the 1979 Act. What are the current levels of recovery? What drives the quantum of lump sum payments under the 1979 Act?
Lord McKenzie of Luton
Yes, I should speak up. What are the current levels of recovery under the 1979 Act? Also, what drives the quantum of lump sum payments under that Act, which created the schedule in the first place? We know what the uprating is about.
The annual question posed is about bringing payments for dependants up to the level payable to sufferers. I join those who say it is time that we should do this. Debate in the other place on the regulations was in part conflated with arrangements in the 2012 Act, which I think was introduced only in 2019. Historically, as we know, there were concerns about low levels of compensation made available for these long-latency diseases. Focus for a long while was on the traceability of employer liability policies and, although progress was made, it was considered that in too many cases employers and their insurers were avoiding liability. I understand that this led to the diffuse mesothelioma payment scheme, introduced in 2014 and led by the noble Lord, Lord Freud, who deserves credit for his difficult negotiation with the insurance sector.
Social Metrics Commission
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Baroness Buscombe
My Lords, this is a very important point. I thank my noble friend for introducing a debate on this very subject last week. It is right that we take note of the unavoidable extra costs of disability and childcare. However, so far as we understand it, the Social Metrics Commission does not include, for example, the unavoidable cost for the elderly of social care. In regard to disability, it is important to note that we spend more than £50 billion a year on benefits to support disabled people and those with health conditions. It is encouraging that 973,000 more disabled people have entered into work in the last five years, and we now have much more generous childcare provision.
Lord McKenzie of Luton (Lab)
My Lords, we share my noble friend’s enthusiasm for the approach adopted by the commission, particularly the focus on relative poverty. This is a measure that takes account of both income and inescapable costs to which the Minister has just referred, such as childcare, housing and the impact of disability. Under the commission’s new measure, there are 14.2 million people in poverty, nearly half of whom are living in families with a disabled person. Do the Government think that this is acceptable? Measuring is all very well, but what are the Government going to do about it?
Baroness Buscombe
To answer the last point first, the current measure shows that in 2016-17 23% of people in households where someone was disabled were in poverty, compared with 24% in 2010-11, so that shows that poverty levels among disabled people are not rising. Compared with 2010, there are now 1 million fewer people—300,000 fewer children, 500,000 fewer working-age adults and 200,000 fewer pensioners—in absolute poverty.
Poverty: Metrics
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Lord McKenzie of Luton (Lab)
My Lords, this worthy debate has been far too short. The noble Baroness, Lady Stroud, deserves our congratulations on all that she has done, together with her team, which was mentioned a moment ago. She is right to encourage the putting of poverty at the heart of government policy, although we recognise that this will entail a major change of approach. The SMC report which she has presented reminds us that there are no official measures of poverty in England or across the UK as a whole. As others have said, can the Minister say why this is? How is it possible to target poverty, particularly child poverty? We have heard from a number of Peers that what gets measured gets done—the noble Baroness, Lady Tyler, and the right reverend Prelate made that same point.
Noble Lords may recall the debates we had at the time over the use of income measures in the Child Poverty Act, which was renamed by the coalition Government as the life chances Act. My noble friend Lady Lister will certainly recall that, as indeed will the noble Lord, Lord Freud, who led the charge in those days. The income measures were replaced by reporting obligations on workless households and educational attainment, particularly at key stage 4. Can the Minister please remind us of progress on those reports, which are required to be made to Parliament? I think that two are due by now under those arrangements.
It would seem that the Social Metrics Commission accepts that an income component to measuring poverty is appropriate. This would base its data on the FRS. As we have heard from a number of noble Lords, its metric of total resources available is proposed to include all sources of post-tax earnings and income, including benefit and tax credit income, liquid assets available for immediate use—I can see that there may be some difficulties with those at the margins—deductions for family-specific recurring costs such as housing and childcare, along with the inescapable costs of disability. I think that the report floats the possibility of social care being included at some stage. We are thoroughly supportive of the proposals to include rough sleepers as living in poverty. Indeed, it should be impossible to describe them otherwise.
We know that despite the substantial effort on the part of the commission there are still gaps where the policy is not oven-ready. The approach of the commission is caveated by reference to, “within existing data and research”. The report indicates that the commission decided that it was not possible to move immediately to a new method of equivalisation and that more work would be needed. Can the Minister say how any future work on this is to be undertaken? I think that we were given a hint that there may be a Bill in the offing at some stage. Will this be the responsibility of the DWP or the Social Metrics Commission? Who has responsibility for and ownership of the project? At the end of the day, this should be about sending a message to Government about changing the dire state of our communities blighted by poverty. We have some 14.3 million people living in poverty, including 8.2 million working-age adults despite the success of universal support, as well as 4.6 million in persistent poverty. I could go on. We must build a picture of those in poverty so that we can better understand their challenges and what they need to make progress in their lives.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Buscombe) (Con)
My Lords, I thank my noble friend Lady Stroud for securing this debate and all those who have contributed to today’s debate of this important question. I really commend the work of the Social Metrics Commission.
Measuring poverty is complex. There are many factors affecting a person’s standard of living, and reaching consensus on whether a person’s circumstances indicate poverty is difficult to assess objectively. Of course, assessing poverty accurately across the whole population requires robust data. This is why academics here and abroad have developed so many measures, including low income, material deprivation, social exclusion, consumption, expenditure and multidimensional poverty. I was struck by the reference by the noble Lord, Lord Howarth, to the lack of indicators for cultural poverty—our collective experiences. That is a very good point, because it emphasises the reality that the possibilities for how we approach the way we measure poverty are, if not quite endless, enormous.
As noble Lords know, this Government already publish official data that sets out the number and characteristics of households that fall below various income thresholds, as well as a measure of material deprivation. These are well-established measures, often used for international comparison purposes. We will continue to publish data on them in line with the statutory commitment that we have made. However, the Government accept that the current suite of measures is not without limitations. For example, the relative poverty line moves with average income, which is useful when looking at whether groups are keeping up with the middle of the income distribution over time but does not show whether the average incomes of those on the lowest incomes is improving in real terms. If everyone’s incomes were to double tomorrow, the number of people in relative poverty would be unchanged. On the other hand, the absolute poverty line moves with inflation, providing a better measure of how the income of those on low incomes compares with the cost of living.
Our persistent poverty measures assess the numbers in relative poverty for three of the last four years, and are helpful in identifying groups struggling to escape low income. Our material deprivation measure looks at the goods and services that people report they can access, taking account of the costs that parents and pensioners face as well as the resources they have. At 11%, the number of children in material deprivation has never been lower. That means, for example, more families able to afford fresh fruit and vegetables every day and more children who have a winter coat.
We therefore welcome the Social Metrics Commission’s work. Its new measures aim to better reflect what it has identified as the unavoidable costs that are combined with a person’s income. This goes further than our current low-income data, as while it takes account of housing costs, it does not take account of the costs of childcare and disability, as referenced by a number of noble Lords. The commission has also identified further costs—for example, care costs—that it thinks should be taken into consideration if appropriate data was available.
The recommendations in the report are too numerous to cover here, but I offer a couple of examples of the elements we need to assess. First, we need to look at the quality of the data used to estimate some of the costs included in the commission’s measure. Indeed, its report accepts that there are data-quality issues. There is also the possibility that including some additional costs but not others could skew the measure towards certain groups. The commission’s report indicates that there may be more children and disabled people and fewer pensioners compared with the official statistics. What would be the impact on the measure if social care costs were also included? Children and disabled people were particularly referenced by my noble friend Lady Stroud.
In disregarding disability benefits from the calculation of relative poverty, we cannot lose sight of the fact that these provide a valuable financial contribution towards the extra costs that disabled people can face. I want to encourage my noble friend Lord Bethell. We spend over £50 billion a year on benefits to support disabled people and people with health conditions. That is £8 billion more in real terms than in 2010. PIP, the personal independence payment, is better at targeting support to those who need it most, as we see with 31% of people on PIP receiving the top rate of benefit compared with 15% under DLA. Alongside this, the proportion of people with mental health conditions getting the highest level of support under our system is over five times higher than under the old system. We believe that disabled people should have every opportunity to thrive in the workplace, and we provide financial support to ensure that someone’s disability or health condition does not hold them back at work. My noble friend Lord Bethell referenced how difficult it is for people to go to work, but it is really encouraging that 973,000 more disabled people have entered work in the last five years.
Over the coming months, we look forward to the release of further information, including the programmes used by the commission to produce its estimates and the papers supporting its decisions around what its measures should include. To answer my noble friend Lady Stroud, while we are unable to make any commitments to the Social Metrics Commission at this stage, we will want carefully to consider the detail that underpins the methodology that the commission has employed when this is made available to us. The department is also keen to be involved in the stakeholder discussions on some of the critical and more complex issues associated with the commission’s measure.
To answer the noble Lord, Lord McKenzie, about who will be empowered through where we go next, I want to make it clear that we welcome the opportunity that we as a department have been given to work with the Social Metrics Commission. As a number of noble Lords suggested, as with so many things in life, this is more important than politics.
In tackling poverty, ensuring that we have robust measures for assessing the nature and extent of poverty is vital. The department is thinking strategically about the issues behind poverty, including housing, debt, low pay and worklessness. We will raise housing supply to 300,000 new homes per year on average by the mid-2020s and are investing £9 billion into our affordable homes programme, so that we can deliver more homes where they are needed most. Our economy has grown for the 23rd consecutive quarter in a row and we are backing businesses to deliver better jobs, better incomes and better lives for people across the country. Since 2010, there have been 1,000 more people in work every day and 80% of the rise in employment has been in full-time work. That suggests that it is important that we look more closely at low pay across all employment sectors, not just the private sector.
I thank my noble friend Lord Freud for his reference to the introduction of universal support. It is doing an enormous amount to help, but I also take on board his suggestion with regard to the importance of sharing data. That is incredibly important. There is also the possibility going forward for claimants to be able to work with electronic wallets.
I now move to our approach as a Government. We are firm in our belief that work is the pillar of a strong economy and strong society, and we have clear evidence about what works. We know that, for those who can, work offers the best opportunity to get out of poverty and become self-reliant. Adults in workless families are four times more likely to be in poverty than those in working families, and children in workless households are around five times more likely to be in poverty after housing costs than those where all adults work. Indeed, the Social Metrics Commission recognises that, under its new measure, the majority—68%—of people living in workless families are in relative poverty, compared with just 9% of people living in families where all adults work full time. Our policies therefore strongly reflect that work is the best way out of poverty. One example is the Access to Work scheme, which now allows people to claim up to £57,200 annually to help pay for the additional support they need in the workplace. That is particularly targeted at the most vulnerable and the disabled.
Children need role models and parents need dignity and self-worth to believe that they can achieve their potential of supporting their children. The principles of UC entirely support this truth. I particularly take on board what my noble friend Lord Farmer said regarding the elephant in the room and the importance of including the family. I commend all the work that he does on the reducing parental conflict programme. It is important to note that the Social Metrics Commission does look at the family—the reference is to family, relationships and community—but we need to look further at this and see how it all comes together. It is for those reasons that we are pushing ahead with the most ambitious reform to the welfare system in decades, delivering real and lasting change to the lives of many of the most disadvantaged people in society—and yes, as my noble friend Lady Stroud said, focusing on better outcomes for people.
Universal credit is, of course, at the heart of these reforms and will tackle poverty by helping an extra 200,000 people into work. It is a modern benefit with one monthly payment that adjusts to earnings, avoiding the cliff edge associated with the legacy benefits it replaces. Those in work under universal credit earn an average £600 extra a year, and because it is a simpler system than Labour’s complex mix of tax credits and benefits, 700,000 families will get money they are entitled to which they are currently missing out on.
I take issue with what the noble Lord, Lord Shipley, said about the UC system being digital by default. That is simply not the case. Universal credit focuses on strong personalised support, with work coaches and case workers, and we will offer home visits where needed. We want to focus on individuals and we do so.
As my noble friend Lady Bloomfield of Hinton Waldrist said, we are listening to concerns. We note when we get it wrong, and it is a work in progress. I thank the right reverend Prelate for his welcome for the Secretary of State’s comments in her recent speech in this regard.
Our policies are making a difference. Under this Government income inequality is down year on year and remains lower than 2010, both before and after housing costs. Since 2009-10, annual incomes of the poorest fifth have increased by £400 above inflation before housing costs, whereas the incomes of the richest fifth have fallen by £800, showing that people are able to progress. Our official statistics show that there are 1 million fewer people in absolute poverty compared with 2010, including 300,000 children, and that the number of children in material deprivation has never been lower. There is so much more that I would like to say. We believe that building stronger partnerships with local services and organisations is key to identifying barriers and providing cohesive support for those who need extra help.
My noble friend Lady Stroud has asked what I believe is a question of great importance for all of us in this House, and I stress that the Department for Work and Pensions takes this very seriously. I thank my noble friend for the work the commission is undertaking and look forward to its further work in the future. Ultimately, however, this Government will be held to account for their progress in tackling poverty, and I have no hesitation in recommending our reforms as the right approach if we are to make a long-term difference to people’s lives and build a society where everyone can realise their potential.
Occupational and Personal Pension Schemes (Amendment etc.) (EU Exit) Regulations 2018
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Lord McKenzie of Luton (Lab)
My Lords, I have stayed out of this to date and I propose to do so in the future. I want to make just one point before we lose sight of it. The Minister talked about the change involving just one word. I think that we should recognise that that word is “UK”, which is a pretty substantial one.
Baroness Drake (Lab)
My Lords, these draft regulations are part of a suite of instruments intended to plan for the no-deal scenario, necessitating a sweep across the stock of pension law. Such contingency regulations may well amend both primary and secondary legislation, the remit of the Pensions Regulator, the Pension Protection Fund and the Financial Assistance Scheme. What we have not received, however, is a broader assessment of what the pension landscape would look like in a no-deal scenario which sets the context for the consideration of these SIs individually. That is because to call them technical, when we stand back and look at the wider implications of no deal, is not to see some of the serious challenges and loss of member protections that could flow as the consequence of a sudden dropping out of EU legislation in a no-deal scenario.
These particular regulations address cross-border activity where an employer in one member state selects to base its occupational scheme in another member state, but they remove from the Pensions Act 2004 the requirement for occupational pension schemes to obtain authorisation from the Pensions Regulator for cross-border activities. They repeal the cross-border regime.
The UK and Ireland are the two countries between which there is significant cross-border pension provision, which will be another complication in future UK-Ireland relationships. Recent amendments to the Occupational Pension Schemes (Cross-border Activities) Regulations 2005 were made to allow for the IORP II strengthened requirements on cross-border activity which would be revoked if there is no deal. The acronym IORP comes from the EU directive meaning “Institutions for Occupational Retirement Provision”. Thus a new set of regulations that has just been accepted and which puts in place protections for cross-border activity would be revoked. In the event of no deal, the Pensions Regulator would need to provide guidance to those pension schemes which are currently authorised for cross-border activities within the EU. They exist now and they will not cease to exist simply because we may leave with no deal. Can I ask the Minister what would be the effect of substituting existing Pensions Regulator authorisation with a weaker system of Pensions Regulator guidance for cross-border activities? How would the effect of that weaken the level of protection afforded to scheme members in respect of both contributions and the protection of their assets? When will the regulator’s guidance be published so that we can more fully understand the implications of no deal?
Could the Minister advise whether there have been any discussions between the Pensions Regulator in the UK and Ireland on pension cross-border activities in the event of a no-deal scenario? Will the IORP II new authorisation process for schemes wishing to undertake bulk transfers of assets with a separate scheme located in another EEA state include ensuring that the cross-border transfer is approved by a majority of the members and beneficiaries or, where applicable, by a majority of their representatives? What will happen to those protections in a no-deal scenario? I do not know because I cannot find the answers to those questions. There will be UK citizens whose assets are in occupational schemes in other EU states that may be protected by ring-fencing or whatever.
The original draft of these regulations, as has been said on numerous occasions, required pension schemes to invest predominantly in UK-regulated markets. Regulation 29, the one being referred to, has been revised to allow schemes to invest in regulated markets more generally and therefore avoids the unintended consequence of large numbers of occupational pension schemes having to divest themselves of investments in regulated markets outside the UK. It illustrates how the impossible speed and pressure our departments and regulators are expected to work under to prepare simultaneously for a possible no deal and a withdrawal deal can lead to unintended consequences, which worries me. I fear that in retrospect, in the rush to prepare for no deal against a self-imposed deadline of 29 March, we will discover more unintended consequences in the canon of UK law, not simply in pension law. We have seen others, on trademarks or wherever, where people are beginning to identify unintended consequences.
I will not refer to Northern Ireland because we are now taking that separately, but on the broader point of how impact is defined and measured, there is a series of cliff-edge issues that could pose material risk to our financial markets in a no-deal scenario. UK providers will also be unable to rely on current passporting rights, could experience difficulties in servicing cross-border contracts and will not be part of the legal framework for moving data between the EU and the UK. In the absence of regulatory co-operation agreements or memoranda of understanding between the UK and the EU in a no-deal scenario, the operation of pension schemes and the value of members’ pension pots will be negatively impacted.
This takes me back to my opening point that, in considering these statutory instruments individually, the House lacks a broader assessment of what the pension landscape will look like in a no-deal scenario. To argue that somehow there is no need for consultation if the impact of no deal does not result in a change of policy is to completely fail to understand that the effect of no deal in weakening the protectors of members’ rights is a policy choice if one chooses no deal, because it will consequently affect members’ rights. It seems so narrow to argue that you cannot find a change of policy, though really the issue around consultation is not well argued. Although I accept that these regulations deal with the more narrow issue of cross-border activity, they are indicative of the problem of trying to look at any SI on pensions without the context of understanding the impact on pensions generally under no deal. Pension schemes everywhere are sitting and worrying about the consequences of this, particularly in financial markets. There are also UK citizens whose assets are in pension schemes in other EU states. Just walking away from the regime without any understanding, even with the Irish regulator, does not seem to be good preparation.
Lord McKenzie of Luton
Forgive me; I was waiting because I thought the Minister was going to answer the question.
Lord McKenzie of Luton
My Lords, this has been a wider debate than I anticipated when I signed to speak on these regulations but, I suggest, relevant nevertheless. Some important issues have been raised. The noble Lord, Lord Deben, implicitly shared my noble friend Lady Drake’s view of the squeezing of time to look at these things properly. My noble friend Lord Adonis went to the root of the problem and the challenges that we face on no deal.
My noble friend Lord Adonis talked about secrecy in the departments. I have to say that I have been disappointed in one respect because I have always been a supporter of the DWP. There is a note attached to each information note saying, “X at the Department for Work and Pensions, telephone number Y and email Z, can be contacted with any queries regarding the instrument”. When I tried to do so, I was told that that was not really for opposition Members to use. Given that these are situations where there is highly technical stuff, I found that disappointing. We had always thought that we would have a basis of sharing technical issues, even if our conclusions may be different.
The noble Lord, Lord Kirkwood, started off by giving us robust reassurances about the degree of scrutiny and sufficient time. What came from that bit of the debates, which involved my noble friend Lord Adonis and the noble Lords, Lord Kirkwood and Lord Deben, was that we need to reflect on this issue. What started off as a narrow technical piece of legislation has raised a lot of questions about scrutiny—not only the scrutiny of this legislation but other things that we do as a result of Brexit.
I am again indebted to my noble friend Lady Drake, who has done the heavy lifting for us on this SI. She has focused particularly on the challenge caused by the absence of the Northern Ireland Assembly, and raised an important point about a weaker regulatory system for cross-border activities and the broader question of what the pensions context should look like.
I thank the Minister for her explanation of these regulations. They have a fairly straightforward intent, so we are told, despite the seemingly technical nature of the proposed adjustments. As we heard, the regulations are part of the planning that would enable UK law to operate effectively if the UK leaves the EU without a withdrawal agreement in place. One example would be the obvious problems where the UK is currently particularised in relation to the EEA, either as “with the UK” or as “other than in the UK”.
The Explanatory Memorandum asserts that we do not need to make policy changes to ensure UK law in the field of occupational and personal pensions continues to operate effectively in the event of withdrawal without an agreement. I am not sure that is right; at what point is a change a policy change, and at what point is it not? For example, Regulation 2(3), among others, in reference to insurance policies or annuity contracts of security, would,
“omit ‘or any other EEA state’”.
Is that a minor tactical detail or a change of policy? The Pensions Act 2008 excludes Article 6 of the IORP directive, with its main administration in the EEA. Is that not a change of policy? The regulations enter into force on exit day, so could the Minister confirm what date this is? It is not specified in the regulation so far as I can see. If the UK should exit the EU on an agreed basis, how does this impact the entry-into-force date? Does it simply fade away? How much of this SI still stands or is necessary should—however unlikely—the Prime Minister’s deal be supported by the Commons? Indeed, can the Minister remind us of what is in the Prime Minister’s deal on the issue of pensions? The amendment to the Pension Schemes Act 1993 is focused on the security for GMP not to be allowed to be an instrument of an EEA state. May I ask the Minister why that is the case?
Further provisions are a bit convoluted; perhaps the Minister can comment on some, starting with Part 2 and Regulation 2, which amends the Pension Schemes Act 1993; what is this detail about? I tried to get clarification from the department. Can the Minister please give us a detailed explanation of this and the amendment to the Pensions Act 2004?
These are important provisions. I share with many the view that we may never have to deal with them in practice, but they should be properly introduced and scrutinised in the interim.
Baroness Buscombe
I thank all noble Lords who have taken part in the debate, and I will do my best to respond. My notes are somewhat spread, so if I may I will begin by responding to the noble Lord, Lord McKenzie. On his not being able to contact the department, I took 27 pieces of legislation through this House on behalf of Her Majesty’s Opposition, and not once was I given access to civil servants or to support from any department. I recall the wonderful Lord McIntosh of Haringey, who sat in my place and whom I miss still, because he was utterly brilliant when it came to the most technical and difficult regulations. I would telephone him and he would laugh at the suggestion that I should have access to any of his civil servants. However, on one occasion he did relent, because he agreed that the support I had from industry was so exceptional that he would share his expertise with me if I shared mine with him.
My department responded to a question from the noble Lord only this morning, confirming that these regulations are focused on what will happen in the event of no deal, but in the event that there is a deal, it is very important to stress that they will no longer be required. We would then expect to defer, revoke or amend the instruments in time for the end of the implementation period to ensure that they properly reflect whatever deal scenario might be in existence. It is important to make it clear that these regulations are about legal certainty on exit day; they are not about trying with a crystal ball to know what would happen in any particular deal situation. They are about ensuring legal certainty in the event of a no deal, which would mean that we walked away from the EU on 29 March.
Social Security (Amendment) (EU Exit) Regulations 2018
Lord McKenzie of Luton Excerpts(5 years, 11 months ago)
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Lord Kirkwood of Kirkhope (LD)
My Lords, I thank the Minister for that helpful introduction. I understand that these are minor and technical amendments. I have looked at them very carefully as a member of the statutory instruments scrutiny committee of your Lordships’ House. I am pretty familiar with their scope.
Could the Minister clear up two questions from my mind? First, is there any prejudice, potential or otherwise, to transfer payments and entitlements made from United Kingdom sources and systems to United Kingdom citizens and families living in the European Union? I think the answer is no, but an assurance would help, particularly relating to pension payments.
Secondly, I know that the Minister cannot do anything about this but I am getting more and more nervous about the Northern Ireland arrangements being handled indirectly by the department with no meaningful legislature in Northern Ireland to deal with some of their consequences, particularly since it has a free-standing social security system of its own. Colleagues know that it is a mirrored system, so changes are almost automatic. We have been living with that for some time. But in situations such as this, where changes are being made at one or two stages removed from the good people of Northern Ireland who are entitled to these benefits, there are particular concerns that those entitlements should be especially carefully considered in these amendment regulations. If the Minister can help me with these two items I would be very happy to see the regulations pass.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for introducing these regulations. It is fair to say that this is not the most exacting task she will have to undertake on matters Brexit. As we have heard, there are two sets of regulations, the territorial application of one set relating to Great Britain and of the other to Northern Ireland. The two sets cover parallel issues.
The Explanatory Memorandum reminds us that the Northern Ireland Executive are not in being, although the policy areas that are the subject of these regs are transferred matters and should be the responsibility of the Executive. That point was touched on by the noble Lord, Lord Kirkwood, with some expression of concern that we share. The memorandum states that the Government,
“will take through the necessary secondary legislation … in close consultation with the Northern Ireland departments”.
Perhaps the Minister will say what this involves. I think she might have answered that by saying that the Department for Communities was consulted.
The regs will operate with effect from exit day, but it goes without saying that many of us wish that that day will never arrive. Given that the powers of the European Union (Withdrawal) Act 2018 are engaged by these regulations, it is incumbent on Ministers to make certain statements. These encompass a requirement to state that the regs do no more than is appropriate to deal with deficiencies in retained EU law, but that there are good reasons for the provisions and that they leave intact equalities provisions. The Minister states that, given that the Equality Act does not extend to Northern Ireland, she has given due regard to the need to eliminate discrimination, harassment and victimisation. We do not seek to disagree with those conclusions.
As we have heard, these instruments fall into two groups. They amend various provisions in UK domestic legislation that contain references to the UK as a member state of the EU, or of the EEA. Further, they amend Section 179 of the Social Security Administration Act 1992 and its Northern Ireland equivalent to enable social security-related reciprocal agreements to be entered into with international organisations. The Explanatory Memorandum instances the EU, but can the Minister state what others might be in contemplation? What is the position with any existing agreements that the UK has entered into with the EU? Could the Minister please list these? Do they have to be reinstated on some basis or do they run on?
The insertions made to Section 179(4) list a range of EC or EEC regulations. Can the Minister differentiate between the two? Taking new subsection (4)(am) as an example, I presume that its inclusion is not intended to change the domestic law. Can the Minister outline for us the impact of Regulation (EEC) 1408/71 on the application of social security systems to employed persons, to self-employed persons and to members of their families moving within the Community?
The regulations extend to other amendments to existing secondary legislation to ensure accuracy of references when the UK is no longer part of the EU. These cover persons abroad, invalid care allowance regulations, SSP, SMP, overpayments and recoveries, AA, DLA, housing benefit, PIP and universal credit. Can the Minister confirm that in each case there is just a change of wording to reflect the changed situation of the UK and that it has no wider implications for the position of the continuing EU members?
We hope to see these regulations gather dust in some corner of Westminster and not be called into use. In so far as they are, we agree that they do the job.
Baroness Buscombe
I thank noble Lords who have taken part in this debate. Perhaps we have now gleaned rather more from the Benches opposite as to which way the noble Lord’s party may vote in the coming days; hitherto, we have been entirely unclear, as have all honourable friends in another place.
These are minor and technical amendments. I want to make it clear that there is no impact on policy. There is of course frustration—if I may put it that way—that the people of Northern Ireland are not fully represented. The noble Lord, Lord Kirkwood, is quite right that there is sadly nothing that I can do about that. The UK Government remain committed to restoring devolution in Northern Ireland—that also concerned the noble Lord, Lord McKenzie. This is particularly important in the context of EU exit, where we want devolved Ministers to take the necessary actions to prepare Northern Ireland for exit. That includes making the necessary legislative corrections to ensure that the Northern Ireland statute book is ready for exit day, consistent with the action taken at Westminster and in the other devolved legislatures. However, with exit day only a few months away and in the continued absence of a Northern Ireland Executive, the window to prepare the Northern Ireland statute book for exit is narrowing. UK Ministers therefore decided that it would be in the interest of legal certainty in Northern Ireland for the UK Government to take through the necessary secondary legislation at Westminster. That decision was made in close consultation with the Northern Ireland Civil Service. We are in constant touch with the Department for Communities in Northern Ireland. I can reassure noble Lords that we are doing all we can to make sure that we work well with it. We hope that the current situation will change for the better in the near future.
I make it absolutely clear that the regulations make consequential amendments to domestic legislation; they do not make any changes to entitlement to benefit or payment—it is crucial to say that in response to both noble Lords’ questions and concerns. A multitude of references to the EU are made as we are currently members of it, but for only a few months longer. I do not have a list today of all the legislation that this references, but I am very happy to write to noble Lords to make very clear exactly which pieces of legislation this impacts upon.
The Government are committed to ensuring that the social security system works for everyone post exit day and these regulations will help to do this by fixing minor and technical changes to existing DWP and corresponding Northern Ireland domestic legislation. They are part of a package of legislation. We have already dealt with some legislation in reference to the payment of pensions. On that basis and with the proviso that I will write to the noble Lord, Lord McKenzie, with specific reference to those aspects of the legislation, I hope that noble Lords will support these statutory instruments.
Universal Credit
Lord McKenzie of Luton Excerpts(6 years ago)
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Baroness Buscombe
I am proud to say that this country provides more benefits for families than any other advanced nation. I do not recognise the estimates; it is not right to make estimates without any underlying evidence. We have come a long way since the cuts some years ago to which the noble Baroness referred. There were cuts right across the board, in all departments. For example, the cost of social security went up by 65% under Labour and was becoming totally unsustainable. We could not continue with that rise. We have therefore had to adjust and make some very difficult choices.
We are doing all we can, with the working tax allowance and increased support for childcare costs, to support children and families. An additional 80,000 working parents who are in receipt of transitional protection and who access support for childcare costs provided by UC are expected to benefit from these regulations. The support for childcare costs provided by universal credit, worth up to £1,108 per month for two or more children, is more generous than the system it replaces. However, the most important support that anyone in a family can give their children is being in work; setting a course for that family out of poverty—a hand up, not a handout—and being role models for the children. There are over 800,000 job vacancies at the moment. We want to do everything we can to support people into work, because that is the best way to lift children out of poverty.
Lord McKenzie of Luton (Lab)
My Lords, a moment ago the Minister said that we had come a long way. I am not sure that is how millions of people who have endured this Government’s cuts would view matters, even though a portion is put back in today’s announcements. The Minister said that home visits would be available for help with a claim. On what basis would that be? Would they be available as of right to anybody who seeks one? I recall that with ESA there were meant to be automatic home visits for people with mental health issues. I do not believe that ever happened. What assurances do we have that it will be robust in this case?
Baroness Buscombe
It is important to explain a little more about the test and learn process, which is one of the reasons why we are taking longer than we might to introduce the first tranche of managed migration. We are not doing this by ourselves. It is very much a co-design with a number of charities, the third sector and researchers to help us work out our monitoring. We will closely monitor the quality of communications which we will issue, and whether they are understood by recipients, before we increase the pace of migration. We are also making sure to put out letters that are easier to understand, and constantly working out what we can do. However, if we hear nothing from a claimant, we will offer home visits. That has to be an opportunity for those who are genuinely afraid of change. That is one reason why we on this side feel passionately. The less scaremongering around this system, the better. I put some of the blame on the media, which has not fully understood it.
We are trying to lift people out of the system that trapped them in poverty—on legacy benefits with cliff edges, where they could not work more than 16 or 24 hours a week without losing benefits. The brilliant thing about this simplification—merging six benefits into one—is that you do not lose your benefits. Your benefits may now increase by £1,000 before they begin to taper, and the taper rate has just been reduced from 40% to 30% of your standard allowance. I also remind the party opposite that when it left government and this party came into power—the noble Baroness may shake her head—this Government had to fund debt amounting to 10% of our GDP. That was the issue facing us.
Lord McKenzie of Luton
Would the Minister care to reconsider what she has just said about the taper rates being reduced from 40% to 30%?
Baroness Buscombe
My Lords, I am sorry, it should be the debt repayment rate. I am grateful to the noble Lord. I am so eager to get this right, and noble Lords may understand that there are quite a lot of numbers and it is quite technical. I am quite emotional about the fact that we are the party of social mobility and we have introduced a system that we genuinely believe will be better for everyone. It is, however, a very hard system to get right for everyone, because everyone is different—we are dealing with different situations and circumstances and we do not want people to fall through the cracks.
Employment and Support Allowance
Lord McKenzie of Luton Excerpts(6 years, 1 month ago)
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Baroness Buscombe
First, I want to make it clear that we are constantly looking at how we can make our procedures more robust. In fact, our Permanent Secretary is in discussion with the Public Accounts Committee about how we can do this. The key lesson that we have very much taken on board in developing our processes and our thoughts on managed migration is—as I have just said, and I will repeat it—that it is important that we engage properly with the claimants and that we do not have a system that is entirely automatic without the opportunity to understand up-to-date data, information and circumstances with regard to each and every claimant. That is to ensure that claimants do not lose out on benefits to which they are entitled, unlike the legacy benefits, which about 700,000 people are not receiving. That is about £2.4 billion because there is not sufficient contact.
Lord McKenzie of Luton (Lab)
My Lords, will the Minister say a little more about the reasons for these underpayments? Is it fundamentally a systemic problem, or simply a collection of ad hoc errors?
Baroness Buscombe
It is right to explain—indeed I did explain this in July—that the reality is that a mistake was made that should never have been made. No mistakes are acceptable when it comes to people who genuinely need this important support. What we did back in 2013 was respond to individual cases. Clearly, the department was not aware that there was a much bigger problem. We worked to legal advice at the time, and we took the view that the law prevented us from paying arrears beyond the date of the LH judgment in October 2014. An Upper Tribunal in Scotland endorsed that approach. The department is, however, now in a position to extend the payments back to the date of the original conversion from incapacity benefit to ESA. The department expects to pay back around £970 million in arrears between now and 2020.