Social Security (Personal Independence Payment) (Amendment) Regulations 2017
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Baroness Stroud (Con)
My Lords, I have been listening to the debate and am concerned that the nature of our discussion may not reflect the actions that the Government are taking. I understand that the Government are laying these regulations in response to a court case which has broadened the eligibility criteria of the PIP assessment beyond the original intent that this House voted for, at a potential increase in cost of £3.7 billion.
I want to be clear that I am pleased to be part of this House—a House that has done so much to ensure that the rights and needs of those with disabilities are upheld. That is why I have spoken on the importance of halving the disability employment gap, and why I have supported my noble friend Lord Shinkwin’s Private Member’s Bill.
Like all of us in this Chamber, I believe that a decent society should always recognise and support those who are most vulnerable. However, I have read carefully what the Minister said in the other Place, and I do not think that this is what is at stake here. Despite the wording of this fatal Motion and Motion to Regret, it is worth reflecting on the fact that we in this country rightly spend more on supporting people who are sick and disabled than the OECD average. We rightly spend around £50 billion a year to support people with disabilities and health conditions. However, if you listened to the speeches in the Chamber this evening, you would think that these regulations were about to reverse this level of support and the protections that are in place. Will my noble friend the Minster confirm that this is not the case and that the level of support that this House legislated for will be protected?
The wording of the regret Motion tonight suggests that the regulations discriminate against people with mental health problems and could put vulnerable claimants at risk but, again, it is my understanding that the Government have laid these regulations to address the impact of the court case which broadened the eligibility of PIP beyond the original intent voted for by this House. Will the Minister confirm that this is indeed the case and that there are no further savings beyond those that were legislated for here in this House that are being sought?
Both Houses of Parliament voted for the changes from DLA to PIP, and one key reason for this was a recognition that PIP focuses support precisely on those experiencing the greatest barriers to living independently. At the core of PIP’s design is the principle that awards of the benefit should be made according to a claimant’s overall level of need, regardless of whether claimants suffer from physical or non-physical conditions, and it has been good to see that 28% of PIP recipients with a mental health condition get the enhanced-rate mobility component, compared to 10% receiving the higher-rate DLA component, and that 66% of PIP recipients with a mental health condition get the enhanced-rate daily living component, compared to 22% receiving highest-rate DLA care. It is precisely because PIP improves support to those with mental health problems, addressing a discrimination inherent in DLA, that this House supported the legislation in the first place. Will the Minster confirm that this remains not only the intent of PIP but the reality, and that the regulations restore the original intention of PIP, which was to make sure there is a sustainable benefit to provide continued support to those who face the greatest barrier, whether physical or mental, to living independent lives?
Lord McKenzie of Luton (Lab)
My Lords, I shall forgo the right to speak as extensively as I otherwise would, but I shall do three things. First, I very much support the Motion of my noble friend Lady Sherlock, and the manner in which it was spoken to. Then I wanted to ask the Minister a question about the original policy intent, because we have heard it as a justification for these regulations on a number of occasions. Can we be very clear on this? The Government pray in aid the PIP assessment guide as evidence to the original policy intent, but can we understand precisely when that and the detail were discussed by Parliament—not by officials but by Parliament—to be able to justify the claim that was made?
Finally, on the finances, we should not forget in all this that PIP was introduced against a backdrop of the predecessor, DLA, having a 20% cut in its budget. We talk about the implications of government costs of £3.7 billion, but let us just remember that forgoing that cost to government means resources to disabled people are lost as well. While £3.7 billion is what the Government might save from this, the losers are the disabled community, to a massive extent.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Henley) (Con)
My Lords, I get the impression that the House would like me to move this debate towards a close, so I shall deal with some of the points that have been made during what has been a wide-ranging and, at times, an obviously impassioned debate all across the House. I recognise the concerns that have been raised and welcome the opportunity to respond on behalf of the Government. I hope to make matters clear, and provide reassurances on a number of points.
Class 4 National Insurance Contributions
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Lord Young of Cookham
The settlement for the current year has been made and the additional funding that was announced in the Budget will stand, so all the commitments that have been made in the Budget will remain.
Lord McKenzie of Luton (Lab)
My Lords, there is an air of inevitability about this decision today. We have seen it built on the folly of those manifesto commitments referred to by the noble Lord, Lord Higgins. There is another issue that has run through lots of Budgets, which is the internal process of government and the checks and balances that are applied to Budgets, which are much weaker than one would see in most legislation. Anyone producing a Bill in government has to go round every department getting input into it, and there is challenge. That process irons out some of the problems that we have seen emerge not only in this Budget but, to be fair, in previous Budgets and announcements as well. On the specific commitment today about no changes to class 4 contributions, does that apply to the basis of calculation of thresholds as well as the rates?
Lord Young of Cookham
That is a good question. The manifesto commitment was actually about the rates. So far as the thresholds are concerned, our policy has been to uprate them each year in line with CPI, I think. We have no plans to change that.
Civil Society and Lobbying
Lord McKenzie of Luton Excerpts(8 years, 3 months ago)
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Lord McKenzie of Luton (Lab)
My Lords, I too congratulate my noble friend Lady Hayter on securing this important debate and for the clarity and conviction with which it was introduced. It is wide-ranging in its scope but, like others, I propose to speak in support of the role that charities can play in a democracy, and explain how they can reach the parts which government sometimes cannot. I do this by sharing the story of one particular charity, NOAH Enterprise—New Opportunities And Horizons—of which I am privileged to be a trustee, as recorded in the register of interests.
I offer the description of its activities as evidence of the need to promote the importance of charities’ campaigning as well as their role in service delivery at the sharp end. I join those who argue for the rejection of barriers that place restrictions on charities, preventing them imparting their experience and pressing policy and funding issues on government, central or local, if for no other reason than that it would otherwise be a tragic waste of their experience and learning, often gained in the most difficult circumstances. It would be letting down the very people who these charities exist to serve.
NOAH is a charity that, out of Christian conviction, seeks to support the most disadvantaged members of the local community, particularly those who are homeless or at risk of homelessness, who struggle with drug and alcohol abuse or sleep rough, who have fallen into poverty, or who are otherwise marginalised and socially excluded. It endeavours to do this in a number of ways, but fundamentally by a holistic offering of services. It offers street outreach, persuading people to engage with the services on offer, including welfare—essentially food, clothing and personal hygiene—access to a GP surgery, mobile dentistry and a mental health clinic. It will seek accommodation for its clients and give advice on budgeting. It will further provide basic training in life and vocational skills and can provide work experience. Part of this activity is funded from a social enterprise involving furniture restoration, as well as from traditional charity shops. This enables work experience to be offered in such ways as warehousing, drivers’ assistance, woodworking, administration and retailing.
To give all this some context, in the year to 31 March 2016 there were 486 accepted referrals of people who needed help of one sort or another, while 22,000 distinct outreach visits were made and 6,426 breakfasts were served as well as some 17,000 lunches. There were also 484 people enrolled on courses at the new NOAH Academy, with 71 reaching employment. Moreover, it can claim numerous active partnerships with a range of statutory and third sector agencies, churches and community groups. It has also had the benefit of volunteers—around 300 a month at the current level—who support the operations in a variety of ways. This might be in furniture recycling, cooking for the day centre or working to provide food in the evening.
For NOAH, this level of support is vital to its continued existence. The motivation for the volunteers might be varied but many undoubtedly develop an understanding of the challenges of the most disadvantaged, which encourages them to give a voice to those without one. Many become unofficial champions of NOAH, spreading the word and building the support network—campaigning about what NOAH does and what needs to change. In a sense, they are like the “Games Makers”: for them, it is a chance to matter. NOAH has also been the recipient of the CSR efforts of a number of corporates, large and small, to the mutual benefit of all. This has been a two-way process whereby a few corporates have taken work placements.
The focus of NOAH is to assist and support the poorest on a journey out of destitution and towards a sustainable future. As the NCVO says, it addresses the causes of social problems and not just their effects. Its approach is to provide a pathway from living on the street to temporary accommodation and daycare, through to settled accommodation, training, work experience and preparation for employment—and then into employment. This pathway can be joined at any point. For individuals on that journey, there is the benefit of its components being delivered under the one trusted umbrella of NOAH, much of it delivered on behalf of the state but not by the state.
As with many charities, the era of austerity has meant pressure on its finances, particularly from statutory sources and at a time when needs are greatest. However, its income sources last year included grants from statutory bodies for programmes such as Single Persons Homeless, the street drinkers project and Jobcentre Plus. Continuity remains a difficulty. Thirty-one foreign nationals were repatriated at their request last year, through a fund financed by Luton Borough Council. It also continues to get support from the Irish Government under their Emigrant Support Programme, which has been commendably sustained despite the recent recession.
Although there are, reasonably, always grant conditions, so far as I am aware nothing has yet emerged which prevents the charity raising public awareness and campaigning, particularly on poverty and homelessness. NOAH’s second annual conference took place in February with the theme of working together to address poverty in Bedfordshire. It was focused on statutory and third sector decision-makers in the county.
If I had to summarise NOAH’s benefits as an example of what a locally based charity can deliver and why it should be encouraged, I would list that it is driven by a clear and consistent vision; that it might be buffeted from time to time by the policy and funding swings of the statutory sector, and may have to adapt sometimes, but its focus is clear; that it can join things up in a manner which we know that government, local and national, finds difficult; that it is anchored in the community through its many partnerships and participation in local life, and through its proactive and articulate chief executive; and that it has the capacity to build trust among its service users and the wider community. It can reach the most excluded in our community, to offer hope, and seeks to recognise the fundamental dignity and worth of every individual.
Bank of England and Financial Services Bill [HL]
Lord McKenzie of Luton Excerpts(8 years, 7 months ago)
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Baroness Kramer
My Lords, I echo the objections just raised by the noble Baroness, Lady Drake. It is quite inexplicable that “retrospective” does not mean that the new regime will be recalculated from the date that people were able to access their pension pots. It seems equally unfair for people to have paid an inappropriate exit fee a year ago as it is for them to pay an inappropriate exit fee a year from now. Has the Minister considered how this will tend to inhibit decision-making by families until the new regulations are revealed? Instead of making the best decision for the family, there will be great pressure to delay that decision until the rules are clearer and, presumably, the exit fees are removed.
The amount of money involved in this process cannot be substantial but to the individual family that has been impacted, it is certainly significant. I really do not understand the Government’s thinking on this issue.
Lord McKenzie of Luton (Lab)
My Lords, I thank the Minister for his early warning of this amendment, for facilitating the meeting with officials and for addressing at that meeting some of the incisive and expert questions posed by my noble friend Lady Drake. As we have heard, the new clause places a requirement on the FCA to make rules to prohibit or cap certain early exit charges in regulated schemes which act as a deterrent to people accessing their pensions under the new pension freedoms. So far as it goes, this should be supported.
As the Minister’s letter of 16 March sets out,
“after the reforms took effect last April, it has become increasingly clear that early exit charges were preventing some people from accessing their pension flexibly under the freedoms”.
This was substantiated by the government consultation and evidence-gathering by the FCA and the Pensions Regulator. This process identified a number of weaknesses in the application of the freedoms policy: not just the early exit charges but a lack of clarity in the process for transferring pension savings and uncertainty around the need for financial advice when making transfers involving safeguarded benefits.
Although early exit charges are not an issue for the majority of those eligible to access freedoms, the Government have concluded that significant numbers of eligible individuals face charges which in absolute or relative terms present a “real barrier” to early access. This begs the obvious question of why this matter was not addressed as a fundamental component of the design of pensions flexibility in the first place. Why has it seemingly come as such a surprise to the Government that these early exit charges exist and could act as a deterrent? This is symptomatic of the rushed nature of the introduction of this policy more generally, which lacked the consultation and consensus-building that have typically characterised good pensions policy development.
It might be argued that before the introduction of the FCA cap—to be in place before the end of March 2017, as we have heard—there has been no detriment because by definition exit fees could not have been a deterrent to the 400,000 times that pension pots have been accessed to date. But it seems that exit fees could be a deterrent, making it less likely, weighed against other factors, that someone would access their pension pot, without these fees being an absolute bar. That is why, as my noble friend has argued, we consider that any capping should be applied not only to existing as well as new contracts but to pensions accessed from the start of the pension freedoms regime in 2015, a point supported by the noble Baroness, Lady Kramer.
Housing and Planning Bill
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“Development corporations: objects and general powers
(1) Section 136 of the Local Government, Planning and Land Act 1980 (objects and general powers) is amended as follows.(2) After subsection (2) insert—“(2A) Corporations under this Act must contribute to the long-term sustainable development and place making of the new community.(2B) Under this Act sustainable development and place making means managing the use, development and protection of land and natural resources in a way which enables people and communities to provide for their legitimate social, economic and cultural wellbeing while sustaining the potential of future generations to meet their own needs.(2C) In achieving sustainable development and place making, development corporations should—(a) positively identify suitable land for development in line with the economic, social and environmental objectives so as to improve the quality of life, wellbeing and health of people and the community;(b) contribute to the sustainable economic development of the community;(c) contribute to the vibrant cultural and artistic development of the community;(d) protect and enhance the natural and historic environment;(e) contribute to mitigation and adaptation to climate change in line with the objectives of the Climate Change Act 2008;(f) positively promote high quality and inclusive design;(g) ensure that decision-making is open, transparent, participative and accountable; and(h) ensure that assets are managed for long-term interest of the community.”(3) Section 4 of the New Towns Act 1981 (the objects and general powers of development corporations) is amended as follows.(4) For subsection (1) substitute—“(1) The objects of a development corporation established for the purpose of a new town or garden city shall be to secure the physical laying out of infrastructure and the long-term sustainable development and place making of the new community. (1A) Under this Act sustainable development and place making means managing the use, development and protection of land and natural resources in a way which enables people and communities to provide for their legitimate social, economic and cultural wellbeing while sustaining the potential of future generations to meet their own needs.(1B) In achieving sustainable development, development corporations should—(a) positively identify suitable land for development in line with the economic, social and environmental objectives so as to improve the quality of life, wellbeing and health of people and the community;(b) contribute to the sustainable economic development of the community;(c) contribute to the vibrant cultural and artistic development of the community;(d) protect and enhance the natural and historic environment;(e) contribute to mitigation and adaptation to climate change in line with the objectives of the Climate Change Act 2008;(f) positively promote high quality and inclusive design;(g) ensure that decision-making is open, transparent, participative and accountable; and(h) ensure that assets are managed for long-term interest of the community.””
Lord McKenzie of Luton
My Lords, I rise to speak briefly—that was the plan—to Amendment 103, tabled by my noble friends Lord Kennedy and Lord Beecham. In many ways, it picks up on a debate that we had yesterday. The amendment inserts place-making objectives for both urban development corporations in the Local Government, Planning and Land Act 1980 and for new town development corporations in the New Towns Act. It was prompted by the situation in which we find ourselves—a country with a major housing crisis—looking back to those times when it was recognised that we needed to build on a large scale if we were going to make inroads into the housing crisis. That took us back to the era of new towns. The realisation that this needs to be done is encouraging many to look back at that programme, through which Britain built 32 new towns and today provides homes for more than 2.5 million people. The creation of those new towns was made possible because of legislation that is still on the statute book today, but that does not mean it does not need to be updated. The purpose of our amendment is to ensure that the objectives of this are firmly linked to the long-term sustainability, development and place-making of the new communities. Under these amendments,
“sustainable development and place making means managing the use, development and protection of land and natural resources in a way which enables people and communities to provide for their legitimate social, economic and cultural wellbeing while sustaining the potential of future generations to meet their own needs”.
The amendment addresses both the Local Government, Planning and Land Act 1980 and the New Towns Act 1981. I shall not spend time going further into the detail of that as it is set down clearly in the amendment.
I note that there are two further amendments in this group, which have not yet been spoken to, about the need for proper consultation. That is also a reflection of the more modern era, and we support them. I beg to move.
Baroness Evans of Bowes Park
My Lords, the amendments are indeed very timely. On Amendment 103, I say at the outset that I wholeheartedly endorse the importance of creating sustainable, well-designed places and I agree that, as the Budget announcement makes clear, statutory delivery vehicles can have an important role to play in achieving that. However, I echo what my honourable friend from the other place said: I am wary of creating new definitions and prescribing a long list of objectives for new town development corporations and urban development corporations, however worthy those objectives are in principle.
The NPPF already provides a clear view of what sustainable development means in practice, and to a very large extent it incorporates the objectives set out in the amendment. However, I accept that there is a case for change, and I am happy to look further at the objectives of the new town development corporations and how they could be extended, with a view to introducing an amendment that reflects this debate on Report. I hope that in light of this undertaking the noble Lord, Lord McKenzie, on behalf of his colleagues, will withdraw his amendment.
I am grateful to the noble Lords, Lord Best and Lord Taylor, for Amendments 103A and 103B. The Government are committed to updating the New Towns Act 1981 so that we can better support local areas that want to bring forward new garden towns and villages. I emphasise that our focus is on locally led new garden towns and villages, and we will back proposals that have been developed locally with local support. We will absolutely not impose new towns and villages on communities.
The amendments set out one of the key changes that need to be made to the New Towns Act 1981, which is sound in its fundamentals but is showing its age. I am supportive of a modernised process that is consistent across both types of delivery vehicle, and therefore ask noble Lords not to move these amendments with a view to the Government producing similar amendments, which we will table on Report. I hope that I have reassured noble Lords.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lords, Lord Taylor and Lord Best, and my noble friend Lord Harris for their support for these amendments. I am particularly grateful to the Minister for the commitment that even though she is not able to accept the amendments in the terms in which they appear on the Marshalled List, there will be consideration and some government amendments moved on Report. Between now and the time when those amendments are to be tabled, we would welcome an opportunity for discussion about the content, and I am sure that the noble Lord, Lord Taylor, would like to be involved in that as well.
Lord Taylor of Goss Moor
Obviously I will not seek to press these amendments but I very much welcome what the Minister said. I would have liked to have spoken at great length about how much I welcome what is clearly a cross-party consensus on moving forward on this basis. It has the potential to provide a huge and new opportunity for local communities to deliver fantastic places, not just fantastic homes that people can afford.
Lord McKenzie of Luton (Lab)
My Lords, like the noble Lord, Lord Greaves, we have concerns with the amendment. The Countryside and Rights of Way Act 2000 was one of the most successful and supported pieces of legislation in this area of policy—although not always in your Lordships’ House. It strengthened and consolidated the aims of Labour’s original National Parks and Access to the Countryside Act 1949. Since then, the most recent Labour Government introduced the Marine and Coastal Access Act 2009, extending the right further.
We on these Benches are concerned that the amendment would unpick the agreement of the Natural England stakeholder working group which, as we have heard, brings together users, landowners, local authorities, ramblers and the Country Land and Business Association. I urge the noble Lord, if he wants further proposals to be brought forward, to work with the stakeholder working group to deliver a consensus on them.
I might also ask why the noble Lord feels the measure necessary when, as I understand it, there are already powers that permit landowners to apply to a local authority to make changes to such footpaths. A presumption in favour of a diversion would take power away from local authorities and reduce the ability of communities to have a say. I am not sure that that is in accordance with the Government’s localism agenda, although that is a bit thin these days. Local communities, through their local councils, should be able to shape their local area. We should support the rights of all to access the countryside and maintain existing rights of way, especially as the local countryside offers our citizens benefits in terms of health, exercise and mental well-being.
Baroness Williams of Trafford
I applaud my noble friend Lord Skelmersdale’s efforts to help those who face problems with a public right of way that passes through their farm or garden. He will know through his contact with Ministers in Defra that the Government have considerable sympathy for those people who face these issues and who may feel that the system has let them down. Where these cases occur, people may experience acute problems: my noble friend has cited some examples, and I can think of others. Although the numbers are comparatively few, and we should ensure that any changes we make to legislation are proportionate to the extent of the problem, nevertheless, the Government are determined to help by putting in place a remedy.
Noble Lords may recall the passage of a suite of measures in the Deregulation Act 2015 which aimed to reform the system of recording and diverting public rights of way, to which my noble friend referred. The Government are now in the process of implementing these measures, which will come into effect later this year. We believe that the combined effect of these measures, which received cross-party support in both Houses, will make a significant difference, and that we should not legislate further before seeing how they work out in practice. A package of measures such as that, which is being implemented through agreement among stakeholders, is far more likely to prove successful in practice.
There is clear agreement among the stakeholders on the working group that developed the package of reform that the major difficulty for landowners is in getting local authorities to make a diversion or extinguishment order in the first place. Our plans to implement the right to apply for such orders will overcome this. The right to apply will enable a landowner to make a formal application for the diversion or extinguishment of a public right of way. With that will come the right to appeal to the Secretary of State if the authority rejects the application or fails to act on it. Therefore, local authorities will no longer be able to ignore requests or dismiss them out of hand. They will be obliged either to make an order or to be prepared to justify their reasons for not doing so on appeal to the Secretary of State.
The provisions in the Deregulation Act allow the right to apply to be extended to land-use types other than agriculture, forestry and the keeping of horses— for example, private residential gardens. The right to apply will be supplemented by guidance that will effectively act as a presumption to divert or extinguish public rights of way that pass through the gardens of family homes, working farmyards or commercial premises where privacy, safety or security are a problem.
The noble Lord references guidance and I will come back to that in a moment. A further hurdle is to get an order confirmed. However, according to the Ramblers, which keeps accurate records of these matters, of the 1,257 diversion orders which have reached a conclusion in the past three years, 94% did not attract any objections. Of the 6% that did, less than 1% were not confirmed following submission to the Secretary of State. The guidance will give authorities more scope to confirm orders made in the interests of the landowner in circumstances where a right of way may cause hardship because it goes through the garden of a family home, a working farmyard or other commercial premises.
There is no intention to water down the guidance, which was deposited in the House Library during the passage of the Deregulation Act. Defra officials continue to work with the stakeholder working group and the Intrusive Footpaths Campaign to finalise the drafting. We believe that the combined effect of the right to apply and the guidance will have the desired effect and we should not rush to legislate further before seeing how these measures work in practice. Moreover, under the right-to-apply provisions, the Defra Secretary of State will be the confirming authority for all disputed orders.
I am happy to reaffirm the commitment made by the previous Government that we will review, within two years of implementation of the reforms package, how effective the right-to-apply provisions and the accompanying guidance have proved to be. The review will send a message to authorities that the Government are determined that the new policy should work and that if guidance does not bring about sufficient changes, we will consider the introduction of further measures.
The amendment, which was also spoken to by my noble friend Lady Byford, is also concerned with public rights of way. However, she refers to urban routes in current use which are not recorded on the legal record of public rights of way, the definitive map and statement. The amendment would reduce the work of local authorities by removing a whole class of routes from the work to update the record.
I referred earlier to the package of measures in the Deregulation Act 2015 concerned with improving the processes for diverting, extinguishing and recording public rights of way. I also mentioned that the Government are working closely with the stakeholder working group which developed the original package of measures.
The secondary legislation will include regulations made under Section 54(1) of the Countryside and Rights of Way Act 2000—mentioned by the noble Lord, Lord McKenzie—which allows the Secretary of State to specify descriptions of unrecorded routes which will not be extinguished in 2026. The working group and the Government are mindful of the need to consider urban as well as rural. We think that no further primary provisions are required to achieve the outcome sought by my noble friend. With these assurances, I hope that my noble friend will be persuaded to withdraw the amendment.
Trade Union Bill
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Lord Dykes
My Lords, I add my thanks to the noble Lord, Lord Kerslake, for moving this amendment, and to the noble Baroness, Lady Watkins, for what she has just said. Once again this indicates that on the unaffiliated or Cross Benches there has been a considerable collective contribution of good suggestions to restore a sense of balance and proportion into what was far too ideological a matter in the original drafts of the documents that eventually became the Trade Union Bill launched by the Conservative Party in government.
I am advised by the research I sought to do that these matters are very important from the point of view of ordinary, routine, daily trade union activity with employers in the context of the public sector and private company entities in which they work. The main activities in the practical usage of facility time include: negotiating improved pay and conditions for members and the wider workforce and accessing specialist union training on employment rights; accompanying individuals in their disciplinary or grievance hearings; carrying out health and safety duties; training people who are not yet trained on health and safety matters; and promoting learning opportunities and opportunities for further intellectual activity in the entities in which they work.
Those are routine matters, not matters that, I am sure, in the original draft text in Conservative Central Office, before it became the Bill launched by this Government—on the basis of only 24% of the population—were ideological clauses based on the belief that there was some kind of union racket in this facility time element. That simply is not the case on all the evidence we have. Once again I hope that the Government will be tempted to see reason on this and accept the amendment.
Lord McKenzie of Luton (Lab)
My Lords, I support Amendment 20 and the arguments advanced by the noble Lord, Lord Kerslake. I will concentrate my brief remarks on the provisions in the Bill that relate to safety reps, and in doing so I declare my interests as president of RoSPA and a vice-president of the LGA. Concentrating on health and safety reps is not in any way meant to undermine the broader thrust of the amendment as it applies more generally.
As a preamble, I reiterate points raised in Committee about the importance of TU safety reps and the positive impact that they have on the safety culture of their employers. There is an abundance of evidence about the importance of effective health and safety systems and that these systems work best when trade unions and employers work together. That is why the Health and Safety at Work etc. Act gave legal backing to union safety reps and why, rather than seeking to undermine or weaken the system, the Government should be concerned with its promotion and enhancement.
I would argue that the Government are in error in including health and safety reps’ time as facility time. Facility time is time off from an individual’s job granted by the employer to enable a representative to carry out their trade union role. We have heard why this should not be constrained in the manner proposed in the Bill. A safety rep, however, although appointed by a trade union, does not fulfil a trade union role as such. It is a specific legal position with defined functions, and the regulations state that in this capacity it must represent all workers in a workplace, not just union members.
This comes about not only from the Health and Safety at Work etc. Act but by Article 11 of the 1989 EU framework directive which deals with consultation and participation of workers. The directive specifically states:
“Employers must allow workers’ representatives with specific responsibility for the safety and health of workers adequate time off work, without loss of pay, and provide them with the necessary means to enable such representatives to exercise their rights and functions deriving from this Directive”.
There is no limit on this, but it would have to be reasonable. The UK regulations use the phrase “as shall be necessary”, which will obviously vary from workplace to workplace and from time to time. The exercise of reserve powers under Clause 13, which are triggered by consideration of the information requirements of Clause 12, would be entirely inconsistent with the directive, which focuses on the need for adequate time off to exercise rights and functions. The latter must have regard to the circumstances of individual workplaces, which, as I say, can vary from location to location and from time to time.
Moreover, the legal requirement under the directive is for the employer to comply in allowing time off. This is as it should be, because it is generally the employer who creates the risks which have to be managed. It is not for the Government to second-guess in respect of either public sector workplaces in aggregate or individual workplaces in particular. Can the Government spell out for us the circumstances in which they envisage using these reserve powers to limit the time of safety representatives otherwise agreed between an employer and a trade union? What evidence do they have that there is an abuse of the system as the law stands? The Minister in the other place, Nick Boles, is on record as acknowledging that:
“An employer must allow them”—
safety reps—
“as much paid time off work as is necessary or reasonable to perform their statutory functions, and we absolutely do not propose to change that rule”.—[Official Report, Commons, Trade Union Bill Committee, 22/10/ 15; col. 352.]
In that case, why they are potentially subject to reserve powers in Clause 13 and why will the Government not remove those powers?
There is one other point. The Bill applies only to trade union representatives. The Minister will be aware that there are two sets of regulations covering workplace representatives: the 1977 regulations, which apply only to trade union reps, and the 1996 regulations, which apply to representatives for workplace safety in non-unionised workplaces. If the Bill is passed in its current form, the Government will be able to restrict time off given to trade union representatives in the public sector but not to non-trade union ones. Is this the intention and why do the Government seek to discriminate against trade union reps in this manner? Can the Minister tell us how this measure is consistent with the fairness obligation that was set out at the start of our proceedings?
Lord Bridges of Headley
My Lords, I am grateful for the contributions this evening. I will try to keep my remarks relatively brief but hope to explain why I believe this measure is both proportionate and reasonable. First, as has been said, the reserve power may never need to be used. Our intention is that the transparency measures that I have outlined before, as noble Lords know full well, should encourage employers to moderate their spending where necessary. To pick up on the point that the noble Baroness, Lady Watkins, made, managers will, for the first time, be able to easily compare their spending with others in their sector. However, if for some reason inefficient spending is not addressed, it is only right that there is a reserve power to ensure that wasteful use of taxpayer funding does not continue.
Noble Lords should remember that even if this power were to be used, as I have said before, facility time will not be banned, as the Government note the considerable contribution that it makes. That brings me to the process that would have to be followed if these powers were to be exercised. First, as the reserve powers are subject to the affirmative resolution process, this House would have the opportunity to debate and scrutinise any cap that may be proposed. Secondly, crucially, implementation of the reserve powers must be rational and evidence based. Ministers must have regard to the relevant information to make their decision. If Ministers do not do so, they invite upon themselves the prospect of judicial review proceedings. The cap is a power of the last resort, and cannot be applied without due and proper consideration of all relevant factors.
I now turn to what might trigger the cap. The reserve powers are most likely to be triggered in one of two circumstances. First, if unjustifiably high patterns of spend were found to persist in certain parts of a sector, that would signal a need to investigate further why they were happening. If the answer were to be that particular parts of a sector needed to do more to control spending, a decision may be taken to apply a cap to that sector or part of that sector. Secondly, if a significant proportion of the cost of facility time is spent on trade union activities as opposed to duties—a key difference—across a sector, we may question why expenditure for which there is no statutory entitlement is being given such priority. We may conclude that such spending does not reflect reasonable prioritising of public funds and suggest applying a cap at a level we believe is reasonable.
If either of these situations were to arise, the Minister must present the case for using the reserve powers to Parliament to secure affirmative resolution. Before the Minister can do that, as I have said, they will have gathered trend data showing patterns of spend to support a rational, evidence-based case for why a cap should be made at a particular level. If Ministers do not feel they have sufficient data to arrive at a decision, they may also choose to consult the relevant sector. This House would of course have the opportunity to debate that cap.
I note the concerns that this is anti-localism but if a cap were to be imposed, it would still be up to local managers to decide how to manage facility time within the cap: for example, by deciding how they should prioritise trade union duties as opposed to activities. Working within budgets, while still meeting statutory duties, is not a novel concept in the public sector.
Turning specifically to devolution, I would argue again that this matter of industrial relations is entirely within the legislative competence of the United Kingdom Government. If an organisation is publicly funded, it should be held to account for how taxpayers’ money is spent. Taxpayers in Scotland and Wales have the same right to transparency about how much money and resource is dedicated to industrial relations—a reserved matter—as taxpayers in England.
A valid concern was raised about the effect of a very restrictive cap, were one to be placed on facility time spending, and what that might do as regards health and safety obligations. I cannot envisage any circumstances under which this Government would introduce such a restrictive cap that important statutory obligations could not be met. We would certainly take account of what was necessary to ensure such union duties could be properly performed. After all, to do otherwise would leave the Government exposed to challenge by judicial review. For that reason, we do not expect there to be any conflict with employers being able to meet their statutory duties, but we are not going to dictate to them the minutiae of how they may do that. As a final reassurance, if required, the Bill contains the power to make exceptions to the cap to meet statutory obligations.
At the end of the day, by removing the cap entirely, the Government would be able to point to where taxpayers’ money could be saved or better spent, but be unable to do anything about it. Government needs the power to act in a reasonable and accountable way. Under our proposals, this House will have the opportunity to scrutinise any cap, were one to be introduced. Ministers must have regard to relevant information to make their decision; failure to do so risks judicial review. Union duties such as health and safety will remain a statutory obligation. With that in mind, I ask that the noble Lord withdraws his amendment.
Lord McKenzie of Luton
Before the noble Lord sits down, could he just deal with the point about the difference between non-trade union reps being covered under one set of regulations and trade union reps under another? Why is that discrimination being allowed in the Bill?
Lord Bridges of Headley
My Lords, we need to make sure that taxpayers’ money is properly accounted for, wherever it is spent. My understanding is that that is the rationale behind this.
Bank of England and Financial Services Bill [HL]
Lord McKenzie of Luton Excerpts(9 years ago)
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Lord McKenzie of Luton
My Lords, I will speak briefly to Amendment 25. I thank the noble Lord, Lord Bridges, for his courtesy in organising a meeting with officials and for his helpful letter of 14 December. Having said that, I am bound to say that it is not helpful to receive the Government’s response to their consultation on the secondary annuity market just this morning, particularly given that the consultation closed on 18 June—six months ago. This is simply not the way to make good legislation and I look to the Minister to undertake that we will have the opportunity to return to this matter at Third Reading, should our further examination of the government response identify issues which raise concerns.
Clause 27, together with Amendment 25, provides a broad framework for aspects of the secondary annuity market, but much is left to regulation: relevant annuities, relevant interests, exempt persons, criteria determining the proportion of a person’s financial resources and appropriate advice. Yet more will be dealt with via FCA rules, although I understand that this will be subject to consultation in 2016. We are clearly not going to be able to see even draft regulations by the time the Bill leaves this House, and although the government consultation response fills in some of the blanks, there is still much that is unknown. My noble friend Lady Drake has pressed the recommendation that at least the regulations concerning exempt persons should require the affirmative procedure, as recommended by the Delegated Powers and Regulatory Reform Committee. Like my noble friend I would press that matter on the Minister and hope that he will respond positively.
If there is to be a secondary market in annuities, we agree that as well as extending Pension Wise to provide free and impartial guidance to those with a relevant interest in an annuity there should be a requirement to seek financial advice before such annuities can be sold. A particular bone of contention is the protection of dependants and beneficiaries, an issue which, as my noble friend said, impacts disproportionately on women. Although this is acknowledged in the government response, they are simply asking the FCA to consider whether a requirement could be placed on the annuity provider to ensure the dependant or beneficiary of an annuity has consented to an assignment and to consider further rules for consumers with vulnerable characteristics. The Government are also passing to the FCA consideration of the challenges arising from their being unnamed beneficiaries. It will be important for there to be clarity on these matters by April 2017. What will happen if there is not?
It appears that the Government are not going to prohibit the assignment of an annuity for those on means-tested benefits, as my noble friend said, or for those meeting social care costs, but will look to changing guidance to help people understand the deprivation of income and capital rules. Perhaps the Minister might say more, given the complexity of these issues, about how robust this consumer protection will be.
It would seem that the secondary market will not be without its complications: there will be individual annuity holders; there may be beneficiaries and dependants; there will be purchasers of rights of an annuity under a specific regulated activity; there will be a further regulated activity for providers buying back annuities; there will be regulated intermediaries; there will be IFAs providing mandatory regulated advice; and there will be authorised entities to check that holders of a relevant annuity have received appropriate financial advice. Given this plethora of parties, how confident is the Minister that conflicts of interest can in practice be avoided? Where are the costs of all of this going to fall? Who, in particular, is going to meet the costs of an authorised entity checking to see that appropriate financial advice has been received? These arrangements also of course mean that the annuity providers will be under no obligation to permit assignment of annuity payments in the first place.
The Government appear, again as my noble friend said, to have changed their mind on allowing providers to buy back their annuities through intermediaries. Can the Minister say more about how the originally perceived consumer detriment of this is to be managed? The Government do not seem to have resolved some of the basic operational issues. What is their current position on maintaining a central death register?
The Government will not restrict any entities from purchasing on the tertiary market, nor do they seem minded to place restrictions on buyers’ abilities to reassign annuities once purchased. However, they are looking at preventing UK retail investors from purchasing rights under annuities that are reassigned on the tertiary market, to protect them from a complex financial product. We would agree with that approach. It seems that the prospect of securitisation or unbundling in the tertiary market leaves scope for the tax planners.
The consultation response states that the Government want the secondary market for annuities to be fair, simple to understand, cost effective and operationally deliverable. It is clearly a long way from that. There are a host of issues still to settle but none more important than the protection of consumers. All of this is in circumstances where the Government expect that, for most annuity holders, continuing to hold the annuity income will be the right decision. I am not sure where this will all end up but we will not, for the time being, oppose this amendment.
Lord Davies of Oldham
My Lords, I am not here to pile Pelion upon Ossa. I counted that at least 12 questions of considerable complexity have been addressed to the Minister, and all of them are important. My two noble friends have of course reflected the considerable anxieties on this side with regard to the position with pensions, particularly for secondary annuities. I hope the Minister will do his level best to respond to real questions that need to be addressed, which would also minimise the amount of time we will need to spend at Third Reading on the issue.
Bank of England and Financial Services Bill [HL]
Lord McKenzie of Luton Excerpts(9 years, 1 month ago)
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“Pensions guidance: review
The Secretary of State shall, before any regulations under section 333A(2A) of the Financial Services and Markets Act 2000, as inserted by section 24(3) of this Act, come into force—(a) undertake and publish a review of—(i) the progress of provisions enabling a person to access a cash balance or other money purchase benefits, and (ii) the extent to which pension guidance has in practice empowered consumers to make informed and confident choices about their pension arrangements;(b) introduce arrangements for establishing a research programme to track consumer outcome with respect to the pensions guidance;(c) review the adequacy of reporting requirements for pension providers;(d) strengthen safeguards against pension scams through the provision of misleading guidance or advice;(e) clarify the distinction between pensions guidance and pensions advice;(f) identify—(i) the specific risks which consumers may face in the secondary annuity market, and (ii) any improvements, additional safeguards and resourcing which are required for an extended pensions guidance service to help individuals make decisions in connection with transferring or dealing with the right to payments under an annuity.”
Lord McKenzie of Luton (Lab)
My Lords, I should explain that this is a probing amendment at this stage. Indeed, it was prompted by Clause 24, which of course is an enabling provision to allow Pension Wise to be expanded in due course to cover guidance for a secondary annuity market. It also enables us to pursue issues that arise from the House of Commons Work and Pensions Committee report covering guidance and advice. This is not to revisit our support for the changes to the pension regime introduced from April 2015, although we previously expressed our concerns about the speed with which such a dramatic policy shift was introduced and the lack of consultation that would normally characterise such a change. I thank the Minister for his letter of 4 November that followed up on some matters raised at Second Reading and which, to an extent, overlaps with this amendment.
We welcome the announced delay to the introduction of the secondary annuity market until 2017, given the reported responses to the Treasury consultation, in particular because of expressed concerns about the potential costs of operating a scheme and the challenges of enabling an in-depth package of support for consumers making their decision—I will say more on this in a moment. The Bill makes reference to enabling guidance for “relevant interests” for “relevant annuities”. Perhaps the Minister can give us news of what these terms may cover or, at least, when we might expect some news.
The House of Commons Select Committee raised a number of concerns about the current arrangements. A key concern was the lack of data and, indeed, a reticence to publish statistics, which inhibits proper scrutiny of how the reforms are progressing. It recommended that the Government should publish, or cause to be published on a quarterly basis, customer characteristics, including pension pot size and other sources of retirement income; take-up of each channel of guidance and advice; reasons for not taking up guidance and advice; subsequent decisions taken; and reasons given for those decisions. It will also be important to have a breakdown of the customer characteristic by gender and ethnicity so that there is a greater understanding of the differing impact of these changes.
The Minister’s letter suggests that Government will make “core” Pension Wise data available on the government performance platform “this autumn”. Can the Minister expand for us on what is to be covered by “core data” and whether they will satisfy the recommendations of the Select Committee that I have just outlined? The committee rightly concluded that the long-term effects of the new freedoms are uncertain and recommended that the Government initiate a rolling research programme to track the long-term consequences of consumer decisions. It is to be welcomed that research is to be undertaken on the immediate impact of a Pension Wise appointment on customers, but where does this leave the concept of a rolling research programme? Does the Minister agree that one is appropriate?
From what data there are, there seems to be a legitimate cause for concern about the take-up rates of the guaranteed guidance and suggestions that fewer than one in 10 individuals accessing their pension pot availed themselves of face-to-face or telephone advice. Given that the guidance guarantee was recognised as a fundamental component of the reforms and vital to help individuals make informed choices about their lifetime savings, is the Minister satisfied about the current state of play? Particular concern was recorded by Age UK and the Financial Services Consumer Panel about whether the system of pension providers giving risk warnings and signposting consumers to Pension Wise was operating as it should. There are suggestions that providers are following the letter rather than the spirit of their obligation—hence the recommendation that there should be a review of the obligations with a view to their being strengthened, particularly in the prominence given to communications. Will the Government encourage the FCA to strengthen its rules and guidance for pension providers concerning Pension Wise?
The Minister will be aware of the ongoing debate around the adequacy of just one session with Pension Wise and whether it really is sufficient to support people through their retirement. The expectation is that those with complex needs should pay for advice. For others, it seems they could dip in and out of engagement with the specialist services of TPAS, the Money Advice Service and Citizens Advice. Is this viewed by Government as a sustainable model? Confusion abounds, seemingly not just among consumers, about the distinction between advice and guidance, and we are reminded that the FCA January 2015 guidance seeking to clarify the boundaries of advice runs to 47 pages. Evidence suggests that individuals are very reluctant to pay the typical sums required for a session with an independent financial adviser, hence the need and hope for some middle ground between regulated advice and guidance. Progress on this will presumably have to await the outcome of the Financial Advice Market Review.
It is hard to read a newspaper or indeed watch a consumer TV programme these days without some reference to the rise of pension scams. Whether there has been an actual increase is, according to the Select Committee, a matter of some uncertainty, although the ability to access the whole of one’s pension pot has certainly created scope for the increase of such activity, given the ingenuity of unregulated businesses often based overseas.
Lord McKenzie of Luton
My Lords, I thank the Minister for a very comprehensive reply to the issues raised in the debate. I think there may be one or two specifics that he will follow up on in correspondence, and that would be helpful.
I think the Minister said that the response to the consultation on the secondary annuity market would be published next month—I hope I caught that correctly; if it is not next month, perhaps he might write to me and say when that will take place.
I thank my noble friend Lady Drake for her, as ever, wise words on pensions, focusing on the risks and complexity of the secondary market system. She made the telling point that if the problem with the annuity market was the creation of those annuities in the first place and whether people were getting value for money, the situation could be compounded by overlaying a secondary market. That is a key issue to address.
The noble Baroness, Lady Kramer, made the point about the growth of DC schemes and the lapse of DB schemes, and that is right. I think we are now in the position where there are more members of DC schemes than there are of DB schemes. Of course auto-enrolment and the benefits of that will accelerate that as well.
Having said all that, and given the hour—I have been here for only one amendment but am conscious that noble Lords have sat through a very busy day— I beg leave to withdraw the amendment.
Bank of England and Financial Services Bill [HL]
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Lord McKenzie of Luton (Lab)
Despite the hour, I have enjoyed listening to the deliberations thus far and the many knowledgeable banking contributions. In fact, I signed up to speak on just one clause—Clause 24, concerning pensions guidance. As we have heard, this clause is an enabling provision which expands the scope of the guidance service, Pension Wise, to those considering selling their income from their annuities to a third party. It leads to regulations, what type of annuities might be covered and the interest therein. Doubtless, all this will be aligned with the legislation that ensues from announcements already made, and the Treasury consultation on the creation of a secondary annuity market.
The extension of Pension Wise to cover these situations is, in principle, unobjectionable, but it gives the opportunity to reflect on how the service is working so far and how the implementation of the reforms commencing in April this year are working out. It will be a pointer to whether Pension Wise is actually fit for purpose. The Budget 2014 announced that individuals aged 55 and over would be able to access their DC pensions savings as they wish, subject to their marginal rate of income tax. That was, for good or ill, a profound change to the tax landscape. It was recognised by most that for change to work, individuals would need help to review and explore the options available to them. So the Government determined that individuals should have a guarantee that at the point of retirement they would be offered guidance that was free, impartial and of a consistently good quality and that covered a range of options to help them make decisions, including taking further advice.
These arrangements were, of course, legislated for in the Pension Schemes Act 2015 and were debated at length in your Lordships’ House and the other place. A particular bone of contention was whether there should be a second line of defence in encouraging referrals to the service, which has certainly proved to be necessary. The upshot of all this is a service that consists of a face-to-face component to be provided by CABs, branded Pension Wise, a telephone service to be provided by TPAS and an online service organised by a Treasury team drawn from the Government Digital Service and the Money Advice Service. New duties have been placed on the FCA to have responsibility for the setting of standards and monitoring compliance. It seemed to be the Government’s original intent that the Treasury would retain responsibility for service design and implementation until it was,
“very satisfied that it is working well and is seen to be in a stable and successful state”.—[Official Report, 12/1/15; col. 568.]
Can the Minister therefore tell me how it considers this requirement has been met, given the announcement in September that, because of a strong strategic fit, Pension Wise should move to the DWP by April 2016, and the announcement in October that there is a need to identify a long-term home for the service? What on earth is going on? How does this uncertainty help the service, particularly in its early period, and especially if it is to take on the wider requirements for guidance which the creation of a secondary annuity market will entail?
Of course, we now have the benefit of the report from the House of Commons Work and Pensions Select Committee, hot off the press. The committee had a number of significant concerns about the current situation. One of these was the dearth of information on the use being made of the new pension freedoms, and in particular a near complete lack of data about Pension Wise itself. It pointed to there being no research programme tracking consumer outcomes. The committee noted that the take up of face-to-face and telephone guidance appeared to be lower than many had expected. Expectations when the Pensions Bill Committee was under way were that the take-up rate for guidance would be over 75%, and some 25% initially. The FCA found that, in the three months to June 2015, more than 200,000 individuals accessed their pension pots but fewer than 20,000 completed face-to-face and telephone Pension Wise appointments. This would seem to be consistent with suggestions that the CAB is running at 10% to 15% of its capacity and is redeploying staff to other duties. Would the Minister care to comment on this?
A number of reasons have been advanced for this slow take-up: limited early publicity because of parliamentary purdah, the propensity of individuals to take the path of least resistance and to look to existing established providers, and that the requirement on pension providers to give risk warnings and signpost consumers to Pension Wise is being followed more in the letter than in the spirit.
This is all deeply worrying. Pension Wise was designed to fill a gap in support for consumers, and the Government should see these concerns addressed before loading the service with further obligations arising from the secondary market. Of course, the service currently is predicated on the flow of those reaching retirement; causing the stock of those with existing annuities to be covered raises different issues of capacity. It is estimated there are some 5 million individuals with 6 million annuities.
The Select Committee report makes a number of recommendations, some of which the Government appear to be taking forward, although we would wish to probe these further in Committee. These recommendations include the Government publishing or causing to be published regularly a range of data on such matters as consumer characteristics, take-up of guidance and advice, and the decisions individuals make. Given that the pension freedoms have increased the prospect of people being conned out of their life savings, the recommendations urge a redoubling of publicity around pension scams, advise that the FCA strengthen its rules on guidance for pension providers regarding Pension Wise signposting and risk warnings, and state that there should be a research programme to track consumer outcomes.
It is acknowledged that the Government have launched a nationwide marketing campaign to raise awareness of the guidance service, and that two related consultations are under way. A consultation on public finance guidance has just been launched, and a financial advice market review consultation commenced in August. I presume we are unlikely to see these reports by the time the Bill leaves your Lordships’ House; nevertheless, we will use this legislative opportunity to take stock of how the pensions relaxations are progressing and to consider the protections that need to be in place for the secondary annuity market, which is a very significant development.