Pensions Bill [HL]

Lord Stoneham of Droxford Excerpts

Tuesday 1st March 2011 Grand Committee

[Lord Boswell of Aynho]

My Lords, I shall respond briefly to the noble Baroness, Lady Hollis, who has performed a service to the Committee in raising this issue. My immediate reaction, not least as a former small employer in the agricultural business employing casual labour and the kinds of people who she rightly described from her Norfolk experience, is that we need to think about how this burden should fall on employers if we are to do it. I shall come in a moment to the other side of the argument, but the Minister will have to tell us how this can be done. He will also need to reassure us that, even if perhaps it should not, it will not in practice act as a disincentive to employers employing these people. That is partly on the administrative side, as well as being the effect with regard to cost uplift. I am not for a moment suggesting that the right thing is for people to go into the irregular economy or that in some way we should find some kind of special deal for them because that is not what the noble Baroness is saying. However, we need to have at least some assurance that it is not going to create problems for employers, that it is manageable and that it will not have malign economic effects.

On the other hand, the noble Baroness is very much on to a point of substance. We have mentioned the word “problem”; I appreciate that that was not the context of what she said, but we should not regard part-time employment as a problem. It is a problem only if, when people would choose to be working for longer hours, it does not escalate into being able to do so, or they have not got the right bag of skills or their remuneration package is too low. We should welcome part-time employment with open arms, along with the flexibility that it brings. That is important and positive, which is why I hope that the Minister can come up with a solution.

I have one more thing to say, which is not meant to be threatening to him or anyone else. My knowledge of employment law has somewhat faded over the years and I am not too good on the equal treatment directive, but, looking at this from the perspective of human rights law, which I know a little more about from recent experience, and equality, if we do not come up with a system that provides the same functional opportunity for people who are working the same number of hours but for a number of employers as compared with those who are working for one employer, we are at some risk of being accused of discrimination. The Minister has to find a workable answer to this.

[Lord Stoneham of Droxford]

I support the amendment. It is related to the amendment that we will discuss in a moment about including part-time earnings to qualify for NEST. This is an important issue, and we need the Minister to look at it with a view to recognising the fact that part-time work is growing and is going to grow. There is a lot more out there in the unseen economy than we probably realise, which should be revealed as we move towards the universal credit system. We must therefore address it. As an employer myself, I have seen discrimination happen over the years. People deliberately keep employment below a certain limit so that they can avoid national insurance, and in future they will be doing this on pension contributions as well. This needs to be addressed.

I accept that there is an administration problem, but systems are improving. We should be trying to address this problem in the light of that. Because it is linked to the problem that we will be discussing on a later amendment, I am very sympathetic to this one.

[Lord McKenzie of Luton]

My Lords, my noble friend Lady Drake and I have put our name to this amendment because we support its thrust. Having heard my noble friend, I gather that, perhaps unsurprisingly, she is even more ambitious for this amendment than I took it to be on first reading. It is entirely consistent with the progress that has been made in crediting people into the pension system, in any event, over many years. It is highly relevant—we heard from the noble Lord, Lord Stoneham, and my noble friend Lady Hollis about the growing importance of part-time work in our economy.

When I first read the amendment, I thought that its thrust was to say that when you aggregate employment earnings, if you are above the lower earnings limit, you get credited in. That in itself would not require any payments from the individual or any payments on behalf of any employer. That, at least, would be progress from where we are. There are arrangements that you have to aggregate if you are within associated companies, but that is a separate case.

If it is possible, as my noble friend suggested, perhaps in discussion with the noble Lord, to go further and say that we could aggregate and then work out what the employee and employer contributions would be and how we divvied that up across employers, then that would be a significant improvement and an advance. That is not only because of the state pension arrangements, with credited and contributory benefits in any event, but for the point that the noble Lord, Lord Stoneham, made about auto-enrolment. If we can aggregate and reach qualifying earnings, particularly if qualifying earnings are going to be pitched at the primary threshold, or at the secondary threshold, which I think is the same thing at the moment, then we can also seek to ensure that people on part-time earnings who would not otherwise qualify in respect of a single employment could, on some basis or another, by aggregation and then divvying up across employers, be entitled to auto-enrolment. At its most basic, lowest level, the ability to aggregate and credit in, for the purposes of the state pension, would be a valuable gain. To be able to go further, as is the ambition of my noble friend, would be a very considerable advance, and if the Minister’s command of technology enables him to deliver on that, we would all be delighted.