In-work Poverty

Matt Rodda Excerpts

Wednesday 28th June 2023 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Sir George. I thank my hon. Friend the Member for Slough (Mr Dhesi), my Berkshire colleague, for his excellent work on this important issue. He is a doughty champion for people across our county, and is focused on his constituency. In the time allowed, I would also briefly like to thank families who are under enormous pressure at this time. They are working incredibly hard to keep up with a huge range of increases in costs, whether that is in the price of food, which has rocketed, energy costs, mortgages or rents.

I briefly want to mention some points, to which I hope the Minister will respond. I hope he will be able to direct his remarks to me, my hon. Friend the Member for Luton South (Rachel Hopkins) and my hon. Friend the Member for Slough, because we have many residents in high-cost areas who are under pressure because of the high cost of renting and buying homes in the south-east of England and other high-cost areas.

It is staggering that food prices have risen by around 20% in the past few months. Imagine the impact on most families. The cost of common staple goods, such as Weetabix, pasta, eggs and cheese, which every family rely on daily, and which are almost impossible to substitute in a weekly shop, have all gone up enormously. That is affecting people across the whole country in a most dreadful way. Families are struggling because of that, and there is no easy way to avoid it. Children are desperate for their favourite foods—they are often keen to have specific things. The cost of even own-brand items has gone up enormously.

Equally, the cost of housing has skyrocketed. I have mentioned constituents; there are those whom my hon. Friend the Member for Newport West (Ruth Jones) mentioned in a debate yesterday, who face terrible pressures in the mortgage market. I mentioned a couple of constituents who are under enormous pressure, which is common in my area. There are huge additional costs on mortgages. I spoke about a family paying £800 extra a month for a mortgage on a three-bedroom property in a suburb. Another resident, who lives in Reading town centre, is having to pay an extra £400 a month on the mortgage on her flat. She is already suffering from the cladding crisis, because of unresolved cladding problems with the property. Imagine the pressure that a person in that situation is under at this terrible time.

I hope that the Minister will broaden his response and address some of the related issues around housing and the effect on renters. Landlords are under enormous pressure to put up rents because of the increase in mortgages. That is a hugely important related issue. My hon. Friend the Member for Barnsley East (Stephanie Peacock) made an excellent point about the number of families living on very modest incomes. Rents are increasing dramatically. In the area that I represent, there has been an increase in the proportion of people who rent and a decrease in the number of people who can afford to buy because of the high cost of housing. That puts pressure on many young families, many living in terraced housing or flats in our town centre.

In addition—I hope that the Minister will respond to this—energy prices are still extremely high. We still have not seen a proper windfall tax. There is still enormous pressure on households because of that problem, which will only get worse in winter, in the colder months. It might not seem immediate to some people, but it will be a huge challenge for many residents facing enormous costs. Many people in this country still live in poorly insulated properties. In the area that I represent, we have a very large number of terraced houses, as do many British cities and towns of a similar size, such as Derby and Portsmouth; so do London boroughs, and other areas in the north of England. Much of that housing stock is poorly insulated. That is a hugely important related problem, and I hope that the Minister can update us on the Government’s action. So far, they have been woeful on that point. A series of problems has not been addressed by either the coalition Government or Conservative Governments.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 19th June 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

Sadly, the figures also show that hundreds of thousands of pensioners are still missing out on pension credit. To make matters worse, this large group of pensioners is also missing out on the Government’s £900 cost of living payment, because receiving pension credit acts as a gateway to other help. Could the Minister explain why the Government designed their cost of living payments in that way? Could she explain what she will do to fix the problem, which the Government themselves created?

[Laura Trott]

I am sure that the hon. Gentleman will welcome the figures that I just announced on the uptake of pension credit. We will not have the eligibility figures for a while—hopefully, they will be out later this year. I hope we will see a rise, but in the meantime we are doing all we can—as I know is true across the House—to get as many people as possible to apply for pension credit so that they qualify for those important cost of living payments.

Terminal Illness: Early Access to Pensions

Matt Rodda Excerpts

Tuesday 2nd May 2023 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Sharma. I thank the hon. Member for Angus (Dave Doogan) and colleagues from across the House who have contributed to this important debate. I hope the Government will take this issue seriously and find ways to improve the lives of people with a terminal illness.

I am pleased that legislation was passed last year to support people with a terminal illness in having fast-track access to benefits. I hope that we can develop a consensus on other matters, including the related issue we are discussing today, but I would sound a note of caution following on from the debate last September on the Social Security (Special Rules for End of Life) Act 2022, where the House worked together to allow people in the last years of life to receive increased benefits. One of the challenges raised at the time was whether the Government were able to deliver on their promises, given the series of failures over the last decade. I hope that the Minister will ensure that DWP runs smoothly and that the errors we have seen in some aspects of the pensions and benefits system will be addressed, so that the people in that greatest need are protected. I ask the Minister to reassure Members that the Department will be able to provide individual pension savers and people in need with the level of service they would expect.

On the substance of the debate—early access to pensions—I want to cover two aspects in my speech: the issue of occupational pensions, and then the issue of access to the state pension, which the hon. Member for Angus mentioned. Occupational pensions play a very important role in allowing constituents to save for their retirement, and it is only right that people who have saved all their lives and contributed to the system should be able to access the money that they have saved. I understand that people with less than a year to live are already able to withdraw their entire pension in some cases, and a substantial amount in other cases, and even those who are younger may be able to take advantage of that facility through the pension freedoms that are normally available at the age of 55. I ask the Minister to reassure Members about her work with the pensions industry to develop this further, so that we can have a further discussion and perhaps gain further understanding of the possible ways to support people. Given that a great deal of many constituents’ income in retirement does not come from money that is saved through occupational pensions, it is very important that the money that people have saved is available to them at their time of need.

On the state pension, I want to put on the record my thanks to Marie Curie and other campaign groups for raising this issue. It is very important that we listen to the voices of those campaigners, and I am grateful to the hon. Member for Angus for securing the debate so that we can discuss them. I understand that the Government’s current position is not to allow early access to the state pension. I would be very grateful if the Minister confirmed that that and set out the evidence on which the decision is based. I am sure that the Department will have explored the issue in detail, and I ask her to consider publishing some of the research carried out by the Department on this matter, so that we can understand it better and have a fuller debate in future.

I want to take this opportunity to raise some other points that have been made by campaigners. I am worried by some of the research that outlines the scale of the problem that energy bills can cause those facing the awful diagnosis of terminal illness, and I am grateful to the hon. Member for Angus for mentioning that point. For example, research by Marie Curie explains that after a terminal illness diagnosis, energy bills may rise by as much as 75%. I think I heard the hon. Member refer to some of the additional medical needs, the need for greater home heating and sometimes the need for expensive equipment, such as oxygen tanks, in a person’s home. It is very important that we understand that, take it into account and see the wider needs of somebody facing an awful diagnosis and suffering a terrible challenge.

There is a lot of independent research on the consequences of living in damp, under-heated properties, which we should also bear in mind when we consider this issue. For example, the World Health Organisation estimates that about 30% of excess winter deaths are directly attributable to living in cold, damp environments, and we have to take that point into account, as well as the additional cost of heating for medical reasons and of paying for additional energy to support machinery. That is why it is really important that we take steps to reduce energy bills in a sustainable and long-term way. As the official Opposition, we are calling for energy bills to be cut for good, which should obviously start with a proper windfall tax on oil and gas giants, continuing with our long-term mission to make Britain a clean energy superpower by 2030.

Campaigners have highlighted other financial and family impacts of having a terminal illness diagnosis, and one difficult challenge faced by some families is that other forms of support may not be available to them. For example, access to paid childcare may diminish as a result of not being able to work, although a family may still need it.  I would like the Government—I hope the Minister will address this in her speech—to look at not only reforming the childcare system in broad terms but addressing the specific issue faced by those who have a family member with a terminal illness diagnosis. They should look at the need for childcare at that difficult time and at the unintended consequences of some aspects of Government policy. There is a need for wider reform because, sadly, families, children’s education and our economy are paying the price for our current childcare system.

To conclude, I hope the Government will respond and continue to work with the pensions industry. I look forward to the Minister answering my questions about her work with the industry, confirming Government policy on the state pension and committing to publish suitably informative material about the research carried out by the Department.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 24th April 2023 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

The price of food is rising by 30%, yet the Government are continuing to fail pensioners at this very difficult time: nearly 200,000 women in their 80s have been underpaid for years because of errors at the DWP; hundreds of thousands of pensioners are missing out on pension credit, as we have heard; and when pensioners do get their pension credit application in, it can take up to three months for officials in the Department to process a claim. When will the Government finally tackle this appalling pattern of failure?

Pensions (Extension of Automatic Enrolment) (No.2) Bill

Matt Rodda Excerpts

Committee stage
Wednesday 15th March 2023 Public Bill Committees

[The Chair]

The general debate. I call Matt Rodda.

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairship, Sir Christopher. I will address my remarks purely to the amendments.

I thank the hon. Member for Glasgow East for his work on the subject. He made a deeply personal and heartfelt point about his own experience. However, there has been a wide range of discussion and debate on the matter, and I believe that this afternoon we ought to focus on the Bill itself. I am aware that time is pressing, and given the matters being discussed in the main Chamber, I will leave my remarks at that for now.

[The Parliamentary Under-Secretary of State for Work and Pensions (Laura Trott)]

It is a pleasure to serve under your chairmanship, Sir Christopher.

I have respect for the hon. Member for Glasgow East, as he knows. I listened carefully to what he said. He set out his personal story beforehand, and it is very powerful. I reiterate the points made by my hon. Friend the Member for Stoke-on-Trent North and by the hon. Member for Reading East. This was looked at as part of the 2017 review, and there will be a statutory consultation to follow it up.

--- Later in debate ---

[Margaret Ferrier]

It is a pleasure to see you in the Chair and to serve under your chairmanship, Sir Christopher. I would like to make some brief comments of support, as this Bill sits in the reserved space and naturally will apply in Scotland on Royal Assent.

We have already seen how automatic enrolment has successfully brought many more members of the public into a pension scheme, which will only serve to benefit them in later life and in retirement. Particularly as we are facing a cost of living crisis and many people are finding it much harder to put away spare cash for a rainy day, it is important and right that contributing to a pension from a younger age is made easier. For the younger generation just starting out in the workplace, retirement looks like a speck on the horizon—too far off to think about for some time yet. I am sure we all remember feeling the same; pensions were the last thing on our mind at that age. It is crucial, however, to start making those savings earlier in life, so that there is less pressure later, as retirement approaches and people have the realisation that they have not saved as much as they need.

A general lack of understanding about pensions is a real problem when it comes to future planning. Research by the Social Market Foundation has shown that most of the population nearing retirement age do not actually know how much money they will need to see them through retirement. The typical person aged 50 to 64 has pension savings that are 58% short of what they require. That adds up to a total annual savings gap of £132 billion across the country for those reaching retirement age.

I hope that this legislation, if passed, will have some positive impacts for the harder-to-reach groups in society: women, people with disabilities, and ethnic minorities. They already have substantially lower-value pension pots on average. However, I wonder whether, when eliminating the lower earnings limit for contributions and laying regulations, the Secretary of State might consider this being for employers only, and having a higher threshold for employee contributions in the light of the current economic difficulties.

I warmly congratulate the hon. Member for Stoke-on-Trent North on successfully steering his Bill through its legislative stages so far. Last year, I was lucky enough to see my own private Member’s Bill through to Royal Assent—incidentally, it was also on pensions policy—and I know how much hard work that is for the Member and for those supporting him, so well done.

[Matt Rodda]

Once again, it is a pleasure to serve under your chairmanship, Sir Christopher. I commend the hon. Member for Stoke-on-Trent North for his work on this Bill, and, indeed, other Members from across the House and the wider policy discussion about the importance of auto-enrolment. As the hon. Member for Rutherglen and Hamilton West rightly said, pensions adequacy is a very important issue facing the whole of our society; it is a matter of great importance. We should, across the House, be encouraging people to save for their future, so it is important to debate this issue today.

I particularly want to say, in the time that I have, that auto-enrolment in itself is a great public policy success of the last few years. It dates back to the work of the Pensions Commission for the last Labour Government. The coalition Government implemented this change in 2012, and there has been growth in the number of people saving for a pension as a result. That is a commendable step forward.

However, pensions adequacy remains an issue and it is important for us to continue to go forward. In doing so, we need to work in a gradual, sensible and practical way to try to encourage auto-enrolment, and to work with stakeholders such as businesses, savers themselves and, indeed, society as a whole to try to take this work forward. In that spirit, I have some questions for the Minister.

This Bill will clearly offer real advantages to many younger people, who will be saving not only a greater sum, but from an earlier point in their life. That will help to build a much better pension pot for those pension savers. My questions for the Minister are primarily about the nature of the consultation, because as we have heard, it is hugely important that we work with pension savers themselves, with employers and with other stakeholder organisations to ensure that there is consensus on this issue and that policy is developed in a sensible way. Therefore I would like the Minister to explain to the Committee a little more about the nature of the consultation: in particular, what work the Department has done to encourage pension savers, especially young people, to be aware of the potential to save more for a pension in the future; the discussion that she has had with employers, both individual employers and employer organisations; and what she will do to continue to work with them, because when this legislation is implemented, it is a step forward for them—it is a greater contribution. We need to work with them.

I would like to know what work the Minister is doing with trade unions. They have a very important part to play in the roll-out of auto-enrolment. I was glad that the hon. Member for Stoke-on-Trent North mentioned that and acknowledged the significant work that they do. I am also interested in the consultation, in so far as it has reached out to advice organisations such as Which? and many others that have an important role in the wider money and savings debate. I hope that she is discussing with them the importance of this.

My second question is about when the Department hopes to use these powers. As has been said, the Bill allows the Government the power to do this and explains how it would happen through a statutory instrument. However, the Bill does not specify when this might happen. The Minister has talked in the past about the mid-2020s. I would be grateful if she clarified how she defines mid-2020s, and whether she will take into account any other factors such as the overall performance of the economy and the nature of any continuing cost of living crisis as we approach that time.

Once again, I thank the hon. Member for Stoke-on-Trent North for his work on this matter, and I thank colleagues from across the House. I look forward to further answers from the Minister about the importance of consultation and bringing stakeholder groups with us on this important journey.

[Laura Trott]

I congratulate my hon. Friend the Member for Stoke-on-Trent North and, in absentia, the Under-Secretary of State for Transport, my hon. Friend the Member for North West Durham, on this excellent Bill, which will expand the benefits of automatic enrolment into workplace pensions to younger people and lower-paid workers.

I think we all agree that automatic enrolment has been a huge game changer in the workplace pension savings market over the past decade. Private sector workplace pension participation among eligible employees has increased by 44 percentage points since 2012, to 86% in 2021. As has been mentioned a couple of times, it has been especially transformative for women, low earners and young people, who historically have been poorly served by or excluded from workplace pensions. The proportion of women in the private sector participating in a workplace pension reached 87% in 2021, above that of men and more than double what it was in 2012.

Thanks to automatic enrolment, the overwhelming majority of eligible workers are now enrolled in a workplace pension, saving an asset for the future. Automatic enrolment is re-establishing a culture of retirement saving for a new generation. However, we know that there is more to do. The Government have made it clear that their ambition has always been to deliver on the 2017 automatic enrolment review measures. The review proposed two key measures: extending AE to young adults aged 18 to 21 by lowering the age criteria for enrolment; and removing the lower earnings limit, which would improve saving levels among low and moderate earners.

Since I took up my role as Minister for Pensions, I have been determined to make progress on AE expansion, and I am therefore delighted to confirm that the Government are supporting my hon. Friend’s Bill to do exactly that. The legislation will mean that younger workers and those who are in lower-paid employment—often because they work part time owing to personal circumstances, such as caring responsibilities—will be able to participate fully in automatic enrolment. For the first time, every worker will benefit from an employment contribution if they are enrolled or opt in; that is key to boosting the overall amounts being saved into a workplace pension. The powers in this Bill allow a Government-defined authority to deliver the changes set out in the 2017 review reforms, which Parliament has debated on numerous occasions, and I think there is broad agreement that it should become law.

On the questions from the hon. Member for Reading East, the Government are clear that implementing the expansion of automatic enrolment can only take place following consultation. That will be a consultation on the implementation approach and the timetable. He mentioned employer and employee engagement in particular. We absolutely need a full comms campaign, and—to the points raised by the hon. Member for Glasgow East—we could also look at what we can do for 16-year-olds. Even if we do not get quite where the hon. Member for Glasgow East wants us to with the age, I think there is more we can do to encourage them to opt in. We can discuss that as part of the consultation.

Trade unions were part of the original 2017 work, and I am very grateful to them for that. We have spoken to them frequently since, as we have to employer organisations. We will hold a series of roundtables now as we move towards the consultation, and we will involve them in the consultation. On timing, I would like to launch the consultation in the autumn, with this Bill going through, I hope, in the near future. I cannot say anything further than “mid-2020s”, I am afraid, but as soon as I am in a position to update the hon. Member for Reading East, I will of course do so.

Our objective is to maintain the broad political consensus for workplace pensions, which has been an important part of the success of the reforms since the beginning. The approach taken in the Bill to guarantee meaningful and detailed consultation to help implement the changes will help to build enduring support for this important work to boost the retirement aspirations of millions of our fellow citizens. Once again, I congratulate my hon. Friend the Member for Stoke-on-Trent North and I commend the Bill to the Committee.

Draft Occupational Pension Schemes (Administration, Investment, Charges and Governance) and Pensions Dashboards (Amendment) Regulations 2023

Matt Rodda Excerpts

Wednesday 8th March 2023 General Committees

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairship, Ms McVey. I welcome the Minister to her post and thank her for her recent work on auto-enrolment.

The dashboard is clearly an important aspect of pensions policy, and we support it. We understand why the Government are proposing these changes, but I have a series of questions about the specifics of the charge cap and related matters. I will also say a brief word in support of illiquid investments, which are hugely beneficial to the country in terms of the transition to net zero in the future. I visited a solar farm with the former pensions Minister, the hon. Member for Hexham (Guy Opperman), and I put on the record my thanks to him for the cross-party way in which he worked with me on the issue.

I support greater illiquid investment, but to what extent have the Minister and her colleagues considered the interests of savers in this change? Clearly, higher charges have an impact on pension savers. I am also interested in what the Government are doing in other aspects of pensions policy to encourage greater illiquid investments, whether in green energy infrastructure or other matters that come under the same heading. There may well be a range of other policy levers that could be used to encourage this type of investment.

In addition, I have concerns about the progress of the dashboard following consultation with the pensions industry and previous updates from the Minister about this important area of policy. I am thinking in particular about the pace of the roll-out and how the Government have had to increase their involvement in the direct management of the scheme. There is a long history of Government IT projects being over-ambitious and having difficulty delivering. I hope that the Minister can reassure the Committee about this, because the dashboard is a hugely important step forward for the country. There have been delays, and there may well be further delays. It is important that the Government are honest with the pensions industry and pension savers. People would clearly like to be able to access further information about their pensions in one place; there is a huge advantage in that. However, there are significant challenges to rolling that out, as with many other complex IT programmes. The industry itself is concerned about this series of delays from the Government.

I would like to raise a specific technical point that indicates the challenge. One pensions organisation raised with me concerns about pension savers not being able to use their national insurance number as an identifier. One would think that that would be a practical way of accessing information and exactly the sort of security measure that such an IT programme would warrant, yet the organisation tells me that, for some reason, it is no longer possible. That worries me. An individual’s national insurance number could be an important part of accessing personal information and a safeguard against anybody with an untoward intent.

I look forward to an update from the Minister on those important matters,. We support the roll-out of both the dashboard and the other measures to encourage illiquid investment. I hope that she will be able to reassure the Committee, the pensions industry and savers about these important points.

--- Later in debate ---

[Laura Trott]

I am grateful for the cross-party support for the auto-enrolment work we are taking forward. I look forward to participating in a similar Committee, with a similar cast list, next week.

In the interests of savers, we have ensured that fees are payable only where there is a return. The exact schedule of the return and its rates will be a discussion between trustees, scheme members and investment managers. We brought that into the regulations to ensure that the interests of savers are at the heart of everything we are trying to do.

Green energy infrastructure is exactly what we are trying to promote as part of the illiquids reform. To be clear, I do not think that will be the be-all and end-all of trying to get more investment in illiquids, but it will take us a large degree further forwards. Again, I am grateful for the cross-party support for moving in this direction. Not only is it important for the UK economy as a whole but, from my perspective most important, it is in the interests of pension savers.

The dashboard is a complex project, which had a long history before I came into this post. When I got the job, I asked for a look into how it was going and whether we thought we could meet the deadlines that were set out. I have some concerns about what I saw, and that is why a reset programme is in place at the moment.

Members were all absolutely right to say that we need to get this correct the first time round. I have committed to come back to the House to put new deadlines in place, and I would like to be able to do that before the summer recess—that is certainly what I am working towards. I will be able to confirm that nearer the time. It is important that we get this right, and get it right first time, so that we do not have to do this again. What the dashboard will do is incredibly important and will make a massive difference. We know that lots of people have lost their pots. It is vital that we increase adequacy for pension savers, and the regulations are a vital part of that.

I am pushing as hard as I can to ensure we keep to the deadlines as much as possible. We can move around the upload deadline, but I would like to keep as close as possible to when savers should be able to access this. I will come back to the House before summer recess to hopefully give more detail on that.

[Matt Rodda]

I appreciate the Minister’s candour. It is indeed vital that we get this right. It is an important piece of pensions infrastructure for the future and hugely important to both savers and the pensions industry. Will she be able to update the House on the Government’s spending on the project as well? There are also concerns that the Government may have overspent on some aspects of the project, and the wider project management and governance might need to be tweaked and improved.

[Laura Trott]

Yes, absolutely. When I come back with the regulations, I can provide an update on the spending. I reassure the hon. Gentleman that part of what the reset is doing is looking at the expenditure to ensure that it is in hand. I will have more to say about that when we come back.

The shadow Minister mentioned NI numbers, and that is one of the things we need to look at again. It is really important. I have had representations from industry about this, and I had a meeting on it this week. It should potentially be incorporated, and that is part of what we are looking at as part of the reset programme.

[Laura Trott]

We are definitely taking this a step further now. In my time as pensions Minister, I have tried to really focus on the value for money, rather than the charges, and that is a shift. We are a step further into our automatic enrolment journey. We now see that we have the coverage, which is really positive, but we need to improve adequacy. In my time as pensions Minister, I will really focus on that and getting returns to savers so they can build up their pot. It can make a massive difference to how effective someone’s ultimate retirement pot is in giving them the retirement they want, and this is another step in that direction. It has been a journey, and this is additional to what we have done previously.

[Matt Rodda]

I think the right hon. Member for Camborne and Redruth makes an excellent point in asking the Minister about the number of revisions of the programme. Has the Minister discussed with the Cabinet Office and other Departments across Whitehall how the programme benchmarks against what is known about good practice in managing complex IT programmes?

[Laura Trott]

The Cabinet Office has been involved in this. Every big project goes through a major project review process, so the Cabinet Office has been involved.

Automatic enrolment has been a huge success. It has led to nearly 11 million people, as of January 2023, joining a pension scheme, many for the first time. However, being enrolled in a pension scheme is not enough; pension schemes must continue to ensure they are delivering the maximum return for their savers, and illiquid investments will be a huge part of that. I commend the regulations to the Committee.

Question put and agreed to.

Oral Answers to Questions

Matt Rodda Excerpts

Monday 6th March 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

[Matt Rodda (Reading East) (Lab)]

The Government seem to be trying to pat themselves on the back after years of failure on pension credit. As we just heard, hundreds of thousands of pensioners are still missing out on a vital top-up benefit that is needed to get them through the cost of living crisis. Why has the Government’s response been so ineffective, and what on earth will the Government do about their dismal failure to help pensioners during their hour of need?

[Mel Stride]

I am very surprised to hear the hon. Gentleman pose that question, first, because of his party’s record on this matter when they were in government; and secondly, because of the clear progress that I have outlined to the House today and on previous occasions about the increase in take-up that the Government are securing.

Saving for Later Life

Matt Rodda Excerpts

Tuesday 7th February 2023 Westminster Hall

[Matt Rodda (Reading East) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hosie, and I commend my right hon. Friend the Member for East Ham (Sir Stephen Timms) and the other members of the Work and Pensions Committee for their excellent work and their report.

People who work hard and save all their lives deserve to expect a decent income in retirement. It is vital that the Government support pension saving as well as providing a decent state pension, and I hope that the debate will be a starting point as we discuss some of those issues. First, however, I want to put the debate in context.

We are living through difficult and challenging times with families and pensioners facing a cost of living crisis the like of which has not been seen for 40 years. Food prices are up, fuel prices are up and the cost of living is rising dramatically. That is having an enormous impact on households across the country, and there is, as has been mentioned, a real risk that some people might either stop saving for a pension or dip into their pension savings early and unsustainably, simply because they cannot afford the cost of living.

To make matters worse, the wider economic context is, to say the least, extremely challenging. Last week, the International Monetary Fund reported that the UK faces the worst economic outlook of any major economy. After 12 years of economic mismanagement by the Government, we seem to be stuck in a persistent period of low growth and high inflation. As a result of that mismanagement, the Government are trying to cut public spending. They have reduced spending on the state pension by failing to increase pensions in line with inflation until April, which means that pensioners, for some months, have been trying to keep up with the huge increase in the cost of living. They have been let down by the Government in attempting to do that.

Saving for a pension takes time and regular contributions, and, as we have seen, there is an issue of pensions adequacy. I note that the Committee’s report found that many savers did not realise that they were not on track for the retirement they had envisaged. This, sadly, is a tragedy waiting to happen. I hope the Minister will address that, and I encourage her to focus on it because Ministers must do more to avoid a terrible problem in future and to show they are taking the issue seriously. Sadly, I am not convinced that the point was adequately addressed in the Government response to the report, and I hope the Minister will find time to discuss it more properly.

Saving for the future remains sustainable only if pensions are kept safe, and increased pensions freedoms, which were introduced in 2015, gave many hundreds of thousands of people choice as to how to invest their savings. However, the Government need to do more to help them, including providing better advice, as we heard earlier, and helping to tackle fraud, such as pension scams. I am afraid that the evidence so far is that Ministers, unfortunately, are failing on both counts. As we heard earlier, not enough people are accessing free, impartial advice, and it seems as though those with the largest pension pots might be somewhat more likely to seek such advice, rather than those in greatest need.

On fraud, there are also deeply worrying indications of Government failure. In 2022, there was a 75% increase in online searches for scam help and a large increase in searches for pension scams. In 2018, the Financial Conduct Authority published data showing that hundreds of people had been scammed out of their pensions, losing on average the enormous total of £82,000 per person. Research by the Money Advice Service suggests that there could be as many as eight scam calls every second, and Citizens Advice found that 8.4 million consumers had been offered unsolicited pensions advice between 2015 and 2016.

On a similar note, we need to ensure that the regulator and the ombudsman are given the tools they need to take swift and effective action in cases of mis-selling or unethical behaviour, and the serious ongoing problems with the British Steel pension scheme show the need to improve regulation. Much of the damage in that case could—and indeed should—have been avoided if tougher action had been taken at the time. I am glad to say, however, that steps can be taken. The law was changed in 2020 to ban cold calling from UK numbers, thanks to Labour pressure. The Government should act on our calls to take further steps, such as banning fraudulent online advertisements, which remain an option for scammers.

Let me move on to speak more about the structures to help people save. As was mentioned earlier, auto-enrolment, which was created by the previous Labour Government, has become an undisputed success. We must maintain the ambitions of the previous Labour Government and do more to ensure that everyone benefits, including, as colleagues mentioned earlier, women, low-paid people and minority groups. I remind the Minister that the Government promised to look at expanding auto-enrolment by the mid-2020s. I hope she will address that point when she responds.

There is, as the hon. Member for Amber Valley (Nigel Mills) and others have mentioned, scope for other innovations. I urge the Government to think more creatively about new ways of encouraging saving—for example, by considering pensions sidecars and other ways to address the wider challenge of encouraging saving, which we have heard so much about today.

I am aware that time is limited, so I will finish by urging the Minister to do more. There is scope for pensions to contribute to protecting the future of the planet. I welcome the work of the shadow Chancellor, my right hon. Friend the Member for Leeds West (Rachel Reeves), and her plans to support green start-up companies’ links with pension funds. I look forward to the Minister’s response.

--- Later in debate ---

[Laura Trott]

My hon. Friend makes a typically excellent point. He is right that we have a lower investment in illiquids than many of our European counterparts. We are at 7%, and they are at 15% or 16%. Last week, I announced a change in regulations, which I believe will come to the House in around March. It will mean that the performance charges can be passed on for the first time, which will hopefully take away a barrier to investment in those types of asset. It is of course for the pension trustees to make investments in the best interest of pension savers, but it is important that we do not put any barriers in the way of that. My hon. Friends the Members for Grantham and Stamford (Gareth Davies) and for Amber Valley are right that we need to focus on returns. If we are going to deal with adequacy, we need to ensure that investments in pension schemes return the maximum amount that they can for savers. Illiquids are part of the story in making that happen.

[Matt Rodda]

I was lucky to enjoy a very interesting visit to a solar farm with the Minister’s predecessor, the hon. Member for Hexham (Guy Opperman). One of the issues there—this relates to the point made by the hon. Member for Grantham and Stamford (Gareth Davies)—is that the obstacles to pension funds investing in illiquids are quite considerable. Does the Minister agree that there is an issue with work across Government on that matter? The delays in that case were to do with electricity connectivity to the site, and there may be other similar delays that are holding pension funds back from investing in illiquids in the UK.

[Laura Trott]

If there is a specific issue with that, I am of course happy to talk to the hon. Gentleman about that separately.

I want to give the right hon. Member for East Ham time at the end to sum up, so I will try to get through the rest of my speech quite quickly. On the generation X issue, we have an issue with the people who fell into the gap between the mid-1990s and 2010, when auto-enrolment was introduced. I praise the work of the Work and Pensions Committee, but I hope the right hon. Gentleman and the hon. Member for Reading East (Matt Rodda) would accept that not enough was done between 1997 and 2010. I cannot wave a magic wand and make that right, but I can raise awareness through pension dashboards and help boost returns through value for money, as discussed. In addition, the state pension has been boosted significantly under this Government.

I thank the Committee for all its work on the stronger nudge. It is important to recognise, as my hon. Friends the Members for Amber Valley and for North Norfolk (Duncan Baker), and the hon. Member for Glasgow East (David Linden), have done, that Pension Wise is consistently given very high feedback. About 47% of pots in 2021-22 were accessed for the first time with Pension Wise guidance. It is important to look at the amounts. If the pot is very small, say £100, it is potentially less valuable to have a Pension Wise appointment, than it would be for a pot of multiple thousands. I note that 73% of pots larger than £100,000 were accessed using Pension Wise guidance. It is important to look at that graduation.

[Matt Rodda]

I thank the Minister for giving way again. Does she agree that it is important for people with very modest pension pots to get access to high-quality advice? They are financially vulnerable in some cases. There have been instances of people approaching retirement taking their pension early, when that is not necessarily in their best long-term interests.

[Laura Trott]

It is absolutely the case that people who want or need guidance should get it. As I was coming to, we are seeing a positive impact with stronger nudge, which we should continue to evaluate. I am conscious of time, so I will wrap up. It is vital that we put pension savers at the heart of everything we do. I am grateful for the comprehensive and thoughtful discussion today, which I look forward to continuing in future.

Social Security and Pensions

Matt Rodda Excerpts

Monday 6th February 2023 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

I thank all hon. Members who have taken part in this debate on uprating benefits. Today, Members have the chance to vote on Government spending on supporting the vulnerable, and this debate takes place at a time when families and pensioners across the country face an unprecedented cost of living crisis. We have an important opportunity to debate the Government’s response. However, I am afraid that, based on the Government’s actions and what we have heard today, that response has let down both families and pensioners. As my hon. Friend the Member for Westminster North (Ms Buck) said, this year’s uprating will at best maintain the severely reduced real-terms value of benefits, which has been eroded over the last decade.

The inadequate safety net provided by the Government has, as expected, contributed to an increased number of children living in poverty, to a deepening poverty, and to an increasing need for food banks. It has also led to pensioners having to wait months for the state pension to be increased in line with inflation, and to those approaching retirement being placed under unnecessary stress and uncertainty as the Government have floated the idea of bringing forward the increase in the state pension age to 68. That has been suggested in the media but without proper consultation, breaking the long-standing convention that pension policy is developed by consensus.

The Government’s response to the cost of living crisis has been deeply disappointing. While I have the opportunity, I will ask the Minister a question about a particular aspect of policy. When one member of a couple is on universal credit and the other receives the state pension, the pensioner is not allowed to claim pension credit, which may have a significant impact on the couple’s income. Will the Minister explain that to me, and write to me about it? Will he also consider changing that harsh and unnecessary policy?

It was clear in contributions made by Members from across the House that there was a great deal of feeling about and interest in this matter. We have discussed the cost of living crisis, child and pensioner poverty, the prices of food and fuel rising faster than the uprating of benefits, and pensioners needing more support. Many speakers criticised the Government for disapplying the triple lock, and called on them to speed up the take-up of pension credit.

Let me be clear: we will, of course, support the motion, but the Government deserve no praise for their actions, as my hon. Friend the Member for Westminster North said. I urge the Minister to rethink the Government’s approach both to the annual uprating and more generally. The Government have let down some of the most vulnerable people in the country, at a time of great financial pressure. I hope that the Minister will reflect on that when he responds.

Raising the State Pension Age to 68

Matt Rodda Excerpts

Wednesday 1st February 2023 Commons Chamber

[Matt Rodda (Reading East) (Lab)]

Pensions are an incredibly important issue. People who have worked hard and contributed all their lives deserve a decent pension in retirement. The state pension has been a crucial part of all our lives in this country for a very long time. I thank the Backbench Business Committee for securing today’s debate, and the hon. Member for Amber Valley (Nigel Mills) and Members across the House for their contributions.

I am sorry to say that there has been a certain amount of unhelpful briefing in the media about a possible change to Government policy on state pension age. I urge the Government to stop that, and to raise issues in this House rather than in the media. If Ministers are serious, they should discuss the future of pensions policy with the public and the pensions industry in a proper public consultation. The current speculation fuelled by off-the-record briefings is hugely unsettling for people who are saving for a pension and trying to plan for their future. Ministers should remember that families and pensioners are living through an unprecedented cost of living crisis and facing huge pressures on household budgets. The last thing that people need is further stress and uncertainty.

We are living in challenging times, with inflation rates that the country has not seen for more 40 years. To make matters worse, as the IMF reported earlier this week, the UK faces the worst economic outlook of any major economy. After 12 years of economic mismanagement by the current Government, we are stuck in a period of persistently low growth and, unfortunately, persistently high inflation. As a direct result of that mismanagement, the Government are now trying to cut public spending. They have reduced spending on the state pension before by failing to increase pensions in line with inflation until April this year. That means that pensions have failed to keep up with the huge rise in the cost of food and fuel that has hit pensioners in the last six months.

Independent research by the Pensions and Lifetime Savings Association using data from Loughborough University showed the scale of the Government’s failure. It showed that the basic state pension has now fallen below the cost of living. The PLSA put the basic cost of living for a single pensioner at £12,800, more than £2,000 above the basic state pension, which will be £10,600 in the financial year 2023-24.

The Government’s mismanagement of the economy and their desperate attempts to cut public spending form the backdrop to today’s debate. This is made even worse by Ministers’ disregard for pensioners, the House and the public. The Government’s pattern of behaviour is in stark contrast to the way in which Governments have conducted themselves in the past. As I mentioned earlier, there has been a long-standing convention that pensions policy is based on evidence and agreed by consensus. For example, when the evidence showed that life expectancy was increasing, there was a discussion about the impact on the state pension age, and it was agreed that it should be gradually increased. The UK already has one of the higher state pension ages among OECD countries.

Following extensive consultation about the impact of increased life expectancy in the 2000s, the Government established the Pensions Commission to look into the issue. As a result, and after a great deal of discussion, it was agreed that the state pension age should be raised. The Pensions Act 2007 provided for it to be increased from 65 to 68 in stages over the period between 2024 and 2046. I should stress that those increases were agreed at a time of steady rises in life expectancy. The current situation is somewhat different, to say the least. As we heard earlier, there is clear evidence of a stalling of the increase in life expectancy. Data from the Office for National Statistics on healthy life expectancy between 2018 and 2020 shows a downward trend in most regions of the UK, and the situation for some pensioners seems to be even worse, with a fall in life expectancy among some groups since 2010. We have heard several examples of that today, and there are others.

There is also clear and, in my view, deeply troubling evidence of local disparities, with gaps of about 10 years between the average life expectancy of some people—often those living in better-off areas—and that of their neighbours living in less well-off areas comparatively nearby. The full impact of the pandemic on long-term health is unclear, and there seem to be a growing number of older people of working age who are suffering from serious health conditions. That evidence needs to be considered carefully.

I appreciate that time is limited. Let me end by saying that the Government are letting down both pensioners and people saving for pensions. They have broken with the long-standing convention that pensions policy is developed on the basis of evidence, through consultation and discussion. I hope the Minister will address these issues in her speech. I know that she does prefer to consult, even if some of her colleagues do not always follow that approach.