Fraud and Error in the Benefit System
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The annual statistics for fraud and error in the benefit system for the financial year ending 2024 were published earlier today.
Fraud and error is an ongoing challenge across Government and beyond. In 2023, fraud was responsible for 37% of all crime against households and there has been a rising trend in fraud against organisations. With welfare benefits paid to around 22.7 million people, the welfare system is a deliberate target for both organised crime groups and opportunistic individuals.
Today’s figures confirm the overall rate of overpayments is now 3.7% (£9.7 billion) for 2023-24, compared to 3.6% (£8.3 billion) in 2022-23. Overpayments due to fraud were 2.8% compared to 2.7% last year while claimant error and official error remained at 0.6% and 0.3% respectively. The rate of overpayments in universal credit was 12.4% in 2023-24 compared to 12.7% in 2022-23.
It is vital that the Government continue to robustly tackle fraud to ensure support goes to those who need it most. We are taking further steps to minimise errors, ensuring the right people are paid the right amount at the right time. The total rate of benefit expenditure underpaid in 2023-24 was 0.4% (£1.1 billion), compared with 0.5% (£1.2 billion) in 2022-23.
This week the Government have published an update to the Department of Work and Pensions’ fraud plan, “Fighting Fraud in the Welfare System: Going Further”, highlighting measures we are taking to prevent and stop fraud.
In 2023-24, we exceeded the £1.3 billion savings target we set and expect our plan to deliver £9 billion in total by 2027-28.
Since 2022 we have delivered on commitments to invest in our front line, hiring over 4,400 people across our counter-fraud and targeted case review programmes combined. We will continue to expand our targeted case review team to almost 6,000 by March 2025.
We are delivering new powers to improve our access to vital third-party data so we are better able to identify fraud and take action. The third-party data gathering measure is a strong, yet proportionate step to prevent exploitation of the benefit system and will save up to £600 million over the next 5 years.
We are preparing a new fraud bill for the next Parliament which will align the Department with HM Revenue and Customs, provide new powers to make arrests and conduct search and seizures by warrant, and enable penalties to be applied to a wider set of fraudsters through a new civil penalty.
This is an ambitious package which we will deliver to protect the taxpayer and help uphold the principles of fairness that sits at the heart of the welfare system.
Today’s publications also include changes to claimant error underpayments. These have been reclassified and reported as unfulfilled eligibility in the benefit system publication. This follows a planned review of the fraud and error statistics that determined that the estimates previously published as claimant error underpayments do not fit the legal definition of underpayments. The total unfulfilled eligibility rate in 2023-24 was 1.2% (£3.1 billion) compared with 1.0% (£2.3 billion) in 2022-23.
We will report more on both overpayments and underpayments by way of our annual report and accounts, which are due to be published in July 2024.
[HCWS476]
Women’s State Pension Age: Ombudsman Report
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Wendy Chamberlain
I am grateful to my hon. Friend for her intervention, and I absolutely agree with her. We have had the report for some time, and I think the Government should be making a statement to say that they support it. It is quite clear that plenty of work has been done by both the APPG and the ombudsman to outline what a compensation scheme should look like.
My hon. Friend is right about the mental impact. I met a constituent of mine, Heather, several weeks ago. She is a single woman, so she does not have a partner’s or spouse’s income—that is the assumption made about women—to rely on. She has had to give up work as a teacher earlier than expected due to ill health, and feels that the injustice is compounded by the Government not having yet acknowledged the ombudsman’s report properly.
The DWP has had full notice of the investigation by the PHSO and its findings, and I would argue that they should therefore have had the opportunity to plan accordingly. With regard to the infected blood scandal, the Government have said that when the report is finally published on Monday, they will make a statement on what they will do very quickly thereafter. I feel, therefore, unmoved by the argument that they need more time to respond to the ombudsman’s report, when they have known for some time that it was coming. The first report on maladministration was published almost three years ago, so I just do not accept that the Government and the DWP have not had the time to consider the likely outcome of the findings. We knew that a recommendation for compensation was likely, so I would have expected the DWP to have started making plans for administering it.
While sitting in the Chamber, I have been notified by my researcher that I have had a response to a written parliamentary question, which states that the Department did not have sight of a draft copy of the PHSO’s report at the end of last year. My researcher has also confirmed with the WASPI campaign—I have met Angela Madden and others several times—who say that that is not the case, and that the Government did have sight of the draft report. I would be grateful for clarity from the Minister on that. I am happy to give way to him now—[Interruption] —or perhaps he can comment on that written response to the parliamentary question in his closing remarks. Is it correct that the Government did not have sight of the draft report at the end of last year?
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
On a point of order, Mr Deputy Speaker. Opposition Members are complaining about the fact that I dip my head in order to listen, and suggest that is somehow evidence of me not listening. I take exception to their criticism of my body position.
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairmanship, Madam Deputy Speaker. I am grateful to the Backbench Business Committee for finding the time to host the debate. We have heard from Members on both sides of the House and from across the whole country, who have spoken both eloquently and passionately on behalf of their constituents. I know that many in the Public Gallery, as well as those listening remotely, who will be taking a close, scrutinising interest in this matter. I am always conscious that it is on behalf of those women that we are deliberating.
I pay tribute to those in my own constituency who have campaigned long and hard and met me down the years, even in recent weeks. I readily acknowledge the strength of feeling on both sides of the House. The Government are listening. What colleagues have had to say during the debate, which I have heard, will be taken fully into consideration.
In the oral statement made to the House on 25 March, the Secretary of State explained that the ombudsman’s report is complex, with the events that it considers spanning about 30 years. He committed to provide an
“update to the House once we have considered the report’s findings.”—[Official Report, 25 March 2024; Vol. 747, c. 1281.]
I understand the wide interest in this matter across the Chamber. We are all united in wanting a resolution. The ombudsman’s investigation has taken five years and produced a substantial report that requires careful and considered scrutiny. It is only right that we should give it that scrutiny. The Government are giving full and proper consideration to the ombudsman’s report, and that work is ongoing. The issues to be decided are significant and complex and require detailed understanding and deliberation.
I would like to remind the House of the Government’s strong track record of supporting pensioners. In 2024-25, we will spend more than £167 billion on benefits for pensioners. That is 6% of GDP and includes spending on the state pension, which is forecast to be about £138 billion in 2024-25. We are honouring the triple lock, having increased the basic and new state pensions by 8.5% in April. In 2024-25, the full yearly amount of the basic state pension will be £3,700 higher in cash terms than it was in 2010. We now have 200,000 fewer pensioners in absolute poverty after housing costs.
Grahame Morris
I am grateful to the Minister for sharing those figures. I am aware that people are a bit sceptical about statistics—someone said in the Select Committee the other day that 83.6% of all statistics were made up; I am not sure if that is true. Can I just advise the Minister of this? We have the poorest pensioners in Europe. Just 5.7% of our UK GDP is spent on state pensions and pensions benefits, compared with 16% in Italy, 13.9% in France, 11.9% in Spain, and an OECD average of 8.2%. His suggestion that our pensioners are generously provided for does not stand up to scrutiny.
Paul Maynard
I am grateful for that contribution. I heard the hon. Gentleman make those comments in his speech as well. I am trying to remember the precise figures, but I cannot, so I will write to him. More generally—this point is often made to me by pension experts—the international numbers are not directly comparable because each welfare system is entirely different, particularly in the public-private split in how pension systems are funded. To say that one percentage is generous while another percentage is not generous is not quite the point. I shall write to him none the less, because I think that he will find the fine print useful for his future contributions.
Sir George Howarth
The Minister said that the Government are to give the ombudsman’s report serious consideration before they decide what to do. How long does he think that process will take?
Paul Maynard
If I may, I will answer that in a moment, because I will now turn back to the report. In laying the report before Parliament, the ombudsman brought matters to the House’s attention, making it clear that Parliament has a role in responding to the report. The Government intend to engage fully and constructively with Parliament. I view this debate as a crucial part of that process.
I remind the House about what the ombudsman’s report says—and indeed does not say. The ombudsman has looked not at the decision to equalise the state pension age but rather at how that decision was communicated by the DWP. That is important to understand, as the motion calls on the Government to
“deliver prompt compensation to women born in the 1950s who had their State Pension age raised.”
Importantly, the ombudsman’s report hinted at the Department’s decisions over a narrow period between 2005 and 2007, and their effect on individual notifications. The ombudsman has not found that women have directly lost out financially as a result DWP actions. The report stated:
“We do not find that it”—
the DWP’s communication—
“resulted in them suffering direct financial loss.”
The final report does not say that all women born in the 1950s will have been adversely impacted, as many women were aware that the state pension age had changed. The stage 1 report found that between 1995 and 2004, the DWP’s communication of changes to the state pension age reflected the standards that the ombudsman would expect it to meet. That report also confirmed that accurate information about changes to the state pension age was publicly available in leaflets, through the DWP pension education campaigns and DWP agencies and on its website. However, when considering the Department’s actions between August 2005 and December 2007, the ombudsman came to the view that they resulted in 1950s-born women receiving individual notice later than they might have done had different decisions been made.
I welcome the wide-ranging contributions from Members on behalf of their constituents.
Alan Brown
The ombudsman clearly said that the DWP was guilty of maladministration during the period of 2005 to 2007. Does the Minister accept the finding that the DWP was guilty of maladministration, and should put its hands up to that?
Paul Maynard
I recognise that there will be an appetite from some Opposition Members for the Government to respond item by item to different parts of the ombudsman’s report, but the Government wish to respond in full when they have reached a conclusion from their deliberations. I will not go down the path that the hon. Gentleman seeks to take me along.
Some of the detailed commentary from Members today illustrates the interlocking considerations at play, depending on how each Member of Parliament responds to the report. The fact that so many have spoken today demonstrates the importance of this issue. Many parliamentary activities are worth noting to understand how they fit in. The Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), mentioned the evidence session held last week and the recommendation that he has made to the Department, which I read after he mentioned it, so I have only just seen it.
Late last month I was able to meet the hon. Member for Salford and Eccles (Rebecca Long Bailey) and my hon. Friend the Member for Waveney (Peter Aldous), the chair and co-chair of the all-party parliamentary group, to discuss our initial views of the report and what steps they intended to pursue to take further evidence. I am looking forward to seeing what they have to say. I have noted the evidence given last week to the Select Committee. I also took careful note of what occurred in the Scottish Parliament. The many views expressed so far provide valuable input to the ongoing deliberations.
Let me come to the question from the hon. Member for North East Fife (Wendy Chamberlain) about the written answer she received. I will take my glasses off to read this, because the print is very small and not clear: in November 2023, alongside other interested parties, the DWP received a copy of the PHSO’s revised provisional views on injustice, which was stage two of the inquiry, and remedies, which were stage three, for comment. The DWP responded with its comments in January 2024. The Department was notified by the PHSO on 19 March that the final report would be received on 21 March 2024, at a meeting between the permanent secretary and the ombudsman. I note that the hon. Lady’s written question was about the final report as opposed to the preliminary report.
Wendy Chamberlain
It was about the draft report, but I am grateful for that clarity.
Paul Maynard
Members raised questions about changes to the state pension age. As I said, the ombudsman’s report is clear that it cannot consider the impact of changes in the law on state pension age. The changes are set out in primary legislation and, as such, were agreed by Parliament. The announcement in 1993 of the equalisation of the state pension age addressed a long-standing inequality between men and women. The changes were also about maintaining the right balance between the sustainability of the state pension, fairness between generations and ensuring a dignified retirement.
Changes to the state pension age were made in a series of Acts by successive Governments from 1995 onwards, following public consultations and extensive debates in both Houses of Parliament. From the 1940s until April 2010, the state pension age was 60 for women and 65 for men. The decision to equalise the state pension age for men and women dates back to 1995. It was right to address a long-standing inequality between men’s and women’s state pension age. The report of the Pensions Commission in 2005 recommended that the state pension age should increase in a staged way to 68 in the three decades following the completion of equalisation in 2020. A broad consensus on that was achieved largely due to the commission’s evidence base, which showed that state pension age should follow increases in life expectancy to help ensure the affordability and sustainability of the state pension.
Legislation passed in 2007 introduced a series of increases, starting with a state pension age of 66 between 2024 and 2026, and ending with an increase to 68 between 2044 and 2046. As has been observed, the Pensions Act 2011 accelerated the equalisation of women’s state pension age by 18 months and brought forward the increase in men’s and women’s state pension age to 66 by five and a half years, relative to the previous timetables. The changes in the 2011 Act occurred following a public call for evidence and extensive debates in Parliament. During the passage of the Act, Parliament legislated for a concession worth £1.1 billion. The concession reduced the proposed increase in state pension age for more than 450,000 men and women, and meant that no woman saw their state pension age change by more than 18 months relative to the timetable set by the Pensions Act 1995.
Paul Maynard
Sorry, I won’t.
During the course of the ombudsman’s investigation, state pension age changes were considered by the courts. In 2019 and 2020, the High Court and Court of Appeal respectively found no fault with the actions of DWP. The courts made clear that under successive Governments dating back to 1995, the action taken was entirely lawful and did not discriminate on any grounds. During those proceedings, the Court of Appeal held that the High Court was entitled to conclude as a fact that there had been
“adequate and reasonable notification given by the publicity campaigns implemented by the Department over a number of years”.
We recognise the importance of providing information in good time about the state pension age to help individuals to plan for their retirement. Since 1995, the Government have used a range of methods to inform people about the increases in state pension age, including the provision of detailed and personalised information. The methods have included leaflets explaining the legislative changes, pensions education campaigns, press advertising and direct mailing exercises to millions of people. People have been able to request personalised state pension information since the 1980s.
John McDonnell
We do not know the timing of the general election—possibly November, but maybe later—but it is likely that we will have only about 10 sitting weeks between now and a general election. Can I impress on the Minister to take back to his fellow Ministers that we need the proposals rapidly in those 10 weeks, and certainly before recess, if we are to get a viable scheme through Parliament?
Paul Maynard
I am happy to confirm that I will take that message back. I have heard it clearly today. I understand the points about the Work and Pensions Committee’s findings, too. The right hon. Gentleman will have heard the Secretary of State—and me, in oral questions on Monday—say that we wish to have no undue delay. That remains the case. I recognise that people are frustrated by that phrase, but it is an accurate phrase. We do not wish undue delay. As I keep saying, it is a complex issue. It is not just a matter of ticking a box. It needs to be gotten right, and we understand all the ramifications and options that are open to us.
Between April 2000 and February 2021, the DWP provided more than 41.2 million personalised state pension statements, and it continues to do so. As well as issuing letters to the 6.9 million women and men born in the 1950s notifying them of the state pension age increase, the DWP sent around 17.8 million automatic state pension forecasts between 2003 and 2006, which included a leaflet explaining that the state pension age for women was increasing.
As I have outlined, the Government recognise the importance of this issue. The ombudsman report has been laid before Parliament, and we have been invited to take a view and engage with this issue. Today is one part of that. We will listen to the views of the House with great seriousness. The report is currently being given active and extensive consideration within the Department, by me and by the Secretary of State. We will seek to provide a further update without, as I say, undue delay, and I hope to give the issue the airing that it deserves as soon as that is practically possible.
Oral Answers to Questions
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Sarah Green (Chesham and Amersham) (LD)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The Government are committed to ensuring that separated parents support their children, taking robust enforcement action against those who do not do so. Since December 2022, there has been an increase from 65% to 68% in those paying something towards maintenance through collect and pay.
Sarah Green
Last year, I wrote to the Department about a loophole that allows paying parents who earn non-taxable income overseas to avoid making child maintenance payments. For one of my constituents, that loophole has allowed their ex-partner not to pay any maintenance and effectively engage in financial abuse towards them. Will the Minister meet me to discuss that loophole, to ensure that paying parents are fulfilling their financial obligations to their children?
Paul Maynard
I am obviously concerned to hear that case. We have just had a consultation on the possibility of moving from collect and pay to direct pay for all claimants, which would certainly help to put a greater focus on compliance. Although I am more than happy to arrange a meeting, I am not sure that one with me would be much help, because I am not in charge of child maintenance. I will ask the relevant Minister in the Lords to have a meeting with the hon. Member.
Mrs Sheryll Murray (South East Cornwall) (Con)
Paula Barker (Liverpool, Wavertree) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
No estimate has been made, but customers can request a mandatory reconsideration if they do not agree with a decision to stop their universal credit.
Paula Barker
My constituent Georgina Mitchell is a single mum to three children, two of whom have additional needs. She works as a nurse and is in receipt of universal credit. The Minister says that work pays, but since October, Georgina has had her benefits stopped intermittently because the DWP has falsely recorded her earnings as £19,000 one month, £12,000 the next, and so on and so forth. She cannot pay her social landlord, and her ability to pay for childcare is severely impacted. I have raised the matter with local officials, but despite assurances, it keeps happening. She cannot sort this, and despite my interventions, I cannot seem to sort it. Will the Secretary of State or the Minister investigate the matter urgently, and advise me on why these mistakes keep happening and on what will be done to ensure that they do not happen again?
Paul Maynard
I am very concerned to hear about the case that the hon. Lady has raised. I am more than happy to look into it if she contacts me further, and I recognise the urgency with which we would need to do that.
Christian Wakeford (Bury South) (Lab)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
Poverty among pensioners has remained stable, with no statistically significant changes since 2022-23. The number of pensioners with relative low income decreased by 1% in 2023 to 16%, and since 2010, over 200,000 pensioners have been lifted out of poverty.
Christian Wakeford
My inbox is full of constituents who are sick of the economic chaos inflicted by this Government and by the former Prime Minister, the right hon. Member for South West Norfolk (Elizabeth Truss). Can the Minister explain why the number of elderly individuals resorting to food banks has doubled in the past year to nearly 100,000? Are the people of Bury South wrong, and if they are, what is the reason why so many elderly residents cannot afford to eat in this country?
Paul Maynard
In 2023, 1% of low-income pensioners lived in a household that had accessed a food bank within 12 months. That percentage is unchanged from the previous year’s figures. I recognise the effort that people put into supplying their Front Benchers and Back Benchers with zinger points to make, but when I was in that role 25 years ago, I learned to make sure I had worked out what the Government’s answer might actually be.
Mr Speaker
We now come to the temporary shadow Minister. I wish the shadow Secretary of State, the hon. Member for Leicester West (Liz Kendall), a speedy recovery, and look forward to seeing her in the House. Angela Eagle, welcome back.
Dame Angela Eagle (Wallasey) (Lab)
Thank you very much, Mr Speaker. I am sure that the shadow Secretary of State is making a good recovery—she is probably watching us even now, in between her physiotherapy.
Is it not the case that on this Government’s watch, food bank usage has doubled for pensioners, and over 2 million pensioners—nearly one in five—are now living in poverty? That figure is not stable; it is rising, so what is the Minister going to do about it?
Paul Maynard
Of course, I also pass on my good wishes to the shadow Secretary of State, who I hope is recovering well.
Just as I gave the hon. Member for Bury South (Christian Wakeford) some advice, I can now give some advice to Labour Front Benchers: always listen to the answer the Minister has just given. I will repeat it: in 2023, 1% of low-income pensioners lived in a household that had accessed a food bank within 12 months. That percentage is unchanged from last year’s figures.
Dame Angela Eagle
But 2 million pensioners are in poverty. Labour got far more pensioners out of poverty than the Minister’s Government have, and the number of pensioners in poverty is now rising: it was 1.6 million when the Conservatives came into office, and it is now 2.1 million, so there are more pensioners in poverty. Despite the Minister’s bluster, the Government’s own statistics show that well over a third of pensioners entitled to pension credit are not receiving it, which saves his Department almost £3 billion a year. Even when pensioners do apply, the Minister’s Department is missing its own 10-week service standard for processing new claims in nearly a quarter of all cases. Why is his Department so reluctant to ensure that pensioners are receiving the benefits they are entitled to?
Paul Maynard
The Government are putting an enormous amount of effort into improving the uptake of pension credit. The number of claims received in financial year 2022-23 was more than 80% higher than in the same period the year before, and the recent case load is going up for the first time in over a decade. We have given cost of living payments to pensioners on pension credit—we have given pensioners extra money on top of their winter fuel allowance and cold weather payments. The reality is that no Government have supported the pensioner population more than this Government have. As we all know, Labour is the party of 75p pension increases; no pensioner will ever forget that.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Alexander Stafford (Rother Valley) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The state pension provides the foundation of support for older people. In the next year, we will fund more than £167 billion of benefits for pensioners—some 6% of GDP.
Alexander Stafford
Older people should be able to retire in comfort and dignity, which is why this Government created the triple lock and increased the state pension by 8.5% this year and 10.1% last year. However, many of my constituents are concerned about being taxed on those pensions, as the personal allowance has, in effect, been frozen for nearly five years. Will the Minister encourage the Chancellor to look again at the personal allowance and allow more pensioners to keep more of their well-deserved money?
Paul Maynard
As I am sure my hon. Friend is aware, it is this Government who have doubled the personal allowance since 2010. It is absolutely clear that those who rely solely on the state pension are not liable for income tax.
Steve McCabe (Birmingham, Selly Oak) (Lab)
We must all be aware of a growing number of pensioners who are struggling with rent, council tax and other cost of living increases. Given that state of affairs, does the Minister think there may be an argument that the threshold to access pension credit is too high and that if he were to lower it just a little, he would help a great many more people who are obviously struggling?
Paul Maynard
I draw the hon. Gentleman’s attention to the fact that the state pension has gone up by 8.5% this year, after an increase of 10.1% last year. On top of that, for those in receipt of pension credit we have added £900 in cost of living payments, and 8.9 million have received a £300 top-up to their winter fuel payment. We have spent billions on supporting pensioners through the cost of living crisis. As we established in the exchanges earlier, pensioner poverty remains stable.
Deidre Brock (Edinburgh North and Leith) (SNP)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The Government have provided total support of over £108 billion to help households and individuals with higher bills. As I just said, in addition, the basic state pension has gone up by 8.5% this year.
Richard Burgon
But a new poll today shows that two thirds of people think the Government should urgently pay fair compensation to all WASPI women, including many in east Leeds, who were hit by the change to the state pension age. It has been over six weeks since the Secretary of State got the parliamentary ombudsman’s final report, but nearly three years since the ombudsman said that the Department for Work and Pensions had committed maladministration through its failure to properly inform affected women of the state pension age changes. With a WASPI woman dying every 13 minutes, time is not on their side. When will the Government stop dragging their feet? To help ensure justice, will the Government allow MPs to vote on a compensation package before the summer?
Paul Maynard
The hon. Gentleman has heard the Secretary of State reply at great length to a number of questions on that subject today. As he said, we are looking carefully at the report and considering what is a very complex set of recommendations and proposals to make sure that we do the right thing.
Deidre Brock
Ministers certainly seem to prefer the comfort of their own massaged figures to facts. The Trussell Trust, however, says it has seen a 36% rise in pensioners turning to food banks in the past six months, and that is likely to increase. The hard fact is that the UK devotes a smaller percentage of GDP to state pensions and pensioner benefits than most other advanced economies. When will they take pensioner poverty seriously and fix this scandal?
Paul Maynard
The households below average income statistics, which are cleared by the Office for National Statistics, show that 1% of low-income pensioners live in a household that has accessed a food bank within 12 months. Given all the effort we are putting into the ongoing campaign to increase access to pension credit and the success that campaign is having, I am very confident that we will make continued progress in reducing pensioner poverty.
Chris Clarkson (Heywood and Middleton) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
Let me simply point to what the Resolution Foundation had to say in its Living Standards Outlook: pensioner poverty is forecast to fall.
Sir Desmond Swayne (New Forest West) (Con)
Pension Schemes
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to be here today. I thank the right hon. Member for Orkney and Shetland (Mr Carmichael) and the Backbench Business Committee for allowing the debate, which is a second outing on the issue within a few months.
We all agree that occupational pensions are crucially important. Many hard-working people across the country depend on their occupational pensions for an income in retirement, having spent years paying into their pension scheme. The right hon. Member for Orkney and Shetland spoke powerfully, once again, about the situation that his constituents face, and he referred to others as well. He spoke powerfully about the situation as he saw it. All of us have constituents who have done the right thing, worked hard and contributed to their occupational pension scheme, so it matters to all of us that they get what they have been promised when it falls due, as set out in the rules of the scheme.
When we last debated the issue, in Westminster Hall in January, I made the point that I would not speak about specific schemes, and I will not do so today. I will comment in more general terms. What comments I might make about the generality of the issue should not be taken as an oblique commentary on any of the schemes mentioned in the debate today, no matter how tempting that might be for some.
Since the debate in January, the world has indeed moved on, and I have tried to take some steps as well. As has been said, we published a consultation on options for defined-benefit schemes in February. The consultation reflected a new funding landscape, where funding levels are generally high and many schemes are in surplus. The consultation sought feedback on proposals to make surplus extraction easier, where it is safe to do so, and on the model for a future public sector consolidator, operated by the Pension Protection Fund. The consultation is now closed and we are currently analysing the responses. It closed only a fortnight ago, so we are not quite there yet, but there will be a Government response in due course. But I can be clear today that better outcomes for savers lie at the heart of our proposals. I stress, given the comments we have heard today, that the proposals on surplus sharing include a range of safeguards, as the starting and foundational principle, to ensure that member benefits are protected.
Mr Carmichael
I can understand the attractions of such changes for Governments and corporates, but I impress upon the Minister the need to ensure that if changes of this sort are to be made then the first protection always has to be for the beneficiaries. If there is to be flexibility for Governments and corporates to get investment in big infrastructure projects, that is to be encouraged but it should never be at the expense of the pensioners themselves.
Paul Maynard
That is very much the approach that I am taking with this matter. It has been discussed at great length at the sector roundtables that I have been present at. It has been a very strong theme that I have heard, so I can assure the right hon. Gentleman that I am acutely conscious that that is the lens through which I am looking at the issue.
Sir Julian Lewis
My hon. Friend did say that things had moved on since January. May I gently remind him that it was in January that he told the Work and Pensions Committee that he was waiting to hear from his officials who were in discussions with the Cabinet Office about the AEA Technology pension scandal? He has since been saying that there is no timeline for how these people will be advised of appropriate redress. Does he expect there to be no timeline between now and the general election, or can they expect a definite answer at some point before then?
Paul Maynard
My right hon. Friend has pre-empted a topic that I was about to come to, because I could see that it was going to come up in the discussion on the Select Committee report. I have now been to see the Cabinet Office Minister with my officials, and my officials then went back for a second visit. So although I cannot give him a timeline, I can say that I am motoring this issue along as rapidly as I can. When I say that this is complex, it is because it is complex; it is not merely because that is a useful and convenient word to cover a multitude of things. We continue to work as fast as we can to try to reach a conclusion. I hear the points that he has made to me, both in this place and outside, about wanting to draw this to a conclusion as best we can.
The regulations that I referred to on the funding and investment strategy clarify what prudent funding plans look like, allow open schemes to take account of new members and future accrual, make it explicit that there is headroom in the regulatory environment for schemes to invest more productively, and require all schemes to be clear about their long-term strategy to protect member benefits.
DB funding levels have improved in recent years, and it is important that schemes take advantage of the opportunities that this brings. The scheme funding regulations will help schemes get the most from their assets, while at the same time ensuring that scheme members can be confident that they will receive the benefits that they are promised.
The regulations embed good practice and build on the existing funding regime for DB schemes by providing clearer funding standards, which will ensure, as far as possible, that schemes are properly funded over the long term. Scheme members can and should be confident that the regulations provide increased security for their promised pensions, which is important to many of the people whom the right hon. Member for Orkney and Shetland is trying to support through this debate.
In addition, the new general code for the Pensions Regulator has come into effect since we last discussed these issues. The new general code consolidated and simplified 10 of the existing codes to make it easier for trustees and those running occupational pension schemes to find the information they need on the regulators’ standards of conduct and practice. It came into force at the end of March this year.
I will do my best to reply to some of the points that have been raised in the debate before I continue with my speech. I am grateful to the Chair of the Work and Pensions Committee, the right hon. Member for East Ham (Sir Stephen Timms), for covering many of the issues in what was a very helpful report on DB schemes. I know that we often discuss Select Committee reports in this place on a Thursday, and it is quite right that we should do so. Normally, however, we do so after the Government have issued their official response to that Committee report. If the Chair of the Select Committee will forgive me, I will not pre-empt every recommendation in the report. But I can assure him that I sat down for a marathon session with my officials not so long ago, going through every last sentence in the report, so I can tell him that I am giving the matter full consideration.
It is worth noting that both the right hon. Member for East Ham and the hon. Member for Strangford (Jim Shannon) mentioned the auto-enrolment reforms. I am happy to place on the record today our ongoing commitment to consult in the mid-2020s on that issue. I am keen to make progress. I hear all across the Chamber that there is a recognition of why it is important that we make as rapid progress as we can.
The right hon. Gentleman mentioned that he will have to provide a consultation. He summarised the general tone of the contributions very well. Certainly there have been more responses to that consultation than to any other during my time in the Department. I have read most of them myself, rather than just waiting for the summary. I have absorbed similar mood music to the right hon. Member for East Ham, and I hope that we can have a proper Government response very soon.
Sir Stephen Timms
I thank the Minister for the attention that he is paying to the recommendations in our report. On the auto-enrolment review recommendations, does he envisage the consultation on implementation happening this side of the election?
Paul Maynard
No decision has yet been taken on when that might be. It would be wrong for me to speculate at the Dispatch Box about when it might occur but, as I say, I am keen for it to happen as soon as we can manage it.
The hon. Member for Cardiff South and Penarth (Stephen Doughty) rightly raised his constituents and the AWS pensioners. As he may be aware from the oral evidence I gave to the Work and Pensions Committee, I have met with the pensioners. I fear this always sounds like a cliché, but I listened carefully, commissioned work on the back of that meeting, received that work and reviewed it, and then commissioned some further work on the back of that. The policy development process is ongoing. I am happy to meet the hon. Gentleman. He asked for a timeline. He actually read out my timeline when he quoted my reply to him from 18 April, so he answered his own question. As I say, I will happily meet with him and the pensioners, but I caution him that I doubt that I can say very much more at this stage than I have already. He may want to consider at what point he wishes to have a further meeting, given that it is a long way for them to come from south Wales to hear me say what I already said to them a few months ago, but I am working hard on the issue.
My right hon. Friend the Member for Suffolk Coastal (Dr Coffey) spoke eloquently about the potential value of CDCs, not least in this place. I cannot wait for the Royal Mail one to get off the ground. I welcome her comments on the importance of employers doing right by their employees. We should always note just how many do that. She asked for an update on the pensions dashboards. As I am sure the House knows, there was a reset of the pensions dashboards shortly before I arrived in the Department. I have taken a close personal interest in it, having overseen a few rail infrastructure projects in my time that also needed a bit of a reset. The chief executive of the Money and Pensions Service, Oliver Morley, and I are taking a careful, scrupulous and in-depth interest in the progress of the reset. I am satisfied that we are making good progress. The timetable for connections has now been issued, and we are very much on track.
The hon. Members for Strangford and for Ayr, Carrick and Cumnock (Allan Dorans) mentioned WASPI. I am not sure that there is much that I can usefully add right now, because I do not think that this is the debate for it. I note the comments that were made and entirely understand them. As the hon. Member for Strangford mentioned, there will be a debate on WASPI in this place very soon, as an important part of the engagement with Parliament that the ombudsman identified. I look forward to hearing what Members have to say.
I will do my best to cover a few issues around discretionary increases, because it is important to put on record the legal situation. There are clear legal requirements for schemes to provide indexation on all defined-benefit rights accrued after 1997, and on guaranteed minimum pension rights accrued between 1988 and 1997. Some pension schemes go beyond the legal requirements and provide more generous indexation. If higher levels of indexation are set out in the scheme rules, those levels of indexation must be paid. The scheme rules set out the pension package that members have the right to receive. Some schemes provide additional indexation on a discretionary basis. In some cases, these payments may have been made regularly in the past, but they are not part of the pension package promised by the employer; rather, they are, and remain by definition, discretionary.
I understand the frustration that will cause for pension scheme members no longer receiving such discretionary increases, and during a previous debate I committed to looking closely at the situation in order to better understand whether the arrangements that we have in place are working as intended. That commitment still stands, and I recently met with the Pensions Regulator to personally discuss the issue, along with many of the other concerns that were raised in January, and indeed some of those raised today. I have to stress that the legislation does not and cannot seek to set out exactly what every scheme must do in each and every circumstance. The legislation sets out some minimum standards for indexation. That does not prevent more generous arrangements, which may be brought into a scheme through its rules or provided on a discretionary basis. Those arrangements are the concern of the scheme trustees.
The Government set a minimum legal requirement, which trustees and sponsoring employers can exceed if they choose, if they judge that scheme can afford it in the short and the long term. It is important to achieve a balance, providing members with some measure of protection against inflation while not increasing a scheme’s costs beyond what most schemes can generally afford. Trustees, whether of big firms or small ones, must have an eye to the future viability of their scheme.
I am very grateful to all Members who have contributed to this debate. It has been wide-ranging, partly because, being called “Pension Schemes”, it covers a multitude of issues beyond the more precise ones that the right hon. Member for Orkney and Shetland raised. I am grateful to all who have participated, and I commit to working much harder on this issue in the future, because I know how important it is to many of our constituents.
Mr Deputy Speaker (Mr Nigel Evans)
With two minutes, I call Alistair Carmichael to wind up.
Pensions (Special Rules for End of Life) Bill
Paul Maynard ExcerptsWednesday 24th April 2024
(3 weeks, 5 days ago)
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The Chair
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairship, Dame Siobhain. I thank my hon. Friend the Member for Tewkesbury for bringing forward this legislation; I should also thank my right hon. Friend the Member for Suffolk Coastal, the former Secretary of State for Work and Pensions, for paving the way.
This may seem a small and discrete piece of legislation, but it is very important. As my hon. Friend the Member for Tewkesbury explained, the Bill extends the definition of terminal illness for compensation payments made under both the Pension Protection Fund and the Financial Assistance Scheme. Members will be able to claim their compensation on the grounds of terminal illness if a medical professional confirms that they have less than 12 months to live, rather than the current six months. That will enable eligible members to receive the vital support of payments at an earlier point in their illness. The change restores the original policy intent of alignment between the social security special rules provisions and both the PPF and FAS. It will also bring those two schemes into line with the tax definition of “serious ill health”, which allows private pension schemes to make payments where the member has less than 12 months to live.
I will try to cover some of the issues raised today and on Second Reading. There was a particular concern on Second Reading as to whether people whose schemes were not in the PPF or FAS would have a similar opportunity. Although I cannot provide definitive numbers—I do not believe they actually exist—for serious ill health payments, one of the leading independent trustee firms, Dalriada, has confirmed that:
“Trustees may only make such payments in accordance with the provisions of their scheme’s trust deed and rules. In practice, most scheme rules do allow for such payments.”
Officials have also contacted the Association of Pension Lawyers, which collectively acts for many schemes of all sizes. It has confirmed that, in the experience of its members, most occupational pension schemes will have an option of a serious ill health lump sum payable on a discretionary basis.
We have also heard questions today, and as we did on Second Reading, about who would be making the decisions on terminal illness, and the range of those illnesses. I can confirm that those decisions will be made by healthcare professionals, such as clinicians and medical practitioners, who have had direct oversight of the individual concerned. Although there is no definitive list of what constitutes a terminal illness, I imagine that the provisions would certainly include illnesses such as advanced cancer, dementia, motor neurone disease, and other neurological diseases, such as Parkinson’s. However, in my view the definition does not exclude any particular range of conditions, because one’s lived experience of a condition is not determined by the label that we hang around our necks. I find that I have been saying that for 48 years of my life, frankly. We do not determine someone’s lived experience just by the name of their particular condition.
My hon. Friend the Minister for Employment was also asked on Second Reading whether fixed time limits were the right way to go, and whether there would be adequate training for clinicians and communication to make people aware of the changes. The Department engaged widely on time limits ahead of the Social Security (Special Rules for End of Life) Act 2022, and chose the 12-month approach specifically to align with the NHS definition of “end of life”, and to link up with existing initiatives for clinicians that encourage the identification of people in their final year of life. This Bill simply aligns the definition used for the PPF and the FAS with that used more widely by the DWP and the NHS.
As part of the preparations made ahead of the 2022 Act, the Department engaged extensively with senior clinicians from key medical organisations and hospices, as well as representatives from multiple charities and networks of welfare advisers. DWP bulletins were sent out by the British Medical Association, the Royal College of General Practitioners, the Royal College of Physicians, the Association for Palliative Medicine, Hospice UK and NHS England networks across the country. The Department also initiated plans to create a learning module for clinicians to raise awareness among the clinical community of the financial support available for those who are nearing the end of life. That learning module went live in February.
Assurances were also sought that the definition of a terminal illness would be consistent across the DWP. I can provide that assurance today. As the Minister for Employment said on Second Reading, this Bill builds on the previous legislation—which we have just heard about—which changed the special rules for social security benefits. The scope of that legislation limited the changes that we could make to social security benefits administered by the DWP, as they involved the fast-tracking of benefit claims. This final change brings payments made by the PPF and FAS into alignment with those changes.
As I mentioned a little earlier, this Bill aligns the PPF and FAS definition with the tax rules for serious ill health. That will ensure that the payments made by the PPF do not trigger unauthorised payment tax charges on either the PPF or the individual to whom the payments are made. If the definition was to be amended beyond 12 months, as some have suggested, members could have faced significant tax charges on their payments, which I am sure no one wishes to see happen.
I have noted the comments today from my right hon. Friends the Members for East Yorkshire and for Suffolk Coastal about the commencement of the provisions in the Bill. I can confirm today that the intention is for that to happen as soon as practicable after Royal Assent. I see no reason for delay or obfuscation. We have all agreed today that this is a vital piece of legislation that will benefit many of the most vulnerable in our society at the time they need help most, so I have no intention at all of delaying it.
Sir Greg Knight
I am most grateful to the Minister for what he has just said. Can he confirm that that is an undertaking that he has given, and that it is unequivocal?
Paul Maynard
Given that the phrase I used was “as soon as practicable”, I can give that solemn undertaking. I would hate it if either scheme had some kink in its processes that might cause delay. I will do everything in my power to ensure that this is done as soon as possible. I meet the PPF regularly, and this will be on the agenda for the next meeting to make sure all its ducks are in a row, like all the Department’s are.
To conclude—
James Gray
Before the Minister does that, does he agree that one person who would have been very pleased by this legislation is that great champion of pensions and of pensioners, Frank Field, who died yesterday? He was a great man and a great gentleman.
Paul Maynard
I am grateful for that intervention, because I should have thought to start my speech by paying tribute to Frank Field and the immense amount of work he did in the Department for Work and Pensions. He was a thoughtful and humane man, respected on both sides of the House, and I am more than happy to join in paying tribute to him.
Being told that one is nearing the ends of one’s life can be a devastating and frightening experience. It is crucial that those reaching the final stages of their life do not have to worry as much about their finances and can focus on spending their time with the people who matter to them. The Bill takes us one step further toward ensuring that that can happen, building on the changes made back in 2022. I am grateful to my hon. Friend the Member for Tewkesbury for promoting the Bill, and I commend it to the Committee.
Mr Robertson
I thank the Minister for that positive response. We look forward to the measure being introduced as soon as practicable. I also thank all members of the Committee for their attendance and contributions today, as well as the team who helped to put the Bill together.
It was rather remiss of me to forget to pay tribute to Frank Field, and I am grateful to my hon. Friend the Member for North Wiltshire for reminding us. A long time ago, before I was elected to this House, I had the pleasure of working with Frank on a charity project I was involved with, just across the river at Lambeth Palace. We were raising money to create a hostel for homeless women in London at Marylebone complex, just off the Marylebone Road, and Frank was very active member of the fundraising committee. There was no benefit to him; he did it because he felt it was the right thing to do. I pay sincere tribute to Frank.
That seems a good point to finish my speech by restating my thanks to everyone who helped with the Bill.
Pensions Dashboard
Paul Maynard Excerpts(1 month, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
The success of automatic enrolment has led to record numbers of people saving for retirement. Pensions dashboards will allow individuals to view information about their pensions, including their state pension, for free, in one place online. This will help individuals’ awareness and understanding of their pension information and estimated income in retirement, building a greater sense of individual control and ownership.
Since the reset was initiated last year, the pensions dashboards programme has made significant progress on building and testing the system that will enable pensions dashboards to work. Subject to satisfactory testing, the programme plans to begin the process of connecting the organisations building a direct connection, including the Department for Work and Pensions state pension, from August 2024. Connection testing will then continue to ensure readiness to support wider industry connection from early 2025.
The Secretary of State for Work and Pensions will today publish guidance setting out a staged timetable for connection. This will help smooth the process of connecting the approximately 3,000 pension schemes and providers in scope by the connection deadline of 31 October 2026. The timetable prioritises connection of the largest pension schemes and providers, so that crucial user testing can quickly take place at scale, with the first cohort expected to have completed connection by the end of April 2025. While the timetable is not mandatory, it is a legal requirement that trustees or managers of occupational pension schemes and providers of personal and stakeholder pensions have regard to this guidance.
The Government are absolutely committed to delivering pensions dashboards safely and securely to the public at the earliest opportunity. The publication of the connection timetable marks a significant milestone towards launching pensions dashboards, and takes us closer to introducing a service that has the potential to transform how individuals plan for retirement.
[HCWS381]
Oral Answers to Questions
Paul Maynard Excerpts(2 months ago)
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Mr Louie French (Old Bexley and Sidcup) (Con)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
In 2023-24 we will spend over £152 billion on benefits for pensioners in Great Britain—5.9% of GDP—including a forecast £125.4 billion on the state pension.
Mrs Wheeler
I thank my hon. Friend for his reply. South Derbyshire pensioners have been in touch with me following the Budget, emailing to say that it seemed to offer them nothing. Would he be kind enough to set out today the help that the Government have given and are giving to pensioners, to help them realise that “nothing” is far from the reality of what a Conservative Government are giving them?
Paul Maynard
I am grateful for that question. The answer could not be further from nothing. This is a Government with a proven track record of supporting pensioners, including our commitment to the triple lock. In April we will see the state pension raised by 8.5% this year, after an increase of 10.1% last year, meaning that it will be a full £3,200 higher in cash terms than it was in 2010.
Greg Smith
I very much welcome the record on supporting pensioners that my hon. Friend has just outlined. A number of pensioners in my constituency have contacted me about the effects of fiscal drag—they may have a very modest private pension that is now being dragged into tax when they never expected it to be. What steps is my hon. Friend taking in conjunction with the Treasury to ensure that we can get pensioners on modest private pensions out of tax?
Paul Maynard
This is the Government who have nearly doubled the personal allowance since 2010, ensuring that most of the lowest earners do not pay income tax. Indeed, thanks to the personal allowance, around 30% of individuals do not pay tax, and of course any pensioner solely reliant on the state pension does not pay income tax.
Mr French
Does my hon. Friend agree with me that while the Conservatives proudly continue to support pensioners in their hard-earned retirement with the triple lock and other cost of living support measures, it is disgraceful that the Labour Mayor of London has hammered pensioners and working people in Bexley by increasing council tax by approximately £200 per year, and ultra low emission zone charges to £12.50 per day?
Paul Maynard
I am sure my hon. Friend agrees with me that the Mayor of London seems to spend more time paying extremely expensive salaries to some of his key employees around Greater London. Of course ULEZ has an effect on pensioners: whether they are going to the shops, visiting their family or attending hospital appointments, they will be the ones to pay the price for the Mayor’s overweening ambition.
Kate Hollern (Blackburn) (Lab)
In early December, my constituent was informed by the DWP that they must renew their personal independence payment entitlement. They were told that if the necessary forms were not returned by 13 January, their PIP could be stopped. On Christmas day, the DWP informed my constituent that, as the forms had not been returned, their PIP entitlement had been stopped and they owed some money. My constituent returned the forms in early January, long before the deadline, but they have had no response since then, and nor have they received their benefits. Could I implore the Minister to intervene in this astounding case and work out exactly how this error could have occurred?
Paul Maynard
I thank the hon. Lady for her question. If she writes to me with further details, I will ensure that the relevant Minister is able to look into the case.
Steve McCabe (Birmingham, Selly Oak) (Lab)
With more than 9 million pensioners now paying income tax —many, as we have just heard, as a result of frozen allowances—and almost 1 million not receiving pension credit to which they are rightly entitled, does the Minister think it might be time to improve the uptake of pension credit?
Paul Maynard
I am pleased to be able to say that applications to receive pension credit are currently increasing, quarter on quarter.
Paul Maynard
If the hon. Gentleman will wait and listen to the answer, I will explain what we are doing to increase uptake of pension credit. Not only do we have major nationwide campaigns, our latest one featuring Harry Redknapp; we are also carrying out experimental campaigns, such as writing to all those pensioners who are in receipt of housing benefit, to make sure that those most likely to be eligible for pension credit are being targeted to take it up.
Alison Thewliss (Glasgow Central) (SNP)
It is all very well people applying for pension credit, but The Well advice centre in my constituency has identified massive delays in people getting the pension credit for which they are eligible. One constituent got in touch with me in February, having applied for pension credit in August 2023, and they were still waiting for the application to be resolved, resulting in a backdating of more than £8,000. Would that money not have been much better in the pocket of a pensioner who needed it right then, rather than waiting indefinitely for the DWP to get back to them?
Paul Maynard
I am obviously disappointed to hear of that constituent’s experience, but it is not something I hear very often about pension credit. We have an excellent delivery record and an extremely low level of complaints.
Anna Firth (Southend West) (Con)
Southend’s indomitable pensioners and WASPI women Frances Neil and Deborah Dalton came to see me on Friday on behalf of the 10,000 WASPI women across Southend. With the ombudsman’s final report due within weeks, will the Secretary of State please commit to coming to the House to make a statement so that these issues can be fully aired?
Paul Maynard
As I am sure my hon. Friend is all too aware, I am not able to comment until the Parliamentary and Health Service Ombudsman’s report is published.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
When will this miserable Government wake up to the fact that there is a shortage of skilled labour in this country, and at the same time that we have an army of pensioners who could be retained in the workforce if they were given the right incentives to carry on working? There is a good relationship between work and staying healthy, so will the Minister act?
Paul Maynard
I am not sure whether the hon. Gentleman is volunteering himself for a post-Commons career, but there are many job opportunities for pensioners across the country. Indeed, many people working on attendance allowance in my part of Blackpool are in their 70s and 80s, and they are doing a fantastic job. We put an awful lot of effort, not just through the mid-life MOT but through the older worker support in our jobcentres, to make sure that we match jobseekers to the right job for them.
Gill Furniss (Sheffield, Brightside and Hillsborough) (Lab)
Time and again, pensioners have been let down by this Government. They suspended the triple lock, breaking a key manifesto promise; their disastrous mini-Budget knocked hundreds of billions of pounds from pension pots; and their failure to get a grip on the cost of living means that pensioners are mainly living in cold homes over the winter and have a choice between heating or eating. Against this backdrop, is the Minister at all surprised that almost one in five pensioners are now living in poverty?
Paul Maynard
It is as if the shadow Minister has not noticed the almost £900 of cost of living payments made to pension credit recipients across the country over the last year. I know the Opposition have relied on last week’s Resolution Foundation report to criticise what we are doing, but this is what the report actually says:
“‘Pensioners used to be by far the most likely to be in poverty…now they are the least likely.’ This change in the relationship between old age and low income is one of the most profound social and economic changes this country has seen”.
We achieved that under this Government, not under our failed Labour predecessors.
Hywel Williams (Arfon) (PC)
The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
I am always happy to have a debate with the hon. Gentleman. We sit next to each other almost every morning in Portcullis House, and I am sure that we can have a conversation.
Rob Butler (Aylesbury) (Con)
Aylesbury is a wonderful place to live, work, visit and invest in, but sadly we have some areas of economic deprivation. Opportunity Bucks, run by Buckinghamshire Council, has identified Aylesbury north and Aylesbury north-west as areas for extra attention, where we could improve education, training and skills. How can my hon. Friend’s Department assist such initiatives in getting more Aylesbury residents into work?
Draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024
Paul Maynard Excerpts(2 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
I beg to move,
That the Committee has considered the draft Occupational Pension Schemes (Funding and Investment Strategy and Amendment) Regulations 2024.
It is a pleasure to serve under your chairmanship, Dame Maria. The regulations introduce new measures that will support trustees and sponsoring employers of defined-benefit occupational pension schemes to plan and manage their scheme’s funding over the longer term. The regulations will require trustees to send a statement of the scheme’s funding and investment strategy to the Pensions Regulator, alongside the three-yearly actuarial valuations already required. This will articulate the trustees’ approach to long-term planning and risk management.
The regulations will work with the regulator’s revised funding code of practice, aiming to strike a fair and lasting balance between providing security for members of defined-benefit schemes and affordability for the sponsoring employer.
Sir Greg Knight (East Yorkshire) (Con)
The explanatory memorandum states on page 7:
“There were concerns that the new regime would result in a disproportionate governance burden for small schemes”.
Does the Minister intend to address that concern?
Paul Maynard
My right hon. Friend makes the very fair point, which I have always been conscious of in this brief, that small schemes may occasionally get out-shouted by some of the larger schemes. Alongside the Pensions Regulator, we have engaged extensively not just with industry but with the professional bodies that are often more involved in the running of smaller schemes. I am confident we have struck the right balance between providing the clarity and assistance that trustees of smaller schemes need, and the interests of members in ensuring that they get the benefits that are due to them. It has been quite a long process to come up with this particular set of schemes and, in my view, we have struck the right balance.
As many will know, DB schemes have around £1.4 trillion of assets under management. In a world where most DB schemes are closed and maturing, it is more important than ever that sponsors and trustees work together, are clear how their promises will be met, and agree how to manage the funding and investment decisions involved. These regulations will support them to do that.
DB funding levels have indeed improved in recent years. It is important that schemes take advantage of the opportunities that that brings, and crystal-clear funding standards enable that. This package of measures aligns with the Government’s policy on investing in productive finance and the consultation on options for defined-benefit schemes.
Mr John Baron (Basildon and Billericay) (Con)
As somebody who has run pension fund money, I have a few concerns. One is the administrative concern raised by my right hon. Friend the Member for East Yorkshire, but this could also smack of the approach, “I’m from central office—nothing to be concerned about”—[Interruption.]
Mr Baron
Thank you, Dame Maria. I fully understand where the Government are coming from on these measures, but what assurance can the Minister give that the Pensions Regulator, if and when it intervenes, is suitably sighted of investment risk, so that it understands the pension scheme and its funding liabilities, and whether or not it has low funding capability, so that it will be a help rather than a hindrance?
Paul Maynard
I am grateful for that intervention. The Pensions Regulator is expert in regulating, but more than that, it recruits investment consultants, experts in covenants, and experts in risk management. It reaches out to the wider community—to not just those who run pension schemes, but those who manage the process from beginning to end. Having met with the regulator on many occasions, I am confident that it has the necessary skillset to implement its own funding guidance and ensure that it is adhered to by scheme trustees.
As I was saying as my hon. Friend intervened, DB funding levels have improved in recent years. It is important that schemes take advantage of the opportunities that brings, and crystal-clear funding standards enable that. This package of measures aligns with the Government’s policy on investing in productive finance, and the consultation on options for DB schemes. We want to encourage schemes to get the most from their assets through more productive investments, while at the same time ensuring that scheme members can be confident that they will receive the benefits that they have been promised. We know that most DB schemes are well-managed and properly funded, and that the vast majority of members will receive the promised pension.
Good practice is not universal. Some schemes still take inappropriate levels of risk. There remain around 27% of schemes, on a technical-provisions basis, that have a deficit that will need to be repaired. The regulations embrace good practice and build on the existing funding regime for DB schemes by providing clearer funding standards, which will ensure, as far as possible, that schemes are properly funded over the long term.
The regulations set out the details for the scheme funding provisions in the Pension Schemes Act 2021, the details for the funding and investment strategy, and how important metrics, such as maturity, covenant strength and low dependency, must be determined. Schemes will be required to have a funding and investment strategy that sets out the way pension benefits will be paid over the long term. That could be through buying out with an insurer, entering a super-fund, or running on with employer support.
As they were originally drafted, the regulations would have meant that one component of the reforms—recovery plans—would come into effect from April and not September. Having identified that, and to avoid potential confusion and additional administrative requirements for the small number of schemes affected, we withdrew the regulations and re-laid this revised version.
I am pleased by the positive response to the regulations from our stakeholders, and I am confident that the regulations will support schemes and sponsoring employers to make long-term plans so that their members get the retirement income that they have contributed towards and rightly expect.
Paul Maynard
I thank the shadow Minister—the hon. Member for Sheffield, Brightside and Hillsborough—and my hon. Friend the Member for Basildon and Billericay for their contributions.
I will do my best to reassure my hon. Friend. I fear he has greater expertise than me in this matter, so I may not succeed, but I am sure he will let me know. To his specific point, the funding risks taken by schemes need to be supportable by the employer. They are required to address any deficit that emerges if risks materialise. When we say “employer covenant”, we are really referring to the strength of that covenant—the financial ability to plug a gap should it occur.
The key objective of the reforms is to provide clearer and more enforceable funding standards. The regulations will define the strength of the employer covenant and set out the principles for how that is to be assessed. They will then set out a further principle for how to determine scheme liabilities. The level of risk that can be taken depends on the strength of the employer covenant and the maturity of the scheme. The regulations will require schemes, as a minimum, to have sufficient funds to have a low dependency on their sponsoring employer by the time they are significantly mature to meet the scheme’s future pension promises. That means that, under reasonably foreseeable circumstances, further employer contributions will not be expected.
Mr Baron
This will be my last intervention. I take on board what the Minister has said, but he still has not directly answered the bit of my question about the fluctuating fortunes of a company. I appreciate that pension schemes going forward will be funded on a low-dependency funding basis and should be fully funded from the registered date. But what assurance can he give that, if the fortunes of the company fluctuate markedly, and if the trustees are going to meet the obligations according to the explanatory memorandum, they will not find themselves in a situation where they have to continually adjust the investment risk profile of the portfolio they are overseeing to ensure that they maintain that balance during what could be difficult economic times?
Paul Maynard
I am sure my hon. Friend will be aware that we have seen volatility in pension schemes over recent years. Many DB schemes are now funded to surplus, to a much greater extent than has hitherto been the case, but I recognise that that will not always be in the case. Let me try to go down one level further in terms of what the regulations will prescribe in the hope of reassuring him. If I do not reassure him, I will happily invite him to the Department for a thorough going-over with officials, but let me do my best first.
The regulations are subject to the principle that the funding and investment risks taken by a scheme before the relevant date must be supportable by the employer. The relevant date is the date on which the scheme is expected to reach significant maturity. Less mature schemes, such as open schemes, can support more risk because there is more time to adjust any funding shortfalls that may emerge if the risks are realised.
The regulations amend the Occupational Pension Schemes (Scheme Funding) Regulations 2005. They require trustees and managers to follow the principle that when determining recovery plans, the period for the recovery must be set with reference to what the employer can reasonably afford. The regulations will also make it clear that when determining an appropriate recovery plan, the trustees and managers must take into account any impact on the sustainable growth of the employer.
What I draw from that, and what I hope my hon. Friend will draw from it, is that should a DB scheme find itself facing a deficit that was not anticipated, both the trustees and the managers of the scheme will have the flexibility to determine the appropriate recovery plan, and that any variation within a short period of time can be accommodated by the fund. Over a longer period, the reference date that they start their planning from should enable longer-term volatility—the ups and downs that we naturally see across time—to be smoothed out. If that does not answer my hon. Friend’s question, he can grab me at the end and he will get a speedy invite.
On the point the shadow Minister made on some of the issues around guidance more generally, we have tried to ensure that the regulations are flexible and will work well for all schemes. It is important to make the point that even mature schemes can invest in a wide range of assets as long as they reach low dependency at significant maturity. We also want the regulations to allow open schemes to take account of new entrants and future accrual when determining when the scheme will reach significant maturity. To make long-term planning and implementation easier and to avoid unnecessary administrative burden, we have given the Pensions Regulator the flexibility to ask for less detailed information depending on the circumstances of a particular scheme.
We can expect the revised DB funding code of practice to be laid before Parliament this summer, in time to come into effect from September 2024 in line with the regulations. Around the same time as the Pensions Regulator publishes its code, the regulator will also publish the fast-track parameters and the updated impact assessments. Later in the summer, the Pensions Regulator will consult on the covenant guidance. There is a whole suite of things coming up over the course of the summer, all intended to be in force ready for 22 September, when the regulations will become effective.
We are making sure, in collaboration with the regulator and the industry, that any burden is proportionate to the outcomes and reflects the particular circumstances of any individual scheme. Fundamentally, as the shadow Minister agreed, the regulations will guarantee that member benefits are protected, but that we enable defined-benefit schemes to grow as best they can to meet any funding shortfall that may occur. On that basis, I hope that I have answered everyone’s questions, and I commend the regulations to the Committee.
Question put and agreed to.
State Pension Changes: Women
Paul Maynard Excerpts(2 months, 1 week ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
It is a pleasure to serve under your chairmanship, Sir Gary. I thank the hon. Member for Strangford (Jim Shannon) for securing this debate and all Members who have contributed to it.
This has been a valuable and constructive debate focused on the issues of compensation for 1950s-born women affected by state pension age changes. I recognise that there is a huge strength of feeling among 1950s-born women about the increase to their state pension age and the way in which it was communicated. We have heard today about people who have had difficult personal circumstances to manage, and their struggles are regrettable in the extreme. I am grateful to all Members who have participated. It is important that Members on all sides are able to tell the stories of so many of their own constituents. Indeed, I pay tribute to many of my own constituents whom I have sat with and listened to on a number of occasions as they explained their circumstances. It is important that such testimony is uppermost not just in my mind as the Minister, but in the mind of Government more widely.
I note that the Member in charge of the debate, the hon. Member for Strangford, is a Northern Ireland MP. For the record, I will set out how Northern Ireland manages its own system for dealing with complaints such as this; as he will know, such matters are for the Northern Ireland Public Services Ombudsman to address. Any question relating to Northern Ireland must be directed to the relevant authorities in Northern Ireland. All DWP policy areas are transferred in Northern Ireland, including pensions. However, the equivalent Department in Northern Ireland, the Department for Communities, historically has maintained parity with the DWP on matters of social security, child maintenance and pensions.
As House is aware, the Parliamentary and Health Service Ombudsman’s investigation into state pension age communication is not complete. The date of publication is a matter for the ombudsman. As the investigation remains ongoing, I cannot comment on it, as the ombudsman’s investigations are confidential. The privacy rules extend to all parties involved in the investigation.
Alan Brown
The Minister is right about probity and the fact that the ombudsman’s investigations are to remain quiet. Does he accept that after stage 1 it is still in the Government’s hands to bring forward compensation? They do not have to wait until the conclusion of further stages.
Paul Maynard
I will come on to the sequencing and the importance of the different stages shortly, but I am reminded that the Parliamentary Commissioner Act 1967 states that ombudsman investigations that are not complete
“shall be conducted in private”.
The ombudsman has made some information about the investigation public via its website. It published the final version of stage 1 of its report on the website in July 2021. The report said that
“these women should have had at least 28 months’ more individual notice of the changes than they got.”
These findings relate to a specific window of time between August 2005 and December 2007. The report also found that
“between 1995 and 2004, DWP’s communication of changes to State Pension age reflected the standards we would expect it to meet.”
I know that there is frustration among Members of this House and their constituents about how long the investigation has been ongoing, and about the fact that the ombudsman has yet to publish his final report. It is a complex investigation that spans over 30 years, as equalisation of the state pension age was enacted in 1995. The ombudsman provides an independent complaint handling service for complaints that have not been resolved by UK Government Departments and the NHS in England. The ombudsman is managing the investigation in stages, and publication of the final report is entirely a matter for the ombudsman.
Paul Maynard
As I think I have already said, the timing of the report is a matter for the ombudsman to determine. I have received no indication from the ombudsman of the timescale to which he is working, much as we would all like to know the date when it is coming.
The Department for Work and Pensions has to be mindful of its independence, but we are co-operating fully with the investigation. We believe that it is important to let the independent process conclude, so that we can then carefully consider the findings and the recommendations that may arise from the final report.
Peter Gibson (Darlington) (Con)
For the record, can the Minister give us a cast-iron guarantee and reassurance that his Department is fully co-operating with the ombudsman?
Paul Maynard
I can indeed give that assurance. As I have just said, we are fully co-operating at every stage with the ombudsman’s investigations.
Ashley Dalton (West Lancashire) (Lab)
I understand the Minister’s position on the specifics and the dates. It is perfectly clear that we are not going to get any indication of a timeline, but does the Minister accept that the WASPI women paid their dues and did their part? We have already seen that maladministration has been found. Do the Government accept that a trust on which our entire democracy is built has been broken, and that WASPI women deserve justice as soon as they possibly can?
Paul Maynard
I very much hear what the hon. Lady says. The whole point of the ombudsman’s investigations is to determine the outcome of that process and how justice is to be delivered.
Patricia Gibson
As has happened with other judgments in a legal context, will the Minister commit his Government at the very minimum to implementing the judgment of the ombudsman? Or will they try to fight it, obfuscate and kick it into the long grass?
Paul Maynard
I am sure the hon. Lady will appreciate the principle that until a final report is published and until we know the contents of that report, I—as a Government Minister with a duty to manage public money properly—cannot make any such commitment as she describes.
Joanna Cherry
The Minister is hiding behind the need to wait until the final report is out, but at around the time of the stage 1 report, the PHSO said that Ministers could be proactive in finding a remedy for 1950s women. What does the Minister say to that?
Paul Maynard
I certainly do not believe that I am hiding behind anything. The ombudsman’s inquiry is going through the processes that the ombudsman itself has set out.
Paul Maynard
I have given way a number of times, and I have been very generous. I am conscious that I need to finish my contribution and allow the hon. Member for Strangford to comment. I am sorry, and if there is time towards the end I will try to give way, but I need to set out the factual information that Members have been asking me to deliver, so I will make some progress.
The announcement in 1993 of the decision to equalise the state pension age addressed a long-standing inequality between men and women. Changes to state pension age were made over a series of Acts by successive Governments, following public consultations and debates in both Houses of Parliament. All women after 5 April 1950 and all men born after 5 December 1953 are impacted by state pension age changes. The state pension age is currently 66, and is due to rise to the age of 67 between 2026 and 2028, as confirmed by the recent Government review of state pension age. The Government also committed in the last review to conduct a further review within two years of the next Government, to consider the age of 68. The further review will be able to consider the very latest evidence.
The reforms have focused on maintaining the right balance between the affordability and sustainability of the state pension, and fairness between generations. Women retiring today can still expect to receive the state pension, but over 21 years on average, which is over two years longer than men. If equalisation had not taken place, upon reaching the age of 60 women would be expected to spend on average over 40% of their adult lives in receipt of the state pension.
I will say a few words about the processes of the ombudsman’s investigation, for clarification and to place them on the record. The Parliamentary and Health Service Ombudsman published its stage 1 report on 20 July 2021. PHSO found maladministration in the steps that the Department took between 2005 and 2007 in relation to notifying the women affected. In December 2022, the PHSO submitted its stage 2 findings and the original stage 3 findings for comment, and published a high-level summary on its website, concluding that the maladministration had caused injustice.
Following the PHSO’s stage 2 findings in December 2022, the WASPI campaign initiated judicial review proceedings against the PHSO, arguing that the ombudsman’s approach to calculating when letters should have been sent ignored pauses in the DWP’s letter-writing campaign, which meant that women should have had notice far earlier than the ombudsman had assumed and could therefore have made different decisions to avoid some of the financial impact. Following an agreement between WASPI and the PHSO, the High Court granted a consent order quashing the PHSO’s final stage 2 report in May 2023. The consent order specifically requested that the PHSO revisited those sections of the stage 2 report dealing with the 28-month delay calculation. The stage 3 provisional view on remedy had not been finalised by the PHSO, so it did not require consideration by the court.
We responded to the provisional stage 3 report in early February 2023. The PHSO sent all parties to the complaint a revised provisional stage 2 report in November 2023. That is the report whose publication we await.
Paul Maynard
I have already given way, and I am running out of time. I do apologise.
I have listened carefully to the arguments that have been made today. I would like to set out further the range of support available both for those making provision for their retirement and for those who have reached state pension age.
In 2016, the state pension was reformed with the introduction of a new state pension to be simpler and more sustainable. It had the clear objective of providing the foundation for private saving. In this way, the state provides a base to which people can add to provide the pension they want through their retirement.
The new state pension improves outcomes for many women, carers and self-employed people, who often did less well in the past. State pension outcomes are projected to equalise for men and women more than a decade earlier than they would have under the old system. On average, women receiving the new state pension receive about £18 a week more than women under the pre-2016 system. Under the new state pension system, women currently receive an average of 97% of the amount that men receive, compared with 85% under the pre-2016 system.
Automatic enrolment has helped millions more women to save with a pension, many for the first time. Participation rates for women are catching up with those for men. Pensions participation among eligible women working in the private sector was at 86% in 2022, up from 40% in 2012.
Pension credit is extra money to help with daily living costs for people over state pension age and on a low income. It tops up a person’s other income to a minimum of £201.05 a week for single pensioners and £306.85 a week for couples. People with a severe disability, carers and those who are responsible for a child or young person who lives with them can get more. Pension credit can also include extra amounts for certain housing costs such as ground rent or service charges. The pension credit case load is just under 1.4 million people, of whom 66% are female; in fact, of the total case load, 63% are single women. People receiving pension credit may also get help with other costs, including rent, via housing benefit, and council tax.
The latest statistics show that by 2021-22, the poverty rate for pensioners had decreased by two percentage points since 2010. For both female and male pensioners, there was a decrease of two percentage points over the same period. In 2021-22, there were 200,000 fewer pensioners in absolute poverty, after housing costs, than in 2010. By 2024-25, working-age and extra-costs disability benefit rates will increase by 6.7%, and relevant state pension rates, including the standard minimum guarantee in pension credit, by 8.5%, following the 10.1% increase in April 2023.
Paul Maynard
I am about to conclude, because I have only a minute left before the hon. Member for Strangford needs to have his concluding say.
I thank the hon. Member for Strangford for raising such an important issue, which I know concerns very many people—thousands across each of our constituencies. I have the greatest sympathy for anyone who has found themselves in difficult circumstances, but I believe that the welfare state can be and is effective in providing support for those who need it. In particular, there is a range of established support that this Government provide for people either nearing or over state pension age. Additionally, we have made cost of living payments available to those who are most vulnerable.
As I have outlined, the Government take the matter of state pension age extremely seriously. The Department is committed to giving the best service it can, and we will very carefully consider the ombudsman’s final report.
Child Maintenance Service
Paul Maynard Excerpts(2 months, 3 weeks ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Paul Maynard)
Provided that you cough strategically, Sir Charles, because my eyesight—
Sir Charles Walker (in the Chair)
I will—I actually have a cold, so I will be coughing and sniffling throughout.
Paul Maynard
My eyesight cannot quite determine the numbers on the clock any more—such is my venerable age. It is a pleasure to serve under your chairmanship, Sir Charles. I thank the right hon. Member for East Ham (Sir Stephen Timms) and my hon. Friend the Member for Stroud (Siobhan Baillie) for applying to the Backbench Business Committee to obtain this debate, and all hon. Members for their participation.
We have had a constructive, wide-ranging and, for my part, very interesting debate. We have discussed the original findings of the Select Committee report, which I very much enjoyed reading. Indeed, I always enjoy reading difficult, challenging reports when they are not in my brief, because I find them much more reassuring to read knowing that thinking is going on. We discussed the Government’s response at the time, the progress since that response, what is being done and how far that has got.
I will try to cover as many themes as have been raised today, but if I run out of time or there is insufficient detail, I will make sure that we write to all hon. Members. I know that Viscount Younger has already spoken to the right hon. Member for East Ham to have a further briefing. I am sure that all hon. Members here today will be interested in what Viscount Younger has to say, so I will try to ensure that all that information is properly communicated.
I do not normally do this, but I particularly thank the hon. Member for Wirral South (Alison McGovern) for speaking in such glowing terms about my letter to her. There were some helpful comments about the progress the Government have been making. That might give other hon. Members some optimism that things are moving in a more rapid direction than they might hitherto have realised.
The Child Maintenance Service makes a real difference to the life chances of many thousands of children. That is why we are reforming it for the long term on an ongoing basis to continually improve outcomes. The service plays a crucial role in securing financial support for children when parents have separated, mandating and, when necessary, enforcing arrangements so that money flows from paying parents to receiving parents, which can benefit children and help prevent them falling into poverty. Indeed, payments for both child maintenance and private arrangements delivered an estimated £2.6 billion annually to parents between 2020 and 2022, keeping around 160,000 children out of poverty.
The vast majority of parents strive each and every day to give their children the best possible start in life. Those who shirk the financial responsibilities they have for their children must be quickly held to account. That is why we continue to improve the Child Maintenance Service to ensure it works as effectively and efficiently as possible. However, it is currently still too easy for parents to avoid paying up if their income does not come through normal PAYE. That is why we are looking at changing the rules so that child maintenance calculations include a much broader range of earnings, such as property income.
We recognise that some parents will find it more difficult to afford their payments if they have built up substantial arrears. The Child Maintenance Service will continue to prioritise collection of ongoing maintenance, but we have committed to reviewing the calculation. We have begun the process of updating the underlying research to consider how we ensure the calculation reflects current and future societal trends. Any changes made to the child maintenance calculation will require amendments to both primary and secondary legislation. The calculation formula underpins every Child Maintenance Service case. Furthermore, those with private arrangements can also use the online calculator to get an estimate to inform their own arrangement, which is doubly crucial. It is essential, therefore, that we undertake a thorough and comprehensive review of the calculation formula and consider the potential impacts on all parents and children. That requires time to ensure we take an informed and co-ordinated approach, to ensure the calculation is fit for purpose and future-proofed.
Peter Grant
Clearly, there has been an error at set-up that the calculation needs primary legislation to be updated. Given that it is now 25 years out of date, is it not time to bring forward legislation to change it once and for all, so that future changes can be made through secondary legislation or by other means? There have been examples recently where other DWP payments were uprated through statutory instruments and it did not take nearly as much bureaucracy to get that done. We should be able to do that with the child maintenance system as well.
Paul Maynard
The hon. Member makes an interesting point that may risk becoming a digression. I note that the secondary legislation he refers to is regarding automatic uprating of particular indicators. This is a more fundamental change to how the entire structure of child maintenance is conducted, so is perhaps not suited to secondary legislation. We often hear criticism that too much goes through secondary legislation, unscrutinised by this place. As a Member rather than a Minister, I always think that I would rather such a fundamental change be scrutinised properly in the form of a Government Bill. That is an important point.
Sir Stephen Timms
I take the point entirely about the complexity of the review’s underlying formula, which the Minister has just been talking about. Can he give us any sense of how long he envisages that review will take to complete?
Paul Maynard
I have made a lot of comments today about the drumbeat of ongoing changes and how we implement some of the private Members’ Bills that have gone through, for example. I hear what the right hon. Gentleman says about the progress and the drumbeat, but I am not sufficiently close to the actual data and the information that he seeks. I will ensure that he is written to, along with other Members present today. I am sure that will be discussed when he meets Viscount Younger.
Alison McGovern
While I am pleased to have cheered the Minister up, I can assure him that I will certainly be giving the Government down the banks yet again. But that exact point is why I thought it would be helpful if we could have some sort of regular update out of this debate. Can the Minister feed that back to the Secretary of State, if necessary? I am sure it can be discussed whether that is a statement that the Government place in the Library or a regular update to the Select Committee, but for those reasons, Members need to know what is happening with the different streams of improvement to the service.
Paul Maynard
I have already heard that point, and in my preparation for the debate, I noted the complexity and the number of workstreams going on in this area. I will certainly take that point back to the Department. Another theme that we have heard today is the importance of not just having an enforcement process but having an efficient and effective one. That is done partly by deciding what actions are appropriate on a case-by-case basis and using the existing powers that have the greatest chance of ensuring that parents meet their obligations to pay for their children.
The CMS has made a number of improvements to processes, for example by making better use of deduction from earnings orders so that they can be set up faster. The CMS has also brought forward the point at which deductions from bank accounts are made, which not only has increased the volume of deductions from bank accounts but means getting money to children faster. Working alongside His Majesty’s Courts and Tribunals Service, the Child Maintenance Service has improved court processing times by introducing virtual court presenting and the electronic exchange of documentation.
Following the Child Support (Enforcement) Act 2023, the Government propose to bring into force a legislative change to accelerate the enforcement process. The change will introduce a simpler administrative process to obtain a liability order against those paying parents who actively avoid their responsibilities. That will enable the CMS to take faster enforcement action, affecting at least 10,000 cases a year. They will also publish a consultation shortly on how the Child Maintenance Service collects and transfers payments to support survivors of domestic abuse, following the Child Support Collection (Domestic Abuse) Act 2023 receiving Royal Assent.
In addition, operating a scheme where parents are not paying their maintenance liability and where the Government guarantee child maintenance payments is not the intent of the Child Maintenance Service’s policy, which is the philosophical issue that we are stressing. The role of the CMS is to encourage parents to take financial responsibility for their children. The scheme is designed to encourage parents to agree their own family-based arrangements wherever possible, and that tends to be in the best interests of children. The CMS must always work in the best interests of children. The statutory scheme exists as a fall-back if parents are unable to reach those voluntary arrangements. The Government do not believe that the state covering the shortfall of unpaid maintenance is the right way to target additional funding appropriately, given that there is no means test for receiving parents.
We are also bringing the Child Maintenance Service into the modern age, having made a number of improvements to ensure that it delivers to the highest standard with a more digital customer focus. In order to get help arranging child maintenance on the digital service, which is available 24 hours a day, seven days a week, we are making it more accessible for parents to decide what type of arrangement is most suitable for them and to make an application online. Those improvements have already seen new applications rise by 13% in the year to September 2023, and I look forward to seeing further progress in the future. That is a welcome increase that we expect to continue with the removal of the £20 application fee. The upgraded online service allows customers to access and maintain their CMS cases themselves. Twenty-six different changes of circumstances can now be reported online. The advantage of digital systems means the service is, as I have said, available 24 hours a day. Many customer requests are now fully automated, so it is much quicker for parents to manage their own arrangements.
We have also, as I have said, improved the speeding up of enforcement processes. In the quarter ending September 2023, around £23.5 million—more than half—of the child maintenance collected through collect and pay was from parents who had a deduction from earnings order in place at the end of the quarter. Those improvements deliver a modern and efficient service for customers while enabling caseworkers to focus on parents who have more complex issues.
I will try to deal with specific issues that were raised. I might not succeed in three minutes, but I will at least try. I can confirm that the £20 fee has been removed as of yesterday, along with the eradication of debts of £7 and under, which we achieved through delegated legislation—the draft Child Support (Management of Payments and Arrears and Fees) (Amendment) Regulations 2023.
I was equally as concerned as the right hon. Member for East Ham to hear of the case of Rachel Parkin regarding the continuity of the support that she received from that single nominated caseworker. The Department will write to the Chair of the Select Committee to make sure that we properly understand that case and what can be done about it. There will be more to come on that point.
I was asked for updates on the progress of various Acts. It might be unhelpful to confirm that consultations are ongoing, because we want the measures to be proportionate, robust and targeted appropriately. It is never easy to rush consultations through. We are often criticised should we rush a consultation. Equally, I understand, not least from when I was a Back Bencher, that when final reports have been issued by the Government, people like to see action, so that point has been heard. I do not wish to pre-empt any Government decisions on curfews—those are not mine to take—nor would I wish to pre-empt the meeting of the former Secretary of State, my right hon. Friend the Member for Suffolk Coastal (Dr Coffey), with Viscount Younger when that will be fully discussed, I have no doubt. I, like her, await the outcome with great interest on what is discussed.
I have been told I now have one minute left, not three minutes. I would love to talk about fraud, but one point I have observed from my own casework is that very often people know that something is not right. They have suspicions that fraud might be occurring, but when they engage with the CMS it is not always taken forward. One thing that we hope to be able to do by the end of this month, in order to avoid vexatious frauds, is to provide to those making claims an illustrative list of evidence that the financial investigations unit will require to take an investigation forward. That then avoids the disappointment when someone thinks that something is going on, but they cannot prove it. I think that will help the individual stuck in that situation and perhaps also our caseworkers who try to guide people who ring our offices on how to go about it.
Anything that I have not covered I will cover in a letter to Members. On that note, I will sit down.