Welfare Reform and Work Bill (Third sitting)

Debate between Shailesh Vara and Kate Green

Tuesday 15th September 2015 Public Bill Committees

[Kate Green]

Q 132 Could I ask for your comments on a suggestion made to me that if this legislation precedes as currently proposed, there should in fact be a choice for some housing associations to accelerate the increase and take it in the first year or two, rather than it being 1% per annum? Have you any comments on the pluses and minuses of that suggestion?

David Orr: That would be even more destabilising for most business plans, because what you do is bring forward the reduction in rent, and once that reduction is in, it is there in perpetuity. That would just add to the amount being taken out of business plans, so it is not a helpful proposal.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

Q 133 Good morning, gentlemen. I just have a few brief questions. For those who are on low incomes, would you agree that the reduction will be beneficial?

Gary Porter: For those who are on low incomes but above housing benefit level, yes, by about 80p a week. For those who earn money but not enough to take them out of housing benefit, no, it will not make any odds. For council tenants, the biggest savers will save about 84p a week. Obviously, if you do not have a lot of money, that extra £1 a week will be a benefit, but there are better ways of doing it.

Mike Donaldson: In L&Q terms, 54% of our residents will not see any benefit at all, because the benefit is to the Treasury—the taxpayer.

British Airways (Pensions Uprating)

Debate between Shailesh Vara and Kate Green

Monday 14th September 2015 Commons Chamber

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

May I start by congratulating the hon. Member for Stretford and Urmston (Kate Green) on her promotion to the shadow Cabinet, which I am sure will bring her much excitement, as well as much busyness? I also congratulate her on securing this debate. It is clear from this evening’s turnout, on both sides of the political divide, that this is certainly a popular issue, and one that affects many people, and therefore many Members of Parliament, in a wide variety of constituencies.

I trust that the hon. Lady, and colleagues throughout the Chamber, will appreciate that it is not appropriate for a Minister to comment on the running of individual schemes or individual trustee decisions. Moreover, I hope she will appreciate that it is not appropriate for me to comment on matters that are subject to ongoing legal proceedings, as is the case here. She will be aware, as will other Members, that the case brought by British Airways against the trustees is scheduled for a hearing for 25 days in February next year.

[Kate Green]

As I explained, there are two separate matters. I am not discussing the matter that is before the courts—it would be wholly inappropriate to do so in this House tonight—but raising a separate matter that is not the subject of litigation.

[Mr Vara]

The trust and British Airways—the whole organisation—have been the hon. Lady’s subject in this debate. Both are taking part in a debate concerning the trust that was originally set up in 1948. I think it is inappropriate to comment, because there is a huge overlap. She has been in the House for long enough to know, as have other Members, that in such a situation where there is pending litigation it is inappropriate and wrong for Ministers to comment. However, I can speak in a general way and, I hope, address some of the issues she has raised.

--- Later in debate ---

[Mr Vara]

I am sure that British Airways is keeping a watchful eye on the Chamber and has noted the presence of not only those who have had the opportunity to speak, but the many others who support them.

Having explained the switch to CPI, I would like to return to the role of trustees in running pension schemes, including setting pension increases. I have explained that any increases above the statutory minimum are a matter for scheme rules and the trustees. In some cases, the increases will be at the discretion of the trustees; in others, the rate will be written into the rules. The House will appreciate, however, that in view of the issues in the ongoing High Court proceedings, I cannot comment on either the ambit or use of powers by the APS trustees.

Trustees of pension schemes are the same as those of any other trust, and much of what they do is governed by trust law. They have to act in line with the trust deed and scheme rules and they have to act impartially, prudently, responsibly and honestly, and in the best interests of beneficiaries. Those obligations apply regardless of whether trustees are nominated by the employer or by members. That means that trustees may have a potential conflict of interest, and the Pensions Regulator issues guidance on how trustees should manage them should they arise.

Trustees are also required, under pensions legislation, to undertake certain actions to ensure that the scheme is funded to meet its liabilities and that it can pay the right amount of benefits to the right people at the right time. Having set those parameters, the Government do not interfere in the running of individual schemes. Regulation of occupational schemes is undertaken by the Pensions Regulator. If it appears that trustees are not carrying out their duties correctly, the regulator may intervene. Alternatively, members may have recourse to the pensions ombudsman or the courts, which is the route being taken at present.

However, another party is involved: the sponsoring employer. The employer is ultimately responsible for putting enough money into the scheme to pay the benefits due under its rules, which is why it is essential for trustees and sponsoring employers to work together when agreeing the level of employer contributions—even more so if the scheme is in deficit and the employer has to pay in extra contributions to make good the shortfall. Inevitably, employers and trustees sometimes cannot resolve disputes, so it falls to the courts to determine the outcome. Sadly, that is the case here.

[Kate Green]

Will the Minister comment on the appropriate balance between the responsibility to the interests of the company and the trustees’ fiduciary responsibility to scheme members?

[Mr Vara]

It is a complex legal matter. There certainly are responsibilities, but they extend to trying to build a good working relationship with all concerned, as well as relationships that are in law. Having such a working relationship—it is not defined in law, but is common sense—is critical if we are to reach a proper solution. Sadly, that has not worked out in this instance, so we have this 25-day hearing, which is a significant amount of time. It is a very complex case about which much will clearly have to be said in due course. However, much has already been said.

I have but a few seconds in which to speak, so I simply say to the hon. Lady and colleagues that it is good to see so many Members in the Chamber for an Adjournment debate. Given that we were threatened with up to four votes, it is fortunate that we will all be able to get away this side of midnight. I commend the hon. Lady again for raising this matter. We await the result of the court case in due course.

Question put and agreed to.

Welfare Reform and Work Bill (Second sitting)

Debate between Shailesh Vara and Kate Green

Thursday 10th September 2015 Public Bill Committees

[Kate Green]

Q 6 May I ask one last question? It has been suggested that some people who do not return to work—perhaps people who are on long-term sickness or disability benefits and do not become well enough to return to work—will never make repayments of the loan as a result of returning to employment, but will be able to do so when the house is sold. For some of those people, the sale is likely to take place at the point when they become so disabled that they need to make adaptations and perhaps downsize to release equity to do so. How will the market respond and what are the risks of those people being unable to fund a move to more suitable supportive housing?

Paul Smee: I think that any lender would want to talk to the borrower about the circumstances in which they found themselves. There might be ways, using conventional lending instruments of one form or another, to find a way through. Whether the Government at that point decide to exercise their second charge and in effect demand repayment of the loan would be up to them, but I believe the lending industry would want to work with the borrower to come to some sort of acceptable outcome.

[The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)]

Q 7 Welcome, gentlemen. It would be the Government’s intention to have comprehensive advice for claimants who are in the position of having interest that is to be converted into a loan—by way of advice on the accrual of interest and on the impact of the second charge. It could be a third or fourth charge depending on how many debts they have. It is our intention to give comprehensive advice. Is there anything that we should be mindful of when considering the advice to give? What would you emphasise that we should make clear to claimants?

Paul Smee: The first point I would make is that the advice that you will be giving will not be regulated advice within the regulatory framework to which my lenders are subject.