Pension Schemes Bill [Lords]

Simon Kirby Excerpts

2nd reading: House of Commons
Monday 30th January 2017 Commons Chamber

[Debbie Abrahams]

I am grateful for that ruling, Madam Deputy Speaker. Although we have made significant improvements in terms of pensioner poverty, I have to say it is a disappointment that there are still outstanding problems. Under our pension system, of which we should be guardians, one in seven pensioners still unfortunately lives in poverty. We are the fifth richest country in the world, so we should be able to ensure that our pension system provides dignity and security in retirement. Currently, it does not. For me, this a significant failure of our pension system and highlights a particular failure in the Bill.

I could also talk about the missed opportunities surrounding the Cridland review of the state pension age, which has not been brought to this place, and there are lost opportunities when it comes to the defined benefit Green Paper. It was due later this year, but it has now been decided that it will not be brought to this place for scrutiny in connection with this Bill.

I will move on, Madam Deputy Speaker, because I know I am testing your patience. [Interruption.] That is a bit unkind. Closer to home and in relation to the Bill, it does very little to build—[Interruption.] Do any Conservative Members want to intervene? Okay, I will carry on.

The Bill does very little to build on the success of Labour’s auto-enrolment policy by ensuring that saving into master trusts is accessible and encouraged for a number of groups currently excluded from auto-enrolment provision. I recognise that the Government have announced a review of auto-enrolment, but again, why is this not in the Bill?

Let me speak briefly about the issue of low-income savers’ access to saving in master trusts. Under the policy of auto-enrolment developed by my party, working people would be automatically enrolled in a master trust scheme once their earnings hit the trigger of just over £5,000. The logic of this proposal was that people would begin to save towards an occupational pension at the same earnings level at which they began to pay national insurance contributions. The coalition Government increased this earnings threshold to £10,000, denying millions of low earners the automatic right to save towards a relatively low-cost occupational pension through a master trust. Given the generational crisis developing in our pension system, we believe that more needs to be done to include low earners in savings provision and encourage retirement planning.

That is also true for the self-employed. Self-employed people currently make up to 15% of the workforce, and since 2008 have accounted for over 80% of the increase in employment. There is much evidence to suggest that the self-employed are not saving as much as other sectors of the workforce. Research by the Association of Independent Professionals and the Self-Employed found that four in 10 self-employed people did not have a pension. Despite that worrying evidence, there is little obvious means by which a self-employed person could begin to develop a savings pot within a master trust. Once again, this is not sorted out in the Bill. There are other examples, such as people with multiple jobs and carers, of those who do not have access to, and the benefit of, an occupational pension scheme.

The Secretary of State has just announced that there are gaps in the Bill, relating to its failure on a number of different issues. We are shocked by the vast amount of detail missing from the Bill, when that detail is necessary to achieve what the Government have set out to do. The Secretary of State mentioned that secondary regulations will not be laid before the end of the year. Once again, the Government are, in respect of some important protections, presenting a skeleton Bill, with much of the detail left to secondary legislation.

Although we generally support the Bill, despite its narrow scope, there are a few aspects that we will look to strengthen and a few gaps that we believe need to be plugged. These can be considered broadly under three themes: improved governance, strengthened member engagement and greater transparency. The Bill includes a number of clauses that provide a framework for the effective governance of master trusts. We welcome, in particular, the authorisation criteria set out in the Bill. However, it does not address a number of core principles, the first being scheme member representation.

Unlike defined benefit schemes, defined contribution schemes provide for the risk of saving and investment to be borne by the scheme member. On that basis, we believe that scheme members should be represented among the trustees of master trust pension funds. It is, after all, their money, and they have a direct interest in ensuring that a sound and sustainable investment strategy is delivered at good value. That surely stems from the basic democratic principle that those on whose behalf decisions are being made should have a say in those decisions. It would also be a necessary step towards greater transparency in the pensions system, which the Under-Secretary of State for Pensions himself confirmed that the Government would pursue following Labour’s campaign.

Furthermore, providing for a certain number of member-nominated trustees would not be a particularly new or unique arrangement. Mandated member representation already exists in the pensions system: trust-based pension schemes are required to ensure that at least a third of the board of trustees is member-nominated. Why should master trusts not be subject to the same requirement, especially in the light of the increased risk borne by scheme members?

Let me say something about transparency. For too long, people have been encouraged to put their faith—and, perhaps more important, their money—in a distant savings pot, and have been given very little information about where the money is invested, the performance of their savings, and, importantly, how much the investment is costing, in terms of the costs and charges that they will incur. Neither the scheme trustees nor the scheme members have been able to ascertain adequately whether they are getting value for money. I remember that in 2015, the former Financial Secretary to the Treasury promised the Work and Pensions Committee that if there was not openness about costs and charges, the Government would introduce legislation. Well, it has come a little bit late. Why has it taken so long?

In almost any other market, people wishing to purchase goods or services are given basic information about performance and costs before they do so. That basic principle is a necessary requirement to ensure that they receive value for money, but it is not operating in our pensions system. The Financial Conduct Authority has therefore published an interim report, which recognises a number of significant failings in the competitiveness of the asset management market. Its recommendations have important implications for the transparency of pension funds, especially in relation to the costs and charges being extracted from pension savings by investment managers.

We are pleased to see that part 2 of the Bill attempts to prevent excessive fees from being applied should a scheme member wish to take advantage of the Government’s pensions freedom reforms. However, the Bill does not refer to transaction costs, the charges applied by asset managers when they are making new investment decisions. There is a great deal of work to be done to tackle the problem of opaque and excessive costs and charges being extracted from workers’ savings by investment managers. Currently, the Bill merely scratches the surface. It must become a stronger vehicle for change in this regard.

We believe that, alongside member-nominated trustees, a member engagement strategy is required to ensure that master trusts are communicating properly with those whose money they are investing, and that they play their part in driving informed saver choices on a bedrock of transparent information. The Pensions Regulator’s voluntary code of practice for defined contribution schemes asks trustees to provide “accurate, clear and relevant” communications for scheme members as good practice. We believe that proper member engagement should not merely be a voluntary requirement placed upon trustees, but should form part of the regulatory framework. That would help to ensure that scheme members can make rational and informed choices about their pension savings, creating a more sustainable system.

There are other elements in the Bill whose purposes we want to strengthen or clarify: for instance, the definition of the scope of a master trust, what happens to non-money purchase benefits under this Bill, a number of issues relating to the pause clause, and the status of the scheme funder as a separate entity.

We welcome the Bill, but we see it as a wasted opportunity. So much is being introduced after the event. There will be no opportunity for another pensions Bill; the provisions will be delegated to statutory instruments.

[The Economic Secretary to the Treasury (Simon Kirby)]

How do you know?

[Debbie Abrahams]

That is what we have been told. That is what we have been led to believe by the Government. Given how long overdue this Bill is, this is likely to be the only opportunity that we have to raise this, and it should have been brought to this House.

We need to develop a sustainable and secure pension system that drives down pensioner poverty and delivers dignity in retirement for all, and I am afraid that this Bill falls well short of that.

Oral Answers to Questions

Simon Kirby Excerpts

Monday 8th December 2014 Commons Chamber

[Steve Webb]

I am surprised that the hon. Gentleman did not raise this point last Thursday when I made an oral statement on this issue; perhaps he heard about it on “Money Box” on Saturday. As he knows, not all pensioners receive the full rate of the state pension. Many people—many women, particularly older women—receive a reduced rate, and, as has always been the case, the increase is proportionate to the rate of pension they receive. They get the same percentage increase; it is lower if they get a lower pension.

[Simon Kirby (Brighton, Kemptown) (Con)]

4. What steps he has taken to increase support for heads of households in the workplace.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

In October we introduced the family test, putting the family at the heart of policy making across Whitehall. From April 2015, for the first time ever, shared parental leave will enable both parents to retain a strong link with the labour market, allowing fathers to play a greater role in raising their children and helping mothers to return to work at a time that is right for them.

[Simon Kirby]

I thank my right hon. Friend for that answer. How many troubled families have been helped in Brighton, Kemptown?

[Mr Duncan Smith]

The troubled families programme has turned around the lives of over 69,000 families in England, and 120,000 had been helped by August 2014. In Brighton and Hove, the programme has worked with 675 families, changing their lives, and 417 families were turned around by August 2014, giving them a new start in life.

Affordable Homes Bill

Simon Kirby Excerpts

Friday 5th September 2014 Commons Chamber

[Chris Bryant]

The hon. Gentleman makes a good point. I do not need to reiterate it, except to say that that is why I find the retrospective element of the policy’s application to be one of its cruellest aspects.

[Simon Kirby (Brighton, Kemptown) (Con)]

The hon. Gentleman talks about difficult decisions. Did he vote for the benefits cap? If so, what other benefits that affect my constituents is he planning to cut?

[Chris Bryant]

Of course we voted for the overall benefits cap. I want to cut the cost of welfare in this country, but the best way of doing that is to ensure that the minimum wage and wages in general catch up with inflation. However, we have had inflation ahead of wages for every month except one since this Government came to power in 2010, which is making that a darn sight more difficult to achieve.

Oral Answers to Questions

Simon Kirby Excerpts

Thursday 30th January 2014 Commons Chamber

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

Local authorities that are concerned about any betting shop can use their licensing conditions, which were used very successfully by Newham when it had concerns about crime, antisocial behaviour and under-age gambling. With regard to the number of staff in shops, licensing conditions can again be used.

[Simon Kirby (Brighton, Kemptown) (Con)]

T4. In the last four years, over 600 businesses have advertised on Brighton’s excellent Juice FM. Will the Minister join me and the Advertising Association in encouraging small and medium-sized enterprises to use our diverse local media to publicise their businesses?

[Mr Vaizey]

The Advertising Association has today issued a report showing how important advertising is for small and medium-sized businesses. My hon. Friend graphically illustrates that with the example from his constituency, particularly using the excellent local radio station Juice FM.

Oral Answers to Questions

Simon Kirby Excerpts

Monday 13th January 2014 Commons Chamber

[Mr Duncan Smith]

It is this Government who have stood by that. The Prime Minister gave a pledge before the last election, and we intended to, and will, see that all the way to the election. As always, all further commitments will be made and published in the manifesto.

[Simon Kirby (Brighton, Kemptown) (Con)]

Can the Secretary of State confirm that universal credit will improve the lives of those in our poorest communities, including those of many people in Brighton, Kemptown?

[Mr Duncan Smith]

I can indeed. Universal credit replaces the benefits that are most open to fraud, in many cases. Also, housing benefit doubled in value under the last Government; universal credit will deal with those problems, get things back into order, and provide an incentive to go back to work; that is the key thing. Getting people back to work, which the Opposition are not interested in, is the key element of welfare reform.

Universal Credit

Simon Kirby Excerpts

Thursday 5th September 2013 Commons Chamber

[Mr Duncan Smith]

I can tell the right hon. Gentleman, whom I usually respect—and he may recall that we were facing each other across the Dispatch Box at the time when he was looking into the matter—that the advice I received then made it absolutely clear that universal credit could be delivered and a timetable could be set in the Department. I take full responsibility for the delivery of universal credit, and I will not shirk that responsibility. I intend to deliver it on budget and on time.

The NAO is an historical report. It relates to the period during which I was making the changes. Those changes have now been made, and all the outside advisers and experts believe that universal credit is deliverable. The right hon. Gentleman’s party has said that it supports universal credit, and I was happy to receive that support, but Opposition Members have continually voted against it and carped about it. I think that it would be far better for him to ensure that they stay the course.

[Simon Kirby (Brighton, Kemptown) (Con)]

Will not 3.1 million people, including many in Brighton and many on the lowest incomes, be better off and receive a higher entitlement under universal credit?

[Mr Duncan Smith]

That is absolutely true. That is why this programme is worth seeing through, and why having the nerve and decisiveness to see it through is so important. Of course there were difficulties—I do not shy away from that—but the changes that have been made by my Department, the Cabinet Office and external parties will deliver the system on time in order to benefit the very people to whom my hon. Friend has referred, while the Opposition carp and forget their own history.

Oral Answers to Questions

Simon Kirby Excerpts

Monday 14th June 2010 Commons Chamber

[Maria Miller]

Looking after the most vulnerable groups in society is absolutely at the heart of the work that we do in the Department. I reassure the hon. Lady that when we are reviewing services, whether at a local or national level, we keep that very much in mind.

[Simon Kirby (Brighton, Kemptown) (Con)]

10. What his policy is on measures to encourage people into work in areas of long-term deprivation.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Many people in areas of long-term deprivation are also long-term benefit recipients. We will introduce the Work programme to give those benefit recipients access to tailored back-to-work support through an integrated system. Within that, we are actively considering how best to support those with complex barriers to work.

[Simon Kirby]

I thank the Minister for that answer. Does he agree that many of Labour’s top-down schemes, such as the new deal for communities in the areas of Moulsecoomb and Whitehawk in my constituency, have failed to deliver any real difference to people’s lives, despite having cost tens of millions of pounds? Does he also agree that this new Government’s empowerment of individuals and communities is a much more sensible way forward?

[Steve Webb]

Yes, the hon. Gentleman is right. We want to see an end to top-down, “Whitehall knows best” government. We want to see local communities and voluntary groups empowered and enabled to provide tailored solutions for individuals and local communities.