Pensions Bill

John Bercow Excerpts

Tuesday 29th October 2013 Commons Chamber

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

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Amendment (a) to Government new clause 1, line 6 at end add—

‘(2) In this section—

(a) “charges”; and

(b) “transaction costs”

shall be defined in regulations by the Secretary of State.

(3) Before making regulations under subsection (2), the Secretary of State must undertake a public consultation, which must include the views of—

(a) the Financial Conduct Authority; and

(b) the Pensions Regulator.

(4) With reference to paragraph (2)(a), any public consultation must consider the different elements which comprise charges and not just the annual management charge.

(5) Such charges, together with any transaction costs incurred by the funds in which qualifying schemes are invested, shall be declared on an annual basis to the Pensions Regulator, which shall maintain a public register thereof.

(6) The Secretary of State shall by regulations set the standards by which pension schemes must declare charges and transaction costs for the purposes of the register and for declaration to their members and their members’ employers.

(7) The standards set out in regulations under subsection (6) shall be reviewed every three years.

(8) The Secretary of State shall have power to make regulations ordering other disclosure arrangements on administration charges.

(9) Regulations under this section may not be made unless a draft has been laid before and approved by resolution of both Houses of Parliament.’.

New clause 7—Railways pension scheme—

‘(1) The Railways Act 1993 is amended as follows.

(2) In Schedule 11 (Pensions), after paragraph 11 there is inserted—

“Employers insolvency

11A (1) This paragraph applies if an insolvency event occurs in relation to the employer or former employer of a protected person.

(2) Where this paragraph applies the Secretary of State shall become liable to discharge any liabilities in respect of relevant pension rights, to the extent that they are not discharged by the trustees of a new scheme in which the employer was a participating employer.

(3) For the purposes of this paragraph—

(a) “insolvency event” has the meaning set out in section 121 of the Pensions Act 2004;

(b) “relevant pension rights” means the relevant pension rights referred to in paragraph 6(3) above.

11B The duty referred to in paragraph 11A also applies if an insolvency event has occurred in relation to the employer or former employer of a protected person on or after 1 October 1994.”.’.

New clause 9—Fiduciary duty of independent trustees—

‘(1) The Secretary of State may by regulations—

(a) require any pension scheme, which is not already overseen by independent trustees, to appoint a board of independent trustees; and

(b) set out the powers and duties of a board appointed under paragraph (1)(a).

(2) Regulations under this section—

(a) shall be made by statutory instrument; and

(b) may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.

(3) The board of independent trustees shall have a fiduciary duty towards members of the scheme overseen by them.

(4) The fiduciary duty set out in subsection (3) shall take precedence over any duty to—

(a) the shareholders in, or

(b) other owners of,

the operators of the scheme.

(5) In relation to any matters of member interest, decisions of the board of independent trustees shall be binding on the board of directors or other analogous management board of any undertaking operating a pension scheme.’.

New clause 10—Promotion of good value in scheme size—

‘(1) The fiduciary duty of pension scheme trustees shall include a duty to consider whether the scheme has sufficient scale to deliver good value for members.

(2) Where trustees take the view that the scheme has insufficient scale, they must consider whether merger with another scheme would be in the members’ interests.

(3) The Pensions Regulator shall have power to direct merger of pensions schemes where it would be in the interests of the members of each of the relevant schemes for merger to take place.

(4) The Pensions Regulator shall exercise this power in accordance with a methodology on which it has publicly consulted and which has been agreed with the Secretary of State.

(5) The methodology set out in subsection (4) shall be kept under regular review and revised when necessary, subject to further consultation and agreement from the Secretary of State.’.

New clause 11—Decumulation—

‘(1) Any qualifying money purchase scheme must direct its savers to an independent annuity brokerage service or offer such a brokerage service itself.

(2) Pension schemes shall ensure that any brokerage service selected or provided meets best practice in terms of providing members with—

(a) an assisted path through the annuity process;

(b) ensuring access to most annuity providers; and

(c) minimising costs.

(3) The standards meeting best practice on decumulation shall be defined by the Pensions Regulator after public consultation.

(4) The standards set out in subsection (3) shall be reviewed every three years and, if required, updated.’.

New clause 12—Sustainability of private pensions: review of implications of climate change and natural resource constraints—

‘(1) The Secretary of State shall commission an independent review of the implications of climate change and natural resource constraints for the sustainability of private pensions.

(2) In particular, the review must consider the implications for long-term investment outcomes for members of work-based pension schemes of potential—

(a) systemic risks posed by high levels of exposure to fossil fuels and other carbon-intensive assets;

(b) economic and physical impacts of climate change under various climate mitigation scenarios; and

(c) constraints on the availability of non-renewable resources.

(3) In subsection (2)(c), “non-renewable resources” includes food, water, land and energy resources.

(4) A report of the review’s findings, including recommendations to government, must be laid before Parliament no later than 30 October 2014.

(5) The government must lay before Parliament its response to the review’s recommendations no later than 30 January 2015.’.

Government new schedule 1—‘Work-based schemes: power to restrict charges or impose requirements.

Amendment 38, in clause 29, page 15, line 24, leave out from ‘scheme’ to end of line.

Government amendments 5 to 10.

Amendment 53, in clause 34, page 18, line 22, at end insert—

‘(5) Regulations under this section shall not exempt entire classes of business or businesses, such as small and medium-sized businesses, from automatic enrolment.’.

Government amendment 11.

Amendment 54, in clause 42, page 23, line 7, at end add—

‘“(czb) to promote, and to improve understanding of long-term and sustainable investment amongst work-based pension schemes,”.’.

Amendment 39, in schedule 16, page 84, line 37, leave out from ‘of’ to ‘transfer’ in line 1 on page 85, and insert

‘a transferable benefits scheme, the cash equivalent of the transferable benefits—

‘(a) is transferred to a nominated’.

Amendment 40, page 85, line 3, leave out ‘automatic transfer’ and insert ‘transferable benefits’.

Amendment 41,  page 85, line 8, leave out from ‘an’ to end of line 9, and insert

‘a transferable benefits scheme, means a member of the scheme who is no longer having contributions made to their benefits.’.

Amendment 42,  page 85, line 22, leave out sub-paragraph (5) and insert—

‘(5) In this Schedule “nominated transfer scheme” means—

(a) a work-based pension scheme which is registered under Chapter 2 of Part 4 of the Finance Act 2004 and is a money purchase scheme;

(b) a scheme in which the qualifying member is a member, or that has been nominated by the member or the transferable benefits scheme for the purposes of transferring pots;

(c) a pension scheme which meets quality standards as set out by the Secretary of State;

(d) a pension scheme that meets any other requirements set out in regulations.’.

Amendment 43,  page 85, line 38, leave out from beginning to end of line 29 on page 87, and insert—

‘Transferable benefits scheme to transfer to nominated transfer scheme

2 (1) The regulations must require the trustees or managers of a transferable benefits scheme to establish an agreement with a nominated transfer scheme to make provision—

(a) for the transfer of qualifying members’ benefits to the nominated transfer scheme; and

(b) describing how and when steps are to be taken in order to effect the transfer.

(2) The regulations may make provision for a protocol through which a transferable benefits scheme may establish an agreement with a nominated transfer scheme.

(3) The regulations must ensure that where the duty to transfer qualifying members’ benefits to a nominated transfer scheme, has arisen, the member may opt out of the transfer or identify an alternative nominated transfer scheme to which the members’ benefits will be transferred.’.

Amendment 44,  page 88, line 25, at end insert—

‘Nominated transfer schemes: quality requirements and administration charges

10A (1) The regulations may impose requirements that must be satisfied by any nominated transfer scheme.

(2) The requirements may in particular relate to—

(a) the governance of the scheme;

(b) the administration of the scheme; and

(c) the certification of the scheme by the Regulator.

(3) The regulations may make provision limiting or prohibiting any administration charge that may otherwise be imposed on a member of an automatic transfer scheme.

(4) Regulations made because of sub-paragraph (3)—

(a) may make provision for the manner of, and criteria for, determining whether an administration charge exceeds any limit or is prohibited; and

(b) may provide for the determination to be made in accordance with guidance issued from time to time by the Secretary of State.

(5) The requirements that may be imposed, and the charges that may be limited or prohibited, because of this paragraph need not relate to things done under the regulations.’.

Amendment 45,  page 88, line 27, leave out paragraphs 11 and 12.

Government amendment 28.

Amendment 55,  page 88, line 38, at end insert—

‘(c) the ability of the scheme to generate sustainable investment returns.’.

Amendment 46, page 89, line 39, leave out ‘an automatic’ and insert ‘a nominated’.

Amendment 47,  page 90, line 1, leave out ‘current’.

Amendment 48,  page 90, line 2, after ‘member’, insert ‘in a nominated transfer scheme’.

Amendment 49,  page 90, line 3, leave out sub-paragraph (2).

Government amendment 29.

Amendment 50,  page 91, leave out line 11.

Amendment 51,  page 91, line 21, at end insert

‘“nominated transfer scheme” has the meaning given by sub-paragraph 1(5);’.

Amendment 52, page 91, leave out lines 36 and 37.

Government amendments 30, 31 and 12.

[Steve Webb]

This group of amendments contains a long list of disparate topics. To give the House a feel for what we are discussing, it includes an attempt to limit the scope of automatic enrolment, the transfer of small pension pots, short service refunds, the vexed issue of pension scheme charges, issues with governance and administration, the decumulation of pension pots, the specific issue of rail pensions and the pension protection fund compensation cap. I shall do my best to whizz through all those issues to minimise or obviate as far as is possible the need for me to return to the Dispatch Box on this group.

I should start on a note of consensus. This part of the Bill deals with private pensions and I think that the House would agree that the process of automatic enrolment into workplace pensions is going exceptionally well. The process started a year ago. British industry has automatically enrolled about 1.7 million employees into workplace pensions. The rate of not opting out, or of staying in, has been far better than anybody predicted. Our survey evidence suggests that of the order of nine in 10 workers have chosen to remain in their workplace pensions. That is something that we should all welcome.

The Bill is designed to improve that situation further and to deal with some unfinished business. Although the principle of automatic enrolment was legislated for in the previous Parliament, many issues were not dealt with. If those are not dealt with, it will undermine the success of automatic enrolment.

Amendment 53 relates to the scope of automatic enrolment. Clause 34 gives the Government the power to exclude some people from the employer duty for automatic enrolment. I will give the House a flavour of the sorts of people that we might be talking about. In automatic enrolment, we have sought to strike a balance between setting out the rules at the start and giving employers and the industry certainty, and learning and listening and then changing the rules when we have got something wrong or when something needs to be refined or streamlined. We could have changed the rules and constantly tweaked things, or we could have said at the start, “These are the rules for the next five or six years until everybody’s in. Go and deal with it”, but we tried to strike a balance.

As we have learned, the rules require employers to put a certain set of people into workplace pensions who may immediately opt out. For example, people with what is called enhanced or fixed tax protection status—high net wealth individuals—could face a tax surcharge if their pension pot exceeds the lifetime allowance. In general, such individuals will want to opt straight back out of the scheme, and their employers have said, “Why are you making us put these people into pension schemes? We all know they are going to opt out, and indeed they will be cross with us if they fail to opt out and later face a tax penalty.” At the moment, the Government do not have the power to enable firms not to enrol those people, so clause 34 provides the power to exempt them from enrolment.

The second example concerns those who have already given notice. Someone may have given a month’s notice, but in the middle of that period the Government require the employer to put them in a pension scheme. As Members will understand, that is silly, because that person will probably opt out immediately. In any case, asking firms to enrol people who have already given notice does not do much for our relations with the CBI. Those are examples of where we have given employers a comprehensive, rigid legal duty that creates perverse outcomes. Clause 34 therefore allows employers to exempt certain categories of workers, and I have mentioned the sorts of examples it would cover.

Amendment 53 says, “That’s all very well, but we don’t want you using the power to exempt categories of business such as small and medium-sized firms.” Leaving aside the fact that the amendment does not define an SME and it is not clear who would be covered, and that any amendment with “such as” suggests it is a bit vague to begin with, in responding to the spirit of the amendment I assure the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) and the House that the Government have no intention of using the power to exclude small and medium-sixed firms. That is not what this is about.

Amendment 53 is otiose, because if we were the evil Government that the hon. Gentleman thinks we are and wanted to exclude small and medium-sized firms, we could do that anyway. The staging schedule is set in statutory instrument, subject to negative procedure. Therefore, if we wanted to exclude Britain’s small firms, we would have only to produce a statutory instrument that would say that small firms will be required to stage in 2099. That would not even be subject to a vote in the House. If the amendment seeks to stop the Government doing something that, in any case, we do not want to do, it would not work; we could still do it even if the amendment were successful. I hope I have reassured the House that amendment 53 is unnecessary, because we do not plan to do such a thing. Secondly, the amendment is not well drafted because it is not clear who it means. Thirdly, even if passed, it would not achieve the desired objective. An unnecessary, poorly drafted amendment that does not work should probably not be approved by the House.

Amendments 38 to 52 concern what happens to small pension pots—an issue that was not addressed when the original legislation for automatic enrolment was drawn up. People change jobs perhaps 10 or 11 times in their working life, and they leave behind small pension pots. From the Australian experience, we know that can mean lots of people losing track of their pension pots and not engaging with pension saving because they have large numbers of small, silly pension pots all over the place.

Australia is often mentioned as having one of the world’s best pension systems, and the Australians say that the one thing they wish they had addressed at the start was small dormant pension pots. The Australian Government have been going at this for longer than we have, and they estimate that they have 5 million lost pension accounts containing 20 billion Australian dollars. It is a serious issue. Clause 29 in schedule 16 sets out the Government’s response to the issue, which is what we call pot follows member. When someone moves from an auto-enrolment defined contribution pot to another one, their pot—as long as it is below a £10,000 threshold—automatically follows them unless they opt for that not to be the case.

Interestingly, Nick Sherry, former Australian superannuation Minister and highly regarded in the field, said of pot follows member:

“It’s the only practical way. It’s better off”—

because the money is in the worker’s last account—

“which is why I think it’s the only practical solution”.

We are delighted to have Nick Sherry’s support for our approach, as well as that of the Association of British Insurers. In the briefing sent to hon. Members the ABI welcomes the fact that the Bill includes provisions for the automatic transfer of small pension pots, which will lead to greater engagement and help people make savings decisions that are right for them and should lead to greater income in retirement. That is a welcome level of support for the proposition.

The Opposition amendments suggest a different route and would mean that when someone changes job, the dormant pension pot is automatically transferred to a third-party pension scheme called an aggregator. As I understand it, there would not be just one aggregator but multiple aggregators, and I have multiple concerns about that. First, such a policy would clearly lead to greater fragmentation of pension saving—it must do. Let us imagine the simplest example in which someone moves from firm A to firm B, and works only for two firms in their working life. In our model, the small dormant pension pot follows them from firm A to firm B—or scheme A to scheme B—and they end up with a single pension pot. In the model suggested by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, the dormant pension pot gets shunted off to some third-party provider with whom the employee has never engaged. They therefore have a pot with the current employer and with the third-party provider.

We are trying not just to hoover up small pension pots but to get people engaged in pension saving. The problem with someone shunting their money off to a third-party provider, perhaps one they did not choose—there is not much detail in the hon. Gentleman’s model, but I do not think it involves a person choosing a third-party provider, although perhaps it does—is that they get a letter from a pension company they have never heard of saying, “Guess what, we’ve got your dormant pension pot.” It is not exactly a ransom note, but it might be the first that someone knows about it, and that will not lead them to becoming engaged.

Under our model, someone’s pension savings are with their current employer. That is what they are interested in and where workplace pension engagement takes place. We therefore believe that our model provides better consolidation of pension saving and better engagement. Our model also saves on the cost of running pension schemes, compared with the model set out in the amendments. With a pot size limit of £10,000—obviously our published research relates to the £2,000 pot size limit on the aggregator model—which is the same across the two systems, we still estimate that the aggregate approach will achieve only half the cumulative administrative savings by 2050 of our pot follows member system. While aggregators are worth a look—we considered that option—it is clear that pot follows member is the best solution.

There is an issue of what happens if money is automatically transferred from a “good” scheme to a “bad” scheme, and I accept that point. That is why we are regulating for scheme quality. It should not just be a worry that someone’s small pension pot gets auto-transferred to a bad scheme; it should be a worry that an entire work force have been auto-enrolled into a bad scheme. We should not have bad schemes and must deal with that. That is why we are tackling pension scheme quality, which includes a range of issues such as governance, investment, costs and charges. In a few moments I will have news for my hon. Friends and the House about what action we are taking on charges. For those reasons, we are not convinced by the multiple aggregator model, as it is catchily known. We believe that the someone changing job and their money following them is a simple, attractive notion that I commend to the House. I therefore ask the House to reject amendments 38 to 52.

Amendments 5 to 10 are largely technical and deal with short service refunds. There is a category of money purchase pension schemes through which someone who has worked for a firm for under two years can have their money back when they leave. That is not in the spirit of what we are trying to achieve through our pension reforms. We want people, even those who put in relatively small amounts of pension savings, to accumulate that, build up what I call a big fat pot, and have a decent retirement. Short service refunds fly in the face of the view that even modest pension savings are worth having, and we therefore propose to eliminate them. The danger with the current legislation is that although someone joined to a pension scheme through a contract has 30 days to opt out, under the Bill they would be in the scheme on day one, and a day’s or month’s worth of pension contribution would be lodged. On purely pragmatic grounds we took that view that we ought to apply the same 30-day rule to short service refunds. Clause 32 abolishes short service refunds, and technical amendments 5 to 10 deliver a 30-day breathing space so that someone who is a member of a scheme for fewer than 30 days can receive a refund of what are essentially nominal contributions. I hope that amendments 5 to 10 will be welcomed across the House.

--- Later in debate ---

[Steve Webb]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this we will debate the following:

Government new clause 4—Preserving indefinite status of certain existing assessed income periods.

Government amendment 13.

[Steve Webb]

Unlike the debate on the previous group, the debate on this short group need not detain us too long. It relates to a feature of the state pension credit system known as the assessed income period. The basic idea was to avoid the need for people on pension credit to keep reporting changes in their circumstance—the basis was that older pensioners in particular have less frequent changes of circumstance. The basic idea of the assessed income period was a perfectly reasonable one but, unfortunately, it has not worked in practice and has raised a lot of issues.

To give an example, if someone in retirement inherits substantial wealth from the generation above them, they can continue to get pension credit for five years or even indefinitely, despite having very substantial wealth. If someone retires, has an assessed income period and then starts to draw a new stream of pension income, they can go on getting pension credit despite the fact that their living standard is well above the level of pension credit. We have given this a good go, and it was a reasonable thing to try, but in practice it has created anomalies, with payments to people who, if they were assessed on their current circumstances, would not be entitled to benefit.

--- Later in debate ---

[Mr Speaker]

With this it will be convenient to discuss the following:

New clause 6—State pension entitlement for women born between 6 April 1951 and 5 April 1953

‘(1) Women born between 6 April 1951 and 5 April 1953 have the right to choose to receive their state pension and associated benefits under the new state pension system, set out in Part 1, from its introduction.

(2) The Government must ensure information about the full range of entitlements under the old state pension rules and the new state pension is available to allow women in subsection (1) to make a comparison of total weekly income.

(3) The responsibility for making a choice under subsection (1) lies fully with the individual.’.

New clause 8—Review in relation to women born on or after 6 April 1951

‘(1) The Secretary of State shall conduct a review to determine whether all women born on or after 6 April 1951 should be included within the scope of the new state pension arrangements established by this Act.

(2) The Secretary of State must prepare and publish a report on the review within six months of Royal Assent of this Act and must lay a copy of the report before Parliament.’.

New clause 13—Pensionable age: differential effect in England, Wales and Scotland

‘Part 2 of this Act shall not come into force until the Secretary of State has laid a report before both Houses of Parliament containing an assessment of the differential effect and impact of the pensionable age in England, Wales and Scotland due to varying levels of life expectancy and gross value added.’.

Amendment 1, page 10, line 1, leave out clause 20.

Amendment 35, page 11, line 34, clause 24, leave out ‘An’ and insert

‘With the consent of the trustees, an’.

Government amendments 2 and 3.

Amendment 37, page 11, line 40, clause 24, at end insert—

‘(c) a scheme in respect of any of its terms which relate to persons protected under the terms of—

(i) the Electricity (Protected Persons) (England and Wales) Pension Regulations 1990;

(ii) the Electricity (Protected Persons) (Scotland) Pension Regulations 1990;

(iii) the Electricity (Protected Persons) (Northern Ireland) Pension Regulations 1992;

(iv) the Railway Pensions (Protection and Designation of Schemes) Order 1984;

(v) the London Transport Pensions Arrangements Order 2000;

(vi) the Coal Industry (Protected Persons) Pensions Regulations 1994; or

(vii) the nuclear industry employees protected by Schedule 8 of the Energy Act 2004.’.

Government amendment 4.

Amendment 36, page 12, line 10, clause 24, at end insert—

‘“trustees or managers” has the meaning given in section 178 of the Pension Schemes Act 1993 and regulations made thereunder.’.

Government amendments 14 to 20.

Amendment 34, page 79, line 5, schedule 14, leave out paragraph 11.

Government amendments 21 to 24.

[Sheila Gilmore]

One of the issues that has come up in the course of all the debate about the single-tier pension is the decision that the Government have taken to bring to an abrupt end to the provisions that previously existed for women in particular—I shall talk primarily about women, although men could be in this position—to be able to derive a pension or years towards a pension from the contributions of their spouse. That dates back to a different world. When the state pension system was set up in the post-war period, there was an assumption that the standard pattern for married people was that one person, normally the man, would be the main breadwinner, and the woman would spend considerable periods out of the labour force, and perhaps not even work at all after marriage. Indeed, although they were about to go, there were still marriage bars on certain types of employment, so time out of employment was not just a question of choice; it was sometimes a question of necessity.

Things have changed and, although it can still be a necessity, for many women the amount of time out of employment can be very short. The arrangement in the original proposals was that a woman could receive a derived pension from her husband’s contributions—currently approximately 60% of the full state pension—or receive benefit if she was widowed or divorced. For someone widowed after retirement who was receiving only the 60% pension—sometimes referred to as the married couples pension when both bits are put together—it would be increased to a full single person’s pension, regardless of whether she had made contributions during her working life. For those who are divorced, there is currently provision in the system to inherit and carry over a spouse’s contribution record if it is better than one’s own. That can be beneficial to women, and some men, in building up a pension record.

Other changes that have taken place include crediting certain types of contribution that are not entirely financial. As well as the credits people receive during periods of unemployment when they are claiming benefit, successive Governments have introduced credits for periods of child care and for caring for other relatives, and that can make up some gaps. There are still some people—a decreasing number, without a doubt—who will end up in a position where they do not build up sufficient contributions in their own right. If the right to obtain these so-called derived benefits is taken away, there will be a group of people, primarily women, who, post-2016 when the new arrangements come in, will have less than they would have expected to get before that date. They will be in a worse position than they would have been previously, and that will have all sorts of consequences.

People have reasonable expectations of the rules. Age UK gave an example of someone who had specifically asked the Department for Work and Pensions for advice on whether she should start making contributions relatively late in her working life. She was told not to do so, because she would not be able to work to receive nearly as much as she would be getting in any event. That advice was given in good faith and at the time she accepted it in good faith, but it is now too late for her to make up the difference.

The Government estimate that there are 40,000 women in this position. I am not sure whether there is certainty about that figure, because I do not know whether a full survey has been carried out. However, 40,000 is not a huge number. New clause 5 asks for a full review to ascertain how many women are in this position and what the cost would be of allowing them to continue to benefit from derived rights for a transition period—it would not be for ever.

Oral Answers to Questions

John Bercow Excerpts

Monday 14th October 2013 Commons Chamber

[Mr Duncan Smith]

My hon. Friend is right that the benefit cap is popular and effective. Although the new shadow Secretary of State said that Labour would be tougher on welfare, we have all noticed throughout questions that the only thing we have heard from Labour is opposition to every single spending reduction and welfare reform. That party is not fit for government.

[Mr Speaker]

The hon. Member for Brighton, Pavilion (Caroline Lucas) has been looking doleful for much of questions. I shall do my best to rescue her from her misery.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I am entirely grateful, Mr Speaker, but my dolefulness has more to do with the responses from the Government than with my not catching your eye.

The Government’s main reason for denying women born between 1951 and 1953 the option of receiving the single-tier pension if that means a higher weekly income appears to be the uncertainty about when their husbands will die. That is irrelevant for single, unmarried female pensioners—the poorest of all groups in retirement—who know that they would be better off with a choice. Will the Minister reconsider his policy so that the Government can help my constituents and others like them?

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Speaker]

I am sorry to disappoint colleagues, to whose mellifluous tones I could happily listen all afternoon, but we must move on to the statement.

Universal Credit

John Bercow Excerpts

Thursday 5th September 2013 Commons Chamber

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

I start by reminding the House of the importance of universal credit. Universal credit is a major and challenging reform to transform—

[Mr Speaker]

Order. Just before the Secretary of State develops his remarks—the exchanges will run on—I say very gently to the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) that the proper form in these matters is to stick to the urgent question in the terms submitted. It is not appropriate for a Member to refine, adjust or spin the terminology of the question. We really must stick to the terms. I am not impugning the integrity of the right hon. Gentleman—[Interruption.] No, no; I am not doing anything of the kind. What I am saying is that I think he has behaved in a mildly cheeky manner, and I hope he will not do that again.

[Mr Duncan Smith]

We would never accuse the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) of being less than cheeky—or, for that matter, of ever attempting to spin anything—but I stand by your judgment, Mr Speaker: a cheeky spinner he is.

Universal credit, I remind everybody, is an important and challenging programme to provide major benefits for claimants and the country as a whole, with a clear financial set of incentives that will get an estimated 300,000 additional people into work and make 3 million claimants better off. However, all major programmes involve difficult issues and difficult decisions, week in, week out. In 2011, I added to the programme and the original schedule—as the right hon. Gentleman knows, because we saw each other and I told him about this—the need for a pathfinder, which I said would start rolling out in April.

I added that provision because I was concerned that we needed to ensure that we tested the IT throughout. By the way, I have done that for every programme—from disability living allowance to the personal independence payment, and everything else. We need to make sure that we are right, and I was concerned that the existing programme was not quite right.

In the summer of 2012—or rather, before that, in early 2012—I instigated an independent review because I was concerned that the leadership of the programme was not focusing in the way that it needed to on delivering the programme as it had been originally set out. The internal report showed me quite categorically that my concerns were right: the leadership was struggling, a culture of good news was prevailing and intervention was required. That was very much backed up by the National Audit Office.

As a result, I changed the leadership team in October 2012 and brought in the brilliant Philip Langsdale, who had successfully delivered Heathrow terminal 2. He was one of the great IT brains in the UK. He made it very clear that the programme was deliverable, and that it needed to be reset so that it could be delivered on time and on budget. When he sadly died, I went to my right hon. Friend the Minister for the Cabinet Office and Paymaster General and asked for David Pitchford—in the short term, while we looked for a replacement—who headed the Major Projects Authority in January. My right hon. Friend agreed to that, and the Cabinet Office helped us to put together the reset programme that had been started by Philip Langsdale.

I accepted the findings of the report absolutely in review, and have made certain that in the last few months we have been working to deliver the programme. It has been handed over to Howard Shiplee, who has now taken over. He wrote recently in The Daily Telegraph that he believed the programme was deliverable on time and on budget. The important thing about Howard Shiplee is that he is the man who delivered the Olympic park under budget and early. His clear indication is that he believes that we might do similar things here. He has made that very clear.

I should also like to remind the House that universal credit is not just succeeding but progressing. It is progressing because we have already started to roll out the pathfinders. I was in front of the Select Committee in July, when I explained that those pathfinders were already teaching us some important lessons. We are expanding those into six new jobcentres and dealing with them. Also, from October, around 100 jobcentres a month will begin using the claimant commitment with new jobseekers. That commitment will act as a contract between the jobseeker and the state. We are already seeing that this is driving people into work. Universal credit is not just about IT. It is massively about cultural change to get people back to work and to ensure that those who do go to work, particularly the poorest, benefit the most.

The NAO concludes on the programme:

“It is entirely feasible that it goes on to achieve considerable benefits to society”.

Every recommendation that the NAO has made in the report has already been made. The key lesson that I take is simply this. The previous Government crashed one IT programme after another, and no Minister ever intervened to change them early so that they delivered on time. We are not doing that. I have taken action on this particular programme. This programme will deliver on time and will deliver within budget.

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[Justin Tomlinson (North Swindon) (Con)]

Why was this urgent question called when the Public Accounts Committee, of which I am a member, is investigating this clearly outdated, historic report next Wednesday?

[Mr Speaker]

Order. I am afraid that that is not a question for the Secretary of State. I decide whether an urgent question should be granted or not. I am fully conscious of what other parts of the House are doing and the judgment I have to make is whether the matter should be aired on the Floor of the House today. The answer is yes. That, to be honest, is the end of the matter.

[Margot James (Stourbridge) (Con)]

I was delighted to hear my right hon. Friend say that he thought that the cultural change afforded by the introduction of universal credit was even more important than the financial savings that it will offer. In my part of the world in the black country, we have a higher than average rate of workless households. Will he talk to his officials about ensuring that some of the pathfinder pilots that he has in mind take place in the black country?

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Speaker]

Order. I appreciate that there is much interest, but 25 Members have questioned the Secretary of State and we must move on—[Hon. Members: “Aw.”] The House is used to a situation in which virtually everyone gets in, because that is the way I like to play it—I must say, especially to new Members, that it did not use to be like that at all—and it usually is that way, but I have to make a judgment about the time available, and we have the business question, a statement on legal aid and debates under the auspices of the Backbench Business Committee to follow. These matters can be rehearsed again in the future—and doubtless they will be.

Disabled People

John Bercow Excerpts

Wednesday 10th July 2013 Commons Chamber

[Mr Speaker]

I advise the House that I have selected the amendment in the name of the Prime Minister.

--- Later in debate ---

[Mr Byrne]

We believe that the bedroom tax should be dropped, and dropped today, because the evidence is mounting that it is going to cost more than it saves. [Interruption.]

[Mr Speaker]

Order. These points must be allowed to come out in debate, and right hon. and hon. Members can speak on their feet but not from their seats.

[Mr Byrne]

I am grateful to you, Mr Speaker.

We have to deal with the issue of the bedroom tax and then the issue of the cash benefits—

--- Later in debate ---

[Mr Duncan Smith]

He has now just said—

[Mr Speaker]

Order. We must proceed, on both sides, according to established rules of debate, which include taking interventions or choosing not to do so. A Member cannot intervene, however strongly he or she feels, if the person who has the Floor declines to give way.

[Mr Byrne]

If the Secretary of State is so passionate about speaking, he should be answering for the Minister this afternoon instead of intervening from a sedentary position.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Speaker]

Order. I now have to announce the result of a Division deferred from a previous day. On the motion relating to the draft Alternative Investment Fund Managers Regulations, the Ayes were 273 and the Noes were 27, so the Question was agreed to.

[The Division list is published at the end of today’s debates.]

I notify the House that several right hon. and hon. Members wish to contribute to the debate, as a consequence of which I have imposed, with immediate effect, a seven-minute limit on Back-Bench contributions. As with all time limits in these circumstances, it is subject to review, depending on levels of interest and rates of progress.

Oral Answers to Questions

John Bercow Excerpts

Monday 1st July 2013 Commons Chamber

[Sir Tony Baldry (Banbury) (Con)]

Does not this question demonstrate the fact that the concept of national insurance has always been a bit of a con in that it is not, and never has been, an insurance scheme? Essentially, those who are in work at any time are paying, out of their taxed income, for the pensions of pensioners of that time, on the understanding that when they reach pensionable age those in work will pay their pensions. Ever since it was introduced, the phrase, “national insurance”, has been misleading.

[Mr Speaker]

I am sure the reply will be shorter than the treatise.

[Steve Webb]

My hon. Friend is correct: it is an intergenerational pension promise, although we hold to the notion that we pay bigger pensions to those who have made more years of contributions. Therefore, we believe that there is an insurance element to the scheme.

--- Later in debate ---

[Graham Evans (Weaver Vale) (Con)]

In the interests of time, Mr Speaker, I should say that I was about to ask that question.

[Mr Speaker]

Well, that is a first, not just from the hon. Gentleman but more generally.

[Jim McGovern (Dundee West) (Lab)]

The most recent figures suggest that of the people who are on the back-to-work programme in my city of Dundee, 9% have managed to get back to work. I admit that that is an improvement on the farcical 1.4% that we had last year—the lowest in the UK, I believe—but it is not necessary to be an expert in arithmetic to work out that that means that 90% of people on the programme have still not found work. Will the Government admit that with the recent bedroom tax, which has been mentioned, and welfare benefit cuts, they are not just starving families in work but starving them full stop—

[Mr Speaker]

Order. We have got it.

[Mr Hoban]

There was a nugget buried in that question: the hon. Gentleman accepts, unlike those on his party’s Front Bench, that the Work programme is improving and getting more people into work. I am delighted by his support for it.

--- Later in debate ---

[Steve Webb]

The hon. Lady will have heard in the comprehensive spending review announcement that the Government are committed to a £3 billion investment in building affordable housing. This is a priority for this Government and we agree entirely that previous Governments left far too few affordable houses.

[Mr Speaker]

Last but not least, I call Oliver Colvile.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

When the benefit cap, which will develop strong work incentives, is rolled out to Plymouth, will my right hon. Friend be able to tell me how many people will be encouraged to get a job, rather than depend on benefits?

[Mr Duncan Smith]

Yes.

[Mr Speaker]

We are grateful for that.

Oral Answers to Questions

John Bercow Excerpts

Monday 20th May 2013 Commons Chamber

[Rosie Cooper]

It came as a great shock to my constituents that the new regulations will see the removal of the Motability lease payments after 28 days of a person’s being in hospital. Will the Minister explain why she is prepared to leave disabled people worried about going into hospital and potentially losing their Motability car, losing their deposit and having to restart the whole process when they come out? They will be worried about what it will mean for them to reapply for a new car with new adaptations that requires a new deposit. Additional administration will fall on the Department for Work and Pensions, so who will bear the cost incurred when the exclusively and specifically adapted Motability cars have to be returned—

[Mr Speaker]

Order. I think that the hon. Lady’s essay —perhaps even her thesis—has been completed.

[Esther McVey]

Obviously, I do not know the specific details of the case, but when somebody is in hospital for a long time they will not need the Motability car. However, every case is taken on its specifics and everything is dealt with in the most sensitive way. That has always been the case with Motability cars.

--- Later in debate ---

[Fiona Mactaggart]

I have been driven to ask this as an oral question by my being refused a reply to a number of written questions on the grounds that it would cost too much money. I have been able to discover that there are 678,000 housing benefit claimants who are also receiving ESA, so there are at least two thirds of a million disabled people in receipt of housing benefit. In Slough landlords—

[Mr Speaker]

May we have a question? We must move on.

[Fiona Mactaggart]

What is the Minister going to do to protect disabled people in private housing when landlords refuse to accept people on housing benefit, which is common in my constituency?

--- Later in debate ---

[Esther McVey]

I was not exactly sure where the right hon. Gentleman was going with that question. The PIP was introduced to support the most vulnerable and to make it as easy as possible to do so, and to ensure that people who could not fill in a self-assessment form could see somebody on a one-to-one basis. This is the biggest ever change in welfare. I thank all the people who have helped with it in Jobcentre Pluses, and the stakeholders. Over 1,000 disabled people got involved to make sure that the system was right, and I thank them for making it a good transition to a new benefit.

[Mr Speaker]

The Minister can always have a cup of tea with her right hon. Friend if any further clarification is required.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Many of my constituents rely on the sub-prime lending sector to manage from day to day and to build their credit record. What conversations has the Secretary of State’s Department had with the Financial Conduct Authority in its efforts to improve that sector and to make sure that my constituents get a good service rather than, in some cases, being driven into the hands of illegal moneylenders?

Budget Resolutions and Economic Situation

John Bercow Excerpts

Friday 22nd March 2013 Commons Chamber

[Mr Duncan Smith]

I will make a little progress and give way in a minute.

[Mr Speaker]

Order. I gently remind the House that the Secretary of State is in order. He has been generous in taking interventions, but 30 hon. Members wish to speak in the debate. I know that both the Secretary of State and his shadow will factor that into their calculations.

[Mr Duncan Smith]

Rather than advice, I will take that to be an instruction, gently and eloquently given. I can crawl with the best of them—I hope better than my opposite number, but he will make his own attempt. I will make progress and try to be quicker.

I will talk briefly about the single-tier changes for which we are legislating. They are not just about improving the prospects of workers today, but about securing their position as they enter retirement. I am enormously pleased that the Chancellor confirmed that the single-tier pension will start in April 2016, which is in keeping with our original timetable. That means that after 60 years of modifications and tinkering, we will deliver a vital overhaul of the pensions system as soon as possible. I pay tribute to the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has been instrumental in driving that forward. If anyone is able to say at the end of this Parliament, “I made a difference,” it will be him. I will ensure that his name is remembered for that.

We are successfully rolling out auto-enrolment, which will help up to 9 million people get into a workplace pension scheme. That is important as it will make saving the norm. However, auto-enrolment will not work unless it pays to save. That is the key problem that the Minister and I have been discussing endlessly. What is the incentive to save? Too many people in Britain have been spending rather than saving.

The single-tier pension is all about solving that problem. We are replacing the complicated two-tier system of the basic state pension, additional state pension and the other outdated add-ons with a single flat-rate payment. That means that people will know what they are entitled to and will be able to project forward so that they know what they need to save. They will know that what they save will go above the line and that they will be able to use every pound; it will not be means-tested away so that they cannot use it. At £144 a week, the new state pension will be set above the level of the means test.

We are ending the unfairness whereby many people reach state pension age, having scrimped and saved all their life, only to find that others, who did not make any effort, get the same income through the pension credit. That is unfair. This change is about fairness and making saving pay. Michelle Mitchell, the charity director general of Age UK, said:

“The government’s proposals for a single tier state pension could help transform retirement for future pensioners, bringing clarity and stability to a system which is currently opaque and unfair.”

In 2020, three quarters of new pensioners will get a higher state pension following the introduction of single tier. That will benefit those who have historically had poorer state pension outcomes in particular. There will be better provision for the low-paid. Some 60% of low-income pensioners will see their income in retirement increase by 2040, compared with the current system.

Critically, there will be better provision for the self-employed, who, for the first time in about 40 years, will be treated the same as employees for the purposes of state pension retirement. There will be better provision for those with broken contributions, such as women and those with caring responsibilities. Some 700,000 women who reach state pension age in the 10 years after the single tier is introduced will receive £9 per week more on average. Implementing it in 2016 will benefit an additional 85,000 women who will now retire under single tier.

The single-tier pension is one of the big reforms, alongside universal credit, that will transform the landscape. It pays to work and it will now pay to save.

--- Later in debate ---

[Mr Byrne]

I will happily give way to the hon. Gentleman. Will he admit that unemployment rose—

[Mr Speaker]

Order. The hon. Member for Rochford and Southend East (James Duddridge) will resume his seat. [Interruption.] Order. Do not argue with the Chair, Mr Duddridge. The hon. Gentleman would not have the foggiest idea when to start or where. He will intervene when permission has been granted, and not before. If he does not like it, he can lump it and he might not speak at all.

[Mr Byrne]

I am grateful to you, Mr Speaker, but I am happy to give way.

Jobseekers (Back to Work Schemes) Bill (Allocation of Time)

John Bercow Excerpts

Tuesday 19th March 2013 Commons Chamber

[Mr Hoban]

The hon. Lady makes a helpful point, but the legal position is as follows. If the Supreme Court does not give us leave to appeal, the regulations will be quashed, and we would have to repay sanctions to claimants who had not participated in schemes to help them back into work. The Bill is therefore needed. Hon. Members may have received briefings from third parties saying that that was not the case, but I can assure her and others that it is.

The Department has applied for permission for leave to appeal to the Supreme Court, but there is no guarantee that that will be granted. We therefore need to expedite the Bill so that we are not in a position where we have to repay benefit sanctions to people who have neither participated nor accepted the help that we have offered them.

[Mr Speaker]

I take it that the Minister has concluded his remarks. He cannot be accused of doing so with a fanfare of trumpets, but we are grateful to him for moving the motion.

[Stephen Timms (East Ham) (Lab)]

We find ourselves in a deeply unsatisfactory situation with the Bill and, indeed, the programme motion. We do not quite know what happened between the court case and the decision that prompted the measure. My right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) and I were told about the problem a couple of weeks ago; there was a three-week gap when we did not know what was happening. The House of Lords Constitution Committee will, I believe, opine on the measure tomorrow, but equally we do not want to risk an additional £130 million cut to benefit spending over the period ahead, particularly not on a day on which it has emerged that the Government want to cut £2.5 billion from spending across Government, some of it doubtless from the budget of the Minister and his right hon. Friend the Secretary of State. Nor do we want to be in a position in which people who were sanctioned months ago—in many cases, well over a year ago—have to be refunded because of the appalling mess that the Government have got themselves into.

The way forward proposed by the Bill and the programme motion is deeply unsatisfactory, but it is less bad than the alternatives, and for that reason I shall not urge my hon. Friends to oppose it.

[Mr Speaker]

If no one else wishes to contribute, the debate has been pithily concluded.

Question put and agreed to.

Oral Answers to Questions

John Bercow Excerpts

Monday 11th March 2013 Commons Chamber

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

With permission, I will answer this along with Questions 7, 8 and 16.

We have today published a document analysing the pension outcomes of this group of women. Overwhelmingly, women in this group—who reach state pension age up to three years before a man born the same day—would get more pension benefits over their lives than a man with the same national insurance record.

[Mr Speaker]

The Minister is a man of formidable intellect and therefore I hesitate ordinarily to disagree with him, but I think that the grouping is with Questions 6, 7 and 16. I hope he does not mind.

[Ian Murray]

The Minister may have a formidable intellect but I am going to disagree with him. As he will know, half a million women born between 1952 and 1953, many of whom will have celebrated mother’s day yesterday, will lose out on this single-tier pension. Will he apologise to the 700 women in my constituency who are affected and have written to me? Will he do something before they lose out?

--- Later in debate ---

[Mr Speaker]

Order. The hon. Member for Dudley North (Ian Austin) is noisier in heckling the Secretary of State than he was in heckling me at Essex university 30 years ago. He needs to calm down.

[Mr Duncan Smith]

With respect, Mr Speaker, the hon. Gentleman’s noise covers a complete lack of intelligence. That is what I would say. Let me bring something forward—[Interruption.] No, monkeys can jump around, but the noise they make is not necessarily relevant. Let me tell the hon. Gentleman about his own area. In Dudley, which I think he might know, the National Housing Federation estimates that there are 2,000 households under-occupying—in other words, with spare rooms. It also estimates that there are 1,500 families in overcrowded accommodation. In other words, if property is properly managed, we might get those who are overcrowded into decent-size accommodation. When will the Opposition moan about that?

--- Later in debate ---

[Mr Duncan Smith]

We have put—and will continue to do so—large numbers of internet access devices in jobcentres, so people will automatically get help and support when they go in. We are talking and working with local authorities to ensure that people will be able to gain immediate access through libraries and all other local authority outlets. We are also working with individuals to make sure that those who have computers at home fully understand how to use the system. The truth is that this will be helpful. The Opposition seem to occasionally miss the fact that 92% of advertised vacancies require basic IT skills and that if people do not have the ability to go on a computer, they cannot apply for the job.

[Mr Speaker]

I call Mr Ruffley. Not here.

[Jeremy Lefroy (Stafford) (Con)]

22. How many people are in receipt of out-of-work benefits; and what assessment he has made of the level of inactivity in (a) Stafford constituency and (b) England.

--- Later in debate ---

[Andrea Leadsom (South Northamptonshire) (Con)]

T3. Does my right hon. Friend agree that for Opposition Members to talk of the spare bedroom subsidy as a tax shows a profound lack of understanding on their part of what a tax actually is?

[Mr Speaker]

Order. I say gently to the hon. Lady that Ministers have no responsibility for the Opposition’s use of terminology. It is better that we leave it there. There has been a very full exchange on that subject.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

May I start by thanking the Secretary of State for briefing me and my right hon. Friend the Member for East Ham (Stephen Timms) on his plans for urgent legislation, about which his Department has commented in The Daily Telegraph this morning? Both he and I believe that sanctions are vital to give back-to-work programmes their bite. However, when he signed off the 2011 regulations that created sanctions for the Work programme, why did he not check that they were legally bullet proof?

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry, but we must now move on.

Romanians and Bulgarians (Benefits)

John Bercow Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Duncan Smith]

If my hon. Friend does not mind, I will skip the language and keep to the sentiment.

[Mr Speaker]

Order. I can say only that I experienced a moment of deafness—partly because somebody else was wittering on at me—but I have the impression that perhaps something rather tasteless was said. I trust that the person concerned will wash his or her mouth out without delay.

[Ian Lucas (Wrexham) (Lab)]

Will the Secretary of State clarify whether the Government are considering removing rights to NHS treatment for British citizens, in an effort to restrict access to EU migrants? This has been reported over the past few days, as part of his party’s reaction to events last Thursday.