State Pension Age: Review

Stephen Timms Excerpts

Thursday 30th March 2023 Commons Chamber

[Madam Deputy Speaker (Dame Rosie Winterton)]

I call the Chair of the Work and Pensions Committee.

[Sir Stephen Timms (East Ham) (Lab)]

I am grateful for early sight of the statement. I understand why the Secretary of State has chosen to defer the key decision. Like John Cridland’s independent review six years ago, Baroness Neville-Rolfe’s report should have been published soon after the Department received it six months ago, rather than kept needlessly under wraps until today. John Cridland proposed early access to pension credit. Will the Secretary of State consider leaving access to pension credit at age 66 when the state pension age rises to 67 in three years’ time?

[Mel Stride]

The right hon. Gentleman raises the issue of when Baroness Neville-Rolfe’s report was published. We had a fairly detailed discussion about that when I appeared before his Committee yesterday, so he knows my arguments around that. It is something that I certainly would not rule out for future reviews as a perfectly reasonable practice, but he knows the reasons it did not happen on this occasion. In terms of early access to pension credit, that is not something that the Government are currently planning—nor was it something that previous Governments planned to do at any stage—but of course, as with all matters around pensions, we will keep that under review.

Budget Resolutions and Economic Situation

Stephen Timms Excerpts

Thursday 16th March 2023 Commons Chamber

[Mel Stride]

The answer to the hon. Gentleman’s inquiry is in the early measures, which I was going to come on to. The Chancellor has dealt with the one-month requirement for the up-front payment by making it clear that jobcentres will fund that payment. That will come in in the short term, as will the increase in the cap—the maximum amount that those who claim those benefits can receive.

Before I come on to specific measures in detail, I think it is important to put workplace participation in the wider context of a robust and resilient UK labour market and economy. As confirmed again by Tuesday’s labour market statistics, unemployment is at a near-historic low of 3.7%, payroll employment is at an all-time high and economic inactivity continues its downward trend. However, there are still 1.1 million job vacancies, and we have many people who could work and want to work, but who do not work. This Budget will help to unlock that potential and fill the vacancies. It builds on our key Conservative belief that we should make work pay, and on our sustained efforts to reward and incentivise employment to get more people into work. That is why, as well as keeping unemployment low, I am determined to see participation in the labour market continue to rise and inactivity fall. In doing so, we will see more people fulfil their potential and more employers get the skills they need to support their businesses and ensure the economy grows for the future.

Over the past few months, I and my Ministers have been leading work across Government to look in detail at the issue of participation in the labour market. I have looked carefully at the cohorts that make up the 8.9 million inactive people in the economy and the nature of the barriers these groups face, and I and others have thought innovatively about how we can help many of them into the workforce. That involved examining in detail international comparators, as well as engaging with a wide range of stakeholders and experts, and I thank in particular those who served on my expert panel.

It is clear from this work that concerted action across the board is required, and yet it is important to recognise that the level of economic activity in the UK is lower than in the United States, France and Italy. It is below the EU average and below the average of OECD countries. However, it is equally important to recognise that, whereas for most other comparable countries the increase in inactivity that occurred during the pandemic has since returned broadly to its pre-pandemic level, in the UK it has remained elevated. So this Budget focuses on economic inactivity and on the key groups that I considered in my review: disabled people and those with health conditions, the over-50s, parents and carers, and people looking for work or working a low number of hours.

We know that many disabled people and people with health conditions want to work and benefit from the positive impact on health and wellbeing that employment can bring. We have made good progress, contrary to the remarks of the right hon. Member for Leeds West. There are over 1 million more disabled people in work compared with 2017—a milestone that I am particularly proud of and that we marked last year, having delivered on this commitment five years early. That is a record of which this Government can be proud.

[Sir Stephen Timms (East Ham) (Lab)]

Will the Secretary of State give way?

[Mel Stride]

I give way to the Chair of the Work and Pensions Committee.

[Sir Stephen Timms]

I am pleased that the White Paper says the Department will keep a focus on the disability employment gap, which is the really telling indicator. Will the new target that the Secretary of State sets relate to that gap, rather than a rather arbitrary number of increased jobs?

[Mel Stride]

The right hon. Gentleman will know that hitherto we have indeed focused on a gap. The Department will come forward with something to say on that in the not-too-distant future, and he will have to wait until that point to know the exact kind of target, although I recognise that the current measure has value.

The measures we have set out in the Budget and in our health and disability White Paper will help to remove barriers, so that disabled people have the same opportunity as anybody else to thrive in work. Some 20% of those who have been assessed through the work and capability assessment as having limited capability to work and to look for work say that they want a job at some point in the future, but one of the barriers to work is the health and disability benefits system itself. For too many disabled people, the system feels like it focuses on what they cannot do, rather than what they can do.

Having listened to disabled people, the White Paper that we published at Budget yesterday sets out how we will fundamentally rewire the benefits system, changing it from a system that can often leave people feeling that moving towards work is too risky and that they might not be able to return to benefits if that work does not work out. I want to give people the confidence to try work without the worry that they will not be able to access benefits again promptly if a job does not last. Under our new approach, people will have the confidence that they will receive support for as long as it is needed. Our reforms will also provide additional support to those disabled and long-term sick who request it.

These reforms have been years in the making and follow the Green Paper that we published in July 2021. We have engaged widely on these changes, including with disability charities and disabled people’s organisations, as well as with disabled people themselves who have been through the current process and understand how and why it needs to change. Just as we have taken a measured approach to developing this way forward, so we will operationalise this approach with care.

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[Sir Stephen Timms (East Ham) (Lab)]

Thank you, Mr Deputy Speaker, and I apologise for my late arrival in the debate.

It is striking how hard it is for Conservative Chancellors to resist the temptation to hand out big tax cuts to the wealthiest while raising tax for ordinary people. We can sympathise with the Chancellor in that he meets many such people—many people among the 1% wealthiest pension savers in the country—who are very courteous and very nice to him over convivial dinners, and they explain to him their frustrations with the Government’s pensions tax policy. These are good eggs, and who could possibly begrudge them a £1.2 billion tax cut? But the reality is that pension tax relief is already massively skewed in favour of the best-off, and the Chancellor, when times are hard, has decided to give another billion to the wealthiest in pension tax relief.

I do welcome the adoption of the Select Committee recommendations on support in universal credit for the costs of childcare, which was announced yesterday. As the Secretary of State explained, allowing the costs to be paid up front from universal credit and lifting the cap—absurdly, it had not been raised since 2005—will remove very important barriers to work, including a barrier to those who are working part-time from working full-time.



There is much to welcome in the health and disability White Paper, which says that the system will be changed so that it focuses on

“what people can do, rather than what they can’t”.

That is laudable, but precisely the same form of words was used by Alistair Darling to introduce changes to the incapacity benefit system 25 years ago. Whether the detail turns out to be a good thing will depend on the detail, which is largely absent. The Secretary of State spoke about consultation. The Government’s ill-fated disability strategy came to grief in the courts because had not adequately consulted disabled people. We must hope that that lesson has been learned.

Nobody will mourn the work capability assessment, which the White Paper says will be replaced by

“a new personalised health conditionality approach”.

Can Ministers tell us what that means? The White Paper goes on to explain that it

“will provide more personalised levels of conditionality and employment support”,

but I am afraid that leaves us none the wiser. The problem is that, despite being years late, much of the vital detailed work does not seem to have been done yet.

I welcome some of the specific proposals to reform PIP—for example, I am pleased that the call to match people’s primary health condition with a specialist assessor will at least be tested. Many PIP assessments come up with the wrong answer, as we know, because when people appeal against the determination, the great majority win their appeal—in fact, the proportion who do so has been going up. The White Paper proposes to place more weight on the PIP assessment in future, so it is even more important that we get it right. The only way to do that is to record all the assessments, so that if the decision is subsequently found to be wrong, it is possible to go back, work out why and consider how to avoid the same mistake being made again in future.

The White Paper says that there will be an increase in recording, which is a good thing, but the Select Committee proposed five years ago that all assessments should be recorded, with an opt-out for the claimant if they did not want their assessment to be recorded. In the new contract for assessments to be agreed this year, the Department should instruct providers to record assessments by default with a clear opt-out option. That proposition is supported by all three assessment providers. It will ensure that there is an objective record of the assessment, which will reassure claimants and allow assessment quality to be audited. When recordings are available and the findings of assessments are overturned, the recordings should be checked at least on a sample basis to see whether an erroneous outcome could have been avoided.

I welcome the White Paper’s commitment to test the feasibility of sending a copy of the assessor’s report to claimants automatically before the decision is made, which was also recommended by the Select Committee five years ago. I hope that the feasibility testing will be brief so that that can be introduced across the system soon.

It is disappointing that there is still not yet a target for disability employment in the White Paper. The Government congratulate themselves on achieving the previous very undemanding target early, but I am pleased that the White Paper says:

“Our goal to reduce the disability employment gap remains.”

In the 2015 election campaign, David Cameron announced a target to halve the disability employment gap. Unfortunately, that target was quickly scrapped as soon the general election was out of the way. I hope that a clear target on the disability employment gap will now be adopted.

Much will depend on the support that disabled people receive from work coaches. Polling by the charity Scope found that half of jobseekers with complex disabilities do not feel supported by work coaches. The initial training for work coaches does not seem to cover the barriers to work faced by disabled people, and jobcentres lack the specialist assistive technology that many disabled people need to look for and apply for work.

The White Paper refers to the potential of the UK shared prosperity fund to provide employment support. It is disappointing that there will be, I think, a two-year gap between the European social fund ending and the UK shared prosperity fund being allowed to support employment projects. A witness to the Select Committee yesterday suggested that the flexible support fund might be expanded, at least temporarily, to try to bridge that gap.

That could lead to a large amount of important employment support capacity not being lost, which it will be if the gap is allowed to take effect.

Lastly, I appeal to the Secretary of State to spare us the embarrassment of the Department’s appealing against the ruling this week by the Information Commissioner that the Department’s research on the impact of benefit sanctions must be published. The Department promised to publish it. As was her wont, his predecessor but one, the right hon. Member for Norwich North (Chloe Smith), decided to hide as much as possible if it contained any hint of a question mark about the Department’s policies. I welcome his review of that approach, and I hope he will show with this particular case that things have now changed.

Health and Disability White Paper

Stephen Timms Excerpts

Thursday 16th March 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Work and Pensions Committee.

[Sir Stephen Timms (East Ham) (Lab)]

There are very welcome measures in the White Paper, although a lot of the detail is still missing. The work capability assessment is to be scrapped, starting in three or four years’ time, and replaced with

“a new personalised health conditionality approach”

to assess entitlement to what the Minister just referred to as the “health top-up” in universal credit. That sounds like a new assessment of some kind. Can he tell us what it means?

[Tom Pursglove]

I suspect that these issues will come up when I appear before the Select Committee along with my hon. Friend the Minister for Employment in a few weeks’ time. I look forward to that opportunity to delve into these reforms in some detail. The detail of our proposed approach needs to be worked through. I am clear that stakeholder engagement, working with disabled people and hearing views from this House will help to inform that. I want people to feel that they can engage with the programmes announced in the Budget, as well as with the existing provision. That will happen on a voluntary basis, but we need to move the reform forward in a pragmatic way. We will say more about it as we move forward with implementation.

Local Housing Allowance

Stephen Timms Excerpts

Wednesday 15th March 2023 Westminster Hall

[Sir Stephen Timms (East Ham) (Lab)]

I am delighted to serve under your chairmanship for the first time, Ms Elliott. I congratulate the hon. Member for Arfon (Hywel Williams) on securing this debate.

On Monday, in Committee Room 5, the Joseph Rowntree Foundation launched its research on an essentials guarantee. It has tested public opinion and worked out the cost of absolutely basic, non-housing essentials in Britain today: food and non-alcoholic drink, electricity and gas, water, clothes and shoes, communications, travel, and sundries such as cleaning materials. That is the lot, and the Joseph Rowntree Foundation says that the cost of all that for a single person is £120 a week, which is £35 a week more than universal credit from next month. That is just for the minimum, basic essentials. It is absolutely clear why so many people have to go to food banks.

Quite a lot of people do not get the full rate of universal credit because of deductions of one kind or another. In addition to that, because of the subject we are debating, a growing number of people have to take money out of their inadequate universal credit payments in order to pay the rent. Local housing allowance often stops people on universal credit being paid housing support anywhere near to the amount of their rent. It is making life impossible.

Since LHA was frozen in 2020, after temporarily being restored to the 30th percentile, as the hon. Member for Arfon pointed out—it used to be the 50th before 2011—rent has risen sharply across the country. DWP data shows that by last August, 57% of private rented households in receipt of housing support had a shortfall between their benefits and the rent. That proportion is going up.

In July 2022, the Work and Pensions Committee published a report, “The cost of living”, which highlighted how support through the LHA was not keeping up with rising rents. The fact that housing support and current rents are so out of kilter—the hon. Member for Arfon referred to this—creates what the Institute for Fiscal Studies described as “bizarre consequences”. It gives an example, one of which affects the constituency of my hon. Friend the Member for Bristol East (Kerry McCarthy), stating that

“the 30th percentile of rents in Bristol is £100 more than in Newbury. But the amount of housing support that those who live in Bristol can receive is £12.50 less than those who live in Newbury.”

That makes no sense. The system has got completely out of touch with the reality.

Crisis told the Select Committee about research with Alma Economics before the pandemic, showing that a return to the 30th percentile would benefit the public purse by over £2 billion, because it would avoid councils resorting to more costly temporary accommodation.

The hon. Member for Arfon rightly made this point. In its briefing, the National Residential Landlords Association says that we should press the Minister, and I want to join the hon. Member in doing so. Have the Government worked out how much local authorities could save in temporary accommodation costs if the local housing allowance was back up at the 30th percentile?

The impacts are getting more severe. Shelter has warned this year that the

“continued freeze on housing benefits is pushing more and more private renters towards homelessness”.

The number approaching Shelter with rent arrears is up 30%. Crisis says that the

“affordability gap is driving homelessness”,

and reports that evictions from the private sector have more than doubled in the last year.

Government figures last month showed the first increase for four years in the number of rough sleepers, and in London there was a 34% increase. The Government say they are committed to ending rough sleeping, but their policies, and particularly this policy, are increasing rough sleeping.

People in households with a disabled person are more likely to be hit by LHA shortfalls. Paul Sylvester, head of housing operations at Bristol City Council, told our Committee in 2021 that half the households they saw with a shortfall included a disabled person. They were increasingly seeing disabled people forced to use their disability benefits to

“cover the rent top-up, rather than what they are meant for”.

Discretionary housing payments can be used by local councils to support households at risk of homelessness. This financial year, the DHP budget has been cut by 29%. Shelter has said—echoing again the hon. Member for Arfon—that a number of councils

“appear on the brink of running out of funding”.

There are 31 English councils that had spent over three quarters of their budget on DHP before winter began. They included traditionally low-rent areas such as Derbyshire Dales, Leicester, and Hinckley and Bosworth, which all spent over 80% of their annual allocation in the first six months. The east midlands, where they are all located, had the highest rate of private rent inflation in the last year, at just over 5%. In the north-east—your area, Ms Elliott—Sunderland, Gateshead and Northumberland all spent more than 90% of their DHP allocation by the end of September.

Sadly, today’s Budget has done absolutely nothing to help. The Government must stop turning a blind eye to such a very serious problem and recognise that local housing allowance must go up, at least to the 30th percentile. Once it has gone up to that, it needs to be kept there.

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[Mims Davies]

I understand the point. That is why I want the quality to rise, rather than people feeling that they have to move. There is obviously a fall-back position.

The hon. Member for Arfon made a point about the broad rental market rates. Those are determined for Wales by rent officers in Wales. If the rent officers believe —I have just looked again at my local rates—that the boundary needs to be reviewed, as the hon. Member for Bristol East (Kerry McCarthy) mentioned, they can apply to the Secretary of State for change, but no reviews have been submitted by Wales. Local authorities can also request a review by contacting rent officers. It is up to the rent officer whether they will review it, but I think that is an important point for the hon. Member for Arfon to take away. 

Obviously, there is the wider cost of living support as regards Welsh and indeed Northern Ireland devolution. The hon. Member for Strangford (Jim Shannon), with his typical empathetic tone and understanding, has brought real care to the debate, as usual. I recognise the hon. Member for Neath (Christina Rees), because I lived nearby in Neath for many years, and I very much welcomed the Welsh housing standard. I think that is exactly what we should be doing, rather than reducing things. I sense that the right hon. Member for East Ham is keen to come in.

[Sir Stephen Timms]

I am grateful to the Minister for giving way. I am pleased to hear that she is working across Government on the issue, and I wish her well with that. Can she tell us whether there has been an assessment of how much could be saved in the costs of temporary accommodation if LHA was raised back up to the 30th percentile?

[Mims Davies]

I hope to come that before I conclude my remarks. On the “no impact assessment” point made by the hon. Member for Arfon, we will publish an equalities analysis to the House of Commons Library, and I know the hon. Member for Glasgow East (David Linden) will keenly watch for that. On the recent question regarding shared rooms, there is an issue with the quality of data on room entitlements, so, if the hon. Member for Arfon writes to me, I will share with him further what I can best do to provide that.

Social Security (Additional Payments) (No. 2) Bill

Stephen Timms Excerpts

Committee stage
Monday 6th March 2023 Commons Chamber

I urge the Government to accept this simple amendment, which I suspect would not cost very much. It is entirely consistent with the policy intent of providing support to households who desperately need it. It is more consistent with the overall aims and objectives of universal credit to ensure that work always pays. I commend the amendment to the Minister, and I hope that she will accept it when she speaks again.

[Sir Stephen Timms (East Ham) (Lab)]

I add my very warm welcome back to you, Dame Eleanor; like everyone, I am delighted to see you back in the Chair.

I will make a few brief remarks. Initially, I will follow up the speech from the hon. Member for Amber Valley (Nigel Mills) in favour of amendment 3, which I have signed alongside him. The amendment relates to an intervention that I made on Second Reading, when I highlighted—the hon. Member just mentioned this—that people who are paid every four weeks instead of monthly, of whom there are quite a large number, receive 13 payments a year rather than 12. That means that in one month of the year, they receive two salary payments instead of one. Very often, that means that even though they will normally receive universal credit, they will not in that particular month, because their income is deemed to be too high for them to be eligible for universal credit. If that month happens to be one of the months when eligibility for the cost of living payment is assessed, they will lose their payment. No one is going to argue that they should not receive a payment, because their annual income is exactly the same as it is in every other month of the year. However, because of universal credit’s rigid approach to assessing people on a monthly basis, they will miss out. By arguing that eligibility should be based on looking at two months, not one, the hon. Member’s amendment entirely overcomes the problem for people in that situation.

The hon. Member for Bromley and Chislehurst (Sir Robert Neill) made some telling points about the situation for self-employed people. He was right to query how the minimum income floor works. There did not used to be a minimum income floor in tax credits. The Department for Work and Pensions introduced that innovation into universal credit and the case for it is, at best, debatable. But again, I do not think anyone would argue that the operation of the minimum income floor should deprive people of a cost of living payment when they would otherwise be entitled to receive it.

The hon. Member made a telling case for musicians and actors. Self-employed people may well have a good month and receive a significant amount of income, so they would perhaps not receive universal credit in that month. However, if they did not receive anything like as much in the month before or the month after, they would receive universal credit in that month. Most would agree that people in that situation—self-employed people with very fluctuating incomes, as he described—should receive a cost of living payment if their income across the year made them eligible. Therefore, looking at two months instead of one would help in that situation as well.

The hon. Member for Glasgow East (David Linden) made some telling points about people who have been sanctioned. It is very hard to argue that someone who happens to have had a sanction in a particular month, and therefore does not receive a penny of universal credit in that month, should not be entitled to a cost of living payment. A lot of sanctions last for a month. If we looked at two months, that would help to overcome that problem. I note from the briefing that 7,000 people lost out on the previous cost of living payments because they were subject to a sanction when their eligibility was assessed.

The Minister may say in response that people who are in this difficult situation can apply to their local authority for a payment from the household support fund. However, as we all know, the reality is that the household support fund is very little known by our constituents. It is extremely unlikely that anyone in the situation that I described would know that they should apply to the local council for a payment from the household support fund. It would be much better and simpler to extend the assessment of eligibility from one month to two months. It would mean adding an extra line of code in the computer system, which is a very easy thing to do to deal with a significant part of this clear unfairness in how the system works.

I want to make a point to the hon. Member for North East Fife (Wendy Chamberlain), who tabled the amendments on behalf of the Liberal Democrats. My worry about saying that all the payments should be in one would be that the whole assessment for eligibility for that therefore annual payment would be based on receiving universal credit in one month. There is a benefit in dividing this across three months, as the Government have: if someone misses out on the payment in one month, at least they will still get the other two, whereas if it was all done at one time, there would be a danger of losing the whole year’s payment.

I will say a few words in support of new clause 7, which my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) tabled. I commend her contribution to the work of the Work and Pensions Committee. Indeed, all the amendments that I have spoken in favour of are tabled by members of the Committee. My hon. Friend correctly highlights the public health impacts, for better or for worse, of our social security arrangements, and it is absolutely right to take account of them.

At present, the headline rate of social security benefits—the typical universal credit standard allowance—is the lowest in real terms that it has been for four decades. As a percentage of average earnings, it is probably the lowest that it has ever been. It is certainly much lower than it was when Lloyd George introduced unemployment benefit in 1911. He did so at a significantly higher proportion of then average earnings than the standard allowance of universal credit today. There are significant public health impacts of this low level of social security support, making a contribution, for example, to the mental health crisis, which has hit so many people of working age in the UK since the pandemic. The hon. Member for Glasgow East referred to the fact that the Work and Pensions Committee will conduct an inquiry on the adequacy of benefits and the question of what the level of benefits should be. Public health impacts are a very important part of that debate.

[Paul Bristow (Peterborough) (Con)]

Let me add how wonderful it is to see you back in your place, Dame Eleanor.

I rise to speak to amendment 4, which was tabled by the hon. Member for North East Fife (Wendy Chamberlain). I will also comment on one or two other amendments and clauses that have been mentioned, because this has been a very worthwhile debate.

Before I do so, I want to qualify the reason why I am here speaking to the Bill. I am doing so because in my city of Peterborough the Bill will impact and benefit so many of my constituents. It will benefit 21,900 people in my constituency, and that is a significant number of people. The difference that these payments and this legislation will make to their lives is considerable. On top of that, we are looking at 13,100 individuals who will be eligible for the disability payment.

This Government are committed to supporting families, and this legislation will be a good thing. It will get many, many of our constituents through, let us be honest, a difficult time, and that should be applauded. The people of Peterborough will benefit from this. It is a sign that the Government are doing exactly what they said they would do, supporting families across the UK during a global cost of living crisis.

Oral Answers to Questions

Stephen Timms Excerpts

Monday 6th March 2023 Commons Chamber

[Mr Speaker]

I call the Chair of the Select Committee.

[Sir Stephen Timms (East Ham) (Lab)]

The pensions dashboard will provide important support. It was due to be rolled out from August, but last week the Minister, very disappointingly, announced a delay and we do not now know when it will be implemented. Is it a delay of weeks or months, or even longer? Will the Minister give us a full, urgent update before the Easter recess?

[Laura Trott]

Work is ongoing and I will come back to the House at the earliest available opportunity.

Social Security (Additional Payments) (No. 2) Bill

Stephen Timms Excerpts

2nd reading
Tuesday 21st February 2023 Commons Chamber

[Mel Stride]

As the hon. Lady will know, the disability employment gap is a key measure on which we are focused. It has more recently increased a little, which I think is the point that she is alluding to, but generally, prior to that it was on a downward trend. The Department is very focused on making sure that we get it as low as we possibly can.

In the last year we also had the energy price guarantee, which ensured that average energy bills came in at £2,500 on average, and £400 off energy bills directly paid to bill payers. In England, we had the council tax discounts for bands A to D. We had two further extensions to the household support fund, as was just referred to by my hon. Friend the Member for Bosworth (Dr Evans). For the devolved Administrations, there have been Barnett consequentials of £1.5 billion since October 2021. I am very proud of our record and the wide package that has already been deployed, which is valued at £37 billion.

That brings me to this year, when we intend to go still further. As the Prime Minister has stated, one of our key aims as a Government is to reduce inflation by 50% by the end of this year. I am confident that we will achieve that, but we recognise that, despite the relief that that will provide to millions up and down the country, we need to provide further support payments. There will be three payments totalling £900 for around 8 million low-income households. Like last year, there will be a £300 payment alongside the winter fuel payment of £300 to pensioners, and a £150 payment to disabled people. The delivery of the support for pensioners will be via regulation and is not the subject of the Bill, but the other payments will be delivered through this legislation.

The Bill sets out the basis of qualification for the payments and who makes the payments, whether that is me and the DWP or His Majesty’s Revenue and Customs in the case of, for example, tax credits. It makes provision as to how the timing of the payments will be set out and it exempts the payments from charges to taxation. It sets out the arrangements that will ensure that data can be transferred and shared between my Department and HMRC, so that all the payments run smoothly and we avoid duplication and minimise fraud.

[Sir Stephen Timms (East Ham) (Lab)]

Will the Secretary of State give way?

[Mel Stride]

I give way to the Chair of the Work and Pensions Committee.

[Sir Stephen Timms]

As I understand it, the eligibility for the payments is based on being in receipt of benefit—at least 1p—in a specific month. There will be people who, for example, are paid every four weeks instead of every month and may get two payments in a particular month, so they do not get any benefit in that month. Would it not work better to base eligibility on a two-month period to reduce the likelihood of that problem arising?

[Mel Stride]

The right hon. Gentleman raises a valid point and we looked at instances where anomalies can occur in what is known in the legislation as the “qualifying period”. The reality is that we cannot iron out all the possible hard edges, but we did break the payments into three for this financial year, rather than the two that we had last year, so that in the event that the circumstances he described were to occur, there would at least be other periods in which someone could qualify. There is also the household support fund, which has already been referred to and is for just the kind of circumstances that he described.

Saving for Later Life

Stephen Timms Excerpts

Tuesday 7th February 2023 Westminster Hall

[Sir Stephen Timms (East Ham) (Lab)]

I beg to move,

That this House has considered the matter of saving for later life.

It is a great pleasure to serve under your chairmanship, Mr Hosie. The debate arises from the recent report by the Work and Pensions Committee and the responses from the Government, the Financial Conduct Authority and the Money and Pensions Service. I am grateful to the Backbench Business Committee for allowing us to have this debate.

Auto-enrolment has been a big success, reversing the decline in workplace pension saving. By the end of last November, over 10.8 million workers had been automatically enrolled and over 2.1 million employers had met their obligations. Our report highlights two big challenges: first, people are not saving enough for an adequate income in retirement; and, secondly, there are people outside the scope of auto-enrolment, due to low pay or self-employment, who would nevertheless benefit from saving in a pension. I will set out those two problems.

The first is retirement income adequacy. Auto-enrolment requires employers to enrol eligible workers aged between 22 and state pension age and earning above £10,000 a year into a workplace pension, and, unless they opt out, to make minimum contributions on a band of qualifying earnings. Employees have to contribute at least 5% of qualifying earnings, including 1% in tax relief, and employers must contribute 3%, so the statutory minimum contribution is 8%. Thanks to auto-enrolment, 86% of eligible workers were saving in a pension in 2020—about twice as much as the proportion was in 2012. The problem is that some who used to have no pension savings now have inadequate pension savings, and they do not know that that is the case.

The Pensions Policy Institute claims that only 39% of households are on track for an adequate pension, according to the Pensions Commission definition. The Pensions and Lifetime Savings Association says that nearly 20% of households at the moment are heading for poverty in retirement. The problem is worse for people in their 40s or and above who have no defined benefit pensions and have not had time to build up an auto-enrolment pension either. The crisis of under-saving will crystallise when they retire, when it will be too late to do anything about it. One of the Minister’s predecessors, Sir Steve Webb, describes it as a “slow-motion car crash” that requires action now.

In our report we asked the Government to consult on a plan to deal with the issue and report back to us by March this year. In their response, the Government recognised the problem:

“Current statutory contributions of 8% on a band of earnings are unlikely to give all individuals the retirement to which they aspire”.

However, they said that now was not the “right time to consult” and that instead they would provide “further information and guidance”. Many witnesses, including the then Pensions Minister, the hon. Member for Hexham (Guy Opperman), told us that that would not work. He told us that

“the lessons of automatic enrolment are that default is the only way to get big interventions”,

and he was absolutely right.

The Government now need to make the case for higher contributions. As things stand, people do not know that they are not saving enough. We need a plan to raise minimum contributions, perhaps with mechanisms such as Save More Tomorrow, where people commit in advance to contributing more as their pay rises in future. The Association of British Insurers argues that contributions should go up from 8% today to 12% by the early 2030s, as in the successful Australian system.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I commend the right hon. Member on this timely debate. He talked about timing. Does he agree that while successive Governments commendably maintained the triple lock on state pension contributions and entitlements, it will come under increasing pressure in the coming years? The timeliness of the debate in resolving that is, or should be, apparent to everyone.

[Sir Stephen Timms]

The hon. Gentleman is right. The Government have usually—not always—applied the triple lock correctly, but it is absolutely vital that people build their own pension savings on top of that. Otherwise, a lot of people will get a very nasty shock when they reach retirement, and at that point it will be too late to do anything about it.

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

Understanding someone’s private pension is quite complex, particularly if they have had more than one job and been in several schemes. Does the right hon. Member agree the work that the Department for Work and Pensions is doing to deliver a dashboard with industry will allow people to access all that information?

[Sir Stephen Timms]

That is very important. We are expecting quite significant progress on the dashboard this year. The Select Committee will, I hope, be taking evidence about that in a session quite soon. That will be an important step, when it finally becomes available.

We recognised in our report that with the cost of living crisis now is not the right time to increase everybody’s pension contributions, but the ground needs to be prepared for increases in future. To quote the Financial Inclusion Commission, we need a “light bulb moment” to alert employers and the public to the gravity of the current under-saving problem. We need to start building a new consensus on what an adequate retirement income is and what is needed to deliver it.

[Jim Shannon (Strangford) (DUP)]

I commend the right hon. Member on bringing this forward. It is not just about the workers of today; we must start earlier. I know he has probably commented on that, but there have been numerous surveys. One, undertaken by Deloitte, states that younger people do not have a sound understanding of things such as ISAs, saving pots or pension pots. We must also note that some teenagers as young as 14 have jobs, so they should be knowledgeable about pensions and savings. Does he agree that consideration should be given to incorporating these matters into learning for life and work modules in schools across the UK nationally? Start it early, because that is when we build for the future.

[Sir Stephen Timms]

The hon. Gentleman makes an important point. It is helpful for people at school to develop an understanding of financial matters. Even a fairly brief exposure to these matters at school can be really helpful in forming an understanding that serves people well throughout their future working lives.

In their response to our call for work to start building this consensus, the Government said they had a range of metrics for adequacy, but that misses the point. Will Ministers work with others to identify what an adequate retirement income is, and will they then start laying the ground for sufficient saving to deliver it? The Department’s own analysis in 2017 was that 12 million people were under-saving—that is about 38% of the working-age population. Some 1.5 million were substantially under-saving. The Minister’s predecessor, the hon. Member for Hexham, told us that the number of under-savers was “up for debate” but “clearly substantial”. He said the Government would carry out further analysis and keep the Committee informed. When will the Department produce new estimates of the extent of under-saving? When will it publish its research on the pension saving issues for people with low incomes?

The 2017 auto-enrolment review recommended first lowering the minimum age at which a worker must be auto-enrolled from 22 to 18. Secondly, it recommended

“removing the lower limit of the qualifying earnings band”—

which is £6,240 at the moment—so that contributions are paid on the whole of somebody’s earnings. We heard there was “almost universal support” for thus helping people poorly served by the current system—in particular, low-paid or part-time workers—and we recommended doing so. In response, the Government restated their commitment to implementing the 2017 review in the mid-2020s, saying:

“We aim to bring forward legislation at a suitable opportunity and when parliamentary time allows.”

Well, the mid-2020s are approaching rapidly. We need legislation this year if that is to be achieved, and I would welcome any encouragement that the Minister can give us about the prospects for that.

A second big problem is tackling exclusion from auto-enrolment. As I have said, auto-enrolment has reversed the decline in the number of employees saving in a pension. By contrast, there has been a big fall in self-employed pension savings, from about 48% in the 1990s to 16% now. We have known about that for some time; indeed, the Department’s response to the 2017 auto-enrolment review said that it was

“a significant and complex strategic problem”,

which is a fair comment.

A lot of people giving evidence to our inquiry argued for mirroring auto-enrolment, using the tax or national insurance system to auto-enrol self-employed people. It is very disappointing that the Government have no plans to do either of those things. Instead, they say that they favour prompts and nudges through accountancy, plus opportunities from the Making Tax Digital programme, but none of that will be enough. Can the Minister tell us when the Department plans to report back on those efforts? I am afraid they are doomed to fail.

A key part of our report focused on the gig economy. The 2021 Uber case suggested to some people that auto-enrolment might be opened up to all workers, but there are big enforcement challenges. Uber gave us compelling evidence and told us about its auto-enrolment model for drivers, which it had invited competitors to join. None of them has done so yet. The Government say that many gig economy workers are already eligible for auto-enrolment, including fixed-term contract, zero-hours and agency workers. The Pensions Regulator ought to be securing employer compliance, but it told us about a “significant evidential burden”. It told us that employers routinely challenge it at every stage and that the guidance issued by the Department for Business, Energy and Industrial Strategy last July did not help.

Uber and the GMB trade union called on the Government to legislate for better enforcement, with a new body for that purpose. We repeated the recommendation that we made in two previous reports for an employment Bill to address these issues. We have no idea why that Bill has not been forthcoming. In their response, the Government referred to their backing for five private Members’ Bills on a range of employment issues. Those are all no doubt helpful, but none of them helps with delivering auto-enrolment in the gig economy. We called for the Department to work with the Pensions Regulator to estimate, first, how many people in the gig economy should be workers for auto-enrolment purposes and therefore should be auto-enrolled, and, secondly, what resources or powers the Pensions Regulator needs to make sure that employers comply with their obligations, which they are most certainly not doing at the moment. I hope the Minister will be able to tell us something about what the Government will do to stop people working in the gig economy missing out on their entitlement.

The third important gap was referred to in evidence to us from a number of bodies, including Age UK, which told us the gender pensions gaps remains a serious problem. It reflects differences in labour market participation and hits women at retirement, when there is very little they can do about it. Nobody in government produces any data on the gender pensions gap, so the Prospect trade union produced a definition. It suggested the definition should be the percentage difference in average gross pension income for men and women receiving the state pension, and it currently estimates the gap to be 37.9%. There has been very little progress in reducing that since Prospect started reporting five years ago.

[Margaret Ferrier]

Last year, I carried a private Member’s Bill through the House to Royal Assent.  That legislation addressed sex-based inequality and guaranteed minimum pensions, which is just a small aspect of the pensions pay gap. Does the right hon. Member agree that because women are likely to earn less than men, and therefore their pension contributions will be lower, further and widespread work is required?

[Sir Stephen Timms]

Yes, I think the hon. Member is quite right. It is not just that women’s earnings are lower and therefore their pension contributions are lower; a lot of women earn below the current auto-enrolment earnings threshold, so they do not save anything at all. NOW: Pensions says that of the 14.6 million employed women in the UK, 17% do not meet the automatic enrolment criteria, compared with 8% of male employees. That is a big part of the problem as well and, as the hon. Member said, it is very much tied up with lower earnings.

I warmly welcome the announcement that the Department is working across Government to develop a coherent framework for assessing this gap and to find a definition to enable the measurement of progress to reduce it. Will the Minister tell us when she expects that work to be complete? In her helpful letter to the Work and Pensions Committee, which was published yesterday, she said that she was looking at

“regular reporting on the gender pension gap….to better highlight the issue publicly.”

When does she expect “regular reporting” to begin? When she says “regular reporting”, does she envisage that happening annually?

Auto-enrolment has been a big success in increasing the number of workers saving in a pension, but there is a lot more to do for the pension system to deliver adequate retirement incomes. The Department agrees with the Committee on the problems that need to be addressed; now we need to get a move on and address them. After the 2017 review—some six years ago—the Department said that its focus was

“for individuals to keep saving and to save more after minimum contributions reach 8 per cent in 2019”

and

“to ensure that younger people, part-time workers and the self-employed can achieve more security in later life.”

Momentum has now stalled. The Department has not even progressed the recommendations of that review. In winding up, will the Minister make a start by telling us when the Government intend to make progress on those recommendations?

--- Later in debate ---

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

It is a pleasure to serve under your chairmanship, Mr Hosie. I thank the Work and Pensions Committee for its report and the important role that it plays in scrutinising the work of the Department. I also extend my thanks to the Chair of the Select Committee, the right hon. Member for East Ham (Sir Stephen Timms), for securing this debate. We have had thoughtful contributions from everyone here.

The Committee’s report rightly raises key areas for reflection in our ongoing story of pension saving. The pensions landscape has undergone substantial change in recent years with the new state pension, increased pension saving through automatic enrolment, and increased choice through pensions freedoms, backed up with free, impartial guidance. We have laid a solid foundation to enable people to take responsibility and plan more effectively for the retirement that they want.

We have had numerous pension successes, with the most notable mentioned by everyone here today: the successful delivery of automatic enrolment, which has got 10.8 million more people into saving for retirement. However, the way that people save has undergone a significant shift in recent decades by shifting the retirement outcomes responsibility on to individuals rather than employers. That has thrown up policy challenges, which we have discussed today and were rightly considered in the Committee’s report.

I turn now to the future of automatic enrolment. Last year was the 10th anniversary of AE, which was introduced under a Conservative Government. AE facilitated a dramatic shift in workplace pension savings, with 86% of eligible employees in the private sector now participating in a workplace pension. The Government are committed to building on the success of AE by implementing the outcomes of the 2017 review, as endorsed by the Committee. I am pleased that there is a widespread consensus on that.

We will reduce the age at which people are auto-enrolled from 21 to 18, as well as removing the lower earnings limit. I heard what the hon. Member for Glasgow East (David Linden) said about lowering the age to 16—he tells a powerful story—and we will keep that under review. The 2017 recommendations will change the landscape for the better. They will enable people to save for longer and begin their savings journey from the first pound of their earnings. That will give younger people and people in part-time jobs, particularly women, the opportunity to be brought into the world of pension savings for the first time. I know the Committee is keen for me to set out a timeline. I, too, am keen to set out a timeline, and as soon as I have collective agreement I will come back to the Committee and the House to announce that.

In its recommendations the Committee also asked the Government to look at measures to close the gender pensions gap, which is something we can all agree on. My Department regularly monitors the contribution and participation rates by gender and regularly publishes the data in our workplace pension participation and savings trends publications. As discussed, I want to take that one step further and begin monitoring and reporting on the issue regularly. Although many factors create inequality in pension outcomes, most notably the gender pay gap, I have started working with key stakeholders and colleagues across Government to create a framework to understand the challenge and also to produce a definition of the gender pensions gap.

Agreeing a definition, as discussed by many Members today, is a crucial first step. That will allow us to agree a suitable metric to monitor progress and begin reporting on the issue. Again, I need collective agreement before I can say more, but I will come back to the Committee when I have a timeline for that.

[Sir Stephen Timms]

I welcome what the Minister has just said. Does she envisage annual reporting? Is that the sort of frequency she has in mind for monitoring the size of the gender pensions gap?

[Laura Trott]

I think annual reporting would make sense, but this is something that we need to look into further. I will come back to the right hon. Gentleman and his Committee.

The hon. Member for Glasgow East spoke about the gender pensions gap. We have seen progress in women’s participation, particularly in automatic enrolment, where they are now slightly ahead of men, but I agree that we need to see further work on the issue. I intend to drive that forward.

I turn to measures for the self-employed. When I started this role, I found it striking how low pension savings were among the self-employed. As the right hon. Member for East Ham is aware, the success of AE is down to the employer enrolling the member, which is clearly something that the self-employed do not have. Nest Insight has recently published the results of its trials on behavioural messaging and savings mechanisms on financial digital platforms and money management apps, to test the role of tech-based nudges and the value of flexible savings.

My intention is to make retirement savings easier for the self-employed. To do that, I want to better understand the touchpoints through which the self-employed engage with the Government, which will be the most effective at encouraging them to save into a pension pot. So far, the most obvious point is the tax system. We have begun work with the UK trade body for business software developers to help us better understand the software market and explore the opportunities, both current and new, to support self-employed people to save for their retirement. This includes scoping the feasibility of building and testing retirement savings solutions with incompatible software used by the self-employed to manage their money.

We are also keen to explore and test hybrid saving vehicles that combine accessible and illiquid savings, which could preserve some control for individuals in managing their short-term finances alongside saving for retirement. The next stage of trialling will also build on the evidence from the work with HMRC to test the capacity of nudges to pension guidance systems installed within the existing assessment system, with a view to encouraging the self-employed to start saving. The Government have no intention to make automatic deductions for the self-employed via the making tax digital system, and we agree with my hon. Friend the Member for Torbay (Kevin Foster) that although we welcome all ideas for boosting self-employed pension savings, we do not think that mixing them with the national insurance system is workable.

Many Members mentioned the gig economy, and we are continuing to work with the Pensions Regulator and BEIS on this complex issue. As the right hon. Member for East Ham outlined, the Department’s view is that many gig economy workers are already eligible for automatic enrolment, including those on fixed-term or zero-hours contracts and agency workers. I heard what he said about the guidance produced by BEIS, and I will feed that back to that Department.

[Sir Stephen Timms]

I am grateful to the Minister for giving way again. I hope she is right and the legal position is as she said, but delivering enforcement clearly is not happening at the moment. Does she recognise that the Pensions Regulator needs more powers in order to do the job that she is saying it should be doing already?

[Laura Trott]

I understand and respect the right hon. Gentleman’s concerns, and I will be having further meetings with the Pensions Regulator about this issue. I look forward to discussing the outcomes of those when I appear in front of his Committee.

--- Later in debate ---

[Sir Stephen Timms]

It has been a useful debate, and I express my thanks to the Backbench Business Committee for scheduling it. There is no dispute that we need people to save more towards their pensions—that was accepted by the Minister in her speech—but we do need to get a move on in making it happen. We are certainly not demanding that minimum auto-enrolment contributions ought to be raised now, but they will have to be raised, and the Government should draw up and publish a plan for when that will happen, and build a consensus around it.

The Minister said she could not wave a magic wand. Nobody is asking her to wave a magic wand, but we are asking her to get a move on and bring forward the plan, so that people know what will happen in two, five or 10 years. The longer we delay, the larger the numbers will be of people who suffer a terrible shock when they reach retirement, start drawing their retirement income and discover that it is way below what they expected and what they need.

I am pleased to hear the Minister confirm that the Government are committed to implementing the recommendations of the 2017 review. I assume she means by the mid-2020s, as has repeatedly been said. We look forward to hearing soon how that will be achieved. I also welcome what she said about monitoring the gender pensions gap. I welcome the prospect of annual Government reporting on that subject. I hope she is able to secure the cross-Government agreement she needs to deliver that.

The hon. Members for Amber Valley (Nigel Mills), for North Norfolk (Duncan Baker) and for Glasgow East (David Linden) all talked about the case for at least trying out automatic enrolment into an appointment with Pension Wise. As we have heard, it is an excellent service. The feedback from people who use it is good, but take-up remains lamentably low.

When the pension freedoms were introduced in the middle of the previous decade, the talk was of a guidance guarantee. That is what we were told was going to be provided—a guarantee. What came of that was the Pension Wise service, which is taken up by a very small proportion of people. It is a good service, but taken up by a small proportion. We need more effort to be made to promote that. The Committee has repeatedly said that it is worth trying out automatic enrolment into a Pension Wise appointment for people who reach that stage.

My final point relates to the comment by the hon. Member for Amber Valley. He referred to the scheme suggested in the Committee’s report for auto-enrolment of self-employed people. The proposition would be to increase national insurance contributions for self-employed people that would allow them to direct their additional payment into a pension, alongside a matching contribution from themselves. That would replicate the attractions of auto-enrolment for self-employed people. The Minister rejected that proposition, but we need to do something. We simply cannot carry on with five sixths of self-employed people not saving for retirement. We think that proposition is well worth pursuing, and I hope the Minister will take another look at it.

Question put and agreed to.

Resolved,

That this House has considered the matter of saving for later life.

Social Security and Pensions

Stephen Timms Excerpts

Monday 6th February 2023 Commons Chamber

[Ms Buck]

This freeze in local housing allowance, which is such a critical element of people’s income, is causing such hardship for hundreds of thousands of families. That is not only undermining living standards in the middle of a cost of living crisis, but leading to utterly perverse disparities between areas due to differences in rent inflation. The 30th percentile of rents in Bristol is £100 more than in Newbury, but the amount of housing support that those who live in Bristol can receive is £12.50 less than those who live in Newbury. To quote the Institute of Fiscal Studies again:

“the current approach makes little sense. It permanently bakes in historic information about differences in rents across the country, while entirely ignoring current information about those differences.”

We can see the real-world consequences playing out on our streets as rough sleeping soars and council homelessness units are stretched to breaking point.

[Sir Stephen Timms (East Ham) (Lab)]

I simply want to respond briefly to the intervention of the hon. Member for Gloucester (Richard Graham), who mentioned me in passing—inaccurately, I must say. He was wrong to say that benefits have been uprated in line with inflation. At the moment, the headline rate of benefits is the lowest in real terms for 40 years, following the repeated freezes we have had. Does my hon. Friend agree that the hon. Member for Gloucester ought to check the record?

[Ms Buck]

I totally agree with my right hon. Friend, who speaks with expertise on this issue.

The fact is that we have seen the implications of freezes in benefits. We are seeing it in soaring poverty, and we are seeing support for housing and childcare costs failing. Those things need to be based on real-world prices, not those obtained in the past. Universal credit and legacy benefits need to be uprated with general inflation—not just once in a while, but every year—if their value is not to be permanently eroded. It would be welcome if the Minister could commit to those basic principles at least.

--- Later in debate ---

[Sir Stephen Timms (East Ham) (Lab)]

I echo the relief expressed by the hon. Member for Blackpool North and Cleveleys (Paul Maynard) about the uprating decision, and I am pleased to follow his speech. I will begin with some points about the way we uprate benefits and echo some of the important points made by the hon. Member for Amber Valley (Nigel Mills), whose contribution to the Select Committee I appreciate.

We now know that legacy benefits will be claimed by some people until at least 2028. The Select Committee, in its report last July, called on the Department to improve its IT systems and increase the speed with which changes can be made to legacy benefit and state pension rates, and the lack of progress has been disappointing. Annual uprating based on the previous September’s inflation is perfectly reasonable when inflation is stable, but it is not reasonable in the current volatile circumstances. The Committee called for a shorter gap—the hon. Gentleman echoed this—between the inflation reference period and the uprating date, preferably using inflation data from the previous quarter, or possibly more recent still.

In the past year, the lag has caused real hardship. Benefits were uprated last April by the inflation rate of the previous September: 3.1%. By the time the uprating took effect, inflation was nearly 10%. The result has been benefits at the lowest real-terms level for 40 years, and a big surge in food bank demand. Like the hon. Member for Blackpool North and Cleveleys, I applaud the fact that the Government are honouring their obligations this year, and that the uprating will be 10% in time for the new financial year. That should prevent things becoming substantially worse for many in the coming year.

But it is not going to make things much better. Trussell Trust food banks gave out 1.3 million food parcels from April to September last year—more than in any previous six-month period, and 50% more than before the pandemic. At the Liaison Committee in December, the Prime Minister said that he would

“work very hard to deliver”

lower food bank demand by the end of this Parliament. I warmly welcome his adoption of that goal, but it will be achieved only if social security support is increased in real terms. What is the right level for the social security safety net? The Work and Pensions Committee plans in the near future to launch an inquiry into the adequacy of benefit levels, a subject that the hon. Member for Amber Valley spoke about. It seems to me that the safety net is now so inadequate that it is damaging the economic recovery: it is too low to do its job properly.

[Wendy Chamberlain (North East Fife) (LD)]

The Chair of the Select Committee cites some damning statistics from the Trussell Trust. For all that food bank use is increasing overall, the inquiry by the all-party parliamentary group on ending the need for food banks, which the hon. Member for Blackpool North and Cleveleys (Paul Maynard) mentioned, has demonstrated that it went down when the £20 universal credit uplift was in place. Does the right hon. Gentleman agree that we should look at that?

[Sir Stephen Timms]

I absolutely agree. That was the one point at which food bank demand fell, and of course it went straight back up once the £20 uplift was removed.

The level of the safety net is now too low for it to do its job properly from the standpoint of economic efficiency. People are being forced to accept unsuitable jobs, with no prospect of training or advancement, simply in order to subsist. That is one reason why the UK’s productivity record is so poor, and we will not deliver economic growth until we tackle that productivity failing. Interesting cross-party thinking on the matter is under way, for example in the work of the Poverty Strategy Commission set up and chaired by the noble Baroness, Lady Stroud. Our Committee’s inquiry will be able to draw on that and other work.

It is clear that the immediately preceding Administration —the interim Government, as the hon. Member for Blackpool North and Cleveleys described it—would not have honoured those obligations. The right hon. Member for South West Norfolk (Elizabeth Truss) told us yesterday that her Administration was brought down by a left-wing conspiracy in the financial markets. It is not clear whether she regards my right hon. Friend the Member for Hayes and Harlington (John McDonnell) as having been responsible for organising that.

[John McDonnell (Hayes and Harlington) (Lab)]

I knew I’d get the blame somehow.

[Sir Stephen Timms]

Actually, of course, it was brought down by economic reality. But I do not think that that Administration would have delivered an inflation uprating, so it is to the credit of the current Administration that they have done so.

I also welcome the increase in the benefit cap. The cap was introduced in 2013 and then reduced in 2016; it has never been increased at all. At the beginning of April it finally will be, thank goodness, but only by the overall rate of benefit uprating, which means that in effect it is a standstill increase. The impact of the benefit cap will not get worse in the coming year, but that will not affect the worsening impact of the cap’s falling in real terms every year since it was introduced.

[David Linden]

Will the right hon. Gentleman go one step further and join those of us who want the benefit cap not merely raised, but scrapped in its entirety because it is having such a detrimental impact on families across these islands?

[Sir Stephen Timms]

There is a strong case for that. At the time when the benefit cap was introduced, we were told that it was to prevent people from receiving more in benefits than they would if they were working, but any relationship with wage levels has long since disappeared.

In its briefing for this debate, the Child Poverty Action Group makes the point that the increase does not undo the damage of the cap having been frozen since 2016, but

“pushes families who would be in poverty anyway into even deeper poverty.”

It points out that 123,000 households are currently affected by the cap, including 107,000 households with children. That is one reason why, before the pandemic, when the data was most recently updated, 700,000 more children were in poverty than in 2010. The case for the cap needs to be reconsidered.

I want to pick up a point that my hon. Friend the Member for Westminster North (Ms Buck) made about the absence of an uprating to the local housing allowance, which is a very big problem. The LHA will be frozen for the coming year at the level at which it was set in 2020, even though rents are rising fast. When I raised the matter with the Prime Minister at the Liaison Committee in December, he replied that the uprating in 2020 represented

“a very significant cash uplift at the time, which it is appropriate to have maintained”,

echoing the wording of the ministerial statement from which my hon. Friend the Member for Westminster North quoted.

[Jeremy Corbyn]

I agree with the Chair of the Select Committee about the rapid increase in rents, particularly in the private sector—it is huge in the big cities. Does he think that the Government should at least reflect on the need for a freeze on private sector rents, and for some serious legislation to protect the now huge proportion of our country’s population who live in the private rented sector?

[Sir Stephen Timms]

The right hon. Gentleman makes a very powerful argument that the rate at which rents are now rising is devastating household finances in many parts of the country. All the 2020 increase—the much-vaunted “generous uplift”—did was raise the local housing allowance back to the level at which it had been set at the beginning of the decade: at the 30th percentile of local rents. In other words, it was raised to a level at which it covered three in 10 of the homes of that size in each local area, so even in 2020 it was not enough to cover the rent for seven out of 10 of the homes available. Since then, it has been frozen; by the end of the coming financial year it will have been frozen for four full years.

The consequences are becoming clear. Last week, the Combined Homelessness and Information Network reported that up to 3,570 people were sleeping rough in London from October to December 2022—a 21% rise on the same period in the previous year, with a 29% increase in the number of new rough sleepers. The chief executive of Crisis said:

“It is simply disgraceful that the numbers of people forced to sleep on the capital’s streets is very nearly back to the record levels we were seeing before the pandemic.”

Zoopla data shows large shortfalls for the cheapest properties by the end of last year: the shortfall for a one-bedroom home in Southwark had almost doubled in five months to £2,630 a year, while the shortfall for a three-bedroom home in Bromley had increased by more than £1,000 in five months to £3,555. At the start of 2022, some 1.7 million people—more than one in three renters in the private rented sector—were dependent on housing support to help them with their rent. Fewer than one in 12 private homes listed last year were affordable within the local housing allowance level; that figure reduced by a third in just five months last year.

The level of support is now being frozen in cash terms for a further year. Crisis said last week that it was

“particularly concerned that the lack of social housing and the growing gap between overheating rents and the frozen Local Housing Allowance is pushing people towards homelessness.”

That is the reality of the impact of the policy, which should urgently be reconsidered. Ministers say that they are committed to ending rough sleeping, but the policy is driving an increase in rough sleeping.

I am grateful to my hon. Friend the Member for Westminster North for drawing attention to the Select Committee’s recommendation about the cap on the level of childcare support in universal credit. It is regrettable that there is nothing in the present measures that will address that, but I hope we might see something in the Budget on that front, given the cross-party concern about the inadequacy of childcare support at a time when we want to encourage people back into work.

It is a relief that a catch-up uprating is being delivered to the main rates of benefit, but we are a very long way from providing an adequate social security safety net. A large-scale repair job will be needed in the near future. There is growing evidence that disabled people are facing an especially tough time in the current cost of living crisis. Their situation, to which the hon. Member for Blackpool North and Cleveleys was right to draw attention, has to be addressed.

Most immediately, however, I urge the Minister to take another look at the local housing allowance level. Ministers say that they are committed to eradicating rough sleeping, but it does not look as though they mean it. Keeping the local housing allowance frozen for a fourth year will drive a further surge in the number of rough sleepers, as well as very serious problems for hundreds of thousands of others.

Raising the State Pension Age to 68

Stephen Timms Excerpts

Wednesday 1st February 2023 Commons Chamber

[Sir Stephen Timms (East Ham) (Lab)]

I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing this Backbench Business debate, which gives us the chance to ask for the Government’s views on this topic of great importance and enormous public interest. I am delighted that the Pensions Minister, the hon. Member for Sevenoaks (Laura Trott), and the former Pensions Minister, the hon. Member for Hexham (Guy Opperman), are in their places on the Front Bench.

I agree with much of what the hon. Member for Amber Valley said. The idea of spending a third of adult life in retirement is a sensible yardstick to run with. He made the point, in passing, about the importance of implementing the recommendations of the auto-enrolment review, and I agree with him that that is important. We are repeatedly told that it will be done in the mid-2020s, but time to implement it before 2025 is either running out or has possibly already run out.

In my remarks, I will focus on the process we are in. I recall the wise words of David Cameron, who said:

“Sunlight is the best disinfectant.”

He argued—rightly, in my view—for a culture of openness in government. One of the results of his view was the 2010 protocol on publication of all Government social research, which was most recently updated last year. It states:

“Principle 1: The products from government social research and analysis will be made publicly available”,

and that research should be published “promptly”, within 12 weeks of completion.

For a number of years, that was, to their credit, the Government’s approach. In 2017, when the first review of state pension age was undertaken for the Government by John Cridland—as the hon. Member for Amber Valley has pointed out—his report, and the report of the Government Actuary, were both published on 23 March 2017, nearly four months before the DWP’s own review was set out on 19 July 2017, shortly after the hon. Member for Hexham took up his former post as Pensions Minister in June 2017.

I have often expressed great regret that the Department, for some reason or other—perhaps reflecting a different approach across Government—has abandoned the practice set out by David Cameron and instead now resists publication of research and analysis, or delays it for as long as it possibly can. Preventing public discussion no doubt has the benefit of allowing Ministers to avoid having to answer difficult questions, but it has the disastrous drawback of worsening policy outcomes. The policy cannot be informed by public debate before the decisions are made, because the evidence that would allow a debate is not available. The Government publication protocol was watered down a little last year, but its essential gist remains unchanged. It says, for example:

“The primary purpose of social research commissioned and conducted by government is to inform…policy and delivery, but it also plays a role in wider policy debate.”

That is quite right, but, as we have discussed in the Chamber on various occasions, in the DWP the requirements of the protocol are simply ignored. They are not being fulfilled.

I have been hoping very much that the new ministerial team will turn over a new leaf and take a more enlightened approach. Indeed, the new Secretary of State has hinted that he is considering the advantages of greater openness. But here we have a flagrant example of his predecessor’s bad habits of hiding analysis and evidence until it is convenient to the Government to release them. Instead of publishing the evidence four months before the Government’s decision, as was done in 2017—around the time the former pensions Minister, the hon. Member for Hexham, was appointed—the Department is keeping the evidence hidden until it makes its announcement “early in 2023”. Presumably, as the hon. Member for Amber Valley has suggested, that will be at the time of the Budget next month.

In my brief contribution to this important debate, I mainly want to press the Minister to publish now both the report by the independent reviewer, Baroness Neville-Rolfe, which the Secretary of State received on 16 September last year—more than four months ago—and the related Government Actuary’s report, which was submitted to Ministers on 5 October. Publish them now. Why have they not been published already? What possible benefit can there be in keeping this important work and evidence hidden for all this time?

The Select Committee has published today an exchange of letters with the Minister on the subject. When asked why these reports are not being published before the Government’s announcement as they were for the 2017 review, the Minister, who is in her place, replied that

“this is a different publication schedule to the last review, the issues are still under consideration and so we think this approach is more appropriate.”

In other words, they appear to be saying, “We don’t want anyone to see the evidence until we have made up our mind. This is still under consideration, so we think it is not appropriate to publish the evidence.” Surely, there ought to be a public debate about all this before the Government make their decision, not afterwards. This instinct of hiding things, not disclosing them, and not complying with the requirements of the cross-Government protocol is very damaging to the Government’s ability to make good policy.

Surely, Ministers should take advantage of public debate to inform their decisions, rather than refusing to show anyone the evidence until after the Government have made up their mind. What has become of David Cameron’s belief in sunlight? We are talking here not about confidential advice to Ministers—there is no requirement to publish that—but rather about expert analysis that will eventually be published, and which sets out the evidence that will underpin the Government’s decision. Publish it now so that everybody can see it. The protocol says that

“analysis should be published promptly…as early as possible following agreement of the final output.”

So it should be. The recent independent review was announced in December 2021. The terms of reference said that it should explore what metrics the Government should take into account when considering how to set state pension age. They stated that it should include a consideration of recent trends in life expectancy in every part of the United Kingdom; whether it remained right for there to be a fixed proportion of adult life that people should, on average, expect to spend over state pension age, and what metrics would enable state pension costs, and the importance of sharing those fairly between generations, to be taken into account.

The Select Committee agreed months ago that once Baroness Neville-Rolfe’s review had been published, we would take evidence on it, including from her, as the hon. Member for Amber Valley said, before the Government announced their decision. Now that the Government are unwilling to publish the analysis before they announce their decision, we clearly cannot do that.

The Sun has reported that the Government plan to raise the state pension age from 67 to 68 as early as 2035, which will affect everyone who is 54 and under, instead of 10 years later, as set out in current legislation. Is that the right thing to do? Well, we need to see the evidence. The key evidence is about future projections of life expectancy. As we heard from the SNP spokesperson, the hon. Member for North Ayrshire and Arran (Patricia Gibson), emerging evidence shows that the trend of rising life expectancy is not what it was before the pandemic.

One of the expert witnesses at this morning’s meeting of the Select Committee said, “Mortality seems to have peaked, because one reason why there was increasing mortality was that the second world war lifestyle was ironically quite healthy for people, and the numbers are now going down quite a lot.” We were discussing something else this morning, and I do not know what evidence the witness was drawing on there, but I do not know what evidence the Government will draw on either, because it has not been published and it should have been. There should be no delay in publishing it.

Cohort life expectancy statistics are produced every two years. A new set is expected this year. The latest, 2020-based projections show life expectancy at 65 still rising, but at a slower rate than in previous releases. Of course, the 2020 figures did not take any account of changes arising from the pandemic. The change in projection has prompted some commentators to call for the planned rises in the state pension age to be abandoned, or at least to be slowed.

Lane Clark & Peacock took the latest Office for National Statistics life expectancy projections and reran the 2017 calculations of the Government Actuary’s Department. They concluded that any move from 67 to 68 would not be needed until the mid-2060s rather than the mid-2040s, and certainly not by the late 2030s, as suggested by The Sun. They also suggested that the move from 66 to 67, which is currently scheduled to be phased in over two years from 2026, could be put back until the end of the 2040s. They went on to argue that if further ONS statistics show relatively lower life expectancy growth, that could imply further delays to planned increases, and perhaps even abandoning the planned rise to 67.

The former pensions Minister but two—I think— Steve Webb, who is now a partner at Lane Clark & Peacock said:

“The Government’s plans for rapid increases in state pension age have been blown out of the water by this new analysis. Even before the Pandemic hit, the improvements in life expectancy which we had seen over the last century had almost ground to a halt.”

Those are important public policy questions. They should be debated in Parliament and among the public before the Government announce their decision, so that that public and parliamentary debate can inform the Government’s decision. We should not just see the evidence after the Government have announced what they plan to do, because changing the Government’s mind at that point will not happen.

A wide public debate should take place now, but it cannot happen unless the independent review and the Government Actuary’s report are published before the announcement is made. I ask the Minister to resist the temptation to keep the documents hidden for even longer and instead to remember the wise words of David Cameron, and to be open and publish those two key documents.

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

I thank my hon. Friend the Member for Amber Valley (Nigel Mills) for raising this important issue, and all the other Members who have contributed to the debate.

The Government remain committed to ensuring that older people can live with the dignity and respect they deserve, and I absolutely reaffirm that the state pension is and will remain the foundation of state support for older people. As has already been pointed out today, changes in the state pension age have been made in a series of Acts by successive Governments from 1995—when the state pension ages of men and women were equalised—onwards, following public consultations and extensive debates in both Houses.

The state pension age is currently 66, and will increase to 67 in 2026-28. As was mentioned by the hon. Member for Reading East (Matt Rodda), Labour legislated for it to increase to 68 in 2044-46, but, following the Cridland review of 2017, the current Government policy is to bring the increase to 68 forward to 2037-39. That is the baseline; we are required under law to review it every six years, and that is what is now being undertaken.

As we heard from my hon. Friend the Member for Amber Valley, the coalition Government of 2010 to 2015 were committed to the “core principle” that people should spend, on average,

“up to one third of their adult life drawing a State Pension.”

They were also committed to giving individuals at least 10 years’ notice of any changes affecting them. The first review of the state pension age following the Pensions Act 2014 was undertaken in 2017, informed by both the Government Actuary’s report and the independent report undertaken by John Cridland. As I have set out, Cridland recommended bringing forward the increase in the state pension age to 68 from 2044 to 2026, as set out in legislation, to 2037 to 2039.

[Sir Stephen Timms]

The two documents from 2017 to which the Minister referred were published four months before the Government’s announcement. Why have the Government not published the documents before their announcement this time around, and will she do so now?

[Laura Trott]

I had a suspicion that the right hon. Gentleman might bring that up. As he rightly pointed out, I have written to him today to explain the rationale behind this, but I will confirm that both documents will be published in full. I look forward to discussing them with his Committee in due course.

--- Later in debate ---

[Sir Stephen Timms]

I just want to know why they have not been published. What is the public interest in keeping these things hidden?

[Laura Trott]

As I have said, they will be published in full. On the timing of publication, there is work going on in Government to undertake the review. Once it is finished the documents will be published.

The 2017 review was based on a recommendation to aim for “up to 32%” as the average proportion of adult life spent in receipt of state pension. The review used 2014-based life expectancy data. The Government accepted those recommendations, subject to a further review, before tabling the requisite legislative amendments. The savings from bringing forward this rise to 68 have already been included in published fiscal forecasts.

On 14 December 2021, the Government launched the second periodic review of the state pension age, and work is now under way to complete it, as required by legislation. The review must be published by May 2023, in accordance with section 27 of the Pensions Act 2014. At the autumn statement, the Chancellor committed to concluding the review in early 2023.

As part of the second review, the Secretary of State is considering evidence from two independent reports. The first, a report from the Government Actuary, assesses the latest life expectancy projections from all regions of the UK. There has been a lot of talk about life expectancy today, so I want to put on record the fact that the most recent projections from the Office for National Statistics show a slower rate of improvement in life expectancy than those that informed the Pensions Act 2014 and the Pension Schemes Act 2017. Nevertheless, despite the slower improvement rate, ONS projections continue to show increasing life expectancy over time, and the number of people over state pension age is expected to continue to rise. I can also confirm for the hon. Member for North East Fife (Wendy Chamberlain) that the review will consider the latest recommendations, as well as a wide range of other evidence, before reaching any conclusions about the state pension age.

The second report that will be taken into account is an independent report by Baroness Neville-Rolfe, which will consider recent trends in life expectancy and the range of metrics that we could use when setting the state pension age, including the metrics mentioned by my hon. Friend the Member for Amber Valley. We will publish both documents in full. With respect to the question of whether Baroness Neville-Rolfe will appear before the Select Committee on Work and Pensions, that is a matter for the Committee and for her.

Alongside examining the implications of the latest life expectancy data, the Government review is assessing the costs of an ageing society and future state pension expenditure, as well as considering labour market changes and people’s ability and opportunities to work up to state pension age, bearing in mind recent trends in life expectancy.

My hon. Friend the Member for Amber Valley highlighted the position of those who cannot continue to work. The review will evaluate the impact of previous changes to the state pension age for all individuals, including those with long-term health conditions or disability. The Government continue to provide substantial support for people who are unable to work.

My hon. Friend the Member for Dover (Mrs Elphicke) made some important points about age discrimination. The Government’s business champion for older workers, Andy Briggs, spearheads the Government’s work to promote the benefits of older workers and multigenerational workforces across England, influencing them strategically and by offering practical advice. I will ensure that my hon. Friend’s points about discrimination are passed on to the Department for Business, Energy and Industrial Strategy.

The review will aim to keep the right balance between affordability, sustainability and fairness between generations. The review has not yet concluded—it is very important to emphasise that, given some of the comments today—and I will not pre-empt its outcome. The Government are committed to ensuring that older people have dignity and security in later life, regardless of where in the UK they are living. The Government introduced further targeted support, including cost of living payments of up to £900 for the most vulnerable households and an additional £1 billion, including Barnett impact, to enable the extension of the household support fund in England in the next financial year. Since 2010, the full yearly amount of the basic state pension has risen by over £2,300 in cash terms. That is £790 higher than if it had been uprated by prices, and £945 more than if it had been uprated by earnings. For the first time, from April 2023, the full rate of the new state pension is worth over £10,000 per year.

Automatic enrolment is having a transformational effect on private savings. Over 10.8 million people have been automatically enrolled in a workplace pension, helping to deliver about an additional £33 billion into pension savings in real terms in 2021 compared with 2012. The hon. Member for North East Fife mentioned the PHSO inquiry. She will know that that is ongoing, so it would be inappropriate for me to comment on it until it concludes.

The Government are committed to ensuring that the state pension continues to provide the foundation for people’s retirement income and are proud of the support they have given pensioners since 2010. I welcome today’s debate and thank my hon. Friend the Member for Amber Valley. As I have outlined, the Government take the setting of the state pension age very seriously. I look forward to being able to discuss this matter further—I am sure we will—when the Government finally publish their second review.