Oral Answers to Questions

Steve Webb Excerpts

Monday 23rd June 2014 Commons Chamber

[Julie Elliott (Sunderland Central) (Lab)]

8. What estimate he has made of the number of people below the threshold for auto-enrolment in a workplace pension.

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

We estimate that around 2.7 million individuals, aged 22 to pension age, who have earnings below the earnings threshold for auto-enrolment are not saving in a qualifying workplace pension in the private sector. About 1.6 million of those individuals are earning between £5,772 and £10,000 and have the right to opt in. Employers must tell workers about this right.

[Julie Elliott]

I thank the Minister for that answer, but does he agree that it would be right to extend pension auto-enrolment to all low-paid workers who are missing out at the moment?

[Steve Webb]

I am grateful to the hon. Lady, but let me explain why I disagree with her. She would enrol people at, for example, £6,000 a year—that is the policy of the Labour Front-Bench team. At current contribution levels, someone earning £6,000 a year would be putting 8.8p a week into a pension. If they did that for 35 years, they would end up with a pension of £1.93 a week. That does not seem a sensible policy to me.

[Graham Jones (Hyndburn) (Lab)]

21. Does the Minister agree that the Government have stealthily been depriving more low-paid women of pension contributions every year? Is it not time that that was put right?

[Steve Webb]

No, on the contrary, the people we are excluding from auto-enrolment are those for whom we think the default should be not to save in a pension, because they will get a state pension typically of £7,500. If they are earning £6,000 now, should the Government take money out of their pay packet, when they are earning £6,000, to top up a pension of £7,500? That does not make any sense.

[David Mowat (Warrington South) (Con)]

The Pensions Minister has made some welcome changes to the way in which smaller pots will be managed, with aggregation, pensions following workers and so forth. If that works well, will there be scope in the future to review this limit?

[Steve Webb]

We are keen to avoid discrediting automatic enrolment with trivially small amounts of money. My hon. Friend can imagine the newspaper headlines if we had required a firm to set up a pension scheme so that the employee and employer combined put 8p a week into a pension. We would have been laughed out of court. We have reformed auto-enrolment, and it is going extremely well. It has a good, strong reputation, and I want to protect it.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

What the Minister does not tell the House, of course, is that Library figures show that someone earning just below the raised threshold for auto-enrolment could save up to £20,000 over a working lifetime—quite a decent nest egg, I am sure that we would all agree. So why have the Government deliberately removed 1.5 million people—the majority of whom are low-paid women—from auto-enrolment? Although that sum is not enough to buy a Lamborghini, does the Minister agree that millions of people are losing out?

[Steve Webb]

On the contrary, the Pensions Commission—the hon. Gentleman often refers to the Pensions Commission, one of whose members is now a Labour peer—recommended that low earners needed an 80% replacement rate. Someone on the wage that he just gave gets an 80% replacement rate based on the state pension alone, so we are delivering—[Interruption.] That is after tax and national insurance. [Interruption.] They are paying national insurance at £10,000 a year, so they get about an 80% replacement rate without needing to be automatically enrolled. Setting up auto-enrolment for tiny amounts of saving is simply inappropriate.

[Mr Stephen Hepburn (Jarrow) (Lab)]

10. What assessment he has made of the effect of sanctions on claimants of jobseeker’s allowance.

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

The Department has commissioned an independent review of the changes to local housing allowance, including the extension of the shared accommodation rate. The final report of that review is due to be published this summer.

[Dr Huppert]

I thank my hon. Friend for that answer. The situation worries many of my constituents, and a recent study by Crisis showed that in many parts of the country such as Cambridge only a tiny fraction of shared houses are available for people to rent. When he considers the review, will he change the broad rental market areas and ensure that people can find somewhere to live if they wish to be in Cambridge, Blackpool or any other location?

[Steve Webb]

My hon. Friend has made repeated representations about the broad rental market area for his constituency. We have used targeted funding to provide additional local housing allowance rates in areas of pressure, so although the general increase in the LHA rate is 1%, four of the five LHA rates for Cambridge, including that for shared accommodation, increased this April by 4%.

[David Wright (Telford) (Lab)]

What specific meetings has the Minister had with his colleagues in government with responsibility for housing to discuss schemes such as foyer projects, which link training initiatives with housing and support for young people?

[Steve Webb]

The hon. Gentleman raises the valuable work of foyer projects. My noble Friend Lord Freud, the Minister for welfare reform, leads on housing benefit for the Department, and I will ensure that he is aware of those projects, if he has not already held specific meetings about them. If the hon. Gentleman would like to give us further details, we will be happy to look at them.

[Kerry McCarthy (Bristol East) (Lab)]

The under-35 shared accommodation rate is a particular problem for fathers who do not live with the mother of their children, but want their children to stay with them at weekends, when it is simply not suitable for children to be in the sort of accommodation with other young men that people get under the rate. Has the Minister examined that situation?

[Steve Webb]

The hon. Lady will be aware that, in exceptional cases, housing benefit can be topped up, but she will also know that the same issue could arise under the shared accommodation rate for under-25s. However, if two single people choose accommodation together, the combined total of their shared accommodation rates is larger than one family’s standard rate for a two-bedroom flat, so two people coming together can rent a larger property than a family requiring two bedrooms.

[Mr David Ruffley (Bury St Edmunds) (Con)]

18. What steps he is taking to introduce stricter criteria on eligibility benefit for applications from foreign workers.

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[Kelvin Hopkins (Luton North) (Lab)]

19. What estimate he has made of the number of people who will receive face-to-face guidance at the point of retirement in 2015-16.

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

From April 2015, we expect over 300,000 individuals who retire each year to be able to take advantage of the new pension flexibilities and access the offer of free guidance. The Government have recently consulted on the delivery framework for the guidance, to ensure that it is designed to give consumers the support they need to make informed choices in the way they choose to access it.

[Kelvin Hopkins]

How will the Government ensure absolutely that retirees who cash in their annuities are not exploited by private sector financial vultures in the guise of advisers?

[Steve Webb]

The hon. Gentleman raises an important point. We already hear anecdotal examples of people getting cold-calls that say, “This is your Government guidance offer.” We want to make it clear that that is not based on Government guidance, because that has not started yet. We are trying to make sure that instead of people making retirement choices with no information or advice, which often happens, they will have a right to go to a reputable provider and get information and guidance from someone who does not have a commercial interest in selling them something.

[Rehman Chishti (Gillingham and Rainham) (Con)]

T1. If he will make a statement on his departmental responsibilities.