Oral Answers to Questions

Steve Webb Excerpts

Monday 14th February 2011 Commons Chamber

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

1. What assessment he has made of the likely effects of the proposed change in the state pension age for women.

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

We published a full equality impact assessment as part of the White Paper on our proposals to bring forward the increase of the state pension age to 66, which sets out the effect on women of those changes.

[Tom Blenkinsop]

The coalition agreement states that the parties agree to

“hold a review to set the date at which the state pension age starts to rise to 66, although it will not be sooner than 2016 for men and 2020 for women.”

Will the Minister explain why he saw fit to U-turn on that promise and to start to increase the women’s state pension age to 66 from 2018?

[Steve Webb]

If the hon. Gentleman looks at the process of raising the state pension age to 66, he will find that early in 2020, the age will still be 65 and some months. It will not start to rise to 66 until April of that year.

[Mr James Gray (North Wiltshire) (Con)]

Although I welcome the equalisation of the pension ages, does the Minister agree that a small group of women born, like me, in the middle months of 1954—a vintage year—will be affected disproportionately by the way in which it is being phased in? Will he look again to see what can be done to help that group of women?

[Steve Webb]

My hon. Friend is right that of the 2.6 million women who are affected, 33,000 were born in the vintage months that he describes. That group will have to delay for up to two years before they receive their state pension. One reassurance I can offer is that those women—and indeed he, should he find himself in that situation—will be eligible to apply for jobseeker’s allowance or employment and support allowance, so they will not be left destitute.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

The Turner commission recommended a 15-year lead-in for such changes. Those women who were born in 1954 will not benefit from that. Does the Minister think that fair?

[Steve Webb]

The hon. Lady raises the important point that notice periods are important. The challenge we faced was that the time scale for raising state pension ages that we inherited was staggeringly leisurely. The Conservative party manifesto and the coalition agreement made it clear that we would move faster. The state pension age for men was set at 65 a century ago—I think we need to move faster.

[Andrea Leadsom (South Northamptonshire) (Con)]

A constituent of mine who has worked all her life and has saved for her own pension falls into the vintage year of 1954. She cannot bring herself to be on jobseeker’s allowance at the end of a hard-working career. It seems a little harsh to suggest that as the only outcome.

[Steve Webb]

I am grateful to my hon. Friend. Jobseeker’s allowance and employment and support allowance are available as safety nets, but I appreciate that that is not what many people will want. The vast majority of the women in this birth cohort are still working. In the world that we are going into, we anticipate that more people will work into their 60s—that is part of the change. Many of them will be able to support themselves, perhaps through a part-time job, to cover the gap in years.

[Rachel Reeves (Leeds West) (Lab)]

The Minister’s response is inadequate. The Government’s coalition agreement is clear. Under the Government’s plans, the state pension age will start to rise to 66 in 2018, not in 2020 as promised in the coalition agreement. Some 33,000 women, currently aged 56, will have to wait exactly two years longer to get their pension, with little time to prepare. The average retirement savings of those women will provide them with just £11 a week in retirement. They simply do not have the savings to draw on to accommodate these moving goalposts. Does the Minister honestly believe that these changes for women are fair and proportionate?

[Steve Webb]

I have common ground with the hon. Lady on two points. First, I deplore the fact that the pensions policies of the previous Government have left women in this group with so little pensions savings to draw on. Secondly, she is right that we could go more slowly. We could, as she has proposed, delay until 2020 before doing anything, but we would then have to find an additional £10 billion that the present schedule provides for us. I have not yet had the letter or parliamentary question from her suggesting where that £10 billion might come from.

[Mark Pawsey (Rugby) (Con)]

2. What discussions he has had on changes to the work capability assessment for those with variable conditions.

--- Later in debate ---

[John Howell (Henley) (Con)]

7. What steps he is taking to reduce levels of pensioner poverty.

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

We have restored the earnings link for the basic state pension and given a triple guarantee that the basic state pension will increase by the highest of earnings, prices or 2.5%. We are also protecting key benefits for older people and working to ensure that older people receive the help to which they are entitled.

[John Howell]

My hon. Friend may recall the “Tackling Pensioner Poverty” report produced by the Select Committee on Work and Pensions in the previous Parliament. The Committee was concerned that many pensioners who are entitled to pension credit are simply not claiming it. What measures are the Government taking to ensure that support reaches those who need it most?

[Steve Webb]

One thing we are considering is whether the data we hold about people can be used better. We are therefore undertaking a modest research study, drawing on data that my Department and Her Majesty’s Revenue and Customs hold to see whether we can identify people who look as if they ought to be getting pension credit but who are not doing so. We will then make automatic payments to them, and test how that works over a pilot period, on which we will report in the summer.

[Emma Reynolds (Wolverhampton North East) (Lab)]

Rumour has it that the Minister believes that introducing a universal pension will be a solution to many of the problems in the pension system. If that is the case, why has he not published the Green Paper we were promised in December? Is it because he is facing some resistance from the Treasury?

[Steve Webb]

I am grateful to the hon. Lady for raising that point. I can do no more than quote my right hon. Friend the Chancellor, who told the House in November:

“The Treasury is working with the Department for Work and Pensions on potential pension reform that could simplify pensions and provide a boost to pensioners for many years to come.”—[Official Report, 16 November 2010; Vol. 518, c. 726.]

How right he was.

[Kevin Brennan (Cardiff West) (Lab)]

8. What steps he is taking to increase the number of apprentices employed by his Department.

--- Later in debate ---

[Stella Creasy (Walthamstow) (Lab/Co-op)]

17. What recent representations he has received on his proposed review of housing benefit reforms.

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

We have had, and have responded to, many representations on the review of the housing benefit reforms. Most recently, my noble Friend Lord Freud met with Lord Best to discuss the review and our intention to commission a team of independent, external researchers to undertake the task.

[Stella Creasy]

The Secretary of State will be well aware of the severe and long-term shortages of housing currently faced in Waltham Forest, as in many London boroughs. Given that there are 1,500 people aged 26 to 35 currently in receipt of housing benefit in Waltham Forest, where does he think they will be living next year if his plans to change the shared room rate go through?

[Steve Webb]

One consequence of the reforms to housing benefit will be that the local housing market will change. We anticipate, for example, that some of the larger properties might find themselves converted into houses in multiple occupation, although we do not know exactly what will happen. One problem is that over many years we have seen inadequate house building taking place under the hon. Lady’s Government.

[Matthew Hancock (West Suffolk) (Con)]

In the Public Accounts Committee, we heard from civil servants about the impact of housing benefit and other benefits that make for an extremely complex and complicated benefit system. We have also heard about the enthusiasm for having a universal benefit as a way of cutting through that. Talking of representations, would not these changes have been easier had we not had representations on where the money was left?

[Steve Webb]

My hon. Friend is quite right that Labour Members’ answer to most questions is “More money,” but when we asked where the money had gone, we were told that there was none. Housing benefit is probably one of the most complicated benefits in the system; it is at the end of the line when everything else has been worked out. The sooner we can integrate it into universal credit, the better.

[Hywel Williams (Arfon) (PC)]

On Friday, I met a group of residents at a hostel run by the North Wales Housing Association. Those people have very little prospect of employment in an area of such high unemployment, yet they might face a reduction in their benefits. Does the Minister accept that that sort of cut might threaten the viability of hostels such as the Pendinas hostel that I visited on Friday?

[Steve Webb]

The budget for discretionary housing payments across the country will be trebled over the coming years, so that additional funding will be available for particular difficult cases. One thing we want to do is enable people to get back to work, where jobs are available, and the universal credit process will increase the financial return and people who take low-paid jobs will have a greater ability to afford somewhere to rent.

[Dame Anne Begg (Aberdeen South) (Lab)]

18. If he will put in place provisions to ensure that the expertise of small employment providers is retained in the transition from existing employment programmes to the Work programme.

--- Later in debate ---

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

We are pressing ahead in the Pensions Bill with measures to make the process of automatically enrolling people into workplace pensions a reality, so from 2012 over a four or five year period, getting on for 10 million people will be enrolled into workplace pensions for the first time with an employer contribution. We believe that that will transform the savings landscape, and we need to make sure it pays to save.

[Yvonne Fovargue (Makerfield) (Lab)]

T9. Recently, a constituent contacted me regarding his Atos Healthcare assessment. Three specialists had considered him to be unfit for work, yet it was suggested that he could be a bingo caller or a car park attendant. My local citizens advice bureau has identified many such cases which are resolved in favour of the claimant after an expensive review or appeal. Are there any plans to review Atos Healthcare’s delivery of medical assessments?

Uprating Private Sector Occupational Pensions (Revised Impact Assessment)

Steve Webb Excerpts

Friday 11th February 2011 Written Statements

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

Today, the Government will publish an updated version of their impact assessment for the move to the consumer prices index (CPI) for uprating private sector occupational pensions. A further update is anticipated when the Government respond to the consultation on this issue.

On 8 July, Government announced the move to using the CPI as the basis for the statutory minimum uprating of occupational pensions. On 8 December, the Department published a consultation document on the impact of using the CPI for revaluation and indexation of private sector occupational pensions, and an initial impact assessment was published to accompany the consultation document.

Following publication, an error in the calculations has been identified. Additionally the Regulatory Policy Committee (RPC) has reviewed the calculations underpinning the impact assessment. Acting on the feedback from the RPC, the Government have made a change to the method used to calculate the net present value (the value expressed in today’s money) of the reductions to scheme liabilities. The version to be published later today takes account of these two changes.

The Government are currently undertaking research into private pension schemes rules and the likely reaction of employers to the decision to use the CPI which will extend our evidence base for calculating the impact on scheme liabilities. The outcome of this analysis will feature in the next edition of the impact assessment.

A copy of the revised impact assessment will be placed in the Libraries of both Houses, and is available on the Department’s website at: http://www.dwp.gov.uk/docs/cpi-private-pensions-consultation-ia.pdf

Housing Benefit (Scotland)

Steve Webb Excerpts

Tuesday 8th February 2011 Westminster Hall

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

It is a pleasure to serve under your chairmanship for what I think is the first time, Mrs Brooke. I congratulate the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) on securing the debate; I was trained before we started in how to pronounce his constituency’s name by the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke).

This is an important subject, and I know that the hon. Gentleman takes a close interest in it, not least because I seem constantly to be answering his written parliamentary questions on it. He has pursued the issue in an entirely thoughtful and measured manner, which is always helpful in such debates.

The hon. Gentleman raised a broad set of issues relating to the impact of the changes on his constituency and on Scotland. He also raised some more general points. He brought together changes that will come in during April, some that will be phased in with a nine-month lag for existing recipients, some for which the primary legislation has not yet been passed and some that will happen in 2013. He therefore raises quite a raft of things, and properly so, but it is worth saying that these things will not suddenly happen in April. There is, therefore, time for tenants, landlords and local authorities—but particularly tenants and landlords—to change their choices and behaviour. That is part of the point of the reforms.

The figures that the hon. Gentleman quoted at the start—the £2.2 million going out of his constituency as a result of housing benefit reductions—assume that nothing changes, but part of the point of the exercise is that things will be different in the new regime. As I am sure he knows, the context for these things is the sky-rocketing bill we face, although it is not necessarily his role to say where the £1 billion that will be added to that bill each year will come from. However, without the measures that we are taking, a large amount of extra money will go into the system without necessarily benefiting tenants.

Let me cite a slightly surprising source of evidence for that view. On 10 September, COSLA submitted to the Department its response to the consultation on the first version of the housing benefit amendments. I would not for a second suggest that it was supportive—quite the contrary; it is not—but its analysis was rather interesting. COSLA said:

“We had previously flagged up concerns, during the formal consultation prior to the roll-out of Local Housing Allowance nationally from April 2008, that this new scheme was”—

here we go—

“likely to result in a huge increase in expenditure on Housing Benefit for private sector tenants for little return”,

and that is what has happened. LHA has essentially driven up rents; it has not meant more poor people in nice houses. The response goes on:

“We raised concerns that very many landlords would increase their rents up to the LHA level and that allowing claimants to keep any excess above their contractual rent was unlikely to benefit them… because of that upward drift of rents.”

[Several hon. Members]

rose—

[Steve Webb]

Let me say for the benefit of hon. Members that although I should very much welcome their contributions, this debate was initiated by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, and I will give way to him at any point. It is only fair to him to respond to his points.

The Scottish perspective from COSLA is that the convention expected LHA to drive up rents, and that is what seems to have happened. The question now is what will happen when we try to stop that escalation, which is where the CPI point comes in. In that respect, I should say that the CPI excludes only owner-occupiers’ housing costs, not all housing costs. That, however, is where we are trying to put a cap on the process. As far as I am aware, the national cap does not affect Scotland at all.

The question is what landlords will do in response. The hon. Gentleman’s hypothesis was that there is plenty of demand out there, so they will do nothing. However, a landlord with a potential tenant who is on LHA has a choice between not going with that tenant or telling the local authority, “What would clinch it for me would be direct payment.” We have said that we will extend the scope of direct payment, which the hon. Gentleman asked about at the end of his speech, so that a local authority will be able to agree with a landlord and a tenant to make payments direct to the landlord in return for securing a tenancy that would not otherwise have happened and for getting rents down.

Plenty of landlords rent to people on housing benefit; it is not that landlords will not do so, although I accept that some will not. A large number of landlords will rent to people on housing benefit, who are the people we are talking about. It is not that these things do not happen. A landlord looking at a potential housing benefit or LHA tenant, or thinking about renewing a tenancy, can have uncertainty about whether the tenant will pay or they can have direct payments. Direct payments are like a triple A bond; they are like guaranteed money. That is worth something to the landlord. For an investor, certainty is worth something. If a landlord just shaves a bit off the rent in return for the direct payment, which is the deal we shall try to strike, the shortfalls that the hon. Gentleman mentioned, which look a bit scary when they are multiplied, will be reduced.

The debate is about the impact on Scotland, and the hon. Gentleman will know that the average shortfall in the United Kingdom is £12, while the average figure for Scotland, if I remember correctly, is £10. It does not take much, therefore: let us take the example of a rent of £200. A landlord who reduces that by 2.5%, which is £5, or by 5%, which is £10, has suddenly wiped out the shortfall. Clearly we must ensure that that happens. We cannot just sit back and hope that landlords will cut their rent. I fully accept that. That is why we have made the change. That is important.

The regulations have been improved by the consultation and by the changes that we have made, specifically with respect to transition. We said that from April new tenancies will go straight on to the new rules, because the whole philosophy of the reforms is that the choices made by people on housing benefit—who, I fully accept, may be in work—should mirror the choice that someone would make if they had no subsidy but were just doing a low-paid job. That is the parallel. We are not trying to take a penal approach or to be harsh towards people who happen to be on LHA; we are simply trying to level the playing field. The idea is that they will make the choices in a constrained way, just as people in a low-paid job would have to do. That would, again, mean that they focused on a reduced section of the market; but properties would still be affordable. To take the broad rental market area that serves the hon. Gentleman’s constituency, which I assume is the North Lanarkshire BRMA, we estimate that after the reforms 37% of properties will be affordable. Clearly we are telling people on a relatively low income or benefit, “You have a more constrained choice than you did”; but 37% is still, by definition, more than a third of the market.

The hon. Gentleman asked questions on some more detailed points, including the single room rent. We will publish an impact assessment on that change. He also raised the important issue of people with mental health problems and what would happen if, through a reduction in subsidy, someone were to be coerced inappropriately into shared accommodation. There are already exemptions for vulnerable groups. For example, certain disabled people are not affected by the single room rent regulations; but, clearly, we will always consider the issue of vulnerable people and the impact of changes on them.

[Mr Tom Clarke]

Will the Minister give way?

[Steve Webb]

Because this is the debate of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East it is only fair if I respond to him and the questions he has raised.

[Mr Clarke]

It is not the Minister’s debate either.

[Annette Brooke (in the Chair)]

Order.

[Steve Webb]

I think, technically, that right hon. and hon. Members who intervene are meant to tell me formally that they want to do so; I do not mind at all, but they have made their comments and I think it is fair that I respond to the hon. Gentleman.

There are several Scottish angles to the debate and I want to deal with some of them rather than make more general points. There is an issue about whether people who are covered by LHA are being driven into pockets—very localised areas. One aspect of the Scottish situation is that the 30th percentile tends to be closer to the 50th percentile than perhaps it is in other parts of Great Britain. The cash difference tends to be smaller, as I said earlier, so the impact is not as great as it might be in other areas where the rent distribution is more dispersed. I fully accept the point that the impact of the measures will be different in different places, but the 30th percentile has a smaller impact in Scotland because of the compressed rent distribution.

The hon. Gentleman quite properly raised the issue of unemployment. I would not for a moment suggest that it is ever easy or straightforward to find a job; but, again, headline unemployment is slightly lower in Scotland than for Great Britain as a whole. The majority of Scottish local authorities have lower unemployment rates than the Great Britain average. That is not to belittle the matter, but it is not a purely Scottish dimension. The issue is clearly one to be dealt with nationally.

As to the hon. Gentleman’s constituency and the support that we are giving, an important feature of the new scheme is discretionary housing payments. We recognise that we cannot anticipate every hard case, so we give local authorities discretion. We give them funds so that if there is someone who just does not fit the rules terribly well or who is acutely affected by the changes—the hon. Gentleman gave examples of situations that might be difficult—local authorities have discretionary funding. In 2011-12, Scotland as a whole will be getting an increase of 15% over 2010-11. That is an increase of £360,000 in discretionary housing payments. The hon. Gentleman’s local authority will be getting a 34% increase; more than double the Scottish average increase will be going to North Lanarkshire to provide additional assistance. The figure will go from £77,000 in support this year to £103,000. It is worth saying that the 2011 DHP increase is much smaller than the increases will be in succeeding years; the Great Britain-wide figure will go from £20 million this year to £30 million, and then £60 million a year. Most of the increase in DHP will be in later years, but we have already added 34% to it in the coming year for the broad rental market area of the hon. Gentleman’s constituency. Although, inevitably, that money will have to do a lot of work, it is specifically designed for the sort of hard cases he spoke about.

[Gregg McClymont]

I have been listening closely to the Minister, because I wanted him to develop his argument before I intervened. Is he comfortable with a policy which, as he perfectly fairly described it, tries to put people who get housing benefit and may be working, on a level playing field with people who are, as he described it, low paid, but who do not get housing benefit, in the context of an economy in which there is not much evidence that people can move into better paid jobs? The structure of the economy in a place such as North Lanarkshire does not include many professional—middle-class, if you like—positions for people to move up to, if the Minister’s broader argument is about social mobility. From our point of view there is a danger that instead of focusing on trying to increase opportunities for a broad range of people from near the bottom to the middle of the income distribution, the focus is on people who are already struggling. I think the Minister would agree that we must do something about what happens further up the scale, to open up opportunities for the people who are affected.

[Steve Webb]

I entirely agree with that point. We want to encourage people not simply to move into any job at the bottom of the scale; we also want to encourage career progression and additional hours and training—the things that make people employable and enable them to earn more. That is the philosophy behind the universal credit. One of the problems is that there is an issue about the incentive to take any job; once a person has a job the current system can withdraw 95% in the pound, in extreme cases. That cannot be right and it traps people. Even if jobs are available and there are opportunities to do more work or gain more skills, there is no point, because the money is simply clawed away. With a lower taper rate for most people the universal credit will give people more opportunity to do just the sort of things that the hon. Gentleman describes.

[Gregg McClymont]

We know that the hon. Gentleman is a thoughtful Minister. A larger question looms over the issue, and that is whether, in the economy as it stands—not just in this recession but structurally over the past 30 years—there are opportunities for people to move up the ladder in large enough numbers. Does the Minister agree that such macro-structural political economy issues are related? Unless we have that possibility, what is happening may be seen as an attack on people who are already not exactly living luxurious lives.

[Steve Webb]

I certainly agree that we are not talking about people leading luxurious lives. There are, as the hon. Gentleman says, bigger structural issues affecting the economy. In the past few years under a series of Governments the economy has created millions of new jobs, but some of them are part-time, and they vary in nature. One of the things that the Government are trying to do, whether through apprenticeships or a range of other initiatives, is to upskill the work force. In a global economy we shall not be able to compete with very low wages in the far east, for example.

In the final couple of moments available to me I stress that we are keen to engage with the Scottish perspective, as the hon. Gentleman suggested. COSLA is represented on the Department for Work and Pensions local authority associations steering group, which meets each month, and along with the local authority associations it was formally consulted on the draft regulations for 2011 that I mentioned earlier. Officials from the Scottish Government have attended events and meetings to discuss the impact of LHA reforms, and Members of the Scottish Government have been invited to attend a conference that we are holding in Glasgow on 3 March 2011. We have invited all Scottish benefit managers from local authorities to attend, and we are inviting officials from the Scottish Government to be involved in the LHA reform national implementation group and the evaluation of the reforms.

[Gregg McClymont]

Would the Minister consider publishing evidence that LHA is pushing up rents in Scotland? He referred to that earlier and it would be an interesting piece of information for us, if he would undertake to pass it on.

[Steve Webb]

I was quoting from COSLA’s assertion, but we are happy to give the hon. Gentleman what evidence we have, although trying to prove cause and effect is a challenge.

I congratulate the hon. Gentleman on raising this important debate, and I am grateful to colleagues who contributed.

Question put and agreed to.

Contracted-Out Rebate Rates (Quinquennial Review)

Steve Webb Excerpts

Thursday 3rd February 2011 Written Statements

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

Later today the Government will publish an order to set the contracted-out rebate rate for salary-related pension schemes for the tax years 2012-13 to 2017-18. The new rate will be 4.8% and will be shared in the following way: 3.4% for employers (secondary class 1 contributions) and 1.4% for employees (primary class 1 contributions).

Rebate rates for members of contracted-out pension schemes are reviewed at intervals of up to five years. It has been five years since the last review. The rebate is expected to reflect the cost of providing the benefits given up by individuals contracted out of the additional state pension.

The Government Actuary has produced a report presenting three possible approaches to setting the rate. The Government have adopted the rate that was calculated using the Government Actuary’s “best estimate” approach.

The full report of the Government Actuary will be published alongside the order, as will a report on the order by the Secretary of State for Work and Pensions in accordance with sections 42(1), 42B(1) and 45A(1) of the Pensions Act 1993.

Pensioner Poverty

Steve Webb Excerpts

Tuesday 1st February 2011 Westminster Hall

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

I congratulate my hon. Friend the Member for Beckenham (Bob Stewart) on raising a serious and important issue, and on explaining its depth and breadth. On pensioner poverty, we talk too often about incomes and measuring the statistics, and therefore lose sight of its human side. No matter how immersed we get in the statistics or how much progress we may think has been made, we should all still be shocked by the example that my hon. Friend has given. The experience of the pensioner whom he visited is totally unacceptable. Notwithstanding anything I might say in the time available to me, one person in such a situation is, clearly, one too many.

My hon. Friend raised a broad spectrum of issues and I will respond to a number of his key themes. On fuel poverty, I want to talk about the support we aim to give and some of our new initiatives. I will also address the issue of non-take-up of benefit, which as he rightly says is one of the most significant causes of pensioner poverty. He raised the issue of investment returns, granny bonds, interest and so on during oral questions a few weeks ago. I am pleased that he has followed up on that and I will give him a bit more information on it. Finally, I will talk about some of the broader issues he raised—income, material deprivation, loneliness and so on—and the steps the Government can take to identify those problems and act on them. I will try to run through all those things.

On fuel poverty, my hon. Friend is absolutely right that it is a pretty basic need to be able to keep warm enough and healthy, particularly in such a bitterly cold winter. One of the very first decisions we had to take as a Government was, as he rightly says, to continue the winter fuel payment when there was some speculation that it might go or be cut in some other way. We also made a decision on the cold weather payments, which are specific, £25-a-week payments for when the temperature is below zero for a week. They were temporarily raised to £25, and the budget plans we inherited would have reduced them this winter to £8.50 a week. We took the view that when temperatures are below freezing spending money on relatively low-income pensioners, disabled people and families with young children was a priority. My hon. Friend rightly says that money is tight, but that was a priority for us. Instead of cutting it to £8.50, we held the rate at £25, and those who are eligible in his constituency will have received three payments of £25—a total of £75—towards the extra costs of heating in this bitterly cold winter. I think that he and I can be proud of that decision.

Obviously, that is a short-term situation and, ideally, we have to ask why we in Britain have what is known in the jargon as “excess winter deaths.” Why is a cold winter killing people in Britain when, essentially, it does not in Scandinavia, which is a much colder region? It does not get the spikes that we do in the winter, but one of the fundamental reasons is the poor standard of our existing and new housing stock. Even the houses that we are now building are often not good enough. The Department of Energy and Climate Change is leading on those issues and it is requiring the energy companies, as part of their carbon reduction commitments—the carbon emissions reduction target scheme—to target the most vulnerable households. The idea is that the energy companies will pay for things such as home insulation, loft insulation, cavity walls, draft-proofing and so on because, yes, we need to make sure that pensioners can afford their heating bills, but it would be far better if we could make sure, through a properly insulated home, that those heating bills were not so large in the first place. If we can make sure that more elderly people have cosy homes, they will be able to afford to heat them and everybody will gain. We are requiring the energy companies to do more on that front.

We also experimented—this is an interesting point in relation to take-up—with the energy rebate scheme earlier this year. The electricity companies made payments to pensioners based on data-matching between the data held by the Department for Work and Pensions and the energy companies’ customer data. We brought the two together, identified people on the guarantee credit element of the pension credit and simply credited them with £80 on their electricity bills. The previous Government initiated the scheme and we did it as an experiment earlier this year. We targeted those aged over 70, so the elderly and the vulnerable got £80 credit on their electricity accounts. It was a one-year pilot and most of the delivery costs were paid by energy suppliers, and I sense that it was pretty successful. I had a few letters about people who were not sure why they did not qualify when their name was on the bill, and we had a few teething problems. However, overwhelmingly, that scheme put cash in the pockets of people living in vulnerable households. That has worked well, so we are now proposing something called a warm home discount scheme that will build on that success. We propose that energy suppliers should again pay a rebate to vulnerable pensioners, who have been identified through data-matching. That scheme was a useful precedent and we want to build on it.

However, crucially, that brings me on the second point: take-up. Of course, eligibility for the scheme I mentioned is dependent on the person concerned getting pension credit. As my hon. Friend rightly says, too many people who are eligible do not get the money. I absolutely endorse his comment that the payment is not charity; it is a right. People have paid their taxes and their national insurance and they are entitled to the money. I would not want any pensioner to feel that claiming money that the law says they are entitled to is anything other than a right. I am grateful to him for how he expressed that. As he rightly says, one of the things we are looking at—I view this as a two-stage process—is getting people to claim what is there now and simplifying the claims process. The second step, which I will come on to, is to reduce the reliance on means-testing and use more of the benefits and pensions that we know people will get. We should regard means-testing as a safety net, a residual part of the system, rather than a mainstream part of the process, as it is now.

As my hon. Friend rightly says, we are running a pilot scheme. We are trying to use the data we already hold to indentify the people who are eligible but not claiming. I sense that that will be more difficult than we might think. Eligibility for pension credit depends not just on one’s own income but on one’s spouse’s. It also depends on the whole household’s housing costs, and on all its savings in different accounts with different institutions. One of the problems we have in Government is bringing all that together. On my hon. Friend’s point about identifying people approaching pension age who might be about to become poor, the pilot will tell us how far we can draw together the disparate information that different bits of Government hold. People might have three different pensions from three different providers, and, two years before pension age, might not have even crystallised the pot into a pension. We therefore do not yet know how big the pension will be.

[Bob Stewart]

Perhaps those who work for charities could be used as additional social workers to help those people and give information back to Government. We would all win by doing that.

[Steve Webb]

I am grateful to my hon. Friend for stressing the valuable contribution of charities, such as Age Concern Bromley. Many other charities that do their work in people’s front rooms have a crucial part to play. The Pension, Disability and Carers Service is a local service that works with local authorities and does home visits. It goes into people’s front rooms and does similar sorts of work. Such work is very valuable, but I want to be as systematic as I can, so that we can catch the folk who fall through the net.

[Bob Stewart]

It is part of it.

[Steve Webb]

Absolutely. That work is a very valuable complement to the process. I want to ensure that the Government are as systematic as we can be, so that we can get as much money automatically to people as we can. As I said, we have been running a pilot scheme and have identified a sample of 2,000 people who, on the face of it, appear to be entitled to pension credit and are not claiming it. We have made payments to those people of what we think they should get. We have contacted them and said, “The money that’s arriving in your bank account is what we think you could get as pension credit. Would you like to make a claim?” As my hon. Friend says, that has been going on and we are closing the study in the middle of March. We are hoping to learn from that how far we can use the information we have to ensure that people get what they are entitled to. We will certainly be reporting back to the House on that.

What we have to do—and what the Government are doing—is to ensure that the money people definitely do claim is better. Let me give an example. The state pension, which has virtually 100% take-up, is worth having. My hon. Friend will know that, after 30 years of the link with earnings being broken, we restored the earnings link this year. Over the lifetime of their retirement, a typical pensioner retiring this year can expect to get an extra £15,000 in state pension compared with the old price link. That money is guaranteed and we know they will claim it. My goal for the longer term is to try to rebalance the system, so that we do not have, as he rightly says, a wholly inadequate basic pension—someone cannot live on £97 a week—and a mass means-testing system that results in many people failing to claim. There will always be a need for a safety net and a catch-all, but I would rather ensure that the pension is at a decent level. Restoring the earnings link is the first step towards that, but I hope we can go further.

My hon. Friend rightly raised the issue of investment income and set out a very important context. In fact, many pensioners, particularly poorer pensioners, have next to no investment income. He quoted some figures. Regarding the poorest fifth of single pensioners, who are living on £136 a week, just £4 of that is coming from investment income. So even if I could magically double interest rates, I would be giving them an extra £4 a week. That clearly matters for those who have structured their finances to depend on interest income. I will say a word about that in a moment. However, for us as a Government, getting pensions, pension credit and so on right will have a substantial effect.

My hon. Friend is right: falling interest rates are an issue. He mentioned the granny bond or, as I gather it used to be called, the pensioner guaranteed income bond. That bond was withdrawn by National Savings and Investments in 2008, when it was paying an interest rate of 3.9%. That was a few years ago. Obviously, when there is a base rate of 0.5%, one might think that savings rates had plummeted so far there would be nothing like that out there. I have done a bit of research and, for example, today on the market 3% interest rates are available for a one-year bond, and for three-year bonds 4% interest rates are available.

However, people do not necessarily know about that. When I responded to my hon. Friend in the House a little while ago and mentioned the issue of shopping around, we discussed the fact that, if someone has access to the internet, dealing with such issues is straightforward. Moneymadeclear and so on are good websites. However, the Consumer Financial Education Body also offers a helpline that people can ring up. If someone is not sure whether they are getting the best interest rate and they want to know what is available, they can ring the helpline number. I shall read that number into the record: 0300 500 5000. People can simply phone that number and say, “I’ve got this amount of savings. What sort of options do I have?” As I mentioned, with savings rates of 4% or more and increased limits on individual savings accounts available, decent rates are out there. However, too many people are trapped in receiving very poor interest rates. Let me give an example. I noticed this morning that a high street building society is offering what it calls an e-savings plus account that pays 0.1% interest, and a high street bank is offering what it calls a premier saving account, also offering 0.1%.

[Bob Stewart]

That is exactly where people who work for charities that go into people’s homes can help. If they have such things in their quiver, they can say, “Let’s have a look at your savings and see if we can get you a better return.” That does not cost them anything.

[Steve Webb]

Indeed. I certainly would not downplay the role of face-to-face conversations. I fully accept that many older and more vulnerable people will not have internet access. We need alternatives, such as charities or visitors going into people’s homes and talking about savings rates and giving phone numbers of the sort I have mentioned. That is all part of getting the message across that people who have suffered a big fall in their savings rate need not necessarily face such a situation. There are options out there for them.

In the final few minutes of my speech, I shall talk about the broader issues that my hon. Friend raised. He mentioned carers and social care. As he will know, the Department of Health has an independent care commission headed by Andrew Dilnot, which is due to report in the summer. Although that commission’s formal consultation process finished on Saturday, I am sure it would very much welcome my hon. Friend’s input if he has further comments to make about the role of older carers, whom he mentioned. The Government are seeking to ensure that those who are doing full-time care of, for example, 50 hours a week or more can get far more respite. Perhaps 1 million people are in that category. He also raised the issue of claim forms. I entirely agree: there is always a lot more to be done. I should stress that people can ring a free phone number—0800 882200—and can claim over the telephone. As he rightly says, that might help people who cannot read or deal with the forms. It is great if those people have someone do the form for them or with them. We also try to enable people to complete the form over the phone if that is more helpful to them.

Finally, my hon. Friend properly raised the much wider issues of pensioner poverty. It is not just about income; it is about loneliness and what happens if the cooker breaks and so on. When we publish the figures on households with a below average income—the poverty figures—I am keen for our Department not simply to publish table after table about income, but for it to look much more broadly at deprivation. I have a list of the things we are studying and publishing figures on: for example, whether someone can replace a cooker, take a holiday away from home or go out socially at least once a month. As he rightly says, loneliness, isolation and financial insecurity are important facets.

[Bob Stewart]

rose—

[Steve Webb]

I am about to conclude as there are only a few seconds left.

I congratulate my hon. Friend on raising a vital issue and I look forward to having an ongoing conversation with him. Like him, I congratulate the voluntary sector and our front-line staff on their work. They are bringing these messages to vulnerable people, whom we are determined to help.

Call for Evidence - Pensions

Steve Webb Excerpts

Monday 31st January 2011 Written Statements

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

Today the Government will publish their call for evidence on regulatory differences between trust-based occupational pension schemes and contract-based workplace personal pension schemes. We want to hear about areas where the existing rules or requirements appear to be at odds with our aim of getting people saving in a workplace pension. We do not want to see instances of regulatory differences being exploited.

In particular we are interested in views and evidence concerning the use of short service refunds and disclosure of information, which provide a valuable administrative easement for many occupational schemes but need to be considered carefully against the potential risk to the success of the workplace pension reforms.

Automatic enrolment will play a major part in reinvigorating the pensions landscape, bringing millions of individuals into pension saving. We need to make sure that the legislative framework for workplace pension schemes is straightforward and supports our goals of increasing individuals’ retirement savings.

The Government will respond to the call for evidence in the autumn, outlining the actions we intend to take in response to the evidence presented.

A copy of the call for evidence document will be placed in the Libraries of both Houses, and is available on the Department’s website at: www.dwp.gov.uk/consultations.

Parliamentary Written Question (Correction)

Steve Webb Excerpts

Tuesday 25th January 2011 Written Statements

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

I regret to inform the House that there were inaccuracies in my written answer 15130 given on 4 October 2010, Official Report, columns 1346-48W. The response provided the number of winter fuel payments made in England, Dudley Borough and Dudley North constituency. The age breakdowns supplied for England were incorrect and figures were only provided up to 2008-09 instead of 2009-10. In addition there were some discrepancies in the figures for 2005-06. The correct information is below:

Sure Start Maternity Grant

Steve Webb Excerpts

Thursday 20th January 2011 Written Statements

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

The Government announced in the emergency Budget that, from April 2011, payment of the Sure Start maternity grant would be protected at the current rate of £500, but limited to the first child. Amending regulations were laid today restricting payment to families where their new baby, or babies if it is a multiple birth, will be the only child under 16 in their household. The regulations will come into force on 24 January and apply to babies born, expected, or the subject of an adoption or other analogous arrangement, on or after 11 April 2011.

Sure Start maternity grants are available to families in receipt of income support, income-related employment and support allowance, income-based jobseeker’s allowance, pension credit, child tax credit at a rate above the family element, or working tax credit that also includes a disability or severe disability element. This broad eligibility ensures that the grant is as widely available as possible among families with lower incomes both in and out of work.

Restricting payment in this way ensures that the limited resources available support families when they need it most. Expenditure is inevitably highest when a new baby is the only child in the household and there are no baby items that can be reused or recycled.

This measure will save £73 million a year as part of the Government’s deficit management plans.

Oral Answers to Questions

Steve Webb Excerpts

Monday 10th January 2011 Commons Chamber

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

2. What assessment his Department has made of the effects of changes to prices in January 2011 on the incomes of pensioners.

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

In April this year, benefits and pensions will be increased by more than £4 billion, more than three quarters of which will go to pensioners. In addition, price rises in January 2011 will feed through into the September 2011 price indices, which will be used in future benefit uprating.

[Gregg McClymont]

Pensioners on fixed incomes will be among the hardest hit by the Government’s VAT rise. Will the Minister confirm that the VAT hike will mean that pensioners are worse off in 2011 under this Government than they would have been under the previous Government’s plans?

[Steve Webb]

I am grateful to the hon. Gentleman for referring to the previous Government’s plans. In his constituency, vulnerable pensioners, vulnerable disabled people and vulnerable families with young children received four or five cold weather payments this winter to help them with their fuel bills in January 2011. His policy, and the plans that we inherited, would have reduced those payments to £8.50 a week. We have paid £25 a week four or five times to vulnerable pensioners in his constituency.

[Rachel Reeves (Leeds West) (Lab)]

I will give the Minister another try: will he accept that with pensioners set to pay an extra £217 in 2011 because of the VAT rise, the basic state pension rising by only the same amount as planned by the previous Government and now news that the Department for Work and Pensions and the Treasury cannot agree the £140 flat-rate pension that he has extolled, pensioners have very little to look forward to in 2011 but a lot to fear?

[Steve Webb]

The hon. Lady used to be an economist, so I would not dream of suggesting that any of the figures that she has quoted are in the slightest bit dodgy. She will be aware that colleagues at Her Majesty’s Treasury have calculated that the impact of the VAT rise for each percentage point increase is just less than £1 a week for single pensioners. The 2.5% increase will cost pensioners £2.50 a week, which compares with our £4.50 pension increase this April, and there will be additional increases in 2012 because of the VAT rise, so I dispute her figures.

--- Later in debate ---

[Bob Stewart (Beckenham) (Con)]

12. What assistance his Department provides to pensioners who rely on fixed-interest income bonds.

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

For pensioners with savings, the Government ignore the first £10,000 of their capital when assessing them for pension credit, as a result of which almost nine out of 10 pension credit applicants have no capital taken account of at all. In addition, to support all pensioners the basic state pension will rise by £4.50 this April and the standard minimum guarantee for pension credit by £4.75.

[Bob Stewart]

About one third of my constituents are on pensions, which are often very small. What plans do the Government have to help older people who live on small incomes for which they have saved all their lives to build up?

[Steve Webb]

My hon. Friend raises the very important point that falling interest rates and rates of return on savings tend to affect older people in particular. When we look at state pension reform, the return to saving and the reward for saving will be a particular priority for us. Many pensioners have their savings in very low-interest accounts, sometimes paying as little as 0.1%. There are much better rates out there, and I encourage all pensioners to shop around extensively to find the best rates possible.

[Owen Smith (Pontypridd) (Lab)]

13. What estimate he has made of the number of people in receipt of pension credit who will receive reduced payments as a result of the change to the timetable for the equalisation of the state pension age.

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

Just to be clear, no one currently receiving pension credit will have reduced payments at all because of the revised state pension age timetable. In future, however, we anticipate that about 120,000 households could be affected by the increase in the pension credit qualifying age as a result of the change to the equalisation timetable between 2016 and 2020.

[Owen Smith]

Given that we know that the poorest pensioners are some of those who will be hardest hit by the Government’s changes in respect of equalisation, will the Minister consider de-linking entirely the increase in the qualifying age for pension credit, which is paid only to the poorest, and the increase in the threshold for women’s pensions? He says that he is worried that the relationship with his Tory masters is a bit cosy; here is an opportunity for him to strike a rare, Liberal, fair blow.

[Steve Webb]

The hon. Gentleman is right that, on average, people of lower social classes and on lower incomes tend to have a shorter life expectancy. The good news is that life expectancy is rising for people on all income levels, so as we raise the state pension age, it is only right and proper that we raise the starting point for pension credit. It would be very strange to go on paying at 60 something called pension credit when the state pension age rises, as under the previous Government’s plans, to 66, 67 and 68.

[Dame Anne Begg (Aberdeen South) (Lab)]

In a reply to a written answer, the Minister admitted that half a million women will have to carry on working for longer than a year as a result of accelerating the equalisation of the state retirement age. In particular, women who were born in 1954 and expected to retire in 2018 aged 64 will not now get their state pension until they are 66 in 2020. That strikes me as incredibly unfair. What is the Minister going to do about it?

[Steve Webb]

The hon. Lady is right: of the 5 million people who will be affected by the increase in the state pension, a relatively small age group will be affected as she describes. It would be an option to go more slowly, as the previous Government did, but, if we deferred all changes until 2020 in order to deal with the point that she makes, it would cost an extra £10 billion. Once again, we have a suggestion for £10 billion of extra spending but no suggestion of where the £10 billion might come from.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

14. What recent assessment he has made of the likely effects of his welfare reform proposals on families with multiple births.

--- Later in debate ---

[Andrea Leadsom (South Northamptonshire) (Con)]

19. What steps he is taking to reduce the burden of administration on businesses arising from pension provision.

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

We are taking forward the recommendations of the independent “making automatic enrolment work” review, many of which were aimed specifically at making automatic enrolment in workplace pensions more straightforward for employers.

[Andrea Leadsom]

I thank the Minister for his answer. Although it is crucial that the Government do everything possible to get people to save for their retirement, does he agree that currently it is even more critical to reduce the burden of red tape and bureaucracy which is preventing small businesses from creating the new jobs we desperately need?

[Steve Webb]

My hon. Friend is right to suggest that we need to minimise the burden of quality workplace pension provision on firms. When the pensions Bill is published, she will see that all the changes we are making to the provision for enrolment in workplace pensions are deregulatory and will reduce the cost and burden for firms.

[Margot James (Stourbridge) (Con)]

20. What recent representations he has received on his plans to help disabled jobseekers into work.

--- Later in debate ---

[Henry Smith (Crawley) (Con)]

23. What assistance his Department has provided to vulnerable people during the recent period of severe weather.

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

This winter we have paid a record £427 million in cold weather payments, with 17 million separate payments.

[Henry Smith]

I am grateful to the Minister for his answer. Can he confirm that, contrary to various scare stories that we have heard in recent weeks, cold weather payments will continue into the future?

[Steve Webb]

As my hon. Friend suggests, there are two systems of support during the winter months: the winter fuel payment, which the Chancellor has confirmed will continue on exactly the basis budgeted for by the previous Government; and the cold weather payments, which will not continue on the basis budgeted for by the previous Government because they were going to cut them by two thirds and we are going to keep them at £25 a week.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The Minister went some way towards answering my question about what is going to happen to the winter fuel payment, but can he categorically confirm that we will not see any changes to it in the next economic year?

[Steve Webb]

To reiterate, the Chancellor of the Exchequer made it quite clear in his comprehensive spending review statement that we will be sticking to the budgeted plans for winter fuel payments for future winters.

[Jessica Lee (Erewash) (Con)]

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

--- Later in debate ---

[Barry Gardiner (Brent North) (Lab)]

T7. The Government’s ethnic minority impact assessment of the housing benefit changes states that it is not possible, because of a lack of data, to make a proper assessment. In my constituency, it is estimated that 8,500 people will be displaced. On the register, 64% of claimants are from ethnic minority backgrounds. That rises to 83% and 84% for the most vulnerable groups of those in temporary accommodation and those in houses of more than four people. Will the Government assure me that they will do what they said they might do and conduct further research into the disproportionate impact that the changes will have on ethnic minorities?

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

I do not recognise the estimate of 8,500 displaced families. We have made changes to the proposals so that the changes to housing benefit will be phased in and existing tenants will have nine months’ protection starting from the anniversary of their claim, with the result that local authorities will have time to manage the transition and that there will be more direct payments to landlords, so we will be able to negotiate rents down. We will of course monitor the impact of the changes as they go on, but 8,500 displaced families is not a number that we recognise.

[Mr Sam Gyimah (East Surrey) (Con)]

T8. Although I welcome the Government’s payment by results model as a way of delivering value for the taxpayer, the challenge for a lot of small organisations is that it will pose huge cash-flow problems. They will have to deliver the work and pay their staff, and then they will be paid by the Government. What steps is the Minister taking to ensure that small organisations that can deliver effective work programmes are not disfranchised by the Government’s payment by results model?

--- Later in debate ---

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Special Metals Wiggin is a large and important employer in Hereford city, but it has several hundred pensioners who have not had an increase in their company pension since 1995 and who have therefore suffered a more than 50% loss in the value of their pensions. Will the Minister examine the matter, and is he prepared to meet pensioners’ representatives to discuss it in more detail?

[Steve Webb]

I am happy to look into the individual situation to which my hon. Friend refers. In general there are statutory requirements for the uprating of pensions in respect of service post-1997, but occasionally, when schemes are wound up underfunded and fall under different regimes, different indexation rules can apply. I would be very happy to receive more details and to meet my hon. Friend.

[Malcolm Wicks (Croydon North) (Lab)]

Given the importance of tackling social security fraud, which depends in part on promoting a sense of responsibility and honesty across the whole of society, does the Secretary of State agree that that is undermined by the widespread tax evasion by rich individuals and companies? If honesty is good enough for the poor, surely it is good enough for the rich.

--- Later in debate ---

[Paul Flynn (Newport West) (Lab)]

Of the representations that the Government have received from pensioners’ organisations on the change from the retail prices index to the consumer prices index, what proportion was in favour and what proportion was against?

[Steve Webb]

The consultation that we undertook on the RPI-CPI change was about occupational pensions, and the majority of responses were from occupational pension organisations. Unsurprisingly, as CPI is generally lower, members of the schemes were not so keen and those who have to pay for the schemes were rather keener.

[Mr William Bain (Glasgow North East) (Lab)]

Is the Minister aware that, at the weekend, the disability charity Scope described her plans to remove the mobility component of disability living allowance as “a callous decision”, which would

“result in people being prisoners in their own homes”,

and that disability lawyers have expressed concerns about the compatibility of the changes with the European convention on human rights? When will the Minister join the growing national consensus that the plans are unfair and unacceptable, and withdraw them?

Pension Funds

Steve Webb Excerpts

Tuesday 14th December 2010 Commons Chamber

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

I congratulate the hon. Member for Dagenham and Rainham (Jon Cruddas) on securing this debate and raising such an important issue for many of our constituents. Pensions are sometimes seen as a bit of a minority sport for anoraks, but the issue of what is happening to our money, and of whether it is being invested well, and in an environmentally and socially beneficial way, matters very broadly, and the more we can do to reduce the barriers that people face in obtaining that information, the better.

As the hon. Gentleman was speaking, I was reflecting on the fact that I bank with Smile, the internet arm of the Co-operative bank. As a member of the Co-operative movement, I periodically receive mailings about ethical investment issues and about the policies of the bank and how they could change. I have some interest in those matters professionally, but even just as a private citizen I find that process quite engaging. The process of raising such issues directly with individuals to enable them to make informed choices without always having to be proactive and to go and dig them out, makes me feel more positive about the institution that I am dealing with.

The hon. Gentleman is right to raise these issues. He mentioned the organisation FairPensions, and I congratulate it on its research, which is often thorough and careful. It is neither broad-brush nor high-level, but it examines the detail of the law and the regulations to determine how things might incrementally be improved. I welcome the fact that he has brought to the House’s attention some of the issues that he and Fair Pensions are concerned about.

I want to respond mainly on the questions of corporate governance and accounting transparency, but I also want to touch briefly on charges. The hon. Gentleman mentioned a figure of 40% of pensions going to pay charges, and that is a figure that we often hear quoted. It is worth correcting the record on what that does and does not refer to. It is certainly not an average or a norm. Someone who pays 1.5% charges through the life of their product might end up losing 40% of the fund on retirement, but there is no reason why anyone with a standard product need pay those charges. The stakeholder cap would start at 1.5% and fall to 1%. The new National Employment Savings Trust—NEST—pension will have an equivalent average management charge of 0.5% a year. Every charge represents a bit coming out of the final return, but people are paying for a service and charges are therefore legitimate provided that they are transparent. It is important not to overstate the extent of charges.

One thing that we hope will happen as a result of introducing the NEST corporation into the market next year, and more fully in the coming years, is that it will have a downward impact on charges across the market. When stakeholder pensions were introduced there was evidence that some charges—which might have been even higher than the figures quoted by the hon. Gentleman—were brought down, and we think that the same will happen again.

That raises the issue of the relevant roles of regulation, on the one hand, and of alternative strategies, on the other. I find a lot of common cause with the points that the hon. Gentleman raised. He is an intelligent and thoughtful contributor to these debates. One of the paradoxes that he raised is illustrated by asking whether further regulation is the solution to regulation that is not achieving what we want it to achieve. Or should we consider better enforcement of existing regulation, or alternative strategies? I suspect that the answer might be a mix of all three. He used powerful terms such as “boilerplate”, “paragraphs”, “dead documents” and “tick-box” mentalities. We do not want to create new tick-boxes. We want to ensure that the spirit of the law and the guidance is adhered to.

The NEST corporation has done some interesting work on attitudes to ethical investment, which is worth sharing with the House. It was actually the predecessor body to NEST, the Personal Accounts Delivery Authority, that conducted some public consultation on how NEST should invest its members’ money. NEST will be a pension fund with the potential to cover millions of people, many of whom will never have had a pension before and who might not be financially sophisticated investors. The target market was asked whether NEST should offer

“an ethical or socially responsible investment fund”.

As the hon. Gentleman might imagine, the research evidence suggests that there was very strong support for NEST offering such a fund, and the corporation is thinking about how it will do that. At the moment, about 40% of defined contribution schemes offer an ethical fund. I appreciate that there is a difference between an ethical fund and transparency in pensions, but there are links between the two.

Back in 2007, my Department looked at the NEST target group, and more than a quarter said that they would invest in an ethical fund regardless of the return. So they thought that they were interested in that idea even if sacrificing a bit of their return was involved. Also, a whisker under half of those surveyed said that they would invest ethically if the returns were equal to other investment types. Perhaps that reinforces the hon. Gentleman’s point that there is a big market out there for such investment funds, and that people are concerned about such things. They might not understand every detail of what is happening to their money or what is going on in the financial markets, but they want to know that their money is, as it were, doing good wherever possible. Some are willing to make a financial sacrifice to achieve that, and many more would rather be in that position than not. That suggests that the issues that the hon. Gentleman has raised are important and mainstream, as he said.

One of the challenges in dealing with this issue is that there are many links in the chain. We have the individual investor who puts money into a pension fund, along with their employer. Then we have the pension fund trustees, the investment managers and the businesses in which the money is invested. At each stage there are issues of transparency and reporting that need to be addressed, as the hon. Gentleman rightly says.

The present legislation on occupational pension schemes is contained in the investment regulations of 2000. It will not be entirely helpful to my case to do so, but I am going to quote exactly what they say. They require a scheme’s statement of investment principles to

“disclose the extent (if at all) to which social, environmental, or ethical considerations are taken into account in the selection, retention, and realisation of investments.”

The regulations also require schemes to disclose

“their policy (if any) in relation to the exercise of the rights (including voting rights) attached to the investments.”

As the hon. Gentleman has pointed out, however, that is a requirement to disclose a policy, but not necessarily individual votes on individual issues. I know that many shareholders do not just want information on a boilerplate policy that might be cut and pasted from somewhere else; they want more specific information on how the scheme approaches its position.

The figures change from month to month, but latest figure that I have seen shows that British pension funds own about £1 in every £7 or £8 of the UK stock market, so they are powerful players. Obviously, they do not often speak with a single voice, so they are perhaps more fragmented than that single figure suggests, but the idea that vast numbers of billions of pounds are not having an influence on company behaviour seems implausible. We therefore have an incentive to have a proportionate regime that maximises the beneficial impact of that activity.

There is a lot going on in relation to corporate reporting. In looking into this in preparation for the debate, I identified at least three different Government consultations and calls for evidence that are now going on, and that are relevant to this area. I shall update the House on where we are with those, starting with the Department for Business, Innovation and Skills, which has been consulting on the future of narrative reporting in order to address the coalition commitment to reinstating an operating and financial review. That policy was dropped a while ago, and the intention is to reinstate it. That consultation has closed and our BIS colleagues will shortly publish a summary of responses with a view to outlining the next steps in the new year.

The three key objectives, with which I think the hon. Gentleman would agree, were as follows. The first was to improve the quality of company reporting to shareholders, the second was to empower shareholders to hold directors to account on their performance, and the third was to ensure that any measures we as the Government introduce will improve the quality and relevance of disclosures; that relates to the point that the hon. Gentleman made.

Our colleagues at BIS are, as they say, exploring all the options—regulatory and non-regulatory—to make sure that companies report on matters that are material to their business and their shareholders, including consideration, where relevant, of social and environmental issues. What our BIS colleagues say is that where existing regulation is not meeting its aims, they will be looking at options to facilitate better and more relevant reporting and to empower shareholders to hold companies to account where the needed information is not provided. There is a welcome and ongoing commitment to empowerment of shareholders and to relevant reporting, not just box-ticking exercises.

That is the first exercise, which in a sense is more mature, within the few months for which the coalition has been in power. The second relates to the point that the hon. Gentleman made in his speech about short-termism. The Department for Business, Innovation and Skills published in October a call for evidence on the extent of short-termism and market failures in UK equity markets, looking at issues and causes and whether the current law is suitable. A whole range of issues is covered by that, including whether investors are increasingly short term and whether—to use a bit of economic jargon—there are principal agent problems in the investment chain.

In a sense, that is how I started my remarks, by saying that we do have a chain: there are concerned citizens, perhaps pension funds, financial intermediaries, and then the companies in which they invest. At each stage, as the hon. Gentleman said, the danger is that each thinks it is the other’s job to do what is necessary: “Is it my job to report or your job to ask?” There is certainly scope for greater clarity on that subject.

One reason why I mentioned the consultations across government and the calls for evidence is that there may be more openness on such issues early in a new Parliament or new Government than when a Government have been in power for a long time and have a settled and rigid position. Clearly, the present Administration has a strong emphasis, where possible, on deregulation, so it would be fair to say that there is not an appetite for net additional regulation. That much is true, but where goals can be achieved proportionately by non-regulatory measures or by a mix of regulation and deregulation so that there is no overall increase, there would be much more openness. I would therefore encourage the hon. Gentleman and, through him, Fair Pensions and others, by saying that if they can suggest measures that have no regulatory burden or minimal regulatory burden, or identify other regulations that could be repealed because they are not effective, their ideas would find more favour, particularly with my colleagues in BIS who have overall responsibility for regulatory policy. I hope that that provides a helpful steer.

Continuing the theme of Departments listening and consulting, the Department for Work and Pensions and I have recently published consultation on guidance on default funds. Once we are in a world of auto-enrolment, people who do not make an active fund choice will end up in a default fund, so it is pretty important to see what such a fund looks like. The guidance that we put out for consultation sets out the standards by which default investment options should operate. The hon. Gentleman will be reassured to know that the key standards are about robust governance, review of the default investment option, transparency of charges and providing appropriate information to members about investment decisions. Those things will help.

In connection with the hon. Gentleman’s comments about the parliamentary scheme, I can tell him that another scheme of which I have been a member is the universities scheme. I recall speaking at a recent conference where a representative of that scheme was present. I raised the issue of scheme members wanting to know what was being done with their money. I mentioned that as a member of that scheme, I did not recall ever getting any very useful information. His answer was, “It’s on the website.” I feel that there is occasionally a need to remind those who manage our money that it is our money. That should make them proactive in communicating with scheme members: asking them what they want would be a positive factor in that respect.

The hon. Gentleman mentioned the Financial Reporting Council and its stewardship code. As he said, it has taken a step in the right direction. Fair Pensions’ own report “Stewardship in the Spotlight” found that the UK stewardship code had already helped to encourage voting disclosure. Examples are provided of several asset management firms that have improved their practices. I think that that is progress, but I take the hon. Gentleman’s point that although it is another link in the chain where things are perhaps improving, we need to look at the whole system. A stewardship code should, in the view of the Financial Reporting Council, be based on the idea of “comply or explain”; in other words, investors should either get on with it and comply, or at the very least explain why they have not done that, so that people can form a judgment on that.

The Financial Services Authority has expressed its belief that the principles of the stewardship code are as applicable to occupational pension schemes as to other types of pension and that, ultimately, occupational pension scheme managers will still be answerable to the scheme’s trustees. The FSA does not consider it unreasonable to require scheme managers to disclose their commitment or otherwise to the code, given the nature of the disclosure requirement.

Finally, the hon. Gentleman asked whether I would raise these issues with the new chair of the pensions regulator. I will be very happy to do that—although obviously, the new chair and the regulator itself are operationally independent of the Department and will form their own judgment. I know that they take a risk-based approach to what they do, so one of their top priorities is ensuring that funds are adequate and deficits are dealt with. They prioritise some pretty basic things like making sure that schemes have proper records of who is in them and how much money they have put in. There is a lot on their plate, but the issues that the hon. Gentleman has raised are important as well. I will certainly flag up his and the House’s interests in such matters when I meet—as I hope I will before too long—the new chairman whom we announced last week.

In conclusion, I reiterate my thanks to the hon. Gentleman, to Fair Pensions and to other campaigners on these important issues. The Government are doing a lot of listening, consulting and calling for evidence. I hope that the hon. Gentleman and others will feed into those consultations so that the feedback that we get will help to shape the way in which we take forward this important agenda. I am very grateful to him for placing it before the House this evening.

Question put and agreed to.