Social Security Benefits Uprating ( Correction to WMS)

Steve Webb Excerpts

Monday 27th January 2014 Written Statements

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

I wish to inform the House that an error has been identified in the wording of the written ministerial statement tabled on Monday 9 December 2013, Official Report, column 4WS, on the subject of social security benefits uprating. The error was in the description used in the section of the table of rates for the benefit cap in universal credit (monthly). I wish to apologise to the House for this inadvertent error. The rest of the information contained in the written ministerial statement remains correct.

The extract below shows the relevant text that is incorrect.

Pensions

Steve Webb Excerpts

Thursday 23rd January 2014 Written Statements

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

This Government are committed to tackling high charges in workplace pension schemes, in particular, for those workers who do not exercise any choice, where they are automatically enrolled into a scheme then remain in the default fund.

Our consultation on pension scheme charging closed at the end of November. We continue to examine the responses, and will bring forward further proposals, in due course. However, one strong theme to emerge is about the timing for the implementation of any changes.

We remain strongly minded to cap pension scheme charges in the default funds used for automatic enrolment. However, we have consistently encouraged firms to start getting ready for automatic enrolment 12 months ahead of the time the new employer duties apply to them. Therefore, to give those employers at least 12 months’ notice of the rules that will apply to them, I can confirm that any cap on charges will not be introduced before April 2015.

Oral Answers to Questions

Steve Webb Excerpts

Monday 13th January 2014 Commons Chamber

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

I am pleased to update the House and say that more than 2.5 million workers have now been automatically enrolled into a workplace pension. That puts us roughly a quarter of the way through the entire programme of automatic enrolment.

[Andrew Jones]

What have the Government done to ease the burdens on employers, particularly the small and medium-sized enterprises that play such a dominant role in the business mix in my constituency?

[Steve Webb]

My hon. Friend is quite right. Every change that we have made to the administration of automatic enrolment has been designed to reduce the burden on firms. For example, we have raised the wage threshold at which people are automatically enrolled, and we have delayed the staging for the smallest firms so that no one who employs fewer than 50 people will have to stage before April 2015.

[Dr Matthew Offord (Hendon) (Con)]

11. What transitional arrangements his Department will make in respect of the ending of basic state pension inheritance.

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

The ability to access or increase a state pension based on the national insurance record of a partner or former partner was introduced in the 1940s, but less than 5% of people reaching pension age after the single tier is introduced will be affected by the removal of this facility. We are putting in place transitional arrangements for certain women who paid the married woman’s stamp, but to go beyond that and make transitional arrangements for a broader group would severely damage the simplicity of the scheme.

[Dr Offord]

Can my hon. Friend confirm that protection will be put in place for those women who have paid the married woman’s stamp, to ensure that they receive a decent state pension?

[Steve Webb]

Yes, I can. Women who paid the married woman’s stamp at any point in the 35 years before the scheme comes in will get the pension that they expected—namely, the 60% for married women and the 100% widow’s pension.

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

When the Minister announced his flat-rate state pension reform, the key argument was that the public would henceforth have clarity about what they could expect from the state in retirement. Now we find, via a parliamentary question tabled by my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce), that the Government have no intention of writing to individuals to communicate what the state pension changes will mean for them and their families. Why did the Minister give the impression that the Government would write to people about their state pension entitlement if he has no intention of doing so?

[Steve Webb]

I am slightly baffled by that question, because our reforms to the state pension will affect everyone who reaches state pension age after 2016. That is almost the entire working age population. Is the hon. Gentleman really suggesting that we should write 40 million letters?

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

12. What assessment he has made of the appropriateness of the eligibility criteria for funeral payments allocated from the social fund.

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

It is important that help is targeted at those who are least well off at the time the need arises. The Government therefore firmly believe that the qualifying criteria for the funeral payments should be linked to the receipt of one of a number of income-related benefits.

[Mrs Lewell-Buck]

I thank the Minister for his response, but the reality is that almost one in five people struggles to pay the cost of a funeral service for a member of their family, and more and more are taking on debts so that they can afford to pay for a service for their loved one. Will the Minister therefore consider adjusting the criteria so that families suffering emotional hardship need not experience financial hardship as well?

[Steve Webb]

I am grateful to the hon. Lady for her question. We have expanded the scope of the budgeting loans scheme to include funeral costs, which were not previously eligible. If someone is short of cash to meet funeral costs, they can borrow money through the social fund if they are eligible for a budgeting loan, as well as applying for the grant that we pay, which averages £1,200.

[Nic Dakin (Scunthorpe) (Lab)]

16. What assessment he has made of the effect of the under-occupancy penalty on household incomes.

--- Later in debate ---

[Neil Carmichael]

With the popularity of the Post Office in mind, does the Minister agree that the value of the Post Office card account is immense, benefiting some 2.9 million people? Will he think about extending it?

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

I indeed agree with my hon. Friend that the Post Office card account has played an important part in supporting the post office network and enabling pensioners and benefit recipients to receive their money at a local post office. All of the options under consideration conclude that access to pensions and benefits via the post office will continue beyond March 2015.

[Rachel Reeves (Leeds West) (Lab)]

We already know that 600,000 people are affected by the bedroom tax, two thirds of them are disabled and 60,000 are carers. Will the Secretary of State now tell the House exactly how many long-term residents have been wrongly paying the bedroom tax since April because the Government failed to spot a loophole in the legislation?

--- Later in debate ---

[Dr Matthew Offord (Hendon) (Con)]

T7. Will the Minister confirm that under the new system, 80% of individuals will be entitled to a full single-tier pension in their own right by 2030?

[Steve Webb]

I am encouraged by the close interest my hon. Friend is taking in the single-tier pension, and I feel he is a kindred spirit. He is right that, as the 35-year qualifying rule includes not just earned contributions but credits for caring and so on, the vast majority of people will qualify for the full single-tier pension.

--- Later in debate ---

[Kelvin Hopkins (Luton North) (Lab)]

T4. The Government’s auto-enrolment pension scheme will provide relatively poor and insecure returns, based as it is on the private pensions industry and subject to stock market vagaries. Is not the only long-term solution a comprehensive and compulsory state scheme for all, with defined and guaranteed returns, in line with schemes overseas?

[Steve Webb]

I pay tribute to the hon. Gentleman for his consistency on the issue. His view is that he wants his income in retirement to be wholly dependent on a promise that future taxpayers would fund it. I must say that I would prefer to spread my risks by having a decent, simple state pension, such as the single-tier pension that we are introducing, and a stock market-linked investment that will benefit in the long run as the economy grows and, crucially, will benefit from a contribution from the employer, too, which is not the case in the state scheme.

[Bill Wiggin (North Herefordshire) (Con)]

T9. Will the Secretary of State say how many fewer children there are in workless families since 2010?

--- Later in debate ---

[Greg Mulholland (Leeds North West) (LD)]

Tragically, nearly 10,000 families suffer the death of a child each year, including 7,800 babies under the age of one. Is it not time that the Government did the right and compassionate thing in the remainder of this Parliament by backing the Change Bereavement Leave campaign and introducing a statutory right to bereavement leave for all parents who lose a child?

[Steve Webb]

As my hon. Friend knows, the Government are reforming bereavement benefits. The intention, having talked with bereaved families, is to focus the funding on the point of bereavement and the immediate year thereafter, but obviously ongoing support for bereaved families will be available through universal credit. I will be happy to discuss the matter with him further.

[Jonathan Ashworth (Leicester South) (Lab)]

A few moments ago the Secretary of State quoted the Minister for the Cabinet Office on universal credit, but he forgot to mention the part where the Minister called its implementation “lamentable” and said that a lot of money has been wasted. We also learned last week that the Cabinet Office withdrew the Government Digital Service from universal credit, a decision described as “disappointing” by the lead official. Why did the official describe it in such terms?

Children: Maintenance

Steve Webb Excerpts

Thursday 9th January 2014 Ministerial Corrections

The full answer given was as follows:

[Steve Webb]

A significant amount of work has been undertaken since 2010-11 to reduce the costs of operating the child maintenance systems:

cost per £1 of child maintenance collected and arranged has fallen from 39 pence in 2010-11 to around 35 pence in 2011-12.

The statutory cost of each child benefiting has fallen from £488 in 2010-11 to £425 in 2011-12.

The net cost of administering child support on a comparable basis has fallen from £527 million in 2010-11 to £485 million in 2011-12.

These figures are available in the Child Maintenance and Enforcement Commission Annual Report and Accounts 2011-12, which can be found via the following link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221408/cmec-report-and-accounts-11-12.pdf

The correct answer should have been:

[Steve Webb]

A significant amount of work has been undertaken since 2010-11 to reduce the costs of operating the child maintenance systems:

cost per £1 of child maintenance collected and arranged has fallen from 39 pence in 2010-11 to around 35 pence in 2011-12.

The statutory cost of each child benefiting has fallen from £488 in 2010-11 to £425 in 2011-12.

The net cost of administering child support on a comparable basis has fallen from £513.2 million in 2010-11 to £484.5 million in 2011-12.

These figures are available in the Child Maintenance and Enforcement Commission Annual Report and Accounts 2011-12, which can be found via the following link:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/221408/cmec-report-and-accounts-11-12.pdf

Pension NDPBs (Triennial Review)

Steve Webb Excerpts

Thursday 9th January 2014 Written Statements

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

Today I am publishing the outcome of the review of the Pensions Regulator, the Pensions Advisory Service, the pensions ombudsman and the pension protection fund ombudsman. I am pleased to announce that the Government support the continuation of these non-departmental public bodies (NDPBs) in their current form. The Department for Work and Pensions has completed a robust examination of the NDPB’s functions, delivery arrangements and governance structures. The review was carried out in line with the Cabinet Office’s key principles for reviews of NDPBs. The Government are satisfied that the organisations continue to be fit for purpose and are delivering what they were set up to do effectively—this is essential in order to maintain consumer’s confidence in pensions. I will place a copy of the review report in the House Libraries.

Contingencies Fund Advance (Single Tier Pension)

Steve Webb Excerpts

Tuesday 7th January 2014 Written Statements

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

The Department for Work and Pensions has obtained approval for an advance from the Contingencies Fund of £984,000 for the development of IT for the single tier pension before Royal Assent. This advance is necessitated by the lead in time for delivery in April 2016 which requires IT development work to begin prior to Royal Assent of the Pensions Bill.

Parliamentary approval for additional resource of £984,000 for this new service will be sought in the main estimates for the Department for Work and Pensions for 2014-15. Pending that approval, urgent expenditure estimated at £984,000 will be met by repayable cash advances from the Contingencies Fund. The repayment is expected to be made in the financial year 2014-15.

This advance will allow the single tier programme to continue to work to meet the revised timetable of April 2016 to implement the single tier new service.

Automatic Enrolment Annual Thresholds

Steve Webb Excerpts

Tuesday 17th December 2013 Written Statements

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

I am today announcing the proposed automatic enrolment thresholds for next year.

It is intended to lay an order before Parliament in the new year which will include the following:

£10,000 for the automatic enrolment earnings trigger;

£5,772 for the lower limit of the qualifying earnings band;

£41,865 for the upper limit of the qualifying earnings band.

I am also placing a copy of the analysis supporting the proposed revised thresholds in the House Library.

These papers will also be available later today on the www.gov.uk website.

Ford and Visteon UK Ltd

Steve Webb Excerpts

Thursday 12th December 2013 Commons Chamber

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

I join in congratulating my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) on his work as chair of the all-party group and his perseverance over a number years in raising this issue, along with the officers and members of the all-party group, which is well represented today. Such unanimity across the House, across political parties and across parts of the United Kingdom is rare and is all the more telling for that. The House has spoken today with a single voice. Those who follow our proceedings, both in person and by other means, will have heard clearly the single view of the House of Commons.

As you will be aware, Madam Deputy Speaker, at the beginning of our proceedings your fellow Deputy Speaker relayed Mr Speaker’s guidance. We respect that guidance, of course. I am particularly conscious of the need to avoid saying anything that would in any way undermine or prejudice the case being brought by Unite the union and by individual former Visteon workers. We want to see justice done through due process. I hope the House will understand that my remarks are slightly more guarded for that reason.

We discussed this matter almost exactly a year ago in a debate in Westminster Hall that raised many of the same issues. In the course of that debate, I said that I was particularly conscious of the Visteon workers ending up in the Pension Protection Fund and, as hon. Members have said, finding that the pension they receive is not much more than half the pension they were expecting. With my hon. Friend the Member for South Basildon and East Thurrock, I met members of the Visteon Pension Action Group in summer 2012, and it was their individual case studies that made me acutely aware of the impact of the PPF cap on their entitlements under the scheme. As I explained at the time, the thinking behind the cap was to ensure that what I loosely call the “fat cats” of the scheme, the people right at the top, could not manipulate matters and still receive a full pension. That was why the previous Government introduced the cap. It was my judgment at the time, and it remains so, that the cap was having an unfair and adverse impact on people who had relatively large pension entitlements not because they had earned phenomenal amounts of money, but because they had given very long service.

During the debate, my hon. Friend the Member for South Basildon and East Thurrock referred to his constituent Mr Varney, who had about 38 years of combined service with Visteon and Ford, and my hon. Friend the Member for Maldon (Mr Whittingdale) referred to his constituent Mr Sharpe, who had served for 27 years. These are the sorts of workers potentially caught by the cap, depending—obviously—on their wage. I said in last year’s debate that we were looking at whether we could do something about that, and I am pleased to confirm today that we have acted upon that promise. The Pensions Bill, which is now in another place, provides that for those who have been members of a scheme for more than 20 years, the cap should be increased by 3% for each additional year they are above the cap. Obviously I cannot comment on individual cases but, in principle, someone who has served for 38 years would have 18 lots of 3% so a cap 54% higher than the standard cap. If they were still capped at that point, as it were, their pension would be 54% higher than it is currently.

Sadly, these things take time—the Bill has not passed the other place and when it has we will have to produce detailed secondary legislation—but I can assure the House that we intend these higher rates of payment to be in place in the lifetime of this Parliament and to apply from that date onwards. They will not be retrospectively applied, but they will apply to schemes already in the PPF, such as the Visteon scheme. I am aware that probably only 60 or 70 Visteon employees will be affected by this measure, but I hope that for them, who have suffered the biggest proportionate loss, this will be of some benefit.

[James Duddridge]

I fully support the payment protection being discussed, but if I follow the logic correctly, the Government are, in effect, paying for Ford’s failure to take moral responsibility. Will there come a point when the Government look to Ford to repay money they have paid out through the PPF?

--- Later in debate ---

[Steve Webb]

It is not the Government who pay for the PPF, but the rest of British industry. It is funded partly by the assets of the schemes in the fund and the investment returns on them and partly by a levy on schemes with defined benefit pension liabilities. I realise it does not change the issue my hon. Friend raises, but it is not the taxpayer who funds the PPF; it is other firms with ongoing defined benefit pension liabilities. The PPF does not form a judgment on the rights and wrongs of a firm’s conduct leading up to insolvency. That is a separate matter that might come up during the court proceedings.

During the debate, we heard that Visteon was spun off from Ford in 2000, before the present architecture—the Pensions Regulator and the PPF—was in place. My hon. Friend the Member for Thurrock (Jackie Doyle-Price) asked whether these sorts of things could happen again and whether a hypothetical future firm could structure its affairs with a view to minimising its pensions liabilities and passing them on to the PPF. I can reassure her that part of the remit of the Pensions Regulator is to protect the PPF and hence other levy payers. For example, firms considering a corporate restructuring that would have implications for the covenant of their pensions scheme can seek pre-clearance from the Pensions Regulator, and the latter has powers to act if a corporate transaction has been undertaken with specific intent to weaken pension protection. The situation, therefore, is considerably different from the one pertaining in 2000.

The hon. Member for Ogmore (Huw Irranca-Davies) and my hon. Friend the Member for Castle Point (Rebecca Harris) described the workers who accepted the transfer from Ford to Visteon. The hon. Gentleman said they were not greedy or stupid, which of course they were not, and my hon. Friend said they were sensible and level-headed. It was the natural thing to do at the time: someone’s employment is transferred from one employer to another, they are given assurances about their pension and it is suggested they transfer it across. There are different accounts of exactly how the conversation went, but it was an entirely rational thing for people to do. There is no suggestion that people who made that decision acted inappropriately; they acted in good faith on the assurances given.

[Stephen Metcalfe]

One issue that arose about the point of transfer was that some were reaching the end of their careers within Ford but were still left obliged to transfer before—in one case, only three months before—they retired, only to find out later that they had been disadvantaged. Could the Government look at providing for those in the process of reaching retirement a buffer zone, whereby people do not have to transfer out of the fund into which they have put most of their earnings over their working lives?

[Steve Webb]

It is worth bearing in mind that, in all these cases, we are generally dealing with a trust—a pension fund set up as a trust has trustees—and with private companies, scheme rules and so forth. It is difficult to see how the Government could write a law that interacted with all those different aspects in a rational way. I take my hon. Friend’s point, as I, too, have heard about folk who worked only a few months for Visteon, yet transferred across their life’s pension rights with Ford—with very adverse consequences. I appreciate that that happened. It is quite clear that no blame or criticism could possibly attach to the workers whose pensions were transferred across; they are clearly the innocent parties in all this.

Prior to this debate, I re-read the transcript of our debate of a year ago. I was struck by the tone, which was slightly different. I do not know whether this was co-ordinated because I was not involved in those conversations, but I was struck that a number of hon. Members said that they did not want to drag Ford down, as they recognised that Ford was a key employer for this country and that many people who worked for the company were proud to do. As I say, I was struck that hon. Members were not trying to denigrate Ford, but were concerned that, if the matter remained unresolved, Ford’s reputation would suffer. I think this striking tone will have been noticed.

It was made clear during the debate that although Visteon was spun off as a separate company, there were close links between Visteon and Ford. My hon. Friend the Member for Enfield North (Nick de Bois) mentioned the nature of the relationship, drawing on his business expertise, while some hon. Members pointed out that new contracts were not signed. Reference was made to the fact that the long service award that Visteon workers received accumulated their Ford service, and there was Ford branding and all of that. Leaving aside the legalities, it is absolutely clear that the two companies were very closely interlinked; there can be no doubt about that.

During our discussions, the potential for Select Committees to look into this issue was raised. What Select Committees choose to investigate is obviously not a matter for the Government, but I am happy to repeat the assurance I gave a year ago that if any Select Committee—perhaps the Culture, Media and Sport Committee could find an obscure angle to get going on this—decided to take up this issue, we would be happy to put at its disposal the expertise of the Pensions Regulator, the Pension Protection Fund and my own officials to advise or guide in any such investigation.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) asked what the Government could do. At this point, I refer back to the motion, which “calls on the Government” to do what they can and use what influence they can to bring matters to a “resolution”. The court process is happening, so the legalities will be resolved one way or another through that.

Prompted by today’s debate, I asked my officials to contact Ford UK, which they have done. We have agreed that I shall meet Ford UK early in the UK and I shall take up the concerns that have been voiced. Ford and I have agreed that the spirit of that meeting will be one of constructive dialogue. I thought the best way I could reflect the spirit of today’s debate and the many excellent speeches we have heard would be to relay in person to senior executives of Ford UK the tenor of our debate and the views of the House. Almost uniquely, we have spoken with one voice. I hope that that reassures hon. Members. In addition to what they have done by properly putting their concerns on the record again, I hope that, with our proceedings being heard beyond this House, further steps will be taken on behalf of these pensioners.

[James Duddridge]

I totally agree that constructive dialogue will provide the right way forward. It is what everyone has been trying to achieve ever since the first debate on the issue. If that constructive dialogue does not produce the results we hope for, will the Minister consider seeking a meeting with his opposite number in the United States to see whether any political options across the pond could be explored to encourage everyone to do the right thing?

[Steve Webb]

At the back of my mind is a feeling that I would not want to meet my hon. Friend in a dark alley at night. I am not sure why I have that feeling. [Laughter.] My hon. Friend put his point forcefully. Given that representatives of Ford have agreed to meet me in a spirit of constructive dialogue, I shall leave it at that for now, but we shall clearly have to reflect on what further actions could be taken.

Finally, let me reassure members of the all-party parliamentary group that I shall be happy to report the outcome of my conversation with Ford UK to their office. Obviously I do not want to raise any false hopes—Ford’s position is well known, and I do not want to pretend that it has suddenly changed—but I am trying to engage constructively with the company, and I hope that the company will engage constructively with the House.

Benefits Uprating

Steve Webb Excerpts

Monday 9th December 2013 Written Statements

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

I am pleased to announce the proposed social security benefits rates for 2014, which are set out in the table below. The annual uprating of benefits will take place for state pensions and most other benefits in the first full week of the tax year. In 2014, this will be the week beginning 7 April. A corresponding provision will be made in Northern Ireland.

Single-tier Pension

Steve Webb Excerpts

Tuesday 3rd December 2013 Written Statements

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

In advance of the Pensions Bill Second Reading in the House of Lords today, I can confirm that the minimum qualifying period for the new single-tier pension will be set at 10 qualifying years.

In our White Paper, “The single-tier pension: a simple foundation for saving”, we said that individuals reaching state pension age after the new system is introduced—in April 2016—would need between seven and 10 qualifying years in order to receive any state pension. In response to the Work and Pensions Select Committee’s recommendations, in the Pensions Bill we have limited the minimum qualifying period to a maximum of 10 years. Today’s announcement proposes that the minimum qualifying period be set at 10 qualifying years, with the intention to lay regulations (under clause 2(3) and clause 4(2) of the Pensions Bill) to this effect in due course.

Putting in place the minimum qualifying period will help ensure that state pension expenditure is targeted at individuals who have made a significant social or economic contribution.

People can build qualifying years in many ways; for example by paying national insurance or by receiving credits for a wide range of reasons, including caring for children, caring for others, or being too ill to work.

We have previously published the estimated effects of a 10-year minimum qualifying period in the impact assessment for the single-tier pension.