Post Office Card Account

Debate between Steve Webb and Sheila Gilmore

Tuesday 16th December 2014 Commons Chamber

[Steve Webb]

I am grateful for the work that my hon. Friend has done on this. As she will recall, we met to discuss how we could deliver this contract when she was postal services Minister. About 4,000 people in her Cardiff constituency currently have Post Office card accounts, and they will welcome this announcement. She is right that we have to work out how we can develop and expand this in future. We are trying to make sure that we have the right accounts for the right people. The number of pensioners with these accounts will gradually decline. For people of working age, we want, where possible, financial inclusion and transactional accounts. Many people with POCAs do have other bank accounts—for various reasons, they hold both—but we will make sure that the most vulnerable people have access to their money at the post office.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am sure that it will be a great relief to many people running post offices to know that the contract is going to be extended in this way, because there was uncertainty for some time. On being able to move from the Post Office card account to a basic bank account, I understand what the Minister said about credit checks, but would it not be possible for the Post Office to establish a basic bank account to which people could migrate, because that might speed up the movement of people into proper transactional bank accounts?

[Steve Webb]

Post Office Ltd is coming up with a range of accounts, some of which have monthly charges and other different features. The basic bank accounts of the largest nine clearing banks, among others, are all Post Office-accessible. The key thing is that Post Office Ltd is a business that can develop accounts of different sorts, as it is now doing—perhaps it has taken a bit longer than we might have wished—and customers can choose between them. For us, the crucial thing is that people will, if they wish, be able to get their cash at the post office, whether from a POCA, a basic bank account or a Post Office account.

Quality Workplace Pensions

Debate between Steve Webb and Sheila Gilmore

Thursday 27th March 2014 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend. As I have said, we estimate that around £200 million over the next 10 years will go from the pensions industry to savers, which we think will cover around 2 million pension savers, many of whom will work for smaller firms, because we know that the biggest firms have been able to negotiate good deals with providers. That is good news for people who work for Britain’s small firms, in particular, who might not otherwise have got good value for money in their pensions.

[Sheila Gilmore (Edinburgh East) (Lab)]

I am grateful to the Minister for coming to the House to make a statement, unlike some of his colleagues who have slipped out an important announcement in a written ministerial statement today rather than coming to the House. Will he give us a little more detail on the changes he proposes to make to governance and say when we can expect to see them introduced, because they will be very important in allowing people to be confident that some other form of charging is not emerging to replace it?

[Steve Webb]

I am grateful to the hon. Lady. The principal change, although not the only one, is the introduction of the requirement for independent governance committees. With trust-based governance there are member-nominated trustees and a fiduciary duty on trustees, but with contract-based pension schemes provided by insurance companies there is a question, as has often been argued, of who is acting on the members’ behalf. The IGCs will have to be in place by April 2015 and they will have various duties. The way in which they are set up is described more fully in the document—I know she will not yet have had a chance to read it. I think that she will welcome the changes, which mean that whatever sort of pension scheme someone is in, there is somebody there looking out for them.

Pensions Strategy

Debate between Steve Webb and Sheila Gilmore

Thursday 20th March 2014 Commons Chamber

[Steve Webb]

I am grateful to my right hon. Friend for making the crucial point about the link between this new freedom and the level of the state pension. If we are able to keep the triple lock going, what will happen with a means-tested earnings-linked pension credit is that there will be more and more clear blue water between the means test and the triple-locked pension, which will greatly reduce the risk of anyone falling back into means testing in retirement. I would certainly like to see that continue beyond this Parliament.

On guidance on care, we will liaise with our colleagues at the Department of Health to make sure we are taking best advantage of this conversation.

[Sheila Gilmore (Edinburgh East) (Lab)]

Given the track record of the DWP and the Government on universal credit, the employment and support allowance, the personal independence payment and universal jobmatch, I think people might be a little sceptical about a proposal that appears to have been drawn up on the back of an envelope. The Red Book expects the savings ratio to fall from 7.2% to 3.2% by 2018. How will these proposals help savers?

[Steve Webb]

We heard earlier that these are Labour policies, but now we hear that they were drawn up on the back of a fag packet. Perhaps both statements are true—I do not know. Just to be clear about what the Labour party has been demanding: it has been demanding not a guidance guarantee, but annuity brokers. It wanted everyone to buy an annuity. This is about freeing people up. That is why it will be good news for saving. Let me give the hon. Lady a brief example. Under auto-enrolment, the people most likely to opt out are the oldest—people in their 50s and beyond—partly because they do not want to tie up their money late in life. This will give them a guaranteed return, in cash, within a few years, and we think it will lead to more pension saving and that it will be a boost to savers.

Pensions Bill

Debate between Steve Webb and Sheila Gilmore

Monday 17th March 2014 Commons Chamber

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

I beg to move, That this House disagrees with Lords amendment 1.

We are on the home straight of the Pensions Bill. It has been all the way through this House and their lordships’ House, and we have come back to it today to deal with amendments that, with one exception, make it a better Bill. I am grateful to my noble Friends Lord Freud and Lord Bates who, from the ministerial Benches, took the Bill through another place. I am also grateful to all my colleagues who have contributed to the Bill, and to peers on both sides of the House of Lords who have made insightful contributions and improved the Bill in a number of ways.

We have made a number of amendments in response to concerns raised by noble Lords, so I emphasise that our decision to ask this House to disagree with their amendment 1 is exceptional. Indeed, that is the only amendment with which we are asking the House to disagree, so I hope that we will be seen to have taken a constructive approach and that we have sought to improve the Bill on a cross-party basis wherever possible. For reasons that I will explain, however, we ask the House to disagree with this amendment.

As the House will know, access to the national insurance system through employment is dependent on earning above the lower earnings limit, which is currently £109 a week or, expressed annually, £5,668. People earning above the lower earnings limit but below the primary threshold of £149 a week receive a credit and do not pay national insurance but effectively build up national insurance rights. The issue raised by Baroness Hollis in another place related to the position of people who have more than one job, none of which, by itself, results in their paying national insurance but whose wages, if added together, would be above the lower earnings limit. It was suggested that there was apparent unfairness, because someone with a single job that pays £120 a week would get a year of national insurance, whereas someone with two jobs, each paying £60 a week, would not.

We are grateful to Baroness Hollis for raising the issue. We will set out the extent to which we think the issue is significant, the extent to which we think there is evidence for it and how the Government plan to address it. We ask the House to disagree with the amendment, but we accept the principle that we need a pensions and national insurance system that is fit for the modern age. Crediting and various other issues have evolved and need to evolve to reflect the fact that we are dealing with a changing labour market. I want to share with the House some examples of how that has happened and will continue to happen. One particular example is the introduction of universal credit.

At present, there is a set of low-earning individuals who do not get credits. When universal credit is fully in place and they come within its scope, they will receive credits. Potentially, some will be the very same people we are talking about in relation to the amendment. The House may not be aware that the introduction of universal credit will bring an estimated 800,000 additional low-earning households into the scope of crediting. That demonstrates that the Government are not complacent about the changing labour market, or the position of low earners and their access to the national insurance system. This is a concrete and substantive way through which people will gain access in future.

I understand the concern of Baroness Hollis that people might miss out on a qualifying year for national insurance. Why does that matter? If they were repeatedly to miss out on qualifying years, they might fail to build up a full single-tier pension. That requires 35 qualifying years, bearing in mind that these are years of contributions or credits. However, the mere fact that I have used the phrase “35 qualifying years” demonstrates the first reason why the problem might not be as significant as one might, at first sight, imagine. An 18-year-old might, for the sake of argument, have a 50-year working life, or possibly slightly more. Of that 50 years, only 35 years need to be qualifying years for a full single-tier pension. That person could, therefore, spend 15 years doing multiple small jobs—which is exactly what the noble Baroness is concerned about—and it would not make a jot of difference to their single-tier pension entitlement.

We do not know how many people spend how many years in this situation, and that brings me to one of my central points: we do not have the evidence base to know the scale of any potential problem, let alone to rush to solutions, which is what the amendment does. We have cross-sectional data. On the basis of surveys, we know how many people report having multiple jobs in any given year. We know what the wages are and we can have a stab at aggregating them. What we do not know very reliably is how that changes over time: whether the people who in any given year have multiple small jobs are the same people the next year and the next year. If it is just a transient phase that happens for a few years of someone’s working life and does not happen again, it may be entirely irrelevant to their state pension position.

[Sheila Gilmore (Edinburgh East) (Lab)]

This matter came to my attention through a constituent who was in exactly this position, and the Minister will be aware that I raised it in Committee. The amendment is an enabling amendment rather than a prescriptive amendment, and even if there are only a few people who will be in that position, is it not worth making provision for them? Not everybody will necessarily enter the labour force at 18, particularly with greater further education and so on, so reaching 35 years might be quite difficult for some people. If there is a small number, as the Minister keeps telling us, I do not understand the objection to the amendment.

[Steve Webb]

I am grateful to the hon. Lady who, as she says, has shown an interest in this issue. There will be an issue of proportionality in any change. We estimate that perhaps 50,000 people might at any given point be doing multiple small jobs that together take them over the floor, but do not on their own. If, for most of those people, this happened for a few years and did not happen again, and it was relevant to the state pension for only a handful of people, should we legislate for that handful? It could happen and it probably does happen to some people, but to make well-informed policy the Government ought at least to assess the scale of the problem.

In particular, we should not rush into specific solutions. The amendment advocates a specific model, but I believe that we must begin by identifying not just the number but the types of people who are doing multiple part-time jobs of this kind. For instance, are they people with children? Is that why they are doing such jobs? If they have children under 12, they will receive credits under the general system.

We must match our data on multiple small jobs with data from other sources. We must look at longitudinal as well as cross-sectional data in order to gain a sense of the scale of the problem and the types of people affected, rather than legislating for a single solution. We believe that the amendment is technically flawed for a number of reasons, but we certainly think that rushing to amend the Bill in order to give ourselves power to do something that we might or might not want to do because it is one possible solution to a problem whose scale we do not know would be premature.

[Steve Webb]

My hon. Friend is right. It is important to attribute value to the time that people—both men and women—spend at home bringing up young children, and I can reassure her that years spent doing that will count in full as qualifying years towards a single-tier pension. For the first time, more or less, since the introduction of the system—at least, since earnings-related pensions were introduced— those years will count just as much as years spent running a FTSE 100 company. A year is a year, and a qualifying year is a qualifying year.

The provision will apply to anyone who is looking after a child under 12 and entitled to child benefit—well, it is slightly more complicated, but that is the basic idea—and to anyone who is caring for an elderly relative and receiving carers allowance, or, in certain cases, caring for more than 20 hours a week. There is, rightly, a network of credits which bring people into the system. Those will remain, and, in many respects, will become more valuable in the single-tier context.

[Sheila Gilmore]

The Minister advanced exactly the same arguments on Second Reading and in Committee. He said on those occasions that he did not have enough information. Given that we last considered the Bill several months ago, may I ask what steps he has taken to obtain the information that he feels is needed?

--- Later in debate ---

[Sheila Gilmore]

Does the Minister feel that there is a technical problem in including such people, however small a group he thinks they form, because he seems to accept that people might end up not making up the 35 years towards a pension?

[Steve Webb]

We have always been clear that there will be people who will not make the 35 years, particularly those who come into the country later in life, for example, but the link between multiple mini-jobs and not making the 35 years, which we are talking about here, is unclear at best. We simply do not know whether it is a transient phase for people or whether they are in a recurring pattern. Again, I counsel the House against rushing to policy conclusions in amendments that are not accurately drafted rather than saying, “Let’s get the evidence base together.”

As well as undertaking to update our own figures, we are happy to commit to a literature review of what is known about this end of the labour market, making sure we have access to all the available data. We are also content to convene what we have grandly called an analytical stakeholder forum—that is three words of jargon in one go, so it must be impressive. The point of that is to pick the brains of those who study this end of the labour market, and we will be very pleased to benefit from the insights of the noble Baroness Hollis, with whom I have already had an informal conversation about this matter. I should stress that she would like us to retain Lords amendment 1 to avoid misrepresenting her views. We are very keen to gain her insights and those of economists and others who study this end of the labour market to try to establish what more we might be able to find out through existing data and whether any further work needs to be done.

It seems to us that we need to take a step-by-step approach, rather than rushing to policy conclusions as the amendment would. If we found that there were lots of people in this situation and that something must be done, even the something that must be done might not be the thing proposed in this amendment, and it seems a bit odd to pick one option, which as far as we can see is a sort of opt-in crediting option, when there might be others. For example, one might think that lowering the lower earnings limit might be a better solution. That would reduce the number of people in this position because their combined wages would be more likely to be above that floor. It would not necessarily require an opt-in process, and it would be simpler. That might therefore be a better solution; there might be others. We might relax the rules on voluntary national insurance contributions and the deadlines for payment. One can think of a whole raft of solutions, but if we are not clear about the scale of the problem, the groups affected and the permanence or otherwise of the situation, putting just one such provision in primary legislation—giving ourselves a power we might not use through what is, at that, an ambiguous amendment—does not seem to us to be the way forward.

Let me try to draw these threads together, because we have a lot to get through. We are concerned that the amendment itself is unclear, and I have run through a number of reasons why, such as the reference to the lower earnings “level”, not “limit”, and the reference to “income”, not “earnings”. National insurance liability is based on earnings, so the wording would have to be thus changed. The lower earnings limit figure is currently a weekly figure, whereas the amendment refers to an annual figure. Of course, all these things could normally be tidied up, but we do not have the opportunity to do so because if the House accepts the amendment, that is it: it is the end of the parliamentary process, the Bill becomes law and a deeply flawed amendment is on the statute book.

It is unclear exactly how the amendment is meant to work. As was said earlier, would people have to opt in and get credited, or would there be a duty on Her Majesty’s Revenue and Customs to combine these incomes and then levy national insurance, which might be to the detriment of some? There are a great many issues to be examined, but it is not our view that we should not look at them. We should, and as I said at the outset I absolutely accept the principle that we should have a system of pension rights and national insurance that reflects the current labour market, rather than the one in existence after the second world war. We are making a number of changes in that regard, but as I have said, the amendment as it stands is flawed in a number of respects and ambiguous in others. It rushes to a single solution to a problem whose scale and nature we simply are not year clear about, so we believe that—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

A poetic conclusion was nearly reached; but before I conclude I give way to the hon. Lady.

[Sheila Gilmore]

I understand that the Minister is anxious not to rush to a conclusion, but can he tell us what time scale he has in mind?

[Steve Webb]

We envisage updating our own estimates by the summer and would be very happy to do that, and bringing together experts and trawling through the related literature in the latter part of this year. We do not want to kick this into the long grass. If we concluded that further data-gathering was needed, and it was qualitative rather than quantitative, that would take some time, but well-informed evidence-based policy making sometimes does take time, frustrating though it may be, and that is the approach the Government wish to take.

I urge the House to disagree with the Lords in their amendment 1.

Pensions and Benefits Uprating

Debate between Steve Webb and Sheila Gilmore

Tuesday 25th February 2014 Commons Chamber

[Steve Webb]

With the leave of the House, I shall be grateful for the chance to respond to the three speeches that we have heard. I cannot help reflecting on the fact that we cannot manage to talk for even an hour about spending £3.3 billion, but I take it from that that the House thinks that we are doing a good job.

Before I respond to the detailed points that have been raised, I want to be clear about what we mean by above inflation, real terms and all the rest of it. The April increase in the basic state pension will be in line with inflation at 2.7%. Of course, we now know that CPI is below 2%, so despite the population experiencing inflation at that rate, we are putting up the pension by 2.7%—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

In a second.

That explains the reference at the end of my speech to an above-inflation increase although, as we have discussed, there will be years in which the trend goes in the opposite direction.

[Sheila Gilmore]

The Minister anticipates the point I was about to make. The situation to which he refers could apply in any year. People suffered greatly in previous years because the uprating was set at a low point for inflation, yet they experienced real rising prices, so the increase is hardly a great virtue on the part of the Government.

[Steve Webb]

It is interesting to look at what has happened to benefit rates over the long run. In the seven years since the 2008 crash, the rate of jobseeker’s allowance has increased by more than the growth in earnings. While people with jobs—people would obviously far rather have jobs than not—have seen their wages grow over that period, the rate of JSA, which I still quaintly think of as unemployment benefit, has risen by more than that growth.

The hon. Member for North Ayrshire and Arran (Katy Clark) talked about pitiful increases and slashing benefits, but I can tell her that the Labour Government spent £181 billion on tax credits, benefits and pensions in their final year in office, yet in the first year of the next Parliament, we envisage spending not £181 billion, but £211 billion. Spending £30 billion more than six years previously is an odd definition of “slashing”, so we need to keep a bit of perspective in the debate. I respect the hon. Lady’s sincerity and clearly she wishes that the increases were greater but, as she well knows, her Front-Bench colleagues will not vote against the orders, and that is not because of a technicality, but because they would not allocate money for larger increases. I know that she disagrees with her Front Benchers. If she ruled the world, she would put in place greater increases—she would tax people more and spend more—but that is not her party’s position.

--- Later in debate ---

[Steve Webb]

I did not hear the hon. Gentleman say where the extra cash would come from—the bankers’ bonus tax, perhaps? Is he saying that it should be 2.7% or not? As a debating point he is saying that it should, but he has no idea where the money would come from. [Interruption.] He says from a sedentary position that he wants me to be straight about this. Being straight with the electorate means that if he stands up in Parliament and says that the increase should be bigger, which he has every right to do, he must say where the money would come from. That is the nature of choice in government.

The right hon. Member for East Ham (Stephen Timms) asked about tax credit. Tax credit rates will be set out in affirmative statutory instruments in the usual way and debated in the usual way, so there is no difference there. He talked about the triple lock, which we are very proud of. In fact, we understand that the Opposition are going to copy it. On one level he was mocking and deriding it, but when the Prime Minister said that he would continue it in the next Parliament if re-elected, the leader of the Labour party said that

“nobody should be in any doubt about our commitment to the triple lock”.

The right hon. Gentleman ought to have a word with his leader, who thinks that the triple lock is really a rather good thing.

I want to respond to the right hon. Gentleman’s attempted demolition job on the triple lock that is now his policy. He implied that had Labour been in office, pensions would have gone up by more. There are two possible ways that could have happened. One is if Labour had continued the RPI link. We all know that the statisticians do not think that RPI is a particularly good measure of inflation, and I refer to what the hon. Member for North Ayrshire and Arran said earlier. I entirely accept that RPI is generally, although not always, bigger than CPI, but we are not trying simply to pick a bigger or smaller number. In having these annual debates, we are trying to compensate for average inflation. If society thinks that benefit rates are too low, we can do something about benefit rates. What we do not do is just pick an inflation measure because it is bigger or smaller.

We chose CPI because it is a robust and internationally standard definition. The statisticians have dropped RPI as a national statistic because they do not think that it is a good measure of inflation. When the Secretary of State looked at the increase in the general price level this year, CPI was the only number he could realistically have used because RPI is no longer regarded as an official statistic and the other new measures have not even been properly implemented yet. It is entirely open to the hon. Member for North Ayrshire and Arran to persuade her Front Benchers that we should tax people more and increase benefits, but that should be done by making a decision, not by using a measure of inflation that even the statisticians no longer think works.

[Sheila Gilmore]

I suspect that the Minister will therefore be disappointed to learn that landlords appear to think that RPI is an appropriate measure for calculating their tenants’ rent increases.

[Steve Webb]

Clearly a whole raft of decisions are made about increases. The right hon. Member for East Ham mentioned rail fares, for example, and the train operators’ revenues and some of their costs are determined by RPI. The task that the Department for Work and Pensions has once a year is to look at what has happened to the general price level, and I have not heard a single argument in this debate that CPI is not the best single measure to use for that purpose.

Housing Benefit

Debate between Steve Webb and Sheila Gilmore

Tuesday 12th November 2013 Commons Chamber

[Steve Webb]

I will give way in a moment, but I want to make a little progress. Let me take the first line of the Labour motion and change one word so that it reads,

“this House regrets the pernicious effect on vulnerable and in many cases disabled people of deductions being made from housing benefit paid to working age tenants in the private rented housing sector deemed to have an excess number of bedrooms in their homes”.

The Opposition position seems to be that this is pernicious and evil when it affects social tenants, yet not merely acceptable but policy when it affects private tenants. There are two coherent positions: one is the Government position that asks anyone on benefits to contribute towards the cost of an extra bedroom, and the other is to state that anyone on benefits will receive housing benefit, regardless of the size of house they need; that would cost a lot of money but it would be coherent. The Labour party’s position is incoherent. It states that social tenants should not have to pay towards an extra bedroom, but that private tenants should. We have heard cases of people who need extra bedrooms, for example for dialysis machines. Social tenants need an extra room for that machine, but private tenants should have to pay for it. Surely some mistake.

[Sheila Gilmore (Edinburgh East) (Lab)]

One of the strangest things in this argument about the private rented sector is that during the passage of the Welfare Reform Bill I never once heard the Government mention it—it is one of those later justifications. The problem is that people in the private rented sector were not suddenly told one day, “Your house is too big; you have to start paying for the extra rooms regardless of whether you can move.” That is a huge difference and the two things are not comparable. If we want to talk about equalising, perhaps we should equalise rents.

[Steve Webb]

I am interested that the hon. Lady mentions rents, because if we compare private and social tenants, she is saying that social tenants, who already benefit from subsidised rent, should not have to pay for an extra bedroom, whereas private tenants paying a market rent should pay for it. That does not seem fair to me.

Pensions Bill

Debate between Steve Webb and Sheila Gilmore

Tuesday 29th October 2013 Commons Chamber

[Steve Webb]

In a short time we covered a wide range of issues, and in the 10 minutes or so remaining, I shall try to respond to as much as I can, although I apologise in advance to hon. Members whose amendments I do not reach. I shall deal with amendments in the order in which they were raised.

New clause 5 was dealt with by the hon. Member for Edinburgh East (Sheila Gilmore) and touched on by her colleague, the Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg). It addresses the position of the derived rights of people who are shortly coming up to pension age and the fact that we are ending the ability to derive pensions from a spouse. The spirit of the new clause implies transitional protection, but we have included comprehensive transitional protections in the system.

In particular, those who paid the married woman’s stamp and as a result have a poor contribution record will, notwithstanding the fact that we are ending derived rights, continue to be able to receive a 60% spouse’s pension or a 100% widow’s pension, because that was the basis of the deal that they did with the state. They signed the married woman’s stamp, which said, “I’ll pay less NI, but I understand that when I reach state pension age I’ll be able to get a pension based on my husband’s contribution record.” We took the view that because that was the basis of the deal, we could not change the rules. We have made sure that the limited number of women in that position are protected.

The issue is whether we should go further. It is worth bearing in mind that to get a £66 pension, which is the derived pension for a married woman, because of the rate of the single tier pension, such a woman needs 16 or 17 years in the system. For someone who has spent their life in this country, it is very difficult not to have achieved that or thereabouts.

[Sheila Gilmore]

There is an acceptance that for most people it would be unusual for that circumstance to arise, but according to the Department’s own figures, some women are in that position.

[Steve Webb]

Indeed. The hon. Lady is right. Some women are in that position, but a significant proportion of them have had very limited contact with this country. This is the point that she touched on. Derived rights arise to people who have never even been to the country. They can get a 60% pension or a widow’s pension because their spouse is part of the UK pension system. She is asking us to keep, for another 15 years, an extraordinarily complex bit of the system rolling into the new system. We are trying to deliver a simple and effective new state pension system and we have already introduced transitional protection for the most obvious group, the married woman’s stamp pensioners, which we think needs to be protected. We could have kept the whole of the old system rolling on for another 15 years, but that would have created enormous complexity when we are trying to move to a simpler system.

Were we to follow new clause 5 and the Select Committee’s recommendation and choose 15 years as the cut-off, we could be as sure as anything that we would be under judicial review for someone who was 16 years shy of the line. In other words, if we have a cut-off date, we must have an objective basis for it, and we can find no objective basis for choosing 15 years. I take the point made by the hon. Member for Aberdeen South that because 10 years is the de minimis, 15 years is a bit more than 10. I get that, but so is 16 or 14.

The hon. Member for Edinburgh East said that someone some years ago was told not to buy missing years and now it is too late. I stress that the ability to buy missing years has been substantially relaxed by HMRC so people can buy back as far as 2005-06 on relatively favourable terms. Even by the end of the decade they will still be in a position to buy back missing years. If they have spent the money and they do not have it any more, they cannot do it, but that aside, the ability to buy back missing years still exists. Although buying 10 years costs a lot of money, very few people will be starting from zero. So to reach the 10-year de minimis would not necessarily involve a huge outlay. Many will be over that level already and for those who are not and who have been in this country, the chance to buy one or two missing years will be important.

What we are trying to do is, yes, recognise where we need transitional protection, but we want to avoid such great complexity that we recreate the complex old system for well over a decade in the new one. That is why we reject new clause 5.

Housing Benefit (Under-occupancy Penalty)

Debate between Steve Webb and Sheila Gilmore

Wednesday 27th February 2013 Commons Chamber

[Steve Webb]

I am grateful, Mr Deputy Speaker.

On the analysis that the hon. Gentleman says he profoundly disagrees with, he made two comments and I will address them both. He disagrees with the analysis that there was a deficit of £150 billion, when the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) famously left a note for his successor saying that there is no money left. The hon. Gentleman may not be aware—I do not know—that the previous Labour Chancellor set out spending plans for this Parliament, which involved tens of billions of pounds of spending reductions. The two biggest things on which the Government spend money are paying their employees and paying benefits. We have already squeezed public sector pay. The Opposition initially opposed and now accept that policy. The second biggest item of Government spending is benefits, tax credits and pensions. If the hon. Gentleman can tell us how we can save tens of billions of pounds from public spending without touching benefits, tax credits and pensions, I would like to hear from him. He has not given us that answer.

[Sheila Gilmore]

The Minister has now clearly established that he sees the purpose of this change as saving money in the welfare budget, so will he please spare us all that stuff about making better use of houses? He knows that if everybody did reshuffle into the right size of house, there would be no saving, so will he just cut those pages out of his speech?

[Steve Webb]

The context is the need to save public money, but there are a variety of ways that we can do that. One way has already triggered the better use of social housing stock, but we are still in the overall context stage at the moment.

Pensions and Social Security

Debate between Steve Webb and Sheila Gilmore

Wednesday 13th February 2013 Commons Chamber

[Steve Webb]

The rate of CPI has been 2.7% for four consecutive months. We were aware of the level of inflation when we made these judgments about 2013. Clearly, there are things we can do to help ourselves with the cost of living. For example, the cost of petrol is 10p a litre lower than it would have been if we had implemented the previous Government’s escalator; council tax bills, which are a huge cost of living for many people, have been frozen in many places for three years; and people in low-wage work will receive a substantial income tax cut in April. Those measures will all help people with the cost of living.

[Sheila Gilmore (Edinburgh East) (Lab)]

It is interesting that the Minister should mention council tax, because in large parts of the country many working-age people, working and unemployed, will be paying substantial sums in council tax, and that will have a big effect on their standard of living.

[Steve Webb]

The unprecedented three-year freeze in council tax in many areas is a huge boost not only to those on the lowest incomes but particularly to those whom one might describe as not rich and—

[Sheila Gilmore]

rose—

[Steve Webb]

I wonder if the hon. Lady would allow me to finish replying to her previous point before she intervenes with the next one. The three-year freeze will help particularly those whom I would describe as not rich and not poor—not poor enough to get benefit and not rich enough not to care. We meet them all the time; they have saved a bit, worked hard, and feel penalised. Our freeze will benefit those people in particular.

[Sheila Gilmore]

It may be an unprecedented freeze in England, but it is not unprecedented in Scotland. It is a very regressive form of assisting people, because the higher their level of council tax banding, the more advantage they get from it. Someone who is already in receipt of council tax benefit gets no benefit from the freeze, and the effect on councils is to lead them to raise the cost of many fees and cut services. In fact, therefore, the poorest and most vulnerable do not benefit from a council tax freeze.

[Steve Webb]

In responding to the hon. Lady, I occasionally lose count of the logical flaws in her argument. However, I will take one in particular. The Government have made available for this coming year, 2013-14, an additional £100 million to help local authorities to dampen down the effect of the council tax benefit changes. Many local authorities have reduced the subsidy given on empty homes and on second homes—which are not generally associated with poverty, I would add—and many have damped, or reduced to zero, the impact on council tax. Some Labour authorities have chosen not to do that, which is an unfortunate political decision.

I remind those who might consider voting against the order—the interventions that we have heard suggest that the Opposition are considering it, or perhaps they want to give that impression—that they would be voting against an above-inflation increase in the state pension, a full increase in line with CPI for disability benefit, and any increase in any benefit this coming April.

--- Later in debate ---

[Steve Webb]

I will finish the sentence. It goes on to say

“when looking at the fiscal consolidation as a whole.”

In other words, when looking at everything, which is what we were asked to do.

[Sheila Gilmore]

The other half of what the IFS said referred to the people in the lowest income deciles and the losses that they will incur. The cash reduction for people on the highest incomes will not impinge on their well-being in anything like the same way as these measures, including the 1% increase, will impinge on the poorest.

[Steve Webb]

In fact, the IFS figures are based on the percentage increases and, as we have been reminded repeatedly in the debate, the cash amounts for the very highest income earners are far higher for any given percentage figure. So, even taking percentages instead of cash amounts, the highest earners have, in the IFS’s words, been “hit the hardest”.

Housing Benefit Entitlement

Debate between Steve Webb and Sheila Gilmore

Wednesday 23rd January 2013 Westminster Hall

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

I congratulate the hon. Member for Sedgefield (Phil Wilson) on securing the debate. This is indeed an important issue. This is the second debate on it this week to which I have responded. It is good to have the opportunity to put on record the response to a number of the issues that have been raised and to deal with the myths that are growing up around service personnel, but it is worth briefly setting this debate in context. Most of my remarks will be about the specific matter in hand, but it is almost being implied that the Government woke up one morning and thought, “Wouldn’t it be great if we could take some housing benefit off people?” It is important to understand why this is being done.

In the final year of the last Labour Government, every time the Government raised £3, they spent £4. The word “morality” has been used extensively in this debate. Borrowing money that we expect our children to pay back is not a progressive thing to do. Parents who go out and blow money on their credit card and say to the kids, “When you grow up, you can pay it off” would be regarded as irresponsible. That is what we have to deal with now. Whichever party had taken control in 2010—

[Sheila Gilmore]

rose—

[Steve Webb]

No, I will not give way. Both parties set out deficit reduction plans, which involved spending cuts worth tens of billions of pounds. Public spending consists fundamentally of public sector pay and social security and tax credits—those are the two big areas. Both sides agree that public sector pay has to be held back, but benefits and tax credits also have to be part of the mix. Within the benefits budget, where could we have looked? Where is the low-hanging fruit? Where are the easy things to cut? Of course there is precious little of that. Housing benefit is a large part of the benefits budget and it has been rising fast, so is there an area in the housing benefit budget—

[Sheila Gilmore]

rose—

[Steve Webb]

No, I will not give way. Is there an area in the housing benefit budget where we can save money and tackle some of our housing problems?

[Sheila Gilmore]

rose—

[Steve Webb]

I have said that I am not giving way. This is an area of the housing benefit budget where we can better manage the housing stock. Let me give a specific example. It has been said in this debate that for housing benefit not to cover a spare room is immoral; that is the tenor of what has been said. When Labour introduced the local housing allowance, private sector tenants did not get housing benefit for a spare bedroom. Where is the morality in saying to private tenants that they cannot have a spare room, when social tenants, who are paying a subsidised rent, can? They could be living next door to each other, and we are favouring the social tenant over the private tenant. Why should housing benefit not cover spare rooms for private tenants when it does for social tenants? It is simply not fair.

The second unfairness that we have to tackle is overcrowding. A quarter of a million households in England are overcrowded, and they have had no voice in this debate. They are trying to get family homes, and homes that they need. They are living in overcrowded accommodation—

Welfare Benefits Up-rating Bill

Debate between Steve Webb and Sheila Gilmore

Monday 21st January 2013 Commons Chamber

[Toby Perkins]

rose—

[Sheila Gilmore]

rose—

[Steve Webb]

I will not give way; I would like to respond to what has been said in the past four hours before taking further interventions.

A number of my hon. Friends asked perfectly reasonably about why we needed to set out in legislation exactly where we were going. We all want our constituents to continue to enjoy, for example, the low mortgage rates that are absolutely crucial to their standard of living. We all know that for those of our constituents in the position of owning their own homes, the mortgage is their biggest single outgoing by a long way. It is vital, therefore, that we keep interest rates under control.

[Steve Webb]

But that is kind of the point—not at the moment, because we have kept interest rates under control.

Why is that necessary? Let me share what the International Monetary Fund’s “World Economic Outlook” said as recently as October 2012:

“To anchor market expectations, policymakers need to specify adequately detailed medium-term plans for lowering debt ratios, which must be backed by binding legislation”.

That is the important point. Were we to go year by year, seeing how it went, we would not have the credibility of deficit reduction to which all of us who signed up to the coalition agreement are committed.

Likewise, the OECD’s economic outlook said:

“The government’s fiscal policy stance and strong institutions have secured the confidence of financial markets, as evidenced by the near record-low government bond yields.”

In other words, this is for a purpose—the purpose of tackling the vast, sprawling deficit. To give a sense of scale, my hon. Friend the Member for Argyll and Bute (Mr Reid) was absolutely right when he said that in the final year of the previous Labour Government, for every £3 raised in tax, £4 was spent. What did that add up to? We are talking about a Bill and related measures that will eventually save about £3 billion a year. Labour was borrowing £3 billion a week, so we would need, say, 50 of these Bills to tackle just one year of Labour borrowing. That is the scale of the situation. When Labour Members airily take the moral high ground and pretend that there is a free lunch to be had—that we do not have to do this or make all the other cuts, but that somehow the deficit will disappear—we need to remind people that these are Labour cuts tackling Labour’s deficit.

People should not just take my word for it regarding the need to include social security as part of deficit reduction. Clearly, as my right hon. Friend the Member for Wokingham (Mr Redwood) said, this is not comfortable stuff, and it is not something that any of us take any pleasure in. However, the IFS has said this about why social security is part of the mix:

“When cutting public spending dramatically to help reduce an unsustainable budget deficit”—

that is the IFS’s language, not mine—

“it is almost inevitable that spending on benefits and tax credits—which account for 30% of the government’s total budget—will be targeted.”

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

Not for the moment.

We have a target for 2015-16 of £10 billion of spending reductions. We have not yet found that £10 billion. Even with this Bill, we are on about £6 billion, and without the Bill and related measures we would be down to about £3 billion. The challenge for Opposition Members who have said that taking money away from benefits takes spending power out of the economy is that so do other forms of spending cuts. If the money comes not from benefits but from local government, that will be money out of the local economy; if it comes from infrastructure projects, that will be money out of the local economy. There is not a free way of finding money without any impact.

Let me deal first with amendment 12, tabled by the right hon. Member for East Ham. My hon. Friend the Member for Gloucester (Richard Graham) put it very well when he said of Labour that there is a vacuum where there should be a policy. That is a metaphor for the Labour party. In relation to a Bill that says that benefits and tax credits should go up by 1%, the amendment would take out the figure of 1%, so what would be left? Presumably, “Benefits should go up” but by how much? Perhaps by a fraction of 1%—we do not know. The amendment is incoherent; it would take something out and put nothing in its place. It would remove the heart of the Bill but gives no guidelines on whether the figure should be below inflation or above inflation, below earnings or above earnings.

--- Later in debate ---

[Steve Webb]

My hon. Friend is quite right. There is nothing progressive about vast borrowing, because then we are asking our children and grandchildren to pay for it.

There has been much discussion about percentages during the debate. Several Members have said that a small percentage of not very much is not very much—I think their argument was that the answer was a slightly bigger percentage of not very much. However, even a small percentage of a £200 billion bill for tax credits, pensions and benefits is a vast sum of money, which is why we have to take the difficult decisions we are talking about.

[Sheila Gilmore]

Is not the reality that we have already had all the welfare reforms, and the only reason we are debating this issue is because the Government’s policy has not worked? They have now had to find extra savings, and that is what the Bill is about.

State Pension Reform

Debate between Steve Webb and Sheila Gilmore

Monday 14th January 2013 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for mentioning the self-employed. At the moment, the self-employed build up rights under the basic pension—the £107—but not the equivalent of the £144. In our world, there are just people who pay national insurance, build up qualifying years and build up a pension. The self-employed are therefore potentially substantial beneficiaries of the new and simpler system.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Minister confirm that workers currently in the private sector who contracted out may also see, in addition to having to pay higher national insurance contributions, either higher contributions towards their private pension or a reduction in benefits?

[Steve Webb]

Yes, the hon. Lady is right. We have talked to the CBI, the National Association of Pension Funds and major pension employers. They are clear that they do not simply want to take the national insurance rise on the chin; they want the freedom to adjust their private sector pension scheme in response. However, we have calculated that, even allowing for that, the bulk of people who are within 20 to 25 years of pension age will still get more back, from the extra national insurance and any reduction in their private pension, through the enhanced state pension than they have lost.

Benefits Uprating (2013-14)

Debate between Steve Webb and Sheila Gilmore

Thursday 6th December 2012 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

It might be a bit more sensible if we had an opportunity to vote on all parts of the package. We could then include some of the things that the Minister’s Liberal Democrat colleagues did not manage to include—I am thinking, for example, of higher rates of tax on property. For working people, and particularly those who are working part time and are dependent on housing benefit, the changes to housing benefit uprating are yet another cut in their standard of living. They lost out in the last round of uprating because of the differential tax credits, which were not uprated in line with inflation. The latest changes are another hit on working families.

[Steve Webb]

The hon. Lady’s constituents will want to look closely at how she votes. We hear the sound and fury, but then there is abstention. The Labour party has no alternative. There is a shortfall, and the Government have found a measured and reasonable way to fill it. I have heard nothing from Labour Members about an alternative strategy. Until we hear that, we will not take them seriously.

Unemployment

Debate between Steve Webb and Sheila Gilmore

Wednesday 14th December 2011 Commons Chamber

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

It is important in the few minutes remaining to put on the record some of the facts about the current situation, because there is a danger that the tenor of what we have heard from the Labour party might talk down the British economy and lead to an unnecessary depressing of confidence at a time when we need realism, not talking down the hard-working people in our economy.

Let me give an example. One would hardly believe from today’s debate that since the general election, the number of people in work in this country has risen by a quarter of a million. In fact, the number of people in private sector jobs has risen by more than half a million.

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

In a second. So when it is said that the private sector is not expanding, that is simply not right. People say that there are no jobs, but there are half a million additional private sector jobs. The hon. Lady made the point that that is looking over the whole period, so I will take her at her word. Let us look at the last month. In it, the number of people in work has risen by 38,000. Of course, we can all choose different time periods—Labour Members used the last quarter, for example—but my point is that selective use of statistics, such as that made by the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), creates a highly misleading impression and talks down the British economy in a way that is in nobody’s interests.

Benefits Uprating

Debate between Steve Webb and Sheila Gilmore

Tuesday 6th December 2011 Commons Chamber

[Steve Webb]

There is a danger of missing the central points here, which are that people are better off in work, and we want to go further; that the tax credits are part of a package of measures, and I have listed repeatedly the many things that make work pay; and that our increases in personal tax allowances, for example, will make work pay far more than in the past. The coalition is united on that.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Minister is trumpeting the highest ever increase for pensioners, which I am sure they welcome, but is not the truth that it is so high only because inflation is so high? This is not some generous gift from the Government; it merely allows pensioners to keep up with prices. Further to that, many pensioner groups would point out that the real types of inflation faced by pensioners are actually higher than CPI.

[Steve Webb]

I do not recall the previous Government ever using something other than inflation or using a different rate for pensioners because of factors such as those the hon. Lady mentions. Sometimes the pensioner rate will be higher and sometimes it will be lower, but on average it will be broadly the same. There was a lot of speculation—she may even have read some of it—that we would not provide a 5.2% increase, that we would break the triple lock, that we would average out the figures or do all sorts of things, but we stuck by our promise and provided a 5.2% increase. The real value of the pension as a share of average earnings—that is what pensions are for: to replace the earnings that people used to have—is higher than in any year under Labour, and I am proud to put my name to that.

Living Standards

Debate between Steve Webb and Sheila Gilmore

Wednesday 30th November 2011 Commons Chamber

[Steve Webb]

I am grateful to the right hon. Gentleman for intervening, because I asked him the question when he was speaking, and he said that he opposed cuts for people who are out of work and that he opposed cuts for people who are in work. When I asked him whom that left, he said nothing—he never answers the question—and his Back Benchers said, “The bankers”. He was in the Treasury when, before the general election, the Labour Government introduced a “temporary” bankers’ bonus tax. If Labour thought they were going to win the election, why did they not make the bankers’ bonus tax permanent? It was a one-off, pre-election gimmick, whereas this Government have introduced a banking levy that, every year, will raise more than his temporary banking tax raised in any year.

[Sheila Gilmore]

Will the Minister give way?

[Nic Dakin (Scunthorpe) (Lab)]

Will the Minister give way?

Pensions Bill [Lords]

Debate between Steve Webb and Sheila Gilmore

Tuesday 18th October 2011 Commons Chamber

[Sheila Gilmore]

The concession made by the Government is, of course, a welcome one. The fact that we are saying that it is not enough does not mean that it is not welcome, but I do ask why they have taken so long to arrive at this point. On Second Reading, back in June, not a single Government Back Bencher spoke in favour of the Government’s proposals on the acceleration in women’s pension age. They were clearly unhappy but were prevailed on at the time, it would appear, to vote for Second Reading by being told that some form of transitional arrangement would be forthcoming.

Those of us who were privileged to serve in Committee asked for the transitional arrangements so that we could debate and scrutinise them, which is what a Committee ought to be about, but we were told that they were not ready because they would be very complicated. “By the way,” said the Minister, “Where are your transitional proposals? Why have you not come up with any?” As a new Member, I thought that perhaps it was commonplace for the Opposition to be expected to come up with proposals for the Government because they have not thought them up yet—

[Steve Webb]

They are called amendments.

[Sheila Gilmore]

We had amendments. We tabled amendments that were not a million miles away from those that we are proposing today, because we felt that, in the circumstances, a proposal to cap the period of time for which women would have to endure this change was the best thing to do. Our amendments were not supported by either Government party in Committee, but we had clearly made proposals that ranked as transitional, because—lo and behold—four days before this final chance to debate the subject in the House, a proposal was made. It is not some complex transitional arrangement that would take civil servants hours, weeks or months to work out but fairly straightforward and involves capping the period of time. In my view, that proposal could have been made in Committee without any difficulty and it could also have been made at any time over the months that have passed since the Committee stage ended in July.

I suspect that one of the main reasons this rabbit has apparently been pulled out of the hat at the last minute is to prevent any great campaign being restarted for further change and to prevent people asking for more. Like Oliver—most of us nowadays, unlike the cruel people in Victorian workhouses, think that Oliver was right to ask for more—the women who have contacted my colleagues and me over the past few days are still asking for more because they feel that the Government’s proposals remain unfair. They have alleviated the proposals for one group of women but not for all those who are affected and, in my view, those women are right to ask for more.

The Government have been extremely calculating. By not making their announcement until almost as late as possible while still making it in any way credible, they calculated that they would foreshorten the possibility that their Back Benchers might again be contacted by many of their constituents who would argue that the proposals are still not enough. The fact that they have given the shortest amount of time to this very successful campaign is clearly tactical.

In this debate, we always come back to the money question—it happened repeatedly in Committee and in many interventions on Opposition Members today. We are asked where we will get the money and told to come up with a specific statement about where we will find it. That happens not just as regards this proposal but day in, day out—[Interruption.] It is not unreasonable for us to say that we would not start from here. That is not unreasonable because we have a very different view about the choices and the fairness arguments that it is right to make and about how to progress our public finances over the next period.

Another argument that often comes up states that one cannot borrow one’s way out of a crisis or out of debt. It seems we cannot cut our way out of a deficit either, or out of more debt, because public borrowing, far from having come down in the past year and a half, is rising. We would not start from here because our entire economic strategy would be different. Our view—as we said a year and a half ago and as it remains—is that to attempt to reduce the deficit within this Parliament was reckless, that it would not be successful and that it would risk higher unemployment and the stagnation of the economy. That is what is happening. If the economy continues to stagnate, tax revenues will fall with fewer people in work and fewer businesses thriving. Falling tax revenues are a big reason why we have a deficit in the first place. This is not simply about Government spending, as is sometimes suggested.

Tax revenues will fall and benefits payments and other outgoings will rise, and those are very important considerations. In saying that we would not start from here, it is perfectly reasonable for us to make it clear that we would not want to be in the position that the Government seem determined to drive us into.

--- Later in debate ---

[Steve Webb]

It is a pleasure to support Government amendments 13 and 14 and to ask the House to reject amendment 1.

I welcome the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) to his new role. With due deference to the good people of Kilsyth and Kirkintilloch East, I hope he will forgive me if henceforth I refer to him as the hon. Member for Cumbernauld—I hope they will not take offence at that. As he knows, his predecessor, the hon. Member for Leeds West (Rachel Reeves), to whom he referred in his speech, enjoyed a meteoric rise by shadowing me for 18 months. I hope to do the same for his career.

Before I move on to the amendments, I want to place on record my appreciation of one of the Department’s officials, Evelyn Arnold, who has worked for the Department for 36 years. I know that the right hon. Member for East Ham (Stephen Timms) will have enjoyed working alongside her as well. She is stepping down from a legendary career. It is not often that we pay tribute on the record to the officials who make us sound far better informed than we otherwise would, so I would like to do that formally today.

We have heard £1 billion described today as “window dressing”, “a bit of money” and “penny pinching”. That summarises the difference between opposition and government. It reminds us how we came to find ourselves borrowing £150 billion a year when £11 billion, which is the cost of amendment 1, is regarded as small change and not worth worrying too much about. When pressed about where the £11 billion would come from, the Opposition said, in effect, “We’ll find it at some point,” but there was no specific answer.

It was revealing that the hon. Member for Edinburgh East (Sheila Gilmore) said, “We keep being asked this question.” They keep being asked the question because they keep making unfunded promises. My right hon. Friend the Chancellor pointed out that last week’s Opposition amendment cost £20 billion. Today’s would cost another £11 billion and, as the man once said, “Soon you’re talking about serious money.”

The Government amendments are, as the Chair of the Select Committee graciously said, a huge achievement, which is to say that at a time when the public finances are, if anything—because of the global economic situation—under even more pressure than they were at the time of Second Reading back in June, to identify £1 billion is an important sign of the Government’s commitment to fairness in pension reform.

[Sheila Gilmore]

The Minister wants to make a great deal, and some of his supporters made a great deal, of having extracted that sum from the Treasury, but is he not again mistaking the position? He starts talking about the fact that we are apparently in a very difficult situation, worse than a year ago, and then says, “And we’ve managed to find a billion,” but this is a long-term planning issue—it is not about what has happened in the past year.

[Steve Webb]

I notice that the hon. Lady dismisses the odd billion here or there again as of no great consequence. We have to make these decisions in the context of the real world. That is the difference between government and opposition. The hon. Member for East Lothian (Fiona O’Donnell), who spoke in the debate, said that it would take guts—that was the expression she used—to support an unfunded £11 billion promise, which the Opposition know they will never have to fund and would not implement if in government. That is a very odd definition of “guts”.

Pensions Bill [Lords]

Debate between Steve Webb and Sheila Gilmore

Monday 20th June 2011 Commons Chamber

[Steve Webb]

As I have said, I am happy to engage with the right hon. Gentleman in an open and constructive way. I suspect that wishing away the technical problems might be more difficult than he imagines, but I am happy to have that dialogue with him.

My hon. Friend the Member for Gloucester (Richard Graham) who chairs the all-party group on occupational pensions—

[Sheila Gilmore]

Will the Minister give way?

[Steve Webb]

As I have five minutes to respond, I had better not.

My hon. Friend the Member for Gloucester made a characteristically thoughtful contribution. I am grateful to him for that. He raised the issue of intergenerational fairness, which goes to the heart of the Bill. It is why we need to progress with it and debate it through the House. A number of our constituents who have written to us about the Bill imagine that this is the only chance we get to debate it. We will be in Committee right up to the final day before the summer recess, I am delighted to say, and we will return to it on Report, so there is ample opportunity to debate and discuss the Bill.

The hon. Member for Sunderland Central (Julie Elliott) raised the issue of manual labourers. I accept that that is an important point, which needs to be addressed. My hon. Friend the Member for Salisbury (John Glen) quite properly raised the issue of long-term principles. I hope he will respond to our Green Paper consultation, which looks specifically at age 67 and 68, mechanisms and processes. Those are the principal issues that we are trying to raise.

The hon. Member for Erith and Thamesmead, who tabled the relevant early-day motion, asked about transfers into NEST and so on. As she knows, the idea of NEST was to get the thing going and to cater particularly for people who might not otherwise have access to a pension. Once that roll-out is complete in 2017, the whole system will be reviewed and the issue of transfers-in will be looked at as part of that review, so I can give her that assurance.

My hon. Friend the Member for York Outer (Julian Sturdy) supported the Bill and said that good governance is about taking decisions in the long-term interests of our country, which is what the Bill does. I thank him for that. The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) raised issues about auto-enrolment. I have already pointed out why we are doing it and the balance that we are trying to strike. My hon. Friend the Member for South Dorset (Richard Drax) spoke about the fragility of private sector pensions. I agree with him. That is why it is vital that we move ahead with the Bill and make auto-enrolment work, rather than delaying it, as the Opposition want.

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) asked whether people will be able to work in their later years. I can tell her that women are already, on average, leaving the labour market after state pension age. In 2004 women on average left the labour market at 61.6 years. In the past six years that has gone up by more than a year, so there are already trends of longer working lives. We need to build on them.

The hon. Member for Glasgow North East (Mr Bain) said that other countries are following a different path. I can tell him that they are not. Other countries are raising their state pension ages and in some cases raising them faster than we are. My hon. Friend the Member for Edinburgh West (Mike Crockart) supported many aspects of the reforms. I congratulate him on a very well researched contribution. I am grateful to him for the principles that he set out—simplicity and making auto-enrolment work—and I note his comments about the state pension age changes.

On that issue, which has clearly been the focal point of the debate, let me sum up the position. We heard a number of hon. Members raise their concerns about the state pension age. The Government’s position is clear. We are not simply living longer; we are living longer at a faster rate. The improvement of five years in life expectancy at pension age took 70 years between 1920 and 1990. The next similar improvement happened in 20 years. The improvement in longevity is like a runaway train. We must address that. Those who vote against Second Reading are not just deficit deniers, but longevity deniers. They need to recognise the real changes.

My right hon. Friend the Secretary of State, in his characteristically resolute way, confirmed that the Government believe that we need to equalise more rapidly and reach age 66 as the retirement age more rapidly, but he also said that he recognised that we need to implement that fairly and manage the transition smoothly. He went on to say that he heard the specific concerns about a relatively small number of women and that he was willing to work to get the transition right. I am committed to doing the same, together with him.

If the House were to reject the Bill tonight, those who vote against must tell us where £30 billion will come from, how they will make auto-enrolment work and why judges should not have to pay for their pensions. I commend the Bill to the House.

Question put, That the Bill be now read a Second time.

Social Security

Debate between Steve Webb and Sheila Gilmore

Monday 7th March 2011 Ministerial Corrections

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Government give the House a time scale in which it will consider these matters to do with CPI? Obviously, council tax also has to be taken into account.

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.

[Official Report, 17 February 2011, Vol. 523, c. 1178.]

Letter of correction from Mr Steve Webb:

An error has been identified in the answer given on 17 February 2011. In the third paragraph of my response I meant to say CPI not RPI.

The correct answer should have been:

Social Security

Debate between Steve Webb and Sheila Gilmore

Thursday 17th February 2011 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Government give the House a time scale in which it will consider these matters to do with CPI? Obviously, council tax also has to be taken into account.

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.[Official Report, 7 March 2011, Vol. 524, c. 3MC.]

Finally, I will touch on occupational pensions. Such pensions are not directly the subject of the orders. The changes that relate to the revaluation and indexation of most occupational pensions were the subject of the revaluation order that was tabled before Christmas. However, because of the close link in all pensions matters—everything is connected to everything else—I ought to say a word about this matter. CPI is being used for all social security benefits and additional state pensions, and through statutory linkage, CPI applies to public sector pensions. We had to decide what to do for private sector pensions. I stress that the role of Government is to set the floor for increases to private sector pensions and we had to make a judgment on that. We took the view that the Secretary of State could not decide that inflation was CPI for things that we pay out, but RPI for things that other people pay out. As far as we are concerned, inflation is inflation and we have to be consistent. CPI is therefore the right floor for occupational pensions. However, I stress the word “floor”. Schemes are entirely at liberty to make more generous increases if they wish. This statutory requirement increases only in respect of service after 1997, whereas some schemes index service before that.

Benefits Uprating

Debate between Steve Webb and Sheila Gilmore

Wednesday 8th December 2010 Commons Chamber

[Steve Webb]

Obviously, contracted-out deductions apply not to the basic state pension, but to the additional state pension. The idea of contracting out is that a scheme that offers to provide earnings-related pensions must promise to match the benefits that the state would otherwise have provided. That may not be well understood, but such schemes and the employees who use them pay less national insurance, in return for which, the scheme promises to match what the state would have provided. I do not recognise the hon. Gentleman’s description, but if he writes to me with specific examples, I am happy to look at them.

[Sheila Gilmore (Edinburgh East) (Lab)]

I have been contacted by a large number of constituents who are public sector pensioners, because they are extremely concerned that the pensions to which they have been contributing and which they thought were guaranteed to increase in a certain way should be changed by the Government without any justification. Why is it felt necessary to do that? If it is so good to triple-lock the basic state pension, why is it not equally good for public sector pensioners?

[Steve Webb]

To take the hon. Lady’s second point first, if we were to earnings-link all public sector pensions in payment, it would cause a massive increase in unfunded pension liabilities. She has just spent billions upon billions of pounds, apparently casually, but I am afraid we are not in a position to do that. We have done what Governments have always done, which is to assess the general increase in prices, make a figure for inflation and apply it consistently—in this case, to all social security benefits, tax credits and earnings-related pensions. By statute, public sector pensions are linked to what we do to additional pensions. What we are doing for contracted-out public sector pensions is therefore exactly what we are doing for contracted-in additional pensions.

Housing Benefit (West Ham)

Debate between Steve Webb and Sheila Gilmore

Monday 22nd November 2010 Commons Chamber

[Steve Webb]

With respect, the hon. Lady is conflating about three different changes. The universal credit is nothing to do with the cap. It is a separate proposition, and the details are yet to be announced. We have already announced exemptions, and people in work who receive working tax credit will not face the cap at all. That is part of the response to her point. No one in work and receiving working tax credit will be affected by the overall benefit cap, nor will anyone on disability living allowance, but the details have yet to be worked out. The universal credit—not the universal cap—is a separate reform designed precisely to address the points that she raises.

I shall try to respond to some of the more specific issues that the hon. Lady raised about her constituency. Our estimate is that in her borough of Newham, 32% of properties in the private rented sector will be available to people on local housing allowance.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Minister give way?

[Steve Webb]

I have only six minutes left in which to respond to the hon. Lady, and it is probably important to do that rather than to respond to another hon. Member.

I have explained our broad estimate. A good proportion of rental properties will be available throughout the borough, but I agree that we do not want constant moves. No one wants that. The challenge is to ensure that when people enter a tenancy agreement they do so sustainably. All we are trying to do is to ensure that the choices made by people on benefit at the start of a tenancy, when they choose a property and a rent, involve the same constraints as for someone in low-paid work. The change is not designed to be penal; it is designed to be fair and equal. That is the idea.

The hon. Lady cited a figure of 82,000 people being at risk of losing their home, but that was based on London Councils research and not that of the Department for Work and Pensions, and it was based on a fairly low response rate from landlords. Moreover, landlords are bound to say that they do not want any reform that is going to cap what they get. Landlords have been the principal beneficiaries of the local housing allowance system. We have already seen private sector rents falling in the past 18 months, yet the rents paid to people on LHA have been going up. Through housing benefit and LHA, we are putting more than £21 billion a year into that market, and it would be implausible to suggest that we are not having an effect on it.

We believe in trying to restrain the growth in rents, although in four years’ time, we will still be spending more in cash terms on housing benefits than we are this year. I think that the hon. Lady used the term “swingeing cuts” about something else, but these are not swingeing cuts. This is about restraining the rate of growth of housing benefit, so it is a far more modest reform than she suggests.

The hon. Lady raised the issue of slum landlords, for whom we have no time, and one of the things we want to do is to change landlord behaviour, which is crucial. We are considering whether, by paying housing benefit directly to landlords, we could use that leverage to try to get rents down. Yes, some people might face shortfalls—I accept that point, although I think that the figures might sometimes be exaggerated—but we are not in a static situation. The question is: what happens next? If landlords, particularly those renting to housing benefit and LHA tenants, see that we are not simply going to follow the market up, that could change rent-setting behaviour.

The hon. Lady made a point about the consumer prices index, and about the way in which we are going to index LHA in the future. Her view seemed to be that we should simply follow the market, but we think that that has been the biggest problem with LHA over the years. We have actually stoked up the market, and then increased LHA to keep pace with the market, so that rents keep rising. We are not getting good quality accommodation, however; we are simply driving up rents, and that is not what we want to spend public money on.

I want to come back to the hon. Lady’s point about constant moves and people being constantly moved around an area. Clearly, there is an issue about the transition to the new regime, and we are trebling the discretionary housing payment system. More of that money will go to boroughs such as her own and to other inner London boroughs that are most affected, because we want the particularly hard cases, where people are particularly affected by the changes, to have extra resources to deal with that. However, the long-term goal has to be to try to get rent levels under control, rather than to keep stoking them up.

The hon. Lady referred in the debate in 2008 to the impact of high rents in temporary accommodation. She said:

“My constituents are virtually imprisoned by the excessively high rents charged for temporary accommodation”.—[Official Report, 5 November 2008; Vol. 482, c. 293.]

She was absolutely right, and in April 2010, a cap was introduced on the rents in temporary accommodation. Since then, the early evidence has shown that the rents in those properties have started to fall, so we have a precedent for what we are doing now. This is not nationwide, systematic evidence, but the early evidence suggests that what we are saying will happen in the wider market is already happening in the temporary accommodation market. That is what we as taxpayers, and as people who are concerned about our constituents, want to see. We want to see more of our money providing accommodation for people, and less of it simply stoking up the private rented sector.

The hon. Lady also raised the issue of the changes to non-dependant deductions. They have been frozen for a number of years instead of being indexed, which would have been a more natural policy, and all we are doing is returning them to the level at which they would have been, had they been indexed. So, yes, there is an increase, but we are simply taking them back to their real value of a few years ago. She mentioned the consumer prices index being applied for ever, but that is not the intention. It will come into the LHA rates in 2013 for two years, and we will then look at the market and the impact of the changes that have been made. So we are trying to introduce a cap and to restrain the rate of growth of rents, but we are trying to do that with some flexibility. We will look at the broad rental market areas when we do that and try to ensure that they fit the local housing market situation.

I want to try to draw some of those threads together. First, it is vital that we do not overstate the impact of the changes. There will be an impact, but some of the numbers that get thrown around, such as 82,000, are an exaggeration. We will see what impact they have, and there is the possibility of different rent levels as a result of the changes. There are also discretionary housing payments. The idea is to get good value for the taxpayer, but not to cause misery for the hon. Lady’s constituents. That is not our intention, and I do not believe that we will do that.

Question put and agreed to.

Housing Benefit

Debate between Steve Webb and Sheila Gilmore

Tuesday 9th November 2010 Commons Chamber

[Steve Webb]

Sorry; the shadow Secretary of State is disowning the right hon. Member for Greenwich and Woolwich (Mr Raynsford), who got it wrong. In 2014-15 the housing benefit budget will have been “slashed” from £21.5 billion to £22 billion. We are not slashing. We are making changes.

It has been said that we are being too hasty. The Labour party has decided that after 13 years of making the problem worse, doing something about it is “hasty”. Labour was so unhasty that it never got round to doing anything about the problem before it lost office. We are getting a grip.

First, we have established that the impact of the changes has been grossly exaggerated. Secondly, we have established that rents will not stay as they are. During the debate it has been suggested that the fact that the British taxpayer is putting more than £20 billion a year into housing benefit has no impact on the market. We, the taxpayers, pay housing benefit towards 40% of private rented tenancies. It is a long time since I studied economics, but I reckon if we pay for 40% of the tenancies and we put £20 billion a year into the market, we might just be having some impact.

[Sheila Gilmore]

The hon. Gentleman is using the figure of 40%. Recent research done both in Scotland and England is completely different. It produces a figure of 20%. In fact, in Scotland it was 17%; the report was produced for the Scottish Government. Only 8% of that was for housing benefit. We need to see the evidence that differs from the research that the Government themselves commissioned.

[Steve Webb]

I am not sure what the hon. Lady is questioning. Some 40% of private rented sector tenancies have housing benefit. That is a fact.

As my right hon. Friend the Secretary of State pointed out earlier, people have said in this debate that rents will not fall. There is an assumption that rents have to go up. I have news for those people: since November 2008 private sector rents have fallen by 5%, while LHA rents have risen by 3%. So there is a void. That is further evidence. Opposition Members have asked for evidence, and here is clear evidence that LHA is driving up rents.