Oral Answers to Questions
Torsten Bell Excerpts(1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
Andrew Rosindell (Romford) (Reform)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
The Government are committed to supporting British pensioners to enjoy a comfortable retirement after a lifetime of work. That is why we are raising the state pension throughout this Parliament via the triple lock. That saw the state pension increase by 4.8% in April, boosting the level of the new state pension by £575 a year.
Andrew Rosindell
I thank the Minister for his reply, but he will know that my borough of Havering has the second largest number of older people in the entirety of Greater London. Nearly a quarter of my constituents are within that age bracket, and they are losing out. I know that the Government’s policy on the winter fuel allowance has changed, but it frightened them and made them ask whether Labour is really on their side. Will the Minister assure my constituents that the next Labour Administration will not target pensioners, but will give them the respect they deserve, and ensure that they have a happy and healthy retirement?
Torsten Bell
I can give the hon. Member the assurance he asks for, which is that this Labour Administration, like all Labour Administrations, are on the side of pensioners. Of course, he only defected earlier this year, so he was a Conservative MP during all 14 years of the Conservative party’s disastrous last Government—a Government who saw pensioner poverty rise and left one in five of those aged over 75 on NHS waiting lists. That is what letting down pensioners looks like.
Luke Akehurst (North Durham) (Lab)
Can the Minister set out what plans he has to make sure that today’s workers—tomorrow’s pensioners—enjoy a decent retirement?
Torsten Bell
That is a very important question. We need to make sure that those who will retire in 2050 can look forward to the same kind of comfortable retirements that many—not all, but many—of today’s pensioners enjoy, and the honest answer is that we are not on track for that at the moment. This Government are taking a two-stage approach. We are driving up returns on pension savings now—that is what the Pensions Schemes Act 2026 does—but we are also doing the longer-term work through the Pensions Commission to look at exactly the question of how we make sure that tomorrow’s pensioners can enjoy comfortable retirements. I promise that the commission will bring forward its report early next year.
Mark Garnier (Wyre Forest) (Con)
The Pensions Minister likes to spend a lot of time criticising the previous Government for their actions on pensioners. He also spends an awful lot of time talking up his legacy on helping pensioners, but his actions simply do not reflect the narrative. So far, he has capped salary sacrifice, there have been delays to the pensions dashboards, we have had retrospective changes to inheritance tax on pension pots, and—as we have heard—the Government are chasing hard-up pensioners for their winter fuel allowance. All of this creates uncertainty among savers and pensioners alike, so I will repeat the question asked by the hon. Member for Romford (Andrew Rosindell): is the Pensions Minister hopeful that his successor will do a better job of looking after pensioners?
Torsten Bell
I am incredibly hopeful that this Government are doing a much better job than the previous Government in supporting pensioners, not only by driving up the state pension, but by getting on with the much delayed reforms to our defined-contribution pension system, which the previous Government left on ice. We are also coming forward with something much more important, because the biggest betrayal of older generations in Britain today is the state in which the Conservatives left our national health service.
John Cooper (Dumfries and Galloway) (Con)
Andrew Rosindell (Romford) (Reform)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I recognise the hon. Gentleman’s point, and we need to fund the NHS to stop letting down older generations. Taxes have consequences that affect the whole population, including pensioners. The Chancellor has set out that the level of the personal allowance will remain above the level of the new and the basic state pension—the headline rates—throughout this year. In future years we will ensure that we ease the administrative burden for pensioners who have small amounts of tax due.
Dame Nia Griffith (Llanelli) (Lab)
Torsten Bell
My hon. Friend and I have discussed this issue on a number of occasions, and she has been an important campaigner for pensioners in her constituency who have been affected by it. Although three quarters of schemes provide some degree of pre-1997 indexation, there is a very real impact on members of schemes that do not—indeed, we have discussed that with local pensioners in south Wales. The surplus reforms that this Government are bringing forward will make it easier for some trustees to negotiate for additional indexation. We launched a consultation on this issue on 10 June, and it runs until 2 September. I will take my hon. Friend’s comments as input for that consultation.
Sarah Olney (Richmond Park) (LD)
Neil Duncan-Jordan (Poole) (Lab)
The Pensions Minister knows that there is no retirement on a dead planet, so will he commit to writing to the 50 largest UK pension funds to ask them to set out their timetable for divesting from fossil fuels?
Torsten Bell
My hon. Friend is a consistent campaigner on these issues in this place and in our regular meetings, and I always learn something from those conversations. I am not going forward with exactly the suggestion he brings forward, but I agree that there is more we can do, not least to provide clarity for trustees. We are working with industry to develop guidance clarifying that fiduciary duties allow trustees investing in members’ best interests to consider systemic risks, including climate change, and we will consult later this summer.
Joy Morrissey (Beaconsfield) (Con)
The increased PIP costs are expected to add an extra £5 billion to the welfare budget this year. As the TaxPayers’ Alliance has highlighted, the number of households earning over £100,000 and getting PIP has doubled to 200,000 claimants. Will the Minister make an assessment of the potential merits of means-testing PIP to ensure targeted support?
Seamus Logan (Aberdeenshire North and Moray East) (SNP)
Given that benefit fraud is estimated at around £9 billion, and that the WASPI women are apparently willing to have the cost of their just compensation claim capped at around a third of that figure, can someone from the ministerial team confirm that the Government are willing to change course and negotiate with the WASPI women?
Torsten Bell
The hon. Member will know that a judicial review claim has been filed, and that we cannot comment on live litigation. There are legitimate views on raises in the state pension age, particularly the 2011 acceleration put in place by the coalition Government, but the investigation that is being considered by the Parliamentary and Health Service Ombudsman is not about those increases; it is purely on the narrow point about communication. The Government have made their position clear on that and set it out in the decision document placed in the House of Commons Library.
Amanda Hack (North West Leicestershire) (Lab)
Safeguarding has been a key focus of the Work and Pensions Committee, so I was shocked to hear that my constituent Barbara Skedd received a letter to her executors, incorrectly notifying them of her death. This resulted in Barbara’s benefits being stopped, including the personal independence payment and all her pensions. My team have been working hard to get those reinstated. Can the Secretary of State outline what steps he is taking to ensure that those kinds of errors are minimised, and that the appropriate package of support is put in place so that when errors do occur, they are dealt with quickly?
State Pension Age Communications and Complaints Handling
Torsten Bell Excerpts(1 week, 4 days ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
In January 2026 the Secretary of State for Work and Pensions announced the Government’s new response to the Parliamentary and Health Service Ombudsman’s report into the way that changes to the state pension age were communicated to women born in the 1950s. This included a commitment to deliver an action plan to learn lessons from the ombudsman’s investigation. Today this action plan has been published on gov.uk.
I will also place a copy of the action plan in the Libraries of the House.
The action plan sets out key steps for state pension age communications and complaints handling, recognising the importance of building a continuous learning approach.
I am grateful to the ombudsman who has provided support to develop the action plan. As we have set out in the plan, we will work collaboratively with a range of stakeholders on future state pension age communications.
[HCWS148]
Draft Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2026
Torsten Bell Excerpts(2 weeks, 6 days ago)
General CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary to the Treasury (Torsten Bell)
I beg to move,
That the Committee has considered the draft Pensions (Abolition of Lifetime Allowance Charge etc) Regulations 2026.
I will briefly take the Committee through the background and purpose of these draft regulations, which relate to the abolition of the pensions lifetime allowance. At the 2023 spring Budget, the previous Government announced that they would abolish the lifetime allowance. The Finance (No. 2) Act 2023 removed the lifetime allowance charge. The Finance Act 2024 removed the other elements of the lifetime allowance from the pension tax regime from 6 April 2024. That was a significant task; the entire pensions tax regime was structured around the existence of a lifetime allowance, and many other aspects of the regime, such as allowable pension and lump sum benefits, were calculated with reference to the lifetime allowance. Additional regulations have thus been needed to provide further administrative and technical detail.
Since the Finance Act 2024 and the regulations that followed, His Majesty’s Revenue and Customs has continued to work with industry representatives to ensure that the legislation operates correctly. In doing so, HMRC has identified further areas that do not operate as intended. This statutory instrument simply modifies a number of areas of primary legislation and some areas of subordinate legislation purely to ensure that the abolition of the lifetime allowance is delivered as originally intended.
Those changes ensure that the lump sum allowances work fairly and consistently, including treating overseas pensions in the same way as UK schemes and giving individuals flexibility to decide the order of multiple payments on the same day. They also clarify the calculation of protections and enhancements so that the outcomes more closely reflect those achieved under the lifetime allowance. Finally, they introduce targeted technical fixes and improved reporting rules to support accurate administration for the post-lifetime allowance regime. The draft regulations are not a change in policy but make the further technical and consequential amendments necessary to ensure that pensions tax legislation can operate as intended following the abolition of the lifetime allowance.
Most of these changes will take effect from 6 April 2024 —in other words, they will apply retrospectively—when the lifetime allowance was abolished, although a small number of amendments will come into effect only from the date that the regulations come into force. The regulations have been made by the Treasury by exercising the powers conferred by paragraph 134 of schedule 9 of the Finance Act 2024. I therefore commend the instrument to the Committee.
Defined Benefit Pensions Regulation: Flexible Apportionment Arrangements
Torsten Bell Excerpts(2 weeks, 6 days ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary to the Treasury (Torsten Bell)
We are taking action to ensure the strong regulatory framework for defined benefit pensions remains effective as innovation develops, to manage future risks and protect member benefits.
On 4 December 2025, a novel use of existing legislation led to an asset manager assuming responsibility for the liabilities and the assets of another employer’s defined benefit pension scheme.
This Government have since delivered the landmark Pension Schemes Act 2026, introducing major reforms to UK occupational pensions, consolidating our fragmented pensions system into larger, better run, more secure schemes.
We want to encourage innovation that has the potential to benefit scheme members throughout the pension system and need to ensure the right legislative guard rails are in place for this to happen safely.
Flexible apportionment arrangements, the legislative mechanism used in this transaction, were introduced in 2012. They were designed to ensure that corporate restructurings, mergers and sales do not cause employer insolvency events when there is an appropriate sponsor who can support the scheme. Whilst this transaction complied with the existing FAA mechanism it did so in a way not anticipated when the mechanism was introduced.
We therefore intend to review this area of legislation to ensure the regulatory standards and safeguards evolve and keep pace with the innovation we are seeing in the pension market. This is to protect members and the Pension Protection Fund, which is there to protect people’s pensions in the event of an employer insolvency.
The DB superfunds framework set out in the Act reflects the fact that superfunds operate schemes on a commercial basis and is designed to ensure that the interests of commercial providers are appropriately aligned with those of scheme members. This contrast highlights the importance of considering whether additional safeguards are required where other mechanisms, such as FAAs, are used in ways that similarly involve the commercial operation of DB pension schemes. We will therefore consult in due course on whether and how existing FAA regulations could be strengthened.
Where providers are looking to run schemes for profit, this can work in scheme members’ interests but regulatory standards and safeguards must evolve to match the new risks this creates.
[HCWS114]
Public Service Pensions: SCAPE Discount Rate
Torsten Bell Excerpts(1 month, 2 weeks ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary to the Treasury (Torsten Bell)
SCAPE—superannuation contributions adjusted for past experience—is the process for setting employer contribution rates at valuations of unfunded public service pension schemes. As part of the SCAPE process, the SCAPE discount rate is used alongside many other factors such as earnings changes, changes to life expectancy and demographic assumptions to determine the appropriate employer contribution rate. Valuations as at 31 March 2024 are currently under way and will result in new employer contribution rates, which will be implemented from April 2027.
The current methodology for setting the discount rate, based on the Office for Budget Responsibility’s forecast of long-term GDP growth, was adopted in 2011, with a commitment to review its methodology every 10 years. A review under the previous Government, from 2021 to 2023, maintained this methodology.
The SCAPE discount rate to be used as part of the ongoing 2024 valuations will therefore be based on the expected long-term GDP growth figures, published by the OBR in July 2025. Based on these figures, the new SCAPE discount rate is CPI+2% p.a.
[HCWS37]
National Savings & Investments: Bereavement Claims
Torsten Bell Excerpts(1 month, 2 weeks ago)
Written StatementsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Parliamentary Secretary to the Treasury (Torsten Bell)
I am today updating the House on the steps being taken to address historic failures in the handling of some bereavement claims by National Savings and Investments.
On 26 March, I informed the House that NS&I had identified a population of cases where, following notification of a customer’s death, holdings were not fully settled in a timely way. These failures relate to past tracing and operational processes and do not reflect current practice. I recognise the distress and inconvenience that these shortcomings may have caused to those that have suffered bereavements.
The Treasury has instructed NS&I to put this right swiftly and fairly, requiring a delivery plan detailing how it plans to do so to be published during May.
NS&I has now completed extensive work to understand the affected population and to design a remediation approach. Today NS&I is publishing the delivery plan that it will follow to ensure proactive timely contact, payment of outstanding holdings, and appropriate compensation.
The current remediation population is estimated at up to 34,000 cases, with a total value of approximately £367 million. These figures have reduced since my announcement and are likely to reduce further.
We are committed to making the process for reuniting estates with their money as easy as possible. NS&I will contact all affected estates with holdings of £10 or more to reunite them with the full value of those holdings that should have been returned to them earlier. To ensure estates have not been disadvantaged by the delay, this will then be adjusted upwards to include either the higher of the interest accrued since the error occurred or the Bank of England base rate plus 1 percentage point, in line with Financial Ombudsman Service principles.
The de minimis threshold is being set lower than seen in some redress cases reflecting the priority we attach to returning funds to those affected while avoiding creating disproportionate administrative burdens and disturbance in the cases of the smallest holdings.
Contact will be made with estates through executors or personal representatives. Beneficiaries will not be contacted directly except where, as is often the case, beneficiaries are themselves executors or personal representatives. Where solicitors or professional executors dealt with the administration of an estate they will be contacted and it will be for them to contact beneficiaries. All cases will be subject to proportionate tracing checks to ensure payments are made safely and to the correct party.
Remediation will be delivered in phases. NS&I will begin contacting the first cohort next week, with payments made shortly after contact. NS&I aims to return holdings to their rightful owners as swiftly as possible and expects to have completed this remediation programme in the first half of 2027.
I have committed to helping bereaved families avoid disproportionate disruption and administrative costs that could result from the inheritance tax consequences of rectifying previous tracing errors. To achieve this I am confirming today that there will be a full inheritance tax exemption for the holdings of the remediation population affected by the NS&I tracing error which are returned to the estates to which they rightly belong. To further ease the administration of estates, the personal representatives or executors will not be liable for any income tax ordinarily due in their role on interest accrued before death or in the administration period. HMRC is working with NS&I to ensure that executors, personal representatives and beneficiaries do not incur any unnecessary administrative burdens or costs where tax is not due.
Beyond individual redress, NS&I has strengthened its bereavement processes to ensure these tracing errors do not reoccur. While this has driven an increase in processing times, an additional 100 people have been hired to ensure this is temporary. NS&I is also exploring broader improvements to the bereavement journey, including alignment with cross-Government services such as Tell Us Once.
As I committed to the House, Sir Jim Harra, acting chief executive of NS&I, is leading a wider review into the background to the tracing problem and what lessons must be learned. This will report before the summer recess and be shared with the Chairs of the Treasury and Public Accounts Committees. The Treasury has also started the process to recruit a permanent chief executive.
Further information for anyone who believes they or loved ones may have been affected is available on the NS&I website and its contact centre is open seven days a week.
[HCWS44]
Pension Schemes Bill
Torsten Bell ExcerptsTuesday 28th April 2026
(2 months, 1 week ago)
Commons ChamberRead Full debate Pension Schemes Act 2026 View all Pension Schemes Act 2026 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Message as at 28 April 2026 (issued at 17:55) - large print - (28 Apr 2026)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I beg to move,
That this House insists on its disagreement with the Lords in their Amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88, insists on its amendments 88C, 88E to 88P, 88R, 88S and 88W to the words restored to the Bill by that disagreement, does not insist on its amendments 88A, 88T, 88U and 88V to the words so restored to the Bill, but proposes further amendments (a) to (j) to the words so restored to the Bill.
It is obviously disappointing to see that not every Member in this Chamber wishes to stay for a detailed discussion of the Pension Schemes Bill, but it is not the biggest disappointment ever. It is good to see our regular engagers on this Bill in their place. I thank in particular those Members for helpful discussions on the Bill in recent days.
I do not intend to detain the House for long. [Hon. Members: “Hear, hear.”] That is the reaction we are always looking for. Members will be aware that there is one outstanding issue between this House and the other place when it comes to the Bill, and it relates to the reserve power on asset allocation. Today the Government return to their previous amendments on this issue. They spell out the intended purpose of the reserve power to underpin the industry’s own commitments in the Mansion House accord and to rule out other uses, such as a focus on any specific asset or asset class.
We are also bringing forward a final set of changes that aim to do justice to the points made in this House and the other place, while retaining the original policy intent. They have three elements. First, there is a new requirement on regulators—in this case, the Pensions Regulator and the Financial Conduct Authority—to make an assessment of barriers to the delivery of private asset investment, including the extent to which those barriers reflect the collective action problem, which we have discussed extensively in our exchanges on the Bill. That assessment would be required to be incorporated into the ex-ante report that the Secretary of State must produce before any use of the reserve power that the Bill provides for.
Importantly, our amendments also place on the Government a duty to have regard to this regulatory assessment before any use of the power. That will ensure that a Secretary of State behaving reasonably—as they are required to do—must place weight on the assessment of the regulators on this matter. It was always the Government’s intention to evaluate progress against the Mansion House accord commitments in terms of the broad direction of travel over a substantial period of time, rather than looking at short-term movements in private asset exposure. To reinforce that, we propose to add to the Bill that the power cannot be exercised any earlier than 2028.
Our second set of changes builds on the savers’ interest test to reinforce the central role of trustees and providers. Our amendments in lieu would change the bar required to engage the savers’ interest test. Rather than having to demonstrate that meeting the asset allocation requirements would be likely to cause material financial detriment, a scheme would instead have to show that meeting the requirements is
“likely not to be in the best interests of members”.
That reflects language regularly used when considering trustees’ duties. In addition, we have more tightly specified the regulators’ role, confining it to ensuring that the trustee or provider’s own assessment of what is in the best interests of members is “reasonable”, rather than replacing that assessment with their own.
Thirdly, our amendments address worries about the differential treatment of particular investment vehicles by allowing for consideration of direct or indirect holdings in the six asset classes named in the Mansion House accord.
I remind the House that the Bill has its roots in much work that was under way for some time in Government, but also in the commitment in the Labour party manifesto to ensure that workplace pension schemes take advantage of scale and invest in a wider range of productive assets. That is why one of the first things that the Government did on taking office was to launch a comprehensive review of pensions investment. That review found clear evidence that the defined-contribution pensions market is operating with an excessively narrow focus on costs, to the detriment of saver outcomes. That is where the reserve power comes from. It exists because the review found—and the industry itself has told us this, publicly and privately—that competitive pressure focused on cost minimisation is the single biggest barrier to diversifying in savers’ long-term interests.
However, things can of course change over time, and a range of other factors may come into play. We have discussed them with, in particular, the hon. Member for Wyre Forest (Mark Garnier). The changes that we propose today address directly that worry and others. They require regulators to assess whether these competitive pressures remain a material barrier to more diverse private asset investment before any use of the power, and they put trustees’ or providers’ own assessments of savers’ best interests centre stage.
On that basis, I commend the Government’s position to the House.
Madam Deputy Speaker (Ms Nusrat Ghani)
I call the shadow Secretary of State.
Steve Darling
The hon. Gentleman makes a powerful point; I am sure that the Minister will reflect on it when winding up. The Liberal Democrats continue to oppose mandation, and we plan to vote against the motion tonight.
Torsten Bell
I thank hon. Members for their contributions, and the shadow Secretary of State for her kind words.
I will be brief. The Government have continued to insist on the inclusion of the reserve power in the Bill in all rounds of discussions in this place because we have not heard a convincing alternative approach to solving the collective action problem that we have discussed. However, we have heard convincing arguments about how this part of the Bill can be strengthened, and we have acted on each of them. That is why the amended power is necessary but also constrained. It is capped, time limited, single-use, sunsetted and subject to a savers’ interest test that has been materially strengthened, as the shadow Secretary of State laid out.
The elected House has now been clear on many occasions, and has had large majorities. Given that, it is clear that this is the time to resolve the issue and get the Bill passed; that is what the industry and the groups supporting workers and pensioners have repeatedly called for. The Government have not only listened to the arguments from the Opposition and those in the other place, but acted on them. The elected House has also made its position overwhelmingly plain. Given both those points, both of which are important, it is clearly time for the unelected House to bring to an end attempts to frustrate the clearly expressed will of this Chamber. With that entirely reasonable expectation, I commend the Government’s amendments and the Bill to the House.
Question put.
Oral Answers to Questions
Torsten Bell Excerpts(2 months, 1 week ago)
Commons ChamberRead Full debate Read Hansard Text Watch Debate Read Debate Ministerial Extracts
The Parliamentary Secretary to the Treasury (Torsten Bell)
The Government made their decision on this case on 29 January 2026, after giving the PHSO’s report careful consideration. The detailed reasons for our decision were set out in our response, which has been placed in the Library of the House.
James MacCleary
The Parliamentary and Health Service Ombudsman has recommended compensation for millions of WASPI women. In 99% of cases, PHSO recommendations are complied with, so does the Minister accept that singling out this group by not complying amounts to discrimination on the basis of sex and age? If not, what possible justification can the Minister offer?
Torsten Bell
As I have previously said to this House, it is unusual but not unprecedented for the Government to take a different view from the PHSO. That does not mean that we have not taken its report incredibly seriously—I have also met its representatives—but as I have said, we set out the detailed reasons for the decision we came to in the response we laid in the House of Commons Library on 29 January.
Jim Shannon
I ask this question on behalf of the 6,000 WASPI women in Strangford. Given that the Department’s own 2007 evaluation raised serious doubts about the effectiveness of letters to pensioners, how can the Minister justify the decision that no direct financial loss occurred when thousands of women were deprived of the 28-month notice period required to adjust their life savings and retirement plans? In the light of the Scottish Parliament’s decision to again press this issue in February, will he please do the right thing, put actions before apologies, and deliver help and support? I say that respectfully, but I do want a good answer.
Torsten Bell
The hon. Member has raised this issue repeatedly over a number of years, and I recognise that. Specifically on the issues he raises, it was the ombudsman itself, rather than the Government, that initially set out that the women affected did not suffer direct financial loss. What is sitting behind the ombudsman’s judgment saying that is that the issue facing the ombudsman was not either the original decision in 1995 to increase the state pension age or the decision to accelerate the increase by the coalition Government in 2011. The ombudsman was looking narrowly at the question of how that increase in the state pension age was communicated, and I think it is really important to clarify that distinction with our constituents. It is the latter—the communication of the state pension age—that we have discussed in this House on numerous occasions.
The hon. Member specifically raises the 2007 evidence, which showed that a minority of people read and remembered such letters. However, it showed something else quite important, which was that those with good knowledge of their state pension entitlement were most likely to read the letters. It was therefore not a good metric for assuming that the majority of those who were sent letters would have learned something from that and changed what they knew.
Seamus Logan
These women were not properly informed about changes to their state pension. So said the PHSO on 21 March 2024, just in time for the election that year, when so many Labour Members of course promised to address the issue, if elected—another shameful, broken promise. First, can I ask the Minister to explain why the last ministerial meeting with the WASPI women took place in September 2024? Secondly, can he tell the House what work has been undertaken in his Department on a properly structured compensation scheme that could be implemented when the Government decide it is time for another U-turn?
Torsten Bell
The hon. Member raises a question about what Labour Members were promising in the 2024 election. As I am sure he is aware, our manifesto was clear that it did not make a commitment to bring forward compensation. What is the case is that Labour Members opposed the acceleration of the state pension age back in 2011, which in some cases gave women only five years’ notice. However, we of course lost that vote in Parliament and subsequent elections, and the courts unfortunately upheld that decision. As I have said, what we are debating in this case is the communications, not the decision itself. On those grounds, we have set out in detail the reasons for the decisions we have made and laid that document in the House of Commons Library.
Mr Speaker
We now come to a marathon runner—five hours and 20 minutes—Chris Vince.
Chris Vince (Harlow) (Lab/Co-op)
I will not lie, Mr Speaker: bobbing is slightly more difficult than normal this morning.
Can the Minister detail what the ombudsman found about the financial loss women suffered as a result of the delay in sending out letters? On a more general point, can he say what this Government are doing to support women in retirement in my constituency of Harlow?
Torsten Bell
My hon. Friend makes a large effort not only when it comes to pounding the streets, but in raising his constituents’ cases and, in this case, those of female pensioners. He is absolutely right to say that there is a distinction between the communication of state pension age increases and the increase in the state pension age, and it is the latter that has had such an effect on millions of women, particularly the speed of the increase in 2011. I think there are lessons for this House and for all Governments about what would happen in future, and we certainly would not be bringing forward such short-notice changes.
My hon. Friend is also right to say that what matters more generally is what we are doing to support pensioners, and making sure they have dignity and support in retirement. On that front, just this month we are increasing the state pension, and we will be continuing to do that over the course of this Parliament via the triple lock, which is set to increase it by up to £2,100. We are also making sure that £26 billion of investment is going into our NHS, bringing down waiting lists month on month, because this Government came into office with one in five of those aged over 75 on NHS waiting lists, and we cannot allow that to continue.
Mark Garnier (Wyre Forest) (Con)
When his party was in opposition, the Prime Minister promised compensation for WASPI women, but when faced with the economic reality of the costs, he and the Secretary of State chose common sense over ideology. In the spirit of that pragmatism, may I ask the Pensions Minister also to take a sensible, thoughtful approach to mandation powers in the Pension Schemes Bill, and to remove clause 40 altogether?
Torsten Bell
We have debated this issue quite extensively in recent weeks, and the House will have another chance to do so later today. As I have set out during our debates, representatives of the industry itself have said that it is in the interests of savers to invest in a wider range of assets. That reflects lessons from across the industry—from open defined-benefit schemes, but also from those in the rest of the world, where the lack of exposure of the UK’s defined-contribution schemes to that wider range of assets makes it stand out. We have introduced a reserve measure to backstop the changes that the industry says are needed to solve a collective action problem. I will not try the patience of the House by repeating them now, but the aim is to ensure that savers do not lose out. We have also put in place significant protections relating to an affirmative vote, as well as the savers’ interest tests that enable pension schemes to spell out what is in the interests of their members.
Vikki Slade (Mid Dorset and North Poole) (LD)
Lauren Edwards (Rochester and Strood) (Lab)
Can the Minister provide an update on the action plan to ensure that lessons are learned from the way that changes to the state pension age were communicated to women born in the 1950s?
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I thank my hon. Friend for her question. There absolutely are lessons for us to learn from this experience, both related to that particular case, and on the general point about giving adequate notice of any changes to the state pension age; that is the most important lesson, and we are absolutely committed to learning that. On the action plan, that will be focused on state pension age comms, and on complaint handling. We will work closely with the Parliamentary and Health Service Ombudsman on that right away, and I hope to be able to publish that action plan in the coming months. More broadly, we are not waiting for that, but are getting on with action. I am sure that hon. Members will have seen over the last few months the “check your state pension age” campaign, encouraging people to be aware of their state pension age.
Clive Jones (Wokingham) (LD)
Twelve weeks ago, I raised four cases with the DWP, and I am still waiting for a response, despite chasing. These delays are upsetting for my Wokingham constituents. What is the Minister doing to address this backlog, and when can my constituents expect a response?
Torsten Bell
I welcome my hon. Friend’s question, and he is absolutely right. We have seen progress in the last 15 years; 23 million employees now save into a pension, and that is restarting the business of workplace pension savings in the UK, but the job is not done. It is not done because of the issue that he raises about the adequacy of the amount saved by those who are saving, and because 45% of working-age adults are saving nothing at all. That is why there has been cross-party consensus that we should bring back the Pensions Commission to look at the question of adequacy, and I am pleased to say that its interim report will be published in the coming months.
Carla Lockhart (Upper Bann) (DUP)
When a child is diagnosed with an illness such as cancer, their caring needs start immediately. Such a diagnosis upends any household; there are appointments, and often families are unable to work. Will the Minister review again the question of whether child disability living allowance should be paid immediately on diagnosis, as opposed to the family having to wait three months, and will he meet the Watson family from my constituency, who have, sadly, lived with this barrier to support?
Pension Schemes Bill
Torsten Bell ExcerptsWednesday 22nd April 2026
(2 months, 2 weeks ago)
Commons ChamberRead Full debate Pension Schemes Act 2026 View all Pension Schemes Act 2026 Debates Read Hansard Text Watch Debate Read Debate Ministerial Extracts Amendment Paper: Commons Consideration of Lords Message as at 22 April 2026 - large print - (22 Apr 2026)
The Parliamentary Under-Secretary of State for Work and Pensions (Torsten Bell)
I beg to move,
That this House insists on its disagreement with the Lords in their amendments 15 to 24, 27, 30 to 34, 36, 38 to 42, 83 and 88, insists on its amendments 88A and 88C to the words restored to the Bill by that disagreement, does not insist on its amendment 88B to the words so restored to the Bill, but proposes amendments (a) to (j) to the words so restored to the Bill.
Madam Deputy Speaker (Judith Cummins)
With this it will be convenient to consider the following Government motions:
That this House disagrees with Lords amendments 37B and 37C but proposes amendments (a) and (b) in lieu.
That this House disagrees with Lords amendment 35B but proposes amendments (a) and (b) in lieu.
That this House insists on its disagreement with Lords amendments 77 and 85 but proposes amendments (a) to (c) in lieu.
Torsten Bell
I thank Members and peers for the continued scrutiny of the Bill before us. Our task today is to focus on the limited outstanding areas of disagreement, although that should not detract from the consensus behind this Bill—behind the case for a better pension landscape that sees bigger, better pension schemes focused on delivering stronger returns for savers. On the issues that remain before us, I hope that Members and peers will see that we have listened to the points they have raised and brought forward amendments that directly address what we have heard, while of course holding to the core principles of delivering against the Labour manifesto, which was clear on our policy intent around scale and productive investment.
First, I turn to the reserve power on asset allocation. Last week I set out the Government’s case for such a power at some length, and I will spare the House a full repetition today—[Interruption.] I know, I know, but there is so much more to discuss. We will not have time to discuss the hair of the hon. Member for Wyre Forest (Mark Garnier) if I offer a full statement.
In brief, since hon. Members have asked, there is a well-evidenced collective action problem in the defined-contribution pensions market. Providers want to diversify their asset allocations in their members’ long-term interests and in the interests of better pensions for savers, but they are clear publicly—and even more emphatically in private—that market dynamics, which focus on minimising cost rather than maximising long-term value for savers, are the single biggest barrier to doing so. That is not a theoretical risk; it is exactly why so little progress was made against the Mansion House compact under the last Government. The reserve power exists for the sole purpose of solving this problem.
Last week, we brought forward changes to make that absolutely explicit by writing the industry-set Mansion House accord targets into primary legislation through the 10% and 5% caps, and requiring any regulations to operate neutrally across asset classes. These were designed to make it clear in the Bill that the power can be used only in line with what the industry itself has committed to. The cap prohibits any move beyond the accord targets and the neutrality requirement rules out the possibility that any Government could direct investments into a particular asset or asset class.
As is plain, however, we have not yet reached agreement across the two Houses. Rather than simply restating our position today, the Government are bringing forward a further package of changes.
First, we are bringing forward the current sunset date for the reserve power from 2035 to 2032. The Mansion House accord commits the industry to reaching its targets by 2030, and bringing forward the sunset clause aligns the power more closely with that timeline. If the power has not been exercised by the end of 2032, it falls away entirely. Secondly, because the power has only one purpose, we are providing that it may be exercised only once.
Thirdly—I want the House to understand the significance of this—we are providing for not just the power but any effects of it to fully fall away at the end of 2035. That goes beyond the sunset clause I have just described and means that even if the power has been used, the entire framework and any requirements on schemes will fall away at the end of 2035. This timeline reflects the fact that once the cultural shift has occurred and the impacts of the Mansion House accord are embedded, the collective action problem falls away. At that point, other elements of the Bill—greater scale and the impacts of the value for money framework—will help to sustain the change.
I want to return to a point made by the hon. Member for Faversham and Mid Kent (Helen Whately) in our previous debate. She observed correctly that the Bill referred to assets held in default funds as a whole, whereas the Mansion House accord applies only to main default funds. As the policy is intended to reflect the accord, the legislation would ideally use the same language, so we have tabled amendments to ensure that that is the case throughout the relevant provisions and have retabled the percentage cap with the same wording. I am grateful to the hon. Lady for pressing that point last week.
Let me be clear that the House today is being asked to consider a reserve power that is highly constrained and narrowly focused on solving a very specific problem. It is capped at the accord targets and provides for absolute neutrality among private asset classes. The Government cannot direct investments. The power explicitly applies only to main default funds, more explicitly matching the language used in the accord. The power’s timeline also matches tightly that of the accord. It can be used only once and lapses entirely in 2035 if not used; even if used, which is unlikely, the entire regime is repealed at the end of 2035. On top of all that, it remains subject to the savers’ interest test, the affirmative procedure and the statutory reporting requirements, both before and after any regulations are made.
Liam Byrne (Birmingham Hodge Hill and Solihull North) (Lab)
I congratulate my hon. Friend on stewarding the Bill with such expertise, and I very much hope that the cultural change that he is hoping for sticks and that we do not just get an unwinding of the repatriation of UK investment. A necessary corollary of what he is proposing is a fiduciary duty and a fiduciary code that give pension fund trustees real clarity in investing in a wide range of investments that are good for the long-term health of the savings they are stewarding. It was unfortunate that the other place rejected the Government’s amendment that would have allowed a new statutory code to be implemented. Will the Minister confirm that the technical working group that he has set up to revise that code will proceed, and will he commit to bringing forward further amendments to future legislation to give effect to the ambition that he set out in response to my new clause 17?
Torsten Bell
I share my right hon. Friend’s frustration about developments in the Lords on those matters, not least because some of those who voted against amendments that would have introduced statutory guidance, as he says, have spent years calling for exactly that—but that is a matter for them. The Government will proceed on work to draft that guidance. The technical working group is well under way and is doing good work to provide clarity to the industry. We will come forward with proposals to put the guidance on a statutory footing in the months and years ahead.
As I was saying, the timeline tightly matches that of the accord. I hope that everybody can see that the framework is a long way from the characterisation of this power that we have occasionally heard. I understand that some Members of this House and the other place would prefer it if the power did not exist at all. I respect that view, but I do not share it. The evidence for the collective action problem is clear—we have lived it—and I have listened but heard no alternative proposal to address it. The consequences of not addressing it fall on pension savers—the people who rely on their defined-contribution savings for a comfortable retirement. That is not a risk that the Government are prepared to take.
The elected House has now considered this question twice. On both occasions, it has overwhelmingly endorsed the case for the reserve power to deliver our manifesto commitments in this area. The Government have listened to the concerns raised in the other place, and have responded not with warm words but with real concessions, through changes to primary legislation that directly address the arguments made. I hope that MPs and peers will now accept that the Government have moved significantly and provided the assurance they have been seeking.
Lords amendment 35B would require the Secretary of State, when making regulations across the scale measures and those for default arrangements, to have regard to
“the benefits of competition among providers of pension schemes”.
The Government of course support the importance of competition as the market moves towards scale, and have done so in the Bill’s provisions. The market is already highly competitive, and the new entrant pathway is designed to ensure that it remains so. The same goal is reflected in a scheme’s ability to open new default arrangements.
However, we have heard the arguments that have been made during debates, and I recognise the desire in the other place to see that commitment in the Bill. This is why I have tabled amendment (b) in lieu of Lords amendment 35B. It sets out that the Secretary of State, in setting regulations in respect of both the scale measures and those relating to default arrangements, must have regard to the importance of competition and innovation. The amendment in lieu delivers on the proposals from the other place, but with an appropriately holistic approach to the issues to which a Secretary of State will need to have regard in the years ahead. That reflects that our ultimate focus is, of course, on delivering the best outcomes for members, of which competition in the market is one important driver. Under the Government’s amendment, regulations must have regard not just to scale, but to competition and innovation, alongside effective governance. The explanatory notes will make that clear.
On Lords amendment 37B, the case for scale has been made, and both Houses have broadly agreed with the benefits that it brings. Indeed, all main parties are on the record as recognising the key role of scale in delivering better outcomes for savers. We all made those arguments, recognising that moves towards scale would always mean some schemes exiting the market because we collectively prioritise the need to deliver for those who work hard to save for retirement, and we must ensure that they are saving into schemes that can deliver better outcomes.
Scale drives lower costs, better governance, investment expertise and a balance sheet that can provide a more diverse portfolio for savers, improving overall outcomes for them in the longer term. That focus on scale was explicitly laid out in our manifesto, and the evidence for the approach we are taking was detailed in the pensions investment review. The Lords amendment pays too little regard to that evidence and that manifesto. It would also be unworkable in practice, as it would enmesh regulators in years of legal proceedings while leaving providers and savers in limbo.
However, I have listened to the argument made in this House and the other place that the innovation some smaller schemes offer members should not be dismissed. I absolutely agree, which is a key reason our approach to ensuring that scale is achieved has been so pragmatic.
Chris Vince (Harlow) (Lab/Co-op)
I do not claim to be a huge expert on pensions, which may be why, rather than focusing on the point last week, I made comments about the hair of the shadow Minister, the hon. Member for Wyre Forest (Mark Garnier). I will not do so again—but it is fantastic hair.
Pensioners in my constituency are passionate about ensuring that they get the best return on their savings—that is hugely important—and that their pensions are secure, as the Paymaster General said in his statement. What reassurance can the Minister give them that the provisions he has set out today and last week will give them the best returns and security?
Torsten Bell
As always, my hon. Friend asks an important question. As I have said, the entire focus of the Bill is on ensuring that we drive up returns for savers. I am sure that he has already read all 200-odd pages of the extensive impact assessment, which sets out clearly that we would expect an average earner who saves over their lifetime, in line with auto-enrolment levels, to see higher returns of around £29,000 to their pension pot when they head towards retirement. That is not an inconsequential amount when we want to ensure that future generations can trust the system to deliver them a comfortable retirement in the years ahead.
As I was saying, the Lords amendments in this area are unworkable, but we must recognise the importance of innovation. That is why we have taken our pragmatic approach. The evidence suggests that the benefits of scale are achieved once a threshold ranging from £25 billion to £50 billion of assets is reached. The scale requirements in the Bill not only target the bottom end of that range—£25 billion—but provide a long timeline for schemes to reach it, especially given that this is a fast-growing market. Smaller schemes require only £10 billion of assets in 2030 to qualify for the transition pathway.
To provide further reassurance, I have tabled amendment (a) in lieu of Lords amendment 37B to require the Secretary of State to publish a report about the effects of pension schemes consolidation and the extent to which innovative product designs are adopted or maintained following consolidation activity, as well as any barriers that may exist to preserving those features. The timing of the report, which is required to be published within 12 months, will ensure that the Government are then able to take necessary action in advance of the scale measures being commenced in 2030.
On Lords amendments 77 and 85, the Government agree with the points made during the Bill’s passage regarding the importance of transparency around, and clear accounting for, public service pensions. I discussed those issues yesterday with Baroness Neville-Rolfe, who tabled the amendments. I completely agree with her that it is crucial that the future cost of payments from unfunded pension schemes is understood and taken into account in Government decision making. That applies to the Treasury in aggregate, as well as to individual organisations making decisions about the nature and level of staffing. We will continue to ensure that accounting and budgetary processes support this.
The Government invite the House to accept our amendment (a) in lieu, which recognises the important principle that Parliament, policymakers and the public should be able to see clearly the long-term cost of unfunded public service pension schemes. The amendment requires the Government Actuary to produce within 12 months a document setting out its analysis of the long-term impacts of public sector pensions, covering both expenditure on benefits and income from member contributions. The document must be provided to the Treasury and the Office for Budget Responsibility, and the former is required to make it available to Parliament. That approach is focused on the evidence base, using the Government Actuary to produce impartial numbers to aid understanding and debates on this issue.
I hope that Members will have heard our serious engagement with the issues raised by peers and by Opposition parties in this House. We are committed to delivering the policy intent in the Bill, given its crucial role in driving better outcomes for savers and the important place given to these pension reforms in our 2024 manifesto. We have tabled significant amendments to address the specific issues raised, aiming to further reinforce the consensus on the Bill that has been evident since its Second Reading in this House. On that basis, I hope that Members will be happy to support our amendments.
Madam Deputy Speaker (Judith Cummins)
I call the shadow Secretary of State.
Steve Darling (Torbay) (LD)
The Liberal Democrats broadly support the proposals before us in the Bill as a whole. I know from conversations with residents in Torbay that there are some challenges within the pensions market, and the Bill as a whole addresses an awful lot of them. However, I suggest that the Minister has been studying his Greek history, assumed the position of Odysseus and developed a Trojan horse, which he has sneaked into the Bill. The Trojan horse is, of course, mandation.
While the Minister may have cut off a couple of the Trojan horse’s legs, it remains a Trojan horse before us. Clearly, as Liberal Democrats, we welcome that as a step in the right direction, but the Government should be shaping the market appropriately through policy so that there is a pipeline of opportunities for investments—that goes across to the Mansion House accord—so that the market has those opportunities and can invest in them appropriately.
There is an element that we need to touch on. Since 2008, there has been risk aversion in the market, which stifles profits; we need to be alive to that. Risk is a good thing when investing, but investments should be sensible and with appropriate spreads. The Bill does elements of that, but I fear that some of the monitoring could stifle risk and therefore stifle returns.
The Liberal Democrats are keen to ensure opportunities. The Government should be ensuring that there are baskets of opportunities to invest in things that matter to our communities, whether regenerating our town centres or social rented housing. We know that people such as Legal & General lead the market in those investments; we need to think about how we can enhance those opportunities. We must also ensure that we are investing in net zero, which is close to the heart of several parties. Again, the Government should be shaping the market in that way rather than dictating. While the Minister alludes to this as a one-shot opportunity, other colleagues are fearful that mandation is the thin end of the wedge.
Finally, I would like to reflect on the changes that the Minister has proposed. We welcome the changes allowing greater innovation and greater development of the market, which are significant steps in the right direction. However, as Liberal Democrats we are not prepared to see the dead hand of Government directing here. We continue to oppose mandation in whatever form it may take.
Torsten Bell
I thank the Members from across the House who have contributed to the debate today. Let me respond directly to a few of their comments. I welcome much of the shadow Secretary of State’s remarks. I am glad that she welcomed many of the Government’s amendments, including those on public sector pensions and around innovation and competition—I appreciate that. I hope, when those issues are debated in the Lords in the near future, that there will be similar consensus across that House.
The shadow Secretary of State raised the question of scale. Again, I am glad that she has welcomed the review that will happen within 12 months of the Bill’s commencement. On scale, I am a bit more confident than she is on the role of small schemes to grow, because we can see significant growth right across the market, including among small schemes, partly because the market itself is growing so fast in the current climate. However, I offer no comment on her pessimism about Tottenham Hotspur; that is for others to speak on.
To be fair, as the shadow Secretary of State set out, the main area of disagreement that remains is around the reserve power. She raised the question of the accord and whether it applied to the whole industry. She is correct; it does not apply to the whole industry, but it does cover 90% of defined contribution assets held within the industry. We are therefore talking about not just a majority but the overwhelming majority of the industry.
The hon. Lady mentioned the Labour manifesto, which set out two focuses on pensions. One was around the question of scale, on which we have just touched and which I think is a matter of cross-party consensus; the second, which, again, I think is a matter of cross-party consensus, is on the importance of delivering change in terms of investment in productive assets in private assets. That is exactly the focus of both the Mansion House accord and the reserve power.
The hon. Lady said the power was about directing specific outcomes. As I have been setting out, it absolutely does not do that. It will not allow any direction of savers into particular assets or particular asset classes, and it offers no ability for Government to take control of pension savers’ pensions. Indeed, I think it is actually dangerous to have members of the public hearing remarks like that when that is categorically not the case.
The shadow Secretary of State is right to say, though, and this maybe gets to the crux of where we are, that the money belongs to savers. That is what this is about and that is what we all agree about; we want to see higher returns to savers. The industry is telling us that diversifying their range of assets is in their savers’ interest and it is admitting that it has not done so to date. [Interruption.] No, that is what the industry is saying. Savers are not saying that, because savers do not have that choice and they are intermediated by providers, some of which have trustees and some of which do not. That is the underlying point: they need to see that change happen, that it has not happened and that we have seen it not happen. Implicitly, what that is saying is that members are losing out from the status quo, and what I am not hearing from the Conservatives is a serious engagement with that reality that has let down savers. [Interruption.] I will come to the point about the previous amendment tabled by the hon. Member for Wyre Forest (Mark Garnier) shortly.
I now come to my right hon. Friend the Member for Birmingham Hodge Hill and Solihull North (Liam Byrne), not least because he admirably set out the big challenge facing Britain, which is to turn this country back into a country that invests in its own future once again. That means higher investment. It is not acceptable that Britain saw both the second-lowest public investment in the G7 and by far the lowest business investment in the G7 under the last Government—and not for some years but for almost every single year. That is the challenge that I think we all want to see addressed. Part of the issue being raised about whether this is about UK assets or private finance is overdone, because what we see around the world is a higher home bias among private asset investments than among public asset investments, for all the obvious reasons about the comparative advantage of different investors in those situations.
My right hon. Friend also rightly says—I think this is, again, part of a cross-party consensus—that moving to that high-investment world is overwhelmingly not about pensions, but much wider changes and about making sure that actual investment happens so firms can actually get things built. That is why this Government have come in and provided the go-ahead for solar farms, wind farms, national grid investments and nuclear power stations that have been held up for too long. That is what a higher-investment country looks like and that is what we need to be getting on with, and I have a nugget of good news to bring my right hon. Friend on that. If hon. Members go and look at the investment levels in the national accounts—I know everybody in this room spends their time doing that—they will see that, since the election, Britain has seen the fastest investment growth of any country in the G7. That is what we are starting to deliver against what we set out as our core objective, which is turning Britain back into a higher-investment country.
The hon. Member for Wyre Forest mentioned his previous amendment, which asked for the reasons why schemes say the change would be in savers’ interest but have not done it. The problem is that we have had a lot of reviews. The Association of British Insurers has written some and published them, explaining why the previous Government’s attempt with the Mansion House compact did not work. We have the answer; I am afraid the hon. Gentleman just does not want to engage with what he is being told.
Mark Garnier
Both sides of this House are going with the grain of what is intended on this. There is a fundamental problem—we all agree on that—but let us get the issues out of the way that are blocking it. We cannot force people into a minefield if the mines are still there; we have to clear the mines and allow them do it. This is the most fundamental point. The Government should not be telling pension fund managers how and where to invest their money. If there is a problem that they are going to encounter, we should get those problems out of the way and managers will go into those assets.
Torsten Bell
I am afraid the hon. Member has just revealed his lack of focus on what is going on. Pension schemes from around the world are investing in British private assets; it is UK pension schemes that are not. The hon. Member implied that there were minefields when investing in Britain. It is that kind of talking down Britain that is the problem. We are making sure that there is a robust pipeline of investments, which is absolutely right.
Alison Griffiths (Bognor Regis and Littlehampton) (Con)
I think all of us on the Opposition Benches would be keen to understand why, if the Minister is so confident that pension funds will invest, he does not make it a choice rather than a mandate.
Torsten Bell
I fear the hon. Lady has not sat through enough of these sessions. Earlier, those on her own Front Bench engaged exactly with some of the arguments that I have made, explaining exactly the points she has raised. I will just say that she should go and have a look at what Australian pension schemes are doing investing in UK infrastructure and go and look at what is happening when US investors are investing in UK venture capital. Why is that happening? It is not because of differential tax breaks—there are very strong tax incentives. No, it is because of a history of not having the collective action problem that we have set out, and the fact that those on the Conservative Front Bench do not wish to engage with that is holding us back.
Helen Whately
On the ABI report that he referred to—he has referred to it before—yes, the ABI has agreed with the diagnosis of the problem, as I set out, as a collective action problem. However, it does not agree with mandation as the remedy. The Minister needs to be clear about that.
Torsten Bell
The truth is that there is a range of opinion among ABI members about that. However, there is agreement across the industry about the need to deliver change.
I turn to some of the comments made by the hon. Member for Torbay (Steve Darling) who, again, kindly did not refer to the Lib Dem manifesto, which called not just for reserve power, but for the direction of pension scheme assets into certain asset classes. I gently say that it is a shame to not see him engage with the substance, rather than taking the easy option of offering high-level, throwaway comments about a thing that he had in his own manifesto. On the plus side, however, he is right to say that the investment pipeline is important. The issue there is that that is different in different sectors. Within the infrastructure sector, it is obviously about having a country that is delivering actual infrastructure. Within venture capital, it is about making sure that there is easier intermediation for pension schemes into a market of which they have less experience. We are doing exactly that and that is what the Sterling 20 process is doing. I see very good engagement between pension schemes right across the board on that and every chief executive I speak to is engaging with exactly those questions that the hon. Member for Torbay raises.
The Bill has received detailed scrutiny over the past year, and it is a better Bill for it. We have brought forward amendments that, subject to delivering the core pension reform programme of the elected Government, respond to the detailed points raised by peers in the other place. With those improvements, this is a Bill that industry worker representatives and charities wish to see passed into law. The TUC said:
“It’s vital the Bill is passed so workers can start to benefit.”
Age UK has said the measures in the Bill will help both the pensioners of today and the pensioners of tomorrow. It is important that these can be implemented as soon as possible. Aviva welcomed today’s amendments and said:
“We hope this is enough to build the consensus needed for the Bill to be passed”.
The ABI has said that it and its members are
“clear that we want the Bill to pass”.
They are right, and I commend the Government’s position to the House.
Question put.
Alternative Measures to GDP
Torsten Bell Excerpts(2 months, 2 weeks ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Parliamentary Secretary to the Treasury (Torsten Bell)
It is always a pleasure to serve under you, Sir Alec. I start by congratulating the hon. Member for South Cotswolds (Dr Savage) on securing this debate and on her speech. I am glad to be here for three reasons. More than most Ministers, I enjoy a chance to discuss statistics, so that is high on the list. The second reason is that I agree with lots of what the hon. Member said about the broad purpose of government and the need to reflect all that in how we govern. The third reason is that everybody likes a quote from Bobby Kennedy, and she has supplied one.
I will start with some of the areas of less agreement and then come to our agreement, so that we can end on a high. A good summary of my view is that there is a very large amount more to life than GDP, but that the lack of GDP growth in recent years has been a very big problem for ordinary working people. That was the big absence in the hon. Member’s speech: she did not wrestle with the fact that the lack of GDP growth over the past 15 years has been a huge problem for the British people that has had real effects on all our constituents, particularly those on the lowest incomes. Much of her speech could have been given in 2010; it did not engage with the real world as we have lived it for 15 years, and the catastrophic consequences of a lack of productivity growth feeding through to a lack of wage growth, feeding through into food bank use and the rest. Those are really important things that her speech did not do justice to.
All of that does not mean that I do not agree with lots of the points she raised, but I see those as being entirely consistent with the Government’s view that economic growth does matter, but not as an end in itself. It matters because it remains one of the most reliable ways to raise living standards and because, for example, wages in Swansea, where I am a representative, did not grow between 2009 and 2023. That is what a failure of Government looks like, and it is a failure of GDP growth, not because of too much focus on GDP growth.
GDP is also important because it is very highly correlated with—I am not saying it is a cause of them—other things that we do care about: health and wellbeing. The correlation between longevity and GDP over time and across countries is very strong indeed. We all, I think, care about longevity because we are hoping to go on for as long as is humanly possible—not in speeches but in life generally.
It is good news that the UK has seen some signs of progress in GDP. It had the highest GDP growth among European countries in the G7 last year. The hon. Member will have seen recent GDP statistics for the start of this year, which show more significant growth than people expected. But—this is where I am in complete agreement with her—there is much more not just to life but to government and statistics than GDP. We care about secure power, clean water, lower poverty and lower inequality, not just higher GDP. All those things are incredibly important and we should care about all of them; Government’s job is to focus on them.
Let us turn to GDP and some arguments that that the hon. Member made about it. I will explain why I do not quite agree, even though I agree with many of the big-picture arguments that she made. Her argument was that there has been too much focus on GDP recently and that has led to bad outcomes. Has there been too much focus on GDP? If so, it has not had any effect because there have been the lowest levels of GDP growth that we have seen in a very long time. GDP per capita fell in the last Parliament—so there was apparently a huge focus on it but it fell. Growth in GDP per capita over the 10 years prior to that Parliament was incredibly sluggish. Was that because there was too much focus on it? No. That is why people oppose the building of houses: they do not care about younger generations or care enough about GDP; they just care about themselves, in some cases, and that is not acceptable any more.
Why, if we cared just about GDP, would successive Governments, disgracefully including the Liberal Democrats after 2010, have slashed public investment levels? Such public investment boosts GDP in the long run. That would be the target. It is a good thing for our society. It would make our country cleaner and help with clean water and the energy crisis, yet public investment levels were slashed. People were not motivated by GDP; they were motivated by easy politics. That is what happened in that Government.
The hon. Member gave the specific example that building prisons would boost GDP. Is that what actually happened? The last Governments, from 2010 onwards, did not build any prisons. They were not motivated by GDP; they were motivated by easy answers. That is why we have had to come into Government and deal with the prisons crisis that was left to us. What actually happened was the opposite of the argument that the hon. Member made.
It is sometimes argued that GDP and the other things that we care about are in tension. I totally agree. But remember: there is one area where they heavily overlap. GDP, in many ways, measures the effectiveness with which we turn resources into output. That is what we who are environmentalists should care about. We want things to become more productive. Fewer resources going in to produce the same output gets us higher GDP and a better environment. That is a really important point to hold on to. We have had a 17% fall in energy usage in the recent past. Some of that is because we have become more efficient at using that energy. That is absolutely the kind of productivity growth that we need; it helps GDP but it really helps the environment.
Chris Hinchliff
On the point about statistics and what GDP measures, I ask the Minister to take away the issue of imputed rent. A fairly strange part of GDP, it measures hypothetical rent on the value of existing houses, inflates the value of our GDP as a country, and could be part of what we are measuring when we say that we are trying to achieve GDP growth, though it is actually entirely theoretical.
Torsten Bell
A debate has come on to imputed rent; we can tell it is nearly 4.30 pm on a Tuesday. The hon. Member is tempting me—and I will engage with the question. What is the big picture that matters regarding the state of Britain when it comes to housing? I will come to why imputed rent is relevant to that and tells us something important.
Housing in Britain is too expensive—incredibly expensive —but most of the population of Britain do not face market housing costs because they are homeowners who bought a long time ago. The negative effect of those high housing costs is very severe for a subset of the population. If I am honest, I think that is why Liberal Democrats oppose house building left, right and centre: the consequences for younger generations of not having built, over the last 20 years, homes that they can live in, that keep their housing costs down and that let them and their children lead a decent life have been ignored because we did not care enough about—forget GDP—actual people and their families. That is what happened. Imputed rent tells us the effect of that, which is that those people who do not face market housing costs but do live in a property that they own, are receiving a stream of benefits from owning that property. By living in it, they are consuming that; that is all that is telling us. The important lesson from GDP and housing is, “Get on with building some houses because younger generations are getting stuffed over,” not, “We paid too much attention to GDP.” That would be the opposite of what it teaches us.
What is GDP a measure of? It is imperfect for lots of the reasons that have been set out by my hon. Friend the Member for North East Hertfordshire (Chris Hinchliff), but it does represent income flowing into people’s pockets, business revenues, and a tax base that funds our public services. Those things do matter. My hon. Friend is right that they are not the only things that matter—I totally agree with that—but they are real things. They are not abstractions, and we do need to care about them. If people do not care about those things, they do not mind that Britain has seen the lowest levels of business investment in the G7 year after year.
Turning to areas of agreement, I absolutely agree with lots of what the hon. Member for South Cotswolds said about the limitations. I also endorse her praise for the approach of the Welsh Labour Government in this area; lots of my friends have spent years developing that work. On its own, GDP does not capture everything that underpins either our economic strategy or what matters in people’s lives; that is absolutely correct. It does not, for example, tell us how growth is distributed or about wealth inequalities, physical and mental health, and environmental sustainability. As the hon. Member set out, those limits have been long recognised, but we need to keep pushing against them. In 2016, the Bean review set out some of the issues that she has raised about the need to consider broader measures of wealth distribution and natural capital. In response, the ONS has put more resources into some of those things. Some progress has been made over the last 10 years—obviously, we were not in government so I am not claiming credit for that.
The Dasgupta review further encouraged us to treat natural capital as an economic asset, as we absolutely should. Those principles have been accepted by the Government and they are being embedded in decision making. Hon. Members will have seen the supplementary guidance to the Green Book that puts in place the appraisal of environmental impacts alongside economic costs.
The truth is that it is easy to say that everyone just myopically focuses on GDP. I have set out that that is not the case because if they did, hopefully we would have seen a better job over the last 15 years. The truth is that across Government we consider a much wider range of economic indicators. Wellbeing is an important one; I have carried out research on wellbeing data and it does have something to bring to the party. But the strongest conclusion from wellbeing data is that people need a decent income and they need to be healthy. The Government do focus on those things because they should. Because we care about wellbeing, we are lifting the two-child limit. Because we care about health, we are investing in the health service to bring down waiting times. Our tax rises, which are opposed by all the Opposition parties, are delivering those things. We care about wellbeing because health is really important.
Even within economic indicators, what is the truth? We look at indicators not just on GDP, but on income, pay, employment, jobs, regional performance, and the environment. I encourage the Government to continue to do that. Ongoing improvements to the national accounts will also help better capture natural capital and the quality of public services, not to mention AI and the things that tend to get reported in the newspapers. Ministers look at all those things when they make policy. When I am looking at pensions policy, I am definitely into the weeds of health data and healthy life expectancy. I promise hon. Members that GDP is not dominating all those decisions.
To conclude, GDP remains central to how we understand the economy. It tells us something important, but partial. Both of those things are important to understand. It is not remotely a measure of everything that matters. It does not aim to do justice to non-market interactions, which is a technocratic phrase for the fact that it does not do justice to some of the most important things in our lives—not least, caring for each other. That is why this Government are so committed to both reversing the dreadful economic performance seen under the previous Government—performances that left wages flatlining—while also assessing success against a far wider range of measures. The goal is a Britain that is not just growing but thriving.
Question put and agreed to.