Pension Funds: Investments and Tax Relief

Debate between Viscount Younger of Leckie and Baroness Hayman

Thursday 29th June 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

We are not unaware of this. We have carefully considered the balance between the burden of reporting requirements for trustees on climate risk and the need for urgent action in this area. That is why we have introduced TCFD requirements only for the very largest schemes, as my noble friend will probably be aware, which have, let us face it, more capability and capacity. It gives us the widest coverage of pension scheme numbers while minimising burdens on trustees.

[Baroness Hayman (CB)]

My Lords, I draw attention to my interests as recorded in the register and to the fact that I have a son who works in this area. The Minister referred to the complexities and nuances of the clarification of fiduciary duty, an issue that was much debated during consideration of the Financial Services and Markets Bill. What interaction is His Majesty’s Government having with the Financial Markets Law Committee, which is looking at this, and the round tables? Will parliamentarians have the opportunity to be involved in those?

[Viscount Younger of Leckie (Con)]

I would hope that parliamentarians have a role in this; I shall certainly get back to the noble Baroness on that point. As she will know, guidance states that trustees can consider climate change, but we acknowledge that there is some ambiguity, which I think is the gist of the noble Baroness’s question. That is why we are engaging with the Financial Markets Law Committee working group, which is discussing further fiduciary duty. The next meeting will take place at the end of the month.

Pension Schemes: Guidance

Debate between Viscount Younger of Leckie and Baroness Hayman

Monday 13th March 2023 Lords Chamber

[Viscount Younger of Leckie (Con)]

As I have said before, it is the case that more progress needs to be made, and the noble Baroness has much experience in this field. Let us start with climate change, which poses major financial risk to pension schemes and savers’ returns, with almost £2 trillion in assets under management. I reassure her that pension schemes in scope of the DWP’s requirements, as I think she will know, must produce the annual TCFD report, which is based on four key pillars: governance, strategy, risk management, and metrics and targets. That might be five, but I think it is four.

[Baroness Hayman (CB)]

My Lords, I declare my interests as set out in the register. Has this afternoon’s discussion not illustrated that there is a lack of clarity about how fiduciary duties are interpreted in terms of the long-term risks and possibilities of climate change-related investments? Therefore, would the Minister reconsider having a conversation with his colleague, the noble Baroness, Lady Penn, about the amendments on this point to the Financial Services and Markets Bill?

[Viscount Younger of Leckie (Con)]

I can certainly pass the message on to my noble friend. On fiduciary duty, the noble Baroness will know that trustees have a duty to act overall in the best interests of members. This has been traditionally interpreted as covering risk-related returns as well. We made clear in our 2022 stewardship guidance, perhaps as an assurance, that trustees should be considering whether climate change risk is financially likely to be a material risk.

Bereavement Benefits (Remedial) Order 2022

Debate between Viscount Younger of Leckie and Baroness Hayman

Tuesday 17th January 2023 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Viscount Younger of Leckie) (Con)]

My Lords, I am pleased to introduce this remedial order, which was laid before the House on 13 October. It will extend the higher rate of bereavement support payment and its predecessor, widowed parent’s allowance, to bereaved cohabitees with dependent children. These benefits can currently be paid only to survivors who were in a legal union—that is, married or in a civil partnership—with the deceased on the day they died.

In the McLaughlin judgment in the Supreme Court, handed down on 30 August 2018, and the Jackson case in the High Court, handed down on 7 February 2020, the legislation on WPA and the higher rate of BSP respectively was declared incompatible with Article 14 of the European Convention on Human Rights. This article requires all rights and freedoms set out in the Act to be protected and applied without discrimination. In both cases, the courts found that, by restricting eligibility to those in a legal union, current legislation discriminates between children on the grounds of the legal status of their parents’ relationship.

This order provides a remedy for both Great Britain and Northern Ireland. It does so by amending the Social Security Contributions and Benefits Act 1992, the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and the Pensions Act 2014. I am satisfied that the provisions of the order are compatible with the European Convention on Human Rights. The Joint Committee on Human Rights has reported on this draft order and recommended its approval.

I will put this draft remedial order into some context. It was in 1925 that financial assistance following a bereavement, in the form of national insurance pensions for widows, was first introduced. This was open to all widows whose husbands fulfilled the contribution conditions, paid at a flat rate with additional allowances for children. This reflected the widely held expectation at that time that a woman would not return to work after marriage.

Further reforms culminated in the introduction of three new bereavement benefits: widowed parent’s allowance, bereavement allowance and the bereavement payment, all in 2001. WPA replaced widowed mother’s allowance, and extended support to both widows and widowers with dependent children. Like its predecessor, it was intended to provide ongoing financial support following the death of a spouse or, from 2005, a civil partner.

The bereavement payment was a one-off payment for surviving spouses, both with and without dependent children. Bereavement allowance was a short-term payment for widows and widowers aged 45 or over with no dependent children. It was not possible to get both widowed parent’s allowance and bereavement allowance.

It became evident that this system of bereavement benefits, based on outdated assumptions, was complex to understand and administer, and could be unfair to claimants. With universal credit’s introduction—a benefit designed to help with ongoing living costs—there was a need to look again at the whole package of bereavement benefits, but especially widowed parent’s allowance, which could be paid for the same purpose. So we modernised bereavement support by introducing a new benefit, the bereavement support payment, from 6 April 2017, to help with the more immediate costs of bereavement and to allow for a period of adjustment.

Although we do not specify what these costs are, it is our intention that they should be those associated with the bereavement. Each family will have different priorities. For some, it could be funeral costs or dealing with debts left by the deceased. For others, it may include budgeting adjustments following a loss of income or additional travel simply to meet family members.

BSP consists of an initial lump sum followed by 18 monthly instalments, and a higher rate is paid for those with dependent children to recognise that families with children may need extra help. Unlike its predecessors, it is tax-free and disregarded for the purpose of income-related benefits, thereby helping those on the lowest incomes most.

Bereavement benefits have only ever been payable to those who were in a legal union with their deceased partner. They are contributory benefits, with eligibility linked to the national insurance contributions of the deceased partner. Such inheritable benefits, derived from another person’s national insurance contributions, have historically been based on the concept of a legal union.

I will now move forward and outline what this draft order covers. Eligibility for WPA and the higher rate of BSP will be extended to surviving partners with dependent children who were living with their deceased partner as if they were married or in a civil partnership on the date of death. This includes partners who are or were pregnant on the date of their partner’s death, and there will be no qualifying period of cohabitation. This change will benefit thousands of families with dependent children.

This draft order applies to those who would have been entitled to either of these benefits on, or from, 30 August 2018. This was the date on which the Supreme Court, in the McLaughlin case, ruled existing WPA legislation incompatible with the European Convention on Human Rights and, effectively, the date on which the incompatibility was accepted as final. The Committee will know that it is exceptional to make social security change retrospectively; we consider this a logical and fair start date.

For BSP, where the death occurred before this order becomes law and the claim is received within 12 months of that date, claimants will get the full amount due to them. If the claim is received later, the claimant will get up to three backdated monthly payments, plus any remaining monthly payments due. The claim must be made within 21 months of the order coming into force for any BSP to be payable.

Where a claimant’s partner died before 30 August 2018, we will make a part payment and no initial lump sum will be payable. Where the death occurred after this order comes into force, BSP will be paid subject to the usual claim time limits: 12 months for the initial lump sum and three months for each instalment.

Claimants will be eligible for WPA where their partner died before 6 April 2017 and they continued to meet the entitlement conditions on 30 August 2018. They too must claim within 12 months of the date the order comes into force. They may also be entitled to ongoing payments if they continue to meet the WPA eligibility criteria at the point of claim.

Extending these benefits to cohabiting partners means that there may be cases where more than one person claims for the same death. This could apply in cases of polyamory or people dividing their time between two households, or where there is a separated spouse who no longer lived with the deceased. As noble Lords can appreciate, this is a complex area and my officials have been working hard to develop an approach that balances protecting taxpayers’ money and the contributory principle, while ensuring that any approach reflects people’s real-life circumstances.

In these cases, this order proposes that we pay just once per death, prioritising who was living with the claimant on the date of death. Where there are claims from different addresses, entitlement would be established as part of the normal decision-making and appeals processes.

In very rare cases, more than one potential claimant may have been living with the deceased on the date of death. Here, entitlement will be decided according to a hierarchy, intended to reflect the most established relationship as this person would usually bear the majority of the bereavement costs. Should this leave more than one potential claimant and become more complex, the Secretary of State would determine who is entitled.

Transitional protection will ensure that those already in receipt of WPA or BSP before the date this order comes into force do not lose their entitlement for the duration of their award. WPA is treated as income for the purpose of income-related benefits, such as universal credit, and is assessed at the point of award.

This order provides for all retrospective WPA payments up to the date of claim to be treated as capital and disregarded for 12 months, or 52 weeks for the purposes of income-related benefits. This ensures that claimants will not lose any existing entitlement to income-related or passported benefits, such as free school meals, as a result of receiving a retrospective award. This order also ensures there is a disregard for the same period for retrospective BSP awards. The usual rules will apply to future BSP and WPA entitlements.

We do not propose any changes for the treatment of income tax; BSP is already tax-free and WPA will be taxed according to the period of entitlement, as per the existing rules. We will communicate to make WPA claimants aware that any payment under this order may incur an income tax liability. The payment of BSP does not affect a person’s tax credit entitlement. WPA will be treated as income for tax credit purposes, as is common practice for social security benefits. It will be assessed in the year of payment rather than entitlement, so no adjustments to past years will be needed.

In accordance with paragraph 3(1) of Schedule 2 to the Human Rights Act 1998, a proposed draft of this order was laid for a 60 sitting-day period on 15 July 2021 to allow for Members of both Houses and other stake- holders, including the JCHR, to make representations. I fully considered all the representations made on the draft proposed order before preparing this draft for affirmative resolution. In doing so, I agreed with the recommendation of the JCHR to amend the order to ensure that pregnant WPA claimants were covered in the same way as those in a legal union. I also agreed with its recommendation to ensure that the implications of the retrospective effect of the order on entitlement to income-related benefits be taken into account. I have also included a number of technical amendments in response to comments made by the JCHR.

Finally, I emphasise how straightforward it will be, as we see it, for people to claim. We already know from our evaluation that claimants have a very positive experience of claiming bereavement support payment, with 97% reporting satisfaction with the process. We have also provided a paper claim form especially for cohabitees, accessible online at GOV.UK or by calling DWP’s bereavement service. For BSP, there will also be the option to claim online.

With that detail behind me, I have pleasure in commending this order to the Committee. I beg to move.

[Baroness Hayman (CB)]

My Lords, I am grateful for the opportunity to speak today and to the noble Viscount for the clarity with which he introduced this order. As he made clear, there are many complexities around the subject but the reason that I am here today is very simple.

In October 2020, I received an email and I shall read some of it: “Dear Madam, I am writing to you to raise an issue with the Department of Work and Pensions. On 12 September 2020, my partner of 12 years sadly passed away after losing his five-year battle with kidney cancer. He leaves behind me and our six year-old son. When going to apply for a bereavement support payment, I learned I was not entitled to claim this support as my partner and I were not married or in a civil partnership. I am writing to you because I feel this is a very unfair law and needs to be reviewed straight away, especially when we are going through a national pandemic and I find that I am not the partner of a very strong and resilient man any more, and I have been left these difficulties and increased anxiety as I face bringing up a child alone. I am by no means begging but I do think that this is discrimination to couples who love each other and live with each other as man and common-law wife with children, because they haven’t got a piece of paper to say they are together. I hope you can raise this issue.”

Public Spending: Borrowing Increase

Debate between Viscount Younger of Leckie and Baroness Hayman

Thursday 13th October 2022 Lords Chamber

[Viscount Younger of Leckie (Con)]

On the mortgage market, I am very aware of the pain that many people are suffering at the moment. Interest rates have been going up—this is not just a matter for the UK; it is a global issue, particularly among the developed countries—and interest rates link into mortgage rates. We very much hope that they will come down. This is very much a matter that the Bank of England is taking decisions on, and we are all aware of the announcements that have been made to stabilise the markets.

[Baroness Hayman (CB)]

May I take the Minister back to his response on the issue of public service expenditure? In response to the noble Baroness, Lady Kramer, he said that he was very well aware of what the Prime Minister said. I think many of us would like to know what the Prime Minister said actually means. Does it take into account the effects of inflation?

[Viscount Younger of Leckie (Con)]

We will obviously have to wait for the fiscal statement that is coming on 31 October. We, and she, expect departments to continuously be identifying opportunities to bring down the cost of delivering public services through better use of technology and by reducing bureaucracy. It is also important to praise the level of service and the hard work that public services and the public sector undertake.

Trade Bill

Debate between Viscount Younger of Leckie and Baroness Hayman

Committee stage
Tuesday 13th October 2020 Lords Chamber

[Viscount Younger of Leckie (Con)]

My Lords, I have already spoken during the course of this Bill of the Government’s commitment to addressing the global environmental challenges that we face. I agree with the noble Lord, Lord Inglewood, that we should continue to debate these very important matters, not just for the UK but for our whole planet. On this at least, the noble Baronesses, Lady Hayman, Lady Jones and Lady Kramer, and I are in full agreement. However, we cannot accept the amendments, and it is incumbent on me to explain why.

Amendment 77, in the names of the noble Baronesses, Lady Hayman, Lady Jones of Moulsecoomb and Lady Kramer, would create a new role for the TRA when it provides advice and support to the Secretary of State, by requiring it to analyse impacts on the UK’s international environmental obligations. This amendment would fundamentally change the function of the TRA, which is being established to act as the UK’s investigatory body for trade remedies. Its core role will be to determine whether to recommend imposing trade remedy measures, in accordance with the rules set out in the relevant WTO agreements. Its role does not and should not extend to providing expertise on the UK’s international environmental obligations. To do so would detract from its function as the UK’s investigatory body for trade remedies. This expertise lies elsewhere across other departments and NDPBs, and requiring the TRA to duplicate it is both unnecessary and wasteful.

I turn to Amendment 83A, in the name of the noble Baroness, Lady Kramer, but spoken to by the noble Baroness, Lady Bowles of Berkhamsted. The amendment would add further criteria to when the Trade Remedies Authority or the Secretary of State consider whether anti-dumping or anti-subsidy remedies meet the economic interest test. Specifically, it would require the UK’s environmental obligations to be taken into account, as far as they are relevant. As with the previous amendment, the primary focus of trade remedy cases is, and has to be, protecting domestic industry from injury where appropriate. Trade remedies cases are not the vehicle for progressing the UK’s domestic or global ambitions on environmental issues, although environmental implications could be considered by the Secretary of State as part of her consideration of whether the measure is in the public interest. On this basis, I would ask that the amendments be withdrawn.

[Baroness Hayman (CB) [V]]

My Lords, I am grateful to everyone who contributed to this short debate. Of course, I am disappointed by the Minister’s response. Ministers at the Dispatch Box—and I do not doubt their sincerity—talk about the Government’s commitments in this area, but we hear more talk about general commitment and less talk about specific actions. Time is running out; we are behind in our own targets for reaching net zero by 2050, and I maintain the view that, as legislators, it is important that we put a climate focus on every policy and piece of legislation. In the area of trade, with its international repercussions, there is an overwhelming argument for so doing. But perhaps we will revert to these issues, and the Bill’s silence on climate issues, at a future date. Meanwhile, I beg leave to withdraw the amendment.