Report (1st Day)

Pensions Bill – in the House of Lords at 3:00 pm on 24th February 2014.

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Votes in this debate

Clause 2: Entitlement to state pension at full or reduced rate

Amendment 1

Moved by Baroness Hollis of Heigham

1: Clause 2, page 2, line 7, at end insert—

“( ) Regulations may provide for circumstances in which a person may opt to have a year treated as a qualifying year if by aggregating income from two or more jobs, that person’s earnings are equal to or greater than the lower earnings level for that year.”

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 3:07 pm, 24th February 2014

I am grateful for the tolerance of the House in allowing me to delay speaking for a moment or two while noble Lords are leaving the Chamber. They are clearly underwhelmed by the issue that we are about to debate.

I strongly welcome the new state pension. Pensions are attached to the waged labour market. Only one job in four created since 2008 is, according to the Work Foundation, permanent; 1 million or more are zero-hours contracts with no certainty of any work at all. Hundreds of thousands of others are short-hours contracts and, along with other non-standard employment patterns such as term-time working, job sharing and so on, comprise 40% of all jobs—I repeat, 40%—as employers seek to match a flexible and irregular labour force to flexible and irregular demand.

Part-time work and flexible work may suit, and does suit, many women, students or older people on a pension. Those jobs are in cleaning, catering, domiciliary care—involving 150,000 people—hotel and retail, and are usually paid at around minimum wage level. Very many of those people will not be building a state pension. Our pension structure, both state and private, has not yet caught up. It is 10 or 15 years behind as the plates shift in the labour market.

This amendment, which is permissive, seeks to put a pension floor under workers who may work in several mini-jobs and put in quite long hours—30 or so a week—but who cannot, under rules set out decades ago, build themselves a new state pension. If they are in one job with sufficient pay they will build a state pension, but if they are in several jobs with identical pay they do not. If your Lordships agree today we can begin to do something about it.

Under Governments of both parties we have sought to credit people into the national insurance system for a state pension where, for good reason, people are not in waged work. They include mothers of young children, disabled people and carers. Universal credit, which I strongly support, will credit another 0.8 million people into national insurance, I understand.

So where are we? From 2016 you will need 35 years’ worth of credits or payments into the national insurance system to get a full state pension. If you are unemployed and on JSA, and later on UC, you are credited in for free. If you have a child under 12, are a grandparent caring for a child whose mother works or are on disability benefits or carer’s allowance, you are rightly credited in for free. Your Lordships have over the years been at the forefront of pressing all Governments to bring such groups rightly into the national insurance system. If you earn above the lower earnings limit, or LEL, at £5,700 a year you come into the national insurance system for free. If you earn more than £7,500 in a single job you come into the NI system but pay. If, however, you work 30 hours a week and earn £11,000 a year but in several, splintered jobs, you cannot add the pay together to get above the LEL. Come retirement, you do not have a decent state pension.

Hence this amendment. It seeks an entirely permissive way in which to future-proof our state pension structure for those in the new flexible economy who work in and combine mini-jobs, by allowing them to combine the earnings from several jobs for a pension if that takes them over the LEL at £5,700. In the past, perhaps 50,000 people, mostly women, were affected, especially in rural areas, as they stitched together a patchwork of cleaning, fruit picking, bar work and so on, and they relied instead on their husband through the married women’s dependency pension. That pension, which would have protected her, is being abolished. She—or you, or we—is on her own and will not get any state pension from her patchwork of mini-jobs. From now on she gets nothing at all. The reason is that the labour market has changed dramatically in the past decade or so with the growth of zero-hours and short-hours contracts.

Short-hours contracts guarantee part-time work for three, 13 or maybe 23 hours. Zero-hours contracts, however, do not guarantee you any hours at all. You may in practice work 10, 15 or more hours fairly regularly. Equally you could find at the beginning of your shift, 10 minutes before you are due to start work, that there is no work for you: you get no pay and go home. I understand that every Domino’s Pizza worker is on a zero-hours contract—ZHCs—as are hundreds of thousands of staff in McDonald’s, Boots, Burger King, Subway, Wetherspoon and Sports Direct. They work in food joints, call centres, customer services and domiciliary care; they are cooks, cleaners, drivers and waiters; they are agency workers—almost all of whom are on zero-hours contracts. Most are on, or on around, minimum wage. Far from this being a shrinking sector of the market, the number of such contracts is increasing rapidly and very many of those workers will not be building a new state pension.

How many people are affected? Labour force statistics show 250,000—from a very small sample—but everyone, including the ONS itself, thinks that this is a severe underestimate. The chartered institute of personnel directors polled 2,000 employers and believes that about a million people are on zero-hours contracts alone, excluding other short-hours contracts. The research of the Resolution Foundation and the Work Foundation works with these figures. The independent research by Mass1 of 5,000 union members for Unite includes all types of short-hours contracts, including zero-hours contracts, and estimates that they affect 5.5 million people. Some zero-hours contracts are in better paid IT or FE and above the lower earnings limit. Some may offer regular work; some may go to people who are in their 60s and are happy to amplify an existing pension. But how many who do need to build a pension are earning below the lower earnings limit of £5,700 in one job? Of these, how many are running alongside it another job, also below £5,700, which, added together, would bring them into the NI system and give them a pension? Of those, how long may they work in this way, outside the NI system, so that over the years ahead they cannot make good their shortfall? Finally, of those in several mini-jobs, how many may none the less come into the NI system through credits, because they have a child or because they are on universal credit?

My data come from all the existing research that I am aware of. With the different sample sets and with cross-cutting the findings—which I have done as honestly as I can—I can only make an estimate, so I apologise that the data do not allow more precision. Half of those under the age of 30—3.75 million, the Mass1 survey suggests—are on short-hours contracts of some form or another. Usually, they will not get credits, not even for children, or qualify for UC if they are single people, which they usually are, and living at home, as often they are. From the personnel directors’ survey of zero-hours contracts, nearly 40% work under 16 hours a week, in other words, below the LEL. Of all part-time workers in April 2013, 30% earned below the LEL, the entry point to NI, according to Unite. A third of those run other part-time work alongside their first short-hours jobs and two-thirds of those second jobs are at minimum wage or also below the LEL.

Such patterns of work may continue for many years. It is not a question of this being temporary, for students who will soon be in full-time jobs. Such patterns may continue for many years. The chartered institute of personnel directors’ polling of employers shows that 40% of zero-hours workers have been with their employers for five years or more and 20% for 10 years or more. In that time, most of them will not be building up a state pension. If in that period they cannot earn above £5,700 in any one job, they will not qualify for an adequate state pension, whatever their total wage. I calculate as best I can—it is a guesstimate—that perhaps 250,000 people, very often in their 20s, are working in two or even three part-time jobs, each of which is below the threshold but which, aggregated, could bring them into the NI pension system. Most want but cannot get more hours in any one job. They might earn £11,000 from two jobs and may even pay tax, but they cannot build a state pension for the simple reason that their wage comes from two jobs, not one, and they are not allowed to put them together.

In the past, we were told that their pay could not be aggregated for national insurance purposes because you could not divi up employers’ national insurance among different employers and that, in any case, the numbers were small, were temporary, were declining and UC would sort it. Not one of those statements do I believe to be true, and we need to rethink the issue.

UC will indeed help some and I welcome it, but it will not usually help single people—the largest group—nor usually women without younger children or households where the joint income, including his income, floats them off UC altogether. Nor are the numbers small and declining: I estimate the figure to be some 250,000, and it is growing. Given the real-time information built into UC, we now know who gets what without burdening employers. In other words, the old obstacles to aggregation have gone. In any case, do we actually need an employer’s contribution? After all, those on benefits such as JSA have no employer, do not pay and are in the system, and those in a single job earning £7,000 or so do not pay but are in the system.

This Bill rightly—and I congratulate the Government on it—brings 4 million self-employed people into the new pension system without an employer’s contribution but paying just £2.70 a week. We could bring short-hours workers, including zero-hours contract workers, into the system by credits, as we do the unemployed, or by payments, such as with the self-employed. We could use voluntary buy-back NICs when people approach retirement, except that the Government currently will not allow us to do so because it is not possible to go far enough back. The amendment does not propose a particular solution, although I can think of several. We need departmental resources to see which makes best sense. The amendment as moved is permissive and would cost no money at all.

It is said that future regulations may allow this sizeable cohort of people—I believe there are a quarter of a million or more at any one time and perhaps several million people over their working lives—to come into the NI system by whatever route any future Government may choose, or indeed not choose. It would mean that in future, if we wanted to address this issue, we would not need primary legislation because a permissive power would be built into the Bill—a statement which could be drawn down in any future policy development. Zero-hours and short-hours contracts are a growing part of our deregulated labour market.

On 5 February the House of Commons had a debate on job insecurity. Vince Cable helpfully has a review of zero-hours contracts under way, reporting, I understand, at the end of March. Needless to say, every single speaker in the debate at the other end ignored the issue of pensions. Every single piece of research—there are about half a dozen—on zero-hours contracts that I have read ignores the issue of pensions. However, we have a Pensions Bill and making this permissive amendment to it would have the DWP poised to respond swiftly to the BIS review.

The amendment would help to future-proof the Bill and allow us, should we see fit following Vince Cable’s review or beyond, to put a pensions platform under thousands of people who are poorly paid and deeply insecure with fractured work and yet are often unable to move on to better jobs. Why should they lose their state pension because we want services and employers want flexible staff around the clock? That should not cost them their pensions. It is the dark side of the flexible labour economy. This afternoon, with your Lordships’ agreement, we could do something about it at nil cost. Therefore, I beg the Minister to accept the amendment and to take this power for the future. We should not turn our backs on some of the most vulnerable and insecure workers in the country. They have difficult working lives. Let us not blight their pensions as well. I beg to move.

Photo of Baroness Drake Baroness Drake Labour 3:15 pm, 24th February 2014

My Lords, a sustainable welfare system needs to be affordable, but it also has to be inclusive and responsive to the realities of the contemporary labour market. For a long time, the national insurance and state pension system has been exclusive, indeed unfair, in its application to a particular group of workers, mainly women—a community which the department estimates to be about 50,000 and consisting of people who undertake mini-jobs. Each job delivers earnings below the lower earnings limit of £5,668, the access point for the national insurance and state pension system, but there is no provision for people with these mini-jobs to aggregate their earnings in a way that would allow them to enter the national insurance system. For example, a woman with two part-time jobs, earning £100 a week from each, will not accrue national insurance and pension rights unless she is covered by some alternative crediting arrangements. Someone earning £110 from one job would accrue. Yet £100 equals about 16 hours on the national minimum wage, so a person with more than one such mini-job could be working a significant number of hours.

Mini-jobs may be driven by caring responsibilities, work availability and, more recently, the increasingly common phenomenon of the zero-hours contract. Some of these women could gain state pension through their husband’s entitlement, but from 2016 they will not be able to build up an entitlement through their spouse because the new single-tier pension allows women to accrue pensions only in their own right. My noble friend Lady Hollis demonstrated the example of women in households who no longer have young children and whose spouse’s income floats them off universal credit being locked out of the pension system. The Bill makes the default position of entitlement through their spouse for many women disappear, which gives the problem fresh urgency.

My noble friend Lady Hollis has long campaigned to have this unfairness addressed and lists the rebuttals she has faced over the years: that it is not reasonable to try to share employers’ national insurance across mini-jobs; that the women will not want to pay class 1 contributions; that there are not very many of them; that their situation is temporary; that they have time to make up missing years; and, if all else fails, that there is pensions credit.

However, the urgency and the scale of the problem have increased exponentially since my noble friend started her campaign and those rebuttals are no longer valid. A much larger number of people with mini-jobs are affected as a result of the growing use of zero and short-hours contracts, where workers have little or no control over the hours they may be offered in any one week. The Office for National Statistics estimates that 250,000 people worked on zero-hours contracts between October and December 2012. However, its survey relied on people understanding that they were on zero-hours contracts, and the ONS has conceded that that may well have resulted in the true figure being substantially understated and that it may be much higher. The ONS is now running a survey to,

“obtain robust data directly from employers”.

As my noble friend said, the Chartered Institute of Personnel and Development suggested that up to 1 million people—around 3% to 4% of workers in the UK—are on zero-hours contracts.

The zero-hour mini-job problem is now systemic in nature. According to the Government’s workplace employment relations survey, in 2011 23% of workplaces with 100 or more employees used zero-hours contracts. Surveys reveal sector concentrations too: 61% of domiciliary care workers in England were employed on zero-hours contracts; and Unite and others report a high incidence in low-paying sectors such as the docks, retail, catering and social care, and they are not restricted by age. These workers face weekly insecurity in hours and pay and many are not building up entitlement to national insurance benefits. The DWP and the Government will have to address a problem that now has scale, is systemic and does not interface with the national insurance system.

When launching his consultation on zero-hours contracts, the Secretary of State, Vince Cable, said:

“It is clear that they are much more widely used than we had previously thought”,

and further that:

“Our aim through this consultation is to find which options best prevent any abuse of zero hours contracts while maximising the opportunity and flexibility such contracts can present”.

This suggests he believes these contracts will be a widespread and sustained phenomenon. The noble Lord, Lord Freud, in his normal straightforward manner in Committee when responding to my noble friend Lord Browne, recognised the growing evidence of zero-hours contracts. He said that,

“the Government have estimated their costings and needs, on the basis that it is a tiny minority”,

and that this basis,

“will be undermined. He certainly makes me even more uneasy about the neglect of this group than I was before we discussed the issue today”.—[ Official Report , 18/12/13; col. GC 332.]

As my noble friend has said, little is said about the implications of these contracts for people’s access to the NI and benefit system. Universal credit may be a work in progress but meanwhile many people will be disadvantaged. A solution is needed so that those in mini-jobs and on zero-hours contracts are not excluded from the pension system. The noble Lord the Minister in Committee argued that the new systems—universal credit, real-time information and single-tier pensions—may provide a new opportunity to address this problem and to find a way of dealing with it. He said that the department intended to look more broadly at crediting arrangements to examine the possibilities of modernising and simplifying the arrangements. He was, however, reluctant to offer a timetable, implying it could take years.

Universal credit may or may not be available to help some of these workers in due course, but given the delays in rolling it out, realistically it may be several years beyond April 2016. We cannot wait that long. We need a solution that will work sooner. In April 2016 women will lose their default protection of building a pension entitlement on their spouse’s NI record; and those trapped in mini-jobs, including zero-hours contracts, are growing in number and will be excluded. A key criterion for the reform of the state system, often referred to by the Prime Minister, is that it must work for women. In this instance, it clearly does not. As my noble friend has clearly pointed out, there will still be young and single people in mini-jobs denied access to the pension system which the universal credit system does not resolve.

Already for many workers on zero-hours contracts who are low-paid, the interaction between variable hours of work and the tax credit system can be a source of concern, particularly where their hours do not fit the guidance from HMRC on regular, usual or typical hours. Eligibility under universal credit, while it is not based on a certain number of hours worked and will be based on real-time information provided by employers to the Revenue, is unlikely to be without significant problems for women and for workers on zero-hours contracts.

The new single-tier pension will be extended to cover some 4 million self- employed people—people who were previously only eligible for the lower basic state pension—a development which is to be welcomed. The political will existed to improve their position. Where is the political will which we need to deal with those doing mini-jobs, whose numbers have increased exponentially to millions?

We need a timely and fair response so that the national insurance state pension system is able to reflect the developments in the labour market and to cater for those in mini-jobs. My noble friend has suggested ways which the department could work through to find a way forward. The state pension system has not sufficiently evolved to be responsive to the modern labour market. With zero-hours contracts and mini-jobs, the scale of disadvantage embraces not only the 50,000 mini-job holders originally identified by the DWP but also the thousands—potentially millions—impacted by zero-hours and short-hours contracts.

Photo of Lord Morris of Handsworth Lord Morris of Handsworth Labour 3:30 pm, 24th February 2014

My Lords, in supporting this amendment I am pleased to follow my noble friend Lady Hollis. I know that she has marshalled the arguments and found the evidence, which she has advanced with authority and passion. Nevertheless, in this debate I seek to reinforce two points that I feel strongly about. First, all the evidence tells us that many people will be adversely affected by not having national insurance credits, not only while they are in work but, most importantly for this Bill, when they move into retirement. Secondly, for too long we have known that this situation is occurring, but we have made the excuse that not many people are in mini-jobs. That argument no longer holds good. We are told that they are here today and gone tomorrow, so we have avoided tackling the problem.

We must remind ourselves that the economy is changing. It is more demanding and is now a truly 24/7 economy which has to be serviced, so those who are affected by the Government’s lack of effort to find a solution to the problem are hard-working people who deserve not just our praise, but our recognition that they, too, should enjoy the same rights and security as others. The answer we have received so far is that they are only part-timers, although it is recognised that many are earning less than the lower earnings limit. The evidence tell us that many are on low pay and that people have not just one mini-job, but two or even three of them under so-called variable contracts spread over five, six or seven days a week. More than that, although they are in work, they are insecure and many have no knowledge of what they will be expected to do next week or the week after. They suffer the inconvenience of not being able to plan their lives and look after their families. People in mini-jobs are doing what the Government have asked us all to do—to be flexible—but of course flexibility in this instance does not provide the security of universal credit or jobseeker’s arrangements. In fact, these people are being penalised for doing exactly what is required to maintain a stable and robust economy. In reality, this group of people should enjoy a system of deferred credits as they are making themselves ready for work for when the economy gathers momentum, as we all know it will.

I said earlier that we have not tackled this problem because we believe that not many workers are involved, but the numbers have been played down. The DWP states that 50,000 people are affected, and this figure has been widely cited by Ministers in both Houses. However, as my noble friend Lady Hollis set out so clearly in her evidence, that figure of 50,000 is a gross underestimate of the number of people in so-called mini-jobs. I suggest that anyone who doubts the number of people involved visits the interchange at Bank DLR at around 5 pm on any working day. Thousands of financial sector workers flow off the DLR only to be replaced by thousands of cleaners and maintenance workers flowing back to service the offices of Canary Wharf and elsewhere in east London. However, that is not the end of their day. Many return later at night to clean hotels and shops. This can be seen wherever there are offices, factories, shops and restaurants in the towns or cities of the United Kingdom. It is a universal pattern of work that has evolved in the past half decade.

I understand that it has been said that providing fairness to people in mini-jobs will add to the work and put considerable stress on employers, and that the computerised systems of government departments cannot cope with the strain. The technological strain is nothing compared with the mental strain and insecurity of the people who are trapped in these so-called mini-jobs. The DWP and HMRC can resolve this problem. All that is needed is some joined-up thinking. They can resolve it, because we are talking about the lives of thousands of people and about fairness. If they are not provided for today while at work, society will have the responsibility and duty to provide for them in retirement.

In seeking to tackle in-work poverty, the Government are rightly proud of raising the tax threshold incrementally to those earning £10,000. However, what is the point of seeking to tackle the scourge of in-work poverty through the tax threshold system by creating poverty in old age through the Pensions Bill? There is not much point at all. In the past, Ministers have argued that this problem of crediting people with multi-jobs may place a burden on employers. The price of not placing a burden on employers is the price of placing a burden on the whole of society in the years ahead, as some of these workers become pensioners. With part-time working and zero-hour contracts on the increase, this is a reasonable expectation for any civilised society to place on them.

In the lexicon of today’s employment pattern, we hear the language of “mobility”, “flexibility” and “creativity”, but for the economy to thrive and deliver its full potential, management too must break out of its silo mentality and be creative and flexible in its ideas, as it seeks to determine how a reward package can and should be made, to ensure that we provide not just for today’s but for tomorrow’s pensioners. At the very heart of this must be the transferability of national insurance credit. It is simple. All we need are the two major departments of state to sit down, have a conversation and, of course, seek knowledge based on the experience of the people who are at the receiving end of these mini-jobs.

I strongly believe that we should make policy on what is right and fair for the workers affected. By any logic, the Minister must admit that it cannot be right that someone can be unemployed and get a credit, but get nothing for having some type of work—so-called mini-jobs. These workers do not seek favours. On their behalf, I hope that this House will give them fairness.

Photo of Lord German Lord German Liberal Democrat 3:45 pm, 24th February 2014

My Lords, the issues raised by this amendment are important, and I congratulate the noble Baroness, Lady Hollis, on her dedication to the issue over many years. She kindly told us in Committee how she was rebuffed by her own Government and today she repeated the argument that they used against her: one could not reasonably divvy up an employer’s national insurance—she used those words today again—if there were two or more such jobs. She further told us that women would not want to pay class 1 contributions. For that reason, this is an important issue. We are looking at people being able to contribute to their own pension and get the credits that they need to win a full pension in under 35 years.

Much of the discussion that noble Lords have heard today and in Committee hasbeen about the way that people behave individually in response to the issues in front of them and about how people’s live are dealt with. The problem that we face is that there are no reliable statistics or evidence that show how individuals’ behaviour works. It is clearly possible—I heard it both in Committee and here today—to illustrate that in a way that works to the best of the argument that says that we need to move on this swiftly because there are so many people involved in a particular category. I do not mind people making contributions about the way people behave, will want to behave or are forced to behave, but I want to know how we can sort this problem out and do so in a realistic way that will result in a concrete outcome.

We are bound to hear more and more about zero-hours contracts. They are not a new phenomenon. Over the past 70 years, the notion of a job for life has all but disappeared. More and more people are spending time in self-employment, many people have more than one job and more people have part-time jobs. The single-tier pension itself is designed in such a way that an individual with a more varied work history will be able to build up their national insurance records to achieve the maximum state pension outcome, provided of course they get credited for their national insurance contributions.

The crucial issue, therefore, is whether universal credit will pick up and deal with this issue. I suspect that the answer given to the noble Baroness, Lady Hollis, when she raised this issue with her own Government, was that this is a very typically difficult issue for HMRC, given the range of information that it would require from every company in the land about who they employed and that it would have to combine the results and put them into a single file. That is of course precisely the process that is taking place, and will take place, through universal credit, which will pick up levels of flexible income including, by implication, that relating to zero-hours contracts. It is interesting that the lower earnings level, below which you do not have to pay or get credit for national insurance contributions, is £5,772 per annum at present. The Labour Force Survey figures show that those on zero-hours contracts work, on average, 20 hours a week at £9 an hour, which is enough to exceed the lower earnings limit. If the figures we have before us are to be believed, most people will be receiving enough income to receive the national insurance contribution.

The other issue about universal credit is that it will look very carefully at how it credits people and bring, as we have heard, another 800,000 people into the crediting system. For example, a single person without savings, earning below that £5,772 per annum level, will be eligible for universal credit and thereby eligible for the national insurance contribution. The question that I have to ask my noble friend is about the delivery of universal credit. In Committee, the Minister said it would be delivered in 2016-17 and the noble Baroness, Lady Hollis, said in 2019-20, although she hoped it might be earlier than that. I apologise if it was somebody else on her Benches but those are the sorts of span. If we believe my noble friend, and it is 2016-17, will this problem be dealt with from the outset by those who are then brought into the universal credit system? If that is the timetable, I ask noble Lords to consider how long it would take to put in the interim solution. In effect, what is being asked for is an interim solution between now and when universal credit comes in for a pensions system that comes into play in 2016.

What is the interim position? Do we need to ask HMRC to invent a system for itself? When the noble Baroness, Lady Hollis, asked the Labour Government for one in their time, they rejected it. I believe they said that it would be cumbersome and expensive. Do we need to have that in place or could we be reassured that, almost within the very short period of the implementation of the single-tier pension, universal credit will be in place in a sufficient and timely position so that the vast majority of people who are occupying two or more jobs that produce an income over a year of less than £5,772 at the current rates will be able to be credited? That is the key question.

Photo of Lord Forsyth of Drumlean Lord Forsyth of Drumlean Conservative

I did not participate in Committee but I am listening to my noble friend’s carefully constructed argument. Is not the point about this amendment that it is permissive? It simply provides the Government with an alternative; it does not oblige them to do anything. I cannot really understand why my noble friend is opposing the amendment while advancing that argument.

Photo of Lord German Lord German Liberal Democrat

It is because we have a response in place, which is the universal credit system. What matters more than anything is that the system is in place in time to capture the people who will be most affected by this in the implementation years, from 2016 onwards. That is the fundamental question and I await the answer in my noble friend’s response.

Photo of Lord Browne of Ladyton Lord Browne of Ladyton Labour

My Lords, I support my noble friend’s amendment—and, having listened to the contribution of the noble Lord, Lord German, I am delighted that I do not have to answer the questions that he posed. I suspect that the noble Lord who is the Minister for Welfare Reform had wanted to avoid having to give a date as to when the universal credit system will be functioning well enough to provide the sort of functionality that the noble Lord, Lord German, seems to think that the alternative to this amendment requires. I will listen carefully to the Minister’s response and write down any date that he gives us in relation to that. It is also a pleasure to follow my noble friend Lord Morris, who speaks with significant experience of, and great authority about, the workings of the modern labour market, and who has assisted us greatly in understanding the need for this amendment.

As my noble friend said, this issue was debated in the Commons and in Committee at some length. I have considered carefully the various government responses, as my noble friends Lady Hollis and Lady Drake clearly have. They are to be congratulated for having produced here what could be described as an elegant, permissive, statutory device that adds to the Minister’s armoury in his desire,

“to seize this issue head-on”.—[ Official Report , 18/12/13; col. GC 328.]

He used that phrase in our debate when he expressed equal concern—the words are mine—as the rest of us about this issue. I believed, as did all those who were present debating the issue, that he shared our concerns. Indeed, in his contribution to the debate he indicated why he had come to that conclusion.

In support of the arguments that I set out in my own contribution in Grand Committee, I simply want to make three points today. First, the phenomenon of people working in two or more low-earning jobs is not a limited one. They are often on zero-hours contracts but certainly on short hours, with each job under the level at which national insurance contributions are made, and are therefore not building up a contributions record towards the state pension. Nor indeed is it a temporary phenomenon, as has been argued, often coming at the end of a working life. Nor is it an experience limited to rural communities, although it is very prevalent there.

Since I shared the content of my overheard conversation on the Transport for London overground train, I have consciously inquired of young people whom I meet in this city and back home in Scotland how many of them are working for more than one employer. For noble Lords who have not heard this short anecdote, I will repeat it. A few days before we debated this matter in Committee, I overheard a conversation among three young people on an overground train as I was making my way home from your Lordships’ House. It was very clear to me that they had all been working together in what I suppose we would call a mini-job and that they each had two other jobs.

What was significant about them was that two were graduates and the third certainly had a tertiary level of education. I found that surprising. I do not know why I found it surprising, but it caused me to inquire the same of other young people, and I have come to the view that this is the norm for thousands of young people in the first phase of their employed life, even for graduates. It is a significant feature of a flexible labour market and, along with zero-hours contracts, it is part of the reason that politicians, particularly Ministers, and employers celebrate its flexibility. Undoubtedly the number of people in this situation is growing, not declining.

The question of numbers leads me to repeat a point I made in Grand Committee, which has already been made by my noble friends. The Government assert that there are about 50,000 people in this category. I am not convinced by their estimate of the scale of the problem. That is based not on my experience but on evidence that has already been referred to. We await the outcome of the—I think still anticipated—BIS consultation on zero-hours contracts, which was promised in October and is due to report by the end of March, but I have not seen a lot of evidence of it. We should reflect on the fact that in the fourth quarter of 2012, the ONS estimated that there were 250,000 people on zero-hours contracts. However, a contemporaneous survey of employers by the CIPD estimated that in fact the figure was around 1 million.

As we have heard, the union Unite estimates that as many as 5.5 million people are employed on such contracts up and down the UK. Following the CIPD estimate, the ONS conceded that the Labour Force Survey, which is based on responses by individuals, more than likely understated the numbers. The ONS then announced, as my noble friends have told your Lordships’ House, that it would change the way it collected its data from autumn 2013,

“so as to obtain more robust data”.

The importance of this contradictory information is not that it goes directly to the heart of the estimate from the Government, but that clearly it must have informed the Government’s estimate. None of the estimates that the Government have for the scale of this problem is at all reliable. Therefore, your Lordships cannot be convinced that a strategy based on unreliable statistics is a reliable strategy.

Finally, the Government’s responses appear complacent. Steve Webb, the Pensions Minister, suggested in the Commons that there was only a tenuous link between having multiple jobs below the LEL and being unable to build up the required 35 years’ contributions, and referred to this problem as a temporary phenomenon. In our debates in Grand Committee, the Minister promised that universal credit would resolve the issue. The noble Lord, Lord German, has already gone through the pros and cons of that in some detail, and my noble friend Lady Hollis significantly undermined that argument by pointing out the categories of people who are in these jobs who would be denied universal credit in the first place and therefore the consequent crediting of national insurance contributions.

I say with respect to the noble Lord, Lord German, that that is the one point of our argument that he did not engage with. Even if universal credit is the answer for some of those people, it cannot be the answer for all people in this category, and in the absence of reliable statistics, it is not easy to see what proportion of people would benefit from a universal credit system that met the coincidence of engagement with the challenge that the noble Lord, Lord German, set out.

What do we need? We need an alternative. We can have no confidence that the approach of either the Pensions Minister or the noble Lord, Lord Freud, will be sufficient. If it is not, the net effect will not only be to deny access to the modern pension system to a significant number of people, most of whom will be the least well paid working people in our society. As the numbers grow—and they will—it will also, in the long term, severely undermine the pensions policy that is now agreed across your Lordships’ House, because it will increase the number of people who have to depend on means testing in retirement.

We support the amendment tabled by my noble friend. We want to make it clear that this is a solution for now, in the context of the Bill. We hope the amendment will be agreed and will become law. It will then be for the Government to take it away and for the Minister to seize the opportunity to use it to address the issue head-on.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions 4:00 pm, 24th February 2014

My Lords, I thank the noble Baroness, Lady Hollis, for the amendment which gives an opportunity to debate again a most important issue which is close to her heart and with which I am sympathetic. Over the years we have had quite a few discussions on how the issue is best addressed.

Single-tier reforms strengthen the contributory principle and reduce disparities in outcomes between individuals. They are designed to fit with the working lives of today’s young people, who should find it much easier to plan for the future, counting on a full single-tier pension. At first glance, it may appear that the national insurance treatment of those in low-paying mini-jobs is at odds with these principles. However, I would like to explain why we think mini-jobs are not the problem they might seem to be and why, looking at how to adjust the national insurance system to combat this perceived problem, we may end up with solutions which create more problems and knock-on impacts than they solve.

The noble Baroness has been as assiduous as always in exploring all the sources to illustrate her case for change. Her central estimate was that 250,000 people would be affected. I continue to be confident in the department’s estimate of the number who—if we were to aggregate their earnings in the way proposed—would gain that extra qualifying year. That number is some 50,000 at any one time, which is fewer than one in 500 workers. This number makes perfect sense when you look at the opportunities the national insurance system provides for gaining state pension qualifying years. The entry point for workers is through the lower earnings limit, which is set at £109 a week. This is £40 below the primary threshold which is when national insurance starts to be paid. At the national minimum wage, this is just 18 hours a week for a year or six months of full-time work. There is also a comprehensive crediting system that recognises caring responsibilities and those unable to work.

The 50,000 figure is a snapshot from 2012-13 and individuals may gain a qualifying year in other years. In the single-tier system, full pension entitlement is achieved after someone has built up 35 qualifying years. People can therefore spend a third of their working lives outside the national insurance system and still gain the full single-tier amount. This was a deliberate part of our design, to recognise that people have increasingly varied careers and working lives, and yet can still reasonably count on a full single-tier pension in their retirement planning.

My noble friend Lord German inquired about the timetable for the introduction of universal credit. We are planning to pull that in for the bulk of people, virtually everyone, in 2016 and 2017. That would certainly include everyone in the workforce. The numbers beyond that are some of the people who are currently on ESA on a long-term basis in the support section.

If we were to take a similar snapshot to that of the 50,000 in 2012-13 but in 2017, we would find that individuals with the same characteristics may well be getting a credit through universal credit. This will bring at least a further 800,000 people into national insurance credits. For instance, the partner of the claimant or those on very low earnings—below the lower earnings limit—will be brought into universal credit because the Government believe that it should pay to work.

We have had a parallel discussion on zero hours, which has clearly been a source of concern around the Chamber today. There is concern at one level from the employment practices perspective. As noble Lords are fully aware, BIS is consulting on this issue. There is also a degree of uncertainty around the prevalence of this practice and whether it is increasing; as noble Lords have pointed out, the ONS is looking closely at evidence for this. However, we know that the proportion of women with two or more jobs is similar to the proportion of 10 years ago; in other words, around 5% of all workers. We are not talking about using the word “exponential”, which I have heard around the Chamber once or twice this afternoon. The number of women in full-time work rose in the past year by more than 270,000, and the number of women in two jobs actually decreased in that year by 25,000.

Clearly, when we look at zero-hours contracts, I need to make the point to the noble Baroness, Lady Drake, that I did not indicate in Committee, nor have I indicated, that the number of individuals on those contracts was small or in some way insignificant. However, the question at hand here is about access to the national insurance system and there is no evidence to suggest that being on this type of contract presents barriers to entering the national insurance system because of low pay.

Figures from the Labour Force Survey and the Chartered Institute of Personnel and Development—the CIPD—both show that those on zero-hour contracts work an average of around 20 hours a week, as my noble friend Lord German pointed out. This is enough to exceed the lower earnings limit even on the national minimum wage of £6.31 an hour. Data from the ONS suggest that the average wage for those on a zero-hours contract is nearer £200 a week. In response to the point of the noble Lord, Lord Morris, the

L abour

M arket

S tatistics show that full-time employment in the year is up 408,000, and part-time employment has gone down by 12,000.

I understand that the amendment is permissive, and even without any evidence of a significant problem one might think it would be helpful to increase the Government’s options in this respect. However, it is simply not necessary, given the extensive regulation-making powers already available, to modify the crediting system. In response to my noble friend Lord Forsyth, it is hardly useful to have redundant legislation on the books.

This amendment would allow people to opt in to have their earnings aggregated. It is not clear that this can be achieved without requiring a very high evidence base. For instance, if we introduced a system where people could effectively send in the employee’s rate of national insurance, we introduce incentives for employers to play the system. Some will contrive to avoid employers’ national insurance but without disturbing their employees’ national insurance position. The noble Baroness, Lady Hollis, suggested that the employer need not pay national insurance. However, even if that were the case there is still a significant burden on the employer. We also could not verify the wages without disproportionate cost. This would incentivise people to underreport earnings to get into the system on the cheap.

Aggregating earnings would have significant consequences for employers, including those people who would not now consider themselves to be employers. Take, for instance, the position of a woman whose job it is to clean private houses for a few hours each day of the week. The nature of the work would mean that she is likely to be employed and could have a number of jobs with different households. Under aggregation, each of those households would need to operate a Pay As You Earn scheme. They would need to contact HMRC to open such a scheme. They would then need to obtain and familiarise themselves with payroll software and use it to report earnings under real-time information to HMRC every time they pay their cleaner.

In response to the question from the noble Lord, Lord Morris, on joined-up thinking between the DWP and HMRC, I am pleased to say that we are actually working—I suspect for the first time—in a very joined-up way to get the RTI system to work. However, we do not want to require employers who would otherwise not have to have a PAYE scheme to open one up on an ad hoc basis. The point discussed by the noble Baroness, Lady Hollis, which would allow people to class themselves as self-employed, seems slightly odd given the concern about job security that motivates the debate we have just had over zero-hours contracts. Blurring the line between employment and self-employment is a minefield from a tax policy perspective. It introduces incentives to create more mini-jobs and to play the system.

The processes required to capture and collate earnings from people in mini-jobs cannot be achieved by simply tweaking the system. Moving to the aggregation of earnings from mini-jobs can only sensibly be considered under the work on the operational integration of income tax and national insurance contributions announced at Budget 2011 by the Chancellor. As noble Lords will be aware, national insurance liability is calculated on a per job basis but income tax liability is aggregated across all sources of earnings so the issues are similar. The Government concluded that given the scale of the change that operational integration would entail and the amount of change that employers are already managing, including the introduction of real-time information, they would await further progress on these before moving forward on tax/national insurance integration.

In the short term, we are not complacent and are determined that people who do the right thing and work are treated fairly. Beyond a radical overhaul of state pensions in this part of the Bill, specifically to make it fit for today’s workers, I have described work that this Government have undertaken to expand crediting coverage for low earners through universal credit and improving monitoring of zero-hours contracts.

This amendment may be intended to place a marker to nudge the Government into taking action, but it comes without strong evidence of a problem and the type of action that it promotes is piecemeal tinkering, which could create perverse outcomes and new unfairnesses, especially in the tax and national insurance system. I hope that the noble Baroness will withdraw her amendment.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 4:15 pm, 24th February 2014

My Lords, first, I thank very much my noble friends Lady Drake and Lord Morris for their powerful and moving speeches. I thought that their contributions were extraordinarily impressive, and I am sure that they moved many people in this House.

I shall address first the comments of the noble Lord, Lord German, many of whose points were dealt with very effectively by my noble friend Lord Browne from the Front Bench. Basically, he ran two arguments. First, he said that most of the people concerned would be on UC, and he pressed the Minister instead on UC. Secondly, he commented on the problems for HMRC in combining possible jobs. On the first argument, on UC—and I am very much in favour of universal credit—we agree the stats are that another 800,000 should come into the NI system as a result of crediting arrangements. That is great, but the point is that UC is income-based and that income is surprisingly low. No one has mentioned that today. For example, if you are a single person and you earn more than £4,000 a year in any job, well below the lower earnings limit, you are above the level for universal credit so you do not get credited in. If you are a married woman, your husband is in work and you have two children—I am aiming for a generic family, if you like—and if he is earning more than £12,000 a year, that family is not entitled to UC, apart from housing benefit. She may be earning £4,000 or £5,000, but that will not give her a credit through him. Those two groups of single people and married women, which my noble friend identified and I seek to identify, are both outside the reach of UC. What is worse—and neither the Minister nor the noble Lord,

Lord German, mentioned this—is that it is happening at the same time as we are withdrawing the married woman’s dependency pension of 60% that she would have had as an alternative and could have relied on. That is what is new. If she cannot get into the pensions system through universal credit, she cannot get in at all, and that has been created and constructed by this Bill.

The noble Lord, Lord Freud, said that he was confident of his figures of 50,000 people, but he was equally confident about two years ago when we were debating welfare reform and the figures then were 20,000 or 25,000. They have doubled exponentially in the past two years or so, and they may go on to grow equally geometrically, as opposed to arithmetically, over the next few years. He says that his stats are broadly in line, but I do not know about that. His stats are based on labour force statistics offered by the ONS, which the ONS now says are unreliable; that therefore means that his stats are unreliable. My stats of 250,000 are the best that I can do with all the evidence there is, overlaying different subsets. I accept that, but I am as confident as I can be on the evidence that exists that at least 250,000 people and maybe more—it is an increasing problem—are outside the national insurance system and will not be credited in either through UC or any caring responsibilities.

The noble Lord quoted average income. An average income is pulled upwards by the proportion of people who work in IT, for example, which is highly paid, or in further education, where they are paid piecemeal. The Chartered Institute of Personnel and Development—which the Minister quoted several times, although he did not quote this—says that 40% of the 1 million people who are employed work below 16 hours per week. We know that the majority of those are on, or on around, the minimum wage: for example, in jobs in domiciliary care, hotels, waiting, driving or security. A mean average is no use in this, because the figures are skewed hugely upwards by people in IT, who may be very well paid—perhaps at £50 per hour—and come within zero-hour contracts. We need to see how many people are below the LEL in one job and work in a second job that is also below the LEL, which together would bring them into the NI system from which they are currently excluded. I repeat: that figure is likely to be 250,000—nearly every single person and most married women.

The Minister says that it would produce all sorts of perversities and paradoxes. There is no greater perversity than the situation in which, if you are unemployed and on JSA, you are credited in for free national insurance, but if you work 30 hours a week in two 15-hour jobs, earn £11,000 and pay tax, you cannot get into the NI system and get no state pension. Which of those is the perversity? Do not work and you are in for free; or work as best you can, by putting jobs together, and you are outside the system. Is that right or decent? It is not. I would like to test the opinion of the House.

Division on Amendment 1

Contents 215; Not-Contents 210.

Amendment 1 agreed.

Division number 1 Pensions Bill — Report (1st Day)

Aye: 213 Members of the House of Lords

No: 208 Members of the House of Lords

Ayes: A-Z by last name


Nos: A-Z by last name


Amendment 2

Moved by Baroness Hollis of Heigham

2: Clause 2, page 2, line 13, at end insert—

“( ) A person is not entitled to bereavement support payment and is exempt from work conditionality as specified in section 30(1A), if he or she has reached pensionable age.”

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 4:34 pm, 24th February 2014

My Lords, I should like first to say a word about procedure. I am glad to see the noble Baroness, Lady Anelay, in her place; that is helpful. This is a paving amendment that the Public Bill Office assures me is appropriate. Amendment 21 in this group—and only Amendment 21—is consequential on Amendment 2. Therefore, any vote on the first amendment is, in the words of the Companion, also a vote on its directly consequential amendment—although it does not, of course, determine any other amendments in the group. If it were not directly consequential there would be no point in a paving amendment. As I have carefully taken the clerk’s advice on this, I hope that the Minister and the House will agree with my statements. If the Minister does not agree that Amendment 21 is consequential, perhaps he could indicate so now because I would not wish to waste the House’s time.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I am grateful to the noble Lord, as this allows us to have a substantive discussion on bereavement—which I know concerns many of your Lordships—in good time and not in the late hours this evening. I know that the Minister is sympathetic to the situation of distressed children and widowed parents. I hope that I can refer generally to widows, as there are three times as many women who are bereaved with children as men—and I know that the Minister means well by them. I hope that the House will agree that this is neither a party matter nor, as it is permissive, a cost matter, as the cost is almost too low to estimate.

This is a modest amendment that seeks to help widowed persons avoid additional pressure in the most stressful and distressing period of their lives. Three-fifths of bereaved parents are in work at the time of bereavement—virtually all fathers and around half or so of mothers. Most fathers with a terminally ill wife continue, or continued, to work. Most mothers, however, give up their jobs to care for their husband. Fathers would normally go back to work after a couple of weeks; indeed, they are often anxious to do so. Some mothers may feel able to do so as well, depending on the age of their children and the nature of their job. However, many widowed mothers were not in work, because they had younger children, or they had stopped working to become carers and—this is key—many mothers who were in work when their husband died drop out of work for some time while they support their children. If they return to work later, it may be to a different job, to one that is part-time or less demanding. Whereas work seems to be essential and continuous for fathers, it becomes secondary and broken for bereaved mothers.

The Government are reconstructing bereavement benefits, with more money paid as an up-front lump sum and less as a monthly payment—which, at £400 a month, will be paid only for 12 months and topped up by universal credit while the claimant is out of work. After 12 months, bereavement support payments stop and, if the parent does not return to work, she may draw her full income from UC. Being on UC normally entails work conditionality—entering or re-entering the labour market. The Minister has agreed—for which I am delighted—for kinship carers, work conditionality associated with claiming UC should not apply for 12 months after they have taken on the care of children. But—and this is the point of my amendment—work conditionality for widowed parents, unlike for kinship carers, will kick in after six months, not 12 months, while they are still on bereavement benefit. That benefit runs for 12 months precisely because the Minister, in all decency—and I respect him for it—recognises that they need that support for 12 months. Surely work conditionality should be aligned with those 12 months.

The Minister said in Committee that he thought that six months’ relief from work conditionality while on bereavement allowance, if the claimant receives some UC top-up, was “generous”. I confess that that shocked me. It is generous only by comparison with the situation of someone who is not a bereaved spouse, and I think that that is not a proper comparison. If the mother has returned to work, or wants help to do so earlier than that—and some will—that is fine, but I do not think it right and decent to require her to attend work interviews and full work conditionality and job-hunting after six months, when she has grieving children who need her more than ever.

In Committee, the Minister justified this by saying that work conditionality after six months,

“is necessary to help them adjust and regain control of their lives”.—[ Official Report , 15/1/14; col. GC 146.]

I was shocked by that as well. From my experience, the exact opposite is true. If work conditionality kicks in at six months while the woman is still on bereavement benefits and she is not ready for it, she loses what little control she has in handling her family life. Instead, that power is transferred to the DWP—perhaps to a 23 year-old young man in a local benefit office who, I expect, will be well intentioned until the pressure of targets bears down on him. He is probably a young man without children and without any experience of bereavement. It is assumed that he knows better than she does what is best for her and her children in their grief. I hope that he asks his own mother for advice, because he probably will not have a clue.

I do not think that that is acceptable. We are turning this young man at the age of 23 into her parent and treating her as the child, denying her, as a parent, the ability to look after her children in the way she believes is best. This is a sort of cruel-to-be-kind, tough-love philosophy towards a grieving widow and severely distressed children. Tough love is perhaps fine for youngsters who are on JSA and do not want to get up in the morning, but we are bullying into seeking work a widow with children who is still numb with grief and hugely distressed. We really cannot have that.

In this paving amendment and the consequential amendment attached to it I am not arguing that a widow’s benefit should be increased, although personally I would support that. The amendment is not about more money; it is about allowing widows to decide what is best for them and their family in the immediate aftermath of bereavement. For me, the immediate aftermath is the first year during which all the anniversaries occur—Christmas, his birthday and the anniversary of his death. I know, as do many of your Lordships, that that first year is the hardest.

I ask your Lordships to put themselves in the widow’s place. Her husband’s death may have been sudden, due to an accident at work or in the car, and she is still traumatised by the shock, or he may have died after an illness such as a stroke or cancer and she is exhausted through caring for him. She is wiped out and her mental and physical health is pretty fragile. It is just at this time when, although she is exhausted herself, her children are distraught and most need her. Children I know who have experienced the death of a parent have regressed into bed-wetting, nightmares, broken sleep and school phobia. They have lots of mysterious tummy aches and frequent headaches, and they display challenging and clearly needy behaviour. Irrationally, they suffer anguish that in some way they were responsible for their father’s death. They feel guilty that they had never told the lost parent how much they loved him and are fearful that they may lose their mother as well.

Older children worry about their mother’s safety if she is late back, or they fear they may lose their home. They are profoundly upset a second time over at their mother’s grief. Stoically they try not to weep, as that makes it harder for her to cope. “He is not here to hug me”, said one young girl. They dream of him and experience severe depression. Children need their surviving parent to be physically available for them. They need the trust that exists between a child and his mother to discuss their father’s death. Emotional availability follows from that. In Committee, the noble Lord, Lord German, quoted very movingly from research into the effect of bereavement on children’s later lives, from delinquency to poor mental health and suicide risk, and the noble Baroness, Lady Finlay, mentioned cases of multiple deaths.

Every family is different, as is the work status of any bereaved parent, but this amendment, at no cost, permits the bereaved parent to decide what is appropriate for her and her family. We know that currently, bereaved parents do not take all the time off that they could from work. They do not exploit the system; they do not abuse it; they do not milk it. They want to work when they feel fit enough and their children are steady enough, but only they know that, not the DWP or the local benefit office. That is the point of having 12 months of bereavement payments. Insisting on work interviews and work conditionality at six months, or even leaving it to the discretion of 23 year-olds in local offices, adds stress to the suffering of the parent and distress to the pain of the child. We really should not do that.

The amendment would give widowed parents a breathing space from work conditionality alongside a bereavement payment while they rebuild their fractured lives. This House has always looked out for widows and children and I hope that it will do so again today. I beg to move.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions 4:45 pm, 24th February 2014

My Lords, the House may find it helpful to know that, although I do not agree that a change to conditionality in respect of only this specific group of amendments is appropriate, I am proposing to conduct a wider review into the circumstances where children could be in considerable distress and where it is clear that conditionality should not be applied. I am not attempting to curtail debate but it may be of advantage to the House to have that information in order that we may have a more informed debate on this group of amendments.

Photo of Baroness Finlay of Llandaff Baroness Finlay of Llandaff Crossbench

My Lords, I have Amendments 18, 19 and 20 in this group. I am grateful to the Minister for informing us of his proposal to hold a review of the level at which conditionality is set in relation to considerable distress in bereaved children. I appreciate his concern and the time that he has spent with me and others in looking at the problems of bereaved children.

However, I must point out that bereaved children express emotions differently from adults. Indeed, the most distressed children often appear almost blunted to the death of the parent and are simply quiet, withdrawn and can even appear disinterested. I hope that there will be no attempt to assess an individual child’s distress because I can foresee the problem of some families blaming that child for not caring enough, and therefore blaming that child for somehow not falling into a group that could have had more benefit. Sadly, transference occurs in bereavement and sometimes bereaved parents project their anger at the death on to the way in which the bereaved child is behaving and are on a very short fuse with the child, which compounds that child’s isolation. These are complex situations and there are serious long-term sequelae.

When a parent dies the support that the state offers must be easy to understand. It must support the widowed parent in providing support to their grieving children. Noble Lords are well aware that the death of a parent places enormous pressure on the rest of the family. The surviving parent has to both provide stability to children and adjust to life as the sole carer and earner while dealing with their own grief as well as that of their children. Quite often they have had no time to begin to adjust to impending widowhood—for example, in any sudden death, whether it is through a road accident, manslaughter, murder, suicide or whatever—and yet their children’s need for stability following the death of a parent makes it vital that the surviving parent is available to them, is present and is able to respond to their needs, which may change almost from minute to minute, hour to hour.

Stopping payments after only one year will have a significant impact on family finances but the major disruptions include the widowed parent often having to increase their working hours to replace lost income, thereby being less available to the children at the time when they are most in need of support. Amendment

18 seeks to increase the period of time that the bereavement support payment is payable to at least three years or until the youngest child has reached the age of seven, whichever is the longest period.

Can the Minister clarify the cost analysis that underpins the decision to end bereavement support payment after only one year, because one year is much too short to address a family’s needs? Removing the payment at the first anniversary of the death adds an additional pressure on the family at a time that is already very emotionally difficult when they often relive the acute episode surrounding the bereavement. Many families report that the second and subsequent years following bereavement are even harder than the first because support from friends and family tends to disappear and children can experience late effects of dealing with grief and bereavement.

The current allowance is paid until the youngest child leaves full-time education. The proposal to reduce this to a period of just one year is a dramatic change. Data provided by the Childhood Bereavement Network suggest that only one family in 28—that is, 4%—claims for less than one year. Most families would therefore receive payments under this Bill for a much, much shorter time than they would under current arrangements, especially if the children are younger. In Committee I described the shortening of this period of time as cruel. A year is a very short time in the life of those bereaved, whether adult or child.

The current benefit is paid until children leave full-time education in recognition partly of the complex emotional needs of young children. Removing the payment when the dependant children are very young is particularly worrying. Pre-school children become very clingy when they realise that one parent is no longer around. They require stability and security. The grief of losing a parent is challenging enough without compounding the disruption caused by the stress of worsened financial hardship for the surviving parent with the premature ending of a bereavement support payment.

Amendment 19 seeks to clarify that the bereavement support payment will be payable to a widow who is pregnant at the time of her spouse’s death. Can the Minister confirm that when the spouse of a pregnant woman dies the allowance would be payable to her? Amendment 20 seeks to clarify what support would be offered in the tragic event of both parents dying. Can the Minister confirm that in the event that both parents die, the guardian of the surviving children under the age of 18 will be eligible for any bereavement support payment which would have been paid to a surviving parent had that parent not died, and that the guardian has six months in which to lodge the claim? Can the Minister also confirm that the changes to the bereavement support payment do not affect the guardian’s allowance? Finally, can the Minister confirm that changes to the bereavement support payment do not affect child benefit?

Photo of Lord Rix Lord Rix Crossbench

My Lords, I cannot claim to be either a young widow or to have young children. My children are actually middle-aged but my wife died a year ago last week and I know perfectly well that a year is really not sufficient time to put to one side all the problems which arise from the death of a partner. I was married for 64 years and, both for my children—middle-aged as they may be—and for me, the grief continues. I know perfectly well that if you are a young widow with young children, to be asked to change your life or to look at the possibility of going into work after six months is absolutely absurd. I support both these amendments with all my heart.

Photo of The Earl of Listowel The Earl of Listowel Crossbench

My Lords, I am sure that the House will want to reach a conclusion on this debate as soon as possible, but as treasurer of the All-Party Parliamentary Group for Children I would like to express my strong support for Amendment 21, tabled by the noble Baroness, Lady Hollis. I also pay tribute to the Minister for the care with which he has clearly been considering this very sensitive matter. That does not surprise me given that his great-aunt, Anna Freud, set up the Hampstead War Nurseries towards the end of the Second World War. She dealt with children who had been separated from their parents and provided them with much needed care. She also made forensic observations of what happens when a child is separated from the parent, looking at the different sequelae of those changes. What she discovered was that while she could feed the children well and provide exercise so that they were healthier, the emotional damage done to them as a result of being separated from their parents was simply huge. The concern must be that if widowed parents are not well supported and given all necessary consideration they may emotionally withdraw from their children, with all the adverse consequences highlighted by the noble Lord, Lord German, in Grand Committee.

Photo of The Bishop of Wakefield The Bishop of Wakefield Bishop

My Lords, having been one of the signatories, along with 26 other Anglican bishops, to the letter that went to the Daily Mirror last week, I am loath to speak too much about amendments to government legislation. However, on this particular occasion, because bereavement support is such a notable part of our business and ministry, I am very bothered about the direction in which the legislation is going.

I should like to reinforce what was said earlier by the noble Baroness, Lady Hollis, about cost. It seems to me that it is not a question of cost but of how long support is given to people. What many clergy learn and what people often forget is that, as the noble Baroness said, it is not just the first three months which are difficult—the problems continue throughout the whole of the first year. More than that, it is a matter of showing support for people over the whole period of time that the emotional pain of bereavement continues to be very severe. The issue of supporting people financially has an impact on that emotional pain.

Speaking on behalf of a group of people who spend so much of their time trying to support those who have been bereaved and who need to understand how they can be helped, we might take good note of these amendments. They will not cost more money. They have been tabled simply to try to offer more support over a longer period of time—not only in the raw first year, but over the first three or four years, and particularly where young children are involved and the emotional impact is even greater.

Photo of Lord German Lord German Liberal Democrat

My Lords, these are delicate and sensitive issues. I pay tribute to the noble Baroness, Lady Hollis, for using her ingenuity to make sure that these issues are right at the forefront of our discussion on Report. The major issues have already been raised and were expressed from these Benches both at Second Reading and in Committee. The evidence I quoted from the research literature on these matters identifies absolutely clearly that one needs to be extremely careful when dealing with these very difficult times for families. Indeed, what we should recognise is that some people may be able to regain a sense of normality more rapidly than others. You cannot make a distinction or see clear lines between one family and another. It seems that this is very much about the circumstances in which people find themselves and how those positions are managed and handled. The issues raised by these amendments have to be a source of major concern to Members on these Benches, and as I say, they were raised earlier.

I am grateful to my noble friend Lord Freud for giving us an opportunity to discuss these matters in considerable detail between the Committee stage and today, and to help shape a Government response which adequately meets the concerns expressed. An adequate response from the Government has to satisfy the discussion we had in Committee and be highly relevant to the issues already raised today in this Chamber about these sensitive matters, particularly relationships within families. I want to see a process that meets the issues and was raised in that evidence. This is what I want to challenge and talk to my noble friend about.

As many people will know, a review has little relevance if it does not result in concrete outcomes. My discussions so far with my noble friend have given me considerable confidence that we will see a changed regime at the end of the review. There is a second issue, which relates to speed. We need to make sure that the regulations, associated not really with this Bill but with universal credit, are in place and that there is a chance for people to put their views on record to that review. Quite clearly, a normal government review of this kind would not give a swift response, but we need to get that response in place before people are brought into the universal credit fold.

Therefore I have a number of questions about my noble friend’s review. The first is about scope. So far today, the amendments have been about specific parts of the conditionality regime. Will my noble friend confirm that his review will not just be about the children of married parents, but also of those in a partnership where one is bereaved and the children find themselves in forms of distress? Will it also include situations where a child loses a brother or sister, or those who flee from violence? Violence is often a cause of people fleeing, and of great distress to those children, yet distress to children is a difficult thing to define—as the noble Baroness, Lady Finlay, described. Is it not rather about the situations in which children find themselves in distress? Is that the purpose of this review? Is it about where and how we see that distress occurring, so we describe the circumstances, rather than the actual distress itself? That would be crucial in ensuring that we get a powerful outcome.

Does my noble friend have the powers to bring in new regulations without putting them in the Bill? Does he have the power to make sure that the results can be put into regulation and guidance, and would any new powers be required for whatever circumstance might be the outcome of his review? What is the timetable for implementing the review’s recommendations, in particular so that any family brought into the universal credit fold can be brought into the new proposed conditionality arrangements which might come out of the review? Some outcome timetable would be very useful to understanding, especially as we have a need for speed.

What assurance of independence and impartiality does my noble friend have within his review? Would he consider appointing an external expert adviser to accompany him on this review? It might be sensible to consider someone who has first-hand, practical experience of distress situations in which children find themselves. How will the Minister conduct evidence gathering? It is important that stakeholders and Members have views and can express them to the ministerial review. Who will the Minister conduct his evidence gathering with, and will he include evidence gathering from a research base, which we heard about today and which I referred to in Committee?

Finally, how will the review’s findings be reported to this House and Parliament in general? In particular, how will Parliament have an opportunity to discuss its outcomes? Given the opportunity for a wider-scoped review which will touch upon some of the situations which are excluded from the amendments before us now, it is possible that we may see before us a real opportunity for a concrete examination of these issues and, more importantly, some specific concrete outcomes which will make changes to the situation before us.

Photo of Baroness Sherlock Baroness Sherlock Shadow Spokesperson (Work and Pensions), Opposition Whip (Lords) 5:00 pm, 24th February 2014

My Lords, I am not surprised, having sat through Committee, that this has been such a powerful debate. We have had some very important, moving and well informed speeches at all stages of the Bill touching on these subjects. I am very grateful to the noble Baroness, Lady Finlay, and to the noble Earl, Lord Listowel, for sharing their expertise in these areas, as well as to the noble Lord, Lord Rix, for being willing to share with us the experience of bereavement and its ongoing impact on one’s life at any age.

My noble friend Lady Hollis laid out the case very strongly at the outset. I am delighted that the Minister is interested in reviewing the impact on families with a distressed child and how that relates to conditionality in the future. It is an excellent commitment and I look forward to seeing the results of it. It is up to my noble friend Lady Hollis to make a judgment on this but I do not think that that in any way precludes the need for this amendment, which is about a very specific category of person—people who are bereaved and who may find themselves going on to claim universal credit but who would normally be expected to go out to work because they had children of school age. Both of those things are important.

I still have with me the very powerful speech made by the right reverend Prelate the Bishop of Derby at Second Reading, in which he laid out his experience of pastoral care for the bereaved, something reprised very effectively today by the right reverend Prelate the Bishop of Wakefield. I do not need to say very much more about why this matters. Many Members of this House have had experience of bereavement in one way or another and there can be few more important issues than how a country supports its citizens when the worst of all possible things happens to them.

The Government’s case throughout this debate has been that these bereavement reforms are not really about money. From 2016 to 2020, they estimate the changes will cost an extra £110 million, because they will protect payments under the current system, but that thereafter, in total, there will be small savings. The argument is that these are reforms not cuts. The Government have said throughout that they want to simplify the system and put resources where, in their view, they are most needed: as a short-term intervention to allow a bereaved spouse or civil partner to deal with the immediate costs of the death of a partner. If support is needed in the longer term, that is what universal credit is for.

Amendments 18 to 20, in the name of the noble Baroness, Lady Finlay, address the question of how long bereavement support should be paid for. In Committee, the noble Baroness laid out some very moving circumstances in which families could find themselves, clearly drawing on her own clinical experience. I know that the Minister expressed sympathy with what she said, and it may be that his review of distress will address that. I would be interested to see what he has to say when he comes to speak.

Amendments 2 and 21, in the name of my noble friend Lady Hollis, quite specifically seek to relax the work conditionality requirement for those in receipt of bereavement support payment. This is particularly important for widowed parents. There is a difference between those who do not want to work and those who would like to work, or go back to work, but who have been forced to recognise that the reality of the state that their children are in is such that they have to choose—of course they will choose their children and not work, unless they have literally no choice. Some parents will need a longer period, both to adjust to their own grief and shock and to deal with the grief and shock faced by their children.

It has already been pointed out that the regulations for universal credit mean that kinship carers are exempt from work conditionality for a year from the time that they assume the care of the child. This was agreed by the Minister—under the persuasive pressure of my noble friend Lady Drake and others—in recognition of the fact that adults need time to adjust to being, effectively, a single parent. Why should the same principle not apply to bereavement? I would be very interested if the Minister could answer one question about his review: does he intend to change the regulations to allow bereaved parents specifically to be exempt from conditionality? In Committee, he said that he was reviewing this and that he wanted to change the guidance given to decision-makers in jobcentres. But that is a very different question altogether. I can see why that might be the way forward for distress in general—after all, distress comes in very different forms and some judgment would have to be made about when the family was distressed. The awful thing about bereavement is that it is horribly clear: one is either bereaved or one is not, and I therefore do not think there is a need for the kind of flexibility that might be needed in other circumstances.

I also worry because I have heard many cases, as I am sure other noble Lords have, where young jobcentre officials, with the best of intentions, ended up making bad decisions because they did not properly understand what it was like to be a single parent trying to juggle more than one child and a part-time job. That person could of course simply say, “I am sorry but despite whatever you say, I am not going back to work because I have to prioritise my children”. If that happens, their benefits get sanctioned. They can appeal, but do we really want them to have to go through that six months after losing their husband, wife or civil partner? When 58% of appeals against sanctions on jobseeker’s allowance are successful, how much are we willing to bet the farm on the effectiveness of decisions by individuals in jobcentres? In my case, it would be not very much.

At Second Reading the noble Lord, Lord German, used words such as “harsh” and “cruel” to describe the decision to force widowed parents back to work after six months. I believe that he was right. He cited the research, which he touched on again today, showing that outcomes for children very much depend on the effectiveness of the remaining parent in coping. That is partly about their availability to children. All that this amendment from my noble friend Lady Hollis does is to ask that those widowed parents who need to claim universal credit alongside bereavement support payment to make ends meet should not be required to go back to work for 12 months. After all, the Government have decided to focus their support on that first 12 months, so surely they should be willing simply to stretch this for the same period.

I have heard it said that a year is too long: since employers do not offer bereavement leave for a year, why should the state? It is because employers cannot do that that so many parents end up giving up their jobs when they lose their spouse or civil partner. The combination of burdens is simply too much to cope with. Universal credit is meant to be the safety net for those very parents, and it must be here. This amendment specifically recognises that the Government are planning to recycle all the resources spent on bereavement to be able to create this new system. All it does is to give them the power to recycle that money in whatever way they want, such that that reform should include this small change—that for 12 months after losing one’s husband, wife or civil partner a parent should not be forced back to work.

We should be clear that a decent society will not put bereaved children in the position of having lost one parent only to find that the other is not able to give them the level of care that they need at this crucial time. Many people in this House will know that losing a parent in childhood is a life-changing event: one never gets over it. We cannot protect children from that horror but when it happens, please let us at least say that we will support the remaining parent as best we can. It is clear that this House does not think that the Government have got this part of the Bill right. Amendments 2 and 19 give them the means and the incentive to go away and get this right. I urge the Minister to accept them.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, losing a spouse is one of the most tragic circumstances that a person will have to endure and, as such, it has been recognised since the outset of the welfare system that the bereaved need some financial assistance. Bereavement benefits form a crucial part of state support but limited reforms over the years have led to a complex system, which has not kept pace with changes in the benefit system or wider changes in society. This legislation will address this. With a simple payment structure focusing support on the period immediately after the bereavement and a single contribution condition, the new bereavement support payment will be far more easily understood and claimed. It will mean that more people will benefit, particularly younger widows.

A claim to the new bereavement support payment is made by the surviving spouse or civil partner. The noble Baroness, Lady Finlay, raised those extremely tragic cases where not only is there one bereavement but the surviving spouse dies shortly afterwards. She is of course right that there can be no expectation that a claim is made by the surviving spouse in such circumstances. I take this opportunity to make it absolutely clear that, as with the current benefits, there will be arrangements in place for claims to be made posthumously. Every year, the Department for Work and Pensions receives around 10 posthumous claims to bereavement benefits made on behalf of a bereaved spouse who has subsequently died. There are regulations to ensure that appropriate payment can be made in respect of these claims.

Currently if a person who would have had an entitlement to a bereavement benefit themselves dies, regulations allow the DWP to appoint a third party to act on their behalf and make a claim. Once a person has been appointed to act on behalf of the deceased they have six months from the date they were appointed to make a claim. The amount awarded following a posthumous claim would match the entitlement the deceased would have had if they had made a claim. I can assure the noble Baroness that the regulations will be updated so that this practice will continue under bereavement support payment. With regard to guardian’s allowance and child benefit, the payment of these benefits is not affected by the award of current bereavement benefits, and this relationship will remain unchanged under bereavement support payment. It is worth saying that, due to the design of new bereavement support payment, such posthumous awards will be higher than under the current system because the new benefit is made up of a higher initial lump sum and monthly instalments.

Let me now spend a little time explaining exactly why we have decided to design the benefit as a higher lump sum and 12 subsequent monthly instalments. This is an issue that the noble Baroness, Lady Finlay, and the right reverend Prelate the Bishop of Wakefield raised. The counterargument is that bereavement has long-term implications for families. I understand this, and I realise that after a single year bereaved families will still be suffering and will be in need of support.

My point—and I hope it does not sound too counterintuitive—is that, looking at the welfare system as a whole, I am convinced that the best way to provide this support is through a shorter-term payment of bereavement support payment and a longer-term income replacement benefit in the shape of universal credit. If we pay the bereavement support payment for a longer period—for example, for three years—it could be done in a cost-neutral way only by reducing our proposed payment and spreading it over a longer period. This would mean providing less money in the period directly following bereavement. From the responses to the public consultation and the findings from the independent social research, it is clear that, regardless of household income, the death of a spouse has a significant financial impact which is acute in the initial months following bereavement. That is why we have decided to focus the benefit on the shorter term when the need is greatest. Let me be clear that this shift is not about saving money. In fact, we will be spending £110 million more over the first four years after implementation than if the current system had rolled forward.

My greatest concern about extending the duration of the bereavement support payment is when you consider the welfare system as a whole. The fundamental design principle of the new benefit is that, as a short-term payment designed to address the additional costs of bereavement rather than everyday living costs, it is clearly distinct from income replacement benefits or pensions. This means that we can fully disregard the payments from universal credit and benefit cap calculations, and this will clearly benefit the less well-off. For example, an unemployed single parent with one child who is entitled to bereavement support payment could receive £9,800 in the first year. In addition, they could receive the standard allowance and the child element of universal credit, which is more than £7,000 a year. On top of this, they may also be able to access other support such as help with housing costs. By extending the duration of the payment, the benefit would resemble an income replacement benefit and would need to be treated as such in the calculation of the benefit cap and universal credit. If we assume that we carried on paying the instalments at the rate of £400 per month, universal credit recipients in the poorest income quartile could lose around £4,800 per year and up to £15,000 by the third year. Our analysis shows that any increase in duration accompanied by removal of the bereavement support payment disregard from UC and taxation of instalments is effectively a transfer of money from poorer to richer recipients.

We are also concerned that a longer payment would be likely to be classified as a survivor’s pension under EU social security co-ordination rules. This would impact on the cost of other benefits, notably healthcare, sickness and family benefits. Analysis shows that if bereavement support payment is treated as a survivor’s pension and is paid over a three-year period, the costs of the bereavement benefit could increase by £400 million, which is four times higher than our planned investment of £110 million.

I turn to the conditionality regime, the issue which noble Lords spent most of this debate on. Our debate in Committee made me go back and think about this whole area from scratch. I will go into the final element—the review—which I touched on earlier and which is a way of thinking about the whole area, not just for this narrow group.

Bereavement has a long-lasting effect on families. We should never lose sight of the fact that the support we provide should not just be financial but help the bereaved to adjust to their situation and regain control of their lives. This process of adjustment varies hugely according to each individual; in particular, bereaved parents draw on a wide range of support mechanisms to get themselves and their children through. For those who are not in work or who have stopped working, part of this process of adjustment is looking to return to work. We know that long periods out of the labour market can have a negative effect on a person’s emotional and psychological well-being. This is why the Government also have a responsibility to help people regain control of their lives: universal credit helps people to do this.

I turn to the timing of when parents feel they need to go back to work. IFF Research concluded that:

“Most people thought it acceptable for the state to make contact following bereavement to offer employment support”,

as long as the approach was “individual and sensitive”, and,

“the typical timeframe suggested was between six and 12 months after the bereavement”.

I agree that supporting children should be every parent’s first priority. This is why universal credit ensures that bereaved parents are never subject to conditionality for the first six months. After this initial period, universal credit offers tailored support. Parents or lead carers of children under five are not expected to work and therefore will not be required to look for and apply for jobs. For those parents with children over five, work- related requirements are still tailored. Parents of children under 13 will be required to look only for work that is compatible with school hours. Parents of older children may have the hours that they are expected to be available for work tailored to the specific care needs they have in relation to the child.

I stress that we have no intention of requiring bereaved parents with childcare responsibilities to take jobs that do not take into account their children’s needs. This engagement is intended to be supportive—for example, supporting with confidence-building or training where a bereaved parent is entering the labour market for the first time or changing career path. Claimants’ individual circumstances are always considered before conditionality is applied and the current legislation allows for some to continue without any conditionality. A move to a fixed, 12-month conditionality exemption, as the noble Baroness’s amendment suggests, assumes that bereaved parents do not want the state to offer support in this period. This is wrong—

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 5:15 pm, 24th February 2014

My Lords, the noble Lord has misrepresented both my amendment and my speech. I said that many parents would welcome it, but that the decision on at which point within that 12 months they returned to the labour market lay with them, not with the local benefit office.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

The point I am trying to make is that it is far better to recognise that individual responses to grief vary. As a number of noble Lords have said, grief often does not manifest in behavioural and emotional challenges until months or even years down the line, as a child matures. That is why, under universal credit, advisers have the flexibility to personalise requirements at any point, responding as circumstances arise. Where parents are facing difficulties with school, childcare arrangements or other extenuating circumstances, advisers can limit or even lift requirements.

I recognise that the application of that flexibility depends on the ability of those advisers. While I feel that our advisers are able, it is important to ensure that they have the best guidance and training to deal with such difficult cases. That is why we are currently working with experts in the field including the Childhood Bereavement Network, the Children’s Society, Cruse Bereavement Care, WAY and Gingerbread, to ensure that guidance and learning clearly articulate how advisers can identify and support parents in these circumstances, including the particular circumstances in which it would be inappropriate to apply conditionality. Our advisory services are also being repositioned as a profession with a clear career path, accredited learning and ongoing professional development. The learning programme will ensure that advisers have up-to-date skills to deal with any claimant interaction and support them in making relevant and appropriate decisions on an individual basis.

That is the standing position. I now move to the more specific response that I wish to make following our discussions in Grand Committee, particularly in answer to the points raised by the noble Baroness, Lady Finlay. I recognise that there are circumstances in which children could be in considerable distress and in which it is clear that conditionality should not be applied and flexibility is essential. I do not, however, see such cases as being limited to bereavement. There may be other circumstances in which children need additional care—for instance, where a family is fleeing domestic violence.

I assure the noble Baroness that we are not looking for a measure to define “distress”. Indeed, we need to establish exactly what the expression means; we are using it as a shorthand and there may be a much better way of capturing the concept, which is one of the things that a review should do. We are looking to identify specific circumstances in which we could expect a child to be distressed, and in which they will therefore have additional needs that need to be recognised. Claimants would need to demonstrate only the circumstances they are in, not the fact of distress, which is, as the noble Baroness has pointed out, extraordinarily difficult to establish.

I therefore want to conduct a review as quickly possible, in order to embed any new rules in the regime before we take new claims to universal credit from families. That is why I propose to undertake the review myself. I would like, in practice, to conclude that review by June or so. I will report back to the House following that. I am not quite sure of what form that will take but we will find the right form nearer the time.

The scope of the review will include not just where there is a bereavement payment due but where there is the death of a partner, possibly unmarried, where the child’s sibling dies, or where a family is fleeing domestic violence. There will be other examples. We will start with an evidence-gathering phase. I should like to involve Members of this House—one or two have already demonstrated extreme knowledge—but I would also look to engage an expert adviser and to conduct open evidence-gathering sessions, including one for Peers. If that review concludes that changes to universal credit regulations are needed, I am able to bring those forward under the existing powers in the Welfare Reform Act 2012.

I think I have covered the areas raised by my noble friend Lord German. On the point made by the noble Baroness, Lady Sherlock, clearly I am able to commit to this review on the basis that the amendment proposed by the noble Baroness, Lady Hollis, does not go through. I would not be in a position to commit to a review with a changed context because if there is an ad hoc change to a significant proportion of those in the scope, I will have to work out again exactly how to scope any proposal that I have.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 5:30 pm, 24th February 2014

I am sorry, but why? The noble Lord has already made the judgment on kinship parents. This is a permissive amendment, which he can draw on if needed. If he does not need it because of his review he does not need to deploy it. It is there as a safety net, so why is he asking the House to make it an either/or judgment?

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, this is not a permissive amendment. It makes a change to the conditionality regime for one element. If I need to look at how I do a review, I would have to look again at the specific context of doing this review.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I am sorry; I crave the indulgence of the House. Let me read the substance of Amendment 21:

“The Secretary of State may by regulation and within the overall budget for bereavement support payment exempt any widowed parent from work conditionality while in receipt of said payment”.

The Secretary of State “may” do that by regulation. As I said, the amendment is permissive. I am sorry that the noble Lord did not, perhaps, fully appreciate that.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, let me make my point here. I will have to look again. As noble Lords know, a “may” in this context is a very substantial “may”. I will have to look again at the context in which I would want to do something such as this. I may very well want to do it, but I cannot make a commitment to have both at this stage. On that basis, I urge the noble Baroness to withdraw her amendment.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I am still slightly baffled by the less than satisfactory response of the Minister. Let me first thank the noble Baroness, Lady Finlay, the noble Lord, Lord Rix, the noble Earl, Lord Listowel, the right reverend Prelate the Bishop of Wakefield and my noble friend Lady Sherlock for their very powerful and moving speeches on something that really matters: trying to protect and support widowed parents for the first 12 months of their bereavement. I welcome the Minister’s offer of a review on distress. However, what he has suggested is so wide that I rather doubt—although I would be pleased to be proven wrong—that he will be able to turn this into effective policy.

I give one tiny example, which I was thinking of as the Minister spoke. He was going to extend this to the distress of cohabiting parents when one of them dies. It is not too far fetched to suggest to the House a situation where a woman was with the father of her child or children in a cohabiting relationship but they then separated. She then had a period of perhaps five or seven years with someone else, to whom the children really connected and related. Then she moved on to a new boyfriend—a new stepfather—for perhaps the past year. Could the Minister tell me which of those three would have to die—forgive the language—for her to be entitled to bereavement benefit under the proposal of distress? Is it the recent stepfather, over whom the children are not especially distressed but the mother is highly distressed; the long-term stepfather, who has helped to bring them up, to whom the children were committed and over whom they are distressed while she is less so; or their natural father, who is giving them financial support and they see regularly? Which is it? I suspect one cannot do what the Minister seeks to do.

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I am grateful to the noble Baroness for making the point for me. If we do these things piecemeal, we will not get the right answer. That is why my response to what the noble Baroness, Lady Finlay, said to me in Grand Committee was to think that we need to look at this comprehensively. We need to get this issue right across the piece and understand how to incorporate it as a whole into our conditionality regime. That is the response that I am looking to do, not to sort it out on the Floor of the House where we simply do not have enough information to do it properly at this stage.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I make two points. First, we are not seeking to sort it out on the Floor of the House. I am seeking the consent of the House, if it is so minded to give it, to a permissive amendment, which does not commit the Government to anything they subsequently decide is inappropriate in the light of further research. The second point is that the Minister’s definition of distress is so wide that I genuinely believe, from my limited experience in Parliament, that he will find it very difficult indeed to turn it into deliverable policy. I am sure he is as aware as I am that it will end up depending on the discretion—he made this point himself—of local people in local benefits offices, such as the 23 year-old who will be interviewing the widowed parent. Is she numb? If so, does that mean she is coping or not caring sufficiently? Alternatively, is she voluble? Does that mean she is coping or not caring? He will have to peer into her soul and we should not go there.

The Minister says that he wants to help widowed parents to adjust, to,

“regain control of their lives”,

with tailored solutions. He is saying that the local benefits office, the 23 year-old, will decide. The 23-year old will turn her into his dependant, reliant on his judgment as to what she should do and what is best for her family. That is inappropriate and improper. You are making the adult back into a child and adding to her stress and distress. The Minister should not be going down that path. He will not be able to do it by clear policy; he will depend on discretion. Neither of those routes is satisfactory for a small and coherent group that we can easily define—that is, widowed parents with children following a bereavement.

The Minister is opposing a permissive amendment dealing with a small, specific group, which he can respond to exactly as he has already helped—and I am glad of it—kinship carers. He has allowed kinship carers 12 months off on work conditionality; he can do the same thing for this very specific group and make their work conditionality freedom align with the 12 months in which they are receiving bereavement benefit. After all, that is precisely why they have bereavement benefit in the first place. If they have it because they need support following their bereavement, at the same time they need the freedom from the additional pressure that the Minister’s work conditionality will ensure.

The Minister said that it was not quite either/or, but suggested that—

Photo of Lord Freud Lord Freud The Parliamentary Under-Secretary of State for Work and Pensions

My Lords, I just want to make the point that if you pick out particular groups and have legislation just for them, you end up with the kind of carbuncled benefit system that we are trying to escape from. I am determined to try to build a system that is coherent across the piece, and I want to look at all the situations to make sure that they are consistent.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I understand the Minister’s support for grand schemes. We will see whether the grand scheme of universal credit, which I support, will deliver what he hopes that it does—and I hope it does. But here we are dealing with a situation in which we have kinship carers and widowed parents, and we may be talking subsequently about women experiencing distress in domestic abuse situations, and the Minister is trying to make something coherent. He is trying to fit them into one common mould, but he does not have to. He may come up with appropriate and different solutions for different groups because, as he himself said in his reply, every family is different and may need different help. This amendment would allow him to do precisely that.

The amendment does not cut across any review in any way, any more than his 12-month provision for kinship carers does. It seeks only to protect a small, identifiable and precise group from additional pressures of work conditionality at no cost at all and at a time when they and their children are most deeply distressed. I do not think that they should be put on the back burner for a review that may or may not deliver what I hope the House will think is the right path to take. If the review goes ahead and the Minister does not need the amendment, as it is permissive, he does not need to draw on it. If his review falters, which I think it will because he is asking too much of it, the amendment would give protection to some of the most vulnerable people in our country at the time of their deepest grief.

It is very simple. The amendment is permissive but says that we recognise the situation of widows and widowed parents and will give them, under the new system, one year of bereavement benefits and payments. This amendment asks for that one year, which we recognise is the period of most grief and distress, and that we should also not apply the pressure of work conditionality. This House has always looked out for widows and children, and I am asking the House to do it again today. The amendment is permissive and cost-free, and the Minister can build on it if he wishes to do the review. It is just a small safety net of help for grieving children and their grieving parent. I beg your Lordships to protect them tonight. I wish to test the opinion of the House.

Division on Amendment 2

Contents 202; Not-Contents 237.

Amendment 2 disagreed.

Division number 2 Pensions Bill — Report (1st Day)

Aye: 200 Members of the House of Lords

No: 235 Members of the House of Lords

Ayes: A-Z by last name


Nos: A-Z by last name