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Grand Committee

Wednesday, 19 November 2014.

Arrangement of Business


3.45 pm

The Deputy Chairman of Committees (Lord Bichard): Welcome to the Grand Committee. If there is a Division in the House, the Committee will adjourn for 10 minutes.

Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations 2014

Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations 20149th Report from the Secondary Legislation Scrutiny Committee

Motion to Take Note

3.45 pm

Moved by Lord Kirkwood of Kirkhope

To move that the Grand Committee takes note of the Social Security (Jobseeker’s Allowance and Employment and Support Allowance) (Waiting Days) Amendment Regulations 2014. (SI 2014/2309).

Relevant documents: 9th Report from the Secondary Legislation Scrutiny Committee

Lord Kirkwood of Kirkhope (LD): My Lords, I am substantially discomfited by the fact that sitting on my right-hand side is the chairman of the Delegated Powers and Regulatory Reform Committee. Next week she is chairing a seminar on how we deal with these orders, and I hope that she does not mark me down too hard.

These regulations are not new to us, and we as a Grand Committee have been considerably assisted in their consideration by the work done, as always, by the scrutiny committee, which identified—rightly, I think—that these amendment regulations raise issues of policy interest to the House. I am also indebted to the Social Security Advisory Committee, which—again rightly, in my view—engaged in a formal consultation on these orders. I think that that was the right thing to do. I am sure that, like me, colleagues have been able to read the orders carefully; they repay careful study, and a consultation was proper.

In passing, I would say that it is disappointing that we got advance notice of these regulations in 2013—I think it was in the Budget, or perhaps the Autumn Statement—and that was repeated in the Budget Statement 2014, but these regulations required some consultation if the policymaking was going to be done carefully, and there was a whole fallow year following their announcement with a flourish—and I am getting more and more nervous about social security announcements that are made with a flourish in Budgets. So, that time in the year 2013-14 could have been used to look at some of these things.

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The evidence that the SSAC has uncovered is invaluable in the consideration of this policy. Indeed, as the Explanatory Memorandum says, the estimated saving is some £50 million in fiscal year 2015-16, and the savings will diminish thereafter. I guess that that is because we approach the introduction of universal credit in 2017-18, and I shall come back later to that important moment. The Explanatory Memorandum mentions the calculations done by the department, and these are useful for reference. Paragraph 3.10 of the SSAC report says:

“The … analysis indicates that for 2015/16, the number of new claimants likely to be most at risk of suffering financial hardship are around 245,000 in JSA and 35,000 in ESA … The estimated average loss of benefit to each claimant from this policy change is £40 for JSA claimants and £50 for ESA claimants”.

That is very helpful to know. The point that I want to raise more than anything else is the hardship that will be experienced by that client group—the 35,000 people on ESA and the 245,000 on JSA. That is the point of discussing this here today.

I am opposed to these changes. If I thought I had any chance of getting a Division that would successfully annul them, I would have tried that. I am seriously considering doing so, depending on what support I can garner from colleagues if restrictions such as waiting days are put on universal credit as we approach 2017. These are savings dressed up. They are pretty mean-spirited and hit the most vulnerable. They again concentrate cuts on the working-age population and take no account whatever of the environment of the past four or five years. A policy of this kind, if it were to be applied eventually to universal credit, would be much worse.

I therefore support the SSAC’s recommendations and need to continue the analysis. I understand and am grateful for the extra work that the department has put in as a result of the request from the Social Security Advisory Committee. The case for exempting ESA was strongly made but resisted by the Government, which is a shame. The case that the SSAC made for promoting short-term benefit advances as a way of trying to alleviate some of the hardship was discarded in a rather offhand way by the Government. Members of the ESA and JSA client group who are most at risk in 2015 and beyond will have to rely on STBAs because they do not have any other options to plug gaps in benefit. I clearly support the idea from the SSAC that communications must be absolutely crystal clear regarding what is happening to the client group so that they can understand the position in advance and get their claims in early. The recommendations of the committee were all well founded. I was pleased that the Government accepted some, but not all, of them.

I want to say a word about context because I get the impression that the department does not pay enough attention to the payment regime. The system of paying benefits to low-income households who operate on a weekly or fortnightly cash basis underestimates problem that some of these delays and reductions will bring. I remember the good old days before 1998, as will other colleagues, when benefits were actually paid weekly and everyone knew where they were. That changed in 2009 to payments fortnightly in arrears, and in 2018 we are facing the cliff edge of universal credit paid monthly in arrears. I do not think that the department fully appreciates the significance of the change in the method

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of payment. I point out the obvious fact that Social Fund crisis loans are no longer available and there is an uncertain labour market in which people are much more quickly churning in and out of benefits and work.

Yesterday I was made aware of a publication by the Institute for Fiscal Studies which reminded me that over the past four years we have been taking, and will take, £20,000 million out of benefit expenditure in every year of this Parliament. That is a huge amount and the vast majority is being focused on working-age benefits. In a wider context, although I might be out of order in terms of this debate, we need to think clearly about how the cuts are shared across any future attempts to reduce social security spending, 50% of which is now spent on the retired cohort of our population.

I want to say a brief word about the eight vulnerable groups who have been identified. I am sure that the categories are not new to any of us. They include 18 to 24 year-olds, the homeless, disabled people and prisoners—who are of particular interest to me as a non-executive director of the Wise Group. We have a Routes Out of Prison programme which tries to mitigate the fact that we send prisoners out on a Thursday morning from Barlinnie prison with £46 in their hands and next to no other support. Issues such as those contained in the regulations will make their lives and futures worse. Concerns about the vulnerable groups identified by the SSAC are all well founded, and we need to watch the impact of these regulations on these eight categories very carefully.

I want to make two other points. The so-called list of investments that we now have access to as a result of this £50 million saving being recycled was first adverted to by the Chancellor as part of the 2013 spending review. They are things like upfront work search, English language requirements, weekly work search reviews and annual verification. I may be missing something, but I thought all this happened anyway. If it has not been happening since 2013, I will be disappointed. I do not see that we can demonstrate clearly that these savings are going to make any difference whatever, which folds back to the point that I made at the very beginning—that this is actually a dressed-up saving. It is the departmental expenditure limit that will get the benefit of this £50 million and next to nothing else. This is why I want to press the Minister about evaluation. There is an undertaking here in the Explanatory Memorandum which talks about looking at the results of these new investments and how beneficial they will be. I am very sceptical about that and would like to hear a little more about it.

The SSAC report says that the statement in the Explanatory Memorandum that there was likely to be “no impact” on business or charities is “implausible”. It is being very polite. Anybody who knows anything about the 245,000 and 35,000 people in the client groups that we are dealing with realises exactly how important charities are to people in that situation. I do not think that the department is living in the real world. It is a laughable statement. This will lead to payday loans and all that they bring, which is potentially deeply regrettable.

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With the funding available to local authorities also being reduced, these regulations are bound to increase hardship. It may not involve millions of people, but it will affect those whom it does affect severely. I want the Government, in evaluating how these regulations are implemented, to have very careful regard to the consequences and the effects on these families. I want them in particular to reflect very carefully about bringing forward similar regulations when it comes to introducing universal credit later in the next Parliament. I beg to move.

Baroness Lister of Burtersett (Lab): My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for initiating this take note debate on a very important subject. I apologise if I repeat any of the points that he made, but they bear repetition because there has not been sufficient publicity about the implications of these important regulations. The SSAC, as we have heard, is very critical of them, especially of the lack of robust analysis of the costs and benefits. The impact assessment that the Government have produced in response is certainly an improvement. Whether it constitutes that robust analysis is another matter, but it does at least give us more information on those who are likely to be affected. I accept that it does give some credence to the original—unevidenced—claim that many affected would be,

“coming to benefits from relatively well paid jobs”,

as the lowest paid are more likely to have linked claims and therefore not be affected. Nevertheless, nearly two-fifths of JSA and three-fifths of ESA unlinked claims were from those earning less than £5,200.

4 pm

The impact assessment makes much of the fact that about half JSA claimants in employment in 2013-14 have been paid monthly and they should therefore have a month’s wages to tide them over. However, it also has to acknowledge that those on lower earnings were more likely to have been paid weekly. In fact, the majority of those who earned up to £10,400 were. If we include “other”, which I guess is probably fortnightly, then it is the majority of those earning up to £15,600. As CPAG—and I declare an interest as honorary president—warned with some restraint:

“Claimants leaving low-paid jobs paid weekly or fortnightly will not necessarily have a large, in-arrears payment to cover them for seven days without income, especially with benefits being paid in arrears too”.

The noble Lord also made this point.

The impact assessment also shows that only 36% of unlinked JSA claimants had savings of £100 or more to tide them over. The majority had less than £100 and, in the DWP’s own words,

“could be deemed to be less resilient in a vulnerable time just after losing work”.

Never mind, that is not going to deter the DWP. We are not told what proportion of those affected is likely to be in arrears or debt when they lose their job. Given the high level of debt and arrears and the high level of in-work poverty, I would have thought that that might be relevant. Can the Minister give us that information now?

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Notwithstanding the Government’s soothing words, in response to the SSAC, that they believe it is,

“reasonable to expect the great majority of ESA and JSA claimants to support themselves during the first seven days of sickness or unemployment”,

they acknowledge that the change “may” cause hardship for some individuals and families, including, according to the evidence presented to the SSAC, homeless people, people with mental health problems or learning difficulties, ex-prisoners and domestic violence survivors.

What options are open to those who cannot afford to lose this money? The Government consider that short-term benefit advances provide sufficient mitigation, but they do not accept the SSAC’s recommendation that they should be proactively and consistently signposted. Research into why people use food banks published today by CPAG, the Church of England, Oxfam and the Trussell Trust, which I will come back to later, demonstrates the importance of this recommendation. It found low awareness of the advances among those who needed help because of benefit delays, practical barriers to making a request including lack of access to a telephone or being advised by Jobcentre Plus to use other emergency support, including the food bank, instead, and refusals of STBA claims that were shown to be legally incorrect. Will the Minister now commit to reviewing the administration of STBAs, in the light of this evidence, and reconsider the Government’s rejection of the SSAC’s recommendation? The SSAC points out that, even for those who get them, these advances have to be repaid at a high payback rate. The SSAC says:

“For those struggling with existing debts, it may generate a further downward spiral of accumulating indebtedness”.

The fear is that the same will happen without an STBA, if claimants have to turn to payday loans or loan sharks to fill the gap.

The SSAC also points out that local authorities are unlikely to help. Some only extend help to those already entitled to benefits. This is a Catch-22: until you are entitled, you cannot ask for help. Moreover, the Local Government Association found that three-quarters of local authorities expect to scale back or scrap their local welfare assistance schemes if separate identifiable funding is ended, as is threatened. Like the noble Lord, Lord Kirkwood, the SSAC shares the scepticism of many respondents about the statement, in the original equalities impact statement, that the change would not have any impact on charities. Is the department not aware of the extent to which benefit delays are cited by food banks as a reason for people turning to them?

As I said, this morning I attended the launch of a report into why people use food banks. It was very moving and it is a pity that the Minister’s colleague, Mr Webb, who was supposed to speak at the launch, decided not to at the last moment. I think he would have learnt something from listening to people talking about the shame they feel going to food banks. One woman was practically in tears, and indeed the researcher said that the evidence was so harrowing that the transcriber rang her to say, “I do not think I can carry on doing this”. It was an opportunity missed for the department to actually hear what is happening on the

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ground. The research has found that benefit delays account for almost one-third of those turning to food banks, and in some places it is more like four in 10 cases. What came out of the launch is that even very short delays can be the tipping point for some people—so food bank providers should beware.

As the noble Lord has said, the impact assessment states that the savings generated by this change will decrease as universal credit is rolled out, but that is only because the savings are transferred to universal credit itself, and will be considerably larger because that rolls up the children and housing components. The TUC has drawn attention to the even greater hardship that this is likely to cause, and I would be grateful if the Minister could write to me with the department’s response to the TUC recommendations. I would also ask him to give serious consideration to the recommendations made by the CPAG that under universal credit, housing costs and payments for children should be exempted. That would not sacrifice the policy intention of the change we are debating today. Better still would be if the noble Lord, Lord Kirkwood, managed to get any subsequent regulations around universal credit not passed—I will see him on the barricades.

To conclude, what is the rationale of the policy intention? It is partly to discourage short-term claims, but as the SSAC noted, some have suggested that this could be counterproductive. If a family is in financial hardship during the waiting days, looking for work, which in itself can incur costs around transport and so on, might not be an immediate priority. The second rationale, as we have already heard from the noble Lord, is saving to spend. The Explanatory Memorandum to the regulations states that the Secretary of State decided that the potential risks of the policy,

“were outweighed by the benefits that could be derived to claimants from reinvestment of the financial savings”.

The SSAC asked for evidence to identify more clearly the cohort of people who would gain from this reinvestment. For example, will those who lose benefits through this change expect to receive specific and additional help to return to work more quickly than they otherwise would have done? Unless I missed it, I have not seen an explicit answer to that question, so perhaps the noble Lord could provide the answer now. Moreover, it seems that the reinvestment is really about more sticks to get people into work, however helpful some of them may be, and no carrots in sight—unless they are provided by a food bank.

The SSAC concluded that, on the basis of the evidence to date, it was sceptical that the case had been made. I cannot speak for the committee, but despite the further evidence supplied as a result of its helpful report, I also remain sceptical.

Baroness Thomas of Winchester (LD): My Lords, I too am grateful to my noble friend Lord Kirkwood for giving us a chance to talk about these regulations, and I really do not think he needs any lessons from my seminar about how to do these things. He is an old hand at regulations of all kinds, particularly DWP ones. I fear that I shall echo much of what he and the noble Baroness, Lady Lister, have said, although I do have a few further points to add.

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As we have heard, the main recommendation from the SSAC is that a robust analysis of the costs and benefits should be undertaken and published before the regulations are proceeded with and ESA claimants should be taken out of the new rule. I echo the noble Baroness, Lady Lister, first by pointing out that although the Government say that they have complied with the first recommendation, it is not what any of us would call robust. Their main contention is that the numbers adversely affected by this change are comparatively small, although they do admit that it is not possible to establish the numbers or levels of hardship for specific vulnerable groups—for example, those who are homeless or have mental health problems. I shall come back to that in a moment. They also admit that there will be financial difficulties for these groups. As we know, if 82% of JSA claimants and 74% of ESA claimants are not on HB and 50% of JSA claimants are paid monthly, this still leaves a large number of claimants who are receiving housing benefit, possibly passported from JSA, and who are not paid monthly. These people are often on low incomes, paid weekly and have no savings. For them an increase in waiting days will make a significant difference with knock-on effects elsewhere in the welfare system, and I do not think we hear nearly enough about knock-on effects.

I am particularly concerned about those on ESA, even though this will only be 40% of ESA claimants. The Government’s reason for not excluding them from this change in the waiting days is that they say there is no evidence that those on ESA are at a greater risk of financial hardship than those on JSA and they do not want to encourage claimants to try to move from JSA to ESA. This surely will impact disproportionately on many disabled people, who are less likely to be claiming ESA through having left work and thus will not have a final salary to fall back on. In any case, disabled people take longer to secure work and move off ESA. They are also likely to be on fixed budgets and have few savings, so for them this change simply means a loss of benefit. Their only comfort is that we are told they can apply for this short-term benefit advance. However, I am absolutely horrified by the Government’s statement that disabled people could use their disability living allowance, if they receive it, during a temporary disruption to other income. This tightens the screws still further on disabled people and should not have been put forward. DLA or PIP is designed to help living with a disability, not day-to-day living expenses.

Here I want to mention another reason the department ought to be very careful before implementing this particular policy as it applies to ESA claimants. It was on the news at lunchtime that there is evidence that the DWP has carried out 60 reviews into suicides linked to benefit cuts in the past three years. This very serious matter has been uncovered by John Pring of the Disability News Service and I think we ought to hear more about this in the coming weeks. As for this amazing statement in the original impact assessment that changing from three to seven waiting days will not impact on local authorities or charities, I want to reiterate what the noble Baroness said about food banks. I suppose the Government tick a box without really thinking about it when they say that this will not

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impact on charities, because nothing could be further from the truth. Of course more people will turn to charities such as the Salvation Army.

Altogether I find the Government’s rationale for this change pretty thin. They say that they want to encourage claimants to look harder for work but claimants have to do this anyway. They do not appear to know how this change will work with UC or how it will impact on housing benefit. We are told that the savings generated by this change will be ploughed back into labour market measures to improve the English language skills of claimants. That is one thing I very much approve of. My noble friend said that I never say anything nice to him on these sorts of occasions. Well, here is one tiny crumb of comfort. If the money is spent improving free English language teaching, I shall be very pleased. The other thing it is supposed to do is to provide more resources to support lone parents to return to employment. I echo the point made by the noble Baroness that we would like to hear more detail about these measures.

It may be very tempting for the Government to say that their aim with this policy is further to weaken the culture of dependency because that is a popular message—we have to be honest about that. However, they must make sure that in so doing they do not cause considerable hardship to many thousands of people, with knock-on effects they have not even tried to factor in. The party opposite flirted with this policy some years ago but changed its mind and did not implement it in the end. I hope that the same will be true of this policy.

4.15 pm

Lord McAvoy (Lab): My Lords, I, too, thank and congratulate the noble Lord, Lord Kirkwood of Kirkhope, on moving this Motion which allows us to elaborate further on this pernicious policy. Like many others, I am still waiting for the rationale behind what the noble Lord described as a mean policy. I do not get the stated—or, rather, not yet stated—rationale behind it.

I would like to repeat some of the comments made by the Secondary Legislation Scrutiny Committee. It stated:

“DWP estimates that this change will generate savings of approximately £50 million in 2015-16, although these will decrease in subsequent years as Universal Credit is rolled out”.

Can the Minister say whether there has been any change in that estimate? If that is the case, I would like to hear what it is. The Secondary Legislation Scrutiny Committee also says:

“DWP states that these savings will be invested in new measures to support people into work”.

Therefore, work must have been done on allocating money to these new measures to support people into work. I would like the Minister to indicate what new measures are planned and their estimated benefits.

The Social Security Advisory Committee has issued a report on this measure, which, again, has been referred to. The Secondary Legislation Scrutiny Committee states:

“An Impact Assessment is now attached to the instrument which indicates that approximately 70% of JSA claimants and 40% of ESA claimants will serve waiting days ... reducing the value of their first benefit payment by an average of £40 for JSA claimants and £50 for ESA claimants”.

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I fully understand why the noble Lord, Lord Kirkwood, described this measure as mean. There is no doubt that the country faces a difficult situation caused by the downturn initiated in America in 2008 to 2010 and that difficult decisions would have to be made by whoever was in authority. The noble Baroness, Lady Thomas of Winchester, mentioned the Labour Party. We have repeatedly expressed concern about how the administration of universal credit will impact on those on low incomes. The reform represents a significant change in the rhythm of social security payments for a group for whom this is a main source of income and whose well-being will be profoundly affected by any delays or problems experienced in receiving it.

My noble friend Lady Lister of Burtersett and the noble Baroness, Lady Thomas of Winchester, both referred to the role played by food banks and charities. Like many people, I am outraged that food banks have had to be established to deal with the society that we live in. This measure has not taken into account the dire straits that some people will find themselves in when trying to deal with it. The Labour Party convened a universal credit liaison committee which reported in June 2014 and made several recommendations on the payment of universal credit which we believe the Social Security Advisory Committee should have considered, including one on the scope of the regulations.

I ask the Minister whether consideration was given to making the first payment of universal credit earlier. If that was the case, it should be widely publicised. The cost of allowing claimants that choice of payment date, as with direct debit payments, should also be looked at. Has that happened or was any consideration given to it? Did the Government ever seriously consider implementing it?

In order to mitigate any hardship that may arise from the recommended move to a seven-day waiting period, we asked that sufficient attention should be drawn to the recourse available to claimants through short-term benefit advances. Noble colleagues have mentioned this aspect. In fact, the Social Security Advisory Committee itself recommended that the DWP should:

“Strengthen the existing process for highlighting the availability of STBAs and ensure that they are proactively and consistently signposted. In particular, it will be important to ensure that staff (through training and appropriately worded scripts) are encouraged to identify potential hardship and, where it has been identified, explain the process to the claimant. It is also important that the Department ensures that all supporting information channels, such as GOV.UK, highlight the existence of STBAs”.

Will the Minister give the Government’s response to that view and say whether they have given any consideration to implementing it?

The claimant should be made fully aware of budgeting advances and more discretion should be shown in order to mitigate any hardship that may arise from the recommended move. Attention should be drawn to the existence of budgeting advances and, in certain circumstances, we hope that discretion is given to advisers to waive the eligibility criteria whereby claimants need to have been in receipt of benefits for a period of six months in order to apply for an advance. I ask the Minister to respond and indicate what consideration was given to the measures that I have outlined or other

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measures from a variety of sources. The Minister has an overriding duty to explain the rationale behind the measure and go into detail about its implementation.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con): I thank noble Lords for their many helpful contributions to the debate. It is clear that this measure has generated a great deal of interest, not just within this House but outside among voluntary and public organisations, which have also presented their views to the Government. The principle behind this extension from three to seven waiting days is that benefits are not intended to provide financial support for very brief periods, for instance when someone is between jobs or during a short period of illness. This measure will generate savings of £125 million over five years. It is money that, as noble Lords have touched on, will be reinvested to help those most at risk of long-term welfare dependency. As noble Lords know, the measures will fund schemes including additional support for lone parents and improving literacy and numeracy skills.

To pick up the question from my noble friend Lady Thomas about any change in those estimates, they were based on departmental forecasts which themselves were based on OBR economic assumptions at the Autumn Statement 2013 and in Budget 2014 and there have not been any updates to this analysis since then, although we are, of course, awaiting another financial event quite shortly.

On the related question from my noble friend Lord Kirkwood and the noble Baroness, Lady Lister, about what and where these investments are, we are expanding on measures that are already in place. They will introduce more rigorous scrutiny on the hardest-to-help claimants. The English language provision is new and will ensure that claimants have the language skills for the workplace. Those methods should enable the claimants to enter the workplace sooner than they otherwise would, which means that they will be earning sooner and not receiving benefits.

Baroness Lister of Burtersett: Perhaps I may ask the noble Lord the question raised by SSAC. Is it likely that the people who are going to be adversely affected by this change will be the people who will be helped by these measures?

Lord Freud: Yes; I thought that I had made that clear—that the intention is to focus on the people with longer-term difficulties. So, yes, the intention is that it will be those people.

This measure means that many people who make a new claim for jobseeker’s allowance and ESA will see a reduction in their first benefit payment. However, we have measures in place through exemptions and the offer of advances and signposting advice to ensure that claimants who are most in need will continue to be protected.

I hope that I can pick up all the points that have been raised. On the point raised by my noble friends Lord Kirkwood and Lady Thomas on the exemption of ESA claimants, if there had been a differentiation between the two types of claimant there would have been a perverse incentive for people to self-certify sickness for a week and claim ESA rather than JSA in

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order to get an additional four days’ benefit. There is no evidence that ESA claimants are at greater risk of financial hardship than JSA claimants. Furthermore, to exempt ESA claimants to make that differentiation would be inconsistent with future proposals for universal credit, where our intention is that all ESA-type claimants will be placed in the all work-related requirements group and therefore subject to waiting days. Clearly, waiting days themselves have been a feature of ESA since its introduction in 2008. This measure has simply extended that existing provision for those who do not qualify for an exemption.

The point that my noble friend made about exempting vulnerable groups is clearly one into which we put a lot of consideration, particularly around care leavers, sufferers of domestic violence and ex-prisoners. Bluntly, they were exempted on grounds of practicability. It would have introduced an unworkable, three-tier system and these groups are already required to serve three waiting days, so the only other option would be a full exemption which would go beyond the scope of this change. Despite what my noble friend said about the UC provisions in this line, we are able to make an exemption for these groups in the UC-equivalent provisions. Perhaps that will leave my noble friend somewhat more relaxed about those.

4.30 pm

My noble friends raised the issue of hardship. Short-term benefits may be available. We are paying more first benefits on time than we used to: it is up to 92%. We can signpost to local welfare provision. We provide financial support to credit unions which are a source of relatively low-cost finance to those who might otherwise be excluded. We are, of course, putting an enormous amount of energy into getting the credit union movement enlarged. Because of the linking rules, many claimants are already exempt and they tend to be the ones in the more vulnerable positions. So 60% of ESA claimants are actually exempt because of the linking rules and the equivalent number of JSA claimants is 30%.

The noble Baroness, Lady Lister, asked about the number of people, when they had their last payments and the state of their savings. Some 70% of JSA claimants are subject to waiting days, 30% having been exempted because of linking rules. Of that 70%, it is estimated that half have been in employment within three months prior to their claim and 30% are in a benefit with savings of greater than £100. For ESA claimants, 60% of whom are exempt, the equivalent figures are that around half of the other 40% were in paid employment immediately prior to their claim and 38% are estimated to be in a benefit with savings of greater than £100.

Baroness Lister of Burtersett: I am sorry to intervene on the Minister. I was not asking about savings, because that is in the public sphere. My question was whether there was any information about people who come out of work in debt or arrears?

Lord Freud: I was coming on to that. The noble Baroness asked a series of questions. We do not currently have the information on the proportion of people

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coming on to benefit who are likely to be in arrears or debt. I am not aware of any published analysis that would allow us to estimate this quickly. All noble Lords who spoke raised the question of short-term advances. SSAC recommended that communications about them should be strengthened.

4.34 pm

Sitting suspended for a Division in the House.

4.44 pm

Lord Freud: A number of noble Lords raised the communications issue around short-term benefit advances. We have taken the recommendation of the committee and issued communications to all staff to improve staff awareness of benefit advances and to remind them of the circumstances in which an advance can be considered.

On the point made by the noble Baroness, Lady Lister, on the report on food banks, I was not at today’s press conference but no one takes the decision to use a food bank lightly. The factors driving food-bank use are many and complex, as today’s report recognises. The report said:

“The immediate income crisis that predominantly led to food bank use was often one incident in a complex life story, in which several other factors had combined to leave people vulnerable and less able to cope with dramatic changes”.

Baroness Lister of Burtersett: I agree that we are talking about very difficult lives here, but it is very clear from this research, which is not a huge study but it is from a number of different places using a number of different methodologies, that benefit delays were a very important factor. Given that, does the noble Lord not accept that this measure could well make it worse?

Lord Freud: My Lords, I would be the last person to say that the current benefits system was easy to navigate. One of the things that has been driving the reform that we are introducing, universal credit, is the production of an in-work and out-of-work benefit that is easy to navigate. I started researching this area in some depth in 2006 and the irony is that benefit delays under the existing, rather complicated system have actually been improving. That is why I revert to the point that this is a complicated matter, as is acknowledged in today’s report and in other reports. That is the only point I want to make.

There was a series of questions on universal credit and the noble Baroness raised the point about TUC concerns about the length of time claimants have to wait for payments under universal credit. Clearly we have an advances process built in, but probably more important is the system that is now developing of universal support delivered locally, which is designed to work in the local community, both with councils and with voluntary organisations, to bring the support that is specifically required by vulnerable people. The estimated saving from increasing the waiting days in universal credit is £200 million per annum once it is fully rolled out, but this figure will be reviewed and updated with the Autumn Statement. I have talked about exemptions within universal credit.

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The noble Lord, Lord McAvoy, asked about our consideration of whether we add waiting days to the assessment period in universal credit or whether we have partial periods of universal credit. We spent a great deal of time considering that issue. Universal credit is an in-work and out-of-work benefit, paid on a monthly basis. That monthly basis is designed to help households to budget on a monthly income and eases the transition from and back into paid work. The one-month assessment period is therefore central to universal credit, and the waiting days in universal credit are days of non-entitlement. I need to remind noble Lords that because universal credit is an in-work and out-of-work benefit, one might not experience waiting days anything like the same number of times as, especially if one is moving from low-paid work to being out of work, one is likely to be consistently on universal credit. That is one of the safety features of universal credit in this regard.

With that I think I have dealt with all the questions raised today and thank my noble friend—

Lord McAvoy: I may have missed it, but I do not think I did. Does the Minister have any response to the point made by the Social Security Advisory Committee about short-term benefit advances?

Lord Freud: Yes, we have accepted the communications issue there and have already, on the basis of that recommendation, issued communications to our staff to improve awareness of the availability of short-term advances and remind them of the circumstances in which those advances can be considered.

As I say, I think I have dealt with everything. I thank my noble friend for the opportunity to discuss this important topic and to address all the concerns and matters that have been raised.

Motion agreed.

Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 2014

Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 20149th Report from the Joint Committee on Statutory Instruments9th Report from the Joint Committee on Statutory Instruments

Motion to Consider

4.53 pm

Moved by Lord Freud

That the Grand Committee do consider the Jobseeker’s Allowance (18–21 Work Skills Pilot Scheme) Regulations 2014.

Relevant documents: 9th Report from the Joint Committee on Statutory Instruments and 12th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con): These regulations were laid before the House on 13 October and I am satisfied that they are fully compatible with our obligations under the European Convention on Human Rights.

Recent labour market statistics show that youth unemployment is moving in the right direction. The most recent figures from last month show that young

19 Nov 2014 : Column GC172

people—those between 18 and 24 years of age—saw the largest annual fall in unemployment since records began, of more than a quarter of a million since last year. Excluding those in full-time education, there are now 468,000 unemployed young people. This is down by nearly a third compared to last year and is fewer than just before the recession. Clearly, this news should be celebrated, but we will not be complacent. Compared with other countries in the OECD, we in the UK still have a higher proportion of young people who are not in employment, education or training—who are NEET—and despite the general upturn in the economy, this remains a stubborn issue. Even in past better economic times, on average some 7% to 9% of young people have struggled to find work, and this is not a situation which the Government are prepared to accept.

Since coming to power we have done much to address the issue. We have expanded the apprenticeships scheme and launched traineeships to support young people who are not yet ready to apply for an apprenticeship. We have worked with business to create more than 100,000 work experience placements for young people. We have cut the national insurance contributions that businesses pay for young employees, and we set up a Cabinet Office review of all policies funding our provision for 16 to 24 year-olds who are NEET. Outcomes from this review include opening up the Jobcentre Plus network to 16 and 17 year-olds so that they can receive support and guidance from jobcentre work coaches, and a new careers guidance system is planned for 16 year-olds to help them make the best possible decisions about their future. Also as a result of the review, the Chancellor announced in the 2013 Autumn Statement the intention, which was reaffirmed in the Deputy Prime Minister’s speech on 27 February last, for the launch of two pilots of support for young people aimed at addressing the skills and experience gap that is holding so many of them back from joining and progressing in the labour market.

We know that a young person is twice as likely to be NEET if they have not achieved a level 2 qualification in English or maths by the age of 18—that is 19% compared with 39%. Young people are much more likely to remain unemployed for longer. Some 45% of the young long-term unemployed have qualifications in English or maths below level 2 as against 20% of the population as a whole. Moreover, two-thirds of JSA claimants do not have level 2 qualifications in English or maths. We also know from employers that English or maths skills are critical in the workplace and are paramount to the recruitment practices of many. Findings from the Employer Skills Survey 2013 suggest that where young applicants were not considered to meet the requirements of the role, the main reasons cited were lack of skills and experience.

The aim of the two pilots, or “phases” as they are described in the statutory instrument, is to test new approaches to the delivery of support for young people who lack the English and maths skills or work-related experience and skills that employers demand. It is not the aim of the pilots to deter young people from making a claim for JSA or to make the claiming of JSA harder. Through these pilots, we want to give young people the tools that will serve them throughout their working lives.

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Under phase 1, we will require new claimants of jobseeker’s allowance aged 18 to 21 who do not possess level 2 qualifications in English or maths—the equivalent of a GCSE grade A* to C—to undertake learning in one or both of these subjects for up to 16 hours per week for up to six months. We will test whether the use of mandation is effective in securing participation in the learning, compare the two methods of learning in terms of effectiveness and cost, and identify the impact of the learning on job outcomes and off-flow from benefit. Under phase 2, we will require all 18 to 21 year-olds who are still claiming jobseeker’s allowance after six months to undertake an appropriate skills or work-related activity, if they are not already doing so. Doing nothing will not be an option for them. We will test the impact of mandation on take-up of provision, off-flow rates from benefit, job outcomes and skill gain. We also seek to understand how the new process is received by claimants, work coaches and employers, and the net impact of piloting this approach.

Phase 1 will be delivered in jobcentres within the Mercia, Kent, the Black Country, Devon, Cornwall and Somerset districts. Implementation is planned to begin this month, with the last referrals to learning taking place towards the end of 2015. Phase 2 will be delivered in Kent jobcentres only. It will also begin this month but is expected to end in the autumn of 2015, as we do not require as many participants to provide robust evaluation.

We believe that the pilots will have a positive impact on the skills and experience levels of young people, improving their competitiveness in the labour market and enhancing their wage-earning potential in future years. It will also give us the opportunity to gain more evidence of what types of support work best for young people, thereby informing future decisions on our approach to helping those claimants who are furthest away from the labour market.

5 pm

Claimants who have basic skills needs are already identified and referred to mandatory provision by Jobcentre Plus work coaches. This provision includes English and maths learning, and for those claimants whose spoken English is below entry level 2, we introduced the English language requirement in April this year. However, our proposal in phase 1 is to make the identification and addressing of English and maths skills much more systematic, and to link this to what we know employers want—a workforce qualified to a level 2 standard in English and maths.

Similarly, Jobcentre Plus already offers a range of work-related interventions as part of the youth contract—for example, work experience, sector-based work academies and timely careers advice—but there is currently no systematic requirement for young claimants to undertake such provision at any particular stage of their claim. We believe that that cannot be right, particularly for those claimants who have become long- term unemployed. Our proposal in phase 2 will therefore ensure that 18 to 21 year-old JSA claimants who reach the six-month point of their claim must undertake some work or skills-related activity as a condition of their continued receipt of benefit.

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These regulations will allow the department to select and refer suitable claimants to participate in the pilots. Under phase 1, 18 to 21 year-old JSA claimants will be asked to provide evidence of their qualifications in English and maths at their initial work-focused interview in the jobcentre. Claimants who cannot provide evidence of such qualifications at level 2 or above, and who do not have more pressing barriers to work that need to be addressed as a priority such as homelessness or drug addiction, will be selected to participate in phase 1 and mandated to attend an assessment with a training provider. The provider will assess the level at which the claimant is operating in English or maths or both, and check for IT skills. Claimants whose skills in English or maths are at level 2 or better, or who do not have the IT skills required to participate, will be deselected. This is to ensure that only claimants who will actually benefit from the training and can fully take part will be required to continue participating. This will ensure that no claimant is set up to fail under phase 1.

On receipt of the assessment report from the training provider, the work coach will randomly assign those claimants who have been assessed as suitable to continue participating in phase 1 to one of three groups: a control group, an online group or a blended group. Claimants in the control group will follow a traditional JSA claimant journey and receive the usual menu of Jobcentre Plus support from their work coach. Claimants in the control group will be monitored for evaluation purposes. Claimants in the online group will be mandated to English and/or maths learning delivered solely through online means, supplemented with virtual support from a tutor via phone calls, video link and other remote channels. Claimants in the blended group will also be mandated to English and/or maths learning but in this case the delivery, while largely delivered online, will also include classroom-based learning.

In the procurement exercise for phase 1, great emphasis was placed on the need for innovative approaches to the delivery of learning, and the need for individualised learner journeys. We expect the learning to engage claimants in a way that traditional methods may have failed to do, and it will be contextualised to the world of work in order to emphasise its relevance for jobseekers. Claimants will be able to access the online learning through their own IT equipment, including tablets and mobile phones, through equipment sited at provider premises or through other venues such as public libraries.

This provision has been designed from the outset to fit in with the restricted availability of carers, claimants with disabilities and other vulnerable groups. The predominantly online nature of the learning will enable claimants to pursue their learning at times and in venues that suit them and to fit it around other commitments that they may have, such as childcare. The specific needs of disabled claimants will be provided for through specialist software packages and IT equipment.

Certain claimants will not have the underlying abilities that are required for phase 1 and will not be selected to participate from the outset or will be deselected from phase 1 at an early stage. For example, those claimants with poor spoken English, insufficient IT skills to benefit from online learning, or English and maths skills below entry level 1, will not be selected for phase 1

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even if they meet the criteria since they will not be able to fully participate. Finding other more suitable interventions to address these skills gaps will be a greater priority. At a later stage, claimants who despite making a genuine attempt to learn, simply find that they are unable to cope with the demands of the learning, will be deselected. The aim of phase 1 is to improve claimants’ skills in English and/or maths by one level from that originally assessed. We will not be mandating claimants to sit exams, but we believe that those who have progressed through the learning will wish to gain a recognised qualification after their hard work, and work coaches and providers will emphasise the value of doing so.

Under phase 2, all 18 to 21 year-olds still on JSA after six months will be interviewed by their work coach to identify what work or skills interventions would be most appropriate to move them closer to the labour market. Some will already be undertaking appropriate activity, but for those who are not, we believe it right that they should take up the offer of appropriate provision. In the majority of cases we anticipate that this will be a work experience placement, although other options include sector-based work academies, a traineeship, and the mandatory work activity scheme. Some of these options are voluntary, but if a claimant declines to take up a voluntary option, they will be required to undertake a mandatory work activity placement or other mandatory provision.

For both phases, claimants will continue to be subject to the conditionality requirements of JSA and will be expected to be available for, and actively seeking, employment. Sanctions will apply to those claimants who do not participate in the pilots without a good reason. This means that where claimants are unable to participate due to, for example, issues relating to internet access or problems with IT equipment, or for isolated instances where an emergency prevents them from attending an assessment or learning, they will not be sanctioned. Sanctions will apply to those claimants who fail to participate without any good reason, not to those who through no fault of their own are unable to participate. The sanctions regime allows claimants to provide an explanation before they are sanctioned and to appeal if they believe the sanction to be unfair.

We believe that the measures proposed in these regulations will give the young people who participate in the pilots a real opportunity to enhance their skills, gain experience of work, and pull themselves out of the benefit trap and into sustained employment. It will also give us the opportunity to further refine the support we give to young people. Nowhere else in the OECD is such a systematic approach being taken to address the literacy and numeracy needs of welfare claimants; in this we will be an exemplar. These pilots offer the potential to impact the lives of thousands of future claimants who will benefit from the insights gained, enabling them to avoid the scarring effects of unemployment and to build better futures for themselves and their families. I beg to move.

Lord German (LD): My Lords, I am grateful to the Secondary Legislation Scrutiny Committee for drawing this matter to the attention of the Committee because it raises issues of public policy that are of some

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significance. As my noble friend has said, this policy seeks to deal with a difficult group of young people. It is an issue which has stubbornly refused to go away despite the many different approaches that have been taken to it. I must say that I agree with the definition of the problem, but I am not yet convinced that the solutions being proposed in these regulations are the right way to progress our knowledge, understanding and prescription for dealing with it.

At paragraph 7.4 of the Explanatory Memorandum the Government say that,

“there is no clear evidence of what methods would be most effective in improving the skills or enhancing the work experience of young unemployed people. For this reason, we wish to pilot the use of innovative approaches”.

I agree entirely with that, although there is a large body of research on the way in which these innovative approaches with young unemployed people can work. I must tell my noble friend that I am not convinced that what is proposed here will be successful—that is, the new approaches to tackle poor English and maths skills among 18 to 21 year-olds and the tests that my noble friend has described. The key word in all this is “innovation”. Innovation means something new, a new approach and doing things in a different way. The two approaches described in the regulations are a classroom-based activity and an online-based activity. They set out where the activities take place and what activities take place rather than the process of dealing with this very difficult group of young people.

Most of the academic research on this issue says that the two crucial issues you have to deal with are lack of self-esteem and lack of confidence. The early steps on the rungs of the ladder they have to climb to achieve qualifications are missing. The group of people we are talking about have probably failed at school. They have been absent a great deal and have not even sat some of the examinations at the end of their schooling. The big question is this: if these young people have failed at school, and school is mandatory, what will the innovative approach in these regulations and the pilot achieve?

Research on this issue and my practical experience indicate that you have to spend considerable time supporting these people outside the classroom environment in order to restore their self-esteem and confidence. To achieve an examination result, you need to improve their self-reliance, and self-reliance does not come simply from following a course or a training programme, no matter how it is constructed. Although the activities in the report of the Secondary Legislation Scrutiny Committee—the DWP was asked to provide a list of all the activities—such as webinars, group sessions, “Telekids”, learning groups and online chat rooms are very straightforward, they do not deal with the crucial problem of improving self-reliance and esteem, which requires personal support.

As a patron of a charity working with a large, modern high school where a large number of young people were failing in the way I have described, my experience is that taking them out of school activities and giving them lessons associated with the charity resulted in most of them gaining some GCSE qualifications and a portion of them eventually going on to further and higher education at the end of the two-year period.

19 Nov 2014 : Column GC177

That was a big success story, but its success depended on the relationship with the trainers in the non-formalised activity. In order for this activity to work, it had to be different from activity undertaken in school. Therefore, I must ask my noble friend what is in these regulations that will convince me and other noble Lords that the approach is innovative and has not been tried before. What academic research has been taken into account in trying to understand how these problems are dealt with in our country?

My only other question is why this pilot is being undertaken in England alone. I suppose—this may presuppose what my noble friend will announce—that it is because the tools by which you might handle this, such as the training and formal education systems, are in the hands of devolved government. If you found an innovative approach that worked, the question would remain how you could undertake it in all parts of the United Kingdom. You would have to convince the devolved Administrations to work with it.

The relationship with the education, training, social and support sectors of our society are crucial to this. Can my noble friend tell us what level of activity there will be with local communities because that is necessary to creating the innovative changes that are crucial to resolving quite considerably this very stubborn problem?

5.15 pm

Lord McAvoy (Lab): My Lords, I am grateful to the Minister for his very full exposition of the regulations. Twice I have heard him say that the number of full-time students has been extracted from the figures. To start off, can he give us the figures for those in full-time education this year and the previous year, if he has them available? If not, would he write to me? Secondly, I would like to follow up on an aspect of what the noble Lord, Lord German, had to say. I think the Minister used the term “deselected” for students who do not come up to scratch on the two aspects of education. Could he explain why information technology is not included in the subjects in this pilot? It would seem almost essential these days, even for my generation, to be fully competent in information technology. I do not see that that would cause too many complications. I would like to find out more about why information technology is not included. I also do not know whether he can find a better word than “deselected”, which is a bit harsh. Maybe he just has to have a sensitive side.

With some justification, the Minister has indicated that the proportion of young people not in education, employment or training is significantly higher here than in other countries. As has been pointed out, alongside the NEET figures referred to by the Minister—where there has been a reduction—there has also been a dramatic growth in the number of young people we just do not know about, as my right honourable friend Stephen Timms pointed out in the other place. Taking account of these issues, the position is perhaps worse than the NEET figures suggest.

I am also interested in finding out what happened to the review authorised by the Cabinet Secretary in September last year, now over a year ago, which intended to look at the Government’s approach to youth unemployment in the United Kingdom. As my

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right honourable friend Stephen Timms also pointed out, there does not seem to be any indication anywhere in Parliament of what happened to that review. I am certainly looking for an explanation as to why it was not carried out.

The Minister talked about sanctions. It is becoming clear across Jobcentre Plus that many people have no idea why they have been issued with their sanction. An explanation really needs to be given whenever sanctions are introduced, if we are not going to destroy totally people’s morale and belief in themselves, as the noble Lord, Lord German, pointed out. We are going to totally destroy people who are lacking in self-belief by wiping them out in this manner. That was not deliberately put across by the Minister, but it is certainly the intention.

I would also like to see more positive indications. Folk will quite rightly ask, “What alternatives have you got?”. Stephen Timms has announced that a Labour Government would take unemployed 18 to 21 year-olds who have not been in employment for a year and who have not yet achieved a level 3 qualification off jobseeker’s allowance and instead place them on a new youth allowance that would be dependent on participation in training. I can see elements of that taken account of —I will not say “poached”—in the proposals for these pilots. The proposal was, rightly, that the amount of allowance would be based on parental income on a similar basis to that used for assessing student maintenance. Positive suggestions have been made by Her Majesty’s Opposition but the concentration here is on the regulation put forward by the Minister.

I have no further questions other than about the number of full-time students; what considerations were taken into account before information technology was disqualified from being included in the exams; and, finally, what happened to the review which the Cabinet Secretary was supposed to carry out. I would not like to think we have armchair or sofa government at No. 10, so there must be a reason why that review was not carried out.

Lord Freud: I thank noble Lords for those two contributions. There is a consensus here that we need to do everything we can to reduce unemployment in young people, increase their opportunity for sustained employment and get their earnings to the maximum possible level. One of the key elements underneath the academic research—most dramatically that undertaken by Professor Wolf—is that English and maths, at the levels required by employers, are at the heart of successful vocational education. That is exactly what this pilot is designed to look at.

I remind noble Lords that this pilot is about whether we can make something work which is very difficult to achieve. We are trying to find evidence of whether systematically mandating young adults to blended or online learning works, and we need a randomised control trial to provide an evidence base to determine whether that is the way to go. If my noble friend will accept the innovation here, it is about finding out what actually works. There have been various tests abroad—in California and Chicago—of whether this kind of model works for people who have not been able to get these skills or qualifications through the educational process.

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There is sound evidence elsewhere and some academic research so it really is worth testing the proposition. We clearly need the pilot to find out the most cost-effective and best method of delivery for learning and to ensure that the claimants are engaged and supported to complete their learning aim. The last thing we want to do is roll out, on a national basis, something for which we have not established the costs and benefits.

The question from my noble friend Lord German was: how on earth will six months of this kind of activity succeed where 11 years of compulsory education has failed? The reason is that the form of learning is different; it is more flexible, more attractive, focused on work and largely online in both the different types—the blended and the pure online. The providers involved will address learners’ needs, such as a lack of confidence, through their training. They are registered further education providers with experience of working with these types of learners.

The other question asked by my noble friend was: why is this taking place in England alone? He answered his own question with far greater precision than I ever could. As he knows, skills is a devolved matter and any pilot activity in a devolved Administration would require consent from the respective Governments. We will, of course, be sharing our findings on these particular pilots with these Governments to inform their own policies in this area.

I was asked by the noble Lord, Lord McAvoy, about the number of people in full-time education who are looking for work. The number currently unemployed is 737,000 of whom 489,000 are not in full-time education, so the number of people looking for work who are also full-time students—I wish I could do sums in my head—is 248,000. This is really taxing my mathematical competence without a calculator so I will send the noble Lord the equivalent figure from last year before I collapse in a heap.

Lord McAvoy: Oh, go on.

Lord Freud: I know the noble Lord would enjoy that more than anything but rather than do that let me go on to talk about the Heywood review, which he admired so much in public for which we are very grateful. In addition to these pilots there is also the 16 to 17 year-olds’ NEET initiative by the DWP in partnership with local authorities which provides personalised job advice and support through Jobcentre Plus. In the Autumn Statement the Chancellor announced a further range of pilots around changes to benefit rules surrounding traineeships, and in February the Deputy Prime Minister announced changes to careers advice and a new UCAS-style system for 16 year-olds. I can assure the noble Lord that there will be further announcements in due course about additional support for young people. I know that he will claim that they were all ideas generated by his own party but I think he is stretching credulity with that claim.

On the question of why information technology is not included, it is almost a logical impossibility, if we are testing online capability with these tests, to get English and maths learning over. It is a completely different proposition to look at online proficiency. It presupposes online proficiency, which is what we

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understand to be the most important thing, but English and maths are important. We may have to have a look at IT skills as well, as I suspect the noble Lord is suggesting, but that is not what this pilot is about. However, I take his point under advisement.

I am infuriated that I have just been given the figures but no sums have been done, so some of my team are as mathematically challenged as I am. No, I have been given the calculations too: I can confirm the figure of 248,000 in the three months to September 2014, which was down 62,000 over the year. I think that that has addressed all the issues raised, and I commend the regulations to the Grand Committee.

Motion agreed.

Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 2014

Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 20149th Report from the Joint Committee on Statutory Instruments

Motion to Consider

5.32 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 2014.

Relevant documents: 9th Report from the Joint Committee on Statutory Instruments

Lord Bourne of Aberystwyth (Con): My Lords, as both the Social Security Class 3A Contributions (Units of Additional Pension) Regulations 2014 and the Pensions Act 2014 (Consequential Amendments) (Units of Additional Pension) Order 2014, as they are snappily called, deal with class 3A contributions, it seems sensible that they should be debated together. I can confirm that in my view these statutory instruments are compatible with the European Convention on Human Rights.

I shall begin with the regulations. The Pensions Act 2014 introduced a new class of voluntary national insurance contributions called class 3A. These new voluntary contributions are aimed at existing pensioners and people who reach state pension age before the introduction of new state pension on 6 April 2016, and who have an entitlement to a UK state pension. It will allow them to make class 3A contributions in return for units of additional state pension, which will increase their weekly state pension. We have called this scheme as a whole “state pension top-up”.

The regulations set out the pricing of class 3A contributions. They specify the contribution rates for class 3A and the maximum number of units of additional state pension that a person may obtain. The contribution rate for state pension top-up will be set at the specific amount that each age group will need to pay in order to obtain £1 per week of additional state pension. For example, it would cost a 65 year-old £890 to gain £1 per week of additional state pension, whereas for a 70 year-old the cost would be £779.

The scheme will be open for 18 months between 12 October 2015 and 5 April 2017. It is the intention that the scheme will open on the same day in both Great Britain and Northern Ireland. However, the

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scheme will not be commenced in Northern Ireland until the legislation necessary to set the amount that a person will receive in return for their contribution is in place. That is because this is a devolved issue, but we anticipate that that legislation will be in place. The intention is that the extra amount of additional state pension will be subject to an overall cap of £25 a week. As the extra pension obtained will be additional state pension, it will be uprated by the consumer prices index and be inheritable in the same way as SERPS. People will also be able to defer it, in line with existing rules.

These affirmative regulations have been made jointly, as HMRC will handle applications and collect payments for Class 3A contributions while the Department for Work and Pensions will administer and pay the extra amount of additional state pension. The intention is to deliver these changes as far as possible within the existing national insurance and benefit framework so as to keep administrative costs to a minimum.

We believe that state pension top-up will be particularly helpful for groups who have little or no additional state pension—for example, women and the self-employed whose social and economic contributions were not captured in SERPS and not fully reflected in the state second pension. We have conducted two online polls to gauge interest in state pension top-up. On the basis of the first poll, which we conducted in June of last year, we estimated that around 140,000 people would take up the scheme. The second poll was carried out in February of this year and suggested interest in state pension top-up had increased to an estimated 265,000 people who would take up the scheme. We gave more detail in the second poll, which demonstrates the power of advertising. This scheme will provide people with an opportunity to boost their state pension income in a secure, inflation-proof way, with the added advantage that it provides survivor benefits. However, people will need to consider whether state pension top-up is the best option for them.

I should also point out that existing class 3 voluntary national insurance contributions, which allow people to cover gaps in their contribution record for basic state pension, will remain unaffected by this measure. The DWP and HMRC will put in place administrative arrangements to ensure that individuals applying to make new class 3A contributions are made aware that they should also check their eligibility to make class 3 contributions. I should stress that class 3A contributions will be actuarially fair and, as a result, will cost more than the heavily discounted class 3 national insurance contributions. As an example of this, in 2014-15 a person paying £723 in class 3 contributions would obtain £3.77 per week in basic state pension. On this basis a person can effectively recoup their money within four years of reaching state pension age. A different approach was required, and has been taken, for class 3A contributions to ensure that the arrangements do not become a burden for today’s national insurance contributors—hence our decision to base class 3A on actuarially fair rates, as advised by the Government Actuary. In keeping with this, the cost will be adjusted to reflect the age of the pensioner at the time they make class 3A contributions, as I pointed out in my earlier example.

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I now turn to the order. We did not want people to take up class 3A contributions only to have their newly acquired additional pension clawed back by rules designed for other parts of additional pension policy. To this end, the order amends primary legislation to ensure that a person’s state pension or disablement pension entitlement is not reduced by obtaining or inheriting units of additional pension acquired from class 3A contributions. The order also applies the existing rules on inherited SERPS to the newly acquired additional state pension. This means that people will be able to inherit the class 3A top-up in the same way as they can inherit SERPS—up to 100% if the deceased spouse or civil partner reached state pension age before October 2002, tapering down to 50% minimum if they reached state pension age since October 2010.

In closing, I reiterate that state pension top-up is an entirely voluntary scheme. It will provide people with a one-off opportunity to boost their state pension with a secure, index-linked income for life, ahead of the introduction of the new state pension. I reiterate that it is actuarially fair. I would also like to take this opportunity to thank the Secondary Legislation Scrutiny Committee for its earlier consideration and analysis of these regulations and order. We have taken on board its comments in relation to the Northern Ireland situation. I seek your approval of the regulations and order, and commend them to the Committee.

Lord McAvoy (Lab): My Lords, I thank the Minister for his very full exposition of the regulations. I welcome him to what I think is his first appearance as a DWP Minister. He is very welcome to join this club of aficionados. I am sure that his colleague, the noble Lord, Lord Freud, has given him a fair idea of what to expect.

These regulations are broadly uncontroversial and there is no difficulty in accepting them, but I thought that while I was here I would ask some questions that arise. We welcome the fact that the Government have undertaken more research, as we asked for collectively in Committee on the Bill. However, the noble Lord, Lord Freud, said that the Government would,

“look to consider qualitative research to find out what sort of barriers there may be to taking up class 3A contributions”.—[

Official Report

, 13/1/14; col. GC19.]

It is not clear to me—or, I think, to others—how the research undertaken is qualitative in this sense. It seems to follow the previous research and to gauge only the level of interest. If the Government have undertaken that qualitative research, would the Minister share its results and tell us what he thinks the barriers are to people taking up class 3A NICs?

There is also the question that was raised in Committee by my noble friend Lord Browne of Ladyton about winners and losers. The only factor that will be taken into account in pricing a class 3A contribution will be age. No account will be taken of any regional or occupational differences in life expectancy. Have the Government done any work on the likely distributional effects of the scheme? Given that the scheme is actuarially fair in pricing, and the proposal is that over time the policy will be broadly cost-neutral, as far as the Government have said, if some people are getting a good deal, is it the case that others must be losing out?

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Presumably, those who lose out will be those with shorter than average lives, but have the Government done more work on this? Who do they think the winners and losers will be?

In addition, we also asked in Committee—I know that the Minister was not involved but I assure him that we did so—for a proper estimate of the number of people who may take up the offer, based on the latest research. The Government now estimate that around 265,000 people may take it up. The Minister does not need to answer because he has indicated that that is the case.

Will advice be provided—and if so, what kind—to ensure that people can make an informed decision on whether making class 3A contributions is the best option for them? There are significant considerations for individuals, such as their life expectancy, that may be significantly affected by where they live in the United Kingdom, by whether they are married or in a civil partnership or likely to be so, and by any other income or savings they may have.

When the Bill was in another place, the then Minister said that the Government would,

“put in place administrative arrangements to ensure that individuals who apply to pay class 3A contributions are made aware that they should first check their eligibility to pay class 3 contributions”.—[

Official Report

, Commons, 17/3/14; col. 578.]

How in practice will that be put in place? In its recent briefing, the Pensions Advisory Service said that this is complex and many people will not know whether it is worth paying voluntary NICs until the DWP can provide a single-tier pension statement. Can the Minister give us a response to that?

I know that there are a number of questions here but pensions are quite important to a lot of people, and it is essential that we take the opportunity in this House to clarify things. The Government have mentioned a cooling-off period of 90 elapsed days during which people can change their mind. How have the Government arrived at that number, and how will that interact with the guidance—or the lack of it?

I appreciate that I have put a number of questions whose answers might be complex and detailed. While I hope the Minister is in a position to answer them today, it is certainly acceptable to receive a reply in writing.

5.45 pm

Lord Bourne of Aberystwyth: I thank the noble Lord, Lord McAvoy, for his comments and his kind introduction to the aficionados’ club. I look forward to discussing these issues with him over the months and years ahead—with us in Government and his party in Opposition, I trust. I am very grateful also for his general support for these regulations and the order. I will try to deal with the issues that he has quite reasonably raised.

The first related to the barriers to class 3 contributions and who was likely to take up these opportunities. As he rightly acknowledged, I gave the figure of 265,000. What research and evidence we have is in general terms, but it seems to be more attractive to women who have had career breaks and the self-employed who have not contributed to SERPS and a second state pension. He is also right about it being actuarially fair and cost-neutral.

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The noble Lord talks about there being winners and losers, but that is not how it is seen by either potential beneficiaries or the Department for Work and Pensions. This is an entirely voluntary scheme to help people who have taken advice. We will stress, both on the website and on a hotline service that is going to be available in Great Britain and Northern Ireland, that people should take advice. Every situation is going to be different. He is right to suggest that it would not be so attractive to people who are not married or in a civil partnership or to people with a lower life expectancy; that is true. Online there will also be—my noble friend Lord Freud would benefit from this—an instant calculation of how much is payable by a person at a given age. The advice that we will be giving to people taking up class 3A contributions will be to check their eligibility for class 3 contributions to see if it is right for them.

Lastly, in answer to his question about why the cooling-off period is 90 days, I think that is a common period. If I am wrong on that, I will write to him. I do not think there is any particular science to it but it is standard practice in these matters to have a 90-day period, and I think that is fair. With those comments, I hope that I have dealt with the questions that the noble Lord raised. I thank him once again for his contribution and support, and I commend these regulations and the order to the House.

Motion agreed.

Social Security Class 3A Contributions (Units of Additional Pension) Regulations 2014

Social Security Class 3A Contributions (Units of Additional Pension) Regulations 20149th Report from the Joint Committee on Statutory Instruments

Motion to Consider

5.48 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Social Security Class 3A Contributions (Units of Additional Pension) Regulations 2014.

Relevant Document: 9th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Representation of the People (Scotland) (Amendment No. 2) Regulations 2014

Representation of the People (Scotland) (Amendment No. 2) Regulations 20149th Report from the Joint Committee on Statutory Instruments

Motion to Consider

5.49 pm

Moved by Lord Wallace of Saltaire

That the Grand Committee do consider the Representation of the People (Scotland) (Amendment No. 2) Regulations 2014.

Relevant document: 9th Report from the Joint Committee on Statutory Instruments

19 Nov 2014 : Column GC185

Lord Wallace of Saltaire (LD): My Lords, I will speak also to the Electoral Registration Pilot Scheme Order 2014 and the Representation of the People (England and Wales) (Amendment No. 2) Regulations 2014.

The Committee will be aware that individual electoral registration was successfully introduced on 10 June in England and Wales and on 19 September in Scotland. For the first time ever, people in Great Britain can apply online to register to vote. To date, some 67% of the 3 million people who have applied under IER have done so online. The draft instruments before the Committee today will make some further refinements designed to improve the operation of IER.

As noble Lords will remember, this is one of a long series of statutory instruments in this process. The process is being taken through with considerable care. Our aim is to ensure that the largest possible number are registered as we make the transition and that the integrity of the register is maintained as we do so. So far, the process has gone well. The matching process has been more successful than we expected, but we are concerned to maximise the number all the way through and we will be maintaining our efforts until the next election and beyond.

The Electoral Registration Pilot Scheme Order 2014 will establish a pilot scheme, enabling information about entries in electoral registers in 24 areas in England, Wales and Scotland to be compared with information held by the Secretary of State for Transport about individuals’ driving records and vehicle registration documents. The current IER system involves matching data against DWP records, and we are keen to see if there are other public data sets that could be used as well to increase the completeness of the electoral register. The order will require participating EROs to disclose their registers to be matched, including the use of the IER digital service, against name, address and, where held, date of birth information to be provided by the Department for Transport and the Department for Work and Pensions.

The Committee may recall noble Lords’ support for using DVLA data during the passage of the Electoral Registration and Administration Act, and will be pleased to see this practical scheme to pilot the use of this data. In 2011 a small-scale pilot indicated that using DVLA data, in addition to the match with DWP data, might increase the confirmation rate by a further 10%. The pilot scheme established by this order will test whether DVLA data will indeed add significantly to the confirmation match rate. The scheme will also allow for the piloting of data matching using DVLA data to identify potentially eligible individuals who are not currently registered. The pilot scheme will end on 30 June 2015.

I have heard, anecdotally, that people—particularly young men—who move very frequently do not on the whole bother to inform the state agencies with which they interact of their new address, including not reregistering with doctors. However, we are told that they do ensure that their driving licence is up to date and the right address is on it, so the DVLA data may help us in teasing out one of the under-registered groups in the population: young, unmarried men living in rented accommodation.

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The Representation of the People (Scotland) (Amendment No. 2) Regulations 2014 and the Representation of the People (England and Wales) (Amendment No.2) Regulations 2014 will enable Crown servants and British Council employees living abroad to register online. The current electoral registration process for Crown servants and British Council employees relies on a paper-based declaration sent via the individual’s organisation, as well as an application to register. This means that these individuals cannot currently apply wholly online. The changes set out in the draft regulations enable them to do so. The figures that I have already given showing the high percentage of people who have registered online in recent months suggest that it would be very advantageous to enable them to do so. The regulations also replace the requirement to send the declaration via the employer, with a requirement for people, as part of their declaration, to supply their staff number or payroll number. The electoral registration officer will then be able to check with the employer that the applicant is entitled to register by virtue of a declaration.

In addition, EROs will be required where necessary to send a second reminder to people, such as overseas electors or service voters who are registered by virtue of a declaration, that their declaration is about to expire. Noble Lords may recall that in May the House approved regulations that disapplied the follow-up process for overseas and service voters, and may wonder why we are now being asked to apply it again. The answer is that we are not proposing to reinstate the previous process that would have required EROs, after the expiry of the declaration, to send an invitation to register to special category electors, followed up by two reminder letters and, theoretically, a visit by a canvasser. That process would have been expensive and impractical in the case of many special category electors, and it is right that it is no longer a mandatory requirement. Instead we are introducing a requirement for EROs to send just one further reminder to those special category electors whose declaration has not yet expired but which is about to do so. I am told that in a large number of cases, online addresses are available and it will be possible to do this online. This is a relatively simple step to take, without the need for the more protracted subsequent process that we rightly removed earlier in the year. The regulations also make minor updates to statutory references to registration appeals.

The Scottish regulations will also extend to Scotland one of the provisions on data sharing by local authorities for electoral registration purposes that were introduced for England and Wales in May. These allowed for the disclosure to an ERO of information contained in records held by the authority by which he or she was appointed, provided that a written agreement was in place between the authority and the ERO as to the processing of the information.

The different local government structure in Scotland rendered a provision for two-tier area data sharing, as set out in the legislation introduced for England and Wales, unnecessary. At quite a late stage in the drafting of the England and Wales legislation it was decided to provide additionally that the ERO’s own local authority may disclose its data to the ERO, provided that a written agreement was in place covering the use of the

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data. It appeared that such a change might also be relevant to Scotland but we undertook to consult EROs and local government organisations in Scotland about that before we sought to legislate. That has now been done. Here, therefore, is the regulation.

The Electoral Commission is content with the provisions of these instruments and the Information Commissioner did not consider that they raised any new or significant data protection or privacy issues. The three statutory instruments before the Committee will each play a part in the continued successful implementation of individual electoral registration in Great Britain, and I commend them to the Committee.

Lord Tyler (LD): My Lords, I want to speak particularly to the second statutory instrument in the group, which relates to the pilot scheme to which my noble friend referred in the early part of his remarks. He quite rightly—and I welcome this—spoke of the whole context of this transition to IER. Those of us with the battle scars of a number of debates in Grand Committee over many years, going back to the previous Government—IER was a previous Administration’s initiative—will recall that this context has caused quite a bit of controversy, and rightly so because, as he emphasised, the register is a critical foundation stone of our whole representative democracy. The present Government, the coalition Government, have not changed the transition in any substantial way but accelerated the process. So my noble friend has rightly referred to the extent to which the Government are determined—I think the phrase he used was that they intend to take “considerable care” in how this transition proceeds. It is in that context that these orders are so important.

6 pm

There are three elements in the way the Government have sought to make sure that the process is considered in a careful way. The first is that a timetable check has been built in, which I will come back to. Secondly, extensive data mining and data matching has taken place, which is where we are again this afternoon. Thirdly, there has been extremely important monitoring of progress right through the operation. Not only do I warmly endorse the trouble that has been taken by my noble friend and his colleagues in the Cabinet Office, but also the extensive work that has been undertaken by the Electoral Commission. At this stage perhaps I should remind the Committee that I am a member of the informal cross-party advisory group, but I do not in any way speak on behalf of the Electoral Commission. Of course, the noble Lord, Lord Kennedy, also has extensive experience in the field. A number of us are well informed about these processes.

On the latter point about monitoring, which is absolutely critical to the measures before the Committee, I had a Question answered by my noble friend just last week. It was as follows:

“To ask Her Majesty’s Government whether they are making preparations to publish data on how many electors on the new electoral register due to be published in December are registered by virtue of (1) filling in a form online, (2) filling in a paper form, (3) responding to a doorstep canvass, (4) confirmation through the data-matching process, and (5) carry-over from the household electoral registration system”.

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My noble friend responded by saying that:

“The Electoral Commission (EC) will assess progress in the transition to Individual Electoral Registration in England and Wales based on the Electoral Register as of 1 December 2014 and plans to publish their evaluation in February 2015. The Office for National Statistics will also publish statistics on the December register. Scotland will publish their registers in March and the EC plans to publish a separate assessment of these in April 2015. The Government intends to make their own assessment of the transition. An assessment of the confirmation live run in England and Wales was published in October 2014 and can be found here”.—[Official Report, 11/11/14; cols. WA 23-4.]

I have a copy of that assessment and I shall return to it shortly. This is the essential background to the measures before us because, as my noble friend referred to briefly both here in Grand Committee and, from memory, in the Chamber, I and my noble friend Lord Rennard have pressed on a number of occasions that we should extend the data matching process to the DVLA for the very reasons my noble friend has just advanced: in order to get to particular groups of otherwise rather inaccessible potential electors; namely, young males. These may perhaps be difficult times for them and it is equally difficult for the authorities to ensure that they are on the register.

I have no complaints about the order before us, but why has it taken so long? As he himself said, and as set out in the Explanatory Memorandum, the original small-scale study which was carried out in one ERO area in 2011, which is a long time ago now, indicated that using DVLA data in addition to matching with DWP data might increase the confirmation rate by on average a further 10%. I do not know which area the study was undertaken in, but in an inner-city area with a large number of mobile young people, particularly young males, the percentage could be a great deal higher. The explanatory note states that:

“The pilot scheme established by this Order will test whether DVLA data will add significantly to the confirmation match rate that may be achieved by matching electoral registers against DWP data in the transition to IER. The scheme will also allow for piloting of data matching using DVLA data to identify potentially eligible individuals who are not currently registered. These pilots are essential for ensuring a strong evidence base in order to make decisions about the costs and benefits of the wider-scale use of this data”.

In no way do I want to suggest that the IER process is in major overall difficulty; I do not think that there are substantial defects. However, I think that my noble friend will accept that there are geographical areas and demographic groups which are not yet fully passported—that is the verb I think we have to use—from the existing registers to the new IER registers. This was seen three years ago as a critical way to get to these difficult-to-access groups.

The timetable for this pilot scheme is extremely important. I do not know how long it is going to take, but we must ensure that it happens at speed and in substantial areas of the country. I think that my noble friend said that 24 EROs were going to take part in the pilot scheme. In the Explanatory Memorandum the number is 21 in England, Wales and Scotland. I wish to know where they are. It would be all too easy to go for the lower-hanging fruit, I think the expression is—that is, to areas where we are already confident that the new register is fairly comprehensive.

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I notice from the document referred to in my noble friend’s Answer to me last week that there is a very wide variation in the success so far of passporting from the old register to the new. For example, London is way behind most other parts of the country. That is unsurprising because it is where a large number of the people we are concerned about tend to be. The EROs seem to be volunteering for this; they are not being selected in any maintained way by either the Electoral Commission or indeed by anyone else such as the Cabinet Office or my noble friend. I hope that he can assure us that London is going to form a very important part of this pilot scheme. That brings us back to the issue of the timetable. Unless this happens very quickly, I cannot see how it is going to feed in substantially to the critical questions that still have to be adjudicated upon by government, on the advice of the Electoral Commission, as to whether we proceed fast on the final decision for the completion of the transition to IER.

I hope that my noble friend can assure me on one other point. I understand that the Government are currently considering—again, with advice from the Electoral Commission—whether an extra annual door-to-door survey in spring 2015 would be appropriate. Again, my noble friend might recall that I and my colleagues were anxious not to dispense with the annual survey during this process. It has a very important role to play, or at least it has done in the recent past, in reinforcing the accuracy and completeness of the electoral register. It would be very unfortunate if all these efforts— either the pilot study to which the order refers or indeed the decision on whether or not to have an annual survey—take so long that they cannot properly inform the vital decision about the final completion of the process from the old register to the new.

I think that my noble friend will concede that the Government have been able to proceed with the accelerated process for the transition to IER because Parliament was reassured successively and continuously by Ministers that the process was being very carefully managed. It would be monitored and reported, and there would be a careful assessment of the appropriate decision-making process so that we could make the final vital decision as to whether IER was firmly in place on the basis of the best possible evidence. On that note, I support what my noble friend and the Government are doing, but with some reservations about the extraordinary importance of the timescale in this process.

Lord Kennedy of Southwark (Lab): My Lords, I have no issues with the orders or regulations before us today. They are part of a series that have been coming to Grand Committee for consideration as we move towards individual electoral registration. I do, though, have concerns that I have raised many times before in Grand Committee regarding the speed at which we are moving—the noble Lord, Lord Tyler, referred to this—and the risk of people dropping off the register. I do not believe that the Government have given sufficient weight to this as part of their preparation for the switchover. I have never understood what the rush was about on the part of the Government and why they would risk the system being brought into disrepute, all for the sake of a bit more time and planning. As the noble Lord,

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Lord Tyler, said, this was originally an idea of the Labour Government. I am a big supporter of IER but the Government’s speedy approach to it worries me.

We have never had an over-registration problem in the UK; rather, we have an under-registration problem. Much academic research states that 6 million or up to 9 million people are not registered to vote. The Representation of the People (Scotland) (Amendment No. 2) Regulations 2014 and the Representation of the People (England and Wales) (Amendment No. 2) Regulations 2014 are sensible moves enabling the declaration made by overseas Crown servants and British Council employees to be made online, along with a requirement that EROs must, where necessary, send a second reminder to people who are registered by virtue of a declaration when their declaration is about to expire. It is also sensible that Crown servants and British Council employees are able to use the online service in the same way as overseas electors and service voters.

I looked at the consultation list and would welcome the noble Lord, Lord Wallace of Saltaire, saying a bit more about it, particularly who the members of the Cabinet Office panel of experts in electoral administration are, how someone is appointed to this body, who chairs it, and what its remit is. I think that a wider policy community could be consulted on matters of electoral policy. I note that the Government consulted the Electoral Commission as part of bringing this order to your Lordships’ House, as required by Section 7 of the Political Parties, Elections and Referendums Act 2000. I am talking generally rather than specifically about this order, but if the Government are not going to consult the political parties directly, I suggest it would be good practice for officials to ask the Electoral Commission whether this issue has been brought to the attention of the Parliamentary Parties Panel set up under the Act, which is formally required to be consulted. I was a member of that body for many years before I became an electoral commissioner and I do not believe for one minute that its full potential has ever been reached. The panel has election experts from all the parties who can give a very practical and down-to-earth view of what things are like on the ground. I think that is sometimes missing from our discussions here.

The Electoral Registration Pilot Scheme Order 2014 is a sensible move and I am happy to support it. However, will the noble Lord, Lord Wallace, tell the Grand Committee what work is going on to identify other departments and agencies that could be brought into scope to assist in getting eligible citizens on to the electoral register? As I said, at least 6 million people are not on it. The noble Lords, Lord Wallace and Lord Tyler, referred to the fact that young males do not always go on the register. That is an important point, but the same could be said of people living in social housing and the private rented sector, and of ethnic minorities. Whole groups of people are not registered to vote. If we get to the point where fewer people are registered to vote when the measure comes fully into operation than was the case previously, that would be a terrible position to be in and a matter of much regret. It would be bad for democracy in this country and for our reputation both nationally and internationally, so we must avoid that.

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Have the Government thought about speaking to large organisations such as Experian which hold vast quantities of data on everybody—Experian has more data than anyone else—and have the whole unedited electoral register, so they know where everyone is? I am sure that those organisations could very easily give every ERO in the country a list of everybody in an area who is not on the register. That would be a fantastic way to identify these people and get them on to the register. I think that it would be a very positive move. The data exist and these organisations could provide it. In addition to getting more people on to the register, which is good for democracy, some relevant people would dramatically improve their credit rating because that is affected by not being on the electoral register. Perhaps the Government could look at this issue. I would welcome the noble Lord, Lord Wallace, commenting on that point, perhaps not today but in the future.

6.15 pm

Lord Wallace of Saltaire: My Lords, I thank both noble Lords for their helpful and intelligent comments. I start by reminding them that in another area of the Cabinet Office, we are much concerned with data sharing, digital privacy and the whole question of public and private data. Concerns about data privacy have been one of our inhibitions about moving in this area. Unfortunately we have not managed so far to bring forward a Bill to harmonise and update the laws which apply to different government departments on their collection and maintenance of data, many of which were put into effect long before cloud computing and two or three generations back in terms of the use of computers. The terms under which some government departments hold data are significantly different from those of other departments. I am sure I do not need to tell noble Lords that the sensitivities of the privacy organisations are such that we move with care in data matching, certainly in disclosure, both between different central government departments and between local authorities and central government departments. This is one reason why we have moved with all deliberate speed on this, using, first of all, the DWP database and moving on from there to the DVLA database. When we started out on this process there was some hesitation within the Department for Transport as to the terms under which the DVLA database ought to be made available for these purposes. We are in a very sensitive area in terms of data privacy and data sharing.

Lord Tyler: Before my noble friend leaves that point, is he saying that there was actually some legislative, statutory problem with the DVLA which did not apply to the DWP? If so, I totally understand the delay, but three years of delay because of some administrative, bureaucratic decision making within the Department for Transport is more depressing. I accept that good progress has been made and I hope my noble friend has not taken my contribution as being in any way negative about the overall process. However, this particular episode is not a very happy one since we were raising these issues more than three years ago.

Lord Kennedy of Southwark: The noble Lord, Lord Tyler, makes a very fair point. We are all looking back with care: we understand that we have to be right and

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proper, but it comes with a bit of a spring in your step at the same time. There is a question of care and there is also just not moving very quickly. I think we need to get on with it.

Lord Wallace of Saltaire: We understand that but I stress that there are other major issues. I happen to have been involved in some of the discussions about changing the system of legal protection for government collection and sharing of data. Noble Lords may remember that there were discussions early in the coalition Government’s period of office about whether or not we could do without the census next time round because all the material collected in the census is actually collected by the Government in the process of normal procedures, year by year. Some of the data are collected by local authorities, such as those about children going to primary school, which is one of the best indicators of the changing social and ethnic basis of a local community. If we were able to put all the data together, much of what we get from the 10-yearly census would be provided. However, if we put all of that material together—including health records and NHS data—we would be in an area in which ordinary citizens and those concerned with data privacy begin to be extremely upset. This is part of the reason why the good progress we made with the DWP data gave us a feeling that we could move along in that way. We are now extending this by looking at the DVLA data. I am told that the pilot will start in December or early January and should be completed by 31 March. It will not be too late for late registration for some of these people. As I said in my opening speech, I stress that access to the DVLA database is not merely a matter of matching but also of discovering people who are entitled to be on the register but who are not registered. The unmarried young men category in particular, which we are all familiar with as a weak area, would enable us to make the electoral register more complete.

Perhaps I may say to the noble Lord, Lord Kennedy, that Experian has a symbiotic relationship with the electoral register because it uses it for a great many things. If you are not on the electoral register, you are often not on the Experian database. Another area we are concerned about is the overlap between public and private databases. When discussing the issue with various people who are concerned about it, I have explained that there is no clear boundary between some public and private databases. For example, when I renew my car tax online, the first thing the DVLA does is check the private insurance database to ensure that my car is insured. That is an example of the public going to the private and coming back. These are all part of what is changing as public and private databases become much easier. The Government—whichever Government they may be—hope that an enormous amount of time, effort and money will be saved by moving more and more of these kinds of data online.

The problem is that this has huge implications for individual privacy and we have to be concerned about it. When talking in Bradford nearly two years ago about why so many people are not on the register, I was told vigorously by local councillors and officials that those people do not want to be registered. They do not want the state to know who they are and where they are. That is part of the issue here.

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Lord Kennedy of Southwark: The noble Lord is absolutely right on the point about the merging of public and private databases, and indeed it is the point I was trying to make. So much information about people is now being held by Experian and a host of other bodies that I cannot believe it is beyond the Government to talk to Experian and others, saying, “We are not looking for people’s medical records or driving licences. What we are after is the data matching that is taking place for you being provided to local authorities. They can then see that in a certain street there are three people who are not on the register but they do actually exist. We know that because we have their bank details and driving licence particulars and we know where they shop”. All we would ask for is that Experian should give the council the name and address; it is as simple as that. I get the privacy point, but my worry is that we will end up with fewer people on the register than we have ever had before, and that is a terrible place to be. I think that the Government should do everything possible to make sure that that does not happen.

Lord Wallace of Saltaire: I would mark that after the next election, we will have a major debate and a draft Bill on the question of data sharing. If we were to access the Google and Amazon databases, I am sure that that would go a good deal further to identifying those who are not on the register, but the Government do not have the legal right to do so, and again, it raises huge questions of privacy.

I think it was the noble Lord, Lord Tyler, who raised the question of an additional door-to-door canvass in the spring of 2015. When I visited the ERO for Wandsworth a couple of years ago—I should mention that the Wandsworth ERO is a member of the Government’s consultative panel—he told me that given the mix of sheltered social housing and new apartment blocks at the top end of the market, the borough of Wandsworth now has some 25,000 homes that are behind locked doors. The problem of gated accommodation, which all of us who deliver leaflets are painfully aware of, is making it more and more difficult to conduct the door-to-door canvass that we used to think was such an important part of the exercise. That is why we have to do all these supplementary things as far as we can. We intend to complete a door-to-door canvass as far as possible, but that is becoming much more difficult as we go on.

I will have to write to the noble Lord about precisely who was on the advisory panel of EROs. I have met a number of EROs during the last three years of the process, and have much enjoyed talking to them about the particular issues with which they are concerned. I will happily write on that.

There were a number of other questions. Why has it taken us so long to get round to data matching? I have explained that DWP records actually took us a very long way, and we are now seeing what we can do to gain further completeness. I was asked whether it was a cross-section of 24 areas—incidentally, it is 24 areas but 21 electoral registration officers, because in Scotland the electoral registration system covers several local authority areas. The areas range from Harrow, Southwark and Trafford to the City of Edinburgh, Bournemouth,

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Coventry and Newport—a fairly good mixture. I have marked one or two areas which have a high concentration of students and several inner-city areas. It includes the City of Edinburgh, for example, as well as Stratford-on-Avon. It is a pretty good cross-section of the country.

The noble Lord, Lord Kennedy, rightly keeps pressing us—as I hope he will continue to—on how confident we are that we will come out with a higher rate of registration than before. I can say only that we are continuing to work towards that objective. We have made some extra funds available to local authorities for this and we are now considering whether further additional funds would be helpful. From what has happened in the last two or three elections, we all know that late registration produces a great boon. We will not know how successful we have been probably until the middle of April 2015, because a lot of the target groups will not have got round to filling in their online forms until the campaign is upon them.

The Government will continue to stress the importance of registering and of people being involved. We are working with a number of non-governmental organisations. I spoke at a Bite the Ballot conference a couple of months ago. Bite the Ballot is working very hard, as are a number of other organisations, with particular vulnerable groups—in its case, young people. However, it is a matter for all of us, in all political parties and beyond, to keep up the momentum as we approach the election of saying that it is very important that you register to vote and that you do vote. That is the final dimension of trying to capture the maximum number of people.

I have two other things to add about the overseas dimension.

Lord Tyler: I am sure, from the long experience that my noble friend will acknowledge, that the best possible way to get people to register and to vote is to have a very close election, as was demonstrated in Scotland, of course. When I got a majority of nine, I managed a turnout of 83% on a very wet and cold night in Cornwall. When my majority went up, the turnout went down. I do not know how he can achieve a close result in every constituency in the country, but that is the ideal way to get a good turnout next May.

Lord Wallace of Saltaire: I will not have to organise the next election. Many of us fear that it will be very disorganised in this respect and that the competition among four or five parties nationally, which will quite often be a competition between different pairs of parties in different constituencies, may make for an extremely confusing election campaign. I spoke at an annual general meeting in Yorkshire and said that I thought we were going to have what would feel much more like a series of by-elections across the entire country. It will be very different constituency by constituency when it comes to it, but let us hope that it does raise the interest.

On the question of overseas voters—

Lord Kennedy of Southwark: I am sorry to interrupt the Minister again. I know one or two local authorities. One of them is Manchester, where there has been a

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catastrophic drop-off in some areas in terms of registration, and that needs addressing. I also know of a local chief executive who was embarrassed to tell us that he sent letters out saying, “You haven’t been matched”, only to get one himself. He lives in the borough that he is the ERO for, and he himself had not been matched. He is not someone who has moved around very often; he has lived in the borough for many years and I assume that he has a bank account and stuff, but he did not match at all. There are one or two places where there has been a catastrophic drop-off. That is really bad. Perhaps the Minister could get his officials to talk to some of these local authorities. In certain pockets there are problems bubbling away.

6.30 pm

Lord Wallace of Saltaire: We are well aware that one of the reasons why the electoral registration business is a local one is that the pattern varies so much from one place to another. The debate now going on about whether additional funds should be made available would of course be concentrated in those areas that have found the greatest difficulties. Again, we are well aware of that.

I will just pick the noble Lord up on one of the things he said. He said that we have never had an overrepresentation problem in the UK. I think I would agree with him that we have never had an overrepresentation problem in Great Britain, but those of us who know something about Ulster politics know that there have been interesting issues in Ulster over the past 50 years.

We are exploring further measures to increase student registration ahead of the general election. We are, for example, looking at emerging evidence from pilots undertaken in Sheffield and Manchester that tested the scope for integrating electoral registration with university enrolment. A lot of these things are under way but we do not quite know where we are.

On the question of overseas voters, we will be having a debate on this next week so we will return to it then. Overseas registration, as I think noble Lords will know, is an extreme example of the extent to which the number of voters registered more than doubles in the run-up to a general election and then falls off afterwards, so again we may anticipate that. The extent to which we can encourage more overseas voters on to the register will be assisted by this measure because the easier it is to register online, the more that overseas voters are likely to do so. I hope that I have answered all the questions and points that have been made, and I beg to move.

Motion agreed.

Electoral Registration Pilot Scheme Order 2014

Electoral Registration Pilot Scheme Order 20149th Report from the Joint Committee on Statutory Instruments

Motion to Consider

6.32 pm

Moved by Lord Wallace of Saltaire

That the Grand Committee do consider the Electoral Registration Pilot Scheme Order 2014.

Relevant documents: 9th Report from the Joint Committee on Statutory Instruments.

Motion agreed.

19 Nov 2014 : Column GC196

Representation of the People (England and Wales) (Amendment No. 2) Regulations 2014

Representation of the People (England and Wales) (Amendment No. 2) Regulations 20149th Report from the Joint Committee on Statutory Instruments

Motions to Consider

6.33 pm

Moved by Lord Wallace of Saltaire

That the Grand Committee do consider the Representation of the People (England and Wales) (Amendment No. 2) Regulations 2014.

Relevant Document: 9th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Business Improvement Districts (Property Owners) (England) Regulations 2014

Business Improvement Districts (Property Owners) (England) Regulations 201411th Report from the Joint Committee on Statutory Instruments

Motion to Consider

6.34 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Business Improvement Districts (Property Owners) (England) Regulations 2014.

Relevant documents: 11th Report from the Joint Committee on Statutory Instruments

Baroness Williams of Trafford (Con): My Lords, noble Lords will know that business improvement districts provide a mechanism for the local business community to come together and agree to fund improvements to its local trading environment.

Introduced in 2004, business improvement districts have proved to be a popular tool, with more than 180 now in operation across England, many of which are now in their second or third term. However, only the occupiers of property—the business ratepayers—currently can vote in a ballot to establish a business improvement district levy to determine what improvements will be made and agree the funding arrangements. Property owners can contribute but only on a voluntary basis and only after the business improvement district has been established. Not only does this mean that property owners do not get an opportunity to influence the activities or services provided by the business improvement district, but the arrangements are arguably inequitable, because all property owners benefit from the business improvement district’s activities but only some contribute financially

Through these regulations, therefore, we are proposing to give property owners the opportunity to promote their own business improvement districts, where primary legislation allows. I say “where primary legislation allows” because noble Lords should note at this point that property owner business improvement districts can currently exist only where there is a ratepayer business improvement district in operation and where a business rate supplement is being levied. This is because the enabling powers are contained within the Business Rate Supplements Act 2009. As the only business rates supplement currently in operation is in London, to fund the delivery of Crossrail, a property owner business

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improvement district could be established for the time being only in London. We will, of course, certainly consider rolling out the powers more widely once we have had the chance to review the first schemes.

The case for property owner business improvement districts was recognised during Mary Portas’s 2012 review of the future of the high street. This highlighted the role of property owners in the regeneration of town centres, and she recommended that the Government should legislate to allow landlords to become high-street investors by contributing to their business improvement district. The Government accepted this recommendation and in 2013 consulted on the introduction of property owner business improvement districts. Consultation responses supported the principle of establishing property owner business improvement districts and the detailed approach the Government proposed. That approach was that the rules and procedures for property owner business improvement districts should, as far as possible, mirror that of the successful model adopted for ratepayer business improvement districts. These regulations enshrine that approach.

As with ratepayer business improvement districts, these regulations give a large degree of discretion to the business improvement district proposer. The size and location of a BID, the identification of those liable for the levy—and therefore eligible to vote in the ballot—the amount of levy and the activities or services to provided within the BID are all matters to be determined locally and must be clearly set out in a proposal document. Importantly, it is also for the proposer to set out the type of owner who should be liable for the proposed levy. So, for example, that may be the freeholder or long leaseholder, as the proposer sees fit, taking account of local circumstances. The proposal document should also identify the ballot date, the commencement date, a statement of any existing baseline services in the area and a map and description of the geographical area of the business improvement district. The ballot will be organised and run by the ballot holder, who will be the returning officer for elections for the relevant local authority. The ballot holder will be responsible for issuing the ballot papers and announcing the outcome of the ballot. In doing this, the ballot holder is required to state the total number of votes cast, the aggregate rateable value of each property class identified as being eligible to vote, the total number of votes cast in favour of the question on the ballot paper and the aggregate rateable value of each property class cast in favour of the question on the ballot paper

A business improvement district can be established only if the outcome of the ballot confirms that a majority of both the number of persons voting and the aggregate rateable value have voted in favour of the proposals. This mechanism provides protection against the setting of excessive levies. Once a property owner business improvement district has been established, the relevant billing authority will be responsible for issuing bills and collecting the levy, thereby maintaining consistency with the existing ratepayer business improvement district and business rate supplement. The authority will also be required to hold a separate

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business improvement district revenue account. The billing authority can also veto the establishment of a business improvement district where they feel the activities of the business improvement district conflicts with any of their policies or where they consider that there is a significant and inequitable financial burden on a particular class of property owner.

Noble Lords may also wish to note that there is a right of appeal against the ballot where a material irregularity appears to have occurred. A request to the Secretary of State to declare the ballot void must be made within 28 days of the notification of the outcome of the ballot and can be made by the billing authority, the business improvement district proposer or a person representing at least 5% of those eligible to vote. These regulations allow for the creation of property owner business improvement districts, which I believe will offer a welcome addition to tools this Government have provided to regenerate the high street and help businesses to grow, and will do so via a set of rules and safeguards built on tried and tested ratepayer business improvement district regulations. I commend this order to the House.

Lord McKenzie of Luton (Lab): My Lords, I thank the Minister for introducing these regulations. I should make it clear that we support the proposition of property owners, the business community and local authorities working together to improve the local trading environment. BIDs themselves have a cross-party pedigree in that it was the Conservative Government who commissioned research in 1997 to assess how they might be established and it was the former Labour Government who legislated for their introduction. I was going to ask the Minister how many BIDs are currently in existence, but the noble Baroness answered that question. I think there are more than 180, with some in their second and third term.

BIDs were driven by a ballot of all non-domestic ratepayers in a proposed area. The idea of a property owner BID is driven, as the name suggests, by the ownership of property rather than its occupation, although a person could qualify under both. Property owner BIDs have developed from the Portas review of high streets. It is understood that the legislation will allow a property owner BID only for areas where there is both a ratepayer BID in place and a business rate supplement being levied. The noble Baroness confirmed that in introducing these regulations. A business rate supplement can be levied by upper-tier authorities in order to fund economic development projects. The Explanatory Note and the Minister today remind us that a business rate supplement is being levied at present only by authorities in London for Crossrail, so it would be possible to have a property owner BID only in London at the current time. Can the Minister say more about why the BRS is seen as a prerequisite for a property owner BID? What does she see as the timing of looking at developing this so that other areas of the country have an opportunity to undertake the same sort of investments? Are there any proposals for the BRS to be levied elsewhere? If not, it would seem that the rest of England is missing out. Perhaps the noble Baroness can tell us what the position in Scotland, Northern Ireland and Wales is in this regard.

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I have a number of other questions. Where the property ownership involves a freeholder or a leaseholder, or possibly a sub-lessee, as well as a tenant, who will have the right to vote in a ballot for a property BID? As I understand it, the noble Baroness suggested that it would be for the proposer of the property owner BID to decide who should be on the electoral roll for these purposes and subject to the levy, but it would be helpful to have some clarification of that. Would it always have to be the same type of ownership? Would it be possible for a proposer of a BID to say that it would be freeholders in some instances and long-leaseholders in other instances who would be involved in these arrangements?

6.45 pm

As I understand it, the BID must, by its nature, be in place before proposals for a property owner BID can proceed. What happens if there is a conflict between the property owner proposals and the settled BID? The interests of the property owners will not necessarily coincide with those who occupy the properties. Paragraph 42 of the Government’s response to the consultation looks at the prospect the other way round and says:

“As it will be a requirement for property owner schemes to provide information about any ratepayer schemes in the same area, information about the objectives of the ratepayer scheme will be available prior to the property owner scheme”.

I accept that, but what is the position if the property owner scheme ballot and proposals are potentially in conflict with the BID that is already entered into? I assume that people are, in a sense, potentially locked in. The BID cannot run for more than five years but might be terminated earlier. Presumably, this would have to bring the property owner BID to an unexpected end. What would be the position with, say, outstanding contracts of the latter?

The government consultation and responses set down the difficulties for any proposer to identify property ownership. What is the position if there is incomplete identification of property owners in the proposed area? Can a proposal still proceed and what happens if it is subsequently established that a wrong owner has been identified in that process? Can we have some clarity on the rules for multi-property ownership? Paragraph 55 of the government response to the consultation suggests multiple votes but paragraph 9 of the regulations suggests otherwise. Will the noble Baroness clarify whether the double lock will exist for property owner BIDs as well as the existing arrangements? What number of voters will that double lock be? Is it still going to be based on rateable value? In some instances, depending on who the voters are, the rateable value may have to be aggregated. For example, if it is the long leaseholder that can be the subject of separate hereditaments and different occupations. I presume that a local authority, being a business ratepayer, would also be entitled to vote and participate in these arrangements, or perhaps not.

Overall, we can support the thrust of these regulations but note that they are narrowly based. We recognise that successful SMEs are critical to the renaissance of our high streets, not just in London but throughout the country. Given that business rates have already

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gone up by an average of some £1,500 under this Government, we would look to help such businesses by actually cutting their rates. However, as I said, we support the thrust of these regulations.

Baroness Williams of Trafford: I thank the noble Lord, Lord McKenzie, for his constructive comments and questions and for the interesting history that has led to this on a cross-party basis, which is always good. The noble Lord’s first question was why BRS was a prerequisite. It is because that was how the legislation was framed back in 2009. He also asked whether it would be possible for the proposer to decide to levy only on leaseholders or freeholders. The answer is yes: it is at the discretion of the BID proposer to decide who should be levied.

Lord McKenzie of Luton: Could I clarify that with the Minister? Can the promoter of the property-related BID choose that it is a freeholder in one case, long leaseholders in another and a sub-lessee in another? What sort of information is expected and on what basis will those judgments be made?

Baroness Williams of Trafford: I will get the answer to that in a second. I am guessing that it would not be possible for him to discriminate against somebody because they were a freeholder and that it would be in relation to the types of property that were in the BID.

The noble Lord’s other question was what would happen if there were outstanding contracts when the five years were up. The BID body is expected to manage its business while recognising the potentially limited timeframe in which the BID will exist. It is a short timeframe but it can be renewed. The noble Lord also asked about conflict.

6.51 pm

Sitting suspended for a Division in the House.

6.57 pm

Baroness Williams of Trafford: My Lords, the answer to the question of whether the proposer can differentiate between leaseholder and freeholder is yes, but he has to give a reason why in the proposal. I am sorry, I have completely lost my stride, but I am sure the noble Lord will tell me if I have missed any questions out.

There was also a question on multiple ownership and what would happen if more than one person was levied and voted in the ballot—that is, a leaseholder and a freeholder both have an interest in the property. There could be more than one property owner in respect of the same hereditament. The legislation provides that in those instances the rateable value is divided between the owners for the purposes of calculating the result of the ballot.

On the question of what happens if a BID conflicts with an existing ratepayer BID, the only conflict that could occur would be around what each BID is doing. In practice, we would not expect this to happen and would expect proposers of a property owner BID to be talking to an existing BID company about the value that they could add.

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The noble Lord asked whether there are plans to levy business rate supplements elsewhere. Not that we are aware of. We have addressed the question of outstanding contracts and when the five years are up. I think that I have answered all the questions but I am very happy for the noble Lord to intervene if I have not.

Lord McKenzie of Luton: I am grateful to the Minister for a good set of replies. Can I come back on the issue of multiple ownership? Let us assume that there was a person who owned two freeholds and each was occupied directly so the divvying up of rateable values was not an issue. When it comes to a vote, you look at the numbers of voters and the aggregate rateable value. If someone owns two properties, are they counted twice for those purposes or only once?

Baroness Williams of Trafford: Twice.

Lord McKenzie of Luton: I want to make one final point on the issue of terminating arrangements. Say

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you had a property owners’ BID—which might be expected to last for three years if there are two years gone of the other one—but the ratepayers’ BID was terminated early for some reason, that would automatically bring to an end the property owners’ BID. Obviously, if that was prior to its expected end, there could be contractual issues. How might that be resolved? Have those situations arisen under ratepayers’ BIDs?

Baroness Williams of Trafford: I am guessing that they would follow the same legal arrangements as any contractual arrangements and be dealt with in the proper legal way—breach of contract, for example.

Lord McKenzie of Luton: I am very grateful to the Minister.

Baroness Williams of Trafford: With that, I commend the regulations to the Committee.

Motion agreed.

Committee adjourned at 7.01 pm.