Pensions Act 2014 (Consequential Amendments) Order 2016 — House of Lords, 2016-09-08
Topic: Labor
William David McKenzie (Labour, Centre-left): My Lords, I shall follow the usual incisive contribution of my noble friend Lady Drake and the contribution of the noble Lord, Lord Kirkwood of Kirkhope, in thanking the Minister for his introduction of this order. It is quite like old times. I also take the opportunity to thank the officials who spent a bit of time yesterday with us trying to unlock for us some of the intricacies of these provisions which, although small in terms of drafting, are quite complicated We note the Minister has confirmed at least in one respect the judgment of his predecessor, concerning compatibility with the European Convention on Human Rights. I state from the outset that we do not seek to challenge these provisions, although we add our concerns to that expressed by the Secondary Legislation Scrutiny Committee, that overlooking an appeals mechanism within three months of a new pension scheme starting does not inspire confidence. My noble friend Lady Drake has rightly chided the Government in stronger terms, and the noble Lord, Lord Kirkwood, made the point that two omissions are two too many As we have heard, the order seeks to address two distinct issues. First, it extends the automatic adjustment of certain benefits where a recipient or their family are in receipt of another benefit which is uprated. In particular, it ensures that the definition of benefit income includes the state pension under the Pensions Act 2014—that is, the new state pension—and that definitions of alteration include those transitional provisions of the new state pension which have to be uprated by no less than the increase in prices. That includes protected payments, certain increments inherited from a deceased spouse or civil partner, and certain other deferred amounts inherited under the state pension. Secondly, as the noble Lord explained, there are appeal rights to secure certain national insurance credits On the first issue, the automatic adjustment would apply only to income-related benefits including income support, JSA, ESA, pension credit and universal credit. The Explanatory Note to the order sets out the limited circumstances where the state pension will form part of the benefit income of a person claiming a working-age benefit. Its application is asserted to be—perhaps the Minister will confirm this—for pension credit awards and potentially for so-called "mixed" couples, where there is currently a choice of pension credit or the working-age benefit. We are told that this choice is to be phased out. Perhaps the Minister will also confirm the timing and mechanism for this to happen To the extent that income support, JSA and ESA are to be replaced by universal credit, the Government anticipate that these arrangements in due course will apply to universal credit and pension credit only. This raises a number of questions. First, there is the timetable for universal credit. It is understood that the most recent plans—pre the resignation of IDS—were for universal credit to be rolled out for all new claimants between 2016 and June 2018, with gateway areas becoming full service areas. This was to be followed by migration of current claims of legacy benefits to be completed in 2021. Is this still the plan How does the Minister respond to the article in Tuesday’s Times, which refers to the involvement of GCHQ in alerting No. 10 to security flaws in the programme, with significant numbers of claimants facing significant issues? Can the Minister assure us that, now IDS is out of the way, the reported chaos under every stone has been dealt with? Quite apart from this order, however, we should find time to debate this fully So far as pension uprating is concerned, Sections 150, 150A and 151A make reference variously to uprating by not less than earnings or prices. My noble friend Lady Drake pressed this issue. There is of course no specific reference to the triple lock in these statutory provisions, although it can be catered for within the drafting formulation. I press the Minister, as has my noble friend, to confirm the Government’s position on this matter, particularly in light of his predecessor’s recent comments. Will the triple lock continue to be applied, as now, at least until the end of this Parliament We have been told that Article 3 amends an omission of a consequential amendment arising from the 2014 Pensions Act, and this omission being included in the right of appeal for decisions concerning awards for credits made under Part 8 of the State Pension Regulations 2015. We are told that any credit decisions under these provisions in respect of the tax year 2016-17 will need to be reconsidered once the law has changed. My noble friend, again, pressed on that matter. As my noble friend said, these could relate to decisions on credits for spouses and civil partners of members of HM Forces, people caring for a child under 12, foster carers and people approaching pensionable age. These are important provisions The Explanatory Note suggests that this omission will have very little effect because it concerns only one class of credits—post-April 2016 class 3 credits to cover gaps in the records of those accompanying HM Forces, as spouses or civil partners, in a posting outside the UK. This seems to be on the basis that generally decisions on tax credits for 2016-17 will be relevant only in determining the new state pension for those reaching state pension age for 2017-18, by which time the problem will have been fixed. The exception appears to be spouses and civil partners of HM Forces personnel, where credit from 1975-76 can be relevant to pension awards for 2016-17. Can the Minister confirm that that is correct and that is why it is of limited effect Can the Minister say generally whether the appeals rights apply only to those credits which have to be claimed and not those applied automatically? I think he did that in his presentation, but I ask: if that is the case, what is the remedy, should the latter be subject to error? Is this a matter of administrative adjustment The Explanatory Note seems to be suggesting that, notwithstanding that there is no current right of appeal in certain circumstances, HMRC can in the interim undertake a reconsideration, which would be the first stage of an appeal should the right to one exist. Again, I think that that is what the Minister said, but perhaps he would confirm that The issue of National Insurance credits takes us back to an earlier debate about generally improving take-up of these credits, which are not awarded automatically—again a point pressed by my noble friend Lady Drake. In resisting a reporting process to Parliament on a take-up strategy, the noble Lord said that, "we intend to review these systems to identify what efficiencies can be put in place to make the system of national insurance credits as simple as possible".—[Official Report, 18/12/13; col. 353.] Would the noble Lord please now offer us an update?