Previous Section Back to Table of Contents Lords Hansard Home Page

Benefit provision is not usually available for full-time students during an advanced course of education because they are funded through educational maintenance channels. It is available during the summer vacation for certain students with children. This includes couples with children, where both members of the couple are full-time students. They can claim jobseeker’s allowance or income support during the summer vacation of their course, provided they meet all other conditions of entitlement for the benefits. There is presently no

7 July 2008 : Column 583

such provision for single students with children or a dependent young person to claim jobseeker’s allowance during the summer vacation.

Single students with children aged under 16 can claim income support throughout their course of study on the basis of being a lone parent. Once their child reaches the age of 16, they are not classed as a lone parent and cannot claim income support. In contrast, couples who are both full-time students and have a dependent child or young person are entitled to claim income support in specific circumstances during the summer vacation.

By making this change to the jobseeker’s allowance and income support regulations, we will remove disparity of treatment between single and couple students and we will prevent putting the children of single students at risk of child poverty. This change removes the present discriminatory effect of these regulations and is compatible with the European Convention on Human Rights.

I hope noble Lords will support the regulations and agree that the changes are worth while and necessary to ensure that all students with children have the same opportunity to claim jobseeker’s allowance or income support during the summer vacation of their course. I beg to move.

Moved, That the draft regulations laid before the House on 14 May be approved. 20th report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

Lord Skelmersdale: My Lords, I regret that I cannot be quite as quick as the Minister has been in responding to what he has said. None the less, we are again grateful to him for explaining the regulations to us. They add another exception to the jobseeker’s allowance rules as far as students with children and young persons are concerned. From now on, they will also be deemed available for work during vacations and will therefore be able to claim jobseeker’s allowance, even though they may be unavailable for work.

Rather curiously, the regulations also allow the vacationing student with a child or young person to claim income support. I may have got my ideas in a slight muddle, but I should be grateful if the Minister could tell me how this juxtaposition will work. Has the general rule that no two benefits can be claimed for the same reason been broken, or is it just the additional child income support that is claimable? Or is it to be one or the other? During our discussions on the Pensions Bill, the Minister uttered the expression “it isn't fair” more than once. I am afraid that he will say it again in response to my comment that the Government are set to miss their target on the number attending university courses. Rather than half the young adult population attending such courses, new figures from the DIUS tell us that the proportion in higher education has scarcely risen over the past eight years—39.8 per cent of 18 to 30 year-olds were at university eight years ago compared with 39.2 per cent in 1999-2000. At that rate, it will take more than a century to achieve the Government's objective. In any event, thousands are not suitable for such courses, so how was the target arrived at?

7 July 2008 : Column 584

I suppose that the regulations will help a little in encouraging some students either to start or continue at university, which cannot be a bad thing. But how many of them does the Minister anticipate taking up jobseeker’s allowance with or without income support? By how much will the 39.8 figure rise? Does the Minister anticipate any of them actually coming into employment during their vacations? The Minister must surely agree that all Jobcentre Plus operational staff and decision-makers must be made aware of the changes made by these regulations. How does he intend to achieve that? Indeed, given that the regulations are an anti-discrimination measure pointed out by an appeals tribunal because student couples with the care of children and young persons already get the advantages now being given to single students in the same position, has the Minister calculated how many student couples under the existing regime have been able to start or continue their studies?

My last thoughts on the regulations, welcome as they will be for some, is that the new deal for young people is not very successful. Frank Field MP even went so far as to describe it as “woeful,” no doubt because half of them end up back on benefit within the year—the so-called revolving door syndrome. The regulations will do nothing to help the situation. Indeed, they will make it slightly worse, so how do the Government intend to correct that depressing fact?

Baroness Thomas of Winchester: My Lords, from these Benches we welcome this change to the student regulations, which removes the discriminatory element in jobseeker’s allowance and income support available during the summer vacation so that single people who are students with responsibility for a child or young person are not treated differently from student couples in the same circumstances.

I have three questions for the Minister. First, as the noble Lord, Lord Skelmersdale, said, will all Jobcentre Plus frontline staff be issued with guidance and training to ensure that the change can be made available to students as soon as possible? Secondly, will Jobcentre Plus contact university welfare services to notify them of the change? Thirdly, will the changes be made in time for students to take advantage of them for the upcoming summer vacation?

Lord McKenzie of Luton: My Lords, I thank the noble Baroness and the noble Lord for their contributions. The noble Lord, Lord Skelmersdale, was fairly wide ranging in his contribution. It went somewhat outside the bounds of the specific and, I hope, welcome regulation that we are dealing with tonight. He asked about duplication of benefits. Most single students will claim income support if they have a child. If they are not able to claim income support, they can now claim jobseeker's allowance provided that they meet all the conditions for the benefit, but it is not a duplication of benefit. They cannot have both.

The noble Lord asked about conditions for claiming jobseeker's allowance. Claimants need to be available for work to claim jobseeker’s allowance during a vacation, which is an important condition. They obviously need to meet the other normal conditions of entitlement.

7 July 2008 : Column 585

He referred to the new deal for young people. We could debate that endlessly, but if you look at the data you will see that the new deal for young people, together with other labour market policies and economic policies of the Government, have meant that youth long-term unemployment is at an all-time low and has dropped dramatically, so the new deal has worked for young people. It is right that the new deal is refreshed, which is why the focus is now on a flexible new deal which focuses much more individually on the needs and support of the young and not-so young, particularly in matching the skills that they need. But I do not accept the criticism that the new deal for young people has not worked.

The noble Lord asked how many student couples have benefited from the current arrangements.

Lord Skelmersdale: My Lords, not quite: I asked how many couples had ended up in work, which is a rather different question.

Lord McKenzie of Luton: My Lords, again, I do not have the data to hand. I will see what is available from the DWP and write to the noble Lord. In terms of the provisions before us, we believe that the number of students who will be affected by this change is very small. The number of single students receiving a parental grant for the academic year 2006 was 16,200. That figure was used in the Social Security Commissioner's decision. Information from the labour market survey on the number of full-time students with responsibility for a child or young person is under 10,000 and is therefore not reported because it is likely to be unreliable. It is estimated that the numbers for which this change will apply is small at less than 0.1 per cent of all single students with responsibility for a child or young person.

The noble Baroness, Lady Thomas, asked whether all Jobcentre Plus staff will know what is happening. The answer is yes. They will be provided with information and support. On whether Jobcentre Plus staff will contact university welfare staff, the answer is yes. Student unions are already aware of the change. She asked whether the changes will be available for this summer vacation and the answer, I am pleased to say, is also yes. I hope that that has dealt with the relevant points noble Lords have made. Again, I commend the regulations to the House.

On Question, Motion agreed to.

Financial Assistance Scheme (Miscellaneous Amendments) Regulations 2008

7.57 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton) rose to move, That the draft regulations laid before the House on 18 June be approved.

The noble Lord said: My Lords, noble Lords will recall that the Financial Assistance Scheme, or FAS, offers help to certain people whose defined benefit

7 July 2008 : Column 586

occupational pension schemes have not provided them with the pension that they were expecting. The draft regulations before us contain further changes to bring about the reforms to the FAS that we announced last December. Noble Lords will recall considering regulations to bring in some of the changes in May and those are now being implemented. In those regulations, we included measures which would raise the assistance level from 80 to 90 per cent, and begin payments from an individual’s normal retirement age rather than age 65. I am pleased to say that increased FAS payments at 90 per cent began to be made on 21 June and we have made 1,257 top-up payments at the 90 per cent level as at the end of June. In the draft regulations now before the House, we include some significant measures which could not be included in the previous set because the policy needed more time in development and consideration.

On the early payments for those members unable to work due to ill health, the draft regulations provide for ill-health payments for members of FAS qualifying schemes, where the FAS scheme manager is satisfied that those members are not able to work due to ill health and are likely to continue to be unable to do so until their normal retirement age. The ill-health payments can be made from five years before the member’s normal retirement age, so that, for example, where the NRA is 62, eligibility would begin from age 57. We continue to discuss with stakeholders issues around the ill-health provision, but it is important that we get this enhancement to the FAS in place as soon as we can in order to get help to those affected.

On extending the FAS to members of schemes which wound up underfunded with a solvent employer, the draft regulations also include provisions to make members of certain pension schemes with solvent employers eligible for FAS. Our intention here is to enable pension schemes that started winding up with a solvent employer after 1 January 1997 but before the employer was required to meet the full buy-out cost to qualify for the FAS.

The Government would expect trustees to recover any debt they can from the employer before turning to the FAS for assistance. Given this, the regulations require the employer to have paid any debt to the scheme at the start of winding up, or to have had no debt to pay on wind-up. Following the consultation, we have included a provision to allow the FAS scheme manager discretion to treat the debt as having been paid where an appropriate portion was paid. Our intention here is to provide for schemes where, for example, the employer paid a significant majority of the debt owed but where the trustees did not consider it worth while to pursue the remaining debt to be included. We think that it is right to expect schemes first to pursue any debt owed by the employer before coming to the FAS for assistance. But where trustees have taken reasonable steps to secure the recovery of the debt, this gives the FAS scheme manager appropriate flexibility to include such schemes.

As for whether the Pension Protection Fund will be more closely involved in developing the new FAS arrangements, I mentioned that further regulations will be necessary to bring in the remainder of the changes to the FAS announced in December. One of

7 July 2008 : Column 587

those remaining changes concerns the transfer of assets from FAS qualifying schemes to the Government. In order for that process to be as efficient as possible, these draft regulations contain provisions for the PPF to provide advice, and to be involved in the process of managing schemes through the wind-up process and on to a stage where they are in a position to hand over their assets. I hope noble Lords will agree that the expertise that the PPF has built up since its inception will be invaluable in this task.

Given that the FAS will take in the assets of pension schemes that have not annuitised, we have included a measure in these draft regulations that allows the FAS scheme manager to direct pension scheme trustees in order to protect the value of the scheme assets. This is similar to an existing PPF power.

We have also included measures to speed up the process of making initial FAS payments—that is, payments made before the final FAS payment position is known—by removing the need for trustees to apply for them. The draft regulations retain the FAS scheme manager’s discretion to make initial payments but without the need for a request from the trustees to trigger consideration. We are also reducing the period allowed in existing regulations for trustees to supply scheme data from six months to three months. In addition, they would introduce appropriate timescales for producing information concerning the new ill-health payments.

Finally, the regulations include removing the option to apply for reinstatement into the state additional pension for those eligible for FAS. This will mean that any person qualifying for FAS will no longer meet the conditions for reinstatement into the state additional pension. The aim is to simplify matters by removing a step that not only delays the winding-up process but also offers uncertain outcomes for members. We are replacing this uncertainty with a guaranteed amount. Where someone has, before the commencement of the provisions, been offered the opportunity to be reinstated by their scheme, they will still be able to select this option.

I hope we can agree that the Government have so far made good on the promises made in the December announcement, with more than 1,200 people already being paid assistance to 90 per cent of the pension that they were expecting. With this second set of regulations we are maintaining the momentum to deliver key elements of the reforms to the benefit of many pension scheme members. Later this year, we intend to consult on further draft regulations to deliver the full package of changes. In addition, to support the changes we intend to make through regulations, we have tabled amendments to primary legislation through the current Pensions Bill. In my view, these draft regulations are compatible with the European Convention on Human Rights. I therefore commend them to the Committee.

Moved, That the draft regulations laid before the House on 18 June be approved. 23rd report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

Lord Skelmersdale: My Lords, this is the first opportunity that we have been given to debate these regulations, which are particularly important as the

7 July 2008 : Column 588

sooner payments get to the recipients, the better off they will be, especially as they will have been waiting years for their badly needed payments. Some will even have died. It is no recompense that their family may get some of their award.

These complicated regulations are stage two in a multipronged series to give effect to the expansion of the FAS announced by Written Ministerial Statement on 17 December last year, as the Minister said. It had taken five long years to bring the Government, kicking and screaming, to that point. The Explanatory Notes say in paragraph 7.3:

That is a masterly understatement. I congratulate whoever drafted that sentence.

Unlike my noble friend Lord Taylor of Holbeach on the first set of these regulations, I will not chronicle the sorry history of the FAS from the Parliamentary Ombudsman’s report through to the action in the courts that brought the Government to that point. Suffice it to say that the amount of money that is now to be expended on the scheme—some £2.9 billion in net present-value terms—is a great deal better than the original proposal. However, will the Minister admit that this is a gross figure? Because all pensions count as taxable income, can he say what the figure is expected to be net of income tax at the current rates of 20 and 40 per cent? As I am dealing with general points, I suggested months ago that it would be both sensible and cost-saving to give the FAS over to be run by the PPF. Now that these regulations involve the PPF to a large extent, why will not the Secretary of State follow my advice?

As for the improvements made by the regulations, the biggest by far is the early payment of pension to those who retired sick before their normal retirement age. Many schemes taken over by the FAS will have paid pensions from that point, but the regulations propose that pension will be paid only from five years before a qualifying member's normal retirement age. Since the FAS rules only permit normal retirement age to be between 60 and 65 no matter what the ages actually were in the original pension scheme, the earliest that ill-health or early retirement benefits can be paid is at age 55, even though, as I said, the retirement may have been much earlier and the original pension scheme may have allowed pension to be paid from that earlier date. Why did the Government come to the decision that they have? Was it to save money, or for some other reason?

The Explanatory Notes give me the impression that this may—just may—be an interim decision. None the less, I am glad that these regulations cover it now, because the afflicted people are inevitably in straitened financial circumstances and may even have died before receiving anything at all. It is small recompense that their relatives may get a reduced amount. I would assume, too, that many are on state benefits of one sort or another. What does the Minister believe is the net cost of this provision? Also, can he tell me a little more about how the interim payments will work? There is great interest in this from the Pensions Action Group.

7 July 2008 : Column 589

The regulations also allow certain schemes backed by solvent employers that started to wind up before 1997, before the employer was required to fund the full buy-out cost. Why was this date chosen?

As the Minister mentioned, the Government are now to take on the residual assets of pension schemes that come into the FAS. This was proposed by the Andrew Young review, and I can readily understand why. It is especially important that those assets are not run down prior to the schemes being accepted into the FAS. It is equally important that information held by the trustees should be given promptly to the FAS, especially when pension or ill health payments are already in payment before the scheme is accepted into the FAS. I approve of introducing timescales for this. Incidentally, I hope that such payments made from, say, the age of 45 will not be terminated by the Secretary of State.

Lastly, although I cannot find it in these regulations, I understand that FAS payments are to be increased not by earnings or even inflation but by 2.5 per cent annually. Can the Minister tell me whether this means an annual FAS uprating order, like the mesothelioma one, or will it be part of the general uprating order? I have made the point before that it would be sensible for all regularly updated benefits to be included in a single uprating order. Can the Minister tell me whether any serious consideration has been given to this, or must I live with the off-the-cuff answer that he has given me previously?

Lord Oakeshott of Seagrove Bay: My Lords, it was at short notice that this business was slipped in last Thursday afternoon for discussion today, particularly given the long and sorry history of the Financial Assistance Scheme. I know that the Minister is busy, but he has the resources of the department behind him. Those of us on the opposition Benches, who are obviously also dealing actively with the Pensions Bill, find it hard work to have things done at such short notice. I know that the Government clearly want to get this done before the Recess, but the Recess dates have been known for many months.

As the Explanatory Memorandum makes clear, this set of regulations makes,

as the Minister said—

In normal circumstances, ill-health payments—or what would have been early retirement due to ill health—would have been subject to the rules and guidelines of individual schemes and trustee discretion. Why have the Government opted for an arbitrary figure? All I could see in the Explanatory Memorandum was that they think it is “appropriate”. The arbitrary figure of five years before normal retirement age could leave some very ill people worse off. Actuarial reductions would not be made in all cases under normal circumstances in those schemes. The House will therefore see that FAS members could be worse off under the current proposals.

Next Section Back to Table of Contents Lords Hansard Home Page