Tuesday 3 March 2020
Arrangement of Business
My Lords, if a Division is called in the House, the Grand Committee will adjourn for 10 minutes.
Rules for Direct Payments to Farmers (Amendment) Regulations 2020
Considered in Grand Committee
My Lords, I declare my farming interests as set out in the register. I hope that it will be helpful to your Lordships if I speak to both the Rules for Direct Payments to Farmers (Amendment) Regulations 2020 and the Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020, given the close connection between the two instruments. These instruments amend retained EU law governing the direct payment schemes for farmers for the 2020 scheme year. This EU law was brought into domestic law on exit day by the Direct Payments to Farmers (Legislative Continuity) Act 2020, which, as noble Lords will remember, we have debated.
These statutory instruments address operability issues in retained EU law so that it can continue to function effectively in the United Kingdom for the 2020 scheme. The instruments make purely technical amendments to fix inoperabilities, and I should emphasise that they do not make policy changes. They use the affirmative procedure and I would like to explain why this was necessary. They could not have been made any sooner as they could be made only after the parent Act received Royal Assent, which was just before exit day. The instruments needed to be in force on exit day, at the same time as the relevant direct payments legislation was brought into UK law. This has ensured a seamless transition from EU law to UK law. It has meant that the Government and the devolved Administrations can continue to operate effectively the 2020 scheme, which began on 1 January, therefore avoiding any disruption to farmers. Significantly, these instruments ensure that the UK Government can meet their commitments to funding in the agriculture sector. The Government have announced nearly £3 billion in funding for direct payments to UK farmers for the 2020 scheme year.
The Rules for Direct Payments to Farmers (Amendment) Regulations 2020 make operability amendments to the retained EU Regulation 1307/2013, which is the main direct payments regulation establishing the high-level framework required to make direct payments to farmers. It also amends two delegated and implementing Acts under this regulation which together set the detailed scheme rules for direct payments. Finally, it makes minor operability amendments to an existing statutory instrument related to direct payments in England. It is worth making it clear that the direct payments legislation being amended by this regulation was brought into UK law only for the 2020 scheme year, not for prior years, so this instrument makes amendments only in relation to 2020 direct payments.
The Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020 make amendments to the retained EU Regulation 1306/2013. This is the main “horizontal” regulation that sets the overarching framework for how the CAP is administered, including direct payments. It also amends four delegated and implementing Acts under the main regulation, which together set the detailed rules necessary to finance, manage and monitor the delivery of the CAP schemes. Finally, it makes minor operability amendments to an existing statutory instrument in relation to direct payments in England.
It is important to recognise that the EU legislation being amended by this regulation was brought into UK law only in so far as it relates to 2020 direct payments and not to other parts of the CAP. Therefore, this statutory instrument amends only the parts of the legislation which relate to the 2020 direct payments. The list of regulations amended by these instruments can be found in paragraphs 2.2 and 2.3 and Annexe 1 to the accompanying Explanatory Memorandum.
The amendments include replacing EU terms with domestic equivalents. For example, references to “Member States” have in most cases been replaced with the term “relevant authority”. The SIs define a relevant authority as meaning the Secretary of State, Scottish Ministers, Welsh Ministers and the Department of Agriculture, Environment and Rural Affairs in Northern Ireland. The instruments in most cases confer powers to make legislation which once sat with the European Commission on either the Secretary of State or the relevant authority.
The amendments also include removing provisions which are not applicable in the UK, such as references to the payment for cotton and administrative processes which lose their purpose outside the EU context; for example, the requirement to send information to the Commission.
More specifically, the Rules for Direct Payments to Farmers (Amendment) Regulations 2020 remove the power to fix spending ceilings for individual direct payment schemes. In a domestic context, it is unnecessary to set such individual ceilings in legislation, particularly given that the schemes are administered at the devolved level.
The Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020 remove from retained EU law the EU’s processes for managing its budget and remove or amend the EU’s auditing and accounting rules.
Except for the amendments made to the domestic statutory instruments, which apply only in England, these SIs cover all four parts of the United Kingdom. We have worked closely with the devolved Administrations to produce the instruments and they have given their consent to them.
In summary, the instruments allow the retained EU law to function effectively so that the Government and devolved Administrations can continue to operate the 2020 direct payment schemes for farmers. I beg to move.
My Lords, I thank the Minister for introducing the regulations. I thank him, too, for the Government’s commitment to give £2.852 billion to ensure that the programme continues. I should declare a family interest in farming in Suffolk, where we are recipients of basic farm payments and stewardship funding.
The instruments speak for themselves. I have no queries with them; the legislation as it stands is fine. However, is the Minister confident that the payments will be made at the right time and in the full amount? I refer not just to the basic payments but to payments on the stewardship side, which has not had a good record in recent times. I understand from farming colleagues around the country that they are still waiting for some of those payments to be made. Perhaps the Minister can tell us how many are outstanding and when they will be paid. My worry is that the Government will find that fewer people enter those schemes because they fear that they will not be paid at the right time. That would be a great shame because we are trying to encourage a greater number of environmental projects within food production.
Given the flexibility within the instruments, might the Government rethink their stance on the three-year crop rule in the light of recent circumstances? I have in mind particularly the flooding that we have had. At the moment, we are supposed to rotate crops within a three-year period, but given the flooding—which remains a key issue in Lincolnshire, Yorkshire and other areas where crops are still standing in the fields, with little chance of farmers getting them out or being able to plant spring crops—is there flexibility within the system to make any allowances for that?
I have a direct question for the Minister on flooding. I know that emergency payments are allowed, and that some may have already been paid of which I am not aware. Within these rules, may some flooding assistance be given to the farmers who are in such dire straits at the moment?
I noticed in particular Regulation 7(10). I think the exchange rates are undecided at this time. Can the Minister tell us whether the exchange rates will be honoured in the same way between the four devolved Administrations? Clearly, it would surely be wrong to have one system in England and another in Wales and in Scotland. Will he comment on that?
On Regulation 7(6), I see that the Government of Wales have paid an amount to small farmers, and in Scotland beef and sheep farmers have been given assistance. Where will that balance take us? Are there plans to assist farmers in England, who are not represented in that way?
Lastly, I turn to payments. The Minister has a farming background and I am sure he realises that we need to ensure that payments given to farmers this year, let alone next year, are equal across the four devolved Administrations; otherwise, we will have unfair trading circumstances, which I know the Minister would not want to encourage.
Having made those few comments, I return to where I started: I welcome these regulations, and it is important that they are passed by the House. I have no difficulty with what is in them, but they raise other questions, which I have been able to ask this afternoon. I thank the Minister for introducing them.
My Lords, I am grateful to the Minister for bringing forward these regulations; it would be a very brave man who stood between the farmer and his payments this year. I am also very grateful to my noble friend Lady Byford for setting out her concerns.
Anybody who has travelled from Scotland or the north of England down to London by train or car will have seen the amount of damage caused by the floods. Like my noble friend Lady Byford, I make a special plea for a sense of urgency on the three-crop rule. I hate to say this in mixed company, but I pay tribute to a previous Secretary of State, under a different Administration, Hilary Benn. He visited the Great Yorkshire Show and, on the same day, went back to London and lifted a similar provision that prevented farmers going on the land. The circumstances were similar, although it was a different time of year—July—and I forget which year it was.
My understanding is that the Government are actually discouraging anybody from applying for a specific force majeure provision. There is a very real concern that, eventually, the RPA will be inundated with potentially thousands of applications, given the scale of the problem this year.
I also understand that those who are seeking farming recovery fund financing are experiencing delays. I appreciate how hard my noble friend and his department are working at the moment—he was in the Chamber until very late yesterday, as indeed we all were—but anything that his department can do would be appreciated.
My noble friend will be aware that Flood Re had limited financial capacity, and that no businesses, particularly small businesses, were included. This means that no farm can make an application for financing or insurance cover under Flood Re. Can that be looked at in some shape or form?
I know that this issue might be raised by others, but another statutory instrument is coming down the tracks to implement the Chancellor’s funding statement of 30 December. I do not know whether my noble friend can put a date on that.
I echo my noble friend Lady Byford’s concerns about Countryside Stewardship Scheme, because the RPA seems to have improved. I know that my noble friend was patron of the Institute of Agricultural Secretaries and Administrators for 10 years. The responsibility falls to me to be its parliamentary patron, which is a great honour. It is very concerned about the late payments by the Rural Payments Agency, particularly in England. Could my noble friend use his good offices in this regard? My main plea, obviously, given that farmers now have great difficulties getting on to the land, is this: could my noble friend seek a derogation from the three-crop rule as a matter of urgency to spread the load? Could he tell us when the remaining SI will come before us? A highlight of something we might expect to see in the Budget this year would be extremely welcome.
My Lords, it is good to follow the noble Baronesses, Lady McIntosh and Lady Byford. I thank the Minister for his considered introduction to these detailed and complex SIs.
It is clear that the department has gone to some trouble to be helpful in its Explanatory Memorandum. Thanks should be given for that, but to the uninitiated lay man these SIs remain complex. For example, the explanation of Article 21, such as it is, goes from page 6 right through to page 7 of the instrument. Page 15 of the Explanatory Memorandum refers to the challenging horizontal regulation, which the Minister tangentially referred to. He might wish to give further explanation to those who might not know about the horizontal regulation. Page 26 of the instrument refers to the 67 permitted varieties of hemp. My challenge to the Minister is: which one does he recommend? Is it Fedora or Silvana? He does not have to answer that, but he has so much insight into the industry that he or his officials might have a recommendation.
These SIs affect the day-to-day lives of thousands of our farmers. They might farm few or many acres. Bearing in mind the humanity of the situation and the personal anxieties that have occurred or might well occur, do he or his officials have an estimate of the total overall direct payments annually? Does he know how much money is made over to farmers in a given, and the most recent, year? How many farmers receive payments—one presumes thousands? Does he have a figure regarding these questions for Wales?
My Lords I am grateful to the Minister for setting out so clearly the details of these two statutory instruments and for his time, and that of his officials, in providing a briefing last week. I have listened to the knowledgeable contributions of other noble Lords; this is a complex issue and one of the few where I wish I were a farmer. During our debate at Second Reading, we strayed into areas covered by the Agriculture Bill which had relevance to direct payments. I do understand that, due to the Brexit date of 31 January, the made affirmative process is needed to ensure that farmers get the payments they deserve, and are relying on, in a timely manner. Many of your Lordships would not have started from here, but here we are. We must make the best of it and ensure that our farmers do not suffer financially this year.
The EU makes CAP payments in arrears, to the UK Government and not to farmers themselves. As the noble Baroness, Lady Byford, has said, the euro to pound exchange rate is important during this process: I understand that this has previously been set in September each year. However, we were told at the briefing that this exchange rate will be calculated “soon”. Can the Minister be more specific on when soon will be? There are a number of aspects to these payments, including the young farmers’ scheme to encourage new entrants into farming. Farming is a vital industry on which we all rely, not only for the management of the land but to provide some of the food we eat. Despite what government advisers may think, farming, and indeed fishing, is a vital component in both social and economic prosperity. The basic payment awarded to young farmers, classified as newcomers under 40 years of age and established in the previous five years, is increased by 25% for the first five years and 2% of the national budget allocation is used to finance this supplement. This payment comes on top of other measures young farmers can benefit from under previous rural development programmes. Under the EU, this payment was mandatory for member states. Can the Minister give reassurance that this payment will continue, despite the leaked information over the weekend? I welcome the changes to guidance for young farmers, and the removal of the need for new entrants to produce a yearly certificate of proof of their youth. This change in the bureaucracy is welcome and I look forward to more of this in the Agriculture Bill.
At Second Reading, we debated the environmental land management schemes which are currently being piloted and are due to begin rollout in 2024. Under the previous EU regime, the greening scheme gave the farmers involved, in addition to the basic payment or the single area payment, an additional payment per hectare for using climate-friendly and environment-friendly farming practices. This was previously 30% of the national funding allocations for this greening payment. As the Committee has already heard, this included crop diversification, maintaining existing permanent grassland and maintaining an “ecological focus area” of at least 5% of the arable land. I am sure all noble Lords are aware that stiff penalties existed for failing to meet these greening requirements. Are these previous greening schemes the ones now being replaced by the environmental land management schemes? Is the money received under ELMS by farmers who previously participated voluntarily in the greening schemes likely to be equivalent to, more than or less than what they could have expected to receive previously?
Lastly, I understand that the payments due to be made under the Bew review do not form part of these two statutory instruments. Scottish and Welsh farmers are keen to know when these payments are likely to be made. When will the Bew review money pass through the statutory process and arrive with farmers? I look forward to the Minister’s response to this debate and am happy to approve these two statutory instruments.
My Lords, I thank the Minister for his clear introduction to the order before the Committee today. I also thank him for making himself available for the meeting he convened with the noble Baroness, Lady Bakewell of Hardington Mandeville, and myself in connection with these instruments. The regulations on the working of the CAP can have certain peculiarities. I am aware of many of these and declare my interest as a farmer in receipt of EU funds.
As the Minister explained, through the parent Act, the Direct Payments to Farmers (Legislative Continuity) Act 2020, and the withdrawal agreement, these regulations put the existing EU payment schemes into UK law to maintain continuity in the agricultural sector for the year 2020, pending the introduction of the Government’s new regime in the Agriculture Bill, presently in the other place. As he emphasised, this will not entail any changes in policy but will merely put the regulations on a UK basis, correcting inoperabilities and providing necessary continuity and certainty to the agricultural sector. Any disruption could have a severe impact on farmers’ financial viability, especially in Wales and other more disadvantaged areas, as my noble friend Lord Jones highlighted. One or two explanations necessarily need further clarity, which it would be helpful if the Minister provided. The noble Baroness, Lady Bakewell, and others drew attention to many of these at our meeting.
The noble Baronesses, Lady Byford and Lady McIntosh, brought up the dreaded three-crop rule and the necessary financial disciplines being maintained by the RPA. To avoid the UK being drawn into the multiannual EU budget cycle, the withdrawal agreement disapplies the 2020 claim year from the implementation period. The payments will become the responsibility of the Treasury, yet the payment exchange rate, normally set each year in September, has yet to be set. Given that the EU will no longer be reimbursing the UK Government, could not the same payment in pounds be maintained as was implemented in 2019? Would that not provide further simplicity and clarity?
One of the challenges that Defra endured every year was having to make payments and then see them being examined by the EU, which led to disallowance from retrospective reimbursements when the EU determined that a member state had not made payments in conformity with the regulations. The Minister will confirm that this often came to many millions of pounds each year. I am sure that the Minister’s department will rejoice at disallowance disappearing; nevertheless, these are public funds and must be administered effectively. The memorandum accompanying the regulations does not entirely clarify whether there will be a distinct, similar process conducted over the year 2020 payments, other than stating that existing domestic public accountability frameworks will apply. I understand that the Rural Payments Agency will still maintain the scheme’s disciplines and infringement penalties, but will there be anything comparable to the specific auditing conducted by the EU, and will that operate this year? How will any potential operability shortcomings be satisfied? Any pursuit of scheme applicants would be a clear departure from previous policy.
A key feature of BPS is the distinguishing of Pillar 1 payments from Pillar 2 payments for rural development, whereby the EU scheme allows member states to convert up to 15% of Pillar 1 payments to Pillar 2—known as modulation. Will the Minister confirm that the Government will continue to apply a modulation rate of 12% for the 2020 year? Can he indicate whether the devolved Administrations will or will not depart from the rate they set in 2019? It would be helpful to have explicit reference today. Pillar 2 payments contribute to various multiannual schemes such as the Countryside Stewardship Scheme, which was the focus of questions from the noble Baroness, Lady McIntosh. Can the Minister clarify that such schemes, and any new applications that may come forward this year, will continue to operate and be funded for the remainder of their respective terms, up to proposals yet to be implemented following the passage of the Agriculture Bill? Would any termination clause be in this year’s applications, should new measures become features of the new policy of reward for public goods? Can the Minister provide details of any pilot scheme under consideration?
During the passage of the Direct Payments to Farmers (Legislative Continuity) Act 2020, it was said that payments, especially to certain of the devolved Administrations, will be enhanced in accordance with the Bew review. I understand that this will be subject to yet another piece of secondary legislation. When might that be forthcoming and will any additional funds also be subject to modulation, or merely be made as Pillar 1 supplementary payments? Will the instrument be under the negative or affirmative procedure? It would be helpful if the Minister could indicate how many instruments his department is planning to bring forward in this 2020 year, so that a complete picture can be forthcoming as soon as possible.
The Explanatory Memorandum also states that, as a continuity measure, no consultation, other than notifying the direct payments working group, and no impact assessment have been undertaken as this measure changes nothing. No concerns have been raised. I do not see any difficulties in this technical departure from normal practice on statutory instruments. The memorandum also states, at paragraph 11.1, that the department
“is not producing any specific guidance on these instruments”.
Will the Minister clarify whether that will apply to his department’s normal practice of issuing a Guidance to Farmers booklet, normally sent to qualifying farmers each year to explain any amendments or changes from previous conditions? In this instance, while there may not be changes, it would be helpful again to produce a booklet for the agriculture industry to answer the many questions that may arise in this one-off year, and to explain that all the features of the BPS scheme, such as cross-compliance, greening and others, may remain.
Finally, does the Minister have any information for the Committee about measures regarding future years, specifically 2021, and when will further announcements be forthcoming?
I am pleased to approve the regulations before the Committee today.
My Lords, I thank all noble Lords for this contributing to this debate, because it reflects what we are all most concerned about: the importance of food production, the people who enable the consumption of food at home and abroad, and their simply excellent produce.
I remind your Lordships that we are the Department for Environment, Food and Rural Affairs, so I intend, in declaring my farming interests, to champion food production and farmers. The noble Baroness, Lady Bakewell, was absolutely right to refer to young farmers. Those of us who farm do not want to be the last generation of farmers. We need to ensure that the next generation produces food for us and enhances our environment, with 70% of our land farmed in the farmers’ custodianship.
I will seek at a brisk gallop to answer a number of questions. My noble friends Lady Byford and Lady McIntosh asked about payments on time. The Rural Payments Agency has worked hard to improve payment performance, as I think has been acknowledged. For farmers, by 20 January the RPA had issued in England £1.69 billion of BPS payments, about £101 million for environmental stewardship and just under £8 million for countryside stewardship. As is recognised in the department, the RPA is now focusing on paying remaining claims as soon as possible. I am well aware of the importance of prompt payments, an issue which the ministerial team places great importance on for future confidence.
The noble Lord, Lord Jones, referred to the intricacy of the instruments. I always go to the Explanatory Memorandum—I find looking at the statutory instrument alone very confusing. Indeed, sometimes, the Explanatory Memorandum needs some explaining too.
However, it is important to record that the Government’s funding for direct payments, announced on 30 December, matches the total funding for direct payments available for 2019. The Government have committed a total of £2.852 billion to UK farmers—£1.843 billion for England, £523 million for Scotland, £243 million for Wales and £294 million for Northern Ireland. This is in addition to the £216.6 million of funding awarded since the spending round to support the farming sector in Scotland and Wales, following the Bew review on farm funding allocations.
The noble Lords, Lord Grantchester and Lord Jones, and the noble Baroness, Lady Bakewell, mentioned the Bew review. This money will be ring-fenced, to be spent on farmers in Scotland and Wales. We intend to lay a further statutory instrument that will amend the 2020 UK direct payments financial ceiling to take account of this funding announcement as far as it relates to the 2020 scheme. We will lay this further SI well ahead of payments being made.
Your Lordships may wonder why this will be dealt with in a separate SI. This is because the SI will be made using a power to amend ceilings which has been transferred from the Commission to the Secretary of State by one of the SIs we are debating today. The SI to amend the UK ceilings will be made with the consent of the devolved Administrations. It will be subject to the affirmative procedure so we will have a further opportunity to reflect on that.
On the issue of exchange rates—again raised by my noble friend Lady Byford, the noble Baroness, Lady Bakewell, and the noble Lord, Lord Grantchester, among others—the level of funding available for the 2020 direct payments will be the same as for 2019 for each part of the UK. The funding is based on the same financial ceilings and exchange rate used for the 2019 direct payments.
The exchange rates to be used to calculate the 2020 BPS payments will be confirmed and set in the statutory instrument we intend to lay in the coming months. The exchange rates were not set in the SIs we have been debating today as at the time, the Government and devolved Administrations had yet to confirm the rates they wished to use for the 2020 scheme. The further SI will be made with the consent of the devolved Administrations and will reflect the decisions made in each part of the UK. This will be the same SI as that used to amend the 2020 financial ceilings.
On devolved Administration funding agreements, raised by my noble friend Lady McIntosh, the Government have committed to engage with the devolved Administrations to develop a fair approach to future funding allocations. This will sit alongside the work to develop an agricultural support framework.
In referring to wet weather and the three-crop rule, I perhaps should declare my own circumstances. I would not like to compare notes with some of your Lordships on the percentage of winter wheat that was drilled, but it has been extremely depressing, so I understand the predicament of farmers across all the nations.
The farming recovery fund provides money to help farmers whose agricultural land has been significantly affected by flooding. The money will go towards the costs of restoring their land as quickly as possible. On 6 January this fund was extended to areas in south Yorkshire and the east Midlands affected by flooding. We are also exploring how best to provide flexibility and support to those farmers affected by the prolonged period of wet weather, so that we can continue to comply with the CAP rules.
The retained EU law governing the 2020 direct payment schemes, as made operable by these two SIs, allows some flexibility from the normal scheme rules. This includes allowing us to waive payment reductions and penalties where a farmer has been unable to meet scheme rules due to exceptional wet weather. In January we published updated guidance for farmers in England to help them safeguard their greening payments. We will continue to keep the weather conditions under review, to assess whether a derogation from the three-crop rule is needed. I will go back to the department with your Lordships’ helpful views on this matter.
The noble Lord, Lord Jones, referred to horizontal regulation—my goodness, I needed a tutorial in that too. These EU regulations set the overarching framework for the administration of the common agricultural policy. That includes the direct payment scheme, which is why I pointed out that it is part of this overarching framework. The law incorporated into the UK now only relates to the direct payment elements.
Questions were also asked about the ELMS. As the direct payments are going to be tapered over this seven-year transition period, it is important that we work collaboratively with the farming community, so these schemes are a codesign. I come from a farming background and I know that they will not work as we intend unless they have the ownership and active, positive collaboration of the farming community. The scheme will be developed through a series of tests, trials and pilots. We plan to launch the national pilot in late 2021. This will provide an opportunity to test and refine the scheme design prior to its full rollout in late 2024. These tests and trials will be taking place across a range of topographies and farmers, so we can see how this works for various types of farm. On 25 February, we published a policy discussion document which provides further information on our current thinking on the ELM scheme.
The noble Baroness, Lady Bakewell, asked about young farmers’ payments. We intend to continue operating the young farmers’ scheme in England while we continue to operate the basic payment scheme. As I said in my introduction, the future of land custodianship rests with the next generation. We need to do all we can to ensure that the enhancement of the environment and food production are a complementary and rewarding part of the farming calendar.
The noble Lord, Lord Grantchester, asked about penalties to be applied in respect of being in the EU in January. Farmers must comply with the scheme rules for the whole calendar year. If a farmer breached them in January, the RPA or devolved Administration would be able to take any necessary enforcement action, in the same way it normally would. This action would include applying reductions or penalties when the payments are calculated later in the year. As the 2020 schemes will be funded by the Exchequer, they will not be subject to disallowance. Disallowance is a fine imposed on member states where the Commission considers they have paid out EU moneys without fully complying with EU rules. Another important part of what the noble Lord, Lord Grantchester, referred to is that the 2020 schemes will be subject to the usual rigorous domestic financing and audit systems. For example, in England, payments made under these schemes will continue to be reported and audited in accordance with the Government Resources and Accounts Act 2000. Equivalent provisions apply in the devolved Administrations.
The noble Lord, Lord Grantchester, referred to the agricultural transition plan, and I have spoken of it before. We will continue to offer land management schemes throughout the transition. On 11 February, a new round of Countryside Stewardship opened for applications, with the agreements starting in 2021. We believe that Countryside Stewardship provides a stepping-stone to the new environmental land management scheme. During the transition, we will also offer schemes to boost industry productivity and improve animal and plant health and animal welfare. I am looking forward to discussing that during consideration of the Agriculture Bill.
The noble Lord, Lord Grantchester, also asked about inter-pillar transfer. The Government will confirm the overall level of direct payments for England shortly. A further statutory instrument will be made to amend the 2020 direct payment financial ceilings to reflect the decisions of each Administration, as this is a devolved matter. This will be done with the consent of the devolved Administrations. This further statutory instrument will, as I said, adjust the financial ceilings to take account of the Bew review’s findings. I seek to ensure that our statutory instruments are not unnecessarily numerous. I will do what I can to try to combine these arrangements.
I think the noble Lord, Lord Grantchester, asked one last question about application timetables for 2020. These statutory instruments do not change the rules that farmers need to meet on the ground for the 2020 scheme, nor will they change the application timetable. In England, the Rural Payments Agency will open the application window on 12 March. As in previous years, the deadline to avoid later claim penalties is 15 May. The agency will issue the annual scheme guidance alongside the opening of the application window. This is in line with the usual approach.
I will look at Hansard, because there might have been some intricacies. I did not go into hemp; the noble Lord, Lord Jones, obviously looks at the same parts of these instruments as I do. I hit upon this long list of hemp. I had no idea that there were so many varieties, but these matters can be extremely educational.
This debate has taken us somewhat beyond the SIs, but it is really important to ensure that farmers have certainty in respect of the 2020 scheme. I will reflect again on the work we have done with the devolved Administrations. All four parts of the United Kingdom know of the importance of the farmer. I am reminded that it is always the farming community who turn out to help their communities in bad weather. They clear the snow with their tractors and help flooded communities. I think I can say that all of us are champions of farmers and food production. I hope that makes my comments extremely clear, given other reports.
My Lords, I am very grateful for my noble friend’s responses to the various questions raised. I am not surprised, but I am really pleased to hear him champion the need to produce food above all else. He kindly referred to the recovery funds following flooding and such things. My understanding is that, in the past, some of those payments have not been made until after the recovery happened. I do not know whether there has been a change of thought on that, because they need those payments most when flooding happens, not when they have recovered, if the Minister follows my line of thought. If he cannot answer today, I am quite happy for him to write to me, because this is crucial. As he knows so well, there is immense pressure on the health and well-being of many of our farmers. For some of them this is nearly the tipping point. It would be very helpful if he could clarify that.
My Lords, I obviously cannot make any commitments today, given the changing situation and floods in parts of the country that were not part of the further announcements. However, the unprecedented flooding in many agricultural parts of the country has obviously affected many towns and villages, as well as farmland. I will write to my noble friend, put a copy in the Library and send it to all noble Lords who have spoken in the debate. Providing an up-to-date version of what we plan to do on farm recovery would be the most helpful way to deal with that.
Financing, Management and Monitoring of Direct Payments to Farmers (Amendment) Regulations 2020
Considered in Grand Committee
Guaranteed Minimum Pensions Increase Order 2020
Considered in Grand Committee
My Lords, I will start with the Guaranteed Minimum Pensions Increase Order. I will cover this briefly as it is an entirely technical matter that we attend to in this place each year. The order concerns contracted-out defined benefit or final salary occupational pension schemes. It will increase scheme members’ guaranteed minimum pensions that accrued between 6 April 1988 and 5 April 1997 by 1.7%, in line with inflation as measured by the consumer prices index.
I should now like to turn to the Social Security Benefits Up-rating Order. The Government are committed to supporting working families and providing financial security for pensioners, and the provisions in the order reflect this. It will increase the basic state pension and the new state pension in line with the triple lock; increase the pension credit standard minimum guarantee in line with earnings; increase working-age benefits in line with prices; and increase carers’ benefits and benefits intended to meet additional disability needs in line with prices.
The Government’s commitment to the triple lock means that the basic state pension will continue to be uprated by the highest of earnings, prices or 2.5%. The triple lock has been an invaluable tool in combating pensioner poverty, so keeping it in place gives pensioners the financial security and certainty they deserve. This year, the increase in earnings was the highest of the triple lock figures. As a result, the basic state pension will increase by 3.9%, rising to £134.25 a week for a single person. This increase is at the highest rate for the past eight years. From April this year, the basic state pension will be over £1,900 a year higher in cash terms than in April 2010.
Four years ago, the Government introduced the new state pension, which provides a transparent and sustainable foundation for private saving and retirement planning for people reaching state pension age from 6 April 2016 onwards. We have also committed to increase the new state pension by the triple lock, so from April 2020 the full rate of the new state pension will increase to £175.20 a week. This year, state earnings-related pension schemes, other state second pensions and protected payments in the new state pension will rise by 1.7%, in line with prices.
We are continuing to take steps to protect the poorest pensioners. This includes through the pension credit standard minimum guarantee, the means-tested threshold below which pensioner income should not fall. The pension credit standard minimum guarantee will rise by 3.9%, in line with average earnings. From April 2020, the single person threshold of this safety-net benefit will rise to £173.75, over £2,100 a year higher than it was in 2010.
I would like to turn now to working-age benefits, which will increase by 1.7%, in line with prices. This includes people receiving jobseeker’s allowance, employment and support allowance, income support, housing benefit and universal credit. Benefits linked to child tax credits and working tax credits will also be uprated in line with those benefits. This reflects the Government’s ongoing commitment to help working-age people get on. Work remains the best route out of poverty. Those in receipt of working-age benefits will see their payments rise at the rate of inflation, with the Government spending an additional £1 billion supporting working-age claimants. Universal credit work allowances will also rise in line with prices. This measure raises the amount that someone can earn before their universal credit payment is reduced and directs additional support to some of the most vulnerable low-paid working families.
Finally, let me turn to disability benefits. This year, the Government will continue to make sure that carers and people who face additional costs as a result of their disability will get the additional support they need. Disability living allowance, attendance allowance, carer’s allowance, incapacity benefit and personal independence payment will all rise by 1.7%, in line with prices, from April 2020. In addition, the carer and disability-related premiums paid with pension credit and working-age benefits, the employment and support allowance support group component and the limited capability for work and work-related activity element of universal credit, will also increase by 1.7%. This Government are committed to supporting the most vulnerable in society.
The Guaranteed Minimum Pensions Increase Order provides for scheme members to receive their annual guaranteed minimum pension increases for pensions in payment, or increases guaranteed minimum pensions that have been postponed as a result of continued employment.
The Government propose to spend an extra £5 billion in 2020-21 on increasing benefit and pension rates. With this spending, we are upholding our commitment to the country’s pensioners by maintaining the triple lock, helping the poorest pensioners who count on pension credit and spending an additional £1 billion on working-age benefits, ensuring that we continue to support working people and providing essential support to disabled people and carers. I commend both orders to the House.
My lords, at last, after four years we finally have an uprating order that actually uprates working-age benefits. But it is very disappointing that it does nothing to start making good the serious losses sustained by an estimated 27 million people, in and out of work, who rely on those benefits, amounting to an average loss of nearly £400 a year for families with children. That will be the focus of my contribution this afternoon.
According to the House of Commons Library briefing, the real value of affected benefits has been cut by about 6%. Taking account of all uprating restrictions across the decade, they are about 9% lower than if CPI indexation had applied since 2010. A cut of nearly 10% in the real value of benefits that were already far from generous represents a shameful attack on the living standards of many of the poorest in our society.
Although the department has done nothing to assess the actual impact on those affected, civil society organisations have provided some evidence, and I thank them. For instance, Citizens Advice reports that from April to August last year,
“four in 10 of the people we helped with debt to claim income-related benefits didn’t have enough money to cover their living costs. This is up from 32% in 2016-17—a 25% increase since the benefits freeze came into effect”.
In contrast, the proportion of households with what it calls a “negative budget” who are not in receipt of those benefits has remained largely unchanged. StepChange, too, identifies the benefits freeze, alongside other social security cuts and changes, as key factors in high levels of problem debt and as
“undermining financial inclusion policy goals”.
The Heriot-Watt University/Trussell Trust State of Hunger report and last week’s Marmot report likewise identify the low level of benefits as a key factor in growing food insecurity and reliance on food banks. The latter argued that benefit and taxation policies since 2010 have largely been responsible for the worsening socioeconomic situation underlying widening health inequalities. The Government’s own statistics show an increase in levels of severe income deprivation. It is worth noting that the impact of the benefit freeze will probably be seen as much, if not more, in the intensity of poverty as in the numbers in poverty, given that many of those affected will already have been in poverty. According to the CPAG, an average family in poverty is now £73 below the poverty line, compared with £56 below in 2012-13, adjusted for inflation. As the Joseph Rowntree Foundation put it, the largest single driver that has “tightened poverty’s grip” in the past few years has been the freeze.
When I raised the benefits freeze issue in Oral Questions the other week, the Minister generously responded that she could not argue with the points I had made and that her door was open to discuss them further. I am very grateful that, true to her word, she arranged for me to meet with her and officials. I will pick up some of the points she made during our exchange in Oral Questions. I emphasise that I do so not to go over old ground for the sake of it, but to support my case for an above-inflation increase now that the freeze has ended.
One of her arguments was that benefits had been rising faster than median earnings. This is true if one takes a short-term perspective, but that period was an aberration in a longer-term trend that has seen working-age benefits plummet relative to median earnings. According to the IPPR, the rate at which the benefit for a single unemployed person was frozen represented only 12.5% of median earnings last year, compared with 20% in 1984. If the relativity between benefits and earnings is important, surely the argument cuts both ways and the Government should seek to make good at least some of the shortfall, the more so because, as the Resolution Foundation emphasises in a recent study,
“adequate benefit levels have a critical role to play in protecting all households from in-work poverty”—
the very route out of poverty that Ministers like to laud. The foundation calculates that, as benefits have become increasingly inadequate, households, including lone-parent families, need to work longer hours to lift themselves out of poverty, which may well not be in the interests of family life. Indeed, it suggests that the number of hours needed to escape poverty are “often unreasonable”.
The Minister also argued that the benefits system was “unsustainable” and that the Government had to take
“very difficult decisions to try to balance it out”.—[Official Report, 13/1/20; col. 443.]
I have two points in response. First, on the basis of OBR analysis, the level of spending would appear to have been perfectly sustainable. Its 2014 Welfare Trends Report noted that
“the proportion of national income devoted to welfare spending has not shown a significant upward or downward trend over time.”
More recently, it estimated that, on current trends, spending on support for children and working-age adults would be at its lowest share of GDP since 1990-91. Yes, “difficult” decisions had to be made, but difficult for whom? To quote the Marmot report:
“Throughout the austerity of the last 10 years, choices have been made as to who most experiences the effects of tax and benefits reforms … working-age families with children within the five lower income deciles have experienced the most significant and negative impacts in the long term as a result of tax and welfare policies.”
A different, fairer choice would, for instance, have prioritised protecting the safety net over increases in personal tax allowances, which are regressive in their impact and some of which, in effect, were paid for by cuts to that very safety net, as shown by analysis by the LSE’s Centre for Analysis of Social Exclusion.
The Minister also prayed in aid the increase in the national minimum wage. Welcome as that is, it is of little help to those hurt by the freeze, including those in work, because, as the IFS has pointed out, only a minority of those who gain from the national living wage are in households hit by the benefits freeze: minimum wages are much less tightly targeted than working-age benefits.
The Minister rightly noted that a major contributory factor to the freeze’s impact was higher than expected inflation towards the end of the period, but she acknowledged that that “is no excuse”. It is not, but it is a very good reason for now making good, at the very least, the part of the cut attributable to higher than expected inflation, which, if I have read the Commons Library briefing correctly, saved the Treasury around £1.2 billion more than it had anticipated. This is money that the Treasury owes to those in receipt of benefits, not least as it rejected widespread calls, including from leading Conservative MPs, to end the freeze a year early in response to the unanticipated increase in inflation.
The Work and Pensions Committee in the last Parliament called for benefits to be uprated by 2% more than inflation over four years to make good the overall losses. When the new chair of the committee raised this in the Commons debate on the uprating order, the Minister did not even bother to respond in his winding-up speech. I know that the Minister here today will be more courteous. I know she cannot make any commitments for the longer term, but I ask her to do all she can to ensure that, first, there are no further cuts in the real value of benefits during this Parliament; and secondly, she takes back the message to the department and the Treasury that it is simply not acceptable that the current depressed value of benefits should be carried forward and locked in in perpetuity. In effect, this would be a long-term levelling down of the living standards of some of the poorest members of our society.
Finally, the Prime Minister has committed the Government to “levelling up”, but levelling up is not just about much-needed physical infrastructure investment in so-called left-behind areas. It has to be directed also to the individuals who live in those areas and elsewhere, who are falling ever further behind because of the freeze and other social security cuts. Indeed, according to a Resolution Foundation analysis, what they call the “blue wall” seats that the Conservatives won from Labour have suffered relatively high exposure to
“the impact of reduced working-age welfare generosity.”
“Ongoing pressure from welfare reforms concentrated in certain parts of the country calls into question the extent to which it will feel like austerity has ended and levelling up is happening.”
A real increase in social security offers an oven-ready policy instrument—to coin a phrase—to start levelling up much more quickly than infrastructure investment, which, according to the National Institute of Economic and Social Research, will probably take a decade to deliver fully. Moreover, as a real increase in benefits would be likely to be spent quickly and locally, it would have ripple effects in these blue wall areas.
I know that the Minister genuinely cares about what is happening to our fellow citizens at the bottom of the pile. I hope, therefore, that she will take the message back and do what she can to persuade her colleagues, so that we will not be back here next year having to make the same old arguments all over again.
My Lords, I congratulate the noble Baroness, Lady Lister, on her speech and I very much support what she said. I shall just raise a few issues that I hope the Minister will agree to consider.
After four years of the freeze in working benefits and £36 billion in cuts over that period, we of course welcome the end of the benefits freeze. However, as the noble Baroness said, the current increase does absolutely nothing to address the shortfall that has built up over the four years, especially since prices are rising for essentials such as food and children’s clothes. The benefit freeze has hit families very hard, particularly children. There are 4.1 million children in poverty—and they are in deeper poverty, further below the poverty line. The average family in poverty is now £73 per week below the poverty line, compared with £56 per week in 2012-13. Unless the Government act to restore the real value of financial support for families, things will continue to get worse. Without policy change, child poverty is projected to rise to 4.8 million, or 37% of all children, by 2023.
I hope the Government will consider what they can do to restore the situation. I know the Minister has a great interest in the welfare of children and I feel sure she will do everything she can. I hope the Government will consider ending the two-child limit on tax credits and universal credit. Continuing with these will push a further 300,000 into poverty. Will they consider lifting the benefit cap to move 100,000 children out of “deep poverty”—those living on 50% of median income before housing costs? Another suggestion is that adding £5 to child benefit would start to restore key benefits to all children.
We welcome the pensions uprating, which is particularly important to women as they live longer than men and often live alone. The pensions situation in the UK shows very significant differences between men and women, and I hope that the Minister will consider what can be done. I know we will be coming back to this issue when we discuss the Pensions Bill tomorrow, but the position as far as women are concerned needs to be looked at.
I very much welcome the fact that state pensions have become more inclusive and redistributive for those who take family caring breaks. However, for those who retired before April 2016, because the full amount of the basic pension remains nearly £40 a week below the threshold for means-tested single-rate pension credit, this improvement has had a limited effect on gender equality. As far as private pensions are concerned, among 65 to 74 year-olds the median private pension wealth is £164,700 for men and £17,300 for women. Among women aged 55 to 59, total personal income is two-thirds the income of men in the same age bracket.
Self-employment, zero-hours contracts and other precarious forms of employment have been increasing and these inequalities restrict the ability to pay either national insurance or private pension contributions. Even when incomes are similar, women’s pension saving is less than men’s, with too many women relying on their partner’s pensions. Many women are excluded from auto-enrolment because they are in low-paid jobs. Extending the coverage of auto-enrolment by reducing the earnings threshold to the national insurance primary threshold would bring 480,000 people, mostly women, into pension saving and would help to improve the gender pensions gap.
I hope that the Minister will consider what has been said. We take the opportunity to raise this issue while we can, despite the fact that nothing can be done about it today. Perhaps reforms to pensions such as revisiting care credits, a reduction in the number of qualifying national insurance years for the state pension and reducing or, indeed, removing the earnings limit so that low-paid workers, particularly women, would be eligible for private pension schemes are issues she might consider in due course.
My Lords, I thank the Minister for introducing these orders and thank all noble Lords who have spoken. First, I will speak briefly about the Guaranteed Minimum Pensions Increase Order before moving on to the Social Security Benefits Up-rating Order.
As we heard, the Guaranteed Minimum Pensions Increase Order 2020 provides for defined benefit occupational schemes that were contracted out to increase by 1.7% members’ guaranteed minimum pensions that accrued between 1988 and 1997, in line with CPI. This is a basically a routine uprating, but I want to take the opportunity to raise a specific issue. When the GMP order 2019 was debated on 14 February of that year, my noble friend Lady Drake invited the then Minister to give an update on the Government’s proposed guidance to occupational pension schemes in the light of the Lloyds Banking Group case. As the Minister will know, that case had the effect of requiring trustees to amend their pension schemes to equalise GMP benefits. In that debate, the Minister, the noble Baroness, Lady Buscombe, said:
“My department has put forward a method that schemes can use to equalise pensions which, because of its ‘once and done’ nature, should limit costs resulting from additional administration requirements. The department will provide guidance in the near future for schemes wishing to use the method upon which the department consulted in November 2016.”—[Official Report, 14/2/19; col. 1961.]
I see from the DWP website that the department has issued guidance in the wake of that case, which I think was updated last April, and that more recently, on 20 February, HMRC has issued guidance on the tax treatment of this issue. I understand that there are some matters which have not yet been clarified, in particular the position of trustees who are seeing further guidance on the extent of their obligation to revisit past transfers out of the Lloyds scheme. If the Minister has any information on this, perhaps she might share it. But what I really want to ask about is the Government’s next move, because in the debate last year, the noble Baroness, Lady Buscombe, continued by saying:
“The Department for Work and Pensions intends to make further changes to the guaranteed minimum pension conversion legislation to facilitate the methodology on which we consulted. We are looking to make those changes as soon as a suitable opportunity presents itself.”—[Official Report, 14/2/19; col. 1961.]
That is what was said in February last year. A number of us have spent most of our adult lives, or so it feels, looking at the Pension Schemes Bill in Committee, which is going through Parliament at this very moment. Was not that Bill a suitable opportunity in which to take this forward, and if not, why not? Do the Government still intend to legislate on these matters, and if so, to what timescale?
I turn now to the Social Security Benefits Up-rating Order 2020. In one sense, this is a routine order that makes changes to the rates of various benefits, but as we have heard in the marvellous speech from my noble friend Lady Lister, this has been anything but routine. In fact, in recent years, a number of us have turned up year on year, even though there were no upratings to debate, just to make the point that they should have been debated, so it is wonderful to be reunited with my noble friend on what is becoming an annual outing. I miss the noble Lord, Lord Kirkwood of Kirkhope, who often attended the debates, but I see that the right reverend Prelate the Bishop of Durham is in his place, and a number of other noble Lords have chipped in on these debates in years gone by. However, there is actually something to uprate and thus to debate.
This is all getting a bit complicated. We now have various categories of benefits. There are those which have to be uprated by at least the increase in earnings: the basic state pension, the new state pension, the standard minimum guarantee element of pension credit and a number of other pension and industrial death benefits. All of these are to go up by 3.9%. Then there are those which must go up by the increase in prices. The Minister gave some examples, mostly for disability benefits, carers’ benefits and some other widows’ benefits. These are to go up in line with the CPI at 1.7%. After that, there are benefits over which the Secretary of State has discretion, which are most of what we think of as working-age benefits that are means tested, plus statutory maternity pay, paternity pay, adoption pay and so on. I think the Minister said in passing that the Government are spending an extra £1 billion on these benefits. Is that in real terms or is that just the cost of the inflationary increase? If it is in real terms, the Government will not be spending anything extra at all. The Treasury measures money in real terms, so if these benefits are simply being increased in line with prices, presumably the Government are spending zero extra. I am glad to see that they will not be cut year on year again, but perhaps the Minister could clarify that.
There is still a fourth category of benefits which will not be uprated at all. By my calculation, this is now a category of one: bereavement support payment that for yet another year will remain at the same cash rate, which means that its value is being cut once again. Will the Government look at this? We expressed grave concerns at the time about the reforms to bereavement benefits, but the fact that this is now a cash payment that is not being uprated year on year means not only have families with children who have been widowed lost out on many years of payments, their value has been decreasing every single year. As I say, this should be looked at again.
I welcome the decision to return to increasing most benefits at least by inflation because the decision to cut the value of most working-age means-tested benefits year on year for seven years—three years of capping followed by the four-year freeze—has, as my noble friend said, been one of the biggest single drivers of poverty rising in the UK. It has saved the Government billions, more than £4.5 billion in the last four years alone, and far more than the £3 billion forecast when Parliament voted for it. The cumulative effects on those who experienced this have been severe. My noble friend cited the House of Commons figures, which are very damning. The idea that benefits will be 9% lower next year than if indexation had applied since 2010 is really damning, while the child benefit and working tax credit elements are between 13% and 17% lower in 2020-21 than would have been the case with CPI indexation. That has a huge effect on a population that is just about managing anyway. I was grateful to my noble friend Lady Lister and the noble Baroness, Lady Janke, for pointing to the intensification of poverty: people are driven ever further below the poverty line. Frankly, they had no give in their budgets already, so where do they go now?
These cuts are now baked in. All future increases are a percentage of today’s rate, which is lower than it should have been, so low-income households are taking a hit year on year on what they should have had. The inflation change has been quite marked. This year, the CPI rate for the year to September, which determines the increase, is 1.7%; the applicable rate last year was 2.3% and the increase was zero; the year before, it was 2.6% and the increase was zero, so that gap is big.
As the CPAG points out in its briefing to noble Lords for this debate, that freeze came on top of a series of other cuts, among them removal of the higher amount for the first child in tax credits and UC, the two-child limit, the benefit cap, reductions in housing benefit—which were introduced before the freeze and then locked in by it—the bedroom tax, cuts in the earnings disregards in tax credits and removal of the limited capability for work element in ESA. Many families are suffering multiple versions of these cuts, with multiple cuts hitting the same people.
Analysis by the CPAG in 2017 found that families with children stood to lose on average around £2,000 a year from cuts. Some benefits are now not just worth less than they were a few years ago; they are worth less than they were two or three decades ago. The Resolution Foundation points out that the real value of basic out-of-work support this year, at £73 a week, is lower than it was in 1991-92, despite GDP per capita having grown by more than 50% in that time. Let us pause for a moment and think about how many of us would try to live on £73 a week. You get help with your rent, but, often, housing benefit does not pay whole rent these days, so you may have to contribute to your rent on top of that. Could the Government not think again about this?
What assessment have the Government made of the impact of the freeze in benefits on poverty levels? On the question raised by my noble friend Lady Lister, the Work and Pensions Select Committee recommended that, from next year, the Government increase the rate of frozen benefits by CPI plus 2%. It says that that would mean that benefit rates would, after four years, reach the level at which they would have been set if they had not been frozen. Did the Government consider that recommendation from the Select Committee and, if so, why did they reject it?
The Government switched from using RPI, the old inflation measure, to CPI because they felt that RPI was flawed. As it happened, they saved a lot of money along the way because RPI was rather higher than CPI. Incidentally, they retained RPI, this deeply flawed measure, for things which cost consumers money, such as the interest rate on student loans or the annual increase in rail fares—they were happy to use RPI for that, but it did not work for benefits. I understand that work is now going on in the Treasury to revise RPI and perhaps to move towards a single measure. Is the department involved in those conversations and will it look at adopting a revised RPI if that comes about?
What is the Government’s final estimate of the savings to the Exchequer of that four-year freeze in benefits? My noble friend raised this, but we would be interested in a having a final, definitive view. I am not asking what it was scored at in the Budget, as we all know that; I am asking what in the end it was worth.
I am glad to have this debate happening here. My noble friend mentioned the debate in the Commons. I was shocked when I read it. Eight MPs contributed and the Minister’s response was 202 words, half of which were simply to thank Members and to tell them that his door was always open and that he did not want to answer everything in the Chamber. Just 202 words, half of which were introductory, were said on something as important as this. I am grateful that noble Lords have turned out to do it more justice than that and I look forward to the Minister doing so, too.
My Lords, I thank noble Lords who have spoken for the honesty, clarity and passion with which they champion those people whom we all come here to serve. I thank the noble Baroness, Lady Lister. I still cannot argue with her, so I am not going to try—I shall not take 202 words to do it either—but the door and our ears are open, and I am not alone in the department in raising these things. At the risk of driving everyone mad, I ask Members to keep coming to us and telling us things. Be assured that we are passing them on, and that real debate is going on about them. I assure noble Lords that I will take all their points back to the department and the Treasury, particularly the profound one about levelling up: it is about not just geography, but people. If we make it work for people, we make it work.
We have had an open discussion in the department about the benefit freeze. I take all the points raised by noble Lords. We are continuing to try to support families and those who we exist to serve. There is a raising of the national living wage and a reduction in the UC earnings taper. The income tax personal allowance has been raised and tax-free childcare introduced. On balance, while there are many things we are unhappy about, these reforms are working and making sure that there are more people in work than ever.
I take the point raised by the noble Baroness, Lady Lister, about the Citizens Advice report and the request for an extra 2% rise. This is well understood in the department and everybody is aware of it. I wish I could tick it off, but it is just above my pay grade. I remind noble Lords that the Secretary of State has a statutory obligation to conduct a review each autumn of pension and benefit rates for the following year. Decisions about the uprating for next year, to take effect from April 2021-22, will take place from October.
The noble Baronesses, Lady Janke and Lady Lister, and the right reverend Prelate the Bishop of Durham raised the two-child limit. Their points were well made. I can make no promises, but we are keeping on; who knows what will happen. I am not trying to lie low on this, but we were trying to get a benefits structure that did not automatically adjust to family size; that was unsustainable. We recognise that some claimants are not able to make the same choices about the number of children in their family and we have exceptions to protect certain groups. Child benefit continues to be paid for all children, as well as an additional amount for disabled children.
My understanding is that this is a purely fiscal situation. People who are working make choices about the size of their families and others should too. I can tell by the look on the noble Baroness’s face that she profoundly disagrees with that. I understand, and if there is anything she wants me to take back to the department I will do so, but that is the reason for the Government’s decision.
The noble Baroness, Lady Janke, raised points about women’s pension outcomes and poverty. While women’s pension outcomes have, historically, been worse than men’s, mainly due to a difference in labour market participation, women’s pension outcomes are increasing and the gap with men is narrowing. On average, women live longer than men and the average weekly amount that women on the new state pension receive is 95% of what men receive on it. At least 80% of women reaching state pension age before 2030 stand to receive more under the new state pension than they would have done under the previous one.
The noble Baroness, Lady Sherlock, raised some points about the GMP equalisation situation. It remains our view that the existing GMP conversion legislation allows schemes that wish to use the DWP’s methodology for equalising to do so now. It is not absolutely necessary to wait for further changes to the GMP conversion legislation to take place first. Schemes that have any concerns over how the DWP’s methodology is supposed to be used can access the department’s guidance published in April 2019. This is a question-and-answer section to address many of the issues that schemes may face when they equalise.
I note what my predecessor said in the answer given last year. My answer to noble Lords is not quite the same: we intend to make further changes to the GMP conversion legislation to facilitate the methodology consulted on. We will look to make those changes in due course.
The Minister has read out two different things. For clarification, is she saying that we do not need to legislate, because the existing legislation allows people to follow the guidance that the Government have issued, or is she saying that they do intend to legislate and will do so in due course, rather than at the first feasible opportunity, which is now? The Minister may want to come back to me on that.
The best thing is that I write to the noble Baroness, rather than put my neck in the noose again.
The noble Baroness, Lady Sherlock, also asked whether the £1 billion was in real terms or an increase. It is a cash increase; there is no increase in real terms. She mentioned equalisation. HMRC has recently published guidance for schemes which compare benefits on an annual basis. We are working closely with HMRC to update this guidance for schemes which choose to use DWP’s method of equalisation.
On the choice of the RPI or the CPI, the RPI is no longer an official national statistic due to concerns over its methodology. The Government and the UKSA will consult on whether the proposed change should be made prior to 2030. The department has no plans at this time to deviate from the CPI and its measure of inflation when uprating benefits.
These provisions reflect the Government’s commitment to supporting working people, while protecting the most vulnerable in society. The Guaranteed Minimum Pensions Increase Order provides for scheme members to receive their annual guaranteed minimum pensions increases for pensions in payment.
To reiterate, through the Social Security Benefits Up-rating Order this Government are: increasing the basic state pension and the new state pension in line with the triple lock; increasing the pension credit standard minimum guarantee by earnings to support the poorest pensioners; increasing working-age benefits in line with prices; increasing the universal credit work allowances, so that claimants can earn more before their payments are reduced; and increasing benefits to meet additional disability needs and carer benefits in line with prices.
I know that I have disappointed many noble Lords with my answers, but I hope that I, and my colleagues in the Government, do not disappoint in our efforts to try to make things better. I commend both orders to the House.
Social Security Benefits Up-rating Order 2020
Considered in Grand Committee
Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2020
Considered in Grand Committee
My Lords, these regulations were laid before the House on 27 January 2020. This statutory instrument, together with the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2020, will increase the value of lump-sum awards payable under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979 and the diffuse mesothelioma scheme, which was set up by the Child Maintenance and Other Payments Act 2008. As many noble Lords will know, these schemes stand apart from the main social security benefits uprating procedure. While there is no statutory requirement to increase rates, I am happy to maintain the position taken by my predecessors and increase the amounts payable from 1 April 2020 in line with the September consumer price index figure of 1.7%. This is the same rate of increase that will be applied to many other social security benefits, including those payable under the industrial injuries scheme.
This Government recognise the great suffering of individuals and their families caused by the serious and often fatal diseases resulting from exposure to asbestos or other listed agents. The individuals affected and their families may be unable to bring a successful claim for civil damages, often due to the long latency period of their condition. Some may not show signs of disease until many years after exposure, by which time their employer may have ceased trading. For those people, the lump sum schemes exist to provide compensation. As well as compensating people who cannot make civil claims, the schemes aim to ensure that people with those diseases receive compensation in their lifetime, while they can still benefit from it, without having to await the outcome of civil litigation.
I will briefly summarise the specific purpose of the two compensation schemes. The Pneumoconiosis etc. (Workers’ Compensation) Act 1979 scheme—to which, for simplicity, I shall refer as the 1979 Act scheme—provides a lump sum compensation payment to individuals who have one of five dust-related respiratory diseases covered by the scheme, are unable to claim damages from employers because they have gone out of business and who have not brought any action against others for damages. The five diseases covered by the 1979 Act scheme are: diffuse mesothelioma, bilateral diffuse pleural thickening, pneumoconiosis, byssinosis, and primary carcinoma of the lung, if accompanied by asbestosis or bilateral diffuse pleural thickening.
The 2008 mesothelioma lump sum payments scheme widens the criteria for compensation to those who contracted diffuse mesothelioma but are unable to claim compensation under the 1979 Act scheme—for example, those who were self-employed or those whose exposure to asbestos was not due to their work. The payments made under the 1979 Act scheme are based on the age of the person with the disease and the level of their disablement at the time of their diagnosis, measured on a percentage scale.
All payments for diffuse mesothelioma are made at the 100% rate. All payments under the 2008 scheme are also made at the 100% disablement rate and based on the age of the sufferer, with the highest payments going to the youngest people with the disease. In the full year from April 2018 to March 2019, 3,920 people received payments under both schemes, totalling £52.8 million.
I am aware that in past debates, Members have raised the subject of equalising the level of payments made to dependants with those made to people who have the disease and claim in their lifetime. It is, of course, clear that whole families can be devastated by the diseases covered by the lump sum scheme, which is why dependents are able to claim some compensation, albeit not at the same level.
When we have to make decisions about how we use our limited resources, it is only right that we target that money by giving it to the people to whom it can make the biggest difference. So, while we have listened carefully to concerns raised, the Government remain of the view that available funding should be prioritised to those people who are currently living with the disease.
I will now address some of the broader aspects of mesothelioma in more detail. The prevalence of diffuse mesothelioma in Great Britain remains at historically high levels. I know that this is a particular concern of Members. The disease has a strong association with exposure to asbestos, and current evidence suggests that about 85% of all mesotheliomas diagnosed in men are attributable to asbestos exposure that occurred through work. The life expectancy of those diagnosed with diffuse mesothelioma is very poor, and many people die within 12 months of diagnosis. Data published by the Health and Safety Executive shows that the number of mesothelioma deaths is projected to be around 2,500 in 2020 before being in decline in the following years, reflecting a reduction in asbestos exposure after 1980.
I will now briefly discuss lung health improvement more broadly. Although we expect the number of people diagnosed with diffused mesothelioma to start to fall in the coming years, we also know that many people will continue to develop it, and other respiratory diseases to which the regulations relate, for many years to come. That is why the Government are committed to working in partnership with our arm’s-length bodies and agencies to improve the lives of those with respiratory diseases. The Government have made improving outcomes for people with respiratory disease a priority; this is reflected in the NHS long-term plan.
During last year’s debate on the uprating of these schemes, my predecessor referred to the pioneering lung health checks trialled in Manchester and Liverpool. So far, this trial has shown an almost fivefold reduction in stage 4 disease in Greater Manchester, with 80% of cancers diagnosed at an earlier stage. We anticipate this scheme being rolled out across the country and I am pleased to report that a mobile site in Hull was launched only last month.
Returning to these important regulations, I am sure we all agree that while no amount of money can ever adequately compensate individuals or their families for the suffering and loss caused by diffuse mesothelioma and the other dust-related diseases covered by these two schemes, those who have these diseases rightly deserve some form of monetary compensation. I am happy to confirm to the Committee that these provisions are compatible with the European Convention of Human Rights and I beg to move.
My Lords, I thank the Minister for explaining these regulations, which uprate payments to sufferers of mesothelioma and other dust-related diseases and their dependants. As she explained the scheme and the reason for it thoroughly, I will not add to that. It is right that by debating these orders, we draw them to the attention of those who follow parliamentary proceedings, to show that we take this matter extremely seriously.
It cannot be emphasised enough that mesothelioma has a very long latency period and often manifests in an affected person decades after exposure to asbestos. It can also affect a person who has had no known exposure to asbestos and therefore no idea where the disease came from. I have anecdotal evidence from the family of a recent, now sadly deceased, sufferer of this terrible, pernicious disease. They stress the urgent need for more research into where the disease could have come from. In this case, it was not from any of the well-documented workplaces, so it is particularly worrying that there must be another source that has not so far been identified, or perhaps asbestos posing a danger in unexpected places. Another possibility is a combination of environmental conditions. More research in this area is vital: people with impaired lung function and their GPs must not be put off looking for mesothelioma because there was no known exposure to asbestos in the past. The earlier it is detected, the better. Will the Minister look into this particular problem to see what, if any, research is going on into unexplained cases of mesothelioma?
Although asbestos is now well-known to cause lung disease, it is perhaps not so well-known that it still lies undisturbed in thousands of buildings—such as schools, hospitals and, of course, Parliament—where there are now fears that it may be beginning to degrade. I wonder how much is known about this. This will be squarely in the remit of the Health and Safety Executive, which does a fine job but has recently had its budget cut. Surely, it must be given enough resources to carry out such vital work.
As the Minister said, the number of deaths from mesothelioma is about 2,500 a year, and I do not think it is likely to drop for several years. Last year, the noble Lord, Lord Alton, told us that the UK has the highest incidence of this disease in the world, which I find truly shocking. More research must surely be undertaken as a matter of urgency.
As the Minister said, every year when these regulations are debated, the most contentious issue is whether the Government will equalise payments to sufferers and their dependants. This surely is only fair, and I believe it was originally the plan. Although the Government say that they will keep the matter under review, they obviously have no intention of doing anything about it. I ask the Minister again whether they will look at this. Finally, I join with what other noble Lords will probably say, in making the annual plea for the uprating to be automatic each year.
My Lords, it is a great pleasure to follow the noble Baroness, Lady Thomas of Winchester, and I will echo some of her remarks about resources, research and automatic uprating. Along with many other noble Lords in Grand Committee today, I have been involved in the fight against mesothelioma for many years. I am pleased to see this important issue before us again because it is important that we keep it in the public eye and keep talking about the questions that the noble Baroness has just raised.
This is not an abstract, theoretical issue for many Members of your Lordships’ House. I have been surprised over the years by the numbers of colleagues from both Houses of Parliament who have told me about the loss of loved ones—people within their own families—who were affected by this killer disease. I fully support the uprating of the lump sum payments in line with inflation. We must do everything possible to support people who have been exposed to asbestos and other hazardous substances at work and who now face these terrible consequences.
In previous years, when these regulations have been discussed, as they have been annually since the introduction of the compensation scheme, noble Lords have asked whether future increases could be made automatically rather than being at the discretion of Parliament—a point that the noble Baroness touched on a few moments ago. It is important that the Government give careful consideration to this argument, and I look forward to hearing from the noble Baroness, Lady Stedman-Scott, when she comes to reply, about how the Government intend to take forward the question of automaticity. Doing so would send a powerful message that we are committed to supporting people and their families affected by these awful diseases.
Why do we need to keep raising our voices about mesothelioma and pneumoconiosis? There is a misconception that occupational lung disease is a historical problem that has been solved. However, there are still many occupations and high-risk work activities that present risks to lung health, from construction and cleaning to artisan baking and much more. The Health and Safety Executive estimates that occupational lung disease results in around 12,000 deaths a year.
Mesothelioma is an invasive type of cancer caused by prior exposure to asbestos. It grows in the pleural membrane that lines the outside of the lung and the inside of the chest. Less commonly, it can also affect a similar lining around the abdomen or the heart. There is currently no cure. Mesothelioma patients often have a short life expectancy and experience complex, debilitating symptoms. Around only 5% to 10% of people diagnosed with mesothelioma survive for five years or more.
As the noble Baroness reminded us, I made the point last year that, tragically, we have the highest rate of the disease anywhere in the world. Mortality rates have more than quadrupled over the past 30 years. It is estimated that around 2,500 people die of the disease every year, and that over the next 30 years around 60,000 people will die of mesothelioma in this country unless new treatments are found.
Mesothelioma is more common in certain parts of the country, such as Liverpool, where people are 18% more likely to die of this disease. Indeed, it was as the Liverpool Member of Parliament in another place that I first encountered the tragic and always fatal consequences of this disease. In Liverpool, mesothelioma has its roots in the historic industrial shipbuilding legacy, as asbestos was used extensively in shipbuilding. Later we will hear more about pneumoconiosis from my noble friend—and friend in every respect—Lord Wigley, but I can see that the noble Lord, Lord Jones, wants to intervene. I would not dream of holding back from allowing an intervention from him.
I am grateful to the noble Lord. For me, it has been a great pleasure to co-operate with him in both Houses of Parliament on issues of this kind. As he knows from his experiences in north Wales, many lung diseases are caused by inhaling dust. The common types include coal workers’ pneumoconiosis, which is caused by breathing in coal mine dust, and silicosis, which is caused by breathing in crystalline silica dust and typically affects workers in industries such as quarrying, foundries and potteries. Like mesothelioma, there is a long delay between exposure and onset of the disease. In 2012, 374 people in the UK died because of pneumoconiosis.
What about diagnosis, prevention and support for people with mesothelioma or pneumoconiosis? Here I pay tribute to the British Lung Foundation. This wonderful charity raises awareness of occupational lung disease and funds research into treatments and cures. It also provides the secretariat to the Taskforce for Lung Health. The task force is a coalition of more than 30 organisations from across the lung health sector, including royal colleges, patients, and the Health and Safety Executive, who came together to publish a five-year national plan to improve lung health in England. Included in the plan are recommendations to improve prevention and awareness of occupational lung diseases such as mesothelioma and pneumoconiosis. I should like the Minister to listen to two of the recommendations, which I will highlight, in order to ask her what more the Government could do to support their elevation in order to make sure that they are given real substance.
Under these recommendations, employers are responsible for ensuring that effective measures are in place to control exposure to hazardous substances in compliance with the Control of Substances Hazardous to Health Regulations 2002. They should also highlight risks at work to employees and encourage people to think about their own and others’ safety, including wearing the right protective clothing and masks. What are we doing to make sure that employers are honouring those recommendations?
Secondly, healthcare professionals should be trained to recognise and understand lung diseases which are caused at work. Asking questions about occupation when a patient presents with respiratory symptoms could improve early detection, allowing people to start treatment as soon as possible, as well as to access any compensation that they are owed. The number of occupations that present risks to lung health is surprisingly broad. Staff training should be included in undergraduate and postgraduate curricula and continuing professional development. Is that something that the noble Baroness would be prepared to take up with the relevant Ministers in other departments to ensure that it is acted upon? What will the Government do to take forward these recommendations?
What are the Government doing to increase funding for mesothelioma research? Research into lung disease is underfunded in comparison with the disease burden. Only 1.8% of the total UK health research spend went towards respiratory disease in 2018, despite it being one of the top three killers in the United Kingdom. As I have said, there is no cure for mesothelioma and it is poorly understood as a disease. That point was made earlier by the noble Baroness: the reasons people contract the disease are not sufficiently well understood.
In 2014, I tabled an amendment to the Mesothelioma Bill, and in 2015, I introduced a Private Member’s Bill in your Lordships’ House which would have put a small levy on participating insurance firms to help secure long-term research funding into mesothelioma. Unfortunately, the amendment and the Bill were defeated. At the time, it had the potential to raise about £1.5 million a year for research. That represents a small amount of money to each of the insurance companies but would have created a great number of research opportunities and given hope to people living with mesothelioma and, indeed, their families.
Since then, the Government have allocated £5 million for a national mesothelioma centre at Imperial College. I thank those Ministers who put in considerable effort to secure that and to look at voluntary funding from the insurance industry—I am thinking in particular of the noble Lord, Lord Freud, and the work that he did on that. I am pleased that the British Lung Foundation was also able to secure match funding for this £5 million and that two insurance companies, Aviva and Zurich, donated a combined £1 million to the British Lung Foundation’s mesothelioma research programme. Unfortunately, negotiations for a broader long-term funding commitment from the insurance industry came to a standstill. What are Ministers now doing to take that forward, building on the excellent work of the noble Lord, Lord Freud?
Overall, the British Lung Foundation has spent over £8.7 million on research into the disease. With this money, the BLF has been able to support further research and clinical trials, and has set up a mesothelioma research network. The network brings together researchers to share ideas and collaborate to help translate research more quickly into new diagnostics and treatments for people with mesothelioma. It now has 180 members worldwide and has led to 12 new or potential research collaborations. I pay special tribute to the efforts of the noble Lords, Lord Giddens and Lord Willis, and the noble Baroness, Lady Blackstone, who have worked, with me and others, to bring some of that about. Some of the research projects funded or co-funded by the British Lung Foundation have included exploring using the immune system to fight the disease and the development of a tissue and blood sample bank, MesobanK, which gives researchers quick access to samples and data to help accelerate research.
I would like to see more research into how we deal with asbestos in schools. This is a very real issue, about which far too little has been done. Again, I pay tribute to my noble friend Lady Finlay of Llandaff, who has taken a lead on this. It is also important to look at the effect of mesothelioma in the Armed Forces. We should recall the noble Lord, Lord West of Spithead, describing to us how young men played snowballs with asbestos at Dartmouth. The consequences of our past ignorance are still being lived out today.
While I fully support compensation for the victims of these diseases, it is surely in everyone’s interest—the victims, the Government and the insurers—to put investment into finding a cure. That would, long term, remove the need for lump sum payments or any insurance industry levies. Because this field is so underfunded, every pound of investment is likely to be worth while and to attract further funding. I am pleased that the British Lung Foundation continues its work to secure funding for vital mesothelioma research. It has recently secured £5 million over five years from Catalina Holdings, aimed at achieving early diagnosis and trials of high-potential drugs. But the Government must do more as well.
I come to my last point. The Merseyside Asbestos Victims Support Group—I pay tribute to John Flanagan and to Joanne Gordon, who chairs the Asbestos Victims Support Forum—has raised with me the particular case of equalising and upgrading posthumous payments. I hope that the Minister will reply to this point tonight—I know that it has been raised with the Government by the metro mayor of Merseyside and others. The payments are meant to provide some compensation for asbestos victims who cannot take legal cases. That is surely right. However, there is an inconsistency in the schemes. If applications are made after the patient has died, the payments, which can be claimed only by surviving partners or dependent children, are substantially lower. That cannot be right.
A victim aged 77 making a claim based on a 100% IIDB award will receive £14,334. The surviving partner of someone who passed away at the age of 77 will receive £7,949. In such a situation, many family members feel that the life of their loved one lost to this devastating disease is regarded as being of less value. This is surely morally wrong, especially as in a legal claim a surviving partner will suffer no such disadvantage. Furthermore, victims’ families could suffer a financial hardship, as people budget on the basis of two incomes and, through no fault of their own, are reduced to one income and are further disadvantaged by receiving a lower government compensation payment.
The victims who receive payments are not interested in the money for themselves. However, they are concerned about the financial security of their families. In this situation there is clearly a moral and financial case for raising the level of posthumous payments. I know that the noble Baroness will have been listening with care, and I hope she will be able to respond in a positive way.
There are also practical considerations. Of the 3,830 payments made in 2018, only 260 were posthumous claims. In 2010, the Government acknowledged that there was no justification for differential payments, further adding that such inequality in payments could put pressure on victims at a time when they are most vulnerable. The Government made a firm commitment to bridge the gap between in-life payments and posthumous payments. I hope the noble Baroness is able to say today that that commitment will be honoured.
Some 60,000 people will die over the next 30 years. We owe it to them not to merely go through an uprating ritual every year but to provide tangible support and world-class leadership in research.
My Lords, I am delighted to follow the noble Lord, Lord Alton, in this debate. We have campaigned together on many occasions, and I was glad to support his Bill in the past. I came to the mesothelioma question through the death of a very close friend, my school chum Peter Wolfe, who died four or five years ago, within a matter of four months of having been diagnosed as suffering from mesothelioma.
The figure quoted, of 60,000 possible deaths, may be more than the number of deaths in the UK arising from the present flu scare. That puts it into context and underlines the need for us to address it. I have spoken in several debates on this in the past and will not repeat the points I have made. I very much support what was said by the noble Baroness, Lady Thomas, and the noble Lord, Lord Alton, about the need for funding for research in order to minimise the extent of suffering due to mesothelioma and asbestosis. I reinforce the point made about schools. So many schools were built using asbestos, and in Wales, the National Assembly are facing this issue in a number of locations. This has to be tackled, otherwise there will be problems.
I will focus mainly on the pneumoconiosis order, although the two do of course blend into each other. From debates in earlier years on the uprating orders, noble Lords may recall the interest I have in these matters, arising from having represented for 27 years a slate quarrying area in the Caernarfon constituency. They may well also recall the significant involvement that my colleagues and I had in pressing for the Act to be completed in the dying days of the 1974-79 Labour Government—something that my noble friend Lord Jones will well recall.
Indeed. Our three votes were not enough to save that Government, but they were enough to help the pneumoconiosis Act find its way through, in two days flat, to the statute book. That that happened is a tribute to Michael Foot, among others. There had been delays all along in getting the Act on to the statute book, but Michael Foot made sure that it went through both Houses within 48 hours—quite a remarkable achievement.
It might interest noble Lords to know that considerable interest is now being taken in this legislation in the context of the bid for UNESCO to accord world heritage status to the slate industry in north-west Wales, in a similar manner to that given to the coal industry’s big pit at Blaenafon. One aspect of interest in the presentation of that case is the way in which the slate quarrying communities led the fight and campaign to secure compensation, not just for slate quarrymen, whose health was undermined by breathing in industrial dust, but for workers in so many other industries. That includes those working in cotton mills, pottery production, foundries and other metal industries, and even some working in the coal mining communities who were not covered by the coal mining scheme.
In recent years we have seen asbestosis and mesothelioma, both covered by the Act, become the predominant part of the payments made under the Act, which I will come on to now.
At the time of passing the 1979 Act, the Government estimated that it would cost £5 million in the first year and, thereafter, £75,000 per year—yes, £75,000 per year. In fact, more than £20 million was spent in the first five years and £30 million over the subsequent 10 years. In the five years from 1994 to 1999, the figure was £25 million. Since then, expenditure under the Act has mushroomed. From 1999 to 2009, £236 million was spent, and from 2010 to 2019, £415 million was spent. A large part of that was clearly associated with asbestos-related diseases, but I have tried by way of Written Questions to identify which payments were related to which industries that come under the purview of the Act—which is a reasonable question to ask—so that we might see how the issue relates to other industries.
I wanted also to establish that the total cost of asbestosis is not only the payments under the 2008 scheme but a large part of the payments being discussed here, which adds to the significance of the need to find a solution for those suffering from mesothelioma. We have a right to know. Certainly, it is not the slate quarrymen who have been the beneficiaries of the huge sums that I have referred to, but they will of course be glad that provision is there is to help others in need. The trigger is asbestosis. Can the Minister confirm that, if those figures are not available now, the Government will undertake to identify exactly what costs are attributable to what industries?
I do not deny for a moment the absolute right of those in any industry who have suffered loss of health and even life as a result of their work to be properly compensated, but questions need to be answered about whether the schemes still help those not affected by asbestosis and to what extent. Perhaps a focus can be put on that. It is also relevant to ask what the total for mesothelioma is between all the schemes and what research budget is needed. It is a large sum, but it needs to be even larger to help those most in need. I would be grateful for the Government’s response.
I thank the Minister, the noble Baroness, Lady Stedman-Scott, for her caring introduction. The increase of 1.7% in respect of asbestosis must be welcome, but, whatever the lump sum paid and whatever the increase, none of us can quite comprehend the miserable impact on the sufferer or the dependant, but it is good that some recompense has now been made.
Is there a regional breakdown of where sufferers worked historically? Does the department have that information? Is there any indication of the number of survivors and the number of dependants in receipt of payments? Does the department have such a figure? What sum of money has been paid so far since enactment? Does the department have that information? If so, could it be given to the Minister?
There have been some recollections. The late Lord Harold Walker of this noble House described to me how in the late 1960s workers in a factory in Hebden Bridge played snowballs with the piles of asbestos. The real tragedy in this case is that the asbestos was blue, which is, in effect, a certain prescription for illness and death.
I recollect debating the subject of the second SI with the Minister on a previous occasion. I remember it well; it might have been her first appearance in this Committee—a very fine appearance, if I might say so. She was responsive, as she always is. Again, I thank her. I intervene on this SI on the matter of the slate quarrymen, particularly those in north Wales, on whom the noble Lord, Lord Wigley, gave us his own insights. How many claimants are there now? How many dependants are claiming? Is there a breakdown for that part of Wales? Is there a breakdown by county—or country—of claimants throughout England and Wales? Is such statistical information available to the department?
Should there be the time and inclination, I will briefly describe a quarry in Blaenau Ffestiniog called Llechwedd. It is underground, of course, cavernous, dark and damp. There were dangers and pitfalls. Of course, the quarrymen worked underground at the quarry face. There were no health and safety regulations whatever when that quarry was at work. In what we call the olden days the quarrymen had to pay for the candles that lit their place of work. That is the memory and heritage. That makes some humanity of the regulations that the Minister must necessarily bring to the Committee. I stress that the emphasis of regulations should be on their humanity—the consequence for the citizen.
Another quarry, Penrhyn, was arguably the biggest in the world. Ten miles away from that great quarry, which is not active now, is a great castle, Penrhyn Castle. It is now a National Trust property. Should Members ever visit it, there is a Rembrandt in the breakfast room. My point is that the castle is mighty; it was built in the 19th century on the profits from the slate quarries. The contrast between the humble quarryman, and the mighty potentate and the wealth and treasure he and his descendants had, is enormous. It puts our debate into further context.
In 1976 I sat alongside the late Michael Foot, when he was deputy leader of the British Labour Party, as a junior colleague throughout the passage of the legislation. He enacted the first Health and Safety at Work etc. Act. It is relevant to emphasise that historic legislation to place this important SI in context. The department would then be the keeper of that memory, and the memories which noble Lords have recalled and put forward for consideration today.
In the quarry, there is a small hospital with a tiny ward. The quarrymen from Ynys Mon/Anglesey would walk to the mainland by first crossing the Menai Strait. They would have tiny, humble lodgings on site while they were at work for the week. It is I think moot to remember where these regulations came from. That little hospital ward in what was once arguably one of the largest quarries in the world is now a museum. These matters bring humanity to important regulations, so it is always important for those who have a connection to make these statements.
My Lords, much has been done to raise awareness of this disease and to improve the lives of people affected by it. This is thanks to a great deal of political support and work by colleagues in this House and the other place. I refer here to my noble friend Lord Alton, who gave his customary forensic analysis of the issue, the noble Lords, Lord Giddens and Lord Wills, and the noble Baroness, Lady Blackstone; and in the other place, Mike Kane, Tracey Crouch and the late Paul Goggins. My noble friend Lord Alton highlighted the invaluable work led by the British Lung Foundation and others.
Although we may expect the decline in heavy industry and mining over the last century to have eradicated occupational lung disease, people are still affected by exposure to harmful substances at work. As my noble friend Lord Alton mentioned, the Health and Safety Executive estimates that occupational lung disease results in around 12,000 deaths a year. For mesothelioma, there is currently no cure. Patients often have a short life expectancy and experience complex, debilitating symptoms.
A recent case regarding a former doctor in Coventry, Dr Kate Richmond, who is 44 with two young children and has only months to live, highlights that we must continue to strive so that employers are responsible for ensuring that effective measures are in place to control exposure to hazardous substances and must comply with the Control of Substances Hazardous to Health Regulations 2002. Last November, during the High Court hearing of Dr Richmond’s case against University Hospitals Coventry & Warwickshire NHS Trust, Judge Master Davison found that she had been negligently exposed to asbestos. Dr Richmond’s exposure as a trainee during the demolition of Walsgrave Hospital was due to
“frequently using underground tunnels in which there were pipes covered with asbestos lagging in poor condition.”
It resulted in a number of people who work for the NHS raising concerns about their working environment. This underscores the calls to fix capital funding to upgrade NHS facilities—and similarly in our schools. If we cannot get it right in-house and have the NHS lead by example, how can we expect others to take steps to remove harmful materials from the workplace?
The regulations under debate today are the annual revision to the rates for the lump-sum compensation payments to people with mesothelioma or pneumoconiosis or to their surviving dependants. The payments are dependent on the age of the person at the time of diagnosis or, if unknown, at the date of the claim. Typically, the payments are uprated each year in line with inflation. The total amount of the levy to be charged for 2019-20 is £33.3 million. I notice that the proposal is to increase the lump-sum payment in line with the consumer prices index, currently 2.4%. I do not know whether that is standard Treasury practice for compensation schemes, but the RPI inflation rate currently stands at 4%. My first question to the Minister is, as in the previous debate, whether this is too small an increase and whether this is the right measure to uprate these schemes.
In last year’s debate the Minister stated,
“I know that in previous debates on increasing the value of these lump sums, noble Lords have raised the subject of equalising the payments made to dependants who claim after the death of someone who had the disease with those made to people who have the disease and claim in their lifetime. However, I must tell noble Lords that we do not intend to equalise payments. The Government’s view remains that it is most important that the available funding is given to the people with the condition who would most benefit from it.”—[Official Report, 14/2/19; col. 1968.]
I am raising this matter again, as have the noble Baroness, Lady Thomas, and the noble Lord, Lord Alton, in light of the case highlighted earlier, given the relative youth of the doctor and her dependent children. Does the Minister still regard not equalising compensation payments as fair? Does the state not have a duty of care to frontline professionals working in the public sector? It seems particularly churlish not to invest in capital assets such as hospitals and schools and then to potentially disadvantage dependants on the grounds that this is taxpayers’ money. In this case, the doctor will have to spend her last months fighting the Government for compensation to ensure that her children are properly taken care of when the household they live in loses its mother and her salary sooner than would otherwise have been the case.
Turning to research, prevention and diagnosis, I welcome the NHS lung health check programme mentioned today by the Minister. It has been offered in some parts of England from autumn 2019 and aims to help diagnose lung cancer at an earlier stage when treatment may be more successful. I also welcome last week’s announcement by the University of Glasgow and NHS Greater Glasgow and Clyde which are set to benefit from a £5 million European research award to refocus research efforts on mesothelioma. The project, led by Professor Kevin Blyth, will help scientists across the UK to develop new research tools, resources and infrastructure to improve their understanding of cancer, including rare and hard-to-treat cancers, helping to find better ways to treat them. Professor Blyth said in the launch press release:
“It’s been difficult to build a network of scientists with enough cases of the disease to build a thorough understanding of how to best treat mesothelioma. And this has left people with the disease very few treatment options.”
Now that the UK has left the European Union, how do we retain collaborative cancer research with the EU and other research-focused countries? What steps are the Government taking to safeguard vitally important research initiatives such as this one, which rely upon data sharing across borders? The Government have said that they will diverge and have their own data protection scheme in the future. Could that prove to be detrimental to research efforts, innovation and of course patients in the UK? I also flag the publication of the EU’s artificial intelligence white paper, published on 19 February 2020.
What steps are the Government taking to ensure that communities such as Glasgow which are disproportionately affected by mesothelioma are not going to be left behind if they fail to agree a sensible way forward which enables research and innovation to flourish in the post-transition period? Glasgow has some of the highest rates of mesothelioma in the world due to the previous widespread use of asbestos in the shipbuilding industry.
Finally, the main focus today is on the people affected by these devastating diseases who currently have little hope due to the lack of treatment options available. It is for them that we must approve these regulations and continue to do all we can to support them.
My Lords, I thank the Minister for introducing these regulations. I love this debate each year here in this Room. It is incredibly powerful, compassionate and knowledgeable, and we should take it to the Chamber so that the wider world can listen to it. We have heard from the noble Baroness, Lady Thomas, about long latency and issues where there is no known cause, which are therefore incredibly difficult to diagnose and treat. I think that that is the situation in a number of cases. We have also heard from the noble Lord, Lord Alton, who is a stalwart of these occasions with his knowledgeable contributions. He spoke in praise of the British Lung Foundation and explained what it has been doing. We heard from the noble Lord, Lord Wigley, and my noble friend Lord Jones about slate quarrymen, reflecting the very real issues that for the noble Lord, Lord Wigley, are deeply personal, which enhances our debate. The noble Lord, Lord Freyberg, had questions for the Minister about collaborative research and what might be lost by our departure from Europe.
As we have heard, the mesothelioma lump sum payments regulations have uprated the lump sum payments for sufferers and their dependants in line with the September 2019 consumer prices index, which was 1.7%. We recognise the fact that the Government have reviewed the rates to maintain their value in line with inflation, although they are actually under no statutory obligation to do so, a point which I think has been made.
The Child Maintenance and Other Payments Act 2008 made provisions to fast-track up-front lump sum payments for people diagnosed with diffuse mesothelioma and their dependants. The scheme was introduced in recognition of the challenges that people can frequently face in obtaining compensation from one source or another and the fact that sufferers usually die within months of being diagnosed. It operates alongside the scheme established under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, with the one difference being that the 2008 provisions assume 100% disability. That is not the case for pneumoconiosis.
These dust-related diseases are very much a reflection of our industrial past and the carelessness with which employers approached health and safety. The 2008 scheme provides for payments to be made to dependants where a person has died from mesothelioma before a claim can be completed. We are told that the 2008 Act payments are made from a compensation recovery mechanism which are then recovered from any subsequent successful civil compensation claim. This being the case, can the Minister tell us what levels of compensation have in fact been recovered in recent years and how do they relate to the 2008 Act payments? The 2008 scheme provides a one-off payment to sufferers who have no occupational link to the disease or who are self-employed. They include, for example, sufferers who live in close proximity to a workplace containing asbestos, those exposed to asbestos in the environment and to family members exposed via workers’ clothing. Payments can be made to dependents but not at the same rate as sufferers, which is a bone of contention that I will come on to.
Mesothelioma is a type of cancer that develops in the lining covering the outer surface of some of the body’s organs and is usually linked to asbestos exposure. Mesothelioma mainly affects the lining of the lungs, although it can affect the lining of other organs as well. It takes some years to develop, but it is usually rapidly fatal following the onset of symptoms. Unfortunately, it is rarely possible to cure mesothelioma, although treatments can help to control the symptoms. That is why it has been important to hear about some of the developments in research. It may take some while, but we need to keep the pressure up, so the engagement that noble Lords have with those involved is incredibly important.
According to the NHS website, more than 2,600 people are diagnosed with mesothelioma each year in the UK. Most cases are diagnosed in people aged 60 to 80, and men are affected more commonly than women. Last year, the Minister said that deaths from mesothelioma are at a historically high level, as we have heard again today, and the widespread use of asbestos in the decades after World War II means that this issue may be with us for some time to come, sadly.
A 2015 study found that some 85% of schools contain asbestos. The material was typically used in buildings between the 1940s and 1970s. Experts say that it is a greater health risk as it gets older and starts to degrade. It needs to be treated with care and expertise. According to the National Education Union, at least 315 teachers have died from mesothelioma.
While welcoming the uprating, we remain concerned about the lack of parity between lump sum payments made to sufferers and those made to dependants. Will the Minister tell us whether she thinks that arrangement is fair? Would not compensation recovery levels permit the closure of the gap? What amounts would be needed to do this? What assessment have the Government made of the impact of the lack of parity in payments for women, given that the difference in payments can often affect women whose husbands were directly exposed to asbestos at work? Will she advise on the most recent estimated cost of providing equal payments for sufferers and their dependants?
I note the call for an automatic uprating each year. This seems an entirely sensible thing to do, as long as it does not preclude us having these debates.
We might just reflect that these arrangements sit alongside the diffuse mesothelioma payment scheme, which was established in 2014 with the help of the noble Lord, Lord Freud, as we have acknowledged in the past. It applies to those diagnosed with the disease who contracted it as a result of negligent exposure. A person cannot get redress because the employer no longer exists and the employer liability insurance policy cannot be found, or, as in some cases, has been destroyed. This payment scheme resulted from years of wrangling and was eventually settled by insurers who wrote employer liability business agreeing to contribute to a fund. The calculation limit was originally capped at 3% of gross written premiums. Will the Minister tell us whether the cap had to be employed in any year? Can we also have an update on the tracing of employer liability policies and whether the obligation to contribute to the payments fund acted as a spur to better tracing of policies?
Elements of the insurance sector have, over the years, contributed to medical research. This was at the urging of several noble Lords who we have heard from today, and who have been involved in this previously. Is there an update on where those matters lie?
It is vital that we continue to raise awareness of the risks of working with asbestos. Will the Minister reassure Members that continuing to raise such awareness is a priority for the Government? Will she tell us how the Government will do this?
Responsibility for asbestos management rests primarily with the Health and Safety Executive. It is important to point out that, as we have heard this afternoon, the HSE’s funding has been cut significantly since this Government came to power. It will receive more than £100 million less from the DWP in 2019-20 than it did in 2009-10—a reduction of 54% in real terms. Between 2010 and 2016, the number of inspectors was reduced by 25%. Can the Minister tell us about the impact of these cuts on the ability of the HSE to run campaigns to raise awareness of asbestos and mesothelioma? Will she also take this opportunity to rule out further cuts to the HSE?
Can she assure us that the Government will fund the HSE at a level that enables it to carry out its responsibilities post Brexit? Will she also commit to ensuring that, so far as is possible, any trade deals concluded post Brexit do not increase the risk from asbestos? It has been reported that a post-Brexit trade deal with the US could raise the threat of products containing asbestos entering the UK. Currently in Britain there is a total ban on the importation and sale of asbestos-containing products. This is an extremely important issue, so I hope that the Minister can confirm that the UK will not in any event seek to lower standards in this country to match American regulations which, as I understand it, allow the use of products containing up to 1% asbestos.
We welcome the regulations to increase lump sum payments to pneumoconiosis sufferers by 1.7% in line with inflation. We have further noted that the Government are under no statutory obligation to do so in this case either. The pneumoconiosis regulations refer to the 1979 Act, which provides lump sum payments to people suffering from certain asbestos-related conditions or, if they have died, to their dependants where they are unable to claim damages because the employer has gone out of business. As well as mesothelioma, the scheme covers pneumoconiosis, bilateral diffuse pleural thickening, byssinosis and primary carcinoma of the lungs where there is accompanying evidence of asbestosis and/or bilateral diffuse pleural thickening. Will the Minister set out what action the Government are taking to raise awareness of all of these diseases and the support that can be offered?
We are told that people suffering from pneumoconiosis often face a series of hurdles to receive payments from the DWP. It can be difficult to diagnose the disease using two-dimensional X-rays since they may not show enough detail. It can take 10 years to manifest itself, so the last X-ray a miner receives on leaving work may well not pick it up. How will the Minister respond to this? As with the mesothelioma regulations, we welcome the uprating, but again there is a lack of parity between the levels of compensation being offered to sufferers and to their dependants. Doubtless we will return to this if there is no movement from the Government. What other support, as well as financial support, is made available by the Government to those who have lost a loved one due to one of the diseases covered by these regulations?
In conclusion, we should acknowledge, as the noble Lord, Lord Alton, has done, the work of the support groups. I have not been in touch with them recently, but I know that they are powerful organisations that keep the focus on these important issues. I support the regulations and look forward to the Minister’s reply.
My Lords, my first time speaking at the Box was to reply to the mesothelioma debate. I remember having a wad of papers then, and today it is the same size. I will do my best to answer all the points which have been made, but if I do not cover them all, I will undertake to read Hansard with my officials to ensure that points which are not responded to verbally are answered in writing. I thank all noble Lords for their contributions. I thank the noble Lords, Lord Jones, Lord Freyberg and Lord Wigley, for their reminders that this is about people who have suffered and are suffering.
I start by referring to what the noble Baroness, Lady Thomas, said about the indiscriminate nature of mesothelioma. As she and all noble Lords will be aware, it is not always the people who work in dangerous environments who get this disease. For example, there have been tragic cases where a worker’s spouse has been exposed while cleaning work overalls. This is why the 2008 Act scheme was set up: to order compensatory payment to anyone with diffuse mesothelioma without a medical examination, regardless of whether they have worked in hazardous environments.
On the crucial matter of research, raised by the noble Lords, Lord Alton, Lord Freyberg and Lord Wigley, and others, the Department of Health and Social Care has been working to stimulate mesothelioma research activities, including making specific calls for research proposals. I believe that the Medical Research Council spent £2 million on research directly related to mesothelioma in 2018-19. Noble Lords will no doubt be aware of the £5 million grant awarded in 2016 from Libor fines to establish a National Centre for Mesothelioma Research. More recently, the Department of Health and Social Care has been working with the British Lung Foundation—another organisation referred to by noble Lords—to support the first UK mesothelioma research network.
All noble Lords have drawn attention to the issue of undisturbed asbestos in public buildings, notably schools. The Government take the matter of asbestos in public buildings seriously. Since 2015, £7.4 billion has been allocated by the Department for Education to building refurbishment, which includes asbestos removal. The Department for Education also launched a new asbestos management process in 2018 to understand how the issue is being handled by state-funded schools. More broadly, I refer all noble Lords to the advice of the Health and Safety Executive: as long as the asbestos is in good condition and protected from damage, it is usually safer to leave it in place and manage it than remove it.
Noble Lords referred to equalising payment rates between those with the disease and their dependants. The intention of the scheme is to provide support to people living with these diseases. My view is that funding should be targeted where it is needed most. In addition, equalising payments would require an overhaul of the payment structure. In 2018-19, 350 awards were made to dependants, compared with 3,570 awards made to those with diseases. Awards to dependants under the 1979 Act scheme are made in two parts: the first payment is for the effects of the illness before death; a second payment is made in cases where death was caused by the relevant disease. Equalising payments would, of course, entail primary legislation and be subject to other government priorities.
Noble Lords referred to calls for uprating to be automatic each year. The point has been made that if we did that, we would not be having this debate. I am not into trade-offs, certainly when they involve people’s lives, but maybe the deal can be that I will try to get this debate in the Chamber next year. Payments have been uprated each year in line with inflation since 2004. Making any change to uprating legislation would make no monetary difference to those in receipt of payments. As I said, we could lose the opportunity to debate this important subject.
On the tragic case of the NHS doctor, Kate Richmond, assuming that Dr Richmond suffers from mesothelioma, our schemes can pay out without liability being established. Anyone in this situation is paid the highest rate for their age without needing a face-to-face assessment. Rates are highest for those who contract the disease at younger ages. I acknowledge the important point that the noble Baroness, Lady Thomas, made about payments to children. I will take that back to the Minister for Disabled People.
The noble Lord, Lord Freyberg, raised the issue of uprating the sums to average earnings rather than RPI or CPI. The Government believe that CPI is an appropriate measure of price inflation, but if the noble Lord has other thoughts on this, I would be very happy to take them back to the department. On the critical point he raised about collaborative research in the EU, it is vital that research into these diseases continues as smoothly as possible. I know that this Government view innovation and research as a priority. I will write to the noble Lord on the specific matter of this health research and I am happy to share that with all noble Lords. I am sure he will appreciate that collaboration with the EU is a cross-departmental matter which we must continue to push.
The noble Lord, Lord Freyberg, also raised the issue of action to help communities such as Glasgow, which is disproportionately affected. As I said in my opening speech, the NHS is delivering a ground-breaking lung health check programme targeting those aged between 55 and 74 years old in parts of the country with the highest mortality rates from lung cancer. After having been trialled in the north-west of England, it will be rolled out more widely.
All noble Lords asked about putting the uprating of the lump sum scheme onto a statutory footing. Since 2004, Ministers have agreed that payments under the scheme can be uprated in line with inflation. Making this legally binding is extremely difficult, as I have said before, and it will not make any monetary difference at all.
The noble Baroness, Lady Thomas, and the noble Lord, Lord McKenzie, raised the important issue of the Health and Safety Executive, and of course the noble Lord, Lord Jones, reminded us about the first health and safety Act. We have one of the best workplace health and safety records in the world, achieving some of the lowest rates of occupational injury and fatality. At the same time, the Health and Safety Executive has demonstrated an ability to deliver better value for money, moving more cost to those who create the risks. I think that is where some budget balance can happen. The executive regularly reviews its approach to regulation with the aim of ensuring that it has the greatest impact in preventing workplace death and injury.
What action is the Health and Safety Executive taking to raise asbestos awareness? Delivery of the strategy for occupational lung disease includes a national summit to raise the profile of occupational lung disease and to establish and facilitate a new healthy lung partnership to provide direction and co-ordinate stakeholder activity on occupational lung disease.
The noble Lord, Lord Alton, mentioned the task force recommendations. He makes very valid points which I shall raise with Ministers at the Department of Health and Social Care, who lead on these matters, and make sure that a response is forthcoming—I hope he is happy with that. He and others raised the promotion of research. As I have said, the Department of Health and Social Care has been working to stimulate activity. The Medical Research Council spent £2 million, and a £5 million grant was awarded from the Libor fund, as I said.
The point was made that although we pay compensation, at the same time we must invest to find a cure. That is a very important point.
The noble Lord, Lord Alton, raised the issue of awareness of asbestos in schools, and the noble Lord, Lord Freyberg, asked about asbestos in NHS and public buildings. It is vital that we deal with the legacy of asbestos in public buildings in the safest manner possible. The noble Lord will appreciate that this is a question for the Department of Health and Social Care, but I will write to him on this subject. The Department for Education and the Health and Safety Executive are proactive in promoting good asbestos management in schools. The DfE convenes the asbestos in schools steering group, comprising experts and campaigners, to support the department in providing guidance to schools on the effective management of asbestos.
We have talked about equalising dependant payments. I have said that it is about making sure that the money goes to those with the disease and, via different payment methods and amounts, to those who have lost people.
I am trying to understand whether the compensation recovery mechanism produces more than, less than or the same as the money needed for the 2008 arrangements and whether there is a surplus which might be applied to equalisation. I am not sure that the Minister has dealt with that point; perhaps she will come on to it.
I have had a number of detailed questions about data, which I will come to.
The noble Lord, Lord Alton, mentioned the insurance industry’s funding for mesothelioma research. Again, I will cover that in the letter.
I have had numerous requests for information: industry led, geographically led and fiscally led, whether there are surpluses or anything else, and about the number of claimants in the slate quarry. I hope noble Lords will understand that I am not able to give them that information at the moment, but I will work with officials to get a complete set of data, where it is available, and I will cover the points raised. Information on the slate quarrymen awards is held by the department. It might be difficult to get, but we will have a go.
The noble Lord, Lord McKenzie, asked what proportion of the amounts paid under the 1979 Act and 2008 Act schemes is recoverable from claims for civil damages. In 2018-19, a total of £24.5 million was recovered. In the current financial year to December 2019, £21.9 million has been recovered. The net cost of the 1979 and 2008 Act schemes to the Government in 2018-19 was £28.2 million.
The noble Lord asked about the number of cases of mesothelioma and requested a breakdown by profession. I will include that in the data that I send out.
Dependants receiving compensation are mostly women. I was asked whether we had considered equality issues. The intention of the scheme was to compensate those who had contracted the disease as a result of their working environment. Historically, those who worked in hazardous environments tended to be men, and this is reflected in the current gender balance of claims.
The noble Lord, Lord McKenzie, asked about the levy on the insurance industry and the cap rate of 3% of gross written premium. The levy is reviewed annually using estimates based on management information from the scheme administrator. The levy for 2019-20 is £33.3 million, which is below the cap of 3% of the employer liability gross written premium.
Trade deals were raised and the need to make sure that no opportunity is given for asbestos-related issues to arise. Our standards in the UK are very high and we have no intention of lowering them.
The noble Lord, Lord McKenzie, asked also about progress on employer liability tracing. I will need to write to him about that once I have found out.
As last year, this has been a wide-ranging debate which has shown this Committee’s interest in and commitment to the people who have suffered this dreadful disease. I thank Members for their many and helpful contributions. I think that I have dealt with a lot of the questions raised, but, as I have promised, I will go through Hansard with my officials and make sure that every noble Lord gets an answer to their questions. The Government recognise the important role played by these schemes in providing financial support to people diagnosed with mesothelioma and the other dust-related diseases covered by them. The regulations will ensure that the value of the schemes is maintained. I commend the uprating of the payment scales and ask for approval to implement it.
Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2020
Considered in Grand Committee
Parental Bereavement Leave Regulations 2020
Considered in Grand Committee
My Lords, I beg to move that the draft regulations laid before the House on 23 January 2020 be approved. These SIs implement a new entitlement to paid leave for employees who lose a child under the age of 18, or whose baby is stillborn.
Every year, there are around 7,500 child deaths, including stillbirths, in Great Britain. While this number is relatively small, each parent of those babies and children will, of course, experience unimaginable grief and sadness following such a tragic event. At the moment, there is no specific right to take time off work to grieve following the loss of a child. The majority of employers respond to these circumstances with great sensitivity and compassion, but sadly there are still a few who do not. These SIs will ensure that there is a statutory minimum provision in place which all working parents can rely on in the event of a child death or stillbirth. They will also establish a clear baseline of support for employers when managing bereavement in the workplace.
Before I go on to explain exactly what each of the two SIs actually does, I thank the noble Lord, Lord Knight of Weymouth, for his excellent stewardship of the Parental Bereavement (Leave and Pay) Act 2018 through this House. It is this Act that gives the Government the powers needed to make these SIs.
The draft Parental Bereavement Leave Regulations 2020 give all employees a right to a minimum of two weeks off work in the event of their child’s death or stillbirth, regardless of how long they have worked for their employer. The Statutory Parental Bereavement Pay (General) Regulations 2020 implement a new statutory payment for parents taking time away from work following their bereavement, subject to the same eligibility criteria as all other statutory family leave payments.
The SIs for which I seek approval today set some of the key policy detail in relation to leave and pay, including how a “bereaved parent” will be defined, how and when the leave and pay can be taken, and the notice and evidence requirements. A “bereaved parent” for the purposes of entitlement to this leave and pay has been defined in broad terms, by reference to the employee’s relationship to the child. The definition reflects the diversity of family structures, taking account of biological and adoptive parents, as well as certain foster carers and kinship carers.
The SIs provide for two weeks of parental bereavement leave per bereaved parent, per child or stillbirth. Individuals will have the choice to take the two weeks consecutively or non-consecutively if they want one week initially and one week further on. The regulations provide a window of 56 weeks, beginning with the date of death, in which the entitlement can be exercised. Bereaved parents will therefore be able to take time off in the immediate aftermath of the death, or at a later point, for example around the first anniversary, or on both occasions.
Consistent with other rights to family-related leave, the employee will be required to give notice to their employer before taking parental bereavement leave, but this need not be in writing. Bereaved parents will be able to notify their employer orally. The notice required for leave will vary depending on when leave is taken in relation to the date of death or stillbirth. A very short notice period is required for leave taken very soon after the death, whereas one week’s notice is required for leave taken later in the 56-week window.
In both cases, the notice required for leave is designed to be minimal and to place as little burden on the employee as possible. In order to claim statutory parental bereavement pay, the employee must provide notice to their employer in writing. This requirement will not create a barrier to a bereaved parent being able to take time off, as the notice for pay can be given some time after the leave has been taken. In no circumstances will an employee be required to produce their child’s death certificate, or stillbirth certificate, in order to access this entitlement. An employer will have no right to ask for this to prove eligibility for this statutory entitlement.
These regulations provide that no evidence is required for exercising the right to leave, but in order to be eligible for pay the employee will be required to provide fairly minimal evidence. This will be a written self-declaration that they meet eligibility conditions as to their relationship with the child, together with confirmation of their name, and the date of the child’s death or stillbirth.
Parental bereavement leave and pay is an employment right, meaning that it will apply to employees only. This is consistent with all other statutory parental leave and pay entitlements. The Government understand the challenges that the self-employed and other “non-employee” parents face. We continue to keep differences in treatment between self-employed and employed people under constant review with respect to parental leave and pay.
In conclusion, this legislation is an important change in the law which will support bereaved parents to take time away from work to grieve, in the tragic event that their child dies or their baby is stillborn. We will also be sending a clear message to employers and providing a helpful framework for supporting an employee in these incredibly difficult circumstances. I commend these regulations to the House.
My Lords, I am grateful to the Minister for his introduction to these regulations, which I support. I am grateful to the department, and the Government, for bringing them forward. Their importance was brought home to me yet again last year when a work colleague at TES—my interests are in the register—lost a child through stillbirth at the moment of delivery. Having been a part of these discussions for nigh on 10 years, I felt better equipped to provide what support I could. I am happy to say that TES acted as a responsible employer, as the vast majority are, in giving Tara the support that she needed.
These regulations bring into effect the law that we brought through and mark the end of a campaign. It may be unfashionable to say so these days, but it is affirming to note that an individual, Lucy Herd, whose son Jack died 10 years ago, was able to campaign and then use the democratic and parliamentary process to effect a change in the law. She did so by securing all-party support of Members in both Houses. As noble Lords know, I first met her, and discussed her campaign, in a TV studio relatively soon after Jack died. She used the system for No. 10 petitions, as well as change.org, a slightly more sophisticated petitioning website to capture more data and more stories, which were really helpful. I introduced her to the then MP for Glasgow Cathcart, Tom Harris, who introduced a 10-minute rule Bill. That was the first time the issue was introduced in Parliament as part of a campaign.
Lucy was then able to contact those who had signed the petition to let them know that that was happening. I was then able to bring it to this House for the first time, with the Children and Families Act 2014. I am delighted to see the noble Viscount, Lord Younger of Leckie, in his place. He was good enough to meet Lucy and me to discuss the issue then and, in the end, we agreed that we would accept his kind offer that ACAS would issue guidance to employers on this and we would see how it went.
After the 2015 general election, when Will Quince was elected as a Member of Parliament, he raised the issue through an unsuccessful Private Member’s Bill. Mr Quince was able to help get it into the Conservative manifesto for the 2017 election, and then Kevin Hollinrake was able to secure a Private Member’s Bill slot and get it through. The goal was then wide open and I was able to put the ball in the back of the net, thanks to support from Front-Benchers, who are all here today.
I am delighted that when the previous Secretary of State announced that these regulations were forthcoming, the department used Lucy as part of the PR; she had another moment with the media to remember Jack and mark the success of her campaign. It was a nice bookend to the whole experience.
It is worth saying that Parliament and democracy can work. When a case is made intelligently, when all the systems are used well and when politicians on all sides in both Houses are willing to listen—that is not necessarily always the case—we can get great things done. This is a significant thing that we are doing.
I want to say one other thing, almost in parentheses. The noble Baroness, Lady Brinton, has a point to make on benefits and the Department for Work and Pensions. I will not steal her thunder, but I am fully supportive of what I think she is about to say. I want to make sure that Ministers who are listening on this issue hear that. With that, I reiterate my support for the regulations and look forward to them being implemented next month.
I thank the Minister for introducing these regulations. I pay tribute to Lucy Herd, who as we have heard has been campaigning for nearly a decade. When I first learned of the campaign, I knew that it would take a while because the issue is not one that affects many families. Not many families or their wider circle of friends will know somebody who has lost a child or are aware of a stillbirth. I give credit not just to Lucy but to the noble Lord, Lord Knight, Will Quince and Kevin Hollinrake for all the work they have done to ensure that this never lost the eye of Ministers. We may all collectively have been a thorn in their flesh, including myself over the past four or five years, but I am delighted that we have now got to the point where these regulations are coming into play.
I note particularly that account has been taken of the definition of “parent”. I was an informal foster parent. I was not a kinship carer but I had parental responsibility for two children after their mother died, so I am very grateful for that. It is because of such funny modern-day family situations that we need a regulation broad enough to recognise that when people are personally involved and have a responsibility, no employer or state system should say that they do not have the right to receive parental bereavement leave.
I am also grateful to the noble Lord, Lord Callanan, who kindly gave me an in to the issue that I want to raise, which I appreciate is not within the remit of BEIS. However, I raised this repeatedly during the passage of the Bill and I want to do so again.
I understand why the decision was made that self-employed parents will not be in receipt of this benefit because they are not in receipt of many other benefits. However, there is a serious inequity for parents, especially those who have stopped working, often for many years, because of the serious medical difficulty that their child has had. They have done so knowing that their child will die. The fact is that under our current system, the day after the child dies, they lose their disability benefit and carer benefit and, shockingly, they have to apply immediately for benefits. I remind the Grand Committee, because I raised this on the Bill, of the words of one parent who wrote:
“The day after, I applied for jobseeker’s allowance, wanting to buy myself a little extra time to grieve before returning to some sort of work, only to be told that because I hadn’t worked in 10 years, I was ineligible, despite the fact that in those 10 years I had worked harder and for many more hours than the average person. The fact that I had saved the Government and the NHS hundreds of thousands of pounds by providing my son with hourly complex medical care counted for nothing. You are told to man up, move on, get a job, pay the bills. Provide for your remaining family.”
That inequity still remains. The noble Lord, Lord Callanan, referred to unemployed parents not being covered but said that the DWP will keep this under review. It will do more than that because the campaign for these parents starts today.
My Lords, I thank the Minister for introducing the regulations, the noble Lord, Lord Knight, and all those he mentioned for introducing the Parental Bereavement (Leave and Pay) Act 2018 which gives the power to make the regulations we are considering today. I shall raise three short points. The first is one that the Minister referred to in his speech, which is that these benefits are available only to employees. This raises a critical issue in labour law and indeed it is one that has beset labour law for centuries: different legal statuses are attached to different kinds of worker. The consequence of having a different status is that one is entitled to different employment rights. This issue will perhaps be dealt with in the forthcoming Employment Bill which I understand will deal with the Matthew Taylor report and contain some measures in relation to that.
The issue is that employees are entitled to more rights than other categories of worker. At one end of the spectrum one has the employee while at the other end one has the genuinely self-employed in business on his or her own account. In between, we have what lawyers call the limb (b) worker; that is to say, a worker under Section 230(3)(b) of the Employment Rights Act 1996, which is a worker under a contract that is not a contract of employment and not working for a client or a customer of a business of that worker. In effect, it is a kind of employee but not quite an employee. The consequence of being a limb (b) worker is that one does not have the same array of employment rights as an employee. There is a fourth category which is what lawyers call the false self-employed, which is somebody who appears to be self-employed because that is how the employer has designated him or her, but in reality and on examination in the courts or tribunals turns out to be an employee or indeed a limb (b) worker.
The point I make to the Minister is that there is really no justification for confining the right to bereavement leave or pay to those who are employees and not extending it to limb (b) workers. I appreciate that these regulations could not confer the benefit on limb (b) workers because the Act itself confines those benefits to employees, but when the Employment Bill comes to be drafted, this is something that could be addressed. There can be no doubt that limb (b) workers will suffer just as much grief and tragedy over the loss of a child as an employee. In his speech, the Minister suggested that the justification for this might be that all parental leave under the Employment Rights Act is confined to employees, but that is not really a justification for excluding limb (b) workers from the benefit of parental bereavement leave or pay.
Secondly, bereavement leave starts on day one of employment, which is a very good thing indeed. The Labour Party takes the view that all employment rights should commence from day one. The problem here is that entitlement to bereavement pay commences only after six months’ continuous employment. One appreciates the rationale for that, but can the distinction be justified? The effect is that the lowest-paid will be unable to afford to take bereavement leave. Three million children are living in poverty in households which contain one or more wage earners, so the people most at risk of not being able to afford to take bereavement leave will be those who are most susceptible to losing the most.
My third and final point is about the complexity of the regulations in relation to the entitlement to bereavement pay, although one understands the reasoning for that. However, there is a category of worker that I do not believe is catered for in the regulations and that I hope the Minister will consider today, or if not, on a later occasion. I refer to people on zero-hours contracts. It may be that the employment Bill will propose to eradicate zero-hours contracts, but if that is not the case, those workers need the entitlement which is conferred on all other workers by these regulations. The problem is that when a zero-hours worker gives notice that he or she would like to take bereavement leave with pay, they find that the employer will say that there is no work for them for that week or two weeks in any event. Sir Michael Marmot’s report last week shows that there is a large number of zero-hours workers. He points out that, 10 years ago, there were 168,000 such workers while today there are some 800,000. Will their entitlement be given further consideration?
My Lords, this has been a useful and helpful debate on an uncontentious set of regulations stemming from a Bill which had to be a Private Member’s Bill but did, it should be said, feature in the 2017 Conservative manifesto—which is why it may have got through with the speed it did. This is in no sense to denigrate it, but from listening to the debate, one might have imagined that it would have been a flagship measure in certain circumstances. It was not to be that way, but that does not take anything away from the fact that this is an important social measure which we welcome.
In a sense the narrative, as rehearsed by my noble friend Lord Knight, reflects the fact that the campaign raised by Lucy Herd has been successful in getting movement in this area. The order before us is about the consequences of that Bill, the consultation that took place and the decisions taken as a result. Despite the points already been made today, we can be pleased that the consultation went well. It seemed to cover exactly the points we were nervous about when saw the Bill through both Houses. The results, although they may not satisfy everybody, give enough of a base for introducing the arrangements that we can welcome them.
Having said that, the points made by the noble Lord, Lord Hendy, are valid. Indeed, I was going to make them myself. We need to settle the question of whether we are going to treat fairly and equitably those who work across the various boundaries described by the noble Lord. I hope that the employment law, when it comes forward, will cover the gig economy and benefits for those who are workers but not employees. There will be no question of the Government being able to rely on the EU regulations in force not permitting them to do this because we will be able to do that ourselves, will we not?
Having been welcoming and supportive of what has been said and noting the points made by noble Lords about issues that perhaps still need to be picked up, I want to mention three myself. First, I welcome the fact that that these regulations have a common commencement date. The Minister will have been advised that I have a thing about this. His predecessor managed a score of one set of SIs starting on a common commencement date and 13 SIs that did not. There was never an adequate answer for that. It just seemed to be the way it happened. I am delighted that the Minister is starting his regime with an appropriate commencement date of 6 April.
Secondly, I read both draft instruments looking for the point picked up in previous discussions in the Grand Committee today about uprating arrangements. I assume that it is automatic, but given the experience of those in the previous debate of there being no statutory requirement to uprate, can the Minister confirm that these payments, if successfully claimed, will be uprated annually? If he cannot confirm that today, perhaps he can write to me.
Thirdly, when the Minister introduced the debate, he estimated that there are 7,000 child deaths a year. However, the Explanatory Memorandum has a figure of 10,200 parents a year eligible for parental bereavement leave, with 9,300 of those eligible for the payment. Can he confirm what the figures actually are? We have just discussed whether we should include in the figures gig economy workers who are not employees, so I think the overall figure is probably bigger. However, as the noble Baroness, Lady Brinton, said, it is still a small number and therefore not one that carries political weight, but we should know what we are talking about. Again, if the figures are not available, I would be happy for the Minister to write to me.
We support these regulations. They have been interpreted with sensitive regard to what is required, with the evidence that came forward supporting what we said at Second Reading. They are therefore welcome.
I thank all noble Lords for their valuable contributions to the debate. I start by reflecting the point made by the noble Lord, Lord Knight of Weymouth. The legislation would not have made it this far were it not for the commitment and support of Lucy Herd, and of Kevin Hollinrake and Will Quince and others in the other place—on both sides of the House, it is fair to say—as well as the work of the noble Lord.
I totally associate myself with the remarks the noble Lord made about the political process. It is often a source of great frustration, even to those of us within government. I am profoundly grateful to have the honour of presenting the regulations, which in no sense were my work, in this place. It shows that occasionally the political process works to the benefit of the people that we are all here to help and it was great to see the support for this measure on both sides of this place. As well as thanking the politicians, I thank all the officials in my department who worked hard to bring these measures before us today.
I hope noble Lords will agree that the Government have carefully considered the needs of bereaved parents, as well as those of employers, in drafting these regulations. I agree with the noble Baroness, Lady Brinton, that the broad definition of a bereaved parent—relying on a parental relationship, rather than biological parentage, to determine eligibility—will ensure that this provision reaches those who need it most. She will get the answer she was expecting to her second point: the policy in this area is not held by my department; it is a matter for the DWP. However, I will ensure that her point is conveyed to that department and that she gets a written reply to her valid concerns.
As I have already set out, the entitlement can be taken flexibly, giving bereaved parents choices about how best to use their time off to support their own, individual grieving process. This is important, as grief rarely follows a predictable path and significant events, even some time after the death, can cause bereaved parents to need time away from work. Wherever possible, these regulations have sought to mirror the existing framework of family-related leave and pay entitlements, which is familiar to most employers. The regulations ensure that an employer has certainty about when their employee will be off, which will enable them to plan ahead. I hope that this will ultimately lead to a more supportive and compassionate response from employers.
These regulations represent a statutory baseline, which should be considered the bare minimum for an employee who has suffered such a tragic loss. Many of us who are parents cannot comprehend the pain that someone in such circumstances will go through. As always, the Government encourage all employers to go further than the statutory minima where they are able to, and to act compassionately and considerately towards their staff. I am happy to say that many employers already provide exemplary bereavement support to their staff. However, there are still a small minority who do not, so I hope that this new legislation will not only ensure a minimum protection for all employees, but lead to better workplace support for bereavement across the board.
ACAS has produced guidance with Cruse, the bereavement specialists, for employers on managing bereavement in the workplace that includes specific advice relating to a parent losing a child of any age. We encourage employers to take notice of the ACAS guidance and to go beyond this statutory minimum in their own workplace policy where possible. I understand the concerns of the noble Lord, Lord Hendy, about the lack of provision for bereaved parents who are self-employed, or who are “workers” as opposed to employees. The Government understand the challenges that the self-employed and other non-employee parents face. We will continue to keep differences in treatment between self-employed and employed people under review with respect to parental leave and pay.
I am happy to reassure the noble Lord, Lord Stevenson, that this payment will be uprated annually, in line with other family payments. Regarding the numbers—we had 7,500 and he quoted 10,500—every child’s death will have a number of parents associated with it. The number in the impact assessment is not exactly twice the number of deaths; the 10,500 takes account of many things, including the number of parents who are not employees. If it would be helpful to him, I can write to him to explain that in more detail.
I hope I have answered all the questions. I commend these draft regulations to the House.
Statutory Parental Bereavement Pay (General) Regulations 2020
Considered in Grand Committee
National Minimum Wage (Amendment) Regulations 2020
Considered in Grand Committee
My Lords, the purpose of the regulations is to increase the national living wage and all of the national minimum wage rates from 1 April 2020. The regulations also include an increase in the accommodation offset rate, which is the only benefit in kind that counts towards minimum wage pay.
The national living wage has had a positive, real-terms impact on the earnings of the lowest paid. Between April 2015 and April 2019, those at the fifth percentile of the earnings distribution saw their wages grow by almost 11% above inflation. This is faster than at any other equivalent point in the earnings distribution. The labour market has continued to perform well: the employment rate is at a record high of 76.5%, while the unemployment rate is at 3.8%, the lowest rate since the 1970s.
From April, the national living wage for those aged 25 and over will increase by 51p to £8.72, which is a 6.2% increase. The 51p increase in April will mean that full-time workers on the national living wage will see their pay increase by £930 over the year. This national living wage increase is projected to meet the Government’s target of 60% of median earnings in 2020. The national minimum wage rate for 21 to 24 year-olds will increase by 50p, meaning that those in this age group will be entitled to a minimum of £8.20, an annual increase of 6.5%. Those aged between 18 and 20 years old will be entitled to a minimum of £6.45, which is an annual increase of 4.9%, while those aged under 18 will be entitled to a minimum of £4.55, an annual increase of 4.6%. Finally, apprentices aged under 19, or those aged 19 and over in the first year of their apprenticeship, will be entitled to £4.15, which is a 6.4% increase. All of these above-inflation increases represent real pay rises for the lowest-paid workers in the United Kingdom.
All the rates in these regulations have been recommended by the independent and expert Low Pay Commission. As noble Lords will be aware, the commission brings together employer and worker representatives to reach a consensus when making their recommendations. The Government asked the commission to recommend the rate of the national living wage such that it reaches 60% of median earnings in 2020, subject to sustained economic growth. For the national minimum wage, the commission has recommended rates that increase the earnings of the lowest-paid younger workers as high as possible without damaging their employment prospects. I thank the Low Pay Commission for its extensive research and consultation, which has informed these rate recommendations, all of which is set out in its 2019 report, published in January.
The Government have further pledged to raise the national living wage to two-thirds of median earnings and apply it to those aged 21 and over by 2024. The Low Pay Commission will continue to have a central role, ensuring that the lowest-paid workers benefit from national living wage increases.
On the subject of enforcement, the Government are clear that anyone entitled to be paid the minimum wage should receive it. That is why we have more than doubled the enforcement and compliance budget, with funding reaching £27.4 million for 2019-20, up from £13.2 million in 2015-16. HMRC follows up on every complaint it receives, even those which are anonymous. This includes complaints made to the ACAS helpline, via the online complaint form, or from other sources. Increasing the budget allows HMRC to focus on tackling the most serious cases of non-compliance, while educating employers into compliance. In 2018-19, HMRC identified a record £24.4 million in pay arrears for over 220,000 workers, and issued more than £17 million in penalties for non-compliant employers. The Government have taken further measures to help employers get the rules right first time by providing improved guidance and support.
While increases in the national living wage and national minimum wage represent a cost to some businesses, the Government have introduced a number of measures to support them. For example, we have cut the corporation tax rate from 28% in 2010 to 19% today, benefiting more than 1 million companies and delivering the lowest rate in the G20.
Record increases to the national living wage and national minimum wage rates are just part of this Government’s agenda to make the UK the best place in the world to work. I commend the draft regulations to the Committee.
My Lords, it would be churlish not to congratulate the Government on achieving their target of 60% of median earnings this year. I also welcome the increased funding for enforcement.
The increase in the national living wage will provide a considerable uplift for the working poor in our country. A top rate of £8.72 is getting closer to the Living Wage Foundation’s recommended £9.30—I presume that it will be further uprated in due course—but it is still a way off the London living wage of £10.75. I should probably know this, but can the Minister explain why there is no Low Pay Commission London minimum wage, when clearly it is more expensive to live in London than anywhere else?
The difference between the minimum wage and the living wage is that the living wage is based on a basket of goods and services which should give a basic but acceptable standard of living. It therefore follows that the national minimum wage is not sufficient for someone to live on. Instead, it has to be subsidised by the Government through universal credit and various other benefits.
I can see that different individual and family circumstances will need a different underpinning level of help. The idea of always making work pay was quite a genius move on the part of the Government when it came in, but implementation was, and still is, another story. Fortunately, that does not come within our remit today. We are where we are and there is something to celebrate.
The adult rate for 21 to 24 year-olds received the greatest percentage uplift, at 6.5%, but the youth rate for under-18s has fared proportionately worse, at 4.6%, or the princely sum of 20p an hour. I know that it is argued that these youngsters enter the world of work with very little knowledge, but it cannot help their self-esteem to give them a 20p rise, especially if they and their families need that money.
I wish I had a crystal ball to see whether, in a time of full employment and even greater skills shortages, not helped by this Government’s immigration policies, wage rates will rise above and beyond the minimum. Unfortunately, I do not have a crystal ball, except to predict that we are all likely to meet here next March. Who knows what state the country and wage rates will be in then?
My Lords, I welcome the SI before us. As has been said, it is interesting to see every year the amount of work that goes into providing the analysis and evidence for it. It is of a very high standard and one enjoys reading the recent literature on these areas. I know that it has been updated this time, although I am afraid that I have not gone to the original texts.
I should have declared my interests. I am the father of a child who is receiving the apprentice wage, being over 19 and still in the first year of his apprenticeship—although I think that comes to an end next week.
Having said that, I want to come back to two questions I have asked previously. The first concerns the disregard for accommodation, which there is not very much detail about. I do not particularly need an answer now, but will the Minister write to me at some point in the not-too-distant future explaining why the percentage used for the disregard for accommodation is still at variance with the figures used for any of the others? My simplistic approach to this is that if there is a broad range of indicators which suggest that pay needs to increase on a particular range, and there are reasons why that might vary across the individual numbers, why do we come to a different figure for the accommodation disregard, even though it affects all those in the sector? It is too complex an issue for the Minister to respond to today, but I would be grateful to receive a letter on that point.
The noble Baroness asked about the work on making sure that employers are paying the national minimum wage, subject to a big increase in funding announced in last year’s Budget. We do not get much detail in these figures about what exactly is happening. A reference on page 37, in paragraph 146, suggests that there will be a change this year, because a greater number of employees are in the lower bands of the national living wage and there will therefore be instances where non-compliance could occur. In fact, there could be an increase in that. There is no explanation given, but if there is anything of significance, perhaps the Minister could write to me about it. I just note it at this stage.
The basic concern is that although the budget has increased and the numbers are down, an alarmingly large number of people are still thought to be affected. In April 2019, it was estimated that 424,000 jobs with pay less than the national minimum wage and national living wage were held by employees aged 16 and over. That is 1.5% of all those aged 16 plus in UK employed jobs. It is true that that is less than last year, when it was 1.6%, but it is still an awful lot of people. Will the Minister say what activity is going to be involved in the expenditure of the greater funds made available for enforcement? Does he judge that it will be successful?
I thank the noble Baroness, Lady Burt, and the noble Lord, Lord Stevenson, for their contributions to this important debate. I do not know whether it is a commentary on the time that the debate is being held or the fact that there is such widespread support for the Government’s policy that they are the only two valiant Peers who have turned up to comment on something that will make such a difference to hundreds of thousands of workers in this country.
The introduction of the national minimum wage and the national living wage is one of the great successes of the UK labour market. Since the year that the national living wage was announced, the annual earnings of a full-time minimum wage worker will have increased by more than £3,700. That is equivalent to a 21% increase in the national living wage since 2015. The record high employment rate shows that a higher minimum wage can go hand in hand with strong employment growth. The Government’s green-rated impact assessment estimates that the minimum wage increases we have debated today will directly benefit around 2.4 million low-paid workers, and of course nearly 8 million workers are estimated to benefit both directly and indirectly because some workers who are paid slightly above the minimum wage will also benefit from increases in the average wage of employees in their companies.
Sustainable increases in minimum wage rates also depend on strong economic fundamentals and I am delighted to say that those of the UK are strong. Since 2010 our economy has grown by 19.5%, which is faster than in France, Italy and Japan. In 2016 the Government committed to raise the national living wage to 60% per cent of median earnings and we have stayed loyal and true to that commitment. Looking ahead, our pledge to raise the national living wage to two-thirds of median earnings by 2024 makes the UK the first major economy in the world to set such an ambition.
Of course, there is sensible flexibility built into this policy. The value of the national living wage in 2024—which is projected on current earnings to be £10.50—will rise and fall in line with average earnings forecasts. This will ensure that the lowest-paid workers continue to benefit from such minimum wage increases. The Low Pay Commission has a central role in advising the Government to ensure that economic conditions are taken into account, and we will soon publish its remit for 2020. To further protect workers—the point made by the noble Lord, Lord Stevenson—we are committed to cracking down on employers who breach the national minimum wage rules, ensuring that all those owed the national minimum wage or national living wage do then receive it.
The noble Lord, Lord Stevenson, asked about the accommodation off-set. In recent years, the Low Pay Commission has sought to raise this to reach the level of the rate for 21 to 24-year-olds, and it achieved that this year. A higher rate for the offset better reflects the cost of provision and enables investment in higher standards of accommodation by businesses. I am happy to write to the noble Lord to amplify my answer. He asked why non-compliance may continue to rise. The rise in the minimum wage is affecting an increasing number of businesses, many of which are being affected for the first time. The increased coverage of the minimum wage means that if the rate of non-compliance stays constant then the number of underpaid workers will therefore increase.
Finally, the noble Baroness, Lady Burt, asked why there is no Low Pay Commission for London and a separate rate. Primary legislation does not permit separate minimum wage rates based on geographical areas. We encourage employers to pay more than the statutory minimum but we recognise that their ability to do so will vary from business to business.
I think I have dealt with the three questions I have been asked. With that, I am happy to commend these regulations to the House.
Committee adjourned at 7.17 pm.