Liam Byrne
MP for Birmingham Hodge Hill and Solihull North · Labour · United Kingdom
“The loss of 4,000 jobs at Jaguar Land Rover is a body blow for workers, families and communities across the west midlands, so I commend Richard Parker, the Mayor of the West Midlands, for moving quickly on Monday to put £500,000 on the table to help ensure that everybody gets back to work.”
“I wholeheartedly welcome this well-rounded statement from the Foreign Secretary, and put on record my thanks to the new Prime Minister for the hard yards that I know he has put in over recent days and weeks.”
“I am grateful to my hon. Friend for giving way, and I offer my warmest congratulations to her on her appointment to the role; she will be a brilliant Minister.”
“Let me start with a word of thanks to my hon. Friend the Member for Chester North and Neston (Samantha Dixon), who is not in her place, who said quite rightly that an awful lot has changed since the Bill was first introduced to this House. Indeed, a lot has been revealed over the course of the summer.”
“The effect of new clause 34 would be to ban off-ramping, ban new forms of digital currency transactions and ban memecoins, which are exactly the kind of measures that Ministers now need to bring forward. If we want to take the crypto system out of political finance, this is what we need to do.”
“No doubt we will learn that Mr Cottrell was in fact on the electoral register when that money was passed. No doubt we will discover that his mother, Fiona Cottrell, declared and did not disguise the fact that the money had ultimately come from her son.”
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“If we put savings credit to one side, we will see that the change in the percentage of pensioners eligible for means-tested benefit is just 1% or 2%. If he chooses to define that as huge, that is his right. I want to flag concerns in three further areas and I hope this will provide us with material for debate and amendments—some probing and some to be voted on —in Committee.”
“I will leave it to the hon. Gentleman to provide his own definition of the word “huge.” He will have read chapter 4 of “The single-tier pension: a simple foundation for saving”, published by the Department for Work and Pensions, which clearly says that under the current system, the number of people reaching state pension age after 2016 who will be eligible for means-tested benefits for pensioners will fall to 16%, and that the figure will fall to 11% by 2060. Under the single tier, eligibility for means-tested benefits will fall by 7.5%. The hon. Gentleman will also have read, as I have, Age UK’s evidence, which states, strikingly, that the great bulk of that change results from the elimination of savings credit, rather than from any increase in generosity.”
“We find ourselves in agreement on that not just with the pensions Minister in this morning’s Financial Times , but with the Deputy Prime Minister and possibly even the Secretary of State, although he will keep his own counsel. Our biggest problem with the Bill is that if the flat-rate pension is so virtuous, its virtue should be enjoyed as widely as possible. It should be a universal pension, but it is not. In particular, we are very concerned about the 700,000 women who will reach the age of 65 in 2016 when the flat-rate pension starts but who, because they will have hit the state pension age of 63, will not enjoy the flat-rate pension, even though a man who was born on the same day will. There are many of those women in our constituencies. I know that this matter will be of concern to the Minister and the Secretary of State.”
“As I have said, the foundation was strong and that is why we are urging him to be a touch more radical. I think that, in his heart, the Secretary of State will share many of my concerns. I know that he has been trapped in difficult negotiations with the Chancellor and I have no doubt that he would otherwise have gone further than he has in the Bill. My first question is about universalism. Every generation has to strike the right balance between universalism and targeted benefits. That was true of the post-war Government and it is true of this Government. The Opposition believe that there needs to be a different balance between universal and targeted benefits for older people in the future.”
“We were ambitious and wanted to focus our resources on tackling pensioner poverty. I am reluctant to take too many lessons from the Secretary of State. The 1986 cap introduced by Lord Lawson led to a huge drop in contributions to occupational schemes. In fact, the pensions Minister himself said: “Pensioners have long memories. They remember the Conservatives’ record on pensions…That record is one of not believing in the state pension, of eroding the basic state pension…of attacking SERPS—the state earnings-related pension scheme—and of slashing entitlements.” —[ Official Report , 6 November 2000; Vol. 356, c. 34.] I am afraid, therefore, that I am reluctant to take lessons from the Secretary of State on the inheritance that he has been bequeathed.”
“We recognise that the minimum income guarantee will remain in place, but we are concerned that the many people who fall short of 35 years and the women to whom I referred will be rather too close to the poverty line for the liking of everyone here.”
“I will give way in a moment. I will just flag another issue that the pensions Minister might say a word about when he intervenes. There is an uplift to 35 years-worth of contributions being required before 100% entitlement to the flat-rate pension is enjoyed. That was not the original plan that was presented to the House in the Green Paper. When the Minister gave evidence to the Work and Pensions Committee, he said that the change would save roughly £1 billion. Five years’ more contributions will now be needed before the full pension is enjoyed, so up to 100,000 fewer people will receive the full pension than if the current system had continued. For every year under 35 years, people will enjoy £4.11 less a week. Of course, someone with below about seven or 10 years of contributions will get nothing at all.”
“The cost of remedying the position of these women would be about 7.5% of the remaining NICs windfall that the Secretary of State has kindly brought the Treasury and just 4% of the overall NICs windfall. We are looking forward to working with the pensions Minister in Committee to fix this injustice, which I suspect he also feels in his heart.”
“I suspected that the pensions Minister would want to play politics with this issue. However, I hope that we can engage on it constructively in Committee. The DWP has published estimates that show that the cost of including those women will be about £220 million a year. I say gently to the Secretary of State that the change that he is taking through the House today will net the Chancellor £5.5 billion in extra national insurance contributions in 2016-17 and £5.4 billion in 2017-18. The Chancellor has obviously spent some of that money for the Secretary of State by funding the proposals for social care, which are scored at £1 billion in 2016-17, and by funding employment allowance, which is scored at £1.6 billion. There is therefore £2.9 billion left.”
“This is an incredibly important part of the pensions saving architecture for the future, and I am extremely concerned that a number of low-paid people—more than 1 million, most of them women—have been shut out of the auto-enrolment system. To that mix we now say to 720,000 women who had the misfortune to be born between April 1951 and 1952, that they will not get the new system either.”
“It is hard to refute my hon. Friend’s argument. I suppose we must look at the position of those women together with the consequences of the reforms that the Secretary of State has authored to auto-enrolment—I know he will do that. One of the first decisions he took in the Pensions Act 2011 was to link the threshold for participation in auto-enrolment to the personal allowance. As the personal allowance has gone up, more and more low-paid people have fallen out of the auto-enrolment system. In 2011-12, 600,000 people fell out of auto-enrolment, and another 100,000 in 2012-12. In 2013-14, 420,000 people will fall out of the auto-enrolment system—1.1 million people have been carved out of that system.”
“I very much hope that the hon. Lady will be on the Bill Committee to ensure that such arguments are fully rehearsed. I am worried that an injustice is being perpetrated on these women, which is why it is incumbent on us all to search every possible option to help ensure that they can be included and not excluded, particularly in the context of changes to auto-enrolment that have moved 1.1 million people out of that future.”
“As the hon. Gentleman will know, many of these women have already been hit by the acceleration of the state pension age at very short notice, so no—we want to search during Committee stage for ways to include these women. I know there will be many women in such a position in his constituency, and I am sure he will want engage in that debate.”
“The mortality figures published by the Library over the past few days show that 1.2 million citizens die between the age of 65 and 69, and 60% of those are in the bottom three income groups. Mortality rates for the poorest in our country are twice the level of the richest, and we must take great care, not just with projections about life expectancy, but also about healthy life expectancy. The Secretary of State is asking for the power—unfettered —to review the state pension age every five years, which we think will promote uncertainty and instability, and damage the pensions savings rate that he seeks to increase.”
“No— [ Interruption. ] I will certainly give way to the Minister in a moment, but I want to underline one final aspect of universalism and the increases in the state pension age to which the Secretary of State referred. The Opposition will not stand in the way of proposals in the Bill to move forward the state pension age, but we want to put it on the record that we are concerned about the proposal to review it every five years. The goalposts on state pension age have already been moved a number of times in this Parliament, which is not good for stability, certainty or long-term planning. I represent one of the poorest communities in the country and there is a 16-year gap in life expectancy between my constituency and Lichfield, a little way up the road.”
“The Minister is right. I was referring to the problem that the state pension age has been moved a number of times in the past three years. The Opposition believe that it is unwise of the Secretary of State to ask for the right to review the pension age every five years because it will promote instability.”
“I will move on, but I will give way in a moment. A flat-rate pension is a good idea and its virtue should be widely enjoyed. It should be a universal system. During the passage of the Bill, the Opposition will look at how we can maximise its inclusivity and universal scope.”
“I note in passing that the Institute for Fiscal Studies states: “The current way of treating the self-employed…is a huge open invitation to tax avoidance, because it is so much lower than you pay as an employee.” The Institute of Directors is not a hotbed of radical left-wingers and many of its members are self-employed, but even it says that the most reluctant would recognise that given the improvement we are about to get from the single-tier pension, it is only fair that everybody is asked to do their little extra bit. We hope that the Secretary of State can put beyond doubt the long-term bargain for the self-employed.”
“However, under clause 2(4), the self-employed get 100% of the new pension. They therefore pay less, but get the same, which sounds too good to be true. Experience tells us that, when something sounds too good to be true, it often is. The self-employed deserve long-term certainty. Although there is nothing on the precise NICs number in the Bill, we hope the Secretary of State and the Chancellor will say more about the long-term plan for funding that measure in the spending review.”
“When the Chancellor presented his Budget, he was clear that there would not be an awful lot of help for those in public services, but two thirds of the money in the NICs bill comes from the NHS, teachers, the police and local government. The Secretary of State has not said much today, and we have not heard much from the Chancellor, on where on earth our hard-pressed public services, particularly the NHS, will find £4 billion from 2016 onwards. During the Bill’s passage, the Opposition would like the Secretary of State to confirm the deal that is being offered in the Bill to the self-employed. Currently, the self-employed pay lower NICs than anybody else— 9% of profits in national insurance, whereas an employee’s contribution is 12% of earnings, and an employer’s contribution is 13.8% of earnings.”
“As I said a few moments ago, those who were contracted out are now contracted in, which is great news for the Chancellor—in fact, it is £5.4 billion-worth of good news. In theory, that will mean that the system will become more affordable over the long term, and that, over the very long term, the fraction of gross domestic product and national wealth that we spend on the pension system will come down. The Opposition believe that that is wise, but we are worried about a number of short-term risks. First, how on earth will the national health service, local government, teachers and the police find £4 billion-worth of national insurance contributions from 2016 onwards?”
“The Secretary of State and I have no difference of opinion on the need regularly to review the state pension age. My point is that we have introduced a number of changes in the past three years and an environment of instability and risk has been created. The Opposition worry that reviewing it every five years will foster more uncertainty and risk. The Government and Opposition share the objective of increasing the level of savings. However, I am anxious to ensure that there are safeguards against, or fetters on, not only this Secretary of State, but future Secretaries of State, to constrain how they make decisions on accelerating or advancing the state pension age if they decide to do so in years to come. The second Opposition challenge to the Bill during its passage will be a pressure test of the financial assumptions that underpin it.”
“We agree on some of the principles, but now is not the time for a failure of nerve; this is half a Bill, half a reform, and as the Bill goes through the House, I urge him to be more radical, to build on his inheritance and to give us a long-term scheme that will deliver a better standard of living for pensioners who have worked so hard for so long.”
“We should also be considering obligations on trustees to assess whether schemes have sufficient scale to deliver low costs, and if the assessment is that a scheme is too small to deliver this, trustees should be empowered to investigate merging with other schemes. Finally, we should consider whether regulators should be empowered to mandate small schemes to merge, as is done in Australia. In conclusion, the Opposition have always believed that matters as serious as those in the Bill should be approached in a spirit of national consensus, and I say again that I am grateful to the Secretary of State for how he has approached the debate, but the House must ask whether the new pensions provision is sustainable, comfortable and genuinely universal. I am afraid that we believe the answers are no, no and no again.”
“The Government must look much harder at how to foster an industry of bigger, simpler and cheaper funds. We can learn many lessons from countries such as Australia, particularly on the establishment of a low-cost default pension fund; trustee directors for every pension scheme with statutory duties to work in the interests of savers; and requirements to publish a detailed charging structure and past performance to ensure transparency. To deliver this kind of industry for the future, we should be considering a legal requirement that all pension schemes prioritise the interests of savers over those of shareholders.”
“We need to allow transfers in from other schemes, end the upper ceilings on contributions—this is what employers are telling us—and legislate harder for transparency on costs and charges, which is why we have called for an investigation by the Office of Fair Trading into workplace pensions. We want to see a simple and comprehensive declaration of the costs of saving in a pension, so that savers can see precisely what is being taken away from them and the long-term impact on the size of their pension pot. We are concerned that there is a structural problem that needs to be grasped: the fractured and small-scale nature of the offer for many pension savers. Too few funds have the scale to offer savers the best investment decisions or the lowest charges.”
“We are concerned that the measures to link membership of auto-enrolment to the personal allowance mean that too few people will be involved in the new personal accounts, and that not enough people will be saving for the future. We are also concerned that the effective shut down of S2P means that workers now lack a state-backed, low-risk option in which to save, which is why we think that now is the time to remove many of the fetters and constraints that were initially constructed for the National Employment Savings Trust, the national pensions mutual created under the Pensions Act 2007.”
“The situation is even more grave for those who are just starting work: those in their 20s who will not retire until after 2060. By the Department for Work and Pensions’ own calculations, the majority of them will have lower pensions under the single-tier system, as the income replacement rate will fall from 38% to just 30%—a big drop that points us to the gaping hole where reform of the private pension system should be. The Government have been clear, as they rehearsed the arguments in the past year, that they want personal accounts to pick up some of the slack for the fall in income replacement rate. There was a degree of consensus on the auto-enrolment system that the Government are now taking forward.”
“Let us be clear that the hard wind-up of the state second pension will create a notional loss for many people under the age of 59. For example, 190,000 people in their 50s could lose between £30 and £35 a week, compared with what they would have got if S2P stayed in place. Someone who has been contracted-in for all of their working life and is aged 55 when the pension is introduced, would in theory have been able to accrue additional state pension for the remaining 11 years of their working life, amounting to £24 a week in additional state pension. That will no longer be possible under the single tier. They will continue to contribute 12% NICs for the rest of their working life, but there will not be an additional S2P entitlement.”
“The hon. Gentleman makes an excellent point. My chief concern in this debate on principles is for the long-term bargain to be put on a secure footing. It would be wrong to lead the self-employed up the proverbial garden path by offering a great deal, clapping everyone on the back and voting it through only to see it collapse because it is literally too good to be true. The final point on which we will press the Secretary of State during the passage of the Bill is probably the most important issue that our constituents will put to us: will the new flat rate pension offer them a comfortable retirement after they have worked so hard for so long? We are concerned that parts of the Bill fail that basic comfort test.”
“The hon. Lady makes an important argument that I am following with great interest. The Opposition are trying to say that this is an extraordinary deal for the self-employed, who are paying half the national insurance contributions of everybody else but still enjoying 100% of the pension. The key assurance we are looking for from the Government is that this is a deal for the long term. It is not clear that this deal will stick; it is generous and sounds good for the self-employed, but is it there for the long term? We think the self-employed demand certainty.”
“The hon. Gentleman is making a compelling speech. Is he as concerned as I am about where on earth the public sector will get £4 billion-worth of new NICs after 2016?”
“The Minister is making a powerful winding-up speech. He told the Financial Times this morning that he has not set triple-lock policy for the next Parliament. Is that still the case?”
“Is the Minister saying to the House tonight, and will the Chancellor confirm in the spending review, that the triple-lock policy will apply to this pension for the next Parliament—yes or no?”
“Can the Secretary of State give the House his personal forecast for when this year’s allocation for the discretionary housing payment fund will run out?”
“Let me tell the Secretary of State the point of the question: across the country discretionary housing payment fund money is about to run out. In my home city of Birmingham applications are up five times on last year. That policy means that in places such as the north-east three-bedroom houses are now standing empty because people cannot afford to move in. There are now 53,000 households in our country being put up in temporary accommodation, which is costing the taxpayer billions of pounds. When will he admit the truth: the hated bedroom tax now costs more than it saved? It is time to scrap it, and scrap it for good?”
“It is a great pleasure to wind up this debate on the Gracious Speech, but on a topic as serious as this, I cannot help but express a little disappointment at the fact that there have been twice as many speakers from the Opposition Benches as we have heard from the Government Benches. Often, as we have looked at the Government Benches in the course of the debate, we have found them as empty as the Queen’s Speech. There appear to be very few people on the Government Benches who are prepared to defend this Queen’s Speech, just as there were very few people to defend the Budget earlier this year.”
“If our economy is to grow at the level that the OBR forecasts it should between now and 2016-17, we need to grow exports by 45% over and above the level we saw in 2009, but we are simply not on track to deliver that change.”
“If only. Consumer demand is flat. Business investment is stalled. We had great hopes that economic growth would come from some kind of rebalancing towards exports. As the Business Secretary said in his lengthy but rather good essay in the New Statesman not long ago, there is not necessarily a problem with global demand. The problem is that we in these islands are not tapping into that demand. Our exchange rate has fallen by roughly 20% since 2007, but exports have grown by 1% or 2%. Once upon a time the OBR forecast that net trade would add 1.2% to GDP. Now it admits that net trade is a drag on growth, not a boost. That is a huge contrast to what we saw in the 1990s, when sterling depreciated by about 20% and exports grew by a third.”
“We should be clear about the task that we confront. It was set out brilliantly by my hon. Friend the Member for Streatham. We have an economy that is flatlining. We have growth of just 1.8%. That is a third of the level of growth seen in the United States. Living standards are falling. The wages of our constituents have fallen by £1,700 a year since the election. Our constituents are getting poorer. GDP per capita has fallen by £1,500 since the election. Unemployment is rising and is 90,000 higher than at the election. The consequence of all this is a catastrophe for the public finances. Borrowing is now £245 billion more than forecast. Worst of all, perhaps, is what is happening to the fundamentals of our economy. The hon. Member for Tamworth (Christopher Pincher) expressed some confidence that the economy is beginning to rebalance.”
“My hon. Friend makes a good point. Looking at the Queen’s Speech, perhaps it is not a surprise that so few people in the Government party are prepared to defend it. I shall start where my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, concluded. After three wasted years, we have this year had a wasted Queen’s Speech. The task on Wednesday was simple—to give us a legislative programme as big as the challenges that face our country. What we got instead was practically nothing. It seems that this Government are incapable of proposing any ideas that they can agree on. They are a weak Government who are out of ideas, and that is why the public want them out of office. They have chosen to fight the biggest economic battle confronting this country for decades by arming themselves only with pea-shooters.”
“Unemployment on three quarters of our worst estates is going up, not coming down, and long-term unemployment is going up on two thirds of those estates. Three years into this Parliament, that is simply not good enough, and it is not good enough that there was nothing in the Queen’s Speech to fix it.”
“Unemployment today is 90,000 higher than it was at the general election. There is simply not enough work to go around. Once upon a time we were promised a welfare revolution, and no doubt it was well intentioned, but the Work programme is not delivering for those who need jobs or those on employment and support allowance. I look forward to some reassurance from the Secretary of State when he responds. Universal credit, again, was a good idea, but if its virtues are confined to 300 citizens in Tameside, I am afraid that it will not revolutionise the back-to-work business here in Britain. Perhaps worst of all, the Secretary of State stands before us today as a man who has failed the test he set himself in Easterhouse.”
“It is what the incoming Governor of the Bank of England, Mark Carney, has criticised in Canada as the phenomenon of “dead money”. Dead money is piling up in bank accounts in this country because the business community does not have confidence in the Government’s economic plans, yet all we got in the Queen’s Speech was a carry-over Bill on bank reform. As the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) said, that will probably not unlock the kind of business and banking investment we need. The Chair of the Treasury Committee has criticised the Bill because he found the Government’s arguments insubstantial. We did not get answers to Britain’s investment crisis in the Queen’s Speech, which is why it is such a wasted opportunity. The wasted opportunity on jobs is perhaps more serious.”
“Those are the challenges that the Queen’s Speech should have addressed—the investment crisis on the one hand and the jobs crisis on the other—but there were big holes where the Bills on promoting investment and growing jobs should have been. Let us start with the investment crisis. The Breedon review showed some time ago that SMEs in our country confront banks that are deleveraging on a scale unseen anywhere else in Europe. The country’s investment rate is now under 15%. It is flatlining and well below the levels seen elsewhere in Europe. Business investment is £11 billion lower than it was during the peak before the crash, and there is falling investment in the venture capital industry, which is £80 million down on the latest set of figures. Meanwhile, in corporate bank accounts cash is piling up.”
“My hon. Friend is absolutely right, and that was outlined very well in today’s newspapers by the former Chancellor of the Exchequer. At a time when we are struggling to grow our export base, why on earth would we choose voluntarily to put in jeopardy our membership of the world’s largest free trade zone? The challenge is not simply that global demand conditions are weak—the Business Secretary said as much in his New Statesman essay—but that our exporters are losing market share. The Prime Minister is fond of telling us that we are in a global race, but the problem is that we have stalled on the starting grid. He is instead locking us into a race to the bottom, with a policy that will deliver nothing better than low growth, low skills and a low-wage future.”
“Apprenticeships quadrupled during our time in office. In the decade before the crash, we achieved rising productivity and rising wage growth. That is why wages were so much higher when we left office than when we began. Because we invested in skills, our record on rising wages was beaten only by Ireland and Australia. The Government should be building on that record, not watering it down.”
“We proposed a jobs Bill that would have given the chance of work to young people unemployed for more than a year and to the long-term unemployed out of work for more than two years. We would have used an injection of capital into the construction industry to get our country back to work.”
“We hope, however, that the Government will acknowledge that many people’s income replacement rate will fall very low under these proposals. Unless there is reform of the private pensions industry that frees the fetters on the National Employment Savings Trust, caps charges and ensures that there is real transparency, we do not believe that plans are yet in place for a low-cost, low-risk private alternative to help people to save for the long term. That will be the thrust of our opposition to and constructive engagement with the Bill when it comes to this place. As many colleagues have said, the tragedy of this Queen’s Speech debate is that there was an alternative.”
“It is record of shame that we will hang around their neck at the next election. That is why it is such a tragedy that at a time when so many people are paying so much, the Government singled out as their chief priority giving a £2,000-a-week tax cut to millionaires. We will look carefully at some of the Bills in the Queen’s Speech. We will study with close attention the proposals on mesothelioma. I will heed the words and sentiments expressed by my hon. Friend the Member for North Durham. The consultation that we undertook in February 2010 is the benchmark against which we will judge the Bill, and if we find it wanting we will oppose it. We will look closely at the plans for flat-rate pensions. We support the principle of a flat-rate pension, which locks in the changes we made in office that lifted so many pensioners out of poverty.”