UK Parliament / Open data

Pensions Bill

Proceeding contribution from Lord McKenzie of Luton (Labour) in the House of Lords on Wednesday, 4 July 2007. It occurred during Debate on bills on Pensions Bill.
My Lords, it is slightly worrying to find myself on the same side as the noble Lord, Lord Skelmersdale, twice in a row. However, the amendments give us a chance to discuss again whether pensions should be provided on the basis of contributions or of residency, although I understand that that is not my noble friend’s direct proposition. I thank her for tabling the amendments, which stem from a commitment on her part to ensure that state pensions are available to as many people as possible, particularly women who may have been discriminated against because of how the system has operated in the past 60 years. The Government’s reforms modernise the contributory principle and will deliver fair outcomes to women and carers as a priority. The Pensions Commission proposals supported a residency accrual-based pension, but our reforms will address concerns about the current system and improve outcomes for women and carers far faster than the commission’s proposals would, as has been acknowledged and welcomed by a number of commentators. The two amendments together would have the Government collect information to support a future Government’s possible decision to move to a residency-based pension and each year, as part of the normal departmental uprating process, to review the build-up of information and record keeping on residency. The assumption is that at some point we could then introduce legislation to switch from the new contribution test, which we will introduce in 2010, to a new residency test. The annual review of benefits is a routine process in the life of the DWP. It starts with a review of benefit rates in the autumn, is followed by consideration by both Houses over the winter and, most important, provides increases in benefit rates at the beginning of the new tax year. I agree that, should we ever introduce a completely new way of testing the basis on which people build their basic state pension entitlement, we would want to keep the evidence that underpinned the new test under review. However, should we ever go down that route, we would want to form bespoke legislation to underpin the evidence-gathering process, rather than borrowing from what we have to try to fit it into existing legislation. That leads me on to a discussion of Amendment No. 6, about the storage of relevant information for the purpose of enabling the possible future payment of a residency accrual-based basic state pension. My noble friend has made it clear in previous discussions that this amendment does not say that we must have a residency-based pension; rather, it is intended as an enabling amendment to allow a future Government to explore residency as an approach that could be adopted some time in the future. There is nothing to prevent the Government from keeping this aspect, or any other aspect of reform, under review in the longer term, but without legislation. We believe that our reforms provide a long-term settlement for pensions, but that does not mean that we will not be assessing reform outcomes. For example, we know how important it is to establish why people fail to build up a full basic state pension, which is why we are undertaking research on this, including consideration of people who will retire in 2025. I make this point because my noble friend believes that the Government should keep their options on residency open in the long term in case reform outcomes are less successful than predicted. However, we have no reason to believe that this will be the case or that residency would deliver better outcomes. She may fear that, unless we start to collect information for residency, we will not be in a position to consider residency as an alternative. Adopting a residency approach raises a problem in that there are no appropriate records beyond those that exist under current tax and benefit systems to support that approach, and we do not believe that there is any effective proxy information. My noble friend has suggested that electoral register data could help to fulfil this role and quoted in Committee research from the Electoral Commission that she believes supports this view. This is the evidence that, of people of working age over 45 who have not moved house in the past 12 months, between 97 per cent and 98 per cent are on the electoral roll. This research, which is found in the report Understanding Electoral Registration: The Extent and Nature of Non-registration in Britain, published by the Electoral Commission, relates to the position in England and Wales in 2000-01. It raises a number of other issues worth noting with regard to electoral register information and how well it might support residency requirements. This same research indicates that around 3.5 million people across England and Wales were eligible to be on the register at their main residence but were missing from the register in 2000—this equates to between 8 and 9 per cent of the population. Areas with the highest levels of unemployment and income deprivation had the highest levels of non-registration. Non-registration was highest among private renters, the unemployed, those without qualifications and those in non-permanent employment—indeed, many of the people whom my noble friend is most concerned about. This gap in coverage of the electoral register represents a small but significant and disadvantaged minority, who could find it difficult to prove residency if electoral register data were the basis for determining this. Of course, the precise outcomes would depend on the exact test of residency to be used, and this is where the next problem arises. To consider residency seriously, we need a definition of it and a test to determine it, which in turn would determine the information needed to support this proposal. But this amendment makes the collection of information the starting point, with consideration later once we have that information of whether it is actually useful for determining residency. To do this without consideration of fundamental issues, such as the length of test and the implications on the universality of the basic state pension, would not be sensible. Our reforms are intended to make it easier to build up full basic state pension entitlement, and any residency approach should be considered similarly. As to the practicality of using electoral registration data to determine residency, the electoral register simply provides evidence of a person’s eligibility to vote. It indicates that a person lives at a particular address but cannot on its own confirm this or tell us how long that individual has lived there. There is no way in which to link periods of residence at different addresses to say whether the John Jones who lived in Anywhere Avenue in 2004 is the same John Jones who lived in Somewhere Street in 2005. Some form of unique identifier or other information would be needed to make this work, and currently no additional identifier is included on the register except in Northern Ireland. The use of unique identifiers or other information in conjunction with electoral registration data would require further arrangements and legislation to be put in place. This presupposes that a test for proportionality and justification of the use of such information could be met for data protection purposes. This is not necessarily the case, as this amendment is about information for possible future use, not definite future use. Without this, at best the amendment would allow for the collection of information but without the ability to make practical use of that information. Legislating now for a potential move to a residency basis, and regular consideration of this as part of a largely unrelated process, is not necessary. It risks undermining the long-term nature of the Government’s pensions settlement by leaving the future operation of the contributory approach open to question. With regard to electoral register information, we believe that the use of such data to support a residency-based approach is questionable. In terms of universality, there would still be gaps in coverage. Electoral register research suggests that the use of register data to prove residency could particularly affect people from disadvantaged backgrounds, yet the outcomes delivered would still not better those from our reforms. I think that my noble friend indicated that she does not propose to press the amendment. I encourage her not to do so.
Type
Proceeding contribution
Reference
693 c1056-8 
Session
2006-07
Chamber / Committee
House of Lords chamber
Legislation
Pensions Bill 2006-07
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