Official Report: Minutes of Evidence

The Chairperson (Mr Maskey): I welcome formally Gerry McCann, Seamus Cassidy and Doreen Roy. You are very welcome to the Committee again. The Department has provided clarification on a number of outstanding issues that we sought information on during the consideration process. They are contained at page 8 of members' tabled items. Additionally, Cruse has provided a follow-up paper to their briefing, which is included at page 10. This paper clarifies some of the issues that they raised in their briefing; you will remember there was a lack of certainty on one or two issues. The paper that they have very helpfully provided does not seek changes to the Pensions Bill, but it reflects ongoing issues that they have in relation to pensions. Obviously, that will help to inform our commentary through the clause-by-clause consideration. I invite Gerry to make any additional clarifications before we proceed with the clause-by-clause scrutiny.

Mr Gerry McCann (Department for Social Development): Good morning, everybody. Does everyone have a copy of the paper from Cruse? I am going to speak to it. First, I repeat the point that what has been asked for in this paper is not actually part of the Bill. All that the clauses in the Bill do is to set out that there shall be a scheme, with the scheme itself to be set out in regulations. There are only four or five points in the Bill itself. Really, we are just talking about how this might work in practice.

Who will be worse off under the Bill? The Cruse paper provides a number of figures at paragraph 8. We accept that, overall, someone with a child, who can no longer receive payments for a period of 18 or 19 years, will obviously get less. However, under the new system, money will be aimed more at less well-off people who fall into the lower end of the income scale, and they will end up getting far more than they do under the existing system. On average, according to the figures that we have, there is a notional gain for the poorest income quartile of the order of about £17,000. Again, money has been taken from the pot and used differently from how it is used in the current system. Those who gain most will be the poorest. That is one of the underpinning issues. Those who lose will be the better off; they will lose if they have children. Anybody who has no children and is aged under 45 gets absolutely nothing at the moment, so they will gain from this as well. Are we happy enough that we have identified the losers and the winners?

I move on to paragraph 10, which is about the cost of funerals. The figure given for NI is £5,893. From what we have been able to find out from the reference, that figure has been issued by a company that advises people to take out some insurance to help cover the cost of a funeral. That also covers things like the wake, for example, which is part of the overall cost but is not something that the state has ever provided for. The last day, I mentioned some of the figures that we got from phoning around undertakers for the cost of a funeral, and they were quoting under half that figure. There is also the extra help available for those entitled under universal credit (UC). People will be able to get help with the costs of the burial etc. There will be extra help available.

Mr Brady: The non-discretionary social fund goes nowhere near to covering the cost of an average funeral. You get about £700 or £800, when the average funeral costs about £2,500. That is without wakes or flowers or anything like that. It is an expensive business.

Mr G McCann: As I understand it —

Mr Brady: On the issue of insurance, people are reluctant to take out insurance for something like that. If you are on benefits, you cannot afford it anyway.

Mr G McCann: I am not arguing that people should take out insurance. I am just saying as part of the background to the report that this is how they came up with the figures and costings. I was only saying that by way of background. I certainly am not saying that people should take out insurance cover for funeral costs; that is not what I mean. I was only saying that to explain the background to the report.

Mr Brady: The majority of people cannot afford to take out insurance.

Mr G McCann: As I understand it, you can get £700, plus the costs for the opening up of the grave etc. The burial costs are separate from that £700. I do accept that it may not cover the costs totally.

Mr Brady: It would probably cover about a third.

The Chairperson (Mr Maskey): These are important issues, but we are dealing with —

Mr Brady: I was just making a point.

The Chairperson (Mr Maskey): Fair enough, but we will be making points for the rest of the day. We need to stick to the clause-by-clause scrutiny.

Mr G McCann: After the meeting, when I was having a quick word with the people from Cruse and the Childhood Bereavement Network, it seemed to me that what they were looking to do was to change it for the whole of the UK; they were not looking for anything for Northern Ireland only. That seemed to be what they were saying to me.

Let us move on to paragraph 18 of their paper. What they say here is:

All their costings work on the basis that these two things would not happen. This week, I went back to our colleagues in Britain to check that nothing has changed and that our understanding is correct. What those colleagues said to us is that, if these were to be over a three-year period, and it were to be done for the whole of the UK, they would have to be taken into account for UC, and they expect that they would also end up having to be taxed. If they are taken into account for UC, the people who would lose out would be those at the very bottom of the income scale; people who need the income support aspect of it. So, to do this would take away from the poorest people.

The Chairperson (Mr Maskey): That is, if they accede to paragraph 18 of the recommendations from Cruse.

Mr G McCann: All of Cruse's costings are based on these payments not being taken into account for UC and not being taxed. Having spoken to GB, our GB colleagues say that they would be. If they were to be extended in that way, they think that they would have to take them into account for UC and that they would be taxed.

The Chairperson (Mr Maskey): So what you are saying is that, if you were to get it changed in the way in which Cruse suggests or hopes for, it would actually be disadvantageous to the least well off.

Mr G McCann: Yes.

The Chairperson (Mr Maskey): OK, fair enough.

Mr Allister: In paragraph 19, however, Cruse challenges the suggestion that they would be seen as long-term benefits.

Mr G McCann: I was about to come to that. I do not think that an outside charity would dictate whether or not it is viewed as a long-term benefit. I may have my views on things, but, at the end of the day, these will be taken into account. All I am saying is in terms of what we are being told by Britain. Certainly, when the Bill was going through at Westminster, Lord Freud, who took the Bill through the House of Lords, was very explicit on these points. I note that Cruse also challenges on the point about EU law — we can talk about that when we come to it. Again, all I can say is that I do not think that the ruling on this issue would fall to an outside charity.

The Chairperson (Mr Maskey): However, the point has been made. Cruse made it here in a presentation, and it has reiterated it, so it would not be outside our gift to add that as a concern.

Mr G McCann: You could certainly say in the report that it was a concern. However, I come back to the point that these issues are not part of the Bill itself; they are to do with how the scheme itself would end up being developed. Certainly, if the Committee thought that it should be done that way, and if it wished to make a recommendation, we would take it back to GB and explore the issue further, if that is what the Committee wants.

The Chairperson (Mr Maskey): Obviously, members would be concerned if there was a disadvantageous consequence from that, be it part of the Bill or otherwise.

Mr Brady: I think that Cruse makes a valid point about the emerging costs for children. I have been in that position, prior to survivors or widowers benefit being payable. It is a valid enough point. Cruse argues for a three-year period. There is a technicality involved then in whether it is a benefit or a survivors benefit. I am not sure what the case law is. Survivors benefit in most European countries is a relatively recent development. It was only introduced in Britain because somebody was prepared to take the British Government to the European Court. Prior to that, a widower could not get benefit. I am not sure what the case law in Europe is.

Mr G McCann: I can ask Seamus to speak on that. Let me come back to the three years. Really, all that Cruse is doing is asking for the amount to be spread over the three years.

Mr Brady: That seems to be a reasonable request.

Mr G McCann: That is what Cruse is saying, which, in itself, implies that Cruse does not think that people who are being paid inside year 1 can budget. That is what you are saying: that these people are not fit to budget for themselves.

Mr Brady: The point that Cruse is making is that there may be costs that you are not aware of initially, but which may emerge. That seems to be a reasonable enough argument because that can happen.

Mr G McCann: I accept that, but it is all part of budgeting. Really, what we are saying is that, from our point of view as officials, we cannot see how it would be worth the risk of those other things happening — for example, for the benefit to end up being taxed — when we can pay those people the same amount of money inside year 1 and it is not taxed and it is not taken into account for UC. Surely, it is better to get all that money to them, as opposed to it being spread out over three years, being taken into account for UC and being taxed, which means that they end up losing.

Mr Brady: Yes, but if they invested that in the first year and there was interest or notional income, that would affect your benefit eventually.

Mr G McCann: For the amount of money that we are talking about and the level of interest rates at the moment, you would not —

Mr Brady: When you are on benefit, any amount of money —

The Chairperson (Mr Maskey): With respect, I think that we need to make progress. Gerry, you are giving us clarification on some of the outstanding issues that we were not terribly sure about. That was one of the issues that members were concerned about; whether it would have a knock-on negative effect on people who are less well off. It may well; it may not, as you are saying. I ask that as we proceed — I need to be rigid on this — if you are giving us clarification, you need to say clearly that this will not be part of the Bill and will not be part of any one of these clauses. We are here to deal with the clause-by-clause scrutiny. All the other issues, which are important and which we will have views on, we will add on afterwards, after we complete the clause-by-clause scrutiny. Let us proceed on the basis that you are telling us what we need to hear by way of clarification, but you will say very clearly that we can set that to one side for the moment because it is not in a clause.

Mr G McCann: OK. Following those parameters, I do not have much more to say. Perhaps it might be helpful if I just clarify again for the members what the main planks of these are.

The Chairperson (Mr Maskey): It is important that people will want to comment on aspects of the Bill that they are concerned about or where they are worried about there being some inadvertent consequences or impacts. However, if they are not in the clauses, we have to separate them out.

Mr G McCann: I will do this very quickly. Let me just confirm again that we have been talking to colleagues in Britain this week and have clarified that the main planks are that this benefit shall only be paid for one year — it is a one-year benefit — and it will be split into two bits — one for people who have children, and one for people who do not. Last week, Mr Brady raised the case of people over pension age. Category B pensions are going; they are being axed, except for the one case, which is where the independent spouse, as it were, is over the state pension age prior to 2016, and the other spouse hits pension age after 2016. They shall still be paid an amount equal to the Cat B(L) or the Cat B rate, as appropriate. That summarises it for you.

The other issues are not inside the Bill.

The Chairperson (Mr Maskey): OK. I hope that the Committee Clerk and the other clerks present are in a position to capture some of the concerns that have been raised through the evidence sessions and this morning. We have to deal with the clause-by-clause scrutiny of the Bill and then come back with a draft report. We may well wish to make all that commentary.

Are members content? You heard the clarification we got there and have raised issues.

We move to the formal clause-by-clause scrutiny. Members know the procedure. I have to go through the routine of reading each clause, and members should indicate whether they are content or otherwise. Let me reiterate that, if members have other concerns, we can add them into the report as observations or recommendations.

The Chairperson (Mr Maskey): That concludes the Committee's clause-by-clause consideration of the Bill. As I noted at the beginning, the Committee may want to make further representation on a range of issues, a number of which we have already covered. The Committee Clerk has captured those, and the Committee will bring them forward in the draft report. The officials will draft a Bill report based on all the discussions and will include the Committee's concerns and how they may be addressed and any recommendations made by the Committee.

Gerry and colleagues, I thank you for your attention on this matter and your support for the Committee in addressing the Pensions Bill. Thank you very much for your very solid support to the Committee and the conduct of our business.

Mr G McCann: Thank you very much.