Official Report: Minutes of Evidence

The Chairperson (Mr Gildernew): I welcome David Tarr, director of social security policy, legislation and decision-making; Andrew Yeates, interim policy lead, universal credit; and Michelle Grills, policy lead, state and private pensions. David, I invite you to make a brief opening statement on the Pension Schemes Bill before I move to questions from members. Thank you.

Mr David Tarr (Department for Communities): Thank you, Chair. Good morning, and thank you for the opportunity to attend the Committee today. First, I apologise that the briefing is being provided after the debate on the legislative consent motion (LCM). The Westminster Bill is progressing through Parliament, and is at Committee Stage in the House of Lords. Legislative consent must be agreed while there is still an opportunity to amend the Westminster Bill. Therefore, we had to proceed with the LCM as quickly as possible. Unfortunately, that urgency meant that the Assembly debate was scheduled in advance of the Committee's scrutiny, which is certainly not ideal.

We are pleased to have the opportunity to speak to you today about this subsequent LCM for the inclusion of Northern Ireland measures in the Westminster Pension Schemes Bill, which I will refer to as "the Bill". The measures for inclusion are pre-97 indexation and funding for the board of the Pension Protection Fund. On 18 November 2025, the Assembly agreed to progress with legislative consent for five measures in the Pension Schemes Bill. Following the introduction of additional measures to the Bill, which were introduced at Report Stage in December 2025 by way of UK Government amendments, Torsten Bell MP, the Minister for Pensions, requested that two of the amendment measures also be included in an LCM.

I will briefly give you a bit of background to the Bill and the two motioned measures that the LCM covers. The Westminster Pension Schemes Bill was announced in the King's Speech on 17 July 2024. DWP introduced the Bill in the House of Commons on 5 June 2025, with the intention of its receiving Royal Assent by spring 2026. As the Committee is aware, the DWP timeline for the Bill presents several issues for progressing corresponding measures through an Executive Bill as several measures are intended to become operational when, or shortly after, the Westminster Bill receives Royal Assent.

In view of the challenges with progressing a parity pensions Bill on all elements, and the associated risk of citizens in Northern Ireland being treated less favourably than people in GB, the Executive agreed on 2 October 2025 to seek the Assembly's agreement to an LCM to extend the Bill to Northern Ireland for five initial measures, which I will not repeat. The same concerns apply to two new provisions in the Bill: the pre-97 indexation and the funding of the board of the Pension Protection Fund. We were not aware of those provisions, and they were not part of the Bill when we last briefed the Committee. Hence, they need to be agreed separately.

The Department's intention is to bring forward a Northern Ireland Bill through the Executive and to the Assembly to address the remaining relevant provisions in the Westminster Pension Schemes Bill.

I will outline the two additional measures. Clause 109 relates to the pre-97 indexation of the Pension Protection Fund and financial assistance scheme and will enable the payment of inflation increases, also known as indexation, on pension benefits for those compensation schemes accrued before April 1997. The measure will ensure that compensation from the Pension Protection Fund and financial assistance scheme on pensions built up before 6 April 1997 is linked to CPI inflation, kept at 2·5%, and will apply prospectively for members whose schemes provided mandatory or statutory inflation increases on pre-97 pensions. That will make a meaningful difference by boosting the income of members of the Pension Protection Fund and the financial assistance scheme.

Clauses 116(4) and 116(5) seek to amend the Pensions Act 2004 to implement changes to the Pension Protection Fund and Fraud Compensation Fund levies. Legislative consent is required to allow for the administrative expenses of the two funds to be met from the reserves of the respective funds. There is now sufficient funding in the Pension Protection Fund reserves to meet the cost of administration, and transparency can be achieved through the Pension Protection Fund's corporate strategies, annual report and accounts. The Pension Protection Fund and the Fraud Compensation Fund are UK-wide schemes. Therefore, it is essential that provision is made for Northern Ireland to be included.

That is an overview of the measures, and the team and I are happy to take any questions.

The Chairperson (Mr Gildernew): Thank you, David. I have a couple of brief questions. Do you anticipate any negative impacts?

Mr Tarr: I do not anticipate any, but I defer to Michelle. She is the lead on this.

Ms Michelle Grills (Department for Communities): No, these are two positive measures, so there are no negative effects.

The Chairperson (Mr Gildernew): Thank you. My other question is more general. I appreciate the fact that the Minister stated clearly the other day how unsatisfactory the timing of the briefings has been in some cases. We have been provided with information on that. Are any significant discussions going on with DWP to ensure that this does not happen repeatedly? It is really unsatisfactory to be discussing this LCM after it has gone through. Are you engaged in direct discussions with DWP to get across the fact that this should not continue?

Mr Tarr: I have raised those concerns. DWP has a devolution team, which, as the name suggests, deals, primarily, with interaction with Northern Ireland, Scotland and, to a lesser extent, Wales. I speak with my counterpart there regularly, and I have communicated to him, and my team has communicated to his team, our concerns on the timelines within which we are receiving not just these Bills but statutory instruments for GB and statutory rules for Northern Ireland. We continue to raise those concerns. I appreciate and fully understand the Committee's concerns about its scrutiny time. The timeline also puts my team under severe pressure as it tries to understand the legislation and get the Northern Ireland equivalent drafted. It is something that I have raised further up the line in the Department as well. All that I can advise you, Chair, is that I am doing what I can with DWP and will continue to do so.

Ms Mulholland: That was one of my questions, Chair. The Bill has been framed as being largely technical, but there are some implications, particularly for scheme governance. My concern is that we are being given very little NI-specific detail. I am relieved to hear that you think that there will be no negative impacts. From your point of view, does the Bill contain any NI-specific financial, administrative and governance implications that should cause concern? Is Northern Ireland-specific context something that we can ask for in the future when LCMs are coming over? That is really important for us.

Mr Tarr: I will bring in Michelle, but I am not aware of anything in the measures, including these measures, that would cause concern. There will be seven measures in total in the Westminster Bill that will apply UK-wide. The Bill, which is still before Parliament, is substantial, and we will be bringing forward a Northern Ireland Bill for the overwhelming majority of its measures. Michelle and her team are working with the Office of the Legislative Counsel on that. Has it gone to the Executive?

Ms Grills: It is going to the Executive. The intention is that we will be bringing that Bill to the Committee and giving you the opportunity to discuss all its clauses. You will have the opportunity to raise any issues that you might have.

Mr Tarr: On your final point, Sian, we can continue to make these representations to DWP. In this case, the first time that we received notification of the further measures was 1 December last year. The measures were not shared with us until a few days later, after they had been laid in Parliament. By the time that my team could contact DWP and understand the measures, the Assembly was going into recess. We will certainly continue to raise that with DWP. In this case, where the Government have decided to table amendments at an advanced stage, I do not know how more willing they will be to share information. We will continue to ask, of course.

Ms Mulholland: Would it be worthwhile for the Committee to make a representation to DWP?

Mr Tarr: I cannot imagine that it would cause any harm.

Ms Mulholland: Could we outline to the devolution team the pressure such time frames put on the Department and on us as a scrutiny Committee? Could we write to the devolution team at DWP to ask for greater consideration of a time frame for Northern Ireland?

The Chairperson (Mr Gildernew): Are members content with that suggestion?

The Chairperson (Mr Gildernew): That is a good suggestion. Are there any other questions, members? There are not.

David, we will move on to the second LCM. Please go ahead and make a brief statement.

Mr Tarr: Thank you for the opportunity to speak about the legislative consent motion for the Universal Credit (Removal of Two Child Limit) Bill, which, again, I will refer to as "the Bill". It is a single-topic Bill that makes provision to remove the policy of paying for a maximum of two children in a household, subject to a limited number of exceptions, in respect of universal credit (UC). The change will increase the amount of welfare support that is available to families on UC with three or more children, and it aims to reduce the number of children who are living in poverty.

I will briefly run through the background to the LCM and the provisions. As the Committee will be aware, in her autumn statement on 26 November 2025, the Chancellor of the Exchequer announced that the two-child limit in UC will be abolished from April 2026. The Bill to remove the two-child limit was introduced in the House of Commons on 8 January, and the UK Government are working to progress it as quickly as parliamentary time will allow to enable the changes to take effect from 6 April this year.

The timeline presents several challenges to introducing the corresponding measures in Northern Ireland through an equivalent Bill. We are very conscious of Committee members' views on the use of LCMs, and we would ordinarily seek to avoid using the process. However, given the circumstances, Minister Lyons has taken the view that, on balance, it is sensible to seek an LCM to ensure that those important provisions extend to Northern Ireland and that people here can benefit from the changes at the same time as people in GB.

Sir Stephen Timms MP, the Minister of State for Social Security and Disability in DWP, has confirmed that formal consent will be required before the Bill reaches Royal Assent, which is likely to be in mid to late March 2026. At its meeting on 15 January, the Executive agreed that the provisions of the Bill should extend to Northern Ireland, and that the consent of the Assembly be sought for an LCM. The legislative consent memorandum was laid on 19 January, and I will briefly cover its provisions.

The two-child limit currently restricts payment of the UC child element to a maximum of two children, except in limited circumstances. The purpose of the LCM is to seek agreement to the inclusion in the Bill of provisions for Northern Ireland, and those are set out in clauses 2 and 3 of the Bill. Clause 2(1) provides for the removal of the two-child limit from the Welfare Reform (Northern Ireland) Order 2015, and for the removal of the existing power to make exceptions to the limit, which will become redundant. Clause 2(2) provides for consequential amendments to the Welfare Reform and Work (Northern Ireland) Order 2016, and the Universal Credit Regulations (Northern Ireland) 2016, removing reference to the two-child limit. Clause 2(3) notes the revocation of regulations 25A, 25B and schedule 12 to the Universal Credit Regulations (Northern Ireland) 2016. The revocation results from the repeal of the primary powers in relation to the two-child limit and provides clarity to any reader of the regulations on how the law applies. Clause 2(4) sets out how the changes will come into effect for the assessment periods commencing on or after 6 April 2026. It defines "assessment period" by referring to the Welfare Reform (Northern Ireland) Order. Additional child elements can, therefore, be included in the calculation of entitlement for assessment periods starting on or after 6 April.

Clause 3 sets out the territorial extent of the provisions and the date for it coming into operation as 6 April. The clause also provides a delegated power for the Department for Communities to make transitional or saving provisions for clause 2. It is a standard power that ensures that the Department can provide for the smooth commencement of the new legislation and address any unforeseen issues in the implementation of the Bill's policy.

Aligning the Bill through an LCM will ensure that UC claimants in Northern Ireland receive the same welfare entitlements at the same time as their counterparts in GB. As of August 2025, 13,780 households in Northern Ireland were impacted on by the two-child policy. There were 48,080 children in the impacted households, of whom 17,600 were not eligible for the child element in UC. We are aware that some families will be affected by the benefit cap as a result of the change: either they will be affected for the first time or the amount of their cap will increase. The estimated additional cost to the Department of mitigating families affected by the benefit cap in 2026-27 is £9·4 million. The additional funding for the mitigation scheme, which is specific to Northern Ireland, will require Executive consideration as part of their multi-year Budget exercise.

The Department considers the abolition of the two-child limit to be a positive measure that will increase the amount of welfare support that is available to families with three or more children through UC. It is a significant change that will help to tackle child poverty. We are happy to answer any questions.

Ms Mulholland: Will the additional child element be automatically applied to existing UC claimants?

Mr Tarr: Yes, that is my understanding.

Ms Mulholland: Great. I was not clear about that.

Have we identified the full cohort of existing UC claimants who will become eligible?

Mr Tarr: We have estimates of their number. I do not know whether we have identified every individual, because it will depend on their circumstances on 6 April. If the assessment period for somebody who has four children but currently receives benefits for only two ends on, for example, 8 April, they will be included. It will be a rolling process from 6 April onwards. If you were unfortunate enough to have your UC paid on 5 April, you would not see the benefit of that until May.

Ms Mulholland: Until the next month. Part of my concern is that we have 67 days. How are we communicating with that cohort now to make them aware of the change that is coming?

Mr Tarr: The working assumption — my operational colleagues are speaking to DWP about this — is that their UC award notice will inform them that they are now entitled to additional child elements. If they are eligible for a welfare supplementary payment, or an increased welfare supplementary payment, they will get notification of that at that time.

I think that your question is about communications pre April 2026 to let people know. I do not have any details on that, but I will speak to counterparts in the work and health group, who are responsible for the operational side. From our point of view, this is moving extremely quickly. We will certainly look at sending out some sort of communication to let people know.

Ms Mulholland: I am really concerned — I think that I have been clear about this in previous Committee meetings — that the numbers that we are getting are not definite when it comes to welfare supplementary payments. I am genuinely concerned that we will end up giving with one hand and taking with the other if we get to a circumstance in which mitigations are just too expensive, or are at least seen to be too expensive, for the Department. Does that £9·4 million come from your area, or is it from the operational side of things?

Mr Tarr: When I refer to the "operational side", I am referring primarily to Conrad McConnell and Leo McLaughlin, who are responsible for the operation and delivery of benefits. I do the policy side that underpins that.

DFC has a statutory obligation to pay benefit cap welfare supplementary payments to any family with children that is affected by the benefit cap. That means that, for households that will not see the full amount of the increase in universal credit, the Department will automatically step in to mitigate that. We are legally required to do that.

Ms Mulholland: Up until 2028?

Mr Tarr: Up until 31 March 2028. I am aware that there are requests in regarding the Department's plans to extend provision beyond that date. The starting position will be that the Department will put a bid in to DOF as part of the Budget exercise for that additional £9·4 million. Obviously, the allocation will be a matter for the Executive and DOF. I am afraid that I will have to defer to my finance colleagues on what it would mean if that were not met. All that I can say is that, short of the Assembly approving new legislation, there is a statutory requirement on us to pay that.

Ms Mulholland: Thanks, David; I appreciate it.

Ms K Armstrong: Sticking with the money side of things, I wrote to the Minister, who kindly provided me with an answer, about the Budget exercise and how much had been put forward. You talked about the additional £9·4 million for the benefit cap mitigations. What is the baseline for the current benefit cap mitigations?

Mr Tarr: In 2024-25, it was £3·4 million. All Departments are making bids at the moment. My finance colleagues, working with the Department's analysts, will forecast what they think that will be.

Ms K Armstrong: The current bill is £3·4 million.

Mr Tarr: We spent £3·4 million in 2024-25. I do not have the forecast for 2026-27 in the event of the two-child policy not changing. I am sure that the Department has the figure.

Ms K Armstrong: I asked very simply what the Minister had bid for. For 2026-27, it was £12·7 million, which would indicate that the £9 million is included. There was £13 million for the next year and £13·4 million for the year after that. I wanted to double-check to make sure that we had the right figures in the draft Budget, so it is in the ballpark?

Mr Tarr: That is my understanding, yes. From what I have seen in the departmental papers, the Department has bid for the additional money.

Ms K Armstrong: Which is

forward planning. Thank you very much, David.

The Chairperson (Mr Gildernew): Last one from me, David. Are equality impact assessments (EQIA) being done on this? If so, when can we expect to see them, albeit belatedly?

Mr Tarr: We will be doing impact assessments on the Bill. Strictly speaking, the equality impact assessment does not fall, because it is a UK Bill. DWP has done an impact assessment that is published alongside its Bill, but we recognise that there is an impact here, so we will be doing the relevant screenings and impact assessments. Those will be made available as soon as they have been completed.

The Chairperson (Mr Gildernew): Do you have a rough idea of when that is likely to be?

Mr Tarr: Do you have any idea, Andrew? Am I putting you on the spot? Sorry.

Mr Andrew Yeates (Department for Communities): Work is ongoing on that. My team is working on it.

The Chairperson (Mr Gildernew): I am just conscious that a number of those assessments are outstanding. I do not want them piling up.

Ms Mulholland: Is a child rights impact assessment included in that or will it just be an EQIA?

Mr Tarr: Just the EQIA. We will look at that and see whether we can get a timeline for you.

The Chairperson (Mr Gildernew): David, Michelle, Tommy and Andrew, thank you very much. We appreciate your attendance.

Mr Tarr: Thank you.