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Duration of assessed income period

Mr. Boswell: I beg to move amendment No. 13, in page 6, line 28, at end insert—

'(1A) The Secretary of State may provide by regulation for the assessed income period to be continued for a period not exceeding five years notwithstanding that the payment of benefit during that period has been terminated under regulations made under section 1(5) or section 2(6) of this Act, and may make provision for the restoration of benefit on the same basis of assessment as has previously applied when the conditions giving rise to the termination of that benefit no longer apply.'.

Even those of us who do not habitually indulge in immoderate language or high political grandstanding are entitled to do so from time to time. I seem to remember on one occasion during consideration of the Bill that became the Learning and Skills Act 2000 becoming extremely excited with the Secretary of State and threatening at about midnight to divide the House. Although I make no such threat at this point, which might be a comfort to some hon. Members, who knows what will happen? As ever, it depends on the Minister's response. There is a serious and important point that needs to be dealt with. We discussed it at some length in Committee, but I do not feel that it has been satisfactorily answered yet, although I realise that it might be resolved at a later stage through appropriate regulations.

The whole business arises from the Government's shift to an assessed income period of a maximum of five years, compared with what might be regarded as a traditional measure of weekly income for means-tested benefits, or annual income for tax. My argument is not that that shift should not have happened. We all know that for practical reasons the purity of the doctrine of the weekly basis for the payment of means-tested benefits has become somewhat attenuated in recent years—for example, in the qualifications for jobseeker's allowance and the linking rules that apply to people who are returning to work—but the House would not forgive us were we to dilate on those issues today. However, we face an extraordinary and unprecedented position in which, at up to five years, the assessment period for a means-tested benefit—the savings credit—is to extend for considerably longer than the annual period of assessment for tax or the period used in respect of any other benefit.

We are not arguing in the amendment that that concept should be removed from the legislation—there are immensely important practical reasons why it should stand. However, unlike some pensioners' organisations, the Government do not appear to have fully grasped the dramatic administrative implications of trying to run a means-tested benefit for approximately 5.5 million pensioners—half the total number. It is clearly sensible to make the assessment period as long as reasonably practicable, but the implications of doing so must be addressed.

There are basic inequities that will be difficult to eliminate in applying assessment over a long period. When we asked Ministers about that in Committee,

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their reply was, in effect, that if something happens to a pensioner's income and it falls, they can apply for reassessment, or they will receive an annual reminder and then apply for reassessment. In short, the matter can be picked up, and they can be reassessed and their credits adjusted appropriately. That appears wholly reasonable. However, there will be other cases in which a pensioner's income will rise for some reason—for example, they might come into some money. That might make them no longer eligible for benefit if they are new claimants; conversely, if they have had an assessment, which lasts for five years, they will not be required to report their windfall or to have their means-tested benefit reduced. There could be inequity between people with the same level of income, or assumed income, according to whether or not they were assessed for five years. That also applies to circumstances in which there may have been a discontinuity in their benefit, and those are addressed in the amendment.

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In Committee, when we asked Ministers about such circumstances, they said that if it would be better for pensioners to reapply, they could reapply. However, we pointed out that if continuity for pension credit had been broken and a new assessment was required, pensioners would need to reapply but would receive a lower benefit than someone in exactly the same circumstances who had maintained their benefit for five years.

We need to discuss the circumstances in which that problem might arise. I should make it clear to the House that we are not talking here about what might be termed genuine changes in circumstances arising, largely, from voluntary decisions. If a pensioner chooses to marry or has a child, clearly there is a material change in their circumstances, but those factors have always been recognised in the benefits system. We are concerned here with what I might call contingent changes of circumstance whereby pensioners go through a hoop and then have to reapply on a new basis, as a consequence of which they may lose out, as against pensioners with exactly the same income circumstances who can maintain their vested rights to an assessment for five years.

The circumstances that may arise range, if I may put it this way, in order of diminishing acceptability, from the entirely reasonable to the more questionable. First, a pensioner may spend time abroad. It is envisaged in the explanatory notes to the Bill that, on the analogy of jobseeker's allowance, a pensioner who goes abroad for four weeks will be able to maintain their benefit, and after that it will cease. That period will be extended to eight weeks, as I understand it, in cases where a pensioner has to go abroad to support a child who is receiving medical treatment. No one wishes to cavil at that. If it is necessary to have a distinction, that seems to be an acceptable one.

We need to consider the situation of pensioners who normally go abroad for longer than four weeks. For example, they might want to go abroad to receive medical treatment. It could even be that they had been referred by the NHS to a hospital in another country, paid for by the British taxpayer. If they could not get the operation that they needed in the UK, they might be sent abroad for it, and they might need to be away for more than four weeks,

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although medicine now tends to achieve quicker turnaround times. In that circumstance, which arises from a deficiency in NHS provision, they might say, " I accept that I must have treatment abroad, and I am going at the public expense, although I don't object to that." However, they might come back to find that their pension credit entitlement had ceased. In that case, they would have to make a new application, and they might get less.

That would be the extreme case, and Ministers understand that not everything can be tailored to the needs of the hard case, but there is a point of much wider application, for example, to anybody who wanted to go away to the Costa Brava for a winter holiday. Unless I have completely misunderstood the Bill, after four weeks, the assessment that they had previously enjoyed would be lost, and on coming back they would have to reapply and be assessed on a new basis, which might be less favourable than the original.

I leave aside, because it will complicate the issue, concerns about the administrative arrangements for reactivating the benefit, although those will clearly be important. I leave aside also concerns about cases in which the pensioner had, in good faith, nipped off for a holiday, perhaps at short notice, and forgotten to inform the Pension Service. By doing so they would have committed a technical offence or perhaps even a substantive one.

Pensioners with an entitlement to benefit which is fixed for five years—it is not reassessed weekly—who take a holiday in another state of the European Union or beyond and are penalised may feel that they are harshly treated as against those who take their holiday in the UK and are not penalised. That may well attract the attention of European jurisprudence in due course. I mentioned that in Committee, and I do so again because there is a barrier to the free movement of persons if some disadvantage arises out of a contingent movement to another EU state. Anyway, in the real world, it is perfectly reasonable for a pensioner to say, "I want to take six weeks' holiday in the Costa Brava this year. I feel that I've earned it. Why am I being messed about on my benefit?"

As the Minister will remember, other cases may arise. I hope that when he replies he will not caricature such cases. One, which we did not talk through enough in Committee, is that of hospital downrating. That issue is separate from whether or not persons are sent abroad for treatment that is paid for by the NHS. It would be appropriate to ask whether, if a person was sent abroad by the NHS, and the period of treatment or hospitalisation exceeded 13 weeks, they would be subject to downrating on their basic pension as well. It would be useful to get that on the record.

There is also the question of the entitlement to savings credit. The Under-Secretary, who responded to the previous debate, confirmed that savings credit will not be lost even if hospital downrating takes place. It would be useful to get that back on the record. I am concerned about the re-entry into benefit when hospitalisation finishes, and I should like ministerial confirmation that the assessed income period that already applies will be maintained—that is, unless and until it is more favourable for the claimant to be assessed on a different period.

The final issues that I wish to raise are the perhaps less worthy ones that we debated and kicked around in Committee. They concern people who enter religious

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orders, some of whom are represented in the Chamber this afternoon. I do not imagine that people would do so for a short period, so my query is hypothetical, but it also concerns individuals detained at Her Majesty's pleasure. I have said that there is a problem with double provision. Clearly it is wrong to pay someone pension credit while they are inside and being maintained at Her Majesty's expense—and very expensive that is, as we all know. On the other hand, should they lose satisfactory pension credit arrangements?

The intention and effect of the amendment is to suspend the assessment period, then reactivate it later. There should be no question about paying benefit while someone is abroad and perhaps, if we want to complete the provision, in the subsidiary example in which someone is in prison or some other state of disqualification from benefit. Rather than just simply having a mechanism that enables the system to regenerate a claim and get someone back on benefit, it would be more sensible to have a system in which the benefit is deemed to be suspended, then reactivated when those circumstances no longer apply. We have tried to draft the amendment in that way.

I urge the Minister to accept that I tabled the amendment with good will. The issue is difficult. The problem may not be as extensive as I have stated but, if I were him, I would make provision for it—if not now, then perhaps in the regulations that will no doubt flow from the Bill—so that, if necessary, benefit can be reassessed and looked at afresh. In addition, in certain cases it may be administratively easier and fairer for the benefit to be suspended, then reinstated when certain conditions no longer apply. Our amendment is tailored to do that.

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