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Standing Committee Debates
State Pension Credit Bill [Lords]

State Pension Credit Bill [Lords]

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Standing Committee A

Tuesday 16 April 2002

(Afternoon)

[Mr. Peter Atkinson in the Chair]

State Pension Credit Bill [Lords]

Clause 1

Entitlement

4.30 pm

Mr. James Clappison (Hertsmere): I beg to move amendment No. 19, in page 2, line 4, at end add—

    '(7) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report setting out—

    (a) the number of those entitled to the state pension credit;

    (b) the number of those entitled to—

    (i) the guarantee credit alone;

    (ii) the guarantee credit and the savings credit; and

    (iii) the savings credit alone;

    (c) the number of entitled persons claiming the credits set out in paragraphs (a) and (b) above;

    (d) the take up in terms of expenditure in respect of each of the categories set out in paragraphs (a) and (b) above;

    (e) details of the steps taken to encourage those entitled to state pension credit to make a claim for it, and of the steps to advise those making such claims;

    (f) representations made to the Secretary of State by the Social Security Advisory Committee or by such organisations as may seem to him representative of the interests of pensioners in connection with the operation of state pension credit.'.

The Chairman: With this it will be convenient to take amendment No. 20, in clause 3, page 3, line 34, at end add—

    '(9) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report containing an assessment of the effect of the savings credit on the propensity of individuals to save for their retirement.'.

Mr. Clappison: I welcome you to the Chair, Mr. Atkinson, and I look forward to serving under you.

The amendments address the extent of the take-up of the pension credit and the relationship between that and saving. We hope that the Minister will regard the modest but constructive amendments in a helpful spirit.

Amendment No. 19 addresses the question of take-up. Much of what has been said about the pension credit has been postulated on the basis of a take-up of 100 per cent. However, we know from other income-related benefits that take-up will be much less than that—I believe that the Government accept that. Indeed, the Department for Work and Pensions stated in its memorandum to the Select Committee on Work and Pensions that the assumed take-up for the pension credit is 67 per cent. in its first year. However, the Department was unable to satisfy completely the Committee on the level of take-up in subsequent years. I venture that because the Committee concluded:

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    ''We were concerned about the Department for Work and Pensions' inability to produce reasonable estimates for such an important figure as the take-up of a key Government benefit. We urge the Government to set out clear, and achievable, targets for levels of take-up of the Pension Credit.''

Mr. Tim Boswell (Daventry): My hon. Friend makes a compelling case. Does he agree that the whole business of assessing how the system is turning out is germane to the concerns expressed by the Select Committee that the long-term cost, evaluation and evolution of the pension credit scheme are almost entirely opaque?

Mr. Clappison: I may use the word ''opaque'' in a slightly different context later in my contribution. However, the future cost of the pension is important for the reasons that my hon. Friend mentioned and because organisations, interest groups and future pensioners need as much clarity as possible on the subject. That lies at the heart of the modest amendment, which would enable the Government to throw more light on the matter to satisfy bodies, such as the Select Committee, that are not completely happy.

As the Minister will know, many interest groups and organisations that gave evidence to the Select Committee were worried about take-up. Two of the many organisations were Age Concern and Help the Aged. Help the Aged said that

    ''benefit take-up is extremely important for a number of reasons.''

Although I shall not go into all the reasons that Help the Aged set out, two are particular salient to our debate. First, it said:

    ''older people are less likely to be receiving the benefits they are entitled to than people of working age. This is particularly so for Income Support . . . where pensioners are much less likely to be claiming their entitlements than younger people''.

That relates to lack of take-up by older people. It continued:

    ''worse, the proportion of older people who are entitled but not claiming has been increasing in recent years. Older people are now less likely to be claiming their entitlements than they were when Labour came to power''.

I am sure that that worries all members of the Committee—it certainly worries Help the Aged.

Kevin Brennan (Cardiff, West): The hon. Gentleman would, as we do, wish to see the maximum possible take-up of the pension credit. Is it not, therefore, important to be careful about the language that we use in discussing the Bill, which will pass into law, and ensure that we do not put people off applying for pension credit by irresponsibly banging on about the means test when it clearly does not conform to the image of the means tests of the 1930s and national assistance that he is trying to put into pensioners' heads?

Mr. Clappison: I shall discuss means-testing in a moment. Hon. Members may have had the opportunity to study all the evidence submitted to the Select Committee. That is one of the factors about which organisations that represent older people are most worried. Given the spirit of the hon. Gentleman's intervention, I hope that he will encourage the Minister to examine the amendment even more carefully and attentively. Amendment No. 19 is

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drafted in characteristically moderate language for Conservative Members. Its purpose is to bring to light the factors that the hon. Gentleman mentioned, and it should find favour with him.

One factor that we must bear in mind in considering why older people do not always claim the income-related benefits to which they are entitled is their attitude to means-testing. According to Help the Aged:

    ''All the evidence suggests that there are large numbers of pensioners who are resistant to means testing.''

Research carried out by the Government has found that a substantial proportion of those who do not claim the minimum income guarantee have what is described as ''attitudinal resistance''. Help the Aged is far from alone in expressing that view. In evidence to the Select Committee from a wide variety of organisations and interest groups from different parts of the political spectrum, including the Institute for Public Policy Research, similar concerns were expressed.

Mr. Julian Brazier (Canterbury): My hon. Friend makes a powerful point. Does he agree that the Minister's remarks this morning emphasising that the Bill should be regarded as an anti-poverty measure and classed with benefits such as income support will further underline that point?

Mr. Clappison: My hon. Friend makes a good point. The Minister regards the Bill as an anti-poverty measure and will want maximum take-up. He will therefore want the fullest possible information about take-up so that that can be brought to light.

David Cairns (Greenock and Inverclyde): I am reading the amendment with interest. In paragraph (e), the hon. Gentleman wants to know

    ''details of the steps taken to encourage those entitled to state pension credit to make a claim for it''.

Is that an undertaking from the Conservative party that there will be an end to the constant bleating about the cost of the Government promoting such important benefits to people? When we tell people about the benefits to which they are entitled, all we hear from the Opposition is that that is Government propaganda. Presumably, therefore, the hon. Gentleman is saying that he will now not complain about that cost.

Mr. Clappison: The hon. Gentleman tempts me away from the spirit of the amendment, which asks for details of the steps taken. I should have thought that he would join us in wanting such matters to be explained to people, as they are not entirely self-evident.

Patrick Mercer (Newark): If the methods of promoting take-up of entitlement were effective and so many people were not left out of the equation, the complaints might be fewer.

Mr. Clappison: I do not know whether the hon. Member for Greenock and Inverclyde (David Cairns) takes an interest in the subject. If he does, he will know that one of the main concerns expressed was that some expensive advertising campaigns apparently had little effect. I am sure that he would welcome research into

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that. I can think of several examples with regard to social security. I am sure that he joins us in wanting to ensure that money is well spent.

Amendment No. 20 relates to saving, which is an extremely important issue that we shall discuss in different contexts. Once again, we simply want to bring matters to light and have as much information as possible about the consequences that flow from the Bill.

On Second Reading, the Secretary of State said:

    ''It should surely also be an objective of the Government to put in place incentives to encourage people to save.''—[Official Report, 25 March 2002; Vol. 382, c. 606.]

For our purposes, the question is whether the Bill will encourage more people to save. Will it enable that objective to be fulfilled? In many ways, the Bill is a follow-on from the minimum income guarantee, which created a disincentive for saving through the withdrawal of benefits at the rate of 100 per cent. in respect of savings-generated income that falls beneath the guarantee level.

This morning, Ministers said that the Bill promotes saving; it has to because of the measures that the Government took with the minimum income guarantee. They are putting the minimum income guarantee at a substantially higher level than the state pension, and it is likely to get higher still. That created the need for the measure. We must ask whether the provision puts right the disincentive that was originally created by the Government through the minimum income guarantee.

 
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