State Pension Credit Bill [Lords]

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Mr. Bill Tynan (Hamilton, South): Will the hon. Gentleman say what benefit he believes would come from the amendment, and what numbers would take up the credit if the amendment were passed? He argues that we would have additional take-up.

Mr. Webb: I haven't a clue how many people would take up the benefit. The take-up figures are almost an irrelevance, first because they are woefully out of date, and secondly because when they are published the Government rubbish them. Reliable estimates of take-up are not part of the debate. If we had quoted a figure of 500,000, previous Ministers would have said, ''Well, they are not really people,'' or ''It's only statistics,'' or ''We don't really know.'' The current Minister and his colleagues say that there is such a huge margin of error that we cannot have any confidence in the numbers, so take-up gets downplayed.

If the amendment were passed, we would know what the Government do every year, what works and what does not, and whether take-up was going up or down. If the system were to change—and, for goodness' sake, the systems are always being changed—we would get a feel for whether the change had helped or hindered take-up. The report would put take-up on the agenda. We could debate what the Government were doing about take-up every year.

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There is no way that that could not at least help. I have no idea how many extra people the provision would bring on board. I simply cannot guess.

Kali Mountford: Can the hon. Gentleman tell me how that would be different from the general review of the Department in the annual report?

Mr. Webb: Given that the Department produces take-up estimates periodically anyway, I suspect that the cost would not be noticed in a £100 billion departmental budget. I suspect that the sum of money that we are talking about could be spent in an afternoon by the Minister. It is negligible compared with the good that it could do in ensuring that people got the money to which they were entitled.

The hon. Member for Hertsmere alluded to the position of women. Older pensioners are less likely to claim, and we know that older pensioners are more likely to be women. There is plenty of evidence that those who are missing out, in some cases on quite substantial sums, are predominantly women. A colleague of mine asked me what a pensioner neighbour of his who was struggling to get by could do. He described the circumstances. I said, ''Clearly, she is entitled to income support, as she is a pensioner.'' The other day he thanked me for that advice. The pensioner is now getting £20 a week that she did not receive before.

Some Labour Members seem to think that take-up will be better under a really complicated scheme. Under the current scheme, people are promised a minimum level of income that anyone can claim, but some 500,000 of them do not, and we have all met some of them. If that is so, there will be a real problem with a more complicated scheme.

Kevin Brennan: The hon. Gentleman is very generous in giving way. Will he accept that pensioners will be more likely to take up the credit when the so-called means test is much less onerous than it is for income support? He himself described the proposed means test as humane. Perhaps if he stopped using the kind of language used by Opposition Members to try to put fear into people about a means test, more and more pensioners would take it up.

Mr. Webb: As I said on Second Reading following a similar intervention, I doubt my influence. I doubt whether using that phrase makes a blind bit of difference to the pensioners in the hon. Gentleman's constituency, who, I strongly suspect, do not know who I am, amazing though that may seem.

Kevin Brennan: Underestimate constituents at your peril.

Mr. Webb: The key point is that a more complex system will have a lower take-up rate than a simpler one. That must be true because people make a claim if they think that they might be entitled. If any fool can see whether a person is entitled, that person might make a claim. If the means test is complicated and a person thinks that he or she might not be entitled, they might not claim. That stands to reason.

Maria Eagle: Is the hon. Gentleman arguing that the guarantee credit, which is the equivalent of the

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minimum income guarantee, is more complicated than the minimum income guarantee?

Mr. Webb: No, I am not. I am saying that savings credit is what makes it all more complicated. The guarantee credit aspect of it is streamlined, compared with the minimum income guarantee, and there are a number of things in the guarantee credit that are a move in the right direction. It is the added complexity of the savings credit that means that the overall take-up of the combined pension credit risks being lower than for the existing minimum income guarantee.

Maria Eagle: I thank the hon. Gentleman for giving way again; he is being very generous.

I would have a lot of sympathy with what the hon. Gentleman was saying if we were requiring pensioners to do the paperwork themselves. In fact, if we were to do that, the take-up rate might fall substantially, from whatever it is to an awful lot less. However, all we are asking pensioners to do is to tell us their circumstances in a much simpler way—and less frequently. Surely that should encourage take-up.

Mr. Webb: We are introducing a new element that has not been there before. The savings credit is an entirely new element. It is bringing in a new group of people. It can be argued that there is some evidence that there is a pride barrier to claiming any sort of benefit apart from the pension. We are bringing in the next tier up of pensioners—perhaps another fifth or sixth, or whatever the figure is—who are more likely to have the pride barrier, because they are the small savers. It is a group of people for whom the attitudinal problems might be greater, and it is a more complicated scheme.

Of course, we are not asking pensioners to do the sums themselves, but I keep coming back to the same fundamental point: who initiates the claim? The Government will write to people of 60 years of age, but who contacts a 73-year-old who, let us say, becomes a widow? Ideally, the Pension Service will pick her up; it would be great if that were what happened. However, what if something else happens?

On Second Reading, I used the example of Railtrack shares. If they were suddenly to collapse in value, an investor's capital would go down, their imputed income tax would go down, and they would become entitled. Would such people suddenly think, ''Oh, I might be entitled to a savings credit now''? I do not think that they would. They would become a person who does not take-up, which is why an amendment is needed.

Kevin Brennan: I am grateful to the hon. Gentleman for giving way. He mentioned my constituents earlier; I am sure that I am not known to the people of Northavon either. However, on his travels around his own constituency, has he never come across any pensioners on the doorstep who have been crying out for exactly this sort of measure? If he has not, he must represent a very strange constituency. In my experience, there is a huge latent demand for this kind of thing, and I predict to him—I am prepared to have a bet with him about it—that take-up will be higher.

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Mr. Webb: What I have discerned from my discerning constituents is that what they resent is the position that they have been put in, where their savings have stopped making them better off than the person next door, and that problem has got much worse over the past four years.

Four or five years ago, the pension was very close to the means test. [Interruption.] The hon. Member for Cardiff, West (Kevin Brennan) is shifting ground here. With regard to the pensioners who resent the fact that their small savings are not doing anything for them, four or five years ago their savings lifted them clear of income support, and they got benefit from having saved, because they were a few pounds better off than the neighbour who had not. They are the people who I meet on the doorstep who say, ''I am no better off, because there is not a chasm between the pension and the means test.'' The fact that the savings credit will marginally ameliorate that does not take away their resentment.

I have hogged a lot of the Committee's time, but I wish to respond to one further intervention. However, I want to return to the point on women, and then I will try to conclude my remarks.

Kali Mountford: I hope that I will not delay the hon. Gentleman too long. Surely he remembers that, under the old system, pensioners would tell us on the doorstep, ''My neighbour's on income support and gets everything that comes with that. I have a little bit of saving and therefore I get nothing''. Does he not see that this measure starts to bridge the gap between the poor and the relatively poor, and gives some benefits to those with small savings?

Mr. Webb: The point that the hon. Lady seems to be missing is that the number of people who feel that their savings have got them nowhere has been increasing. This Bill may, at the margins, reduce that number.

The hon. Lady is forgetting that, when her party came to power in 1997, the gap between the pensions and the means test was small. I forget the exact figure, but I think that it was about £6 or £7 a week. Next year, it will be £23 a week. When her party came to power, a person with £23 of private saving was £17 better off than the neighbour on income support. Now, that person is no better off than the neighbour on income support, so we have to have another scheme to give back to such people some of the money that they lost as a result of the increase in means-testing, to put them in a position that is relative to their neighbour. [Interruption.]

The Chairman: Order. The hon. Gentleman accepted an intervention and I should be grateful if hon. Members would allow him to respond.

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