State Pension Credit Bill [Lords]

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Mr. McCartney: I really have nothing to add to what I said, not because I have not read the notes or do not know anything else about the clause, but because the trust does not provide any financial gain to the couple, so it would be totally wrong to include it in any process of consideration. For example, the trust could be maintained for children or grandchildren of the couple or for a relative who suffers physical or mental disabilities and requires someone to be responsible for the trust on their behalf, but the couple would receive no income whatever or any other form of support from the trust. We gave that example to indicate that there are exceptional circumstances, and it would be wrong to have regulations that are set in concrete.

Clearly, if someone is acting on behalf of someone else in such a capacity, they are probably also acting in a caring capacity. Therefore, it would be wrong to penalise them for carrying out a good citizen's duty in acting for a close relative, a close friend or someone else—perhaps a tenant—who requires additional support, which is linked with a trust.

Mr. Clappison: I am grateful to the Minister for his helpful reply. I was not disagreeing in any way, shape or form with the proposition that such income should be excluded from the aggregation. It is right that it should be excluded. My point was on the use of the regulation-making power. I presumed from the fact that an example was cited in the explanatory notes of a case where the regulation-making power might be used to exempt income from being taken into account and aggregated, that there was a risk that such income—income that comes to one of the couple from a trust on behalf of another—might be taken into account in the aggregation. I was simply asking whether the regulation-making power would be used to deal with that case. I shall certainly consider carefully what the Minister said in his helpful reply.

I was not aware of the connection with section 136 of the Social Security Contributions and Benefits Act 1992. The information was not at my fingertips, but I

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had a feeling that there might be similar provisions elsewhere. I shall certainly look at how that operates.

Mr. McCartney: I said in my opening remarks that this is a safety-first measure. We have no plans to bring forward regulations at this stage, because the measure allows us flexibility. Flexibility always ends up on the side of the pensioner in such circumstances. It would seem at the outset of this new and almost unique way of providing additional income that we should allow ourselves to transfer from the 1992 Act to this one a flexibility that may be of use to a particular group of claimants, which has not been yet identified.

Mr. Clappison: As I said, the Minister's remarks have been helpful. They have put the power in context, and have given an indication of how it might be used in future to give greater flexibility. I shall consider his comments carefully. The debate has been useful, and has drawn out from the Minister another example, which sounded worthy, of where the power to disaggregate might be used to encourage someone to work. The Minister has indicated the background to Government thinking on the power, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 ordered to stand part of the Bill.

Clause 6

Duty to specify assessed income period

Question proposed, That the clause stand part of the Bill.

10.45 am

Mr. Clappison: Clause 6 brings us to the question of the assessed income period, and is the first of several clauses to do so. The system set out in clauses 6 to 10 is put forward on the basis that the income of claimants aged 65 or over is to be treated as remaining the same for a five-year period, which is the assessed income period. Increases in income do not affect entitlement, and therefore they do not have to be reported, although a claimant can apply for reassessment if his income goes down. We shall shortly come to the mechanism for doing that. Other prescribed circumstances need to be notified during the assessed income period, and they are similar to those that apply to the basic state pension.

I cannot let the clause pass without making one observation. The original consultation document stated that the Government planned

    ''to award the Pension Credit for a longer, fixed period, drawing on experience from tax credits.''

That consultation was issued when the working families tax credit was granted for a six-month period based on a snapshot of a claimant's income, after which the credit was fixed. Since then, the working families tax credit has been replaced—or has evolved, as the Government would have it—and its successor establishes awards that are more sensitive to changes in circumstances, and allows for wider responsibilities for claimants who report such changes. In particular, clause 6 of the Tax Credits Bill establishes that, in relation to the working tax credit, at the end of the tax year the claimant must consider

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their income and whether there have been variations in it. If there have been variations of certain types, they must report that and it will have an effect on entitlement.

The working families tax credit has evolved into the working tax credit, which is more sensitive to changes in circumstances than its predecessor, which gave credit for a fixed six-month period. One wonders what experience of other tax credits has been drawn on to design the pension credit. A lesson that could usefully be learnt from the working families tax credit is the way in which it has constantly changed. It would be a good idea if the Government could resist the temptation to make change after change to the design of tax credits. The more change there is, the more complexity enters the system. Many would say that the system is already complex enough.

Mr. Steve Webb (Northavon): Clause 6 sets out an assessed income period, and the presumption is that that period will be five years for anyone of 65 or over. I hope that the Minister will clarify what it will be for those under 65, and whether it will be akin to the weekly assessment that happens under income support, whether it will be one year, or what. I am hazy on that.

I have one point that I hope that the Minister will address. The nub of the Government's contention that the assessment is a more humane form of means-testing rests primarily on the fact that people will only be assessed every five years. There will be an assessed income period, which, once people are 65, will be five years.

There will be circumstances, which claimants will be obliged to report, in which that period will not be five years. It is not clear whether the Government have researched or made estimates of—I hope that the Minister will inform the Committee about this—the question how, if the assessed income period is set at five years, someone will typically run five years without contacting the Department to reassess their pension credit? If, for example, hitting a particular age, losing a partner or another major change in circumstance prompts a reassessment, two years, rather than five, might become the norm, or half of all claimants might have to put in fresh claims three times in five years. In that case, all the benefits claimed for only having to be assessed once every five years will be greatly diminished.

Although the attraction of means-testing somebody every five years rather than every week is self-evident, five years might not be the outcome if many people have changes in their circumstances that require them to report more regularly, or have changes in their circumstances that they would want to report because if they did not do so they would lose out. I should be grateful if the Minister were to tell us the Department's assessment of how many people will, even if the period in the clause is set to five years, be reassessed more frequently. Will it concern a minority, or will the typical pension credit recipient find themselves in contact with the Department far more frequently than every five years? That is critical to our assessment of how far that is humane means-testing, or how far it

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will end up being regular contact with the Department, and I should be grateful for clarification.

Kevin Brennan (Cardiff, West): Clause 6 is important because it lays out a Minister's ability to be able to set the assessment period at five years. That is highly significant because it is about time that we started to move away from talking about a means test and describing the state pension credit by that phrase.

I have talked to some in the voluntary sector who work with older people, all of whom welcomed the additional money that will be going into pensioners' pockets when the Bill becomes law. They all agree that what is crucial to the take-up of state pension credit is the need to get it into pensioners' heads that it is something to which they are entitled, that it will not be intrusive or demeaning, and that it will not affect their wish to live a dignified retirement, but rather quite the opposite because it will hugely enhance the quality of life of many pensioners across the country.

The points raised by Opposition Members in trying to draw a comparison between a state pension credit, in which there will be an assessment of pensioners' means every five years, and national assistance benefits, in which people face intrusive interference in their personal lives and minute inquiries into their personal circumstances, is ludicrous and damaging. The Bill will pass into law, and we should start using more realistic language when we talk about it and recognise that the burden of the so-called means test in the Bill bears no comparison with the kind of burden that lives in the memories of people from my part of the world as a result of means-testing in the 1930s.

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