State Pension Credit Bill [Lords]

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Mr. Clappison: The Minister said that he was trying to bring the Opposition on board. I am trying to be as consensual as possible, but I must say to him that for much of the time we were not trying to jump overboard in the first place, because we agreed with a great deal—but not all—of what he said. I agree with the Government that it is more appropriate to have a longer assessed income period for pensioners than for people of working age, and that the assessment period should not be as sensitive to changes in circumstances as when people are working. The point that I was gently making was that that was not the case when the Government launched their consultation paper. They said that they wanted to learn lessons from the existing system of the working families tax credit, and then promptly changed that system.

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The Minister asked me about the Opposition's policy, and whether we would do away with the provisions. In the next three or four years, the biggest risk to the provisions will come from the Government themselves. The credit would be unique if it survived that long; none of the other credits has. There have been relaunches and fundamental changes pretty shortly after they were introduced. My plea to the Minister was that there should be some stability in the system. Credits should not be abolished or changed before people have the opportunity to get used to them.

I take the Minister's point that the means test is less intrusive than past tests, but I draw his attention to the remarks of the hon. Member for Northavon about the fact that there is still a need for changes in circumstances to be reported. I shall not take issue with the Minister about pensioners reporting falls in income and the effect that such falls would have. However, I remind him and his colleagues of the evidence presented to the Select Committee from a variety of sources on pensioners and means testing. They have a resistance to means tests for a variety of attitudinal reasons, and simply do not want to undergo them.

It may be less intrusive for pensioners to undergo just one means test every five years, but they do not like them at all. There is a wealth of evidence for that, including some from the Institute for Public Policy Research, which I invite the hon. Member for Cardiff, West to consider. Proof of that fact will be found in take-up rates, on which we shall have to keep a close eye. I also gently remind the Minister of the pledge made by his right hon. Friend the Chancellor of the Exchequer in 1993 to abolish means testing for pensioners altogether within a generation. He did not pledge to introduce a different form of means test.

Kevin Brennan: I was intrigued by the hon. Gentleman's remarks. Do I take it that he, as a Conservative Front-Bencher, is saying that he is opposed to means-testing?

Mr. Clappison: I do not want to go too widely into that; I do not want to earn your strictures, Mr. Atkinson. However, in the 18 years of Conservative Government there was a reduction in means-testing as more pensioners had pensions and assets of their own. We have heard the Minister's comments on that. Pensioners floated off means-testing.

In 1993, the man who is now Chancellor of the Exchequer pledged that a Labour Government would abolish means-testing, saying that that generation of pensioners would be freed from it altogether. However, there has been an increase in the proportion of pensioners undergoing means-testing—and the structure of the Bill and the assessment period are likely to ensure that there is a huge increase in means-testing in the future. PricewaterhouseCoopers' analysis was that given the way that things are structured at the moment, 70 per cent. of pensioners will be undergoing means tests by 2050. Those records are there for the hon. Gentleman to see. May I gently remind him of his party's obligations? I appreciate that

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he is trying to make the point that this is a new and improved form of means-testing that is entirely different from that done in the past, but that is not quite what the Chancellor said.

Mr. McCartney: Once again I rise to speak—rather wearily. I thought that I would give the hon. Gentleman another chance to come on board—

Mr. Clappison: I am on board.

Mr. McCartney: The hon. Gentleman is on board in the sense that he recognises the common sense of the Government's position, but he could not quite overcome his prejudices against the proposals and find a reason not to jump overboard. I hope that when he does, he will have a lifebelt.

I perceive a wee bit of movement among the Liberal Democrats. We were told this morning that more than half Britain's pensioners would face a nasty means test. The hon. Member for Northavon then recalculated and reduced the figure to a proportion of men aged 60 to 64—he has a point—and turned the argument round. He now accuses us of not being intrusive enough. He says that if the period remains five years, at the end of that period—[Interruption.] I apologise for paraphrasing the hon. Gentleman; I shall give way to him in a moment. He says that at the end of that period, huge amounts of benefit would be unclaimed because we had not been in contact. I thought that Liberal Democrat policy was that we were being far too intrusive. He cannot have it both ways.

The Pension Service will send all pension credit recipients an annual statement that shows their entitlement and how it is calculated. Each year, therefore, they will know how much they receive and whether that amount is correct. Regularly and unintrusively, we shall maintain contact with them to tell them what they are receiving and ask them whether the amount is correct and whether there has been a change in their circumstances. If the amount is not right because of error or a change of circumstances, that is where the beauty of the scheme kicks in. It turns the current system on its head and becomes an advocate on older people's behalf. The system will operate effectively on behalf of older people.

The hon. Member for Northavon must sort out in his mind what he wants us to do—to have an ongoing, transparent and grown-up relationship with older people through the Pension Service, or to go back to the past, when we had no relationship other than the draconian one of which he paints a picture. We are moving on, modernising and considering the matter in terms of the two components of income assessment that apply at the start of someone's basic state pension.

The Liberal Democrats do a disservice to pension credit—and, more importantly, to older people. They tell older people that they will be means-tested, screwed into the ground, kicked from pillar to post and have the thought police, the financial police and the Metropolitan police all onto them. That is what the hon. Member for Northavon throws into the argument. Perhaps I exaggerate—I am paraphrasing—but that is the point that the Liberal Democrats have

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reached. They are desperate to ensure that pensioners do not regard the proposal as a beneficial and major change on their behalf.

If pensioners do regard it in that way, as they increasingly do and will, the hon. Gentleman's arguments will be threadbare in the extreme, and all that will be left is a simple question that pensioners will ask them: ''Would you take it away?'' That is rather like what happened with the winter fuel payment, as hon. Members may remember. Pensioners got the payment, and when the Liberal Democrats were asked whether they would take it away, they changed their policies overnight. They will do the same with pension credit.

Mr. Webb rose—

Annabelle Ewing rose—

Mr. McCartney: I give way first to the hon. Member for Northavon.

Mr. Webb: The alternative to 5.5 million people receiving pension credit is a decent state pension. Let us suppose that we asked Britain's pensioners, ''What do you want in your old age? You have a choice. You can have a good state pension, which won't change when your other income goes up and down, or a relationship with the Pension Service. Which would you prefer?'' Something tells me that Britain's pensioners are not crying out for a relationship with the Pension Service, and that that is second best to a decent pension—

The Chairman: Order. That is an interesting point, but it has little to do with clause 6.

Annabelle Ewing rose—

Mr. McCartney: I shall address the points raised by the hon. Member for Northavon first and then I shall give way to the hon. Member for Perth (Annabelle Ewing), but I thank her for the note that she sent me at the weekend.

The hon. Gentleman is no longer drowning; he has drowned. Pensioners will not only have a relationship with the Pension Service, they will get a decent pension. More importantly, the basic state pension is a building block, and there are additional above-average increases. We are dealing with the problem that pensioners lose out for every pound of their small additional earnings or small second pension. We have changed the nature of the game. We will make a contribution—a payment to reward thrift. Hon. Members may inform me otherwise, but I know of no other state pension system in the world that has ever done such a thing. It is a dramatic change in terms of both structure and policy.

The hon. Member for Northavon mentioned the alternative. At some stage in the proceedings, we must put on record what the alternative would mean, because it is full of means-testing and poorer pensioners would lose out considerably—but we will return to that later, because I have information that is hot off the press; I have just received another note. The hon. Gentleman needs help with his policy because it is in disarray.

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11.30 am

Annabelle Ewing: Taking the European Union as a comparator, I wonder how the United Kingdom fares in terms of the level of basic pension rights—although that may be beyond the scope of the clause. The Minister mentioned the annual statements to pensioners in receipt of pension credit and said that they would be able to see at first hand if they were not receiving their full entitlement. What type of information will be provided in the statement to enable pensioners to look at the statement and know if they are not receiving the amount to which they are entitled? Will it simply be a case of, ''Please contact the office if you have any questions''? They may fear that if they contacted the Pension Service, they might end up with less money.

 
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