State Pension Credit Bill [Lords]

[back to previous text]

Column Number: 201

Mr. McCartney: Clause 13 provides the Government with a power to regulate the smooth transfer of pensioners from the current system of financial support and income support to a state pension credit. The probing amendment gives us an opportunity to set out the transitional arrangements in some detail. This is a massive exercise, and enacting the Bill is the easy part, if hon. Members do not mind me saying so. I reassure the Committee that a great deal of effort has been spent on the implementation strategy, and a great human and financial resources have been made available to ensure the smooth operation of pension credit in a rolling programme over the next few years to access the system. I shall write to the hon. Gentleman and to the hon. Member for Northavon if they want regular updates. It is in all our interests that the system is open and transparent.

Mr. Boswell: I want to put on record that I would appreciate, as I am sure that the hon. Member for Northavon would, a continuing briefing on the matter. As the Minister rightly says, it is in the interests of everyone, especially our constituents and pensioners, to know what is going on and what the plans are for the service.

Mr. McCartney: I thank the hon. Gentleman. If he hears nothing, he should not surmise that there is a problem. He will have to trust me to get in touch with him with information that is not just a regurgitation or re-spin of what was said before. We will let him know where we are up to as we make progress.

During the transition period, we need to be able to transfer the 1.8 million people who qualify for state pension credit from the existing income support system, so that there is no interruption to their income. We intend to make regulations that will enable them to be treated as having made a claim for state pension credit. They will be notified of their new entitlement and will have the normal right to ask for a review or appeal. This proposal will remove the need for them to make a separate claim and so minimise bureaucracy and ensure continuity of payment.

We will introduce arrangements that will enable staff in the Department for Work and Pensions to recalculate these cases before October 2003 and arrange payments of state pension credit from the appropriate date. That answers one of the points that the hon. Member for Daventry made about the bulge in 2003–2004. In addition, there are 6.3 million households with someone aged 60 and over of whom we estimate some 2.4 million could be entitled to pension credit. We will systematically identify and contact them over the 18-month period from April 2003 to October 2004 to ensure they know what to do to take up their entitlement. We will make provision in the regulations that will allow backdating of the payment of pension credit to the start date in October 2003 if an application is made by October 2004 so that no pensioner need lose out.

Mr. Boswell: Let us make it absolutely clear—I do not think that I dissent from the Minister. Everyone will have been contacted by October 2004 so there is no question of anyone not having a chance to get the credit and having it run backdated from October 2003.

Column Number: 202

Mr. McCartney: That is why we are taking advance claims.

Subsection 2 (b) provides that regulations may also allow for an assessed income period in excess of five years where a person has reached the qualifying age when state pension credit is introduced. We expect that the circumstances of the vast majority of people, both existing minimum income guarantee recipients and take-on cases, who are over 65 will be settled and so a five-year income assessment period, starting from A-Day—the first date of implementation—would normally apply.

All the rules for setting and maintaining assessed income periods under clauses 6 to 10 continue to apply. Claimants would be able to ask for their pension credit entitlement to be re-determined under clause 8, so I can assure the Committee that amendment No. 34 is not needed. All those five-year periods would start from October 2003 and that would create a potential peak of reviews in October 2008. Setting a different period will help us to even out the work load in a manageable way, avoiding the operational problems that could otherwise occur five years after the introduction of the credits.

We have considered carefully how best to manage those arrangements and propose to carry out this large review task over a two-year period between 2008 and 2010. This will mean that pensioners awarded pension credit in the first year and, who would otherwise have an assessed income period of five years, will instead have an assessed income period of anything from five to seven years, which goes back to a point made by the hon. Member for Northavon.

5.45 pm

Amendment No. 36 would prevent us from setting longer periods in those cases. That would mean either that the Pension Service would have to undertake an unmanageable number of reviews in 2008 or we would have to set shorter periods and carry out the extra work in the early years of implementation when we expect it to be concentrating on maximising take-up. That is the choice that we have had to make. Both jobs are not doable at the same time and there is no point in trying to claim that they are. Most people would welcome our decision, which gets them into the system and enables them to receive pension credit.

Mr. Webb: The business of backdating to October 2003 is tremendously welcome. It is a helpful thing that has come from the Committee. Those on income support have not been asked for some of the information that they will have to provide for their savings credit to be calculated such as, for example, the uprating rules that apply to their occupational pensions. Will they get a letter telling them about the new thing coming in in October and asking them for that information? Although they will not be making a fresh claim in one sense, they will be asked for extra information and that will happen in that six-month period.

Mr. McCartney: The hon. Gentleman asks a very fair question. As soon as the Bill receives Royal Assent, we will start approaching those people, who will transfer to the pension credit. As soon as the Bill is

Column Number: 203

signed, sealed and delivered, that process will commence, and as soon as it does, we will notify hon. Members of that.

Amendment No. 36 would prevent us setting longer periods in such cases and make them unmanageable. I went on to say that we were concentrating on maximising the take-up. That is the judgment that has to be made, and we have made it. Given the two scenarios that I set out, pensioners' organisations would have wanted us to make that judgment. Assessed income periods are being introduced to reduce the burden on pensioners of reporting changes. Longer periods would generally work to the claimant's advantage.

The hon. Member for Daventry raised a couple of other points. First, on IT, for the next sitting, I will give him a copy of a letter that I had to send to Computing magazine, which ran a front-page scare story about our IT system for pensioner credit. It was a rather disingenuous story. My letter set out a rebuttal of that, but also reassurances. The hon. Gentleman might find reassurance in the statement made about IT by the Secretary of State, debating another matter in the House. My hon. Friend the Under-Secretary and I take seriously the issue of IT implementation and want to have an open and transparent strategy about it. Across the piece, Governments of whatever hue have had problems with IT. When I was in the Cabinet Office, I was made responsible for sorting those out, so it is all down to me.

I give the hon. Member for Northavon reassurance that we are designing the system to use spare capacity. For the introduction of pension credit, we will use capacity that we transferred out to other systems. Rigorous, properly managed programmes will be put in place at every stage, including risk assessment and timetables for implementation and testing. All of that is part of the preparations for the introduction in 2003.

Mr. Boswell: I am grateful to the Minister for saying that he is genuinely trying to help the Committee. However, given the read-across to the difficulties in introducing the new formula for child support that I am sure he had in mind, will he assure the Committee that if a problem were to develop—even if he thinks that it will not—in the implementation of pension credit for the scheduled date of October 2003, he and the Secretary of State will take an early opportunity to report that to the House? I think that it would be the general view of most Members, rather shown by the case of child support, that it is far better to get it right and implement it, than to half-implement it and get off on the wrong foot.

Mr. McCartney: I understand what the hon. Gentleman is saying. If he hears that I have left the country, he will know that there is a problem.

It is all a matter of transparency. We discussed that with the stakeholders in the Department. Obviously, we built into the design of the IT systems periods for testing and, once testing is reviewed, periods to make the changes. Again, I assure the hon. Gentleman that a rigorous process is in place to ensure that we have robust measures to minimise risk and to apply testing.

Column Number: 204

Testing will take place during a period of months, not a period of days. We will not just decide the weekend before the launch to have a live check of the system and see how it goes. Those days are over, but there used to be occasions when projects were not even tested in the weekend before they went live; they just pressed the button and hoped that things went well. The system has radically changed, and a very robust system has been put in place for the delivery of the credit in October 2003.

The hon. Gentleman also asked whether anyone would lose out when a longer assessed period was set. The answer is no, because of the win-win situation. The claimant can always ask about changes to his or her entitlement provision, which will result in an increase of pension credit entitlement. As a result of the phased introduction, there is no potential loss to the individual concerned. I hope that those explanations will allow the hon. Gentleman to withdraw his amendment.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 23 April 2002