State Pension Credit Bill [Lords]

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Mr. Boswell: I would like a precise answer to a question that I posed obliquely about winter fuel payments—and what about free television licences for the over–75s; do they score?

Maria Eagle: They do not count as income. Under the old MIG rules there was an onus on the claimant to report all kinds of little streams of income. We are setting out on the face of the Bill what counts as income: things that are not mentioned there are not included. That is probably a clearer way of doing things, and is consistent with the fact that we do not expect people to report minuscule changes on a weekly basis.

The hon. Gentleman raised some points about subsection (6) and capital being treated as income and income being treated as capital. He made some comments about parliamentary counsel with which I have some sympathy. With a lawyer in the family he will understand why lawyers do that kind of thing, but perhaps I can give him an example. First, the flexibility is carried over from income support. There is nothing new. We are not suddenly stating in legislation that we might sometimes treat income as capital and capital as income. The practice is carried over from income support, to make sense of some of the more obscure forms of both and to put the treatment beyond doubt and thus avoid tangles over how things should be dealt with.

My right hon. Friend Baroness Hollis of Heigham, gave an example in the other place. She said that the power to prescribe in regulations the circumstances in which income is to be treated as capital

    ''would be used in circumstances when a payment that is regularly received, or is made in relation to a particular period, should not be treated as income; for example, a pensioner may have loaned a relative some money which he or she is repaying monthly by instalments. Although it would be regular monthly income, it clearly would be in respect of capital and, therefore, we would want it to be treated as such.''—[Official Report, House of Lords, 29 January 2002; Vol. 631, c. 192.]

By making that clear in the Bill, we can deal sensibly with issues that are by their nature small and unusual.

I hope that that deals with what the hon. Gentleman said about subsection (6). He made some

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points about personal equity plans, TESSAs and other tax-advantaged savings. There is a notional income from capital and there is the disregard, but we would not want to ignore capital savings. We do not want to put incentives in the system by completely ignoring things such as tax-free savings, which would allow one type of capital to be treated differently from any other kind for the purposes of the calculation.

My hon. Friend the Member for Bassetlaw, apart from urging his constituents to spend all their money, referred to information for those who might come into some money in due course as a result of a personal or industrial injury. That is an important point. We considering how such matters should be treated but we have not made final decisions yet. Those will come through in the regulations, but it is important that when people who are not used to having a lot of money come into money they receive good advice about the implications of dealing with the money in certain ways. We take on board what my hon. Friend said.

Mr. McCartney: Except ''Spend, spend, spend.''

Maria Eagle: My hon. Friend the Member for Bassetlaw will no doubt have to answer to his constituents for making such comments.

I hope that I have dealt with the points that have been raised.

Mr. Webb: Will the Under-Secretary address the point about working tax credit?

Maria Eagle: I did not address that point specifically. Working tax credit is in the Bill, so it is to be included as income. I can say that clearly. One of the main reasons for including it is that that will prevent pensioners who are already receiving the working tax credit from being paid by the state again to meet the same needs. We are back to the point about double provision. We might not agree with it, but we all realise that the rule against double provision has always been a cornerstone of the welfare state. Now I am starting to repeat myself from our debates on earlier clauses, so I shall stop there. I hope that I have dealt with all the points that have been made.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.

Clause 16

Retirement pension income

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

Mr. Boswell: We now come to the narrower concept of retirement pension income. I appreciate the Under-Secretary's elucidation of the wider concepts of income in clause 15. I am content with her approach, which is to specify the heads for income, including, if necessary, a get-out clause to deal with anything that we have not thought of, or abuses of the system. It is more comfortable for pensioners to be able to carry out a mental checklist and say, ''I have none of the above,'' than to be caught out. As I conceded earlier, it is right that there should be a fallback provision, as set out in subsection (2), which is that amendments may be made

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by regulation to subsection (1) to add or vary something, or to delete anything that no longer seems appropriate. The Committee heard examples of the complexities even of retirement income in our exchanges on annuities, and I shall not repeat them.

As I shall say when we come to clause 17, the inference to be drawn from clauses 16 and 17, and from clause 19, which gives the details of regulations, is that the regulations will be made by negative resolution. That may be appropriate, but given the complexities—such as the fact that some people may be stakeholders, and the different kinds of income that may fall within the measure—can Ministers assure us that they will usually carry out consultations before introducing such regulations? A possible exception to consultation would be the discovery of a clear abuse that is escalating fast; for example, if someone finds a scheme that he then markets and people take it up at an inordinate rate. In such circumstances, Ministers may wish to regulate first and consult afterwards to stop the loss of revenue and the abuse of the system. Subject only to that reservation, there is everything to be gained by Ministers taking a considered view and consulting experts and interested parties if they need to redefine the heads under which retirement income is established. I hope that they will bear that in mind and give us the assurances that we want.

Mr. McCartney: I shall not speak for long on the clause, which is best described as a sort of subsection of clause 15. It was drafted as a separate clause to give a better structure to the Bill and to make it more manageable.

I gave a long list of details about the income relevant to guarantee calculation in clause 15 and earlier clauses, and on what will be treated as income, or treated as income and ignored. Details of qualifying income were also stated. There is no need for further debate about some of the issues, because although they impact on this clause, they were discussed by my hon. Friend the Under-Secretary on clause 15.

Clause 16 is a belt-and-braces clause, which defines what we mean by retirement pension income. The definition covers both state and private pension provision and is an important link to clauses 6 and 10. We discussed in detail that family of clauses and their interrelationship.

In general, pensioners, especially those aged 65 and over, have a settled and regular retirement pension income that is not subject to frequent changes. Therefore, there is little point in constantly asking them about changes to that income, as such questions are intrusive and may be demeaning. We debated the subject at length, with gusto, during an earlier sitting; we also discussed the idea of pensioners not having to report changes in their income for up to five years.

The clause underpins our commitment to fixed assessments. Pensioners will not usually need to report, which makes transparent the operation of the pension credit and the assessed income period. The clause includes powers to add to, vary or remove descriptions in the list of requirements for pension

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income. The list is flexible, to allow it to be amended and to remain relevant. The pension industry may come up with new products that are not yet defined, but that would benefit us in the process of assessing pension income. It is therefore important to keep that flexibility.

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As for consultation, we are required to consult the Social Security Advisory Committee, but we would do so in any event. The hon. Member for Daventry reasonably asked if there would be a fuller firmer process outside that consultation. Rather than give a disingenuous reply, I shall say no. However, that does not mean a diminution of our commitment to consultation, as stakeholder groups have been established alongside pensioners organisations to consult on the implementation strategy. Regulations are, of course, critical to that strategy. I reassure the hon. Gentleman that we will consult as fully as we can.

Question put and agreed to.

Clause 16 ordered to stand part of the Bill.

Clause 17

Other interpretation provisions

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

Mr. Boswell: I draw the Committee's attention to subsection (2), which, as often happens, comes a long way after subsection (1). Subsection (2) relates to regulation-making powers. The Under-Secretary helpfully reminded the Committee that he proposes to keep in touch with various stakeholder groups. That is entirely welcome. It is not the most productive system to have to consult formally on everything, and I would prefer him to have a continuing dialogue. I do not seek to draw a distinction there—although I would draw a distinction in connection with my previous intervention on clause 16.

Help the Aged has flagged up an issue that relates to subsection (2). In its characteristically economic way, it says:

    ''The two definitions to which this refers need more clarification, and should not be left to regulation by straightforward statutory instruments.''

We could have an interesting theological discussion about what an unstraightforward statutory instrument is, or whether there is such a thing as a straightforward statutory instrument. However, we all know what Help the Aged means. It does not want the definitions to be passed into law without consultation. That is even more important for the definition of income in clause 16, to which I briefly referred.

There is the sensitive issue of who is and is not in the same household. As the Committee will remember, I referred to Help the Aged's briefing about what is and is not cohabitation, and what is and is not a benefit unit. It would be helpful to have the Under-Secretary's assurance that the Government will consult on that.

There is also an issue about severe disability. I am involved with disability interests, and we should record that there will be an uplift for severely disabled

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persons. The statutory instrument concerned will shortly be subject to a prayer procedure, and the Under-Secretary will realise the importance of the definitions of severe disability and their implications, especially in borderline cases. Given the vulnerability of such people, they should be handled as sensitively as possible. I am not looking for trouble in advance. However, I hope that the Under-Secretary will take on board the need for the closest possible consultation, so that she can ensure that all possible angles are explored before regulations are made. She must ensure that what she rightly intends to be a helpful set of provisions will not give rise to any recriminations on the grounds that they have not been fully considered.

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