State Pension Credit Bill [Lords]

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Schedule 1


3.45 pm

Mr. Boswell: I beg to move amendment No. 40, in page 15, line 26, at end insert 'foreseeable'.

The genesis of the amendment is that, rather like a dog with a lamppost, I treat it as professional deformation to leave schedules unamended. It is necessary to warn Ministers that something should be said about them. When I introduced schedules as a Minister, I always had my fingers firmly crossed and hoped to goodness that I knew what was not right with them. I mention that as a semi-jocular point, because this schedule relates to administration, and that, rather than the essence of the Bill, is the proper subject of a schedule. The schedule reflects a considerable body of doctrine and experience in the social security system, so the amendment is not an attempt to get at the Department by a side wind.

However, I am glad that I chose the amendment as the Committee begins to draw to a conclusion because, although I missed some debates on Tuesday because

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the Minister and I were debating elsewhere, I have looked at the record and I am concerned that some points were not brought out as clearly as they might have been. The amendment suggests the insertion of one word, and addresses what is and is not reasonable for a pension credit claimant to have to lay on the table, and what a decision maker should have to consider when determining an assessment period.

We all anticipate that most pension credit claimants will act in good faith, that they will be straightforward and declare their income as best they understand it, and that they will expect to be treated on that basis. The system will become intolerable if people go around inventing potential circumstances under which additional income may accrue. I understand that we are talking about only the assessment period, which can be revised, rather than about a determination that must run for five years, but I am anxious to explore what is or is not a likelihood.

Future changes in income could very well be predictable. For example, a pensioner could have an annuity—dare I say, a pension annuity, to refer to the new concept in clause 16—which may include an income-related escalator clause. It could be sensible to have such an inflation clause, which would keep the claimant as well off in real terms as they were at the point at which the annuity was taken out. If that were the case, it would be as easy for a decision maker to calculate the impact of inflation as it would be for the state benefit system to work out how much pensions should be uprated annually to meet inflation. That is pre-mechanical procedure.

Other kinds of change could be less predictable. They could relate to dividends received from companies with which the claimant had shareholdings. Changes could be even more speculative and could—as we discussed the other day—relate to matters such as casual windfalls or irregular income, which could affect calculations. However, I do not suggest that Ministers seek to create an artificial or unfair situation, at least in this regard; they want to produce sensible rules for decision makers.

So, what is a decision maker allowed to consider, and what is a pension credit claimant reasonably expected to disclose? If there were to be income-related annuity, that would be a reasonable thing to declare because it would show the income flow forward. On other matters, it may be more difficult to make predictions. We all want to avoid a situation in which a decision maker brings extraneous material into a calculation or decides that there has to be a shorter assessment period, causing some irritation to the claimant. We also want to avoid a situation—this is my real concern—in which a claimant might have tried to act in perfectly good faith, and disclosed all the sources of income that he or she knew of, but might not have completely levelled with the decision maker, perhaps accidentally, on what was likely to happen to an increase in those incomes.

In such circumstances, the judgment would be difficult to make. We would have to try to separate the pensioner who acted in good faith but did not take everything into account, or who genuinely

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underestimated future income flow, from the pensioner who was very happy to keep something hidden behind his or her back and had not been straightforward in filling in the form or in discussions with the Pension Service.

Although there are some difficult concepts there, we all want to achieve a system that is precise. When the tax authorities capture an actual income, for example, in relation to a year of assessment that has taken place, that is relatively manageable. However, when future income flows have to be estimated, as in a sense they do under the Bill, things become more speculative. We want the system to work fairly. I hope that, in responding, the Under-Secretary will understand that the amendment is essentially a probing one. It would be useful to have her assurances on it.

Maria Eagle: I am somewhat relieved that the hon. Gentleman has given me a hint on what his amendment is about. He has just referred to ''difficult concepts'', and I was looking at it last night, trying to get my head around what ''foreseeable'' likelihood was. I was not sure whether he would be in the mood for a deeply philosophical or epistemological inquiry when discussing the schedule, or whether he just wanted to probe exactly what ''likelihood'' means.

I decided that I had better resort to a dictionary. The hon. Gentleman has told us something about the genesis of the amendment, and it was apparent once I had looked in the dictionary that that genesis was not there. I looked up ''foresee'', which should have been somewhere between ''forsake'' and ''forsooth'', but it was not. I did not get much help from ''Chambers English Dictionary'' or from the ''Oxford English Dictionary''. I resorted, as one does as an ex-lawyer, to a legal dictionary, and did not find the term in there either.

I then turned to ''likely'' and ''likelihood'', and got some succour from the legal dictionary about the meaning of likely, most of it from the Antipodes. There have been a lot of cases there about the meaning of likely, but general opinion seems to be that it means probable. I think that that is helpful. When we look in our own dictionaries, likely and likelihood are defined in terms of probability. The thesaurus included such terms as probable, possible, expected and to be expected. That is the kind of meaning that we are looking at, if that reassures the hon. Gentleman.

We are looking at something of a subjective test. We shall not be conducting some kind of Kafkaesque interrogation of the possible likely future with causal relationships having to be calculated at certain levels of probability. It is a commonsense test about what the claimant actually knows about a future of some uncertainty, a subjective test of his knowledge. The intention is not that the claimant must know of all changes in circumstances that are likely to occur, but that he should inform us of what he does know to be likely. We are not asking him to anticipate any strange change that might happen in certain unlikely circumstances and tell us about those in case it does. That would be a Kafkaesque world. It is a subjective test of what he knows is likely to happen.

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As currently drafted, paragraph 3(3) would require a person to notify the Department of ''predictable'' changes in their circumstances. That means unsurprising, knowable changes. Any other interpretation would require speculation on the part of the claimant, which would clearly be unreasonable. We do not want to be unreasonable. Our decisions makers are by their nature reasonable, otherwise they will fall foul of the appeals process. By ''unreasonable'' I mean difficult or unfair. It is obvious that I had fun with my dictionary last night. I thought that I might as well look some words up while I had the books down from the Library shelves.

I hope that the hon. Gentleman will be reassured by what I have said. I am sorry not to have been able to find a definition of ''foresee'', but given that it was not there and given that he has explained to the Committee that it was a probing amendment in respect of reasonableness and the subjectiveness of the test, perhaps I can finish by saying, forsooth, I hope he will forsake his amendment.

Mr. Boswell: At least in that respect I am ''Reassured of Daventry''. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: I am grateful to the hon. Gentleman. I do not know what would have happened to the status of the amendment when the word did not appear in the dictionary and had no legal meaning.

Schedule 1 agreed to.

Schedule 2

Minor and consequential amendments

Mr. Webb: I beg to move amendment No. 39, in page 26, line 5, at end insert—

    'National Assistance Act 1948

    24A In section 22(4) of the National Assistance Act 1948 (charges to be made for accommodation), at end insert ''and an amount of savings credit under the State Pension Credit Act 2002 to be prescribed in regulations''.'.

I see that we have the remainder of today and all of Tuesday to discuss this amendment.

Maria Eagle: Talk slowly.

The Chairman: Oh no.

Mr. Webb: The amendment would answer a simple question: what is the position of pension credit recipients in residential and nursing homes with regard to the savings credit? We may have got the wrong bit of the wrong Act. The Government claim that the Bill will make savings pay, yet we have already thought of a number of instances—for example, for women aged 60 to 64—where savings will not pay. I received a written answer the other day, which stated that 200,000 recipients of pension credit will be living in residential care or nursing homes. I presume that that includes those people who are there on income support and getting all their fees paid. As I understand it, they will get what would colloquially be called pocket money, although that may be slightly

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pejorative. They get an expenses allowance of about £15 a week.

I have raised that issue in the House. An issue of dignity is involved if people get £15 a week for pocket money in their declining years. As the pension credit comes along, should people who have saved and are now living in residential or nursing care have every penny of saving credit taken off them too, and just be left with the pocket money? Or should we simply say, as the amendment does, that those who have saved will receive a reward even if they are living in a residential or nursing home, because in addition to the pocket money they will get some savings credit? Two people in a residential home could both be getting the pocket money when one has saved and the other has not. If the Government want to reward savings, should not the credit apply just as much to people in residential accommodation?

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