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Question put and agreed to.

Bill ordered to be brought in by Adam Price, Tony Lloyd, Harry Cohen, Mr. Huw Edwards, Mr. Frank Field, Sue Doughty, Alan Simpson, David Taylor, Mr. Roger Williams, Annabelle Ewing, Mr. Elfyn Llwyd and Sir Teddy Taylor.

Interest Rates (Limits on Charges)

Adam Price accordingly presented a Bill to impose limits on the interest rate and associated charges which may be charged by those providing loans and other forms of credit: And the same was read the First time; and ordered to be read a Second time on Friday 18 June, and to be printed [Bill 107].

 
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Orders of the Day

Age-Related Payments Bill

Order for Second Reading read.

12.45 pm

The Minister for Pensions (Malcolm Wicks): I beg to move, That the Bill be now read a Second time.

This Bill will put in place the promise in the Budget to pay all eligible households with someone aged 70 or over an extra £100 this year. Of course, this measure has already been subject to some debate following the Chancellor's Budget speech. When combined with winter fuel payments, it will mean that households with someone over 70 will get up to £300 later this year and households with someone over 80 will receive £400.

The payment will be neither taxable nor income tested. It will not affect the other benefits that a pensioner may receive. For example, it will not reduce the amount of council tax benefit, housing benefit or pension credit. In particular, by making this one-off payment, we are recognising the impact of recent council tax increases on the fixed incomes of older pensioners. It will also help with their other living expenses.

Mr. Christopher Chope (Christchurch) (Con): Can the Minister explain how the Bill will help pensioner households where someone over 70 now lives if, come September, that person has died, leaving a widow under 70 in that household? Will that household still qualify for the £100 payment, which is clearly what the Chancellor implied in his statement; or is the letter of the Bill, which suggests that that household will not get £100, the truth?

Malcolm Wicks: The payment will go to those who meet the requirements during the qualifying week. Of course, there will be exceptions—the hon. Gentleman mentions one—but I hope that he will listen and understand that the payment will be a great benefit to a number of vulnerable, elderly households in this country.

Mr. Patrick McLoughlin (West Derbyshire) (Con): Will the Minister give way?

Malcolm Wicks: I will give way in a moment.

We are aware of the concern felt by many people, especially those on low incomes, about council tax increases. On 5 February, Parliament approved the local government finance settlement for the 2004–05 financial year. The settlement provides a general grant increase of 5.5 per cent. and an overall increase of 7.3 per cent. Since taking office, we have increased funding to councils by 30 per cent. in real terms. That contrasts with a 7 per cent. real-terms cut during the last four years of the previous Government—which perhaps will now be explained.

Mr. McLoughlin: I would love to explain that, but Mr. Speaker might rule me out of order if I did so. Will the Minister tell us why the Bill refers only to 2004? Are the Government thinking of getting rid of the council tax?
 
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Malcolm Wicks: We are legislating for this year only. Of course, such things are of real concern, as I was arguing, to those who face high council tax increases. [Interruption]. As I am being provoked, perhaps I can say something about the average council tax increases per dwelling in 2004–05. In Labour councils, they are likely to be £870; in Liberal Democrat councils, £971; and in Conservative councils, £1,072.

Sir Paul Beresford (Mole Valley) (Con): Will the Minister give way?

Malcolm Wicks: I will give way, because perhaps a word of explanation, or even apology, is coming up.

Sir Paul Beresford: If there is to be an apology, it must come from the Government—the shifting of the grant explains the biased way in which the grant has been applied to many local authorities. The Minister may be interested to hear that the Select Committee on the Office of the Deputy Prime Minister yesterday met a number of people, including from the "Is It Fair?" campaign and pensioners groups. They blame the Government for the council tax rise.

Malcolm Wicks: I always take seriously the interventions of the hon. Gentleman, who used to be a fellow Croydon MP before the electorate decided otherwise. In the south-east, there have been more generous grant increases than in other parts of the country, which should have benefited many Conservative authorities.

By making this one-off payment, we are recognising the concerns that I have discussed, including the way in which local authorities controlled by different parties have increased council tax. We are encouraged that this year's average increase of 5.9 per cent. is less than half the increase last year and is the lowest in almost a decade. We made it clear that we would use our powers to cap excessive increases in council tax in 2004–05, and that strong message has already had an effect—councils have set lower council tax increases this year than would otherwise have been the case.

Mr. Michael Weir (Angus) (SNP): Given that the Minister is making a powerful case about the purpose of the payment to help with excessive council tax bills, should the Government not look at an alternative to council tax instead of trying to buy off pensioners for one year only?

Malcolm Wicks: Some increases remain excessive, so we are using our powers to cap. The Government are reluctant to cap, but we cannot stand back and allow excessive council tax increases to take place year after year. Help with council tax is, of course, already available to pensioners and other people in the form of council tax benefit. We expect nearly 2 million pensioner households to benefit from increases in their council tax benefit or to become newly entitled to it as a result of the introduction of pension credit.

Andrew Bennett (Denton and Reddish) (Lab): While the proposals in the Bill are welcome, is my hon. Friend not concerned that almost 50 per cent. of pensioner
 
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households are not claiming the council tax benefit to which they are entitled? What is his Department doing to ensure 100 per cent. take-up of that benefit?

Malcolm Wicks: I know that my hon. Friend was not prompted by anyone to ask that question, but it leads into what I was going to say. We are extremely keen to ensure that all pensioners entitled to help with their council tax bills claim the benefit, which is why the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), launched a campaign on 1 March 2004 to help support local authorities to encourage everyone who may be entitled to help with their council tax to claim the benefit. We have issued a new poster and flyer, and have sent mailing packs to local authorities, our own local offices and advisers, as well as to local branches of Help the Aged, Age Concern, Citizens Advice and the National Pensioners Convention across Great Britain. We will follow that up with press advertising over a three-week period in regional and some national titles.

In response to my hon. Friend the Member for Denton and Reddish (Andrew Bennett), I concede that for too long council tax benefit has been one of the more obscure and less understood benefits. We are now taking significant steps to publicise it because, as with all income-tested benefits, we want to drive up take-up.

Mr. Weir: Would the Minister urge the Pension Service to advise pensioners about council tax benefit when they apply for tax credit, as that does not always happen at present? It would be helpful if pensioners could have a one-stop shop offering advice on all those benefits.

Malcolm Wicks: I agree that in general we need to move towards the notion of one-stop shops. The Pension Service is now sending out forms for council tax benefit along with news about the pension credit, so we are taking action. We need to take more steps, but I am particularly proud of the local services of the Pension Service, which have been welcomed by Members on both sides of the House. They are very much the human face of the Pension Service and are collaborating with various organisations on the Bill and other measures.

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