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Mr. Waterson: I am grateful to the Minister for his offer to write to me. That will be helpful. It may assist him if I pin down my concern and express it a little more clearly. At the moment, we are all knocking on doors and are very conscious of the cut-off date for postal votes and proxy votes. There is the problem of people being abroad on the qualifying date or when the form arrives. That is why I am even more puzzled by the clause. If a person goes away on holiday and is abroad during that relevant week, but is otherwise ordinarily resident in the country, will that person still get the money? I suspect that the answer is yes. We will need to see the reasoning behind that ''yes'' in the letter.
Malcolm Wicks: I was temporarily confused by the one day myself. However, as I said, this is not about everyone having to return to this country, or about Britons of 80 years' standing having to come back from south America to get their £100 from the Government. Those people are ordinarily resident here.
I now realise that this is a much more technical issue. Let us say that a British family had lived on the continent for several years and came back here to retire. If the family members were judged ordinarily resident, being at this cut-off point in September for just one day, subject to other criteria, would make
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them eligible for the winter fuel payment and the £100. I think that that is the explanation. However, I will write to clarify it.
Question put and agreed to.
Clause 5 ordered to stand part of the Bill.
Clause 6
Payment to be disregarded for tax and social security
Question proposed, That the clause stand part of the Bill.
Malcolm Wicks: This clause deals with the treatment of a payment for tax benefit and tax credit purposes. In line with our commitment that the payment will be non-taxable and will not affect other benefits that a pensioner may receive, the clause ensures that the payment will be disregarded when considering tax liability and entitlement to other benefits. The payments will be made in full to help older people in the way that I have described.
Mr. Waterson: I want to hark back to an earlier debate. It is the ringing tones of the words
''No account shall be taken'',
as stated in the clause, that I want to probe a bit more.
One of the odd concepts of this payment is that, as originally designed, it was going to be a wholly one-off, free-standing payment with no strings attached. No tax was to be payable on it. It would not matter how rich a person was, or how little they needed the money, they would get it, subject to other matters already debated. Even if a person was getting complete council tax benefit, they would still get it, more or less no questions asked. That was the original idea.
There are two arguments on two sides of the coin. One wonders what is the justification for the payment if it bears no relation to council tax levels and rises in different parts of the country, or to the ability of individuals to pay. On Second Reading, I teased the Government slightly by suggesting that they were finally coming around to our way of thinking about restoring the earnings link, which, sadly and unaccountably, we did not get around to debating and voting on when we reached the Report stage of the Pensions Bill.
The best way to help the poorest pensioners is to ensure that all pensioners receive a decent state retirement pension and to restore the earnings link. However, I do not think that the Bill is to do with that. I assume that the attraction of the measure was its simplicity. I understand that. The Chancellor, on a basic political level, wanted to make an announcement, so there was no time to start worrying about tax, benefits, council tax or whatever—the payment was just going to be handed to people. They would, more or less, get the money as long as they were in the country, over 70 and as long as various other things happened. It could be a fraction of their daily income, or make all the difference between paying the council tax and not being able to do so. Nevertheless, broadly speaking, people would get it.
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We know, as a result of earlier debates on people in care homes, nursing homes and hospital, that it is not so simple. There is a point at which people can become entangled in the benefits system. The tax issue is fairly clear, unless we stumble across a new surprise in Committee. People do not pay tax on the payment and there is no basis for paying tax at all—end of story. That is clear. However, it is not clear whether, as it says in paragraph (b), no account should taken of
''entitlement to benefit under an enactment relating to social security''
and, as it says in paragraph (c), ''entitlement to a tax credit.'' We know that there is an involvement with pension credit and the benefits system in the context of care homes and hospitals. Given its absolute drafting, is the clause still relevant or accurate?
Malcolm Wicks: I do not think that the hon. Gentleman has understood. Clause 6 clearly sets out that the money will not be taken account of for income tax purposes or count as income for income-tested benefits. That does not have much to do with our earlier discussion about when pension credit is relevant for certain households.
I, too, regret that we never discussed the earnings link because it would have been fascinating to behold the hon. Gentleman's explanation of why it was abolished by a previous Conservative Government in 1980.
Question put and agreed to.
Clause 6 ordered to stand part of the Bill.
Clause 7
Power to provide for payments
Mr. Waterson: I beg to move amendment No. 7, in
clause 7, page 4, line 15, leave out 'may' and insert 'shall'.
Even compared with what has gone before, this part is really interesting because it seems to have landed in the middle of the Bill from some other dimension or planet. It flies in the face of the rest of the Bill and what Ministers—in particular this Minister—have been saying.
On 30 April 2004, the Minister, in a written answer to the hon. Member for Northavon, talked about
''ad-hoc payments to pensioners''—[Official Report, 30 April 2004; Vol. 420, c. 1369W.]
In a reply to my hon. Friend the Member for Chichester (Mr. Tyrie) on 4 May 2004, the Minister made it abundantly clear that this is a one-off payment to people over 70 resulting from the Budget statement. One would have thought that that was where the matter would rest. It was a one-off payment motivated by worries about the council tax.
We are told that the Government are in the process of coming up with some proposals for the reform of Government finance, which are promised in July. The Minister may or may not be privy to the options that
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are being considered. It would be fascinating to hear, as far as it is in order to do so, how that debate is developing in the Government. People might think that that would be the end of the matter.
11.15 am
We also heard an argument about the 70-years cut-off point. The Minister argued why that would cost too much and be inappropriate. It seems that all the help is being directed at older pensioners because they deserve it more and are likely to have less money. Then, barrelling out of nowhere, comes clause 7(1), which contains two things that are at odds with what has been said.
The Government intend to make regulations. I wonder, just for a laugh, whether there is any chance of the Committee seeing draft regulations, but I will not hold my breath. The Government say that they will make regulations to provide for further one-off payments in the future, if that does not sound too Irish, and—blow me!—those will apply to people who have reached the age of 60, not 70. I do not know what the Minister is getting at.
Amendment No. 7 is the mother of all probing amendments, as it changes the word ''may'' to ''shall,'' which is simply designed to tease out what is going on. Are we talking about an annual event? Recent political history suggests that when we start giving pensioners Christmas bonuses or payments to cover cold weather or winter fuel, they become, as with the free television licences for certain pensioners, fixtures—[Interruption.] I hear a murmur of assent from the Labour Back Benchers. There will come a point when the Government will have difficulty saying, ''We gave it to you one year, but we'll not give it to you in another.''
The only way out for the Government would be for them to come up with some impressive proposals to amend the system of local government finance. We should not get into the detail of that. We know that the Liberals want to get rid of council tax and replace it with something called local income tax, which would be wholly unworkable, with a lot of pensioners ending up paying more than they do now.
The £100 figure is popular in this context. We all remember the promises made at the Brent, East by-election when we saw pictures of the Liberal Democrats giving a £100 cheque to pensioners. Just for the record, that policy has been abandoned. The following article, referring to the Liberal Democrat leader, appeared in The Guardian:
''The Lib Dem insisted that he had not broken his promise, although he admitted that the pledge would not now be met. 'It is not a matter of breaking a promise. It is a matter of saying that we have been reviewing policies'.''
We all know about the kind of policy that pops up in time for a high-profile by-election and dies afterwards, although, as we discovered in a debate the other day, the promise still features on the website of the hon. Member for Brent, East (Sarah Teather).
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The Chairman: Order. I have been reasonably lenient with the hon. Gentleman, but he is steering a considerable way from his amendment. He might be able to make such remarks in the stand part debate, but not in a debate on his amendment.
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