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Earl Russell: My Lords, I am grateful to the Minister. When we speak of lone parents, it is often assumed--it is most certainly assumed by the Minister--that they may have to return to work at some future date. We do not normally make that assumption about the pensioner in his 80s unless he is a Member of this House.

Baroness Hollis of Heigham: My Lords, that is not a comment relevant to the point I was making, which was that lone parents are on benefit because they have no alternative income and experience poverty. There is persistent poverty and they are persistently on benefit. That is why we try to get them into work. Pensioners do not have a common income. If they did, my noble friend's amendment that she pressed at Committee and Report stages would have far greater resonance if pensioners all shared the same income in the same way as lone parents. It is because they do not and because the poorest one-fifth have only one-third or so of the income of the richest one-fifth, that to treat them all in the same way as my noble friend would, or treat them differently according to age, as the noble Lord, Lord Goodhart, would do, fails basically, simply and decently to address the poverty that is targeted on the poorest one-fifth, and to some extent the poorest two-fifths, of pensioners. That is why the Government are convinced that the best way to tackle pensioner poverty, and therefore ensure that those who need help get it whereas those who do not need help do not get it, is to produce, with their support, the minimum income guarantee irrespective of age.

We are aware of the needs of pensioners who have failed to qualify for the minimum income guarantee. That is why we have raised the capital limits from next April from £3,000 to £6,000 and £8,000 to £12,000, to help those with smaller amounts of savings. As the noble Lord, Lord Higgins, perceptively noticed in the Chancellor's Statement, in the long term we shall be publishing in the autumn proposed plans for a new pensioner credit with a view to further announcements on a Budget timetable. That pensioner credit will be designed to ensure that pensioners who have worked hard all their lives are not penalised if they have a modest occupational pension or savings.

The noble Lord, Lord Higgins, said that that was a throw-away line. On the contrary, that needs to be linked with what we are doing with MIG for those at or below the poverty line. We then need to look at our proposals for raising the capital limits for those just above the midline; the Chancellor's proposals for the autumn timetable for publishing plans for new pensioner credit and what we have been doing in this Bill and last summer's Bill, which has introduced a state second pension and a stakeholder pension. The noble Lord would surely accept that with the pensioner credit we are putting the last of the building blocks into a comprehensive and consistent pensioner programme which I hope will ensure that future generations of

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pensioners will not suffer the poverty they have inherited over the past 20 years. I give way to the noble Lord.

Lord Higgins: My Lords, does the Minister not agree that unless the Government fiddle the figures in the same way they did on the working families' tax credit, all the recognised standards of accountancy suggest that that should be treated as public expenditure, and the public expenditure review does not include it?

Baroness Hollis of Heigham: My Lords, I have no knowledge of the way in which the Chancellor will account for that expenditure; whether that will be through the Inland Revenue and tax credits systems or through the DSS. However, I have somewhat greater knowledge of the working families' tax credit. The noble Lord, together with the noble Earl, Lord Russell, took part in those debates. Unlike family credit which was paid to the parent at home and was therefore a benefit, the working families' tax credit is paid through the wage packet and is therefore a tax credit. That point was well aired. I know that the noble Lord disagrees. I do not think that I shall persuade him, any more than he will persuade me. However, that was perfectly proper and acceptable by all accounting standards of which I am aware. As far as I know, there has been no criticism to that effect, except from the Conservative Party.

I return to the amendment, rather than a wider debate on the CSR--

Lord Higgins : My Lords, I apologise for interrupting the noble Baroness again. If it is not the case, as she suggests, that it is accepted by outside accountancy bodies, will she take steps to correct the statement?

Baroness Hollis of Heigham: My Lords, it is a question of what weight one puts on particular views. I know that the Conservative Party wishes to see that included in the expenditure on the Department of Social Security. The whole philosophic push of the working families' tax credit is that this was no longer a benefit paid to a parent at home but an encouragement to ensure that work pays for those who, for whatever reason--for example, low levels of skill or low regional wages in their local economy--would otherwise find it difficult to manage and to make work pay if they re-entered the labour market. In that sense it was a tax credit to encourage an attractive wage and therefore make it worth while to work.

We have had this debate. I do not think that it is appropriate to reargue it tonight. At the time, the noble Lord persisted in his points because he and his party are opposed to WFTC in the same way that they are opposed to the New Deal. As far as I can see, the only expenditure the Tory Party opposite is happy to support is that which ensures that people stay at home rather than go out to work and find it worth while to work either through the support of the New Deal or the WFTC. We have seen the Shadow Chancellor recently do a U-turn on the minimum wage. I think that it will not be long before we see the Shadow Chancellor do a

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U-turn on the New Deal and the WFTC as he recognises that putting this together has ensured that we now have some of the lowest unemployment figures ever. Whereas we inherited youth unemployment of over half a million, it is now down to 50,000. Instead of sniping away at accounting conventions, it would have been gracious rather than churlish if the Benches opposite had joined in congratulating the Government on their performance in terms of their economic record so far.

I return to the amendment. I am happy to stay on the wider territory of government expenditure if noble Lords wish. However, I suspect that most noble Lords would like me to proceed. The noble Earl, Lord Russell, said that this proposal was an alternative to the indignity of the charity of the minimum income guarantee. Again, either he has not read or listened to the previous debates or he has not addressed the facts. An age-related addition of the sort proposed by the noble Lord, Lord Goodhart, would lift 50,000 pensioners aged between 75 and 79 off MIG; 200,000 would remain on it. For those at £10, the proposal also in the amendment, it would lift 100,000 pensioners over 80 off MIG; 400,000 would remain on it.

If the noble Earl, Lord Russell, persists in what he says, he must either say that MIG will no longer be necessary--in which case three-quarters of the pensioners who would benefit from the age-related addition as expressed by the noble Lord, Lord Goodhart, would be poorer because they would lose their entitlement to MIG--or accept the Government's position; that is, if we were to do that, they would still need to apply for MIG. Therefore, they would still need to apply for an income-related benefit in addition to an age-related benefit. We cannot have it both ways.

The same is true of the amendment tabled by my noble friend on the earnings-related link. Because the age addition is so poorly targeted, in the same way as the earnings link, we have to have a minimum income guarantee on top. That means that the vast majority of people would still have to apply for an income-related top-up whether that is an age-related or earnings-related addition. Those facts are inescapable unless we are otherwise to consign three-quarters of pensioners currently eligible for MIG to a life of poverty lower than currently exists. I believe that the noble Earl wishes to intervene.

Earl Russell: My Lords, I was describing how pensioners think of MIG. That is fact, and I have listened to it more times than I enjoy, even when it was aimed against my own party. I think that it is common ground between all parties that it will be a while before we can do without such a thing. We think--I should like to think that the noble Baroness does too--that there should be something else of right on offer.

Baroness Hollis of Heigham: My Lords, I am reminded that it is Third Reading. Although I am being tempted by noble Lords opposite, I shall stop. The idea put forward by the Liberal Democrats means that the extra help that we are giving to low and moderate earners through the state second pension will not be

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available. The noble Lord's amendment will not work. Although it pays some money to older pensioners who need it, it gives a lot of money to older pensioners who do not need it and it does not help poorer pensioners, who will get nothing.

I repeat that any pensioners who come through age-related cohorts, any more than earnings-related additions, would still need MIG on top if their poverty is to be addressed. That would mean that some money would go to those who do not need it, whereas others would not get enough. On the ground that the age-related rebates are no more adequately targeted on the needs of poorer pensioners than are my noble friend's earnings-related amendments, I ask your Lordships to reject the amendment.


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