Mr. Webb: I should like clarification about pensioners having to go into jobcentres. Pensioners may not like doing that, for understandable reasons, and it may not be appropriate. On Tuesday, when I asked about the face-to-face service that will be available to pensioners immediately, instead of on the third Thursday of the month in the library or whatever, the Minister for Pensions said that that would still be available and would not be taken away. Will the Under-Secretary confirm that pensioners will still have to go to the jobcentre for that face-to-face service? Can she clarify whether there will still be people who understand pensions at jobcentres?
Maria Eagle: Local services and the Pension Service will still be available to everyone. It is true that the Pension Service will do much of its processing work and will hold much of its telephone interaction with members of the public from central locations. There is nothing innovative or terrible about that; it already happens in the case of retirement pensions, in which many pensioners interact perfectly happily on the telephone. There is no doubt that the Pension Service will have a local arm, although it is a national service. Whether it is based in the jobcentre or a different building will vary from place to place. We intend to ensure that those pensioners who would prefer to see someone face to face will have the opportunity to do so at their convenience, rather than at that of those providing the service.
There will be surgeries and places in the local community to which pensioners can go to meet Pension Service staff if they need to do so face to face. If they need a home visit, that can be arranged. All of us Members of Parliament are subject to such demands from our constituents, and we know that we can always make appointments to see constituents at their convenience. Of course, there are always constraints to do with when we are in the constituency and so on. The idea is that the service that is made available will be tailored to meet the needs and requirements of the individual pensioner. That is our aspiration, and there is no reason why we cannot make it happen. Apparently, a letter has been sent to the hon. Gentleman by my right hon. Friend the Minister for Pensions; I am sure that that deals in greater detail with the concerns that he has raised.
Clause 2 introduces the guarantee credit, which is similar to the minimum income guarantee. Primarily, it is an anti-poverty measure; it is intended to ensure that there is a minimum income to which all pensioners are entitled.
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I could explain all the detailed provisions of clause 2, but I am unsure whether that that would be a productive use of the Committee's time, because I sense that there is not much opposition to the clause. However, I will continue.
The clause introduces a calculation of the first element of pension credit, which is the guarantee credit. That will be available to everyone over 60 years of age. It will bring pensioners' incomes up to a basic guaranteed level, which we expect will be £100 for a single pensioner and £154 for a couple. Those rates are continuing to rise, due to the increases that we have introduced since 1997.
The guarantee credit will be simpler than the minimum income guarantee, which it replaces. It will remove the numerous rates and premiums, and provide a level of income under which no pensioner needs to live. As it is designed for pensioners rather than for people of working age, it will be possible to get rid of some of the extraneous questions on the form. It will have a simpler structure that will enable the system to minimise intrusion into pensioners' affairs, by only asking them the questions to which answers are really necessary, thereby removing one of the obstacles that prevent pensioners from claiming the money that is rightfully theirs. Another obstacle will also be removed, because it will be much more clearly an entitlement.
We also hope that the guarantee credit will tackle pensioner poverty. It will give additional help to those with extra needs, such as severely disabled pensioners, pensioners with caring responsibilities and pensioners with owner-occupier housing costs. Therefore, some beneficial elements of income support additions will be carried forward into the guarantee credit. It will be calculated by making up the difference between the pensioner's income and the guarantee credit.
Savings credit is the other fundamental element of the pension credit, and we will discuss that when we address clause 3. I hope that the Committee will support clause 2, as it is a basic building block of the pension credit.
Question put and agreed to.
Clause 2 ordered to stand part of the Bill.
Mr. Webb: I beg to move amendment No. 1, in page 2, line 42, leave out 'age of 65' and insert 'qualifying age'.
The Chairman: With this it will be convenient to consider amendment No. 2, in page 3, line 26, at end insert—
'(6A) In the case of men aged under 65, such regulations shall provide that the calculation of qualifying income shall include an amount equal to the amount of retirement pension that the claimant has accrued at the time of the claim.'.
Mr. Webb: The Committee benefits from the fact that the Bill has been considered in another place. A fundamental issue was raised there: the treatment of 60 to 64-year-old women who are excluded from the savings credit under clause 3. These amendments
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address that matter. They are intended to equalise entitlement to the savings element of the pension credit not at 65 years of age, as the Bill proposes, but at the state pension age—although it is clear that that will rise for women.
The initial effect of the amendments will be to bring everyone over 60 into the scope of the savings credit, rather than to exclude everyone under 65. That will bring in women pensioners of between 60 and 64 years of age, as well as male non-pensioners in that age bracket.
The Government say that they have to equalise, and we understand that. The winter fuel payments situation is a good recent example where the Government fell foul of the courts because they did not equalise. They were forced to equalise ex post, which was not desirable. Therefore, we accept that there must be equalisation. However, a question must be answered: should that happen at 65 or at pension age? For the sake of simplicity, I will say ''60'' instead of ''pension age'' throughout the rest of my contribution.
It appears that the argument in favour of 65 goes as follows: the Bill is about pensioners, so why should men aged 60 to 64 who are not pensioners get the savings credit? The first response to that is that men aged 60 to 64 who are not state pensioners get guarantee credit. The idea that the state pension credit does not apply to non-pensioners is wrong. A group of non-state pensioners—men aged 60 to 64—get the guarantee credit if they are entitled to it. There is not a principle at stake. People who are not pensioners already benefit from the pension credit.
Why should men aged 60 to 64 be excluded from the savings credit element of the pension credit? There is an assumption that to keep non-pensioners out, we must equalise at 65. However, one can think of measures in addition to the guarantee credit, such as the winter fuel payment and concessionary travel, that are aimed at pensioners and equalised at 60, although the equalisation of concessionary travel was forced by a court case. The argument that one cannot include non-pensioners when one equalises is not borne out by other aspects of the system, or even the Bill. Therefore, there is no reason why men aged 60 to 64 should not fall within the scope of the savings credit.
The second concern might be what happens to rich men aged 60 to 64 because the measure is designed for pensioners who, on average, are poorer members of society whom the means-tested benefit is designed to help. We do not want to help rich men aged 60 to 64. However, the benefit is means-tested and, therefore, such a person would have pots of money and would not be entitled to the benefit. We are not discussing rich men aged 60 to 64 but relatively poor men between those ages.
The question arises: what is the problem? Baroness Hollis implied in another place that part of the integral structure of the state pension credit is that it is built around the state pension. One of the thresholds in the Bill—I forget its name—is the same as the pension. Therefore, if we are addressing a group who do not
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draw a pension, how can they be given a savings credit that is premised on the assumption that people draw a pension? That is where amendment No. 2 comes in because it would assume that men aged 60 to 64 were drawing the pension that they had accrued so far.
The point is slightly subtle and I have had difficulty getting my head around it. However, given the way in which the system is structured, a person who has a pension entitlement that is less than the full entitlement must use their savings to bring them up to that entitlement before they earn pension credit. A man aged 60 to 64 who did not have a pension would not receive savings credit unless he used earnings or pensions to bring himself up to the £77 level of the pension. He would receive savings credit only on the bit above £77. I happily accept that a system that rewards men aged 60 to 64 with more than £77 of savings is peculiar, and that would have been the strange effect if we had tabled only amendment No. 3.
Maria Eagle: We are talking about amendments Nos. 1 and 2, not amendments Nos. 3 and 4.
Mr. Webb: I apologise. The Minister is quite right.
That would have been the strange effect of tabling only amendment No. 1. Amendment No. 2 is designed to address that and would assume that such men were drawing the pension that they had accrued so far.
The Minister might say, ''It is a funny business to assume that people are getting a pension when they are not.'' However, on Tuesday she said that the system would do that for 65-year-old men who defer. If a 65-year-old man defers his pension until he is 66 and claims pension credit at 65, the Government will, properly, say, ''We'll assume that you're getting a pension and treat you as though you were getting a pension, even though you're not, because we do not want to give you a barmy advantage for deferring and treat you as though you have no income.'' The principle of assuming that a person gets a pension that he does not receive is implicit in the system.
I accept that it is a bit muddy to assume that a person is receiving the pension that they have accrued so far. The phrase ''decrepit computer systems'' may pop up in the next half hour. The phrase is beloved of the Secretary of State because he is fond of saying that computers cannot count—no, not ''count'', although one wonders about that sometimes. I meant to say cannot cope.
Many men aged 60 to 64 would have accrued something approaching a full basic state pension. Amendment No. 2 would not assume that they have a full basic state pension because that would entitle them to savings credit to which they might not be entitled if, when they reached 65, they did not have a full basic state pension. Our drafting of the amendment erred on the side of caution, as we are wont to do. For example, we are arguing not that someone who has just swanned into the country should be imputed to be earning a full basic pension and should receive a savings credit for each penny that he had saved, but that people who have worked all their life and have practically accrued a full basic pension should receive a reward for their savings at the age of 60, not 65. I accept that, over
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time, the 60 years threshold will rise and eventually equalise at 65.
We want equalisation at 60 not 65 because of women aged 60 to 64. That is the critical reason behind the amendments. Women pensioners will have listened carefully to the Secretary of State for Work and Pensions announcing the virtues of the pension credit and the savings credit and saying that they are a reward for pensioners who save and that, at last, they will not be worse off than their neighbour. Women aged 60 to 64 will have said, ''Good. That's me.'' The Government made the case that the pension credit would be good news for people who save and that it would get rid of the next-door neighbour problem.
It will not. Many woman aged 60 to 64 may think of themselves as pensioners. That is not a strange notion. Let us bear in mind a woman of 62 years who heard the Secretary of State talking about pensioners being rewarded for saving. Perhaps long speeches qualify certain proposals, but headlines do not, and nor does the coverage given to such speeches. The Government have raised an expectation among women aged 60 to 64, and to turn round and tell them, when the system is in place, that they may have to wait five years to be rewarded for saving and until then will be no better off than their next-door neighbour may create resentment. If the amendment were to bring 60 to 64-year-old men into the scope of the proposal, it is worth considering.
Can the Minister give us an estimate of the savings credit entitlement of women aged 60 to 64 if the threshold was lowered? That could be used as part of the total cost but, if the proposal really is a reward for saving, pensioners should be given that reward.