State Pension Credit Regulations 2002
Lord Higgins (Conservative)
My Lords, this is an absolutely marvellous opportunity to make another Second Reading speech on the State Pension Credit Act 2002. However, I think that it is true to say that while a number of noble Lords have arrived for a subsequent debate, those involved in this debate are probably those who might usually be described as "the usual suspects". We are not unfamiliar with this matter, which, as the noble Baroness has rightly pointed out, we have only recently discussed.
It is also right that the Minister's virtue should be rewarded, in the sense that during the passage of the Bill she—I think unusually—provided draft regulations in Committee, on Report and at Third Reading and so on, which cover much of what we have in the order. Therefore, it is not unfamiliar to us. So far as one can see, it does not contain any shocks.
Perhaps I may, therefore, just ask one or two questions. The first is a question to which I ought to know the answer and do not. In the order it says, as is normal, that the advice of the Social Security Advisory Committee has not been taken because the Bill has been passed only a short time before. I am not absolutely clear whether the Social Security Advisory Committee expresses a view ahead of a Bill. Does it have an opportunity to make any comment after the Bill is passed and after it has seen these regulations, which it has not previously seen? It seems rather unfortunate that when it may have some comments on the regulations it is precluded from so doing. Probably the normal case is that the initial regulations come out within the six-month period.
Secondly, the orders cover a number of points with regard to absence overseas and whether individuals should or should not be allowed to continue to receive state pension credit when they are overseas. The order sets out the period over which they continue to receive the benefit, although that is a fairly tight limit—in some cases four weeks and in other cases eight weeks. It is particularly relevant in the context of the orders, which are concerned with what are described as "patients", that is to say, people who go overseas to receive medical treatment.
My impression is that the individuals concerned only continue to receive the state pension credit if they go overseas for medical treatment paid for by the NHS. If that is true it seems to me quite wrong because the individual who pays has not only paid all the normal contributions for National Health Service treatment but has in addition paid for his own treatment, thereby relieving the state of that cost. Consequently, it does not seem to me that there should be a differentiation between people who go overseas for medical treatment under the NHS and those who go overseas for medical treatment privately. No doubt the Minister can respond to that and we can then consider whether we need to go further.
The only other point which one might consider is the question of the definition of income. In particular, the orders are concerned with the rate of return which is deemed to be received on capital. The Minister anticipates what I am going to say. The rate which is specified in the order would seem to imply a rate, once the initial tranche of capital has been taken into account, of something over 10 per cent. If the noble Baroness can tell me where I can invest money at 10 per cent at the moment I should be happy to hear from her. So will many other people suffering from the situation on the Stock Market.
The usual Treasury argument is, "Well, you must take the average rate of return, allowing for the fact that the first tranche of capital is not taken into account". It is the marginal rate which is relevant. Even if one were to take the average rate, it is still significantly higher than the rate one is likely to receive on risk-free investments at the present time. What I am really saying is that it does not seem to me that the rate which is set is as favourable or as sensible as it ought to be. The question then is whether there are sufficient powers to alter that rate in future.
Those are my main points. I shall not go over the fascinating aspects that we discussed on the recent passage of the Bill through your Lordships' House, particular with regard to polygamy and other favourite subjects of the noble Baroness. I look forward to hearing her specific answers to those points.