Clause 3 - Savings credit
State Pension Credit Bill [Lords]
2:30 pm
Mr Ian McCartney (Minister for pensions, Department for Work and Pensions; Makerfield, Labour)
The purpose of having two parts to the legislation is to ensure that those who were wronged or left out previously and have insufficient records will get the minimum income guarantee part of it. Without that, they would be deficient by considerable sums. We have not left them out—far from it. We can consider the minimum income guarantee as a catch-all measure, under which we do not have to find out who all those people are. Those people do not have to construct a case to prove that they were carers for more than 35 hours a week, and we do not have to work out a simulation test to find out whether they had appropriate caring responsibilities. It would be a nightmare for an
elderly person to have to do that now, when we could just give them the minimum income guarantee. However, we are concerned about what else we can do.
The guarantee credit, which is a vital part of the Bill, ensures that those who are washed out because of the past are now afforded security in retirement. The guarantee level is significantly above the level that pensioners received before 1997. It is not just a guaranteed level; it is a new guaranteed level.
On 13 March, my right hon. Friend the Secretary of State said in evidence to the pension credit inquiry of the Select Committee on Work and Pensions that the pension credit continues to be a basic feature of the contributory scheme. On the issue of deficient records, he said that the problem would reduce as women build up their own pension entitlements. He was then asked about the conflict between that and pensioner poverty, and he replied that the second state pension deals with poverty for periods in which people cannot contribute and the savings credit provides the reward. That shows an interrelationship in the modernisation of state pension provision.
Concerns have been raised throughout the passage of the Bill about people whose national insurance records fall short because the protection that is now available for carers, for example, has not always been there. We believe that instead of trying to right the wrongs of the past in what would be a complex and impossible way, the critical thing is to ensure that something is done quickly. That is why we introduced the minimum income guarantee and the state second pension. Those who have lost out for many years should at least be afforded a decent income in retirement.
I understand what my hon. Friend the Member for Stalybridge and Hyde (James Purnell) was trying to do in his intervention. We appreciate the work that foster carers do and sympathise with those who, having chosen to be full-time carers, receive poorer pensions as a result. Home responsibilities protection in respect of carers of children is awarded through entitlement to child benefit. Foster parents do not receive child benefit directly and have consequently not been covered by home responsibilities protection. We estimate that of the 37,000 foster carers in Britain, approximately 7,000 could benefit from an extension of that protection.
We have discussed with local authorities and other interested organisations, including those that represent carers, whether it is possible to improve the position of foster carers. We are satisfied that improvements could be made without the need for primary legislation. We are reviewing the arrangements and, should we decide that a change in legislation is required, the proper place in which to fix the problem is in the Social Security Contributions and Benefits Act 1992, which deals with legislation for home responsibilities protection.
I can offer my hon. Friend a meeting in the near future to discuss the issue of foster carers, about which he has also written to me. We intend to work with officials to see whether anything can genuinely be
done. I do not wish to over-egg the pudding and suggest with nods and winks that a solution is just around the corner; I am telling him openly and honestly that this is another issue that I looked at when I first became a Minister, and I decided that something must be done. We are reviewing the matter. I cannot say any more, but I hope that hon. Members will understand that I recognise the problem and that it must be resolved in an effective way—[Interruption.]
James Purnell (Stalybridge and Hyde) rose—