Clause 6 - Duty to specify assessed income period
State Pension Credit Bill [Lords]
Public Bill Committees, 23 April 2002, 10:45 am
Mr James Clappison (Hertsmere, Conservative)
Clause 6 brings us to the question of the assessed income period, and is the first of several clauses to do so. The system set out in clauses 6 to 10 is put forward on the basis that the income of claimants aged 65 or over is to be treated as remaining the same for a five-year period, which is the assessed income period. Increases in income do not affect entitlement, and therefore they do not have to be reported, although a claimant can apply for reassessment if his income goes down. We shall shortly come to the mechanism for doing that. Other prescribed circumstances need to be notified during the assessed income period, and they are similar to those that apply to the basic state pension.
I cannot let the clause pass without making one observation. The original consultation document stated that the Government planned
''to award the Pension Credit for a longer, fixed period, drawing on experience from tax credits.''
That consultation was issued when the working families tax credit was granted for a six-month period based on a snapshot of a claimant's income, after which the credit was fixed. Since then, the working families tax credit has been replaced—or has evolved, as the Government would have it—and its successor establishes awards that are more sensitive to changes in circumstances, and allows for wider responsibilities for claimants who report such changes. In particular, clause 6 of the Tax Credits Bill establishes that, in relation to the working tax credit, at the end of the tax year the claimant must consider
their income and whether there have been variations in it. If there have been variations of certain types, they must report that and it will have an effect on entitlement.
The working families tax credit has evolved into the working tax credit, which is more sensitive to changes in circumstances than its predecessor, which gave credit for a fixed six-month period. One wonders what experience of other tax credits has been drawn on to design the pension credit. A lesson that could usefully be learnt from the working families tax credit is the way in which it has constantly changed. It would be a good idea if the Government could resist the temptation to make change after change to the design of tax credits. The more change there is, the more complexity enters the system. Many would say that the system is already complex enough.