Clause 15 - Income and Capital
State Pension Credit Bill [Lords]
6:45 pm
Ms Maria Eagle (Parliamentary Under-Secretary (Minister for Disabled People), Department for Work and Pensions; Liverpool, Garston, Labour)
Clause 15, in setting out what counts as income for the purpose of the legislation, is an important part of the Bill. That sounds easy, but as one would expect, our debate has shown that there are many issues of concern. I shall attempt to deal with some of the points that have been raised in the debate.
The clause sets out the income to be taken into account in the calculation. Without that, subsections (2) and (3) could not operate. It also sets out the basis of how we intend to treat certain types of income and capital in the assessment. I hope that members of the Committee will recognise some of its good aspects. For example, the provisions abolish the rules that exclude pensioners with £12,000 or more of savings from any help at all. Savings below £6,000 will also be disregarded. In assessing the imputed 10 per cent. return, hon. Members should not forget the disregard, which can affect the final amount. It takes out the first £6,000 of any savings, and we reckon that about 85 per cent. of pensioners will not have to report any capital at all. The income that they receive from savings will be ignored entirely.
The assumed rate of return of £1 for every £500 of savings above £6,000 will halve the current rate, and the Committee should acknowledge that improvement. As hon. Members will know, we initially considered examining actual income, but decided after consultations and representations that it would be simpler, easier and fairer to do it in this alternative way. We are improving the current position
by halving the current rate of return, and as I said, the disregards mean that many people will not have to worry about assumed income at all. In addition, we should not forget that such income will be rewarded through the savings credit—another offsetting consideration. Overall, savings will be treated five times more generously than under the minimum income guarantee.
Clause 15 also protects the position of payments made to people in exceptional circumstances. For example, we intend to ignore attendance allowance and disability living allowance, which are designed to meet the extra costs of disability. We also intend to recognise the special nature of certain payments, such as war pensions, by not taking account of the first £10 in the assessment. I hope that members of the Committee will be pleased with such aspects of the clause. It allows for flexibility, which is I how I would choose to put it, though the hon. Member for Daventry probably believes that it takes liberties.