Schedule 1 - Administration
State Pension Credit Bill [Lords]
3:45 pm
Mr Tim Boswell (Daventry, Conservative)
I beg to move amendment No. 40, in page 15, line 26, at end insert 'foreseeable'.
The genesis of the amendment is that, rather like a dog with a lamppost, I treat it as professional deformation to leave schedules unamended. It is necessary to warn Ministers that something should be said about them. When I introduced schedules as a Minister, I always had my fingers firmly crossed and hoped to goodness that I knew what was not right with them. I mention that as a semi-jocular point, because this schedule relates to administration, and that, rather than the essence of the Bill, is the proper subject of a schedule. The schedule reflects a considerable body of doctrine and experience in the social security system, so the amendment is not an attempt to get at the Department by a side wind.
However, I am glad that I chose the amendment as the Committee begins to draw to a conclusion because, although I missed some debates on Tuesday because
the Minister and I were debating elsewhere, I have looked at the record and I am concerned that some points were not brought out as clearly as they might have been. The amendment suggests the insertion of one word, and addresses what is and is not reasonable for a pension credit claimant to have to lay on the table, and what a decision maker should have to consider when determining an assessment period.
We all anticipate that most pension credit claimants will act in good faith, that they will be straightforward and declare their income as best they understand it, and that they will expect to be treated on that basis. The system will become intolerable if people go around inventing potential circumstances under which additional income may accrue. I understand that we are talking about only the assessment period, which can be revised, rather than about a determination that must run for five years, but I am anxious to explore what is or is not a likelihood.
Future changes in income could very well be predictable. For example, a pensioner could have an annuity—dare I say, a pension annuity, to refer to the new concept in clause 16—which may include an income-related escalator clause. It could be sensible to have such an inflation clause, which would keep the claimant as well off in real terms as they were at the point at which the annuity was taken out. If that were the case, it would be as easy for a decision maker to calculate the impact of inflation as it would be for the state benefit system to work out how much pensions should be uprated annually to meet inflation. That is pre-mechanical procedure.
Other kinds of change could be less predictable. They could relate to dividends received from companies with which the claimant had shareholdings. Changes could be even more speculative and could—as we discussed the other day—relate to matters such as casual windfalls or irregular income, which could affect calculations. However, I do not suggest that Ministers seek to create an artificial or unfair situation, at least in this regard; they want to produce sensible rules for decision makers.
So, what is a decision maker allowed to consider, and what is a pension credit claimant reasonably expected to disclose? If there were to be income-related annuity, that would be a reasonable thing to declare because it would show the income flow forward. On other matters, it may be more difficult to make predictions. We all want to avoid a situation in which a decision maker brings extraneous material into a calculation or decides that there has to be a shorter assessment period, causing some irritation to the claimant. We also want to avoid a situation—this is my real concern—in which a claimant might have tried to act in perfectly good faith, and disclosed all the sources of income that he or she knew of, but might not have completely levelled with the decision maker, perhaps accidentally, on what was likely to happen to an increase in those incomes.
In such circumstances, the judgment would be difficult to make. We would have to try to separate the pensioner who acted in good faith but did not take everything into account, or who genuinely
underestimated future income flow, from the pensioner who was very happy to keep something hidden behind his or her back and had not been straightforward in filling in the form or in discussions with the Pension Service.
Although there are some difficult concepts there, we all want to achieve a system that is precise. When the tax authorities capture an actual income, for example, in relation to a year of assessment that has taken place, that is relatively manageable. However, when future income flows have to be estimated, as in a sense they do under the Bill, things become more speculative. We want the system to work fairly. I hope that, in responding, the Under-Secretary will understand that the amendment is essentially a probing one. It would be useful to have her assurances on it.