Clause 1
Pensions Bill
4:00 pm
James Purnell (Minister of State (Pensions Reform), Department for Work and Pensions; Stalybridge and Hyde, Labour)
It is a great pleasure and privilege to serve under your chairmanship again, Mr. Taylor, as we did in the Programming Sub-Committee. I know that you are an extremely experienced Chair and I look forward to your chairing our proceedings.
When we broke earlier, the Committee was no doubt fascinated by my saying that if the new clause were included in the Bill, the Pension Service would have to reassess the pensions of more than 2 million pensioners in one go. We estimate that in some 350,000 cases where the pensioner is getting pension credit, despite the significant expense that would be incurred, the provisions of the new clause would not make a penny of difference to the person’s total pension income. So there would be a significant amount of work, involving confusing notifications for many people with little or no overall gain in many cases. Although I understand that my hon. Friend the Member for Northampton, North tabled the new clause so that we could have this debate, which has been helpful, given its consequences I urge her not to press it.
New clause 30 focuses on a narrow issue of bereavement benefits. I understand the rationale behind my hon. Friend’s new clause, which would apply the new single contribution to widowed parent’s allowance and bereavement allowance. Although I, like every Committee member, have every sympathy for people coping with the effects of bereavement, I cannot see a clear rationale for changing the contribution conditions for bereavement benefits. Reducing the number of qualifying years for a full basic state pension to 30 years is designed to address the inequalities of outcome that currently exist for women, as we discussed this morning. However, those inequalities have built up over many years and bereavement benefits were only introduced fairly recently—in 2001—and are available to both men and women. Prior to 2001, widow’s benefits were only available to women. Our data on widowed parent’s allowance show no real evidence of unequal outcomes between men and women.
As one would expect, significantly more women than men receive bereavement benefits—around 25,000 women, compared with some 10,000 men—but that reflects the fact that men are far more likely than women to die before their spouse, because women live longer. However there is no significant difference in the proportion of men who qualify for full rate widowed parent’s allowance compared with women.
The existing contribution conditions for bereavement benefits allow the number of qualifying years to be reduced where a person dies before reaching state pension age. For example, if a man dies at 40 he would need to have accrued only 21 qualifying years for his widow to qualify for full widowed parent’s allowance if she were left with children. There is already a mechanism in the Bill to achieve the spirit of what my hon. Friend was trying to do. The current link between the contribution conditions for bereavement benefits and pensions is largely historical and has little basis today, given that bereavement benefits are paid to people of working age who have very different needs and responsibilities from those of pensioners.
My hon. Friend asked whether a widow might not qualify for bereavement benefits at the full rate, even though her husband would have qualified for a full basic state pension under the new rules. That is possible, but the number of cases will be fairly small, as the 30-year qualifying test has a marginal effect on the proportion of men, as we discussed earlier. A woman in that situation would not be any worse off than she is now, on her eligibility for bereavement benefits, but she would be better off than she is now on the basis of her eligibility for state pension benefits. In the same way as her husband would be better off in terms of his lower number of qualifying years for his state pension benefits, so would she. The Bill only improves the situation, compared with today.
Our priorities for working age benefits are to increase employment and to reduce child poverty. Change in the contribution conditions for bereavement benefits would have only little if any impact on either of those two issues. We are reducing the number of qualifying years so that people have better incentives to save to reflect the different caring contributions and patterns of work. That is appropriate for pension benefits, but we do not consider that it is appropriate for working age benefits. I urge my hon. Friend not to press her new clauses and extend that wish to new clause 23.