David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I beg to move, That the clause be read a Second time.

The new clause is about the pension credit disregard. It would require the Secretary of State to bring forward a report no later than 1 April 2008 on the labour market disincentive effects of the operation of the pension credit system for people over the age of entitlement to pension credit who are in employment. The new clause is a probing amendment, to see whether the Government will respond to the recommendations of an earlier Work and Pensions Committee report on pension credit, back in the 2005-06 Session, in which the Committee repeated its previous recommendation that the Government should reconsider the treatment of earnings and pension credit, taking particular account of the number of pension credit claimants who might wish to engage in paid work. The point is that currently large numbers of people who pass the age of 60 have a pension credit entitlement. The disregard for work for those people who receive pension credit is £5 a week, but it has not been changed for quite a number of years.

An important part of the Government’s solution to low incomes in retirement seems to be a quite reasonable expectation and aspiration that people should seek to work on for longer, at ages that are traditionally associated with retirement. It seems ironic that, because of the operation of the means-tested pensions system and the pension credit, there is quite a   powerful disincentive for people in that situation to carry on working. The Select Committee recommended that the disregard, which has remained static for so long, should be reviewed. If it is not to be reviewed, it would be interesting to know whether the Government have any other ideas about how to remove the disincentives for people in those circumstances.

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