Pensions: Minimum Income Guarantee

– in the House of Lords at 2:44 pm on 12th March 2001.

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Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour 2:44 pm, 12th March 2001

asked Her Majesty's Government:

What are the latest figures for the take-up of MIG (minimum income guarantee) by eligible pensioners following the Government's take-up campaign; what are the Government's plans for the future of the campaign; and what has been its cost to date.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, the Government's MIG take-up campaign has so far resulted in over 82,000 successful claims. A follow-up exercise started in the week of 5th March to encourage claims from pensioners who might become eligible due to this April's increase in the MIG capital limits should again bring in more claims. To date, the campaign has cost approximately £9 million.

Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour

My Lords, is the Minister really satisfied with a situation in which the Government, having launched a massive take-up campaign directed at half a million people, by this stage can report only that 80,000-odd people have responded? Can the Government explain why people do not like means testing? I hope that the Minister will not say that they are too rich to benefit. Does the Minister realise that as a result of the pensioner credit the number of those on means-tested benefits will rise dramatically and something like 5½ million people whom the Government say will qualify for pensioner credit will become means tested? If the Minister cannot sell the present system to the potential recipients, can she hope to persuade 5½ million people to take up their due?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I believe that that was a question, but I am not entirely sure. My noble friend pressed me on two points: first, the MIG take-up campaign; secondly, the implications of the pensions credit which is due to be implemented in 2003. I ask noble Lords to allow me to deal with both matters, although it may take a little while given the length of time taken by my noble friend in putting her questions.

First, I did not say that there had been 82,000 responses but that there had been 82,000 successful claims. There were 840,000 responses, approximately half a million of which were by telephone. Of those, 82,000 claims were successful. Claims were unsuccessful because the individuals had too much income or capital, which are issues that we seek to address in our subsequent developments. As for my noble friend's suggestion that this arises because of stigma, of the 470,000 people who replied to the MIG take-up campaign by telephone, only one-fifth knew that MIG was income support and of those the vast majority said that it did not matter. I do not accept my noble friend's argument that stigma deters people from claiming. People did not know that it was an income support benefit, and for the most part the reason they failed to be eligible was that they had too much income or capital.

Secondly, my noble friend referred to pensioner credit and the extension of means testing to 5½ million people. It is the case that under pension credit 5½ million people will enjoy both MIG and the protection of the modest occupational pensions that so many pensioners have in this country. My noble friend might have rejoiced with me that because MIG is earnings-related 55 per cent of all pensioners will in future effectively have their pensions earnings-related.

Photo of Baroness Castle of Blackburn Baroness Castle of Blackburn Labour

Why not the other 45 per cent?

Photo of Lord Higgins Lord Higgins Conservative

My Lords, is the Minister aware that, given the Government's increase in means testing and the complexity of the social security system, she may now be the only person in the country as a whole who understands it? Does the noble Baroness estimate that the total number of people who are now entitled to minimum income guarantee but have failed to take it up is now greater than when MIG was introduced?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, as to the first point, my late husband used to say that one should be aware whether people like compliments to be forehand or backhand. I believe that the noble Lord's question counts as "backhand". I take the point about complexity. That is one of the reasons why we have, with some prodding by the journalist Peter Kelner, simplified our income support form. The current form for pensioners has been reduced from 40 to 10 pages and is in big print. I believe that that will help to overcome some of the complexity of claims. The basic point is that one can either give all pensioners the same money or target the poorest. As a result of the Government's policies, the younger, poorer pensioner couples--those on MIG--have seen their real income increase by 30 per cent--I repeat, 30 per cent. We take a great deal of pride in that.

Photo of Lord Goodhart Lord Goodhart Liberal Democrat

My Lords, does the Minister agree that it is absolutely intolerable that only one in six of those eligible for MIG have taken it up? Does she further accept that the noble Baroness, Lady Castle, was correct in saying that the situation will get much worse when MIG is extended upward through pensioner credit?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, I accept neither of those points. On the first point, 840,000 pensioners--far more than we thought might be entitled--applied for information about the scheme. Most of those decided that they had income or capital which excluded them from eligibility for MIG. That is confirmed by our research. So, I do not accept the first point.

On the second point, given that we are seeking ways of delivering automaticity for MIG, which is earnings-related, of those pensioners who, from 2003, will enjoy pensioner credit, some 6 million will see a real increase in their standard of living that hitherto they have not enjoyed.

Photo of Lord Barnett Lord Barnett Labour

My Lords, what assumption has the Treasury given the Minister for the total expenditure in 2001 to 2002?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department of Social Security

My Lords, as a result of our proposals, additional expenditure on pensions is approximately £6.5 billion. However, one point that may interest my noble friend Lord Barnett is that when we came into government in 1997 the amount of GDP that went on pensioners was 5.32 per cent. Had we had the earnings link that my noble friend would have pressed for, it would by now have fallen to 5.23 per cent. As a result of the increases in our proposals it will rise to 5.47 per cent. So not only have pensioners kept pace with the growing prosperity of the nation, they have done even better than that and surpassed it.