I beg to move amendment No. 9, in page 1, line 3, leave out 'state'.
With this we may discuss the following amendments: No. 18, in page 1, line 4, at end insert—
'(1A) State pension credit shall be publicised to the general public under the title ''pension credit''.'.
Amendment No. 10, in page 1, line 5, leave out 'state'.
Amendment No. 11, in page 1, line 11, leave out 'state'.
Amendment No. 12, in page 1, line 22, leave out 'state'.
Thank you, Mr. Griffiths, for starting us off on a good note. The amendments are possibly both trivial and profound simultaneously—trivial because they relate to a piece of nomenclature and drafting, and profound in that they expose some of the details and equivocations of the strategy behind the Bill.
It is obvious, even to a casual observer, that amendments Nos. 9, 10, 11 and 12 all have the same effect in their different places—to leave out ''state'' in state pension credit. It is not easy or even possible to amend the short or long title or, indeed, any of the rubrics to a Bill, such as that which appears on line 1:
''State pension credit: entitlement and amount''.
One can only amend the text of the Bill. The amendments seek to probe an apparently minor matter—what the benefits to be derived from the Bill will be called. It is odd that the word ''state'' is inserted before the words ''pension credit'', not least because Ministers made it clear in the points of guidance, including the Select Committee Report, that the benefit would be called the pension credit. We now find that it has an unnecessarily long and pompous title in the formal presentation.
I also have reservations about why the benefit is called a state credit. I rehearse each day whether I understand how the Bill works, and I think that I do—at least for parts of the day.
My hon. Friend agrees. Perhaps the Minister feels the same way. The Bill is a complex piece of legislation. Essentially, it says that there shall be a guarantee analogous to the minimum income guarantee that will take over from it. It will be effected by a guarantee credit paid to pensioners as part of their pension. It is relatively straightforward and precedented by present practice, although there are welcome changes and improvements about which I do not argue. However, beyond that is a savings guarantee, which does not mean that people will receive more money than they would with a flat rate set at the level of the minimum income guarantee as an entitlement, and in addition their own income. It means that their income will be withdrawn at a particular pace, and we may want to debate that later.
Of course I concede to the Minister that, as a payment is to be made alongside the state pension, in his view it is supplementary to that pension and designed to reward saving, and he would regard it as a state benefit. I, however, would regard it the other way round, as a phased withdrawal of the benefits of retaining a full private entitlement. However, we could argue endlessly about that. The question is whether it is to be tied around the neck of the state.
I have a further reservation relating to the amendments—the use of the word ''state''. I admit that, possibly because of analogy with the amendments, I slipped into using the words ''state retirement pension'', which many of us use as a term of art. However, I am not aware of any formal titles that
include the word ''state''. The last time that I can think of anything similar in a benefit, it was national assistance, introduced by the National Assistance Act 1948, and was the precursor to income support. The word ''national'', rather than the word ''state'', was used. Will the Minister explain his thinking in using the word ''state''?
I do not understand how the reasons that the hon. Gentleman cites support the argument for getting rid of the word ''state''. Perhaps he will reassure me that the reason why the Conservatives tabled the amendment was not that they were thinking of getting rid of the state pension, perhaps by having people opt out of it, as was reported in The Guardian recently.
Much as I like The Guardian, I do not have to believe everything that I read in it, although I increasingly welcome much of what I read in it.
The hon. Gentleman must not speculate. I assure him that we are engaged in a full review of all aspects of policy. When that policy is announced, I am sure that he will be one of the first to know. Indeed, having arrived to scoff, he may stand back and stay to cheer on the matter.
Instead of agreeing with The Guardian, perhaps the hon. Gentleman agrees with his colleague the hon. Member for Havant (Mr. Willetts), who speaks from the Front Bench on such matters, who said in a recent letter to the hon. Member for Sutton Coldfield (Mr. Mitchell), dated 7 March 2002:
''The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one which you and I share.''
The hon. Gentleman, who has recently arrived in this place, would not want me to comment on correspondence on its own and out of context. Perhaps he did not understand what I said to his colleague. We shall consider such matters, decide on our approach and announce it.
I also said—the hon. Gentleman may want to differ about this, although I hope that he will not differ about the rest—that he may yet find that, having turned up to grumble, he returns to cheer. Indeed, it is already clear from the remarks of the hon. Member for Kettering, my constituency neighbour, which were made only yesterday, that several Labour Members are unhappy with the approach of moving to a means-tested credit and ultimately extending means-testing to probably two thirds of pensioners, if not more. It goes against their principles, if they have them—I hope they do—and may not be effective in dealing with poorer pensioners' interests.
I recall a meeting of members of the Greater London Pensioners Association—not in this Room, but next door—whom one might think are perhaps not my natural soul mates. However, they felt strongly that they wanted the measure to be a basic credit, rather than a means-tested credit. I signal to Labour Members, who might be cutting themselves off from some of their roots, that many people who would not necessarily put their cross against the name of a Tory candidate are unhappy with this tendency.
Does my hon. Friend agree that we have not received a full explanation from the Government of the sudden conversion to mass means-testing? We know that the Prime Minister and the Chancellor of the Exchequer have spoken at length about their severe disquiet on means-testing, especially for older people. We have not received an explanation of their change of heart.
I am grateful to my hon. Friend for his intervention. I was about to wrap up the previous two interventions by saying that I had been led wide of the narrow amendment by my indulgence in responding to Labour Members' concerns. I shall now indulge myself by responding to my hon. Friend's worry, which I share. The only explanation that I can produce is psychological. If people change their mind—I dare say that this is true of all politicians, before we single out individual examples—they may do that immoderately in the opposite direction and become passionately opposed to that which they espoused until only recently. I do not put too much weight on this, but a party that set its face against means-testing, and has now contrived a system under the title of state pension credit that will require ever more means-testing, may have lost its anchors and may not be doing what it intends.
On that point, is the hon. Gentleman recanting the view that he expressed last year that the state winter fuel benefit—a universal benefit—should be targeted, which would require more means-testing? Has he changed his mind?
I recant nothing. I am sorry that the hon. Gentleman has become unduly excited about what I said last year but I shall repeat it. I did not think that the winter fuel benefit was particularly well targeted. [Interruption.] I shall give an explanation to the hon. Gentleman, who undoubtedly wanted to know the answer.
Later this year, I shall attain the age of 60 and I shall duly send off my form. The Minister has said that he wants as many people as possible to take up the benefit. No doubt I shall then receive my benefit, if the Department gets round to the administration.
Why should that be a shame? The hon. Gentleman obviously disagrees with his Minister, whom I heard say that he wanted people to take up the benefit. The benefit is universal, although I remarked that it is not well targeted.
I am rather inclined to agree with you, Mr. Griffiths. We have had a good rattle around several wider issues, but as the late and much lamented Frankie Howerd used to say, let us get back to the prologue: we want to know whether the word should be in or out, and the Minister's thinking on that.
I have spoken to amendment No. 9 and the other identical amendments, and I shall touch on amendment No. 18, which is in the names of my
hon. Friend the Member for Hertsmere (Mr. Clappison) and I. We argue that the credit should be publicised under the title ''pension credit''. If, as I understand it, that is what everyone wants and what it will be called, why is it not called that in the Bill?
There are wider issues that you, Mr. Griffiths, wisely advised me not to address when discussing the programme resolution. I shall not discuss them at length, but there are worries about the Bill, even in quarters that are not tied or beholden to the Conservative party, such as among people with no party affiliations who are experts in the interests of older people. As recently as this morning a briefing from Help the Aged arrived on my desk—as, I am sure, it did on the desks of other Committee members—and we might have occasion to refer to it again, in different places and at appropriate times, when we address further relevant amendments.
The briefing states—this refers back to the general issue—that the new money that is now promised to pensioners is very welcome. I am glad that it is generous in acknowledging that. It also states that the matter under discussion makes a significant difference to the architecture of pension provision that was outlined in the 1998 Green Paper but that, if those new resources had then been on the table, a better solution than the pension credit proposal could have been in prospect. That is an interesting point.
Meanwhile, the Bill must be dealt with. With regard to it, the letter from Help the Aged states that, despite the attentions of the House of Lords and the Select Committee, its shape remains more or less as originally drafted, and that Help the Aged remains rather less than impressed. That comment comes from a highly responsible, well regarded and entirely independent and neutral organisation. That is the best thing that it can say about the Bill, despite the fact that it gives more money to pensioners. That does not constitute a ringing endorsement—and, in essence, that is why we are expressing concerns about the Bill.
While making some general comments, Help the Aged also makes points about the titling of the Bill, which are of particular relevance to this amendment. It is much more critical than I have been in our amendments. It states:
''The titling of the new policy is poorly described.''
''The nomenclature of the Bill is an additional confusion. Under the general title of Pension Credit, the Bill is actually implementing two overlapping schemes with similar yet different applications.''
Those schemes are the guarantee credit and the savings credit and, as we will return to them later, it is not necessary to read out the entire text now.
Help the Aged then states, with regard to points that I have not referred to in my amendments:
'''Credit' is an off-putting word which some older people will regard with suspicion, and the Savings Credit might be more honestly called an ameliorated tax on savings.''
Those are Help the Aged's words, not mine.
The Minister must reflect on his situation as, in parliamentary terms, his position behind him is crumbling, and there is great concern among
pensioners across the field about whether this is the right strategic approach. He is bolting it on to the Government by specifically entitling it the state pension credit. By doing so, he is adding further to the complexity, which is one of the features to which we object—and to which our amendments are addressed.
A monster of complexity has been created in the Bill. If I were a Minister, I would wish to distance myself from it and pass on, but the Minister is using the full resources of the state to say, ''It's all our responsibility; aren't we proud of it?'' That is inappropriate, given that so many people—not all of them in my party—have serious reservations.
It is fine to spend money, and it is good to give money to pensioners. I am not arguing about those issues; they are Aunt Sallys, which the Minister occasionally attempts to put up. What we are saying is, ''If you are going to do that, it might not be the most appropriate way of doing it. It might not get to the people who most need it, and there might be other ways to approach it and deal with it.''
The Minister must explain his approach, and we will ask him to do so throughout these debates. The specific point of the amendment is to ask a question: why—without precedent in social security legislation, as far as I am aware, and without need in terms of its efficiency, and without any appropriateness in terms of a short title on which to sell what is a very difficult concept for people to grasp—does he have to insert the word ''state'', when it seems to me, in this case at least, to serve no useful purpose?
Before we start the debate I should say that I have called the hon. Member for Daventry to order once or twice, but I could have done so many more times. I decided to let him speak because he was putting the debate in its context, but many of his remarks were more suited to a clause stand part debate than to the amendment. From now on, I shall be stricter.
I am sure that we will all take that fair injunction to heart. I associate myself with the comments of my hon. Friend the Member for Daventry on what a pleasure it is to serve under your chairmanship, Mr. Griffiths.
I should like to supplement the excellent points raised by my hon. Friend, who adverted to the sketches of the late Frankie Howerd. If I remember correctly, the narrator of the prologue was followed or interrupted by the soothsayer, who came on with tales of woe and doom. The Committee will be relieved to hear that I shall not assume that function this morning. To set the scene, we had an important debate about the crisis in funded pensions and the fact that more and more of our elderly people will rely on means-tested benefits rather than funded pensions. Our concerns on the subject are encompassed in the amendment.
I wish to make a simple plea about nomenclature, which is the subject of the group of amendments. I hope that, when we decide on the name attached to the payment, there will be a degree of continuity. I hope that the public can become accustomed to it, and that it will not change in a short time. That plea is encompassed in the amendments, particularly amendment No. 18, which mentions how the credit is to be publicised. It is the way of Governments—this Government are certainly not immune—to make changes to the names of payments and benefits, make a few marginal changes to them, and then launch them as entirely new propositions. The result, time and again, is that the public become thoroughly confused about such benefits. The Minister looks a bit disgruntled at that.
Name one? The Minister tempts me. Between them, the working families tax credit and the children's tax credit are on their sixth configuration. There has been the working families tax credit, the employment tax credit and the working tax credit; and the children's tax credit, the integrated children's tax credit and the child tax credit. Income support became the minimum income guarantee and will now become the state pension credit. I hope that that is enough for the Minister, and that he will not tempt us by saying that there may be more to follow.
I hope that the name of the credit will give some continuity, and that the public will become accustomed to it. Otherwise, we will be in danger of adding the complexity of different names to the complexity of the provisions of the Bill. That will affect take-up, an important subject that we will consider under a later group of amendments. There may well be a link between take-up and familiarity with the credit. I hope that the Minister can reassure us that we will not have the constant change we experienced with the minimum income guarantee and other credits.
First, I should say to the hon. Members for Daventry and for Hertsmere—have I got that right? [Hon. Members: ''Yes.''] I shall try to make sure that I get their constituencies right by the end of the Committee. This is not so much a genuine debate about the name as a mini Second Reading debate, in which the Conservatives have taken the usual well-worn path. I will respond to general issues about whether the credit can work, means testing and the core of the amendments, then we might not have to raise these issues later on in Committee.
The hon. Member for Daventry says that he finds it difficult to understand the Bill and respond to it in a positive way. I do not. The game was given away on 7 March 2002 when the shadow Secretary of State wrote to the hon. Member for Sutton Coldfield (Mr. Mitchell), who used to be Under-Secretary at the then Department of Social Security in the last Conservative Administration, to ask him to do some work. I quote from the note:
''Here is the material I promised you about a funded alternative to the basic state pension.''
The Conservatives do not want pension credit because that is based on an enhancement of the basic state pension, which they want to get rid of. They want to privatise the basic state pension, as is clear in the first line of that letter.
Just a minute. I want to make sure that I put the letter in context, and not misquote. As the letter continues, it gets better—or worse for pensioners. It says:
''Any advice you have about the best way forward on this would be very helpful. The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one which you and I share.''
The shadow Secretary of State believes, with a passion in his heart as well as his brain, that we should get rid of the basic state pension. He has two brains, but they do not often connect with the facts of life. The letter continues:
''there are a series of practical questions that . . . have to be addressed so that our policy conveys credibility and seriousness'',
the first of which is public opposition. There is an interesting final paragraph:
''I was wondering if you would like to prepare a short note on some of these issues then perhaps lead a discussion of the matter at one of our teams meetings which . . . take place on Tuesdays at 10.30 am.''
Perhaps we could have the Room number so that we could all participate in the discussion.
How can the Opposition have private discussions about getting rid of the basic state pension, and then, in debating the first amendment to the Bill, lambast a Government who are not only enhancing the basic state pension for the first time since its creation, but providing an absolute standard to ensure that people have a basic minimum and will benefit from their thrift as part of a credit. The letter pours scorn on the proposals.
The Opposition seek to suggest that the Government do not have a credible policy or strategy, and paraphrased comments from colleagues in the lobby representing pensioners' advocacy groups. I have good relations with those groups, which hold views on pension credit, but they are not opposed to pension credit. Far from it, they have worked with us and, through the consultation process, have informed decision making about the Bill's structure. We do not expect them to agree with or not comment on every dot and comma of a Bill, but we want to work with advocacy groups just as they want to work with us.
Advocacy groups recognise that large numbers of people are left out of the current structure of the basic state pension and may end up living in poverty unless something is done. Increasingly, those represented by advocacy groups see that they are penalised for having small savings or second pensions. This is the first time that that problem has been examined. After decades of complaints about penalisation because of a small income or small second pension, we are the first Government to listen to advocacy groups and do something about the problem.
Advocacy groups are not banging on our doors saying, ''Don't do this, Minister—don't create the
pension service.'' Rightly, they are banging on our doors to work with us and give us their views. The Committee should recognise that we worked well with them to implement the proposals, which, by their submissions, have been able to greatly influence the structure of the Bill.
I have a feeling that the claim that this is the first time that a Government have rewarded savings may be repeated throughout sittings of the Committee. I challenge the Minister to agree that, when the pensions and means test were almost at the same level, someone with savings got the full benefit of their saving and were better off than the neighbour who had not. The Government created a chasm between pensions and the means test, and someone with a small amount of savings is no better off than a neighbour with none. Therefore, the Government have created the problem that the Minister is now trying to solve.
To be frank, that is turning history on its head. When we debate the amendments tabled by the hon. Gentleman, we will not only show that our action is unique, but deal with the alternatives that he proposes. Despite his argument against it, those alternatives will drag people back into means-testing. People who will benefit from pension credit will not benefit under his proposals, but we shall discuss that later in our proceedings. The hon. Gentleman does not have a good record in such matters, nor does his party.
The second allegation was that the Bill would not meet its aims in respect of pension credit. I refer to the summary of the Select Committee on Work and Pensions, which concluded in its second paragraph that the pension credit
''has the potential to go some considerable way toward achieving the aims set down for it by the Government'',
and that means the Bill. We will respond positively to the report in due course. The all-party Committee reached the unanimous view that the Bill is going in the right direction.
I said that we shall need to respond to the Select Committee, but the hon. Gentleman has hinted that it was not happy. That is not the case. In general, the Select Committee sees the Bill as achieving its aim. That is important. We want a basic minimum guarantee. We want to reward thrift, and it will be the first time that such aims will become law. I repeat—I know that the hon. Gentleman does not like to hear it—that it will be the first time that such matters will be covered by legislation.
The Bill will benefit millions of pensioners, which is why the hon. Gentleman wants to whinge, but not to hurt—as does the hon. Member for Northavon. They do not want to return to their constituents when the Bill becomes law and say, ''We want to take this off you. We don't want you to have £400, £500 or £600 extra income each year. We do not think that it is fair.
It is the wrong way in which to deal with such matters.'' No, the hon. Gentleman will not do that.
As for the extent to which the name reflects the aim of the Labour Government, the Minister mentioned two aims, but he did not refer to those relating to means-testing. Is it still an aim of the Labour party to end means-testing for elderly people, as the Chancellor of the Exchequer said it was in 1993?
I was about to come to means-testing, so will the hon. Gentleman calm down for a moment? I assume that later in our proceedings we will have more wide-ranging discussions about income assessment and means-testing. Means-testing in the context of what the hon. Gentleman is trying to peddle—as is his friend in such matters, the hon. Member for Northavon—is the means-testing of the Conservative party, which in the annals of history has gone from generation to generation spreading fear about means-testing, saying how it is demeaning and disempowering, and how it attacks individuals, undermines them and blames them for their poverty. The Conservative party put communities and individuals under the cosh and wanted to exercise power against the poor. It wanted a divided society. That is the truth. That was the means-testing that the Conservative party introduced throughout its period in power.
In addition, in the 1980s and 1990s, the Conservative party introduced means-testing not to target poverty and eradicate it, but to target the poor who were in poverty. We want to target poverty, not the poor. As well as helping the poor out of poverty and breaking the cycles of poverty, we want the state—for the first time—to recognise those who have had the capacity to have small savings or small savings and a second pension, not to create a system that drags people into poverty by undermining their additional income.
Of all the people in the Room, the hon. Lady should have understood my accent. I said that we are targeting poverty, not targeting the poor. We should look across the whole piece—the measure cannot be taken in isolation—and look at the response to what the Government have been doing.
May I just say something first? I have no problem giving way to the hon. Gentleman.
From day one, the Government set their face to tackling poverty. In-work poverty has been tackled through the national minimum wage, and that has been linked to the working family tax credit. We have increased child benefit and given assistance to people through the new deal. We have made working affordable and given people in the workplace dignity and a living wage.
Secondly, we have targeted young children, and we use specific policies to ensure increasingly that we meet our ambitious target to end poverty among young people. Thirdly, politicians, churches, community groups, local authorities and Labour and other political parties have campaigned for the past 25 years—mainly under Conservative Governments—on behalf of the 2 million poor in Britain. We had the opportunity to do something about that, and we did.
The minimum income guarantee is rough and ready. I make no excuses about that but, during the past four years, I would rather have had a rough and ready system operating from a standing start that identified and, at last, met the needs of generations of pensioners who were left outside the system and living in poverty and that ensured that they got the dignity and income that they would never otherwise have received. We have sat gazing at our navel for the past four years working out what to do in the long term. The minimum income guarantee was always meant to be an anti-poverty measure to be developed and linked with what we are doing in our second term for pension credit. The Government have a good record on targeting poverty, on empowering people to get out of poverty, on giving them self-esteem and on involving them in decision-making. I make no apologies to the hon. Lady.
I make a vital point on means-testing. Opposition Members want to continue the historical argument about ways of introducing means-testing. That undermines the concept and principle of the Bill and the Government's intellectual analysis of a broad and integrated approach to tackle the causes at the heart of poverty and to address those who suffer from poverty. We are getting rid of the causes and giving income to such people—in this case, pensioners.
Opposition Members are also undermining pensioners' confidence in the new system. How mean can they get? It is one thing to oppose the Bill, but another thing to perpetrate language throughout the country that undermines people's self-awareness and their understanding of what is their essential right. For the first time in Britain, we are creating two forms of income from the state that make up the basic income of the state pension.
Thank you, Mr. Griffiths. I was just on my last word when you intervened. I give way to the hon. Member for Newark and, depending on what he says, I may give way to the hon. Member for Canterbury (Mr. Brazier).
I see a number of pensioners in my surgeries, and they tell me time and again that their benefits have fallen. The Minister mentioned increasing pensioners' confidence. Pensioners have no confidence in the current system and they cannot understand the improvements that the Minister suggested.
May I suggest that if the hon. Gentleman goes back to Newark, probably about 3,500 to 4,000 pensioners are getting the benefit of the minimum income guarantee and probably more than 20,000 people receive the winter fuel payment? I assume that the hon. Gentleman is not suggesting that he wants to take that money away from them and that he will oppose their receiving any benefit from pensioner credit. The 3,000 to 4,000 people who already receive the minimum income guarantee will automatically be placed on pensioner credit. Some of them will qualify not only for the minimum income guarantee but for benefits through credit. A lot of benefits are available to the hon. Gentleman's constituents in Newark.
I am conscious of your correct ruling, Mr. Griffiths, but the Minister's remarks are wide ranging. The clear point that emerged from Beveridge—from which Governments of all complexions have moved away slightly, but especially this Government, most of all in this measure—was not to create disincentives to save. What is the marginal withdrawal rate for a pensioner household that receives housing benefit and council tax benefit? What is the marginal rate of tax and benefit withdrawal—the combined marginal rate?
I shall answer that question elsewhere. In general, the Bill is designed to ensure that people such as those to whom the hon. Gentleman refers, who lose out under the current system, will benefit significantly under the new system. I look forward to debates on the issue.
I had intended to start my remarks on the kernel of the amendments by quoting Baroness Greengross in the Lords, who took a fair and non-partisan stance. Some serious issues are involved, and my earlier comments were just as serious. On amendment No. 1, she said:
''I do not share that view as I believe that people get used to new things and new names if they are introduced well and thoughtfully''.—[Official Report, House of Lords, 24 January 2002; Vol. 630, c. 1588.]
The principle of introducing things well and thoughtfully is important.
From day one we used the title ''pension credit'', and I give a firm undertaking to Committee members that we shall continue to do so. Amendment No. 18 is, therefore, entirely redundant. I assure hon. Members that we shall undertake a substantial programme of targeted publicity to achieve the dual aims of reducing stigma and promoting take-up. I hope that in doing so and in incurring expenditure we see no silly press releases from the Liberal Democrats and the Conservatives saying that it is an appalling use of
taxpayers' money to support the Labour party's achievements and manifesto. In giving people income and benefits, it is legitimate to tell them what they are entitled to. I hope that we shall have seen the last of those, but I have my doubts. The day we start that publicity, we shall see the first press releases from the Opposition complaining about the money being spent on advising people about their entitlements, and we shall just have to put up with that.
The reason the Bill refers to ''state'' pension credit is perfectly simple. The term ''pension credit'' is already used in legislation, although in a very different context. Section 29(i)(b) of the Welfare Reform and Pensions Act 1999 uses it to refer to rights acquired by one spouse over the other's non-state pension in the event of divorce.
The amendments would create a second pension credit. I do not believe that Committee members need be lawyers, let alone parliamentary draftsmen, to realise that that is a recipe for legislative confusion.
The hon. Member for Daventry and I also sat on the Committee that considered the Employment Relations Bill, which I wanted to call the Fairness at Work Bill. The White Paper had been entitled ''Fairness at Work'', and fairness at work was referred to in the manifesto. Parliamentary draftsmen are, rightly, independent. It is their responsibility to determine the Bill's title. On this occasion, parliamentary draftsmen called the Bill the State Pension Credit Bill. We shall continue to refer to pension credit in getting the message across to people.
We need to move on to issues surrounding the use of the word ''credit''. Increasingly, people understand through the Government's activities that, under this Government, credit is positive and means an entitlement that people did not have before, whether working families tax credit, child tax credit or disabled person's tax credit. The term ''credit'' has been changed by the Government into something positive and meaningful, unlike how it has been used in the past.
It is vital for us all to take the view that, whatever the Bill is called, its implementation and the uptake of benefits that accrue from it are vital. The creation of the pension service is important. As we roll out the pension service, I make an offer to each Committee member individually; if any of them wish to visit a pension service facility, I will facilitate that. It is important that hon. Members who have taken the time to participate in the Committee can see how the programme is rolling out in practice, after the Bill's enactment. I leave that offer on the table.
I hope that the hon. Gentleman will see fit to withdraw his amendment.
I thank the Minister for that offer to Committee members. The pension service that covers my constituency is based in Leicester. Its director has already been in touch with me and I hope, in due course, to have a conversation with him about how things are going, because it is important that that should happen.
The Minister may recall that I suggested to him, in prior correspondence, that he might like to have a couple of presentations in this place, for the benefit of hon. Members who are not members of this Committee.
I have not yet responded to that suggestion, as I have been ill. I apologise for the delay, but the hon. Gentleman will get a positive response.
I am delighted about that. It is in everybody's interests that, regardless of whether we like the exact way that this legislation comes out, it should be properly understood by hon. Members, in so far as it is easy to understand—or, at least, the rudiments of it are—and it should be possible to communicate it to our constituents.
The Minister was talking about what we do at weekends. I can assure him that I am very happy to go home to my constituency, where I have lived for many years, and tell pensioners to participate in taking up this benefit, if they are entitled to do so. Therefore, there is no difference between us on that.
However, I wish to address one major concern and I shall draw an analogy with the minimum income guarantee. It has had some difficulties, which are now being ironed out, but it is, nevertheless, a more straightforward benefit than what we now have. We know that about one in four people who are entitled to it are not participating in it. Therefore, in my constituency—and in most others—some 1,000 pensioners have the right to take it up, but are not doing so at present. That is the continuing concern about such benefits, regardless of how they are presented. Regardless of whether they are called means-tested, or new Labour, or graded, or reward—or whatever—the fact is that they are not reaching the people that they are intended to help as much as they should. It is as simple as that.
I was happy to let the debate run on, rather than to make serial interventions on the Minister. However, I wish to state that the underlying difficulties were very well set out in the interventions by the hon. Member for Perth (Annabelle Ewing)—who asked what the difference was—and the hon. Member for Northavon (Mr. Webb) who asked, ''Is it not, in fact, a solution to a problem that the Government have caused by allowing the gap between entitlements and an acceptable level of income to widen?''
That is the underlying problem. We are fond of the Minister, but he is given to rhetoric from time to time: indeed, sometimes he gives rhetoric a bad name. However, I think that what he was trying to say was that he was attacking poverty. I hope that that is a commitment that most Committee members genuinely share. However, we wonder whether it is being met and I shall give an example that is based on something he said. He said that he wanted to tackle those who are left out of the state pension. However, if he reads the Select Committee's report—which gives flesh to the concerns that we have already felt—he will discover that one of the major problems is the large number of women who do not have a full state pension
entitlement, for historic or other reasons, and whose starting point for the savings credit will be handicapped by the fact that they do not have a full retirement pension entitlement.
Order. I appreciate that we went rather wide on that amendment—thanks to my indiscretion in being generous with the Committee. However, I wish the hon. Gentleman to conclude on the issue of the word ''state'' being excluded from the amendment. The issues that he is talking about can easily be discussed when later amendments are addressed.
You are very perceptive, Mr. Griffiths. I would not dream of saying, as you modestly have, that you are indiscreet, and if you were, I would not wish to join you in your indiscretion. I am happy to address the subject more narrowly.
The amendment is very narrow. It is about nomenclature. The Minister gave us an assurance on the publicity scheme mentioned under amendment No. 18. He also gave us some explanation—albeit transmitted at third hand through the parliamentary draftspersons—why he did not want to call the credit ''the pension credit''. I suspect that, given more time and thought, we could have found an acceptable alternative. We could have called it the pensioners' credit instead of using the term in the Bill. I offer him that name in case he later decides to amend the term.
The Minister has attempted to charm us with his rhetoric, but there is still a problem with the Bill, which will not achieve what it is intended to do. I do not like the word ''state'' being slung around its neck, as it is not really about the state contribution to the joint programme that will provide an adequate income for those in old age. I know that the Minister has expressed jocular concern about our thinking on the matter. I assure him, first, that we meant what we said in our reasoned amendment and, secondly, that we will continue to consider constructive ways of effecting that. It is sad that our meetings on Tuesday mornings are disrupted by the Committee, as they provide even better value. I hope that the Minister will learn something from those meetings, as I am sure that we will.
We have had an interesting exchange on state pension credit. We are not going to be factious and divide on everything, but on this occasion, particularly as the Minister went rather over the top, I feel inclined to advise my hon. Friends to persist with the amendment, which stands in my name and that of my hon. Friend the Member for Hertsmere.
Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 12.
I last moved an amendment deleting the word ''temporary'' from legislation when I was a Government Back Bencher. It triggered a debate—lasting some hours—in which I received massive assistance from the Labour party. That resulted in one of the relatively few occasions when I was unable to support the Government of the day; I abstained. I cannot possibly make such claims about the intentions or the effect of the amendment, but I want to probe some important points that both amendments raise.
I thank the Under-Secretary for indicating that she will reply to this short debate. Amendment No. 22 would remove subsection (5)(a), which relates to
''circumstances in which a person is to be treated as being or not being in Great Britain''.
It is a classic probing amendment and designed to encourage the Under-Secretary to explain the circumstances under which such a provision may arise. I have two points to make. First, why cannot a court decide whether a person was in Great Britain? Why do we need regulations? Surely that is relatively easy to prove.
Secondly, it would be helpful to receive the Under-Secretary's elucidation of how it is possible to be in Great Britain for the purpose of receiving the pension credit, but not to be physically in Great Britain at the time. The explanatory notes proceed on the analogy of income support and dangle out to us the prospect that no action will be taken if a pensioner entitled to the credit is outside the United Kingdom for four weeks, or eight weeks in certain circumstances. Will the Under-Secretary explain her thinking about the four-week period and say how it may be extended to eight weeks?
Clearly, no one is suggesting that, if someone goes on an awayday trip to Calais, he or she is disqualified from receiving benefit. However, can the Under-Secretary explain why people who leave the jurisdiction for longer than the normal length of a holiday may lose their entitlement to pension credit? On what basis is such a provision made? Income support is essentially a short-term benefit related to immediate need, although within that are some savings to prevent people from losing the benefit immediately when their circumstances change. Under the Bill, however, such concepts are bolted on to consider eligibility for pension credit.
I have two or three worries that are touched on to some extent by amendment No. 13 that would delete the word ''temporary''. The obvious point is that the
assessment period for pension credit is to be set at five years or, to put it another way, a person will not lose his entitlement to pension credit over five years, after which time circumstances would be re-examined. I understand the Bill well enough to know that it does not contain such a provision relating to, for example, a visit to hospital. Leaving the United Kingdom on a permanent basis would be a notifiable event and there would be a reassessment.
And marriage, as the Minister says. Good luck to people of that age who do marry. I welcome it.
The Under-Secretary must set out for the Committee why such an arrangement has been chosen, why the periods are such, why it is appropriate to go alongside the income support period and how that will mesh in with the much wider entitlement to pension credit that is available without reassessment.
My hon. Friend is asking for insight. With regard to fixing those periods, in the consultation paper the Government said that they wanted to learn the lessons of the working families tax credit. Does my hon. Friend share my interest about which lessons they have learned from that, given that in their new arrangements for the working families tax credit they have altered the way in which assessment is to take place from fixed periods to periods which are more sensitive to changes?
That is a germane point, and I hope that the Minister will reflect on it and address it in his argument.
I wish the Minister to think a little more about what we have said about what the periods should be and why they should be that, bearing in mind that we are talking about regulations which will eventually, no doubt, fall to be considered here.
Beyond that—to make a point that begins to mesh into my second amendment—I wish to address the question of temporary absence. Why should these periods be set at all? I do not want to caricature the pension credit but, somewhere at the back of my mind, I am thinking about a problem of equity that might arise. A person might perfectly legitimately—and with no mis-statement of their income or circumstances—receive an assessment with regard to pension credit on day one that fixes their entitlement for five years, and that is, as it were, a one-way street, because it can be increased but it cannot be reduced. Shortly after that assessment they might, for example, receive a windfall, perhaps from the death of an elderly relative, which makes them very much richer, and they might continue to live in the United Kingdom, and to benefit from both the pension credit and from the windfall gain for five years, until reassessment. One can contrast that position with a situation where someone either finds that they have a reduction in income, and they may or may not apply, or they go outside the jurisdiction to another country, perhaps for very good reasons, such as family reunion, and after a qualifying period they are no longer entitled to the pension credit. There is
the potential for a tension in equity between those two cases.
I turn to how far the regulations run—and how far they might extend. Are they, for example, absolutely neutral between residents and people who have undertaken a longer than temporary removal to another country within the European Union, or to a British colony, such as the Falkland islands, or are the regulations intended to be absolutely neutral between all countries, for example the United States of America, or a Commonwealth country, or a country outside Europe that is not directly associated with the UK in any way?
Will the hon. Gentleman clarify something for me, so that I can try to answer his point when I reply to the debate? Is he just asking whether there will be no difference, outside the UK, between the European Union, for example, and anywhere else? Is that the point that he is asking me to clarify?
I think that I am. That is the first point. However, I then come to my final point, which is buried in the second amendment.
I realise that we are entitled to debate legislation here, irrespective of proceedings in courts elsewhere—there is, as I understand matters, no sub judice law. I am not asking Ministers to trespass on areas that, no doubt, their counsel will be advocating in the High Court at this moment, but it will not have escaped their attention that currently there are proceedings in the High Court about overseas pensioners, which are addressing whether they have an entitlement and, if so, whether it is principled to withdraw that entitlement for those who have moved to certain countries, but not to others. With regard to that, there frequently appears to be a link with countries where there is a reciprocal social security agreement.
We are faced with a complex picture. With respect, it is not quite as simple as the Minister was seeking to set out, and, therefore, it is important to probe the exact basis on which this state pension credit entitlement would be withdrawn if someone were to leave the UK.
I am sure that nobody, least of all the Minister, would wish to caricature us by suggesting that we are saying, ''The moment you arrive at Dover, that's the end of it; you lose it, it's gone.'' Of course, that is not the case. Neither do I suggest that pensioners should not be able to go on holiday—of course they should. I am sure that the Minister would want that as well.
I understand the argument that if the benefit is income-related, although that is sometimes equivocal, Ministers might want to set a limit on the entitlement period if a person moves outside the jurisdiction. Whether they do or not, that should be principled. That chimes in with issues such as whether the jurisdiction would be the European Union or wider than that, and whether a limit would be compatible
with European law. Additionally, the measure could be discriminatory against different types of pensioners who may move to different areas.
These matters are sensitive, and the Minister will know—I have made my worries clear—that some apparently settled arrangements on retirement pensions are being challenged in the High Court. We neither could, nor should, rehearse all that today. However, we must be on the right basis before we start, and we need a clear understanding of what Ministers are trying to do and the reasonableness of rules to limit entitlement that they will set in regulations.
Alongside that is the obverse of the concessions that Ministers explained or made. If the Government intend to give a five-year entitlement to person A who receives a bonus of income but remains in the UK with full entitlement to pension benefit, they must consider pensioner B, who may have the same entitlement due to their initial income but who could move outside the jurisdiction and be disqualified from receiving benefit although he or she has a much lower income than person A. These are real issues of equity, but there are also legal issues and, in any case, we need to know from where Ministers are coming.
I shall examine two classes of cases of potential claimants who are abroad, but before I do so I want to make a theoretical point.
With benefits of this type, this Government—even more than the last—have increasingly moved away from the Beveridge provision of handling both the problem of poverty and incentives to save with an insurance-based scheme. We have ended up with two classes of benefit: those that are designed to relieve poverty directly, and those that are designed to patch the system so that people who have made provisions for themselves are not disadvantaged. The benefit that we are considering falls into the second category. Overseas, or partially overseas, potential claimants are good examples of the muddles in which we get.
My first case is fairly rare, but the second is more general. Two pensioners who attended my surgery—I shall not bother members of the Committee with details of what they came to see me about, but their circumstances are related directly to the clause—had a daughter in Australia who had tragically become extremely ill with a chronic and irreversible condition. They took the decision to fly to Australia to look after her during what they thought would be the final months of her life. That was a generous decision because they were certainly not well off, although they were not absolutely on the breadline because had they been they would not have been able to afford it. I believe that the daughter could not have flown back to this country for medical reasons. Contrary to all medical opinion, instead of taking three to six months to die, she took more than three and a half years. Throughout that period, the little house that the pensioners owned in my constituency remained their property—I believe that they covered some of their costs by letting it. When they returned, they found that from the point of view of a range of benefits they were deemed to have been abroad for the
entire period, and, for various reasons that do not concern the Committee, they were disadvantaged.
The point that I want to draw out of that example is the point that my hon. Friend the Member for Daventry made at the beginning of his speech. In dealing purely with the immediate relief of poverty, like the two benefits to which the clause as drafted is pegged, it is not unreasonable to exclude people who are away for a long period. However, in dealing with the Beveridge-style principle of ensuring that those who have paid into an insurance-based system and behaved reasonably are rewarded for doing so, it is surely completely unreasonable that such people, who enjoy a small occupational pension and some savings, and who should receive a top-up from the benefit, should be grossly penalised because of their decision to go abroad for, in this case, a very long period. That is the sort of problem that a bad patching exercise, which is what the benefit is, throws up.
I do not want to rest my case on that one genuine but none the less fairly rare and unusual constituency case. A wider issue is involved, to which my hon. Friend alluded briefly in the last part of his speech—how to treat pensioners who are resident outside the country.
My hon. Friend alluded to a court case. I shall not discuss which countries are covered. As many Committee members will know, several countries that have the closest links with this country, including Australia, Canada and New Zealand, which contain many pensioners who fought on our behalf in the war, are excluded from indexing for the state pension. Therefore, those who have paid into the national insurance system all their lives and who choose in their late 60s to go to Australia, Canada or New Zealand—several other countries are also affected—receive from that moment on no indexing of their state pension. Before I was a Whip, when I had political views, I signed several early-day motions on the subject.
As the clause is worded, we seem to be in danger of introducing two more perverse incentives among all the perverse incentives in the increasingly complicated legislation relating to pensioners. The first relates to someone who has just qualified for his state pension and who would receive the top-up who is considering going abroad, perhaps to Australia, Canada or another country where, perhaps, like me, he has cousins. Perhaps, like some pensioners, including members of my family, he has a medical condition and might benefit from a warmer climate. By going abroad, he would relieve the national health service of a considerable potential burden and, in the long run, he may also relieve the taxpayer of a much larger burden in nursing home costs, for example. Are we to say to him not only, ''Off you go. Goodbye. You made all those contributions, but you will not receive any indexing on your state pension,'' but, ''By the way, you'd better not go abroad until after your first assessment, and five years later we shall strip your state pension credit from you''? As my hon. Friend said, as the clause is drafted, that might even be stripped from him immediately. If so, we provide a perverse incentive for someone not to do something
that would relieve the Exchequer of a considerable sum.
My hon. Friend sets out the case and his concerns well. Does he agree that the most important aspect is the simple human terms involved? An elderly person with a United Kingdom pension entitlement may want to move to live with a daughter in Australia or Canada. Decency should enable that to be done without any inhibitions on the pensions front.
My hon. Friend knows that I could not agree more strongly about this issue. None of my cousins in any of the countries that I mentioned have fallen foul of the legislation. However, I feel desperately strongly about people who have given their whole lives to this country and, for exactly the reasons mentioned by my hon. Friend, have chosen to go abroad to countries where huge numbers of British citizens have cousins. Some Caribbean countries are also affected by the problem. It is unfair that such people are treated in that way. I feel strongly about the matter so I have to restrain my emotions.
We have set into the system a potential injustice that will cost the British taxpayer in the long run. Clearly, people who have not looked into the detail will find out how much they will lose and be encouraged to come back after a year or two with sad human consequences for themselves and at considerable cost to the Exchequer.
We are increasingly pushing apart the two traditional Beveridge strands—the principles of insurance and relief of welfare. As we embark further down the split, cases involving overseas people are a good example of how, on the one hand, the human side gets steadily less human for deserving classes of people, and, on the other hand, we potentially throw up unforeseen costs to the state. Therefore, I urge the Government to accept the amendments that my hon. Friend so skilfully moved.
I am pleased to stand in Committee for the first time as a Minister, although I have tried it out in private Members' business. It is a pleasure to be here in a position to try to answer points made by hon. Members today in respect of the amendments.
I listened intently to the way in which the hon. Member for Daventry put his points about amendments Nos. 22 and 13. I do not wish to be unpleasant, but initially I found it difficult to understand what he was getting at. He seemed to suggest that pension credit should be payable to people whether or not they are resident in the United Kingdom. That would be the effect of the amendments. Amendment No. 22 would remove the provision allowing residence conditions to be a prerequisite for receipt of pension credit beyond mere physical presence.
Amendment No. 13 would, as the hon. Gentleman said, remove the word ''temporary''. Interestingly, he obviously remembers removing that word from previous legislation, which, he said, went on for some hours. I do not know whether that was an appeal to Back Benchers to assist him in speaking for hours, but they have not taken the bait.
Taken together, the amendments would remove the need for any residence test for pension credit. The only time that one would have to be in Britain to get pension credit for a five-yearly assessed income period would be at the time of making the claim. It would then be paid to anyone in this country over 60, including those who usually live abroad. It would be extraordinary for a social security benefit to operate in that way. As far as I am aware, it would be unique. I may be passed a note by my officials saying that a certain benefit allows for that, but I am not aware of one.
The Government believe that it cannot be right that a person with no real connection or affiliation with this country can receive a benefit or credit funded by the British taxpayer. When it was in power, the Conservative party believed that, too. In 1994, it introduced the habitual residence test, the purpose of which was to curb abuse of the benefit system by those with little or no recent connection with this country.
The hon. Lady's history is accurate as it applies to measures to relieve poverty, but surely she accepts that the basic state pension is paid to people who have paid national insurance contributions all their lives and who retire abroad. The same principle should apply under the Bill.
I hear what the hon. Gentleman says, but the Bill is about pension credit. We are talking about additions to the basic state pension.
I intervene only because I want to hear what the hon. Lady thinks about two different circumstances. She talked about persons with no prior connection with the United Kingdom, but who may turn up here to access the benefit system. If that is her concern, I am with her in principle. However, perhaps she can deal with the point also made by my hon. Friend the Member for Canterbury (Mr. Brazier) about people who have contributed throughout their lives by both national insurance payments and taxation, but who then choose for good reasons to leave this jurisdiction. They may be disqualified from receiving the benefit or be in a dilemma about their circumstances.
I am happy to answer such points one after the other, not at the same time; otherwise I shall be speaking gobbledegook to the Committee. I shall do my best to go through them.
We are applying the habitual residence test. It has been in existence for some years and was introduced for understandable reasons by the Conservative Government as a curb on the possible abuse of the benefit system by benefit tourists or by people with little or no recent connection with this country. In large part, that test applies to all income maintenance benefits. Different tests apply to other parts of the state support system, whether they be taxation or tax credits, but the habitual residence test applies in respect of benefit.
We are not proposing to change that system under the Bill. We want to retain the same test for pension credit that exists for other income maintenance benefits. That is not to say that the habitual residence test that we inherited was perfect. Indeed, we thought that it was deficient in several aspects and in the previous Parliament we made significant changes to improve it. If it would assist the Committee, I can elaborate on that although the hon. Gentleman did not refer specifically to the habitual residence test. We are not suggesting a different test for the benefit from that for other benefits so, in that sense, we are building on the current system.
As a lawyer in a former life, I am probably as aware as other lawyers in the Room—I have not checked my ''Dod's Parliamentary Companion'' to see if there are any, but they lurk in the most surprising of places—that it is dangerous to change the wording of eligibility criteria. That would be like a red rag to a bull not only to those lawyers who may be looking to take test cases, but to judges who may hear them. Rightly, if Parliament in its wisdom uses different words for eligibility and calls it something other than ''habitual residence'', the courts would assume that there was a difference and would want to know what it was. We are not seeking to change the current eligibility for the minimum income guarantee, which is built on income support, as the hon. Gentleman knows. We are reproducing the test, and are not trying to make any significant changes.
The Minister is helping us by trying to elucidate the Government's thinking. I am not a lawyer, but my daughter is a judicial review specialist so I understand the constraints within which the Minister properly operates. Although the concept should stay unchanged for the reason that she gives, it is not necessary—even within the same theoretical framework—to prescribe exactly the same qualifying periods. If it were right to do so for the equity of the case, one could take a different approach with the new benefit. It could have the same wording and concepts but perhaps operate slightly differently.
I can understand the hon. Gentleman's point. As a former Minister, he will be aware that when legislation is brought forward, Ministers are always tempted to suggest tweakings and differences. Such little changes might be helpful in a particular piece of legislation but on reflection they often turn out to be unnecessary complications that give more work to lawyers. With such a distinguished daughter in the family, the hon. Gentleman is as good as a lawyer himself. I am sure that he has fireside chats that enable him to understand much more about the law than those with no lawyers in the family, so he will be aware of the difficulties to which I am alluding. It is not our intention to make any significant changes to the minimum income guarantee.
The hon. Gentleman made it clear when speaking to his probing amendment that he would not want to suggest that an awayday to Calais should force one to claim again for pension credit. Of course that is sensible of him. It is perfectly reasonable that pension credit should remain in payment for limited periods
when a pensioner goes abroad. No one is trying to suggest that pensioners do not deserve holidays, even quite long ones. Good luck to them if they can get abroad. We would not want to make them reapply for pension credit.
Yes, and I am sure that many of them do. However, some of them wish to go to warmer climes, and I understand that Scotland is not always warm.Kevin Brennan: There is Wales.
That is a very old joke.
We have to strike a sensible balance, and allow some flexibility while being mindful of the fact that we are still operating a habitual residence test. We do not want abuses to creep back in. At present, a ''temporary absence'' is four to eight weeks. I think that four weeks takes care of the idea of holidays. Very few of us manage to have holidays that last for longer than four weeks, although we may aspire to them. Perhaps some of us were thinking about long holidays this morning. However, in the main, we do not expect to have holidays of more than four weeks.
A rather strange exception to that arises in the case of the families accompanying children who are receiving treatment abroad. I gather that it arose from the case of the Peto institute. Autistic children needed to stay at that institute for somewhat longer and ran into benefit problems. An exception was made in the income support rules by the then Government. That remains the only exception to the four-week rule. Although the Bill is ambitious, it is not intended to recast the entire entitlement conditions for income-related benefits. If it were intended to do that, it would have more than 22 clauses.
I wish to say to the hon. Member for Daventry, who moved the amendments, that we are trying to keep things pretty much as they are with regard to general social security entitlement, to fit this benefit in with the other income and maintenance benefits that it sits with, and to try to ensure that there are no anomalies between them.
Will the hon. Lady deal with the specific issue of whether there are any EU implications, and whether she is satisfied—after taking advice, no doubt—that there is no obligation to repay for people who might have gone to another EU country for a period of, say, six weeks, and would, therefore, appear to be losing their pension credit entitlement, unless and until they returned to the UK and reclaimed?
I will address that point. I got carried away in flurries of compliments and I apologise for that, but the hon. Gentleman also asked me whether the regulations that we are contemplating would be neutral between all countries. It is my understanding that the only respect in which requirements are not neutral is in the application of the habitual residence
test, which operates slightly differently for EU countries than for other countries; workers exercising community rights—for example, if they return to the UK to seek work—are not subject to the habitual residence test in the same way as are others. Therefore, there is some difference.
The hon. Member for Canterbury raised a tragic case—although, as he said, such situations are mercifully rare. However, such unusual cases often serve to highlight the effect of rules when they are applied at the far end of their range.
Once again, that case involves the habitual residence test. It is, of course, very difficult to design a general rule that applies to all income-related benefits and that takes account of such cases, especially given the length of time that the hon. Gentleman's constituents remained away. I gather from what he said that the daughter was an adult, rather than a child—although he did not make that clear.
All I can say is that habitual residence is, to some extent, a moveable feast. It is a creature of case law. It is not set out, or strictly defined in legislation, and nor is it defined in regulations. However, general principles are set out in regulations, which have been defined over the years in case law. Because of that, there is a certain amount of flexibility with regard to the application of the test. For example, the length and purpose of the absence from the country would be one of the considerations that a decision maker would take into account. I cannot comment on individual cases, but I hope that that flexibility would be applied to situations such as that which the hon. Member for Canterbury raised—although, with regard to that situation, three and a half years is a long while.
I am relieved that the Under-Secretary has made that last comment. I have come across a case that might be more common than that which was raised by the hon. Member for Canterbury. It involved a pensioner who travelled to a foreign country and fell ill. They were diagnosed with a serious illness—cancer of the oesophagus—and they had to be treated in the foreign country. They could not be moved for a long time and, consequently, when they re-entered the country they faced problems with regard to the habitual residence test. I hope that the flexibility that the Under-Secretary described would be sufficient to be able to deal with those sorts of circumstances, which are beyond the control of the individual.
Indeed, and I would hope so too. That would, of course, be a matter for decision makers in the Department, and subject to all the usual legal appeals. However, it would be impossible to come up with a set of rules, either in primary legislation or in regulations, which could cover all such eventualities, and one hopes that, by having more general guidance, the vast majority of such problems could be taken into account, although it is difficult to envisage how flexibility could be maintained for that length of time.
I should like to ask about the periods involved. If the regulations prescribe four weeks, or in the exceptional case that the Minister mentioned, eight, is the decision maker left any discretion about the period? The intention might be perfectly reasonable, but the danger in specifying such matters is that doing so removes the discretion that the decision maker might otherwise reasonably want to use.
The hon. Gentleman is perfectly correct. The decision maker's discretion is limited to the reasons involved, rather than relating to the length of time. If benefits are to be paid to people in this country, changing the length of time would affect all benefits. We do not propose to do that for this one alone. The benefit is in line with other income-related benefits. General eligibility is affected after four weeks, unless the person involved is taking a child—the exception to which I referred before—when it extends to eight weeks. That has been so for many years, including, as the hon. Gentleman would accept, when his party was in office.
I believe that I have dealt with most of the points made.
The Minister helpfully referred to regulations and guidance notes, and said that the habitual residence test was generally interpreted on the basis of case law. Might she or her Department consider examining that point specifically in cases of pensioner illness or compassionate care of a member of a pensioner's family overseas?
Decision makers working in the Department receive mountains of guidance notes about their responsibilities and flexibilities. I am sure that some guidance notes would help, although guidance notes do not obviate the law, and the length of time is not a matter for discussion.
I have made the points that I wanted to make. The hon. Member for Daventry said at the beginning of his remarks that the amendments were probing. I hope that he has found my comments to be of some assistance and will not feel the need to force the amendments to a Division, although he is of course perfectly entitled to do so.
I am delighted to have the first opportunity to welcome the Minister to the Committee. If she continues as she has started, she will do very well. I look forward to a long and constructive relationship on some serious issues of law and practice.
I shall make a couple of personal points that show the reach of the issues involved. The first was stimulated by the extremely helpful speech of my hon. Friend the Member for Canterbury. Many people, and not only in the conventional old dominions, are related to people in the UK. On a parliamentary visit to New Zealand many years ago, I had a conversation with someone at a reception. After five minutes, I said to them, ''By the way, you don't
know it, but you're actually my cousin.'' It happens. There are huge family links, and long may that continue.
My second point is, perhaps, a bit more jocular. I warned the Under-Secretary about my daughter's interests. I notice that already my six-month-old granddaughter becomes extremely animated on mention of the words ''judicial review''. It is the one thing that is calculated to get her going.
I realise that the Under-Secretary is having difficulty. She has a difficult brief marked ''resist''. It is tough. Some hard cases will not be adequately met, for the reasons that we gave. There are several comparisons to be made between the harsh treatment of a person who moves outside the jurisdiction and a person coming in as a benefit tourist expecting the full clutch of social security benefits.
I welcome the way in which the Under-Secretary set up her response and what she said about the habitual residence test. It is one of those things that is at the back of our minds and hon. Members have said that it occasionally comes up in constituency casework. We may think that it does not seem right or that it is harsh. We should, perhaps, revisit that on another occasion in a different format such as Westminster Hall. However, I am pleased that the Under-Secretary emphasised that discretion is available to decision makers and that case law moves the matter in what I hope will be a more friendly direction.
My hon. Friend the Member for Canterbury made an impeccable speech that reminded the Committee about the reasons why people who are outside the world of benefit tourists and who do not seek an unfair advantage may have good reasons to leave the United Kingdom. That may be for such reasons as tending to a sick relative or joining another relative. The system is sometimes harsh to them. Although we will leave it at that point while the High Court considers its decision, such people may well feel a sense of unfairness and inequity.
Those are wider issues, but I ask the Under-Secretary to answer two specific questions that come from a train of thought that arose from our discussions. If a person claims for pension credit and receives an award before leaving the jurisdiction, the credit ceases after four weeks.
Maria Eagle indicated assent.
The Minister nods. That person may have gone on an extended holiday and may wish to return after 12 weeks—that is not unreasonable behaviour for an older person. Will the Under-Secretary assure us that the Pension Service and other people involved in support are geared up to reactivating the claim—for example, they could put leaflets in ports—immediately so that people do not lose their benefit for an extended period while everything is sorted out? I am sure that the hon. Lady wants that to happen, but it would help if she could tell us the ways in which that might be done, and the way in which Ministers and people in the Pension Service will press forward and respond positively. It might be possible for a person to leave a conditional set of papers in which they write, ''I'm going away for
three months. I'll be back on such-and-such a date. Can you give me a ring to remind me, or can I send an e-mail to say that everything is the same as before?''
I am always worried by cases of people who go abroad beyond the qualifying limits, which could lead to overpayments. A situation could arise in which a person leaves the United Kingdom to tend a sick relative or friend in another European Union country—not so far away. What could have been expected to be a weekend or week's commitment could last for three months. That person would be outside the United Kingdom and disqualified from pension credit after the four-week period. The last thing that they would think about in such a situation would be that they should advise people that they had left the jurisdiction, but they would have no intention of evading the system or taking an unfair advantage. Will the Under-Secretary tell us how she envisages the recovery to occur in such cases and how that would be phased in? Would people be treated reasonably?
I raise a separate question about neutral intention. People who have a pension credit entitlement may decide to leave the United Kingdom. They may be aware that it is being paid and may know that the entitlement is for five years on the basis of the assessment that they received. They may fail to notify their departure out of pure inadvertence, or it could be a deliberate attempt to gain an unfair advantage from other taxpayers by continuing to claim the benefit. However, if they are abroad, they are outwith the jurisdiction and benefit cannot easily be recovered. Not to recover it would be inequitable to those who remain. Will the Under-Secretary tell us now, or by correspondence if that is easier, how people who go on a bona fide holiday can restart their claims easily when they return? What can be done about overpayments that arise inadvertently or maliciously, and in cases in which a person is not within the jurisdiction to make a reclaim easily?
It may have been a form of nuclear deterrent, but the Under-Secretary threatened to read out all her brief on the habitual residence test. Although she kindly refrained, it would be useful if she put the information in a letter to members of the Committee. We could then be informed about a subject that we have already discussed, and which, over the years, we should have given more attention. I am grateful to the Under-Secretary and assure her that, at least on this occasion, she will start with a good record because I will advise my hon. Friends not to press the amendment.
I will respond briefly to the hon. Gentleman's points to the best of my ability now and, if he is not satisfied, I will correspond with him later.
In respect of pensioners who go abroad for a three-month holiday, the new Pension Service should be more responsive to the needs of those whom they serve. Given that the hon. Gentleman's fictional holidaying pensioners already have pension credit, there is no problem in informing them of its existence, so we do not have to start from scratch. Certainly, there is no reason why they could not make an arrangement with the Pension Service by telephone or
e-mail to make contact as soon as they return, and reclaim pension credit as soon as possible.
Indeed, the fictional pensioners could receive advice about their entitlement and whether it would be affected by the length of stay because, although they may be aware of the pension credit, they probably would not be aware without further inquiry that it would cease after four weeks. There is no reason why they could not get advice about the implications of being away for three months before leaving. No doubt the Pension Service will be much more capable of doing that now that it has been disaggregated from the Benefits Agency, and is no longer trying to deal with working-age benefits as well.
In respect of overpayments, whether or not they are inadvertent, the Department always tries to be as reasonable as possible. Clearly, overpayments must be repaid unless the Department is at fault; in which case, there is discretion to look at whether overpayments are collected. I hope that the Department always deals with such issues as sensitively as possible and makes proper arrangements to pay over a period of time. I would expect that to happen in this case. Normal rules apply and nothing will be changed.
Will the Under-Secretary also deal with the question of a deliberate evasion of the rules, when someone has gone abroad and is quite happy to continue receiving benefit but cannot easily be collared by United Kingdom authorities?
Yes, that is the problem with fraudulent claims. Obviously, there are safeguards in the Department to detect such claims, and fraud in respect of this benefit would be no different. We will try to ensure that there are no fraudulent claims. We do not want overpayments or fraudulent claims and there is no reason to believe that we would be any less vigilant in respect of this benefit.
I would be happy to send the hon. Gentleman a précis version of the brief on habitual residence tests. He would not want to see the full detail. If he wishes to discuss it in some other place, I will be more than happy to do so with him.
The argument rehearsed under amendment No. 17, which is rather terse and is not
worth reading out, and amendment No. 16, which is opaquely worthy, is that of what happens to the pension age. Change is being effected on an appropriately long-term time scale. The qualifying age for the state retirement pension for women will rise progressively from 60 to 65 over the decade beginning 2010. That has not started yet, and many of those still below retirement age will not be affected and will reach their pension entitlement at 60.
It is not the purpose of the amendment to allow us to discuss the wider issues that the hon. Member for Northavon has touched on. We will later come to what should happen to the saving credit for men under 65 and whether we should wait until the whole matter is swept up by the gradual raising of the female retirement age.
The amendment allows us to consider a world in which there is no formal retirement age. That is a speculative operation. The Institute for Public Policy Research, with which my hon. Friends and I do not always see eye to eye, has produced an interesting report. One of its recommendations was raising the retirement age to 67 in order to balance the books. One of the major social changes, as well as social policy changes, that has taken place since the inception of the modern national insurance system in 1948 is that males often retire before 65. The Secretary of State had something to say about that in Question Time yesterday.
Both males and females are incontestably living longer. I recently wrote that a mental pattern is developing whereby people stay at university and perhaps get an early postgraduate qualification, and start work at 25. They work for 30 years and then look forward to 30 years of retirement. That is a deliberate oversimplification, but the issue of what will happen to the retirement age is interesting. Ministers tend to shy away from the subject by saying that they do not want to make any changes.
There is also the issue of the Government's response to what is to happen in relation to age discrimination, in terms of the article 13 duties and their implementation in the United Kingdom. As the Minister for Pensions would undoubtedly acknowledge if he were here, there is also the question of employment law and whether it is reasonable for an employer to be able to discharge someone because they reach retirement age. The Under-Secretary, as a lawyer, will be familiar with such issues. These are probing amendments.
The hon. Gentleman accuses the Minister of shying away from the debate. He should not do the same; will he tell us whether he thinks that the retirement age should go up?
Mr. Boswell: That is a temptation that I shall resist, with great difficulty—I thought that it would amuse the Committee if I were to do so. With the greatest respect to the hon. Gentleman, he should remember first the Biblical injunction, ''Thou shalt not tempt'' and secondly, that it is his Minister who is meant to be answering the debate.
A retirement age has been set in history. We have always thought that it should be 60 for women and 65 for men and, a few years ago—partly because of the equality agenda and partly to reflect the wider social changes to which I have referred—the then Conservative Government decided to start moving to one age. If the Under-Secretary regards that as the end of the story, our amendments are redundant. Is she willing to keep the issue under review? I do not expect a commitment either way. I am not giving one, and I do not expect that she should do so. Would it be sensible to have some flexibility so that, if the Government were to change the qualifying age after 2020 when the enacted changes had taken place, they could proceed to the next stage? I am conscious that we may want to wrap up matters in a reasonable time before lunch, so it may be appropriate for the Under-Secretary to start casting some interest and concern into such issues. We do not want to reach a final conclusion now, but we should like to see the colour of her thinking.
The hon. Gentleman has again said that the amendments are probing amendments, so I shall not assume that he wants them incorporated into the Bill. They would make slightly odd changes to it; they would not cause substantial problems if they were accepted. In fact, they would not be of much practical use at all. Amendment No. 16 would allow the Secretary of State flexibility to break the link between the state pension age and the qualifying age for pension credit. It is interesting that the hon. Gentleman should be so kind as to allow the Secretary of State such flexibility.
The hon. Gentleman rightly spotted—and, given that such action was taken under his Government, I would have expected him to—that we are moving gradually towards equalisation of the age at which basic state pension is received by men and women, which is 65 years. While that age is often referred to in common parlance on the street as the pension age, no one is obliged by the state to retire at 60 or 65. They are the ages at which basic state pension becomes payable. It is possible for people to defer taking basic state pension at those ages and consequently to receive a higher pension when they do retire.
I refer to when I was a lawyer. There is something known as the usual retirement age in most workplaces and many contracts of employment require people to retire at a certain age. However, there is no standardisation within industry, although terms may vary. There is nothing in law—in black and white—that says that a man must retire when he hits 65 or that a woman must retire when she hits 60. I accept the hon. Gentleman's point that we are moving towards equalisation in the age at which one receives a basic state pension, unless it is deferred.
The Under-Secretary is being characteristically helpful on these important issues.
I wish to make a point that is genuinely intended to help the Under-Secretary, and on which she might wish to reflect instead of responding now. I understand that, from 2010, when the process of integration or consultation begins to take place, the deferring supplements for the retirement pension will be
increased. She might like to reflect on—and comment on, either now or later—the fact that there has been a secular decline in those deferring their pension, partly because the earnings rule has run out. It might be interesting to look at how much one can encourage people to continue working, if they are fit and well.
I turn to the dismissal of people on account of their age. I think that we would all want to get away from that kind of concept. Although the Under-Secretary says that that is not set down by the state, it may be set down by contract. She might wish to reflect on the point that, if people are fit and genuinely able to do their duties, they should not be pushed out on account of their age.
I could not agree more with the hon. Gentleman on that point. The Government are committed to legislation to try to deal with age discrimination by 2006, but that is not in this Bill, so I will not discuss it now.
The Bill has arrangements within it to deal with equalisation. Equalisation is a good thing in itself. The hon. Gentleman asked whether equalisation was the end of the move to change the age at which one receives the basic state pension, or whether there was more to do, with regard to the contemplation of that. There is a discussion going on, which no doubt will continue, about whether the basic state pension should be received at 65, at 67—as the Institute for Public Policy Research suggested—or at any other age that one might choose. Personally, I would like to go on and on: I am not planning to stop at 67, and I am not contemplating retirement at the moment.
That debate will continue, but it is important to note that the positive effects of deferring the age at which the basic state pension is payable that are spotted by organisations such as the Institute for Public Policy Research are not always as obvious as they appear, because one of the problems that we face is that many people who are effectively in retirement now are well under the age at which they would normally be receiving their basic state pension. Currently, a third of people between the ages of 50 and their state retirement age of 60 or 65 are not economically active. It would be nice if we could get those people working.
With regard to that matter, there is a mix between employment policy and pensions policy; they are intertwined. Often opinions about the beneficial effects of deferring the payment of the basic state pension do not take into account the fact that many people who are well under that age are not working.
Can the Minister clarify how the deferral interacts with the pension credit? If I were 65, and I decided to wait a year before drawing my pension, and to draw it at an enhanced rate a year later, how would my income be assessed for the purposes of pension credit when I am 65? Am I deemed to be drawing a full basic pension, or is there some incentive to defer?
That is a good point. As I understand it, pension credit becomes payable at 65, and one is deemed to have the basic state pension in payment, regardless of whether it has been deferred. Therefore,
by deferring retirement, one does not defer one's entitlement to pension credit. I think that I have correctly interpreted the hon. Gentleman's point; no doubt he will leap up, if he is thinking of another matter.
I wish to make some points about the amendments, as that is what we are discussing. The hon. Member for Daventry is kindly including a provision in the Bill to enable the Secretary of State to change that age, if it were to go up—and we are assuming that it would go up, rather than down. However, normally we would require primary legislation to change the age at which people receive their basic state pension. In the normal way of things, we would expect to make all relevant consequential amendments to other legislation in that primary legislation. It was kind of the hon. Gentleman to try to give the Secretary of State an additional power, although that is not necessary at this time. He may consider, on reflection, that such a measure would be redundant if it were added to the Bill. Those of us who want the Bill to be easily understood, something to which we all will aspire when we reach clause 3, would not wish to include in it unnecessary measures so, although helpful, the hon. Gentleman's assistance is unnecessary in this instance.
The hon. Gentleman has forgotten some consequential matters that he would have spotted if he were really on the ball. If he had shown the amendments to his daughter, I am sure that she would have spotted them immediately. References to the age of 65 elsewhere in the Bill would also need to be allowed to slide upwards. Although I understand his argument, the amendments would be redundant and would also cause awkwardness if they were ever to be enacted. Given that the hon. Gentleman said that the measures were probing amendments, I hope that he will withdraw them.
I am grateful to the Under-Secretary. The probing amendments have generated a little debate. Frankly, I could have enjoyed more debate on deep-seated issues to do with older people. It is much better if a debate on the pension age is carried out coolly and not by megaphone diplomacy or preconception. Above all, if we eventually decided to change the pension age—whichever party was in power—I hope that it will not be a penal exercise because there will be people who for good reasons feel it appropriate to retire early. They may feel that their contribution to working life is over. We may want to make such a change more flexible and study other ways in which to make it. We could debate at length how to set up a system.
The hon. Lady reasonably referred to the likelihood of a change. If we considered that—I believe that her party would be the same—I am sure that we would be looking upwards not downwards. That is consistent with what happened in 1995 and equalisation. Furthermore, we must bear in mind the passage of events and the welcome increase in longevity, and the fact that people live to greater ages and enjoy long periods of retirement of 20 or 30 years. We have no problem with that, let alone any implied suggestion that we would want to reopen the distinction between men and women. No one wants to do that. I am
relieved that no one has set up an Aunt Sally in that area.
It has been useful to touch on the issue. I am sure that it will return in a different context and, as the Under-Secretary said, in different Bills. For the time being, given that we have had a preliminary canter around such an important issue to which none of us has an easy solution, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On a point of order, Mr. Griffiths. I have a slight sixth sense that we may be drawing our morning sitting to a close. We may reach clause 3 this afternoon and, as that was the subject of the background note to which the Minister referred this morning when he said that he had intended, but had omitted to circulate it to members of the Committee, will you do all in your power to ensure that we have
sight of that enclosure in advance of this afternoon's sitting?
I apologise again to the Committee, but may I make it clear that the omission should not affect the debate? The enclosure was simply a personal attempt to engage with members of the Committee. What started off as a simple exercise has become more complicated than the clause itself. I apologise again.
It is clear that the enclosure is additional to the notes that have been circulated already and that it should not affect what happens this afternoon. However, I am sure that the Minister will do his best to ensure that it is available.
Further consideration adjourned.—[Angela Smith.]
Adjourned accordingly at ten minutes to One o'clock till this day at half-past Four o'clock.