Good morning, Mr. Griffiths. The purpose of amendment No. 3 is similar to that of amendment No. 14. That amendment would remove subsection (6), while our amendment would allow the Secretary of State the power to specify lower amounts, except in respect of hospital in-patients. That proposal is more narrow than amendment No. 14, because the explanatory notes to the Bill suggest that the Secretary of State needs powers to specify lower amounts, for example, in respect of prison inmates. Even I do not have a problem with a lower rate of pension credit for prison inmates. However, hospital in-patients should not be treated the same.
We welcome the fact that the Government made a concession in another place. It is clearly a step in the right direction, but has it gone far enough? The issue is one of principle as well as one of pragmatism. The key question is whether the Bill should give the Secretary of State power to reduce guarantee credits for hospital in-patients. The Minister will no doubt say that it has been a feature of the welfare state since the war that people in hospital have their benefit cut, but because something has been going on since the war does not make it right. There has been an upper earnings limit on the national insurance system since it was established, but yesterday the Chancellor of the Exchequer breached that by taking national insurance beyond the upper earnings limit. That something has been in done for decades does not mean that it cannot or should not be reformed, and I hope that the Minister would not suggest that that is a reason for continuing with the system.
We have to examine the thinking behind the practice. The historic argument is that the state should not pay twice—in this case, by providing for patients in hospital and also paying their full pensions, or pension credits. They are being fed, sheltered and looked after while they are in hospital, which is part of what the pension credit is about. However, the Government have not produced any evidence about the extent, if any, of the double provision, so my first question is empirical—what evidence is there of double provision? Clearly, food would be an obvious example.
The hon. Gentleman may wish to intensify that point. When we have sought to require information in parliamentary questions relating to the distribution of the benefit, except for the global figure of relief of £40 million annually, it has been remarkably difficult to work out how many people are affected and for how long, and to determine the caseload on which information is based.
Mr. Webb: I would certainly agree that there have been gaps in the detail. There has been a greater amount of detail concerning the numbers affected than the hon. Gentleman suggests, but the Department has hardly been overflowing with information about how such people are affected.
I presume that the Under-Secretary will respond. Will she provide empirical evidence of research committed by the Department to determine the costs incurred by people in hospital and the costs saved because they are not living in their own homes? Obviously, they are not buying food while in hospital, so a slightly lower rate may be justified to account for that. However, how important are such items of expenditure compared with costs that roll on when one is in hospital, such as household insurance premiums, which may rise during an extended period of absence—insurance companies sometimes increase premiums if nobody is sleeping in the house? Many costs roll on regardless, such as standing charges on utilities—telephone bills, for example—and car insurance does not stop when one is in hospital.
What is the relative magnitude of the costs involved? If one took all costs faced by a pensioner, what is the balance between costs that continue when one is a long-term hospital in-patient and those that stop? If, as I rather suspect, a large proportion of costs continue and only a small amount is saved, that should inform any hospital downrating.
My second question is what costs increase during a hospital in-patient stay? If a person is married, the partner will want to visit regularly, which will incur additional travel costs, such as car parking charges. Hospitals in my constituency, like others, charge rates of approximately £3 a visit. The cost of visiting once a day would be some £20 a week, which is a substantial sum relative to the figures that we have been discussing. Such additional costs may offset any savings.
Pragmatically and empirically, have the Government commissioned research on the problem and demonstrated evidence? Frankly, the number of people involved when the system was established post-war was probably only a handful. Most people died before any downrating would have applied, which is no longer the case. People are likely to live longer now and have long in-patient stays. Harking back to the fact that downrating is a feature of the post-war welfare state does not prove the case. It affected far fewer people in a very different world.
Hospital downrating also involves an issue of principle that relates to benefits other than those in the Bill, so I will not dwell on that point. However, one may question whether we should be going down this track with regard to contributory benefits. For people who receive benefits for care needs, although the hospital provides care for in-patients, a carer may have to be retained and wages paid for the duration of the hospital stay.
I am grateful to the hon. Gentleman for giving way again. I hope that this will be the last
intervention that I need make. He mentioned care needs. Does he agree that there might be inequity between people who are resident in hospital, and possibly blocking a bed, in the absence of other care provision, and those who have moved out of hospital and are resident in other accommodation? That, too, might give rise to inequities.
The hon. Gentleman is right to raise the issue of bed blocking, which is entirely germane to the point, as I shall explain in a moment. I am not sure that the position of people in residential care is different, because their treatment under the pension credit will be complex. However, bed blocking matters, because the people with whom we are dealing are long-stay hospital in-patients. In a sense, they are, potentially, victims twice. Not only are they in hospital when they would like to get out—they are ready to do so, but the social care is not available—but, under clause 2(6), they will also have some of their money taken from them. People face a sort of double jeopardy. Once again, the phrase ''bed blocking'' had not been invented in 1948, but it is now part of the lexicon of everyday language.
The matter involves issues of principle that relate to hospital downrating and apply especially to contributory benefits, and issues that relate to the Government's failure to extend the concession to care benefits, with which we should deal elsewhere. Means-tested benefits are designed to top-up people to a certain standard of living and ensure that they can maintain that standard of living. The matter involves arguments about double provision. I hope that the Minister will give us evidence of research that the Department has commissioned to measure the extent of that double provision and that suggests that there is a basis for the tendency to downrate.
Having spoken informally to Ministers elsewhere about why the Government did not go the whole hog and scrap hospital downrating, my impression was that it was not so much the people left—the victims of hospital downrating—who were the worry. It involves a thin-end-of-the-wedge argument. It was not the 6,000 people, or whatever the figure involved is, but the fact that, once we allow the principle of not downrating hospital in-patients, we have opened a Pandora's box. What other things are the Government worried about in accepting the principle? What other expenditure do they fear that they might incur? Where else in government might the principle be applied about which they are worried? Ministers have implied informally elsewhere that the reason is not so much those 6,000 but where it might lead. I hope that the Minister will fill us in on the empirical evidence on cost-saving and on the thin-end-of-the-wedge argument.
I shall be more than happy to do my best to answer the questions asked by the hon. Members for Daventry and for Northavon (Mr. Webb). I shall discuss the amendments in detail in due course, but I shall deal first with the substantive issue of hospital downrating. Both amendments are effectively about that, although they would have some strange other effects.
Immediately following his appointment to his post, my right hon. Friend the Minister for Pensions started considering the issue. As long ago as last July, he told the National Pensioners Convention that he was doing so and from that time answered various parliamentary questions explaining that to the House, too. The matter has been driven by my right hon. Friend's interest when he was appointed to consider the issue, and it has been recognised that there is some strength in the argument relating to downrating after a certain period.
The hon. Member for Northavon is right to say that the grand principle behind the proposal relates to the issue of double provision. It remains a fundamental principle of the welfare state that the state does not provide twice for the same contingency. That sometimes resurfaces in other benefits for which I am responsible as the overlapping benefit rule. Those are not small matters, and ''Pandora's box'' is a useful phrase in considering changes to such fundamental principles in social security, as they often have extensive implications for other areas.
My right hon. Friend the Minister for Pensions spotted that problem and began to consider it as soon as he took on his current role in the Government. Consultations, discussions and his internal investigations resulted in the announcement on 25 February of proposals to change the way in which hospital downrating rules applied. The changes are collected under the State Pension Credit Bill because the downrating of pension credit will be the same.
Downrating will now take place after a 13-week stay in hospital instead of a six-week stay. Hon. Members should remember that that relates not only to pension credit but to a range of other benefits. However, we are now talking about the effect on pension credit. There will be a further reduction at 52 weeks. There will be no reduction before 13 weeks in hospital. After that, the single person's standard minimum guarantee will be reduced by an amount equivalent to 38 per cent. of the basic state retirement pension, with a further reduction to 20 per cent. of the state pension after 52 weeks. For couples, the downratings will be 20 per cent. at 13 weeks, and the claim is disaggregated at 52 weeks. That applies only to pension credit, as the savings credit will not be downrated.
I took care to take a note of the questions that the hon. Member for Daventry asked on Tuesday about the subject. He asked whether we had been dragooned, to use his word, into relaxing the downrating rules so that they apply at 13 weeks. I should prefer to say that my right hon. Friend the Minister took an interest in the matter from the time of his appointment. After considering the issue, he decided to do something about it. That decision coincided with the passage of the Bill, so we were able to get the new rules into the Bill.
The hon. Gentleman asked why we left any downrating at all. The hon. Member for Northavon also raised that question. We must be mindful of double provision. Downrating applies to a range of
other social security benefits, not just those relating to pensioners. It is therefore difficult to argue that it is right to end downrating for pensioners completely while leaving it in place in other benefits. One has to consider the thin-end-of-the-wedge argument when considering the issue because that has implications for many other benefits.
I should like to inform the Committee of the numbers that will be affected, as that might be helpful. The six-week rule affects about 35,000 people. We think that about 26,000 of them are pensioners and 9,000 are of working age. We therefore expect about 26,000 people to gain from increasing the threshold to 13 weeks. Obviously, a much smaller number of people will be affected by the 52-week rule, because thankfully most people leave hospital well before 13 weeks have passed, so many fewer people will be affected by the changed rule.
The Conservative party was in power for 18 years. It considered the hospital downrating rule but never, as far as I am aware—I am sure that the hon. Member for Daventry will correct me if I am wrong—attempted to abolish hospital downrating for any type of benefit. Clearly, it too was concerned about the rule against double provision.
The hon. Lady is putting her case reasonably, and I think that we are all pleased that relaxations have been made. She carefully gave the figures of those who would benefit from the extension from six to 13 weeks, and she said that not that many would be affected after 13 weeks. Will the hon. Lady give the Committee her estimate of the number who will still be caught at 13 weeks, rather than those who are, presumably, unchanged after 52 weeks? It would be useful to have that figure on the record.
I have a figure in front of me. We think that about 9,000 people will continue to be affected at the 13-week stage—6,000 of pension age and 3,000 of working age.
The Conservative Government did not abolish the rule against double provision or end hospital downrating for benefits. However, they did examine hospital downrating. During the late 1980s—the hon. Gentleman will correct me if I am wrong—there was an exercise in standardisation. Benefits had different points at which downrating applied. When that happens, Governments sometimes think that there should be standardisation, and the Conservative Government undertook an exercise on that. Before the exercise, several benefits were downrated at eight weeks, others at six weeks. The Conservative Government decided to standardise at six weeks. Although they made a change to hospital downrating, that was not for the benefit of in-patients who were subject to it—to put it gently.
My right hon. Friend the Minister for Pensions can claim credit for having a fair look at the issue and for making a change that benefits significant numbers of affected people. Labour Members are pleased that he has done so, and members of the Committee of all parties have welcomed it.
I shall deal with several points made by the hon. Member for Northavon before addressing the detail of
the amendments—I do not think that I should miss having the fun of discussing the strange consequences that they would have. The hon. Gentleman asked whether the provision went far enough and whether we should end hospital downrating completely. I should be interested to know whether that is the Liberal Democrats' policy because it would apply not only to pension credit but, in all equity and fairness, to all other benefits. One can imagine the lobbies to which we would all be subjected if we ended hospital downrating on pension benefits but not other social security benefits. There would be a general feeling of inequity. [Interruption.] Unequal treatment indeed. The hon. Gentleman must be suggesting ending hospital downrating for all benefits.
I hope that the figures that I mentioned on hospital downrating for pension credit show that it would affect relatively few people. The Government believe that there is a principle in the welfare state of not making double provision. Ending hospital downrating throughout all benefits would breach that rule, and would make it more difficult to argue that we should retain the overlapping benefit rule. I shall not stray too wide of the amendment, but I will say that I do not know whether the hon. Member for Northavon has a policy on ending that rule. Since I entered the Department for Work and Pensions, I have learned that one can come up with many good ideas to end small inequities. However, once costed, they would prove to cost an enormous amount of money—we are usually talking about billions.
Of course, we must bear in the mind the impact on the entire system that breaching the principles of the welfare state, such as the overlapping benefit rule and the rule against double provision, would have. The Government are not convinced that we should get rid of the rule against double provision. Are the hon. Gentleman and his party committed to doing so and, if they are, what do they think about overlapping benefit provisions?
The hon. Gentleman asked about empirical evidence of the impact of hospital downrating on individual cases. I am not aware of any research that has been carried out specifically to pin down individual cases and try to extrapolate from them across the field of those who are affected, but I will get back to him if I am wrong about that. Over the years, hospital downrating has been driven by the basic principle against double provision. On this matter, I emphasise again that we are talking about only a few people, but I undertake to inform the Committee if there is an empirical study of specific instances.
What would be the effects of amendments Nos. 14 and 3? It appears that amendment No. 14, which was tabled by the hon. Member for Daventry, would prevent any hospital downrating for pension credit. It would also prevent a prescribed amount of nil from being awarded to—
Maria Eagle: Yes, to prisoners, and also to fully maintained members of religious orders; that is the other category.
On Tuesday, the hon. Gentleman asked me whether the nil prescription would be applied only to hospital downrating. It also applies to monks, nuns and prisoners. Therefore, he might be interested to know that the effect of his amendment would be to induce sin, in some cases. Many religious orders take vows of poverty, and we would be forcing pension credit upon their members. I am sure that the hon. Gentleman would not want to be responsible for promoting sin amongst members of such religious orders. However, that is the other—rather small—category.
I was, of course, kidding. However, that would be one of the effects of the amendment.
I know that this is a probing amendment, so I do not intend to chide the hon. Gentleman too much, but it would have another slightly strange effect: a person in hospital would continue to receive their pension credit, irrespective of the length of time that they were there, although many other benefits that they might be receiving would be downrated. Therefore, pension credit would be taken out of line with other benefits.
Amendment No. 3, which was tabled by the hon. Member for Northavon, is trying to do a similar thing. With regard to that amendment, I wish to point out a remarkable coincidence. Initially, it appeared to be an amendment to clause 3, rather than to clause 2, and it made sense in relation to both clauses, even down to the line to which it referred. That is remarkable; I have never come across that before. Therefore, it was not immediately apparent whether we were dealing with a typing error. We finally managed to establish that the hon. Gentleman did mean it to be an amendment to clause 2, rather than to clause 3.
Therefore, the effect of amendment No. 3 would be similar to that of amendment No. 14—but not quite the same. It deals with the sin side of things, because it would enable us to exclude prisoners, monks and nuns, but it would still mean that pensioners who were in hospital for the appropriate amount of time would get their pension credit in full, but not their other benefits or their retirement pension. Therefore, it would have slightly anomalous effects.
I hope that the explanations that I have given the Committee are satisfactory, and that the hon. Member for Daventry will withdraw amendment No. 14. However, he must decide about that.
I am touched by the Under-Secretary's response because it puts me in the category of sinners, which I would wish to do myself. With regard to that, the only possible exculpation that I can give is to refer to that famous motto that states that if one is to sin, one should be a good sinner, and trust at the same time in the Lord. Her response also sought to suggest that I had led the hon. Member for Northavon, who always informs our debates, into the path of sin. It was not my intention, unless severely provoked, to advise my hon.
Friends to divide on a point that would have the side-wind effect not only of abolishing downrating in respect of pensions credit but of bringing in the force feeding of pension credits to nuns.
The Under-Secretary understands that this is in essence a probing amendment, and she has responded broadly in that vein. They are difficult issues of substance, as she rightly says, and I do not wish to suggest that we are uninterested in avoiding double provision. The hon. Member for Northavon raised some legitimate questions about the extent of double provision—and, of course, we have an interest in the overall cost to the social security system.
Does my hon. Friend agree that it is at least slightly curious that if a pensioner received a substantial inheritance or had a lottery win at the start of the five years, there would be double provision because he would receive the pension credit until the next review period?
Order. Before that point is answered, I wish to raise a technical point. If the hon. Member for Northavon wishes to intervene again, you, Mr. Boswell, should not at this stage beg leave to withdraw the amendment—should that be your intention. You should wait until the hon. Gentleman has resumed his seat.
That was very delicately put, Mr. Griffiths. As we are talking about sin, I seem to have become increasingly Jesuitical. I signalled that I would not withdraw the amendment but for the fact that we have an opportunity to return to the subject. However, I to not want to detain the Committee.
The substantive point is that we understand the interest in double provision; indeed, it is part of social security doctrine going back to 1948. In responding to the hon. Member for Northavon, the Under-Secretary did not really stem concerns about the thin end of the wedge. She might have done; there might be some awful skeletons in the cupboard in other Departments that we have not spotted. However, she was worried about it. I understand the principle although, as my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) pointed out, the reality can be rather different. For instance, a person who entirely legitimately is in receipt of a pensions savings credit may be affluent as a result of a windfall.
I shall not tease the Under-Secretary at length about the choice of the 13-week period now, although I might do so under another clause.. One can always ask—indeed, Oppositions always ask—for evidence and precise specification, and it would be difficult for Ministers to give it. However, given that they have extended the period, and given that the Under-Secretary's helpful explication of the figures showed that it is a substantial relief, I concede. I do not want to go further on that, except to say that I am sure that Ministers will want to note the importance of keeping the matter under review, continuing to consider the overall position of pensioners in those circumstances. None of us in Committee have lost interest in the subject, but it is clearly an advance.
There is one area that I did not touch on in my opening remarks, which is how the system will operate in practice. The Under-Secretary knows that it was discussed at some length in another place. If the number of persons affected is reduced, that problem would obviously be reduced as well. However, when I first intervened on the hon. Member for Northavon, at the back of my mind was the answer to my parliamentary question to find out more about the restoration of benefit to persons who had been in hospital—for example, how soon they got it back, and so on. The position was not wholly clear or satisfactory.
Hospital authorities do not charge persons in receipt of benefit for their hospital services. That would be another way of doing it, but I am not canvassing; I merely say it for the record. However, that raises much wider issues, and you, Mr. Griffiths, would not thank me if I went into them today. Hospitals have no interest in advancing the matter, except in relation to hospital social workers and advising individual patients. The interest lies with individual claimants who must notify the authorities when they go into hospital for more than a short stay and who must reapply for benefit thereafter.
Earlier, we discussed persons who went abroad, and I may want to return to the matter of assessment. There is concern that it should be much easier to get pensioners through temporary interruptions in benefit—however well founded—and I hope that a means of doing that will emerge as the Pension Service develops.
The Under-Secretary should consider the incidence of outliers in reapplying for benefit. We are discussing people who are convalescing, and their first thought on leaving hospital will not be, ''I must reclaim my benefit.'' They will do that along the way, and the hon. Lady should perhaps think about operational systems that would make it much easier for them to do so.
I say no more about that now, but it would be useful if the Under-Secretary could give an indication of her approach to the matter. Even if there has been relief on the general issue, there is still concern that those who come to the end of their qualifying period and go into disbenefit may lose out.
I shall make one more point about the continuing review. As regards the overall cost or the benefit to the Exchequer of downrating, I had a slightly irritating answer from the Minister, which did not answer the substance of my question. Nevertheless, in so far as the numbers are reduced, the changes that the Minister has made involve a substantial cost to the Exchequer. As one reduces the number of cases to a minority, the cost to the individual of the downrating increases—the individual case cost increases. Ministers should perhaps bear that in mind. They may reduce the pain of downrating for many people, but they may, if not intensify the pain, at least increase the relative pain for those who remain in the system.
I shall respond briefly to the Under-Secretary's comments on amendment No. 3. She said that there were three reasons why it would not work. The first related to the principle of double provision,
but there is clearly no principle at work in the provisions before us. They are, at the least, tempered by pragmatism, and the Government will allow what they see as double provision to go on for 13 weeks. If there is a fundamental, absolute principle at work, why would it not apply in the first week? Because of the effects on the people about whom we are talking. The Government therefore accept that the principle can be breached. Indeed, they have extended the breach of that principle, so it is not a principle at all—we are talking about pragmatism.
Furthermore, the hon. Lady offered no evidence of double provision. If one is to accept the Government's contention that we must have downrating to avoid double provision, one needs evidence of double provision, but the Minister says that there is none. No one has compared the costs of people being in hospital with those of people living in their own home. There is, therefore, no evidence of double provision, so that fundamental reason for carrying on with downrating is not proven—I think that that is the legal term.
The second reason that the Under-Secretary gave was that the amendment would be anomalous. If the Government went through with it, they would get rid of downrating for pensioners, but no one else. However, that reflects the scope of the Bill. We can amend provisions that apply to pensioners on guaranteed credit, but not those that apply to anyone else.
The hon. Gentleman is being a bit disingenuous. Changes can be made by regulation. The hon. Gentleman and other colleagues have legitimately raised this issue, but have concentrated solely on older people. The Government took the view, however, that changes should not impact negatively on other groups. We therefore went further than any campaign or this House ever intended us to. We extended provision to all those who have been affected by hospital downrating. That is the best way forward. The hon. Gentleman is content to focus narrowly on one very important group—the largest group. He cannot possibly be serious in saying that the Bill should be amended to give something to pensioners while denying it to others in the same circumstances because they receive another form of income from the state.
That is a very strange intervention. Clearly, as the Minister just said, pensioners are the biggest group affected by downrating, so it is not surprising that pensioner groups have been pushing the campaign. I am delighted that the Minister came to his office with the desire to do something about the issue—that is great. No pensioner group would have objected to the extension of the principle to non-pensioners, but that is not their client group, nor does such extension fall within the scope of the Bill.
The Minister says that we can amend the provisions by regulation. He may be aware that the Opposition do not have the power either to introduce regulations or to amend them when they are laid before the House—we are able only to say either yes or no. It is
the Government's job to make such amendments and I am concerned that they have failed to do so.
If the amendment were passed, we would want the principle to be extended. The Under-Secretary said, ''Ah, but what about the cost?'' She used the term ''billions'' during her speech and then she said that very few people were involved. She cannot have it both ways.
I was making a general point when I said ''billions''. As a social security Minister I have found that changes that appear small can sometimes result, when followed through the system, in billions of pounds in costs. I was not suggesting that abolishing hospital downrating would cost billions.
Well, we will not continue to bat back and forth.
As the Minister said, we are talking about 3,000 non-pensioners and 6,000 pensioners. The principle has already been breached. The measure involves very few people, so the cost would be limited. The Minister has not addressed the issue hinted at by the hon. Member for Daventry, which is that there is a cost to the Government of running hospital downratings.
Even if someone reports on day 1 that they have passed the six-week or 13-week mark, the Government have to stop and then reinstate their benefit, which has a cost. If someone were to stay for 14 weeks, I should have thought that the cost of stopping their money would be greater than the money saved by doing so. So it is not clear that the measure will save the Government much money. If someone inadvertently fails to report a long stay in hospital and they end up being overpaid, the Government have to recover that and that costs money as well.
There is no great issue of principle involved, because it has already been breached. Hardly any people are involved and no evidence that double provision is occurring has been produced, so I cannot understand the Government's objections. I understand the issues around nuns and prison inmates, which is why they are excluded from the amendment. I feel that no coherent objection to our argument has been made, but it is not my position to decide which amendments in the group we should divide on, so I will leave it at that.
I gave notice, in moving the amendment that we have just discussed, that I would press the Minister on some wider issues concerning clause 2. By way of trailer for later discussions—which may not even take place in Committee, so rapid and telescoped are our considerations—I should say that we may propose putting clauses 2 and 3 together.
Some Members who would not normally be seen as allies of mine wonder what is going on in conceptual terms. As I understand it, we are essentially extending the minimum income guarantee above the level of minimum income by providing a phased withdrawal in relation to savings income. Yet two separate concepts—the guarantee credit and the savings credit—are addressed in separate clauses. I do not want to debate that matter now, but I should like to pick up on the Under-Secretary's remarks about improvements in the minimum income guarantee. Let us isolate the issue of the savings credit—if that is possible—and consider the criteria for the minimum income guarantee. The essential point is that it is now available above the MIG level, and that is what the Bill effects.
It would be helpful if the Under-Secretary could say whether there are any other changes of substance beneficial to pensioners in how the guarantee is made available, and whether any other changes arising from clause 2 are negative for pensioners? I do not canvass any because I do not think that there are any, but it would be helpful if she could give an assurance. Under clause 3 we shall be able to debate the substance of the savings credit.
Several hon. Members have already expressed concern about the way in which the guaranteed income traditionally delivered by income support and now delivered by the MIG has been compressed against the entitlement to pension, or that the two have now separated, leaving a gap that the Bill was designed to address. Leaving those macro issues aside, let us consider entitlements and the delivery of the guarantee element of the credit. Will the Under-Secretary tell us whether that has changed, and whether the change is beneficial? We were not heavily lobbied on the matter, and it would be fair to say that clause 2 has almost crept by inadvertently, but it would be useful to discuss that matter before we discuss the savings credit.
Clause 2 is creeping by somewhat quickly, which, as the Minister, I should welcome, because we do not want to debate one clause for too long. However, I want to say in more detail why I think that the clause should stand part of the Bill.
The clause ensures that the minimum income guarantee, which is an anti-poverty measure, is carried forward into pension credit. The meat of the Bill and the changes that it brings about relate more to the savings credit in clause 3. The guarantee credit simply ensures that no one loses out in the system.
Can the Under-Secretary give us the explicit assurance that there will be no losers in the system, at least in relation to the guarantee? Perhaps I should have asked that more explicitly in the first place.
I can indeed. I am happy to make it clear to the Committee that there will be no losers and that no one will be worse off on the guarantee credit than they would have been under the minimum income guarantee. Perhaps that explains why the hon. Gentleman found it difficult to spot aspects of the
guarantee credit that were different from those of the minimum income guarantee.
The hon. Gentleman will be aware that when the Government came to office we were keen on assisting those pensioners at the bottom end of income distribution. We may debate whether his party agrees with the way in which we have undertaken that or even the concept of undertaking that, but that has been our policy. We wanted to get help to those at the poorest end of income distribution as quickly as possible, so we had to build on what was already there—which was income support.
We are going further than that now, not only to award savings, which comes under a different part of the Bill, but by ensuring that those who have benefited from MIG do not lose out from the changes that we propose. Clause 2 ensures that no one should be worse off in respect of the guarantee credit than they would have been in MIG.
Some problems have been highlighted with regard to MIG that have arisen because it is based on income support. For example, we heard about the 40-page form that asked a female pensioner whether she was pregnant. That happened because the system was based on the income support form and the income support computer system. Of course, we ameliorated those effects in time, but our main priority was to get money to those pensioners at the poorest end of income distribution as quickly as possible, and building on income support was the way to do it.
In a sense, the Under-Secretary answered the point that I anticipated making. She has been able to make those changes before legislating in the Bill. The form does not have to be complicated just because it is based on the son or daughter of the old income support form.
The Under-Secretary mentioned the reference on the form to whether a female pensioner was pregnant. I realise that she used that slightly absurd case to make her point. Of course, as she will know, there is a presumption in law that there is no absolute bar on pregnancy. In the next village to mine, a lady aged 56 gave birth to healthy twins. When considering approximation or even equalisation, we must remember that it is not impossible that at some stage it may be necessary to reintroduce that question into the form. I welcome that, and have no objection to it in principle. My substantive point is that the Under-Secretary was able to make changes under the old format without clause 2.
I am sure that my father, who had to cope with twins at a much younger age, would have a great deal of sympathy for the lady in the next village to the hon. Gentleman. It seemed as though he was arguing for the reintroduction of complex forms, although I know that he was not really doing so.
We reduced the minimum income guarantee form from 40 pages to 10 simply by concentrating on the fact that we want to provide pensioners with services that are relevant to them and are not just tacked on to the working-age services that we provide through income support. That has driven not only the design of pension credit but, for example, the creation of the
Pension Service, which will be a public service aimed directly and solely at helping pensioners to meet their needs. Pensioners interacting with the benefit system and trying to claim their entitlements will no longer have to go to offices designed to help those of working age get back into employment, and they will no longer have to fill in forms that are designed to meet the much more varied circumstances of those of working age. We Labour Members think that pensioners will come to value that.
I should like clarification about pensioners having to go into jobcentres. Pensioners may not like doing that, for understandable reasons, and it may not be appropriate. On Tuesday, when I asked about the face-to-face service that will be available to pensioners immediately, instead of on the third Thursday of the month in the library or whatever, the Minister for Pensions said that that would still be available and would not be taken away. Will the Under-Secretary confirm that pensioners will still have to go to the jobcentre for that face-to-face service? Can she clarify whether there will still be people who understand pensions at jobcentres?
Local services and the Pension Service will still be available to everyone. It is true that the Pension Service will do much of its processing work and will hold much of its telephone interaction with members of the public from central locations. There is nothing innovative or terrible about that; it already happens in the case of retirement pensions, in which many pensioners interact perfectly happily on the telephone. There is no doubt that the Pension Service will have a local arm, although it is a national service. Whether it is based in the jobcentre or a different building will vary from place to place. We intend to ensure that those pensioners who would prefer to see someone face to face will have the opportunity to do so at their convenience, rather than at that of those providing the service.
There will be surgeries and places in the local community to which pensioners can go to meet Pension Service staff if they need to do so face to face. If they need a home visit, that can be arranged. All of us Members of Parliament are subject to such demands from our constituents, and we know that we can always make appointments to see constituents at their convenience. Of course, there are always constraints to do with when we are in the constituency and so on. The idea is that the service that is made available will be tailored to meet the needs and requirements of the individual pensioner. That is our aspiration, and there is no reason why we cannot make it happen. Apparently, a letter has been sent to the hon. Gentleman by my right hon. Friend the Minister for Pensions; I am sure that that deals in greater detail with the concerns that he has raised.
Clause 2 introduces the guarantee credit, which is similar to the minimum income guarantee. Primarily, it is an anti-poverty measure; it is intended to ensure that there is a minimum income to which all pensioners are entitled.
I could explain all the detailed provisions of clause 2, but I am unsure whether that that would be a productive use of the Committee's time, because I sense that there is not much opposition to the clause. However, I will continue.
The clause introduces a calculation of the first element of pension credit, which is the guarantee credit. That will be available to everyone over 60 years of age. It will bring pensioners' incomes up to a basic guaranteed level, which we expect will be £100 for a single pensioner and £154 for a couple. Those rates are continuing to rise, due to the increases that we have introduced since 1997.
The guarantee credit will be simpler than the minimum income guarantee, which it replaces. It will remove the numerous rates and premiums, and provide a level of income under which no pensioner needs to live. As it is designed for pensioners rather than for people of working age, it will be possible to get rid of some of the extraneous questions on the form. It will have a simpler structure that will enable the system to minimise intrusion into pensioners' affairs, by only asking them the questions to which answers are really necessary, thereby removing one of the obstacles that prevent pensioners from claiming the money that is rightfully theirs. Another obstacle will also be removed, because it will be much more clearly an entitlement.
We also hope that the guarantee credit will tackle pensioner poverty. It will give additional help to those with extra needs, such as severely disabled pensioners, pensioners with caring responsibilities and pensioners with owner-occupier housing costs. Therefore, some beneficial elements of income support additions will be carried forward into the guarantee credit. It will be calculated by making up the difference between the pensioner's income and the guarantee credit.
Savings credit is the other fundamental element of the pension credit, and we will discuss that when we address clause 3. I hope that the Committee will support clause 2, as it is a basic building block of the pension credit.
Question put and agreed to.
Clause 2 ordered to stand part of the Bill.