Clause 2 - Entitlement: basic cases

Age-Related Payments Bill – in a Public Bill Committee at 9:45 am on 25 May 2004.

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Photo of Nigel Waterson Nigel Waterson Shadow Minister, Economic Affairs 9:45, 25 May 2004

I beg to move amendment No. 2, in

clause 2, page 1, line 18, at end insert 'and'.

Photo of Derek Conway Derek Conway Conservative, Old Bexley and Sidcup

With this it will be convenient to discuss amendment No. 3, in

clause 2, page 1, line 19, leave out from 'credit' to end of line 20.

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Economic Affairs

These are fairly minor probing amendments. They are intended to get at the thinking behind the various conditions that apply to the £100 payment.

Amendment No. 2 would, as I understand it, mean that under subsection (2) someone would get the reduced payment of £50 only if they were single,

''in receipt of state pension credit''

''living with another qualified individual.''

I am not sure whether that is clear in the clause, but I should be grateful if the Minister clarified it.

Amendment No. 3 would remove the qualification in subsection (2)(c) of

''he is living with another qualifying individual.''

Is the provision a read-across from the winter fuel payment conditions? Is there a particular reason for it? Is there an issue around the basis on which someone is living with another qualifying individual? There is a reference to ''a couple'' in subsection (3). Has this provision been prepared with a view to the Civil Partnership Bill? What is the basis on which subsection (3) is included?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

Clause 2 sets out the conditions under which a person is eligible for a £100 or £50 payment, whether they are single or a member of a couple. The hon. Gentleman is right to say that that follows the procedure and definitions of winter fuel payments. The short story is that we start off with a £100 payment to a relevant household, which looks simple, but when household composition and one or two other issues are considered, it starts to get a little bit more complicated—although I hope that it is not too complicated.

A single person who is the only qualifying person in the household, or who, regardless of who else is in the household, is in receipt of state pension credit, will be eligible for a £100 payment. A single person who is not receiving state pension credit and is living with another qualifying person will be eligible for a £50 payment. In other words, this is an attempt to even out the £100, rather than assume that the money should always go to the male in the household, and so on. A £100 payment will be made to a qualifying member of a couple when the other member does not qualify, or to the qualifying individual when either member of the couple is in receipt of an income-related benefit. A £50 payment will be made to members of the couple who both qualify for the payment, where neither of them is receiving state pension credit.

These conditions follow what we are doing with the winter fuel payment. In practice, although the payments sound complex, they enable us to have a simple process. In reducing their entitlement from £100 to £50, the amendment discriminates against single pensioners who are not receiving state pension credit and live alone. That would mean depriving around 1.1 million older pensioners of half their entitlement. Many of those people will be older pensioners with incomes that are only just above pension credit level. I assume that the hon. Member for Eastbourne intended that, but I am not certain.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

Perhaps the Minister could clarify something that I have not understood. Would a brother and sister who live together under the same roof, although not as husband and wife, get £100, or does it depend on whether they receive pension credit?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I think that if one of them were a pension credit householder, he would get £100. If the sister were over 70, I think that she would get £50. If no one was on pension credit, I think that they would receive £50 each. Although hon. Members might not want such detail, I should be happy to write to them with some examples of household composition, if it would help.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 10:00, 25 May 2004

That would be helpful. The brother and sister example is not far-fetched or fanciful. It had not dawned on me until we got to this point that being in receipt, or otherwise, of a means-tested benefit in any sense affected how much of the so-called universal payment people would receive. Obviously, it does, but I had not grasped that. If a sister and brother both received pension credit in their own right, what would they get?

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I am wondering whether the answer is £100 each, if they are both pension credit households; I think that that is the logic of the position. The rationale behind the measure is partly administrative, in that it deals with benefit units; however, as a generalisation, the people we are talking about tend to be the poorer group in the age profile. If hon. Members would find it interesting, I shall try to set out some household circumstances to clarify the situation.

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Economic Affairs

Interesting might be putting it a bit high, but that would be useful.

Is it not a tad worrying that we are making up measures as we go along? We are talking about real people in real situations. I thought that the rationale behind the Bill—if that is not putting it too strongly—was that the payment had no relation to the tax system or the benefit system, and that the Government were just saying, ''Here you are: here is £100 if you meet these simple requirements, whether you are a duke or a dustman'', to use a phrase that used to be bandied around in relation to the poll tax. If, as it now appears, there is read-across to the benefit system, we need to know about it sooner rather than later.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

As we will see later, there is no read-across in the sense that the £100 is not taxable and is not counted as income for income-tested benefits. However, the benefit system is relevant in that a pension credit household will receive the £100. Again—this will become a refrain—that mirrors the treatment of winter fuel payments for those with pension credit. However, I will write to hon. Members about the matter, even if, in one or two cases, they may find it only slightly interesting.

Obviously, our policy honours the Chancellor's commitment to pay pensioner households in which there are people aged 70 or older all the extra £100 this

year. The payment is not linked to benefit entitlement, as I said, and is not income-tested. It is paid to households rather than individuals. Through that policy, we are ensuring that that group, which is poorer and more vulnerable in many respects than the younger elderly, will receive the extra £100.

Photo of Claire Ward Claire Ward PPS (Rt Hon John Hutton, Minister of State), Department of Health

As the level of payment appears to be tied to whether someone receives pension credit, can the Minister give an assurance that those pensioners who receive the lower amount will be sent details on whether they qualify for pension credit? I am sure that he will agree that some people not receiving pension credit, and who therefore receive the reduced amount of £50, may actually qualify for it.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

I am grateful for that question; my hon. Friend makes an important point. We argue that the development of pension credit is going well. Almost 3 million people now benefit from it. However, many who are eligible are not yet claiming, and we are doing our utmost to improve take-up. Later, we will discuss an amendment suggesting that we take the opportunity to increase people's awareness of their welfare rights when we send out the payments this winter. I hope that Opposition colleagues will consider withdrawing their amendments—or have they done that already?

Photo of Nigel Waterson Nigel Waterson Shadow Minister, Economic Affairs

The Minister needs to slow down a bit; we are not making progress quite that rapidly.

These are certainly probing amendments, but when I rose to speak to them, it was beyond my wildest dreams that they would probe quite so deeply. It now appears that, contrary to what we have been told—indeed, contrary to a criticism that I advanced on Second Reading—this stand-alone payment is not unrelated to the benefit system. I have just broken the habit of a lifetime and reached for the explanatory notes in the hope that they might tell me the answer, but as far as I can see they do not. This is an important issue. The examples put forward by the hon. Member for Northavon are by no means fanciful; they are real-life situations. Members of this House will receive correspondence, and people will come to their advice surgeries, saying, ''I have only had £50; why did I not get £100?'' Out in the country, people over 70 will all expect to get £100.

If the parameters are not yet clear, they need to be cleared up very quickly, and certainly by Report stage. It would be helpful if the Minister wrote to us soon, so that we could digest what he has to say, think about it in relation to these groups and think of any new points that can sensibly be debated next week.

My amendments have more than served their purpose. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.