Minimum Income Guarantee (Hansard, 8 February 1999)

§ 6. Ms Rosie Winterton (Doncaster, Central)
If he will make a statement on the implementation of the minimum income guarantee for pensioners. [68011]

§ The Minister of State, Department of Social Security (Mr. Stephen Timms)
The minimum income guarantee will be delivered through income support. We plan a number of improvements to help those who are entitled to claim the guarantee to do so, for example by triggering claims at particular events when entitlement is likely to arise. We have also said that we will examine how we might reform the rules to reward better those who save for their retirement.

§ Ms Winterton
I thank my hon. Friend for that reply, particularly because about 9,000 pensioners in my constituency will benefit from the minimum income guarantee. However, Age Concern and the citizens advice bureau have raised a number of concerns, some of which he has addressed, in respect of the fact that thousands of people are unaware of their entitlement to income support. They will therefore be unaware of their entitlement to the minimum income guarantee.
9 There is also the issue of the notional interest which is put on savings above £3,000. Is my hon. Friend looking at that matter as well as the other issues that he has outlined?

§ Mr. Timms
My hon. Friend is quite right. We estimate that between 400,000 and 700,000 pensioners eligible for the minimum income guarantee are not currently claiming income support. Pensioners who are not initially eligible for the guarantee are most likely to become eligible when they reach 75 or 80, or when they start to receive attendance allowance, because, at that point, a higher premium becomes payable and another group of people comes within the scope of the guarantee. We are looking at how to trigger claims from those people automatically at those points, and at other measures that could encourage people to come forward, including a take-up publicity campaign which we hope to run later in the year.
My hon. Friend is also right in that we intend to consider the current rules on savings, which prevent some people who would otherwise benefit from the minimum income guarantee from doing so. We want to produce proposals during this Parliament to address that issue as well.

§ Mr. Julian Brazier (Canterbury)
In answer to an earlier question, the Secretary of State referred to the anomaly whereby people who have saved modest amounts or who have small pensions are penalised by the existing benefits system. In considering the minimum income guarantee, will the Minister confirm that, as it stands, the number of such people will be greatly increased, and that disincentives to save for pensions will become still greater? Will he also confirm that it will take more than tinkering with this proposal to remove the considerably increased disincentive to save for pensions?

§ Mr. Timms
The question that the hon. Gentleman must answer is: does he agree that even the least well-off pensioners should share in rising national prosperity? Of course, it would be possible to increase the guarantee only in line with prices to keep it at a lower level. That would reduce the number of people benefiting from it, and it would also leave a large number of pensioners stranded on lower incomes than they should be receiving. We are committed to security and a decent income for all in retirement. My right hon. Friend has made it clear—and it is spelled out in the Green Paper—that we are looking into the amount of savings people can have before they become ineligible for the minimum income guarantee, and we shall produce proposals to address that issue.

§ Mr. David Winnick (Walsall, North)
Do I take it that the minimum guarantee does not exclude other matters? Is my hon. Friend aware that I am pursuing the case of one of my constituents, who is 79, very unwell—that is not in dispute—has been housebound for three years and has been refused a social fund grant for a mobility chair? Will he give me a promise that, once Question Time is over, he will investigate this matter carefully? The reply that I have received stated that the case has gone through 10 review and has been rejected. That is totally unsatisfactory. I want justice for my 79-year-old constituent, and I want it very soon indeed.

§ Mr. Timms
I was not previously aware of the details of my hon. Friend's case, but I should be delighted to look into it if he would write to me about it.

§ Mr. Steve Webb (Northavon)
The Government want people on £10,000 a year to take out stakeholder pensions, but will not require them to put anything in beyond their rebates. If someone on £10,000 a year puts in just his national insurance rebates at the start of his working life, will he reach retirement needing to depend on the minimum income guarantee?

§ Mr. Timms
No. The state second pension has been designed to ensure that everyone who is in it will, when he gets to retirement age, have an income above the minimum income guarantee level. People earning more than £9,000 who choose to move into a stakeholder pension should also be above that level. We hope that stakeholder pensions will ensure that people who contribute to them and receive them are above—well above in most cases—the minimum income guarantee level when they retire.

§ Gillian Merron (Lincoln)
How do the measures that the Government are introducing to support pensioners, such as the minimum income guarantee, compare with what would have happened had the link with earnings been restored?

§ Mr. Timms
The restoration of the link with earnings would have been an extremely expensive measure. We have chosen to concentrate help on those who need it most. The minimum income guarantee allows us, from April, to offer pensioners dependent on income support an increase in their income three times the rate of inflation. That is a significant boost for the pensioners who need it most.