Capital Thresholds

HC Deb 03 April 2000 vol 347 cc617-9

9. Mr. David Heath (Somerton and Frome)

What plans he has to adjust capital thresholds for social security benefits. [115871]

The Parliamentary Under-Secretary of State for Social Security (Mr. Hugh Bayley)

We have delivered on the pledge in our pensions Green Paper better to reward savers with low incomes. From next April we will increase the capital limits for pensioners to £6,000 and £12,000.

Mr. Heath

I welcome the Budget announcement, but is there not a case in logic and in justice for automatic uprating across all benefits where a capital limit applies? If it were necessary to disparage the actions of the previous Government—a view which I share—in not increasing limits for the poorest pensioners, why was it necessary to wait for this Budget for an increase to be put in place, and why will that increase not apply for yet another year?

Mr. Bayley

I do not need to remind the hon. Gentleman that this year his party voted against all the social security up ratings, including those for pensioners. In answer to his specific question, I do not think that automatic up ratings would be a good idea. I welcome strongly the fact that half a million pensioners who missed out in the past on the minimum income guarantee will become eligible for it as a result of our decision to raise capital limits.

Mr. Frank Field (Birkenhead)

I welcome the Government's announcement to raise capital limits. It is welcomed on both sides of the House and by the country as a whole. However, does my hon. Friend accept that even with the changes that have been announced there will be many pensioners who have saved and other pensioners who have small occupational pensions who will not be eligible for the minimum income guarantee? Would it not be possible to change the rules for qualifying for MIG so that the criterion is not whether an individual qualifies for income support but whether his pensionable income is below the minimum income guarantee, when it would be brought up to that level?

Mr. Bayley

My right hon. Friend will be aware that in the longer term, through the pension credit, we shall be considering this issue.

Mr. Field

What about now?

Mr. Bayley

Now, or in April next year, we shall be dramatically improving the situation for half a million pensioners. That is something for which hon. Members on both sides of the House have called. It is something that we said we would consider in our pensions Green Paper, and we have done so, and it is something which my right hon. Friend the Chancellor of the Exchequer acted on in his Budget.

Mr. Edward Leigh (Gainsborough)

May I ask a supplementary question to the question posed by the right hon. Member for Birkenhead (Mr. Field)? I remind the Minister that recently the right hon. Gentleman said: As more and more people in work on low wages realise the futility of saving when every penny is taken from the Minimum Income Guarantee which is gained by people with little or no savings, fewer and fewer people on low income will save. Is that statement not a devastating critique of the minimum income guarantee? Is it not true that the Minister has no answer to the criticism levelled at his policy by the right hon. Gentleman?

Mr. Bayley

I do not need to remind the hon. Gentleman that his party left the capital limits unaltered for a 10-year period, and we are doubling them. The Government's approach is to target additional resources on those pensioners who need help most—the poorest pensioners. That is what we are doing through the minimum income guarantee. We realised that there was a problem for pensioners with small savings, and that problem has been addressed by the change announced by the Chancellor.

Mr. Michael Jabez Foster (Hastings and Rye)

May I tell my hon. Friend how welcome the increase has been to some of my constituents in Hastings and Rye? However, a problem has arisen. A lady who wrote in last week, and who qualifies, received a form headed "income support". She said that that was nothing to do with her. May I ask my hon. Friend to change the name to supplementary pension or something other than income support? His campaign to change the system is great, but there must be a change of terminology.

Mr. Bayley

I understand the point that my hon. Friend makes. We are, of course, bound by statute, which refers to income support, but it is important to get the message across to pensioners that the minimum income guarantee is an entitlement. It is not charity; it has been paid for by their own and their spouses' national insurance contributions throughout their life. We will, as my hon. Friend knows, shortly be taking forward the take-up campaign with television advertising. I can assure him that the minimum income guarantee will get a plug in that advertising; we want to get it into everyday currency. We want to get pensioners talking about the minimum income guarantee, and claiming it as well.