HC Deb 18 December 2000 vol 360 cc8-11
8. Mr. Paul Flynn (Newport, West)

What is his most recent estimate of the take-up of the minimum income guarantee. [141808]

The Secretary of State for Social Security (Mr. Alistair Darling)

The latest estimate is that nearly 2 million pensioners are claiming the minimum income guarantee. That will mean that the poorest pensioner households are at least £15 a week better off in real terms as a result of the measures that we have introduced since 1997.

Mr. Flynn

It is a wonderful achievement for the Government that both the minimum income guarantee and the pensioner credit will be increased by the top level of inflation—by the earnings rate—and that the increase in pensions next year will he the first for 25 years that has been higher than both measures of the inflation rate. However, should we not now consider combining all those measures into a simple scheme—a new national insurance fund, free-standing and run by independent managers paid by results? Such a scheme would give pensioners what they want, which is an assurance that their incomes will not be reduced by future inflation.

Mr. Darling

I assume that my hon. Friend's first remark was an acknowledgement of what the Government have done for pensioners, both through next April's increase in pensions and by ensuring that we do more to help the poorest pensioners.

However, I disagree with my hon. Friend's second point. The problem that we have to deal with is that the inequality between pensioner incomes now is as great as it was nearly 40 years ago, and an across-the-board pension increase would not deal with that inequality. We wanted to do more for the poorest pensioners. That is why we introduced the minimum income guarantee, which will rise to £100 in 2003. Crucially, we also wanted to do more for the millions of pensioners—more than half the pensioners in this country—who have a little money in the bank and some modest savings, and who should be rewarded for their thrift, whereas under the present system, which we inherited, they are penalised for having saved.

I also disagree with my hon. Friend in that I believe that there should be a partnership between state provision and people's own funded provision. What my hon. Friend suggested sounded suspiciously like moving everybody into totally funded provision. That is not the right thing to do, particularly for lower earners as everybody knows, they should not be in funded provision, because it would not suit them.

Mr. Archy Kirkwood (Roxburgh and Berwickshire)

In answer to Question 2, the Secretary of State gave the House the welcome news that three quarters of a million people had responded to the minimum income guarantee campaign asking for further details. In the next sentence, he went on to say that half those people had made successful applications. I am sure that that is wrong. For the avoidance of doubt, will he tell us how many people made successful applications?

Secondly, the Department's own figures recently suggested that £2 billion to £4 billion in possible expenditure is left unclaimed. Those figures are almost the same as the sums talked about in connection with fraud within the Benefits Agency system. Will the right hon. Gentleman ensure that local offices can take initiatives on take-up campaigns themselves, in addition to the national strategic advertising campaign for the minimum income guarantee?

Mr. Darling

About 143,000 additional claims have been processed. I was referring to the fact that just under three quarters of a million people had responded to the campaign. My point was that the problem does not appear to be stigma, or a reluctance to claim, but the fact that, because of income levels, or because people can lose all entitlement to help unless they have £8,000 or less in the bank, too many people do not qualify. Those are not rich people; they are people who need assistance, and we are determined to ensure that they get it.

The hon. Gentleman made a further point about unclaimed benefits. Undoubtedly there are unclaimed benefits, but the fact that so many people responded to us suggests that, rather than there being a reluctance to claim, many people simply do not qualify because of the rules that we inherited. That is why we are scrapping the capital rules when the pension credit starts in two years' time, and why we have increased the minimum income guarantee to £92 next year, rising 10 £100 the year after. I want to ensure that all who need help get it. No doubt the hon. Gentleman will be aware that the embryo of that policy was what the Liberals proposed at the general election.

Mr. Gordon Prentice (Pendle)

I am not entirely sure that I can agree with all that, because six weeks ago the Minister told me that 500,000 elderly people who were entitled to the MIG did not apply for it. It is not that they applied and got knocked back; nine months after the start of the take-up campaign, 500,000 elderly people are still not applying. It seems to me that those people are likely to be very elderly and frail, with failing eyesight and hearing. If we mean what we say about reaching the poorest pensioners, might not the only way of doing that be to employ people to knock on doors, speak to those people and encourage them to take up their entitlement?

Mr. Darling

At the last Social Security questions, it was probably right that 500,000 had then responded. The figure is now nearly three quarters of a million, simply because more people have responded in the past five weeks. My hon. Friend makes a perfectly legitimate point—some pensioners who are entitled to the minimum income guarantee and other help have not yet applied for it, and we are constantly looking at what to do about that. I tell him and the others who complain about the minimum income guarantee that it is the most effective way to get far more money to some of the poorest people in this country. They are getting fives times more than they would have done if we had restored the earnings link. By all means let us consider what further steps need to be taken to reach some of those pensioners, but our proposal is the only way to ensure that we can get more help to those pensioners who live in poverty, which was never done when the Tories were in power. I am determined, and I am sure my hon. Friend is, to ensure that pensioner poverty is a thing of the past.

Mr. David Willetts (Havant)

The Secretary of State is perhaps about to give the House some useful information—it is a bit like extracting teeth, but we can put together the answers that he has recently given. He says that 600,000 application forms have been returned and that 130,000 or 140,000 forms are being processed. He said earlier that half the applications were successful. So is he saying that there have been between 60,000 and 70,000 successful claims for the minimum income guarantee as a result of his take-up campaign, as against approximately 700,000 pensioners who are entitled to it but are not claiming it?

Mr. Darling

Let me explain the position so that even someone with two brains can understand it. Just under 750,000 people have responded to the latest take-up campaign. I make the point yet again that that implies that stigma, or the reluctance to claim, is not the problem in relation to the minimum income guarantee. In answer to a further question, I said that 143,000 additional new claims have been processed. A large number of people were told when they phoned that they would not qualify because they had too much money in the bank, or because their income was too high. That is why fewer claims are being processed, but more claims are still in the pipeline. Some 62,000 claims have been successful.

The hon. Gentleman may weep crocodile tears about the number of people who are successful, but he opposes the minimum income guarantee and would ensure that pensioners received even less money as a result. He did absolutely nothing about the growing levels of pensioner poverty when he was in office. If people were to vote for the Conservatives again, they would be faced with scrapping the minimum income guarantee, the winter fuel payment, free television licences and the Christmas bonus. As a result, millions of pensioners would be worse off under his proposals.

Mr. Willetts

It took questions from three different parts of the House, but we have got there: we now know that there have been 62,000 successful claims for the minimum income guarantee as a result of the massive take-up campaign, although the Government know that more than 600,000 pensioners are entitled to it but are not claiming it. Thus we are talking about a success rate of less than 10 per cent. Does not that show that the Government's take-up campaign has been a conspicuous failure and that it would be a jolly sight better to put the money into a straightforward increase in the basic pension?

Mr. Darling

The hon. Gentleman is not proposing to do that; he is against the minimum income guarantee and against giving more money to the poorest pensioners in this country. With respect, he is missing the point. The fact that 750,000 people responded to the campaign suggests to me that the real problem is not stigma, or a reluctance to claim, but the artificially low limits on the amount of money that people can save before being denied help—something that his Government did absolutely nothing about in the 18 years that they were in office. A further problem is that, until now, those pensioners who are the poorest in society have been getting too little, which is why we are increasing the minimum income guarantee. But make no bones about it, the Tories do not propose to give the poorest pensioners more money. More than 2 million pensioners do not even qualify for the full pension, so an across-the-board increase would do absolutely nothing to help them. The Tories presided over a record growth in the number of pensioners living in poverty, and if they got their chance, they would continue exactly the same policy again.