§ 9. Colin Burgon (Elmet)If he will ensure that the upper limits indicators for pension credit will be linked to the minimum income guarantee and rise proportionately each year. [11688]
§ The Minister for Pensions (Mr. Ian McCartney)Our proposals for pension credit will ensure that all pensioners share fairly in the rising prosperity of the nation. Our plan is that the levels of pension credit will be reviewed routinely as part of the normal uprating process. As the pension credit consultation document makes clear, our intention is that the guaranteed income level of the pension credit will keep pace with the growth of earnings over this Parliament.
§ Colin BurgonI thank the Minister for his reply, and I am delighted that we are now turning our attention to that large group of pensioners who have only modest savings and small occupational pensions. In my constituency, for instance, that includes people who have worked in tailoring and mining. They will be delighted when the pension credit comes into being. Will the Minister continue what I would class as a caring, committed and concerned approach by improving the quality of the financial advice and information that our pensioners receive? In my opinion, far too many pensioners invest their life savings in low-yield funds.
Will the Minister also consider the introduction of an effective equity release scheme, which would allow pensioners, with a great degree of confidence, to use their biggest capital asset—usually their home—to raise an income without fear of losing it?
§ Mr. McCartneyThe whole purpose of pension credit is to get away from the system in which pensioners with a small second-tier pension or savings—such as those pensioners to whom my hon. Friend referred—were taxed effectively at 100 per cent. for every extra pound of income. Pension credit will give them a bonus or a reward for every pound of second pension or savings income up to a maximum level per week. That is the first time in pension provision since the creation of the welfare state that the state will make payment in recognition of the thriftiness of pensioners. The scheme will mean a guaranteed £100 a week for a single pensioner and £154 for a couple. Some 5.5 million pensioners—50 per cent. of all pensioners—will gain as a result of the credit.
§ Mr. David Willetts (Havant)Will the Minister confirm two independent figures about pension credit? First, will he confirm that the House of Commons Library estimates that when pension credit is brought in, more than 57 per cent. of pensioners could find themselves on means tests? Secondly, will he confirm that independent experts calculate that the cost of pension credit could be more than £2 billion? For the first time, we will have a Government who have taken almost £5 billion from pension funds belonging to the pensioners, driven those pensioners into dependency, and then expected them to be grateful when they get the money back through a complicated new means test.
§ Mr. McCartneyWhen we publish the Bill, we will publish the costs. We are the first Government in decades to introduce a pensions policy that will increase income for pensioners, not decrease it as the Conservative party did in Government. Some 5.5 million pensioner households will benefit from the policy. Already, 2 million pensioners have benefited from the minimum income guarantee, and others are benefiting from the winter fuel allowance. One could go on, but the problem is that the hon. Gentleman would not like it because he would like to abolish all those measures.
§ Mr. WillettsLet me ask the Minister another question. He is saying that 5.5 million pensioners will benefit, but he has been warned by Help the Aged that pension credit is far too complex. Why will not Ministers learn—[Interruption.] It is no good the Secretary of State telling the Minister of State the answers; I am asking the Minister. It is not surprising that the pension credit Bill will be introduced in the House of Lords if the Secretary of State does not trust his Minister to answer questions about it.
Why is the Minister assuming that 5.5 million pensioners will get pension credit, when we know from all the Government's schemes that one of the big problems is catastrophically low take-up, with fewer pensioners collecting benefits to which they are already entitled because the Government's schemes are too complicated by far?
§ Mr. McCartneyThe problem is that the hon. Gentleman does not like this Government paying out resources to get pensioners out of poverty. He fought the last election on the basis of taking away benefits from pensioners. I made the position clear to the hon. Gentleman—when we publish the Bill, we will publish the costs. We made it clear during the consultation that 562 our target is to ensure that half of Britain's pensioner households benefit from the policy. What a difference it makes having a Government who are on the side of pensioners, rather than one who attacked them.
§ Miss Julie Kirkbride (Bromsgrove)Does the Minister agree that the minimum income guarantee, however well intentioned, has been a disaster for the Government's policy on stakeholder pensions? Stakeholder pensions have flopped, with very few people taking them up. The Minister offers people a guaranteed income in old age, and yet expects them to save their own money to achieve the same standard of living as they would achieve by saving nothing at all. In those circumstances, the scheme is bound to be a flop.
§ Mr. McCartneyThe last Conservative Government drove almost 2 million pensioners into poverty. The minimum income guarantee has produced an average increase of £15 per week, and the very poorest pensioners—over 100,000 of them—have received an average increase of £20 a week this year alone. The hon. Lady must learn from history. When the Conservatives were in power they drove pensioners into poverty; it is the job of this Government to get them out of poverty.