§ Dr. Evan Harris (Oxford, West and Abingdon)
I beg to move amendment No. 17, in page 12, line 6, leave out from "means" to end of line 8 and insert—'two people, who are not married, (whether of different sexes or the same sex) living as partners in an enduring family relationship, 473 not including two people one of whom is the other's parent, grandparent, sister, brother, aunt or uncle, and where references to these relationships—
- (a) are to relationships of the full blood or half blood or, in the case of an adopted person, such of those relationships as would exist but for the adoption, and
- (b) include the relationship of a child with his adoptive, or former adoptive, parents,but do not include any other adoptive relationships.'.The Bill does not allow the provision to apply to unmarried couples who are not heterosexual, which creates four problems. First, it is unequal. Secondly, it costs the taxpayer money, which is a concern to the Minister for Pensions. Thirdly, it is not compatible with the Human Rights Act 1998 to discriminate in that way against heterosexual couples, who will lose out on extra money that same-sex couples would get, because they are treated separately. Indeed, the House recently passed legislation that recognised the right to equality—
It being Six o'clock, MR. DEPUTY SPEAKER interrupted the proceedings, pursuant to Order [25 March].
§ Mr. Deputy Speaker (Sir Michael Lord)
Order. If the Question has not been proposed from the Chair, there cannot be a vote.
§ Order for Third Reading read.
§ 6 pm
§ Mr. McCartney
I beg to move, That the Bill be now read the Third time.
The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), will send the hon. Member for Oxford, West and Abingdon (Dr. Harris) a detailed reply on his amendment No. 17, if that will help him.
During the passage of this Bill we have heard much from Opposition Members about it extending means-testing. Obviously, they have not had first-hand, or sometimes even second-hand, experience of reliance on means-tested benefits. If they had, they would know that what we are proposing in the Bill is light years removed from the means-testing applied under the Poor Law and the assistance Acts before the war, and the National Assistance Act 1948 after it.
As my hon. Friend the Member for Hamilton, South (Mr. Tynan) reminded us so clearly on Second Reading when he recalled his childhood, means-testing was used in the 1930s to exclude people from income to ensure that they stayed poor. The purpose of the pension credit claim process is the exact opposite. It is about inclusion, to ensure that people qualify for the income to which they are entitled.
We will ask pensioners only for the information that we need to know to work out their combined income. For example, we will only need to know about their savings if they are over £6,000. Let us compare that to claiming assistance in the 1930s, when every penny had to be disclosed and, as a consequence, many households did not receive the support that they needed for food, household expenses and children and whole areas of the country were in abject poverty.
474 This is a landmark piece of social security legislation that will end centuries of unfairness, going back to the Poor Laws of 1598 and 1601. It will remove once and for all the disincentive to save for retirement. When it is introduced in October 2003, people with modest savings will see a reward for their efforts.
The Bill also marks another, although less obvious, break with the past. We are abolishing the criminal offence that could mean pensioners being punished for "wilful neglect" to maintain themselves. The origins of that provision go back centuries to the Vagrancy Acts and further. Those Acts enabled the courts to imprison a person who failed by his own neglect to maintain himself, or anyone he was liable to maintain, with a resulting charge to public funds. That offence dates back to 1713.
The 1948 Act repealed the Poor Laws. However, the interdepartmental committee that reported on the break-up of the Poor Laws in 1946 considered it necessary to retain the offence of failure to maintain. Although the Conservative party had two chances to repeal it—with the Social Security Acts 1986 and 1992—it remains to this day, albeit seldom used, in the shape of section 105 of the Social Security Administration Act 1992.
That offence will not be carried forward in the Bill. Along with the ending of the weekly means test, it sends out an important message to pensioners, to this effect: "pension credit is not a benefit of last resort or public charity; it is your income entitlement."
The Bill is an essential part of our pensions reforms—it will ensure that it will pay to have saved. Our ambition is for all pensioners to share in the nation's rising prosperity. We set out our plans for pensions reform in the 1998 Green Paper, which established a new framework for reforming both state and private pensions. The first stage was tackling pensioner poverty by introducing the minimum income guarantee to ensure that pensioners could enjoy a decent income in retirement. There are 1.1 million fewer pensioners below 60 per cent. median income than in 1996–97 and there are encouraging signs that we are reversing the trend of numbers of pensioners with relatively low incomes.
However, too many pensioners have not had the opportunity to build up a second pension, so our second stage concentrated on reform of the basic structure of pensions to make it possible for more people to save. For those who could not save, we introduced the state second pension. The state earnings-related pension scheme did not provide enough support for people on low earnings or for people with broken records. For those who could save, we have improved and extended the options for doing so through stakeholder pensions.
The third stage is to ensure that even those with modest savings will be able to see a reward for their thrift and effort through the pension credit. We are now beginning a fourth stage to deal with the complexity in private pensions, and we shall be consulting on those matters in the autumn. As I said, the third stage will make further inroads towards our objective of tackling pensioner poverty. Through pension credit, we can correct a fundamental flaw in the pension system that leaves people with modest savings no better off than those who have no savings.
The savings credit element of the Bill will ensure that, from the age of 65, pensioners will no longer lose a pound in their income for every pound of pensions or other 475 savings that they have built up. The Bill will give people a guaranteed income from the age of 60, so that they need not live on less than £100 a week at the commencement of pension credit. More than 5 million pensioners will be eligible. On average, they stand to gain about £400 a year.
We know that Opposition Members have other ideas about spending the £2 billion that we have set aside for pension credit. Some have argued that all pensioners really want is an increase in their basic state pension. The basic state pension will remain a key building block of state pension provision. Restoring the link with earnings or diverting the money that we have set aside for the pension credit would not achieve our objective of helping all those pensioners who lost out because of the flaws in the current system, and those flaws would continue.
The simple truth is that the poorest pensioners would lose out if we took any of the routes proposed by Opposition Members, while pensioners with higher incomes would receive the greatest gains. We have decided to redistribute in favour of the poor and those pensioners with modest income or savings. Who said that socialism was dead on the Labour Benches?
§ Mr. McCartney
Oh, no. I hope that that will appear in Hansard.
My right hon. Friend the Secretary of State for Work and Pensions put this question plainly on Second Reading and I will do so again now: will Opposition Members oppose the Bill? Would they repeal this legislation? Hansard cannot record silences, so if I say the words "total silence" people will get the meaning.
I should like to remind hon. Members of the comments made on Second Reading in another place. Lord Fowler was one of those responsible for the fact that pensioners were left poverty-stricken under the Conservative Government, but he has repented: he has been on the road to Damascus and stopped off in search of victuals at the House of Lords. While he was there he said:To be frank, I should have preferred it if my government had introduced the pension credit. I have no intention of jumping overboard just because that proposal comes from … the current Government."—[0fficial Report, House of Lords, 18 December 2001; Vol. 630, c. 165.]So even those who were responsible for the poverty left to the Labour Government recognise that these proposals are a significant step forward.
The alternative route that we are taking is more difficult, but we believe it is the right one. It will target more help on those who need it, and we are doing that in a fairer, simpler way that does not intrude on pensioners' lives and encourages people to take up what they are entitled to.
Other hon. Members want contribute to the debate, so I shall soon end my speech, but it is important for the benefit of every pensioner in Britain that we put on record the truth about the proposals. Under pension credit, we will not need to ask pensioners reams of intrusive questions and we will not require them to notify us constantly if their income fluctuates. Of course, if their income goes down, they will be entitled to claim an increase.
When was a system ever devised in which people were invited to come along to ask for an increase if they thought that their income had gone down? That is the 476 beauty of this system. It is not intrusive and it will give pensioners the opportunity to approach us for a recalculation if their life circumstances change on the basis that they are entitled to more income, not less.
Means-testing is about stopping people getting access. The hon. Member for Northavon (Mr. Webb) refuses to accept that fundamental difference. We are not proposing an old-fashioned means test, although the Liberal Democrats continue to parrot on about that. The hon. Gentleman is the one who wants to continue the old-fashioned means test because he cannot provide for poor pensioners under 75.
The Pension Service, however, will deliver services to pensioners in a totally new way: dedicated and sensitive to their needs, and putting more dignity into the way in which pensioners are treated. Better than that, our staff will be trained to be advocates on behalf of older people—no longer doorkeepers who prevent them having access to income services but trained to watch over and befriend older people and to be responsible for managing them through the process. That is a radically different way in which civil and public servants work with citizens—on this occasion, pensioners.
Some detail will be in regulations that I hope we will debate in the near future. I promise to share that detail with Members before that debate. Although, in Committee, Members usefully probed the Government's intentions, there have been no significant or even minor changes to a Bill that allows us greatly to improve the situation for pensioners. It will be simpler—for example, 85 per cent. of pensioners will not need to report their level of capital because of the disregard and the lack of an upper limit. Most pensioners over 65 will only have to report changes in their savings and pension income once every five years. We will fully protect those on housing benefit and council tax benefit—another very important innovation—by increasing the guaranteed elements of those benefits by £13.80, or £18.60 for couples. That will ensure that those pensioners maintain their current entitlement as well as benefiting from more generous income and savings rules, as in pension credit.
That is so important, How many pensioners currently get no access to council tax benefit or housing benefit because they are 1p over the limit? We do not intend, through the introduction of pension credit, to give with one hand and take away with the other. These changes are therefore vital. Because we have also changed the income and savings rules, a further 700,000 pensioner households which will not receive pension credit itself will gain from the changes to the treatment of capital and will access housing benefit and council tax benefit for the first time. We are not just protecting those on pension credit—we recognise that there will always be people who are just above the line, whatever it is, and they should not lose out either. A substantial number of people-700,000 households—who do not currently get access to housing benefit and council tax benefit will gain from these measures.
On Second Reading, my right hon. Friend the Secretary of State—I think we know who he was talking about—said:When someone claims to have a simple solution to pensions, people should watch their wallet."—[Official Report, 25 March 2002; Vol. 382, c. 607.]That has been shown in spades today. The problem is that, in truth and in practice—I shall keep repeating this, as people need to know—the Liberals are not interested in 477 poor people from the age of 60 onwards. Their proposals are so flawed that, despite what they are saying, large numbers of people—1.7 million plus—will have to rely on a traditional means test. How can the hon. Member for Northavon say that his proposals compare in any way with the Government's? I expect nothing from the Conservatives, but at least we know where we stand with them, and we know where they are coming from. We know that they are opposed to all these measures. Despite what they are saying about a campaign, we know that they do not mean it, that they cannot sustain it, and that the public do not believe a word they say.
The hon. Member for Northavon is different. He parades himself as the human shield for Britain's pensioners. That shield is not only dented: it does not exist. As I heard it said from the Benches behind me, when it comes to looking after the interests of pensioners, he is as much use as a chocolate fireguard.
A simplification of the income process is vital. We are reducing the complexity inherent in the current system. It will be a straightforward process—a single gateway access to all state retirement income. People approaching retirement will be contacted by the Pension Service to give them information about their basic state pension, based on the contributions that they made during their working lives. At the same time, we will inform pensioners that they may be entitled to extra help through pension credit. The complexity of the current claims process is at the heart of pensioners' uneasiness in dealing with the state. The new service will transform that relationship, and pension credit is the foundation for that change.
In the past, the system has been intrusive and bureaucratic and, crucially, pensioners do not like it. We are tackling that. Our proposals will significantly reduce the intrusion and complexity, marking a radical change from the current system. Quite simply, people with weekly incomes up to about £135 to £200 for pensioner couples—can get extra income through pension credit. Or looking at it another way, if capital was the only source of income over and above the basic state pension, a single person would need at least £35,000 of capital and a couple would need at least £44,500 before they failed to be entitled to pension credit. The figures show just how radical our policy is. Pension credit is a complementary source of income alongside the basic state pension, and it is like the tax allowances that not one of us would refuse.
To conclude, I wish to return to the point made so effectively on Second Reading by my hon. Friend the Member for Hamilton, South. With pension credit, we are finally leaving behind the detested historical images of the means tests that stripped people of their dignity and robbed them of their pride. Yet even though we have moved on from the dole queues of the 1920s and the unemployment assistance boards of the 1930s, our collective memory does not dwindle. It has lived on through the generations, and it continued to live on through the Tories' Social Security Act 1986. It is currently dragged up each time someone talks about pension credit using the language of pre-war social policies.
Pension credit is not about old-fashioned means-testing. Means-testing was about excluding people from income to keep them poor. Pension credit is about inclusion, 478 taking people out of poverty and making sure that they do not slip into poverty in the first place. We will make sure that, for the first time, people who have worked hard and managed to put modest amounts away for their retirement get the income they are entitled to and see a real reward for their efforts.
The passage of this Bill will ensure that the old images of means-testing will not live on in pension credit. As with the National Minimum Wage Act 1998, I am deeply proud not only to have introduced the Bill to the House but to be the Minister who will ensure that it reaches the statute book.
§ Mr. Boswell
I wish to express my thanks to my hon. Friend the Member for Hertsmere (Mr. Clappison). His wise advice and acuity immensely impressed me and other members of the Committee that considered the Bill.
We are used to fireworks from the Minister for Pensions. Although we have also had some measured contemplation and a helpful announcement today, I wish to refer to the fireworks. I was fascinated by his distinction between the means-testing of old and what is being introduced now. There are two characteristics of the Minister's proposal for means-testing. It is apparently all right if it is introduced by new Labour and if it is inclusive and means that nearly every pensioner will be involved. That argument will not wash, because there are serious problems with the proposal.
The Minister is impetuous and determined to get decisions out of us, but it is rather unreasonable to ask us to judge the effects of the Bill—they will be apparent not too far off, but in a year or two—before it is even passed. With regard to our decision on Third Reading, we will listen to the rest of the debate before coming to a conclusion. However, the House will not have to wait too long for that.
Our concerns remain those that were set out in the reasoned amendment to Second Reading. I have underlined our five cardinal points and they relate to mass means-testing, the complexity of the system—despite what the Minister said—the fact that many pensioners will miss out on their entitlements, the erosion of incentives and our belief, which the Liberal Democrats have been consistent in supporting, that expenditure would have been better directed towards the basic state pension, in particular for older pensioners. The argument is not about whether we should help pensioners, but about whether any additional money is being spent to best effect.
As the Minister conceded, the Bill is essentially unchanged. However, it would be churlish and inappropriate not to acknowledge the two substantial changes that Ministers made. It is often the case that if there is a consensus of opinion across the House, it acts as a good catalyst for change. In fairness, we managed to make one change in each House. First, the Government made a significant concession on hospital downrating, and we should remain grateful for that. Secondly, the Minister made a statement today on compensation payments, which will be thoroughly welcomed by hon. Members on both sides of the House. He also repeated his concerns about foster carers for children, so we can anticipate how we might benefit their position. Those are all welcome concessions and reflect the way in which we should make progress when we discuss Bills.
479 I also hope that Ministers and their officials picked up from the Committee some detailed points for consideration as we get close to making regulations. They may also have spotted some pitfalls relating to the equity of, and the ability to administer, the legislation, which will stand or fall on the regulations and the way in which they are administered.
Frankly, Conservative Members remain worried about extending means-tested benefits to 5 million pensioners. Age Concern is also worried about that. In its general briefing for the debate, it refers specifically to the difficulties of securing take-up of means-tested benefits and the large number—about 5 million—of possible claimants. It goes on to say:we believe that the most important issue will be the level of take-up.That is the cardinal test of whether the Minister's wishes are fulfilled. Whatever else happens, means-testing will put a great premium on the performance of the Pension Service, which for technical reasons we have not been able to discuss in detail today.
We remain concerned about excessive reliance on 26 call centres and a telephone system. We believe, as I think do other hon. Members, that people still need access to a local service within a reasonable time. More generally, the Select Committee said:The Department for Work and Pensions must ensure that the Pension Service has the necessary resources and expertise to deal with the challenges that the Pension Credit poses.Those remain serious challenges. Whatever the Minister may wish to happen, he and his colleagues have still to ensure that it does happen.
We need to reflect on how the Bill came about. The Minister is occasionally long on rhetoric, but the plain fact is that in trying to solve the poverty problem, the Government have widened the gap between the state basic pension and the minimum income guarantee. They are now having to bridge that gap, but the gap is of their making. That was well set out in the written answer that I received from the Minister on 7 May. He gave a detailed response to my request to give the historic levels of the minimum income guarantee and its precursors, supplementary benefit and income support, and of the basic state pension for the past 30 years. I also asked him to give the ratio between them.
It is interesting that for a long period the differences between the two were small, not generally exceeding 5 per cent. In some cases, they were negative. However, the levels began to climb slightly and in the latter years of the Conservative Government, the income support level was roughly 10 per cent. above the basic state pension. However, since the introduction of the minimum income guarantee, the figures have sharply diverged, and they now show a 30 per cent. disparity. We remain concerned about filling that gap and about the pensions and savings implications to which my hon. Friend the Member for Hertsmere.
We will not resolve those issues today. The Minister and his colleagues have produced what I am sure they want to describe as good news for pensioners, and we do not want to challenge benefits to pensioners. However, we will ask whether the money is being used to best effect, whether it could have been better spent, and whether there will be consequences in the long run. 480 We are genuinely concerned that the long-term disincentives to save that are built into the system will have a depressing effect on the savings of young people.
Ministers say, and they have done so again today, that they want to produce an annual pension statement that includes both state benefits and private sector benefits, so that people know where they stand. May I float the suggestion at this late stage that what they need to do is get hold of people like my youngest daughter, who is in her early 20s and just starting her career? It should be made clear to young people where they will stand if they do not get down to saving, and what will be provided by their company pension scheme if—like my daughter—they are still fortunate enough to have one. They should be asked to think seriously about the issue, and made to realise that they are part of the £27 billion savings gap.
Will the pension credit act as a disincentive because its long-term effects and benefits will be unclear?
§ Mr. McCartney
I am more than happy to help the hon. Gentleman's daughter, who I believe is a solicitor or a barrister. Small practices and chambers rarely provide in-work benefits such as defined benefit schemes or even defined contribution schemes. That is why we introduced stakeholders. His daughter can start now to save for her retirement through a stakeholder scheme, and as she succeeds and moves from one practice or chamber to another in what I am sure will be an upward career trajectory, she can take her pension with her and suffer no loss. We have made the preparations; all the hon. Gentleman need do is persuade his daughter that she should get involved.
§ Mr. Boswell
The Minister is, if I may put it this way, very seductive, but unfortunately he has identified the wrong target. I have more than one daughter. One is employed by the civil service to look into the sorts of problems posed by person such as myself, or those who decide to litigate against Government Departments. The daughter in question has transferred from a personal pension into a company savings scheme.
To the Minister I say in all fairness and friendliness that the current take-up of stakeholder pensions is worrying, if not to him, then to many people in the sector.
§ Mr. McCartney
That is propaganda. Stakeholder schemes are very important. In the year after their introduction, 800,000 people who previously had no access or any chance of access to a savings product for their pension got one, and about 85 per cent. of companies that had not provided access registered to do so. That is a significant step forward. The hon. Gentleman is right, in that there is a lot more to do, but let us be clear: we are all in favour of people saving earlier in their lives, so it is in all our interests not to belittle stakeholder schemes, but instead to encourage people to take one out.
§ Mr. Boswell
I have absolutely no intention of belittling stakeholder pensions, but I should in all fairness point out that they are currently striking only 2 per cent. of the target group. Of the 800,000 already taken out, a significant number—174,000, if memory serves—have been through the transfer of the construction industry pension scheme. The position is generally regarded as not being as promising as the Minister and I would hope for. 481 It would be inappropriate to widen a Third Reading debate to cover such issues, but it is relevant to the debate and to the provisions we debated and voted on earlier this afternoon to point out that the price of success in pensions policy is eternal vigilance. We need to keep revisiting the subject to see whether the proposals are working. We have reservations about stakeholder pensions, and we still have serious reservations about the long-term effect of the pension credit on the incentive to save and, if there is no long-term private saving, about the future affordability of the pension credit programme. That rolls on a long way ahead.
This is not just a matter of today's pensioners, important as they are; it is a matter of tomorrow's pensioners and the arrangements that we need to set down now to meet their needs in the future. I have a feeling that when we have finished debating this Bill and when we are no longer around to be drawing our own pensions, today's young people may be paying the price for some of the decisions that we are about to take.
§ David Cairns
At the outset of his remarks the hon. Member for Daventry (Mr. Boswell) said that he would listen to the rest of the debate before deciding whether to oppose Third Reading. As I think I am the only Member on the Government Benches seeking to speak, I will assume that if he does not divide the House, it will be entirely due to the persuasive force of my argument. Of course, if he changes his mind and decides to divide the House, I will take it equally personally.
I had hoped that after the brilliant speech by the Minister we would hear no more of the scaremongering nonsense about mass means-testing. Alas, the hon. Member for Daventry continued, as if he had heard nothing of what my right hon. Friend said, to perpetuate that nonsense, and although I do not want to prejudge the contribution of the hon. Member for Northavon (Mr. Webb), I suspect that he will do the same. I assume, however, that if the hon. Member for Daventry does not divide the House, it will he a principled decision and not the result of incompetence such as we saw a few minutes ago on the last group of amendments.
I want briefly to address a couple of canards from the debate. The first is the extraordinary allegation that the Bill has been introduced to clear up a mess made by the minimum income guarantee. It is quite ludicrous to assert that the Government should or could achieve all their social policy on pensioners in one Bill, and that one cannot begin, as we did, by focusing on alleviating the appalling legacy left to the poorest pensioners in this country.
Not only did we have to spend considerable sums alleviating the dire poverty of the poorest pensioners, but we had to ensure that significant sums and a great deal of parliamentary time were taken up sorting out the scandal of pension mis-selling which we inherited from the previous Conservative Government. We make no apology for focusing first and foremost on the poorest pensioners, as we did with the minimum income guarantee. We also ensured, through the winter fuel payment and other universal benefits such as free eye tests, that all pensioners who had lost out were receiving additional benefits. We were right to do all that.
482 What we are doing now is not an academic exercise. The remarks made earlier by the hon. Member for Northavon, when he said that giving an extra pound to someone with savings of £6 was better than giving that person £23 through the minimum income guarantee but nothing extra for savings, were like something that Alice might have found through the looking glass. The Government are being extraordinarily generous to our poorest pensioners, and rightly so, because they deserve nothing less.
We are addressing a pressing need that every single Member has heard expressed on the doorstep time after time. People say, "What about me? I have a small second pension and a few savings, and I'm no better off than the person down the road who smoked and drank all his life and didn't bother." The Government are addressing that real need in the Bill, so I hope, although I am not optimistic, that we will hear no more nonsense about the Bill clearing up a mess. We have laid excellent foundations, and the Bill builds on them, and I am very proud of that.
Let us keep our eye on the bigger picture when considering what the measure is seeking to achieve. Pensioners will be more than £400 a year better off on average, and in constituencies like mine and those of my hon. Friends, where people are poorer because their incomes are below the national average, they will be even better off. That goes a long way towards righting an historic wrong; people should not be penalised for thrift and prudence.
The other theme running through our four hours of debate has been the scaremongering about means-testing. After Second Reading, I decided that I wanted to look into the subject in depth, so I turned to what the Library told me was the definitive history of the means test, "Reserved for the Poor: The Means Test in British Social Policy" by Deacon and Bradshaw, which I am sure the hon. Member for Northavon has lectured on. Referring to the 1950s, Deacon and Bradshaw say:Sometimes insurance was increased by more than assistance—at which point the Government claimed that it was reducing the role of means testing and the opposition claimed that help was not going to those who needed it most. On other occasions assistance was increased more, and then exactly the same debate was had in reverse, with the Government extolling the virtues of selectivity and the opposition complaining about the means test".A sterile debate has been taking place since the inception of the welfare state, but the Bill takes us past that. The Government are prepared to go beyond the sterile debate about mass means-testing, but the Opposition want to drag us back to it.
Deacon and Bradshaw also write about the reality of the means test under the National Assistance Board in the 1940s and 50s. They say that it wasone thing for a claimant to have to tell the Board that he or she needed extra money for clothes or bedding when friends and neighbours were in a similar position and when the cause of need was so obviously beyond the control of any one person. It was quite another to have to show worn clothing to a visiting officer when everyone else had 'never had it so good'".That was the reality of the means test, which my right hon. Friend the Minister said was designed not to lift people out of poverty but to ensure that they were given just enough to keep them in poverty. Heaven forbid that the Governments of the 1950s would give people enough money to lift them out of poverty and float them beyond range of the means test.
483 The Bill is quantitatively and qualitatively different. We are not talking about weekly assessments or people from the National Assistance Board coming round demanding to see people's sheets, clothing and ornaments that might have been pawned. We abhor such means-testing. We are talking about one phone call every five years, with a request for the bare minimum of information so that claimants get what they deserve to lift them out of poverty. It is an extraordinary perversion to equate the means-testing of the National Assistance Board with the income assessment in the Bill. The hon. Gentlemen on the Opposition Benches—and they are all hon. Gentlemen—know full well that those are completely dissimilar beasts, yet they are willing to perpetuate that myth for one reason alone: scaremongering.
My right hon. Friend has said on more than one occasion that, as soon as the legislation allows, he intends to publicise and promote the credit; every Labour Member will make sure that every pensioner knows about it. We will hold the Minister responsible for ensuring that the Pension Service is as proactive as he promised. I guarantee to my right hon. Friend that if I suspect that the Pension Service is not proactive and does not provide a localised service I will, to coin a Scottish phrase, be in his face. He knows that, and he knows that every Labour Member feels exactly the same way.
Our approach is completely different from the scaremongering of Opposition Members, who have only one aim in mind—to depress take-up. They will prevent people applying for the credit by telling elderly and poor pensioners, "It's the old means test. It's the humiliation and embarrassment that your parents had to endure." It is no such thing. A glimmer of recognition on the part of the Opposition that the Bill is entirely different from that sort of means-testing would be very welcome.
I commend the Government for introducing the measure. It addresses a real need, it is generous and it is clear. The complexity will be dealt with by the civil servants, not the claimants. All the claimants need to know is whether they have £135 a week coming in. If they can answer yes or no to that question, the system will do the rest. The Bill is a good measure. It is positive, redistributive and progressive, and I warmly support it.
§ Mr. Webb
The contributions of the hon. Member for Greenock and Inverclyde (David Cairns) are passionate and well researched. They are fundamentally misconceived, but none the less entertaining for that.
As a parent—I am sure that there are many parents in the House—if I come home and discover that my child has made a mess of the kitchen floor but has begun to clean it up, I would applaud them for the fact that they had started to clean it up, but I might ever so gently suggest to them that they should not have made the mess in the first place: That is how we view the Bill.
The hon. Member for Greenock and Inverclyde mentioned the familiar cry of the person who finds that their neighbour has the same living standards as they have, even though they have saved. That very problem has been made worse by the Government over the past four or five years. A person with £20 a week of savings this year is no better off than their next-door neighbour, whereas in 1997 a person with £20 of savings would have been better off than their neighbour. In terms of dealing with the resentment felt by people who have saved, the Government have made the matter worse and are only partially remedying it through the Bill.
484 The hon. Gentleman says that what is proposed is not the same as the means-testing of the 1930s. I agree; however, I am not contrasting what is proposed with the 1930s but with the means-testing of the 1990s—the system from which the Bill takes over. The non-take-up rate, not under the system where claimants have to show that their sheets are worn through, but under the system operated now in modern-day Britain, is one in three. Forget about the national assistance board in the 1930s—the means-testing that does not work is the means-testing that is done now.
The hon. Gentleman's noble Friend Baroness Hollis, told Members in another place that the non-take-up rate for the shiny new-fangled benefit credit would be one in three. He can check—it is on the record. The non-take-up rate for the new pension credit would be one in three. Baroness Hollis hopes that that will build up as time goes by, but what I want to know—
§ Mr. Webb
No. I will not give way. I did not intervene on the Minister.
We were told in Committee that the Government would allow a year from October 2003 for people to claim their entitlement and backdate it to 2003. That is entirely welcome, but why must they leave a year for people to claim it? The Minister said that the Government had done away with complexity. The Government must leave a year for people to claim the pension credit because it is so complicated they do not believe that they can get the money to people. The system is not simple; it is still extremely complicated, as the Bill clearly shows.
In his earlier remarks, the Minister said that pensioners would no longer lose, pound for pound, as though he had not been listening to what we have been saying this afternoon. Which pensioners will no longer lose, pound for pound? Women aged 60 to 64 will lose, pound for pound. Women with poor contribution records will lose, pound for pound. In the propaganda that we got on Third Reading, that is all brushed under the carpet.
The prejudice against women in aspects of the Bill explains why our campaign for justice in women's pensions is sorely needed. The fact that the Government sweep all these things under the carpet and deal in generalisations does a disservice to people's understanding of how the system will work. It is fiendishly complicated. That is why the Government assume that one in three will not take up their entitlement.
The Minister of State rightly says that the Bill is historic. It is. It will be seen as an historic turning point at which Government policy was set in the direction of 485 mass—I am not to call it means-testing, apparently—targeting and mass attempts to identify the poorer half or the poorer two thirds. In our old age, we will not want to have to report our changes in circumstances or know—or, more to the point, care—about tapers, thresholds and credits. We will want to know that we have state pension and some sort of second pension, and that we can budget on the basis of that income for the rest of our lives. That is what we will want in our old age. None of us would prefer to depend on a pension credit, but that is what we will have imposed on two thirds of our fellow citizens by the time people of my age reach pension age.
It is correct to say that when the Government came to power, they could not achieve all their social policy objectives in one go and it was important to tackle pensioner poverty, but who were the poorest pensioners in the land when they took office? It was not the people getting income support and so on who were poorest, but those who were entitled to that support but not receiving it. The Government's figures tell us that there were 500,000 such people. I have a feeling that the Labour party manifesto referred to a much bigger number; it may even have said that there were 1 million such people. None the less, the Government's figures tell us that 500,000 pensioners were not getting income support, and they did not get a penny from the MIG.
Labour Members who talk about their compassion for the poorest pensioners should be aware that the statistics that Ministers cite are based on simulation models from the Department that assume that everybody gets their money—but they do not. As long as the Government continue arguing about the effects of their policies on the assumption that everyone gets their money, they will continue to give a misleading impression, as one of the fatal flaws of their strategy is that a lot of people do not get it. The trade-off is not between a system that gives money only to the poor—let us call it targeting for shorthand—and our proposal of giving to the old, some of whom are not poor; it is between giving to some of the poor and completely ignoring the poorest, although most of the poorest, such as the elderly who miss out on their benefits, get their income through the basic pension.
The Government did have an alternative. The Bill could be called the culmination of their failure to think laterally. Some of the policies mentioned by the Minister, such as relaxation of the capital rules, are not dealt with in the Bill. We did not need the Bill to relax the capital rules. The suggestion that the pension credit is the only way in which such proposals could have been implemented is therefore wrong. It could have been done on day one or at any time.
§ Mr. Webb
I shall not give way, as other hon. Members still want to contribute in the short time that remains.
All that work could have been done without the Bill. The only thing that the Bill adds, while introducing some streamlining of the means-testing process, with which I have no problem, is the savings credit, which partly undoes the saving disincentive that the Government have created. If we are to applaud them for partly undoing the damage that they have done, the applause will be pretty limited.
486 I think that our goal should be bigger. The Minister tried to sound visionary and put some passion into his contribution, but my vision is much bigger than that of ensuring that two thirds of pensioners have to report their circumstances and receive top-ups. My vision is to ensure that as many people as possible are independent of the state. That is the sort of goal for which we should be striving and it is a bigger vision than that contained in the Bill.
§ Bob Spink
British pensioners are right to feel betrayed by this Labour Government. They do not want yet more gimmicks or means-testing, whether it is old-fashioned means-testing or the new fangled type that Labour is currently trying to spin. They simply want a decent, universal and honest basic state pension so that they can live with the dignity that they deserve. They want decent Members of Parliament who can stand up in this House and represent their interests.
I should like to give the House a quote:The concept of the Pensions Credit is … far too complex and over-elaborate … It inevitably draws more pensioners into means testing, which many will resent … We need a system which is simple, understandable, and which accords a proper dignity to pensioners.Those are not my words, but those of Mervyn Köhler, head of public affairs at Help the Aged, in his press notice of 9 November last year. We would do well to listen to Help the Aged, and the proof of his words is clearly evident. Of the 2.5 million pensioners who qualify for the MIG, only 1.7 million take it up. That take-up is pitifully low because of the complexity of the MIG and the stigma of means-testing. Yet the measure before us tonight is if anything more complex than MIG and extends the scope of pensioner means-testing, notwithstanding the fact that the Labour manifesto pledged to end it—yet another broken Labour promise. As a result, take-up may fall even below the miserable level of MIG take-up, but I doubt whether that worries the Government, because they do not care about pensioners.
I will give the Bill some credit. The Government claim that it will help more than 5 million pensioners, which is greatly to be welcomed, and it is right to target the poorest pensioners. But I challenge their estimate that the Bill will increase benefit expenditure by £2 billion in a full year of operation, because if take-up is only 70 per cent. or 75 per cent.—around the same level as MIG take-up—there would be little or no increase in overall expenditure. That is why I say that low take-up owing to high complexity will not worry the Government.
§ Bob Spink
No, I will not. Other Members wish to speak, and the right hon. Gentleman has spent an inordinate length of time at the Dispatch Box today.
The 1997 manifesto on which the Government were elected, "New Labour because Britain deserves better", said:We believe that all pensioners should share fairly in the increasing prosperity of the nation … Everyone is entitled to dignity in retirement.Those are fine words, and we can all agree with them. However, under this Government the proportion of national wealth that goes to pensioners has fallen, even 487 after fully accounting for all the gimmicks such as free television licences for over-75s, the winter fuel payment and other concessions.
Quite simply, the Government have failed pensioners. As always, the Prime Minister was long on aspiration and warm words and short on delivery. Pensioners made this country what it is. They created its wealth and established its infrastructure and enterprise base. They gave their blood, sweat and tears—some gave their lives—so that we could be a free nation enjoying prosperity and improved standards of living, yet they are denied a fair share of the very prosperity that they created through their efforts.
Let me be perfectly balanced and fair in what I say. On balance, during the 1980s and 1990s, Conservative Governments improved the lot of pensioners—although, to be honest, we did not do enough—but under this Labour Administration many pensioners have become worse off. Just as they are worse off under Labour as regards health, transport and street crime, they are worse off financially. So what is the Government's response to current levels of pensioner poverty? First, to introduce more, not less, complexity; secondly, to introduce more, not less, means-testing; and, thirdly, to create a long-term disincentive to saving. That will lead to lower pensioner take-up of their hard-earned entitlements and more, not less, pensioner poverty. In short, Labour has failed pensioners, and the Bill may compound the Government's failure by leading to an increased dependency culture. As the Minister said, socialism still lives on those Benches.
§ Mr. Goodman
It was interesting that the Minister devoted so much of his summing up to means-testing. It was no accident that, of all the various elements in the Bill, he chose to concentrate on that one, because it is at the heart of new Labour thinking on this matter. Old Tory means-testing is apparently bad, but new Labour means-testing is apparently good.
At this point, hon. Members should remember who is, as it were, the "onlie begetter" of the Bill. It is not the Minister, nor even the Secretary of State, but the Chancellor of the Exchequer, who is absolutely confident that, by extending these credits both through his Department and—I hope that the Minister will not be embarrassed by this—his proxies in the Department for Work and Pensions he will be able to raise the living standards of poorer pensioners. I believe that it is widely acknowledged in and outside the House that the Minister is an admirer of the Chancellor. I am sure that the Under-Secretary, who is sitting next to the Minister, will not mind my putting that on the record.
There is a difficulty with the Chancellor's approach. According to the Government's figures, 2.5 million pensioners are entitled to the MIG, but only 1.7 million have taken it up. Some of us find it hard to distinguish between old and apparently wicked Tory means-testing and new, wonderfully effective Labour means-testing. As the hon. Member for Northavon (Mr. Webb) ably pointed out, between a fifth and a third—the latter was his figure—do not get a penny of the MIG.
The Government have presented no evidence that the take-up for the pension credit will be higher. I acknowledge that the Government hope that it will be higher, but they cannot reassure any hon. Member about that. The fundamental flaw in the Government's approach, 488 which the Chancellor masterminded, is becoming clearer as time goes on. The Minister placed great stress on means-testing in his summing up because he is so worried about the failure of new, apparently effective Labour means-testing that he wants to meet the point head on. However, he cannot guarantee that the take-up will be higher. He is naturally unwilling to listen to criticism from the wicked Tories, but perhaps he should take account of the concluding paragraph of the report by the Labour-dominated Select Committee on Work and Pensions. It statesMost importantly, it"—that is, the Government—will need to ensure that the levels of take-up for the Credit increase dramatically from those currently seen with the MIG, and that the poorest pensioners benefit in full from its provisions.That acknowledges that the poorest pensioners do not benefit in large numbers from the MIG and that they may not benefit from the provisions of the pension credit.
In short, we know that those who take up the pension credit will be better off, but the system is gradually becoming increasingly complex. It is not so easy for my elderly constituents, especially those who are of an ethnic minority, to pick up the telephone, as the hon. Member for Greenock and Inverclyde (David Cairns) suggested, and get their benefit, as Tommy Cooper would have said, just like that. The Select Committee believes that, in practice, it is enormously difficult for many pensioners to cope with the complexity of the forms and take up the benefit as the Government want.
The Select Committee report concluded:the Pension Credit unquestionably adds further complexity to an already byzantine system of retirement provision, which is causing confusion for pensioners, pension providers and those saving for their old age. In particular, the Credit throws the role, and indeed future, of the State Second Pension into serious question.By placing so much stress on means-testing, the Government introduce a fundamental weakness into their plans that affects the country's poorest pensioners. I believe that they will pay dearly for it in the long run.
§ Mr. McCartney
I simply want to place on record my thanks to my Front-Bench and Back-Bench colleagues who have taken the Bill through its stages. I also want to thank the hon. Member for Daventry (Mr. Boswell) and his colleagues and the hon. Member for Northavon (Mr. Webb). They have battled and put their cases with rigour. I hope that, at the end of our debates, the Bill is stronger and that many pensioners will receive a clear signal that, for the first time in their lives, they have a Government on their side, who will represent their interests. On income, social care, health care, transport or any public service, the Government are on the pensioners' side.
Question put and agreed to.
Bill accordingly read the Third time, and passed, with amendments.