HC Deb 07 July 2003 vol 408 cc734-6
2. Mr. David Amess (Southend, West)

How many pensioners will be in receipt of means-tested benefits as a result of the introduction of the pension credit by 2004–05. [123520]

The Secretary of State for Work and Pensions (Mr. Andrew Smith)

The planning assumption is that around 3 million pensioner households will be receiving pension credit by 2006. Pensioners who qualify will be on average £400 a year better off, without the need for a weekly means test. We also expect an additional 250,000 pensioners to become newly entitled to housing benefit and council tax benefit from October as a result of the improved income and savings rules in pension credit.

Mr. Amess

Does the right hon. Gentleman agree with the right hon. Member for Birkenhead (Mr. Field) that the means-testing strategy on which the Government have embarked, with the best of intentions, is not sustainable?

Mr. Smith

No, because we are replacing a regime where savings were penalised by pound-for-pound withdrawal with one where savings and modest occupational pensions are rewarded.

Mr. Peter Pike (Burnley)

Will my right hon. Friend confirm that the pension credit will in fact help many people with modest savings or a modest second income who were barred from additional help in the past? It will be a welcome boost to that group. Will he also confirm that publicity and preparations for the scheme are well under way and that people who do not receive the credit until October 2004 will have it backdated to the start date? I understand that that is one of the provisions of the scheme.

Mr. Smith

My hon. Friend is right on all counts. There is, as he says, a big improvement, in that the £12,000 ceiling on savings is being removed and savings below £6,000 are being disregarded. That gives much greater reward to people with modest levels of saving and occupational pension income, and is an incentive to save in the future.

Mr. David Willetts (Havant)

The Secretary of State has just said that he expects 3 million pensioners to be receiving the pension credit in 2006. Will he confirm that 5.1 million pensioners will be eligible in 2006? If so, he will have just admitted that 2 million pensioners will not be receiving the benefits to which they are entitled. Will he admit that take-up of means-tested benefits is low and that one reason for that is the stigma still attached to them?

Mr. Smith

I think that, in his question, the hon. Gentleman may be confusing pensioners and pensioner households, but I shall examine the figures that he mentioned. If he wants to know the equivalent take-up rate for the 3 million planning assumption, it is 73 per cent. However, I stress that we want pension credit to go to all those who are entitled to it, which is why we are writing to all pensioners and why we shall be mounting an extensive publicity campaign later this year.

Mr. Willetts

Does the Secretary of State agree with a report that states take up of some means tested fiscal measures remains low …partly due to the stigma still attached to them? That document was produced on the No. 10 website last week, signed by the No. 10 strategy unit, the social exclusion unit and the Office of the Deputy Prime Minister. It has not been sexed up, it is not dodgy; those are the facts. Does the Secretary of State agree with that analysis?

Mr. Smith

No, I think that if anything promotes and entrenches wholly outdated and wrong concepts of stigma it is the hon. Gentleman and the Conservative party, who keep talking about the take-up of these entitlements as though they were a stigma. Those people were awfully stigmatised by the previous Conservative Government. The introduction of the Pension Service and the fact that pensioners will receive their money from the Pension Service and not from social security is a big step forward in tackling stigma. Making it easy for people to receive their entitlement, as we are doing, removes barriers and reminds people that it is their right and not something that they are being given as a favour—the hon. Gentleman is wrong to suggest that it is.

Mr. Steve Webb (Northavon)

The Government have made much of the fact that under the pension credit a pensioner has to contact the Pension Service only once every five years. Can the Secretary of State clarify the position of a typical pensioner with a basic pension and a company pension who receives the pension credit in year one? In year two, what does the scheme assume has happened to the company pension? If it assumes that the pension has risen when it has not, there is risk of an error, and if it is assumes that it has not risen when it has, there is risk of an error—or does the person have to phone and report the change in circumstances?

Mr. Smith

People can take advice from the Pension Service on those matters at any time, if they want to do so. The way the system operates means that they do not have to be reassessed for five years unless there has been a significant and material change. It does not sound as though the hon. Gentleman was putting to me a significant or material change.

Annabelle Ewing (Perth)

In the light of recently highlighted problems about the take-up of means-tested benefits by pensioners in Scotland, and as many pensioners unfortunately do not receive their entitlements, can the Secretary of State tell us whether a specific take-up target will be set for Scotland for the new pension credit?

Mr. Smith

All regions and Scotland and Wales will be trying to get as many people as possible to take up pension credit. Of course, there will be extensive publicity in Scotland and through the Scottish media, as well as the work being undertaken by the Pension Service, including the local pension service. I went out with the local pension service in Scotland, visiting pensioners in a sheltered housing scheme, so I could see just how much help those people gave pensioners and how readily it was received. I am confident that such efforts from our first-rate staff will increase take-up in Scotland, as elsewhere.