Pension Credit (Hansard, 17 March 2003)

§ 2. Helen Jones (Warrington, North)
What assessment he has made of the impact of the pension credit on the incomes of the poorest pensioners. [102945]

§ The Secretary of State for Work and Pensions (Mr. Andrew Smith)
Around half of all pensioner households will be eligible for pension credit, and, on average, stand to gain around £400 a year. In total, as a result of the Government's tax and benefit changes, the poorest third of pensioner households will be on average £1,500 a year better off than in 1997, with pensioner households as a whole better off by an average of £1,150.

§ Helen Jones
As my right hon. Friend will know, many constituents like mine whose incomes are just above the income support level will benefit greatly from pension credit. Sadly, however, many are still unaware that they can claim it and of how much it would be worth. What steps is my right hon. Friend taking to ensure that all pensioners who are entitled to the credit know of their right to claim, and are helped to do so? Many are put off by the need to fill in forms and so forth.

§ Mr. Smith
My hon. Friend makes a good point. That is exactly why we are introducing pension credit—to help those who previously just lost out because of modest occupational pension or savings income. We will make claiming simple and straightforward. Only a telephone call will be necessary: all the information is provided for the claimants, and they will not have to complete complicated forms. The forms will be sent to them to be signed. Moreover, those already receiving the minimum income guarantee will automatically be passported on to pension credit.
As for my hon. Friend's important point about take-up, since we launched our take-up campaign in May 2000, over 150,000 more people have received the minimum income guarantee, and have benefited by an average of £20 a week. We need to build on that.

§ Mr. James Arbuthnot (North-East Hampshire)
The Institute for Fiscal Studies has calculated that about 1.6 million pensioner families will be floated on to benefit entitlement by pension credit, and therefore lose their incentive to save. About a month ago, however, the 611 Minister of State said that there was no inherent disincentive. Is the institute right, or the Minister of State?

§ Mr. Smith
That is a very easy question. The Minister of State is right. I heard what he said. He pointed out that, with the introduction of the pension credit, we reward saving where previously it was penalised. In opposing the pension credit, Conservative Members should open their eyes to the fact that they are committing to going back to 100 per cent. rates of withdrawal, which penalise saving and thrift and hit those on modest incomes hard.

§ James Purnell (Stalybridge and Hyde)
When parents take time off work to look after their children, they get home responsibilities protection and, therefore, contributions towards their pension. When foster carers do the same, they do not get HRP, so they lose those contributions towards their pension. Foster carers do extremely important work. Often, they are struggling on low incomes. Can my right hon. Friend do anything to put that right and give them the right to the basic state pension and therefore to full pension credit entitlement?

§ Mr. Smith
There is widespread support in the House for what my hon. Friend says. I pay tribute to the energy and persistence with which he has campaigned on that issue. I can announce that we shall extend home responsibilities protection to foster carers, so that those years of caring count towards their pension entitlement. They do an invaluable job for this country. It is time that that contribution was recognised in the way they build up their pensions. I am pleased to give my hon. Friend the good news that we shall go ahead with that.

§ Mr. Oliver Heald (North-East Hertfordshire)
Is it not wrong that so many of the poorest pensioners, particularly women, will miss out on pension credit through low take-up? Can the Secretary of State confirm that his projection is that only two thirds of those entitled will receive it in the first year, and that the target that he has agreed with the Treasury for 2006 means that 1 million pensioner households will still not receive pension credit? Is that the best he can do for our poorest pensioners, and how does he justify a benefit that was set up on the basis that millions of pensioners would not receive it for many years?

§ Mr. Smith
It is extraordinary that the hon. Gentleman should seek to berate us when we are trying to maximise take-up. The approach of the Conservative party is to take pension credit away from those people altogether. On the projections for future years, it of course depends on the numbers who will be eligible at that time but I am confident that it will be more than the 67 per cent.; that figure is purely a planning assumption. We will do everything that we can to ensure that everyone entitled to the pension credit receives it. I hope that Conservative Members will join us in campaigning for that, and not get on their high horse about abolishing it.

§ Andy Burnham (Leigh)
In my constituency at least, pension credit has universal backing. I pay tribute to the Secretary of State and the Minister for Pensions for 612 developing an excellent policy. Many people in Leigh have small works pensions. Many of those are former miners or their widows. They may have just received, or be about to receive, a lump sum compensation from the coal health compensation scheme. It would be unfair if those payments in respect of ill health affected eligibility for pension credit or the level at which it is paid. Will the Secretary of State assure me that such payments will be disregarded when calculating pension credit?

§ Mr. Smith
I can indeed confirm that such payments, which are important for the reasons that my hon. Friend gave, will be disregarded in the calculation of pension credit.