HC Deb 20 October 2003 vol 411 cc358-60
5. Mr. Peter Viggers (Gosport)

What proportion of pensioners are eligible for means-tested benefits. [132605]

The Minister for Pensions (Malcolm Wicks)

Pension credit has removed the old weekly and intrusive means test. Instead, most pensioners aged 65 and over will have their award fixed for five years and only have to tell us about major changes in their circumstances. About half of all pensioner households will be eligible for pension credit and other income-related benefits, standing to gain £400 a year on average. Already, more than 1.1 million pensioner households on the credit will receive more money than they did before.

Mr. Viggers

With a firm of actuaries calculating that a couple would need to save £180,000 to float free from means-tested benefits, what advice does the Minister have to give to young couples on modest means who are planning for their retirement?

Malcolm Wicks

The example presented by the shadow Secretary of State was specific, very long-term and assumed that the couple were not owner-occupiers, which would not be typical of elderly households, so I dispute its usefulness. In the here and now, large numbers of people in Gosport—and, indeed, Kettering—stand to benefit from pension credit. I am pleased to inform the hon. Gentleman that 70 of his constituents attended a recent advice session in the Gosport bingo hall, which I am sure he is very familiar with, and they were given very good advice. Already, people in Gosport are benefiting from pension credit. Let us focus on that.

Mr. Frank Roy (Motherwell and Wishaw)

My hon. Friend supports total uptake in the pension credit system, but will he look into the fact that pensioners are not allowed to go into the Pension Service building in Motherwell to meet the staff face to face to discuss their claims?

Malcolm Wicks

We are very concerned—hon. Members' advice will be most welcome—to reach all elderly people who might be eligible for pension credit. That is why we have a number of advice surgeries in my hon. Friend's constituency and in all constituencies. There is also a telephone line, a freephone line, and we are arranging many home visits, but I should like to talk to my hon. Friend to get his advice on how to make pension credit even more accessible in his constituency.

Mr. David Willetts (Havant)

I was very disappointed that the Minister did not accept the estimate by an independent firm of actuaries that a couple would need to save £180,000 during their working lives to secure enough income to keep them off means-tested benefits when they retire, but if he does not agree with that figure, could he tell the House what his estimate is?

Malcolm Wicks

May I say that I have a report that Mercer actuary Deborah Cooper, who did the calculation, says that reports that people should save £180,000 or not bother at all are misleading"? It would help the House if we had studies that were not only accurate but helped us in the discussion. Under the last Conservative Government, there was no incentive for savings: there was a penalty knocking off any savings or occupational pension pound for pound. Why does not the hon. Gentleman welcome the fact that at long last pension credit rewards savings and does not penalise them?

Mr. Willetts

Why does the Minister not give a simple answer to a simple question? All that Members of the House and the entire savings industry want to know is how much people need to have saved to build up a sum of money sufficient to float them off means-tested benefits. That is the sum needed to be confident that one has not mis-sold a pension. If the Minister does not accept the figure produced by Mercer, he owes the House an account of what his estimate is.

Malcolm Wicks

The hon. Gentleman's problem seems to be that Mercer may not accept the example that he cites. He asked for simple estimates, but he is being simplistic. What the figure might be depends on a wide range of assumptions, but bringing forward a figure that is in denial of owner-occupation, which is the common experience of pensioners, is not at all helpful. Pension credit is a major advance in recognising savings in this country.

Siobhain McDonagh (Mitcham and Morden)

Can I bring my hon. Friend's attention to the response of one of my real—not made-up constituents, Mr. Catt of Pollards Hill? He wrote to me: the really exciting news for me was the result from a claim made for minimum income support…not only have I been granted assistance with some MIG, but the increase within the new pension credit…is almost too good to be true. To be so much more financially independent is akin to the Promised Land. Is my hon. Friend getting many similar responses from pensioners across the country?

Malcolm Wicks

Yes, indeed, and while Opposition Members may be more interested in the simplicity of far-fetched actuarial assumptions, I am pleased that my hon. Friend has brought this debate down to earth by talking about real people. I am delighted that in the Gosport constituency, for example, someone who had a home visit and had not been receiving minimum income guarantee previously is now £20 a week better off. In fact, because one of her friends happened to be there, too, that friend is also claiming attendance allowance for the first time. Surely we should welcome those human experiences and not knock a real social policy advance.

Annabelle Ewing (Perth)

Is the Minister satisfied with the take-up rate of the means-tested pension credit in Scotland by pensioners other than those who were already in receipt of the minimum income guarantee? If he is not satisfied, what does he plan to do to ensure that all pensioners in Scotland receive their entitlement, and that they do so as quickly as possible?

Malcolm Wicks

Of course we want every eligible elderly person in Scotland and across Great Britain to receive pension credit. That is why we have said previously that, although we have planning assumptions, we will not be satisfied until we reach every pensioner who might be eligible. May I say to the hon. Lady, however, that given that pension credit has only been in existence for a week or two, I hope that she will understand that it will take a little longer before we reach the targets that we have set.

Jeremy Corbyn (Islington, North)

What estimate does the Minister have of the comparative costs of administration of the pension credit compared with increasing the state pension to an equivalent level and recouping the excess wealth from others through income tax rather than through this system of administration of pension credit?

Malcolm Wicks

Of course there will be higher administrative costs for a targeted system than for a flat-rate system. By 2004–05, however, when the full pension credit will have been in place for a whole financial year, we will be spending over £9 billion more than in 1997. That gives my hon. Friend's constituents around Highbury stadium in Islington far more money, when they are on low incomes, than simply raising the basic pension. I am sure that he would welcome that for his constituents in Islington.

Mr. Hugo Swire (East Devon)

Does the Minister not accept that, by extending means-testing in this way and by changing Government policy yet again, he is adding to the confusion of many of my elderly pensioners? Does he share the concern of the Select Committee on Trade and Industry about the payment of pensions? Post offices up and down the country—such as Knowle post office near Budleigh Salterton, which shut last week—are closing, so what practical steps can the Minister take to reassure real people such as my pensioners and the elderly and confused that they will find it easy to claim their pensions in future?

Malcolm Wicks

People use the term "means-testing", but we need a serious and adult discussion about this. Pension credit is a million miles away from the old-fashioned weekly means test over which the hon. Gentleman's Government used to preside. His constituents can, through one phone call, find out whether they are eligible for pension credit, or there can be a home visit. Direct payments and the introduction of the Post Office card account are likely to guarantee the security of more local post offices as they start to use modern banking systems not only for the Post Office card account but for access to other accounts. That is the point.