HC Deb 08 June 2004 vol 422 cc150-9 12.41 pm
Mr. George Osborne (Tatton) (Con)

I beg to move amendment No. 3, in page 1, line 6, leave out paragraph (b) and insert— '(b) is already 70 years old at the start of the financial year ending 31st March 2005, or attains that age at any time during the said financial year, or was living with such a person who dies during the said financial year.'.

Mr. Speaker

With this it will be convenient to discuss the following amendments: No. 2, in page 1, line 6, leave out 'relevant week' and insert '31st March 2005'.

No. 9, in page 1, line 13 [Clause 2], leave out 'either'.

No. 10, in line 14, leave out from 'individual' to end of line 15.

No. 11, in line 19, leave out paragraph (b) and insert 'and'.

No. 4, in line 19, leave out from 'credit' to end of line 20.

No. 12, in page 2, line 3, leave out from 'individual' to end of line 7.

No. 13, in line 10, leave out from 'individual' to end of line 11.

No. 14, in line 40 [Clause 3], leave out subsection 4.

No. 15, in line 44, leave out subsection 5.

No. 16, in page 3 line 6, leave out subsection 6.

No. 18, in line 12 [Clause 4], leave out paragraph (a).

No. 19, in line 17, leave out paragraph (a).

No. 17, in page 5 [Clause 8], leave out lines 15 and 16.

Mr. Osborne

On the theme of light, I am sure that most of us would rather be outside in the sunlight than in here. We are doing our duty, however, as this is an important measure

My amendments—I tabled only two of the amendments in the group; the Liberal Democrats tabled the others—seek to revisit an argument that was explored in Committee. It is worth revisiting, however, as it is on the issue of eligibility.

The Bill is all about giving elderly people a £100 payment to help them to pay their council tax bills, although it does not require people to pay council tax to receive the money. We have been round that course a couple of times, however, and the issue is eligibility. The Government included a requirement that only those who are 70—or over, obviously—during the week of 20 to 26 September this year will qualify. I suppose that they did so for reasons of administrative simplicity, and because that is the qualifying period for winter fuel payments.

Our amendments Nos. 3 and 2—principally amendment No. 3—would help all those who reach the age of 70 during this financial year, not just those who were 70 or over during the week of 20 to 26 September. Amendment No.3 would also help those who were living with someone aged 70 or over where the person had died before the qualifying week arrived. It helps two groups of people who are not being helped because of the rough justice of the Government's proposed system of administration. It will help those who turn 70 after 26 September, who under the Bill will not get any money, but who are paying council tax bills for this financial year, and indeed have probably already done so. It will also help those who are paying in instalments. Furthermore, it will help widows, widowers and partners of people who were 70 and who paid their council tax bills, but who died before the magic qualifying week.

Of course, those people would have been alive to hear the Chancellor promising them that money. I do not suggest that £100 would make up for the loss of a relative, husband, wife or partner, but the situation seems a little unfair.

When the Chancellor made his Budget speech, he produced the proposal with a great flourish—it was the big bit that he was saving for the end of his speech that was announced at the last minute and designed to get a cheer from Labour Members. After listening to him, one would not have imagined that some people who would be aged over 70 during the financial year and had to pay council tax bills would not be eligible—he certainly did not spell that out.

When the Chancellor made the announcement, he had little idea that primary legislation would be required to bring about the £100 payment. The Bill has presumably been pushed upon the chancellor and the Government because he did not consult the Department for Work and Pensions before he made the announcement. The Department had to go to him after the event to say, "Hold on Chancellor, you're going to need a full piece of primary legislation here", and that is why the details were not spelled put in the Budget speech.

The Conservative amendments address the basic point of what the Bill is about. It is designed to help elderly people to pay their council tax bills. The bills landed on their doorsteps in early April or late March, and they have already paid them or are paying them in instalments. Although the measure is linked to winter fuel payments, there is a big difference between the schemes. People receive winter fuel payments on the basis of the qualifying week be week 20 and 26 September because the scheme is linked to the winter, so September is a good time to ascertain which people will be 70 during the forthcoming winter. However, the Bill is linked to council tax bills, which are issued in April. I do not understand why, for sample reasons of administrative efficiency, the Government are excluding people who will be 70 in the forthcoming year and paying high council tax bills. Such people are on fixed incomes and are exactly the kind of elderly pensioners whom the Chancellor mentioned. However, by a fiat of Whitehall, they will not receive the money which they are due. That is unfair and it is not what they would have expected after listening to the Chancellor. The amendments would achieve the simple objective of allowing the Government to live up to their word.

Mr. Steve Webb (Northavon) (LD)

When I saw the eight-minute speech limit sign flash up on the Annunciator, I thought that there had been a sudden rush of interest in the Age-Related Payments Bill and that hon. Members were queueing up to have their say. I then realised that the limit related to far more important matters, such as where airports should go. As the hon. Member for Tatton (Mr. Osborne) said, the Bill is important. It will lead to the spending of nearly £500 million of public money, so slightly more than desultory attention should be paid to it—it will probably get that this afternoon.

There are two kinds of amendments in the group. As the hon. Gentleman said, the first kind revisits arguments that we had in Committee. Liberal Democrats advocated similar arguments about which 70-year-olds should be eligible: should they be those who reach 70 by the week in September or should there be a more generous interpretation under the scheme? The Minister is a generous man, so I am sure that he will want to accept the amendments with a generosity of spirit.

If the Bill is supposed to help people who are 70 and have to pay council tax, why would we want to exclude from its provisions people who reached 70 during the year and started to pay council tax in April? One amendment would provide that if people reached the age of 70 by the end of the financial year, a payment could be made to them. Such people might spend half the year at the age of 70, but despite paying council tax for that time, they will not receive a penny from the Government or qualify for anything.

As the hon. Member for Tatton rightly pointed out, one can see the convenience of linking the payment with the winter fuel payments, but there is no winter aspect to it. Since it runs from last April to next March, we think that people who reach 70 at any point during the year ought to qualify.

If the typical council tax is about £900 for a band D property, and knocking off a quarter for the single person's discount makes it about £675, the £100 payment is only a tiny fraction of the council tax bill. If a 70-year-old were 70 for only half the year, he or she would still pay more than £300 in council tax while 70 but would not qualify for £100 from the Government towards that bill; they would qualify for nothing because they became 70 at the wrong point in the year. It is a bit daft to use a cut-off point that has something to do with winter, which is related to an entirely different system for help with fuel costs. It means transposing that system into something to do with council tax, which is not seasonal but requires payments pretty much throughout the year. I sympathise with the amendment that would allow the payment to be made by the end of the financial year, and I recall from Committee that, in the context of the £500 million cost of the Bill, the cost of including those who become 70 in the second half of the year would be relatively marginal and would not upset the overall balance of the scheme.

Since Committee, we have tabled amendments that arose, in the true spirit of parliamentary scrutiny, from the Minister's responses. When we looked at the Bill in detail, we discovered some unpalatable aspects to it. One is the fact that the £100 is not universal, as we had thought, but means-tested. The public do not appreciate that whether someone gets £100 depends on whether they are receiving a means-tested benefit. That is not widely understood.

The Minister has been very helpful. I raised some hypothetical cases with him in Committee, and within the last hour my fax machine has whizzed away as he has made sure that, in plenty of time for this debate, I had the details of how the system works. It is worth putting a couple of examples on the record that illustrate quite how beautifully the new scheme will work. The Government think in terms of pensioner households, but there ain't no such thing: there are individual pensioners living in different combinations, each of whom, known in the jargon as a benefit unit, has an entitlement to the age-related payment.

The Minister has given me two examples. One involves three sisters—the Beverly sisters, perhaps, all now over 70, I imagine—who are living together and none of whom is in receipt of pension credit. Each of them would get £50. On the other hand, two brothers—the Righteous brothers, maybe; I do not know how many of them there were—over 70 and living together while in receipt of pension credit would get £100 each. That pensioner household would get £200, but the payment is supposed to be £100. Why do they get £200? It is because they are poor. So poor people get more, but the payment is not means-tested: I do not quite follow that logic.

Another of our amendments would remove another perversity. If one lives in a nursing home, the Government do the opposite to the foregoing. Poor people in nursing homes get nothing, but those in nursing homes who are not on pension credit get £50. Where is the logic in that? When we pressed the Minister, he said that poor people in nursing homes have their council tax paid for them. Lots of people have their council tax paid but can get the £100 if they do not live in a nursing home.

The more we looked at the Bill, the more riddled with inconsistencies we found it. The Minister will correct me if I am wrong, but I am told that the Bill mirrors precisely the arrangements for the winter fuel payment, which means that that is far more means-tested than I had realised. We have tabled a lot of amendments because the Bill is riddled with means-testing. The words "pension credit" appear all over the place, and the question must be why, if the payment is a flat-rate, universal one, the Bill refers to pension credit at all.

In fact, this is a means-tested payment that the Chancellor dressed up as a universal one. Had he said at the end of the Budget that he would introduce a £100 payment, but it would be means-tested and how much anyone would get would depend on whether they were on pension credit, who they lived with and whether they were on pension credit, and whether they were in a nursing home, his reception would not have been quite as rapturous as it was.

The amendments are intended to remove every reference in the Bill to pension credit. The effect would be, we hope—amendments do not always do quite what we intend them to do—to say that the amount people get should be fixed and should not be means-tested. That would not enhance the payments of people on pension credit, but those in nursing homes would not be penalised for being on pension credit, which seems right. There is a long string of amendments, but there is one point to them: why are we making a universal payment, then introducing all sorts of aspects of means-testing to determine how much is paid?

The Minister for Pensions (Malcolm Wicks)

Will the hon. Gentleman confirm that while there are special arrangements for pension credit households, he understands that there is no separate means test for the £100? I should hate those listening to think that some income-testing system is being introduced to determine the £100 payment. It is not so.

Mr. Webb

The Minister has given me fresh wind. It may be that there is a household of two people not on pension credit who get £50 each. If one of them then applies for the pension credit, that one gets £100. The means test applied to determine whether he was eligible for pension credit carries across to the £100 payment. I do not want to give a misleading impression, and I am not suggesting that here is separate means-testing when someone claims the age-related payment, although, in general, people will not have to claim it because it should be automatic. I an saying, however, that the amount anyone gets depends on whether they are claiming a means-tested benefit, which is certainly not the impression that the Chancellor gave at the end of his Budget speech.

In the spirit of what the Chancellor said, we would have expected then to be no mention of pension credit in the Bill, and we would especially not have expected any bizarre business about three sisters not on credit getting £50, or £150 for that household, when the payment is supposed to be £100. How can a household get £150? Simply, it is because the payment is not a payment per household. It is just a mess, and it is disappointing that a Department implementing such a simple policy has made such a mess of it. We are trying to help the Department by simplifying the Bill and stripping out all the complexity to do with means-testing by introducing a straight entitlement, which I am sure will find favour with the Government.

Mr. Alan Hurst (Braintree) (Lab)

It seems to me that Jeremiah is not only the prophet of Scottish Members, but is widely favoured among the Opposition. I fully understand the points made by the hon. Member for Tatton (Mr. Osborne), but I see certain flaws in his argument. I could understand his logic more if he had suggested that those who were 69 at the beginning of the financial year were Then, there would be a clear date after which people would qualify.

The hon. Gentleman's amendment would allow payment to be made before the recipient became 70. It may be that, for various reasons, those people would fail to qualify afterwards: death is the most obvious, but people might move out of the jurisdiction or a range of events might subsequently disqualify a recipient. If the amendment referred to someone being 69 at the beginning of the financial year, there would be a greater logical force to his argument. I had hoped for more joy from the hon. Member for Northavon (Mr. Webb) about what the Government have brought in, which is widely regarded as a most helpful measure. One can always find financial improvements in any measure, and it is always better to simplify measures to make them less complicated than they might otherwise be, but the Bill has the great advantage that claimants do not have to go to great lengths to claim and that the payment is made automatically on the basis of information that the Department already has. In that way, it compares well with certain other benefits that have been paid in the past.

Malcolm Wicks

As has been set out already by the hon. Member for Tatton (Mr. Osborne), this is a relatively simple measure. Its intention is to pay all eligible households containing someone aged 70 or over an extra £100 this year in recognition of the burden of council tax increases on many of those households. It was announced by the Chancellor of the Exchequer in the Budget speech.

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We reasoned that the best way to deliver that payment would be through the winter fuel payment process, a tried and tested system that is popular and works well. Many of the arguments made today some of which are perfectly legitimate, relate to that methodology. All such matters are kept under review—I mean that seriously—and some of that methodology perhaps needs further scrutiny, but many of the issues raised relate to that.

The hon. Member for Tatton mentioned fiats of Whitehall, which sounds rather like a local car dealer. He made quite heavy weather out of what is really a simple measure. The hon. Member for Northavon (Mr. Webb) has a great art of making the relatively simple sound vastly complex. That is quite an endearing trait, but to build a whole political career on it could become tiresome. I was reflecting that I am glad that it was not the hon. Gentleman on the radio this morning explaining exactly how and why Venus is passing in front of the sun; otherwise, I should have been even more confused by that than I am.

This group of amendments would revise clauses 1, 2, 3, 4 and 8 to change who is a qualifying individual, the link between the eligibility criteria and the relevant week, entitlement conditions for both basic and special cases, disqualifications and, as a consequence of the changes to clause 2, definitions of terms used in the Bill.

Amendments Nos. 3 and 2 would amend clause 1 by extending the payment to include people who will reach the age of 70 on or before 31 March 2005, at an additional cost of about £20 We believe that deferring the data-matching process to allow people to attain age 70 by 31 March would delay the making of automatic payments. Under current arrangements, those will be made in November, at a point at which the money is needed because pensioners are still paying this year's council tax bills. As the data match takes five to six weeks, those amendments would mean that automatic payments could not be made until May 2005—too late to help with this year's bills.

Mr. Webb

One reason why we tabled that amendment in a slightly different way in Committee— using the definition of people's dates of birth—was that that information is known at the start of the financial year. The Department would not have to wait until those people reached 70 before doing the data matching, but could do that at the start of the financial year because it would know who would reach 70 during that year. Obviously, arrangements would be needed for people who died, but we might be concerned about widows and their council tax, too.

Malcolm Wicks

Sadly, that is the difficulty—we cannot quite predict who will still be there later in the year. I should point out that by extending the qualifying date to September, using the winter fuel payment methodology, we have brought an additional 210,000 pensioner households into the payment since it was announced on 17 March. I hope that we will not be accused of a lack of generosity because the September deadline has now allowed that extra group to be included.

Amendment No. 3 would extend qualifying individual status to anyone who lived with someone who was aged 70 or over but had died during the current financial year. That would allow anyone who shared accommodation with such a person to become a qualifying individual, eligible for the payment. If the person aged 70 or over died before the relevant week, they would not have gained entitlement to the payment, but the person who lived with them would do so purely as a result of their death. This is probably a drafting problem, but that would theoretically mean that a 12-year-old grandchild, a 30-year-old rent-paying lodger or a 40-year-old live-in carer could become a qualified individual and receive the payment simply by virtue of living with a person who was aged 70 or over before they died. That might not be the amendment's intention, but it is what it means in technical and legal terms.

Amendments Nos. 9, 10 and 11 would remove the automatic £100 household payment from all qualifying single pension credit recipients and align their entitlement with that of non-pension credit recipients. That would mean depriving some older and poorer pensioners of half their entitlement. Almost 70 per cent. of pension credit recipients are aged 70 or over, and of those 83 per cent. are single pensioners. We have had a brief discussion about whether the special arrangements for pension credit households represent a means-testing element in the Bill, but I was pleased that the hon. Member for Northavon agreed that we are not attempting to introduce a separate income-testing arrangement especially for this measure.

Amendment No. 4 would change conditions in clause 2 that govern how much qualifying individuals will receive. It would have the perverse effect of allowing two payments, totalling £150, to be made to single individuals who do not live with another qualifying individual and who are not in receipt of pension credit. As clause 2 stands, a qualifying individual can fall into either the £100 payment category or a £50 payment category, but not both. If a single eligible person receives pension credit, they will automatically receive £100 irrespective of with whom they live. If they do not live with another qualifying individual, they will receive £100 irrespective of whether they receive pension credit. That leaves only the situation in which a single eligible person is not on pension credit and is living with another eligible person. That person will receive £50.

Amendment No 4, however, would remove the condition of living with another qualifying individual from the £50 payment category, which would leave the default position that a single eligible person not living with another qualifying individual and not receiving pension credit would become eligible for the £50 payment. As those people are already in the £100 payment category, they would be eligible to receive both payments, giving a total of £150. The amendment would mean that that group of people would receive a higher payment than couples, having become eligible, in effect, for more than the full payment. Again, I suspect that that was not the intention of the amendment, but it would be its effect and impact.

Amendments Nos. 12 and 13 would change the payment condition for members of the more than 225,000 couples who receive pension credit. Where both members of a couple qualified for a payment, they would each receive £50, rather than the current provision for a single £100 household payment to be made to the pension credit recipient. That would mean establishing the eligibility of every pension credit recipient's partner, and those who qualified would receive a separate £50 payment while their partner's household entitlement was adjusted from £100 to £50. There would then be two payments, two letters and double postage costs to deliver the same £100 to the same couple in the same household. Again, we are following the logic of the winter fuel payment system in the Bill, which is simpler and more sensible.

Amendments Nos. 14, 15 and 16 would remove from clause 3 the specific entitlement and payment conditions for people aged 70 or over who have been living in care homes for 13 weeks or more. That would mean making a payment to all care home residents, even where their care and accommodation needs were being met through public funds, at an additional cost of some £7 million. As drafted, the Bill provides for care home residents not receiving pension credit to be eligible for a £50 payment because they are sharing their accommodation with others and it is safe to assume that they are contributing at least in part to their care home costs. Care home residents receiving pension credit are not entitled to a payment because it is equally safe to assume that people in receipt of pension credit have their care and accommodation needs met through public funds.

The effect of amendments Nos. 18 and 19 would be to remove disqualification from those who have been receiving free in-patient hospital treatment or care continuously for 52 weeks or more, even though their day-to-day living expenses, including heating and food, are provided by public funds through the health service. That would extend eligibility to some 6,000 people aged 70 or over who have been in hospital for more than a year, at a cost of about £600,000.

I understand the intention behind the amendment, but I hope that Members will accept my explanation that it would not constitute a good use of public resources, and that they recognise that this Government have made great improvements in what is known as the hospital downrating of benefit by enabling people to keep that benefit for a year.

Mr. Webb

The logic of the Minister's argument concerning people who live in care homes is that those who pay towards care home costs get the £50, and those who are on pension credit and who do not pay towards the costs get nothing. As he will confirm, these payments are intended to help with council tax. If he is arguing that such people should not receive these payments because they do not pay council tax, what about the 1 million or more pensioners on pension credit who also do not pay council tax? Why are there different rules for the two groups of people?

Malcolm Wicks

I understand the question and it is a perfectly reasonable one. We discussed this issue in Committee, and w rile the intention behind the £100 payment for this year arises from concern about the burden of council tax, we nevertheless sought to make the payment in a broad-brush way through the winter fuel payment system. Yes, there will be rough edges, and there may even be n element of rough justice here and there, but this is the simplest way to get the money to those who need it.

At the risk of accusing the hon. Member for Northavon of occasionally being inconsistent, I should point out that adopting a more sophisticated system that ties public moneys to the particular burdens facing particular individuals in particular parts of the country, and which allows for whether or not they are in care homes, would take us down a far more complex road. It would probably involve some form of income testing, and I doubt whether he is in favour of such testing in this era.

I do not intend to elaborate further on the issue of hospital downrating, given that we discussed it at considerable length in Committee and divided on it. Clause 8 contains definitions of terms used in the Bill and amendment No. 17 would remove the definition of state pension credit. As I have said repeatedly, we are aligning the rules and procedures for entitlement to payment with those for winter fuel payments—with which such payments will be made—to keep the process simple. Moving away from this tried and tested process would incur additional administrative costs in excess of £20 million and would lead to a delay in the making of payments, at least for some. In the light of that explanation, I hope that the Opposition will consider withdrawing the amendment.

Mr. George Osborne

This has been quite an interesting debate. I congratulate the hon. Member for Northavon (Mr. Webb) on some of his contributions. I was saddened to see that he did not include on the selection list an amendment that would give everyone who pays council tax a £100 payment. Of course, such a payment was Liberal Democrat policy during the Brent, East by-election, but it was strangely dropped soon afterwards. We are now waiting for the Liberal Democrats' Leicester, South policy.

The Minister rather made my case for me at the end of his speech whet he talked about elements of rough justice. He is right, and I made the same point on introducing the amendments: because of the Government's chosen administrative mechanism, some of the people who really should be getting the £100 will lose out. If the £100 payment is linked to people who pay council tax and is designed to help the elderly and those on fixed incomes, those who reach 70 after 26 September but who have paid council tax bills for this year really should receive the money. I am not a Department for Work and Pensions official who has pored over this issue—[Interruption.] The Minister pays me the tribute of saying that I would make a very good DWP official, but unfortunately I did not sit my civil service exams all those years ago.

I do not know whether there is a simple way of identifying such people, and the Minister did not explain whether the Government considered paying those who will reach 70 after 26 September. Nor am I sure what devices were at the DWP's disposal, but as the legislation is currently constructed some people will be caught on its rough edges. I suppose that the Government's chosen delivery mechanism does expose the fiction that this payment is linked to council tax, given that some people who do not pay council tax will in fact receive it. The provision has served that purpose if nothing else, but that said, I do not wish to detain the House further. I beg to ask leave to withdraw the amendment.

Amendment. by leave, withdrawn.

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