Age-Related Payments Bill

HC Deb 12 May 2004 vol 421 cc360-409

Order for Second Reading read.

12.45 pm

The Minister for Pensions (Malcolm Wicks)

I beg to move, That the Bill be now read a Second time.

This Bill will put in place the promise in the Budget to pay all eligible households with someone aged 70 or over an extra £100 this year. Of course, this measure has already been subject to some debate following the Chancellor's Budget speech. When combined with winter fuel payments, it will mean that households with someone over 70 will get up to £300 later this year and households with someone over 80 will receive £400.

The payment will be neither taxable nor income tested. It will not affect the other benefits that a pensioner may receive. For example, it will not reduce the amount of council tax benefit, housing benefit or pension credit. In particular, by making this one-off payment, we are recognising the impact of recent council tax increases on the fixed incomes of older pensioners. It will also help with their other living expenses.

Mr. Christopher Chope (Christchurch) (Con)

Can the Minister explain how the Bill will help pensioner households where someone over 70 now lives if, come September, that person has died, leaving a widow under 70 in that household? Will that household still qualify for the £100 payment, which is clearly what the Chancellor implied in his statement; or is the letter of the Bill, which suggests that that household will not get £100, the truth?

Malcolm Wicks

The payment will go to those who meet the requirements during the qualifying week. Of course, there will be exceptions—the hon. Gentleman mentions one—but I hope that he will listen and understand that the payment will be a great benefit to a number of vulnerable, elderly households in this country.

Mr. Patrick McLoughlin (West Derbyshire) (Con)

Will the Minister give way?

Malcolm Wicks

I will give way in a moment.

We are aware of the concern felt by many people, especially those on low incomes, about council tax increases. On 5 February, Parliament approved the local government finance settlement for the 2004–05 financial year. The settlement provides a general grant increase of 5.5 per cent. and an overall increase of 7.3 per cent. Since taking office, we have increased funding to councils by 30 per cent. in real terms. That contrasts with a 7 per cent. real-terms cut during the last four years of the previous Government—which perhaps will now be explained.

Mr. McLoughlin

I would love to explain that, but Mr. Speaker might rule me out of order if I did so. Will the Minister tell us why the Bill refers only to 2004? Are the Government thinking of getting rid of the council tax?

Malcolm Wicks

We are legislating for this year only. Of course, such things are of real concern, as I was arguing, to those who face high council tax increases.[Interruption]. As I am being provoked, perhaps I can say something about the average council tax increases per dwelling in 2004–05. In Labour councils, they are likely to be £870; in Liberal Democrat councils, £971; and in Conservative councils, £1,072.

Sir Paul Beresford (Mole Valley) (Con)

Will the Minister give way?

Malcolm Wicks

I will give way, because perhaps a word of explanation, or even apology, is coming up.

Sir Paul Beresford

If there is to be an apology, it must come from the Government—the shifting of the grant explains the biased way in which the grant has been applied to many local authorities. The Minister may be interested to hear that the Select Committee on the Office of the Deputy Prime Minister yesterday met a number of people, including from the "Is It Fair?" campaign and pensioners groups They blame the Government for the council tax rise.

Malcolm Wicks

I always take seriously the interventions of the hon. Gentleman, who used to be a fellow Croydon MP before the electorate decided otherwise. In the south-east, there have been more generous grant increases than in other parts of the country, which should have benefited many Conservative authorities.

By making this one-off payment, we are recognising the concerns that I have discussed, including the way in which local authorities controlled by different parties have increased council tax. We are encouraged that this year's average increase of 5.9 per cent. is less than half the increase last year and is the lowest in almost a decade. We made it clear that we would use our powers to cap excessive increases in council tax in 2004–05, and that strong message has already had an effect—councils have set lower council tax increases this year than would otherwise have been the case.

Mr. Michael Weir (Angus) (SNP)

Given that the Minister is making a powerful case about the purpose of the payment to help with excessive council tax bills, should the Government not look, at an alternative to council tax instead of trying to buy off pensioners for one year only?

Malcolm Wicks

Some increases remain excessive, so we are using our powers to cap. The Government are reluctant to cap, but we cannot stand back and allow excessive council tax increases to take place year after year. Help with council tax is, of course, already available to pensioners and other people in the form of council tax benefit. We expect nearly 2 million pensioner households to benefit from increases in their council tax benefit or to become newly entitled to it as a result of the introduction of pension credit.

Andrew Bennett (Denton and Reddish) (Lab)

While the proposals in the Bill are welcome, is my hon. Friend not concerned that almost 50 per cent. of pensioner households are not claiming the council tax benefit to which they are entitled? What is his Department doing to ensure 100 per cent. take-up of that benefit?

Malcolm Wicks

I know that my hon. Friend was not prompted by anyone to ask that question, but it leads into what I was going to say. We are extremely keen to ensure that all pensioners entitled to help with their council tax bills claim the benefit, which is why the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Gravesham (Mr. Pond), launched a campaign on 1 March 2004 to help support local authorities to encourage everyone who may be entitled to help with their council tax to claim the benefit. We have issued a new poster and flyer, and have sent mailing packs to local authorities, our own local offices and advisers, as well as to local branches of Help the Aged, Age Concern, Citizens Advice and the National Pensioners Convention across Great Britain. We will follow that up with press advertising over a three-week period in regional and some national titles.

In response to my hon. Friend the Member for Denton and Reddish (Andrew Bennett), I concede that for too long council tax benefit has been one of the more obscure and less understood benefits. We are now taking significant steps to publicise it because, as with all income-tested benefits, we want to drive up take-up.

Mr. Weir

Would the Minister urge the Pension Service to advise pensioners about council tax benefit when they apply for tax credit, as that does not always happen at present? It would be helpful if pensioners could have a one-stop shop offering advice on all those benefits.

Malcolm Wicks

I agree that in general we need to move towards the notion of one-stop shops. The Pension Service is now sending out forms for council tax benefit along with news about the pension credit, so we are taking action. We need to take more steps, but I am particularly proud of the local services of the Pension Service, which have been welcomed by Members on both sides of the House. They are very much the human face of the Pension Service and are collaborating with various organisations on the Bill and other measures.

Mr. Nigel Waterson (Eastbourne) (Con)

I am grateful to the Minister for giving way, as I appreciate that he wants to make progress. When did he first become aware that the payment required primary legislation?

Malcolm Wicks

That is a favourite question at the moment. I am happy to write to the hon. Gentleman with as much precision as I can. Our early thinking was that legislation would not be necessary, but lawyers—

Mr. Eric Forth (Bromley and Chislehurst) (Con)

Not good enough.

Malcolm Wicks

I am being heckled by a well known heckler, but some of us want to have a grown-up debate. I am trying to answer the hon. Member for Eastbourne (Mr. Waterson), so perhaps the right hon. Member for Bromley and Chislehurst (Mr. Forth) would listen along with his Front-Bench spokesman. After legal advice, we realised that in fact we needed primary legislation, which is why we introduced the Bill.

Mr. Henry Bellingham (North-West Norfolk) (Con)

We have always had civilised dialogue with the Minister in the past, so could he tell the House the extra cost of having to legislate? Is a figure available for the cost of legal advice, the deployment of civil service resources, printing, time taken and so on?

Malcolm Wicks

I do not think that there is a figure to hand. We may receive an explanation from the hon. Member for Eastbourne, the Conservative spokesman, but I am not sure why the hon. Member for North-West Norfolk (Mr. Bellingham) is puzzled. We obviously operate on a legal footing. If the payments could have been made through regulations, we would have taken that route. The legal advice, however, was that we needed primary legislation. It is the purpose of Parliament to debate primary legislation, which is why we are here today.

Several hon.Members

rose

Malcolm Wicks

I need to make progress soon, but first I shall give way to the hon. Member for Northavon (Mr. Webb), the Liberal Democrat spokesman.

Mr. Steve Webb (Northavon) (LD)

To return to the point about timing, one has a slight sense that the decision was made rather late in day. The Minister said he would write to the hon. Member for Eastbourne (Mr. Waterson), but can he tell us when the Department for Work and Pensions became aware of the Chancellor's intention to make the payment?

Malcolm Wicks

I said that I would do my best to let the hon. Member for Eastbourne know exactly when we realised that primary legislation was necessary, but I am not in a position to write up in one long letter any modest diaries that I may have kept as a Minister. I suspect that it would not be a bestseller, and would be a step too far.

We believe that it is particularly important to target pensioners over 70, as most people in that age group have long since stopped working and are on fixed incomes, so are disproportionately affected by council tax increases, which often take up a larger portion of their income compared with younger households. The evidence supports that conclusion, and our own experience as Members of Parliament is that the very elderly tend to be more financially disadvantaged than people in their 60s. We shall take steps to ensure that the administration of the payments runs smoothly, which is why they will be administered through the tried and tested winter fuel payments system.

The hon. Member for North-West Norfolk, who asked about costs, will be interested to know that the age-related payment will be included with the winter fuel payment, which is currently made to more than 11 million people. That will also keep administrative costs to a minimum—not more, we estimate, than £6.8 million. The entitlement and payment rules are set out in the Bill. To keep the process simple and transparent, there will be no need to make a claim in the vast majority of cases. People over 70 should get their payment automatically if they have received a winter fuel payment before and their circumstances have not changed, or if they claimed a winter fuel payment this year. We will do all that we can to ensure that the very small number of people who need to make a claim are made aware of the payment and are given the opportunity to receive it.

Although we intend to make the payment for one year only, the Bill provides a regulation-making power so that, if circumstances warrant it, future payments may be made to people over 60 in specified groups. It stipulates that any such regulations will be subject to the affirmative resolution procedure, and will therefore be subject to full parliamentary scrutiny as well as scrutiny and investigation by the Social Security Advisory Committee.

Mr. David Wilshire (Spelthorne) (Con)

The Minister said that the payments were for this year only. In the almost certain event that the Government make a further mess of local government finance and force even greater increases in council tax, will he return to the House next year to increase the £100 as compensation?

Malcolm Wicks

I do not accept that Tory hypothesis at all, so it would be ludicrous to try to answer a question more in the realm of social science fiction than fact.

Let me remind the House of the Government's record on pensioner issues. It is this Government who have made sure that no pensioner need live on less than £105 a week for a single pensioner and £160 for a couple. When we came to office in 1997 the amounts were just £75.80 for a single pensioner and £115.15 for a couple. I am sure hon. Members will want to reflect on that contrasting record in their own speeches.

Mr. Bellingham

I accept what the Minister says, but is he aware that the majority of pensioners in constituencies such as mine are worried about the extent of means-testing that is going on? I appreciate that the payments under discussion will not be means-tested, which is a plus point. How many pensioners are now means-tested? What is the total figure, and what was the figure five years ago?

Malcolm Wicks

I had intended to deal with our record on pension credit, albeit briefly, to provide some context. As a result of pension credit and the other measures we have introduced since 1997, the poorest third of pensioners are, on average, £1,750 a year, which is more than £33 a week, better off than they were in 1997. The disproportionate increase for the poorest is because of targeting. Does the hon. Gentleman think it wrong that we are giving more money to the poorest third?

As I said recently at oral questions, I do not think that any of us, as MPs, would want to go up to elderly people in our constituency who have benefited from pension credit and tell them they are victims of some terrible means-testing. Indeed, an application for pension credit is usually made over the telephone and the form is filled in by an expert, rather than by the elderly person. There is a whole new approach to the notion of income-testing.

David Winnick (Walsall, North) (Lab)

As regards targeting, or means-testing, is it not a fact that before we came to office, and before there was any winter fuel allowance, the only help that pensioners got was the cold weather payments, and it had to be freezing for seven consecutive days, no less, before the allowance was paid, and they had to be on income support to receive even the miserly £7 or £8 a week? Compare that with what we have done in office.

Malcolm Wicks

There is a further comparison to be made between the former Administration and our Administration in respect of VAT on fuel. On a theme that is dear to my hon. Friend's heart and mine, as he knows, the energy efficiency programmes are also important.

Through pension credit the Government are for the first time rewarding those who have saved and who so often just missed out in the past under the old minimum income guarantee system. Despite the constant knocking by those on the Opposition Benches, pension credit is working well. It is already helping 2.4 million pensioner households—nearly 3 million individuals—across our country. And we must not forget that it is this Government who introduced the winter fuel payment and increased those payments from £20 in 1997 to £200 today, with an extra £100 for those over 80. Also, it is this Government who give free TV licences to the over-75s.

We will be spending about £l0 billion extra on pensioners this year as a result of the measures introduced since 1997—£10 billion. This includes about £5 billion that is being spent on the poorest third of pensioners—targeting, again, the very people who need help the most. That is almost £6 billion more than if the basic state pension had been linked to earnings since 1998 and nothing else had happened.

Around 80 per cent. of recently retired women pensioners do not have a full state pension because of broken national insurance records—something often forgotten by those on various sides who are campaigning to restore the earnings link. We are supporting women particularly through pension credit. More than half—54 per cent.—of those eligible are single women, and two thirds of those who benefit overall from the new credit are women.

The measure before the House today will benefit a large number of elderly people. About 5 million households will receive the payment at a cost of around £500 million. We are again able to give extra help to our eldest pensioners. The Bill represents yet another step in our mission to tackle poverty in old age. Alongside many other measures, it recognises the contribution that our elders have made to our country.

1.5 pm

Mr. Nigel Waterson (Eastbourne) (Con)

We had a relatively short speech from the Minister commending the virtues of the Bill and it is a relatively short Bill, but one that says much about where the Government find themselves at this point in the electoral cycle. Make no mistake: the Bill is a panic measure in the face of the Government's failure on local government finance and in the face of campaigning by people like 83-year-old Devon pensioner, Elizabeth Winkfield, who memorably said that she would rather go to prison than pay her increased council tax.

The Bill is a straightforward electoral bribe. Furthermore, it is based on a misapprehension about the way the payment could be paid. It dawned on the Government only late in the day that they needed primary legislation to put through the payment. I will hear in correspondence, apparently, when the Minister became aware that that would be necessary. I cannot help feeling that it was one of those days when civil servants brought unpalatable news to the Minister and that he might have remembered it. I suspect that there might have been the odd expletive, but we will find out in due course.

Malcolm Wicks

The hon. Gentleman meant that as a joke, but I do not use expletives and I talk to my officials as sensibly as I am sure he would.

Mr. Waterson

I am happy to accept that, bloodless and restrained as ever, the Minister does not use expletives. Perhaps he contented himself with saying, "Oh dear."

Mr. Bellingham

Does my hon. Friend agree that there probably were expletives among the Government party managers? They must have been furious that the Treasury had made a mistake. The Chancellor introduced his Budget and made a great announcement, then all of a sudden we are dealing with primary legislation. Surely that shows staggering incompetence on the part of the Government.

Mr. Waterson

My hon. Friend is right. There was certainly some incompetence, but it is obvious that the Bill is a panic measure. We do not yet know, because the Minister is being so reticent, when he heard for the first time about the £100 payment.[Interruption.] As my hon. Friend the Member for Tatton (Mr. Osborne) says from a sedentary position, I have a shrewd suspicion that the Minister learned about it at the same time as everybody else, during the Budget statement. Most of all, the Bill is a panic measure that seeks to tackle, in a clumsy way that I shall describe in more detail, a problem created by the Government.

Before I remind the House of the Government's record on local government finance in detail, may I say how disappointed I am that someone with the Minister's academic credentials should still be trotting out the old canard about how to compare like with like in respect of council tax? We have all heard the arguments before but, for the sake of repetition, I remind hon. Members that the House of Commons Library, no less, says: to compare year-on-year increases council taxes are expressed in terms of the average Band D council tax for a 2-adult dwelling.

In TheSunday Times, Mr. Peter Kellner memorably wrote: Homes in Labour areas tended to fall into lower council tax bands and this was why average council tax was lower … The proper way to judge the figures was to compare like with like—say, Band D figures, council by council". He went on to state that Labour's claim is as misleading as it ever was … On this issue, Labour is wrong and Tories are right".

Mr. Chope

Does my hon. Friend accept that Labour areas often get a lot more grant from a Labour Government than Conservative councils? For example, Sedgefield council gets eight times more grant than East Dorset district council.

Mr. Waterson

My hon. Friend is right. One of the great unfairnesses faced by those of us who represent constituencies in the south, and particularly in the south-east, is the decision, which was clearly political, to switch resources from our areas to the north and other parts of the country.

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)

Did the hon. Gentleman examine the figures before asserting that Labour councils get larger grants than Conservative councils and that more funds go to councils in the north than those in the south? Is he aware that the 5.9 per cent. average grant increase for Labour councils was slightly lower than the 6.1 per cent. increase for Tory councils? Councils in the three northern regions received slightly lower grant increases than those in the south-east and London. Is he aware of the facts, or is he trotting out the mantra?

Mr. Waterson

The Under-Secretary speaks for the Government, but perhaps he should speak for Kent.

Sir Paul Beresford

My hon. Friend will know that, although the Under-Secretary's point was helpful, he was discussing this year's increase on last year's deficit. Having taken away £30 million year on year from Somerset and £39 million year on year from Surrey, the Government gave those areas a tiny little increase compared with that for the north in the previous year.

Mr. Waterson

My hon. Friend speaks with his usual authority on such matters, and some of my hon. Friends and I recently met a Minister from the Office of the Deputy Prime Minister to raise that unfairness. Without wishing to bore the House with details from East Sussex, the Government recognise that the first attempt to give grants from central Government resulted in inequities, so they came up with a second tranche of funding. The only problem is that the entire population of East Sussex received the princely sum of £5,000 as a result of that exercise, which piled incompetence on top of incompetence.

The figures are clear: since the Government came to power, council tax bills for the average band D home have increased by 70 per cent. A typical household now pays almost £500 extra a year under this Government. One third of the increase in the basic state pension for the typical pensioner has been taken up by higher council tax, which is a point that relates to this Bill.

In his introduction, the Minister rightly touched on council tax benefit, which, as we all know, is traditionally the means-tested benefit with the lowest take-up. Government figures produced in February show that the position is getting worse, because the take-up of council tax benefit is between 66 and 72 per cent. by case load. Older pensioners are less likely to claim the benefit, which makes the situation worse, and take-up is a particular problem with older pensioners who are owner-occupiers. Low take-up affects the poorest pensioners most severely.

We welcomed the attempts led by the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond) to boost take-up. Although they were welcome, they did not alter the fact that the figures are getting worse, not better. Perhaps the storm of protest, particularly among pensioners in the south of England, was not surprising. I have already referred to 83-year-old Elizabeth Winkfield from Devon, who refused to pay the full 17.9 per cent. increase in her council tax bill—she said that she would rather go to jail than pay more than an inflation-based increase.

It was no surprise, except possibly to the Minister, when the Chancellor set out his understanding of the difficulties faced by older pensioners on fixed incomes. He said: The evidence shows that their council tax bills take a higher share of their income than the rest of the population."—[Official Report, 17 March 2004; Vol. 419, c. 336.] Welcome to the real world. The Government clearly took a political decision to make the £100 payment, which is a nice round figure, although it is difficult to see where it came from. It bears no relation to the different levels of council tax up and down the country or individual pensioners' means, because it was plucked out of the air. All the evidence points to a panic measure included in the Budget at the last minute, possibly without the knowledge of DWP Ministers and certainly without the knowledge of DWP officials.

When the Budget statement was drafted, the assumption that clearly underlay the decision to make the payment was that the money could simply and easily be added to the winter fuel payments by an amendment to the Social Fund Winter Fuel Payments Regulations 2000. As the Minister says, the problem was that the Government's legal advice stated that that was not possible and that the Government must introduce primary legislation. When the Chancellor made his statement, issued the accompanying press notices and released the Red Book, no one had properly addressed how those payments were to be coupled with the winter fuel payments and the precise mechanism had yet to be examined—a panic measure, if ever there was one.

In a written answer, the Minister stated: We are looking at the most cost-effective and efficient way to deliver payments. It is intended that a single one-off payment is made in 2004–05."—[official Report, 31 March 2004; Vol. 419, c. 1490.] That leaves a question mark, Mr. Speaker, and I am sure that it has occurred to you, as well as to me. The Minister used the phrase "one-off" again in his speech this afternoon, but the Bill seeks powers to make payments to the over-60s, as opposed to the over-70s, on various terms.

I must press the Minister further and I shall return to the question whether the payment is a one-off or whether the Government simply intend to make similar payments year on year. It is a harsh fact of political life that once one gives a payment for cold weather or TV licences, for example, pensioners, not unreasonably, become attached to it, and it becomes politically difficult to take it away.[Interruption.]

Perhaps I can quell the hilarity on the Government Benches by examining the reaction of pensioners and pensioners' organisations to the Bill and to the £100 payment. The under-70s are not terribly impressed. Why should a 69-year-old not receive the payment? What is the logic behind that? As my hon. Friend the Member for Christchurch (Mr. Chope) says, if the husband in a retired couple sadly passes away before the qualifying date and the widow is slightly under 70, why should she not get the payment?

On the face of it, the measure involves an element of discrimination. We know that the Government are wedded to dealing with discrimination: they signed up to the European convention on human rights, article 14 of which makes it clear that discrimination should not occur on a range of different grounds. However, the Secretary of State for Work and Pensions feels able to make a standard statement on the Bill that, in his view, the provisions are compatible with convention rights.

For once, the explanatory notes to the Bill are interesting: The setting of age 70 for entitlement is justified on the grounds that members of this age group are less likely to be in work, have less money and have fixed incomes. There is, of course, some truth to that statement, but one could say the same about the over-65s or even the over-60s—many more people now take early retirement. It is not clear why only the over-70s should be included.

Mr. Chope

Does my hon. Friend agree that another cause for concern among younger pensioner households is that the Government have deprived them of their married couples allowance, which is still payable to older married couples?

Mr. Waterson

My hon. Friend is right. That is yet another peculiarity about the odd division between the over-70s and the under-70s.

Another issue, which certainly puzzles pensioners in my constituency, is that the payment is wholly unrelated to council tax rises in different areas. A third puzzle is that it bears no relation at all to tax or benefits, as it is completely independent of the tax and benefits systems. The ultimate example of that—the Minister will correct me if I am wrong—is that a pensioner who is on full council tax benefit will still get the £100.

Perhaps the issue that has caused most controversy among pensioners and their organisations is the eight-month delay in receiving the money. Again, that may be a function of the panic in which the promise was put in the Budget, but the reality is that pensioners will have received their council tax demands eight months earlier than the payment that was made at Christmas, at the same time as the winter fuel payment. Will the Minister explain why, if it is not possible without primary legislation to link the payment to the winter fuel payment, it still has to be done at the same time and with the same qualifying week? There may be a good, practical reason for that, but if the Government hope to garner some electoral benefit from the payment, would it not have made more sense for it to drop on to people's doormats at about the time that they are wondering whom to vote for on 10 June?

Another interesting feature of the announcement was the chorus of disapproval from pensioners' organisations. Mr. Neil Duncan-Jordan, a spokesman for the National Pensioners Convention—the Minister and I are to have the pleasure of addressing its parliament next week, so I hope that he remembers to put the telephone directory down his trousers beforehand—said: It is completely wrong to make an announcement like this and not have the details in place. It leads us to believe that the Chancellor's statement was made simply to gain publicity. Heaven forfend. I am sure that such thoughts never cross the mind of this Government and these Ministers. He went on: "One-off payments"—to use the Minister's phrase— such as this are not the answer to pensioner hardship. They are often seen by the public as just cynical attempts to grab votes. Is not that the likely reaction of the average pensioner?

Mr. Mervyn Kohler of Help the Aged said: there would be no need for gifts like this if the Government was to review its fixation with means-testing"— a point that was made by my hon. Friend the Member for North-West Norfolk (Mr. Bellingham). Mr. Kohler continued: For many older people, this means months of going without in order to pay this year's bill.

Mr. Rodney Bickerstaffe, who is not yet a member of the Conservative party, but is president of the National Pensioners Convention, said: The best way to tackle the problem is through a bigger basic state pension … the Chancellor's announcement … fails to offer a long-term solution to the problems faced, by those under 70, of rising bills and falling incomes … with the Chancellor's decision not to restore the link with earnings in favour of expanding the Pension Credit, millions of existing and future pensioners will continue to rely on means-tested benefits. Frankly, I could not have put it better.

Malcolm Wicks

Given that the Opposition declined to give a Second Reading to the Pensions Bill, which will establish the very important pension protection fund, is it not time for the hon. Gentleman to say whether he will support this Bill?

Mr. Waterson

That is the traditional purpose of making a speech on Second Reading. If the Minister can contain his enthusiasm, I shall of course come to that.

Gordon Lishman, director general of Age Concern, said: it's a disgrace that the state pension is so inadequate people have to rely on one-off payments to cover daily living costs.

Lest it be said that I am being unfair in focusing entirely on the Government and the Minister, whom I know to be well intentioned, let me turn for a moment to the Liberal Democrats, who have turned hypocrisy into an art form or an Olympic event. Up and down the country, including in my constituency, they are running a campaign to abolish the council tax. That is rather like the serial killer who leaves a note at the home of his last victim saying, "Please stop me before I do it again." My own council, Eastbourne, is a good example: it has increased council tax by 45 per cent. over the past two years. With the Liberal Democrats running the show at the town hall, no one could devise a system of local government finance that did not involve extremely high payments being made, often by the poorest in society. The highest rise anywhere this year—28 per cent.—was imposed by Shepway council. There are no prizes for guessing who runs Shepway—it is of course the Liberal Democrats.

Mr. Pond

Can the hon. Gentleman remind the House of the name of the MP for the constituency that covers Shepway?

Mr. John Bercow (Buckingham) (Con)

I am sure that my hon. Friend has anticipated that point, which is somewhat irrelevant.

Mr. Waterson

I welcome my hon. Friend to our deliberations—he brings a new lustre to this parliamentary occasion.

The Under-Secretary presses me to say that the local MP is my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard), the Leader of the official Opposition. It might also interest the Under-Secretary to know that the other day there was a council by-election in Shepway in which a formerly Liberal Democrat ward was won by the Conservatives with a swing of 31 per cent.[Interruption.] From a sedentary position, appropriately, the hon. Member for Northavon (Mr. Webb) says that it was all about toilets. Indeed it was—the Liberal Democrat council wanted to shut every single public lavatory in the entire area.

Mr. Deputy Speaker (Sir Michael Lord)

Order. Hon. Members may find this fascinating, but I would be grateful if the hon. Gentleman would return to the subject before the House.

Mr. Waterson

Certainly, Mr. Deputy Speaker.

My main point is that the Liberal Democrats often present their idea of a local income tax as a simpler and fairer alternative to council tax, but it is neither of those things.

Mr. Webb

We can anticipate what is coming, because we have heard it all before, but what is the hon. Gentleman's solution to the unfairness of the council tax?

Mr. Deputy Speaker

Order. I would appreciate it if hon. Members did not go too far down that road.

Mr. Waterson

One solution is not to elect Liberal Democrat councils.

The problem with the idea of a local income tax is that it does not address the real causes of the crisis in local government finance for which the Bill is designed to be a fig leaf: first, the fiddled funding from Whitehall and, secondly, spendthrift Liberal Democrat and Labour councils.

Malcolm Wicks

Bring back the poll tax.

Mr. Waterson

The Liberal Democrats' local income tax would involve a tax, on adjusted figures, of 3.8 per cent. on all income between £4,745 and £100,000 a year. That would produce a basic rate of income tax of almost 26 per cent. and a higher rate of almost 44 per cent. The reality is that, at that 3.8 per cent. level, an average couple in England would end up paying an extra £630 a year—an increase of 65 per cent. Furthermore, such a tax would lead to large discrepancies in income taxation between different parts of the country, be a major burden on employers and distort the jobs market. I am sure that the Liberal Democrats are carefully examining those issues, but the central flaw, as they have said themselves, is that, as with any system of local government finance, there remains the issue of equalisation—how to deal with the differences between poorer and richer areas—and the related problems of gearing.

Andrew Bennett

In some places, there are considerable seasonal employment fluctuations while others can suddenly suffer large numbers of redundancies. Equalisation has to happen not just annually, but as the year progresses.

Mr. Waterson

The hon. Gentleman makes a fair point. That is only one of many practical problems that should be tackled but does not appear to have been considered by those who support a local income tax.

Mr. John Gummer (Suffolk, Coastal) (Con)

Does my hon. Friend agree that the Liberal Democrats support such a policy because, in the areas that will get money, they will tell people that money is coming and in areas where they might expect to do better out of local income tax, they will not mention equalisation? Liberal Democrats always say different things in different places. In my constituency, they recently blamed the Conservative winner of a local council election because he was too young and campaigned on the maturity of their candidate. In a nearby constituency, they said how wonderful it was to have a young candidate. Whatever the case, they will always present it.

Mr. Deputy Speaker

Order. I am sorry to have to repeat myself but the Bill does not deal with such matters. I should be grateful if the hon. Member for Eastbourne (Mr. Waterson) dealt specifically with the measure's contents.

Mr. Waterson

I shall certainly do that and try to avoid too much party political discussion. In a sense, the Bill is more about council tax and local government finance than pensioners.

Mr. Deputy Speaker

Order. It is true that the measure deals with how money is found for that purpose but not the detailed ramifications of the various aspects of the way in which council tax or other methods of payment are arrived at.

Mr. Waterson

I thank you for that guidance, Mr. Deputy Speaker. If I may answer my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) briefly before moving on, he is right about the detail. The briefing note that sadly fell into the wrong hands when the Liberal Democrats launched local income tax stated: We might get asked about the rate of local income tax we expect we would levy. We don't want to be drawn extensively into this. How wise.

Clearly, a system that was different from the council tax and based on local income tax would have winners and losers, especially pensioners, who would pay more under the Bill if they had savings, worked hard and had a decent income. Many pensioners would pay more. It is easy to propose glib alternatives. In the Brent, East by-election, we were promised a £100 refund on council tax but that pledge appears to have been abandoned. InThe Guardian, the leader of the Liberal Democrats insisted that he had not broken his promise, although he admitted the pledge would not now be met I am not sure what that means.

Let me press the Minister on some specific questions. Are we considering a one-off payment or not? He appeared to make it clear in his opening speech that it was a one-off payment to pensioners who are over 70. Yet clause 7 grants the power to make regulations providing for the making of payments … to persons who have attained the age of 60 years. It is not unreasonable to press Ministers about the circumstances in which they envisage using those powers. Will the payment depend on opinion polls? Will it be made only to people in marginal seats? Will it apply to swing voters? Perhaps it will be made only to women. There would be much sense in making the payments to older women because the latest findings show that that group in the electorate is going off the Government faster than any other. We need to be told why clause 7 is included in the measure when the payment is described as a one-off.

In correspondence with my hon. Friend the Member for Chichester (Mr. Tyrie), the Minister made it clear that the payment is only for 2004–05. My hon. Friend and I accept that at face value. However, that makes the presence of clause 7 even more puzzling. It seems clear that Ministers intend to use it in future and it is important to know the circumstances in which that might happen.

Mr. Bercow

Does my hon. Friend agree that, if the Government are clear in their mind about their use of clause 7 and, moreover, believe that there is no ground for ambiguity on the matter, it would help to have a draft copy of the regulations before the Bill proceeds any further?

Mr. Waterson

My hon. Friend makes a telling point, as one would expect. However, after spending seven weeks serving on the Committee that considered the Pensions Bill, in which many important aspects are left to regulation, and not catching even a glimpse of a draft regulation, I do not hold out much hope.

Andrew Bennett

In the unlikely event of a future Conservative Government, would they make such payments?

Mr. Waterson

With respect, it is not right to ask me to make such a commitment. I am trying to ask the current Government about their intentions, which appear very murky.

I want to ask about the qualifying date. According to my reading of the measure, a person in the household would have to be over 70 on the qualifying date in September to qualify. Why not make that a little more flexible? My hon. Friend the Member for Christchurch (Mr. Chope) mentioned the problem of a 70-year-old in the household who dies in the relevant period. Could not we provide that someone had to be 70 on the qualifying date in September, when the amount was to be paid in December or at sometime in the council tax year? That would be simpler and might be fairer.

Why in only this instance do the Government accept the logic of giving help to all pensioners in the same way? On more important matters, they pin their hopes on ever more means-testing. Are they perhaps beginning to appreciate the wisdom of the Conservative policy of restoring the link with average earnings?

I have now reached the part of my speech that the Minister was so keen to hear. Of course, the official Opposition will not stand in the way of older pensioners receiving their £100. Good for them. If there is a vote on the Bill, I shall invite my hon. Friends to support it. However, it is a blatant piece of electioneering. Worse, it has signally failed. It has been revealed to be a panic measure. Its implementation will be bungled because the money will arrive far too late for pensioners in genuine need. Pensioners and pensioners' organisations have seen through the whole exercise. In short, the Government will end up spending up to £500 million with not a single vote to show for it.

1.39 pm

Mr. Steve Webb (Northavon) (LD)

One almost feels that the Bill need not detain the House at all. We all know what it is about. As the hon. Member for Eastbourne (Mr. Waterson) concluded, it provides for a one-off payment of £100 because the Government are panicking about the council tax; there is an election approaching, and there was nothing in the Budget for subsequent years. None of us would begrudge older pensioners £100 because we all acknowledge that many of them need the money, so why do not we accept that and go home? I rather feel, however, that having been given the Floor, I cannot quite leave it at that—tempted though I am.

The proposed payment clearly has nothing to do with council tax, because it will be paid to people who do not pay council tax, such as those living in households with members under pension age. It will also be paid to people who are already getting a full rebate. So it has nothing to do with council tax, just as the winter fuel payment has nothing to do with winter fuel—it has something to do with the winter, because that is when it is paid, but nothing to do with fuel.

The reason that the winter fuel payment has "fuel" in its title is that that allows the Government to pay it through the social fund, which meant that its introduction did not require primary legislation. If they could have called this payment a "council tax and fuel payment", they would not have needed primary legislation to introduce it, because as long as it has something to do with fuel, they can deliver it through the social fund. I am not sure whether millions of pensioners realise that they are getting social fund payments at the moment, but I shall draw a veil over that. My hon. Friend the Member for Cheltenham (Mr. Jones) has pointed out to me that some of the council tax money paid by pensioners is used to heat council buildings, so perhaps the Government could have used that loophole to bring this payment within the social fund.

This is a bizarre situation. Under the Bill, £500 million—give or take—has been tossed away in the last minutes of a Budget speech. One of the strange things about the Bill is this business about the ability to pay other payments of this kind at any point in the future, as set out in clause 7. I asked a question about the circumstances in which the Government might want to do that, and I received a reply on 30 April, in which the Minister for Pensions referred to the affirmative procedure. So we will get a vote on the proposal to spend £500 million, or whatever, which will be wonderful, but we shall be voting on something unamendable.

The Bill therefore paves the way for proposals for payments—if they were to go to all pensioners, they could easily add up to billions of pounds—to go through after two 90-minute debates. Moreover, the Government will have some influence, shall we say, on the membership of the said Committee through the usual channels. Huge sums of taxpayers' money could therefore be spent with no opportunity to amend the proposals in any respect. That seems an extraordinary power to give to the Government through the Bill. At least we shall have some semblance of a debate today, and we shall have at least a day in Committee, which will give us some chance to look at how that £500 million is to be spent. But the fact that the Bill gives the Government the power to sling a few hundred million more in the direction of pensioners whenever they feel like it seems very odd and rather unacceptable.

Andrew Bennett

How does this proposal differ from the uprating orders that we have each year?

Mr. Webb

The uprating orders have traditionally been debated on the Floor of the House, often taking a whole day of parliamentary time rather than 90 minutes in an upstairs Committee Room. Indeed, on the occasions when we have felt that an uprating order was unacceptable—for example, the one that related to the 75p pension rise that the Government do not mention very often—we have voted it down, in an attempt to make the Government bring in a better one. A far better way of scrutinising these matters would be to present them in an amendable form, and for the Government to be required to come to the House with something that could be scrutinised not only in principle but in detail. I do not know whether the hon. Gentleman thinks that a commitment to spend £500 million next time round, given without virtually any examination, is an acceptable example of the way in which the House scrutinises the Government, but I certainly do not.

Mr. Weir

Is not another difference between this proposal and the uprating orders the fact that the orders deal with existing benefits? We know what those benefits are, whereas clause 7 of the Bill could conceivably be used to introduce any sort of payment.

Mr. Webb

I was about to make that excellent point. The hon. Gentleman is quite right. Every year, we use the uprating orders to roll on an existing system that we understand well, but the Bill is about something completely new. It will introduce a new set of rules, which is why it requires even more proper scrutiny than the annual uprating process.

If we are concerned—as we are—about the burden of council tax on people on low or modest fixed incomes, we must ask ourselves whether this Bill presents the right strategy to deal with that issue. There are better ways to approach the problem, namely, to provide people with a decent pension. It seems undignified for pensioners to have to hang on every word of the Chancellor's speech, having remembered to switch it on five minutes before the end, which is when they get given the cash—the goodies that the Chancellor had to spare because an election was coming up. Is not that an undignified way to treat pensioners? Should they not know at the start of each financial year what money they will have coming in, and should not that money be adequate to meet bills of this sort so that they do not need such one-off special payments? I have similar feelings about other ad hoc payments that the Government have introduced.

Mr. McLoughlin

The hon. Gentleman has just accused the Government of offering an election bribe, which this proposal clearly is. If my memory is correct, in the last by-election that the Liberal Democrats fought, they put a "cheque" for £100 on the bottom of their leaflets, offering voters that amount off their council tax. They have now abolished that proposal. Was that not an election bribe that they subsequently decided was a bad idea?

Mr. Webb

We are proposing to abolish the council tax. Indeed, my right hon. Friend the leader of the party has over-performed, as he does so often, by proposing not only to cut £100 from people's council tax but to abolish the whole thing. If I am accused of breaking a promise to the electors to cut £100 of their council tax, when we are replacing that with a policy to scrap £1,000 of their council tax. I stand condemned.

Mr. Wilshire

Can we be absolutely clear about this? Is the hon. Gentleman pledging that his party, should we have the misfortune to see it form a Government, would scrap the council tax and replace it with a local income tax? If he will give us that pledge, my constituents would then understand why the average male in my constituency would end up with a bill of £700 a year more than he pays at the moment. They would be delighted to hear confirmation of that.

Mr. Webb

The hon. Gentleman should not believe his central office briefings. He should know that by now. In answer to the first part of his intervention: yes, our pledge is unequivocally and absolutely to replace the unfair council tax with a fair local income tax of the kind used in many European countries, which will not reassure the hon. Gentleman. Such taxes are also used in many American states, however, which perhaps will reassure him.

In answer to the second part of the hon. Gentleman's question, the local income tax will replace the council tax, but we envisage one tax rise, on those earning more than £100,000 a year. Part of the proceeds of that tax rise—£1.7 billion, to be precise—will be used to ease the burden of the transition from council tax to local income tax. The amount raised under our local income tax will actually be less than that raised under the council tax. Given that it will raise less money, the notion that the average family could be hundreds of pounds worse off does not make sense. The average outcome must be a gain, because we shall be raising less money overall. In fact, because the tax will be charged according to the ability to pay, the vast majority of pensioners, for example, will benefit from our proposal.

That is precisely the focus of the Bill. That is what it is trying to do, in a very inadequate way. We believe, however, that a system in which pensioners who do not pay national income tax would not pay council tax either would be fairer than giving everyone £100 across the board, as that will fail to discriminate between those who pay no council tax and those who are well able to afford to do so.

Mr. Wilshire

I am sure that I heard the hon. Gentleman say that his plans included some extra tax to ease the transition, so he is not actually denying that my constituents will face another £700 a year in tax. What he is saying is that he has a wheeze to put that off for a little while in the hope that people will forget about it, vote for his party, and subsequently pay the extra £700. Is that what the hon. Gentleman is saying?

Mr. Deputy Speaker

Order. I appreciate that the hon. Member for Northavon (Mr. Webb) is now being seduced off the straight and narrow, but I would be grateful if he would avoid being seduced.

Mr. Webb

I shall not find that too difficult in the present context, Mr. Deputy Speaker. As the hon. Gentleman's question has been placed on record, I shall simply say that a tax that raises less money—namely the replacement local income tax—could not possibly create an average loss, let alone one on the scale that he envisages. In fact, there will be average gains under our proposals.

Andrew Bennett

Will the hon. Gentleman give way?

Mr. Webb

Yes, although I recognise your strictures, Mr. Deputy Speaker.

Andrew Bennett

If the hon. Gentleman's proposals would bring in less money, does that mean that councils would have to cut services, particularly services to the elderly? Or would income tax have to go up to meet the shortfall?

Mr. Webb

For the benefit of the record, if the hon. Gentleman had been listening a few moments ago, he would have heard me point out that, of the £5 billion or so that our proposal for a 50p income tax rate will raise, £1.7 billion will go towards easing the transition between council tax and local income tax. That would mean that councils would get the same amount of money. I would have thought that the hon. Gentleman, as a socialist—if I dare use that term—would favour higher taxation for those earning more than £100,000 a year.

Mr. Nigel Jones (Cheltenham) (LD)

To keep strictly in order, Mr. Deputy Speaker, may I say that I welcome the £100 proposal? Will my hon. Friend confirm, however, that under the local income tax, 74 per cent. of my constituents in Cheltenham would be better off?

Mr. Webb

I am sure that my hon. Friend has read a more reliable briefing on that subject than the hon. Member for Spelthorne (Mr. Wilshire), and I am sure that he is correct.

The focus of our debate is pensioners. The Bill is about doing something because the council tax hits pensioners, but the proposal to pay everyone a uniform amount, when some pay no council tax at all and others can afford to pay it, is very poorly targeted.

Far better than an unfair tax system and a rebates system designed to try to redress that—and because that does not work, another lump sum payment—would be a fair local tax system in the first place. That must be the key. The problem at the moment is, first, that we have an unfair and rapidly increasing local tax bill, and secondly, a hopelessly ineffective rebates system—if it worked, pensioners would not feel the pain of the council tax. Because 1 million or more pensioners are missing out on the rebates and are paying the full council tax, the Government's policy has had political consequences. A sticking plaster of £100 to remedy the fact that the rebates fail to address an unfair council tax system is a crazy solution. The House should be aware that the bureaucracy to run a rebates system, which is one way of trying to make council tax fairer, and to levy council tax, costs £600 million. That money should be going on pensions and pensioners. That is another reason why there are better strategies to adopt than that in the Bill.

The alternative strategy, as well as making the local tax system fairer, offers a better system of support for pensioners. Clearly, one of the reasons why many pensioners over 70, who are the subject of the Bill, are so poor is that they do not get the means-tested benefits to which they are entitled. The Government's view is that with one more heave, another publicity campaign and another leaflet, all will be well with the world. The Minister knows, however, that for years to come a structural feature of the Government's mass means-testing strategy is that vast numbers of older people will simply not get the money to which they are entitled. The Government will then recognise that as a political problem, and will have to find a system that people do take up. I accept that winter fuel payments are generally taken up, with men aged between 60 and 64 as the main exception. The Government must use a system that they know works to get money to people, because the other systems, such as mass means-testing, do not work. The Government have an unfair local tax system and a rebates system that does not work, so they have had to patch it up. On top of that, they provide an inadequate pension and conduct means-testing to deal with that inadequacy, and because that does not work, they need another sticking plaster.

Malcolm Wicks

I am following the hon. Gentleman's argument, but does he accept that one of the problems with putting all the money into the national insurance pension is that many vulnerable people, particularly elderly women, do not have full national insurance contributions records, and would not therefore benefit? How does his critique of the £100 payment for the over-70s—I am not sure whether he is criticising winter fuel payments—relate to his party's policy of age-relating the basic pension in favour of the older elderly?

Mr. Webb

The Minister makes two good and perfectly fair points. That is why we believe that when we try to improve the pension, we should do it on a citizenship basis. It may not be feasible to do that for all pensioners in one go, but the starting point needs to be that a citizen, particularly an older citizen, qualifies for a pension, and recognition of the fact that because many older people have inadequate contribution records because of caring responsibilities and because, as women, they have spent a lot of time out of the labour market, they have suffered. For as long as the Government insist on using the contributory basis to go forward with pensions policy, the groups that he has highlighted will continue to suffer. That is why our citizenship proposal will benefit older pensioners and women in particular. He is right to highlight that group. I am grateful for that, and I am glad about his concern for that group. We will address that group's problems with our policies, and it is time that the Government did so too.

On the issue of how best to support our pensioners, clearly, the hon. Gentleman has mentioned restoring the earnings link, which we will discuss at greater length next week on the Pensions Bill. If we are concerned about the effect of council tax on pensioners, increasing a woefully inadequate pension by a few percentage points above inflation is not the way to do it. In part, that is precisely because of the reasons that he gave—many poorer pensioners do not get full pension, so they will get less from the restoration of the earnings link—but it is also because the pension is so inadequate.

To raise a few issues to which we might return in Committee, I agree with the hon. Gentleman about the eligible date for this payment. When dealing with winter fuel payments, some of the recipients are not yet state pensioners, so there might be an argument that more time is needed to include them in the system, although I have some doubts about even that. A more credible argument is that given that we are not paying pensions to some of those people, but they are 60, they qualify for winter fuel payments, and because those people must be identified, a time lag is needed between the day on which they qualify and the day on which we pay the money, although I think that that argument is overdone.

That argument does not apply to the over-70s, however, as they are all in the system already, and I presume that practically all of them will already be getting winter fuel payments. Therefore, why do we need a qualifying date in the third week in September to pay them the money by Christmas? To coin a phrase, we know where they live and who they are. Given our desire to support older pensioners, why do we have to say that someone who is 70 in October cannot have a payment to help them with their council tax in December—when they will be 70 and two months—because they were not 70 in September. Given that they are already in the system, and the Department knows their date of birth—even its crumbling computers will know that, as it will be paying their winter fuel payments—there seems no reason for that early entitlement date. Changing it would not cost the Government huge sums of money. A set of pensioners will feel aggrieved that they do not qualify for the payment, even though they are 70 in December, because they were not that qualifying age three months earlier in September, even though the Department knew all about them—[Interruption.] I am happy to give way if the Minister wants to challenge that.

Mr. Pond

I am rather puzzled, because wherever one sets the point of qualification, some people will be on the wrong side of the line. I am afraid that that is inevitable.

Mr. Webb

With respect, that is not the point. My point is that there is a three-month gap between the date on which someone becomes eligible and the date on which they get the money. Why must it be three months? Because those people are already in the system, November could be the eligible date, for example, which would allow more people who are 70 at the time of payment to get the money, which is surely what we want.

Mr. Waterson

I am following the hon. Gentleman's point, not least because it mirrors to an extent one that I made. Can he see—because I cannot—any practical objection to making the payment to anyone who becomes 70, or is 70, during that council tax year?

Mr. Webb

I see where the hon. Gentleman is coming from. I guess that his suggestion is that perhaps it should be a 70th birthday present of some sort, so that it might be paid at different points throughout the year. I can see the administrative attraction of making all the payments in one week, give or take a little, and of drawing attention to all the publicity at a particular point rather than steadily through the year. There are attractions in bunching the payments. That said, I cannot see why three months are required to work out who is 70.

Mr. Chope

Does the hon. Gentleman accept that his answer to my hon. Friend the Member for Eastbourne (Mr. Waterson) does not address the issue of someone who is 70 now, and who is part of a household in which no one else is over 70, and who dies in August but has already had to pay the council tax bill for this year?

Mr. Webb

That is a fair point. The honest truth is that we all know that this is nothing to do with the council tax. For as long as the Government want to maintain the fiction that it is, however, the hon. Gentleman has a perfectly fair point. One would sympathise hugely with a household that has already started to pay council tax at the high levels that people must pay, but has never got help because sadly it suffered a bereavement during the year.

Andrew Bennett

There is a slight flaw in that argument. It is very sad that someone dies, but at the point at which they die, the household will almost certainly get the single person rebate on the council tax.

Mr. Webb

For several months while that person is still alive, however, the household will pay the full council tax at the higher rate that people must pay, yet it will not get anything towards the bill for that period—the discount will only apply for the remainder of the year.

I always want to save the Government money if I can. In relation to winter fuel payments, I recall that the Government were taken to court—and they lost, if I remember rightly—by British citizens living elsewhere in the EU. I do not know if the Minister has a view on this, and he may want to deal with it in his winding-up speech. As I recall, at first, winter fuel payments were meant to be paid only to UK citizens living in Great Britain. A court case was then held, and I think that I am right that winter fuel payments can now be paid to British citizens living elsewhere in the EU. What I am not clear about is whether this Bill, which tries to restrict payments to people who are reside it in Great Britain during the qualifying week, will be subject to the same legal challenge, because winter fuel payments now have to be paid across the EU. I am not clear as to why these payments will only be paid to Great Britain residents. Clearly, the argument will be that people elsewhere in the EU do not pay the council tax, but the Bill does not mention the council tax, because it is nothing to do with it. I merely wish to save the Government the trouble of a legal challenge.

As I said at the outset, we know what the Bill is all about. We will not stand in its way, as none of us begrudge £100 for elderly pensioner who certainly need the money. The key point, however, is that once again the Government are producing a sticking plaster to deal with problems elsewhere in the system. We have an unfair local tax system that is not being dealt with satisfactorily through an ineffective rebate system, so we need a sticking plaster. We have an inadequate basic pension which is not being dealt with satisfactorily through an ineffective means-testing system, so we need another sticking plaster. One day, I hope—and I hope that day comes soon—we will have a Government who introduce fair local tax and decent pensions, and we will not need Bills like this.

2 pm

Sir Paul Beresford (Mole Valley) (Con)

Before you took the Chair, Mr. Deputy Speaker, the Minister carefully explained—notwithstanding what the hon. Member for Northavon (Mr. Webb) said—that the Bill was intended to help pensioners with their council tax. He went through the usual performance of explaining that council tax rises had been dramatic over the past couple of years—which they have been—and blaming local authorities. I believe that if the Government examined the real causes of the increases they would see that had they adopted a different approach earlier, we would not need the Bill and we would not need the money for pensioners. Indeed, that might be the case if they adopted a different approach even at this late stage. Pensioners in my area will of course welcome the money. Pensioners aged 70 and above, and those under 70, will be worried by the council tax rise that they face—courtesy, again, of the Government.

About two years ago, ODPM Ministers explained that the council tax was reasonable. The huge outcry that prompted this panic reaction was generated at that time because people, especially in London and the south-east, were hurt by the tax. I believe that the Government are largely responsible for that. The Minister blamed local authorities, and I accept that some are to blame. Many Labour and Liberal councils' running costs are exorbitant compared with those of Conservative councils. The Liberals' idea of a different tax system should be taken with a pinch of salt: in Mole Valley the group led by the Conservatives and Independents raised the council tax by 5 per cent., but the Liberals wanted to raise it by 18 per cent. Nevertheless, I believe that central Government are the main cause of the increases.

The English council general fund has increased by 72.5 per cent. over the past 10 years. It consists of councils' running costs, and is directly reflected in council tax. One of the main reasons for the increase, in my view, is the Labour Government's paranoia, and their wish to centralise and control. They have introduced best value comprehensive performance assessments, various inspections, including Audit Commission and school inspections, and complex social services procedures. In addition, they have produced target after target. If there is a difficulty with local authority performance in any area, the Government will come up with yet another target—and all that costs money. The cost of inspections, and reactions to inspections, is reflected in council tax—dramatically, because of the gearing effect—and in the position of our pensioners.

The Government's last thought is for output and whether value for money has been obtained. By abolishing competitive tendering, they have hurt some councils that have tried to save council tax. Many hidden costs—best value and CPAs, for instance—can paralyse council staff for many weeks as they prepare for inspections, and in addition there is the process of the inspections themselves. All that is reflected in the additional cost to pensioners, whom the Bill is intended to help.

The Select Committee on the Office of the Deputy Prime Minister is conducting an inquiry into the costs, and there has been quite a reaction. Some councils' costs are fairly dramatic. A Havering councillor tells me that the Government have imposed extra planning requirements on the council, which cost another £150,000. Performance indicators add another £400,000 and external inspections a further £400,000. Best value reviews mean another £150,000; responding to Government consultations, another £100,000; Government returns, another £200,000; and bidding for grants, another £300,000. All that goes on to council tax, with gearing attached—at a time when the Government have reduced funding for London and the south-east dramatically year on year.

Yesterday, Somerset county council told the Committee that it had lost £30 million year on year as a result of the change in the funding formula. Surrey had lost £39 million. Those losses, which came at very short notice, prevented the councils from responding with savings to cut costs for all pensioners—indeed, for all local people.

Andrew Bennett

Somerset did not lose £30 million. The money that it received was not cut. It did not receive extra money that it had hoped to receive.

Sir Paul Beresford

That is a slightly slanted way of looking at it. Somerset says that if the existing funding formula had continued, it would have received the £30 million. In effect, it lost the money year on year. The hon. Gentleman—who chairs the Select Committee—nods. I am grateful for that.

Council tax benefits provided part of the solution, but, as the Committee is finding out, take-up is pitiful. When we asked yesterday why that was so, we were told that the forms were too long, complicated and intrusive. As my hon. Friend the Member for Eastbourne (Mr. Waterson) pointed out, this is a panic reaction from the Government—their second panic reaction. The first manifested itself in capping and sudden handouts to selected local authorities.

The Liberals, who never miss a bandwagon, have jumped on the bandwagon of local income tax. Treasury figures suggest that a married couple in my constituency on average earnings would pay an extra £886 a year if such a tax were imposed. They would not gain from any of the benefits proposed today.

ODPM Ministers tell us that we have been helped by threats of capping. Some local authorities have, in fact, been capped. Although that is welcome and has generated the right response, it does not deal with councils' main problem—the exorbitant cost of the Government's intrusion on and management of their affairs, and the additional cost of gearing, which lands on the doorsteps of our pensioners and everyone else. Rather than presenting us with this Bill, the Government should do what they should have done long ago. They should get off local authorities' backs, and reduce the costs that have been generated by their interference.

Malcolm Wicks

I am sorry to interrupt to hon. Gentleman's flow, but I want to apologise to him. When he intervened on me earlier, I reminded the House that we had both been Croydon Members, and implied that he had been thrown out by the electorate. In fact, he was the innocent victim of a boundary change. He must now feel very satisfied about the fact that he did not become a candidate for the new Croydon constituency, which fell to a Labour swing. I wanted to place that correction on the record and apology to a former colleague in Croydon.

Sir Paul Beresford

I thank the Minister for his apology. An interesting question, which will never be answered, is whether I would have been elected had I stayed in Croydon.

Here we sit, looking at a little Bill that will give a few people in my constituency and across England £100. That pales into insignificance in comparison with the damage that the Government have done to local authorities and to council tax bills, multiplied by gearing. For most local authorities, an extra £1 in costs means another £4 on council tax. For some, particularly in London, it means another £11.

It would have been practical for this paranoid Government to get off the back of local authorities and to go back to the approach of the Conservatives in 1992.

2.9 pm

Hywel Williams (Caernarfon) (PC)

The Bill applies not only to England but to Wales and Scotland. Obviously, Plaid, Cymru and the Scottish National party welcome this modest payment to older people, as far as it goes. Unfortunately, it does not go far.

We note with interest that it is a flat-rate payment on the basis of age, using age as a proxy for poverty, as the Government have noted themselves. People over 80 will get a higher payment. There are hon. Members on both sides of the House who wish that the Government would apply that principle to the retirement pension. That would address some of the poverty that is prevalent in my constituency and throughout Wales among older pensioners.

We note with approval the Minister's argument that the payment is transparent and that the administrative costs will be modest. Would that he and his colleagues applied the same argument to the growth in means-tested benefits, which are opaque, complicated and expensive to operate, as is council tax benefit. As has been said in the debate already, one of the reasons for the low take-up of council tax benefit is its complexity and opacity. This payment in some ways seems to be a sticking plaster—a recognition by the Government that council tax benefit is not working.

I am pleased to say that some local authorities in Wales have had significantly lower council tax increases than others. The increase in my own local authority, Gwynedd county council, is well below the average. Caerffili and Rhondda Cynon Taf have also had low council tax increases. Happily, council tax payers in those Plaid Cymru-controlled areas will have more disposable income, but this is hardly fair to those council tax payers in Wales still groaning under the weight of council tax increases in Labour and independent-controlled councils.

Mr. Weir

Does my hon. Friend recognise that the same is true in Scotland, where SNP-controlled councils such as my own in Angus have low council tax, despite the fact that the Liberal and Labour coalition in Edinburgh has distributed funds unfairly? The £100 will make little impact on the many people paying huge council taxes under Labour-controlled councils and indeed independent controlled councils such as Moray, the council tax of which is increasing by almost 10 per cent. this year.

Hywel Williams

My hon. Friend makes a pertinent point—all the more so since there are no elections in Scotland and his comments are untainted by the considerations that have led the Government to bring in this electoral bribe. He is clearly a man principle.

As far as I can see, there is no direct link between this payment and council tax rises. As has been said, pensioners over 70 will receive the full payment. Pensioners receiving council tax benefits will still qualify. Significantly, the payments will be made with the winter fuel payment. Therefore, it is highly likely that older people will not make a particular link with council tax. They are far more likely to see the payment as linked to their fuel bills. They may see it as being consolidated with the £200 that they already receive. In that respect, questions regarding the fuel payment are especially pertinent.

I wish to highlight my concern that the new payment will be a single payment—one payment at one point. Many local authorities offer the facility of monthly payments of council tax, often by direct debit. I take advantage of those arrangements and find them extremely convenient. I do not see why older people should not be enabled to take advantage of that convenience and why the payment could not be staged in some way, although it may not be practical to have 10 payments. I presume that the Department for Work and Pensions' computer could facilitate that, although perhaps I am assuming too much in that respect.

I was approached recently by a constituent, Mrs. Beryl Williams of Nefyn, who asked me a couple of questions that I could not answer, but the Government might like to suggest answers to them. She asked why the payment is for one year only—why it is a one-off—when older people's needs are likely to be the same over a number of years. Clause 7 will allow the Government to make other payments, but that is no reassurance to my constituent, who is trying to think ahead and to plan her income and expenditure. She needs some reassurance.

Mrs. Williams also asked me why the Department for Work and Pensions will assess qualification for the payment on the basis of residence and age in one relevant week. She asked, and I could not answer her, why there could not be some move towards a rolling assessment, so that people could be paid closer to their birthday. Those sensible questions have occurred to her as a practical consequence of her experience as an older person trying to make ends meet. Those are questions that the Minister might address when he sums up. I am sure that he has a ready answer and I look forward to hearing it.

2.16 pm

Mr. David Wilshire (Spelthorne) (Con)

May I start by seeking to help the Minister? His ministerial colleague has left, but he got very excited earlier when he was anxious to know whether Opposition Members were going to support the Bill. Let me clear that one up to save the Minister asking me in a moment or two. I make it clear that I welcome the principle behind the Bill, in that the principle, as I understand it, is that the Government are offering pensioners more help. I, and I am sure all other hon. Members, have no difficulty in supporting more help for pensioners, so the principle is fine. It is just that some of the detail is not quite so clever. We need to look at that.

Not only do I welcome the principle, but I have some pleasure in being here this afternoon. It is pleasing and worth while for a Conservative MP to come along this afternoon to offer support and help to clear up the Labour Government's mess. That is what we are doing: clearing up their mess. It gives me even greater pleasure because it is only Conservatives, with a bit of help from the Liberals and from Plaid Cymru, who are prepared to come to help the Minister out of the hole into which he and his colleagues have got themselves. Not a single Labour Back Bencher has come here to help the Minister to do more for pensioners and to sort out the Government's mess. That must speak volumes.

Mr. Weir

I would just like to point out that the Scottish National party is also here helping out as best it can. It is noticeable that not one Labour Member from Scotland has spoken in the debate.

Mr. Wilshire

I grovel to the SNP. I am a great friend of the SNP. I have had connections with it in previous Parliaments. I am desperately sorry—I did not mean to fail to mention it. That intervention helps to underline my point. I am grateful to the hon. Gentleman for saying that it is not only English Labour Members who appear not to care less about helping pensioners or rescuing the Government, but Scottish Labour Members, and they seem to try to run the Government from time to time. It is a pleasure to be here to see what little bit of help I can give to this discredited Government.

David Cairns (Greenock and Inverclyde) (Lab)

The pleasure is all ours.

Mr. Wilshire

I am glad that the pleasure is all the Labour Government's. I hear the Parliamentary Private Secretary singing our praises—the cavalry is coming to his rescue. I promise him that the more mess the Government make, the more willing we will be to pick up the pieces come the next election.

The Bill is not, as has been said, about council tax; it is about a brown envelope being bunged to pensioners in the hope that the Government can buy a few votes. It is a Government measure that admits that they are not doing enough for pensioners. They have caned pensioners through extra costs, and they now suddenly realise in a moment of panic that they are not doing enough to help, so they come along with a rushed measure that says: let us give pensioners some money and hope it will be all right. That was done in a panic, and not even from generosity and thought. The Government were suddenly confronted with pensioners who were prepared to go to prison because of the Government's crass incompetence in putting up costs for pensioners. Faced with the thought of the bad publicity of pensioners going to prison because of them, the Government panicked and introduced the Bill.

Not only that; this is not only a panic measure but a blatant attempt to buy votes. Why, one might ask, are the Government having to do that? The opinion polls say it all. The Government are losing support, so they panic and try to buy votes. It will not work.

There is one other reason behind the Bill, rather than council tax. I have a suspicion that it owes something to the Chancellor of the Exchequer's having seen a wounded Prime Minister and thinking that if he can leap to the Dispatch Box in the middle of a Budget and produce, like a rabbit out of a hat, some money for pensioners, when the moment comes at which the Labour party decides to get rid of its leader, the Chancellor will be seen as the person who can get rabbits out of hats, and will be placed to take over. The reality of what is happening here this afternoon is as I describe it, which probably explains why the Labour Benches are so empty. Labour Members are too embarrassed to come here and be part of this.

The Government have tried—I suppose we should take them at face value—to pass the measure off as an attempt to help with council tax. In his Budget statement, the Chancellor said: The evidence shows that their council tax bills"— referring to the older pensioners take a higher share of their income than the rest of the population. So for this year, for those over 70, on top of the winter fuel payment, we will pay an additional £100 to each household."—[Official Report, 17 March 2004; Vol. 419, c. 336.] There we have the clear attempt to pass the measure off as an effort to help with council tax. So let us take this Labour Government at their word when they say that it is an attempt to deal with the council tax problem, and look at what the problem really is, and at how bad a mess this Government have made of matters.

Let us take my constituency, as just one example of hundreds. In 1997, when this Government took over, my constituents in Spelthorne on council tax band D were paying £630.77. By 2003–04, the same people were paying £1,170.65. That is an extra £540, or an increase of 85.6 per cent. I have a large number of elderly people on fixed incomes, like many other hon. Members, and the Government are quite right to say that people on fixed incomes, having been asked to find another £540 over that period with very little extra coming in to help them to pay it, need help. My word, they need help! That is all down to what has happened under this Government.

That puts the £100 into some sort of context. Having caned those people for an extra £540, the Government want us to believe that it is generous for them to give £100 of it back. That does not strike me as generous at all; it strikes me as quite miserly. Again, it is an attempt to get publicity without actually solving the problem.

If that is the problem that the Labour Government have asked us here this afternoon to try to sort out for them, let us be clear about its cause, which is not what they want us to believe. I can do no better than refer to the Audit Commission, which is a neutral body. It seeks after facts, and reports accordingly. I quote from a summary of a report that it produced entitled "Council tax increases 2002/03 to 2003/04: Why were they so high?" What was it, according to the Audit Commission, that caused the problem? Point 8 of its summary says: We also looked at the impact of changes to grant on council tax increases. The 8 per cent. national increase in grant for local councils was more than in previous years. That is the bit that the Government want us to listen to, but it is point 9 that we need to understand. It says: But grant redistribution, which moved grant from London and the south to the midlands and the north"— in other words, from my constituents to Tony's cronies, which is my interjection, not a comment that the Audit Commission would make— led to some councils putting up council tax more than others. We found a clear association between the size of grant increase a council received and their increase in council tax. The fiddled funding of Labour is the problem that we are addressing. It is a problem that the Government have caused, and that is why I am more than happy to be here to try to put it right.

The Government make much play of the fact that the additional help for council tax comes on top of the help that they have been giving through council tax benefit, so I thought that it might be useful to look at the figures for council tax benefit in Spelthorne, to discover the reality of that means of helping. I found that in 1997, there were 4,854 claims for council tax benefit, but by 2003–04 that figure had fallen to 4,189. So much for the great boost given by extra council tax benefit to more people. Fewer of my constituents are getting that help&; no wonder they need a handout of £100 or more.

Insult is added to injury, because when I asked Spelthorne borough council about council tax benefit, I discovered that the benefit that it hands out is not automatically received in full from the Government. It has to find 2.1 per cent. of the benefit that it hands out, which makes a bill of £80,000 for my council tax payers. Spelthorne borough council also pointed out to me that the cost of administering that wonderful Government scheme last year came to £313,276, but that the administrative grant from the Government for doing their work for them was just £144,762. If we take into account the extra cost of the council tax benefit, we find that, far from benefiting from the council tax benefit scheme, the council tax payers in my constituency have to fund it for themselves. My council tax payers have had an extra burden of £169,000 dumped on them in the so-called name of helping people to pay their council tax. That is a wonderful achievement by the Government. They say that they will help people to pay their bill, but they then come up with a scheme that puts up the bill that has to be paid in the first place. That is madness. It does not help; it makes matters worse. That is another reason why the £100 will not get us very far. The Government push up the bill, give people a little of that back and think that they are being generous.

Although I support the Bill in principle, I have some key concerns, which I hope that the Government will be willing to address in Committee. The first has been mentioned, but it needs underlining. It is the concept of waiting until after Christmas for a payment. As I am sure the Minister knows, people start paying their annual council tax in April. Council tax is paid in monthly instalments, but for only 10 months, so people finish paying in January, but the Government in their wisdom will not give them any help to make the April-to-January payments until 31 December. Fat lot of good that is. Most of the money will have been paid by then. People first have to pay the extra that they cannot afford, and then in a so-called bit of generosity, they are told that they will be given a little of it back later. That is not helping people; it is simply making a mockery of them.

Mr. Chope

Does my hon. Friend agree that another anomaly that the Government could have addressed through this Bill is the ability to pay only over 10 months? The ability to pay over 12 months would spread the payment burden more evenly.

Mr. Wilshire

That is absolutely right. I would love to discuss that issue, but I suspect, Mr. Deputy Speaker, that you would consider it slightly beyond the Bill's terms of reference. I will settle for saying that I completely agree with my hon. Friend and that we will discuss the matter on another occasion.

I am also concerned that the Government are offering nothing to 65 to 69-year-olds. I readily accept that I and other Members of this House have a significant number of constituents over the age of 70 who are struggling, but the reality is that all of us have constituents over that age who are not struggling. So why are we helping over-70s who need help and over-70s who do not, but ignoring those aged 69 and a half who are in desperate straits—perhaps worse straits than anybody aged over 70? Through that cut-off point the Government are saying to people aged under 70, "Frankly, we don't care about you." My constituents do not want that sort of Government running the country. The Government have to revisit the issue of not helping people under the age of 70 who need help.

That train of thought leads to another of my key concerns. This entire procedure, which helps the rich and poor alike, is unrelated to the tax and benefit system. The Government do not like my party's future approach to pensions because, in their view, it does not distinguish between the rich and the poor. They are keen to attack our policies, yet they brazenly propose the kind of policy that they keep saying we should not implement: a universal benefit for everybody over the age of 70. These are serious issues that the Minister needs to address in his wind-up.

So much for my introduction—I now turn to the detail of the Bill. I have a number of queries that I hope the Minister will address. Clause 1, which deals with the "Qualifying individual", bothers me somewhat. According to the Government, a qualifying individual is someone who is ordinarily resident in Great Britain", but nowhere in the Bill can I find what "ordinarily resident" means. It cannot mean someone who lives here permanently, because clause 1 also states that a person has to be ordinarily resident for "one day". That does not strike me as a definition of a permanent resident of the United Kingdom. I would like the Minister to reassure us about what "ordinarily resident" means. If it means that one has to be here for just one day in September, I suspect that in September the ferries will be full of coach-loads of people aged over 70, coming to stay for one day in order to get their £100, only to go back where they came from. The Minister needs to reassure the taxpayer that that is not the intention.

Clause 2 deals with an issue that crops up time and again in the Bill. It states: A qualifying individual shall be entitled to a payment of £100 if at any time in the relevant week—(a) he is single". Later, it refers to couples, for which clause 8 provides a definition. The Government have great difficulties with this issue. Clause 8 states that "couple" means a man and a woman who share a household and who are, or who live as, husband and wife". If I remember rightly, various Bills passing through this House go out of their way to ensure that, in keeping with the Government's view, we do not make a distinction through the concept of "couple" equalling man and woman. Yet the Bill states that a "couple" must be a man and a woman. What about same-sex couples? Do they not fall within this definition, and if not, why not?

Similarly, clause 8 refers to those who are, or who live as, husband and wife". What does that mean? Are we to have an army of inspectors visiting 70-year-old couples to find out what they are doing? That seems remarkably ridiculous. Moreover, what happens when an elderly brother and sister live together, or an elderly mother lives with her elderly son? Mums live for very long times these days. It is perfectly possible for a mum and a son who are both over 70 to live in the same house, yet they will not be considered a couple, because although they are a man and a woman, they are not living together as husband and wife. The Government have got something terribly wrong here—assuming that they believe in their other legislation. I should be grateful if they sorted that one out for us.

Mr. Chope

Has my hon. Friend looked at clause 2(1)(b)(i), which refers to a single person's either … not living with another qualifying individual, or otherwise being in receipt of state pension credit? Does he think that the phrase "living with" is relevant to the definition of "couple", which seems to imply something slightly different?

Mr. Wilshire

If my memory serves me correctly, clause 8 provides no definition of "living with", so that is another thing that the Government ought to clear up.

There is another issue in respect of couples. Does the term "single" as used in the Bill include a widow or widower? When a spouse dies, one still considers oneself married to them and part of a couple, even though one half of the couple is no longer alive. Will the Bill discriminate against widows and widowers, or does "single" mean something that the dictionary definition does not cover? That issue needs to be sorted out.

Clause 3 also needs some attention. Subsection (1)(a) refers to situations in which two or more couples live together". The Government say that a payment of £100 per household will be made. Where two or more couples live together, and if three or more of the people in question qualify, will that household get £150, £200 or £250, depending on how many qualifying people there are? We need to know the answer to that question. I suspect that there are some problems.

Clause 3(4) states: Subsection (5) applies to a qualifying individual if … throughout the period of 13 weeks ending with the relevant week his ordinary place of residence was a care home. So it is suggested that those who live in a care home will not necessarily qualify. Why a period of only 13 weeks? Council tax is paid over a whole year—in 10 monthly instalments, or in one go—so why are those who are in a care home for only 13 weeks of that 12-month or 10-month period disqualified from getting the help given to those who live in their own home for a year? That is thoroughly inconsistent, and perhaps we could be told something about it.

I turn to clause 4, which deals with disqualifications. Subsection (1)(b) disqualifies a person who is in custody throughout the relevant week". So if, for some reason or other, a 70-year-old is locked up for that week, they are disqualified for an entire year. That cannot be right. I accept that subsection (2) provides a definition of being in custody. It states:

a person is in custody if he is detained in custody under a sentence imposed by a court". So the Government have at least thought of people on remand, who will not be caught by the provision. What happens if the Court of Appeal quashes the conviction of someone who has been under a sentence for a week or so and has been disqualified? What happens if they were under sentence during the relevant week but are subsequently declared innocent? What provisions do the Government intend to make to deal with that anomaly?

Mr. Chope

Does my hon. Friend accept that the anomaly goes further than that? Someone could be sentenced to one week's imprisonment in the qualifying week in September, thereby losing the entitlement to £100, while someone sentenced to six months' imprisonment starting in October would receive the full £100.

Mr. Wilshire

That is absolutely right. The provisions have been ill thought through. Perhaps provoked by the concept of 70-year-olds going to prison, the Government wondered what to do to discourage such people from being sent there. Perhaps they thought that disqualification might induce people who are prepared to martyr themselves to think again. If that is what the Government thought, it goes to show that they do not understand 70-year-olds, most of whom will stick to matters of principle, despite the threat of being penalised by the Government or ending up in prison for a short while.

Before we vote, the Government must explain clause 5. Under subsection (3)(c)(i), when making a claim, people have to tell the Secretary of State their name, address, date of birth"— I have no problem with that because the address could be a park bench and it does not necessarily apply for council tax purposes— and national insurance number (if he has one)". I was under the impression—the Minister will put me right if I am wrong—that every British citizen had a national insurance number. If so, the Government have some explaining to do about what led them to include "(if he has one)" in the Bill. Why can we not say that people have to have a national insurance number in order to receive the benefit, which would clear up a few anomalies? That takes us back to coach trips in September: people could come over here to qualify as ordinarily resident for a day; they do not have a national insurance number; they take the money to pay for the coach trip and go back home. The Government must clear up that problem.

Clause 7 deals with the power to provide for payments. We have been told that this is a one-off measure. We have heard that no provision is being made to continue the benefit in future Budgets, yet the Government are assuming powers to "make regulations"—not to come before the House—to continue the benefit. They want not only to continue with the provisions before us, but to assume powers to do anything they like without reference to the House.

The Government can make regulations to deal with persons in a specified class". If they wanted to, they could give more money to all the people who lived in the north or to all those who voted Labour. That is my understanding of a "specified class". They are also able to make provision for "specified circumstances". In other words, the Bill does not necessarily apply to people who are particularly poor; in future years, it could apply—again without any reference to the House—to whatever circumstances the Government like.

Under clause 7(3) the Government assume powers to make "exceptions" in future years. What comes to mind is that someone who votes Conservative could be deemed an exception and would not receive the benefit. These are draconian and dictatorial powers, short-circuiting Parliament to enable the Government to do whatever they like.

Malcolm Wicks

indicated dissent.

Mr. Wilshire

The Minister is shaking is head. If he thinks that I am exaggerating, I refer him to clause 7(3)(d), according to which regulations allow the Government to make different provision for different cases or circumstances. In other words, the Government want powers not to treat everyone equally, but to treat individuals exactly how they like. Why do they need clause 7? What are they planning; what are they up to? They really must explain.

Clause 8 deals with the interpretation. As I explained earlier, the Government have got themselves into an awful muddle about couples—men and women, same-sex couples, husbands and wives, people who may or may not be living together. Even though it was not possible to get their mindset round to single-sex couples, somebody somewhere—probably in the basement of the Ministry—considered that polygamy should be mentioned. Under clause 8(2): The provisions of this Act shall apply, with any necessary modifications, to the parties to a polygamous marriage as if they together formed one couple. They thought about that, but not other relationships, which I find extraordinary.

I come to the last part of the Bill that is worthy of mention. Although for the purposes of my brief examination of the Bill's details I have been prepared to accept that there is a council tax link, there patently is not such a link. Payment is to be made to people aged over 70 and it is being passed off as an attempt to help pensioners pay their council tax. That being the case, why clause 10? The clause makes it clear that the Bill applies to England and Wales and Scotland. If the Bill is part of an argument about the council tax, I understand why Northern Ireland is not included, but since it is not about the council tax, why are the Government discriminating against 70-year-olds who live in Northern Ireland? Are they not UK citizens like the rest of us, who pay the same income tax as we do? Why are they picked on and discriminated against in respect of a benefit that is paid to everyone else, irrespective of whether they pay the council tax? Again, the Government must explain themselves.

We should also give some thought to human rights issues, to which the Bill and the explanatory notes refer. Page 5 of those notes deals with the European convention on human rights, and paragraph 31 quite properly refers to the requirements of article 8 and the "right to family life". I have already pointed out problems with the Bill's treatment of same sex-couples, for example, and the Government will no doubt argue that the ECHR makes it clear that such couples are included in such references to family life. A statement is appended to the Bill to the effect that it conforms with human rights legislation, but I would argue that, if we accept the Government's definition of family life in other debates, the Bill in its current form patently does not comply with article 8. The Government should do something about that.

Paragraph 32 of the explanatory notes refers to the requirements of article 14 on discrimination. It is arguable that people over 70 are less likely to be in work and have less money than people under 70, but I completely reject the argument that over-70s are more likely to have fixed incomes. The Government have offered no evidence to prove it, and my experience of my constituents suggests that people are on fixed incomes from age 60 onwards. I would have; thought therefore that there is a possibility that the Bill fails to comply with the requirement of article 14 not to discriminate. I would be grateful for any clarification.

To conclude, I am happy to support the Bill. I am pleased that Conservatives are willing to help elderly people. As I said at the outset, it was shameful that no Labour Members were willing to speak. I believe that the hon. Member for Denton and Reddish (Andrew Bennett) was not present at that time, which is why I made that point. He has since returned and made helpful interventions. I have a great respect for him, but I sometimes wonder whether his help is as welcome to the Government as help from other quarters is to them. I welcome him back to the debate. I am sure that he, like Conservative Members, is trying to do his level best to dig the Labour Government out of their hole.

I will take the Government at their word and accept that the Bill is an attempt to put right the catastrophe of the council tax, which was caused entirely by them. I also accept that the Bill is a one-off, temporary measure. I take that as an admission that, by this time next year, the Government will have lost the election. All I can say is good riddance.

2.49 pm

Mr. Christopher Chope (Christchurch) (Con)

It is a pleasure to follow my hon. Friend the Member for Spelthorne (Mr. Wilshire), who brings to the debate a wealth of local government knowledge and experience, as well as an incisive criticism of some of the Bill's important details.

This is called the Age-Related Payments Bill, but it might better be described as the Election-Related Payments Bill. All those who have spoken so far agree that that is the motivation of a Government who are in severe panic. They realise that sustained increases in council tax and manipulation of the, grant system have resulted in council tax poverty for pensioners. I have spoken about that many times in the House, and I have also presented a petition on the matter on behalf of thousands of my constituents who are worried about being forced into council tax poverty by the Government. Obviously, the Bill will mitigate that to a small extent for some of my constituents, but I doubt very much that it will help the Labour party's electoral fortunes in the Christchurch constituency, even though the area has one of the largest populations of households containing one or more people over 70.

In my constituency, the council tax bill for many households has increased by between £700 and £1,000 since the Government have been in office. When people heard what the Chancellor said in his Budget speech, they asked me why the Government were offering only £100, and only for this year. Although everything and anything is welcome from this tight-fisted and mean Government, my constituents are very worried that what the Chancellor said in the Budget has not been borne out in practice, and is not reflected in the contents of this Bill.

Referring to older pensioners, the Chancellor said: The evidence shows that their council tax bills take a higher share of their income than the rest of the population. So for this year, for those over 70, on top of the winter fuel payment, we will pay an additional £100 to each household."—[Official Report, 17 March 2004; Vol. 419, c. 336.]

That is not what the Bill delivers. We have discussed already the question of households that contained a person over 70 at the beginning of the financial year but which will not contain a person of that age in the critical week in September. The Government therefore have not delivered on the Chancellor's Budget pledge.

It is now a commonplace that we must not listen to the Chancellor's speech so much as look at the small print later, and the Bill is another example of that. I can put it in no other way than to say that the Government have misled pensioner households up and down the country. As the Red Book states, at paragraph 5.36: The Government understands the position of older people on fixed incomes facing pressures such as higher council tax bills and thus a reduction in their standard of living. Council tax consumes a greater proportion of the incomes of older pensioners—who have little or no opportunity to increase their incomes—than it does for other households. Alongside Council Tax Benefit the Government believes that it is right to help older pensioner households with their council tax. Pensioner households with someone aged over 70 will therefore receive a £100 payment to help with their council tax bills. The Bill does not deliver on the assertion contained in that crucial paragraph.

Earlier, the Minister talked about people who are vulnerable. What household could be more vulnerable than one in which a person over 70 dies between now and September? Why should that household be put at a disadvantage compared with one in which a person over 70 remains alive during September, and dies instead in October or November? I urge the Government to reconsider that anomaly, which means that people aged 70 at the beginning of the financial year will not qualify unless they survive the course—and all the vagaries of the NHS—until September.

As my hon. Friend the Member for Spelthorne said, there are many anomalies in the detail of the Bill. I hope that the Under-Secretary of State for Work and Pensions, the hon. Member for Gravesham (Mr. Pond), who will wind up the debate, will address some of those anomalies. If he cannot do that today, I trust that he will look at them in Standing Committee.

The phrase "living with" in clause 2 is ambiguous. It may mean that a household in which, for example, two siblings aged over 70 live together—and in my area it is not unusual for a mother and daughter over that age to be living together—may be entitled to two payments of £100. However, that depends on how "living with" is defined. I hope that the Under-Secretary of State will clarify that, for the benefit of the House.

In an intervention, I referred to the question of people in prison, and my hon. Friend the Member for Spelthorne also mentioned it. Why should a person who is in prison for a week forfeit entitlement to the whole of the payment for a whole year, when a person who is in prison during another part of the year will get the full benefit of the payment? That is an absurd anomaly. Do the Government really think that that is a consistent approach? I do not think that it stands up to detailed scrutiny, and it shows that the Bill is very much a rushed measure on the Government's part.

Why does the Bill offer a solution for one year only? The problem of unaffordable, unfair and unsustainable council tax bills will face us next year too. In his Budget statement, the Chancellor implied that, as a result of the balance of funding review, the Government would produce a legislative fix that would change matters in time for next year. If that is the case, I hope that the Under-Secretary will confirm as much when he responds to the debate. However, most hon. Members who have had anything to do with the fraught subject of local government finance will say that it is totally unrealistic to assume that the Government will be able to come up with a fix in response to the balance of funding review—a fix that would bring substantial relief to hard-pressed pensioners—that will take effect in time for the next financial year, which starts in April 2005.

My constituents very much resent the fact that their state retirement pension increased this year by 2.8 per cent., when their council tax bills rose by a much greater amount. The Minister earlier seemed proud of the fact that the average council tax bill rise was only 5.9 per cent., but that is double the increase in the state retirement pension. That emphasises that the Government believe that it is perfectly reasonable for pensioner households to dip into savings or cut back on other expenditure so that they can afford their council tax bills.

In effect, the council tax has become a stealth wealth tax. It bears disproportionately heavily on people who occupy properties that have a significant value and which may have increased in value enormously while they have lived in them. Those people must pay a lot more in council tax, even though they cannot afford it.

We know that there are problems with council tax benefit. A pensioner with even modest savings is not entitled to that benefit in any event, so the benefit does not meet the needs and concerns of many of my constituents.

In his earlier remarks, the Minister quoted some rather specious figures, but let us take them at face value anyway. He said that the average council tax bill in a Labour area is £870, in a Liberal Democrat area it is £971 and in a Conservative area it is £1,072. That is because, of course, Conservative-controlled councils tend to be—although it is dangerous to generalise too much—in parts of the country where property values are higher.

Let us consider council tax bills. Why is it that the Bill will give a much higher percentage benefit to somebody living in a Labour council area than to somebody living in a Conservative council area? Obviously, if the bill is £870 in a Labour area and £100 is taken off it, that is a much higher discount than it would be on a bill of more than £1,000. The Minister has played games with percentages and I challenge him to say why it is reasonable that those with smaller bills should receive a disproportionate benefit compared with those who face larger bills.

My hon. Friends have made the point that the Bill takes no account of the means of the individuals. Why will somebody aged 70 who pays a higher rate of tax be entitled to benefit under the Bill but somebody aged 69 who does not even earn enough money to pay tax at all will not get any benefit?

Mr. Roger Williams (Brecon and Radnorshire) (LD)

I agree that the Government proposals are an inadequate mitigation of an unfair council tax, but the hon. Gentleman and his party support the council tax. What would their solution to the problem be?

Mr. Chope

I assure the hon. Gentleman that I do not support the council tax as it is at the moment. We are preparing for government, and part of that process involves bringing forward detailed policies. I assure the hon. Gentleman that he will not be disappointed when my hon. Friends on the Front Bench produce cogent and coherent policies for addressing the problems of the council tax before the general election. However, many of the problems of the council tax at the moment do not stem from the legislation but from the way in which the Government have manipulated the grant system to the detriment of councils in the south in order to favour their friends.

I gave the example earlier of the Prime Minister's constituency and Sedgefield district council, which receives eight times as much grant as east Dorset district council. Only a Labour Government could think that that was a fair way to distribute grant. If there is no general election before the next grant settlement, we can expect even more distortions in grant distribution.

The Minister tried to defend the Government by saying that this year the grant has gone up by a larger percentage amount in Conservative-controlled councils. That is a specious use of statistics, because if east Dorset gets only one-eighth of the grant of Sedgefield, even if east Dorset's grant were doubled it would still be only a quarter of that of Sedgefield. To try to equate percentage increases in very low levels of grant with percentage increases in grants that are already much higher is totally misleading.

I raised earlier some other ways in which the Government could reduce the plight of pensioners in council tax poverty. One way to do so would be to amend the regulations to allow council tax payments to be made in 12 monthly instalments. That would not take much effort. Indeed. on one interpretation, the regulations would not even have to be changed and the Government could advise local authorities that they could bill over 12 months rather than 10.

The Bill has been thrown together at short notice. The Government did not realise that they would have to produce primary legislation on the subject and the Bill smacks of panic. It contains some interesting provisions, but much of the detail is anomalous. The most mischievous part of the Bill is the enormous power in clause 7, which the Minister did not attempt to explain and which refers to the age of 60 years. However, the Government claim that it is important to concentrate extra help only on those aged 70 and over. Why then do the powers in clause 7 refer to those aged 60 and over? If those aged 60 and over are in need—many of us have examples in our constituencies of pensioners of that age who find it difficult to meet their council tax obligations—why are the Government resolutely refusing to help them?

The extra payment is a gimmick and an attempt to paper over the cracks caused by the Government's manipulation of the grants system. The damage has already been done, and the extra payment will mitigate it only slightly. It certainly will not make people forget the sustained way in which they have been made to suffer by this Government's local finance arrangements. I shall support the Bill because many pensioner households in my constituency will benefit from it, and I would not wish to prevent them from doing so. However, I would prefer it if the substantive issue of the manipulation of the grants system that has caused council tax bills to rise so much in my constituency were addressed by the Government. If the Government have taxpayers' money to put into the funding of local government, they should put it into the local government settlement, instead of messing around with gimmicks.

3.7 pm

Mr. George Osborne (Tatton) (Con)

I congratulate my hon. Friend the Member for Christchurch (Mr. Chope), who summed up many of the arguments in this debate, and my hon. Friend the Member for Spelthorne (Mr. Wilshire), who practically took the Committee stage on the Floor of the House. He gave the Bill the kind of scrutiny that it deserves. It is not a Bill of huge constitutional significance, so it would be unusual to have its Committee on the Floor, but perhaps my hon. Friend, who is an Opposition Whip, will put himself on the Committee where he can explore some of his points in greater detail.

Mr. Wilshire

As my hon. Friend may remember from his time in the Opposition Whips office, we can also ensure that certain people do not get on Committees.

Mr. Osborne

I remember that, although I remember spending a lot of time in Committee as a Whip. Indeed, I have spent much time in Committee this year as a Front-Bench spokesman.

We have had an interesting debate, thanks to my hon. Friends and those who have contributed from the minority parties. As my hon. Friend the Member for Spelthorne pointed out, it has also been interesting because of what Labour Members did not say. It is extraordinary that there are no Back-Bench Labour Members in the Chamber to take part in this debate. We have two Ministers, a couple of Parliamentary Private Secretaries and a Whip, but no Back Benchers. We have not heard a single speech by a Labour Back Bencher on the Second Reading.

Let us cast our minds back to the Budget. The extra payment was the great surprise announcement. The Chancellor produced it, as Chancellors do, with a great flourish at the end of the Budget. He said that he had one final announcement and we could hear the collective intake of breath by loyal Labour Members in anticipation of his great surprise. We also remember the waving of Order Papers, as happens every year, when the Chancellor announced his latest wheeze. Where are they now? Why have they not come and told us what a great benefit the Bill will provide for the pensioners aged over 70 whom they represent? They are not here. Perhaps they are embarrassed because they know that, as my hon. Friend the Member for Eastbourne (Mr. Waterson) said in his excellent opening speech, this is a panic measure. It is a sticking plaster on the gaping wound of the huge council tax hikes made under the Labour Government. As my hon. Friend the Member for Christchurch said, it is not an Age-Related Payments Bill but an election-related payments Bill.

Normally, it is difficult for the Opposition and those who watch the Government to know what goes on in the bowels of the Government; it is difficult to tell when something is a panic measure—one can only guess. But we know that the Bill was a panic measure from the way that it was introduced. In his opening speech, the Minister for Pensions was coy about when he knew that the Chancellor would be announcing the £100 payment. He said that he would not bore us with his diaries and that we would have to await their publication, but one can imagine the entry for 17 March: "Listening to the Chancellor in the Chamber today, stunned to hear his announcement on council tax payments. Why wasn't I told?"

David Cairns

Just imagine what it will say for today.

Mr. Osborne

It will say, "Had to clear up the Chancellor's mess today on the Floor of the House of Commons. Had to introduce a piece of primary legislation which I wasn't expecting."

One has to feel sorry for the Minister and his departmental colleagues. The decision was taken by the generals in the chateau—the Treasury—and Captain Wicks and Corporal Pond have to go up the line and implement it; they have to jump out of the trenches with primary legislation that they were not expecting to introduce.

Mr. Bellingham

I am sorry to interrupt the flow of my hon. Friend's excellent speech, but does he agree that one of the points that the Minister did not answer was my question about how much extra this primary legislation will cost? What will be the cost of all the legal advice, civil service time, printing, effort and everything else? We must be talking about a figure of around £500,000, yet this is the Government who say that they are trying to cut unnecessary expenditure.

Mr. Osborne

As ever, my hon. Friend makes a good point and is keeping a watchful eye on the interests of the taxpayer. It will be interesting to learn from the Minister how much this fiasco has cost. How much did it cost to draw up this unexpected primary legislation? Even if expletives were not involved, one can imagine that there was a moment of shock when the unfortunate Minister for Pensions was told by his officials, "Excuse us Minister, but the Chancellor seems to have made an announcement and doesn't realise that it requires primary legislation. Shall we call him or will you?" It is clear that the Department for Work and Pensions was left out of the loop.

Sir Paul Beresford

My hon. Friend is all sweetness and light towards the Ministers on the Treasury Bench, but does he agree that some of the blame must go not so much to the Treasury as to the Office of the Deputy Prime Minister—one of whose Ministers has just entered the Chamber—and to the Department of Health, because they are the primary cause of the problem we face?

Mr. Osborne

My hon. Friend is right. The only reason that the Minister for Housing and Planning is in the Chamber is that he hopes to get on to the next piece of parliamentary business, which deals with the Planning and Compulsory Purchase Bill. Thankfully, however, we still have plenty of time to consider this important Second Reading.

My hon. Friend the Member for Mole Valley (Sir Paul Beresford) is right to say that the problems that the measure is designed to address—although I shall argue that it does so very poorly—are, first, rising council tax bills, brought about by the Office of the Deputy Prime Minister, as we must now call it, and, secondly, fixed pensioner incomes, which mean that people cannot pay for rising council tax bills that are several times the rate of inflation. That is the story that has driven the legislation. As my hon. Friend the Member for Eastbourne and several of my hon. Friends pointed out, council tax bills have risen by 69 per cent. since 1997—equivalent to 3p on the basic rate of income tax. They rose 12.9 per cent. last year and are set to rise 5.9 per cent. this year. In Macclesfield borough council in my constituency, they will rise by 8.4 per cent. this year—[Interruption.]

The Minister for Housing and Planning says, "Shame." My hon. Friend the Member for Macclesfield (Sir Nicholas Winterton) and I are leading a delegation—of two—to see his colleague, the Minister for Local and Regional Government, to make the point that Macclesfield borough council, like many other Conservative–run councils, is well managed, does its job effectively and is debt–free, yet it is having to put up council tax by 8.4 per cent.

The reasons for that rise were set out by Councillor Wesley Fitzgerald, who represents a ward in my constituency and is a member of the cabinet of Macclesfield council. He gives a clue as to the underlying causes for the Government's introduction of the measure. I am sure that his comments would be true of many borough and other councils. He says that the rate support grant for this year went up by only 0.94 per cent., even though inflation is 2.5 per cent., which resulted in a gearing effect of 4 per cent. on Macclesfield council's bottom line He says that the council has to pay increases on nationally agreed wage settlements: 70 per cent. of council expenditure is on staff salaries. The community corporate plan will apparently cost the council £80,000 a year. There are targets to be met, such as those set by the Department for Environment, Food and Rural Affairs on waste recycling. Such targets may be a good thing, but they are set nationally and no provision is made to help local councils to meet them.

Such costs have forced Macclesfield and other councils to increase their council tax by several times the rate of inflation. After listening to the arguments that have been made in the debate, we can all agree that the band D rate is the correct way to measure the impact of council tax rises and council performance. The average council tax on a band D property is £478 more than it was in 1997. Unfortunately, I did not bring a copy of the 1997 Labour manifesto to the debate but I seem to remember that it made an explicit promise to avoid excessive council tax increases. If an increase of 69 per cent. since the publication of that manifesto is not excessive, I am not sure what is.

My hon. Friend the Member for Mole Valley lucidly set out some of the pressures on councils. They have also been noted by the Audit Commission, as several hon. Members pointed out. "Council tax increases 2003/04—Why were they so high?" is the title of the Audit Commission pamphlet. Even if Members cannot read the entire document. I recommend the summary, which is only two and a half pages. The Audit Commission, a wholly independent organisation, makes it clear that the main reasons for council tax rises are due to pressures from central Government.

Sir Paul Beresford

I am no fan of Torbay council, which is renowned as a not especially competent Liberal authority, but it is one of the councils that have been capped. Indeed, not only have the Government capped the council but they have loaded it with 24 comprehensive performance assessments next year, which will cost Torbay about £2.5 million. If gearing is the same—at one for four—that is £10 million extra on the council tax of Torbay residents.

Mr. Osborne

My hon. Friend gives a powerful local illustration of the general problem. I suspect that all Members—even though Labour Members would not admit it—are aware of examples of the red tape and centrally directed targets that are being imposed on their local councils and that have led to huge increases in people's council tax bills. People on fixed incomes or on incomes that are inflation–linked are struggling to pay those huge bills. That includes not only those aged over 70 but anyone whose income is inflation–linked, for example, people working in the public or private sector whose salaries rise only by inflation.

We heard an interesting exchange about the alternative proposed by the Liberal Democrats and it is fair to say that the hon. Member for Northavon struggled to explain the fairness of an average couple paying £630 a year more under his proposal—not the super-rich, as he implied, but the kind of people that the Liberal Democrat leader was referring to when he said on Radio 4's "Today" programme that the middle classes should pay more as well. Those are the people at whom he is directing the proposal.

The hon. Gentleman also struggled to explain what had happened to the Liberal Democrat promise to take £100 off people's council tax bills. For the greater information of the House, I have one of the leaflets that the Liberal Democrats distributed during the Brent, East by-election, which makes it absolutely clear that, as a first step, Every Council Tax payer in the country would see their bills cut by £100 in the first stage of the Liberal Democrats plans for a fairer tax system. So there it is.

The hon. Gentleman, whom I have some time for, made a better stab at defending the fact that the Liberal Democrats have abandoned his policy than did his party leader—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. The umbilical cord connecting what the hon. Gentleman is saying to the terms of the Bill is stretching very thin indeed, and there may be other occasions when it would be more appropriate to develop the argument on which he is now embarked.

Mr. Osborne

I will, of course, take your advice, Mr. Deputy Speaker, and not explore alternative ways of alleviating the pressure on council tax payers, although I hope that you will allow me to say that the poor old hon. Member for Brent, East (Sarah Teather) still has that proposal on her website, so no one has told her that the Liberal Democrats have changed their policy.

The hon. Member for Northavon made one decent point in his speech: the Bill is not a solution to the problem of high council taxes, however it is billed; nor does it have any direct connection, as he properly pointed out, with council tax—hence its rather anonymous name, the Age-Related Payments Bill, which tells everything about the fact that it is not linked to the problem that it is designed to solve.

Of course, the second issue that the Chancellor had in mind was the problem of low pensioner incomes and the proportion of those low incomes that is now swallowed up by the council tax. It is interesting to look at the figures. I am not sure whether these figures were quoted by other hon. Members, so it is worth mentioning them now. Since 1997, 40 per cent. of the increase in the basic state pension for a typical single pensioner and a third of the increase in the basic state pension for a typical pensioner couple have been taken up in higher council tax bills. A huge proportion of pensioners' incomes is involved, but the Bill does not tackle the root problems.

The Minister and other hon. Members mentioned council tax benefit and it is worth reminding ourselves that we have a benefit that is supposed to tackle the problem of people unable to pay their council tax bills. The Government should not need to introduce new primary legislation to provide payments to help people with council tax bills because such a benefit already exists.

The Government cannot rely on council tax benefit to help poorer pensioners because fewer than two in three of eligible pensioners claim that benefit. It is interesting to note that that represents quite a fall on the figure in 1998, when more than 75 per cent. of eligible pensioners claimed their council tax benefit. I have never seen a Government explanation of that fall. There has been a drop in the take-up of council tax benefit and plenty of evidence suggests that that low take-up is particularly skewed towards the poorest and older pensioners. Instead of trying to tackle the problem with council tax benefit, the Government have introduced this sticking-plaster solution to give all older pensioners a universal payment.

One should note in passing that it is good that the Government now have enthusiasm for universalism and believe in non-means-tested, universal benefits. Perhaps, when the Pensions Bill is debated on the Floor of the House next week, the Government will make a policy U-turn—they have made lots of U-turns recently—to support an increase in the basic state pension by linking it to earnings.[Interruption.] I am sorry, would the hon. Member for Harwich (Mr. Henderson) like to intervene?

Mr. Deputy Speaker

Order. I am sorry to interrupt the hon. Gentleman, but there has been far too much noise from the Parliamentary Private Secretaries' Bench, which, by tradition, is an area that should be silent.

Mr. Osborne

In the three years that I have been a Member, I have found that those on that Bench are normally the most vocal, Mr. Deputy Speaker, whatever the tradition is.

The Bill will tackle neither of the twin problems of high council taxes and low pensioner incomes. Indeed, as my hon. Friend the Member for Eastbourne said in his opening speech, the Bill has been given a drubbing by various organisations that speak up for pensioners. It is worth reminding the House that the director general of Age Concern said: It is utterly scandalous that the average council tax bill is rising by more than double the increase to the basic state pension. Many pensioners will be dreading their council tax bill dropping through the letter box and the latest £100 payment from the Government will not ease the burden for many. Help the Aged said: There would be no need for gifts like this if the Government was to review its fixation with means-testing. The National Pensioners Convention said: One-off payments such as this are not the answer to pensioner hardship. They are often seen by the public as just a cynical attempt to grab votes. The "Is It Fair" campaign said: Basically what the Government is doing is tinkering with a system that is fundamentally flawed … interestingly we now learn that to make good on their promise, the Government needs to pass a bill through Parliament that could take months. This is no consolation at all to those who cannot afford to pay. It is worth mentioning some of the specific questions that hon. Members—mainly my hon. Friends—asked the Government during the debate and reminding the Minister that he should address them when he replies. In particular, my hon. Friend the Member for Eastbourne asked questions in his introduction and they were reiterated by my hon. Friends the Members for Spelthorne, for Mole Valley and for Christchurch.

First, there is the question of why pensioners must wait until after Christmas to receive the payment if it is supposed to help them to pay council tax bills. I thought that that question was very effectively put in the debate. Why must people wait until the beginning of next year, when the bills were sent out in April? Indeed, if pensioners are paying their council tax in 10 monthly instalments, they will have finished paying them just as they get the money that is intended to help them make those payments. There is no logic to that, so perhaps the Minister will address that point.

Will the Minister justify the exclusion of 65 to 70-year-olds? Obviously, there is a question of cost if £100 is to be paid to all people over 65, but did the Chancellor or the Department consider making a smaller payment to all pensioners? Of course, that could have been an option. Why did the Chancellor make his decision? If the Under-Secretary says that he wanted to target the payment on older pensioners, why does the Bill give the Government power to make future payments to people aged 60 or over? In what circumstances would such payment be justified?

My hon. Friend the Member for Christchurch said that people over 70 who die before the qualifying week will lose out. They will lose out in a big way as they will no longer be with us, but their widow or widower will lose out on the payment, thus exposing the absence of a genuine link with the payment of council tax bills. The Minister for Pensions addressed only in passing the question of why the Government are asking Parliament to give them authority to make one-off payments in future. What is the principle or theory behind future one-off payments, if that is not a contradiction in terms? Why do the Government feel that they need power to provide payments for people aged 60 and over?

When the winter fuel payment was introduced, we were told that it was a one-off payment, but it has since been confirmed every year. Will the one-off council tax payment be repeated next year? I would put a lot of money on that outcome, as it would be only weeks before the general election. However, what about the year after if, God forbid, Labour is re-elected? Will the one-off payments continue on a regular basis and, if so, could they still be described as one-off payments? Will the Under-Secretary explain why in the Bill the Government are taking on themselves the power to make a payment not just this year but in future years and, indeed, for different age ranges?

As I said when discussing the principle behind the Bill, it is a cynical piece of legislation that does nothing to tackle soaring council tax bills—council tax payers are well aware of that—or the low pensioner incomes that mean that pensioners cannot pay those bills. In time, the Government may move towards our policy of linking the rise in the basic state pension to earnings. We will support the Bill, because any help for pensioners to assist with the payment of council tax bills is worth while, but we must wait for a Conservative Government for a lasting solution to the pensioner income problem and, indeed, the council tax problem.

3.31 pm

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond)

I have experienced a wave of nostalgia in our debate, as in recent weeks I spent many happy hours in Committee with the hon. Members for Eastbourne (Mr. Waterson) and for Tatton (Mr. Osborne) discussing the Pensions Bill. On Second Reading, they voted against that Bill, which will set up the pension protection fund to make sure that people do not find themselves in the circumstances in which many others have already found themselves, a measure lauded by the Leader of the Opposition in Prime Minister's questions this afternoon.

I therefore expected the Conservatives to vote against the Second Reading of the Age-Related Payments Bill. Indeed, I became increasingly convinced that they would do so when I heard the hon. Member for Eastbourne say that the Bill was blatant electioneering and an election bribe. In response to a question from my hon. Friend the Minister for Pensions, however, he said that he would vote for the Bill, even though, according to him, it is a panic measure and an election bribe. I bet that on the doorsteps this weekend and over the next few weeks, the Conservatives will tell people that they will continue with the payments after a general election if, indeed, they ever have the opportunity to do so. They have told the House one thing, but will tell their constituents another

Mr. Waterson

I am sure that it is only battle fatigue after Committee, but the Under-Secretary may wish to correct what he said about my party voting against the Pensions Bill on Second Reading. We voted for a reasoned amendment, which, of course, is the only procedural way of expressing concern about a Bill—those concerns are even deeper now—without voting against the measure in its entirety.

Mr. Pond

I am even more puzzled. The hon. Gentleman declined to give the Pensions Bill a Second Reading because he had concerns about it. Almost every Opposition Member who has spoken this afternoon has expressed concern about the Age-Related Payments Bill, but they have not declined to give this small Bill a Second Reading. I smell a whiff of opportunism in their approach to the two Bills dealing with pensions.

The hon. Member for Eastbourne spent much of his speech bemoaning the fact that we are using primary legislation to introduce the measure. I doubt that the 5 million older pensioners who will get the benefit of the extra £100 will say, when that payment arrives, "This is shameful. This had to go through on primary legislation. I'm not accepting this. It should have gone through on regulations." That will be of little interest to the 5 million people who will get real help from the measure.

The hon. Gentleman mentioned our council tax benefit take-up campaign, which I think he welcomes. That measure runs alongside this one to give additional help to older pensioners, many of whom, we know, were hurting as a result of increases in the council tax last year. Through council tax benefit, we have made sure that we put every effort into getting the help to those who are entitled to and need it, and in the Budget the Chancellor introduced additional help for those very people. The hon. Member for Eastbourne and other hon. Members are wrong to suggest that take-up of council tax benefit is getting worse. The fact is that more people are entitled to council tax benefit as a result of the changes we made with pension credit. We increased the numbers by almost 2 million. Many of those people still have to get the information necessary to get the benefit that they are entitled to and need.

Mr. Wilshire

Does the Minister find it curious that somebody who is getting only 50 per cent. of the maximum council tax benefit gets the same £100 as the person who gets the full council tax benefit? By definition, the person who gets the additional council tax benefit is in greater need than the person who gets only 50 per cent., so why does the scheme not address that problem?

Mr. Pond

As I said a few moments ago, we are seeking to help people in that position in a number of ways. People who are on low incomes for a range of reasons will get help from council tax benefit, whether they are over the age of 70 or below that age, if they are on a low income. We are providing additional help for those over 70 because we feel they have additional need for extra help.

Mr. Chope

Will the Minister give way?

Mr. Pond

I will make some progress, if I may. The hon. Gentleman had quite long enough to develop his thoughts. I will give him an opportunity in a few minutes to come in.

A number of Conservative Members tried to turn the debate into one about council tax rises. That is not what the measure is about, but since they have done that, and since they like the band D comparisons on council tax, I can tell them that for 2004–05 Tory authorities have seen an increase of 5.4 per cent., Labour authorities 4.7 per cent. and Liberal Democrat authorities 6 per cent. I am grateful to the Liberals' local election manifesto 2004 for telling us that Liberal Democrat–controlled authorities over the last 6 years have seen average council tax rises of 6.9 per cent. compared to rises in Labour councils of 6.8 per cent. and Tory-run councils of 8.9 per cent. Far be it from me to challenge the Liberal Democrats on any of their arithmetic.

Sir Paul Beresford

The hon. Gentleman is falling into the same fictitious trap as the Minister for Local and Regional Government did on the radio. He picked out one local council and said that its increase last year was 40 or 45 per cent., but as was pointed out to him, it is the bill on the mat that counts, and the bill in that local council was consistently the lowest in the country. So percentages do not count. What counts is the bill on the mat.

Mr. Pond

I thank the hon. Gentleman for that. It is worth him considering what the bill on the mat means for people working in Tory authorities, as against Labour authorities or Liberal Democrat authorities. I can tell him that the bill on the mat in cash terms is a lot smaller in Labour authorities than in Tory or Liberal Democrat authorities. If he wants to play the argument that way, he can do so, but he will not win the argument.

Hywel Williams

Will the Minister give way?

Mr. Pond

I shall make a little more progress, if I may.

A number of hon. Members asked what would happen in future years, under clause 7. It is true that the Bill provides for a one-off payment this year. The Chancellor made that clear. However, if the House approves the measure, we will take additional powers to give us flexibility so that in future years, if the circumstances are appropriate, the Chancellor may decide to give similar help or some other form of help, using the mechanism of the Bill. There is no commitment to do so, but it seems sensible to make sure that we have that flexibility.

Mr. George Osborne

What are those appropriate circumstances?

Mr. Pond

The hon. Gentleman must wait until the Chancellor considers those matters, but the circumstances will be fair, prudent and just, which are the principles that drive the Chancellor of the Exchequer in all his considerations.

I am sure that the hon. Member for Eastbourne did not intend this, but he caused great embarrassment this afternoon by quoting a good friend of mine, Rodney Bickerstaffe of the National Pensioners Convention. He sits on the Benches of the party that cut pensioner incomes by £10 billion, and he quoted Rodney Bickerstaffe in support of his argument for spending the money on the basic state pension, which, like the Bill, would result in a universal increase in pensioner incomes. The difference is, of course, that an increase in the basic state pension would not help the poorest pensioners, but this across-the-board payment is not offset against other benefits and will help the poorest pensioners.

This targeted help for the over-70s, winter fuel payments and free TV licences for over–75s cost around £3 billion a year, and those measures are cost-effective because they help the poorest pensioners as well as the rest. By comparison, the suggested increase in the basic state pension to £105 would cost an extra £10 billion. As with other measures, we concentrate help on those who need it most—older pensioners and those on the lowest incomes. I remind the hon. Member for Eastbourne that the increase in the basic state pension between 1997 and this April was 7 per cent. above inflation, and that it cost about £6 billion a year.

The hon. Member for Tatton asked why we are not making the payment until after Christmas, but he must brief himself more carefully. The payments will start to come on stream from November, and we hope to make all 5 million payments before the end of the year. That is not an absolute commitment, but it is our objective.

The hon. Member for Northavon (Mr. Webb) criticised the £100 payment to ease the burden of council tax because it is across the board. However, the hon. Member for Tatton reminded us that, until recently, Liberal Democrat party policy was to make a payment to everybody, rather than just the over-70s and those who are most in need. That policy was quietly dropped after the Brent, East by-election, although the hon. Member for Brent, East (Sarah Teather) is apparently unaware of that change.

Several Conservative Members suggested that the payment is an election bribe. That prompts the question: why are they going to vote for it? If we were offering an election bribe, we would promise that a Labour Government would continue to make the payments after the next election, but we are not making that promise, because the payment is a one–off. That does not sound like the work of a Government more concerned about the ballot box than the needs of older pensioners.

Mr. Chope

Does the Minister accept that clause 7 contains a power that will enable him to ensure that only people who voted Labour get paid next time?

Mr. Pond

I am not going to bother to respond to that.

The hon. Member for Northavon was rather defeatist as regards ensuring that people who need council tax benefit get that help. I can tell him that we are absolutely determined to ensure that they do get it. I accept that it is means-tested—it always has been. We did not invent council tax benefit any more than we invented council tax. I accept, too, that by increasing the numbers of people who are eligible for that help and get it, we will in the process increase the numbers of people who are on means-tested benefits. However, I do not intend to apologise for the fact that we are ensuring that people get the help that they need and to which they are entitled, especially given that we are today seeking to introduce the £100 universal payment for all pensioners aged over 70.

Opposition Members seem to find difficult the notion that the Government are determined to get help to pensioners, and the most help to those who need it most, but in different ways—by boosting the basic state pension, by introducing universal payments such as the £100 and the winter fuel payment, and by accepting the need for some income-related benefits. Through those measures, we are spending £10 billion a year more on pensioner incomes than when we first came to office. That compares with the £10 billion cut in pensioner incomes under the last Conservative Government.

The hon. Member for Mole Valley (Sir Paul Beresford) suggested that this proposal is the result of the Government's policy on council tax. I remind him that his party's policy on council tax is to cut grant to all local authorities by £2.4 billion, which is equivalent to a 10 per cent. increase in band D bills; to cut the grants to poorer councils; and to refuse to use capping powers even against councils such as Shepway, which, as we heard, is in the constituency of the right hon. and learned Gentleman the Leader of the Opposition, and which increased band D council tax by 28.9 per cent.

Mr. George Osborne

It is a Liberal Democrat council.

Mr. Pond

Yes, it is—I should read that into the record, too.

The hon. Member for Mole Valley suggested that we need to get off the backs of local authorities. I have to tell him, in the presence of my right hon. Friend the Minister for Housing and Planning, that he is a little out of date with the progress of the Government's discussions. We are determined to work in partnership with local authorities, and that is what we are doing. We are giving them the flexibility to make local decisions according to local needs, but in such a way as to ensure that basic minimum national standards apply. That is the context in which we have increased Government grant by 30 per cent. in real terms. Most local authorities have behaved very responsibly this year in proposing council tax increases that are half what they were last year. In the case of those few authorities that decided to go their own way, we had to consider using our capping powers.

The hon. Member for Mole Valley prayed in aid the Audit Commission report, which, it was suggested, blamed the Government for high council tax increases. However, the chair of the Audit Commission, James Strachan, has said that there are a number of factors behind the rises and that trying to find single point of blame is not only counter-productive, but not borne out by the evidence. The Government are trying to do whatever we can to ensure that the implications of that are minimised in terms of the effect on the poorest pensioners and those on low incomes generally.

The hon. Member for Spelthorne (Mr. Wilshire) went through the Bill clause by clause. We thought that perhaps he would speak long enough to qualify for the £100 payment. He made some interesting detailed points, which will be considered in Committee, where I look forward to debating them with him. I am sure that he will want to put himself forward to serve on the Committee. However, I must ask my officials to contact his council because he appears to believe that the local authority meets part of the cost of council tax benefit when the central Government subsidy finances all properly made payments of such benefit. I will happily ensure that he and his local authority are clear about that.

Mr. Wilshire

Is the Minister saying that, because my council has paid out more than the Government's help, he will send it a cheque to cover the loss that it is reported to have made? Or does he accuse the council of telling me an untruth?

Mr. Pond

I cannot promise to send the hon. Gentleman a cheque. I shall send him an official if he likes—I am sure that he would be grateful for that.

I do not know how to respond to the hon. Member for Tatton. Again, he told us everything that was wrong with the Bill but said that he and his colleagues would vote for it. It is difficult to know exactly where one stands with an Opposition who are prepared to say one thing in the Chamber and another on the doorstep.

The Government are proud that we are giving extra help of £100 to older pensioners through the measure. We believe that they need and deserve that additional help. Those who have listened to our debate will recognise the cynicism and opportunism of Conservative Members, who are prepared to criticise every clause but ultimately do not have the courage to vote against the measure. With our other measures, the Bill adds £10 billion to the amount that we spend each year on pensioners. I repeat that we are proud to spend the money—pensioners deserve and need that help. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.