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House of Commons

Monday 18 December 2000

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]


The Secretary of State was asked--

Means Testing

2. Miss Anne McIntosh (Vale of York): What representations he has received on the impact of means testing on the take-up of benefits; and if he will make a statement. [141802]

The Secretary of State for Social Security (Mr. Alistair Darling): The fact that almost three quarters of a million people have responded to the latest minimum income guarantee take-up campaign suggests that, until now, lack of awareness was probably a more significant influence.

Miss McIntosh: Can the Secretary of State explain why he has cancelled the quinquennial review of the Benefits Agency? Is the Department of Social Security trying to hide something sinister, or is he trying to frustrate the House's scrutiny of the work of the Department and the agency--perhaps to prevent the discovery that the Government's means-testing policy of

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the past five years has resulted in lower benefits take-up rates? Is he concerned that his previously clean-shaven image is being severely tarnished?

Mr. Darling: I can see that the hon. Lady spent a weekend practising her question. In fact, she asked two questions. As it is Christmas, Mr. Speaker, perhaps you will allow me to address both important issues that she raised.

First, the House will be aware that, on 15 March this year, I think, the Prime Minister announced that the Government intended to bring together the Employment Service and those parts of the Benefits Agency that deal with people of working of age to create a new agency, which will be established next year. Consequently, as the Government have already decided to bring together the Benefits Agency and the Employment Service, the usual quinquennial review of the Benefits Agency--which, in simple terms, is conducted to establish whether the Benefits Agency should continue for another five years--was clearly rendered redundant. That is why there is no quinquennial review.

Additionally--for the sake of completeness--the hon. Lady will be aware that, at about the same time,I announced our intention to establish a separate organisation dealing with pensions and pensioners' interests. That deals with the first part of her question.

Secondly, one of the interesting facts to emerge from the take-up campaign is that three quarters of a million people have responded to that campaign. To me, that implies that stigma, or reluctance to claim, is not the big disadvantage that people thought it was. The fact that three quarters of a million people have responded to the take-up campaign implies that they are interested and would like to know more about the minimum income guarantee.

It is interesting also that, of those who did not receive the minimum income guarantee, just over half failed to do so because they had higher incomes than the current minimum income guarantee--which is why we are increasing the minimum income guarantee to £92 next year, and to

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£100 in 2003--and 41 per cent. failed because they had too much money in the bank. As the hon. Lady will be aware, we are the first Government to get rid of the completely arbitrary and unreasonable limits that stop people receiving help just because they have modest sums in the bank. That is why we propose to scrap the capital rules.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich): My right hon. Friend will know that many lone parents are working very hard just to keep their heads above water. As failure to claim the guarantee is, in many cases, just ignorance, and as the world is full of ad men trying to get money out of the Government, will my right hon. Friend find someone very imaginative to do a campaign to bring that very excellent support to the attention of those who most need it?

Mr. Darling: I agree with my hon. Friend that we want to get all those who are entitled to the minimum income guarantee to claim it. That is why we ran the advertising campaign to which three quarters of a million people have responded. However, as I told the House a moment ago, until now, the problem has been that many people who would have qualified for help have failed to do so because there is such a low limit on the sum that they can have in the bank before help is excluded. That is why we are scrapping the capital limits, as many of us have advocated doing for years. Additionally, in two years, we are introducing the pension credit so that, for the first time, saving is rewarded. We will be able to say to people that it always pays to save. Interestingly, Conservative Members oppose both those measures.

Mr. Steve Webb (Northavon): May I raise the issue of a benefit that has one of the lowest take-up rates--council tax benefit? A couple of weeks ago, the Department of Social Security published figures showing that 1 million pensioners--about 1,500 people per constituency--are failing to claim an average of £300 each to which they are entitled. Given that the number of people is, if anything, increasing slightly, is the Minister concerned about it? What does he plan to do specifically about council tax benefit?

Mr. Darling: We are anxious that those who are entitled to benefit should receive it. Although we cannot make people claim money to which they may be entitled but which, for one reason or another, they do not want to claim, I think that two measures will help pensioners. First, as I said in reply to the hon. Member for Vale of York (Miss McIntosh), we are establishing a new organisation specifically to ensure that we can do more to get to pensioners money to which they are entitled far more quickly and effectively.

Secondly, we are greatly simplifying the claims process and the claim form itself. As I have said before, I am confident that we can get rid of the current 40-page claim form and reduce it to fewer than 10 pages. I think that that will be a great help to all those who are entitled to benefits.

Mr. Ian Davidson (Glasgow, Pollok): Has my right hon. Friend the Secretary of State paid adequate attention to the percentage of poorest people applying to take up benefits? I appreciate that many more people are filling in the forms, but many of us are not convinced that

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benefits are reaching those in greatest need. Will the Minister ensure that we focus on the poorest, many of whom retain the sense of stigma attached to claiming from the state?

Mr. Darling: I disagree with my hon. Friend about the reluctance to claim. The Department of Social Security wrote to 2.5 million people whom it thought might be entitled to the minimum income guarantee, and 750,000 responded. That is far more than ever before.

Mr. David Willetts (Havant): How many were successful?

Mr. Darling: Just under half were successful.People are prevented from getting the minimum income guarantee either because they have too high an income--we are addressing that by raising the minimum income guarantee to £100 from 2003--or because they have too much money in the bank; that is, they have more than the permissible amount.

The Conservatives argue that, because they are against the minimum income guarantee, they would give less to poorer pensioners. That is an absurd position, especially for the party that presided over a huge growth in the number of pensioners living in poverty. I agree with my hon. Friend that we need to do more to ensure that those who are entitled to the minimum income guarantee get it. We shall do more, but the evidence suggests that it is not stigma or fear of claiming that get in the way, but the current rules, nearly all of which we have pledged to get rid of over the next couple of years. That will mean that more people will get the help to which they are entitled.

Mrs. Jacqui Lait (Beckenham): In order to assure us that the ranks of those on means-tested benefit will not be added to by Equitable Life policyholders, will the Secretary of State tell us whether either he or his Department has been in touch with that company or with the Financial Services Authority? If so, what advice did he give or receive? If not, what were his reasons--as a champion of older people--for not doing so?

Mr. Darling: The answer to that question is that responsibility for the prudential supervision of insurance companies lies with the Financial Services Authority.

Housing Benefit (Students)

3. Mr. Simon Thomas (Ceredigion): If he will make a statement on the payment of housing benefit to eligible students with loans. [141803]

The Parliamentary Under-Secretary of State for Social Security (Angela Eagle): Most full-time students are supported by the student support system, which is designed to meet their needs. Full-time students in vulnerable groups and all part-time students are entitled to claim housing benefit.

Mr. Thomas: The Government's policy of taking into account student loans as full income for housing benefit purposes is affecting mature students in particular, including students at the universities at Lampeter and Aberystwyth. Why count loans as income at all? After all,

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they are usually paid back with interest at the end of a certain period. Why count loans as income in full, especially if an individual student has not taken out a loan or has taken out only a very small loan?

Angela Eagle: It is our policy to count all eligible income, and that includes student loans. At the moment, only part-time or vulnerable students can apply for housing benefit. Extra protections are in place to ensure that we do all that we can to enable people in those categories to take advantage of the right to study. Changes will be introduced to the treatment of student loans in income-related benefits, which will mean that lone-parent students will be likely to receive more help during July and August than they have previously.

The Department for Education and Employment will also introduce the child care grant, based on the cost of child care, which will help students who look after dependent children. I hear what the hon. Gentleman is saying, and we are doing our best to tailor the system to enable those who wish to take advantage of education to do so in a practical way.

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