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Mr. Steve Webb (Northavon): I am pleased to follow the hon. Member for Havant (Mr. Willetts) and wish him well if he is off to spend an evening in a council house. I hope that he will report back to the House on that.
The orders deal with the benefits for the coming financial year and the guaranteed minimum pension. With one or two exceptions, they involve indexation in line with inflation and some above-inflation increases in the retirement pension, which we welcome. However, the House will be aware that, alongside the order, the Government Actuary prepares a report on the state of the national insurance fund. I listened carefully to the Secretary of State; I do not recall him mentioning the fund
I was startled to readperhaps I should have been aware of it beforehandthat when the Government Actuary sat down in November 2000 to forecast national insurance revenue for the current financial year, he estimated that it would total £55.5 billion. The outturn is more likely to be £57.9 billion, or £2.5 billion of extra revenue in a year. Therefore, we must set some of the Secretary of State's announcements in the context of a £2.5 billion overshoot of revenue to the national insurance fund.
The Government Actuary indicates that the balance of that fund in the year ending 2001 was 41 per cent. of benefit expenditure and payment; in 2002, it will be 47 per cent; and in 2003, it will be 52 per cent. Therefore, the balance in the national insurance fund is substantial and growing. Set against those huge sums and the fact that there is £2.5 billion more than was budgeted for, do we judge this as a generous or a mean settlement?
We must look at the welcome announcement of the relaxation of the hospital downrating rules. Perhaps I am not the only hon. Member who discovered thatas usual, not in the form of a statement from the Secretary of State but about four hours earlier through a press release that mysteriously appeared on my fax machine, which said:
Hospital downrating rules have been relaxed somewhat, so instead of pension being cut after spending six weeks in hospital, it is cut after 13 weeks in hospital. Clearly, that is a step in the right direction. The Secretary of State said that that would cost £40 million a year. The overall cost of the pension downrating is about £60 million a year. When we set that against the £2,500 million that the Government had not expected a year ago, we start to see how parsimonious the concession is. The Government could have paid for the abolition of the downrating of pensions over the next 40 years but they chose not to go the extra mile; they have moved barely an extra inch.
Although a few pensioners will welcome the announcement, when they read the small print they will discover that if they go into hospital this week they will still have their pension downrated after six weeks. Next monthindeed, this time next yearthey will still have it downrated after six weeks.
Mr. Tim Boswell (Daventry): Will the hon. Gentleman reflect on the possibility that, unless the transitional rules are very carefully scoped, a pensioner who falls within the six-week period before the operating date in April 2003 may have benefit withdrawn, but a pensioner who falls after that time may not? That could create a further anomaly.
Mr. Webb: I am sure that the hon. Gentleman is right. I understand that the changes come into force in October 2003 when the pension credit is introduced. The argument in principle is simply not there. People have paid for their pensions all their lives. If they have paid for a private pension they are allowed to keep it, but if they get a state pension some of it is taken away from them.
The Government say that there is double provision, but where is the evidence? What studiesI hope that the Minister will tell us when he respondshas the Department done of the costs that people incur as a hospital in-patient? The Department may say that they save money on food, but what about the extra costs that they incur? What about when a spouse comes to visit and pays for hospital car parking or for transport? What about the other costs, regardless of whether someone is in hospital? Has the Department any evidence that people are better off during a hospital stay? I suspect that it has no evidence whatever, and until it produces such evidence there should be no hospital downrating, not merely the half-hearted concession that we have heard about.
I mentioned that not all the rates in the orders have been uprated in line with inflation. I looked long and hard, and there it was on page 16 of the order: the age addition to the pension mysteriously remains at 25p. Year after year Ministers acknowledge that it is absurd and an insult to pay people 25p, yet they do nothing about it. Is not it clear that the poorest pensioners in the land are not merely the oldest but the oldest who fail to claim their minimum income guarantee? They do not get the MIG. They do get their pension. Twenty-five pence is all they get on top of their basic pension.
Mr. Howard Flight (Arundel and South Downs): Does the hon. Gentleman agree that, as several pensioners in my constituency have pointed out, the cost to them merely of updating their pension book will be more than that pathetic 25p?
Mr. Webb: It is absurd. The fact that the cost of a first-class stamp exceeds that amount highlights how absurd it is, yet it is a perfectly good mechanism for delivering guaranteed cash to poor pensioners. In fact, it is the only genuine guarantee. When I take over from the
The Government Actuary's report on the orders highlights another worrying factor that the Secretary of State again glossed over. It refers to the lack of information before the House about some key elements of the pension and benefit system because of national insurance recording system 2. Page 10 of the report says:
All the benefits in the orders are fine if people receive them. However, far too many of our constituents fail to get the benefits that they are being promised today. The Secretary of State has had his advertising campaigns, and Thora Hird, and people ringing upbut how many people, especially pensioners, are still not getting the money that they are entitled to? That number is still nearly half a million for the minimum income guarantee[Interruption.] Does the Secretary of State question that number? I do not know why he is shaking his head.
Nearly half a million people are not getting their minimum income guarantee, and probably double that number are not claiming their council tax benefit. Year on year, successive Governments have used council tax to bring in extra cash through a mechanism of taxation for which they do not get the blame, so that has become an increasingly heavy burden for pensioners in all parts of the country. The fact that council tax benefit misses so many pensioners is an increasing source of concern.
What plans do the Government have to get the council tax benefit to pensioners? It has one of the lowest take-up rates of any benefit, yet it can be critical for pensioners just beyond the reach of the other means-tested benefits. What is the Government's strategy?