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Maria Eagle: The hon. Member for South-West Bedfordshire (Andrew Selous) is a very honest man. My hon. Friend has received his reply.
I do not want to try the patience of the House. I hope that I have dealt with the issues in relation to new clause 5 in detail and that Conservative Members, although they may not like what I have said, will accept that I have at least attempted to answer their points.
Interestingly, when the hon. Member for Hertsmere referred to amendments Nos. 4 to 12—he did not technically move them, of course—he mumbled something about them reducing complexity. He went on to say that they were so complex that he could not and would not deal with explaining to the House what they meant. I was hoping that he would do so, because, on giving them a close look after they had been tabled, I hoped that I would receive a little guidance in his opening remarks.
Maria Eagle: Oh, the hon. Gentleman is feeling tempted now. I shall not tempt him too much. Given that he did not set out clearly precisely what the amendments were about and what he was about—one wonders how they got written, given that nobody is quite sure what they are about—I must crave the indulgence of the House and deal with them in relation to my interpretation of them rather than the interpretation of the Members who tabled them.
Mr. Boswell: Perhaps I can assist the Minister, as my name is also attached to these amendments, although, for technical reasons, I did not move them. Indeed, it would take a long time to explain them. They are, as it were, derivatives of amendments moved in another place by the late and sincerely lamented Baroness Castle. They are intended to be entirely neutral in effect. The reason they are more complex than the amendments moved by her and Baroness Turner in the other place is that they have been upgraded to take account of at least two of the objections made by the Minister's colleague Baroness Hollis, and we felt that her third objection could have been dealt with in another way. They therefore have a degree of commonality of pedigree, even if the Minister is not prepared to accept them.
Maria Eagle: We are back to cricket again. I agree that, given that explanation, the amendments have a degree of pedigree behind them. On reading them, it was apparent that there was a great deal of ingenuity behind them—I have even written "ingenuity" on my notes. Even though I thought that they were tabled by the Conservative party, I was about to concede that they were ingenious, which they are. If we accept the new clause and amendments at face value as an attempt to improve the Bill, I have some points to make about their faults.
Clearly, clause 3 is a complex piece of work, and it was recognised in Committee that it was not the clearest drafting that we have ever seen. When one tries to set out a mathematical calculation in words, one is already at a disadvantage—that is why we have mathematics—but that is what the parliamentary draftsman who produced clause 3 had to do. The calculation of the pension credit
in the Bill has two parts. First, a single pensioner who has an income below £100 will receive 60p a week for every £1 of savings that they have over £77, building to a maximum of £3.80 a week for someone whose weekly income from pensions and savings is £100. Secondly, if a single pensioner's income is above £100, the weekly maximum savings credit of £13.80 starts to reduce by 40p for every £1 of original income. That is the basic calculation.To achieve the same end, the new clause and amendments introduce an income disregard. The way they work is quite clever, because it seems that the calculation that they introduce works across the entire income range to produce the same figures as the calculation in the Bill. That is why I use the word "ingenious"; they are ingenious. I am not absolutely sure, however, that the calculation is any more transparent than the one in the Bill. In addition, there is a flaw. The current Bill distinguishes between the two components of the pension credit—the guarantee credit and the savings credit—whereas, effectively, the new clause and amendments do the calculation in a different way, which brings everybody's income below the guarantee level using disregards. That was put forward as more simple because, I presume, there is one element instead of two. I hope that I am getting it right.
Maria Eagle: Good. The problem with that is that the guarantee credit is a poverty alleviation measure and a passport to other benefits, receipt of which is dependent on receipt of guarantee credit. Without guarantee credit, below which everybody's income is reduced before being topped up, there is a difficulty in how to identify those who might be eligible, by passporting to other elements of income support—for example, severe disability premium and carers premium. That is one set of problems with the proposals.
Another defect is that the new clause would exclude pensioners with a downrated guarantee credit, because they were in hospital for more than 13 weeks, from benefiting from the savings credit. As the House knows, or at least, as Members on the Committee know, savings credit should not be downrated. Were we to adopt the proposed formulation and calculation, we would be prevented from being able to differentiate those who had guarantee credit and savings credit, and which one should be downrated.
Mr. Boswell: I had, in a sense, already trailed the Minister's objection to one point about the passporting of benefits. If we had gone on at length about the approach that we would have taken, we would have said that only people with incomes not exceeding the appropriate minimum guarantee would be passported. Although I have not considered the point in detail, I think that it would equally have been possible to have maintained the savings credit about which she has also expressed concerns.
4.30 pm
Maria Eagle: That is interesting, but it still prompts the question: why bother doing the calculation in a different way if it means taking a different route to exactly
the same place? What is the benefit of doing that? We need two elements of the pension credit, because they are essential to enable us both to support the income of pensioners by way of the guaranteed credit and to make transparent—this is a main policy aim of the Bill—the fact that there will be a reward for saving. The hon. Gentleman's approach would remove that clarity, because it would not be clear that a specific element of the pension credit would be a reward for savings. That would have an impact on incentives. I know that Opposition Members do not always accept our point of view, but we believe that their approach would be bad in that regard.I hope that I have dealt with the amendments tabled by Conservative Members, so I shall move on to some of the points made by the hon. Member for Northavon (Mr. Webb). I intervened in his speech when he appeared to complain about our proposals for the alleviation of poverty. He suggested that, by increasing the amount of the minimum income guarantee—soon to be guaranteed credit—we would create a problem. However, I believe that we are helping to alleviate poverty. I would have thought that Liberal Democrats were in favour of that—they used to be.
Perhaps the hon. Gentleman is moving a bit closer to the main Opposition party in saying that he is not really in favour of alleviating poverty even though we inherited from the Conservative party, when it left office after 18 years, a far wider income disparity than existed when they came to office. We were very keen to do something about that.
Mr. Webb: I am never entirely sure whether the Minister is wilfully misrepresenting my position. I made it absolutely clear that we believe that there are two strategies for tackling pensioner poverty: the mass means-testing route or targeting by age. Each has strengths and weaknesses and each involves trade-offs. I made it perfectly clear that we did not oppose attacking poverty but that we thought that the Government's approach had damaged savings, and missed the people who do not claim under the complicated schemes. We think that there are better ways of alleviating poverty, and that is clearly what I said. We do not disagree about the fact that there should be a strategy for dealing with poverty.
Maria Eagle: The approach that the Liberal Democrats have chosen would not achieve that aim, whereas our policies will.
I assure the hon. Gentleman that I am not in the business of wilfully misrepresenting him. Perhaps he is in the business of not being quite as clear as he might be. I listened to him carefully and he basically said that targeting could be achieved without any form of means-testing—[Interruption]—without a form of mass means-testing is the phrase I think he used. He referred to using age as a proxy for poverty and signed up to the reasoned amendment on Second Reading that made that point. That is why I see a lessening gap between the policy of the official Opposition and the Liberal Democrats.
Both parties have referred to age additions as targeting without means-testing. The hon. Gentleman said that the biggest income gaps could be proxied by age, and therefore that age additions were a way of dealing with
the problem without resorting to mass mean-testing, as he put it. However, the family resources survey shows that the biggest income gaps are between people in the same age groups, not between people in different age groups. So his point is simply not true.The hon. Gentleman proposes to give extra money to people such as Baroness Thatcher. Whatever one thinks of her, she is a wealthy woman and has been rewarded for her work. He would give extra money to Baroness Thatcher because she is over 75 but not to a poor pensioner who is 60. If he really is suggesting that that is a way of targeting poverty, he has got it very wrong.
The hon. Member for Northavon suggests that we should pay the £2 billion that the pension credit will cost to the over-75s, but that would still leave three quarters of that group short of the current MIG level. When I asked him for his calculations for those who would be still on the MIG under his scheme, he was not able to provide them and he did not give his figures for what he might raise the pension to. However, if we were to raise the basic state pension to the current MIG level, which is probably higher than he would suggest, that would cost £9.7 billion net and it would not target the poorest pensioners. In fact, the poorest pensioners would have their benefit reduced pound for pound because of the income support rules and the 100 per cent. marginal rate of deduction. That would still leave 1.6 million pensioners entitled to the MIG. His policy would not even achieve his aims or deal with the problems with which the pension credit deals.
On amendments Nos. 1 and 2, points were made about those aged between 60 and 64. As we discovered in Committee, it is a difficult issue. The hon. Member for Northavon has also been fairly ingenious in coming up with a different way of achieving what the amendments he tabled in Committee tried to achieve. Amendments Nos. 1 and 2 seek to rectify the anomaly, as he sees it, of restricting the savings credit for men and women over 65 by making it available to both men and women from the same age as for the guaranteed credit, which is currently 60.
The amendments would set the minimum age for the savings credit at the qualifying age rather than the age of 65. The hon. Gentleman has used that device, and the qualifying age would apply to the guaranteed credit and to the savings credit. Under the Bill, the qualifying age is different for the guaranteed credit and the savings credit.
The problem with the hon. Gentleman's approach is that we still do not have equality in pension provision. I tried to make the point to him in Committee that his proposal would not work because we will not have equality in the basic state pension and pension provision by the state until 2020. The House will recall that the Pensions Act 1995 tackled the issue of gender inequality in pensions, but it recognised that the problems could not be dealt with overnight because pension saving does not operate in that way. Therefore, a provision was made that, between 2010 and 2020, the basic state pension age for women would rise over that time until it is equal to that for men. Until that happens, we will not be able to apply the Bill's provisions in a way that can avoid anomalies. That is the basic problem.
The amendments are slightly different from the ones that the hon. Gentleman tabled in Committee, but they still create the same problems. That is why I ask the House to reject them. They would still leave inequalities
between men and women at different ages even though they are in identical circumstances. Despite his ingenuity, the effects are the same. The Government cannot accept them because they would produce anomalous results such as the one that I referred to in Committee. Under his amendments, men between 60 and 64 might receive the pension credit but, once they hit 65, they would have it taken off them. We do not want our policy to create such anomalies.I give the hon. Gentleman every credit for his ingenuity, but the basic problem is the current inequality in state pension provision. We cannot overcome the problem until we have the equality that will take time to achieve. Try as he might and try as we did, we cannot do any better than to have the savings credit come into effect at age 65. It is regrettable that some people will lose out because of that, but there is nothing that we can do to put matters right unless we bring forward the age of equality between the genders. And we cannot do that.
I realise that I have been speaking for some time. I do not want to try the patience of the House too much, and I hope that I have dealt with the points raised. I also hope that the hon. Member for Hertsmere is not falling asleep as a result of my droning on, and that having heard my argument, he will withdraw the motion.
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