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Paul Holmes: I am sure that other hon. Members, like me, welcome the statement by the Minister for Pensions about disregarding compensation for industrial injuries. Many industrial workers in my constituency come to me with problems such as vibration white finger and asbestosis, so I am especially aware of the importance of that statement.
On amendment No. 3, however, I am disappointed that the right hon. Gentleman is still not prepared to listen to the almost universal advice of those whom he has consulted and from whom he has received comments. In particular, I note that he says that what the Labour-dominated Select Committee told him was completely wrong. I also note that Ministers cite the comments of Age Concern when it suits them—as they did twice today—but ignore its comments when they do not suit them.
All the advice received by the Government is that the measure will act as a disincentive to pensioners seeking work after retirement age. That is a serious issue, and I hope that they will come back to it with new proposals. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr. Evan Harris (Oxford, West and Abingdon): I beg to move amendment No. 17, in page 12, line 6, leave out from "means" to end of line 8 and insert—
'two people, who are not married, (whether of different sexes or the same sex) living as partners in an enduring family relationship,
(a) are to relationships of the full blood or half blood or, in the case of an adopted person, such of those relationships as would exist but for the adoption, and
(b) include the relationship of a child with his adoptive, or former adoptive, parents,
but do not include any other adoptive relationships.'.
The Bill does not allow the provision to apply to unmarried couples who are not heterosexual, which creates four problems. First, it is unequal. Secondly, it costs the taxpayer money, which is a concern to the Minister for Pensions. Thirdly, it is not compatible with the Human Rights Act 1998 to discriminate in that way against heterosexual couples, who will lose out on extra money that same-sex couples would get, because they are treated separately. Indeed, the House recently passed legislation that recognised the right to equality—
It being Six o'clock, Mr. Deputy Speaker interrupted the proceedings, pursuant to Order [25 March].
Dr. Harris: On a point of order, Mr. Deputy Speaker. I wish to put amendment No. 17 to the vote.
Mr. Deputy Speaker (Sir Michael Lord): Order. If the Question has not been proposed from the Chair, there cannot be a vote.
6 pm
Mr. McCartney: I beg to move, That the Bill be now read the Third time.
The Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Liverpool, Garston (Maria Eagle), will send the hon. Member for Oxford, West and Abingdon (Dr. Harris) a detailed reply on his amendment No. 17, if that will help him.
During the passage of this Bill we have heard much from Opposition Members about it extending means- testing. Obviously, they have not had first-hand, or sometimes even second-hand, experience of reliance on means-tested benefits. If they had, they would know that what we are proposing in the Bill is light years removed from the means-testing applied under the Poor Law and the assistance Acts before the war, and the National Assistance Act 1948 after it.
As my hon. Friend the Member for Hamilton, South (Mr. Tynan) reminded us so clearly on Second Reading when he recalled his childhood, means-testing was used in the 1930s to exclude people from income to ensure that they stayed poor. The purpose of the pension credit claim process is the exact opposite. It is about inclusion, to ensure that people qualify for the income to which they are entitled.
We will ask pensioners only for the information that we need to know to work out their combined income. For example, we will only need to know about their savings if they are over £6,000. Let us compare that to claiming assistance in the 1930s, when every penny had to be disclosed and, as a consequence, many households did not receive the support that they needed for food, household expenses and children and whole areas of the country were in abject poverty.
This is a landmark piece of social security legislation that will end centuries of unfairness, going back to the Poor Laws of 1598 and 1601. It will remove once and for all the disincentive to save for retirement. When it is introduced in October 2003, people with modest savings will see a reward for their efforts.
The Bill also marks another, although less obvious, break with the past. We are abolishing the criminal offence that could mean pensioners being punished for "wilful neglect" to maintain themselves. The origins of that provision go back centuries to the Vagrancy Acts and further. Those Acts enabled the courts to imprison a person who failed by his own neglect to maintain himself, or anyone he was liable to maintain, with a resulting charge to public funds. That offence dates back to 1713.
The 1948 Act repealed the Poor Laws. However, the interdepartmental committee that reported on the break-up of the Poor Laws in 1946 considered it necessary to retain the offence of failure to maintain. Although the Conservative party had two chances to repeal it—with the Social Security Acts 1986 and 1992—it remains to this day, albeit seldom used, in the shape of section 105 of the Social Security Administration Act 1992.
That offence will not be carried forward in the Bill. Along with the ending of the weekly means test, it sends out an important message to pensioners, to this effect: "pension credit is not a benefit of last resort or public charity; it is your income entitlement."
The Bill is an essential part of our pensions reforms—it will ensure that it will pay to have saved. Our ambition is for all pensioners to share in the nation's rising prosperity. We set out our plans for pensions reform in the 1998 Green Paper, which established a new framework for reforming both state and private pensions. The first stage was tackling pensioner poverty by introducing the minimum income guarantee to ensure that pensioners could enjoy a decent income in retirement. There are 1.1 million fewer pensioners below 60 per cent. median income than in 1996–97 and there are encouraging signs that we are reversing the trend of numbers of pensioners with relatively low incomes.
However, too many pensioners have not had the opportunity to build up a second pension, so our second stage concentrated on reform of the basic structure of pensions to make it possible for more people to save. For those who could not save, we introduced the state second pension. The state earnings-related pension scheme did not provide enough support for people on low earnings or for people with broken records. For those who could save, we have improved and extended the options for doing so through stakeholder pensions.
The third stage is to ensure that even those with modest savings will be able to see a reward for their thrift and effort through the pension credit. We are now beginning a fourth stage to deal with the complexity in private pensions, and we shall be consulting on those matters in the autumn. As I said, the third stage will make further inroads towards our objective of tackling pensioner poverty. Through pension credit, we can correct a fundamental flaw in the pension system that leaves people with modest savings no better off than those who have no savings.
The savings credit element of the Bill will ensure that, from the age of 65, pensioners will no longer lose a pound in their income for every pound of pensions or other
savings that they have built up. The Bill will give people a guaranteed income from the age of 60, so that they need not live on less than £100 a week at the commencement of pension credit. More than 5 million pensioners will be eligible. On average, they stand to gain about £400 a year.We know that Opposition Members have other ideas about spending the £2 billion that we have set aside for pension credit. Some have argued that all pensioners really want is an increase in their basic state pension. The basic state pension will remain a key building block of state pension provision. Restoring the link with earnings or diverting the money that we have set aside for the pension credit would not achieve our objective of helping all those pensioners who lost out because of the flaws in the current system, and those flaws would continue.
The simple truth is that the poorest pensioners would lose out if we took any of the routes proposed by Opposition Members, while pensioners with higher incomes would receive the greatest gains. We have decided to redistribute in favour of the poor and those pensioners with modest income or savings. Who said that socialism was dead on the Labour Benches?
Mr. Goodman: The Prime Minister.
Mr. McCartney: Oh, no. I hope that that will appear in Hansard.
My right hon. Friend the Secretary of State for Work and Pensions put this question plainly on Second Reading and I will do so again now: will Opposition Members oppose the Bill? Would they repeal this legislation? Hansard cannot record silences, so if I say the words "total silence" people will get the meaning.
I should like to remind hon. Members of the comments made on Second Reading in another place. Lord Fowler was one of those responsible for the fact that pensioners were left poverty-stricken under the Conservative Government, but he has repented: he has been on the road to Damascus and stopped off in search of victuals at the House of Lords. While he was there he said:
- "To be frank, I should have preferred it if my government had introduced the pension credit. I have no intention of jumping overboard just because that proposal comes from . . . the current Government."—[Official Report, House of Lords, 18 December 2001; Vol. 630, c. 165.]
The alternative route that we are taking is more difficult, but we believe it is the right one. It will target more help on those who need it, and we are doing that in a fairer, simpler way that does not intrude on pensioners' lives and encourages people to take up what they are entitled to.
Other hon. Members want contribute to the debate, so I shall soon end my speech, but it is important for the benefit of every pensioner in Britain that we put on record the truth about the proposals. Under pension credit, we will not need to ask pensioners reams of intrusive questions and we will not require them to notify us constantly if their income fluctuates. Of course, if their income goes down, they will be entitled to claim an increase.
When was a system ever devised in which people were invited to come along to ask for an increase if they thought that their income had gone down? That is the
beauty of this system. It is not intrusive and it will give pensioners the opportunity to approach us for a recalculation if their life circumstances change on the basis that they are entitled to more income, not less.Means-testing is about stopping people getting access. The hon. Member for Northavon (Mr. Webb) refuses to accept that fundamental difference. We are not proposing an old-fashioned means test, although the Liberal Democrats continue to parrot on about that. The hon. Gentleman is the one who wants to continue the old-fashioned means test because he cannot provide for poor pensioners under 75.
The Pension Service, however, will deliver services to pensioners in a totally new way: dedicated and sensitive to their needs, and putting more dignity into the way in which pensioners are treated. Better than that, our staff will be trained to be advocates on behalf of older people—no longer doorkeepers who prevent them having access to income services but trained to watch over and befriend older people and to be responsible for managing them through the process. That is a radically different way in which civil and public servants work with citizens—on this occasion, pensioners.
Some detail will be in regulations that I hope we will debate in the near future. I promise to share that detail with Members before that debate. Although, in Committee, Members usefully probed the Government's intentions, there have been no significant or even minor changes to a Bill that allows us greatly to improve the situation for pensioners. It will be simpler—for example, 85 per cent. of pensioners will not need to report their level of capital because of the disregard and the lack of an upper limit. Most pensioners over 65 will only have to report changes in their savings and pension income once every five years. We will fully protect those on housing benefit and council tax benefit—another very important innovation—by increasing the guaranteed elements of those benefits by £13.80, or £18.60 for couples. That will ensure that those pensioners maintain their current entitlement as well as benefiting from more generous income and savings rules, as in pension credit.
That is so important. How many pensioners currently get no access to council tax benefit or housing benefit because they are 1p over the limit? We do not intend, through the introduction of pension credit, to give with one hand and take away with the other. These changes are therefore vital. Because we have also changed the income and savings rules, a further 700,000 pensioner households which will not receive pension credit itself will gain from the changes to the treatment of capital and will access housing benefit and council tax benefit for the first time. We are not just protecting those on pension credit—we recognise that there will always be people who are just above the line, whatever it is, and they should not lose out either. A substantial number of people—700,000 households—who do not currently get access to housing benefit and council tax benefit will gain from these measures.
On Second Reading, my right hon. Friend the Secretary of State—I think we know who he was talking about—said:
- "When someone claims to have a simple solution to pensions, people should watch their wallet."—[Official Report, 25 March 2002; Vol. 382, c. 607.]
The hon. Member for Northavon is different. He parades himself as the human shield for Britain's pensioners. That shield is not only dented: it does not exist. As I heard it said from the Benches behind me, when it comes to looking after the interests of pensioners, he is as much use as a chocolate fireguard.
A simplification of the income process is vital. We are reducing the complexity inherent in the current system. It will be a straightforward process—a single gateway access to all state retirement income. People approaching retirement will be contacted by the Pension Service to give them information about their basic state pension, based on the contributions that they made during their working lives. At the same time, we will inform pensioners that they may be entitled to extra help through pension credit. The complexity of the current claims process is at the heart of pensioners' uneasiness in dealing with the state. The new service will transform that relationship, and pension credit is the foundation for that change.
In the past, the system has been intrusive and bureaucratic and, crucially, pensioners do not like it. We are tackling that. Our proposals will significantly reduce the intrusion and complexity, marking a radical change from the current system. Quite simply, people with weekly incomes up to about £135 to £200 for pensioner couples—can get extra income through pension credit. Or looking at it another way, if capital was the only source of income over and above the basic state pension, a single person would need at least £35,000 of capital and a couple would need at least £44,500 before they failed to be entitled to pension credit. The figures show just how radical our policy is. Pension credit is a complementary source of income alongside the basic state pension, and it is like the tax allowances that not one of us would refuse.
To conclude, I wish to return to the point made so effectively on Second Reading by my hon. Friend the Member for Hamilton, South. With pension credit, we are finally leaving behind the detested historical images of the means tests that stripped people of their dignity and robbed them of their pride. Yet even though we have moved on from the dole queues of the 1920s and the unemployment assistance boards of the 1930s, our collective memory does not dwindle. It has lived on through the generations, and it continued to live on through the Tories' Social Security Act 1986. It is currently dragged up each time someone talks about pension credit using the language of pre-war social policies.
Pension credit is not about old-fashioned means-testing. Means-testing was about excluding people from income to keep them poor. Pension credit is about inclusion,
taking people out of poverty and making sure that they do not slip into poverty in the first place. We will make sure that, for the first time, people who have worked hard and managed to put modest amounts away for their retirement get the income they are entitled to and see a real reward for their efforts.The passage of this Bill will ensure that the old images of means-testing will not live on in pension credit. As with the National Minimum Wage Act 1998, I am deeply proud not only to have introduced the Bill to the House but to be the Minister who will ensure that it reaches the statute book.
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