THE CREDIT'S INTERACTION WITH OTHER BENEFITS
43. The interaction of the new Pension Credit with other aspects
of the benefits system will naturally be crucial if the Credit
is to achieve the Government's aims. One of the biggest single
concerns to emerge following the launch of the Credit's consultation
paper was its relationship, in particular, with Housing Benefit
and Council Tax Benefit. Many of those who commented on the Government's
proposals feared that, unless properly integrated, any gains for
the poorest pensioners from the Pension Credit could be lost immediately
through reduced HB and CTB.[81]
The Government heeded these concerns and, in its final proposals,
announced that the level at which pensioners qualified for help
from the two benefits would be raised in line with the Pension
Credit. The new rules for the treatment of capital in the calculation
of entitlement to Credit (see paragraph 17) would also be extended
to HB and CTB.[82] In
this way, the Government assured us, "Nobody will lose Housing
Benefit or Council Tax Benefit as a result of the Pension Credit."[83]
44. The evidence we have received in this inquiry confirms that
the effect of the Government's announcement is that gains from
the Credit will not be "clawed back" through loss of
HB and CTB entitlement.[84]
For example, Sally West, of Age Concern, told us that the DWP,
"is right in saying that people cannot lose."[85]
Andrew Dilnot, of the IFS, similarly agreed that the Government
had, "given their objectives," hit on the right solution
to the problem of the Credit's interaction with HB and CTB.[86]
He did raise a note of caution, however, commenting that the Government
still needed to devise a strategy for the long-term reform of
both benefits; something which the Social Security Committee in
the last Parliament considered in some detail.[87]
We welcome the Government's proposed changes to the rules governing
entitlement to Housing Benefit and Council Tax Benefit, which
should ensure that no pensioner loses benefit as a result of the
Pension Credit. These changes do not, however, alter the case
for a more fundamental re-examination of Housing Benefit.
Given that the take up of Council Tax Benefit is particularly
low amongst pensioners, it is also vital that the introduction
of the Credit is underpinned by campaigns to promote Council Tax
Benefit take up.
45. It is less clear, though, how entitlements to Pension Credit
will affect the amount that local authorities require people who
receive care in their own homes, or care in residential and nursing
homes, to pay towards the cost of that care. There is a real risk
that these pensioners will see little, if any, benefit from the
Pension Credit. Hertfordshire County Council told us that it had:
a "particular concern at the apparent failure of the Department
of Health to consider the Pension Credit when issuing guidance
to local authorities on home care charging policies."[88]
It reported that new charging policies for services, such as day
centres, home helps and Meals on Wheels, were due to be introduced
from April 2003 and that, "in the absence of adequate guidance
from the Department of Health, it is possible that the real gains
introduced by the Pension Credit could be negated by charging
policies designed without regard to the new benefit." The
groups representing pensioners echoed these worries in their oral
evidence, drawing our attention not only to those paying for care
at home but also those living in residential homes. Richard Wilson,
of Help the Aged, told us: "It seems difficult if you are
going to say saving always pays but then they give you your pension
with one hand and take it away with the other, via the Department
of Health and charges. That will not make sense to ordinary pensioners."[89]
The need for greater "joined-up Government" between
the Departments of Work and Pensions and Health, were also raised
during the debate on the State Pension Credit Bill in the House
of Lords.[90]
46. We raised these concerns with the Secretary of State when
he gave oral evidence to the Committee. He stated that "what
local authorities charge for home care is essentially a matter
for them" and that "guidelines will be issued from time
to time".[91] In
a supplementary memorandum to the Committee, he clarified this
point, stating that guidance on charging policies recently issued
by the Department of Health would ensure that "the vast majority
of Pension Credit recipients will also be entitled to free home
care" and that discussions between the two Departments were
continuing over the interaction of charges for residential care
services and the Credit.[92]
47. We understand that at present, in determining how much a pensioner
has to contribute towards care home fees, local authorities are
required to treat capital in the same way as they are currently
treated for the MIG. Although the capital limits are higher, the
notional rate of income from capital is the same - £1 a week
for every £250 of capital between the limits. If the extra
income that pensioners in care homes receive from the Pension
Credit is taken away in higher contributions to care home fees,
then the message that it always pays to have saved will not be
true for a significant number of retired people. We believe
that the Department for Work and Pensions and the Department of
Health need to make clear how the proposals for the Pension Credit
will interact with care charges: pensioners in residential care
do not yet know if the real increase in pensioner income from
the Credit will be lost through increased home care charges.
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