State Pension Credit Bill [Lords]

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Mr. Brazier: I shall examine two classes of cases of potential claimants who are abroad, but before I do so I want to make a theoretical point.

With benefits of this type, this Government—even more than the last—have increasingly moved away from the Beveridge provision of handling both the problem of poverty and incentives to save with an insurance-based scheme. We have ended up with two classes of benefit: those that are designed to relieve poverty directly, and those that are designed to patch the system so that people who have made provisions for themselves are not disadvantaged. The benefit that we are considering falls into the second category. Overseas, or partially overseas, potential claimants are good examples of the muddles in which we get.

My first case is fairly rare, but the second is more general. Two pensioners who attended my surgery—I shall not bother members of the Committee with details of what they came to see me about, but their circumstances are related directly to the clause—had a daughter in Australia who had tragically become extremely ill with a chronic and irreversible condition. They took the decision to fly to Australia to look after her during what they thought would be the final months of her life. That was a generous decision because they were certainly not well off, although they were not absolutely on the breadline because had they been they would not have been able to afford it. I believe that the daughter could not have flown back to this country for medical reasons. Contrary to all medical opinion, instead of taking three to six months to die, she took more than three and a half years. Throughout that period, the little house that the pensioners owned in my constituency remained their property—I believe that they covered some of their costs by letting it. When they returned, they found that from the point of view of a range of benefits they were deemed to have been abroad for the

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entire period, and, for various reasons that do not concern the Committee, they were disadvantaged.

The point that I want to draw out of that example is the point that my hon. Friend the Member for Daventry made at the beginning of his speech. In dealing purely with the immediate relief of poverty, like the two benefits to which the clause as drafted is pegged, it is not unreasonable to exclude people who are away for a long period. However, in dealing with the Beveridge-style principle of ensuring that those who have paid into an insurance-based system and behaved reasonably are rewarded for doing so, it is surely completely unreasonable that such people, who enjoy a small occupational pension and some savings, and who should receive a top-up from the benefit, should be grossly penalised because of their decision to go abroad for, in this case, a very long period. That is the sort of problem that a bad patching exercise, which is what the benefit is, throws up.

I do not want to rest my case on that one genuine but none the less fairly rare and unusual constituency case. A wider issue is involved, to which my hon. Friend alluded briefly in the last part of his speech—how to treat pensioners who are resident outside the country.

My hon. Friend alluded to a court case. I shall not discuss which countries are covered. As many Committee members will know, several countries that have the closest links with this country, including Australia, Canada and New Zealand, which contain many pensioners who fought on our behalf in the war, are excluded from indexing for the state pension. Therefore, those who have paid into the national insurance system all their lives and who choose in their late 60s to go to Australia, Canada or New Zealand—several other countries are also affected—receive from that moment on no indexing of their state pension. Before I was a Whip, when I had political views, I signed several early-day motions on the subject.

As the clause is worded, we seem to be in danger of introducing two more perverse incentives among all the perverse incentives in the increasingly complicated legislation relating to pensioners. The first relates to someone who has just qualified for his state pension and who would receive the top-up who is considering going abroad, perhaps to Australia, Canada or another country where, perhaps, like me, he has cousins. Perhaps, like some pensioners, including members of my family, he has a medical condition and might benefit from a warmer climate. By going abroad, he would relieve the national health service of a considerable potential burden and, in the long run, he may also relieve the taxpayer of a much larger burden in nursing home costs, for example. Are we to say to him not only, ''Off you go. Goodbye. You made all those contributions, but you will not receive any indexing on your state pension,'' but, ''By the way, you'd better not go abroad until after your first assessment, and five years later we shall strip your state pension credit from you''? As my hon. Friend said, as the clause is drafted, that might even be stripped from him immediately. If so, we provide a perverse incentive for someone not to do something

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that would relieve the Exchequer of a considerable sum.

Mr. Boswell: My hon. Friend sets out the case and his concerns well. Does he agree that the most important aspect is the simple human terms involved? An elderly person with a United Kingdom pension entitlement may want to move to live with a daughter in Australia or Canada. Decency should enable that to be done without any inhibitions on the pensions front.

Mr. Brazier: My hon. Friend knows that I could not agree more strongly about this issue. None of my cousins in any of the countries that I mentioned have fallen foul of the legislation. However, I feel desperately strongly about people who have given their whole lives to this country and, for exactly the reasons mentioned by my hon. Friend, have chosen to go abroad to countries where huge numbers of British citizens have cousins. Some Caribbean countries are also affected by the problem. It is unfair that such people are treated in that way. I feel strongly about the matter so I have to restrain my emotions.

We have set into the system a potential injustice that will cost the British taxpayer in the long run. Clearly, people who have not looked into the detail will find out how much they will lose and be encouraged to come back after a year or two with sad human consequences for themselves and at considerable cost to the Exchequer.

We are increasingly pushing apart the two traditional Beveridge strands—the principles of insurance and relief of welfare. As we embark further down the split, cases involving overseas people are a good example of how, on the one hand, the human side gets steadily less human for deserving classes of people, and, on the other hand, we potentially throw up unforeseen costs to the state. Therefore, I urge the Government to accept the amendments that my hon. Friend so skilfully moved.

Maria Eagle: I am pleased to stand in Committee for the first time as a Minister, although I have tried it out in private Members' business. It is a pleasure to be here in a position to try to answer points made by hon. Members today in respect of the amendments.

I listened intently to the way in which the hon. Member for Daventry put his points about amendments Nos. 22 and 13. I do not wish to be unpleasant, but initially I found it difficult to understand what he was getting at. He seemed to suggest that pension credit should be payable to people whether or not they are resident in the United Kingdom. That would be the effect of the amendments. Amendment No. 22 would remove the provision allowing residence conditions to be a prerequisite for receipt of pension credit beyond mere physical presence.

Amendment No. 13 would, as the hon. Gentleman said, remove the word ''temporary''. Interestingly, he obviously remembers removing that word from previous legislation, which, he said, went on for some hours. I do not know whether that was an appeal to Back Benchers to assist him in speaking for hours, but they have not taken the bait.

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Taken together, the amendments would remove the need for any residence test for pension credit. The only time that one would have to be in Britain to get pension credit for a five-yearly assessed income period would be at the time of making the claim. It would then be paid to anyone in this country over 60, including those who usually live abroad. It would be extraordinary for a social security benefit to operate in that way. As far as I am aware, it would be unique. I may be passed a note by my officials saying that a certain benefit allows for that, but I am not aware of one.

The Government believe that it cannot be right that a person with no real connection or affiliation with this country can receive a benefit or credit funded by the British taxpayer. When it was in power, the Conservative party believed that, too. In 1994, it introduced the habitual residence test, the purpose of which was to curb abuse of the benefit system by those with little or no recent connection with this country.

12 noon

Mr. Brazier: The hon. Lady's history is accurate as it applies to measures to relieve poverty, but surely she accepts that the basic state pension is paid to people who have paid national insurance contributions all their lives and who retire abroad. The same principle should apply under the Bill.

Maria Eagle: I hear what the hon. Gentleman says, but the Bill is about pension credit. We are talking about additions to the basic state pension.

Mr. Boswell: I intervene only because I want to hear what the hon. Lady thinks about two different circumstances. She talked about persons with no prior connection with the United Kingdom, but who may turn up here to access the benefit system. If that is her concern, I am with her in principle. However, perhaps she can deal with the point also made by my hon. Friend the Member for Canterbury (Mr. Brazier) about people who have contributed throughout their lives by both national insurance payments and taxation, but who then choose for good reasons to leave this jurisdiction. They may be disqualified from receiving the benefit or be in a dilemma about their circumstances.

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