State Pension Credit Bill [Lords]

[back to previous text]

The Parliamentary Under-Secretary of State for Work and Pensions (Maria Eagle): I shall be more than happy to do my best to answer the questions asked by the hon. Members for Daventry and for Northavon (Mr. Webb). I shall discuss the amendments in detail in due course, but I shall deal first with the substantive issue of hospital downrating. Both amendments are effectively about that, although they would have some strange other effects.

Column Number: 087

Immediately following his appointment to his post, my right hon. Friend the Minister for Pensions started considering the issue. As long ago as last July, he told the National Pensioners Convention that he was doing so and from that time answered various parliamentary questions explaining that to the House, too. The matter has been driven by my right hon. Friend's interest when he was appointed to consider the issue, and it has been recognised that there is some strength in the argument relating to downrating after a certain period.

The hon. Member for Northavon is right to say that the grand principle behind the proposal relates to the issue of double provision. It remains a fundamental principle of the welfare state that the state does not provide twice for the same contingency. That sometimes resurfaces in other benefits for which I am responsible as the overlapping benefit rule. Those are not small matters, and ''Pandora's box'' is a useful phrase in considering changes to such fundamental principles in social security, as they often have extensive implications for other areas.

9.45 am

My right hon. Friend the Minister for Pensions spotted that problem and began to consider it as soon as he took on his current role in the Government. Consultations, discussions and his internal investigations resulted in the announcement on 25 February of proposals to change the way in which hospital downrating rules applied. The changes are collected under the State Pension Credit Bill because the downrating of pension credit will be the same.

Downrating will now take place after a 13-week stay in hospital instead of a six-week stay. Hon. Members should remember that that relates not only to pension credit but to a range of other benefits. However, we are now talking about the effect on pension credit. There will be a further reduction at 52 weeks. There will be no reduction before 13 weeks in hospital. After that, the single person's standard minimum guarantee will be reduced by an amount equivalent to 38 per cent. of the basic state retirement pension, with a further reduction to 20 per cent. of the state pension after 52 weeks. For couples, the downratings will be 20 per cent. at 13 weeks, and the claim is disaggregated at 52 weeks. That applies only to pension credit, as the savings credit will not be downrated.

I took care to take a note of the questions that the hon. Member for Daventry asked on Tuesday about the subject. He asked whether we had been dragooned, to use his word, into relaxing the downrating rules so that they apply at 13 weeks. I should prefer to say that my right hon. Friend the Minister took an interest in the matter from the time of his appointment. After considering the issue, he decided to do something about it. That decision coincided with the passage of the Bill, so we were able to get the new rules into the Bill.

The hon. Gentleman asked why we left any downrating at all. The hon. Member for Northavon also raised that question. We must be mindful of double provision. Downrating applies to a range of

Column Number: 088

other social security benefits, not just those relating to pensioners. It is therefore difficult to argue that it is right to end downrating for pensioners completely while leaving it in place in other benefits. One has to consider the thin-end-of-the-wedge argument when considering the issue because that has implications for many other benefits.

I should like to inform the Committee of the numbers that will be affected, as that might be helpful. The six-week rule affects about 35,000 people. We think that about 26,000 of them are pensioners and 9,000 are of working age. We therefore expect about 26,000 people to gain from increasing the threshold to 13 weeks. Obviously, a much smaller number of people will be affected by the 52-week rule, because thankfully most people leave hospital well before 13 weeks have passed, so many fewer people will be affected by the changed rule.

The Conservative party was in power for 18 years. It considered the hospital downrating rule but never, as far as I am aware—I am sure that the hon. Member for Daventry will correct me if I am wrong—attempted to abolish hospital downrating for any type of benefit. Clearly, it too was concerned about the rule against double provision.

Mr. Boswell: The hon. Lady is putting her case reasonably, and I think that we are all pleased that relaxations have been made. She carefully gave the figures of those who would benefit from the extension from six to 13 weeks, and she said that not that many would be affected after 13 weeks. Will the hon. Lady give the Committee her estimate of the number who will still be caught at 13 weeks, rather than those who are, presumably, unchanged after 52 weeks? It would be useful to have that figure on the record.

Maria Eagle: I have a figure in front of me. We think that about 9,000 people will continue to be affected at the 13-week stage—6,000 of pension age and 3,000 of working age.

The Conservative Government did not abolish the rule against double provision or end hospital downrating for benefits. However, they did examine hospital downrating. During the late 1980s—the hon. Gentleman will correct me if I am wrong—there was an exercise in standardisation. Benefits had different points at which downrating applied. When that happens, Governments sometimes think that there should be standardisation, and the Conservative Government undertook an exercise on that. Before the exercise, several benefits were downrated at eight weeks, others at six weeks. The Conservative Government decided to standardise at six weeks. Although they made a change to hospital downrating, that was not for the benefit of in-patients who were subject to it—to put it gently.

My right hon. Friend the Minister for Pensions can claim credit for having a fair look at the issue and for making a change that benefits significant numbers of affected people. Labour Members are pleased that he has done so, and members of the Committee of all parties have welcomed it.

I shall deal with several points made by the hon. Member for Northavon before addressing the detail of

Column Number: 089

the amendments—I do not think that I should miss having the fun of discussing the strange consequences that they would have. The hon. Gentleman asked whether the provision went far enough and whether we should end hospital downrating completely. I should be interested to know whether that is the Liberal Democrats' policy because it would apply not only to pension credit but, in all equity and fairness, to all other benefits. One can imagine the lobbies to which we would all be subjected if we ended hospital downrating on pension benefits but not other social security benefits. There would be a general feeling of inequity. [Interruption.] Unequal treatment indeed. The hon. Gentleman must be suggesting ending hospital downrating for all benefits.

I hope that the figures that I mentioned on hospital downrating for pension credit show that it would affect relatively few people. The Government believe that there is a principle in the welfare state of not making double provision. Ending hospital downrating throughout all benefits would breach that rule, and would make it more difficult to argue that we should retain the overlapping benefit rule. I shall not stray too wide of the amendment, but I will say that I do not know whether the hon. Member for Northavon has a policy on ending that rule. Since I entered the Department for Work and Pensions, I have learned that one can come up with many good ideas to end small inequities. However, once costed, they would prove to cost an enormous amount of money—we are usually talking about billions.

Of course, we must bear in the mind the impact on the entire system that breaching the principles of the welfare state, such as the overlapping benefit rule and the rule against double provision, would have. The Government are not convinced that we should get rid of the rule against double provision. Are the hon. Gentleman and his party committed to doing so and, if they are, what do they think about overlapping benefit provisions?

The hon. Gentleman asked about empirical evidence of the impact of hospital downrating on individual cases. I am not aware of any research that has been carried out specifically to pin down individual cases and try to extrapolate from them across the field of those who are affected, but I will get back to him if I am wrong about that. Over the years, hospital downrating has been driven by the basic principle against double provision. On this matter, I emphasise again that we are talking about only a few people, but I undertake to inform the Committee if there is an empirical study of specific instances.

What would be the effects of amendments Nos. 14 and 3? It appears that amendment No. 14, which was tabled by the hon. Member for Daventry, would prevent any hospital downrating for pension credit. It would also prevent a prescribed amount of nil from being awarded to—

Mr. Boswell: Prisoners?

Column Number: 090

Maria Eagle: Yes, to prisoners, and also to fully maintained members of religious orders; that is the other category.

On Tuesday, the hon. Gentleman asked me whether the nil prescription would be applied only to hospital downrating. It also applies to monks, nuns and prisoners. Therefore, he might be interested to know that the effect of his amendment would be to induce sin, in some cases. Many religious orders take vows of poverty, and we would be forcing pension credit upon their members. I am sure that the hon. Gentleman would not want to be responsible for promoting sin amongst members of such religious orders. However, that is the other—rather small—category.

Previous Contents Continue

House of Commons home page Parliament home page House of Lords home page search page enquiries ordering index

©Parliamentary copyright 2002
Prepared 18 April 2002