State Pension Credit Bill [Lords]

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Mr. Boswell: While not necessarily disagreeing with the dilemmas with which the Under-Secretary is wrestling, I cannot let pass unchallenged the assertion that the potential roll-up of retirement pension for the male approaching retirement age would be difficult to estimate. Surely that is what her Department proposes to do in issuing retirement forecasts.

Maria Eagle: The hon. Gentleman makes some interesting points. The area is difficult and there is no ideal solution. We must ensure that we treat everyone fairly, and if the amendments resulted in people in the same circumstances receiving different amounts because they were male or female, because of the unequal way in which provision works at present, we would not have succeeded in solving the problem. We cannot implement such a system without being open to legal challenge. The first point at which we can ensure that the outcomes are the same is at age 65, in respect of savings credit.

Mr. Webb: The Minister is engaging constructively with what we want to achieve with the amendments, but who would launch the legal challenge to which she refers? It would not be the women, because they would be receiving more money—they cannot say that they should have even more because they would be using their actual pension roll-up. It would not be the men, either, because we would have brought them into the system when they would not normally have been included. Who will challenge the provision?

Maria Eagle: The hon. Gentleman is not a lawyer, but if he were he would know that someone will always challenge provisions if the outcome is unequal. Never mind the fact that the system is unequal in that men and women in the same circumstances do not receive the same amount of money—if there were a difference, there would be a man who, although he was benefiting, would claim that he should receive the higher amount. In all conscience as a Government, we cannot proceed on the basis that a legal challenge is possible and that we know that what we are doing is wrong but hope that no one will bring a case. That would not be a responsible way to conduct ourselves in government.

The other difficulty with the amendment is that it would cause strange outcomes for some recipients. Some men, for example, would be rewarded for their savings while aged between 60 and 64 and have the calculation based on state pension accrued before the end of their working lives. When they reached 65, however, they would find all their savings rewarded less or not at all. There are instances in which a man could receive a savings credit element between 60 and 64 and lose it when he hit 65, which would be difficult to explain.

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I shall give the hon. Gentleman an example. Let us consider the case of a 64-year-old man who has a £60 personal pension but no basic state pension, because he is not yet 65, and no other income. Based on his contributions to date, he would receive a full basic state pension—that is, he would receive £77 when he was old enough. Under the amendment, he would receive £13.80 savings credit. When he turned 65, he would keep his £60 personal pension and receive his £77 a week basic state pension, so under the amendment his savings credit would be reduced from £13.80 to zero.

With the best will in the world, the hon. Gentleman is trying to find a way to include men aged 60 to 64 and to equalise and introduce savings credit at 60 rather than 65. However, the impact on the man in my example would be that he would receive savings credit to begin with, but lose it when he hit state pension retirement age or when he retired.

Mr. Webb: As I said, the Under-Secretary is responding helpfully. However, in the case that she has just cited, my argument would be that when the man is aged between 60 and 64, he will have no money other than the £60 pension. The guarantee credit will bring that up to £100. The Minister is saying that he should not be rewarded for having saved because he will lose that reward at 65 when he gets his pension. If the Government's principle is that people should be rewarded for having saved—especially when they have nothing else to live on—why should he not be rewarded for having done so when he is 64? The alternative is that he does not get rewarded for having saved at all—a situation which the Government must surely want to stop.

Maria Eagle: It would be slightly more difficult to persuade that man that he should lose his reward for saving when he gets to 65.

Mr. Webb: It would never happen.

Maria Eagle: Anomalous situations would arise from the hon. Gentleman's amendment, in addition to the general problem, which we have already mentioned, of the legislation's being open to challenge because there are different outcomes dependent only on gender.

Annabelle Ewing (Perth): I appreciate that one can never exclude the possibility of a legal challenge—I declare an interest in that I am a lawyer, although I am not currently practising—but will the Minister clarify on what grounds such a challenge could be brought? What legislation would form the basis of such a challenge?

Maria Eagle: It is just a matter of equality. The grounds would be the same as those on which other actions have been brought with respect to other benefits—the difference between the pension ages for men and women. There have been cases and we have no reason to think that there will not be further ones. It would not be responsible for us to proceed to implement a system that is blatantly discriminatory on the grounds of gender and hope that no one would challenge it. Although I understand the point made by the hon. Member for Northavon that we will be giving men between the ages of 60 and 65 more money, that is

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not to say that they will be getting quite as much as the women.

As long there is inequality, there are grounds for a challenge. We cannot cross our fingers and hope that no one challenges the legislation in the courts. Someone almost certainly would and we would not have many legs to stand on when they did. We have examined the issue and there is no way that we can get around the fact that if what we do creates a gender inequality, albeit of a slightly different kind from the existing one, we would be open to challenge. It would not be possible for us to legislate on that basis. The problem is the existing inequality, and problems of this kind will end only when that inequality ends. Parliament has already made provision for that, but this Bill cannot do it any more quickly and does not seek to do so. Therefore, we have to make do until that inequality ends.

I was asked what would be the cost of paying savings credit to 60 to 64-year-olds. Based on a 100 per cent. take-up, and including the housing benefit and council tax benefit costs, we think that the measure would cost about £200 million. We estimate that about 300,000 benefit units—Committee members will know what we mean by that—would gain from the savings credit's being paid to 60–64 year-olds. However, that does take away the problems that I have been trying—not as lucidly as I might—to explain in respect of the amendments.

I understand why the hon. Member for Northavon wants to equalise provision. We all agree with that. Parliament agrees with that and has made provision for it, but we cannot equalise outcomes until that provision has come into force. The Bill cannot be used to speed up the process of equalising the basic state pension age. The Bill has provisions to ensure that we fit in with that equalisation, which will start soon and will be ongoing.

I hope therefore that the hon. Gentleman will understand that we have gone through a similar process to him in trying to ensure that the maximum number of people benefit from the Bill, but we have concluded that, because of the current inequalities in the system, it is impossible to do so except by paying savings credit at 65. In view of that, I hope that the hon. Gentleman will ask leave to withdraw the amendment.

11 am

Mr. Webb: I thank the Under-Secretary for the spirit in which she responded to the amendment. She gave an example of an anomaly that would have been created under the amendments, but which I believe would not be a problem. Her example was of a person with a £60 private pension who, before the age of 65, had to live on the £60 pension and a top-up that guaranteed him £100. In my world, however, that chap will also receive the maximum pension credit of £13.80. That will give him £113.80. I acknowledge that he will lose the savings credit when he hits 65, but he will start receiving his pension, so he will then have the £77 state pension and a £60 private pension, which will take him up to £137 a week. He will go from £113 a week pre-retirement to £137 post-retirement.

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The Under-Secretary may say that he has lost his savings credit, but I cannot imagine him saying, ''This is not fair; you are taking something away from me.'' He will know that he is £24 a week better off. Indeed, that increase will come from the state: his private pension will not have changed. I understand what the Under-Secretary is driving at—that his savings credit would go—and it does sound strange, but his total income will rise significantly. I am not convinced, however, that he would say, ''It's a scandal, Guv.'' I understand what the Under-Secretary is saying, but people will not object if they are better off once they retire but have still received that welcome pre–65 money. It is not a telling objection.

The fundamental objection is that it creates an inequality—a different inequality—that is open to challenge under law. The hon. Lady may say that I am not a lawyer, but the amendment proposes that men and women are treated the same, and that the savings credit should be assessed on the basis of their accrued state pension rights. It so happens that women cannot go on accruing more state pension rights after 60, but men can. The assessment is made indiscriminately, on the basis of the accrued state pension rights on the day when the claim is made. However, the Government have a leg to stand on at least on that issue. I accept that stranger things than that have been challenged, but it is not inherently discriminatory to treat men and women identically and then to assess them on the basis of their accrued rights.

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