State Pension Credit Bill [Lords]

[back to previous text]

Kali Mountford (Colne Valley): I do not deny that there might be women who, without full information, made decisions that were not to their benefit, but does the hon. Gentleman accept that many women, several of whom I know personally, made conscious decisions that it would be to their immediate benefit to pay less national insurance because that gave their family extra income at the time? Does that build an inequity between women who made a sensible and conscious choice of what they thought was best for their family and women who simply made a mistake?

11.15 am

Mr. Webb: I absolutely agree with the hon. Lady. Any remedy to that must distinguish between the two groups. For example, if we allowed people to fill the gaps in their record by buying back missing years, that would deal with her point. People who made a conscious decision not to pay national insurance could get on with it, and those who misunderstood could pay the equivalent amount to what they saved. I do not suggest that we rewrite history and reward those who saved money at the time.

Mention of the married woman's stamp might have been a red herring. We must think about the group of women who end up under the contribution threshold. However, the second group, who are more important in many ways, are those who stopped work altogether or who did not start work. They were bringing up children but rather than paying a reduced stamp, they paid nothing at all because they did not work. Such women trashed their pension rights in a society that did not value care in the way that it did after 1977 under home responsibilities protection. Women who had not worked or paid national insurance and who were completely outside the system have been punished once by society for not building up their pension rights. However, the Bill would mean not only that such women would be punished by getting a grotty state pension, but that they would not be rewarded for their savings either because the pension is so low that all their savings, which may not be much because many of these women do not have high savings, would bring them up to only the pension level and not entitle them to pension credit. We would hit them twice.

The last group of amendments addressed the fact that we are penalising people aged 60 to 64 by excluding them from the savings credit. However, we would also hit women who brought up children by giving them a grotty pension and a grotty savings credit. The amendment would examine what would

Column Number: 113

have happened if the home responsibilities protection rule had applied when the women were bringing up their children. Our society now thinks that what women did then was worth doing and that it was wrong not to recognise that. Although we would not recalculate their pension entitlement—one could argue that we should, but I am going only one step down that track—they should not be penalised for what they did. We should certainly not penalise them twice when legislating for their incomes over the next 30 years. If the amendment were not accepted, a woman who cared for and brought up children would receive no savings credit at the age of 60. The period might not be 30 years because there is the question of what women get from their husbands when they reach 65. However, the period could be five years.

When such women's husbands reach state pension age, women receive a 60 per cent. pension based on their husband's contributions. The threshold for a couple is 160 per cent. of the threshold for a single person and, therefore, the issue diminishes substantially. Until the husband reaches 65, however, it is a big issue. Women with what are loosely termed toy-boy husbands—women with husbands who are merely younger than them—will be penalised for at least five years. If a 60-year-old woman has a 60-year-old husband, although that may be an extreme use of the phrase ''toy boy''—[Interruption.] The hon. Member for Daventry is not my idea of a toy boy.

If a 60-year-old woman has a 60-year-old husband, she will not receive savings credit during the five years until he is 65. Does the Committee really want to say that a woman's reward for saving is all about the age of her husband? That is not right, given our regard for the independence of women and the value that we place on caring activities.

The Minister may say that history cannot be rewritten, that we now have a system in place and that people will just have to lump it. Perhaps I am being slightly uncharitable, but that is the Government's argument. They say that women did not have such protection in the past and that their income is topped up through the minimum income guarantee, so what do women want? Well, let us consider those women who, given that start in life, have still managed to save. It would not have been easy. The fact that they did not have a paid job until they were in their mid–30s or until their children started school would not have been atypical in those days. They would not have saved a great deal anyway. Some women may have a little amount of savings or a pension from when they were 40-years-old. Can we not reward those meagre savings? It would not even cost that much—people seem to be wary when I say that.

I hope that the Minister has an estimate in mind? We are not talking about huge sums. I am referring to a group of people who have been penalised once, and I do not want them to be penalised again. The amendment reflects the value of their caring in the way that Parliament accepted was right post–1977. We must not replicate society's attitudes of the 1960s. If

Column Number: 114

the amendment were not accepted, we would be reinforcing those attitudes on the pensioners of 2002.

James Purnell (Stalybridge and Hyde): I refer to a particular aspect of amendment No. 5. I have sympathy with his motives although, in rectifying an anomaly, we may create new anomalies. As my hon. Friend the Member for Colne Valley (Kali Mountford) said, such a proposal may not improve matters. I hate to disappoint the hon. Gentleman; although I agree with what he forecasted Labour Members would say. The best way in which to cope with the anomaly would be to give people a top up through the guarantee credit element.

I seek assurance from the Minister about the treatment of foster carers. They provide a vital service and deal with some of the most difficult cases that life can throw at people. A constituent of mine has given up her job to take on two teenage boys who have been subjected to fairly significant abuse in two different homes. That is an incredible step to take on behalf of society and, bearing in mind the expenses that carers receive, it is poorly rewarded. The service is not salaried.

My constituent was warned that, under the current system, she would lose contributions to her basic state pension. Home responsibilities protection is calculated through passporting from other benefits. If she gave up work to look after her own children, she would receive home responsibilities protection through the receipt of child benefit but, because she does not receive child benefit for fostering children, she does not receive home responsibilities protection.

The sensible reaction of people who realised that they were not receiving credits towards their basic state pension—very few people do realise that—might be to save towards a private pension. The problem with the savings credit as it is constructed is that such people may be subjected to a 100 per cent. withdrawal rate on the small income from their private pension. If they were earning less than £77 overall in retirement, the income will be taken away at the rate of 100 per cent. Will the Government consider rectifying the overall situation with regard to foster carers or allow those who have saved towards a private pension to keep a proportion of that pension in retirement?

We must continue to attract people into foster caring. I have sat on adoption panels that have had to make terrifying choices about where to place children—such as in foster homes that we were not confident would give them the best possible care or to leave them in care homes. We all know that children in care often have a bleak prospect of educational development and fall back into criminality and drugs. The more that we can attract foster carers into offering their services, the better. If the Government can reassure us that they will consider proposals in respect of the pensions of foster carers, the more progress would be made towards attracting people into the foster care service.

It being twenty-five minutes past Eleven o'clock, THE CHAIRMAN adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Column Number: 115

The following Members attended the Committee:
Griffiths, Mr. Win (Chairman)
Boswell, Mr.
Cairns, David
Clappison, Mr.
Cruddas, Jon
Eagle, Maria
Ewing, Annabelle
McCartney, Mr. Ian
Mann, John

Column Number: 116

Mercer, Patrick
Mountford, Kali
Osborne, Sandra
Purnell, James
Selous, Andrew
Smith, Angela
Turner, Mr. Neil
Tynan, Mr.
Webb, Mr.

Previous Contents

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