State Pension Credit Bill [Lords]

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Mr. Tim Boswell (Daventry): Is there not real concern that, notwithstanding the more generous treatment under the state second pension, there will be plenty of people who attain only the current or projected level of the minimum income guarantee? They may not benefit at all.

Mr. McCartney: The purpose of having two parts to the legislation is to ensure that those who were wronged or left out previously and have insufficient records will get the minimum income guarantee part of it. Without that, they would be deficient by considerable sums. We have not left them out—far from it. We can consider the minimum income guarantee as a catch-all measure, under which we do not have to find out who all those people are. Those people do not have to construct a case to prove that they were carers for more than 35 hours a week, and we do not have to work out a simulation test to find out whether they had appropriate caring responsibilities. It would be a nightmare for an

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elderly person to have to do that now, when we could just give them the minimum income guarantee. However, we are concerned about what else we can do.

The guarantee credit, which is a vital part of the Bill, ensures that those who are washed out because of the past are now afforded security in retirement. The guarantee level is significantly above the level that pensioners received before 1997. It is not just a guaranteed level; it is a new guaranteed level.

On 13 March, my right hon. Friend the Secretary of State said in evidence to the pension credit inquiry of the Select Committee on Work and Pensions that the pension credit continues to be a basic feature of the contributory scheme. On the issue of deficient records, he said that the problem would reduce as women build up their own pension entitlements. He was then asked about the conflict between that and pensioner poverty, and he replied that the second state pension deals with poverty for periods in which people cannot contribute and the savings credit provides the reward. That shows an interrelationship in the modernisation of state pension provision.

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Concerns have been raised throughout the passage of the Bill about people whose national insurance records fall short because the protection that is now available for carers, for example, has not always been there. We believe that instead of trying to right the wrongs of the past in what would be a complex and impossible way, the critical thing is to ensure that something is done quickly. That is why we introduced the minimum income guarantee and the state second pension. Those who have lost out for many years should at least be afforded a decent income in retirement.

I understand what my hon. Friend the Member for Stalybridge and Hyde (James Purnell) was trying to do in his intervention. We appreciate the work that foster carers do and sympathise with those who, having chosen to be full-time carers, receive poorer pensions as a result. Home responsibilities protection in respect of carers of children is awarded through entitlement to child benefit. Foster parents do not receive child benefit directly and have consequently not been covered by home responsibilities protection. We estimate that of the 37,000 foster carers in Britain, approximately 7,000 could benefit from an extension of that protection.

We have discussed with local authorities and other interested organisations, including those that represent carers, whether it is possible to improve the position of foster carers. We are satisfied that improvements could be made without the need for primary legislation. We are reviewing the arrangements and, should we decide that a change in legislation is required, the proper place in which to fix the problem is in the Social Security Contributions and Benefits Act 1992, which deals with legislation for home responsibilities protection.

I can offer my hon. Friend a meeting in the near future to discuss the issue of foster carers, about which he has also written to me. We intend to work with officials to see whether anything can genuinely be

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done. I do not wish to over-egg the pudding and suggest with nods and winks that a solution is just around the corner; I am telling him openly and honestly that this is another issue that I looked at when I first became a Minister, and I decided that something must be done. We are reviewing the matter. I cannot say any more, but I hope that hon. Members will understand that I recognise the problem and that it must be resolved in an effective way—[Interruption.]

James Purnell (Stalybridge and Hyde) rose—

Mr. McCartney: Does the hon. Member for Daventry wish to intervene?

Mr. Boswell: No.

Mr. McCartney: I give way to my hon. Friend the hon. Member for Stalybridge and Hyde.

James Purnell: I thank my right hon. Friend for his assurances and will take up his offer of a meeting. I hope that he will forgive me if I disappear half way through his speech, because I am already in hot water for doing the same thing in the main Chamber.

Mr. McCartney: It is quite all right for my hon. Friend to disappear, because I had come to the end of my remarks.

Mr. Boswell: In view of the extremely valuable contribution made by the hon. Member for Stalybridge and Hyde, I thought it only appropriate to give him first crack at the Minister in response to that extremely welcome announcement. This is a genuine question because I have not checked and do not know the answer: what happens to child benefit at present if it does not go to the foster carer? Does the money go to someone else, into a type of black hole, or is it accounted to the local authority en bloc?

Mr. McCartney: That is a very good question.

The Chairman: Order. The matter is not strictly within the confines of the debate, although it may be later on.

Mr. McCartney: The benefit goes to the local authority.

I have tried to be open and honest about the difficulties that we face. I hope that my remarks were helpful and that the hon. Member for Daventry feels able to withdraw the amendment.

Mr. Boswell: I am genuinely grateful to the Minister for his response. He was positive in relation to foster carers and I do not wish to trap him, but some of the detail needs to be considered and I wish him good speed in that. Should he keep us in touch with developments, I am sure that we would wish to give a fair wind to any improvements that can be made, especially if they are modest in cost.

The hon. Member for Stalybridge and Hyde unwittingly but charmingly revealed some of the difficulties of the debate, because when I looked up at the monitor I realised that Conservative Members have created what is probably an unprecedented situation; my hon. Friend the Member for Havant (Mr. Willetts) is speaking in the Chamber, my hon. Friend the Member for Hertsmere is participating in a debate on the social fund and I am trying to deal with this Committee. Therefore, we are splitting our forces,

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but I make no complaint about that. Credit should also be given to the hon. Member for Northavon: he has been associated with these amendments, but he cannot be here for the same reason. It might be a tribute to the Minister's Department, or to the importance of the subject—or to both—that we are all rushing around discussing social security this afternoon.

The Minister's responses have been helpful. I especially thank him for his offer to discuss how the mechanism for publicising how this is to work, and the accountability of the mechanism and its likely effects, can best be explained to the general public—if the Minister is setting out to do that. On occasion, I have been very pleased that he has been able to do that in other respects, for instance with regard to the Pension Service, so I am sure that we shall take him up on that offer. A dialogue with hon. Members will be constructive for his Department and for us.

I am also conscious of a personal difficulty: I was not present to hear my hon. Friend the Member for Hertsmere move the amendment. All hon. Members will be aware that constituency crises occasionally occur: a son of a constituent of mine is in prison abroad, and I had to deal urgently with that. However, my hon. Friend was right to raise the issue. The hon. Member for Northavon supplemented it with his own concerns, and the Minister gave a full response. These are complex issues that do not yield to a momentary soundbite or 10 seconds' consideration.

As I said, the amendment was moved by my hon. Friend. Had I moved it, I would seek the leave of the Committee to withdraw it, but, as the Minister will be aware, for procedural reasons, I cannot withdraw it because I did not move it. However, if the Minister were to negative it, on the assumption that we might take it away, reflect on it and return to it on a future occasion—or, rather, on the tacit assumption that that will be the case, as he cannot guarantee that—I would be happy to sit down and let the Committee take its course.

Amendment negatived.

Mr. Boswell: I beg to move amendment No. 25, in page 3, line 25, leave out subsection (6).

I think that we will now make some progress. The exchanges that have taken place on this clause have revealed some of our underlying concerns about it and the way that it operates, and as it is, in a sense, the central motor for the Bill, they will feature here and throughout our consideration—although we shall, of course, always be bearing in mind the relevance of what we have to do.

This is an overtly probing amendment. In response to it, I am sure that the Minister will want to say something about how he is going to approach the question of income, and we shall have some detailed points to make at a later stage. The amendment proposes to exclude subsection (6). That would make it impossible for him to produce regulations about what should and should not be treated as qualifying income. At a later stage, I am sure that we will want to

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talk about capital assessments, implied incomes and so forth—in much the same way that my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) and I briefly touched on such matters this morning.

There is also the entire question of earnings, and the frequency with which that plays into assessments, for example, particularly if they fluctuate, which will create problems. Anything else, including tax-sheltered incomes, such as tax-exempt special savings accounts and individual savings accounts, may or may not enter the equation.

I told the Minister that the amendment is probing and, in that sense, I do not want it to be agreed to because there clearly must be regulations. However, the Committee would be helped by an explanation of how he sees things panning out. Will he give us at least a foretaste or a trailer of the definitions of income, which we might consider later in Committee or on Report?

I make one or two points of general application. We are trying, when possible, to be equitable to different sources of income—that is not necessarily wrong. I understand the distinction between savings incomes and earnings incomes for older people, but, given that we are discussing a savings credit, as a broad principle, one would expect savings incomes to be treated in the same way irrespective of their source. That reflects a general worry that if older people saved to get an income from capital or if they bought a house to let—that is becoming rather fashionable—such income should be treated on all fours with the annuity income that they would otherwise receive from a private pension.

There is also a general principle, which is lesser but nevertheless relevant, that income from different sources should be handled in the same way. We will examine the assessment period later, and there will be provision to allow the decision maker who decides the level of pension credit to take a view on what is likely to happen. If the income is likely to change radically, a lower period than the five years that the Minister normally wants may be used. We want the provision to be broadly neutral between different types of income so that an accident would not propel a person into a comparatively unfair assessment. I am sure that the Minister wants that too.

I shall give an example. I recall a case of constituents who were left a piece of property in a will. A condition of the will was an obligation to make over the income arising from rental to a third party during the third party's lifetime. I have not come across such an arrangement before, but I am sure that it is well precedented. Although I have not looked up the file, I recall that there was awful difficulty with social security benefit because my constituents were deemed to have an income. The social security doctrine had difficulty dealing with the fact that they were obliged to pay out the income.

It would help the Committee if the Minister told us more about the form of the regulations and the broad criteria for dealing with the matter. We have received a taster from the Secretary of State about earnings. The

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Minister will note that owing to the temporary retirement of the hon. Member for Northavon, we shall not discuss amendment No. 4, which he tabled, or my amendment to that amendment. The amendments are about the treatment of earnings. Did the Secretary of State mean to imply that all earnings will be left out or that they will be included in some way? If we are on a level playing field and people earn substantial amounts of money, that might be knocked off against their pension credit. However, if they had received a five-year assessment and acquired the earnings later, that would not occur.

I have outlined considerations of consequence and practice, and it would be useful for the Minister to fill us in and respond to my points.

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