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House of Commons

Monday 13 January 2003

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Child Benefit

1. Andrew Mackinlay (Thurrock): If he will make a statement on planned improvements to child benefit and its delivery. [89700]

The Secretary of State for Work and Pensions (Mr. Andrew Smith): This Government have shown their commitment to universal child benefit as the foundation of their support for children, with record increases and child benefit for the first child up by #4.70 a week—a 25 per cent. real-terms increase. From April, the Child Benefit Agency will transfer to the Inland Revenue, so families will receive Government financial support for their children from a single Department.

Andrew Mackinlay: Bearing in mind that hundreds and thousands of mothers who are currently recipients of child benefit will also be beneficiaries of the new child tax credit, is it not possible that all the money could be paid in one lump sum through the payroll taxation system? Will not many people who currently receive child benefit be confused by the similar names of the benefits and not understand what they will soon be entitled to receive through the child tax credit?

Mr. Smith: I take my hon. Friend's point, but I would have thought that most parents, and mothers in particular, would like to know what they are getting in child benefit as well as what they are getting in child tax credit. The key issue is how much better off they will be as a consequence both of the increase in child benefits and the introduction of the new child tax credit.

Sir Archy Kirkwood (Roxburgh and Berwickshire): I acknowledge that the Government have done much to increase the volumes of money that are paid through child benefit, which is welcome. The Secretary of State mentioned that a major transformation is coming in April, when the child benefit centre goes to the Inland Revenue. Is he not concerned that the decision-making report that he made to the House last July indicated that some 57 per cent. of child benefit calculations for

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decisions against which appeals could be made were accurate? That means that 43 per cent. were inaccurate. Surely, that needs to be sorted out before the transfer is effected in April.

Mr. Smith: I share the hon. Gentleman's concerns about that issue and note his comments. Work is being undertaken by the Child Benefit Agency specifically to improve its performance. I am pleased to say that its performance has been improving in many respects and I am confident that it is well placed to make the transfer to the Inland Revenue satisfactorily.

Means-tested Benefits

2. Mr. Peter Viggers (Gosport): What proportion of pensioners are eligible for means-tested benefits. [89701]

The Minister for Pensions (Mr. Ian McCartney): Good afternoon, Mr. Speaker.

About one third of pensioner benefit units have been in receipt of income-related benefits over the past five years. We want all pensioners to have a decent and secure income in retirement. Our first priority was to help the poorest, which is why we introduced the minimum income guarantee. As a result, no pensioner has to live on less than #98.15 a week or #149.80 for a couple. From April this year, the level will be #102.10 for a single person or #155.80 a week for a couple.

Mr. Viggers : The Chancellor of the Exchequer once memorably told the Labour party conference that he wanted to end the scourge, as he called it, of means-testing pensioners. Of course, this Government have done exactly the opposite, and by April about 60 per cent. of pensioners will be means-tested. Has the situation developed to such an extent, undermining people's independence, as a result of a sequence of incompetences and serious blunders, or, as I suspect, because of a cynical and deliberate intention by this socialist Government to undermine people's independence and increase their dependency?

Mr. McCartney: Christmas has come early; that is a second present for me. The hon. Gentleman accused me of being a socialist. I plead guilty.

It is bit rich to hear Opposition Members talking about means-testing. This Government are not means-testing; we are targeting poverty, not pensioners—[Hon. Members: XAh!"] Hon. Gentlemen should listen for just a second. We are ending the weekly means test. Those aged 65-plus will need to report major life events. Instead of a weekly means test, financial circumstances over a period of five years will need to be reported. We are abolishing the upper capital limits of #12,000 and #16,000 for people in residential care and waits for hospital operations are down from 13 to six weeks. On calculations relating to personal injury awards, notional earnings for unpaid work, charitable donations, credit or insurance and disability allowances, this Government are getting rid of the means-testing created by the previous Tory Government.

Lynne Jones (Birmingham, Selly Oak): The Secretary of State is on record as describing the pension system as

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an incomprehensible maze. Does my right hon. Friend accept that part of the incomprehensibility is due to the increase in means-testing in the system for helping pensioners, and that the Green Paper deals with the complexity of only the private pension scheme? As one socialist to another, I ask him whether the Government will examine more closely the relationship between private pensions and the basic and secondary systems that the state provides to simplify that incomprehensible maze.

Mr. McCartney: I thank my hon. Friend for her question. In the Green Paper and through modernising the public pension system, the Government are simplifying the system. The amount of money that we spend on pensioners' income, not bureaucracy, is growing. The pension credit alone means an additional #2 billion a year to tackle pensioner poverty. I make no apology for doing that.

Mr. Steve Webb (Northavon): In order to evaluate the Government's strategy of mass means-testing for pensioners, we need information on the number of pensioners who are entitled to means-tested benefits but do not claim them. The last figures show that hundreds of thousands of the poorest pensioners were missing out, but they relate to the previous century. When will we get figures for this century? Is the delay due to incompetence or a more sinister reason?

Mr. McCartney: In this House, the hon. Gentleman has from time to time tried to put pensioners off claiming their entitlements, whether the minimum income guarantee, winter fuel payments or the pension credit. Instead of dancing on a pinhead about uptake, he should say whether Liberal Democrats support the introduction of the pension credit, which means an extra #2 billion a year for pensioners. He can either support that or continue his campaign of denigration and put pensioners off claiming their rights.

Mr. Kelvin Hopkins (Luton, North): There can be no doubt that pensioners are better off under the Labour Government than under the Conservative Government. Indeed, the Conservative Government broke the link between pensions and earnings. However, does my right hon. Friend agree that the next logical step forward to overcome the problems of means-testing and take-up is converting the minimum income guarantee into the state pension? That would automatically link pensions with earnings again and overcome the problems of means-testing.

Mr. McCartney: My hon. Friend's proposal would mean an additional #10 a week for all pensioners, but a reduction of #17 a week for the poorest pensioners. We want real distribution of resources, which means tackling poverty. If we want to do that, we must put our resources where they are required for pensioners who do not get a decent income.

Mr. James Arbuthnot (North-East Hampshire): Does the Minister accept that if he does not do what the hon. Member for Luton, North (Mr. Hopkins) suggested, the minimum income guarantee and pension credit will act as a serious disincentive to save for those who are on

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average and lower incomes? Will not that ultimately mean more rather than less means-testing under the Government?

Mr. McCartney: This is the first time in history that a Government are rewarding savings through the pension credit. The Conservative party opposes the minimum income guarantee and winter fuel payments and wants to privatise the basic state pension. That lies behind the right hon. Gentleman's question. It is time that Conservative Members told the British public what they are up to with pensions. While the right hon. Gentleman tries to hide that, we shall get on with eradicating pensioner poverty.

David Winnick (Walsall, North): Does my right hon. Friend remember that however cold the winter months became before 1997, pensioners did not receive a penny, and that since we have been in office, the #200 per pensioner household has been a good socialist move? Why did not the Tories do that? Why were they so mean that they deprived pensioners? [Interruption.]

Mr. Speaker: Order. The Minister does not need to answer that.

Mr. Oliver Heald (North-East Hertfordshire): When the Chancellor spoke of getting rid of means-testing, did he mean, as the Minister suggested, simply renaming it as Xtargeting"? Is not it time that the Government accepted that they have increased the number of people who do not claim the benefits to which they are entitled? Millions of people live on 30 per cent. less than what the Government consider appropriate. It is estimated that 1 million people will not claim the pension credit, even by 2006, according to the Government's figures. All those involved with pensions are devising proposals to restructure the basic pension system so that people receive a larger state pension, yet the Government complacently sit on their hands. They simply twiddle and produce a Green Paper that recycles old information, which we have heard time and again. Is not it time that the Government did something to help poor pensioners?

Mr. McCartney: The hon. Gentleman should calm down. I can answer the point about 1 million people not claiming the pension credit—that policy has not yet been implemented. The hon. Gentleman should ask a sensible question. The one organisation that brutalised pensioners is the Conservative party. The Government inherited a legacy of pensioner poverty and are eradicating it.

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