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Direct Payment

9. Mr. James Gray (North Wiltshire) (Con): How many people are still to be contacted about conversion to direct payment of benefits and pensions. [167685]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): The conversion of customers to direct payment is going well. More customers now have their benefits and pensions paid into an account than by order book and are benefiting from the greater choice about where and when they collect their money that direct payment gives them. Of the 10.2 million customers that we have contacted so far, more than 70 per cent. have responded positively, and among pensioners and child benefit customers the proportion is nearer 80 per cent. We shall contact the remaining 4 million over the next few months. I am sure that the hon. Gentleman agrees that the measure is a major step forward in the Government's fight against financial and social exclusion.

Mr. Gray: I am grateful for the Minister's response, but it was not entirely clear. He spoke about pensioners responding positively. Does that mean that they said they want their pensions to be paid directly into bank accounts? Is he saying that a total of 80 or 90 per cent. of all benefit payments go directly into bank accounts? If that is the case and if, by his logic, that is a success, does he not have concerns about rural post offices such as the Kington St. Michael post office, which I opened in my constituency recently and which will have little hope for the future?

Mr. Pond: It is true that pensioners and others are voting with their feet about direct payment. Some 89 per cent. of new pensioners are opting to have their pensions paid into an account, as one might expect. The hon. Gentleman knows that we are committed to the post
 
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office network, especially in rural areas. That is why we are putting £2 billion into the network, including £450 million to protect rural post offices such as the one that he mentioned in his constituency. We are committed to that and we are doing something about it. What a shame that more post offices closed when the Conservative Government were in office.

Mr. Michael Weir (Angus) (SNP): Is the Minister aware that later this week there is likely to be a further round of post office closures in Scotland, largely as a result of the transfer to direct payment of benefits? How many more post offices does he expect to close if he is successful in strong-arming the remaining 4 million recipients into direct transfer?

Mr. Pond: The future of post offices depends on their ability to provide a full range of facilities for the communities that they serve. That includes banking and financial services. In the past year alone, there have been 25 million banking transactions through post offices. It is through the expansion of such services that we will be able to maintain the network, which is so valuable to all of us, and to which we all want to pay tribute. But we cannot hope that the post office network will remain there when people are, as I said, voting with their feet, regardless of what the Government do in terms of promoting direct payment.

Pension Credit

11. Mr. Anthony Steen (Totnes) (Con): How many pensioners have applied for the savings element of pension credit in the last year; and how many of these were eligible. [167687]

The Minister for Pensions (Malcolm Wicks): I am pleased to report that in March we had the largest ever increase in pensioner households joining pensioner credit—138,000. Now 1.67 million households are receiving the savings element of pension credit, including 623,000 households that were not formerly receiving the minimum income guarantee, so these households are being rewarded for their savings for the first time. In the hon. Gentleman's constituency, some 4,760 households are now receiving pension credit, with an average award of just over £39 a week. Of these, 3,490 are receiving the savings credit.

Mr. Steen : There could be even more pensioners getting pension credit if their modest savings were not preventing them from getting it. Can the Minister explain the Government's hypothetical figure of 10 per cent. interest per annum on pensioners' capital, whereas 4 per cent. is all they could get? They save money and are then charged 10 per cent. by the Government, but they can never get 10 per cent. on their money anywhere else. How do the Government reach the hypothetical figure of 10 per cent., which is preventing more people from getting the credit?

Malcolm Wicks: Whatever divides us, I am sure that the hon. Gentleman would agree that that is an advance on the old Conservative system of income support, where money was taken off, pound for pound. This Government introduced the savings element. Let us
 
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remember—we do not want to misinform constituents about this—that the first £6,000 of savings is not taken into account at all in the calculation. That covers the vast majority of pensioners. Some 85 per cent. are covered by the limit on the £6,000. That is a far more generous treatment of interest and savings than under the old system.

John Robertson (Glasgow, Anniesland) (Lab): I congratulate my hon. Friend on the work that he has done and on the £46 a head, on average, that the constituents of Glasgow, Anniesland are receiving in pension credit. What does he intend to do about the mop-up when we get to the end of June and have gone round all the pensioners? What do we do then to catch those who did not apply?

Malcolm Wicks: At the end of last month 2.4 million pensioner households were receiving pension credit. That represents 2.9 million individuals, so we are where we intended to be in the campaign. We have a target of 3 million by 2006. We now enter a phase in which, through home visits and by working with voluntary organisations and others, we go back to people who have not yet claimed. We all have a role in that. I have previously described my hon. Friend as a mighty champion of older people in his constituency, and he is. One of the dangers that we face, however, are the cynics in the House, not least on the Liberal Democrat Benches, who go round the country stirring up apathy and confusion about pension credit. They get headlines, and that is putting some people off claiming pension credit. That is why we will redouble our efforts to make sure that pension credit becomes a triumph of hope over fear.

Mr. Henry Bellingham (North-West Norfolk) (Con): How many pensioners in the country currently receive means-tested benefits?

Malcolm Wicks: Some 2.4 million people currently benefit from pension credit, and I can write to the hon. Gentleman with the details to give him a fuller answer. When he meets constituents who receive pension credit for the first time and who gain by £10, £20 or £30 extra a week—our local Pension Service sometimes brings extra benefits to the attention of his elderly constituents—does he say to them, "This is terrible. You are a victim of means-testing."?

Housing Benefit

12. Dr. Alan Whitehead (Southampton, Test) (Lab): If he will make a statement on the reform of housing benefit. [167688]

The Parliamentary Under-Secretary of State for Work and Pensions (Mr. Chris Pond): We have already made    considerable progress, both in improving administration of housing benefit and towards creating a simpler, fairer system, enhancing work incentives and cutting the risk of fraud and error. In the private rented sector, we have introduced our new local housing allowance, which is a flat rate allowance based on size of family and the area in which people live, and we are
 
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exploring how we might extend reform to the social sector, although we are mindful of the two sectors' different characteristics.

Dr. Whitehead : Will my hon. Friend accept that reform of housing benefit in the private sector was well overdue, with about eight out of 10 recipients of housing benefit in private rented accommodation, including a large number of my constituents, not being able to cover their rent from housing benefit? Have the standard housing allowance arrangements in the pilot areas addressed that problem?

Mr. Pond: These are early days in which to assess the impact of the local housing allowance in the pathfinder areas, which started moving over to the system between November and February, but the early indications are that the local housing allowance works well. To take account of local circumstances, the housing allowance in each area is based on the local reference rent. To date, the indications from the pathfinders are positive, and the early scare stories about landlords walking away from the system or of tenants absconding without paying have not proved founded.

Miss Anne McIntosh (Vale of York) (Con): Will the Minister confirm that identity cards should be one of the tools in the reform of housing benefit to rule out fraud?

Mr. Pond: My Department is in favour of the move towards identity cards, which could, in a number of respects, reduce fraud in the system, and that is as true of housing benefit as it is of other benefits. These are early days in the development of those proposals, but we favour the principle.

Mr. Andrew Love (Edmonton) (Lab/Co-op): May I congratulate the Department for Work and Pensions on its success in using housing benefit to reduce the use of bed-and-breakfast accommodation, especially in Greater London? I understand that it is considering making changes, however, and I ask the Minister carefully and specifically to examine any policy to pay housing benefit directly to tenants, which might lead to the loss of accommodation in London.

Mr. Pond: We carefully examined whether direct payment to tenants has the effect that my hon. Friend suggests, and we will continue to consider the matter in our examination of the pathfinders. He knows that the reforms have safeguards built into them—for example, once payment is more than eight weeks in arrears, it reverts to the landlord, and vulnerable groups are exempt from the scheme. We have a pathfinder in London, and we will examine its impact especially carefully.

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