Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 389-399)


18 MAY 2004

  Q389 Mr Betts: May I begin by giving apologies for Andrew Bennett, who would normally be chairing this meeting. He is unavoidably away this morning. Could I invite you to the Committee, Minister. For the sake of our record, could you introduce yourself, then perhaps you would like to make an introductory statement or we could go straight into questions, whichever you wish.

Mr Pond: Thank you, Mr Betts. My name is Chris Pond. I am the Parliamentary Under-Secretary of State at the Department for Work and Pensions and one of my responsibilities is council tax benefit. That is why I am particularly pleased that the Committee is including a consideration of council tax benefit in this inquiry because it is a very important element of the structure of council tax, ensuring some element of fairness in the way in which council tax is administered and the burden falls. Therefore, the challenge we are all trying to face, to make sure people get the council tax benefit which they need and deserve, I think will be assisted by the inquiry by the Committee.

  Mr Betts: We have joined-up committees as well as joined-up government.

  Q390 Sir Paul Beresford: Minister, congratulations. You are about the only minister I have seen who has not come along with an army sitting beside him for all the questions, so it is obviously going to be an easy morning, and I quite liked your opening shot. Quietly, within these four walls, we listened to you last week telling us how wonderful council tax benefit was and how the take-up was going, but our indication is that it is low and it is failing. Could you brief the Committee on what you are doing about it and how it is going to improve?

  Mr Pond: I think all of us would accept, Sir Paul, that take-up of council tax benefit is too low. We know that for pensioners we are talking about rates of take-up of between one-half and two-thirds, which all of us would agree is far too low, especially amongst pensioners who are also owner-occupiers. The question about what has been happening in recent years is, I think, a confused picture. Certainly the figures show that the take-up in proportionate terms has been falling. There may be a number of factors for that. One is the increasing proportion of pensioners who are owner-occupiers, who, as I say, are likely to have a lower rate of take-up than other groups of pensioners, let alone groups across the board. We have also seen increases in council tax benefit rates and applicable amounts which are above the rate of inflation. That has meant, with the other changes which no doubt we will have an opportunity to discuss in this session, that the number of people eligible for council tax benefit has increased, and that will mean that the proportionate take-up figures are likely to fall, even if there is not a great reduction in the number of people who are actually receiving the benefit, because, as you extend the benefit to higher income groups, then by definition the take-up will tend to be lower amongst those groups who are not normally used to claiming means-tested benefits.

  Q391 Sir Paul Beresford: When I knock on doors in my constituency and in others and meet pensioners or people who ought to be claiming benefits and ask them, there are a number of responses. We have some of the responses from some of the witnesses: it is too complicated, too intrusive, they cannot work it out, nobody is really going to be able to help them, the council does not seem to know. This is a form that is 31-pages too long. Do you think it is too long and too complicated? Do you think you are being paranoid about fraud? Have you tried to fill it in yourself?

  Mr Pond: I do not think we are being paranoid about fraud because we need to make sure that—

  Q392 Sir Paul Beresford: Too paranoid?

  Mr Pond: Too paranoid, because we need to make sure that we make the correct payments of the correct benefit to the correct people, and, indeed, at the correct time. We are pretty well focused on that, but at the same time we want to make sure that the system is as simple and as easy to understand as it possibly can be. Of course those two objectives are not necessarily contradictory. A simpler system, one that is easier to administer, is also one which is less likely to be subject to fraud and error. I would like to see a reduction in the size of the claim form. We have already made steps in that direction. The Pension Service is doing a lot of work to try to make sure that when people apply for pension credit they are told if they may be entitled to council tax benefit and they receive a copy of the form. Of course the home service for the Pension Service, the local service, will visit people in their homes if necessary and fill out the form for them. We are doing everything that we possibly can to make sure people understand the way the system operates, that people know if they are entitled to this benefit and that they are encouraged to take it up. We recognise that for many pensioners, especially, there is a feeling that perhaps council tax benefit is something they should not have to claim: they feel it undermines their independence and their dignity. That is why, through the council tax benefit awareness campaign which we launched a few weeks ago, we want to get across the message to pensioners that this is something to which they are entitled: they deserve it, they need it, and we want them to get it.

  Q393 Sir Paul Beresford: Have you tried to fill it in?

  Mr Pond: I have not tried to fill in the form, no.

  Q394 Sir Paul Beresford: It might help the officials.

  Mr Pond: I would welcome the Committee's assistance with that. I might have to turn to the local Pension Service's help as well. We recognise that it is inevitably too complex. There is certain information which we do require but we are trying to keep the form as simple as possible, despite needing that information.

  Q395 Sir Paul Beresford: Every department has targets and they like to impose targets. What is your target on this?

  Mr Pond: On take-up of council tax benefit we do not have a specific target. All I can say to the Committee is that we will not be satisfied until everyone entitled to that benefit is receiving that benefit, especially those pensioners, perhaps 1.7 million pensioners, who are entitled to this help but are not getting it. My target would be to say 100%. We do not want anybody to fall through the net.

  Q396 Sir Paul Beresford: I think we will note that. Are there any regional or local variations in take-up?

  Mr Pond: There are regional and local variations. There is often a problem where people are tending to be entitled to rather less in cash terms and that might mean that in areas like London and the South East there is an additional problem, but perhaps, Mr Betts, I could give the Committee a note on that point. I do not have the details here but we could look at what information is available on regional and local variations.

  Q397 Sir Paul Beresford: It is slightly more complicated when witnesses have told us that the council tax benefit system assumes that they are able to generate an income of 10% per annum on their savings. The best savings rates on offer are 4.5% per annum. Why does the CTB system assume such a high rate of return on savings and would the Department support proposals to bring the assumed rate more closely into line with the real rate?

  Mr Pond: As you know, Sir Paul, we are already moving in that direction. The assumed income on capital, the £1 per week assumed income for every £250 of capital or part thereof, has historically been built into the system. Through pension credit we have made that twice as generous—so we are only now assuming £1 for every £500 of capital or part thereof—which reduces the assumed interest rate to 10%. We recognise that is still too high and we are taking steps both to increase the generosity of the capital limits and also to ease the assumptions in terms of the income that is generated from that capital. We recognise that for pensions especially that is very important.

  Q398 Sir Paul Beresford: Targets on that?

  Mr Pond: No targets on that. The Chancellor has already given us the announcement that from April 2006 we will see a doubling of the minimum capital limits on the income-related benefits across the board to £6,000 which will be ignored altogether, and of course for pension credit guarantee recipients there is no upper capital limit. We are seeing what we can do to move in that direction further, but no specific targets.

  Q399 Mr Betts: We talk about the size of the form, which clearly is a massive undertaking for many people. You say that the Department and yourself are trying to get that down. Do you have a target that you have set, such as "Go away and produce me a form of, say, eight pages, or something much more reasonable"?

  Mr Pond: No, I have not done that, Mr Betts, partly because, as I say, there is certain information which we do need. We are trying to make sure that in bringing together that information the same people are not asked the same question several times. If we can get different parts of the Department and, indeed, different local authorities who administer council tax benefit to ask that question only once, then that will ease the process. It may mean that the form remains longer than any of us would wish, but the simplicity of filling out the form is increased as a result. But all the time we are looking to see whether or not we can reduce the size of those forms as well as make them easier to fill out. As you know, with pension credit we now have the mechanism whereby people can have the form filled out for them over the phone through the pension credit application line. It is then sent to them for them to check and sign. I would like to see us in the longer term being in the same position with council tax benefit. At the moment the Pension Service is able to send out the forms to people, and, indeed, for those who find the form difficult to fill in, as I say, the local service will visit people in their homes if they wish and fill it out with them. So we are doing everything we can to improve the system within the constraints of certain information that we need to administer the benefit properly.

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