Examination of Witnesses (Questions 400-419)
MR CHRIS
POND MP
18 MAY 2004
Q400 Sir Paul Beresford: I would suggest
from past experience that ministers have a great advantage over
officials: they have one foot in the office and one foot outside.
If you sit down in the office with a big black pen to strike things
out, and then ask them to argue with you on why it should go back
in, you might get it down to five pages.
Mr Pond: That is an exercise I
often undertake, Sir Paul.
Q401 Christine Russell: Minister, you
have already answered a number of the questions I was going to
ask you around the low take-up from pensioners and you have told
us how you are encouraging the Pension Service to get their act
together. What dialogue are you having with local authorities
to try to persuade them perhaps to do more to promote the discount
system?
Mr Pond: In March this year we
launched, I am told, the first ever national awareness campaign
on council tax benefit. We are doing that by working with local
authorities, because they are the bodies who have responsibility
for administering that tax. I have to say that they have engaged
in this campaign with enthusiasm. In my own county of Kent, for
instance, all the local authorities are working together to coordinate
the information they send to people about council tax benefit
to try to increase awareness. We have our national advertising
campaign, the campaigns through the regional press, the posters
and the leaflets, and the information which local authorities
can download in the form of standard information material which
they can make available to people in their local areas.
Q402 Christine Russell: What research
are you looking at commissioning within the Department, looking
at things like the savings limits, the thresholds?
Mr Pond: We are looking at a range
of different options. As you know, we have already introduced
a number of changes to the way in which council tax benefit works
and particularly the abolition of the restrictions on council
tax benefit for those in higher banded properties above band E.
We have also, as you know, changed the capital limits. As I said
in response to Sir Paul, we have increased the capital limits,
and for pensioners we have reduced the imputed income, and we
are also now looking at a range of different options to see whether
or not we could improve the take-up and perhaps get to people
who should be entitled to this. I understand that the range of
options has been shared with the Committee, and I have to say
that none of the proposals is from the Department for Work and
Pensions or the Government but they are the sorts of things we
are looking at to see if we can increase the take-up of council
tax benefit.
Q403 Christine Russell: One of the witnesses
that we have had has suggested that the responsibility for council
tax benefit for pensioners in particular should be transferred
to the Inland Revenue. Do you have any views on that?
Mr Pond: I think this is probably
the proposal from the New Policy Institute which they undertook
in their commissioned report for Help the Aged. That was certainly
a report which we welcomed because it made a number of important
points and it is something we are looking at very carefully. In
that report there are a number of important recommendations, including:
to raise the take-up of council tax benefit through the awareness
campaign—we have already launched it; to reform the capital
limits—as you have heard, we have already done something
on that; removing the rules on the CTB restriction—as I
have said, we have just done that. The radical proposal from the
New Policy Institute, which is that there should be a maximum
liability (in other words, that you would turn this from the council
tax benefit into a maximum council tax as a means of reducing
perhaps the stigma and increasing take-up) is one at which we
are looking with interest. I have to say that it does not change
the calculation of the benefit and does not necessarily reduce
the complexity of it but it does change the appearance and give
an opportunity for everybody to understand what the maximum council
tax would be payable for people in certain circumstances and that
would assist local authorities, voluntary organisations, government
departments in getting the message across to people of what help
they are entitled to. So it is an interesting proposal. It is
certainly not one that I could say we can adopt wholesale, and
certainly not in the short term, but it is one that we are looking
at carefully.
Q404 Mr Sanders: Before you started the
take-up campaign, there were a number of pilot take-up initiatives
in different parts of the country. What were the results of those?
Is there a clear increase in take-up in those areas, carrying
on from those pilots?
Mr Pond: I think one of the reasons
that we launched the campaign was on the evidence of those localised
campaigns—and of course they have been running in different
parts of the country for many years: many local authorities had
taken the initiative themselves to try to increase take-up by
getting information across to people. It was very clear that where
the effort goes into increasing take-up, it has an impact. By
introducing the national awareness campaign we wanted to learn
the lessons of some of those local initiatives and apply it across
the country. We have to recognise that we are dealing with local
authorities who are independent and autonomous, who will pursue
this campaign in different ways according to their local circumstances,
and that is something that we welcome.
Q405 Mr Sanders: What was the actual
result of the pilots? How successful were they? Was it an extra
quarter, third, half? Have the results of that continued beyond
the period of those pilots?
Mr Pond: Unless, Mr Sanders, inspiration
comes to me from behind in the next few seconds, I would suggest
that I provide . . . Now I know why inspiration did not come to
me before because the DWP itself has not carried out any pilots.
I assumed you were referring to the work that was being done by
local authorities and I do not think we have done a consistent
assessment of that.
Q406 Mr Sanders: There was one in my
area and it was clearly a government department that was behind
it.
Mr Pond: That one was very successful.
That was bringing together local authorities, voluntary organisations
and, indeed, the Department for Work and Pensions, to make sure
that all of us could provide a joined-up approach to ensuring
that pensioners not only received help with council tax benefit
but with a range of other support. That, I can tell you, was very
successful. It is something which will help us in developing the
Third Age Service which we are moving towards, which would be
making sure that we work with voluntary organisations, local authorities
and other stakeholders. So we have a holistic approach—and
I am not sure I like that phrase, Mr Betts—towards the needs
of older people.
Q407 Sir Paul Beresford: When you were
talking about the idea of a ceiling, one of the advantages in
there being some form of local taxation—whatever it is:
rates, council tax, poll tax, etcetera—is that the local
authority members are very aware that sitting out there are people
paying and also people voting, so it does tend to inhibit them.
Would it not therefore be a disadvantage if the people were protected
by a maximum?
Mr Pond: When we launched the
campaign, Sir Paul, we had to make it very clear that although
it was important that we get the help to those people who were
entitled to that help, that was not an alternative to local authorities
taking a much more responsible approach to the setting of council
tax levels than had been the case in the previous year, and I
am pleased to see that the sort of levels of council tax increases
now being proposed, which are averaging, I understand, 5.9%, are
very much more acceptable than the previous years' levels of over
12%. We cannot see the council tax benefit awareness campaign
as an alternative to local authorities taking that action, and
I am delighted, given the extra resources which central government
has put into local authorities—as you know, the 30% increase
in real terms in government grant over the past seven years—that
that is being reflected in a more responsible level of council
tax. That is one of the major contributions of course local authorities
can make to easing the burden of council tax on some of their
more vulnerable constituents.
Q408 Mr O'Brien: On 17 March the Chancellor
of the Exchequer made a very welcome announcement that he would
pay £100 to help with council tax costs but it only applied
to households with a person of 70 years of age or over. Why was
the cut-off point 70?
Mr Pond: One of the reasons was
that there is evidence that older pensioners in that group tend
to have a higher level of need than pensioners across the board.
They tend to be pensioners who have very little additional income
on top of their pension, very few of them are still working, and
that is a group it was felt appropriate should be given special
attention. In the context of our discussions this morning, I think
it is also worth putting on record the fact that almost half of
that age group, the 70s and over, are not claiming the council
tax benefit to which they are entitled[1],
and therefore we have to have a two-pronged attack on this, first
of all, to make sure they get the help to which they are entitled
from council tax benefit but also recognising that the measures
we are taking, such as the awareness campaign, will take some
time to come into effect. That £100 announced by the Chancellor
for that group was a very welcome, if you like, interim measure
to ease the pain that some of those people had felt as a result
of the rather large council tax increases the previous year.
Q409 Mr O'Brien: How many pensioners
are receiving the income guarantee?
Mr Pond: I do not have the figures
to hand in terms of the total numbers on the pension credit income
guarantee.
Q410 Mr O'Brien: How many under 70?
Mr Pond: I do not have the figures
with me. I could certainly make them available.
Q411 Mr O'Brien: How much would it cost
to extend it to all pensioners?
Mr Pond: I do not have those figures
with me again, Mr O'Brien. I apologise but I could certainly get
those to you.
Q412 Mr O'Brien: We understand it would
cost in the region of about £250 million but, because of
the lack of take-up to which you referred earlier, again we are
advised that for the years 2001-02 there could have been £770
million not taken up. So there is no hardship through the Department
if it were extended to all pensioners, would you agree?
Mr Pond: It is an issue of balance
and use of resources, is it not? There is a commitment that we
should get that extra money, the £0.75 billion to £1
billion that is not being claimed in council tax benefit, to those
people regardless. The announcement by the Chancellor of the additional
£100 was on top of that—it is not a trade-off, one
to the other—and the judgment was made that those pensioners
over 70 were the group who were likely to be most in need, likely
to have higher levels of fuel poverty, likely to be feeling a
greater burden in terms of the council tax increases they had
seen and other elements of expenditure, and the judgment by the
Chancellor was clearly that that was an appropriate cut-off point.
Q413 Mr O'Brien: But if there is money
retained, saved, for the year 2001-02, that has not been spent.
It was not taken up. Do we take it in the first instance that
the £100 will continue or is it just a one-off payment? If
it is just a one-off payment, then £250 million out of what
was saved could have been used for all pensioners to receive the
£100, because all pensioners had to pay the tax. Would you
not agree that that could have been applied on this occasion?
Mr Pond: In answer to the question:
Is it a specific one-off payment? it was explicitly introduced
as a payment for this year alone. The Bill, of which we had the
second reading in the House last week, does give the option that
similar payments might be made in future years, but it has been
made clear that it is a one-off payment in terms of its commitment,
and we would have to see what happens in future years. That would
be a judgment for the Chancellor, taking account of the circumstances
of the time. In terms of the saving on council tax benefit and
other benefits, as I have said, the objective of the Government
is to make sure that people get that help. We are not seeking
to save that money and to transfer part of it across to this £100
payment, but part of the consideration might well have been that
in order to try to get that help to this particular age group—and
I have said that 48% of them are not claiming the council tax
benefit to which they are entitled[2]—the
quickest and most effective way of getting that help through to
people would be the £100 payment. I think that was probably
part of the consideration.
Q414 Sir Paul Beresford: Would you accept
that many people outside see this as another problem booted into
the long grass, and if you walk into the long grass you will stumble
over an awful lot of problems?
Mr Pond: Nicely put, Sir Paul,
but the fact is that we are dealing with the level of council
tax, as you acknowledge. We are seeking to make sure people get
the council tax benefit to which they are entitled. There was
a particular problem for the most recent round of council tax
increases which we recognised did place a burden particularly
on older pensioners. We do have the awareness campaign; it will
take a while to bite. We do have the extensions of eligibility
for people, which inevitably will take a while to bite. We do
have the measures now to get council tax levels down to a more
acceptable level, but that did not help people paying the 12%
plus average increase in council tax, and I think that is why
this measure was taken.
Q415 Sir Paul Beresford: The council
tax rise you are talking about, it is not very often it becomes
negative, so next year it will still go up.
Mr Pond: It will still go up,
but it will go up by a much more acceptable amount, and the £100
will help towards that, by which time we hope we will have had
even more success in getting council tax benefit to the people
who are entitled to it.
Q416 Mr Brady: If it were to become a
one-off payment, would it not be more straightforward, more logical
and easier to administer just to increase the level of the basic
state pension for over 70s?
Mr Pond: It is going to be fairly
easy to administer because of course it is payable through the
normal winter fuel payments mechanisms, and it simply means that
households in which there is somebody over 70 will receive up
to £300 instead of £200; those with somebody over 80,
up to £400 instead of the £300. It is a straightforward
mechanism, easy to understand. We expect the take-up is going
to be pretty universal. There is an argument about whether or
not resources should be added to the basic state pension. We have
increased the basic state pension by more than inflation over
the years, as members of the Committee will be aware. If we had
added this money to the basic state pension, those on whom we
are focusing attention this morning, the very poorest, would not
have been helped by that, because of course those on the guarantee
credit would have lost most or all of that increase. This makes
sure it goes to the people who need it in a simple and straightforward
way and it contributes to the additional £10 billion that
we will be spending this year on pensioner incomes in comparison
with the position in 1997 when we took over.
Q417 Mr Betts: How do the accountancy
practices work in terms of council tax benefit inside your Department.
Does the Treasury assume each year that you have a certain take-up
of council tax benefit and if you are successful and the take-up
goes up you have an overspend in your Department?
Mr Pond: No, I think the assumption
would be that the council tax eligibility is there and the Treasury
has been very supportive in our campaign to make sure people get
that entitlement.
Q418 Mr Betts: So if you increase the
take-up by 20%, if the take-up is really successful that is extra
cost.
Mr Pond: Yes.
Q419 Mr Betts: Where does it come from?
Mr Pond: The Treasury would provide
those resources.
1 Based on the latest available figures, the Department
for Work and Pensions estimates that just under half of those
entitled to CTB but not claiming this (entitled non-recipients)
are aged 70 or over. Back
2
Based on the latest available figures, the Department for Work
and Pensions estimates that 48% of entitled non-recipients are
aged 70 or over. Back
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