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

Examination of Witnesses (Questions 400-419)


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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