Examination of Witnesses (Questions 100-119)
MR RICHARD
WILSON AND
MS SALLY
WEST
10 NOVEMBER 2004
Q100 Ms Buck: What about the savings
credit as opposed to the guarantee credit element, because we
tend to wrap the whole of pension credit up as one, and it is
not really. I wondered if you have thought about this take-up,
because the argument that the very poorest are the ones who are
losing out, which may or may not be true and clearly would be
very worrying, we need to deal with it, but if it is the savings
credit, perhaps, that there is a lesser take-up than might be
expected, that would change our way of having to respond to the
situation?
Mr Wilson: I think that the Department
has been successful in bringing in people who have always been
entitled to benefit, people who were entitled to claim but never
claimed it, into pension credit, and there has been an increase
in those people claiming; and I think the Department has been
surprised at how successful it has been at persuading people with
high entitlements to claim but how unsuccessful it has been persuading
people with low entitlements to claim. There is a bit of a feeling:
how do you persuade these people just for a pound entitlement
a week, particularly if they are already on housing benefit, council
tax benefit and whether they are going to gain or not is unclear
and whether they are going to gain significantly is unclear. So
I think to a certain extent that has been borne out, yes, that
it is the people with the smaller entitlements who are not making
the claim, but there will still be considerable numbers of people
with big entitlements.
Q101 Ms Buck: Of course it would, but
the assumption that low take-up of itself tends to mean that the
very poorest are the ones who are not claiming would not be borne
out by what you are saying. Would you agree with that? I am not
saying it is not a problem. I am not saying there are not people
with quite a large entitlement who are missing out, but this kind
of slogan that it is always the poorest who are losing out may
not be borne out by your research?
Mr Wilson: Yes, I think often
that data is used because obviously the people who do not claim
are by definition the poorest, whereas those who do claim have
been topped up to a high level. I think that while there is evidence
generally that savings credit take-up is lower and guarantee credit
take-up has done well, considering specific groups, like BME groups
and people with sight loss, or hearing loss and other disabilities,
we know that the take-up in those groups can be really bad and
those groups are amongst the poorest in our society. It may be
that still there are specific groups who will have high entitlements
to benefit who are still not claiming because they have not been
reached by the pension service.
Q102 Ms Buck: Would the corollary of
that not be then just in terms of focus? Instead of perhaps, as
we were discussing earlier, high street bases for information
like Jobcentre Plus, should it not really be all focused on integration
with local authorities? Should this not be the single area that
we concentrate our effort: because it does seem that council tax
benefit would then be your biggest gateway to all of those groups
and that it is local authorities, certainly Jobcentre Plus, that
are most likely to be able to have an interaction with those hard
to reach groups that you are describing?
Ms West: I think the integrated
system is the ideal and there should be a lot of work concentrated
on making it happen as soon as possible. Also it needs greater
links with the health service. The DWP refer to people not getting
pension credit, as "hard to reach" groups. It is not
that these groups are isolated from everybody. They visit their
GPs, they go to hospitals, they have contact, but not necessarily
contact with the pension service in terms of pension credit. I
would like to see, as well as the sort of close integration between
local authorities and the pension service, the different health
service delivery agents taking benefit take-up as more of a priority,
not necessarily becoming an expert in all the different benefits
but being aware of possible entitlements so that a district nurse
or health visitor would automatically be perhaps providing the
information or offering a referral if that is what people wanted.
Q103 Ms Buck: In the 88 most deprived
local authorities with local strategic partnerships, some of them
have a representation from Jobcentre Plus and some do not, but
I am not conscious that any of them would have, say, pension
service representation. Is that something you have thought about,
because the local strategic partnership is supposed to be a means
of bringing together all of the key agencies to serve and provide
to the community and make sure that there is this proper integration
and service delivery?
Mr Wilson: We have over the last
few years looked at regeneration and what monies are going there,
what has actually been spent on older people and how older people
have been brought in to be involved in these kinds of partnership;
and actually it is very little. Many of these partnerships are
very much based on education and on worklessness and getting people
into jobs, and older people have often been excluded from much
of the work that has been going on in these deprived areas. It
is quite interesting when you go and look. For instance, I went
on a visit recently to see a Surestart programme in the deprived
area of Camden and how services are becoming integrated for people
of different age groups, and there have been huge innovations
in the way the Government delivers services to those groups, but
for older people there is still this fragmented service where
people have to go round all the houses saying the same things
over and over again to get their entitlement. I think a lot of
people have been left behind in those areas.
Q104 Ms Buck: This is something we could,
for example, raise, with respect to local strategic partnerships,
and ask what planning they are doing for pensions. One last question,
which is about changes of circumstances and whether you feel that
pensioners are properly informed about, or can find advice to
deal with, questions about changes of circumstances, and, in particular,
on the capital rules, when there are more complex cases, which
I think you raised, such as equity release schemes?
Ms West: One of the things with
pension credit that was well publicised was that there are less
changes of circumstances that you have to report, which is a good
thing. If your retirement income goes up or your savings go up,
you do not need to report that. However, it does make the system
more complicated because, for example, you may not have to report
your increase in savings to the pension service, but if you are
not getting the guarantee credit but you are getting savings credit
and housing benefit, you have to report savings going up to more
than £16,000 to the local authority. I think it is quite
early days to know whether this is going to have an impact, because
it is perhaps only when benefits are reassessed that if people
perhaps have not reported something to the local authority that
they should have done that will be picked up. So I think it is
difficult for people to know what they must report to whom, but,
as yet, we have not had a great deal of feedback about whether
this is going to cause problems in the future.
Q105 Mrs Humble: I want to ask you questions
about the interaction of the pensions credit and care charging.
Can I preface it by saying, "Help"? Does anybody understand
this? I have read and re-read and re-re-read all the many submissions
that we have had, briefing notes that we have had, and I just
want to go into a dark corner with a damp towel over my forehead.
If I cannot understand this, how on earth are elderly people supposed
to understand it? Is either of your two excellent organisations
giving them advice on this? Can we clarify, first of all, what
it all means: because, as I understand it for the non-residential
care charge, if you are getting the home help in, the savings
credit is fully disregarded, but then, I think it is Age Concern
who point out, if you do not qualify, if your savings are too
much, then you have to pay the full whack, which for some home
care charges now can be very considerable; and the neighbour next
door who gets a savings credit and it is disregarded, the person
paying the full amount with savings that could actually just be
a little bit above what the neighbour has, could end up very much
worse off. Is that true?
Mr Wilson: Yes, we are very fortunate
in the fact that we both have health colleagues who mostly deal
with this, but, yes, the Department of Health seem to—there
seems to be a break down in communication between the DWP and
the Department of Health, so it was quite late by the time the
Department of Health decided what they were going to do about
this. It was clear there was no extra money, that no-one had bid
for any extra money for them to pass over the more generous rules
that were being introduced on income related benefits over to
home care charges, and there are two different teams, one on residential
care and one on home care, which seem to have taken two completely
different views on how they should try and work this on a revenue
neutral basis. On the domiciliary care side, yes, it would at
first sight seem to be sensible, but if you just disregard savings
credit it actually can introduce the perverse result that you
describe, that people with a bit more savings can be worse off
than people with a little bit of savings. So you have these optimum
levels at which somehow you are supposed to realise that if you
had saved just the right amount you could be in the best position
when you need home care; but also in residential care, we also
feel that is unfair—both organisations—because your
savings credit it is kept so that you cannot receive the full
amount. Is that really fair? The Government says that it wants
to reward savings, but they are not for people who are in residential
care; they only can get a small amount of it, keep a small amount
of their savings credit.
Q106 Mrs Humble: But the Secretary of
State, has argued that setting the savings credit disregard equal
to the savings credit a person receives would produce an anomaly
in which someone with savings too high to qualify for savings
credit could be left with less money than somebody who had saved
less, which the opposite to the other one. I think I need a flow
chart. I think I need coloured diagrams to understand all this,
because people in residential care do get a lot—their savings
credit is capped a lot lower, it is four or five pounds as opposed
to the—five or six pounds as opposed to the £15.51?
Ms West: That is specifically
because of using the money that they had in a kind of cost neutral
way in order to ensure, to try to make it so people with higher
savings were not worse off. The problem with the system is because
they bring your income down to a certain amount. So if you are
getting help from the local authority in a care home, the personal
expenses allowance is £18.10. So having paid your charges,
you are left with £18.10. Had they just ignored savings credit,
then some people would get £18.10 plus the full £15,
but, as you pointed out, there would be people with higher levels
of savings who would still be on the £18.10. So what they
have done is enabled anyone with up to £4.65 in a care home
to keep that amount—£4.65 of savings credit to keep
that amount—people whose incomes are too high to get savings
credit can still get an extra £4.65 on top of their £18.10.
So it is capped for everybody. We feel that the fairest thing
would be to allow people to keep their full savings credit, but
also to increase that disregard for people with higher levels
of savings because we do not see any other way to fulfil the Government's
aim of enabling people to benefit from their savings. After all,
£18.10 is a very small amount to cover all your personal
expenses when you are in a care home. So that at least if people
were able to keep their savings credit and have their additional
income capped at that sort of £15—
Q107 Mrs Humble: How much would that
cost?
Ms West: I do not have that figure.
It may be available.
Q108 Mrs Humble: Would it be simpler,
instead of talking about pension credit and entitlement to pension
credit and all of the complexities and the winners and the losers,
to simply say that for people in residential care, they do not
have an entitlement to pension credit and instead just boost the
amount of the personal allowance, which has gone up by a lamentably
small amount over the years. Seven years ago it was about £16.
As you say, it is £18 something now. Would it be simpler
just to say, "If you go into residential care, no pension
credit but you get a lot more on your personal allowance"?
Ms West: I think it is important
to increase the personal allowance, because £18.10 is not
enough to cover clothing and toiletries and Christmas presents
for your grand-children and all those issues. So that would be
one way of ensuring that people have a more reasonable amount
of income when they live in a care home. You would not then give
people a higher income because they have got higher savings. So
I suppose that is a different policy intent, but I guess our biggest
concern would be to ensure that people in care homes have enough
income to be able to enjoy and participate in the life that they
have.
Q109 Mrs Humble: It is also important
to recognise that most of the residents who are in care homes
now are not the residents who were in care homes 20 years ago,
that people tend now to go into residential care when they are
much frailer and have much more profound social care needs. They
have to be assessed by social services as needing 24 hour a day
seven day a week care. So there are issues about what they need,
and also the financial support that the state could give them.
Perhaps this debate should be taking place against that backcloth.
I do not know.
Mr Wilson: I think both our organisations
have campaigned in the past for a higher amount for personal expenses
in care homes. The amount is too low; it does not leave people
with enough to buy the odd things that they want—newspapers,
toiletries and things like that, all the many little things that
people would like to have—but obviously having a different
system for people in care homes to outside in the community might
break some principles about the equality and how we treat people.
Should we be treating people differently just because they live
in a residential care home and do not hoard their savings? It
is a difficult question.
Q110 Mrs Humble: It will also take into
account the fact that some people go into residential care for
respite and then go back into their own homes. Finally on this
issue: both of you mentioned discussions between the DWP and the
Department of Health. There is a statutory basis going back to
the 1948 National Assistance Act on charging policies for residential
care. For home care the situation has been more discretionary
on local authorities, although the Government a couple of years
or so ago introduced a charging framework to try to get some more
national equity. Do you think that the DWP should be engaging
much more with the Department of Health in these sorts of discussions
and should the Department of Health be re-examining its charging
policy to take into account changes in benefit? They clearly were
not there. Charging policies may have taken into account all the
income support but not the complexity of pension credit?
Ms West: I think we definitely
would like departments working together at an earlier stage to
ensure that there is integration between Department of Health
charging policies and the pension service, because, after all,
from the point of view of the older person, it does not really
matter who was assessing them and what the different departments'
ways of working policies are, it is the amount of money they get
and getting a fair assessment and receiving their full entitlements.
Mr Wilson: The fact that every
different means-test, whether it is social services or pension
credit or housing benefit, seems to have different capital limits,
different tariff incomes, different ways of assessing, makes the
whole system very complicated. So if those could be brought into
line it would make the job of people working for the DWP and for
local authorities much easier and, of course, would make it much
more easy for older people and their families trying to navigate
the system, and actually one of the first priorities of working
together is to have one standard means-test so that everyone knows
they are going to be treated the same by different agencies.
Ms West: If you are in a care
home your savings are assessed for pension credit using the £1
for every £500 over a limit. If you are assessed by the local
authority, it is £1 for every £250, and you can get
some very anomalous situations to say nothing of the complexities
of people having to administer the systems.
Q111 Mrs Humble: There is also the complexity
of the situation where one partner of a couple goes into residential
care, the other one is living in their home as owner/occupier,
where there are different rules, as I understand it, for the Department
of Health charging policy and how DWP then allocates entitlement
to pension credit.
Ms West: We all struggle in working
out these rules, so it is very difficult for people to understand
how they are charged.
Q112 Chairman: We are always as a Committee
a bit loath to go into making recommendations as part of our reports
if we do not know what even the estimated general cost of some
recommendations are. If we were minded to look at a recommendation
in the field of the inter-relationship between pension credit
and domiciliary residence—some of these important questions
that Joan has just been putting to you—if you have any way
of estimating the cost of that, I do not recall it being in the
written evidence that we have got. It may be a very difficult
question to estimate, but if either of you have any way of capturing
what it would cost to deal with that and some of the ways that
you have been discussing, that would be very helpful, a short
note to the Committee.
Ms West: There may well be some
information. As Richard says, these are issues that colleagues
of ours work on as well; so we can check whether there has been
any information publicised.
Q113 Mr Dismore: Can I raise some questions
about the new direct payment system? Obviously the DWP have said
that they are not going to keep the order books, which are now
being phased out. In relation to people who cannot convert to
direct payment you have suggested that instead of issuing single
cheques, which is what is being intended, you would like to see
batches of cheques issued. Can you explain that idea in a little
more detail?
Ms West: I think both our organisations
have had many people contacting us about the withdrawal of the
order book, because in a lot of ways there are a lot of advantages
in having an order book where you know exactly what you are going
to get each week, you know it is going to be there because the
book says this Monday you can collect a certain amount of money.
We have had discussions with the Department on this for many years
since Peter Lilley first wanted to replace the order book with
a payment card in 1996. We are now at a situation where we know
that order books are going to go because the contract has finished
with the Post Office, or will finish in the spring-time, so the
Government has announced that the cheque is going to be the only
method for people who are not able or refuse to have an account.
So we have tried to look at if there is any way within the context
of a system of weekly cheques to make an improvement on what has
been proposed, and I think the biggest concern is, if you are
waiting for a cheque to come each week, what happens if the post
does not arrive, what happens if it arrives after your carer has
been and gone? One option seemed to be, without trying to completely
re-invent the order book, but to at least ensure that people have
a few cheques together, even if it was perhaps just four cheques,
so that you know that when your carer comes next Monday you have
already got the cheque, you are not going to be worrying about
the post and they can go straight and collect your money at the
Post Office. So it might be a possible way of trying to address
one of the major concerns without relying on weekly posted cheques.
Q114 Mr Dismore: One of the arguments
that the DWP put up is the cost of this order book system. I think
they say it is 68p per order counterfoil compared to 1p for a
direct payment transaction. What would be the cost of doing it
the way you suggest?
Ms West: I am not sure that we
have had any costings in terms of cheques. I cannot imagine that
sending several cheques together would be that much more expensive
than sending a cheque each week. In fact, it is potentially cheaper
than sending a cheque each week.
Q115 Mr Dismore: One of the other arguments
they come up with is the cost of fraud and theft, particularly
theft, and I think the estimate they have come up with is in the
region of £50 million, the number of people who have their
order books stolen, and so forth, and the money stolen. Presumably
if you are sending out a batch of cheques the benefit of sending
out single cheques is somewhat diminished by the risk of theft
or fraud.
Mr Wilson: Much of the theft or
fraud is theft or fraud where cheques go missing or where the
books went missing in the post. In the old system you would perhaps
give someone three or four opportunities a year for someone to
steal someone's pension book. With weekly cheques obviously that
is every week that person is going to sit there thinking, "Will
this cheque arrive?" You are giving people a lot more opportunities
for this post to go missing. It seems a very expensive way of
delivering every week to send one cheque when actually I think
people would prefer to have more at the same time, and it will
mean less postage cost. So I think that is something that will
have a major difference and that we are supportive of. Now what
we are doing is inventing a service that specifically is targeted
at the most vulnerable people, those who have multiple carers,
those who cannot use bank accounts, those who cannot remember
pin numbers, those who have dexterity problems and cannot press
the buttons. Instead of making it the most difficult to use system,
the one that would perhaps cause the most worry, why not make
it a really helpful system that is best targeted at these people
and gives them the service they want.
Q116 Mr Dismore: Have the Department
responded to your suggestion?
Ms West: They have told us that
it is not possible.
Q117 Mr Dismore: One point that you did
raise, which I think is an important one—I would like to
ask whether you have had any experience of this so far—is
that the Royal Mail are changing their delivery systems—certainly
in my area you are unlikely to get your post before lunchtime—and,
I think, obviously they are moving away from the early morning
post, and I think that is going to become a general trend. The
point that you made about carers often having gone before the
post has arrived perhaps, but is this an issue that you have raised
with the Department specifically?
Ms West: Yes, we have and there
are a few stock phrases that we are always told, which is there
is no question of people not getting their money and then, when
we have asked what will happen if people do not get their money,
we are told there will be a number of options. What you have to
do is contact the pension service, telephone them and then they
will decide the best option. In emergency situations this could
involve somebody from the pension service coming round with some
money, although we suspect that will not happen very often. The
other options are what happens now when somebody does not get
a giro, you could perhaps go to the office and they could give
you a replacement or they may provide another order and another
cheque will be sent in the post. The system is not ideal, I do
not think, for younger people now because it can mean that you
are quite a while without money, but I think for the older vulnerable
group of people who will be tending to use the cheque service,
it is going to be even less suitable because a lot of people will
not be in a position of being able to get to the office—I
do not know where the local office will be, job centre office,
I suppose, or a pension service surgery, if it happens to be there
on that day.
Q118 Mr Dismore: Have we formulated what
the options will be for people in a standardised way that they
have communicated to you and to your organisations if somebody
does not get their cheque on time?
Ms West: We have been given some
general information to explain that these are the kinds of options.
We did say could we see the guidance that staff would have in
order to help them decide which option would be suitable on what
occasion, but we are told that is internal information.
Q119 Mr Dismore: Do you get the impression
that guidance actually exists and you are not allowed to see it,
or that the guidance has not been formulated?
Ms West: The guidance they are
referring to I think is the guidance that staff would use now
if somebody's job seekers allowance giro, for example, did not
arrive.
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