20 Jun 2005 : Column 503

House of Commons

Monday 20 June 2005

The House met at half-past Two o'clock


[Mr. Speaker in the Chair]

Oral Answers to Questions


The Secretary of State was asked—

Pension Credit

1. Adam Afriyie (Windsor) (Con): What assessment he has made of the impact of pension credit on the private pension and savings industry. [5073]

5. Mr. David Amess (Southend, West) (Con): What his assessment is of the impact of pension credit on incentives to save. [5077]

The Secretary of State for Work and Pensions (Mr.    David Blunkett): The statistics that we are publishing today show that those in retirement have benefited to the tune of 2.7 million households in receipt of pension credit. That has lifted millions of people out of poverty in retirement and ensured, through the savings credit, that those who have shown thrift and saved above the basic pension level are not damaged in the way that otherwise would be the case. It is precisely because of the complications in relation to avoiding pensioner poverty in years to come that we established Adair Turner's commission and why we have appealed to everyone to join positively in the dialogue that we are having across the country to find a consensus to ensure that, while the pension credit helps to lift people now, they in turn will be able to invest for their own salvation in the years to come.

Adam Afriyie: I thank the Secretary of State for a long answer to a straightforward question. Some 13 per cent. of the population of Windsor are above the age of 75, and I was alarmed to discover at a recent lunch at Age Concern in Dedworth that none of the people to whom I spoke were claiming their full means-tested benefits, largely because they found the forms complex, intrusive and stressful. First, will the Secretary of Secretary tell us how many pensioners fail to claim their full credit? Secondly, will he apologise to pensioners for making the system so complicated?

Mr. Blunkett: I thank the hon. Gentleman very much and welcome his long supplementary question—we are all failed in the House, one way or another, Mr. Speaker.
20 Jun 2005 : Column 504

The people who have benefited most from the pension credit are women. Some 90 per cent. of single women over retirement age receive the pension credit because of the failure in the past to recognise the change in demography and in working and social patterns and, of course, the opt-out from national insurance contributions. I suggest that, in the hon. Gentleman's constituency, it would be much better to go out and advocate that people take up their right—it is a right—than to try to blame the Government for the fact that people are not taking up an option that has, over the past eight years, raised the basic pension entitlement from £62 to the new pension credit entitlement of £109.45. That is a tremendous achievement, and we should build on it.

Mr. Amess : Although I might admire the Secretary of State's presentation of his case, surely he realises that he is losing all credibility in this matter when 1.5 million people who should take up the benefit do not do so, when the Minister for Pensions Reform was barracked by the pensioners parliament and when, finally, the Pensions Commission's report says that means-tested benefits are a positive disincentive to save.

Mr. Blunkett: I have always enjoyed the hon. Gentleman's flattery, and I shall do so in future. I remember that he once praised the National Union of Teachers' attack on me, and we now hear the pensioners parliament in Blackpool being applauded for attacking my hon. Friend the Minister for Pensions Reform, who is doing a first-rate job in explaining how getting 2.7 million households out of poverty is a good thing, not a bad thing, and something of which we should all be very proud. The answer must be to get individuals, employers and the Government to put together a programme for the future that meets the impossible aspirational circle according to which people want to live longer, to live better, to retire earlier and want someone else to pay. We in Government need to have answers to those questions, which is why we are working on the dialogue with the Pensions Commission to find answers for the future.

Mr. Frank Field (Birkenhead) (Lab): Does the Secretary of State accept that, with pension credit, the Government have offered more help to the poorest pensioners than any other Government in our history, but that, because it is means-tested, that credit is not sustainable in the longer run? Does he look to the Turner commission to come up with one or perhaps two long-term solutions that will impose a shelf-life on the pension credit?

Mr. Blunkett: My right hon. Friend has made a substantial contribution over many years to this debate, and I am looking to the commission to be able to lay out a framework on which the Government can, with the dialogue that I have described, reach a consensus across parties and across the country. We have invited the political parties in the House to become part of that consensus. Of course, simplicity does not always yield the results that we require in circumstances where an historic failure to save and where people were encouraged to opt out of making their contributions have led us to take immediate action. It is absolutely
20 Jun 2005 : Column 505
true, however, that providing incentives to people to save for their retirement, encouraging people to work out what income they think they should live on in retirement and helping them to achieve that goal makes more sense than having to bail people out of poverty—doing that is not the reverse of ensuring that it does not have to be done in years to come.

Miss Anne Begg (Aberdeen, South) (Lab): Many pensioners in Aberdeen are delighted by the pension credit and have been claiming it. A lot of people, many of whom were women, told me as I was campaigning during the election that they felt that they had never been so well off. However, although the take-up of the guarantee credit is quite good, more could be done to encourage people to take up the savings element of the credit. In Aberdeen, the work of the Pension Service has been very good, so that is no reflection on its efforts. It has done quite a lot of outreach work, which is certainly paying dividends. Will my right hon. Friend encourage the Pension Service throughout the country to do more outreach work, through which it goes into communities to try to track down those who should be claiming what they are entitled to, but are not?

Mr. Blunkett: My hon. Friend is entirely right. Many people feel aggrieved as they believe that because they have saved they are not entitled to the pension credit, although, under the savings credit, they would in fact be able to gain. It is thus important to reach out to them. We have the task of ensuring that we use cross-referencing methods, as we do with other benefits, to ensure that take-up in one area encourages people to take up in another, but we still have some way to go.

Sir Malcolm Rifkind (Kensington and Chelsea) (Con): Will the Secretary of State confirm the statement he gave in an interview with the Financial Times last Monday in which he said that when considering future entitlement to pension credit and other pensions, he intended to take into account capital as well as income? Does he realise that if he goes ahead with that proposal, it will be the first time in our history that people's capital, including the value of their homes, is taken into account when considering whether they receive pension credit or other forms of pension? Can he explain to the House where that appeared in the Labour party's election address?

Mr. Blunkett: I warmly welcome the right hon. and learned Gentleman to our first Question Time. I simply advise him not to read The Daily Express—[Hon. Members: "It was the Financial Times."] And not to take too literally The Sunday Times's version of the Financial Times interview, which is on the website, so everyone with the good will and intelligence to do so can read it for themselves. The interview says nothing of the sort. It says, as I have said over eight years in Government, that assets are absolutely crucial for the future, and that there will be a gap between those who inherit assets in the form of housing from parents and grandparents and those who have always been in rented property. That will add to the generational disadvantage of one group and the advantage of another. When building retirement income, we should all take into account the fact that we are talking about assets and not just pension
20 Jun 2005 : Column 506
investment, but we should not somehow penalise people. If people would simply like to read the interview, I would be proud to have a debate with them about how we take on that challenge for the future.

Sir Malcolm Rifkind: I happen to have read the interview and indeed have it in front of me.

Mr. Blunkett: Read it out.

Sir Malcolm Rifkind: I am grateful for the right hon. Gentleman's invitation. Does he accept that he said in the interview—these are his words, not mine—on considering future pension entitlement:

Mr. Blunkett: Yes, that is exactly what I said. It represents exactly the same debate that the right hon. and learned Gentleman wishes to have through his private Member's Bill about how we give people the ability through annuities, much more radically, to translate the investment that they hold into realisable assets that can be spent in retirement. It is exactly the same issue that he wishes to debate around annuities. Next time he wants to take me on, I hope that he will read full quotes from the Financial Times and not just a partial one.

Ms Diane Abbott (Hackney, North and Stoke Newington) (Lab): The Government are to be congratulated on lifting many pensioners out of poverty through the pension credit, but if it is the case that more than 1.5 million people who are entitled to claim do not do so, does the Secretary of State agree that a worrying number of people are thus trapped in the direst poverty? As individual MPs we can all encourage pensioners with whom we come into contact to claim, but do the Government have further plans to bear down on the worryingly large number of people who do not claim when they are entitled to?

Mr. Blunkett: The figures that I cited show a substantial drop in the 1.5 million, which is a positive outcome of the campaign for people to take up the credit. Whatever the disagreements that people may have on so-called means-testing—the criticism varies depending on whether they like child tax credit and the working tax credit or do not like the pension credit—it is beholden on all of us, including those who speak on behalf of people who are in retirement, to sell that message.

As I said, we have further plans for cross-referencing those who receive other forms of benefit. We have done that already, as will be revealed later this afternoon, in relation to getting more people to take up council tax benefit. We can do much more on people taking up pension credit.

Mr. David Laws (Yeovil) (LD): May I belatedly welcome both the Secretary of State and the Conservative Front-Bench spokesman, the right hon. and learned Member for Kensington and Chelsea (Sir Malcolm Rifkind), to their new responsibilities? The Liberal Democrats are keen to play a constructive and positive
20 Jun 2005 : Column 507
role in finding a consensus on pensions. Is there a consensus in the Government on the future of means-tested benefits, such as the pension credit? In particular, is there a consensus between the Secretary of State and the Chancellor of the Exchequer? If so, what is it?

Mr. Blunkett: I would like to reciprocate the hon. Gentleman's welcome. It would have been easier had the leader of the Liberal Democrats not laid out last week, in such detail and with such prescription, what they do not favour before tomorrow's meeting, to which they are invited.

Mr. Laws: They were principles.

Mr. Blunkett: I am being hectored on the idea of principles. I did not think that many of them were principles, but that is not unusual for the Liberal Democrats. There is absolute unanimity between the Chancellor and myself that it is right to lift people out of immediate poverty in retirement. The pension credit does precisely that.

Dr. Phyllis Starkey (Milton Keynes, South-West) (Lab): In the Secretary of State's earlier response, he said that women are particular beneficiaries of the pension credit. Given that women in general have a pension that is about a third of that of male pensioners, will he assure me that in any analysis his Department does of different options on pensions policy, the effect on women is looked at separately?

Mr. Blunkett: Yes. I have already raised with Adair Turner how critical it is to build on the discussions that have taken place. In addition to women's caring responsibilities for children and relatives as they near retirement age, there is a clear anomaly that arose from the different social, economic and family make-up after the second world war and the advice that was given to them on the opt-out from national insurance. It is crucial that we see that as a critical strand and that the solutions we find take those caring duties into account.

Next Section IndexHome Page