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Pension Credit

3. Mr. Edward Vaizey (Wantage) (Con): If he will make a statement on the take-up of pension credit. [31683]

The Minister for Pensions Reform (Mr. Stephen Timms): At the end of June, 2.7 million households in Great Britain were receiving pension credit.

Mr. Vaizey: The Minister will be aware that only 21,000 households took up pension credit in the last quarter for which figures are available, and that 1.7 million pensioners still do not take up pension credit. Does that not make it clear that the take-up of pension credit has stalled? What further measures will the Government take to help our poorest pensioners?

Mr. Timms: We are doing a great deal about this. It is not true that only the number of applications that the hon. Gentleman suggested were made during that quarter. It was a much larger number—about 80,000, I think. But of course there were other people who, perhaps through death, stopped claiming. Between April and October, Pension Service staff made 500,000 home visits to make it easier for people to claim their entitlements. As the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt) said, we have done a great deal to simplify the process, and we shall do more over the next few weeks. Indeed, in a new campaign, 500,000 people have been mailed on this issue since the middle of October, and another 800,000 will be mailed between now and March.

Mr. Frank Field (Birkenhead) (Lab): Does the Minister accept that the take-up of pension credit is probably far higher than the official figures show and that, in both Birkenhead and Wantage, Members of Parliament would have difficulty in finding a pensioner who had been eligible for pension credit for any length of time but was not claiming it? If it is true—as I believe it is—that this Government have redirected more money to poorer pensioners than any other Government since 1948, is it not important for us to recognise that, following the publication of the Turner report, we shall be able for the first time to concentrate on long-term reform rather than remaining bogged down in the reforms that will help the poorest pensioners now?

Mr. Timms: My right hon. Friend has made an important point. When the report is published on Wednesday, it will be clear that there is no crisis over pensioner incomes, for the reason that he gave. He also suggested that fewer people than we thought might be eligible for pension credit, and there is some evidence that that may be so.

Dr. Vincent Cable (Twickenham) (LD): Does the Minister agree that a central problem of pension credit is the disincentive caused by high marginal rates of
 
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withdrawal, amounting to 40 per cent. or more? What analysis has his Department conducted of the effects of change in the marginal rate of tax or benefit withdrawal on pension credit, in terms of people's willingness to save?

Mr. Timms: There is little evidence of any damage to saving incentives being caused by the current arrangements. There has been an element of means-testing of pensioner incomes since 1908, but the key point is that pension credit has lifted 2 million pensioners out of poverty, and abject pensioner poverty has been consigned to the history books. That is a huge achievement and we want to ensure that it is maintained.

Mrs. Joan Humble (Blackpool, North and Fleetwood) (Lab): Will the Minister bear in mind the outreach services offered by the Pension Service? The Pension Service has opportunities to work with local voluntary organisations and local authorities to contact pensioners who may be reluctant to telephone contact centres and who need to know about the benefits to which they are entitled.

Mr. Timms: My hon. Friend is right. There is much scope for the Pension Service to work creatively with the voluntary sector and local authorities. Joint teams involving the Pension Service and local authorities and, in some instances, voluntary agencies, are being established all over the country. I agree that that approach could be developed further, and that the service provided for elderly people could be significantly improved.

Mr. Peter Lilley (Hitchin and Harpenden) (Con): Does the Minister agree that, had proper reform been carried out eight years ago, fewer people would now need to rely on pension credit? In the light of the revelation from the right hon. Member for Birkenhead (Mr. Field) that the Prime Minister considered a proposal to build on my plans for basic pension-plus and was put off only when he was reminded that he had attacked it during the general election, will the Minister ensure that future reforms are not based on party-political considerations?

Mr. Timms: I do recall the debate about basic pension-plus, which I think contributed to the failure of the right hon. Gentleman's party in the 1997 election. I hope that the Turner report will provide the basis for national consensus on the way forward. There is wide agreement on the need for reform. I trust that, now that we have addressed the appalling problem of pensioner poverty with which we were left in 1997—as was pointed out by my right hon. Friend the Member for Birkenhead (Mr. Field)—we can build wide agreement on what further steps are needed.

Ms Celia Barlow (Hove) (Lab): Is the Minister aware that in Hove and Portslade in my constituency, pensioners are unclear about, for instance, savings thresholds? Will he confirm that a particular target of his take-up campaign will be pensioners whose claims have been turned down in the past, and that the campaign will not be aimed only at new applicants?

Mr. Timms: My hon. Friend has made an important point, but as the credit is uprated in line with earnings,
 
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people who were not previously eligible may well find a couple of years later that they are. My hon. Friend may wish to advise her constituents to telephone the pension credit application line on 0800 991234.

Mr. Nigel Waterson (Eastbourne) (Con): Has the Minister seen a copy of the Chancellor's letter to Lord Turner, in which he stated:

link of pension credit to earnings "will continue beyond 2008". With 1.7 million pensioners failing to claim pension credit, and 2 million pensioners still living in poverty, does the Minister accept that scrapping the link would condemn even more older people to poverty, and be, in the words of Help the Aged, "unforgivable"?

Mr. Timms: The commitment to uprate pension credit in line with earnings up to 2008 is long established, and has been set out time after time. The uprating that we have seen has made a big contribution to lifting large numbers of pensioners out of poverty, and I reassure the hon. Gentleman that this Government's commitment to keep people out of poverty will endure.

Pensioner Poverty

5. Mr. Pat McFadden (Wolverhampton, South-East) (Lab): If he will make a statement on the extent of pensioner poverty. [31685]

The Secretary of State for Work and Pensions (Mr. John Hutton): Tackling the legacy of pensioner poverty that we inherited when we came into office has been one of our top priorities. The introduction of pension credit means that every pensioner is now guaranteed a weekly income of at least £109, compared with £69 in 1997. Those and other measures have helped nearly 2 million pensioners escape from absolute poverty.

Mr. McFadden: Of the 2 million pensioners whom the Secretary of State mentioned, 5,600 in my constituency are receiving pension credit at an average rate of £45 a week, which makes a huge difference to their standard of living. Will he assure the House that, whatever the Government's response is to the Turner commission report, we will not return to the days before the pension credit, we will keep protecting the incomes of the poorest pensioners, and we will not see again the situation when the Conservatives were in power in which pensioners were expected to live on as little as £69 a week?

Mr. Hutton: I am grateful to my hon. Friend for making those points. We have no intention whatever of returning to the poverty pensions of the previous Conservative Government. His constituents and, I am sure, those of many Members on both sides of the House, will support what we have done. We have made significant progress in tackling pensioner poverty, and will continue to place a high premium on doing so.

Mr. David Laws (Yeovil) (LD): Does the Secretary of State acknowledge that one way to tackle pensioner poverty would be to have a better state pension, and that
 
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one of the things that could help to pay for that in the long term would be reform of public sector pensions? Does he agree that, over the weekend, signals from the Government on the issue of public sector pensions have been difficult to read? Can he confirm today whether or not the deal on retiring at 60 until 2048 is unbreakable—yes or no?

Mr. Hutton: On the basic state pension, we have seen significant improvements because of the measures that we have taken. I think that I am right in saying that most of those have been opposed by the hon. Gentleman and Opposition Members. On Lord Turner's report, I think that I am also right that the only political party in the House that has so far pre-empted it is the Liberal Democrats, who have already announced what their policies are. On the public sector pension deal, we have no plans to revisit that.

Mr. Brian Jenkins (Tamworth) (Lab): With regard to pensioner poverty, my right hon. Friend will be aware that, at one time, pensioners who had savings had the income from those taken into consideration when their pensions were balanced out. The point was reached at which the Government of the day introduced a £3,000 limit, above which all savings were automatically chopped. That sent a message to many pensioners, which, I believe, is still in their mind, not to reveal to the state any amount of money that they had for fear of any entitlement being cut. They do not want to get embroiled in that system. What plans does he have in place to ensure that pensioners are not penalised for saving and that any income that they receive is not automatically deducted to a higher amount than that which they receive from their investments?

Mr. Hutton: I am grateful to my hon. Friend. The introduction of the savings credit was the first time that any Government had provided an incentive for pensioners who have saved. It is an important precedent to have established that people do the right thing when they save for their retirement, and it is the Government's responsibility to support people when they do so. In relation to specific proposals, he and the House will need to wait until the publication of Lord Turner's report on Wednesday and the Government's response later in the new year.

Mr. Mark Harper (Forest of Dean) (Con): I listened carefully to the Minister for Pensions Reform's reply to    my hon. Friend the Member for Eastbourne (Mr. Waterson) about pension credit uprating. He did not answer the question, so perhaps the Secretary of State can help us. Will the Government uprate pension credit in line with earnings from 2008?

Mr. Hutton: Those are all matters for my right hon. Friend the Chancellor.

Mr. David Winnick (Walsall, North) (Lab): Is my right hon. Friend aware that, particularly in this very cold spell, poorer pensioners welcome the £200 winter fuel allowance? Will he promise that we will not return to a system under which help was provided only if the temperature fell below freezing on seven consecutive days and under which only those on income support
 
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received perhaps £7 or £8 a week? Is not our system superior, certainly for poorer pensioners, to what happened during the 18 years of Tory government?

Mr. Hutton: The policy that relied on temperatures dropping below freezing for seven days before pensioners got any help was totally inadequate and we certainly will not return to that. Winter fuel payments have made a significant difference and, again, I think I am right in saying that they have been resisted by the Conservative party.

Sir Malcolm Rifkind (Kensington and Chelsea) (Con): Is the Secretary of State aware that many future pensioners who will be dependent on the state pension to avoid poverty feel indignant that, while they may be expected to continue working until the age of 67, the Government's own existing employees will be allowed to continue retiring at 60 for up to the next 40 years? I listened carefully to what he said to the hon. Member for Yeovil (Mr. Laws). He said that there were no existing plans to reopen the issue but did not rule it out completely. Given that the Prime Minister has said that he was very unhappy with that deal and that conflicting signals have come from Government Departments, will the Secretary of State be more explicit? Is he simply saying that there are no plans as of today to reopen that deal, or is he ruling it out completely?

Mr. Hutton: We have no plans to revisit that deal. I am truly surprised that the right hon. Gentleman has sought to raise that issue in the House today. [Interruption.] I am very surprised, for one simple reason: I have had the opportunity to look at the guidance sent out to all Conservative parliamentary candidates at the last election, guidance that will have been read by some new Conservative Members. That guidance made it clear that his party not only had no plans to raise the pension age but would revisit any plans the Government made so to do. If he wishes to be treated seriously, he has to come here with serious proposals and, as on every other pensions issue, he has absolutely nothing to say.

Michael Connarty (Linlithgow and East Falkirk) (Lab): May I echo the remarks of my hon. Friend the Member for Wolverhampton, South-East (Mr. McFadden)? I have similar numbers of pensioners in my constituency who benefit from pension credit and would live in poverty without it. When I have debated with people who have works pensions and wish to have a link to earnings, every one of them—honourable to their last breath—has said that they would wish that only if it did not mean that the most impoverished pensioners lost their pension credit. Will my right hon. Friend make sure that the first priority is that we remain with the pension credit and deal with those of pension age in serious poverty?

Mr. Hutton: Yes.


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