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Session 2005 - 06 Publications on the internet Standing Committee Debates |
Third Standing Committee on Delegated Legislation |
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Column Number: 1 Third Standing Committee on Delegated LegislationThe Committee consisted of the following Members: Chairman: Mr. Eric Forth †Benyon, Mr. Richard (Newbury) (Con)†Carswell, Mr. Douglas (Harwich) (Con) Dunne, Mr. Philip (Ludlow) (Con) Gidley, Sandra (Romsey) (LD) †Heppell, Mr. John (Lord Commissioner of Her Majesty’s Treasury) †Joyce, Mr. Eric (Falkirk) (Lab) †Laws, Mr. David (Yeovil) (LD) †Mullin, Mr. Chris (Sunderland, South) (Lab) †Randall, Mr. John (Uxbridge) (Con) †Stringer, Graham (Manchester, Blackley) (Lab) †Timms, Mr. Stephen (Minister for Pensions Reform) †Todd, Mr. Mark (South Derbyshire) (Lab) †Vis, Dr. Rudi (Finchley and Golders Green) (Lab) Waterson, Mr. Nigel (Eastbourne) (Con) †Winnick, Mr. David (Walsall, North) (Lab) †Wyatt, Derek (Sittingbourne and Sheppey) (Lab) Alan Sandall, Committee Clerk † attended the Commitee Column Number: 3 Monday 11 July 2005[Mr. Eric Forth in the Chair]Draft Age-Related Payments Regulations 20054.30 pmThe Minister for Pensions Reform (Mr. Stephen Timms): I beg to move,
I welcome you to the Chair, Mr. Forth. I am certain that I speak on behalf of every member of the Committee when I say that we look forward to this debate being conducted under your firm but fair hand. I also welcome those whose first opportunity this is to serve on such a Committee—the first, no doubt, of many, but no less significant for that. The regulations were laid before the House on 23 June and I can confirm that, in my view, the provisions are compatible with the European convention on human rights. They are being made under the Age-Related Payments Act 2004. Hon. Members may recall debates last year during the passage of that Bill, and the particular interest aroused by section 7. The effect of the regulations is to allow payments to be targeted at those who need them most—those with the lowest incomes in retirement. As a result of measures introduced since 1997, we will spend nearly £11 billion extra on pensioners in this financial year. Nearly half of that extra spending—more than £5 billion—will go to the least well-off third of pensioners. The regulations will provide, first, for a payment of £200 to households with someone aged 65 or over who is not in receipt of the guarantee credit element of pension credit, to help with council tax bills. Committee members will welcome the fact that this year’s council tax increases are the lowest in a decade. However, those in retirement remain the hardest hit by the increases and it makes sense to direct help towards them. Secondly, the regulations provide for a payment of £50 for households with someone aged 70 or over who is in receipt of the guarantee credit element of pension credit. That payment will provide help with additional living expenses for the least well-off pensioners. Regulation 2 allows for the £200 payment. It describes the conditions under which a qualifying individual will receive either £200 or £100, depending on their household circumstances. The concept of a household payment comes from the now familiar winter fuel payment scheme, on which the age-related payments have been modelled. A qualifying individual will receive a payment of £200 when they are the only eligible person in that household. When there is another eligible person or several more, they will each receive £100. When the
When a couple are in receipt of the savings credit element of pension credit, £200 will be paid to the person claiming that savings credit on behalf of the couple. If both members of the couple qualify and neither receives savings credit so that there is no existing channel, each will receive a £100 payment. The regulations also cover the circumstances under which the £200 payment will be made in special cases. When a couple with one qualifying member live with another qualifying individual, payments of £100 will go to the member of the couple and to the qualifying individual with whom they live. By extension, when two couples share the same household and one member in each couple qualifies, they will each receive £100. Regulation 4 makes provision for the payment of £50 to households with someone aged 70 or over who is in receipt of the guarantee element of pension credit. A £50 payment will be made to a qualifying individual when they are single, when they are part of a couple if the other member does not qualify, or when they are part of a couple who both qualify but they receive the guarantee credit element for them both. For both age-related payments, the partner of the eligible person who receives the winter fuel payment will also receive the age-related payment on behalf of their partner. That way, we can also use the tried and tested system for winter fuel payments to deliver those payments. The regulations also disqualify people who have been living in a care home continuously for 13 weeks by the end of the relevant week, as their daily requirements are likely to be provided by their care home and paid for from public funds, and they are not subject to the same large one-off expenses as those maintaining their own homes. Regulation 6 applies to both the £200 and £50 payments. It details the conditions under which a person will be disqualified from receiving a payment, which mirror the conditions applied to people receiving winter fuel payments and the social security system more widely. Payment will not be made to a person in receipt of free in-patient treatment throughout the 52-week period, ending with the relevant week, or to a person who is in custody or subject to immigration control throughout the relevant week. A person who is part of a couple and disentitled under the regulation is treated as a non-qualifying individual when we assess whether their partner is eligible for a payment. The payments will be made without a claim where we hold the information to allow that. However, the regulation also allows for payment to a person who has subsequently ceased to be subject to immigration
Regulation 8 provides for the payment to be disregarded for tax, social security and tax credit purposes. Regulation 9 allows for the payments to be covered by over-payment provisions. There is a lot of detail in the regulations, but the intent behind them is simple. 4.37 pmMr. John Randall (Uxbridge) (Con): It is a great pleasure to serve under your chairmanship, Mr. Forth. It is, in fact, rather awe-inspiring, as I know you to be one of the most painstaking Members of this Parliament when undertaking detailed scrutiny of legislation. I feel thoroughly inadequate in this role, which was thrust on me by the unfortunate absence of my hon. Friend the Member for Eastbourne (Mr. Waterson), who has been detained in his constituency, for which he apologises to you, to the Minister and to members of the Committee. Having emerged from the dark of the Whips Office into the bright sunlight, I shall be waiting to scurry back as soon as possible to deal with these matters in the appropriate manner rather than in this particular format, although I understand, of course, that this might well be the pinnacle of my political career. It would be churlish of the Opposition not to say that giving money to elderly people is welcome. In his Budget speech on 17 March 2004, however, the Chancellor announced that that was the result of the difficulty that older pensioners have in paying their council tax bills. I cannot help feeling that there are better ways of dealing with that difficulty than simply doling out money. It is not only old-age pensioners and the elderly who have found the recent huge increase in council bills difficult. I understand the Minister saying that this year’s increases were some of the lowest on record, but I am becoming a little old and cynical and have a feeling that it might have something to do with the electoral cycle. Perhaps I shall be proved wrong next year if the increases are similarly low, although there is another electoral cycle going on out there, so one never knows. I am not sure that the regulations are the best thing, and I want to ask the Minister a few questions, because, as he said in his almost brilliant speech, there is a lot of detail in the regulations, some of which I found a little confusing. I do not claim to be a great mind—most of my colleagues will back me on that. I have some questions for the Minister. It might be that the answers are apparent and that he can quickly put me right. In part 2, under regulation 2, “Entitlement: basic cases”, paragraph (1) states:
That prompts me to ask how the measure would work if that person were to marry. People may think it strange, but it is perfectly possible for people over 65 to be encouraged to get married and enjoy the rest of
My second question follows on from that point: what is the definition of a couple? I have looked through the legislation and have tried, unsuccessfully, to work out whether couples have to be married to qualify. Nowadays, couples often do not have to be married to qualify under legislation, but how do we know whether two elderly people living together qualify as a couple? Of course, that might be apparent. Later in part 2, under regulation 3, “Entitlement: special cases”, paragraph (2) gives details of how the legislation applies where
I have great problems trying to understand exactly what the circumstances might be in such cases. From what the Minister said, I understand that people in care homes are excluded from the measure, but what is the definition of a care home? What is the difference between a care home and a nursing home? People sometimes convalesce in nursing homes. Will people who go to such homes for a while but who do not stay there be excluded from the legislation? I have some questions about part 4, although they might have been solved. Under regulation 6, “Disqualifications”, paragraph (1)(b) disqualifies people who are
I wondered whether that would cover someone who was on remand, but then I read a bit further and found a definition under paragraph (2)(b), which states that
Why could not that be stated under paragraph (1)(b)? Perhaps it is one of those legalistic things. I understand that the regulations will apply to the whole of the United Kingdom. Is it relevant that there is a different legal system in Scotland? Is the legislation clear enough? I am no lawyer. Does paragraph (2)(b) apply exclusively to sentences imposed by UK courts, or to those imposed by courts elsewhere? I presume that it applies only to those imposed by UK courts. Would someone who is placed in custody abroad be excluded? Those are some of the aspects of the legislation that I find confusing. If I were not worried about testing your patience, Mr. Forth, and that of the Committee, I would address many other things that I do not quite understand. However, I would like to ask the Minister when he expects the payments to be made. Is there a date by which he expects all people who qualify for them to have received them? Column Number: 7 4.45 pmMr. David Laws (Yeovil) (LD): I also welcome you to the Chair, Mr. Forth, and thank the Minister for his opening comments. I congratulate the hon. Member for Uxbridge (Mr. Randall) on his excellent speech. I am sure that, once the news of his analytical skills gets back to the Whips Office, he will find himself involved in much more delegated legislation as a reward. These regulations have an impressive title that suggests that somebody in the bowels of the Department for Work and Pensions—or more likely, these days, in the Treasury—spent a great deal of time carefully constructing a new policy that could be tacked on to the country’s social security architecture to deal with a specific problem. Yet, as the hon. Member for Uxbridge said, the regulations are being introduced in the context of an announcement by the Chancellor of the Exchequer on 16 March, a few weeks before the announcement of this year’s general election. The more that one looks at the measure, the more it has the flavour of an ill conceived and somewhat incoherent bung, introduced just before a general election and aimed at a particular group of voters, than it does a rational addition to our social security architecture. The Minister needs to answer a number of major questions before he invites us to approve, let alone welcome, the measure. He said that those in retirement are hardest hit by the increase in council tax. Presumably, that is his reason for introducing measures targeted at pensioners and not at the rest of the council tax-paying population. That is against the background of an enormous increase in council tax since 1997—people in many parts of the country have seen their bills increase by 100 per cent. in that time. Surely we should ask before we approve this one-off payment what evidence underlies the Minister’s statement that those in retirement are hardest hit by higher council tax. We know that they are very vocal and that they vote in general elections, but we have had no evidence from the Minister that they are hardest hit. Many people—possibly many of those in work whom the Chancellor continually claims that he is trying to help—are on much lower incomes than those covered by this provision, but they get no help with their council tax bills. At the same time, the regulations would benefit pensioners whose income could be at any level, many of whom do not need it as much as those in low-income groups. The measure is as coherent as the Government’s general support for pensioners, which mixes means-tested benefits with one-off payments from the social fund, which are paid irrespective of income. Mr. Randall: Is it the hon. Gentleman’s view that the benefit should be means-tested? Mr. Laws: My point is that the Government tried to fix an aspect of the council tax system relating to one group of individuals just before a general election by tweaking the existing, flawed system. Our view is that the system needs to be swept away and replaced with a fairer tax based on income, rather than tinkered with in the way that the Minister suggests. Column Number: 8 I was talking earlier about the Government’s approach. They constantly suggest that we should focus the scarce resources that are available on those most in need, including pensioners. That is why they have brought in many means-tested benefits, such as guarantee credit and the architecture of the pensions credit. However, at the same time, they are introducing largely non-means-tested benefits such as this and extending the winter heating allowance to people regardless of income. That illustrates the incoherence of provision for pensioners: part of it is means-tested, and the rest is not linked at all to people’s ability to pay. Mr. David Winnick (Walsall, North) (Lab): The hon. Gentleman is giving the impression, perhaps unintentionally, that there is a case for this provision to be means-tested. However, he has just said that the winter fuel allowance has not been means-tested ever since it started—and it did not start until there was a Labour Government. It is received automatically. I can declare an interest: I am in receipt of it. Mr. Laws: The hon. Gentleman confirms my criticism of the Government. On the one hand, they have introduced a set of means-tested benefits for pensioners, and on the other they are paying to wealthy pensioners, who do not need such provision, a benefit from the social fund, which is non-means-tested. That highlights my point extremely well. The first issue for the Minister to explain is why this group of council tax payers is uniquely well qualified to receive the payment, which was announced just before the general election, and why the Government consider people on low incomes who pay council tax, including those in work, to be unfit to receive it, or not to need it. What is the statistical basis for the Minister’s suggestion that those in retirement are hardest hit by council tax? The second issue, which affects many in the country, is the arbitrary point at which people qualify to receive the benefit. There is a distinction between people, mainly female pensioners, who retire on a state pension at age 60 and those who do not receive their pension, or this benefit, until the age of 65. I have received a letter from an individual who is not a constituent but who wrote to me because she had been trying without success to get answers from the Labour Government. She said that all that she had received so far was DWP gobbledegook. She explained that female pensioners such as herself
She points out that, for no particularly good reason, the Government are excluding that group of female pensioners from the £200 one-off council tax rebate that the Chancellor promised. She goes on to say that either she is a pensioner or she is not. If she is a
There seems to be cross-party support for only one or two things in relation to pensions. One is that more should be done for female pensioners who have lost out under the pension policy that we have had for 50 or 60 years. It seems odd that the Government should exclude from the benefit of £200 for higher council tax those female pensioners who have reached the age of 60, but not of 65. Some explanation of their thinking is given in a letter that I received from Baroness Hollis, dated 25 April, before she moved on to other places. Baroness Hollis was responding to a letter from me, which raised this precise point on behalf of one of my constituents. The explanation that the Government give for excluding female pensioners between the ages of 60 and 65 from the regulations is as follows:
That is surely an extraordinary argument. The current age of retirement for female pensioners is 60. That is when they can receive their state pension, their winter heating allowance and pension credit. However, according to the Government, they cannot get this support for council tax payments until the age of 65. That is not because they do not receive the state pension until the age of 65—clearly, there will be a transition to a higher pension age between 2010 and 2020—but because the Government consider that to be the appropriate age for retirement. However, if the Government consider 65 to be the appropriate age for retirement, why on earth is it possible for female pensioners to receive their full state pension from the age of 60? Is it appropriate for Ministers to have two separate state pension ages: the effective state pension age at which people can draw their pension, which is 60 for women, and another pension age, which is the age that the Government consider that it would be appropriate for women to retire at? That is clearly a very odd situation for the Government to have got themselves into. It seems like a clear case of discrimination against female pensioners who are in that situation. Another element of the bizarre nature of the regulations becomes apparent when we consider the additional payments that the Government are making to people over the age of 70. In the explanatory memorandum, the Government make it clear that the £50 payment will be made in 2005
In other words, it appears that a group of individuals who would be left out of receiving that payment if they were simply over the age of 65—those people who receive the guarantee credit element of pension credit
Rereading the Chancellor’s Budget statement on 16 March, he appears to imply that both the £50 payment and the £200 payment relate to a council tax rebate, even though that group of individuals may not have a council tax liability. It is therefore unclear why he should have said in his Budget statement that this measure is fairer and worth more to pensioners than all other proposed schemes. I will not even go into what other proposed schemes would deliver. We could have a good debate on local income tax, but I am sure that you would rule me out of order, Mr. Forth. Will the Minister confirm whether it would be possible for some individuals to be better off under the regulations if they gave up their pension credit altogether? I am talking about individuals who are over the age of 65 who currently receive the guarantee credit element of pension credit and who will therefore not receive this particular pre-election payment. Is it possible that some of those individuals, who presumably receive small amounts of pension credit, could find themselves better off if they gave that up and received a council tax rebate of £200? Given that such individuals must, by definition, be on extremely low incomes, would not the Government be negligent if they did not inform them that they might be better off giving up their pension credit so that they could receive a non-means-tested benefit that might provide a better income? I hope that the Minister can provide answers to those questions. 5 pmMr. Timms: I am grateful to hon. Members for their contributions. I enjoyed the speech by the hon. Member for Uxbridge, who said that this debate might be the high point of his political career. I am sure that that is not the case and that many distinguished opportunities await him. Let me try to answer some of the hon. Gentleman’s questions. He wondered what would happen if two people became a couple during the relevant week and their circumstances changed. The regulations set out in detail the treatment of people in a variety of circumstances. In such a case, we would pay whichever amount was the most beneficial to the customers, so if their circumstances in one part of the week meant that they would receive more than they would for their circumstances in another part of the week, the former would be the basis for the payment. The hon. Gentleman also asked whether people had to be married. The regulations do not require marriage for people to be treated as a couple. Mr. Randall: Perhaps I am being a bit premature and the Minister will go on to deal with this, but how do the regulations define a couple? Column Number: 11 Mr. Timms: A couple is defined as two people who live together. As I said, there may be households with three people or more, but a couple is two people who live together. |
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