New
Clause
28
Removal
of overlap between carers’ allowance and state retirement
pension
‘The Secretary of
State must make regulations to amend the Social Security (Overlapping
Benefits) Regulations 1979 (S.I., 1979, No. 597) which will
have the effect of removing the overlap between carers’
allowance and state retirement pension.’.—[Ms
Keeble.]
Brought
up, and read the First
time.
Ms
Sally Keeble (Northampton, North) (Lab): I beg to move,
That the clause be read a second
time.
The new clause
touches on people’s inability in retirement to get the
carer’s allowance—an issue that has been of great concern
to my constituents, especially women. The change proposed in the new
clause could be made by regulation, but it is important to debate the
subject now.
I understand
the reasons for saying that people on the state pension should not get
carer’s allowance because it is not payment for caring, but
replacement of lost earnings. As pensioners are judged not to be
working, they cannot get replacement of lost earnings. That is bitterly
resented both by people who have looked after their spouses for a
number of years and who lose their carer’s allowance once they
reach retirement age and by people looking after disabled children. I
have had a number of cases of women who are looking after adult
children with learning difficulties, mental health problems, or
physical disabilities.
People feel a great sense of
injustice. For a number of years they have cared for others. They have
often given up work and made it their life’s work to look after
a spouse, but suddenly when they reach retirement age they hit the
buffers and their income goes down, often just at the point when the
need more money. At the same time, if they have mobility impairment,
they cannot get access to the mobility components of disability living
allowance.
Let
me give an example of someone who is particularly hard hit by this
combination of factors. A woman in my constituency had spent all her
working life with Barclays.
She gave up work early to look after her husband, who was in very ill
health. I cannot remember exactly what her benefits were, but she
certainly got carer’s allowance. When she reached the pension
age she lost that. At about the same time the car that she used to
drive her husband to his hospital appointments broke down completely.
She came to me because she could not afford to get it repaired. She had
all those difficulties getting to the appointments and her income had
gone down because she had lost part of her allowances. In struggling to
work out what to do, it also transpired that she had very severe
mobility impairment herself, because she had profound disabilities to
her feet. However, she had never got that assessed and had never
claimed any disability benefits, which she would almost certainly have
got. Because she was also retired, she could not get those benefits,
either.
The mere fact
of reaching a certain age, plus the accident and the car breaking down,
had turned her from being the mainstay of her family and for a
neighbour who was ill as well, with a modest but reasonable level of
income, to somebody whose income had gone down, who had lost her
mobility, and who was completely unable to access any help from the
state, purely because of her age. She resented that most
bitterly.
Andrew
Selous:
It is extremely helpful to have a real-life
example, but will the hon. Lady explain in a little more detail why
that lady’s income had gone down? Was she not in receipt of a
pension or pension credit that might in some way have compensated for
the loss of her carer’s
allowance?
Ms
Keeble:
I was going to come to that. No, she was not in
receipt of that. I cannot recall all the details of her exact
circumstances, but the two things that really grated with her were,
first, that she had lost her carer’s allowance and, secondly,
that she had gone through her life with a very severe disability that
she had, quite remarkably, managed to hide. When she was driving the
car, her feet could not reach the pedals properly; she needed a
properly adapted mobility vehicle, so how she managed to drive
everybody around to all the appointments, goodness knows. However,
purely because of her age, it was impossible to start to resolve any of
the difficulties. The problem was not just her income, but the
well-being of a number of people who were dependent on her and who were
affected by what happened. She was one of the people who found herself
most aggrieved about the retirement age cut-off point for certain
benefits.
Quite a lot
of the debates throughout this Committee stage have been about
people’s changing lives and circumstances, particularly those of
women, and the way in which the pension system should adapt to become
fit for purpose and to meet people’s needs in those changing
circumstances. Among the arguments that have been made is, first, that
there should be equity and that women’s role in the workplace
and as carers should be recognised much more substantially, and
secondly, that people should go on working for longer and should not
regard retirement as some sort of cliff edge that they go off and spend
the rest of their lives as semi-citizens.
I welcome
that, and certainly my constituents have always had the most remarkable
work ethic. Both men
and women have worked and have done so post-retirement, so it seems
particularly unfair that we are saying to people that they should not
regard retirement age or state pension age as the end of their lives
and they should carry on working and participating—we even have
a new deal for older workers—but we then say, “By the
way, you are not going to get carer’s allowance, and if you
suddenly become disabled, and your mobility decreases, you are not
going to be able to get help there.” That seems to be an
absolutely basic inconsistency.
My hon.
Friend the Minister will remember that, in response to my amendment
that proposed spending an extra £14 billion, he said that the
research had shown that people wanted the biggest increase in income
directly after retirement. That surprised me, because I thought that
people wanted more money when they were older, but that is what he said
the research showed. Having a cut-off point for carer’s
allowance and disability benefits therefore seems to be particularly
counter-productive. On the mobility components, people now have the
positive expectation that they will be mobile when older. They do not
expect to reach retirement, put their feet up and never drive a car
again.
2.30
pm
The rule about
the overlapping benefits runs counter to that. I understand that, of
course, people can get the carer’s component of pension
credit—some 200,000 people do already. It would be helpful if my
hon. Friend would say whether there is any information on
under-claiming because, until this Committee, I did not know about the
disability or carer’s components. I have done a huge amount of
take-up work in my constituency in order to encourage people to claim,
and if there is under-claiming, we need to ensure that people know
about those
components.
Not
everybody gets pension credit and some only get the savings element. I
am not sure whether the carer’s component can go to those who
only get the savings credit. However, quite often, although a husband
might be disabled or ill when older, he could still have a good income
from a work pension. It by no means follows that the carer, or couple,
will always be entitled to the carer’s component of pension
credit. I should be grateful if my hon. Friend would respond to that
point. In particular, will he explain the rationale for the cliff edge
that means that when someone retires, although they might be expected
or encouraged to continue to work, they will not continue to benefit
from support to replace lost
earnings?
Andrew
Selous:
Not for the first time the hon. Member for
Northampton, North has rendered a service to the Committee by raising
an important issue. It has certainly been raised with me by a number of
my pensioner constituents, not least by the Dunstable and District
Association of Senior Citizens, which I meet
regularly.
As the hon.
Lady said, her new clause would remove the carer’s allowance and
the state retirement pension from the overlapping benefit rule, which
says that it is not possible to receive more than one earnings
replacement benefit at the same time. It does not just apply to those
two benefits, but to contribution-based
jobseeker’s allowance, incapacity benefit, maternity allowance,
widow’s or bereavement pension, widowed mother’s or
parent’s allowance and severe disablement
allowance.
Ms
Keeble:
This might be a cheap point, but I do not think
that maternity benefit comes into the equation of state
pensions.
Andrew
Selous:
The hon. Lady is, of course, generally right, but
in our advanced scientific times, we do read the occasional story in
the newspapers of such things happening. However, I take the general
point that she is quite rightly
making.
On the
specific amounts of money, I understand that in 2006-07, carer’s
allowance is £49.65 a week, which is a significant income for
many pensioners; losing it would be a real blow. As the hon. Lady said,
it is possible for those entitled to carer’s allowance to
receive the carer’s addition in pension credit, which I think is
£26.35 a week, when they become entitled to a state retirement
pension. That represents a net loss of income of £26.30 a week.
One would hope that that would be more than made up by the receipt of
state retirement pension—although that will obviously vary from
case to case—or, perhaps, by the receipt of pension credit. Will
the Minister, when he responds, address what action the Government are
taking to help more people take up their entitlement to the
carer’s addition within pension credit?
That issue has been raised by
the Select Committee, when Jim Dickson of Lancashire county
council’s welfare rights service gave evidence on that point and
specifically called for greater liaison between the carer’s
allowance unit and the Pension Service. He also made the practical
point that, in order to be entitled to the carer’s addition in
pension credit, pensioners have to fill in the complete carer’s
allowance form as if they were applying for that allowance, when they
are obviously not entitled to it if already in receipt of state
retirement pension. Perhaps a simplified form could be organised for
people who are already in receipt of state retirement
pension.
Mr.
Laws:
Is the hon. Gentleman’s position that people
should, once they have got to retirement age, still be able to claim
carer’s allowance on top of the pension
allowance?
Andrew
Selous:
No; that would be a huge spending commitment. If
the hon. Gentleman is proposing to get rid of the overlapping benefits
rule, I hope that he will tell us how he would fund that. We would
probably all love to go that far, but it is a question of cost, is it
not? So, I am not proposing that but focusing on the important issue of
ensuring maximum take-up of entitlement—for, as the hon. Member
for Northampton, North quite properly said, many people do not realise
that they can get the carer’s addition. They know that they are
not entitled to carer’s allowance and think,
“That’s it”; many then suffer a loss of income
that need not be as severe as it is. The issue is: how can we get the
carer’s allowance unit and the Pension Service dovetailing
together to ensure greater take-up? I look forward to hearing what the
Minister has to say.
James
Purnell:
Well, it is not quite a golden rivet,
Mr. Gale, nor indeed a silver one, but it may be a silver
foil rivet in my telling the hon. Gentleman that, this spring, the
Pension Service plans to introduce an additional question in the
pension credit application process to identify relevant carer
responsibilities in order to invite the customer, where appropriate, to
claim carer’s allowance using a new, shortened claim pack
specifically for people of pension age. This is the last but one
clause, Mr. Gale, but we have added value.
I am genuinely
disappointed that the hon. Member for Yeovil did not make a speech in
that debate. He could have told us his proposals on the carer’s
element of pensions.
Mr.
Laws:
Will the hon. Gentleman give
way?
James
Purnell:
I will make a deal and give way to the hon.
Gentleman if he tells us what his plans are for the carer’s
element in pension credit. Will he do that?
Mr.
Laws:
I was going to ask the Minister whether he
understands that I am not supporting this expensive new clause 28. In
my earlier intervention, I was merely trying to find out what the hon.
Member for South-West Bedfordshire had been telling the Dunstable
pensioners group, which sounded intriguing.
James
Purnell:
I will take it that the hon. Gentleman did not
make a speech to cover up his plans to take the carer’s element
from people on pension credit. That is obviously his secret plan;
otherwise, he would deny it.
My hon.
Friend the Member for Northampton, North is a long-standing and
passionate campaigner on the issue of carers, and I am grateful to her
for giving us an important opportunity to debate carer’s
allowance. This goes to the heart of what carer’s allowance is
for. Some people regard it as a payment for caring, but that is not the
case when it is, in fact, a benefit that provides income maintenance
for people who are unable to work full-time because of their caring
commitments; that is an important distinction.
When Barbara Castle introduced
what was then invalid care allowance she told the House that it
would
“provide new,
non-means-tested help for those of working age who are deprived of the
opportunity to earn their living and who have no rights under existing
contributory insurance schemes.”—[Official Report,
21 November 1974; Vol. 881, c. 1555.]
Carer’s allowance, the successor
benefit to the ICA, is designed to provide an income to a person who,
because of caring commitments, cannot work full-time. Conceptually,
that puts it on a par with other benefits that step in to provide help
when, for some reason, the mainstay of an income from work is not
available. There are several benefits, such as the widowed
parent’s allowance and incapacity benefit, for which the outward
contingency may differ but whose purpose, replacing income, is a
constant. In those circumstances the overlapping benefit rules operate
so as not to duplicate
payment.
I am
describing a fundamental principle of insurance. If my hon.
Friend’s car were stolen and burned, she would not expect to
receive the value of the car twice over just because she had had it
insured against both fire and theft. In the same way, a person
not working for two reasons—because of caring commitments and
because of having reached state pension age—should not expect to
be paid twice in full. I appreciate the fact that an individual can
work and still receive the state pension, but that does not alter the
fact that the purpose of the state pension is to provide an income in
retirement. We are
entirely sympathetic to my hon. Friend’s aims of ensuring that
the contribution of carers is properly
recognised.
Ms
Keeble:
Does my hon. Friend accept that a lot of women do
not get the state pension? They might have got carer’s allowance
but not qualified for the state pension. The idea that when they retire
they necessarily get the state pension does not work, which is one
reason why there is such a grievance among so many women about the fact
that when they hit retirement age they hit the buffers and lose
everything.
James
Purnell:
At the risk of having to correct myself again, if
carer’s allowance gives people more than they would get from the
state pension and they are not entitled to pension credit, they can
keep their carer’s allowance. In answer to my hon.
Friend’s main point, which was valid, the majority of women in
that situation would be able to claim pension credit, including the
carer’s element of it. That is how we deal with the situation of
women such as those whom she talked about. I hope that I have avoided
having to write to the Committee
again.
Ms
Keeble:
I am sorry to press the matter, but one issue to
consider, which has driven the debate on women’s pensions, is
equity. If a woman works but does not qualify for a state pension, she
might then lose her carer’s allowance. Although her husband
might have a reasonable pension entitlement, she will therefore have
little or no income despite having been completely financially
independent for all her adult
life.
James
Purnell:
My hon. Friend is right that one of the key
thrusts of the Bill is to give women independence in retirement. My
point is still valid: a woman in that situation would at least be able
to keep getting the same amount of carer’s allowance. If her
state pension were less than she was getting in carer’s
allowance, she would keep the latter. We have introduced
that.
Ms
Keeble:
She would keep
it?
Ms
Keeble:
Post-retirement?
James
Purnell:
Yes,
post-retirement.
I
assure my hon. Friend that we are sympathetic to her aim of recognising
the contribution of carers. Indeed, a large part of the Bill is about
doing exactly that. I am sure that the debate on the matter will
continue on Report and in another place. The carer’s credit
provisions that we are making and the reduction in the number of
qualifying years to 30 will make a
great difference to people who care, whether for children or for those
who are sick or disabled. As a consequence of the Bill it will be
possible to build up a full entitlement to the state pension entirely
through caring contributions throughout one’s life. That is an
important
change. 2.45
pm
Ms
Keeble:
Is it for the state second pension or the basic
pension that the carer’s credits will have to go on for 43
years, not 30
years?
James
Purnell:
That is for the state second
pension.
With that,
and without resorting to my brief about the cost of the new clause, I
urge my hon. Friend to withdraw the
motion.
Ms
Keeble:
I shall do so, and I look forward to seeing the
proposals for work on the take-up of the carer’s element of the
pension credit, which will benefit a lot of women. I beg to ask leave
to withdraw the
motion.
Motion and
clause, by leave,
withdrawn.
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