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Jenny Willott: The hon. Gentleman is absolutely correct. If we consider the group of people affected, they are likely to be vulnerable and to have chaotic lives. As he says, sending out leaflets will not assist them in understanding the changes. One of the groups likely to be caught out are those with mental health problems, and with communication and language problems. Mental health problems often cause confusion, resulting in chaotic lives. That category of people are likely to make late benefit applications, so they could be disproportionately affected.
Mr. Waterson: Is the hon. Lady aware that, some months ago, the Department quietly dropped its ambitions to increase take-up of pension credit across the board? So, coming on top of that, the regulations could see the take-up rate decline quite sharply.
Jenny Willott: The hon. Gentleman is absolutely correct, and the level of take-up of both those benefits, at working age and by pensioners, is worrying.
John Howell (Henley) (Con): As the hon. Lady has set out, there are certainly issues around poverty, but does she agree that, as many of us have experienced in our surgeries, the back claims for pension credit arise at traumatic occasions in people’s lives, whether because of disability or savings finally running out, which makes it an even more poignant matter?
Jenny Willott: The hon. Gentleman is correct. I wanted to flag up the issue of homelessness, which is also a traumatic experience, and it means that people are likely to start trying to claim backdated benefits for a significant period.
The change to housing benefit is questionable on the ground that it is paid to meet a defined liability, not to cover day-to-day costs. Housing benefit is often paid directly to the landlord, although that is different with the local housing allowance. That can lead to delay, meaning that the claimant does not realise that housing benefit has been stopped and that they need to re-apply. The application itself can also be very slow.
Landlords evict tenants if they default on their rent, and the regulations will only increase the likelihood of that happening. That is certainly the concern of the voluntary sector. Shelter, which works on these issues, has said that the changes will inevitably cause homelessness in a number of cases. The Government should be taking that seriously, rather than imposing the changes.
Given that the changes have been in place for one month, I have some examples of the negative impact that they have had on claimants. There are a lot of different examples, but I shall flag up two: one is of a person of working age and the other is of a pensioner. A citizens advice bureau in the midlands had a single mother of three who was facing eviction come to them. She was being evicted by her social landlord for rent arrears of over £5,500. She put in a claim for housing benefit in April and at the same time requested backdated payment. She had good cause because she had recently suffered a number of personal difficulties: her son had been in and out of hospital and there was a recent death in the family. Under the old rules for housing benefit backdating, she would have been able to claim fully. However, because of the changes, she was not able to claim as far back as she needed to in order to cover the arrears. As a result, the application to suspend the warrant of eviction is likely to be dismissed and she is in danger of losing her home, so that she and her three children will be homeless.
The other example also comes from a citizens advice bureau in the midlands, which saw a client in his 60s who had been working in a voluntary capacity since he stopped caring for his mother seven years ago. He did not think that he was eligible for any benefits because he still had some inheritance left and he had been surviving on £50 a week for the past two years. He found in May that he was eligible for pension credit and he subsequently claimed. When he went to the citizens advice bureau for assistance in August, he was advised that he could also claim council tax benefit. He has been awarded pension credit backdated to 28 May, of £124 a week, and full council tax benefit of £20 a week, backdated from September 2007.
In total, under the old rules that client has received £7,490. Under the new rules he would have received £1,700 only, which is clearly a massive difference. He was falling into arrears with his council tax, phone and utilities bills, and if he had not received those backdated payments he would have had no means to resolve his debt problems. The number of people affected by the changes is already becoming clear and is something that we are concerned about and that the Government should be concerned about.
The regulations raise a significant number of other issues, particularly around whether they are genuinely a matter of simplification, or whether they are a cost-cutting measure. I will leave it to other members of the Committee to raise those issues, as I am sure they wish to. The Government seem to have sneaked out the regulations during the recess, showing some disregard for the scrutiny role of this House. It appears that the regulations are a cost-cutting move and that the Government do not have a good defence for them and cannot provide the evidence to back them up. In case the Committee have not guessed already, I intend to press the matter to a Division.
9.19 am
Mr. Waterson: May I say what a pleasure and a privilege it is to serve under your chairmanship, Mr. Bercow? The title of the regulations belies their sinister intent—“The Social Security (Miscellaneous Amendments) Regulations”. What could sound more harmless than that? But as the hon. Member for Cardiff, Central has already explained—I shall certainly be supporting a lot of her points, as well as making additional ones—the regulations matter a great deal to a number of people. I share the hon. Lady’s concerns about the way in which the regulations were sneaked out, and the Government’s approach to consultation on them.
It is also odd that the Committee was rescheduled to 8.55 on a Thursday morning, when there is not a great deal of other excitement going on in the House to detain us—the original timing was more mainstream. Despite that, there is an excellent turnout on the Conservative Benches, although some Government Members may regret having come at all.
Sometimes the Government amaze me. They take actions such as that leading to the 10p tax rate fiasco, to give a recent example, which seem designed to disadvantage the most vulnerable people in our society. Such actions seem to be based not on principles—not even eccentric or quixotic ones—but rather on a general desire to save the Treasury money. I will come on to the apparent savings in the regulations in a minute, but they do not seem significant enough to pay for the huge political damage that I expect—and hope—the Government will suffer for putting the regulations through. I offer the Government only advice in the friendliest way—if they do not take it, so be it.
It is interesting that when pension credit was first introduced, the Treasury’s working assumption was that 1.4 million people would never get round to claiming it. On one level, the Government should be congratulated, as they exceeded even that target—currently, up to 1.8 million people who are entitled to claim pension credit do not do so. It is no wonder that an estimated £5 billion in benefits is unclaimed by pensioners. The Institute for Fiscal Studies has pointed out that if all that money was claimed, 500,000 pensioners would be lifted out of poverty at a stroke. Currently, there are 2.5 million pensioners living in poverty in this country, which is extraordinary given the promises made by the Labour party in opposition.
I would like to deal with the mantra that Lord McKenzie of Luton expressed in the House of Lords. He asserted that, thanks to the wonders of Government policy, pensioners are now less likely than other parts of the population to fall into poverty. The Government tend to select the measure that suits them when they make those sorts of claims, and the figure is taken after housing costs have been taken into account. However, according to the House of Commons Library, if we look at income measures before housing costs, the equivalent figures are 23 per cent. for pensioners, and 18 per cent. for the population as whole. That means that the proportion of pensioners in poverty is greater than for the rest of the population. Let us hear no more of that boast from Ministers.
In a logical world, the aim of all parties would be to increase the take-up of pension credit and other means-tested benefits, which is clearly a serious challenge. The Government have rightly spent a great deal of money and effort—leaflets galore, letters, phone services and the Pension Service’s excellent efforts to increase the take-up of the pension credit—but they seem to have hit a ceiling and, if anything, take-up is going down. That is the challenge in public policy terms, but what is the Government’s response? Their response is to make it even more difficult for people to claim pension credit, and when they start to use words such as “simplification”, it is time for people to put their hands on their wallets.
The hon. Member for Cardiff, Central has already mentioned the explanatory memorandum, which is a treasure of its kind. It talks about the “overall package of simplification.” That is a marvellous sentence, and I would love to meet the person who drafted it. It goes on:
“Overall, this package of measures aims to streamline the process of claiming and reduce the amount of intrusion into customers’ financial circumstances once a claim has been made.”
Streamline is probably the right word. A host of pensioners will not get a sniff of pension credit if they are outside the three-month period.
With a mind-boggling level of insouciance, the memorandum continues:
“Pension credit is no longer a new benefit, and extensive marketing has taken place over those years to publicise it and encourage take-up.”
I have already accepted that. The only niggling problem is that there are still 1.8 million people who are not claiming the credit.
The explanatory memorandum then mentions the impact:
“A full impact assessment has not been published for this instrument.”
As the hon. Lady has said—I agree with her—that is extraordinary. Therefore, we have to extract from other statistics what impact the measure will have.
Let me go back to the benefits uprating statement of 5 December in which the Minister’s predecessor announced the changes. Even then, an element of spin had begun to creep in. When this Prime Minister took over, we were told that the age of spin was over and that we would get straight talking and straight dealing from the Government. Now that the prince of darkness himself is back in the Government, we seem to back to the usual stuff.
The Minister said that he wanted the customer to get their state pension entitlements with the minimum fuss, bureaucracy and form filling. If customers are out of time, they will have the minimum of fuss, because they will not get any. As I said on that day, it is a case of robbing Peter to pay Paul. When I pressed the then Minister—I hope that I will have more good fortune with this Minister, who comes fresh and enthusiastic to the job—he said:
“There will be no actual losers, as we are redistributing the money within the budget”.—[Official Report, 5 December 2007; Vol. 468, c. 846.]
I cannot think of a more Orwellian way of putting it. Surely, this Minister must accept that there will be losers. Perhaps, she will tell us how many there are likely to be.
A press release, which was published by the DWP in August, was headed:
“Over 60s — Don’t miss out on extra cash”.
I am not sure what the DWP means by “extra cash”, because for quite a few thousand pensioners, there will be no cash. The press release contains a quote from Gordon Lishman, director-general of Age Concern:
“we would urge any older person struggling to make ends meet to make a claim now to ensure they don’t lose out on cash that’s rightfully theirs.”
That is the only way to describe the effect in the real world of the regulations.
As if we have not heard every possible spin, I turn to the speech by Lord McKenzie:
“The Government are also keen to foster a greater sense of responsibility among customers for their financial affairs. An unintended consequence of lengthy backdating periods is that they can increase the likelihood that people, particularly in the most vulnerable groups, become desensitised to their situation and avoid taking action to tackle their debts.”—[Official Report, House of Lords, 10 November 2008; Vol. 705, c. 519.]
That may be, but people will have debts galore if the regulations go through. In an intervention, I mentioned that this is against a background of the Government having quietly abandoned their targets to increase pension credit take up across the board. It appears that Ministers have deliberately diverted resources away from meeting their target to increase take up.
The Department’s productivity report, which was produced in February, says that
“despite significant campaigns to encourage take-up of Pension Credit, the number of customers responding to such campaigns has reduced over time. The Department continues to look at further ways to identify those who may be entitled to Pension Credit and encourage them to apply. However, it would not represent value for money to repeatedly press unwilling eligible people to take up their entitlement.”
In a parliamentary answer on 27 February, the then benefits Minister effectively said that they were abandoning the target to increase the take-up of pension credit.
The hon. Lady rightly touched on the equality impact assessment on the regulations. One of its clear findings is that older pensioners are more likely to be affected by the proposed rule change. In 2006-07, older pensioners were more likely to backdate their claims than younger pensioners, and they were more likely to do so for the maximum of 12 months. In 2006-07, 110,000 successful pension credit claims were backdated for more than three months.
Quite rightly, the hon. Lady referred to the views of the SSAC, and I want to quote one sentence in its report. The members of the SSAC are not people normally given to dramatic and colourful statements, but this is what they said:
“We have concluded that the department has offered neither adequate evidence to support its case for change nor a convincing proposal for mitigation of the potential negative impacts of the change.”
People are queuing up to criticise these regulations, which hardly have a friend in the world. Citizens Advice has said that
“we are concerned that the proposal to reduce backdating for pension credit will have the opposite effect, making it less likely that the most vulnerable older people will claim their full entitlement”.
Furthermore, I think that all hon. Members have a copy of a briefing from Age Concern, which is very blunt about this issue:
“Age Concern is against the reduction in time available to backdate.”
Age Concern talks about its research showing that, of those people who had made backdated claims who they had surveyed, one in five had used that money to clear debts.
Age Concern has said that these issues cause considerable worry and distress to older people. That relates to the SSAC’s comments and the DWP’s apparent principle—it must be a new principle—that changes that benefit one group of people should be made at the expense of another group, in this case people on low incomes. It gives a case study of a “Mr. K” who, as a result of backdating, was able to clear his debts and improve his finances. It also talks about the low rate of take-up of pension credit.
Those very serious organisations, which are dealing day to day with the existing debt and other problems of older people and other vulnerable groups in society, are united in their criticism of and opposition to the regulations. The official Opposition and the Liberal Democrats are of the same mind, and the SSAC has lambasted these regulations more than once.
The regulations have had an eight-year gestation period. One would have thought, as the hon. Lady has said, that in all that time the Government would have commissioned some serious work to examine the real impact of the regulations on people.
I want to turn briefly to the issue of the 13-week rule for pensioners living abroad. We have no difficulty at all with that proposal, which makes a considerable amount of sense.
Charlotte Atkins (Staffordshire, Moorlands) (Lab): Will the hon. Gentleman clarify whether it is his party’s policy to retain the pension credit?
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