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Baroness Hollis of Heigham: That is helpful, but entirely irrelevant, if I may say so. We are dealing here with men, whether or not they are married to someone of the same age, a woman under the age of 60 or a woman over the age of 65 is irrelevant. We are dealing for these purposes with single men aged between 60 and 65. I was seeking to take your Lordships through the argument that we should treat them at the age of 60 as though they were women and thus entitled to savings credit.
The issue of the age of the man's partner is indeed an extra complexity, which would make it even harder to deliver the policy intent of the amendments, but the argument does not hinge on that. Separating out and treating what is actually a household assessment as though it were a disaggregated tax assessment would not improve the situation, because the man would still be between 60 and 65 and, for the purpose of the pension credit, we should have to deem a full retirement pension that he cannot have by law. That is what produces the anomalies that I have been describing. The issue of marriage makes the situation more complex, but does not alter the basic, fundamental flaw of what seems a generous proposal.
That is before I come to SERPS, which makes the position even more exotic. Women may have some SERPS in payment at age 60. Men do not receive that until 65. Again, there is no easy solution. We cannot simply ignore SERPS, because some people will have contracted out of SERPS, and it would be unfair to treat those who have contracted out of SERPS differently from those who have not. Another point is that men continue to expect to build up provision for their retirement until age 65, and this will become increasingly the case for women.
Given all that, I hope that I have persuaded your Lordships that we cannot equalise at 60 the savings credit that is built on a retirement pension that men cannot receive and have never received until 65. That would be true even if women's pension age was never going to rise. The fact that it is to rise to meet that of
men seems to me to render the proposed process foolish. The difference with MIG is that that is about poverty. It has always been available from the age of 60. It is a form of income top-up. The savings credit, which has to deem the full retirement pension to come into play, cannot be paid to men under the age of 65 because they do not have a retirement pension. To deem it as if they had would produce some of the anomalies that I have tried to describe.Behind the amendments is an understandable concern, which I share with the noble Baroness, Lady Barker, that women do not lose out overall, compared to men and compared to the current position, in the pension provision provided by the Government by the state second pension, stakeholder pensions and the Bill's provisions. The noble Baroness is absolutely right to bring such issues to our attention. My noble friend Lady Turner would of course join her in that.
Women tend to have lower incomes in retirement than men and they live longer, so they are more likely to see a relative decline in their pension income over their retirement. Pension credit will therefore be of particular help to women—as is the state second pension. More than half of pensioner households entitled to pension credit will be single women. About a further third will be men and women in a couple. In other words, pension credit will primarily help women and older women, for the reasons that I have just described.
Finally, Amendment No. 54 would extend assessed income periods to cover pensioners aged 60 to 64, as well as those aged 65 and over. I do not think that my noble friend Lady Turner of Camden really addressed that point in moving the amendment. She may not have envisaged the impact of the amendment. I am willing to speak to the draft that I have here, which addresses the purpose of Amendment No. 54, even though my noble friend did not speak in that way. I am in my noble friend's hands: if she would like me to do it, I am willing to do so. She may prefer me to sit down at this stage, for I have taken up a lot of the Committee's time, and we can return to the issue under another group of amendments, perhaps that relating to assessed income periods. I am happy to indicate to my noble friend which clause that will be under.
I hope that I have addressed the Committee's concerns. I recognise that it is an honourable problem, but I hope that I have persuaded the Committee that there is no solution, given that men's retirement age is 65. If we deem it, we will end up with marginal deduction rates, which would introduce further inequalities. Given that and the fact that women's retirement age is creeping up to that of men, we think that we have come up with the best solution, which is to treat men and women equally at the point of their poverty, which is 60. When it comes to the credit, which requires a full RP to get the full benefit, it must be at 65, if we are not to introduce further inequalities.
That was a long explanation. I hope that some of the worked examples will make it clearer—if I have not made any mistakes in citing them—when your Lordships read this before Report. I hope that the amendment can be withdrawn.
Earl Russell: The Minister has given us a brilliant demonstration of why the demanded simplification of social security law can never be as simple as it looks. Does she accept the principle expressed by my noble friend Lady Barker that there is here no solution without anomaly? Is she attempting to offer us an anomaly-free solution, or is she—in the words once used by Lord Whitelaw—investigating alternative anomalies?
Baroness Hollis of Heigham: I shall give the Committee a bit of biography. In an interview for an internal Department for Work and Pensions staff magazine, I was asked what I thought to be the biggest problem in social security. I am sure that the person interviewing me expected me to say, "The Treasury". Heaven forbid—I would not dream of saying that the Treasury was the biggest problem in social security.
What I actually said echoes the noble Earl's point. I said that the hardest issues were those in which there were conflicting or competing good things. All that one can do is go for an optimum solution, not a maximum solution. The noble Earl is absolutely right. No one—certainly not I—would wish to disadvantage women at any point, but to deal with the issue in this way would produce worse anomalies than that which the amendment seeks to address.
We have come up with a decent solution, equalising at 60 men and women who are especially poor and equalising men and women with regard to rewarding their savings at 65. That is the decent solution, although I accept much of what the noble Earl said.
Baroness Turner of Camden: I was going to ask the Minister about the comment that she made about the difficulties relating to the position of women and the desire that women should not be disadvantaged in the way suggested by the noble Baroness, Lady Barker. Will the Minister give the matter further consideration, or does she think that it is an anomaly that cannot be addressed?
Baroness Hollis of Heigham: Yes, I do. I am not the Minister responsible for that portfolio issue, but I have spent many hours going through it, to see whether there were other ways of addressing the issue. I am persuaded that this is the most decent solution that we can come up with.
That does not stop your Lordships revisiting the issue. My noble friend may wish to press the amendment to a vote, but I beg the Committee not to make amendments that simply make the situation worse because of the unintended consequences of the read-across. With social security, it is not, as the noble Earl, Lord Russell, said, about simplicity, it is about
read-across. It is like yellow lines on the road—one never knows where the cars are going to back up, for they do not always back up at the end of the yellow lines. That is what would happen here.My noble friend Lady Turner of Camden has hit the end of the road on this matter. Obviously, if there are any particular points to pursue, I will be happy to correspond with her. If she wishes to revisit the issue at a later stage, she is, of course, free to do so. We have done the best that we can. I hope that when noble Lords read the proceedings in Committee over their cornflakes, they will agree that the issue should be put to bed.
5.45 p.m.
Baroness Turner of Camden: I thank the Minister for her detailed response to the amendments. Of course, I still feel that 60 would be a better age, especially in view of the fact that so many people—especially men—now have to retire much earlier than 65, because of industrial situations. Often, they do so on inadequate pensions.
I accept, however, that it is an extremely difficult issue and that has been illustrated by the Minister's response. Of course, I would like the opportunity to consider in more detail the numerous examples of difficulties that she gave. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden moved Amendment No. 12:
- Page 2, line 8, leave out "does not exceed" and insert "is less than"
The noble Baroness said: This is a simple amendment. We want to leave out the words "does not exceed" and insert "is less than". The amendment would mean that the Bill would read:
- "has income which is less than the appropriate minimum guarantee".
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