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Baroness Hollis of Heigham: I hope that when my noble friend has heard my reply, she, too, will not wish me to accept it. The amendment would have unintended consequences that she has, perhaps, not foreseen.
The amendment would amend the provision in subsection (1)(b) so that it would provide that a pensioner would be entitled to pension credit only if their income were less than the appropriate minimum guarantee. As drafted, the condition would be satisfied if their income were equal to the appropriate minimum guarantee.
I can see why my noble friend might have thought that the amendment was necessary. On the face of it, if a person's income were equal to the appropriate minimum, they would not need a payment to bring their income up to the prescribed level. However, the subsection has been drafted deliberately and benevolently in its current form. It is the Government's policy that a person with income equal to their appropriate minimum guarantee will also be entitled to automatic qualification—passporting—to a range of other benefits provided by other departments and the devolved Administrations, including free dental treatment, the full value of an optical voucher, free wigs and fabric supports, full refunds of reasonable travel costs to hospital for NHS treatment, assisted prison visits, Legal Aid, court fee exemption and grants from the Home Energy Efficiency Scheme.
I am sure that the Committee will agree that those are important and necessary benefits. No one would wish to see them withdrawn, which is why we want to leave the wording as it is. I hope that, on that basis, my noble friend will persuade me not to accept her amendment.
Baroness Turner of Camden: I thank the Minister for that response. Of course, no one wants to disadvantage people or to affect passporting to benefits. In the circumstances, I accept what the Minister said, and, having made the point, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 13 to 16 not moved.]
Baroness Noakes moved Amendment No. 17:
- Page 2, line 21, leave out "or unmarried"
The noble Baroness said: In moving Amendment No. 17, I shall also speak to Amendments Nos. 25 and 101.
The Bill covers a scheme of pension credits that has a set of payments for single people and higher amounts for married couples. That reflects the way in which the pensions system works. However, the Bill also treats an unmarried couple as if they were a married couple. In that circumstance, two people—I shall come to the definition of married couple in a moment—have all of their income and capital aggregated for the purposes of calculating the pension credit. Of course, the pension credit for couples is not double that for a single person. Thus if two people who are not in fact married are deemed to be a married couple for the purposes of the pension credit, they will suffer from being allocated a lower limit than that for two individuals.
The definition such as it is can be found in Clause 17. An "unmarried couple" is defined as,
- "a man and a woman who are not married to each other but are living together as husband and wife otherwise than in prescribed circumstances".
Clause 17 defines a "married couple" as,
- "members of the same household".
This is an intrusive part of the Bill. I know that many nobles Lords resent the extension of means testing implicit in these new credits, but this is an additional intrusion into the most personal aspects of older people's lives, according them no dignity in retirement. For that reason, Amendments Nos. 17 and 25 seek to remove the concept of an unmarried couple being treated as if they are married.
Perhaps I may turn briefly to Amendment No. 101, which seeks to remove the ability of the Secretary of State to prescribe when a man and a woman are not to be treated as living as man and wife. I know that we will return to the theme of regulation many times during the course of our deliberations in Committee. Why does the Secretary of State need a power to determine who is not to be treated as living together as man and wife? Furthermore, is that the best way of determining how an unmarried couple are to be determined? The Secretary of State appears to have no powers to determine how they are to be treated as an unmarried couple. That seems perverse. I beg to move.
Earl Russell: I think that the noble Baroness, Lady Noakes, has opened a rather bigger can of worms than she realises. It has been perfectly clear in social security law since—I think I am right in saying—1946 that it is based not on the ceremony of marriage, but on the household unit. The central point of social security is that it is designed to relieve need. We do not wear our wedding rings around our stomachs, and so we feel a great deal of need to sustain ourselves against hunger. That is the case whether or not we are married. If the basic purpose of social service is to sustain against need, then it must be done as it has always been done ever since the welfare state was set up—through the household unit.
That principle runs right through the warp and woof of the whole of social security law. To make it apply to the whole of social security law except with regard to the pension credit would be to create a degree of complexity of the kind which we have spent a good
deal of the afternoon saying that we would rather like to avoid. This is one element of social security law that is absolutely clear.For my part, I am reminded of a story about Arthur Balfour and the young lady at a dinner party. Halfway through the dinner, the young lady turned to Arthur Balfour and said, "I am in an awfully embarrassing position and I do not know what to do about it. The gentleman sitting next to me has put his hand on my knee and I cannot make him take it away". Arthur Balfour responded by saying, "How long has it been there?". "Since the fish". "Well then", said Balfour, "I'd let it stay there".
On Amendment No. 101, I am going to surprise the Minister considerably by defending the existence of a regulation-making power. We are now in the age of the global economy, as we are in the age of the two-career marriage. I shall take one actual example, that of an individual person—my colleague Professor Natalie Zemon Davies, whose work I am sure is even better known to the Minister than it is to me. She worked at the University of California at Berkeley, but decided to move to Princeton in order to be closer to her husband in Toronto. There was absolutely no doubt that this was a genuine marriage in every possible way, but because they had two careers, they ended up living several thousand miles apart. They thought that reducing that distance to a few hundred miles was a genuine advantage, and one which held great attraction for them.
Is that the kind of circumstance which under the Bill might very well have been prescribed? If it cannot be prescribed, how are we to deal with two-career marriages? I think in particular of the freedom of movement of labour within the European Union, which is likely to make that kind of situation occur a good deal more frequently.
I hope that the noble Baroness, Lady Noakes, will not feel the need to press these amendments because they will create a great deal more complexity than they seek to be rid of.
Baroness Hollis of Heigham: I agree with much of what has been said by the noble Earl, Lord Russell. In any income-related benefit, the usual assessment is made of the household; that is, where there is financial interdependence based on a long-term—or in some cases even a temporary—relationship of sufficient stability that the two people concerned can be treated for these purposes as a couple.
The effect of Amendment No. 17 would be to limit the rate of pension credit payable to couples only to those who are lawfully married. An unmarried couple would therefore be entitled only to the lower rate of pension credit payable to single people. However, they would not be able to claim pension credit separately because that is precluded by subsection (1) of Clause 4. Thus they would be worse off and, as was pointed out by the noble Earl, Lord Russell, that would not be reasonable.
I do not see why the noble Baroness should think that unmarried couples have fewer domestic needs and requirements than married couples. Across income-related benefits there exists a long-standing principle of equal access for married and unmarried couples. I see no reason to abandon that principle for the purposes of the pension credit.
Amendment No. 25 would simply impose a claiming restriction on unmarried couples. Where one member of an unmarried couple was under 65, entitlement to the savings credit could be established only if the partner who was over 65 made the claim. In the case of married couples, provided that one of them was over 65, either one could make the claim.
As drafted, the clause provides for equal access to the savings credit for married and unmarried couples in the same way as for the guarantee credit, which again follows the well established principles for income-related benefits. I do not believe that the introduction of pension credit should be used to overturn the basic assumptions on which social security is based; that is, what comprises a "household" for the purpose of such assessments.
This does not concern whether we do or do not regard marriage as an inferior, superior or equal state; it is about the basic building blocks of social security legislation. I do not think that this Bill should be used to try to overturn such principles. Again, even if the amendment were accepted in principle, the read-across to all other areas of social security would be devastating.
I turn now to Amendment No. 101, at which point I was pleased to note that the noble Earl has discovered a new-found faith in the power of regulation. I shall seek advice about the particular case he mentioned, but certainly the power to prescribe circumstances is a legacy from earlier schemes. Analogies can be found with the example described by the noble Earl. The last time that it was used was in supplementary benefit before 1988, when it allowed for a brief "tiding-over" payment for children in some cases when a couple first started living together and otherwise all benefit would have stopped immediately.
To date, we have not had to use that flexibility and we may not have to use it in the future; but I can conceive of a situation such as that detailed by the noble Earl. With two generous incomes, in practical terms such a couple would be unlikely to come within the framework of the pension credit. However, I can conceive of a situation where one or the other might have caring responsibilities, such as looking after an elderly relative. I shall need to check on the technical accuracy of this, but I can conceive of situations where this might arise and where we might be glad of such flexibility. Were we to use it, however, the result would be only to the advantage of the individuals concerned as they would receive more as two single people than as a couple. The majority of pensioners claiming pension credit will also be claiming housing benefit or council tax benefit. Were there to be a need to use this flexibility, we want to be able to do the same as regards pension credit.
The procedures here are simple, standard and well defined. Given that, I hope that the noble Baroness will understand and accept that it would be profoundly unwise to change the basic building block of income-related—and therefore household-based—assessment.
6 p.m.
Baroness Noakes: The Minister said that it would be unfair because they would not have an entitlement to married allowance, the higher allowance. But one can look at it the other way. If two individuals had a full entitlement before being deemed to be husband and wife, they would lose by being deemed to be a part of a unit. So it depends on which way one looks at it. With increasing numbers of women having their own entitlement to a state pension—the numbers have been increasing and are forecast to continue increasing—that situation will continue.
The noble Earl may be pleased to hear that I tabled these amendments in the full knowledge that the household unit was the building block of social security legislation. However, we are dealing with something which is more akin to pensions, and I do not believe that the household unit is the building block of pensions legislation. We are seeking to create a credit with which pensioners will feel comfortable and which aligns with their experience of the pension system, not something which makes them feel that they are being dragged into the benefits system, with all its problems of uptake. I am sure that we will refer to that subject later.
Perhaps I may put a more detailed question to the Minister about how we define an unmarried couple. The noble Baroness referred to a household unit but, as I read the Bill, there is no reference to a household unit for an unmarried couple. Indeed, the definition in Clause 17 simply states that "unmarried couple" means:
- "a man and a woman who are not married to each other but are living together as husband and wife otherwise than in prescribed circumstances".
The household unit is not referred to in relation to an unmarried couple but is referred to in relation to a married couple in Clause 17. I am a little unclear as to how this will work in practice.
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