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Lord Higgins: I am most grateful to the noble Baroness. The issues are so much clearer when she makes it up as she goes along than it is when, as with the previous amendment, she reads out the official brief. I am lost with admiration that she is able to do that on her feet. I shall study very carefully the points that she has made.
How do the proposals tie in with local authorities, for example? Do they have to be informed of the changes?
Baroness Hollis of Heigham: Yes.
Lord Higgins: In previous discussions on housing benefit, I do not think that Members on either side of the House have shown enormous confidence in their ability to handle this type of complex problem.
Baroness Hollis of Heigham: The noble Lord is correct. Local authorities will have to identify the new applicable amounts for pensioners. However, given the current state of computerisation, we are not worried about that. We should also remember that probably most pensioners who will be affected live in social housing. Consequently, their rent is paid after housing benefit has been deducted at source. Anyone on the basic guarantee does not pay any rent at all. The situation is not comparable with that in the private sector, where giros have to be sent to pay private landlords. As the noble Lord will be aware, in local authorities, housing benefit is not paid to pensioners who are on MIG. They do not pay rent at all, rather than being charged full rent and then being sent a cheque to pay it. There could be an issue, I suppose, that the payments to private, non-social landlords might get hooked up in the current problems that some local authorities have with their administration. That certainly will not affect pensioners in social housing, which will be the large majority as far as I am aware, although I will check the figures. We will obviously have to watch that. However, it is my understanding that this is one of the simpler tasks. After all, housing benefit changes with uprating anyway.
Lord Higgins: I am grateful to the noble Baroness for that explanation. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 24 to 26 not moved.]
The Deputy Chairman of Committees (Lord Skelmersdale): In calling Amendment No. 27, I have to inform the Committee that if it is agreed to, I cannot call Amendments Nos. 28 to 45 inclusive, by reason of pre-emption.
Baroness Noakes moved Amendment No. 27:
- Page 3, line 3, leave out subsections (2) to (8) and insert—
The noble Baroness said: The purpose of Amendment No. 27 is to try to put some clarity into this Bill. It tries to rewrite Clause 3; not to change its substance, but to try to express the savings credit in more direct language. I know that myself, the noble Baroness, Lady Turner, and a number of others who looked at Clause 3 found it incomprehensible when they first read it; and incomprehensible when they read it a second and third time. This is a modest attempt to try to re-express Clause 3. It is put forward with some humility, not in the belief that it is perfect. It is intended to see whether there is a possibility of finding a clearer way of expressing what should be a relatively simple concept.
If we look at how this relatively simple concept of the tax credit is turned into law, we can see that it has many complicated elements—it has amounts A subtracted from amounts B; it has definitions of all of those amounts; it has two definitions of "income"—income and qualifying income. If we work through it, we could find that to reach the savings credit we have to pass through an obstacle course involving eight different concepts and two different measures of income. That is just to reach the basic level.
There are also more complications. The clawback operates by reference to appropriate minimum guarantee under Clause 2, which assumes that it is a higher amount than the standard minimum guarantee. But that will not always be the case. Occasionally it can be lower under the powers in Clause 2(6).
If we then have something that is lower and put that into the formula that is in the existing clause, that would not work. We therefore have to have a further power in subsection (5) to rewrite amount B. My noble friend Lord Higgins has already said that he does not understand what it is trying to do. It tries to do something extremely complicated.
As I said a moment ago, I do not put forward this amendment in the belief that it is perfect. It is to see whether there is scope for simplification. If so, I am sure that it could be improved upon. The amendment tries to distil the Government's intentions into three simple cases and then set out in subsections (3), (4) and (5) what savings credit follows from those simple cases. In the new subsection (8) it also gives what are, we hope, clearer, more direct definitions than are found in the existing Clause 3. I hope that the redraft commends itself to the Minister and I look forward to her comments. I beg to move.
Baroness Hollis of Heigham: I hope I am not giving out any secrets when I say that when I was discussing this amendment with my officials they thought this was a very good try. They were mightily impressed. It will not work for all sorts of reasons, which the noble Baroness would expect me to say but which I happen to believe is true. But jolly good points for effort, if I may say so, and that is not in the least meant to be patronising. It was an impressive piece of work.
Perhaps it might be sensible to stand back a bit and, before discussing the detail of the amendment, give an overview of how Clause 3 works as it is presented in the
This works in two ways, depending on where a pensioner's income falls in relation to the standard minimum guarantee. First, as the noble Baroness and I am sure other noble Lords are aware, if a single pensioner has income below £100 he will receive 60p a week for every £1 of savings he has over £77. This builds to a maximum of £13.80 a week for someone whose weekly income from pensions and savings is £100.
Secondly, if a single pensioner has income above £100 the savings credit starts to reduce, although it is worth stating that under our proposal a pensioner's overall income will always increase as their pre-pension credit income rises. Where income is over £100, the savings credit will be reduced by 40p for every £1 of original income. The savings credit runs out at £135 a week.
That is the basic structure with which I am sure everybody is comfortable. Exactly the same principles apply to the savings calculation for couples. If we now turn to the noble Baroness's redraft, it seeks to do much the same thing but by reference to individual calculations. Because of that we welcome the chance to discuss it. But it cannot work. The new subsection (5) makes no reference to income which does not exceed the appropriate minimum guarantee. It needs to if the calculation is to work.
The amendment does not include a calculation for those pensioners with qualifying income which does not exceed the standard minimum guarantee and income which does not exceed the appropriate minimum guarantee. I am sure that is not the noble Baroness's intention, but the amendment cannot work without those changes.
In addition, as I interpret it—although I may misunderstand here—the amendment provides for hospital downrating to be considered under the proposed subsection (8) and the definition of the "appropriate minimum guarantee". The definition put forward would have the effect of excluding pensioners with a downrated pension guarantee credit, because they were in hospital, from benefiting from the savings credit at all. Again, I am sure that is not the noble Baroness's intention. Our intention is that those who are in hospital should be rewarded for their thrift through the savings credit as with any other pensioner, whatever may happen to the retirement pension—given the little debate that the noble Lord, Lord Higgins, and I had about the brilliant, transparent clarity of our drafting.
I could go on. But I hope that the noble Baroness will accept that, though this is a gallant effort, her version as drafted will not work for the reasons I have given. I could go on in more technical detail. The noble Baroness is more than welcome to have another go next time. I know that this Bill is extremely technically
That is not to say that there cannot sometimes be improvements. It may be that with a consolidating Act five or 10 years down the line, the legislation may be consolidated and improved in the process. But I am pretty loath to disturb technical reading. What is important is that we ensure that our descriptions in speeches in this place, the literature that goes out, the briefing to our staff and the briefing to bodies like Age Concern, Help the Aged and citizens advice bureaux are impeccable.
Some time ago I was challenged by the noble and learned Lord, Lord Brightman, about the wording of a provision. He produced three or four lines which could be interpreted as saying, "If you get into work, tell us", but we had to couch it in different ways because of the meanings of "work", "occupation", "earnings" and the like. Given that, I congratulate the noble Baroness on the rewrite. I could not have done it. It is impressive. But it does not work as it stands. I honestly think that it is not worth investing energy in that territory, desirable though it may be, unless one is absolutely sure that it is going to be robust enough to stand up to the sort of scrutiny I detailed.
We have been at the receiving end of human rights cases and so on that have been brought as a result of our flawed amendments. At the end of the Committee stage I shall ask the Committee's indulgence as regards an amendment which seeks to correct drafting on which we slipped up in a previous Bill. As I say, I congratulate the noble Baroness but I suggest that she withdraws the amendment.
"(2) A claimant has satisfied the second condition for eligibility under section 1(2)(c)(ii) if a savings credit would be payable under any of the following provisions of this section.
(3) If an eligible claimant has qualifying income in excess of the standard minimum guarantee, and has income in excess of the appropriate minimum guarantee, the available savings credit shall equal the maximum savings credit less the clawback amount.
(4) If an eligible claimant has qualifying income in excess of the standard minimum guarantee, and income which does not exceed the appropriate minimum guarantee, the available savings credit shall equal the maximum savings credit.
(5) If an eligible claimant has qualifying income which does not exceed the standard minimum guarantee, the available savings credit shall equal the prescribed percentage of the amount by which the claimant's qualifying income exceeds the savings credit threshold.
(6) The eligibility of any claimant under this section is subject always to sections 4 and 12.
(7) The Secretary of State shall make regulations prescribing the operation of this section, and, notwithstanding any other provision of this Act, this section shall not take effect at any time when no such regulations are in force.
(8) For the purposes of this section—
"appropriate minimum guarantee" has the meaning given in section 2 in respect of any given claimant, save where regulations issued under that section prescribe an appropriate minimum guarantee for any claimant which is less than the standard minimum guarantee, in which case for the purpose of this section the appropriate minimum guarantee for a given claimant shall be the standard minimum guarantee;
"clawback amount" is the amount equal to the clawback percentage of the amount by which the claimant's income exceeds the appropriate minimum guarantee for the claimant, and the clawback percentage shall be the difference between 100 per cent. and the prescribed percentage;
"maximum savings credit" is the amount equal to the prescribed percentage of the difference between the standard minimum guarantee and the savings credit threshold, save that regulations may prescribe descriptions of persons for whom the maximum savings credit shall be nil (and who therefore shall receive no savings credit);
"prescribed percentage" is such percentage, not to exceed 100 per cent., as may be prescribed for the purposes of this section;
"qualifying income" in respect of any claimant is his income less any items of income prescribed in regulations as falling to be excluded in respect of any claimant satisfying any prescribed criteria;
"savings credit threshold" is such amount as may be prescribed in regulations for the purposes of this section, such amount not to exceed the standard minimum guarantee; and
"standard minimum guarantee" has the meaning given in section 2 in respect of a given claimant."
6.45 p.m.
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