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The Chairman of Committees: I should have said to the Committee that if this amendment were to be agreed to, it would pre-empt Amendment No. 38.
Baroness Hollis of Heigham: What the noble Lord asks for is entirely reasonable. I shall seek to write to
him and share the information with the House. For reasons he will understand, some of the points may take longer to determine. But at least I could identify the areas on which we are clear and those areas on which we are still consulting. If Members of the Committee wish to give a view on those areas, that will be helpful.
Lord Higgins: I am grateful to the noble Baroness. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Turner of Camden moved Amendment No. 38:
- Page 3, line 25, after first "income" insert "including earnings"
The noble Baroness said: Amendment No. 38 is another probing amendment. If it were accepted, subsection (6) would read:
- "Regulations may make provision as to income [including earnings], which is not to be treated as qualifying income for the purposes of this section".
The White Paper originally said that consideration was still being given to the treatment of earnings in the pension credit. At present, pensioners can normally earn only £5 a week without loss of income support. The amendment would ensure that earnings are counted as qualifying income for the purposes of subsection (6). I am wondering, therefore, whether the Minister will be kind enough to say whether the Government have concluded their consideration of earnings in relation to pensions credit and, if so, with what result. I beg to move.
Lord Higgins: In the light of the discussion we had a moment ago I am a little uncertain how to respond to Amendment No. 38. I was inclined to take the view that it would be better to consider the question of what is and what is not earnings under Clause 15 of the Bill. But I suddenly realised that the earnings in this section may not be the same as the earnings in the later section.
Important issues arise as to what the situation is in relation to disregards for part-time earnings, both as to standard credit and savings credit. However, I am inclined to defer my remarks until we come to Clause 15. If I have made a mistake we can return to this matter on Report.
Baroness Hollis of Heigham: My noble friend seeks an assurance from us that earnings taken into account in the pensions credit calculation are always rewarded.
It has always been our intention that those who continue to work after age 65 are rewarded for their efforts. I hope Members of the Committee will appreciate my dilemma. We are still considering how best to do that. For example—a point I made at Second Reading—we need to consider the relationship between pension credit and working tax credit; or, as my noble friend suggested, whether the small earnings disregard still suits our purposes. So issues do arise here. We are trying to seek the best way forward.
We are not dealing with an inconsiderable number of people. Around 450,000 people have earnings which could affect pension credit. But, equally, we want to encourage them to work where they can do so. How best to do it, and whether it is best done through the vehicle of working tax credit, through earnings disregard or through allowing earnings to be regarded as qualifying income for pension credit purposes, we are still consulting on and considering. I hope the Committee will tolerate that. That is probably as much as I can say as to how things are going at the moment. Obviously we will be revisiting this matter.
Baroness Turner of Camden: I am grateful to my noble friend for that explanation. It was in order to find out what the present score was that the amendment was tabled in the first place. In the circumstances, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Higgins moved Amendment No. 39:
- Page 3, line 26, at end insert—
The noble Lord said: Amendment No. 39 is an attempt to try to bring in some consistency between the various parts of the Bill given, as we now discover, there are various definitions of "income". I thought initially it was merely tidying up the drafting and making sure the various parts were consistent. In the light of the earlier discussion, I am not at all sure that that is all that arises on this amendment.
It may be that some items will be disregarded in this part of the Bill which are not disregarded under Clause 15. No doubt the Minister can enlighten us as to whether or not that is the case. Each of the amendments interlock to some extent. I pick up the point the noble Baroness made on the previous amendment; that is, that the Government were unsure what to do about the additional pension received if people defer drawing their basic state pension.
Lord Higgins: I thought that was what the noble Baroness said. In that case I am stimulated to think about that point even though she did not say that.
Baroness Hollis of Heigham: I do not always give the noble Lord all the words of everything I am thinking all the time. He might not want that.
Lord Higgins: I am making a serious point; namely, that we shall have to consider among the items which should or should not be included in income the additional income which pensioners get if they defer their retirement age in order to get a higher basic state pension. That is a pretty meagre increment at the moment. I am bound to say that the ability of the
Baroness Hollis of Heigham: Again I have some difficulty here because my understanding of the amendment bears no relationship to what the noble Lord has said. It is equally clear that he decided that his own amendment did not bear much relationship to what he originally intended to say and he added to it interestingly in good House of Commons style as his speech proceeded.
The Chairman of Committees: I hope the noble Baroness will forgive me if I put the amendment to the Committee. Amendment proposed,
Baroness Hollis of Heigham: I have never done that twice before on a Bill and certainly not with one Chairman of Committees. I seek the Committee's apology.
I shall respond first to the amendment as drafted. The amendment as drafted seeks to ensure that any earnings which are disregarded in the income assessment are not rewarded. The truth of the matter is that no income, including earnings, which is disregarded in the income assessment will be rewarded. This is achieved in Clause 15(6)(b) which allows in prescribed circumstances for capital or income which is possessed by a pensioner to be disregarded. Disregarded means exactly what it means. No account will be taken of that money in calculating an individual's entitlement to the guarantee. DLA or AA are the obvious examples.
By the same token no reward will be payable in respect of that money through the savings credit. It is simply outside the calculations in a kind of "suspense" account. It may be that the noble Lord's intention in proposing the amendment was to ensure that apart from disregarded earnings any other disregarded income should attract the savings reward. However, that would mean that people would get a double advantage of not having the money count against their guarantee credit while at the same time receiving a 60p in the pound reward for it. That is certainly not our intention and, I suspect, is not the noble Lord's either.
I am not sure about the noble Lord's approach here. However, he then turned his comments into an introduction on an issue which is certainly important and interesting; namely, the increment question. However, that is nowhere indicated or reflected in the amendment. I shall have a go at it all the same. My
"( ) Regulations made under this section may not specify as qualifying income for the purposes of this section any item of income relating to earnings which has been prescribed to be disregarded under section 15(6)(b)."
9.15 p.m.
Page 3, line 26, at end insert—
"( ) Regulations made under this section may not specify as qualifying income for the purposes of this section any item of income relating to earnings which has been prescribed to be disregarded under section 15(6)(b)."
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