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Baroness Barker: I, too, support the amendment. This is one of the most timely revisions that there could
be. I hear all that the noble Lord, Lord Higgins, and the noble Baroness, Lady Greengross, have said about the time when this rule was introduced. I was not alive in 1948 and I do not know whether there was an equivalent system of housing benefit at that time. No one could have foreseen then the misery into which many pensioners are forced today by the operation of this rule.This rule has a bearing on the lives of pensioners in two ways. First, it makes an assumption that there is double funding, but an increasing amount of research suggests that there is little double funding. When this rule came into effect there was an assumption that if someone was in hospital they would have no heating charges at home, but today pensioners have standing charges to pay.
A couple of weeks ago in response to a Question, the Minister responsible for pensions said that this downrating was about board and lodging. I believe that board and lodging, in the context of a hospital, means food. The most recent figures from the Government that I have been able to find from the Library suggest that on average the amount of money spent on food is £1.67 per day for every person in hospital. That is worked out from an overall amount of the numbers of patients and the cost of food. There is a flaw in the way in which this rule operates in that it makes assumptions about double funding that are not true.
Secondly, it does not recognise the increased costs to older people of being in hospital. In my work with Age Concern London last year I was involved in the production of a report on hospital transport entitled A helicopter would be nice. That was what an older person said to us about hospital transport. I offer this observation. One is more likely to have free parking at Sainsbury's than at a hospital. For the spouses or partners of older people, there are a number of increased costs as a result of being in hospital.
Perhaps more important is the point to which the noble Lord, Lord Higgins, referred: the huge disruption to housing benefit and council tax benefit. The noble Lord questioned the Minister—she did not respond—about the review of housing benefit having been put back. We know that there are enormous problems with housing benefit administration. Those are acute in London. If Members of the Committee want evidence of that, they should drive through Brixton at about 7.30 in the morning, before the benefit office opens, to see the queue of older people who wait for several hours before they are due to be seen. In many parts of the capital, housing benefit administration is a disgrace which drives pensioners to distraction. I do not believe that anyone would wish that on any pensioner, far less on one who has been ill enough to be in hospital.
The noble Baroness, Lady Greengross, rightly indicates why we should now review the situation. The new arrangements for intermediate care lack clarity about who will be deemed to be having hospital care. That is why we need to probe what is happening.
At Second Reading the Minister said that the circumstances of pensioners do not change that much. That was the reasoning on which she based periods of assessed income. For some pensioners going into hospital is a precursor to great change, but for most it is not. If the Government are confident that the circumstances of pensioners do not change in the longer term, it is right to consider benefit for what may be short periods in hospital.
I have not received an answer to my Written Question to the Minister about the cost to the department of making changes. I hope to receive an answer during these debates. If there is change when a pensioner goes into hospital, there is another change when he or she comes out. So there are two costs. The Government receive back about £57 million a year as a result of hospital downrating. I shall be interested to know the cost to the Government of implementing the rule. I look forward to the Minister's response.
Baroness Hollis of Heigham: The amendment is more narrowly focused than the discussion. Perhaps I may say a few words about the broader issue and come back to the amendment.
The amendment would impose an obligation on the department to restore a person's pension credit within one week of his discharge from hospital, presumably at the pre-admission rate of payment, and proposes that the person be compensated for any delay in the payment of such an increase. The noble Lord was understandably quite explicit that it was the intention to put pressure on the competence of the department to reinstate benefits where delay would otherwise cause stress.
Perhaps I may just step back for a second and talk about the wider issue. We propose that for hospital in-patients receiving pension credit a single person would have their standard minimum guarantee replaced with a lower amount. The reduction in such cases would be equivalent to about £28 or so of the basic state retirement pension after six weeks in hospital, with a further reduction to 20 per cent of the basic state retirement pension following an extended stay of longer than 52 weeks. At that point essentially there is a read-across between the amount remaining to a long stay hospital patient and someone in a local authority home who is receiving, so to speak, pocket money after their costs have been met.
Baroness Barker: I rise to make one point. In the past the noble Baroness has, very rightly, taken Members of the Committee to task for using wrong terms about benefits such as MoT tests. The term "pocket money" is offensive to older people. We are not talking about children with small amounts of money for sweets. We are talking about adults and a personal allowance, which they have the right and the dignity to choose how to spend.
Furthermore, to talk about pocket money is misleading. It gives the impression that this is some additional extra—some indulgence. For many older
people it is not. It is about buying the necessities for the circumstances in which they find themselves. Rather worryingly, the social policy ageing information network is beginning to tell us about instances where people in residential and nursing homes are being asked to contribute that money towards their fees.I wanted to make that point to all Members of the Committee. It seemed appropriate to do so now. To talk about this as a personal allowance as opposed to pocket money is important. It is a principle on which the noble Baroness has previously picked up other Members of the Committee. I hope that she will accept that.
Baroness Hollis of Heigham: I used to call it "personal allowance" to my children. They called it "pocket money". But I am very happy to use that term if the noble Baroness feels more comfortable with it. I do not have any problems with it. The point which I was making was not a language point, but actually the substantive point, which I am sorry the noble Baroness did not come back or challenge me on. That is that after 52 weeks the residual monies, or personal allowance or whatever she wishes to call it, for a person in a long-stay hospital has a read-across to the local authority situation, which is why it takes that particular form.
In the case of couples, the reduction would be equivalent to about £14.50 off the basic state pension after six weeks in hospital and 39 per cent of the basic state retirement pension after 52 weeks. However, any savings credit, as opposed to retirement pension, will continue to be paid regardless of the length of stay in hospital.
Not to accept the principle that there should be no double payment would mean that a person in hospital is put on exactly the same footing as a person living in their own home. I think that noble Lords have always accepted that there should be no double payment of benefits. For example, if one gets a widow's pension one does not often get ICA and the like. Food, laundry and heating, particularly if one is a single person, are expenses that are reduced from one's retirement pension if one is in hospital because those items are provided by the hospital, compared to the situation of living in one's home. That is the basis of the Government's position.
Perhaps I may now turn to Amendment No. 46. Members of the Committee will be aware that currently a person is required to notify the department of periods of in-patient treatment and will be required to do so under pension credit. That allows the department to make the necessary adjustments following admissions or discharge. As noble Lords will appreciate, the department can act only upon the information within its knowledge. When a person is discharged from hospital their pension credit entitlement would be restored to the pre-admission rate of payment. Where a person's pension credit entitlement ceases as a result of the interaction between his income and the application of the downrating provisions, a new claim to pension credit would be required upon discharge from hospital. This
is to ensure that the correct rates of benefit are paid and that all changes in a person's circumstances are recorded.The noble Lord, Lord Higgins, rightly pressed me on the clearance times and, therefore, the delay in reinstatement of benefit. It may help the Committee if I were to indicate the Government's target figure and the actual level of our performance. Obviously, the averages that I give are just averages, so there may be a lot of variations around the mean. As for new or repeat claims in terms of the income-related benefits—income support and MIG, as well as JSA—our target is 12 days. The actual performance for IS and MIG is 9.4 days. Our target in respect of a change of circumstances is to have that benefit reflect such a change within four days; our actual performance is 2.5 days, which is quite impressive.
I understand the noble Lord's wish to encourage us to improve those performances from the department that differ very widely from the rather satisfying averages that I have given. However, there is a difficulty with the noble Lord's proposal. If every week of delay would result in a customer being paid double the benefit, we would be offering people an incentive not to report their discharge from hospital on time. It is a two-way process: it is when the customer reports to us, as well as when we can reinstate benefit. We need to be exemplary in our performance. I believe that the averages that I have given indicate that the performance is really rather good. We are also dependent on the former patient notifying us of the situation. As such former patients are convalescing, it may take them some time for them to do so; and we cannot act until we have that information.
However, the department will be providing full training to the staff who will be administering pension credit to ensure that claims and changes in circumstances are processed as quickly as possible. We shall be making significant improvements to service delivery. The introduction of the Pension Service will make it easier for customers to contact us. Over time, the Pension Service will provide former hospital patients, as well as all other pensioners, with a wide range of contact channels through improved modern technology, including telephony, digital television and Internet technology. Call and contact centres will be open longer than current office hours to allow pensioners to contact the service when it is convenient for them to do so.
In cases where we have delayed unreasonably, the department already has a special payment scheme that provides compensation. We use the average retail shares and deposits rate supplied by the Building Societies Commission to calculate compensation payments for delay. However, the noble Lord's amendment would provide compensation to pensioners at 100 per cent, which is an unrealistic rate. Moreover, we would have to extend it to all other benefits; indeed, in all justice, we could not limit it to pensioners. The noble Lord will have to accept that fact.
Finally, I was asked what the cost of administration would be under the current system. As a matter of information, I can tell the Committee that we are talking about a figure, on average, of about £4.5 million. It is absolutely right that the noble Lord should put pressure upon us to speed up our reinstatement process. However, if he shares with us a recognition that, to some extent, it all depends on when the information is supplied to us by the former patient or his or her family, I am sure that he will realise that his way of making us respond is inappropriate. Our performance has improved. Our targets are quite challenging, but we are meeting them. Indeed, we are doing better than our target in some cases; for example, as I mentioned earlier, 2.5 days.
The Pension Service will seek to improve our performance still further, but unacceptable delays remain unacceptable. If the noble Lord has other ways of meeting his objective without going down this path, which, as I said, would produce perverse incentives, I shall be very happy for him to share them with us in due course. With that explanation, I hope that the noble Lord will feel able to withdraw his amendment.
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