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Baroness Barker: The Minister mentioned the figure of £4.5 million. Can she give details of how that figure has been arrived at? The Minister may wish to write to me. The hour is late.
Baroness Hollis of Heigham: I gave the figure of £4.5 million in respect of staff, costs and the rest of it over the table. I believe that it is appropriate for me to write to the noble Baroness if she wishes for further information on this matter.
Lord Higgins: I am most grateful to the Minister for that very helpful reply. I need to consider the points that she made. Perhaps I may take up two points and a suggestion. First, is it the case, as I believe the noble Baroness, Lady Greengross, said, that if someone goes into hospital the five-year period runs afresh? Secondly, the noble Baroness has given the figures for the average, but that is not the problem: it is the dispersal around the average. While some people may receive fairly immediate resumption of their benefits, others may have to wait a great deal longer than was revealed by the figures which the Minister gave.
Perhaps I may make one suggestion. This matter has been in existence for so long that it has probably not been considered in any depth until quite recently. One way around the problem of the resumption of benefits would be to continue them all the way through, but to charge the individual for rent, accommodation and so forth. That might be more acceptable to them in the sense that they are paying for something and receiving something in return. I merely put forward that suggestion. We may well wish to return to this point on Report.
Baroness Hollis of Heigham: I am grateful to the noble Lord for triggering my memory. As I understand it—I shall qualify it in writing if I need to—reduction alone in the retirement pension through being a
hospital patient for more than six weeks will not of itself end the assessment period. The assessment period would not have ended for those purposes. One would have to start after 52 weeks when changes in the household composition would effectively turn it into a disaggregated claim. I believe Members of the Committee will understand that.The noble Lord made a second point about averages. He is right in saying that it is the aberrant cases, not the averages, which are the problem. We have a compensation system and the noble Lord is right to press us about it. He suggested that we might wish to recover the costs subsequently, and that payment would continue while in hospital. That would be worse from his point of view than the current situation.
The notion that someone could be charged and be told, "Here is your retirement pension, but we are going to take away 'X' for this and that" comes perilously close to a charging system which would have to include people not on benefit. Is the noble Lord suggesting that it should apply to people on benefit? Otherwise, there would be no justification for someone not on benefit with several times the income being charged for their food, laundry or heating. I do not believe that we can go down that path.
The problem here is double provision in that people are receiving a retirement pension which is expected to cover their food, laundry and heating. I believe that most people would accept that when one goes into hospital some costs are reduced but some may increase. None the less, there is double provision. Some costs certainly do reduce and that is why this situation has existed for many years. I believe that the noble Lord's suggestion could not be applied simply to pensioners: if we are to have that form of payment it would have to be applied to those receiving wages and earnings. I am very happy for the noble Lord to return to the matter if he wishes, but I still believe that his solution is worse than the dilemma which currently faces patients who go into hospital.
Lord Higgins: I am most grateful for the clarification of the various points. Before asking for leave to withdraw the amendment, perhaps I might just clarify what I was saying. I was not suggesting that they should pay subsequently; I was suggesting that payments to them would continue throughout their period in hospital and beyond, but that they would then be charged while in hospital. They would then have no problem on discharge.
The noble Baroness said in that respect that other people in hospital not receiving benefit would have to be put in the same position by charging them, as if it were not the case that we were charging those on benefit now. It is simply that the matter is stopped rather than charged. However, at all events, we are making some progress, and we can return to the matter on Report. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Baroness Greengross moved Amendment No. 47:
- Page 3, line 36, leave out subsection (1).
The noble Baroness said: This is also a probing amendment. It may be somewhat badly drafted—on the back of an envelope, literally. I expect that the Minister's brief has already indicated that.
The amendment would allow members of married or unmarried couples to claim the state pension credit, each in their own right. I understand why subsection (1) has been included. If it were not, the cost of the state pension credit would be much higher and would allow all kinds of incentives for well informed couples to shift their resources around to maximise their entitlement. However, there is a serious point behind my probing amendment and I referred to it at Second Reading in relation to tax credits.
I am disappointed that the Government have not had the courage at least to begin to chip away at benefit rules that still assess a couple's income together, rather than individually. Only when that is tackled will we see the beginning of the genuine integration of tax and benefits. I strongly favour that, not least because it would benefit women significantly. However, it would also be to the benefit of older people generally, in particular poorer older people, the very people whom the Bill seeks to help. A genuine integration of tax and benefits would be the best way to tackle take-up, so that, as the Minister explained at Second Reading, we move away from the language of means testing to the language of entitlement. We would all appreciate that.
Everyone understands that above a certain income one pays tax, usually automatically, via PAYE, or by being taxed at source on savings. If benefits were integrated with that basic and accepted principle, the opposite would apply. Below a certain income, the state would automatically pay money back to people to top up their income.
In the case of the State Pension Credit Bill, I was encouraged to read in the November 2000 pension credit consultation document that,
- "over time, the Government wants to take tax and benefit integration further . . . ultimately to create a seamless and integrated system of support".
The Chairman of Committees: I should draw the Committee's attention to the fact that if the amendment were to be agreed to, it would pre-empt Amendment No. 49.
Baroness Noakes: I spoke earlier about married and unmarried couples and some of the related problems. Treating married couples as one unit, rather than two individual units, may have been appropriate for a
different age, when the husband worked most of his life as a breadwinner, providing for his wife and himself in their retirement. However, the world is changing, and increasing numbers of women are in receipt of their own retirement pension by dint of their own contributions. The figure was 53 per cent for 1997, according to a Written Answer given on 16th January by the Minister's right honourable friend in another place. That is forecast to rise to 68 per cent, comprising almost 5 million women, by 2006-07.This issue is coming up and is ripe for the noble Baroness, Lady Greengross, to raise. I suspect that the problem lies in its public expenditure implications. I should be interested to learn what the Minister has to say with regard to the costs. From my perspective, it is clear in which direction we should travel, but I am less than clear that we could afford the bill.
10 p.m.
Lord Hodgson of Astley Abbotts: The hour is late and so I shall be brief. I very much support the thoughts and philosophy driving the proposer of the amendment. The separation of the taxation system and the possibility offered here for integrating taxation and benefits and all that that would mean seems to me to be an objective worth pursuing. It is something which perhaps we have passed by too lightly amid the many other complexities of the legislation before the Committee. I hope that the Minister will be able to take up, explore and think about the points made by the noble Baroness.
Baroness Hollis of Heigham: Pension credit is a household-based, income-related assessment. It is not a tax system based on the individual assessment of income. It could mean that, for example, the wife or partner of a wealthy husband with very little money held in her own name would be entitled to the pension credit, despite her wealthy partner. That may be the situation with regard to a tax—if you do not aggregate, you separate—but it does not strike me as a suitable or appropriate basis for a pension credit. A non-working spouse, or someone working only part-time, or perhaps with only modest savings or £5,000 or £7,000 in a building society who none the less had an extremely wealthy husband, would be entitled to claim pension credit. I cannot believe that that would be a sensible use of public money. Indeed, it would be similar to introducing a policy pursuing the route of "wages for housework".
There are other and better ways of addressing the problem identified by the noble Baroness. We shall do that through the state second pension. The fact is that the majority of beneficiaries of the state pension credit will be women when they find themselves in a position, perhaps through the death of a partner or spouse, where they are required to support themselves, if they have not already been doing so.
We shall not go down the path of disaggregation. We cannot do so because this is a household-based, income-related benefit. It is not like a tax and thus based on individual assessment. Furthermore, it is not like a tax and thus based on an annual assessment of the previous year. It is also not like a tax based on actual income as opposed to a notional income based on capital. For all those reasons, I hope that the noble Baroness will accept that we are not going to disaggregate in that way.
I do not believe that the noble Baroness would wish to advocate some of the more bizarre possible interpretations of her amendment. With regard to the substance of the proposal—whether we are going to disaggregate—the answer to that is no. We shall not do so in the case of pensioners, most of whom in any case are not taxpayers. We are seeking here to establish a right and decent way to respond to pensioners' needs. Their needs are household based and their ability to meet those needs will be met by household-based income. That is why we think that it is right and proper that pension credit should be based on households rather than on individual disaggregation.
Even if the noble Baroness does not agree with my comments I hope that, with my explanation, she will feel able to withdraw her amendment.
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