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Lord Avebury: My Lords, it only remains for me to thank most warmly all noble Lords who have taken part in the debate. In particular, I thank the Minister for the careful and extremely thorough explanation that she gave of the way in which the procedures will work. That has reassured noble Lords to some extent.
However, the views of the agencies have been echoed in all quarters of the House; they are that the procedure is not satisfactory. We shall watch extremely carefully how it will work in practice. I was extremely glad to hear the Minister say that at the beginning the arrangement will be tried experimentally in four geographical areas and that there will be a review in March. I hope that the Minister will report to noble Lords in March on what the experience has been of the experiment, so that we can express an opinion on whether the procedures are satisfactory or need to be revised.
The Minister said that the rules are part of the wider reform of the appeals system. I still wonder why on earth it was necessary to rush them through in the way in which that was done. She brushed aside the concern that was expressed by several noble Lords; namely, that the rules were pushed through during the Christmas Recess. The fact is that they came into operation on 7th January, which was the day before noble Lords came back from the recess. There was therefore no satisfactory opportunity for us to consider the rules before they became law. That is the position.
The Minister said that there had been consultations. She mentioned that the draft was sent to the Council on Tribunals and that it had replied. I also believe that the chief adjudicator was a recipient of the draft at the same time. Would the Minister be kind enough to say whether the draft that was presented and the comments that were made on it could be placed in the Library of your Lordships' House? Does she accept that consultations at that level are no substitute for the involvement of the whole refugee community? I believe that it was the noble Lord, Lord Judd, who said that it was extremely important to have good relations between all those concerned. That does not mean simply those on one side of the fence, such as the adjudicators and the tribunal; it also includes those acting on behalf of the appellant. They were not given the opportunity to enter into the consultations.
If I understood the Minister correctly, she said that the decisions of the adjudicator would be served on the appellant within two weeks. In the case of tribunals, if decisions were not served within six weeks, the tribunals would want to know why. There seems to be a fundamental difference in the two cases that are set out in the rules. In the first set of cases—those that are dealt with by the adjudicator—the appellant will not have very long to wait. However, in the other cases, the
appellant may wait six weeks—or it may be such longer period of time as the tribunal is prepared to tolerate.
Baroness Scotland of Asthal: My Lords, I make it clear—I hope that this helps the noble Lord—that it is our intention that the decisions will be served as soon as is reasonably practicable. As I said in my earlier response to the noble Lord, very few such cases are likely to be subject to the new procedure. We shall monitor how quickly the procedure can be carried out. I reassure the noble Lord that the estimates that we are currently giving are simply estimates, because the procedure has not yet been tried. I also reassure noble Lords that we shall seek to place the necessary documents in the Library.
Lord Avebury: My Lords, I am extremely grateful to the noble Baroness for that assurance. But I have to warn her that I do not believe that the agencies will be wholly satisfied with what she said about the time limits. I believe that many of them would like the Home Office and the Lord Chancellor's Department to have a fixed time within which to serve the notices instead of it being a matter of "suck it and see"; that is, "Wait to see what happens in the experiment and then we'll come back to you".
Finally, I want to take up the point that the noble Baroness made in relation to the three-day period. That seems to be a very short time within which the appellant—if he is taken into custody as a result of this process—must claim legal advice on further action by way of judicial review. Let us imagine that he is waiting to hear the outcome of his application to the adjudicator or tribunal. The first that he knows of it is when, as we said, the snatch squad descends and takes him, and perhaps the whole of his family, to Harmsworth. I did not ask the noble Baroness about that issue. What will the procedure be when it is not only a question of an individual but of the whole of his family which resides with him? Will they be taken into custody at the same time?
As I understood the Minister, having been taken to Harmsworth, Trinity House or wherever, the appellant then has only three days in which to contact his lawyer to discuss whether or not there are grounds on which judicial review can be sought. That seems to me to be a very short time. I am not a lawyer, but I believe that the agencies may have something to say on the matter.
Obviously, as a result of this debate we know a great deal more about the procedure and I am enormously grateful to the noble Baroness for that. I believe that she will find that after this evening there will be further communications between the agencies and the Lord Chancellor's Department and even perhaps with the noble Lord, Lord Rooker, who we are very glad to see sitting beside her on the Bench. Having said that, I beg leave to withdraw the Motion.
State Pension Credit Bill [HL]
8.42 p.m.
House again in Committee on Clause 15.
Lord Hodgson of Astley Abbotts moved Amendment No. 86:
- Page 9, line 18, at end insert—
The noble Lord said: With this amendment we come back to the questions that we were discussing before we adjourned with regard to other income and other assets. I do not suppose that the amendment is by any means perfectly drafted. But I should like to explore the Government's intentions on this matter because it is an issue that may well affect a number of potential recipients of the pension credit.
The people to whom I refer are those with modest earnings who have taken advantage of the right-to-buy legislation and have probably now paid off their mortgage. They therefore have an unencumbered capital asset in the shape of their home, disposal of which is, of course, capital gains tax-free. Therefore, when the Minister referred to an unlevel playing field in the treatment of savings, this is another area where there has already been quite a tilt towards a particular asset.
It is likely that such people will wish to remain in their homes in their old age. Their home may be in an area with which they are familiar, where their friends are around them and where there are social facilities that they understand. But, bearing in mind their overall wealth, they may wish to use that asset to extract value from it. There are clearly several ways in which they could do so: they may wish to receive rental income from renting out a room to a student or someone who is temporarily residing in the area where they live; they may wish to enhance their standard of living by releasing part of the equity of the house—there are building societies that offer that particular facility; or they may wish to raise a loan taken out against the home by means of a mortgage which will be repaid after their death either by selling the house or by their heirs paying off the mortgage.
I am anxious to find out from the Government where that capital asset and the potential income that flows from it, some of which may be lumpy in the shape of equity release and some of which may be a stream of income in the shape of rental income, fits into this proposal. I look forward to hearing the Government's response. I beg to move.
Baroness Noakes: I rise to support the amendment in the name of my noble friend Lord Hodgson. The treatment of homes is clearly significant. It represents the major capital asset for the vast majority of pensioners. My noble friend's amendment refers to excluding certain forms of income from earnings, although I believe that he had in mind a broader definition of income for that purpose. My concern
Baroness Hollis of Heigham: As I understand the noble Baroness's last question, the principal residence—a home—is not included at any point; nor are what I would call "personal chattels", such as furniture, fixtures, a car and such other items. The use of some capital to buy a replacement car, and so on, would also be exempt from any problems in this regard. I believe that that is a sensible definition which, I hope, will be of help.
Amendment No. 86 asks that we do not treat as earnings income arising from rent or from the release of equity in a pensioner's principal place of residence. As the noble Baroness said, such forms of income would not, in any case, normally be treated as earnings. However, I am sure that it would be more helpful to the Committee if we dealt with the intention behind the amendment, which, I suspect, was to probe our proposed treatment of such income streams.
Currently fewer than 5,000 pensioners who claim MIG also receive income arising from rent in a pensioner's principal place of residence; in other words, from boarders or lodgers. Such income is not defined or treated as earnings. Those pensioners benefit from varying levels of disregard depending upon the terms of their boarding or sub-letting arrangement. A disregard of £4 or £13.55 per week is applied for lettings without board—the level of disregard depends on whether heating costs are covered in the charge—and a weekly disregard of £20 is applied for lettings with board.
This is a complex area and we intend to cover in regulations the detail of the level of future disregards. We are seeking to simplify the rules as they currently stand. It is estimated that just under 10,000 pensioner households entitled to pension credit—unlike the 5,000 who receive MIG—will have income from boarders or lodgers. I can assure the noble Lord that the new rules that we introduce for this income stream will be at least as generous in all cases as those currently in place in relation to MIG.
I turn to the second issue concerning equity release schemes whereby a pensioner sells all or part of his home for an annuity and retains the right to live in the home for the rest of his life. Such schemes can be used to provide additional income in retirement to supplement pensions or to pay for long-term care or home repairs. The home is the largest investment for many pensioners and some plan to use it as a source of income in retirement.
We intend that under pension credit the capital available from an equity release scheme will be treated as are any other savings or capital holdings used to provide income in retirement. Such capital will be taken into account in the income assessment for the purposes of determining entitlement to the guarantee credit and rewarded in the savings credit.
In common with many of the other income streams that we have discussed in relation to Clause 15, our policy on equity release schemes aims to strike a balance between reforming the capital rules so that they are fair and simple and avoiding destabilising the personal finance market by incentivising one form of providing for retirement above others. This is "level playing field" stuff. If we were to treat income from equity release schemes more favourably than other forms of capital—by disregarding such income, for example—the result would be to increase the incentives to take out equity release schemes. Such a policy would treat home owners more favourably than other pensioners at an estimated cost of £25 million.
Pensioners can derive income from their principal residence by renting out rooms to lodgers or boarders or by taking out an equity release scheme on the value of their home. As we develop further the detailed treatment of different forms of income within the pension credit regulations, we shall no doubt revisit these issues. However, I hope the noble Lord is reassured that we are committed to treating pensions with such income streams with fairness and increased simplicity. I urge the noble Lord to withdraw the amendment.
"( ) For the purposes of this Act, a person's earnings shall not include any income arising from rent or the release of equity in a person's principal place of residence.".
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