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Baroness Hollis of Heigham: My Lords, I shall speak to Amendments Nos. 2, 13 and 14 as they all address the issue of hospital downrating. Amendment No. 2, moved by the noble Baroness, Lady Greengross, would remove the regulatory powers designed to enable the Secretary of State to prescribe a lower amount in place of the standard minimum guarantee which would be payable to the claimant.

As I tried to explain in Committee, the intention in Clause 2(6) is to replicate the existing position. The Secretary of State should have the power to replace the standard minimum guarantee with a lower amount if, as a result of his taking no action, there would be double provision. That would be the case if someone was in hospital. It would also apply to people in prison or in, say, a convent, where they were fully maintained. If I may, I shall return later to Amendment No. 2.

Amendments No. 13 and 14 refer to benefits that are reduced under the provisions of the Social Security Hospital In-Patients Regulations (S.I. 1975/555). Pension credit will not be subject to those regulations, just as income support and jobseeker's allowance are not subject to them. Each of those benefits has, as pension credit would have, its own provisions regarding hospital in-patients. Therefore, if taken

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literally, the amendments would apply to a great number of benefits which are outside the scope of the Bill.

Therefore, I have assumed that, for the purposes of probing, the noble Lord was concerned to speak primarily about pension credit. I repeat that it is our intention that the savings credit element of pension credit should be payable throughout a stay in hospital. The arguments for that approach are well rehearsed—we believe it is right to reward thrift.

Amendment No. 14 would impose an obligation on the department to restore a person's pension credit immediately upon his discharge from hospital, presumably at the pre-admission rate. The amendment is silent on that, as it is silent on how the department would fulfil what would be a legal obligation, unless of course the pensioner told the department the instant he was discharged.

As I stated in Committee, 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 admission or discharge. To reiterate the point, the department can act only upon the information that it has. When a person is discharged from hospital, his pension credit entitlement will be restored to the pre-admission rate of payment.

If the noble Lord would find it helpful, I could explain the practical steps concerning what happens in cases of readmission. Alternatively, I could hand him a copy of the procedures that we are giving to junior staff, or I could write to him with fuller details. I hope to allay his concerns. I understand that throughout he has been worried about possible delays in the reinstatement of benefit in the case of a pensioner who is fragile, having come out of hospital, and who, at that moment, is unable to cope, possibly having no money. I recognise that to be a perfectly proper concern.

Therefore, I have been trying to take steps to find out what the practical procedures are, and perhaps I may spend a moment on that. When a person is discharged from hospital, his order book is recalled. The assumption is made that the patient has been in hospital for more than six weeks and has therefore received a reduced benefit. Often the pensioner will return the book unprompted. But usually a recall notice is issued to the Post Office asking the postmaster to retain the order book and return it to the benefit office. Normally a pensioner obtains payment on a weekly basis.

Therefore, within the first week of payment the postmaster would be in a position to retain the order book. Usually—this may be helpful—a giro is issued to the pensioner for the first week and a new order book is ready to collect from the Post Office at the second week. That is the way in which reinstatement occurs. It is quite speedy; the target time is 15 days and most are restored within that time. If they are not, within the first or second week a giro is used to top up the existing reduced hospital benefit payment. I believe that that should meet the needs of the pensioner

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concerned. If the noble Lord wants further information, I shall be happy to write to him at great length on wads of paper but that explanation may reassure him. If payment is made into a bank account, there is no problem. If there is an order book, any delay can be topped up with a Giro to make good the hospital-reduced rate until the new order book comes through—normally within a fortnight. That may help the noble Lord on reinstatement.

The noble Lord asked about costs. The revenue that would be lost if one scrapped all downrating for pensioners would be £60 million and of the order of £100 million if one scrapped downrating for everyone on benefits. It would be curious to scrap downrating for only one group of people receiving benefits. I accept the general point that some expenses increase and some decrease. The noble Lord asked for precise statistics. The current average downrating for pensioner couples represents about 5 per cent of their total income after six weeks. For a single pensioner, on average it represents 18 per cent—which not unreasonably reflects the reduced cost of food, laundry and some reduction in heating costs for a single pensioner. I accept some of the broader points.

The noble Lord, Lord Higgins, and the noble Earl, Lord Russell, know that this is not just a question of hospitals and downrating pensions or benefits but one that applies across social security. If one is a carer of a severely disabled son who received ICA before becoming a widow, one now receives the widow's pension, not both—yet the costs of being a carer possibly remain unabated. Nevertheless, one does not receive two payments for the same situation. That principle underpins the whole of social security law and its importance is recognised by the Government and the noble Lord, Lord Higgins.

Earl Russell: My Lords, I understand the principle that the Minister is explaining but are the vires in the Bill limited to the principle that the Minister is outlining?

Baroness Hollis of Heigham: My Lords, I do not understand that question.

Earl Russell: My Lords, does the Bill give a future Government the power to do something over and beyond the principle that the Minister has stated?

Baroness Hollis of Heigham: Yes, my Lords—by regulations subject to the negative or affirmative procedure that could and would be scrutinised by the House. The Secretary of State could decide to apply the principle to, for example, prisoners, people in convents and others in similar situations. There could be circumstances in which it would be appropriate to reduce the minimum income guaranteed by the state where the individual's circumstances mean that they are supported in other ways. I cannot envisage them all. There could be developments in, for example, intermediate care and other situations that we cannot

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conceive now but which might result in the potential for double payment—against which the Secretary of State would properly want to protect public funds.

Any such extension or activity would be subject to parliamentary scrutiny through the negative or affirmative resolution procedure.

Earl Russell: My Lords, if the Minister would add the word "control" to "scrutiny", that might put an end to discussion.

Baroness Hollis of Heigham: My Lords, it is for both Houses to determine how to treat regulations. Whether this House appropriately has the right to overrule the elected democratic House is perhaps for argument between the noble Earl and me on another occasion. I was making the point that such a measure could not be smuggled in against the public good in future but would be subject to parliamentary procedures.

The Government do not believe that an individual should be paid by the state twice for the same contingency. Even if we could accept the amendment's financial and read-across implications, which we cannot, it is seriously flawed as it would allow prisoners and fully maintained members of religious orders to receive full benefits, as well as people in hospital. On that basis, I imagine that your Lordships do not want to proceed with the amendment in its present form but will want to revisit the issue at a later stage.

I would like to think more about some of the points that have been raised—including by the noble Lord, Lord Higgins, and the noble Baroness, Lady Greengross. I do not want to raise hopes. It may be that we cannot meet any of their concerns but I will try to address some of them. Given also that the amendment has a much wider remit than the noble Baroness intended, I hope that she feels about to withdraw it.

4.15 p.m.

Lord Rix: My Lords, before the Minister sits down, will she kindly write to me regarding the disability benefits that would be affected?

Baroness Hollis of Heigham: My Lords, I failed to answer also the question from the noble Baroness, Lady Barker. The number of persons caught by the linking rules is, we believe, so small as to be insignificant. That is the sort of question of which one requires advance notice. If I can find a more precise answer, I shall write to the noble Baroness.

The noble Lord, Lord Rix, asked which benefits are unaffected by downrating. They include statutory sick pay, statutory maternity pay and industrial injury benefits. The other benefits fall within the scope of downrating.

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