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The noble Lord’s amendment and our later amendment both call for a number of other reports. We will have to wait and see how the discussion on other report-seeking amendments goes, because we do not want to create a report overload. However, I accept the broad thrust of this amendment. We will need further discussions before Report to see how hard we should press each of these report-seeking amendments.
Lord Fowler: I say in parenthesis that I was quite cheerful in the debate until the noble Baroness, Lady Hollis, revealed that the average age of grandparents was 45.
Baroness Hollis of Heigham: It is 49.
Lord Fowler: It makes almost no difference to the point that I was going to make. Having become a grandfather for the first time three months ago, I hope that the noble Baroness recognises the contribution that older grandparents can make.
I strongly support this amendment and congratulate my noble friend on proposing it. It is one of the more important amendments that we have so far debated and potentially one of the most important on the Bill. However, I agree with the noble Lord, Lord Oakeshott, that it would be much better to have an independent commission do this type of review.
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My noble friend Lord Skelmersdale and I come to pension credit from rather different viewpoints. I think it fair to say that he was rather sceptical about it. I have always supported pension credit, and indeed Ministers have sought to embarrass me by almost always claiming my support for this proposition. The basis for my support was that it seemed to me entirely right that we should help those who had been unable to build up a pension of their own, through no fault of their own, to have some extra income in retirement. I never envisaged that it would become a permanent part of the pension landscape. The aim should be to give the opportunity to as many people as possible to build up an adequate pension, therefore doing away with the need for pension credit in the first place. That is what all our efforts should be about in this and other legislation.
There is a more general point to be made about this and, as someone who was in the Department for Health and Social Security for six years, perhaps I may advise the Minister. The most important thing about some pensions legislation has not been the pre-legislative scrutiny; it has been the lack of post-legislative scrutiny—in other words, checking what has happened against what was intended to happen. The faults, difficulties and errors that occur can certainly come about because of a change of Government, as different Ministers from different parties come in, but one should not ignore the fact that they can come about also when a long-serving Government appoint a new Minister. Regardless of whether we are talking about a Conservative Government or a Labour Government, a new Minister is unlikely to think that the way of making his mark in his new department is to carry out effectively and brilliantly all the plans that were laid down by his predecessor. Ministerial politics do not work that way. I could give chapter and verse of my own experience in this and I am sure that the Minister and the noble Baroness, Lady Morgan of Drefelin, could give chapter and verse on the other side.
It is vital that we have a means of checking how any of the measures which are passed are carried out in practice. This is entirely a non-party political point. Without such action, we run the risk of repeating some of the errors made in the past. The department will always take its priorities from the Minister who is there at the time. That is no criticism of it, but it could lead us into error. Whether the proposition is accomplished by this amendment or by the later amendments on independent commissions, the Government should, for their own interest, look very seriously at it.
Lord McKenzie of Luton: I thank noble Lords who have contributed to this debate, but I urge the noble Lord, Lord Fowler, not to keep going on about changes of Ministers at this juncture—it does not help one to concentrate.
I thank the noble Lord, Lord Skelmersdale, for moving the amendment, which raises the important issue of future pension credit take-up. Much has already been said about this subject both here and in another place; however, I think we can all agree that it would not have been appropriate to allow means-testing to spread as it would have done had we not acted. Our package of reforms will result in a reduction of the proportion of pensioners eligible for pension credit. This amendment seeks to require the Government to produce five-yearly reports on pension credit which will be considered by both Houses.
We have already set out our longer-term projections for pension credit entitlement under our reform proposals in the regulatory impact assessment which accompanies the Bill. There is a lot of information about how the projections have been derived. It is important that we monitor the extent of means-testing and the take-up and expenditure of pension credit, and such evaluation will be critical in ensuring that our reform project is on track. In that respect I can see the intentions behind this amendment. However, the amendment asks for a five-yearly report on information which is largely already produced regularly, usually annually. The DWP already publishes annual long-term estimates of benefit expenditure which includes pension credit. These estimates also feed into the Treasury report on long-term fiscal sustainability. Estimates of current and projected case loads are used to calculate these expenditure projections. We recently published these case-load projections and will continue to do so annually.
Estimates of current pension take-up rates are included in the annual take-up of income-related benefits report published under the independent national statistics guidelines. The number of pension credit recipients is published quarterly on the DWP website. So we already regularly produce a comprehensive set of pension credit data, and it is important that we continue to do so for planning and operational purposes. I can therefore see no reason for legislation to require information that is already in the public domain to be reproduced in a single report and published only every five years. That would be a backwards step from what we have now. For those reasons, I urge the noble Lord to withdraw the amendment.
I know that we are going to have a debate, as part of our consideration of the Bill, about the extent of means-testing and how that impacts on people’s propensity to save, and I look forward to that. Simply because people are on pension credit does not mean that they cannot get good returns from savings. That would not apply to absolutely everyone in that situation. The long-term projection shows that something like 6 per cent of people on pension credit would be on the guaranteed minimum amount, which is the 100 per cent withdrawal category.
A lot of information is already in the public domain and is published and produced regularly, and I am happy to commit the Government to producing regular updates of our longer-term projections of pension credit entitlement under reform, which fed into the RIA.
Lord Skelmersdale: I am extremely grateful to my noble friend Lord Fowler for his speech in response to my amendment. I was somewhat surprised by the last point that the Minister made. At Question Time today, the third Question was about the Olympics; the noble Lord was clearly jumping fences before he had arrived at them, which is probably a bad habit, certainly for a hurdler. Perhaps he has never been a hurdler; I do not know.
It is all very well having little dribs and drabs of information scattered in miscellaneous reports, but that is no substitute for collating them. I accept the Minister’s point about having such a report every five years, but I do not accept the fact that it is not needed because of the plethora of information that is already available and which he has committed himself to continuing to make available. I will consider whether to go further with the amendment. In the mean time, I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Lord Skelmersdale moved Amendment No. 12:
(a) the number of carers in receipt of contribution credits;(b) the associated costs of contribution credits received by carers to the National Insurance Fund;(c) any proposals he may have for reviewing eligibility for contribution credits.”The noble Lord said: I will be even briefer with this amendment, to give the noble Lord the opportunity to repeat the assurance that was made by his colleague in another place. It is clear that some tweaking is required to ensure that child benefit and the associated home responsibilities protection and contribution credits go to the correct parent.
In the past, most parents—usually the mother—collected their child benefit from their local post office, which meant that the money was instantly available for the child’s needs and was collected by the parent who handled the majority of the childcare. However, now that most benefits are paid by cheque or giro, child benefit is often paid to the parent whose name is at the head of the joint account, generally the one who is earning the main wage and who is not the main child carer. I was struck by the Minister in another place assuring the Committee that the Government’s intention is to allow the parent with care to benefit from child caring credits. Does that extend to child benefit? It jolly well ought to. I beg to move.
Baroness Morgan of Drefelin: I think I am replying to Amendment No. 13. Is that correct? I will come back to Amendment No. 12.
Lord Skelmersdale: We have already done Amendment No. 12.
Baroness Morgan of Drefelin: No, we did Amendment No. 11. The noble Lord spoke to Amendment No. 13 but he moved Amendment No. 12. Does the noble Lord want to move Amendment No. 12?
Lord Skelmersdale: No. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Skelmersdale moved Amendment No. 13:
If child benefit is paid into a joint account and allocated to a parent who did not wish to accrue home responsibilities protection or contribution credits, and the other parent wishes to have accrued home responsibilities protection or contribution credits, the Secretary of State must reallocate the qualifying years of home responsibilities protection or contribution credits, as the case may be, to the parent who wished to receive them.”
The noble Lord said: I have just spoken to this amendment; perhaps we can now have an answer to it. I beg to move.
Baroness Morgan of Drefelin: I am very happy to respond to Amendment No. 13.
Noble Lords will already be aware that home responsibilities protection is currently awarded to a parent or person who is in receipt of child benefit, in order to protect pension entitlement. Currently, a person who is awarded child benefit can ask for it to be transferred to their partner. However, the individual must apply to transfer the child benefit award so that the transfer is completed within the first three months of a tax year—6 April to 6 July—to qualify for HRP for that year. As the noble Lord stressed, legislation does not allow the protection to be awarded retrospectively. In most cases, that operates successfully, but we are aware of a small number of cases in which a non-working parent misses out on HRP because their working partner receives child benefit. But for those affected—we have heard of only 80 appeals for 2005-06, which is a small number—the negative consequences on basic state pension entitlement can be severe.
With the proposed replacement of HRP with weekly credits from 2010, the situation could be exacerbated because, unlike HRP, credits will count positively to benefit entitlement. To mitigate the effects, we intend to allow the new contributions credits to be utilised by the partner or parent who actually needs them; for example, in cases where the person awarded child benefit also has contributions from earnings but their partner does not. That measure was announced at Second Reading in the other place by my honourable friend, James Purnell, Minister for Pensions Reform.
We made it clear in the delegated powers memorandum that the power to define those “engaged in caring” will be used to provide that important safeguarding measure for parents. It would apply to those reaching state pension age from 6 April 2010, the proposed start date of the coverage reforms. That safeguarding measure would allow HMRC, which administers child benefit, to deem that a parent is entitled to contributions credits throughout or for any part of a tax year in which they have a deficient contribution record if their partner, who was awarded child benefit, has a full contribution record for that year derived from paid or credited contributions and does not need the credits themselves.
However, we will also extend the existing HRP regulations to ensure that the non-working partner can benefit from HRP awarded prior to 2010. The onus will be on the individual to tell us, either before or following the calculation of someone’s state pension entitlement, that their partner should have been awarded child benefit. The customer will need to inform the Pension Service or HMRC that the wrong partner was allocated child benefit. They will also be required to provide supporting evidence, either before or following calculation of benefit entitlement, within the normal time limits. We will be working with HMRC to ensure that people are made aware of the new provision and how it may affect individuals’ pension entitlement.
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While I am on my feet, and if I may be a little cheeky, I want to clarify a point about carers allowance. To be absolutely clear and put the question beyond doubt I should say that carers allowance, along with other social security benefits, can be paid only to people over 16. If I may slip back to another discussion, the Committee may be interested to know that the national carers strategy review has prioritised services for young carers and the setting of specific commitments to improve support for young carers. I thought that it would be helpful to the Committee to know that.
Given the information that I have provided, I hope that the noble Lord will feel able to withdraw the amendment.
Lord Skelmersdale: I shall certainly withdraw it. I was extremely interested in the further information that the Minister gave me over and above what I gleaned from proceedings in another place. I shall study it with great interest. She appeared to say that, with the exception of a tiny minority, there was no problem in the reallocation of child benefit to the correct parent. I am delighted to hear that that is the case.
As regards the new arrangements for carers credit, one rather wonders whether that is likely to be of the same low order. As I said, I shall study very carefully what the Minister said and, if necessary, come back at a later stage. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Up-rating of basic pension etc. and standard minimum guarantee by reference to earnings]:
Lord Oakeshott of Seagrove Bay moved Amendment No. 14:
The noble Lord said: This amendment concerns a very serious and persistent injustice which affects about half a million people. The reason we do not hear more about it is that most, although not all of them, do not have votes in this country. None the less it is an injustice that we need to address and begin to right.
This amendment seeks to unfreeze the frozen pensions of British pensioners who have moved abroad. Many may have been there for 30 or 40 years and the real value of their pension has been eroded enormously in that time. We do not seek to bring them back to where they were but at least to stop the problem getting any worse by restoring the link to the pensions at the level they have now got down to. It is a modest amendment which none the less seeks to halt the decline and at least let those pensioners begin to share again in the rising pensions that their fellow pensioners in Britain enjoy.
There is also considerable injustice as between different overseas pensioners depending broadly on where they have moved to and whether the countries to which they have moved have reciprocal arrangements with Britain. In the case of the European Union, pensioners are automatically entitled under reciprocal arrangements for their pensions to be upgraded. I pay particular tribute to Mr John Markham, who is an indefatigable campaigner, especially on behalf of the Canadian pensioners but of pensioners in other countries too. My honourable friend David Laws and I have had meetings and engaged in considerable correspondence with him.
Now that we are moving to earnings linking, it is particularly unfair that the overseas pensioners in countries with these arrangements will see their pensions going up through earnings while under present arrangements the other half a million pensions will be frozen completely. I refer to the gap between those pensioners who live in America who get the uprating and those in Canada who do not. That gap will get even worse.
There is support from other parties for looking at the pensioners’ plight but so far, certainly in the debates in the Commons—we look forward to seeing what happens in this place—only the Liberal Democrat Benches are prepared to put forward any constructive proposal as opposed to just sounding sympathetic.
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