State Pension Credit Bill [Lords]

Public Bill Committee, 16 April 2002.

Standing Committee A

State Pension Credit Bill [Lords]

Win Griffiths (Labour, Bridgend)

Our first business is the resolution of the Programming Sub-Committee. I call Mr. Ian McCartney to move the motion.

Ian McCartney (Labour, Makerfield)

I beg to move,

That—

(1) during proceedings on the State Pension Credit Bill [Lords] the Standing Committee do meet when the House is sitting on Tuesdays at half-past Ten o'clock and at half-past Four o'clock and on Thursdays at half-past Nine o'clock and at half-past Two o'clock, except that on Tuesday 30th April 2002 the Committee shall not meet at half-past Ten o'clock;

(2) the proceedings to be taken on the sittings shall be as shown in the second column of the Table below and shall be taken in the order so shown;

(3) the proceedings which under paragraph (2) are to be taken on any sitting shall (so far as not previously concluded) be brought to a conclusion at the time specified in the third column of the Table;

(4) paragraph (2) does not prevent proceedings being taken (in the order shown in the second column of the Table) on an earlier sitting than that provided for under paragraph (2) if previous proceedings have already been concluded.

TABLE SittingProceedingsTime for conclusion of proceedings 1stClauses 1 to 3— 2ndClauses 1 to 3 (so far as not previously concluded)— 3rdClauses 1 to 3 (so far as not previously concluded)— 4thClauses 1 to 3 (so far as not previously concluded)5 p.m. 5thClauses 4 to 14— 6thClauses 4 to 14 (so far as not previously concluded)9.50 pm 7thClauses 15 to 22, new Clauses, Schedules 1 to 3, new Schedules, remaining proceedings on the Bill- 8thClauses 15 to 22, new Clauses, Schedules 1 to 3, new Schedules, remaining proceedings on the Bill (so far as not previously concluded)— 9thClauses 15 to 22, new Clauses, Schedules 1 to 3, new Schedules, remaining proceedings on the Bill (so far as not previously concluded)7 pm

I welcome you to the Chair, Mr. Griffiths, as I do your colleague, the hon. Member for Hexham (Mr. Atkinson), with whom I have had the pleasure of discussing many Bills in Committee over several years. You and I entered the House at the same time, and I assure you that my wild-boy days are over and that I

am an absolute statesman when it comes to debating matters in Committee. I will not cause you any problems—at least not those that are unnecessary to cause.

I thank the hon. Member for Daventry (Mr. Boswell) and other colleagues who were members of the Programming Sub-Committee for the efficient way in which the resolution was dealt with. To show the honest way in which such matters proceed, I gave an undertaking last night to members of the Sub-Committee to use my best endeavours through the usual channels if it were felt in later sittings that further time might be required.

I thought that I would help members of the Committee by sending a letter enclosing an explanation of clause 3 and the assessment of income periods. They have received the letter but not the enclosures, for which I apologise. However, I have now issued the background information. As the hon. Member for Daventry will know from our discussions of previous Bills, if I can help members of the Committee by issuing further information, I shall be more than happy to do so without, I hope, causing too much trouble to civil servants in the Department. I hope that the additional information about clause 3 and other issues will help members of the Committee in their consideration of the Bill.

Tim Boswell (Conservative, Daventry)

May I echo the Minister's words in welcoming you to the Chair, Mr. Griffiths? Your co-Chairman—my hon. Friend the Member for Hexham—the Minister and I have debated at less convenient hours than this morning matters of considerable public importance in relation to employment law. I do not wish to signal to the Committee our determination necessarily to prolong affairs to such an extent. We want to have a proper businesslike discussion and deal with the main worries and detailed matters. As the Minister said, we had a discussion to that end in the Programming Sub-Committee, which reached a broadly successful conclusion and one that has been reinforced by the undertaking of the right hon. Gentleman this morning. The explications that he promised in his letter, but which were not enclosed with it, are not yet on the Table, but I sure that they will be placed there during our debate, although they are not relevant to today's discussions.

Although I do not want to make a meal of the programme resolution, for the avoidance of any doubt I wish to say—the Minister referred to it in the exchanges that we had in the House yesterday—that our reservations about the Bill remain. They were referred to in a reasoned amendment in the name of several members of the Committee, not all of whom were Conservative Members, when the Bill was discussed on Second Reading. We are concerned about mass means-testing, the complexity of the system and the possibility that many pensioners will miss out, that there will be an erosion of incentive to save and that additional expenditure could have been better directed towards the basic pension, especially for older pensioners. Such central worries will no doubt inform our arguments later in our proceedings.

Perhaps it would be appropriate, while the memory of yesterday's questions is still in our minds, to respond to the point that the Minister made after answering an interesting line of questioning. The hon. Member for Kettering (Phil Sawford) said, reasonably enough, that he was pleased that there was more money for pensioners, but thought that it could have been better spent on providing an uplift in the basic state pension. That is very much cognate with what we intended through our reasoned amendment on Second Reading, although the hon. Member for Kettering was unable to support us. The Minister then challenged me to say whether I was in favour of the extra money.

Win Griffiths (Labour, Bridgend)

Order. How exactly is that related to the programme resolution? It seems to be a substantive debate that could be had elsewhere in our consideration of the Bill.

Tim Boswell (Conservative, Daventry)

I would have no difficulty discussing the subject when we are considering the substance of the Bill, if that is what you wish, Mr. Griffiths, but I was anxious to establish the ground rules from the start. Perhaps you will allow me a brief analogy. The Minister asked me whether I was for or agin putting the extra money into the state pension. I afterwards thought to myself that if there was a choice between haddock and chicken in a restaurant and I chose haddock, it would not mean that I was against chicken.

Ian McCartney (Labour, Makerfield)

It looks as if he has chosen both, actually.

Tim Boswell (Conservative, Daventry)

The Minister is one up on the jokes. He will remember that a distinguished member of his party was known as ''two dinners''. The Minister may recall an occasion, involving the former leader of my distinguished party and some cod, when I found myself having two dinners. However, it would certainly be out of order for me to discuss that further. In all seriousness, if one makes a choice one way or another, it does not mean that there is something wrong with the other choice; it just reflects the balance of preferences.

Important things have happened since Second Reading, and we will have occasion to refer to them as we work through the programme. There has been the publication of the useful report by the Select Committee on Work and Pensions, which was ready in good time for the debate. It contains some interesting reservations on the Government's position. There has also been a debate on annuities. Although annuities are not mentioned explicitly in the Bill, the incomes derived from them are relevant.

I did not notice many Labour Members' names on either side of the Division list on Friday; no doubt they were busy with other matters. It is nice that they have bothered to turn up for the pensions legislation today. I realise that their lordships have discussed the matter at some length. We have, as a matter of propriety, the opportunity to put their lordships out of our minds and ask the Minister for his explanations of various bits of the Bill. That will be healthy for him, and will probably be enjoyable for us. However, we are conscious that their lordships have had a good go at the Bill, and that informed the reasonableness and

moderation of our demands in the Programming Sub-Committee.

I am pleased that we have on the Opposition Benches a representative of our associates on the reasoned amendments and a representative of the Scottish National party. We also have a splendid body of men from my party, most of whom have a military background and who would insist, if you did not, Mr. Griffiths, on an absence of prolixity on my part, a businesslike approach, and a speedy resolution of our affairs.

Julian Brazier (Conservative, Canterbury)

Surely no one could accuse my hon. Friend of prolixity.

Tim Boswell (Conservative, Daventry)

I would very much hope not. To be accused of obesity and prolixity in the same morning would be intolerable, and I have no intention of giving occasion for that. Let us, in all good faith, touch on the programme resolution—others may wish to contribute on that subject—but we are here for business, and we will be pleased to engage with it.

Steve Webb (Liberal Democrat, Northavon)

Like all members of the Committee, I am keen to proceed to the substantive discussion and have no contention with the programme resolution. For the benefit of our future deliberations, I should say that our role is to consider the amendments with care and in detail during our limited number of sittings on the Bill, and not to rehash the broad-brush Second Reading debate. I hope that the Minister and the hon. Member for Daventry will, in good faith, join me in taking the limited opportunity that we have to examine the detail of this technical Bill, rather than trotting out the tired clichés and accusations that sometimes arise on Second Reading. I am sure that the Committee will conduct its deliberations in a positive spirit and I look forward to getting on with business.

Question put and agreed to.

Win Griffiths (Labour, Bridgend)

I remind the Committee of the money resolution in connection with the Bill, copies of which are available in the Room. I also remind hon. Members that adequate notice should be given of amendments. As a general rule, my co-Chairman and I do not intend to call starred amendments, including any that may be reached during afternoon sittings.Clause 1 Entitlement

Clause 1 - Entitlement

Tim Boswell (Conservative, Daventry)

I beg to move amendment No. 9, in page 1, line 3, leave out 'state'.

Win Griffiths (Labour, Bridgend)

With this we may discuss the following amendments: No. 18, in page 1, line 4, at end insert—

'(1A) State pension credit shall be publicised to the general public under the title ''pension credit''.'.

Amendment No. 10, in page 1, line 5, leave out 'state'.

Amendment No. 11, in page 1, line 11, leave out 'state'.

Amendment No. 12, in page 1, line 22, leave out 'state'.

Tim Boswell (Conservative, Daventry)

Thank you, Mr. Griffiths, for starting us off on a good note. The amendments are possibly both trivial and profound simultaneously—trivial because they relate to a piece of nomenclature and drafting, and profound in that they expose some of the details and equivocations of the strategy behind the Bill.

It is obvious, even to a casual observer, that amendments Nos. 9, 10, 11 and 12 all have the same effect in their different places—to leave out ''state'' in state pension credit. It is not easy or even possible to amend the short or long title or, indeed, any of the rubrics to a Bill, such as that which appears on line 1:

''State pension credit: entitlement and amount''.

One can only amend the text of the Bill. The amendments seek to probe an apparently minor matter—what the benefits to be derived from the Bill will be called. It is odd that the word ''state'' is inserted before the words ''pension credit'', not least because Ministers made it clear in the points of guidance, including the Select Committee Report, that the benefit would be called the pension credit. We now find that it has an unnecessarily long and pompous title in the formal presentation.

I also have reservations about why the benefit is called a state credit. I rehearse each day whether I understand how the Bill works, and I think that I do—at least for parts of the day.

James Clappison (Conservative, Hertsmere)

I know the feeling.

Tim Boswell (Conservative, Daventry)

My hon. Friend agrees. Perhaps the Minister feels the same way. The Bill is a complex piece of legislation. Essentially, it says that there shall be a guarantee analogous to the minimum income guarantee that will take over from it. It will be effected by a guarantee credit paid to pensioners as part of their pension. It is relatively straightforward and precedented by present practice, although there are welcome changes and improvements about which I do not argue. However, beyond that is a savings guarantee, which does not mean that people will receive more money than they would with a flat rate set at the level of the minimum income guarantee as an entitlement, and in addition their own income. It means that their income will be withdrawn at a particular pace, and we may want to debate that later.

Of course I concede to the Minister that, as a payment is to be made alongside the state pension, in his view it is supplementary to that pension and designed to reward saving, and he would regard it as a state benefit. I, however, would regard it the other way round, as a phased withdrawal of the benefits of retaining a full private entitlement. However, we could argue endlessly about that. The question is whether it is to be tied around the neck of the state.

I have a further reservation relating to the amendments—the use of the word ''state''. I admit that, possibly because of analogy with the amendments, I slipped into using the words ''state retirement pension'', which many of us use as a term of art. However, I am not aware of any formal titles that

include the word ''state''. The last time that I can think of anything similar in a benefit, it was national assistance, introduced by the National Assistance Act 1948, and was the precursor to income support. The word ''national'', rather than the word ''state'', was used. Will the Minister explain his thinking in using the word ''state''?

James Purnell (Labour, Stalybridge and Hyde)

I do not understand how the reasons that the hon. Gentleman cites support the argument for getting rid of the word ''state''. Perhaps he will reassure me that the reason why the Conservatives tabled the amendment was not that they were thinking of getting rid of the state pension, perhaps by having people opt out of it, as was reported in The Guardian recently.

Tim Boswell (Conservative, Daventry)

Much as I like The Guardian, I do not have to believe everything that I read in it, although I increasingly welcome much of what I read in it.

The hon. Gentleman must not speculate. I assure him that we are engaged in a full review of all aspects of policy. When that policy is announced, I am sure that he will be one of the first to know. Indeed, having arrived to scoff, he may stand back and stay to cheer on the matter.

Kevin Brennan (Labour, Cardiff West)

Instead of agreeing with The Guardian, perhaps the hon. Gentleman agrees with his colleague the hon. Member for Havant (Mr. Willetts), who speaks from the Front Bench on such matters, who said in a recent letter to the hon. Member for Sutton Coldfield (Mr. Mitchell), dated 7 March 2002:

''The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one which you and I share.''

Tim Boswell (Conservative, Daventry)

The hon. Gentleman, who has recently arrived in this place, would not want me to comment on correspondence on its own and out of context. Perhaps he did not understand what I said to his colleague. We shall consider such matters, decide on our approach and announce it.

I also said—the hon. Gentleman may want to differ about this, although I hope that he will not differ about the rest—that he may yet find that, having turned up to grumble, he returns to cheer. Indeed, it is already clear from the remarks of the hon. Member for Kettering, my constituency neighbour, which were made only yesterday, that several Labour Members are unhappy with the approach of moving to a means-tested credit and ultimately extending means-testing to probably two thirds of pensioners, if not more. It goes against their principles, if they have them—I hope they do—and may not be effective in dealing with poorer pensioners' interests.

I recall a meeting of members of the Greater London Pensioners Association—not in this Room, but next door—whom one might think are perhaps not my natural soul mates. However, they felt strongly that they wanted the measure to be a basic credit, rather than a means-tested credit. I signal to Labour Members, who might be cutting themselves off from some of their roots, that many people who would not necessarily put their cross against the name of a Tory candidate are unhappy with this tendency.

Andrew Selous (Conservative, South West Bedfordshire)

Does my hon. Friend agree that we have not received a full explanation from the Government of the sudden conversion to mass means-testing? We know that the Prime Minister and the Chancellor of the Exchequer have spoken at length about their severe disquiet on means-testing, especially for older people. We have not received an explanation of their change of heart.

Tim Boswell (Conservative, Daventry)

I am grateful to my hon. Friend for his intervention. I was about to wrap up the previous two interventions by saying that I had been led wide of the narrow amendment by my indulgence in responding to Labour Members' concerns. I shall now indulge myself by responding to my hon. Friend's worry, which I share. The only explanation that I can produce is psychological. If people change their mind—I dare say that this is true of all politicians, before we single out individual examples—they may do that immoderately in the opposite direction and become passionately opposed to that which they espoused until only recently. I do not put too much weight on this, but a party that set its face against means-testing, and has now contrived a system under the title of state pension credit that will require ever more means-testing, may have lost its anchors and may not be doing what it intends.

David Cairns (Labour, Greenock and Inverclyde)

On that point, is the hon. Gentleman recanting the view that he expressed last year that the state winter fuel benefit—a universal benefit—should be targeted, which would require more means-testing? Has he changed his mind?

Tim Boswell (Conservative, Daventry)

I recant nothing. I am sorry that the hon. Gentleman has become unduly excited about what I said last year but I shall repeat it. I did not think that the winter fuel benefit was particularly well targeted. [Interruption.] I shall give an explanation to the hon. Gentleman, who undoubtedly wanted to know the answer.

Later this year, I shall attain the age of 60 and I shall duly send off my form. The Minister has said that he wants as many people as possible to take up the benefit. No doubt I shall then receive my benefit, if the Department gets round to the administration.

Bill Tynan (Labour, Hamilton South)

Shame.

Tim Boswell (Conservative, Daventry)

Why should that be a shame? The hon. Gentleman obviously disagrees with his Minister, whom I heard say that he wanted people to take up the benefit. The benefit is universal, although I remarked that it is not well targeted.

Win Griffiths (Labour, Bridgend)

Order. I have listened patiently to the debate, and it is time to return to the issue in contention, which is leaving out the word ''state'' from the clause.

Tim Boswell (Conservative, Daventry)

I am rather inclined to agree with you, Mr. Griffiths. We have had a good rattle around several wider issues, but as the late and much lamented Frankie Howerd used to say, let us get back to the prologue: we want to know whether the word should be in or out, and the Minister's thinking on that.

I have spoken to amendment No. 9 and the other identical amendments, and I shall touch on amendment No. 18, which is in the names of my

hon. Friend the Member for Hertsmere (Mr. Clappison) and I. We argue that the credit should be publicised under the title ''pension credit''. If, as I understand it, that is what everyone wants and what it will be called, why is it not called that in the Bill?

There are wider issues that you, Mr. Griffiths, wisely advised me not to address when discussing the programme resolution. I shall not discuss them at length, but there are worries about the Bill, even in quarters that are not tied or beholden to the Conservative party, such as among people with no party affiliations who are experts in the interests of older people. As recently as this morning a briefing from Help the Aged arrived on my desk—as, I am sure, it did on the desks of other Committee members—and we might have occasion to refer to it again, in different places and at appropriate times, when we address further relevant amendments.

The briefing states—this refers back to the general issue—that the new money that is now promised to pensioners is very welcome. I am glad that it is generous in acknowledging that. It also states that the matter under discussion makes a significant difference to the architecture of pension provision that was outlined in the 1998 Green Paper but that, if those new resources had then been on the table, a better solution than the pension credit proposal could have been in prospect. That is an interesting point.

Meanwhile, the Bill must be dealt with. With regard to it, the letter from Help the Aged states that, despite the attentions of the House of Lords and the Select Committee, its shape remains more or less as originally drafted, and that Help the Aged remains rather less than impressed. That comment comes from a highly responsible, well regarded and entirely independent and neutral organisation. That is the best thing that it can say about the Bill, despite the fact that it gives more money to pensioners. That does not constitute a ringing endorsement—and, in essence, that is why we are expressing concerns about the Bill.

While making some general comments, Help the Aged also makes points about the titling of the Bill, which are of particular relevance to this amendment. It is much more critical than I have been in our amendments. It states:

''The titling of the new policy is poorly described.''

It continues:

''The nomenclature of the Bill is an additional confusion. Under the general title of Pension Credit, the Bill is actually implementing two overlapping schemes with similar yet different applications.''

Those schemes are the guarantee credit and the savings credit and, as we will return to them later, it is not necessary to read out the entire text now.

Help the Aged then states, with regard to points that I have not referred to in my amendments:

'''Credit' is an off-putting word which some older people will regard with suspicion, and the Savings Credit might be more honestly called an ameliorated tax on savings.''

Those are Help the Aged's words, not mine.

The Minister must reflect on his situation as, in parliamentary terms, his position behind him is crumbling, and there is great concern among

pensioners across the field about whether this is the right strategic approach. He is bolting it on to the Government by specifically entitling it the state pension credit. By doing so, he is adding further to the complexity, which is one of the features to which we object—and to which our amendments are addressed.

A monster of complexity has been created in the Bill. If I were a Minister, I would wish to distance myself from it and pass on, but the Minister is using the full resources of the state to say, ''It's all our responsibility; aren't we proud of it?'' That is inappropriate, given that so many people—not all of them in my party—have serious reservations.

It is fine to spend money, and it is good to give money to pensioners. I am not arguing about those issues; they are Aunt Sallys, which the Minister occasionally attempts to put up. What we are saying is, ''If you are going to do that, it might not be the most appropriate way of doing it. It might not get to the people who most need it, and there might be other ways to approach it and deal with it.''

The Minister must explain his approach, and we will ask him to do so throughout these debates. The specific point of the amendment is to ask a question: why—without precedent in social security legislation, as far as I am aware, and without need in terms of its efficiency, and without any appropriateness in terms of a short title on which to sell what is a very difficult concept for people to grasp—does he have to insert the word ''state'', when it seems to me, in this case at least, to serve no useful purpose?

Win Griffiths (Labour, Bridgend)

Before we start the debate I should say that I have called the hon. Member for Daventry to order once or twice, but I could have done so many more times. I decided to let him speak because he was putting the debate in its context, but many of his remarks were more suited to a clause stand part debate than to the amendment. From now on, I shall be stricter.

James Clappison (Conservative, Hertsmere)

I am sure that we will all take that fair injunction to heart. I associate myself with the comments of my hon. Friend the Member for Daventry on what a pleasure it is to serve under your chairmanship, Mr. Griffiths.

I should like to supplement the excellent points raised by my hon. Friend, who adverted to the sketches of the late Frankie Howerd. If I remember correctly, the narrator of the prologue was followed or interrupted by the soothsayer, who came on with tales of woe and doom. The Committee will be relieved to hear that I shall not assume that function this morning. To set the scene, we had an important debate about the crisis in funded pensions and the fact that more and more of our elderly people will rely on means-tested benefits rather than funded pensions. Our concerns on the subject are encompassed in the amendment.

I wish to make a simple plea about nomenclature, which is the subject of the group of amendments. I hope that, when we decide on the name attached to the payment, there will be a degree of continuity. I hope that the public can become accustomed to it, and that it will not change in a short time. That plea is encompassed in the amendments, particularly amendment No. 18, which mentions how the credit is to be publicised. It is the way of Governments—this Government are certainly not immune—to make changes to the names of payments and benefits, make a few marginal changes to them, and then launch them as entirely new propositions. The result, time and again, is that the public become thoroughly confused about such benefits. The Minister looks a bit disgruntled at that.

Ian McCartney (Labour, Makerfield)

Name one.

James Clappison (Conservative, Hertsmere)

Name one? The Minister tempts me. Between them, the working families tax credit and the children's tax credit are on their sixth configuration. There has been the working families tax credit, the employment tax credit and the working tax credit; and the children's tax credit, the integrated children's tax credit and the child tax credit. Income support became the minimum income guarantee and will now become the state pension credit. I hope that that is enough for the Minister, and that he will not tempt us by saying that there may be more to follow.

I hope that the name of the credit will give some continuity, and that the public will become accustomed to it. Otherwise, we will be in danger of adding the complexity of different names to the complexity of the provisions of the Bill. That will affect take-up, an important subject that we will consider under a later group of amendments. There may well be a link between take-up and familiarity with the credit. I hope that the Minister can reassure us that we will not have the constant change we experienced with the minimum income guarantee and other credits.

Ian McCartney (Labour, Makerfield)

First, I should say to the hon. Members for Daventry and for Hertsmere—have I got that right? [Hon. Members: ''Yes.''] I shall try to make sure that I get their constituencies right by the end of the Committee. This is not so much a genuine debate about the name as a mini Second Reading debate, in which the Conservatives have taken the usual well-worn path. I will respond to general issues about whether the credit can work, means testing and the core of the amendments, then we might not have to raise these issues later on in Committee.

The hon. Member for Daventry says that he finds it difficult to understand the Bill and respond to it in a positive way. I do not. The game was given away on 7 March 2002 when the shadow Secretary of State wrote to the hon. Member for Sutton Coldfield (Mr. Mitchell), who used to be Under-Secretary at the then Department of Social Security in the last Conservative Administration, to ask him to do some work. I quote from the note:

''Here is the material I promised you about a funded alternative to the basic state pension.''

The Conservatives do not want pension credit because that is based on an enhancement of the basic state pension, which they want to get rid of. They want to privatise the basic state pension, as is clear in the first line of that letter.

Tim Boswell (Conservative, Daventry)

Will the Minister give way?

Ian McCartney (Labour, Makerfield)

Just a minute. I want to make sure that I put the letter in context, and not misquote. As the letter continues, it gets better—or worse for pensioners. It says:

''Any advice you have about the best way forward on this would be very helpful. The vision of moving to a funded alternative to the basic state pension is a powerful and compelling one which you and I share.''

The shadow Secretary of State believes, with a passion in his heart as well as his brain, that we should get rid of the basic state pension. He has two brains, but they do not often connect with the facts of life. The letter continues:

''there are a series of practical questions that . . . have to be addressed so that our policy conveys credibility and seriousness'',

the first of which is public opposition. There is an interesting final paragraph:

''I was wondering if you would like to prepare a short note on some of these issues then perhaps lead a discussion of the matter at one of our teams meetings which . . . take place on Tuesdays at 10.30 am.''

Perhaps we could have the Room number so that we could all participate in the discussion.

How can the Opposition have private discussions about getting rid of the basic state pension, and then, in debating the first amendment to the Bill, lambast a Government who are not only enhancing the basic state pension for the first time since its creation, but providing an absolute standard to ensure that people have a basic minimum and will benefit from their thrift as part of a credit. The letter pours scorn on the proposals.

The Opposition seek to suggest that the Government do not have a credible policy or strategy, and paraphrased comments from colleagues in the lobby representing pensioners' advocacy groups. I have good relations with those groups, which hold views on pension credit, but they are not opposed to pension credit. Far from it, they have worked with us and, through the consultation process, have informed decision making about the Bill's structure. We do not expect them to agree with or not comment on every dot and comma of a Bill, but we want to work with advocacy groups just as they want to work with us.

Advocacy groups recognise that large numbers of people are left out of the current structure of the basic state pension and may end up living in poverty unless something is done. Increasingly, those represented by advocacy groups see that they are penalised for having small savings or second pensions. This is the first time that that problem has been examined. After decades of complaints about penalisation because of a small income or small second pension, we are the first Government to listen to advocacy groups and do something about the problem.

Advocacy groups are not banging on our doors saying, ''Don't do this, Minister—don't create the

pension service.'' Rightly, they are banging on our doors to work with us and give us their views. The Committee should recognise that we worked well with them to implement the proposals, which, by their submissions, have been able to greatly influence the structure of the Bill.

Steve Webb (Liberal Democrat, Northavon)

I have a feeling that the claim that this is the first time that a Government have rewarded savings may be repeated throughout sittings of the Committee. I challenge the Minister to agree that, when the pensions and means test were almost at the same level, someone with savings got the full benefit of their saving and were better off than the neighbour who had not. The Government created a chasm between pensions and the means test, and someone with a small amount of savings is no better off than a neighbour with none. Therefore, the Government have created the problem that the Minister is now trying to solve.

Ian McCartney (Labour, Makerfield)

To be frank, that is turning history on its head. When we debate the amendments tabled by the hon. Gentleman, we will not only show that our action is unique, but deal with the alternatives that he proposes. Despite his argument against it, those alternatives will drag people back into means-testing. People who will benefit from pension credit will not benefit under his proposals, but we shall discuss that later in our proceedings. The hon. Gentleman does not have a good record in such matters, nor does his party.

The second allegation was that the Bill would not meet its aims in respect of pension credit. I refer to the summary of the Select Committee on Work and Pensions, which concluded in its second paragraph that the pension credit

''has the potential to go some considerable way toward achieving the aims set down for it by the Government'',

and that means the Bill. We will respond positively to the report in due course. The all-party Committee reached the unanimous view that the Bill is going in the right direction.

Tim Boswell (Conservative, Daventry)

For the sake of completeness, I refer to the third sentence of the Select Committee's third paragraph of its summary. It states:

''However, in our Report we raise a number of specific concerns about both the operation and the role of the Pension Credit.''

Ian McCartney (Labour, Makerfield)

I said that we shall need to respond to the Select Committee, but the hon. Gentleman has hinted that it was not happy. That is not the case. In general, the Select Committee sees the Bill as achieving its aim. That is important. We want a basic minimum guarantee. We want to reward thrift, and it will be the first time that such aims will become law. I repeat—I know that the hon. Gentleman does not like to hear it—that it will be the first time that such matters will be covered by legislation.

The Bill will benefit millions of pensioners, which is why the hon. Gentleman wants to whinge, but not to hurt—as does the hon. Member for Northavon. They do not want to return to their constituents when the Bill becomes law and say, ''We want to take this off you. We don't want you to have £400, £500 or £600 extra income each year. We do not think that it is fair.

It is the wrong way in which to deal with such matters.'' No, the hon. Gentleman will not do that.

James Clappison (Conservative, Hertsmere)

As for the extent to which the name reflects the aim of the Labour Government, the Minister mentioned two aims, but he did not refer to those relating to means-testing. Is it still an aim of the Labour party to end means-testing for elderly people, as the Chancellor of the Exchequer said it was in 1993?

Ian McCartney (Labour, Makerfield)

I was about to come to means-testing, so will the hon. Gentleman calm down for a moment? I assume that later in our proceedings we will have more wide-ranging discussions about income assessment and means-testing. Means-testing in the context of what the hon. Gentleman is trying to peddle—as is his friend in such matters, the hon. Member for Northavon—is the means-testing of the Conservative party, which in the annals of history has gone from generation to generation spreading fear about means-testing, saying how it is demeaning and disempowering, and how it attacks individuals, undermines them and blames them for their poverty. The Conservative party put communities and individuals under the cosh and wanted to exercise power against the poor. It wanted a divided society. That is the truth. That was the means-testing that the Conservative party introduced throughout its period in power.

In addition, in the 1980s and 1990s, the Conservative party introduced means-testing not to target poverty and eradicate it, but to target the poor who were in poverty. We want to target poverty, not the poor. As well as helping the poor out of poverty and breaking the cycles of poverty, we want the state—for the first time—to recognise those who have had the capacity to have small savings or small savings and a second pension, not to create a system that drags people into poverty by undermining their additional income.

Annabelle Ewing (Scottish National Party, Perth)

How does the Minister think that his means-testing differs from what he said that the Tories conducted?

Ian McCartney (Labour, Makerfield)

Of all the people in the Room, the hon. Lady should have understood my accent. I said that we are targeting poverty, not targeting the poor. We should look across the whole piece—the measure cannot be taken in isolation—and look at the response to what the Government have been doing.

Patrick Mercer (Conservative, Newark)

Will the Minister give way?

Ian McCartney (Labour, Makerfield)

May I just say something first? I have no problem giving way to the hon. Gentleman.

From day one, the Government set their face to tackling poverty. In-work poverty has been tackled through the national minimum wage, and that has been linked to the working family tax credit. We have increased child benefit and given assistance to people through the new deal. We have made working affordable and given people in the workplace dignity and a living wage.

Secondly, we have targeted young children, and we use specific policies to ensure increasingly that we meet our ambitious target to end poverty among young people. Thirdly, politicians, churches, community groups, local authorities and Labour and other political parties have campaigned for the past 25 years—mainly under Conservative Governments—on behalf of the 2 million poor in Britain. We had the opportunity to do something about that, and we did.

The minimum income guarantee is rough and ready. I make no excuses about that but, during the past four years, I would rather have had a rough and ready system operating from a standing start that identified and, at last, met the needs of generations of pensioners who were left outside the system and living in poverty and that ensured that they got the dignity and income that they would never otherwise have received. We have sat gazing at our navel for the past four years working out what to do in the long term. The minimum income guarantee was always meant to be an anti-poverty measure to be developed and linked with what we are doing in our second term for pension credit. The Government have a good record on targeting poverty, on empowering people to get out of poverty, on giving them self-esteem and on involving them in decision-making. I make no apologies to the hon. Lady.

I make a vital point on means-testing. Opposition Members want to continue the historical argument about ways of introducing means-testing. That undermines the concept and principle of the Bill and the Government's intellectual analysis of a broad and integrated approach to tackle the causes at the heart of poverty and to address those who suffer from poverty. We are getting rid of the causes and giving income to such people—in this case, pensioners.

Opposition Members are also undermining pensioners' confidence in the new system. How mean can they get? It is one thing to oppose the Bill, but another thing to perpetrate language throughout the country that undermines people's self-awareness and their understanding of what is their essential right. For the first time in Britain, we are creating two forms of income from the state that make up the basic income of the state pension.

Julian Brazier (Conservative, Canterbury)

Will the Minister give way?

Ian McCartney (Labour, Makerfield)

No. I give way to the hon. Member for Newark (Patrick Mercer).

Win Griffiths (Labour, Bridgend)

Order. The Minister has had a full opportunity to respond to Mr. Boswell's general points. We should return to the specific issue of whether the amendment should be accepted. Other issues can be debated at a later stage during clause stand part, or even on Third Reading.

Ian McCartney (Labour, Makerfield)

Thank you, Mr. Griffiths. I was just on my last word when you intervened. I give way to the hon. Member for Newark and, depending on what he says, I may give way to the hon. Member for Canterbury (Mr. Brazier).

Win Griffiths (Labour, Bridgend)

I hope that it relates to the amendment.

Ian McCartney (Labour, Makerfield)

Indeed.

Patrick Mercer (Conservative, Newark)

I see a number of pensioners in my surgeries, and they tell me time and again that their benefits have fallen. The Minister mentioned increasing pensioners' confidence. Pensioners have no confidence in the current system and they cannot understand the improvements that the Minister suggested.

Ian McCartney (Labour, Makerfield)

May I suggest that if the hon. Gentleman goes back to Newark, probably about 3,500 to 4,000 pensioners are getting the benefit of the minimum income guarantee and probably more than 20,000 people receive the winter fuel payment? I assume that the hon. Gentleman is not suggesting that he wants to take that money away from them and that he will oppose their receiving any benefit from pensioner credit. The 3,000 to 4,000 people who already receive the minimum income guarantee will automatically be placed on pensioner credit. Some of them will qualify not only for the minimum income guarantee but for benefits through credit. A lot of benefits are available to the hon. Gentleman's constituents in Newark.

Julian Brazier (Conservative, Canterbury)

I am conscious of your correct ruling, Mr. Griffiths, but the Minister's remarks are wide ranging. The clear point that emerged from Beveridge—from which Governments of all complexions have moved away slightly, but especially this Government, most of all in this measure—was not to create disincentives to save. What is the marginal withdrawal rate for a pensioner household that receives housing benefit and council tax benefit? What is the marginal rate of tax and benefit withdrawal—the combined marginal rate?

Win Griffiths (Labour, Bridgend)

That question can be answered elsewhere, rather than in debating the amendment.

Ian McCartney (Labour, Makerfield)

I shall answer that question elsewhere. In general, the Bill is designed to ensure that people such as those to whom the hon. Gentleman refers, who lose out under the current system, will benefit significantly under the new system. I look forward to debates on the issue.

I had intended to start my remarks on the kernel of the amendments by quoting Baroness Greengross in the Lords, who took a fair and non-partisan stance. Some serious issues are involved, and my earlier comments were just as serious. On amendment No. 1, she said:

''I do not share that view as I believe that people get used to new things and new names if they are introduced well and thoughtfully''.—[Official Report, House of Lords, 24 January 2002; Vol. 630, c. 1588.]

The principle of introducing things well and thoughtfully is important.

From day one we used the title ''pension credit'', and I give a firm undertaking to Committee members that we shall continue to do so. Amendment No. 18 is, therefore, entirely redundant. I assure hon. Members that we shall undertake a substantial programme of targeted publicity to achieve the dual aims of reducing stigma and promoting take-up. I hope that in doing so and in incurring expenditure we see no silly press releases from the Liberal Democrats and the Conservatives saying that it is an appalling use of

taxpayers' money to support the Labour party's achievements and manifesto. In giving people income and benefits, it is legitimate to tell them what they are entitled to. I hope that we shall have seen the last of those, but I have my doubts. The day we start that publicity, we shall see the first press releases from the Opposition complaining about the money being spent on advising people about their entitlements, and we shall just have to put up with that.

The reason the Bill refers to ''state'' pension credit is perfectly simple. The term ''pension credit'' is already used in legislation, although in a very different context. Section 29(i)(b) of the Welfare Reform and Pensions Act 1999 uses it to refer to rights acquired by one spouse over the other's non-state pension in the event of divorce.

The amendments would create a second pension credit. I do not believe that Committee members need be lawyers, let alone parliamentary draftsmen, to realise that that is a recipe for legislative confusion.

The hon. Member for Daventry and I also sat on the Committee that considered the Employment Relations Bill, which I wanted to call the Fairness at Work Bill. The White Paper had been entitled ''Fairness at Work'', and fairness at work was referred to in the manifesto. Parliamentary draftsmen are, rightly, independent. It is their responsibility to determine the Bill's title. On this occasion, parliamentary draftsmen called the Bill the State Pension Credit Bill. We shall continue to refer to pension credit in getting the message across to people.

We need to move on to issues surrounding the use of the word ''credit''. Increasingly, people understand through the Government's activities that, under this Government, credit is positive and means an entitlement that people did not have before, whether working families tax credit, child tax credit or disabled person's tax credit. The term ''credit'' has been changed by the Government into something positive and meaningful, unlike how it has been used in the past.

It is vital for us all to take the view that, whatever the Bill is called, its implementation and the uptake of benefits that accrue from it are vital. The creation of the pension service is important. As we roll out the pension service, I make an offer to each Committee member individually; if any of them wish to visit a pension service facility, I will facilitate that. It is important that hon. Members who have taken the time to participate in the Committee can see how the programme is rolling out in practice, after the Bill's enactment. I leave that offer on the table.

I hope that the hon. Gentleman will see fit to withdraw his amendment.

Tim Boswell (Conservative, Daventry)

I thank the Minister for that offer to Committee members. The pension service that covers my constituency is based in Leicester. Its director has already been in touch with me and I hope, in due course, to have a conversation with him about how things are going, because it is important that that should happen.

The Minister may recall that I suggested to him, in prior correspondence, that he might like to have a couple of presentations in this place, for the benefit of hon. Members who are not members of this Committee.

Ian McCartney (Labour, Makerfield)

I have not yet responded to that suggestion, as I have been ill. I apologise for the delay, but the hon. Gentleman will get a positive response.

Tim Boswell (Conservative, Daventry)

I am delighted about that. It is in everybody's interests that, regardless of whether we like the exact way that this legislation comes out, it should be properly understood by hon. Members, in so far as it is easy to understand—or, at least, the rudiments of it are—and it should be possible to communicate it to our constituents.

The Minister was talking about what we do at weekends. I can assure him that I am very happy to go home to my constituency, where I have lived for many years, and tell pensioners to participate in taking up this benefit, if they are entitled to do so. Therefore, there is no difference between us on that.

However, I wish to address one major concern and I shall draw an analogy with the minimum income guarantee. It has had some difficulties, which are now being ironed out, but it is, nevertheless, a more straightforward benefit than what we now have. We know that about one in four people who are entitled to it are not participating in it. Therefore, in my constituency—and in most others—some 1,000 pensioners have the right to take it up, but are not doing so at present. That is the continuing concern about such benefits, regardless of how they are presented. Regardless of whether they are called means-tested, or new Labour, or graded, or reward—or whatever—the fact is that they are not reaching the people that they are intended to help as much as they should. It is as simple as that.

I was happy to let the debate run on, rather than to make serial interventions on the Minister. However, I wish to state that the underlying difficulties were very well set out in the interventions by the hon. Member for Perth (Annabelle Ewing)—who asked what the difference was—and the hon. Member for Northavon (Mr. Webb) who asked, ''Is it not, in fact, a solution to a problem that the Government have caused by allowing the gap between entitlements and an acceptable level of income to widen?''

That is the underlying problem. We are fond of the Minister, but he is given to rhetoric from time to time: indeed, sometimes he gives rhetoric a bad name. However, I think that what he was trying to say was that he was attacking poverty. I hope that that is a commitment that most Committee members genuinely share. However, we wonder whether it is being met and I shall give an example that is based on something he said. He said that he wanted to tackle those who are left out of the state pension. However, if he reads the Select Committee's report—which gives flesh to the concerns that we have already felt—he will discover that one of the major problems is the large number of women who do not have a full state pension

entitlement, for historic or other reasons, and whose starting point for the savings credit will be handicapped by the fact that they do not have a full retirement pension entitlement.

Win Griffiths (Labour, Bridgend)

Order. I appreciate that we went rather wide on that amendment—thanks to my indiscretion in being generous with the Committee. However, I wish the hon. Gentleman to conclude on the issue of the word ''state'' being excluded from the amendment. The issues that he is talking about can easily be discussed when later amendments are addressed.

Tim Boswell (Conservative, Daventry)

You are very perceptive, Mr. Griffiths. I would not dream of saying, as you modestly have, that you are indiscreet, and if you were, I would not wish to join you in your indiscretion. I am happy to address the subject more narrowly.

The amendment is very narrow. It is about nomenclature. The Minister gave us an assurance on the publicity scheme mentioned under amendment No. 18. He also gave us some explanation—albeit transmitted at third hand through the parliamentary draftspersons—why he did not want to call the credit ''the pension credit''. I suspect that, given more time and thought, we could have found an acceptable alternative. We could have called it the pensioners' credit instead of using the term in the Bill. I offer him that name in case he later decides to amend the term.

The Minister has attempted to charm us with his rhetoric, but there is still a problem with the Bill, which will not achieve what it is intended to do. I do not like the word ''state'' being slung around its neck, as it is not really about the state contribution to the joint programme that will provide an adequate income for those in old age. I know that the Minister has expressed jocular concern about our thinking on the matter. I assure him, first, that we meant what we said in our reasoned amendment and, secondly, that we will continue to consider constructive ways of effecting that. It is sad that our meetings on Tuesday mornings are disrupted by the Committee, as they provide even better value. I hope that the Minister will learn something from those meetings, as I am sure that we will.

We have had an interesting exchange on state pension credit. We are not going to be factious and divide on everything, but on this occasion, particularly as the Minister went rather over the top, I feel inclined to advise my hon. Friends to persist with the amendment, which stands in my name and that of my hon. Friend the Member for Hertsmere.

Question put, That the amendment be made:—

The Committee divided: Ayes 5, Noes 12.

Tim Boswell (Conservative, Daventry)

I beg to move amendment No. 22, in page 1, line 20, leave out paragraph (a).

Win Griffiths (Labour, Bridgend)

With this it will be convenient to take amendment No. 13, in page 1, line 23, leave out 'temporary'.

Tim Boswell (Conservative, Daventry)

I last moved an amendment deleting the word ''temporary'' from legislation when I was a Government Back Bencher. It triggered a debate—lasting some hours—in which I received massive assistance from the Labour party. That resulted in one of the relatively few occasions when I was unable to support the Government of the day; I abstained. I cannot possibly make such claims about the intentions or the effect of the amendment, but I want to probe some important points that both amendments raise.

I thank the Under-Secretary for indicating that she will reply to this short debate. Amendment No. 22 would remove subsection (5)(a), which relates to

''circumstances in which a person is to be treated as being or not being in Great Britain''.

It is a classic probing amendment and designed to encourage the Under-Secretary to explain the circumstances under which such a provision may arise. I have two points to make. First, why cannot a court decide whether a person was in Great Britain? Why do we need regulations? Surely that is relatively easy to prove.

Secondly, it would be helpful to receive the Under-Secretary's elucidation of how it is possible to be in Great Britain for the purpose of receiving the pension credit, but not to be physically in Great Britain at the time. The explanatory notes proceed on the analogy of income support and dangle out to us the prospect that no action will be taken if a pensioner entitled to the credit is outside the United Kingdom for four weeks, or eight weeks in certain circumstances. Will the Under-Secretary explain her thinking about the four-week period and say how it may be extended to eight weeks?

Clearly, no one is suggesting that, if someone goes on an awayday trip to Calais, he or she is disqualified from receiving benefit. However, can the Under-Secretary explain why people who leave the jurisdiction for longer than the normal length of a holiday may lose their entitlement to pension credit? On what basis is such a provision made? Income support is essentially a short-term benefit related to immediate need, although within that are some savings to prevent people from losing the benefit immediately when their circumstances change. Under the Bill, however, such concepts are bolted on to consider eligibility for pension credit.

I have two or three worries that are touched on to some extent by amendment No. 13 that would delete the word ''temporary''. The obvious point is that the

assessment period for pension credit is to be set at five years or, to put it another way, a person will not lose his entitlement to pension credit over five years, after which time circumstances would be re-examined. I understand the Bill well enough to know that it does not contain such a provision relating to, for example, a visit to hospital. Leaving the United Kingdom on a permanent basis would be a notifiable event and there would be a reassessment.

Ian McCartney (Labour, Makerfield)

Marriage.

Tim Boswell (Conservative, Daventry)

And marriage, as the Minister says. Good luck to people of that age who do marry. I welcome it.

The Under-Secretary must set out for the Committee why such an arrangement has been chosen, why the periods are such, why it is appropriate to go alongside the income support period and how that will mesh in with the much wider entitlement to pension credit that is available without reassessment.

James Clappison (Conservative, Hertsmere)

My hon. Friend is asking for insight. With regard to fixing those periods, in the consultation paper the Government said that they wanted to learn the lessons of the working families tax credit. Does my hon. Friend share my interest about which lessons they have learned from that, given that in their new arrangements for the working families tax credit they have altered the way in which assessment is to take place from fixed periods to periods which are more sensitive to changes?

Tim Boswell (Conservative, Daventry)

That is a germane point, and I hope that the Minister will reflect on it and address it in his argument.

I wish the Minister to think a little more about what we have said about what the periods should be and why they should be that, bearing in mind that we are talking about regulations which will eventually, no doubt, fall to be considered here.

Beyond that—to make a point that begins to mesh into my second amendment—I wish to address the question of temporary absence. Why should these periods be set at all? I do not want to caricature the pension credit but, somewhere at the back of my mind, I am thinking about a problem of equity that might arise. A person might perfectly legitimately—and with no mis-statement of their income or circumstances—receive an assessment with regard to pension credit on day one that fixes their entitlement for five years, and that is, as it were, a one-way street, because it can be increased but it cannot be reduced. Shortly after that assessment they might, for example, receive a windfall, perhaps from the death of an elderly relative, which makes them very much richer, and they might continue to live in the United Kingdom, and to benefit from both the pension credit and from the windfall gain for five years, until reassessment. One can contrast that position with a situation where someone either finds that they have a reduction in income, and they may or may not apply, or they go outside the jurisdiction to another country, perhaps for very good reasons, such as family reunion, and after a qualifying period they are no longer entitled to the pension credit. There is

the potential for a tension in equity between those two cases.

I turn to how far the regulations run—and how far they might extend. Are they, for example, absolutely neutral between residents and people who have undertaken a longer than temporary removal to another country within the European Union, or to a British colony, such as the Falkland islands, or are the regulations intended to be absolutely neutral between all countries, for example the United States of America, or a Commonwealth country, or a country outside Europe that is not directly associated with the UK in any way?

Maria Eagle (Labour, Liverpool, Garston)

Will the hon. Gentleman clarify something for me, so that I can try to answer his point when I reply to the debate? Is he just asking whether there will be no difference, outside the UK, between the European Union, for example, and anywhere else? Is that the point that he is asking me to clarify?

Tim Boswell (Conservative, Daventry)

I think that I am. That is the first point. However, I then come to my final point, which is buried in the second amendment.

I realise that we are entitled to debate legislation here, irrespective of proceedings in courts elsewhere—there is, as I understand matters, no sub judice law. I am not asking Ministers to trespass on areas that, no doubt, their counsel will be advocating in the High Court at this moment, but it will not have escaped their attention that currently there are proceedings in the High Court about overseas pensioners, which are addressing whether they have an entitlement and, if so, whether it is principled to withdraw that entitlement for those who have moved to certain countries, but not to others. With regard to that, there frequently appears to be a link with countries where there is a reciprocal social security agreement.

We are faced with a complex picture. With respect, it is not quite as simple as the Minister was seeking to set out, and, therefore, it is important to probe the exact basis on which this state pension credit entitlement would be withdrawn if someone were to leave the UK.

I am sure that nobody, least of all the Minister, would wish to caricature us by suggesting that we are saying, ''The moment you arrive at Dover, that's the end of it; you lose it, it's gone.'' Of course, that is not the case. Neither do I suggest that pensioners should not be able to go on holiday—of course they should. I am sure that the Minister would want that as well.

I understand the argument that if the benefit is income-related, although that is sometimes equivocal, Ministers might want to set a limit on the entitlement period if a person moves outside the jurisdiction. Whether they do or not, that should be principled. That chimes in with issues such as whether the jurisdiction would be the European Union or wider than that, and whether a limit would be compatible

with European law. Additionally, the measure could be discriminatory against different types of pensioners who may move to different areas.

These matters are sensitive, and the Minister will know—I have made my worries clear—that some apparently settled arrangements on retirement pensions are being challenged in the High Court. We neither could, nor should, rehearse all that today. However, we must be on the right basis before we start, and we need a clear understanding of what Ministers are trying to do and the reasonableness of rules to limit entitlement that they will set in regulations.

Alongside that is the obverse of the concessions that Ministers explained or made. If the Government intend to give a five-year entitlement to person A who receives a bonus of income but remains in the UK with full entitlement to pension benefit, they must consider pensioner B, who may have the same entitlement due to their initial income but who could move outside the jurisdiction and be disqualified from receiving benefit although he or she has a much lower income than person A. These are real issues of equity, but there are also legal issues and, in any case, we need to know from where Ministers are coming.

Julian Brazier (Conservative, Canterbury)

I shall examine two classes of cases of potential claimants who are abroad, but before I do so I want to make a theoretical point.

With benefits of this type, this Government—even more than the last—have increasingly moved away from the Beveridge provision of handling both the problem of poverty and incentives to save with an insurance-based scheme. We have ended up with two classes of benefit: those that are designed to relieve poverty directly, and those that are designed to patch the system so that people who have made provisions for themselves are not disadvantaged. The benefit that we are considering falls into the second category. Overseas, or partially overseas, potential claimants are good examples of the muddles in which we get.

My first case is fairly rare, but the second is more general. Two pensioners who attended my surgery—I shall not bother members of the Committee with details of what they came to see me about, but their circumstances are related directly to the clause—had a daughter in Australia who had tragically become extremely ill with a chronic and irreversible condition. They took the decision to fly to Australia to look after her during what they thought would be the final months of her life. That was a generous decision because they were certainly not well off, although they were not absolutely on the breadline because had they been they would not have been able to afford it. I believe that the daughter could not have flown back to this country for medical reasons. Contrary to all medical opinion, instead of taking three to six months to die, she took more than three and a half years. Throughout that period, the little house that the pensioners owned in my constituency remained their property—I believe that they covered some of their costs by letting it. When they returned, they found that from the point of view of a range of benefits they were deemed to have been abroad for the

entire period, and, for various reasons that do not concern the Committee, they were disadvantaged.

The point that I want to draw out of that example is the point that my hon. Friend the Member for Daventry made at the beginning of his speech. In dealing purely with the immediate relief of poverty, like the two benefits to which the clause as drafted is pegged, it is not unreasonable to exclude people who are away for a long period. However, in dealing with the Beveridge-style principle of ensuring that those who have paid into an insurance-based system and behaved reasonably are rewarded for doing so, it is surely completely unreasonable that such people, who enjoy a small occupational pension and some savings, and who should receive a top-up from the benefit, should be grossly penalised because of their decision to go abroad for, in this case, a very long period. That is the sort of problem that a bad patching exercise, which is what the benefit is, throws up.

I do not want to rest my case on that one genuine but none the less fairly rare and unusual constituency case. A wider issue is involved, to which my hon. Friend alluded briefly in the last part of his speech—how to treat pensioners who are resident outside the country.

My hon. Friend alluded to a court case. I shall not discuss which countries are covered. As many Committee members will know, several countries that have the closest links with this country, including Australia, Canada and New Zealand, which contain many pensioners who fought on our behalf in the war, are excluded from indexing for the state pension. Therefore, those who have paid into the national insurance system all their lives and who choose in their late 60s to go to Australia, Canada or New Zealand—several other countries are also affected—receive from that moment on no indexing of their state pension. Before I was a Whip, when I had political views, I signed several early-day motions on the subject.

As the clause is worded, we seem to be in danger of introducing two more perverse incentives among all the perverse incentives in the increasingly complicated legislation relating to pensioners. The first relates to someone who has just qualified for his state pension and who would receive the top-up who is considering going abroad, perhaps to Australia, Canada or another country where, perhaps, like me, he has cousins. Perhaps, like some pensioners, including members of my family, he has a medical condition and might benefit from a warmer climate. By going abroad, he would relieve the national health service of a considerable potential burden and, in the long run, he may also relieve the taxpayer of a much larger burden in nursing home costs, for example. Are we to say to him not only, ''Off you go. Goodbye. You made all those contributions, but you will not receive any indexing on your state pension,'' but, ''By the way, you'd better not go abroad until after your first assessment, and five years later we shall strip your state pension credit from you''? As my hon. Friend said, as the clause is drafted, that might even be stripped from him immediately. If so, we provide a perverse incentive for someone not to do something

that would relieve the Exchequer of a considerable sum.

Tim Boswell (Conservative, Daventry)

My hon. Friend sets out the case and his concerns well. Does he agree that the most important aspect is the simple human terms involved? An elderly person with a United Kingdom pension entitlement may want to move to live with a daughter in Australia or Canada. Decency should enable that to be done without any inhibitions on the pensions front.

Julian Brazier (Conservative, Canterbury)

My hon. Friend knows that I could not agree more strongly about this issue. None of my cousins in any of the countries that I mentioned have fallen foul of the legislation. However, I feel desperately strongly about people who have given their whole lives to this country and, for exactly the reasons mentioned by my hon. Friend, have chosen to go abroad to countries where huge numbers of British citizens have cousins. Some Caribbean countries are also affected by the problem. It is unfair that such people are treated in that way. I feel strongly about the matter so I have to restrain my emotions.

We have set into the system a potential injustice that will cost the British taxpayer in the long run. Clearly, people who have not looked into the detail will find out how much they will lose and be encouraged to come back after a year or two with sad human consequences for themselves and at considerable cost to the Exchequer.

We are increasingly pushing apart the two traditional Beveridge strands—the principles of insurance and relief of welfare. As we embark further down the split, cases involving overseas people are a good example of how, on the one hand, the human side gets steadily less human for deserving classes of people, and, on the other hand, we potentially throw up unforeseen costs to the state. Therefore, I urge the Government to accept the amendments that my hon. Friend so skilfully moved.

Maria Eagle (Labour, Liverpool, Garston)

I am pleased to stand in Committee for the first time as a Minister, although I have tried it out in private Members' business. It is a pleasure to be here in a position to try to answer points made by hon. Members today in respect of the amendments.

I listened intently to the way in which the hon. Member for Daventry put his points about amendments Nos. 22 and 13. I do not wish to be unpleasant, but initially I found it difficult to understand what he was getting at. He seemed to suggest that pension credit should be payable to people whether or not they are resident in the United Kingdom. That would be the effect of the amendments. Amendment No. 22 would remove the provision allowing residence conditions to be a prerequisite for receipt of pension credit beyond mere physical presence.

Amendment No. 13 would, as the hon. Gentleman said, remove the word ''temporary''. Interestingly, he obviously remembers removing that word from previous legislation, which, he said, went on for some hours. I do not know whether that was an appeal to Back Benchers to assist him in speaking for hours, but they have not taken the bait.

Taken together, the amendments would remove the need for any residence test for pension credit. The only time that one would have to be in Britain to get pension credit for a five-yearly assessed income period would be at the time of making the claim. It would then be paid to anyone in this country over 60, including those who usually live abroad. It would be extraordinary for a social security benefit to operate in that way. As far as I am aware, it would be unique. I may be passed a note by my officials saying that a certain benefit allows for that, but I am not aware of one.

The Government believe that it cannot be right that a person with no real connection or affiliation with this country can receive a benefit or credit funded by the British taxpayer. When it was in power, the Conservative party believed that, too. In 1994, it introduced the habitual residence test, the purpose of which was to curb abuse of the benefit system by those with little or no recent connection with this country.

Julian Brazier (Conservative, Canterbury)

The hon. Lady's history is accurate as it applies to measures to relieve poverty, but surely she accepts that the basic state pension is paid to people who have paid national insurance contributions all their lives and who retire abroad. The same principle should apply under the Bill.

Maria Eagle (Labour, Liverpool, Garston)

I hear what the hon. Gentleman says, but the Bill is about pension credit. We are talking about additions to the basic state pension.

Tim Boswell (Conservative, Daventry)

I intervene only because I want to hear what the hon. Lady thinks about two different circumstances. She talked about persons with no prior connection with the United Kingdom, but who may turn up here to access the benefit system. If that is her concern, I am with her in principle. However, perhaps she can deal with the point also made by my hon. Friend the Member for Canterbury (Mr. Brazier) about people who have contributed throughout their lives by both national insurance payments and taxation, but who then choose for good reasons to leave this jurisdiction. They may be disqualified from receiving the benefit or be in a dilemma about their circumstances.

Maria Eagle (Labour, Liverpool, Garston)

I am happy to answer such points one after the other, not at the same time; otherwise I shall be speaking gobbledegook to the Committee. I shall do my best to go through them.

We are applying the habitual residence test. It has been in existence for some years and was introduced for understandable reasons by the Conservative Government as a curb on the possible abuse of the benefit system by benefit tourists or by people with little or no recent connection with this country. In large part, that test applies to all income maintenance benefits. Different tests apply to other parts of the state support system, whether they be taxation or tax credits, but the habitual residence test applies in respect of benefit.

We are not proposing to change that system under the Bill. We want to retain the same test for pension credit that exists for other income maintenance benefits. That is not to say that the habitual residence test that we inherited was perfect. Indeed, we thought that it was deficient in several aspects and in the previous Parliament we made significant changes to improve it. If it would assist the Committee, I can elaborate on that although the hon. Gentleman did not refer specifically to the habitual residence test. We are not suggesting a different test for the benefit from that for other benefits so, in that sense, we are building on the current system.

As a lawyer in a former life, I am probably as aware as other lawyers in the Room—I have not checked my ''Dod's Parliamentary Companion'' to see if there are any, but they lurk in the most surprising of places—that it is dangerous to change the wording of eligibility criteria. That would be like a red rag to a bull not only to those lawyers who may be looking to take test cases, but to judges who may hear them. Rightly, if Parliament in its wisdom uses different words for eligibility and calls it something other than ''habitual residence'', the courts would assume that there was a difference and would want to know what it was. We are not seeking to change the current eligibility for the minimum income guarantee, which is built on income support, as the hon. Gentleman knows. We are reproducing the test, and are not trying to make any significant changes.

Tim Boswell (Conservative, Daventry)

The Minister is helping us by trying to elucidate the Government's thinking. I am not a lawyer, but my daughter is a judicial review specialist so I understand the constraints within which the Minister properly operates. Although the concept should stay unchanged for the reason that she gives, it is not necessary—even within the same theoretical framework—to prescribe exactly the same qualifying periods. If it were right to do so for the equity of the case, one could take a different approach with the new benefit. It could have the same wording and concepts but perhaps operate slightly differently.

Maria Eagle (Labour, Liverpool, Garston)

I can understand the hon. Gentleman's point. As a former Minister, he will be aware that when legislation is brought forward, Ministers are always tempted to suggest tweakings and differences. Such little changes might be helpful in a particular piece of legislation but on reflection they often turn out to be unnecessary complications that give more work to lawyers. With such a distinguished daughter in the family, the hon. Gentleman is as good as a lawyer himself. I am sure that he has fireside chats that enable him to understand much more about the law than those with no lawyers in the family, so he will be aware of the difficulties to which I am alluding. It is not our intention to make any significant changes to the minimum income guarantee.

The hon. Gentleman made it clear when speaking to his probing amendment that he would not want to suggest that an awayday to Calais should force one to claim again for pension credit. Of course that is sensible of him. It is perfectly reasonable that pension credit should remain in payment for limited periods

when a pensioner goes abroad. No one is trying to suggest that pensioners do not deserve holidays, even quite long ones. Good luck to them if they can get abroad. We would not want to make them reapply for pension credit.

Ian McCartney (Labour, Makerfield)

They could go to Scotland.

Maria Eagle (Labour, Liverpool, Garston)

Yes, and I am sure that many of them do. However, some of them wish to go to warmer climes, and I understand that Scotland is not always warm.Kevin Brennan: There is Wales.

Maria Eagle (Labour, Liverpool, Garston)

Wales, as I am reminded by my hon. Friend, is a very sunny place. Certainly, the sun always shines when I go there.

Ian McCartney (Labour, Makerfield)

Perhaps the Minister's house is on fire.

Maria Eagle (Labour, Liverpool, Garston)

That is a very old joke.

We have to strike a sensible balance, and allow some flexibility while being mindful of the fact that we are still operating a habitual residence test. We do not want abuses to creep back in. At present, a ''temporary absence'' is four to eight weeks. I think that four weeks takes care of the idea of holidays. Very few of us manage to have holidays that last for longer than four weeks, although we may aspire to them. Perhaps some of us were thinking about long holidays this morning. However, in the main, we do not expect to have holidays of more than four weeks.

A rather strange exception to that arises in the case of the families accompanying children who are receiving treatment abroad. I gather that it arose from the case of the Peto institute. Autistic children needed to stay at that institute for somewhat longer and ran into benefit problems. An exception was made in the income support rules by the then Government. That remains the only exception to the four-week rule. Although the Bill is ambitious, it is not intended to recast the entire entitlement conditions for income-related benefits. If it were intended to do that, it would have more than 22 clauses.

I wish to say to the hon. Member for Daventry, who moved the amendments, that we are trying to keep things pretty much as they are with regard to general social security entitlement, to fit this benefit in with the other income and maintenance benefits that it sits with, and to try to ensure that there are no anomalies between them.

Tim Boswell (Conservative, Daventry)

Will the hon. Lady deal with the specific issue of whether there are any EU implications, and whether she is satisfied—after taking advice, no doubt—that there is no obligation to repay for people who might have gone to another EU country for a period of, say, six weeks, and would, therefore, appear to be losing their pension credit entitlement, unless and until they returned to the UK and reclaimed?

Maria Eagle (Labour, Liverpool, Garston)

I will address that point. I got carried away in flurries of compliments and I apologise for that, but the hon. Gentleman also asked me whether the regulations that we are contemplating would be neutral between all countries. It is my understanding that the only respect in which requirements are not neutral is in the application of the habitual residence

test, which operates slightly differently for EU countries than for other countries; workers exercising community rights—for example, if they return to the UK to seek work—are not subject to the habitual residence test in the same way as are others. Therefore, there is some difference.

The hon. Member for Canterbury raised a tragic case—although, as he said, such situations are mercifully rare. However, such unusual cases often serve to highlight the effect of rules when they are applied at the far end of their range.

Once again, that case involves the habitual residence test. It is, of course, very difficult to design a general rule that applies to all income-related benefits and that takes account of such cases, especially given the length of time that the hon. Gentleman's constituents remained away. I gather from what he said that the daughter was an adult, rather than a child—although he did not make that clear.

Julian Brazier (Conservative, Canterbury)

Yes, that is right.

Maria Eagle (Labour, Liverpool, Garston)

All I can say is that habitual residence is, to some extent, a moveable feast. It is a creature of case law. It is not set out, or strictly defined in legislation, and nor is it defined in regulations. However, general principles are set out in regulations, which have been defined over the years in case law. Because of that, there is a certain amount of flexibility with regard to the application of the test. For example, the length and purpose of the absence from the country would be one of the considerations that a decision maker would take into account. I cannot comment on individual cases, but I hope that that flexibility would be applied to situations such as that which the hon. Member for Canterbury raised—although, with regard to that situation, three and a half years is a long while.

Kevin Brennan (Labour, Cardiff West)

I am relieved that the Under-Secretary has made that last comment. I have come across a case that might be more common than that which was raised by the hon. Member for Canterbury. It involved a pensioner who travelled to a foreign country and fell ill. They were diagnosed with a serious illness—cancer of the oesophagus—and they had to be treated in the foreign country. They could not be moved for a long time and, consequently, when they re-entered the country they faced problems with regard to the habitual residence test. I hope that the flexibility that the Under-Secretary described would be sufficient to be able to deal with those sorts of circumstances, which are beyond the control of the individual.

Maria Eagle (Labour, Liverpool, Garston)

Indeed, and I would hope so too. That would, of course, be a matter for decision makers in the Department, and subject to all the usual legal appeals. However, it would be impossible to come up with a set of rules, either in primary legislation or in regulations, which could cover all such eventualities, and one hopes that, by having more general guidance, the vast majority of such problems could be taken into account, although it is difficult to envisage how flexibility could be maintained for that length of time.

Tim Boswell (Conservative, Daventry)

I should like to ask about the periods involved. If the regulations prescribe four weeks, or in the exceptional case that the Minister mentioned, eight, is the decision maker left any discretion about the period? The intention might be perfectly reasonable, but the danger in specifying such matters is that doing so removes the discretion that the decision maker might otherwise reasonably want to use.

Maria Eagle (Labour, Liverpool, Garston)

The hon. Gentleman is perfectly correct. The decision maker's discretion is limited to the reasons involved, rather than relating to the length of time. If benefits are to be paid to people in this country, changing the length of time would affect all benefits. We do not propose to do that for this one alone. The benefit is in line with other income-related benefits. General eligibility is affected after four weeks, unless the person involved is taking a child—the exception to which I referred before—when it extends to eight weeks. That has been so for many years, including, as the hon. Gentleman would accept, when his party was in office.

I believe that I have dealt with most of the points made.

Andrew Selous (Conservative, South West Bedfordshire)

The Minister helpfully referred to regulations and guidance notes, and said that the habitual residence test was generally interpreted on the basis of case law. Might she or her Department consider examining that point specifically in cases of pensioner illness or compassionate care of a member of a pensioner's family overseas?

Maria Eagle (Labour, Liverpool, Garston)

Decision makers working in the Department receive mountains of guidance notes about their responsibilities and flexibilities. I am sure that some guidance notes would help, although guidance notes do not obviate the law, and the length of time is not a matter for discussion.

I have made the points that I wanted to make. The hon. Member for Daventry said at the beginning of his remarks that the amendments were probing. I hope that he has found my comments to be of some assistance and will not feel the need to force the amendments to a Division, although he is of course perfectly entitled to do so.

Tim Boswell (Conservative, Daventry)

I am delighted to have the first opportunity to welcome the Minister to the Committee. If she continues as she has started, she will do very well. I look forward to a long and constructive relationship on some serious issues of law and practice.

I shall make a couple of personal points that show the reach of the issues involved. The first was stimulated by the extremely helpful speech of my hon. Friend the Member for Canterbury. Many people, and not only in the conventional old dominions, are related to people in the UK. On a parliamentary visit to New Zealand many years ago, I had a conversation with someone at a reception. After five minutes, I said to them, ''By the way, you don't

know it, but you're actually my cousin.'' It happens. There are huge family links, and long may that continue.

My second point is, perhaps, a bit more jocular. I warned the Under-Secretary about my daughter's interests. I notice that already my six-month-old granddaughter becomes extremely animated on mention of the words ''judicial review''. It is the one thing that is calculated to get her going.

I realise that the Under-Secretary is having difficulty. She has a difficult brief marked ''resist''. It is tough. Some hard cases will not be adequately met, for the reasons that we gave. There are several comparisons to be made between the harsh treatment of a person who moves outside the jurisdiction and a person coming in as a benefit tourist expecting the full clutch of social security benefits.

I welcome the way in which the Under-Secretary set up her response and what she said about the habitual residence test. It is one of those things that is at the back of our minds and hon. Members have said that it occasionally comes up in constituency casework. We may think that it does not seem right or that it is harsh. We should, perhaps, revisit that on another occasion in a different format such as Westminster Hall. However, I am pleased that the Under-Secretary emphasised that discretion is available to decision makers and that case law moves the matter in what I hope will be a more friendly direction.

My hon. Friend the Member for Canterbury made an impeccable speech that reminded the Committee about the reasons why people who are outside the world of benefit tourists and who do not seek an unfair advantage may have good reasons to leave the United Kingdom. That may be for such reasons as tending to a sick relative or joining another relative. The system is sometimes harsh to them. Although we will leave it at that point while the High Court considers its decision, such people may well feel a sense of unfairness and inequity.

Those are wider issues, but I ask the Under-Secretary to answer two specific questions that come from a train of thought that arose from our discussions. If a person claims for pension credit and receives an award before leaving the jurisdiction, the credit ceases after four weeks.

Maria Eagle indicated assent.

Tim Boswell (Conservative, Daventry)

The Minister nods. That person may have gone on an extended holiday and may wish to return after 12 weeks—that is not unreasonable behaviour for an older person. Will the Under-Secretary assure us that the Pension Service and other people involved in support are geared up to reactivating the claim—for example, they could put leaflets in ports—immediately so that people do not lose their benefit for an extended period while everything is sorted out? I am sure that the hon. Lady wants that to happen, but it would help if she could tell us the ways in which that might be done, and the way in which Ministers and people in the Pension Service will press forward and respond positively. It might be possible for a person to leave a conditional set of papers in which they write, ''I'm going away for

three months. I'll be back on such-and-such a date. Can you give me a ring to remind me, or can I send an e-mail to say that everything is the same as before?''

I am always worried by cases of people who go abroad beyond the qualifying limits, which could lead to overpayments. A situation could arise in which a person leaves the United Kingdom to tend a sick relative or friend in another European Union country—not so far away. What could have been expected to be a weekend or week's commitment could last for three months. That person would be outside the United Kingdom and disqualified from pension credit after the four-week period. The last thing that they would think about in such a situation would be that they should advise people that they had left the jurisdiction, but they would have no intention of evading the system or taking an unfair advantage. Will the Under-Secretary tell us how she envisages the recovery to occur in such cases and how that would be phased in? Would people be treated reasonably?

I raise a separate question about neutral intention. People who have a pension credit entitlement may decide to leave the United Kingdom. They may be aware that it is being paid and may know that the entitlement is for five years on the basis of the assessment that they received. They may fail to notify their departure out of pure inadvertence, or it could be a deliberate attempt to gain an unfair advantage from other taxpayers by continuing to claim the benefit. However, if they are abroad, they are outwith the jurisdiction and benefit cannot easily be recovered. Not to recover it would be inequitable to those who remain. Will the Under-Secretary tell us now, or by correspondence if that is easier, how people who go on a bona fide holiday can restart their claims easily when they return? What can be done about overpayments that arise inadvertently or maliciously, and in cases in which a person is not within the jurisdiction to make a reclaim easily?

It may have been a form of nuclear deterrent, but the Under-Secretary threatened to read out all her brief on the habitual residence test. Although she kindly refrained, it would be useful if she put the information in a letter to members of the Committee. We could then be informed about a subject that we have already discussed, and which, over the years, we should have given more attention. I am grateful to the Under-Secretary and assure her that, at least on this occasion, she will start with a good record because I will advise my hon. Friends not to press the amendment.

Maria Eagle (Labour, Liverpool, Garston)

I will respond briefly to the hon. Gentleman's points to the best of my ability now and, if he is not satisfied, I will correspond with him later.

In respect of pensioners who go abroad for a three-month holiday, the new Pension Service should be more responsive to the needs of those whom they serve. Given that the hon. Gentleman's fictional holidaying pensioners already have pension credit, there is no problem in informing them of its existence, so we do not have to start from scratch. Certainly, there is no reason why they could not make an arrangement with the Pension Service by telephone or

e-mail to make contact as soon as they return, and reclaim pension credit as soon as possible.

Indeed, the fictional pensioners could receive advice about their entitlement and whether it would be affected by the length of stay because, although they may be aware of the pension credit, they probably would not be aware without further inquiry that it would cease after four weeks. There is no reason why they could not get advice about the implications of being away for three months before leaving. No doubt the Pension Service will be much more capable of doing that now that it has been disaggregated from the Benefits Agency, and is no longer trying to deal with working-age benefits as well.

In respect of overpayments, whether or not they are inadvertent, the Department always tries to be as reasonable as possible. Clearly, overpayments must be repaid unless the Department is at fault; in which case, there is discretion to look at whether overpayments are collected. I hope that the Department always deals with such issues as sensitively as possible and makes proper arrangements to pay over a period of time. I would expect that to happen in this case. Normal rules apply and nothing will be changed.

Tim Boswell (Conservative, Daventry)

Will the Under-Secretary also deal with the question of a deliberate evasion of the rules, when someone has gone abroad and is quite happy to continue receiving benefit but cannot easily be collared by United Kingdom authorities?

Maria Eagle (Labour, Liverpool, Garston)

Yes, the benefit will be stopped after four weeks if we know that the person is abroad.

Tim Boswell (Conservative, Daventry)

If we know.

Maria Eagle (Labour, Liverpool, Garston)

Yes, that is the problem with fraudulent claims. Obviously, there are safeguards in the Department to detect such claims, and fraud in respect of this benefit would be no different. We will try to ensure that there are no fraudulent claims. We do not want overpayments or fraudulent claims and there is no reason to believe that we would be any less vigilant in respect of this benefit.

I would be happy to send the hon. Gentleman a précis version of the brief on habitual residence tests. He would not want to see the full detail. If he wishes to discuss it in some other place, I will be more than happy to do so with him.

Tim Boswell (Conservative, Daventry)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Tim Boswell (Conservative, Daventry)

I beg to move amendment No. 16, in page 2, line 4, at end add—

'(c) in the case of a woman or a man, if the definition of pensionable age set out in the rules in Schedule 4 to the Pensions Act 1995 is amended or rescinded then such other age as the Secretary of State may determine by regulations'.

Win Griffiths (Labour, Bridgend)

With this it will be convenient to take amendment No 17, in clause 19, page 13, line 26, at end insert—

( ) section 1(6)(c)'.

Tim Boswell (Conservative, Daventry)

The argument rehearsed under amendment No. 17, which is rather terse and is not

worth reading out, and amendment No. 16, which is opaquely worthy, is that of what happens to the pension age. Change is being effected on an appropriately long-term time scale. The qualifying age for the state retirement pension for women will rise progressively from 60 to 65 over the decade beginning 2010. That has not started yet, and many of those still below retirement age will not be affected and will reach their pension entitlement at 60.

It is not the purpose of the amendment to allow us to discuss the wider issues that the hon. Member for Northavon has touched on. We will later come to what should happen to the saving credit for men under 65 and whether we should wait until the whole matter is swept up by the gradual raising of the female retirement age.

The amendment allows us to consider a world in which there is no formal retirement age. That is a speculative operation. The Institute for Public Policy Research, with which my hon. Friends and I do not always see eye to eye, has produced an interesting report. One of its recommendations was raising the retirement age to 67 in order to balance the books. One of the major social changes, as well as social policy changes, that has taken place since the inception of the modern national insurance system in 1948 is that males often retire before 65. The Secretary of State had something to say about that in Question Time yesterday.

Both males and females are incontestably living longer. I recently wrote that a mental pattern is developing whereby people stay at university and perhaps get an early postgraduate qualification, and start work at 25. They work for 30 years and then look forward to 30 years of retirement. That is a deliberate oversimplification, but the issue of what will happen to the retirement age is interesting. Ministers tend to shy away from the subject by saying that they do not want to make any changes.

There is also the issue of the Government's response to what is to happen in relation to age discrimination, in terms of the article 13 duties and their implementation in the United Kingdom. As the Minister for Pensions would undoubtedly acknowledge if he were here, there is also the question of employment law and whether it is reasonable for an employer to be able to discharge someone because they reach retirement age. The Under-Secretary, as a lawyer, will be familiar with such issues. These are probing amendments.

James Purnell (Labour, Stalybridge and Hyde)

The hon. Gentleman accuses the Minister of shying away from the debate. He should not do the same; will he tell us whether he thinks that the retirement age should go up?

Mr. Boswell: That is a temptation that I shall resist, with great difficulty—I thought that it would amuse the Committee if I were to do so. With the greatest respect to the hon. Gentleman, he should remember first the Biblical injunction, ''Thou shalt not tempt'' and secondly, that it is his Minister who is meant to be answering the debate.

A retirement age has been set in history. We have always thought that it should be 60 for women and 65 for men and, a few years ago—partly because of the equality agenda and partly to reflect the wider social changes to which I have referred—the then Conservative Government decided to start moving to one age. If the Under-Secretary regards that as the end of the story, our amendments are redundant. Is she willing to keep the issue under review? I do not expect a commitment either way. I am not giving one, and I do not expect that she should do so. Would it be sensible to have some flexibility so that, if the Government were to change the qualifying age after 2020 when the enacted changes had taken place, they could proceed to the next stage? I am conscious that we may want to wrap up matters in a reasonable time before lunch, so it may be appropriate for the Under-Secretary to start casting some interest and concern into such issues. We do not want to reach a final conclusion now, but we should like to see the colour of her thinking.

Maria Eagle (Labour, Liverpool, Garston)

The hon. Gentleman has again said that the amendments are probing amendments, so I shall not assume that he wants them incorporated into the Bill. They would make slightly odd changes to it; they would not cause substantial problems if they were accepted. In fact, they would not be of much practical use at all. Amendment No. 16 would allow the Secretary of State flexibility to break the link between the state pension age and the qualifying age for pension credit. It is interesting that the hon. Gentleman should be so kind as to allow the Secretary of State such flexibility.

The hon. Gentleman rightly spotted—and, given that such action was taken under his Government, I would have expected him to—that we are moving gradually towards equalisation of the age at which basic state pension is received by men and women, which is 65 years. While that age is often referred to in common parlance on the street as the pension age, no one is obliged by the state to retire at 60 or 65. They are the ages at which basic state pension becomes payable. It is possible for people to defer taking basic state pension at those ages and consequently to receive a higher pension when they do retire.

I refer to when I was a lawyer. There is something known as the usual retirement age in most workplaces and many contracts of employment require people to retire at a certain age. However, there is no standardisation within industry, although terms may vary. There is nothing in law—in black and white—that says that a man must retire when he hits 65 or that a woman must retire when she hits 60. I accept the hon. Gentleman's point that we are moving towards equalisation in the age at which one receives a basic state pension, unless it is deferred.

Tim Boswell (Conservative, Daventry)

The Under-Secretary is being characteristically helpful on these important issues.

I wish to make a point that is genuinely intended to help the Under-Secretary, and on which she might wish to reflect instead of responding now. I understand that, from 2010, when the process of integration or consultation begins to take place, the deferring supplements for the retirement pension will be

increased. She might like to reflect on—and comment on, either now or later—the fact that there has been a secular decline in those deferring their pension, partly because the earnings rule has run out. It might be interesting to look at how much one can encourage people to continue working, if they are fit and well.

I turn to the dismissal of people on account of their age. I think that we would all want to get away from that kind of concept. Although the Under-Secretary says that that is not set down by the state, it may be set down by contract. She might wish to reflect on the point that, if people are fit and genuinely able to do their duties, they should not be pushed out on account of their age.

Maria Eagle (Labour, Liverpool, Garston)

I could not agree more with the hon. Gentleman on that point. The Government are committed to legislation to try to deal with age discrimination by 2006, but that is not in this Bill, so I will not discuss it now.

The Bill has arrangements within it to deal with equalisation. Equalisation is a good thing in itself. The hon. Gentleman asked whether equalisation was the end of the move to change the age at which one receives the basic state pension, or whether there was more to do, with regard to the contemplation of that. There is a discussion going on, which no doubt will continue, about whether the basic state pension should be received at 65, at 67—as the Institute for Public Policy Research suggested—or at any other age that one might choose. Personally, I would like to go on and on: I am not planning to stop at 67, and I am not contemplating retirement at the moment.

That debate will continue, but it is important to note that the positive effects of deferring the age at which the basic state pension is payable that are spotted by organisations such as the Institute for Public Policy Research are not always as obvious as they appear, because one of the problems that we face is that many people who are effectively in retirement now are well under the age at which they would normally be receiving their basic state pension. Currently, a third of people between the ages of 50 and their state retirement age of 60 or 65 are not economically active. It would be nice if we could get those people working.

With regard to that matter, there is a mix between employment policy and pensions policy; they are intertwined. Often opinions about the beneficial effects of deferring the payment of the basic state pension do not take into account the fact that many people who are well under that age are not working.

Steve Webb (Liberal Democrat, Northavon)

Can the Minister clarify how the deferral interacts with the pension credit? If I were 65, and I decided to wait a year before drawing my pension, and to draw it at an enhanced rate a year later, how would my income be assessed for the purposes of pension credit when I am 65? Am I deemed to be drawing a full basic pension, or is there some incentive to defer?

Maria Eagle (Labour, Liverpool, Garston)

That is a good point. As I understand it, pension credit becomes payable at 65, and one is deemed to have the basic state pension in payment, regardless of whether it has been deferred. Therefore,

by deferring retirement, one does not defer one's entitlement to pension credit. I think that I have correctly interpreted the hon. Gentleman's point; no doubt he will leap up, if he is thinking of another matter.

I wish to make some points about the amendments, as that is what we are discussing. The hon. Member for Daventry is kindly including a provision in the Bill to enable the Secretary of State to change that age, if it were to go up—and we are assuming that it would go up, rather than down. However, normally we would require primary legislation to change the age at which people receive their basic state pension. In the normal way of things, we would expect to make all relevant consequential amendments to other legislation in that primary legislation. It was kind of the hon. Gentleman to try to give the Secretary of State an additional power, although that is not necessary at this time. He may consider, on reflection, that such a measure would be redundant if it were added to the Bill. Those of us who want the Bill to be easily understood, something to which we all will aspire when we reach clause 3, would not wish to include in it unnecessary measures so, although helpful, the hon. Gentleman's assistance is unnecessary in this instance.

The hon. Gentleman has forgotten some consequential matters that he would have spotted if he were really on the ball. If he had shown the amendments to his daughter, I am sure that she would have spotted them immediately. References to the age of 65 elsewhere in the Bill would also need to be allowed to slide upwards. Although I understand his argument, the amendments would be redundant and would also cause awkwardness if they were ever to be enacted. Given that the hon. Gentleman said that the measures were probing amendments, I hope that he will withdraw them.

Tim Boswell (Conservative, Daventry)

I am grateful to the Under-Secretary. The probing amendments have generated a little debate. Frankly, I could have enjoyed more debate on deep-seated issues to do with older people. It is much better if a debate on the pension age is carried out coolly and not by megaphone diplomacy or preconception. Above all, if we eventually decided to change the pension age—whichever party was in power—I hope that it will not be a penal exercise because there will be people who for good reasons feel it appropriate to retire early. They may feel that their contribution to working life is over. We may want to make such a change more flexible and study other ways in which to make it. We could debate at length how to set up a system.

The hon. Lady reasonably referred to the likelihood of a change. If we considered that—I believe that her party would be the same—I am sure that we would be looking upwards not downwards. That is consistent with what happened in 1995 and equalisation. Furthermore, we must bear in mind the passage of events and the welcome increase in longevity, and the fact that people live to greater ages and enjoy long periods of retirement of 20 or 30 years. We have no problem with that, let alone any implied suggestion that we would want to reopen the distinction between men and women. No one wants to do that. I am

relieved that no one has set up an Aunt Sally in that area.

It has been useful to touch on the issue. I am sure that it will return in a different context and, as the Under-Secretary said, in different Bills. For the time being, given that we have had a preliminary canter around such an important issue to which none of us has an easy solution, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Steve Webb (Liberal Democrat, Northavon)

On a point of order, Mr. Griffiths. I have a slight sixth sense that we may be drawing our morning sitting to a close. We may reach clause 3 this afternoon and, as that was the subject of the background note to which the Minister referred this morning when he said that he had intended, but had omitted to circulate it to members of the Committee, will you do all in your power to ensure that we have

sight of that enclosure in advance of this afternoon's sitting?

Win Griffiths (Labour, Bridgend)

I think that the Minister has heard what the hon. Gentleman said.

Ian McCartney (Labour, Makerfield)

I apologise again to the Committee, but may I make it clear that the omission should not affect the debate? The enclosure was simply a personal attempt to engage with members of the Committee. What started off as a simple exercise has become more complicated than the clause itself. I apologise again.

Win Griffiths (Labour, Bridgend)

It is clear that the enclosure is additional to the notes that have been circulated already and that it should not affect what happens this afternoon. However, I am sure that the Minister will do his best to ensure that it is available.

Further consideration adjourned.—[Angela Smith.]

Adjourned accordingly at ten minutes to One o'clock till this day at half-past Four o'clock.

Standing Committee A

Clause 1 - Entitlement

James Clappison (Conservative, Hertsmere)

I beg to move amendment No. 19, in page 2, line 4, at end add—

'(7) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report setting out—

(a) the number of those entitled to the state pension credit;

(b) the number of those entitled to—

(i) the guarantee credit alone;

(ii) the guarantee credit and the savings credit; and

(iii) the savings credit alone;

(c) the number of entitled persons claiming the credits set out in paragraphs (a) and (b) above;

(d) the take up in terms of expenditure in respect of each of the categories set out in paragraphs (a) and (b) above;

(e) details of the steps taken to encourage those entitled to state pension credit to make a claim for it, and of the steps to advise those making such claims;

(f) representations made to the Secretary of State by the Social Security Advisory Committee or by such organisations as may seem to him representative of the interests of pensioners in connection with the operation of state pension credit.'.

Peter Atkinson (Conservative, Hexham)

With this it will be convenient to take amendment No. 20, in clause 3, page 3, line 34, at end add—

'(9) The Secretary of State shall as soon as practicable after the end of the fiscal year 2004–05 and as soon as practicable after the end of each fiscal year thereafter lay before Parliament a report containing an assessment of the effect of the savings credit on the propensity of individuals to save for their retirement.'.

James Clappison (Conservative, Hertsmere)

I welcome you to the Chair, Mr. Atkinson, and I look forward to serving under you.

The amendments address the extent of the take-up of the pension credit and the relationship between that and saving. We hope that the Minister will regard the modest but constructive amendments in a helpful spirit.

Amendment No. 19 addresses the question of take-up. Much of what has been said about the pension credit has been postulated on the basis of a take-up of 100 per cent. However, we know from other income-related benefits that take-up will be much less than that—I believe that the Government accept that. Indeed, the Department for Work and Pensions stated in its memorandum to the Select Committee on Work and Pensions that the assumed take-up for the pension credit is 67 per cent. in its first year. However, the Department was unable to satisfy completely the Committee on the level of take-up in subsequent years. I venture that because the Committee concluded:

''We were concerned about the Department for Work and Pensions' inability to produce reasonable estimates for such an important figure as the take-up of a key Government benefit. We urge the Government to set out clear, and achievable, targets for levels of take-up of the Pension Credit.''

Tim Boswell (Conservative, Daventry)

My hon. Friend makes a compelling case. Does he agree that the whole business of assessing how the system is turning out is germane to the concerns expressed by the Select Committee that the long-term cost, evaluation and evolution of the pension credit scheme are almost entirely opaque?

James Clappison (Conservative, Hertsmere)

I may use the word ''opaque'' in a slightly different context later in my contribution. However, the future cost of the pension is important for the reasons that my hon. Friend mentioned and because organisations, interest groups and future pensioners need as much clarity as possible on the subject. That lies at the heart of the modest amendment, which would enable the Government to throw more light on the matter to satisfy bodies, such as the Select Committee, that are not completely happy.

As the Minister will know, many interest groups and organisations that gave evidence to the Select Committee were worried about take-up. Two of the many organisations were Age Concern and Help the Aged. Help the Aged said that

''benefit take-up is extremely important for a number of reasons.''

Although I shall not go into all the reasons that Help the Aged set out, two are particular salient to our debate. First, it said:

''older people are less likely to be receiving the benefits they are entitled to than people of working age. This is particularly so for Income Support . . . where pensioners are much less likely to be claiming their entitlements than younger people''.

That relates to lack of take-up by older people. It continued:

''worse, the proportion of older people who are entitled but not claiming has been increasing in recent years. Older people are now less likely to be claiming their entitlements than they were when Labour came to power''.

I am sure that that worries all members of the Committee—it certainly worries Help the Aged.

Kevin Brennan (Labour, Cardiff West)

The hon. Gentleman would, as we do, wish to see the maximum possible take-up of the pension credit. Is it not, therefore, important to be careful about the language that we use in discussing the Bill, which will pass into law, and ensure that we do not put people off applying for pension credit by irresponsibly banging on about the means test when it clearly does not conform to the image of the means tests of the 1930s and national assistance that he is trying to put into pensioners' heads?

James Clappison (Conservative, Hertsmere)

I shall discuss means-testing in a moment. Hon. Members may have had the opportunity to study all the evidence submitted to the Select Committee. That is one of the factors about which organisations that represent older people are most worried. Given the spirit of the hon. Gentleman's intervention, I hope that he will encourage the Minister to examine the amendment even more carefully and attentively. Amendment No. 19 is

drafted in characteristically moderate language for Conservative Members. Its purpose is to bring to light the factors that the hon. Gentleman mentioned, and it should find favour with him.

One factor that we must bear in mind in considering why older people do not always claim the income-related benefits to which they are entitled is their attitude to means-testing. According to Help the Aged:

''All the evidence suggests that there are large numbers of pensioners who are resistant to means testing.''

Research carried out by the Government has found that a substantial proportion of those who do not claim the minimum income guarantee have what is described as ''attitudinal resistance''. Help the Aged is far from alone in expressing that view. In evidence to the Select Committee from a wide variety of organisations and interest groups from different parts of the political spectrum, including the Institute for Public Policy Research, similar concerns were expressed.

Julian Brazier (Conservative, Canterbury)

My hon. Friend makes a powerful point. Does he agree that the Minister's remarks this morning emphasising that the Bill should be regarded as an anti-poverty measure and classed with benefits such as income support will further underline that point?

James Clappison (Conservative, Hertsmere)

My hon. Friend makes a good point. The Minister regards the Bill as an anti-poverty measure and will want maximum take-up. He will therefore want the fullest possible information about take-up so that that can be brought to light.

David Cairns (Labour, Greenock and Inverclyde)

I am reading the amendment with interest. In paragraph (e), the hon. Gentleman wants to know

''details of the steps taken to encourage those entitled to state pension credit to make a claim for it''.

Is that an undertaking from the Conservative party that there will be an end to the constant bleating about the cost of the Government promoting such important benefits to people? When we tell people about the benefits to which they are entitled, all we hear from the Opposition is that that is Government propaganda. Presumably, therefore, the hon. Gentleman is saying that he will now not complain about that cost.

James Clappison (Conservative, Hertsmere)

The hon. Gentleman tempts me away from the spirit of the amendment, which asks for details of the steps taken. I should have thought that he would join us in wanting such matters to be explained to people, as they are not entirely self-evident.

Patrick Mercer (Conservative, Newark)

If the methods of promoting take-up of entitlement were effective and so many people were not left out of the equation, the complaints might be fewer.

James Clappison (Conservative, Hertsmere)

I do not know whether the hon. Member for Greenock and Inverclyde (David Cairns) takes an interest in the subject. If he does, he will know that one of the main concerns expressed was that some expensive advertising campaigns apparently had little effect. I am sure that he would welcome research into

that. I can think of several examples with regard to social security. I am sure that he joins us in wanting to ensure that money is well spent.

Amendment No. 20 relates to saving, which is an extremely important issue that we shall discuss in different contexts. Once again, we simply want to bring matters to light and have as much information as possible about the consequences that flow from the Bill.

On Second Reading, the Secretary of State said:

''It should surely also be an objective of the Government to put in place incentives to encourage people to save.''—[Official Report, 25 March 2002; Vol. 382, c. 606.]

For our purposes, the question is whether the Bill will encourage more people to save. Will it enable that objective to be fulfilled? In many ways, the Bill is a follow-on from the minimum income guarantee, which created a disincentive for saving through the withdrawal of benefits at the rate of 100 per cent. in respect of savings-generated income that falls beneath the guarantee level.

This morning, Ministers said that the Bill promotes saving; it has to because of the measures that the Government took with the minimum income guarantee. They are putting the minimum income guarantee at a substantially higher level than the state pension, and it is likely to get higher still. That created the need for the measure. We must ask whether the provision puts right the disincentive that was originally created by the Government through the minimum income guarantee.

Kali Mountford (Labour, Colne Valley)

Will the hon. Gentleman give way on that point?

James Clappison (Conservative, Hertsmere)

Certainly, but I hope that the hon. Lady will not—

David Cairns (Labour, Greenock and Inverclyde)

Ask a hard question.

James Clappison (Conservative, Hertsmere)

The hon. Lady may certainly ask a hard question; I shall do my best to answer it. I hope that she is not going to suggest that the minimum income guarantee is not a disincentive to save, because that is the Government's case.

Kali Mountford (Labour, Colne Valley)

I should merely like to refer the hon. Gentleman to paragraph 23 on page 14 of the Select Committee report, which welcomes the recognition and extra reward that the pension credit will provide. The paragraph also mentions the minimum income guarantee. Surely we must consider pensioners' provisions as a whole, and not point by point, as he has tried to do.

James Clappison (Conservative, Hertsmere)

My question for the hon. Lady is this: will the extra reward that the pension credit establishes encourage saving? We know that there is no incentive for saving for those who see their every pound—100 per cent. of the savings they accrue—taken off their benefits. The Government know that. We must now ask whether the reward and withdrawal system that the Government are putting in place will create an incentive to save. As the hon. Lady has studied the Select Committee's report, she would do well to consider also the evidence given to the Select Committee by expert groups. One of the points made by the expert groups was that the Government's

proposals do not entirely remove the 100 per cent. disincentive to save. Many groups are still subject to that disincentive.

As the hon. Lady and other hon. Members are evidently interested in the subject, I shall ask them some questions. Perhaps they would like to tell me whether they agree with the view that has been expressed about those—there are many of them—who are entitled to less than the full basic state pension. The first part of such a pensioner's personal savings will be used to bring them up to the level of the basic state pension and will not attract the additional savings credit. They will face a rate of withdrawal of 100 per cent. Quite a large number of those people are women who for historical reasons have not have the opportunity to accumulate a full savings record.

The hon. Lady will be interested to know that that is not the only case in which women are the losers. There is also the case of women who are aged between 60 and 65. They become entitled to the guaranteed part of the credit at 60, but they are not entitled to the savings credits until they reach 65. Presumably, between 60 and 65, if they fall within the appropriate threshold and have savings, they will have a rate of withdrawal of 100 per cent. and will gain no benefit from their savings in that period of their lives. If I am wrong about that Labour Members will put me right, but that seems to be explicit in the Bill. Those two substantial groups, one consisting exclusively of women and one of many women, will have a 100 per cent. withdrawal of their savings under the proposals.

Tim Boswell (Conservative, Daventry)

If my hon. Friend looks in detail at the Select Committee Report, as I am sure he has, he will see that paragraph 31 on pages 16 and 17 suggests that the Department had some difficulty estimating the number of those with incomplete rights. The Select Committee's conclusion was that

''there will be around 50,000 pensioner 'benefit units' who have private income for which they will see no benefit . . . Another 2–300,000 will be 'rewarded' for only some of their private savings.''

That is quite a significant number of pensioners.

James Clappison (Conservative, Hertsmere)

My hon. Friend's point is so important that I am sure that we will come back to it when considering other clauses and amendments. For the purposes of this amendment, it is extremely relevant to whether it creates a disincentive to save.

I wish to move on from those who suffer 100 per cent. withdrawal from their savings. There will now, under these provisions, be for many others a much lower rate of withdrawal of 40 per cent. after they reach 65, and then it is the Government's case that those people will see a benefit from having saved. It is beyond peradventure that they will be better off by saving at that stage of their lives than those with no savings at all, because they will have the benefit of 60p in the pound for every £1 of their savings. However, that by itself does not fully address the question of whether they will find it worth their while to make savings earlier in life—whether there will be an incentive for them to save—because, to put it bluntly, what they save earlier in life will be subject to a 40 per cent. rate of effective tax later on.

As the hon. Member for Colne Valley (Kali Mountford), who is interested in the Select Committee, will know, that point is made much more elegantly, and with far greater authority, by the Association of British Insurers, in its analysis of the implied rate of saving for those in the relevant circumstances. Its analysis looks at the implied rate of return for an individual saving £50 a month and, as the hon. Lady and others may know, it defines a negative implied rate of return as suggesting that saving, in fact, has a net cost to the individual; less value is received in increased retirement income than is paid through contributions.

In its evidence to the Select Committee, the Association of British Insurers compares the present situation with the minimum income guarantee, and then the situation that will appertain under the pension credit. It concludes:

''Under the Pension Credit as outlined in the State Pension Credit Bill saving is more worthwhile for those saving for short periods of time than it is now, but the implied rate of return is still negative for more than 10 years. This is because any saving results in a reduction in income from MIG and Pension Credit of 40p for every £1 of saving income.''

The Association of British Insurers is not alone in expressing concern about the impact of the pension credit on savings behaviour. Similar concerns are expressed by the Institute for Fiscal Studies, the Institute for Public Policy Research, and many other interest groups, as well as those who have financial expertise in the field, and many of the interest groups and organisations that represent elderly people. Age Concern succinctly states:

''Given full information people may decide that if say £10 of extra income is only going to make them £6 a week better off (or possibly far less if they are also entitled to other means tested benefits) it would be better to spend the money when they are younger.''

I am not a financial expert of any description, but against this background and having read the views of these financial experts and the concerns of others, it seems to me that there is great uncertainty about the effects of the pension credit, to say the least. The uncertainty is increased by the fact that, evidently, more and more people will be drawn into it, at least for the foreseeable future—as we know, they will be drawn into pension credit, as the threshold increases in line with earnings. That point is made by the Institute for Fiscal Studies.

It has been argued in some quarters that all of this is unlikely to fall within the contemplation of pensioners. It is not my experience that pensioners are entirely uninterested in the effective treatment of their savings under the tax and benefit system, especially when it comes to what they regard as instances of double taxation. I am referring not only to pensioners, but to those who advise them. These days, more individuals receive professional financial advice. Those advising people who are looking towards their retirement will need to be aware of the treatment of savings under the pension credit system and will face difficulty in discharging the unenviable task of studying the effect of the pension credit in individual cases.

I am not intimately connected with the Institute for Public Policy Research, but it has an interesting

perspective on such matters. My hon. Friend the Member for Daventry will be pleased to know that it used the word ''opaque'' when it said:

''the Pension Credit is a highly opaque means of generating the right incentives; it is extremely difficult for individuals to know what to expect from it, especially over the long time periods relevant to retirement planning. The problem does not just affect the individual planning for their own retirement: professional advisers are in a similar position in respect of their clients.''

The Minister may put a different complexion on such matters and put forward compelling arguments about the effect of the pension credit on savings. If he does, he will make a case for the amendment. It seeks to bring to light what happens with savings behaviour under the pension credit system. The Government's case is that pension credit will promote saving; that it will not only give pensioners an extra reward, but that it will create an incentive for saving earlier in life. So surely the Minister will look with some favour on the amendment because the Government will want to be as brave as their words about the pension credit and will want to make full information about it available. I hope that he will regard the amendments in the constructive and moderate way in which they are couched. We are asking only for information to be brought to light so that the exact effects of the measure are known.

Steve Webb (Liberal Democrat, Northavon)

I welcome you to the Chair, Mr. Atkinson. I have much sympathy with the amendments . The hon. Member for Hertsmere (Mr. Clappison) put the case well. Amendment No. 20 is probably pointless, however. As an academic, I suppose that I should not vote against more research being undertaken but, even if the amendment were accepted, the report that would result from it would be almost unilluminating. As an analogy, I cite yesterday's debate about the effect of the new deal with one side saying that it had been tremendously successful and the other side saying that it had been relatively unsuccessful. Vast amounts of research have been carried out into that, yet each side of the House chose to use the figures that suited it from which to draw its own conclusions. The problem with such matters—as with amendment No. 20—is that we are trying to work out what would otherwise have happened, how much of the effect was due to the specific measure and how much of it would have happened anyway. In matters such as the new deal, we could probably go a long way down the road of working out what may have happened anyway, but to work out total savings is extraordinary. We do not even know how much savings there are. Governments are bad at knowing the history of savings. As the hon. Member for Havant (Mr. Willetts) regularly reminds us from the Opposition Front Bench, the Government do not know the current amount of pension savings to within tens of billions of pounds.

Tim Boswell (Conservative, Daventry)

Will the hon. Gentleman acknowledge that no less than the Association of British Insurers has estimated that the annual current savings gap is in the order of £27 billion, which is a lot of anyone's money even if the figures are not precise.

Steve Webb (Liberal Democrat, Northavon)

It is indeed. There is a substantial savings gap, but even the best of researchers would struggle to reach a robust conclusion whether a particular measure had influenced the behaviour of a group of current workers to save more or less, rather than the many other issues that may be affecting their savings behaviour. Although I understand where the hon. Gentleman is coming from, my fear is that even if we had such a report it would not convince anyone either way. I would not object to such a report, but I doubt whether it would be possible to disentangle its findings from the many other things that affect people's propensity to save, among which the proposal is, as he and I probably agree, likely to be peripheral. Trying to ascribe an amount to it is, I suspect, almost impossible.

Far more practical and desirable is amendment No. 19, which would require the Secretary of State to put in the public domain reliable information on the numbers receiving the different components of the pension credit and the numbers entitled to it. The issue of take-up is fundamental to assessing the pension credit, and the hon. Member for Hertsmere is right to raise it.

We should be especially worried about take-up. The Government are doing a good thing. They are contacting people when they reach pension age and telling them about retirement pensions and pension credit. Over time, that will tend to increase take-up. That is entirely good, and the Government should have done that a long time ago. I support the Government that far. The problem with hitting people at 60 and suggesting that there might be quite a good level of take-up on the inflow is that it will be about another 40 years before everyone has been through the process. All Committee members would want some serious progress on take-up substantially more rapidly than that. We cannot merely wait until everyone in the system now has worked their way through, as we shall probably all be dead by then. We need to make more rapid progress.

Reports such as the amendment suggests would put pressure on the Government to give us reliable figures on take-up. One of the more disappointing aspects of the Department for Work and Pensions and its predecessor in recent years is that it has been rubbishing its own take-up figures. Lord Rooker of Perry Barr, the previous Minister with responsibility for pensions, was fond of saying, ''These are not real people; they are just statistics.'' Yet the surveys on which take-up estimates are based are surveys of real people. Interviewers go to households, sit in front rooms with laptop computers, go through people's circumstances and calculate that those people are entitled to benefits and are not claiming them. To say that they are not real people is absurd.

Maria Eagle (Labour, Liverpool, Garston)

Does the hon. Gentleman accept that Lord Rooker meant that the figures were based on a 5 per cent. sample and that they are extrapolated from that figure? Although they are statistically meaningful, that is what he was referring to. We have not counted up all the people.

Steve Webb (Liberal Democrat, Northavon)

I take the hon. Lady's point; indeed, the figures were based on a sample of much less than 5 per cent. However, as the Minister responsible for pensions, the noble Lord was trying to rubbish the figures and to suggest that, because when Thora Hird did her stuff in all the adverts, the number of people who ended up claiming extra was nothing like the numbers in the take-up figures, they did not really exist on the scale that his figures suggested. That was what he tried to imply, as the record will show.

That is dangerous. I should feel pretty disheartened if I were an official in the Department constructing the take-up figures, which take months of careful statistical analysis, to find the Government rubbishing their own figures because those figures are inconvenient.

As I believe the Minister or one of his colleagues said yesterday, a margin of uncertainty is attached to the figures. We accept that. They are estimates. They are based on a sample, and the recording is not necessarily always accurate. However, it is clear that large numbers of pensioners, whether a third of a million or two thirds of a million—that is the sort of range with which we are dealing—are missing out.

The danger with a proposal such as the pension credit—the reason why amendment No. 19 is so welcome—is that the problem will get worse. It will get worse not for the 60-year-olds who receive the letter, who are more likely to claim—I welcome that—but for the stock.

The fundamental reason why take-up might end up being lower, possibly for years, relates to why a person claims a benefit. People claim a benefit if they believe that they might be entitled to it. That has to be the first thought. They hear about it, read about it and think, ''That could be for me.'' If the circumstances involved and the system are so complicated that it is not possible to work out readily whether it might be for them, or it does not occur to them that it might be for them, take-up could end up being lower. With the MIG, or income support, or whatever we call it, if a Minister says that everyone receives £100 a week, and people think, ''I'm not getting £100 a week; maybe that's me'', fair enough. However, if we start talking about people possibly being entitled to a tapered disregard, people's eyes immediately glaze over.

Tim Boswell (Conservative, Daventry)

Is it not also important that we examine the stock of people who might be in receipt, or otherwise, of pension credit? If their circumstances change while they are in receipt of the benefit, although they may receive something, they will not be paid their full entitlement. Even if there is the entry point of the allocation of the first state retirement pension, people whose circumstances change two and a half years down the track will not know that they are under-recorded and receiving less than their entitlement.

Steve Webb (Liberal Democrat, Northavon)

The hon. Gentleman makes an important point. There is absolute non-take-up by people who are entitled and do not receive, and there is an under-entitlement of people who would be entitled to more if the correct assessment was made. The

amendment would prompt the Government to take their own figures seriously—rather than rubbishing them, as they are prone to do—and to work harder to give a higher profile to the system and to increase the impetus of the drive for take-up.

James Purnell (Labour, Stalybridge and Hyde)

The hon. Gentleman argues that people will not apply because they will not know the exact amount to which they are entitled. People on the doorstep know that an injustice is going on because their small private-sector pensions are completely taken away under the current system. It would be easy to address that through an advertising campaign because people know that they should receive recompense. The hon. Gentleman's policy would do nothing for a person aged between 65 and 75 who was losing their entire pension, but we will be able to give them the pension credit.

Steve Webb (Liberal Democrat, Northavon)

I do not quite follow the hon. Gentleman's logic. He suggests that if I were a person aged 70 with a small private pension, I may hear on the news that there is a new scheme for people with private pensions. However, the situation is not as simple as that. If I had a private pension above a certain threshold, I would not get a reward for saving because the saving credit is tapered away. For example, if I had a £80 state pension and a £55 private pension, I would not receive the pension credit. Therefore, any coverage would say that not all people with a private pension are entitled to the credit, but that some people are. That is because the scheme is tapered.

Kali Mountford (Labour, Colne Valley)

Would not a fairer analogy be drawn with the tax system? Pensioners do not have difficulty filling in their tax returns if they are not absolutely sure about what the return will accrue. Does not the system bear more similarity to a tax credit than to income support, about which people would want more precise information about entitlement? Does that cover the attitudinal problem that was mentioned in the earlier debate?

Steve Webb (Liberal Democrat, Northavon)

The hon. Lady raises a range of issues. Many pensioners do not fill in tax returns. It is unusual if a pensioner sees a tax return because two thirds of pensioners do not pay tax.

Ian McCartney (Labour, Makerfield)

Because of this Government's policies.

Steve Webb (Liberal Democrat, Northavon)

One of the Government's policies—there we go. Apparently, the goal is that fewer pensioners will see tax returns.

The poorest two thirds of pensioners, who are the target group of the pension credit, do not see tax returns—on average; some of them do. No analogy is drawn by saying that because pensioners are used to dealing with paperwork, the form will not frighten them.

Kali Mountford (Labour, Colne Valley)

I am grateful to the hon. Gentleman for allowing me to clarify that our debate has been about the attitude of pensioners, the level of take-up and whether a perceived injustice or a perception of means-testing would keep people out of the system. I tell the hon. Gentleman that many of my constituents complete tax returns or, at least, do

not have the same mental attitude about that type of system as about income support. Could the advantage not be that the attitude to this system would be different and unlike the system that he mentions?

Steve Webb (Liberal Democrat, Northavon)

The system is not seen as different because the whole thing is integrated. A guarantee credit and a saving credit make the pension credit. What is the guarantee credit? It is income support by another name, although I accept that it is more humane means-testing. The sums are done on the thresholds of the income support system. A person would claim one benefit at the same time as the other. The two could not be more intertwined. The idea that people will think, ''Oh, it's like a tax return; I don't mind filling those sorts of forms in'', is very alien.

The key point that worries me and the reason why I think that the amendment would be so helpful is that people who will be beyond retirement age when the credit is introduced, and especially people whose circumstances have changed, will experience the take-up problem. One of the good things that the Department's research on take-up has shown is that some of the pensioners who are least likely to take up are those to whom some trigger event has happened, such as hitting 75 or 80, or becoming a widow.

Governments can take action to spot people at such points in their lives, and the Department is already taking action to catch some of them. We want to know about such matters systematically. We want to learn what is being done each year, what works and what does not. We are all on the same side on that subject. If there is to be a pension credit, we want people to claim it. The point of such a report will be to apply pressure and raise the profile of take-up, and that is entirely laudable.

Bill Tynan (Labour, Hamilton South)

Will the hon. Gentleman say what benefit he believes would come from the amendment, and what numbers would take up the credit if the amendment were passed? He argues that we would have additional take-up.

Steve Webb (Liberal Democrat, Northavon)

I haven't a clue how many people would take up the benefit. The take-up figures are almost an irrelevance, first because they are woefully out of date, and secondly because when they are published the Government rubbish them. Reliable estimates of take-up are not part of the debate. If we had quoted a figure of 500,000, previous Ministers would have said, ''Well, they are not really people,'' or ''It's only statistics,'' or ''We don't really know.'' The current Minister and his colleagues say that there is such a huge margin of error that we cannot have any confidence in the numbers, so take-up gets downplayed.

If the amendment were passed, we would know what the Government do every year, what works and what does not, and whether take-up was going up or down. If the system were to change—and, for goodness' sake, the systems are always being changed—we would get a feel for whether the change had helped or hindered take-up. The report would put take-up on the agenda. We could debate what the Government were doing about take-up every year.

There is no way that that could not at least help. I have no idea how many extra people the provision would bring on board. I simply cannot guess.

Kali Mountford (Labour, Colne Valley)

Can the hon. Gentleman tell me how that would be different from the general review of the Department in the annual report?

Steve Webb (Liberal Democrat, Northavon)

Given that the Department produces take-up estimates periodically anyway, I suspect that the cost would not be noticed in a £100 billion departmental budget. I suspect that the sum of money that we are talking about could be spent in an afternoon by the Minister. It is negligible compared with the good that it could do in ensuring that people got the money to which they were entitled.

The hon. Member for Hertsmere alluded to the position of women. Older pensioners are less likely to claim, and we know that older pensioners are more likely to be women. There is plenty of evidence that those who are missing out, in some cases on quite substantial sums, are predominantly women. A colleague of mine asked me what a pensioner neighbour of his who was struggling to get by could do. He described the circumstances. I said, ''Clearly, she is entitled to income support, as she is a pensioner.'' The other day he thanked me for that advice. The pensioner is now getting £20 a week that she did not receive before.

Some Labour Members seem to think that take-up will be better under a really complicated scheme. Under the current scheme, people are promised a minimum level of income that anyone can claim, but some 500,000 of them do not, and we have all met some of them. If that is so, there will be a real problem with a more complicated scheme.

Kevin Brennan (Labour, Cardiff West)

The hon. Gentleman is very generous in giving way. Will he accept that pensioners will be more likely to take up the credit when the so-called means test is much less onerous than it is for income support? He himself described the proposed means test as humane. Perhaps if he stopped using the kind of language used by Opposition Members to try to put fear into people about a means test, more and more pensioners would take it up.

Steve Webb (Liberal Democrat, Northavon)

As I said on Second Reading following a similar intervention, I doubt my influence. I doubt whether using that phrase makes a blind bit of difference to the pensioners in the hon. Gentleman's constituency, who, I strongly suspect, do not know who I am, amazing though that may seem.

Kevin Brennan (Labour, Cardiff West)

Underestimate constituents at your peril.

Steve Webb (Liberal Democrat, Northavon)

The key point is that a more complex system will have a lower take-up rate than a simpler one. That must be true because people make a claim if they think that they might be entitled. If any fool can see whether a person is entitled, that person might make a claim. If the means test is complicated and a person thinks that he or she might not be entitled, they might not claim. That stands to reason.

Maria Eagle (Labour, Liverpool, Garston)

Is the hon. Gentleman arguing that the guarantee credit, which is the equivalent of the

minimum income guarantee, is more complicated than the minimum income guarantee?

Steve Webb (Liberal Democrat, Northavon)

No, I am not. I am saying that savings credit is what makes it all more complicated. The guarantee credit aspect of it is streamlined, compared with the minimum income guarantee, and there are a number of things in the guarantee credit that are a move in the right direction. It is the added complexity of the savings credit that means that the overall take-up of the combined pension credit risks being lower than for the existing minimum income guarantee.

Maria Eagle (Labour, Liverpool, Garston)

I thank the hon. Gentleman for giving way again; he is being very generous.

I would have a lot of sympathy with what the hon. Gentleman was saying if we were requiring pensioners to do the paperwork themselves. In fact, if we were to do that, the take-up rate might fall substantially, from whatever it is to an awful lot less. However, all we are asking pensioners to do is to tell us their circumstances in a much simpler way—and less frequently. Surely that should encourage take-up.

Steve Webb (Liberal Democrat, Northavon)

We are introducing a new element that has not been there before. The savings credit is an entirely new element. It is bringing in a new group of people. It can be argued that there is some evidence that there is a pride barrier to claiming any sort of benefit apart from the pension. We are bringing in the next tier up of pensioners—perhaps another fifth or sixth, or whatever the figure is—who are more likely to have the pride barrier, because they are the small savers. It is a group of people for whom the attitudinal problems might be greater, and it is a more complicated scheme.

Of course, we are not asking pensioners to do the sums themselves, but I keep coming back to the same fundamental point: who initiates the claim? The Government will write to people of 60 years of age, but who contacts a 73-year-old who, let us say, becomes a widow? Ideally, the Pension Service will pick her up; it would be great if that were what happened. However, what if something else happens?

On Second Reading, I used the example of Railtrack shares. If they were suddenly to collapse in value, an investor's capital would go down, their imputed income tax would go down, and they would become entitled. Would such people suddenly think, ''Oh, I might be entitled to a savings credit now''? I do not think that they would. They would become a person who does not take-up, which is why an amendment is needed.

Kevin Brennan (Labour, Cardiff West)

I am grateful to the hon. Gentleman for giving way. He mentioned my constituents earlier; I am sure that I am not known to the people of Northavon either. However, on his travels around his own constituency, has he never come across any pensioners on the doorstep who have been crying out for exactly this sort of measure? If he has not, he must represent a very strange constituency. In my experience, there is a huge latent demand for this kind of thing, and I predict to him—I am prepared to have a bet with him about it—that take-up will be higher.

Steve Webb (Liberal Democrat, Northavon)

What I have discerned from my discerning constituents is that what they resent is the position that they have been put in, where their savings have stopped making them better off than the person next door, and that problem has got much worse over the past four years.

Four or five years ago, the pension was very close to the means test. [Interruption.] The hon. Member for Cardiff, West (Kevin Brennan) is shifting ground here. With regard to the pensioners who resent the fact that their small savings are not doing anything for them, four or five years ago their savings lifted them clear of income support, and they got benefit from having saved, because they were a few pounds better off than the neighbour who had not. They are the people who I meet on the doorstep who say, ''I am no better off, because there is not a chasm between the pension and the means test.'' The fact that the savings credit will marginally ameliorate that does not take away their resentment.

I have hogged a lot of the Committee's time, but I wish to respond to one further intervention. However, I want to return to the point on women, and then I will try to conclude my remarks.

Kali Mountford (Labour, Colne Valley)

I hope that I will not delay the hon. Gentleman too long. Surely he remembers that, under the old system, pensioners would tell us on the doorstep, ''My neighbour's on income support and gets everything that comes with that. I have a little bit of saving and therefore I get nothing''. Does he not see that this measure starts to bridge the gap between the poor and the relatively poor, and gives some benefits to those with small savings?

Steve Webb (Liberal Democrat, Northavon)

The point that the hon. Lady seems to be missing is that the number of people who feel that their savings have got them nowhere has been increasing. This Bill may, at the margins, reduce that number.

The hon. Lady is forgetting that, when her party came to power in 1997, the gap between the pensions and the means test was small. I forget the exact figure, but I think that it was about £6 or £7 a week. Next year, it will be £23 a week. When her party came to power, a person with £23 of private saving was £17 better off than the neighbour on income support. Now, that person is no better off than the neighbour on income support, so we have to have another scheme to give back to such people some of the money that they lost as a result of the increase in means-testing, to put them in a position that is relative to their neighbour. [Interruption.]

Peter Atkinson (Conservative, Hexham)

Order. The hon. Gentleman accepted an intervention and I should be grateful if hon. Members would allow him to respond.

Steve Webb (Liberal Democrat, Northavon)

Thank you, Mr. Atkinson. The Bill goes some way to deal with a problem that has been greatly exacerbated in recent years, but it does not go the whole way because people, instead of being clearly means-tested and receiving the full benefit are, at the best, receiving 60 per cent. of the benefit of their savings.

Maria Eagle (Labour, Liverpool, Garston)

I am not trying to make partisan points, but they are technically correct. The gap that the hon. Gentleman describes is basically due to the fact that the previous Conservative Government decoupled the basic state pension from earnings upratings. Consequently, there was much recipient poverty and it was becoming worse. The means test, the minimum income guarantee, income support—members of the Committee can call it what they will—is there to tackle that problem, hence the gap. Is it not still the hon. Gentleman's party's policy to increase the basic state pension in line with prices? That will not deal with the problem. We are dealing with it.

Steve Webb (Liberal Democrat, Northavon)

Obviously, my party's policy is not related directly to the amendment. I shall happily lend the hon. Lady a copy of the Liberal Democrats' manifesto, which pledged state pension rises of £5 for those aged 65 to 74, £10 for those aged 75 to 79 and £15 for those aged over 80, and those sums are vastly in excess even of the earnings uprating of a whole Parliament. In other words, by substantially raising the state pension, people would be clear of the means test and their savings will count.

Amendment No. 19 asked for statistics on those entitled to the

''guaranteed credit alone;

(ii) the guarantee credit and the savings credit; and

(iii) the savings credit alone''.

The Minister has often said that two thirds or three quarters of the gainers under the Bill will be women. Can we be given a breakdown of the guarantee credit and the savings credit by gender? Clearly, the minimum income guarantee is predominantly about women. It concerns poor pensioners and they are mainly women. Most of the money will go to women. When the Government say that two thirds or three quarters of the gainers will be women, I am not clear whether that is driven by the MIG and whether rewarding people with small savings is about women or men, or both equally. I do not know that information and the report proposed under the amendment No. 19 would help.

I hope that the Minister can give us in writing not only the overall figure of women gainers, but the proportion of the minimum income guarantee and the savings credit gainers who are women. I am grateful to have had the chance to pursue such important issues. As the Committee will have gathered, my key point is that take up is essential. At present, the position is unsatisfactory. The figures are out of date. They are derided by the Government. We need good, reliable evidence and the amendment would give it to us.

Tim Boswell (Conservative, Daventry)

The Committee has already been treated to two serious presentations by my hon. Friend the Member for Hertsmere and the hon. Member for Northavon, and to some lively exchanges. I seek neither to prolong nor provoke those, but merely to make a couple of points. The purpose of the amendments is to invite the Government to commit themselves to an exercise in truth when presenting the effects of the policy. Clearly, Labour Members believe that the initiative will be successful and that it will

generate huge benefits for pensioners. We have accepted that it will generate benefit to some pensioners, so we shall not rehearse that argument. However, on the assumption that it will benefit a lot of pensioners and they will take it up, the figures will show that to be so.

My hon. Friend the Member for Canterbury (Mr. Brazier) will remember the story—as would a Biblical scholar—of Gamaliel, who said that if an enterprise is from heaven, it will be successful, and if it is not, we need not bother. That is the essence of what we are saying. Let us get the information out so that we know the figures. In deference to the hon. Member for Northavon, who is the social scientist among us and has a proper interest in the matter, as do we all, let us see whether we are getting value for money and whether the thing is working. That is the substance of the amendment.

It is fair to say that the other amendment is more speculative because of the complexity of working out people's behaviour on their pension provisions from the age of 15 onwards. However, we must know what happens about payments against entitlements—take-up—and whether the system has the success that Ministers anticipate. I do not think that that is unreasonable.

I pick up two points to share with the Committee. Some members of the Committee may have read a study of ancient languages and their texts—I recommend it to hon. Members who have not read it—which may be of value when understanding the pension credit. However, if hon. Members are really students of higher criticism, they will notice a slight difference of style in the text of amendment No. 19. The earlier part is more elegant because it was drafted by my hon. Friend the Member for Hertsmere, and the latter part is rough and ready because I drafted it. Broadly speaking, paragraphs (a) to (d) are in my hon. Friend's hand, and paragraphs (e) and (f) are in mine. I shall speak to those further.

Paragraph (f) states that the report should include

''representations made to the Secretary of State by the Social Security Advisory Committee or by such organisations as may seem to him representative of the interests of pensioners in connection with the operation of state pension credit.''

We are asking for what the social scientist would call a feedback system, whether on initiative or because of a request by the Secretary of State. That would allow the outside bodies that gave evidence to the Work and Pensions Committee and made submissions to members of this Committee to continue to monitor the situation.

That process would be iterative. If the Government publish a report one year with figures on entitlement and take-up, bodies such as Help the Aged and Age Concern could come back the next year and say, ''This isn't working very well. Our analysis suggests that this is the area that isn't as good as it should be.'' There could be dialogue and what car manufacturers call a policy of continuous improvement. The hon. Member for Basildon (Angela Smith) will remember that phrase because it used to be the policy of the Ford Motor Company—we both have plants with Ford involvement in our constituencies.

We accept that the situation is not perfect now, and I hope that the Ministers accept that. It is imperfect in several respects. However, even if it were perfect, we could improve it to an extent. Therefore, it is important that continuing dialogue exists. That is a matter of accountability, and forms an important part of the wider issue of the Government's shift to a credit-based philosophy. There is a suggestion that although benefits flow through the Social Security Advisory Committee in what may be termed loosely a time-honoured way, accountability and feedback would be less developed as we move to a credit regime. We want those to be taken forward.

Paragraph (e) mentions

''details of the steps taken to encourage those entitled to state pension credit to make a claim for it, and of the steps to advise those making such claims''.

That is the essence of whether the Government's wish to improve take-up will succeed and whether the delivery of the benefit through the Pension Service will be a success. If one wanted to give a short title to the paragraph, it would be ''Let's have a talk about the Pension Service''. The Ministers know that I have expressed worries about that in the past.

If it gets about in the Committee that we are trying to subvert the success of the policy, that is an absurdly overblown attribution of our power. We have no interest in doing that. We shall play it straight and try to tell people how the system works and, above all, not rubbish the work of the Pension Service or its officials. The Minister is blessed with some excellent officials who will want the Bill to work.

I mentioned the fact that the manager of my local Pension Service centre in Leicester has been proactive and has written to me to ask whether I would like to discuss the matter. I welcome that and will respond, and I hope that other Members will do so, too.

Our older constituents have an interest in receiving a proper service. That needs saying, and I am sure that everyone will do their best, including Ministers. However, both the evidence given to and the report of the Work and Pensions Committee show some major areas of concern. I do not want to widen the debate unduly, but the concerns flagged up in the report at least suggest that as part of the process of annual accountability there should be some reporting and feedback on that aspect, too.

The relevant sections of the Select Committee report show concern about the concept of call centres, with which many of us are reasonably familiar and comfortable. Just this afternoon I had to ring a service company about having my windscreen repaired, as a stone hit it. I went through the multiple choice, had to press 1 or 2 and hang on and was told to wait two minutes, very courteously—it is a high level of service, up to a point—and did not end up slamming down the telephone in despair. It went perfectly well, but it was a 10-minute, slightly stressful process, and could be broken at any stage. I am a little younger than a pensioner and my generation was taught to argue, make its case and fill out forms. It is not as easy for every customer of the Pension Service. The dynamics of relying on a call centre, especially if

there is no local access or adequate domiciliary visits, are important.

A subset of concern expressed in the Work and Pensions Committee's report relates to the natural first language of people from ethnic minorities. Until I read the report, I was not aware of the remarkable fact that there will be no call centres in the south-east. Its Pension Service will be located in Blackpool or thereabouts. Not many people in Blackpool are natural first speakers of ethnic minority languages and so able to match the 300 languages spoken in London. I am sure that the problem can be overcome and am merely telling Ministers that it is essential that it should be.

Ministers will be aware of past analogies and that considerable concern has been expressed about the robustness and reliability of the Department's computer systems. If any of them go wrong, there will be difficulty. My biggest worry, which I do not signal—I do not want it to happen—is that if the credit gets off on a bad foot, people will be discouraged from using the system and even applying for it. Take-up and other figures will tend to move down further.

Ministers are upbeat and optimistic about how the credit will work. I hope for their sakes and that of pensioners that it does. However, to counterbalance that, I quote Tony Lynes of the National Pensioners Convention, who, as is mentioned in the report, said bluntly:

''No Government has ever before tried to means test over 5 million pensioners. The chances of that going smoothly seem to be extremely remote.''

That is his conclusion, not mine, and I hope that he is unduly pessimistic. However, the potential for difficulty exists. The policies may not work in policy terms, and they may not be delivered in terms of the service's arrival or availability to those who need to use it. We all want it to work properly. No one who serves on this Committee has no commitment to the cause of pensioners. They constitute a huge interest in this country in terms of numbers, and many of our constituents. Many of them are still under some strain and pressure of income. That is not a matter that we need to debate; we need to ensure that they are looked after properly.

The series of changes to the system were, no doubt, conceived with the best possible motives and from a wish to get the system right; I am not arguing that Ministers do not want it to work. We now have the boring business of seeing that at work. If we are to find out whether it works and whether it has the social consequences that Ministers want, we need data and a system under which there can be feedback and discussion, and under which improvements can be made. That, and no more, is what we are trying to do through the amendment.

Julian Brazier (Conservative, Canterbury)

I shall give just one example of the myriad difficulties of means-testing 5 million pensioners: how is income to be treated? The Secretary of State may announce at the Dispatch Box, ''We said all along that income from work is going to be treated the same way as income from pensions'', but if the assessment is only five-yearly and

the pensioner is doing a job in which the income varies sharply from week to week, how on earth is income from work to be treated? That question was asked repeatedly in another place at Committee stage and was never answered.

Peter Atkinson (Conservative, Hexham)

Order. The question of assessment of income comes later in the Bill.

Tim Boswell (Conservative, Daventry)

I bow to your strictures, Mr. Atkinson. Indeed, I was drawing my remarks to a close. The essential point, which goes wider than the Department for Work and Pensions, its Ministers and its policy, is that it is all very well to want things to happen—I would not deny that Ministers have a passion for them to happen—but we must get on with the job of checking that they work. If they do not, we had better level with everyone and think of a better way of doing it. We proposed the report framework so that there would be no doubt in the minds of Parliament about what is happening, what could and what needs to be done to improve matters, and whether Ministers have the will to do it. That is a basic prerequisite for putting the policy in place. That is an important part of our case.

Ian McCartney (Labour, Makerfield)

Under the guise of the amendments, we have had an interesting general debate on the reporting of take-up, women, lack of incentive both to save and to make long-term savings in the private sector, means-testing, the Pension Service, and language and other services for those with special needs.

I do not wish to stray on to the subject of clause 3. You are quite right that issues have been raised which come up in later amendments, Mr. Atkinson, but I am not trying to dodge questions. We are here to answer questions and to be accountable. If the hon. Member for Northavon permits it, I shall write with the answers to his questions. If I address my letter to the Chairman, every member of the Committee can have a copy. I can scoot into the Library or trouble you to photocopy it for them, Mr. Atkinson. I shall do that as soon as I can.

Having listened to Opposition Members for the past hour or so, I must say, so that we do not get too depressed, that on top of the 3.9 million pensioner households that gain from pension credit, another 700,000 households that will not receive the credit will gain from changes to housing benefit, council tax benefit, and the way in which capital is treated; higher applicable amounts will follow from the changes. This is still a good news story, but no one would think so from listening to members of the Committee.

Having created a massive pool of poverty, Conservative Members stick their heads in the sand. Up pop the Labour Government, and suddenly there are ways of resolving the problem. The matter is complex and difficult; we cannot simply write away poverty, and we cannot make changes to a complex pension and benefit system without difficulty. Simplification of the state benefit system and pension policy is a very complex thing indeed. One of the first

and most enduring lessons I have learned as the Minister for Pensions is how complex changes are, even when it seems right to introduce them.

Whatever happens when we challenge, change and modernise the benefit and pension systems, and whatever the relation between the public and private sectors—we have a very mature relationship in this country—none of us thinks that the changes themselves are not difficult. However, if we add to that the creation of a new Department, for the first time identifiably offering services for children, working age people and older people—bringing together 130,000 people who had never worked together before and galvanising them into new departments and agencies from 1 April—and if we add the new pension credit and other modernisation strategies, including the £1 billion plus investment in new technology to ensure that the scheme works even more effectively over time, we face a big challenge. I accept and understand that.

I also accept that the House and other institutions, such as those that represent older people, are entitled to scrutinise us and hold us to account. After all, the Department is not just providing a service for more than 1 million people a day. That service is paid for by taxpaying citizens and we have a responsibility to them. I do not duck any of those big issues—neither the complexity of the situation nor the need for us to be accountable. I shall come on to that in a moment.

I reconfirm that we are aiming for a take-up rate of 67 per cent. of eligible households during the first year to October 2004. That will mean that more than 1 million more pensioners will receive additional financial support than currently do under MIG. That in itself, as a first stage in the development and rolling out of the policy, is a major operation. Some 1 million more will be helped than are helped under MIG, and 2 million are helped under MIG who did not previously get any support. For the further hundreds of thousands who have had no support through council tax benefit or housing benefit, this is a major change, bringing more than £2 billion worth of benefit to older people.

On take-up, the hon. Member for Northavon is right that we could argue till the cows come home about interpreting figures, but we must have figures to interpret. I do not think it sensible to say that the figures look partisan—although I make partisan remarks, so I take such things on the chin—or that Ministers somehow rubbish their own figures. That is not the case. Ministers receive independent advice. The taxpayer pays for that advice and we are the custodians of it. It is not the case that that advice is given at any stage in a partisan way or in an attempt to influence anyone. It is therefore important to look from time to time, as we move forward, at the way in which take-up figures and other figures have developed.

We must get that right, so that social or any other type of policy can develop in a scientific way. There must be facts. That is more important in the area of poverty than in many other areas. Utilising figures should not be a yahoo game. The figures and information concerned must be seen from a non-

partisan viewpoint. There must be a rigour to the research, a willingness for those whom the research is about to participate in it and a transparent analysis of that research. We should all operate on those principles, and that has not always been the case. I do not mean that the previous Government fiddled unemployment figures. However, it is important that those who create the figures are independent. This Government have brought about that independence. There must also be transparency.

It is important to get the figures right. That is why, some months ago, we and the Secretary of State had discussions with those who compiled the figures. Increasingly, they have said, of their own volition, that the figures on pensioners have been slightly unreliable, to say the least. The areas of tolerance are huge and growing, to such an extent that the figures are difficult for politicians, social scientists or those who represent pensioners to interpret.

It is important to get that matter right, so we are putting resources into developing ways of getting more accurate information, making the information transparent and encouraging older people to be involved in the research. That is a lesson for us all. If we are to have accurate information, older people must have the confidence to participate and we must encourage them to do so. In the end, the information must be of a nature that can be utilised to their benefit. Therefore, we all have a job to do. We must also come up with a better way of giving access to information on a regular basis.

I am enthusiastic about take-up; it is important to maximise it. In order to do that, the following measures will be taken. We will publicise the pension credit from April 2003 so that its availability is widely known among the eligible population. We will transfer existing MIG recipients to the pension credit, ready for payments to be made from October 2003. During the take-on period through to October 2004, we will write to all pensioners who are not already receiving MIG to alert them to their possible pension credit entitlement. Any who apply before October 2004 who are entitled to a credit will have payment backdated to October 2003. It is important to make that clear.

During that period, we will also work with local partners to help with communications to pensioners, and we will constantly review take-up and tailor our marketing and communications activities accordingly. We will review take-up during autumn 2004 to plan further necessary activity.

Earlier in the debate, when I was asked by the hon. Member for Daventry about having discussions between Members and officials in the run up to the introduction of the pension credit, I said that I would write to them in a positive way. If it helps, in addition to that and as part of the process, I am happy to take ideas from Members about their locality and generally about the way in which they would like us to develop pension credit take-up services and our campaign strategy. I would welcome that.

Tim Boswell (Conservative, Daventry)

I welcome the Minister's tone. The matter is important, and I stress that we have a common interest in ensuring that things work as well

as they possibly can. Will he particularly bear in mind the importance of non-governmental organisations such as pensioner groups and other groups—he has already given them credit—not merely in facilitating the Pension Service, if not acting as delivery agents, but in providing ideas and examples of good practice to the Pension Service?

Ian McCartney (Labour, Makerfield)

Part of our core activity is to develop working relationships and partnerships with older people's organisations in respect of the development and roll-out of the Pension Service, and older people's issues generally, such as better access to public services. Furthermore, in the development of future policy on income and services, we have established several groups that have already begun meeting to tackle the issues, including a forum to deal with poverty. At every level, official and political, we involve all the groups that we possibly can and make them partners with the Department.

That is not happening just at national level. With the roll-out of the Pension Service at regional level and at local level in particular, much of the activity is being focused on the output of the local service. During the next few years, the structure of a meaningful local partnership will include the involvement of local pensioner organisations in all instances, because it is important that we take the Pension Service to the pensioners rather than asking them to come to the service. There will be a change of ethos and strategy in the management of the service and the way in which staff work in the community with older people in relation to take-up of pensions and other services.

Steve Webb (Liberal Democrat, Northavon)

There is one thing that I have been trying to pin down about the way that the Pension Service will work. In principle, pensioners can go to a Benefits Agency office the day that they want to talk to someone in the Department for Work and Pensions. Although I see the attraction of going to the local library on the third Thursday in the month for an Age Concern session or whatever it might be, clearly, that is much less flexible and responsive. Will the Minister clarify what the arrangement will be if someone does not want to pick up the phone but, being fit and well, wants to go out of their home? How soon will they be able to see someone face to face?

Ian McCartney (Labour, Makerfield)

They can do that now, and they can continue to do that. I have seen a letter saying that that is not the case. However, it is absolutely the case. We are offering additional services in the community because our research shows that older people do not like to visit old-fashioned Benefits Agency offices, and we have to respond to that. It is not that we are taking a service away and saying, ''You can have this, and that is all.'' It is about people being able to visit the Department—and, if they do not want to do that, the Department will come to visit them. Such meetings might take place at a local luncheon club, or at Age Concern's local office, or in joint action with the local authority. Currently, a pilot project of Care Direct is giving single gateway access to older people and their carers to a range of services, and we want to build on that concept.

As the new service rolls out, it will become possible to see many more older people in their homes. Many such people are isolated because of age or infirmity. They lose out too. It is important to release officers' time, so that they can be visited in their homes.

That links up with something else that the Government are doing in primary care. We are increasingly getting the primary care team to work with other professionals, so that people's health and social care and financial well-being can be looked at as a total package. That is the principle behind the concept. It will not be realised immediately—in the next few weeks or months—but we must have ambition and an idea of where we want to take the service.

Tim Boswell (Conservative, Daventry)

The Minister mentioned that there were letters flying around, and he will be aware that the Public and Commercial Services union itself is one of the organisations that has expressed concern. I do not wish to suggest to him that he should conduct industrial relations negotiations through Members of Parliament or other third parties, or that he should seek to produce such partisan literature. However, he did seek to suggest that some of the stuff that is going around about the withdrawal of personal interviews was not properly conceived, and I must say that I am beginning to receive correspondence from constituents who are saying that they are worried that they are not going to have the opportunity to have personal access to benefits offices, and so forth. Before that tide begins to run, and bearing in mind the sensitivities about the subject—which I respect—will he give some consideration as to how he might communicate with us? Some of the things that he says in the Committee might also need to be said to colleagues outside the Committee Room, so that there is no doubt as to where the Government stand on this.

Ian McCartney (Labour, Makerfield)

As a former trade union negotiator, I do not intend to negotiate in a forum that is unrepresentative of the unions.

To be serious, I have a good working relationship with the PCS, and I intend to maintain that. It has been very helpful with regard to the change. Let us be honest: the change has been great, and it is legitimate for it to voice concern and to seek assurances about issues, particularly with regard to those who work in the Pension Service, which is one of the most stable work forces in the Department. People who come to work for the Pension Service tend to remain there. It is a highly skilled and motivated workforce, so we want to maintain a good relationship with it.

It is true that, in the campaign that is being put across to maximise the potential for negotiation in the new Department, some things have been said that are not only technically incorrect, but incorrect in terms of the entire concept. We have sent out information to hon. Members. I intend to send information to them regularly about pension centres in their areas. We have already sent out information about the new officials in particular areas; so, on a rolling programme basis, hon. Members will get information. If any hon. Members become concerned or worried because they

have received letters such as those that have been mentioned, I will provide them with a letter that effectively explains matters, which they can give to their constituents.

Annabelle Ewing (Scottish National Party, Perth)

I have listened with interest, in particular to the exchanges about the recent lobbying and the concerns of some members of the PCS and increasing numbers of pensioners. Is the Minister saying that there is no foundation to the concerns that have been expressed by this union? Are greater resources required to implement the kinds of schemes that the Minister was talking about? If so, will those resources be made available?

Ian McCartney (Labour, Makerfield)

The hon. Lady is trying to draw me into discussions with the PCS in a different way.

I can only say that the resources are available in spades for the new Department, as the creation of the Pension Service and Jobcentre Plus shows. It is the biggest investment in the welfare state—in its structure, its communications, its staff and staff well-being, in their working environment and their skill match and mix, and in their change of skill mixes and opportunities. There has never been a better time and place to work in the public service than there is now at the Department for Work and Pensions, and we intend to maintain good working relationships, particularly in the aftermath of the correct decision by the union to accept the decision.

The offer with regard to Jobcentre Plus was made some time ago. It is about working with staff, and staff at a local level working with the local community and other groups. The creation of the Pension Service is a good news story all round for both staff and older people.

The MIG take-up campaign was pooh-poohed. One complaint was that it was a waste of public money and was only an attempt by the Government to promote their policies. There is nothing wrong in doing that if such policies enable people to get out of poverty. Anti-poverty is a reasonable policy to promote. It was also said that, because of the complex nature of the initiative, older people will not apply for it. Both complaints were wrong.

Patrick Mercer (Conservative, Newark)

If that is the case, why are only a quarter of those eligible claiming it?

Ian McCartney (Labour, Makerfield)

That is not the case. I accept what the hon. Gentleman is saying in the sense that more people are entitled to the minimum income guarantee than those are who are receiving it. That is why we are trying to improve the uptake of MIG in advance, after which time we will try to improve the uptake of pension credit. We are not arguing about that. A legitimate question is how we will sustain a campaign, which is why I have explained the first part of the phased programme.

The substantial MIG campaign resulted in more than 128,000 additional individuals receiving it. On average, they are receiving £20 a week more than they received before the campaign. The interesting aspect is that, if we provide older people with access to a friendly environment, they will apply for their entitlements. They will use the telephone. They will

respond to specific campaigns in the community. It will not be a system in which older people will not take part. Increasingly, they have a great deal of knowledge and want to have such relationships within the community. People now apply by telephone for their basic state pension. The system will be so easy. Let me leave aside those who will benefit immediately and who are already on MIG. They will be transferred automatically to the system and will not have to do anything, and rightly so. In the four months running up to retirement, when people can make applications for their basic state pension—as they do now—they can apply at the same time for pension credit.

There will be two elements to the basic income from the state that people receive on retirement. That will be a major change for the good. Because of the new technology and the new skill mix at the Pension Service, application can be made by telephone. If people do not want to do that, we can provide home visits and other environments in which applications can be made. We will give older people a choice. Under the old system, they could either visit an office and sit in an environment that they did not like or sit at home and receive nothing, because no one bothered whether older people made applications. That situation will change dramatically. I am talking not about individuals, but the bureaucracy of the system.

When the system operates effectively as an advocacy organisation on behalf of older people, matters will be transformed immediately. I am not exaggerating about the cultural and organisational change that will take place. Five years from now, when compared with the new pension system, the old system will not be recognised. There will be a five-year rolling programme of improvements. As people come to retirement age, they can make application for pension credit by telephone. They can receive basic information. We have had a debate for an hour and a half. There is a ready reckoner on the back pages of the pension proposals. I am not saying that matters are easy, but we will be providing simple and quick access to information.

The stress of making an application under the old system will be taken off individuals by the state, which will act on their behalf. The system will be vastly different from the old-fashioned ways of communicating with older people, different from the days of the poor law and different from the complex systems that operated in the '50s, '60s, '70s, '80s and the early part of the '90s when the income support system was made up of complexities. Each system was another layer of bureaucracy and regulation. Some layers were added for the best of reasons; some were added to undermine people's access to benefits. Whatever the reason, we inherited huge complexities. The purpose of the Bill is to get rid of as much complexity as possible on behalf of older people.

A question was raised about women. I say from the outset that I have robust, open and frank discussions with older people's organisations about whether the current state pension system is beneficial to every citizen in the country. A range of people paint the rosy picture that all we need to do in order to resolve everything and end poverty overnight is to add extra

cash—£2 billion, £3 billion, £4 billion or £5 billion; whatever case they want to argue for—to the basic state pension.

Of course, the problem with any public or private pension system is that it is a compromise. The compromise of the state pension system was worked out by liberal academics and left-wing Labour politicians as we left the '40s and moved into the '50s. It was designed using that fact that men coming out of the war years had an average life expectancy of 61 years—they qualify for the pension at 65.

For a range of reasons, the vast majority of women did not have a work record. That began to change only after the war. Women were not entitled to a basic state pension; they had to rely on a marriage. If a woman was not married—large numbers were not—she was on her own. Of course, the system did not take account of people's caring responsibilities and intermittent work records. The only universal thing about the basic state pension was that everybody had the right to apply for it. However, nobody had the right to benefit from it. If we are to break into the cycle and deal with poverty and the fact that we have a system that is discriminatory, we must be serious about the changes that we make.

The biggest recipient group is women. Many women have small occupational pensions and will benefit from the reward. About 300,000 single women over 65 have a form of occupational pension and are eligible for the minimum income guarantee, and 92 per cent. will be rewarded when the pension credit is introduced. A further 400,000 women outside the range of MIG will become eligible for the rewards. Over 700,000 single women will be rewarded for their savings because of the pension credit. The largest recipient group of pension credit—over 53 per cent. of people—will be single women. They will be the greatest beneficiaries of the change. We are challenging the structure of the old basic state pension, which ruled out so many women from receiving it.

Tim Boswell (Conservative, Daventry)

I thank the Minister for setting out several positive aspects of the Bill. Undoubtedly, some women will benefit from the credit. However, he also said in his historical exposé that many women at the time that the system was devised were not expected to work. Many subsequently had extremely broken work records and served as carers. Such people would have an incomplete entitlement to the state retirement pension when they retire. Owing to their inadequate contribution record, they need all the savings that they have to make themselves up to the minimum income guarantee before they can avail themselves of any benefit. Many women will not benefit from their savings.

Ian McCartney (Labour, Makerfield)

We shall return to that when we consider clause 3. However, over 53 per cent. of people who will be entitled to pension credit are single women. The hon. Gentleman cannot get away from the bottom line. Over a quarter of those who will claim pension credit are women over 80. The hon. Gentleman cannot escape the fact that the Bill represents an important policy change that benefits mainly women.

Tim Boswell (Conservative, Daventry)

I do not disagree with that. However, will the Minister concede that if we examine the overall population of pensioners—those in receipt of the state retirement pension—the proportion of women in that total is higher than the 53 per cent. who he claims will benefit from the pension credit? If that is the case, is there not a disproportionate under-representation of women among the total population receiving the pension credit? It is less skewed towards them than is the total number of retirement pensioners, where the preponderance of women increases considerably.

Ian McCartney (Labour, Makerfield)

Sixty per cent. of women over 80 will be entitled to the credit. This is the first major policy change that benefits women in this way. If the hon. Gentleman believed that that was the case during the 18 years that his party was in charge of the basic state pension, why did he not do something about it? The Tories allowed women to languish. Many women did not get a state pension, but income support and income support rules and the tapers that existed meant that they lost everything. They had no gain at all from any kind of income, even if they had a small income that they might have scraped together. The Bill at last recognises and puts right a big wrong. I am not apologising for it.

To return to what was said about the Association of British Insurers, its report is very interesting, and is overwhelmingly supportive of the Government. The area in which it shows concern is also an area of ongoing policy work. No doubt that will be debated in the autumn, certainly by those who speak from the Front Bench for their respective parties. At that time, we will be examining the Sandler and the Pickering reviews, and the second state pensions and stakeholder pensions will begin to kick in. The policy cannot be viewed in isolation; it is part of a range of measures to develop pensions for today's and tomorrow's pensioners.

It is important that we get the regulatory regime's incentives right. I would not disagree with that. For the first time in a long time, we have a Government who are prepared to take a long-term approach to the issue. They are prepared to consider the relationship between the public and private sector, and the impact of the regulatory regime on incentives to save, on employers to make a contribution, on benefit contributions and on all those people who are outside any form of pension plan but are employed on a regular basis. Stakeholder pensions are designed to assist those people. Then there are the 18 million people whom we would let down if we did not introduce a state second pension. If we did not do so, we would replicate the mistakes of previous generations of excluding large numbers of citizens from a pension because of intermittent work records, such as women who are carers for people with disabilities. We are thinking about the future as well as the present.

The hon. Gentleman raised several issues concerning amendments Nos. 19 and 20. It is important that I give a response. I have given enough airing to the timetable for the Pension Service and what we are doing. If hon. Members

want more information, I am happy to provide that at a later date.

Together with the regular publication of claims data and estimates of take-up, the reporting requirements that apply to the Department as a whole can allow the publication of all the information that is required by the amendment. The Department will continue to present its annual departmental report to Parliament. That will provide a comprehensive picture of performance across the whole Department. The report will provide an account of departmental performance against its public service agreement objectives—an innovative approach adopted since 1997. It also provides an account of how the Department has expended money voted to it by Parliament. As an executive agency, the Pension Service will be required to produce a separate annual report and financial accounts must be laid before Parliament before each summer recess. The report must contain details of performance against key targets for the year. Hon. Members said that they would want one target to cover how many people have access to pensioner credit. That is one of the major components of the work that is being done by the agency. The report will include other internal objectives and performance measures.

Amendment No. 20 would require an annual report to be laid before Parliament setting out the effect of pension credit on individuals' incentives to save for retirement. That goes to the heart of much that the hon. Member for Daventry said. As far as savings incentives go, pension credit must be seen against a much bigger picture including the state second pension, stakeholder pensions, ISAs and the supporting tax regime, which are all geared to encouraging savings for retirement.

Pension credit is fundamentally different from the benefit regime that we inherited. It is principally about fairness. We are doing away with a regime where pensioners saw no additional income from saving, as benefit was clawed back pound for pound. It was not only unfair, but created a severe saving disincentive for people who were likely to qualify for the minimum income guarantee when they retired. By contrast, under the credit individuals will see a 60p increase in their net income for every pound that they save. It will be worthwhile to save under the credit, and the results, in terms of a net increase in retirement income, will show that.

Our strategy is based on three foundations: creating the right environment for saving, providing the right incentives and ensuring that people have access to clear, impartial information that educates them towards greater financial literacy to support their making the right saving decisions. I assure the hon. Gentleman and other members of the Committee that it is in the interests of the credibility of my Department, the new executive and all those who work with older people to ensure that the reporting mechanisms that we put in place are not reporting mechanisms in name alone, but give effective and transparent information. I assure hon. Members that that will be the case.

The amendment was well placed to seek that information. There will be robust ways in which reports will be made both inside and outside the House. I hope that the hon. Gentleman will withdraw the amendment.

Julian Brazier (Conservative, Canterbury)

In the Minister's lengthy reply, he took the trouble to make a number of detailed points, on which my hon. Friend the Member for Daventry will no doubt be commenting in a moment.

In a brief contribution, I should like to say that although the Minister spent a lot of time commenting on amendment No. 19, he said very little about the substance of amendment No. 20, which relates to disincentives to save. They are both important amendments, but to my mind amendment No. 20 goes to the heart of what is wrong with the Bill.

The only serious criticism of amendment No. 20 came from the hon. Member for Northavon in an otherwise excellent speech. He was, however, mistaken on one point. He suggested that what was wrong with amendment No. 20, unlike amendment No. 19, was that it would not produce any valuable information because it was impossible to tell whether there was a disincentive to save as a result of any one particular measure. As disincentives to save in the case of pensions can in principle apply to people at all ages in the spectrum, and many other factors affect people at all ages in the spectrum, superficially his point might appear to be right.

I want to give a specific historical example to prove why that is wrong, providing that we segment the study by age. Lest anyone thinks that I am making a party political point, let me point to a mistake by a previous Conservative Government. In 1988, we brought in a measure that introduced very strong disincentives to save, namely the decision to capital test rather than just income test the arrangements for income support for pensioners. For my sins, I wrote a paper at the time saying that that would have a disastrous effect on savings retained by people who had reached retirement age.

Six years later, I was smug enough to publish a second pamphlet that included a graph, which I took the liberty of showing to the hon. Member for Northavon. It would be out of order to show it to the Committee, but I shall tell hon. Members what it contains. A form of measurable disincentive to save occurred as a result of a measure that dramatically extended the bite of means testing to large numbers of pensioners. Because it was combined with an increase in the provision for income support, it did so in almost exactly the same way in which this measure will extend its bite.

I shall make a final historical point before I develop my argument. We have heard arguments about how pensioners may not immediately see the economic consequences of their actions. The decline in the proportion of people living on income support—a process that continued for a generation—has been turned round. During the three-year period between 1991 and 1994, the proportion of pensioners reliant on income support rose from around 12.5 per cent. to just over 15 per cent.

It would be deeply patronising to suggest that pensioners cannot do their sums. The overall effect of the measure will be to extend means-testing so far up the income range that before long, according to the Government's projections, it will embrace more than half of them.

Maria Eagle (Labour, Liverpool, Garston)

I am listening to what the hon. Gentleman is saying, but I have not had the advantage of seeing the pamphlet and I am sure that he will lend it to me. Does he not welcome the simplification of the capital rules that the Bill introduces?

Julian Brazier (Conservative, Canterbury)

Let me explain why not, in so far as I can while remaining in order on a narrowly drawn amendment. In arguing the case against the measure—savings take-up is central to the whole case against the Bill—I want to be clear on one point lest there be any mistake. I wholly share, as does my party and, I am sure, the Liberal Democrats and the Scottish National party, the underlying objective that the Government claim to have in the Bill: to reward those who save but feel that they miss out because of the way in which means-tested benefits work within the system. The problem with the measure falls into two parts. My hon. Friend the Member for Daventry alluded to both and the hon. Member for Northavon alluded to the first.

The point was made from the Conservative Front Bench, not only by my hon. Friend the Member for Daventry in Committee, but on Second Reading, that the minimum income guarantee itself has sucked a huge number of people into the problem and has pushed it well up the age spectrum. All the figures we were given about a £100,000 pension fund being required just to balance the value of the minimum income guarantee and so on apply.

The second and more narrow point that concerns us—the reason for the amendment is to show the impact on saving—is that more than half of the pensioner population will come within the remit of the Bill. As my hon. Friend the Member for Daventry explained so compellingly, the problem is that if a steep taper is put into the Bill, side by side with the taper that is provided by taxation, the taper provided by housing benefit to such a large proportion of recipients and the taper provided by council tax, people will see immediately that, if they had not saved during the last years before their retirement and had chosen to spend their money on other things, the proportion lost would be very little.

I do not want to repeat the incredibly good opening speech by my hon. Friend the Member for Daventry in which he quoted different bodies which illustrate these points and which have been through the figures. I leave the Committee with one final thought: does anyone remember a measure—I cannot in all the years that I have been in Parliament—that offered to hand out large sums of money to an extremely worthy group of people but which met with so few welcoming voices? The least we can do is to measure its impact.

Andrew Selous (Conservative, South West Bedfordshire)

I also want to speak briefly to amendment No. 20. I concur with the comment of my hon. Friend the Member for Canterbury that we did not hear much from the

Minister about the amendment. I believe that he broadly welcomed its intention, but he tried to tell us that there were other means whereby the Department would seek that information.

The Government have said that they want to move from the current figure of 40 per cent. of funded pensions to 60 per cent. Opposition Members thoroughly support them in trying to attain that. That is even more important given the accelerating demise of final pension schemes.

I shall focus on a comment in paragraph 32 of the Select Committee's report, in which the Committee said that it hoped that in future it would always pay to save. Because of the complexity of pension legislation—I am thinking especially of the task facing independent financial advisers and others; some of my constituents recently contacted me to explain the difficulties that they face—rlwe need clarity.

My hon. Friend the Member for Hertsmere described the four categories of people for whom we cannot say that it always pays to save. Amendment No. 20 is important. The first is those with less than a basic state pension. Information from the Department is that 12 per cent. of retiring men currently do not have a basic state pension. However, 75 per cent. of retiring women do not have a basic state pension and will therefore fail to benefit from the savings credit in the Bill. Women aged between 60 and 65 currently number 1.5 million, a figure that it is anticipated will rise to 2.2 million by 2031. They are a second major group that has no incentive to save under the Bill as currently structured. There are more than 3 million self-employed people who, because they do not fall within the ambit of the state second pension, suffer a disadvantage in being unable to benefit from the savings credit in the Bill. Even for those who save £50 a month and are entitled to the savings credit, for the first 10 years or so, there is no benefit. I hope that amendment No. 20 highlights the suggestion in the Association of British Insurers submission that there might be a disregard for the first £10 of saving income. The graphs in its submission to the Select Committee show that if there were, it would always pay to save.

Those issues are important. As the ABI and my hon. Friend the Member for Daventry said, the savings gap is currently £27 billion. The Government have rightly said that they want to move to a ratio of 60 per cent. private occupational funded pensions, reversing the current ratio. We shall not achieve that unless it can be said with clarity that it always pays to save.

I refer to the recommendation in paragraph 32 of the Select Committee's report. We recommend that the Government devote time to looking into the cost of the measures. It is, perhaps, worth noting that we do not know how much the Bill will cost. As Parliament, we have passed the Bill with various scenarios, but we do not know exactly what the total cost will be. The Select Committee has been slightly more cautious and

has asked the Government to look into the costs of the four measures that I have described.

Patrick Mercer (Conservative, Newark)

I shall concentrate on amendment No. 19, which has already been spoken to at some length. I hope that I shall not labour the points too much. The amendment has been carefully drafted by my hon. Friends the Members for Hertsmere and Daventry.

Although the Minister gave a sterling response to all the points that have been made, the amendment has the merit of casting light on a subject that is otherwise often obscured. I shall quote extensively from evidence from Help the Aged, which may provide one or two points that will help us. The minimum income guarantee is one of the only means-tested benefits with which we can compare what is going to happen to pension credit. Clearly, pension credit has no track mileage or precedent on which it can yet be judged. The MIG is probably a helpful yardstick. Despite a very expensive television campaign, it is still clear—I bow to the Minister as regards the precise figures—that much of the funds available are not yet claimed.

I take issue with the Minister about the complexity of claiming pensions and benefits. That is something that I hear about frequently in my constituency surgeries. Indeed, every time I go to Tuxford, the same point is made. Those who are most vulnerable—pensioners who are most reluctant to get involved in the bureaucracy and the complexities of applying for benefits more often than not—will say, ''Mr. Mercer, I am extremely concerned about over-applying. I would rather not apply than get paid too much benefit, then have to pay it back at a later stage.'' I have heard that three or four times—I do not pretend to have the answer. I am aware that there is ''attitudinal resistance'', to quote the report, among many of the pensioners to whom I speak about such bureaucracy. I commend amendment No. 19, which I hope would help to clarify that, and allow us to check as the new benefit comes into place.

Maria Eagle (Labour, Liverpool, Garston)

It is interesting to hear what the hon. Gentleman said. Obviously, we want to encourage take-up. Would he accept that that concern is likely to be less when one has a five-year assessed income period, during which income is allowed to go up without affecting benefit, as opposed to a weekly means test, which was designed for income support for people of working age?

Patrick Mercer (Conservative, Newark)

I am grateful for the intervention. I probably would accept that, but the point I am about to make is that if the Department for Work and Pensions were to set targets for the level of take-up, rather than the current vague notion, that would help and might overcome the problems that I have just mentioned.

The attitudinal resistance that I mentioned is reflected in that 25 per cent. of those who were told that they were eligible for the minimum income guarantee but would probably still not claim. The introduction of pension credit will bring several more millions of pensioners into the means-tested programme:

''This new group will be more likely to have occupational and private pensions and, therefore, may be less likely to see themselves as the kind of people whom benefits are aimed at, or to assess themselves as eligible. Because wealth as a pensioner is strongly linked to wealth during one's working life, they are less likely to have had dealings with the social security system in the past.''

Negative perceptions, and unfamiliarity with claiming and the claims process could therefore be higher in this new group. That is what Help the Aged has to say about it, and that is my impression at the moment of the new benefits that are being introduced.

There is also the question of those people who have applied for the minimum income guarantee. The campaign had a mixed result—we have heard from the Minister that it was highly successful—but when it went out, many applied having taken the advice offered and were turned down. That has probably built a resistance into those who will be claiming pension credit; having failed in the past will make them less keen to claim again in future. The Government also say that the pension credit will bring £2 billion into the hands of pensioners. However, already £2 billion of means-tested benefits is not taken up annually:

''The reality is that much of this £2 billion worth of pension credit will never reach pensioners' pockets and will remain safely back in the Treasury. However, the administrative costs both ongoing and of introducing the pension credit will, undoubtedly, be very high.''

One must consider the costs and benefits of the introduction of pension credit from the first principle.

It would be helpful if the Department for Work and Pensions were to set targets for take-up by 2004, the first year when the benefits will be active. Currently, we are told that a target of 67 per cent.—only two thirds—would be ambitious. Amendment No. 19 would assist considerably. It would make visible a problem that has beset other means-tested benefits in the past. It would be helpful, give clarity and, overall, save money.

James Clappison (Conservative, Hertsmere)

The debate has been useful and interesting. As we had to, we touched on subjects that we will come to later but that were relevant for the purposes of the amendments, such as take-up, savings and so on. I am grateful for the support and interest that the amendments have attracted across the Floor and in other quarters. They certainly stimulated a lively debate at times. The hon. Member for Northavon fielded several interventions with good grace, in a non-partisan way. Clearly, the interventions were evidence of the Committee's interest in the amendments.

I am grateful to my hon. Friends the Members for Daventry and for Canterbury for their contributions. I was not hitherto aware of the pamphlet of my hon. Friend the Member for Canterbury. I will take it away and study it in detail. I am also grateful for the excellent contributions of my hon. Friend the Member for Newark (Patrick Mercer) and my hon. Friend the Member for South-West Bedfordshire (Andrew Selous), who spoke with the authority of someone who was a member of the Select Committee, who had witnesses appear before him and who was able to ask them questions.

The Minister made a lengthy reply to the debate. He will understand that I shall want to consider in more detail many of his comments about the measures that his Department is already taking and about forecasts for the future. However, two points remain in my mind.

First, if the Minister and the Under-Secretary are so confident about take-up, why are they so reluctant to countenance a report that would highlight it and set it out? The argument is not about whether there will be high take-up but about whether there should be a report. Surely, with the degree of confidence that they have ventured this afternoon, Ministers would welcome a report that gives so much detail. The Minister said that, in any case, the information would come out in other places; I have heard that reply before. It may well be the case—it is something else that I want to consider in detail—but why not have a report that specifically highlights the issue and brings to public attention a matter that we all, apparently, regard as important? I am not convinced by the arguments against such a report that I have heard so far.

The second point is about savings. The Minister did not deal in as much detail with amendment No. 20 on savings as he did with amendment No. 19, but I heard him say that it was worth saving with a pension credit. I believe that he put forward that proposition in the sense that it was more worth while to have saved than to have no savings at all. That may be the case, but he did not address the question that was raised by the Association of British Insurers: is it sufficiently worth while to save, given the rewards that will come after the withdrawals? Is that sufficient to encourage people to save earlier on? That is a separate subject, on which expert opinion is divided.

The Minister may want to reflect upon the ABI's conclusions. He spoke about what it had said in broad terms. I invite him to look at the conclusion of the most recent memorandum that it submitted in evidence to the Select Committee, which is the final conclusion that it reached on this question and, indeed, on the whole subject. It says:

''In order for it pay to save in all circumstances, these issues must be addressed before the State Pension Bill passes on to the Statute Book. Failure to do so would leave a proportion of the population vulnerable to not getting value for money for their hard earned savings, and potentially more damaging discouraging many people to save when it is in their best interests to do so.''

We think that it is in people's interests to save. We want to do everything that we can to promote that and will look very carefully at anything that expert bodies think might possibly discourage saving. The Minister will be aware of the separate line of analysis pursued by the Institute for Fiscal Studies, which comes to a similar conclusion.

If the Minister wishes to respond to that, perhaps it will be convenient for him to do so at this stage, before I come to my concluding remarks.

The rest of the debate is in Hansard.