State Pension Credit Bill [Lords]

Public Bill Committee, 25 April 2002.

Standing Committee A

State Pension Credit Bill [Lords]

Ian McCartney (Labour, Makerfield)

On a point of order, Mr. Griffiths. I want to make a correction to the Hansard report of the fourth sitting of the Standing Committee on 18 April. I said the right words and Hansard took the right words down, but somewhere in the transposition there was a slight mix-up, which significantly changes what I said. I do not attach any blame to this. These things happen when millions of words are being transcribed every day.

In relation to amendment No. 25, I gave some examples of the types and treatment of income that will be relevant to the calculation of pension credit. These do not appear to have been reflected correctly in the Official Report, so I thought that it would be useful if I set out our intentions in that important area. Specifically, column 127 indicates that war disablement and war widows' and widowers' pensions will be subject to a full disregard. That is incorrect—they will be subject to a £10 disregard. However, as stated, the whole of any war widow's supplementary pension, paid in addition to the normal pension to certain pre-1973 war widows, will be disregarded.

In addition, the Official Report indicated that matrimonial maintenance payments, working tax credit and employer's sick pay would be subject to a £10 disregard. They will not, and all income from those sources will be relevant to the pension credit calculation. I would like to apologise to the Committee for any confusion that those inaccuracies may have caused, but I hope that I have clarified the position.

Tim Boswell (Conservative, Daventry)

Further to that point of order, Mr. Griffiths. We readily accept the Minister's explanation of the confusion that has arisen, but I want to make two further points. First, if such confusion can arise, it is perhaps a function of the complexity of the matter, so one can imagine what might happen during a telephone conversation between a pensioner and the Pension Service.

Secondly—perhaps somewhat stretching the point of order—despite our political differences, hon. Members of all parties have some affection for the Minister, so we would like to wish him a very happy birthday. In the circumstances, I am sure that he would not want us to pull our punches or give him anything other than a hard time, but we will respect the spirit of his birthday and hope that he thoroughly enjoys it.

Win Griffiths (Labour, Bridgend)

I am sure that we can endorse that from the Chair.

Ian McCartney (Labour, Makerfield)

I just want to say how pleased I am with those remarks. As the hon. Member for Daventry (Mr. Boswell) knows, usually when I am in

Committee, it is either my birthday or I become a grandfather again. The Committee was delayed because of the Easter recess, when I did become a grandfather again, for the eighth time, and when the Committee was sitting the other day it was my granddaughter's sixth birthday, so it has been a happy week for me. I hope that the jollities of today will not be reflected in the answers that we are yet to hear, but I thank the Committee very much—the drinks are on the Chair.

Win Griffiths (Labour, Bridgend)

Thank you very much.New clause 1 Advice

New clause 1 - Advice

Steve Webb (Liberal Democrat, Northavon)

I beg to move, That the clause be read a Second time.

We tabled the new clause to give the Committee an opportunity to probe the Government about their intentions with regard to the Pension Service. Our central tenet is that the pension credit is a complicated benefit, so pensioners will need a lot of easily accessible and good advice. The new clause sets out some of the criteria by which we might judge whether the service provided to pensioners is good enough.

We suggest that there should be regulations, setting out the quality and type of service that people who want to know about pension credit can expect to receive. Subsection (2) lists some of the features of what we would consider to be decent standards of advice. Paragraph (a) suggests that advice should be available ''face-to-face''. It is not meant to undermine the Minister's assertion that pensioners want the option of contacting the Department by telephone or that many would find it more convenient. We do not have a problem with that. We want to ensure choice. The telephone is great, if that is what pensioners want to use, as is the internet. However, we believe that there should be a statement of their entitlement to ask for advice face to face. It has been suggested that face-to-face advice will be available, but it would help if we had a little more clarity about that.

We have listed further qualifications under paragraphs (b), (c) and (d). Paragraph (b) provides that the advice should be given by a ''suitably qualified person''. At the moment, pensioners who are unsure about pension entitlements and income support can go to the Benefits Agency office because, somewhere in the building, there will be someone who understands pensions. The division between Jobcentre Plus, which is for people of working age, and the Pension Service, which is for people of pensionable age, will result in the number of people in the Benefits Agency who

know about pensions diminishing to nil. For the first year or two, pensioners will be told, ''Fred in the back office, who used to work in pensions, will know something about it. Go and see him.'' My worry is that in five years' time, once that segmentation has taken place, and because those who want an immediate face-to-face interview will have to go to a Benefits Agency or Jobcentre Plus office, such expert advice will no longer be available.

Paragraph (c) is about home visits. We have been given assurances by the Minister that people will be able to have a home visit if appropriate. On the face of it, that is excellent news. Some of the people involved are very frail and elderly, and may be disabled, and a home visit would be the best and only way to help them. However, it is not clear—again, it would help if the Minister could place it on the record—how absolute is the right to a home visit. We cannot have 5 million of 10 million home visits; it would not be practical. Will all those who say, ''I'd like you to come to me,'' get a home visit? Will they have to satisfy a disability test or a test of competence? Will discretion be allowed?

One can imagine a constituent telephoning the constituency office and saying, ''I want someone from the Department for Work and Pensions to come and see me about pension credit.'' However, the answer may be, ''I am sorry, but we don't have enough people to make all those house calls. You will have to come to us because you are obviously fit enough and well enough to do so.'' What will be the nature of the entitlement? Will people be entitled to a home visit, or will it be done at the service's discretion? How pushy can pensioners be if they are told that the office is fully booked for the next few weeks and that they need to visit the office?

Paragraph (c) mentions also a ''reasonable travelling distance''. The danger is that although the Department might say that pensioners could be given advice face to face, it might be available only at major regional centres. For those living in rural areas, a requirement to go to a city centre might not be good enough. The Minister has said that face-to-face advice will be available, but how far will people have to travel to get it?

John Mann (Labour, Bassetlaw)

What does the hon. Gentleman mean by ''reasonable''? It is a vague word; how does he define it? It would assist the debate if he were to be more precise.

Steve Webb (Liberal Democrat, Northavon)

We have not yet reached paragraph (d), which provides for a ''reasonable period of time''. I get the impression that the travelling surgeries that the Department is talking about—the Age Concern session at the local library or sessions at the citizens advice bureau or the council office—may be held less often than weekly. I hope to clarify those matters. If we were dealing with the successor to income support, the poverty line safety-net benefit where people are not intended to go even a week without the bare minimum income, a delay of more than a week would be unreasonable.

I do not want the new clause to be too prescriptive. I want to probe and to see what is offered. However, I wish to raise two other issues about the Pension Service. Listening with care to both Ministers, one starts to capture their vision. It sounds really good, and I am sure that all members of the Committee welcome the idea of a proactive service. We have tabled amendments to other Bills saying that the onus should be on the Department to seek people out and to ensure that they get all that they are entitled to, and they have always been rejected. In the past, the argument has been that the onus is on the individual; it is not the Government's job to get benefits to people, but the people's job to claim benefits. I hope that I shall not be misunderstood if I welcome the reversal of that ethos to the extent that the Pension Service has reversed it.

However, my worry is how we are to get from the present culture of not always being proactive or clear to the promised land that the Minister has described. I reflected on that last night when I came across a letter that I had received from the Pension Service. It was on plain paper—I assume that the new letterhead has not been printed yet—and included this fragment of a sentence, from a decision maker at Bristol East Pension Service:

''We should not chase up capital details if the capital is under £5,500''.

Fair enough, but it continues:

''user case controls should be set to box on annual reviews that do not need to be carried out until the system has been upgraded.''

User case controls should be set to box? I have read that half a dozen times and I do not have a clue what the letter means. I will not name the individual who wrote it; that would be unfair. My point is that there is an existing culture, a bureaucracy—

Ian McCartney (Labour, Makerfield)

May I clarify? That is not a letter to a member of the public. I assume that it is an internal staff note between people who are developing the IT technology for the training and retraining of staff, relating to the work of implementation. Is the hon. Gentleman saying that the letter was sent to him, as a Member of Parliament?

Steve Webb (Liberal Democrat, Northavon)

I am.

Tim Boswell (Conservative, Daventry)

Does the hon. Gentleman not feel that the plain English interpretation of that message is that because of the deficiency of the existing IT system, it will be impossible to operate the system properly until after the new IT is introduced—that is to say that some assessments, although they might favour the pensioner, will be inappropriate within the terms of the legislation that we are in the process of introducing?

Steve Webb (Liberal Democrat, Northavon)

The hon. Gentleman raises an interesting question. I do not know, because I do not understand the sentence. It is a huge organisation and the odd letter that is gibberish slips through. I do not want to make a cheap point; I am trying to say that, if it is to match the tremendous goals that we have heard from both Ministers, the whole culture of the organisation must change fundamentally.

My question—which is reflected in the new clause—is: how confident can Ministers be that that sort of

transformation will take place? Will every decision maker, like the person who wrote that letter, be trained in what the hon. Gentleman has mentioned—plain English? I assume that some of them already have been, yet we still receive letters like that. What is the training programme? The new clause mentions suitably qualified people. That means not only people who understand the nitty-gritty of pensions but people who can communicate such things in plain English to pensioners and to their representatives, be they councillors, MPs, advisers or welfare rights workers. The person who wrote that letter might have assumed that I had some understanding of such matters—

Ian McCartney (Labour, Makerfield)

That will teach them.

Steve Webb (Liberal Democrat, Northavon)

—rather more than I do, and such letters do not encourage me; so there is the question of culture.

There is also the matter of targets. We have not, so far, had any sense of entitlements. It would be great if people could be seen face to face—but when? What percentage of people need to be seen by when? The hon. Gentleman asked what I meant by a reasonable length of time. What does the Department think? If the Bill says that people can have face-to-face meetings, not necessarily in their homes, what does the Department mean by a reasonable length of time? Does the Department yet have precise performance targets for the Pension Service in terms of such matters? Perhaps I have missed them. I should like some indication of the performance targets and people's entitlements.

Age Concern has read the new clause and asked the Minister to respond to a couple of specific questions. Our proposal refers to home visits, and Age Concern asks the Minister to confirm how many staff will be available for such visits and whether there will be a target of a certain number of days in which to grant them. Again, the theory is all very well, but how much of an entitlement do people have and how will they be able to exercise it?

Age Concern raises another issue. When pensioners receive advice and benefits, there can be knock-on effects. Will the Pension Service take a—for want of a better word—holistic approach and consider not only the narrow individual benefit, but its knock-on effects? Age Concern gives the practical example of local authority social services charges. The Pension Service may tell pensioners to claim pension credit because they will be £3 a week better off, but the council may say that those who get pension credit above the level of the minimum income guarantee must pay £3 a week social service charges. Local decision makers will need to be aware of such issues, and although it is not within the compass of the Department for Work and Pensions, pensioners will want to be told of them, too. Those who get meals on wheels and home care for free will ask the Pension Service, ''Will I need to pay for my care if I claim your benefit?'' I hope that the Minister can assure us that the service will look at the big picture, consider the whole person and know about such issues.

The key issue is rights. Are we talking about entitlements to home visits? Will someone have to wait a long time if the service is overloaded or will they have a right to be seen in a certain time? Have targets been set, and will we know if the service fails to meet them? More specifically, when the system is up and running, will people have an entitlement to meet face to face and in a reasonable length of time someone who knows understands them, who is not miles away and who is suitably qualified?

We have occasionally tried to obtain some of that information through written parliamentary questions. I asked eight different questions about the Pension Service, and the reply was substantially shorter than the combined length of the questions. If we were being charitable, we might say that the answers were concise; we might also say that they were opaque. Ministers' comments about pension schemes have been made in the right spirit and are encouraging. We have been invited to visit those involved to hear how things are going, which contrasts with what has sometimes happened when we have tried to probe the issue through written questions. Will the Minister therefore give an assurance that if we probe the performance of the service and the roll-out of the pension credit over the coming months, the spirit of the Committee's debates on those issues and the spirit of openness that we have been promised will be reflected—

David Cairns (Labour, Greenock and Inverclyde)

Will the hon. Gentleman give way?

Steve Webb (Liberal Democrat, Northavon)

I am about to finish. Will that spirit be reflected in the style of the answers that we receive? I hope that we shall get the openness that we have been promised, rather than the defensive tenor that we have heard so far.

Tim Boswell (Conservative, Daventry)

The hon. Gentleman has set entirely the right tone in presenting the issue. Often in Committee, I feel like the person who confessed to his friend that he was confused, and who was advised to go to a conference to inform himself. He returned to debrief his friend, saying that he was still confused, but at a somewhat higher level. The hon. Gentleman raised the issue in a perfectly reasonable way, but—I say this half in jest—if a professor finds this subject difficult and a Minister of State has problems with some of the detailed definitions, pensioners will have great difficulties. Before the Minister says anything—

Ian McCartney (Labour, Makerfield)

Will the hon. Gentleman give way?

Tim Boswell (Conservative, Daventry)

If I may, I shall finish the point. If the Minister then needs to respond, that is fine. I anticipate that the Minister will say that pensioners do not have to sit an exam to get the pension credit, and thank goodness for that. However, they will require intermediaries from the Pension Service, who will need to function to the highest possible degree. In moving the new clause, the hon. Member for Northavon (Mr. Webb) has pretty precisely set the parameters as regards what will be required and what we would reasonably expect.

To be slightly critical of the Minister, I question some of his comments about questions that have arisen on the matter. We who are outside Government are in a position to spot difficulties, which is easy to

do, although solving them is more difficult. We have some concerns, however.

We have received replies from the Government that say that the Pension Service will be a high-quality customer-focused modern service—I do not think that I am caricaturing them when I say that. I hope that it will be, the hon. Member for Northavon hopes that it will be and pensioners and pensioner organisations hope that it will be. We shall do our best not to rubbish the service or those who deliver it.

Mr. Julian Brazier (Canterbury) rose—

Andrew Selous (South-West Bedfordshire) rose—

Tim Boswell (Conservative, Daventry)

I give way to my hon. Friend the Member for South-West Bedfordshire (Andrew Selous).

Andrew Selous (Conservative, South West Bedfordshire)

The hon. Member for Northavon referred to the letter that he received on the Pension Service. Has my hon. Friend's mailbag, like mine, begun to fill up with letters from pensioners who are concerned about the frequency and availability of the face-to-face service?

Maria Eagle (Labour, Liverpool, Garston)

How many letters has the hon. Gentleman received?

Andrew Selous (Conservative, South West Bedfordshire)

Well, I have received four letters from pensioners so far. That is not a huge amount, I know, but it is early days. I have received letters from pensioner groups that represent pensioners in my constituency. I hope that no members of the Committee would suggest that four letters on a subject are to be treated lightly. Has my hon. Friend the Member for Daventry had the same experience?

Tim Boswell (Conservative, Daventry)

The short answer is yes, I have had the same experience, and in roughly the same numbers. We are not talking about a large number of letters—

Ian McCartney (Labour, Makerfield)

My hon. Friend the Under-Secretary is answering the debate, but I want the Committee to get the tone right. Will the hon. Gentleman stop using a printer's error to make a political point? He is using the fact that Hansard printed something wrong to make out that the system is a shambles and that pensioners will not understand it.

Tim Boswell (Conservative, Daventry)

I am happy to accept that assurance. With no disrespect to the Secretary of State or to Hansard, the matter is so complex that it is easy for such errors to creep in. I pass over that, however.

I shall refer to the substantive point made by my hon. Friend the Member for South-West Bedfordshire before I give way to my hon. Friend the Member for Canterbury (Mr. Brazier). My concern is not only that we may receive letters from concerned pensioners who, prompted by a piece in the newspaper, are worried about whether they will be able to talk to someone, but that pensioner organisations may start off on the wrong foot with the assumption that the service will not be properly delivered. If it is to be properly delivered, as we all hope, we need to lay those concerns

to rest before they create a culture in which people expect the service not to work.

I give a loose example, but it is germane to the matter. We have all had huge experience of the Child Support Agency, which is a very different organisation that deals with different client groups.

Ian McCartney (Labour, Makerfield)

The Tories started it.

Tim Boswell (Conservative, Daventry)

The right hon. Gentleman tries to distance himself from it, but it was created with the assent of all parties. We have ended up with a situation in which it is still difficult to obtain a satisfactory service from that agency. That situation may be compounded by the actions of some of the service users, but that is not the point. People do not feel happy or comfortable with it.

I do not want to speak for too long on that subject, however. What I really want to do—and I hope that Labour Back Benchers will approve of my reference—is quote the Prime Minister's remark that what counts is what works. That is a good and congenial principle. I am not getting at the Minister or the Under-Secretary in saying this, but over the years Ministers of all parties have given too much attention to the big scheme and the press release and not enough to the details of delivery. One can go to the opposite extreme and have micromanagement, constant fiddling with the system and telling managers how to do their jobs. However, it is important for Ministers during the run-in process to keep in touch with what is happening and take a lively interest in the delivery.

We may debate endlessly about who was responsible for what, but if we want to find an example from the Department we need not refer to the Child Support Agency. We could consider the example of NIRS2, which did not work as well as Ministers of either party hoped or intended that it would. [Interruption.] The Under-Secretary is seeking to barrack, but I am trying to be as bipartisan as I can on this matter.

Delivering to pensioners and honouring undertakings or understandings is what is important. Only this week, we heard the disturbing news that service pensions will no longer be available by order or warrant but will have to be paid through bank accounts. That decision was not taken by the Minister's Department, but it will mean that some service veterans may feel that they have been badly treated. My hon. Friend the Member for Canterbury may want to comment on that matter.

Julian Brazier (Conservative, Canterbury)

It is particularly crass timing for what is already an unwelcome announcement.

Win Griffiths (Labour, Bridgend)

You are straying a little.

Julian Brazier (Conservative, Canterbury)

I understand that, Mr. Griffiths, but it is particularly bad timing for the Government to announce that decision, given that we have just heard about a long-running tax problem associated with pensioners.

Tim Boswell (Conservative, Daventry)

You were genteelly implying, Mr. Griffiths, that that matter was on the periphery of our concerns, but the example is relevant.

Let me praise the Department, not only to defuse any implied criticism but because it deserves praise for the little leaflet that it published, entitled ''Changes to our service from April 2002.'' That leaflet is clear, in that any member of Committee might understand it and most pensioners would, if they chose to read it. It explains that the Department is being split and that those of working age will deal with Jobcentre Plus and that the Pension Agency will be in contact with those nearing state pension age. It continues:

''The Pension Service is setting up local services to support a network of 26 pension centres which will handle your enquiries.''

It advises pensioners not to panic if they do not hear from the service for a considerable time, because the process will take some while and the service will be able to get in touch with them. The leaflet also says that if people want help from the social fund they will have to go through Jobcentre Plus anyway, even if they are pensioners. That is an implicit contradiction, and an example of what happens when services are divided. Are the different functions actually joined up?

The matters to which I refer attracted considerable attention from the Select Committee, whose report most members of this Committee will have studied. Those who participated in writing the report may want to comment on it. The report makes seven recommendations. It emphasises the need to ensure proper delivery and appropriate levels of training and support for the Pension Service and to test the cost and practicability of providing a freefone number for clients. It also refers to the need for a significant number of local staff able to deal with pensioners on a face-to-face basis. It makes a particular point about pensioners from ethnic minorities, which is interesting when one bears in mind the revelation that there will be no call centre in the south-east because of cost. The call centre will be located in Blackpool, which certainly is remote. Finally, the report emphasises the need for an adequate level of expertise and expresses concerns about initial take-up.

That is a legitimate block of concerns from the Select Committee, which has after all a Government majority.

Andrew Selous (Conservative, South West Bedfordshire)

In relation to proposed subsection (2)(b), does my hon. Friend agree that ''suitably qualified'' should include the ability to speak the pensioner's first language? Will the Minister enlighten us on the number of Urdu and Bengali speakers that will have to be employed in Blackpool to deal with pensioners from ethnic minority backgrounds in the south-east?

Tim Boswell (Conservative, Daventry)

That is a perfectly fair consideration.

There is a wider issue here, and my interests in disability drive me to comment on it. We shall be dealing with those who are frail or vulnerable, do not understand the rules or are diffident about making a claim because they are concerned about means-testing. They may not want to admit to their relative poverty or need for benefit, so it is extremely important that the right kind of training is given to employees, and that they are aware of the sensitivity of the matter. They need to show sensitivity, not just in the cold sense of being able to respond to a query without upsetting

the client; they must show active sensitivity, in the sense of being able to flag up a particular case if they have concerns about the safety of an individual who seems to be suicidal or disturbed—especially if he or she has been given advice that they did not want to hear—or if they have concerns about the urgency of a case, where a domiciliary visit is necessary and someone needs to get on and handle the case.

Most of us would probably be able to resolve the problem if, for example, our pension payment was delayed by a week or two, because people may show us understanding, and we may have bank accounts or reserves of capital, but that is not the case for everyone. We must ensure that those who deliver the service at the coal face can respond to those concerns. I am sure that the Minister would wish that to be the case and I do not want to lecture him further. I just wanted to reinforce the sensitivities that the Select Committee set out in its report.

I want to flag up two specific points. The first—it is not a cheap trick, although it requires the continuing attention of Ministers and senior managers in the Department—is that there are always demarcation lines. It is an old military maxim that one attacks where the two commands of the enemy join. Social fund claimants, who are, by definition, those with extreme and immediate problems, must go through Jobcentre Plus, even if they are pensioners. I emphasise that point to the Minister because he mentioned earlier that many pensioners do not like going through a conventional employment office—[Interruption.] They would find Jobcentre Plus better. I am not seeking to dispute that, but some people would find even that unpleasant because it smacks of going down the social.

My second point relates to the interface with the disability and carers service. I received a helpful response from the Minister on that subject the other day, although it was not entirely convincing, because we shall not know how well the services interrelate until we see the legislation working in practice. However, it is intended that the recipient authority should pass on concerns to other parts of the service, and that will be an important part of the training process. Even if the individual does not know the answer to a problem, he or she will need to know someone who does if they are to pass the case on, and ensure that it is managed properly and does not die off. We all understand why work has to be done in silos and people must be trained in a specific benefit, but they also need to have knowledge on the periphery, as Members of Parliament often have to demonstrate in dealing with casework, to enable them to deal with other difficulties that need to be sorted out.

I want to mention two or three other issues, starting with call centres and telephones. In my constituency experience, when people explain about the benefit that they do not receive or the service that they have received—I do not want to overstate the numbers because they are not huge, but they are a cause for concern in some cases—they often say, ''I rang up and someone told me this, so I did this, and then I was told

that I had over-claimed or shouldn't have received the benefit and there was an overpayment,'' or they say, ''I found out later that I could have claimed, but I haven't got the benefit.''

One of the difficulties with a call centre system is that all the documentary evidence disappears. For years we laughed about people pushing pens, in the Whitehall tradition, and I have some sympathy with that. I have been a Minister, and I know that a private secretary may write lovely notes saying that the Minister has agreed to something when the Minister only put a vague tick on the page, but at least we knew where we were. I remember one interesting exchange with a senior official, when I said, ''I don't think I agreed to that.'' He said, ''Well, here it is, Minister.'' I said, ''Fine—gotcha! I accept it.''

James Clappison (Conservative, Hertsmere)

Gotcha!

Tim Boswell (Conservative, Daventry)

That is what he said—we had a good relationship. The point is that if something is in writing it is incontestable, unless there has been some duress. A telephone conversation is much less definite. We anticipate that officials would give the correct advice in most cases. Sometimes—our constituency work echoes this—we may not understand what the client is trying to communicate to us. It does get confusing. There is also the error—

David Cairns (Labour, Greenock and Inverclyde)

I agree with much of what the hon. Gentleman is saying. However, the technology exists in modern call centres to record conversations. Perhaps that would be a route forward. I had a disastrous experience involving a call to Barclays bank in which I was given very bad advice that had catastrophic consequences in terms of my credit rating. However, the matter was resolved because a recording of the call existed and the bank was able to go back to it. I would like the Minister to tell the Committee whether the technology exists to enable recordings to be kept for a certain period so that calls could be monitored and mistakes such as those that the hon. Gentleman is rightly flagging up could be avoided.

Tim Boswell (Conservative, Daventry)

I am genuinely grateful to the hon. Gentleman for his point. My next note dealt with the issue of recording. However, there is a converse and we should be honest about it. Some pensioners will not want to feel that Big Brother is snooping on them. They will not want their personal details to be recorded. We need to think about that sensitivity. I am attracted to the option of recording for what the financial institutions describe in their advertisements as ''training purposes''. There should be an opportunity for some calls to be recorded and for some officers to be trained using recorded calls.

I have one other concern. There is the danger of confused messages from a pensioner claimant. There is also the danger that when data are being transcribed a cup of coffee could get spilt or there could be some other interruption, such as a power failure, leading to the message's not getting through. I happen to use the same bank as the hon. Gentleman. I have had experiences in which a message has only partly got

through and I have had to start again, although the consequences have not been disastrous or difficult.

All that is of concern. It is a question of customer service and, as the hon. Gentleman was properly implying, trying to replicate the best of modern private sector standards in the public sector. If that replication is not achieved and there is increasing concern about call centres, we need some safeguards to ensure that things are done properly. That applies particularly to situations in which people are taking details and using them to complete a form. There are ethnic minority issues as well—people's English may be imperfect. It may be—the Minister of State may want to respond to this—that pensioners will be able to get an early response from the Pension Service that sets up the schema of their benefit so that if the data do not correspond to what was said, they will be able to point that out. The area is one of continuing concern and it is right to debate it.

The other area about which I am much concerned is that of distance. I must be careful not to make too much of my own case. I live at the very edge of my constituency and have done so for more than 30 years. My constituency is divided into four regional postcodes—it used to have five—and my postcode belongs to a different region. That means that I am fairly used to the problems caused by people sending things to me with the wrong postcode. I shall give an example, which is not intended to imply criticism of the officials involved. I recently dealt with a case involving the disability and carers service and an adjacent village that has an Oxfordshire postcode, despite being in Northamptonshire. I was sent a letter from Wembley. We responded by saying, ''I am very sorry, the place has an Oxfordshire postcode, but it is in Northamptonshire,'' but it turned out that the files had miscarried between Wembley and Birmingham. I do not make a cheap point; it is an example of the sort of situation that could arise. However, the point was not specifically about administrative boundaries but about distance.

Leaving aside the special problems in the south-east, given that the Pension Service is located in Leicester, I understand that my own case will be dealt with in Leicester, as will those of many of my constituents. When I first moved to the area, we tended to use a local social security office in Banbury—I am sure that there was a knock-for-knock arrangement. That office is in a different county, and about seven miles from my home. Things were tidied up later, and everything was transferred to Northampton, my county town, which is 30 miles from my home. Leicester, good as it may be for the Pension Service—I have had a favourable contact with the new director—is 50 miles from my home.

It is nearly even stevens for time as to whether I go to Westminster or to Leicester. It will probably not matter to me, as I am used to using the telephone, and I can even make modest use of the internet. However, for anyone who does not have those advantages, it is a long way to have to hack up to Leicester. The Minister of State has given us lots of assurances about the flexibility that he wants to see, and has spoken of using

drop-in centres and other ways of dealing with the problem. That should suffice, but there is a sort of iron logic in distance. It is therefore all the more incumbent on the Department to offer a local service.

Bill Tynan (Labour, Hamilton South)

Does the hon. Gentleman accept that Members of Parliament have a responsibility? If we are proactive in seeking to encourage people to apply for pensioner tax credit, and if we have information that we can circulate, we should not depend on the service's being provided automatically. It would be better for us to contact our pensioners. I have listened to the debate over the past few days, and recognise that it is everyone's intention that we get this right. However, I am still concerned. Labour Back Benchers have referred to the means-testing element—the complexity element—but if we keep talking about it I fear that we might be putting people off and preventing them from applying for it. If we work together to try to achieve what is necessary, we can make some real progress.

Tim Boswell (Conservative, Daventry)

I am grateful to the hon. Gentleman for his intervention.

Win Griffiths (Labour, Bridgend)

Order. May I appeal to hon. Members to keep their interventions concise?

Tim Boswell (Conservative, Daventry)

It was a worthwhile intervention.

Win Griffiths (Labour, Bridgend)

Oh, very much so.

Tim Boswell (Conservative, Daventry)

The hon. Member for Hamilton, South (Mr. Tynan) made a good point. We may have doubts about the arrangement, but it is conceivable that the Bill will become law. It is therefore incumbent on us not to sit back and hope that it fails but to ensure that it succeeds. If we can, we should play an active and proactive role with local organisations such as Age Concern, and encourage them to make use of the opportunities to reach out to people. I am entirely with the hon. Gentleman on that, and I think that we should signal the fact here and now. That, I believe, is entirely the spirit of the new clause moved by the hon. Member for Northavon.

On distance, close attention needs to be paid to local delivery points; and interaction between the call service and local deliveries is necessary so that people can be transferred relatively quickly if needed.

The only other point that I wish to make is about the Pension Service's annual revisiting of entitlement. That is important if people might be entitled to more if their income has declined. In turn, that will require the use of some smart systems to enable people to notice that they have suffered a downrating of income. We are talking about national savings and investments, not a complex foreign security operation. Such changes in income may affect the overall calculation. We shall return later to the question of capital income.

There is a huge amount to do in the Pension Service. I agree with the hon. Member for Northavon and, in fairness, with the general tone of the debate. It will need a lot of attention along the lines that he has set out. If it has that attention, I am sure that it will get off on the right foot, and we can refine it later. There should be no doubt about the magnitude of the undertaking and the potential downside if it does not work because it is under-resourced or hurried or

suffers from inadequate training later. I am sure that it can be got right; it certainly needs to be.

John Mann (Labour, Bassetlaw)

This is a fascinating debate, especially for its talk of out-of-town call centres. The more Government Departments move away from London, the better. Should there be, because of demand, a requirement for more land, I can assure the Minister and civil servants that the best voice for call centres has been defined as the north Nottinghamshire or South Yorkshire—

Angela Smith (Labour/Co-operative, Basildon)

Basildon!

John Mann (Labour, Bassetlaw)

There are not a lot of South Yorkshire voices there. In terms of honesty and reliability—

Win Griffiths (Labour, Bridgend)

This is a very controversial point.

John Mann (Labour, Bassetlaw)

May I say as a crowning point on that particular issue that I am delighted to inform colleagues that the Labour party's national executive elections telephone voting contact has been awarded in the past week to a large call centre in my constituency. That is a major step forward. It is a non-partisan facility; business is business.

The point is relevant. I have become an expert in trying to win business for call centres in my constituency. This is about data imaging, and I declare an interest in translation, as I established a large translation company some 10 years ago. Data imaging is a key factor in the potential development of equal opportunities for Government services, and one that could be cost effective, and the company that I mentioned in my constituency is at the leading edge of it. It is a technology well beyond most of its competitors in this country and in western Europe, and well above the current capacity of any Government Department. I urge the Government to consider the matter in detail during the next year or two. The ability to use data imaging to complete and process forms in as wide a range of languages as is required will be a significant step forward in terms of the accessibility of Government services.

I would add a caveat to the comments of the hon. Member for Daventry and others about translation. In a sense it reflects that business opportunity. It would be absurd with the range of languages now spoken in this country—I believe that there are 860—to try to pretend that call centres or face-to-face interviews can be made effective by the provision of a translator. Essentially, we must apply the principle operated by Departments such as the Department for Transport, Local Government and the Regions—assistance is sought in an emergency, rather than there being de facto aid provision. Such a service does not exist and would be expensive to provide. I urge caution in relation to any suggestion that accessibility is attainable in that way. It is something of a myth.

I should like to raise two more points. I never cease to be amazed by the number of grey surfers in the mining villages of my constituency.

Maria Eagle (Labour, Liverpool, Garston)

Silver surfers.

John Mann (Labour, Bassetlaw)

We call them grey surfers; we have our own language in the coalfields. They are pensioners who regularly use e-mail and other electronic communication. We have not properly explored linking Government services with further education providers who train pensioners to use electronic services and who could therefore promote accessibility in terms of form-filling, and so on. The development of electronic communication offers a tremendous possibility, and we should make use of the good work being done by further education providers—some schools, although not enough, are slowly beginning to do the same—in acting as community facilities. That work has particularly attracted the older age range.

Tim Boswell (Conservative, Daventry)

The hon. Gentleman is making characteristically constructive comments, and I agree, in particular, with his point on further education. Does he not think, however—the hon. Member for Northavon touched on this—that there should be no element of compulsion? We want no suggestion that pensioner claimants must go to further education colleges to learn how to fill in the forms. Some people of my age have not had the privilege of learning IT as a native language, but have had to acquire it later on. Quite a lot of people are still put off by it, however seductive the hon. Gentleman's presentation.

John Mann (Labour, Bassetlaw)

We are flexible people in the coalfields, and there is a high density of IT usage among pensioners. However, there clearly should be no compulsion.

To ensure cheapness and effectiveness, those involved could connect the FE training curriculum directly to the provision of Government services, rather than using abstract examples to teach people. That tremendous possibility has not yet been exploited, and now would be a good time to do so, before home-shopping supermarket providers such as Tesco corner the market in providing free training advice to FE and other training providers. I hope that the issue will be examined in the not-too-distant future, because we are witnessing exponential growth in that area.

My final point relates to home visits, and I shall be interested in the Minister's response. Sections of the population in many parts of the country include ex-miners with chest infections and respiratory diseases, and asbestos victims—not least those with mesothelioma. Therefore, health and medical experts already have clear criteria for assessing illnesses on home visits, and I hope that such criteria will be transferred cross-departmentally to the Minister's Department, should the opportunity of home visits arise.

Annabelle Ewing (Scottish National Party, Perth)

I am sure that the Committee will be pleased to hear that I do not want to rehash everything that has been said. The hon. Members for Northavon and for Daventry expressed concerns about face-to-face meetings, which are shared by pensioners in my constituency to whom I have spoken and by me. I do not want to play the numbers game, because this is not an issue of how many letters hon. Members receive. One job of Members of Parliament is proactively to explore

possible concerns on behalf of constituents, as the hon. Member for Hamilton, South rightly said. The issue has been properly raised, and I look forward to the Minister's reply.

David Cairns (Labour, Greenock and Inverclyde)

Does the hon. Lady agree that it is also the task of Members of Parliament to allay fears and, as my hon. Friend the Member for Hamilton, South said, not to go around stoking up misconceptions? Does she agree that Members should be proactive in communicating the benefits of this new system to their constituents?

Annabelle Ewing (Scottish National Party, Perth)

I agree that it is not the job of a Member of Parliament to go around stoking up fear and alarm in their constituency or anywhere else, but it is an MP's job to scrutinise draft legislation and to find out whether it will work. Various concerns about the Bill have already been expressed in Committee. I am sure that the hon. Gentleman is not suggesting that MPs should not be allowed to make any comment at all. We should consider the Bill and judge in what ways it can be improved. That is what Opposition Members are trying to do.

To return to the new clause, I share the concerns that have been raised about the face-to-face meetings. I also share those about distance, as I represent an urban-rural constituency. That is a key issue for my constituents.

It is all very well to say that the call centre system will be substituted for face-to-face meetings. I note with interest paragraph 50 on page 22 of the Select Committee's report. It states:

''The DWP, in its memorandum, told us that: 'Many pensioners have said that they prefer using the telephone.'''.

I do not know what the percentage is, or how big the sample was—

Maria Eagle (Labour, Liverpool, Garston)

Some 64 per cent. of pensioners now make their retirement pension claim on the telephone.

Annabelle Ewing (Scottish National Party, Perth)

I thank the Minister for that helpful intervention. However, the fact that they make their claim by telephone does not necessarily mean that they prefer to do so. What is their motivation? How does the Minister know that that figure reflects a preference?

Maria Eagle (Labour, Liverpool, Garston)

That is how they choose to do it. We do not prescribe whether they should go into an office to fill in a form or pick up the phone. They choose to pick up the phone.

Annabelle Ewing (Scottish National Party, Perth)

With respect to the Minister, the fact that they do so is not indicative of their motivation in doing so or of a preference. It may be that for whatever reason they could not get in to the local office. Travelling can be very difficult for those in rural communities and there may be many reasons why pensioners use the telephone rather than going into an office.

Steve Webb (Liberal Democrat, Northavon)

Does the hon. Lady accept that the preferences of newly-retired pensioners may be very different from those of pensioners in their 80s or 90s? Familiarity with the practice of doing financial business over the phone may vary a great deal among the very large pensioner population.

Annabelle Ewing (Scottish National Party, Perth)

Yes, that is exactly the point. It is also true of technology. Many new pensioners will be much more au fait with computers than those in older age brackets. Those older pensioners may have completed computer courses at further education colleges, but that, I think we would all accept, is unlikely. There should be no element of compulsion forcing pensioners to deal with the service via a particular communication channel.

We need to be satisfied that the arrangements for the call centres will be adequate. We have all experienced problems with call centres—that is not an attack on the staff of call centres, who do an extremely good job, frequently in very difficult conditions. Whether a call centre is successful depends on how it is set up, resourced and managed. We do not have very much detail of the plans for the service's new call centres. It seems that there are to be 26 of them. Does the Minister know how many staff will be allocated to each one? Is it envisaged that each member of staff will be trained to the same level, or will there be more junior front-line staff in a pyramid structure, with a few managers at the top? That is an important point because it can be frustrating and may increase the length of calls if the first point of contact in a call centre is someone who is not trained to a particular level.

Has any estimation been made of the necessary resources based on the estimated average length of the call to a freefone number? When pensioners ask a series of questions so that the relevant form can be set out, how long is the call likely to take? Calls could be lengthy, so there is a strong argument for a freefone number.

Lastly, on another point that frustrates those who use call centres, if the person who makes the call does not have all the information to hand and has to phone back, will he or she have to start at the beginning again or will it be possible to slot in somewhere in the middle? The Minister is looking exasperated. Perhaps the Minister does not have to use call centres in his position.

Ian McCartney (Labour, Makerfield)

All the time.

Annabelle Ewing (Scottish National Party, Perth)

It is tremendously frustrating to have to phone back and start right from the beginning. My questions are specific, factual questions, and I look forward to a response.

David Cairns (Labour, Greenock and Inverclyde)

It is hard to disagree with the sentiments behind the new clause, and I am grateful to the hon. Member for Northavon for enabling us to discuss the Pension Service in more detail than we would otherwise. However, I am willing to accept the reassurances of the Secretary of State on Second Reading and, presumably, the Under-Secretary in this Committee, that the issues are being considered seriously and dealt with in the construction of the Pension Service. We are not dealing with that matter in our considerations, but the new clause gives us an opportunity to raise questions about it.

The Minister will know that the question of take-up is vital and central for all hon. Members. There is no

point making an extra £2 billion available in devising a system that rewards those with modest savings and small pensions if people do not receive the money to which they are entitled. He will share with me the desire to ensure that people get their hands on that money, and in that respect the operation of the Pension Service is crucial.

The hon. Member for Northavon rightly spoke of the need for a change of culture in the service. I am encouraged by precedents that show a change of culture in the Department over the past few years, much of the credit for which must go to the Secretary of State, who has been responsible for steering that change. One of the Jobcentre Plus pilot schemes ran in my constituency at a cost of £2 million, which was the largest single investment in helping the long-term unemployed back into work made by any Government. I am grateful for that investment, which is already beginning to show results.

Even allowing for the industrial action that severely hampered the operation of that scheme and which is now over, we can see in the operation of Jobcentre Plus encouraging signs that the change of culture for which we argued eight or nine months ago, when it was evolving from trials, has actually taken. The questions that constituency Members were asking eight or nine months ago are similar to those that the hon. Member for Northavon asked, such as ''When the initial calculation is made, will all benefits be taken into consideration?'' We can see that that has happened in the Jobcentre Plus scheme. When someone is shown a job opportunity, an immediate calculation can be made on how the working families tax credit and all other benefits will be affected—with the unfortunate exception of housing benefit, which is still clogging up the system. Reform of housing benefit lies well beyond the scope of the new clause, but I mention it again because we simply must grapple with it, as its complexity is mind-boggling.

The staff in the old Benefits Agency and the Employment Service have shown a willingness to embrace the change of culture and are making it work. Those who were out on strike, with whom I had many meetings, were striking because they were concerned about the change of culture and the greater degree of proactivity. They had specific concerns about safety. The change of culture is permeating the whole Department, and beyond. The Inland Revenue, which will clearly have a part to play in the calculations, are embracing a proactive culture in their Department.

The hon. Gentleman is right to raise the questions and ask whether the change of culture that is necessary for delivering the service will take place, but recent precedents are encouraging. I have been speaking for a while, so I shall curtail my remarks.

Maria Eagle (Labour, Liverpool, Garston)

We have had a long and interesting debate about the new clause. I shall deal with the specific points raised before commenting on the new clause.

First, I wish my right hon. Friend a very happy birthday. He must be having a great time.

Ian McCartney (Labour, Makerfield)

Same time, same place next year.

Maria Eagle (Labour, Liverpool, Garston)

We might have another Bill next year, apparently. Same time, same place—who knows?

Our intention in respect of the Pension Service is to have a better service that is more tailored to the needs of pensioners instead of being mixed up with a service more aimed at working-age people. That is the reason for the separation between Jobcentre Plus and the Pension Service. It is not being done simply for the sake of change and to give civil servants something to do, but because when it is completed we shall be able to provide a better, more tailored service for our pensioners and enable those who deal with working-age clients to respond better to their needs. I hope that hon. Members accept that we are not simply dabbling for the sake of it, but undertaking a major change in culture and organisation within the Department with the aim of improving the service.

The Pension Service, formally launched on 1 April, will be responsible for ensuring that pensioners receive their pension credit entitlement, their other retirement pension provision and anything that they need in respect of that entitlement. It will provide a more modern, efficient, customer-focused service that is dedicated to combating poverty, encouraging saving for tomorrow's pensioners and trying to ensure that current pensioners receive their entitlement.

Many have questioned whether the telephone is an appropriate way for customers to contact us, but many pensioners already use that medium. It is more convenient, because most pensioners have telephones. As I said to the hon. Member for Perth (Annabelle Ewing), approximately 64 per cent. of retirement pension claims are made over the telephone. It is easier, more convenient and does the job.

Tim Boswell (Conservative, Daventry)

Will the Under-Secretary tell us what the dispute or complaint rate is? In other words, how many calls generate further correspondence because of alleged errors made by officials?

Maria Eagle (Labour, Liverpool, Garston)

I shall try to reply at some point to the hon. Gentleman's question. I do not know the figure off the top of my head, but I shall do my best to answer him in time.

We are centralising those telephone services in a sensible way in the 26 pension centres. They will be our customers' daily contact point, probably for longer than normal office hours. We are changing the way in which we work.

In addition to the 26 pension centres, the Pension Service will operate an improved local service nationwide. Committee members' remarks have followed two trends. The hon. Member for Northavon was concerned that tight standards, set centrally, should be imposed locally in order to ensure that a level of service of which we would approve is definitely available. However, the hon. Member for Daventry and others suggested that needs would vary enormously from one area to another due to distance and other factors, such as whether they are urban or rural. Some of us, as the hon. Member for Perth said, have a mixture of urban and rural areas in our constituencies. It is not sensible to prescribe down to

the last dot and comma exactly how things should be done—as the hon. Member for Daventry will agree, given his comments about micromanagement.

We are developing partnerships with many organisations, including local government agencies and the voluntary sector dealing with elderly people, to provide an extra level of service locally, in addition to the national call centre-based services. The local service will allow us to meet customers face to face in places where they feel most comfortable, such as libraries or local community centres, which will vary from place to place. It will also offer a home visiting service and regular surgeries where pensioners know that can contact the Pension Service.

Tim Boswell (Conservative, Daventry)

In this respect it is useful that the Under-Secretary is a lawyer. Will she reflect on the need to tie up very carefully, in cases where an agent is involved, the nature of the advice and the responsibility for that advice? We do not want to add a further level of potential recrimination if people are given advice through a third party, which is later repudiated by the Department. It is important that service level agreements are tied up closely. In principle, it must be clear that it is the Department's advice that is being given.

Maria Eagle (Labour, Liverpool, Garston)

Yes. The hon. Gentleman anticipates my next remarks. It is important that we do not simply give people a blue badge and let them loose to say whatever they like. Fully trained Pension Service staff will provide the information, and their focus will be entirely on the needs of pensioners. We should be able to ensure that we have a responsible, dedicated service, suitable for each local area, in addition to the call centre and the telephone-based service that will be offered.

Before I deal with the new clause, I shall answer some of the points made during the debate. The hon. Member for Northavon asked how we shall get from where we are now to where we should like to be. That is a question that Liberal Democrats do not always have to answer. We shall do it over a period of time. The call centres are being established and we shall develop the local service over the next year or 18 months. Until that happens, pensioners will not notice a change. They will still be able to go into their local social security office in order to receive the advice and help that they need.

Steve Webb (Liberal Democrat, Northavon)

This is something that I have tried unsuccessfully to pin down through written questions. There will be a period until the local service is established and then there will be one once it is established. I have asked whether people will have face-to-face contact as soon as they need it. The answer has been that they will still be able to go into a benefits office because the local service is still being introduced. I understand that that will be the case until it comes in. What I am trying to clarify is, once the whole shooting match is up and running, will I, as a pensioner, be able to say, ''I want to come in tomorrow and get some advice about income support, which I desperately need''? Where would I go? Would it be to a Jobcentre Plus office, because there will be nowhere else?

Maria Eagle (Labour, Liverpool, Garston)

The hon. Gentleman essentially asks about the local service, which, as I have tried to explain, will meet the needs of people in the local area. We do not intend to prescribe that there will be a Pension Service office in towns of a certain size. There will be partnership agreements between ourselves, other Government agencies, local government agencies and voluntary sector agencies about what is appropriate in any particular area. Therefore, provision in the constituency of the hon. Member for Northavon may be different from that in the constituency of the hon. Member for Perth or that in the constituency of the hon. Member for Daventry, but the idea is to make provision suitable for the local area and to supplement the national pension call centre, through which pensioners and customers will be able to keep in daily touch, if they wish. The arrangements will enable pensioners to access services and advice in whichever way suits them.

Tim Boswell (Conservative, Daventry)

The Minister is genuinely trying to help the Committee, but does she not also agree that it is important, both in terms of staff development and the management of her Department, that people are aware of other activities in which they are not involved from day to day? I am not suggesting that people at Jobcentre Plus should give authoritative advice on pensions, but when an old lady comes in, because she knows that the building used to be a benefits office, someone should be able at least to scope what she is worried about and pass it on quickly, preferably without the old lady having to make a second visit, to someone who can deal with her query and get her the service that she needs.

Maria Eagle (Labour, Liverpool, Garston)

We are making those arrangements. To reiterate for the benefit of the Committee, during the coming year, pensioners will continue to be able to access local services through the existing network of local offices while we build the new local service network of the Pension Service. The Pension Service has been discussing partnership arrangements, and has received very positive responses from a range of key stakeholder organisations, not only from Government and local government organisations, but from organisations that represent elderly people, to which the hon. Member for Northavon referred. Help the Aged, Age Concern and the National Pensioners Convention have all been involved in devising the arrangements for local partnerships to deliver a local service.

The hon. Gentleman raised the issue of targets, and asked whether we would publish performance targets. I hope that he received a copy of the Pension Service business plan, accompanied by a letter of 5 April. It might be waiting for him in his constituency office. That document includes some of the existing targets that the Pension Service is working towards, as well as details of the work programme for the next year or two.

Steve Webb (Liberal Democrat, Northavon)

For the benefit of the Committee, will the Minister read out one or two targets that relate specifically to new clause 1 and to advice standards?

Maria Eagle (Labour, Liverpool, Garston)

I am just having a look at some of the

targets to which we are already committed. For example, there is one for accuracy, which relates to quality of advice. Claims will not be accurate if people are not properly advised. We aim to achieve an accuracy rate of 94 per cent. on minimum income guarantee by March 2003. The document contains a whole set of targets, which I recommend the hon. Gentleman takes a look at. I will not read them all, but they are available in highly readable form, and the hon. Gentleman should have received a copy. If he has not, I shall provide him with one.

By the time the service is up and running, pensioners will be able to contact us by telephone, post, interactive digital television—we are just starting a pilot using interactive digital television; one does not need to be a silver surfer to have that—the internet and local and home visits. It is probably a better range of services than pensioners have ever had when dealing with central Government. That is certainly what we aimed for, and we believe that it will be a great improvement.

The hon. Member for Perth asked a number of questions about the staffing levels of the call centres. There will probably be between 250 and 350 staff per call centre. They will be skilled; we shall not put extremely junior and untrained staff on duty and leave them to it. That is not the way to achieve an efficient service. Our aim is that 80 per cent. of queries should be dealt with on the first call, without staff having to go away and check things. The efficiency and speed of call centres are undermined if the staff are not properly trained. The targets are important. We need to ensure that the staff who deal with pensioners are properly equipped for the job. We shall publish public service agreement and performance targets for the service following the current spending round. The hon. Member for Northavon will then be able to see how the business plan is translated into those targets.

My hon. Friend the Member for Bassetlaw (John Mann) assiduously seeks new jobs for his constituents. We should praise him for that, and for representing his constituents and doing his best for them. He had some interesting things to say about the technology used in call centres. One call centre in my constituency has no telephones. That is something to behold, but I have seen it and it is very interesting. Call centres without telephones do exist, and one of them is to be found in Liverpool, Garston. I am aware that some fast-moving technology is involved, and we want to take advantage of it as soon as it is available because it will enable us to do a much more efficient job.

Various questions were asked about postcodes going wrong, about what would happen if the wrong information was given and whether people would have to go back to the beginning of their claims. If the wrong information is given or if there is a lack of information on the form, our IT and software will not allow staff to proceed beyond a certain point. Staff in the telephone call centres will not be writing messages on bits of paper and sending them to each other; they will be working directly on PCs. Although people may sometimes spill coffee on their PCs, they will not be spilling coffee on notes, and I can reassure the hon.

Member for Daventry that notes will not be able to go missing. Staff will put information directly on to the PC and post it immediately to the customer, who will then check it, sign it and return it.

The hon. Gentleman asked about complaints about the telephone service. I am told that since June 2001 we have received 52 written or telephoned complaints about the service. Given that we contact about 1 million of our customers each day, that is not bad. We have high hopes of providing a good service.

Annabelle Ewing (Scottish National Party, Perth)

The Under-Secretary may be about to answer this point, but I and other hon. Members asked about the possibility of having a freefone number, at least during the transition period.

Maria Eagle (Labour, Liverpool, Garston)

Yes, indeed. The telephone calls will all be at the local rate. We shall be perfectly willing to call back those who wish it, so that people will not necessarily have to spend a lot of money making long calls. It should not be a problem. I hope that I have allayed the hon. Lady's fears in that regard.

The new clause appears to require us to deal with pensioners on a face-to-face basis, even if they want to deal with us on the telephone. That is my reading of it, although the word ''may'' appears in subsection (1), which casts some doubt on its meaning. In any event, it is far too prescriptive in its intent. We have every intention of providing an excellent service without having to use such a clause to prescribe the details of the information service and the regulations. We fully intend, and I hope that I have been able to convince the Committee of this, to provide an excellent service to pensioners. That is what we are setting out to do.

Andrew Selous (Conservative, South West Bedfordshire)

The Under-Secretary has just told the Committee that pensioners calling the service will be charged at the local rate. Given the falling cost of telephone calls in Britain, will she undertake to the Committee to follow up the Select Committee's recommendation 52? Will the Department consider the cost of providing a freefone number? If the figure were very low, there might be grounds for setting up such a number in the near future.

Maria Eagle (Labour, Liverpool, Garston)

I can certainly promise the hon. Gentleman that the Department will respond in full to the Select Committee's report in the usual way. No doubt we will consider his point carefully. I hope that I have satisfied the hon. Gentleman that his new clause adds nothing to the Bill except perhaps some confusion about whether it forces us to see people face to face. I hope that, in view of my assurances, he feels able to withdraw it.

Steve Webb (Liberal Democrat, Northavon)

We have had a full debate on the new clause and I am grateful to all those who have contributed their different insights, often from their constituency experience. The constructive comments about the culture change in Jobcentre Plus are worth reflecting on.

The principal issue that we have discussed is that of standards, entitlements and targets. Is it a question of a Government and a Department with good will trying to do their best? Should we all be reassured of that and

go away happy, or do pensioners have entitlements and rights? The new clause implies that it is not enough for Ministers to assure us that the service will be much better and have bells and whistles. If the new clause is added to the Bill and the Government are true to their word, it would not do any harm because the quality of service will meet its criteria. It is designed to ensure that face-to-face services are available, not mandatory, and that they will be provided by suitably qualified people.

Tim Boswell (Conservative, Daventry)

Does the hon. Gentleman agree that the new clause is very much in the spirit of the citizen's charter, which was introduced by the then right hon. Member for Huntingdon, John Major? Even if it did not always work, it was materially useful in raising standards in the public service generally.

Steve Webb (Liberal Democrat, Northavon)

The idea of minimum standards is good. The Under-Secretary has a lot of time for the idea of local discretion, and the way in which the services are delivered will need to vary from area to area. At the same time, people should be able to expect certain minimum standards in the quality of outcome nationwide. To draw a brief analogy, we have minimum standards in response times for ambulances. They are different in rural and urban areas, but we still have minimum standards. Although the mechanism for delivery needs to tailored to the local area, there is no need for a degree of discretion that would allow one area and its pensioners to have a poorer standard of service than another.

If the new clause is added to the Bill, it would not require the Government to do anything that they are not telling us they will do. If they do what they say they will, it will have no binding effect, but if they do not, the measure will be a stopgap and a safety net for pensioners to ensure that wherever they live they get the accessible service that we all want for them. For that reason, I wish to test the Committee's opinion on whether the clause should be added to the Bill.

Question put, That the clause be read a Second time:—

The Committee divided: Ayes 6, Noes 9.

New Clause 2 - Fraud

James Clappison (Conservative, Hertsmere)

I beg to move, That the clause be read a Second time.

We now come to the entirely different subject of fraud. The amendment is modest but important. It proposes that the Government set out a report each year before both Houses that contains a statement as to the extent of fraud in state pension credit claims and what measures they are taking to deal with the problem. Fraud is taking place across the range of benefits—in credits, social security payments, credits administered by the Inland Revenue, and so forth. Fraud is an important subject and we need to know what the Government are doing about it, because a substantial amount of public money is at stake.

We have raised the question of fraud throughout the deliberations of Committees on tax credits, especially on the working tax credits in the new Tax Credits Act 2002 and the working families tax credit. We are still waiting for an answer from the Government about the prevalence of fraud in working families tax credit. They initiated a survey—a benchmarking exercise—to discover the extent of fraud within that credit, but it was abolished before we got sight of the survey report. We are still waiting, and the Treasury seems shy about telling us how much fraud there is. We hope that Ministers in the Department for Work and Pensions will do a little better than their colleagues in the Treasury.

Fraud is an important subject. In evidence to the Public Accounts Committee in July 2000, the Department gave its estimate of the level of fraud throughout the social security system as approximately 3 per cent. of benefit expenditure. Estimates vary depending on whether fraud is proven or suspected. One Government Minister said it could be as low as £2 billion or as high as £7 billion, if one took into account cases of suspected as well as proven fraud.

In the course of our deliberations, we have already made observations about the prevalence of fraud within pension credits and benefits for the elderly. It may be less prevalent among elderly people claiming benefits and taking up benefit entitlements, but it is not unknown. However, instances of fraud appear to be low in respect of retirement pension, and the same is true of other universal benefits with age-related entitlements.

Fraud seems to be greatest in means-tested benefits, not least because of their complication, which sometimes encourages people to embark on fraud. If a benefit is complicated, people might commit fraud and then find themselves trapped in fraudulent situations. The pension credit is a means-tested benefit, so we should be on our guard about fraud. We should therefore be grateful if the Minister would tell us what steps the Government will take to ascertain the level of fraud in pension credit. We hope that he can also give us details about who will investigate the fraud, and whether investigations will be made on the same basis as others carried out by his Department.

We would also like to know the Government's strategy for dealing with fraud in pension credit. We seek reassurance that they are doing all that they can, both in the Bill and in secondary legislation, to design out that fraud. We make no apologies for raising the subject, as we think that it is important. We want to save public money, and get it to the people who are properly entitled to it, not those making fraudulent claims.

Ian McCartney (Labour, Makerfield)

This is perhaps the third occasion that we have discussed fraud, but I am not complaining. As I said on the previous two occasions, we all recognise that we are not attacking and impugning the character of pensioners per se. We are holding a genuine debate, which must take place, on the design of a new form of income. We must also discuss how the credit impacts on the Government's strategy of fraud prevention, how to establish when fraud is taking place, and the processes for dealing with it by means of the legal system.

Although I have no problem engaging in discussion with the hon. Member for Hertsmere (Mr. Clappison) on the subject, I am a wee bit disappointed. I thought that when we discussed it previously I gave as full and as frank an explanation as one could give at this stage. Also, by offering to have further discussion with officials, I had indicated that we were in an ongoing process. It is worth saying that, as we are bringing in a brand new benefit and scrapping the weekly means test, we have to rethink the strategy for measuring underlying losses caused by fraud or error.

Our Department's fraud investigation service has worked with us from the outset in designing both parts of the pension credit: the minimum income guarantee and the guarantee credit. There is also inter-relationship with working-age services and the Pension Service in the development of their business strategies. It is an integral part of both the development of the policy and its outcome—the implementation strategy—that those in the Department with expertise in the subject of fraud work with us. It is important to say that from the outset. Measures against fraud are not seen as a peripheral issue or an add-on. They are part of the integral core activities in the design and implementation of pension credit.

The new clause would place a statutory requirement on the Secretary of State to report annually to Parliament on the level of fraud in pension credit and the measures taken to deal with fraudulent claims. We believe that the new clause is unnecessary; we do not need a statutory requirement for an integral part of our business. As the weekly means test no longer applies, the pension credit will significantly reduce the scope for mistakes, and with that for fraud, on the part of the claimant. Many mistakes are made because pensioners forget to, or do not realise that they have to, report a change in circumstances—most commonly an increase in their capital or their second pension.

However, we are not so naive as to believe that we have completely removed the potential for fraud, or that pensioners never steal from us. Figures show that 3.2 per cent. of MIG claims are fraudulent. That is about a third of the level of fraud in benefits for lone

parents, and well below the figure of 9 per cent. for fraudulent job seeker's allowance and incapacity benefit claims. Pension credit has the least fraud of any of the benefits for which we have indicators, but fraud still occurs. Pensioners are just as determined as we are that they should not be defrauded by fellow pensioners—that minority of a minority. It is therefore in all our interests to get this right, and in a non-partisan way.

I do not believe that there is a difference between the political parties on the concept of getting rid of fraud. Arguments have been advanced in the past about whether parties could clamp down on fraud as they claimed to want to do and about how best to do so. However, we all appreciate the benefit to the citizen and the taxpayer if fraud does not take place, whether at a low, medium or high level, and of tackling it and bringing to justice those who perpetrate it.

I am trying to make it clear to the hon. Gentleman how seriously we take the matter in designing pension credit. I hope that at the end of my remarks he will be sufficiently secure to say that he has made his point, that the measures that we are putting in place will be preventive and that we have the capacity to deal with fraud both in the transitional arrangements to transfer the old MIG, or income support, system to the new pension credit system, and when the new system is effectively up and running.

As I said, we are not naïve about the potential of a minority of pensioners to steal from us. The key to success in preventing fraud in pension credit is to ensure that the application process is secure. The design of the process is still being refined, with that purpose in mind. As I said earlier, I shall be more than happy on another occasion to discuss with the hon. Gentleman how that will be achieved.

Since day one, experts involved in the Department's fraud strategy have been involved in the design and are playing a key role in ensuring that the process is as secure as possible. That is not to say that the application process will be off-putting for pensioners. The balance must be correct. We do not want to meet a public perception of dealing with fraud in a way that is so off-putting that it deals neither with fraud nor with pensioners' capacity to be put off by the bureaucracy involved or to be confused by the bureaucracy and to fall into fraud through no fault of their own.

As the hon. Gentleman says, it is important that the design features design out fraud. However, they must also tackle fraud in existence intelligently. We must get the balance right and ensure that the process is simple but not simplistic and has the capacity to catch those who intend to defraud or attempt to do so. That involves working intelligently behind the scenes with information provided in order to identify rogue claims. For example, it might be possible to identify an undeclared occupational pension from the details of a person's retirement pension calculation. We shall use existing intelligence in the system alongside the new design features that will be available.

The new clause is restricted to fraud. It is imperative that fraud should be rooted out, but what about other forms of incorrectness, such as genuine error on the part of the claimant or departmental error? Such cases do not constitute fraud in common language, but they are the main causes of benefit being overpaid or, indeed, underpaid to the pensioner involved.

When the Government first took responsibility in 1997, although the Department was far from short of targets for its anti-fraud activity—on number of visits, number of fraud referrals, weekly benefits savings from detected fraud, and number of claims withdrawn—there was nothing on which success in removing fraud and error from the system could be judged. There was no process for judgment.

Success can be measured only in terms of outcome. The key question is, has the level of losses from fraud and error been reduced? That is the basis of our public services agreement target for reducing fraud and error in income support and jobseeker's allowance. We are in the process of developing a robust strategy for measuring losses from fraud and error in pension credit, too. The hon. Gentleman asks whether we shall be able, in the public domain, to judge reductions in fraud, loss and error as we have for income support and jobseeker's allowance. The answer is yes.

James Clappison (Conservative, Hertsmere)

I am listening carefully to the Minister. His comments are helpful, but I ask him to go a step further and say that his Department will place in the public domain the results of its investigations and analysis, and targets.

Ian McCartney (Labour, Makerfield)

Current targets are in the public domain, as I shall discuss in a moment.

Targets must be meaningful and outcome-based. We are the first Government to have such a strategy. The hon. Gentleman asks us to extend to pension credit a strategy that has been in place since 1997. He does not need to ask exactly what the strategy will be. It will be an extension of that strategy, based on design features of pension credit, not on jobseeker's allowance or income support, for obvious reasons. That needs to be done in consultation with the National Audit Office in considering carefully how underlying fraud and error can be most accurately measured. We also need to consider carefully how to devise an effective approach that minimises intrusion into pensioners' lives.

The new clause would be redundant. It would remove an important safeguard in the impartiality of the fraud and error figures.

The hon. Gentleman asks whether information will be in the public domain. It will. In addition, publication will be independent. Impartiality is important. Let us be honest: a political brickbat over the years has been who has the best policy on fraud and who has done most on fraud. Most Opposition parties base their alternative Budgets on filling up the black holes and getting rid of fraud. The hon. Member for Northavon laughs, but that is true of 90 per cent. of his Budget. They add up the fraud and say, ''That's fine. We're about £1.9 billion short of our target, so

we'll fill that up with fraud. That'll make us feel good.'' It is a classic. Let us be honest—we are in the open here, and we may as well be transparent about each other's views on such matters.

We have to do better than that. A genuine effort is being made to put in place a preventive strategy and, when that strategy fails and someone is involved in fraud, to challenge and stop that fraud on behalf of the citizen and the taxpayer, and to deal with the person who has perpetrated the fraud. Those three pillars are important.

The fourth pillar is public accountability. That is what we are dealing with here—how we can, through important safeguards of impartiality, have transparent ways of finding out whether the Government are achieving what they set out to do in reducing fraud and error. Those four pillars are a significant step forward from where we were pre-1997. I hope that the hon. Gentleman will accept what I suggest as something that will meet his requirements.

Publications from the Office for National Statistics are subject to a strict protocol under which Ministers have no say in either content or timing of release. Now there's a thing to shiver my timbers. I did not realise that. That is going a bit too far. Does Alastair Campbell know that? It is not possible to get any better than that. I would even argue that a fifth pillar has been sneaked in there.

Seriously, however, I am trying to show how the days of yah-boo about fraud and error should be over. We have put in place intelligent business systems in designing our products in order to prevent fraud, seek it out, stamp it out, deal with perpetrators and allow in a transparent and impartial way the public and the House to see how we have dealt with fraud and error. Along with fraud, error is important. We have concentrated on fraud. Fraud is a fraud on the taxpayer and the citizen. Error is a damning indictment of a system because it impacts negatively on the individual who should not have been the subject of error. The processes for dealing with error are transparent, independent and impartial.

We will do everything that we can as we progress through the implementation of the strategy, and I have no problem with working with colleagues in the House to ensure its success. We are absolutely determined to root out fraud and reduce error to the barest minimum although I cannot hold up my hand and promise that, in a million contacts a day, there will not be someone somewhere who is dealt with inappropriately. I will, however, apologise each time that it happens.

Indeed, there is a new system. Whenever a complaint is brought to my attention, as well as writing to the hon. Member concerned, I write a personal letter of apology to the constituent on the hon. Member's behalf because it used to get right up my nose when I received a letter from a Minister saying, ''Please apologise to a constituent on my behalf.'' Why? The Department made the error. The buck stops at my desk, even if I did not know about the error. We have introduced a system of personal apologies from Ministers to constituents who have been the victim of an error.

It is a question of culture. If I ask staff to change their culture and become ambassadors on behalf of older people while doing their day job on the front line, at the very least I should give leadership. I am prepared to put up my hand as a Minister and apologise. Whenever possible—occasionally we can—we should pay compensation for the error. It is important for Ministers to show leadership.

We are determined to root out fraud and error, but I hope that hon. Members will agree that the vast majority of older people are honest, upstanding citizens. The measures are about protecting those citizens in particular and the taxpayer in general, because taxpayers pay for the system through tax and national insurance contributions. We have taken the hon. Gentleman's amendment seriously. I hope that he will agree that the measures that we are taking and will continue to take more than meet the problem, and that he will withdraw his amendment.

James Clappison (Conservative, Hertsmere)

I shall certainly look very carefully at the Minister's considered remarks and the strategy that he outlined. However, I emphasise that we need information to determine whether the strategy is working. We need benchmarks for current levels of fraud that are based on robust evidence before we can determine what impact the strategy is having.

I agree with the generality of the Minister's comments about older people, and about people who commit fraud because of complication. However, I was not quite with him when he said that people could come into fraud through no fault of their own. I know what he was getting at, but, in order for fraud to be committed there must be intent to commit fraud, which is what he later said.

In his earlier remarks, the Minister was possibly referring to people who become involved in fraud even though their applications were not fraudulent. One way or another, they find themselves trapped in fraud. There is a greater risk of that happening when things are complicated, because people are exposed to more temptation. We must always be careful that, when an allegation of fraud is made, it is proven according to strict standards, the intent to defraud is proved and that we all understand what that is.

Julian Brazier (Conservative, Canterbury)

My hon. Friend makes a powerful point. There are many advantages to adopting a five-year system. However, one of the problems is that, should pensioners discover some time into the assessment that they have got their calculations wrong for three or four years, the prospect of making a potentially huge repayment could be a strong incentive to keep their head down and not own up to something that they would never have deliberately done.

James Clappison (Conservative, Hertsmere)

It is my hon. Friend who makes the powerful point, because that is absolutely right. I dare say that there are other ways in which complication can expose people to a high temptation to commit fraud. We know that older people are generally more honest and we often look to the older generation for examples of how to behave honestly and decently.

The Minister's remarks about design are also important, and I urge the Government to bear those

in mind throughout the design stage to find ways in which to design out fraud. For an example of fraud suddenly coming to light, we need look only at the individual learning accounts in the last Parliament.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee A

New clause 2 - Fraud

James Clappison (Conservative, Hertsmere)

I was about to bring my remarks to a close before we adjourned for lunch. I was talking about individual learning accounts, about which my hon. Friend the Member for Daventry (Mr. Boswell) memorably asked the Deputy Prime Minister at Prime Minister's questions. The lesson that we must learn from the problems that arose with ILAs is that there is no room for complacency. If we do not scrutinise such provisions with the right degree of rigour, a great deal of fraud may suddenly come to light. That is what happened with ILAs, which had to be precipitately withdrawn.

Having highlighted the dangers that we face, I should say that I am grateful to the Minister for his remarks. As in other areas, we shall hold the Government to account as regards fraud. On that basis, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New clause 4 - Self-employed

James Clappison (Conservative, Hertsmere)

I beg to move, That the clause be read a Second time.

New clause 4 is about pension provision for the self-employed and how they fare under the state pension credit. As a result of evidence that it received during its investigation, the Select Committee on Work and Pensions directed its attention to this subject. In its memorandum to that Committee, the Association of British Insurers categorised the position of the self-

employed as an anomaly within the pension credit proposals. The Association said:

''One of the stated aims of Government pension policy is to ensure that all pensioners share in rising prosperity. The current system manifestly fails to ensure that this is the case for the self-employed. The Pension Credit proposals will extend this inequitable situation. ABI urges Government to grasp this nettle and address the issue of pension provision for the self-employed. We endorse the recommendations put forward by the Pension Provision Group, namely that the self-employed, as a group, ought to be brought into the State Second Pension (S2P). Doing so would allow all self-employed persons to benefit from S2P—thereby enabling them to gain access to the savings credit element of the Pension Credit.''

That submission quotes the Pension Provision Group. In its December 2001 report, the group concluded that excluding the self-employed from the state second pension when it moved to being a flat-rate pension would further increase the gap between pension provision for employees and the self-employed. The group, which examined precisely that question, said:

''Last November the Government published its outline Pension Credit proposals, and we decided we should take the opportunity to review this report in the light of them. Our view is that Pension Credit, as proposed then, and in the absence of our recommendations in this report, would further widen the pensions gap between employees and those in self-employment.''

At the time that the report was published, the Government said in a written parliamentary answer:

''We also welcome the group's report on pension provision and self-employment. It makes a useful contribution to the debate on this important issue.''—[Official Report, 19 December 2001; Vol. 377, c. 384W.]

Apparently, it was a useful contribution in December 2001, but it does not seem to have got much further. In a later reply, to my hon. Friend the Member for Havant (Mr. Willetts), the Minister said:

''As with SERPS, self-employed people cannot join the State Second Pension because they do not pay class 1 national insurance contributions.''—[Official Report, 20 March 2002; Vol. 382, c. 429.]

That is right; the self-employed do not pay class 1 contributions, but they do pay class 2 and class 4 contributions. Although their national insurance liability remains below that of employees who pay class 1 contributions, self-employed persons above the lowest rung of earnings pay ever more in combined class 2 and class 4 contributions. Their liability has increased significantly because of changes that the Government have already made. Indeed, that is something of an understatement, given that those on moderate incomes have seen a whacking increase in their contributions,; even before we take into account the effects of the Budget that was unveiled last week.

According to figures supplied by the House of Commons Library, if we take into account class 2 and class 4 contributions, the national insurance liability of a self-employed person earning £30,000 a year has increased from £1,350 in 1997–98 to £1,881 in 2002—a £531 increase. Those are the figures up to this year, but when the Budget takes effect, the same person will be a further £253 worse off. The liability of a self-employed person earning £30,000 a year will, therefore, have risen £784 since 1997; from £1,350 to £2,134.

The increase in contributions at higher levels of income is even more dramatic. The national insurance liability of a self-employed person earning £50,000 a

year, for example, will have increased by more than £1,000 since 1997 because of the Budget and earlier changes. Indeed, the Budget means that contributions for self-employed people at every level of income will increase over the levels for 1997 and 2002.

Many self-employed people have seen whacking increases in their national insurance contributions. According to the Association of British Insurers and the Pension Provision Group, however, the Government are offering such people nothing in return; beyond their entitlement to the basic state pension, they have been excluded from the Government's plans. To put it mildly, many may feel a sense of grievance about their contributions. I need hardly remind the Committee that a substantial number of our constituents are self-employed; there are more than 3 million self-employed people in the country. They form one of the most productive and important groups in the economy and often provide vital services.

In his Budget statement, the Chancellor said that he wanted people to move from employment to self-employment and that he wanted to ease the transition for those who sought to do so. However, the Government's pension plans and the whacking increase in national insurance contributions do little to help the self-employed. We need only consider some of the facts that the Pension Provision Group provides about the self-employed to see why it is so important that we consider the Bill's implications for them.

Over the past 20 years, self-employment has grown, become more diverse and expanded into new, non-traditional occupations, while contracting in others. More people now move between self-employment and employee status. The growth of dependent self-employment and subcontracting means that work previously done by employees is now done by self-employed people. There are ever more self-employed people, and ever more of our constituents are moving between self-employment and employment.

Those facts led the Pension Provision Group to conclude that the distinction between employed and self-employed people in state pension provision was outdated. The group's analysis of the pension situation of the self-employed leaves, at the very least, a large question mark as to whether all self-employed people make appropriate provision for their retirement. The group found that self-employment increased the risk of retiring on a very low income, particularly for those working in personal services, and that:

''Those with experience of self-employment tended to retire later than their employee counterparts and were more likely to work beyond state pension age. This partly reflected a desire (and ability) to continue working, but also in some cases a financial need to do so.''

Those interesting conclusions were submitted to the Select Committee in the course of its inquiry in relation to the Bill about how the self-employed would fare under the proposals. It is important to raise the issue, because the position of the self-employed seems, in some respects, to have been overlooked in the proposals; that is the view, at

least, of authoritative groups commenting on the proposals, as well, possibly, as that of the self-employed. A representative of the Federation of Small Businesses described the self-employed in this context as ''a forgotten army''.

We shall try to remember them. We raise the subject in order to ventilate it and look forward to hearing from the Minister what the Government's response is to this, to the important submissions that were made to the Select Committee and to our concerns about how self-employed people will fare under the proposals.

Steve Webb (Liberal Democrat, Northavon)

I support a good deal of what the hon. Member for Hertsmere (Mr. Clappison) said. It is important that the Conservatives have raised the issue of the self-employed, whose pension provision is often neglected. I shared his near-despair at the Minister's written answer in response to the Pension Provision Group that it was a useful contribution to the debate; that is the worst brush-off that one can imagine. That contribution does not seem to have informed policy since. The distinction between employed and self-employed is much less clear-cut—

Ian McCartney (Labour, Makerfield)

I do not want to interrupt the hon. Gentleman's train of thought. However, before he gets too despairing, it was the Government that set up the Pension Provision Group. We are not afraid of debate, of looking for alternatives or of developing blue-sky policies. The hon. Gentleman would not have had the report if the Government had not established the group.

Steve Webb (Liberal Democrat, Northavon)

It is to the Government's credit to set up a group if they are prepared to listen to its conclusions. If they entirely ignore its conclusions, I am not sure that that is to their credit; in fact one could argue that the money should not have been spent on it.

I should like to expand on a point made by the hon. Member for Hertsmere about the two kinds of self-employment. Traditionally, the assumption has been that pension provision is less of an issue for the self-employed person with a business that will provide their pension—although that might not turn out well—or who can make their own private provision. However, the new self-employed might not have a business with assets; if they move between employment and self-employment, treating them as a group distinct from employees is a less tenable position than ever. As the hon. Gentleman suggests, crediting them into the state second pension, thereby encouraging them to save, would be a good thing to do.

I differ from the hon. Member for Hertsmere in what that should imply for the national insurance contributions made by the self-employed. When we compare them with the employed, we tend to forget the national insurance contributions of employers; the combined contribution represents a 20 per cent. rate per worker, whereas a self-employed person currently only pays 7 per cent. plus the class 2 contribution. The Treasury has estimated that the gap between the benefits received by the self-employed in retirement pension and the contributions that they make is substantial; possibly as much as £2 billion.

This might sound odd, and not very pro-business, but in some ways the self-employed have historically under-paid national insurance relative to the benefits that they get from the system. Although they receive less than employees, they do not receive much less—essentially sickness benefits—but they pay less than half the amount of national insurance; so they actually get a substantial subsidy. If they were to be brought into the state second pension, there would be a case for looking at whether there should be a compensating rise in national insurance.

James Clappison (Conservative, Hertsmere)

I agree with the hon. Gentleman that we need to look at the whole issue. However, does he not agree that while that might have been the case in the past, the gap between what the self-employed pay in national insurance contributions and what employed people pay, not taking into account the employers' contribution, is closing?

Steve Webb (Liberal Democrat, Northavon)

Only to a point, in that I do not disregard the employer. Clearly an individual makes a choice to become an employee with an employer who effectively knocks the 10 per cent. off his wages. In a sense, the employee is paying the combined amount, so there might be some convergence. However, I would still argue that the difference between 7 per cent. class 4 and 20 per cent. class 1 in terms of employee plus employer is hugely relative to the difference in benefit. While I agree that the state second pension should be the province of the self-employed, there might need to be an offsetting national insurance rise. However, the new clause is quite proper. It is important that the Government respond to concerns about the pension position of the self-employed and I welcome the opportunity to debate it this afternoon.

Andrew Selous (Conservative, South West Bedfordshire)

I support the new clause. My hon. Friend the Member for Hertsmere has given a good summary of the findings of the Select Committee so I shall not tire the Committee by repeating them.

The Budget that was presented last week in the House was promoted on the two themes of fairness and enterprise. We know that the Government intend all pensioners to benefit from these provisions, so it is curious that some 1.4 million people will not have as full a benefit as they possibly might receive under the Bill. In terms of enterprise, we know that it is self-employed people who form the small businesses that go on to become larger businesses and create the wealth of the nation.

Work patterns are changing, as has been said. The Government have pushed out the boundaries of those who will be covered by S2P, and those within S2P are not just those who were formerly within SERPS; there has been some change. Given that the Government have looked at the area afresh and that this is a major revisiting of pensions legislation, I have to register a note of disappointment that an opportunity has been missed. Because of the 1.4 million people who will not be brought within S2P and who will gain significantly less benefit from the savings credit part of S2P, I commend the clause to the Committee.

Patrick Mercer (Conservative, Newark)

I support new clause 4, particularly as a veteran of the forgotten army of the self-employed. Having been a member at one stage, I know the difficulties; I am only pleased that I am no longer one and am back in Her Majesty's employment. It is a delight so to be.

I should like to draw attention to the report proposed in the new clause. It would set out ways in which the self-employed can be monitored. The measures would allow for the monitoring of the effectiveness of pension credit in providing support to those who have been self-employed throughout their working lives. Should it prove to be ineffective in supporting such people, it would offer a signal as to the need for reappraisal.

As we have already heard from my hon. Friend the Member for Hertsmere—in a much more eloquent way than I can put it—self-employment expanded rapidly during the 1980s. In 1981, the total number of people who were self-employed was about 2 million; roughly 8 per cent. of those in employment. By 1991, the total had risen to 3.4 million, 13 per cent. of those in employment. During the 1990s, that expansion slowed, so that in 1999 3.2 million, 12 per cent. of those in employment, were self-employed. Experience of self-employment in the UK has become much more widespread over the last 20 years.

One implication of that development is that self-employment now represents a more significant factor in the provision people need to make for retirement. I believe that the new clause would allow that to be monitored in detail. A study by Knight and Mackay was cited by the Pension Provision Group in its recent report on pension provision for the self-employed. It estimated how significant the impact of changing patterns of employment would be on men and women reaching retirement age in the next 15 to 20 years. It suggested that at least 28 per cent. of men aged between 40 and 49 in 1994-95 will have spent some time in self-employment by the time they retire—I am one of those—compared with 20 per cent. of men who are now at about state pension age.

The significance of those figures is realised when examined in the context of patterns of pension provision, particularly the levels of pension developed by the self-employed. In 1998, the Pension Provision Group found that one in 10 self-employed people had a personal pension to which contributions had been made in the past but which were no longer being made, but that some 40 per cent. of self-employed people had never had a personal pension.

The group also suggested that there were indications that a number of self-employed people may be failing to build up a qualifying record for the basic state pension each year. Although some of those people may overlap with the, approximately, half of self-employed people who are not building up rights to a second-tier pension, the group concluded that it seemed reasonable to assume that a significant minority of self-employed people do not build up any pension entitlement in a given year.

Under the pension credit provisions, second-tier pension provision in the form of the state second

pension will attract a savings credit. However, according to the Pension Provision Group, the effect of that will

''not only widen the gap between state pension rights earned in self-employment and those earned as an employee, but also the minimum underpin will be substantially higher for retired employees than for those retiring with histories of self-employment''.

The group suggests that a small proportion of self-employed people will be able to fund their retirement by selling business assets or through other savings. For many, however, that option will simply not be feasible, and the result will be an increased risk of poverty in old age.

I believe that the provisions of new clause 4 will allow us to monitor that. It may serve as a useful signal as to whether pension credit is being effective for the self-employed.

Julian Brazier (Conservative, Canterbury)

I congratulate my hon. Friend the Member for Hertsmere on initiating an excellent debate and my hon. Friends the Members for South-West Bedfordshire (Andrew Selous) and for Newark (Patrick Mercer) on their contributions. The hon. Member for Northavon (Mr. Webb), the Liberal Democrat spokesman, contributed to an interesting exchange.

I should declare an interest, in that my wife works part-time in a self-employed capacity.

I shall take as my starting point the interchange between the hon. Member for Northavon and my hon. Friend the Member for Hertsmere, because it seemed to go to the heart of an increasingly complicated and important debate. The question is how do we compare chalk and cheese; that is, the individual self-employed person's national insurance rate, which now stands at 7 per cent., and the rate paid by the employee, who contributes a little more, at 10 per cent., but whose employer also makes a large contribution.

In thinking about why we need to study the matter carefully, as suggested in the new clause, by producing figures regularly, I believe that we can look at the question in a slightly different way. Every year, the incentives increase for companies to shed employees and replace them with self-employed full-time or part-time consultants. Indeed, that is what happened to my wife. She now works for only two days a week; she is self-employed, and replaces a full-time former employee. For the sake of any feminists sitting on the Government Benches, she is replacing a man. [Interruption.] I heard the Minister's sedentary interruption; I shall not comment on it. [Interruption.] I feel provoked, Mr. Atkinson, but I shall merely observe that my wife sells far more business each month than the full-time chap that she has replaced.

A slightly different way of looking at the comparison is this. The incentives to replace full-time employees in that way are increasing. Every time the employers' national insurance contribution rate rises, it increases the incentive not to employ people and to find self-employed people instead. Every time a fresh piece of labour legislation is introduced that provides

extra rights for workers, another disincentive is created. Every time—

Peter Atkinson (Conservative, Hexham)

Order. The hon. Gentleman is straying rather wide of the new clause, which relates to pensions for the self-employed.

Julian Brazier (Conservative, Canterbury)

I understand that entirely.

As two of my hon. Friends have already remarked, the net result is that a growing proportion of people are self-employed. The catch is this. Where does it leave the self-employed if the Government continue, through a range of measures that I will not list again, trying the Committee's patience, to provide incentives for employers to ensure that the proportion of self-employed people in the total work force goes up each year, while self-employed individuals find that they are making almost the same contributions—7 per cent. compared with 10 per cent.—and providing more than two thirds of the contribution of their employee counterparts? Where does that leave those people, who will not be part of the great new pensions future that is allegedly unfolding before us in the Bill? It will leave us with a two-tier economy.

The statistics quoted by my hon. Friend the Member for South-West Bedfordshire a moment ago were chilling. They showed that some 40 per cent. of self-employed people had made no contribution, but the saddest statistic was that 10 per cent. had tried, but had now stopped making contributions. That is why the new clause is necessary. We must have a system to monitor what is going on in the self-employed sector. The Government say that their measures are designed to provide better pension prospects, but if that sector, which is growing fastest in the market, is left out of the picture, the provisions will be unfair in the long run.

Ian McCartney (Labour, Makerfield)

Good afternoon, Mr. Atkinson.

I want to take this matter at a leisurely pace because I think that, in moving the amendment, the hon. Member for Hertsmere intended to probe the issues surrounding the self-employed, rather than the issue of reporting to Parliament in a specific way. He tried to work us up into a frenzy by suggesting that the state system of contributions ignores the contribution of the self-employed to the economy and treats them in a shabby way. Let us get the basics right first before we move on to discuss the wider issues about the self-employed, because the picture that has been painted falls a long way short of the truth.

At present, the self-employed pay class 2 and class 4 contributions. Even allowing for the fact that the self-employed do not currently build up rights in SERPS or the state second pension, they are—there is no way around it—in effect, subsidised by other employees, who pay class 1 national insurance contributions at a rate of 10 per cent. for the employee and 11.9 per cent. for the employer at current rates. That ensures that the self-employed receive broadly the same benefits. The hon. Member for Northavon made that point without prompting.

The principal exceptions are SERPS, the state second pension and contributory jobseeker's allowance. Despite paying much less than national insurance contributions, it is estimated that the

subsidy amounted to £2.5 billion in 2001–02 alone. In moving the amendment, the hon. Member for Hertsmere was not initiating a general discussion. He made it absolutely clear that the Conservative party had a particular policy. I am not ridiculing him for making that statement, but he made a clear announcement on policy that has significant implications for the public purse, but he has not indicated whether his reform would preserve, extend or remove the subsidy. He gives no idea of how contributions would be made. Even allowing for what he said about a year-on increase and the levels of class 2 and class 4 contributions, the truth is that a huge subsidy would be involved in those contributions to the state. The hon. Gentleman has given no indication of how he would intend to pay for the effects of the amendment.

This is an example of a Conservative Member currying favour and saying that he is doing something for the self-employed. If that is what the Conservatives want to do, why did they not do it during all their reforms of employment law and national insurance? They had nearly 20 years to do something about it.

Some 2 million people pay only class 2 self-employed contributions. Some 50 per cent. of self-employed aged over 20 contribute to some form of non-state pension, but that masks the fact that the proportion of full-time employees who contribute to forms of non-state pension is 69 per cent. With part-time employees, the figure is 38 per cent., so the figure for the self-employed is higher than that for part-time employees, but significantly lower than the contribution for full-time employees.

The hon. Member for South-West Bedfordshire said that 1.4 million people were left out, but they are people who have made deficient basic state pension contributions. However, they qualify for the minimum income guarantee. They are not excluded in the purist sense intended by the hon. Gentleman, but he makes a fair point, because we need to develop a strategy for the years to come.

During last week's debate, I referred to monitoring. It is inconceivable that we would not want to monitor and publish information on the impact of pension credit on recipients. I have offered to discuss with the Committee the reporting arrangements that we shall put in place, but I cannot provide the required information for the new clause. We shall be able to publish information about the number of people receiving different elements of pension credit but, as with MIG, it will not be possible to determine how many have been self-employed at some time during their working life.

Pension provision for the self-employed has been the subject of a complex debate for some time, and the hon. Member for Hertsmere emphasised some of the comments and policy attitudes of a range of organisations and individuals. Some have said that people who have been self-employed will be disadvantaged in relation to pension credit entitlement, especially in comparison with those who were employed all their lives, because SERPS and the

state second pension will count for the purpose of the savings credit. It has been suggested that the self-employed should be included in the state second pension.

The Government attach importance to pensioners having a decent secure income on retirement. The state second pension and pension credit are crucial steps towards achieving that end. Indeed, the state second pension will for the first time cover 40 million low-paid workers, 2 million carers who do not build up contributions and 2 million people with disabilities who have intermittent work records. They are the types of employees left out of the original compromise on SERPS. All pension programmes are a compromise, and the SERPS compromise left out a large number of people of low earning and low capacity for earning. Although it was a wonderful scheme for those who could earn, it exacerbated the problem at the bottom. The purpose of redesigning the state second pension is to design out that flaw in SERPS, so it is important that the state second pension is a success.

Of course, large numbers of self-employed save for their retirement with personal pensions, often by investing in their own businesses. The hon. Gentleman is right in saying that the traditional image of the self-employed person has changed dramatically. The changes started in the late '70s and continued through the '80s and '90s. The change in the structure of labour market relationships has led to a change in the type of person who is self-employed. It is no longer just a question of a family working in a corner shop, or a small business such as a garage. The group is far more complex and diverse. The lower end of the income range of the group is also very diverse.

There is no such thing as a typical self-employed person. The category contains people who are semi-skilled, skilled, who have intermittent work records, who work with an employer, in the construction industry, at term time or on a seasonal basis. There are huge variations in the degree of access to the employment market for people who are generally called self-employed. It is not easy to create a contributory system that all self-employed people can or would wish to enter into.

Julian Brazier (Conservative, Canterbury)

By explaining how things are getting more and more complicated, the Minister is making a strong case for the new clause, which is basically about providing fixed information. To take him back to his original point, he challenged us to produce a policy on the measure. However, he is merely illustrating one more area in which the Bill is failing a whole section of society in encouraging people to save, and so on. Self-employed people will, as he has observed, enjoy MIG, but they will not become part of the new self-help culture that the Minister claims that the Bill espouses.

Ian McCartney (Labour, Makerfield)

I did not challenge the hon. Gentleman to produce a policy. I believe that I congratulated him on his policy announcement. I wanted him to tell the Committee what would happen to the £2.5 billion subsidy. Would he continue it, extend it or remove it—where is the financial framework to meet the requirements of this newly announced policy? There is silence on that, of course.

I have been trying to establish that there is some common ground here on the nature of the self-employed—the complex issues that I was talking about before the intervention of the hon. Member for Canterbury. The subsets of the main group of self-employed people have not been properly catered for in terms of pension policy. However, they are notoriously difficult to identify, target and engage in Government initiatives. Some want to participate and some do not. That is particularly true in terms of any financial implication in relation to themselves.

Some people in academia and politics say every self-employed person must be advised to enter the state second pension. When one asks how one goes about that, what the cost to the individual and to the state would be and how it would impact on all the other people making a contribution, there is a strange silence. There is silence for two reasons. It is a question not just of the complexity but of the politics of the matter. None of them wants to tell the truth—that there may be a financial implication for the self-employed as well. If there are no policy changes in this area there may be a financial implication for the funding structure. Nobody has yet got a policy to deal with that.

We held consultations on the possibility of including self-employed people in the second state pension in the 1998 Green Paper ''Partnerships in Pensions''. No clear way emerged from those consultations, but as with all new benefits, we are prepared to review the scheme and the question of whether to include the self-employed. Self-employed people who have no second pension can still gain from the guarantee credit. They will have less income taken into account in the income assessment.

We are committed to monitoring and evaluating the situation. We are committed to considering, at a later date, the issues around the self-employed. However, when it finally comes to making them those decisions will be hard. We shall then see whether or not the hon. Member for Hertsmere and his colleagues are still with the Government, or whether it is a bit of an airy-fairy thing for them, a nod and a wink to the self-employed, saying, ''We want to do something for you,'' but when it comes to the mechanics and they add up the costs, they will not be prepared to tell them what their contribution is likely to be. That is why, although he supported the hon. Gentleman, the hon. Member for Northavon made clear that there was a cost to it. He did not offer his unconditional support; he fudged around it because he wants us to offer him a free lunch on the new clause. I am not prepared to give him a free lunch.

Let us debate what we need to do for the self-employed. The Government are committed to the self-employed, and we need to look at how we can enhance pension provision for them. However, our decisions will have to be made in the context of what I said in my opening remarks.

I know that I am not going to convince the hon. Member for Hertsmere. I shall wait to see whether he withdraws new clause 4 or puts it to a vote, but the

Committee can rest assured that the Government are committed to the self-employed and we want to do what we can in relation to those policies. In saying that, I am being absolutely honest with Opposition Members about where we are in the debate. I have no doubt that the hon. Gentleman will want to return to the matter on the Floor of the House.

James Clappison (Conservative, Hertsmere)

We have had an interesting and useful debate. I am grateful for the contributions made by my hon. Friends, and for the comments of the hon. Member for Northavon.

I congratulate the Minister on his response, not least on his ingenuity. He made heroic efforts to construe the debate as a policy announcement. It was a nice try, but I assure him that when we have a policy on the subject he will know about it. He was helpful—[Interruption.] Before he intervenes, I would gently remind him of what he said earlier. He said that the pension provision group that I cited was set up by the Government. It is rather rich that Ministers, when reminded of what their groups have said, should accuse the Opposition of making up policy.

Ian McCartney (Labour, Makerfield)

I cannot let the hon. Gentleman get away with that. It is one thing to set up a group, and one can accept or reject its recommendations because it is independent, and it is an ongoing debate, but the hon. Gentleman, absolutely and clearly—I shall take Hansard out to lunch if necessary—supported the recommendations. I congratulate him on the first spending commitment given by the Opposition in this Parliament. I am sure that the self-employed intend to ensure that they stick to it.

James Clappison (Conservative, Hertsmere)

I quoted at length the words of the Association of British Insurers on the question of what the Government have done. That would be a unique way of making policy, but I assure the Minister that the purpose of the amendment, as I tried to make clear—[Interruption.] It is an interesting way of answering a question to refuse to say anything about it and then to accuse the Opposition of having the temerity of asking questions.

Julian Brazier (Conservative, Canterbury)

Many Opposition Members, who are extremely fond of the Minister, feel profoundly relieved that my hon. Friend has managed to get him out of the unfamiliar consensual mode and back into party-political aggro.

Ian McCartney (Labour, Makerfield)

I hate to see the hon. Member for Hertsmere so embarrassed. It was not my intention in congratulating him to cut short his career. We all know that we may from time to time declare things that we have not discussed with our leaders. We have all done it. The hon. Gentleman has two options. He can resign, or, between now and the Bill going before the House, he can clarify the matter—the latter would be easier than my having to buy Hansard a meal. There is no doubt that the hon. Gentleman gave a commitment. However much he wriggles, or looks at me with those big eyes, he gave a commitment.

James Clappison (Conservative, Hertsmere)

The words in Hansard will speak for themselves. I give the Minister an undertaking, however, that if he finds the words that he claims are there, I will happily treat him to an extra lunch for his

birthday, particularly as he is in such an expansive mood.

The new clause raises the issue of pension provision for the self-employed to discover how they will fare under the Government's proposals for the state pension credit. It refers to preparing and setting a report before Parliament, but that would not cost a great deal, and no other expenditure is envisaged. It is, however, fair to ask what the implications of the proposals are and what has been said about them.

The right hon. Gentleman had a second line of attack, beyond accusing me of making a policy commitment that I did not make. I apprehended his attempt, which was great fun, and nice while it lasted. His other line, however, was to ask what the Conservatives had done for the self-employed, but I should gently remind him of what his colleagues have done for them. When the Conservatives left office, national insurance contributions for the self-employed were much lower than they are today. As a result of this Government's 1998 announcement, which took effect in 2000, the rate on profits for the self-employed increased, and the upper and lower profit limits were extended. As a result, someone who earned £30,000 a year—

Peter Atkinson (Conservative, Hexham)

Order. The hon. Gentleman is talking about contributions, but, as I understand it, the new clause is about benefits.

James Clappison (Conservative, Hertsmere)

Indeed, but we must briefly examine contributions to see that the Government jacked them up by £300 in a single year.

We asked the Minister about the position of the self-employed under the state pension credit, and his response took matters a little beyond what we knew at the beginning of the debate. This is an important question, and I, too, shall read Hansard carefully—to see whether the Minister offered the self-employed anything other than bogus debating points.

Like employed people, the self-employed will face whacking increases in their national insurance contributions this year, on top of whacking increases in previous years. In the new clause, we ask how they will fare under the state pension credit. We will read the Minister's remarks carefully and reflect on the issue. However, for today's purposes, and to make progress, I beg to ask leave to withdraw the motion.

Motion, and clause, by leave withdrawn.

New clause 8 - Income from capital

Tim Boswell (Conservative, Daventry)

I beg to move, That the clause be read a Second time.

The Committee will feel much better for that lively debate. I am conscious of the passage of time and that

this is the last substantive new clause that has been selected for debate. In a way, it brings us back to technical considerations, but it also has important wider policy implications.

I am always astonished at my own moderation and at my ability to give.

Julian Brazier (Conservative, Canterbury)

Hear, hear.

Tim Boswell (Conservative, Daventry)

I am concerned that my Whip feels that I am unduly modest. I will move into attack mode—it might be safer.

I tend not to use extravagant language, except possibly in the confines of my home, so I shall have to use an agent. In this case, my agent is Mervyn Kohler, who is known to many of us as the public affairs director of Help the Aged. In commenting on the treatment of capital in clause 15, he lets drive, saying:

''The prescribed rate should be on the face of the Bill, and expressed as a number in relation to the rate set by the Monetary Policy Committee of the Bank of England, perhaps calculated as a six-month average. It is iniquitous to assume a 10 per cent. return on capital and to leave this as a matter for regulation (not even requiring the positive affirmation process described in 19(2)''.

Those familiar with the Bill will know clause 19 as the regulations clause. Mr. Kohler bitterly attacks the concept and operation of clause 15, which we have already discussed, and to which I shall not return. However, he is right to express concern about it. Of course, we are not beholden to anyone and we will make our own judgment about how to present our concerns.

I shall deal first with the assessment period. The assessment period is set at five years, and the suggestion is that there should be a review every five years. That is no accident. Every five years, the sort of period during which a normal case would not be varied in relation to pension credit, there should be a fresh look at how the capital formula is determined or transmuted into income. That builds on the idea of Help the Aged. The really meritorious part of the comments of Help the Aged, apart from its attack on the Government, was the suggestion that there should be some objective test or process by which the process of taking notional capital and converting it into income should be carried out. It suggested a link to the Monetary Policy Committee rate, so that one could read off an implied capital rate. In my proposal, I want to leave slightly more discretion for Ministers, but the principle touched on by Help the Aged is important. We need an independent body that we can run such issues past. We have an admirable example, in doctrine and in practice, in the Social Security Advisory Committee.

The new clause proposes that, every five years—that is consistent with the assessment period—the Secretary of State should invite that advisory committee to see whether the definition of income under the Act remains appropriate and to make recommendations for any change in the formula for implied income. That is a modest and reasonable proposal. We have already said that there are concerns about treating capital as income. However, Ministers have made the point that it is much easier if it is treated in that way, because capital is easier to capture than income flows, which may vary, and we certainly

do not want a situation in which persons who find that their income is diminishing cannot benefit from changes in their assessment. There may be cases in which capital increases and we have to ask whether income follows that, and whether their high notional assessment is actually fair. I pass over the matter that the working tax credit, as introduced in the Budget, will do away with the test of implied income altogether, so there is now inconsistency between the various tax credits.

I suppose that the biggest concern, which is clear from the comments of Help the Aged and other pensioner organisations, is that the Government will set a 10 per cent. notional rate of return on capital in excess of £6,000, as they have suggested. That is a bit steep to put it mildly, even in present circumstances.

Maria Eagle (Labour, Liverpool, Garston)

If the hon. Gentleman thinks that is steep, would he like to make an alternative suggestion?

Tim Boswell (Conservative, Daventry)

If I were to make an alternative suggestion, the Minister of State would immediately say that I had made a policy pronouncement. With greatest respect to the Under-Secretary, charming as she is, it is for Ministers to decide the figure. I do not want to make a suggestion; I want the Social Security Advisory Committee to make suggestions. It can do that independently, without my figures or the Minister's.

Ministers have pointed out that 85 per cent. of pensioners are below that starting point of £6,000 capital. That may change over time, which is also relevant to our proposal in the new clause. They also said, when we debated clause 15, that the implied average rate of return on capital as pensioner income is attenuated by the bottom tranche. If it is zero on the bottom £6,000, the average rate is reduced, and there is no point in arguing with that. However, while that may be true of the average rate, it is not true of the marginal rate of return, which is expected to be 10 per cent. I challenge the Minister to find me a reliable security on which I can have a reliable return of 10 per cent. on capital at the moment. In the present circumstances of a low-inflation economy, it would be necessary to look for a special set of circumstances such as a person of advanced age—over 75—who bought an annuity. Because a high loading is put on the possession of capital, there is an implied suggestion that pensioners should dis-save or annuitise their existing capital assets, which might not be a good idea. People working for our team have done some exemplifications on the figures, and it is difficult to understand how a pensioner can possibly receive as much income as under the 10 per cent. formula set out by the Minister.

I do not want to belabour the point, but we understand that the Government—and especially the Chancellor—want a degree of stability. I quoted the Prime Minister with approbation this morning, so I shall be kind to the Chancellor this afternoon to preserve balance. However much the Government want stability and feel that they have achieved it in

relation to monetary policy, which my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) has essentially approved, major changes could take place quite suddenly in inflation or interest rates, for example. Such changes would affect the returns on capital.

We should also consider the relationship between capital generally, or particular kinds of capital, and the interest determined from it. The notes from Help the Aged express concern about the long-term valuation of real property. Many buy property as their pension fund—by buying to let, for example. Especially in London and the south-east, that property might have a high and escalating capital value but give a relatively low income when expenses are taken into account. A circumstance may arise in which a property that was tenanted suddenly falls into vacant possession and the capital value shoots up because the premium falls to the landlord, but the property produces no income at all until it is sold.

Let us consider another example. If changes were made in other benefits, such as council tax or housing benefit, the capital rules or coverage might be different and it would seem inequitable to have two sets of regulations subsisting at the same time. Until recently, for example, the rules on quantity have varied in relation to the distinction between pensioner and disability benefits.

In addition, as a matter of public policy, it may be necessary to consider whether a measure is working out fairly. A capital assessment may appear wrong, or it may become difficult to make a reliable capital assessment—on an overseas asset, for example. What happens if an asset is in a devalued currency? Will that automatically affect the assessment?

Finally, some important issues of policy might arise. We might decide to remove certain kinds of capital holdings from the system altogether. I refer, for example, to the compensation payments in which the hon. Member for Bassetlaw (John Mann) expressed interest.

None of that is intended as a policy recommendation, so there is no need to get excited about that idea. That is not to say that it is impossible to derive an implied income from capital. The new clause would mean that for a period of time, which for convenience we suggest should be consistent with the maximum assessment period in the Bill, the Social Security Advisory Committee should examine the matter and any representations that it might have received, reach an objective view and make a recommendation to Ministers. It would always remain Ministers' responsibility to receive that advice, deliberate on it and to make a decision.

The new clause would introduce into this part of the world, as the Monetary Policy Committee introduced into the setting of interest rates, a degree of objectivity and independent appraisal. That is why the new clause has considerable merit. I hope that the Minister can see that it is tendered in a non-partisan way and is designed to help make the system work better and more fairly for pensioners.

Steve Webb (Liberal Democrat, Northavon)

As it is the Minister of State's birthday, I propose to applaud the Government. I shall try not to make a habit of this, but in 1988, when the rules on the conversion of capital into income were introduced in their present form, an implied interest rate of not 10 but 20 per cent. was introduced. It applied not from £6,000 but from £3,000. In 1988, capital rules were applied for the first time to housing benefit, which affected many pensioners, the group about which we have been talking for the past few weeks.

Between 1988 and 1997, the then Conservative Administration did nothing about that. They left the £3,000 threshold at that level for nine years thereby eroding its real value and bringing many more pensioners into penal rates of 20 per cent. After 1997, the Conservative party decided that it wanted to sound like it was on the side of pensioners and savers, and it started attacking that regime. The hon. Member for Havant started to say that the imputed rate was too high and that there should not be a cap on the top. We had made that point somewhat earlier, but we welcomed his conversion.

The Government have done that. They have taken the cap off at the top, which means that there is no upper limit, and they have halved the imputed rate. They considered looking at actual savings income, but on reflection that would have been quite messy and the pensions groups did not want it. We have a situation in which most pensioners with savings are not in the system and there is some flexibility whereby rates can be changed if interest rates change. Indeed, we would want some flexibility in the regulation. I do not agree that we need a figure, or necessarily a formula, in the Bill.

I have no particular problem with new clause 8 and the idea that the SSAC should look at the matter. However, my suspicion is that if we let it do that and it does so every five years, which I do not have any problem with, it might well say that what we have is a darn sight better than what we used to have.

On 10 per cent. rates, the hon. Member for Daventry admitted that that is 10 per cent. on the margin beyond £6,000. Someone with £6,500 is only going to be imputed to have a tiny amount of savings income. The average rate on that is well below that of a long-deposit building society account. For once, we should stand up and say that we have been banging on about that for years, it was not addressed for almost a decade, but it has finally been addressed. Of course, we would all have liked it to have gone further, but it seems to me to be an enormous step in the right direction.

The only question is if the rate of imputation beyond £6,000 is quite high, on very low quantities of capital that is a very low average rate, but on high quantities of capital it is a high imputed rate above that that one might reasonably attain. That kind of loading is probably what we want in the sense that the system was initially a safety net. We do not want to catch small savers in it, but we probably do not want to hand out means-tested benefits to somebody with a socking great amount of savings. The SSAC may look at hard cases, of the sort that the hon. Member for Daventry legitimately raised, through that sort of

mechanism. I do not object to that, but they will be extreme cases. In the majority of cases, the Government have moved in entirely the right direction and we should applaud them for doing so.

Andrew Selous (Conservative, South West Bedfordshire)

I want to make two points. First, I want to point out that the contradiction in what the hon. Member for Northavon said is that for those pensioners who are lucky enough to have savings over £12,000 it is actually a move in the reverse direction. If the interest rate is halved and the limit is doubled, all those with more that £12,000 are worse off. Although I appreciate that not many pensioners are fortunate enough to have savings of £12,000, they do comprise an increasing number of pensioners, particularly as people inherit money from the proceeds from their parents' houses, or as a result of compensation claims. That must be borne in mind; I do not think that it fits very well with the Government's declared intention to encourage savings. There has been a reversal for those lucky enough to have more than £12,000.

The other brief point that I wanted to make is purely for the sake of simplicity, and the reduction of complexity. The limit on capital for local authority charges is £11,500. There would be merit in having one uniform limit for nursing home charges and pension credit. If the two could be moved together, pensioners would better understand them, and that would end confusion.

Maria Eagle (Labour, Liverpool, Garston)

It is a pleasure to be under your Chairmanship again, Mr. Atkinson. The debate has been interesting. I have had a very strange afternoon because I find myself in almost total agreement with what the hon. Member for Northavon has just said, which is quite something. I thought that what he had to say effectively answered many points raised by the hon. Member for Daventry, in respect of his new clause.

For the purpose of clarification, I want to tell the Committee what the effect of rate of return would be at various levels of capital savings. That will inform the debate because it is easy to forget about the disregard, and to make assumptions about the effect that that has on the notional rate of return. Of course, under £6,000 that is zero; between £6,000 and £8,000, the effective rate of return is zero to 2.6 per cent.; between £8,000 and £10,000 it is 2.6 to 4.2 per cent.; between £10,000 and £12,000 it is 4.2 to 5.2 per cent.; between £12,000 to £15,000 it is 5.2 per cent. to 6.3 per cent.; and between £15,000 to £20,000 it is 6.3 to 7.3 per cent. Only at £20,000 plus, does it reach 7.3 per cent., rising to 10 per cent. That is a vast improvement on the current situation. The hon. Member for Northavon kindly made that clear.

The substance of the new clause makes various references to the SSAC in respect of the notional rate of return. The hon. Member for Daventry suggests a mandatory reference every five years asking for recommendations. The Government have a high regard for the SSAC and for the advice that it gives. We do not follow its recommendation in every instance, as hon. Members will be well aware, but we do take seriously what it has to say, and consider its recommendations closely. We are happy to include pension credit in its remit. If the hon. Gentleman

examines schedule 2(20), on page 25, he will see that we have done so. On that basis, pension credit does come within the remit of the SSAC.

Tim Boswell (Conservative, Daventry)

Is not the point of the new clause that it ties Ministers to referring the matter on a fixed timetable? Given the concerns from the hon. Member for Northavon about the performance of the previous Conservative Government, if such a timetable had been enacted under something similar to the new clause, the long gap that he did not like would have been run past the advisory committee, which would have made recommendations whether Ministers liked it or not.

Maria Eagle (Labour, Liverpool, Garston)

The SSAC, as a result of the fact that the benefit will be included within its remit, will have the opportunity to comment on pension credit regulations after the usual period in any event. It will be free to look at any aspect of pension credits, as it sees fit. If the Government see a particular need for advice, it is open to the Secretary of State to invite the SSAC to look at any area of social security policy at any time. In that sense, the hon. Gentleman's new clause would, in effect, put an artificial timetable and process on any scrutiny that the SSAC might actually wish to carry out.

The Government take seriously their duty to monitor the achievements of their social policy objectives. That is part of our day-to-day stewardship responsibility, as a Government. We would not want to turn our mind to it only once every five years in a mechanistic way.

Andrew Selous (Conservative, South West Bedfordshire)

The new clause refers to intervals ''not exceeding five years''. I think it is worth the Under-Secretary reflecting on that point.

Maria Eagle (Labour, Liverpool, Garston)

Yes, but such phraseology tends to end up meaning quinquennial. At the moment, references can be made and the SSAC can itself seek information and look at the scheme if it wishes. In many ways, the new clause would put an artificial constraint on the relationship that is created by including pension credit in the SSAC's remit.

I also point out that we shall specifically look at the capital limit annually, as part of the normal uprating process, as hon. Members would expect. Changes to the notional income from capital can be made by regulations. I agree with the hon. Member for Northavon that including figures in Bills can lead to inflexibility of the kind that one often sees in older social security legislation, which makes change difficult.

I think that there are mechanisms to examine, take independent advice on and make changes to our arrangements for notional capital. I have tried to look fairly at the new clause of the hon. Member for Daventry and have listened to what he has to say, but I genuinely think that his concerns are addressed by the arrangements already in the Bill. I hope that he might come to agree with me. The arrangements for notional income being made under the pension credit scheme are five times more generous than those under the minimum income guarantee. As the hon. Member for

Northavon has pointed out, they are significantly more generous than such arrangements have been. I hope that, in view of my assurances, the hon. Member for Daventry will consider not pressing his new clause to a vote, although he is perfectly entitled to do that should he so wish.

Tim Boswell (Conservative, Daventry)

The Under-Secretary has consciously adopted a moderate tone in her response. I have been accused of introducing no new policies and incurring no new public expenditure, and I suppose that one should be grateful for such modest gains.

The Under-Secretary pointed out that there are some procedures and safeguards in the Bill, so that the matter could be looked at. It is important that such assurances are drawn out in our debates. All that I am really saying is that things change over time, whether she or I like or anticipate those things or not. In the interests of fairness, it should be fairly common for the Social Security Advisory Committee, and others, to examine the consequences of the Bill in the area covered by the new clause. That area will need, and I hope will be susceptible to, change.

In deciding whether to press the clause to a vote, I have been thinking that what we have achieved here is a very important development. I have been rehearsing in my mind, since the speech of the hon. Member for Northavon, the sad saga of Sven and Ulrika, which has been occupying the popular prints for a long time. We thought that he was walking out with us, but now we have found that he has really gone back to his true love, supporting the Government. I make no disapprobatory comment, except to record the passing scene and say—[Interruption.] We are getting into very deep waters indeed.

The important point is that we have had a good and, to be honest, a good-natured exchange of views on a key matter. I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

Schedule 1 - Administration

Tim Boswell (Conservative, Daventry)

I beg to move amendment No. 40, in page 15, line 26, at end insert 'foreseeable'.

The genesis of the amendment is that, rather like a dog with a lamppost, I treat it as professional deformation to leave schedules unamended. It is necessary to warn Ministers that something should be said about them. When I introduced schedules as a Minister, I always had my fingers firmly crossed and hoped to goodness that I knew what was not right with them. I mention that as a semi-jocular point, because this schedule relates to administration, and that, rather than the essence of the Bill, is the proper subject of a schedule. The schedule reflects a considerable body of doctrine and experience in the social security system, so the amendment is not an attempt to get at the Department by a side wind.

However, I am glad that I chose the amendment as the Committee begins to draw to a conclusion because, although I missed some debates on Tuesday because

the Minister and I were debating elsewhere, I have looked at the record and I am concerned that some points were not brought out as clearly as they might have been. The amendment suggests the insertion of one word, and addresses what is and is not reasonable for a pension credit claimant to have to lay on the table, and what a decision maker should have to consider when determining an assessment period.

We all anticipate that most pension credit claimants will act in good faith, that they will be straightforward and declare their income as best they understand it, and that they will expect to be treated on that basis. The system will become intolerable if people go around inventing potential circumstances under which additional income may accrue. I understand that we are talking about only the assessment period, which can be revised, rather than about a determination that must run for five years, but I am anxious to explore what is or is not a likelihood.

Future changes in income could very well be predictable. For example, a pensioner could have an annuity—dare I say, a pension annuity, to refer to the new concept in clause 16—which may include an income-related escalator clause. It could be sensible to have such an inflation clause, which would keep the claimant as well off in real terms as they were at the point at which the annuity was taken out. If that were the case, it would be as easy for a decision maker to calculate the impact of inflation as it would be for the state benefit system to work out how much pensions should be uprated annually to meet inflation. That is pre-mechanical procedure.

Other kinds of change could be less predictable. They could relate to dividends received from companies with which the claimant had shareholdings. Changes could be even more speculative and could—as we discussed the other day—relate to matters such as casual windfalls or irregular income, which could affect calculations. However, I do not suggest that Ministers seek to create an artificial or unfair situation, at least in this regard; they want to produce sensible rules for decision makers.

So, what is a decision maker allowed to consider, and what is a pension credit claimant reasonably expected to disclose? If there were to be income-related annuity, that would be a reasonable thing to declare because it would show the income flow forward. On other matters, it may be more difficult to make predictions. We all want to avoid a situation in which a decision maker brings extraneous material into a calculation or decides that there has to be a shorter assessment period, causing some irritation to the claimant. We also want to avoid a situation—this is my real concern—in which a claimant might have tried to act in perfectly good faith, and disclosed all the sources of income that he or she knew of, but might not have completely levelled with the decision maker, perhaps accidentally, on what was likely to happen to an increase in those incomes.

In such circumstances, the judgment would be difficult to make. We would have to try to separate the pensioner who acted in good faith but did not take everything into account, or who genuinely

underestimated future income flow, from the pensioner who was very happy to keep something hidden behind his or her back and had not been straightforward in filling in the form or in discussions with the Pension Service.

Although there are some difficult concepts there, we all want to achieve a system that is precise. When the tax authorities capture an actual income, for example, in relation to a year of assessment that has taken place, that is relatively manageable. However, when future income flows have to be estimated, as in a sense they do under the Bill, things become more speculative. We want the system to work fairly. I hope that, in responding, the Under-Secretary will understand that the amendment is essentially a probing one. It would be useful to have her assurances on it.

Maria Eagle (Labour, Liverpool, Garston)

I am somewhat relieved that the hon. Gentleman has given me a hint on what his amendment is about. He has just referred to ''difficult concepts'', and I was looking at it last night, trying to get my head around what ''foreseeable'' likelihood was. I was not sure whether he would be in the mood for a deeply philosophical or epistemological inquiry when discussing the schedule, or whether he just wanted to probe exactly what ''likelihood'' means.

I decided that I had better resort to a dictionary. The hon. Gentleman has told us something about the genesis of the amendment, and it was apparent once I had looked in the dictionary that that genesis was not there. I looked up ''foresee'', which should have been somewhere between ''forsake'' and ''forsooth'', but it was not. I did not get much help from ''Chambers English Dictionary'' or from the ''Oxford English Dictionary''. I resorted, as one does as an ex-lawyer, to a legal dictionary, and did not find the term in there either.

I then turned to ''likely'' and ''likelihood'', and got some succour from the legal dictionary about the meaning of likely, most of it from the Antipodes. There have been a lot of cases there about the meaning of likely, but general opinion seems to be that it means probable. I think that that is helpful. When we look in our own dictionaries, likely and likelihood are defined in terms of probability. The thesaurus included such terms as probable, possible, expected and to be expected. That is the kind of meaning that we are looking at, if that reassures the hon. Gentleman.

We are looking at something of a subjective test. We shall not be conducting some kind of Kafkaesque interrogation of the possible likely future with causal relationships having to be calculated at certain levels of probability. It is a commonsense test about what the claimant actually knows about a future of some uncertainty, a subjective test of his knowledge. The intention is not that the claimant must know of all changes in circumstances that are likely to occur, but that he should inform us of what he does know to be likely. We are not asking him to anticipate any strange change that might happen in certain unlikely circumstances and tell us about those in case it does. That would be a Kafkaesque world. It is a subjective test of what he knows is likely to happen.

As currently drafted, paragraph 3(3) would require a person to notify the Department of ''predictable'' changes in their circumstances. That means unsurprising, knowable changes. Any other interpretation would require speculation on the part of the claimant, which would clearly be unreasonable. We do not want to be unreasonable. Our decisions makers are by their nature reasonable, otherwise they will fall foul of the appeals process. By ''unreasonable'' I mean difficult or unfair. It is obvious that I had fun with my dictionary last night. I thought that I might as well look some words up while I had the books down from the Library shelves.

I hope that the hon. Gentleman will be reassured by what I have said. I am sorry not to have been able to find a definition of ''foresee'', but given that it was not there and given that he has explained to the Committee that it was a probing amendment in respect of reasonableness and the subjectiveness of the test, perhaps I can finish by saying, forsooth, I hope he will forsake his amendment.

Tim Boswell (Conservative, Daventry)

At least in that respect I am ''Reassured of Daventry''. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Peter Atkinson (Conservative, Hexham)

I am grateful to the hon. Gentleman. I do not know what would have happened to the status of the amendment when the word did not appear in the dictionary and had no legal meaning.

Schedule 1 agreed to.

Schedule 2 - Minor and consequential amendments

Steve Webb (Liberal Democrat, Northavon)

I beg to move amendment No. 39, in page 26, line 5, at end insert—

'National Assistance Act 1948

24A In section 22(4) of the National Assistance Act 1948 (charges to be made for accommodation), at end insert ''and an amount of savings credit under the State Pension Credit Act 2002 to be prescribed in regulations''.'.

I see that we have the remainder of today and all of Tuesday to discuss this amendment.

Maria Eagle (Labour, Liverpool, Garston)

Talk slowly.

Peter Atkinson (Conservative, Hexham)

Oh no.

Steve Webb (Liberal Democrat, Northavon)

The amendment would answer a simple question: what is the position of pension credit recipients in residential and nursing homes with regard to the savings credit? We may have got the wrong bit of the wrong Act. The Government claim that the Bill will make savings pay, yet we have already thought of a number of instances—for example, for women aged 60 to 64—where savings will not pay. I received a written answer the other day, which stated that 200,000 recipients of pension credit will be living in residential care or nursing homes. I presume that that includes those people who are there on income support and getting all their fees paid. As I understand it, they will get what would colloquially be called pocket money, although that may be slightly

pejorative. They get an expenses allowance of about £15 a week.

I have raised that issue in the House. An issue of dignity is involved if people get £15 a week for pocket money in their declining years. As the pension credit comes along, should people who have saved and are now living in residential or nursing care have every penny of saving credit taken off them too, and just be left with the pocket money? Or should we simply say, as the amendment does, that those who have saved will receive a reward even if they are living in a residential or nursing home, because in addition to the pocket money they will get some savings credit? Two people in a residential home could both be getting the pocket money when one has saved and the other has not. If the Government want to reward savings, should not the credit apply just as much to people in residential accommodation?

Maria Eagle (Labour, Liverpool, Garston)

The hon. Gentleman has raised a point that has come up in other parts of the Bill. It is obviously important. The amendment is a probing one but it has some faults in the sense that if it were implemented as it stands, it could have perverse effects. I therefore cannot tell him that we love his amendment. It would place an obligation on the Department to ring-fence at least part of the savings credit from the financial assessments undertaken by local authorities when determining an individual' s ability to pay for their residential care.

Local authorities' assessment of the amount that people can pay towards their care costs is a matter for them operating within the Department of Health's guidance. It is not an area of policy for which Ministers in my Department are responsible, which is why it does not appear in the Bill. When Baroness Hollis was asked about this in another place, she reminded the other House that it was a matter for the Department of Health, which indeed it is.

I want to advise the hon. Member for Northavon of the effect of his amendment on individuals and illustrate that it is not so simple to carry it out and ignore the savings credit in the assessment. Random effects would be created. The local authority means test reduces a person' s income—the hon. Gentleman referred to it as pocket money, but many elderly people find that an offensive way of putting it—to £16.80 a week. If the savings credit were to be paid on top, as the amendment suggests, a person with £100 income before the local authority applied the means test would be left with £30.60 after the income assessment. That is because they would be entitled to the maximum savings credit of £13.80 on top of the £16.80 allowed under the local authority means test.

However, a person with £115 original income who was entitled to a savings credit of £7.80, would be left with just £24.60—£16.80 plus £7.80—so some illogical and arbitrary payments would arise. That is why the Department of Health is still considering how best to deal with guidance in respect of the pension credit and its impact. We intend, however, that pensioners in residential care homes will be treated in the same way as other pensioners. The Department of Health is

looking at the detail. I cannot tell the hon. Gentleman how far it has got with solving this problem, but that is the position. I hope that that reassures the hon. Gentleman that we intend to ensure that everyone benefits and that he will not press the amendment, but he may feel inclined to do so.

Steve Webb (Liberal Democrat, Northavon)

I am somewhat heartened by the Minister's response. I hesitate to nit-pick, but the anomaly whereby someone with fewer savings ends up with fewer savings credit than someone with more savings is precisely the same anomaly outside residential care as inside it. It is not anomalous at all; it is the point of the scheme, so it is not a fundamental obstacle. If I have understood the hon. Lady correctly, the Department of Health will attempt to ensure that the goal of savings credit in rewarding those who saved will also apply to people in residential care, so it will not all be swiped away.

Tim Boswell (Conservative, Daventry)

Let me enter a boring, though necessary, reservation. If that is to happen, the detail of financing and the implications for charges and local authorities will have to be examined carefully.

Steve Webb (Liberal Democrat, Northavon)

I am sure that, as the hon. Gentleman says, all the intricacies will have to be examined, but I am greatly encouraged by the Minister's response. A propos the hon. Gentleman's likening me to Sven-Göran Eriksson rather than Ulrika Jonsson, I may be forced to forgo the pleasantries that normally conclude our proceedings because I have been summoned to 10 Downing street. I hope that the Committee will forgive me and not think me rude for that. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Schedule 3 agreed to.

Question proposed, That the Chairman do report the Bill, as amended, to the House.

Ian McCartney (Labour, Makerfield)

As part of the normalities of ending Committees, I shall be brief and I know that the hon. Member for Daventry will do the same. I do not want to detain our colleagues too long, but it is important that I make a number of points. The Committee does not simply do its work and go away again. A lot of effort is put in by many people behind the scenes, to whom I pay tribute.

You and I, Mr. Atkinson, have been rattling around the House and this Corridor for some considerable years. Indeed, in recent years, you have chaired virtually all those occasions when I have been dealing with the legislative programme as a Minister, and you have kept me on the straight and narrow. I am also grateful to your colleague, Mr. Griffiths. I hope that he will survive the consequences of chairing the Committee.

The hon. Member for Daventry and I have a similar relationship. I do not know why, but every time there is a reshuffle in the Government or the Opposition, we telephone each other to check whether colleagues are still around. For a short period, the two of us were broken apart and became broken-hearted: when I had to go to the Cabinet Office, the hon. Gentleman was not allowed to follow me. However, we have been put

together again, and I look forward to more discussions with him over many years.

On behalf of us all, I thank the Clerk and the Hansard writers. I particularly thank the Clerk for the assistance and advice that he gives hon. Members. Without that, the Committee could not operate effectively.

I thank my hon. Friends for their support. A number of them have worked on Bills with me before, but for others, it is their first time. Indeed, some of my hon. Friends are in the House for the first time, having worked in other places, including Downing street and the Labour party. They used to write my speeches; now they have to sit and listen to them, so I thank them.

That reminds me of a comment made way back in the dark years about the Labour party national executive. ''What is this committee?'', it was asked. Someone replied, ''It is a group of the unwilling, picked from the unfit, to do the unnecessary.'' I hope that that is not how people perceive this Committee. I hope that we have been fit for the purpose and have done what is necessary for pensioners.

I say to Opposition Members that the whole point of parliamentary democracy is to have accountable Governments and to enable Oppositions to hold them to account. I usually give awards on these occasions, and the award for the best Government reply on the Bill goes to the hon. Member for Northavon, who beat both me and my hon. Friend the Under-Secretary with the reply that he gave this afternoon. I have to give the award for the best Opposition speech to the hon. Member for Hertsmere for getting out of the first commitment given by the Opposition. Whatever happens in the rest of his career, he will always have the McCartney award.

This is the first Bill on which the Under-Secretary has worked with me, and I hope that it will not be the last. She has the passion of a politician, but also the guile and savvy of a lawyer. With those characteristics, she could end up as leader of the Labour party, but we shall pass over that.

I thank my Parliamentary Private Secretary, my hon. Friend the Member for Wigan (Mr. Turner), and my hon. Friend the Member for Basildon (Angela Smith). I could not have expected more from them. I also thank parliamentary counsel, all the officials, the government and parliamentary relations unit and my Bill team. We have not quite finished our activity, but I hope that their work will be well rewarded.

This is one of our flagship Bills. It is critical to the Government and to our relationship with older people. I look forward to the challenges ahead on the Floor of the House and, more important, to the real work that begins when the Bill leaves the House. That will ensure that the measure is implemented effectively and we get the pension credit to those 5.1 million pensioners in the way that we have described.

I finish by saying that I am sometimes rather dubious about the press and would therefore like to hear the Committee's view on something that was written about me last Tuesday. I always like to hear

the views of my parliamentary colleagues. That edition of The Times says that the shadow Secretary of State for Work and Pensions

''can surely never have come across anything quite so alien . . . as Ian McCartney, the Minister of State for Pensions.

Mr. McCartney is a Scottish former seaman and chef, pugnacious, entirely round''

and—I paraphrase—so short that even when he stands at the Dispatch Box he sometimes cannot be seen. The article continues:

''Mr. McCartney has a unique rhetorical style, a Tsunami''—

I thought a tsunami was one of those big, fat guys from Japan.

Maria Eagle (Labour, Liverpool, Garston)

It is a wave.

Ian McCartney (Labour, Makerfield)

I know. I looked it up in the dictionary. The piece continues:

''His native tongue is triple Dutch . . . foaming and unstoppable, he brings Hansard writers out in a muck sweat.''

I ask you, can you believe a word that the Conservative press say?

Colleagues, thank you for everything. It is unique day, as the Committee stage is finishing on my birthday. I look forward to our debate in a few weeks' time to finish the Bill. I thank you, Mr. Atkinson, and your fellow Chair very much for the wonderful way in which you have chaired the Committee.

Tim Boswell (Conservative, Daventry)

First, I want to speak about our lost love, the hon. Member for Northavon. We all understand why he had to leave the Committee, but he would have wanted to join in these sentiments and pleasantries, which are one of the nicest parts of parliamentary procedure. I am happy to join my hon. Friends and other associates on the Opposition Benches in supporting the Minister's kind remarks. We are grateful to you, Mr. Atkinson, and to your co-Chairman, Mr. Griffiths, for looking after our proceedings. They were less fraught than some, and certainly less extended, but no less fruitful for that.

We thank the supporting staff—the Clerk for the advice we have had, and the assistance of the Hansard writers—who are so important. There is an interesting, albeit indirect and oblique, relationship with those on the Bill team assisting the Minister, who seek to iron out the wrinkles, as we hope that they will. We also thank the police, the press, and those who briefed us.

These occasions are always pleasant, especially when the Minister is the right hon. Gentleman, and he has taken time on his birthday to be present. He can now go and enjoy the rest of the day.

I have been casting around for a suitable analogy for the Government, and as there is a fairly strong military component on the Opposition Benches, I will say that I admire immensely the military discipline of my hon. Friends who made their points with precision and efficacy where they caused maximum difficulty for the Government.

I also admire the naval traditions on the Government Benches. Those on the Back Benches appear to be in the submarine service and only occasionally break cover and hoist their periscope, but have generally done so with perspicacity and to good effect. They have done well.

Then there is the new frigate, launched on the Mersey only recently: the Under-Secretary, the hon. Member for Liverpool, Garston (Maria Eagle). She showed that she is a fast mover who can keep up with the convoy; in no sense did she fail to honour her position on the Committee.

James Clappison (Conservative, Hertsmere)

Now tell us who is the Titanic.

Tim Boswell (Conservative, Daventry)

Then we come to the Minister of State. I am ashamed to say that my hon. Friend the Member for Hertsmere—I owe him much thanks for his ability to explain things, and, above all, to avoid any commitments on spending or anything else—likens the Minister to the Titanic, but he is wrong. The Minister is much more like a pocket battleship; he carries heavy firepower in the shape of his eight grandchildren and in that respect I am sadly outgunned, as I have only one. Therefore, I might appear to be running away from a fight. However, we should remember what happens to pocket battleships in warfare. Sometimes, a group of lightly armed cruisers work together to hole them and do severe damage.

I say that in good spirit, because this has been a most enjoyable Committee. If a Committee can enjoy a state pensions credit Bill, its members must be a remarkably agreeable and farsighted set of people. I agree with the Minister that there are important aspects of substance in the Bill. Points made by hon. Members in our debates may eventually bear fruit in the regulations and in the administration of the Pension Service. We all have constituents who are pensioners. We know their difficulties and worries, and how important they are to our communities. We want to do the right thing by them. We may not always have agreed, but we have had some valuable exchanges and developed a better understanding and a common commitment. That is why this has been such an agreeable Committee.

Peter Atkinson (Conservative, Hexham)

I thank the Minister of State and hon. Members for their kind words. On behalf of my co-Chairman, the hon. Member for Bridgend (Mr. Griffiths), may I say that it has been a pleasure to chair the Committee, which has been good natured and constructive. It has been as good an example of a constructive Committee as one could have hoped to find. The Bill is complex, extensive and important, and has been dealt with expediently, efficiently, and with clarity and good humour. I am impressed by the Minister's and the Opposition's command of a detailed and difficult subject.

Bill, as amended, to be reported.

Committee rose at fifteen minutes past Four o'clock.