Guaranteed Minimum Pensions Increase Order 2009

My Lords, I thank both noble Lords for their contributions and understand that, despite some of their challenges, they support the order. I shall try to deal with the points that were raised. The noble Lord, Lord Skelmersdale, asked about the age addition to long-term incapacity benefit. He may remember that when we debated the employment and support allowance, we recognised that the age addition had no part in that because that benefit was structured to help people get back into work. The age addition was associated with incapacity benefit where basically we paid people and did not engage with them. He may recall that a year ago we thought that to eventually align incapacity benefit with employment and support allowance we would not uprate incapacity benefit claimants who had the age addition at all until they met with the same rate as the employment and support allowance. We have changed that this time round and are uprating by half Rossi. We are not uprating by the full Rossi, which is what incapacity benefit claimants without the age addition or employment and support allowance will be uprated by. Therefore, the path to aligning those rates will be longer but I hope that the noble Lord sees that as a helpful change. The noble Lords, Lord Kirkwood and Lord Skelmersdale, referred to the ““tariff”” income and the rate of interest that is applied to that. Those arrangements were introduced under the previous Conservative Government back in 1988 on a less generous basis than is currently the case. The tariff was never constructed as an interest rate: it just recognised that people who have a certain level of capital should progressively contribute, the more capital they have, towards the benefits that would otherwise be due to them. That was the basis of the measure. But somehow a campaign has emerged that this constitutes a 10 per cent interest rate without recognising how it is calculated. The first £6,000 of a person’s capital is ignored completely. Once you go above £6,000 for pensioners there is a deemed income of £1 per week for every £500 in excess of £6,000. You could say that £1 a week on £500 equates to 10 per cent on that marginal amount, but that would not be a fair assessment of the picture. The other thing relating to pension credit is that about 80 per cent of people who access it are not affected by the tariff. They simply do not have that level of capital. Sometimes we can look through this issue through the wrong end of the telescope. Picking up on the issue of savings, and to put it in context, 42 per cent of pensioners receive less than £1 a week from investment income. Indeed, 70 per cent of pensioner benefit units receive less than £10 a week. Although some of those households have lost income as interest rates have declined, the extra money that the Government have put in, particularly through the Christmas bonus, has helped to compensate for that. The noble Lord asked specifically whether all winter fuel payments are now received. I cannot confirm that without checking specifically. Most of the payments are made automatically. Some people who may be newly entitled, who have not previously been in the benefits system or received council tax or housing benefit—this might affect men particularly between the ages of 60 and 65—are not necessarily known to the department and therefore need to make a claim. If they have not made the claim yet—they have, I think, until March of this year to do so—the payment will not have been made. However, it is right to say that overwhelmingly those winter fuel payments have been paid. I do not have a precise update. The whole purpose of linking the payments to assessment in the third week in September is so that the payments can be made before Christmas. I cannot be precise on the Christmas bonus. We said that it would become payable between January and March, and I understand that we are still on track to meet that. The Christmas bonus route was taken because it was generally the quickest and most effective way, given the systems that we have, to get money to the most vulnerable people. The noble Lord also asked about the capacity of Jobcentre Plus and whether it is coping. Clearly it faces significant challenges; there was a programme on Saturday morning on the telly about people presenting to Jobcentre Plus from professions who have not previously used it. There are emerging challenges from the current environment, but £1.3 billion extra has been put in and Jobcentre Plus is recruiting staff to make sure that we meet the challenges. I believe that we are still meeting our target times for dealing with claimants. Figures for the current claimant count are published monthly; I am not sure when the next figures are due—probably in a couple of weeks.