Benefits Uprating

Ann Coffey Excerpts

Wednesday 8th December 2010 Commons Chamber

[Steve Webb]

I am grateful to my hon. Friend for that point. Many of the letters that I signed as a new Minister were to people complaining about the April 2010 non-increase in pension rates because they were linked to the RPI, which was negative. One of the worst things about using something that is so heavily affected by mortgage interest rates is that a pensioner with savings not only fails to benefit from falling mortgage rates, but is penalised by falling savings rates, so they get a double whammy. Neither factor will affect the CPI.

[Ann Coffey (Stockport) (Lab)]

The Minister in his statement said that he will continue to freeze the savings credit maximum, and the reason he appears to give is that over time the savings credit has resulted in more and more pensioners becoming caught up in a means-tested system. Is not another way of looking at the situation the fact that, in future, fewer pensioners on low income will be eligible for pension credit?

[Steve Webb]

I am grateful to the hon. Lady for her question. She is right: last year the savings credit maximum was increased—by 12p, and by 6p for a couple, so it is important to keep what we are doing in context. If, however, she is accusing us of shifting the balance between means-tested benefits and universal benefits such as the state pension, I plead guilty. We have chosen to focus scarce resources on the basic pension through the earnings link and to constrain the rise in savings credit, which is a relatively ineffective way of reaching poorer pensioners. It has a take-up rate of barely 50%. Half the people who are entitled do not even have it; everyone claims their pension.