Oral Answers to Questions

Steve Webb Excerpts

Monday 10th January 2011 Commons Chamber

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

2. What assessment his Department has made of the effects of changes to prices in January 2011 on the incomes of pensioners.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

In April this year, benefits and pensions will be increased by more than £4 billion, more than three quarters of which will go to pensioners. In addition, price rises in January 2011 will feed through into the September 2011 price indices, which will be used in future benefit uprating.

[Gregg McClymont]

Pensioners on fixed incomes will be among the hardest hit by the Government’s VAT rise. Will the Minister confirm that the VAT hike will mean that pensioners are worse off in 2011 under this Government than they would have been under the previous Government’s plans?

[Steve Webb]

I am grateful to the hon. Gentleman for referring to the previous Government’s plans. In his constituency, vulnerable pensioners, vulnerable disabled people and vulnerable families with young children received four or five cold weather payments this winter to help them with their fuel bills in January 2011. His policy, and the plans that we inherited, would have reduced those payments to £8.50 a week. We have paid £25 a week four or five times to vulnerable pensioners in his constituency.

[Rachel Reeves (Leeds West) (Lab)]

I will give the Minister another try: will he accept that with pensioners set to pay an extra £217 in 2011 because of the VAT rise, the basic state pension rising by only the same amount as planned by the previous Government and now news that the Department for Work and Pensions and the Treasury cannot agree the £140 flat-rate pension that he has extolled, pensioners have very little to look forward to in 2011 but a lot to fear?

[Steve Webb]

The hon. Lady used to be an economist, so I would not dream of suggesting that any of the figures that she has quoted are in the slightest bit dodgy. She will be aware that colleagues at Her Majesty’s Treasury have calculated that the impact of the VAT rise for each percentage point increase is just less than £1 a week for single pensioners. The 2.5% increase will cost pensioners £2.50 a week, which compares with our £4.50 pension increase this April, and there will be additional increases in 2012 because of the VAT rise, so I dispute her figures.

--- Later in debate ---

[Bob Stewart (Beckenham) (Con)]

12. What assistance his Department provides to pensioners who rely on fixed-interest income bonds.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

For pensioners with savings, the Government ignore the first £10,000 of their capital when assessing them for pension credit, as a result of which almost nine out of 10 pension credit applicants have no capital taken account of at all. In addition, to support all pensioners the basic state pension will rise by £4.50 this April and the standard minimum guarantee for pension credit by £4.75.

[Bob Stewart]

About one third of my constituents are on pensions, which are often very small. What plans do the Government have to help older people who live on small incomes for which they have saved all their lives to build up?

[Steve Webb]

My hon. Friend raises the very important point that falling interest rates and rates of return on savings tend to affect older people in particular. When we look at state pension reform, the return to saving and the reward for saving will be a particular priority for us. Many pensioners have their savings in very low-interest accounts, sometimes paying as little as 0.1%. There are much better rates out there, and I encourage all pensioners to shop around extensively to find the best rates possible.

[Owen Smith (Pontypridd) (Lab)]

13. What estimate he has made of the number of people in receipt of pension credit who will receive reduced payments as a result of the change to the timetable for the equalisation of the state pension age.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Just to be clear, no one currently receiving pension credit will have reduced payments at all because of the revised state pension age timetable. In future, however, we anticipate that about 120,000 households could be affected by the increase in the pension credit qualifying age as a result of the change to the equalisation timetable between 2016 and 2020.

[Owen Smith]

Given that we know that the poorest pensioners are some of those who will be hardest hit by the Government’s changes in respect of equalisation, will the Minister consider de-linking entirely the increase in the qualifying age for pension credit, which is paid only to the poorest, and the increase in the threshold for women’s pensions? He says that he is worried that the relationship with his Tory masters is a bit cosy; here is an opportunity for him to strike a rare, Liberal, fair blow.

[Steve Webb]

The hon. Gentleman is right that, on average, people of lower social classes and on lower incomes tend to have a shorter life expectancy. The good news is that life expectancy is rising for people on all income levels, so as we raise the state pension age, it is only right and proper that we raise the starting point for pension credit. It would be very strange to go on paying at 60 something called pension credit when the state pension age rises, as under the previous Government’s plans, to 66, 67 and 68.

[Dame Anne Begg (Aberdeen South) (Lab)]

In a reply to a written answer, the Minister admitted that half a million women will have to carry on working for longer than a year as a result of accelerating the equalisation of the state retirement age. In particular, women who were born in 1954 and expected to retire in 2018 aged 64 will not now get their state pension until they are 66 in 2020. That strikes me as incredibly unfair. What is the Minister going to do about it?

[Steve Webb]

The hon. Lady is right: of the 5 million people who will be affected by the increase in the state pension, a relatively small age group will be affected as she describes. It would be an option to go more slowly, as the previous Government did, but, if we deferred all changes until 2020 in order to deal with the point that she makes, it would cost an extra £10 billion. Once again, we have a suggestion for £10 billion of extra spending but no suggestion of where the £10 billion might come from.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

14. What recent assessment he has made of the likely effects of his welfare reform proposals on families with multiple births.

--- Later in debate ---

[Andrea Leadsom (South Northamptonshire) (Con)]

19. What steps he is taking to reduce the burden of administration on businesses arising from pension provision.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We are taking forward the recommendations of the independent “making automatic enrolment work” review, many of which were aimed specifically at making automatic enrolment in workplace pensions more straightforward for employers.

[Andrea Leadsom]

I thank the Minister for his answer. Although it is crucial that the Government do everything possible to get people to save for their retirement, does he agree that currently it is even more critical to reduce the burden of red tape and bureaucracy which is preventing small businesses from creating the new jobs we desperately need?

[Steve Webb]

My hon. Friend is right to suggest that we need to minimise the burden of quality workplace pension provision on firms. When the pensions Bill is published, she will see that all the changes we are making to the provision for enrolment in workplace pensions are deregulatory and will reduce the cost and burden for firms.

[Margot James (Stourbridge) (Con)]

20. What recent representations he has received on his plans to help disabled jobseekers into work.

--- Later in debate ---

[Henry Smith (Crawley) (Con)]

23. What assistance his Department has provided to vulnerable people during the recent period of severe weather.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

This winter we have paid a record £427 million in cold weather payments, with 17 million separate payments.

[Henry Smith]

I am grateful to the Minister for his answer. Can he confirm that, contrary to various scare stories that we have heard in recent weeks, cold weather payments will continue into the future?

[Steve Webb]

As my hon. Friend suggests, there are two systems of support during the winter months: the winter fuel payment, which the Chancellor has confirmed will continue on exactly the basis budgeted for by the previous Government; and the cold weather payments, which will not continue on the basis budgeted for by the previous Government because they were going to cut them by two thirds and we are going to keep them at £25 a week.

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

The Minister went some way towards answering my question about what is going to happen to the winter fuel payment, but can he categorically confirm that we will not see any changes to it in the next economic year?

[Steve Webb]

To reiterate, the Chancellor of the Exchequer made it quite clear in his comprehensive spending review statement that we will be sticking to the budgeted plans for winter fuel payments for future winters.

[Jessica Lee (Erewash) (Con)]

T1. If he will make a statement on his departmental responsibilities.

--- Later in debate ---

[Barry Gardiner (Brent North) (Lab)]

T7. The Government’s ethnic minority impact assessment of the housing benefit changes states that it is not possible, because of a lack of data, to make a proper assessment. In my constituency, it is estimated that 8,500 people will be displaced. On the register, 64% of claimants are from ethnic minority backgrounds. That rises to 83% and 84% for the most vulnerable groups of those in temporary accommodation and those in houses of more than four people. Will the Government assure me that they will do what they said they might do and conduct further research into the disproportionate impact that the changes will have on ethnic minorities?

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I do not recognise the estimate of 8,500 displaced families. We have made changes to the proposals so that the changes to housing benefit will be phased in and existing tenants will have nine months’ protection starting from the anniversary of their claim, with the result that local authorities will have time to manage the transition and that there will be more direct payments to landlords, so we will be able to negotiate rents down. We will of course monitor the impact of the changes as they go on, but 8,500 displaced families is not a number that we recognise.

[Mr Sam Gyimah (East Surrey) (Con)]

T8. Although I welcome the Government’s payment by results model as a way of delivering value for the taxpayer, the challenge for a lot of small organisations is that it will pose huge cash-flow problems. They will have to deliver the work and pay their staff, and then they will be paid by the Government. What steps is the Minister taking to ensure that small organisations that can deliver effective work programmes are not disfranchised by the Government’s payment by results model?

--- Later in debate ---

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Special Metals Wiggin is a large and important employer in Hereford city, but it has several hundred pensioners who have not had an increase in their company pension since 1995 and who have therefore suffered a more than 50% loss in the value of their pensions. Will the Minister examine the matter, and is he prepared to meet pensioners’ representatives to discuss it in more detail?

[Steve Webb]

I am happy to look into the individual situation to which my hon. Friend refers. In general there are statutory requirements for the uprating of pensions in respect of service post-1997, but occasionally, when schemes are wound up underfunded and fall under different regimes, different indexation rules can apply. I would be very happy to receive more details and to meet my hon. Friend.

[Malcolm Wicks (Croydon North) (Lab)]

Given the importance of tackling social security fraud, which depends in part on promoting a sense of responsibility and honesty across the whole of society, does the Secretary of State agree that that is undermined by the widespread tax evasion by rich individuals and companies? If honesty is good enough for the poor, surely it is good enough for the rich.

--- Later in debate ---

[Paul Flynn (Newport West) (Lab)]

Of the representations that the Government have received from pensioners’ organisations on the change from the retail prices index to the consumer prices index, what proportion was in favour and what proportion was against?

[Steve Webb]

The consultation that we undertook on the RPI-CPI change was about occupational pensions, and the majority of responses were from occupational pension organisations. Unsurprisingly, as CPI is generally lower, members of the schemes were not so keen and those who have to pay for the schemes were rather keener.

[Mr William Bain (Glasgow North East) (Lab)]

Is the Minister aware that, at the weekend, the disability charity Scope described her plans to remove the mobility component of disability living allowance as “a callous decision”, which would

“result in people being prisoners in their own homes”,

and that disability lawyers have expressed concerns about the compatibility of the changes with the European convention on human rights? When will the Minister join the growing national consensus that the plans are unfair and unacceptable, and withdraw them?