Pension Credit

Baroness Sherlock Excerpts

Monday 9th September 2024 Lords Chamber

[Lord Davies of Brixton]

To ask His Majesty’s Government how many people (1) claimed, and (2) were eligible to claim, Pension Credit in each of the past three financial years.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)]

My Lords, in answer to the first part of the Question, the numbers of people claiming pension credit were: in 2019-20, 1.49 million, in 2021, 1.41 million, and in 2021-22, 1.35 million. In answer to the second part, we cannot know precisely how many people are eligible to claim pension credit because we do not hold data on their circumstances, but we make estimates based on surveying pensioners and extrapolating from there. On that basis, we estimate that in 2019-20, 2.26 million were eligible. No figures are available for 2020-21 because the pandemic restricted the number of face-to-face interviews that could be done, and that were necessary to collect the data. In 2021-22, there were 2.15 million.

[Lord Davies of Brixton (Lab)]

I thank my noble friend for her Answer and express my great pleasure at seeing her in her place. But, her Answer makes it clear that many of the poorest pensioners—not just those who fail to claim credit, but those with an income slightly higher than that—will suffer from the cut to the winter fuel payment. Does she agree that seeking a replacement for the anomalous tax-free cash payment should only follow a thorough and detailed review, rather than this rushed, information-lite and damaging decision?

[Baroness Sherlock (Lab)]

I thank my noble friend—for everything up to the “But”. The Government are having to take what is a difficult decision at this time for the very simple reason that we inherited a £22 billion pressure on public finances.

[Noble Lords]

Oh!

[Baroness Sherlock (Lab)]

If only the Opposition had been as attentive when they were building up the deficit as they are now it is there. To be really straightforward, the Chancellor came in and looked at the public finances, which were the result of significant pressures having built up in departmental spending. Significant commitments had been made, but no spending review had been done since 2021 to make sure that the money was there to pay for things. As a result, this Government have had to make the hard decisions that were not made previously, and this is one of them. We have taken action to make sure that we are protecting the poorest pensioners. Everybody on pension credit will be entitled to the winter fuel payment. We are targeting it at those who need it most, not at the many pensioners who do not need it as much.

[Lord Sherbourne of Didsbury (Con)]

My Lords, when the Government looked at the various candidates for cutting public expenditure, why did they choose winter fuel payments?

[Baroness Sherlock (Lab)]

My Lords, the pressures were such that some of the money had to be found in this financial year, because a series of expenditure gaps came to light in this financial year. We have already cut other capital programmes, and departments are absorbing pressures. This was a cut that could be made in-year, so it was added to it.

I am sorry to say that this is not the last difficult decision this Government are going to be forced to make, but we will try to target things appropriately. I think most Members of the House would agree that something like a winter fuel payment should not be going to the roughly quarter of pensioners who have a million pounds in assets; it should not be going to those who can manage. What we should be doing is trying to target the money at those who need it most, and that is what we set out to do.

[Lord Palmer of Childs Hill (LD)]

My Lords, the Minister has talked about encouraging people who are entitled to pension credit to claim it. Does she agree that they do not claim it for reasons of pride, or perhaps because they are unable to cope with the system? How are the Government going to encourage this large number of people to claim pension credit, because if they do not, they will not have the winter fuel allowance? I have doubts that people will actually claim it to any great degree.

[Baroness Sherlock (Lab)]

The noble Lord makes an important point and I am grateful to him for doing so. Certainly, a significant number of pensioners do claim pension credit—1.4 million have managed to claim and do get it as a result. So, our job is to get the next surge of people to do that. DWP has a big campaign on: we had a week of action last week, and we work with partners such as charities and local authorities to go out and promote the campaign. From next week, we are running a national marketing campaign on a range of channels, including national print and radio. We will be targeting people of pension age but also friends and family, who can encourage them to apply. It can be tough, but sometimes we need to make people understand that there is lots of help out there. They can call the department free of charge and get charities to help them. If people are really stuck, we have a DWP home visiting team, which will visit the vulnerable and help them make a claim. So I urge all noble Lords: by all means let us have the fight in here, but please put the word out and let us get people to claim what they are entitled to.

[Viscount Younger of Leckie (Con)]

My Lords, allied to pension credit, the Government find themselves firmly between a rock and a hard place on this ill-judged decision to cut the winter fuel payment. On the one hand, if there is a substantial increase in the uptake of pension credit—and of course, we are all for that—the figures show that the increased costs will all but wipe out the net gain of £1.4 billion that the Treasury expects through the cut. On the other hand, with a poor or low uptake, it is apparent that many more of the most vulnerable pensioners will be hit. What mitigating measures are the Government looking at to reduce the impact of this decision, and when will they be announced and introduced? Mitigating measures there will need to be—and even better would be to see a reversal of the whole policy.

[Baroness Sherlock (Lab)]

My Lords, the noble Lord is talking about take-up. As I said, the best estimate of pension credit take-up as a whole is 63%: that is 63% of the number of people who could be claiming pension credit who we think are getting it. The amount of pension credit that is taken up is quite a bit higher than that, nearer to almost three-quarters of the total amount claimed. The challenge for us is to make sure that those who do not claim it do get it. However, the big difference this will make is this: if you are on the basic state pension and not claiming pension credit, you will get not just an extra £200 or £300 in winter fuel payments; you could get thousands of pounds in pension credit itself. Our job is therefore to make it as easy as possible for people not just to get this smaller amount, but to get the bigger amount as well, so let us all try to do that.

[Lord Watts (Lab)]

My Lords, many of us accept that the Government have inherited a black hole in the budget and need to take action on it, and we are also not against the principle of some form of means-testing. However, many of us also think that the threshold is too low. Will the Government look at the threshold again to ensure that poor pensioners are not excluded from the winter fuel allowance in the future?

[Baroness Sherlock (Lab)]

My Lords, I have had lots of very interesting suggestions from, and conversations with, Members from around the House, who have variously suggested trying different thresholds and creating a new, higher threshold. One of the challenges is that this is a single, once-a-year, one-off payment. There is already a means-testing process for pension credit. Creating a brand new means-testing system for a one-off payment would involve simply too much bureaucracy, complication and red tape for what is a once-a-year payment. So, we have ended up going for pension credit, which is already there. The great advantage is that, if somebody is on pension credit, we can pretty much automatically give them the winter fuel payment, so they will not have to apply for it, whereas, if we create a new special scheme, people will have to apply for it. We will continue to look at a range of alternatives, but this is clearly the only sensible way to do this in the short term. I stress again: everybody on pension credit is entitled to this money. Let us get them out and getting it.

[Lord Cameron of Chipping Norton (Con)]

My Lords, as someone who made a promise to Britain’s pensioners to keep the winter fuel payment, and kept that for six years as Prime Minister, may I make a gentle suggestion to the Government? Instead of this misguided attack on the winter fuel payment, why not simply say that pensioners who are higher-rate or additional-rate taxpayers do not receive it? You may only raise 10% of the money but you would save 90% of the shame and embarrassment of the current position.

[Baroness Sherlock (Lab)]

I am grateful to the noble Lord. He will remember that the previous Government decided to do something similar with child benefit. They wanted to means-test it, but because they could not find a way to do so, they decided to get just higher-rate taxpayers. He may also remember the massive complications that flowed from that—because the tax system is individual-based and the benefit system household-based—and that it caused huge complications and the Government effectively had to relitigate to do it all over again. We need to find something that works and is straightforward. The pension credit system is established; people know it is there. Our job is to make sure they can apply for it. If we can do that, we can ensure that they get not just this £200 or £300 but the thousands of pounds they might be entitled to under pension credit. We have absolutely committed to looking after pensioners. The triple lock gave people £970 the year before and £900 this year; who knows what the earnings data will be, but it could be several hundred pounds more this year as well. We will keep investing in pensioners, but we will direct more to those who need it most.

[Baroness Jones of Moulsecoomb (GP)]

Why do these tough decisions always hit the poor and not the fossil fuel companies and the water companies?

--- Later in debate ---

[Baroness Sherlock (Lab)]

My Lords, of course, the point is that most of the pensioners hit by this decision will not be the poor, among those who actually get money at the moment. But the noble Baroness absolutely has a point about making sure that polluters pay, and this Government are addressing those questions as well.