Warm Home Discount (Amendment) Regulations 2014

Lord McKenzie of Luton Excerpts

Monday 3rd March 2014 Grand Committee

[Lord McKenzie of Luton (Lab)]

My Lords, I am grateful to the Minister for his clear exposition of his amendment. Like him, we see it as an issue subject to significant challenge. As the noble Baroness, Lady Maddock, has just said, it is the poorest who sometimes pay comparatively more for their fuel; those who of us who are better off can do it with direct debits and take advantage of various schemes on offer.

I have a couple of questions. I understand the thrust of what the Minister was saying. I am sure that my noble friend Lord Grantchester will chip in and support me on this, as I think that he has done the background work. I am a little unclear as to why the numbers in the core group are falling short of what was originally anticipated. My understanding is that the access to that group is determined by pension credit—either the guaranteed credit or the savings credit. I think that there is an age threshold of 75 and above for either savings credit or the guaranteed credit; for those below that age, it is just the guaranteed credit. Part of my question is, if it is because fewer people have been able to access pension credit—we know that pension credit is one of the benefits with the lowest level of take-up—what are the Government doing to address that?

Specifically, in relation to the core group, the non-core group and the criteria going forward, the Government are introducing a Pensions Bill at the moment with the single-tier pension. One consequence of that Bill is that, from April 2016, pension credit or savings credit is being abolished. Therefore, people who retire on or after that date will not be entitled to the savings credit. Fewer will be entitled to the guarantee credit because the idea of the single state pension effectively is to have a pension which is at the current guaranteed pension credit level or slightly above it. The income of people will not be substantially different but they may be swapping state pension for what was a guarantee credit top-up.

Therefore, there are two categories of people; namely, those currently entitled to savings credit, which will disappear in April 2016, and those currently entitled to guarantee credit who will end up with broadly equivalent income but will get it via the single-tier pension and not via the guarantee credit. If those two avenues, which I understand are the access to the core group, are no longer available, what discussions have taken place? What focus has there been on any alternative route and access to the warm home discount scheme? I am sure that the Government have turned their mind to that issue, which seems to me to be vital. I would be interested to hear from the Minister quite what is proposed.

I am not quite sure that I grasped what the Minister said. I certainly will read the record. I am sure that my noble friend Lord Grantchester will ask how the carryover will work. If the net effect is for an extra £34 million to be available in support of this scheme, clearly we would support that. I am not quite sure how the cut-off points work and whether the discounts are dealt with on a financial-year basis; that is, they run until 31 March, notwithstanding the fact that someone’s account might span that date and, in a sense, run over any period. Doubtless the Minister will be able to enlighten us. Those are my questions but my noble friend may well wish to supplement them. I thank the Minister for his exposition of these proposals.

[Lord Grantchester (Lab)]

I apologise to the Committee for being caught out in my public transport arrangements this afternoon and I am very grateful to my noble friend Lord McKenzie for stepping in at the last minute. He is right that the core group has been reduced and in asking his questions. In terms of the year being averaged with the following year, as I understand it, the shortfall in any one year and the expenditure can be carried over into the non-core group. The Minister is nodding his head in confirmation. Obviously my noble friend has asked the pertinent question of what is being done to make sure that the right people are targeted and helped in order to receive the money that they so desperately need to alleviate fuel poverty.

--- Later in debate ---

The noble Lord, Lord McKenzie, quite rightly asked about the size of the core group. If it is any consolation, I asked a similar point in the briefing because it also occurred to me that the size is smaller than was forecast. The explanation is that the DWP forecasts the size of the core group at the start of each year, and during the course of 2013 the accuracy of its forecast was affected by greater than normal volatility in economic conditions and various policy changes, including the details of pension credit eligibility. In addition, the DWP’s principal focus in forecasting is for the pension credit population as a whole rather than the specific eligibility element used in the warm home discount eligibility. That, therefore, is the precise reason why that group was smaller than was forecast.

[Lord McKenzie of Luton]

Can the Minister help me out on that point? He differentiated between forecasts for pension credit as a whole and forecasts of those components of pension credit which drive accessibility to the warm home discount scheme. What is different about that second category compared to those who are otherwise generally entitled to access pension credit?

[Lord Gardiner of Kimble]

I may have to write to the noble Lord because this is getting intricate. However, we are intending to consult this spring on the changes to pension credit impacts. This will include impacts to the changes to the benefits system vis-à-vis, as the noble Lord mentioned, pension credit and universal credit. Therefore, the best thing I can do is to make sure that I get this absolutely right for the noble Lord. Rather like these regulations, some of it is quite intricate, and I would like to give the noble Lord a full answer to that particular point if that would be helpful.

[Lord McKenzie of Luton]

That would be very helpful, and I am grateful to the Minister. I will revert to this issue about the changes which the Government are proposing to the state pension. Part of that is that the savings credit will simply not be available in the future—it will disappear as a benefit. Therefore what discussions have taken place and what planning is under way to make sure of the position of people who currently access the warm home discount scheme because they are in receipt of that benefit? What will be their position and access in the future? That is a pretty important policy issue. We have tried to get some clarity via the Pensions Bill; it would be good to get some clarity somewhere on this.

[Lord Gardiner of Kimble]

Given the points the noble Lord has made, the best thing would be for me to include that issue in a letter. That would be more fulfilling as regards getting the answer he is looking for.

[Lord McKenzie of Luton]

It would be particularly helpful to have that explanation by the time we get to Third Reading of the Pensions Bill, as it is one of the few residual issues on that piece of legislation.

[Lord Gardiner of Kimble]

I shall ensure that the noble Lord gets a letter.

In conclusion, the noble Lord, Lord Grantchester, was right to say that the basis of this is to get the right groups targeted. This is part of the way in which the Government wish to address fuel poverty. It is right that the net effect is to ensure that another £34 million goes in to help families. I agree that we should look at how we simplify these matters, but under the regulations we are dealing with we need to have this amendment.