Pensions Bill

Lord McKenzie of Luton Excerpts

Wednesday 12th March 2014 Lords Chamber

Moved by

[Lord McKenzie of Luton]

1: Clause 23, page 11, line 45, at end insert—
“( ) Before the provisions contained in paragraphs 88 to 91 of Schedule 12 come into effect the Secretary of State shall report to Parliament on alternative arrangements for access to the Cold Weather Payments programme and the Warm Home Discount Scheme currently available to recipients of pension credit.”

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[Lord McKenzie of Luton (Lab)]

My Lords, I begin by thanking the noble Lord, Lord Freud, for facilitating discussion on this amendment at Third Reading. It should normally have been dispatched earlier in our proceedings.

The amendment is very straightforward and calls for a report to Parliament on alternative arrangements for accessing cold weather payments and the warm home discount scheme currently available to recipients of pension credit. I seek an explanation of what is to happen to those who reach state pension age on or after 6 April 2016 because, for such individuals, the savings credit is abolished and some will see the substitution of a single-tier pension for an income which is currently topped up by the guaranteed credit.

Receipt of one or both of those elements is currently a passport to cold weather payments. There is of course a range of other benefits to which pension credit is currently the passport, but there are generally other routes to those benefits, typically on low-income grounds. This raises issues for those of working age of how low income is to be determined under universal credit, but these are matters for another day. This amendment deals in the first part only with cold weather payments.

At present, cold weather payments are payable when the temperature in an area is recorded or forecast to be at or below zero degrees for seven consecutive days—one hopes, behind us for this year. It depends on temperatures recorded at individual weather stations. The current level of payment for eligible recipients is £25 per week. Payments are part of the regulated Social Fund. Eligibility for working-age claimants is dependent on them being subject to income-related income support, JSA and ESA where there is a disability component or where such a claimant is responsible for a young child or getting child tax credit that includes a disability element. Obviously, the position of working-age claimants is not generally affected by the Bill, although the Minister could just take the opportunity to say how eligibility will work for those in receipt of universal credit.

As I have said, the Bill affects those reaching state pension age on or after 6 April 2016. It does so because the savings credit is removed from that date, and for some the single-tier pension will be sufficient to obviate the need to access the guarantee credit. Our briefing note suggests that by 2021 the pension credit caseload will be some 80,000 fewer than would have been the position under the current system, with 20,000 of these previously entitled to guarantee credit and 60,000 entitled only to the savings credit. Over time, these numbers will increase.

Of course that does not necessarily mean that all these would be missing out on cold weather payments. It depends on where they live and the incidence of cold weather. Our briefing note suggests that initially the Government’s saving would be around £2 million per year if those notionally missing out in this way were not to be somehow brought back into the system, but this saving would increase in nominal terms over time as more and more individuals retired into the new system. In the scheme of things these are modest amounts, but nevertheless they are literally a lifeline to some.

The impact assessment of the Bill says:

“Under the single tier, eligibility for Pension Credit is halved compared to the current system in the first few years following implementation, and ultimately falls to around five per cent by 2060 … Ending Savings Credit for single-tier pensioners is the main driver of the reduction in the number of people qualifying for Pension Credit, although there is also a reduction in the proportion of pensioners eligible for Guarantee Credit. The reduction in the numbers within scope of the Guarantee Credit is the result of most single-tier pensioners under the single tier having a state pension above the level of the Standard Minimum Guarantee”.

I invite the Government to say whether, and if so how, they propose to retain access to cold weather payments for those who notionally miss out in this manner.

In similar vein, the amendment calls on the Government to report on future access to the warm home discount scheme. This is a rebate scheme, worth £135 per annum, given by suppliers to vulnerable and low-income households as a deduction from their electricity bills. It is available to two groups: the core group and a broader group. The qualifications for the core group are statutory obligations and suppliers must provide the rebate to all who qualify. Suppliers have more flexibility about who qualifies for assistance under the broader group. For the core group, eligibility is dependent on receipt of the guarantee credit.

It is accepted that the current regulations for this programme cease in April 2015, although the Government have rightly signalled their intention to extend the scheme. I acknowledge receipt of a letter on Monday from the Minister’s colleague, the noble Lord, Lord Gardiner of Kimble, following some amendment regulations that were discussed in the Moses Room last week. This signals an intent to consult in the spring on an extended scheme, taking account of the changes to the welfare system.

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[Lord Freud]

I am always grateful to the noble Baroness when she comes up with solutions for us, and I can see her yearning to be on this side—perhaps not in this particular coalition but in this particular ministry—sorting out these issues. She has gone to the issue of what the best way might be in which to help this group, which, clearly, we will look at precisely when we consider that matter. I shall pass on her thoughts to the consultation in the hope that it will speed it up.

As I say, we will consult on our strategy, and that will cover the two schemes referred to in the amendment of the noble Lord, Lord McKenzie, as well as broader approaches to combating and preventing fuel poverty, which the noble Baroness, Lady Hollis, indicated. On that basis, I urge the noble Lord to withdraw his amendment.

[Lord McKenzie of Luton]

My Lords, I certainly intend to withdraw the amendment. I am grateful to my noble friend Lady Sherlock for her support and for raising the wider issue of the impact of the new pension arrangements on passporting. I am grateful, too, to the noble Lord, Lord German, for probing the same points in seeking reassurance on the continuation of the cold weather payment scheme and the warm homes discount scheme. I am grateful, as ever, to my noble friend Lady Hollis for providing a solution to the Minister.

I took comfort from what the Minister said, but I would like to read the record on precisely where he has ended up in looking at some sort of definition of low income—whether it is somebody just on the basic single -tier pension—and at a broader review of fuel poverty strategy. I am confident that there will be an opportunity going forward to address and, I hope, influence those issues. Accordingly, I beg leave to withdraw the amendment.

Amendment 1 withdrawn.