Social Security Committee

Meeting date: Thursday, April 25, 2019

Official Report 693KB pdf

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Pension Credit

Item 3 is on pension credit. I refer members to paper 4, which is a note by the clerk and correspondence from the UK Government, the Scottish Government and Citizens Advice Scotland.

At our meeting on 7 March 2019, the committee received evidence from Citizens Advice Scotland and Age Scotland on forthcoming changes to eligibility for pension credit, which are due to take effect from 15 May 2019. Citizens Advice Scotland has provided supplementary information to the committee.

The committee agreed to write to the Scottish and UK Governments following the 7 March meeting and responses to those letters have been received and circulated. In a moment, I will ask for the committee’s comments in relation to those replies, but first I will put my thoughts on the record.

I remain dissatisfied with the UK Government position not only on the policy but on the rationale for implementing it. In its reply to us, the Scottish Government estimates that, by 2020-21, the policy will impact 3,800 mixed-age households to the tune of around £20.8 million, which is up to £7,000 for each household per year. The income guarantee for pension credit is £12,940, but it is £5,990 for universal credit—that is a stark difference. The Scottish Government’s reply also noted that the changes might impact some WASPI—women against state pension inequality—women.

I thank Guy Opperman, the Minister for Pensions and Financial Inclusion, for replying to us. In his reply, he said:

“It is important to be clear that this is about making sure that all working age people, irrespective of their partner’s age are subject to the same labour market approach and that taxpayer support is directed to where it is needed most.”

That is the policy intent and it is a reserved issue. I find it fanciful that we will treat pensioner households differently. The policy intent to keep all working households the same will create a variation in how we treat pensioner households, which will be to the significant detriment of many pensioner households. Those are my thoughts on the reality of what the policy intent will achieve.

11:15  

We also asked the UK Government about conditionality and sanctions that might apply to households in which a pensioner and a non-pensioner claim universal credit, and whether they would be subject to conditionality or sanction. The reply said:

“Pensioners in mixed age couples claiming Universal Credit will not be subject to any work related conditionality rules. However, conditionality for the working age partner will be tailored to meet their specific circumstances, just as it would for any other claimant.”

I have a concern that there could be a double detriment to some of those households, which could lose up to £7,000 a year. The working-age individual, who might have responsibilities in that household, could in theory—I admit that it is in theory—find themselves subject to conditionality, which could lead to sanction.

The committee spoke a lot, particularly during our previous inquiry, about those who will move over from the tax credit system to universal credit and whether conditionality or sanction should apply to them. The majority of the committee thought that that would not be appropriate. I accept that we will not change the UK Government’s policy position on that, even though the majority of the committee disagrees with it. However, I wonder whether there is scope for the committee to come together and say to the UK Government that, although we are disappointed that it is restating that policy position, we ask it to review the conditionality arrangements for mixed-age pensioner households, just to reassure ourselves that those households do not have a double detriment from the reforms that will be brought in on 15 May.

That is my view, which I wanted to set out. It is only appropriate that we have a discussion as a committee based on all the replies that we have received. Do members have any comments?

I have always felt that rules should be consistent, whatever they are about. If someone is of working age, the rules should be applied consistently to them. They should not be subject to a different set of rules because their partner happens to be older. That is my position.

Thank you for putting that on the record.

I agree with the point that you made, convener, but I want to go a bit further. I raised a point in the pre-meeting discussion about potential moves to go further on this matter. At the end of his letter, the Minister for Pensions and Financial Inclusion says that this, apparently, is an

“action that helps to alleviate levels of pensioner poverty.”

He also mentions the triple lock. I previously asked about a report that puts the triple lock under threat, which came from a committee of peers who include a Tory peer who rejoices in the name of Lord True. The report talks about taking away free bus travel—presumably that could apply only in England and Wales—and winter fuel allowances for pensioners, reopening the triple lock and making over-75s pay for their TV licences. It seems that, as yet, that is only a recommendation from that committee, but that is often where things start off. Lord David Willetts, known as Two Brains, also made similar recommendations.

My worry is that, despite that the fact that the minister said that he is committed to the triple lock, we will start to see a more broad-based attack on pensioners. The rationale that is given for that, including in the report, is that it is unfair—it is about “intergenerational fairness”—and that pensioners are too well off compared with young people, which is a false dichotomy.

I know that this will probably be a complete waste of time, because the UK Government does not see fit to come to Scottish Parliament committees any more, but I would like the committee to ask the minister to come here to explain, confirm and reassure us that the triple lock and other potential attacks on pensioners form no part of UK Government policy. That is fundamental to the social security of pensioners in Scotland, which this committee should be interested in.

For the sake of clarity, could you confirm that you are suggesting that, whatever we send back in response to the UK Government minister for pensions, we should as part of that correspondence invite him to the committee to address some of these concerns?

Yes. We should invite him to come to the committee to address those concerns.

The reply from the UK Government is, to say the least, very disappointing. Its priority should be addressing the uptake of pension credit, which, at 40 per cent, is scandalously low. Sixty per cent of pensioners in the UK are living in poverty, because they are not taking up their right to this credit, which for the past 20 years has been one of the key drivers for lifting pensioners out of poverty. That should be the Government’s priority.

As for the actions that we should take on the back of this disappointing response, I agree that we should request that the minister come and speak to us and, at the very least, that he keep track of the number of pensioners who are being pushed into poverty and the impact on them. Universal credit’s policy objective is to encourage people to seek more hours or better-paying work in order to increase their household income, but this policy asks one member of a household to increase the value of the work that they do or the number of hours that they work in order to cover two people’s incomes. I do not know how many extra hours of work a working-age person will have to undertake in order to do that. How many hours does the UK Government expect someone to work in a week in order to support their pension-age partner, because of this decision? I would therefore support any request to get the minister here to answer some of these questions.

Do members have any other comments?

There is one thing that disappoints me about both letters. The fact is that, if the 60 per cent of people who are not taking up this benefit can claim before 15 May, they will get it, but when you talk to people, you find that there is a lack of awareness about that. Clearly we do not have very long, but I wonder whether we should say to both Governments that there needs to be something in the media to tell people what is happening. Whether you view it as right or wrong, the fact is that only 40 per cent of people are taking up pension credit, which means that the overwhelming majority are not.

I appreciate that we are doing financial health checks in Scotland, but this is still an issue for both Governments, and no one seems to have grasped that we have to let people know. With so much else going on in society, in the media and in politics, the subject is just not being talked about, and I wonder whether the committee can do something by way of a press release to say, “This is happening on 15 May. You’ve only got 19 days to do something about it.”

With regard to your other proposal, convener, I would have to ask why there should be a differential, just because of someone’s age. As a result, I do not support putting into the letter what you have suggested, but I think that there is a bigger and broader issue to deal with. We have only a couple of weeks before this happens. Can the committee put something out on social media or indeed in the general media to say that this is happening?

Let us focus first of all on the areas of agreement. We agree that we should seek to publicise the fact that people will lose out if they do not claim before 15 May, and I as convener can make sure that we do that and, indeed, that we stress that point in whatever correspondence we agree, whether by majority or unanimously, to send to the Scottish and UK Governments.

I wonder whether I can push you on a particular point. What about the people out there who might well have this underlying entitlement after 15 May? After all, 60 per cent of the people who are entitled to pension credit are not claiming it, and there would be no reason why the UK Government could not accede to giving someone who had this entitlement before 15 May but who claimed after that date their pension credit cover. Would that be reasonable?

I suppose that we have to draw the line somewhere. Frankly, there has been a failure of both Governments to get information out about the issue. It is all to do with the fact that so many other things have been going on in politics.

The committee has raised the issue, and we have a number of days left before the changes come into force. Let us at least unite around one thing, which is that we should tell people about it, perhaps through the Scottish Parliament website or some kind of press release to the general media. That is what I am suggesting.

So I do not have your support for the second aspect but, on the first aspect, let us just assume that we are going to do that—we will make sure that it happens.

On the very narrow point, I agree with Jeremy Balfour that we should try to make the issue as widely known as possible. However, I do not agree that the situation is somehow the Scottish Government’s fault in any way whatever—frankly, that is a ridiculous proposition, but that is politics for you. I also have difficulty with the idea that we should try to warn people that something is about to happen but pretend that it is a good thing anyway. I do not understand the logic in that.

I agree with Jeremy Balfour’s point about take-up, which Mark Griffin also mentioned, but the language that Jeremy used—I am sure that it was inadvertent—about this being a benefit is part of the problem. The UK Government is moving towards describing various pension entitlements as benefits and towards describing pensions as benefits, which we know is a disincentive for people to claim. Older people in particular have a thing about getting a benefit—even if we all know that they are entitled to it—whereas they see pensions as an absolute entitlement. We have to be clear that this is about pensions and not benefits, although of course it affects benefits as well.

I do not resile from anything that I said previously. We should write to the UK Government in the terms that the convener has described, with the additional points that I want to make, but I agree with Jeremy Balfour that we should publicise the issue as widely as possible, because it will have an impact on people’s lives.

On your subsequent point, convener, I do not know whether that is what the 13 August deadline refers to, or is that different? Paragraph 3 of the minister’s letter says that people can make a backdated claim up to 13 August.

I suppose that the danger of promoting that is that people might just think that they have longer to wait before they seek to claim, and that might then become the next line in the sand. That is something to consider.

There is general consensus that the issue is not well known about. That is a consequence of when the decision was announced, which I think was on a day when there was a meaningful vote or a motion of no confidence in Westminster. If we write back to the minister, we could include a request for the implementation to be delayed by six months, or whatever period the committee can coalesce around, to give the Government more time to make people aware of their entitlement and to give them a chance to apply before the support is removed.

That is a constructive suggestion. Unfortunately, when we wrote our initial letters, we were divided on the issue—that is just the nature of politics. We have our individual views on the policy intent, on which we disagree, but the suggestion is that we ask for a six-month extension to the 15 May deadline and the 13 August deadline to allow both Governments to do all that they can to maximise benefit uptake, which is at 40 per cent. Could the committee coalesce around that? I am looking at Michelle Ballantyne and Jeremy Balfour, because I suspect that the other members can coalesce around it. Could our Conservative colleagues do so?

I do not know what to think, really. The measure was announced years ago, and it has just been raised again recently—people were reminded that it was happening. Obviously, there has been very poor take-up, but there is no clarity on why that is the case. Some people obviously feel that they do not need pension credit and others are totally unaware of it. As Keith Brown said, some people may not want to claim it for reasons of pride or discomfort about using the benefits system. The issue is complicated. It is a reserved matter and, really, our colleagues in Westminster should be talking to the Government if they feel that there is a need to do so. I do not know whether there has been a clamour down there, but I am not aware of one. I do not know that our writing at this juncture will make any difference.

11:30  

I want to try to secure consensus and I am conscious that time is against us. Without going down the road of what is reserved and what is devolved, I note that the committee absolutely has a role to play in how the social security system supports or does not support income maximisation and the tackling of poverty. You were very close to being minded to support a six-month extension, Michelle.

It is too late. That is my view. If this was something that really bothered you, it should have been done ages ago.

As soon as the matter was drawn to the committee’s attention, we moved speedily, effectively and efficiently on it. I am not going to speak ill of previous members of this committee or Conservative or Labour Party politicians at Westminster. I want to focus on the mixed-age pensioner households who are at threat right now. We want to try to protect them and drive up the 40 per cent claim rate as much as possible. Even though you suspect that it may not be a successful move, Michelle, would you support a letter calling for that extension?

I will support a letter that says that we are concerned that there has been a very low take-up of the benefit and that there has not been sufficient information out there. If you want to call for the Government to delay it, do I care one way or the other? I probably do not, actually, if I am honest, because I am not sure that you will necessarily get a rush of people taking it up unless some good work is done to advertise it. If you want to write, that is fine.

I thank you for that, because it means that we have consensus. Jeremy, can I check that with you?

Yes.

Okay. Can we word the letter in an appropriate fashion such that it keeps all members of the committee satisfied? On the take-up of entitlement, I do not distinguish between the Scottish Government and the UK Government—or local authorities, for that matter. Let us make sure that we draw attention to all levels of government in that regard. A six-month extension by the UK Government to the May and August dates will give us a window to increase the 40 per cent take-up and protect some mixed-age pensioner households. I am delighted that we have been able to agree on that.

Will the points that I raised be included in the letter?

We have not written the letter yet. We are discussing what the key principles will be. I think that, to give comfort to our Conservative members of the committee, we need to note where there is a majority view and not the agreement of the full committee to some stuff, but we will make sure that the content is included.

The minister’s letter takes up the point about the triple lock. I think that that is important, and we should respond to it. It is also true to say—

That is a completely different issue.

It is not. It is raised in the minister’s letter.

If you want to explore that, you can go on and do that later.

It is a wider issue. I suggest that, if we ask the minister to come to the committee, that will give us an opportunity to speak about that.

We are not drafting the letter by committee just now. We have to agree to the general principles of the letter and members have to empower me, with the clerks, to get it written and sent. Let us make sure that we note that, invite the minister to come to the committee, and call for that six-month extension. That is where we have been able to coalesce across party-political grounds.

Can I give my apologies, convener? I have to go, as I am due to ask a question in the chamber.

I have to go as well.

I suggest that, if that concludes item 3, we do not move to item 4 but close the meeting at this point. We can return to our consideration of the evidence that we have heard this morning.

If we are not going to take item 4—

I remind members that we are still in public session.

I tried to get in at the very end to ask the witnesses a question for information. If I may, I will raise it now. Michelle Ballantyne mentioned Clackmannanshire Council’s rent arrears having gone up as a result of the introduction of universal credit. That is not my understanding, based on the figures that I have from Clackmannanshire Council. It would be useful to hear from the witnesses who were here their version of that.

We have moved on to consideration of evidence, which would normally be done in private session. You have put that on the record. Let us look at that next week when we discuss the information in private. I think that that is reasonable.

We will not move on to item 4 but will close the meeting at that point. Thank you, members.

Meeting closed at 11:34.