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Guaranteed Minimum Pensions Increase Order 2007

I am again grateful to the Government for introducing these orders and I note the change of voice and tone in that introduction. I should apologise to the Committee. If we go on—I suspect that we will—beyond 6.05 pm, I am afraid that I have an unavoidable commitment which I cannot break. Therefore, I will not be here at the end of the debate. My noble friend will of course remain. The uprating order is, as usual, predictable and follows precisely the autumn uprating statement. So we have known since September by how much the various national insurance benefits would rise—that is, 3.6 per cent—and most income-related benefits will rise by 3 per cent, which, as the Minister has said, is inflation stripped of rent, mortgage interest, council tax and depreciation—the so-called Rossi index. The guaranteed minimum pensions order rates the contracted-out final salary schemes by the same amount. On reading the Minister’s colleague’s speech in another place, it surprised me just what was going on. Where the annual increase in the retail price index exceeds 3 per cent, uprating of the guaranteed pensions indexation is limited to 3 per cent, even though last year’s RPI was 3.6 per cent. The latter figure is made up by comparing prices of a standard shopping basket with mortgage interest added in. I suspect that few people will recognise the figure of 3.6 per cent. Certainly, my son's employers do not. He works in London as a back-room boy for a bank and is paid a basic salary, with no extra payment based on his own efforts. He cannot be compared with, say, some of your Lordships in the financial world. His pay rise was 6 per cent, which, interestingly, is what pensioners believe is on average their extra cost of living over the past year. This is hardly surprising when the cost of heating fuel, council tax and petrol is considered. Given the Office for National Statistics’s new website, where people can work out their own inflation rate using a questionnaire of 23 items, I wonder whether the official basket of prices could be altered. Can I issue a plea that all the information given by those who use the website should be added together and averaged out, so that we can see the true position? I of course accept that this would be rough and ready, but it would be no more rough and ready than the RPI. However, it would be much more representative of what is actually happening, even though it would depend on who actually uses the website. It would be skewed for example if it was mostly used by pensioners or young working people. However, the official basket takes no account of whether people actually buy the products and services in that basket. Even using this basket, RPI stands at a nine-year high of 3.6 per cent. I suppose that it is the Rossi index of 3 per cent that is nearest to the cost-price index used by the Bank of England to set interest rates. Given that the Chancellor has instructed the bank to keep the CPI at 2 per cent, it is hardly surprising that interest rates are on the rise. Will the RPI continue to rise? The Minister will probably duck that question by saying, as I used to in his position, that he never answers hypothetical questions. What he can and should answer, however, is what the monthly RPI figures were from October 2006 to January 2007, which will give us a guide on what to expect in the autumn uprating statement. I would like to make three points about the uprating order and I am rather surprised that the Joint Committee on Statutory Instruments did not raise my first point. Regulation 6 gives the dates of when the various upratings will start. My question refers to paragraph (5), which states: "““Any increases in the sums specified for … (iii) carer’s allowance (except in a case where the Secretary of State has made arrangements for it to be paid on a Wednesday) … shall … take effect on 9th April 2007””." There are two Wednesdays—one immediately before and one immediately after—close to 9 April; namely, 4 and 11 April. Which one is being referred to? My guess is 11 April, but it is by no means clear and I find it rather strange drafting. The Minister’s colleague told another place: "““The order provides an extra £2.48 billion to pensioners … and an extra £560 million to disabled people and carers””.—[Official Report, Commons, 19/2/07; col. 42.]" I am no mathematician, but I took advice from one of my noble friends who concluded that that added up to £3.04 billion. However, this order provides for more than an extra £3.5 billion in departmental expenditure on benefits, which leaves a gap of some £500 million. On what will this be spent? Actually spending all this money depends on take-up. We have known for a long time that pensioners are particularly bad at taking up the benefits to which they are entitled. This also applies to other sectors, not least those who would be eligible for council tax and housing benefits. How much of last year’s budget was underspent, and what have Ministers done to correct that? One of the normal reasons for low take-up of benefits is the huge complication of the forms that need to be completed by the applicant. I know that there have been sporadic attempts to shorten them and that some in the past have won plain English awards. What progress has been made in the past year on this most desirable objective? Towards the end of his speech, the Minister rather boasted of some things of which the Government are proud which were outside the remit of this order. So I shall do exactly the same thing. Last but not least, I read, as I expect did the Minister, last year's debate and noted in particular my noble friend Lord Howard of Rising's point about what is not in the order; namely, the over-80 age allowance. This has been set at 25p a week since decimalisation. It is true to say that it has never been uprated by any Government since it was introduced, nor has there been any suggestion that it should be abandoned. Since Ministers tell us that no single pensioner needs to live on less that £119.05 a week—if the pension credit is taken up, which it is not, of course, by more than1.5 million pensioners—25p represents only a smidgeon over 0.05 per cent over that sum. Is it not time that the Government who, as we established during our discussion on the previous order, are reviewing the whole of the welfare scene, gave this some thought? That said, I, and the millions of people who are affected by these orders, welcome them.