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Guaranteed Minimum Pensions Increase Order 2008

rose to move, That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2008. The noble Lord said: I believe that we are dealing with two orders, the second being the Social Security Benefits Up-rating Order 2008. Both were laid before the House on 23 January. I am satisfied that the orders are compatible with the European Convention on Human Rights. The uprating order will increase most national insurance benefits by the September 2007 retail prices index, which was 3.9 per cent. Most income-related benefits will be increased by the Rossi index, which as Members of the Committee will be aware is the retail prices index excluding rent, mortgage interest, council tax and depreciation, and was 2.3 per cent on the same date. The uprating order provides for increases to take effect, in most cases, in the week of 7 April. The Guaranteed Minimum Pensions Increase Order 2008 sets out the amount by which contracted-out defined benefit schemes must increase members’ guaranteed minimum pensions that accrued between 1988 and 1997. This order will provide for an increase of 3 per cent. Primary legislation provides for increases to be capped at this level, when the retail prices index exceeds 3 per cent. This year’s uprating adds nearly £4 billion to government spending. I hope that noble Lords will agree that this will reinforce our commitment to build an active welfare state and to tackle poverty by helping those most in need. The uprating order provides an extra £2.8 billion to pensioners, of which £240 million is above inflation. Today’s pensioners are no more likely to be living in poverty than any other sector of society. Since 1997, pensioner poverty has been reduced by more than one-third through targeted support such as pension credit and around £11 billion extra funding. We have lifted more than 1 million pensioners out of relative poverty. In 1997, the poorest pensioners lived on £69 a week. From April, pension credit means that no single pensioner will need to live on less than £124 a week and that couples need not live on less than £189.35 a week. Around 2.7 million pensioner households, which is 3.3 million individuals, receive pension credit, with an average weekly award of £50. Because of our reforms, pensioner households will be an average of £1,500 better off in 2007-08 than they would have been had the 1997 system stayed in place. My honourable friend in the other place has announced a package of measures that will simplify the state pension system and encourage take-up. The changes will make the system less confusing and intrusive. A simplified and integrated process has already been introduced to make pension credit and state pension easier to claim, but this will be extended further to include housing benefit and council tax benefit—four benefits in one call—without the need for the customer to sign and return a claim form. I am sure that noble Lords will agree that this improvement to simplify claiming council tax benefit in particular should help to increase take-up of that benefit. We recognise there are those who, for a variety of reasons do not claim. We are therefore working jointly with Help the Aged, Age Concern, Citizens Advice and other partners to encourage pensioners to apply for benefits, targeting those areas where take-up is low and helping thousands more pensioners out of poverty. We will also uprate benefits and allowances for the working population. The order provides for an extra £630 million for disabled people and carers, and an extra £420 million for those of working age. Child-related allowances paid in the income-related benefits will be increased in parallel with the child tax credits to ensure that families getting these benefits see the full value of increases in child tax credits. In particular, the allowance paid for a child dependant in the income-related benefits will from next April increase by £5.14 a week to £52.59—almost 11 per cent. This shows our commitment to provide increased financial support for low- and moderate-income families. Tax credits currently benefit nearly 6 million families and 10 million children. This year’s uprating has provided an opportunity to provide extra help to some vulnerable teenagers as well as simplifying the benefit structure. From next April, the single-person rate for the small number of 16 and 17 year-olds getting income support and jobseeker’s allowance will be the same as the rate for 18 to 24 year-olds. This will mean an increase of £12.30, uplifting their weekly benefit from £35.65 to £47.95. The number of people in work is at record level at 29.4 million, and 1 million fewer people get out-of-work benefits than in 1997. The New Deal has helped more than 1.7 million people into work; this includes over 764,000 young people and more than 300,000 long-term unemployed adults. The New Deal for Lone Parents has helped more than 500,000 people into work, with the number of lone parents on benefits almost 250,000 lower than in 1997, and child poverty has fallen by 600,000 since 1998-99. The cost of uprating benefits for next year is nearly £4 billion, with over two-thirds of this going to pensioners. I hope that the order has the support of the Committee. I beg to move. Moved, That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2008. 8th Report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)