Ann McKechin MP

Labour Member of Parliament for Glasgow North

Pension Credit in Scotland - 12 November 2003

I welcome this opportunity to discuss the take-up of the pension credit. That important new entitlement introduced by the Government last month will benefit substantial numbers of my constituents and thousands of people throughout Scotland. It will fulfil the Government's manifesto pledge to do more to reward pensioners who have saved and will stop penalising those who have small additional pensions. I welcome this new entitlement, but I am anxious to ensure that the take-up in Scotland is maximised.

In July, the Daily Record revealed that almost 60,000 Scottish pensioners were each missing out on £1,100 a year under the minimum income guarantee—although that benefit is now replaced by the new pension credit. The Daily Record launched a campaign to encourage those pensioners to claim their rightful share of the wealth of the country they helped to create; it showed that 58,500 Scottish pensioners failed to claim the average minimum income guarantee benefit. The Daily Record's campaign highlighted the case of Isabel Mullally, a 73-year old, who sometimes washed in cold water to save switching on her immersion heater. Her electrically heated flat was a major drain on her state pension and she was terrified that she would not have enough cash to pay the bills. When she went shopping, she was often drenched as she waited in rain-soaked bus queues to get home. Today's weather provides an example of that. However, she is now able to use hot water, and when she goes shopping she gets a cab home. That is due to her income increasing drastically since April, when she received the minimum income guarantee after being a widow for 13 years. By now, she will have been transferred automatically to pension credit. She is one of many Scots pensioners who have benefited by around £22 a week.

Like many of my colleagues I welcome the Daily Record campaign, which resulted in many Scottish pensioners applying for the benefit. I also welcome the automatic transfer of the pensioners who were claiming minimum income guarantee to the new pension credit system. However, I am sure that my hon. Friend the Minister will agree that there is still work to be done to encourage pensioners to apply for the new pension credit. About 400,000 households in Scotland will be eligible from October—but we must ensure that they apply and receive the credit to which they are entitled. Department for Work and Pensions figures show that in 2000–01, £67 million of benefits went unclaimed by Scotland's 1 million over-60s. That gives us some idea of the challenges we face.

Since coming into power, the Government has rightly concentrated their efforts on our poorest pensioners. We must ensure that all of them benefit from our nation's prosperity and every one of them is entitled to a decent income on retirement, rather than relying on a mere safety net. There are, of course, still demands to use Government resources to increase the basic pension in line with earnings. Although that proposal has the advantage of simplicity, it fails to address the widespread pensioner poverty we encountered when we came into power in 1997—particularly among elderly women, who often did not benefit from either the full basic pension or from a secondary pension.

The Government's own estimates show that more than two thirds of pensioners eligible for the pension credit are women and more than 60 per cent. of women over 80 will be entitled to claim it. Due to the historical legacy of unequal treatment for women in pensions for many years, women will, for a considerable time, continue to be much more likely than men to be entitled to less than the basic state pension when they reach retirement age.

The pension credit is one valuable way in which we can try to bridge that inherent gender inequality. To use money for pension credit simply to increase the basic state pension for those aged 75 and over, for example, would not target resources on those who need them most. The poorest pensioners would be around £130 a year worse off. Alternatively, if we had used the funds to increase the basic state pension in line with earnings, it would not have helped the country's poorest pensioners who are entitled to the former minimum income guarantee, now the guarantee credit. The poorest pensioners would have lost out in the Government's commitment to increase the pension credit in line with earnings for the duration of this Parliament. I believe that the Government has the right political argument, but we face an uphill battle against long-standing preconceptions and particularly the stigma that many pensioners feel at making claims.

Only last Friday, a constituent visited my surgery and questioned me closely on the terms of the entitlement all the while more than probably convinced that there had to be a catch. I hope that I finally managed to persuade her that sending in her application would give her more, not less, money. In recent months, while I have been promoting the pension credit in my constituency with special surgeries, I have met several constituents who are living on well below the guarantee credit level but who have never made a claim.

It is no wonder that significant numbers of pensioners share the view of the woman I met last week or the constituents I met during the summer. In the past, for those on basic state pension alone, claiming for income support was a laborious task as one waded through a long and complex form with nitpicking regulations only to discover that one had to go through the same process all over again at regular intervals every year. Visits to the old-style Department of Social Security offices, which we are now replacing, were often unpleasant and older people have a natural reluctance to discuss their private financial affairs in a room filled with strangers. The phrase ''means-testing'' is used so frequently in a derogatory sense, particularly in the media, that many see any application as a symbol of failure.

That is why it is equally important for the Government to tackle the culture and stigma that have stopped more of our older citizens applying for what is properly theirs—not only the pension credit but other entitlements. The new Pension Service is making good strides in creating a genuine change in approach and attitude but the Government need to ensure that any slippages and errors are quickly eradicated because bad news is only likely to discourage genuine claims. As we all know, bad news always travels fast.

I have met members of the staff of the Motherwell pension centre, which services Glasgow, on several occasions in recent months. They are keen and enthusiastic about the service and the way it can help elderly people to obtain their full entitlements. For most pensioners, the phone is the easiest way to make contact and the fact that the advisers will go through the form's questions with them and complete it ready for signature is a real boon for many people. It also offers flexibility and confidentiality from the comfort of their own house.

There will always be cases where face-to-face contact is more appropriate and I welcome the fact that local surgeries are held regularly in every constituency at community centres and libraries. They also offer an individual appointment-style service that allows applicants to speak confidentially to an advisor and not to have to wait for long periods. I have also met pension staff out and about at community events, including events that service the ethnic communities, to publicise their services including the pension credit. A significant number of new and inexperienced staff has been recruited to fill vacancies at the new centres. There are still some problems in the accuracy of information being passed to applicants or their family members over the phone. Concern has also been expressed about the handling of more complex cases, particularly those of pensioners who have recently transferred to nursing homes. I hope that the Pension Service will have the appropriate mechanisms put in place to ensure that any problems are minimised as far as possible and that people receive the correct level of benefit. Entering a nursing home can be a traumatic time not only for pensioners, but for their families.

I suggest to the Minister that we try to urge pensioners not to phone in the early morning at the beginning of the week, which they all have a tendency to do. The lines then get blocked. I urge people to telephone in the evening and later in the week, which is likely to save them the frustration of getting an engaged tone or waiting in the dreaded phone queue, listening to whatever tune may be playing. They are not likely to suffer the type of jammed phone experience that was encountered in April and May because of the working tax credit. I hope that the phased implementation that the Government proposes for the entitlement will ease the strain.

For the first time, the pension credit provides a real benefit to those with small supplementary pensions or with savings who were at a severe disadvantage under the old income support rules. Now, they will get an appropriate reward and there will be no clawback on the savings of the 85 per cent. of claimants who have less than £6,000. Calculations for Government taxes and benefits are frequently complex, but despite some commentators giving the misleading impression of there being multiple questioning for any potential applicant, the system offers substantially less form- filling. Most pensioners will have to make income declarations only every five years, with the weekly means test effectively abolished.

We need to stress that for the large number of pensioners entitled to housing and council tax benefit, the income threshold will be increased by the maximum savings credit payable, so the gains they make in pension credit will not be clawed back. Those messages need to come across loud and clear from the Government, as many people, especially those with literacy problems and the more elderly and frail pensioners, find any type of form filling daunting. Many pensioners are afraid that they may lose out on the swings and roundabouts between various benefits and entitlements for which they apply.

My hon. Friend the Minister shares my enthusiasm for the real financial benefits that the pension credit will provide for many pensioners in Scotland. I urge my hon. Friend and her Department to do as much as possible to promote the benefit in the next year, to ensure that every pensioner in Scotland can enjoy a decent retirement.


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