MPs attack rise in means-testing for pensioners

Senior MPs launched an unprecedented cross-party attack on the Government's reform of pensions policy yesterday, warning that it would create an "eye-wateringly complicated" system that would leave millions of people no better off.

David Willetts, the Tories' work and pensions spokesman, and Steve Webb, the Liberal Democrats' pensions spokesman, said they would oppose the new pensions credit, due to be debated by MPs on Monday.

Frank Field, a former Labour welfare reform minister, also expressed his anxiety at the change, which critics say will vastly increase the scope of means-testing.

Mr Willetts said: "If the first three people to stand up and speak in Monday's debate are myself, Steve and Frank Field, all opposing these changes, then even if we do not win then I think the intellectual victory will be ours."

He added: "We know that the take-up of means-tested benefits among pensioners is low and getting lower.

"Around a third of eligible pensioners did not claim the minimum income guarantee in 1999-2000, and the appalling complexity of the pension credit is bound to make the problem of low take-up even worse."

Both parties are calling on MPs to support a joint amendment to the Bill, to be tabled on Monday. This calls for the Bill not to be given a second reading, and adds that the additional expenditure would be better diverted towards improving the basic state pension, particularly for older pensioners.

Professor Webb said the new pension credit would increase means-testing, force millions of people to fill in hugely complicated claims and fail to reach at least 1.8 million people.

He said: "The pension credit takes us even further down the road of mass means-testing for pensioners. This is a completely misguided strategy."

Mr Field said: "The crucial objective of pension reform should be to secure a decent first-tier pension for everyone retiring from a full working life. Current levels of pensioner poverty are testimony to previous governments' failure to do this. The falling basic state pension and state second pension will not achieve this objective either.

"Pensioners and workers will find the scheme confusing, but there is a further problem for future claimants.

"The Government's own figures show the credit could cost £20bn in 2040 – equivalent to 8p on the basic rate of income tax. Merely to state these figures illuminates why those currently in the workforce cannot rely on the credit remaining in place."