Committee of Public Accounts Press Notice

26th PAC Report 2006-07

Department for Work and Pensions: Progress in tackling pensioner poverty - encouraging take-up of entitlements

Edward Leigh MP, Chairman of the Committee of Public Accounts, today said:

“Measures by the DWP to encourage pensioners to claim the Pension Credit to which they are entitled have made good progress. But billions of pounds are still lying unclaimed in the Treasury. A far better place for them would be in pensioners’ pockets.

“Pension Credit is at least reaching more pensioners than its predecessor benefit - but up to 1.6 million eligible pensioners are still not claiming. Even more worrying is the fact that take-up of Housing Benefit and Council Tax, both administered by local authorities, is actually declining.

“The truth is that the Department’s approaches to encourage take-up of benefits are suffering from the law of diminishing returns. Many pensioners suffer from privation and new and imaginative thinking is needed to encourage them to claim the benefits which can make a big difference to their quality of life. Such new thinking should embrace developing a shared target for all the different agencies to encourage them to concentrate on pensioners’ well-being. It should also extend to allowing pensioners to claim linked benefits through one single transaction; and to focusing on the areas of the country where take-up is poorer.”

Mr Leigh was speaking as the Committee published its 26th Report of this Session which, on the basis of evidence from the Department for Work and Pensions, examined what had been achieved in encouraging take-up of benefits since 2003 and the scope for further improvement.

In 2004-05, an estimated 1.8 million pensioners lived in households below 60 per cent of median income (the definition of relative poverty used by bodies such as the Social Exclusion Unit and the OECD). In 2003, our predecessors reported on the Department for Work and Pensions' efforts in partnership with others to tackle pensioner poverty by encouraging pensioners to take up the benefits to which they were entitled. The Committee made recommendations on setting targets; communicating effectively with pensioners; working in partnership; and simplifying and reducing duplication of processes.

Considerable progress has been made against these recommendations. More pensioners receive Pension Credit, introduced in October 2003 to ensure that pensioners had a minimum amount to live on, than its predecessor, the Minimum Income Guarantee. The Government set a target to pay Pension Credit to 3 million households by 2006 and 3.2 million by 2008. The Department did not meet the 2006 target and does not expect to meet the 2008 target, but the targets have helped to drive the efforts and led to 2.7 million people receiving Pension Credit by 2006.

Despite this progress, in 2004-05 there were still between 1.1 and 1.6 million eligible pensioners not claiming Pension Credit, which equates to a take-up rate of between 61 and 69%, and means that almost a third of eligible pensioners are still missing out on some entitlement. In value terms, £1.5 and £2.1 billion of Pension Credit is not being claimed, corresponding to 72 to 79% take-up of the total entitlement. The National Audit Office's analysis of local patterns of take-up shows that some groups are more likely to miss out, for example pensioners in rural areas. The amount of Housing Benefit and Council Tax Benefit not being claimed is also large, and take-up of these benefits has actually declined in recent years.

The Pension Service identifies pensioners missing out on entitlements and encourages them to apply. It has established a Local Service which offers home visits to help with claims, providing assistance on a range of benefits and services, not just those administered directly by The Pension Service. Much of this work is done in partnership with other local agencies. It is easier to claim Pension Credit than its predecessor the Minimum Income Guarantee and there are now links with claims processes for other benefits, although individuals still have to repeat some actions to claim different benefits.

At a local level, there are 400 Alternative Offices where benefit claims can be processed by other organisations such as Citizens Advice Bureaux and Age Concern on The Pension Service’s behalf. Local authorities, the voluntary sector and other public service providers have a common interest in combating pensioner poverty. Many are involved in local initiatives to increase take-up but there is not much evidence of which of these activities are successful, and there is less partnership work with the health and housing sectors than might be expected considering their contacts with pensioners.

Notes for Editors

1. Contact details for requests for further comment from Mr Edward Leigh are provided below. ISDN facilities are available for broadcasting purposes.

2. The full text of the Committee’s Conclusions and Recommendations is attached to this press notice.

3. This report can be accessed via the internet from around 11.00 am on the day of publication.

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