Bedroom Tax (Scotland)

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Thursday 8th May 2014 Westminster Hall

[Dr Whiteford]

By no means. I commend the work that has happened in some local authority areas and with some housing associations, but that is perhaps a more feasible option for some than for others. The agreement that has been reached among the parties in Scotland, on a cross-party basis, is that the discretionary housing payment system offers the clearest legal route to do that in a way that can be regular and ongoing. It is a bit of a legal quagmire, as far as I understand it, and it is not as straightforward as it might first appear. It is also not always easy to disentangle what are bedroom tax arrears and what are arrears due to another financial hardship such as losing one’s job, other welfare reforms or other loss of income. It is not entirely straightforward. Nevertheless, it is a very serious issue and I absolutely share the hon. Lady’s concerns.

I am glad that we have a commitment to proceed under section 63 of the Scotland Act. I pay tribute to the Under-Secretary of State for Scotland, who has succeeded where the DWP has failed over the past five months. I hope that the Minister will use this opportunity today to outline a speedy timetable for that process to be enacted. It means that local authorities can plan ahead on the basis that the shortfall will be met in full and that they will have funding to ensure that every single tenant subject to the under-occupancy penalty can receive a discretionary housing payment. Twelve of our local authorities already have a full funding allocation to mitigate the bedroom tax in their areas. The rest have extra funding up to the level of the cap and can now be assured that the rest is coming, just as soon as the relevant orders can be laid in Parliament.

The challenge for all of us is to make sure that tenants apply for their discretionary housing payment. I will certainly be going back to every constituent who has been in touch with me about the bedroom tax, including those who applied unsuccessfully for DHPs in the past, and urging them to reapply. I will also ask my local authority what it will be doing proactively to ensure that everyone who is entitled to discretionary housing payments gets them, now that the policy has been fully funded and there is no excuse for anyone who is subject to the bedroom tax to be left without the support that they need.

[Katy Clark (North Ayrshire and Arran) (Lab)]

The hon. Lady will be aware that different local authorities are taking very different approaches. For example, in Renfrewshire, which is adjacent to my constituency, staff are employed to go around proactively and get people to apply for discretionary payments. In my area of North Ayrshire, that does not happen. Does she think that the resources need to be put in to ensure that that happens, if we are going to follow the path that she is suggesting?

[Dr Whiteford]

The hon. Lady makes a really important point, because there are a range of practices across local authorities. However, this is very much their responsibility, and I hope that they will be putting in place a more proactive approach across the board. I know that some have already done that in dealing with other aspects of welfare reform, but I also know that the Scottish Government have made it very clear to every local authority that that money is to be used for the purpose for which it is intended—to mitigate the effects of the bedroom tax—and they need to ensure that everyone gets it. It is incumbent on us all to ensure that our constituents know that and to encourage them to get their forms in. After all, it is in the interest of local authorities to ensure that people do not fall into arrears, because that just creates further problems for them down the line. I am confident that most local authorities in Scotland will be keen to ensure that that policy is properly implemented.

The mitigation measures mean that no one should fall into arrears or face eviction because of the bedroom tax, but we cannot ignore the fact that it is still on the statute book. The Scottish Parliament does not have the power to abolish it. That means that tenants are still legally responsible for the shortfall in their rent caused by the cut to housing benefit. We should not lose sight of the fact that in order to mitigate the worst impacts of Westminster’s bedroom tax, money has had to be diverted from other devolved spending priorities.

The bedroom tax and the other changes to housing benefit are only one aspect of the UK Government’s assault on people in low-income households. By the end of this financial year, about £4.5 billion will have been taken out of the pockets of people on low and middle incomes in Scotland through welfare reforms and other changes to the tax and benefits system. The figure will rise to £6 billion by 2015-16. Apart from in the bedroom tax itself, that is most evident in the changes to tax credits, which have cost 110,000 households in Scotland an average of £700 each, and of course the uprating of working-age benefits at a level substantially below inflation, which has meant real-term cuts in the value of support. The freezing of child benefit means that, cumulatively, a family with two children will be more than £1,000 worse off by next year. In many cases, the people who have been hit by the bedroom tax are the same people being affected by those other changes. It is those people whom the mitigation measures will help, but we must recognise that we cannot fill a black hole of £6 billion without the powers and the budgets to do so.

The Scottish Government have invested £258 million to temper the worst aspects of welfare reform, but we need to be clear that it is a damage limitation exercise, not a solution. As well as the extra £50 million for the bedroom tax, the Scottish Government have put in place arrangements to ensure that 500,000 people in Scotland still get council tax benefit, and have introduced the Scottish welfare fund, which so far has helped 35,000 people.

However, the Scottish Government do not at the moment have the powers or the budget to plug a £6 billion cut in public spending. People would think, listening to the earlier comments today, that the bedroom tax was dreamt up in Scotland and was being imposed by the Scottish Government. The truth is that the bedroom tax is the brainchild of a callous Tory-Liberal coalition Government whom people in Scotland simply did not elect. Responsibility for the bedroom tax rests right here in Westminster. The fact is that housing benefit is a reserved issue and this House has the power to scrap the bedroom tax.

[Katy Clark]

Will the hon. Lady give way?

[Dr Whiteford]

I will give way one last time.

[Katy Clark]

Does the hon. Lady not believe that the Scottish Parliament should be looking to raise the amount of money that it receives through taxation? Can she explain why her party will not support measures such as raising the higher rate of income tax to ensure that we have more money to spend on welfare?

[Dr Whiteford]

I am very much looking forward to the referendum in September, when people in Scotland will have a say on whether they want control of their own affairs and responsibility for setting income tax levels. I led an Opposition day debate on this issue back in February last year, when I called on the Government to end the policy, but we have had a number of opportunities in the House since then to voice our opposition, which includes opposition on the Government’s own Back Benches. The best chance we had to get rid of the bedroom tax was in November last year, when the Government came tantalisingly close to being defeated in the Commons in a vote following a Labour Opposition day debate. A defeat in the Commons would have forced the Government to rethink their approach, because it would have shown that even their own Back Benchers in the coalition—

Housing Benefit (Under-occupancy Penalty)

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

The problem of under-occupation will not be solved by shuffling people around. That will do absolutely nothing to resolve the underlying problems, which I think we all know are related to the supply of affordable housing.

[Katy Clark (North Ayrshire and Arran) (Lab)]

I congratulate the hon. Lady and her colleagues on their choice of subject for this Opposition day debate. Does she agree that one of the problems is the complete mismatch between the stock that housing association and councils have and what people need, and that there are simply not enough properties for people to move to?

[Dr Whiteford]

The hon. Lady is absolutely right—her point is at the core of the debate. Before I turn to that point I want to say more about the issues facing disabled people.

--- Later in debate ---

[Dr Whiteford]

I will give way once more and then I really must get on.

[Katy Clark]

Will the hon. Lady use her eloquence and influence with the Scottish Government to ensure that they have a no-evictions policy?

[Dr Whiteford]

Again, I will come to that and consider some of the structural issues in a moment. First, however, I want to mention pensioners who so far have been excluded from the under-occupancy rules. That is important because many older people who are technically under-occupying are extremely anxious about the bedroom tax and frightened that it will force them to move. We must make it clear that they will not have to do so at this stage. Once universal credit is introduced, however, people of pension age who have a younger partner of working age will be subject to the bedroom tax, and again, they will be forced to move into smaller, more expensive, and often less suitable homes. That is a false economy for the Government and will have a great human cost for older couples.

Public Service Pensions Bill

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Monday 29th October 2012 Commons Chamber

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

I will try to keep my remarks to the point, Madam Deputy Speaker, and enable other Members to get in.

We have heard a lot about some of the changes that have already started to take effect, but one aspect of the Bill that is undoubtedly causing most concern, and proving a sticking point in negotiations with the public sector work force, concerns the equalisation of the normal pension age with the state pension age, and the implications of that for those who may have to work until they are 68.

Although I welcome the exemptions that have been conceded for some of the more obviously physically demanding public sector occupations—police officers, firefighters, members of the armed forces—that is by no means an exhaustive list of public sector jobs that can be extremely physically challenging. Most people would struggle to do many of those jobs into their mid and late-60s, and I hope the Government will listen carefully to employee representatives, and look again at the proposal and at what it might mean for nurses, paramedics, auxiliaries, prison officers and teachers, and others who do stressful and physically demanding jobs. That was one of the principal issues raised across the spectrum of trade unions and other employee representative groups, and the Bill does not currently seem to contain any flexibility to look at the issue in the context of overall negotiations, which is a particular issue in the devolved context.

We need to look at the normal pension age and its alignment with the state pension age in a slightly wider contextual framework, and inject a bit more practical realism into our actuarial spreadsheets. It was a pleasure to follow the hon. Member for Bromley and Chislehurst (Robert Neill), and the issue of life expectancy that he mentioned is important. We all acknowledge that life expectancy is increasing, but that top line trajectory masks great and very marked divergences on a range of demographic and geographic indicators. At this point, may I add my tribute to those of other hon. Members who have mentioned the late right hon. Member for Croydon North, (Malcolm Wicks)? It was he who raised some of these important points during previous debates.

People who have worked in heavy industry, for example, tend to die younger than those who have worked in professional occupations. People in deprived neighbourhoods live shorter lives than those in affluent areas, and on average women tend to live several years longer than men. One aspect of that divergence that does not receive nearly enough attention yet is pertinent to the debate is healthy life expectancy—the number of years in which we can expect to enjoy good health. Healthy life expectancy is rising, but it is not rising as quickly as life expectancy.

In Scotland we have one of the lowest life expectancies in Europe, and men and women can expect to live almost two years less than the UK average, at just over 76 years for men, and just over 80 years for women. The key point, however, is that healthy life expectancy is only 61.9 years for women and 59.5 years for men. The health of many men has already been seriously compromised several years before they reach the current retirement age. Those figures come from the Registrar General for Scotland; they are official Government figures.

Last month, the TUC published research indicating that in the UK as a whole, only 54% of men aged between 60 and 64 are actually in work, which, on the face of it, seems fairly consistent with official figures on healthy life expectancy. Women can obviously claim their state pension at an earlier age so they fare a bit better, but even then only 62% of women between 56 and 60 are in work. We as legislators must be a lot more realistic about how long we can expect people to be fit for work. Furthermore, those figures do not include people who have moved into part-time work because of their health, or taken on unpaid caring responsibilities for a spouse whose health has been compromised. Many people also leave the workplace to look after grandchildren.

I am sure all Members know people who work into their 70s and beyond with robust health and enviable levels of energy, and thanks to equality legislation fewer barriers are now in the way of older people who want—or need—to continue working beyond the state pension age and are able to do so. However, we cannot just cross our fingers and hope that older people will be able to continue in their jobs until they are 68. All the evidence tells us that most people will have developed some serious health problems by that stage in their lives, which may well affect their ability to work. That is not just in heavy occupations, but across the board.

Even if we allow for continued improvement in health outcomes, which I am sure everyone aspires to, and if life expectancy continues to rise, we need to factor in the realistic likelihood that a significant proportion of people will not be fit for work in physically demanding jobs by the time they reach 68. My worry is that those who are forced to leave their jobs early because of ill health face having to live on actuarially reduced pensions. That might well save the public pension schemes money, but it will significantly reduce their standard of living and quality of life in old age. It might even force some to rely on state benefits. The hon. Member for North Ayrshire and Arran (Katy Clark) alluded to that. We currently spend about £13 billion a year in means-tested benefits for older people, most of whom have worked hard all their lives, often in low-paid jobs or in unpaid caring, and do not have occupational pensions. Supporting those people through means-tested benefits is probably the least efficient way we could ensure they have a dignified old age.

As other hon. Members have said, today is not the day to debate the chronic problems with, and abysmal state of, private sector pensions and the reasons for them, but the warning is there: we should not pull the public sector down to the base level—the absolutely inadequate level—of private and voluntary sector pension schemes. That would be a recipe for spending a lot more on means-tested benefits in the long term.

I was struck by the briefing from the Prison Officers Association, not least because the proposed reforms will affect hundreds of prison officers in my constituency who work at Peterhead prison. The POA points out that, although the average age of prison officers in the UK is rising, prisoners are getting younger, and, in its words, “more dangerous”. It is concerned that many prison officers in their 60s might struggle to pass the physical fitness test that all prison officers undertake to ensure they have the physical strength, stamina and stability to, for example, use control and restraint techniques in the course of their duties. Prison officers make the case that there is a direct parallel between their job and that of police officers, and cannot understand why the recognition that police officers might not be able to do their job effectively beyond 60 has not been extended to them. Will the Minister offer some clarification on the Government’s thinking? Is there scope to reconsider the situation for prison officers? Prison officers point out that, if people are forced to leave their job early through ill health, they could put greater financial strain on the system. For example, it could cost a great deal more if they retire on work-related medical grounds than if they retire normally at a sensible age.

Nurses are another group who do heavy work, so the pension age has potentially significant implications for them. The Royal College of Nursing has formally rejected part of the Government’s proposal, but it makes the point that the Government need to keep the link between the normal pension age and the state retirement age under review, as recommended by Lord Hutton. It has asked that that commitment is made explicit in the Bill, and that the review process is conducted independently. I hope Ministers take that on board.

The RCN has also asked the Government to postpone making a decision on the equalisation of the normal pension age and state pension age until the working longer review in England has reported and the Government have had time to consider its recommendations. In the light of what I have said, I hope the Government take that point seriously, because it would be a sensible approach—the review will help to inform good decision making in the longer term.

Another major concern of trade unions and employee representatives—hon. Members have made points on this, so I will not repeat them—is that the retrospective powers in the Bill allow the Government to amend it with limited consultation. Trade unions and employee representatives are legitimately concerned about instability and uncertainty for scheme members. The consequences of people losing confidence in the pension system and dropping out of it are much bigger—that has happened in other sectors when pensions have become unsustainable. I hope the Government consider that in Committee.

The hon. Member for North Ayrshire and Arran raised specific aspects of devolved pensions regulation. I am by no means a spokesperson for the Scottish Government—I urge hon. Members to direct their questions to the Ministers responsible—but I hope I can shed some light on certain parts of the Chief Secretary to the Treasury’s opening remarks. I also want to ask questions for clarification from him and the Minister who will wind up the debate. My understanding is that occupational pensions policy is largely reserved, although Scottish Ministers have Executive responsibilities for the NHS, teachers, firefighters, police and local government pensions schemes, subject to a number of constraints. The major constraint is budgetary—the Treasury controls the purse strings, and Barnett consequentials have a knock-on impact on a Government who are working on a fixed budget and have no borrowing powers.

Will the Minister confirm that formal approval is needed from the Treasury for any legislative changes to the NHS and teachers schemes? What is the Government’s thinking on the Treasury approval required in relation to the firefighters and police schemes? My understanding is that the Government are trying to introduce a Treasury approval requirement for those schemes. Will Ministers confirm what they are doing? Are they seeking a memorandum of understanding to claw back powers from the Scottish Government on police and firefighters’ pensions? Scottish Ministers have had discretion to determine the design of the police and firefighters schemes, although the settlements have always mirrored agreements in other parts of the UK. So far, the benefits of consistency have been thought to outweigh any benefits of divergence. I am not sure whether that balance of opportunity will be seen in the same light if the proposals are implemented.

I believe Scottish Ministers have responsibilities in relation to the local government scheme, provided the powers are exercised within primary legislation. In practice, that scheme, too, has mirrored that of the rest of the UK. To return to points made earlier, I understand that the local government scheme has been reformed, and that “cap and share” arrangements are in place. It is funded differently from other public sector schemes, and decisions on it are made in Scotland by those who manage it. It is worth pointing out that, in Scotland, the public sector local government scheme does not seem to have any financial problems. There is no immediate shortfall—in fact, it is currently running a surplus—and neither the Convention of Scottish Local Authorities nor trade unions are of the view that there is any need for reform. The Government could helpfully clarify why they believe that scheme needs to be reformed. Is this the right time to do so? Public sector workers are in tight financial situations. Most have seen their contributions increase dramatically, and many had their incomes squeezed.

I cannot with any confidence answer the question put to me by the hon. Member for North Ayrshire and Arran on the legislative consent motion. My understanding is that there is no need for a legislative consent motion for most of the Bill, because pensions policy is largely reserved. However, I believe legislative consent would be required for some of the reforms to non-departmental public bodies and some judicial offices. I am guided by the Bill’s explanatory notes, so perhaps the Minister could explain if the situation is different. The Unison briefing asserts that further legislative consent is required with regard to the local government scheme, but I have not seen the legal arguments that back that up or substantiate it. Perhaps UK Ministers are in a position to clarify the UK Government’s understanding of the situation.

[Katy Clark]

I am grateful to the hon. Lady for going through the detail as she understands it. The Bill will have massive implications for our constituents. Does she agree that, if the Unison legal advice is correct—that a legislative consent motion is necessary in relation to the local government pension scheme—everything should be done by the Scottish Government to ensure that the negotiations taking place in Scotland between them and trade unions take precedence in terms of the outcome for our constituents?

[Dr Whiteford]

I certainly agree that it is important that we get a fair and equitable solution in the local government pension scheme. I cannot speak for the Government, but I know that some of the negotiations have been very difficult. From speaking to trade union representatives in recent weeks, it is clear that they recognise the constraints within which the Government are working—and they value the tone of some of the negotiations that have taken place so far—but Ministers in Scotland have been negotiating with one hand tied behind their backs. Greater flexibility, especially on age, would go a long way to helping to reach an equitable conclusion.

Underlying this debate is the need to maintain confidence in public sector pensions, which are really very modest. They keep people just above the poverty line, especially women who have worked in low-paid jobs most of their lives and have very modest pensions that keep them just above the level of means-tested benefits. People are not unreasonable in their expectations, but asking them to pay more, work longer and receive less is not a reasonable proposition to put to our public sector workers. I hope that the Government can and will do better.

Finance (No. 4) Bill

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Thursday 19th April 2012 Commons Chamber

[Dr Whiteford]

I will try to keep my remarks short. I have listened to today’s debate with great interest. First and foremost, it is important that we take proper account of the long-term erosion of pensioners’ incomes over the past three decades, since the link between earnings and the state pension was broken, and of the more recent pressures in the wake of the financial crisis.

The changes to age-related allowances that we are discussing will not affect the poorest pensioners or those who are comfortably off. They will, however, affect the 40% of pensioners who have modest incomes. Those people have saved for their retirement, and 4.4 million older people will be worse off as a result of the changes.

[Katy Clark]

I agree with everything that the hon. Lady has said so far. Does she agree that a subject that we do not discuss often enough is that of pensioners who rely on their savings? Low interest rates mean that they are currently getting a far lower income from their savings than they had envisaged.

[Dr Whiteford]

I absolutely agree. In fact, that was one of the points that I wanted to make, because that subject has been eclipsed in the debate about the changes.

The Government have made great play of the recent increases to the state pension, and seem to suggest that they will somehow offset the changes to the tax allowances. As the hon. Member for Leeds West (Rachel Reeves) pointed out, however, we must remember that that is simply an inflationary rise. It will only keep pace with prices; it is not an increase. It is only a small step in the right direction towards restoring pensioners’ incomes to a level that most of us would recognise as providing a decent standard of living.

I have mentioned in the House before that the way in which pensioners experience inflation can differ markedly from the way in which the general population as a whole experiences it. One of the most obvious and significant examples of that relates to heating and domestic fuel costs. Retired people are more likely to have to heat their homes during the day, while the rest of us enjoy the benefit of our workplace heating systems. Many pensioners also find it harder to keep warm because of their age and the fact that they are not moving about so much. So any inflation in the cost of energy is felt disproportionately by pensioners, and nowhere more so than in those parts of these islands that experience consistently colder weather.

Last year, we saw sharp and dramatic increases in home energy costs, which played a big part in driving inflation up to over 5%. Energy prices have come down since that peak, but I heard on the news this morning that some economic commentators believe that inflation this year is going to be well above the Bank of England forecasts that the Government are using, and that we could experience inflation of over 3% this year as well. The welcome increases in the state pension have only kept it in line with inflation and might not keep it in line with inflation as it is experienced by people of pensionable age. That is why the Government’s argument that the changes to age-related tax allowances are compensated for by the increases in the state pension is somewhat spurious. In real terms, this tax grab squeezes the incomes of pensioners on modest incomes.

It is also all too easy to forget that pensioners have already paid a heavy price for the financial crisis. Those pensioners affected by these new changes to age-related allowances are in many cases the same people who saw the value of their savings and investments plummet in the wake of the financial crisis. Since then, they have had to contend with record low interest rates, coupled with high inflation. As the Treasury Committee reminded us earlier this week, quantitative easing, whatever its intended consequences, has had some very nasty side effects for those reaching retirement age and looking to buy an annuity in the last few years.

Greenock Coastguard Station

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Wednesday 8th June 2011 Commons Chamber

[Katy Clark]

I agree with my hon. Friend. I am trying to get the Minister to provide more detail on the reasoning behind the proposals. I am strongly of the view that we need a geographical spread of coastguard stations and that we need more than one in Scotland. I have not necessarily looked at the detail of every coastguard station, but I suspect that some hon. Members in the Chamber have.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Perhaps the hon. Lady’s concern about stations on all parts of the coastline echoes her comments about the transferability of staff. Does she agree that local knowledge is critical to the successful operation of coastguard services?

[Katy Clark]

I agree with the hon. Lady. I am in no way trying to set one coastguard station against another; what I am trying to do is put points on behalf of the Clyde coastguard station that I do not believe will be put in any other forum. There is huge frustration about the fact that it has not been possible to make those points, and we know that very few reasons were given for the proposals.

In every debate about the issue that has taken place in the House, members of all political parties have strongly made the case for local knowledge. There is a considerable distance between the constituency of the hon. Member for Banff and Buchan (Dr Whiteford) and mine. At present that local knowledge is held in the Clyde coastguard station, and if Aberdeen were to take on the work, the acquisition of such knowledge would take a number of years. That point has been made to the Minister a number of times.

Fuel Costs

Debate between Baroness Clark of Kilwinning and Eilidh Whiteford

Monday 7th February 2011 Commons Chamber

[Dr Whiteford]

Had the hon. Gentleman been here earlier, he would have heard that point addressed in previous contributions. Both VAT and duty have a part to play. The previous Government’s record on this was shameful in not allowing motorists to benefit from the falls in VAT at the beginning of the recession. The key point is that the disproportionate tax on rural parts of these islands does not only harm individual motorists, but inhibits our business growth and the development of our rural economies.

[Katy Clark]

I support what the hon. Lady says about islands and remote communities, and I support a fuel duty discount for such areas. However, the bigger picture is how much we tax fuel in this country, and Britain has decided to have a high level of tax on petrol, diesel and other fuels. Does she support that?

[Dr Whiteford]

We have heard a lot this afternoon about the need for the Treasury to balance its books, and about the role of tax in that, but the fundamental underlying question is: why should people have to pay more and disproportionate tax just because they do not have access to public transport or happen to live in a rural area? I am all for tax, so long as it is fair, proportionately applied, and people are not discriminated against for living and working in a rural area.

The impact is felt particularly by businesses. As other Members have said, goods and services have to be moved into and out of parts of rural Scotland by road, and in many areas we already have to overcome significant challenges arising from our distance from markets. The area I represent has strong food processing, farming and fishing sectors and a great deal of manufacturing. Companies in northern Scotland have to cover the extra costs they incur and the extra taxes they pay, in order to make viable business plans, but nobody else has to. We have come through difficult times but are still struggling to emerge from the recession, and the fluctuating price of oil causes great instability and uncertainty for business. Big and small businesses alike struggle with that. Big businesses can sometimes buy fuel while in greater debt, but small businesses, which are often the greater engine of growth in our communities, really struggle with the unpredictability caused by fluctuating prices.

In conclusion, I urge the Government to honour their commitments before the election. I cannot over-emphasise the urgency and immediacy of this issue in rural Scotland. I urge them to consider the matter seriously. We have heard a lot about the derogation. I hope that not just island communities will be included in that, but that, notwithstanding the difficulties, other rural and remote parts will be included too. I also hope that much more attention will be given to the stabiliser, which, ultimately, will create fairness in the system and proportionality in the taxation on fuel.