Welfare Reform and Work Bill

Debate between Lord Curry of Kirkharle and Lord Young of Cookham

Monday 21st December 2015 Lords Chamber

[Lord Curry of Kirkharle (CB)]

My Lords, I shall speak to Amendment 104A. I very much support the intentions of this Bill, but, of course, there are inevitably special cases that would be adversely affected by a change of this magnitude. The Government have been very clear in their intentions for this change, and I commend them for that. What I seek to amend, however, is not the principle of the clause, but its application. More specifically, I seek to amend this clause so that those who are in receipt of disability living allowance, or carer’s allowance and income support, are exempt from this change so that they can continue to receive support for mortgage interest as a benefit, not as a loan.

This clause was initially brought to my attention by a friend who attends my church. This man purchased a house in 2006 and was financially stable and secure. However, two years into his mortgage, he was diagnosed with a detached retina, which rendered him blind. As a consequence, he has had to cease working. He has been entitled to support for mortgage interest, due to being in receipt of disability living allowance, and carer’s allowance, as his wife is now his carer. With the help of SMI, his mortgage would have reached completion in 2030. At this point, he planned to downsize, using the extra equity to pay off other loans accrued since he was diagnosed as blind to equip his house as a result of his disability. However, the implications of the proposed change from interest support to a loan mean that 12 years’ worth of interest and a small capital contribution will need to be repaid. If interest rates stay as they are for the whole period, my friend, on top of his mortgage, will have to pay the Government back £63,000, the sum contributed by SMI as a loan, and £15,000 for the 5% interest on the interest owed each year. As I said earlier, I am in support of the clause in principle, but strongly urge the Government to reassess and reconsider applying the changes to those who are on disability living allowance.

My friend will be for ever incapable of working, and so would never be able to repay the loan. It is not right that such a burden should be placed on him and others like him—he is not unique—who receive disability living allowance. This change could potentially result in my friend losing his house and being forced to move into government housing, which would ultimately cost the taxpayer much more. Have the Government fully assessed the long-term implications of this? Surely, a successful policy is not one that saves money in one area, only for more to be spent elsewhere.

In conclusion, I repeat that I support the aims of Clause 16, but feel that it is entirely inappropriate for those on disability allowance to be treated in the same way as those on jobseeker’s allowance. The assumption is that those on jobseeker’s allowance will eventually get a job and be able to pay their mortgage in full themselves and also to pay back the loan. Those on disability allowance, however, might never be able to pay it back if they are for ever prevented from working. On these grounds, I urge the Government to reconsider the wording of Clause 16 and allow those on disability allowance or carer’s allowance to be exempt from the changes.

[Lord Young of Cookham (Con)]

My Lords, I listened to most of the debate this evening and have heard the arguments on most of the amendments. Without any discourtesy to those who have proposed these amendments, it seems to me that the case for these are less compelling than the case for some of the amendments that were discussed earlier. There is one fundamental reason for this: what this clause does is basically to convert what is at the moment a grant into a loan. Of itself, it does not affect the quantum of support from taxpayer to recipient: it simply converts the terms. Therefore, to my mind, this is a much less painful way of reducing public expenditure than some of the other measures of the Bill that directly affect the quantum of support from taxpayer to beneficiary. Perhaps it is for that reason that the Opposition’s reasoned amendment to the Bill in the other place said:

“That this House, whilst affirming its belief that … a benefits cap and loans for mortgage interest support are necessary changes to the welfare system”.—[Official Report, Commons, 20/07/15; col. 1264.],

specifically excluding this bit of the Bill from their general reservations. Any measure that reduces the quantum of saving from this particular clause just puts more pressure on some of the other measures in the Bill which directly affect the support that a beneficiary might get.

Turning to the point made by the noble Baroness, Lady Sherlock, in a sense she gave the case away by conceding that 39 weeks was the period for which people had to wait for roughly 10 years under the last Labour Government. If 39 weeks was appropriate when there was not the pressure that we have on public expenditure today, then it is certainly appropriate when we are trying to make necessary savings.