Housing and Planning Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 18th April 2016 Lords Chamber

[Lord McKenzie of Luton]

Before the Minister sits down, I will ask for clarification on two points. She said that anybody on housing benefit would be outwith the policy. What is the position of a tenant just on the cusp of housing benefit at the moment—but not in receipt of it—who, if charged a higher rent, is brought into the housing benefit system? Will that person then be in the system and immediately out? How is that going to work? Does using taxable income not inevitably mean that it has to be based on some “preceding year” basis, with all the complications of changing circumstances arising since?

[Baroness Hollis of Heigham]

Will the Minister confirm, or say that she still does not know, whether the final net money going to the Treasury after increased rents, the taper, fiscal drag—possibly modified by CPI—and the effect of local authority administrative costs will be nearer to £100 million a year as a contribution to reducing the deficit? Is it, frankly, worth it?

[Baroness Williams of Trafford]

The noble Baroness might find it helpful to watch this afternoon’s proceedings. She put a set of figures to me which mixed up hundreds of thousands with hundreds of millions and it was quite difficult to follow where she was coming from. I do not want it now, but could she reiterate what she asked in writing? I am not trying to be difficult, but I found it quite hard to follow some of the mixing up of hundreds of thousands with hundreds of millions—and, indeed, fractions of billions. So if she would not mind, perhaps she could write to me.

The noble Lord, Lord McKenzie, asked me questions which are quite detailed and technical in parts. He asked me about preceding years—in fact, I will let him intervene, because he probably needs to repeat the question to me.

Welfare Reform and Work Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 12th January 2016 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, to respond to the noble Lord, the latest estimate is that 60% or more of property sold under RTB is now in the private rented sector, it is no longer occupied by the people who bought it.

[Lord McKenzie of Luton]

My Lords, this debate focusing on six specific amendments has become quite broad and—dare I say it?—welcome. The noble Lord, Lord Kerslake, kicked us off by reminding us of the background to the policy—in particular, pointing out that it is a complete reversal of CPI plus 1%, with its 10-year guarantee, which was introduced only a year ago. The noble Lord, Lord Horam, made the point that Governments may be foolish to offer 10-year guarantees, but one would hope that, whatever the term of the guarantee the Government gave, it would be met, and certainly not broken after just one year.

The noble Lord, Lord Kerslake, reminded us of what the policy as now constituted will actually deliver. Rents will be 12% lower and £2.3 billion per year will be lost to housing associations and local councils by 2020. Given the current structure of housing benefit, we are effectively talking about almost a straight transfer of resources from social landlords to the Exchequer. There is also the prospect of having 43,000 fewer social rented homes by the end of the period. The noble Lord emphasised the importance of certainty for the financing of housing provision.

I will come to the specific amendments on co-operatives in a moment, but the noble Lord, Lord Best, said that there are only three options for housing associations: cut programmes, cut the revenue costs which add value to housing association tenants or reduce surpluses. The Government have got themselves in a bit of a jam by believing that just because authorities and housing associations have reserves, that is free money. That reserve is there to support other activities and the current borrowing of housing associations and authorities. My noble friend Lord Beecham told us about the practical impact of the policies on his authority, and also supported the amendment of the noble Lord, Lord Ramsbotham, on almshouses, which I will come to.

The noble Lord, Lord Horam, reminded us that we have to deal with the deficit. Of course we do, but why do we always choose to do so off the back of the most disadvantaged in our society? Why that route?

The noble Lord, Lord Scriven, made the challenging point: is this dogma or is it practicalities that we are getting from the Government? My noble friend Lady Blackstone asked whether the Government would be honest and tell us what they think the effect of the policy will be. We ought to hear the Government’s view on what this will mean for housing provision over the upcoming period.

We had a fascinating lesson from my noble friend Lord Triesman on long-term annuity financing, which is very long-term with small margins, so changes in revenue streams could easily tip it into not being available.

My noble friend Lady Hollis challenged the PM’s view on bulldozing sink estates and made the point that to make social housing work requires decent homes, decent jobs, stable communities and decent management, and I agree with all that.

Amendments 104C and 104D, tabled by the noble Lord, Lord Kerslake, have the effect of reducing to three years the period of the rent reduction. That would coincide with when the Government tell us that the deficit will be dealt with, but that remains to be seen. From 1 April 2019, or the equivalent date where the relevant years are determined by Clause 21(6)(a), the rent reduction provisions will not operate. Amendment 104E requires that registered providers increase rents by CPI plus 1% from April 2020 and also requires there to be a review of the formula rent arrangements to see whether there are prospects of higher increases or greater flexibility.

We support the need to have as much certainty as possible for the future so that registered providers can develop long-term plans, although we understand that the Government may be coy about supporting anything beyond April 2020. It is presumed that the noble Lord’s amendments would apply to those tenancies to which the rent standard currently applies and not more generally. We also support the requirement for a review of the impact of Clause 21 to see what flexibility might be required to address its consequences.

I think that the way the Bill would operate at the moment is that if there is silence on the year 2020 before we come to the new arrangements, the regulator’s ability to set the rent under the rent standard would come back into play because it is negated by Clause 27 only for when the rent reduction proposals are under way. That would deal with the year between CPI plus 1% for 2020 onwards.

Overall, the effect of the noble Lord’s Amendments 104C, 104D and 104E would appear to be that the base for future rent increases would be higher than the Bill currently provides. The loss of income to councils and housing associations would be ameliorated and the shortfall in the provision of new accommodation would be reduced, to the benefit of those in housing need and to the benefit of the public purse, which would otherwise be bearing the strain. Other things being equal, the housing benefit bill would be higher in the short term than would otherwise be the case, as would the cost to those tenants who meet all or part of their rental costs. Overwhelmingly, the focus should be on getting back on track as soon as possible the investment programme under way as part of the 10-year settlement, which is what the noble Lord’s amendments seem to achieve: therefore, we are happy to support them.

Amendment 108, tabled by the noble Lord, Lord Best, focuses on fully mutual housing co-operatives. Amendment 108A, tabled by the noble Lord, Lord Kerslake, focuses on accommodation which is excepted from the right to buy because of specific adaptations for disabled or elderly people. Amendment 109A, tabled by the noble Lord, Lord Ramsbotham, which covers almshouse charities, was spoken to by my noble friend Lord Beecham. These amendments should be supported.

The case on mutual housing co-operatives has been fully articulated, as one would expect, by the noble Lord, Lord Best. We heard in particular from the Edward Henry House Co-operative in Waterloo. It argues that the financial model for housing co-operatives is different from that of housing associations. They do not keep large reserves. The reserves are kept low because of the member-tenant role in running the co-op. The prospects for driving efficiencies is therefore limited. These co-operatives should clearly be an exception to the policy, as should community land trusts, which are a very small section of the sector.

It is understood that the exemption from the right to buy for adapted properties is not widely drawn. Is it the case that it would not apply to one-off adaptations and requires properties to form part of a development of similar homes and to have some sort of social service or extra care provided on site or nearby for them to be subject to the right-to-buy exclusion? If this is the case, such properties would appear to fall within the definition of supported specialised accommodation, which is the subject of a separate exemption which we are going to debate shortly. The Minister may care to comment on that. This begs the question of whether the right-to-buy exemption should be widened at all—but perhaps this is an issue for another piece of legislation.

The financial structure of almshouses is different again. Residents pay a weekly maintenance contribution, rather than rent, which is less than a commercial rate. The exception the noble Lord, Lord Ramsbotham, seeks is entirely justified, and it is presumed that any impact on savings would be negligible.

We are confronted with six amendments, each of which should be supported. We have had a very robust debate around the thrust of this policy, the problems it creates and the challenges it will create in providing decent housing for people who have no option but to rent.

Cities and Local Government Devolution Bill [HL]

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 13th July 2015 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, as explained, Amendments 28 to 30 were basically driven by the health agenda. The facility for joint working arrangements, the transfer of functions subject to conditions or limitations, and providing for functions to be undertaken by the public authority on a continuing basis together with joint working seemed to us to be entirely reasonable. On the fundamental debate about the NHS we do not believe that this goes far enough, but that issue will be returned to on Wednesday.

Amendment 34, in my name and that of my noble friend Lord Beecham, is another attempt at clarity on the list of functions that the Government are prepared to consider as available for devolving under the provisions of the Act. We anticipated the answer that we got, and I will not prolong that at this time of night. I just ask: what is so wrong with some form of prospectus that would help local authorities to understand the criteria applied and the capacity that they may build? An annual report would help. I do not fully understand the Government’s reticence on this matter. My noble friend Lord Hunt has dealt with Amendments 31 and 32, and we look forward to the further consideration on Amendment 31.

I say to the noble Lord, Lord Low, that we appreciate the amendment that has just been moved. There is a great need in this area; we know that the social welfare advice system has been all but decimated—advice around benefits, debts, employment and housing—and it is a very difficult time. The noble Lord should be congratulated on the work that he did and the commission that he chaired. He is right on the fundamental point that combined authorities should be a forum within which a strategic framework could be put together to deal with these very issues. I take the Minister’s point that it is not the process of this Bill to prescribe that for each individual authority or the way that they should do it, but I hope that she will accept that it would be enabled by this process—indeed, it is quite an appropriate matter for a combined authority to address.

Amendments 71 and 72, as we have heard, would enable the transfer of public authority functions to certain individual local authorities. To reiterate a question asked by my noble friend, this would apply to any sort of authority—a district, county, unitary or single authority—and potentially the same type of powers that would be available more generally. It is an important change, which is welcomed, although we look forward to the DPRRC’s report when it comes out tomorrow. The change is achieved by the Secretary of State making regulations if it is considered that the exercise of statutory functions will be improved. As we have heard, they have to have the consent of the relevant local authority.

We acknowledge that the affirmative procedure will operate, and the order will be accompanied by a more detailed report, which we will debate in a moment. However, the underlying process is unclear—perhaps we will get some clarity from the report tomorrow. It does not seem to require any starting assessment by the local authority and the proposal then being made to the Secretary of State; that seems to have disappeared from the process. In practice that may end up as an iterative process, but if there is no right for the individual local authorities to make proposals to the Secretary of State for consideration which merits some response, what assurance do we have that this is an inclusive process? It starts from the other end of the process to the existing Section 109, so what creates an effective right for individual authorities with a case to be able to make that case and to be heard? I was anticipating an amendment from my noble friend Lady Hollis in this group but perhaps it will come in a subsequent one.

[Baroness Hollis of Heigham]

I apologise to my noble friend, but as my amendment was on the very different issue of council tax bands and I thought it was worth trying to explore that in greater detail, fairly late today I asked for it to be disaggregated. Therefore noble Lords will find that on the latest list of amendments Amendment 75A is at the very end, and it will be the last amendment to be debated on Wednesday. The noble Lord may have had an earlier set of groupings in which it was included; I pulled it out after the draft groupings had come out.

[Lord McKenzie of Luton]

I am grateful to my noble friend for that clarification. I will just say to the Government that where my noble friend leads, Governments eventually catch up.

Cities and Local Government Devolution Bill [HL]

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 24th June 2015 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, although I am grateful to the noble Earl, Lord Listowel, for managing, with some finesse, to shoehorn housing into this debate on the cities Bill, I share some of the reservations of my noble friend Lord Beecham. In two-tier authorities and shire counties, one of the primary functions of district councils is the housing responsibility. Even if they have stock transferred their property to a housing association, as quite a high proportion has, the district council none the less remains responsible as the strategic authority, so to speak, in dealing with homelessness. That is complicated enough, and I think that the problem is going to get infinitely worse if the wretched housing association Bill progresses. That will fire an Exocet through our ability to meet housing need in localities, as we will lose not only the housing association stock but council housing stock to pay for the discounts—we will lose two rental properties to fund one discount and not one extra house will be built as a result. It will be completely disastrous, and I am sure that the noble Earl, Lord Listowel, will be fiercely engaged in that fight. I very much hope that he will be.

The problem is that, if this is the thinking of the noble Earl, I am not quite sure what distinction he is making between a combined authority and a unitary authority of three previous district councils. Housing is the main function. If this is where it is going, in alignment with the recommendations that will come with a combined authority for the development of the economy and so on, effectively, a unitary authority will be achieved in the name of adding more and more functions to the combined authorities, which are primarily about economic growth.

No one doubts that one responsibility of the combined authority will be to determine areas for housing growth, land development and land use. That is very different from taking on the responsibility for who gets what house due to local priorities. If that is taken away from the district council and given to the new combined authority, we will have effectively removed the responsibility for housing from a district council to a combined authority and would have to start inspecting houses of multiple occupation and all the rest of it to make it work. That would leave district councils virtually non-existent. That is my problem with Amendment 36A.

Although I am sure that Amendment 36B is well intentioned, my problem is with “affordable”. The research of my right honourable friend in the other place, John Healey, has shown that the two drivers of the housing benefit bill have been, frankly, the extension of the private rented sector, with its very high rents, and the displacement of social housing rents by affordable rents. Those two things alone are primarily responsible for the growth in housing benefit, neither of which adds a single property to the stock or houses a single additional person—they are displacement activities. All that is happening behind this amendment and may, I fear, be made worse by it. All the drivers will add to the welfare bill. The Government will then say that we must cut it by taking away the ability to make work pay and removing money from working tax credits because they are not willing to tackle the tax privileges of private landlords who are charging market rents or the issue of affordable rents, which is, in turn, driving up housing benefit bills in the social rented sector.

An infinitely more complicated set of problems has been opened up by the noble Earl’s amendments. None of us would dispute the outcomes that he is seeking, but I do not think that he can get there through this route.

[Lord McKenzie of Luton]

My Lords, we have considerable sympathy with the thinking behind both amendments from the noble Earl, Lord Listowel. They touch upon one of the most serious issues that confront our society—our housing crisis— which must engage the action of central government and local authorities. It is also prescient, given concerns expressed in the press this morning about the figures for child poverty rising for the first time in a decade. We know that the lack of affordable housing is a key driver of homelessness and that homelessness inevitably sits at the centre of disadvantage and deprivation. The major influences on a child’s life—family income, effective parenting and a secure environment—are all directly or indirectly influenced by a family’s housing conditions.

The question posed by these two amendments is what the role of a combined authority should be in addressing our housing crisis and reducing homelessness. There certainly could and should be a role, and the Greater Manchester Combined Authority has shown the way. In its case, the elected mayor has control of a £300 million housing investment fund and powers over strategic planning, including the power to create a statutory spatial strategy for the CA area. There are somewhat convoluted arrangements for administration of the housing investment fund, but it has the prospect of delivering 10,000 to 15,000 homes over the period—a real contribution. Powers to create a spatial strategy for the area are particularly useful, given the demise, as my noble friend Lord Beecham said, of the former regional spatial strategies and the weakness of the duty to co-operate.

There are two issues, however, with the noble Earl’s amendments. Indeed, all noble Lords who have spoken today have, in one way or another, touched upon those issues. We should be mindful of the current requirement for local authorities to ensure that local plans meet the assessed needs for both affordable and market housing and that neighbourhood plans can supplement this. Further, important legislation is already in force that places a general duty on housing authorities to tackle homelessness, however difficult that is in the current circumstances. We would not wish to undermine these important responsibilities and local priorities, but it might well be appropriate to build on these requirements at an overarching strategic level. One way or another, those points were made by the noble Lord, Lord Shipley, and my noble friends Lord Beecham and Lady Hollis.

Certainly the prospect of a combined authority having spatial planning powers across an area could be a considerable advantage in creating a coherent housing framework. However—I am sure that the Minister will make this point—the approach suggested is prescriptive. Doubtless it will be said that there is nothing to prevent a combined authority seeking these powers by agreement, and I hope that the Minister will confirm that the Government would not be shy of agreeing such arrangements.

Pensions Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 13th January 2014 Grand Committee

[Baroness Hollis of Heigham (Lab)]

My Lords, the Minister has been very helpful in his introduction, but how can the consultation that he reports he has had with possible users be at all meaningful when they do not know how much they are going to have to pay and what they may be likely to get? Following that, can he give us any indication of the ball-park figure? Say someone is 70: what is the lowest possible price and the range for which the extra year of pension will be bought? Otherwise, people’s views cannot be taken seriously because they have not got the relevant information.

[Lord McKenzie of Luton (Lab)]

My Lords, following my noble friend Lady Hollis, I support the inquiry about the pricing structure and whether we will know that by the time the Bill completes its passage through your Lordships’ House. I listened carefully to the Minister’s explanation, because at the heart of it this is basically a savings plan. It is effectively an annuity arrangement. It is attached to the additional state pension but you could delete all that and describe the fundamental proposition here very much as an annuity. We know that that cannot be done because the DWP does not have the power to do it. However, we should be clear what this is about.

It is attached to the additional state pension and gives people a chance to enhance provision they have made in that respect. As I understand it, you could avail yourself of this opportunity if there was currently no additional state pension due—or there was a very significant amount of additional state pension due because you had been investing heavily in it, certainly above the level of the single tier of pension. Indeed, if somebody was contracted out of additional state pension I think they would still be able to avail themselves of this opportunity. I am just trying to work out how easily that sits with the whole concept—this is all about people who have reinvested in additional state pension, not just about an investment product.

I did not find the rationale for leaving these arrangements open for only a limited period, and the online survey is a bit difficult to interpret. Can the Minister give us any more information about the expectation of the number of people likely to take this up and the amounts that they are likely to take up? The Minister said—and this was said in the briefing session as well—that nothing has been scored in respect of these proposals so far as the public accounts are concerned, but presumably it will be scored at the next Budget, and certainly credit for any take-up of this will feature in the year 2015-16, presumably with its consequential impact on the deficit and government debt arrangements. Indeed, the lump sum would be taken out in the year in which it is received, and the flow of pension contributions will just score over the years and decades ahead.

Given the nature of this, I am interested to understand the sort of explanations and information that people will be given when they are looking to make their choices. In a sense, the information about their class 3 and 3A voluntary contributions is relatively straightforward, but we are in an environment where we know the annuities market is generally very opaque. The Financial Conduct Authority is on the point of publishing a review of the annuities market. Given the closeness of this product to annuities, what sort and range of advice and information is it proposed that the Government will provide for people thinking about taking up these opportunities? We accept some of the potential benefits. In a sense, it is risk free; it is inflation protected; and it can be shared on divorce. One sees the benefit of those arrangements, but I have one or two queries on the wording of the amendment which I hope the Minister can help me with.

[Baroness Hollis of Heigham]

Would my noble friend not agree that the Treasury is following the same philosophy as it is in trying to abolish the lump sum as an option for people who have deferred taking their state pension for two years in order to avoid paying out the money upfront and is now trying to do exactly the same thing—a sort of mirror opposite—in terms of this package?

[Lord McKenzie of Luton]

Indeed, I agree with my noble friend. It is the converse of that. A cynic might say that this is all to do with managing the deficit and the debt in the run-up to a general election, but that is for us cynics, I guess.

Looking at Amendment 62, I wonder whether the Minister can help me out on what will eventually be new Section 14B dealing with the arrangements for repayment of contributions. I am a little unclear about proposed new subsection 14B(4), which states:

“Regulations under subsection (1) may provide for benefits paid to a person because of the unit of additional pension to be recovered by deducting them from the repayment”.

I am not quite sure whether the benefits referred to there are the additional pension that has hitherto been received or whether there is something else because typically one would not expect extra benefits to be paid if somebody has extra income—quite the reverse. Perhaps the Minister can help me on that provision.

Proposed new Section 61ZA is headed “Shortfall in contributions”. I was a bit bemused by this. It states:

“This section applies to a person who has one or more units of additional pension if the person … is not entitled to a Category A retirement pension, but … would be entitled to a Category A retirement pension if the relevant contribution conditions were satisfied”.

It goes on:

“The relevant contribution conditions are to be taken to be satisfied”,

but in a sense it negates the impact of that in terms of payments as you get only the additional pension attributable to units of additional pension. I was trying to fathom what that was about because if somebody is not entitled to a category A pension presumably they would only be entitled at all if they had a category B or D pension. Or is this saying, basically, that even though you do not have a pension entitlement, we will treat you as having a pension entitlement for the purposes of being able to take up these provisions? That seems to undercut one of the two requirements—and there are only two requirements—to be able to access these arrangements.

I do not know why there needs to be consultation with the Government Actuary or the deputy Government Actuary—I do not know whether you can choose who to go to for advice. I would have thought that going to the Government Actuary’s Department would include going to the deputy if the Government Actuary is not available. But there may be good reason for that formulation. This may well be a nice little earner and deserve support on that basis, but until we know more detail it is difficult to judge. It is an odd formulation to attach this to the additional state pension in the way that is proposed.

Pensions Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 8th January 2014 Grand Committee

[Baroness Hollis of Heigham (Lab)]

My Lords, we move on to a different subject, which is pension sharing on divorce. This is a very simple, short amendment that raises the issues of divorce that were touched on in previous amendments. When we delivered pension sharing on divorce—many of my noble friends were absolutely vital in that activity in the 1990s—it primarily affected private pensions. We thought that the portion that could be set aside as part of the divorce settlement would be the basis of a useful pension for the divorced spouse—usually the woman. We were also anxious that he and she would build on—or, in his case, perhaps rebuild—their pension shares back up again so that both would face retirement with an adequate pension. However, most divorcing spouses do not seek pension sharing. In some cases, obviously, there may not be much pension to share, particularly if the divorce takes place at a relatively young age—often, sadly, younger women do not always properly value their husbands’ pension, and solicitors, I am afraid, are still pretty sleepy about what is quite a technical issue. Many of those who share pensions do not realise the need for or the possibility of rebuilding their separate pensions. However, out of 120,000 or 125,000 divorces a year, an average of 10,000 divorces involve pension sharing, which means that 8% or 9% of total divorces involve pension sharing of private occupational pensions.

This amendment asks what the implications are for the new state pension. Currently, under existing laws—we clarified this again in a previous discussion on divorcees—upon divorce the woman can substitute the man’s NI record for BSP in lieu of her own at the point of divorce, if his is the higher, and she may also be entitled to half of his additional pension—SERPS or S2P—if the court so decrees as part of the sharing of matrimonial assets.

Under the new regime, she will not be able to substitute his NI contributions for her own, a point that we argued a few amendments back. The only element that can be split or shared, if the court decrees it, is the protected pension; for example, the frozen, additional amount from SERPS and S2P, to which my noble friend referred on a previous amendment. What is more, if he has a shortfall in his NI contributions towards the new state pension—possibly because he has a track record in the public sector, I imagine, with contracting out—some of his additional pension will be brought over to make good his NI record and that transferred slice of protected pension will not then be available for sharing. I am assuming a genderised position here, I am afraid. So she takes the double whammy: not only does she not get an ability to substitute his NI contributions for her own for the basic state pension element, but, equally, if he has an inadequate NI contribution—that may well be the case if he has had a lifetime of contracting out, has never had head space and wishes to make good his shortfall in the new state pension—as I understand it, she will then not be able to access that chunk of his protected and S2P or SERPS pension, which will go across to make good the shortfall.

I would be grateful if the Minister would confirm that I have understood this correctly. If so, the woman has a pretty nasty deal and I think some explanation of the implications is required, particularly for women who have childcare responsibilities and so on and who may not be able to rebuild the additional income, particularly once their youngest child hits 12.

Advising people annually of their pension debit—for example, telling him, as it is usually, but not invariably the man, by how much the pension has reduced following divorce, or with regard to pension credit, the fraction that usually has gone to her of the protected additional pension, if the court has so decreed—would allow each of them to know where they stand to make better decisions about their pension futures and, in particular, that might encourage them into NEST to build or rebuild their total pension prospects.

With this amendment, I am seeking to ask the Minister to ensure that women who may not be aware of, but who could well take advantage of, a share of the additional protected pension have the knowledge that they can do so. They may wish to set that against other matrimonial assets that may otherwise go their way on divorce. I hope, therefore, that the Minister will agree with me that as this is techie and this has now been changed substantively in the Pensions Bill, those women who have been married to someone in the public sector—the reverse could equally well be true in terms of gender—will be a loser a second time because he may well dip into this to make good his NI shortfall. I hope that the Minister will agree with me that we need to encourage people to be aware of the situation and I think that the department needs to take some responsibility for ensuring annual information. I beg to move.

[Lord McKenzie of Luton]

My Lords, I put my name to this amendment because I spent a happy half hour with my noble friend trying to fathom out what the legislation was about, on this occasion, without a bottle of gin. The conclusion that my noble friend has just outlined, which I believe to be correct, is that any protected payment could be shared—I think that was confirmed at one of our briefing meetings and indeed in some of the documentation that we have and this parallels the current situation with the additional state pension—but the protected payment cannot, I think, for some of the reasons outlined by my noble friend, be greater than the second state pension accrued at 6 April 2016; it can, however, be smaller. For individuals who grow up entirely within the single-tier system, with just S2P, as we understand it, there would be no basis for sharing the state pension. The noble Lord’s confirmation would be helpful. The particular thrust of the amendment—to make sure that people are routinely informed—seems entirely reasonable.

Pensions Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 16th December 2013 Grand Committee

[Lord McKenzie of Luton (Lab)]

My Lords, this is a gentle, probing amendment designed to give some respite to the Minister and to explore further the details of what is planned about the nature and extent of the communication strategy envisaged for the introduction of the single-tier state pension. The noble Lord, Lord Kirkwood, touched on this, as did the Minister in responding to the first group of amendments.

We have been provided with a certain amount of information in the various briefing packs and we have had the opportunity to peruse the overarching strategy for communicating the reforms, which has been made available in the Library. I take this opportunity to commend the Bill team. We do not want to heap too much praise on them, as this is just the start of our proceedings, but I think that we have had some genuinely good information packs, which have helped. The problem with good information packs, of course, is that they generate additional queries, so forgive me if I pursue some of them.

One objective of the strategy is, rightly, to inform people about the impact of the reforms on their individual circumstances and the actions that they may take to improve them. That aspect is of particular relevance to the amendment. It seems to me that the state pension statement is to be the key way in which this communication is delivered, so the Minister may wish to comment on the statutory underpinning of such statements, if it exists, and on whether this might be improved.

Although the amendment focuses on STP, it does not negate the need to communicate to those who retire before 6 April 2016, especially in relation to the extended arrangements for paying voluntary NICs and the new class 3A NICs to improve state second pensions. I ask the Minister specifically what is planned in this regard. I suppose, given our earlier debates, that the key communication issue for those who retire before 6 April 2016 is why they are in a separate category, although I do not want to revisit the debate that we have just had.

Issues relating to the new class 3A have obviously not yet been fully developed and those who might be eligible are a definable group of all those who reach state pension age before 2016. The group that are particularly in need of information are those who are entitled to a state pension at the transitional rate. If they are to be encouraged to make rational savings decisions, such information as their foundation amount, any protected payments, the rebate derived amount where appropriate or any derived and inherited entitlement is key. Individuals should be made aware of how the revaluation of the various components is to work and they will need to be alerted to their potentially not meeting the minimum qualifying period, having fewer than 35 qualifying years, as well as not being able to add further to their STP.

It is understood that this information is still to flow via state pension statements, but following implementation of the STP it is not planned to make it proactively available, either as soon as the NIC information is available up to 5 April 2016 or otherwise. A post-implementation statement will be provided on demand and digitally but not otherwise, as I understand it.

A number of questions therefore arise. Can the Minister clarify precisely what is to happen between Royal Assent and in advance of implementation so far as state pension statements are concerned? Will these be made available proactively or will individuals have to ask for them? It is understood why a digital service is to be developed for post-implementation—that is to be welcomed—but there will be some for whom the digital approach will be difficult. That is surely the experience of universal credit. What other support will be available to these people? There is clearly some merit in being able to take stock of one’s state pension provision as close to 6 April 2016 as possible, so can the Minister say how long it is expected to be before the 2015-16 national insurance data will generally be available at individual level? How long does it take for that to filter through to the records?

Given more complex situations, how quickly is it envisaged that individuals will be informed of all their pension components, including the rebate-derived amounts, after 6 April 2016? What, if any, capacity will there be in the system for individuals to query, challenge or even appeal the details that they receive? We are told that there is not the capacity in the system to provide full details to everyone proactively—like the noble Lord, Lord Kirkwood, I think that there is a measure of concern about that. Just what is the capacity to provide such details for those who would likely be entitled to a state pension at the transitional rate? We are told that, post-implementation, state pension statements are to be provided on demand. Those who are clued up and digitally savvy will cope, but what monitoring will be undertaken to see what is happening to those who are not? What particular communication strategies are to be focused on the self-employed, who will be brought more fully into the system than hitherto?

Although the components of the calculation will generally be more straightforward for those who grow up entirely in the new system, they will still need information so that they can be reassured on their likely level of state pension income and the desirability of saving. Of course, some may enter the new system part way through their working life because, for example, they had been working abroad or had just decided to join the labour market. What in terms of communications is planned for those in this position? I accept that much of this will be work in progress, but I do not want to miss the opportunity to get an update on the latest position before we leave Committee. I beg to move.

[Baroness Hollis of Heigham]

My Lords, I want to comment very briefly. I declare an interest, which I know is relevant to this amendment, as a board member of the Pensions Advisory Service. TPAS has recently completed a survey of just under 1,000 women on their pensions which makes the point absolutely for my noble friend’s request for an information and communication strategy to go out to prospective pensioners and pensioners. Of that 1,000 women, 36% did not know when their state pension would be paid; 74% did not know how much they would receive; 57% did not know whether there was a shortfall in their NI record; 25% do not know that the age is likely to change again; 54% have made no changes to their retirement plans; 27% wonder whether they will have to work longer; and 76% do not expect to be financially comfortable in retirement. I have before me a lot of quotes, some of which I may choose to use later on. Those figures suggest how wilfully uninformed far too many women are about what will happen to them over the next couple of years. That evidence from a TPAS sample substantiates my noble friend’s points.

--- Later in debate ---

[Lord McKenzie of Luton]

As ever, I am grateful to the Minister for his full reply. I think that I have ended up slightly more concerned than when I started on this amendment. I also thank all noble Lords who have participated in this debate. First, specifically the Minister referred to the opportunity to challenge a statement to see whether the information was right, which is not routinely done at the moment. I can understand that. Is there technically a right of appeal or does that arise only when the pension falls due for payment?

I do not think that we got an answer to the point made by my noble friend Lady Sherlock as regards at what point someone would receive a communication. I think the answer to that is that it would be only at the point at which they asked for it. I can see that an educational policy, financial literacy, and all those issues dealt with by the noble Baroness, Lady Greengross, and the noble Lord, Lord German, are important and may give an enhanced understanding for people. I am trying to understand what would happen if there is no proactive approach. You could end up with very few people asking for a statement, and the percentage of people in the new system getting an early statement seems to be low. I still do not think that we have the answer to the question about the capacity of the department to respond to queries if there are more than the current 600,000 requested statements. I would have thought that there is at least some prospect of a bit of a flood of inquiries at least at the start when people seek to understand the new position, particularly if the broader education approach is to help and encourage people to understand what their potential provision will be in due course and, therefore, what additional saving they might, if they are able, undertake.

I am grateful to my noble friend Lady Hollis, as ever, about some very helpful data which really underlines the importance of getting these communications right. The noble Lord, Lord German, made the point that this is not just for people who are retired or just about to retire. This is a broader issue about helping young people as well to understand the importance of saving. I had not heard the figure of the 2 million people who auto-enrolled. I am grateful for that. It is a huge achievement and it is great to have it announced while sitting next to my noble friend who was so instrumental in getting that under way.

Obviously, I will withdraw this probing amendment. I hope that the Minister may be able to fill in some of the gaps but I am still left very uncertain as to how most people will get that information expeditiously. I would have thought that most would want it.

[Baroness Hollis of Heigham]

Will the Minister think about the possibility of, say, when someone hits the age of 50, a pension statement or whatever being sent out? The whole push of the Government’s programme has been that people should have enough time to be able to make good any shortfall in their record.

They cannot do it six months before they are due to retire. If a statement was sent at 50 and then the usual one was sent a year before retirement when people may or may not be in a position to consider voluntary NICs or something like that, even that would be helpful if a statement cannot be sent out each and every year. I take the point about cost and effort but people need some snapshots so that they know what the position is as they go along at the ages of 50, 55, 60, 64 or whatever. Otherwise, we will find that a hell of a lot of people are going to remain on pension credit and two legacy systems will be running for 40 years.

--- Later in debate ---

[Baroness Hollis of Heigham]

I am sure that the Minister will understand our need for clarity on some of these issues—whether it is net or gross; mean, median or average and so on—because they completely reshape the statistical base on which some of us are trying to base some of our contributions. The Minister is patient in taking our comments on this point, but we really need to know and we have not always had the statistics in ways that have allowed us to read across in a straightforward and simple form. This is not the fault of the Box; it is simply because that is the way in which, classically, statistics have been collected.

I am grateful to my noble friend Lady Drake, who emphasised both the need to deliver the Green Paper promises of a substantial headspace between the pension credit regime and the new state pension, and the way in which this is becoming narrowed. As my noble friend Lady Sherlock said, it is becoming very hard to calculate. I was checking back on what the Select Committee on Work and Pensions actually called for, and I really do not understand why the Minister cannot do this for us. The committee said in paragraph 34:

“There is no certainty about how long the triple lock will be in place and we believe that it is important that there is as much clear water as possible between the rate of the STP and that of Pension Credit. There appears to be scope for a bigger differential (either at the outset or over time) given the increased National Insurance revenue that the Government will derive from the ending of contracting-out and the overall long-term savings which will be made on”,

pension credit,

“expenditure as a result of the introduction of the STP. We therefore recommend”—

and I do not understand why the Minister cannot go along with this—

“that, when the Bill is before Parliament in the summer”—

that is, in the prior discussions at the other end—

“the Government publishes an analysis of (a) the cost of setting the STP rate at a range of higher levels; and (b) the level at which the STP could be funded if the additional NI revenue was used for this purpose”.

The Minister says that the whole of this project has to be cost-neutral. Yes, to an extent, but of course it is cost-neutral within a growing demographic population. When he talks about it being cost-neutral, I am never sure how much he is looking at the rise in life expectancy and so on and therefore at the number of claimants coming through, particularly for the post-war bulge. After all, the GDP figures show a drop for this group in going to pensions of something like 8.9%—I think I am right; I am doing this from memory—or about 8.23%. That is a significant drop in projected GDP going to a cohort that will actually have increased in number. When the Government say that this has to be cost-neutral, therefore, it seems to me that in practice, unless I have misunderstood the Minister, that could be achieved only by allowing the real value of the new state pension to fall simultaneously with the real value of pension credit. Perhaps he might like to write to us to confirm whether that is the case. However, as I have said, I do not understand why he cannot respond to what seems to be an entirely appropriate piece of analysis that was recommended by the Select Committee. Perhaps he could write to us and explain why it cannot be done.

[Lord McKenzie of Luton]

Before my noble friend sits down, does she agree that the drop in the share of GDP would have been even greater had the uprating been by way of earnings rather than by the triple lock? It is maintained even at that 0.6% drop because of the triple lock assumption, which is far from guaranteed, as I understand it.

[Baroness Hollis of Heigham]

My noble friend is exactly right and I thank him for that. Perhaps the Minister could write to us on why this is not possible. Why we cannot follow previous legislation in doing pension Bills, I do not understand.

Welfare Benefits Up-rating Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 25th February 2013 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, this simply will not give you certainty. The whole of the impact analysis brief was a set of mythological language. This will not do what the Government claim. I understand that they are seeking to cut possible expenditure demands but to say that this is about certainty is simply an abuse of language, if I may say so.

[Lord McKenzie of Luton]

My Lords, I thank all noble Lords who have spoken in favour of Amendment 2: the noble Lord, Lord Low, the noble Baroness, Lady Meacher, and my noble friend Lady Lister. From the Minister’s response it seems that this is all about a better future for everyone, and that seems to encompass a rather strange load of decisions. My noble friend Lady Lister asked a question which I do not believe was answered. She raised the comparison with pensioners who are being protected—and we support that because they are not so readily in a position to make up their income by accessing the labour market. However, people are in the support group because they are not expected to be able to be in, or are some distance from, the labour market.

In respect of the WRAG, I think that the Government are generally drawing closer together the JSA group and the WRAG to blur that distinction. People in the WRAG were not expected to look for work. Yes, they were expected to be fit and were deemed to be fit for work-related activity, but there is a constant push by the Government to blur that distinction and ease them much more towards the JSA category, if that job is not being done, in any event, by the WCA and Atos.

The noble Lord, Lord German, asked whether this is a rough edge. It seems to me that it clearly is a rough edge—it has not been overlooked, and it is not being dealt with in any other way. It is a hit that people in the support group and the WRAG have got to take. It seems to me that this is incredibly mean-spirited. It just focuses on the support group—the people who are in the most difficult position and not able to access employment. The noble Baroness said that 65% of them were on DLA and acknowledged that DLA is outwith the Bill. What is the Minister’s understanding of the percentage of people in the support group who will end up on PIP rather than DLA?

In Amendment 3, the noble Lord, Lord Low, makes a broader case for removing ESA from the scope of the 1% restriction on uprating for those who are in the WRAG. It obviously goes further than our Amendment 2. We have made clear that the 1% uprating restriction should be removed in its entirety from all the relevant sums and amounts as defined, and we are grateful for the support of the noble Lord in that endeavour. If we are successful, the noble Lord’s amendment, and several others including our own, would fall by the wayside. Should we be unsuccessful we need to consider how we can at least move some way towards that objective.

As we have just discussed, we focused in our Amendment 2 on those in the support group. We did that because those affected are the most seriously disadvantaged—the furthest from the labour market—and because the Minister has made a commitment that this group would be protected. That commitment clearly is not being met. The noble Lord’s proposal that we should go further, beyond the support group, is entirely reasonable. Those in the WRAG are similarly judged under the WCA as not being fit for work although capable of work-related activity. But for those who seek work, we know that the prospects are not good. Not only do we have a work programme which is failing overall but there is at least anecdotal evidence to suggest that the hardest to help are not being properly supported. We have the shutting of Remploy factories, concerns over the looming bedroom tax, the restrictions on contributory ESA and the loss of the severe disability premium in universal credit. These have all added to the pressure on disabled people.

As the noble Lord, Lord Low, has said, the Bill will mean that people in the WRAG will be some £191 a year worse off by 2015. If we cannot carry the day on removing the 1% restriction across the board, we would look to support the noble Lord should he decide to pursue his line on Report. I beg leave to withdraw the amendment.

Welfare Benefits Up-rating Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 25th February 2013 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, I also support the intention behind the amendment. I declare an interest as a vice-patron of Motability, while two members of my extended family—though not my immediate family—enjoy the use of Motability cars.

A number of us at first welcomed and were appreciative of the amount of consultation that the department engaged in concerning the new regulations for PIP, only to learn that, at the very last moment and without consultation, the Government had made two amendments, one of which was to withdraw the magic words “safely”, “reliably” and so on, while the other allegedly clarified what was meant by “virtually unable to walk” by confining it, as of right, to a territory of 20 metres, as opposed to the original territory of 20 to 50 metres that had informed previous decisions.

The Government, rightly and sensibly, moved on the first of these amendments and reinstated the test for the higher-rate DLA mobility component by introducing the key words “reliably”, “regularly”, “accessible” and so on, but failed to move on the second on the issue of 20 to 50 metres, assuring us that it made no difference in practice. When they were pressed on the statistics, however, the “no difference in practice” turned out to be a very real difference. Although the noble Lord, Lord Freud, suggested that of the 1 million, 600,000 would retain it and 400,000 would lose it, that was not the complete figure because 200,000 people who are currently on the lower-rate mobility allowance—needing psychological supervision and so on—would move up into the higher group, so there was a net loss of 400,000 but a gross loss of 600,000 people in higher-rate DLA who would now lose it, although to some extent that would be compensated for by the further 200,000 coming in from the lower group. Still, the gross figure is something like 600,000.

Like the noble Lord, Lord Alton, I am delighted to acknowledge that I am drawing on the Oxford Economics report that came out in December 2010, which is full of very valuable figures on this. We know from that report that about 28% of people on higher-rate DLA turn that mobility component into a Motability car. There are currently around 543,000 people driving a Motability car on the basis of three-year leases, and around 185,000 new cars are bought each year by Motability. It is the largest purchaser of new cars in the country, accounting for about 10% of them. This will have serious ramifications for jobs and the car industry, which Motability does so much to support.

However, I am not even going to argue about that. I am arguing on behalf of what Motability does for people’s independence. I remember being struck many years ago, back in the late 1990s when I first met the noble Baroness, Lady Campbell, by what she said about the Independent Living Foundation. She said, and for me this was a mind-changing moment, that the ILF, which gave people what we now call personal budgets—generous, or at least adequately generous, sums of money to enable them to employ their own carers and so on—put that disabled person at the centre of the care system, not as a recipient at the end of that system, so that people could determine what time they went to bed and so on. The same is true of a Motability car; it puts the person who is enabled to drive it at the centre of their mobility, not dependent on the charity, good will, altruism, convenience and so on of other people. Of those people who have a Motability car, something like 76% of them drive it themselves, so it becomes their means of movement. The result of that is that it frees not only them to be mobile but their informal carer as well, because without that transport they are totally dependent on someone else to take them to places where they need to go. As one person quoted in the Oxford Economics study said, if they are housebound—that is, without that car—it makes their informal carers housebound too. Removing the car locks two parties into immobility.

The report goes on to show us how effective the Motability car has been in enlarging the horizons of people’s lives. It shows that, for example, most of the recipients had cars in the past that they could no longer use by virtue of their arthritis or their heart problems. Whereas before their disability two-thirds of the recipients of cars were in work, subsequently only 16% were able to hold down paid employment. The Motability car helped 12,500 of them get a job and 56,000 to keep their job. It was crucial for those who needed specially adapted cars that they could not provide for themselves or for people in rural areas, such as my county of Norfolk where, frankly, public transport is non-existent and a complete myth. That car took some of them—16%—to work; it took younger ones into education and training, allowing them, in due course, to get work; it took them to their medical appointments, the shops, their children’s schools and to see their families. It allowed them, as one of them said, to access life. This is what the Government are apparently proposing to take away.

We all accept that people’s disability needs can diminish over time, or may increase over time, but for the most part, those who have reached the threshold of higher-rate DLA continue to have very real and substantial mobility problems wherever that line is to be drawn, whether at 20 metres or 50 metres. Therefore, like the noble Lord, Lord Alton, I urge the Government before Report to hold discussions with the noble Lords, Lord Sterling and Lord Alton, and the noble Baroness, Lady Grey-Thompson, and come up with a way forward on this. We have to have a transitional period—a period of grace—on this, either to the end of the lease or for a two-year period, whichever comes last, which would, at the very least, allow adequate time for the appeals procedure to go through without people losing a car in the mean time and then having to go through the routine that the noble Lord, Lord Alton, and the noble Baroness, Lady Grey-Thompson, described to regain it.

We had a similar discussion with the noble Lord, Lord Freud, about adapted houses. At one stage, if people were underoccupying a house that had had £20,000 spent on adapting it, they were to move from there, go somewhere smaller and have all the adaptation put in again, but good sense prevailed. The Minister agreed that where such money had been invested it was wise for those people to be allowed to stay. That argument makes sense for the home, and it makes sense for the agency of mobility which is the Motability car. That transitional period of grace, whether it is to the end of the lease or for a two-year period, whichever comes last, would prevent the awful situation of cars being taken back in and piled up in scrapyards because nobody would want that supply of used cars on the market when there will not be the purchasing power to buy them. We would not see Ford and the rest of them finding that they suddenly had closed order books, and we would not see people losing their cars, appealing, regaining them and having to go through all the trauma of these arrangements.

At the very least, there is a huge moral, legal, practical and economic obligation on the Government to provide a way forward to allow that transitional period—that period of grace—to allow those who feel that they should keep their car to appeal and, I hope, to retain it and to allow those whom it is deemed must lose their car time to adapt. Without it, I warn the Minister that she has seen nothing yet.

[Lord McKenzie of Luton]

My Lords, I shall start by setting out our position. We certainly support the thrust of this amendment and the intention behind it. We certainly support the concept that there needs to be consultation between the Secretary of State and Motability. The precise formulation of proposed new subsection (2) of the amendment needs careful consideration of the idea of benefits being on an individual basis rather than more generally, but I do not think that particularly concerns the noble Lord, Lord Alton. I think the idea is to press the Government to come forward with some transitional arrangements.

We have heard from the noble Lord, Lord Alton, a comprehensive and passionate argument in favour of the amendment. Indeed, he has been assiduous in following this issue and has been leading on it now for some months. It is probably fair to say that, in all the discussion, the to-ing and fro-ing and all the consultation that was undertaken on the move from DLA to PIP, this did not originally have the prominence that it should have had. The efforts now to ensure that it is properly focused on are very important.

Local Government Finance Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 16th October 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I did not know whether we were going to get a quasi-statement from the Minister at the start of our proceedings, but perhaps I may comment on the Written Statement we received yesterday and then move directly to my amendment.

We should thank the noble Baroness for her Written Statement, if not the entirety of its content. This is an astonishing state of affairs. Just 24 hours before we are due to commence our final day on Report, we are told that there is, after all, just a little more funding for local council tax support schemes. Of course we should welcome any new money for councils, even if it is just a fraction of the endless cuts they have endured, added to by an extra £1.1 billion cut in formula grant that has emerged from recent edicts. The extra money, £100 million, comes with strings. Yesterday’s Written Statement said that it was about “best practice” and that the money,

“will be available to councils … who choose to design their local schemes”,

according to certain criteria.

However, the design of the schemes has been going on for months. They have been consulted on by local authorities up and down the country. Councils have been agonising over the impossible choices with which many of them have been faced, trying to juggle the near impossibility of protecting the most vulnerable and maintaining vital services. The Government have been sitting back and watching all this happen, denying that the councils needed more time, refusing to accept that there was insufficient funding in the system for all councils to produce decent schemes, and letting them go through the agony. However, this announcement is not, even at this late hour, really about protecting vulnerable people or having good work incentives. The cynical reality is that this is about the Government trying to get political cover as the consequences of their policies strike home.

What does this mean for local councils who wish to access this funding? Some may not have to change their proposed schemes to access the pot, presumably but not necessarily including those who have opted for the default scheme. Some may have to make considerable changes, although they do not yet know how the pot is to be distributed and how this relates to the cost of any changes they may have to make. Some richer councils, through the use of increased flexibility from the empty properties and second homes provisions of the Bill, are in a position to have already funded a compliant scheme and will get a windfall from it.

Minor changes to draft proposals consulted on may not require reconsultation, but more substantial changes might, and we need proper advice and the opportunity to research this. Councils will have to grapple with the sustainability of all this. The funding is for one year only. Using this money to fund improvements in year one and for what would otherwise be affordable for the council may just mean reverting to the original scheme in year two. However, of course, the risk is that political blame will be visited on the council rather than the Government.

Quite apart from the content of the Written Statement, the process has been a disgrace. Springing this on our deliberations at the last moment does not make for a considered legislative process. Perhaps we should not be surprised, because the record shows that the Government have failed to live up to commitments to have full information, including draft regulations available, in good time.

As for our business today and as already mentioned, we have a number of amendments that affect vulnerable people and relate to tapers and work incentives that, in addition to this announcement, need to be considered fully in the context of schemes already consulted on by councils. We need to consider whether to push these today or at Third Reading. We would be grateful if we could have a clear statement from the Minister on the approach that will be taken to Third Reading and whether what we took to be the Minister’s position from our meeting on Monday will become the reality.

For us, of course, this approach is irksome and inconvenient but councils are having to deal with the practicalities of it now. This is not a good way for government to do business. Ultimately, it is abundantly clear that, even after this 12th-hour panic measure, the Government are still not prepared to insist that all the most vulnerable, including those currently passported to full council tax benefit, should be fully protected. It is to their shame that they eschew this responsibility.

I now turn specifically to the amendment, which requires the Government to fund local council tax support schemes up to the level of the proposed default scheme—that is, as now. In seeking agreement to this, we reject the notion that the Government’s newly announced transitional funding is an adequate response to the challenges that local councils face in creating local schemes. I acknowledge up front that the amendment would deny the Government the savings that they are seeking—some £400 million—but, when they are so minded, the Government have a happy knack of finding resources for a council tax freeze, bin collections and even tax cuts for millionaires.

We have made it clear that we consider the move away from a national scheme to be wholly misguided and, ultimately, not sustainable. However, in the interim, the underfunding of the task given to local government has put many councils in an impossible position—one which the transitional funding does not fully address. Even with this transitional funding, which is to last but one year, millions of people around the country will face rises in their council tax from April next year. At the very time when the Secretary of State is lecturing councillors that they have a duty not to increase council tax bills, his own actions are forcing up the bills to be paid by people on the lowest incomes. The Secretary of State is delegating the responsibility of providing council tax support but with 10% less funding than the cost of the current national council tax benefit scheme. As my noble friend Lord Beecham said at Second Reading, it is passing the buck without passing the bucks. However, as we know, the 10% cut in funding is greater because it assumes that claimant numbers for council tax benefit will fall when they are rising, and it will not protect councils to the extent that the benefit is attributable to council tax increases.

Of course, because councils have properly to keep the benefit to pensioners whole and are cynically reminded by the Government of their duty under equalities legislation and—would you believe it from this Government?—child poverty legislation, the burden of the cut has to fall on others: the working-age poor. This awful dilemma is being presented to councils at the same time as they face unprecedented cuts in their funding—bigger than the cuts imposed on any government department. The latest cuts facing local government are significantly higher than those anticipated in the 2010 spending review.

As things stand, we know that some councils are being pushed to financial collapse by all this, and the cuts in council tax benefit funding will hit the poorest areas the hardest. Those that have already endured the largest cuts will suffer the greatest reductions in council tax benefit funding: Manchester will lose £5 million; Liverpool, £6 million; Birmingham, £10 million; and the City of London, to which we gave special consideration just last week, £27,000.

Through the consultations that local authorities are undertaking, we have a glimpse of how, before the one-year transitional money, they are seeking to address these challenges. The LGA tells us that of some 200 councils surveyed, nearly 90% are looking to require a minimum from all working-age claimants. Half will seek a minimum payment of 20%. The transitional funding may impact favourably on this for one year, but this permits—even encourages, one might say—a minimum payment of 8.5%.

Of course, we acknowledge that the Bill presents some councils with additional revenue-raising possibilities from empty properties and second homes but these are not equally spread across authorities. There are not many second homes in Luton. Securing maximum revenue from these sources will not always be possible anyway. According to the LGA, if half the additional potential revenue could be garnered, it would still leave some 307 councils needing to reduce council tax discounts. One way or another we are faced with the prospect of hundreds of thousands of citizens who do not currently have to pay council tax having to do so. Whatever amelioration comes from some one-year funding, it will not dramatically change that. These, of course, will be the poorest citizens. They are likely also to be those most likely to suffer other cuts, especially those in receipt of housing benefit. The Government have seemingly still not woken up to the problem of collecting a relatively small amount of council tax from poor people who have not previously been required to pay. The amounts may be smaller for one year as a result of the extra funding but it potentially makes the problem worse. It seems that the lessons of the poll tax have been forgotten.

There are other admirable amendments before us today, which one way or another seek to lessen the harm that the Bill will inevitably inflict. In our view they do not go far enough. This amendment would require the Government to fund as now, without the 10% cut. We have seen time and again proposals that have a profound impact on the lives of our fellow citizens. We are instructed that they have to be accepted because the deficit must be addressed. The impact is invariably measured on a stand-alone basis without the accumulative consequences being laid out. The alternative is invariably measured in a narrow juxtaposition and not across the whole sweep of what government can really do. It is time to say no. The 10% cut is too far and it is time for us to stand up for poor people. I beg to move.

[Baroness Hollis of Heigham]

My Lords, I take pleasure in seconding the amendment. What do Westminster and West Oxfordshire District Council have in common? Not much you might think. One is a prosperous inner-city London borough and the other is a prosperous leafy, rural district council, although admittedly the Prime Minister lives in both of them. However, they are very different local authorities. If the localism agenda means anything at all, one might expect two very different schemes in two such very different councils—Westminster and West Oxfordshire.

Both councils are going for the same scheme—the identical scheme and existing national default scheme. Is that because their local needs are the same? Hardly. Is it because they have identical insights into their locality? Unlikely. Is it because they have a similar demographic make-up? Doubtful. Is it because they have similar economies? Of course not. So what then? What they have in common is that they are both prosperous. As they are prosperous they can afford the existing scheme. That is welcome news for their poorer residents, but elsewhere, as my noble friend has said, councils are leaving the existing national default scheme not because they want to but because they have to—not because of vacuous and deeply cynical mantras of localism but because of the reality of the cuts.

These authorities tend to be the poorer authorities, which do not have the pretty second homes to levy or the comfortable reserves to cover their funding gap. Poorer authorities, with poorer residents, will be cutting their council tax benefit, and those with second homes or deep comfortable reserves who can afford not to choose not to. Some of the poorer authorities may try to revise their schemes for one year, but if they do in the light of the transitional grant, and if it is legal to do so, it will mean that their residents will have three different schemes in three years: this year’s scheme, next year’s scheme at 8.5%, and the third year at 20%.

Local authorities did not want to cut their money for their poorer citizens. Councillors of whatever political complexion did not come into local government to make the poor poorer. Not many want to spend hours, unless they are anoraks, fiddling with various models of tapers, capital limits and contribution levels. Nor—and I am certain of this—do they want to undermine the work incentives of the Welfare Reform Act, as some of these local schemes undoubtedly do, as my noble friend Lady Donaghy will explore. That is why Mr Cameron’s West Oxfordshire District Council, for example, has denounced the Pickles plan as damaging to work incentives, and was absolutely right to do so.

Local Government Finance Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 10th October 2012 Lords Chamber

[Baroness Hanham]

The noble Lord is absolutely right. I apologise. I thought it sounded a bit funny when I said it.

[Baroness Hollis of Heigham]

It is the fireworks.

[Lord McKenzie of Luton]

Notwithstanding that, these amendments seem straightforward and we are content with them. We have not actually debated pooling much during our deliberations—it is a very important facility under this Bill, which we support—but we certainly accept the amendments on the basis on which the noble Baroness has moved them.

Local Government Finance Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 24th July 2012 Grand Committee

[Baroness Hollis of Heigham]

My Lords, this is a probing amendment seeking reassurance from the Minister that the existing system will be retained by which disabled people who have made adaptations to their property do not find their property going up a band. It should stay in the band, or, in some cases, drop a band. I have no reason to think that the Government intend that this should change, but, given the discretion to local authorities, I would be grateful if the Minister would give us reassurance on that point.

[Lord McKenzie of Luton]

My Lords, we speak in support of my noble friend’s amendment, which is a probing amendment, as she explained. I dug out some of the requirements for getting the benefit of the disabled band reduction scheme. It talks about,

“an additional bathroom or kitchen … a room (other than a bathroom, kitchen or toilet) required to meet the needs of the disabled person, and used predominantly by them … extra space inside the property to allow for the use of a wheelchair”.

It says:

“The room or the wheelchair must also be of major importance to the disabled person's well-being, due to the extent of their disability”.

I hope that that is still available in the system. Is there the potential for an inconsistency in government policy between supporting as we do the disabled band reduction scheme and the consequences of potential deemed under-occupation of social housing, which could lead to the withdrawal of housing benefit?

--- Later in debate ---

[Baroness Hollis of Heigham]

My Lords, I strongly support the amendment moved so powerfully by my noble friend Lady Sherlock. I want to add two further points to the admirable way in which she raised the concerns that I think we all share. The first was the implication for social workers and the second is the implication for certain local authorities. I will glare at the noble Lord, Lord Tope, when we come to the second point as he will guess where I am going on that.

On the implications for social workers, they are being asked to undertake a role that is not consistent with their current responsibilities. Their work towards helping children with occasional financial support is based on Section 17 of the Children Act 1987, under which they are expected to intervene when children’s health and development is seriously at risk. That may involve issues of abuse or when children need to go into grandparents’ care, and so on. It was never intended to meet basic needs of relieving poverty, providing family housing or accommodation for children separately from the parents unless it was necessary to promote and safeguard their welfare. As a result of the Social Fund—whether ring-fenced or otherwise—going over to local government, social workers will be asked to do two additional things as well as trying to deliver the purposes of Section 17 of the 1987 Act.

First, it is feared that local authorities will not inevitably budget for sufficient funds. Money might run out in January, which is always a problem with cash-capped grants, or the amount will be so low that the Section 17 work will be drawn on, which will diminish the work that we are currently doing to help children who face abuse. Secondly, and more worryingly, social work time will be taken up with assessing whether a child whose parents cannot meet their basic needs is being neglected or is in need according to the Section 17 definition. They will be saying no frequently as poverty alone, or lack of accommodation, does not fit the Section 17 definition. That was taken away from child protection and other work with families with complex needs. It will create friction with families that they are trying to help, as they will frequently have to say that they do not fit the legal criteria and will appear heartless.

Asking local authorities to now be the gateway to cash handouts for cookers, tables and chairs, bedding, and so on, is inconsistent with the role that social workers actually have, which is trying to help families to develop. The same will apply equally to local authorities and council tax benefit. There is a real problem for council social workers. Although I cannot speak for the British Association of Social Workers and do not have its views, social workers I have talked to, including eminent professors of social work, are deeply concerned about what they regard as the deforming and warping of the role of social workers. They will now be guardians of the gateway to cash handouts in a way they have not been before and do not wish to be now.

My second problem is the implication for two-tier authorities. Providing social services is a county function and housing is a district council function. They are splintered because of the two-tier structure that we have in this country. Social services will have discretionary Social Fund moneys, often for claimants for whom they have not previously worked, across a county-wide area—40 miles by 60 miles, perhaps, or with a million people living in it. They will have to make judgments about who to help with a limited budget that is not ring-fenced and which may be used for child protection or social care for the elderly, which has increasing dominance and a higher priority in most county council budgets—and perfectly reasonably so.

Housing authorities, of course, have responsibility for discretionary housing. My authority in Norwich has enough to support 50 families. In the previous year it ran out in November. Some of those families in distress will be the same families; some of them will be dealt with by county council social workers and the Social Fund, and many of the same families will possibly be dealt with by the local authorities at the district level, handling the housing discretionary payments. They are often likely to be the same families in the future. For unitary authorities, I hope that there will be a cohesive service as they should be able to manage the local connection issues. For cities such as mine where we are stuck against our will in a two-tier system, it will not be easy to handle. There will be costly duplication and even more profound problems about the localisation issue; the county might be helping people who live in one district where they have a local connection whose housing needs may be experienced in a different district. The same family may get help simultaneously from welfare rights people at district level as well as social services at county level.

As the measure stands, it is a mess. As noble Lords will know, if they know about two-tier authorities, I cannot see how it can work, when you have county council social workers trying to dish out cash hand payments to a proportion of 1 million people at county council level while simultaneously the district authority is responsible for discretionary housing payments which may have been engendered by the same crisis and is supposed to maintain a separate fund, also not ring-fenced. This is costly and it is duplication. At the very least it should be ring-fenced; at the very least there should be issues of guidance—and, at the very least, central government should require county social services to work closely with district authorities to try to overcome what this Government in a previous incarnation splintered—I refer to housing from social services—which affects the most vulnerable people in our communities.

[Lord McKenzie of Luton]

My Lords, we have just heard a compelling and comprehensive case from and on behalf of my noble friends, with which I wholly agree. As my noble friend Lady Sherlock said, it does not cost any money and it would provide some protection for some of the most vulnerable members of our community. If we could unite around this issue, it would be a good way in which to conclude our Committee deliberations.

The proposal concerning local connection rules is at the very least something that the Government should accept. They are prepared to give central direction to protect pensioners whom they see as vulnerable when it comes to council tax support schemes, so why do we not have some central guidance to protect those fleeing domestic violence, those leaving care, the homeless and those leaving institutional care? My noble friend Lady Sherlock quoted assurances received from Ministers during the passage of the Welfare Reform Bill to the effect that funding for what was the Social Fund, now transferred to local authorities will be part of a special revenue grant accompanied by a detailed settlement letter. Can the Minister deal specifically with the inquiry made by my noble friend on that point? We know that there will be a revenue support grant for the first couple of years of the business rate retention scheme, but the position after this is a little opaque. In any event, can the Minister confirm that the funding in question will be provided by central government in addition to the central share of the business rate, on top of the central share?

We know that councils will try to do the right thing for those who most need their support, but life has been made incredibly difficult for them by prior cuts, the cuts in this Bill and more cuts to come. In all the near impossible judgments that councils will have to make, we can provide just a small voice for those who might otherwise not be heard. I support my noble friend’s amendment.

Local Government Finance Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 16th July 2012 Grand Committee

[Lord McKenzie of Luton]

Perhaps I may press the Minister on that point because it was originally understood that in October next year all new claimants would be claimants for universal credit. There seems to have been some change to that and this issue is obviously important because local authorities have to assess the volume of claims that they will deal with. Can the Minister confirm that the arrangement is that all new claimants coming through from October 2013 will go straight into universal credit and not into JSA, ESA or income support?

[Baroness Hollis of Heigham]

The legacy cases will spend two, three or perhaps four years coming across.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply. I must say that I am a bit taken aback. I thought that it would be pretty much routine to accept the recommendations of the Delegated Powers and Regulatory Reform Committee. I thought that the reasoning was a bit spurious. It is welcome that regulations have been published now and welcome that we will, I hope, have some chance to debate them when we get to Report, although debating at that stage is not necessarily the iterative process that we could have in Committee.

[Baroness Hollis of Heigham]

Can my noble friend recall any other instance in the past 10 years or so when recommendations from the Delegated Powers Committee suggesting that we go for an affirmative rather than negative procedure have not been followed by the Government?

[Lord McKenzie of Luton]

I cannot. I can remember one occasion as a Minister when I was minded not to take the advice, but Ministers always did if it was pressed upon them. I am truly shocked by what the Minister says. We have other business to debate tonight so I am not going to prolong the thing, but this is something to which we will come back on Report because I do not think that the answer is satisfactory. I beg leave to withdraw the amendment.

Local Government Finance Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 10th July 2012 Grand Committee

[Lord McKenzie of Luton]

The Minister may wish to cast his mind back to the Pensions Bill, which we debated a couple of yours ago, and the representations that were made by the Royal British Legion, for example. It wanted a change to the name of council tax benefit because it believed that elderly people in particular were dissuaded from taking it up. They saw it as a benefit and that was something with which they were uncomfortable.

[Baroness Hollis of Heigham]

They wanted it to be called a council tax rebate.

[Lord McKenzie of Luton]

The nature of this arrangement could cause more people to claim without a campaign for take-up. Why on earth would we want to build any problem into the scheme that would dissuade councils or anyone else from encouraging people to take up their rights?

[Baroness Hollis of Heigham]

Particularly pensioners.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 31st January 2012 Lords Chamber

[Baroness Hollis of Heigham]

The noble Lord is precisely right and has therefore made my point for me. Precisely because that relationship may change over time, we do not want the cliff edge of being on either one-third or three-thirds of the rate. Precisely because, as he says, it changes over time, we want to reduce that cliff edge and not make such a sharp distinction in the spectrum of disability.

The final point that both the noble Lords, Lord German and Lord Newton, argued was that this should be in regulations because they believe in the benevolence of the Minister on the issue, as we all do. I am confident that the enemy of or opposition to the amendment is not the Minister. We know him, as we have been engaged in discussion in Committee and at Report. His principles, integrity, evidence and assiduity are without comparison. His enemy is the Treasury. I put to the House a simple question. Which does the House believe will most strengthen the Minister's arm in seeking to follow the wishes of the whole House as expressed today: leaving it to regulations which we cannot amend some way down the line—three months, six months, nine months or a year—when the Treasury can say “Go away”, as it said to me on many occasions; or passing an amendment today which would insist that the House of Commons and the Treasury think again? If they turn it over, I will be sorry about what I will regard as having happened to their moral compass, but that is their right and privilege.

I know that the noble Lord, Lord Freud, will have to read his script. I do not expect him to either confirm or deny this, but he will have to read out things that he would wish he could say differently. Whatever he may say, if we want to aid him today in his battle with the Treasury on behalf of the most vulnerable people in our entire society, we will support the amendment to establish the principle of proportionality in the Bill.

[Lord McKenzie of Luton]

My Lords, we support the amendment moved so comprehensively and eloquently by the noble Baroness, Lady Meacher. This has been a powerful debate with a strong ethical strand, as my noble friend Lord Peston said that it should be. My job is made easier by the contribution we have just heard from my noble friend Lady Hollis, who dealt comprehensively with those who argue that we should deal with this in regulations. The fact is that we have tried at earlier stages to reach the position that the amendment now provides and have been unsuccessful—as my noble friend said, possibly not because that is where the Minister wants to be but because that is the policy imposed on him. I think that my noble friend is absolutely right: if we pass this amendment today, we will put down a clear marker on proportionality, which will strengthen those who have to go and argue with the Treasury about resources.

As we have heard, the amendment seeks to prevent the interests of one group of disabled people being played off against those of another by limiting the ratio between the higher and lower levels of disability support. At present, as we have heard, the Government’s proposals would lead to a significant cut in the amount of support for disabled children on the lower rate of support, amounting to some £27 a week, or over £1,300 a year, with around 100,000 families seeing this drop in their support. We have heard some graphic descriptions from my noble friend Lady Wilkins about what support meant for her family. We also heard from the noble Lord, Lord Wigley, and the noble Baroness, Lady Browning, who made the very telling point that this is about the whole family—siblings as well—for whom the level of support can make a real difference.

The Government have suggested that this money would be recycled into higher levels of support for disabled adults on the higher rate, but we do not believe that this is a trade-off that anyone wants to see. The interests of adults with severe disabilities should not be played off against those of children with lower-level disabilities, which, as we have heard, may well include conditions such as Down’s syndrome and profound deafness. Such children have no opportunities themselves to increase their income, and we know the problems that parents caring for these children can face when trying to find paid work or increase their hours.

The amendment does not seek to prescribe the levels of support, which will of course be a matter for the Government of the day and will depend on what resources allow, but it does seek to embed the principle that, although there is a need to recognise that some conditions require a higher level of support than others, this should not be used as a reason to downgrade the needs of the many disabled children—and their families—who currently rely on the lower level. Perhaps the Minister could outline in his response, first, what he believes the ratio between the two rates should be and, secondly, how he intends to ensure that those on the lower level do not see a dramatic fall in the support that they receive.

We will doubtless hear again that transitional relief will protect some claimants. However, we know that this is not a protection in real terms and in any event it does not help new claimants. Perhaps we can hear from the Minister what changes in household circumstances he considers would break even this partial protection. In making these judgments, what weight do the Government give to the fact that disabled children are more likely to live in poverty than other children? The Minister may justify the current ratio as aligning support for adults and children. However, is it not the case—a point made by the noble Baroness, Lady Meacher—that the routes into the benefit are quite different: for disabled children through the DLA and for adults through the WCA? Is there not a disability disregard for disabled adults who can access work?

Much of our debate on the Bill has focused on its impact on children. We would all, I hope, recognise the necessity of combating poverty among children because it carries with it the prospect of greater poverty in later life. However, it would seem that on this matter the Government are shifting resources in the other direction from children to adults.

It is perhaps appropriate that today we heard from the UK’s four Children’s Commissioners, who have put out a notice. I should like to finish by quoting them:

“Families who receive welfare benefits are particularly vulnerable because they live in poverty—small changes in their household income can have a big effect on their welfare. We are concerned that many more families and their children will be pushed into absolute poverty over the coming years if these proposed changes go ahead”.

We support the amendment.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 25th January 2012 Lords Chamber

[Baroness Hollis of Heigham]

Perhaps I may challenge the noble Lord, Lord German. What he is saying is entirely applicable to Wales, where every local authority is a unitary authority and therefore has responsibility for both housing and social services and can read across, for example, from the help that will come from the discretionary housing allowance to the Social Fund. Often the same families need support in a crisis if, for example, a house has been flooded, has caught fire, or if someone is coming out of care, and so on. They will need both housing and social services help, and a unitary authority is rightly placed to give that, provided that it spends the money as it should.

However, the noble Lord has not mentioned that most local authorities in England do not want this because they are lower-tier authorities, and the social services which handle the Social Fund are upper-tier authorities. In the county of Norfolk, which is some 60 miles long and 40 miles wide, yellow lines are put on roads that you do not even drive down, and schools that you have never even visited are closed, which happened when I was a county councillor, because it was too large to be called local government. None the less, that social services authority will be determining the Social Fund for seven district councils, including one wholly urban authority, two semi-urban authorities and three or four rural authorities. As a result, there will be a postcode lottery within Norfolk because a county council of one political complexion will be dealing with half a dozen different authorities below it, responsible for housing and trying to manage the discretionary housing allowance at the same time.

We will therefore have two sets of officials, one at district level and one at county council level, dealing with the same vulnerable family, each of them focusing discretionary money with no mutual interlocking, decision-making or accountability. It is a bloody silly system that is being proposed and I hope that my noble friend presses the amendment to a vote and that, as a result, we give the other place a chance to think again.

[Lord McKenzie of Luton]

My Lords, we support the amendment moved with the great passion and inescapable logic which we have come to associate with my noble friend Lady Lister. I say to the noble Lord, Lord Newton, that I prefer the noble Lord of Wednesday to the one of Monday. As my noble friend said, this is light-touch and effectively cost-free, so we should not have the usual argument about what this would do to the deficit reduction programme. Most noble Lords, with the possible exception of the noble Lord, Lord German, were pretty much on the same page, as the right reverend Prelate the Bishop of Manchester said. To the noble Lord, Lord Fowler, I say that this is not about trying to roll back the decision and retain the Social Fund as it is; it is simply trying to ensure that the money allocated through this process will be spent as it was meant to be. I should have thought that, in these times of austerity, the Government would feel it particularly incumbent on them to ensure that.

The amendment is intended to build on the useful reassurances we had from the noble Lord, Lord De Mauley, at earlier stages in response to concerns we raised about the localisation of the discretionary Social Fund. Those concerns primarily centred on the lack of a ring fence for the money that is to be transferred to local authorities to allow them to provide services that replace those that the Social Fund currently provides to some of the most vulnerable people when they are facing a particularly difficult situation.

Those concerns about the lack of a ring fence were raised by more than 40 per cent of respondents to the Government consultation on reform of the Social Fund. They have been raised by a wide range of charities, including Scope, Crisis, and Family Action, which state that they are seriously concerned that the abolition of the discretionary Social Fund and its replacement with a patchwork of local arrangements will remove one of the final safety nets for some of the most vulnerable and needy members of society.

Those concerns are so acute because of the degree of vulnerability of those to whom the Social Fund community care grant scheme provides support. Thirty-two per cent of those receiving a community care grant in 2009 were disabled, 26 per cent were lone parents and 10 per cent were pensioners. Many women fleeing domestic violence see community care grants as a vital lifeline when setting up a new home on exit from a refuge. The fear is that, without some way to ensure that local authorities use the money for the purposes for which it has been allocated, the needs of those groups will go unmet and the money will be diverted to other purposes—a lesson we learnt the hard way, as my noble friend Lady Lister pointed out, when we were responsible for removing the ring fence for the supporting people grant when we were in government. Crisis points out that councils are, on average, cutting supporting people services by 13 per cent, despite the overall supporting people budget being cut by only 2.7 per cent.

Local authorities themselves are worried about that possibility. DWP research published in December 2011 into local authorities’ plans to replace the Social Fund found that a number of authorities were concerned that without a ring fence and some level of reporting, funding would quickly become amalgamated into existing budgets and that, as a result, its identity, visibility and purpose would be lost. A second concern was that councillors or directorate heads would redirect the funding to plug gaps in other budgets. The most common example mentioned was the social care budget.

The amendment would not place a ring fence around the funding, which the Minister argued would be restrictive. He also argued that the settlement letter which accompanies the transfer of moneys to the local authority will be sufficient to ensure that those funds are used for the purpose for which they are intended—the meeting of often urgent need. If this is the case and local authorities intend as a matter of course to use the funds for this purpose, there should be no barrier to the Minister accepting the amendment, which merely puts in place a checking mechanism to ensure that what he is confident will happen takes place. We support the amendment.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 11th January 2012 Lords Chamber

[Lord McKenzie of Luton]

The Minister has not made this easy. I have been trying as best I can to avoid having a vote on this today.

[Baroness Hollis of Heigham]

If my noble friend will allow me, would the Minister be content if we were to introduce such a power by regulation at Third Reading, which would commit him to nothing or everything, according to how he wished to play it in future?

[Lord Kirkwood of Kirkhope]

Before whoever it is who is speaking sits down, I should say that I think that the Minister is making life difficult for himself. If he cannot take the advice that he is getting from all sides—and I, too, concur with what has been said—I, too, will look to get an expression of opinion from the House, which I really do not want to do. The suggestion that has been made about regulation-making powers is an easy out. I do not care what the Box thinks, actually; the Minister has the knowledge and the wisdom to take that decision right now, which would be a beneficial outcome for everyone.

--- Later in debate ---

[Lord McKenzie of Luton]

Forgive me—are we not dealing here with Amendment 46, which the Government have accepted is consequential on Amendment 36A?

[Baroness Hollis of Heigham]

My Lords, I was the person who drafted Amendment 36A. The noble Baroness, Lady Meacher, clearly introduced it as the paving amendment to Amendment 46. So the Government cannot do as they are now suggesting.

[Lord Freud]

My Lords, let me read out what I said in my speech. I said that I confirm that the Government see Amendment 46 as linked to Amendment 36A, but separate Divisions will be required on all amendments in this group.

[Lord McKenzie of Luton]

My Lords, the noble Lord does not make that happen just by asserting it. One amendment is consequential on the other. We have had a very clear and substantial vote on this, and it is quite disgraceful that the Government are seeking to undermine that.

[Baroness Hollis of Heigham]

I am sure that the noble Lord, Lord Freud, does not wish to appear to be subverting the view of the entire House, which was expressed in the full knowledge that the amendment which we voted on was devised—I devised it—as a paving amendment to a substantive one, so that we could debate it in good time. Most of the population of the House has gone home, believing in good faith that the previous vote has established the principle—as it has. However, the noble Lord is trying to renege on that by forcing a vote despite the late-night keeping of the roster. That would be quite improper and quite unprecedented, and I strongly suggest that he think again.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 14th December 2011 Lords Chamber

[Lord McKenzie of Luton]

If it has not been moved already, then I beg to move.

[Baroness Hollis of Heigham]

My Lords, my case then stands, in other words. I had understood that when the noble Lord, Lord McKenzie, spoke immediately after the noble Lord, Lord Best, he moved the additional amendments, which the noble Lord, Lord Best, had previously indicated he would accept as part of the position.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 14th December 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I will be brief on Amendments 27, 30, 31 and 29, which deal with sanctions. However, given the hour, there is just one particular point I wish to pursue.

We have already had the assurances of the noble Lord and his colleagues that there will be no target set in respect of sanctions. That is clearly on the record in Committee. We might like one more go at it, but we need not spend any more time on that. In the other place we made the argument for reducing the maximum sanction from three years to one. Given where we are, I do not see merit in going over those arguments again; we will just have to differ on that.

The point that I wish to pursue is the opportunity for people to mitigate that longer-term sanction. My noble friend Lady Hollis touched upon this briefly in Committee. If someone is sanctioned for three years, your leverage to encourage them closer towards the labour market is very limited. Three years is a long period of time; people change and perhaps understand the consequences of what they have done. It seemed a reasonable proposition that they should have an opportunity of mitigating and reducing that three-year period. That is the point that we wanted to pursue in this amendment. I beg to move.

[Baroness Hollis of Heigham]

My Lords, I strongly support my noble friend on his last point. The whole point of sanctions is not just to punish but to change behaviour. If someone does so and therefore, having learnt their lesson, is willing to comply, they should get rewarded for that, so to speak, otherwise there is no incentive for them to change their behaviour. I hope that the Minister will hear my noble friend’s wise words, otherwise the sanctions regime will not work or stick—and, I suspect, will end up being judicially reviewable.

--- Later in debate ---

[Baroness Hollis of Heigham]

My Lords, I strongly support the amendment. I had the privilege many years ago of being responsible for vaccine damage payments within the department and always tried to make a distinction between payments that were in lieu of earnings, which tended to be of the incapacity benefit sort, and payments which were a lump sum. Sometimes there was a structured payment of capital over a period of time as compensation for suffering and injury as opposed to an earnings replacement. We always excluded that second element from coming within the debiting of benefit. That distinction has been well drawn by the noble Baroness, Lady Hollins.

I hope that the Minister can respect the ethics as well as the long history of making a distinction between getting an income replacement benefit—ESA, for example—and getting an element of compensation for damages, for suffering, for pain and so on. In my understanding that has always been protected and has not been debited against your rent. Otherwise it is not worth anything to you at all. That was never the intention of the law. I hope that the Minister can support the proposals of the noble Baroness, Lady Hollins.

[Lord McKenzie of Luton]

My Lords, the noble Baroness has brought an important point to our attention. I have only two questions for the Minister. Can he explain the extent to which the current rules are going to be translated and taken up in universal credit? The position at the moment is that the compensation recovery scheme does not apply to criminal injuries compensation. Can the Minister say whether that would continue under universal credit?

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 12th December 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I do not want an endless wrangle on this. I think that that is being a little tough on the calling of amendments. My noble friend did not immediately realise that the noble Baroness, Lady Meacher, was not in her place, so it perhaps took her a little while to move the amendment on the noble Baroness’s behalf. Frankly, if we are denied the opportunity to proceed with Amendment 1 today, we will simply bring it back at Third Reading. However, I do not think that that is in anyone’s interest.

[Baroness Hollis of Heigham]

I support my noble friend on this. Some of the difficulty may have been caused by the noble Baroness, Lady Hollins, kindly agreeing not to move her opening amendments, Amendments A1 and A2, so that we could have enough time to debate this matter fully. This has arisen because of the time required for the European Council Statement, which has thrown out all the expected timings. As a result, the noble Baroness, Lady Meacher, was not in her place, as noble Lords would expect, because she had assumed that the other amendments were being debated. So I hope that the House will be sympathetic to my noble friend’s request, which makes good sense. The House is self-regulating. If the House thinks that this is a reasonable thing to do, we can do it. I very much hope that the noble Lord, Lord Freud, will respond to my noble friend in the manner indicated.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 23rd November 2011 Grand Committee

[Lord McKenzie of Luton]

I think that we understand that. However, does the Minister recognise the dilemma with which the Committee is faced? We have a broad framework which the Minister says gives the opportunity of reducing the cap, but we have none of the detail which is absolutely crucial to understanding how it will work and who it will impact. Without providing that he is facing the Committee with an impossible dilemma. Perhaps the noble Lord, Lord Kirkwood, is right and these clauses are irredeemable.

[Baroness Hollis of Heigham]

My Lords, it also means that the noble Lord will face a lot of amendments on Report, which he would not need to face, calling for breathing spaces or a transitional period of one year for people who suddenly lose their jobs or are suddenly exposed, at 27 or 28, to living in a single room, and so on. If he were able to give some clarity about what he proposes, he could wipe out possibly a dozen amendments.

[Lord Freud]

My Lords, I have been set a challenge and a reward. It would be lovely to collect on that, but I cannot make any further assurances.

I shall continue to speak to the amendment in the name of the noble Lord, Lord Best. Apart from the transitional arrangements that I have talked about, the underlying position is to ensure that people understand that they have to take responsibility for the decisions that they make in their lives in the light of what they can afford, and they cannot always look forward to the state stepping in to make good any financial shortfall.

I shall continue on to the more technical areas raised by the noble Lord, Lord Best, on temporary accommodation and supported and sheltered housing. The amendments provide an exemption for households to which local authorities owe a duty because they are homeless, or threatened with homelessness, and for those living in supported or sheltered accommodation. As I said on Monday, discretionary housing payments will not be included as part of the cap, but in wider terms it is too early to say how we shall treat those cases for housing cost purposes in 2013 and beyond. We are exploring options for the treatment of housing benefit for people living in temporary accommodation within universal credit and the overall benefit cap.

Noble Lords may be aware that we recently consulted on high-level proposals to change the method by which help with rent is calculated for those who live in certain supported housing in the social and voluntary sector. As the noble Baroness, Lady Hollis, indicated, there is a series of issues here. We are working very closely with local authorities, housing associations and other government departments, including the devolved Administrations, on these very issues. Our considerations will, obviously, include possible interactions with the benefit cap.

Finally, Amendment 99C, in the name of the right reverend Prelate the Bishop of Ripon and Leeds, would place a requirement on the face of the Bill for exemptions for a range of groups. These include groups that we will provide exemptions for through regulations, and others that we have already discussed during the course of our debates today. The amendment also includes an exemption for lone parents with a child under five. I have made it clear that the cap is intended to act as an incentive to work. I acknowledge that we currently do not require lone parents with children under seven to work, although we are seeking to reduce this to five, but that does not mean that we do not want to encourage them to find employment Indeed that is the very reason why we provide extra support through work-focused interviews.

Each of these amendments would undermine the fundamental principles underpinning the cap—that ultimately there has to be a limit to the amount of benefit that a household can receive and that work should always pay. I have listened carefully to the measured and detailed arguments put forward today and will take them into account when deciding on the final design of the cap. In the mean time, I urge the noble Lords and the right reverend Prelate not to press their amendments.

--- Later in debate ---

[Baroness Hollis of Heigham]

I just want to pick up on my noble friend Lady Lister's point. We know that most lone parents come out of a relationship: very often out of a marriage. These are not people who are regarded by others on the estate as shirkers who need to be driven—that sort of mentality. We could have a situation where, before they separated, the total household earned income was perhaps over £30,000 and there was some housing benefit because it was a three-bedroom property in an inner city area at a fairly high cost. He then leaves and she is left with three small children under the age of five in their existing home, which is rented. As a result, they are facing the benefit cap. How on earth do we think that any of these proposals under universal credit or the benefit cap could or should alter that behaviour, the judgments that they have to make and the possibilities open to them? All it can do is turf them out and send them up to Middlesbrough, as far as I can see.

[Lord McKenzie of Luton]

My Lords, I suspect that we have taken this as far as we can today, but I am sure that we will return to it on Report—perhaps we should already be thinking of booking an extra couple of days for that. I have a technical question for the Minister. As I understand it, before we get to universal credit, the variety of benefits that people have will be looked at. That will go into the calculation on one side. We will compare that with the earnings comparator and the difference will be withdrawn by way of reduction of housing benefit. Is that right? So that will be administered by local authorities.

What if people are in receipt of mortgage interest support or the housing benefit element is not necessarily sufficient to cover the shortfall? What happens with all the local authorities that have outsourced their housing benefit and council tax arrangements? There are a lot of them. Have they been engaged? Presumably, there are extracontractual costs because they will be required to do things in excess of current entitlements.

On universal credit, is it likely that the withdrawal will be in respect of only the housing component of the credit or will the broader range of support that is in universal credit be subject to the clawback?

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 21st November 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, we are indebted to the right reverend Prelate the Bishop of Ripon and Leeds for leading the charge on this. Indeed, faith communities generally have been a voice for people who might otherwise not have been heard. The need for so many amendments around this proposal in the Bill highlights the extent to which it is a badly conceived policy. Whether or not you believe there should be an overall cap on benefit entitlement, what we know about the approach taken to applying such a cap in the Bill shows it to be unfair, inconsistent and to ignore the needs of many of the most vulnerable.

This first group of amendments relates to how the benefit cap is to be calculated and shows the extent to which there are major inconsistencies in the Government’s approach. The second group relates to the fact that the Government appear to have ignored the needs of many of the most vulnerable people when thinking about who is to be excluded from the benefit cap.

The Government have argued that applying the benefit cap is fair. The Secretary of State for Work and Pensions, Iain Duncan Smith, has stated:

“The benefit cap will restore fairness to the taxpayer and fairness to those who do the right thing on benefits”.

Of course, we are learning with this Government that fairness has many different meanings to different people, but it would be hard for anyone to justify the idea that the current policy will be fair to children, who, as we have heard, the Children’s Society has shown are nine times as likely to lose out from the cap as adults. Out of the 50,000 households that will be affected by the cap, the Children’s Society estimates that 210,000 will be hit, compared to 70,000 adults. Perhaps the Minister will tell us whether he thinks this policy is indeed fair to children.

The Bill impacts so heavily on children in part because of the way that the Government have stated that they will calculate the level of the cap. At present it is proposed to set the benefit cap at two different levels. The first, for single people without children, will be introduced at around £350. For couples, it will be introduced whether they have children or not, and for single parents with children the cap will be introduced based on net average earnings for a working household with or without children, which the Government estimate to be around £500 per week at the point of introduction.

We should note that that proposal creates a substantial couple penalty, which the noble Baroness, Lady Tyler, spoke about. Research by Family Action showed that for two lone-parent households that decided to move in together this penalty could be as much as £9,000 a year. Does the Minister believe that financial penalties of this type form a disincentive for families to move in together? If so, what assessments has his department made of the likely impacts of applying the cap in this way on the rates of lone parenthood and cohabitation?

We note that while the universal credit has a higher personal amount for couples than for single people with children, the benefit cap has not followed the same principle. Not only is the current calculation unfair towards couple families, it is also unfair in its comparison between those in and out of work. Both working and non-working families were able to receive child benefit and housing benefit. As the level of the cap is based on earning levels rather than income, however, these will, as the right reverend Prelate said, be excluded from consideration of the amount of money that working families have to live on but included in the calculation for those out of work. Amendments in the next group seek to exclude child benefit and those in this group to exclude housing benefit from being included in the calculation of total income for out-of-work families. Perhaps now the Minister could explain exactly the basis on which this method for calculating average family earnings was chosen.

In-work benefits, including working tax credit and, subsequently, universal credit, will also be excluded from the calculation of the level of the cap, but not from the calculation of the amount of income that out-of-work families are expected to live on. Here we come to another lack of clarity about the Government’s approach, as it is once again not clear what the definition of work is expected to be for the benefit cap when universal credit is established. Before universal credit is established, the cap will initially be applied to housing benefit, and the note with the draft regulations that we received states that a claimant in receipt of housing benefit will be considered to be in work if they are entitled to working tax credit. It has been announced that when working tax credit is abolished, there will be a corresponding exemption for people on universal credit who are considered to be in work. The precise criteria for this exception are still being considered.

Again, the thinking behind the benefit cap appears to be out of kilter with what is behind the universal credit. Indeed, the Government have just spent a large amount of money on ensuring that households working under 16 hours will still be able to claim support with childcare costs under universal credit. Yet in benefit-cap terms, it seems that working less than 16 hours is not really considered as work, and it is possible that this childcare support will be removed by the restriction on the total amount of benefit that a family can receive. Large families may be caught in a trap whereby any move into work brings with it additional childcare costs, which are then reduced by the cap to the extent that working is no longer worth while. Does the Minister believe that a family in which someone is working for less than 16 hours a week is a “working family”?

Amendments 99ABAA and 99ACA in our names seek to understand why housing benefit and council tax benefit have been included in the benefit cap. At present, the proposals seem both unfair and unworkable. The differences in rent around the country, as we heard from the noble Lord, Lord Best, mean that families in different areas will be affected very differently by the cap, with the most severe impact on families in London. As the Government’s own impact assessment states about the possible impacts of the cap, it is likely to affect where different family types will be able to live, housing benefit may no longer cover housing costs, and some households may go into rent arrears. This is a direct consequence, they acknowledge, of government policy. Some households will be pushed into rent arrears, which will require expense and effort by landlords and the courts to evict and seek to recoup rent arrears. Some households are likely to present as homeless and may, as a result, need to move into more expensive temporary accommodation at a cost to the local authority. These costs are likely to fall most heavily on local authorities in London. Shelter, Crisis, Homeless Link and the National Housing Federation state that although the cap has been characterised as a cap on large families, high rents in London mean that families with just two children will be subject to the cap in all inner London and many parts of outer London, including Newham, Haringey and Hounslow, because of higher housing costs in those areas. London Councils points out that rent levels vary widely across the country. London has the highest average private sector rents in the country, at £220 per week, which is more than 35 per cent higher when compared to £164 nationally. It is estimated that more than 50 per cent of couples with more than three children in London are unlikely to be able to afford their rent.

The benefit cap will come on top of the already imposed cap on the local housing allowance, as we have heard, while Shelter, Crisis, Homeless Link and the National Housing Federation state:

“Unless housing benefit is removed from the calculation of the cap there is a risk that low income households will be displaced from large areas of the south-east, on a scale far wider than that feared in response to”

the local housing allowance caps. For families already hit by those caps, the organisations state,

“there is a risk that they could be hit again and forced to move twice within less than a year”,

as the noble Lord, Lord Best, said. What estimates has the Minister made of the additional cost to local authorities in London and the increased costs that they are likely to face as a result of the household benefit cap?

In the post-Bill world, these same local authorities will also be delivering council tax benefit. For the Government to be able to take council tax benefit or its replacement into account for the purposes of the cap, they will therefore need local authorities to tell them who is in receipt of the benefit and how much they are receiving. What arrangements does the Minister expect to be in place to ensure that the benefit cap correctly takes into account the amount of support with council tax?

The variation in local authority support for council tax also means that how families are affected by the benefit cap will vary by local authority. Those local authorities faced with additional costs in temporary accommodation as a result of the cap may be tempted to recoup their costs by limiting the amount of support that they give with council tax—knowing that, in effect, the DWP will pick up the bill by paying out more universal credit before the benefit cap is imposed. Perhaps the Minister can tell us what estimates have been made of the potential for savings from the benefit cap to vary, depending on the level of council tax support put in place by differing local authorities.

The Minister may say in his response that according to the impact assessment the benefit cap is expected to hit just 50,000 households—roughly 1 per cent of the out-of-work benefit caseload. Yet the impact on these families will be extreme, with an expected average loss of £93 a week. He may also tell us that he has no money and no way of recouping the expected savings from this policy of £225 million in 2013-14, and £270 million in 2014-15. However, it is clear that the costs of this policy, not only in terms of family well-being but for local authorities, will be high. The amendments proposed today seek to rescue this policy and to ensure that it can retain some aspects of the fairness that the Government say that they are aiming for. I hope that the Minister feels able to accept the amendments.

Perhaps I may conclude with a few questions. The impact assessment, as has been discussed, sets out the consequences of the benefit cap—that it will force people into rent arrears and cause them to be evicted—but it has not been able to put a cost on that. Do central Government accept that this is an increased burden on local authorities which, under the Government’s policy, should be met on one basis or another, and has any further work being undertaken to quantify this? What about the costs falling on the devolved Administrations? As to those Administrations, which benefits, if any, are included under Clause 93(9) that could be capped in England but not in Wales or Scotland? Perhaps the Minister could let us have a detailed note, not today but by correspondence, on the local authority obligations to individuals and families made homeless by these provisions and the types of rules that local authorities have to take into account, particularly in relation to local connections.

Can the Minister also say something about the number of people who will be affected by this cap and who live in social housing? I think that a figure of something like 70 per cent was discussed in the other place, but that may not be up to date. The point is that social housing is, generally, of lower cost than pretty much any other housing around. If people in social housing are being forced into rent arrears and eviction, the only consequence will be that they will face being rehoused in higher-cost accommodation.

[Baroness Hollis of Heigham]

Does the noble Lord not agree that, with the new affordable rents—which are going to be 80 per cent of market rents—we could end up with social housing being higher than the benefit available to somebody on the 30th or 20th percentile in the private rented sector?

--- Later in debate ---

[Lord McKenzie of Luton]

Would the noble Lord approve of a lifestyle change that forced someone out of a council house, whatever the level of rent, into much more expensive private sector accommodation because they had been made homeless? Is that a lifestyle change that the noble Lord would approve of?

[Baroness Hollis of Heigham]

Perhaps I may add to my noble friend’s comments. Would the noble Lord care to compare apples with apples rather than apples with oranges—in other words, not compare the situation of a single man earning the average of £25,000 with the situation of a family who would also be entitled, for example, to child tax credits? If the noble Lord is going to make comparisons, he must in all integrity compare like with like.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Thursday 10th November 2011 Grand Committee

[Baroness Hollis of Heigham]

Perhaps I could reinforce a point. We know from all the research, going beyond Jane Millar right back to the American research, that a lone parent who goes out to work and retains that work, if it is sustainable, benefits from the lift out of poverty. I entirely accept that that is important for the family as well as for role models. However, that is possible if and only if she has childcare that she trusts. Very often that childcare is from a family member, who is often a grandparent. The grandparent can address the problems of the child in the transition period and so on. Yet time and again we are doing nothing to recognise the role that grandparents may play and instead we are going to impose in-work conditionality on them, taking them out of the caring function that they would voluntarily and willingly embrace for everyone’s benefit. We will expect two generations to work and for the child to be somewhere out there.

[Lord McKenzie of Luton]

My Lords, I thought that this started off as a relatively straightforward debate, but I am delighted that it has expanded into a huge philosophical debate which is very important. I thank all noble Lords who have spoken at least in support of the opposition to the clause. I think that some would go quite a bit further but there are important issues around childcare, the time spent with children, the propensity of the mother to want to work and the quality of substitute childcare. In one way or another, each of those has been touched on by noble Lords. I think that it was the noble Baroness, Lady Lister, who expressed the view that she was not totally signed up to the concept of lone parents in work when their children are as young as five, and I acknowledge that.

--- Later in debate ---

[Baroness Hollis of Heigham]

By allocation.

[Lord McKenzie of Luton]

I think there are two issues. First, what is the total pot for the rest of the spending review? I think the noble Lord has confirmed that that is £178 million—fixed or to be uprated by inflation?

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 8th November 2011 Grand Committee

[Lord McKenzie of Luton]

I can support my noble friend: as I understand it, people get the basic JSA rate in the assessment period.

[Baroness Hollis of Heigham]

You might as well be on JSA and be done with it.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his very extensive reply dealing with a whole host of interruptions. That must certainly be a record for this Committee.

[Baroness Hollis of Heigham]

I wonder if my noble friend will allow me to ask him a question? Does he not agree that this shows the undesirability of having one vast grouping all day, which means that we are constantly interrupting the Minister because he is about to move on to something else and we cannot have a discussion on different topics? It would have been perfectly simple to have turned it into something like four groups on the different issues. We could have had a coherent discussion on each of those and then gone on to a wider discussion at the end. This way, we have been to-ing and fro-ing trying to get information. No wonder the Minister has sometimes had to shuffle his papers. It is because of the way that this has been grouped. It is madness.

--- Later in debate ---

[Baroness Hollis of Heigham]

The noble Baroness the Deputy Chairman of Committees is absolutely right, but you do have to lead on the amendment group to have that right.

[Lord McKenzie of Luton]

To satisfy both my noble friends, there is a balance to be struck between making decent progress on the Bill and having coherent discussions. I hope that we have achieved both, or will achieve both, today.

I come back to the Minister’s response, but will comment on what other noble Lords have said. The overall tenor of our very powerful debate this afternoon is clearly to the effect that people are extremely unhappy with these provisions. Comments have ranged from suggesting that we should not have them at all, with Clause 51 not standing part, to a series of detailed amendments. Noble Lords have made a range of extremely pertinent points. The noble Baroness, Lady Meacher, talked about job prospects and asked where the fairness was in this. My noble friend Lady Lister talked about the value of the contributory principle and making sure that it does not get lost, as well as the quality impact assessment and the challenges of denying people an independent source of income.

The noble Baroness, Lady Thomas, talked about the changing of the rules. We do not have an answer yet as to why the Government changed their mind on that, and the Minister may wish to respond further in due course. The noble Baroness, Lady Morgan, raised a range of concerns focused on how the WCA works, and how people access the support group, particularly those who are terminally ill. The noble Lord, Lord Wigley, was one of those noble Lords concerned about whether Clause 51 should exist at all, while the noble Lord, Lord German, talked about the WCA getting it right. I absolutely agree, and we have common cause on that, but we should get it right irrespective of these provisions as it serves a purpose around conditionality and support that should be available to people.

As for what is arbitrary and what is not, I warm to the Minister’s definition—it is what others do, so it is not arbitrary. On that basis, we might almost apply to join the euro, but I do not think that the Minister would suggest that.

Our amendment fundamentally looked at these things being dealt with by way of orders, so you could build an evidence base as to what was appropriate. Yes, we had a two-year minimum, which one would accept was not based on the most robust of evidence. My noble friend Lady Hollis warmed to the thrust of the amendment, as it was one way to ameliorate some of the impacts of the provisions, although it does not deal with them entirely. For example, it does not deal with the independent source of income, which my noble friend Lady Lister was concerned about.

My noble friend Lady Gibson was also concerned about the very existence of Clause 51, and there were some very moving examples from my noble friend Lady Hayter. The noble Lord, Lord Patel, led the charge on the challenge that the assessment period should not be included, that Clause 51 should not be there at all and that there should not be a start to this before the legislation comes into force. There was an interesting reference to Lib Dem conference resolutions, which we might keep in our sights.

However, we should thank the Minister for a very full series of exchanges on a lot of detailed points. Fundamentally, this comes back to costs, which he always quotes at us. I agree that we shall have to study Hansard and get into the figures. He could not resist the jibe about the deficit, although I wish he had because I could have resisted pointing out that we have had an international financial crisis that has affected all major economies.

[Baroness Hollis of Heigham]

Driven by bankers in their former lives.

[Lord McKenzie of Luton]

Driven by bankers—thankfully not accountants. With great respect, I normally find the Minister convincing but he was not convincing on the assessment period, and at the end of the day acknowledged that he had concerns about that. As to the definition of whether the proposal is backdated or not, starting this process up to 12 months before the legislation comes into effect is a very unusual way to proceed.

Part of the reason why we are going down this path is that the Minister said right at the start of his response that we should expect people to avail themselves of the help and support available. He also said that a lifetime on benefits is no longer an option. I would not disagree one iota with that, but no one is arguing for a lifetime on benefits—certainly not for those who can move closer to the labour market and into work. That is not a matter between us, but the noble Lord did not deal with the point about the WCA, around which there is a lot of discussion. We all want it to work as it should do, but is there not, when people are allocated to the WRAG or the support group—certainly the WRAG—a prognosis that goes with them that says how long they are likely to be in that group and, therefore, when they are likely to be fit to join what is currently the JSA group? That is the hope and that is how it works. The Minister has said that in the past and told us that that prognosis is tested before someone is moved off benefit. We therefore have a process by which an individual judgment is made about how long people will be assumed to be in the WRAG, and then ultimately, when that time is up, whether they should remain in the WRAG, go into the support group or join JSA. We have an individualised process, do we not? Why can that not be used?

This is where we fundamentally differ from the Government: if the object is to ensure that people can stay in the WRAG for as long as they need to and have the benefit of the contributory ESA system for as long as is necessary, is that not a fair way of proceeding? On the other hand—I think that this is probably the Government’s position because we need to save money—is the Minister saying, “We do not care how long you need to stay in the WRAG; after a period your contributory benefit will be chopped”? It seems that the position is not related in the Government’s mind to how long people should need support in the WRAG.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Thursday 3rd November 2011 Grand Committee

[Lord McKenzie of Luton]

I very much agree with the noble Lord, Lord Wigley. He is absolutely right about that. I imagine that the Minister will reply that this is too narrow a definition of work but I do not want to anticipate what he wants to say. The more I think about it—this is not a formal Front-Bench view—the more I believe that we ought to be thinking about smoothing the path so that we do not have that cliff-edge, as we are doing away with cliff-edges for in-work and out-of-work benefits. Is there not something that we could do to create more of a continuum, so that these very difficult judgments would not have to be made?

[Baroness Hollis of Heigham]

Dials not dichotomies.

[Lord McKenzie of Luton]

Indeed. Perhaps I may finish off with a question. I think that earlier in our deliberations we touched on what would happen if someone sought to challenge the WCA determination, as well as concerns about the fact that their benefit would be withheld during that process. I do not know whether the Minister has anything further to say on that. I think that there was an exchange in the Commons on which I had a note on a piece of paper, which I have lost, but it seemed to give some credence to press reports that people were being actively discouraged from going to appeal. If that were the case, it would be an absolute disgrace.

I think that there is great merit in the amendment. Like the noble Lord, Lord Wigley, and perhaps some other noble Lords, I would not accept it quite as it says. However, when someone says that a person should be in the WRAG group but they should be capable of coming out of it in three months or six months, there ought to be a test of what they would be capable of at that point and whether that would amount to work under this sort of description. I should be interested in the noble Lord’s comments on that.

Pensions Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 31st October 2011 Lords Chamber

[Baroness Hollis of Heigham]

My Lords, I support my noble friend, particularly on the issue of orphan assets and the situation of deferred pensioners. As the noble Baroness explained, most men will have up to eight job changes and women will have something like 11 job changes in their lifetime, particularly when they are younger. For example, women in modest jobs, such as hairdressing or in the service industry, may at some points be self-employed and at other times be employed by different employers. They could very well end up with a pot in NEST, or its equivalent, of some £20,000 to £25,000, and several small pots of £2,000 or £2,500 from previous employments. Those little pots are too small to be annuitised, but there is no way to transfer them into the larger pot of NEST, and they cannot be trivially commuted because the NEST pot is over the £18,000 ceiling. Could the noble Lord share with the House his thinking about what women, particularly, on very modest earnings with very modest savings but with a possible multiplicity of small pots so that they can neither annuitise nor aggregate not trivially commute, are expected to do? Can the Minister assure us that he is making arrangements so that, at least at the point of retirement, they will be able to bring those miscellaneous small pots with orphan assets into the NEST pot to ensure that they get the best possible outcome in retirement?

[Lord McKenzie of Luton]

My Lords, I thank the Minister for his explanation of this group of amendments, the helpful background he has given us and his kind words. As the Minister said, the amendments focus on the auto-enrolment provisions, and we put on record our support for the Government’s commitment to take these forward. My noble friend Lady Drake asked the question that I was going to ask, about timing. Could the Minister confirm that it is on track? I do not know whether the Minister can update us on issues around self-certification arrangements, and whether any progress has been made, but maybe that is a matter for correspondence outside the debate.

We remain unhappy with some of the changes to the scheme introduced by the Bill, particularly the hike in the earnings threshold, but now, frankly, is the time to make progress. Turning to the specific amendments, there are just a few points. Amendment 3 deals with continuity of scheme membership and achieves this by requiring automatic re-enrolment to take effect from the day after the day on which the jobholder ceases to be an active member of a qualifying scheme. However, the alternative of allowing a period of time for re-enrolment is preserved whereby the Secretary of State can allow for that period. Given the “day after” requirement, when is the alternative approach likely to be invoked? A similar point arises in connection with Amendment 7.

We support the extended protections dealt with by Amendments 4 and 8. My noble friend Lady Drake has given her welcome to Amendment 11, which has my welcome as well. She talked authoritatively about how important this issue is and about the changes happening in the marketplace. That is therefore a particularly important amendment.

We have no problems with Amendment 12, which deals with a test scheme for certain types of defined benefit schemes, or with Amendments 13 and 14, which deal with certification of schemes where the main administration is within the EEA.

A clarification on protections of back payments for jobholders enrolled into workplace personal pension schemes obviously has our support, but perhaps the Minister could provide us with a little more detail about the scope of Amendment 17, which provides a regulation-making power to exempt employers from auto-enrolment duties where a person is a European employer. What assurances do we have that employers would not be able to organise in such a way as to bring themselves within those “European employer” provisions and therefore be outwith auto-enrolment? An assurance on that point would be helpful but, subject to anything arising from these points, we are content and will support these amendments.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Wednesday 26th October 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I shall speak also to Amendments 51CEC and 51CEE in this group, which probe Clauses 17 and 18. These clauses cover claimants who are subject to all work-related requirements. Clause 17 deals with work search requirements, Clause 18 with work availability requirements. Clause 17 sets down actions which the Secretary of State can require of a claimant, and also limitations that can be placed on those actions. Such limitations can include restrictions to work in particular locations. Our amendment requires the limitations to specifically include,

“consideration of the length and expense of the claimant’s travel”.

A similar issue arises in respect of the work availability requirement.

As we discussed, the conditionality applies to those out of work and also to those in work. Our briefing note suggests that regulations will make the default position that claimants should look for work that is within one and a half hours’ travel time of their home. This makes a handy headline in the national press to show how tough the Government are on the growing numbers of unemployed. I understand also that it reflects arrangements under the existing JSA regime, after a period.

For a start, we contend that the limitations should have regard to cost as well as journey times and that this should be reflected in the regulations and spelled out in claimant commitments. One and a half hours each way is about the time of my journey to Westminster—oh, for the ministerial car—at a cost of more than £100 a week. Individuals on low pay with no long-term job security would not necessarily be in a position to get the cheapest tickets even if the best deals were readily discernible. Of course, the cost of travel from home to work has to be met out of taxed earnings. Journey times will not always be regular, especially in rural areas. They are not inevitably aligned with the hours of a job: five minutes extra at work can mean an hour’s wait for the next bus. It is understood that the Government recognise the need for flexibility in these matters but see the non-application of sanctions as the route to providing it. Is this correct and, thinking about it, is it an appropriate way to proceed?

We get an insight into how the Government are dealing with this by looking at the illustrative claimant commitment that has been provided to us. Jack Smith’s job goal is to be secure in work as a plumber, earning at least £8 an hour, full-time, within one and a half hours of his home. It also says that if he does not find this kind of work within eight weeks, his job goal will be reviewed and he may be required to widen it, and presumably widen his travel times as well. There is no recognition that cost could be an issue, but the prospects of widening the job goal are included in this illustrative claimant commitment.

Perhaps we may ask what the Government intend on this. It brings us to a wider point. The Government have argued the case for universal credit in terms of simplicity and demonstrably ensuring that people are better off in work. We recognise that it is difficult to have a system that inevitably has some national parameters, so our amendment is an individual underpin that ensures that no one can be made worse off under these provisions by taking up any particular paid work. Clearly, regulations would have to flesh out some definitions of “worse off”, but the calculation would have to encompass costs as well as income, particularly costs around childcare and caring. I beg to move.

[Baroness Hollis of Heigham]

My Lords, I support my noble friend in particular on Amendment 51CEC, which is about the cost of travel. Too often and too easily we assume a London model, with the Tube, regular bus services and so on; although even there, lone parents may find it difficult to access work in the way that they would like. However, in a county like Norfolk, where many villages have a bus service twice a day, you have a very different story. In Norfolk you have some of the lowest wage rates and some of the highest car ownership rates in the country; but those cars are battered, second-hand jalopies, which are taken by him to get to work, leaving her—usually—with the children and finding it very difficult to do anything except use a bicycle. The result is that it is very difficult for the second earner in a family, or—even more pertinently—a lone parent, to cope with travel to work if there is no job available for her in the local village.

We are expecting a lone parent to work 20 to 25 hours per week. She has two children, one of whom has to be delivered to a childminder and the other to the local school, but she has no transport apart from her feet. Finally, after that, she has somehow to get to a job of her own, and she has to do that again at 3 pm or 3.30 pm. It is almost impossible to find a job between those two hours in the locality, let alone further afield, given that she has to allow for her travel time. I remember one lone parent telling me that she calculated that the school bus picked up the children of the next-door village 40 minutes earlier than it picked up the children of her village; so she used to walk her child about two miles to the next-door village in order to put the child on the school bus, which would act as a form of childminder. That lone parent, with a great deal of ingenuity, managed to get to her job for its 9 am start. She was able to do so because the two villages were within walking distance of each other, but there is a real problem here. I think those of us who live in London or cities have no sense of just how isolated those villages can be.

However, the work requirement will apply to women, both lone parents and second earners, in a situation where there is no public transport, no private transport, a bicycle that you cannot actually take a small child on—let alone two children—except with some degree of difficulty and therefore there is only feet. I suggest to the Minister that it requires enormous juggling skill even to hold down a part-time job. Sometimes the jobcentre that the person has to travel to is not even in the whole of a rural district but may be 20, 30 or 40 miles away. I hope that jobcentre advisers will take all that into account when deciding what is reasonable for that lone parent or woman—and it is usually the woman who is the main child carer—in that situation. I ask the noble Lord to be sensitive to those issues, not because there is any lack of commitment but because of the sheer, simple, practical, logistical difficulties such women may face.

--- Later in debate ---

[Lord McKenzie of Luton]

It is a good move, because it is important. However, I do not think I can let the noble Lord get away with the constant assertion that the current system that they are seeking to replace by universal credit does not reflect the fact that work can pay. Overwhelmingly, is it not the case that it does? It may be that a very complicated calculation has to be gone through in order to prove it. I accept entirely that simplification of how to deal with the in-work, out-work issue is to be welcomed and is something we support. However, I do not think it is right to say that, overwhelmingly, work under the current system does not pay.

I would hang on to the point that if there is to be discretion in the system, then why is there not protection at the individual level so that someone cannot be forced to undertake work that would make them worse off? Is there going to be some reassurance at the individual level? There can be regulations which have appropriate caveats around timing issues; it is not beyond the wit of the Government to do that. In all of this change and uncertainty which still has to be resolved in many areas, would it not be reassuring to individuals that if it was clear that they would be worse off, they could not be forced down a path? That seems entirely reasonable to me.

[Baroness Hollis of Heigham]

I wonder if I could come in on this. I absolutely see the dilemma and I can quite understand why you may want someone to start in on something in the hope and expectation that a year down the line, that entry into low-paid work will have paid off. I put it to the noble Lord—I think he might be horrified by the possible complexity of it, but I have been looking at the additional material and trying to get my head around how disregards work—that the disregard is relatively modest for a single young person. I wonder, following the point made by my noble friend—I can see already that there may be too much downside to this and the arguments against it—whether the Minister could look at the issue of whether in such circumstances you could adjust the disregard to ensure that, even where it does not appear to pay, you could construct it so that at least someone is not worse off through working until the point at which the hoped-for job progression that we all want to see has taken them into the pathway. I would ask the Minister to take this away. It may be that this is too complicated, but making someone worse off is going to be hard to defend, is it not?

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 24th October 2011 Grand Committee

[Lord McKenzie of Luton]

Perhaps I may come back on a point with the Minister to make sure that I understood an answer to an earlier question. In relation to the proposed changes to capital limits for pension credit, did the noble Lord say that that would apply only—I am not sure how it would be worked out—to the housing component or that it will apply to the totality of the package?

[Baroness Hollis of Heigham]

While the Minister is consulting—because he spoke about the additions and so on—it would be very helpful if he could send a letter around giving worked examples of various pensioner couples, or a couple who bestride the pension credit line, indicating what the implications might be, including the cases that my noble friend mentioned. We could then see what it would be. I have no reason, obviously, to doubt the Minister’s word but it would be useful to know whether the discrepancy is £10 or £50.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 4th October 2011 Grand Committee

[Lord McKenzie of Luton]

On the impact of the taper rates, does the Minister agree that, if you have council tax benefit or its replacement outside the system, you simply cannot be sure what the effect of the withdrawal and taper rates will be? Can you include that benefit?

[Baroness Hollis of Heigham]

I reinforce my noble friend’s point. As every council tax taper will differ from district to district, and there are some 300 to 400 of them, it will be impossible for anyone to predict who gets what.

Pensions Bill [HL]

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Thursday 3rd March 2011 Grand Committee

[Baroness Hollis of Heigham]

My Lords, I have high hopes for the thrust behind these amendments, given that all sides of the Committee today share a similar take on the problem. I know that the Minister shares this view and I hope that he can give us some positive indications of ways forward. I am particularly happy to follow the noble Lords, Lord Stoneham and Lord Boswell, on this.

We discussed earlier the question of the number of job changes and we know that, as I said, the median number of job changes is around 11—25 to 26 per cent will have between 11 and 15 job changes and others will have even more than that. That means, depending on the rules of individual schemes and how long people are required to work before they can join a scheme—it could be two years or up to two years, or your contributions could be returned to you and you might decide to hold them in a pot—that it is likely that low-paid employees and some not necessarily low-paid employees, but people who have moved a lot in their first five, 10 or 15 years of earning, will build up some pension entitlement in five of those jobs. At, say, £11,000—half women’s average earnings—with a fairly conventional DC scheme, which I know applies in a lot of the charitable or voluntary world, a five plus five would mean that such a woman would have something between £1,000 and £1,200 a year in her pot for each year in her job. That could mean that she had five or six pots of anywhere between £1,000 and £3,000, depending on the rules of the scheme. The question then is what happens to those pots.

I am cross with myself because I missed a trick and I should have put it down as an amendment, because one way to approach this, obviously, is to follow in a slightly larger form the thrust of the argument of the noble Lord, Lord Boswell, which is to raise the trivial commutation limit, which at the moment is £18,000— 1 per cent of the lifetime savings allowance. A trivial commutation limit of, say, £25,000 or £30,000 would pick up quite a lot of these very small pots without having to hassle about whether they were at or above a certain level. Of course, some providers—some banks and so on—will allow you to bring together five or six small pots and consolidate them, because they are then worth handling.

In addition, the Government propose in due course to remove annuitisation at the age of 75. However, the Treasury—bless it—has insisted on a quite absurd de minimis figure of £20,000 income. That is quite unnecessary; it merely needs to be about £8,000. Of course, if the new state pension comes into play at £140, you will not need any de minimis for failing to annuitise, because it will float you off all public funds, apart from housing benefit. Therefore, with, I hope, the new state pension of £140, not only would NEST be safe but so would all other small savings schemes. You would not then need things such as trivial commutation rules because the choice would be left entirely to the individual. We would be kicking out a lot of silly mess and tangles that have been imposed by the Treasury, which is more concerned to avoid £1 being lost through manipulation of the tax system than it is to encourage £10 being gathered into the savings system. I consider that to be really rather sad. I am sorry that I missed that point, but we will come back to the trivial commutation issue later if it seems worth doing so.

If the person in question cannot trivially commute and she is handling pots of, say, £3,000 each, she will be getting somewhere between £1 and £4 a week from each of those small pots. The Pensions Advisory Service—I should declare an interest as a board member of TPAS—has been very concerned about what noble Lords have called “orphan assets”. At the moment, a poor woman can use these small pots altogether, but she may end up with, say, £20,000 or £25,000 in her NEST pot, have three, four or five other pots of £3,000, £2,000 or £1,000 and lose all those small pots, which are above the trivial commutation figure, are too small to be annuitised and cannot be bundled together. She would effectively lose a third of her lifetime savings, even though she is on a very low income. No one would regard that as decent. Therefore, I think that she should be able to bundle or consolidate her various pots. For this purpose, I am talking about NEST but I am perfectly happy for it to be any willing provider. The important thing is that she can access all her savings.

What would be the advantage of my proposal? It is very simple. First, above all, the person in question retains the full value of all her savings, rather than possibly losing some of them. Secondly, it represents simplicity for her in retirement, as she could be handling just one flow of pension income rather than multiple flows of small pots. Thirdly, there is a sort of best-value option going on here—a version of the open-market option. In this Bill we have not yet talked about disinvestment strategies, but I suspect that she would get a better return on disinvestment were she to purchase an annuity if all these small pots were bundled together and consolidated into one scheme, rather than if she were trying to play around with various small pots to avoid losing them.

In my amendment, I stipulate that the transfer should be able to take place the year before retirement simply to recognise the concerns—they may be exaggerated but they certainly exist—among some pension funds that existing scheme providers will not want a wholesale flood of money from their schemes under management going earlier into NEST, possibly because NEST will appear so much more attractive in terms of the reduced fees that will be charged and therefore the amount that will be available for accumulation. I do not mind that, but they might, and therefore it may be a price that has to be paid.

Given the support around the Committee today, given that I know that the Minister is sympathetic to the issue that has been raised and given that we have produced two or three different ways in which we can approach this problem, I hope that we will get a sympathetic hearing from the Minister.

[Lord McKenzie of Luton]

My Lords, given the hour, I rise briefly to say that we have put our names to the amendment in the name of my noble friend Lady Hollis because we support the thrust of it. We certainly also support the thrust of the amendment in the name of the noble Lord, Lord Stoneham, as amended by that in the name of the noble Lord, Lord Boswell. This issue seems to have been around for a long time. The Minister may well push that back at us and ask why we did not do something about it, and that would be a good question.

If I have any caveat at all in relation to NEST, it is one that the Minister himself may have. That there should be no transfers into NEST was part of the consensus, although the consensus has been a little disturbed by the Bill, so that does not preclude this being opened up. It changes systems and the costs as well, but those are second-order issues in relation to the substantive matter that has been raised. The time is now right to deal with that.

Public Bodies Bill [HL]

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Tuesday 21st December 2010 Lords Chamber

[Lord McKenzie of Luton]

My Lords, I am most grateful to the Minister for that very full reply. I have no intention of pressing this amendment, as I tabled it in order to seek information. I am comforted by what he said about the progress and planned progress of the child maintenance system and that it is still the objective to try to introduce the new basis of calculation next year and the systems that will support that. I understand that it is intended that all the CSA cases will eventually migrate to the new system by 2014.

However, I am still a little mystified by this issue of ministerial accountability, as there is accountability to Parliament through the Secretary of State. I am a little curious as to what difference the measure would make for Ministers in practice, as for most, if not all, NDPBs there is a way for Ministers to engage and influence. A framework agreement defines not only the financing of NDPBs but their governance arrangements and their relationship with Ministers, so the argument that the Government are switching just to achieve that purpose is a little thin.

I wish to make it clear that I certainly do not contend that improvements came about only once CMEC came into being. Improvements were made under the operational improvement plan before CMEC came into being. I certainly assert—I think that the Minister agreed with this—that CMEC has carried that on and has made continuing progress, although matters still remain to be resolved. I am comforted by the fact that this will not be done in a way that would disrupt the progress that has been made and disrupt the introduction of the new systems.

[Baroness Hollis of Heigham]

Before my noble friend decides what to do with his amendment, as he may be drawing his remarks to a close, I wish to ask the Minister a question through him, so to speak. Do I understand that what the Minister is doing is maintaining the policy drive of CMEC while reinventing the structure of the old CSA? As he may know from his briefing, that structure was that there was a chief executive, who reported quarterly or at six-month intervals to the Minister, supported by an advisory board and shadowed, so to speak, by a policy directorate within the department—a grade 5 and above that a grade 3—who would, so to speak, act as the interface between the policy development and the operational work done by the CSA, headed by its chief executive. Is that the proposed structure that the Minister seeks to reinvent or has he a different version in mind? It would be helpful to know how he thinks the organisation will function at the top level and what independent advice—research advice and expertise—he can expect to draw on, which obviously CMEC has taken further and developed in a far more effective way than under the old CSA.

Business of the House

Debate between Lord McKenzie of Luton and Baroness Hollis of Heigham

Monday 29th November 2010 Lords Chamber

[Lord McKenzie of Luton]

My Lords, the purpose of the amendment is to enable your Lordships to have a proper Committee stage of the Savings Accounts and Health in Pregnancy Grant Bill rather than just the usual, truncated process with, in effect, only a Second Reading, as proposed by the noble Lord, Lord Strathclyde. Indeed, I thought that the latter part of the noble Lord’s contribution was, frankly, unworthy. I had hoped that he would deal with the issue on the basis of the argument advanced. This is not a wheeze; it is not a ploy; it is not mischief making or opportunism. The amendment would require a timetable in which consideration of the Bill was concluded within one month of its introduction into your Lordships’ House, which in effect means by the time that the Commons rises for Christmas.

The Bill has been certified as a money Bill by the Speaker of the House of Commons. The amendment seeks not to challenge that certification but to deal with the consequences of the Bill’s being so designated. The noble Lord, Lord Strathclyde, said that we have not sought to do so in similar debates on recent Bills that have gone through your Lordships’ House. Indeed we have not—as he outlined, I participated in such a debate just last week—but this is a different Bill. We are trying to achieve a Committee stage only for the Bill before us.

The noble Lord rightly cited the Parliament Act, but the Companion says:

“If a money bill, which has been passed by the Commons and sent up to the Lords at least one month before the end of a session, is not passed by the Lords without amendment within a month after it is sent to them, the bill shall, unless the Commons direct to the contrary, be presented for Royal Assent without the consent of the Lords. This does not debar the Lords from amending such bills provided they are passed within the month, but the Commons are not obliged to consider the amendments”.

Why on earth the noble Lord seeks to pre-empt what we might do—whether the Bill might be amended if we had a Committee stage, and indeed what the Commons’ reaction to that might be—is a little strange. We do not see the Committee process as having no point.

The Bill will do three things: it will stop any further government contributions to child trust funds; it will end the savings gateway; and it will abolish the health in pregnancy grant. It was somewhat surprising to us that a Bill of this nature was designated as a money Bill, particularly given that the setting up of each of these arrangements was by way of separate primary legislation that included all the usual stages in your Lordships’ House. It was also a surprise to our colleagues in another place. A reading of their proceedings will illustrate their clear belief that there would be the opportunity to continue to advance the argument for some changes to the Bill at this end and, in so far as I can tell, the Minister, Mr Hoban, did not offer a contrary view.

The Bill’s being certified as a money Bill denies this House the full opportunity to bring its knowledge and experience to bear on major matters of social policy concerning poverty, family and child welfare and the health of pregnant women. I do not propose to speak in detail to the range of issues that might be raised in Committee, but I will say that that particularly denies the opportunity to develop and amend how the Bill impacts on looked-after children. For example, the position of looked-after children has been the subject of ongoing discussion, initiated by Paul Goggins MP, about the hiatus between the abolition of child trust funds and the promised introduction of junior ISAs. That is very much work in progress. The discussion, involving the Minister, recognised that looked-after children have only the state or their corporate parent to make the equivalent of parental contributions to these savings vehicles.

As we know, it is often the case that issues emerge during the consideration of legislation in another place. Amendments may be proposed, arguments advanced and rebuffed and then reconsidered and reformulated for consideration here. Knowing that there can be a second bite at the cherry—a chance for some reflection, challenge and consensus building—has proved an important element in improving legislation. We know that some stakeholders are particularly frustrated at knowing late in the day that the House of Commons was possibly their only chance to improve legislation. Noble Lords may have heard from Action for Children, Barnardo’s, the Zacchaeus 2000 Trust, Gingerbread and the Family and Parenting Institute. We are seeking the opportunity for the Bill to have a proper Committee stage so that those matters that some consider to be unfinished business can be properly examined. The rules allow it; we know it must be done expeditiously in order not to fall foul of the one-month rule; and we would co-operate in the timely scheduling of the Bill’s stages.

This matter raises a broader issue. As I have made clear, we do not seek to challenge today a certification of the Speaker, but we need to understand it and its possible future ramifications for our deliberations. We understand that this is a money Bill because, although the setting up of child trust funds, the savings gateway and the health in pregnancy grant were matters of policy, a parliamentary measure that only withdraws funding for them is a money Bill, notwithstanding the fact that removing funding involves prioritisation—and therefore policy changes—and will bring to an end these particular policy mechanisms. We fear that such designation paves the way for the Government to rely on the cloak of deficit reduction in a way that would deny your Lordships the opportunity fully to scrutinise swathes of policy, from the withdrawal of education maintenance allowance to changes to the benefits system. That would deny this House what it does best. This is a matter to reflect on both here and in another place.

For today, we simply ask to have the opportunity to have a proper Committee stage on a Bill that has significant social policy ramifications. If we cannot achieve even that, what hope is there for the future? Let me be clear that the amendment seeks not to challenge the Speaker’s decision—the amendment accepts the decision—but to apply to the full, and without expanding, the restricted opportunities available to this House when dealing with a money Bill. The amendment does not seek to frustrate the timetable of the Government. If we do not pass this Bill by Christmas Recess, the Bill will go for Royal Assent anyway. The amendment would not undermine the thrust of the Government’s deficit reduction plan, whatever our disagreement with that plan. This is about us—all parties and none—having a chance to input into important policy changes that will affect the lives of many young people and families. That is, after all, why we are here. I beg to move.

[Baroness Hollis of Heigham]

My Lords, I support my noble friend. I do not want to go over the ground that he has laid out on why, on this particular measure, he is not challenging the Speaker’s ruling that this is a money Bill, even though I find it very difficult to understand why a policy established by primary legislation requiring expenditure could then be revoked under the description of a money Bill. I say this because almost every piece of social security legislation could in future fall under the remit of being labelled a money Bill and therefore not available for debate or scrutiny in this House.

Let me give two examples, in which I suggest that this House has more experience and more to offer on this debate than most other agendas, and probably more than the other place. We know, for example, that there is a question over whether the mobility component for people in long-term residential care will be removed. In previous debates my noble friend Lady Wilkins and the noble Baroness, Lady Campbell, spoke passionately about that. Such a move would remove money resulting from a policy established in primary legislation back in 1992, by the then Government, which we all supported. Under this precedent, that could be labelled a money Bill, and notwithstanding the expertise of this House in disability matters, about which this House feels very strongly indeed, we would not be permitted to debate it. It not just about this House and about Parliament—hundreds of thousands of disabled people would be affected as a result.

In another example, a week or two ago I led a debate on housing. There were half a dozen of us on these Benches, half a dozen from the Lib Dem Benches, who made very powerful speeches, half a dozen from the Cross Benches, and one person, the noble Lord, Lord Brooke, from the Conservative Benches. We analysed forensically the issues associated with changes in housing, and I welcome the fact that the Government appear to be listening to some of those concerns. In future, if this is a precedent, nearly all those issues that we debated would be, and could be, classified as a part of a money Bill and not available for this House to discuss, explore, revise and, if necessary, to ask the other place to think again about.

This is extraordinarily dangerous. There is hardly any piece of government policy that does not involve expenditure. This means that, in theory, almost every piece of policy could be regarded as a money Bill and this House would be denied scrutiny of it. I have given just two examples from social security but it could affect a lot of local government funding as well. I hope that your Lordships will today accept my noble friend’s amendment; and that perhaps consultations could take place between the two Houses to make sure that the other House realises the seriousness of the precedent that could be set, and that we would be walking away from a major part of our responsibility to the public we seek to serve.