Welfare Cap
Debate between Shailesh Vara and Emily Thornberry(8 years, 11 months ago)
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Mr Vara
I will not give way to the hon. Gentleman. I have given him plenty of opportunity to apologise, and he is not doing what the nation wants. If he is not going to do that, he needs to sit quietly and contemplate what policies his party is going to produce. On policies, it is worth noting that he, along with the hon. Member for Islington South and Finsbury (Emily Thornberry), actually supported the measure that introduced this cap, as did several other welfare Cabinet Ministers when Labour was in government, so it is ironic that they now seek to make cheap political points. As I say, by 2019-20 we will have achieved our £12 billion welfare savings. That is what we pledged at the election, that is what the public gave us a mandate for and that is exactly what we will deliver. We can do this because of the permanent savings that we have already made and the long-term reforms that we are making.
The simple fact is that Labour completely overspent on welfare during its 13 years in power. Under Labour, welfare spending went up by almost 60% and the benefits system cost every household an extra £3,000 a year. Spending on tax credits increased by 330%. That is £24 billion—
Emily Thornberry (Islington South and Finsbury) (Lab)
You are still spending more than us.
Oral Answers to Questions
Debate between Shailesh Vara and Emily Thornberry(8 years, 11 months ago)
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Mr Vara
Both terms are applicable. May I just say that we should not get bogged down in the terminology? The important thing is to make sure that people actually have support to get them back to work. As we just heard in the quote from my hon. Friend the Member for Torbay (Kevin Foster), our long-term plan is working. We want to make sure that as many people as possible are in work so that they do not have to resort to food banks.
Emily Thornberry (Islington South and Finsbury) (Lab)
Is the Minister surprised that the Secretary of State has never bothered to visit a food bank? Presumably, people in his Department have spoken to people in food banks. The message we get loud and clear from people in food banks is that the most important thing the Department can do is to fix its broken system of sanctions and stop benefit delays.
Mr Vara
It is always helpful if, when Front Benchers say things at the Dispatch Box, they are accurate. My right hon. Friend the Secretary of State has visited food banks. As far as sanctions are concerned, may I just tell the hon. Lady that the Oakley review said that 71% of people found sanctions helpful in encouraging them to find jobs?
Welfare Reform and Work Bill (Ninth sitting)
Debate between Shailesh Vara and Emily Thornberry(9 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Mr Shailesh Vara)
It is a pleasure, Mr Owen, to serve under your chairmanship. First, may I clarify one point concerning the Council of Mortgage Lenders? The other day, I spoke in good faith and on the basis of the many regular meetings that we have with the CML during which the issue has not been raised at all. Indeed, Paul Smee, its director general, did not raise the issue when he was in a meeting with my ministerial colleague, the noble Lord Freud, when they met in early September. Although the CML has definitely said that it believes that the 39-week waiting period will drive repossessions, they are unable to quantify numbers of repossessions. We will continue to work with the CML to assess any such impact in terms of repossessions but we do not believe that these will be significant.
Mr Vara
I have said all I am going to say on that. I would like to make progress as there is a lot to be said this morning. I would rather not get bogged down on issues on which I have made proper statement.
Claimants receiving income-related benefits may claim help towards the cost of their mortgage interest payments. Other than those receiving state pension credit, claimants have to serve a waiting period before the entitlement to help with mortgage interest begins. During the period of 1997 to 2009—the announcement was made in 2008 but the actual impact was in 2009—the waiting period for the majority of working age claimants was 39 weeks. In January 2009, the then Government introduced temporary arrangements reducing the period to 13 weeks, specifically to deal with the economic circumstances and to give additional protection to those who lost their jobs during the recession. At the same time, the maximum value of the mortgage for which support was available—the capital limit—was doubled to £200,000.
It was announced in the summer Budget that, from April 2016, the waiting period will return to the pre-recession length of 39 weeks, but it is important to remember and to note that the higher capital limit of £200,000 will be maintained. Given that the 39-week period was perfectly satisfactory from 1997 to 2009, and that the reduction was introduced purely on a temporary basis to deal with the then economic circumstances, it is right and proper that we should now revert to the former system.
We are all aware that the economy is on the rise and of the huge benefit that the employment market has had. We have record employment levels. I pay tribute to my right hon. Friend the Minister for Employment for her contribution to ensuring the record level of employment that we have at the moment.
The amendment would remove the current broad powers in the Bill that allow the waiting period for SMI to be set out in regulations, replacing them with a narrowly defined 13-week waiting period.
Emily Thornberry
I beg to move amendment 134, in clause 16, page 15, line 34, leave out subsection (11) and insert—
‘(11) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.’
To require that regulations under this section must be subject to the affirmative resolution procedure.
The proposed extension of the waiting period is, in my view, just the tip of the iceberg of what we do not know about how the switch from benefit to loan will work in practice. As is often the case with this Government, the Bill contains little detail. The operation of the proposed scheme will instead be set out in regulations, which the Government intend to slip through on the nod, hoping that no one will be paying any attention. Amendment 134 would require that the regulations on the details of the proposed loan scheme under the clause be subject to the affirmative procedure. It is all about democracy.
As drafted, the Bill will allow the Government to implement significant changes to the scheme, including such important details as the loan provider, the rate of interest payable on the loan itself, the terms of repayment and any additional charges and fees, without the need to seek parliamentary approval. That is pretty extraordinary. Amendment 134 would require the regulations to be subject to a debate and a vote in both Houses, so that we may scrutinise the proposals properly and understand what we are being asked to agree to.
I have touched on some of the important details that have been left out of the Bill, some of which I wish to explore further to give a sense of the scale of the issue. The first and most immediately obvious question is, who will provide the loans? In 2011 the Department for Work and Pensions, when it called for evidence, indicated that it would be responsible for administering the scheme, but things seem to have changed. The Bill lists a number of potential providers, including deposit-taking institutions, insurers and local authorities, of which the DWP is not one. So we are left to guess.
The Bill also indicates that administrative fees and interest charges will be payable on loans, but it does not say what will be chargeable or how the rates of interest might be set. It seems ironic, and not at all fair, that when the Government are proposing that loans for mortgage interest should be subject to repayment with interest we do not have the detail in the Bill, so we are not in a position to make an informed judgment.
Another unanswered question is to do with the interaction between the proposed scheme and universal credit. If people continue to receive support for housing costs as part of their monthly universal credit payment, the Government are creating a recipe for confusion by telling claimants that part of their benefit has become an interest-bearing loan that they must at some point repay. We seem to be going in all sorts of different directions at once, and that would seem to undermine one of the core arguments that Ministers put forward in favour of universal credit, which is—I do not know if you remember this, Mr Owen, but we hear it all the time—that it is supposed to be simple. Well, that is not simple.
The Bill is silent on a number of other issues, many of them more complex, that will inevitably arise from the transition period. There are, for example, many features of support for mortgage interest that might make sense for a means-tested benefit, but which seem less appropriate when imposed as a condition for receipt of a loan. Time-limiting claims for those on jobseeker’s allowance is an obvious example. Putting a ceiling on the amount of eligible capital for which SMI is payable is another. The Government do not make it clear whether either of those features will be carried over to the loans that will replace SMI, nor have they made it clear what additional costs the loans may be able to cover.
The Minister recently tabled a number of amendments—we have just heard one—that will change the wording of the Bill to specify that loans will be able to cover “owner-occupier payments” and not only mortgage interest. It is as if a light has just gone on above the Minister’s head and he realises that more ought to be covered. It seems to reflect the Government’s realisation that the scheme has the scope to cover additional costs, such as essential repairs and service charges. For example, some of my pensioners in Bunhill might find themselves in difficulty and needing to go for SMI, but they also have huge service charges for the lifts and cleaning—many of them complain that the service charge is one of the biggest costs that they have—so the Government, at the last minute, have realised that they have to do something about that as well.
If that is the case, the recognition came late in the day, and it indicates that the full implications of the proposal are still not fully thought through. Here we are, in Committee, discussing such an important change—a change of principle, whereby we are asking people to take out a loan in order to pay off the interest on a loan—and the Government have simply not thought it through. We are talking about some of the most vulnerable people, and frankly, leaving aside the fact that the principle is wrong and the measure will not save a great deal of money, to add insult to injury, the Government have not even thought it out.
Finally, the Bill leaves out the crucial issue of the rate at which the loans will be payable. If the payments are too low to cover the full amount of interest owed—for example, if the Government, as they have suggested, use the Bank of England’s standard interest rate as a benchmark—the system will not serve its purpose, and it will increase the incentive for people to abandon their mortgages altogether. I do not know whether the Government have thought of that.
Whatever rate the Government settle on, that important detail deserves more in-depth discussion than the Committee has time for. It simply is not good governance for Ministers to pass legislation that allows them to make changes of such consequence with so little accountability. I hope, therefore, that Government Members will agree that Ministers need to be more forthcoming about their intentions on these issues before the Bill moves forward.
Mr Vara
The amendment would require the regulations made under clause 16 to be subject to the affirmative resolution procedure and to be approved by each House of Parliament. That is not necessary, since the fundamental principles we wish to achieve will have been clearly laid out during the Bill’s passage and debated in Parliament.
We had a call for evidence between December 2011 and February 2012. That is a number of years ago, and there has been debate since then. We have had oral evidence. It was between December 2011 and February 2012 that the idea of providing support for mortgage interest payments through a loan was first introduced, and the majority of responses were positive.
Emily Thornberry
I appreciate that the Minister is saying that he will be able to push the principle through using his majority, but the point I am trying to make is that the details make no sense, and the Government have not thought them through. Given that we have no indication of how the system will work, we need an opportunity to scrutinise it further in a Delegated Legislation Committee so that, frankly, we can give the Government a hand, because they are making a pig’s ear of this. The Minister talked about the call for evidence in 2011 and 2012, but the can was kicked down the road for many years, until after the Conservative party won the election, at which point the Government started pushing these things through without thinking through the consequences.
Mr Vara
There is a fundamental distinction between pushing forward an ideology, while ignoring everything and anything that may be put forward, no matter how sensible it is, and deciding to consider the evidence before the Committee and recognise the reality of Government—that it is important to have flexibility and regulations. That is why Departments across Whitehall have regulations: to be able to deal with the minutiae. It is also important to have that facility so that we can deal with things quickly and take a flexible attitude, rather than go through the cumbersome and time-consuming procedure of having everything approved in Parliament. That is simply not the way the real world works; it was not the way the Labour Government operated, it certainly was not the way the coalition Government operated, and it is certainly not the case now.
Emily Thornberry
I beg to move amendment 135, in clause 17, page 16, line 13, at end insert—
‘(4) The regulations must make provision for persons applying for a loan to have access to financial advice, which must be provided free of charge by an organisation independent of the qualifying lender.’
To require that those applying for a loan must have access to free and impartial financial advice which is independent of the lender to whom the application is made.
The amendment stands for itself; it is not complicated. It requires those applying for a loan to have access to free and impartial financial advice independent of the lender to whom the application is made. Given that the Department will not be dealing with the loans and will be asking various other organisations to be responsible for such loans, the amendment is consistent with the principle of having free and independent advice. When the coalition Government decided that people should be given access to their pension pots to buy a Lamborghini, they agreed that there should be independent advice before people made such important decisions, so we ask for poor pensioners and disabled people to be given independent advice before they are asked to take out loans.
Mr Vara
Clause 17 allows the Secretary of State to set out in regulations further details regarding the support for mortgage interest loan scheme, including the Secretary of State’s ability to contract out certain functions of the scheme to a third party, such as for the provision of financial advice. To be clear, the Department will administer and provide loans, but the advice and recovery will be provided by a third party, which will be chosen in an open and transparent way so that everyone can see that an independent arm’s length body is providing that advice.
Emily Thornberry
That is very interesting and helpful. Will the advice be free?
Mr Vara
That is a matter to be decided.
The hon. Lady’s amendment seeks to set parameters for the advice: who will provide it, and what it will entail. It is the Government’s intention that the regulations should set out the details of that advice, including the type of provider that we will appoint. We also intend for the advice provided to be broad, including available options other than taking out a loan, the implications of taking out a loan and whether people need to speak to potential beneficiaries of their will who might be affected by their decision, so that they can make a fully informed decision about whether to take out a loan. The amendment is restrictive, as it would prevent the Government from providing the broad advice necessary to claimants when they are considering taking out a loan. I hope that the hon. Lady will withdraw it.
Emily Thornberry
I will, but we will want to hear before Report whether the advice will be free. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Emily Thornberry
Amendment 136 asks for a 12-month grace period. The Government say that there will be a transitional period, and we think it right for existing claimants to be given 12 months in which to work out the implications of the new necessity of taking out a loan in order to pay off another loan. They need a certain period to get their house in order—to coin a phrase—and to get themselves proper advice. We ask for a 12-month grace period before they have to take out a loan.
Mr Vara
The hon. Lady’s amendment would allow existing claimants who are receiving help with the cost of their mortgage interest payments as a benefit to continue to receive that help for at least a year after the new loan scheme has been introduced by regulations. That would effectively allow existing claimants a grace period before they are required to decide whether to continue receiving support for their mortgage interest as a loan. Given that many such claimants have received help with their mortgage as a benefit for some time—in many cases, decades—it would simply be unfair to continue to provide them with help in the form of a benefit while new claimants are offered loans for the same purpose.
Emily Thornberry
Can the Minister point us to the evidence showing that some people have been receiving assistance for decades?
Mr Vara
I do not have that evidence to hand, but I am quite sure, given that the Department is responsible for paying the benefit, that it is there, and therefore that the measure is based on evidence. We all know people who have been on benefits for many years, in many cases for very good reasons, but it is a fact that many people out there have been on benefits for many years, so we must accept the reality of the situation.
Mr Vara
I will happily answer that question. There has been contact at official level, and the engagement will certainly continue with the Administration in Scotland.
Government amendment 129 is a straightforward technical amendment, which will ensure that new clause 13 has the same extent as clauses 16 and 17 and apply to England, Wales and Scotland. I hope the hon. Member for Islington South and Finsbury will withdraw the amendment and accept Government new clause 13 and Government amendment 129.
Emily Thornberry
I have nothing to add, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: 122, in clause 17, page 16, line 16, leave out “pay mortgage interest” and insert “make owner-occupier payments”.
Amendment 123, in clause 17, page 16, line 19, leave out “pay mortgage interest” and insert “make owner-occupier payments”.
Amendment 124, in clause 17, page 16, line 28, leave out
“in respect of the mortgage interest”
and insert
“in relation to which the amount is paid”.
Amendment 125, in clause 17, page 16, line 39, leave out from “is” to end of line 40 and insert
“liable to make owner-occupier payments under more than one agreement to make such payments.”
Amendment 126, in clause 17, page 16, line 46, leave out subsection (7).
Amendment 127, in clause 17, page 17, leave out lines 29 to 32.—(Guy Opperman.)
This amendment removes definitions that are no longer needed for clause 17.
Question put, That the clause, as amended, stand part of the Bill.
Mr Vara
We have heard a lengthy and passionate speech, the bottom line of which is, “Can we make an exception for pensioners?” As I have said before, we are talking about pensioners who have an asset, probably the biggest and most valuable asset that they have—the biggest asset that most people have is their home. That asset will appreciate in value. There is an element of fairness involved in the measure, as well as ensuring that we make some savings, and it will save £250 million.
I come back to the fundamental point: we are talking about individuals who have an asset that is being subsidised by the taxpayer. Many of those taxpayers do not have such an asset of their own. It is important to recognise that the proposed system is almost the same as the existing system, save that the benefit is converted into a loan that is payable on sale of the valuable asset or, to the extent that there is nothing left in the equity, the Government will write off the balance. All the care, attention and other benefits that pensioners receive will continue.
Emily Thornberry
I hear what the Minister is saying, but his difficulty is that it flies in the face of what the Government are doing for people who are being helped to buy their housing association homes, a measure that will cost £11.6 billion. People—taxpayers—who do not own their own homes are contributing to the £11.6 billion pot that will help housing association tenants to buy. SMI is chickenfeed compared with the amount of money that the Government are using to subsidise that.
Mr Vara
If £250 million is chickenfeed, to quote what the hon. Lady said, I am afraid that people reading our proceedings in Hansard will take a deep breath and say, “This is what those people think of £0.25 billion.” The consequence of several such chickenfeed decisions is the mess that the country is in now.
Mr Vara
It has been considered. There will be a minimal overlap between the DWP loans and the Department of Health deferred payment arrangements for social care. Those people expected to avail themselves of a deferred social care payment are likely to be mortgage-free or to have income levels above the benefit threshold and so would not qualify for SMI loans. [Interruption.] We will have to agree to disagree. Simply, the bottom line is that the measure is about fairness—fairness for taxpayers. We have to recognise that pensioners have an asset that appreciates, although they are not expected to make any repayment until that asset is sold.
Emily Thornberry
The answers we have heard are profoundly disappointing, and they will be disappointing to the most vulnerable pensioners throughout the country who have paid into a system and who deserve better from the Government.
Mr Vara
My answers to those questions will come subsequently. There are other issues at hand and I am more than happy to address the matter raised by the hon. Member for Bradford West. That comes up in another section and I will happily deal with it then.
Amendments 147 and 148 clarify that clause 19(7), which allows an alternative relevant year, applies only to private registered providers. Unlike local authorities, whose budgeting and rent reviews are carried out on a traditional financial year cycle, starting 1 April, the housing association sector practice regarding rent review dates varies. Clause 19(7) therefore enables the use of a different relevant year, where the provider’s rent review date for the greater number of its tenancies is not 1 April. The amendments ensure that that subsection applies only to private registered providers, as local authorities do not need that flexibility.
Amendments 150 to 152 on private registered providers, and amendments 157 to 159 on local authorities, provide some important flexibility in the levels of permissible rent once an exemption has been granted by direction. They modify the provision in clause 21 for limited exemptions from the rent reduction requirement, which means that providers will have the flexibility to make a greater reduction in the rent than that set out in the direction.
Amendment l53, which is for private registered providers, and amendment 160, which is for local authorities, deal with circumstances where a registered provider may need to be able to increase rents but it is not appropriate to completely exempt the provider. They allow the regulator and the Secretary of State to issue a direction setting a maximum threshold up to which a provider can increase rents. The amendments give the regulator and the Secretary of State the tools they need to support registered providers in difficult circumstances while protecting hard-working tenants from excessive increases.
Welfare Reform and Work Bill (Tenth sitting)
Debate between Shailesh Vara and Emily Thornberry(9 years, 1 month ago)
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Mr Vara
Let us talk about the private rented sector. In the years 2004 to 2014, the rent increase in the private rented sector was 23%, according to the Office for National Statistics. In the same period, the social housing rent increased by 63%. If that does not show that there is a difference, I do not know what does.
Emily Thornberry
I would be happy to take the Minister around Islington, where, I can assure him, the social rent levels are very much lower than private rent levels and the private rents are going up enormously. In my borough, we have great problems finding accommodation for people in the private rented sector if we cannot provide sufficient housing for them in the social rented sector, which we cannot. Our concern is that everything that the Government are currently doing is undermining the social rented sector and will, in the end, lead to a bigger benefit bill.
Mr Vara
I am grateful to the hon. Lady for her contribution, but I suggest she takes up the issue with the Office for National Statistics, rather than with me, as it is a highly regarded independent body. I am minded to say that the vast majority of the public will agree with the ONS, rather than with her.
Mr Vara
I will not for the moment.
The Government remain committed to the delivery of 275,000 homes over the course of this Parliament. I remind Opposition Members that we have a track record of delivery—in the past five years we delivered more affordable homes than the Labour party did in 13 years of Government.
Welfare Reform and Work Bill (Eighth sitting)
Debate between Shailesh Vara and Emily Thornberry(9 years, 1 month ago)
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Mr Vara
It is a pleasure to serve under your chairmanship, Mr Streeter. For the sake of good order, may I refer colleagues to the Register of Members’ Financial Interests to the extent that anything therein applies and ought to be declared?
I welcome the new members to the Committee and I wish well those who served on it before, particularly the right hon. Member for East Ham, who spoke eloquently in his contributions here and will be sorely missed on the Front Bench of the Labour party.
The clauses will change the way in which claimants with outstanding mortgages receive help from income-related benefits. I will be absolutely clear at the outset. The Government remain committed to helping owner-occupiers in times of need to avoid the risk of repossession. However, we believe it is wrong that taxpayers who are unable to afford to buy a home of their own are subsidising claimants who own their own homes. Taxpayers support a significant asset from which many homeowners are able to profit. It is our intention that help towards mortgage interest payments should be taken in the form of an interest-bearing loan that will be recovered from available equity once the property is sold. In that way, we will be able to provide a better deal for the taxpayer while ensuring that claimants receive the protection from repossession that they currently enjoy.
Moreover, the amendments will ensure that we do not exclude claimants who have non-standard financing arrangements from the offer of a loan, for example where a person has entered into what are referred to as alternative financial arrangements for purchasing their property rather than a traditional mortgage.
Emily Thornberry
I am listening with care to the Minister because the change is radical compared with how things were done until now. I want to be clear about this. He has talked about the importance of protection from repossession, but can he confirm that the clause extends the period during which there is no assistance available when someone becomes unemployed from 13 to 39 weeks? Would it not make it more likely that homes will be repossessed if mortgage companies get no money at all for 39 weeks?
Mr Vara
I am grateful to the hon. Lady for giving me the opportunity to make that point. She will be aware that, before the introduction of 13 weeks in 2009, the period was 39 weeks. There was a specific reason why it was reduced by the then Government to 13 weeks: it was the height of the recession. It was very difficult to get jobs and it was felt necessary to make that adjustment. The economic climate now is a lot different from what it was in 2009. When there are record levels of employment —unemployment is very low—and when we have the prospect of an economy that is recovering, we feel the time period should be brought back to what it was previously. There was no concern when there was a 39-week period when there were better economic circumstances. With the economy picking up, we feel that, as 39 weeks was fine in the past under a Labour Government, there is no reason why it should not continue under a Conservative Government.
Emily Thornberry
The Minister says that he feels 39 weeks will be fine because it was fine under a Labour Government before the recession, but is the change to policy based on any evidence? Can the Government point us to any impact assessment or other information that will reassure us that homelessness will not be increased?
The Chair
Order. The hon. Member for Islington South and Finsbury has tabled an amendment that we will consider later in our proceedings on this very issue. She may not necessarily want to emphasise the point at this stage. The intervention has gone on long enough that she may want to respond to her own colleague and then perhaps give way to the Minister.
Emily Thornberry
I am grateful to my hon. Friend. I appreciate that I sound like a cracked record, but it is about evidence, evidence, evidence. What is the evidence that this change will help us? What is the evidence that this will not increase the number of repossessions? Give us evidence and we would be interested, glad and reassured to hear it.
On the face of it, if someone does not pay back any mortgage for 39 weeks, their mortgage company will kick them out. A steelworker in Redcar might have a good mortgage, a family home and a good family wage one week, but the next week, they could be made redundant and no longer be able to pay their mortgage. The Government will not give them any assistance for 39 weeks. They would have no job and no prospects, and things could suddenly turn very nasty and difficult. Thirty nine weeks is a long period. They might be able to get a zero-hours contract. All I can say to that is: good luck with paying off a mortgage on a zero-hours contract.
As we said at the beginning of these proceedings, although the Government want to use the terms of clause 1 to be able to get up and brag about full employment or the progress towards that, we know that the definition of employment seems to be any work at all. The definition of employment is not the living wage, a wage that a family can live on or a wage that people can use to pay their mortgage..
Mr Vara
I would make two brief comments. The Council of Mortgage Lenders has not said that the 39-week wait will drive repossessions. That is an eminently respected organisation, and it would have said if it felt that was the case. May I gently remind the hon. Lady that though she was not an MP at the time, the Labour Government from 1997 to 2009 maintained a 39-week waiting period? It seems ironic that what was suitable for a Labour Government for so many years is now felt to be inappropriate for this Government, particularly when our economic record is on the up and far better than it was under the previous Government.
Emily Thornberry
I was an MP in 2005, and the difference was that there was real investment going on, homes were being built and the economy was working properly as opposed to fumbling along as it currently is and seemingly being fuelled entirely by rhetoric. It is all very well for the Minister to assert until he is blue in the face that everything is well, everyone is working, everyone is getting a great wage and there are no problems, but that is not the reality of people’s lives.
Mr Vara
That is very helpful. As the Government amendment deals with houses, what I am about to say will be very relevant, particularly given what the hon. Lady said. She spoke about the huge amount of house building under the Labour Government when she was a Labour Member. May I remind her that the past five years have seen more affordable housing built than in the 13 years of the Labour Administration?
Emily Thornberry
No. I do not agree. I am grateful for the Minister’s comments about the Council of Mortgage Lenders and its statement. I counter him with a statement from the Money Advice Trust:
“We strongly support the tabled Amendment 19, which would require that the waiting period before an application for a loan for mortgage interest can be made is retained at 13 weeks, instead of the proposed 39. Lenders and advice agencies alike know from experience that early intervention is the key to resolving financial difficulty. The proposed 39 weeks will mean that claimants will be well over six months in arrears with their mortgage by the time SMI starts to be paid—by which time it will be significantly more difficult for them to resolve their financial situation.”
There are arguments both ways.
It is important that we look at what will happen. The Government have said a great deal about pensioners, about how they will look after pensions, about the triple lock and about this Government being friendly to pensioners. Is not there a problem that this measure will affect pensioners as much as it will affect anyone else? The particular difficulty with pensioners is that if they are expected to take out a loan against their property instead of getting relief on the interest, increasingly they will lose ownership of that property. As pensioners it will be even more difficult for them to work. In fact, the idea of a pensioner is that they do not work. The policy will increasingly eat away at an asset that cannot be expanded.
Is that not an asset that, as a matter of social policy, the Government expect pensioners to use in many other ways? I will not get into a detailed debate about the cuts in social care. Let us just say that I think there have been cuts in social care. I am sure that the Minister thinks that social care is marvellous so let us leave it at that. Are not pensioners expected to be paying for their long-term care out of the asset that is their home?
Many pensioners may have been tempted by the Government’s deregulation of access to pension pots. Memorably, the previous Pensions Minister said that he would be intensely relaxed if people were to take their money out and spend it on a Bugatti or whatever it was. Of course, deregulation and the access to pension pots means that people will have access to their pension funds, which they will be able to spend in advance of their pension. They will be expected to use their houses to pay for social care and if they need assistance with paying off their mortgage, that mortgage will not be available for them in any other way; they will be expected continually to take out more of a loan on the equity of the property.
It seems that pensioners are getting it from every angle, which is very far from the rhetoric we heard at the party conference about how much the Tory party is a friend of pensioners. It is interesting that this is the first—I suspect it will not be the last—occasion in which the Government are changing the game. The Government say they want to help people make the right choices. Pensioners, of all people, may be unable to make choices. They are coming towards the end of their lives and their options are limited. They are expected to take yet another charge on the one asset of value that they have—to continually take out a loan on their property, which their children may be expecting to have to help pay off their student loans or to set up in life.
We have heard that the average age for people to set up their own home now is in their 30s. Quite often, they rely on their parents to be able to help. The rules are being changed for pensioners. This is blow No.1; we will see how many other blows there are for pensioners in the future. We will certainly ensure that pensioners hear the truth, which is that, despite the rhetoric, this Tory party which claims to be the friend of pensioners, is not. This is the first step in undermining all the promises the party made in its manifesto and at the last general election.
Mr Vara
I simply make two responses. On pensioners, the hon. Lady conveniently overlooks that it is often the case that the asset is increasing in value. She also overlooks that the loan will eventually be paid when the house is sold. It is therefore a question of balance, and we have to ask whether it is fair that those who do not own a property of their own are through their taxes helping to pay others who own an asset that is increasing in value.
As for healthcare, I simply say to the hon. Lady that for many of those securing help in healthcare there is unlikely to be an overlap in terms of the equity in their property, as many of them are mortgage-free and sometimes have a second income or another income. They would not probably qualify for SMI in the first place.
Amendment 110 agreed to.
Amendments made: 111, in clause 16, page 15, line 13, leave out
“amounts secured by a mortgage”
and insert “liabilities”.
This amendment and amendments 112, 113, 118, 122, 123, 124, 125 and 126 are consequential on amendment 110 which replaces the reference to mortgage interest payments with a reference to owner-occupier payments.
Amendment 112, in clause 16, page 15, line 16, leave out
“the mortgage relates to amounts used”
and insert
“a person’s liability to make owner-occupier payments was incurred”.
Amendment 113, in clause 16, page 15, line 18, leave out from “about” to “in” in line 19 and insert “—
(a) determining or calculating the amount of a person’s liabilities;
(b) the maximum amount of a person’s liabilities”.
Amendment 114, in clause 16, page 15, line 24, after second “a” insert “mortgage of or”.
This amendment ensures that regulations under clause 16 about requiring security for a loan may make provision for situations where there is no pre-existing mortgage over the person’s home.
Amendment 115, in clause 16, page 15, line 24, at end insert
“a legal or beneficial interest in”.—(Mr Vara.)
This amendment makes clear that regulations under clause 16 about requiring security for a loan may make provision for security to be taken in respect of a legal or a beneficial interest in the person’s home.
Ordered, That further consideration be now adjourned.—(Guy Opperman.)
Welfare Reform and Work Bill (Third sitting)
Debate between Shailesh Vara and Emily Thornberry(9 years, 2 months ago)
Public Bill CommitteesRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Emily Thornberry (Islington South and Finsbury) (Lab)
Before you go on, can I follow this up?
Mr Vara
Q 136 I note what you say about comparability, but you will be aware that between 2004 and 2014, average social rents rose by more than 60% compared with 23% in the private rented sector. Notwithstanding what you said, would you agree that the reduction in social rents will be able to bring some sort of parity between the private sector and the social sector?
Gary Porter: It is the complete reverse. If you force our rents down and allow private sector rents to go up—
Mr Vara
Q 137 Hang on; you say “allow”, but the private sector operates independently. The disparity at the moment is that one has been going up a lot more and the other less so. As I say, look at the figures: between 2004 and 2014, average social rents rose by more than 60% compared with 23% in the private rented sector. Given that this has gone in a certain direction in the past 10 years, if it were to go in the same direction in the next 10 years, clearly one will go up less than the other.
Gary Porter: Private sector rents will go up as a result of this, because there will be less public sector houses built. That will push up the demand in the private sector, which will allow private sector landlords to push their rents up more. That is the way the market works.
David Orr: Sadly, we don’t live in a world that is that simple and straightforward. Social rents going up by 60% is a specific and direct consequence of Government policy to reduce the amount of capital investment in new supply through housing associations, while still wishing to see the same level of delivery.
In the 2010 comprehensive spending review, when capital investment in new supply through housing associations was reduced by 63%, the coalition Government set us a challenge to deliver the same number of new homes or more, specifically by introducing a new rent regime called the affordable rent regime, with much higher rents. That was a Government proposition; it was not asked for or particularly supported by the sector. Having created affordable rents that are designed to be set at 80% of market rates and therefore responsive to what is happening in the market, rebased every time there is a new letting, the Government now want to reduce the rates on those. It is not consistent; that is the problem.
Housing and housing investment is a long-term business. We borrow money and organise finance on a 30-year basis, and that kind of cavalier approach—up one year, down the next; capital subsidy and then changing it to revenue subsidy—plays havoc with the ability of organisations to make the commitments they have entered into.
Emily Thornberry
Q 138 You have been asked a question about those on low incomes and the impact on them of rent going down, and I wanted to pick that up. I wonder perhaps if Councillor Porter particularly might be able to answer this. If rents go down by 1%, will that have an impact on the amount of money that local authorities have available to do repairs, and can you see that having a long-term impact on the service that is available to council tenants?
Gary Porter: Well, yes. Whatever money is taken out of the system will prevent us either, in some cases, from maintaining the homes in the way that we would like to maintain them, or—more importantly from a Government perspective, I would suggest—from building new homes to reduce the long-term housing benefit bill. It will in a few cases have an impact on the ability to maintain homes properly, but I hope that my members would find a way of prioritising making sure that people still live in fit, decent properties. We have a good track record over the past 10 years of improving the high quality of our housing stock, and I cannot see any council easily going back on that. They will make other decisions, other than reducing maintenance, but that will be investment in their value.