Housing and Planning Bill

Baroness Bakewell of Hardington Mandeville Excerpts

Monday 18th April 2016 Lords Chamber

All of the above would strongly argue for a voluntary scheme as originally envisaged in the Localism Act. Higher rents could be charged for households who are on genuinely higher salaries—the figure in the Act was £60,000 or above. This is a much smaller number of people, perhaps of the order of up to 34,000. Indeed, thinking about the origins of this policy, Bob Crow was on a salary of £145,000—somewhat different from £30,000 and £40,000. Crucially, if we adopted this voluntary approach, we would learn from a localist model how best to deliver a fair and workable system in such a complex and sensitive area. We will debate the thresholds and the taper in more detail in the next grouping. In the mean time, I urge noble Lords to support the alternative, localist, voluntary approach set out in these amendments.

[Baroness Bakewell of Hardington Mandeville (LD)]

My Lords, I shall speak to Amendments 72, 75 and 78, to which I have added my name. I remind the House of my entry in the register of interests as a South Somerset district councillor.

As has been said many times in this Chamber in recent weeks, local authorities know their communities, and their officers know the circumstances of individual families and couples within these communities. It is far better for local authorities to make decisions that affect the lives of those families than for a blanket diktat to come down from the Secretary of State. It is also surely not logical for a local authority to be forced to implement a high-rent policy if the cost of doing so exceeds the additional income raised by the charging of the higher rent. This is not cost effective and everyone can see that that is the case. I echo the comments made by the noble Lords, Lord Kennedy and Lord Kerslake, and will support them if they wish to divide the House.

[Lord Horam (Con)]

My Lords, this is, I am afraid, an idea that probably looks good in the confines of the Treasury or in the rarefied world of special advisers in No. 10. In the real world outside it does not look so good. The noble Lord, Lord Kerslake, mentioned the late Bob Crow. I recognise, as the noble Lord said, that there is a case for saying that people on a higher income or earning over £100,000 should move out of council tenancy and seek a home of their own, thus leaving one for someone on the waiting list. I understand that argument. It is an important one that we should not forget.

However, this is not the greatest problem that we face. In the case of London, for example, where the housing crisis is most acute, 100,000 properties have been bought by secret offshore companies, pushing prices up for ordinary Londoners, who cannot get access in the way that they need to. I also agree with the noble Lord, Lord Kerslake, that this leads to a lot of administration for a small return. He used the word “inefficient”; we should not compromise on efficiency in administration. I believe in smart government, neither large, nor small; it depends on what you need. We should have efficient government and this in principle does not look like that. A lot of bureaucracy will be involved, a lot of mistakes will probably be made and the returns will be quite small. Should the Government be doing something as detailed as this? Should they not leave it to local government? Frankly, this smacks of the sort of thinking that went into the bedroom tax, which I think that many people regret.

While my noble friend Lady Williams has noticeably been listening throughout—I pay tribute to her conscientiousness and her willingness to take arguments on board—there is a case to be made for Amendment 72, which would leave this matter to the local authorities. I agree with the noble Lord, Lord Kerslake, that we need a higher threshold before it kicks in: £60,000 in London and £40,000 outside are a minimum, frankly. In many ways I would prefer a higher threshold, but that would be a starting point, which is encapsulated in Amendment 77 in the name of the noble Baroness, Lady Bakewell. I also agree with the proposal in Amendment 75; if the administrative costs outweigh what you raise in revenue, it is senseless to go ahead.

Finally, if we do go ahead with this and raise some money the local authorities should keep it to invest in further council housing. That is essential. It should not go into the pockets of the Treasury, which does not need this small amount and it should not get it. The amendments in this group are both fair and sensible, and it is my experience that what is fair and sensible is usually good politics.

--- Later in debate ---

[Lord Kerslake]

My Lords, I rise to speak to my Amendment 76 and to Amendment 73, which I support. I set out my concerns about pay to stay in the debate on the previous grouping, so on this occasion I will keep my remarks fairly short. I support everything that the noble Lord, Lord Best, said about the taper, so I shall focus particularly on the threshold.

For the reasons that I have already spoken about, these proposals catch not just households on high incomes but those on average incomes. They may be in the higher group in relation to social rented properties but, as households, they cannot in any sense be described as high income in relation to the population as a whole. This is a crucial point. It is not about high-income households in any meaningful sense, so to have any kind of fairness in the system, we need to raise the thresholds from those proposed and keep the taper low. It is not a matter of either/or; both are necessary.

My amendment proposes increasing the thresholds that have just been announced by the Minister by some £9,000. That would make them £40,000 outside London and £50,000 inside London, and the amendment would put those thresholds in the Bill. That was one of the options referred to in the Government’s own impact assessment, so it must have been under consideration. It is in fact lower than the previously proposed threshold of £60,000 agreed by the coalition Government. I think that there is a case for the threshold to be at least £60,000 in London, as proposed by the noble Baroness, Lady Bakewell, but, in the spirit of trying to reach a compromise, I have aimed to meet the Government half way on this—hence the recommended thresholds in the amendment.

The effects of raising the thresholds would be twofold. First, it would substantially reduce the number of people caught up in these proposals. There is a clustering of people around the £30,000 to £40,000 income level, so raising the thresholds would reduce the numbers to perhaps as low as 50,000 compared with 350,000. Secondly, it would start at the income level of people, and households in particular, in the top 20% of incomes, not in the top 50%, as is currently proposed, so it would affect people on genuinely high incomes compared with what is proposed now. I think that by any reasonable reckoning having the thresholds at the levels that I propose would be a fairer starting point, and a taper of 10p in the pound would be much fairer. Taking on board these amendments would go a long way to making what I think is a very poor piece of legislation a little fairer and a little more workable.

[Baroness Bakewell of Hardington Mandeville]

My Lords, I shall speak briefly to Amendment 73 in the names of the noble Lords, Lord Best, Lord Beecham and Lord Kerslake, to which I have added my name. I shall speak also to Amendment 77 in my name and that of my noble friend Lord Foster of Bath.

The pay-to-stay policy has caused widespread concern among hard-working couples and families who are struggling to make ends meet and do not consider themselves to be high earners. It is essential that we give these people some sort of peace of mind that they will be able to afford to pay their rent, continue in their jobs and finish the education of their children. Raising the threshold of the income level at which people start to pay a higher rent to £40,000 outside London and £60,000 inside, at the same time as introducing a taper of 10p in the pound, would go some considerable way towards achieving that. Such a taper would assist couples and families with their budgeting and with planning to work towards paying market rents. In my opinion, 20p in the pound is too harsh. The discrepancy between a high earner for tax purposes and a high earner in terms of paying rent is stark, and the Government need to acknowledge that this is illogical.

Both amendments are crucial to the implementation of the Government’s pay-to-stay policy, to ensuring that tenants are given some level of security and that the threat of eviction is not continually hanging over their heads. I agree with the comments that have been made by the previous speakers.

[Lord McKenzie of Luton (Lab)]

My Lords, I declare my interest as a vice-president of the LGA. I want to comment briefly on some of the administrative and practical implications that seem to be emerging from this policy. I support the amendment moved by the noble Lord, Lord Best, in relation to tapers. One of the consequences of having a taper is that the income figure needs to be precise in every respect. It is one thing to have a threshold that people have to get over, but you have to be clear as to how much in excess of that threshold people have to be for the taper to operate fairly. That seems to me to bring into question some fundamental issues. We had a bit more information from the Minister today—a couple more veils were drawn back from how this is going to work. However, there are still some fundamental matters that have not been worked through, or, if they have, they have not been disclosed to us.

The first issue is whether or not what we are talking about will always be an annual assessment of a person’s income. Certainly the thresholds have been proposed in terms of annual amounts, but is there any suggestion that these are going to be divvied up into quarterly or weekly amounts so that the assessment would change not only periodically but frequently? If the answer is no, and we are looking at an annual assessment, that can be done only on the basis of a preceding year because until you get to the end of a year it is impossible to know what the yearly income is, particularly when you have fluctuating contracts. My noble friend Lord Beecham touched upon the issue of those who are self-employed. In any particular year, a self-employed person’s income is often not determined finally until some time after the end of the year, not during it.

Secondly, we do not know what the final definition of “income” is going to be. We know that certain benefits are going to be excluded, such as DLA and child benefit, and that is to be welcomed. However, what about things like SSP, statutory maternity pay or carer’s allowance and a number of other matters? What is to be included? It seems to me that the Government by now ought to have worked that through in some detail.

As to whose income is to be taken into account, again touched upon by my noble friend Lord Beecham, as I understand it the proposal is that if you have joint tenants it can be the income of those joint tenants or the income of their spouses or civil partners, whichever are the highest two. But that comes back to the issue of the period for which you are going to assess, because until you get to the end of a year, you do not know necessarily which are the two highest incomes from those four people. Somebody might get a year-end bonus on the last day of the tax year and that person could then become one of the two highest earners—what are you going to do then? Will the rent be recalculated on some basis? It does not make sense. These are fundamental issues about how this is going to work and I think we need greater clarity.

--- Later in debate ---

[Baroness Williams of Trafford]

The noble Lord raises a reasonable point, and it is clear across a number of policy areas that it is not always possible to be absolutely accurate on either anticipated income or income in retrospect—but I will write to the noble Lord to clarify exactly what the framework for the policy will look like.

[Baroness Bakewell of Hardington Mandeville]

My Lords, I am sorry, but I want to raise a point of clarification. I had understood that the pay-to-stay provision was intended to move tenants on social rents towards a market rent, but I thought I heard the Minister say that the Government are moving them towards paying a third of their income in rent. Will she clarify that please?

[Baroness Williams of Trafford]

What I said was not in order to move them to paying a third of their income in rent; it was quite something else. I can repeat what I said: the households I described are in the top 40% of household income and, at a 20% taper level, most high-earning social tenants will be paying no more than 20% of their income in rent—much less than the average household in the PRS, and lower than the 33% of income often used by housing providers as a rule of thumb for what is considered affordable. I was making the point that we were not doing that.