Baroness Williams of Trafford
Main Page: Baroness Williams of Trafford (Conservative - Life peer)Housing and Planning Bill
Baroness Williams of Trafford Excerpts
Baroness Gardner of Parkes (Con)
My Lords, this is a very emotive issue. I recall very clearly being quite upset and thinking it very wrong when I discovered that people earning huge salaries—we all know that Bob Crow was the famous one so much in the public eye—occupied properties that someone in much greater need would have required. Yet I also understood his feelings that it was his home, he had lived there a long time and he wanted to stay. Therefore, a very fair answer seemed to me to pay more. I again declare my interest, which is in the register and as I have done every time before.
Would not the answer to all this administration being discussed be to place the onus on the tenant to state whether their income is above a certain amount? That way the council would be much less restricted by being obliged to do it. Either you make it compulsory with a “must” or you do not bother to enforce it too hard at all but give a penalty if, at later stages, you discover that people have not declared when they should have. The whole thing is extremely difficult, yet the people in the greatest need should occupy these properties.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, the amendments in this group seek to make the policy voluntary for local authorities and to impose restrictions on where the policy should operate. These are basically wrecking amendments and I should be clear up front that we cannot accept a voluntary approach for local authorities. Local authorities can now, if they want, put a voluntary scheme in place, but we are not aware of any that have actually done so, so the policy must remain mandatory.
Within these amendments there may be some room for common ground, particularly around considering the impact on authorities in particular areas. Combined with the reassurances that I have provided on the proposals for the design of the policy through regulations, I hope that this can help us avoid an argument about the nature of the scheme. We are clear that it should be applied consistently by local authorities.
Amendment 72, tabled by the noble Lords, Lord Kennedy and Lord Kerslake, would have the effect of making the policy voluntary for local authorities to operate. As I have explained, we cannot accept this position. Unless there are very good reasons for an authority not operating the Government’s policy, with those circumstances set out in regulations, we want a consistently applied policy.
I think that it was the noble Lord, Lord Kennedy, who asked how the figures had been arrived at. The figure of 30,000 represents the top 40% of earners and the figure of 40,000 represents the top 20% of earners.
Lord Kennedy of Southwark
The Minister says “earners”, but, of course, these incomes refer to households—the earners earn much less than that.
Baroness Williams of Trafford
The noble Lord is absolutely right; it does represent households. But he asked how the figures were derived and that is how I understand they were derived.
The noble Baroness, Lady Hollis, raised a number of questions about the affirmative regulations that we will bring forward. Introducing a taper will reduce the money coming in. I have just had a note saying that the regulations we will bring forward will provide more detail in due course. The noble Baroness also asked, what is the updated estimate of savings from the policy in light of the taper? Introducing a taper will reduce the money coming in by about half compared to what was set out in the Budget. That is what I can say at this stage.
Amendment 75, tabled by the noble Lords, Lord Kennedy and Lord Kerslake, seeks to allow a local authority discretion to implement the policy where the costs of administering the policy are likely to be greater than the extra rental income raised. It also seeks to allow local authorities to retain the additional revenue raised from increased rental income. I am sympathetic to one half of this amendment and I can give a commitment that we are thinking through the impact of the policy in certain authority areas. I accept that there may be some areas where social rents and market rents are so close that it may not make sense for an authority to operate the policy. We will consider that evidence carefully and consider how to approach this in the regulations. We will not be allowing local authorities to retain any money raised, however. The money has been identified as a contribution to reducing the national deficit and, on that basis, it must come back to government. I reinforce our commitment to allow local authorities to retain reasonable administrative costs.
Government amendment 133 provides for the regulations to be subject to the affirmative resolution procedure, which I am sure will be supported. I do not think that I need to say much more about this. I have given a commitment that the Government are in listening mode and want to take on board the views of noble Lords across a number of areas of detail. The affirmative regulations give us the chance to do this and I welcome the opportunity.
I hope that I have provided some reassurance and highlighted areas where we are thinking carefully about the way forward. Although we cannot accept a voluntary approach, we will work with noble Lords to consider the impact in some local authority areas. On that basis, I commend the government amendment and hope that the noble Lord will withdraw his.
Lord Kennedy of Southwark
Will the noble Baroness clarify one thing? I may be getting confused but I believe that the figures of £30,000 and £40,000 were the earnings figures that have now been applied to households. That seems a very odd and unfair government policy—taking an earnings figure and applying it across the board.
Baroness Williams of Trafford
My Lords, the noble Lord raises a very relevant question. May I write to him?
Lord Kennedy of Southwark
I thank the noble Baroness for that response. However, it highlights the fact that we are still not clear about some issues, even now we are on Report. That has been one of the problems with the Bill from the start. That is not the noble Baroness’s fault, but we are still not clear about some things even on the third day on Report. That is the fault of the department and the way it has handled the whole process.
I thank all noble Lords who have spoken in this debate. I agree very much with my noble friend Lady Hollis that the Government appear to be obsessed with council tenants’ incomes. As the noble Lord, Lord Kerslake, said, households with these income levels could in no way be described as high-earning. This proposal is just a tax on working council tenants on modest wages. That is very regrettable. I have heard nothing from the noble Baroness today or in Committee to convince me otherwise, although she has tried her best. I find this all very disappointing.
I still do not understand why the noble Baroness has on previous occasions—although she did not do so today—referred to a figure of £50,000 in London but seeks to impose this tax on working council tenants earning £40,000. I think the real reason, as we all know, is that the department has done its figures and realised that it needs to start levying this tax on earnings of £30,000 or £40,000 to get the maximum income. That is what this is all about; it is purely a tax.
I agree very much with what the noble Lord, Lord Horam, said. It was a pleasure to serve with him on the Electoral Commission, on which we both served for many years. I would have hoped that, even if the noble Baroness did not listen to my contribution or those of other noble Lords, she would have listened to that of the noble Lord, Lord Horam. However, clearly she has not done so today. I wish to test the opinion of the House.
Lord Lansley
My Lords, I had not intended to say anything on this, but following the most helpful exchange with the noble Lord, Lord Best, I just want to make two points quickly before we conclude this debate.
First, it seems to me that, within this group of amendments, there appears to be an assumption both that the taper should be low and that the threshold should be high, but that is an illogical position to take. If the threshold were very high, the taper presumably should be much higher, representing a much greater capacity to pay. To that extent, I urge noble Lords who are thinking about supporting any non-government amendments in this group to think very carefully about how one thinks about this. If one supports a taper, it seems to me that giving the Government discretion to bring in a taper is an appropriate way to do it, because the Government can then balance the threshold with the taper. Otherwise, if one introduces a low taper, it seems to me that one should therefore automatically not support amendments whose purpose is to increase the threshold and to impose a higher threshold.
Secondly, although my knowledge of this is only as good as the figures that I have looked up in the last few minutes, the English housing survey figures from 2013-14 suggest that, including housing benefit, private rented sector tenants were paying on average 43% of their income in rent, whereas local authority housing tenants were paying on average 28% of their income in rent. I do not quite understand where the 10% figure that has been included in Amendment 73 comes from. It is asserted to be fair, but on the face of it the difference in rental costs as a proportion of income between private rented sector tenants and local authority tenants is already significantly larger than that—so where the 10% figure comes from I am not quite sure I understand. In so far as local authority tenants have an income that allows them to pay more, private rented sector tenants might not understand if we were to legislate in such a way as to ensure that local authority tenants paid less of their income in rent, relative to a market rent, than would be the case if they were out in the market having to rent at that level.
Baroness Williams of Trafford
My Lords, I will, if I may, take this opportunity to reiterate our overall position on this policy. I wrote to noble Lords about this earlier this afternoon and I would like to take the opportunity to set out the key points on the Floor of the House. I hope that noble Lords will indulge me, but I will not take interventions at this stage, because I hope that many of the questions will be answered as I make my way through my opening statement.
The policy is about fairness, and our view is that social housing at lower rents should be provided to those households that need it most. Households that decide to remain in social housing but can pay more should be expected to do so. At the same time, the Government are making home ownership more accessible to tenants both of local authorities and of housing associations through the right to buy and shared ownership.
In Committee, I reinforced the Government’s commitment to ensuring that the policy is designed fairly and that work always pays. On this basis, I gave three reassurances: first, that we would introduce a taper to ensure that it would always be in the tenant’s interest to increase their earnings; secondly, that we would exempt those on housing benefit entirely; and that we would allow local authorities to retain the reasonable costs of administering the scheme.
In Committee, many important points were made. The noble Baroness, Lady Hollis, asked how the policy would work alongside universal credit. The noble Baroness, Lady Lister, spoke eloquently about the importance of ensuring that the policy is applied fairly for social tenants. The noble Lords, Lord Kerslake and Lord Best, both raised concerns about the level of the thresholds and how we mitigate those through our choice of income taper.
We have listened carefully to those arguments and to the views expressed by tenants and local authorities. We agree that people in receipt of certain state benefits should not be caught and that there should be an element of protection for those households on incomes close to the thresholds. Rents should rise by a reasonable amount and protect those work incentives. Following our consideration of the views and arguments, I can outline today much more policy detail that we intend to put into regulations. I hope that that will reassure noble Lords.
First, I can say more about which households will be affected. The policy will affect households with an income of more than £31,000 outside London and £40,000 in London. This would mean that households with two adults each working 35 hours a week on the national living wage would be below the threshold. In addition, I can confirm that no household in receipt of universal credit or housing benefit—this is the point that the noble Baroness, Lady Hollis, made—will be subject to the policy. This makes absolutely clear that this policy is not aimed at households on the lowest incomes, or at those households on incomes above the thresholds in areas of very high market rent that may qualify for these benefits. I hope that this will reassure the noble Baroness in particular about the link with universal credit. It also means that there will be no extra burden on the taxpayer, who would need to fund the increase in housing benefit or in universal credit to cover the rent.
This link to benefits is further reinforced by our proposed definition of “income”. I think that the noble Lord, Lord McKenzie, alluded to this. We want to define this as “taxable income”. When determining whether a household’s income is over the threshold, this means that we will take into account employment earnings, pension income and investment income, but not child benefit, disability living allowance or tax credits. This will protect many families on incomes close to the thresholds. Taken together, these announcements on income thresholds, the exclusion of households on universal credit and the definition of “income” make it absolutely clear that there will be no impact on families on low incomes.
Secondly, I know that there have been concerns about how much additional rent a household might have to pay. In Committee I said that we would use a taper to ensure that households did not face a very large increase in rent as a result of a small increase in income. I can confirm that we are proposing a taper of 20%. This will mean that for every additional pound someone earns over the income threshold, they will pay an extra 20p towards the rent. In determining the level of the taper we have looked closely at a range of tapers in use, including universal credit, to ensure that tenants’ rents are increased in an affordable way, while maintaining the principle that those who can pay a little more do so. The taper ensures the principle of affordability and of protecting incentives to work.
A household outside London on £32,000 a year will pay less than £4 a week extra and a household in London with a taxable income of £42,500 will pay less than £10 a week. A household outside London with an income of £40,000 would pay around £35 a week. The households that I have just described would be in the top 40% of household income. At a 20% taper level, most high-earning social tenants would pay no more than 20% of their income in rent—much less than the average household in the private rented sector and lower than the 33% of income often used by housing providers as a rule of thumb for what is considered affordable.
Thirdly, I know that noble Lords have been keen to ensure that we implement this policy in a way that does not penalise the parents of adult children who live at home, perhaps while they save to buy their own home. With that in mind, I can now confirm that “household” will be defined as the tenant, any joint tenants and their spouses, partners or civil partners. Within a household, only the incomes of the two highest earners will count. This means that the incomes of non-dependent children will not count unless they are named on the tenancy agreement—and, even then, only if they are one of the two highest earners. I reaffirm at this point that no household in receipt of universal credit or housing benefit will be subject to the policy. As I said earlier, the policy is not aimed at households on the lowest incomes or households on incomes above the thresholds in areas of very high market rents which may qualify for these benefits.
Finally, I can confirm that in the first year local authorities will return the actual amount of money they raise through the policy: the Government will not set a formula. However, we will return to this issue after the first year, when more information is available, to decide on the best approach. I understand that noble Lords are keen to scrutinise the detail of this carefully. As announced in Committee, I have accepted a recommendation from the DPRRC to make the secondary legislation subject to the affirmative regulation procedure. I am sure that this will be welcome news to your Lordships. There will be some further policy questions to address before we debate regulations but I want to take the opportunity to clarify some points of detail which I know the House had concerns about in Committee.
The noble Baroness, Lady Hollis, and the noble Lord, Lord Campbell-Savours, raised some important points about private companies having access to individuals’ income data. I assure noble Lords that the data-sharing powers in the Bill will be limited to data shared between HMRC and local authorities and HMRC and housing associations. The Bill contains strict conditions over how that information can be used and there is absolutely nothing here that enables further data-sharing with third parties.
There was some debate about admin costs. It is still the Government’s position that local authorities will be able to retain a reasonable amount of admin costs. I know that there was some confusion about this language in the previous debate. It is the Government’s intention that the costs should be covered but we are working with local authorities to fully understand the costs they will face in setting up and running the policy. It is important that we do not unfairly reward local authorities which are running inefficient systems. I can also confirm that regulations will not expect local authorities to collect where the administration costs would not be covered by the returns from this policy—a number of noble Lords made this point.
Before I conclude, I want to say something about the approach for housing associations. The decision on whether to operate a policy will be voluntary for housing associations. The Bill contains a requirement that where a housing association wants to operate a voluntary policy it must publish details of that policy and have an appeals mechanism in place. This is not a control but a sensible protection for tenants, but where housing associations operate a policy they can retain any funds raised and use them for investment in new social housing. We will continue to work with housing associations to help them put policies in place where they wish to do so. I hope that the details I have set out, though rather lengthy, demonstrate that the Government have listened to concerns raised by this House. Our proposals strike a balance between the need for fairer rents in the social sector and the need to ensure that the policy is applied fairly to tenants.
I now move on to the amendments. Government Amendment 73A allows us to make exemptions for those households in receipt of housing benefit and universal credit. Our proposed definition of income will ensure that payments from tax credits, child benefit and disability living allowance will not count towards the calculation of income. I hope that this will provide an element of reassurance for those in receipt of these benefits who may be close to the threshold. Of course, noble Lords will spot that this does not mean that everyone receiving disability living allowance, for example, will be outside the scope of the policy. If their income is high, they may be asked to contribute more. I am sure that there will be strong views on this, and I should make it clear that other exemptions could, of course, be made in the regulations. I know that noble Lords have particular concerns about the impact on certain groups of people—for example, the noble Baroness, Lady Lister, spoke eloquently about those with caring responsibilities or those who have suffered at the hands of a partner through domestic violence. We take this very seriously. I welcome further views on this, so that we can take forward further consideration of the evidence in advance of the affirmative regulations.
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.
Lord Elton (Con)
My Lords, the Companion, at paragraph 8.137, sets down the Standing Orders for how we conduct these debates. We are on Report, not in Committee.
Baroness Williams of Trafford
I thank my noble friend, but I was very clear that the noble Lord was asking a question of clarification.
Lord McKenzie of Luton
I am grateful to the Minister, and I do not want to prolong our proceedings; we have much to get through. The issue was that if it is based on taxable income, does that not inevitably mean that it will have to be based on a preceding year’s income, because you cannot for the year for which you are setting rents possibly know the outcome of people’s taxable circumstances in all respects?
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.
Lord Beecham
My Lords, the Minister said that we might return to Amendment 77ZA at Third Reading. Is that an undertaking on her part to bring something back on the lines of the amendment?
Baroness Williams of Trafford
The point that I was making was that the noble Lord made a valid point and that, if we can reach some sort of consensus, it may be possible to bring something back at Third Reading.
“( ) The regulations may create exceptions for high income tenants of social housing of a specified description.”