Housing Benefit (Under-occupancy Penalty)

Debate between Geraint Davies and Steve Webb

Wednesday 27th February 2013 Commons Chamber

[Geraint Davies]

rose—

[Steve Webb]

I want to make some progress, as I have not yet got past page 1 of my speech and I think the House would like to hear from a few other people.

The cost of housing benefit increased in real terms by 50% in the past decade to £23 billion. Given that we said we would ring-fence the state pension, the biggest thing that we spend money on, we simply cannot ignore housing benefit for people of working age if we want to save money.

[Geraint Davies]

Will the Minister give way on that point?

[Steve Webb]

No, I want to make some progress.

For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.

At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.

--- Later in debate ---

[Steve Webb]

Let me make a little more progress, and I will give way again later.

We recognise that this is a time of change that will present challenges for tenants and for landlords, and we have to support both. One of the positive things to come out of the change is that landlords are getting to know their local authority tenants and social housing tenants far better than in the past. All too often, housing associations did not know their tenants well enough; we have now seen an important process of getting to know individual tenants and their needs. As a result, some of the more creative housing associations have schemes whereby half a dozen people have moved accommodation so that there is a better fit between the individuals and their housing needs. The 1 million spare bedrooms are a precious resource of our communities and of vulnerable people in them, and I will not have it said that those who stand up for the vulnerable are on the Opposition Benches, as we are standing up for them and we want those bedrooms filled.

[Geraint Davies]

rose—

--- Later in debate ---

[Geraint Davies]

No, because I will run out of time—perhaps at the end if I have time.

We will see major problems. My hon. Friend the shadow Secretary of State for Wales mentioned the impact of this change on Wales. He said that 46% of households would be affected in Wales as against 31% in England—half as much again. Once again, this is part of the strategy of taking money out of the poorest communities, yet poor people spend more of their money. If we want a growth strategy to get people back into work, we should give money to poor people instead of giving it to the rich who hide it away in savings accounts or offshore accounts. When people have only a little money, they have no choice but to spend it. We are denuding local authorities with poor populations of money power.

What of incentives? A son or daughter of parents might say, “I want to go off and get married and live with this person. I want to go off and live in a different town and get a different job. I haven’t got a job here; I’m unemployed.” The parent would say, “Son, that will cost me”. What if the children want to go off to university? That is going to cost the parents, too. Once again, this is just encouraging people to stay where they are until somebody hits 60. It is preposterous. The savings will not be made.

[Steve Webb]

There are only so many times that the hon. Gentleman can get it wrong. If someone goes away to college and is based at home, the bedroom is kept.

[Geraint Davies]

My point is that if someone goes away to work, that person will lose the bedroom. Moreover, if someone’s children go off to university, they will not be hanging around in the local chip shop—which is good, but obviously their parents will say, “We do not want an educated son and daughter going off and leaving us to pay for the empty bedroom. You can stay here and run the chip shop. That was good enough for us.” That is the sort of new economy that the Minister—who is now dozing off—wants, and it just does not make any sense.

As for the overall savings, the Government are making political choices. They will not save £490 million, because much of that will consist of costs for local authorities. What they are saying is “We will give the money to the voting people. We will increase their tax thresholds. Let’s face it, they are not going to work any harder. We will not harm the older people, because they vote; we will harm the poor people who do not vote. Let us hope that they do not. If they do not register to vote, we have our other plan to carve up the constituencies, so that their size relates not to the population but the number of people who are registered.”

This is a cynical attempt at political manipulation that has no regard for the economic and social impact. It is absolutely disgraceful, and it should be thrown out.

Ford UK (Duty of Care to Visteon Pensioners)

Debate between Geraint Davies and Steve Webb

Tuesday 4th December 2012 Westminster Hall

[Steve Webb]

Absolutely. This is like trying to grasp something that we cannot quite grasp; we are all trying to see how we can produce a fairer outcome for the Visteon pensioners. We would be happy to engage constructively with any parliamentary process that could assist with that, so I am grateful to the hon. Gentleman for that suggestion.

The hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East raised the interesting question: does the existence of the Pension Protection Fund mean that corporate Britain is tempted, shall we say, to shovel off its pension fund liabilities and hope that someone else will pay for them? Clearly, the anti-avoidance powers of the Pensions Regulator are crucial in that regard. The Pensions Regulator did not exist when the Ford Visteon transaction took place, but it exists now, and central to its remit is protecting the Pension Protection Fund and, indirectly, the levy payers of British industry. The regulator can, and does, therefore, initiate action to require firms that have allowed their deficit to get out of control to put money in and put up collateral against the pension fund.

There is a balancing act to be struck. I hear what the hon. Gentleman says, and clearly we do not want people shovelling off their liabilities on to everyone else, but if the Pensions Regulator goes in too heavily and presses companies, particularly at a difficult time in the economic cycle, to pump more money into the pension fund, which perhaps then precipitates problems for the firm, we get criticised from the other side. It is a delicate balancing act, but what is good about the new regime is that it is scheme-specific. Whereas when the Ford-Visteon transaction took place there was a reactive regulatory regime in place—the Occupational Pensions Regulatory Authority—which reacted to whistleblowers but did not go out proactively, the Pensions Regulator does go out to look at schemes, and acts on a case-by-case and a risk-assessed basis. We can only speculate about what it would have done had it existed in 2000, but in similar cases now the regulator would consider whether a deficit would be properly funded, and if a parent company had tried to pass a liability on to a spin-off company, it would want to take action.

[Geraint Davies]

Is the Minister saying that if a global company created an arm’s length company that supplied itself, set it up with an underfunded pension fund and then unilaterally reduced the prices and therefore squeezed the pension fund still more, the Government could, under current regulations, act to stop that and to prevent the kind of injustice we have heard about today from happening in the future?

[Steve Webb]

I am grateful for the hon. Gentleman’s intervention. He has played an active role in the campaign. If a new pension fund is set up under trust, the trustees have a responsibility to look after the interests of the members. The scheme would have to be valued, and if there was a deficit a recovery plan would have to be agreed between the trustees and the new employer. The role of the Pensions Regulator at that point would be to sign off the recovery plan, on the grounds that it was a realistic basis on which the scheme could go forward. That could happen if, for example, a promise by the employer to make certain contributions over a period of time, or the actuarial assumptions, were considered realistic.

However, if a scheme were set up with a large deficit and the recovery plan was not credible, the Pensions Regulator could look at the parent company and require it to put up an asset as collateral or make a direct financial contribution to the scheme. Sometimes the regulator does that by passing a directions or issuing a notice, but often, as with good regulation, a mere threat is enough to get a firm to comply. Judging the effectiveness of the regulator by the number of times it uses its big stick is missing the point, because the point of the body is to spot things before they go wrong and get in there first, with enforcement as a last resort rather than as something immediately jumped to. In this sort of case, the regulator has far more power than it had back in 2000, under the previous regime.

This has been a broad debate, and for understandable reasons I have focused on the position of the pensioners. I hope that I have explained why the Pensions Regulator, while doing what it can, could not use its powers. We are, however, looking at whether the role of the Pension Protection Fund could be improved, so that the Visteon pensioners who have ended up in the fund through no fault of their own—principally those who have been capped—can get a fairer deal. That is something we will return to in the House.