Lord Best
Main Page: Lord Best (Crossbench - Life peer)Housing and Planning Bill
Lord Best Excerpts“( ) The regulations must specify that the rent shall not equate to more than 10 pence for each pound of a tenant’s income above the minimum income threshold.”
Lord Best (CB)
My Lords, in moving Amendment 73, I am grateful to my noble friend Lord Kerslake, the noble Lord, Lord Beecham, and the noble Baroness, Lady Bakewell, for adding their support. Amendment 73 continues the debate on pay to stay. It starts with the assumption that the Government are determined to introduce a scheme of this kind to address the issue of very high earners in council housing, such as the case, which has been much quoted today, of Bob Crow on £145,000 per annum. The amendment seeks to moderate the disruption to the lives of ordinary people which this surcharge on the rent could cause.
I note in passing that the extra payment by the tenant is not rent, since it does not relate to the property and the landlord does not receive it. It is a payment that goes to the Exchequer, based on one’s income, and that is normally called a tax. Of course, as we explored in the debate on Amendment 75, if the likely receipts from pay to stay are going to be less than, or much the same as, the cost of administering it, it would be a pointless exercise to impose this housing tax. I was pleased to hear the Minister announce a willingness to accept this point in principle. I do not believe that anyone wants vindictively to tax successful council tenants just for the sake of it. In at least some areas, however, where incomes are highest and market rents are way above council rents, the Treasury has clearly seen that pay to stay is a chance to generate some extra revenue for the Government.
In the light of the amendment that we have just passed—if it is accepted by the other place—councils will be able to opt out of this duty to collect this housing tax for the Exchequer. My guess is that unless the arrangement is changed by Amendment 75, so that local authorities can keep the monies that they raise and apply them to housing purposes, virtually all councils will opt out if Amendment 72 survives. This renders my amendment here almost redundant. However, for local authorities that wanted to introduce a pay-to-stay scheme, it would limit the amount to be collected. It would be helpful everywhere, of course, if the other place fails to support the amendment we have passed.
Pay to stay is another manifestation of the Bill’s overarching policy of, on the one hand, bolstering home ownership, which is fine, but, on the other hand, diminishing the social housing sector, which is not good. In this instance, the levy on council tenants is not for housing purposes: it is, to quote the Chancellor, to “contribute to deficit reduction”. But these austerity measures do not apply to the generous treatment of those who want to buy, be they acquiring starter homes with big discounts or exercising a right to buy with even bigger discounts. For the buyers, there are no reductions in levels of subsidies for those earning more than £30,000, £40,000, £60,000 or £80,000. Amendment 73 would limit the transfer from council tenants to the Exchequer by restricting the levy on those earning more than the threshold, which, we have now been told, will be £31,000 per annum or £40,000 in London.
Amid all the uncertainties as to what this Bill really means, because so many key decisions have been left to subsequent regulations, we have some indications about the detail of pay to stay. It seems very likely, we now know, that the Government, very sensibly, will go for a tapered charge: that is, X pence for every £1 over the threshold, which is clearly much better than a cliff edge over which somebody just over the threshold would see a huge hike, perhaps doubling or even trebling their housing costs.
We also now know that the Government plan to set this taper at 20 pence in the pound. Twenty pence for every pound earned is equivalent to the doubling of basic rate income tax. For those earning £10,000 over the limit, the housing surcharge would cost them another £40 per week on the rent. That sudden imposition out of the blue would be very hard to bear for a couple with a family to support when both earn little more than the national living wage.
Lord Lansley (Con)
I am trying to understand how Amendment 73 is intended to work. I cannot find a reference in the Bill to the minimum income threshold, so I am working on the assumption that the noble Lord believes that it is to be inserted. Is he supporting an amendment for that purpose—and, if so, at what level? For those who are contemplating the application of a taper, surely the level of the taper must critically depend upon the size of the minimum income threshold to which it relates.
Lord Best
My Lords, since the Minister has announced this and circulated a number of us with the details, I am making the not-very-rash assumption that the threshold will be set at £31,000 and at £40,000 in London, and that the taper—the reduction for those earning £1 more than those numbers—will be at a rate of 20p in the pound. I want to put in the Bill a level of taper lower than the level that the Minister proposed in writing to us.
Lord Lansley
I am grateful to the noble Lord for that explanation, but it does not quite answer the question. As it stands, the amendment refers to the minimum income threshold, but nowhere else in the Bill is there such a thing as a minimum income threshold—merely a power in regulations, which Ministers have told us about, to apply such a threshold. It does not exist in the Bill, so the amendment is not complete. I completely understand the point the noble Lord is making. It suggests that the taper he is looking for should be applied to an income threshold in regulations of the kind that Ministers are suggesting. Is that his position?
Lord Best
That is my position. I would be very happy to withdraw this amendment if the Minister were able to say that in regulations there would be a taper of 10p in the pound so that it did not need to be placed in the Bill.
The reality is that most of those hit by the proposed housing tax on their earnings will indeed have to stay and pay. I contend that it is important that they should not be forced to move. It would not be wise policy to engineer through a punitive pay-to-stay regime that only those on the lowest incomes can occupy council or housing association homes. Council housing traditionally—right back to the homes fit for heroes after the First World War—provided for hard-working families. Today it accommodates, for example, key workers—nurses, teachers, care workers and others—for the benefit of the wider community. Social housing will often help people who start out with problems or low incomes but who settle in and prosper. These households are a vital part of sustaining a strong community.
For several decades those of us involved in social housing have been aware of the need for mixed-income communities—not benefit ghettos, to use a horrid term. Driving out all those who have done well is the very opposite approach to the kind of place-making that addresses the Prime Minister’s concerns about deprived estates. Every housing professional will tell you that confining council or housing association estates just to poorer and vulnerable people can stigmatise all those who live there. That approach removes role models of people who are succeeding at work and deprives an estate of people with spending power and of potential community leadership.
In conclusion, pay to stay has proved the most contentious ingredient in the Bill because, unlike the gains for future would-be buyers and the problems for future would-be tenants, it affects hundreds of thousands of existing tenants. If handled insensitively, it will impair work incentives and the living standards of those on pretty moderate incomes who instead really deserve praise for their hard work and success and who help to sustain a mix of incomes on council estates. This amendment accepts the probability of the Government introducing a pay-to-stay surcharge, but, by limiting the levy to 10p in the pound, it minimises the considerable downsides to this policy.
I am not hopeful that the Minister, who has now announced the decision on having a taper of 20p in the pound as the rental surcharge, will today accept the 10p in this amendment. However, I know that she and the Secretary of State have been considering other ways in which a similar outcome—a reduced burden for not very highly paid council tenants from the new levy—can be achieved. My hope is that her response to the amendment will not necessitate a Division today, but I must reserve judgment on that. In the mean time, I beg to move.
Lord Beecham (Lab)
My Lords, I support the amendment moved by the noble Lord, Lord Best, and I shall refer to the amendments in this group to which my noble friend Lord Kennedy and I have subscribed. The noble Lord, Lord Best, referred to Zoopla, and I should declare an interest on top of my local authority interests. Recently Zoopla gave an evaluation, not sought by me, for my four-bedroom semi-detached in Newcastle of £5.96 million. On my pointing out that this was somewhat excessive—despite the house having been built by the father of the noble and learned Lord, Lord Woolf, in the 1930s—Zoopla radically reduced the price, such that after a few days I seemed to be more than £5 million less well off than it would have had me and the world believe. Such is the world of estate agency.
These amendments deal with the critical issues of the taper which should apply to the imposition of higher rents, whether by government diktat or the exercise of discretion by housing authorities, and the relevant income thresholds. It is all of six weeks since the Minister wrote to Peers with the Government’s response to the six-week consultation initiated in October. The consultation, which contained not a single figure, occupied all of four pages. The response, remarkable for its opacity even by comparison with the abysmal lack of information that has been a feature of virtually every aspect of this Bill, consisted of three pages and no definitive indication of the relevant figures. The Minister’s letter accepted the notion of a taper, exemplifying in very broad terms the impact of tapers of 10% and 20%, but, significantly, without specifying the anticipated impact per household or the aggregate cost to the Exchequer. At 1.34 pm today I and, no doubt, a few other noble Lords received an email from the Minister stipulating a 20% threshold, which now results in the threshold figures being £31,000 outside London and £40,000 in London. I do not blame the Minister at all for this belated information, but it is another symptom of the way the Government as a whole conduct their business in general and on this Bill in particular.
As the Secretary of State reminded my noble friend Lord Kennedy and me last Thursday, this provision stems essentially from the Treasury’s determination to save money, not from any substantive housing policy requirements, and is based on the false premise that council rents are subsidised by the taxpayer—a notion that, in all fairness, the Minister disavowed in an Answer to a Written Question from my noble friend Lord Kennedy. Council house rents are not subsidised by the taxpayer. However, as the noble Lord, Lord Best, has indicated, it is a tax, in the same way that the residents of Boston discovered when the tax on tea was imposed in 1776. I do not say that the reaction will entirely match that of that celebrated occasion, but it is a tax and nothing to do with housing as such.
There is a paradox embedded in the Government’s approach. If tenants feel unable to pay the higher rents demanded, they may seek private rented accommodation, adding thereby to the pressure on rent levels in that sector—on which, incidentally, the Government propose no action—which could ultimately increase the housing benefit budget and indeed line the pockets of landlords while so doing. In Committee, I cited the case of the son of a family friend whose household income is a little over £40,000 and who would face a large increase in rent if the threshold remained at that level, which it appears it now will. The Minister indicated in her letter that the Government would institute a taper, and of course, we have heard that that is now their intention and what that threshold would be.
Lord Best
My Lords, I am grateful to all noble Lords who contributed to this debate. The noble Lord, Lord Beecham, concluded on a point that he made at the beginning: the linking of these numbers to CPI, so that they remain the same in real terms in years to come. That important point remains unresolved, but there is a promise to return to it at Third Reading.
I am grateful to the noble Lord, Lord Kerslake, for his support. As well as the taper, which is the subject of the amendment, he talked about raising the £30,000 or £40,000 threshold, as did the noble Baroness, Lady Bakewell. We may need to return to those points.
The noble Lord, Lord McKenzie of Luton, pointed out some of the many hazards in trying to calculate these sums: finding the two highest earners, updating their earnings from previous years and the rest of it. As a former Minister in this field, he understands the complexities of these things, and we should be warned by him of the problems in administering the arrangements.
The noble Baroness, Lady Lister, talked about the various kinds of benefit that need to be excluded from these calculations. I hope that she was at least in part reassured by the Minister’s comments.
The noble Lord, Lord Low, quoted examples from his own experience. The noble Viscount, Lord Hanworth, wanted an appeals procedure, and I hope that he was satisfied that the Minister was able to reassure him that there will be an appeals procedure in this regard.
The noble Baroness, Lady Hollis, wondered whether all this was about was raising £100 million to try to reduce the deficit. The Red Book following the last Budget Statement has a figure, and I think that that figure is £125 million a year, so she is not so far adrift there. We are talking in those sort of terms: £100 million a year, maybe £125 million a year, as the figure that will be produced from this.