Housing and Planning Bill

Lord Kerslake Excerpts

Monday 18th April 2016 Lords Chamber

[Lord Kennedy of Southwark (Lab)]

My Lords, I first refer all noble Lords to my declaration of interests and further declare that I am an elected councillor in the London Borough of Lewisham.

As I said in Committee, and early on Report, many aspects of the Bill are controversial. As we move on to consider the pay-to-stay proposals, I think it is correct to say that this is one of the most controversial parts of the Bill. It is, in fact, just a revenue-collecting exercise for the Government to fund programmes that they should be funding centrally, which makes it all the more disgraceful. Local authorities will have no discretion over who they deem to be a high-income tenant and then what they should be charged.

I have received numerous emails from worried tenants, and I am sure many other noble Lords have as well. I recall one email from a woman who told me that she and her husband have a combined income in London of £42,000. They pay their rent and their taxes, and their children have grown up and moved away. They cannot afford to go on holidays, but they can afford to go out for the odd meal in a local restaurant. They love their jobs and feel that work in the public sector is rewarding. They were very happy. But then they were shaken by the worry that they will be deemed high-income tenants and their rent will increase dramatically to the levels that they see in the private sector. They just cannot afford to pay those levels of rent and are fearful for their future. That distress has been caused by the Government to tenants who find themselves in this position and is due to their handling of this policy right from the start. While we were assured of tapers and other protections, which I am sure the Minister will point to when she replies to this debate, this is no way to make legislation.

I am also puzzled that the noble Baroness, Lady Williams of Trafford, has often referred in our debates to the figure of £50,000 when talking about higher incomes and higher rents, yet the Government propose a cap of £40,000 in London. That makes me all the more convinced that the amounts of £30,000 and £40,000 have been selected more for the number of tenants who are expected to be caught and the revenue raised rather than because anyone really believes that these levels of household income are in any way high. If that is not the case, I invite the noble Baroness to explain clearly for what reason these levels have been selected other than that the department’s own research has illustrated that the largest number of people to be caught have incomes just above the levels proposed by the Government and that this is in fact a tax on council tenants on modest incomes.

I was going to suggest to the House that this is a stealth tax, but there is nothing stealthy about it; it is just a good old smash-and-grab raid. Furthermore, it applies only to earned income, so it is a tax on working as well. It really is unacceptable. My Amendment 72, which is supported by the noble Lord, Lord Kerslake, and the noble Baroness, Lady Bakewell of Hardington Mandeville, would replace “must” with “may”, thereby giving local authorities discretion about the levels of rent they would want to charge tenants who found themselves in this difficult situation. It is right to give local authorities this power to decide what is best for their area and I hope the Minister will accept my amendment. I beg to move.

[Lord Kerslake (CB)]

My Lords, I support Amendments 72, 75 and 78 in this group and in doing so declare my interests as chair of Peabody and president of the Local Government Association. The amendments would leave with individual local authorities the decision on whether to increase rents for higher-income tenants, give them the discretion not to implement the change if income was exceeded by the costs and enable them to retain this additional income at local level. This would put them in exactly the same place as the Government now propose for housing associations.

As the Bill has progressed, it has been increasingly clear that the pay-to-stay proposals are a back-door form of taxation. Application of the increased rents is mandatory regardless of local circumstances. Local authorities will collect the money, but the Chancellor gets to keep the income. How else could you describe this other than as a locally collected tax? The argument that we are doing this because of higher-income tenants subsidising those on lower income simply does not add up. We know that, following the un-ring-fencing of the housing revenue account, housing revenue accounts must now be balanced without government grant.

I use the term “higher” here because we are not talking about high income. The proposed thresholds, which we will talk about further in the next group of amendments, are for household incomes—this is the crucial point—of £30,000 outside London and £40,000 inside London. A couple in London, one working as a teaching assistant and another working as a caretaker, will come above the threshold. By no stretch of the imagination can these be seen as highly paid positions.

Jan Sweeney and her husband, who live in north Kensington, fit this description precisely. Jan wrote to me and I had the opportunity to meet her subsequently. When they started out in north Kensington many years ago, it was not a particularly attractive place to live, but they made it their home. They have never claimed benefits and have made a positive contribution to the community. They do not go on expensive holidays or own a car. They are just at the stage where the children have grown up and they have some money available to go out for the odd meal and treat the grandchildren.

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There are many questions about and difficulties with the proposed scheme. I hope your Lordships’ House will support the amendments in this group and that the Government will think again. It may be that certain of these issues can be dealt with next week, and if the Government are not in a position to agree on them today, I hope that they can at least give us some assurances. Failing that, this matter will have to go backwards and forwards between the Houses. That would be regrettable. It would prolong uncertainty and, I suspect, not answer the questions that I and others have raised.

[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.

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Moved by

[Lord Kerslake]

76: Clause 79, page 35, line 1, at end insert “which will not be below £50,000 a year per household in London, or £40,000 per household outside London,”

[Lord Kerslake]

My Lords, I welcome the debate that we have had on this amendment. I believe, though, that the thresholds are still too low and catch too many people on ordinary incomes. I would therefore like to test the opinion of the House.