Lord Shipley
Main Page: Lord Shipley (Liberal Democrat - Life peer)Housing and Planning Bill
Lord Shipley Excerpts
Lord Shipley (LD)
My Lords, I am very pleased to have the movement that the Minister has announced. Perhaps I can make one further suggestion, because I am still not entirely clear what the timing of all this is, because, as I recall, last Thursday, the Minister said that we would not have further information about regulation on aspects of the Bill until after Royal Assent. To pursue the point made by the noble Lord, Lord Campbell-Savours, there is an issue about the Government’s plan to use the negative procedure, as opposed to the affirmative procedure, in secondary legislation. I draw the Minister’s attention to the two reports by the Delegated Powers and Regulatory Reform Committee, which had a lot to say on that. If the negative procedure is used and if the working group comes up with proposals which post-date Royal Assent, that makes it very difficult for the House to make any changes to the Bill. Therefore, accompanying the proposal to have a working group I hope that the Minister can now at least think with colleagues about how the strong criticisms of the committee about overuse of the negative procedure can be addressed.
Baroness Williams of Trafford
I will bear the noble Lord’s point in mind. It has just come to me that I may have sent that list to the noble Lord, Lord Campbell-Savours, last week, so it may be in his post pile today.
Lord Shipley
My Lords, I rise to speak to Amendments 69D, 70E, 76A and 79C in this group. I have already declared my vice-presidency of the Local Government Association in Committee, but in view of what I am about to say, I will simply draw attention to it again.
The noble Lord, Lord Best, covered all the key issues on pay to stay, although I will say something further when Amendment 81 in this group has been spoken to. These amendments basically challenge the nature of Clause 78, which is about a mandatory approach to local authorities. They require an element of discretion for local authorities to make decisions that they think are best for their areas. It is difficult to understand why, if it is voluntary for housing associations to do this, it is not voluntary for local authorities. The noble Lord made clear that there is to be a change in the nature of what the Government have been proposing on pay to stay, so the “cliff-edge approach” that he talked about is apparently no more—although we have yet to see the detail. I associate myself with what the noble Lord said about the lower sum being better.
Will the Minister give some further thought to the administrative cost to local authorities and others of pay to stay? I think that the cost will be much higher than the Government currently think. On a later group we will come to the issue of access to HMRC data, but it would be easier to raise the thresholds than simply apply a taper, partly because so much of what is being proposed could relate to levels of household income that exist a number of months before the information is made publicly available under HMRC timescales. The Government need to be very careful about the administration and bureaucracy that will be put in place, particularly relating to the taper, whatever its level—and let us hope that it is the lower one.
My objection to what the Government have been proposing on pay to stay is that it reduces the aspiration to work more and actually encourages people to work less. If they are to lose out with the amount of rent they have to pay it is not worth their while to work, or work as much, so there will be a tendency for people to decrease their hours, with a growth in part-time working. That is particularly dangerous in the public sector, where pay levels are not that high. It might encourage people to work less and take qualified people away from public-facing duties.
I say to the Minister that I hope that it is understood that any extra income deriving from higher rents should be kept for reinvestment in the housing stock locally. I know that there are discussions on that. In the end, the requirement for social housing for rent is such that this cannot be seen as some kind of source of taxation for the Treasury to get its hands on. Actually, money needs to be reinvested by local authorities in providing the right level of housing for their areas.
I hope to come back at a later point on Amendment 81 in this group, which relates to the delegated powers that the Secretary of State will have—but I will wait until a later moment to do that.
Baroness Hollis of Heigham
My Lords, I will speak to this group of amendments, and in particular in support of Amendment 69D, which would make pay to stay voluntary for local authorities.
The government argument for RTB for housing association tenants is the level playing field—or, as the noble Lord, Lord Porter, said, similar treatment of people on either side of the street. The Government have also proposed pay to stay, under which so-called high-earning council tenants outside London on £30,000 a year between them—£15,000 times two—were to pay a full market rent. But whereas for housing associations pay to stay is voluntary, for local authorities it is compulsory. We need the level playing field of the noble Lord, Lord Porter.
As the noble Lord, Lord Best, absolutely rightly said, whereas housing associations can retain any proceeds from this, local authorities must send theirs to the Exchequer. The reason for that, according to page 56 of the impact analysis, is that the policy of sending the proceeds to the Exchequer will help the Government “reduce the deficit”. Will the Minister tell us why council tenants have a special duty to reduce the deficit while housing association tenants do not?
Secondly, how does this interact with the 1% social rent reductions? Let us assume that a local authority family with two children on gross £30,000, net £24,000, income a year might now have a social rent of about £100 a week for a three-bedroom house. Social rents will be coming down 1% a year, while market rents will grow, it says, with overall private-rental inflation. So the gap between the two will therefore widen. With the push to market rents, if that family’s rent rose to £150 a week, they would get housing benefit; if it rose to £250 a week, their housing benefit would be £100 a week. Even the Government think that that is daft.
So the Government are now proposing, as the noble Lord, Lord Best, said, that rent increases should be tapered and should not apply to those on housing benefit. What would be the result? As the noble Lord, Lord Shipley, asked, what family on housing benefit would increase their pay and lose their housing benefit firewall? Work incentives would be badly damaged. Fraud would certainly increase—and, incidentally, contaminate HMRC records. Part-time work would move into the grey economy and couples would come to more informal living and financial arrangements, and so on. In a single-parent household, with an adult son living there, what happens to adult non-dependent deductions? Around 25% of their income is taken into account in determining HB. The son may move out—and then there lurks the threat of the bedroom tax.
And how—I am puzzled by this—will all this interlock with universal credit? If you are on HB, you will not be paying market rent; but what happens if you are on universal credit? The Government say, in their consultation exercise, that they will consider the links to UC “in due course”. That is very odd. DCLG is treating housing benefit and universal credit as two separate streams of benefit. Having sorted HB, they will turn to UC. But of course, as the Minister must know—and I am sure that she does—UC is absorbing HB. UC will be based on monthly real-time information. Pay to stay—ultimately part of UC; whether the Minister or the department are fully aware of this or not, I do not know—will be based on out-of-date tax records, perhaps one year behind. So UC will be based on real-time information on a monthly basis, and housing benefit on the taper will be based on records perhaps a year out of date.
The effect for the tenant of the 20% taper on the move to market rent takes UC withdrawal rates—and there is not a word about this anywhere in the impact analysis, needless to say—from up around 73p in the pound, which is already a high work disincentive, as the noble Lord, Lord Shipley, said, to 93p in the pound. As a result of this, you work for 7p an hour. Would any of your Lordships do that? This really screws UC. There is not much point in rolling out UC—which I very much support and which was based on improving work incentives, which I very much support—if you return to pre-UC deduction rates, keeping just 7p in the pound.
Let us turn away from the effect on tenants to the effect on local authorities—again, as mentioned by the noble Lord, Lord Shipley. At the moment, tenants coming forward for housing benefit know that their finances will be scrutinised—of course they will be; it is an income-related benefit. But in future, as far as I can see, local authorities will need blanket information from HMRC on every adult living in a council home not already on HB, reversing separate taxation and matching it by household and address, in order to increase their rent on an individual, tailored basis. So, if you go down the street mentioned by the noble Lord, Lord Porter, almost every tenant could pay a different rent, personally tailored, for the same kind of property—or worse, based on out-of-date details of their previous year’s income.
At the moment, because rents are standard in local authorities, HB is fixed for the most part for 12 months at a time, apart from major reportable changes of circumstance. Yet even now, local authorities are unable to deliver HB as speedily as they would wish, while losing more and more staff because of their 40% cuts. Given, as we found with tax credits, that income fluctuates quite markedly over the course of the year with overtime, commission, children’s school holidays and periods of sick pay, will the tenants’ pay-to-stay rent fluctuate by the month alongside their income?
If it does not fluctuate, or the Government rely on end-of-year HB adjustments, tenants will find it impossible to avoid debt, arrears, poverty and probably eviction. But if it does fluctuate monthly, the local authority will find—as with tax credits—that the pay-to-stay rent it charges on a monthly basis is always a couple of notifications behind the facts and will never catch up. It will be a nightmare. As local authorities said in response to the very perfunctory consultation exercise as reported by the Government, their systems are not designed to do any of this. The Government breezily say that they can keep their administrative costs. But the system will crash—constantly.
Then, any extra rent goes to the Treasury. Local authorities already have the power to pursue an individual on more than £60,000 a year for a rent rise—what we call the Bob Crow amendment—if they see fit. But the last thing they will want to do is proceed with mass investigations of almost every council tenant—some will be on HB; those who are not will need to be investigated—at huge administration and probity costs. This is almost literally another poll tax. And the sums at the end of all this go not to local authorities but to the Exchequer.
Only local authority tenants, not housing association tenants, are being levied to fund huge discounts under the voluntary deal. Only local authorities, not housing associations, are required to pursue market rents. Only council tenants, not housing association tenants, may see their UC taper rise from 73p to 93p in the pound so that poorer council tenants get less financial support than the housing association tenant on the other side of the street of the noble Lord, Lord Porter, while having an identical property, identical family and identical income. Finally, only local authorities, not housing associations, are required to send the proceeds to HMT. Local authorities have become the whipping boy at every point in the Bill. Yet local authorities are publicly elected, fully accountable and entirely transparent bodies, open to the public and the press. None of that is true of even the best-run housing associations.
Lord Shipley
My Lords, I said earlier that I wanted to comment on Amendment 81 when it had been spoken to. It is part of Clause 84, and therefore Clause 84 stand part is relevant. This is a very important issue. The noble Lord, Lord Foster of Bath, referred to pages seven, eight and nine of the Delegated Powers and Regulatory Reform Committee’s report. I do not seek to repeat what the noble Lord, Lord Beecham, has said, but I hope that the Minister will have a clear reply because, as the Delegated Powers and Regulatory Reform Committee says in paragraph 37:
“It could be viewed as a form of taxation because it enables the regulations to require local housing authorities to make payments to the Secretary of State in respect of ‘any estimated increase in rental income because of the regulations’”.
It goes on to say that the memorandum of explanation that it received,
“gives only the barest explanation or justification for this power; indeed, it seeks to dismiss this highly important provision as ‘quasi-technical’.… The intended meaning of that expression wholly eludes us, and the House may wish to ask the Minister for an explanation”.
We have asked for this. Given that this has been available since 5 February, clearly the Government have time now to respond through the Minister’s reply as to how they plan to deal with that matter.
In paragraph 38, the Delegated Powers and Regulatory Reform Committee says:
“The Henry VIII power in Clause 83(4) will be subject to the affirmative procedure. Otherwise, the negative procedure applies to regulations made under all the other powers in this group of clauses. The justification in the memorandum is that the negative procedure follows ‘a clear policy framework that has been set in Clause 78 and the related clauses of the primary legislation’….We strongly disagree with the suggestion that the clauses in question offer anything like a clear enough statement of discernible policy to justify the delegation, far less the negative procedure”.
I want it to be clearly understood by the Minister that this is a very serious matter. I hope and anticipate that she will be able to give a full explanation of why this clause has been worded in this way.
Baroness Williams of Trafford
My Lords, before I turn to the amendments I want to outline the Government’s latest position on the policy for high-income social tenants, which I outlined in a letter late last week. I hope this will address some of the concerns from noble Lords, particularly those who have stated their opposition to the policy and the clauses in the Bill.
I recognise and share the concern about the level of detail that has been brought forward with regard to our policy for high-income social tenants. My priority over the past few weeks has been to finalise key aspects in order to give that detail. This is particularly important, as the greater part of the policy will be set out in secondary legislation. Although I do not have regulations to share with noble Lords today, I am able to set out a significant amount of detail about what will be included in those regulations.
I am clear that secondary legislation is necessary for this policy, as we need the ability to keep the policy under review and bring forward changes in future based on a thorough review of the effectiveness of the policy and its impact. I am sure that that will be supported.
It is fair to ask how the legislation will be used in the first place. Before I turn to that, I remind the Committee of the Government’s reasons for introducing the policy. The 2015 Budget set out that households in social housing on incomes of £30,000 or above nationally and £40,000 or above in London would be required to pay a higher amount of rent if their current rent was below the market value. It is simply not right that social tenants continue to benefit from lower rates of rent as their income rises when households in the private sector on comparable income levels do not have this luxury. Households in the private sector on those kinds of incomes would, in many cases, be expected to pay the market rent. This is fundamentally unfair when it is those same taxpayers who are contributing to the lower rents enjoyed by tenants on similar incomes in the social sector. The position cannot continue.
Many taxpayers will be surprised to learn that there are more than 40,000 households in the social sector on annual household incomes of over £50,000 a year who are continuing to benefit from taxpayer-funded lower rents. Of course, that figure is at the top end of the household income scale, and we recognise that there are far more social households in receipt of incomes between £30,000 and £40,000 a year. We have always recognised that we must not damage the incentive to keep and find work, as the noble Lord, Lord Foster, says, and I know this important aim will be shared by many in the Committee. Households earning above £30,000 should be able to contribute a little more towards their housing costs, and it is on that basis that we consulted in October 2015 on a proposal for a taper to ensure that rents would increase gradually above the proposed income thresholds.
There was a strong level of support for the proposed taper, with just under 90% of respondents to the question supporting the proposal. I am pleased to be able to confirm to the Committee that the Government will be introducing a taper, and we will use regulations to set out the design of the taper. There are a number of ways in which this could be done. For example, a taper set at 20% would mean an extra 20% in rent for every £1 earned above the income threshold. A taper set at 10% would mean an extra 10% in rent for every £1 earned above the threshold. Both examples would mean that, for households just above the starting income thresholds, the rent rise would be a few pounds each week, not the doubling of rental payments that has been a prominent accusation in recent weeks. I am sure the Government’s confirmation of the taper will provide some reassurance to members of those households who have been worried that rents will jump straight to market rental values.
Lord Berkeley of Knighton (CB)
My Lords, I agree with everything that has just been said. One other point might complicate matters. Should we leave the EEC, the effect on subsidies to farming would make this whole area even more volatile.
Lord Shipley
My Lords, my name is attached to Amendment 79A in this group, along with that of my noble friend Lady Bakewell of Hardington Mandeville. However, I also support Amendment 70A and other probing amendments.
Amendment 79A is our attempt to consider the threshold, which the Government had defined as £30,000 outside London and £40,000 inside London, and which the amendment increases to £40,000 outside London and £60,000 in London. It is a probing amendment. However, our view is that the taper starts too low at the figures that the Government originally decided on. Therefore, I hope there is an opportunity for them to look carefully at whether there is a good case, as we think there is, for the minimum threshold to be much higher. That would save a great deal of administration and associated costs. Be that as it may, I hope the Minister will explain why those figures are deemed too high, because I suspect they are more reasonable than the ones on which the Government have decided.
Baroness Lister of Burtersett
My Lords, I raised a number of questions at Second Reading which never got a reply and, as they are relevant to this group of amendments, I thought I would have another go.
The first follows directly from what the noble Lord, Lord Shipley, just said: why was it decided to reduce the earnings threshold from that in the existing voluntary scheme? Am I correct in thinking that there is no intention to increase the threshold in line with average earnings, thereby pulling more and more tenants into the net of pay to stay? If so, why? What protection might there be for vulnerable tenants unable to provide the necessary documentation? Crisis has raised concerns that they could be liable for the full market rent, regardless of their actual income. We can think of a lot of situations where there may be good reason why someone has not provided that information, but it would be totally unfair for them to have to pay the full market rent.
Finally—I did not raise this at Second Reading, but I raised it two groups of amendments ago and the Minister did not come back to me—there is the whole question of the lack of equivalisation. There will be such a crude means test that takes no account whatever of family needs. We are not treating like with like; we are treating the same income to meet rent, regardless of how many mouths have to be fed from that income.