Welfare Reform and Work Bill (Ninth sitting)

Neil Coyle Excerpts

Thursday 15th October 2015 Public Bill Committees

[Mr Vara]

I do not have that evidence to hand, but I am quite sure, given that the Department is responsible for paying the benefit, that it is there, and therefore that the measure is based on evidence. We all know people who have been on benefits for many years, in many cases for very good reasons, but it is a fact that many people out there have been on benefits for many years, so we must accept the reality of the situation.

[Neil Coyle (Bermondsey and Old Southwark) (Lab)]

The Minister has suggested that the evidence exists but he does not have it to hand. Will he make some of it available to the Committee?

[Mr Vara]

First, I pay tribute to the hon. Gentleman, who has a distinguished record in the charitable sector. I take this opportunity to commend him and the hon. Member for Birmingham, Yardley, who also has a charitable background. Many people do such work but it gets very little recognition, so I am happy to give that recognition both to colleagues and to the hundreds of thousands of people working in that sector.

As for the evidence, it is abundantly clear that many millions of people are claiming benefit. It is also a fact that, in the election last May, this Government were given a mandate by the people of this country to put forward these reductions and cuts.

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[Mr Vara]

I have not misled the Committee. It is a fact that the Government said that we would make £12 billion of reductions from the welfare budget, and it was on that basis that the people of this country, in their millions, voted for this Government as a majority Government and gave us the mandate to make those £12 billion of reductions in the welfare budget, as we are doing.

[Neil Coyle]

The Prime Minister also gave a commitment not to reduce tax credits, so I look forward to that commitment being implemented by the Government. To return to my previous point, where is the evidence for this Committee about decades-long benefit entitlement? [Interruption.]

[The Chair]

Order. The Minister has been asked a specific question. I do not want the debate to broaden out to the topic of the general election.

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[Emily Thornberry]

I do not know whether you were in Prime Minister’s questions yesterday, Mr Owen, but many of us were. We heard the Prime Minister say the Government were “very proud” to have kept all their promises to pensioners, but their actions in this Bill show that that is simply not right. The Opposition will make it perfectly clear to pensioners that the Government are going back on their promises to them.

Through the amendment, we want to exempt pensioners from the provisions in the clause. If there is a rationale for the policy, I have yet to work out what it is. On Tuesday, the Minister said—he has said this again today—that

“we believe it is wrong that taxpayers who are unable to afford to buy a home of their own are subsidising claimants who own their own homes.”––[Official Report, Welfare Reform and Work Public Bill Committee, 13 October 2015; c. 356.]

That is a very odd statement in the light of what the Government are doing generally. It is quite startling, because obviously the Minister has forgotten about the Government’s plan to extend the right to buy to housing association tenants. That policy, which the Government say is about supporting home ownership, comes with a price tag of £11.6 billion. That is almost equivalent to the savings that the Government say that they need to make in the welfare budget. Compared with that, SMI is absolute peanuts.

The last time the Government looked at the issue, which was in 2011, as we heard, the then Welfare Reform Minister said in a press release that the existing system was “not sustainable”. That is the justification for the measure and why we are going through it—the Government say that SMI is not affordable. At the time, the Government said, spending on SMI was about £400 million. Now it is £265 million a year. In three years’ time the cost will be £250 million. So far from being unsustainable, the cost is going down. If the Government’s definition of “unsustainable” is spending going down, as projected, we need to have a new dictionary.

In fact, the cost-effectiveness of SMI is one of its most distinguishing features. To quote my new favourite organisation, the Council of Mortgage Lenders, of which the Minister is also a fan, as we have heard, it is important that the Government should

“recognise the relative cost-effectiveness of SMI in preventing repossessions.”

The Government’s impact assessment for the Bill, which was the subject of some back and forth during Tuesday’s sitting, helpfully notes that the average weekly payment to working-age SMI claimants is £38 a week. For pensioners who receive the benefit, it is only £20 a week—so it is £20 a week to keep the roof over the head of a pensioner.

To put that into context, the DWP’s most recent figures show that the average weekly housing benefit payment is £95 a week. If there is even the slightest increase in the number of repossessions as a result of the changes that the Government are proposing, and homeless families have to go into privately rented housing and therefore need to claim housing benefit, we are clearly talking about false economies, because they will be moving into somewhere more expensive. Housing benefit is an average of £95 a week, but SMI for pensioners is £20 a week. That speaks for itself and shows the benefit of making social policy on the basis of evidence rather than rhetoric.

Part of my problem in understanding the Government’s intention is that the proposal seems to fit poorly with the values that they claim to hold. We have recently been through an election campaign—as the Minister was telling us—in which the Government repeatedly claimed that welfare reform would protect the most vulnerable. It was not always clear exactly what they meant by that, but what seemed never to be in doubt was that pensioners would be included, and it was certainly hoped that disabled people would be as well.

As the Government are well aware, the overwhelming majority of those who receive SMI are the very same people whom the Government had promised to protect. Almost half of those who receive SMI are pensioners, and about 40% are disabled. Only 15% are claiming JSA, which is a clear reflection of the fact that, in the majority of cases, the people who rely on SMI support will have fallen on hard times because of increasing age or disability and are therefore unlikely to return to work. A disproportionate number of them are single women.

Again, it is important to look at the evidence, and the evidence is that a disproportionate number of the people who are getting the very small sums of money that keep the roof over their head are single women. I do not know this, but I will make a leap and say that I presume we are talking about poor widows—women who have fallen on hard times and whose partners have died. The Government are taking £20 a week away from poor widows, and that might well result in those women losing their homes. Perhaps those women took their mortgage into retirement after their husband died, or perhaps they had to leave a well-paid job after developing long-term health problems. As we have heard, 40% of them are people with disabilities.

Whoever those people are, however, they are taxpayers. They have spent their entire life working and paying income tax and national insurance. They paid stamp duty when they bought their home, and they might be subject to inheritance tax when they die, although recent announcements suggest that that is less likely to be the case in future. People who receive SMI will have paid into the system and are entitled to expect that there will be a safety net for them when they need it. The Government’s proposal sets a disturbing precedent by turning a benefit to which those people will have contributed into a loan that could be clawed back at some future point. Adding insult to injury, they will be charged for the privilege.

The Prime Minister said yesterday:

“We are very proud to have kept all our promises to pensioners”.—[Official Report, 14 October 2015; Vol. 600, c. 314.]

That is not right. I cannot imagine what he means by that. The other point that my hon. Friend the Member for Oldham East and Saddleworth made is important. The Government have also failed to keep their promises in relation to social care and to what Dilnot called catastrophic costs, and have refused to give assistance to people who will need long-term care. People need to have a home to be able to sell it to pay for their social care.

The Government’s rhetoric again flies in all sorts of different directions. We hear high-flown talk from the Chancellor of the Exchequer about how important it is for people to be able to pass their savings and their money on to the next generation, and to be able, when they die, to hand over to the next generation without being clobbered by inheritance tax. There really does seem to be one rule for the rich and another for the poor. Widows who need £20 a week will have that taken away from them. They will be expected to take out a loan in order to pay off the interest, and will be charged to do so. It is cruel.

Amendment 138, which is consequential to amendment 137, provides that SMI will continue to be paid to low-income pensioners as a non-refundable benefit.

[Neil Coyle]

My hon. Friend is making a really solid point about the Government’s rhetoric. It is typical of the Government to create a false divide between taxpayers and those in receipt of benefits, as we have discussed in Committee previously. The Government seem to assume that the two do not overlap at all. As my hon. Friend has already pointed out, those who have put into the system for many years will find that the system is not there to support them, and we will now be charging them to draw down what they have contributed over the years. It is typical of a Government who are out of touch with ordinary working people.

[Emily Thornberry]

I could not agree more, and I thank my hon. Friend. I would go even further: I think that the welfare state and the principles on which we built it are one of the things we should be proud of about being British, and that is being fundamentally undermined by nasty little clauses such as this one. The Government should be ashamed. The Opposition will certainly fight it.

As I have said, amendment 138 is consequential to amendment 137, which will provide for SMI to continue to be paid to low-income pensioners as a non-refundable benefit. If the Government wish to go ahead and convert the benefit into a loan for working-age people, that is an idea that we can debate separately, because that is a different matter, but for pensioners who are unable to work there should be different considerations. If someone is coming to the end of their life and is not expected to work any more—that is what being a pensioner is—or if they are disabled, circumstances ought to be different. If someone is of working age and on jobseeker’s allowance, there might be a different argument—I have yet to be persuaded, but I appreciate that they might be a different group. However, as we have heard, most of the people affected by this nasty little clause will be pensioners.

If pensioners are to consider the Government’s promises worth the paper they are written on, Ministers should go back to the drawing board and rethink this cruel and unnecessary proposal. It is unnecessary because, in the great scheme of £12 billion, how much money are the Government really saving? It is an amount of money that is going down and down, and it is a fraction of a percentage point of the money that is to be saved.

The measure is a mistake. I hope that the Minister is listening—we are trying to help and the Government are making a profound mistake. I will press amendment 137 to a vote. If Conservative Members really believe that they cannot bring themselves to find, from a £120 billion welfare budget, £20 a week to help poor widows not lose their homes, the public have a right to know where the Government stand.

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[Mr Vara]

If £250 million is chickenfeed, to quote what the hon. Lady said, I am afraid that people reading our proceedings in Hansard will take a deep breath and say, “This is what those people think of £0.25 billion.” The consequence of several such chickenfeed decisions is the mess that the country is in now.

[Neil Coyle]

Given what the Minister has said about the economic competence of the Government before last, will he remind us of the savings projected for employment and support allowance and housing benefit in the previous Parliament and whether they were met?

[Mr Vara]

I do not have those figures to hand, but I am happy to obtain them and write to the hon. Gentleman. He is seeking to make a name for himself. On Tuesday he sought to do so by calling other Members names. Today he seeks to be clever by asking questions, which are important, but which he knows will get a written answer.

The amendment will not make a difference. This is all about fairness.

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[Emily Thornberry]

The answers we have heard are profoundly disappointing, and they will be disappointing to the most vulnerable pensioners throughout the country who have paid into a system and who deserve better from the Government.

[Neil Coyle]

Does my hon. Friend agree that the Minister is making a mockery of the Government’s supposed commitment to protect the disabled and pensioners, which is what they claimed? The Government seem to be relying on a low number of people being affected by the measure to hide their false pretence.

[Emily Thornberry]

That is absolutely right. Of course, for people who are affected, it will not matter whether the number is a low one—their life will be profoundly affected by the changes made in the Bill. A relatively small amount of money is involved. I appreciate that huge numbers of people will not be affected, but that does not change the principle, the justice or the unfairness to the individual concerned. We will not withdraw the amendment and will press it to a vote.

Question put, That the amendment be made.

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[Mr Vara]

The social rent clauses relate to the Government’s commitment to achieve a reduction in rents for social housing of 1% a year over four years. That will be good for the tenants and for the taxpayer, saving £1.445 billion by 2020-21. The amendments are the consequence of the Government listening to points made since the Bill was published by social landlords, local government and housing bodies, among others. We hope our amendments address some of the issues raised. The amendments in the group are either concerned with issues of clarification or make small drafting changes.

Amendments 141 and 143 clarify that the 1% rent reduction applies in each relevant year, which is to say, each of the four years from 2016. Amendments 142 and 146, taken together, clarify that the reduction relates to the amount of rent that is payable by a tenant in respect of a year—not the amount that is actually paid by the tenant, which is to recognise the reality that those figures might differ. Amendment 145 is a minor drafting point to clarify that the “amount” relates to the “amount of rent”. Amendment 170 is to simplify the drafting of clause 19 and amendment 173 is a drafting change to the clause to provide that a relevant year for a private registered provider whose practice is not an April start to a rent year will be determined in relation to the rent practice for the number of tenancies, not tenants.

Amendment 163 deals with the potential failures of providers to comply with the clause. It seeks to give the regulator of social housing the appropriate grounds on which to exercise monitoring and enforcement powers. With this amendment we have had regard to how the Housing and Regeneration Act 2008 established such powers and the need to avoid any confusion in how the regulator should exercise its power.

[Neil Coyle]

The Minister mentioned that he had had meetings with or representations from social housing associations. Will he clarify how many housing associations supported the measures proposed by the Government? How many housing associations have outlined to the Minister and the Department the risk that they might have to close some of the housing they provide as a result of the measure?

[Mr Vara]

Let me put things into context. We have spoken with a lot of organisations—I have a list at the back of my file and am happy to read out some of the names if necessary. The context of the measure is that it is part of the Government’s £12 billion welfare reduction. We made that absolutely clear to the country at the time of the general election. The people of the country voted democratically, in their millions, and we have a mandate to make those cuts. That is the reality of the position, which might be something that the Opposition do not like—

[Neil Coyle]

Will the Minister give way?

[Mr Vara]

I will not give way for the moment; I will finish my answer. The reality is that that is the position.

We have, however, spoken with a lot of people. I simply refer to the comments made by David Orr, the chief executive of the National Housing Federation, when he give oral evidence before the Committee. Most of us were at that sitting on Tuesday 15 September 2015. In response to a question from my hon. Friend the Member for Sutton and Cheam, Mr Orr said:

“I think that, in truth, there is no sector anywhere that is not still capable of making further efficiency savings. That is as true in our sector as it is anywhere else.”

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[Neil Coyle]

Riverside Housing Association has said that

“a year on year rent reduction would make this element of our business loss making.”

St Mungo’s has said that

“the requirement to reduce rents in social housing in England by one per cent per year for four years will result in the loss of supported housing schemes for homeless and vulnerable people.”

The Homes and Communities Agency has estimated that those services save the taxpayer £640 million per year. Where is the saving in the longer term if those services do not exist?

[Mr Vara]

I am sorry that the hon. Gentleman was so keen to ask his question and so busy thinking about it that he paid no attention to what I was saying. He referred to one organisation. I referred to the comments of the chief executive of the National Housing Federation. We have done our homework, and estimate that we will save nearly £1.5 billion, as I have said.

Amendment 163 provides that a failure or risk of failure to comply with clause 19 is not to be, of itself, a ground for exercising certain monitoring and enforcement powers under part 2 of the 2008 Act, by removing clause 22(1) and (2) from the Bill as introduced. The practical effect of the amendment is that, before exercising those powers, the regulator must satisfy the specific grounds relevant to each power in chapters 6 and 7 of the 2008 Act, as amended by clause 22(3) to (8) of the Bill. Amendments 164 to 168 insert the correct title of the Bill into certain provisions.