Child Maintenance
Steve Webb Excerpts(11 years, 7 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
On 19 July 2012, the Government published “Supporting separated families; securing children’s futures” (Cm 8399), a public consultation on the draft Child Support Fees Regulations 2013 and the draft Child Support (Ending Liability in Existing Cases and Transition to New Calculation Rules) Regulations 2013.
This statement summarises the changes the Government intend to make in response to the consultation. We will publish a full response later this year.
As previously outlined, once the 2012 scheme has been opened to all applicants and has been shown to be working well, the Government intend to begin a gradual process of ending liabilities on cases in the previous Child Support Agency schemes. Parents in these “CSA” schemes will be invited to consider making their own family-based arrangements for maintenance or to apply to the new child maintenance service, which operates the 2012 scheme.
The Government will also begin charging application, collection and enforcement fees in the 2012 scheme. We have listened to concerns that the proposed 7% parent with care collection fee is too high a figure and therefore we will be reducing the proposed fee to 4%. The proposed fee for non-resident parents will remain at 20% calculated on top of the maintenance calculation.
In addition, we will extend the list of organisations to which an incident of domestic violence and abuse may be reported in order to qualify for the exemption from the application fee to include local authorities, legal professionals and specialist support organisations.
Separately, we have reconsidered our position on the flat rate of maintenance and have decided to set the 2012 scheme flat rate at £7 rather than £10 as previously proposed.
We intend to carefully manage the process of ending liabilities on cases in the CSA schemes so as to minimise the risk of disruption to child maintenance, particularly where maintenance is flowing as a result of enforcement action, such as deduction from earnings orders. We aim to do this in different ways.
First, we will change the proposed order in which liability is ended on CSA cases, starting with those CSA cases where a nil liability has been calculated, and therefore there is no possibility of payment disruption. We expect around 50,000 previously nil-assessed cases to be positively assessed in the 2012 scheme, resulting in maintenance flowing to these children for the first time; we will then end liability on cases that are not currently compliant, again because there is no current payment arrangement to disrupt; followed by any cases that are compliant but not subject to enforcement action, starting with those cases managed clerically. Finally, we will end liability on CSA cases that are in legal enforcement—and where money is flowing—or where money is only flowing as a result of an enforced method of payment. We anticipate this process of ending liability in CSA scheme cases to take approximately three years from start to finish.
Children living in lone parent families tend to be at greater risk of falling below low-income thresholds. By prioritising those cases where no maintenance is flowing, we aim to maximise the contribution of the statutory scheme to the welfare of these children.
Second, we will take a firmer line on which non-resident parents will be given the choice of paying the parent with care directly. We will offer a “compliance opportunity” to those non-resident parents who are subject to enforced methods of payment, such as deduction from earnings orders. We will write to non-resident parents nine months before their CSA maintenance liabilities are due to end, offering them the opportunity to prove their compliance voluntarily by paying via an unenforced method of payment such as direct debit for the final six months of their CSA liability.
Those non-resident parents who accept the invitation and then comply would have access to the “direct pay” option and thereby avoid the collection fee. Non-resident parents who refuse or fail this invitation will, if a case is opened on the 2012 scheme, be placed on the same enforcement method that they were subject to in the CSA schemes, thereby minimising the potential for payment disruption.
Finally, although this statement concerns changes to the statutory scheme, our reforms go wider than this. Our starting point is that children tend to do better when they have a positive relationship with both parents, so we are supporting both parents to play an active and positive role in the life of their child through the help and support for separated families (HSSF) programme. As part of this, we have launched the sorting out separation web app; an HSSF mark; the HSSF telephony network; and an innovation fund to test and evaluate new interventions to help separated parents work together.
Taken overall, these reforms are an important part of the Government’s wider social justice strategy, strengthening the support we provide to families and promoting the welfare of their children.
State Retirement Pensions
Steve Webb Excerpts(11 years, 7 months ago)
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Yasmin Qureshi
To ask the Secretary of State for Work and Pensions how many people will not get a full pension as a result of any increase in the qualifying period from 30 to 35 years.
[Official Report, 25 April 2013, Vol. 561, c. 1090W.]
Letter of correction from Steve Webb:
An error has been identified in the written answer given to the hon. Member for Bolton South East (Yasmin Qureshi) on 25 April 2013.
The full answer given was as follows:
Steve Webb
The single-tier pension will require 35 qualifying years of National Insurance contributions or credits for the full amount. Based on the illustrative amount of £144 for the full single-tier pension in 2012-13 terms set out in the White Paper, 30 qualifying years under the single-tier scheme would be equivalent to a value of £123.43 a week.
Under the current state pension system, people reaching State Pension age today require 30 qualifying years for the full amount of basic State Pension currently £107.00 a week and can make contributions to the State Second Pension for each year in their working life. When the single-tier pension is implemented we will recognise contributions made under the current system and translate them into a single-tier pension foundation amount.
In the long term around 85% of people will get the full single-tier pension under the proposals outlined in the White Paper published in January. Chart 4.1 shows the proportion who will receive the full single-tier pension by the year in which people reach State Pension age. In the early years of the reforms most people receiving less than the full single-tier amount will do so because they will have a deduction applied to take into account periods when they were contracted out of the additional State Pension, rather than because they have fewer than 35 qualifying years.
The correct answer should have been:
Steve Webb
The single-tier pension will require 35 qualifying years of National Insurance contributions or credits for the full amount. Based on the illustrative amount of £144 for the full single-tier pension in 2012-13 terms set out in the White Paper, 30 qualifying years under the single-tier scheme would be equivalent to a value of £123.43 a week.
Under the current state pension system, people reaching State Pension age today require 30 qualifying years for the full amount of basic State Pension currently £110.15 a week and can make contributions to the State Second Pension for each year in their working life. When the single-tier pension is implemented we will recognise contributions made under the current system and translate them into a single-tier pension foundation amount.
In the long term around 85% of people will get the full single-tier pension under the proposals outlined in the White Paper published in January. Chart 4.1 shows the proportion who will receive the full single-tier pension by the year in which people reach State Pension age. In the early years of the reforms most people receiving less than the full single-tier amount will do so because they will have a deduction applied to take into account periods when they were contracted out of the additional State Pension, rather than because they have fewer than 35 qualifying years.
Pensions Bill
Steve Webb Excerpts(11 years, 7 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am pleased to announce that the Pensions Bill and associated documents will be published today.
The Bill was introduced into Parliament yesterday and provides for important reform to both state and private pensions, and bereavement benefits. This Bill will:
introduce the single-tier pension, a simpler, fairer system that encourages retirement saving, to be implemented from April 2016;
bring forward the increase in the state pension age to 67 and establish a framework for considering future changes in light of increasing life expectancy to maintain the long-term sustainability of the system;
provide for a system of automatic transfers of small pension pots, which will reduce the number of dormant pots and make it easier for people to keep track of their pensions savings and secure a better income in retirement;
introduce a new statutory objective for the Pensions Regulator to take account of the sustainable growth of employers, and contains a number of smaller amendments in relation to private pensions legislation, including some measures relating to automatic enrolment into workplace pension schemes; and
reform the existing suite of bereavement benefits to simplify the system in line with changes to the state pension and wider welfare reform measures, and ensure that it is fit for the 21st century.
It is vital that the pension savings of individuals who are automatically enrolled are protected. Following a thorough review, I have concluded that the consultancy charging mechanism is not appropriate in schemes used to comply with the employer duties under the Pensions Act 2008. I am therefore also announcing the Government’s intention to ban consultancy charges in automatic enrolment schemes. This will apply to both occupational and personal pension schemes and I intend to lay regulations before Parliament as soon as possible. Furthermore, in light of the forthcoming Office of Fair Trading report, the Government plan to publish a consultation this autumn. This will set out proposals including for introducing a charge cap.
Later today, the Government will also publish a response to the Work and Pensions Committee’s report of their pre-legislative scrutiny on part 1 of the draft Bill. I would like to express my thanks to the Committee for agreeing to undertake pre-legislative scrutiny and for their helpful recommendations. The report raised a number of important issues and has resulted in changes to the Pensions Bill since it was published in draft, including to specify that the single-tier pension will now be implemented from 6 April 2016.
I will place a copy of the delegated powers memorandum in the Libraries of both Houses along with a high-level single-tier communications strategy document and a list of all older papers relevant to the Bill.
Copies of the Government’s response to the Work and Pensions Committee, the impact assessment and the delegated powers memorandum will be available in the Vote Office and Printed Paper Office and on the GOV.UK website later today.
Jobs and Business
Steve Webb Excerpts(11 years, 7 months ago)
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Julie Hilling (Bolton West) (Lab)
A few weeks ago I sat in the Chamber listening to the Budget debate. My overwhelming memory is of the Chancellor sitting on the Front Bench looking like a little boy lost, with no idea what to do about a flatlining economy, the loss of our triple A status or the level of borrowing, and no idea how to balance the books. So he delivered a Budget that did none of that, sitting on his hands, hoping that things would just happen.
After that disappointment, one might think that I would learn, but sadly not. I listened to the Queen deliver the Gracious Speech, hoping that she would tell us about the action Her Government would take to improve life for my constituents. It seemed to start pretty well:
“My Government’s legislative programme will continue to focus on building a stronger economy”.
I frowned a little at the word “continue”, because after three years they seem to have failed to build anything, but still I sat in hope. She continued:
“It will also work to promote a fairer society that rewards people who work hard.”
Well, we all agree with that. She went on:
“My Government is committed to building an economy where people who work hard are properly rewarded. It will therefore continue to reform the benefits system, helping people move from welfare to work.”
I frowned a little at that, too. As I see it, their reforms of the benefits system are not helping people to move from welfare to work; they are making them move to food banks and to skip meals so that family members can eat. If they are even more unfortunate, they might be one of the families who have been made homeless.
Even so, I waited to hear what the Government would actually do to build our economy. I waited and waited—I did not have to wait long, because in less than 10 minutes the speech was over—but there were no answers and no relief for my constituents. There was a little tinkering, but it was yet another wasted opportunity from this failing Government. They are out of touch and out of ideas.
How much evidence do the Government need that their policies are failing? The International Monetary Fund says that growth in the UK is slower than in 23 of the 33 advanced economies it monitors. Olivier Blanchard, its chief economist, warned the Chancellor that he is “playing with fire” by refusing to change course. However, there was nothing in the speech to address the IMF’s call to boost growth and rethink the speed of the deficit reduction. Starting to build HS2 in a few years, welcome though that is in Bolton West, will do nothing to build the economy now.
On the same day that the Queen delivered that terribly thin speech, the Institute for Fiscal Studies said that 1 million more children will descend into poverty as a direct result of benefit policies. Simply saying that people should work hard and blaming the poor for the situation they find themselves in is an insult. The Joseph Rowntree Foundation says that 6.1 million people living in poverty are in working households, 6.4 million people lack the paid work they want and 1.4 million part-time workers want full-time work, the highest figure in 20 years.
The Government like to boast that they have created over 1 million new jobs, but they do not tell us how many of those jobs are a direct transfer from the public sector or how many are unpaid. Unbelievably, workfare jobs, where people work for their dole, are counted as jobs created. Despite the Secretary of State’s denial, according to the Office for Budget Responsibility unpaid work experience and work placements make up 14% of those so-called new jobs. The Government do not tell us how many of those jobs are on are zero-hour contracts or how many are part time, and they do not tell us how many of them no longer exist because the business has failed or downsized.
The Government like to peddle the myth that the 2.5 million people who are out of work and the 1 million young people who do not have jobs are skivers and shirkers. The reality is that millions of people are desperate for work and there is a substantial churn of people in poverty or out of work. Although 18% of people are on a low income at any one time, one in three of us experience at least one period on a low income in a four-year period, and 11% of people are on a low income for more than half of those four years. More people are out of work under this Government than were when they took office, and the flagship Work programme gets only two in every 100 people into work—fewer than if the Government had done nothing at all.
Tax credits have been cut so hard that a previous Work and Pensions Minister revealed that some families with children could be £728 a year better off if they were out of work. The Department for Work and Pensions impact assessment reveals that universal credit will fail to make work pay for 2.1 million workers and that real wages are down by £1,700 since the election. The welfare bill has continued to go up since the financial crash and is increasing in real terms by 2% each year. Borrowing is going up and unemployment is set to rise even higher.
Of course, the Government like to blame Labour for everything. According to them, the Labour Government caused the global economic crash—a crash that started in America and spread to the rest of the world. They like to say that we did not fix the roof while the sun was shining, but they forget that the Labour Government paid off the second world war debt, built hundreds of new schools and hospitals, and invested more in the railways than the so-called record spending that this Government currently claim. At the time of the general election we had growth of 0.7%, unemployment was falling, and the deficit was coming down.
The Government need to start to take responsibility for a double-dip recession, for soaring borrowing, and for failing to meet every one of their predictions on growth, borrowing and deficit reduction, yet they carry on with their failed policies. Have they never heard the old adage, “You can’t cut your way out of a recession”? They need to take action to grow the economy. Building homes would be a good place to start, as would ensuring that businesses get the finance they need with a British investment bank.
The Minister of State, Department for Work and Pensions (Steve Webb)
I do not know whether the hon. Lady is aware that when she stood for election in 2010 her party set out spending plans for this Parliament that involved substantial spending cuts.
Julie Hilling
Absolutely; I am well aware of that. In fact, we said that we would halve the deficit over this four-year period. The Government said that they were going to cut it completely in one term, but they are not even three quarters of the way there yet. They told my local council that it would have to find £20 million-worth of cuts over the course of the Parliament. It has already had to find £100 million-worth of cuts. That is the difference between a planned deficit reduction and planned action for growth and a Government who sit there saying, “If we cut, something miraculous will happen to grow our economy.”
Rushanara Ali
The Government’s record in tackling poverty domestically is risible, and their inability to stick to the commitment to enshrine in law the commitment of 0.7% of GNI is deeply disappointing. I hope they will act on that. It is disappointing that the commitment was not in the Queen’s Speech, and that it was not in previous Queen’s Speeches.
I want to return to the Government’s failure to take child poverty seriously. In my constituency we also have some of the highest rates of youth and graduate unemployment. If the Government were serious about lifting families out of poverty, they would increase the number of training opportunities to help graduates into work and increase the number of apprenticeships. We have 10 young people chasing every single apprenticeship opportunity—that is completely unacceptable. The money spent on the millionaires’ tax break could have been used to create more apprenticeship opportunities. We cannot go on like this, with 1 million young people out of work.
Steve Webb
The hon. Lady said that half the children in her constituency are living in poverty. She will know that the official published figures on child poverty show a fall since the general election. Presumably, after 13 years of a Labour Government, half the children in her constituency were in poverty. Will she apologise for that record?
Rushanara Ali
The hon. Gentleman’s Government should apologise for their failure to reverse the increase. Child poverty in my constituency has gone up consecutively in the past three years. He ought to apologise for that and he ought to act. He should have lobbied his Government to propose measures in this Queen’s Speech to tackle child poverty. He ought to apologise and I give him the opportunity to do so today.
Private Pensions
Steve Webb Excerpts(11 years, 7 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
As part of the Government’s red tape challenge programme, the Department has undertaken a detailed examination of the regulatory framework for private pensions. This has been supported by input from the pensions industry, employers, consumer groups and the public. With the conclusion of this work, the Department can confirm a number of proposed changes to private pension regulation, as well as areas where further work will be undertaken.
In particular we are proposing:
a simplification, consolidation and future-proofing of the regulations that deal with disclosure of information by pension schemes. This was a key request in the representations we received from stakeholders during the red tape challenge process and we have since published a consultation proposing improvements. We estimate net savings to business of £10 million per year, subject to the consultation response. We have also asked in the consultation whether respondents would welcome a move to a more principles-based approach to the disclosure regulations.
a new statutory objective for the Pensions Regulator to support scheme funding arrangements that are compatible with sustainable growth for the sponsoring employer and fully consistent with the 2004 funding legislation.
continuing to examine whether to make indexation for future accruals discretionary as part of our ongoing work to encourage more risk-sharing in pensions, through “defined ambition” pensions.
further work to consider how the current processes relating to employer debt that cause difficulties for charities and others participating in multi-employer schemes could be improved.
amendments to the regulations setting out the treatment of pension rights on bankruptcy to ensure compliance with EU treaty obligations.
a series of minor improvements and revocations of statutory instruments relating to the operation of the Pension Protection Fund, financial assistance scheme and the Pensions Regulator.
In coming to these conclusions through the red tape challenge process, we have sought to balance a reduction in burdens with the need to protect accrued rights and keeping an appropriate level of consumer protection. Broadly speaking, we feel the current regulatory framework strikes the right balance, though as can be seen from our proposals, there are some areas for improvement and further consideration.
In addition, we are proposing to make technical changes to improve the automatic enrolment process for employers, pension and payroll providers. We are currently consulting on proposals and expect to bring changes into force by April 2014.
We are grateful for those who have contributed to the debate around the regulatory regime for pensions and will continue to explore areas where we might be able to ease burdens without reducing member protection. In particular, as outlined in our recent reinvigoration strategy, we are carefully considering the future regulatory framework for private pensions as part of our work to enable greater risk-sharing and the development of defined ambition pensions.
Automatic Transfers: Consolidating Pension Savings
Steve Webb Excerpts(11 years, 7 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Later today I intend to publish the Command Paper: “Automatic transfers: consolidating pension savings” (Cm 8605).
Reform of the UK’s pension system is already well under way. Last year saw the introduction of automatic enrolment, confirmation of our plans to fundamentally reform the state pension, and the publication of our strategy for reinvigorating private pensions.
At the heart of our overall strategy is our commitment to support people in building up a better income for their retirement. At the moment every time a person moves job there is a significant risk that they will leave behind a small pension pot, which may never get consolidated to achieve a decent retirement income. Automatic transfers will help people consolidate their savings so they get a clearer view of how these savings build up over their working lifetime and help to ensure they do not miss out on valuable retirement income. By 2050, we estimate that our proposals would halve the number of dormant pots created by automatic enrolment.
Our consultation document: “Meeting future workplace pension challenges: improving transfers and dealing with small pension pots” (Cm 8184) set out options to create an automatic transfer system to deal with the problem of small pots. In July 2012 the Government response to this consultation (Cm 8402) confirmed this intention, and proposed a “pot follows member” automatic transfer system where broadly speaking, peoples’ pension savings move with them when they move jobs.
Since then we have been taking forward work on how we might design and deliver our policy and have been talking to a wide variety of people, including pension providers, third-party administrators, consumer representatives and employers. We were grateful to hear their views. We have made good progress and this Command Paper will set out in more detail how a system of automatic transfers might work in practice. We intend that a broad framework would be provided for in primary legislation, the detail will be set out in secondary legislation which will, of course, be subject to formal consultation. The relevant primary powers will be created in the forthcoming Pensions Bill.
This paper will also confirm my earlier announcement to withdraw short-service refunds from those in money purchase schemes. I will do this at the earliest opportunity following Royal Assent to the forthcoming Pensions Bill as early as 2014.
We will keep working with interested parties to develop and put in place a viable and cost-effective automatic transfer process for schemes and members.
The Command Paper will be available later today at: www.gov.uk/dwp#consultations.
Credit Unions
Steve Webb Excerpts(11 years, 8 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
The Government have previously announced that we will work with credit unions on ways in which the future progress of this sector can best be supported.
On 27 June 2012, it was announced that the Government will take forward the findings of the Department for Work and Pensions credit union expansion project feasibility study, and that the Department for Work and Pensions will make a further investment of up to £38 million in credit unions to March 2015. This investment will be conditional upon the credit union industry meeting a number of agreed milestones for collaboration, modernisation and expansion, and to deliver this expansion in a way that makes them financially sustainable.
We are now able to announce that following a procurement exercise, the contract has been awarded to the Association of British Credit Unions Ltd (ABCUL).
The high-level objectives are to enable credit unions joining the project to: increase access to financial services to at least 500,000 more people on low incomes by March 2015 and a total of at least 1 million more people by March 2019; and to reduce their costs and become financially sustainable by March 2015, thus eliminating the need for further Government funding of credit unions after that date. The project will provide access to affordable credit, bank and savings accounts, and save consumers up to £1 billion in loan interest repayments by March 2019.
The feasibility study also showed that at present even the biggest credit unions struggle to meet the operating costs of making small loans to people on lower incomes. Therefore, in addition to our investment in modernisation and expansion, HM Treasury has consulted on raising the cap on the interest rate that credit unions are permitted to charge on loans from 2% to 3% per month, supporting credit unions to achieve financial sustainability and reach a wider range of customers. The consultation period is now complete and HM Treasury is considering the responses received and plan to provide a Government response this summer with any changes on the rate cap coming into effect from April 2014.
State Pension and Benefit Payments (Cyprus)
Steve Webb Excerpts(11 years, 8 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I would like to update the House on actions taken by my Department in response to the closure of the Cypriot banking system last week.
The Department for Work and Pensions (DWP) acted swiftly to hold on to benefit and state pension payments to our customers with bank accounts in Cyprus or accounts with Cypriot banks in Greece due to the financial uncertainty and the extended bank closures. In any event, the bank closures mean that recipients would not have received their benefits as payments have not been processed. And when the Cypriot banks do reopen, delays in payment processing are possible.
DWP then took the decision to contact all those with state pensions or benefits affected by the situation in Cyprus. To speed up this process DWP couriered letters to Cyprus to ensure this information reached individuals as soon as possible. Our staff have also been contacting individuals in Cyprus by email and phone.
We are advising customers to change the bank account into which payments are made, for example by nominating an alternative bank account or the account of a “trusted friend” which is permissible under our current rules on benefit payment. This is a practical measure to ensure that payments reach our customers promptly, and we are not advising these customers to close their Cypriot bank accounts.
Customers who do not currently have another bank account may wish to open one. HM Treasury have also worked with Barclays to put in place a process so that individuals can open a bank account quickly if they wish to do so.
The Government will continue to monitor the situation closely from London and Nicosia and attempt to minimise the disruption for those affected.
Customers who wish to change their accounts, or require more information should contact the International Pension Centre, whose details are on the Gov.uk website.
Social Fund Loans Budget Allocation
Steve Webb Excerpts(11 years, 8 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am pleased to announce that the gross national loans budget for 2013-14 will be £460.7 million.
The national loans budget is funded exclusively by recoveries from existing loan debt and will continue to provide a national budgeting loan scheme until full roll out of universal credit to help those still receiving income support, income-related employment and support allowance, income-based jobseeker’s allowance, and pension credit.
I will allocate the national loans budget in line with the provisions in the Welfare Reform Act 2007. The aim is to control and manage the national allocation while providing consistency of outcomes for budgeting loan applicants wherever they live.
In addition, the Secretary of State’s directions and guidance on the discretionary social fund have been amended with effect from 1 April 2013 to reflect the ending of community care grants and crisis loans and the continuation of budgeting loans. This includes maintaining policy arrangements under which budgeting loan decisions can be subject to a further review following an initial review by an appropriate officer in Jobcentre Plus.
I will place an explanatory note about the 2013-14 social fund loans allocation and a copy of the amended directions and guidance in the House Libraries later today.
Under-Occupancy Penalty (Birkenhead)
Steve Webb Excerpts(11 years, 8 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
Good afternoon, Mr Benton. I congratulate the right hon. Member for Birkenhead (Mr Field) on securing a debate that is of considerable importance to his constituents. I entirely accept that the effect of this nationwide policy is different in different areas, and that a higher proportion of working-age households are affected in the north-west than in some other parts of the country.
Steve Webb
I am representing the Government rather than discussing my constituents, but clearly far fewer of mine are affected than the right hon. Gentleman’s, which is no great surprise to anyone.
The right hon. Gentleman’s speech was made in a vacuum, without mention of the fiscal context or how we treat other tenants. He used various lurid adjectives to describe the policy, as though it was some uniquely unfair concept that where benefits are paying someone’s rent, the level of benefits should have regard to the size of the household. He suggested that this is some unprecedented, evil thing, the like of which he has never come across in 30 years in Parliament—except that he was a Minister in my Department and, intermittently, a supporter of the previous Government, who introduced the local housing alliance. As I am sure he knows, with that allowance we say to private sector tenants on housing benefit that, broadly speaking, the rents we pay will reflect household size: generally, if not universally, someone can have private rent up to, now, the 30th percentile of rents for a household of the size it is. For some years, therefore, we have said to 1 million LHA private sector tenants, “We won’t pay benefit for an extra bedroom. If you want one, that’s fine, but you pay for it.”
If that policy is fair and appropriate for private sector tenants, why is it squalid, evil and unprecedented for social tenants? Surely consistency and fairness—a word the right hon. Gentleman used—mean that we should treat people the same way, whether they are private sector or social tenants. One might argue, indeed, that social tenants generally have the advantage of a subsidised rent, which private sector tenants do not have, and we treat private sector tenants unfairly in the sense that we do not give them an extra bedroom.
Mr Field
The Minister knows perfectly well that the local housing allowance level we set was above the average amount for those in social housing, so there is still a real difference in the rent levels for what someone can command in the private sector compared with the public sector.
Steve Webb
The right hon. Gentleman reinforces my point: people in the private sector were having to pay higher rents than those in the social sector, and they could not have a spare bedroom.
Steve Webb
People in the social rented sector still benefit from subsidised rents and, potentially, spare bedrooms. The figure used by the right hon. Gentleman was of more than 800,000 spare bedrooms in households where the rent is paid for by housing benefits.
To give a sense of scale, we are asking a household with one spare bedroom to contribute £2 a day on average for having the spare bedroom. I do not belittle the financial pressures that many households are under, because it would be entirely wrong of me to do so, but we know from experience of the private rented sector that some households will decide that, notwithstanding the financial pressures on them, £2 a day for the advantage of that extra bedroom is a price that they will pay. There will also be many other responses. The right hon. Gentleman mentioned taking in lodgers, and some housing associations and local authorities have given their tenants advice on how to do that. It is good use of a spare room, because it provides accommodation to someone, such as a young single person perhaps, as well as extra income to the household, and deals with the problem.
There will be some movement in the social rented sector. In the right hon. Gentleman’s area, 20 housing associations and local authorities have come together to form Propertypool Plus, doing exactly what they should be doing, which is pooling their stock and giving a much greater chance of having something to suit a particular family than an individual housing association would have. If we facilitate someone moving from under-occupied accommodation into a house that fits, someone else who is living in overcrowded accommodation can also move to a house that fits, which seems to be an entirely good thing, although the latter person’s voice was silent in the speech of the right hon. Gentleman.
I looked at the Wirral housing strategy for 2011 to 2026, and the council has realised that under-occupation is an issue. Before we invented our policy, the local authority stated:
“Research has identified that there are a number of people who are under occupying their home, regardless of tenure,”
going on to say that
“the Council will seek to help people by offering a range of services”
to help them live in more appropriate accommodation. There is therefore recognition in Wirral of a mismatch between the homes people are living in and the homes that they might need, perhaps particularly in the case of older people, although I stress that pensioners are exempt from our policy.
Creative things are being done in the right hon. Gentleman’s part of the world. For example, Wirral metropolitan borough council has obtained £2 million of Homes and Communities Agency funding to work on empty properties and plans to bring 765 empty properties back into use over a three-year period. He is right to say that supply is a crucial part of the story. We want to ensure that the supply is there for people, but that will not happen overnight. We also know that initiatives to deal with under-occupation have not really worked. Simply saying, “Would you like to move to somewhere smaller?” when there is no reason for anyone to do so, has not worked, and we have to regard the spare bedrooms in social housing in this country as a precious resource, because there is not enough housing.
The right hon. Gentleman colourfully described bricking up spare bedrooms, but I can save the landlords he is seeking to send down that track the trouble. If, for example, they want to designate a property with one bedroom occupied and a spare bedroom as a one-bedroom property, they can do so. They do not need to brick anything up or knock any walls down; they can simply designate it as a one-bedroom property. They will take the lower rent, but the tenant is not under-occupying. The reduction in the spare-room subsidy would not apply because there is not a spare room; it is the landlord who takes the financial hit in that situation. Knowsley local authority has, on occasion, followed such a policy. If landlords decide that that is the best solution, we have no problem with that. Obviously, we get the saving, because we are only paying the rent for a one-bedroom property and not a two-bedroom property, so if local authorities and other landlords can bear the financial impact, that might be a part of the mix. I do not think that many will be able to do so, but questions of bricking up rooms do not arise.
I have come across cases in which housing associations have designated a box room as a second bedroom and they have been gaily claiming the rent on a two-bedroom property. Then this measure comes in and it is quickly apparent that it is not really a bedroom; it is just a box room. Part of the answer is for landlords to be honest about the nature of their properties and say whether there really is a spare bedroom that someone could sleep in. They should then designate the property accordingly.
The right hon. Gentleman mentioned fairness. I have referred to fairness between social and private tenants, but what about fairness between overcrowded households, households on the waiting list and those who are in under-occupation? In Wirral, there are 21,280 households on the waiting list for a home. Where is their voice in this debate? I may be wrong, but I do not think the right hon. Gentleman mentioned the people on the waiting list or the people who are overcrowded. Fairness is surely about them as well as the people already in occupation.
We recognise that there are some people who should not be affected by this measure. That is why, for example, we have exempted pensioners. People living in their lifetime home, who have retired and have no prospect of working again, are exempt. We have also taken the view that local authorities need money to deal with what one might loosely call hard cases. In Wirral, in the year that is coming to an end—2012-13—roughly £500,000 of discretionary housing payments were available; next year it will be not far short of £1 million. For individuals whom it would be wrong or inhumane to expect to move, money is there to make up the shortfall. Nearly £1 million in that local authority and about £150 million nationwide is a huge sum of money, provided to make sure that where the room is not really spare and where it would be inappropriate to expect someone to move out or put someone else in the room, local authorities have got the resource to respond appropriately.
It is vital that local authorities spend the money, yet we have come across cases of local authorities underspending their discretionary housing payments. Hon. Members berate the Government and say how terrible the policy is, but their local authority is sitting on cash that it has not spent to help people who have a shortfall in their housing benefit.
Steve Webb
My understanding is that the right hon. Gentleman’s own local authority had a discretionary housing payment contribution of £464,000 for the current year, but has a carryover that takes it up to £522,000. I am happy to write to him with figures for the country. That is not a one-off example. It is surprisingly common. I have spoken to local authority leaders in the past few weeks who have said, “We are not spending the money we have got.” We and they need to make sure that the money that is specifically there for hardship is actually spent.
Steve Webb
We expect local authorities to budget, but of course this measure comes into effect on a single day, and good landlords and good local authorities have already been looking at the existing stock of people. It is by definition a stock of people that does not turn over very much, so it is pretty predictable. My plea to local authorities is to use the money that we have given them.
We have given local authorities discretionary money, initially with two groups in mind. The first is people whose houses have been substantially adapted for disability. We accept that if there is a spare bedroom in a house that has been completely redone to reflect wheelchair access or whatever, it is not cost-effective, sensible or humane to say, “You’ve got to move,” and then either the public purse has to pay for another property to be done up or the people have to live somewhere inappropriate. We estimate that, nationwide, roughly £25 million of the potential saving from the measure would be related to properties of that sort. Our initial plan was to try to define that centrally in regulations: what is a substantially adapted property? We then took the view that it is better left to local discretion, so we made the money available locally.
We did the same for foster families who have a spare room because they are between foster children. Most people would accept that foster parents need to have a spare room. Initially, we thought that we would support that through £5 million of discretionary payments, but the message we got back was that foster families wanted to have a right to a room and not to be reliant on a discretionary payment from the council. We have now passed regulations, which will come into force next month, that give foster families the right to a spare bedroom, subject to certain constraints. We have also recently made it clear that where, for example, a child with a disability or health condition cannot sleep in the same bedroom as a sibling, the family can go to the local authority, which, having satisfied itself that it is a valid claim, can allocate an extra bedroom.
I stress that the measure is not a crude one-size-fits-all cut. We have to save money. The right hon. Gentleman knows that we have to save money and that housing benefit is one of the biggest working age benefits that we have. He knows that two thirds of the housing benefit bill is for social tenants and that we have already cut back on the housing benefit bill for private tenants. In the context of needing to save money on social tenants’ housing benefit bill, not paying for spare bedrooms seems to be a place where we can find savings, subject to the crucial proviso that we protect the most vulnerable.
We have protected the most vulnerable through discretionary housing payments. Of course, although local authorities can use such payments for substantially adapted properties, the clue is in the title: they are “discretionary” payments. Local authorities have the payments for this purpose and for other changes. They have core discretionary housing payments that they had anyway, before any of the measures came in. Local authorities have that pot of money, which is of course not limitless and does not cover everybody, but at least it gives them the flexibility to respond to people as they come to them. The crucial thing for anybody listening to our proceedings who is concerned about the impact of the measure is that if people genuinely need the additional room, and if the options that some would take up, such as swapping, taking in a lodger or working extra hours, are not options for them, they should approach the local authority.
The right hon. Gentleman said that if people move into the private sector, it will cost money, but that is a very static way of looking at things. When somebody moves out of the social sector and into the private sector, a social sector property will be freed up that someone perhaps paying a high rent in the private sector will move into. It is not self-evident that in cases where someone moves from the social sector to the private sector, it costs money overall. Yes, we are trying to save money, and half a billion pounds will be saved by the measure, but let me set that in context: in the final year of the previous Labour Government, we were trying to fill a hole not of half a billion pounds, but of £150 billion a year. The right hon. Gentleman objects to the measure, but it illustrates the scale of the task we have been faced with. Even a measure such as this, which has been controversial and difficult, saves only half a billion pounds, and we have had to take many more such decisions to deal with the fiscal deficit.
Good things are going on in local authority areas such as that of the right hon. Gentleman. I welcome the fact that housing associations and councils are pooling their stock to enable people to exchange. My local housing association and others have had what they call “speed-dating” events—I am not being flippant; that is what they call them. They try to bring together people from among their tenants, some of whom have a spare room and some of whom are desperate for a family home. I think of a constituent of mine who contacted me after receiving a letter about this. She said, “I am living on my own in a three-bedroom house. What are my options? Actually, could my brother and sister-in-law move in?” I said, “Absolutely. Talk to the landlord.” That was an ideal outcome: it meant that the housing stock was better used and someone else had suitable housing.
To summarise, the way in which people respond to the measure will be individual and varied. Some will be able to exchange with someone else. Some will stay where they are, regarding £2 a day, on average, as worth paying for that spare bedroom. Some will fill the spare bedroom with a lodger. As the right hon. Gentleman colourfully suggests, some landlords will redesignate properties, so that in effect there is not a spare bedroom, and the landlord will take the cost. Some people will go to the local authority, and we have put money into the pockets of local authorities such as his—nearly £1 million in the Wirral—so that the most vulnerable people can go to their local authority and make their case and be heard.
Again, I urge the local authorities to spend the money that they have been given to help people, because we have sought to protect the most vulnerable. We have sought to protect families with disabled children, fosterers, and people with service personnel living at home. We have given local authorities the ability to respond on a case-by-case basis. None of these decisions is easy, but they are necessary decisions that we have sought to mitigate where possible. We are trying to bring about a beneficial effect: to make better use of scarce social housing stock and to create fairness between private and social tenants, which, I have to say, in the past, we have not had.
Question put and agreed to.