Housing: Under-occupancy

Debate between Lord Freud and Lord Stoneham of Droxford

Monday 17th October 2016 Lords Chamber

[Lord Freud]

The policy is clearly directed at people who have a spare room. These tend not to be people with families; in many cases, they are empty nesters. They would be a typical group—people who have had a larger place but some of the people living in it have then moved on and they now have spare rooms. There is a point in time at which one should address the issue to get the downsizing. This policy looks to make sure that that time is during working age and not later.

[Lord Stoneham of Droxford (LD)]

My Lords, I declare my interest as chair of Housing & Care 21. As the Minister will be aware, there is a major problem coming down the road on retirement housing, particularly the imposition of a cap on housing benefit, which will impose itself on people in retirement housing where rents and the cost of housing are higher—often higher than the proposed cap on housing benefit. How are the Government going to address, beyond just using discretionary funds, the needs of these retired people who will be disadvantaged and also stop the undermining of future development of retirement housing in this country?

[Lord Freud]

We put out a Ministerial Statement in September outlining our approach to supported housing, including sheltered housing, which looks to divide the support into two, with one element coming out of the housing benefit bill up to the limit of the LHA amount in each area, which is then topped up by local authorities through a fund. This will help them drive the commissioning of the appropriate level of housing, and supported housing, for the people in their area.

Social Housing Sector

Debate between Lord Freud and Lord Stoneham of Droxford

Thursday 14th January 2016 Lords Chamber

[Lord Freud]

As my noble friend Lady Williams made clear on Monday night, this area is under active consideration within the timetable of the Bill.

[Lord Stoneham of Droxford (LD)]

My Lords, I declare an interest as the chair of Housing & Care 21, one of the housing associations referred to by the noble Lord, Lord Best. Can I ask the Minister whether he really understands the urgency of this issue? He talks about 2018, but the housing associations involved will have to start telling people in the next few weeks what they can expect under the current government policies. The review has to be quick. How quickly can the Minister respond in order to help housing associations that are currently delaying their decisions?

[Lord Freud]

We are aiming to develop our policy on the back of the information that we get in the spring, and we will be working with the whole sector to develop policy. As for the other issue that the sector is concerned about, which I discussed in the last question, that is within the timetable of the Bill.

Benefits: Sanctions

Debate between Lord Freud and Lord Stoneham of Droxford

Monday 16th December 2013 Lords Chamber

[Lord Freud]

My Lords, as part of the Jobseekers (Back to Work Schemes) Act we passed earlier this year, we are having a review, which is being run by Matthew Oakley. He is concentrating on precisely the issues of communication that the noble Lord raised.

[Lord Stoneham of Droxford (LD)]

My Lords, one of the complications of the sanctions policy could be its impact on the Troubled Families programme. Will my noble friend confirm the number of instances of second-time sanctions, and how many of them were part of the Troubled Families programme?

[Lord Freud]

I thank my noble friend for giving me advance notice of that question. Only a small proportion of claimants are sanctioned two or more times. For high-level sanctions, only 5% received two sanctions and 1% received a third sanction. On the specific question about the Troubled Families programme, that provision is delivered by local authorities and unfortunately we do not have the data available at the present time.

Housing: Under-occupancy Charge

Debate between Lord Freud and Lord Stoneham of Droxford

Monday 21st October 2013 Lords Chamber

[Lord Freud]

My Lords, as the noble Lord knows, an elaborate programme of research is going on around this measure and will take place over a two-year period. Regular reports will be provided. I believe that the first interim reports are coming out in the spring. I will, of course, be pleased to talk to the noble Lord about the research and will give a great deal of attention to what we find. If there are concerns, we will match them. As noble Lords will know, we have made changes to the discretionary housing payments system this year to reflect some of the early concerns that have developed and we have found an extra £35 million for that.

[Lord Stoneham of Droxford (LD)]

My Lords, I declare an interest as chair of Housing 21, a housing association. There is evidence that local authorities are not fully using the Government’s transitional support funding for ending the subsidy for under-occupied housing. What action are the Government taking to ensure that those in need get the support that the Government have provided for them?

[Lord Freud]

My Lords, my noble friend is right. Our very early soundings are that some local authorities are not spending all their DHP. Clearly, we provide that funding in order that vulnerable people are protected through this transition period and we have been monitoring that very closely.

Universal Credit

Debate between Lord Freud and Lord Stoneham of Droxford

Tuesday 6th November 2012 Lords Chamber

[Lord Freud]

My Lords, we have a very substantial contingency prepared if, for instance, a disaster takes down our data centre—we have two data centres for that reason—and particularly if we have a cyberattack. We will have contingency built into the system to make sure that our payments systems do not go down because of these problems.

[Lord Stoneham of Droxford]

Can the Minister confirm that the Treasury is giving the fullest possible co-operation to his department on the computerisation of the universal credit system? In particular, are employers being sufficiently geared up to provide monthly pay information on their employees?

[Lord Freud]

My Lords, I am happy to confirm that the Treasury is whole-heartedly in support of this radical transformation of our welfare system. Part of the system relies on real time information through HMRC networks, and HMRC is driving ahead with a series of expanding pathfinders. It currently has 2 million employees or pensioners on the system today and is ramping it up into April and October next year.

Energy: Winter Fuel Payment

Debate between Lord Freud and Lord Stoneham of Droxford

Monday 19th December 2011 Lords Chamber

[Lord Freud]

Yes, you can keep your winter fuel payment only if you go to another European country, so if it is being obtained by someone in Trinidad, the noble Baroness might make a call to Crimestoppers or someone.

[Lord Stoneham of Droxford]

Does not my noble friend agree that it would be fairer to tax the winter fuel allowance and use the money to ease the burden of his housing benefit reforms?

[Lord Freud]

My Lords, clearly, one can look at how one treats this, but essentially it is a simple payment. It is one of the universal payments to pensioners along with the state pension, additional pension and passported benefits such as NHS prescriptions. That is how it is designed. It would be rather complicated and expensive to tax it.

Pensions Bill [HL]

Debate between Lord Freud and Lord Stoneham of Droxford

Wednesday 30th March 2011 Lords Chamber

[Lord Stoneham of Droxford]

I have already allowed one intervention and I should like to move on, since this is a short debate.

Finally, it is important to understand that too low a threshold may well encourage more lower income people to opt out than would a more realistic one. For those reasons, I support the proposal set out in the Bill.

[Lord Freud]

My Lords, there is clearly a lot of consensus in the House around auto-enrolment, but I am afraid that one of the areas where there is genuine disagreement—there are not many of them—concerns the right earnings triggers for it. The amendments in the name of the noble Baroness, Lady Drake, seek to introduce a lower entry point for automatic enrolment, and we need to look at them with the amendment which seeks to cap annual rises in the automatic enrolment trigger to the higher general level of earnings and prices. Let me take a few moments to explain why it is our view that the threshold we are proposing is right and why reverting to a lower trigger would not be right. As the noble Baroness, Lady Hollis, pointed out, we reached a recommendation on the level by leaning on the Johnson review, which considered a number of factors: earnings dynamics, family characteristics, and the replacement rate which the noble Baroness finds distasteful.

Let me explain why the replacement rate is an important factor. If you are earning a certain level of income through your working life, it does not necessarily make sense to take money out of that to have a better income later. That should be a choice for the individual—that is the theory of replacement rates. When you are looking at asymmetric paternalism and encouraging people to do things that they might not do if they thought about it harder or were equipped to make those assessments, it does not necessarily make sense to create a situation where people find themselves scrimping and saving during their working life to have a slightly better lifestyle when they are older. That might be the right choice, but it should not necessarily be something that we encourage.

If we only consider replacement rates, then the analysis done by the review shows that individuals with earnings in the £10,000 to £15,000-a-year range throughout their working life would, through the combination of the state pension and income-related benefits, receive replacement rates that are often in excess of 100 per cent. If it had been replacement rates alone that guided the setting of the threshold, it would have been set somewhere between £10,000 and £15,000. However, that clearly is not the whole story and the review recognised that. It recognised the importance of dynamic earnings, which mean that some of those who have low earnings today will still benefit from saving as they are likely to go on and earn more in the future, a point made by the noble Baroness, Lady Hollis. However, even that is not straightforward either—when a person’s earnings are low there is a genuine question about whether it is right to encourage them to save at particular times when they may very well have a pressing need to use all their income to meet present living costs.

That led the review team to consider individuals’ family circumstances. These may well mean that a low-earning individual with a higher-earning partner might benefit from saving even when their earnings are low, as it would help provide a decent replacement rate for the family as a whole. In the vast majority of families with both partners working, their total earnings are significantly higher than the earnings of just one individual. Bearing all these complicated and interrelated factors in mind, the aim of the independent review was to set a threshold which maximises pension saving for those for whom saving is valuable, while minimising the number of those brought in for whom it is not. In doing this and making its recommendations, the review team struck a very careful balance.

It is simply not correct to assert that all low earners will benefit from pension saving throughout their working life due to dynamic earnings, receipt of working tax credits or the fact that they live with partners who earn more; nor is it correct to say that all low earners will not benefit from saving. That is why we have the opt-in to allow those who will benefit from saving to choose to do so. Individuals who opt in and have qualifying earnings will of course still benefit from an employer contribution.

No earnings threshold will ensure that automatic enrolment is perfectly targeted, encouraging saving among all those who need to save while excluding all those who should not—unfortunately, the world is not that simple. That is why the review team sought to identify the correct balance between all these factors. The Government accepted its findings, including the adoption of a higher earnings threshold; this was widely welcomed by stakeholders. We believe that the starting point that we have proposed in the Bill on the basis of the review recommendation strikes the right balance between ensuring that we do not encourage persistently low earners or those experiencing a period of low earnings to save, while ensuring that those who clearly will benefit are able to be automatically enrolled.

We all agree that setting an appropriate earnings threshold for auto-enrolment is absolutely central to the success of the reforms. The arguments that I have heard today and during Committee have not persuaded me that there is sufficiently compelling evidence in favour of setting a lower threshold in the Bill when this is compared with what the review team has already considered in detail in reaching its recommendation.

Let me turn to the second element of the issue: the mechanism for revaluing the automatic enrolment thresholds year on year. The aim of the independent review was to set a threshold for automatic enrolment which maximises pension saving for those for whom saving is valuable, while minimising the number of those brought in for whom it is not. In doing this, the review team recommended that the automatic enrolment earnings trigger should be aligned with the tax threshold, currently £7,475. The presumption of the Johnson review was that the trigger would remain aligned with the tax threshold, unless future action by Government resulted in a fundamental change in its purpose or the relationship between them. The Johnson review is clear about its view on the right direction of travel.

The Chancellor has now announced the personal tax threshold for 2012-13 as £8,105. It is logical that this announcement has prompted the question, which my noble friend Lord Stoneham raised, as to whether it is our intention to uprate the automatic enrolment trigger to this figure for live running in 2012. We will want to undertake detailed work over the coming weeks and months to assess the impact of aligning the earnings trigger with that threshold of £8,105. We will look in particular at whether the right balance continues to be struck in terms of who is brought into auto-enrolment using this trigger, especially with regard to low earners and women.

It is appropriate to share with the House the figures that demonstrate the impact of moving up to £8,105. It would remove around 100,000 individuals from automatic enrolment. It is also appropriate to share with the House the fact that the bulk of those are likely to be women—our figure is 79 per cent, a proportion consistent with the impact of the rise to £7,475.

It is too early to say definitively that because £8,105 is the personal tax threshold for next year this will also be the auto-enrolment trigger. However, I can say that our expectation is that we would align with this figure, unless the evidence suggested that this was the wrong thing to do. It is therefore worth my repeating here the commitment I made at Committee that as well as the uprating order being subject to an affirmative debate, we will prepare an impact assessment to accompany the uprating order for each of the first five years up to and until shortly after the 2017 review. This will give us the opportunity to explain in detail to the House how and why we are proposing to uprate the auto-enrolment trigger and inform the affirmative debates that we will have annually.

Times are changing—as we debate these issues, the Chancellor has announced not only a new personal tax threshold but a major review of the operation of tax and national insurance contributions. It is vital therefore that we retain for the long term the flexibility in the uprating power to allow us to consider a number of factors.

Social Security (Reduced Rates of Class 1 Contributions, Rebates and Minimum Contributions) Order 2011

Debate between Lord Freud and Lord Stoneham of Droxford

Wednesday 9th March 2011 Grand Committee

[Lord Stoneham of Droxford]

I have very little to say on this. This is a shadow document in many respects because it is provisional on what we are doing on the current legislation. I think we are broadly supportive of it.

[Lord Freud]

My Lords, I thank, in particular, the noble Lord, Lord McKenzie, for his interest in this and the noble Lord, Lord Stoneham, for making that point. To summarise, this sets out the level of contracted-out rebate rates that will apply to employers and employees within defined benefit contracted-out occupational pension schemes from April 2012. As I said earlier, while we have provided rates for defined contribution schemes, that is purely to meet the statutory requirement. As I said before, we are looking at a reduction for contracted-out defined benefit schemes from 5.3 per cent to 4.8 per cent.

As I understand it, the central question that the noble Lord, Lord McKenzie, put was about why we have picked that one rather than the funding basis or the gilts basis. I shall go a little into the concepts behind the three different approaches. Each approach is designed to provide the employer with a different level of guarantee about it being sufficient to cover the cost of the additional state pension foregone. Taking into account the considerable cost to the taxpayer of providing the reduction in national insurance contributions, the Secretary of State decided that adopting the best estimate approach was the most reasonable. When you think about it, the point about it working half the time is really saying that we have reached the point of indifference between whether you provide a pension scheme or do not do so and rely on the state. There is a rationale there. The other approaches in practice provide a much more powerful bias towards contracting out.

The noble Lord’s supplementary question was about defined benefit schemes. The risk is now essentially being run by the schemes. Different schemes will, of course, have different contributions rates for employers and employees, so there is no simple answer. The core answer is that moving to the point where, on balance, there is a point of indifference between whether you go in or out means that it is a neutral decision.

On the question about public versus private, for public sector schemes there is no extra cost to the employer as the Government are the employer so there is a degree of funds being recycled. Both public and private sector employees will see a slight reduction in take-home pay as a result.

Pensions Bill [HL]

Debate between Lord Freud and Lord Stoneham of Droxford

Thursday 3rd March 2011 Grand Committee

[Lord Freud]

I reassure the noble Baroness, Lady Drake, that if the research shows that charging levels are creeping up, we have the power under the Pensions Act 2008 to regulate to set a charge cap for qualifying schemes and auto-enrolment schemes. NEST will offer low-cost provision to individuals on low to moderate earnings. As the noble Baroness knows better than anyone else in the world, the annual management charge will be 0.3 per cent. If the contribution charge is taken into account, the overall annual charge is the equivalent of about 0.5 per cent. That will provide a clear benchmark for pension providers.

Given the safeguards that will be in place, and in light of the assurances that I have been able to give on Amendment 40, I urge my noble friends Lord Stoneham and Lord German not to press their amendments.

[Lord Stoneham of Droxford]

I beg leave to withdraw the amendment.