Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Hollins (CB)
My Lords, I will speak briefly to Amendments 5 and 6. I remind noble Lords that the terms of reference of the health and well-being boards, established through the Health and Social Care Act 2012, require them to report on local efforts in reducing health inequalities and improving the well-being of their population, so it should not be too difficult to find a way to report on health and well-being, as suggested by my noble friend. On Amendment 3, the evidence is enormous that the nutritional status of women both before and during pregnancy can have an important influence on foetal, infant and maternal health outcomes. I remind noble Lords of the enormous parliamentary and public interest in the manifesto The 1001 Critical Days and the work that goes on in thinking about the first two years from conception to age two, and how nutrition is such a key part of improving the life chances of children and young people.
Lord McKenzie of Luton (Lab)
My Lords, this is an interesting group of amendments. If I heard correctly from each of the speakers, the thrust of it is that government should be entitled to a whole range of information that will best inform it across the piece as to how to tackle a range of issues. Specifically, the group of amendments seeks to add to the reporting requirements to Parliament: the progress of children at five in areas of cognitive, personal, social, emotional and physical development—likewise for children living in disadvantaged households; the health and well-being of children living in workless and long-term workless households; and maternal nutrition in workless and long-term workless households.
The noble Lord, Lord Ramsbotham, referred to a range of matters. In particular he spoke about the collection of disadvantage that you get: homelessness, mental health, fuel poverty and low income—it is that collection of issues which makes more difficult the life chances of individuals. A number of speakers emphasised the importance of education—the noble Baroness, Lady Manzoor, picked up again the point she made in Committee about key stage 1 for education, and the noble Baroness, Lady Hollins, spoke about the importance of health and well-being boards. I understand that the Office for National Statistics produces data on national well-being and on the well-being of children; I think it reported in 2014 and again just last year. It is interesting that a whole range of data goes into those measures. It is said with regard to children that there are something like seven domains and 30-odd measures of children’s well-being, which is a whole collection of stuff to have to handle and deal with.
At the end of the day, government ought to welcome the information that this collection of amendments seeks to be reported on, which is a range of information across the piece. The key issue that flows from it is what you do with it, or what strategies or interventions will flow from that collection of data which will make a difference to the life chances of young people—which is the thrust of this.
The noble Lord, Lord Ramsbotham, made the point that we do not have a collective figure for the consequences of all the changes in the tax and benefit system in recent times. I know that the IFS did a calculation of what had happened under the coalition Government with regard to tax and benefit changes and concluded that if you look at those changes—the percentage of the income of various groups of people—the lowest two percentiles bore the greatest burden. If you look at it in terms of absolute amounts, the top 10% bore the most, but if you look at it as a percentage of income, the poorest have had the worst outcome from all these changes the Government have introduced—and that is before we get into ones that are reflected in the Bill we have debated to date.
When we talk about health and well-being, we need to be clearer about our distinctions. We have the national statistics data and the background to that, which is a very broad measure. The issue around health and well-being boards’ and local authorities’ responsibility is a slightly different focus, but important nevertheless. So far as we are concerned, we can see the benefits of this range of amendments, which try to encourage the bringing-forward of data to underline just what the consequences of these policies are. I think the noble Earl, Lord Listowel, talked a moment ago about how it is all too easy for us in this Chamber to see this in perhaps rather abstract terms and not the reality. People out there have to face the reality of what these policies mean, and the collection of data of which noble Lords speak will help bring that home to government as well as to campaigners generally, so that those who bear the largest burden feel that that is understood, reflected and challenged—which is our job here.
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, these amendments on Clause 4 have been grouped together quite widely. I will start by making a general point about adding to the reporting duties that the Government have already set out. The best way of securing progress by government is to have a focused set of measures. I echo the implication of what the noble Lord, Lord McKenzie, said. The more you have, the more likely you are to have a diluted effort and distraction from the key issues, which in this case the evidence tells us are worklessness and educational attainment. Of course many factors contribute to these headline measures. For example, we know that children’s health is an important factor in their educational attainment. Tackling health at work will help ensure that more adults are able to work. Therefore delivering on worklessness and educational attainment calls for a wide set of actions. However, it is important that we focus government on its core objectives that will tackle the root causes of child poverty.
First, with regard to additional statutory reporting duties, I turn to Amendment 3. With this amendment the noble Lord, Lord Ramsbotham, seeks to introduce an additional reporting duty on the Secretary of State. The report must contain data on maternal nutrition in workless and long-term workless households in England. I have already set out that our evidence review published in 2014 makes it clear that worklessness and educational attainment are the factors that have the biggest impact on child poverty and children’s life chances. We are committed to supporting families at the earliest stage and to helping parents move into work and earn more through universal credit or investment in childcare, the national living wage and increases to the personal allowance in the tax system. This is the best way to secure children’s life chances and ensure that parents are able to care for themselves, too.
I cannot overstate the importance of ensuring that we focus on measures that tackle the root causes of child poverty and not be distracted by others that do not do so. Of course, the issue raised by the noble Lord, Lord Ramsbotham, is important. The Government take action. They provide advice for parents on maternal and infant nutrition via NHS Choices and Start4Life. Government also operates the Healthy Start vouchers scheme, which provides low-income people with vouchers that can be spent on milk, plain fresh and frozen fruit and vegetables, and infant formula. It already publishes the results from the National Diet and Nutrition Survey, which includes results by age and gender. There are a variety of reasons why adults have poor diets, and it is important that we look at the whole picture, which gives us valuable information and helps shape interventions. I therefore cannot support this amendment.
Through Amendment 4, the noble Lord, Lord Ramsbotham, seeks to expand the duty placed on the Secretary of State to include a duty to report on the progress of children and disadvantaged children living in England at age five in their cognitive, personal, social, emotional and physical development. It is vital that all pupils thrive and develop in their early years. Monitoring children’s personal development is already a core function of every education setting. This monitoring then enables teachers to tailor their support based on how each individual is progressing. I assure your Lordships that we do not take this issue lightly. As the Prime Minister said during his speech about children’s life chances—quoted by noble Lords—we want,
“stable families and good parenting, because we know the importance of those early years in setting children up for a good life”.
There are two key issues at the heart of the life chances reforms—action on work and action on education. Lives can be transformed by focusing on these two most significant drivers of poverty. The Bill will start to realise the vision set out by the Prime Minister when he said that,
“we can rescue a generation from poverty and extend life chances right across our country”.
We all know that the end of key stage 4 is a vital juncture in a young person’s education. It represents the culmination of primary and secondary schooling and provides a consistent point at which to measure attainment across all young people. Pupils who fail to achieve at the end of key stage 4 are at high risk of not being in employment, education or training, so the Secretary of State is committed, through the life chances measures in the Bill—
The Earl of Listowel
In listening to this debate, I find myself sympathetic to the notion of social mobility but I also think of the play “Macbeth” and of Macbeth and his wife. There is a risk, I suppose, if one puts too much weight on social mobility, of a society which is red in tooth and claw. The addition of the words “Life Chances” balances that. Your Lordships may also remember the series “Seven Up!”, which I think started in the 1970s and followed 10 children through their lives into adulthood. To my mind, the happiest life in the group was that of a young black boy who grew up in foster care and then went on to become a butcher, marry and have a family. He seemed the most contented of the lot. To be able to achieve a stable and loving family is also important to society, so it would also be helpful to measure that.
Lord McKenzie of Luton
My Lords, this amendment has been moved very comprehensively by my noble friend Lady Lister and spoken to by the right reverend Prelate the Bishop of Durham, to whom I should say that the closest I got to Oxford on Sunday night was watching “Endeavour” on television. This is a re-run of an amendment moved in Committee as part of a wider group covering life-chances strategies. The Minister’s response then, as reported in col. 1598 of Hansard on 9 December 2015, was clear on a commitment to publish a life-chances strategy, as well as the annual report as set out in the Clause 4 obligations, but there was no commitment to make this a statutory obligation. As my noble friend Lady Lister has argued, the concern which has been expressed about the commission is that, for the future, it has no obligation explicitly to promote the tackling of child poverty. Although there is a commitment to report on life-chances data, and a statement on the record that there will be a life-chances strategy, the role of the Social Mobility Commission seems somewhat removed from this.
As my noble friend Lady Lister pointed out in Committee, promoting social mobility is a narrower ambition than tackling poverty and promoting life chances: it is not a substitute. It is, of course, a not unreasonable ambition, but a commission focused on life chances would naturally encompass the prospects of social mobility. The reverse is not the case. We therefore support my noble friend’s amendment. It seems odd that the Government are keen to have a commission reporting on progress on improving social mobility but not on life chances.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McKenzie of Luton (Lab)
My Lords, we thank the Minister, the noble Baroness, Lady Evans, for her introduction and we are grateful for the separate briefing that we received before Christmas with her colleague, the noble Baroness, Lady Williams. This is a very substantial list of government amendments, but we will not oppose them, as overall they are intended to make the policy work more effectively and securely. We understand that they are, in essence, technical.
However, we might just reflect on the fact that in Committee in another place we saw the introduction of four new clauses and one substantial new schedule, with more government amendments on Report. The amendments in this group include those—for example, 108B—which replace provisions inserted by government amendments in Committee in the House of Commons. This creates the impression that the policy has not been fully worked through. I wonder what else is being worked on which will require amendment before we are finished with this Bill.
We know from the Government’s briefing note of Clauses 21 to 28 and Schedule 2 that work is under way on regulations to come into force on 1 April 2016. These are to cover further exceptions but also alternative provision for accepted categories and alternative conditions for granting directions. Regulations are also to cover the enforcement of Schedule 2 by the regulator. Can the Minister say whether we will see at least a draft of these regulations before we get to Report? Clearly, the clock is ticking, and drafting must have reached an advanced stage if the regulations are to come into force on 1 April this year.
So far as Clause 23 is concerned, there is the opportunity for the Secretary of State to direct that the provisions of Clause 21 do not apply to a local authority if it would be unable to avoid serious financial difficulties. Similar considerations arise for private registered providers, where the regulator has to take a view on financial viability. Can the Minister say whether any general guidance will be published covering these matters? We note that the Secretary of State is taking powers to publish measures which individual local authorities can take, so we are back with central government micromanaging the affairs of local authorities—so much for devolving power. But as I say, we do not and will not oppose these amendments.
Lord Kirkwood of Kirkhope (LD)
My Lords, I support what the noble Lord, Lord McKenzie, has just said. He is right to say that the process of this particular measure and its sections through its various parliamentary stages has been less than best practice. Of course, it is not the Minister’s fault; I think that the Committee is grateful to her for her concise explanation of what these amendments seek to do, and it is agreed that they are, by and large, improvements. However, having substantial bits of policy of the kind covered by the sections and amendments that we are dealing with this evening in a summer Budget Statement, with no prospect of any consultation beforehand—an ex cathedra Statement by the Chancellor of the Exchequer, and then a long Summer Recess where everybody tries to work out what on earth it all meant—is not a good way of producing legislation.
It does not surprise me that there was a degree of confusion at the Commons Committee stages and that we are now faced at this quite late stage with admittedly helpful amendments. However, they are technical and they need consideration, because they increase the corpus of housing law and make things more complicated. Not only does the primary legislation make it more complicated; it will spawn secondary legislation. This House will no doubt look forward to studying it in great detail, larding and littering the statute book with consequential changes, including protecting mortgagees, implied terms in leases—which is always dangerous; from a legal point of view, implication by statutory legislation is never a good thing—and transitional protection, which may well be necessary. But at this stage I think it is appropriate for the noble Lord, Lord McKenzie, and the Committee to say to the Minister that housing Bills and measures of this kind should be done properly. Consultation and Green Papers are always an advantage. If we had had a Green Paper in relation to these clauses, some of the difficulties that the Minister faced in introducing these amendments could have been avoided and could be avoided in future.
Baroness Evans of Bowes Park
I thank both noble Lords for their contributions and take note of the points that they raised. In specific relation to the draft regulations, we will be putting out information on our detailed intentions in due course, and I will look at what more information can be provided at Report.
Lord McKenzie of Luton
Can I just press the Minister a bit to say what “in due course” means? Can we narrow that timeline a bit? For example, is it likely to occur before we get to Report?
Baroness Evans of Bowes Park
As I said, we will look at what information we can provide for Report; I am afraid that I cannot go further than that.
Baroness Hollis of Heigham
My Lords, to respond to the noble Lord, the latest estimate is that 60% or more of property sold under RTB is now in the private rented sector, it is no longer occupied by the people who bought it.
Lord McKenzie of Luton
My Lords, this debate focusing on six specific amendments has become quite broad and—dare I say it?—welcome. The noble Lord, Lord Kerslake, kicked us off by reminding us of the background to the policy—in particular, pointing out that it is a complete reversal of CPI plus 1%, with its 10-year guarantee, which was introduced only a year ago. The noble Lord, Lord Horam, made the point that Governments may be foolish to offer 10-year guarantees, but one would hope that, whatever the term of the guarantee the Government gave, it would be met, and certainly not broken after just one year.
The noble Lord, Lord Kerslake, reminded us of what the policy as now constituted will actually deliver. Rents will be 12% lower and £2.3 billion per year will be lost to housing associations and local councils by 2020. Given the current structure of housing benefit, we are effectively talking about almost a straight transfer of resources from social landlords to the Exchequer. There is also the prospect of having 43,000 fewer social rented homes by the end of the period. The noble Lord emphasised the importance of certainty for the financing of housing provision.
I will come to the specific amendments on co-operatives in a moment, but the noble Lord, Lord Best, said that there are only three options for housing associations: cut programmes, cut the revenue costs which add value to housing association tenants or reduce surpluses. The Government have got themselves in a bit of a jam by believing that just because authorities and housing associations have reserves, that is free money. That reserve is there to support other activities and the current borrowing of housing associations and authorities. My noble friend Lord Beecham told us about the practical impact of the policies on his authority, and also supported the amendment of the noble Lord, Lord Ramsbotham, on almshouses, which I will come to.
The noble Lord, Lord Horam, reminded us that we have to deal with the deficit. Of course we do, but why do we always choose to do so off the back of the most disadvantaged in our society? Why that route?
The noble Lord, Lord Scriven, made the challenging point: is this dogma or is it practicalities that we are getting from the Government? My noble friend Lady Blackstone asked whether the Government would be honest and tell us what they think the effect of the policy will be. We ought to hear the Government’s view on what this will mean for housing provision over the upcoming period.
We had a fascinating lesson from my noble friend Lord Triesman on long-term annuity financing, which is very long-term with small margins, so changes in revenue streams could easily tip it into not being available.
My noble friend Lady Hollis challenged the PM’s view on bulldozing sink estates and made the point that to make social housing work requires decent homes, decent jobs, stable communities and decent management, and I agree with all that.
Amendments 104C and 104D, tabled by the noble Lord, Lord Kerslake, have the effect of reducing to three years the period of the rent reduction. That would coincide with when the Government tell us that the deficit will be dealt with, but that remains to be seen. From 1 April 2019, or the equivalent date where the relevant years are determined by Clause 21(6)(a), the rent reduction provisions will not operate. Amendment 104E requires that registered providers increase rents by CPI plus 1% from April 2020 and also requires there to be a review of the formula rent arrangements to see whether there are prospects of higher increases or greater flexibility.
We support the need to have as much certainty as possible for the future so that registered providers can develop long-term plans, although we understand that the Government may be coy about supporting anything beyond April 2020. It is presumed that the noble Lord’s amendments would apply to those tenancies to which the rent standard currently applies and not more generally. We also support the requirement for a review of the impact of Clause 21 to see what flexibility might be required to address its consequences.
I think that the way the Bill would operate at the moment is that if there is silence on the year 2020 before we come to the new arrangements, the regulator’s ability to set the rent under the rent standard would come back into play because it is negated by Clause 27 only for when the rent reduction proposals are under way. That would deal with the year between CPI plus 1% for 2020 onwards.
Overall, the effect of the noble Lord’s Amendments 104C, 104D and 104E would appear to be that the base for future rent increases would be higher than the Bill currently provides. The loss of income to councils and housing associations would be ameliorated and the shortfall in the provision of new accommodation would be reduced, to the benefit of those in housing need and to the benefit of the public purse, which would otherwise be bearing the strain. Other things being equal, the housing benefit bill would be higher in the short term than would otherwise be the case, as would the cost to those tenants who meet all or part of their rental costs. Overwhelmingly, the focus should be on getting back on track as soon as possible the investment programme under way as part of the 10-year settlement, which is what the noble Lord’s amendments seem to achieve: therefore, we are happy to support them.
Amendment 108, tabled by the noble Lord, Lord Best, focuses on fully mutual housing co-operatives. Amendment 108A, tabled by the noble Lord, Lord Kerslake, focuses on accommodation which is excepted from the right to buy because of specific adaptations for disabled or elderly people. Amendment 109A, tabled by the noble Lord, Lord Ramsbotham, which covers almshouse charities, was spoken to by my noble friend Lord Beecham. These amendments should be supported.
The case on mutual housing co-operatives has been fully articulated, as one would expect, by the noble Lord, Lord Best. We heard in particular from the Edward Henry House Co-operative in Waterloo. It argues that the financial model for housing co-operatives is different from that of housing associations. They do not keep large reserves. The reserves are kept low because of the member-tenant role in running the co-op. The prospects for driving efficiencies is therefore limited. These co-operatives should clearly be an exception to the policy, as should community land trusts, which are a very small section of the sector.
It is understood that the exemption from the right to buy for adapted properties is not widely drawn. Is it the case that it would not apply to one-off adaptations and requires properties to form part of a development of similar homes and to have some sort of social service or extra care provided on site or nearby for them to be subject to the right-to-buy exclusion? If this is the case, such properties would appear to fall within the definition of supported specialised accommodation, which is the subject of a separate exemption which we are going to debate shortly. The Minister may care to comment on that. This begs the question of whether the right-to-buy exemption should be widened at all—but perhaps this is an issue for another piece of legislation.
The financial structure of almshouses is different again. Residents pay a weekly maintenance contribution, rather than rent, which is less than a commercial rate. The exception the noble Lord, Lord Ramsbotham, seeks is entirely justified, and it is presumed that any impact on savings would be negligible.
We are confronted with six amendments, each of which should be supported. We have had a very robust debate around the thrust of this policy, the problems it creates and the challenges it will create in providing decent housing for people who have no option but to rent.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, I thank all noble Lords who have spoken to these amendments. I have listened with care to the comments made and thought it might benefit the Committee if I quickly set out some general comments with regard to the purpose of the 1% rent reduction.
As my noble friend set out at Second Reading, this Bill, including these measures, is part of a broader package of reforms, one of the aims of which is to put spending on welfare on a more sustainable footing, but in a way that protects the most vulnerable. I hope that answers the point made by the noble Lord, Lord Scriven, and other noble Lords who asked the same question. The housing benefit bill for the social housing sector in England has risen by nearly a quarter over the past 10 years to £13 billion, and rising rents are a key part of the equation. Average rent increases in the social sector have been more than double those in the private sector over the past five years. That is why the Government have taken the decision to reduce social rents by 1% a year for four years from 2016. That will mean that by 2020 tenants will be paying around £12 per week less than they would pay under the current policy of CPI plus 1% increases.
I listened carefully to the points made by the noble Lord, Lord Kerslake, regarding Amendments 104C and 104D. The noble Lord brings a great deal of knowledge of these issues to this House—I had not realised he had been chief executive of Sheffield—but we cannot accept these amendments, which would reduce the number of years of the rent reduction from four years to three. The noble Lord asked why we have gone back on the 10-year rent settlement of CPI plus 1%. This measure is crucial to the Government’s drive to secure housing benefit savings in order to control the welfare bill. Moreover, it will reset levels of social rents, which have got out of kilter with the private rented sector over the past few years. Around 60% of social tenants receive housing benefit, and the housing benefit bill for England in the social sector stands at £13 billion, and has risen by a quarter over the past 10 years. Social rents have risen by around 60% over that period. The average weekly rent for housing associations has gone up from £58 a week to £92 a week over the past 10 years. In contrast, in the private rented sector, it is 23%. We recognise that social housing providers will have to manage these reductions, but the Government are committed to reducing welfare spending, and everyone has a part to play. Moreover, we are confident that social housing providers will be able to adapt.
The noble Lord, Lord Beecham, asks why, if we are doing this in the social sector, we cannot do it in the private sector. We believe it is important to allow market rents in the private rented sector so that we have a diverse supply of private rental accommodation available for a variety of different needs. A fundamental move away from market rents would hold investment back when we most need to encourage it, and the resulting shortage of rented accommodation would help neither tenants nor landlords.
We also cannot accept Amendment 104E, tabled by the noble Lord, Lord Kerslake. It would require registered providers to increase rents by CPI plus 1% each year. The amendment also seeks to require the Secretary of State to review whether, given the impact of the rent reduction measure, there should be additional flexibility for registered providers to increase rents above the noble Lord’s proposal for an increase of CPI plus 1%. This is an important point that also goes to the question from the noble Lord, Lord Scriven: the Government will determine rent policy after 2020 at a future fiscal event. When taking future rent policy decisions, the Secretary of State will have to consider a range of issues, and it would not be right to prejudge now what those issues might be.
The noble Lords, Lord Kerslake and Lord Best, talked about the OBR predictions of 43% fewer properties being built by providers. The Government believe that providers will make efficiencies to continue to release resources for new development. I remind noble Lords at this point that housing associations hold £2.4 billion in surpluses, which is a very similar amount to local authorities. In the spending review we secured over £20 billion for housebuilding over this Parliament, including £8 billion for 400,000 new affordable homes over the next five years, so the Government are playing our part in the provision of housing.
Lord McKenzie of Luton
How much of that £20 billion is going to be applied for social housing for rent?
Baroness Manzoor
Forgive me for having to get up again; after all, we are coming to this subject on Amendments 107 and 109 so we will debate it then. However, I think there needs to be greater clarification regarding exemptions. There are currently organisations that are very vulnerable and provide housing services for some of the most vulnerable in our society to prevent people from becoming homeless, as well as those that provide refuge for domestic violence victims and so forth. I will not pre-empt the discussion that we will inevitably have, but I am looking for some reassurance from the Minister regarding whether these exemptions will continue to apply to those organisations that currently seem to be exempted. These rent reductions will have an impact because the providers will not be able to continue to provide those services, particularly to help and manage those kinds of conditions.
Lord McKenzie of Luton
Might the noble Baroness take the opportunity to clarify the distinction between exceptions and exemptions? I think she has been talking about exemptions today—exceptions are something else.
“( ) The Secretary of State must, within 12 months of this section coming into force, produce a plan to offset the impact of lower social rents on housing associations and local government.”
Lord McKenzie of Luton
My Lords, Amendment 105 stands in my name and that of my noble friend Lady Sherlock. We are pleased to note that it has the support of the noble Earl, Lord Listowel, and the noble Baroness, Lady Manzoor. The amendment calls for the Secretary of State to come forward with a plan to address the impact of lower social rents on housing associations and local authorities within 12 months of the rent reduction provisions coming into effect. It mirrors a debate which took place in Committee in the other place and follows on from much of what we have just debated.
The rent reductions amount to some £3.5 billion by 2020 for housing associations and are estimated by the Local Government Association to amount to some £2.6 billion for local authorities by that date. However, their impact will of course extend beyond 2020 because even if CPI plus 1% is restored after four years, it will be applied to a lower base than would otherwise be the case. LGA figures show that the rental loss for local authorities is equivalent to 60% of the total housing maintenance budget each year or 19,000 new homes over four years. London Councils points to a loss of rental income for London of £800 million up to 2020, but also, the cumulative impact looking across the 30-year business plan, assuming rents at CPI plus 1% after 4 years, is £13.3 billion.
The Government recognise that these reductions will have an impact on the finances of housing associations and local authorities but effectively say—we have heard it again tonight—that these can be managed. This amendment seeks clarification of how the Government think this can be accomplished. Effectively, it restates the question posed by my noble friend Lady Blackstone. Various estimates have been made of the loss of rental accommodation which might ensue, and it is recognised that this will obviously be influenced by what exceptions and exemptions are to be made available. We will come on to these in following groups. The National Housing Federation estimates that 27,000 fewer homes will be built over the next four years, although the OBR has different figures.
The Government have cited a number of factors in support of their view that everything is going to be all right. These include the accumulated surpluses of housing associations and HRA reserves, the latter totalling some £2.2 billion. They also point to the prospect of higher rents arising from social tenants with a household income of £30,000 to £40,000, which the impact assessment suggests could produce,
“hundreds of millions [of] pounds per year”.
Can the Minister give us a breakdown of this estimate, saying how much relates to London and how much to outside London, how many households are likely to be affected and what level of rent is expected to be levied and garnered from this process? Is it correct that the rent standard does not currently apply to rental accommodation where household income is £60,000 or more? Presumably this will have to be adjusted.
As for the reserves of local authorities and housing associations, the Government should be wary of making judgments by looking at the aggregate position. London Councils, for example, cites a loss of rental income of £800 million but reserves of stock-holding boroughs of only £700 million. There is an assumption that reserves can be used effectively without cost. What guidance, if any, is given to housing associations and local authorities generally about maintaining prudent reserves?
If the Secretary of State were to publish a document under Clause 23(12) about measures a local authority might take to avoid financial difficulties, what would his approach be in considering the running down of reserves? The impact assessment explains that the regulator is currently collecting information from large providers and requiring a revised financial forecast return reflecting updated policy announcements. Is this exercise complete and what is the outcome? The impact assessment also makes it clear that the Government are continuing to engage with the housing association sector and,
“remains confident that they will be able to find the necessary efficiencies to manage this change”.
Will the Minister please share with us what specific factors underpin this confidence? What is the Government’s current assessment of the shortfall in social housing for rent which they consider will flow from the operation of Clause 21? In addition, what is the estimated impact on housing waiting lists?
We can exchange statistics about the housing performance of this Government and will doubtless hear, among other things, proposals to develop 275,000 affordable homes over the course of this Parliament. If we do, can we be clear on the definition of affordable housing being used, and how many homes will be available for rent? I beg to move.
The Earl of Listowel (CB)
My Lords, I support the amendment. I am very concerned about the rise in child homelessness and the number of homeless families living in insecure accommodation. I am concerned at the possibility that these changes will reduce the supply of housing and contribute to further child homelessness. Will the Minister look at the possible impact on child homelessness of the reduction in rent over the next four years?
I welcome the extra investment, announced yesterday, that the Prime Minister has made in perinatal mental health care so that during and immediately after pregnancy mothers get support if they have mental health issues. I understand that he is doing that because it is increasingly recognised how crucial it is for children to have a good start in life. The noble Lord, Lord Horam, spoke earlier about productivity. I suggest to your Lordships that if we do not do everything possible to give children the best start in life, we will be shooting ourselves in the foot as regards productivity. We know that if they get a good start, they will do well in school and will probably also do well in employment. That is why I particularly support the amendment.
Living in insecure accommodation is also obviously very troubling for children as they may have to move from school to school and may be separated from their friends. I know that, like me, all your Lordships are very concerned about the increasing number of children who are homeless, and I look forward to the Minister’s reply.
Lord Horam
My Lords, the noble Baroness, Lady Blackstone, may be amazed to know that I rather agree with her that all government policy should be carefully monitored to see its economic and social effect. However, while I well understand the purpose of the amendment—I appreciate that it is well meant—12 months is frankly far too short a period in which to see what the effect of this quite dramatic change in policy will be. It would be much more sensible to wait for a period of two to three years before you could sensibly look at the exact effect, either social or economic, of these policies. I see that the noble Baroness is nodding. I do not think that this proposal will work because 12 months is simply too soon. It is no time at all in which to look at the way in which the measures unfold.
Lord McKenzie of Luton
Does the noble Lord accept that there is a distinction between trying to understand what the Government currently think the impact of their policy will be and evaluating within a certain period in the future how it is working out?
Lord Horam
I appreciate that. Clearly, we ought to know as much as we can now about the effect of the Government’s policies as they are articulated in this Bill. None the less, a sensible monitoring process should allow a reasonable period of time for the whole thing to work through. I suggest that halfway through a Parliament is a much more sensible time than 12 months, frankly.
Baroness Williams of Trafford
My Lords, I was not the Minister a year ago. However, I get the noble Baroness’s drift. The point is that we now have a majority Conservative Government and this policy has come out of that. I am not saying in any way, shape or form that it is the social rented sector’s fault. I am saying that that is the position in which we find ourselves, due to many different factors. Over the past few years, inflation has been one of the factors driving it up. However, I will correct that if I am wrong, given that I am saying it from the Dispatch Box.
The noble Lord, Lord McKenzie, asked about the guidance to social providers on maintaining surpluses. We feel that it is a matter for the housing association boards to run their businesses as they see fit. It is a well-regulated sector that, to date, has managed its finances magnificently. Boards have been advised to raise any anticipated exceptional challenges with the regulator to discuss any difficulties that they might anticipate.
Lord McKenzie of Luton
Is any guidance given to local authorities on prudent reserves?
Baroness Williams of Trafford
Perhaps I may write to the noble Baroness; I understand her point. However, I also understand the point made by my noble friend Lord Horam: it is difficult to assess an impact within 12 months. It will probably take longer.
The noble Lord, Lord McKenzie, asked about the high-income social tenants’ policy and its impact on housing. It is worth noting that we will have an opportunity to scrutinise this fully during the passage of the Housing and Planning Bill, when I will probably be the Minister standing at the Dispatch Box. However, at this point I hope the noble Lord will feel able to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank all noble Lords who have participated in this short debate. The noble Earl, Lord Listowel, expressed his concerns about the impact of the policy on children; the noble Baroness, Lady Manzoor, believed that we had a straightforward, simple proposition to put to the Government; and my noble friend Lady Blackstone still awaits an answer to the fundamental question she has now raised on the last two groups of amendments. We must hope that the correspondence from the Minister will elicit a response.
I accept the point that if particular issues arise, the route of exemptions and exceptions may be brought to bear to address them, but that does not substitute for the fundamental question my noble friend is asking: what is the Government’s assessment, in introducing these policies, of the impact they will have on the provision of housing and their targets for building houses? How will it be affected by this?
The noble Lord, Lord Horam, made a reasonable point about monitoring and said that one should do that after a period of longer than 12 months. I hang on to my point that we are looking for two things here: the Government’s current assessment of the impact on housebuilding of the introduction of the policy; and then monitoring what will happen in practice.
We have given this issue a good airing. For the time being, I beg leave to withdrawn the amendment.
“(c) the accommodation is specified accommodation, as defined in The Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014 (S.I. 2014/771).”
Lord McKenzie of Luton
My Lords, Amendment 107 calls for certain types of property to be excepted from the provisions of the rent reduction scheme. It was assumed when it was drafted that it would have the same effect as Amendment 109 in the name of the noble Lord, Lord Best, and others. I acknowledge that Amendment 109 seems to have garnered a broader range of support and doubtless this has much to do with the credibility of the person whose name is at the top of it as well as the substance of the drafting.
The scope of this exception is built on the coverage of the regulations which widen the protection from the benefit cap. It is intended to include supported housing where the landlord is of a specified type and provides, or causes to be provided, care support or supervision to claimants; supported accommodation where the landlord is a specified third or social sector provider and care, support or supervision is provided to residents; third and social sector refuges, including local authority refuges where a claimant is accommodated because they are fleeing domestic violence; and local authority hostels providing care, support or supervision.
The Government’s briefing note on these clauses indicates that they are minded to align exceptions to the policy with exemptions that apply to the rent policy set out in the rent standard guidance. We would support this as far as it goes as its coverage would include PFI schemes, temporary social housing and short-life leasing schemes for the homeless, residential and nursing homes, student homes and key worker accommodation. Perhaps the Minister will confirm that this is still the intent and say why, therefore, more could not be put in the Bill.
Despite this, it is considered that the specialised supported housing definition included in the rent standard is too limited. The guidance itself has indicated that interpretation has not been without difficulty. For example, it says that the exemption from social rent requirements of specialised support in housing is usually limited to those properties developed in partnership with local authorities or the health service and which satisfy all of the following criteria. The scheme should offer a high level of support for clients; no or negligible public subsidy should have been received; and the scheme should have been commissioned in line with local health and social services or supporting people strategies and priorities. I paraphrase.
Adopting the definitions in the housing benefit and universal credit regulations—which is what this amendment and the amendment of the noble Lord, Lord Best, do—will provide a wide enough basis for an exemption from Clause 21. The reason we need a comprehensive exception from the policy in this respect has been abundantly clear from the range of submissions we have received. As the submission from Homeless Link sets out, the type of accommodation we are referring to—let us call it supported housing—caters for a wide range of tenants with specific needs requiring various degrees of support. It points out that this provision is generally more expensive to build, manage and maintain. The fear is that the rent reduction measure will lead to a loss of existing supported housing schemes, with fewer schemes being developed in the future. Those who bear the brunt will be the homeless, those with mental health problems, people fleeing domestic violence, those with learning disabilities and those with drug and alcohol problems. Denying them the chance of decent accommodation and care and support will only push the costs elsewhere in the public sector as well as impairing the life chances of those whose quality of life is under challenge.
We have been presented with examples of projects that will fall by the wayside, including from Riverside, with a third of its supported housing schemes being at risk; St Mungo’s, with a cumulative four-year loss of projected income of £4 million; and the YMCA, with the potential end to a housing project for 170 16 to 17 year-olds. Indeed, Riverside has set out a range of stark facts. It states that early Riverside projections indicate the impact of the rent decrease policy will be a reduction in income in excess of 16% over four years, a cumulative total of almost £100 million, which it says will reduce its operating margins by 9.5%. Riverside owns and manages around 4,600 units of supported housing. Housing associations as a whole manage 105,000 units of supported housing, which is 3.7% of all stock managed. The level of savings forgone, it is suggested, as a result of an exception for supported housing, would be modest.
Having moved this amendment, I hope it puts us on the same page as the noble Lord, Lord Best. I look forward to hearing from him to see whether we can forge a common position. I beg to move.
Lord Best (CB)
My Lords, I speak to Amendment 109, which covers the same issue as Amendment 107, moved by the noble Lord, Lord McKenzie of Luton. Of course I entirely support that amendment, which was so well presented by the noble Lord. In both cases the amendments look for an exclusion from the proposed 12% rent cuts for supported housing as defined in housing benefit and universal credit regulations. I am grateful to the noble Lords, Lord Kerslake and Lord Shipley, and the right reverend Prelate the Bishop of Rochester for supporting this amendment, and to the noble Lord, Lord Horam, who spoke earlier in favour of exceptions and exclusions for cases of this kind. I also offer sincere thanks to Members from all sides of the House who signed a letter to the Times, co-ordinated by the National Housing Federation just before Christmas, expressing the hope that the Government would give favourable consideration to the case we are making today.
The specialist housing organisations that fall within this definition—such as St Mungo’s Broadway, the YMCA and many small charities—would suffer a major blow from the 12% reduction in income from their rents. These are the organisations on the very front line, providing supported housing for those with mental health, drug and alcohol problems, homeless people, care leavers, those fleeing domestic violence, as well as veterans and older people needing care and support.
The vulnerable people these charities support inevitably require higher spending than for general-needs renting. The charities working for them operate on the margins of viability and can easily be pushed over the edge. As well as supported housing being provided by specialist bodies, many of the larger housing associations have been keen to include schemes of this kind within their wider stock, but these social businesses cannot absorb loss-making projects. It is very hard for them to sustain this specialist provision if supported housing becomes a financial liability.
Management costs are not the only ingredient that means supported housing must have higher rents than the norm. There are higher maintenance costs due to the higher turnover of tenants, greater wear and tear, more voids between lettings, more arrears, and even significantly higher insurance premiums. Yet without these housing schemes it is certain that a lot of people will suffer the most acute deprivation, including living out on the streets. Moreover, the wider impact on society from neglecting their needs will be immense. The Homes and Communities Agency found that supported housing work produced a net positive financial benefit of some £640 million—more than six times the savings that the Government would obtain from cutting rents by the fourth year of this rent-cutting policy.
The accommodation covered by the amendment has already been given special status in respect of the new benefit cap and exemption from the so-called bedroom tax. Therefore it seems entirely consistent to exclude these hostels and specified accommodation schemes from the requirement for rent cuts. The Government have stated that it might be possible for an organisation which could face extinction as a result of the rent reductions to apply for a waiver from this requirement. However, there are two flaws in this approach to solving the problem now facing housing.
First, the specialist charities requesting a waiver face ongoing uncertainty and an unknown, potentially bureaucratic and time-consuming process to decide the somewhat extreme question of whether they will become insolvent rather than just be completely undermined by losing so much income. Secondly, the waiver route does not address the issue of supported housing provided within their wider role by larger housing associations that do not face financial ruin but which are likely to pull back from pursuing this kind of accommodation if rent cuts render supported housing loss-making.
If an association with wider objectives has to improve its financial viability by closing its supported housing schemes, the effect will be just as bad as forcing a small charity out of business. This is where we get into the issues raised by the Minister on the difference between exempting organisations by providing a waiver if they look like they are going bust because of the rent reductions, and excluding categories of housing—the category in this case being supported housing.
I know that the last thing the Government want is to undermine housing provision for those in the most acute need, with all the extra expenditure for the NHS, social care, the justice system and the rest which would follow. I believe that the Government already have a concession of this kind in mind, but confirmation of the position by the Minister is needed urgently because the process for a rent reduction on 1 April, with the sending out of thousands of notices to tenants and local authority housing departments, which will be very hard to rescind, must begin at the end of this month.
I must conclude with a footnote, albeit a rather important one. The Government are also planning to introduce another constraint: a cap on housing benefit for council and housing association tenants at the same level as for tenants of private landlords; that is, at the local housing allowance level. This ceiling is not a problem for the great majority of housing association properties since their rents are lower than in the private rented sector. The noble Baroness, Lady Hollis, suggested that they are something like 40% to 50% lower. But, of course, rents for supported housing—the kind of housing that private landlords do not provide—are obviously much higher.
For example, a homeless project for people with mental health and/or drug and alcohol issues is currently charging £119 per week, but the relevant local housing allowance maximum for an ordinary one-bedroom flat is £84 per week, so the new cap at LHA levels would mean a loss of £35 per week per flat for the project. A purpose-built autism scheme for enabling people to move out of institutional care would face a shortfall of £90 per week per flat, even though the scheme saves huge sums compared with the costs of leaving people in the institutional setting.
Baroness Williams of Trafford
My Lords, the noble Baroness has been in government and she knows the processes of government. She is right to say that I am a consensual politician, where I can be, but I will not stand at the Dispatch Box and give assurances that I cannot absolutely fulfil. I therefore have to say that I cannot do that but I will be doing all I can to make progress in this area. That is all I can say at this stage.
Lord McKenzie of Luton
My Lords, I thank the Minister as I thought that what she was beginning to say was encouraging, but can I clarify one point about the reference to specialised supported housing? This is really the nub of the issue. Is the definition which the Government are working towards the same as that exempting people from the benefit cap, or is it a different one?
Baroness Williams of Trafford
My Lords, it is different. We are looking at this whole area of provision but it is a different definition. The noble Lord asked whether we could include the exceptions on the face of the Bill. They would probably be too complex to include in the Bill, while regulations would provide more flexibility to effect better the appropriate definitions and make adjustments in due course.
Funding for supported housing is also part of the Government’s wider financial settlement to councils. This includes investing £5.3 billion in the better care fund in 2015-16 to deliver faster and deeper integration of health and social care. This will enable councils to invest in early action to help people live in their own homes for longer. It will also help prevent crises, as well as supporting councils to work more effectively together, deliver better outcomes for less money and drive integration across all local services. We are also investing in specialised housing for older people. In the spending review, we have committed £400 million of funding to deliver 8,000 specialised homes for the vulnerable, elderly and those with disabilities through the affordable homes programme, with a commitment to further funding from the DoH for specialist accommodation. We will continue to support local areas to meet their local needs by maximising funding flexibility.
I think it was the noble Lord, Lord McKenzie, who asked about the combined impact of the social rent reduction and capping the highest housing benefit awards for social renters, in line with caps applicable in the private rented sector, meaning that supported housing will be decimated. Now that I am looking at the noble Lord, I do not think it was him who asked this. But there was a noble Lord who asked that question, because I have written it down. Applying a cap on the highest social rents will mean that housing benefit will no longer subsidise families who take new tenancies in social houses that many working families cannot afford. The new cap will have effect only from 2018 for new or re-let social tenancies signed after 1 April 2016.
The noble Lord, Lord Shipley, asked whether the savings of £75 million were for supported housing. I do not know but I will write to him about it and I can come back to that question on Report, if he wishes. My noble friend Lord Young asked whether we can meet providers, as I think I have said. We have met providers and will meet them again.
Finally, I reiterate that while we expect providers to make all possible efforts to manage the rent reductions and plan on that basis, Clause 23 allows for individual providers to apply for an exemption from the rent reduction if they think that they will face severe financial difficulties.
Baroness Williams of Trafford
My Lords, providers have a very good track record both in managing their finances and in terms of the housing that they provide, and I do not expect that a housing provider will go to the Government only when it is on its knees. In well-run housing associations, I expect that forward planning would show what sort of difficulties might be coming up and that they might therefore apply for an exemption on that basis. I hope it would not be at the 11th hour, because that is not good financial planning. I hope I have provided some reassurances and that the noble Lord will feel able to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for a very comprehensive reply. There was a moment there where I thought some comfort was coming, but it disappeared relatively quickly. I thank all noble Lords who participated in this short debate—forgive me if I do not pick up on all the comments, because I believe that pretty much everyone who spoke on this issue shared the same view. I also believe that the Government did not intend this to happen. We will cling to that belief and hope that it sees us to a sensible solution at the end of the day.
There is an overwhelming recognition that supported housing of the type we have discussed is significantly needed in our country, and that if it is not provided, the cost to the rest of society will spill over and be much worse. We need to act quickly on this. The noble Lord, Lord Best, in his comprehensive argument in favour of the amendments, made the point that we need to pursue exceptions rather than exemptions. Exemptions will not be any use to those associations which embed provision within their business plans, and the uncertainty that having to seek an exemption will lead to is one that many will not be prepared to live with or cannot live with. Urgency on this is important.
I do not think we had an answer on whether the other components which are exempted from the rent standards at the moment, such as PFI schemes, temporary social housing and short-life leasing schemes for the homeless, are going to be replicated in some way. The important point is that if the definition of specialised supported housing is not going to be the broader one, then the job will not be done, and we will return to this if it is not. We look forward to continued engagement on this between now and Report, but in the mean time, I beg leave to withdraw.
“Housing costs in the private rented sector
(1) The Secretary of State must, at a time no later than the end of the financial year ending March 2017 and at least once during the course of each of the subsequent four financial years, review the relationship between housing costs in the private rented sector and levels of local housing allowance.
(2) Where a review under subsection (1) shows that less than 30 per cent of private rented properties in each locality are affordable to persons in receipt of local housing allowance, the Secretary of State must by regulations under section 130A of the Social Security Contributions and Benefits Act 1992 (appropriate maximum housing benefit) amend the rates of local housing allowance.”
Lord McKenzie of Luton
My Lords, Amendment 110 stands in my name and that of my noble friend Lady Sherlock. We welcome the support of the noble Earl, Lord Listowel, who has added his name to it. The amendment moves us into somewhat different territory. It is about the adequacy of the local housing allowance system and the quarterly review of the extent to which at least 30% of private rented properties in each locality are made affordable by the LHA. It is an opportunity, in particular, to review the effect of the four-year freeze on the LHA.
Whereas the Government have sought in the Bill to ameliorate the costs of housing benefit for social housing by reducing rent levels, their efforts and those of the coalition Government have taken a different approach in the case of the private rented sector. For the PRS, the Government have progressively reduced the level of support provided by the LHA. This started by moving the LHA rate down from the median rent in any given area to the 30th percentile and was followed by national caps on categories of property, limited uprating, initially to 1% a year, and now a four-year freeze. As well as changes to the LHA which effectively substitute for the rent level in any calculation, there have been changes which affect the calculation of housing support itself: the abolition of the family element, the two-child policy and cuts to work allowances, not to mention, where appropriate, the benefit cap. That is happening at the same time as more people are looking to the PRS for housing and rents are increasing.
The private rented sector is growing out of all proportion to the UK’s housing stock, and is expected to comprise more than one-third of the total stock by 2032. This growth has been stimulated in particular by the deregulation efforts in the Housing Act 1988 and the continuing shortfall under successive Governments of new housing provision. Research by Shelter highlighted that a third of renters are now families with children—those most affected by the volatility and uncertainty of the rental market. Nearly three-quarters of families who rent are in work and would overwhelmingly like to own their own home but believe that they will never be able to afford it.
In a release just last week, Shelter set out recent findings of an online survey which showed that 32% of private renters have had to cut back on either heating or winter clothing to meet housing payments and 56% are struggling or falling behind with their rent. An earlier study by Shelter highlighted that more than half of local authorities in England have a median private rent for a two-bedroom home which costs more than 45% of median take-home pay in the area. Eight per cent of authorities have median rents that are 50% or more of median full-time take-home pay. This is before the 1% freeze begins to operate.
The test the amendment sets down is whether 30% of private rented properties in each locality are affordable to people whose housing support is based on the LHA. It implies that the 30% would be the lowest cost, the 30th percentile, because that was the central test considered appropriate before uprating was decoupled from actual rental levels, a change which has been deepened by the LHA freeze which, as we touched on, is to be visited on social rented housing in 2018.
As I said, the extent to which private sector rents are affordable depends on how the broad rental market area operates in practice, as well as the details of the current social security system, but the starting point is the actual level of the allowance, the rent equivalent. There is no doubt that at times of growing demand, inadequate supply and rising rents, a freezing of the LHA is likely to widen the gap between actual costs and the level of housing support.
Indeed, this is already happening, particularly in London, where London Councils recently published an analysis of the likely effect of the freeze which demonstrates that already less than 30% of private rented properties are affordable at the LHA rate. It suggested that only 5% to 10% of properties in some high-value parts of inner London might be affordable and that this could spread more widely around the capital. For 2015-16, a gap is already opening up between LHA rates and the 30th percentile. Based on government figures, in two-thirds of the broad rental market areas the 30th percentile rents for two-bedroom properties, for example, are already above the April 2015 LHA levels.
Does the Minister accept those figures? Unless rents are to come down, this shortfall will only grow. A clear consequence of this is that more and more people will uproot and move to cheaper areas, with all the consequences of that upheaval for families and their communities, both old and new. For some, the benefit cap will further make properties unaffordable, leading inexorably to homelessness and poverty. We cannot allow this to go on. This is a deepening crisis, which the Government need to address. The noble Lord, Lord Kerslake, has two amendments in this group. I may respond to them when I wind up. I beg to move.
The Earl of Listowel
My Lords, I am concerned that the Government’s proposal may reduce the supply of housing or cause what housing is available to be of poorer quality. I go back to my earlier concerns about the poorest families. In her response, will the Minister give an assurance that this will not have the effect that I am concerned about, will not make more families homeless and will not lead to poor families living in poorer conditions and less well-maintained homes? I look forward to her response.
Lord McKenzie of Luton
My Lords, I thank the Minister for her reply. I should not worry too much about getting Box notes confused. I once read out a Box note that said “Don’t go there”. It is tucked away somewhere in Hansard, but I will not tell noble Lords where.
I thank the noble Lord, Lord Kerslake, for dealing with his amendments. The proposition he advanced is entirely reasonable—that new supply, which he said was less than 2% of the total, could be freed up from these provisions. It is a pity that the Government could not respond positively to that.
So far as the rest of the response was concerned, I am not sure that the Minister fundamentally dealt with the issue around the private rented sector and the effect of affordability, and that there is a widening gap between what the LHA reduces in terms of support and rent levels. In some respects that is forcing quite significant movements out of the capital, out of initially lower-cost areas into even lower-cost areas, and the consequences of that for people’s lives, lifestyles, their community, schooling for their kids and so many other issues is quite profound. I regret that the Government are not addressing that issue. However, perhaps in fairness to the Minister I ought to read the record, supplemented as appropriate by any correspondence she feels in retrospect it might be helpful to have. Having said that, I beg leave to withdraw the amendment.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McKenzie of Luton (Lab)
My Lords, this amendment requires certain financial and governance arrangements to be put in place in respect of the providers of motor vehicles under Motability arrangements. As we have heard, it is attached to Clause 20, which contains a provision enabling the Secretary of State to recover the costs of administering the scheme under which mobility components of DLA and PIP are made available, on the claimants’ request, to Motability. I understand that the annual charges will be under £1 million per annum and that Motability will absorb this so that it will not be passed on to lessees, but perhaps the Minister will confirm that.
The noble Lord, Lord Kirkwood, and my noble friend Lord Rooker have raised concerns before over the governance issues and in particular the level of remuneration of the chief executive of the operating company. We should acknowledge that Motability has been a major force in helping disabled people to have access to suitable vehicles. Since its creation in 1977, it has supplied more than 3.5 million vehicles and currently has some 637,000 customers—a 1.8% increase on the year.
Noble Lords will be aware—my noble friend spelled this out—that there are basically two separate entities: Motability, which is a registered charity incorporated under royal charter; and Motability Operations Ltd, an entity regulated by the FCA and owned by four major banks. The latter is contracted to carry out the acquisition and leasing operations on behalf of the charity. Each of them publishes extensive annual accounts, the former in accordance with the Charities Act 2011. The latter is financed by a combination of bonds in the capital markets and bank borrowing. Obviously, the main source of income for the scheme comes from individuals who choose to spend either their higher rate mobility component of DLA or the enhanced mobility component rate of PIP.
It will be recalled that the introduction of PIP as a replacement for DLA was discussed extensively during the passage of the Welfare Reform Act 2012, with the prospect of the revised mobility thresholds meaning that some disabled people would drop out of entitlement. Can the Minster please update us on the progress of this, which is due to be completed in 2018? How many DLA recipients have been reassessed and how many have fallen out of eligibility for Motability? One-off transitional support has been introduced for those who would lose the use of their vehicle, and perhaps we can know how many have availed themselves of this. This level of support was said to be subject to review during 2015. Has this happened and what changes are proposed? Was there any consultation with the DWP involved?
It would seem that the operating group is funding the cost of this transitional support via the charity. Does this mean that the costs are ultimately being borne by the vehicle lessees—that is, the very disabled people the scheme was meant to support?
The DWP also provides funding to the charity for the Specialised Vehicles Fund, which enables disabled people to lease a drive-from-wheelchair vehicle. Is it the case that, faced with funding being frozen on an annual basis, Motability has restricted access to the fund and apparently did this without consultation? Can the Minister say whether this restriction was discussed with the department at all and whether it agrees with the approach adopted?
As my noble friend made clear, public funding is involved in these arrangements in various ways: the application of Motability components of DLA and PIP; funding for the Specialised Vehicles Fund; and taxation benefits by way of zero VAT on the lease of vehicles and their sale at the end of the lease period. On this basis, notwithstanding the published report and financial statements, noble Lords are justified in testing matters of value for money, transparency and probity, and we look forward to the Minister’s response.
Lord Freud
My Lords, that was a thoroughly enjoyable debate for this time of the evening. The amendment moved by the noble Lord, Lord Kirkwood, is directed at Motability, which provides vehicles at discounted rates to people whose disability or long-term health condition has a significant effect on their mobility. It is run on a day-to-day basis by Motability Operations, a limited company, and is overseen by the Motability charity.
On the specific questions about Clause 20 that were raised by the noble Lord, Lord Kirkwood, I can say that the Government divert benefit payments directly to Motability but the administrative costs of the diversion have been borne by the Government, who do not have the power to recoup them. Clause 20 gives the Secretary of State the power to make regulations to do so. Such a power would currently apply only to Motability but it is drafted broadly to enable the provision to apply to any organisation running a future scheme.
I can confirm to the noble Lord, Lord McKenzie, that the cost is small—less than £1 million, I think—and Motability has confirmed that it will not change its pricing or the level of service it provides. Therefore, it will have no impact on its members.
The noble Lord, Lord Rooker, asked about information on directors’ remuneration and relevant interests. That is available in the annual and interim accounts of Motability Operations, in compliance with international financial reporting standards. These can be found on its website, which is where I found them on the occasion referred to by the noble Lord, Lord Rooker. Indeed, it publishes information on its board meetings in the same place.
The department meets regularly with Motability to discuss the scheme’s performance. I know that this does not overly impress the noble Lord, Lord Rooker, but as a charity, Motability is accountable to the Charity Commission. It is therefore unnecessary to require Motability to submit the annual report that is the formal subject of the amendment, because the information is there.
I will run through some of the rather surprising number of other issues. On overhead costs, Ernst & Young found that Motability was driving down its overhead costs, while satisfaction was rising. On the monopoly question, we have regular meetings and consider the value for money that Motability provides. The banks own Motability shares but they have waived all dividends and received no profit.
Lord Freud
There is a key issue about charities having to attract the best people when they are very substantial operations, which Motability is. I know, because I was involved for a period in a foundation in the charitable area, that to attract the kind of people who are commercially competent puts you into that bracket. I have said enough.
Lord McKenzie of Luton
One can understand the argument that the Minister has advanced in respect of the operations entity, but it seems much more difficult to justify the position he has taken in respect of the charity.
Lord Freud
I should have made clear before that that is not departmental money; it is users’ money that we transfer. That is the reason that the salaries are set by Motability and not by government. Government does get itself into quite a lot of problems because there are areas of commercial endeavour where salaries, bluntly, are much higher than the Prime Minister’s salary. There is a different set of rates in the outside world. I know that the noble Lord, Lord Rooker, is not going to let this one go and I will watch him—from a distance—to see how far he gets on this.
Finally, the noble Lord, Lord McKenzie, asked where we are. It is too early to tell the full picture. This started on a control basis only in July 2015, so I do not have a reliable figure for him. I remind noble Lords that customers who return their vehicle in good condition will get the benefit of up to £2,000-worth of support from Motability, which will in practice allow many to continue to be mobile through purchasing a used car.
Lord McKenzie of Luton
Would the Minister just mind dealing with two residual points? One is about the transitional protection—how that is funded and whether it is dealt with by the charity from contributions to the operating company or otherwise. The second is that the specialised vehicle fund has been frozen for a couple of years, which has obviously had an impact in terms of the opportunity to take advantage of that in an inflationary situation. Were the Government consulted on the changed criteria that were put in place for that?
Lord Freud
I will have to write on that latter point. The funding for the £2,000 comes from Motability itself—the charity—as I understand it, based out of the reserves it has built up. It needs very substantial reserves because the risk in a leasing business is in the residuals, which can be very volatile, even though you are the biggest. You need very substantial reserves, but it took a view that it had some excess which it was prepared to spend in this way. I urge the noble Lord to withdraw his amendment.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, Amendment 72, tabled by the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, would retain the benefit cap at its current levels and have those levels apply across Great Britain. We introduced the benefit cap to increase incentives to work, to promote fairness between those in work and those on benefits and to help address the deficit, and it is clear from the evidence that the cap is working. Since it was introduced in 2013, more than 18,000 previously capped households have moved into work.
The evaluation evidence shows that capped households are 41% more likely to go into work than similar uncapped households. This is even more marked in London alone, where households were 70% more likely to go into work than similar uncapped households.
I am heartened to hear from the noble Baroness, Lady Sherlock, that she now supports the existing benefit cap. I happen to remember that that was not necessarily the position on the Opposition Benches in 2012. Indeed, I seem to remember that the counter proposition from them was that we should have a regional cap, so I hope that the Opposition are now delighted that we are beginning to move in the direction suggested. Perhaps in another three years, in 2018, the Opposition—
Lord McKenzie of Luton (Lab)
When we debated the regional cap at that time, did the noble Lord support it?
Lord Freud
Of course I did not support it; I am on the record as not supporting it. This is not an absolute regional cap—this is a two-tier cap, London and the regions—but, the Opposition may feel that it is better late than never. I look forward, by 2018, in another three years, to the full-hearted support of the Opposition for the current proposals.
Lord Kerslake (CB)
My Lords, I declare my interests as chair of Peabody and president of the Local Government Association.
My amendment is very similar to the other two amendments in this group, and I will not repeat what I think was a very compelling argument made by my noble friend Lord Best. What I would like to do this evening is focus on three key reasons why I think that the Government should reconsider their approach to this issue. The first reason is the rising level of homelessness, the second is the quadrupling of the number of people who will be caught by the cap and the third is the inadequacy, as my noble friend Lord Best has said, of the discretionary housing payments fund.
Let me deal with the issue of rising homelessness first. My noble friend Lord Best referred to the recent report by Shelter. This report found that the number of children in temporary accommodation is at a seven-year high. The total number of people in temporary accommodation from the period of July to September 2015 was 68,500. That was a 12.5% increase on the year before. So we are clearly experiencing a significant rise in the levels of homelessness. The effect of this will be that, this Christmas, Shelter estimates that some 103,000 families will be in either bed and breakfasts, hostels or temporary rented accommodation. That will be a very grim Christmas for those families. Of those families, something like one in four are living in a different area from the area that they previously lived in. That means that they are away from their children’s schools and family support. In London, that figure is one in three. This is a very significant issue that is growing in its scale and impact.
The second issue I referred to is the number of people who will be caught by the cap. As has already been said, that number is likely to quadruple, adding an extra 90,000 people. Therefore, there will be two effects on the issue that we are speaking about, and that in turn will impact on the financial consequences for local government. It is important to say that the people involved here do not have any real choices. The circumstances they face—losing their shorthold tenancies or family break-up—will undoubtedly lead them to a position where they need to move and move quickly. Similarly, local authorities will have little choice, given the limited accommodation that they have available to them to put people into temporary accommodation, even though the management costs of that accommodation are higher. So we face the situation where there is likely to be rising homelessness, a quadrupling of the numbers caught by the cap and people, through having no great choices of their own, needing to go into temporary accommodation with higher costs.
In the past, the response has been that the discretionary housing payments fund will cover this. The evidence produced, again by Shelter, suggests that that is unlikely to be the case. We know that, in London, the scale of the costs through the DHP funding is already around £4 million. It has been calculated by Shelter that for one local authority alone, Tower Hamlets, this could add a further £2 million per annum in terms of costs. I do not believe that the discretionary housing payments fund will be the answer to this issue. It will squeeze out the other reasons why local authorities need to use this fund. They will therefore be faced with a choice of either compelling families to move further away so that the cost is lower or, alternatively, dipping into resources that they have for other purposes. We will face an increasing squeeze on those local authorities that they will not be able to cope with.
The Minister may say that DHP funding is rising. Indeed, it is. It will rise from £165 million this year to £185 million in 2017-18. However, it falls to £140 million in 2021. Therefore, this fund goes up, but it goes down again, whereas the pressures that I have spoken about are inexorably rising. A simple way out of this issue is to exempt families in temporary accommodation, as has been proposed. This recognises the reality that there is little choice and that, if we ignore this issue, we will increase the pressure on local authorities to a point where it will damage the finances of those authorities and the prospects of those families.
Lord McKenzie of Luton
My Lords, I speak to Amendment 86, which is in my name and that of my noble friend Lady Sherlock. I also speak in support of Amendment 73 moved by the noble Lord, Lord Best, and Amendment 90A in the name of the noble Lord, Lord Kerslake. As we have heard, regardless of whether the benefit cap has played a role, local authorities remain legally obliged to rehouse families who are demonstrably homeless through no fault of their own, are vulnerable in some way or are in priority need for rehousing.
Families will be placed in temporary accommodation while a council decides whether it owes them a rehousing duty and then until a settled home can be found. For some families, the wait for rehousing can be considerable. I note that the noble Lord, Lord Best, has a 39-week grace period. I understand that that is likely to be sufficient in the overwhelming majority of cases but not in all cases, particularly in London. While in temporary accommodation, councils charge families rent to cover their own costs and expenses, and this is commonly paid for by housing benefit. In some cases, councils have to top up additional costs out of their own funds or, as we have heard, the limited pot of discretionary housing payments.
Temporary accommodation is generally leased by local authorities from the private sector at a premium, placing a considerable burden on them. Councils are already struggling to secure enough temporary accommodation as a result of the combined effect of limited funding and a shortage of self-contained accommodation. This is already leading to an increase in bed-and-breakfast use or people being rehoused away from their local area. The lower benefit cap will increase demand for homelessness services and exacerbate the pressure on the local authority supply of temporary accommodation. With more homeless families affected by the cap, local authorities are likely to be forced into further subsidising the cost of temporary accommodation. This will be difficult for cash-strapped councils, increasing the incentive to place families in the cheapest areas far away from their support networks.
It will also make it harder to permanently rehouse homeless families, as the benefit cap will make alternative housing options unaffordable. For larger families, even social housing will be subject to the cap. The policy therefore risks the perverse scenario in which families are made homeless because of the benefit cap and trapped in the limbo of temporary accommodation by the benefit cap at the expense of the public purse. The amount that can be reimbursed through the local housing allowance is limited to £500 a week, which means that other costs over and above that amount must be met by local authorities. In some cases, this will come from funding for discretionary housing payments, but often the necessary funds will have to come from elsewhere, given that DHP funds are in such short supply in the context of seemingly insatiable demand.
We know that the Government have declined to collect statistics which might help them measure the extent to which any purported savings from capping household benefits are simply being shifted on to local authorities in the form of additional homelessness costs. Our honourable friend Emily Thornberry MP sent freedom of information requests to every local authority in London over the summer and the findings throw doubt on the idea of the cap as a savings measure.
In the first year following the introduction of the cap, London councils spent a combined total of £19.2 million supporting households which had been hit by it. In the second year, this rose to £23.3 million altogether. Some boroughs spend more than 80% of their total DHP allocations on supporting capped households, and in most boroughs the proportion is increasing each year. To date, local authorities in the capital have spent almost £47 million in DHP funding as a direct result of the benefit cap and it is likely that this is just the tip of the iceberg in terms of the overall costs involved. Reliance on temporary accommodation is a significant driver of these additional costs.
As we have heard, across London more than a quarter of households currently affected by the benefit cap are living in temporary accommodation and in some boroughs it is much higher. In Waltham Forest, apparently a staggering 58% of capped households live in temporary accommodation. This compares with less than 1.5% of the overall population of people claiming housing benefit. The disproportionate presence of families in temporary accommodation among households affected by the cap is a huge issue for local authority spending. It is also a real source of human misery as, increasingly, councils are having to house homeless families in temporary accommodation outside their area, and sometimes many miles away from their support networks and their children’s schools.
Our amendment would exempt newly homeless households from the benefit cap. This would allow councils to continue to procure nearby temporary accommodation and make it easier for them to move households into affordable accommodation. It will also help councils focus their DHPs and their own budgets on homelessness prevention. If the Government are serious about cutting back on public expenditure associated with the benefit system, and in targeting the benefit cap at families in a position to make choices about where they can afford to live, it is hard to see why they should argue against exempting homeless families being housed in temporary accommodation.
Lord Freud
My Lords, these amendments seek to exempt people in temporary accommodation from the benefit cap. I cannot agree that it is appropriate to have a blanket exemption from the cap for all those living in temporary accommodation, even if it is time limited in the case of Amendment 73. Rather, I believe that the best approach is to provide support so that people may better address their barriers to work. My challenge to the noble Lord, Lord Best, is: if there were to be a 39-week exemption, how would that not have a perverse incentive on people staying in temporary accommodation longer term if it is likely that the cap will apply to them when they move? That is the reason for our approach.
Discretionary housing payments are available from local authorities for those households who need additional support in adjusting to the cap. We have made £800 million available over the next five years for all the welfare reforms. However, in particular areas, one of which is London, this will be a substantial element. In the Autumn Statement, it was announced that further DHP funding will be made available for the most vulnerable people, including those who may be in supported accommodation. In 2016-17 it will go up from the current level to £150 million, and the allocation of those funds reflects the new measures we are bringing in, as does the timing of their introduction.
We have already made provision to support the most vulnerable people who might be affected by the cap. Housing benefit paid to households in specified accommodation is disregarded from the benefit cap and we have included refuges within the definition of “specified accommodation”. The disregard applies to benefit cap cases under both housing benefit and universal credit. While this does not mean that these households are exempt, by not including housing benefit in the calculation we expect that the vast majority of these vulnerable cases will not be affected by the benefit cap.
Finally, from April 2017 the weekly management fee, currently £40 in London and £60 elsewhere, will be abolished and replaced with a grant that devolves this funding to local authorities. Unlike the existing management fee, the new grant will not count towards the benefit cap and will help local authorities tackle homelessness more effectively. I would therefore ask the noble Lord to withdraw his amendment.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Earl of Listowel
My Lords, I rise very briefly to support the amendment of my noble friends. On a visit to a Centrepoint hostel in Soho several years ago, I spoke with a very young girl—16 or 17 perhaps—and asked her why she was there. She said that her mother had a new boyfriend who did not want her around. The OECD said in its report on family formation that this country will overtake the United States in the 2030s in terms of the numbers of young people growing up without a father in the home. We have to think about the changes in families and about the Children’s Commissioner’s report on the sexual exploitation of children. Most sexual exploitation takes place within the family, from people within the family who the children know. Some 90% of lone parents are going to be women, and if different men are regularly coming into the household, this issue of girls in such households having worries about sexual exploitation or being sexually exploited also has to be considered. I commend the amendment to the Minister.
Lord McKenzie of Luton (Lab)
My Lords, as your Lordships have heard, we have added out name to Amendment 60 in the name of the noble Baroness, Lady Manzoor, and I cannot think why we did not do likewise for Amendment 62C, which we support and which also has the support of the noble Baroness, Lady Hollins, the noble Lord, Lord Best, and the noble Earl, Lord Listowel.
The proposition to remove access to the housing element of universal credit for 18 to 21 year-olds from April 2017 has been some time in the making. Its progression—or, more likely, regression—can be tracked from a series of references by the Prime Minister at his party conference. Its original focus was to remove housing benefit for people aged 16 to 24, but this has now been narrowed, as we have heard, to 18 to 21 year-olds for universal credit. There are of course already lower levels of housing benefit allowances for single people under 25 and couples under 18, as well as restrictions under the shared accommodation rate. Can the Minister confirm that the Prime Minister’s desire to have an extended denial of housing benefit or universal credit for 16 to 25 year-olds is now off the agenda? The rationale for the policy has a familiar refrain:
“This will ensure young people in the benefits system face the same choices as young people who work and who may not be able to afford to leave home”.
That is a simplistic view of the choices facing many young people and in any event ignores the fact that housing benefit can be claimed by those in work.
This policy is being introduced at the same time as the new youth obligation for 18 to 21 year-olds on universal credit—the so-called boot camp. As the noble Lord, Lord Low, points out, we are promised that there will be exemptions, and the amendment is probing what might be available. The policy starts from April 2017 for 18 to 21 year-olds who are out of work. Can the Minister confirm specifically that there will be protection for vulnerable claimants, as spelt out by the noble Lord, Lord Low, and that they will definitely include those with recent experience of work, young people living in homeless hostels or domestic violence refugees, care leavers, those with dependent children, those receiving ESA, or its equivalent, or income support and those who cannot live at home?
Like the noble Lord, Lord Low, we are grateful for the briefing provided by Crisis and its insights into the consequences of these proposals should they not be ameliorated—in particular, the consequences for those who are homeless or who have experienced or are at risk of homelessness. Its briefing reminds us that if the protections and exemptions are not sufficient, any savings from this measure will be wiped out by costs elsewhere, mostly from increased homelessness.
The policy has generated a range of criticism, as we have heard. The Chartered Institute of Housing says that it could mean young people being less willing to take risks in moving for work because of the removal of a safety net. Centrepoint says that claiming housing benefit is for many a short-term solution to a situation they find themselves in, providing them with a safety net from which they can get their lives back on track. Shelter opposes the measure because it asserts that,
“every young adult deserves somewhere safe and decent to live”—
and who could disagree with that?
House of Commons briefing paper number No. 06473 of 26 August 2015 refers to the Uncertain Futures paper published by YMCA England. This points out that, of the estimated 3.2 million 18 to 21 year-olds, just over 19,000 young people are currently claiming jobseeker’s allowance and housing benefit, and that 71% of the 18 to 21 year olds who access JSA do so for less than six months. It also points out that 7,200 young care leavers between 19 and 21 years-old in England are currently out of work and would potentially be able to claim JSA and housing benefit and that nearly 1,400 18 to 21 year-olds are currently living in YMCA supported accommodation and claim JSA and housing benefit. It points out, on lifestyle choice and the assertion that people just want to live on the dole, that most young people are entitled to £57.90 a week in JSA—frankly, what we would blow on a meal at the weekend.
YMCA England concludes:
“By removing automatic entitlement to Housing Benefit for 18 to 21 year olds the Government could be in danger of inadvertently taking away support from the young people who need it most and in doing so, exposing many more vulnerable young people to the risk of becoming homeless and therefore damaging their prospects of finding work in the future. Action is needed to address youth unemployment, but without protections thousands of vulnerable young people will face uncertain futures, not knowing if they will have anywhere they can call home and leaving them less able to find work”.
Lord Freud
My Lords, the Government’s policy proposal is to remove automatic entitlement to the housing cost elements of universal credit for certain young people aged 18 to 21. I confirm to the noble Lord, Lord McKenzie, that that is the Government’s policy. It will apply only to relevant 18 to 21 year-old claimants who make new claims in the areas where UC digital has rolled out. This will ensure young people in the benefits system face the same choices as young people who work and who may not be able to afford to leave the family home.
I start with the amendments tabled by the noble Baroness, Lady Manzoor. It is not fair that taxpayers should have to pay for young people who are not working to be able to live independently when young people in work or education may not be able to afford to do so. Having said that, the Government recognise that vulnerable people need to be protected. Work is currently being undertaken with a wide range of stakeholder groups to understand who these vulnerable young people may be. I can reassure the noble Baroness that the policy will not stop people looking for work in other areas of the country in the same way that young people not reliant on benefits can look for opportunities away from where they live.
We need to complete the consultation work in order to ensure that a robust policy is put in place. I acknowledge the remarks of a wide range of noble Lords, including the noble Lord, Lord Low, the noble Baroness, Lady Hollins, and the noble Lords, Lord Best and Lord McKenzie, but we are doing this work. It is too soon to make decisions on the specific exemptions that will be applied, but we will bring forward detailed proposals once the work is completed—although, to anticipate the question, that will not be in time for Report. Indeed, to jog back to the previous amendment, I do not anticipate that the work on the work allowances that we discussed in UC would be done in time for Report. As I mentioned previously, the change will apply only to new universal credit claims from April 2017.
Lord Suri (Con)
My Lords, it is a pleasure to be able to support Amendment 67, which is crucial. At present, the disability employment gap means that disabled people are over 20% less likely than their counterparts to be in full-time employment. Employment has many benefits other than the obvious one of economic advantage. The recognition of your employment acts as an important societal signal, improving your reputation among your peers. Furthermore, in what the Prime Minister has termed the “global race”, the cost to the country of having unutilised human capital is immense. Quite simply, high levels of unemployment for the disabled are not something we can afford.
The new clause which Amendment 67 would introduce would nudge the Secretary of State into dealing properly with this issue, and laying out a clear strategy to close the disability employment gap. The current Secretary of State has made significant strides towards helping the disabled into work. It would also allow Members of Parliament and Peers to scrutinise the work done in this field separate from any other scrutiny of employment statistics which goes on. Some might argue that this is not required or that it is impracticable to have a separate report for disabled people but, as the amendment says, these people are,
“marginalised from the labour force and require a specific focus”.
Lord McKenzie of Luton
My Lords, before I get to Amendment 62, I will comment on the range of amendments which other noble Lords have spoken to. Each of these has the aspiration of getting appropriate reporting requirements from the Government, particularly to address the challenge of closing the disability employment gap. We heard from the right reverend Prelate the Bishop of St Albans about the importance of reporting, particularly in the context of something such as the ESA WRAG. If that is going to challenge closing the employment gap then reporting is needed to make sure it is better addressed. He said that we have ignored for too long the aspiration of disabled people to work.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Earl of Listowel
May I correct something I said earlier? On my visit to the food bank in Tower Hamlets on Friday, the principal reasons given for people coming to food banks were mistakes in benefits and their own lack of knowledge about their entitlements; it was not to do with sanctions brought against them. I have checked my notes and apologise for my mistake.
Lord McKenzie of Luton (Lab)
My Lords, I speak enthusiastically in support of Amendment 57, moved with her customary precision and passion by my noble friend Lady Lister. I am pleased that it also has the support of the noble Earl, Lord Listowel, the noble Baroness, Lady Manzoor, my noble friend Lord Beecham, and the noble Lord, Lord Kirkwood, with his particular focus on getting these things sorted out before we get fully into universal credit.
The amendment seeks a full and independent review of sanctions attached to working age benefits, with particular reference to their application to lone parents and disabled claimants. The review should also focus on the effectiveness of sanctions in moving claimants into sustained work. The noble Lord, Lord Hodgson of Astley Abbotts, posed three tests for a review, based on timing, remit and even-handed terminology. I think that we have established that the terminology involved is that which the department itself uses. On timing, the issue here is that the hardship and detriment people are suffering because of the sanctions regime is happening to them now. They do not have the time to wait for a fuller, more extended review. On the remit, I doubt whether my noble friend would have great problems in seeing that expanded. We would be interested to know quite how much further detail the noble Lord wants.
The proposition follows a call from the House of Commons DWP Committee in its March 2015 report, referred to by my noble friend. We know the call has been rejected, but we hope that this debate will help the Government to change their mind. This is of course inextricably linked to conditionality issues, which we debated at some length on Wednesday. We can agree that conditionality has long been a component of social safety nets and needs a system to support compliance. But as the amendment makes clear, as did my noble friend in moving it, the system should be applied appropriately, fairly and proportionately, and with a clear focus on improving sustained employment outcomes. It should not be seen as a substitute for effective support to help individuals back into work.
We support the approach that says that the design and application of sanctions need to be considered alongside conditionality and employment support. The three go together. The coalition Government initiated the Oakley review, although as we have heard it was narrow in its remit. It focused on JSA claimants and back to work programmes, but the number of sanctions overwhelmingly associated with the Work Programme represented only some one-third of the total JSA sanctions in 2013.
Baroness Evans of Bowes Park
No, it will be within a particular region of Scotland.
Sanctions play an important part in the labour market, encouraging people to comply with conditions which help them move into work. We want the sanctions system to be clear, fair and effective in promoting positive behaviours and we will continue to keep it under review so that it meets its aims, but also to ensure that it is flexibly delivered, as noble Lords said.
The noble Lord, Lord McKenzie, asked about sanctions statistics. We will look carefully at the point raised and consider what further information is useful to inform public debate. We have made a start on this, and our statistical releases now include additional information on sanctions.
Lord McKenzie of Luton
Can the noble Baroness deal specifically with the issue of how many, if any, three-year sanctions there have been?
Baroness Evans of Bowes Park
JSA sanctions continue to decrease, and the JSA monthly sanctions rate has slightly fallen—by 15%—over the past year. Each month, on average, 95% of JSA claimants comply with the reasonable requirements placed on them. On average, 5% of JSA claimants were sanctioned each month of last year. We can provide those figures; I will write to the noble Lord.
The noble Lord, Lord Kirkwood, asked about the gulf between the department and what charities say about sanctions. I can only attempt to reassure him that officials are working closely with charities to investigate concerns. For instance, we have worked closely with Crisis and Gingerbread on improving communicating sanctions and will continue to do so. I will take the issues raised by the noble Lord, Lord Beecham, back to the department, because I do not have some of the more detailed information that he was asking about.
On the basis of those responses, I hope that the noble Baroness will withdraw her amendment.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Lord Freud) (Con)
I can answer that. It is a general way across the world that social scientists compare family to family of different sizes so there are ways of weighting each child or adult in the family.
Lord McKenzie of Luton (Lab)
My Lords, this has been a thoughtful and extensive debate. Amendments 24 and 26 in the name of my noble friend Lady Lister and the noble Lord, Lord Kirkwood, would cause data on low-income families where one or both parents are in work—that is, in-work poverty—to be reported.
We support these amendments. We know, as we have heard, that some two-thirds of children living in poverty are in working families and that whatever the climbdown on tax credits, the Government have in-work support in their sights. If we are concerned with measures that look at the current experience of poverty as well as the risk of poverty, there seems no logic in including out-of-work but not in-work poverty, although the policy levers may be different.
Amendment 25 in the names of the noble Baroness, Lady Grey-Thompson, and the noble Earl, Lord Listowel, seeks to retain the current income measures in the Child Poverty Act. We, of course, support that. Our Amendment 46 does the same but retains that Act’s targets as well.
The absence of income measures cannot be justified and runs counter to pretty much all the evidence or views of those engaged with child poverty. The Government’s suggestion that income measures are a symptom of poverty, rather than a cause, is too simplistic. My noble friend Lady Blackstone gave us a great example relating to educational attainment. If people are poor they do not have the same opportunity to have the same equipment at home; they do not necessarily have books at home and they do not necessarily go to school with a meal inside them so that they can be more attentive at school. It is simplistic to say that one is looking at the experience of poverty and that it is not a symptom of poverty.
In its July 2015 response to the Government’s child poverty statement—a number of noble Lords referred to this—the Social Mobility and Child Poverty Commission stated:
“The commission has argued in the past that a more rounded way of measuring poverty—taking … account of causal risk factors—is sensible. The life chances of children, the poorest especially, depend on many things … It is not credible, however, to try to improve the life chances of the poor without acknowledging the most obvious symptom of poverty, lack of money”.
Pretty much every noble Lord who has spoken in this debate, with the possible exception of the noble Baroness, Lady Stroud, agreed with that proposition. She asserts that looking at simplistic measures of income contains a number of flaws, but my noble friend Lady Hollis made clear that the Child Poverty Act 2010 had four measures. You need to look at the circumstances in aggregate, not just at one snapshot in time.
CPAG says:
“We believe that poverty is a condition marked by a lack of adequate resources, some of which may not be financial. Nonetheless, an inadequate income remains the decisive characteristic of poverty and must remain central to any poverty measurement”.
A number of noble Lords referred to the Centre for Analysis of Social Exclusion at the LSE and the work that it did. It looked at the responses to the DWP’s consultation on child poverty measures, which sought to test the level of support for replacing the existing measures with new dimensions, including those provided for in the Bill. As we have heard, the research shows that there is a very high level of support for the existing measures in the current Act. Most wanted no change and those who countenanced additional dimensions saw this as supplementary information, but not as measures of child poverty itself. Most respondents were of the view that lack of material resources— income—was the very core of child poverty. We agree with that. It is suggested that respondents to the consultation saw the proposals to change the measures as bringing to an end the official measurement of child poverty in the UK. How does the Minister respond to that? He will doubtless tell us that the HBAI figures will still be published as now, but we know from our prior deliberations—the noble Baroness, Lady Grey-Thompson, made this point—that what gets reported under Clause 4 will be the focus of the Government’s attention. That is why they are approaching it this way.
Baroness Lister of Burtersett
I am sorry to intervene, but I wanted to ask the Minister whether he could answer a specific question relating to that. I know that there are some fears about this among academic social scientists and the voluntary sector. I absolutely accept the Minister’s assurances that the households below average income statistics will continue to be published, but will he assure the Committee that they will be really clear and published in an accessible form, not just as a load of Excel tables that some of us will not be able to understand? It is very important that we have that assurance on the record.
Lord McKenzie of Luton
I thank my noble friend for that intervention. I doubt there is much that she does not understand or is incapable of understanding, but she asked a highly relevant question. I hope that the Minister will give that assurance.
We have had a number of contributions to this debate. My noble friend Lord Liddle took us back in history but stressed the importance of the work that went into developing these measures in the first instance, enjoining the skills of Tony Atkinson. The right reverend Prelate the Bishop of Durham recognised the value of having worklessness and educational attainment as part of a measure. However, he said that that was not sufficient; there needs to be a focus on income if life chances are to be influenced and addressed.
The noble Earl, Lord Listowel, supported the existing measures in legislation. I think that the Child Poverty Act was the first legislation that the Minister worked on in opposition when he joined this place. At the end of the day, I thought that we had pretty much cross-party agreement, although it is fair to say that the Minister said there were other aspects of poverty which he thought should be reported as well. However, I do not believe that is the same as tearing up the Child Poverty Act, which is what this piece of legislation seeks to do. This is a very important issue because, unless we look at income, we will not address the here and now of poverty. It is all very well looking at some of those factors which have medium and long-term effects on people’s life chances, but we also need to address how people without resources exist today. That is why we need these amendments.
Lord Freud
My Lords, if we are taking a trip down memory lane, I remind the noble Lord, Lord McKenzie, that he unceremoniously threw out my amendment to put in four key life chance measures, which I said at the time would better reflect the real drivers of poverty, so clearly the debate has not moved on a lot.
Lord McKenzie of Luton
Does the noble Lord accept that the issues he was talking about were quite properly to be included in the building blocks of the strategy, which the Bill also required? It did not eschew the measures themselves.
Lord Freud
I shall address the amendments. I am sure the noble Lord will come back to me on some of these issues as I go through my remarks. Amendment 25, in the names of the noble Earl, Lord Listowel, and the noble Baroness, Lady Grey-Thompson, seeks to expand the report to include data on children living in households with low relative income combined with the other three income measures in the current Act, as we have discussed. The reason that we do not want to include those is that they fail to tackle the root causes of child poverty and focus on symptoms, which we want to replace. I will set out my argument in full. The effect of Amendment 46, in the names of the noble Baroness, Lady Sherlock, and the noble Lord, Lord McKenzie, is wider still. It would prevent the repeal of those measures from the Child Poverty Act 2010.
I shall try to explain why we find the four income-related measures unfit for purpose, particularly as regards treating them as targets. The income measures they are based on are a poor test of whether children’s lives are really improving. As my noble friend Lady Stroud pointed out, in the past, they have shown child poverty falling when the economy was in recession. Much more importantly, when you look at them as a driver of decisions by a Government, they are inherently unpredictable and would lead a Government to spend finite resources on action that does not produce the best results for children.
Baroness Blackstone
My Lords, though the Minister makes a commitment, will he accept that, as is so often said in this House, if there is no statutory requirement and nothing on the statute book any one of his successors could abandon that commitment? That is why we who have concerns about children in poverty want this measure to go on being collected and to be done under statute.
Lord McKenzie of Luton
I agree that we should have this in legislation but can the Minister confirm that his personal commitment will cover the circumstances and the work that needs to be done to identify whether somebody is experiencing material deprivation? That is not just an income issue.
Lord Freud
I think the noble Baroness, Lady Lister, will support me here but my memory is that the material deprivation figures are in the HBAI statistics. She nods that that is the case, so I can confirm that.
I shall summarise briefly. I am not in a position to give noble Lords the one word they want, but hope I have indicated that the measures will be available to see what is happening to relative child poverty. I am convinced that it is our new life chances measures—the measures rejected six years ago by the noble Lord, Lord McKenzie, which focus on the key drivers of worklessness and educational attainment—that will make the biggest difference to children, and that these amendments, were they on a statutory basis, would dilute that focus. We want to focus on the measures that make a real difference to children’s lives. I therefore invite the noble Baroness to withdraw her amendment.
The Lord Bishop of Durham
My Lords, I rise to speak first to Amendment 31. Given the serious enthusiasm that the Government have for introducing “life chances” as a title and theme, it would make complete sense for the Government to want to report on improvement in children’s life chances in the future. So I commend this as being entirely in line with the purpose of the whole Bill—it would make sense to report.
I will speak now to Amendments 36 to 40 and 42 to 45, and I would like to keep us in the north-east of England. Yesterday, it was my privilege to open the new building for Holy Trinity primary school in Seaton Carew in Hartlepool, and to then go to Prior’s Mill primary school in Billingham, both of which are Church of England schools. I add that I have visited the school in Berwick that the noble Baroness mentioned and can confirm what she said; it is a very fine school but it has not produced people for higher education in the way that it should.
The proposal to change from a “Social Mobility Commission” to a “Life Chances Commission” gives us a very rare opportunity to change the title of a government commission so that it is understood by the very children whom it seeks to serve. Most of our departments and so on do not resonate with the life, language and conversations of children themselves. However, in both the schools I visited yesterday, I found myself talking with those children about their hopes and their dreams and their fears, but they were longing to talk about the chances and hopes that they had in life. Those were not purely about money: they were about work and home and family and so forth. Not once did I hear any of them talk about social mobility possibilities.
In all seriousness, I say that it would be a much more sensible heading and title for the commission and it would fit much more accurately with the aims and purposes that the Government have stated for life chances, so I would seize this with every opportunity. It would please the children of the nation if they understood what the commission was about.
Lord McKenzie of Luton
My Lords, I shall be brief because I know that we want to make progress today. I support wholeheartedly my noble friend Lady Lister, with her brilliant exposition as to why we should substitute “life chances” for “social mobility”. I join her in opposing the proposition that Clause 5 stand part of the Bill. We have a very specific amendment in this group, Amendment 41, which is merely to delete the words, “on request”, so that the commission, whatever its final title and remit, can be proactive in offering advice to the Minister. That obviously carries the implication that the commission must be appropriately resourced. Perhaps the Minister will tell us what is intended in this regard. I hesitated to raise that issue, because I feared that the Minister was going to tell me that we put it there when we were in government, but I hope that he will not. Even if we did, it seems to be entirely reasonable that it should now be expunged from the provision.
I also support those who argue that there should be proper strategies, so that you do not just have odd reporting obligations: there must be an intent to come forward with a strategy focused on life chances and on fuel poverty. As the noble Baroness, Lady Grey-Thompson, said, if we do not have a strategy, where is all this reporting going to lead? Given the hour, I think I will leave it there.
Lord Freud
I hope that what I have to say on this group of amendments will be a little more pleasing, although I do not think it will please everyone on everything. I will divide my remarks into two areas: the first on strategy and targets, and the second on the commission. It is a wide group of amendments, and that is the way they break down.
Starting with Amendment 33, I think that noble Lords who put that forward would accept that we have dealt with that pretty thoroughly when we considered Amendment 25, so I shall not reiterate all of my arguments on that matter. Noble Lords have heard my concerns about the implications of legal targets when the financial figures are so difficult to forecast.
Amendment 31 sets out exactly what information should be in the Secretary of State’s report. I think that I am going to please the noble Baroness, Lady Lister, when I explain where we are. We will publish a strategy on life chances, so that is the noble Baroness’s strategy. We will then publish an annual statutory report on the new measures: I think that is effectively what the noble Baroness is driving at. The Government have produced major new strategies, and I think that noble Lords all around the Chamber will accept that we have tried to transform all the structures of the benefits system and the support we provide for people in a coherent way.
Lord McKenzie of Luton
My Lords, this is an extremely important group of amendments. On behalf of the Labour Benches, my noble friend Lady Sherlock and I will oppose Clauses 13 and 14 standing part of the Bill and will support Amendments 50 and 53, in the name of the noble Lord, Lord Patel. We support the thrust of Amendment 52 in the names of my noble friend Lord Layard and the noble Baronesses, Lady Hollins and Lady Tyler, which concerns access to psychological therapies. I acknowledge the campaigning work conducted by my noble friend when we were in government and the fact that he managed to move the issue of psychological therapies up the political agenda. More than that, he was significantly responsible for people getting treated.
As we have heard, Amendments 50 and 53 defer the changes to ESA coming into force until their impact on individuals’ physical and mental health, their financial situation and their ability to work has been estimated. All these matters have, in one way or another, been the subject of real concern since the substance of this policy—a £30 a week docking of the WRAG rate—became apparent. The noble Lord, Lord Patel, explained that he was particularly focused on people moving from the support group to the WRAG who were recovering from cancer. In so far as the Government’s impact assessment seeks to address these matters, it seems to conclude that it is doing claimants a favour by removing the WRAG rate and its equivalent in universal credit because this will encourage them to take steps back to work, with a consequent improvement in their health and the life chances of their children.
We should be ashamed, if not surprised, that a priority for our Government is to reduce the income of disabled people—individuals who have been assessed as not currently fit for work—from the current rate of £102 a week to just £73 a week, and to pray in aid a 10 year-old OECD report which, by all accounts, does not make a single reference to disabled people. We should also be concerned about the attempt to incentivise and coerce people into work when they have been found by a rigorous assessment not to be fit for work. There is either a lack of understanding of, or a callous disregard for, the financial circumstances that many in the WRAG face today, let alone in the future—circumstances that mean they struggle to pay their bills and maintain their health, rather than not drift into social isolation and focus on activity that will move them closer to work.
Of course, this is not a small group. There are nearly 500,000 disabled people within the ESA WRAG, almost half of them with a mental and behavioural disorder, including learning disabilities and autism. These are individuals who will need time and proper support to make it back to the labour market. Far from help with their struggles, the ESA cut will add to debt, stress and anxiety, making their journey more difficult, if not impossible, and pushing them into further poverty.
Most noble Lords here today will have received a raft of substantial and authoritative briefings from charities and other organisations whose opposition to this particular cut is remarkably consistent. We should thank them for their defence of disabled people, particularly their robust challenge to the proposition that cutting the WRAG is a work incentive. We also now have the benefit of the formal review of the proposed reduction in the employment and support allowance and how it will assist the Government’s declared aim of halving the disability employment gap.
The report was led by the noble Lord, Lord Low, and the noble Baronesses, Lady Meacher and Lady Grey-Thompson, at the request of a group of charities. We should acknowledge their commitment and the clarity of their conclusions and recommendations. I hope we will hear from them and have the benefit of their expertise during this debate. One of their central recommendations was to reverse the removal of the ESA WRAG component and the equivalent payment in universal credit. This is precisely what our amendments will do. But the review is not just about objecting to the change that the Government are seeking to impose. It sets out a series of recommendations focused on helping the Government to help more disabled people move closer to and into work. Perhaps a recast amendment on Report might better capture this broader approach.
I will not attempt to outline each of the 11 recommendations of the review in the hope that others will cover some of them but of particular significance is the call to redesign the WCA, focusing on a holistic approach which understands the barriers to work that people face, and ensuring that this information is used to provide appropriate support. Not only did the review find no evidence that the £30 a week WRAG component is acting as a disincentive to work, or that reducing the payment will incentivise people to seek work, it received evidence to the contrary—that the reduction would hinder rather than help people take steps towards work.
The extra money individuals in the WRAG receive is to recognise that they are likely to be unemployed for a longer period than those receiving JSA, and that once out of the workplace disabled people find it more difficult to return. The typical time for which claimants were expected to be in the WRAG was two years; for those on JSA it was much less. This loss of resources is being imposed on a range of other measures that can affect disabled people—council tax support cuts, the bedroom tax, the benefit cap for those not on DLA/PIP—and benefit freezes are in place. The review reminds us why this extra income is so important to disabled people and why the threat of its loss—as well as the reality, should it come about—is so hazardous to their health and well-being.
Your Lordships should read the report and understand the strains of daily living for so many of our fellow citizens—individuals who would welcome the chance of moving towards and into work if we would only invest in tailored and personalised programmes to make this a reality for them. I urge the Government to reject these misguided cuts, listen to the views of those whose lives would be made a misery if they proceed, and instead grasp the opportunities that could genuinely transform the lives of so many disabled people.
Baroness Manzoor
My Lords, we on these Benches strongly oppose the question that Clauses 13 and 14 stand part of the Bill, along with the opposition party. At Second Reading, I made it clear that these were the clauses that the Lib Dems were most concerned about—in a Bill which had little to be joyous about.
Clause 13 legislates to reduce the amount of money that new claimants receive within the employment and support allowance work-related activity group—known as ESA WRAG—by £29.05 per week or nearly £1,500 a year. This cut is mirrored in Clause 14 for the equivalent payment in the new universal credit, called the limited capability for work group. As the Disability Benefits Consortium says, this is despite the fact that the WRAG is specifically there to provide support for disabled people who are assessed as being not fit for work, as the noble Lord, Lord Patel, stressed.
In his summer Budget, in order to make savings on welfare expenditure, the Chancellor announced that he would reduce the level of benefit paid to claimants in ESA WRAG to the value of jobseeker’s allowance—JSA. How can that be right? These are people who have been deemed to be ill. This is despite the fact that, as the noble Lord, Lord Patel, and others have said, the people receiving ESA WRAG and the limited capability for work element of universal credit have been independently medically assessed by government assessors as being too ill to work—not by their own GPs but by independent assessors, and that is really key. These are people with disabilities—nearly 500,000 people; people with long-term health conditions such as mental health and behavioural disorders—nearly 250,000 people; and people with cancer or progressive motor neurone illnesses such as MS and Parkinson’s disease.
I entirely agree with Macmillan Cancer Support, the Disability Benefits Consortium, Mind, Mencap, Leonard Cheshire Disability, Scope, the Rowntree Foundation and many others—they cannot all be wrong—that reducing the amount of money received by individuals on ESA WRAG and the limited capability for work element of universal credit will make it harder for individuals to cope with the financial impact of their condition and to afford what they need to support their recovery. The additional pressure to seek work when not fit could detrimentally impact on an individual’s health and recovery. I have seen this, having worked in the NHS for many years. This could actually move them further from the labour market. That is not what the Government want to do. The negative impact of returning to work before individuals are fit to work compromises them and is unsustainable, and may lead individuals to require welfare support for longer or indeed move them into the support group, where they do not work again. That cannot be right.
The Government’s impact assessment states:
“Someone moving into work could, by working around 4-5 hours a week at National Living Wage, recoup the notional loss of the Work-Related Activity component or Limited Capability for Work element”.
Frankly, that is unbelievable, as people in this group have been found not fit for work. That is the hub of the whole issue. Clauses 13 and 14 have no place in a caring and compassionate society and I urge that they be removed from the Bill. It is far better that the Work Programme trains advisers better to understand conditions so that the most appropriate support and help can be given to individuals to return to work. Barriers to employment such as lack of job opportunities, attitudes and transport difficulties must also be addressed by the Government, and employers should be given the necessary training and support to enable them to take on more disabled people so that people can return to work when they are deemed fit to do so.
I urge the Minister to exempt people on the ESA WRAG and that Clauses 13 and 14 do not stand part of the Bill. The Government must give people hope and support. I fear that these measures are merely about the Treasury wanting to demonstrate that it can achieve a budget surplus—how wrong is that?—without, I fear, the Treasury thinking about real people and real lives, and the impact it will have on those people. This is not about figures on a balance sheet but people who will find the impact of these clauses deeply damaging, as they will affect their life chances. This is not just about the young. I agree with the noble Lord, Lord Patel, that these clauses are not sensible or morally right.
Welfare Reform and Work Bill
Lord McKenzie of Luton Excerpts(10 years, 1 month ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Hollins (CB)
My Lords, I speak in support of my noble friend’s Amendment 34 and focus on the impact of benefit sanctions on people with mental health problems. Mental health professionals are extremely worried about the impact of this, which is why this amendment asks for a report containing data to be published.
The latest statistics around the number of people with mental health problems being supported into work though the back to work scheme are astonishingly low. Just 9% have been supported into employment since the scheme began. There are two key areas where better evidence is needed. We know that more than half of people receiving ESA in the WRAG have a mental or behavioural disorder as their primary health condition, and many more people in the WRAG will have comorbid physical and mental health problems.
We also know that people with mental health problems are being disproportionately sanctioned. Recent Freedom of Information requests to the department revealed that in 2014, on average 58% of sanctions for people in the ESA WRAG were given to people with mental health problems—20,000 in all.
The mistaken assumption is that people do not want to work, and that the best incentive is to threaten benefit withdrawal. Research shows that people with mental-health problems have a high want-to-work rate. I could say a lot more about that, but in view of the time I will not. What are the barriers? We need much more information—hence the request for a report.
I would like to share an example given to me by Mind, the mental health charity. It told me the story of a man who has been out of work for most of his adult life due to his mental health problems and who is currently in the support group. Under conditionality in the work-related activity group, this man felt so fearful and anxious of the threat of sanctions that he forced himself to attend his appointment a couple of days after being hospitalised following an overdose. This is just one shocking example of the pressure claimants are under, the health conditions that people face and, crucially, the level of anxiety and stress reportedly caused by fear of sanctions.
I urge the Minister to take these concerns and this amendment very seriously.
Lord McKenzie of Luton (Lab)
My Lords, this group of amendments is largely focused on the non-income issues and seeks to add the matters of worklessness and educational attainment to the measures, which the Government say are focused on the causes of poverty rather than its symptoms. These matters are important because it is asserted that what is measured and reported on will drive the focus of government attention, although reliance on this approach is inherently weaker than having strategy obligation and specific targets. There will be more about that in later amendments.
In considering Clause 4 and these amendments, we should set the context by reflecting on the starting positions, and that has been done by the noble Lord, Lord Ramsbotham, and the noble Baroness, Lady Manzoor. The current Child Poverty Act 2010, as amended in 2012, contains targets to be met in 2020 that relate to: relative low income; combined low income and material deprivation; absolute low income; and persistent poverty. There are four targets, not just one. It provides for the Social Mobility and Child Poverty Commission—formerly the Child Poverty Commission, and soon to lose child poverty altogether—to give advice when requested to Ministers on how to measure socioeconomic disadvantage, social mobility and child poverty and to report on progress on improving social mobility, meeting the targets and implementing the required strategies.
The Act also requires the publication of a strategy to comply with the targets and to combat socioeconomic disadvantage. In preparing the strategy, consideration must be given to measures—we referred to them as the building blocks at the time of the legislation—including: parental employment and skills; financial support; promotion of parenting skills; physical and mental health; education, childcare and social services; and housing and social inclusion. The Act imposes a requirement for local authorities to co-operate to reduce child poverty in their areas and prepare local child-poverty needs assessments.
As well as having income measures and associated targets, this required the Government to produce a strategy which would have regard to a range of factors, including the multiplicity of matters which affect child poverty. Apart from for Northern Ireland strategies, this Bill sweeps away all those provisions—the entirety of them. We will seek to reinstate this with subsequent amendments. Instead, the Bill requires the Secretary of State to publish an annual report containing data on children in workless and long-term workless households in England and educational attainment at key stage 4 for children in England and the educational attainment of disadvantaged children. There is no obligation on the Secretary of State to define these terms until the first report is provided for, in the year 2017 and a veiled reference to developing “other measures” to recognise what is suggested are the root causes of poverty: family breakdown, problem debt and drug and alcohol dependency. There is no statutory obligation to do so.
There is a reference in the briefing notes to a “life chances strategy” in due course, but no commitment on the scope and timing of this. The commission will have a focus on social mobility and no longer on reducing child poverty. Crucially, the Bill removes any income measure and related targets. This is on the basis that income is a symptom, not a cause, of poverty and that the relative income measure can lead to spurious outcomes when medium incomes are falling.
Lord Freud
There have been studies showing the numbers who are addicted to one or the other. I remember producing some figures on that in the debate on the last Welfare Bill. Clearly, one of the points of developing a life chances strategy is to get a better grip both of those areas and, indeed, the figures on debt. As the noble Baroness hinted, the figures are imperfect, and that is one of the reasons we want to get a better grip on it. When we look at the levels of debt, that will tell us about impacts, and we can start to analyse what those impacts are. That would of course include any government measures and the impacts would be revealed.
Lord McKenzie of Luton
I am still a little unclear on one fairly key point. When responding to the consultation on the measurement of poverty, the commission recommended almost a two-pronged approach. One was that there should be a multidimensional focus on the causes of poverty, but a clear focus on recording the experience of poverty and dealing with poverty here and now with an income measure. I understand what the Minister has been saying about focusing on the causes. One can see the longer-term impact of that; but what, precisely, are the Government going to do differently in respect of the here and now of people’s actual experience of poverty—people who simply do not have enough income today, and will not tomorrow or the day after, to get by and play their part in society? That is what I find to be missing, so far at least, from the Minister’s response.
Lord Freud
I am not sure that the Government would do much different from what they are doing. They have a safety net and there are various measures to support people. We are building at speed now the universal support system in which we are combining with local authorities to help the most vulnerable, but in a very different way from how people have been helped in the past, which was through crisis loans that they went on and on building in a random way, without anyone looking at the root causes of their problems and trying to help them out of them. This approach accords with that. Clearly, we will be spending our money on the root causes of poverty and on life chances. But there will be income measures published, because we have said that we will go on publishing the HBAI. If people want to see what is happening, that gets a lot of publicity every year. That is the change: the money that we will be spending on life chances. Those are some of the mechanisms by which we will do it. Universal support is one of the key things, but there are a lot of other things. Getting mental health right is something that has evaded Governments for a long time, and we are now spending more money on that than any Government have before.
I urge noble Lords not to press these amendments.
Lord McKenzie of Luton
Could we perhaps have one more brief run-through of the issue of income? The Minister says that the Government are not doing anything specific to address income poverty other than the application of their current broad benefit regime, with all the cuts that that is now having to endure. Is that it, in terms of actually tackling current poverty? How does the Minister deal with the point that pretty much every expert out there has concluded—certainly the commission has—that we need to have consistent, robust measures of poverty? What the key driver is, and all the other stuff, is subsidiary to that. There seems to be an overwhelming view coming from the experts on that. Is that not a view that the Government share?
Lord Freud
No. Every year I stand here because there is a forecast that says that child poverty is going up, has gone up or will go up, but when we actually see the figures we find that child poverty has actually gone down; the Government have been impressed and shocked by that. When you transform the economy, change the culture so that work is what has been driving things, and move up the employment rates and the earning rates in the way that we have, you find that the behavioural impacts are very different from the static analysis that many of the external experts tell us about.
Lord McKenzie of Luton
I will follow up on the point about local authorities that my noble friend Lady Lister raised. The Minister will be aware that we are in the era of devolution deals, particularly with combined authorities—Manchester was the first, and there are others as well. As part of that process, is the department engaged in inputting into the package with a particular focus on child poverty issues?
Lord Freud
As noble Lords will be aware, the Government’s emphasis is to put authority into the hands of local authorities, which is what devolution is about. Therefore they cannot have devolution on the one hand and then send a whole series of specific requirements down on the other.
State Pension: Women
Lord McKenzie of Luton Excerpts(10 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord McKenzie of Luton (Lab)
My Lords, I thank my noble friend Lady Bakewell for initiating this short debate and for bringing to our attention some of the distressing communications she has received in her postbag. I also thank the noble Baroness, Lady Jenkin, and the noble Lord, Lord Stoneham, for their contributions. We are a small but select band on this occasion.
The focus is the new single-tier state pension, which is due to come into effect in April 2016, and in particular how it is being communicated to people about to reach state pension age. This is brought into sharp focus as its introduction looms and the spotlight falls on the detail of what the changes mean to individuals. The issue is also to an extent entangled with the changes to the state pension age and the different ages at which men and women will gain entitlement to a state pension. It is also relevant to the changes to private pension provision and the new freedoms concerning access to pension pots if decisions are to be based on robust information about future income in retirement. It is also relevant, as we have heard, to progress on auto-enrolment.
The single-tier pension has been promoted as the route to speeding equalisation of pension outcomes between men and women a decade earlier than would be achieved under the 2007 legislation. Despite significant improvements under that legislation—in particular, the reduction of the number of years needed for a full basic state pension to 30, and more generous credits for carers—we know that women have continued to be at a disadvantage compared to men. They have been less likely to be in work, more likely to work part-time, often in multiple jobs, and more likely to be on low pay and therefore historically inherently less well treated by the mechanisms determining state pension entitlement. We know that life expectancy is increasing and that life expectancy for women is greater than for men. The majority of today’s pensioners are women, and this is projected to be the case into the long term.
Therefore, the prospect of accessing a new single-tier pension with the promise of greater simplicity and a shorter period before an equalised outcome with men is obviously to be welcomed. These changes are driven by the ending of the earnings-related state second pension and because a new single-tier year is worth more than the current basic state pension year. However, it is not all good news: 35 years of contributions are needed for a full single-tier pension and there are restrictive rules concerning reliance on a spouse’s national insurance contributions.
Despite the new arrangements offering the prospect of eventually leading to a simpler, more understandable pension system, the transition certainly has its complexities. We should acknowledge that the Minister is on record as recognising as an early issue on taking office that more needed to be done to communicate what these changes mean, and we look forward to an update when she replies.
The Minister will have heard from my noble friend about the confusion, frustration and disappointment that abounds on this issue, especially among women. That confusion is not only about what level of pension will be payable. There is frustration about the precipitate changes to the state pension age. These issues potentially make more difficult the choices, usually falling on women, about leaving employment to take up family caring responsibilities, for example.
My noble friend is right to challenge whether more could be done to encourage realistic expectations of what will flow from the single-tier pension. In this context, it is helpful to remind ourselves of the overall impact of the proposals. The DWP’s impact assessment produced for the Pensions Act 2014 showed that over the long term the overall expenditure on pensioner benefits from the state is projected to be lower than under the current system. It is broadly the same as the current system in overall costs through to 2040 but with savings thereafter. This includes pensions as well as pensioner benefits, pension credit in particular. However, we should not forget that the Exchequer will gain massively from the ending of contracting out next year and the consequent increase in national insurance contributions. This benefit was due to be applied to meet the proposed changes to the funding of social care, and perhaps the Minister will tell us whether that is still the case and how it is being put into effect.
The very helpful Library briefing reminds us that the Work and Pensions Committee concluded that the overall impact of the reforms, whether people gained or lost, is likely to be marginal. Reference is made to a Joseph Rowntree Foundation report which concluded that gainers from the new system will include the self-employed and those not qualifying for the additional state pension prior to 2002, but the conclusion is that overall and in the longer term the new single-tier pension will be less generous than the current system for most people. Do the Government accept this analysis?
Of course there are a host of reasons why from April 2016, contrary to many people’s expectations, there will not be a single-tier pension of £155.65 per week for all pensioners. For a start, the single-tier pension will apply only to people who reach state pension age on or after 6 April 2016 and, because state pension ages will not have been equalised by then, the starting point for a man is those born after 6 April 1951 but for a woman it is those born after 6 April 1953. Not all will have achieved the required number of national insurance contributions, by payment or crediting, for a full pension, which is to be increased to 35 years, and if at least 10 years’ contributions have not been earned then there will be no entitlement at all. Not all will have the opportunity to close gaps in their national insurance record, and those who have been contracted out of the additional state pension will suffer a deduction which can be made good in whole or in part only by post-April 2016 payments before state pension age. Some will have a starting amount under the current pension rules which provides for a protected payment in the new scheme.
These are just some of the factors which will determine entitlement or lack of it. Recent press reports, which were referred to by my noble friend Lady Bakewell, highlight the impact of these issues on the early years of the scheme. It is suggested that of the 400,000 expected to claim the new state pension next year only 20,000 women will get the full rate of £155.65. Do the Government accept these figures? What is the Government’s analysis of the actual reasons why individuals are not receiving the full rate?
The National Federation of Occupational Pensioners reinforces the point that its members are confused about which system they are in. It also points out what it says is an anomaly—that the triple lock applies to the entirety of the single-tier pension, whereas it applies to just the basic state pension under current arrangements. The federation also emphasises the difficulty which the increases in the state pension age have presented for women born in the 1950s.
As the noble Lord, Lord Stoneham, said, in October 2014, the previous Pensions Minister, Steve Webb, launched a service to provide individuals with a written estimate of what they might expect to receive under the single-tier pension. This is to be available for those reaching state pension age between April 2016 and August 2021. Will the Minister tell us how many such written estimates have been requested and provided to date? Will she say whether the information provided contains a comparison with the existing pension system and whether the projected levels of pension could be enhanced by, say, the payment of voluntary national insurance contributions? The papers we have provide further details of the single-tier communication strategy. Will the Minister update us on progress on the strategy and, in particular, on whether phase 3 is under way and on schedule?
Pension issues can be complicated, even for the sophisticated practitioner, as the noble Baroness, Lady Jenkin, acknowledged. It is clear that the Government are failing to communicate effectively with potential pensioners on these very significant changes to the system. My noble friend Lady Bakewell should be congratulated not only on bringing this issue before us today but for her continual support for those women—WASPI—whom this Government are letting down.
State Pension: Equalisation
Lord McKenzie of Luton Excerpts(10 years, 2 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Baroness Altmann
My Lords, the policy of merging and transferring pension pots will be addressed but, at the moment, there is a significant amount of increased regulation and changes in legislation for the pensions industry to cope with. By 2018, when auto-enrolment is fully rolled out, we will know much better what are the appropriate and required measures for automatic transfers.
Lord McKenzie of Luton (Lab)
My Lords, the Minister will doubtless recall one of her contributions to Saga magazine where she wrote:
“A group of older women are very angry. Many of them have written to me, some have written to their MPs, and others say they don’t believe it is worthwhile writing to their MPs, as the Government will not listen to them anyway. They remember that it was the Conservative Government in 1995 who increased their pension age, which they quietly accepted, but they now feel taken advantage of and treated like a ‘soft target’ because they have been given such short notice of another major change. They feel the move is discriminatory and manifestly unfair”.
She went on:
“The plans demonstrate a lack of understanding of the realities of many of these women’s lives. They feel betrayed that the Conservatives have hit them a second time and by far more than men”.
Does the Minister stand by those words?
Baroness Altmann
My Lords, as I have said, this matter was properly and thoroughly debated by Parliament. All those arguments were put to both Houses of Parliament and a majority voted for the legislation more than four years ago. This afternoon, I checked quite carefully and it is clear that this issue was missing entirely from the Labour Party’s manifesto before the general election. No party committed to doing anything about the billions of pounds that it would cost to change any of these plans.