State Pension Reform
Steve Webb Excerpts(11 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
My noble Friend, the Minister for Welfare Reform, Lord Freud, tabled a written statement in the House of Lords yesterday because events prevented the Department from making an oral statement in the House of Commons as planned.
I am pleased to announce the Government will be able to launch the new single-tier state pension in April 2016, in keeping with the original timetable.
Our 2011 Green Paper “A state pension for the 21st century” set out the Government’s vision for a simpler state pension, which would reward retirement saving and be fairer for those who have historically had poorer state pension outcomes, such as women, the low-paid, the self-employed and those with caring responsibilities.
The work undertaken that resulted in our White Paper “The single-tier pension: a simple foundation for saving” took longer than anticipated, mainly because the existing system is so complicated, containing 60 years of modifications and tinkering, and the road to fundamental reform is not straightforward when we also need to recognise what people have built up under the existing system. Consequently, a start from 2017 reflected the additional 12 months it took to complete our plans.
However, given the positive response to our White Paper, we looked again to see if it would be possible to return to our original timetable and to deliver reform as soon as possible, to support the roll-out of automatic enrolment into workplace pensions and provide certainty for both individuals and their pension schemes at the earliest opportunity.
Therefore, I can confirm today that, from April 2016, those reaching state pension age will do so in the single-tier system. The individualised pension will reflect the lives and working patterns of today’s working-age population, and recognise the vital social contribution of those caring for children, elderly relatives or disabled people through crediting arrangements. The single tier will also mean that, for the first time in around 40 years, self-employed people will be treated the same as employees for the purposes of state pension entitlement.
Reform in April 2016 will mean that around 400,000 more people will reach state pension age under single tier, including every woman affected by the acceleration of the state pension age equalisation process in the Pensions Act 2011.
Arrangements will also remain in place to enable people to pay voluntary national insurance contributions and Her Majesty’s Revenue and Customs is reviewing the time limits for those who will receive a single-tier state pension so that, if they delay paying voluntary contributions until a pension statement based on the single-tier pension qualifying conditions is available, they will not lose out.
As the single tier is a flat-rate pension, a consequence of its introduction is the closure of the state second pension scheme and, with it, the ability to contract out of this element of the system. Those people who were contracted out will see their national insurance contributions equalise to the same rate as the rest of the population, but will also build up access to the same flat-rate state pension, set above the level of the basic means test. I can also confirm that 90% of affected individuals reaching state pension age in the first 20 years of the single tier will receive more state pension than the additional national insurance they pay.
As stated previously, this will result in additional national insurance revenue for the Exchequer. About £3.3 billion is employer national insurance contributions from the public sector and so in effect a transfer within the public sector. Of the rest of the revenue, around £0.6 billion is employer national insurance contributions from private sector, £1.4 billion is employee national insurance contributions from public sector and £0.2 billion is employee national insurance contributions from private sector—this money will not be used for net revenue raising. As per standard practice, the detail of these fiscal impacts will be accounted for in the Budget on Wednesday.
State Pension Reform
Steve Webb Excerpts(11 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I shall shortly be making a statement about changes to the timetable for the introduction of state pension reform.
Under-occupancy Penalty (Nottingham)
Steve Webb Excerpts(11 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate the hon. Member for Nottingham South (Lilian Greenwood) on securing this debate. She made no reference whatsoever to the context in 2010 in which an incoming Government had to make decisions or to the fact that the previous Government spent £150 billion more in their final year in office than they had coming in. She knows perfectly well—she did not mention this, but she knows it—that any incoming Government, including an incoming Labour Government, would have sought to take tens of billions of pounds out of public spending. She also knows that out of public spending there are two big things on which Governments spend money. The first is public sector pay, on which the Opposition were very slow to agree with us—they have now finally agreed—that restraint was required. The second is what is loosely called welfare—benefits, tax credits and pensions. It is completely implausible that an incoming Labour Government would not have cut social security spending. This is not a debate about whether social security spending has to be cut back; it is about how.
Lilian Greenwood
Will the Minister explain why his Government will deliver a tax cut at the beginning of April for the highest earners in the UK? Individual millionaires will get more than £100,000 each. Why is he choosing to balance the books on the backs of poor people in my city?
Steve Webb
I would be happy to respond to the hon. Lady’s question, although I was trying to keep to the subject of her debate. The higher rate of income tax in April will be 45%. For 13 years under the previous Labour Government the highest rate of income tax was not 45% but 40%. If she thinks that a 45% rate of income tax is immoral, why was a 40% rate acceptable for 13 years under the previous Labour Government? In addition, higher earners will pay a bigger share of tax as a result of a combination of measures. The hon. Lady has chosen to mention one, but if she takes the capital gains tax increases and the cuts in pension tax relief into consideration, she will see that overall we are taking more from higher earners than the previous Government did.
Let me focus on the specific issues that the hon. Lady raised. A number of voices were silent in her remarks. She used the word “fairness” and seemed to think that the suggestion that benefits should, broadly speaking, support a household size that a family needs rather than spare rooms was immoral, but that had been the case for private sector tenants for a long time under Labour party policy. The local housing allowance scheme introduced by the previous Government was, broadly speaking, for benefits to cover the household size needed. Why is it immoral to ask social tenants to pay the cost of a spare room, but not private sector tenants?
Steve Webb
I am sure that the hon. Gentleman will forgive me if I continue to respond to the points raised by the hon. Member for Nottingham South.
Why is it acceptable to restrict private sector tenants on a low income, but okay to allow social tenants to have a spare room?
Steve Webb
I hope that the House will forgive me, but I want to respond to the points raised by the hon. Member for Nottingham South and have limited time to do so.
There is an issue of fairness as between private sector tenants on a low income and social tenants on a low income, but there is also a second issue of fairness. Our estimates for Nottingham are ballpark figures—the hon. Lady is right to say that we do not have exact figures for her constituency, but we do have regional figures and we can estimate overcrowding—but we estimate that of the order of 2,000 or so households there are overcrowded.
Lilian Greenwood
I thank the Minister for giving way. I specifically asked Nottingham to provide me with the figure for the number of people who face overcrowding and it is just short of 630 households, compared with 6,103 households that face the bedroom tax.
Steve Webb
One figure over which there is no dispute is the number of people on the housing waiting list in Nottingham, which is 12,000. They are desperate for a family home or for family accommodation, whereas 6,000 households have spare bedrooms.
Steve Webb
No. There is an issue about fairness between social and private tenants and between those who face overcrowding and are desperate for a home and those who have spare rooms, and about fairness for those on the waiting list.
The hon. Member for Nottingham South raised a number of specific issues to which I want to respond. She asked whether people who will find themselves in the private sector will be able to rent if they are on housing benefit. The number of people in the private sector on local housing allowance recently passed the million mark, so more than a million people in the private sector are getting housing benefit. The suggestion that landlords will not rent to people on housing benefit is therefore demonstrably false.
Lilian Greenwood
I would be interested to hear whether the Minister ever speaks to anybody in Nottingham, because the experience of social tenants who are finding it difficult to move into the private sector was provided to me by the local homelessness charity, Framework, which has a pretty good idea of what is happening in our city.
Steve Webb
All I can say to the hon. Lady is that there are more than 1 million people on housing benefit in the private rented sector. There is not a little island called Nottingham where those people do not exist. Across the United Kingdom, private sector landlords are renting to people on housing benefit.
The hon. Lady mentioned Nottingham City Homes. I welcome some of the measures that it is taking to assist people who are affected by this measure. For example, it has produced a lodger guide so that any tenant who wishes to take in a lodger has information about how to do so. That will not be the answer for everyone, but it will be the answer for some. It will mean that there is better use of the scarce resource that is the empty or unused bedroom in social housing.
The hon. Lady mentioned HomeSwapper, a mutual exchange website that Nottingham City Homes is encouraging people to refer to. That is very welcome because it tries to make better use of the valuable social housing that we have. Nottingham City Homes ran what I think it called a speed-dating event to help match people who want to move to smaller properties with those who want to move to larger homes. It is true that this measure saves money, but it also leads us to make better use of the very underutilised resource of our social housing stock. As these initiatives demonstrate, there are some people living in overcrowded accommodation, whose voice was silent in the hon. Lady’s speech, and some people who are living in accommodation with spare rooms.
There is an issue with what one might loosely call “hard cases”. Those include people for whom a spare bedroom is not spare, but is very important. The hon. Lady dismissed in a very new Labour sort of way the £700,000 that is being given to Nottingham next year in discretionary housing payments, as if it is a drop in the ocean or a trivial sum of money. That money is being given to local authorities so that they can assist people on a case-by-case basis who approach them and say that there is a particular reason why the measure would be unfair or adverse in their case.
Steve Webb
I hope that the hon. Gentleman will forgive me if I try to respond to the hon. Lady.
It is said that the money will help only a relatively small proportion of people. That is entirely true because it is for exceptional cases. The basic principle is that if people have spare bedrooms, they should either put somebody in them or pay for them, perhaps by earning more if they are able to.
It is important to say that the price we are asking for a spare bedroom is just under £2 a day in Nottingham. That is what we are asking private renters on a low income to contribute anyway.
Steve Webb
No.
We are asking private renters in Nottingham and elsewhere to pay just under £2 a day for a spare room. Obviously, if somebody is on benefit, that it not easy. However, for those who want to retain their spare room, that is the contribution that we are asking. Many people on a low income who are renting in the private sector pay that money.
There were scare stories about mass evictions and homelessness before the limits came in for the private rented sector, but those things have not happened. Just the sort of alarmist language that the hon. Lady used about mass evictions and the rest of it was used before the caps came in for the private rented sector. In some cases, people have traded down. In other cases, people have made a contribution towards retaining the spare room.
The hon. Lady mentioned the Department for Communities and Local Government and ring-fenced funding for under-occupation. She will know that the strategy of the DCLG has been to let local authorities decide their own priorities and not to have ring-fenced funding.
The hon. Lady mentioned the combination of this measure and other measures. She mentioned the reduction in support for council tax benefit. Nottingham city council has taken the decision to charge some of its working-age benefit recipients a contribution to the council tax. Not all local authorities have done that.
Steve Webb
Well, other local authorities have avoided doing that. It is noticeable that many Labour-led local authorities have decided to pass the cost on to their tenants. For example, my local authority of South Gloucestershire has not passed on the cut to tenants, so they will receive full council tax benefit. Nottingham city council, however, has decided to expect its low-income tenants to make a contribution. The hon. Lady said that Governments have to make choices, but so do local authorities. Nottingham council has decided to charge low-income working age households a contribution towards their council tax. That was its decision.
Looking forward to the changes we have made, foster families were mentioned and the Government have been clear throughout that we want to protect such families. Our original strategy was to put the £5 million that we think it will cost to protect those families into local government budgets through discretionary payments, but, partly because of the alarmist scaremongering about foster families, we decided it was far better to avoid any anxiety on that point and simply to entitle foster families to an extra bedroom at the same cost. We have not had to find extra money for that measure because it was there already. We always said that we would protect those families, and we will. However, we will do so directly because when we relied on discretionary payments, Opposition Members claimed that we were not going to support foster families, which caused concern among those families. Giving foster families a right to a room seemed a more direct way of providing that support. Likewise, we have made it clear, as the Prime Minister did—
Steve Webb
No. I only have a couple of minutes left. I have made my point clear. As the Prime Minister made clear from the Dispatch Box a couple of weeks ago, families with disabled children who cannot share a room will have the right to an extra room if they approach their local authority and make their case. Provided that case is accepted, they will have a right to a room. There are a number of elements where we have either given a right to a room, and the hon. Gentleman for, I think, Shipley—
Steve Webb
No. I apologise. I am sorry, I cannot remember the hon. Gentleman’s constituency, but he cited a case where a carer had to come in and use a spare bedroom. To be clear, the rules allow for a non-resident carer who has to stay overnight to have a room. Obviously, I do not know the full details of that individual case, but a spare bedroom is allowed for a non-resident carer.
Chris Leslie
I am afraid that the carer rules do not capture that particular case, but I wanted to ask the Minister a particular question about the bedroom tax—sorry, the spare room subsidy. I know the name is important, much like the community charge which some people did not want to call the poll tax. Can the Minister provide a figure for the number of households affected by the bedroom tax that include a disabled person?
Steve Webb
The hon. Gentleman glossed over his constituent’s case, but to be clear for the record, a spare bedroom is allowed for a non-resident overnight carer and it is important that he does not alarm people about the issue. In our impact assessment we published the number of disabled people affected by the change, and, as he knows perfectly well, around one in three—broadly speaking—of those affected by the measure is receiving the disability living allowance. Time is running out, but simply to say—
State Pension Reform
Steve Webb Excerpts(11 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
To assist the Work and Pensions Select Committee with its pre-legislative scrutiny of the draft Pensions Bill, I shall later today publish some additional research carried out by the Department for Work and Pensions into the state pension outcomes for the particular cohorts of women who have become the focus of the Committee’s enquiry.
I will place a copy of the analysis in the House Libraries, it will also be available later today on the Department’s website at: www.dwp.gov.uk/single-tier- pension.
Oral Answers to Questions
Steve Webb Excerpts(11 years, 2 months ago)
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Grahame M. Morris (Easington) (Lab)
2. What steps he is taking to tackle the increased use of pension liberation schemes.
The Minister of State, Department for Work and Pensions (Steve Webb)
We take the issue of so-called pension liberation very seriously. The Pensions Regulator is currently investigating 21 cases, and scheme assets worth over £50 million have been protected as a result of regulatory action.
Grahame M. Morris
Many pension liberation schemes are skimming off thousands of pounds in charges and commissions, and leaving customers exposed to punitive tax penalties. In the wake of mis-selling scandals such as that involving payment protection insurance, what action is the Minister taking to ensure that future pensioners are protected?
Steve Webb
The hon. Gentleman is right. When people transfer money from a pension, they must fill in transfer forms. We have established a “scorpion sting in the tail” information campaign, producing very eye-catching literature which people wishing to transfer their money receive before signing on the dotted line. It is a “buyer beware” measure, and is one of a suite of measures that we are taking to crack down on such fraud.
Andrew Bridgen (North West Leicestershire) (Con)
Many participants in pension liberation schemes pay extremely high interest rates on any loans that are taken out, and residual funds are invested at the discretion of the trustees, which can lead to insecure or poor investment decisions. Does my hon. Friend agree that that is in no one’s long-term financial interests?
Steve Webb
My hon. Friend is right. We are warning people to be extremely wary. In general, they should not get their money out before they reach the age of 55, except in the event of, for instance, terminal illness. Trustees need to be wary, and participants need to be wary. Those who spot fraud should report it, and we will continue to crack down on it.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
19. Some £400 million has been liberated illegally from pension funds, and all that the rather incurious Minister is saying is that he has produced some rather catchy literature. Is that sufficient?
Steve Webb
If that were all we had done, no of course it would not be. Many of the Government’s anti-fraud authorities, including, among others, the Serious Fraud Office, are working with us. One of the challenges is that the money is sometimes transferred overseas, where we have less jurisdiction. However, what we need is trustees not to be transferring money—authorising the transfer of money—out into suspicious pension funds. So trustees have a part to play, as do scheme members.
Ian Murray (Edinburgh South) (Lab)
3. What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953.
Heidi Alexander (Lewisham East) (Lab)
16. What recent assessment he has made of the effects of the Government’s proposal for a single-tier pension on women born between 6 April 1952 and 6 July 1953.
The Minister of State, Department for Work and Pensions (Steve Webb)
With permission, I will answer this along with Questions 7, 8 and 16.
We have today published a document analysing the pension outcomes of this group of women. Overwhelmingly, women in this group—who reach state pension age up to three years before a man born the same day—would get more pension benefits over their lives than a man with the same national insurance record.
Mr Speaker
The Minister is a man of formidable intellect and therefore I hesitate ordinarily to disagree with him, but I think that the grouping is with Questions 6, 7 and 16. I hope he does not mind.
Ian Murray
The Minister may have a formidable intellect but I am going to disagree with him. As he will know, half a million women born between 1952 and 1953, many of whom will have celebrated mother’s day yesterday, will lose out on this single-tier pension. Will he apologise to the 700 women in my constituency who are affected and have written to me? Will he do something before they lose out?
Steve Webb
I take your correction on the question numbers, Mr Speaker.
I think that the hon. Gentleman should apologise to the 700 women in his constituency, as he seems to be asking us to treat them the same as a man born on the same day—that appears to be the essence of his problem. If we did that, those women would have to wait up to three years longer for their pension, and they would not thank him for that.
Catherine McKinnell
Some 1,700 women in Newcastle will miss out on the single-tier pension, yet men born in the same period will qualify. Claiming that those women are better off because they are allowed to retire earlier is simply not good enough. If they are retired for 20 years, they could lose up to £38,000, which is well over twice what they would receive through benefiting from retiring earlier. What message does this send out to the hard-working women of Newcastle, many of whom celebrated not only mother’s day yesterday, but international women’s day on Friday?
Steve Webb
The message it sends out is that their MP did not listen a moment ago. We have published research today that shows that 85% of these women will do better over their entire retirement—both the first few years and their entire retirement.
Steve Webb
Unless the hon. Lady has read the research, I do not know why she should be shaking her head. It says that 85% will do better by being treated as women than they would by being treated the same as men.
Kate Green
You and I, Mr Speaker, have just had the great pleasure of welcoming a rather beautiful portrait of Emmeline Pankhurst to Parliament, and I hope that all colleagues will want to go to admire it in the Upper Waiting Hall. It is important that we remind ourselves that women’s political interests can sometimes be different from men’s, and I am grateful to have the chance to ask the Minister about his pension proposals and their implications for women today. Many women will struggle to achieve 35 years of full employment and full contributions, partly because of caring responsibilities and also because of labour market discrimination. What steps does he intend to take to address that disadvantage?
Steve Webb
As the hon. Lady says, we have a system of not only paid contributions, but credits. Although 35 years will be needed for the full £144, even a woman with 30 years will get thirty thirty-fifths of £144, which is more than the current basic pension of £107. So, many women will benefit from the new rules.
Heidi Alexander
The Minister says that 85% of women will benefit under the proposals that he has announced today, but what about the 15% who do not?
Steve Webb
It is gratifying that the main Opposition response to our proposals is that they want more people to benefit from them. The hon. Lady is right: there is a set of women—a small number of women—who would do better under the new system than the old, but overwhelmingly the vast majority will do better under the current system. She raises an issue about allowing people to choose whichever was the better, but it is not always certain—at the moment—what the better answer would be for their entire retirement. So we could not actually advise people in advance which category they would be in.
Jane Ellison (Battersea) (Con)
The Minister might be aware that during the pre-legislative scrutiny of the Bill there has been considerable confusion about how much some of these women would lose. There is considerable misunderstanding out there, so could he provide some clarity in this area?
Steve Webb
I am looking forward to two hours with the Select Committee this afternoon after this warm-up. My hon. Friend is absolutely right, in that some of the women in the group we are talking about will miss out on nearly £20,000 of pension if they were to be treated the same as a man born on the same day. I think that very few of them would think that a good deal.
Gordon Birtwistle (Burnley) (LD)
Does my hon. Friend agree that the reforms to the state pension will be advantageous to women in the future?
Steve Webb
Absolutely. The process of state pension reform was happening at a glacial pace and equality between men and women was many decades away. We have brought that equality forward and men and women on both sides of the House should welcome that fact.
Nigel Mills (Amber Valley) (Con)
We look forward to seeing the Minister later. Does he agree that one of the problems is that people just do not understand what the change will mean for them? What plans do the Government have to write to everybody to tell them what pension they would have received under the old system and what they will receive under the new one?
Steve Webb
My hon. Friend is right to say that information will be crucial. One thing we have been doing with the changes to the state pension age, for example, is writing to the individuals affected so that they know exactly what position they are in. All too often in the past, laws have been passed, no one has been told and it has taken many years for people to find out about it. An information campaign will be central to taking forward these excellent proposals.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
The Minister has so far provided cold comfort for the 429,000 women who will not benefit from the new state pension when men of precisely the same age will. May I ask the Minister about a specific group of 80,000 women who are represented in Parliament today? Under the Pensions Act 2011, which this Government passed, their retirement age increased with little notice. Now they will miss out on the Government’s proposed new pension with an average loss to the tune of £9 per week. Is it fair to penalise these women twice in two years?
Steve Webb
To be clear about the particular group to which the hon. Gentleman refers, their pension ages increased by a maximum of six months under the 2011 Act. The vast majority of those 80,000 would be worse off if we treated them the same as men, which is what he seems to be calling for. I was not clear what else he was calling for, but treating them the same as men would leave them worse off than they are now.
The Minister of State, Department for Work and Pensions (Steve Webb)
From 8 April, people living in temporary accommodation will, in most cases, be unaffected by the removal of the spare room subsidy in the social rented sector. However, where a local authority’s own temporary accommodation is used, the spare room subsidy will be removed if the tenant is placed in accommodation that is larger than they need.
Katy Clark
In North Ayrshire the council owns 63% of the accommodation used as temporary accommodation, and the bedroom tax will apply to approximately two thirds of those properties. Will the Minister look again at the definition of temporary accommodation, given that this policy will simply mean that local authorities end up spending a lot more on less suitable accommodation from the private sector?
Steve Webb
We think that local authorities using their own stock to discharge their homelessness function should, wherever possible, house people in appropriately sized accommodation. If there are short-term problems in matching families to accommodation size, discretionary payments are available and can be used to support any shortfall a local authority may experience.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Half of all the temporary accommodation in Scotland is council-owned and the accommodation size reflects the existing housing stock and a varying range of needs in that sector. The discretionary housing budget in Scotland will not even cover the cost of keeping disabled people in specially adapted homes, so in no way will it cover the needs of people in temporary accommodation. Will the Government look again at this and reconsider what I can only assume is an unintended consequence or an oversight?
Steve Webb
The hon. Lady raises the important issue of the mismatch between the housing stock and families who need housing. That has gone unaddressed for decades and we now need to address it. We recognise that there may be particular issues in Scotland, partly with rurality and partly with the housing stock, and we are happy to continue having that conversation with hon. Members.
Mark Pawsey (Rugby) (Con)
15. What arrangements his Department is making for benefit payments to people who are unable to receive them through a bank or building society account.
Mr Betts
This question was raised with me by my constituent, Mr Leonard Jolicoeur. He asked whether it is true that someone who is of pensionable age when the new single-tier pension comes in and who has a small occupational pension and therefore does not receive pension credit will get the existing state pension, but that someone who is in exactly the same financial circumstances and becomes of pensionable age after the single-tier pension comes in will get the new single-tier pension, which is some £40 a week more. What can the Minister say to persuade my constituent that it is fair or reasonable for somebody who is in exactly the same financial circumstances as his neighbour to get £40 a week more than him?
The Minister of State, Department for Work and Pensions (Steve Webb)
That is not what would happen. People who have contracted out into an occupational pension, such as his constituent, currently get money off their state pension, which is called a contracted-out deduction. That will remain part of the single-tier proposition. Therefore, somebody such as his constituent who has contracted out would not get the £144. There is no cliff edge. There would be a deduction for past contracting out in both cases.
Andrea Leadsom (South Northamptonshire) (Con)
T3. Does my right hon. Friend agree that for Opposition Members to talk of the spare bedroom subsidy as a tax shows a profound lack of understanding on their part of what a tax actually is?
David Mowat (Warrington South) (Con)
The Pensions Minister will have seen the recent press coverage about the high margins generated by annuity providers. That comes as no surprise given the complete market failure that has occurred in large parts of the private pension industry. Will he consider imposing a uniform product structure—as has been done in energy—and will he enforce legally the open market option?
Steve Webb
My hon. Friend has a good track record of challenging the issue of charges and value for money. The Association of British Insurers has just published its code of practice, to which members have to sign up, to ensure that instead of people just defaulting to the provider they save with, they shop around. We will monitor closely whether that makes the market more effective. [Interruption.] Opposition Members are shouting “Do something”, but they did not do something when they were in power.
Mr William Bain (Glasgow North East) (Lab)
A constituent I met on Saturday is a divorced lone parent who works hard for a low income, and his children stay with him on three evenings a week. Why does the Secretary of State believe that such a hard-working individual should lose £12 a week under his hateful bedroom tax?
Child Support Agency
Steve Webb Excerpts(11 years, 2 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I congratulate the hon. Member for Airdrie and Shotts (Pamela Nash) on securing this debate and on the assiduity with which she has represented her constituent. I have looked into the individual case and corresponded with her a number of times about it. I will frame my remarks in a more general way, however, so as not to disclose any further personal information about her constituent, save to say that if the Child Support Agency has sent a recent letter containing factual errors, I hope she will send me a copy as I would be happy to look further into that specific issue.
The hon. Lady raised an important point about the fact that there are still 261,000 cases of people being assessed under the 1993 rules. Perfectly reasonably, she said that she did not want to approach the debate in a partisan manner, and neither do I. I will simply observe, chronologically as it were, that the 2003 system came in. I shall say more about the reasons for that, but it was not because the 1993 system was felt to be fundamentally unfair or that the figures the system produced were somehow wrong. Rather, it was about the massive bureaucracy and complexity of assessing anybody, which meant vast amounts of time were required and vast amounts of evidence had to be gathered. That is why the decision was taken by the previous Government to streamline all that—not because the answers of the 1993 system were inherently wrong or worse than under the 2003 system, but because of the awful amount of time and effort involved. It was fundamentally a streamlining process.
The original intention was, as the hon. Lady said, to migrate people across, and for several years the previous Government sought to do that in good faith. That is why letters of the sort she mentioned from Doug Smith were sent. Those letters were subject to the caveat that when the Government were convinced things were in order, those people would be moved across—but they never were. In fact, it was the independent Henshaw report that finally put the nail in coffin of this idea back in 2006. So well into the period of the last Government, it was decided that it was simply not feasible to bulk transfer people across. As the hon. Lady will have gathered—now there are more than a quarter of a million of cases; back then, there were far more—the IT issues, the compatibility of the data and the whole difficulty involved in moving things across meant that bulk transfer and bulk case closure were simply not an option.
The hon. Lady asked why, if a single constituent had calculated that he would pay less under the 2003 system, we could not just transfer that one person. Within the total of 261,000, there will be an awful lot of people who are potentially in that position. I do not know how many precisely, because we have not made 261,000 calculations; if we had, we could probably transfer all the people concerned. However, it is clear that there will be a proportion of people of whom that is true, and a proportion of whom the opposite is true.
I was pleased when the hon. Lady rightly said that what matters is the well-being of the children. A unilateral case-by-case closure is currently against the law, but if we changed the law to enable all the people who did not fancy their ’93 assessment because they thought it was bigger than the 2003 assessment simply to transfer to the latter, tens of thousands of children—perhaps hundreds of thousands—would receive less child maintenance.
The position would be asymmetrical, because parents with care who calculated that they were receiving more under the old system would presumably not have a right of veto. All the non-resident parents who were paying more under the old system than they would under the new one would be transferred, although there would be a massive take-up problem: people would be asking us to do calculations and all the rest of it. If people opted to be transferred in tens of thousands of cases, tens of thousands of children would receive less money and no one would receive more, because no one would move in the other direction.
I hope the hon. Lady recognises that that would create a different kind of unfairness. How is it fair for someone who would pay less under the new system to be able to move to that system, while someone else—a mother, for example—who would receive a larger amount under the new system because the maintenance would be higher, as it will be in some cases, cannot do the same? That person will then persuade her Member of Parliament to hold an Adjournment debate and say, “It’s not fair. My ex-husband could transfer because he wanted to pay less, and I should like to be in the system in which I receive more. Why can he do what he wants and I cannot?”
Pamela Nash
I would argue that if non-resident parents are to be allowed to ask to be transferred, resident parents should have the same right.
Will the Minister clarify his position on cases in which there is such a large discrepancy between the amounts being paid under the two schemes? How can both schemes be seen to be fair when according to one assessment my constituent should be paying £350 a month and according to the other he should be paying nearly £600 a month?
Steve Webb
The aim of the ’93 system was to produce a tailored figure, and it took account of factors such as housing and travel costs. I believe that in some cases nearly 100 items of data were required to calculate the assessment. The incomes of the new partner and the parent with care had to be assessed, for instance. There are different answers to different questions. If those doing the calculations take the view that all the complexities of people’s circumstances should be taken into account, they will come up with one number; if they take the view that what is wanted is a rough and ready, quick calculation—15%, 20%, 25%; now let us get on with our lives—they will come up with a different number. Is one right? Is the other one right? Who is to say?
It could be argued that a comprehensive system is fairer because it is tailored to individual cases, but the calculation takes for ever. The last Government took the view that we were spending all our time doing complicated sums instead of getting child maintenance to people. The change was not based on the view that the 1993 figures were wrong—that they were inherently unfair to one party or another.
The hon. Lady asked about the process of migration. That is obviously important to her constituent, and I should probably put something on record now, because we have not said a great deal about it so far. The new system is intended to turn things around. That may be more difficult in the case of those who have been in the system for a decade or more, but, in general, we are trying to make sorting things out the default.
For many years the couple to whom the hon. Lady referred seem to have talked to each other and resolved matters. We know that children do better when mum and dad sort things out between themselves, and our goal is to make the child maintenance service a last resort. We are investing resources in help and support for separated families—in web applications, advice services and so on—to help people to sort things out for themselves, and if they contact us, we will signpost them and advise them on how they can do that. Clearly, however, some will still come to us, and about 1 million cases remain in the system, so we will have a migration process. Let me explain how that will work.
Pre-Christmas, in December, we started the process for new cases where there were four or more children. It is a very slow pathfinder system trying to learn from the ’93 and ’03 failures. Those cases will go straight into the new system and later this year, when we are convinced that it is working—it is going well so far—we will bring in the two-child-and-above new cases, and later still in the year all new cases. Once we are convinced all of that is working, we will begin the process of migration.
When we close cases under the existing two systems and bring them into the new system, we will encourage parents to reach family-based arrangements. Cases will be closed over a three-year period from next year, and where maintenance has been hard-won—where a non-resident parent has tried quite hard not to pay but we have got payment—we are thinking very carefully about how we can manage the case closure and migration process to make sure we do not disrupt the maintenance that is flowing. We are thinking very carefully about the sequencing of the way we do that.
We will introduce charges for the use of the statutory scheme, particularly on the non-resident parent. Again, the idea is to encourage both parties to reach a family-based arrangement, rather than to use the statutory system. Both parents can avoid collection fees entirely by paying directly using Direct Pay. Therefore, in the vast majority of cases we will give the paying parent the opportunity to pay the receiving parent directly. This Direct Pay option will give parents access to the statutory service in a way that can help rebuild trust between them.
We want to avoid the mistakes of the past. We acknowledge that some parents are better off under the ’93 scheme and some are better off under the ’03 scheme, but I stress for the record that these are statutory assessments, so people cannot say, “I don’t think the law as it stands is fair, so I will decide what I will pay.” These are legal liabilities, so the amounts are owed; it is not a matter of choice, I am afraid. I appreciate the point that some people, on both sides in many cases, will feel the sum is unfair. That is why if somebody does not pay what they are legally required to pay, arrears build up, and that will remain the case.
The previous Administration originally planned to move all 1993 scheme cases to the 2003 scheme, but it was simply not possible clerically to move 250,000 or so cases one at a time. We want to focus our energies on getting the new scheme up and running and migrating everyone to it—except where we can secure family-based arrangements—rather than put a lot of effort into moving people from the previous-but-one scheme into the previous scheme.
We are trying to ensure what happened in the past does not happen again. We are using tried-and-tested—standardised—software, as one of the problems with the ’93 system was that it was bespoke and unlike anything anyone else was using. We are also introducing the 2012 scheme gradually through a pathfinder approach, so that any issues can be picked up at an early stage, before we have a large case load.
The 2012 scheme, as I mentioned, is now open and progress so far has been good. We will gradually move people across and we have been consulting on the exact sequencing. I cannot give the hon. Lady a date for when her constituent’s case will be moved across, but our idea is to contact people six months ahead of the point at which their case would be due to be closed. We will encourage them to reach a family-based arrangement where possible and will support them in doing that. If that is not possible, six months afterwards the case can be reopened under the 2012 system, which is designed to be simpler and contains charges to encourage people to come to their own arrangements.
Another point that I think is relevant to her constituent’s case is that the 2012 scheme uses more up-to-date income information. One problem with cases on the ’93 system is that they are often stuck in the system untouched, so the maintenance assessments get very out of date, and they can be based on very old income data. I do not know whether that is the case with her constituent, but if someone asks for a reassessment and finds that their liability has gone up, that is often because the previous assessment was based on very old wage data.
The beauty of the new system is that it will use most recent tax return data from HMRC. Rather than our having to go to a non-resident parent, ask for wage slips, wait for them to come back, process them and so on without reassessing the assessment, those data will feed through automatically to us. Once a year on the anniversary we will revisit the assessment and update it with the latest income information so people will not have the rude shock of a sudden hike or drop in their liability, which will be based on the latest income information.
The hon. Lady is absolutely right that there is a set of issues for the people on the ’93 system who are paying more than those on the ’03 system. Equally, a set of parents with care would love to be on the ’03 system but are stuck on the ’93 system. It is important to realise that and perhaps we have not communicated it in correspondence as clearly as we might. We are not saying that because the computers cannot do it there is no issue of fairness, but there are multiple issues of fairness.
What we mean by “for every one, there is another” is that for every parent with care who would receive more under the new system, there is a non-resident parent who would pay less under it. Simply allowing case-by-case migration, quite aside from being unlawful, would create a different set of injustices. That is my conclusion: we want to get as quickly as we can to a new streamlined system that is fair to all and in which we do not have either of the legacy systems while learning the lessons from the past. As the hon. Lady rightly said, the process has not worked as well in the past as it should have done and we want to get to the new system as quickly as we can.
Question put and agreed to.
Housing Benefit (Under-occupancy Penalty)
Steve Webb Excerpts(11 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Steve Webb)
I welcome the opportunity—
Steve Webb
I think the hon. Gentleman is after a world record. I will, as they say in the trade, make just a little more progress—to the end of the sentence— and I will then be happy to give way. I am happy to have this opportunity to discuss attempts to end the spare room subsidy.
Pete Wishart
I am grateful to the Minister for giving way so early in his speech. It is always very nice to hear him at the Dispatch Box, but we do not want to hear from him; we want to hear from the chief guru and architect of the bedroom tax, the Secretary of State. Even at this late stage, I am sure that the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey) could step aside at the end of the evening, so that the Secretary of State can come to the Dispatch Box and try to defend the indefensible. He should be here, and he should be trying to explain and defend this measure.
Steve Webb
I can assure the hon. Gentleman that the Secretary of State and I are of one mind on this issue. I will explain the context and origins of the policy, and the relevant context as to why we are seeking to take approximately £12 billion a year out of spending on social security.
Jacob Rees-Mogg (North East Somerset) (Con)
May I tell my hon. Friend that the people of North East Somerset are desperate to hear from him, are looking forward to hearing from him, and are glad that he is leading this debate?
Steve Webb
I am very grateful to my hon. Friend.
Before we go into detail about the ending of the spare room subsidy, it is worth providing a little more detail about the fiscal context in which this measure is being taken. In the final year of the Labour Government, borrowing was £150 billion a year. This measure saves £500,000 a year, so if we were trying to fill Labour’s deficit by measures of this sort, we would need 300 such measures to tackle that scale of borrowing. I expected the hon. Member for Banff and Buchan (Dr Whiteford), who opened the debate, to suggest alternative sources of revenue not just for this measure, but for every single welfare spending reduction that she has opposed—all £12 billion of it.
Andy Sawford (Corby) (Lab/Co-op)
If the hon. Gentleman’s proposition in setting out the context—on which he and I profoundly disagree—is that those who, in effect, should foot whatever difference there is between us in public finances are the people affected by this bedroom tax, I must say that he is absolutely wrong. May I give him the specific example of my constituent Cheryl Maskens? Cheryl Maskens was homeless and was offered a two-bedroom property. Had she refused that property she would have been told that she had not accepted re-housing. Should she be the person who loses out in this scenario?
Mr Deputy Speaker (Mr Lindsay Hoyle)
A lot of Members want to speak and we are only up to the Front Bench speeches. Can Members make sure that if there are to be interventions, they are short? Those who want to catch my eye but intervene too much will go down the list, and they will understand why.
Steve Webb
I am grateful, Mr Deputy Speaker.
On the analysis that the hon. Gentleman says he profoundly disagrees with, he made two comments and I will address them both. He disagrees with the analysis that there was a deficit of £150 billion, when the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) famously left a note for his successor saying that there is no money left. The hon. Gentleman may not be aware—I do not know—that the previous Labour Chancellor set out spending plans for this Parliament, which involved tens of billions of pounds of spending reductions. The two biggest things on which the Government spend money are paying their employees and paying benefits. We have already squeezed public sector pay. The Opposition initially opposed and now accept that policy. The second biggest item of Government spending is benefits, tax credits and pensions. If the hon. Gentleman can tell us how we can save tens of billions of pounds from public spending without touching benefits, tax credits and pensions, I would like to hear from him. He has not given us that answer.
Sheila Gilmore
The Minister has now clearly established that he sees the purpose of this change as saving money in the welfare budget, so will he please spare us all that stuff about making better use of houses? He knows that if everybody did reshuffle into the right size of house, there would be no saving, so will he just cut those pages out of his speech?
Steve Webb
The context is the need to save public money, but there are a variety of ways that we can do that. One way has already triggered the better use of social housing stock, but we are still in the overall context stage at the moment.
Gordon Banks (Ochil and South Perthshire) (Lab)
The Minister needs to understand that the real solution is growth in the economy: getting businesses to pay more corporation tax because they are making more profit; and getting more people into jobs and paying income tax, not this draconian and horrid tax that the Government are proposing.
Steve Webb
The structural deficit, which is the part of the deficit that does not disappear as the economy grows, was estimated to be approximately £80 billion. That is what we have had to tackle, regardless of the ups and downs of the economy. That is the core deficit that the Labour party left us to deal with—these are Labour cuts.
Ms Karen Buck (Westminster North) (Lab)
Will the Minister take this opportunity to confirm his own impact statement, which makes it clear that if this policy works and encourages people to downsize to smaller accommodation, there will be no savings? Will he explain to the House which of the two objectives he supports: saving money or encouraging downsizing?
Steve Webb
No, I am afraid that the hon. Lady is not correct in saying that. There will be a range of responses to this change, which I will run through later in my remarks. Some people will stay where they are and will pay the shortfall; some people will use a spare room for a lodger or for sub-letting; some people will work or work more hours; and some people will move. Our impact assessment has a range of modelling on how people will respond, but it clearly includes people staying where they are and paying the shortfall—that is where the saving comes from.
Gordon Banks
On a point of order, Mr Deputy Speaker. A minute ago the Minister said that these were Labour cuts. May I seek your advice and clarification about who is in government?
Ian Murray
The Minister is being generous in giving way so early in his contribution. Can this Liberal Democrat Minister honestly say that it is fair to throw disabled people out of their house because of this bedroom tax, while giving millionaires £2,000 extra a week?
Steve Webb
On the tax treatment of the wealthy, I understand that Britain’s millionaires are demanding a return to the halcyon days of Labour when they paid a 40% top rate of tax, not 45%, and when they paid 18% capital gains tax, not 28%. I hope he is proud of Labour’s record on not taxing high earners as much as we are doing.
Steve Webb
I am grateful that someone has brought a voice to the voiceless in this debate. I have heard nothing about the 250,000 people shamefully left in overcrowded accommodation by the last Government and the nearly 5 million men, women and children on housing waiting lists up and down the land. Their voice deserves to be heard, so I am grateful to my hon. Friend for his intervention.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I was pleased to hear the Minister’s comments about fairness. I notice that the Conservative literature in Eastleigh says that the Liberal Democrats oppose further changes to benefits that would, they claim, make our welfare system fairer. Is he 100% sure that this measure will deliver the savings set out by the Chancellor? Yes or no.
Steve Webb
Our impact assessment is our best estimate based on what we expect the impact of the policy to be. That is all any Department ever produces. We believe that it is a robust best estimate.
Simon Hughes (Bermondsey and Old Southwark) (LD)
My hon. Friend knows that his Liberal Democrat colleagues expressed concern about this measure when it went through this House and the other House, and that it was changed as a result of some of those concerns, but does he accept that there is still concern that the message about the facts is not getting through and that pensioners in particular are worried? Will he also accept the need to address other categories of people who need separate rooms—for example, those with disabilities or those with teenage, university or service children—but whose needs are not being adequately met at the moment?
Steve Webb
My right hon. Friend has some credibility on the issue of welfare reform, because he has been prepared to vote for difficult decisions on public spending. Neither the Labour party nor the nationalist parties have taken any difficult decisions on anything—they simply oppose everything—whereas he has, quite fairly, been willing to take some difficult decisions and support them and, again quite properly, raise concerns about the detail of policy. He is entirely right. The principle of the policy must be seen in the context of deficit reduction. Given that we have to reduce the deficit, we want to do so in a way that potentially has upsides as well as downsides, such as by making better use of the social housing stock, but it has always been our intention to protect the most vulnerable. The additional £30 million on top of the core £20 million for discretionary housing payments is the key way we want to do that, and I will say more later about how we want to ensure that that system works.
Mr Rob Wilson
Does my hon. Friend agree that the question that the mover of this motion—she would not allow me to ask it—and the Labour party must answer is: do they support any restrictions on the size of accommodation for social tenants or on the amount of housing benefit?
Steve Webb
We know that the housing benefit bill doubled in a decade—up 50% in real terms—and that Labour did nothing to tackle it. With the collapse in house building under the last Government, it is not surprising that private rents, and as a result housing benefit bills, soared.
Mr Byrne
I know that the Minister does not want to deliberately mislead the House, so I know that he will stand up now, correct the record and say that Labour introduced the local housing allowance and limits on housing benefit, and acknowledge that our manifesto set out plans for a cap on benefits, including housing benefit.
Steve Webb
That is very interesting. The right hon. Gentleman and his party were in office for 13 years and decided in their 2010 manifesto—the manifesto to which he just referred—to do something to control housing benefit. In office, they do not do it, but as they are heading out of government, they promise to do something.
Gemma Doyle
Will the Minister explain to the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) that Ministry of Defence Ministers have now admitted that some armed forces families will be affected by the change? Why does he think that families of prisoners should be exempted, but not armed forces families?
Steve Webb
Let us address the position of armed forces personnel specifically, because there has been an awful lot of misinformation about that. A married member of the armed forces is unaffected, so if someone is living with a spouse and goes away to fight—[Interruption.] Let me work my way through—they will be unaffected. A young serviceman or woman living in barracks will not be affected either, because they are not social housing tenants. Many young service personnel living with parents not in social accommodation will not be affected, and neither will young people living in social accommodation who are not on housing benefit, so we are narrowing down the number of people we are talking about probably to a very small number. When a young serviceman or woman, leaves social accommodation where the parents are on housing benefit, their housing benefit will go up.
Steve Webb
If the hon. Lady knows it, I do not know why she asked the question.
The young serviceman or women, who will be on a wage, is deemed to be making a substantial contribution towards the household rent—say £70 a week or so—but when they have been away for more than 13 weeks, that non-dependent deduction does not apply anymore, so the housing benefit goes up substantially. There will be a charge for under-occupancy, which might be, say, £14 a week. Instead of paying £70 to the household housing costs, the young serviceman or woman will not have to pay anything, so if they value the room at £2 a day, they could still pay that £2 to mum and dad and be more than £50 a week better off. Rather than seeing mum and dad’s housing benefit fall, therefore, they will see it increase. So we have dealt with that issue.
Steve Webb
Perhaps I could make a little more progress.
The hon. Member for Banff and Buchan—[Interruption.] Sorry to disturb her—referred to private sector tenants and the relative position of social housing tenants. We spend more housing benefit on social housing tenants than on private sector tenants and we pay for their rent subsidy, so it is wrong to say that we subsidise private tenants more than we do social housing tenants. That is simply wrong. But if someone is living in private rented accommodation, broadly speaking we do not allow them an extra bedroom. Why, then, is it fair to have two houses next door to each other, one of which is privately rented and the other socially rented, and give a spare bedroom to the person in social accommodation, who also benefits from subsidised rent, but not to the person in the private rented accommodation?
Mr Byrne
The Minister is being characteristically generous in giving way. Why does he not tell the House the whole story and admit that the DWP has lost its case in the Court of Appeal and that its policy of discriminating against disabled people and not giving them any kind of special treatment has been struck down by the courts? That is why his Department has applied to the Supreme Court to have it looked at again. Why is he taking that to appeal and why will he not come clean to the House about how his policy is suffering at the hands of the courts because it is wrong?
Steve Webb
The case to which the right hon. Gentleman refers is in the courts now—before this policy has been implemented—so it is not specifically about this policy, but about a broader issue concerning the private rented sector. So it is a challenge to the regulations that his party was responsible for.
I will say more in a moment about the specific way in which we are planning to address the position of disabled people, because that is an important issue. Roughly two thirds of all social tenants have a disability as defined by the Disability Discrimination Act 1995, based on the measure used in our impact assessment. That is a similar proportion to those affected by this measure, so it is not disproportionate. If we look at the stock of social tenants, we inevitably find that about two thirds of them are in that category, and that is true of this specific measure.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
My hon. Friend will know about the lengthy correspondence that I have had with his colleague, Lord Freud, on my concerns regarding remote rural areas, of which there are a considerable number in my constituency. Will he or the Secretary of State agree to meet me to look at the potential for transitional arrangements that could assist those areas with specific needs relating to the change-over to this policy?
Steve Webb
We are always happy to meet my hon. Friend. He raises an important issue about rural areas, and that will obviously be germane to some of the concerns that members of the nationalist parties have raised today—
Steve Webb
And others, yes. As this is a nationalist debate, that seemed to be a relevant remark.
In response to concerns expressed in the House of Lords, we are going to undertake a rolling two-year research programme into the impact of these and other changes, and the impact on rural households will be one of the factors that we will look at specifically. Wales and Scotland are included in the scope of the research. We are happy to look at the allocation of discretionary housing payments, and at whether we have done enough justice to the needs of rural areas, compared with other areas. We will keep that matter under review.
Mr MacNeil
Did I hear the Minister correctly? Did he say that he was going to research the impact of this measure regardless of what it is going to do to people in the meantime? What he is suggesting is absolutely obscene, and the suggestion by the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) that we should have some sort of transitional arrangements would mean that we would still end up with this at the end of the blooming day anyway. It is ridiculous. Get rid of it.
Steve Webb
Jolly good. That was helpful. We cannot research the impact of a policy that has not happened. We are implementing a change that is designed to save £500 million a year, and we have heard nothing about where others would find that money from. We have said that, as the policy is implemented, we will research and look into its implementation, because there are things that we can change as we go along, one of which is the allocation of discretionary housing payments.
Mr Reid
I believe that the policy could be made to work if people were offered smaller alternative accommodation before a penalty was imposed. As my hon. Friend knows, however, the nearest alternative for people living on the islands in my constituency could be on the mainland, and it could be 20 or 30 miles away for people living in the remote villages in Argyll. Will he look at the formula for allocating discretionary housing payments to councils, so that those in the highlands and islands could add in the rural factor and get more funding owing to the problems of the remoteness and the islands?
Steve Webb
My hon. Friend is very welcome to join the conversation between my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and me, which I am looking forward to. He raises an important point. My hon. Friends have credibility in this argument because they have been willing to take difficult decisions on public spending, whereas Labour has just said no to everything, disowning its responsibility for the deficit and any willingness to say where the money would come from.
Steve Webb
I want to make some progress, as I have not yet got past page 1 of my speech and I think the House would like to hear from a few other people.
The cost of housing benefit increased in real terms by 50% in the past decade to £23 billion. Given that we said we would ring-fence the state pension, the biggest thing that we spend money on, we simply cannot ignore housing benefit for people of working age if we want to save money.
Steve Webb
No, I want to make some progress.
For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.
At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.
Mr Weir
What would the Minister say to people who wish to downsize from a larger home to a smaller one, but who find that such accommodation simply does not exist in their areas? In mainly rural areas such as mine, such accommodation does not exist. People could be offered another home many miles away from where they have grown up, from where they work or from where their friends are. This is a ridiculous policy.
Steve Webb
I want to stress that there will a range of responses to the under-occupation charge. Some people will move. About one in six of the households we are talking about are in work, and there are options for people who are in work. People could take work. It is often said that there are no jobs, but there are more people working in this country now than in the whole of human history. The number of people in work in this country is now approaching 30 million, so, for some, working or working more hours will be an option. It will not be the answer for everybody, but it will be the answer for some.
Steve Webb
Let me just address the hon. Gentleman’s point before he replies to my reply. I have not finished replying to his first point yet.
There has to be better use of the social housing stock. I pay tribute to the housing associations in the Liverpool area, 20 of which have come together with local authorities to pool their housing stock. I take the hon. Gentleman’s point that a small housing association might have limited stock and limited scope for moving people around, but by pooling their stock, those organisations are able to make better use of it so that more options will be available. I entirely accept his point that the answer to this question will be different in a city from in a remote rural area, and that is why we are more than happy to look at whether the allocation of discretionary housing payments to help people in rural areas is the right answer. As it happens, the allocation of DHPs is slightly over-represented in rural areas, compared with city areas, because of the way in which it has been done. We recognise that there is an issue there.
Mr Weir
I thank the Minister for that answer, but he said that there would be a range of responses to the policy, including paying the difference. However, people on housing benefit are, by their very nature, on low wages. They are already under intense pressure from rising energy and fuel prices and from freezes on benefits if they are receiving any. It will be difficult for those people to make up the difference in that way. Their choices will be very limited, and many will be forced to move by financial necessity when the change comes in.
Steve Webb
We have already seen the impact of our restrictions in the private rented sector, and we know that people make certain choices. It would be wrong of any of us to belittle those choices, given the financial situation, and I do not do so, but we have seen people on relatively modest incomes in the private rented sector saying that paying £2 a day for a spare room is worth more to them than spending that money on something else. Some people in that sector are making that choice, and that is part of where the saving comes from. Some people in the social housing sector will do the same thing.
Yvonne Fovargue (Makerfield) (Lab)
In my constituency, the choice is between staying put in two-bedroom properties, of which there is a surplus, or moving to one-bedroom properties in the private rented sector, which cost more in housing benefit. How does that represent a saving?
Steve Webb
I am grateful to the hon. Lady for raising that point. It is a common misconception that there is a one-way flow of people in this context. If someone moves from social housing into the private rented sector, as some do, that frees up socially rented accommodation, into which someone who might previously have been living in overcrowded, temporary or bed and breakfast accommodation can move. There will be flows in both directions, and we have taken account of those moves in our estimate of the cost of the changes.
Mr Raynsford
Does the Minister not recognise that the largest single driver for the increase in housing benefit in England is rent increases, not only in the private rented sector but in the social and affordable sector, because of the policies of his colleagues in the Department for Communities and Local Government who are pushing rents up higher? If a tenant moves out of a secure council tenancy into a new affordable rent tenancy, that will involve a substantially higher rent. If that person is on housing benefit, the benefit bill will rise. That is entirely counterproductive. Why is the Minister doing this?
Steve Webb
The right hon. Gentleman is very knowledgeable about housing, so he will know that the period of the last Labour Government was not a good one for the building of affordable homes. That is part of the reason for the problems we have now.
David T. C. Davies (Monmouth) (Con)
Does the Minister agree that nobody on the Government Benches takes any pleasure whatever from these changes, which have been forced on us by the actions of the Opposition who left us with a £1 trillion debt and a £160 billion deficit?
Steve Webb
My hon. Friend is quite right. These are Labour cuts because of Labour’s deficit.
Steve Webb
Let me make a little more progress, and I will give way again later.
We recognise that this is a time of change that will present challenges for tenants and for landlords, and we have to support both. One of the positive things to come out of the change is that landlords are getting to know their local authority tenants and social housing tenants far better than in the past. All too often, housing associations did not know their tenants well enough; we have now seen an important process of getting to know individual tenants and their needs. As a result, some of the more creative housing associations have schemes whereby half a dozen people have moved accommodation so that there is a better fit between the individuals and their housing needs. The 1 million spare bedrooms are a precious resource of our communities and of vulnerable people in them, and I will not have it said that those who stand up for the vulnerable are on the Opposition Benches, as we are standing up for them and we want those bedrooms filled.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I knew the difference between the two Members who rose, but with both standing I was not sure to whom the Minister was giving way. I do not need any advice from Mr Brown on this occasion.
Steve Webb
We got the right one, as it were.
We are all in favour of incentives to encourage people to make better use of the housing stock, and I welcome any measures the hon. Member for Swansea West (Geraint Davies) took to that effect, but they have not worked. We have 1 million spare bedrooms among people on housing benefit. The changes have simply not worked on the necessary scale—
Steve Webb
I have given way three times to the right hon. Gentleman, and I want to make further progress.
Dame Anne Begg
The Minister seems hell-bent on introducing this policy, but he might be able to protect some people. I think he accepts that some people will not be able to move because no suitable property is available. They will not be able to afford the shortfall and will therefore fall into housing rent arrears and could be evicted. At that stage, they become “intentionally homeless” and end up at the bottom of any housing list. Will the Minister look at that further to see whether he can do anything to ensure that someone in that position because of housing debt is not deemed intentionally homeless? Otherwise, such a person stands no chance of getting social housing again.
Steve Webb
I am grateful to the hon. Lady. The point of the policy is not for people to be evicted, which would raise costs for the Exchequer and for the individual, but to ensure that existing housing stock is fully occupied.
Let me try directly to address the issue of the shortfall. There were two ways in which we could have approached the matter, one of which was blanket exemptions, which is what we did for pensioners. I am grateful to the hon. Member for Banff and Buchan for making it absolutely clear in opening the debate that pensioners are not covered by this change.
It is clear that we wanted to protect another set of people. Let me deal with the example of foster children, whom my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned. The position on foster families is, I think, shared across the House. If people need a spare bedroom for a foster child, we want to make sure that they have one, and we want to support fosterers. The question is whether that is done better by some blanket exemption or by what we have done in costing what it would take to meet the shortfall for those families and giving the money to local authorities so that a foster family for which this was an issue—it might not be an issue for all of them—can approach the authority and have the shortfall made up.
My right hon. Friend the Secretary of State and I are entirely open to discussing whether that is the most effective way of delivering that support. Our judgment was that discretionary housing payments gave local authorities the discretion we would want them to have. If for any reason that message is not getting through and is causing anxieties to foster families who do not know about DHPs, for example, or if local authorities have not communicated well enough, we would be happy to look at whether this is the most effective way of supporting families. Where there is a shortfall, discretionary housing payments for this and other measures are available. We want to make sure that people use them when they are in genuine need. Eviction is clearly not something that we are seeking to achieve.
Simon Hughes
That was really helpful. I want to pursue the issue raised by the hon. Member for Aberdeen South (Dame Anne Begg). The Minister has said that he is willing to look at whether the discretionary funds will meet certain problems. May I take it that he and the Secretary of State would be willing to look at the categories defining which people need a bedroom, as I think some categories that are not currently counted as falling within the definition should be included in it?
Steve Webb
I can see the attraction of that approach, and I think there is a balance to be struck. The attraction of the approach for foster families would be that the size criteria could be defined and then categories of people such as a couple, teenage children and so forth could be added to the list. We could say that a bedroom used for a foster child is a bedroom, so no deduction applies, people do not need to go to the council for the DHPs and the Department for Work and Pensions rather than the local authority would meet the bill. That is one way of doing things.
The challenge for us in that approach is defining in Whitehall all the categories of people who ought to have a room. There could be difficulties even within a category, as there might be foster carers, for example, for whom this is more or less of an issue. It could vary from case to case. We have to make the judgment: where do we need to make a blanket exemption or a blanket entitlement to a room, and where do we say that we will give the local authorities money and discretion? Each side of the argument has its attractions. We have to ensure that the money we have given to local authorities is well spent and that people know it is coming.
I have been interviewed on various television programmes, which have featured case studies of people who were obviously distressed—and I do not doubt that some people are distressed by this change. Obviously, however, if they approached their local authority, they would not be affected by it. That is the issue. They would go to their local authority, which has been given money to help them; the authority would help them, so they would not be affected. My right hon. Friend the Member for Bermondsey and Old Southwark and the hon. Member for Aberdeen South (Dame Anne Begg) are right that we must ensure that people are not unduly alarmed, as in many cases money is available to help the most vulnerable.
Greg Mulholland (Leeds North West) (LD)
Does my hon. Friend think that the guidance to local authorities on how they should target the discretionary fund and discretionary housing payments has been sufficient?
Steve Webb
My hon. Friend raises an important point. We have allocated funds to local authorities with two particular groups in mind: foster families and those for whom there has been a substantial adaptation to the property. We can all see whether a house has been substantially adapted; moving someone somewhere else and adapting the property again will not be a good use of public funds. That is the basis on which the funding was allocated. We have indicated that to local authorities, but I agree with my hon. Friend that we can probably do more and will do more to make sure that local authorities are aware of the needs of those groups.
Owen Smith (Pontypridd) (Lab)
Will the Minister confirm that the total amount of money available in discretionary funds to Wales will be £6.1 million? He will have seen that the Welsh Government last week estimated the total cost to Wales of the bedroom tax at £25 million. Does he concede that there is a significant shortfall, or is he proposing to increase the money available to Wales—and, indeed, to the rest of the country, where a similar shortfall will apply?
Steve Webb
I started my remarks by talking about deficit reduction because this measure is intended to save money. The shortfall to which the hon. Gentleman refers is the saving to the Exchequer. If we fill the gap completely, we will not save any money, so we might as well not do the policy. I have to say that if Wales is getting a fifth of the shortfall, it is doing exceptionally well relative to the rest of the country.
Steve Webb
If I may, I shall respond to the Chairman of the Select Committee, who made an important point about those who are “intentionally homeless”. Although it is for local authorities to make decisions on homelessness applications as they do now, under current statutory homelessness legislation, if the only reason for the person’s homelessness is a reduction in benefit that is outside their control they should not be considered intentionally homeless by the local authority. I can put that on the record and hope it is helpful.
Owen Smith
The Minister is generous in giving way. He says that Wales is doing exceptionally well, but his own impact assessment demonstrates in black and white that 46% of claimants will be affected in Wales versus a UK average of 31%. Wales faces the largest impact—more than anywhere else in the country. Will the Minister therefore reconsider his remark that Wales is doing particularly well out of the bedroom tax?
Steve Webb
The impact of ending the spare-room subsidy that we currently pay will be an average loss in Wales that is below the national average—£12 a week, as opposed to £14 a week—and the same is true of Scotland. Both Wales and Scotland will experience below-average losses.
The hon. Gentleman asked about the size of discretionary housing payments. Across the country as a whole, we have allocated £30 million, relative to a saving of about £500 million. That £30 million is on top of the £20 million that local authorities already receive in DHPs, so a total of £50 million will now be available to them. If Wales is receiving a bigger proportion of that, it is receiving a bigger proportion of the DHPs.
Steve Webb
I am going to make some more progress, but I shall be happy to respond further later.
We have engaged actively with a range of advice organisations, including the Chartered Institute of Housing, to develop guidance for social landlords. We have already encountered many examples of social landlords working with tenants to prepare for this change. However, we recognise that certain individuals will face problems, which is why—on top of the £20 million in DHPs that local authorities already receive—we have allocated an extra £30 million. As I have said, a total of £50 million will be available to them to help people who are affected by this policy. I have already mentioned two groups whom they can help: disabled people living in significantly adapted accommodation, and foster carers, including those who need to retain an extra room when they are between fostering placements. I believe that authorities will be able to help about 5,000 foster carers, and about 35,000 wheelchair users living in adapted housing.
There has been some discussion about the position of disabled people. The definition of disability used in our impact assessment is a self-assessment based on a household survey. It should be borne in mind that fewer than a third of the people affected by the policy are receiving disability living allowance. We have also touched on the position of service personnel, and I think that I have reassured the House about that.
Helen Goodman (Bishop Auckland) (Lab)
The Minister has said that he is considering the rural element of discretionary housing benefit. Last week the BBC reported that the Secretary of State had instructed officials to look into the definition of disability, and the way in which the bedroom tax would be applied to disability. Is the Minister saying that the Secretary of State was wrong and that no instruction has been given to officials, or is he countermanding what the Secretary of State said last week?
Steve Webb
Not at all. I am not sure whether the hon. Lady was listening, but I said earlier that we kept this and all other policies under constant review, and that, in particular, we were considering whether the use of the DHP to target vulnerable groups—which is what I think the whole House wants us to do—was being effective in protecting the people whom we all want to protect. We are continuing to work on that, to ensure that we are achieving what we want to achieve.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Given what the Minister has just said about disability living allowance, will he agree to exempt people who receive it from the bedroom tax? How can the Prime Minister possibly say that he is putting disabled people first if that is not done?
Steve Webb
At the risk of straying into other legislation, let me point out that when we had to make difficult decisions on benefit rates—which, of course, the hon. Lady opposed—we specifically exempted DLA, attendance allowance and the support component of employment and support allowance as a sign of our commitment to disabled people.
The hon. Lady suggests that we should exempt a third of those affected by the policy. As she will understand, this measure is partly about reducing the deficit and partly about making better use of the housing stock. Receiving DLA is not synonymous with needing a spare bedroom: that is the point. Someone who needs a spare bedroom can approach the local authority, and we have given local authorities funds for that purpose, but a blanket exemption of people receiving DLA does not correlate with the need for a spare bedroom.
As my noble Friend Lord Freud announced on 15 October last year, these measures will be monitored and evaluated over a two-year period from April this year. Initial findings will be available in 2014, and the final report will be published late in 2015.
Jim Shannon
May I return the Minister to the subject of disabled people in bungalows or houses to which they will have to consider moving in order to downsize? What criterion will the Government use to enable a person to justify keeping a spare bedroom? Will it be a doctor’s note saying that the person is disabled and needs a bedroom of his or her own?
Steve Webb
We have already made one specific exemption. Someone who needs a spare room for a non-resident, overnight carer can have it. That is an absolute right, and people do not have to apply for it. However, someone who is in particular need can approach the local authority, which has discretion—after all, the D in DHP stands for discretion; there is no set of national Whitehall-driven rules—and the authority can then judge whether the household is indeed in particular need of help from the budget that has been allocated to it. We have not set out a rigid blueprint; the whole point is that local authorities will have discretion to meet people and, if they think it a priority, to meet their needs.
Caroline Lucas
I thank the Minister for pointing out that the D stands for discretion, but as far as I can see it stands for draconian. The Minister is trying to give the impression that people need not worry, because they can approach their council to get the extra money. Does he not realise that the extra money that he is providing is a pittance in comparison with the amount that is needed? This is essentially an ideological attack on social housing: the Government are simply trying to get rid of it.
Steve Webb
It is astonishing that the hon. Lady should suggest that we are trying to get rid of social housing, given that we have built more affordable housing in the last year than was built, on average, over the preceding 10 years under Labour. That is an absurd suggestion. I entirely understand that the hon. Lady opposes everything—it is a kind of nihilism, which is fair enough—but her suggestion is not a credible option for a credible Government.
The research that we will undertake will include small-scale primary research involving a range of local authorities, social landlords and voluntary organisations in England, Scotland and Wales. The researchers will consider supply issues, rural effects—which were raised by my hon. Friend the Member for Argyll and Bute (Mr Reid)—and people who are unable to share rooms. When possible, they will also consider the effects on vulnerable individuals and their financial circumstances, social networks and family life. That was mentioned earlier as well.
Steve Webb
I hope to end my speech in a moment, but I shall be happy to give way to the hon. Lady.
Nia Griffith
If the Minister is so keen for people to receive discretionary payments, can he explain why the Government are taking to court a case in Wiltshire in which a disabled child is unable to share a room with a sibling? Why are they spending money on taking that case to court if they think that money should be given to such families?
Steve Webb
There is a limit to what I can say about cases that are currently in the courts. We have been given permission to appeal to the Supreme Court. We are, of course, applying the current Appeal Court ruling, and we have issued local authority guidance on how such cases should be dealt with. That case is very much in flux at present, and I do not want to say too much about it. However, let me make a general point that sums up what we are trying to achieve.
We are trying to tackle a massive structural deficit. The biggest two items of public spending are public sector pay and benefits. We have taken action on public sector pay, with little or no support from the Opposition. We have also had to take action on benefits. We have concentrated on working-age benefits because we have protected the state pension, and no Opposition Member has suggested that we should not have done that. We were trying to find £12 billion from public spending, and housing benefit is one of the biggest working-age benefits. We had tackled private sector housing benefit, and we had to look at the social sector. The most valuable way in which we can look at social sector housing benefit costs is to look at the million spare bedrooms that we currently subsidise, and to ask whether that subsidy is fair to the people who do not receive it.
These are difficult choices, but we have had to make them because of the mess that the Labour party left to us. I hope that the right hon. Member for Birmingham, Hodge Hill will begin with an apology.
Stewart Hosie
I agree entirely with the hon. Gentleman. In the meanwhile—until that happens—communication should of course be better and foster carer families should be encouraged to apply now, in advance, if that is possible. He rightly says that this policy should simply be scrapped because it will not work and, as far as I can see, it is only punitive. That is certainly also the view of the Scottish Government, who feel that it will have an appalling impact on families throughout Scotland and, indeed, the rest of the UK.
That assessment also shows that eight out of 10—the exact figure is 79%—of the households in Scotland set to be hit by this change, as we have heard before, contain an adult with a recognised disability. That is extraordinary. This is about as punitive as it could be—[Interruption.] The Minister of State is muttering, “Do they need a spare bedroom?” He is using the robotic mantra again, suggesting that somehow it is evil to have a spare bedroom. There are very good reasons for having spare bedrooms and I shall come to some of them later.
I know that the Minister for Housing and Welfare in the Scottish Government has warned the UK Government of the impact of this change. The Scottish Government have highlighted to the Government the disproportionate effect on disabled people and have asked them to rethink their policy. We understood before the start of the debate that the Secretary of State had instructed a rethink on part of the policy, and that is to be welcomed. However, we have found out that we will have a rolling review after the policy starts, which might not report until two years after commencement.
The numbers I have show that people with two spare rooms will pay an extra £20 a week, or more than £1,000 a year. They could be £2,000 down before the Government’s review reports back and says that those rooms are not really spare at all, because one of the sons is serving in Afghanistan. Alternatively, he will not be able to come back to the family home because they will have been forced to move. That is the kind of issue the Government are failing to take into consideration—[Interruption.] The Minister is still muttering, but he will not get to his feet to say anything. I am sure that when he was at university, he was more than happy to go home to his family house. Why should working-class children whose houses are part-funded by housing benefit not be able to go back to their family home because of the nature of their tenure? That is ridiculous.
Other groups are affected, of course, such as tenants who are willing to move to smaller properties and are waiting for one to become available, but who will lose out in the meantime; the parents of foster children; and parents who live separately and look after their children. The final category concerns me greatly. I have already been contacted by a constituent—one of many. He is separated from his wife, which is sadly not uncommon, and has two daughters in their late teens. This gentleman is so careful that he does not switch the heating on in his very modest apartment unless there are guests. He counts every penny.
His wife has primary caring responsibility for the two children, but one or both of his daughters stays with him up to four nights a week. That will become impossible without the second bedroom, and even if he could find a smaller property it is highly unlikely—almost impossible, in fact—that he would be able to do so within the community in which he and the rest of his family live. That means that the relationship between him and his children will wither, because contact will become far less possible.
The Government do not understand the appalling impact this tax will have. The fact that eight out of 10 of the households that will be hit include an adult with a disability is compelling evidence that the UK Government must reconsider, and quickly.
As I said earlier, not only disabled people but many others will be forced to pay. I want to raise two specific cases with the Minister. The first is that of a woman—a pensioner who will not herself be affected—who cares for her severely disabled adult son. He lives in his own apartment, which has two bedrooms. That is not his fault; it is the one he was allocated. He has a severe psychological condition and needs to be cared for every day, and his mother carries out those caring responsibilities. If he is forced to move, the trauma will be extraordinary. If he manages to get through that, the fact that his mother has medical conditions of her own means she will be unable to carry out her caring responsibilities if her son is forced to move even a few streets away. The real-life impact on that family in that part of that community will be horrendous. I am deeply disturbed that the Government have not thought this through properly.
Steve Webb
May I ask the hon. Gentleman to confirm that he is aware of the provision for a bedroom for a non-resident overnight carer?
Stewart Hosie
I am extremely well aware of that. The thing is, the mother who cares is there during the day and perhaps occasionally in the evening, but she is not a permanently present overnight carer. That goes back to this being a matter of discretion, rather than people with a disability being properly exempted.
Stewart Hosie
The Minister says it is a right. I believe it may be a matter of discretion. It is not at all clear whether my constituent could meet the criteria for a discretionary payment, and even if he did, getting it would depend on whether any money was left in the pot.
I did not intend to speak in such general terms. In the final three minutes, I will concentrate on what is happening in Dundee. We have figures from the council telling us that 3,387 households will be affected by this tax—and it is a tax. Of those, 583 will lose 25% of their housing benefit. That is a loss that will have the impact of a tax.
Geraint Davies
No, because I will run out of time—perhaps at the end if I have time.
We will see major problems. My hon. Friend the shadow Secretary of State for Wales mentioned the impact of this change on Wales. He said that 46% of households would be affected in Wales as against 31% in England—half as much again. Once again, this is part of the strategy of taking money out of the poorest communities, yet poor people spend more of their money. If we want a growth strategy to get people back into work, we should give money to poor people instead of giving it to the rich who hide it away in savings accounts or offshore accounts. When people have only a little money, they have no choice but to spend it. We are denuding local authorities with poor populations of money power.
What of incentives? A son or daughter of parents might say, “I want to go off and get married and live with this person. I want to go off and live in a different town and get a different job. I haven’t got a job here; I’m unemployed.” The parent would say, “Son, that will cost me”. What if the children want to go off to university? That is going to cost the parents, too. Once again, this is just encouraging people to stay where they are until somebody hits 60. It is preposterous. The savings will not be made.
Steve Webb
There are only so many times that the hon. Gentleman can get it wrong. If someone goes away to college and is based at home, the bedroom is kept.
Geraint Davies
My point is that if someone goes away to work, that person will lose the bedroom. Moreover, if someone’s children go off to university, they will not be hanging around in the local chip shop—which is good, but obviously their parents will say, “We do not want an educated son and daughter going off and leaving us to pay for the empty bedroom. You can stay here and run the chip shop. That was good enough for us.” That is the sort of new economy that the Minister—who is now dozing off—wants, and it just does not make any sense.
As for the overall savings, the Government are making political choices. They will not save £490 million, because much of that will consist of costs for local authorities. What they are saying is “We will give the money to the voting people. We will increase their tax thresholds. Let’s face it, they are not going to work any harder. We will not harm the older people, because they vote; we will harm the poor people who do not vote. Let us hope that they do not. If they do not register to vote, we have our other plan to carve up the constituencies, so that their size relates not to the population but the number of people who are registered.”
This is a cynical attempt at political manipulation that has no regard for the economic and social impact. It is absolutely disgraceful, and it should be thrown out.
Mr Bain
My hon. Friend is certainly right to draw attention to the absurdity of the Chancellor’s claim that there is a zero tax band for people on low incomes, who of course pay national insurance, higher VAT under this Government and all the things described in this debate. I should also point out that rents are rising in much of Scotland—by 6.3% in Aberdeen and 5.1% in Edinburgh, for example—which is adding to the pressure this policy will cause.
The bedroom tax will hurt the country in many ways that the Government do not presently acknowledge, for example through its impact on families, the economy, employment and housing. First, these plans utterly fail the test of promoting economic growth. Indeed, by diminishing demand among people who will spend the money, the least well-off, they will have a deeply contractionary effect. Keynes’s paradox of thrift will sadly become a death knell for local shops across the country as people are forced to cut back on spending. The University of Strathclyde’s Fraser of Allander Institute estimates the cost to the Scottish economy to be more than 300 jobs, £30 million a year in lost demand and a reduction in wages in Scotland of nearly £8 million a year.
The Minister claims that people should work longer hours, but do I really have to point out to him that under-employment has soared to 3.2 million under this Government and that there is a slump in productivity because demand has been so weakened by their catastrophic fiscal policies? I also remind him that, with the deficit tracking 7% higher this year than last and our credit rating having been downgraded, these are Tory cuts that he is defending because of the Chancellor’s utter and abject failure on growth.
The Office for Budget Responsibility predicted in November 2011 that the economy would grow last year by 2.5%. It has been confirmed today that instead, it grew at less than a tenth of that rate. The impact assessment on these changes also reveals the truth: if people are able to change their behaviour, as the Minister vainly hopes they will, these plans will save little or no money for the Exchequer. His other policies to cut the benefits bill are failing, because unemployment is 340,000 higher than the OBR predicted in 2010 and living standards are falling in a low-growth economy. He can generate the savings he is seeking with this policy only if people cannot move or work longer hours and so are forced to pay the tax. He is making the poorest suffer for the Chancellor’s manifest incompetence in securing less than a tenth of the economic growth we were predicted to have over the past two and a half years.
Secondly, these proposals are a byword for absurdity. The Minister believes that people can simply uproot themselves from homes they have lived in for three decades or more, and from friends, family and jobs, to go and live in parts of the country where there are smaller houses and perhaps fewer opportunities to work. He says that alternatively, people should take in a lodger—a step that is actively discouraged in the registered social housing sector in Scotland, where stock is allocated on the basis of need. The sheer absurdity is further heightened by his refusal to admit until this afternoon that his plans will potentially remove money from up to 96,000 members of the armed forces, nearly 8,000 Army trainees, carers and foster parents in Glasgow, while nearly 1,000 prisoners on remand in Barlinnie jail in my constituency will be exempt.
Mr Bain
No, because I am compliant with Mr Speaker’s strictures on those who wish to take part in the debate. The Minister will have an opportunity to deal with this later.
All age groups in society will be affected. People over the age of 61 could be drawn into this tax too if they have a spouse or a partner living with them who is under that age and they apply for universal credit after October.
Thirdly, these plans hit the most vulnerable the hardest. Two thirds of the 660,000 people affected across the UK have a disability. Last week I met disabled people who told me that they will be caught by the tax and asked to pay an extra £14 a week for having a room in which no one sleeps but that is used to provide physiotherapy and medical treatment within their home. I spoke to the friends of a young person with a learning disability who is co-operating with the local housing association and who would move into a small house if he could, but there are simply none available. Through no fault of his own, he will be forced to pay the bedroom tax on income support of £47 a week.
Fourthly, there is a lack of available properties for people to move into. Some 540,000, or 81%, of those losing out will be people who cannot move because there are no one-bedroom properties in their areas. According to Glasgow Housing Association, there is a waiting list of 13,000 in Glasgow for one-bedroom properties because housing associations, and the council before them, responded to local housing demand by building homes with two or more bedrooms. With a social housing shortfall of 156,000 properties for Scotland’s housing needs, there is no way the required properties could be built so that people can avoid destitution through having to pay this tax from April.
Fifthly, these plans will cause enormous uncertainty for our housing associations. They now have no clarity about their future revenue levels or the investment decisions they can make on social housing. They are unsure whether they should be building one-bedroom houses. They are fearful of managing a surge in rent arrears, with the cost being paid by all tenants in the form of lower priorities for refurbishment of existing properties or reduced budgets for repairs.
The wider issue is this Government’s lack of empathy with those who live in social housing. This is a further attack on that very concept from a Government who have cut the social housing budget in half. This is not an issue that divides people in Scotland from those in England and in Wales: it is about a feeling that Ministers are losing their sense of what is morally right or wrong for people across the United Kingdom. What best sums up what ordinary people feel about the injustice of this absurd tax is a conversation that I had with a 69-year-old constituent on the way to my constituency office last week, who stopped me to see whether she would be affected by the bedroom tax. When I explained that she would not, she told me how troubled she was that other people in her community would have to pay it. She said that this has been the worst Government in her lifetime and that the right hon. Member for Tatton (Mr Osborne) is the most arrogant and out-of-touch Chancellor in history, but that of all the cruel things they have done, this is by far the most vicious. She was right.
The voice of ordinary people has been heard in this debate, but it must also be reflected in the votes in the Division Lobby tonight. I particularly urge the party of Lloyd George and Gladstone not to vote for a policy that even the party of Thatcher would have shrunk from in the 1980s. It is the duty of all Members to avoid causing unnecessary suffering to nearly 700,000 people by opposing this cruel tax in a strong, clear vote tonight.
Pensions and Social Security
Steve Webb Excerpts(11 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Minister of State, Department for Work and Pensions (Steve Webb)
I beg to move,
That the draft Guaranteed Minimum Pensions Increase Order 2013, which was laid before this House on 28 January, be approved.
Mr Speaker
With this we shall consider the following motion, on social security benefits uprating:
That the draft Social Security Benefits Up-rating Order 2013, which was laid before this House on 28 January, be approved.
Steve Webb
The guaranteed minimum pensions order is a routine and technical order which provides for contracted-out defined benefits schemes to increase their members’ GMPs that accrued between 1988 and 1997 by 2.2%, in line with inflation. I assume that this will be uncontentious. The order paired with this is the Social Security Benefits Up-rating Order 2013.
I shall begin with the basic state pension. Despite the tough fiscal context, the Government remain committed to protecting those who have worked hard all their lives, which is why we have stood by our triple lock commitment to uprate the basic state pension by the highest of earnings, prices or 2.5%. This year the third element of our triple lock comes into play for the first time—our 2.5% minimum commitment. That means that we shall be increasing the basic state pension by more than inflation for millions of pensioners.
Mr Alan Reid (Argyll and Bute) (LD)
I congratulate my hon. Friend on the work he has done as pensions Minister to drive through the triple lock, which means that pensioners will get an above-inflation increase this year. The days of 75p increases, which happened under the previous Government, are long gone.
Steve Webb
I am grateful to my hon. Friend for pointing that out. He will know that we have set a minimum increase of 2.5%, which is what we are having this year. Under that policy, it would now be impossible for us ever to go back to the days of 75p increases.
Stephen Timms (East Ham) (Lab)
Will the Minister confirm that the order contains a real-terms cut in the amount of the basic state pension?
Steve Webb
The right hon. Gentleman is well aware that the Government increase benefits in line with inflation in the year to September, as did his Government. He will know that inflation under the consumer prices index in the year to September was 2.2%, and we have increased not in line with inflation, but by more than inflation, at 2.5%.
Stephen Timms
The Minister will have heard today’s announcement that CPI is currently at 2.7%. Last year he claimed that he was introducing a substantial real-terms increase in the level of the basic state pension. On precisely the same terms he used last year, this order has a real-terms cut. Will he confirm that the order contains a real-terms cut in the level of the basic state pension?
Steve Webb
I well remember our exchanges last year, and I seem to recall that the right hon. Gentleman rejected that way of measuring things.
Our above-inflation increase will be £2.70 a week, taking the new level of the basic state pension to £110.15 a week. That means that from April 2013 the basic pension is forecast to be around 18% of average earnings. My right hon. and hon. Friends might be pleased to know that that is a higher share of average earnings than at any time in the past 20 years. Our triple-lock commitment means that the average person reaching state pension age in 2012 with a full basic pension can expect to receive an additional £12,000 in basic state pension over the course of their retirement.
Let me turn to additional state pensions, often referred to as state earnings-related pension schemes. This year SERPS pensions will rise by 2.2%, which means that the total state pension increase for someone with a full basic pension and average additional pension will be around £3.33 a week, or £175 a year. Unlike the Labour party, which froze SERPS in 2010, the coalition Government will, for the third year in a row, uprate SERPS by the full value of CPI.
Let me turn to pension credit. As I announced in my statement on 6 December, we have taken steps to ensure that the poorest pensioners will benefit from the effects of our triple lock. Each year the standard minimum guarantee must be increased by law at least in line with earnings. That means that the minimum increase this year would be 1.6%. However, we decided to increase the value of the standard minimum guarantee credit by 1.9% so that single people will receive the full increase of £2.70 a week, which is equal to the increase in the basic state pension, while couples will receive £4.15 a week. Consistent with our approach last year, the resources needed to pay that above-earnings increase to the standard minimum guarantee have been found by increasing the savings credit threshold, which means that those with higher levels of income will see less of an increase.
Jim Shannon (Strangford) (DUP)
Although the increase in pension credit is welcome, what steps are the Government taking to ensure that those who do not take up pension credit are enabled to do so? A vast number of people in Northern Ireland—somewhere in the region of 100,000—are not taking advantage of pension credit, and I am sure that the same applies across the whole United Kingdom.
Steve Webb
The hon. Gentleman is right that non-take-up of pension credit has been a persistent problem. Over the past year or so we tried a pilot scheme in which we took a sample of people we thought, based on our records, might be entitled and put the money in their bank account. We then wrote to them to say, “We’ve put some money in your bank account. Would you like to claim pension credit?” The experiment failed. Incredibly, people did not claim it, or decided that they did not want or need it, or thought that they were not eligible. Even putting money into people’s bank accounts, based on our records, did not succeed. However, I have some good news for the hon. Gentleman. As a consequence of the universal credit reforms, whereby housing benefit for working-age people will be merged with universal credit, we will be merging housing benefit for pensioners with the pension credit.
The reason that is relevant to the hon. Gentleman’s question is that we know that some people claim their housing benefit and not their pension credit, and that some claim their pension credit and not their housing benefit, but when we combine the two in a single payment each group will claim both and we anticipate several hundred million pounds of extra benefit expenditure to low-income pensioners as a result. I think that that will be the most tangible thing that any Government have done in many years.
Michael Ellis (Northampton North) (Con)
Will the Minister confirm that that will also save administrative costs to the state, because we want as much saved in such costs as possible?
Steve Webb
My hon. Friend is right that placing the housing element in a single benefit—the pension credit—rather than it being a separate claim through a local authority will reduce administrative costs and increase take-up as well.
On disability benefits, this year the coalition will ensure that those who face additional costs because of their disability and who have perhaps less opportunity to increase their income through paid employment will see their benefits increased by the full value of CPI. Therefore, disability living allowance, attendance allowance, carers allowance and the main rate of incapacity benefit will all rise by the statutory minimum of 2.2% from April 2013, as will the employment and support allowance support group component and those disability-related premiums paid with pension credit and with working-age benefits.
Stephen Lloyd (Eastbourne) (LD)
Will the Minister make it absolutely clear for the record that, despite some noise in the media, disability benefits are all going up by the higher rate?
Steve Webb
Yes. My hon. Friend is right. The specific benefits for the extra costs of disability are all rising by the full 2.2%.
Stephen Timms
Will the Minister tell the House by how much the benefit paid to people in the ESA support group will go up overall under the order?
Steve Webb
As the right hon. Gentleman knows, the main rate of ESA will rise by 1%, which is just over 70p a week, and the addition that people in the support group receive will go up by 2.2%.
Mr Russell Brown (Dumfries and Galloway) (Lab)
What message can I give to one of my constituents whose doctor has notified me that she has terminal cancer and is on a syringe drive and whose disability living allowance has been taken from her?
Steve Webb
I sympathise with the hon. Gentleman’s constituent, whose individual circumstances I do not know. Disability living allowance has not yet been reformed by this Government, so we have changed nothing about DLA. If his constituent believes that she has been wrongly assessed, I hope that she will have his support in appealing against that decision.
On working-age benefits, as the International Monetary Fund has said, strong fiscal consolidation is under way, and reducing the high structural deficit over the medium term remains essential. As we continue to face pressure on our national economy, we have had to take some tough decisions. There was, as my hon. Friend the Member for Eastbourne (Stephen Lloyd) has suggested, speculation about benefit freezes. It is true that we cannot afford to be as generous this year as we have been in the past. However, in the exercise of his discretion in the uprating of certain benefits, having regard to the national economic situation, the Secretary of State has found sufficient money to pay a 1% increase to those of working age on the main rate of jobseeker’s allowance or income support, as well as for housing benefit and the main rate and work-related activity component of employment and support allowance.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
Has today’s news that inflation is set to stay very high for the next few years encouraged the Minister to rethink in any way this real-terms cut in working benefits?
Steve Webb
The rate of CPI has been 2.7% for four consecutive months. We were aware of the level of inflation when we made these judgments about 2013. Clearly, there are things we can do to help ourselves with the cost of living. For example, the cost of petrol is 10p a litre lower than it would have been if we had implemented the previous Government’s escalator; council tax bills, which are a huge cost of living for many people, have been frozen in many places for three years; and people in low-wage work will receive a substantial income tax cut in April. Those measures will all help people with the cost of living.
Sheila Gilmore (Edinburgh East) (Lab)
It is interesting that the Minister should mention council tax, because in large parts of the country many working-age people, working and unemployed, will be paying substantial sums in council tax, and that will have a big effect on their standard of living.
Steve Webb
The unprecedented three-year freeze in council tax in many areas is a huge boost not only to those on the lowest incomes but particularly to those whom one might describe as not rich and—
Steve Webb
I wonder if the hon. Lady would allow me to finish replying to her previous point before she intervenes with the next one. The three-year freeze will help particularly those whom I would describe as not rich and not poor—not poor enough to get benefit and not rich enough not to care. We meet them all the time; they have saved a bit, worked hard, and feel penalised. Our freeze will benefit those people in particular.
Sheila Gilmore
It may be an unprecedented freeze in England, but it is not unprecedented in Scotland. It is a very regressive form of assisting people, because the higher their level of council tax banding, the more advantage they get from it. Someone who is already in receipt of council tax benefit gets no benefit from the freeze, and the effect on councils is to lead them to raise the cost of many fees and cut services. In fact, therefore, the poorest and most vulnerable do not benefit from a council tax freeze.
Steve Webb
In responding to the hon. Lady, I occasionally lose count of the logical flaws in her argument. However, I will take one in particular. The Government have made available for this coming year, 2013-14, an additional £100 million to help local authorities to dampen down the effect of the council tax benefit changes. Many local authorities have reduced the subsidy given on empty homes and on second homes—which are not generally associated with poverty, I would add—and many have damped, or reduced to zero, the impact on council tax. Some Labour authorities have chosen not to do that, which is an unfortunate political decision.
I remind those who might consider voting against the order—the interventions that we have heard suggest that the Opposition are considering it, or perhaps they want to give that impression—that they would be voting against an above-inflation increase in the state pension, a full increase in line with CPI for disability benefit, and any increase in any benefit this coming April.
Kate Green (Stretford and Urmston) (Lab)
I am sure that the Minister will be reluctant to penalise with his uprating measures people who are in employment, so why is statutory maternity pay encompassed within the 1% freeze? Has he seen the letter in The Guardian today from six mums who have written to complain about this measure and point out that having a new baby costs families money?
Steve Webb
Statutory maternity pay applies to those who are leaving work to have a baby and who often return to work, and for those in work our income tax cut in April will be a very substantial benefit. It is true that the 1% figure applies to SMP. It also applies to in-work benefits such as tax credits, which are not within the scope of the order. That is a consistent approach, particularly given that many people in work, such as those in the public sector, are also getting a 1% increase.
Mr David Winnick (Walsall North) (Lab)
The Minister says that we cannot vote against the 1% figure without opposing the uprating of pensions and the rest. That may well be so, and no doubt he is pleased about it, but the fact remains that whether we vote against it or not, some of us feel very strongly about it because we believe that it is hitting the most vulnerable, and I look on it with loathing and contempt. Only a Tory-led Government could carry out such a measure.
Steve Webb
I do not know whether the hon. Gentleman’s Front Benchers share his loathing and contempt, but they have a vote to cast and they can use it if they want to.
Steve Webb
No, I am going to conclude; there will be plenty of opportunity for people to contribute.
At a time when the nation’s finances remain under real pressure, this Government will be spending an extra £2.8 billion in 2013-14 to ensure that those people who are least able to change their regular income are protected against increases in the cost of living. Of this, about £2.1 billion is for the state pension, including an above-inflation increase for the basic pension; nearly £500 million will go to disabled people and their carers; and nearly £300 million will go to people of working age. We have protected the triple lock, we have helped our poorest pensioners, and we have protected the key benefits for disabled people. Even as we face the need to make savings to rebalance our economy, we have still found money for a 1% increase to help to support those who are not currently in work. I have set out our ongoing commitment to ensuring that even in these difficult times no one is left behind. I commend the orders to the House.
Stephen Timms
I congratulate my hon. Friend on his foresight in pushing for that change. I am delighted that, partly thanks to his work, the previous Government were able to deliver it. It is greatly appreciated by pensioners.
In my view, the triple lock has been a triumph of rhetoric, but a damp squib in reality. One can only hope that the quadruple lock delivers rather more for those following the Marriage (Same Sex Couples) Bill than the triple lock has done, but perhaps we should be a bit kinder to the triple lock. Perhaps we should credit it at least with saving pensioners from the fate of strivers. The order locks in the strivers tax to working-age benefits for the coming years. Strivers are being hammered.
It is worth looking back at what the Minister said last year about working-age benefits. It is hard to believe now, but last year he announced a 5.2% increase in working-age benefits:
“These increases will ensure that the most vulnerable people in society are protected and that those looking for work get the support they need to move into the labour market.”—[Official Report, 23 February 2012; Vol. 540, c. 1046.]
How different is the picture today! After another 12 months of failed economic policy in which the economy has hardly grown and the Government’s forecasts for unemployment and borrowing have risen sharply, the most vulnerable are no longer being protected; they are being hammered and are paying the price for the failure of the Government’s economic policy and the Chancellor’s inability to deliver the steady growth and falling unemployment that he promised.
Let me remind the Minister of something else he said last year. He said that
“there were siren voices from some quarters suggesting that we could not afford, or that we should not go for, this inflation figure. He is absolutely right that the coalition parties decided that it was a priority. That is something that I am proud to be associated with.”—[Official Report, 23 February 2012; Vol. 540, c. 1045.]
I think we can safely assume that he is not proud to be associated with the shabby treatment of working-age people in the social security system. This year, the siren voices have won. This year, the coalition parties have decided that safeguarding strivers is not a priority. This year, and for the next two years, the most vulnerable are being kicked in the teeth. The measures will come into effect at the beginning of April, on the same day as the introduction of the tax cut for everyone earning over £150,000 a year.
Steve Webb
The right hon. Gentleman will have noticed that I did not use the word “strivers”. Will he clarify who he means by “strivers” and who he is excluding from that definition?
Stephen Timms
The term “strivers” refers to those who are working, who are often struggling to make ends meet and who are going to find things a good deal harder because tax credits are being uprated by only 1%. That is being done on exactly the same day as every one of the 8,000 people earning over £1 million a year will get a tax cut averaging over £2,000 a week. Let me remind the Minister that that will happen on the same day as the employment and support allowance paid to a single person aged over 25 goes up by 70p a week. The hon. Member for Eastbourne (Stephen Lloyd) reminded the House a few minutes ago about the 75p a week pension rise some time ago. This order will give the people I have just described a 70p a week increase, and that is a disgrace.
Stephen Timms
My hon. Friend is absolutely right. It is fair to say that the bedroom tax is increasingly being seen as a hated tax across the country, as its impact becomes clearer and the date on which it will be applied approaches. It will make life a great deal harder for those people who have no option to move into a smaller place because there are no smaller places available in the council or housing association stock.
I commend to the Minister the speech made by the Bishop of Leicester in the other place in the Second Reading debate on the Welfare Benefits Up-rating Bill on Monday. He said of the Bill:
“It will depress hard-working families even further, remove much needed support for the vulnerable and unable to work, and potentially take us in the wrong direction for a generation, condemning countless children to poverty. It is a proposal that I cannot support.”—[Official Report, House of Lords, 11 February 2013; Vol. 743, c. 471.]
He was speaking for Britain. The Resolution Foundation has pointed out that the measure is a strivers tax, and that well over half the savings from uprating working-age benefits by just 1% over three years will be taken from people in work, because tax credits are being cut in real terms.
My hon. Friend the Member for Stretford and Urmston (Kate Green) has pointed out that the provisions will hit women particularly hard. The House of Commons Library has calculated that two thirds of those hit will be women. The real-terms cut of £180 to statutory maternity pay has already been dubbed the “mummy tax”. Taking into account all the cuts that will affect a woman during pregnancy and the first year of her baby’s life, including maternity pay, pregnancy support, tax credits and child benefit, the loss adds up to an average of £1,700. So, on the day when the highest paid are getting a massive tax cut and the rich are getting a £3 billion tax giveaway, people who are striving will be hammered.
Steve Webb
The right hon. Gentleman’s words in Hansard will show that he is very concerned about all this. Will he therefore tell the House whether it is his intention to reverse any of these measures?
Mr Russell Brown (Dumfries and Galloway) (Lab)
I had not intended to speak this evening, but my hon. Friend the Member for Hayes and Harlington (John McDonnell) has somewhat inspired me. He spoke on a subject that I want to say one or two things about. It is extremely saddening that we are taking both orders together, because we on the Opposition Benches—[Interruption.] Well, we can support one order, but we have severe difficulties with the other. We will see what happens.
Steve Webb
Just to clarify, for the convenience of the House, we have three hours to talk about both orders. One is uncontentious, so the hon. Gentleman can talk to his heart’s content about the other and vote against it if he wants to.
Gregg McClymont
I am still waiting for the hon. Gentleman to confess that he was absolutely wrong to suggest that this is an above-inflation increase. That leads to some questions about the ability of the Liberal Democrats to devise economic and financial policy when they do not know the current rate of inflation and how it relates to the basic state pension.
Steve Webb
Understandably, the hon. Gentleman would like to be sitting where I am sitting. If he was, by how much would he have put the pension up?
Gregg McClymont
The Minister is determined to tease out from the Opposition what will be in our next manifesto. Our position is clear, and he is obviously trying to deflect attention from this real-terms cut in the pension.
Gregg McClymont
My hon. Friend makes a good point. The Chancellor thought that he could play clever politics and draw dividing lines between different sections of society, but he did not take it into account that this would hit those in work above all else. I am afraid that he has been too clever by half.
Let us be clear. One of the groups that will be particularly hard hit will be women. House of Commons Library analysis is clear that two thirds of those hit overall by the real-terms cut in benefits and tax credits are women.
Gregg McClymont
The Minister shakes his head, but that is House of Commons Library research.
There has built up a picture of a Government who, having failed miserably on the economy, want to make working people and those seeking work pay the price for their economic failure. Labour’s alternative is clear: get Britain back to work, introduce a compulsory jobs guarantee and bring down the unemployment bill—the price of failure that the country is paying.
To conclude, the proposals in the order for working-age benefits are an affront to hard-working people—although an increase is better than no increase, of course. If the Government want to plug the hole in their failing economic plan, they should cancel their tax cut for millionaires this April, not hit millions of working people on modest incomes. That is the reality of the situation. The pension proposals are, of course, worth having. Pensioners depend on these upratings every year to maintain their standard of living, so I will urge my hon. Friends to abstain on this order, but to campaign for a new set of economic policies as we move towards 2015.
The Minister of State, Department for Work and Pensions (Steve Webb)
This has been an interesting debate. We have heard heartfelt contributions from the hon. Members for Hayes and Harlington (John McDonnell), for Banff and Buchan (Dr Whiteford) and for Dumfries and Galloway (Mr Brown), the latter of whom described his own experience of childhood poverty. I would describe those two hon. Gentlemen—I am not sure the hon. Lady would accept this term—as socialists and so would clearly not be where we are, but would be taxing the rich far, far more to avoid the sorts of things we are having to do to reduce the deficit. Their Front-Bench team do not share their view, however, so although I respect their position that they would rather tax the rich, that is not the position of their Front-Bench team.
The right hon. Member for East Ham (Stephen Timms) was the classic personification of Labour now—a vacuum where there should be a political party. When asked what they would do now, both he and the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) said, “Well, if this had been done, we might have done that, and in some years, we will produce a manifesto, but we’re not saying.” The hard-working folk who write Hansard could have simply inserted, “Vacuous twaddle here”. The House has a right to know what the official Opposition would do, but answer came there none.
The hon. Member for Edinburgh East (Sheila Gilmore), among others, asked for a cumulative impact assessment. Occasionally, when the Government produce such figures, they are met with some scepticism. The Institute for Fiscal Studies chose to analyse the cumulative impact of all the fiscal consolidation from the start of this Parliament through to the end, and it has stated this month in its “Green Budget” that
“those on the very highest incomes have clearly been hit the hardest”.
Steve Webb
I will finish the sentence. It goes on to say
“when looking at the fiscal consolidation as a whole.”
In other words, when looking at everything, which is what we were asked to do.
Sheila Gilmore
The other half of what the IFS said referred to the people in the lowest income deciles and the losses that they will incur. The cash reduction for people on the highest incomes will not impinge on their well-being in anything like the same way as these measures, including the 1% increase, will impinge on the poorest.
Steve Webb
In fact, the IFS figures are based on the percentage increases and, as we have been reminded repeatedly in the debate, the cash amounts for the very highest income earners are far higher for any given percentage figure. So, even taking percentages instead of cash amounts, the highest earners have, in the IFS’s words, been “hit the hardest”.
Steve Webb
No, I want to make some progress.
The right hon. Member for East Ham referred to the triple lock and the increase of 2.5% over inflation, compared with 2.2%, as derisory. I remind him that the extra 0.3% cost the taxpayer £150 million. I remember the funny-money days of Labour when £150 million was considered a mere rounding error. He dismisses it as derisory. When his party was in office, it was borrowing £150 billion a year, so I appreciate that for him £150 million is small change, but I still have the naive feeling that that amount is a lot of money. He and others derided our triple lock as though it were a trifle and of no consequence, but had Labour implemented the triple lock between 1997 and now, we would be spending an additional £3 billion on the state pension. So if Labour had applied the triple lock that he derides as inconsequential throughout their term in office, we would be spending £3 billion a year more on pensions. But perhaps he thinks that that sum is derisory, and a frippery, as well.
We have also been hearing about strivers. This is the classic dog-whistle politics of the Opposition. They accuse us of trying to divide people, yet they suddenly divide people—[Interruption.] It is not our side that has used that language.
Steve Webb
The Opposition have tried to divide people into “strivers” and “somebody else”. I am not sure who the “somebody else” is—a non-striver, perhaps. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) is shouting out, but he is the man who said in his conference speech that Labour was on the side of the strivers, not the shirkers. We know who uses that language.
Why is it necessary to have the fiscal consolidation? It is because of the Labour party’s debts. There was £150 billion of borrowing in the final year of the last Labour Government. Labour takes no responsibility for that but, had the previous Chancellor’s plans been put into operation, it would have had to implement substantial spending cuts on public sector pay—which it has finally now agreed—and on benefits. Have we heard a single suggestion from the Opposition today on how they would make savings? They simply oppose every cut, pretend to be on the side of the poor, and never accept responsibility for how we got into this mess in the first place.
Steve Webb
No.
A number of people have said that we are the seventh richest country in the world, in terms of our gross national product per head, but we are of course also the country that was brought to the brink of bankruptcy by the last Labour Government. That is what we have had to deal with.
The hon. Member for Dumfries and Galloway mentioned people having their disability-related benefit reassessed. I would gently remind him that reassessing the millions of people on incapacity benefit, many of whom had been parked on benefit for a decade or more, was begun, rightly, by the last Labour Government. That process has been carried on. That is why people are being reassessed. We think it right not to park people on incapacity benefit for decades, only for them to retire and find that they have no pension either. So the reassessments are right. I entirely accept the point that they have to be done well, but they were begun under the last Government and they continue under this one.
Mr Russell Brown
Surely the Minister recognises that for people going through assessments it is almost like a revolving door. People with long-term and fluctuating conditions are losing benefits, eventually getting them reinstated, and then six months pass and they are back losing their benefits again. The system is not working for about 40% of people who have to go through a process time after time, making them even more ill.
Steve Webb
The Government fully accept that Labour’s work capability assessment was not working when we came into office, which is why we commissioned Professor Harrington to undertake a series of reviews. We have implemented his recommendations to make the test better, and that will continue under a new assessor.
Steve Webb
No. We have heard a lot of handwringing from the Opposition Front Bench, but no alternative proposition. We have been told that this measure will be devastating and cost the poorest people in the land billions of pounds, so surely we can have a commitment from the Labour party to reverse it. I think the hon. Member for Stretford and Urmston (Kate Green) said this measure was “egregious”, and we have heard how evil and unkind it is, so the Labour party is clearly committed to reversing it. However, those on the Front Bench know that they will weep crocodile tears and try to persuade people that they actually care about this stuff, but they will not find a penny to reverse any of it. That is the truth.
Steve Webb
No, I am reaching a conclusion.
We are bringing forward regulations that will increase the pension by more than the rate of inflation, taking it to the highest share of average earnings for more than 20 years. We are uprating key disability benefits by the rate of inflation, and ensuring that even in these straitened times we are able to increase benefits for people of working age. I commend the order to the House.
Question put and agreed to.
Resolved,
That the draft Guaranteed Minimum Pensions Increase Order 2013, which was laid before this House on 28 January, be approved.
Resolved,
That this House takes note of and approves the draft Social Security Benefits Up-rating Order 2013, which was laid before this House on 28 January.—(Steve Webb.)
Social Fund Schemes
Steve Webb Excerpts(11 years, 3 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
I am pleased to announce that later today we intend to lay regulations to include universal credit in the list of qualifying benefits that currently act as an initial gateway to the three regulated social fund schemes (i.e. the Sure Start maternity grants, funeral payments and cold weather payments). The other qualifying criteria that also apply to these schemes will continue as now with some modifications being made to the cold weather payment scheme.
As universal credit is both an in and out of work benefit and does not exactly mirror the existing income-related benefits, the cold weather payment scheme has had to be modified. In addition, to ensure that the underlying principles behind the scheme continue to apply—that additional support is given to help the most vulnerable with the extra costs associated with heating the home during severe weather periods—a further qualifying criterion has been introduced for recipients of universal credit, which restricts access to those not in employment. An exception to this criterion has been made for families with a disabled child or children.
Two further changes have been made to the funeral payment scheme. The first relates to the introduction of universal credit. Because elements for housing benefit will be included in the universal credit assessment and payments will be made monthly, changes must be made to prevent any final benefit arrears owing to the deceased from extinguishing an award being made to the person taking responsibility for the funeral. The second change removes council tax benefit from the list of qualifying benefits that currently act as an initial gateway to the scheme following the decision to abolish council tax benefit from 1 April 2013 in favour of localised provision.
With the exception of the cold weather payment scheme, all the changes are due to come into effect from 1 April 2013 to ensure the changes are in place for the commencement of the universal credit pathfinder. The changes relating to cold weather payments will come into effect from the start of the winter season 1 November 2013.
Child Maintenance
Steve Webb Excerpts(11 years, 4 months ago)
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The Minister of State, Department for Work and Pensions (Steve Webb)
The Government are reforming the child maintenance system. As part of these reforms, later today I am publishing a strategy for addressing arrears of child maintenance and maximising ongoing compliance: “Preparing for the future, tackling the past: Child Maintenance—Arrears and Compliance Strategy 2012-2017”.
I am grateful for the input received in earlier discussions on child maintenance arrears from various interested parties, including the Public Accounts Committee.
I will place a copy of the strategy document in the Libraries of both Houses.