Housing Benefit Shared Accommodation Rate

Steve Webb Excerpts

Monday 28th March 2011 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

My hon. Friend, the Under-Secretary of State, responsible for welfare reform, Lord Freud of Eastry, has made the following statement.

The Government announced in last October’s comprehensive spending review that it would extend the housing benefit shared accommodation rate to people under the age of 35 from 2012. This rate currently applies to people under the age of 25 and reflects the costs of renting non-self-contained accommodation in the private sector where the tenant has exclusive use of a bedroom but shares other facilities such as a bathroom.

We intend to bring forward these changes by three months so that they start to take effect from January 2012.

The local housing allowance reforms, to be introduced from this April, cap the level of payments to a maximum of a four bedroom rate and reduce local housing allowance rates so that they are based on the 30th percentile of rents rather than the median. They also introduce overall caps on the rate of local housing allowance for one, two, three and four-bedroom accommodation. Existing customers will be given up to nine months transitional protection from these reforms starting from the anniversary date of their claim.



By introducing the shared accommodation rate changes slightly earlier, this will bring the timing of the shared accommodation rate change more closely into line with the local housing allowance reforms for existing customers. It will ensure that single people aged 25 to 34 reaching the end of their transitional protection period will experience at that point a single reduction in their housing benefit, rather than two separate reductions.



That is why we have decided to bring forward the shared accommodation rate changes. We will publicise these proposed changes through appropriate channels to make sure that those affected are aware of them in advance.

Housing Benefit

Steve Webb Excerpts

Thursday 10th March 2011 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

As others have done, I congratulate the Select Committee, on producing such a comprehensive report into the Government’s proposals in the June Budget. I also congratulate my hon. Friend the Member for Aberdeen South (Dame Anne Begg) on her thoughtful, balanced and comprehensive introduction to the debate. It is a great credit to the Select Committee that the report sought to be so balanced, and that the Committee so rigorously examined the proposals. It is striking and a tribute to the generosity of my hon. Friend’s character that the report ended up being just a touch more generous to the Government than to itself in terms of the Government’s impact assessment, which warned of the danger of increases in the number of households facing rent arrears, eviction or presenting as homeless, and of rising crime, increased pressure on the legal aid budget, increased overcrowding, disruption to children’s education and lower educational attainment.

The Social Security Advisory Committee also comprehensively rubbished the proposals, and warned of unintended and perverse consequences of the changes, which will in many cases lead not only to hardship, but to additional expenditure in other areas of Government service.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Just for the record, will the hon. Lady confirm that the SSAC produced its report before the nine-month transition period, before the October and April changes were brought together and before the 10% housing benefit change was reversed?

[Ms Buck]

I certainly confirm that. I am happy to commend the Government on their decision to withdraw the proposal to reduce housing benefit by 10% for people who have been on jobseeker’s allowance for more than a year. I also accept entirely that there has been a phasing in of the cap on housing benefit, which particularly affects central London. As the Minister knows, that was more than compensated for in cash terms by bringing forward the reduction to the 30th percentile for housing benefit for local housing allowance claims, which affects the rest of the country for new claims.

We have heard a range of contributions this afternoon. My hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) was highly critical of the proposals, and she raised concerns about their impact particularly on families with children. She made it clear that one of the areas that has not been properly addressed by the Government and many commentators on this agenda is the variance between London housing costs and those in the rest of the country.

The hon. Member for Cardiff Central (Jenny Willott) raised a number of thoughtful and important points about the structure of the broad market rental areas and the complex lives of real individuals who will be affected by the move to the single-room accommodation rate. She made an important point, which I accept entirely, when she said that one reason why we have a dilemma about how to pay for low-income households and housing is due to a 30-year-long reduction in the availability of social housing. I do not want to divert too far from the central topic—I know you will not allow me to, Mr Sheridan—but in 1997 the Labour Government inherited social housing stock in such a poor condition that huge investment had to go into improving the physical conditions of council housing through the decent homes initiative. I have gone on the record extensively over the years to say that I, too, regret that we did not build more social housing. We would still, however, have had a significant number of low-income households in the private rented sector, and we would still be facing some of the same problems.

My hon. Friend the Member for Stockton North (Alex Cunningham) drew attention to the risks of homelessness and eviction in another part of the country. This debate has so often focused on London, and it is good and right for us to recognise that it is not only a London problem. The hon. Member for Brighton, Pavilion (Caroline Lucas) spoke powerfully about the experience of a city with a large private rental market, where the changes will have a profound impact in terms of squeezing out low-income households on local housing allowance across the city.

Since the cuts were introduced by the Government, the debate has concentrated largely on London and a few individual cases. It was good to hear many speakers emphasise that such cases involve a tiny minority of larger households living almost in very high-value properties, something none of us would defend. As the Select Committee report reflected, depending on which figures one uses, the few thousand cases that are at the significantly higher end of the cost market are an issue that the Government could have tackled, if they had wanted to. They could have confined themselves to that, but instead we have almost 1 million—936,000—households that will lose by an average of £12 a week over the course of a full year, once housing benefit changes to the local housing allowance are introduced. It is important that the public understand the sheer scale and spread of the changes, and there will be a nasty shock starting in April with the new cases calculated on the 30th percentile and the other changes phased in later.

[Steve Webb]

It is important that those who listen to our debates understand whether the hon. Lady opposes all the changes. She has mentioned 1 million losers. Does she accept that roughly 500,000 households would have lost in any case through the abolition of the £15 excess, which the previous Government were going to implement but put off until after the election? Does she support those losses affecting 500,000 households, or does she oppose them?

[Ms Buck]

It is right that the Labour Government intended to remove the £15 excess. However, the Minister will accept that the sheer number of people who will lose as a consequence of these changes far exceeds the small number of high-profile cases to which people on his side of the argument usually confine the debate.

We have rehearsed this argument before, so I do not want to spend too much time on it. None the less, the argument was made again during yesterday’s debate on the Welfare Reform Bill that housing benefit is out of control. We know that expenditure on housing benefit increased from £11.5 billion to £21.5 billion over the decade, and only half of that is down to inflation. Social housing rents have risen significantly as a consequence of rent restructuring, and above all—this is the key factor and the reason behind so much concern in the Labour party—case loads have risen. Case load increase has been the main driver of increased expenditure on housing benefit. In the two years since the local housing allowance was fully extended across the country, 87% of the rise in that allowance was driven by case load. During those years of recession, almost half that case load involved either people in work, or those on jobseeker’s allowance who were therefore connected with the labour market and seeking to get back into work.

It is also worth emphasising that local authorities have been making far greater use of the private rented sector in order to place homeless households. That is not a party political point, because the previous Government did that as well, reflecting the shortfall in social housing. In the past year, 60,000 households were placed in the private rented sector at far higher unit cost than if they had been in social housing. Many of those high profile individuals who found their stories in the Daily Mail and the Daily Express were placed in that accommodation by a local authority, because it had no other place in which to put them.

Professor Wilcox was, I believe, an adviser to the Select Committee and has worked extensively for the Department for Work and Pensions. Writing in the new UK Housing Review, he refuted the central Government claim that the local housing allowance was the main driver of inflation in costs:

“The Government have argued that increased rents charged to clients reflect exploitation of the housing benefit regime by private landlords and that this has also been a substantial factor accounting for rising programme costs. The evidence for these claims is not robust. Even if it is assumed that all the above-inflation rise in private rents is attributable to landlord action, this would account for only 10% of the total cash increase in Housing Benefit over the decade.”

We therefore have a rising case load, including a rising case load of those in work, of people who are at risk of losing a substantial share of their income either from April or during the 9 months afterwards. There will be new claims, and many of those people will be forced to move.

We already know that 47% of all local housing allowance tenants have a shortfall between their current rents and the allowance—I stand to be corrected if that is wrong. Therefore, the ability of tenants to absorb an additional shortfall is already small. We know that a substantial number will need to move to a reduced and continually decreasing pool of available property. The National Housing Federation has stated that in London alone, 160,000 claimants will need to fit into 46,000 homes.

There will be a major movement of people. The hon. Member for Woking (Jonathan Lord) made the case that his constituents find it hard to justify people living in high rental areas, and that they want to see costs come down and fewer people living in expensive areas, which may well be true. I understand that concern and that members of the public, particularly outside London, find it a struggle to justify those rents. There is less of a clamour, however, among the communities that seek to accommodate all those who will be required to move, whether that is further out into Brighton, to the edges of London or outside London.

It is worth reflecting on the response given by the London borough of Barking and Dagenham to the housing benefit cuts. Barking and Dagenham is one of the cheapest areas in the south-east, and it is likely to receive a large number of out-movers. I will quote its report:

“Given that Barking and Dagenham has the lowest private rent levels in London…it would be logical to expect that displaced households might…of their own choice look for private rentals here,”

or they might be placed there by other local authorities.

“Such an influx would place additional pressures on waiting lists, social, educational and welfare provision as well as greater demands for support in preventing debt and homelessness.”

It has been estimated that at least 3,000 households will seek to move to Barking and Dagenham. The report goes on to say:

“If rental demand does decrease and housing benefit claimants do migrate to the borough, this may have a significant impact upon the Council’s ability to move its own residents from waiting lists”

into local accommodation. That would lead to increased tension between Barking and Dagenham residents and in-movers—as we know, Barking and Dagenham is a community where we do not want to increase tension between in-movers, many of whom will be black and minority ethnic, and the resident population.

The areas that will be expected to accommodate out-movers are not prepared for it financially: they do not have the resources; they do not have the school places; they do not have the social capacity; and many of them are seeing their grants cut as well. The move to using the consumer prices index will further ratchet down the availability of accommodation until, as the Cambridge centre for housing and planning research has shown, 34% of all local authorities will, within a decade, be unaffordable to everyone on the local housing allowance.

The Minister will say that discretionary housing payments will meet the shortfall and take the strain. It is welcome that additional money has been put into the discretionary housing payment pot and into the homelessness prevention fund for local authorities. However, it is estimated that that money will assist only about 60,000 of the total pool of households. Conveniently, 60,000 is also the figure for the households placed by local authorities in the private rented sector. It will therefore go no further than merely meeting the shortfall of local authorities’ placements of their own homeless households. If it is asked to stretch further, it will not meet the shortfall at all. Therefore, as welcome as the money is, it will go only a very short way towards offsetting the disadvantage.

The measures will mean homelessness, hardship and all the risks set out in the Select Committee report, the Social Security Advisory Committee report and the Government’s own assessment. They will mean, as we have heard, that huge numbers of people who are currently in work—including 1,000 local housing allowance claimants in my borough alone—will lose and lose big. Those people have jobs, and they will be forced a long way out of inner London. They will, of course, face commuting costs that make it extremely difficult for them to make work pay in the new environment.

I want to say a few words about the measures on social housing under-occupation, which so far have not received the attention that they deserve, because they are being phased in a little later than those relating to the private sector local housing allowance. We have seen the equality impact assessment released yesterday by the Department, and we know that the introduction of the size criteria for social housing will affect an estimated 670,000 people throughout the country. That number will rise as the pension age rises. It is 32%—almost one in three—of all housing benefit claimants in the social rented sector.

Most extraordinarily—I think this astonishing—the equality impact assessment states that the number of people with disabilities who will be affected by the change is twice as high as the number of people without disabilities. The Government are seeking to require, in two years’ time, 450,000 households with a disabled recipient of housing benefit to move to an alternative property. That is what the impact assessment says—450,000. The figure is 670,000 people in total. If those people do not move, they will face a shortfall of £13 a week between their rent and their housing benefit. Not only is that a disproportionate and extraordinary impact on older and disabled people, but one wonders how on earth the whole policy of downsizing in relation to the under-occupation rule will work. The total number of households that moved in the social rented sector in the last year for which figures are available was less than 200,000. In 24 months’ time, the Government will expect 670,000 people to try to avoid a penalty on their housing benefit by moving to smaller accommodation. That is three times more than the total number of people who get moved in the social rented sector every year.

Housing authorities, housing associations and councils simply will not be able to meet the demand for downsizing. The position is even worse, because there is a huge regional disparity, with by far the highest level of under-occupation in the north-west of England and by far the highest level of overcrowding and pressure on housing in London and the south-east. Local authorities will not necessarily be able to meet even the demand in their own local authority area. They will be seeking to obtain accommodation from other local authorities in other areas at the very moment when local authorities are tightening their criteria for housing allocations. Westminster council—my local authority—has just announced a 10-year residency qualification for people seeking to move into the area. It will not be offering any of its accommodation to people outside the area who are seeking to downsize.

The sheer mismatch between the legal duties on local authorities and housing associations, their own lettings criteria, their homelessness duties and reasonable preference requirements and what the Department for Work and Pensions expects to happen is extraordinary. I asked the Minister parliamentary questions to try to find out, before we got to the Welfare Reform Bill, what the practical implications of the measures would be. Of course, the reply that I get is that the Minister and the Department are still working on what the practical implications will be.

The scale of the problem is far greater than the Government have admitted, including in their response to the Select Committee. There will be huge practical difficulties in implementing the policies, which I suspect will end up in many cases either not saving any money or being completely impossible to implement, leading to greater responsibilities and homelessness costs in relation to other authorities. That is before we get into the extraordinary situation in which the new affordable housing delivery programme—150,000 new homes—welcomed by the hon. Member for Cardiff Central, will involve higher levels of housing benefit than most properties currently in the private rented sector, thereby pushing up the housing benefit bill at the same time.

A great deal of work needs to be done by the Government to see whether any of the proposals are workable, let alone able to accommodate the sheer hardship and social stress that will be caused by them. It would be nice to be able to house people who are on low incomes and in need for nothing, but that is not a possibility. We have to work with the resources that we have. What the Government are proposing will potentially create a perfect storm of housing need and difficulty with implications going far beyond the housing sector.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

Let me begin, quite properly, by congratulating the Select Committee on its thorough and detailed report and by thanking members of the Committee and other hon. Members for their contributions to the debate. Members of the Committee and other hon. Members who have spoken have a lot of expertise on the benefits system in general and on housing and housing benefit in particular, and we have all benefited from that expertise today.

It would have been nice if the Government response to the Committee had been available slightly earlier than the day before the debate, but it was in the hands of the Committee yesterday, ahead of the debate, as I was keen for it to be. Rather than my standing up here and giving the Government response and then everyone going away and deciding what they thought about it, the Government response was already in the hands of the Committee and, as we have seen, members of the Committee have been able to read it, form a view and give further feedback, which has enabled us to have a useful dialogue this afternoon as part of the conversation. From that point of view, this has already been a worthwhile afternoon and a valuable process.

I thank the Chair of the Select Committee, the hon. Member for Aberdeen South (Dame Anne Begg), for acknowledging some of the important steps forward that have been made since the Committee’s report was tabled. There was some suggestion that we had paid no attention to it, but in her opening remarks, the hon. Lady graciously flagged two particular areas in which there has been significant progress since the Committee’s report was produced. One was on research into the impact of the changes. The other, which was the subject of several paragraphs of recommendations from the Committee, was on the previously proposed 10% cut in housing benefit after a year on jobseeker’s allowance.

It is tempting to say that Government responses to Select Committee reports should be judged by action, not words. If a Select Committee recommends a specific change in policy, and a change in policy subsequently takes place, it is a little ungenerous of members of the Committee to say, “Ah, yes, but the wording of the response was not good enough,” or something similar, especially if it were done at significant cost to the Exchequer. The hon. Lady, of course, was characteristically gracious.

It may help if I update hon. Members on where we are on monitoring the impact of the changes. The Committee issued a press release to accompany the report three days before Christmas—it is good to see that they were working right up to the deadline. In it, the hon. Lady said that

“it is too early to determine if this will happen in reality, which is why it is hard to say exactly what the impact of these changes will be.”

There is an element of uncertainty, which is why we always intended to commission research and to monitor the impact of the changes. Discussions with their lordships prompted a fuller discussion of the form that it would take.

The research that we undertake will be independent. It will include comprehensive primary research on the effect of the changes on different types of households in a range of areas. The debate has shown that the impact of housing benefit in Blackpool is different from that in Cambridge or central London. We accept that, which is why the research will cover the whole of England, Scotland and Wales. It will be done over the next two years, due to a factor that was given insufficient attention in our debate. With a nine-month transition period, and with no change happening until the anniversary of claims, some people will not be affected by the change until December 2012.

That is the roll-out period, which is significant. Rather than there being a day when everyone’s housing benefit is reassessed, with everyone competing for the same properties, new tenancies will be dealt with under the new rules, which is precisely the point of the exercise. We did not want people to be locked into new tenancies at above the new limit, day after day and month after month, only for us to say, “Oh, no, we’ve cut the limits, so the decision that you made three months ago is not valid.” Instead, from April new tenancies will come under the new rules, so people starting new tenancies will face the constraints that anyone else will face, as we discussed earlier, rather than having a more generous system. It is right to make new tenancies under the new rules and to give existing households more time to adjust.

[Ms Buck]

Does the Minister mean new tenancies or claims, or changes of circumstance that affect existing claimants?

[Steve Webb]

That is a helpful question. We are talking about what happens after April. For people who are working but who become unemployed post-April, it will clearly be a new claim, and it will be dealt with under the new rules. The fact that they happen to be living in the same house as before will not affect the claim. However, as their circumstances change, they will face the new regime. They will have to decide whether to take the new rules—the new regime—and stay where they are. For example, if someone becomes temporarily unemployed but has a pretty good chance of getting a new job—many folk who become unemployed are typically back at work within three to six months—a short-term period on a tighter housing benefit regime can be accommodated before moving back to work.

The hon. Lady asked about the existing case load and the protection that we give those cases. The majority of relatively minor changes in circumstance will not affect ongoing entitlement.

[Ms Buck]

I am grateful to the Minister for allowing me to interrupt him again. In many parts of the country, the shortfall will be relatively manageable, which would accommodate his point about people being temporarily out of work. In London and some other high-cost areas, however, the difference could be £5,000 or more over three months. In those areas, the shortfall will be such that people who lose their jobs will also lose their homes.

[Steve Webb]

The phrase “lose their homes” is rather evocative and misleading. When people say that they have lost their home, they are usually describing repossession—their home; their loss. What the hon. Lady describes is someone who has presumably managed to sustain a very high rent—if the shortfall is £5,000 in three months, the rent must be enormous.

The suggestion that the taxpayer should keep paying a vast rent while the claimant decides whether to stay in the property brings me back to my fundamental concern about the tone of the debate, which relates to balancing the responsibilities of the individual and of the Government. It was evident to some extent in the remarks made by the hon. Member for Aberdeen South, and particularly in other contributions, that almost every combination of circumstances, every possible need and every possible variation was deemed to be responsibility of the Government.

The hon. Member for Hampstead and Kilburn (Glenda Jackson) mentioned our response to the Committee’s report and some specific needs. For instance, she said that people living in a larger house might need somewhere to put a wheelchair and questioned whether it should be included in statute. The implication of what Committee members were saying is that they did not want it decided on a discretionary basis, but wanted it written into law. The point about our allowing an extra bedroom for carers is that we have legislated for it; after deciding on a category of clearly identified people and clearly specified needs, we wrote it into legislation, and it has become a right. However, there is a dividing line between identifiable, clearly categorised groups with particular needs and the much broader group listed in the Committee’s recommendations that may need a room for a wheelchair or something else.

The question is not, “Do we give a damn?”—I am sorry; I mean, “Do we care?” The hon. Lady implied that the Government do not care and that we are telling people to get lost. No; as my hon. Friend the Member for Cardiff Central (Jenny Willott) said, the Government believe that some needs should be written into statute, which we have done in cases where previous Governments did not act. However, other needs are so diverse that we should have the local flexibility to respond when the need arises. That is better than sitting down in Whitehall, trying to think of all possible circumstances and writing primary legislation to deal with them, which is not a sensible way to proceed.

[Dame Anne Begg]

That is not what I or others were asking for. In other areas, we use proxies or other measures to help passport people into getting greater help. For instance, there is a good chance that someone on the highest rate of the disability living allowance care element will need extra housing. That factor would give them the right to apply for more housing benefit. It works with the council tax system, under which those who need more space as a result of a disability can get the council tax reduced to a lower band. It is straightforward and simple. The problem with discretionary payments is that not everyone gets them, because they can be refused.

[Steve Webb]

The hon. Lady has said that proxies can be used, which means that we can identify categories of people to whom additional concessions should be made. That is what we did with the extra bedroom for the carer. The report specifically mentions people who need an extra room for a wheelchair. People on certain rates of disability benefit will almost certainly have a wheelchair but live in a house that can accommodate it; others will live in houses that need another room for the wheelchair. Rather than trying to categorise everyone in the same way, the flexibility of the discretionary system allows us to cater for those differences.

I was pleased to hear the hon. Member for Westminster North say that we have to work within our resources. That was a heartening comment, because every pound spent on another recipient or on further delays and concessions—on everything that has been asked for today—comes either from someone else covered by the housing benefit system or from our contribution to tackling the deficit, which is one reason for the reforms.

The hon. Member for Stockton North (Alex Cunningham) said that it is a difficult time for local government, implying that the Government just fancied cutting council budgets by 25% because of what he called an evil Tory-led, or Liberal Democrat-Conservative coalition plot. We all knew that this would happen, because substantial cuts in local government were coming down the track anyway. It is important to acknowledge that that is the backdrop against which we are operating. This is not an environment in which there is money kicking around. It is not as if we can resolve all these problems and delay tackling the remorseless rise in the housing benefit budget. Every £1 billion that goes on housing benefit every year is £1 billion that the low-paid, hard-working taxpayers, who are our constituents, will have to find.

[Alex Cunningham]

There would have been cuts under a Labour Government as well, but they would have been spread over a longer period of time. Does the Minister not accept that the pressure on local authorities today in dealing with all the inquiries from people who are worried about the Government proposals is just adding to the strain that they are under at a time when they are losing staff and more people are coming through their doors?

[Steve Webb]

As the hon. Gentleman has said, local authorities are making plans to reduce staff over the coming years. Some local authorities have chosen to frontload more than is necessary—more than is proportionate to the cuts that they have had—for their own political reasons. Nobody disputes that this is a difficult financial environment for local government; it is. Part of the problem is that spending has been allowed to get so out of control that we have had to rein it in rather rapidly.

[Ms Buck]

rose—

[Glenda Jackson]

rose—

[Steve Webb]

I will give way to the hon. Member for Westminster North in a second. One of the reasons why deficit reduction is so vital is that so many items of spending have become too large. Some of the concessions that we have talked about would be £100 million here or £500 million there. Very soon they add up to serious money.

[Ms Buck]

Let me make one thing clear. Of course the financial context is important. When I used the word resources, I was not only talking about money, but making an important point. With the social housing stock, we only have so many units into which we can pack people on lower incomes. We know that many people—we know how many—need to be accommodated in the private rented sector, and we know the geographical distribution of those properties. One of my big concerns is that we are attempting to do something with that that cannot be done.

[Steve Webb]

That is where I fundamentally disagree with the hon. Lady. The flaw in her analysis is this static view of the world: housing stock and the private sector is as it is and nothing can ever change. The figures that she quoted from the impact assessment assume that nothing changes. The losses she quoted assume nothing changes. Nobody can find somewhere cheaper to live; they just stay where they are and lose the money. Rents do not go down; they stay exactly as they are. The impact assessment from which she quoted is the worst-case scenario.

However, what actually happens is different. Let me give an example. If we were able to reduce rents by £10, that would wipe out nearly 500,000 people with shortfalls. One of the questions that was asked in the debate was: how will landlords respond? Guess what? When landlords were surveyed, they said, “Oh, we won’t cut our rent.” Well, there is a shock. Of course they would. They do not want these cuts because they are the ones who will be most affected. I was very surprised by the hon. Member for Brighton, Pavilion (Caroline Lucas) for whom I have a lot of respect—sadly, her contribution was 90% polemic and 10% substance—because she seemed to be defending private landlords. They are the people who get this money. They are the people who have got the £21 billion that used to be £11 billion 10 years ago. I did not know that they were her best friends. That is where the money is going.

The question is: if we go to direct payment in cases in which it will secure a tenancy, will landlords bite? We have 1 million private sector tenants on housing benefit. We have all seen adverts that say, “No housing benefit” but there are also 1 million people with private sector landlords getting housing benefit. Therefore, someone out there is renting to people on housing benefit. If a private sector landlord is renting to someone whose housing benefit gets squeezed and they or the council says to them, “You can have a guaranteed rental stream straight into your bank account month after month if you will reduce your rent to a level that will enable the tenancy to carry on” that is hugely attractive. It is turning a tenant into a triple A credit-rated tenant rather than someone who may or may not pass on the rent.

[Dame Anne Begg]

rose—

[Glenda Jackson]

rose—

[Steve Webb]

I will give way in a moment. Landlords are quite clear that that is hugely attractive to them. It is worth shaving the rent for, and that is often all that it would take.

[Dame Anne Begg]

It is actually possible to accept the Minister’s argument. The problem is the Government are about to introduce universal credit, which will make direct payments impossible, unless he has a different idea.

[Steve Webb]

We are focusing specifically on the roll-out of these changes over the next two years. Over that period, before universal credit comes in, this mechanism will be in place. Clearly, there is plenty of time to work out ways of underwriting the rent to the landlords combined with the universal credit. The crucial point is that this is a transitional issue, although there are longer-term aspects as well. It is in this transition—the crucial period in which the housing market adjusts—that the mechanism will be most effective.

[Dame Anne Begg]

May I make a suggestion to the Minister? It is that very point that concerns the housing associations, which already have direct payments. They are terrified that under universal credit, there will be no direct payment, which could undermine their whole ability to get us out of this mess by building more houses because they are not able to borrow the money. That is a serious concern.

--- Later in debate ---

[Steve Webb]

Indeed. In co-operation with our colleagues at the Department for Communities and Local Government, we are working through the way in which we can ensure that these affordable rent tenancies—80% of market rent tenancies—have a guaranteed revenue stream that will enable the investment to take place and those discussions are ongoing.

[Angie Bray (Ealing Central and Acton) (Con)]

I apologise for coming in so late. I absolutely agree with the Minister when he says that landlords will inevitably adjust. That is what the private sector does. When the benefit changes, there will be so many tenancies affected that there will be a sizeable effect on the market. The Opposition sometimes forget that this is about not just cost-cutting but fairness and balance. We must remember the taxpayer in all of this. In Acton, we had that amazing example—some called it grotesque—in which a family was plonked into a house that was worth well over £1 million. Very few people in Acton can afford to live in a house of that value. There are some really unfair things that must be addressed.

[Steve Webb]

I am grateful to my hon. Friend for setting that context. During the course of this debate, one or two hon. Members have said that this is all about chasing the headlines in the red tops—the tabloids—and it is that that is shaping policy. Clearly, this is not a policy about a small number of extreme cases. The hon. Member for Hampstead and Kilburn says there are about 90 cases, but let me give one example. The top 5,000 cases of people to whom we pay housing benefit cost us £100 million a year. For 5,000 people to live in properties—

[Glenda Jackson]

It is not 5,000 people; it is 5,000 families.

[Steve Webb]

The hon. Lady can have 5,000 families, but she is, I think, losing sight of zeros. For someone in the Department for Work and Pensions, £100 million does not seem such a big figure, but it is a colossal amount of money that is not providing value for the hard-pressed, low-paid taxpayer, who often does not live in brilliant accommodation. It is not a good use of £100 million.

[Ms Buck]

I will try to make this my last intervention. Given that the Minister says it is a colossal amount of money, does he agree that introducing affordable rents in the social rented programme, which will add £200 million to the cost of housing benefit, is also not a good example of joined-up government?

[Steve Webb]

As the hon. Lady knows, a lot depends on who takes those tenancies. If they are people who would have been in lower-rent social tenancies, the housing benefit costs will be higher, but if they are people who would have been renting in the free-market private sector, the costs could end up being lower. The numbers that she quotes are spurious.

[Glenda Jackson]

I want to know the Minister’s evidence for believing that landlords in the private rented sector will lower their rents. That certainly was not the finding of the National Landlords Association, which I mentioned earlier in the debate. Surely it is dependent on whether there is an excessive amount of empty properties, which, in a constituency such as mine, or any in central London, is an absurd premise. For all the properties concerned, there are many more people who are willing to take them on.

[Steve Webb]

I have a number of observations to make. First, the hon. Lady cited “evidence” that was not evidence at all, of course. It was a survey of the people who stand to lose from the policy, who mysteriously wanted to undermine the policy. When we talk to landlords’ groups—as we do—it is absolutely clear that direct payment is a prize for them. I hope that she does not argue with that statement. It is self-evident, blindingly obvious and common sense.

[Glenda Jackson]

Will the Minister give way?

[Steve Webb]

Can I just respond to the hon. Lady’s points before giving way to her again? [Interruption.]

[Jim Sheridan (in the Chair)]

Order.

[Steve Webb]

I hope that I can just respond to the points that the hon. Lady has made.

[Glenda Jackson]

I did not make that point.

[Steve Webb]

Landlords clearly value direct payment. There is no doubt about that. It is common sense and stands to reason. I do not know if the hon. Lady accepts things that stand to reason, but it is patently obvious that landlords value direct payment. There is an economic value to direct payment. It offers certainty as opposed to uncertainty. That can translate into lower rent. If landlords have a choice between the rent that they previously charged with uncertainty about whether they get the money, and a slightly lower rent with certainty of getting the money, landlords will go for certainty every time. That is common sense.

[Glenda Jackson]

Will the Minister give way?

[Steve Webb]

In a moment. The hon. Lady also said, “Where are all these properties? There is this massive, pent-up demand and these landlords will just go somewhere else.” If there is that massive, pent-up demand, why have landlords not already gone somewhere else? Why have they not already increased their rents beyond what housing benefit covers today? Why are they not already renting to non-housing benefit tenants? There is a reason why they rent to housing benefit tenants: they get the money, particularly with direct payments.

[Glenda Jackson]

Oh, I am most grateful to the Minister for giving way. The words “direct payment” never passed my lips and as I said in an earlier intervention, I would be grateful if the Minister could try to answer the questions that I put to him. Then there is the issue of why landlords are not renting to others outside the housing benefit sector. As I have pointed out, there is a growing trend that private landlords will not accept tenants whose rent is paid by housing benefit. In my constituency and contiguous constituencies, I do not see a massive increase in signs showing places to let.

--- Later in debate ---

[Steve Webb]

I hesitate to bring facts into the debate, but the number of properties in the private rented sector with tenants on housing benefit, which the hon. Lady says is falling and indeed she also says that such properties are hard to find, has risen since November 2008—

[Glenda Jackson]

Where?

[Steve Webb]

Across the country. It has risen since November 2008 by 440,000. To listen to the hon. Lady talk, one would imagine that tenants on housing benefit cannot find anywhere to live. There are 1 million tenants on housing benefit in the private rented sector. To listen to her, one would think that those people do not exist. Unfortunately for her, I am afraid that what she describes is at variance with the facts.

[Ms Buck]

Will the Minister give way?

[Steve Webb]

As such a wide range of issues were raised during the debate and a number of hon. Members have contributed to it, I will make a bit more headway and then I will be happy to give way again.

I was about to describe the evaluation and assessments that we will be carrying out, because a lot of the points that were raised during the debate were about particular groups of people. I want to identify the facets of the research that we will be undertaking.

To ensure that we gather the evidence required on key areas of concern, such as the behavioural and market responses of claimants, landlords and external organisations, we will commission primary fieldwork that will cover a number of issues, which I will now take the House through. They are: homelessness and moves; the single shared accommodation rent, which I will come back to later because there were a lot of misconceptions about that during the debate; the impact on Greater London, which is explicitly in the terms of reference for the research; the impact on rural communities, which I think has been mentioned in the debate; the impact on black and minority ethnic households, which has been mentioned; large families, family life and children’s education, and schools, for example, were mentioned in the debate; older people, who were mentioned in the debate; people with disabilities; working claimants; landlords, and housing and labour markets. There will be comprehensive evaluation that will start imminently and that will run over a two-year period. We will be watching—very carefully—what goes on and we will be reforming the system, with measures such as the allocation of discretionary housing payments.

Discretionary housing payments are quite important. Although the allocation of those payments for 2011-12 has been determined, the allocation has not been determined beyond that time. The total budget has been determined and it will treble. This year, it will be £20 million and then it will be £60 million a year for the next three years. We will treble the total budget. However, where the money goes will be informed by the early roll-out and by the research. We will base the policy on the evidence about the impact on the ground. If there are particular areas—hot spots—where there is particular pressure, we will be able to gear the discretionary housing payments money to those areas.

I enjoyed the observations of the hon. Member for Aberdeen South, who is the chair of the Work and Pensions Committee, about how often we refer to discretionary housing payments. I take her point. I read the Government response myself and I noticed the same thing. However, there is a reason for it. It is that the Select Committee’s report quite properly identified specific sets of circumstances that need to be addressed and they will be addressed by a response that is tailored to the local situation. If there are particular geographical areas where there are particular local pressures—we heard about a number of such areas during the debate—the DHP system will be tailored to those areas. It is almost a circular argument. That is the reason why the DHP system is our answer to most of the questions put to us, because it is the best way to respond to different but equally significant local issues of the type that have been raised during the debate.

I now come to the issue of the shared accommodation rate. Technically, I know that the title of the Committee’s report is, “Changes to Housing Benefit announced in the June 2010 Budget”, but as the shared accommodation rate was covered in the report I will address it.

The question is, “Why do we pay a shared accommodation rate to the under-25s only, because many young people are sharing and is it fair”—to come back to the point about fairness made by my hon. Friend the Member for Ealing Central and Acton (Angie Bray)—“that someone in their early 20s on housing benefit can, in principle, get a flat to themselves but someone in their early 20s who is in work and beyond the reach of the housing benefit system has to share, because they cannot afford a flat of their own?” That is the thinking and in fact that was why the shared accommodation rate was introduced. I think that it was introduced about 15 years ago, if I remember correctly. It has certainly been a feature of the system for many years.

When we have looked at the 25 to 35 age group, we have found it striking that a very high proportion of individuals who are not on housing benefit in that age group are also sharing accommodation. The number of people sharing accommodation does not tail off dramatically at the age of 25. More than 40% of non-students—single people—in this age range are sharing accommodation in a range of situations.

Various questions were asked about shared accommodation during the debate. For example, “Is any of this sort of accommodation available?” One of the notable things is that about 50% of those being paid the shared accommodation rate now are over 25. We have to think about that for a moment. The shared accommodation rate is only imposed on the under-25s, but if someone applies for housing benefit from shared accommodation and they are over 25 they receive the shared accommodation rate, even though they could receive housing benefit for a one-bedroom flat. There is a set of people over the age of 25, therefore, who could receive housing benefit for a one-bedroom flat but who are living in shared accommodation. That suggests, first, that some of those people have chosen to do so and, secondly, that the properties of that type exist. That helps to counter the suggestion that those properties simply do not exist.

Of course, there will be local variations. I accept that point and I will come back later to the point about houses in multiple occupation. However, I think that the hon. Member for Aberdeen South, the Chair of the Select Committee, wants to intervene.

[Dame Anne Begg]

Again, I suspect that the group of people that the Minister is talking about were already in that shared accommodation, which illustrates that people do not like to move house because of the upheaval involved. It also illustrates that not everybody is out to milk the system and receive the maximum amount of housing benefit. It does not illustrate at all what the Minister said it illustrated.

[Steve Webb]

I do not think that I have ever said that everybody is out to milk the system. Moreover, the hon. Lady is guessing what the figures tell us. Clearly, the information demonstrates that such properties exist. It was asserted during the debate that, “You just can’t find these properties”.

[Several hon. Members]

rose—

[Steve Webb]

Let me just explain what I mean by that. The hon. Lady and others said that we are expecting young people to live in HMOs and that those HMOs may not be there. However, to qualify under the shared accommodation rate, someone does not have to be in an HMO. For example, someone could be a lodger. Her Majesty’s Revenue and Customs already runs the rent-a-room scheme, whereby owner-occupiers can receive several thousand pounds a year in tax-free rent simply by renting out a room. Someone renting in those circumstances would qualify for the shared accommodation rate. There are statistics about HMOs, licensing and all the rest of it. However, if we think that things will be a bit tight and that some people might face unemployment and therefore will need some extra income, we might find that more owner-occupiers in a particular area are renting out spare rooms. That might be a very rational thing to do and that will increase supply. But of course the entire debate that we have had today has been based on the assumption that nothing changes. What we are saying is that this change will create a new demand for these shared rooms and spare rooms, and the market will to some extent adjust. That is part of the story.

[Several hon. Members]

rose—

[Steve Webb]

I will give way to the hon. Member for Aberdeen South, the Chair of the Committee, and then I will give way to the hon. Member for Hampstead and Kilburn.

[Dame Anne Begg]

I am sorry, but I have now forgotten what my point was.

[Steve Webb]

Okay, I shall give way to the other hon. Lady.

[Glenda Jackson]

I just wondered whether the Minister had the shared accommodation figures, and why hard-working taxpayers are not offended by HMRC allowing people to have tax breaks when they let a room.

--- Later in debate ---

[Steve Webb]

I have a feeling that it might have been the previous Government, in whom the hon. Lady was a Minister, who introduced the rent-a-room rate. The point about the rent-a-room scheme is to try to make better use of the housing stock. I will not dwell on the social housing overcrowding measures—they are in the Welfare Reform Bill and are not the subject of this report—but I will say that much of what the Government are trying to do is about recognising the limitations of the existing social housing, private rented and owner-occupied stock, and making better use of it.

We have here a classic example. Rather than pay a 29-year-old single person the full housing benefit for a flat of their own, we could pay them housing benefit that enables them to live in a spare room in someone’s house, which would be good news for the person who owned that house, would free up the one-bedroom flat and would save the taxpayer money. I have no idea why the hon. Lady opposes that idea, unless it is on the grounds that it is better value for money. [Interruption.] I am sorry, but I have not given way. I am trying to manage my time, because we have covered a very wide range of topics.

I have covered the fact that accommodation does not need to involve HMOs, and I have raised the rent-a-room scheme. As soon as I talk about, “living with family”, everyone will throw their hands up in horror and say, “You can’t possibly expect people to do that,” but there are diverse circumstances. For example, there is a set of people in their late twenties who live at home with their parents—I think they are called the boomerang generation. For them, it is a rational thing to do, and it enables them perhaps to save up for a deposit on a house. There is also a set of people who live close to family and have a good relationship with them—there are lots of caveats to that—to whom we pay housing benefit for the full rent on a one-bedroom flat just for themselves, when they have family down the road who could accommodate them at no cost to the taxpayer. At a time when money is tight, asking them to consider that option seems entirely rational and a sensible way to use the existing housing stock.

The hon. Member for Aberdeen South spoke about the housing market in her own constituency. I do not think that anyone is saying that all housing rent inflation is about the LHA. I do not think that I have ever said that, and I am not aware that any of my ministerial colleagues have either. I do not dispute for a second that in Aberdeen and other places local market factors drive up rents. However, it is clear that rising real rents are part of the story. In response to Professor Steve Wilcox, whom I know well because I have written papers with him, our breakdown of the growth in housing benefit between different factors suggests a significant role for rent growth. Let me just take Members through how we get to that.

In the past decade, between 2000-01 and 2010-11, the cash increase in spending on housing benefit was £10.5 billion. It is worth reflecting on that £10.5 billion increase over 10 years, and there is no sign of that increase easing off. With another billion, another billion and another billion, doing something does not seem particularly deplorable. Out of that amount, £5 billion is straight inflation—what we would have expected on the strength of inflation—£2 billion is real terms social rent growth, £2 billion is real terms private rent growth, £2 billion, right at the end of the period, as the hon. Member for Westminster North said, is case load growth, and about £500 million is the child benefit disregard. Real rent growth, therefore, is not only about the LHA, but it is a significant contributor to the growth in spending.

The challenge for us, as a Government, is whether to just sit back and take it, letting private landlords go on increasing rents above inflation year after year, and saying, “Yep, that’s fine, we’ll pay that,” without trying to put a brake on it. That is where CPI comes in. I have seen the projections. If CPI is done for decades, it of course has the sorts of effects that were described in the Shelter research mentioned by the hon. Member for Stockton North and, I think, the hon. Member for Brighton, Pavilion, who has now left us. CPI is not for ever. We have said that CPI on the LHA rates will be introduced in 2013, and will be reviewed at the end of the comprehensive spending review period in 2014-15. At that point, we will look at the impact, but what CPI will do is put a brake on the expenditure. Housing benefit expenditure is like a runaway train—nothing seems able to stop it—and we have to try to get the housing market to structure itself differently, rather than keep feeding the runaway train.

[Alex Cunningham]

If, as the Government say, CPI is the only fair way to determine increases in the future, is the Minister suggesting that they will go back to an unfair system at some point?

[Steve Webb]

No. The hon. Gentleman, possibly with my help, might be confused. We have already had lengthy debates on CPI as a measure of inflation for uprating benefits, and our judgment is that it is the most appropriate measure of inflation. What I am talking about here is what we do to the LHA rates in 2013. We will put a brake on them rising faster than inflation for two years, and at that point we will look at the impact. That is all I am saying. We are putting in place a mechanism that will cause a pause in that remorseless rise, and I have heard almost nothing in this debate about how we will tackle the growth, apart from building more houses, which is vital—in the past year, we have had the lowest rate of private house building on record, or certainly for a very long time. The argument appears to be, “Lie back and take it,” but that is not the action of a responsible Government.

My hon. Friend the Member for Cardiff Central raised the issue of broad rental market areas, which is relevant in the CPI context. If LHA rates are to be subject to CPI, ideally the broad rental market areas should not move around because the base figure subject to CPI would not be clear. The broad rental market areas must be frozen at the point at which one goes to CPI, and the question is what they would be at that point. My hon. Friends the Members for Cardiff Central and for Cambridge (Dr Huppert) have properly highlighted the problems with the city of Cambridge and the wider area of Cambridgeshire, and although there have been changes to the BRMAs around that area, the idea is that they will be fixed in 2013. My hon. Friend the Member for Cardiff Central mentioned coterminosity with local authorities, in relation to Wales, and that is one of the options being considered. It is an option that has a number of attractions. In London, it would mean that the BRMAs were smaller, and the affordability figures would therefore be within a tighter geographic area. We would be unlikely to make significant changes this side of 2013, partly because every time the rules are redrawn, another set of gainers and another set of losers are created. So, we would rather do that at the point of moving to CPI in 2013.

Local authority boundaries are not without their own problems. Many of my Liberal Democrat colleagues represent seats in Cornwall. Cornwall is now a unitary authority and the whole of Cornwall would be one BRMA—I think that BRMAs can be smaller than that. My colleague who represents Land’s End, my hon. Friend the Member for St Ives (Andrew George), and my hon. Friend the Member for North Cornwall (Dan Rogerson) might have views about the interchangability of their two areas. There is no simple solution, but we are certainly looking at local authority boundaries in response to the points that my hon. Friend the Member for Cardiff Central has raised.

Universal credit has been mentioned, and it was asked whether housing benefit would go in at a flat rate. The details of that will be discussed more in the Welfare Reform Bill Committee, but my certain understanding is that the intention is not simply to have a “so much for housing” number in the universal credit. I think that the approach will be much more tailored, but I am sure it will be discussed much more fully in the Committee.

On the under-occupation rules, it was asked whether people would be moving from three-bedroom houses to one-bedroom flats. The data show that about three quarters of the under-occupation in the social rented sector is by only one bedroom, so the move from three bedrooms to one bedroom would represent perhaps a quarter of the change. The impact might not be quite as great as I think the hon. Member for Westminster North suggested, but we have just published some more data on that.

[Ms Buck]

I am grateful to the Minister for giving way again; he is being generous. We will be addressing this issue in the Committee on the Welfare Reform Bill, so we must think about it.

In my contribution, I mentioned that the total number of transfers in social housing stock in one year was only one fifth of the total number of people who will need to move to avoid the under-occupation penalty after its introduction. Has the Minister thought about that and discussed it with the Department for Communities and Local Government? Surely any penalty applying to people in the social security system must be avoidable. The question is whether the capacity in housing stock makes the under-occupation penalty avoidable.

[Steve Webb]

It is important to remember that we are discussing a change that will not be introduced for more than two years. The fact that local authorities and housing associations know that the change is coming two years down the track will affect tenancy decisions and allocations now, so it will be part of the mix. Putting someone into a property that they are under-occupying, knowing that in a few years’ time they will not be covered by housing benefit, would raise issues. The situation will be ameliorated partly by forward planning. However, these are issues in the Welfare Reform Bill rather than the report. I fully accept that they are important issues and will need to be managed.

I propose to allow the Chair of the Select Committee to respond at the end of the debate, if she would like to do so, so I will leave some time for that, but first I will consider some of the main themes that have emerged during the course of this debate. The dropping of the 10% cut after a year was an important theme of the report, and we have heard several hon. Members discuss their quite proper concerns about that. We took the view that the measure was not necessary after 12 months on benefit, given the introduction of the Work programme, which will support people, and the universal credit. We took account, obviously, of what the Select Committee and others who made representations had to say. Naturally, I was pleased that the proposal was withdrawn. It is another example of how we have responded to the proper concerns raised by the Select Committee.

Since the proposals were first published, they have been considerably improved. On the nine-month transition, the changes will start to have an impact from April, but rather than a cluster of people chasing after the same properties, we will see the rental market start to adjust. Landlords will adjust their rent-setting behaviour; we will see whether the mechanism that we have implemented—direct payment, where that enables a tenancy to happen—is working; and we will be able to refine it over the next nine months before almost nobody with an existing claim starts to be affected. I stress that people will not be affected until the anniversary of their claim. For some people, that will be 18 months or more. The process will be gradual, giving us a chance to monitor what is going on and to consider the allocation of discretionary housing payments as we go, which improves the proposition considerably.

To draw the threads together, one thing that strikes me about this debate is that it is clear that whoever was running the country at this point would have done a number of the things that we have done and are now being criticised for. We have heard figures quoted on the losers: 500,000 people will lose an average of more than a tenner a week from the abolition of the £15 excess. The previous Government decided to delay that change by a year, because there was an election coming, but we are going to do it, yet the figures for losses have all included that. It would be unfortunate if anyone gained the impression that we are making new policy and new decisions. This would have happened anyway and was part of what was planned.

As my hon. Friend the Member for Cardiff Central said, the previous Government applied bedroom caps. They drew the line at five, and we draw the line at four, but the principle is identical. The outgoing Administration stood on a platform of restricting housing benefit to what somebody in work could afford. What does that imply? The 30th percentile. Using the 30th percentile, getting rid of the excess and applying bedroom caps is virtually there. I hesitate to say this, but almost everything that we are doing is Labour party policy, yet the Opposition suggest that this is some sort of evil right-wing plot to attack the poor.

The idea is that the housing market is not static. It is influenced by what the Government do. We cannot spend £21 billion a year subsidising rents without influencing the housing market. Does anyone think that if we abolished housing benefit tomorrow, it would not have a massive effect on the rental market? It would have a huge effect. We are players in the market, and we have a huge effect.

Our challenge is to ensure that the system is fair. In most rental market areas, 30% of properties will be affordable. There will be a transition to the new system of at least nine months for existing tenants and up to a year after that to ensure that in difficult local situations treble the amount of discretionary housing payment will be forthcoming. The fact that the budget is £20 million this year and will be £60 million in two years’ time, repeated over a three-year period, indicates that we accept that there will be difficult individual cases in which adjustments must be made, which is why we have provided the money.

I do not apologise for tackling something that has gone untackled for too long. The budget was growing remorselessly by billions year after year. We must ensure that taxpayers’ hard-earned money is well spent, and we believe that the housing benefit changes will make that difference.

Welfare Reform Bill

Steve Webb Excerpts

Wednesday 9th March 2011 Commons Chamber

[Mr Duncan Smith]

The answer to the hon. Lady’s question is that budgeting loans will still be available for those cases. On the second question that she raises about crisis loans being down to the recession, the trend of upward claiming was on track and had started long before the recession.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

With the telephones.

Health and Safety (Construction Industry)

Steve Webb Excerpts

Wednesday 9th March 2011 Westminster Hall

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) on securing the debate, on all the work that he does as chair of the all party parliamentary group and on the well-informed and measured way in which he has raised these issues. As he rightly said, one death is too many, which is the title of the Donaghy report. There were 42 fatalities in 2009-10 and that is not something to be proud of. I should just say that the Minister of State, Department for Work and Pensions, my right hon. Friend the Member for Epsom and Ewell (Chris Grayling), who takes the lead on these matters, is on the Front Bench in the Commons responding to the Welfare Reform Bill and so I am standing in for him today. I know that he welcomes the fact that over the past decade there has been a significant improvement in the number of fatalities in the construction sector.

Let me give a feel of the progress that has been made. The reason I mention this is that if we can see that progress has been made over a decade—although that until we get to zero deaths we should not rest, and even then we should not rest—the challenge for us is to see what delivered the progress and whether we can continue doing more of those things or whether fresh duties, fresh structures and fresh obligations are the best way forward. I want, therefore, to give some figures for the record. Ten years ago, in 2000-01, there were 105 fatalities, compared with 42 last year. There are also figures relative to the scale of the industry, which obviously fluctuates. Measured relative to every 1,000 workers, in every year except one of the last 10, the rate of fatalities has fallen. The Health and Safety Executive, the trade unions and the industry deserve some credit for the improvements that have been made.

The hon. Member for Paisley and Renfrewshire North quite properly asked, “But what of the future?” He speculated that fatalities would rise. I know that the HSE will be working very hard, in partnership with industry, the trade unions and the Government, to ensure that that does not happen. However, although he rightly says that there have been construction industry inspectors at the HSE on temporary contracts, they were always intended to be on temporary contracts. This Government have not decided to make them temporary. They were always fixed-term appointments that were due to end this summer. Nevertheless, even if we exclude those inspectors, as at January 2011 we have more HSE construction division inspectors in post than ever before.

I just want to give some idea of the sorts of people that I am talking about. Currently, 150 operational inspectors visit sites on a day-to-day basis—up by nearly 25 from three years ago. There are 24 line managers who also conduct inspections. In addition, there are 16 inspectors in construction sector and policy; 20 specialist inspectors who provide expert input on the causes of accidents and advice on technical issues; and 27 visiting officers in the construction sector. As things stand, therefore, there is a very significant commitment by the HSE to the construction sector.

As with all aspects of Government, budget cuts have been required of the HSE, but I stress that the HSE will inevitably continue to concentrate its work on the highest-risk sectors—

[Ian Lavery]

Will the Minister give way?

[Steve Webb]

I hope that the hon. Gentleman will allow me to continue for a moment. As I was saying, the HSE will continue to concentrate its work on the highest-risk sectors, such as construction.

I also want to respond to the specific point made by the hon. Member for Jarrow (Mr Hepburn) in his intervention. He suggested that there might be an end to unannounced inspections in the construction sector. I am happy to confirm on the record that there is no intention to stop unannounced inspections in construction and indeed the HSE will be paying greater attention to smaller sites, where we fully recognise that there are still poorer standards. Indeed, it is on those sites that the majority of fatal accidents happen.

[Mr Andrew Smith]

Will the Minister give way?

[Steve Webb]

If the hon. Member for Paisley and Renfrewshire North is happy for me to give way, I will give way, but I have only eight minutes left to respond to his speech. I am in his hands. If he is happy for me to give way, I will give way.

[Jim Sheridan]

indicated assent.

[Steve Webb]

I will give way.

[Mr Andrew Smith]

I am grateful. I welcome the assurance from the Minister. Can he assure us that there will not be a reduction in the number of unannounced inspections?

[Steve Webb]

Obviously, the HSE will introduce its proposals for responding to the budget changes. Indeed, the Government will announce our health and safety strategy relatively shortly, in response to the Young review and other changes. Details about all those things will be made clear to the House in due course. However, the key thing is that I have no doubt—in preparation for this debate, I have obviously had helpful discussions with the HSE—about the HSE’s commitment to an ongoing and high level of effective intervention in the construction industry.

One feature of the construction industry is that it is clearly different from other industries. At its best, it is capable of great things and great successes, and it has a great deal of expertise in controlling health and safety risks to workers. Of course, even many of those temporary inspectors I mentioned, who soon will not be working for the HSE, will go back into the industry and take their expertise with them.

I said that there were just over 100 fatalities a decade ago. Two decades ago, 154 construction workers were killed. Progress, therefore, has been made—fairly considerable progress over a period of 20 years or more. The hon. Member for Paisley and Renfrewshire North mentioned the Donaghy inquiry and the issue of the Gangmasters Licensing Authority. I know that he has been involved with previous private Member’s legislation on the GLA and I also know that there is a private Member’s Bill on the matter before the House at the moment.

[Jim Sheridan]

The Minister has just announced figures about fatalities. Do they include people who lost their lives as a result of occupational or industrial disease, such as mesothelioma?

[Steve Webb]

The figures that I gave—for example, the figure of 154 fatalities for two decades ago—were for construction workers who were killed in accidents at work. I entirely take the hon. Gentleman’s point that issues that emerge during refurbishment work, for example with asbestos, silica and so on, are also very important. Indeed, I will try to reassure him on that particular point, as he raised it. The HSE is undertaking work on refurbishment and even as we speak that work is ongoing. The national refurbishment inspection initiative targets small refurbishment sites where a disproportionate number of serious and fatal accidents occur. The current initiative has been run periodically for several years and it is going on now between 14 February and 11 March. Although full data are not yet available, to date nearly 1,200 sites have been visited, involving more than 1,400 contractors and, alarmingly, breaches of health and safety legislation were found to be so significant that enforcement notices were required at 254 of those 1,200 sites. I join all hon. Members who have contributed to the debate in not being remotely complacent about where we are now on health and safety in construction.

The challenge is to ask what effective regulation would look like. I fully respect the argument that says, “Bring the Gangmasters Licensing Authority supervision into construction”. I can see why that argument is made. My reservation is that the health and safety rights of people in the construction industry are there already. The hon. Member for Paisley and Renfrewshire North mentioned bogus self-employment. Whether somebody is self-employed or employed, they have health and safety rights. Regarding some of the points that the hon. Gentleman made about those in bogus self-employment, there are obviously issues about tax. However, there is not much evidence—if any—that construction fatalities are higher among those who are notionally classified as self-employed as opposed to those who are employed.

The Gangmasters Licensing Authority is clearly a generalist authority that looks at issues such as minimum wage compliance, tax and national insurance, as well as health and safety. The danger is that if we bring construction within the scope of that authority we might get, at one level, duplication and potentially we might get a sort of box-ticking mentality, whereby people think, “We’ve got to satisfy this regulator and that regulator”. There could be regulatory confusion if we have different bodies trying to enforce health and safety.

I also want to give an idea of the scale of what might be required if we bring construction within the scope of the GLA. At the moment, the GLA licenses 1,200 gangmasters. If the licensing scheme was extended to cover the construction industry comprehensively, we could be talking about 200,000 licences. The cost of regulating the 1,200 licences in the sectors covered by the GLA already—agriculture, horticulture, shellfish gathering and associated industries—is just over £4 million a year, of which the taxpayer pays about £3 million. Clearly, there would be economies of scale if the GLA’s licensing scheme was extended to cover the construction industry, but simply pro rata-ing those figures to the full size of the construction industry would mean licensing costs of £600 million.

[Jim Sheridan]

rose—

[Steve Webb]

I will give way shortly. Of that £600 million, the taxpayer would pay £400 million. On a pro rata basis, we would potentially need 8,000 new inspectors. I do not claim to be an authority on the subject, but I find it difficult to imagine that there are 8,000 spare inspectors out there to be had, although people could be trained to become inspectors. In addition, creating this type of parallel regulatory structure alongside the HSE’s work is problematic. If there was £400 million to be spent—or indeed anything like it—channelling it through what is quite an effective existing regulator, enabling it to do more, might be a better idea.

[Jim Sheridan]

The Minister has referred to £3 million of taxpayers’ money being used to pay the licensing costs of the GLA. However, does he take into account the fact that gangmasters are then registered and legalised, and migrant workers are registered and legalised and they then pay tax and national insurance, which they would not be paying otherwise, so there is a net benefit to the Treasury?

[Steve Webb]

The figures that I am referring to are the gross running costs of the GLA and the revenue from licences. I am not sure about the potential payback of such a scheme in the construction sector. One thing to consider is that we would end up licensing in practice the entire sector—as it were, the good guys and the bad guys—and there would be a lot of dead weight in areas where there already was compliance with tax and national insurance legislation.

The hon. Gentleman also asked about the role of the construction skills certificate scheme. That is certainly a well regarded industry-run scheme and a big one, although there are many similar schemes across the industry, as I am sure he knows better than I do. My understanding is that the CSCS or an equivalent is already required under Government contracts, which I very much welcome. However, when it comes to legislating for the CSCS, for example, one issue that arises is whether we should choose that particular scheme or others. On balance, the health and safety at work and construction regulations already require workers to be trained for health and safety.

To conclude, I take the issues that the hon. Gentleman has raised very seriously. We want to make more progress on them and further announcements will be made by the Government in due course, but we will continue to take construction industry safety and fatalities seriously, as the hon. Gentleman quite properly says that we should.

Social Security

Steve Webb Excerpts

Monday 7th March 2011 Ministerial Corrections

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Government give the House a time scale in which it will consider these matters to do with CPI? Obviously, council tax also has to be taken into account.

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.

[Official Report, 17 February 2011, Vol. 523, c. 1178.]

Letter of correction from Mr Steve Webb:

An error has been identified in the answer given on 17 February 2011. In the third paragraph of my response I meant to say CPI not RPI.

The correct answer should have been:

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in CPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.

Social Fund Crisis Loans

Steve Webb Excerpts

Thursday 3rd March 2011 Written Statements

[The Minister of State, Department for Work and Pensions (Steve Webb)]

To meet genuine need, and in addition to continually recycling from the £1.3 billion fund, this Government are committed to maintaining core funding of £178 million a year for the discretionary social fund scheme over the spending review period.

However, since the introduction of remote telephone applications in 2006, there has been an unjustifiable growth in the use of crisis loans. The number of awards made has increased from around 1 million to 2.7 million while spending has almost tripled, reaching £233 million in 2009-10. In the last 12 months alone, over 17,000 people received 10 or more crisis loans.

On current forecasts, the resources for 2011-12 will only satisfy two-thirds of expected demand. Without corrective action to bring spending back under control the shortfall would need to be met from the budgeting loan scheme.

The situation is unsustainable, so I am announcing the introduction of three changes to the crisis loan system, to rebalance supply with affordable resources, to ensure funding for community care grants is protected, and to ensure we can continue to make budgeting loans throughout the year.

From 4 April 2011:

we will no longer pay crisis loans for items such as cookers and beds. There will be residual support for people following a disaster such as flooding;

we will reduce the rate paid for living expenses from 75% down to 60% of benefit rate. This will align with the position for jobseekers allowance cases paid at the hardship rate; and

we will implement a cap of three crisis loan awards for general living expenses in a rolling 12-month period.

Without these measures budgeting loans would need to be withdrawn before Christmas. This would leave significant numbers of people on low incomes with little alternative but to turn to high cost or illegal lending.

Trawlermen’s Pensions

Steve Webb Excerpts

Wednesday 2nd March 2011 Commons Chamber

[The Minister of State, Department for Work and Pensions (Steve Webb)]

It is common courtesy, simply as a matter of routine, to congratulate the Member who has secured a debate, but in this case I sincerely congratulate the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), because he has a track record of campaigning on this issue over a number of years. I looked at some of the articles on his website, and I recognise that he and other right hon. and hon. Members have done an important service to their constituents and the trawlermen. He spoke powerfully and evocatively about the lives that they led and their quite proper demand for justice.

I pay tribute to the right hon. Gentleman for that work and for, as he said, giving a voice to what has to some extent been a silent campaign. I must admit that when the titled “Trawlermen’s pensions” came out of the hat, I raised an eyebrow and wondered what the subject was. As I have read up on the issue and as my officials have provided me with briefings, I have been quite startled by, as has been said, the shoddy record keeping of the various schemes right from the beginning. It seems incredible to think that a pension scheme could have just a name, an initial and a date of birth—for example, “Smith, J., 1920”, or whatever. It just seems hopeless.

It was clearly a different world back then. We did not have the Pensions Regulator, a pensions ombudsman, the Pensions Advisory Service or the pension tracing service. A lot of those institutions have come about partly to ensure that such situations do not arise again. I want to talk predominantly about the trawlermen and their situation this evening, but I should also say that good record keeping in company pension schemes has not completely gone away as an issue. Even this year, the regulator has been doing more work to ensure that schemes keep proper records. I would like to use this opportunity to reiterate the vital importance both of schemes keeping proper records—something that the trawlermen’s case demonstrates—and, if records are not in order, of doing something now to put them in order to avoid a recurrence of anything similar.

Let me draw together where we are now and where we go from here. I recognise that in the limited time available I might not be able to cover all the detail that I would like to, so let me say that I would be more than happy to meet the right hon. Gentleman and his colleagues to discuss how we might take matters further, although I do have an update for him of where we have progressed things in the interim.

We are talking about five schemes, all of which are now administered by Aviva. One confusing aspect of this situation is that the schemes have traded under different names at different times. The principal scheme is the fishermen’s pension scheme, which had around £1.3 million of assets as of June 2010, as the right hon. Gentleman said—obviously these things fluctuate—and around 4,800 remaining members, but there are four others: the Fleetwood fishermen’s scheme, the Scottish trawler fishermen’s pension scheme, the Fairtry pension scheme and the Hull fish merchants’ pension scheme. The right hon. Gentleman talked about tuppence-ha’penny and fourpence going in, but what is unusual about those schemes is that, essentially, the amounts coming from them are in many cases not pensions at all, but lump sums of, say, £300 or £400. This leads to confusion about where some of the money has gone. If someone was told that they were paid a pension but they said that they were not, it would be obvious and easy to decide, but on the whole we are talking not about pensions but about a right to a small amount relative to a lifetime of pension receipt. In the past, those amounts were often paid as lump sums.

[Alan Johnson]

I am grateful to the Minister for giving way and for agreeing to a meeting. The amounts involved average £600, and, as with any average, many of the amounts are higher. The people involved did not have bank accounts, and when the battle rages about disputed payments—there are about 53 cases—it is important to recognise that fact. One of my constituents, unusually, had a bank account in the 1980s and he was able absolutely to prove his case. Aviva said it had sent the money via the seaman’s mission and the employer so that it eventually ended with him, but he was able to prove from his bank account that the money had not arrived. In the one case where there is any proof, we can see that it clearly supported the side of the trawlermen and their families. That is why we say that people should be given the benefit of the doubt.

[Steve Webb]

One issue that I know has been suggested to the right hon. Gentleman in the past, but as far as I am aware has not so far been taken up—he will correct me if I am wrong—is how far the pensions ombudsman could be used for this purpose. There are issues of cases being out of time, but it might be worth considering whether the pensions ombudsman can provide a route to resolve some of the disputed cases. It is an issue that we could discuss further.

The right hon. Member for Kingston upon Hull West and the hon. Member for Great Grimsby (Austin Mitchell) stressed the need to wind the schemes up as soon as possible. One problem has been the absence of trustees and the difficulty of tracking people down. I asked my officials to speak to the Pensions Regulator on that very subject. As the former Secretary of State will know, the regulator is operationally independent of the Department and therefore cannot be told what to do by me, although I am sure that he is doing his best for the trawlermen.

We spoke to the Pensions Regulator’s office today to find out the latest information and to try to ensure that things move forward as quickly as possible. The regulator confirmed that he expects Capital Cranfield to be appointed to the other three schemes where it is not already the trustee. I understand that the appointments are imminent. Capital Cranfield will be in a position to resolve issues quickly, and I certainly hope that it will do so.

I should add, given that the hon. Member for Great Grimsby asked about costs and charges, that Capital Cranfield has confirmed that it is willing to take on the trusteeship of the additional schemes at no charge. The regulator is taking all urgent steps to get the trustees in place quickly—within weeks. I hope that getting those trustees in place and getting the schemes dealt with by a single trustee will represent an important step forward. My impression from the briefing provided by Capital Cranfield is that the lessons learned from the biggest scheme can be applied quickly across all schemes to bring these matters to a satisfactory conclusion.

The decision about what should happen to the balance of the funds is important. The right hon. Gentleman will appreciate that this issue is governed by a number of factors—fundamentally, trust law and tax law. There are formidable barriers to taking money from a pension fund under trust law for which tax relief and so forth is given. There is quite a web—if you will pardon the phrase, Mr Speaker—of complex legislation surrounding the use of that money for an entirely laudable purpose, but one that is different from the trust’s original purpose. I believe that Capital Cranfield has looked at that option and I know that the right hon. Gentleman is in dialogue with it. I would be happy to discuss it further with him when we meet, but I place on record the fact that there is a significant barrier to that approach.

Very much prompted by the right hon. Gentleman’s efforts, Aviva undertook the Find a Fisherman exercise. I understand that one further exercise is being undertaken to try to track down those who might not have made claims. This uses a service known as Assets Reunited and it is used to track down any people not already found. It is a dwindling exercise, but I am pleased to hear that this ongoing effort is being made.

The right hon. Gentleman asked to whom the companies involved are answerable. There is a sequence. They are answerable initially to the members of the scheme, who have some representation—typically they are represented by the trustees, although the position varies—and are then answerable to the regulator. The regulator is becoming very involved, and I welcome the work that it has already done. In the event of maladministration, that is where the pensions ombudsman comes in. I should be happy to discuss with Opposition Members the scope for involving the ombudsman, particularly in the disputed cases.

I understand that the overall sum that we are discussing is about £1.7 million across the five schemes, and, as we have heard, there are between 6,500 and 7,000 untraced members. Given that the record keeping was so poor, it is not surprising—although entirely to be condemned—that it has been impossible to trace half the members involved. It is reasonable to assume that, thanks to the efforts of the Pensions Regulator to improve record keeping, the failure to find members will not be repeated on the same scale. As I have said, the problem does not occur as much in large, well-run schemes, but one of the features of pension funds is a very long tail. In many very small schemes record keeping may not be particularly good, and problems not dissimilar to this may well have arisen in other schemes. As was pointed out by the hon. Member for Great Grimsby, over a period the assets of the schemes and member records have passed through various companies owing to corporate amalgamations and acquisitions, which has increased the difficulty of tracking people down and finding out what has happened to the money.

Capital Cranfield has expressed the hope that matters will be pretty close to resolution by, certainly, the end of this year. I know that the right hon. Member for Kingston upon Hull West and Hessle has been involved in the issue for about four years, but these schemes were set up 50 years ago, and it has been a long saga. I entirely agree with the right hon. Gentleman that the sooner we can resolve the matter and convey the money to the people who should have it, the better.

There is also the question of the balance of the fund. I shall leave aside for the moment the idea of an alternative charitable or other use. In the normal sequence of events, part of the balance would be used to buy a deferred annuity for any deferred member who might no longer be a trawlerman—presumably that applies to pretty much all of them now—and who had not yet reached pension age within the scheme: in other words, to buy a product that would match the pension promise made to that scheme member. That would be the first call on the funds, but a second possibility would be the purchase of an insurance policy. If new members turned up after the scheme had been wound up, the policy would pay out and they could also make a claim.

If, after all that, there was a surplus in the fund, it would be a matter for the trustees and the administrators to consider how the money is allocated. I understand that the most straightforward option available—although it is a matter for them, not for me—is to allocate the money to the people who are still members of the scheme. One of the questions that I have asked when we have discussed the matter in the Department is whether it would be possible to pay it to the people who had received the lump sum some years ago, but in many cases that money was paid and those people cannot be traced.

I congratulate the right hon. Member for Kingston upon Hull West and Hessle on raising an important issue of injustice. I am happy to commit myself to working with him and with the Pensions Regulator to try to bring the matter to a satisfactory conclusion.

Question put and agreed to.

Social Security

Steve Webb Excerpts

Thursday 17th February 2011 Commons Chamber

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I beg to move,

That the draft Social Security Benefits Up-rating Order 2011, which was laid before this House on 3 February, be approved.

[Madam Deputy Speaker]

With this we shall discuss the following motion on pensions:

That the draft Guaranteed Minimum Pensions Increase Order 2011, which was laid before this House on 3 February, be approved.

[Steve Webb]

I shall deal briefly with the Guaranteed Minimum Pensions Increase Order 2011. The order provides for contracted-out defined benefits schemes to increase by 3% their members’ guaranteed minimum pensions that accrued between 1988 and 1997. Increases are capped at this level when price inflation exceeds 3%. This is a technical matter that is attended to on an annual basis, and I suspect that it will not be the focus of our discussions.

The broader uprating of social security benefits this year is a landmark event for two reasons. First, it enshrines the restoration of the earnings link for the basic state pension. Secondly, it introduces a clear and consistent approach to price measurement through the move from the retail prices index to the consumer prices index. I suspect that a lot of our debate will focus on that issue, but I want to turn first to pensions and pensioners. It is more than 30 years since the link between the basic state pension and earnings was broken. Although Labour Members talked a good game towards the end of their time in office, they had 13 years in which to restore that link, and they failed every year to do so.

The coalition Government said that they would restore the earnings link for the basic pension, and that is precisely what we have done. Indeed, we have gone one better with the introduction of our triple guarantee, which means that the basic pension will be increased by whichever is highest of earnings, prices or 2.5%. We estimate that the average person retiring on a full basic pension this year will receive more than £15,000 extra in basic state pension income over their retirement than they would have done under the old prices link. This important change will be a benefit to existing and future pensioners. It will provide a more generous basic state pension, giving a solid financial foundation from the state. So from this April, the standard rate for the basic state pension will rise by £4.50 a week, taking it from £97.65 to £102.15 a week. The introduction of this triple guarantee will finally halt the decline in the value of the basic state pension for current and future pensions. It will also mean that even in times of slow earnings growth, we will never again see a repeat of derisory increases such as the 75p rise presided over by the previous Government in 2000.

In addition to restoring the earnings link, we have taken action to ensure that the poorest pensioners do not see the increase to their basic state pension clawed back in the pension credit. This has been done by linking the minimum increase for the pension credit to the cash increase for the basic state pension this year. Therefore, from April 2011, single people on pension credit will receive an above-earnings increase to their standard minimum guarantee of £4.75, which will take their weekly income to £137.35. Of course, as you will be well aware, Madam Deputy Speaker, this is in addition to the key support for pensioners that the coalition protected in the spending review: free NHS eye tests; free NHS prescription charges; free bus passes; free TV licences for over-75s; and winter fuel payments exactly as budgeted for by the previous Government. In addition, we have reversed a planned cut—one of Labour’s many ticking time bombs that I discovered in my in-box. The previous Administration had planned to reduce the cold weather payment from the pre-election—I use that phrase deliberately—rate of £25 a week to just £8.50 a week. We took the view that despite money being tight, helping elderly people on a low income to heat their homes in winter was vital and a priority for the coalition. I can update the House by saying that we have paid slightly more than we thought—an estimated 17.2 million payments worth an estimated £430 million, which we believe is money well spent.

[Kate Green (Stretford and Urmston) (Lab)]

Naturally, elderly people will be relieved by the news about the winter fuel and cold weather payments. However, is not the Minister concerned that in the longer run the cut in funding for Warm Front will mean that those pensioners have higher fuel bills?

[Steve Webb]

The hon. Lady is absolutely right that home insulation is an important part of this: it is not just about helping people to pay their fuel bills, but about improving the insulation standards of their homes. Our colleagues at the Department of Energy and Climate Change are working on the issue and will shortly introduce proposals that will build on the energy rebate scheme, which took place in 2010, whereby low-income pensioners and others—the most vulnerable households—received direct payments. I understand that a further scheme will shortly be brought forward that will benefit exactly the people she talks about.

Despite the pressure on public expenditure, the coalition, through these orders, will spend an extra £4.3 billion in 2011-12 to ensure that people are protected against cost of living increases, and, of that, fully £3.4 billion will be spent on pensioners.

Let me move on to the second landmark change—the move to the consumer prices index. At one stage, the House thought that it might have a jolly three hours on price indices after an all-night sitting, so we are probably all relieved that we got a bit more sleep before entering this territory. The purpose of the annual uprating exercise is to ensure that the purchasing power of social security benefits is protected against inflation. We view the CPI as the most appropriate measure of price inflation for this purpose, although we would acknowledge no single index is perfect. The CPI is

“more reliable because, taking account of spending by all consumers, this consumer prices index gives a better measure than the old RPIX measure of spending patterns. It is more precise because, as in America and the euro area, it takes better account of consumers substituting cheaper for more expensive goods.”—[Official Report, 10 December 2003; Vol. 415, c. 1063.]

They are not my words, but those of the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown). I could not agree more. Increases in line with the growth in the CPI maintain benefit and pension value. The CPI is the country’s headline measure of inflation, forming the target for the Bank of England’s Monetary Policy Committee. I remind the House that the legislation under which this order is made requires that we reflect the “general level of prices”.

It would be remiss of me not to thank the Leader of the Opposition for his support for our position on this issue. When Laura Kuenssberg of the BBC challenged him at a press conference on 11 January, saying,

“You’ve said time and time again that you will not oppose every cut; but four months into the job, the list of cuts that you will support remains pretty short,”

the Leader of the Opposition said:

“Let me just say on the cuts, I listed four cuts that we had not opposed, but it’s not just four cuts...from Employment Support Allowance to some of the changes to Disability Living Allowance, to the changes to the Consumer Price Index and RPI, to a range of other measures, we’re not opposing all the cuts.”

I am very grateful to him for his support.

[Dame Anne Begg (Aberdeen South) (Lab)]

Would the hon. Gentleman like to quote the Leader of the Opposition further, where he said that if there were a case to be made for shifting to the CPI, it would be a temporary move, not a permanent one?

[Steve Webb]

I am grateful to the hon. Lady. I have heard it intimated that the Opposition support using a temporary measure of inflation before using a different one in the future. I can see the politics of that, but not its coherence. The duty on my right hon. Friend the Secretary of State is to measure the general increase in price levels in an appropriate way, and it would be very odd if he were to decide one year that the CPI, with its method of calculating on a basket of goods, was the right answer, and then four years later, because there was a bit more money, that there was a different answer. That is not the legal duty on my right hon. Friend.

[Dame Anne Begg]

Will the hon. Gentleman clarify whether the move from RPI to CPI has anything to do with deficit reduction, which would be a reasonable argument as to why it might be temporary?

[Steve Webb]

The hon. Lady asks an important question. I will deal specifically with the budget deficit. However, when we looked at this issue as a new Government, we were prompted particularly by the context of a year in which the RPI had been negative. We arrived in May 2010. In April 2010, uprating had been nil for the state earnings-related pension scheme, public sector pensions and all the connected pensions. That is not because inflation for pensioners had been nil—I have never met a pensioner who thought they had negative inflation in the year to September 2009—but because that is what the RPI said. The RPI was clearly not doing its job then, and that focused our mind on whether it was the right thing. It is true that, on average, the CPI tends to be lower—not always, but generally. I have looked at the past 20 years, and in five of those the RPI has been lower than the CPI. That improves the situation in a difficult financial position; I would not pretend that it does not. However, our job is to have an appropriate, stable measure of inflation, and that is what the CPI achieves. [Interruption.] Indeed, it is much less volatile.

I sometimes think—perhaps this makes me sound a bit sad—that if the CPI were a person, it would be taking people to court for slander and libel for some of the things that have been said about it over the past few weeks and months. It is almost as if it is a stray number that we found on the back of a fag packet and decided to use to up-rate benefits. In fact, it is a careful calculation by the Office for National Statistics, with excruciating amounts of thorough methodological detail about the general increase in consumer prices. It is not the only measure, but it is an entirely decent and proper one.

I want to respond to some of the myths that have grown up about CPI, and to stress that this is not a choice between a good index and a bad index, but about trying to find the most appropriate measure for the purpose. The first argument that is made is that CPI is always lower. As I have pointed out, that is not true, although it is lower on average over the long term. People criticise the methodology that is used. I will explain what the difference is and why we think it is appropriate. Somewhat more than half the difference between RPI and CPI is to do with the way in which CPI assumes that people change their behaviour when prices change. CPI uses a substitution method, which assumes that people substitute for cheaper goods. Interestingly, the Institute for Fiscal Studies, which has looked at this issue, has said that that difference is a

“sound rationale for the switch”

that we are making today. RPI does not do that. Even the Royal Statistical Society, which has been critical of aspects of our proposals, states that RPI arguably overstates inflation as a result. I stress that we are trying to find not a high number or a low number, but an appropriate number with an appropriate method. Particularly for those on benefits, the substitution approach is important.

It is worth adding in parenthesis that people who say that RPI is the only possible way in which we can uprate pensions, because it is appropriate for pensioners, seem to be oblivious to the fact that RPI excludes the poorest fifth of pensioners from its consumption patterns. Their spending patterns are deliberately excluded in the construction of RPI. It seems odd that people are so wedded to RPI on purity grounds when it excludes the most vulnerable pensioners, about whom we should be most concerned.

The second myth is that the UK Statistics Authority does not think that CPI is a proper measure of inflation. [Interruption.] The hon. Member for Leeds West (Rachel Reeves) says that she has not said that, but I assure her that I have seen it in plenty of letters. The UK Statistics Authority oversees the Office for National Statistics, so it would be very odd if it thought that the ONS was producing dodgy figures. CPI is the headline measure and it is the target for the Bank of England, so it is hard to see how it is not a proper measure of inflation.

Thirdly, some say that the Royal Statistical Society does not like CPI. It has certainly criticised some aspects of the change, but it takes a more balanced view and sees limitations in CPI and RPI. As I have said, no single measure is perfect. The Royal Statistical Society has highlighted the issue of housing costs, and I will come on to that because it is clearly important.

The fourth thing that people say is that this is a real cut to the value of benefits. [Interruption.] The hon. Member for Glasgow East (Margaret Curran) says that it is, but it is not. What we are doing is measuring inflation in an entirely proper manner and increasing benefits—revaluing and reflating them—every year in line with inflation, measured in an appropriate way. That is what indexation is meant to do. There is no argument for saying that it is a cut when we are increasing benefits and pensions by inflation. Only a couple of nights ago, the lead story on the BBC news was “Inflation hits 4%”. Indeed, CPI inflation had hit 4%. That was the headline, that is inflation, and that is what we are uprating benefits by.

[Stephen Timms (East Ham) (Lab)]

I think that I know the answer to my question on the basis of what the Minister is saying, but I want him to confirm it. Is it the Government’s intention that the change from RPI to CPI will not be temporary, but permanent?

[Steve Webb]

Yes. For all the reasons I have been giving, we regard CPI as a more stable and appropriate measure for uprating pensions and benefits. We see no reason to change it in the future. The arguments that I am advancing, it seems to me, will stand the test of time.

There is an issue with the treatment of housing costs. One of the reasons why CPI is more appropriate than RPI for pensioners is that only 7% of pensioners have a mortgage. Mortgage interest fluctuations dominate the changes in RPI, sometimes swooping it up and sometimes swooping it down. The year in which RPI went negative, it happened because mortgage rates slumped. Not only was that of no benefit to the vast majority of pensioners; it was a penalty to the vast majority of pensioners because their savings rate fell. Just at the point when pensioners were suffering through low interest rates, RPI came along—to humanise it once again—and kicked them in the teeth and said, “Oh, inflation is falling so you don’t need a benefit rise.” I do not see how that can be right.

[Kate Green]

I am interested in the Minister’s argument for making CPI permanent. Will he comment on Lord Freud’s response to the Select Committee on Work and Pensions on the indexation of housing benefit, in which he suggested that it would be for this Parliament only?

[Steve Webb]

To be clear, my noble Friend was talking about the indexation of the housing benefit limit of the 30th percentile to CPI. We have said specifically that that will be looked at after two years, so that is a quite separate point. The fundamental point I am making is that the more one looks at the argument for using CPI for pensioners, the more powerful it gets.

There is an issue about the role of owner-occupier housing costs, as CPI includes rents and certain housing costs. The CPI advisory committee has said that the ONS should consider whether owner-occupier housing costs should be included. We are entirely open to that proposition and do not rule it out. It is interesting that the CPI advisory committee has already ruled out doing so by lumping in mortgage interest payments in the same way as in RPI. It accepts that putting that into CPI in the way it is put into RPI would not be a good way of doing it. We will obviously consider what the committee comes up with.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Government give the House a time scale in which it will consider these matters to do with CPI? Obviously, council tax also has to be taken into account.

[Steve Webb]

I am grateful to the hon. Lady for raising that point. We are, of course, driven by the Office for National Statistics, so we are not cobbling together our own index. It is undertaking careful work over the next two years. We will then look at its findings and consider whether it is appropriate to use a CPIH-type measure. We are governed by the ONS’s time scales.

I will comment briefly on benefits for people of working age. Unfortunately, last year the Government got themselves into a bit of a mess over uprating. As I have said, RPI was showing negative inflation, mainly as a result of falling mortgage interest. As a result, benefits such as additional state pensions did not increase at all. They would have done under CPI. Other benefits, mainly the disability and carers’ benefits, were the subject of what my notes call a bewildering fudge—I think that roughly sums it up. In the end, disability and carers’ benefits last year were increased by 1.5%, but on the proviso that the pre-election—sorry, that word slipped out again—increase in 2010 would be clawed back in 2011. In other words, that would have happened this year in this order. [Interruption.] The Secretary of State says that we had to decide whether to pick up the ticking time bomb of that 1.5% clawback as well.

Members will be pleased to know that the 2011 uprating order before the House today contains no such sleight of hand. It is based on the straightforward proposition that, aside from increases in the basic pension and pension credit that have already been explained, the other mainstream social security benefits and statutory payments will increase by 3.1%, in line with the annual growth in RPI. There will be no attempt to recoup the value of the 1.5% fudge that we inherited from the previous Government.[Official Report, 7 March 2011, Vol. 524, c. 3MC.]

Finally, I will touch on occupational pensions. Such pensions are not directly the subject of the orders. The changes that relate to the revaluation and indexation of most occupational pensions were the subject of the revaluation order that was tabled before Christmas. However, because of the close link in all pensions matters—everything is connected to everything else—I ought to say a word about this matter. CPI is being used for all social security benefits and additional state pensions, and through statutory linkage, CPI applies to public sector pensions. We had to decide what to do for private sector pensions. I stress that the role of Government is to set the floor for increases to private sector pensions and we had to make a judgment on that. We took the view that the Secretary of State could not decide that inflation was CPI for things that we pay out, but RPI for things that other people pay out. As far as we are concerned, inflation is inflation and we have to be consistent. CPI is therefore the right floor for occupational pensions. However, I stress the word “floor”. Schemes are entirely at liberty to make more generous increases if they wish. This statutory requirement increases only in respect of service after 1997, whereas some schemes index service before that.

[Dame Anne Begg]

Will the Minister quantify the number of private occupational pensions that will not adopt the floor? When the initial announcement was made, the impression was that all private occupational pensions would move to CPI rather than use RPI. I understand a number of them have RPI in their schemes and therefore will not move to the new index. Can the Minister say anything about the volume of such occupational pensions?

[Steve Webb]

When we produced the initial impact assessment on the changes, we divided schemes into four groups according to whether they revalued by RPI or CPI and whether they indexed by RPI or CPI. We found that a good deal of revaluation was done in terms of the revaluation order and hence would go to CPI, but that a lot of the indexation was in terms of RPI. We have gone out into the field and talked to those administrating schemes, and we are revising our estimates of the proportion that will respond to this change.

The hon. Lady brings me on to the point that I wanted to make: some schemes have RPI hard-wired—for want of a better phrase—into them. We faced the difficult decision of whether to override that and put CPI in or whether to say, “Rules are rules, scheme promises are scheme promises,” and keep it how it was. We announced at the start of December that we felt that people’s confidence in pensions is important, and therefore that we would not override scheme rules. If someone has joined a private sector occupational scheme that has RPI in the scheme rules, we will not override it. Obviously, each scheme will make its own decision on how to respond if they have the flexibility to do so, but many schemes do not have that, and therefore will not make the change. We will publish updated estimates of the proportions.

[Mr Jim Cunningham (Coventry South) (Lab)]

I apologise to the Minister and to you, Madam Deputy Speaker, for coming in late to the Chamber.

Will that also apply to the public sector schemes, because I have had a number of letters about those? Will the Minister clarify that matter for me?

[Steve Webb]

I am grateful to the hon. Gentleman for that point, because there is a difference between public and private schemes. The latter very often have the words “retail prices index” or “in line with statutory provisions” in their rules. The rules of public sector pensions did not have the words “retail prices index” in them; statutorily, they simply link to whatever the Government of the day do with state earnings-related pension schemes. Whatever amount or percentage SERPS went up by has always been the legal entitlement for members of public sector schemes, and we have not changed that or the law on it. Obviously, we are defining inflation differently, but the legal entitlement of members of public sector schemes was always whatever happened to SERPS, and we have not changed that.

[Albert Owen (Ynys Môn) (Lab)]

The Minister is giving the House a very thorough outline of his plans, but does he acknowledge that the people he just mentioned—many thousands of them, and those on deferred pensions—will lose out considerably because of the change brought about by the order?

[Steve Webb]

It is important for the people who have contacted the hon. Member for Coventry South (Mr Cunningham) to remember that we are changing two things. We are changing, first, the indexation of the basic state pension that they will receive, and, secondly, the indexation of SERPS and therefore public sector pensions. Overall, most pensioners, and particularly those on lower incomes, will benefit net from the two changes taken together. In other words, although earnings are depressed at the moment, in the long term the earnings link is a substantial boost. The CPI change on average means about 0.8% or 0.9% less over the long run, and the earnings link means close to 2% extra, so people with very large private or public sector pensions will lose net, but people with smaller pensions—the people who are most worried about the changes—will probably gain net. I am grateful to the hon. Member for Ynys Môn (Albert Owen) for raising that point.

[Albert Owen]

Can the Minister say how many people he is talking about? No one has written to me to say that they will benefit from the change, but considerable numbers of people have said that they will lose. I realise that that is the nature of the beast, but has the Minister done any impact assessment?

[Steve Webb]

People often miss one important point. The numbers on pensions in payment are in a sense straightforward, because we know the level of the state pension and the average pension in payment. To give the hon. Gentleman a flavour, the average occupational pension in payment is £70 a week, and the basic state pension is of the order of £100 a week. If we give an extra 2% on the £100 and take 0.8% off the £70, it is clear that people in that typical situation will be better off. Those are long-term changes, so there will be a big cumulative effect for someone who is 25. Of course, they do not see the boost to the state pension—they do not see that, in 40 years’ time, 40 years’ worth of earnings link will be embodied in their state pension. It is very hard to project that, which is why those people do not see it. Overall, I am confident that large numbers of pensioners will be net beneficiaries of the change.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I am grateful to the Minister for clarifying the situation on SERPS. Will he confirm that the previous Government did not uprate SERPS in 2010?

[Steve Webb]

My hon. Friend is quite right. One of my first tasks as a Minister was quite strange. I had to write ministerial letters to say why we the Government—meaning my predecessors—had frozen people’s SERPS pensions, which was precisely because the RPI was negative, yet inflation was not.

[Katy Clark (North Ayrshire and Arran) (Lab)]

When the Chancellor announced the change in his emergency Budget last June, he said that it would save more than £6 billion a year by the end of this Parliament. If that is true, it must surely mean that individuals will be worse off.

[Steve Webb]

Just to be clear, my right hon. Friend the Chancellor was talking about the CPI indexation of all social security benefits, not just pensions. Clearly, compared with previous plans, benefits for people of working age will generally increase by less over the Parliament, which will lead to significant savings. I should mention therefore in passing that any political party that went into the election promising to reverse that would also have to indicate where many billions of pounds would come from over the course of a Parliament. However, specifically for pensioners, the earnings link in the long-term is much more generous than the reduction from the CPI change.

[Stephen Timms]

The Minister says that the order enshrines the earnings link. Is there a reference in the text to earnings uprating? I could not find it, but if there is one, where is it?

[Steve Webb]

No. This is the first set of upratings to which we have applied the triple lock. Indeed, we have gone further, and said that because RPI was built into the spending plans, we did not want to go lower than that, so there is an RPI increase of 4.6% this April. When we reintroduced the earnings link last summer, we did not know what the earnings figures would be, but had earnings been higher than any of those figures, we would have used it.

I ought to move on, because many hon. Members want to contribute to the debate. To conclude on occupational pensions, we have not overridden scheme rules. As the Chair of the Work and Pensions Committee pointed out, many people will still get RPI, if that is what the scheme rules say, but those that are free to link to CPI may do so. We will report shortly on our research on the balance between different schemes.

The approach adopted in the uprating order seeks to strike a fair balance between the interests of benefit recipients and pensioners, and the burden placed on the taxpayers of the UK, who often end up footing the bill. Despite the fact that the nation’s finances remain under severe pressure, this Government will spend an extra £4.3 billion in 2011-12 to ensure that people are protected against cost-of-living increases.

We have restored the link between earnings and the basic pension and confirmed that most people on pension credit will benefit from the cash increase enjoyed by those on the state pension. The move to CPI for the uprating of the majority of other pensions and benefits will result in an uplift of 3.1% from April, and sets the future of uprating on a more appropriate, consistent and stable basis that is fair to individuals and fair to the taxpayer. Through this package of uprating, I have outlined our firm commitment to ensure that no one is left behind, and I commend the order to the House.

--- Later in debate ---

[Stephen Timms]

Well, the Secretary of State has shifted back a little way towards the Minister by suggesting that the Government view the change as permanent. As for the view of my party, I simply refer the Secretary of State to what the leader of my party has said, which is that the suggestion that the change should be made for a period—perhaps up to three years—would be something that we could consider. If that proposition were on the table, we would be happy to consider it. But sadly it is not. As we have heard from the Minister—and as I think the Secretary of State has now reluctantly confirmed—the Government’s intention is that this arrangement should be permanent. That is what I strongly object to.

I was just about to refer to what the Civil Service Pensioners Alliance said. It

“firmly”

rejects

“the assertion that the CPI is a ‘better’ measure of inflation for pensioners.”

It urges the Government

“to take account of the advice of their own statisticians before embarking upon a change which will adversely affect the incomes of pensioners for the rest of their lives and not just for the term of the current financial crisis.”

Age UK has made a similar point.

All the main public service schemes are contracted out of the additional state pension. Of course, in the current climate we need restraint over public sector pay and pensions, but one group that the proposed permanent change will hit particularly hard is those who serve in the armed forces and their dependants, who rely on their pensions at an earlier age than almost anyone else. A permanent switch would, as I understand it, mean that somebody who had perhaps lost both legs in a bomb blast in Afghanistan could miss out on half a million pounds in benefit and benefit-related payments over the rest of their life. War widows, too, will lose out severely. For instance, if this change were made permanent, the 34-year-old wife of a staff sergeant killed in Afghanistan would be almost three quarters of a million pounds worse off over her lifetime.

If Ministers are going to pursue this policy, they need to explain why those serving in Afghanistan—already in some cases, as we have heard in the last few days, facing redundancy of which they were informed by e-mail—should see their pensions reduced for the rest of their lives compared with the expectations that they have had until now, and why—

[Steve Webb]

The right hon. Gentleman has raised a serious point. I think both sides of the House would be united in our respect and admiration for our forces and our forces veterans, but surely the issue is that we pay decent forces pensions, not that we choose to measure inflation in a particular way. Those are two quite separate issues. There is the adequacy of forces pensions and there is the proper measurement of inflation, but to conflate the two seems confusing.

[Stephen Timms]

In opening the debate the Minister accepted that in 15 years out of 20, CPI uprating is less than RPI uprating. My point is that those serving in Afghanistan have been contributing to their pensions on the understanding that their pensions, when in payment, would be uprated in line with RPI. Now the Government are saying, “No, they won’t; they’ll be uprated by a smaller amount,” and that is a very worrying development. In view of the sympathy that the Minister has expressed for people in that position, the Government must give further thought to this matter—why war widows, who have had the person most special to them taken away, deserve to have the support that they would otherwise have been able to depend on cut as well.

--- Later in debate ---

[Dame Anne Begg]

But that is assuming that the only income that pensioners have is the basic state pension, which is not the case. Most pensioners supplement the basic state pension with an occupational pension or, if they worked in the public sector, with a public sector pension. That is where the Government have sometimes missed a trick. In obsessing about the triple lock and the basic state pension, they have taken their eye off the ball with regard to all other pension income.

Because other pension income will be reduced as a result of the link with CPI, many pensioners will find themselves worse off, or certainly not as well off as they expected or as the rhetoric from the Government would suggest. To listen to the Government, one would think they are doing everything that pensioners ever wanted, whereas they have taken action only on the narrow area of the basic state pension.

We already know that inflation is going up. VAT went up, thanks to the Chancellor. The Opposition expect inflation to go up much further because we do not think the Chancellor has the right policies. We know from the most recent inflation figures for January this year that CPI is now up to 4%—good news, one would think, for pensioners—but RPI is up to 5%. It is that differential that will cause problems.

We are considering not just pensions, but uprating for the whole benefits system. Even the Minister must recognise that there is an enormous irony in using CPI to uprate housing benefit—CPI being the one inflation measure that does not include housing costs, notwithstanding the point that the hon. Member for Cardiff Central (Jenny Willott) made about the poorest people being in social housing. That is not the case in cities such as London, and it is not the case because of the shortage of housing.

We know that large numbers of people are dependent on housing benefit—or, more accurately, local housing allowance—and they will be hit. When the Select Committee on Work and Pensions looked into the matter, we thought there were some figures to show that within a very short time nobody on housing benefit would be able to afford houses in the private rented sector that fit into the 30th percentile.

[Steve Webb]

For the avoidance of doubt—this has been said incorrectly twice in the debate—the CPI includes rent, so it is owner-occupiers’ housing costs that are not included. As rent is included in CPI, it is entirely appropriate to index housing benefit by it.

--- Later in debate ---

[Dame Anne Begg]

My hon. Friend is right. There is a triple whammy on people who live in London in high rent areas: the local housing allowance is to be capped, possibly below the level of the rents; they will have access only to houses within the 30th percentile; and they will not see the inflationary increases in the indexation of their housing benefit to meet those conditions. They will be hit more than once with regard to the affordability of their rents. That certainly came over loud and clear when the Select Committee looked at what was happening to local housing allowance.

The effects of the Welfare Reform Bill have been mentioned. The universal credit will make it difficult to project benefit uprating into the future to work out what percentage of their incomes people are likely to loose. There will be no straight line from the current benefits to the universal benefit, because they will be mixed up. It is difficult to see what will happen. The compounding effect will probably be seen in pensions, particularly for those in receipt of the state pension, and the level of pension will be less.

In reply to my hon. Friend the Member for Eastbourne (Stephen Lloyd)—I am sorry, Madam Deputy Speaker; I always refer to fellow Committee members as hon. Friends—I said that the assumption is that the largest part of a pensioner’s income is the basic state pension, but we know that for many people that is not the case. Even if the state pension makes up a large part of their pension, it is often not all of it. Many people on the lower pension are dependent on SERPS, which of course will now be moving up in line with CPI, rather than RPI.

On the basic state pension, I accept the Minister’s figures indicating that it will rise from £97.65 to £102.15, an increase of around £4.50 a week. No one would say that that is wrong, because we all agree that £234 a year is great. However, the average public sector pension of £7,800 will be reduced by around £117 because of the difference between RPI and CPI. I am not very good at the arithmetic, but that means that instead of getting a rise in income of 4.6%, the people affected will get a rise of less than 2%. It is a rise, but it is not as much as they were expecting, and we must remember that we are living in a time when inflation is increasing.

A woman who receives the average local government pension of £2,600 will be £40 worse off than if her pension had been linked to RPI. If she has paid the small stamp, she might get no extra money through the basic state pension anyway, not even the compensatory increase in it. She might not have made full contributions and so will get some of it, but not all. The Government’s proposal is unfair to pensioners, and it is particularly unfair to women.

My right hon. Friend the Member for East Ham has already mentioned the particular unfairness of raising the state pension age to 66 by 2020. To be clear on the Opposition’s position, we have no qualms about raising the state pension age to 66 in principle, but we are concerned about the speed with which the Government are doing so. That overrides what was already in place for women who were born in the 1950s, who were going to see their pension age rise to 65 by 2020 anyway.

Women who began their working lives expecting to get a state pension at 60—that happens to include me—will now have to wait another six years for it. On a quick calculation, that will save the Government £32,000 on today’s basic state pension. It will come out of the pockets of women who are roughly my age and will stay with the Government. We will have to increase the indexation an awful lot more to make up for the £32,000 that those women will lose as a result of the increase in the state pension age by six years.

I appreciate that the measure whereby women born in 1955 would have to wait until 2020, when they were 65, to receive their income was already in train, but what about the women born between 6 October 1953 and 5 April 1955, who had already made all their financial plans but will now have to work for more than one further year before they can receive their basic state pension? The Minister has said on numerous occasions that that measure alone will save the Government £10 billion. All that is a win-win for the Government: the Government win, because they do not have to pay the money out, and because they have changed the indexation. The people who lose are those who expected to receive their pensions at a certain point, and in this case those people are women.

I would understand the Government’s rationale if the measure was part of their deficit reduction plan, but they have already said that they intend to get the deficit off the books in four years’ time, and none of this stuff comes in until after the deficit is meant to have been reduced, so it cannot be part of a deficit reduction plan. The Government should be more honest. We have heard that the change to CPI is going to be permanent, so they should say, “We’re doing this as a long-term measure, because we want to save money.” That is part and parcel of what the Government are about: saving money.

[Steve Webb]

The hon. Lady is a thoughtful person who will know that there is an issue of short-term deficit reduction and an issue of the long-term sustainability of the public finances. Leaving aside the £1.3 trillion of public debt, which will still exist and need to be dealt with even when the deficit is no longer adding to it, does she not accept that the Office for Budget Responsibility has challenged the Government to do something the previous Government did not do and get a grip on the long-term sustainability of spending, particularly on older people?

[Dame Anne Begg]

My right hon. Friend the Member for East Ham claimed that there might be a case for deficit reduction in the short term. We are considering women and the accelerated increase in the state retirement age to 66, however, and, in terms of the 50-year pension policy and the long term, why could not the Government have waited another year or even two before equalising the state pension age at 66? The Minister keeps bandying about the £10 billion figure, but in terms of equity and fairness it would have been much more sensible if the Government had taken a long-term view. Theirs is a very short-term view, meaning that a large number of women—half a million—will lose out.

The Government could have introduced a measure that people considered fair, rational and part of a long-term decision to ensure that pensions are affordable, and it is ironic that, while they have made the decision on equalisation, they have forgotten about the long-term sustainability of the basic state pension. They have done so because the Liberal Democrats had an election promise—the one they seem to have kept to, when they have managed to ditch all the others—that was all to do with the triple lock. The Minister will not accept this point in the Chamber, although he might do privately, but the triple lock debate has skewed the Government’s entire pension policy. We are not looking at the issue in the round or over the long term, when perhaps we should be.

We do not know what inflation will be in years to come, so in the private and public occupational pensions sectors in particular it is difficult to work out exactly how much people will lose compared with what they expected to receive. Lord Hutton, in his interim report, thought that on average they would lose up to 15% of their pension’s worth, but I have seen lots of other figures for, and various calculations of, what a pensioner would have expected if their pension had been linked to RPI as opposed to CPI.

This measure cannot just be about paying off the deficit, because we know that the big-time savings kick in well after the Government propose to have paid off the deficit. The Government will win, but the people who will lose are, unfortunately, the pensioners of this country.

--- Later in debate ---

[The Minister of State, Department for Work and Pensions (Steve Webb)]

We have had a worthwhile debate, with some thoughtful and well-informed contributions. I compliment all Members who have taken part, as the issue is important to our constituents. All Members will have received representations on the matter, and Members who are here on the final Thursday afternoon before a recess show their sense of priorities.

I enjoyed the accusation from the right hon. Member for East Ham (Stephen Timms), whom I think of as my right hon. Friend, that the policy is ideologically driven. I have never heard the use of the geometric mean described as ideologically driven. Intriguingly, his position seemed to be that it would be bad to make such a proposal on a point of principle, but that he could support it if it was a temporary expedient because of a financial mess. That is not the position of the Government, whose judgment is that CPI is a better measure of inflation, not a temporary fix. I am grateful that he appeared to be saying that he would support us for three years on grounds of expediency.

[Stephen Timms]

If CPI uprating is right in principle, why are the Government not doing it this year?

[Steve Webb]

We are doing it this year for pretty much every benefit in the entire uprating order, which runs to many pages. The ones we are not doing it for are the basic pension and the pension credit. We are not doing it for the basic pension because the budget we inherited provided for a larger increase and we did not want to pay a smaller increase than was planned. If the right hon. Gentleman thinks we should have done so, I will take that advice, but he probably welcomes the fact that we did not follow it.

The Chair of the Select Committee, the hon. Member for Aberdeen South (Dame Anne Begg), indicated that unfortunately she could not be in the Chamber for the wind-ups. She asked why we had chosen a different figure for the pension credit. As I think I explained in my opening remarks, as we were putting the basic state pension up by about £4.50 a week, we did not want the increase in pension credit to be less than that, because the poorest pensioners would not have the full benefit of the pension rise. That was the basis for the increase in pension credit.

The right hon. Member for East Ham asked about the impact assessment on occupational pensions, and I am happy to say a few words about that. In December, we published an impact assessment suggesting a £76 billion impact from the reduction in revaluation and indexation. To respond to a point made by my hon. Friend the Member for Finchley and Golders Green (Mike Freer), one way of looking at that is to see £76 billion less in pensions, but another way is to see a £76 billion boost for British business. We are trying to reduce the regulatory burden on British business, so an advantage of the change—albeit not the purpose—is that major British firms will make a saving, and they and their pension funds will be in a stronger position as a result. Many pension schemes and companies have welcomed the change for that reason.

We discovered an error. We made a mistake, for which I apologise. As soon as we found it, we decided to give the House a revised estimate. In addition, we were asked by the Regulatory Policy Committee to revise the way we calculate net present values; I know that the right hon. Gentleman takes a close interest in such matters, and if he is not careful I shall tell him what it was. To draw the threads together, we reissued the figures last week, ahead of this debate, with an £83 billion estimate. That is a further interim estimate. We then undertook field research, as I mentioned, to ask companies how they will respond to CPI/RPI. We have early results; it would be premature to say what the impact will be, but early indications are that fewer pension funds will take advantage of CPI than we had thought. Such things are complex and there could be factors that move them in the other direction, but my sense is that the final version of the figures is more likely to be lower than the one we have already published, but we thought we should give the latest estimate as soon as we had it.

The right hon. Gentleman raised the important issue of accrued rights. It is a fundamental point and it relates to my pre-election remarks about a pension promise made being a pension promise kept. What is the accrued right of someone in a public sector pension scheme, or any pension scheme? The first point is that everything accrued to date—all the revaluations to date, based on RPI—stand; we are not going back and saying that all the revaluations to date have to be reworked according to CPI. The provision is prospective, not retrospective.

The question then is what future expectation people legitimately have. If they are in a company scheme that has RPI in the rules, we actively chose not to override that. If that was their expectation, because it was in the rules, that is what they will get. However, people in the public sector are members of a scheme whose rules are tied by statute to what we do to SERPS. That is the accrued right they have always had, and we are not changing it. We shall go on indexing their pensions in line with what we do to SERPS each year. That was the pension promise they were made; that is the pension promise we are keeping. We are indexing SERPS by CPI. I accept that, and I also accept that on average that will be lower than RPI, typically by about 0.8% a year. I do not dispute that. The accrued right is the one we are honouring.

The right hon. Gentleman said in parenthesis that pensioner inflation is typically higher than general inflation. I do not know whether he actually believes that; it was never something his Government took into account when setting pensions. They never uprated pensions differently because of pensioner inflation. There are certainly periods when pensioner inflation is higher when, as the right hon. Gentleman said, the costs of fuel and food are rising faster than the norm, but there are other periods when it is lower. I have asked officials to look at the matter and there is no evidence over a 20-year run that pensioners buy goods that have that inflation time bomb ticking away inside them. There are times when inflation is higher, which may include recently, and times when it is lower, but over the long run there is no evidence for that proposition.

My hon. Friend the Member for Cardiff Central (Jenny Willott) welcomed the restoration of the earnings link, and the triple lock. I am grateful for her support. She quite properly put me on the spot about the future of the pension system. I accept her analysis; we need a pension system fit for the future. If we are to auto-enrol 10 million of our fellow citizens, we need to be confident that it pays to save, and that they will be better off. I assure her that that is absolutely central to our thinking about long-term pension reform. We are making good progress on that project.

The Chair of the Select Committee asked a number of questions. I will respond to one or two on the record, although she has explained why she is not here to hear the response. She kept making the point that the basic state pension is not the only part of a pensioner’s income. Of course it is not.

I thought that the hon. Member for North Ayrshire and Arran (Katy Clark) made some sincere comments. She raised the issue of people with relatively modest occupational pensions who will get less under CPI. The state pension is bigger than all of those figures. Every one of the figures she quoted is less than the basic state pension. The package of Government policy on pension indexation is for an earnings link on the basic and a CPI link on the additional. The basic pension of every person she is concerned about is bigger than their additional pension, the earnings link in the long run is worth 2% more than prices and CPI is 0.8% less than RPI. The people she is most concerned about will overwhelmingly benefit from our package of policies. Therefore, I can assure her on that point. Taking the package as a whole, they will be better off, not worse off.

My hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) made an important contribution and pointed out that Age UK, which is very much an independent organisation, was delighted by the triple lock, because it is a historic move to give pensioners the best of earnings, prices, plus 2.5%. I wish only that we were able to do this in a normal year—in 16 of the past 20 years, earnings were greater than prices. People would then start to see the benefit of the earnings link and the triple lock, and in time they will.

The hon. Member for Arfon (Hywel Williams) quoted some civil service pension figures. I make the same point to him. All the figures he quoted, based on average civil service pensions, prove my point. If we take them in isolation, CPI is lower than RPI, but people do not just get their civil service pension—they also get their state pension. We are putting more in through the state pension than we are taking away typically through the additional pension because of the relative sizes and the difference between the various indices. Our constituents write to us and raise the bit they see, but overall the state pension will more than make up for that for the vast majority of people, although not for people with very large pensions.

On the ratchet, I simply accept the hon. Gentleman’s rebuke for fiscal irresponsibility. I will take it on the chin and pass it on to the Chancellor for him.

I enjoyed the contribution of my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) and his account of his conversation with Jack Jones. I am delighted to say that both coalition partners supported that. We needed the Chancellor on board for that one. I regard it as being to the credit of both coalition partners that we have been able finally to restore the earnings link. I am grateful to my hon. Friend for raising the case of his constituent. As he was describing it, I was thinking that I was sure I signed a letter on that the other day, and I gather he has now received it. I apologise to his constituent for the mistake that was made and I hope that that has now been resolved.

The hon. Member for Hayes and Harlington (John McDonnell) perfectly properly says that he will not support the order and that he is against mass means-testing and so am I. A pension system that allows too many people to retire poor and means that they have to be swept up by a leaky safety net is not a good, sustainable long-term pension system. I have set it as my goal to do something about that. We may not agree about these orders but we have common cause on that principle.

[John McDonnell]

Did the Minister ever consider a quadruple lock so that, earnings or inflation, CPI or RPI, whichever was the higher, would be used?

[Steve Webb]

We did look at that. Either one could say that what one is trying to do with pensions and benefits is protect pensioners’ spending power—that would be a price measure—or one could protect people’s position relative to the rest of society, which is an earnings measure. One wants to avoid silly small figures such as 75p, which is where the 2.5% comes from. To say, “But we will measure inflation according to different measures and we will pick the biggest” conceptually does not work for me. We could have done that, but in our judgment the point of revaluation is to maintain spending power fairly for the group in question. Our judgment is that CPI is the answer to that question.

There is a separate question about whether pensions should be higher or lower. In a way, the hon. Gentleman and the hon. Member for North Ayrshire and Arran are saying that we should be paying bigger pensions. It seems to me that that is an entirely separate debate from how we should correct for inflation. That is where CPI comes in.

[John McDonnell]

There is a point of principle that the Minister and I have argued over the past 13 years at least, which is that, whatever measure is introduced, there should not be a loss. Having that quadruple lock would convince people that this is at least a way forward, because people would be protected against years such as those five out of the past 20 where CPI was higher than RPI.

[Steve Webb]

I come back to my point that as the basic state pension is a big part of pensioners’ income, particularly for the most vulnerable, we are protecting their living standards overall—they will get bigger increases under this package of indexation than they would have on the basis of a straightforward RPI level alone. I believe we are doing the right thing.

I am grateful to my hon. Friend the Member for Finchley and Golders Green (Mike Freer) for his kind comments and I appreciate the expertise he brings to the debate. He was absolutely right that the idea that large numbers of pensioners will have large mortgages is quite implausible. It is true that 7% have some mortgage interest at the moment, but even those who face mortgage interest will typically have lower average amounts because they will be towards the end of their mortgage terms. Basing an inflation measure on an index that includes mortgage interest seems to me to be quite inappropriate for pensioners. As my hon. Friend pointed out, one consequence of CPI schemes such as the local government pension scheme is that it will help to put pensioners on a more even keel. As he also rightly said, this money has to come from somewhere—somebody has to find it—and this order will have the consequence of getting the systems on to a more sustainable basis. My hon. Friend tempts me on public sector pension reform, but I obviously must not pre-empt what Lord Hutton will say. He will be saying what he is going to say within the next few weeks, so we do not have much longer to wait.

Drawing the threads together, this debate has provided a worthwhile exploration of the issues. Our fundamental point is that the principal order will cost the Government £4.3 billion to protect and enhance the benefits for the people who need them the most. I am proud to commend these provisions to the House.

Question put,

Housing Benefit

Steve Webb Excerpts

Thursday 17th February 2011 Commons Chamber

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Dagenham and Rainham (Jon Cruddas) on securing this debate. It is the second debate of his to which I have responded in the House, and he raised his issues in a thoughtful and measured way. I think that the House appreciates that.

This is a welcome opportunity to consider the shared accommodation rate. Many of the other aspects of housing benefit reform have been aired quite extensively, but this one has perhaps been a bit overlooked. It is important to focus on that and the potential implications. I want to reflect on the proposition: what is now known as the SAR currently applies to under-25s in the private rented sector, and is based on rent levels for accommodation where at least one room—for instance, a kitchen or a bathroom—is shared. The spending review has announced that, from April 2012, it will be extended to under-35s. Furthermore, as the hon. Gentleman acknowledged, there are exemptions for those in certain vulnerable situations. There is also the issue of discretionary housing payments, to which I will return, because he raised some important questions.

Clearly, one reason for introducing this measure is to reduce the budget deficit. It is worth noting, therefore, that it will save £130 million in housing benefits in 2012, rising to £225 million in 2013. There are two ways of looking at that: it is a lot of people, but it is also a significant amount of money for the Exchequer. It is not done lightly, but it is an important contribution to the Department’s efforts to rein in the budget deficit.

On the number of people affected, the hon. Gentleman mentioned the figure of 120,000, but that is the answer to a slightly different question. We think that the figure will be 80,000 to 90,000. Those are the sorts of numbers we are talking about. He is right that the shortfalls, particularly in London, will be significant. Whereas with some of the caps—certainly the 30th percentile —in some cases the shortfall will typically be £10 a week or less, such shortfalls will be very different. The sorts of examples and figures that he gave are available on the internet. Other than in exceptional cases, it is unlikely that people will make up the shortfall from their spare cash. I take his point entirely that the shortfalls will be significant and that, although there might be occasions on which tenants can renegotiate their rents, that will probably be the exception rather than the rule. Although he kindly tried to write my speech for me—I was writing furiously all the good points he made—I am not going to say, “We don’t need to worry, because landlords will just slash their rents”, because that is not realistic.

Why are we introducing this measure? As the hon. Gentleman said, the thinking behind the under-25s rate is to save money and have a level playing field for young people on benefits and other young people on low-paid jobs who commonly will share accommodation. For the under-25s, the figure is about 45%. That means that about 45% of single, non-student—students would obviously bump up the figures—childless people who are under 25 and not on benefits are in shared accommodation. That is our control group. He might ask what the figure is for 25 to 34-year-olds. The answer is 40%. He used a figure of 2%, and I have seen that number, because when I saw the crisis briefing, I thought, “Oh my goodness, 2%”. However, it turns out that 2% is the answer to a totally different question—it includes all tenure types and all ages. The appropriate benchmark is that roughly two in five of the sort of folk we are talking about, and who are not on benefits, are sharing. The question is: what is the appropriate level of support from the taxpayer? Should the taxpayer pay the full cost of a self-contained flat for a 29-year-old, when many of their contemporaries would be living in shared accommodation? That is the thinking behind this.

If, therefore, this measure leads to shortfalls, and if renegotiation of rents is a limited option, what alternatives are available? I have mentioned the limited exemptions, particularly for vulnerable people. The hon. Gentleman downplayed the role of discretionary housing payments rather more than I would, so let me explain why. The discretionary housing benefit budget is increasing nationally from £20 million this year, to £30 million next year and to £60 million in each of the following three years. It is being trebled compared with the year just ending. However, we will not spread the money incredibly thinly across the whole country, but focus it where it is most needed, and the impact of the SAR is one of the things that will dictate where the money goes. I cannot forecast what his local authority will get beyond next year, but clearly London authorities as a whole will get a significant proportion of that increase—I strongly suspect that it will be more than the national average increase.

There is a case for saying that discretionary housing payments are the right approach, whereas using broad categories of people probably is not. The hon. Gentleman mentioned a whole set of people, but what was striking about his individual examples was how individual they were. We do not necessarily want to say that every ex-offender should have support, but to consider particular situations. Clearly, we need some block exemptions for the most vulnerable—we have that—but discretionary funding should be used in specific circumstances to ease some of the examples that the hon. Gentleman gave.

Discretionary housing payments are clearly a top-up, which are not meant to meet the whole rent. Housing benefit is already doing much of that, and discretionary housing payments cover the shortfall. The hon. Gentleman says that £120,000 is not much. Off the top of my head, a shortfall of £20 a week means £1,000 a year, so the sum covers 120 people. It does not sound like a huge amount, but it will treble across the country and can help some of the vulnerable groups that he mentioned.

There is a question about the options for young people. The hon. Gentleman pre-empted one of my points, but I shall make it again anyway. He rightly pointed out that quite a few young people have chosen—some have freely chosen but others may have felt constrained because of availability—to live in shared accommodation. Even though they are over 25 and the benefits system would pay for a self-contained flat, they have chosen shared accommodation.

We think that nearly half the local housing allowance cases that are currently assessed under the shared accommodation rate would be entitled to higher rates if they lived in separate accommodation. Nearly half the people to whom we pay the shared accommodation rate—that is what they get if they are in shared accommodation—do not need to be in shared accommodation because of the benefits system, but are there anyway. I must admit that that surprised me. Clearly, that is not all about choice. It is partly about availability, but it again suggests that what we ask is not quite as unreasonable as perhaps it might seem at first sight.

When considering that group’s characteristics, there is a question about how soon they can support themselves and not be on benefit. Clearly, a shortfall of £30 or £40 is difficult but manageable for a short period for many people, if they have been working, but difficult to sustain for a long time. That group tends to have relatively short jobseeker’s allowance durations. If we consider the 25 to 49-year-olds, for whom data are readily available, we estimate that around 60% of that group have been on JSA for less than six months. Clearly, after six months of a shortfall, someone is well out of pocket. However, although there might be a shortfall at a point in time for quite a few of those people, many might have a reasonable expectation of getting back into work and then being able to afford their rent in self-contained accommodation.

There is a question about what their options are if they decide not to carry on in free-standing accommodation. One option for some will be living with mum, dad or family. The hon. Gentleman and I both well know that it is not a perfect solution or something that works for people who have irreparable family breakdown. It is not a blanket solution. However, in general, that age group—I think they are called the boomerang generation—are doing precisely that. Many 28-year-olds and 31-year-olds are back with mum and dad or family. Perhaps they are saving for a house, and they have made the decision to stay with family because it is cheaper and they can put money by. Should we ask the taxpayer to pay for some 29-year-olds and 31-year-olds to have a flat of their own, rent fully paid, when others have to live with mum and dad and save the money? Again, it is a balance of fairness. Living at home with the family is not an option for all, but it will be for some. The hon. Gentleman talked about bonds with family and their breaking down—I do not know what living with your mum and dad at the age of 31 does to you, but it will be an option for some. At a time when money is tight, it is not an unreasonable thing to ask young people to include in the range of options that they consider.

There is also an important issue, which is underestimated, about being a lodger. Again, I take the hon. Gentleman’s point about individuals with particular needs. Her Majesty’s Revenue and Customs runs a special scheme called Rent a Room. It was introduced in 1992 to boost the private rented sector and was designed specifically to encourage individuals to offer spare accommodation in their homes at affordable rents to low-income groups such as nurses and students. Under the scheme, home owners and tenants who let furnished accommodation in their own homes are exempt from income tax on rental income of up to £4,250 a year. They receive relief on the rent and tax relief on meals, goods and services, such as cleaning and laundry. As people who get less than that amount do not have to tell HMRC, we do not know exactly how many people benefit from the scheme. However, we have survey data from the family resources survey, and roughly 130,000 landlords do not pay tax on their rental income under the scheme.

The situation is very dynamic, and as young people start to realise that they cannot get benefit for a flat on their own and start to look for lodgings, another family who may have lost income through redundancy or loss of overtime in these difficult economic circumstances might wish to let out their spare rooms. So the availability changes over time. There are tentative signs of a new supply of shared accommodation. Indeed, in east London, there is some suggestion that the housing benefit cap will mean that larger family homes will be converted into shared accommodation. I take the hon. Gentleman’s point about HMOs, and I will come back to that in a minute. Clearly it does not solve the problem for those families, but in the context of this debate it could mean three or four new single rooms will be available for young people. The situation is dynamic and changing.

The hon. Gentleman raised the issue of delay or cancellation. Although the change starts in April 2012—on current plans—it would kick in on the anniversary of a claim. So someone who starts a claim in November 2011 would have it renewed in November 2012. The position will not change all at once on a single day so that everyone turns up at the local hostel saying, “I’m homeless.” There will be a gradual change and people will start to explore other opportunities. They will know that the change is coming—we are talking here in late 2010-11—and there will be a chance for new supply to come on stream so that people can think about their options. We are keen not to do these things suddenly because we recognise that people will need time to adjust.

The hon. Gentleman mentioned some of the problems of HMOs, and the Government recognise that those need to be handled carefully. He will know better than most that HMO licensing is mandatory for houses of more than three storeys housing five or more persons. Local authorities also have discretionary powers to extend licensing to small HMOs where they have identified problems with management or property condition. This is known as additional HMO licensing. Local authorities will be able to impose conditions on those licences, such as requirements for occupation by a set maximum number of people or the provision of adequate amenities. Fines of up to £5,000 can be imposed for breach of a licence and letting a property without a licence is a criminal offence subject to a fine of up to £20,000. That is not to suggest that everything is perfect, but the Government are aware of the problems.

Since April last year, there has been a general consent for local authorities to introduce this additional HMO licensing and they do not need permission from central Government to do it. If councils think it necessary in their area—such as the hon. Gentleman’s area—they have those additional powers to crack down on rogue landlords. It is important to point out that sharing a house with a few other people is not synonymous with slum accommodation and rogue landlords. Both versions are out there, and we want to encourage the provision of good shared accommodation and drive the bad guys out.

The Department has always planned to monitor the impact of these changes, but when the other place considered the housing regulations it was agreed, after discussions with Lord Best, that there would be full independent monitoring and evaluation of the housing benefit reforms. I assure the hon. Gentleman that we are committed to comprehensive review of the changes to housing benefit, some of which will come into effect from this April. That will include independent, comprehensive primary research that looks at the effects on different types of households in a range of areas including London. The evaluation will cover a whole list of things, including homelessness and moves; the shared room rate and HMOs; the impact on Greater London; black and minority ethnic households; landlords; the housing market; and the labour market. To update the House, we have just completed an expression-of-interest exercise for potential contractors for the research, and we are drafting a specification for the monitoring. The idea is that the results will be published.

We recognise that these are significant changes, and that there will be people who are adversely affected; that is why we have trebled the discretionary housing payment budget. The hon. Gentleman was absolutely right to raise his concerns about that group, and it is something that we are looking at carefully. I thank him for bringing the matter to the attention of the House and reassure him that we take seriously the points that he raises.

Question put and agreed to.

Youth Unemployment

Steve Webb Excerpts

Wednesday 16th February 2011 Commons Chamber

[Pamela Nash (Airdrie and Shotts) (Lab)]

On that point, do the Government honestly believe that for 50% of young people to be in work a full month after their future jobs fund placements—

[The Minister of State, Department for Work and Pensions (Steve Webb)]

That’s not what he said.

[Pamela Nash]

My point comes from the same statistics. Do the Government honestly believe that 50% of young people being in full-time work a month later is a failure? In our opinion, it is a great success for the fund.