5 Clause 20, page 27, line 20, at end insert—
and shall include the whole of the amount which he is liable to pay by way of rates in respect of his home.
§ The Commons disagreed to the above amendment for the following Reason:
§ 6 Because it would alter the financial arrangements for housing benefit made by the Commons, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient.
§ Baroness Trumpington
My Lords, I beg to move that the House do not insist on their Amendment No. 5 to which the Commons have disagreed for their Reason numbered 6.
My noble friend the Lord President has already referred to the fact that another place has disagreed with your Lordships' amendment. I should like to add to what my noble friend has said so that your Lordships have an opportunity to reconsider what I believe are strong and persuasive arguments.
Your Lordships' amendment would guarantee 100 per cent. rebate of domestic rates, but only for those with incomes at or below the income support level. The first point I ask your Lordships to ponder is that this would create sharp reductions in benefit as income rises and thus new unemployment and poverty traps which the unified structure in the Bill is designed to avoid. Such effects are universally recognised as unfair and act as strong disincentives to work. The only way round the problems created by the amendment would be to base everyone's rate rebate on 100 per cent. maximum help. Let me explain what that would mean.
At present a substantial minority of households— about 3 million—are insulated entirely from rises in domestic rates. Under the new structure, with 100 per cent. help as the basis for the calculation in all cases, this would apply to much greater numbers. Let me spell this out. At present for standing housing benefit cases the starting point for calculating rate rebates is 60 per cent. of the claimant's rates. This means that if his rates go up by £ 1 a week, unless his income or other circumstances change, his rebate automatically goes up by 60p a week. This is the same for everyone receiving a rebate however big or small that rebate was to start with. But under a scheme based on 100 per cent. of rates, a £1 increase in weekly rates would produce a £1 increase in benefit—again, no matter how much rebate the individual was receiving to start with. Even if he were only entitled to a rebate of a few 417 pence a week, a £1 a week rise in rates would still lead to a £ 1 rise in his rebate if his circumstances remained the same.
The amendment has another quite different but equally unacceptable effect, which I think is unintended, in that it would also prevent any deduction from housing benefit to take account of the contribution toward the domestic rates expected from non-dependent members of the same household. It cannot be right that a head of household should receive 100 per cent. help from the taxpayer with domestic rates when, for example, other members of the household are in full-time work.
Lastly I come to expenditure. We have been entirely open in our commitment to restrain the cost of housing benefit. Total expenditure on assistance with rent and rates has more than doubled over the past six years. Current expenditure is estimated to be about £4¼ billion per annum. At the same time the numbers have risen so that one in three households are receiving some assistance. Overall our proposals would restrain future housing benefit expenditure and our plan that everyone should make a contribution toward their domestic rates is an important part of that objective.
Those are the arguments. I hope that your Lordships will appreciate that the level of help with rates is set out now in regulations and indeed could be changed without the need for this Bill. Equally, I hope that your Lordships also appreciate that even on the illustrative figures published with the White Paper the majority of those people on income support would not experience any reduction in disposable income overall. Mention of the illustrative figures leads me to remind your Lordships that we are not talking about current benefit rates, nor those applying from Monday of next week, nor even those that will apply from the up-rating next April. We are talking about benefit rates which will not be decided until the autumn of 1987 to apply from April 1988. We are clearly a long way from final decisions on actual cash levels of benefit.
In conclusion, I should like to ask the House to recognise that your Lordships' amendment is nothing more than a pre-emptive measure. It does not controvert any substantial provision in the Bill because maximum levels of assistance are not prescribed in the Bill. They will be set out in regulations which your Lordships will have a separate opportunity to scrutinise and debate. My noble friend the Lord President has asked your Lordships to bear in mind that another place has reaffirmed its original position. I have argued that your Lordships' amendment would be unfair, bad for work incentives and bad for local accountability, and I have suggested that its impact on the poorest households would be modest. I have indicated that I suspect that it is technically flawed and I have pointed out that your Lordships will have further opportunity to debate this issue again when considering the relevant regulations. In the face of all these facts, I ask your Lordships not to insist on Amendment No. 5.
§ Moved, That this House do not insist on their Amendment No. 5 to which the Commons have disagreed for Reason numbered 6.—(Baroness Trumpington.)418
§ Baroness Jeger
My Lords, I am rather confused and slightly amused by the Reason No. 6 which the Commons have given. They say that they disagree:Because it would alter the financial arrangements for housing benefit made by the Commons, and the Commons do not offer any further Reason trusting that this Reason may be deemed sufficient".There cannot have been financial arrangements in this country which have been altered more than financial arrangements for housing benefits. They have gone up and down and in and out from social security offices to town halls in a state of total confusion. If the Government's only objection—and it is the only objection that is stated—is because of some flaw in the housing benefit aspect of the amendment, which is truly peripheral, then I think that the reason for the rejection is very inadequate.
Last night the Minister said in the House—and I must say that I also think it is most unfair that we have to do our homework under such difficulties and such constraints:Above all, the amendment is out of time. It seeks to pre-empt the Government's right to make proposals to Parliament in a vital area of policy".—[Official Report, Commons, 23/6/86; col. 413],The noble Baroness the Minister has of course repeated that statement today. The reason why this amendment was tabled was because of statements which have been made officially, including a statement by the Prime Minister, that it was the intention to require every claimant for benefit to pay up to 20 per cent. of their rates. There was some criticism in the other place last night that this was not a social security matter but a matter for rates revision, and I could not agree more. I could not agree more with that. It is not we who have thrown the problem into the arena of social security but the Government by their announcement of the proposed changes in the social security assessments.
The Government come along, all innocent, having thrown Andromeda's rock into the pool, and complain about the ripples that they have set up. They are more than ripples. They have referred the matter to the Social Security Advisory Committee. If it is not a social security matter, they have been wasting the time of their advisory committee, especially because it says:We are seriously concerned at the proposal to limit eligible rates to less than 100 per cent. and possibly as low as 80 per cent. First, we believe that the proposal could cause real hardship to many claimants, especially those on income support. Second, the proposal will cause local authorities extra administrative difficulties and therefore higher administrative costs at a time when the Government is committed to simplifying administration and controlling costs".The Association of Metropolitan Authorities has officially considered the matter and is opposed to it because of the cost and difficulty of collecting many small sums, and the system could in the end amount to a net loss to some authorities. We have had no answer in either place about the difficulties of enforce-ment; the chasing up of those people, the sending in of bailiffs, and the court sentencing which could result if the provision as it stands became part of the law. The association is also concerned about that. There are these difficulties and I am sorry that the noble Baroness has not fully dealt with them. I know her difficulties; she has to read her brief. She is getting very good at reading, as she is having a lot of practice.
419 On a previous occasion the noble Lord, Lord Trefgarne, said that the average cost to the people concerned would be about £1 a week. That shows that the Government are thinking of doing that. I do not know who is pre-empting who. I read in the Government's housing benefit review, which is a report of the DHSS, on page 41, at table 3, that the proposed change could cost £29 in parts of the North-West and £142.40 per year in parts of central London. It is no use telling a man who is being asked to pay £142 a year that the average would be only £52. Many figures have been quoted, but I understand that the Government expect to collect £300 million or more from the change. It cannot be regarded as academic.
Then there is the question—which I know that the Prime Minister is fond of—of local accountability. If it is thought that the pressures of higher rate contributions from poor people will encourage them to vote Conservative, I do not not think that the Government know the rudiments of politics, particularly of local politics. About 4 million ratepayers are involved in the proposal and we have heard little about them tonight. The Widdicombe Committee found that people with rate rebates still regard themselves as ratepayers, especially as often the rebates are only temporary.
It would have helped had we had clearer informa-tion earlier about when the Government intend to implement the 20 per cent. rule. That information may have made our amendment unnecessary. If they are saying that that will not happen until we have the total review of local government finance, on which they are now working, that would be acceptable. But it is unacceptable in the middle of a review of local government finance to pick on the poorest people and say, "By the way, you must pay a bit more while we are still thinking about everybody else". That is what was behind our thinking when we put down the amendment.
The argument has been going on for a long time. I do not feel that we have finalised it by a long way tonight. I remember in 1974 the present Prime Minister saying, when she was asked about this:Within the normal lifetime of a Parliament we shall abolish the domestic rating system".Since then we have had White Papers, Green Papers and reports galore. All we know now is that the Government are still thinking about a Green Paper. We do not have a White Paper. There is much anxiety and uncertainty.
If our amendment was pre-empting any of the decisions, that difficulty could be put right if the Minister could say tonight that the Government's intention is to consider this along with other reforms of local government finance. Had they said that before, the amendment would not have been necessary in the first place. I very much regret that we have not had that assurance. After all these years of consideration and waiting it seems invidious to pick on the poorest people in the community in order to make an initial reform without the full legislation.
§ 5.45 p.m.
§ Lord Kilmarnock
My Lords, nothing that the noble Baroness, Lady Trumpington, said alters the fact that 420 between 1.7 million and 2 million of the poorest pensioners will be worse off because of this measure. We are back where we started, with the fundamental financial basis of the Bill.
What has been proclaimed as the biggest social security reform since Beveridge consists in shifting some £300 million from very poor pensioners to poor families in work and claiming that as extraordinary largesse. That was unacceptable to us when the Bill was introduced and it remains unacceptable. But, having invited the Government to change their mind and not succeeded, I do not imagine that we shall reverse that at this late stage. But people up and down the country will take due note of what has happened and will form their own conclusions.
§ Lord Boyd-Carpenter
My Lords, we had a long discussion on this at previous stages of the Bill, and the issue, unlike that on the previous amendment, is perfectly clear-cut and simple. I therefore do not propose to take up more than a moment of your Lordships' time.
I simply say this. The amendment which this House, against the advice of the Government, put into the Bill would have secured for a considerable time ahead at any rate that there would be a substantial number of local government electors who would, when they came to cast their vote on the competing policies of local government parties, have done so in the happy knowledge that, however much the result of those policies was to put up the rates, it would not affect them. Those of us who are concerned, as I have been for many years, that local government should be a vital and a responsible democratic organisation would regard that picture with great alarm. It was no doubt because noble Lords opposite take a different view that this amendment was originally moved and put in at an earlier stage in the Bill. I am glad that the Commons have taken it out. If it stayed in our law, it would be damaging to local government.
I also happen to agree with the reasons that the Commons gave. The ultimate financial responsibility lies with the Commons. It has made fairly elaborate proposals in respect of financial support generally. Arbitrarily to say that housing benefit shall cover every penny of rate liability is, quite plainly, to undermine and change that. I think that the other place was quite right to reject the amendment that we put in and I hope that we shall accept its amendment.
§ Lord Swinfen
My Lords, although I agree that everyone should pay rates, will my noble friend please keep in mind the position of housing associations which deal specifically with physically disabled people? They often have considerable difficulty in making their outgoings and income match. Often their tenants rely on housing benefit, which is severely delayed in payment. If they have to pay part of the rates without a full rebate, that will exacerbate the situation.
Housing associations of that sort also have much greater voids than other housing associations because once they have chosen a tenant they often have to wait a long time—sometimes several months—for that tenant to be fit enough to come out of hospital and to go into the flat. That does not help their income.
421 I fear that if that position is not kept under review, such housing associations will find their tenants getting into severe financial difficulties and will have to get rid of them. That will put an added burden on to local authorities.
§ Baroness Trumpington
My Lords, the noble Baroness, Lady Jeger, has sought to alarm people, and she will no doubt do it again. She has claimed that the measure will have dire consequences for poor households. We should be clear that we are talking about benefit rates to be set at the uprating, as I said, that is due to take place in the autumn of 1987, not at the next uprating.
Our present plans for social security reform in 1988 include a minimum contribution to rates from that date, but before then—and it is still a long way off—we have made it clear that the proposal will need to be developed in the light of discussions on local government finance reform.
To sum up, the amendment would not increase accountability in local government; it would reduce it. It would not restrain future spending on housing benefit; it would multiply it. Above all, the amendment is out of time.