Welfare Reform Bill

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Mrs. McGuire: On a point of order, Mr. Hood. I am seeking your guidance at the moment because there has been some confusion. I am prepared to answer the hon. Gentleman’s point, but I suspect that he is talking about old clause 38, which is now clause 40. I am struggling with what I should do and whether or not you will offer me appropriate advice.
Mr. Boswell: Further to that point of order, Mr. Hood, I understand. It became clear to me when I picked up the wrong copy of the Bill. There were reasons for that, which I need not go into now but I am indeed talking exactly on those points and I am happy, with your guidance, to receive a response from the Under-Secretary—either now or at the appropriate moment.
The Chairman: If it will help hon. Members, we will deal with clause 38 stand part now, and if we want to vote on clause 40 stand part when we get to it, we shall do so.
Mrs. McGuire: Thank you, Mr. Hood. The hon. Gentleman does not normally flummox me but he did today and I thought that perhaps this was not the clause that I was about to speak to.
The Chairman: I have to apologise to the Under-Secretary. I will now put the question on clause 38 and later she can reply to the stand part debate onclause 40.
Question put and agreed to.
Clause 38 ordered to stand part of the Bill.
Clause 39 ordered to stand part of the Bill.
Schedule 5 agreed to.

New Clause 8

Non-dependent deductions
‘(1) The Secretary of State shall make regulations such that the non-dependent deduction for—
(a) housing benefit;
(b) council tax benefit; and
(c) Local Housing Allowance
shall be nil where the non-dependent—
(i) is in non-remunerative work, or
(ii) has a gross income from remunerative work of under £101.00 per week.’.—[Danny Alexander.]
Brought up, and read the First time.
Danny Alexander: I beg to move, That the clause be read a Second time.
I endorse many of the comments made by the hon. Member for Daventry and I look forward to hearing the Minister’s response in due course. May I say how much, in my brief time in the House, I have valued the hon. Gentleman’s contribution from the Front Bench? I look forward to that continuing from the Back Benches too.
New clause 8 is designed to elicit a debate and probe in a bit more detail the Government’s thinking about the non-dependent deductions regime for housing benefit and other benefits. The thought behind it, supported by evidence from Shelter and Citizens Advice, among others, is that the current non-dependent deductions regime causes problems for claimants from time to time and significant reform is needed. Reform of the non-dependent deductions regime has been considered before. It may be of interest to Labour Members, some of whom were not around at the time, that when in opposition the Labour party raised a number of concerns about it. In 2000 the Government’s housing Green Paper, “Quality and Choice: a decent home for all” proposed the simplification of non-dependent deductions. Of the 103 organisations and individuals who responded to the consultation paper, only five raised objections.
The idea behind the non-dependent deductions regime is that non-dependants living in a person’s house, such as grown-up children, should make some contribution toward the rent. One might ask who could argue with that. In many cases that would be a fair point, but there are certain categories of claimants for whom the current regime causes problems. The regime has a minimum non-dependent deduction, which at this year’s rate amounts to £7.40. The deduction is banded according to income and the highest rate of non-dependent deduction goes up to £47.75, but where no evidence of the income of the non-dependant is provided, the deduction takes place at the highest rate.
The Department for Work and Pensions has conducted some research on non-dependent deductions and who claims them, but that research is rather out of date as it is 10 years old. Is the Minister happy to agree that further research should be carried out to update the figures? For example, 52 per cent. of claimants for the non-dependent deduction were aged 60 or older and the average age was 58. Clearly, those figures apply to a wide range of categories of people, but mainly—probably—to those with children who have grown up or are growing up, or adult non-dependants, such as spouses or partners.
A problem arises—certainly it did in relation to a constituency case with whom I have dealt—when the non-dependant is a child and the parent is the claimant. Whether or not they are on benefits—my constituent claimant was on other benefits—the parent has to seek from the non-dependant some of the money to make up the difference, if they do not wish to suffer a reduction in living standards or a shortfall in their rent. In that case, if the minimum amount applies, £7.40 would be required from the non-dependant to meet the shortfall. Citizens Advice found that where the non-dependant is a grown-up child under the age of 25, it can be very difficult for parents to get the money to meet that shortfall.
Obviously, I am anxious to hear the Minister’s response to the concern that the rules, which are in place for very good reasons in the vast majority of cases, are, in a minority of cases, causing hardship, can cause rent arrears and might even in extreme circumstances lead to an eviction. That is disruptive for the individuals concerned, and in some cases for families.
My amendment reads:
“The Secretary of State shall make regulations such that the non-dependent deduction...where the non-dependent...is in non-remunerative work, or...has a gross income from remunerative work of under”
a certain amount should be nil, so that if the non-dependant is either living on benefits or has no, or a low, remunerative income, the housing benefit would be payable to the claimant in full. That is an attempt to get around some of the problems. I appreciate that that might not necessarily be a perfect solution, but I wanted to identify in this debate the fact that in some categories of case there are quite serious problemswith the operation of the current rules. I encouragethe Minister to update the Committee on the Government’s latest thinking on that matter.
Let me return to the Government’s response to the Select Committee on Social Security in 1999-2000. The Committee recommended that
“the number of rates of non-dependent deductions is substantially reduced, and that this should be accomplished by abolishing the higher rates of deduction”.
In their response, the Government said:
“The Government acknowledges that the present scheme does increase complexity and that the highest rates of non-dependent deductions may, in some cases, exceed total rent liability. There would of course be costs arising from abolishing the highest two rates....The Housing Green Paper put forward the idea of simplifying non-dependent deductions and the consultation responses will need to be considered before a decision is made about making any changes.”
At that stage the Government’s thinking seemed to betray a degree of awareness of the problems that the current regime can cause in a minority of cases. I would be grateful if the Minister could inform the Committee of whether under the new local housing allowance that issue could be looked at again.
Mr. Ruffley: Good morning, Mr. Hood. It is a great joy to see you again after such a long break.
I hope, Mr. Hood, that you will not have to witness the scenes that some of us had to witness in the Chamber, not once but twice. At oral questions to the Department for Work and Pensions, there were dangerous signs of a breakdown in the valuable consensus that has been displayed in Committee. Ministers were actually criticising Opposition Members, quite openly and on the record. [Laughter.]
11 am
The debate yesterday afternoon started badly and then got worse. I am glad those scenes, which took place during the winding-up speeches, were after the9 pm watershed because children should not have been watching. There were sneering and barracking noises from Government Members in a pathetic attempt to put off my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). I really hope that we do not see scenes like that in Committee today.
The Chairman: I am sure we are getting round to the new clause.
Mr. Ruffley: I am merely trying to rebuild the consensus and remind hon. Members on both sides of the divide of that. There is still sedentary chuntering from the hon. Member for Glasgow, North-West, but that is part of the great glory of the Committee. All shades of opinion are welcome here under your excellent chairmanship, are they not, Mr Hood?
Let us move on to the business of the clause. This important and probing amendment owes much to the excellent work, campaigning and lobbying done by Shelter and Citizens Advice. For Members of Her Majesty’s loyal Opposition, the amendment is important for two reasons. First, the area of non-dependent deductions is complex and Opposition Members and—I think—Government Members want benefit simplification higher up the agenda, mainly because it will help customers, many of whom are the most vulnerable in society. Secondly, the amendment would streamline Government business and make it more efficient and cost-effective.
The current regulations discourage housing benefit claimants from allowing friends and adult relatives on benefits and low incomes to reside with them. In extreme cases, that may result in eviction, but I do not think there is any great evidence of that, so we are not scaremongering. However, the regulations may well encourage under-occupation of housing units, particularly social housing.
The thrust of the regulations is based on an unassailable proposition that non-dependants with a reasonable income should be expected to contribute to the cost of their housing. No one disputes that. However, the current requirements and rates at which non-dependent deductions are applied can cause hardship either to the non-dependant or the claimant. What concerns us, and I am sure Government Members, too, is the work disincentive effect. Another concern is the possible impact in terms of family breakdown, which is why the modern Conservative party is looking at the area of non-dependent deductions afresh and with renewed interest.
My right hon. Friend the Member for Witney (Mr. Cameron) has, in a modern way—not in a traditional, tub-thumping, right-wing way—talked about the importance of the modern family and about the way in which family units no longer have to have a marriage certificate attached to them. Keeping families together is an important part of any Government’s public policy, and it is a very important part of the benefits system as well. Sometimes the system can keep families together and sometimes it can keep them apart. I suspect that the new clause teases out the problems that some families have in relation to non-dependent family members. Quite often the elder member of the family will be claiming housing benefit, and we can see that there is a disincentive in keeping that non-dependant in the household because of the way that the regime operates.
Mr. Jeremy Hunt (South-West Surrey) (Con): I, too, welcome you back to the Chair, Mr. Hood.
Does my hon. Friend share two of my concerns about non-dependent deductions with respect to work disincentives? First, the statistics are very clear about the greater incidence of child poverty in workless households. In such a non-dependent deductions regime, there is a clear disincentive for someone else living in the household to take work. There is therefore a risk of increasing the number of workless households, which has a direct impact on child poverty.
Does my hon. Friend also share my concern about the possible impact on carers for disabled people? If a carer is living with a disabled person, that carer might also have a strong disincentive to work because of the non-dependent deductions. Does he share those concerns, and does he think that they might be another reason why the new clause should be taken very seriously?
Mr. Ruffley: I do indeed share my hon. Friend’s concerns about the impact, both in relation to disabled people and on child poverty. I think that I am right in saying that slightly fewer than three out of four children in single parent workless households are in poverty, whereas only one in eight children in single parent working households are in poverty. Ministers would not disagree with those figures. As they have a 2020 child poverty reduction target, I know that they are seeking to tackle those figures and to halve them by 2010. We sign up to those aspirations, but it is certainly the case—
The Minister for Employment and Welfare Reform (Mr. Jim Murphy) indicated dissent.
Mr. Ruffley: Target or aspiration—whatever. We sign up to those propositions, but to get from where we are now to the 2020 target and to the first milestone at 2010, we must all understand that the decisions made by the Government will have an impact on our ability to meet that target. That is why the new clause is extremely important. My hon. Friend the Member for South-West Surrey makes an excellent point.
My first area of concern is benefit complexity. It contributes to delays and cases of maladministration, but above all—this is the key point for us now—it creates confusion for claimants, many of whom are vulnerable and who will sometimes be in distress. The confusion and uncertainty about how the quite complicated rates and different levels operate can worry the non-dependant, who wishes to stay in a family house or flat, as well as the housing benefit claimant him or herself. That confusion is compounded by the knowledge that failure to provide evidence of a non-dependant’s income will result—without any ifs or buts—in the top rate deduction of £47.75 being applied straight away, which seems quite a harsh principle.
Will the Under-Secretary first explain the rationale for that sanction? I do not think that there is any other word for it. One must remember that individuals might not be able to provide accurate evidence, or any evidence at all, of a non-dependant’s income, for perfectly understandable reasons. In explaining the rationale for why that top rate deduction is applied in such circumstances—where evidence is not fully forthcoming—will she say whether there are any derogations, such as mental illness, which might be just cause for not disclosing that information? If such a good reason is given, could the £47.75 hit be avoided? That is quite an important point.
On complexity, it is worth reading into the record that quite a lot of rates are involved for non-dependent deductions. My second question to the Under-Secretary is why the rates start at the top with £47.75, then descend to £43.50, £38.20, £23.35, £17 and finally £7.40? We understand a deduction regime is needed, but will she explain why there are so many rates?
I hope that the Minister will also fully answer my second question, which was: has she had any discussions with her hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), the Under-Secretary of State who is responsible for benefit simplification? If she has not discussed with her fellow Minister why there are so many levels of benefit, I ask her to explain why not, because it is an area that is ripe for simplification. We say yes to the principle of deductions, but why are there so many rates?
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