The
Chairman: Order. I am hearing a cross-conversation
here.
Danny
Alexander: Thank you, Mr. Hood. The
Under-Secretary made the point that we are talking about only people
over 25 here, but we are not because for some reason—perhaps she
can clarify this—under-25s in receipt of contribution-based
jobseeker’s allowance have non-dependent deductions applied to
them. It would be useful if she explained
that.
Mrs.
McGuire: I probably stand corrected on that point, and I
will come back to it. I want to deal with some of the real issues
raised in the debate, and I hope to assuage some of the fears that have
been highlighted. As I said in my opening comments, we think it is
right that if someone is living in someone else’s house, they
should contribute to the housing costs. I draw the parallel that people
on income support who are home owners have to manage all their
financial outgoings, including bills and so on. Why, then, is it being
said that if someone lives in the household, as described here today,
they should not contribute to meeting those costs? We think that asking
that question is consistent with our rights and responsibilities
agenda. I repeat that
we are talking about adults here. I do not want our discussion to be
muddied by any possible appearance, which I appreciate may have been
unintentional, that we are talking about children. If the non-dependent
person is on income support, or on income-based JSA, and under 25, no
deduction is taken into account for that
individual.
Mr.
Hunt: The last time that I made repeated interventions,
the Under-Secretary said that I was trying her patience. Obviously, in
our new consensual spirit, I would not wish that to happen, but I would
still like a little clarification. Given that one working-age disabled
person in three has children, if such a person were claiming housing
benefit and had a partner living with them, who could cause a
non-dependent deduction to be made? Does she not agree that, in that
situation, there is a concern that the non-dependent deduction acts as
a disincentive to that partner working? That could therefore indirectly
increase the number of workless households. That is our concern and why
we are pressing her on child poverty.
Mrs.
McGuire: The hon. Gentleman is not trying my patience this
morning. He has made a reasonable intervention, but with the greatest
respect it is oftenthe case that if one element is taken out
of a whole approach, a conclusion can be drawn about disincentives. I
ask him to look at not only the housing benefit regime, but all the
other elements—not only the Bill, but the tax credit system and
so on. I could go
through the whole gamut of our policies, which support people going
into work and sustain them in work. If the hon. Gentleman looked at all
those measures, he would perhaps get a more realistic picture of what we
are doing to support people in that
respect. I return to
the point I made earlier, which is that the Minister for Employment and
Welfare Reform and I think that drawing the issue of child poverty
across this debate is not particularly helpful. It is not relevant, and
if I was in a more tetchy mood I would say that it is a red
herring.
Mr.
Hunt: Will the Under-Secretary please give
way?
Mrs.
McGuire: No, I am going to deal with some other points.
Forgive me, but I cannot remember which Member raised the issue of
carer’s allowance; it might have been the hon. Gentleman. If the
carer is a member of the household—the unit of
assessment—the carer’s allowance will be taken into
account, but the claimant of the housing benefit will receive a
carer’s premium as part of their housing benefit claim. That is
what I mean when I say that we cannot look at just one part of the
system—there is a holistic approach to support. I appreciate
that sometimes it may appear to be fragmented, but it brings together a
whole range of support in terms of the household income. There is a
carer’s premium within household benefit, which deals with some
of the issues raised on carer’s allowance. I hope that that has
attended to the issue of disabled people with carers.
The hon. Members for Inverness,
Nairn, Badenoch and Strathspey and for Bury St. Edmunds asked about a
simpler scheme with fewer deductions. We must recognise that one
person’s bureaucracy can be another’s sensitivity. We
must recognise that. Quite fairly, in highlighting the issue in the
Green Paper pre-millennium and looking at the development of our policy
post-millennium, we recognised that if we reduced the number of bands,
the system would be less sensitive to individual circumstances. We
feared that if fewer deductions were imposed over a given income range,
which I believe is the thrust of the new clause, that would create
winners and losers. Our assessment is that life would be made worse in
terms of housing benefit support because the bands would be wider, so
any change in the rate of reduction would be greater than the change in
income. So, in trying
to deal with a simplification issue—as an aside, Ministers in
the Department constantly talk about simplification because it is one
of our priorities—we feel that, in this case, if we compressed
the bands in terms of numbers but extended the range, there would be
more losers than winners. That would be to the disadvantage of the
individual. It is often difficult to be sensitive in an enormous system
such as housing benefit or the benefits system in general, but we try
to differentiate and to pick up some sensitivities.
That is
why—this goes back to the comments made by the hon. Member for
Bury St. Edmunds—many of our benefits have a range within them.
Disability living allowance has higher, medium and lower;
carer’s allowance and JSA also have a range. All the way through
our benefits system, we try to recognise that not everybody needs the
same support and that people
need to be assisted in a slightly different way
financially than could be managed if we went for an approach of total
simplification. Danny
Alexander: The Under-Secretary is making an important
point about the need for the benefits system to be sensitive and finely
tuned to the range of concerns that might be present in a particular
benefit. However, in this case, the new clause suggests a zero rating
for the non-dependent deduction for people who have no remunerative
income. That could be seen to increase the sensitivity of the benefit
system. If the non-dependent person had a low or zero income, applying
the deduction could cause greater hardship and so could be seen to be
more, rather than less,
insensitive.
Mrs.
McGuire: I shall come back to that when I try to pull all
the points together.
Mr.
Boswell: Is it not the logic of the
Under-Secretary’s argument—although we do not always have
to follow logic to its ultimate conclusion—that one should not
have bands at all and that the deduction should simply be income
related on the basis of a sliding
scale?
Mrs.
McGuire: The hon. Gentleman, as usual, has put his finger
on the pulse of the issue. I am sure that my hon. Friend the Minister
for Employment and Welfare Reform will say something to him, on behalf
of both of us, when we reach clause 48, but I do not want to take up
the Committee’s time just
now. As I was saying,
I shall come back to the previous point when I try to pull all this
together. The hon. Member for Inverness, Nairn, Badenoch and Strathspey
asked whether we have any plans to reform non-dependent deductions. It
is fair to say—I hope the Committee recognises this—that
we have looked constantly at how we keep under review the provisions of
the benefits system. We intend to amend the provisions for the local
housing allowance where a person could be a non-dependant of more than
one occupier. Instead of the existing process, which is probably
unnecessarily bureaucratic, where the deductions are portioned between
a number of occupiers if somebody is moving between two or three
households, the whole deduction will be made only in the calculation of
the first occupier who notifies the local
authority. I hope that
I have dealt with the issue of simpler schemes with fewer deductions.
That links in with a point raised by the hon. Member for Bury St.
Edmunds on the simplification of non-dependent deductions. From October
2003, if the householder or their partner is aged 65 or over and a
non-dependant moves in to their home, or existing non-dependant
circumstances change and increase the deduction, we have not started
the deduction or the increase until 26 weeks have passed. We take into
account, for example, short-term visits to mum, dad or
friends. There is
another important issue. I am sorry that the hon. Gentleman has had to
leave us for a few minutes, because it links into the issue that he
raised about older people and those receiving pensions. If the
non-dependant is on pension credit, no deduction is
made.
I shall deal with a point raised
by the hon. Gentleman on the non-dependent deductions and income
support, and why the measure kicks in at the age of 25. As has been
highlighted, we do not implement any deduction for claimants between
the ages of 18 and 24 who are in receipt of income support or
income-based jobseeker’s allowance. After the age of 25, only
the minimum deduction is applicable, which reasonably reflects the
levels of benefit for those in that age
range. That reflects
the fact that allowances for those on benefits rise at the age of 25 by
£11.95 a week. Returning to our responsibility agenda, it is
reasonable to expect that someone over the age of 25 who is in receipt
of an income, albeit through income support or jobseeker’s
allowance, should make a contribution to the household in which they
live. 11.45
am
Danny
Alexander: It is important to flesh out the point about
under-25s. Can the Under-Secretary explain why NDDs should be applied
to under-25s on contribution-based JSA but not those on income-based
JSA? Does that not throw up a potential anomaly for an individual who
is entitled to either income-related or contribution-based JSA? He will
choose the higher amount, and if that is contribution-based JSA and he
then has an NDD applied, his allowance might be reduced to below the
level of the income-related JSA to which he would otherwise have been
entitled. Having elected to take contribution-based benefits, the
individual might receive less benefit overall because the NDD has been
applied to him. That
is also the case for somebody who is not in receipt of benefit or has
had his benefit sanctioned. If an under-25 has lost his JSA owing to a
benefit sanction and is a non-dependant, although there is no NDD while
he is in receipt of benefit, the effect of his benefit’s being
sanctioned is that the person on whom he is dependent also has his
benefit sanctioned, so a double sanction is going on. From the point of
view of the person on whom the under-25 is dependent, that is a
particularly negative situation.
Mrs.
McGuire: There were so many negatives and double negatives
in the hon. Gentleman’s question that I can only hope to give
him a definitive answer. However, if I cannot do so, I shall deal with
that specific example in writing. I do not usually like to do things
that way, but this is a complicated matter and I should not want either
of us inadvertently to create an incorrect
impression. As I
suggested to the hon. Member for BurySt. Edmunds, when he
talked about whether the income of senior citizens and those who had
had a short-term stay in another person’s house would be taken
into account, the test for the non-dependant is whether his normal
residence is with the claimant. If it is not, no deduction is
made. On capping, I
have to say to the hon. Member for Inverness, Nairn, Badenoch and
Strathspey that if we went for a capping regime, it would cost
some£37 million per year. That harks back to the point
that every person in a household should make a contribution to its
income, and deductions are made
accordingly. I hope that I have answered most of the points that have
been made. If I have missed any, or if I need to clarify a point of
detail, I shall deal with
them. The hon. Member
for Inverness, Nairn, Badenoch and Strathspey asked about
non-remunerative work. What we mean by that is somebody working for
less than 16 hours a week. I do not know whether that will help him to
understand why we have used that term. If a person works more than
that, the normal situation will apply.
We have had a fascinating
debate, and some genuine issues have been raised. It is important to
remember that the Government have frozen the deduction rates since
2000, although the income band widths that determine the rate of
deduction have been increased each year. For six years, there has been
no increase in the deduction level, although we have expanded the
bands. That has been beneficial both to householders and to
non-dependant individuals.
I respectfully suggest to the
hon. Gentleman that the new clause would break with the general
principles that I have outlined. In other words, it is expected that a
person who is a member of a household will make a contribution to that
household’s running costs. In addition, if the new clause were
accepted, some people who at present attract a deduction would not do
so. I am not sure whether the hon. Gentleman recognises that. Those two
groups would be those in non-remunerative work—those working
less than 16 hours a week—and those in remunerative work whose
income is less than £101 a week. Members of both groups
currently attract a £7.40 per week deduction from the
tenant’s housing benefit and a £2.30 reduction from
council tax benefit.
It is not clear from the new
clause what the intention is regarding non-dependants who are in
non-remunerative work and who are in receipt of income support or
income-based jobseeker’s allowance. I have assumed that the hon.
Gentleman intends that no deduction should apply for anyone in
non-remunerative work. With the greatest respect, I suggest that that
is rather odd because the new clause would mean that a non-dependant
who was on income support and was not working would continue to attract
a deduction, but a non-dependant who was on income support and doing
some part-time work would not attract a deduction. There is an inherent
contradiction in the new clause, unless it is just a typical Liberal
Democrat attempt to play both ends off against the middle.
Although the lower rate of
deduction in council tax benefit applies to incomes of less than
£157 a week, if the intention is to split the current lower
income band in two with the dividing line at £101 it would mean
that the current lower rate of deduction would apply to weekly incomes
between £101 and £157. If the intention is to move the
current band threshold from £157 to £101, it would mean
that around 10,000 non-dependants with incomes between £101
and£157 would attract increased deductions, up
from£2.30 to £4.60 per week. I am not sure
whether the hon. Gentleman has appreciated that. Taking all of those
factors into account, the cost of the new clause would be £45
million a year. Although I like the idea of ignoring the price tag, in
some circumstances we have to look at it.
The Secretary of State already
has broad powers in relation to non-dependent deductions. Using primary
legislation to set the lower rate would mean that flexibility to review
the rate each year would be lost. As people’s incomes increased,
as they must under the national minimum wage, more people would attract
a deduction. The non-dependent deduction scheme is dealt with through
regulations and the Government continue to believe that that is the
right place for it.
We have had a fairly lengthy
and somewhat detailed discussion of the clause. I hope that I have
managed to address most of the points raised. We will certainly
scrutinise the contributions of hon. Members. If there is anything I
have missed that needs to be clarified I will write to
them.
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