Welfare Reform and Work Bill

Public Bill Committee, 15 October 2015.

Albert Owen (Labour, Ynys Môn)

I call a poorly Emily Thornberry to move the amendment.

Clause 16 - Loans for mortgage interest

Emily Thornberry (Labour, Islington South and Finsbury)

I beg to move amendment 19, in clause 16, page 15, line 25, at end insert—

‘(7A) The waiting period before a person can apply for a loan under this section shall be 13 weeks.”

Hannah Bardell (Scottish National Party, Livingston)

It is a pleasure to serve under your chairmanship once again, Mr Owen. The Scottish National party supports the intentions behind Labour’s amendment 19, because access to support must be available within 13 weeks and not the proposed 39 weeks.

According to Shelter, around £300 million per annum in SMI is “small” in terms of welfare spending, but it is very important:

“It covers the interest payments for around 200,000 home owners on their mortgages, meaning that they are less likely to be forced into having their home repossessed and, ultimately, to end up homeless.”

Shelter also says that SMI has

“tight eligibility criteria and is restricted to very low income households who are out of work, pensioners or sick or disabled. In fact, the overwhelming majority of recipients of SMI either qualify through pension credit or employment and support allowance.”

They are already some of the most vulnerable benefit claimants, so adding a further burden by turning the benefit into a loan is essentially giving with one hand and taking away with the other. We do not support the Government’s attack on the weakest by forcing more and more vulnerable people to take on the added burden of debt just to get out of hard times. How can we define that as welfare?

Amendment 19 would ensure a waiting period for applications by eligible claimants for support with mortgage interest of 13 weeks. That would offer protection against the Government increasing the waiting period, as they have done with statutory instrument No. 1647, which will increase the waiting period to 39 weeks from 1 April 2016. The explanatory memorandum to the instrument states:

“The provisions in this instrument introduce a 39 week waiting period for all working age claimants who are required to serve a waiting period before housing costs, including payment of eligible mortgage interest, can be paid.”

We do not want yet more financial pressure on benefit claimants due to having to wait more than half a year to receive financial help with their mortgage interest payments, let alone the added pressure of that financial help pushing them into further long-term debt when that benefit is turned into a loan. Has the Minister had discussions with the Scottish Government on the implications of that change from support to loan, which will impact the people of Scotland by pushing them into further debt? I would be grateful for information on that.

Shailesh Vara (Conservative, North West Cambridgeshire)

It is a pleasure, Mr Owen, to serve under your chairmanship. First, may I clarify one point concerning the Council of Mortgage Lenders? The other day, I spoke in good faith and on the basis of the many regular meetings that we have with the CML during which the issue has not been raised at all. Indeed, Paul Smee, its director general, did not raise the issue when he was in a meeting with my ministerial colleague, the noble Lord Freud, when they met in early September. Although the CML has definitely said that it believes that the 39-week waiting period will drive repossessions, they are unable to quantify numbers of repossessions. We will continue to work with the CML to assess any such impact in terms of repossessions but we do not believe that these will be significant.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the Minister give way?

Shailesh Vara (Conservative, North West Cambridgeshire)

I have said all I am going to say on that. I would like to make progress as there is a lot to be said this morning. I would rather not get bogged down on issues on which I have made proper statement.

Claimants receiving income-related benefits may claim help towards the cost of their mortgage interest payments. Other than those receiving state pension credit, claimants have to serve a waiting period before the entitlement to help with mortgage interest begins. During the period of 1997 to 2009—the announcement was made in 2008 but the actual impact was in 2009—the waiting period for the majority of working age claimants was 39 weeks. In January 2009, the then Government introduced temporary arrangements reducing the period to 13 weeks, specifically to deal with the economic circumstances and to give additional protection to those who lost their jobs during the recession. At the same time, the maximum value of the mortgage for which support was available—the capital limit—was doubled to £200,000.

It was announced in the summer Budget that, from April 2016, the waiting period will return to the pre-recession length of 39 weeks, but it is important to remember and to note that the higher capital limit of £200,000 will be maintained. Given that the 39-week period was perfectly satisfactory from 1997 to 2009, and that the reduction was introduced purely on a temporary basis to deal with the then economic circumstances, it is right and proper that we should now revert to the former system.

We are all aware that the economy is on the rise and of the huge benefit that the employment market has had. We have record employment levels. I pay tribute to my right hon. Friend the Minister for Employment for her contribution to ensuring the record level of employment that we have at the moment.

The amendment would remove the current broad powers in the Bill that allow the waiting period for SMI to be set out in regulations, replacing them with a narrowly defined 13-week waiting period.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

The Government’s own impact assessment says that people of pension age are more likely to be affected by the change in SMI. Has there been an assessment to look at the impact that it may have on, for example, their ability to pay social care costs, and at what overlap there may be as a result of having an ageing population?

Shailesh Vara (Conservative, North West Cambridgeshire)

May I first pay tribute to the hon. Lady? She has a formidable reputation in health matters, particularly in relation to elderly people. I understand that she co-chairs at least one all-party parliamentary group and chairs another. She comes with a formidable background and I take what she says with considerable respect.

It is important to remember that many pensioners will have had the assets for many years. That is actually the case. During that period, those assets will have appreciated considerably. What we are saying is that the loan will be paid only when the home is eventually sold. If there is no equity left, there will be nothing to pay back to the state. The provision is reasonable given that there are taxpayers who do not own their own home but whose taxes are being used to help others—pensioners or not—with a substantial asset whose value is continuing to appreciate and rise in value thanks to those taxes. As I said, no payment will be required until the property is sold at the end. If there is a balance left, that will be written off.

We also wish to retain the ability to act quickly in response to varying wider situations, such as economic downturn in the event that that happens again. Prescribing the waiting period in primary legislation would remove that flexibility. It is important to understand that the purpose of helping owner-occupiers with mortgage interest payments is not to secure their asset or reduce any outstanding payments owed to lenders; it is to help them mitigate the risk of repossession. There is no evidence to suggest that lenders will do anything other than exercise the same degree of forbearance that they did during the period 1997 to 2009, when the 39-week waiting period last applied, particularly as we are maintaining the £200,000 upper capital limit.

The hon. Member for Oldham East and Saddleworth also spoke about social care. Again, some people who need social care have assets that they have held for many years, often decades. People do not buy houses late in life, particularly those who are pensioners now. Many of them have an alternative income—not everyone, I accept—so we believe that there is sufficient equity to meet social care as well as the charge for the loan.

Emily Thornberry (Labour, Islington South and Finsbury)

The Minister asserts extraordinary things. I am sorry, but “We do not believe that this will increase repossessions; there is no evidence that it will” is not an answer to “Please provide the evidence that it won’t.” It is not an answer simply to assert that that will not happen, when common sense dictates that people who do not pay their mortgage for three times as long as before are likely to get into trouble with the lenders. It seems perfectly straightforward.

I will move on to that in a moment, but again, many of the points made by the Minister do not accord with what we know to be the case. As my hon. Friend the Member for Oldham East and Saddleworth said, only 15% of those who rely on the payment are on jobseeker’s allowance. Half of them are pensioners, and 40% of them are disabled, so they are unlikely to be able to get back into work. Social policy should be made on the basis of evidence rather than what one would like the situation to be. I will withdraw the amendment at this stage, but the Government should go back to the drawing board and think again. I beg to ask leave to withdraw the amendment.

Emily Thornberry (Labour, Islington South and Finsbury)

I beg to move amendment 134, in clause 16, page 15, line 34, leave out subsection (11) and insert—

‘(11) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before, and approved by resolution of, each House of Parliament.’

Shailesh Vara (Conservative, North West Cambridgeshire)

The amendment would require the regulations made under clause 16 to be subject to the affirmative resolution procedure and to be approved by each House of Parliament. That is not necessary, since the fundamental principles we wish to achieve will have been clearly laid out during the Bill’s passage and debated in Parliament.

We had a call for evidence between December 2011 and February 2012. That is a number of years ago, and there has been debate since then. We have had oral evidence. It was between December 2011 and February 2012 that the idea of providing support for mortgage interest payments through a loan was first introduced, and the majority of responses were positive.

Emily Thornberry (Labour, Islington South and Finsbury)

I appreciate that the Minister is saying that he will be able to push the principle through using his majority, but the point I am trying to make is that the details make no sense, and the Government have not thought them through. Given that we have no indication of how the system will work, we need an opportunity to scrutinise it further in a Delegated Legislation Committee so that, frankly, we can give the Government a hand, because they are making a pig’s ear of this. The Minister talked about the call for evidence in 2011 and 2012, but the can was kicked down the road for many years, until after the Conservative party won the election, at which point the Government started pushing these things through without thinking through the consequences.

Shailesh Vara (Conservative, North West Cambridgeshire)

There is a fundamental distinction between pushing forward an ideology, while ignoring everything and anything that may be put forward, no matter how sensible it is, and deciding to consider the evidence before the Committee and recognise the reality of Government—that it is important to have flexibility and regulations. That is why Departments across Whitehall have regulations: to be able to deal with the minutiae. It is also important to have that facility so that we can deal with things quickly and take a flexible attitude, rather than go through the cumbersome and time-consuming procedure of having everything approved in Parliament. That is simply not the way the real world works; it was not the way the Labour Government operated, it certainly was not the way the coalition Government operated, and it is certainly not the case now.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Can I push the Minister a little on interest rates and ask him to reflect on the experience with student loans? They started off in 2010 at a base rate, but they have now gone on to commercial rates. Allowing the issues in the Bill to be fully debated involves important considerations of transparency and openness.

Shailesh Vara (Conservative, North West Cambridgeshire)

The hon. Lady makes a very good point, and she gives me the opportunity to make it clear that, unlike students, almost all the people we are talking about have an asset—a property. Therefore, the two groups are fundamentally different. The interest rate we charge will be what we will have paid to borrow the money, and that will depend on the gilt rates at the time. It is as straightforward as that.

The Government recognise the importance of helping owner-occupiers in times of need, and they remain committed to doing so. We are simply changing the nature of the support we provide so that in future the support will be paid to claimants in the form of a recoverable loan. We will recover the loan only when the house is sold, or earlier if individuals’ circumstances change and they are in a position to pay the money back.

It is right that taxpayers, many of whom are unable to afford their own home, will no longer be asked to subsidise claimants in the accrual of a significant asset. We will continue to engage with stakeholders as we prepare for the introduction of these measures, which is vital to ensure that implementation is smooth and that the provision of support for mortgage interest continues seamlessly through the transition.

Requiring the affirmative resolution procedure would have a negative impact on implementation planning and the development of contracting arrangements with third party providers, and in so doing delay the savings that can be achieved by this measure. I hope that the hon. Member for Islington South and Finsbury will withdraw the amendment.

Emily Thornberry (Labour, Islington South and Finsbury)

This was a probing amendment and an attempt to get more detail from the Government, so I beg to ask leave to withdraw the amendment.

Clause 17 - Section 16: further provision

Emily Thornberry (Labour, Islington South and Finsbury)

I beg to move amendment 135, in clause 17, page 16, line 13, at end insert—

‘(4) The regulations must make provision for persons applying for a loan to have access to financial advice, which must be provided free of charge by an organisation independent of the qualifying lender.’

Shailesh Vara (Conservative, North West Cambridgeshire)

Clause 17 allows the Secretary of State to set out in regulations further details regarding the support for mortgage interest loan scheme, including the Secretary of State’s ability to contract out certain functions of the scheme to a third party, such as for the provision of financial advice. To be clear, the Department will administer and provide loans, but the advice and recovery will be provided by a third party, which will be chosen in an open and transparent way so that everyone can see that an independent arm’s length body is providing that advice.

Emily Thornberry (Labour, Islington South and Finsbury)

That is very interesting and helpful. Will the advice be free?

Shailesh Vara (Conservative, North West Cambridgeshire)

That is a matter to be decided.

The hon. Lady’s amendment seeks to set parameters for the advice: who will provide it, and what it will entail. It is the Government’s intention that the regulations should set out the details of that advice, including the type of provider that we will appoint. We also intend for the advice provided to be broad, including available options other than taking out a loan, the implications of taking out a loan and whether people need to speak to potential beneficiaries of their will who might be affected by their decision, so that they can make a fully informed decision about whether to take out a loan. The amendment is restrictive, as it would prevent the Government from providing the broad advice necessary to claimants when they are considering taking out a loan. I hope that the hon. Lady will withdraw it.

Emily Thornberry (Labour, Islington South and Finsbury)

I will, but we will want to hear before Report whether the advice will be free. I beg to ask leave to withdraw the amendment.

Emily Thornberry (Labour, Islington South and Finsbury)

I beg to move amendment 136, in clause 17, page 16, line 13, at end insert—

‘(4) The regulations must provide for persons in receipt of Support for Mortgage interest at the time the regulations come into force to continue to receive these payments for a period of no less than 12 months before they are required to apply for a loan.’

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government new clause 13 and Government amendment 129.

Emily Thornberry (Labour, Islington South and Finsbury)

Amendment 136 asks for a 12-month grace period. The Government say that there will be a transitional period, and we think it right for existing claimants to be given 12 months in which to work out the implications of the new necessity of taking out a loan in order to pay off another loan. They need a certain period to get their house in order—to coin a phrase—and to get themselves proper advice. We ask for a 12-month grace period before they have to take out a loan.

Shailesh Vara (Conservative, North West Cambridgeshire)

The hon. Lady’s amendment would allow existing claimants who are receiving help with the cost of their mortgage interest payments as a benefit to continue to receive that help for at least a year after the new loan scheme has been introduced by regulations. That would effectively allow existing claimants a grace period before they are required to decide whether to continue receiving support for their mortgage interest as a loan. Given that many such claimants have received help with their mortgage as a benefit for some time—in many cases, decades—it would simply be unfair to continue to provide them with help in the form of a benefit while new claimants are offered loans for the same purpose.

Emily Thornberry (Labour, Islington South and Finsbury)

Can the Minister point us to the evidence showing that some people have been receiving assistance for decades?

Shailesh Vara (Conservative, North West Cambridgeshire)

I do not have that evidence to hand, but I am quite sure, given that the Department is responsible for paying the benefit, that it is there, and therefore that the measure is based on evidence. We all know people who have been on benefits for many years, in many cases for very good reasons, but it is a fact that many people out there have been on benefits for many years, so we must accept the reality of the situation.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister has suggested that the evidence exists but he does not have it to hand. Will he make some of it available to the Committee?

Shailesh Vara (Conservative, North West Cambridgeshire)

First, I pay tribute to the hon. Gentleman, who has a distinguished record in the charitable sector. I take this opportunity to commend him and the hon. Member for Birmingham, Yardley, who also has a charitable background. Many people do such work but it gets very little recognition, so I am happy to give that recognition both to colleagues and to the hundreds of thousands of people working in that sector.

As for the evidence, it is abundantly clear that many millions of people are claiming benefit. It is also a fact that, in the election last May, this Government were given a mandate by the people of this country to put forward these reductions and cuts.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

With respect, it is quite clear that the scale of the cuts being proposed was not one of the issues put to the public. The proposed cuts were published only after the general election, so for the record that is a very misleading statement to make—[ Interruption. ]

Albert Owen (Labour, Ynys Môn)

Order. I am sure the Minister will correct things if he has unintentionally misled the Committee.

Shailesh Vara (Conservative, North West Cambridgeshire)

I have not misled the Committee. It is a fact that the Government said that we would make £12 billion of reductions from the welfare budget, and it was on that basis that the people of this country, in their millions, voted for this Government as a majority Government and gave us the mandate to make those £12 billion of reductions in the welfare budget, as we are doing.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Prime Minister also gave a commitment not to reduce tax credits, so I look forward to that commitment being implemented by the Government. To return to my previous point, where is the evidence for this Committee about decades-long benefit entitlement? [ Interruption. ]

Albert Owen (Labour, Ynys Môn)

Order. The Minister has been asked a specific question. I do not want the debate to broaden out to the topic of the general election.

Shailesh Vara (Conservative, North West Cambridgeshire)

The fact is that we have a mandate from the people of this country to make reductions to the welfare budget. That is what we are doing. This measure will save—

Albert Owen (Labour, Ynys Môn)

Order. I am sure that the Minister is going to come back to the provisions before us.

Shailesh Vara (Conservative, North West Cambridgeshire)

I will. This measure will save £250 million. I regret to say that, were it not for the incompetent Labour Administration who put this country in the mess it is in, we would not be having to take the tough decisions that we are now.

Albert Owen (Labour, Ynys Môn)

Order. Will the Minister take his seat for two seconds, please? Our debate is, I feel, repeating the general election debate. We have specific measures in front of us, and the Minister has been asked a question about evidence. If he could deal with that then move on, that would be useful.

Shailesh Vara (Conservative, North West Cambridgeshire)

I have answered the question. It is a fact that millions of people are claiming benefits. We said specifically in our manifesto that there would be £12 billion of cuts. That is what the measure is all about.

Government new clause 13 will enable the Government to put in place, by way of regulations, a framework to support the transition from the current provision of support for mortgage interest as part of the individual’s benefit entitlement to the new system of loans. It is a simple transaction: instead of a benefit, it becomes a loan. The new clause will ensure that the Government can manage the introduction of support for mortgage interest as a loan—in particular, the migration to the new system of those currently receiving support for mortgage interest as a benefit—as they see fit.

In particular, the new clause includes provisions to allow a phased approach to the introduction of support for mortgage interest loans should that prove necessary. It makes it clear that regulations may make provisions about the timing of the transition to the loan system both for new claims and for individuals currently receiving support for mortgage interest as a benefit, and provides that that can be achieved by the issuing of notices to those individuals. Notices may be issued by reference to the area in which an individual lives or the type of qualifying benefit that the individual receives.

Our intention is that existing claimants should be notified well in advance both of the implementation of the changes and of when they will be affected, and that they should be provided with financial advice so that they are aware of the alternatives to receiving a loan and the implications of doing so. Advice will include discussion of the claimant’s financial position, both now and in future, confirming their understanding of the terms of the loan and encouraging them to engage with any beneficiaries there may be in due course.

Hannah Bardell (Scottish National Party, Livingston)

I will make this brief. In Scotland, people did not vote for the Conservative manifesto or the Conservatives’ austerity cuts—more than 50% voted for the SNP. However, on the specific point I asked about—I apologise if I missed the answer—what discussions has the Minister had on the clause with the Scottish Government? It will affect people in Scotland.

Shailesh Vara (Conservative, North West Cambridgeshire)

I will happily answer that question. There has been contact at official level, and the engagement will certainly continue with the Administration in Scotland.

Government amendment 129 is a straightforward technical amendment, which will ensure that new clause 13 has the same extent as clauses 16 and 17 and apply to England, Wales and Scotland. I hope the hon. Member for Islington South and Finsbury will withdraw the amendment and accept Government new clause 13 and Government amendment 129.

Emily Thornberry (Labour, Islington South and Finsbury)

I have nothing to add, and I beg to ask leave to withdraw the amendment.

Clause 18 - Consequential amendments

Emily Thornberry (Labour, Islington South and Finsbury)

I beg to move amendment 137, in clause 18, page 17, line 40, leave out “repealed.” and insert “amended as follows—

(a) insert at the end of subsection 1—

‘(1AA) In addition to the conditions set out in subsection 1 a “relevant beneficiary” must be an individual in receipt of pension credit (see section 1 of the State Pension Credit Act 2002).’”

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss amendment 138, in clause 18, page 17, line 41, leave out subsections (2) and (3).

Emily Thornberry (Labour, Islington South and Finsbury)

I do not know whether you were in Prime Minister’s questions yesterday, Mr Owen, but many of us were. We heard the Prime Minister say the Government were “very proud” to have kept all their promises to pensioners, but their actions in this Bill show that that is simply not right. The Opposition will make it perfectly clear to pensioners that the Government are going back on their promises to them.

Through the amendment, we want to exempt pensioners from the provisions in the clause. If there is a rationale for the policy, I have yet to work out what it is. On Tuesday, the Minister said—he has said this again today—that

“we believe it is wrong that taxpayers who are unable to afford to buy a home of their own are subsidising claimants who own their own homes.”––[Official Report, Welfare Reform and Work Public Bill Committee, 13 October 2015; c. 356.]

That is a very odd statement in the light of what the Government are doing generally. It is quite startling, because obviously the Minister has forgotten about the Government’s plan to extend the right to buy to housing association tenants. That policy, which the Government say is about supporting home ownership, comes with a price tag of £11.6 billion. That is almost equivalent to the savings that the Government say that they need to make in the welfare budget. Compared with that, SMI is absolute peanuts.

The last time the Government looked at the issue, which was in 2011, as we heard, the then Welfare Reform Minister said in a press release that the existing system was “not sustainable”. That is the justification for the measure and why we are going through it—the Government say that SMI is not affordable. At the time, the Government said, spending on SMI was about £400 million. Now it is £265 million a year. In three years’ time the cost will be £250 million. So far from being unsustainable, the cost is going down. If the Government’s definition of “unsustainable” is spending going down, as projected, we need to have a new dictionary.

In fact, the cost-effectiveness of SMI is one of its most distinguishing features. To quote my new favourite organisation, the Council of Mortgage Lenders, of which the Minister is also a fan, as we have heard, it is important that the Government should

“recognise the relative cost-effectiveness of SMI in preventing repossessions.”

The Government’s impact assessment for the Bill, which was the subject of some back and forth during Tuesday’s sitting, helpfully notes that the average weekly payment to working-age SMI claimants is £38 a week. For pensioners who receive the benefit, it is only £20 a week—so it is £20 a week to keep the roof over the head of a pensioner.

To put that into context, the DWP’s most recent figures show that the average weekly housing benefit payment is £95 a week. If there is even the slightest increase in the number of repossessions as a result of the changes that the Government are proposing, and homeless families have to go into privately rented housing and therefore need to claim housing benefit, we are clearly talking about false economies, because they will be moving into somewhere more expensive. Housing benefit is an average of £95 a week, but SMI for pensioners is £20 a week. That speaks for itself and shows the benefit of making social policy on the basis of evidence rather than rhetoric.

Part of my problem in understanding the Government’s intention is that the proposal seems to fit poorly with the values that they claim to hold. We have recently been through an election campaign—as the Minister was telling us—in which the Government repeatedly claimed that welfare reform would protect the most vulnerable. It was not always clear exactly what they meant by that, but what seemed never to be in doubt was that pensioners would be included, and it was certainly hoped that disabled people would be as well.

As the Government are well aware, the overwhelming majority of those who receive SMI are the very same people whom the Government had promised to protect. Almost half of those who receive SMI are pensioners, and about 40% are disabled. Only 15% are claiming JSA, which is a clear reflection of the fact that, in the majority of cases, the people who rely on SMI support will have fallen on hard times because of increasing age or disability and are therefore unlikely to return to work. A disproportionate number of them are single women.

Again, it is important to look at the evidence, and the evidence is that a disproportionate number of the people who are getting the very small sums of money that keep the roof over their head are single women. I do not know this, but I will make a leap and say that I presume we are talking about poor widows—women who have fallen on hard times and whose partners have died. The Government are taking £20 a week away from poor widows, and that might well result in those women losing their homes. Perhaps those women took their mortgage into retirement after their husband died, or perhaps they had to leave a well-paid job after developing long-term health problems. As we have heard, 40% of them are people with disabilities.

Whoever those people are, however, they are taxpayers. They have spent their entire life working and paying income tax and national insurance. They paid stamp duty when they bought their home, and they might be subject to inheritance tax when they die, although recent announcements suggest that that is less likely to be the case in future. People who receive SMI will have paid into the system and are entitled to expect that there will be a safety net for them when they need it. The Government’s proposal sets a disturbing precedent by turning a benefit to which those people will have contributed into a loan that could be clawed back at some future point. Adding insult to injury, they will be charged for the privilege.

The Prime Minister said yesterday:

“We are very proud to have kept all our promises to pensioners”.—[Official Report, 14 October 2015; Vol. 600, c. 314.]

That is not right. I cannot imagine what he means by that. The other point that my hon. Friend the Member for Oldham East and Saddleworth made is important. The Government have also failed to keep their promises in relation to social care and to what Dilnot called catastrophic costs, and have refused to give assistance to people who will need long-term care. People need to have a home to be able to sell it to pay for their social care.

The Government’s rhetoric again flies in all sorts of different directions. We hear high-flown talk from the Chancellor of the Exchequer about how important it is for people to be able to pass their savings and their money on to the next generation, and to be able, when they die, to hand over to the next generation without being clobbered by inheritance tax. There really does seem to be one rule for the rich and another for the poor. Widows who need £20 a week will have that taken away from them. They will be expected to take out a loan in order to pay off the interest, and will be charged to do so. It is cruel.

Amendment 138, which is consequential to amendment 137, provides that SMI will continue to be paid to low-income pensioners as a non-refundable benefit.

Neil Coyle (Labour, Bermondsey and Old Southwark)

My hon. Friend is making a really solid point about the Government’s rhetoric. It is typical of the Government to create a false divide between taxpayers and those in receipt of benefits, as we have discussed in Committee previously. The Government seem to assume that the two do not overlap at all. As my hon. Friend has already pointed out, those who have put into the system for many years will find that the system is not there to support them, and we will now be charging them to draw down what they have contributed over the years. It is typical of a Government who are out of touch with ordinary working people.

Emily Thornberry (Labour, Islington South and Finsbury)

I could not agree more, and I thank my hon. Friend. I would go even further: I think that the welfare state and the principles on which we built it are one of the things we should be proud of about being British, and that is being fundamentally undermined by nasty little clauses such as this one. The Government should be ashamed. The Opposition will certainly fight it.

As I have said, amendment 138 is consequential to amendment 137, which will provide for SMI to continue to be paid to low-income pensioners as a non-refundable benefit. If the Government wish to go ahead and convert the benefit into a loan for working-age people, that is an idea that we can debate separately, because that is a different matter, but for pensioners who are unable to work there should be different considerations. If someone is coming to the end of their life and is not expected to work any more—that is what being a pensioner is—or if they are disabled, circumstances ought to be different. If someone is of working age and on jobseeker’s allowance, there might be a different argument—I have yet to be persuaded, but I appreciate that they might be a different group. However, as we have heard, most of the people affected by this nasty little clause will be pensioners.

If pensioners are to consider the Government’s promises worth the paper they are written on, Ministers should go back to the drawing board and rethink this cruel and unnecessary proposal. It is unnecessary because, in the great scheme of £12 billion, how much money are the Government really saving? It is an amount of money that is going down and down, and it is a fraction of a percentage point of the money that is to be saved.

The measure is a mistake. I hope that the Minister is listening—we are trying to help and the Government are making a profound mistake. I will press amendment 137 to a vote. If Conservative Members really believe that they cannot bring themselves to find, from a £120 billion welfare budget, £20 a week to help poor widows not lose their homes, the public have a right to know where the Government stand.

Shailesh Vara (Conservative, North West Cambridgeshire)

We have heard a lengthy and passionate speech, the bottom line of which is, “Can we make an exception for pensioners?” As I have said before, we are talking about pensioners who have an asset, probably the biggest and most valuable asset that they have—the biggest asset that most people have is their home. That asset will appreciate in value. There is an element of fairness involved in the measure, as well as ensuring that we make some savings, and it will save £250 million.

I come back to the fundamental point: we are talking about individuals who have an asset that is being subsidised by the taxpayer. Many of those taxpayers do not have such an asset of their own. It is important to recognise that the proposed system is almost the same as the existing system, save that the benefit is converted into a loan that is payable on sale of the valuable asset or, to the extent that there is nothing left in the equity, the Government will write off the balance. All the care, attention and other benefits that pensioners receive will continue.

Emily Thornberry (Labour, Islington South and Finsbury)

I hear what the Minister is saying, but his difficulty is that it flies in the face of what the Government are doing for people who are being helped to buy their housing association homes, a measure that will cost £11.6 billion. People—taxpayers—who do not own their own homes are contributing to the £11.6 billion pot that will help housing association tenants to buy. SMI is chickenfeed compared with the amount of money that the Government are using to subsidise that.

Shailesh Vara (Conservative, North West Cambridgeshire)

If £250 million is chickenfeed, to quote what the hon. Lady said, I am afraid that people reading our proceedings in Hansard will take a deep breath and say, “This is what those people think of £0.25 billion.” The consequence of several such chickenfeed decisions is the mess that the country is in now.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Given what the Minister has said about the economic competence of the Government before last, will he remind us of the savings projected for employment and support allowance and housing benefit in the previous Parliament and whether they were met?

Shailesh Vara (Conservative, North West Cambridgeshire)

I do not have those figures to hand, but I am happy to obtain them and write to the hon. Gentleman. He is seeking to make a name for himself. On Tuesday he sought to do so by calling other Members names. Today he seeks to be clever by asking questions, which are important, but which he knows will get a written answer.

The amendment will not make a difference. This is all about fairness.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I want to push the Minister again. The context of the clause is so important given that the Government have reneged on their commitment to cap social care costs. There has been no assessment of that. During the summer, the Government said that they would not be pushing forward with the Dilnot figures—actually, slightly different figures from the Dilnot ones—and the cap on care costs of £70,000-odd. That is not going to happen. We can add all that together, but it does not seem to have been considered at all by the Government.

Shailesh Vara (Conservative, North West Cambridgeshire)

It has been considered. There will be a minimal overlap between the DWP loans and the Department of Health deferred payment arrangements for social care. Those people expected to avail themselves of a deferred social care payment are likely to be mortgage-free or to have income levels above the benefit threshold and so would not qualify for SMI loans. [ Interruption. ] We will have to agree to disagree. Simply, the bottom line is that the measure is about fairness—fairness for taxpayers. We have to recognise that pensioners have an asset that appreciates, although they are not expected to make any repayment until that asset is sold.

Emily Thornberry (Labour, Islington South and Finsbury)

The answers we have heard are profoundly disappointing, and they will be disappointing to the most vulnerable pensioners throughout the country who have paid into a system and who deserve better from the Government.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Does my hon. Friend agree that the Minister is making a mockery of the Government’s supposed commitment to protect the disabled and pensioners, which is what they claimed? The Government seem to be relying on a low number of people being affected by the measure to hide their false pretence.

Emily Thornberry (Labour, Islington South and Finsbury)

That is absolutely right. Of course, for people who are affected, it will not matter whether the number is a low one—their life will be profoundly affected by the changes made in the Bill. A relatively small amount of money is involved. I appreciate that huge numbers of people will not be affected, but that does not change the principle, the justice or the unfairness to the individual concerned. We will not withdraw the amendment and will press it to a vote.

Clause 19 - Reduction in social housing rents

Shailesh Vara (Conservative, North West Cambridgeshire)

I beg to move amendment 141, in clause 19, page 18, line 11, at beginning insert—

“In relation to each relevant year,”

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government amendments 142, 143, 145, 146, 170, 173, and 163 to 168.

Shailesh Vara (Conservative, North West Cambridgeshire)

The social rent clauses relate to the Government’s commitment to achieve a reduction in rents for social housing of 1% a year over four years. That will be good for the tenants and for the taxpayer, saving £1.445 billion by 2020-21. The amendments are the consequence of the Government listening to points made since the Bill was published by social landlords, local government and housing bodies, among others. We hope our amendments address some of the issues raised. The amendments in the group are either concerned with issues of clarification or make small drafting changes.

Amendments 141 and 143 clarify that the 1% rent reduction applies in each relevant year, which is to say, each of the four years from 2016. Amendments 142 and 146, taken together, clarify that the reduction relates to the amount of rent that is payable by a tenant in respect of a year—not the amount that is actually paid by the tenant, which is to recognise the reality that those figures might differ. Amendment 145 is a minor drafting point to clarify that the “amount” relates to the “amount of rent”. Amendment 170 is to simplify the drafting of clause 19 and amendment 173 is a drafting change to the clause to provide that a relevant year for a private registered provider whose practice is not an April start to a rent year will be determined in relation to the rent practice for the number of tenancies, not tenants.

Amendment 163 deals with the potential failures of providers to comply with the clause. It seeks to give the regulator of social housing the appropriate grounds on which to exercise monitoring and enforcement powers. With this amendment we have had regard to how the Housing and Regeneration Act 2008 established such powers and the need to avoid any confusion in how the regulator should exercise its power.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister mentioned that he had had meetings with or representations from social housing associations. Will he clarify how many housing associations supported the measures proposed by the Government? How many housing associations have outlined to the Minister and the Department the risk that they might have to close some of the housing they provide as a result of the measure?

Shailesh Vara (Conservative, North West Cambridgeshire)

Let me put things into context. We have spoken with a lot of organisations—I have a list at the back of my file and am happy to read out some of the names if necessary. The context of the measure is that it is part of the Government’s £12 billion welfare reduction. We made that absolutely clear to the country at the time of the general election. The people of the country voted democratically, in their millions, and we have a mandate to make those cuts. That is the reality of the position, which might be something that the Opposition do not like—

Neil Coyle (Labour, Bermondsey and Old Southwark)

Will the Minister give way?

Shailesh Vara (Conservative, North West Cambridgeshire)

I will not give way for the moment; I will finish my answer. The reality is that that is the position.

We have, however, spoken with a lot of people. I simply refer to the comments made by David Orr, the chief executive of the National Housing Federation, when he give oral evidence before the Committee. Most of us were at that sitting on Tuesday 15 September 2015. In response to a question from my hon. Friend the Member for Sutton and Cheam, Mr Orr said:

“I think that, in truth, there is no sector anywhere that is not still capable of making further efficiency savings. That is as true in our sector as it is anywhere else.”

He went on:

“Ten years ago, when the Government put in a pound of public money, housing associations were generating £1.60 of private investment. Now, the Government put in a pound of public money and housing associations generate £6 of private investment; I think that is a pretty impressive efficiency gain. To be able to do that, housing associations have to be financially robust and be able to generate surpluses that give confidence to the investors in our sector.”

With reference to the surpluses—remember that housing associations had a surplus of £2.4 billion in 2014—he said:

“In our sector more than anywhere else, surpluses are not paid as dividends to shareholders; they are reinvested in building new homes and providing services.”––[Official Report, Welfare Reform and Work Public Bill Committee, 15 September 2015; c. 91-92, Q144.]

Although there have been utterances of disagreement with what we are doing, let me be absolutely clear that housing associations are robustly managed, have robust financial bottom lines and have a £2.4 billion surplus.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Riverside Housing Association has said that

“a year on year rent reduction would make this element of our business loss making.”

St Mungo’s has said that

“the requirement to reduce rents in social housing in England by one per cent per year for four years will result in the loss of supported housing schemes for homeless and vulnerable people.”

The Homes and Communities Agency has estimated that those services save the taxpayer £640 million per year. Where is the saving in the longer term if those services do not exist?

Shailesh Vara (Conservative, North West Cambridgeshire)

I am sorry that the hon. Gentleman was so keen to ask his question and so busy thinking about it that he paid no attention to what I was saying. He referred to one organisation. I referred to the comments of the chief executive of the National Housing Federation. We have done our homework, and estimate that we will save nearly £1.5 billion, as I have said.

Amendment 163 provides that a failure or risk of failure to comply with clause 19 is not to be, of itself, a ground for exercising certain monitoring and enforcement powers under part 2 of the 2008 Act, by removing clause 22(1) and (2) from the Bill as introduced. The practical effect of the amendment is that, before exercising those powers, the regulator must satisfy the specific grounds relevant to each power in chapters 6 and 7 of the 2008 Act, as amended by clause 22(3) to (8) of the Bill. Amendments 164 to 168 insert the correct title of the Bill into certain provisions.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

This is my first opportunity to say that it is lovely to see you in the Chair today, Mr Owen. I will speak more fully on the clause when we discuss the Opposition amendments, but I will comment on this first group of amendments. With respect to the Minister, the Government have tabled 42—I have just counted them—amendments, so we can hardly say that they have done their homework. I am afraid that that reflects the nature of the Bill as a whole, which has been made up on the hoof. There has been no thorough assessment. I will go through my concerns about the lack of assessment and the evidence we have heard about today on the impact the Bill will have not just on the viability of housing associations but on their ability to provide affordable housing.

The Minister quoted the National Housing Federation. Housing associations have been working incredibly hard to ensure that they have a going concern and are able to afford to invest in the development of affordable housing. One issue with the clause is that it would threaten their viability and ability to borrow at low interest rates. Moody’s, the credit rating agency for the 44 social landlords, has said:

“A traditional credit strength of English [housing associations] has been the predictability of the policy environment…This stability has been eroded by the sudden removal of the rent-setting formula, which was preceded by limited consultation.”

If anything, the measure will make it even harder. I will speak more fully on the implications, not just for housing associations.

Peter Dowd (Labour, Bootle)

My hon. Friend referred to the fact that this 1% reduction will have a significant effect. Is she aware that Riverside Housing Association has estimated it will lose £3.9 billion nationally?

Debbie Abrahams (Labour, Oldham East and Saddleworth)

My hon. Friend makes a very good point. I am indeed aware of that. When preparing for this part of the Bill, I was inundated with concerns from my local housing associations about what it will mean for their bottom line and how it will affect their ability to build. Later this afternoon, I will go over what the potential loss of income means for housing associations and local government.

Shailesh Vara (Conservative, North West Cambridgeshire)

I simply say to the hon. Lady that we have done what Governments are often accused of not doing: we have listened. Since the Bill was published, we engaged with the relevant communities and stakeholders and listened to their concerns. As will become apparent as the debate progresses, we have made changes that will clarify the position better for those concerned.

I am sorry if the Government, in listening to communities with a view to making the Bill better, are now being accused of doing wrong.

Shailesh Vara (Conservative, North West Cambridgeshire)

I beg to move amendment 144, in clause 19, page 18, line 12, after “is” insert “at least”.

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government amendments 169, 171, 147, 148, 150 to 153, and 157 to 160.

Shailesh Vara (Conservative, North West Cambridgeshire)

This group of amendments deals with some important elements of the rent-setting process. Amendment 144 provides flexibility to registered providers to set reductions in rent of more than the required 1%.

Amendment 169provides that the rent reductions must be applied on a pro rata basis if the tenant’s tenancy comes to an end part way through a relevant year. The same principle applies if the rent reduction provisions cease to apply to a tenant part way through a year because an exception under clause 20 or an exemption under clause 21 no longer applies. The amendment therefore makes it clear for registered providers that, in the circumstances specified, the rent reduction should apply on a pro rata basis.

Amendment 171 is an essential amendment that clarifies a number of important points. Proposed new subsection (3) provides that the amount payable by the tenant in the preceding 12 months is to be treated as having been the greater of: the amount that would have been payable if the rent at 8 July 2015 had applied during those 12 months; or, if the Secretary of State consents to the use of a different permitted review day, the amount of rent that would have been payable if the rent on the permitted review day had applied during those 12 months. We expect to use the flexibility to grant providers whose normal rent review date is after 8 July permission to use an alternative date as the reference date when calculating reductions, providing there is no evidence that the provider in question has manipulated his rent review date or implemented rent rises after 8 July 2015 in order to avoid the effects of the rent reduction.

Proposed new subsection (3A) clarifies that the Secretary of State’s consent for an alternative permitted review date may be for a particular case or for a description of cases. It is likely that the Secretary of State will issue a general consent covering typical cases. Proposed new subsection (3B) clarifies that, if a tenant was a tenant on 8 July 2015 and continues as a tenant of the same social housing until the beginning of the first relevant year, they will be treated, for the purpose of clause 19(1), as if they had been a tenant for the 12 months preceding the first relevant year—whether or not that is in fact the case—in order to establish the baseline of the rent on which the reductions will then apply.

Naseem Shah (Labour, Bradford West)

It is great pleasure to serve under your chairmanship, Mr Owen. Will the Minister highlight whether service charges are subject to the 1% cut and explain the process for introducing rent reductions for tenants when rents changes are not usually announced until April?

Shailesh Vara (Conservative, North West Cambridgeshire)

I am not sure whether that question is entirely relevant to what I am saying.

Emily Thornberry (Labour, Islington South and Finsbury)

You can still answer it, though.

Shailesh Vara (Conservative, North West Cambridgeshire)

My answers to those questions will come subsequently. There are other issues at hand and I am more than happy to address the matter raised by the hon. Member for Bradford West. That comes up in another section and I will happily deal with it then.

Amendments 147 and 148 clarify that clause 19(7), which allows an alternative relevant year, applies only to private registered providers. Unlike local authorities, whose budgeting and rent reviews are carried out on a traditional financial year cycle, starting 1 April, the housing association sector practice regarding rent review dates varies. Clause 19(7) therefore enables the use of a different relevant year, where the provider’s rent review date for the greater number of its tenancies is not 1 April. The amendments ensure that that subsection applies only to private registered providers, as local authorities do not need that flexibility.

Amendments 150 to 152 on private registered providers, and amendments 157 to 159 on local authorities, provide some important flexibility in the levels of permissible rent once an exemption has been granted by direction. They modify the provision in clause 21 for limited exemptions from the rent reduction requirement, which means that providers will have the flexibility to make a greater reduction in the rent than that set out in the direction.

Amendment l53, which is for private registered providers, and amendment 160, which is for local authorities, deal with circumstances where a registered provider may need to be able to increase rents but it is not appropriate to completely exempt the provider. They allow the regulator and the Secretary of State to issue a direction setting a maximum threshold up to which a provider can increase rents. The amendments give the regulator and the Secretary of State the tools they need to support registered providers in difficult circumstances while protecting hard-working tenants from excessive increases.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Again, these are technical amendments, which we have no specific comment on. My earlier remarks apply. It is good that the Government are in listening mode. It is just a shame that that was not done when the Bill was drafted. As I said, I will discuss my particular issues with the clause later this afternoon.

Shailesh Vara (Conservative, North West Cambridgeshire)

I take on board the hon. Lady’s comments. Clearly, the matter will come in for further debate and I am sure that other members of the Committee will wish to comment. Mr Owen, I ask the forbearance of you and the Committee as a number of technical amendments need to be dealt with.

Shailesh Vara (Conservative, North West Cambridgeshire)

I beg to move amendment 172, in clause 19, page 18, line 25, leave out subsections (4) to (6).

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss the following:

Government amendments 174, 175, 178 and 179.

Government new clause 19—Further provision about social housing rents.

Government new clause 20—Provision about excepted cases.

Government new clause 21—Rent standards.

Government new clause 22—Interpretation.

Government new schedule 1—Further provision about social housing rents.

Government amendments 180 to 183.

Shailesh Vara (Conservative, North West Cambridgeshire)

It is good see you this afternoon, Mr Owen, as it was this morning.

We recognise that tenancies will start at different points in the four years of rent reductions and that providers will want to know what rent is set on re-lets for new social housing and for conversions to affordable rent. First, I turn to the more substantial amendments in the group, which make more detailed provision for this situation than clause 19 as introduced. They enable a provider to determine the amount of rent that is initially payable when a tenancy begins after 8 July 2015. The cases are not covered by clause 19(1), which applies to the generality of tenants who were tenants of their social housing on 8 July. Clause 19(1) also governs the future rent reductions for all tenants whose tenancies began after 8 July 2015, once they have been tenants for a full relevant year.

New schedule 1 sets out the details of how rent should be set for different types of new tenancies starting after 8 July 2015. It also provides for exceptions, exemptions and enforcement of the schedule. Part 1 provisions are intended to clarify how the rent reduction requirements should be applied in relation to new tenancies after 8 July, whether that is a re-let of existing housing, new social housing or letting at affordable rent. In the first of those instances, re-lets that exist in social housing will be able to be let at the greater of a social rent or an assumed rent rate.

The social rent rate, which is prescribed in sub-paragraph (4) of new schedule 1, is set in relation to a formula that will be set out in regulations. Sub-paragraphs (7) and (8) provide that the Secretary of State may define “formula rate” in the regulations. Our intention is that the regulations will mirror the formula set out in the rent standard guidance and the Government’s guidance on rent. For supported housing, we will continue to allow rents to be set at up to 10% above formula. I appreciate that these are important issues for social housing providers, so I draw Members’ attention to this change.

The assumed rent rate, which is prescribed in sub-paragraph (5), is based on the rent that was payable under a tenancy in place on 8 July, but the calculation reflects the rent reduction requirement. This is important for providers whose rents have historically been set higher than the formula rent at 8 July 2015. In those circumstances, we do not want providers losing more than 1% year-on-year in rent reductions, which would have been the case if rents for all new tenancies were set with reference to the social rent rate.

Sub-paragraph (6) clarifies that, if the tenant is in that social housing for a part of the year only, or if the requirement ceases to apply because of an exception or exemption, the reduction in rent applies on a pro rata basis. In instances of new social housing, the rent will be set with reference to the social rent rate as described above. Paragraph 3 sets out the case for a person becoming a tenant of affordable rent housing after 8 July 2015.

Sub-paragraphs (2) to (4) provide that the rent payable by that tenant should be set at no more than 80% of what would be the market rent for that social housing and that, in the following years, a reduction of 1% per annum applies. Again, such rents will be on a pro rata basis if appropriate. What constitutes affordable rent housing will be set out in regulations made under paragraph 4. The intention is to mirror the existing policy that homes should be let at affordable rent levels only in certain circumstances, including where there are agreements or arrangements with the Homes and Communities Agency, the Greater London Authority and the Secretary of State, to control housing benefit costs.

Part 2 of the new schedule sets out exceptions to, exemptions from, and the enforcement of, the requirements in part 1. Paragraph 5 makes provision for exceptions that mirror those set out in clause 20, namely low-cost home ownership and shared home ownership accommodation, and various exceptions applicable to mortgagees and other lenders when those persons take steps to enforce a security. Paragraph 5(4) gives the Secretary of State a power to make regulations to disapply the requirements of part 1 in other cases, set out in sub-paragraph (5). In particular, the regulations may include provisions on tenants, tenancies, accommodation and events. They may also include provisions on high-income social tenants and on periods when a tenant’s rent is temporarily reduced or waived.

Paragraph 6 of the new schedule relates to the granting of exemptions by the regulator or the Secretary of State and makes equivalent provision to that in clause 22. Paragraph 7 gives the Secretary of State a power to make provision about the enforcement of the schedule, including provisions to apply part 2 of the Housing and Regeneration Act 2008 with modifications.

Part 3 of the new schedule sets out the conditions relating to regulations made under the schedule. Paragraph 9(2) provides that providers must have regard to guidance when determining assumed rent in cases of properties that were not tenanted on 8 July 2015.

Amendment 172 removes the provision made for other cases in the Bill as introduced. Amendment 174 is a drafting amendment linked to new clause 20 on excepted cases under the new schedule and new clause 19, and is necessary to introduce the new schedule. Amendments 175, 178 and 179 are minor technical amendments consequential on new clause 22 and, in the case of amendment 175, on new clause 21.

New clause 21 expands the provision in clause 19(9) of the Bill as introduced. Sections 194(2A) and 198(3) of the 2008 Act give the regulator of social housing the powers to set and revise standards relating to levels of rent. The new clause ensures that the regulator may not issue standards inconsistent with the provisions on social housing rent in the Bill.

New clause 22 simply gives the meaning of various terms set out in the provisions on social housing rent in the Bill. In particular, subsections (3) and (4) clarify when a tenancy begins, when a tenancy is to be treated as continuing although a new tenancy has been granted, and when a tenancy that has been assigned should be treated as coming to an end. The new clause clarifies the position in respect of new grants of tenancies to the same tenant, including at least one of the tenants who formerly held a joint tenancy, as well as certain changes of tenancy under schedule 1 of the Rent Act 1977 and assignments by way of exchange.

I turn briefly now to new clause 20, which provides the Secretary of State with a power to make regulations regarding the maximum amount of rent payable by a tenant in a category excepted by regulations under clause 20 or the new schedule. It also enables the Secretary of State to make provision regarding the maximum amount of rent payable by a tenant who ceases to be excepted from the rent reduction provisions. Those powers are important as they enable the Secretary of State to make regulations to establish the appropriate rent regime for such excepted cases. In so doing, they give flexibility to make provision for special cases—for example, supported accommodation and tenants whose rent has been temporarily reduced. Providers, at present, have discretion to charge high-income social tenants a higher rent, and it is the Government’s intention to exempt such tenants from the rent reduction provisions. It is important to ensure, however, that if a tenant’s income drops below the high-income threshold, they will no longer be required to pay a higher rent, and the Secretary of State will be able to require that under the regulations.

We also recognise that providers’ individual circumstances will differ significantly, and the new clause will give the Secretary of State power to provide in regulations for an exemption regime if a provider needs it. The new clause will also enable regulations to provide for enforcement of the regulations by the regulator. Amendment 180 is consequential on the addition of the new clauses and the new schedule to the Bill.

Amendments 181 to 183 are technical and relate to the date upon which the various provisions come into force. Amendment 181 will ensure that the provisions exempting a registered provider from the rent-reduction measures can come into force from the date of Royal Assent. Although we do not expect registered providers to plan on the basis that an exemption will be granted, it is nevertheless important that a provision is put in place quickly where it is needed. Amendment 182 is consequential on amendment 181. Amendment 183 is consequential on the addition of the new clauses and the new schedule and will enable the Secretary of State to introduce regulations quickly following Royal Assent. The Bill provides that such regulations will come into force on other appointed days for other purposes. The intention is to bring the Bill’s provisions into force on 1 April 2016.

I wish to make a clarification. Earlier, I said that paragraph 6 relates to the granting of exemptions by the regulator or the Secretary of State. I said that it makes equivalent provision to that in clause 22. I should have said clause 21.

I thank you, Mr Owen, and colleagues for forbearing in listening to these detailed, technical and necessary comments. I am sure everyone will appreciate that it is necessary to provide such detail on the changes.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

As I said this morning, I accept that these are technical amendments. We will scrutinise them in detail, but I will make more general remarks in relation to my own amendments.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I beg to move amendment 21, in clause 19, page 19, line 25, at end insert—

“(9A) The Secretary of State must, within 12 months of this section coming into force, produce a plan to offset the impact of lower social rents on housing associations and local government.”

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss the following:

Amendment 85, in clause 19, page 19, line 25, at end insert—

“(9A) The Secretary of State must, within 12 months of this section coming into force, produce a report outlining the impact of the reduction in social housing rents on the availability of accessible and supported housing.”

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I hope everyone has had a good lunch. The amendments are in my name and those of my hon. Friends.

Clause 19 requires registered social housing providers to reduce the amount of rent payable by a tenant in social housing in England by 1% a year for four years from 1 April 2016. The Government argue that the measure will save money paid on housing benefits. They estimate in the impact assessment that the saving will be approximately £1.995 billion, which, on the surface, seems like a good deal for social tenants. However, there are significant implications for current and future renters.

The Local Government Association has estimated that councils in England will lose more than £2.6 billion, and that 19,000 fewer affordable homes will be built by 2019-20 as a result of the measure. I will come to what that will mean in terms of fewer homes in my area of Oldham, but for housing associations in general, the situation is even worse. The National Housing Federation calculation is that housing association income, collectively, will reduce by £3.85 billion over the next four years, resulting in 27,000 fewer homes being built. That contrasts markedly with the Office for Budget Responsibility assessment in the Budget, which predicts 14,000 fewer affordable homes being built.

Will the Minister confirm how that discrepancy has arisen? Is there a calculation that we are not aware of? Exactly how has that difference come up between the OBR’s 14,000 and the figures of the LGA and the NHF? May I also ask why that was not included in the impact assessment process? At the same time, will he confirm the actual figure for loss of income to be suffered by housing associations by 2020? My colleagues will want to comment about their own areas, but in my area the estimate for loss of income is £15 million. In places such as Oldham, that has significant implications for affordable homes.

In May 2014, following the 2013 spending review, the Government committed to a 10-year rent settlement, which was meant to introduce the necessary long-term certainty needed to attract private investment into building new affordable homes. What has changed? As a result of the longer-term planning with assumptions about what rental incomes they would be receiving, housing associations have been able to borrow for house building at reasonable rates, attracting £6 from the private sector for every £1 of public money, as the Minister said this morning. Moody’s, the rating agency for the social landlords, commented that the change to the 10-year rent settlement and long-term planning came out of the blue, without any consultation, and is making things incredibly difficult, threatening the viability of many housing associations. We will debate that under a subsequent clause. The OBR acknowledged the difficulty caused by such a sudden change—it is due to be implemented next year. It also said—this is absolutely key—that:

“We do not expect private sector house-builders to offset this effect to any material degree.”

That is in paragraph 3.84 of the OBR publication accompanying the July Budget.

The ability of housing associations to borrow and the effect of the measure on their ability to build more affordable homes are key concerns not only of housing commentators, but of the 1.38 million or so people who are on local authority housing lists—that is a 2014 figure, the latest produced by the Government—71% of whom are in receipt of housing benefit. I will be grateful if the Minister confirms what assessment has been undertaken. How will the provision affect social housing waiting lists? We know from last year’s Work and Pensions Committee report on affordable housing that there are considerable issues for people in receipt of housing benefit in being taken on by private sector landlords. What will be the impact of the measure on social housing waiting lists and people’s ability to move into the private rented sector?

It is important that we look at what the Government are proposing in the context of the housing market as a whole. Most people recognise—possibly the Government do not—that there is a housing crisis in this country, and this measure will make it worse. The Government’s own figures show that from 2012 onwards there has been a huge decline in affordable homes being built, from 37,680 in 2012 to 10,840 in 2014. That brings it to a 20-year low.

Neil Coyle (Labour, Bermondsey and Old Southwark)

My hon. Friend may be aware that my local authority, Southwark, is the largest landlord in London. In the previous Parliament, it was able to build more affordable homes than any other local authority, and it has a commitment to 11,000 new council homes in a welcome house building programme. However, the measures in the Bill would leave Southwark Council’s housing revenue account with a loss of £62.5 million by 2019-20, and in that year it would lose £28.2 million, with a knock-on effect on its ability to provide sufficient accommodation. I hope the Minister will commit to meeting my council to address those concerns, and I would welcome my hon. Friend encouraging him to do so.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

As my hon. Friend rightly says, Southwark is the largest housing provider in London, and London faces particular issues.

Policy measures that have already been implemented have exacerbated the problems that we face on affordable homes. For example, the Government waived the mandatory quota for building affordable homes in new developments, which has further contributed to the poor quantity of affordable homes. The coalition Government allow developers to build more properties for rent in the private rented market, and by deregulating what was already the least regulated private rental sector in Europe, they open the door to rogue landlords.

The Government used £12 billion of taxpayers’ money to guarantee £130 billion of new mortgage lending in the form of the Help to Buy scheme. That has done little to help renters become buyers and homeowners. Instead, it has fuelled increases in new house prices and private sector rents, as many owners either sell or rent their properties as soon as the subsidies run out, and the increase in private sector rents has fuelled the increase in the housing benefit bill over the past five years. It has gone up from £4.4 billion in 2009-10 to £24 billion in 2014-15.

Neil Coyle (Labour, Bermondsey and Old Southwark)

To further demonstrate the Government’s inability to understand the housing crisis in London in particular, is my hon. Friend aware that the Help to Buy scheme helped a very round number of people in the run-up to May 2015—an incredibly round number of zero—and that I have written to the Government to ask for improvements to the scheme? Unfortunately, no sufficient response was forthcoming.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

My hon. Friend makes an important point. To be honest, I am not surprised. The Minister this morning was unclear about the rise in the housing benefit bill. As I was saying, it is up from £4.4 billion in 2009-10 to £24 billion in 2014-15—those are the actual figures. I know my hon. Friends will want to raise this point, but I will bring it up first: the number of people in work and claiming housing benefit has doubled to 1.1 million since May 2010.

Neil Coyle (Labour, Bermondsey and Old Southwark)

Those people in work are also paying taxes. There seems to be some misunderstanding on the Government Benches about who pays taxes in this country.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Absolutely. The language used is sometimes unfortunate; it leads to a misconception that is commonly put out to the public arena. We all have an obligation to not mislead the public.

Extending the right to buy, which was mooted in the Tory party manifesto and set out this week in the Housing and Planning Bill, may increase homeownership —we all want to encourage homeownership—but without building more social housing, the extension will just reduce the supply of affordable homes for people on low income to rent. What will happen then? The average house price in the UK is more than £180,000. In London, it is more than £460,000. It has been estimated that it would take 22 years for people on low and middle incomes to save for a deposit.

I remind the Government of all the warm words from last week’s Tory party conference about helping people in poverty and with low incomes. There is a practical measure that the Government can take to do something about that, and I challenge them to do so. Housing is one of the biggest costs families face, and the Government’s plan will make the situation worse. Many young people, but not exclusively young people, are living with their parents or renting—the so-called “generation rent”. Inequalities are unfortunately increasing, not only in income but in wealth and assets, such as housing and land. Those inequalities, including the cost and availability of land, are key to addressing the housing crisis.

In addition to the effects of the plans on the building of affordable homes, there will undoubtedly be an impact on housing repair and regeneration programmes. The Local Government Association estimates that the loss in income from rent is equivalent to 60% of all local authorities’ total housing maintenance budget. That is significant. Ultimately, there will be an impact on both the integrity and the condition of the stock, and on maintaining decent home standards.

Peter Dowd (Labour, Bootle)

Is my hon. Friend aware of any Government assessment of the medium to longer-term impact of the policy? If they denude associations of cash now, it saves the Government their £250 million or £300 million, but in the longer term, trying to claw back the lack of investment and denuding of the infrastructure might cost double or triple that.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

My hon. Friend makes a valid point that needs to be driven home. There is such a poor evidence base to justify the policy. The Government have calculated the savings to the housing benefit bill, but the potential impact in other areas is significant. As a former public health consultant—I qualified in the ‘90s—I can remember the housing issues such as the need for rehousing on medical grounds, which was commonplace due to the poor quality of housing. A lot has been done to improve housing conditions though the decent homes programme and so on, and we do not want to reverse that. It would be particularly harmful to tenants, and particularly the young.

Naseem Shah (Labour, Bradford West)

Is the Minister aware that the measure will disproportionately affect certain housing associations in my constituency that cater for larger families? We have had the bedroom tax, and these measures feel like an extension of that sanction, which particularly affects more vulnerable people, such as women fleeing domestic violence. The Black Women’s Support Project in Bradford will suffer; I know because had a conversation with the chief executive, as I have served on the board in the past.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Again, my hon. Friend makes a valid point. Yes, there will be a small reduction in rent, which will be reflected in a reduction in housing benefit, but the cumulative impacts on individual families and in other spending areas will be considerable.

My point is that the measures will particularly affect the very young, the very old and people with existing health conditions and disabilities. As we anticipate, that is a logical consequence of reducing the maintenance budget, because the quality of housing will be affected. What assessment has been made? It is clear that the provision will push more households into the private rented sector, where there are currently 1.5 million families with insecure tenancies who could be evicted with as little as two months’ notice. Homelessness and rough sleeping have risen over the past five years, with 54,000 accepted as homeless, up 36% since 2010, and 920 families with children being illegally housed in bed and breakfasts for longer than six weeks because there is no affordable housing. That figure has risen by 820%. Again, how is it anticipated the measures will affect the homelessness figures?

Neil Coyle (Labour, Bermondsey and Old Southwark)

On the point about homelessness, is my hon. Friend aware that in London since 2010, the number of former armed forces members sleeping rough has risen elevenfold, and does she agree that that heaps shame on the Government’s attitude towards those who have served in our country’s armed forces?

Debbie Abrahams (Labour, Oldham East and Saddleworth)

My hon. Friend makes a valid point. People whom we should be supporting after their service to our country are unfortunately finding themselves without a roof over their head. I say “unfortunately”; there are means to prevent it. The measure will stop the roll-out of the affordable homes programme and have an impact on armed forces personnel and people leaving care, who are more likely to need affordable homes. A whole host of people will be impacted.

What assessment has been undertaken of the viability of registered social landlords? I know that we will debate that when we come to a later clause, but given the risks that people already face, for example from the introduction of universal credit and the lowering of the benefit cap, housing associations have a genuine concern about how they will measure it in practice. I refer to one of my own local housing associations. I mentioned the £15 million reduction in income from rent; it will have to deal with that, including through redundancies and by rowing back on some of the programmes by which it hoped to upgrade accommodation. What assessment has been made of the risks being shifted to housing associations?

Amendment 21 would compel the Secretary of State to produce a plan within 12 months of the provision coming into force to offset the impact of the reduction in rent, so that the building of affordable homes is not affected. We are asking the Government to say within 12 months how they will stop the building of affordable homes being pared back, as the LGA and the NHF anticipate.

Peter Dowd (Labour, Bootle)

I am sure that my hon. Friend is not aware of this; I do not know whether the Minister is aware, but it would be interesting if my hon. Friend could check it out in due course. Riverside Housing Association, which is one of my local housing associations, estimates that the rent reductions will require an additional internal subsidy of £12,000 per home built for rent, and an additional internal subsidy of £12 million for the current programme—a 50% increase. Are the Government aware of the implications for building when they take that much money out of the system in one fell swoop? Do they seriously believe that that will not have an impact on housing in the medium term?

Albert Owen (Labour, Ynys Môn)

Order. Before I ask the hon. Member for Oldham East and Saddleworth to continue her speech, may I say that the Minister will be on his feet later, so if Back-Bench Members wish to ask him aw question they will be able to do so directly?

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Thank you, Mr Owen, for that clarification. My hon. Friend makes a relevant point, and perhaps he will ask the Minister directly.

Amendment 85 would require the Secretary of State to produce a report on the availability of accessible and supported housing. Finally, amendment 184 would introduce a sunset clause so that there would be no further reductions in rent after 2020. These things have a way of continuing, so we want to ensure that it is clear that the Government intend there to be no further rent reductions after 2020.

Shailesh Vara (Conservative, North West Cambridgeshire)

I am grateful to the hon. Lady for the measured way she has approached the debate and presented the case for her amendments. I am grateful to her for moving amendments 21 and 85, because they give me the opportunity to set out clearly why we have put these measures in the Bill.

The housing benefit bill for England in the social sector now stands at £13 billion, having risen by nearly a fifth over the past ten years. Rising rents in the social housing sector are fuelling that increase, with average rent increases in the social sector more than double those in the private sector over the past five years. The Government are determined to put welfare spending on a sustainable footing and reduce the deficit while protecting the most vulnerable. We made commitments to deliver £12 billion of welfare savings, and the scale of the housing benefit bill means that we must address it, including through social rents, if we are to reduce the deficit.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister’s concern for the rising rents in housing associations might be more welcome if it were married with concern for the rise in the private rented sector. Why is the Minister reluctant to address the concern of 70,000 private renters in Southwark and the steep rent rises they face?

Shailesh Vara (Conservative, North West Cambridgeshire)

Let us talk about the private rented sector. In the years 2004 to 2014, the rent increase in the private rented sector was 23%, according to the Office for National Statistics. In the same period, the social housing rent increased by 63%. If that does not show that there is a difference, I do not know what does.

Emily Thornberry (Labour, Islington South and Finsbury)

I would be happy to take the Minister around Islington, where, I can assure him, the social rent levels are very much lower than private rent levels and the private rents are going up enormously. In my borough, we have great problems finding accommodation for people in the private rented sector if we cannot provide sufficient housing for them in the social rented sector, which we cannot. Our concern is that everything that the Government are currently doing is undermining the social rented sector and will, in the end, lead to a bigger benefit bill.

Shailesh Vara (Conservative, North West Cambridgeshire)

I am grateful to the hon. Lady for her contribution, but I suggest she takes up the issue with the Office for National Statistics, rather than with me, as it is a highly regarded independent body. I am minded to say that the vast majority of the public will agree with the ONS, rather than with her.

Peter Dowd (Labour, Bootle)

May I ask for clarity? The whole point about the public sector is that it reinvests the money into new houses, new stock, decent homes and so on. The corporate group of the public sector tends to do that—it is part of its raison d’être—but the private sector is not doing it. Will the Minister give his view on that?

Shailesh Vara (Conservative, North West Cambridgeshire)

I thank the hon. Gentleman for that contribution. I am mindful of the fact that he was a council leader before entering Parliament, and he brings added value to the Committee, and indeed the House, as a result. I will address the issue he has referred to and the argument that there will be a reduction in housing, so if he will please bear with me for a while longer, I will tell him why I believe that these measures will not have the impact that Opposition Members seem to think they will.

The Government have taken the decision to reduce rent increases within the social sector, which is good news for tenants. Just as I did on Tuesday, I pay tribute to the right hon. Member for East Ham (Stephen Timms), who acknowledged on Second Reading that the 1% reduction was a good thing and that he supported it. He is a distinguished Member of Parliament, and I am sorry that the Opposition Front Bench team has been deprived of the benefits he brought to it. He is a former Chief Secretary to the Treasury and a former Department for Work and Pensions Minister, and commands respect on both sides of the House. Given his ministerial experience, he knows the real position, and he said that he felt the 1% reduction was necessary. To be fair to him, he said he had concerns about the housing stock; I will address those concerns shortly, as I said to the hon. Member for Bootle. However, he recognised that the 1% reduction is necessary.

Rents paid by social housing tenants in England will reduce by 1% a year for four years from 2016. That means that by 2020 they will be paying roughly £12 per week less than they would have had to pay under the current policy of increases at a rate of the consumer prices index plus 1%. The policy will also help taxpayers, who are subsidising rents through the rising housing benefit bill. It is interesting that we have heard a lot of comments regarding housing associations, but no one seems to be acknowledging the financial benefit of £12 a week to the people living in those houses.

Jess Phillips (Labour, Birmingham, Yardley)

To return to the Minister’s point about the benefit to the taxpayer, people living in lots of different types of supported accommodation, in social housing or in housing association housing are also in work and are taxpayers. I wonder how many times we will have to repeat that point to the Minister. They are not two distinct groups. Everybody pays tax, so will he please stop making out that one group of people is paying for another?

Shailesh Vara (Conservative, North West Cambridgeshire)

The hon. Lady speaks of one group. The only conversations we hear are about the people she refers to; she does not talk about the people who are paying through their taxes for social housing but do not live in it. She speaks of a distinction she would rather I did not make—she would rather that we all spoke of just one group. She needs to recognise that there is another group. Perhaps she might reflect on those people occasionally.

Jess Phillips (Labour, Birmingham, Yardley)

Is the Minister telling me that the taxes of people who do not live in social housing are put in one pot and the taxes of people who do are put into another, and that those pots pay for different things? Am I confused, or is that money mixed?

Albert Owen (Labour, Ynys Môn)

Order. This is a debate, and I am sure that the Minister will deal with the questions that have been raised.

Shailesh Vara (Conservative, North West Cambridgeshire)

We need to treat this debate as one taking place in Parliament, not in a sixth-form debating society.

Albert Owen (Labour, Ynys Môn)

Order. I am conducting a Bill Committee at parliamentary level, and I am sure that the Minister will respond at that level.

Shailesh Vara (Conservative, North West Cambridgeshire)

Absolutely, Mr Owen. I refer to all taxpayers, whether or not they are in social housing. All are equal in the contribution they make, but we must recognise that the taxpayer is paying a huge amount into the social housing budget at the moment. We have decided that a 1% reduction is fair. An argument has been put forward about there being inadequate housing; I will come to that shortly.

We recognise that the reductions will have an impact on registered providers of social housing, although we believe that most will be able to manage them. We need to reflect and remember, as Opposition Members conveniently forget to do, that many housing associations are in a robust financial position, with strong balance sheets and £2.4 billion of surplus in 2014. We need to recognise that 165 local authorities with a housing revenue account have built up housing revenue account reserves of almost £2.2 billion.

Naz Shah rose—

Shailesh Vara (Conservative, North West Cambridgeshire)

A lot of questions were asked, and I would like to have the opportunity to address the issue of additional funds. I will give way to the hon. Lady in due course.

We need to recognise the £2.4 billion in surplus funds that housing associations have and the £2.2 billion that the 165 local authorities have in their housing revenue accounts. We should also remember the Government’s £10 billion debt guarantee scheme to support the delivery of new rental homes, and we are encouraging the supply of new homes with a £1 billion build to rent fund.

Naseem Shah (Labour, Bradford West)

Will the Minister give way?

Shailesh Vara (Conservative, North West Cambridgeshire)

I will not for the moment.

The Government remain committed to the delivery of 275,000 homes over the course of this Parliament. I remind Opposition Members that we have a track record of delivery—in the past five years we delivered more affordable homes than the Labour party did in 13 years of Government.

Emily Thornberry (Labour, Islington South and Finsbury)

Will the Minister give way?

Shailesh Vara (Conservative, North West Cambridgeshire)

I will not give way to the hon. Lady.

We also need to remember that when the Labour party was in power, house building fell to its lowest level since the 1920s. In England—

Several hon. Members rose —

Albert Owen (Labour, Ynys Môn)

Order. The Minister is not giving way, and I would appreciate being able to listen to him without the conversations on both sides of the Committee Room.

Shailesh Vara (Conservative, North West Cambridgeshire)

In England, only 75,000 homes were started between June 2008 and June 2009, the lowest level of building since the 1920s. So Government Members will take no lectures from Opposition Members when it comes to house building. They need to reflect on a whole host of other things—

Naseem Shah (Labour, Bradford West)

Will the Minister give way?

Shailesh Vara (Conservative, North West Cambridgeshire)

I will give way to the hon. Lady.

Naseem Shah (Labour, Bradford West)

Will the Minister qualify his 2014 figure of £2.4 billion? Was that before the bedroom tax hit, when the housing associations lost that money, or afterwards?

Shailesh Vara (Conservative, North West Cambridgeshire)

I thought I had made it clear that the £2.4 billion was in the 2014 financial year. The £2.2 billion for local authorities was in the last financial year.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The Minister used careful language—“most” and “many”—when talking about the financial robustness of housing associations. What distinction is made for those housing associations that are not in as strong a financial position? How will they be supported through a change that could see them lose significant sums?

Shailesh Vara (Conservative, North West Cambridgeshire)

I appreciate that the hon. Gentleman is still reading the Bill, but when he gets further on he will find a subsequent clause that deals with exceptions, including local authorities or housing associations that might be in financial difficulty, and there are measures to deal with them.

To help further, the regulator will be on hand to assist housing associations in considering how they can deliver more efficiency and better value for money. My colleagues at the Department for Communities and Local Government continue to engage with all those concerned as they develop plans to meet the reductions. We acknowledge, however, that there might be some circumstances in which the reduction policy should not apply. Clause 20 therefore provides some statutory exceptions and for further provision to be set out in regulation. In clause 21 we have also allowed for circumstances in which the financial viability of a private registered provider might be jeopardised. In such circumstances a provider may apply to be exempt from the rent reductions; similar provision is made for local authorities.

As for the number of new homes being built, the Government remain absolutely committed to ensuring housing for those who cannot access the market, and we support the ongoing role that the housing association sector has to play in the supply of affordable housing, as well as driving more home ownership. There continues to be a role for housing associations in delivering the mix of housing supply that the country needs, as we have already seen with the delivery of 260,000 new affordable homes over the past five years. We are committed to delivering 275,000 homes by 2020.

We do not believe that there is a need for a plan or a report, as suggested in the amendments. Our approach is measured and will be good for tenants and taxpayers while building in safeguards for supported accommodation and the financial viability of private registered providers. On amendment 184, the Government have made a commitment to reduce rents for a period of four years from April 2016, which is made clear in clause 19 and the new schedule. I hope amendment 21 will be withdrawn.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

The amendments have been drafted in consultation with a number of agencies, housing associations, the National Housing Federation and the Local Government Association. Moody’s has also criticised the Government’s measures. The Minister said that my right hon. Friend the Member for East Ham supports this measure, but he supports and has put his name to amendments 21 and 85.

Shailesh Vara (Conservative, North West Cambridgeshire)

To clarify, I was simply saying that, on Second Reading, the right hon. Member for East Ham did not disagree with the 1% reduction. He agreed with it, but with caveats.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Amendment 21 reflects the concern about the affordable homes building programme, which is why we have asked for a plan. We are not convinced that the Government will follow through, which is why I have moved the amendment.

On the other, more general points, I gently refer the Minister to the Government’s own data on house building performance, which were published this summer. Unfortunately, since 2010 the Government have presided over the lowest level of house building in peacetime since the ’20s—those are the Government’s own figures. I will not press the amendment but, again, I refer the Minister to the figures on affordable homes. We are really concerned about what is happening. I beg to ask leave to withdraw the amendment.

Neil Coyle (Labour, Bermondsey and Old Southwark)

On a point of order, Mr Owen. I raised a point of order on Tuesday about a letter promised by the Minister for Employment. I now have a copy of the letter, for which I am grateful. There was clearly a mix-up, because it was sent some time ago. However, the letter does not answer the specific point about how the Government will assess the impact on disabled people in different areas.

On 17 September we discussed the impact on disabled people and carers and how to assess that impact more effectively. The Minister committed to providing an explanation of how that will be done. The letter I received talks about how Dr Simon Duffy has not responded to something for which the Department has asked—that is the block. I expected that the Department would outline what it is doing, not what it is not doing. I am keen to get more information on how the Government will address that.

Albert Owen (Labour, Ynys Môn)

I have the gist of what the hon. Gentleman is saying. I was not in the Chair for the first point of order, and this is not a point of order for me. He has asked a question of the Minister, who is in her place. If she wishes to enhance what she said, she has the opportunity to do so, but he hon. Gentleman has his point on the record. We now need to move on.

Clause 20 - Exceptions

Shailesh Vara (Conservative, North West Cambridgeshire)

I beg to move amendment 176, in clause 20, page 19, line 42, leave out paragraph (c) and insert—

‘(1A) Section 19 does not apply in relation to social housing that consists of or is included in a property if, where the property is subject to a mortgage or other arrangement under which it is security for the payment of a sum or sums—

(a) the mortgagee, or a person entitled under the arrangement to be in possession of the property, is in possession of the property,

(b) a receiver has been appointed by the mortgagee, by a person entitled under the arrangement to do so or by the court to receive the rents and profits of that property and that appointment is in force, or

(c) a person has been appointed under or because of the mortgage or the arrangement to administer or sell or otherwise dispose of the property and that appointment is in force.’

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government amendments 177 and 149.

Shailesh Vara (Conservative, North West Cambridgeshire)

The amendments relate to clause 20, which provides for an exception from the rent reduction requirements when a mortgagee takes possession of a property, or when a receiver is appointed by the mortgagee or the court, or where a property is sold by a mortgagee in possession or the receiver. This exception is intended to protect the value of stock held by all private registered provider landlords, to ensure that they can continue to use their assets as security for borrowing in the same way that applies in similar circumstances under the existing rent policy.

Our intention is that the rent reduction measures should be aligned as far as possible with existing policy on social housing, currently set out in the regulator of social housing’s rent standard guidance and the Government’s guidance for local authorities. Amendment 176 expands the exception from the rent reduction requirements in clause 19 so that it also includes cases where steps are taken to realise security under a different form of security, and where any person is appointed under a mortgage or different form of security arrangement to administer or sell the property.

Amendment 177 provides that the exception applicable to a sale by a mortgagee in possession or a receiver is not limited to the first person or body becoming successor in title of the registered provider on the sale or transfer of the property by a mortgagee or receiver, but extends to all subsequent purchasers or owners. It also expands the exception to cases in which the property is sold under a different form of security arrangement.

Amendment 149 clarifies that events for which the regulations may provide may include periods when the rent payable by a social tenant is temporarily reduced or waived. Such provision could be used to clarify how the rent reduction should apply when a registered provider has temporarily reduced or waived a tenant’s rent—for example, because they are making repairs to the property.

The details will be set out in the regulations. Without these amendments, there would be an impact on the private registered provider sector, potentially reducing the value of all social housing assets currently being used for security for borrowing, which would lead to a need for more security, and preventing them from borrowing more to build the homes that we need.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I should like to make a reference to my amendment, if I may.

Albert Owen (Labour, Ynys Môn)

We will be coming to that in the next group.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

In which case I will leave my remarks until then.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I beg to move amendment 109, in clause 20, page 20, line 5, at end insert—

“(e) the accommodation is specified accommodation, as defined in the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014.”

Peter Dowd (Labour, Bootle)

Does my hon. Friend agree that Government policy on parity of esteem for people with mental health problems, which is trumpeted in relation to health, is not only about health, but about a range of social services, including housing? The Government proposal potentially directly affects parity of esteem for people with mental health problems.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Absolutely. My hon. Friend makes a powerful point. Those housing providers provide housing and support to a very vulnerable group, including people with mental health conditions. The measure will affect their opportunity and ability to live independently and well.

The impact on accommodation for homeless people with support needs demonstrates how damaging the change would be for supported housing as a whole. One homeless organisation in the north-east of England has modelled the impact of the change on the 300 beds of supported accommodation that it provides, which accommodate 1,400 disadvantaged people a year. The impact of the 1% rent reduction, assuming that other costs increase by 2% or 3% a year, is that 50% of its accommodation projects will be financially unviable in 2016-17. It is absolutely imminent. That is key. The pace of the clause’s implementation means that we will be facing problems in the next few months and I hope the Minister responds appropriately. It gets worse, I am afraid: the organisation has mentioned 100% financial unviability by 2017-18. What will happen to that vulnerable group of people?

A second organisation, St Mungo’s Broadway, provides accommodation support to 3,800 people each year across London and the south-east of England. I have visited the project here and in the midlands. St Mungo’s estimates that the 1% annual rent reduction requirement will result in it losing £1.25 million in rental income by year 4—between £250,000 and £300,000 each year. Taking into account the rental income that the organisation anticipates over that period, the overall impact on its finances over the four-year period is a loss of £4 million. That loss of income will force some projects to close, resulting in the loss of accommodation for homeless and disadvantaged people.

Mr Owen, I expect that you have experienced an increase in rough sleeping in your constituency. I was shocked recently, in the last month or so, when I arrived back in Manchester from Parliament late one night. Every 50 metres there was somebody sleeping rough. The fact that the measures will affect organisations such as St Mungo’s is serious. I have mentioned the groups of people supported by those housing providers. The providers have estimated who will be affected in percentage terms. They expect that people with learning disabilities and physical health problems, people who have slept rough and people with a history of offending, and people with alcohol, drug and mental health problems who have been accessing their services for support needs, will be affected.

As has been mentioned, the measures will have an enormous impact on services working with other disadvantaged people. A large national provider of supported housing has estimated that the change will lead to the loss of 104 schemes, removing 1,969 support spaces for clients, including 228 spaces for people experiencing domestic violence. A small specialist learning disability provider will have its operating margins reduced to 0.2% and will be forced to cancel all proposed development of learning difficulty schemes. A large national organisation will be forced to reduce planned development of extra care by 400 units, including units specifically to help people home from hospital. Such organisations reduce the pressures that our beleaguered NHS is experiencing—the measures will have a direct impact on the NHS.

There is a precedent. The principle of treating supported housing separately from other social housing for welfare reform purposes was recognised in the previous Government’s proactive decision to keep housing costs for specified accommodation out of universal credit and the benefit cap calculations.

Jess Phillips (Labour, Birmingham, Yardley)

Does my hon. Friend want to pay credit to Ministers for removing specified accommodation during the previous Government? It most certainly meant that, at the refuge where I worked at the time, we could maintain operations exactly as they were, and in fact develop some others. The Minister spoke earlier about listening. Perhaps we should pay credit to the Government for listening on that occasion.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

My hon. Friend is absolutely right. That is a valid point, and I hope the Minister can do so. On that note, I will stop there.

Neil Coyle (Labour, Bermondsey and Old Southwark)

In rising to speak to the amendment, I just want to say that I welcome the Minister’s commitment this morning to write to me so I can find out a bit more information. He suggested that I was trying to make a name for myself—I believe that was the term he used. I certainly do not intend to upset him in any way, not least because I understand he has a black belt in martial arts.

Shailesh Vara (Conservative, North West Cambridgeshire)

Let me assure the hon. Gentleman that I have been here for 10 years and what he says will in no way upset me. He will very soon become a seasoned politician with a thick skin.

Neil Coyle (Labour, Bermondsey and Old Southwark)

The commitment to providing information was linked to the amendment because we were talking about housing associations, representations and the discussions that the Department is having. It would be useful if the Minister, when answering in writing, could provide information on the number of housing associations that have been met; the numbers that indicated that they support the policy, especially those providing specified and supported accommodation; those that specifically outlined the risk to their business case of the policy going ahead; and any representations to the Department from organisations suggesting that they would be unable to provide specified accommodation. I would be grateful to receive that information. I do not expect an answer today.

We heard about specified accommodation in great detail from my hon. Friend the Member for Oldham East and Saddleworth, and from all the organisations that made representations—I am particularly grateful to Homeless Link, St Mungo’s Broadway, Shelter and Crisis. The amendment is designed to cover shared houses, hostels, refuges and self-contained accommodation owned by registered providers, and instances where housing-related support, including financial management, is provided.

St Mungo’s Broadway operates in my constituency. Of its residents—the people that it provides support to—52% have previously been rough sleepers, 72% have mental health needs, 44% have significant physical health problems and more than one in five have experienced violence or abuse from a family member or partner. That is the client group, to use the Department’s language, that we are talking about. The total number of units provided at the moment is around 105,000. My hon. Friend the Member for Bootle mentioned Riverside, which estimates that it provides about 4,600 units of that kind of accommodation. We are not talking about a huge number, but the measure would make the provision of the services and housing more difficult for those organisations.

The Homes and Communities Agency was mentioned earlier. It has estimated that investment in supported housing results in a net cost-benefit to the public purse of £640 million per year. Does the Minister have any information about how that cost-benefit analysis has been undertaken or about the risk to that cost-benefit if housing is put at risk? The cost to local authorities of rough sleeping is roughly £8,600 per person. That does not include any cost to the Department of Health, the Ministry of Justice or the Home Office—it is just the cost to local authorities. Getting this wrong and putting accommodation for vulnerable people at risk could have knock-on costs for all taxpayers.

The Department for Work and Pensions and the Department for Communities and Local Government have commissioned a review into supported accommodation to establish a better evidence base for future funding decisions. Would the Minister give an indication of where that review is at and why the Government are not prepared to wait for the outcome of that review before pressing on with the policy?

Riverside estimates that the cumulative cost of the policy to it would be about £100 million. It has said that

“a year on year reduction in rental income would make this element”—

the specified accommodation—

“of our business loss making”.

It would either have to subsidise from elsewhere or stop providing that accommodation.

St Mungo’s Broadway has said that

“the requirement to reduce rents in social housing in England by one per cent per year for four years will result in the loss of supported housing schemes for homeless and vulnerable people.”

It is saying categorically that it will be unable to provide some of the accommodation that it currently provides, and that there is a knock-on cost that the Government have not taken into account. As my hon. Friend the Member for Oldham East and Saddleworth has mentioned, St Mungo’s Broadway has said that it will lose £1.25 million by the end of this Parliament as a result of the annual rent reduction. The four housing associations that I have spoken to, which provide some of their accommodation in Bermondsey and Old Southwark, have said that collectively, the cost to them of the proposed policy would be more than £180 million during the lifetime of this Parliament alone.

The amendment is in line with the Government’s attempts to simplify the welfare and social security system. The Government talk a lot about simplification, but on this policy there is a risk of confusion because specified accommodation is exempt from universal credit and benefit cap calculations. The amendment would help to align Government policy.

The status of “specified accommodation” came into law in 2014 through the Housing Benefit and Universal Credit (Supported Accommodation) (Amendment) Regulations 2014—I do not think we need the statutory instrument number. Specified accommodation serves a different purpose from general needs accommodation; it is defined as housing where “care, support or supervision” is provided. People who live in specified accommodation have support needs that generally mean that they would find it difficult to sustain accommodation in which support was not provided. Those support needs might be related to homelessness, mental health issues, offending, domestic violence, substance abuse or any combination of those. The rationale for treating supporting housing separately from other social housing has been recognised in the Government’s decision to keep housing costs for specified accommodation out of universal credit and benefit cap calculations. There is a practical precedent, and it would be wrong to undo the steps that the Government have already taken to protect vulnerable people from those policies, which is why the amendment is much needed.

Shailesh Vara (Conservative, North West Cambridgeshire)

May I initially address the hon. Gentleman’s points, although I will of course write to him? As a caveat, I must say that we have lots of meetings with lots of organisations, and many have asked whether we could look at something differently. Policy is not reached purely on the basis of asking, “Do you agree with this, or don’t you?”. Instead, we make it clear that we propose to do something and that we have a Government mandate to do so, and we ask how we can do that so that we best accommodate others’ views. Matters are not clearcut, but I will certainly write to the hon. Gentleman.

The hon. Gentleman referred to the evidence review that the Government have commissioned on the specified accommodation and supported housing sectors to understand better the scale, shape and cost of the sector in England, Scotland and Wales. We hope that the findings will be available sometime next year.

I welcome the contributions to the debate, all of which have been heartfelt. I commend the hon. Member for Oldham East and Saddleworth for the measured way in which she put forward her arguments, and I have taken her points on board. I am very grateful that the amendment was selected, because it gives me the opportunity to set out what is in the Bill, and to explain why we cannot support the amendment. However, I hope that the hon. Lady will take comfort from my remarks.

We recognise that the rent reduction measures introduce a significant change to existing rent policy. We have listened to comments and concerns about the housing of vulnerable groups, and I can offer the hon. Lady a number of assurances that mean that her amendment is unnecessary. First, in the light of this new policy, we will look to align as far as possible exceptions under the new policy with those that apply under the existing rent policy for social housing. That means that we intend to except from the rent reduction requirement the types of housing that are excepted from the rent standard. Those include specialised supported accommodation, which provides support for the most vulnerable people and which is developed in partnership with councils or the health service. Also excepted will be residential care homes and nursing homes. Clause 22 gives the Secretary of State for Communities and Local Government a power to set further exceptions should they be needed, to except that accommodation from rent reductions.

Clause 23 further clarifies the cases and circumstances that regulations may provide for, which include groups of tenants and types of accommodation.

Peter Dowd (Labour, Bootle)

I acknowledge what the Minister is saying, but I would ask him to cast the net more widely. For example, does he recognise that, under section 117 of the Mental Health Act 1983, if accommodation cannot be continued, provision becomes much more expensive because of a statutory requirement, notwithstanding the forthcoming amendments? That provision would be much more expensive if organisations could no longer provide it. The Government are taking money from Peter to pay Paul, but Paul is much more expensive.

Shailesh Vara (Conservative, North West Cambridgeshire)

I take on board what the hon. Gentleman says, some of which I will address later when I talk about other forms of help, assistance and funding.

We have tabled amendments that provide the Secretary of State with powers to allow, by regulation, rent setting for new tenancies in supported housing at up to 10% above the formula. That is similar to the existing rent policy and standard practice. We believe that should help providers of supported accommodation for vulnerable people to continue to provide that important housing. We also acknowledge that there might be some circumstances in which the financial viability of a private registered provider or a local authority could be jeopardised—something the hon. Member for Bermondsey and Old Southwark mentioned. In those cases, the providers could apply to be exempt from rent reductions.

Neil Coyle (Labour, Bermondsey and Old Southwark)

It sounds like some of what the Minister is saying is likely to be welcome. Let me reiterate that the borough of Southwark is the biggest landlord in London. In bringing forward other exemptions, would the Minister be willing to meet my local authority to ensure that the most appropriate accommodation is exempted to best effect?

Shailesh Vara (Conservative, North West Cambridgeshire)

I would of course be happy to meet the hon. Gentleman and anyone he wishes to bring to the meeting. What I would say is that we have been mindful of the fact that we cannot judge the situation as it is now. Where local authorities or housing associations find themselves in financial difficulty and their viability may be an issue, there are processes in place to ensure that the regulator works with them to make sure that things can be worked out. If it is felt necessary, then with the consent of the Secretary of State there can be alterations through a rent reduction, and organisations can make their case. However, we hope to set out in regulations the criteria that would be applied.

We intend to work with organisations—housing associations and local authorities—because we want to make this work. The change is not simply being imposed; we are consulting widely. The hon. Member for Oldham East and Saddleworth was right to say that there have been a number of amendments, and I repeat that that is a direct consequence of lots of organisations coming to us and saying, “Well, how about this?” We have taken what I think is a commendable decision, in that we have genuinely listened and tried to clarify what we thought we were aiming for. It was not clear enough for the people concerned, so we sought to clarify it.

It is important to get the balance right between reducing the burden on taxpayers and supporting the provision of housing for vulnerable people, as well as the balance between supporting the provision of that housing and treating fairly those older or disabled tenants who pay their own rent and who should benefit from the rent reductions, but will not do so if there is a blanket exemption.

When it comes to dealing with vulnerable older and disabled people, it is important to look at the wider context. As a Government, we are determined to protect the most vulnerable in society and help them to live independent lives, and assistance goes beyond what we are discussing today. Funding for supported housing is included in the wider settlement to councils. The Government continue to support local areas to meet their local needs by maximising funding flexibility. For example, in 2015-16, we are investing £5.3 billion in the better care fund to deliver faster and deeper integration of health and social care. This will enable councils to invest in early action to help people to live in their own homes for longer and help to prevent crisis, as well as supporting councils to work together more effectively, deliver better outcomes for less money and drive integration across all services.

The Government are also investing in specialised housing for older and disabled people through the £315 million care and support specialised housing fund. Phase 1 is expected to deliver over 4,000 homes by 2018; phase 2 was announced in February and will set aside up to £155 million in capital funding for the development of specialist housing to meet the needs of older people and adults with disabilities or known mental health issues.

Neil Coyle (Labour, Bermondsey and Old Southwark)

My understanding is that the better care fund is entirely restricted to new projects, so it cannot help towards councils’ existing accommodation costs. Given that we know the waiting lists that councils across the country have, I am not convinced that the better care fund is the solution to the specific problem before us. At the same time, the Government are ending the independent living fund, leaving councils potentially significant new costs for providing residential care accommodation for disabled people who had previously been able to be supported in their own homes.

Shailesh Vara (Conservative, North West Cambridgeshire)

I repeat that we should not look at this solely in the context of what we are discussing today; there is a wider picture here, and I have given details of the other moneys available alongside the 1% reduction we are discussing.

I repeat that the Government are committed to ensuring that the most vulnerable people are protected. Statutory homelessness is lower now than in 26 of the past 30 years, at less than half the peak it reached in 2004. This Government have increased spending further to prevent homelessness, making over £500 million available to help the most vulnerable in society. That has resulted in local authorities preventing 935,000 households from becoming homeless since 2010.

Neil Coyle (Labour, Bermondsey and Old Southwark)

There is a brilliant charity in Bermondsey called UK Homes 4 Heroes, which supports former members of the armed forces. We have seen a dramatic rise in the number of former members of our armed forces sleeping rough in London. How will this specific policy help councils and others to better support those coming out of the armed forces, to prevent them from ending up sleeping rough, given what the Minister has just said?

Shailesh Vara (Conservative, North West Cambridgeshire)

That issue commands huge respect across Government and on both sides of the political argument. There is discussion and debate across Government to make sure that brave men and women who are prepared to put their lives on the line for our safety and security get the best possible treatment. There are clearly still issues that need to be resolved. It is an ongoing debate. I am very aware of the situation to which the hon. Gentleman refers; there are RAF bases in my constituency, and I am only too aware of how we need to look after those people a lot better. We have made progress in the past five years, but we need to do more and should remain vigilant.

I believe that there are sufficient safeguards in place to ensure the continued financial viability of housing providers while balancing the need to support tenants who should benefit from a reduction in their rent. I urge the Opposition to withdraw the amendment.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I am grateful to the Minister for that positive response and look forward to the regulations he mentioned setting out the criteria on requests for exemptions that providers of supported housing may put to the regulator. I believe that the Minister recognises the dire situation those providers are in. I also thank my hon. Friend the Member for Bermondsey and Old Southwark, who provided us with the wider context about, for example, how the end of the independent living fund will affect local authorities’ provision for supported accommodation; that is very relevant.

I differ from the Minister in my interpretation of the homelessness situation at the moment. We can trade off figures, which I do not think is helpful. We need to move beyond that. I have the Government figures here, and in the past five years, for example, there has been an 840% increase in the number of families with children who have been declared homeless and are living in bed-and-breakfast accommodation. The situation is certainly not rosy. We have anecdotal evidence of that ourselves. However, I beg to ask leave to withdraw the amendment.

Clause 21 - Exemption of a registered provider of social housing

Shailesh Vara (Conservative, North West Cambridgeshire)

I beg to move amendment 154, in clause 21, page 21, line 5, at end insert “, and

(b) the social housing in relation to which it is to have effect.”

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government amendments 155, 156, 161 and 162.

Shailesh Vara (Conservative, North West Cambridgeshire)

We have recently been talking about exceptions and exemptions and it might be helpful if I clarify the position. We will set out the criteria for exceptions in the regulations. When we talk about exemptions, the financial viability conditions are in the Bill. We can also set out other conditions for an exemption in the regulations. I hope that that is helpful in drawing a distinction.

The amendments seek to introduce flexibility into the exemption process in relation to clause 19. Amendments 154 and 161 allow a direction to be made in relation to only some of the social housing that a private registered provider or a local authority have, ensuring that exemption can be targeted. Amendment 155 enables the regulator of social housing, the Homes and Communities Agency, to publish guidance on steps that a private registered provider should take before seeking an exemption. Amendments 156 and 162 give the Secretary of State power to prescribe conditions other than serious financial difficulties in which an exemption may be granted to a local authority.

Amendment 154, 155 and 161 recognise that exemption is a tool of last resort and, if needed, should be used in as targeted a way as possible. Amendments 156 and 162 provide for greater flexibility in the exemption regime.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

I am grateful to the Minister for his clarification. We are talking about the financial viability of supported housing providers and, more broadly, housing associations. The Government are considering the problems that they face, so has there been any assessment of the housing providers whose viability could be threatened as a result of the measures? Will one be undertaken? I am grateful for the detail on the amendment, but it seems that implementation is already anticipated. Should there not be a step before that?

Shailesh Vara (Conservative, North West Cambridgeshire)

We are not anticipating difficulty. We are trying to recognise what might happen in future, so we are making it absolutely clear that, although we propose a 1% reduction, where financial viability is threatened, there are measures in place to deal with it.

We must recognise that the regulator is there to help, assist and advise. Its job is to assist, but as a default mechanism we have those provisions. However, as far as I am aware, we do not anticipate anyone having difficulty. I reiterate that we are confident that housing associations and local authorities are robust organisations that can deal with the 1% reduction. It must be considered in the wider context. Individuals and other organisations throughout the country are having to put up with difficulties. We are asking for a 1% reduction. I repeat the comments made by David Orr, chief executive of the National Housing Federation. I will not repeat the whole quote, as I gave it earlier, but simply two lines. He said that

“in truth, there is no sector anywhere that is not still capable of making further efficiency savings. That is as true in our sector as it is anywhere else.––[Official Report, Welfare Reform and Work Public Bill Committee, 15 September 2015; c. 91, Q144.]

Clause 22 - Enforcement

New Clause 13 - Transitional provision

New Clause 14 - Expenses of paying sums in respect of vehicle hire etc.

Priti Patel (Conservative, Witham)

I beg to move, That the clause be read a Second time.

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss Government amendment 130.

Priti Patel (Conservative, Witham)

It is a pleasure to serve under your chairmanship this afternoon, Mr Owen.

The amendments are about fairness for taxpayers. Currently the Government divert benefit payments to Motability Operations Ltd on behalf of claimants who participate in the Motability scheme. That is of direct benefit to Motability Operations Limited, but the cost of doing it is borne by the taxpayer. The new clause seeks to rectify that by granting the Government the power to recover the expenses incurred in the administration of that arrangement and any similar future arrangement in respect of benefit diversion to an organisation that leases or sells motor vehicles to disabled persons.

Amendment 130 will enable the Government to exercise the power in England, Wales and Scotland. The power will not have an impact on customers. It will merely allow the Government to recover the expenses incurred in diverting the benefit. It has the support of Motability.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

New clause 14 and amendment 130 make provision for the Department to recover costs made in administering the payments to relevant providers for the lease or hire-purchase of motor vehicles for those in receipt of the higher rate mobility component of disability living allowance or the enhanced mobility component of PIP.

Currently, around 620,000 people lease vehicles through the Motability scheme for an average of £3,000 a year over three years. Concerns have been expressed about the number of people who previously qualified for the higher rate mobility component of DLA, but who failed to qualify for the enhanced rate of the mobility component of PIP and so no longer qualify for the scheme. As the Minister is aware, about 360,000 current Motability scheme users will be reassessed between October 2013 and 2018.

What assessment has the Minister made of the numbers of people who to date will no longer be eligible for the Motability scheme? In addition, will the Minister inform the Committee of the cost to the Department of administering payments to providers, as outlined in the new clause? Will she estimate how much per lease the recovery of DWP expenses will cost? Furthermore, what estimate has she made of the recoverable expenses as a percentage of the overall average leasing or hire-purchase agreement? When will the Government produce an impact assessment for the provision?

I am sure we all recognise the importance of the vehicle-hire schemes to disabled people, and of the benefits that the independence of having a suitable vehicle brings in health, social, work and financial terms. My father-in-law was registered blind and, through a mobility scheme, my mother-in-law was able to drive him around. The independence that that gave him was very important to him.

Opposition Members would welcome the Minister’s assurance that the changes outlined in new clause 14 and amendment 130 will not negatively impact on a disabled person’s ability to secure access to vehicle leases and rental agreements, and the independence and the lifeline that they provide. We would also like assurances that there will be no further shifting of costs to disabled people.

Priti Patel (Conservative, Witham)

I have a number of points, and I will come back to the hon. Lady specifically on quantity information and data. The measure has the support of Motability, and working with Motability is the right thing to do because Motability Operations Ltd provides great support for claimants. She makes it abundantly clear that a great deal of vital and valuable support is provided. This is a valuable lifeline to claimants.

The hon. Lady mentioned costs. I have some figures. The measure costs less than £1 million a year, and Motability has confirmed that it is affordable and will not have an impact on its users. She has specifically asked for further information, and I will ask officials in the Department to get back to her.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I welcome the Minister to her place. It is interesting to hear that Motability supports the amendment. Does the amendment arise from the expectation advertised by Motability that it will be forced to withdraw vehicles from disabled people as a result of the transition from disability living allowance to the personal independence payment?

Priti Patel (Conservative, Witham)

My understanding is that there will be no impact on claimants who participate in the scheme. The measures are about ensuring the service and reclaiming costs in a fair way for taxpayers, as I explained in my initial comments. This is not about service provision changes. I hope that answers the hon. Gentleman’s question.

New Clause 19 - Further provision about social housing rents

New Clause 20 - Provision about excepted cases

New Clause 21 - Rent standards

New Clause 22 - Interpretation

New Clause 4 - Personal independence payment: timing of payment

Neil Coyle (Labour, Bermondsey and Old Southwark)

I beg to move, That the clause be read a Second time.

Albert Owen (Labour, Ynys Môn)

With this it will be convenient to discuss:

New clause 18—Review of Disability Living Allowance and Personal Independence Payment—

‘(1) Part 4 of the Welfare Reform Act 2012 (Personal Independence Payment) is amended as follows.

(2) Insert new section after section 79—

“79A Review of Disability Living Allowance and Personal Independence Payment

(1) The Secretary of State shall in each tax year review the standard rate and enhanced rate of the daily living (section 78) and mobility component (section 79) of the personal independence payment.

(2) In carrying out a review under subsection (1) the Secretary of State shall consider the effect on the rates if they were increased by—

(a) the percentage increase in the general level of earnings at the end of the period;

(b) the percentage increase in the general level of prices for goods and services, as measured by the Consumer Price Index or by any measurement formally replacing the Consumer Price Index; and

(c) 2.5 per cent.

(3) The Secretary of State shall within three months of this review concluding lay before Parliament a draft order which increases the value of the amount referred to in subsection (1) by the greatest of the three amounts calculated under paragraphs (a) to (c) of subsections (2).”’

Neil Coyle (Labour, Bermondsey and Old Southwark)

Thank you, Mr Owen. That was a bit of a surprise; I thought that there were more Government new clauses to get through.

I pay tribute to my hon. Friend the Member for Sheffield Central (Paul Blomfield) who supported the drafting of the new clauses. I also pay tribute to the citizens advice bureau that serves Sheffield Central and Sheffield, Brightside and Hillsborough for providing case studies. As the explanatory statement makes clear, the new clause is designed to improve support for disabled people who become terminally ill when they are already in receipt of DLA and are in the process of being transferred to the PIP. Welfare rights advisors have identified delays in support to that group. Are the Government were willing to address the concerns?

Today, we heard the Government again suggest that they are protecting disabled people and the most vulnerable. My new clause is solely concerned with terminally ill disabled people—people with an existing impairment or health condition and a terminal prognosis of six months or less left to live. It is very small group. On September 9, I asked the DWP for the specific number of people on DLA who would be affected by the measure. The answer I got back was disappointing—it was not from the Minister, but one of her colleagues. The answer was that the information on the number of disabled people affected by the issues “is not collated” by the Department

“and could only be provided at disproportionate cost.”

That was an incredibly disappointing response, not least because the DWP publishes PIP statistical ad hoc reports.

The most recent figures from May 2015 on registrations, clearances and awards indicate how many people within the figures might qualify for support. As of 31 March 2015, 774,800 new PIP claims and 123,700 DLA reassessment claims had been registered. For the entire period of PIP, the number of reassessments under the

“special rules for the terminally ill”

—to use departmental language—was 16,000. To put a figure on it to enable the Government to cost the measure, we are talking about just 800 people a year, roughly, who are disadvantaged by current process and would benefit slightly from a more sympathetic position from the Government. Those are purely disabled people who are on DLA and moving to PIP due to terminal illness. The new clause is designed to ensure that they receive their first PIP immediately instead of waiting four weeks from the final DLA payment and another four weeks before receiving their first PIP. When people are terminally ill, time is more pressing and precious, and that is a ridiculous amount of time to wait to receive support. That length of time was not required by the former DLA rules, under which the payment would have been received far more quickly.

In the welfare rights advice sector, the perception of the coalition Government’s welfare reform legislation is that it was an accident, rather than a deliberate policy designed to delay support for terminally ill disabled people. Will the Minister indicate whether making terminally ill disabled people wait longer to access vital support was an intended outcome of the change under PIP?

Citizen’s advice bureaux throughout the country have been working as part of the big society—we do not hear so much about that any more. In Southwark, those services have seen a 40% jump in demand. Their support for society has got far bigger as a direct result of welfare reform. I am grateful to the citizen’s advice bureau in Sheffield for providing information about Carol. Carol is 59 and was in receipt of the DLA care component at the lowest rate of £21.80. On 27 May this year, following a diagnosis of metastatic breast cancer, she notified the DWP that she wanted her claim reconsidered under special rules. The Department awarded her the highest rates of the daily living and mobility components of PIP, which equates to £139.75 a week. However, due to the application of transitional rules, payment was from 8 July—four weeks after her next DLA payment date. Had she been a new claimant for PIP who was not already in receipt of DLA the benefit would have been awarded from 27 May. In Carol’s case, that meant losing £117.95 a week for the period of 27 May to 8 July. Some claimants in similar situations would simply not live long enough to receive their awards under existing rules.

I must ensure that I anonymise the next example, as I do not believe that I have permission to name the individual. C1 was diagnosed with terminal lung cancer. He has chronic obstructive pulmonary disease and has had his right leg amputated below the knee. He received the DLA higher-rate mobility and lower-rate care payments. C1 was told that he could claim PIP instead of DLA but would then be entitled to enhanced care as well as higher-rate mobility. His PIP would not increase until four weeks after his next DLA payment date, so it might take four to eight weeks for the increase to take place, despite his significant disadvantages and terminal prognosis. On the date the advice was given, the client would not have been entitled to receive the enhanced rate until 30 September. He was given the advice in August. The individual has agreed to allow his story to be put forward, and he is happy for us to discuss his circumstances, but not to be named. However, it is a genuine example from Sheffield.

I have one further example. A man with terminal cancer of the oesophagus looked into claiming under the special rules, having received disability living allowance at the highest rate of mobility and the lower rate of care. Again, this is about the process used by the Department and the system of allocating transfer dates by postcode. The PIP rates would not apply until 28 days after his next payment date. He lives on his own, has income-based employment and support allowance, is in the support group and currently receives £125.05 a week. That should increase by £61.85 a week, but at the point when his DLA was due on 5 August, he was not entitled to the enhanced rate until 2 September.

Again, that is another example of someone with a significant health condition—a terminal prognosis—losing out as a direct result of what was perhaps an accident in the original legislation. He would stand to benefit if the Government accepted the new clause tabled by my hon. Friend the Member for Sheffield Central and me. If Government Members believe that they are protecting the most vulnerable, that should include terminally ill people. It is difficult for medical professionals to give a terminal prognosis within six months, but those are three genuine examples of people who would have a small amount more funding for a small amount more time. I hope that the Government will accept the amendment or indicate how they will introduce their own mechanism to fix that anomaly, which leaves the most disadvantaged and the terminally ill without some support.

Again, for clarification, if it was a DLA to DLA claim, the support would arrive much more quickly. This group are losing out purely as a result of the PIP changes, rather than of a specific change to overall benefit payments.

I am grateful to Scope for providing information and advice on a policy idea that that organisation has championed. The idea borrows a little from the triple lock policy for pensioners of which the Government are so proud, although I understand that some Liberal Democrats would claim credit for the policy. New clause 18 would require the Secretary of State to ensure that the value of extra cost payments, disability living allowance and personal independence payment are further protected through the use of a similar triple lock. DLA and PIP are critical in supporting disabled people to meet the extra costs of living with a health condition or impairment, which can be substantial. Benefits do not cover the full cost.

When I was still in the disability sector—I am grateful for the Minister’s earlier kind words about my role in that sector—my charity, Disability Alliance at the time, undertook the largest review of disability living allowance and discovered that the costs often far outweighed the benefit received. Scope has undertaken more recent work to highlight the extra costs associated with disability. To quote a figure mentioned in a previous sitting, the average cost associated with a disabled person’s health condition or impairment is £550 a month. The average personal independence payment award is £360 a month. Scope’s research on backs up all previous research, including the Department’s own analysis. It has not conducted research recently, but in the past, the DWP’s research suggested that costs outweighed the payments received by disabled people.

Costs will vary between individuals, but there are common causes, such as the high price of specialist equipment and higher fuel and energy costs. It is also easy to identify someone with a lung condition or asthma —mention has previously been made of the need to keep heating consistent to facilitate easier breathing. Transport is a particular cost, and we have just spoken about Motability. Another factor is the inaccessibility of much of public transport, especially in rural areas, which adds to the additional cost that disabled people face when they have to use their own vehicle rather than public transport. Routine medical treatment also requires transport to and from hospital or the doctor. Costs also arise from the unaffordability of insurance and the necessity to buy more clothing and bedding. A disabled person who is not able to get out and about may have more visitors, in particular more personal assistants and care workers, and although they are not obliged, it is the decent thing to offer coffee, and have loo roll in the toilet. All those are costs.

Scope provided a couple of examples. Lesley said:

“My 18-month-old daughter has cerebral palsy, and her new specially-adapted buggy arrived on Monday. I had assumed it would have a shade and rain cover included, but no—the cheapest …is £200. A rain cover for a non-adapted buggy is less than £20!”

That puts it in context, and it is an extra cost for which the family had not budgeted. The second example provided by Scope was that of Anabelle, who said:

“I have to buy shoes far more frequently than I would do if I did not have cerebral palsy. My shoes wear out quickly because of the way I walk. For example, the shoes I wear for work—9 to 5, five days a week—only last me two or three weeks.”

I thought that I got through shoes quickly on the campaign trial, but others do so as a direct result of how they walk, and that cost must be taken into account.

All those extra costs serve to undermine the financial resilience of some disabled people, which means that they are exposed to financial uncertainty in a way that non-disabled are not. DLA and PIP have a vital role to play in supporting disabled people to mitigate those costs and in helping with the broader implications of financial stability—finding work, participating in the community and living independently as far as possible.

Before the election, the Prime Minister said that he planned to “safeguard” and “enhance” the value of PIP. Although DLA and PIP have been protected from means-testing or taxation, there is no indication in the new Parliament of any willingness to act to enhance their value. In the original debates before the legislation on PIP was finalised, Ministers indicated that one reason for the change was that some disabled people could expect a higher level of support as a result, but that has not materialised. If the Government are serious about their supposed commitment to protecting the most vulnerable in society, it is essential that the role of DLA and PIP in supporting disabled people’s lives is fully recognised and protected accordingly in legislation. New clause 18 provides that opportunity.

To enhance the value of PIP with a triple lock, so that the value of the payment rises by the highest of the consumer prices index, earnings or 2.5%, similar to the basic state pension, would be a welcome step in the desired direction. It would underpin the Government’s commitment to protect disabled people.

DLA and PIP are currently uprated according to the CPI, which is based on a basket of general consumer goods and services. It does not relate to the extra costs that DLA and PIP payments are intended to offset, as they are often for expensive and specialised items, including mobility scooters. In case hon. Members are unaware, there are a lot of assumptions about who pays for what, and people assume that wheelchairs are provided to disabled people as a matter of routine—they are not. A contribution is made towards a wheelchair, but even something as essential as that is not covered and there is no budget from the national health service for it.

Disabled people also use DLA or PIP to pay for various costly services. Survey data from the think-tank Demos show that disabled people spend an average of almost £65 a month on household tasks and over £40 a month on therapy. That information is available online—the report is called “Counting the Cost”. A triple lock on PIP is more likely to be aligned with the value of those goods and services, because it provides a wider range of inflation measures. Protecting and enhancing the value of PIP through a triple lock would have a major beneficial impact by supporting disabled people to meet disability-related costs more effectively and establishing a stronger sense of financial stability. We are talking about costs purely as a result of living with a disability or a health condition—there is no luxury in what we are discussing.

The triple lock would enable individuals to overcome financial barriers to accessing employment, pay more into savings and pensions and exert consumer spending power. That is essential to raising the living standards of a growing disabled population, and a key element in establishing a thriving economy. Twenty years on from the passing of the Disability Discrimination Act 1995, it is a fitting time to recognise that the extra costs of disability still present a significant barrier for disabled people, and we should act to address that.

It should not be forgotten that the disability living allowance arose from a report commissioned by a Conservative Prime Minister, Margaret Thatcher, and was introduced by a Conservative Minister after she left office. So disability living allowance was a Conservative Government achievement. We have an opportunity to improve and enhance it, so I hope the Government will accept the amendment.

Peter Dowd (Labour, Bootle)

I support my hon. Friend and new clause 4. The Under-Secretary of State for Work and Pensions, the hon. Member for North West Cambridgeshire, talked earlier about a wider context, and I want to talk in a wider context now. Not many weeks ago we debated the Assisted Dying Bill—many people in this room were there. I suspect many Members, like me, voted against that Bill. We said it was a question of giving people dignity in death and as much support as possible in the weeks and months leading up to their death. The new clause would go a long way to helping with that concept, because we can have the abstract idea of supporting people who do not think people should be assisted when they are dying, but the new clause is a practical step to help those who voted against the Assisted Dying Bill to put that into effect.

We recently had a discussion about the hospice moment. I wrote an article about the movement in which I said it was part of the wider context and the wider support that we give in society to people who are on the doorstep of death—let us not beat about the bush, that is exactly what it is. The new clause is a practical proposal to help such people.

For those of us who have had a relative or a friend with a terminal illness, or for those who have worked in the sector and had to deal with people with a terminal illness, the new clause would provide reassurance. It would reassure me that I could be part of the process of saying, “Yes, we have helped you. It might be minor in some regards, but we have been able to help you in your last days and weeks.” That would take some of the stress from the family, and it might take some of the stress from the dying person as well. It is important that we play a part, even if we in this room can play only a small part.

There is another aspect. Some people with a terminal illness might have co-morbidity. They may have Parkinson’s disease; indeed, they may have Alzheimer’s. In those circumstances, it is incumbent on us to make sure that we link the abstract with the practical. This is a genuine opportunity to link our abstract principles and philosophy— on assisted dying, for example—with the practical implications.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I also attended the debate on the Assisted Dying Bill, and there was a strong consensus that there was insufficient support for those who are dying or contemplating suicide. It is unfortunate that, even where there is an indication that some cuts in support have contributed towards tragic consequences for individuals, the Government are reluctant to analyse that properly and to prevent that from happening—not for any other purpose, but to ensure support to prevent people from taking their own lives and to support people at the end of their lives.

Peter Dowd (Labour, Bootle)

That is a well-made point. The more we get into this debate, the more we have to move from the philosophical and the abstract to the practical. This is a practical example of where we can say to people, “You’ve got so many pressures on your life at the moment, the least we can do is try to take away just a little of the pressure on you and your family.” If we can just do that, it would be a small step, but a great achievement.

Priti Patel (Conservative, Witham)

Let me start by thanking the hon. Members for Bermondsey and Old Southwark and for Bootle for their contributions, and particularly the hon. Member for Bermondsey and Old Southwark, who has experience in this area from his professional background. For the record, I also thank the third party organisations that have submitted written statements to the Committee and its members. The hon. Gentleman gave some examples—not attributable ones—but I repeat my offer to the Committee: if there are cases that he or any other member would like me to look at, I would be happy to do that and to meet them to give support and assurance.

New clause 18 seeks to create a duty to increase the rates of disability living allowance and PIP by the highest of the CPI, the rise in average earnings or 2.5%. DLA and PIP are benefits that offer support, as we have heard, for those needing care or supervision as a result of their disability. New clause 18 would require the Secretary of State to review those rates every tax year, considering the effect on them if they were increased by earnings, prices or 2.5%, and, within three months of concluding that review, to lay an order increasing them by the highest of earnings, prices or 2.5%.

Making this change to the Welfare Reform and Work Bill, rather than to the Social Security Administration Act 1992, would create a second review process of DLA and PIP rates, which would overlap with the general review of benefits conducted by the Secretary of State every tax year. That would create uncertainty for benefit recipients, who may find their benefit rates reviewed and announced at different times. Furthermore, the change would remove the alignment between the rates of the care components of DLA and the daily living components of PIP, and those of the attendance allowance, causing further confusion for recipients between working and pensioner age.

This discussion has been highly relevant, however, because we all understand and share the desire of hon. Members who have contributed to the debate to protect and to support those in receipt of DLA and PIP. That is why we have in place many protections, which I would like to set out. We already continue to uprate DLA and PIP by price inflation; specifically, we have exempted certain benefits relating to the additional costs of disability and care from the benefits freeze. Those include DLA and PIP, as well as carer’s allowance, attendance allowance and the support group component of ESA. We have also exempted recipients of DLA and PIP from the benefits cap. The welfare system continues to provide support and to protect those recipients. As we have heard, there are families who cannot work and require the support of DLA and PIP, which is why we have these exemptions. We have also ensured that both DLA and PIP remain universally accessible benefits and have committed not to means-test either. We have also committed to keep them non-taxable. We have built extra protections into the system for claimants who may need extra support.

That brings me on to new clause 4. During the course of our welfare reform programme, the Government have always made it clear that, in our steps to achieve a higher-wage, low-tax and low-welfare society, we will always provide support for those with the greatest needs. In particular, PIP recognises the unique challenges of claimants who are terminally ill. Special rules and criteria for the terminally ill have been introduced to ensure that the PIP system handles such cases both efficiently and sensitively to reduce burdens on individuals and their families at what is inevitably a difficult time. PIP has a fast-track system to allow us to process special rules claims more quickly, with claims, on average, being cleared within six working days. Some 99% of those who apply under the special rules are awarded the benefit, and we have ensured that each of those individuals is guaranteed the enhanced rate of the daily living component.

Evidence for special rules cases is reviewed on a paper basis, and we do not expect individuals applying in such circumstances to undertake any face-to-face assessments. We have worked closely with stakeholder organisations to design a system that allows us to make the correct decisions in such instances without the need for a face-to-face assessment, thereby reducing intrusion and stress for claimants and families. It also helps us to deliver vital support for claimants in the most practical way as soon as possible.

In many cases where an individual may not be aware of their prognosis, or where that might be a particularly distressing subject to discuss, we have worked to design the system to support family members, or representative third party organisations, through the claims process to ensure that individuals can still access the support to which they are rightly entitled in a way that is sensitive to their needs. Through those steps, we have a clear focus on delivery for the individual. It is also important that case managers still have sufficient time in which to consider an individual’s case to ensure that they are being awarded the correct level of support and benefits. Reducing that time, as suggested, would potentially increase the risk of an incorrect payment being made. In such cases, the claimant would either be left with less support or little support. Obviously, we want to ensure that we are not creating any arduous or difficult processes. We are focused on supporting individuals.

Debbie Abrahams (Labour, Oldham East and Saddleworth)

Will the Minister clarify that point? My hon. Friend the Member for Bermondsey and Old Southwark has said that that happens automatically in the current DLA system. It happens in the DLA system, but not in the PIP system. Why would there be an issue if it is transferred to the PIP system?

Priti Patel (Conservative, Witham)

As I have just said, that would undermine its value. The best way to put this is that, importantly, it is about the individual and ensuring that we have the right rules so that we can support the individual in the right way.

Neil Coyle (Labour, Bermondsey and Old Southwark)

It is a bit disturbing to hear the Minister worrying about an inappropriate payment, because she is suggesting that the Department cannot handle this issue. It already handles the issue through disability living allowance so that people get the support when they need it. A very small number of people are moving from disability living allowance to the personal independence payment—we are talking about a maximum of 800 people a year, according to the Department’s figures. We are talking about a very small number of people and a change that aligns the support with DLA for those people in the DLA to PIP transition areas.

Priti Patel (Conservative, Witham)

I completely understand those points. The focus is on ensuring that PIP is delivered in the right way and providing the right support. Having listened to the debate today, I will happily consider the views expressed. We are working with stakeholders under the independent reviews, as well. That is important for the efficacy of the delivery and roll-out of PIP. I will take the views and representations made by the Committee into consideration, and we will work with hon. Members, as well. I will be happy to discuss this matter further outside the Committee.

The hon. Gentleman touched on the issue of how frequently claimants who are terminally ill receive their DLA or PIP. Those claimants receive their benefit payment weekly in advance, as opposed to four weeks in arrears, the normal payment cycle for PIP. As I said, I am happy to discuss the matter further and take on board hon. Members’ considerations and representations. I therefore urge the hon. Gentleman to withdraw the new clause.

Neil Coyle (Labour, Bermondsey and Old Southwark)

I thank the Minister for her response. It is good to know that there is a window of opportunity to explore this issue in a bit more detail. As I mentioned at the beginning of my remarks on the new clause, I hope that my hon. Friend the Member for Sheffield Central and the organisations in his constituency can be included in the discussions.

The fast-track system the Minister mentioned is there not out of the goodness of the Department’s heart; it reflects the fact that these people have only six months to live from diagnosis. Looking to have equivalent support for those on disability living allowance who are transitioning to the personal independence payment gives us a small window of opportunity to make sure that there is no time lapse and that people do not end up out of pocket purely because of a postcode lottery.

I welcome the Minister’s commitment and hope the discussions she mentioned are fruitful. If things are not as clear as we would like before Report, there will be the opportunity to discuss the provisions in the new clause at that stage.

To come back to the earlier point about taxpayers, there are many disabled people who use DLA and PIP to support themselves in work. In-work costs are higher for many disabled people—public transport costs, different work uniforms or whatever it might be. We should not lose sight of that. It would be useful if the Government could give a stronger indication that they would be willing to consider having higher payments, which the triple lock would achieve.

I beg to ask leave to withdraw the clause.

Albert Owen (Labour, Ynys Môn)

This is my last sitting of the Committee. I thank all members, including the Ministers and those sitting on the Opposition Front Bench. In particular, I thank both Clerks, who have been tireless in their work, and Hansard.