Welfare Reform Bill

Amendments Nos. 103B and 103C seek to amend Clause 29. Amendment No. 104A is a new clause concerning non-dependant deductions. I propose to address AmendmentNo. 103C first, as both Amendments Nos. 103B and 104A are about the non-dependant deduction scheme. Amendment No. 103C would effectively provide that certain categories of people could be eligible for an extra room under the local housing allowance. I certainly sympathise with the admirable intentions behind the amendment, but I hope to be able to reassure noble Lords that it is not necessary. From a legislative point of view, under Section 175(3) of the Social Security Contributions and Benefits Act 1992 we already have powers to exercise the regulation-making powers so as to make different provision for different groups of people. In the majority of cases, care for those who need it is provided by a person who is a permanent member of their household. In these cases, under the local housing allowance, the carer would already be included when the local authority calculated how many rooms the customer was eligible for. Of course, customers who are disabled will often require more support with housing than customers who are not. I fully appreciate that. Disabled customers have a diverse variety of extra needs, and support must be tailored and be specific and responsive to an individual’s needs. I suggest that the local housing allowance structure is not the place to provide that support. That is why the department has a wide range of disability benefits, all designed to meet customers’ different needs. It is also for this reason that we have the discretionary housing payment scheme. That is a matter that I hesitate to return to, and I commit to responding more fully to the point on which the noble Lord, Lord Oakeshott, pressed me. This is a more flexible system that enables a local authority to target more help to those customers who need it. Because it is discretionary, the local authority can tailor additional help to the level that the customer needs. Changing the local housing allowance so that it became a more complicated, specifically targeted benefit would undermine the aims of housing benefit reform. Both Amendments Nos. 103B and 104A relate to non-dependant deductions. It has long been the established policy that adults who live in the household of a person in receipt of income-related benefits should contribute towards the costs of their accommodation. It is right that that should be so, because the taxpayer should not indirectly subsidise the accommodation costs of non-dependants. I think that the noble Lord accepted that point when he moved his amendment. Standard deductions are based on the non-dependant’s gross income level. This avoids subjecting the non-dependant to a detailed means test, which would be impractical for local authorities and the department to administer. The amendments mean that some people who at present attract a deduction would not do so. Those who would not attract a deduction would be the following: anyone of working age who is 25 or over and in receipt of income support or income-based jobseeker’s allowance; anyone in non-remunerative work—that is, working less than 16 hours per week; and anyone in remunerative work whose income is under £101 per week. Currently, non-dependants in receipt of pension credit and non-dependants aged under 25 who are in receipt of income support or income-based jobseeker’s allowance do not attract a deduction. For non-dependants on income support or income-based jobseeker’s allowance, the scheme reflects the fact that weekly allowances in those benefits rise at the age of 25, currently by £11.95, so it is reasonable to expect someone on those benefits to contribute towards household costs from that point. Regarding non-dependants on pension credit, a review of the scheme was undertaken in 2005 and changes were made to reflect the needs of pensioners. The second part of Amendment No. 103B would in effect impose a ceiling on the level of non-dependant deductions that could be taken from a person’s housing benefit. I appreciate that the intention of this is to limit the effect of non-dependant deductions on the tenant’s housing benefit, but it would also mean that the level of contributions expected from non-dependants on high incomes would be capped. That cannot be fair, especially to non-dependants on lower incomes, and indeed to the taxpayer, who would be subsidising the housing costs of those non-dependants. On Amendment No. 104A, under the current scheme, dependants who are not in remunerative work and who are earning less than £101 per week attract a £7.40 per week deduction from the tenants' housing benefit and a £2.30 a week deduction from council tax benefit. It is not clear from the amendment what is the intention for non-dependants who are in non-remunerative work and are in receipt of income-based jobseeker’s allowance. I assume that the noble Lord intended no deduction to apply for anyone in non-remunerative work. If that is right, that would mean that a non-dependent who was on income support who was not working would continue to attract a reduction, but a non-dependent who was on income support and doing some part-time work would not. Also, the lower-rated deduction in council tax benefit, assuming that there would be a read across, applies to incomes below £157. If the intention is to split the current lower income band in two, and the divide then being £101, that would mean that the current lower rate of deduction would apply to incomes between £101 and £157. If it is intended to move the current bandwidth from £157 to £101, that would mean that about 10,000 non-dependants with incomes between those figures would attract increased deductions up from £2.30 to £4.60 per week. It is important to remember that the Government have frozen non-dependent reduction rates since 2000. Indeed, we dealt with that in the uprating just a couple of days ago, when they were frozen again for next year—although the income bandwidths, which determine the rate of deduction have been increased each year. That is beneficial both to householders and to the non-dependants themselves. Any reform of the scheme must take account the overall rationale for it. The Government's view remains that it is right to expect a contribution from non-dependants. The burden to the taxpayer must also be borne in mind. I am conscious that a few complicated calculations and figures were flying around in that response, but I thought that it was important to put them onthe record. I urge the noble Lord to withdraw the amendment.