My Lords, I support the amendment moved by the noble Lord, Lord Best, and I shall refer to the amendments in this group to which my noble friend Lord Kennedy and I have subscribed. The noble Lord, Lord Best, having referred to Zoopla, I should declare an interest on top of my local authority interests. Recently Zoopla gave an evaluation, not sought by me, for my four-bedroom semi-detached in Newcastle of £5.96 million. On my pointing out that this was somewhat excessive—despite the house having been built by the father of the noble and learned Lord, Lord Woolf, in the 1930s—Zoopla radically reduced the price, such that after a few days I seemed to be more than £5 million less well off than it would have had me and the world believe. Such is the world of estate agency.
These amendments deal with the critical issues of the taper which should apply to the imposition of higher rents, whether by government diktat or the exercise of discretion by housing authorities, and the relevant income thresholds. It is all of six weeks since the Minister wrote to Peers with the Government’s response to the six-week consultation initiated in October. The consultation, which contained not a single figure, occupied all of four pages. The response, remarkable for its opacity even by comparison with the abysmal lack of information that has been a feature of virtually every aspect of this Bill, consisted of three pages and no definitive indication of the relevant figures. The Minister’s letter accepted the notion of a taper, exemplifying in very broad terms the impact of tapers of 10% and 20%, but, significantly, without specifying the anticipated impact per household or the aggregate cost to the Exchequer. At 1.34 pm today I and, no doubt, a few other noble Lords received an email from the Minister stipulating a 20% threshold, which now results in the threshold figures being £31,000 outside London and £40,000 in London. I do not blame the Minister at all for this belated information, but it is another symptom of the way the Government as a whole conduct their business in general and on this Bill in particular.
As the Secretary of State reminded my noble friend Lord Kennedy and me last Thursday, this provision stems essentially from the Treasury’s determination to save money, not from any substantive housing policy requirements, and is based on the false premise that council rents are subsidised by the taxpayer—a notion that, in all fairness, the Minister disavowed in an Answer to a Written Question from my noble friend Lord Kennedy. Council house rents are not subsidised by the taxpayer. However, as the noble Lord, Lord Best, has indicated, it is a tax, in the same way that the residents of Boston discovered when the tax on tea was imposed in 1776. I do not say that the reaction will entirely match that of that celebrated occasion, but it is a tax and nothing to do with housing as such.
There is a paradox embedded in the Government’s approach. If tenants feel unable to pay the higher rents demanded, they may seek private rented accommodation, adding thereby to the pressure on rent levels in that sector—on which, incidentally, the Government propose no action—which could ultimately increase the housing benefit budget and indeed line the pockets of landlords while so doing. In Committee, I cited the case of the son of a family friend whose household income is a little over £40,000 and who would face a large increase in rent if the threshold remained at that level, which it appears it now will. The Minister indicated in her letter that the Government would institute a taper, and of course, we have heard that that is now their intention and what that threshold would be.
4.15 pm
The Delegated Powers and Regulatory Reform Committee’s 27th report, while commending the Government’s acceptance of the application of the affirmative procedure to the rent regulation regime, expresses surprise that the Minister rejected its other recommendations and remains,
“of the view that there should be more on the face of”,
the Bill,
“to define the key expression ‘high income’”.
It regards as inappropriate the “sub-delegation to guidance” in Clause 78(4) of the determination of rent and the calculation of income under Clause 79(2)(f) because,
“it will elude any form of Parliamentary control”.
We now understand that there is to be an affirmative procedure, but as we all know, that is not the same thing as parliamentary control, and it certainly comes much later than the legislative process which creates the situation in the first place.
These are not, of course, trivial matters. London Councils estimated that on the original figures, 28,000 households in the capital would be affected. In Newcastle, the council’s estimate is some 500 houses. However, what is the Government’s estimate, and on what basis, of the impact of the proposed thresholds and tapers in London and elsewhere on the households affected and the amount to be paid to the Treasury net of any costs incurred by the authorities? I understand that the net figure is likely to be some £230 million, but that does
not take account of the costs of administering the scheme—which, of course, will be incurred not by the Government but by local authorities. Can the Minister assure us that this pay-to-stay principle will not be extended to housing association tenants once their legal position in relation to the ONS’s concerns about their status and its impact on the definition of “public expenditure” is determined?
How, moreover, is household income to be calculated? Members have raised concerns about the position, for example, of resident family members who have income. The consultation document referred merely to the two highest earning members of the household. They may not, of course, be the tenants; they might be an elderly parent—or, rather, an older parent, because as I understand it we are talking about earned income—or a younger member of the family rather than a tenant with an interest in the property. Moreover, in these days of zero-hours contracts, many with brief periods of employment or fluctuating earnings from employment or self-employment may move above or below the threshold with, I suspect, some rapidity, given the relatively modest amounts involved and the types of trades and jobs which provide variable wages. I am not merely talking about zero-hours contracts, although that would of course be an issue, but generally there is likely to be a fluctuation of income. How are councils supposed to deal with this, and at what cost as regards administration? Is it appropriate for HMRC to be distracted from its belated efforts to tackle tax evasion and avoidance by having to supply information to councils—and perhaps, ultimately, to housing associations—about household income? What will it cost HMRC, stretched as it is by its current responsibilities, to undertake that exercise? Further, what undertakings can the Minister give about reviewing both the taper and the thresholds?
I am pleased that the Government have indicated that they are prepared to accept—I take it that that part of today’s discussions remains valid—Amendment 77ZA, a manuscript amendment in my name, under which the household income threshold,
“for the purposes of defining ‘high income’, is to be increased every three years to reflect any increase in the consumer price index”.
I hope the Minister will be able to assure us that the Government will still implement that element, at least, of today’s somewhat fraught discussions.
There are many questions about and difficulties with the proposed scheme. I hope your Lordships’ House will support the amendments in this group and that the Government will think again. It may be that certain of these issues can be dealt with next week, and if the Government are not in a position to agree on them today, I hope that they can at least give us some assurances. Failing that, this matter will have to go backwards and forwards between the Houses. That would be regrettable. It would prolong uncertainty and, I suspect, not answer the questions that I and others have raised.