My Lords, I very much welcome these amendments, so ably moved by my noble friend and supported by the noble Lord, Lord Kerslake, and the noble Lord, Lord Horam, whose words I thought were very wise.
I must say that I am baffled by the Government’s obsession with council tenants’ incomes. For starter homes, buyers can be on £80,000 a year and still get a subsidy of £100,000 or more to climb the housing ladder into a larger property, and no questions are asked about their income; council tenants, meanwhile, go down the housing snake—they face the bedroom tax mentioned by the noble Lord, Lord Horam, if they cannot compress into a smaller home, while other council tenants, with a family income of £30,000 between two of them, are pushed into market rents. After five or eight years, starter homes owners may happily leave their homes to trade up; at the selfsame time, council tenants fear that they will lose their homes to an insecure tenancy. It cannot all be about Bob Crow, as the noble Lord, Lord Kerslake, said—can it? Fair it is not; spiteful, as far as council tenants are concerned, I believe it is.
So I have some questions to the Minister that span this and the next group of amendments. The original impact analysis suggests that the increased income from rent under this policy, before taper, would be wiped out every year by the “behavioural impact”. In other words, tenants will ensure that they do not pay an extra penny if they can help it, so the Treasury will only gain not from increased rents but from “fiscal drag”. That is very speculative. My first question to the Minister, therefore, is: what are the Treasury’s revised net figures with a taper of 20%? Less income perhaps? Less evasion, certainly. Perhaps less fiscal drag, also?
Secondly, what is the estimated admin cost to local authorities of assessing the income of separate family members for those half of council tenants who are not on housing benefit? Where will that information come from? Will it come from HMRC? For hundreds of thousands of tenants, will councils draw on data that are 18 months old? In many councils, these data would be handled by private companies, so what of taxpayer confidentiality—or does that not matter for council tenants?
Whenever people’s incomes fall, they will, rightly, want their rent to be reduced immediately, although they may be slower to report a pay rise. What will it
cost councils to collect data on any such income drop, verify it with HMRC, conjoin family incomes, assess the rent and notify tenants and then collect it? What will it cost to do that all over again for that family, perhaps every month or two, when the job goes, the partner goes, their hours go down or their income, as a self-employed person or someone on commission or on a zero-hour contract, doubles or halves from month to month?
At huge cost, as the noble Lord, Lord Horam, said, local authorities will be endlessly chasing rent arrears for, on the one hand, increased rents or, on the other, for failing to credit for reduced rents. Always, they will be three changes of circumstance behind. With tax credits and with the Child Support Agency, we never caught up—half of all lone parents, I found, had more than a dozen significant changes of circumstance affecting their tax credits or his maintenance every year. That required endless recalculation of tax credits and maintenance, which government never managed to handle. I was there. We were foolish and we got it wrong. We have not learned from it. This is what is so exasperating: look at what has happened with the bedroom tax. I checked this figure over the weekend. So far, some councils have recovered just 30% of the increased rent due because of the cut in housing benefit—30% after a couple of years, with 70% still outstanding and half the affected tenants with hugely increased arrears. That is the legacy. That, as a system, was fairly easy because rent and income in those cases were both fairly stable, unlike this mess. If pay-to-stay rent is not adjusted speedily the tenant will suffer and fall into debt, but if the local authority tries to do so it will be unable to cope. Oh, and the IT providers tell us that the IT will not be ready on time either, but that is a minor consideration.
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Now add a taper. Because this policy is so spiteful—I use that word deliberately—the Government have allowed some inadequate mitigation that softens the edges but hardens and makes more difficult the administrative delivery. A taper is welcome, but an increase in the threshold that takes most of those families on fluctuating incomes out of pay to stay is, in my view, essential. Only that will ease the administrative nightmare about to hit local government; only that will protect work incentives and the wish of so many struggling families to get on and progress. Otherwise, tenants will refuse overtime or not declare it. A modest promotion would be declined as, with NI and tax, they will now lose 52p in every pound, making quite fragile lives and that effort to get on so much harder.
As the noble Lord, Lord Kerslake, said, housing associations have discretion on whether to impose pay to stay at all. If they do they are allowed, as the noble Lord, Lord Horam, said, to keep the rent. Councils have neither option. It is mandatory and the money does not stay with them. They will have the cost, but the money goes to the Treasury. The Government are not even guaranteeing that the costs will be covered. The Minister is keen to talk about the level playing field between housing associations and local authorities on right to buy; she is silent, so far, on the lack of fairness between the tenures of housing associations and local authorities on pay to stay.
This policy is spiteful and unnecessary. It will not bring in much income. I do not see why council tenants, unlike us, are expected to contribute to reducing the deficit in this way—pushed behind, according to the impact analysis. It is not too late to amend the Bill. I hope that the House does so today by supporting the admirable amendments in this group and the group that follows.