New Clause 8
Welfare Reform Bill
10:45 am

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

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

I endorse many of the comments made by the hon. Member for Daventry and I look forward to hearing the Minister’s response in due course. May I say how much, in my brief time in the House, I have valued the hon. Gentleman’s contribution from the Front Bench? I look forward to that continuing from the Back Benches too.

New clause 8 is designed to elicit a debate and probe in a bit more detail the Government’s thinking about the non-dependent deductions regime for housing benefit and other benefits. The thought behind it, supported by evidence from Shelter and Citizens Advice, among others, is that the current non-dependent deductions regime causes problems for claimants from time to time and significant reform is needed. Reform of the non-dependent deductions regime has been considered before. It may be of interest to Labour Members, some of whom were not around at the time, that when in opposition the Labour party raised a number of concerns about it. In 2000 the Government’s housing Green Paper, “Quality and Choice: a decent home for all” proposed the simplification of non-dependent deductions. Of the 103 organisations and individuals who responded to the consultation paper, only five raised objections.

It may be worth discussing briefly the problemsthat can be caused by the present non-dependent deductions regime. In some circumstances it can lead to  rent arrears and consequential hardship, and perhaps even eviction and homelessness. It can also, which is an important point in the overall context of the Bill, create disincentives to work. In my constituency casework I have had experience of the regime causing all those problems, except eviction. Other hon. Members may have broader experience than that.

The idea behind the non-dependent deductions regime is that non-dependants living in a person’s house, such as grown-up children, should make some contribution toward the rent. One might ask who could argue with that. In many cases that would be a fair point, but there are certain categories of claimants for whom the current regime causes problems. The regime has a minimum non-dependent deduction, which at this year’s rate amounts to £7.40. The deduction is banded according to income and the highest rate of non-dependent deduction goes up to £47.75, but where no evidence of the income of the non-dependant is provided, the deduction takes place at the highest rate.

The Department for Work and Pensions has conducted some research on non-dependent deductions and who claims them, but that research is rather out of date as it is 10 years old. Is the Minister happy to agree that further research should be carried out to update the figures? For example, 52 per cent. of claimants for the non-dependent deduction were aged 60 or older and the average age was 58. Clearly, those figures apply to a wide range of categories of people, but mainly—probably—to those with children who have grown up or are growing up, or adult non-dependants, such as spouses or partners.

A problem arises—certainly it did in relation to a constituency case with whom I have dealt—when the non-dependant is a child and the parent is the claimant. Whether or not they are on benefits—my constituent claimant was on other benefits—the parent has to seek from the non-dependant some of the money to make up the difference, if they do not wish to suffer a reduction in living standards or a shortfall in their rent. In that case, if the minimum amount applies, £7.40 would be required from the non-dependant to meet the shortfall. Citizens Advice found that where the non-dependant is a grown-up child under the age of 25, it can be very difficult for parents to get the money to meet that shortfall.

Obviously, I am anxious to hear the Minister’s response to the concern that the rules, which are in place for very good reasons in the vast majority of cases, are, in a minority of cases, causing hardship, can cause rent arrears and might even in extreme circumstances lead to an eviction. That is disruptive for the individuals concerned, and in some cases for families.

My amendment reads:

“The Secretary of State shall make regulations such that the non-dependent deduction...where the non-dependent...is in non-remunerative work, or...has a gross income from remunerative work of under”

a certain amount should be nil, so that if the non-dependant is either living on benefits or has no, or a low, remunerative income, the housing benefit would be payable to the claimant in full. That is an attempt to get around some of the problems. I appreciate that that might not necessarily be a perfect solution, but I wanted to identify in this debate the fact that in some  categories of case there are quite serious problemswith the operation of the current rules. I encouragethe Minister to update the Committee on the Government’s latest thinking on that matter.

Let me return to the Government’s response to the Select Committee on Social Security in 1999-2000. The Committee recommended that

“the number of rates of non-dependent deductions is substantially reduced, and that this should be accomplished by abolishing the higher rates of deduction”.

In their response, the Government said:

“The Government acknowledges that the present scheme does increase complexity and that the highest rates of non-dependent deductions may, in some cases, exceed total rent liability. There would of course be costs arising from abolishing the highest two rates....The Housing Green Paper put forward the idea of simplifying non-dependent deductions and the consultation responses will need to be considered before a decision is made about making any changes.”

At that stage the Government’s thinking seemed to betray a degree of awareness of the problems that the current regime can cause in a minority of cases. I would be grateful if the Minister could inform the Committee of whether under the new local housing allowance that issue could be looked at again.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

Good morning, Mr. Hood. It is a great joy to see you again after such a long break.

I hope, Mr. Hood, that you will not have to witness the scenes that some of us had to witness in the Chamber, not once but twice. At oral questions to the Department for Work and Pensions, there were dangerous signs of a breakdown in the valuable consensus that has been displayed in Committee. Ministers were actually criticising Opposition Members, quite openly and on the record. [Laughter.]

The debate yesterday afternoon started badly and then got worse. I am glad those scenes, which took place during the winding-up speeches, were after the9 pm watershed because children should not have been watching. There were sneering and barracking noises from Government Members in a pathetic attempt to put off my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond). I really hope that we do not see scenes like that in Committee today.

Jimmy Hood (Lanark and Hamilton East, Labour)

I am sure we are getting round to the new clause.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

I am merely trying to rebuild the consensus and remind hon. Members on both sides of the divide of that. There is still sedentary chuntering from the hon. Member for Glasgow, North-West, but that is part of the great glory of the Committee. All shades of opinion are welcome here under your excellent chairmanship, are they not, Mr Hood?

Let us move on to the business of the clause. This important and probing amendment owes much to the excellent work, campaigning and lobbying done by Shelter and Citizens Advice. For Members of Her Majesty’s loyal Opposition, the amendment is important for two reasons. First, the area of non-dependent deductions is complex and Opposition  Members and—I think—Government Members want benefit simplification higher up the agenda, mainly because it will help customers, many of whom are the most vulnerable in society. Secondly, the amendment would streamline Government business and make it more efficient and cost-effective.

The current regulations discourage housing benefit claimants from allowing friends and adult relatives on benefits and low incomes to reside with them. In extreme cases, that may result in eviction, but I do not think there is any great evidence of that, so we are not scaremongering. However, the regulations may well encourage under-occupation of housing units, particularly social housing.

The thrust of the regulations is based on an unassailable proposition that non-dependants with a reasonable income should be expected to contribute to the cost of their housing. No one disputes that. However, the current requirements and rates at which non-dependent deductions are applied can cause hardship either to the non-dependant or the claimant. What concerns us, and I am sure Government Members, too, is the work disincentive effect. Another concern is the possible impact in terms of family breakdown, which is why the modern Conservative party is looking at the area of non-dependent deductions afresh and with renewed interest.

My right hon. Friend the Member for Witney (Mr. Cameron) has, in a modern way—not in a traditional, tub-thumping, right-wing way—talked about the importance of the modern family and about the way in which family units no longer have to have a marriage certificate attached to them. Keeping families together is an important part of any Government’s public policy, and it is a very important part of the benefits system as well. Sometimes the system can keep families together and sometimes it can keep them apart. I suspect that the new clause teases out the problems that some families have in relation to non-dependent family members. Quite often the elder member of the family will be claiming housing benefit, and we can see that there is a disincentive in keeping that non-dependant in the household because of the way that the regime operates.

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

I, too, welcome you back to the Chair, Mr. Hood.

Does my hon. Friend share two of my concerns about non-dependent deductions with respect to work disincentives? First, the statistics are very clear about the greater incidence of child poverty in workless households. In such a non-dependent deductions regime, there is a clear disincentive for someone else living in the household to take work. There is therefore a risk of increasing the number of workless households, which has a direct impact on child poverty.

Does my hon. Friend also share my concern about the possible impact on carers for disabled people? If a carer is living with a disabled person, that carer might also have a strong disincentive to work because of the non-dependent deductions. Does he share those concerns, and does he think that they might be another reason why the new clause should be taken very seriously?

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

I do indeed share my hon. Friend’s concerns about the impact, both in relation to disabled people and on child poverty. I think that I am right in saying that slightly fewer than three out of four children in single parent workless households are in poverty, whereas only one in eight children in single parent working households are in poverty. Ministers would not disagree with those figures. As they have a 2020 child poverty reduction target, I know that they are seeking to tackle those figures and to halve them by 2010. We sign up to those aspirations, but it is certainly the case—

The Minister for Employment and Welfare Reform (Mr. Jim Murphy)indicated dissent.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

Target or aspiration—whatever. We sign up to those propositions, but to get from where we are now to the 2020 target and to the first milestone at 2010, we must all understand that the decisions made by the Government will have an impact on our ability to meet that target. That is why the new clause is extremely important. My hon. Friend the Member for South-West Surrey makes an excellent point.

My first area of concern is benefit complexity. It contributes to delays and cases of maladministration, but above all—this is the key point for us now—it creates confusion for claimants, many of whom are vulnerable and who will sometimes be in distress. The confusion and uncertainty about how the quite complicated rates and different levels operate can worry the non-dependant, who wishes to stay in a family house or flat, as well as the housing benefit claimant him or herself. That confusion is compounded by the knowledge that failure to provide evidence of a non-dependant’s income will result—without any ifs or buts—in the top rate deduction of £47.75 being applied straight away, which seems quite a harsh principle.

Will the Under-Secretary first explain the rationale for that sanction? I do not think that there is any other word for it. One must remember that individuals might not be able to provide accurate evidence, or any evidence at all, of a non-dependant’s income, for perfectly understandable reasons. In explaining the rationale for why that top rate deduction is applied in such circumstances—where evidence is not fully forthcoming—will she say whether there are any derogations, such as mental illness, which might be just cause for not disclosing that information? If such a good reason is given, could the £47.75 hit be avoided? That is quite an important point.

On complexity, it is worth reading into the record that quite a lot of rates are involved for non-dependent deductions. My second question to the Under-Secretary is why the rates start at the top with £47.75, then descend to £43.50, £38.20, £23.35, £17 and finally £7.40? We understand a deduction regime is needed, but will she explain why there are so many rates?

I hope that the Minister will also fully answer my second question, which was: has she had any discussions with her hon. Friend the Member for Warwick and Leamington (Mr. Plaskitt), the Under-Secretary of State who is responsible for benefit simplification? If she has not discussed with her fellow Minister why there are so many levels of benefit, I ask  her to explain why not, because it is an area that is ripe for simplification. We say yes to the principle of deductions, but why are there so many rates?

Tim Boswell (Daventry, Conservative)

My hon. Friend must now get used not only to criticism from in front but occasionally even withering—[Interruption.]

Jimmy Hood (Lanark and Hamilton East, Labour)

Order. Ministers on the Front Bench may need to confer, but if I can hear them they are conferring too loudly.

Tim Boswell (Daventry, Conservative)

I will be brief, Mr. Hood, so as not to excite them. I simply want to say to my hon. Friend that if there are a series of benefit rates there are, by definition, steps, with which he will be familiar from his work in the Treasury. There are important marginal implications when people cross each of those steps and that contributes to the pattern of disincentives, which worry my hon. Friend and me.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

My hon. Friend makes an important conceptual point, which we come across in the parallel area of tax simplification. There are often very good reasons why tax codes and tax legislation are so detailed: they are protecting the Chancellor of the Exchequer’s revenue base on which we all rely. Were that base not protected we would not have the revenue, the tax pounds, to pay for all the public services. It is always a case of striking a balance. In the case of these benefit levels, my hon. Friend says that there must be no sharp cliff edge in terms of the marginal effect, but it would be useful to understand why there are so many rates for deductions. None the less, I will simplify the question about simplification and ask the Under-Secretary to tell us, without going into the theology of marginal rates and cliff edges, whether she has had any discussions on the issue with her hon. Friend the Member for Warwick and Leamington?

My third question for the hon. Lady is on a matter that puzzles me. It is a “techy” point, which is also made by Shelter and Citizens Advice, but we should have a reply to it. Under-25s who are in receipt of income support or income-based JSA are exempt from NDDs, but those in the same age group claiming contribution-based JSA, paid at the same rate, are not. My simple question for the hon. Lady is: why?

Income support and JSA claimants, both income and contribution-based, aged over 25, attract an NDD of £7.40 a week, which is the lowest deduction, but that means that NDDs can still push people below minimum income levels and into poverty. Those benefit claimants are expected to contribute towards the rent from their benefits when they would not be required to do so if they held their own tenancy, which prompts another important question for the hon. Lady. There is a perverse incentive in that people might be better off if they found their own tenancy and made their own housing benefit claim at a far greater cost to the taxpayer, rather than not finding their own tenancy, not claiming a large slug of housing benefit and instead lodging or taking a room in a family home or with a friend or relative. Have the hon. Lady and her Department done any research on that question?

Should we not encourage better and more efficient use of our housing stock? Would not an answer to that question help to tease out what is going on? Is it the Government’s policy to encourage greater occupation or to drive people into finding their own tenancies at inconvenience to them—they might not want the responsibility of their own household unit—not to mention the extra cost to the taxpayer of a new housing benefit claim for a brand new tenancy?

The spokesman for the Liberal Democrats referred to the age of the last DWP research on NDDs. I shall not say that it was done when dinosaurs stalked the earth, but it was 10 years ago, and that is a long time in governmental terms. I do not have the advice of numerous brilliant civil servants, advisers and speechwriters that Ministers have; I have only my basic research, which says that the most recent DSS and DWP research into NDDs is the 1996 DSS research report No. 43, “Paying for Rented Housing”. How long it seems since that report, and the days when the Major Administration was constructing its golden economic legacy, a legacy from which the Labour Government benefits in no uncertain way.

For the record, that research, albeit 10 years old, found that 52 per cent. of claimants of an NDD were aged 60 or over—that is a high figure; more than half—that the average age of all claimants was 58, and that 48 per cent. of claimants survived on income support. Touching on the point about which my hon. Friend the Member for Daventry speaks with such authority, 11 per cent. were sick or disabled—the study said parenthetically that that was believed to be an underestimate—and 71 per cent. were either aged over 60 or disabled, lone parents or on unemployment benefits. The 1996 study also looked at the profile of non-dependants and found that the average age of non-dependent children of claimants was 28 and that of brothers or sisters was 55.

Those figures illustrate the fact that NDDs are more likely to affect the elderly and people who are in receipt of other benefits. The departmental data are supplemented by troubling data from Shelter and Citizens Advice. Their advice centres find evidence of family formation being undermined. They report that the application of NDDs to JSA and income support claimants causes problems for the housing benefit claimant in two ways. First, housing benefit claimants with adult children often find it difficult to recover the expected contribution from those children, leaving them with no choice but to ask the children to leave or to meet the shortfall from their own incomes. We can imagine that that can lead to difficulties in families. The second problem that the advice centres have discovered is that claimants might allow a friend, rather than a relative, to stay but find out later—when the friend has moved on—that they have been overpaid and anNDD has been applied retrospectively. In those circumstances, the housing benefit department will attempt to claw back the overpayment. It can be difficult for the host to recover a large sum from the friend who was staying if he is receiving only the low income that benefits provide.

Tim Boswell (Daventry, Conservative)

In the spirit of the exchanges at DWP questions yesterday, does my hon. Friend agree that if it is difficult for the Department, with its debt recovery organisation, to make much inroad into overpayments centrally, it is particularly difficult under the present rubric for a council housing benefit department to recover overpaid benefits in a world in which people move on and change location?

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

My hon. Friend makes an excellent point, to which the Under-Secretary might like to respond. Overpayments like those often result in rent arrears, with the possibility of eviction for tenants. That is not desirable.

I should like to make a short excursion into recent history and remind the Under-Secretary that, when in opposition, the Labour party raised concerns about the non-dependent deduction regime, and later did more than that. When it got into Government, the Labour party considered the matter quite purposefully, by all accounts. In 2000, the housing Green Paper, “Quality and Choice: a decent home for all”, proposed the simplification of NDDs, and 103 of the individuals and organisations that responded to the consultation paper supported their simplification or reform. Five respondents apparently disagreed with simplification.

In the 1999-2000 Session, the Select Committee on Social Security held an inquiry into housing benefit and recommended that the number of rates of non-dependent deductions should be substantially reduced, and that that reduction should be accompanied by abolishing the higher rates of deduction—which refers back to a point I mentioned earlier. In its response to that Committee recommendation, the then Department of Social Security stated:

“The Government acknowledges that the present scheme does increase complexity and that the highest rates of non-dependant deductions may in some cases exceed total rent liability. There would, of course, be costs arising from abolishing the highest two rates. The Housing Green Paper put forward the idea of simplifying non dependant deductions and the consultation responses will need to be considered before a decision is made about making any changes.”

To repeat the point, in spite of what seemed overwhelming support from the respondents to the consultation, in December 2000, Ministers announced that they were not taking forward options to simplify NDDs. To ask a simple question, in the spirit of honest inquiry, about something that happened before the Under-Secretary’s time in the Department: why? A lot of valuable work was done by her predecessors after the 1997 election and many important noises were made, particularly on benefit simplification. This was not my bedtime reading in 1999 and 2000, so I come into this area with a relatively fresh mind—well, certainly a mind; I am getting on in years, so I am less fresh than I used to be—and I am puzzled by the basis for the policy decision by the Department not to proceed with what look like sensible benefit simplification measures. I should have thought that such measures would have benefited those operating and administering the system and, most importantly, the customers on the receiving end—those requiring the help that they clearly deserve.

Shelter and Citizen’s Advice, which have done a lot of work on this matter, have helpfully sketched out three main runners as options for reform, which I shall  place on the record. We know that each one has a price tag, so I do not want the Under-Secretary to say that this is a spending commitment from Shelter, Citizens Advice, the Liberals or the Conservative Opposition; they are options offered in the spirit of genuine inquiry. Putting aside the price tags, could she tell the Committee whether any or all of the three propositions are being considered with a view to simplifying and improving this area of the benefits system?

The first proposition is that no NDDs should apply for non-dependants in receipt of income support or jobseeker’s allowance. Currently, only under-25s receiving those benefits are exempt. Has the Under-Secretary considered that? If she has done so and rejected it, that is fine, but it would be useful to know for the future whether we are barking up the wrong tree. According to a written answer of 27 February this year, the DWP estimates that such a change would cost £22 million per year.

The second proposition is that total NDDs should be capped at 50 per cent. of the rent. Currently, some claimants with more than one non-dependant living at home have more than 50 per cent. of their benefit deducted. The DWP estimate of the price tag for that is £37 million a year. I stress, however, that I do not wish the Under-Secretary to get hung up on price tags at this stage; we are just discussing the principles.

Thirdly and finally is the proposition from Shelter and from Citizens Advice that the two highest rates of non-dependent deduction—those at £47.75 and £43.50—should be abolished. That proposition was prefigured in the musings of the Under-Secretary’s ministerial predecessors at the turn of the millennium. According to DWP estimates that would incur a cost of £10 million a year.

I thus conclude my peregrinations around NDDs. I hope that the Under-Secretary will answer some of our questions, which were asked in a spirit of honest inquiry and probing and have excited the attention and interest in particular of Citizens Advice and Shelter, to whom I am greatly indebted for their briefing and informative advice.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

I did not realise how much I had missed the hon. Gentleman, and the magic word “parenthesis”. I am fascinated by his wish to put aside the price tags for the matters to which he refers. That makes us utterly confused sometimes.

Kali Mountford (PPS (Rt Hon Des Browne, Secretary of State), Ministry of Defence; Colne Valley, Labour)

Suspicious.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

Suspicious, as my hon. Friend says. We are not sure whether the Opposition are raising a concern, making a commitment or just chuntering on in the way that the hon. Gentleman accused my hon. Friend the Member for Glasgow, North-West of doing. I am not at all surprised that they want to put aside the price tag for anything, given the devastating performance yesterday of the Chancellor of the Exchequer, when he pulled apart the spending commitments that the Opposition have already made.

With that little frisson of excitement by way of introduction, I shall—

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

Proceed more gently.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

Proceed more gently. That is right.

The debate has been interesting, and we have had discussions around a subject that I know causes great concern to some. I hope, however, that I can persuade the Committee that the Government are on the right track. By way of preamble, as opposed to peroration, let me say that we have considered the points made by the various organisations. However, I stress that we are dealing with adults in households, because an underlying impression seems to have been created that we are concerned with dependent children. We are not.

As far as the Minister for Employment and Welfare Reform and I can see, there is no impact on child poverty in relation to the proposals. I appreciate that the eradication of child poverty, as opposed to the creation of it, is the new commitment of the Conservative party, but in our honest opinion there is no impact on our eradication policy, nor on our strong commitment to that policy. The point is whether adults in a household can rightly be considered to make a contribution to the household income.

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

Can the Under-Secretary clarify something that I might not have understood about non-dependent deductions? Suppose a non-dependant is living in a household with someone who is claiming housing benefit, and they have a child. The concern about child poverty is that the non-dependent deductions might discourage the other person from seeking work and therefore increase the number of workless households. Can she clarify that?

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

I know there has been a bit of a break since the earlier part of our consideration of the Bill, but its general thrust has been about supporting people into work. To deal with some issues that have rightly been raised on child poverty, I do not accept the hon. Gentleman’s primus that somehow that will impact on our policy of eradicating child poverty. We must recognise that we are saying to adults within a household where there is income that there is a responsibility to contribute to the general household income.

I appreciate all the difficulties raised, in that sometimes it can be difficult to get an adult child—we are talking here about people over the age of 25—to make that contribution, yet I dare say that when some of us went out to work and got our first pay packet, the first thing that happened was a parent insisting that we make a contribution to the household. That may not have been a great deal of money, but it was recognition that we were inside a family community where a contribution had to be made. That is a very good principle—a good socialist principle, I dare say.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I am grateful to the Under-Secretary for giving way when we have just heardthe word “socialist” spoken by someone on the Government Benches—something we have not heard in some years. It may be a response to the new, modern Conservative party.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

Will the hon. Gentleman give way?

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I am not sure that I can when I am making an intervention. [Interruption.]

Jimmy Hood (Lanark and Hamilton East, Labour)

Order. I am hearing a cross-conversation here.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

Thank you, Mr. Hood. The Under-Secretary made the point that we are talking about only people over 25 here, but we are not because for some reason—perhaps she can clarify this—under-25s in receipt of contribution-based jobseeker’s allowance have non-dependent deductions applied to them. It would be useful if she explained that.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

I probably stand corrected on that point, and I will come back to it. I want to deal with some of the real issues raised in the debate, and I hope to assuage some of the fears that have been highlighted. As I said in my opening comments, we think it is right that if someone is living in someone else’s house, they should contribute to the housing costs. I draw the parallel that people on income support who are home owners have to manage all their financial outgoings, including bills and so on. Why, then, is it being said that if someone lives in the household, as described here today, they should not contribute to meeting those costs? We think that asking that question is consistent with our rights and responsibilities agenda.

I repeat that we are talking about adults here. I do not want our discussion to be muddied by any possible appearance, which I appreciate may have been unintentional, that we are talking about children. If the non-dependent person is on income support, or on income-based JSA, and under 25, no deduction is taken into account for that individual.

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

The last time that I made repeated interventions, the Under-Secretary said that I was trying her patience. Obviously, in our new consensual spirit, I would not wish that to happen, but I would still like a little clarification. Given that one working-age disabled person in three has children, if such a person were claiming housing benefit and had a partner living with them, who could cause a non-dependent deduction to be made? Does she not agree that, in that situation, there is a concern that the non-dependent deduction acts as a disincentive to that partner working? That could therefore indirectly increase the number of workless households. That is our concern and why we are pressing her on child poverty.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

The hon. Gentleman is not trying my patience this morning. He has made a reasonable intervention, but with the greatest respect it is oftenthe case that if one element is taken out of a whole approach, a conclusion can be drawn about disincentives. I ask him to look at not only the housing benefit regime, but all the other elements—not only the Bill, but the tax credit system and so on.

I could go through the whole gamut of our policies, which support people going into work and sustain them in work. If the hon. Gentleman looked at all  those measures, he would perhaps get a more realistic picture of what we are doing to support people in that respect.

I return to the point I made earlier, which is that the Minister for Employment and Welfare Reform and I think that drawing the issue of child poverty across this debate is not particularly helpful. It is not relevant, and if I was in a more tetchy mood I would say that it is a red herring.

Jeremy Hunt (Shadow Minister (the Disabled), Work & Pensions; South West Surrey, Conservative)

Will the Under-Secretary please give way?

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

No, I am going to deal with some other points. Forgive me, but I cannot remember which Member raised the issue of carer’s allowance; it might have been the hon. Gentleman. If the carer is a member of the household—the unit of assessment—the carer’s allowance will be taken into account, but the claimant of the housing benefit will receive a carer’s premium as part of their housing benefit claim. That is what I mean when I say that we cannot look at just one part of the system—there is a holistic approach to support. I appreciate that sometimes it may appear to be fragmented, but it brings together a whole range of support in terms of the household income. There is a carer’s premium within household benefit, which deals with some of the issues raised on carer’s allowance. I hope that that has attended to the issue of disabled people with carers.

The hon. Members for Inverness, Nairn, Badenoch and Strathspey and for Bury St. Edmunds asked about a simpler scheme with fewer deductions. We must recognise that one person’s bureaucracy can be another’s sensitivity. We must recognise that. Quite fairly, in highlighting the issue in the Green Paper pre-millennium and looking at the development of our policy post-millennium, we recognised that if we reduced the number of bands, the system would be less sensitive to individual circumstances. We feared that if fewer deductions were imposed over a given income range, which I believe is the thrust of the new clause, that would create winners and losers. Our assessment is that life would be made worse in terms of housing benefit support because the bands would be wider, so any change in the rate of reduction would be greater than the change in income.

So, in trying to deal with a simplification issue—as an aside, Ministers in the Department constantly talk about simplification because it is one of our priorities—we feel that, in this case, if we compressed the bands in terms of numbers but extended the range, there would be more losers than winners. That would be to the disadvantage of the individual. It is often difficult to be sensitive in an enormous system such as housing benefit or the benefits system in general, but we try to differentiate and to pick up some sensitivities.

That is why—this goes back to the comments made by the hon. Member for Bury St. Edmunds—many of our benefits have a range within them. Disability living allowance has higher, medium and lower; carer’s allowance and JSA also have a range. All the way through our benefits system, we try to recognise that not everybody needs the same support and that people  need to be assisted in a slightly different way financially than could be managed if we went for an approach of total simplification.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

The Under-Secretary is making an important point about the need for the benefits system to be sensitive and finely tuned to the range of concerns that might be present in a particular benefit. However, in this case, the new clause suggests a zero rating for the non-dependent deduction for people who have no remunerative income. That could be seen to increase the sensitivity of the benefit system. If the non-dependent person had a low or zero income, applying the deduction could cause greater hardship and so could be seen to be more, rather than less, insensitive.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

I shall come back to that when I try to pull all the points together.

Tim Boswell (Daventry, Conservative)

Is it not the logic of the Under-Secretary’s argument—although we do not always have to follow logic to its ultimate conclusion—that one should not have bands at all and that the deduction should simply be income related on the basis of a sliding scale?

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

The hon. Gentleman, as usual, has put his finger on the pulse of the issue. I am sure that my hon. Friend the Minister for Employment and Welfare Reform will say something to him, on behalf of both of us, when we reach clause 48, but I do not want to take up the Committee’s time just now.

As I was saying, I shall come back to the previous point when I try to pull all this together. The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked whether we have any plans to reform non-dependent deductions. It is fair to say—I hope the Committee recognises this—that we have looked constantly at how we keep under review the provisions of the benefits system. We intend to amend the provisions for the local housing allowance where a person could be a non-dependant of more than one occupier. Instead of the existing process, which is probably unnecessarily bureaucratic, where the deductions are portioned between a number of occupiers if somebody is moving between two or three households, the whole deduction will be made only in the calculation of the first occupier who notifies the local authority.

I hope that I have dealt with the issue of simpler schemes with fewer deductions. That links in with a point raised by the hon. Member for Bury St. Edmunds on the simplification of non-dependent deductions. From October 2003, if the householder or their partner is aged 65 or over and a non-dependant moves in to their home, or existing non-dependant circumstances change and increase the deduction, we have not started the deduction or the increase until 26 weeks have passed. We take into account, for example, short-term visits to mum, dad or friends.

There is another important issue. I am sorry that the hon. Gentleman has had to leave us for a few minutes, because it links into the issue that he raised about older people and those receiving pensions. If the non-dependant is on pension credit, no deduction is made.

I shall deal with a point raised by the hon. Gentleman on the non-dependent deductions and income support, and why the measure kicks in at the age of 25. As has been highlighted, we do not implement any deduction for claimants between the ages of 18 and 24 who are in receipt of income support or income-based jobseeker’s allowance. After the age of 25, only the minimum deduction is applicable, which reasonably reflects the levels of benefit for those in that age range.

That reflects the fact that allowances for those on benefits rise at the age of 25 by £11.95 a week. Returning to our responsibility agenda, it is reasonable to expect that someone over the age of 25 who is in receipt of an income, albeit through income support or jobseeker’s allowance, should make a contribution to the household in which they live.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

It is important to flesh out the point about under-25s. Can the Under-Secretary explain why NDDs should be applied to under-25s on contribution-based JSA but not those on income-based JSA? Does that not throw up a potential anomaly for an individual who is entitled to either income-related or contribution-based JSA? He will choose the higher amount, and if that is contribution-based JSA and he then has an NDD applied, his allowance might be reduced to below the level of the income-related JSA to which he would otherwise have been entitled. Having elected to take contribution-based benefits, the individual might receive less benefit overall because the NDD has been applied to him.

That is also the case for somebody who is not in receipt of benefit or has had his benefit sanctioned. If an under-25 has lost his JSA owing to a benefit sanction and is a non-dependant, although there is no NDD while he is in receipt of benefit, the effect of his benefit’s being sanctioned is that the person on whom he is dependent also has his benefit sanctioned, so a double sanction is going on. From the point of view of the person on whom the under-25 is dependent, that is a particularly negative situation.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

There were so many negatives and double negatives in the hon. Gentleman’s question that I can only hope to give him a definitive answer. However, if I cannot do so, I shall deal with that specific example in writing. I do not usually like to do things that way, but this is a complicated matter and I should not want either of us inadvertently to create an incorrect impression.

As I suggested to the hon. Member for BurySt. Edmunds, when he talked about whether the income of senior citizens and those who had had a short-term stay in another person’s house would be taken into account, the test for the non-dependant is whether his normal residence is with the claimant. If it is not, no deduction is made.

On capping, I have to say to the hon. Member for Inverness, Nairn, Badenoch and Strathspey that if we went for a capping regime, it would cost some£37 million per year. That harks back to the point that every person in a household should make a contribution to its income, and deductions are made  accordingly. I hope that I have answered most of the points that have been made. If I have missed any, or if I need to clarify a point of detail, I shall deal with them.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey asked about non-remunerative work. What we mean by that is somebody working for less than 16 hours a week. I do not know whether that will help him to understand why we have used that term. If a person works more than that, the normal situation will apply.

We have had a fascinating debate, and some genuine issues have been raised. It is important to remember that the Government have frozen the deduction rates since 2000, although the income band widths that determine the rate of deduction have been increased each year. For six years, there has been no increase in the deduction level, although we have expanded the bands. That has been beneficial both to householders and to non-dependant individuals.

I respectfully suggest to the hon. Gentleman that the new clause would break with the general principles that I have outlined. In other words, it is expected that a person who is a member of a household will make a contribution to that household’s running costs. In addition, if the new clause were accepted, some people who at present attract a deduction would not do so. I am not sure whether the hon. Gentleman recognises that. Those two groups would be those in non-remunerative work—those working less than 16 hours a week—and those in remunerative work whose income is less than £101 a week. Members of both groups currently attract a £7.40 per week deduction from the tenant’s housing benefit and a £2.30 reduction from council tax benefit.

It is not clear from the new clause what the intention is regarding non-dependants who are in non-remunerative work and who are in receipt of income support or income-based jobseeker’s allowance. I have assumed that the hon. Gentleman intends that no deduction should apply for anyone in non-remunerative work. With the greatest respect, I suggest that that is rather odd because the new clause would mean that a non-dependant who was on income support and was not working would continue to attract a deduction, but a non-dependant who was on income support and doing some part-time work would not attract a deduction. There is an inherent contradiction in the new clause, unless it is just a typical Liberal Democrat attempt to play both ends off against the middle.

Although the lower rate of deduction in council tax benefit applies to incomes of less than £157 a week, if the intention is to split the current lower income band in two with the dividing line at £101 it would mean that the current lower rate of deduction would apply to weekly incomes between £101 and £157. If the intention is to move the current band threshold from £157 to £101, it would mean that around 10,000 non-dependants with incomes between £101 and£157 would attract increased deductions, up from£2.30 to £4.60 per week. I am not sure whether the hon. Gentleman has appreciated that. Taking all of those factors into account, the cost of the new clause would be £45 million a year. Although I like the idea of ignoring the price tag, in some circumstances we have to look at it.

The Secretary of State already has broad powers in relation to non-dependent deductions. Using primary legislation to set the lower rate would mean that flexibility to review the rate each year would be lost. As people’s incomes increased, as they must under the national minimum wage, more people would attract a deduction. The non-dependent deduction scheme is dealt with through regulations and the Government continue to believe that that is the right place for it.

We have had a fairly lengthy and somewhat detailed discussion of the clause. I hope that I have managed to address most of the points raised. We will certainly scrutinise the contributions of hon. Members. If there is anything I have missed that needs to be clarified I will write to them.

David Ruffley (Shadow Minister, Work & Pensions; Bury St Edmunds, Conservative)

May I raise two points quickly? The first is about something that puzzles me. Under-25s on income support or income-based JSA are exempt from NDDs, but those of the same age group claiming contribution-based JSA are not. It happens with other benefits too. Why is there this separation for those in the younger age group, in this case the under-25 demographic, between income-based JSA and contribution-based JSA?

My second question is one that the Minister will not be embarrassed to answer because there is no price tag attached, although technically there is one. When will more research on this important area be commissioned by her Department? Is it intended to refresh and renew the research work done in 1996, particularly in view of the disincentives to keep a family together caused by the current regime? The present regime might lead to a perverse incentive for a non-dependent to leave shared accommodation in which they may be lodging or living and applying for their own tenancy, thus putting pressure on housing stock and the Exchequer by giving rise to a brand new housing benefit claim. There is anecdotal evidence that that could be a problem, and any Minister would want to deal with it. Will more research be done? Has any research been done on that? It does not seem to do anyone any good if the current regime is forcing people out of their homes and leading to further householder unit formation, with people having to find their own housing and claiming more housing benefit in their own right.

I shall finish, having asked a grand strategic question about research and made a technical query about the distinction between income-based and contribution-based JSA.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

I hope that I can tell the hon. Gentleman why the two regimes are different. First, however, I should like to say that we keep our research under review and I would not be surprised if we were considering how to refresh—as the hon. Gentleman said—our research in this field. That is within the Department’s research priorities, into which Ministers may have some input.

On housing break-up because of a deduction, we have to be clear that when a person moves into their own household, the £7.40 deduction is not the only factor—there are many elements that someone needs to  take into account in moving. I appreciate what the hon. Gentleman said, but he did say fairly that the evidence was anecdotal. Obviously, however, we will keep an eye on that. As I said to the hon. Member for Daventry, we have to recognise that, if we look at things in isolation, an incorrect conclusion can be drawn because it is based on only one piece of logic, if not evidence.

On the contributory and non-contributory elements of JSA, if the benefit is income-related, we recognise that the individual’s income and capital is low, so there is an element built into JSA that takes account of individuals’ financial circumstances. However, a person can be on contribution-based JSA and not need any additional income support, because they are entitled. If any Committee member needed to do so, they could sign on for JSA as an entitlement because of their contribution record. There are two different circumstances that reflect the fact that within our large social security system there are different ways of supporting people at various points in their lives and in the light of individual circumstances. The new clause opens up a discussion about that sensitivity; nevertheless, I ask the hon. Member for Inverness, Nairn, Badenoch and Strathspey to reconsider and to ask leave to withdraw the motion.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I am grateful to the Under-Secretary for that clarification, although I should be grateful if she wrote to Committee members about the regime for under-25s, not least about circumstances where someone might be entitled to both income-based and contributory jobseeker’s allowance.

In her earlier remarks, the Under-Secretary mentioned a particular change that the Government are seeking to make to the non-dependent deduction regime relating to circumstances in which there is more than one householder and one non-dependant, and the way in which the non-dependant deduction is shared between those people. Members of the Committee may wish to reflect further on that point. One possible risk is that it provides an incentive for one householder to wait on the other to notify the Department. There are swings and roundabouts in all these things.

I echo what the hon. Member for Bury St. Edmunds said about research. The Minister said, slightly bashfully perhaps, that Ministers had some influence on the Department’s research programme. I hope that Ministers’ influence on that programme is considerable when they feel that a particular area is ripe for further research.

We have had a good debate, which has highlighted the fact that the NDD regime is ripe for additional research, none having been conducted during the Labour Government’s term of office. The last research took place under the Conservative Government, and Ministers may therefore want to have a fresh look at it.

I share the hon. Gentleman’s concerns about household break-up. I appreciate that many factors are involved, as the Minister said, but that could be usefully addressed in further research by the Department. I hope that it will also be taken into account in designing the Department’s future research programme, with due ministerial influence.

Anne McGuire (Parliamentary Under-Secretary (Disabled People), Department for Work and Pensions; Stirling, Labour)

Just to clarify the position, as Hansard may show, I appreciate that I said “some” influence; I meant, of course, that we have great influence on the Department for Work and Pensions’ research priorities.

Danny Alexander (Shadow Minister and Disability Spokesperson, Work & Pensions; Inverness, Nairn, Badenoch and Strathspey, Liberal Democrat)

I am grateful to the Minister for that intervention. I hope that she will use her great influence to ensure that further research on the matter is conducted.

The Minister made some important criticisms of the amendment. As I said when opening the debate, it was designed to probe the Government’s thinking and I hope that some of the issues that have raised in the debate will be taken further in another place. With that in mind, I beg to ask leave to withdraw the motion.