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Housing: Pensions and Deposits

Volume 798: debated on Wednesday 5 June 2019


Asked by

To ask Her Majesty's Government what plans they have to allow individuals to use accrued pension savings to fund first time home deposits.

My Lords, the Government have no plans to change access to accrued pension savings. Automatic enrolment has transformed pension participation, with over 10 million people enrolled in workplace schemes. We will build on these reforms. We are also committed to helping people realise their aspiration to own their own home. Since 2010, over half a million people have been helped to purchase a home through government-backed schemes including Help to Buy.

When I read about this proposal, I thought it was ill-thought-out and damaging. Does the noble Baroness agree that people need to plan carefully for their retirement, to ensure they have an adequate income? If this idea ever came to fruition, it is likely that it would push up house prices and leave people worse off regarding their expected retirement income.

I entirely agree with the noble Lord that we must think carefully about how we encourage and support people to save for the long term and their retirement. That is why we are so pleased about the success of auto-enrolment. Our priority remains establishing long-term savings behaviour, so that people are enabled to save for greater security. Automatic enrolment has already reversed the decline in workplace pension savings seen in the decade prior to its introduction, and the number of first-time home buyers is at its highest level for 11 years.

My Lords, could the Minister clarify whether the average 35 year-old has put £35,000 into a pension pot, or whether the figure is much lower, as statistics showed a few years ago? It is very good news that we are not going to risk young people completely emptying their pension pots in a desperate attempt to get on to the housing ladder. Of course, this is another reason why more affordable housing is desperately needed.

I entirely agree with the noble Baroness that one of our key concerns is to ensure that we encourage this culture of young people saving for their retirement. Of course, we do not want to do anything which would expedite them getting into financial difficulty by accessing their pension pots early. We are very excited by young people’s level of uptake of the auto-enrolment pension scheme. Our ambition and aim is to do anything we can to support them and to build more affordable homes.

My Lords, would my noble friend not agree that the problem in the housing market is a shortage not of money, but of houses? If we do anything at all to put more money into the market before we have dealt with the problems of planning consents and got the houses built, we will only inflate the prices of houses even more.

I do agree. I am sorry that I am not the Housing Minister answering this Question, but it is important that we are committed to ensuring the housing market works for everyone. Of course, there is more to do. That is why we have announced an extra £17 billion in funding for Help to Buy since 2017 and reformed stamp duty so that 80% of first-time buyers will not pay tax. We are absolutely on a track that does not mean an increase in house prices. The important thing is that we focus on supporting first-time buyers. The number of first-time buyers is at an 11-year annual high.

There is a first time for everything. When I read about this, like my noble friend Lord Kennedy I initially wondered whether it was April Fools’ Day. The Minister in charge of housing has a wheeze whereby young people should raid their pension pots to fund the deposit on a new house. I can immediately see three things wrong with this. First, frankly, most young people do not have enough money to put a deposit on a flat to rent—there is certainly not enough for fish and chips afterwards. Secondly, if they have enough money in their pension pots it should stay there, otherwise they will not have anything to retire on. Thirdly, as my new friend, the noble Lord, Lord Tebbit, points out, this will drive up the cost of housing. Given all that, and given that the DWP has had a multi million-pound advertising campaign to encourage younger people to save, what will happen to James Brokenshire?

My Lords, I am very grateful that the noble Baroness has formed a new friendship over this topical Question. In short, our focus in the Department for Work and Pensions is on ensuring we support young people in every way we can to save for the long-term, for their retirement and security. I have to say to noble Lords opposite that, if they feel as I do, perhaps it is not right that we should be giving so much oxygen to this idea in the House of Lords.

On the question of the role of land in house prices going up, is not one of the requirements of a sensible policy that the land value increase does not all stay in the pockets of the people who are sitting on this land, which could be given planning permission? That would help the Exchequer in other aspects of public finance.

My Lords, as I said, I am not the Housing Minister, but I will say this. Clearly, we must be very careful about how we develop our policies in this area. The reality is that our schemes are working. We are building a record number of homes. The latest evaluation has found that there is no evidence of a significant impact on house prices overall. The Help to Buy scheme is a hugely important part of that. There is no question of us supporting any scheme that would mean excess profits in the wrong hands.