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Margaret Hodge (Barking) (Lab)
I am very grateful, Mr Gray, to all the right hon. and hon. Members who have joined me today to take part in a hugely important debate on what I consider to be the Government’s very ill-conceived plans to slash housing benefit for the poorest families in the poorest communities—plans that will inevitably force thousands of people to leave their homes, their families and their friends as they try to find an affordable roof over their heads and the heads of their loved ones. In my view, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), can feel nothing but shame at having to come to Westminster Hall to defend such ill-conceived proposals. With his background and knowledge, he should know better.
When we last debated this issue, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) eloquently outlined the devastating implications of the Government’s plans. In addition, we have all been provided with evidence on the impact of the proposals by my hon. Friend the Member for Westminster North (Ms Buck), whom I congratulate on her well deserved place on the Opposition Front Bench, and by the research carried out by a range of organisations working in housing.
The Government’s proposals on housing benefit have to be considered alongside the other proposals that were announced at the Conservative party conference last week: the capping of all benefits that a family can receive at £500 a week and the ending of the universal child benefit. All of that comes on top of the housing benefit cuts set out in June and the cuts to child tax credit, maternity allowance and the child trust fund.
The Minister of State, Department for Work and Pensions (Steve Webb)
I am grateful to the right hon. Lady for giving way and I congratulate her on securing this debate. Because I am sure she wants to be part of a responsible Opposition, I think it might help our discussion if, in her remarks, she set out the alternative proposition. Is it her position that rents and housing benefit should simply be uncapped and that people on benefits should be able to choose to live wherever they want to, without any limit being imposed, or does she accept the principle of a cap?
Margaret Hodge
As the Minister will know, the Labour Government themselves set the housing allowance. The purpose of this debate is to demonstrate that the intent of the present Government and of the Minister himself will not be achieved by the proposals that he has put before us. That is what I intend to do this morning.
Emily Thornberry (Islington South and Finsbury) (Lab)
Given that we are talking about intent, does my right hon. Friend agree that it is possible that the Government’s intent is not fairness and that, instead, as we are told a senior Minister has said, this is all about highland clearances?
Margaret Hodge
I agree entirely. There are several quotes in the press from senior civil servants demonstrating that they think the proposal will create the greatest dispersal of families that has been witnessed probably since the 19th century. Perhaps that is part of the political intent of the Government.
In my view, the litany of cuts that I have outlined—all of them, not just the housing benefit cuts—represent an historic assault on the poorest families in the poorest communities, which I think even Baroness Thatcher would have considered to be a bridge too far.
Mr Andy Slaughter (Hammersmith) (Lab)
I am glad that we have reached that point so early in the debate. Does my right hon. Friend agree that we seem to have moved from a position where the proposals look like ill-thought-out budget cuts to a position where they look like a deliberate policy to socially cleanse the poor from central London, which the Minister is defending? We have already seen that process in Hammersmith, with the demolition of council estates. The proposals will ensure that, for ideological and electoral reasons, it will no longer be possible for the mixed communities of London to continue to exist as they have for centuries.
Margaret Hodge
I agree entirely with my hon. Friend. In my view, the process is much more about political engineering than it is about achieving sensible reductions in public expenditure. I shall talk about the impact that the proposals will have in my constituency and the borough of Barking and Dagenham. In doing so, I hope to expose the flaws in the Government’s argument and what I think is the shameful agenda that they are, in fact, pursuing.
The Minister claims that the policy objective of the cap on local housing allowance—setting that cap at 33% of average local rents—linking housing benefit to the lower consumer price index rather than the retail price index and capping the total benefits that workless households receive, is to drive down rents. Let me tell him that he will not achieve his objective. His policies will not drive down rents. What they will do is drive out families—drive them in their droves out of the inner-London constituencies where they live to constituencies such as my own in the London suburbs.
Let us consider the facts—these are the facts from the Department for Work and Pensions, not my facts. In Brent, 9,650 families will lose from £18 a week to £160 a week and the families who will lose the most are those with the most children. In Hackney, 16,440 families will lose from £13 a week to £125 a week, and again the families who will lose the most are those with the most children. We can also take the example of Camden, where 2,940 families will lose from £20 a week to £262 a week, and yet again the families losing most are those with the most children.
It is simply nonsense to believe that the rents in Brent, Hackney or Camden will go down. A survey by London Councils found that 60% of landlords who are renting to tenants in receipt of housing benefit would not be prepared to reduce their rent by even a small amount if their tenants could no longer afford to pay the existing rate because of the reduction in local housing allowances. More than 90% of landlords said that they would try to evict a tenant or refuse to renew their contract if the tenant fell into arrears, if the shortfall in rent was more than £20 a week. Those landlords know that their properties will not lie empty. We all know that there is a massive shortage of housing in the capital and we know that, with the drying up of the mortgage market, more people are being forced into the private rented sector, which in turn increases demand in that sector. We know that the buy-to-let market is booming, because investors can get a good return on their properties. Landlords will not lower their rents, but poor people will be forced out of their houses.
Do not just listen to me on this subject—listen to Boris Johnson, the Conservative Mayor of London, when he says in the briefing that he prepared for today’s debate that the Government’s proposals will lead to
“the loss of the private rented sector as a major safety net for London boroughs”.
He continues:
“We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term”.
Those are Boris Johnson’s words, not mine.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I am grateful to my right hon. Friend for giving way and I congratulate her on securing this debate. I very much want to reinforce the points that she is making. The private rented sector is absolutely vital to meeting housing needs in London. During the past 15 years or so, that sector has begun to recover from very low levels seen in the late 1980s. The real damage that could be caused by these maladroit and ill-considered housing benefit changes could well destroy confidence and take away a large quantity of housing that otherwise would be available to meet the needs of Londoners.
Margaret Hodge
I bow to the huge experience and knowledge of my right hon. Friend and I agree entirely with his analysis of the likely impact of the changes that the Government are proposing to make.
In my constituency, all 3,810 households that currently receive local housing allowance will already lose out because of the housing benefit cuts that will come into effect next year, so they will experience additional hardship as a result of those cuts. Because rents in Barking and Dagenham are currently lower than in the inner-London boroughs, private tenants in the borough will not be hit as badly as those in central London, where rents are the highest in London. but as inner-London private tenants are forced to find a home in outer London, rents will inevitably be driven up in the outer-London boroughs. More demand on limited supply will be a double whammy for the people of Barking and Dagenham. Has the Minister commissioned any research to understand better the potential impact of his proposals on rents in outer-London areas such as Barking and Dagenham? If so, will he place that research in the Library?
We know from anonymous quotes in the press that civil servants are telling Ministers that the proposals, as my hon. Friend the Member for Hammersmith (Mr Slaughter) said, will lead to the biggest population movements experienced since the industrial revolution. Even at her worst, Shirley Porter deported only 1,000 people out of Westminster, yet this Liberal Democrat Minister is deliberately forcing tens of thousands of families out of inner London, in a shameful act of social engineering and political gerrymandering that will damage our communities irreparably.
Bob Russell (Colchester) (LD)
The right hon. Lady rightly draws attention to the problems. Does she agree that the provision of council housing is one way to address supply and demand, and can she inform us how many council houses were built during the 13 years of Labour Government?
Margaret Hodge
I accept the point that insufficient priority was given to the building of council houses under the Labour Government, but we must deal with the situation in which we find ourselves. Making the position worse by deliberately forcing the poorest families out of the only homes that they can find is an outrageous and cruel act of public policy.
Does the Minister accept or even understand that if the reforms proceed, inner London will become a no-go area for the poorest people in our communities? What will be the further impact on my constituency? He knows well that changes in housing tenure over the past 20 years, since the introduction of the right to buy, have created deep social tensions in Barking and Dagenham as new people have moved into the borough and established residents have become unable to secure homes for their sons and daughters. The extreme right and the British National party tried to exploit people’s legitimate frustrations for divisive and evil political ends. We saw them off, but this Government’s housing benefit policies will inevitably reignite those tensions as private tenants from inner-London boroughs compete for homes with established residents of Barking and Dagenham. Has he considered at all the implications for social cohesion of his short-sighted reform proposals?
Has the Minister also considered his policies’ impact on local authority services? If Barking and Dagenham suddenly experiences an influx of literally thousands of families, what will that do to local schools and hospitals, to special educational needs provision and to child protection services in the borough? The proposals will place an unacceptable strain on local authorities in the more deprived outer boroughs—authorities that are already struggling to meet their communities’ needs in areas such as housing and education while planning to meet the 25% to 40% cuts that will be forced on them by the comprehensive spending review announcements next week.
In education, for example, Barking and Dagenham is already facing the huge challenge of keeping up with the pace of demographic change. Demand for primary school places is a particular problem not only for my constituency but across London. As it is, the local authority is having to create hundreds of new reception places every year—337 extra primary school places are needed in 2011 and 247 in 2012—and does not have sufficient funding to meet projected demand. The borough simply cannot cope with further significant levels of inward migration.
Barking and Dagenham council already has a housing waiting list of more than 11,000. That waiting list will only grow longer as more people move into the area and more households seek to be housed by the local authority because they have been priced out of the private sector.
Mr Slaughter
As my right hon. Friend may know, that is already happening. Kensington council is urging people to move out before the rush starts. Hammersmith council is urging overcrowded families to give up their secure and assured tenancies and to move into the private sector and rely on housing benefit, without telling them that they will then have to leave the borough next year when that benefit is cut.
Margaret Hodge
That is outrageous. I must also tell the Minister that I am absolutely convinced that within a year or two, boroughs and authorities such as Kensington and Chelsea or Hammersmith, from which families move out to areas such as Barking and Dagenham or Tower Hamlets, will cease to take responsibility for providing all the other local authority services that those families will need. They will then be an additional burden on those local authorities.
Who will foot the bill for social services and support for those families? They are already on the edge, and they are bound to make greater demands as they are uprooted from their inner-London homes and lose their links with the local services on which they depend. Has the Minister properly considered the impact of the proposals to cut housing benefit on the demand for other local authority services? Has he received advice on whether the proposals will increase homelessness and child poverty, as I believe they inevitably will?
The reforms will not achieve what the Government claim, but that is only half the story. The truth is that the Government want to drive low-income families out of inner London and other wealthy areas. London Councils estimates that at least 82,000 London households will find themselves in that position, and that is without taking into account the impact of the measures announced at the party conference last week. People will not have the option to move to a cheaper property in the same area because there will be none, unless they are prepared to downsize and move into overcrowded accommodation. They will have no choice but to move to areas where rents are more affordable. That will be a tragedy for families and communities. It is completely wrong of the Government to implement such a policy, with the full knowledge of the demographic upheaval that it will cause, and to leave local authorities to cope with the consequences.
We will also lose the diverse communities and social mix that have been a part of London’s character for generations. Central London will become the home of young professionals and the very well-off who, conveniently, can be relied on to vote Conservative. Those struggling on low incomes will congregate in the outer boroughs, which will become more disadvantaged, overstretched and troubled. The reforms will cause suffering and push more families into poverty by forcing them to contribute more of their income to housing costs. Members of all parties recognise the need to reform housing benefit, but this is not the way to go about it.
The reforms have not been properly thought through. They have the potential to cause hardship of a kind not seen since the creation of the welfare state, and they have been informed by a disgraceful political calculation. How a Liberal Democrat can attempt to defend them is beyond me. What evidence do the Government have to support their claim that the new cap will reduce rents in the private sector? What additional resources will be made available to help local authorities such as Barking and Dagenham cope with any significant increase in inward migration? Finally, how will the Government keep their promise to eradicate child poverty, given the hardship that their policy will inflict on low-income families?
Bob Russell (Colchester) (LD)
I congratulate the right hon. Member for Barking (Margaret Hodge) on securing this debate. I am not here to defend the proposals, but I will be consistent with my position during the 40 years of my public life, the past 13 of which I have spent as a Member of the House. If only the present Opposition had been consistent with the views that we are now hearing during their 13 years of Labour rule, perhaps we would not be in this situation.
The right hon. Lady and her colleagues might wish to know that in 13 years of Labour Governments, 6,470 council houses were built. In the first 13 years of the previous Conservative Governments—I am using the same number of years—the figure was 507,200. Labour’s total, as I said, was 6,470.
Bob Russell
The hon. Gentleman has asked how many social houses were built. If we factor those figures in, the number is still considerably lower than that achieved during the 13 years of the previous Conservative Governments. Presumably, the right hon. Member for Greenwich and Woolwich (Mr Raynsford) can give us chapter and verse about how successful the housing association sector is, an issue on which the Government in whom he served failed so lamentably.
Mr Raynsford
Will the hon. Gentleman tell hon. Members about the state of the social housing stock in 1997, the condition of the properties in which people were living, the extent of the backlog of disrepair that had to be dealt with and the scale of the renovation programme—the decent homes programme—that was put in place by the previous Government, which has improved the living conditions of millions of people in this country? Why is he being so churlish about that?
Bob Russell
The right hon. Gentleman is correct about the inheritance of the new Labour Government, but that makes their concentration on one aspect of housing just as bad. I am not saying anything new; these are points that, as Hansard will confirm, I put to the then Prime Ministers Blair and the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), as well as to Prescott when he was in charge of council housing—or rather non-council housing.
In the years of plenty when the economy was thriving, new Labour should have emulated what Clement Attlee did in 1945 after six years of war: introduced a house building programme to house the poorest people in the land. It did not do that. The poorest people were among those the party turned its back on, which is why it lost 5 million votes at the last general election.
Sheila Gilmore (Edinburgh East) (Lab)
I agree that we should have built more houses—I have always said that—but is the solution to this problem to introduce changes to housing benefit that will affect current tenants and will not result in any more houses being built? The savings generated by the cuts will not be ploughed back into building housing, which might have made such cuts more tolerable, so how can these changes be justified on the basis that not enough houses have been built?
Bob Russell
If the hon. Lady had been paying attention, she would have noticed that I opened my remarks by saying that I am not speaking in defence of the coalition Government’s proposals—anything but. I am just setting the scene by pointing out that the problems are inherited. I do not agree with how the matter is being dealt with, but Her Majesty’s official Opposition should not come here today and pretend that they are the saviours of the social housing market, given that the record shows that they built only—let me repeat the figures—6,470 council houses in 13 years, in contrast with the previous Conservative Government, who built 507,200 in their first 13 years.
Let me now say that I do not agree with the proposals on housing benefit. I know that the Minister will be aware of them, but I draw his attention to the gospels of Matthew, Mark and Luke—particularly Matthew chapter 19, verses 13 to 15, Mark chapter 10, verses 14 to 15, and Luke chapter 18, verses 15 to 17, which includes the phrase “suffer little children.” I do not want this coalition Government to make children suffer, but that is what will happen as a result of the proposals on housing benefit. I wish to put it on the record that I have already initiated one debate on child poverty in this Chamber since the general election. Another record for the previous Labour Government is that they left 3.9 million children living below the official poverty line. What an appalling legacy. I do not want that figure to increase; I want it to be eliminated.
I am grateful to the Local Government Group, particularly Mr Ben Kind—the public affairs and campaigns manager—for sending me a briefing in advance of today’s debate. That document states:
“The housing benefit measures announced in the June 2010 budget, including capping local housing allowance rates, paid to tenants in the private sector, and setting them based on the 30th percentile of local rents, are likely to increase homelessness costs, since they will diminish the willingness of private rented sector landlords to let to housing benefit customers. This will have hugely variable and disproportionate effects on different parts of the country.”
On the local housing allowance, the briefing points out:
“Councils will continue to have a duty to house those who are homeless and this will be a challenge to council homelessness budgets. Although the precise extra cost is still hard to estimate, temporary accommodation costs seem certain to be higher.”
I know that from my own constituency of Colchester. It is a relatively prosperous town in a relatively prosperous part of the country, but there are pockets of deprivation. The simple fact is that housing a homeless family is far more expensive for the public purse than putting them in a proper, decent house.
I refer colleagues to the full debate that I had on child poverty, in relation to which I was contacted by the Child Poverty Action Group. In that debate, I pointed out that it is no good for any Government, either this Government or the previous Government, to come up with wondrous schemes and policies for the betterment of people if the basic pieces of the jigsaw—the framework and the corners—are not in place. Such a basic building block is a house. If children do not have decent housing, the rest of the Government’s proposals are almost meaningless.
Social housing is already extremely scarce—I have mentioned the failures of the previous Labour Government—and an increase in the number of people who are priced out of privately rented housing will place additional demands on housing stock. Meanwhile, the increase in the non-dependant deduction could have a negative effect on family and community stability to the extent that young adults feel that they have to move out of the family home. That could have the adverse effect of encouraging the concealment of the presence of and incomes of some family members, which will add to the level of fraud and error in the system.
I do not wish to defend the relatively small number of people in society who abuse the system. Unfortunately, the Daily Express and the Daily Mail think that everybody on housing benefit is abusing the system. The minority who do are destroying the case for genuine people who are not defrauding the system, but who are depicted as scroungers. Of course, we need to tackle that problem, but we must not alter the whole system to deal with just a few scroungers.
Jeremy Corbyn
I am interested in that point. Does the hon. Gentleman accept that the biggest scroungers are the private landlords who are charging absolutely exorbitant rents for appalling properties that they do not maintain? We—the public—are paying for that. Is it not time that we got real and dealt with the issue of the conditions of the private rented sector and the rents that are charged? We should start bringing in controls. Attack the landlords, not the tenants.
Bob Russell
Let us put on the record that there are some very good landlords. Good landlords would endorse the points that have just been made. It is the rogue landlords—those who exploit their fellow human beings—who we need to deal with. Successive Governments have failed to address that matter.
I come back to the question of supply and demand. Thirty years ago in Colchester, there was no such thing as homelessness. People could be guaranteed a council house within six months to a year, depending on their location of choice. The right to buy was not the real problem; the real problem was the failure to replace with new stock the houses that had been sold. Successive Governments failed to deal with that.
It has been said that we must not use extravagant language and say that the proposals will result in the biggest forced social movement of people since the highland clearances because that is emotive and there is no comparison with that situation. I do not wish to give any comparisons of that sort; it would be wrong to do so. However, it is a fact that if there are benefit changes and the housing cap goes through, the forced migration of whole communities—or a large number of people from a particular community—will take place. Families, pensioners and children will be removed from the communities in which they grew up. That will have a devastating effect on their lives. I want to concentrate on the effect on children because, as I am sure colleagues have realised, I have been picking up on that angle since the general election.
Emily Thornberry
I agree with the hon. Gentleman that it is unfortunate when extreme language, such as the reference to the highland clearances, is used. However, did he read in the papers at the weekend that a senior Conservative Minister in the Government described the policy as exactly that? They said that we will not have seen anything like it since the highland clearances. Such references are emotive, but they may be entirely descriptive.
Bob Russell
I do not think that our Scottish colleagues would accept that comparison, but the point being made is that people will be forced from their homes against their will. In the previous debate that I secured, I referred to that as economic cleansing. Of course, those families that stay put in their houses and struggle on with higher rent will have less disposable income to spend in local shops and on local services, which will have an impact on their local economies.
Children will be forced out into the suburbs or elsewhere, and it is important to remember that this is not just a city phenomenon, but one that can have an impact in rural areas. It will also have an impact on schooling, as there will be depopulated schools in some areas, because of the forced removal, and overcrowded schools in others, assuming that parents can find the places.
I know that other Members wish to speak so I conclude by quoting from one section of the excellent briefing that I was sent by Scope:
“An unemployed or low-income lone parent or couple with one child (or two children who share a room) is likely to lose around £500 a year once this reform takes effect…These reductions are likely to have a disproportionate impact on disabled people…those living in cities and urban centres with higher property costs—especially London—will be particularly affected…a reduction in the financial support that Housing Benefit provides will further reduce the number of suitable properties disabled people can afford, increasing the risk of them having to live in inappropriate housing, exacerbating their social isolation and dependence on other forms of support.”
I recognise that the coalition Government inherited serious financial problems that they need to tackle, but nowhere in the coalition agreement does it say that poor families should be forced out of their homes or that children in disadvantaged families should be further disadvantaged.
Heidi Alexander (Lewisham East) (Lab)
I congratulate my right hon. Friend the Member for Barking (Margaret Hodge) on securing the debate. She spoke convincingly about why the proposals are so misguided and I associate myself with all that she said.
I think that the Government’s announced shake-up of housing benefit is well intentioned; they talk about reducing the welfare bill, getting more people into work and forcing private sector landlords to lower their rents. What is there not to agree with about that? However, anyone who has looked at the proposals will recognise that they are likely to have a devastating impact on families and communities up and down the country. Put simply, many decent, responsible people will struggle to keep a roof over their heads and will have to leave their homes.
As has already been said, in parts of the country, such as London, some high-rent areas will simply become no-go zones for people in receipt of housing benefit. Although, as the hon. Member for Colchester (Bob Russell) said, much is made in the right-wing press about work-shy households living in Mayfair mansions, the vast majority of those who will be affected by the changes will be pensioners, people with disabilities, people caring for relatives and hard-working people on low incomes.
Only one in eight people receiving housing benefit does so because they are unemployed. In Lewisham, 9,600 people who rent flats on the private market are in receipt of housing benefit. The proposed changes to how the benefit is calculated will mean that those residents will lose on average £17 a week, or £884 a year, from next October. That represents an overall reduction in Lewisham of £8.6 million.
Furthermore, some of the largest families in the largest properties will also have their housing benefit reduced from next April due to the introduction of the weekly cap. Those are not people who have money left over at the end of the week; they often struggle to make ends meet. They already often experience shortfalls between the housing benefit that they receive and the rent that they pay. Last Friday, a gentleman came to my surgery and told me that because he had to pay for his mother’s funeral abroad, he could no longer keep up his rent payments. The Government’s proposals will make situations such as his worse, and the problems that many families currently face in tackling the shortfall between the benefit that they receive and what they have to pay in rent will become even worse.
I accept that one of the Government’s solutions for tackling that hardship is to increase the payments made to local councils for discretionary housing payments. I am seriously concerned, however, that the scale of that increase will not even touch the sides of the problem in my constituency. Will the Minister consider doubling the planned increase in DHP, and has any assessment been made of the amount of money that will come to London for that? I am aware that organisations such as London Councils believe that DHP should be increased by £19 million in the capital to address the unique complications of the private rented sector here.
The problem in London is complex. One of the major fears of my local authority relates to the knock-on effects of the introduction of weekly rent caps in expensive central London boroughs, which have already been mentioned. It has been estimated that nearly 10,000 households will have to move from the five most expensive areas in London to lower-cost areas as a result of the proposed changes, but if anyone in this Chamber thinks that areas such as Lewisham have spare flats with suitably low rent just lying around and waiting to be filled, they are sadly mistaken.
Only one third of rents in Lewisham’s private sector are set within local housing allowance limits, and one third are already occupied by housing benefit claimants. Lewisham has 17,000 people on the housing register and more than 1,000 homeless households in temporary accommodation. My corner of south-east London will simply be unable to absorb a further increase in housing demand because the supply of homes is already so short.
The sad reality of the proposals is that they will actually reduce the amount of housing available to people in need. Research undertaken in London has shown that landlords are likely to withdraw from the market for housing benefit tenants for fear that people will default on their rent payments and because anticipated rental income will no longer cover their costs. My right hon. Friend the Member for Barking referred to a study that indicated that 90% of landlords would not accept shortfalls in rent of more than £20 a week and that they would evict tenants or bring tenancies to an end as a result, and 60% of landlords have indicated that they would not accept any shortfall. However, I understand that landlords are saying that they would consider lowering their rents if housing benefit could be paid to them directly. Will the Minister consider reintroducing the direct payment of housing benefit to landlords?
Will the Minister outline what support he intends to provide to councils to deal with the problem of increased homelessness? Like many of my colleagues who have spoken this morning, I cannot see how the changes will not result in more and more people being priced out of their homes. Will he commit to maintaining and increasing the homelessness prevention grant, which will help local councils with the additional work that the proposed changes to housing benefit will undoubtedly create?
In conclusion, I urge the Government not to proceed with the proposals and to think hard about whether they fit with the claim that we are all in this together. Are they not, in effect, a vicious attack on some of the poorest and most vulnerable members of society? One of the solutions to reducing the housing benefit bill must be to build more social rented housing. I accept that more could have been done on that over the past 13 years, but as my right hon. Friend the Member for Barking has already said, the housing sector was facing huge challenges when the previous Government came to power in 1997.
What discussions has the Minister had with his colleagues in the Department for Communities and Local Government about the new supply of affordable homes? My concern is that some of the wider changes being made to the planning system, along with the reduction in capital grant available though the Homes and Communities Agency, will mean that those new homes simply will not be built.
Finally, the idea that the proposals will somehow miraculously get people into work is laughable, and the assumption that private sector rents will be lowered is deeply flawed. The proposals may well reduce the welfare bill, but at a huge cost to my constituents, who are already struggling hard to make ends meet.
Mr James Gray (in the Chair)
Order. Five Members will be trying to catch my eye in the 20 to 25 minutes that we have available. It would be helpful if those giving speeches tried to keep their contributions as short as possible.
Jeremy Corbyn (Islington North) (Lab)
Thank you, Mr Gray. I will be brief so that everyone can contribute to the debate.
I welcome the debate and congratulate my right hon. Friend the Member for Barking (Margaret Hodge) on securing it, on what she said this morning, and, in particular, on her successful annihilation of the British National party in the general election, which she did on behalf of all of us.
As Members know, I represent Islington North, which is an inner urban constituency. It is perceived by the Daily Mail and Daily Express to be the fountain of all things that are bad in our society. The perceptions are of liberal intelligentsia, cappuccino society and restaurants where new Labour used to meet. I personally have never had anything to do with new Labour whatsoever, so I take no responsibility for that.
Unfortunately, that image has placed itself in the public eye as being fact but, in reality, it is not. My hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) and I represent a borough which is the eighth poorest in the country. It has a large number of people living in council or housing association accommodation, a large number of people living in private rented accommodation, and probably one of the lowest levels of owner occupation in the country. I believe it is now down to about 30%, which is less than half the national average. The number of people living in private rented accommodation has gone up by a huge amount and now represents more than 30% of the population. They are not all on housing benefit, but some are.
The local authority has a huge housing problem to deal with, but, in the long term, it can be addressed only by purchasing existing properties and converting them into flats, where appropriate, and by building new properties where land becomes available, which is a huge problem in inner London. Indeed, during an earlier incarnation as chair of housing in Islington, my right hon. Friend the Member for Barking managed to secure the purchase of a large number of street properties which were then converted into flats and remain so, so Islington has many street properties. Also, she presided over a considerable level of council house building in the early 1980s, despite huge opposition from the then Conservative Government, so it is not that enormous efforts have not been made to try to address the issue of housing stock.
However, as in every other borough, nothing had been done in the way of major repairs before 1997 because of central Government cuts, as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) said. The council was reduced to doing repairs only if tenants took legal action against it to get them done, and that was normal throughout London at the time. I accept the criticisms made by the hon. Member for Colchester (Bob Russell) about the lack of new house building, but he should recognise the enormous repair problem that was left to the incoming Labour Government in 1997, and also recognise that decent homes standards have made a difference.
I have discussed the problems of housing benefit in countless debates; indeed, many Members in the Chamber today have taken part in them. This nation spends a vast amount of money on housing benefit, but I have no problem whatsoever with the principle of it. I absolutely support it, and where housing benefit is paid to people living in council or housing association accommodation, it is all straightforward.
What annoys me beyond belief is when two successive families come into my advice surgery—I shall not reveal names, as that would not be appropriate—family A lives in a council flat and gets housing benefit for the full rent, which is around £100 per week, and family B, who could be living next door in an identical flat with identical social conditions, receives housing benefit of £250, £300 or £350 a week. Why the difference? It is because family B’s flat was bought from the council under right to buy, possibly with a large discount. Someone is able to live off the private rent paid for by housing benefit. That is wrong, and the Government must deal with it, but the problem cannot be addressed by punishing the tenant or attacking people who are in receipt of housing benefit, which is exactly what the Government are trying to do by introducing a housing benefit cap.
What is likely to happen in my community and in the communities of others here today, particularly inner-London Members, is that large numbers of our constituents on a low wage, income support or jobseeker’s allowance and in receipt of housing benefit, will be faced with a horrible choice. The housing benefit will be cut, but the landlord will refuse to lower the rent. They will then be faced with a terrible choice. Do they take the children out of school? Do they move away from the area where their family live, where they may be caring for an elderly relative, where they have community links, where they have their general practitioner or local hospital? They have that kind of social support network, but they will have to try to find a private rented flat somewhere else, some distance away.
Emily Thornberry
My hon. Friend speaks extremely well on behalf of Islington, but may I chip in with this? One argument put forward is that the housing benefit cuts will result in rents dropping, but may I point out to the Minister, who may not know this—I know that my hon. Friend does—that only 12% of Islington’s private rental sector receives local housing allowance? Therefore, if the benefit were cut, the market would simply move on to other people. If we wish to push down rents in the private rented sector, we cannot do it by cutting housing benefit. I would suggest that the Minister listen carefully to my hon. Friend, because the points that he is making are extremely valid, particularly in respect of Islington.
Jeremy Corbyn
Absolutely. My hon. Friend understands the borough very well. That is the situation, and I suspect that it is exactly the same in Hammersmith and Fulham, Westminster and many other inner-London areas. There is enormous demand. This is a fast-growing, vibrant city where there is huge demand for private rented flats. The effect of the proposals will be social cleansing of the poorest people out of what are perceived to be high-cost areas. Like other boroughs, Islington is subject to the peculiar combination of being high cost but poor at the same time. That does not apply in the whole country, but it certainly does in London, and I hope that the Minister will at least begin to understand that.
Islington council cannot house all the people on the waiting list by any manner of means. There are 8,000 families on it at present, and serious overcrowding problems in existing council and housing association accommodation. A small amount of building has been started—I wish it well and welcome it—but I suspect that, after the Chancellor makes his statement, there will be an end to all council house building in this country, unless I have been misled by the media, which, of course, is possible.
I ask the Minister to look at the issue and deal with it in an intelligent, rational and humane way. He should not place a cap on housing benefit but instead look at the exorbitant private sector rents that are charged and introduce at least some form of appeal system against excessive rents. As my hon. Friend the Member for Islington South and Finsbury said, if people are moved out of private rented accommodation, somebody else on housing benefit or housing allowance will not be moved in. The property will be filled by someone from the open market, because that is the reality of the situation.
James Murray, the executive member of Islington council who deals with housing, made an excellent submission to the Work and Pensions Committee, in which he states:
“Islington is a high demand area, with some of the highest private sector market rents…With over 8,000 people on its housing register, and demand for social housing far outstripping its supply, the borough relies heavily on the private rented sector to help house its residents.”
Islington has placed, through the rent deposit scheme, large numbers of people in the private rented sector on an agreed rent, but all those arrangements will disappear. Islington has tried to co-operate with the private sector in doing that and calculates that,
“Over the past 18 months 228 of the 422 households placed through the rent deposit scheme will be adversely affected by the caps.”
The answer is to recognise the housing needs of people in London and the social damage of overcrowding and homelessness, not punish the tenants and victims, and instead—I agree with the hon. Member for Colchester —build as many properties as rapidly as we can and deal with excessive rents, bad conditions and bad landlords, of whom, unfortunately, there are still far too many all over London. It breaks my heart when people living in vermin-infested flats, which we the public are paying several hundred pounds a week in rent for, come to see me. Such tenants feel that they have no rights and feel excluded. Their children are suffering educationally, from overcrowding and everything else.
We need a decent, fair society. The Prime Minister claims that we are all in it together, but I do not believe that he really thinks that, because if he did he would be doing something about the disgraceful way that many private sector tenants are treated. Support the tenants; do not bail out the landlords.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I congratulate my right hon. Friend the Member for Barking (Margaret Hodge) on securing this debate. I am stunned that the Minister, who has, as my right hon. Friend mentioned, been sent here again to attempt to defend the indefensible, seems to have ignored previous debates on this issue. His response to the entirely justified criticism by my right hon. Friend was to try to move the debate, which was endorsed by the hon. Member for Colchester (Bob Russell), on to the failings of the previous Labour Government. It is almost impossible to believe that the Minister did not take on board the litany of facts and figures that were presented to him in this Chamber by the usual suspects, who are here. [Interruption.]
Glenda Jackson
I said “usual”, not “old”. [Laughter.] These hon. Members know, from first-hand experience in their own constituencies, precisely the depth of damage that will be inflicted on our constituents if these proposals go through without any reconsideration or re-evaluation of what is actually, practically, going to happen. If the Government are not going to listen to what the loyal Opposition are presenting to them in this respect, perhaps they will give consideration to organisations such as Citizens Advice, Crisis, Gingerbread and the Chartered Institute of Housing, all of which are saying that the housing benefit proposals will increase the amount of homelessness and that it is unlikely that they will save any money at all.
The amount of social disturbance that will take place is scandalous. Crisis predicts, as I have had occasion to say in this Chamber, that if the proposals go through there will be a vast increase in homelessness. However, there will still be a statutory responsibility for local authorities to house children, so we will go back to the bad old days of bed and breakfast. As Crisis says, it is the norm for bed and breakfast charges to be £60 a day for a room. How much will that save the country? Children will not only lose their homes, but lose their schools, friends and community support and will more than likely lose an immediate and direct medical service, so their parents will have to take them, should they be ill, to the local accident and emergency unit. How will that affect those boroughs to which these thousands and thousands of families are expected to move to reduce the rent they pay and to stay in some kind of reasonably permanent housing?
Citizens Advice has said that there is only a short time left for someone who will have to move out of their present accommodation if the changes are brought in. A family may be forced to change their accommodation twice in as short a space of time as three months. Citizens Advice quotes cases where this has already happened.
It is incomprehensible that the party that purported to be on the side of the weakest, poorest and most vulnerable in our society has signed up totally to the proposals on housing benefit. In one way I am surprised, but in another I am not. The Deputy Prime Minister, the right hon. Member for Sheffield, Hallam (Mr Clegg), who has become the Marshal Pétain of his generation, had the audacity to speak at the United Nations on the failure of countries infinitely poorer than ours to meet their millennium development goals on tackling infant mortality and reducing deaths in childbirth, but one of the first policies that he has endorsed will make women and children in this country homeless. He has also urged his colleagues, supporters and followers to enjoy their power. Will the Minister do that today? Will he enjoy the power that has been vested in him and use it to destroy families and communities?
My hon. Friends have already said that central London will become a no-go area for basic, usually very low-paid jobs, on which the whole of central London depends. I will be interested to see what happens in the Palace of Westminster if this measure goes through. It is highly likely that there will be a marked reduction in people keeping our offices clean, providing us with food and giving us the services on which we in the Palace of Westminster depend. If that situation is expanded across the whole of central London, what will we see? There will be fewer bus drivers and, certainly, fewer teachers. Teachers are already telling me that they cannot afford to buy and are finding it virtually impossible to rent. The Government argue that we have to attract foreign investment to give yet another kick-start to bring this country out of recession—although they have provided a gentle nudge more than a kick—but if this proposal goes ahead the very services on which this city depends simply will not be there.
It is utterly absurd to think that the outer London boroughs will be able easily to take up the thousands of people who will have to move out of central London—this is not an exaggeration, as the Minister must know—and meet their housing, educational, social and medical needs. Does he really wish to turn this city back to what it was under Thatcherite mark 1—he is signed up to Thatcherite mark 2—when people were living in doorways and slept for the night on gratings? Lincoln’s Inn Fields, for example, was taken over by a tented community. That will be the result of this disastrous policy if the Government do not begin seriously to rethink what they are proposing. If they do not listen to Her Majesty’s loyal Opposition, perhaps they will listen to organisations whose sole purpose in life has to do with helping provide people with decent housing. Then perhaps they will, for heaven’s sake, rethink this disastrous policy.
Sheila Gilmore (Edinburgh East) (Lab)
It is important to realise that issues to do with housing benefit do not just apply in London. I acknowledge that problems in London are great—far greater than in many other places—but the suggested housing benefit reforms will affect other parts of the country in ways that are similar, if not quite so grotesque.
In Edinburgh we will not be affected by the proposed cap. The local housing allowance is already beneath that cap. However, the decision to restrict the LHA to the 30th percentile will affect us, as will the decision to up-rate not according to what the market is doing, but according to the consumer prices index. The proposals will have an effect on the kinds of homes that people can find.
As it is, many people in Edinburgh who are receiving housing benefit or local housing allowance already meet a shortfall on their rent. Housing benefit is not just for people who are out of work, as some of the propaganda would suggest. Many people work and are able to stay in their homes only because housing benefit is available to them, even if it tapers off. Many people are already paying an excess out of their limited incomes because they have not been able to find anywhere else within the LHA. The number of people in that situation will rise. That is a substantial financial difficulty. Some of my constituents are paying £10 or £15 a week out of a limited income just to top up their rent payments. That problem will become greater.
I live in a city with a large private rented sector. It is not as large as in Islington, but 20% of all households are in the private rented sector, which in Scottish terms is high. At the moment, around 18% of private rented sector properties are occupied by people who receive some housing benefit. There is ample scope for landlords, if they no longer wish to have tenants on housing benefit because of the lower local housing allowance, to find other tenants. There is a huge shortage of properties in the city and plenty of other people to fill them without landlords reducing rents. We are a high-cost city and a high-rented city. Students and young people will be able to occupy such properties; perhaps if they are sharing, they will be able to pay the high rents that a household could not meet.
There are other practical issues for people who must move that are not always taken into account. Some of us forget—I had almost forgotten until recently when someone came to see me and told me that she must move—the difficulty of finding a deposit. There are schemes to help people to provide a deposit, but they are limited and those in Edinburgh are very limited. For many people, finding enough money for a deposit to enable them to move is a huge issue. Many of us may believe that it is not that big a deal, but to find £400, £500 or £600 for a deposit, which may be low by London standards, is a lot of money for some people. There are practical issues that make it difficult for people to contemplate moving.
Glenda Jackson
The obverse is touched upon by one of the briefings from Citizens Advice. For example, in Brent, if a tenant, because of the changes in housing benefit, finds it impossible to pay their rent and loses their tenancy, they will also lose their deposit because the tenancy agreement is broken before the due date. The landlord wins all round.
Sheila Gilmore
That worsens the position.
In Edinburgh, if people with homes in the private rented sector, whether they are in work or not, can no longer afford such homes because they do not receive housing benefit, they will come to the council for help with housing. The council has already entered into lease agreements with landlords for around 1,500 to 1,700 properties to provide accommodation for people who have presented as being homeless. They are outside the local housing authority, and the rent levels are extremely high, which is a serious problem. That was intended to be a temporary expedient, but it has been temporary for five years, and the council has recently entered into another contract because it has little choice. The LHA cap will not apply, but if more people go into such accommodation and the council must take on more private leases to cover the situation, the real bill for housing benefit—we are always being told about the huge total of housing benefit—will be squeezed from one end and will push up at the other end. There will be unintended consequences.
Labour Members recognise that some of the changes and reforms, sometimes well intentioned, have had unintended consequences, and that should be taken into account before the changes go ahead. At the end of the day, the total housing benefit bill may not fall, despite the changes that will badly affect individuals, households and families. It is not good enough to say, “You didn’t do enough about building housing, so we must do this.” If the solution is to build more houses, build more houses. We did that, although they may not all have been council houses, as the Scottish National party said. It came to power saying that it was dreadful that we had not built any council houses, and that it would do so, but the total number built was exactly the same because it gave a little money to councils to build council houses but it took it away from housing associations that were building houses; the global figure did not change.
The answer is not to punish people for the failure of a policy. That is perverse. If there were even a suggestion that some of the money saved would go towards building houses, at least there would be some purpose in the argument, but I do not believe that that will happen. We have had no such assurances. From a perspective much further north than London, I agree with my hon. Friends that the reform is bad and will affect my constituents. I urge the Government, even at this late stage, to reconsider.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the right hon. Member for Barking (Margaret Hodge) for introducing this important subject and congratulate her on her election success. Importantly, she saw off the British National party. I also congratulate the hon. Member for Westminster North (Ms Buck) on her deserved promotion, and I welcome my good and hon. Friend the Minister, whom I am sure does not have the attitude that our Opposition Friends are suggesting.
I shall not develop the argument, but there is an issue with the housing legacy. I understand the point made by the right hon. Member for Greenwich and Woolwich (Mr Raynsford), but the failure to build enough houses, particularly in London, left a terrible legacy for the new Government. We must be honest about that. The waiting list in Southwark is 15,000, and Labour Members cannot back off from that.
We must all face the fact that the population in London is rising significantly all the time, so the social challenge for the Government is extremely difficult. I am sure that it is not in their mind to drive people from one part of the country and forcibly to move them elsewhere, but there is a risk of unintended consequences. In the final week before the announcement of the comprehensive spending review—I know that some of the decisions on housing are not yet finalised—I want to take the opportunity to influence my hon. Friend and our colleagues through this debate and more widely to make the best possible decisions. There is clear evidence that forcing people away from their communities does long-term damage to children and the next generation in their relationships, and to the social fabric and community cohesion.
The campaign for homes in central London, with which I, the hon. Member for Islington North (Jeremy Corbyn) and others are associated, recognises that some people are born and brought up and have their home and being in the centre of our cities. They should be able to expect to remain there, even if they are not on high incomes, which most of them are not.
I am conscious of the time, but I want to mention three acute issues. The first is the housing benefit changes planned for next year. The Budget statement in June proposed that housing allowance rates be capped in April. Secondly, from October next year, rates will be set at the 30th instead of the 50th percentile of local rents. The method of working them out is complex, but the previous Labour Government set up broad market rental areas, so that they are considered in the community context.
Thirdly, further down the track,
“Housing benefit awards will be reduced to 90 per cent of the initial award after 12 months for claimants receiving Jobseekers Allowance. This will be introduced in April 2013.”
That policy is wrong. It is too inflexible and must be changed. One cannot presume that someone who has been trying to find work has not been able to do so because of their own failure, and that they must therefore move. The consequence of that and some of the other proposals risks forcing people from where they are, and by definition they then become a burden on the local authority if they are in any of the vulnerable categories or have priority needs. The problem does not go away; it simply moves, with trauma to those concerned.
What should our policy be? I can only summarise, but of course we need a policy that delivers more homes at affordable rents in London and elsewhere, including short-term homes, as other Governments have realised, perhaps on brownfield sites and the like. We absolutely need to make sure that empty homes are filled, and that people with spare space are encouraged to move so that that space can be released to others. We must not shake the security of tenure principle, because that is not the right approach.
We must ensure that we do not discourage people who are currently living in private rented accommodation from going into work because the rents are so high that should they start work, or should their partner come to join them, they might suddenly discover that they cannot stay in their property. That is a terrible failure which we must correct, and I have heard the Minister and other people say that they intend to do so.
In the view of London Councils—I stress that this is a cross-party view held not just by the Conservative Mayor but by all three parties that lead councils in London—there must be a review and change to the 90% rule, and a change to the rules currently planned for implementation next year. In its submission, which I hope the Minister has received and which I endorse, London Councils asks the Government to
“reconsider the level of the national cap in London and for the Central Broad Rent Market Area (BRMA) in particular”
and my own area. London Councils goes on to ask for the introduction of a transitional scheme. It also asks us to ensure that
“Current claimants…be subject to the 30 percentile change from April, but not to the national cap”
and that only new claimants who could find a property would be subject to the national cap. London Councils wants a progression—a transition—so that London has an opportunity to work out a solution with the Government, rather than be told the solution by the Government.
The June proposals were over-hasty and need to be revisited. They are not fair. I do not think that the Minister would want the Government to be known for a policy that was draconian and most adversely affected the poor and the disadvantaged. That is not the housing policy that he or I signed up to, and I hope that the Government will not sign up to it either.
Ms Karen Buck (Westminster North) (Lab)
I congratulate my right hon. Friend the Member for Barking (Margaret Hodge) on securing the debate. She has done us a great service by setting out to the House the implications for those local authorities that are likely to receive people who move from higher-cost areas. Many of us, including me as a constituency MP, have focused on issues that will impact on the areas from which people will be moving, but we must understand the sheer scale and extent of the proposals.
Almost 1 million households will lose out as a consequence of the combined measures introduced in the June Budget. As was rightly pointed out by my hon. Friend the Member for Edinburgh East (Sheila Gilmore), that will have implications for the entire country. The measures will have the most extensive impact in London, but that will ripple through all local authority areas in the country, including a particularly sharp effect in the south-west, Bristol, Brighton, Cambridge, Oxford, Edinburgh and parts of the north-west. Although London is at the sharp end of the proposals, it is not exclusively affected.
We heard powerful and well informed speeches from across the Chamber, and particularly from those hon. Members who will see the impact of the proposals. My expert and right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) spoke about the potential damage to the private rented sector, which is a valid point. My hon. Friend the Member for Lewisham East (Heidi Alexander) spoke correctly about how the image of work-shy households in Mayfair mansions is completely contradicted by the lived experience of the overwhelming majority of people who claim local housing allowance. She and others mentioned the fact that in east or south-east London, and many other parts of the country, there are no rooms or houses to spare to absorb that movement.
My hon. Friend the Member for Islington North (Jeremy Corbyn) talked about the sometimes perverse consequences of the right to buy, a popular policy that delivered much to those who benefited from it, but which down the line has contributed to some of the problems. In yet another extraordinarily powerful speech, my hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) talked about the impact of dislocation on households and children. The hon. Members for Bermondsey and Old Southwark (Simon Hughes) and for Colchester (Bob Russell) talked about the impact on children, and they were right to do so.
Before I address one or two of the substantive points and ask the Minister some questions, it is important to place on the record a correct understanding of what housing benefit and the local housing allowance for private tenants actually do, and why they have risen so much. We have heard a great deal—including this week from the Secretary of State—about the explosion in the cost of the local housing allowance. Almost half, 48%, of the entire increase in housing benefit over the past five years has been a result of the growth in the private rented sector. It has been driven by cases and not by rents. Of that, 28% is accounted for by an increase in social rents, while a mere 20% is accounted for by rises in rents themselves at a time when house prices have doubled.
That does not mean that we do not have problems in some areas. We know that there are hard cases and that some people will always swing the lead; that is the case everywhere and in every system. However, such people are outweighed by thousands to one by those who rely on housing benefit and the local housing allowance to keep a roof over their heads. There are ways of dealing with hard cases by allowing local authorities discretion, and some such measures were set out by the last Government in the March Budget. We must not let hard cases dictate a national policy that impacts on 1 million people. That is the catastrophe.
Ministers seem to fail to understand the number of households on local housing allowance who are in work—again, the Secretary of State failed to refer to that. Over the past two years, there have been a quarter of a million new cases of people in work claiming local housing allowance. During the recession, as wages and the hours that people worked fell, people turned to housing benefit and the local housing allowance to stop themselves from being made homeless. The coalition Government have completely ignored that. Research commissioned by my party when considering housing benefit reform last year laid to rest the myth that, taken as a whole, the local housing allowance discriminates against working households.
Research published three weeks ago stated that
“housing benefits arrangements do not seem to unduly favour local housing allowance recipients compared to most low-income working households”.
One clear message is that it would be a mistake to see housing benefit claimants and low-income working families as totally distinct categories. Most interviewees in the research study moved between those categories, sometimes several times, so that the same household could be a low-income working household one week, and find itself on housing allowance in another.
Despite all the evidence and research, in something like 20 weeks, a policy will come into effect that could impact on 114,000 households, mostly in London, who live in properties too expensive for them. The Mayor of London’s own submission contains an expectation that 20,000 children will be moved. In my local authority, 5,500 households will be way above the cap. If we consider that half of those households are larger households with children, that is 5,000 children in one borough. Where are the school places going to come from? Where will those children be educated? Where will health services be found for them? Where will they be found homes? The sheer lack of planning for the scale of population movement, and the debt, homelessness and distress to be caused is overwhelming. That is in 20 weeks. In a year’s time there will be a much bigger and deeper cut with the move to the 30th percentile, which is far wider.
The Minister says that rents will fall. Where is the evidence for that? Will all rents fall? Of course they will not. Some rents will fall, but where are the calculations about the numbers affected in areas where rents do not fall? Does the Minister think that the market does not exist, despite everything that we hear about it? When tens of thousands of people leave their homes in high-cost areas and move to Croydon, Barking, Southend, Hastings or Luton, surely the market will respond and rents will go up. Where will the savings be made? That is before households turn—as they will—to local authorities for rehousing.
Over the past two years, 120,000 households have been placed in the private rented sector by local authorities to prevent people from becoming homeless. What are those households going to do? Has the Minister considered how many of those households will apply to local authorities as homeless? It will be the overwhelming majority. Will local authorities have to pick up those duties and house those households in temporary accommodation, and at what cost? Do we not see the rankest hypocrisy from my own local authority of Westminster, which has been the cheerleader for some of these reforms for what I must say are highly political reasons? In response to a question that I asked the Minister, Westminster was the first council to write to the Government to ask for assistance in dealing with temporary accommodation costs. What extraordinary hypocrisy for it to be holding its hand out for financial assistance while lobbying for the changes that will see the majority of households, particularly those with children, moved out of the borough.
We are talking about a staggering movement of people, an increase in homelessness and an increase in the number of children—many of them vulnerable—throwing themselves on the mercy of ill-prepared local authorities in other parts of the country, including London, which are themselves expected to make a huge cut in their own expenditure at the same time. Many of the households involved are working households.
Has the Minister reflected on the effect of the policies on his own constituency and, indeed, that of the Secretary of State? It is worth remembering how they are affected. In the Secretary of State’s constituency, 13,990 households are losers in the two broad rental market areas affected, and of those, just under 5,000 are in work. In the Minister’s area, a shade under 1,000 working households lose, with families in two-bedroom properties losing nearly £1,000 a year. The policies are impacting in the Government’s own backyard. I hope that that will give them some pause for thought.
Many measures are being proposed to ameliorate some of the most catastrophic impacts of the decisions. The Minister should allow time for impact assessment before local authorities are placed in the position that has been described, because I predict that even with the most minimal impact of the policies, we will see the most distressing scenes that we have seen in many years, as families are forced from their homes, are forced into debt and have to queue at local authority housing departments to make a claim for homelessness. There will also be an impact on the demand for services from local authorities throughout the country, which will have to deal with people’s needs. Please will the Minister tell us what measures are being put in place to allow local authorities to cope with that?
The Minister of State, Department for Work and Pensions (Steve Webb)
I have already congratulated the right hon. Member for Barking (Margaret Hodge) on securing this important debate. I also congratulate the hon. Member for Westminster North (Ms Buck); the Select Committee’s loss is the Labour Front Bench’s gain. She and many other hon. Members who have spoken bring to the debate a great deal of expert knowledge on housing. In the eight minutes remaining, I shall do my best to respond to some of the key points that were made.
My hon. Friend the Member for Colchester (Bob Russell) is a doughty campaigner on housing issues and I hope that he always will be. He raised very important questions. Are the measures not bad for child poverty? What about disabled people? A number of hon. Members mentioned the position of vulnerable groups. My response to my hon. Friend is twofold, but principally it is that if we examine what we are spending on housing benefit, we see clear evidence that a significant part of our spending is not subsidising people in need to have decent housing, but subsidising landlords. In each of the past five years, we spent an additional £1 billion in real terms; each year it was another billion, then another and then another.
I want to put a hypothetical scenario to my hon. Friend. The Department for Communities and Local Government says to the Chancellor of the Exchequer, “We want to spend £1 billion next year building affordable homes.” The Chancellor says, “Yes, I’d like to do that.” Then he goes to the Department for Work and Pensions and we have just put in a bid for another £1 billion and another £1 billion for housing benefit, and he has to go back to the DCLG and say, “I’m sorry. The DWP has claimed that £1 billion. It’s not available for affordable housing. It’s not available for tackling child poverty.” The crucial point is that we have a housing benefit system that protects the vulnerable but does not pre-empt resources that could be spent on the very things on which we in this Chamber want to spend money.
Steve Webb
No. I will give way to the right hon. Member for Barking, who initiated the debate, but in the remaining seven minutes, I want to respond to some of the points made in the debate.
I want to correct a number of the inaccurate impressions that have been given. As the hon. Member for Westminster North said, it is a helpful focus in this debate—as distinct from our July debate, which was on the position of tenants—to ask about the position of the receiving local authorities. That is an entirely valid point. We are in discussions with our colleagues in the DCLG. We are working with the local government associations across the country to work out how best to support local authorities, which will face challenges; I do not dispute that for a second.
The allocation of the discretionary housing payments, which will be trebled from £20 million to £60 million, is part of the picture. As the hon. Member for Edinburgh East (Sheila Gilmore) pointed out, one of the issues for people will be difficulty in securing deposits, and one of the things that discretionary housing payments can be used for is to assist people in paying for deposits. That is part of the purpose of the scheme. We have deliberately trebled that money and, although I cannot say anything definitive about the allocation of that funding, inevitably we shall want the money to go where the need is greatest, and inevitably that means that London will get a significant slice of that money. That is clear, and I think that it will help.
I want to question the description that we have heard of the private rented sector in London. I hesitate to do that in a room full of London MPs, but I shall give it a try. It has been presented as though it is an incredibly static situation, in which people live in communities for generations and it is always the same property, yet surely hon. Members would accept that there is massive turnover in the private rented sector in London. People move in and out of properties all the time.
The idea that there are static communities where any disruption will somehow undermine the community seems to me a parody of what is actually going on. The same applies to the suggestion that in the most expensive parts of London, there are mixed communities, with people at all income levels. The only people who can afford very high rents are the very rich and the very poor; there is nobody in the middle. The suggestion that we are somehow disrupting those terribly cosmopolitan, mixed communities is not true. [Interruption.] Indeed, it is not true. What can we do about the situation?
Margaret Hodge
I think that the Minister has demonstrated, as he will have heard from the comments around the room, a lack of understanding of the nature of the population affected. I am referring to the families, about whom we have concern, who will be dislocated by his proposals. Will he give an undertaking to do just a little bit of research that will demonstrate the potential impact on movement across London, which families that will involve and how they will be impacted? If we shared that research and the evidence, we could then have a sensible debate about the impact of the Minister’s proposition. Will he give us that assurance today?
Steve Webb
Like the right hon. Lady, I am keen to have a sensible debate on this subject. She mentioned the evidence that the Mayor of London has produced. The Mayor met my right hon. Friend the Secretary of State towards the end of September, and we are in close dialogue with London local authorities and others so that we do understand the implications of the changes.
With regard to turnover in the private rented sector, the local housing allowance scheme only came in just over two years ago, in April 2008, and 75% of private rented sector cases are now within the scope of that scheme. There is huge turnover of people. People are making decisions about new—
Steve Webb
No. People are making decisions about new tenure choices all the time, and we are saying this: why should those whose rents are wholly paid by the taxpayer not face the same constraints as those who are in low-paid work? I take the point made by the hon. Member for Westminster North that the two are not distinct categories; there is movement between the two. However, people in low-paid work are not choosing to live in the most expensive parts of the city, because they know that they would have to be able to pay those rents out of their wages. Why should people on benefit be in an advantageous position, in terms of their housing choice, compared with those in low-paid work? That simply is not right.
I am convinced that nothing in my language or my ministerial colleagues’ language is about clearances or scroungers. That is not what we are talking about. We are talking about value for money for the taxpayer, including the low-paid taxpayers in the constituencies of each hon. Member present, whose taxes are going to subsidise those exorbitant rents. Although we have heard that those very high rents are exceptional, I was appalled when I discovered that the 5,000 families to whom we pay the most housing benefit cost the taxpayer an annual £100 million—5,000 families receive £100 million a year just in housing benefit, leaving other benefits aside. It cannot be right that low-paid workers in our constituencies, people dealing with child poverty and disabled people are paying taxes to pay those rents.
My hon. Friend the Member for Colchester asked about the position of disabled people. One of the changes that has not been reported is the improvements to the system of housing benefit for disabled people who need a non-resident carer. We are spending an extra £10 million on writing off that extra bedroom in the housing benefit assessment, because we recognise the particular needs of disabled people.
These are huge issues and it is disappointing to have only a few moments to respond to them. The crucial consideration is to be fair—yes, to people on benefit, but also to the low-paid taxpayers whose taxes are paying for these things. If we simply pay the full, very high rents, we make it very difficult for people to take work, which will ultimately be the best antidote to child poverty and the best long-term prospect for people. That is the goal of the reforms.