Housing Benefit

Tuesday 9th November 2010 Commons Chamber

15:40

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I beg to move,

That this House believes that, whilst housing benefit is in need of reform, the Government’s proposals will mean significant losses for hundreds of thousands of working families and pensioners and risk spending an additional £120 million on the cost of providing temporary accommodation; and calls on the Government to bring forward revised proposals for the reform of housing benefit which do not penalise those who have been unable to secure employment within 12 months, and which ensure that any proposals are implemented on a revised timetable which allows councils, tenants and landlords to adjust, allows the impact on rents to be observed and understood, and avoids additional spending on temporary accommodation.

It is common ground across the House that the deficit needs to be cut and that, as the motion states, housing benefit needs to be reformed. The shadow Secretary of State for Communities and Local Government, my right hon. Friend the Member for Don Valley (Caroline Flint), will speak later and I am sure she will reflect the views of many in this House in recognising that the issue of housing benefit cannot, and should not, be detached from broader issues of housing provision. However, it is important to start the debate by setting out some of the facts that explain the real and rising concerns that have been expressed from both sides of the House about the impact of the Government’s proposed housing benefit changes. I will address first the reach of the changes, then the reason for them, and finally their potential impact.

If we were to believe everything we read in the newspapers, we would have thought in recent weeks that housing benefit reform is solely a London issue and that it matters only to people who have large houses and should be, but are not, working. Broadcasts and newspapers have suggested that the key issues are workshy families in Mayfair mansions, so let us start with some truths, however inconvenient they are for the Opposition Front Bench. Some 4.7 million people in the United Kingdom currently receive housing benefit, 2 million of whom are pensioners on pension credit guarantee of just about £132 a week, while 500,000 are people on jobseeker’s allowance and 700,000 are people in work in low-paying jobs. From just one measure of the Government’s proposed changes alone—the cut in local housing allowance from the 50th to the 30th percentile—700,000 of these, many of the poorest people in our country in and out of work, stand to lose on average £9 per week.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am looking forward to hearing the rest of what I know will be a very passionate and important speech. Does my right hon. Friend agree that many people—not only in my constituency, but throughout the country—who have disabilities or who are carers for people with disabilities are terrified that these proposals might affect them?

[Mr Alexander]

To illustrate my hon. Friend’s point, one of the depressing aspects of the changes is that we have not yet had a comprehensive impact assessment; I will discuss that during the course of my remarks. We have had figures about the proposed changes from the Department for Work and Pensions, which confirm that they will hit every part of Britain, and from the smallest flat upwards. A poor pensioner living in a single-bedroom flat in Glasgow will lose £7 a week, and a family in a two-bedroom flat in Liverpool will lose £10 a week. Housing benefit recipients in Yorkshire and Humberside are most likely to lose out from this 30th percentile measure, with 90% of local housing allowance recipients seeing a reduction in their housing benefit.

Little wonder that Shelter’s chief executive, Campbell Robb, explained only yesterday:

“The focus of debate so far has been the cap to housing benefit and the impact on London, but this analysis shows that these cuts will affect hundreds of thousands of people across the country.”

That is why the Church of Scotland, a body with a long and distinguished tradition of work and witness in deprived communities across Scotland, on Friday wrote to every Scottish Member of Parliament, raising concerns and questions in advance of today’s debate about the impact of the proposed measures on the communities it serves. Today, Shelter in Cornwall raised concerns about the Government’s proposals, saying:

“The reality is that we are going to be facing much more homelessness and more evictions because of this. Cornwall’s low incomes mean that lots of hard working people do have to claim housing benefit.”

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my right hon. Friend realise that many people not affected by the cuts are appalled that this Government sought out the poor and needy and attacked them with these cuts?

[Mr Alexander]

I am grateful to my hon. Friend for that question. I hope that the Secretary of State will take the opportunity to explain to the House and indeed to the country why, in the package of measures contained in the spending review, the Government decided to take more money from the nation’s families than the nation’s banks.

Calls for a rethink on these proposals have also come from the hon. Member for St Ives (Andrew George), whose constituency covers the Isles of Scilly. I hope that he will vote in support of the motion, as he has said:

“The impact on Cornwall is likely to be very severe indeed.”

He also said that the proposals

“will put a lot of families in extreme stress and ministers should think again.”

Concern is rising among those on both sides of the House and across the country, from Cornwall in the south to Shetland in the north. We have to recognise that when we talk about these rushed and ill-considered changes, we are talking about changes that will affect our constituents, no matter what part of the country we represent. The changes will affect many of our constituents, those in and out of work, as well as many of our poorest pensioners. This debate should be informed by that state of mind, rather than by the lurid headlines that Ministers have worked so hard and so shamefully to create in recent days.

[Mr David Ruffley (Bury St Edmunds) (Con)]

I agree with the following statement:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

It came from this year’s Labour manifesto. Does the right hon. Gentleman agree with it?

[Mr Alexander]

I do, which is why I wish those on the Government Benches would spend less time reading our manifesto and more time changing their proposals.

Let me deal with the substantive points. [Interruption.] Hon. Members should have just a little patience—one of the virtues that I wish the Secretary of State had learned in relation to these changes. Two arguments are being advanced in favour of the changes, the first being that the housing benefit bill is out of control and the second being that reform will lower the rent levels paid by the state for private sector accommodation available through housing benefit.

Let us start by examining the facts and the merits of those arguments. First, as the Building and Social Housing Foundation points out:

“Housing benefit has remained remarkably consistent at around 14% of the benefits bill for many years and most of the increase over the last 18 months has been down to an increase in the number of claimants, which is exactly what we would expect to happen in response to a recession.”

[Bob Russell (Colchester) (LD)]

rose—

[Mr Alexander]

I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession—that is undisputed—but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%. That was fuelled hugely by the Labour Government’s reform to local housing allowance. The figures show that today’s rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.

[Mr Alexander]

I am happy to come on to deal with exactly those points, which echo some that we have heard.

[Bob Russell]

rose—

[Mr Alexander]

I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills—

[Mr Duncan Smith]

Explain it.

[Mr Alexander]

I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department’s own statistics show that since 2000 more than half the increase in the housing benefit bill—54%—did not come from the few high claims. It came from poorer private tenants—those in low-paid work, and disabled or elderly people—claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.

[Mr Oliver Heald (North East Hertfordshire) (Con)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I feel that I should give way first to the hon. Member for Colchester (Bob Russell).

[Bob Russell]

The right hon. Gentleman was a Minister in the last Government. He started his speech with a brief mention of “housing provision”, but he has not said anything about it since. Will he inform the House how many council houses were built and how many were sold by the last Labour Government?

[Mr Alexander]

The hon. Gentleman made that point in the debate in Westminster Hall. I will not pretend that our priority was council housing as distinct from social housing, because for Governments over many years there has been a move away from direct provision by local councils to broader social housing, principally provided by housing associations. We will happily stand comparison between the number of social houses that we built during our time in office and the number being trumpeted by those on the Government Front Bench. Incidentally, almost half of the 150,000 in the figure that is now being used by the Conservatives are houses that were initiated by the Labour party when it was still in office. Notwithstanding the fact that I do not think that that was a point worthy of the hon. Gentleman’s genuine concern, I hope that he will back up the words of the early-day motion with his actions this evening and join the Labour party in the Division Lobby.

[Mr Heald]

Does the right hon. Gentleman not agree, as all commentators have said, that since the introduction of the LHA the transparency of it has led to landlords putting up rent? Does he not think that there is a duty on Government in these difficult times to do something about it?

[Mr Alexander]

I have great respect for the hon. Gentleman, but there is a difference between having a duty to act—and we support the case for reform in housing benefit—[Hon. Members: “Ah!”] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the ’80s and ’90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.

The core of the Government’s policy is their belief that by cutting or capping housing benefit—this has been the substance of a couple of interventions—they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government’s regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.

In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?

[Mr Duncan Smith]

Bureaucratic nonsense.

[Mr Alexander]

I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.

Not only does the Government’s core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients—[Interruption.] From a sedentary position, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), says, “They would say that, wouldn’t they?” Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? “Yes,” I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.

[Christopher Pincher (Tamworth) (Con)]

The right hon. Gentleman is keen to use statistics. I wonder whether he is comfortable with the statistic that more than 50% of Labour supporters believe that housing benefit should be reformed. They support us. Is it not ironic that he is proposing such a motion today when his supporters support this Government?

[Mr Alexander]

First, I respectfully suggest that the hon. Gentleman reads the motion. Secondly, I suggest that he recognises that we introduced the LHA, which has already been the subject of an exchange across the Floor of the House. He might also want to go back and read the statement of the former Chancellor at the March Budget, when we suggested further measures for reform of housing benefit.

That is commonplace. There is a difference between the right reforms that will save the public money, and the wrong reforms that will potentially cost the public money and lead to higher homelessness, as we have seen so often in the past.

[Matthew Hancock (West Suffolk) (Con)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I am keen to make a little progress.

According to a study commissioned by Shelter from the Cambridge Centre for Housing and Planning Research—I wonder if the Government will dispute the integrity of that body—more than four in 10, or 42%, of landlords currently letting to LHA claimants planned to scale back. Shelter estimates that that will equate to 100,000 landlords. Liz Peace, the chief executive of the British Property Federation, said:

“Landlords might decide to abandon the social sector.”

The Conservative Mayor of London—I wonder what the Government will say in relation to this evidence—says that the Government’s proposals will lead to

“the loss of the private rented sector as a major safety net for London boroughs”.

He continued:

“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 the words not of the Labour Front Bench, but of Boris Johnson.

[Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)]

Has my right hon. Friend seen the Daily Mail today? Under the headline “Archbishop is wrong about…welfare…says Iain Duncan Smith”, the opening paragraph states:

“Iain Duncan Smith has attacked the Archbishop of Canterbury’s claims that housing benefit cuts will lead to a cycle of despair that will socially cleanse the poor from Britain’s cities.”

The article goes on to quote the Secretary of State as saying of the Opposition and special interest groups:

“‘They have even tried to suggest that our real purpose is not just to cut the budget deficit but to remove poor people from the heart of our cities.’”

If that is not the purpose of the Government’s intentions, surely that will be the net effect.

[Mr Alexander]

I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.

[Mr Duncan Smith]

I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who think that our measures will socially cleanse London? Will he please answer that question?

[Mr Alexander]

I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.

[Mr Duncan Smith]

rose—

[Mr Alexander]

I am happy to give way.

[Mr Duncan Smith]

I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?

[Mr Alexander]

I have said that I think London will look very different in the years ahead if the Government’s proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government’s policies, not about my words.

[Mr Dennis Skinner (Bolsover) (Lab)]

Will my right hon. Friend compare the current position to the days when Lady Porter decided to take measures in this part of London to shift people out of certain areas for political reasons? Is not the Government’s current idea one that Lady Porter could only have dreamed of, because it is 10, 20, 30 times worse?

[Mr Alexander]

The cumulative impact of Lady Porter’s measures was in the hundreds or the few thousands. The impact on people being removed from their homes if the current proposals pass unchecked will extend significantly beyond that.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Has my right hon. Friend discovered which Conservative Minister described the measures as having such a high social impact in terms of moving people out of London that it would be greater than the highland clearances?

[Mr Alexander]

Alas, I cannot answer that question, but I hope the Secretary of State for Work and Pensions will do so.

[Several hon. Members]

rose—

[Mr Alexander]

No, I have been generous and I will make a little progress, although I will be happy to take further interventions. Given that the subject has moved on to the highland clearances, let us move from London to Edinburgh and take the example of Edinburgh to prove that the issue is not exclusively a London one.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I will give way in a few moments, because I am interested to hear what the hon. Gentleman intends to do later this evening.

Let us take the example of Edinburgh. About 20% of all households live in the private rented sector, and about 18% of housing in the private rented sector is occupied by people who receive some housing benefit. If landlords no longer wish to have tenants on housing benefit because of the lower local housing allowance, they will have ample scope to find other tenants in that city.

Perhaps we should move on from Edinburgh to the east midlands. In the other place, the Bishop of Leicester said:

“The present belief that cutting housing benefit will depress the market and reduce private sector rents might just work if there were more houses to meet the demand. As it is, all the risk is being born by the vulnerable, not the comfortable.”—[Official Report, House of Lords, 1 November 2010; Vol. 721, c. 1446.]

[Simon Hughes]

The right hon. Gentleman and his colleagues are perfectly right to raise this important issue, which is of concern across the House, but will he be his usual self and use careful language? There is no evidence to suggest that the implication of the policy is what his hon. Friend the Member for Rhondda (Chris Bryant) and his hon. Friend the Member for Bolsover (Mr Skinner) have suggested—or, indeed, what the Mayor of London has implied. Yes, there are issues, but the idea that people will be moved forcibly from where they are to somewhere else is neither necessarily the case nor evidentially the case.

[Mr Alexander]

I can assure the hon. Gentleman that I will be characteristically careful in my language. I hope that he will be characteristically careful in aligning his words with his actions. We will be watching carefully this evening to see whether this is another instance of the Liberals either being able to prove that they are willing to match their words with actions or, alas, not.

[Mr Clive Betts (Sheffield South East) (Lab)]

rose—

[Mr Andy Slaughter (Hammersmith) (Lab)]

rose—

[Mr Alexander]

I am going to make a little more progress.

There is a substantive question, and that is: on what evidential basis do the Government assert that rents will fall? In the debate involving the Bishop of Leicester last week in the other place, the Under-Secretary of State for Communities and Local Government, Baroness Hanham, in response to being challenged directly on the evidence that the Government could adduce for a fall in rents as a result of the changes, said that it was a “suggestion”.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I think that the shadow Secretary of State is a measured and reasonable man who will not want to be hysterical but will want to look at the facts. Since November 2008 private rents have fallen by 5% and local housing allowance rents have risen by 3%. LHA is pushing rents up. Does he accept that?

[Mr Alexander]

I have already covered the point that LHA is calculated in relation to rent in the private rented sector. The Minister generously characterises me as a reasonable fellow, but the fact is that this is the second time in as many days that a coalition Minister has accused the Government’s critics of being hysterical. I think that it was the Secretary of State for Communities and Local Government who yesterday told London councils, when perfectly reasonable questions were being asked, to “grow up”. I hope that when the Secretary of State for Work and Pensions speaks in this debate we will have a more measured and reasonable account of why the policies have been decided on and of whether the Government are willing to reflect on the points being raised, and in turn change their mind.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Does my right hon. Friend recall the answer that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) gave less than one month ago, when he indicated that at the last count 48% of local housing allowance recipients received a sum less than the rent that they were due to pay? The idea that half of all local housing allowance recipients are forcing up rents, when they are not actually getting enough housing allowance to pay the rent, is an extraordinary proposition.

[Mr Alexander]

My right hon. Friend’s expertise is well revealed in his question. I have been told to avoid hysteria and be careful and measured, but any of us who recollect the impact of the community charge, when a number of poor people started with a small but rapidly accumulating debt and ended up owing significant arrears to local authorities—which ultimately had to write off those debts—have reason to be very cautious before endorsing these proposals.

[Matthew Hancock]

Will the right hon. Gentleman give way?

[Mr Alexander]

No. I am keen to make a little progress, by looking at the individual measures that the Government are advancing.

When the Secretary of State speaks, will he explain why the Department for Work and Pensions is not producing an impact assessment on the whole package of changes to housing benefit before the House? An assessment has been made of the introduction of the LHA measures during 2011-12, as the Social Security Advisory Commission requires, but that is partial, and of course does not take account of the effect of the consumer prices index cap on LHA rates from 2013.

We would also expect a separate impact assessment of the jobseeker’s allowance measure and social sector size limits to follow once the secondary legislation is published. At this stage, however, it is unclear whether an assessment will be made of the CPI changes. The fact that no comprehensive impact assessment has been completed before the announcement does nothing to reduce the widespread anxiety about this package of reforms. I therefore hope that the Secretary of State will now accept the concerns of his colleagues and undertake to publish an assessment of the whole package.

[Mr David Lammy (Tottenham) (Lab)]

Will my right hon. Friend confirm that it is a statutory duty of the Secretary of State to undertake to give an impact assessment, on the basis that this greatly affects London’s ethnic minorities—and if there is a disproportionate effect, to do something to alleviate it? It is extraordinary that that impact assessment has not yet been published.

[Mr Alexander]

That is an outstanding point made by a tireless fighter for the people of Tottenham. I know that my right hon. Friend has already taken the opportunity to raise this matter directly with the Secretary of State, who I hope will be able to find an opportunity to respond to it.

[Mr Slaughter]

My right hon. Friend is right to analyse and dismantle the individual points made, but there is also a cumulative effect. The cumulative effect on my borough after these changes are introduced, if they are, is that 6% of neighbourhoods—seven out of 111—will be affordable to people in receipt of housing benefit. Mine is by no means the worst affected borough in London: all the central London boroughs are affected. If that is not forcing people out of London and making it impossible for people on low incomes to live in London, I do not know what is.

[Mr Alexander]

My hon. Friend speaks with force and knowledge about the impact of these changes in his own constituency. I hope that when Government Front Benchers reflect on the range of points that have been made about the impact on our communities and constituencies across London, they will take the opportunity to think again.

[Mr Rob Wilson (Reading East) (Con)]

It takes the entire income tax paid by seven average earners in my constituency, and by nine average earners in the right hon. Gentleman’s constituency, to pay one family’s housing benefit bill. Does he think that is fair?

[Mr Alexander]

I will come to the issue of the cap. The hon. Gentleman does a disservice to the importance and seriousness of this debate by simply reading out the questions the Whips have given him. In terms of the cumulative effect, which is what we were talking about, this package involves £1.8 billion-worth of cuts. The measure that he identifies accounts for £65 million of that £1.8 billion. One of the many attributes missing on the Government Benches is a sense of proportion.

Let us look at some of the individual measures. Labour Members do not have any objection in principle to asking younger single adults to live in a shared house or flat—after all, that is what has happened a great deal in the private sector. Yet it is revealing that the Chancellor, in his spending review statement to the House, described this as a chance to limit the ability to live on housing benefit as a lifestyle choice. So why have the Government not produced an impact assessment for these proposals? How can we be reassured that there will be sufficient supply to accommodate additional people and that the specific needs of young people in special circumstances, such as the disabled, will be addressed before this measure is introduced?

On the social sector, even the Government themselves seem to be struggling to understand some of the proposals. The June Budget promised to change housing entitlements for people of working age in the social sector. Can the Secretary of State explain what that means, and whether it will mean forcing people to move out of their council homes when their children turn 18? The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate, who has already contributed to the debate, recently said in an answer to a written question:

“The detailed policy design of this change is still being developed.”—[Official Report, 1 November 2010; Vol. 517, c. 565W.]

In that case, why are the Government so confident that it will save £490 million?

Let us move on to the issue of the CPI. The shadow Chancellor has made it clear that we would support changing the uprating of benefits for a time-limited period, but this is not what the Government propose in relation to housing benefit. Index-linking local housing allowance to the CPI, which does not in any way reflect housing costs, means that the LHA’s value will drop substantially against rising rent levels, and households will increasingly find themselves priced out of all but the poorest-quality accommodation.

The impact is clear if we view the decade from 1997 to 2007 and then project forward. During those 10 years rents increased by 70%, while the CPI—the new inflation index that the Government have chosen—increased by only 20%. On that projection, by 2020 housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10% of the available property. In Manchester it would cover only 5% of available two-bedroom flats, and in parts of Winchester, within 10 to 12 years not a single two-bedroom home would be affordable on housing benefit.

I ask Ministers in all seriousness whether it is coincidental that in evidence to the Select Committee on Work and Pensions last week, Lord Freud suggested that the coalition Government now saw it as

“quite valuable to rewrite the homelessness legislation”

Can the Secretary of State confirm whether that is indeed the case, and can he further assure the House that the Government are not simply seeking to rewrite the rules for those threatened by homelessness as they rewrote the rules for the unemployed in the 1980s and ’90s, parking a generation of people in the unemployment figures?

[Matthew Hancock]

The right hon. Gentleman is being careful not to set out the Labour party’s position on the cap. Does he agree with his leader, the right hon. Member for Doncaster North (Edward Miliband), or does he agree with the shadow Health Secretary, who said nine days ago:

“Those top level benefits do need to be capped”?

[Mr Alexander]

I will answer the hon. Gentleman’s question directly. The former Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh South West (Mr Darling), introduced an option for dealing with extreme cases in the March budget—excluding a proportion of the highest rents from the calculation of the median. I am sure that given his past employment, the hon. Member for West Suffolk (Matthew Hancock) will be aware of that change. As I have previously stated, I have no objection in principle to a cap, if it is introduced on a staged timetable. I commend to him the speech that I gave at the Institute for Public Policy Research as recently as Friday. However, we have to ask whether a national cap is the most appropriate plan, or whether a regional cap would target the very highest claims in all regions.

[Guy Opperman (Hexham) (Con)]

rose—

[Mr Alexander]

I am keen to make a little progress.

I rather fear and suspect that the focus on the cap in some interventions owes more to Andy Coulson than to the Secretary of State. As I have already made clear, despite the fact that it will yield £65 million, it is only one part of a package of more than £1.8 billion-worth of proposed housing benefit changes resulting from the cumulative impact of the June Budget and the spending review.

Perhaps the Secretary of State will be able to answer some specific questions. Why is it necessary to introduce a cap on rent levels from April next year, and the change in the maximum rate to the 30th percentile in October? Is there not a real risk that some households will be displaced twice within a short period, with all the costs and individual traumas that that would entail?

Let us look at the reality of the matter for a moment. Many households will be making their housing arrangements now without full knowledge of what the proposals will mean. They may be arranging for their children to go to a local school, to sign up for child care support or to buy a season ticket for travel to work. It must be right to give individuals enough notice and clarity about what the first tranche of measures will mean for them to be able to ascertain whether they will be able to avail themselves of the discretionary housing payments that the Government claim will be available.

What estimate has the Department made of the impact of the changes on homelessness? Does the Secretary of State accept the figures provided by London Councils, which expects that 82,000 households will be forced from their homes? What estimate has he made of the cost of the changes to local government? Shelter has said that the costs of introducing all the rushed changes will be as much as £120 million. Does he have an alternative figure that he would like to share with the House?

The Mayor of London’s own director of housing has stated that the introduction of the cap in London alone will lead to a 48% rise in homelessness acceptances, which will mean £78 million being spent in London on temporary accommodation. Yet the Budget Red Book estimates savings of only £65 million a year. Given those figures, why would the Government introduce a policy that could end up costing the taxpayer more than it is intended to save?

I now move from the cap, about which people have been so keen to talk in the newspapers for so many days, to the change to the 30th percentile, which is perhaps more deserving of that level of publicity. Liz Phelps of Citizens Advice UK has remarked that the change

“will potentially affect people across the country. It will mean lower rates…It is very crude, short-term thinking. It will cut the DWP budget but it will explode the homelessness budget. We will see a lot more rent arrears, a lot more debt and acute poverty, and then more homelessness.”

[Mr Gordon Marsden (Blackpool South) (Lab)]

I wish to put on record that however important the change is in London and the south-east, it is not simply an issue for that area. Does my right hon. Friend agree that the Department’s own figures, which show that some 5,500 local housing allowance recipients in Blackpool will lose up to £25 a month, are not acceptable in such areas, which have some of the highest rates of deprivation in the country?

[Mr Alexander]

My hon. Friend speaks with authority about not just Blackpool but a number of seaside towns where there are real communities that are suffering and afflicted by deprivation. That is why it is incumbent on the Secretary of State and the Minister, who is winding up this debate, to offer a clear and unequivocal answer to my hon. Friend. Why is it acceptable that people in Blackpool who are in work but low-paid, and who bear no responsibility for the global financial crisis, are now being asked to bear the burden?

[Mr Betts]

That is precisely the issue that affects cities such as Sheffield as well. The Deputy Prime Minister has objected to the word “cleansing” and other Members have objected to the word “clearance”. In a disparate housing market such as Sheffield, the effect will be to disperse families from the affluent part, the Sheffield, Hallam constituency—the Deputy Prime Minister’s constituency—to the rest of the city. That will lead to a more segregated city, and it is that sort of effect that the Government should address.

[Mr Douglas Alexander]

I shall resist the temptation of suggesting that the one person who should be dispatched from Sheffield is the Deputy Prime Minister. I acknowledge the fact that in communities such as Sheffield, and in cities across the whole of Britain, there is deep anxiety and concern about the impact of these changes. That is why the Local Government Group agreed that the move to the 30th percentile is

“ likely to increase homelessness costs,”

since it 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.”

The Government’s impact assessment of the 30th percentile change goes into great detail to demonstrate that at least 30% of the market is available in every area. However, is it not the case that the inevitable consequence of the LHA cap and the CPI cap is that, over time, the proportion of the available market will shrink below 30%?

Finally, let me come to one measure that has absolutely nothing to do with welfare reform and everything to do with a welfare cut. The Government propose that someone who is doing everything that we would ask of a person on benefits—applying for jobs, going to interviews, and even getting on the Secretary of State’s famous bus from Merthyr Tydfil—will still lose 10% of their housing benefit if they cannot find a job within a year.

Let me unpick the statistics in two communities. Wolverhampton has six claimants for every job. If they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10% of their benefit. To take Norfolk, a very different community from Wolverhampton, the figures say that there are 5,000 jobs, mainly casual, and 15,600 claimants—and that under these rules, 1,254 families would be sanctioned tomorrow. How can such an approach be fair when there are five claimants chasing every vacancy in the British labour market?

On Sunday, the Secretary of State’s colleague, the Chief Secretary to the Treasury, stated:

“Sanctions in the welfare system only apply when people don’t take advantage of the help and support that is on offer.”

Such a statement is irreconcilable with the policy that the Treasury has now imposed on the Department for Work and Pensions. I have to say to the Secretary of State, for whom I feel great respect, that he is losing even old and dear friends as he tries to defend the measures that he has signed his Department up to. Indeed, when Bob Holman, the man who brought the right hon. Gentleman to Easterhouse in 2002, was asked why the Secretary of State had changed track, he said:

“It is hard to say. I think he has come very much under the influence of George Osborne, who is very much more aggressive, who is much more anti-working class and I think that Iain probably is looking at it—if I am to get my big reform through, the universal credit system, I’ve got to go along some way with the attitude of Osborne.”

Indeed, how does the right hon. Gentleman want the unemployed to answer the question originally asked by Norman Tebbit? The truth is that homes are cheaper where there are fewer jobs. Should the jobless from Middlesbrough move to London where there may be jobs but fewer homes, or should the homeless from London move to Middlesbrough where there are homes but fewer jobs? I hope that the Secretary of State will take the opportunity to answer that question in the course of his remarks.

The right hon. Gentleman once styled himself as “the quiet man”. I simply cannot believe why, given all the work he has done over recent years, he stayed silent in his conversations with the Chancellor when the latter told him that this was a progressive move to help people into work. It is the very opposite of a progressive move. The party that once said that unemployment was a price worth paying now wants to fine the unemployed if they cannot find a job. We were guaranteeing work for the long-term unemployed, but the Conservative party seems to be threatening them with homelessness.

[Steve Webb]

My eyes may deceive me, but I sense that the shadow Secretary of State is on the final page of his speech. He must have dropped a very long section in which he was to set out Labour’s alternative. Perhaps he will do that now.

[Mr Alexander]

It might help the hon. Gentleman if he recognised that as he has chosen to align himself with the Conservative party in government, it is now his responsibility to answer the questions. I know that, as a former professor of social policy at the university of Bath, he is a man of great erudition and deep thinking. May I commend to him the speech I made on Friday in which I went through each of the measures and set out our thinking, as I have done on a range of them today?

We disagree fundamentally about the balance between the cuts that have to be borne by the poor and the vulnerable relative to the contribution that should be made by the banks. So we disagree about the deficit. We also disagree with measures such as the 10% cut in housing benefit relative to jobseeker’s allowance—[Interruption.] What do we support? In the March Budget we made it clear that we wanted to take the top rental—forgive me, Mr Speaker. I should not get into a debate with someone who is sitting down. I shall address you, Mr Speaker. We have made it clear that we could support a phased approach to caps, and that we want to look into regional caps. We have made it clear that we are willing to consider the proposal—once we receive an impact assessment—on the deductions available for non-dependent individuals living in households that receive housing benefit. We have also made it clear that we regard the 10% cut in housing benefit for those who have been unemployed for a year as completely unacceptable—and in his previous persona, I fear, the Minister would have found them unacceptable as well.

I need to draw my remarks to a conclusion, as was kindly anticipated by the Minister. Let us be honest: this package of rushed, ill-considered and potentially devastating cuts has raised concerns beyond the debates in this Chamber in communities across the country. In the 1980s, the previous Conservative Government showed that higher homelessness, like longer dole queues, ends up costing the taxpayer more, not less. These ill-thought-through proposals have already led a number of MPs of conscience and concern, on both sides of the House, to register their disquiet. I do not claim a monopoly of concern about the proposals for any one party. Perhaps that is why the Government have run scared of putting an amendment to the House today endorsing explicitly each of the present proposals on housing benefit that they continue to advocate. Fortunately, however, there is still time for the Government to think again about these proposals. I urge Members on both sides of the House to take the opportunity this evening to reflect on these changes, and I commend the motion to the House.

16:19

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I rise to oppose for a number of reasons the motion moved by the Opposition. I will deal with it quickly, and then move on to the rest of the rationale behind the speech by the right hon. Member for Paisley and Renfrewshire South (Mr Alexander).

In the past two weeks—particularly, in the past two or three days—the right hon. Gentleman has started trying to reset the tone in the motion. None the less, the facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. There is no policy in this motion at all. Despite the major deficit that we have inherited, and despite the fact that housing benefit is running out of control, he did not say a thing about what he is planning to do. Opposition comes with responsibilities, and one of them is to have some policies before criticising, but the Labour party has none.

The right hon. Gentleman is basically a reasonable man, and I look forward to dealing with him—[Interruption.] That is very kind. Thank you. So we are all reasonable across the Dispatch Box. But what is not reasonable is what has gone on over the past two weeks. I am pleased that in the past few days he has suddenly entered the fray, because he was suspiciously silent when a lot of his colleagues were running up and down the place trying to frighten the public about the changes. In many senses that was quite disreputable. Two weeks ago, the hon. Member for Rhondda (Chris Bryant)—the right hon. Gentleman’s hon. Friend—accused us of deliberately trying to “socially cleanse” London, and that is in Hansard. Furthermore, in the other place, one of the right hon. Gentleman’s great friends, Baroness Hollis, talked of

“Weeping children, desperate mothers, defeated fathers …carnage”.—[Official Report, House of Lords, 4 November 2010; Vol. 721, c. 1743.]

This has gone too far. I should also say that, encouraged by a nod and a wink from his Front-Bench colleagues, one of their great supporters in one of the national papers—a columnist—talked about our “final solution” for the poor. What they have actually managed to do—

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way in a minute, but not right now, because I want the Opposition to chew on this for a little. The way in which they have behaved over the past two weeks has been atrocious and outrageous. They knowingly used terminology used to describe events such as the holocaust, making shrill allegations of bitter intent that they knew would frighten rather than inform. I say “rather than inform”, because until Saturday, when the right hon. Member for Paisley and Renfrewshire South gave his interview to The Guardian, the Opposition’s manic rabble-rousing had failed to tell the public a rather interesting point: that had Labour Members been re-elected, they knew that they would have had to take strong measures. I will read a few quotations that should explain to his Back-Bench colleagues just exactly what Labour was planning to do.

The first quotation that I want to give them is from somebody whom I hope they will identify: their right hon. Friend the Leader of the Opposition. He said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

In the run-up to the election, the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that Labour’s LHA—he was describing his own party’s reform—had discouraged employment and was unfair. He made it clear that the policy was set for a major change and that Labour was to blame.

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

Before I do, I want to finish this one off. My predecessor, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), went even further before the previous election, hinting strongly at a much bigger change. She said that

“it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford.”

I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour’s flagship LHA reform was in an expensive mess, she went on:

“We will publish further plans…to make the system fairer, and to make sure housing benefit encourages people into jobs.”

Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public—the electorate—what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.

[Mr Douglas Alexander]

Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?

[Mr Duncan Smith]

I agree with Boris Johnson. What he said is that there will be no “Kosovo-style cleansing” of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.

[Emily Thornberry]

Will the right hon. Gentleman help us now? Which Front Bencher has been scaring my constituents by saying that the policy will be worse than the highland clearances? Which shameful Front Bencher has been telling the press that?

[Mr Duncan Smith]

I think that that is the case on the Opposition side. The reality is that they have been scaring the public, and they know it. I detect just a little dog whistle blowing from those on the Labour Benches, freezing and frightening everybody out there in the socially rented sector.

[Toby Perkins (Chesterfield) (Lab)]

rose—

[Mr Duncan Smith]

I want to deal with some of the allegations. Opposition Members made the allegations, so let us get the record straight. The first was that London will somehow end up like Paris—socially cleansed so that people live only on the outer circle.

[Mr Lammy]

It is true.

[Mr Duncan Smith]

Oh, it is true? Okay. Let me remind the House about one simple point. The proposed changes to the local housing allowance concern the private rented sector. London has nearly 800,000 social homes—by the way, the Labour Government built far too few in their time—and the changes do not affect them. London has social housing embedded in its heart, and that will not change. So Labour Members must have known that they were scaring people with a complete pack of lies and nonsense. [Interruption.]

[Mr Speaker]

Order. I apologise to the Secretary of State. I accept that there are strong views on this matter, and that the atmosphere is highly charged, but there are many subscribers to this debate, and for the benefit of Back-Bench Members, the Chair would like to accommodate as many as possible. The more noise there is, the greater the delay, and the more difficult it will be to accommodate them. Perhaps we can calm down a little.

[Mr Duncan Smith]

I am grateful to you, Mr Speaker. In the calmer mood, I will give way to the hon. Member for Hampstead and Kilburn (Glenda Jackson).

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Is it not also part of the right hon. Gentleman’s housing policy to ensure that rents in the social housing sector will rise to 90% of the median, and that the Government are considering abolishing secure tenancies?

[Mr Duncan Smith]

The answer is no for existing tenants. Our policy will apply to new tenants and new build, so the hon. Lady should check her facts.

Let us not forget that the private rental market is dynamic. That is the point that the Opposition fail to mention.

[Angie Bray (Ealing Central and Acton) (Con)]

Will my right hon. Friend give way?

[Mr Duncan Smith]

I will give way in a moment.

Around 40% of private rental tenancies are less than a year old, and 70% are less than three years old. What effectively happens in the marketplace is that there is a huge amount of movement. Another nonsense that Opposition Members have peddled over the past two weeks is that the sector is made up of a static group of people who have mostly lived in the same place all their lives and that we are about to uproot people who have a reasonable and rational reason to live where they are. In the past year, more than 100,000 people in the sector moved naturally. The idea that we will go in and raid all those homes is utter nonsense and scaremongering.

[Mr Slaughter]

The report referred to earlier says that independent research shows that 134,000 households will be evicted or forced to move when the cuts come in next year, and those are just the first set of cuts. It is the Government’s policy to get rid of new social tenancies and to raise rents for new tenants to 80%. Over a period, the exact effect of that combination of measures will mean that no one on a low income can live in the inner city. Will the right hon. Gentleman have the courage to admit that that is his Government’s policy?

[Mr Duncan Smith]

The impact assessment does not say that, and it is typical of the Opposition to take a figure for those who will be affected and assume automatically that they will be driven out of their homes. That is shameful.

[Angie Bray]

The scaremongering is a disgrace, and I am sure that many of us have had scared constituents coming to us having been worried unnecessarily by stories that they have heard from Labour Members. I have been looking online at some of the properties on offer in the private rented sector in Ealing and Central Acton. There are some remarkably good offers around that are well within the proposed caps—for example, a four-bedroom house with a garden at under £400 a week, and a flat for about £250 a week with access to a swimming pool. The situation is really not as dire as the Opposition are suggesting.

[Mr Duncan Smith]

My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say “have to move” because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.

[Mr Clive Betts (Sheffield South East) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

[Mr Douglas Alexander]

rose—

[Mr Duncan Smith]

I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?

[Mr Alexander]

I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his fellow Minister Lord Freud said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government’s position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?

[Mr Duncan Smith]

We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better—he has an ex-housing Minister sitting next to him—and that they know full well that those definitions of “homeless” are simply not true. He should have disowned them early on, before we started this debate.

[Simon Hughes]

The Secretary of State is rightly trying to lower the temperature and to ensure that we deal in facts and not in hyperbole. Will he take this opportunity to deal with one other myth that has become common? Will he confirm that, if anyone in the private rented sector has to move because their property has become too expensive, it is not the Government’s policy that they should move to a far-off community with which they have no links, and that the intention will always be that they should ideally stay in the community or council area where they come from and where they have lived?

[Mr Duncan Smith]

That is exactly what we want and what we intend. That is what we believe, for the most part, will actually happen—and in smaller numbers than people think. In some cases, there will be short moves even within boroughs.

I was asked about impact assessments, and we are going to publish them. We are bound to do so by the legislation. I am not trying to hide from that. We published an impact assessment after the Budget, and we are going to publish them when the legislation is due. I have already said that we will do that.

[Sajid Javid (Bromsgrove) (Con)]

My right hon. Friend was right to point out that I was shocked to learn in the Select Committee that I had been homeless as a child. I believe, however, that the question is not so much one of the definition of homelessness as one of whether people living on housing benefit should be forced to make the same choices that other low-income working families are forced to make. Those low-income working families typically pay rent to the 30th percentile and their children are forced to share bedrooms, as they would be in any ordinary family. It should be no different for anyone on housing benefit.

[Mr Duncan Smith]

My hon. Friend’s exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.

[Mr Douglas Alexander]

The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

[Mr Duncan Smith]

The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute—here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I give way to the hon. Member for Colchester (Bob Russell).

[Bob Russell]

Will my right hon. Friend clarify a point? Is he saying that rents are too high in the private sector? If that is the case—I am sure that is what he said—should there not be, in the interests of fairness, other measures to deal with landlords whose rents are too high?

[Mr Duncan Smith]

Let me deal with that question. My Department pays for 40% of all rental housing in Britain—we pay 40% of the total bills—and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase—it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA to rocket to provide landlords with excess amounts of money for providing housing that would have cost less. How do we know that? [Interruption.] I am going to answer this really important question.

We know that for two good reasons. First, if we compare those who remained on what was there before—it did not change for them because it was new people who came on to LHA—we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made. That is the first thing. [Interruption.] Hold on a second. That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.

The second point is that there are many things we can do. We now know that, according to the Office for National Statistics, the private marketplace in housing—Labour Members are completely wrong about this—fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.

[Andrea Leadsom (South Northamptonshire) (Con)]

I have an excellent researcher who earns £22,000 a year. Just before I came to attend this debate, he pointed out that he has to commute into London because he cannot afford a room in central London. He remarked that his best chance of getting a flat in central London was to resign from his job and make himself homeless.

[Several hon. Members]

rose—

[Mr Duncan Smith]

May I answer my hon. Friend’s point first before I give way? My hon. Friend’s real point is that there is no fairness in this particular system when people who have to make decisions about their housing have to commute distances to get to work. That is the reality for them. The idea that people can live exactly where there is work is simply not the case. That is the choice that people have to make.

[Several hon. Members]

rose—

[Mr Duncan Smith]

Many of the colleagues of the right hon. Member for Paisley and Renfrewshire South want me to give way to them. Does he really want to take their place? Okay—

[Mr Douglas Alexander]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Members should not be constantly standing on their feet. The Secretary of State is indicating to whom he intends to give way. I would be grateful if Members resumed their seats.

[Mr Alexander]

I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker’s allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.

[Mr Duncan Smith]

We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures—

[Mr Alexander]

rose—

[Mr Duncan Smith]

I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.

[Mr Marsden]

The right hon. Gentleman is setting the cap and justifying the 10% cut for the long-term unemployed on the basis that people will be moved from welfare into work. Does he not realise that part of that process involves retraining and reskilling? If he does realise that, why has there been so little discussion between him and Ministers from the Department for Business, Innovation and Skills?

[Mr Duncan Smith]

I do not quite understand why the hon. Gentleman asks that question. I have been talking about the issue endlessly to Ministers from the Department for Business, Innovation and Skills. [Interruption.] The hon. Gentleman can take my word for it that I have spent a great deal of time talking to them, but if he would like to attend the next meeting, I should be more than happy to invite him.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way, but I want to make some progress first.

The fact is that we have heard a lot of this nonsense. We have put aside a large amount of money—some £140 million, and we have been keeping the position under review—so that we can deal with the hardest cases when we believe that it is necessary for anyone to be affected or moved. The Department for Communities and Local Government is assisting us with that.

Among the Opposition’s other charges was the charge that our changes were somehow not fair. The maximum rent following a cap—and the Opposition still have not said whether they agree with it—is £400, the weekly equivalent of more than £20,000 a year. Let me remind the House what someone who was out there earning would have to earn to pay that £20,000. That person would have to earn £80,000. The Government left us an LHA rate of £104,000 a year. Someone would have to earn £250,000 a year to pay that in rent. [Interruption.] I fully accept that we are dealing with the top end of the cases, who constitute by no means the largest number. The point is, however, that the previous Government were so slack with the system that they allowed abuses and excesses. Before the last election, even people on their own side were saying that they would have to change it. That is the reality.

[Toby Perkins]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will, but then I must make some more progress.

[Toby Perkins]

I think that the Secretary of State is focusing excessively on the cap. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) has already made it clear that that is not the main focus of our objections to the Government’s proposals. The Secretary of State dealt with myths earlier. Will he now deal with the myth that housing benefit recipients are out of work? Many of them are working, but they are low-paid. More than 350 of them in Chesterfield will be badly affected, when they are trying to work their way towards a better life. Why are they the people whom the Secretary of State is attacking with his policy?

[Mr Duncan Smith]

There are people in work who receive housing benefit, but the worst aspect of the changes with which the previous Government left us is that many of them are now trapped in short working hours. They dare not work for more hours, because they would lose too much of their housing benefit and would lose their homes as a consequence. Setting housing benefit at the levels at which the previous Government set it was no kindness to people who really do want to get on and work longer hours, because they are faced with the invidious choice of whether to move. That is one of the reasons more than 100,000 people moved in the rental market last year. Many people have to move to find a house that is suitable so that they can go and find better work. That is the reality. The hon. Gentleman’s party left us with that situation, and it is his party that he should now blame for the mess and chaos.

[Ms Karen Buck (Westminster North) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I must make a bit of progress. I will give way in a second.

Although that was not the largest number, the fact is that the top 5,000 of those cases of housing benefit cost the Exchequer £100 million a year. Unless Labour Members think that £100 million a year is not a lot of money, I should like to know why the shadow Secretary of State does not say that he agrees with the capping system that we want to introduce. Will he perhaps tell me whether he agrees with the capping system? No, he will not. Yet again we have heard no policy from the Opposition, but the fact is that we inherited a chaotic housing system.

[Mr Alexander]

I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?

[Mr Duncan Smith]

The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?

[Mr Alexander]

Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.

[Mr Duncan Smith]

At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.

[Ms Buck]

On that point, will the right hon. Gentleman confirm that the Mayor of London’s housing adviser has stated that, in London alone, the cost of temporary accommodation for homeless households, arising from the impact of the caps, could exceed the total savings by £13 million in one region alone? Will he also confirm that the figure for working households on local housing allowance is almost half the total case load, including those on JSA with the 90% annual turnover that he has just confirmed?

[Mr Duncan Smith]

The reality is that the adviser said that before he even knew how much we were using for the discretionary allowance. [Interruption.] Hold on a second. He said “could”. The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, no; I am already answering the question. I do not agree and we do not agree with the statement that the adviser made. I have explained the issue to him personally, and he has accepted that.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, I am not going to give way. I also want to say to the hon. Lady that she includes in her figures those who are in work with those on jobseeker’s allowance. She must not confuse two different positions, yet again trying to merge figures that are not right.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I am going to make progress. Labour Members continue to try to accelerate the figures to the worst level and then make ludicrous assumptions. That is what is going on. The fact is that we inherited 5 million people on out-of-work benefits from the Labour Government—the hon. Lady was in the Government—which they did nothing about at all. Two million people of working age are claiming incapacity benefit, of whom 900,000 have been claiming it for an entire decade.

The figures that lie behind this issue are astonishing. Today we spend £1 in £3 on British welfare, which that Government left us, yet youth unemployment is higher, inequality is greater and there are 800,000 more working-age adults in poverty than in 1998-99. That is the great record of the last Government.

[Andrew Griffiths (Burton) (Con)]

rose—

[Mr Duncan Smith]

The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to the right hon. Member for Don Valley (Caroline Flint), who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.

If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair—

[Mr Alexander]

rose—

[Mr Duncan Smith]

No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, “We think it’s fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work.”

[Andrew Griffiths]

I thank the Secretary of State for giving way. He will know that one of the myths put about by the Opposition was that councils in London were already booking bed and breakfasts across the city to cope with the consequences of this policy. I draw the Secretary of State’s attention to a website called FullFact.org, which has made some freedom of information requests to local authorities in London. I shall pick just a few. In Kensington and Chelsea, no such bookings have been made; in Wandsworth, no bookings have been made in bed and breakfasts; Lewisham council confirms that it has not made any bookings—

[Madam Deputy Speaker]

Order. That was supposed to be an intervention, not an opportunity to read statistics on to the record. I am sure the Secretary of State is perfectly capable of doing that himself.

[Mr Duncan Smith]

My hon. Friend the Member for Burton (Andrew Griffiths) is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, “This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast”—another scare story put about by Labour. It is absurd.

[Mr Alexander]

rose—

[Mr Duncan Smith]

If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.

[Mr Alexander]

I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?

[Mr Duncan Smith]

There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended—[Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.

We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure—which they used to argue was too low—achieved by the previous Conservative Government, which was 39,000 a year.

The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.

[Emily Thornberry]

rose—

[Mr Betts]

rose—

[Mr Raynsford]

rose—

[Mr Duncan Smith]

I will give way in a minute.

Nine tenths of the rise in housing benefit in the past 10 years is down to increased rents. To put that into context, if that increased spend in rents going to private landlords had instead been used to invest in social housing, we would have had 80,000 social homes being built per year. I therefore wonder who Labour Members think has squandered the money they had flowing into the Exchequer. Political short-termism was the reason for that.

[Mr Raynsford]

rose—

[Mr Duncan Smith]

Okay, I will give way to the right hon. Gentleman as he was one of those responsible.

[Mr Raynsford]

Will the Secretary of State please now put the record straight and say that the increase in housing benefit attributable to rent increase covers both the social and the private sectors, and that the increase in housing association rents contributed to building the homes that were built? Will he now put the record straight and say it is completely wrong to imply that this is entirely going to private landlords when it is not?

[Mr Duncan Smith]

When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.

We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.

[Mr Betts]

rose—

[Mr Duncan Smith]

Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.

Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year—Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.

Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords’ charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.

I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure—I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I have said that I have given way enough, so I am going to complete this. For where problems do arise, we have tripled the discretionary housing payment to £140 million. We will keep that under review; I am prepared, where necessary, even to add to that. We will not shy away from the duty of care to provide housing for those who cannot house themselves. A safety net will not just remain; it will be improved for the most vulnerable. That will be done through an increase in discretionary housing payments and an additional bedroom for non-resident carers—the previous Government should have provided that, but never did. If we are prepared to pay, as we are, some £20,000, there is no reason anyone should be left without a home. Our choices are tough but right, and we are weeks from regulations to fix the broken system.

We are in touching distance of changing things, including through producing, later this week, a welfare Bill that will put all this into context and that could change the whole prospect for the next generation as we improve work incentives, secure fairness, and protect the vulnerable. We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.

May I remind the House of something that the Opposition did when they were in government? They made changes when they sorted out the pathway back in 2005. At that time, they made an assumption that those who were renting could cope with an £18 increase in their rent, which they duly did. It is not as if it was we who were hammering people in difficulty; the Labour Government were already doing it and then they took their eye off the ball. That is why, over the last week, we have witnessed Labour’s confusion. Some Labour Members, although not the right hon. Member for Paisley and Renfrewshire South, to be fair to him, but a number of his colleagues—he knows this, and I am looking him in the eye—started to blow very faintly and then louder on the dog whistle, just trying to scare people outside, winding things up until they became ludicrous and he finally had to try to draw the tone back down to a reasonable level. I believe that the right hon. Gentleman is a reasonable man and that what we need is constructive dialogue—I am ready for that. He should say to his colleagues that if they want to show what it is really like to be in opposition preparing for government, they need to put the dog whistle away, change what they are doing and behave as though they have a credible plan.

[Several hon. Members]

rose—

[Madam Deputy Speaker]

Order. I remind hon. Members that Mr Speaker has imposed an eight-minute time limit on all speeches. There are 36 or 37 Members who wish to participate this afternoon and the time limit starts now.

17:05

[Tony Lloyd (Manchester Central) (Lab)]

The Secretary of State began by making great play of the fact that there had been what he described as “scaremongering”. However, many of my constituents are very scared about his Government’s proposals. If they have taken the trouble to listen to his speech today, I regret to say that he will have done nothing to allay their concerns. Of those in receipt of housing benefit in my city of Manchester—70,000-plus—10,000 will be affected by the proposals. Some will be affected significantly, as I hope to make clear in a moment. That is the reality. People are scared because they see either a significant loss of income or the reality that they will be forced to move home. That is what the proposals will do.

I am delighted that the hon. Member for Bermondsey and Old Southwark (Simon Hughes) is in the Chamber. He was quoted in an election leaflet for his party in my constituency recently and it seemed to run almost totally counter to his question to the Secretary of State. I will be happy to give way to him on this point, but the words that were put into his mouth in that election leaflet were that it was “Labour lies” that people would be forced to move from their homes—Labour lies told in order to win an election. A few moments ago, he asked the Secretary of State to confirm that were people forced to move, they would be in a position to stay in the same neighbourhood. He clearly accepts that people will be forced to move under these proposals, and that, of course, is not a Labour lie but something that the Government are proposing.

[Simon Hughes]

For the avoidance of doubt, I am very clear that if people who are in the private sector have to move they should not be forced to move away from their communities, because community cohesion is very important, and that the proposal to knock 10% off people’s benefit if they have been out of work for a year and have not been able to get a job is not something I support.

[Tony Lloyd]

That is very helpful, but I hope that if the hon. Gentleman speaks later he will apologise to my constituents, at least for the words that were put into his mouth in a Lib Dem election leaflet that went out during the by-election that was won very successfully by the Labour party last week in Manchester. It was quite clear that he was quoted as saying that people would not be forced to move, but it is now clear that both he and I accept that the Government’s proposals will force people to give up their homes, and that is unacceptable and atrocious.

[Simon Hughes]

I do not think that we can anticipate exactly what will happen, which is why speculating and making people worried is unfair. We have to go on the figures that the Government have produced in their impact assessment and I hope that the local authorities and the Government, as I have said to the Secretary of State, will agree the figures. If we get common facts, we will reduce alarm considerably.

[Tony Lloyd]

I think that that was nearly the apology I sought, although it was not quite the apology that my constituents were entitled to hear from the hon. Gentleman, who supports this coalition. It was not quite the apology needed by those who will lose significant sums of money and will be forced to absorb that loss by not being able to spend their money on other things.

[Steve Webb]

I think the hon. Gentleman’s own manifesto pledged this precise policy.

[Tony Lloyd]

I am talking about the Minister’s policy. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) made it clear what a Labour Government would have done. That was clear also from the statements of the then Secretary of State, and it was very different from the current Government’s proposals. The proposed income loss is not something that I recognise from any Labour manifesto.

The income loss will be significant for those in one, two or three-bedroom houses. In my constituency, for example, 8,000 people face an income loss of £12 to £14 a week. That sum may be trivial to a Minister or Secretary of State, but £12 to £14 is a significant part of the disposable income of somebody on housing benefit or on benefits more generally. The House ought not to countenance taking away that amount of money. It penalises the most vulnerable people in our society to prop up the Government’s policies. That is not scaremongering; it is a disgrace. Ministers and their supporters should recognise that.

There is another aspect of the proposals that we should not countenance. The Secretary of State made a long and complicated speech, which gave no comfort whatever to those in my constituency who will lose money. It gave no comfort to those who will potentially lose their homes. It gave no comfort because the right hon. Gentleman is far more concerned with the polemic of his speech than with the reality of human beings who will lose out in respect of both housing and their finances.

I hope that the right hon. Gentleman and others on the Government Benches will think again, particularly about some of the most difficult aspects of their proposals. There are parts of them which, with proper care and attention, we could all begin to agree with. The problem, at least in part, is the ridiculous speed of their implementation and the lack of acceptance of the impact that they will have. Were the Secretary of State to stand at the Dispatch Box and say that the Government are prepared to look again at the speed of their implementation, we might have a basis for real debate.

The worry among my constituents is that the proposals are driven, first, by concerns of budgetary restraint—the battle that the Secretary of State fought with the Chancellor and lost—and secondly, although this is a claim that I do not make against the Secretary of State, by the apparent desire among some of his Back Benchers to penalise the poorest and most vulnerable in our society. That rhetoric has come through in some of the debate.

[Mr Aidan Burley (Cannock Chase) (Con)]

rose—

[Tony Lloyd]

The hon. Gentleman will forgive me, I have a limited amount of time and will lose some if I give way.

The speed of the changes raises real issues. Even if I believed that rents would adjust as the Secretary of State believes, they would not do so at the lightning speed required by his policies. People will not suddenly find their landlords voluntarily reducing their rents by £12, £13 or £14 a week. That will not happen for a number of reasons.

[Andrew Bingham (High Peak) (Con)]

Will the hon. Gentleman give way?

[Tony Lloyd]

No, I am sorry.

The first of those reasons is that there is no evidence that rents adjust at that speed. The second and more important reason is that in a city such as Manchester—a complicated city which is quite different from the London housing market, with different types of housing tenure and different types of housing cheek by jowl—the housing benefit system is not the primary driver of rental levels. Those are driven by other factors. If that thesis is right, the Secretary of State’s proposals are doomed not to succeed. If they do not succeed, rent levels will not adjust downwards and people will inevitably lose money. Even if rent levels were to adjust, they would not do that overnight. That is why, partly as a plea and partly as a demand on behalf of my constituents, I hope that the Secretary of State will think again about the speed with which the changes are implemented.

The Secretary of State’s argument about jobseeker’s allowance was rather confusing. He seemed to imply that no one would really lose 10% of JSA because nobody would find themselves in that position. Even in the relatively high employment times under the Labour Government, my constituency still had serious pockets of unemployment because it is one of those constituencies that are the repository of the longer-term unemployed. In those circumstances, it is fanciful to suggest that no one on JSA will be unemployed for more than 12 months and fanciful to say that nobody will be hit by that 10% penalty.

Ten per cent. of JSA is a huge amount of money for somebody in that situation to lose. I hope that the Secretary of State will look again at this issue, because, as my right hon. Friend the shadow Secretary of State has said on many occasions, those whom we regard as blameless—those who have conformed to everything that the Government and society have asked of them, sought work and gone out of their way to upskill and everything else—simply should not be penalised in the way that the Government propose. I hope that the Secretary of State, almost mirroring what he said—if he believes it—will say that if all the other changes that he proposes to benefits are to be effective, he will withdraw the 10% cut. To follow his direction of travel, it is an unnecessary 10% cut, and it simply should not exist.

People in my constituency who are in work, looking for work or disabled are going to lose out under the proposals. When Manchester city council considered the measures, it discovered that the people most likely to be hurt were single parents and those seeking work. They are simply not the people whom we should penalise. If Government Members’ ambition is to penalise, they should support their Government and these proposals. If their real intention is to reform the system, they should say to their Secretary of State, “Please think again.”

17:16

[Mr Oliver Heald (North East Hertfordshire) (Con)]

After the election the Government found themselves in a situation whereby it was necessary to curb costs in a number of areas, and housing benefit was one of them. However, it is important to do so fairly and to bear in mind the policy’s overall effect. We cannot get away from the fact that housing benefit rents went up faster than the private rental market from 2000 right the way through to 2007. That is the evidence that was given to the Select Committee on Work and Pensions. In 2008, the system changed, the local housing allowance came in and the situation became worse.

The National Housing Federation, in its evidence to the Committee, said that

“private sector landlords increased rents with the introduction of Local Housing Allowances… the average housing benefit reward for Local Housing Allowance cases is over £9 per week more than for people still on the previous scheme… the Local Authority Omnibus Survey…finds that Housing Benefit managers say that some landlords are using the transparency of the arrangements to raise rents to the Local Housing Allowance level.”

The British Property Federation said that

“rents in some areas have adjusted towards the local housing allowance rates and in markets where there are significant claimants this is seen as the ‘going rate’.”

Paddington citizens advice bureau in central London said that

“we understand the need to place a cap on rents paid by the tax payer, especially in central London where the LHA was spiralling out of control”.

I shall not cite any more evidence, but I remember that during the Committee’s previous inquiry into housing allowance earlier this year and before the general election, Blackpool, to which the hon. Member for Blackpool South (Mr Marsden) referred, was specifically mentioned, because the broad rental market area there included Fylde. As a result, all the rents in central Blackpool went up far faster and far higher than was expected, so it is not surprising that the change under discussion, which I hope will rectify the situation, will have an impact in Blackpool.

[Karen Bradley (Staffordshire Moorlands) (Con)]

In evidence to the Committee, the Royal Institution of Chartered Surveyors told us that the average returns for private landlords in the housing benefit market were 4 to 5%. Does my hon. Friend agree that that seems to be a significant return for any private landlord?

[Mr Heald]

My hon. Friend, who makes an important contribution to the Committee, makes an important point. If we look at the effect of the policy, we find no doubt that landlords will reduce rents, because all the evidence to the Committee suggests that they will.

There are arguments about how much effect the changes will have, but the British Property Federation and the Residential Landlords Association have said that 29% of landlords would reduce rents voluntarily. The Cambridge university research for Shelter shows that 29% of tenants will not be able to negotiate a rent reduction or make up the difference. It concludes that of the remaining 29%, 50% of the group will be in difficulties because landlords will not accept the lower rents paid and will not forbear. It says that some £42 million to £82 million a year will be needed to help those who do not get that forbearance from the landlord, are unable to negotiate a change, and so on.

Let us bear in mind, however, that the Government have set aside very substantial resources for exactly this problem. One might say that the mid-point is around £60 million, which is the figure that the Government are moving towards, although the Secretary of State said, very reasonably, that he will keep it under review and see what exact figure is needed. It is completely wrong to suggest that the Government have gone into this without realising that they must match hardship if it is found.

[Mr McCann]

If this is about a recalibration of rent, why are the Government using the poorest and most vulnerable in society as a battering ram to get there?

[Mr Heald]

To be fair, the hon. Gentleman should think occasionally about the hard-pressed taxpayer. Working people on the lowest incomes pay lower rents than housing benefit claimants. Surely the principle should be that we all want to help someone worse off than ourselves, but that the average taxpayer should not be expected to put a person into a better position than he himself would ever be able to afford.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Would not a better approach be to follow the regulatory reforms in the Republic of Ireland and 40 other countries, and in New York city, where rents are capped for benefit recipients and for normal working people? That would enable the Government to control their benefits bill as well as making rents affordable for normal working people.

[Mr Heald]

As somebody who believes in markets, I think that what really needs to happen is that we have enough social housing. As the Secretary of State said, it is woeful that the previous Government, who were supposed to want to help people in that situation, did so little over all those years. I am very hopeful that the proposals will improve matters.

[Ms Buck]

Will the hon. Gentleman give way?

[Mr Heald]

I am running short of time, I am afraid.

Let me turn to disincentives to work. The fact is that the Government’s welfare programme is all about trying to get people back to work. It is a big ambition to do something about the 3 million households where nobody works, even though there are people of working age.

[Graham Jones (Hyndburn) (Lab)]

rose—

[Ms Buck]

rose—

[Mr Heald]

I have got only a few minutes left, and I have already given way three or four times.

It is a disincentive for someone to work if they know that they will never be able to earn enough to pay their rent. That is a ludicrous situation in which to have trapped people. We need to tackle that problem, and there is no other truly sensible way of doing so.

[Ms Buck]

Just before this myth takes hold too completely, will the hon. Gentleman at least concede that just under half the recipients of local housing allowance are either in work or on jobseeker’s allowance? The Secretary of State confirmed that 90% of JSA claimants returned to work within a year. Constantly repeating the idea that housing benefit claimants are not in work is misleading the House, frankly.

[Mr Heald]

But the hon. Lady must accept that the Secretary of State has a grand ambition, which is to get people into work. One of the ways of doing that is the universal credit, which tackles the very problem that she is talking about. We should be supporting the Secretary of State, as a Parliament, for finally tackling some of these dreadful issues that have pulled our country back for so many years. The hon. Lady really must not go around telling people that 50% of such people are in work or on JSA, because 13% are in work, not 50%. Someone who enters work on low pay loses housing benefit very soon afterwards. Addressing that issue is one of the great improvements that universal credit will bring. I support the policy, and I believe that the independent evidence supports it.

17:24

[Mr William Bain (Glasgow North East) (Lab)]

It is a pleasure to follow the hon. Member for North East Hertfordshire (Mr Heald) and the other right hon. and hon. Members who have contributed so far.

The Secretary of State likened his welfare reform programme to that of William Beveridge in the 1940s. I welcome his ambition, but I suspect that Beveridge would have major criticisms of the unnecessary hardship that the Government’s housing benefit proposals will cause. It is a matter of great regret that no member of Beveridge’s party has yet risen to their feet to criticise these unjust proposals. Beveridge supported a contribution-based welfare state and the Government doing more to stimulate job creation. That would represent the foundations of genuine welfare reform, and I hope that the Government will reconsider their plans, which will unduly punish those who have the least. They cannot in any shape or form be described as progressive.

There are three key issues of concern to my constituents: the proposals to slash housing benefit payments by 10% for those who find themselves on jobseeker’s allowance for 12 months or more; the restriction of local housing allowance payments to rent for properties in the lowest 30% of rental levels, rather than the median level; and the plans for a crude national cap on housing benefit payments.

The 10% cut hides the inconvenient truth for the Government that affected tenants will have to make up the difference from their jobseeker’s allowance. A single, childless person will therefore experience a drop of almost 30% in their disposable income, as the Scottish Federation of Housing Associations established in its briefing. For the 970 people in Glasgow North East who have been out of work for more than 12 months, the measure could mean a loss of £25 a week in their incomes. Across the UK, the proposals are expected to save £110 million a year from 2013, but at what price to my constituents and to 4.7 million constituents of right hon. and hon. Members throughout the House, who face being pushed into higher levels of poverty?

The SFHA underlined in its briefing that approximately 700,000 people in the social and private rented sectors would be affected by the new rule, losing an average of £9 a week. Overall, 5,445 people in Glasgow who have been on JSA for 12 months or more will lose out—some 22% of all housing benefit recipients in the city. The loss for the 2,750 Glaswegians receiving the allowance for a one-bedroom flat will be £7 a week, for the 2,390 affected people in two-bedroom houses it will be £10 a week, for the 590 recipients in a three-bedroom house it will be £15 a week, and for the 50 families in four-bedroom houses it will be £22 a week.

The Glasgow Housing Association has said that between 11 and 16% of its tenants will be affected by the changes to the rules on presumed under-occupancy of properties. Unable to make ends meet, tenants will suffer higher expenses and the prospect of substantial debts. At worst, they will lag behind on their rent payments and perhaps ultimately face eviction. People will be pushed out of prosperous areas where they have the highest prospects of finding work, and there will be an increase in unemployment and social tensions in areas that are already marginalised and suffer multiple deprivation.

Under the stricter medical tests that the Government have introduced, people will be moved off employment and support allowance, incapacity benefit and severe disablement allowance and on to jobseeker’s allowance. They will be at a greater disadvantage in the labour market, and will they not find it more difficult to find a job within 12 months? If healthy and fit people are unable to find work under the Government’s policies, what chance have the most vulnerable ?

In the June Budget, the Chancellor assured the House that he was aiming to protect the most vulnerable in our society, but the Government’s proposals will hurt the most vulnerable and those who are trying to find work, at a time when their fiscal policies will make that much more difficult with the loss of almost 1 million public sector and associated private sector jobs, as PricewaterhouseCoopers established recently. The truth is, as the Office for Budget Responsibility established in June, there is no guarantee that the economy will be in a state to secure the availability of sufficient jobs by 2013.

Singling out those who can least afford to lose money is neither fair nor progressive. The Government should consider investing in affordable housing rather than slashing the budget by half over the course of this Parliament. That would not only secure savings in the long term, but protect the vulnerable and incentivise work in the coming year.

I support welfare reform that ensures that taking a job will pay and that improves work and training opportunities for those whom previous initiatives have not reached. However, my hon. Friends and I cannot support plans that set out to punish the most vulnerable in our society, who make great efforts to seek work, and who deserve a Government who is on their side and not preparing to abandon them at their time of greatest need. These are the wrong proposals targeting the wrong people. I hope hon. Members across the House will reject them and support the Opposition’s motion in the Division Lobby tonight.

17:31

[Jenny Willott (Cardiff Central) (LD)]

For many years, housing benefit has acted as a barrier for people who are trying to get back into work. I remember many debates in the last Parliament in which hon. Members raised concerns about people being trapped in poverty, out of work and frustrated. If, for example, a constituent got a job and lost their housing benefit, they would not be able to afford their rent. To be fair, the previous Government put much effort into ensuring that people would be better off in work than they were on benefits, but the housing benefit rules often scuppered such efforts. I hope that these proposals, which are part of the wider reform of the benefit system of which universal credit is a part, will help people get out of that benefit trap and into work. They should also benefit people who are working and paying tax. As many hon. Members have said, it is unfair when such people see the Government paying for a home for someone else that they could not possibly afford themselves, even though they are working.

There have been some positive changes, including the proposals for people with disabilities. Previously, a person who had a full-time carer could not claim for a room for them. In the previous Parliament, as the hon. Member for North East Hertfordshire (Mr Heald) said, the Work and Pensions Committee recommended a change to that unfair system. I am very glad that such a proposal is now being introduced, as it rights a wrong.

I warmly welcome the long-overdue decision to reform housing benefit. Although I have concerns about some of the Government’s proposals, I have to say that much of the criticism of the plans has been extremely overblown. Much has been said in the media and in the debate today, and I am sure that more points will be raised later tonight. I will raise my concerns with the Minister, and I look forward to his response.

One problem with the local housing allowance that was identified in the previous Parliament concerns the broad rental market areas. Many BRMAs are very large and cover very different areas. Cambridge is often cited as an example. The BRMA covers the city itself, a large rural area and some smaller towns, including Newmarket and Ely. Shelter’s research found that in Cambridge itself, only 4% of rental properties were affordable to people on LHA, while in rural areas up to 70% were affordable. That has significant implications for people on local housing allowance who want to access work. They are pushed out of the city, which is where most of the jobs, particularly the low-paid jobs, are to be found. That is not a new problem. It arose as soon as LHA was introduced.

If the Government change the LHA calculation from the median rent to the 30th percentile—I am afraid that this sounds like jargon—BRMAs such as Cambridge or Blackpool, which already have a problem, could find things getting even worse. The Select Committee recommended an urgent review of the particularly problematic BRMAs, which I hope the Government will consider further in the light of the proposed changes.

I would also like some reassurance on the raising of the age limit for the shared room rate from 25 to 35. I understand the Government’s argument that it is often unlikely that young people in work could afford to rent on their own, and they are more likely to rent a room in a shared property. However, when the Select Committee considered that point earlier in the year, we found that the shared room rate led to an increased threat of homelessness, particularly for vulnerable young people. It is unlikely that those who have recently been made homeless, or those who are suffering from a mental illness or recovering from an addiction, will be able to organise living in a shared household, but they constitute the group most likely to face a shortfall between rent and local housing allowance. Increasing the age limit to 35 could broaden that pool of people and increase the number of people facing a shortfall and homelessness—and because plugging that gap is often left to discretionary housing benefit, this has implications for the Government’s plans in that area.

I welcome the significant increase that the Government have announced in the amount available for discretionary housing benefit over the next four years. That will be very important in determining how well the changes are made. However, discretionary housing benefit is usually used only for short-term payments—certainly, my constituency casework leads me to believe that that is how local authorities see it. Often, for example, it will be paid, following a change of circumstances, to tide people over until they can make longer-term arrangements. Some of the Government’s proposals for changing housing benefit will have more long-term implications there, including the changes involving the shared room rate, and so on. Local authorities need more flexibility in their use of discretionary housing benefit over the long term in order to plug the gap and ensure that we do not end up targeting particularly vulnerable people.

The biggest issue for my colleagues and me, however, is one that has been mentioned by hon. Members already—the proposal to reduce housing benefit for those claiming jobseeker’s allowance for more than a year. If we really are trying to help people off benefits and into work, this arbitrary limit makes no sense. It does not take into account the job market in a particular area or the effort that a claimant may have made to find a job, and it could have serious implications for child poverty, in particular. I hope that the Government can think through that proposal again. If we are applying the test that the reforms should support vulnerable people, help them into work and ensure they have a roof over their heads, while ensuring that work pays, reducing housing benefit for jobseekers after one year fails that test.

That is a shame, because most of the rest of the proposals are sensible. Overall, I welcome the reforms, and I am glad that at last the Government are doing something.

[Clive Efford (Eltham) (Lab)]

Will the hon. Lady confirm that her website states that the benefit cuts will hit the poorest hardest? If so, would she like to put that on the record in the House?

[Jenny Willott]

I have to confess that I am not au fait with every page on my website. [Hon. Members: “Oh!”] Having returned a few weeks ago from maternity leave, I am afraid that my brain is suffering somewhat. However, that is for a debate on the comprehensive spending review in general. This debate is specifically about housing benefit, on which I have made my views very clear.

Overall, I welcome the reforms, and I am glad that at last the Government are sorting out housing benefit. It has been of significant concern to Members on both sides of the House for many years. Government Members all have the same aim, and I hope that the Government can take my comments in the constructive spirit in which they are intended. We would all like housing benefit to be set up in a way that helps people lift themselves out of poverty and progress through work, and does not act as a barrier to people trying to show ambition and better themselves. I hope that by tweaking the proposals we can do just that.

17:39

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

Let me draw attention at the outset to my interests as declared in the register.

It is clear that the Government are pursuing a policy not of housing benefit reform but of housing benefit cuts—a policy based on assumptions that are wholly untested.

[Bob Russell]

Will the right hon. Gentleman give way?

[Mr Raynsford]

No, I have only just started. I will give way in due course, but the hon. Gentleman is perhaps being a little impatient. He might benefit from listening for a moment before interrupting.

The policy is based on assumptions, many of which are wholly untested, premises that are, frankly, incredible, and an absence of detailed impact assessments of how the eight different cuts will cumulatively affect the 4.75 million households that currently receive housing benefit. In my view, it is that absence of a detailed and thorough appraisal of the impact of the cuts that is the most serious indictment of the Government.

We have heard the Secretary of State’s claim that the effect of the changes will be to reduce rent levels in the private rented sector. His noble Friend Lord Freud made a similar claim last week when, according to a report in The Guardian, he said:

“We are expecting a large number of people who see less housing benefit to be able to negotiate their rents downwards, and the landlords will move to the new lower rate.”

As the Secretary of State and Lord Freud are clearly not totally familiar with the rented market, let me remind them and their colleagues on the Front Bench what is actually going on. Yesterday’s Evening Standard reported:

“Widespread rental ‘gazumping’ has hit London for the first time as desperate tenants fight to secure homes. Rents have soared by up to 35 per cent this year, with as many as one in four landlords asking for sealed bids from applicants, according to one agent.”

The director of a lettings agency is quoted as saying:

“The exceptional demand for rental properties which we saw earlier in the summer is showing no signs of slowing down. If anything, the rental market is now more red-hot than a month ago.”

He said that

“one four-bedroom ex-council home was recently let in Camberwell for £500 a week—£150 above the asking price and more than 40 per cent higher than the previous rent.”

A partner at Cluttons is quoted as saying:

“occupancy rates stand at an unprecedented 95 to 98 per cent, as tenants opt to stay put rather than move and risk being frozen out,”

adding that

“the stampede for homes was at all levels of the market, from studio to family homes and is in all areas of London.”

She said:

“We had a studio let at Cinnamon Wharf in Shad Thames that had been on at around £225 to £230 a week. I suggested putting it on at £305 and we got that within half a day.”

The director of another agency said:

“The demand for rental property will heat up even further in the medium-term and gazumping will become even more common as tenants look for any way in which they can get ahead of the competition.”

[Bob Russell]

I was going to ask the right hon. Gentleman what interest he was declaring, but my question to him now is this: is he not talking about supply and demand? If the issue is supply and demand, why did the previous Government, in which he played a leading role for 13 years, fail with the supply?

[Mr Raynsford]

Let me say to the hon. Gentleman what I have said in many previous debates. When we came into government in 1997 we inherited a very serious problem caused by the condition of the existing housing stock, as he knows. He also knows that a great deal of money was put into the decent homes programme to improve the condition of millions of social homes throughout the country. Because that was a priority, perhaps not enough was spent on building new homes, but if he looks at the figures, he will know that during the later years of the previous Government, until the recession hit, there was a rising trend of new house construction in all tenures, including social housing. Had that been sustained, we would now be seeing levels approaching those set out by Kate Barker in her report.

Obviously there has been a recession in the meantime. It has hit the world—it has hit this country and everywhere else—but given that situation, we want to see policies that will improve prospects rather than make things worse. The problem is that the present Government have managed to destabilise every part of the housing market. House builders are in shock because of the ill-considered planning changes. The private rented sector is in difficulty. Landlords are worried about the proposed changes to housing benefit. The social housing sector has been pulverised by the Government’s proposal to remove security of tenure and to jack up rents to near market levels. That has created a serious problem of anxiety and lack of confidence in all sectors of the market. Not surprisingly, as the hon. Gentleman highlighted, there is therefore a problem with shortage of supply. That is precisely what is driving rent levels.

[Mr Burley]

Will the right hon. Gentleman give way?

[Mr Raynsford]

No. I have given way once, and I must make a little more progress.

All hon. Members should realise that the Government’s hope that the changes will lead to a reduction in rents is delusional. It will not happen, and the consequence will be that many people who depend on access to private rented housing, and on a degree of housing benefit to support it—many of them are in low-paid work—will find it harder and harder to compete in an increasingly tough market. I am afraid that the Government are making things worse.

[Simon Hughes]

One factor over the past 13 years that affected supply was the number of right-to-buy applications exercised by tenants. Does the right hon. Gentleman support a discretion for local councils to decide whether to allow the right to buy? That has become the policy throughout Wales.

[Mr Raynsford]

The hon. Gentleman is going wide of the subject. The right to buy now has a relatively minor influence on the supply of housing, because most people in social rented housing are on incomes that make it impossible for them to buy. I would not change the current rules. I think it is right to have an option for people to buy, but in the current market there will not be many who take that up. I want the focus to be on securing a good supply of rented accommodation through social and private providers at rents that people can afford, supported by a proper benefit system.

We know that a substantial number of local housing allowance recipients are in properties where the rent is higher than the LHA. I have quoted the answer given by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), earlier this month that 48% of LHA recipients had to meet a shortfall because their rent was higher than the LHA. It is absurd for the Government to argue that the LHA is driving increases in rent, when the evidence that I quoted from the Evening Standard shows that it is the private market and the huge demand in the private market that is driving the increase. A very high proportion of LHA recipients will find it increasingly hard to compete, because their LHA is already below the rent that they are paying.

[Steve Webb]

Will the right hon. Gentleman give way?

[Mr Raynsford]

No. I will not give way because I have very little time left. The Minister should remember that private tenants who are dependent on housing benefit may find that they are priced out of the market as a result of the Government’s policies. I am surprised that he and his party are prepared to countenance that.

The hard questions that Ministers must answer—they have not done so—is simply: where will the tens, and perhaps hundreds, of thousands of LHA recipients go when their allowance is cut to a level that makes it impossible for them to make up the shortfall, and their landlord declines to reduce the rent?

[Steve Webb]

The right hon. Gentleman cited a £500 rent on a four-bedroom property—he quoted that from a newspaper—which is above our cap. Is it his policy that taxpayers should pay someone £500 for a four-bedroom property?

[Mr Raynsford]

No, it is not, and the point has already been made that that is not a housing benefit letting; it is a market letting being driven by the market. The Minister finds that difficult to understand because of his extraordinary prejudice that the local housing allowance is somehow driving the increase. I would have thought that he understood that, because he has some grasp of economics. He should also understand the cumulative effect of a series of such changes: not just the cap, not just the local housing allowance, but the change in non-dependant deductions, the restriction of the entitlement of social housing tenants of working age who are deemed to occupy larger accommodation than they need, the extension of the shared room rate to single applicants aged 35—the hon. Member for Cardiff Central (Jenny Willott) raised that anxiety—the change to the uprating formula using the consumer prices index rather than the retail prices index, the 10% cut in benefits for those on jobseeker’s allowance for more than a year, and the overall cap on benefit entitlement. Cumulatively, those changes will have a devastating effect. Why has the Minister, with his distinguished background in social policy, not insisted on proper appraisals of the cumulative impact, and the impact over a period, of all the changes, which will have dire consequences for many people on very low incomes?

This is not evidence-based policy making; it is faith-based policy making, using assumptions that most of the commentators in the outside world who have a real understanding of these things believe to be seriously flawed. I put it to the Minister that unless the Government can give us evidence that their policy will reduce rents in the private sector—for which there is not a shred of convincing evidence—and that the cumulative impact of the changes will not have dire consequences for many vulnerable people, the only decent thing for them to do is to withdraw their package and say that they will look again at the measures and discuss with the Opposition agreed arrangements to deal with abuses of the system without causing vulnerable people to suffer. If they do that, they will have our support. If they do not, I hope that all hon. Members with open minds will vote for the motion tonight.

17:49

[James Wharton (Stockton South) (Con)]

I disagree with much of what the right hon. Member for Greenwich and Woolwich (Mr Raynsford) said, but he made one key observation that many Opposition Members would do well to heed. He referred to the legacy that the previous Labour Government inherited from the Conservatives, and many Labour Members forget the context in which so many of the decisions that the new Government are now taking must be understood—namely, the terrible financial situation that we inherited from Labour. I do not intend to dwell for too long on the national debt that is approaching £1 trillion, the deficit of £150 billion, or on the fact that we are paying more than £40 billion a year in interest, which is £120 million a day. That is more than we are paying for either our police or our universities.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

Does the hon. Gentleman acknowledge that, when the Labour Government came to power in 1997, we had to pay more to service the debt based on borrowing to pay for tax rebates than the cost of defence and transport put together?

[James Wharton]

The hon. Gentleman is right to voice his concern about any level of Government debt, and I entirely understand the historic context in which the new Labour Government found themselves, and the one in which we find ourselves today. It is important, however, that we do not spend all our time looking back. We must look forward and consider what the Government are doing to address the challenges that we face, and specifically address the issue of housing benefit, which is just one piece of that much larger jigsaw.

Housing benefit today costs about £21 billion a year, and we have heard about the trend of housing benefit costs in recent years. Between 2000 and 2007, it increased by about 25%, and, in the past five years, it increased by about 50%. The shadow Secretary of State mentioned the difficult times during the worst of the recession when it was increasing at its greatest rate. That was true, and we cannot take those times as typical and project them forward, but we can identify a clear long-term trend of housing benefit costs increasing unsustainably and putting a burden on the Exchequer that cannot be maintained in this day and age. The Government therefore have to make some tough choices.

A word that we frequently hear on both sides of the House, in different contexts, is “fairness”. We are asked what it means to be fair. Opposition Members appear to dwell on outputs, rather than giving consideration, as is correct when considering any matter of fairness, to what people put in—that is, to inputs and outcomes. It is important to look at the proposed changes to housing benefit in the context of the national financial situation, and of the need for real fairness that takes proper account of what the Government can do to help people out of poverty and into work, and to take away the benefit traps that hold people back in poverty and on housing benefit. As my hon. Friend the Member for North East Hertfordshire (Mr Heald) said, housing benefit is one of the very worst benefits when it comes to encouraging people and helping to make work pay, because of the very steep rate at which it is withdrawn.

[Ms Buck]

The hon. Gentleman mentioned the impact of housing benefit during the recession. Does he accept that 250,000 households claimed housing benefit during the period between 2008 and 2010 because their earnings dropped? Does that not show that housing benefit has a critical role to play in sustaining people, both in work and in their homes, during difficult times?

[James Wharton]

The hon. Lady is quite right. That is why nobody on either side of the House would ever propose to do away with it. It is an important part of the welfare state in this country, but that does not mean that spending on housing benefit should be allowed to escalate out of control indefinitely. That is why the Government are introducing measures to bring it under control and to ensure that people are properly incentivised to find work, to earn and to contribute successfully to our economy. The hon. Lady is right to say that housing benefit is important, however; that is why it is being reformed in a way that will secure its sustainable future.

[Mr Chuka Umunna (Streatham) (Lab)]

Will the hon. Gentleman give way?

[James Wharton]

I will not give way again.

In the context of the understanding of fairness, let us look at what the Government are doing. We have heard talk about the cap, and it is abundantly obvious that it is not fair for a family or an individual to be able to claim more in housing benefit than an average family takes home in earnings in any given week, month or year. If we set the cap at £20,000 a year, that will still be a very high level. That is the equivalent of earning just over £26,000 a year, as that is what someone would need to earn to have the income to pay that amount of rent without claiming housing benefit support. That is more than the average wage of my constituents, and more than the average wage in the north-east generally. It is also more than the average wage in many of the constituencies of Members on both sides of the House. We cannot expect people who work hard but do not earn large sums of money to pay tax to subsidise individuals and families who are unable to work, for whatever reason, to live in homes that those taxpayers themselves could not afford.

This is an important issue, but there are many other measures involved. The shadow Secretary of State asked whether it was fair to use the 30th percentile to set the level at which housing benefit would be paid in any given area. The Department’s research has shown that, in any given area, just over 30% of properties would be available within that price band, and I suggest that that makes it abundantly obvious that this is not an unreasonable step. Given the difficult financial situation in which we find ourselves, this is a way of finding some of the necessary savings while ensuring that those who need help will still get it. It will ensure that support will be there for those who will benefit from it most, while not unfairly disadvantaging the people who work hard to pay their taxes to enable this to happen. It is important to look at these points in the round, and in the context of the world in which we live today.

Many Opposition Members are not keen to talk about discretionary housing payments because, for many of those who hit particular hardship, such payments will increase. This will help individuals who are in danger of losing their homes, who fall through the gaps between policies or who find themselves in difficulty through no fault of their own. The Government are increasing the provision to £140 million over five years to ensure that, when people are in particular need or when their circumstances are particularly difficult, help is there to ensure that they can stay in their homes and communities. People should not be made homeless by the steps that are being taken, and the Government are taking steps to ensure that that does not happen.

Another measure that Opposition Members often overlook relates to overnight carers. At the moment, the fact that someone has an overnight carer, because they have a disability or for any other reason, is not accounted for when calculating the amount of housing benefit they receive. The Government will change that, and 15,000 people who currently have overnight carers but are not entitled to have the need to provide accommodation for them taken into account in their housing benefit allowance will be better off as a direct result. Their needs will specifically be catered for in a way that, disgracefully, has not been the case for many years.

Lots of changes are taking place in housing benefit, as well as right across the Department for Work and Pensions and other Departments. Opposition Members are right to raise concerns, when they have them, and to call for a debate when that is appropriate. When I look at the motion today, however, I find it most striking that they have suggested no alternatives. This is not an Opposition who are here to put forward alternative proposals or an alternative plan to deal with some of the problems we face. It is an Opposition who are opposing for opposition’s sake.

[Matthew Hancock]

I compliment my hon. Friend on his extremely fluent speech. In talking about the tone of this debate, does he agree that it is important not to make scaremongering comments that make people ill at ease when the changes being made are very important to get a grip on this particular budget?

[James Wharton]

As ever, my hon. Friend makes an excellent point. The point has been raised a few times already—that the tone of this debate in public and in the media has not necessarily been as it should. When we are talking about people’s homes, people’s allowances and changes that will affect people’s lives, it is incumbent on all of us to ensure that we do so in a careful, measured and sensible way.

[Gavin Williamson (South Staffordshire) (Con)]

I am not sure whether my hon. Friend’s experience has been the same as mine, but many people I talk to in my constituency think that the proposals being put forward are sensible, logical and should have been made an awful long time ago.

[James Wharton]

I thank my hon. Friend for another excellent intervention. He is, of course, right about how right-thinking people look at some of these measures—I single out the cap of £20,000 on the maximum amount of housing benefit that can be claimed. As I said at the beginning of my speech, this is equivalent to earning more than £26,000 a year. These are reasonable steps taken to deal with a very real problem. If Opposition Members wish to continue to oppose what the Government are doing, I urge them to come up with proposals and solutions of their own, so that we can have a properly informed debate—rather than mudslinging, calling names and worrying all the people who rely on Members from all parties to represent them and do the right thing.

18:01

[Miss Anne Begg (Aberdeen South) (Lab)]

I am grateful for the opportunity to contribute to the debate. I am keen to make sure that we do not get bogged down in a debate about what is happening to the caps in London, which has been the tenor of the debate in much of the media and, indeed, here today. I understand why my hon. Friends representing London constituencies feel angry and annoyed about the impact of the changes on their constituents, but I would like to look further afield at the impact across the country.

The difficulty with the emphasis on the caps that might apply only in London is that we need to acknowledge that the real cap is the 30 percentile that will apply in each of the broad rental area markets. It is not right to look at four-bedroom houses that can be had for less than £400 a week in an individual constituency and then say, as did the hon. Member for Ealing Central and Acton (Angie Bray), “Well, that’s fine; you can get that if you are on housing benefit”. That is simply not the case.

We already know, as alluded to by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), that even at the present 50 percentile level many of our constituents still have to supplement their housing benefit to pay the rent. We know that people, even today, before any of these changes come into place, have to spend perhaps £10 or £20 out of their benefit to pay their rent. We know that because on a Select Committee visit, we encountered an elderly gentleman at a citizen’s advice bureau who had found it very difficult to get a house or a one-bedroom flat within the money afforded under the BRMA—broad rental market areas—level at 50 percentile. He already had to spend £10 a week out of his pension credit to supplement his rent.

Another point worth noting is that the people who receive housing benefit are not all of working age, so the Government’s purpose of incentivising work does not apply to them. What incentive does an old-age pensioner have if they stand to lose perhaps a considerable portion of their rent, and what incentive is there for such a pensioner to have to move home in order to find an affordable rent?

I hope that we can start to concentrate on some of the people who are not in the percentages quoted—the people who can move and can find somewhere affordable. For every 50% of the people who can move, there are 50% who cannot move; for every 50% who can easily find affordable rented accommodation, there are 50% who cannot. As my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) said, only £65 million of the savings on the housing benefit budget will come from the cap, which will apply predominantly in London, whereas the full savings amount to £1.8 billion.

I would like us to consider what is happening in Aberdeen—not a typical place and probably an exception, but it might help to highlight some important issues. Only 6% of housing benefit claimants—910—in Aberdeen are in the private rented sector. Of them, only 370 of them—about a third—are likely to be worse off. Moreover, only 9% in the private rented sector actually claim housing benefit. If we accept what the Government are saying, this 9% should find it easy to find a house within the 30 percentile—obviously, because only 9% of them are trying to find it. That appears to be a no-brainer, but that is not the case. The reason is that they are competing with people who are already on low pay but perhaps do not have housing benefit and are trying to find somewhere else to live.

We also know that there is a housing shortage in Aberdeen, as there is in many other places, so many landlords will not rent for housing benefit. That might not be true elsewhere, but it is true in an area where we have a buoyant housing market. If only 6% of housing benefit claimants are in the private rented sector, it cannot be true that it is housing benefit rates that are pushing up the rents in Aberdeen. We know that rents are going up. It cannot be true that landlords will therefore reduce their rent because we know that there are plenty of other people who will be willing to take these houses if the housing benefit person cannot afford them. There will be areas in which the market will not operate effectively, as my ‘hon. Friend’—I call him that, because he is on the Select Committee with me—the hon. Member for North East Hertfordshire (Mr Heald) said, but although it may be true in some areas, it will definitely not be true in other areas that already have a buoyant market.

Lastly, even if we accept the Government’s argument that landlords will reduce the rent, there will inevitably be a time-lag for all that to happen. I do not think that people will move all that often in Aberdeen. Constituents have come to see me because they cannot afford the deposit on their new house or they cannot afford their first month’s rental or they cannot afford the bond that they are expected to find—I believe that applies just in Scotland. The cost of moving is difficult for people to meet. Landlords, however, will not reduce the rent initially; they will need to be persuaded in some way that they cannot get that rental anywhere else. In the meantime, individuals will have had to move at great cost and it might be difficult for them to find somewhere until the market adjusts. Even accepting the argument that the market will adjust, we are still looking at a six-month period in which people will be either forced to move or build up a huge amount of arrears. It is going to be difficult for this group of people to negotiate lower rents.

I have tried to show that there are issues beyond what is happening in London. Different areas can have different problems. There is no single solution that will have the same effect across the whole country. I hope that the Government will listen to that argument.

18:09

[Amber Rudd (Hastings and Rye) (Con)]

Fairness is a constantly recurring theme today, and fairness has been the dominant feature of this reforming Government’s coalition agenda. I agree with my hon. Friend the Member for Stockton South (James Wharton) that we must also be fair to the people who pay the taxes that pay for the housing benefit and local housing allowance.

I know what I am talking about, because my constituents earn extremely low wages. In the past 10 years the average wage in Hastings, which used to be £30 below the average United Kingdom rent, has fallen to £100 below that figure. I know about low wages. The hon. Member for Glasgow North East (Mr Bain) spoke of people who were vulnerable. People on low wages are also vulnerable, and I feel strongly that they should not be charged with paying the housing benefit of people who live in houses and in areas where those on low wages could not begin to live themselves.

[Caroline Flint (Don Valley) (Lab)]

Does the hon. Lady agree with councillors in Hastings who have expressed concern about the additional pressures that the Government’s policies will impose on their local community, including additional costs for education and children’s services?

[Amber Rudd]

I am grateful to the right hon. Lady for making that point, because it is exactly the one with which I am about to deal. Earlier in the debate, we heard about sensational articles in newspapers and unrealistic reporting. I am afraid that Hastings has been on the receiving end of quite a lot of that. I have spoken to the councillors who made those comments and to our director of housing, Andrew Palmer, who has done excellent work. I asked him how many London councils had made inquiries of him, and he said none. I asked him whether he had had an opportunity to speak to the people who run the bed-and-breakfast establishments that he very rarely uses—although he has had to do so occasionally—and to the landlords whom he uses for the purposes of the local housing allowance. He said that he had spoken to all of them, and that not one of them had received such an inquiry.

I strongly believe that we have been reading sensationalist reports in the newspapers. There is an apocalyptic vision of a group of Londoners arriving on the south coast, but it simply is not happening. I think it important to repeat that so that people do not become fearful. They do not have to believe what is said by the right hon. Member for Don Valley (Caroline Flint) about extra pressure on education establishments, because that is not happening at the moment.

We hope that rents will fall. Members will not be surprised to hear that I agree with much that has been said by Conservative Members about reducing rents. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) spoke of the unrealistic aspect of falling house rents, and referred to an article in the Evening Standard that focused mainly on larger houses. In my constituency at least, between 80% and 90% of people who receive local housing allowance live in homes with one to two bedrooms. The larger house element does not feature so much, although it represents a large cost. I am told by Westminster council, whose representatives I have consulted, that house prices in its area are falling rather than rising.

[Mr Raynsford]

When the hon. Lady reads the record of the debate, she will see that among the quotations that I gave from the article in the Evening Standard was one from an agent who said that properties of all sizes were affected, from the largest to the smallest, and that all areas of London were affected.

[Amber Rudd]

I am interested to hear that London is affected. We will see the consequences, but at present I am receiving different answers and people are reaching different conclusions. It is not entirely clear how the private sector will respond, but one thing is entirely clear: we cannot continue with the cost as it is now.

[Mr Heald]

When the London councils gave evidence to the Select Committee, they said that 40% of landlords would cut their rents.

[Amber Rudd]

The 40% figure is totemic in this debate. As we know, 40% of private rented properties are used by the Department for Work and Pensions.

[Chris Ruane (Vale of Clwyd) (Lab)]

Like me, the hon. Lady represents a seaside town. If Kosovo-style clear-outs do take place in the inner cities—[Interruption.] It was Boris Johnson who used that phrase. If that does happen, it is logical to assume that people will go where there is cheap available accommodation: houses in multiple occupation in seaside towns such as the hon. Lady’s and mine.

[Amber Rudd]

The hon. Gentleman obviously does not want to let the facts interfere with a good story. Some of the newspapers have taken the same view. However, he too should try to look at the facts. He should establish whether London councils are making such inquiries, and whether B-and-Bs are being booked up. There is absolutely no evidence of that. Rents are expected to fall, which will make things less costly for us all.

[Ms Buck]

My local authority, Westminster council, has written to me and to Ministers in the Department for Work and Pensions and the Department for Communities and Local Government, asking for changes in the homelessness legislation because of the potential impact of the cuts, and stating that it will expect substantial out-of-borough bookings for temporary accommodation if the proposals go ahead unamended.

[Amber Rudd]

That is an interesting comment, but I can tell the hon. Lady that I have spoken to the cabinet member in charge of Westminster council—which has the largest supply of houses at the top level above the cap—and she told me unequivocally that the council was not doing that.

[Ms Buck]

I have a letter.

[Amber Rudd]

I also have a letter. Perhaps we can exchange letters later, and see what the conclusion is.

It is impossible not to see these reforms of housing benefit outside the context of the overall attempt to carry out the reforms of the welfare system to which the Government are so committed. I commend to all Members a fascinating article in today’s The Times by a former Labour Secretary of State for Work and Pensions, in which he draws strong parallels between our efforts to reform the welfare system and the proposals on which he had been working for the past few years, until the last two years or so, when he was unable to obtain any traction and had to resign. He spoke of the line that Government must tread between the poverty trap and the welfare trap. That is exactly what this Government are trying to do, but let me add that there is not just a welfare trap or a poverty trap. The welfare trap is a poverty trap in its own right. It is not a good place in which to be, but our efforts to reduce housing benefit and introduce a universal credit will start to change the present position and make a fairer society for us all.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Before I call the next speaker, I must inform the House that I am going to reduce the speaking time to seven minutes, because so many Members wish to contribute and I want to ensure that all of them can do so.

18:17

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

Let me begin by referring the House to my declaration in the Register of Members’ Financial Interests.

I am grateful to you, Mr Deputy Speaker, for calling me to speak in this important debate, and I am pleased to follow the hon. Member for Hastings and Rye (Amber Rudd), although I beg to differ with her interesting interpretation of the word “fairness”.

The Government’s £1.8 billion cuts in housing benefit will push the most vulnerable families in our society into poverty and debt. It has been estimated that up to 12,000 households in the north-east could be made homeless. The Government are using extreme examples to justify their wholesale swingeing cuts, but the simple truth is that most housing benefit recipients are low-income, hard-working families, pensioners, carers, and people with disabilities. The housing charity Shelter estimates that only one in eight housing benefit recipients is unemployed. We should not lose sight of the fact that housing benefit is also an in-work benefit. In fact, the average housing benefit award to private sector tenants in Sunderland is just £93 per week, and for social tenants it is even less: £69 per week.

What concerns me most is that the cuts in housing benefit will affect not only hard-working, low-income families, but pensioners. In Sunderland alone, more than 20,000 housing benefit recipients are over 60. Those people have contributed to society throughout their lives, but in return—when they need help from the state at the time when they are at their most vulnerable—their security is threatened, and they are treated as mere statistics.

[Steve Webb]

I am sure that the hon. Lady does not wish to alarm pensioners in her constituency. The figures that she has given relate to housing benefit, which applies overwhelmingly to social tenants who will not be affected by this change. Will she correct the record?

[Bridget Phillipson]

What I will say is that many older tenants will move into different tenancies at different points, and will be affected by the changes that the Government are introducing. Many older people will, at times, vacate social homes and move into the private sector as their needs require, and may be affected by the Government’s changes. The only alarm being caused is coming from the Government Benches. I hope that the Minister will think again about some of these measures.

The Chartered Institute of Housing summed things up best when it stated that the Government’s motive

“appears to be reducing expenditure with little co-ordination or regard for the purpose of the benefit itself.”

This is not a genuine attempt to reform housing benefit and introduce a better system in its place; this is a Treasury-driven hit on the poorest and most vulnerable in our society.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am grateful to the hon. Lady for giving way. The House is unclear about Labour’s position on the cap. Labour Members have accepted that there is a need for public spending restraint, but Government Members want to know whether they think the cap is fair or not.

[Bridget Phillipson]

I respectfully suggest to the hon. Gentleman that had he been here earlier, he would have heard some of the arguments articulated by my right hon. Friend the shadow Secretary of State. I also respectfully suggest that I am not referring to the cap. That is not the issue that I am discussing in relation to Sunderland; I am discussing the changes in respect of the 10% and the 30th percentile. That is my concern, and that is why this debate has to be on issues broader than London. I understand the concerns of my hon. Friends with London constituencies about the impact there, but the impact it will have in Sunderland will be different.

On average, claimants of local housing allowance in the north-east will see a cut of about 10% a week, or £468 a year, in what they receive. That will have a massive effect in the region, and in Sunderland it will affect more than 4,500 households. Furthermore, those out of work on jobseeker’s allowance for more than one year will be hit particularly hard, with a cut of 10% in their housing benefit. Currently, 2,500 of my constituents are claiming jobseeker’s allowance in an area of ongoing deprivation, where jobs are increasingly hard to come by. That will simply drive people into further poverty and drive up homelessness at a time when, no matter how hard people try, it is often difficult to find a job.

Sunderland city council prevented homelessness for 157 households in 2009-10, helping people to find accommodation, often in the private sector. Overall, the changes made in the comprehensive spending review will make it even harder for Sunderland city council to prevent homelessness. In the long term, the use of temporary bed-and-breakfast accommodation will inevitably drive up housing costs for local councils and have massive social consequences.

Changes in the calculation of housing benefit—pegging it to the consumer prices index—will lead to a dramatic rise in rent arrears, contributing to increased use of temporary accommodation and increased homelessness. It is not yet clear to me whether those who fall into arrears because of the cuts will be deemed to have made themselves intentionally homeless, which would mean that councils would not have a duty to house them. I would be grateful for some clarity from the Government on that issue.

Before I was elected, I managed a refuge for women and children fleeing domestic violence, and the city council supported these homeless families and got them rehoused, often in the private sector. The women would often pay a small top-up to their housing benefit, often to be near supportive family who could help with child care so that they could undertake training or return to the workplace. Such women will be doubly hit, and at the point when they are trying to get their lives back on track.

It is clear that the Government have failed to come up with an acceptable plan for housing benefit. They fail to recognise the long-term solutions to the underlying causes, and they are certainly not progressive.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady agree that for a great many people the purpose of housing benefit is to get them out of low-income housing? The changes that the coalition Government are proposing will keep those people in poverty and low-income housing for the rest of their lives. That is my concern. Does the hon. Lady share it?

[Bridget Phillipson]

I do. It is clear that the changes will have a huge impact not only in England, but in the hon. Gentleman’s constituency.

While more social homes need to be built, the coalition is cutting investment and scrapping regional housing targets. When people are crying out for help on unemployment, the coalition Government are set to cut 23,000 public sector jobs in the north-east alone. Until we tackle unemployment and until the Government bring forward a credible growth strategy, the housing benefit bill will not come down. In the north-east, the situation has not been helped by the scrapping of One North East and the lack of a regional industrial strategy.

Finally, when we need a system to stop unscrupulous private sector landlords from profiteering from the local housing allowance, the coalition Government do not even consider it. Instead, they focus their programme of cuts on the defenceless, the elderly and the least well off in our society. That cannot be allowed to happen. Labour Members all agree that there is a need to reform the current system of housing benefit—but not at such a cost, and not with the plan that the Government are implementing with such ill regard for the consequences.

I oppose these rushed, punitive and divisive measures. I will do what it takes to protect the low paid and the most vulnerable people across the country, who rely on housing benefit, and I encourage colleagues on both sides of the House to do so too.

18:25

[Bob Russell (Colchester) (LD)]

The debate so far has made only fleeting reference to child poverty. The previous Government left 3.9 million children living below the official poverty line, so we need to think long and hard about whether this Government’s measures are going to make that figure worse.

According to Shelter, the average loss per family in my constituency will be about £9 a week. For a low-income family, that £9 now has to compete; if the rent is not paid, and a family lose their home, they are, in law, deemed to be intentionally homeless. Whatever faults there are in this country, one thing is for sure: the children of this country are not responsible. They must not be allowed to lose their homes. For that family in my constituency, having to find another £9 a week for rent means £9 a week less on food, clothing, shoes and utility bills. We know that fuel poverty has an adverse impact on low-income families. Others have mentioned pensioners and their points have been well made, but I am going to concentrate on the families.

The loss of £9 from such a family’s disposable income will mean that the local economy will lose out. That could affect what else is going on. Incidentally, I have come up with a novel saving for middle-England households. It is not compulsory to buy the Daily Mail or The Mail on Sunday, and not buying them will produce a saving of about £500 a year to a middle-England household. I recommend it.

The Local Government Association has kindly provided the following suggestion:

“a full and robust new burdens assessment should be made of the extra local authority costs that will be incurred as a result of these changes. This should not just include the expected homelessness costs, but also community safety, physical and mental health, social care, child protection and other services.

The wider impact of these costs should not be underestimated and will result in increased costs for councils.”

The LGA has suggested that local authorities should have more flexible powers, so that they can work with local landlords to negotiate rents downwards. That would fit in with the Secretary of State’s view that the object of the exercise is not to penalise families, but to force rents down. In a spirit of collaboration, coalition and fairness, I think that the Government should take equal measures—put a cap on the rent as well as on the housing benefit.

The problem is that we have had 30 years of successive Government failures to provide sufficient housing for rent. The last Government were as guilty as the previous Conservative Government, building fewer than 7,000 council houses in 13 years; even the dastardly Thatcher Government managed to build more than half a million. Indeed, the last Labour Government sold half a million council dwellings. I intervened earlier on the question of supply and demand because of the simple fact that for 30 years supply has not matched demand.

[Mr Betts]

I welcome the hon. Gentleman’s commitment to increasing the number of social houses built, but does he accept that under the comprehensive spending review the expenditure plans for new social homes have been cut in half? The only such homes that will be built on the current tenures and rents will be those to which the previous Government committed? All new homes built after that will cost 80% of market rents, and that building will be paid for by increasing the rents on re-let tenancies to that level as well, so this Government are committing to no new social housing at all.

[Bob Russell]

I was praying for an Opposition intervention because it gives me an opportunity to pick up and wave these pages containing the more than 50 questions on council housing that I have put in the last decade, including to former Prime Minister Blair, his successor and former Deputy Prime Minister Prescott, all of whom failed the Labour party. We should contrast what the last Labour Government did with what the real Labour Government of 1945 led by Clement Attlee did in the aftermath of the war.

[Chris Ruane]

I concur entirely with the hon. Gentleman. In my constituency I visited a lady who had an 18-month-old child and who lived in a house of multiple occupation. She had one bedroom. That cost £85 a week in housing benefit, topped up with £20 a week from her own dole money. That is £105 a week for a one-bedroom rat hole, whereas the council charges £60 for a three-bedroom council house with both a front and back garden. It makes both economic and moral sense to spend money on building new council houses and social housing, and that would also penalise the Rachman landlords and reward the local authorities and social landlords.

[Bob Russell]

I agree with most of that; and, of course, if the last Labour Government had taken note of what I said in those 50-plus parliamentary questions—if two successive Prime Ministers and a Deputy Prime Minister had listened—we would not be in the pickle we are in now. I might add that all of us know of former council houses in our constituencies that were sold and are now being let out at higher rents than those for the council house next door, and where the housing benefit tops that up. The coalition Government should address that.

“When social historians write the history of the 20th century, they will contrast the huge advances made in the living standards of the British people between 1900 and 1999. Even allowing for two bloody world wars and the years of economic depression, by the end of the century the quality of life had improved dramatically for the mass of the population, beyond the wildest dreams of those doughty pioneers of social change who sowed the seeds in Victorian Britain for better health, higher standards of education, longer life expectancy, improved working conditions, wider opportunities and vastly superior housing conditions for most people.

While the improvements in the overall quality of life spanned the 100 years, for millions of people it was in the middle 50 years or so of the 20th century—the second and third quarters—when the great advances were made in housing. Council housing did it.”—[Official Report, 11 June 2003; Vol. 406, c. 237WH.]

I know that Members are fascinated by what I have just said, and they can read the 2003 speech I made in Westminster Hall on the subject of council houses. Again, had the Labour Government listened and taken note seven years ago, things would have been much better.

For most people, the aspiration to home ownership cannot now be fulfilled. The resumption of council house building would have the twin outcome of supplying good quality houses for families to rent and lessening demand in the house buying market. There would be another bonus too: it would give a boost to employment in the building industry.

The conclusion of my speech is aimed at my coalition partners. When I was leader of Colchester borough council between 1987 and 1991, I attended a meeting of the Essex branch of the Association of District Councils at which I told the then Member for South Colchester and Maldon, now Lord Wakeham, that a combination of the large-scale sale of council houses and a failure to build replacement houses would result in thousands of people being forced into the property owning market who would not otherwise have been, and that the demand for lower priced houses would therefore be greater than the availability, and that that would lead to an increase in house prices throughout the housing market. I suggested that that policy did not make economic sense, and that it was not fair on those who would be deprived of a decent home in which to live. I have been proved right, but, tragically, the problem is considerably worse than I ever thought it would be.

For the homeless and those in accommodation that is less than ideal for their needs, there is no such thing as the dream of being part of the property owning democracy. Instead, there is the 24-hour nightmare of housing despair. That is particularly the case for the children involved. Big cities, towns and villages all have residents who are suffering because of the lack of council houses. In rural areas, young people are being forced to leave the villages in which they were born, and where their families may have lived for generations, because there is no housing for them, or none that they can afford.

I urge the coalition Government to think again. They are right to tackle the higher rents, but that has to be done with fairness. At the moment, however, their proposals are being aimed only at the tenants, and I am particularly concerned about the children of the families who will be affected.

18:29

[Mr Clive Betts (Sheffield South East) (Lab)]

From what the hon. Member for Colchester (Bob Russell) has said, I take it that he will be voting with us in favour of this motion, because it seems that that is where his heart lies, if nothing else.

The issue as presented by the Government is that we have a problem with housing benefit. Two explanations have been given for that. One is that local housing allowance levels are pushing up rents, and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) dealt with that very well. The other is that housing rents and housing benefit levels are rising because there is a shortage of houses in this country. The hon. Member for Colchester said that that was the case, and I have a lot of sympathy with his point about the need for more social housing.

Let us look at Government policies on housing provision to deal with this fundamental problem. The hon. Gentleman mentioned social housing provision, but he ought to understand that this Government’s policy is to withdraw from social housing provision, and that is what they are doing. Under the comprehensive spending review, the budget for new social housing is being cut in half, and the half that is left will simply fund the houses to which the previous Government were committed, which is about half of the 150,000 target. Where will the other 75,000 come from? The answer is that there is an assumption that social housing landlords will raise the rents on new lettings to 80% of market rents and that that increase in rental income will then fund the building of these extra 75,000 so-called social houses. They will not be social houses, however; they will be houses at 80% of market rents—or at intermediate rents, if we prefer that term. Effectively, therefore, the Government are withdrawing from the provision of social housing.

I know some Liberal Democrat Members will not agree that that is what the Government are doing—indeed, the Lib Dem Communities and Local Government Minister, the hon. Member for Hazel Grove (Andrew Stunell), said exactly the opposite in a recent Westminster Hall debate—but that is the policy. If it is not what they intend to do, the Minister who is currently in the Chamber should stand up and say so.

As the Government claim that their key policy is to reduce housing benefit costs, they must also explain how the two bits of their agenda join up. If getting housing benefit costs down is the right thing to do, will there not be an increase in housing benefit costs from these new 80% market rents they are going to introduce, and how much will they increase by? I have asked that question, but no one can answer it. Do the Government not know or have they not done the figures? Is this another consequence of the impact assessment that they have not done? The Minister has done a lot of jumping up and down in the Chamber today, but he is surprisingly silent and sedentary at present.

That is another major question to which we need an answer. Why are the Government intent on pushing up rents in the social housing sector? What will be the housing benefit costs of that, and is the fact that there will be such costs not an inherent and fundamental contradiction in the Government’s policy?

[Mr Heald]

I do not think the hon. Gentleman understands the scope of the ambition of this Government. They want to get people back to work. They do not want there to be 3 million homes where nobody works and everybody is on housing benefit. They want to change that, and that is how the costs of welfare will come down.

[Mr Betts]

I thank the hon. Gentleman for that helpful intervention. I am not sure how putting 1.6 million people in the dole queue is part of a grand strategy to get people back to work. At some point, somebody will add those bits of the grand strategy up and explain how they connect together.

On the lack of joined-up thinking, we have been taking evidence in the Select Committee on Communities and Local Government about the impact of the Government’s policy of abolishing the regional spatial strategies. Some people have told us that that is a good thing to do, others have been more critical of the inherent aim of Government policy, and some have said that eventually we will get policies in the localism Bill that explain the Government’s long-term strategy. However, almost every witness has said that in the meantime there is a complete vacuum in housing planning policy. The National Housing Federation has commissioned detailed research and it has been estimated that 160,000 planning permissions that would have been given under the previous planning regime have not now been given. That means that fewer houses will be built when eventually the housing market returns.

[Richard Graham (Gloucester) (Con)]

The hon. Gentleman mentioned joined-up thinking. Does he feel it is fair that so many families who are not working and who are not disabled receive more in benefits than families who are working and are on the average national salary or less? What would he say to my constituents about the joined-up thinking of the past 13 years that allowed that situation to continue unchanged for so long?

[Mr Betts]

As Labour Members have clearly said, those on the Government Benches are involved in a complete misthinking about the fact that not everyone on housing benefit is unemployed; many people on housing benefit are on low wages and they will be affected by these changes too. There is a real issue to address about disincentives to work and tapers in the housing benefit system. I would appreciate those tapers being flatter than they have been or are now, but we all have to recognise that if the steepness of housing benefit tapers, or of any other benefit tapers, is reduced, the cost is increased. That is a problem and I look forward to seeing how the Secretary of State will solve it when he introduces his universal credit.

I have alluded to the impact that these changes will have in Sheffield. It is not the cap that affects cities such as Sheffield; it is the 30th percentile change that affects us. That is the fundamental problem and it will cost the average family on housing benefit in Yorkshire and Humber about £7 a week. The total cost of the change for the average family in Sheffield will be more than £30 a month, and it will lead to dispersal. There are considerable differences in the rates that apply in different parts of Sheffield, and not only the unemployed, but those on low wages who are renting in the private sector will be dispersed from richer parts of the city, in the constituency of Sheffield, Hallam, to other parts of the city. I did not use the word “cleanse” or “clear”, because “disperse” is an accurate and proper word to use when describing what will happen. The city will become more segregated and more divided. The situation will get worse, because local housing allowances are linked to the consumer prices index but rents rise at a higher rate. Therefore, over time, people will be dispersed from progressively more parts of the city. That is what the impact will be on cities such as Sheffield—that is the reality.

At the same time, housing departments, such as Sheffield city council’s, will face pressure because unemployment will create more housing problems and more homelessness. The budgets of these departments will have been cut, yet they will have to deal with advising or re-housing people in desperate circumstances. What we have not had a clear answer to is whether people who have to move home because they cannot pay their rent as housing benefit no longer covers it will be considered intentionally homeless. That is a fundamental point, so can we have an answer on it please? Can we also have an answer on whether the Government really are going to change the homeless legislation as Lord Freud indicated in order to see their way out of this problem without local authorities having to have the responsibility of housing people? Those are fundamental issues.

Why is it necessary to punish the couple in their 50s who lose their jobs, whose family have left home and who are living in a three-bedroom council house? Why is their home at risk because they have lost their jobs and housing benefit will not cover their rent as they are deemed to be under-occupying? This is simply not fair. It is a vicious and nasty policy that is aimed at hard-working people who happen to be unemployed and who then need to be re-housed too. These benefit reductions are not part of any grand policy on welfare reform and they are certainly not part of any clear housing strategy. They are part of an unfair agenda driven by the Chancellor, who has simply cut the incomes of some of the poorest people in our communities.

18:45

[Laura Sandys (South Thanet) (Con)]

I thank the hon. Member for Sheffield South East (Mr Betts) for his speech, despite disagreeing with many of the things he said, not least the last one. This is an interesting debate because we are considering housing benefit change, but in many ways it has to be regarded as part of a much wider welfare reform programme. As such, we can ensure that some of the observations of Labour Members will be addressed by the universal credit benefits, the Work programme and many other ways in which the Government will make work reward and pay, by ensuring that we put the right value on, and give the right level of reward to, those who work.

It has taken a lot of political courage to address housing benefit. It has not been done early enough, but the coalition can now deal with what has become a ludicrous and highly inflationary system. Like my hon. Friend the Member for Hastings and Rye (Amber Rudd), I represent one of the poorest areas in the country—it has the second highest number of low-paid workers. These people earn less than £7 an hour and often hold down more than one job at a time; they work in the care sector, in our hospitals and in the low-paid retail sector. Before and during the election, my campaign with them focused on asking how we could show how greatly we valued them. I promised to do something about this issue and said that my Government would try to help those people who hold down one or two jobs, who put food on the table and who ensure that they pay their rent.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

Does the hon. Lady acknowledge that the majority of housing benefit recipients are people in work, pensioners and disabled people, and that less than one in five of the recipients are unemployed?

[Laura Sandys]

First, it is 13% of people who work who receive housing benefits. It is good to see on the Front Bench the Minister who is responsible for disability, because in addition many provisions are made for people with disability. We need to protect those who are vulnerable, and they will be protected. It is crucial that we ensure that equity and justice are at the heart of the housing benefit structure.

Housing benefit is one of the key problems in Thanet. In an area of real deprivation, the rate of housing benefit has dramatically distorted the market, disadvantaging those on low wages while not delivering an improvement in the housing stock for those on housing benefit. I wish to highlight three blights that my constituency faces as a result of the level of housing benefit. As I said, it is unfair on the low paid, who do not claim housing benefit. The double whammy of inequity is compounded by the inflationary impact on the overall housing market.

[Guto Bebb (Aberconwy) (Con)]

I, too, represent a seaside constituency, so I know that my hon. Friend’s point is strong and fair. The average wage in my constituency is £21,800. People earning that will be paying about £4,500 in taxes, yet they often find themselves priced out of the local market by people who move into the area from other parts of the world.

[Laura Sandys]

My hon. Friend mentioned £21,000, but the average wage in the south-east is £17,000. The inflationary impact of housing benefit on those families has been huge.

My second point is that these rates have not seen an improvement in the housing stock. Some landlords are interested in the rental value rather than the capital appreciation because that gives them such a high return on their investment. Investing in the properties and in the fabric of them is therefore not a priority.

The third issue is the extreme concentration of housing benefit claimants in pockets in my constituency. That problem was brought up by my hon. Friends the Members for North East Hertfordshire (Mr Heald) and for Cardiff Central (Jenny Willott). We create micro-economies that attract a significant amount of housing benefit because property prices are so low and the return from housing benefit is proportionally high.

The current situation has fundamentally distorted housing in my area. The average wage in Thanet is £17,000 and housing benefits for the unemployed stand at more than £8,000 a year. Most working families cannot compete in that market.

[Richard Graham]

Does my hon. Friend agree that one of the bizarre uses of the word “fair” during the whole debate has been the assumption that it is somehow unfair to people who are not working for them not to have better housing than those who are working? The whole point of this reform is to enable a level playing field in which people can live in the houses that they can afford from their work.

[Laura Sandys]

Absolutely.

As I said, concentration is also an issue. Two wards in Thanet have 83% privately rented accommodation and 20% of all the benefits claimants in my district, but only make up 2% of the population of Thanet district. Some 30% of the activity of all our housing benefits department is taken up by those two wards. Why? The housing benefit has increased by more than 50% over the past 10 years. Some landlords are making a return on their investment of more than 12% through housing benefits whereas similar properties in Westminster would generate only 4 to 5%. These pockets are hugely attractive to landlords, particularly in coastal towns, and that can be very inflationary.

In certain areas across the country, these micro-economies have significantly lower house prices than areas within their broad market rental area. I urge the Government to consider the possibility of allowing local authorities to create sub-districts to ensure that they can exercise the localism that is at the heart of our agenda and the discretion to assess where low market values are creating a magnet for housing benefit claimants. However, that has to do with broader issues of welfare reform. I am sure that throughout the universal approach that the DWP is taking, we will be able to reverse the current situation.

Our system is broken. Those who want to work know that work does not pay. Those who work get less than those who claim and those who do not work often receive the most. I commend these measures and believe that many in my constituency and those areas that have lower income workers will welcome the reforms.

18:53

[Phil Wilson (Sedgefield) (Lab)]

I want to broaden the debate, because for me it is about not just housing benefit but housing in general. In particular, I want to talk about the problems that we have with private landlords. It seems to me that the Government are more than prepared to attack the tenants, whereas we need to look at the escapades and state of some of the private landlords we have to deal with—not just in the cities, but in ex-colliery villages in County Durham, such as those that I represent.

There seem to be three basic problems. We need to look at housing benefit and the LHA and to reform them, but we also need to look at the rented sector and at housing supply in general. There are three pillars to the problem, as I see it. If we do not control and manage the private landlord aspect, it will suck the community spirit out of some of our villages and communities up and down the country. I have had problems in places such as Chilton, Ferryhill and Trimdon Station, where the police have been involved. I have had to address large meetings and the problems have basically been to do with the behaviour of some private landlords and, indeed, the tenants too.

We should consider not only the reform of housing benefit but the depth of the problems in some of our communities. For example, we did a survey in some of the communities that I have just mentioned of just under 1,100 houses, 38% of which were in the hands of private landlords. More than half of those private landlords did not even live in the county and quite a few—a significant number—lived outside it. What kind of relationship with and understanding of the local community will they have if they do not even know where some of the properties they own are? That is something that the Government need to address.

The Labour Government started to address it with a selective licensing scheme sanctioned by the Secretary of State. I have two or three in my constituency and they are starting to happen around the country, too. Local authorities can implement these schemes and they go some way towards imposing rules and regulations on private landlords and on the behaviour of tenants. The only problem is that although we have the legislation, if the Government are interested in that aspect of housing they should give it some funding so that we can have stable communities where there are private landlords and a lot of people on housing benefit live.

Another thing that we wanted to introduce was a national register for private landlords. That was one of the things that I discussed with the then Secretary of State, my right hon. Friend the Member for Wentworth and Dearne (John Healey), before the election. However, the Government have said that they will not introduce it. I understand that they think that it is over-bureaucratic, but local residents who have to put up with some of the behaviour of the private landlords and their tenants do not believe that it is too bureaucratic. If there is a will, there is a way, and we will have to consider that in future.

I do not agree with those who think that if housing benefit and the LHA are reformed in the way that the Government propose, rents will automatically come down. The British Property Federation briefing that I have received states:

“Currently in areas across the country from Harrogate to Trafford to Brighton and most of the South West, for every LHA claimant searching for a two bedroom property to rent there are between five and ten individuals who are in work doing likewise. LHA”—

and housing benefit—

“claimants will be left behind as landlords naturally seek individuals who are looking for property to rent and are in work.”

That is what will happen. People on housing benefit and LHA will be priced out of some of their local communities because the first port of call for the private landlord is those people who have a secure income—people who are actually in work. As the federation has said, five to 10 people in work are chasing every let, compared with two or three people on housing benefit. That is one of the main reasons why rents will not automatically come down. A major survey by the Cambridge centre for housing and planning research has found:

“A majority of 500 landlords surveyed for the study believes the changes will increase arrears, and a large proportion of those who currently let to LHA claimants intends to reduce the number of such tenancies they offer.”

Those are some of the issues that we need to address. We should not focus on housing benefit and tenants and think that these people are just sitting watching the television all day long. Perhaps some of them are, but a lot of them are not. Some are pensioners, some are out of work because they have been forced out of work, and some are among the five people chasing every job vacancy. The Government must confront these issues. It is about not just sorting out the tenants, but sorting out the rest of the market, too.

Let me end on one point. I have with me a copy of a written answer from the Treasury. At the moment, about 100,000 tenants in the private sector are paying rents to private landlords—about 44,000 of them—who have not paid tax on that rental income. More than 50% of those landlords are receiving income from housing benefit claimants. The Government need to look into that. It is a case not just of tenants claiming benefit, but of many people in the private sector who rent out properties who are not playing the game. We need to look at both sides, not just one.

19:00

[Paul Uppal (Wolverhampton South West) (Con)]

I speak in this debate as somebody who has had experience in the commercial and residential property markets for more than 22 years.

I was heartened to hear the comments of my hon. Friend the Member for South Thanet (Laura Sandys). She highlighted the 12% return on some investments and the fact that that seems to attract a certain type of landlord. The hon. Member for Sedgefield (Phil Wilson) alluded to that as well. It is almost an open secret in the property business that that aspect needs reform. If truth be told, it seems to attract those who are not the best landlords.

The shadow Secretary of State, the right hon. Member for Paisley and Renfrewshire South (Mr Alexander), quoted Liz Peace, and the hon. Member for Sedgefield quoted the British Property Federation. Both quoted selectively. The context in which Liz Peace made that comment was much broader. She was making the point that many landlords do not receive housing benefit directly, so they prefer tenants who are working. Her comment was quoted selectively. As a member of the all-party group on urban renewal and regeneration, it is part of my remit to read such quotes comprehensively.

[Phil Wilson]

Those affected by the cuts will find it increasingly difficult to find a place to live. I quoted most of the paragraph. In the private sector there are good landlords and bad landlords. The problem is that many of them are amateur landlords who have one or two properties. That sector needs to be regulated, and a national register would be extremely helpful.

[Paul Uppal]

Brevity is always required of us, so I shall press on.

Throughout the debate, I have been saddened by one feature of it. All of us on both sides use partisan language. Let us be honest and acknowledge that some of us use politically partisan language, but the language used about the issue under discussion has been inflammatory and poorly judged. I refer specifically to the term “cleansing”. My family experienced partition in India in 1947. My father was eight years old when he saw people forcibly removed—Hindus, Sikhs and Muslims. My maternal grandfather had to protect his neighbours from a mob of Sikhs and Hindus who wanted to burn out his Muslim neighbours. It is particularly difficult for them to accept the sort of language that has been used in the debate.

As a new Member I say these words not through any pomposity or grand-standing, but because our words resonate widely outside the House. The advice that we received at the very beginning to use temperate language was impressed upon us by wiser heads than ours.

[Mr Russell Brown]

I am sure I recognise the background that the hon. Gentleman comes from. May I offer him a quote?

“A mark of any society is how it cares for the vulnerable. It is not possible for any society to guarantee equality of outcomes for all; it is however possible to achieve equality of opportunities.”

That is a quote from the convener of the Church and Society Council of the Church of Scotland. Can the hon. Gentleman explain to me and to the House how people being forced from their homes because of the rent levels and the actions of his coalition Government will produce equality for anyone?

[Chris Heaton-Harris (Daventry) (Con)]

rose—

[Paul Uppal]

I was going to respond to the hon. Member for Dumfries and Galloway (Mr Brown), but I am happy to give way to my hon. Friend the Member for Daventry (Chris Heaton-Harris).

[Chris Heaton-Harris]

I thank my hon. Friend. Perhaps I can add another quote from a Labour Front Bencher:

“This would lead to social cleansing on an unprecedented scale, with poorer people shipped out in large numbers”.

Does that bring anything whatever to the debate?

[Paul Uppal]

We could trade quotes, but the issue was eloquently covered earlier by my right hon. Friend the Secretary of State, who made a passionate and pertinent point about the inflammatory language that has been used.

Government estimates show that spending on housing benefit has risen from £14 billion 10 years ago to £21 billion at present. These figures self-evidently make the case for reforming the system and I, for one, believe that reform is long overdue. The central point of the proposed reforms is that people who receive benefits should have the same choices regarding housing as people who do not get benefits. To be balanced in these reforms, the Government have announced more support for the additional discretionary housing payment to help the most vulnerable cases, particularly where there are unusual difficulties.

In a nutshell, if we are prepared to pay, as we are, £20,000 in housing benefit, is it not reasonable to assume that we can meet the vast majority of housing requests? But with a massive deficit, tough choices have to be made. We need to push ahead with the changes to ensure that hard-working individuals and families will no longer have to subsidise people living in properties that they themselves could not afford.

Figures will undoubtedly be bandied across the Chamber today, and I have no desire to rerun arguments that have been put forward already, but it is always important to put things in perspective. The maximum rent following the cap will be £400 a week, which is equivalent to £20,000 a year. As the Secretary of State said, based on what people spend on average on housing, this would require an income of more than £80,000 a year. The current maximum local housing allowance rate is £104,000 a year, which would require an income of well over £250,000 a year to fund. Can that be right? Indeed, it could be argued that extreme LHA payments act as a barrier to mobility, trapping people in unemployment and benefit dependency. It is also grossly unfair to expect hard-working low-income taxpayers to fund these rates.

Recently a constituent of mine wrote to me about his experiences as a landlord. The tenant received housing benefit directly after the landlord had been advised that he could be paid directly only if the tenant was in arrears by two months. I say this to show that there are always two sides to the argument—the tenant’s perspective and the landlord’s perspective. I quote my constituent:

“Currently tenants are assessed for housing benefit and the amount paid is dependent on the tenant’s personal circumstances and size of house . . . However if the housing benefit awarded is over the amount of rent agreed on the assured shorthold tenancy, the tenant is allowed to keep the difference.”

If the tenant benefits under the existing assured shorthold tenancy agreement, the landlord would have to make up the difference in the rent agreed.

My constituent continued:

“If the tenant is not happy that the rent is being paid directly to the landlord then the tenant has the right to move to a new property and the whole process starts again.

My tenant advised the housing benefit department that she had left my property; they subsequently stopped paying the rent. In fact she stayed at the house for three weeks without paying a penny. When I advised the council that she was still residing at the property and provided them with evidence of this, they said they had to take her word for it”.

Although I welcome the broad measures in the housing benefit reforms initiated by the Government, I believe that significant savings could be achieved if the local housing allowance were paid direct to landlords instead of to tenants. That would remove a significant disincentive for landlords to provide accommodation to LHA claimants. Research by the British Property Federation has shown that as a consequence, 60% of the landlords surveyed do not offer tenancies to those receiving LHA, mainly for fear of rent arrears. At the very least, claimants ought to have the right to choose how their housing benefit is paid, and be able to choose that their payments should go directly to the landlord.

I reiterate that I wholly support the Government’s measures, not only because they mark a move away from dependency towards independence, but because under the Labour Government housing benefit was allowed to spiral out of control. However, it would be wise to revisit the issue of direct payment to landlords to prevent public money from being wasted, and to encourage landlords to continue to let property to those receiving housing benefit. All of us would agree that the welfare system should provide an effective safety net, but it should not pay workless families far more than most working families earn. As has been said, the 2010 Labour party manifesto stated:

“Our goal is to make responsibility the cornerstone of our welfare state.”

I wonder whether the shadow Secretary of State still stands by those words.

I appreciate the acknowledgement in today’s Opposition motion that

“housing benefit is in need of reform”,

but they mean “at a slower pace”, which in essence seems to apply to almost all the debates that we have. Government Members have decided to address the problems that face our country, and, although Opposition Members now talk of reform, under their stewardship housing benefit increased by more than 50% in one decade.

This debate is not just about reform; it is essentially about responsibility—and Government Members have taken on that responsibility for the good of the country and its financial future.

19:10

[Frank Dobson (Holborn and St Pancras) (Lab)]

I make no apologies for saying that as a Member of Parliament, before that as the leader of Camden council, before that as an individual councillor for Holborn ward, and before that as a human being, I suppose, campaigning locally, I have always been obsessed with trying to ensure that the beleaguered ordinary residents of the area be allowed to stay there. However, that does not mean that I believe that spending £20 billion on housing benefit is a sensible use of public funds. Not a penny of that £20 billion goes on building flats or homes, it is just used to subsidise rents that ordinary people cannot afford, and I remind Government Members from both parties that 100 years ago, Winston Churchill rightly said that rent is a preliminary tax on all economic activity. That was true 100 years ago, and it is true now.

In my constituency there is a gross shortage of housing for ordinary people at rents that they can afford.

[Neil Carmichael (Stroud) (Con)]

rose—

[Frank Dobson]

No, I shall not give way. I do not have time.

When I say ordinary people, I mean nurses, street cleaners, bus drivers, shop assistants, people who clean the hospital, ambulance drivers, kitchen staff, waiters who serve Government Members, butchers, bakers, plumbers, electricians and builders. Those are the ordinary people who I want to be able to stay in my constituency, in decent housing and at rents that they can afford. That is not the case at the moment, and the Government now propose not just to cap housing benefit, but to slash the funding to build decent homes and flats that people can afford.

The Government are cutting housing investment. In Camden, certainly, private rents are very high, and in the south of my constituency they are very, very high. However, the ordinary people living there did not set those extortionate rents; grasping landlords did, and then they gave some of it to fund the Tory party’s election campaigns, election in, election out—[Interruption.] It is no good Conservative Members jeering; they know that the landlords help to fund their party.

Those profiteering landlords have set the rents, yet the Government claim that if they cap housing benefit the landlords will cut the rents. In my area, nine out of 10 private lettings are nothing to do with housing benefit, so if there is to be a reduction in housing benefit for one flat in 10, it is clearly not going to have an impact on the rest of the sector. There is unlikely to be very much impact at all.

Let us look at the cap. All hon. Members who live outside London rightly receive an allowance for a one-bedroom flat so that they can live in London. The going rate, according to the Independent Parliamentary Standards Authority, is £340 for a one-bedroom flat. According to this generous Government, the going rate for a three-bedroom flat if one is on housing benefit is also £340. Well, if it is the going rate for a one-bedroom flat, it cannot be the going rate for a three-bedroom flat, and that just shows how unfair the system is.

All the talk about the unemployed getting housing benefit is significantly misleading, because at least one third of the people on housing benefit in my constituency are in work. They struggle to make ends meet, they send their children to local schools, and they frequently rely on support, both financial and practical, from family and friends. Many were homeless, but then the Liberal Democrat-Tory coalition council in Camden urged them to rent in the private sector. They were told that that would be okay. It did not matter what the rents were, because housing benefit would cope with them—or, as the current Leader of the House of Commons said some years ago, housing benefit would “take the strain”. All those people were told that housing benefit would take the strain, but the Lib Dem-Tory coalition Government are now going to take away the money that would have helped them, and I believe that that is wrong.

Many people from my constituency will be pushed out to outer London where they do not want to be, and among neighbours who do not want them to be there, which does not seem a very good formula for establishing decent communities in outer London. It is also worth bearing in mind that some of those areas already have higher mortgage and landlord repossessions than inner London.

The situation will affect not just people in work, but those out of work. Three such cases were brought to my advice surgery last weekend, all by well-spoken middle-class people who had hit a bad patch. One had lost a well-paid job, another was suffering from a serious illness, and another was experiencing a family breakdown. They all faced being pushed out of their homes, because the housing benefit that helps out middle-class people going through a bad patch is to be taken away from them just to suit the Treasury. Money will be taken away from those in the greatest difficulty.

We have heard of the highland clearances. There are no highlands in my constituency, but what we face is the lowland clearances—a combination of grasping landlords and a malignant Government, as existed at the time of the highland clearances. We do not want those in London, and I hope that we never will have them.

19:17

[Jackie Doyle-Price (Thurrock) (Con)]

I am grateful for the opportunity to speak in this important debate. Many Government Members have said that at the heart of this debate about housing benefit is fairness—fairness for those on average incomes who face higher tax bills because of the size of our welfare budget. I remind the House that when £1 in every £3 spent by the Government is spent on welfare, the need for reform is acute and unavoidable. The need to control housing benefit is an important component of that.

The way in which housing benefit operates causes a major distortion in the way in which our housing market operates generally. As any A-level economics student will tell you, subsidies lead to higher prices, and the result is that as taxpayers we all subsidise the rents that even above-average earners would not be able to afford.

[Neil Carmichael]

In my constituency one of the biggest problems is that people cannot access houses. It is one of the biggest distortions of which we should be aware, and it is grossly unfair. My hon. Friend makes a good point, because we have to free up the situation so that people who really need a house have access to a house.

[Jackie Doyle-Price]

My hon. Friend makes a good point. It is easy for Opposition Members to say, “It’s all about those evil Tory reforms to housing benefit,” but the housing market is much more complicated than that. It involves a lack of supply and, under the failed regulatory system, the over-provision of credit by our banks. All of us together have a big job to do in tackling it, but I am glad that we have seen fit to grasp the nettle and do exactly that.

[Mr Lammy]

On that point about grasping the nettle, will the hon. Lady and the leader of her local council join me and the leader of mine in making provision to house in her constituency some of the overcrowded tenants in Tottenham?

[Jackie Doyle-Price]

Tottenham is not in my constituency, I am afraid.

[Mr Lammy]

“Not in my back yard.”

[Jackie Doyle-Price]

Let me address some of the specifics. We are talking about putting a cap of £250 a week on the proposed maximum for a one-bedroom flat. That would amount to £12,000 a year to be spent on rent. I am afraid that not many people who are working can afford to spend £12,000 on rent.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the event that the problem is as the hon. Lady describes it, can she explain to my constituents why they are having their housing benefit reduced when the cap has no relevance whatsoever to people in Edinburgh because all the rents are well below it? Despite that, they will have their LHA reduced to the 30th percentile. Others, who are not necessarily in the private rented sector, will have non-dependants deductions from their housing benefit increased substantially, which is a serious problem for many low-income households. Why is that justifiable to solve the problem of high rents in London? Why not deal with London on its own?

[Jackie Doyle-Price]

It is justifiable because this country simply cannot afford the level of welfare benefits that we are paying out. It is all very well to say that this is all about London, but it is not; it is about the fact that people who are working hard are having to pay higher taxes to pay the bills that Labour left for us to sort out.

We have a system of housing support that is no longer fit for purpose. Housing benefit should act as a safety net to support people who need it—I think we would all agree with that—but it should not provide a subsidy for people to live beyond their means, by which I mean beyond the scope of what they could potentially earn. For those who are jobless, it is clear that this level of subsidy encourages benefits claimants to become trapped in dependency. If we are really going to reform benefits so that work is rewarded rather than penalised, we have to build in incentives that do not encourage people just to sit back and collect their benefits.

[Mr Umunna]

The hon. Lady talked about fairness, and she has mentioned the jobless. What does she think of the proposal to reduce housing benefit by 10% for JSA claimants who have been out of work for more than 12 months and have been doing absolutely everything they can to get work? I come across many people in that position in my constituency, and this measure is unduly punitive, in my view. What does she think?

[Jackie Doyle-Price]

The hon. Gentleman will be aware that the Government are increasing the discretionary allowances that can be used to tackle exactly that problem. My concern is for the people in part-time work who find that increasing their hours is punitive, because their housing benefits will be clawed back.

This measure is not an attack on the vulnerable, nor is it based on an assumption that all benefits claimants are workshy. It is my firm belief that most people do not want to be reliant on state benefits—that they want the pride and self-respect that come with providing for themselves and for their families. However, we have allowed a benefits system to emerge that sucks the self-reliance out of them by preventing work from paying. It is all too easy for self-respecting people to find themselves trapped in worklessness because the amount of support they get from the taxpayer exceeds what they could expect to earn. If we are going to get our economy back on track, that has to change.

Members in all parts of the House will have received many representations on this issue and its impact on vulnerable people. The National Housing Federation claims that those who rely on housing benefit to cover part of their housing costs will be forced to move away from higher-rent areas, and may as a result have to commute and have difficulty finding family care. Well, that is the day-to-day reality for many of my constituents. I consider it unfair that my constituents are having to pay higher taxes for people to live in places where they would like to live but cannot afford to.

[Ms Louise Bagshawe (Corby) (Con)]

My hon. Friend is talking plain common sense. Does she agree that there is a total lack of reality on the Labour Benches, because a YouGov poll in July on the Government’s changes to housing benefit found that 68% of the public supported them, including 57% of Labour voters?

[Jackie Doyle-Price]

I would say that Labour Members are in denial about how we are going to tackle the issues that will get the economy moving again. Many of my constituents say, when I go knocking on their doors, “Good for you—it’s about time people did this,” because they are heartily sick of having to keep putting their hands in their pockets.

[Dr Whiteford]

On the DWP’s own figures, nearly 27% of the people who currently receive housing benefit are pensioners. How are those people, who are mostly on a fixed income that has been squeezed hard during the financial crisis, supposed to be able to pick up the tab for welfare reform? That makes no sense, and it puts unbearable pressure on household incomes that are already very pressured.

[Jackie Doyle-Price]

I think that the hon. Lady needs to see that issue against our broader package of welfare reform. When we introduce the welfare credit reforms, that will be tackled. The Government have recognised that such fundamental reforms will generate difficult cases, and to that end they have increased the money available for discretionary payments. I wholeheartedly endorse that.

Let me reiterate what has been said about the impact that these changes will have on landlords. Removing subsidies means that landlords will change their behaviour. They are charging rents that they know the market will bear, and if we reduce the amount of support available they will have to stay in the market by reducing their rents, or get out of it. As the hon. Member for Sedgefield (Phil Wilson) and my hon. Friend the Member for Wolverhampton South West (Paul Uppal) said, those are exactly the kind of people we want to leave this marketplace.

I shall finish where I started, with the concept of fairness. Government Members want a fair deal for the taxpayer. We also want a welfare system that acts as a safety net and rewards work. Doing nothing, and allowing the current system to continue, would not be treating taxpayers or benefit claimants fairly.

19:19

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

I have to disappoint not only the hon. Member for Thurrock (Jackie Doyle-Price) but one or two others on the Government Benches who called for us to be passive and calm. To be perfectly frank, my constituents would be extremely disappointed, and rightly so, if I were anything other than angry as this debate proceeds. The plain and simple fact is that this debate is about cuts to the most vulnerable—and it is not new. We saw it in the ’80s, and in earlier days when the Conservatives had control. This time, we are telling them that enough is enough.

In my constituency, the response to people who talk about fairness is that this has nothing to do with being fair—that it is unbelievably unfair and unjust. There was an air of unreality in the speeches by Government Members, including, I am sorry to say, the Liberal Democrats. I hope to have time to deal with that in a moment or two. In my constituency, as against what we have been hearing, 7,965 households are in receipt of housing benefit, and probably more than 2,000 will lose £9 a week, with many losing more if they are in the private sector. What is beyond doubt is that the overwhelming majority will lose out: how can that be fair?

[Neil Carmichael]

There is one big unfairness, and that is the level of debt that you have left us to deal with. You are talking about cuts, but we are giving people opportunities as well, and that is what fundamentally underpins the changes to housing benefit. What do you say about that?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

We are not going to use the word “you” in future, are we, because I am not responsible?

[Mr Clarke]

I was about to deal with the hon. Gentleman’s point, and I will do so with the respect that it deserves—frankly, that is very briefly.

The hon. Member for Colchester (Bob Russell) rightly reminded us of the role of Lord Beveridge in dealing with these matters, followed, as he said, by Clement Attlee, who built the welfare state—and whose record on housing was outstanding—and who did so after the war, having dealt with one of the biggest deficits in history. So when it comes to deficits, do not blame it on my people—the people with whom I have grown up.

People have been complaining about the media. I am sick and tired of the media expression “workshy”. We have already been told by the TUC—I prefer its figures to the ones that we have heard from Conservative Members—that only one in eight people who make applications are unemployed. We are not talking about the workshy; we are talking about the work-starved.

[Yasmin Qureshi (Bolton South East) (Lab)]

Like you, I am sick and tired of the Tories blaming the need to make cuts on the ordinary working person, when we know that it was the bankers who caused the crisis. What do you think—

[Mr Deputy Speaker]

Order. Members are using the word “you”, but I am not responsible. I call Tom Clarke.

[Mr Clarke]

I repeat that we are dealing with people, including those with disabilities. They are going to be dragged along for tests, sometimes lasting 10 minutes, and then be told that their payments will be cut off. That happened in my constituency in the 1980s, when person after person told me about such experiences.

The Government tell us that there are hard choices, but there are no harder choices than those that have to be made by people living in high-rise flats who cannot afford electricity or gas given the increased energy charges that we are experiencing. They have to choose whether to eat or have heating, and whether to have any leisure activities at all or to stay at home. On top of that, something that is at the very heart of their income is to be attacked—housing subsidies, as they have been called. Nobody said anything about subsidies given to the bankers.

[Ms Bagshawe]

The right hon. Gentleman must be massively disappointed that an overwhelming 57% of Labour voters agree with the Government’s changes to housing benefit. How does he explain that to his supporters?

[Mr Clarke]

I am speaking for my constituents, and I have not found a single person in my constituency who supports what the coalition proposes. We will go into the voting Lobby at the end of the debate, and afterwards my constituents will look at how we voted. In particular, they will look at how the Liberal Democrats voted, because they know that the Liberals are propping up a Government in whom they simply do not believe, particularly in this field. Nor do my constituents. No wonder the Liberal Democrat Benches are practically empty, although I pay due respect to the two Liberal Members who have stayed.

We have not been without advice from other quarters. What Shelter has said is important, as is what Brendan Barber of the TUC has said. He has stated:

“Ministers want us to believe that housing benefit is going to what they would call work-shy scroungers, yet in reality only one claimant in eight is unemployed. The rest are mainly low-income working households, pensioners or the disabled.”

The homeless charity Crisis has said that the Government are “peddling myths” about housing benefit claimants. Its chief executive Leslie Morphy said:

“We are concerned to hear those who are reliant on housing benefit being described as making a ‘lifestyle choice’. Nearly half of those on LHA already face a shortfall between their benefit and their rent of an average of £23 per week, meaning tough choices between rent, food, heating or falling into a vicious spiral of debt.”

I could go on. My local associations, such as the citizens advice bureau and disability organisations, agree. We had an excellent meeting in one of the Committee Rooms of the House of Lords just a few weeks ago, with representatives of organisations of and for disabled people. Lord Rix made an outstanding speech, and the overwhelming view was that those people were representing those who are already disadvantaged and not fully recognised by society, and who are being asked to bear the brunt of what the coalition Government are imposing on them. How can that be fair?

How can it be fair to say that we have an economic problem, so we will ask the poor to pay for it? Are all the people who criticise the coalition—Shelter, landlords who have made it clear that they will not reduce their rents, the TUC, the Archbishop of Canterbury, the Church of Scotland and so on—wrong, and coalition Members right? I believe not.

The result of tonight’s Division will be extremely important. We have a choice about priorities and our commitment to people. It is a choice between what is decent, right and reasonable and what I believe is the arrogance of intellect and the exploitation of power.

[Jenny Willott]

On a point of order, Mr Deputy Speaker. I should just like to correct the record. Earlier in the debate, the hon. Member for Eltham (Clive Efford) quoted my website, suggesting that I had criticised the current Government for hitting the poorest hardest. I am sure it was a simple oversight, but in fact the quote that he referred to was from 2009 and referred to my criticisms of the previous Labour Administration.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I have to say that that is not quite a point of order, but you have certainly got the clarification on the record.

19:36

[Mr Aidan Burley (Cannock Chase) (Con)]

I congratulate the hon. Member for Cardiff Central (Jenny Willott) on her clarification. I am very glad that she has made it.

I heard so much that I disagreed with from the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) that I do not quite know where to start. I should probably take the opportunity to point out to Opposition Members, as I always do, that last year, of the £700 billion that the Government spent in total, only £40 billion went on propping up the banks, which is 6%. They can hardly go around blaming the bankers for the £170 billion deficit that they left us.

[Frank Dobson]

Will the hon. Gentleman give way?

[Mr Burley]

No, I want to make some progress.

I wish to take head-on the accusation made by the right hon. Member for Coatbridge, Chryston and Bellshill that this is all about the cuts. Of course, a lot of the changes that we are making to housing benefit, and others matters that we are debating at the moment, are a result of having to make public spending reductions. It is broadly agreed by Members of all parties that we need to reduce public expenditure to pay off the deficit and start paying off the £1.4 trillion debt.

[Mr Tom Clarke]

Can the hon. Gentleman tell the House of one single television debate in which his leader referred to housing benefit cuts?

[Mr Burley]

I can tell the right hon. Gentleman that housing benefit expenditure ballooned from £11 billion in 1999 to £20 billion 10 years later, and is forecast to reach £25 billion by 2015. The Prime Minister would agree with me that the country simply can no longer afford that. We cannot go on like this, spending £25 billion a year on housing benefit.

I wish to leave for a moment the necessity argument and the fact that we have to make these changes. Even if we were in the boom years, they would be necessary purely on the grounds of fairness. They are all about fairness, but the problem with the word “fairness” in political debate is that beauty is in the eye of the beholder. There is no single agreed definition of what is fair. Everybody in the House defines it in their own way. For Opposition Members—I respect them for it—it is about redistribution of income. It is about taxing the rich more and throwing more money at the poor. For us, it might be about fairer taxes or rewarding hard work and playing by the rules. Fairness is about being able to keep more of what one earns.

What I wish to add to the debate is what we believe is fair when it comes to housing benefit. I will start with a few basic questions of principle. Is it fair that hard-working individuals and families in this country should subsidise people living in properties that they have no realistic chance of ever affording to live in? Is it fair that when the average salary in this country is £22,000 a year, some people, as we have heard, can claim more than £100,000 a year just for their rent? Is it fair that even under the proposed cap of £20,000 a year, a person would still need to earn about £80,000 just to have that disposable income for their rent? Is it fair that the cap is being set so high? If the average salary in this country is £22,000, the cap should actually be about £7,000 a year.

[Sheila Gilmore]

If the real aim is to reduce the housing benefit bill, will the hon. Gentleman explain why his Government propose to change the way in which houses, for both councils and housing associations, are built? The tenants will be paying for the cost of building houses and rents will rise to 80% of market rents, which will put up the housing benefit bill. If that is the hon. Gentleman’s key objective, how does that help us to reduce the housing benefit bill?

[Mr Burley]

The hon. Lady should have listened to what I said. Our point is that it is not just about reducing the housing benefit bill, but the issue of fairness. We need to go back to the first principles in this debate and decide what is a fair amount for the working majority to pay towards those who do not, cannot or will not work. What is fair? The average annual earnings in my constituency is £25,279 a year.

[Michael Ellis (Northampton North) (Con)]

On the subject of fairness, is it not right that Opposition Members persistently forget one of the first principles of fairness, which is the juxtaposition between low-paid hard-working families and those on housing benefit? Housing benefit claimants should not be better off than those who are hard-working and low paid. Is that not a principle of fairness?

[Mr Burley]

That is precisely my point. People in Cannock Chase who earn £25,279 a year would frankly love to have £20,000 to spend on housing from an equivalent annual salary of £80,000, because that is what it equates to. That is dreamland for them. They have never earned £80,000 a year, so why should they be paying out of their hard-earned taxes for some people to have the equivalent of a salary of a quarter of a million pounds so that they can live in parts of London that have some of the most expensive postcodes on Earth.

[Sheila Gilmore]

If the problem is about households with very high rents, why not tackle that problem? Perhaps we could build more affordable houses in London. Why not solve the problem in a phased way? Housing benefit changes will be made all over the country and 30% of housing benefit recipients in my city are at work. Why are they being punished because there is a problem? Why not just solve the problem? The hon. Gentleman has spoken very eloquently on it.

[Mr Burley]

I agree with the hon. Lady on the need for a regional cap. Funnily enough, some of the work that the Independent Parliamentary Standards Authority has done on regional caps for MPs should be considered. In my constituency, the IPSA cap to claim is £700 a month. That is what IPSA thinks is a reasonable rent for an MP and his family to claim to live in Cannock Chase. Yet under the housing benefit rules, a person can claim £1,600 a month, which is more than double what IPSA thinks is fair for an MP. How is that fair?

The charity Shelter, which has been guilty of some terrible scaremongering, has claimed that up to 80,000 people will be made homeless by the plans. It falls to it to redefine its ludicrous definition of homelessness, which includes two teenage children living in the same bedroom. That is hardly the definition of homelessness that most people in this country would understand. For most, homelessness is about someone not having a roof over their head. Even according to Shelter’s own briefing, the average loss in my constituency will be £30 a month—£7.50 a week. The total number of claimants in Cannock Chase is 10,278. Therefore, one eighth of my constituency—it is a very poor working-class constituency that used to have 52 coal mines—will have to adjust their weekly outgoings by less than a tenner. Is that really a reason to speak of weeping children, social cleansing, Highland clearances, or, worst of all, as Polly Toynbee said, a “final solution” for the poor? She somehow compared capping housing benefit to £20,000 a year to the extermination of 6 million Jews. The left has engaged in disgusting language and it should be thoroughly ashamed.

If anything, these reforms do not go far enough for me. Let me finish by saying that as a country we must start to live within our means. We need to even up the benefit that a person gets from working with the benefit that a person gets from the Government. Yes, the changes are about saving money, but they are also about fairness. It is simply not fair that people on low incomes in my constituency, in which the average income is 25 grand a year, should pay their taxes to subsidise those who want to live in some of the richest postcodes in this country, where a person would need a salary of £250,000 to afford them. That is not fair and neither is the Opposition’s motion.

19:45

[Roberta Blackman-Woods (City of Durham) (Lab)]

Let me begin by commenting on how the coalition parties seek to frame this debate, which was exemplified in the speech by the hon. Member for Cannock Chase (Mr Burley). They are trying to suggest that housing benefit claimants are workless, wasteful and feckless. They are using the most extreme examples of housing benefit claims to try to suggest to the public at large that that is the norm. They are trying to dress up cuts to benefits for some of the most disadvantaged people in this country as fair. If the hon. Member for Hastings and Rye (Amber Rudd) were still in the Chamber, I would say to her that the only sensationalising of this issue that is going on is in the right-wing press. The press is trying to lead the whole country to believe that everybody on housing benefit is getting £26,000 a year. That is absolutely scandalous and outrageous. I cannot believe that the Secretary of State, who has a social policy background, is presiding over such changes. Shelter suggests that the change to the JSA will mean that many claimant households will be shifted from around or below the 60% median income, which is the poverty line, into severe poverty. That will force an additional 84,000 households to live on less than £100 a week. Those are the sums that will apply to most people on housing benefit, which includes 54,000 children. We need to have a more balanced debate on the issue and to have some of the real facts talked about in this Chamber.

The hon. Member for Colchester (Bob Russell) made an interesting contribution. I accept that when we were in government, we did not build enough social houses. In my constituency, the Liberal Democrat council never implemented a housing policy that ensured that all developments contained 30% social housing. Such a measure was not implemented year on year, which is why we have such a shortfall in social housing. Tory and Liberal Democrat councils all over the country stopped, through the planning process, delivering houses. I am talking about not just social houses, but houses right across the whole spectrum. That is why we have a real problem with supply, and those councils should take responsibility for the situation.

Let me go on to explode some of the myths that have been put around about housing benefit claimants. Let us take the first myth that all claimants are workshy. Only one in eight of all housing benefit claimants is unemployed. Taking just those in receipt of local housing allowances across the country, 26% are in employment and only 19% claim jobseeker’s allowance. The rest include pensioners, carers, disabled people and others unable to work. In the north-east, 18% of people in receipt of local housing allowance are in employment, and that includes a number of people in my constituency.

A lot of people in receipt of housing benefit have very complex needs. I have an example from my local housing authority. A 21-year-old woman secured a tenancy through working with a family intervention worker, who helped her to move on from an overcrowded and difficult family situation. She has multiple social issues, so subsequently, in addition to her weekly rent, she had a tenancy sustainment officer working with her. Also due to her circumstances, she had no furniture and had to access a furnished tenancy. With the changes to long-term jobseeker’s allowance after 12 months, she will lose 10% of her housing benefit entitlement. With the additional services, that means £10.75 a week. Her JSA is only £51.85, which means that her income will drop by 20%, leaving her with just £21 to buy food and clothes, to pay for transport, and to get to job interviews and so on. That is the sort of change we are talking about, and that is the type of person who will affected.

I want to address issues applying specifically to my constituency. The risk analysis by the Department for Work and Pensions states that 99% of LHA claimants will, on average, lose £12 a week. With regional variations in the economy, some areas will bear disproportionate impacts, and Durham has been identified as one of those areas. It will take a bigger hit than many other authorities, which is made much worse by the fact that constituencies such as mine have artificially inflated private sector rents because of students. With the reduction in the amount a person can claim from the median to the 30th percentile, most people will be priced out of private renting in Durham. There are always a lot of students willing to come in and take their place, so this will not lead to a reduction in rent levels. Poorer families will be pushed out of areas such as my city centre and will have to move to outer areas, where they will find it much more difficult to access work opportunities. I ask the Minister therefore to think again about the proposals, and certainly to stop trying to suggest that this is part of the fairness agenda. It can be described only as an unfairness agenda.

19:52

[Mark Pawsey (Rugby) (Con)]

Any organisation facing an item of expenditure that has increased by 80% over 10 years would consider it a matter for attention, so it is entirely appropriate that the Government have been looking at housing benefit, given that expenditure there has increased from £11 billion in 1999 to £20 billion in 2009, and it is predicted that, without the reforms the Government are bringing forward, that figure would rise to £25 billion in 2014. As the Minister reminded us earlier, that is £1,500 per working family. Labour did nothing about the situation during 13 years in government, despite the anxieties of the right hon. Member for Holborn and St Pancras (Frank Dobson), although it was recognised by Labour in its 2010 Budget and is accepted in this motion. The question, therefore, is not whether we should act, but how we should act.

The situation today arose from the freeing up of the private rented sector by the Conservative Government in the 1980s. People were freed from the state as the only provider of affordable housing, and new, assured short-hold tenancies massively increased the private rented stock—a stock of property that was barely in existence up until that point. That measure gave greater choice to tenants and increased mobility, but it became clear that if people’s circumstances changed, or they were unable to remain in their homes, a new form of support would be needed. However, that support has got out of control. In addition, the system has introduced unforeseen consequences, because the payment of housing benefit has caused rents to rise higher than they would otherwise have done. There are 3.3 million rented properties in the UK, and 1.2 million tenants receive this benefit. That is more than one third of the total, and has a massive effect in the market for rented properties.

[Sheila Gilmore]

Is the hon. Gentleman not aware that according to two recent research reports—the Rugg report in England, and another conducted in Scotland for the Scottish Government—the proportion of those in the private rented sector on housing benefit was less than 20%. In Scotland, it was 17%. That report was published last year—not a long time ago. Of that 17%, only 8% were on full housing benefit, 6% had half paid, and 3% had less than half paid. Those are the actual figures from research. It is important that we have this published research, and that Government Members are aware of it.

[Mark Pawsey]

I am referring to the UK as a whole, and I will go on to show how the current system has driven rents up. When councils make their rates available, landlords use them as a benchmark for the rents they charge, knowing that a proportion of tenants will be able to pay and will not contest the level. The recipients of housing benefit are happy to accept whatever a landlord asks for, because they know that the state will pay. That contrasts with the position of private tenants, paying rent out of their earned income, who will be keen to negotiate the best rent they can. These higher rents might be good for landlords, but that does nothing to help people who are not in work to find work. In fact, the reverse can apply, because it can discourage claimants from taking low-paid employment or from working longer hours, because if they do so, their benefit entitlement might be lost, and the mobility introduced by the sector might be reduced.

It is worthwhile remembering—sometimes the Labour party seems to forget—that the benefits paid to recipients come out of the taxes paid by hard-working families. A number of my hon. Friends have drawn attention to that. Often, they are the kind of people who look with envy at the kind of housing enjoyed by some recipients of housing benefit. The new system will make things fairer.

We have heard a great deal today about the effect on people living in London, and some Government Members could be excused for thinking that this is a London-only issue. In my constituency, however, a terraced house costs £550 per month to rent, so some of the sums spoken about, such as the family cap of £26,000—more than many people in my constituency earn in a year—are out of this world to the average resident in my constituency. They fail to understand why such sums should be made available.

Concern has also been expressed about the effect of the new rules on availability of properties for people in receipt of housing benefits. I believe that landlords will have to become more realistic in the rents they accept. They will have to accept a lower return than they enjoy now. My hon. Friend the Member for South Thanet (Laura Sandys) spoke about landlords enjoying a return of 12%. There is no reason residential landlords should receive a disproportionately higher rate of return at the expense of the state. In order to improve returns, those who are committed to this sector for the long term and who continue to acquire properties in the future will not be willing to pay capital prices at the level they have done previously. That will exert downward pressure on the price of housing, making housing more generally more affordable, and, as a side effect, benefiting many people struggling to make a start on the housing ladder.

Increasing the supply of housing more broadly will be another important factor as the coalition deals with the Labour party’s failure to build enough homes. Last year, fewer homes were completed than in any time for a generation, and today’s housing reforms need not be seen in isolation when it comes to providing support for those in need of housing.

[Andrew Bridgen (North West Leicestershire) (Con)]

My hon. Friend should be aware that last year saw the lowest number of houses built since 1924.

[Mark Pawsey]

I thank my hon. Friend for that intervention. I spoke about a generation, but it is clearly two or three generations. Either way, we need to deliver more houses, as I think has been recognised by the Labour party, and the changes that the Government are introducing in the localism Bill will enable more houses to be built. It is that additional supply that will bring down prices for both rental and sale, giving occupiers a better deal. Progressive authorities, such as my local authority in Rugby, recognise the benefits of housing growth both for their local economies, by introducing new consumers into the area, and for the community as a whole, through the new homes bonus, which will enable the local authority to retain more council tax to develop new infrastructure.

I will draw my remarks to a conclusion because I know that other Members wish to speak. In my view, the housing benefit reform that the coalition is introducing is a necessary step in controlling the cost of the system of housing support to taxpayers, a saving that will yield £1.6 billion a year. In addition to that saving, the system being introduced will bring long-term benefits in the operation of the housing market.

20:00

[Alex Cunningham (Stockton North) (Lab)]

As a new member of the Select Committee on Work and Pensions, I have a keen interest in this topic. The Committee is undertaking an inquiry into the impact of the changes to housing benefit. We had an insightful evidence session the other day with the Minister for Welfare Reform. Conclusions will follow soon.

It is worth repeating that the statistics show that 4.7 million people receive housing benefit in the UK, two million of whom are pensioners, 500,000 are on jobseeker’s allowance and 700,000 work in low-paid jobs. The housing benefit total is clearly a huge sum, and I, too, am in favour of reforming housing benefit if the changes are fair and well thought through. We all agree that the deficit must be cut somehow, even if we do not agree about the pace at which the cuts should happen. However, the coalition is seeking to push through the changes to housing benefit on the basis of quick fixes and cheap headlines. I reject the approach of targeting and punishing people—that is what it is: punishing people—who cannot find work. Someone who is trying their best to get a job should not have 10% of the money that they need to pay their rent taken from them, thereby only adding to their miserable situation, imposing even greater stress, both financial and emotional, and doing nothing to improve their job prospects. Indeed, quite the contrary: doing so reduces their meagre resources still further, cutting the funds available to them to apply for jobs and attend interviews.

[Dr Whiteford]

Does the hon. Gentleman agree that those cuts will affect local authorities, which will have a statutory duty to pick up the pieces when people are evicted from their homes or forced on to the streets?

[Alex Cunningham]

I do agree. Indeed, my local authority has told me of its anguish in wondering how it will cope with the problem at a time when it is also facing 25% cuts in its budgets.

The cut to housing benefit is not the only disincentive to work. Those 700,000 people claiming housing benefit who are in low-paid work will incur greater travel costs to get to work if they are forced to move further from their places of employment. Indeed, they might not even be able to afford to do so, thereby losing their jobs. For those who are already working for the minimum wage or close to it, the change could make the difference between balancing the books each week and being unable to pay the bills and put food on the table. Certain sections of the media would have us believe that the vast majority of people who have been unemployed for 12 months or more are lazy layabouts who do not want to work—not so: in reality, very few people have that attitude. Most people who are unemployed want to work and provide for their families. The Government’s crude measure, however, will target all those people, regardless of their attitude.

Despite reductions in the number of people unemployed in recent years, in the Stockton borough there are still nine people unemployed for every job available. With 500,000 public sector and 500,000 private sector jobs set to go as a result of the coalition’s cuts, things will only get worse on Teesside. People should not be punished because of a lack of jobs. A few weeks ago, Connaught, a major building company, went into administration, and it was followed by another this week, Rok. Both were big employers in my area, and I doubt whether either will provide the private sector jobs that the Government seem to think will be magicked out of thin air. If people had those jobs, they would not have to access housing benefit.

As a result of the changes, people who claim housing benefit will lose £9 a week on average, or £468 a year, which is a lot of money to a lot of people. It is a big drop in income for people struggling to make ends meet. Much of the focus has been on the impact of the changes on London and the south-east, and understandably so, given the high cost of housing in those areas. However, Shelter estimates that some 45,000 people in the north-east will also be affected by cuts to housing benefit. In Stockton-on-Tees, the local authority has told me that from April 2011, 30 families will lose out by £36 a week on average, thanks to the removal of the five-bedroom local housing allowance rate. From April 2012, 400 claimants will be hit by the extension of the shared room rate, which in future will apply to people up to the age of 35. Another 1,800 households will also lose out in hard-cash terms. Clearly the impact of the changes will be felt by people across the country, and not just in London and the south-east.

We must also look at the associated costs of the changes for local authorities. The wider impact of the changes on families and communities will be significant, particularly in areas expected to see an influx of people who have been forced to move out of areas in which they can no longer afford to live. For example, some schools may see an influx of pupils, as families are forced to move to areas where accommodation is cheaper. I worry that uprooting families in that way will cause chaos and might end up costing more than it saves.

Others Members have talked about the shortage of affordable homes. A key reason for the increase in the housing benefit bill in recent years is the lack of affordable housing. I am passionate about the need to build more homes and ensure that young people in particular can get on the property ladder. According to the Council of Mortgage Lenders, more than eight out of 10 first-time buyers get on the housing ladder only because they receive cash from the bank of mum and dad. First-time buyers today typically require a deposit of 21%, compared with 10% three years ago. The problem will surely only get worse for those young people due to start university in 2012, who will graduate with huge debts, of £30,000-plus, making it even more difficult for them to save for a deposit for a house.

Thirty-five years ago, 85% of the housing budget went on bricks and mortar, building new homes. Today, more than 85% of the housing budget goes on helping people with their housing costs, because the lack of affordable housing has driven up rents and house prices so much. Under the previous Labour Government, many new homes were built, including 500,000 more affordable homes, but that was not enough. In addition, the right to buy gave millions the chance to own their own homes, but it meant that the nation’s social housing stock dwindled. Surely the long-term solution to the problem is to invest in our housing stock, to ensure that rents and house prices are sustainable, and that ordinary, hard-working people can afford housing without assistance from the state.

Since the coalition came to power, I am told that local councils have ditched plans for new homes at a rate of 1,300 every day. That is not the direction that we as a nation should be travelling in. I will be interested to hear just what the Government plan to do to reverse that decline and help us build the affordable homes that will help negate the need for such vast sums of public money in the benefits system.

20:08

[Nick de Bois (Enfield North) (Con)]

As an outer-London MP with the 13th highest proportion of LHA claimants, I very much welcome the opportunity to contribute to this debate, in preparation for which I met representatives from Shelter and other interested parties. I had looked forward to this debate, but I must say that as the afternoon has grown longer and I have grown a little wearier, I have been disappointed that, apart from some notable contributions, we seem to have heard a lot of cant, hyperbole and soundbites from many Opposition Members, which has done little to improve the quality of the debate.

I have sat here for so long that I started looking for some fresh ideas, and at one point the hon. Member for Sheffield South East (Mr Betts) said that there was no strategy. Well, strategy there is, and strategy is the point that has been missed by Opposition Members, because it is a mistake to look at housing reform in isolation. That is a mistake that we have seen all afternoon. To do so is to miss the point of what the Government are trying to do. This Government’s strategy is to try to lift people out of poverty, taking them from dependency to independence—something that the Opposition have neither embraced nor understood, but even at this late hour I hope that they might just reflect on it. They are missing the point of what the Government are doing, but by understanding my constituency they will see what we can do for our constituents.

Enfield North has 7% unemployment, higher than average youth unemployment, and pockets of poverty, mainly in the eastern area. Those are issues that I want to conquer, and that requires reform. Doing nothing is not an option, but constructive suggestions have been notably lacking from the Opposition. Of course the decisions are difficult—[Interruption.] I welcomed the conversion of the hon. Member for Dudley North (Ian Austin) to the cap for London, which was seriously missing from everything that the Opposition had said previously. Of course the changes are difficult, but that does not mean that they are wrong. They will drive out poverty by the most reliable means of helping people and contributing to getting them back into paid employment.

The Secretary of State is sensitive to many of the demands. He was quick to point out the discretionary funds that are available and to which due acknowledgment has not been given today. Is it right to have a system—

[Dr Whiteford]

Will the hon. Gentleman give way?

[Nick de Bois]

I will not give way until I have made some progress. I am sure the hon. Lady will understand that I have been here for many hours, and I am not sure whether there is anything new coming from the Opposition Benches.

Is it right to sustain a scheme that works against employment? No. What do I say to the employer who came to my surgery only last week and told me that people are queuing up for jobs, but they want to work for only a limited number of hours for fear of losing their house? How absurd is that? Whatever the Labour party’s good intentions when it was in government, its reforms produced a grotesque situation. What do I say to the people who come to my office and want to work, but are caught in the poverty trap—[Interruption.] I am sorry that hon. Members do not want to listen, but week after week in my constituency I see the evidence of a failed policy on my doorstep, and it is absolutely right to represent my constituents’ interests not only where there has been failure, but where there is an opportunity for success. That is what this Government are trying to do, and rightly so.

What will the changes mean? We are talking about the LHA, not social housing. Rents are high. There has been a 25% increase over seven years in the LHA sector compared with 15% in the private sector. It was interesting when an Opposition Member—forgive me, I cannot remember his constituency—said that the 40% share of the LHA market that the Government are driving is not influencing rents. It is utter nonsense to think that such a massive contribution can have no impact on the level of rents. Opposition Members may deceive themselves if they wish, but I assure them that in the real world that is definitely the case.

[Glenda Jackson]

Will the hon. Gentleman give way?

[Nick de Bois]

I will not give way at the moment. I want to finish my speech, but if there is time I will happily take a further intervention later.

A four-bedroom house will allow almost £20,000 of LHA, which is equivalent to a substantial amount of gross income. We talk about fairness, but it must work both ways. Hon. Members should come with me down the Hertford road in my constituency to meet those who are working hard to pay their rent and trying to look after their family on a low income. They should try to understand the frustration of living next door to people who may be living in a bigger house, subsidised by the state. We must bear that in mind when making judgments. We are all in this together, and we must reform and change.

The Labour Government believed that the answer to defeating poverty was to use targets and money—some £20 billion of our money in housing benefit. They rationalised that that was how to fix the problem, but it failed. It did not help; it hindered. Instead of releasing those in poverty and suffering inequality, it imprisoned many in a spiral of unwelcome state dependency. The time has come to change. Our proposals are part of a holistic, joined-up programme.

[Caroline Flint]

My understanding is that nearly 7,000 people will lose out as a result of the cuts in Enfield. What does the hon. Gentleman have to say to them?

[Nick de Bois]

The hon. Lady should change the end of the telescope she is looking down. She should look at what she can do to encourage employment and encourage people back to work, and start to take people out of real poverty. That is the contribution that she could make, and I hope that I can welcome her to such a conversion later this evening.

Our proposals are part of a holistic, joined-up programme to reform the Labour party’s policy of surrender to dependency to a future of independence free from poverty. I understand that hon. Members do not want to hear that, but they have heard and perhaps they will learn.

[Hon. Members]

Follow that!

20:15

[Mr Chuka Umunna (Streatham) (Lab)]

Follow that indeed.

I want to pick up on some comments made by the hon. Member for Wolverhampton South West (Paul Uppal) and my hon. Friend the Member for City of Durham (Roberta Blackman-Woods). They referred to the tenor of the national debate on this issue, which I have found deeply worrying, and how our newspapers in particular show unemployed people being divided from employed people, benefit recipients being divided from those who are not claiming benefits.

We saw that division of rich and poor at the weekend with the headlines in some newspapers reflecting announcements from the Department for Work and Pensions. The Mail on Sunday said “New IDS blitz on the workshy”; the News of the World said “Work gangs for shirkers”; and The Sunday Telegraph said “Workshy will have to take unpaid jobs”.

[Michael Ellis]

Will the hon. Gentleman give way?

[Mr Umunna]

I want to make some progress, but I may give way later.

Today, we read that the Department has released figures showing that every family will have to pay more than £1,500 a year in taxes to fund the housing benefit system. As ever, it seems that a particular section of society has become a target. Has the Treasury released figures to show how much each family in this country loses as a result of tax evasion and avoidance by wealthy individuals and companies? It is extremely important that we do not allow the tactic of divide and rule to succeed.

This is particularly pertinent to my community. The constituency that I represent is diverse not only ethnically but in regard to the socio-economic demographic of the people who live there. I spoke to one of my constituents about these issues last weekend. He and his wife live in one of the more leafy parts of Clapham common, an area known as Abbeville village, and he works for a private equity company. He is undoubtedly in the top 1% of earners. I asked him what he thought about the Government’s changes to the housing benefits regime. Given that they will not have a direct impact on him, I was surprised to find that he had strong views about them, and that he was horrified at their likely impact on his community. One of the reasons that he likes living in my constituency is the diverse nature of the streets and the different parts of the area. He said that he did not want to live in a street where all the people were like him. He liked the fact that there were different people living there.

I mention this because it is important to understand that these changes will be an issue not only for people claiming housing benefit but for the community as a whole. Given the impact that the changes will have on my constituents, I do not feel that I am whipping up hysteria or unduly disturbing my community. I am simply looking at the facts. There are 5,470 households in Lambeth that will face huge cuts in housing benefit next year. For example, 1,520 households in two-bed properties in Lambeth will see the contribution to their rent reduced by an average of £25 a week. That is £1,300 a year, and those people simply cannot afford it. The changes will undoubtedly cause an increase in poverty in my constituency. Shelter is predicting that they will affect many of the claimants who live just above the poverty line, and they will undoubtedly lead to deep anxiety and stress among people who are already struggling to get by.

[Bob Russell]

Does the hon. Gentleman agree that an unintended consequence of the measures will be that, if people have to spend more of their income on rent, they will have less to spend in local shops and on local services?

[Mr Umunna]

Absolutely; I would not disagree with the hon. Gentleman.

I have outlined some of the effects on my community that we are able to discern, but there will be others that it is difficult to quantify at the moment. We are going to be faced with people moving from inner London to our part of Lambeth, seeking private rented accommodation.

[Pete Wishart (Perth and North Perthshire) (SNP)]

We know that this is what the Tories do: they attack the poor and the vulnerable. But what about Labour? I could not make out from what the right hon. Member for Paisley and Renfrewshire South (Mr Alexander) said whether Labour was for or against the cap. Does the hon. Gentleman know?

[Mr Umunna]

If the hon. Gentleman reads the motion, he will see no denial of the need for some degree of housing benefit reform. No doubt my right hon. Friend the Member for Don Valley (Caroline Flint) will give further details in her speech, in addition to the many details that my right hon. Friend the Member for Paisley and Renfrewshire South gave the House earlier.

I was talking about the effects of the measures that we are not yet able to discern. We have 22,000 people on social housing waiting lists in Lambeth, but we have no idea of the number who will seek social private rented housing in our area as a result of the changes. I mention that figure to demonstrate that we are already under huge pressure.

There has been a lot of talk about introducing these measures to reduce the benefits bill, but we are told that rents will inevitably fall as well. London Councils, a cross-party organisation, has carried out a survey of landlords in London. I make no apology for talking about London, by the way; it is my area, and it is where my constituency is based. The survey found that 60% of landlords letting properties to housing benefit tenants in London said that they would not reduce their rents, even by a small amount, to accommodate the changes, and Shelter has found that 43% of such landlords will simply scale back their operations in this sector.

I want to finish by mentioning a matter that I have already raised with the Chancellor of the Exchequer—the proposal to reduce by 10% the housing benefit of jobseeker’s allowance recipients who have been receiving JSA for more than 12 months. I challenged the Chancellor about this at a Treasury Committee hearing in July and asked him to provide me with evidence that that measure would produce increased work incentives, given that he said that that was why he was introducing it. Funnily enough, he quoted the Institute for Fiscal Studies back at me. It is funny how the coalition Government choose to ignore the IFS when it tells them things they do not want to hear, only to quote it back at me when they find it helpful.

The Chancellor quoted an IFS report that found that

“welfare benefits can have substantial effects on the work behaviour of unskilled and even for men with high school education”.

Be that as it may, I do not see how there can be an incentive for people to work when there are no jobs for them to go into. In the past few weeks, information from the Chartered Institute of Personnel and Development has shown that 1.6 million people are going to be out of work as a result of the measures being introduced by the Government. We already know that there are five people chasing every vacancy in the economy, and research shows that that figure is not going to fall.

Will the Minister tell us why the Government are seeking to punish people who are doing everything they can to find work? I have asked this question in the Chamber before, but I have not received a reply. There are many people in my constituency who have been on JSA for more than a year—the number generally hovers between 700 and 800—and who are struggling to find work. Why are the Government punishing them when they are already down on their luck? We must resist the divisions that the headlines are seeking to create in our communities. This is an issue for everyone, whether they are on housing benefit or not, and I plead with the Government to reconsider the measure on JSA recipients. As I have said, they are already down on their luck. Why kick them when they are down?

20:24

[Andrew Bingham (High Peak) (Con)]

I am a firm believer—I always have been—that people should be rewarded for hard work. I am also a firm believer that we need housing and other benefits, but that they should be there as safety nets. The willingness of the Labour Government to pay more than £100,000 a year to someone on benefits is not, to me, a safety net. It has to be said that £100,000 is an enormous amount of money, which is sufficient to fund a lifestyle beyond the budget of many hard-working families in my constituency of High Peak. [Interruption.] I am sorry, but that has to be wrong; it cannot be right.

Labour Members claim that this is fair. Do they think it fair that, under current arrangements, someone paying rent below the local housing allowance level will be able to receive the local housing allowance and keep the change? People can make a profit on housing benefit. Does that seem fair? Is that fair to someone working hard to pay their way? Labour Members look askance, but it is true.

[Glenda Jackson]

Will the hon. Gentleman give way?

[Andrew Bingham]

Briefly, yes.

[Glenda Jackson]

In my constituency, private landlords are increasingly reluctant to accept tenants who can pay only through housing benefit. For an increasing number of people, there is a shortfall between what the local rent office deems a property to be worth and what the landlord actually charges. Not one single claimant of housing benefit in my constituency—and they number thousands—has money to take home from the local housing allowance. In many instances, they have to make up the shortfall themselves.

[Andrew Bingham]

That may be the case in the hon. Lady’s constituency, but there are examples where people are keeping the money as change. I will pay slight tribute to Labour Members, as they were going to stop that in April next year. Fair do’s there. However, that needs to be compared with what the hon. Member for Manchester Central (Tony Lloyd) said, as he spoke about taking money away. I gather that £15 of weekly excess was taken away last year. How do they square that one?

The £20,000 to £21,000 cap on housing benefit is fair. Some people have claimed that that amount is too much, but I think it is about right. I also think that setting the local housing allowance at the 30th percentile point is fair. It means that people on housing benefit can afford three out of 10 rental properties.

From experience, however, I would like to sound a small note of caution about broad market rental areas. The determination and review of BMRAs must be done with great care. The Rent Service looked at the BMRA in my constituency. Glossop was covered as well, but because of the determination and conditions, there was a detrimental impact on some residents in my constituency. This issue was raised by my hon. Friends the Members for Cardiff Central (Jenny Willott) and for North East Hertfordshire (Mr Heald), and it is a slight concern of mine. One thing that came out of the Rent Service review was the Heffernan case, which went to the House of Lords—some Members may be aware of it, some not. It caused a long delay—hence my note of caution.

The increase in the discretionary housing allowance has not been much mentioned. It is increasing by £10 million next year, £40 million a year from 2012 to 2015, and £60 million a year from 2013-14. This is a huge amount. The DHA was used to deal with the difficulties of the BMRA in High Peak a couple of years ago.

The reform of housing benefit is long overdue. At present, we spend more on it than on the Army and Navy combined. It is right to offer people support when they need it, and it is right that the extra money is available through the discretionary housing allowance.

[Caroline Flint]

rose—

[Andrew Bridgen]

rose—

[Andrew Bingham]

I will not give way, as I have nearly finished and many others are waiting to speak. [Interruption.] I can talk as long as anyone wants, but I am conscious that some Members have been in their places a long time and are waiting to speak.

It is wrong that hard-working families in my constituency and others who are living within tight budgets—

[Caroline Flint]

rose—

[Andrew Bingham]

Oh, go on. I will let the right hon. Lady have a go.

[Caroline Flint]

The hon. Gentleman welcomes the announcement of a rise in the amount provided for the discretionary housing allowance. How would he feel if those payments were paid to the landlords of the very occupiers of homes that the coalition Government have demonised by letting them stay in houses that cost so much money? What does he feel about that?

[Andrew Bingham]

Excuse me, but I do not like the word “demonised” any more than I like “punished” or “cleansing”. I do not like the language used by Opposition Members.

[Andrew Bridgen]

Will my hon. Friend give way?

[Andrew Bingham]

Yes, for the last time.

[Andrew Bridgen]

Does my hon. Friend believe that the increase in the housing benefit budget from £14 billion to £20 billion in the past five years is a sign of the success or the failure of the last Government’s policies?

[Andrew Bingham]

I think that “abject failure” is probably a better phrase.

I end by saying that it is wrong for families who work hard to see families on benefit living in houses that are beyond their wildest dreams.

20:30

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I was interested by what the hon. Member for High Peak (Andrew Bingham) said. I think that it had something to do with hard-working families and the impact of the present housing benefit system on people who wish to work hard. I was reminded of the first Thatcherite regime, when the hon. Gentleman’s party deemed a living wage to be 75p an hour. I also remember that during our term in government, his party voted against every single move to take people out of poverty, including the national minimum wage.

The most interesting thing to emerge from today’s debate is the fact that Government Members have swallowed hook, line and sinker the myths that were originally used in the proselytising of their Prime Minister, who stood on the Floor of the House and castigated housing benefit for paying people £1,000 and £2,000 a week. He attempted to present that as the median for people claiming the benefit, and I was so intrigued that I tabled a question on the issue. There are, in fact, no claimants receiving £2,000 a week, and there are precisely 90 families, in London exclusively, whose housing benefit pays them rent of £1,000 a week, because those are extremely large families.

The myth with which the Government have been successful in their proselytising is that most people on housing benefit live in four-bedroom properties. Nothing could be further from the truth. Most people on housing benefit live in shared accommodation or in one or two-bedroom properties. In my constituency, the amounts that those claimants will lose range from £21 a week for those in shared rooms to £246 a week for those who are fortunate enough to live in four-bedroom properties.

[Fiona O'Donnell (East Lothian) (Lab)]

The 10 families in my constituency who live in five-bedroom properties do so not because they have dressing rooms or extra en suites, but because of the nature of families nowadays. A mother and a father may bring in children from previous relationships. Government Members do not seem to be able to grasp that.

[Glenda Jackson]

That is a salient point, which can be replicated in my constituency. I know of a family with two children who are severely disabled and in wheelchairs, and two who are not so severely disabled. There are also a mother, a father and a grandmother, and they are all attempting to live in a four-bedroom property.

The other myth that has been propounded by Government Members today is that these changes are essentially fair. I distinctly remember the Prime Minister and the Deputy Prime Minister—who has proved himself to be the Maréchal Pétain of his generation—saying that the changes were not only fair, but made at a time when the Government were having to make extremely difficult choices to protect the most vulnerable members of our society. Throughout the afternoon, it has been clear that Government Members do not regard pensioners as vulnerable. Nor, apparently, do they regard them as being taxpayers. They do not regard people with disabilities as being vulnerable, and they do not regard people on low pay as actually working.

What I say about my constituency and my city of London is not scaremongering. We have been here before. As I said, some of us remember the Thatcherite regime, when people were forced out of their homes and some were sleeping on the streets because they could not afford to find anywhere to live. The bills for bed-and-breakfast accommodation were astronomical. I am sure that Government Members are smiling at that memory, because that, essentially, is what they wish to do.

[Anas Sarwar (Glasgow Central) (Lab)]

Will my hon. Friend give way?

[Glenda Jackson]

Let me finish the point. Government Members wish to get rid of social housing completely.

[Anas Sarwar]

I thank my hon. Friend for giving way, and I promise not to annoy her again. I just want to highlight the fact that Government Members are finding much of this funny. They like to portray this issue as being about workshy or unemployed people taking benefit from hard-working taxpayers across the country. Is it not true that only one in eight people who receive housing benefit are unemployed? Government Members should take this debate more seriously.

[Glenda Jackson]

My hon. Friend is wishing for the moon. Government Members are not interested in facts; they discount absolutely everything that emanates from this side of the House.

[Andrew Bingham]

Will the hon. Lady give way?

[Glenda Jackson]

No.

Government Members also discount the briefings that we have all received, from organisations such as Shelter, Crisis, the Chartered Institute of Housing, Citizens Advice and the National Housing Federation, about the real danger and damage that these ill-thought-out plans are going to inflict on some of the most vulnerable people in our society.

We have been here before. We have seen all this before. An earlier submission by Crisis pointed out that it will cost £60 a day for a room in a bed and breakfast. Let us look back to the earlier history of bed and breakfasts. The hon. Member for Colchester (Bob Russell) referred to the history of 1945; I was somewhat surprised that he did not take us back to the much more recent history of what happened to people in this country under the first Thatcherite regime. The hon. Gentleman was concerned about children then—

[Kwasi Kwarteng]

Will the hon. Lady give way?

[Glenda Jackson]

No.

I was somewhat surprised that the hon. Member for Colchester is not concerned about children this time. As he knows, the greatest damage inflicted on children was when they were stuck in those abominable bed-and-breakfast set-ups. Not infrequently, families were turned out on to the street at 9 o’clock in the morning and not allowed to return until 5 o’clock in the evening.

This, apparently, is the coalition Government’s way of taking people out of poverty. I find it totally incongruous that they should believe that they will take people out of poverty by making them homeless. That, essentially, is what they are going to do.

[Kwasi Kwarteng]

I am much obliged to the hon. Lady for giving way. We have sat through her speech with varying degrees of incredulity. While we admire her histrionic performance, we are still at a loss as to what her position is on the cap. Does she think it is right that in her—[Interruption.] I am fully entitled to ask the hon. Lady a specific question about her view on the cap. There are people in her constituency who are receiving far more than £20,000 a year on housing benefit.

[Glenda Jackson]

If the hon. Gentleman had been here from the beginning of this debate, he would not have been as ill informed as he is ill mannered. There are not people in my constituency claiming housing benefit at that rate, as I have had occasion to say. The majority of housing benefit claimants live in one and two-bedroom properties. We have already said that we would certainly introduce a cap, but not by the method that his Government propose. There should be a regional element.

[Steve Webb]

indicated dissent.

[Glenda Jackson]

From a sedentary position, the Minister is waving his hands in disbelief. This afternoon he was leaping to the Dispatch Box asking questions about what my party would have done if we had been in government. He knows, and I know, that if my party had been in government and his party had still been in opposition, and we had introduced the policies that he is supporting now, he would have fought them tooth and nail.

The Minister has absolutely no cover any more. As I have had occasion to say before in the House, his party has become the “30 pieces of silver” party, and nowhere is that more marked than in what it is proposing to do to some of the most vulnerable people in all our constituencies. I say to Government Members that the problem is not exclusively London’s; this will affect the whole country. When the second tranche of the Government’s approach to social housing comes in—the increase of rents to at least 80% and the removal of secure tenancies—the impact will run and run.

[Michael Ellis]

Are not hard-working people on low incomes also vulnerable, and do they not also need to be treated fairly by our society, as opposed to those on whom so many of the hon. Lady’s Opposition colleagues focus—people on housing benefit who are receiving more from the taxpayer than many of the working poor could dream of paying for themselves?

[Glenda Jackson]

I am intrigued to know how the hon. Gentleman thinks it will benefit low-paid hard-working families who are not claiming housing benefit if we make low-paid hard-working families who are on housing benefit both unemployed and homeless. They will then have to move from where they are currently living—and, I hasten to add, where they provide services that the hon. Gentleman and his hon. Friends would never dream of providing for themselves. We are all dependent on those services, and on the people who provide them. I know the hon. Gentleman and his colleagues do not like it, but when that happens in the centre of London we are going to see—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Time is up. I call Bob Blackman.

20:40

[Bob Blackman (Harrow East) (Con)]

Thank you, Mr Deputy Speaker, and I think I am right in also wishing you a happy birthday for tomorrow. I also wish to say that it is a privilege and an honour to follow the hon. Member for Hampstead and Kilburn (Glenda Jackson).

We cannot divorce housing benefit from the plethora of other benefits that have been allowed to build up over the last 13 years: jobseeker’s allowance, employment and support allowance, income support, and also council tax benefit, child tax credit and working tax credit. Contributory benefits and universal benefits will all play a part in resolving this country’s benefits problem.

These benefits are a bureaucratic nightmare. They are mainly paper based, and enormous amounts of evidence are required to justify their application. As a consequence, many individuals who claim benefits have to go to Jobcentre Plus, the pensions authority, the disability and carers service, their local authority and Her Majesty’s Revenue and Customs. If they are on jobseeker’s allowance they may have to swap between that and incapacity benefit, claiming the money from the same agency yet having to claim again. Clearly therefore, what we have inherited will be a nightmare to resolve. Housing benefits impinge on all those other benefits, and I have said before that housing benefit is a very bad benefit, because it is so complicated to administer.

Let us look at what has happened over the last 10 years. I will not repeat the figures for the increase in the total budget, but we should note that it costs £1 billion to administer that budget. For most local authorities in the country it is the biggest single item of expenditure going through their books. We are using it as a form of housing subsidy. That is right and justified, but the extent to which the costs have built up and been allowed to spiral is completely wrong. The one thing I agree with the Opposition about is the need to reform housing benefit, yet for 13 years they ran this country but did not reform it. Instead they made it worse. Now we have inherited that situation and we, as the new Government, must deal with it.

What must we do to reform it? First, we must look at the costs involved in housing benefits. As we have said, this is the first stage in simplifying the country’s benefit system, making it more effective, reasonable and transparent, and changing it into a system that encourages people to go to work. In my constituency people frequently say to me, “I can’t get a house for love nor money.” The advice given to them by the local authority is, “We can’t provide you with a council house, but what we can do is this: you go into private sector rental accommodation, and housing benefit will pay for it.” If people in that situation follow that advice but then have the temerity to get a job, they lose housing benefit pound for pound, which is, of course, an immediate disincentive to getting a job. What we have to do is make sure that any reform of the whole housing benefit regime transforms it so that work always pays.

[Ms Buck]

I am asking this for about the fourth time this evening. Does the hon. Gentleman concede that half of all local housing allowance claimants of working age in private rented accommodation are either in work or connected to the labour market through jobseeker’s allowance?

[Bob Blackman]

I will repeat the mantra that my hon. Friends have repeated, which is that 13% are in work and the rest are on JSA. The LHA has distorted the market even more, as my hon. Friends have said, by making it more beneficial in certain instances for people to be on housing benefit and pocket the difference. What nonsense! Rent levels have been distorted in many parts of the country.

The Opposition are claiming that the modest reforms being introduced will mean people being thrown out of their houses and suddenly being cleansed out of all proportion, but what will happen is exactly what is happening in the borough of which my constituency is a part. Its housing director has said that 3,040 families will be affected by the change, and the borough will seek to ensure that the rents fall and adjust to the levels of housing benefit that are applicable—although that still distorts the housing market. Some 3,000 properties out of more than 100,000 in the borough will be affected, so this involves a small percentage of people.

When I challenged the housing director to tell me what he would do about the families who might, sadly, lose their houses as a result of this change, the figure came down from 3,040 to 80. I have great sympathy for the 80 families who could be in that position, so I then challenged the housing director to tell me what he would do about it. My authority will do what every local authority in this country should do, which is challenge the landlords to reduce their rents so that those people are not made homeless.

[Phil Wilson]

How can the hon. Gentleman expect private landlords to reduce their rents when for every one person on LHA wanting a property, five to 10 people in work are looking for the same property? Who are private landlords going to go for? They are going to go for the person in work.

[Bob Blackman]

I thank the hon. Gentleman for his intervention, which leads on to the other key issue in this debate: the supply of housing in this country. That point is not really being answered by the Opposition. The Labour party had every opportunity to build houses over the past 13 years, but it failed to do so. At the same time, it failed to take account of the fact that this country’s population is increasing, so the need for housing increases all the time. We have a market for housing and housing benefit distorts it directly, which is why it is a bad benefit in desperate need of reform. One of the reforms that must take place is a change to the way in which housing benefit is withdrawn from people as they get work. At the moment that is a direct disincentive for people at a certain level to work, because they lose benefit pound for pound. Why should someone work if that is the position?

[Fiona O'Donnell]

Does the hon. Gentleman not realise that what this means for housing associations, on which we are going to rely to build homes, is that their cash flow will be interrupted, they will have debts and there will be an adverse impact on their ability to borrow to build those homes?

[Bob Blackman]

I thank the hon. Lady for her intervention. The housing associations throughout this country seek changes of tenure, changes of regime and an encouragement to develop the housing that this country desperately needs in every local authority area. I trust that that is what will happen. The coalition Government have set out their stall: we will build 150,000 new homes during the life of this Government. We agree that that is not enough, and we would like to see more. What we want to see is young people getting a foot on the housing ladder, moving out of rented accommodation and purchasing their own property. What has to change is that the applicable lending regimes of the banks, building societies and suchlike must enable people to get on the property ladder.

[Rosie Cooper (West Lancashire) (Lab)]

Will the hon. Gentleman comment on my local authority, West Lancashire borough council? It wanted to build a new civic centre, and in so doing said that it would build affordable houses and in the process knock down four good homes. While he is speaking about that—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I call Bob Blackman, who has four seconds left.

[Bob Blackman]

Very simply, I welcome its proposition—

[Mr Deputy Speaker]

Order.

20:50

[Nic Dakin (Scunthorpe) (Lab)]

It is a pleasure to follow the hon. Member for Harrow East (Bob Blackman) and his “Just a Minute” remarks at the end—well done.

This is a Government in a hurry. We can all understand their sense of urgency and their desire to get on with the job. In many ways, that is creditable and commendable. However, the reality is that the plans for reforming housing benefit are ill thought out and ill considered. Only fools rush in—they rush in and make matters worse, and they gamble recklessly with people’s lives and livelihoods. In the Secretary of State’s speech at the beginning of the debate, it was unfortunate that he was unable to give any confidence to people who are worried and concerned about these issues. As my hon. Friend the Member for Manchester Central (Tony Lloyd) said, he did not allay the fears of constituents up and down the country.

As those of us who have sat through the whole debate have heard this afternoon, there has been cross-party consensus in favour of reforming housing benefit. That is clearly embedded in the motion. There is no use anyone’s shaking their head—it is there and it is on the Order Paper.

[Kwasi Kwarteng]

If there is the consensus that the hon. Gentleman talks about, does he have any idea why the previous Government did not address the problem in the 13 years that they were in government?

[Nic Dakin]

The previous Government made changes to housing benefit. As recently as a few months ago, the former Chancellor moved to change how rent entitlements were calculated so that big increases in house prices at the very top of the market no longer skewed spending on housing benefit. Things were in train, but they continue to need to be addressed. We could have a cross-party reform process that engages with all those who have expertise in this area, from Shelter to the National Landlords Association. Instead, there is a danger that the headlong rush into this basket of ill-thought-out proposals will threaten the fabric of our communities.

A key reason that the housing benefit bill has gone up is the lack of affordable housing in certain parts of the country, particularly London and the south-east, which has been exacerbated by the economic downturn, as people lost their jobs or reduced their working hours and needed the support available from housing benefit to prevent them from becoming homeless. The Rugg review of the private rented sector points out a possible way of addressing those issues. Those proposals, combined with real investment in more affordable housing, offer an alternative way forward. Unfortunately, the Government’s cuts to the housing budget and their squeeze on local authorities mean that it is unlikely that much new social housing will be built before 2015 other than that already commissioned by the outgoing Labour Government.

Comments by the Deputy Prime Minister and other Government Members show that they signally fail to understand how housing benefit helps people to stay in work. Only one in eight of all housing benefit claimants are unemployed, as my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) pointed out. If we take just those in receipt of LHA across the country, 26% are in employment and only 19% claim jobseeker’s allowance. The rest include pensioners, carers and disabled people who are unable to work. My hon. Friend the Member for Hampstead and Kilburn (Glenda Jackson) excellently exploded the various myths about housing benefit and housing benefit claimants.

The proposal to use the 30th percentile of local rents, rather than the median, to calculate LHA will have a wide-ranging and negative impact. More than 750,000 people will lose out as a result. They are people on low incomes who, the Government will say, can live on lower incomes. According to Shelter, Crisis, the Chartered Institute of Housing and Citizens Advice, the most brutal of all the housing benefit changes is the proposal to uprate LHA according to the consumer prices index, rather than local rents, as currently happens. If this change goes ahead, it will cause great distress.

Independent research by the university of Cambridge suggests that the cuts will push an additional 84,000 households below £100 per week per couple for all expenses after housing costs. Those households include 54,000 children. I recognise the concerns of the hon. Member for Colchester (Bob Russell) that the proposals may well end up increasing the number of children living in poverty. None of us in the House would want that to happen, I am sure.

The proposal in the universal credit idea to unify benefit tapers and make the system simpler have much merit, but the proposed changes to housing benefit in advance of the introduction of the universal credit will severely undermine the goal within it. Some will be forced to give up employment because they can no longer live within commutable distance. Some will be forced to move away from friends or family who provide child care or support.

The proposal to cut housing benefit by 10% for those on jobseeker’s allowance for more than 12 months seems dreadfully punitive. If the claimant has striven ceaselessly for 12 months to get a job but been unsuccessful, they are penalised for their misfortune. That is the world of Gradgrind and has no place in a modern civilised economy. Shelter, Crisis, the Chartered Institute of Housing, Citizens Advice and Mencap are just some of the range of organisations warning of the dire consequences that might occur if the proposals go ahead unamended. The Archbishop of Canterbury has expressed serious concerns that

“People who are struggling to find work and struggling to find a secure future are . . . driven further into a sort of downward spiral of uncertainty, even despair, when the pressure is on in this way.”

This Government are proud to say that they are listening to people’s concerns and will govern according to the new politics. The proposals represent a challenge to them to listen to those who know what they are talking about, and to those who make things happen on the ground and work with people day in, day out on such issues. The Government should step back from helter-skelter decision making and from a reckless gamble with people’s lives and livelihoods.

20:57

[Tessa Munt (Wells) (LD)]

I shall raise three quick structural points, which I hope the Minister will consider in his response and in his proposals going forward.

I come from rural Somerset, where house prices are high. There has been a great rise in house prices over the past 10 years, but people still have low incomes. The average income is £18,500 and many of the workers are part-time workers, with many jobs which they tack together, and seasonal workers.

I have three questions. First, once the existing housing is rented out, will the Government give housing associations the flexibility to build brand-new homes and let them out at the traditional social rents, or will all the new homes have to be charged at 80% of the market rent, which is high? The problem for tenants in my constituency is that they have very little capacity to save money towards their own housing, as such a large proportion of their income goes on housing costs.

The next two points are similar to those raised by the hon. Member for Hampstead and Kilburn (Glenda Jackson). Can the Minister clarify the situation for tenants who have mental health issues? There are two gentlemen in my constituency who use private rented accommodation. Because of their age—they are in their early 30s—they may be asked to move into shared accommodation. Will they be able to access that discretionary housing allowance? Those payments would ensure that they were able to remain in their existing housing, rather than having to move out for a year, two years or three years and into shared accommodation, such as a flat. I want to ensure that they are protected in some way against the disruption of a move, particularly when that might be extremely detrimental to their mental health.

My third point is about the alarming and increasing practice in one district council area of my constituency, where homes that have a dining room are classified as having an extra bedroom. Therefore, a three-bedroom house with a dining room becomes a four-bedroom house, a four-bedroom house becomes a five, a five-bedroom becomes a six, and so on. As a result, families, who are the only ones able to obtain such housing, end up with no living space. People normally retreat to their bedroom if that is the only space that they have in the house, but such a loss of family space is extremely detrimental. That of course has a subsequent impact on the private rented market, because the example that the local authority sets becomes custom and practice throughout the housing sector in my area.

21:01

[John McDonnell (Hayes and Harlington) (Lab)]

This debate has been enlightening in many respects thanks to Members on both sides of the House. I shall not be repetitious; I shall just concentrate on putting on the record the plight of my constituents and the implications of the policy for them. It will at least give me some peace of mind that someone has spoken up for them.

Like every other Member, I have a weekly advice surgery—about twice a week at the moment. We have an open-door policy at the office, and we are swamped with casework, as many Members are. Half my casework is housing-related, and my surgery is the most distressing part of my week, as I am sure the surgery is for many Members are. It is heart-rending.

Families, who come with their children, are living in appalling housing conditions: overcrowded, sleeping three or four to a room and often, as the hon. Member for Wells (Tessa Munt) said, using their living rooms and other parts of the accommodation as bedrooms. They live in unsanitary conditions, lacking heat and hot water, and often their premises are damp. They live a nomadic life in my constituency, with 12 to 18-month accommodation licences, and their children move from school to school, disrupting their education.

We have not seen a housing crisis on this scale since the second world war. In the borough, I have 1,500 to 2,000 families and more who are homeless at any point in time. The reason for that has been mentioned—the hon. Member for Colchester (Bob Russell) referred to it—and it is that the bulk of our council housing stock has been sold off. Little council housing has been built in 30 years, under both Governments, and the buy-to-let landlords have moved in to provide the accommodation. They fail in many instances to maintain the properties, and we also have Rachmanite landlords who abuse their tenants. They are profiteering from the housing shortage with high rents and, of course, through housing benefit, but I find it ironic that in this debate Members on one side of the House seem to be blaming the tenants and housing benefit for high rents, not the landlords themselves, who charge those high rents and exploit the benefits system.

Many families in my area already struggle to pay the rent, and many already make up the gap between benefits and rents. They receive some discretionary payments from the council, but they are few and far between, and the families get into debt and fall back on loan sharks. As a result, they often fall into rent arrears, get evicted and then become classified as intentionally homeless. We can see how people can get caught in a cycle of deprivation.

The new proposals will exacerbate the nightmare that many of my constituents already face. Some 3,000 families will lose out on anything between £6 and £27 a week. The London Councils survey, which has been quoted extensively, demonstrates that a large number of landlords have stated that they will evict families if the gap in rent is more than £20. Many families in my constituency will be evicted, and they are already rushed through eviction as it is. That means that there will be an increase in homelessness in my area and it will be extremely difficult to find accommodation. I already have families moving out of the area on different schemes who find it very difficult to find work elsewhere and then desperately seek to come back to be close to their family members.

The results of these proposals—I want to put this on record for my constituents—will be an increase in poverty, immense stress, and immense distress for many people, particularly at a time when unemployment is rising in my constituency, as it is across the country. I do not believe that cuts in benefits are the answer, or that people are incentivised to find work by poverty or by homelessness—in fact, it pushes them back into further depths of despair.

There is an alternative proposal for which many in this House have argued for a number of years. First, it is about building council homes again, and getting back to investing on a scale that meets the needs of our population. That means an element of redistribution of wealth and ensuring that people pay their taxes, particularly the corporations, so we must tackle tax avoidance and evasion. I believe that we need an emergency programme of house building to tackle the homelessness that we now have, particularly in London and the south-east.

Secondly, there should be rent controls. If benefits are high because rents are high, there is a simple solution that applies in many parts of Europe, where people have controlled the rents and thereby stopped the exploitation by landlords.

Thirdly, in areas such as mine we need a more radical solution to the level of homelessness. We should allow councils compulsorily to purchase empty properties so that we can put families into them. I find it a disgrace that a house will stand empty for a long period. Some 300,000 properties are empty for more than six months, while people are on the streets or living in housing deprivation. We have a housing crisis on our hands, and we need an emergency programme to tackle it.

I certainly do not believe that cuts in benefits will go any way towards tackling this problem—in fact, that approach will cause more homelessness, put more people into deprivation, and cause immense human suffering in our society. That is why I support the motion, and why I will do everything I possibly can in this House, in demonstrations, and in direct action on the streets to oppose these housing benefit proposals.

21:07

[Yasmin Qureshi (Bolton South East) (Lab)]

Thank you, Mr Deputy Speaker, for giving me the opportunity to speak in this debate. I want to support my party’s motion on the housing benefit cuts. We have heard contributions from many Members. I concur with everything that Opposition Members said, and there have been notable exceptions among Government Members. I will not try to repeat everything that has been said, but I would like to flag up three issues that have arisen regarding the Government’s reasons for wishing to introduce these housing benefit cuts.

First, there is the fallacy that the cuts need to be made because of the deficit. Yes, everybody agrees that cuts need to be made in different areas of Government activity and public services to balance the books. However, it is always said that because a Labour Government were in power, we somehow caused the deficit and the financial crisis, when everyone knows that that is not true. Up until 2008, the Government parties supported the public expenditure projects that we brought about in the past 13 years, such as the beautiful hospitals, the schools, and all the building work that had been carried out to improve the country’s infrastructure. Most of the money was spent on that. We created jobs and regenerated the economy. In 1997, when we came into government, we inherited a complete mess, with unemployment and interest rates at record levels, so let us not have any lectures from the Conservatives about financial mismanagement.

Secondly, it has been said that Labour was in power for 13 years and did not do enough about housing. I accept that my party could have done a bit more on building new houses. However, we tried to help vulnerable people by bringing 1.5 million social homes up to a decent standard. Those were homes that were substandard when the Conservatives were in power. We fitted 700,000 new kitchens, 525,000 new bathrooms and more than 1 million new central heating systems. Yes, it cost billions, and I remember the then Opposition begrudging it, but it made life better for the people who had lived in substandard houses. At the same time, it regenerated the economy and provided jobs. We will not take any lectures from Conservative Members who tell us that we did not do enough.

[Mrs Mary Glindon (North Tyneside) (Lab)]

Does my hon. Friend think it is a disgrace that the Conservative mayor of North Tyneside, when she was leader of the council, wrote to the then Housing Minister to oppose £104 million being given to North Tyneside for homes for older people? When she came to power, she also resisted money for building 800 council houses in the area. How can we trust the Tories on council housing?

[Yasmin Qureshi]

I thank my hon. Friend for that helpful intervention.

Even in the face of recession, my party supported home owners to stay in their homes. Because of our actions, the current repossession rate is half that of the last recession of the early 1990s, preventing about 300,000 families from losing their homes. In 2004, local authorities met Labour’s target that no family should be in bed-and-breakfast accommodation for more than six weeks. When we prepared to tackle the issue in 2002, up to 4,000 families were housed in such accommodation. Conservative Members say, “Well, you didn’t do enough”, but we did a great deal for people who were in substandard housing. About 55,000 affordable houses were also built.

I turn to the cuts themselves. The Government say that they have to be made to reduce costs, but contrary to the Secretary of State’s assertion that Labour Members are scaremongering and coming up with facts and figures that are not borne out, it is Shelter that has stated that £120 million more will have to be spent on families who are made homeless as a result of the cuts. It is not Labour party members or MPs who have said that.

The cuts will cause big cities such as London to become like Paris. I know that the Secretary of State said that that was another piece of scaremongering, but it is not. There will be dispersal—we all now accept that word, as we know that people do not want to use the word “cleansing”. It will inevitably follow the cuts that if someone lives in what is considered to be an expensive part of town, where rents and rates are higher, after the cuts they will have to move out of their accommodation. That will effect social engineering, because only well-off people will be able to live in good areas of big cities. It will basically get rid of poorer people to the outer margins of the big cities and towns, into the poorer areas.

[Pete Wishart]

The hon. Lady seems to be suggesting that she is against any cap on housing benefit. I am with her on that one, but can she persuade her Front Benchers to come with us? I still do not know what the Labour party policy is on a housing benefit cap. Does she have any clearer understanding of that?

[Yasmin Qureshi]

I understand what the hon. Gentleman says, but I am talking only about how the change will affect my constituents.

Of course, the increase in rents and rates is not the result of people choosing to live in expensive areas. We have to remember that many people have been living in their areas for the past 20, 30 or 40 years. It is not their fault that over the years house prices and rents have gone up. That does not mean that they should be sent 60 or 100 miles away where they have no family, relatives or friends and be completely disconnected from their community.

Shelter has stated that the Government have not examined the impact of the proposals on many claimant households that will be shifted from around or just below the 60% median income line into severe poverty. The proposals will push an additional 84,000 households below £100 a week per couple, and those households include 54,000 children.

Cutting the local housing allowance to the 30th percentile means that 700,000 of the poorest people, who are both in work and out of work, will be at least £9 a week worse off.

[Kwasi Kwarteng]

rose—

[Yasmin Qureshi]

I promise to allow the hon. Gentleman to intervene in a moment.

On average, the impact of the local housing allowance on my constituency of Bolton South East will be £52 per month for a two-bedroom flat, with an average loss of £39 on properties that have more than two bedrooms. That may not seem like a vast amount of money to some hon. Members here—

[Mr Deputy Speaker]

Order.

21:15

[Mr David Lammy (Tottenham) (Lab)]

I hope that all of us across the House can agree that the best kind of community is a mixed community—a community of young people, old people, people on middle incomes and people on large incomes; a community that is ethnically diverse. That is why, when we think about the proposals in relation to London, hon. Members have described them as something akin to what we have seen in Paris. Most London MPs will recognise that those claiming housing benefit in London largely come from the ethnic minorities. They are families from Somalia, Turkey and Africa. I am deeply concerned that the Secretary of State has not yet produced an equality impact assessment of how the proposals will affect those families. He should be able to tell us that the effects of his proposals are not discriminatory, but he cannot do that. He should also be able to tell us how they impact on women and disabled people, but he is not able to do that.

There is a real concern that the proposals will drive people from central London to outer London. My constituency has some of the highest homelessness figures in London. We have 19,000 people on the housing register and 5,000 people in temporary accommodation.

Members on both sides of the House agree that we have not built enough affordable housing. In the past year in London, under the leadership of Boris Johnson, the Mayor of London, many local authorities failed in that regard, and overwhelmingly they were Conservative. I have the list: 83 affordable homes built in the London borough of Kingston-upon-Thames; 100 built in Kensington and Chelsea; and 200 in Westminster. Given such a backdrop, an exodus from inner London to outer London will exacerbate the problem.

My father arrived in this country in 1956. Like most other West Indian immigrants at the time, he lived in a doss house. This was a London that was still experiencing the effects of the war; there was a shortage of houses and money. Many immigrants huddled together in bedsits. My father lived with four others in a small bedsit in Finsbury Park. He often talked about how he had to huddle around a paraffin heater because of the cold.

I am concerned that these proposals will lead to even more excessive overcrowding in London. I warn the Minister that what we saw in Paris was serious social unrest as a consequence of overcrowding. That is why it is unacceptable to hear the rhetoric about social cleansing, but not to produce an assessment of the effect of the Government’s proposals, which is now a statutory duty as a result of the previous Labour Government.

There is a caricature of the fecklessness that leads people into this situation. Londoners will find themselves in this situation largely for two reasons. The first is that house prices have gone up. For my constituents, they have gone up by over half in the past 10 years. A person needs to be earning £60,000 a year to afford a house in the London borough of Haringey, which is way beyond the reach of most people. Secondly, it is not to say that people are on welfare and that welfare is bad, as was said by one Government Member. Welfare is a safety net for people on low incomes. These are the people who will clean the Chamber long after we have left tonight, and these are the people whom we are letting down as a result of these proposals.

So of course we stand against this motion—[Hon. Members: “For!”] I mean we stand for the motion because of the paucity of evidence backing up the Government’s proposals. Given that the Minister has aligned against him senior members of the Church in this country and given the deep concerns in the city of London and, as we have heard, elsewhere in the country among ordinary, hard-working people, including the 2 million pensioners who rely on housing benefit, he should think again.

21:21

[Jim Shannon (Strangford) (DUP)]

I want to make some constructive comments, and I hope that the Minister will take on board some of the issues I raise. I will ask some questions from a Northern Ireland perspective, because the housing benefit changes will affect us as well—we cannot divorce ourselves or walk away from them.

I should set the scene, because Northern Ireland has some very particular circumstances: the Department for Social Development has responsibility for social security benefits, and the Department for Employment and Learning has responsibility for training and employment programmes, in contrast with the rest of the United Kingdom and the Department for Work and Pensions. DEL has significant differences with its steps to work programme, as against the job guarantee fund here. There are issues to be clarified, therefore, and I want to ensure that the changes in benefits will not impact adversely on the people of Northern Ireland.

Northern Ireland has had the local housing allowance since 2008, but it has not been formally assessed. I had hoped that it would be, because it would have given us an idea of how successful it has been. I am concerned, however, that the proposed changes to the allowance lack a firm evidential base. Will the Minister comment on that? I think that the proposals will adversely affect recipients in Northern Ireland.

I am gravely concerned about the Budget plans to reduce the initial award of the benefit by 10% in April 2013 to those claimants who have been receiving jobseeker’s allowance for longer than 12 months. I make that comment because the unemployment rate in Northern Ireland between April and June was 6.6%. Worse still, the working-age employment rate remained well below the UK average, and was the lowest of all the 12 UK regions. The changes put forward tonight will adversely affect the people of Northern Ireland because of our position in relation to benefits.

I have concerns about the introduction of a measure that utilises sanctions that are neither helpful nor beneficial. The proposal appears to be based on the assumption that a reduction in housing benefit will motivate working-age claimants to find work, but it is clear that even if every working-age claimant was so motivated, there would still be significant numbers of long-term unemployed people in Northern Ireland beyond 2013. Perhaps the Minister will comment on that. We have to find a balance. How do we distinguish between those who are genuinely seeking employment and those who perhaps are not?

I mentioned earlier that the focus of housing benefit has to be on providing low-income families with access to good-quality housing. The housing benefit cap rates may have a knock-on effect on the social housing sector, as private rented accommodation becomes harder to access for those on low incomes and the demand for social housing increases. A great many people are in a Catch-22 situation: they do not have enough money to rent a house privately, yet there is not enough social housing for them.

[Sammy Wilson (East Antrim) (DUP)]

My hon. Friend makes an important point, but does he accept that in the absence of cap rates—or, sometimes, where the rates are fairly generous—private sector rents become inflated? Landlords simply look at what the rate is, and if it goes up they put their rents up. It is almost like a perpetual cycle: the rates go up, so rents go up, and then the rates are pushed up again, and the only people who gain are the landlords.

[Jim Shannon]

I thank my hon. Friend for his information, which is helpful in focusing attention on what we are trying to aim for.

Members have mentioned fuel poverty. One of the spin-offs of losing housing benefit will be fuel poverty. In my former position, I sat as a Member of the Northern Ireland Assembly. One of the inquiries that we undertook was on child poverty. Fuel poverty and housing benefit both came up in that inquiry into child poverty, but all those things were part of the jigsaw of how people survive. Take away one part of it and we have a problem. I have some concern about that.

One Member mentioned the discretionary housing payment, and I would certainly be keen to find out from the Minister what he intends to do if the pool of funding that is set aside runs out. He said that it was impossible to separate housing benefit from housing and social development policy in general, and there are some examples of that in Northern Ireland where housing has been designed to bring mixed communities together, such as in Loughbrickland in County Down and Ballynafeigh in south Belfast, which are also examples of how we have moved forward. I would like to express some concern over the removal of housing benefit from people where it will drive them towards poorer areas. For some people who are already in poorer areas, they will not move beyond them, and I have concerns about that.

I am conscious of the time, but another concern of mine relates to applications by carers for disabled people—I do not think that the issue has been mentioned fully yet, although some Members may have partially touched on it. A carer for a disabled person might want to apply, but the only person who can do so is the claimant’s spouse or partner. Would it not be more beneficial to ensure that the rest of the family members, who are perhaps those who are more affected, may also apply? I look forward to hearing the Minister’s response to that. I also believe that some consideration needs to be given to single parents who have shared custody of children. I am not sure whether that issue has been addressed, so I would ask the Minister to look at that, too. Where custody is established, benefit entitlements should be granted to the parent to support the family unit. I do not believe that the proposals do that. Again, I ask the Minister to consider that point.

Other Members have touched on the issue of large families. It would not apply so much in the area that I represent, but I believe that it none the less applies right across the United Kingdom. Has particular consideration been given to ethnic families in other parts of the United Kingdom, where larger, multi-generational households are perhaps more common? I ask the Minister to consider that as well. There should be more innovative and positive incentives, which are far more preferable in making housing benefit entitlement reflect family size in the social rented sector from 2013. The Government position is bereft of detail, and I ask the Minister to consider my points.

20:24

[Caroline Flint (Don Valley) (Lab)]

We have had a good debate, and I congratulate my hon. Friends the Members for Manchester Central (Tony Lloyd), for Glasgow North East (Mr Bain), for Aberdeen South (Miss Begg), my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), my hon. Friends the Members for Houghton and Sunderland South (Bridget Phillipson), for Sheffield South East (Mr Betts) and for Sedgefield (Phil Wilson), my right hon. Friends the Members for Coatbridge, Chryston and Bellshill (Mr Clarke) and for Holborn and St Pancras (Frank Dobson), my hon. Friends the Members for Stockton North (Alex Cunningham), for Streatham (Mr Umunna), for Hampstead and Kilburn (Glenda Jackson), for Scunthorpe (Nic Dakin), for Hayes and Harlington (John McDonnell) and for Bolton South East (Yasmin Qureshi), and my right hon. Friend the Member for Tottenham (Mr Lammy) on their measured contributions to the debate. They focused on facts and their constituents, and they raised concerns about the impact of the policies and the lack of evidence to clarify them. They asked the coalition Government to consider how their policies may lead to unfortunate consequences for their constituents in many ways. They came forward with ideas for reform. They raised concern about ending up with more polarised communities, and they talked about equality. Most importantly, they tried to address the issue.

The hon. Members for Cardiff Central (Jenny Willott), for Colchester (Bob Russell), for Wells (Tessa Munt) and for Strangford (Jim Shannon) made meaningful contributions. They, too, raised their concerns about the effect of the policies on their constituents. I am sure that the hon. Member for Brighton, Pavilion (Caroline Lucas) would have made a similar point about the people she represents.

[Pete Wishart]

The right hon. Lady promised to say whether the Labour party is planning to introduce a cap. How much would that be, and how would a nice new Labour cap differ from a nasty Tory cap?

[Caroline Flint]

I assure the hon. Gentleman that I will come to that.

Those colleagues—I call them colleagues because the substance of their speeches suggest that they may join us in the Lobby tonight—may be interested to know that the Minister for Housing referred to the Hull city council leader, Carl Minns, who is a Liberal Democrat, as a “motormouth” when he raised concerns about the impact of some of the Government’s policies on people in Hull. Lord Shipley, a former leader of Newcastle city council, said that the private rented sector had been a “cornerstone” in stopping the use of bed and breakfast in Newcastle and that he did

“not wish to return to the days when we did…My concern is that the local housing allowance changes may restrict access to private rented accommodation and therefore limit the capacity of councils generally to resolve future housing need.”

Those thoughts echo many of the comments that have been made.

It is a shame that not one Minister from the Department for Communities and Local Government is on the Benches at the end of these proceedings. Clearly, the Minister for Housing does not believe that it is worth while sitting alongside his colleagues from the Department for Work and Pensions to consider how to address reform of housing benefit and housing supply, which many of my hon. Friends and a few hon. Members raised. That is a great shame.

We are not opposed to reform. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) made that very clear. We are not against caps in the housing benefit system, as long as they do not make people homeless or cost us more in the long run. We do not have an objection to asking younger single adults on housing benefit to live in a shared house or flat, but we must be sure that there is enough supply to accommodate everyone, and to recognise that some single people may have particular needs that require them to be accommodated in a different way. We will look at how non-dependant deductions can be made, provided they do not result in people suddenly finding themselves unable to live in their homes with an elderly relative, for example. We are willing to consider some temporary changes to the uprating of benefits so long as that does not permanently break the link between the rent that people pay and the help that they receive.

We also believe that cutting the local housing allowance to the 30th percentile will have a huge impact, which is not to be desired. About 700,000 of the poorest people, in work and out of work, will be on average at least £9 a week worse off. We recognise the need for reform but, as in other areas, such reform should be staged over a number of years and be more limited.

[Bob Russell]

During the 13 years of the previous Labour Government, I put forward various proposals to them in more than 50 parliamentary questions. Does the right hon. Lady accept that, had the Government in which she served listened to and acted on those proposals, we would not be in this situation now?

[Caroline Flint]

I am closing this debate on behalf of the Opposition and we want to consider some points that hon. Members have made. We also believe that housing should be looked at in the round, in regard not only to benefit reform but to housing supply.

Let us look at some of the other points that have been raised. We heard from the Government that housing benefit was out of control, but it was not. The housing benefit bill did go up as a result of the economic downturn because, as people lost their jobs or were forced to work reduced hours, they needed more help to prevent them from becoming homeless. In the past two years, there have been 250,000 new cases of people in work claiming local housing allowance. Overall, however, as a proportion of total Government spending on benefits and tax credits, housing benefit has stayed stable at 14% for the past 20 years.

[Kwasi Kwarteng]

Will the right hon. Lady give way?

[Caroline Flint]

No, I am going to make some progress.

We have also heard from the Government that their plans will save money. However, if they do not think their policies through and consider their impact on people, they could end up costing more than they save. The Government say that the cap will save £65 million. Others say that its consequences—uprooting families, forcing them out of their homes and into temporary accommodation—could cost nearly twice that. We have heard that the Government intend to increase the amount for discretionary housing payments, but I seemed to hear them say that they would use that money to pay the people who they say should not be in those homes to stay in them. Instead of using housing benefit for that purpose, they are going to use discretionary housing payments. That is a smokescreen too far.

The Government like to say that these reforms will help people into work, but pricing hundreds of thousands of working people out of whole swaths of the country, often where most of the jobs are, will make it more difficult, not less, for people to find work and keep their jobs.

[Dr Julian Huppert (Cambridge) (LD)]

Will the right hon. Lady give way?

[Caroline Flint]

The hon. Gentleman was not here for the debate, so I will not give way.

Reducing people’s housing benefit when they have been out of work for a year does not help them to get a job. It punishes them for not having one, and we reject that entirely. The Government say that reducing housing benefit will bring rents down. Landlords themselves tell us otherwise, however, with 90% saying that they will be less likely to take on people on housing benefit. That means that there will be more people chasing fewer homes, which will drive rents up, not bring them down.

[Mr Duncan Smith]

They would say that.

[Caroline Flint]

The Secretary of State might say that, but I find it difficult to understand, given the question marks over the impact on rents of the Government’s plans, why they are not doing a more thorough job of getting the evidence to prove that their policies are right. I have heard the Minister for Housing—who is not here tonight; he obviously does not think it worth while—say on a number of occasions that he has evidence to back up his idea that rents will go down, but he has refused to provide that evidence. We have seen no sign of it.

My right hon. Friend the Member for Greenwich and Woolwich and my hon. Friend the Member for Sedgefield made strong points about the rented sector. They said that the Government’s policies on housing benefit reform and their lack of a plan for housing supply would do nothing to tackle the issue of rents. Let us be honest about this: the Government have completely rejected the findings of the Rugg review, which we initiated to tackle some of the problems in the private rented sector.

Much has been said about our record on housing, so let me say something about that. Two million more homes were built, there are now 500,000 more affordable homes and 1 million more homeowners, and 1.5 million homes have been brought up to a decent standard. Homelessness was cut by 75%, and no family spends longer than six weeks in a bed and breakfast. In the face of the global financial crisis, the worst of its kind for 70 years, Labour did not walk by on the other side. We took action and supported families to stay in their homes. We prevented 300,000 families who might otherwise have lost their homes—and who would have lost their homes had the Tories been in power—from doing so. That is the reality. That is our record, and it stands in contrast to the mess the Tories left us.

Many thought that bringing so many homes up to a decent standard in such a short space of time would prove impossible. It did not. However, it did come at the cost of not building as many homes as we would have wanted. I agree with the hon. Member for Colchester and some of my hon. Friends who have referenced that tonight. Let us not forget that the reason why we had to focus on decent homes and bring them up to standard was the desperate situation we inherited from the last Conservative Government in 1997.

[Kwasi Kwarteng]

Will the right hon. Lady give way?

[Caroline Flint]

The Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell), who is not in his place, helpfully points out on his website that there were 400,000 fewer homes after the Tories’ 18 years in power. Of the stock that did remain, the last Conservative Government knowingly, wilfully and shamefully allowed so much of it to get into such a state of disrepair that when we came to office in 1997, we faced a maintenance backlog of £19 billion, with 2.3 million homes below a decent standard. Pensioners were unable to heat their homes, and children were made ill because of the damp, mouldy and overcrowded homes they were forced to live in. That is the Tories’ record, and we are not going to let them forget it.

[Kwasi Kwarteng]

Will the right hon. Lady give way?

[Caroline Flint]

Conservative plans today are no better. The Minister for Housing likes to say that his Government will build more affordable homes every year than we built in 13 years. [Hon. Members: “Give way.”] I will give way to the hon. Member for Spelthorne (Kwasi Kwarteng).

[Kwasi Kwarteng]

I am grateful to the right hon. Lady for giving way. I have asked this question six times in the course of this debate. What is your view on the cap? Would you have one?

[Mr Speaker]

Well, the hon. Gentleman ought to be able to get it right the seventh time. The Chair has no view on the cap.

[Kwasi Kwarteng]

rose—

[Mr Speaker]

The hon. Gentleman has finished. That is the end of it.

[Caroline Flint]

The hon. Gentleman should look at Hansard. I said quite clearly that we are not against looking at caps, and we are prepared to look at regional variations as well, but that would have to be planned and done properly over time.

Let me tell the Housing Minister that last year, in the teeth of recession, we built more homes in one year than the Government will build in any of the next five years. Since this Government came to power, local councils have ditched plans for new homes at the rate of 1,300 every single day. In the comprehensive spending review, the housing budget was demolished by devastating cuts of more than 50%. As a result, according to the independent National Housing Federation, once the homes Labour started building are completed, no new social homes at all will be built in the next five years.

[Mr Duncan Smith]

In response to the right hon. Lady and the hon. Member for Perth and North Perthshire (Pete Wishart), she has said for the first time in this debate—her right hon. Friend the shadow Secretary of State has also said it—that Labour Members are in favour of a cap. Will they please explain something to us? We have put our proposals forward. What level of cap do they now favour?

[Caroline Flint]

We have said quite clearly—not just today, but in a speech my right hon. Friend the Member for Paisley and Renfrewshire South made last Friday and in an article that I wrote last week—that we will look at the issue of caps. What we have said is that whatever cap is chosen on whatever basis, it must be planned, phased in and must ensure that people are not turfed out of their homes, put into bed-and-breakfast accommodation or made homeless. The Tories have not been able to answer any of those questions.

The fact is that one part of Government is working on one track for housing benefit reform, but there is no joined-up thinking with the Department for Communities and Local Government on housing supply. That is not a plan of action for housing, but a recipe for chaos and it does nothing to help cut the housing benefit bill. It is not only Labour Members who say that; dozens of Tory MPs have been to see the Secretary of State to tell him why these plans will not work. We have heard about the Conservative Mayor of London and we know that Tory council leaders across the south-east have warned that the dispersal of people that these policies will create will place an unbearable burden on services that are already stretched to breaking point.

There is a better way of doing this. We want to reform housing benefit, but in a way that is fair and that does not end up costing us more than it saves. I urge Liberal Democrat Members and perhaps a few on the Tory Benches to join us in the Lobby and speak up for their constituents.

21:44

[The Minister of State, Department for Work and Pensions (Steve Webb)]

This has been a worthwhile debate. We have learned a number of things. Most of all, we have learned that no Labour MP actually read the manifesto on which they stood. [Interruption.]

[Mr Speaker]

Order. Hon. Members are in a state of almost uncontrolled excitement. I want to hear the Minister talking about his position, and about manifestos.

[Steve Webb]

Thank you, Mr Speaker.

Housing benefit will be reformed so that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford. When we do that, Labour Members are against it. When we propose a cap, they are in favour of it —until we set a figure, and then they are against it. When we propose to cut non-dependant deductions they are in favour of that—unless it actually affects anyone. The shadow Secretary of State said that he wanted regional caps, when the cap would principally affect central London, because he does not want a cap that actually caps anyone. What we need are credible Opposition propositions, not opportunism.

Three main themes have emerged from the debate. The first is that the impact of these changes has been grossly exaggerated. As my right hon. Friend the Secretary of State said at the beginning, talk of highland clearances and the final solution is a disgrace. My hon. Friend the Member for Wolverhampton South West (Paul Uppal) pointed out how offensive such language is to people, but even in this debate we have heard talk of highland clearances, and of Paris.

The right hon. Member for Tottenham (Mr Lammy) does not seem to appreciate that in substantial parts of central London—in the borough of Southwark, for example—48% of properties are in the social rented sector, and will not be affected by either the cuts or the percentiles. The suggestion that central London will be devoid of people on low incomes is complete nonsense. If the right hon. Gentleman wants to correct himself, he is welcome to do so.

[Mr Lammy]

The Minister proposes to increase social rents to 80% of private rents, which will lead to a removal of poor people from central London. The Minister knows that.

[Steve Webb]

I do not think that the right hon. Gentleman has followed the proposition. It involves new houses and new build. People in existing tenancies do not face that change.

We have heard talk of the impact of these changes. I appreciate that it is a shame to introduce facts at 9.45 pm, but I shall give it a try. As was pointed out by the Chairman of the Select Committee, the hon. Member for Aberdeen South (Miss Begg), this is not just a London issue, but obviously the impact of the cap will be felt particularly in London. There are 400,000 people on housing benefit in inner London, which ought to be where the impact will be greatest. Of those, 313,000, or 77%, will be unaffected because they are in social tenancies, and a further 30,000, or 7%, will be unaffected because they are in the non-local housing allowance sector. That adds up to 84%. A further 6% receive local housing allowance, but will not be affected. That means that 90% of people on housing benefit in central London will not be affected at all, while another 3% will be affected by less than £10 a week.

The mistake made during the debate is that people have assumed that any shortfall is equivalent to homelessness. That is a ludicrous leap. We know that people experience shortfalls in a number of ways. Of all the people on housing benefit in central London, 7% will experience shortfalls of more than £10 if there is no change in rents.

[Mr Raynsford]

Will the Minister confirm that he has just misled the House? Tenants in social housing will be subject to increased non-dependant deductions. The housing benefit of those who have received jobseeker’s allowance for 12 months will be terminated or reduced by 10%, and the benefit of those who are deemed to be occupying accommodation larger than they need will be reduced as well. All those social tenants will be affected by the Minister’s changes. Will he now admit that?

[Mr Speaker]

Order. I think that the right hon. Gentleman intended to include the word “inadvertently” in his intervention.

[Steve Webb]

I am sure that he inadvertently forgot, Mr Speaker.

The impact of the cap, the impact of the 30th percentile and the impact of the removal of the £15 excess have been elided in the debate. The hon. Member for Houghton and Sunderland South (Bridget Phillipson) mentioned the figure of 20,000 pensioners in her constituency—most of whom will not be affected by any of the changes. As I was explaining, less than 10% of people receiving housing benefit in the area most likely to be affected—inner London—will experience shortfalls of more than 10%.

The exaggerated impact has been made clear. However, one point has not been made clear. It has been suggested that the private rented sector is somehow an oasis of stability and settled communities, but there is massive churn in that sector. I want to give an example of that. The people affected by the caps and the 30th percentile are on local housing allowance. Local housing allowance was introduced in April 2008, so pretty much all those people did not even move into their current properties until April 2008; in the vast majority of cases they have lived in them for less than three years. The idea that we are suddenly churning up some settled permanent community is complete nonsense.

[Emily Thornberry]

The hon. Gentleman is saying that a huge proportion of people will not be affected, but let us say, for example, that we are doing our best to move a woman in Islington from a three-bedroom house into a smaller flat. Would she lose her secure tenancy if she moved?

[Steve Webb]

When there are specific instances of vulnerable people about whom local authorities have concerns, those local authorities have discretion to do something about the situation. But when people might reasonably be expected to move, that, of course, is part of the equation. If everybody went on staying exactly where they were at the same rent, there would have been no point to the policy.

On the basis of the debate so far, Mr Speaker, you would imagine that this year’s £21.5 billion housing benefit budget was about to be slashed. [Interruption.] Labour Front Benchers are saying that it is.

[Mr Douglas Alexander]

indicated dissent.

[Steve Webb]

Sorry; the shadow Secretary of State is disowning the right hon. Member for Greenwich and Woolwich (Mr Raynsford), who got it wrong. In 2014-15 the housing benefit budget will have been “slashed” from £21.5 billion to £22 billion. We are not slashing. We are making changes.

It has been said that we are being too hasty. The Labour party has decided that after 13 years of making the problem worse, doing something about it is “hasty”. Labour was so unhasty that it never got round to doing anything about the problem before it lost office. We are getting a grip.

First, we have established that the impact of the changes has been grossly exaggerated. Secondly, we have established that rents will not stay as they are. During the debate it has been suggested that the fact that the British taxpayer is putting more than £20 billion a year into housing benefit has no impact on the market. We, the taxpayers, pay housing benefit towards 40% of private rented tenancies. It is a long time since I studied economics, but I reckon if we pay for 40% of the tenancies and we put £20 billion a year into the market, we might just be having some impact.

[Sheila Gilmore]

The hon. Gentleman is using the figure of 40%. Recent research done both in Scotland and England is completely different. It produces a figure of 20%. In fact, in Scotland it was 17%; the report was produced for the Scottish Government. Only 8% of that was for housing benefit. We need to see the evidence that differs from the research that the Government themselves commissioned.

[Steve Webb]

I am not sure what the hon. Lady is questioning. Some 40% of private rented sector tenancies have housing benefit. That is a fact.

As my right hon. Friend the Secretary of State pointed out earlier, people have said in this debate that rents will not fall. There is an assumption that rents have to go up. I have news for those people: since November 2008 private sector rents have fallen by 5%, while LHA rents have risen by 3%. So there is a void. That is further evidence. Opposition Members have asked for evidence, and here is clear evidence that LHA is driving up rents.

[Mr Slaughter]

Will the Minister give way?

[Steve Webb]

Will the hon. Gentleman allow me? I want to respond to 35 different contributions; I hope that he will forgive me for responding to the debate.

My hon. Friend the Member for North East Hertfordshire (Mr Heald) pointed out how LHA is inflating the market. LHA rents are on average 10% higher than the housing benefit rents that have carried on from the previous system—more and more evidence that we, through our taxes, including taxes on hard-working families, are inflating rents. That is not benefiting tenants. During the debate it has been suggested that we are against the tenants, but we are actually against our taxes being spent on inflated rents, because that is not what the money should be for.

We have established that if we can get a grip on the rents, that will benefit tenants and help people in lower-paid work to pay those rents. There have been exaggerated stories about the impact, an assumption that rents will not fall, although we believe that our changes will have an impact, and thirdly—

[Mr Slaughter]

When the local housing allowance was introduced, the hon. Gentleman wrote on his website:

“Proposals of this sort risk creating ‘ghettos’ where low-income tenants are forced to move to accommodation in lower rent parts of town, whilst those who are better off continue to rent the best properties.”

When did he change his mind and stop worrying about that problem?

[Steve Webb]

That is interesting. I wonder whether the hon. Gentleman still supports the housing benefit cut taking away the £15 excess that the Labour party was going to introduce before the general election. If I remember rightly, Labour delayed that cut by one year—until after the election. Does the hon. Gentleman still support that Labour cut in housing benefit? I suspect not.

It is important that we have a discussion about fairness. My hon. Friend the Member for Colchester (Bob Russell) raised the situation of vulnerable people, particularly families with children. We are clear, first, that the impact of the changes as a whole is much narrower than has been assumed; secondly, that they will have an impact on rents, which will reduce the shortfalls and the number of people who will have to move; and thirdly, that there will be individual vulnerable cases. My hon. Friend is right to say that the position of families with children is very important. That is why we have trebled the money available to local authorities for discretionary housing payments specifically to help the most vulnerable. I recently had a conversation about a London authority that estimated that it would need to double its discretionary housing payments to cover these costs. We are trebling them, which we believe will enable local authorities to address the situation of the vulnerable households about which my hon. Friend is rightly concerned. I am grateful to him for raising that point.

The issue of fairness was raised by other Members too. My hon. Friends the Members for Hastings and Rye (Amber Rudd) and for South Thanet (Laura Sandys) rightly pointed out that many low-paid workers cannot begin to afford the sorts of rents we are paying for housing benefit recipients. The Labour party used to agree with us on that. Since they became the Opposition, however, they have stopped agreeing with themselves. There is a fairness issue therefore, and as we bring down rents we will improve the fairness of the system.

One of the key issues is housing supply, which my hon. Friend the Member for Colchester and others also raised. The shadow Communities and Local Government Secretary, the right hon. Member for Don Valley (Caroline Flint), rightly raised that issue as well. However, the housing shortage was caused by the Labour party, which failed to build sufficient numbers of houses when in office. Many Labour Members said that they wished the situation was different. Well, they had 13 years to make it different. It is no good their wishing in opposition that houses had been built. As they held the levers of power and they did not pull them, they have to accept and live with the consequences. That is why I welcome what my ministerial colleagues at the Department for Communities and Local Government are doing to generate new social house building so that there will be diversity in the social housing sector, with the most subsidised rents and also near-market rents—80% of market rents—which will provide the resources needed for the significant increase of 150,000 new social homes. We desperately need that increase during the course of this Parliament.

Many Members raised issues about the disincentive effects of the housing benefit system, and I want to draw attention in particular to the remarks of my hon. Friend the Member for Enfield North (Nick de Bois). He made some powerful points about the fact that once people are in work and on housing benefit—I do accept that there are people in work and on housing benefit—the benefits systems then traps them, because if they want to do extra work they face very high marginal withdrawal rates. My hon. Friend highlighted the situation of people who are in work and do not want to do more hours because they will just find that their housing benefit is withdrawn. That is a crazy system: we, the taxpayers, pay £21 billion a year to subsidise rents, and put inflation into rents, and then we expect people to do low-paid work, and as soon as they do more work we claw the money back.

That is going to change. This Government are doing to do something about it. On Thursday my right hon. Friend the Secretary of State will announce plans to take forward the proposition of a universal credit, whereby for the first time people will be guaranteed to be better off in work.

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

The House proceeded to a Division.

[Mr Speaker]

I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.

21:59

Division 113

Ayes: 258

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Labour: 236
Democratic Unionist Party: 7
Scottish National Party: 5
Social Democratic & Labour Party: 3
Plaid Cymru: 3
Independent: 3
Alliance: 1
Green Party: 1
Liberal Democrat: 1

Noes: 319

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Conservative: 272
Liberal Democrat: 46