House of Commons

Wednesday 27th February 2013 Commons Chamber

Wednesday 27 February 2013

The House met at half-past Eleven o’clock

Prayers

Wednesday 27th February 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 27th February 2013 Commons Chamber

The Secretary of State was asked—

[Alison McGovern (Wirral South) (Lab)]

1. What recent assessment he has made of the effects of the Government’s economic policies on Wales; and if he will make a statement.

[Mr Peter Hain (Neath) (Lab)]

3. What recent assessment he has made of the effects of the Government’s economic policies on Wales; and if he will make a statement.

[Wayne David (Caerphilly) (Lab)]

5. What recent assessment he has made of the effects of the Government’s economic policies on Wales; and if he will make a statement.

[Susan Elan Jones (Clwyd South) (Lab)]

11. What recent assessment he has made of the effects of the Government’s economic policies on Wales; and if he will make a statement.

[The Secretary of State for Wales (Mr David Jones)]

Before answering the question, I wish the House dydd gwyl Dewi da or a very happy St David’s day for Friday.

The Government are committed to delivering the plan that has cut the deficit by a quarter and given us record low interest rates and a record number of jobs, benefiting families and businesses in Wales. Moody’s decision to downgrade the UK Government bond rating is a reminder of how important it is to fix the country’s finances and a warning to those who think that we should simply borrow more.

[Alison McGovern]

What is good for the economy of north Wales is good for Merseyside and what is bad for that economy hurts us too. The fact that 1,240 more people are in long-term unemployment in north Wales than a year ago does not give me hope for the economy of my constituency. What is the Secretary of State going to do about that?

[Mr Jones]

The hon. Lady is entirely right that the economies of north Wales and Merseyside are inextricably linked. The Government have created more jobs since we came to power. The rate of employment has increased by 1.6%. She should bear it in mind that the Welsh Assembly Government are responsible for economic development in Wales. They should therefore align their policies closely with those that this Government are pursuing.

[Mr Hain]

Will the Secretary of State admit that his economic policies are failing Wales disastrously? His new jobs are a mirage. One new worker in 10 is underemployed. They are part-timers seeking full-time work or temporary workers who want a proper job. There are underemployed breadwinners who are struggling to put food on the table and heat their homes. That is contributing to the 200,000 children who are living in poverty in Wales. Why does he not apologise for that shameful record?

[Mr Jones]

I will take no lessons from the right hon. Gentleman, whose party oversaw the trashing of the British economy and was responsible for the mess that we are having to clear up. The Government have created more than 1 million private sector jobs since we came to power, against the international trend, and we are proud of that.

[Wayne David]

Will the loss of the triple A status of the British economy be bad or very bad for Wales?

[Mr Jones]

The loss of the triple A status is a stark reminder of how important it is to develop sensible policies to fix the economy. I remind the hon. Gentleman that Moody’s recognises that the UK’s creditworthiness remains extremely high and points to the strong track record of fiscal consolidation. Were it not for that, we would be on a negative outlook, rather than a stable one.

[Susan Elan Jones]

I am glad to see that the Secretary of State is reading from a script today. No doubt, he is not trusted to make off-the-cuff comments again. I wish him a dydd gwyl Dewi hapus. What will life be like from April, after dydd gwyl Dewi, for the 170,000 working families who will lose their tax credits thanks to his Government, who prefer to give the money to millionaires?

[Mr Jones]

After April, many more families in Wales will benefit from historically high levels of employment and lower taxes. I remind the hon. Lady that since we came to power, 1.1 million people in Wales are paying less tax and 109,000 people are paying no tax at all.

[Jonathan Evans (Cardiff North) (Con)]

What recent assessment has my right hon. Friend made of the prospects for the Welsh house building industry?

[Mr Jones]

The house building industry is extremely important in Wales and a major driver of economic recovery. I was therefore disappointed to read today the comments of Steve Morgan, the chairman of Redrow plc, Wales’s largest building company, who says that the Welsh Government’s housing policies are potentially “catastrophic” for the industry, with the new regulations made in Cardiff likely to add £11,000 to the cost of a three-bedroom house. At a time when Welsh builders need work and Wales needs more homes, that cannot be right. I consequently urge the Welsh Government to align their policies with those of my right hon. Friend the Secretary of State for Communities and Local Government.

[Alun Cairns (Vale of Glamorgan) (Con)]

Although unemployment in the Vale of Glamorgan is well below the national average, Barry still needs to attract private sector investment. Ten years ago, Barry was left out of the assisted areas map, which sadly has led to its increased decline. Will the Secretary of State work with the Welsh Government to ensure that Barry receives assisted area status this time around?

[Mr Jones]

The Wales Office is in discussion with the Department for Business, Innovation and Skills and the Welsh Government about the assisted areas map for 2014 to 2020, but the decision on which sea areas are awarded assisted area status will be determined by the Welsh Government, subject to criteria set by the European Commission. I am sure they will listen to what my hon. Friend has to say.

[Glyn Davies (Montgomeryshire) (Con)]

No coalition Government policy has a greater economic impact on Wales than increasing the spending power of the poorest through raising the tax-free allowance. Will my right hon. Friend tell the House how many people the coalition Government have lifted out of paying tax in Wales over the past two years?

[Mr Jones]

As I have just mentioned, 1.1 million people in Wales are paying less tax as a consequence of policies pursued by this Government, and 109,000 are paying no tax at all. That must be good news for the people mentioned by my hon. Friend.

[Roger Williams (Brecon and Radnorshire) (LD)]

The Welsh economy benefits from students from developing countries attending our excellent universities. Following the Prime Minister’s visit to India, will the Secretary of State join our universities in telling students from India, China, Malaysia and Indonesia that Welsh universities are open and that they would be welcome to study there?

[Mr Jones]

Higher education is a major export earner for Wales and, of course, for the United Kingdom as a whole. During his recent visit to India my right hon. Friend the Prime Minister made it clear that there is no arbitrary limit on the number of students who can study in the UK, provided they have the necessary qualifications and can speak the language. They are more than welcome to come to the UK.

[Owen Smith (Pontypridd) (Lab)]

Last week the Joseph Rowntree Foundation warned that Wales faces a decade of destitution as a result of policies pursued by this Government, and the Welsh Government said that £600 million is being taken out of the pockets of ordinary Welsh people. Is the Secretary of State telling the Prime Minister and his Cabinet colleagues what people are saying about his Government in Wales, or is he just there to cheerlead for policies that are hammering his country?[Official Report, 28 February 2013, Vol. 559, c. 7-8MC.]

[Mr Jones]

If this Government were to pursue the policies advocated by the Labour party and try to fix a debt crisis simply by borrowing more, the plight of the individuals whom the hon. Gentleman mentions would be infinitely worse. So far we are providing 109,000 additional jobs for the people of Wales, and we are reducing their tax bills and doing our best to ensure that they get sustainable private sector jobs. The hon. Gentleman has no answer to that.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

2. What recent discussions he has had with the Secretary of State for Work and Pensions on the roll-out of universal credit in Wales.

[Chris Evans (Islwyn) (Lab/Co-op)]

7. What recent discussions he has had with Secretary of State for Work and Pensions on the roll-out of universal credit in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

The Wales Office has regular discussions with the Department for Work and Pensions on the roll-out of universal credit in Wales to ensure its successful implementation.

[Stephen Doughty]

The Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), recently told me that there would be “no big-bang effect” on the finances of housing associations and landlords across Wales as a result of the Government’s policy. Yet Moody’s has placed housing associations on downgrade review, not just this Government, and the NHS is warning of a massive increase in rent arrears. When will he and the Secretary of State for Work and Pensions get a grip before there are devastating impacts across Wales?

[Stephen Crabb]

I simply do not accept much of the scaremongering from the hon. Gentleman and his colleagues. We are in close discussion and consultation with housing associations and local authorities across Wales that are key stakeholders. We expect 200,000 households in Wales to see an increase in their average entitlement of around £160 per month as a result of universal credit.

[Chris Evans]

Seventy per cent. of council tenants in Crumlin in my constituency will lose out because of the bedroom tax and the roll-out of universal credit. With council services stretched to the maximum, is the Secretary of State concerned that vital services will be cut locally across Wales, as well as homelessness increasing?

[Stephen Crabb]

I will make the same point to the hon. Gentleman: the Government simply do not accept the catastrophic scenarios that Labour Members are trying to communicate. Universal credit will be a major tool in creating new incentives to work and raise employment levels in Wales. Let us not forget that Labour’s legacy in Wales was 200,000 people who have never worked at all. He should feel angry about that.

[Nia Griffith (Llanelli) (Lab)]

Disarray on universal credit means that children in Wales still do not know whether they will lose their free school meal entitlement, and some families in Wales will be better off not seeking more work because they would have to earn an additional £1,500 per child to make up for the loss of school meals. What is the Minister doing to safeguard free school meal entitlements for children in Wales?

[Stephen Crabb]

The hon. Lady makes an important point. The Government take seriously concerns about high child care costs. On her specific point on passported benefits, of which the free school meal is one, we are in close discussions with Welsh Government Ministers. We are making good progress on resolving the outstanding questions. I will write to her with further information.

[David Rutley (Macclesfield) (Con)]

4. What recent discussions he has had on the roll-out of superfast broadband in Wales.

[The Secretary of State for Wales (Mr David Jones)]

The Government have demonstrated our commitment to superfast broadband by providing £150 million across the UK to fund super-connected cities including Cardiff and Newport, and almost £57 million to the Welsh Government to ensure that broadband access is available to homes and businesses in the hardest-to-reach parts of Wales.

[David Rutley]

Will my right hon. Friend assure the House that the Government’s aim is to provide a truly modern digital infrastructure that does not leave behind rural communities in Wales—and, for that matter, in Macclesfield?

[Mr Jones]

The Government have allocated £530 million to stimulate commercial investment to roll out high-speed broadband in rural communities and £150 million to improve mobile coverage where signals are poor or non-existent.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Even though there is a lot of rain in Swansea, the council wants to create a new cloud over Swansea—a wi-fi cloud. Will the Minister meet me and the council to discuss the prospect of super-connectivity for Swansea in the forthcoming Budget, so that the sun continues to shine through the clouds, and we can bathe in the glory of being League cup winners?

[Mr Jones]

I commend Swansea for their wonderful win in the League cup final. The hon. Gentleman knows that I am always happy to meet him. If he would like to contact my office, I will be pleased to do so again.

[Mr Mark Williams (Ceredigion) (LD)]

This Government are committed to broadband, but does the Secretary of State share my bewilderment—and that of many of my businesses and farmers in the Ceredigion constituency—at the Welsh Assembly Government’s curious prioritisation, which means that some rural and hard-to-reach areas of Wales will not benefit from broadband initiatives for two years?

[Mr Jones]

It is good to see my hon. Friend speaking up for Ceredigion on Ceredigion day. A number of colleagues have commented on the choice of areas for the first roll-out. Suffice it to say that Broadband Delivery UK is keeping a close watch on how that develops, and I will speak to it on that very issue.

[Paul Flynn (Newport West) (Lab)]

Because of the lack of coverage on main-line televisions, many of us had the great joy at the weekend of watching Swansea’s triumph on broadband. Will the Secretary of State assure us that the future triumphs of Newport County, Cardiff City and Wrexham will be available on broadband?

[Mr Jones]

Yes, indeed—particularly as Wrexham is currently top of the Blue Square league.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

6. What discussions he has had with Ministers in the Welsh Government who have partial responsibility for justice and law and order.

[The Secretary of State for Wales (Mr David Jones)]

I have meetings with Ministers in the Welsh Government on a wide range of issues, including justice and law and order, although they are of course not devolved.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

I will wish the Secretary of State a happy St David’s day on St David’s day and not today.

There is an all-Wales legal circuit, four excellent police forces and an all-Wales probation trust. It is high time that we devolved justice and policing to Wales. The Secretary of State will know that there is a huge clamour of enthusiasm for this move. I hope he will join it.

[Mr Jones]

I understand that Plaid Cymru has made its submission to the Silk commission, which will no doubt consider those proposals. It will report in spring next year. The Government have shown our commitment to devolution of policing by creating the office of police and crime commissioner, which brings policing as close as possible to the policed public.

[Mr Llwyd]

I heartily disagree with the Secretary of State on that—police and crime commissioners are nothing of the sort—but the obvious point is that laws in Wales are diverging naturally from those in England, including in administrative law, family law and criminal law. It is high time that the legislature in Wales had its own system. Otherwise, it will probably be the only legislature in the world without such a system.

[Mr Jones]

I hear the right hon. Gentleman’s point. No doubt the Silk commission will hear it too, and will take it into account when deciding whether the matter should be taken forward.

[David T. C. Davies (Monmouth) (Con)]

The Welsh Assembly may be able to prevent parents from having their children educated in England and prevent patients from being treated by the excellent English national health service, but they will not be able to stop criminals crossing the border and breaking the law in England, or vice versa. Does the Secretary of State agree that it would be a disaster to devolve policing and justice to the Welsh Assembly?

[Mr Jones]

My hon. Friend has made his point in his customary restrained manner. No doubt the Silk commission is listening very carefully to what he has to say. He has 48 hours in which to make his submissions. I encourage him to do so.

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

In his discussions with Welsh Ministers, has my right hon. Friend had an opportunity to look at the costs and implications of a separate legal jurisdiction in Wales? Can he tell the House whether he favours such a separation?

[Mr Jones]

Tempted though I am, I will not second-guess the work of the commission. I will say, however, that the UK Government will make their own submission to the commission this week, and it will be published next week.

[Nick Smith (Blaenau Gwent) (Lab)]

8. What discussions he has had with the Secretary of State for Defence on the closure of the army recruitment offices in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

I have discussed this issue with the Minister of State, Ministry of Defence, my right hon. Friend the Member for Rayleigh and Wickford (Mr Francois). I was also pleased to support him when we debated this topic in Westminster Hall earlier this month.

[Nick Smith]

Wales punches above its weight in recruitment to the armed forces, but Government outsourcing means that half its careers offices will be closed. What assurances can the Minister give that the Army will still be able to recruit from all parts of Wales, including the valleys, after these closures?

[Stephen Crabb]

The hon. Gentleman is absolutely right; Wales has traditionally been a healthy recruiting ground for excellent soldiers for our armed forces, and that will continue to be the case under the new partnership between Capita and the Army on recruitment. There is a long-term trend of young people using the internet to access careers advice, and that is exactly the same with defence careers. However, this is not just about an online service, but about mobile teams getting out into the communities to enable face-to-face contact between men and women in uniform and young people who show an interest in a career in the armed forces.

[Guto Bebb (Aberconwy) (Con)]

9. What discussions he has had with his ministerial colleagues and others on building a new prison in north Wales; and what progress has been made.

[The Secretary of State for Wales (Mr David Jones)]

The Ministry of Justice is carrying out a review to examine the feasibility of constructing a new prison. I am pleased that north Wales is being considered as a possible location and reiterate my strong support for locating a new prison in the area.

[Guto Bebb]

I thank my right hon. Friend for his response, and I warmly welcome the possibility of a so-called “super prison” in north Wales. Does he agree, however, that while further public sector investment in north Wales is welcome, it should not detract from the need to rebalance the Welsh economy and ensure that we move away from the dependence on public sector pay in Wales?

[Mr Jones]

My hon. Friend makes a fair point. The new prison would provide approximately 900 new jobs of high quality, but its economic impact on the area would be approximately £17.5 million, which would itself be a stimulus to the private sector. The new prison is widely welcomed in north Wales.

[Albert Owen (Ynys Môn) (Lab)]

The Secretary of State said that the Ministry of Justice was reviewing the possibility of a prison in north Wales. Has the Wales Office itself identified sites? I believe, and he believes, that this would boost economic activity in north Wales. It would be good for the economy as well as the justice system.

[Mr Jones]

I agree entirely with the hon. Gentleman that this would be of massive economic benefit. My hon. Friend the Minister discussed this with the relevant Welsh Minister last week, and I have also had discussions with my right hon. Friend the Lord Chancellor.

[Chris Bryant (Rhondda) (Lab)]

10. What assessment he has made of the potential effect of the under-occupancy penalty on social housing in Wales.

[Ann Clwyd (Cynon Valley) (Lab)]

12. What assessment he has made of the potential effect of the under-occupancy penalty on social housing in Wales.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

Information on the expected impact of the social sector under-occupancy measure is provided in the impact assessment prepared by the Department for Work and Pensions.

[Chris Bryant]

Local authorities in Wales need roughly 550 new couples every year to volunteer to be foster parents. Is it not a ludicrous own goal to include potential foster families in the bedroom tax? Before Government Members start complaining about the term “bedroom tax”, let me say that I heard the Prime Minister use it. It looks like a tax, it feels like a tax and it is unfair on those who are going to have to pay it.

[Stephen Crabb]

The hon. Gentleman describes a reduction in Government expenditure as a tax. Opposition Members confuse their debt with their deficits and they spent 13 years describing out-of-control public spending as investment. I agree with the point made by the hon. Member for Cardiff South and Penarth (Stephen Doughty) on 5 February when he said that people who suffer from low levels of financial literacy struggle to make correct budgeting decisions. The hon. Member for Rhondda (Chris Bryant) and his party are proof of that.

[Ann Clwyd]

No. 12, Mr Speaker.

[Mr Speaker]

The right hon. Lady’s question has been grouped. Her moment is now and we should hear from her.

[Ann Clwyd]

I shall take the moment, Mr Speaker.

One immediate measure that would protect the most vulnerable people would be to exempt those on disability living allowance from this tax. Will the Minister urgently review this policy?

[Stephen Crabb]

Let me start by wishing the right hon. Lady well with the important job that the Prime Minister has asked her to do on complaints in the NHS. I know that she has the respect and support of the whole House.

I understand the concerns among the disabled community about the implementation of this measure, but we are making substantial resource available for local authorities to assist with the difficult specific cases, among which I expect the disabled to be included.

[Sir Tony Baldry (Banbury) (Con)]

Can there be any justification for treating tenants on housing benefit in social housing differently from tenants on housing benefit in the private rented sector, and how can it possibly lie in the mouth of those who changed the law on housing benefit for those in the private rented sector to complain when we extend exactly the same provisions to those on housing benefit in social housing? Have I missed something?

[Stephen Crabb]

My hon. Friend highlights very well the total incoherence of Labour’s position. It is even harder to justify maintaining a subsidy for spare rooms given the country’s financial condition and the need to reduce the deficit and restore financial budgetary discipline.

[Hywel Williams (Arfon) (PC)]

I draw the House’s attention to the motion this afternoon and encourage right hon. and hon. Members to participate in the debate and to join us in the Lobby.

DWP Ministers tell me that no assessment has been made of the flexibility of the housing market in rural Wales in order to respond to the bedroom tax. Has the Under-Secretary made any such assessment?

[Stephen Crabb]

There are different types of housing stock throughout Wales, but one problem facing the whole of Wales is that of overcrowding and long housing waiting lists. It cannot be justifiable that, at the same time as people are receiving housing benefit for spare rooms, in the same streets and on the same housing estates there are houses with three or four children in the same bedroom.

[Owen Smith (Pontypridd) (Lab)]

How on earth can the Minister defend a policy that is unfair and unworkable and will penalise the disabled, forces’ families and foster parents in Wales? Does he deny that his Government’s own impact assessment shows that Wales will be harder hit than anywhere else in the UK? Is there not a single issue on which he and the Secretary of State will stand up for Wales?

[Stephen Crabb]

There is nothing caring, compassionate or progressive about walking away from our responsibility to fix the deficit and the debt. If we do not do that, the very people we will hurt in the future will be the poor and the vulnerable—the very people whom we all came into politics to defend.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

13. What plans his Department has to support Wales tourism week.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

Wales Office Ministers will undertake a range of visits to attractions across Wales to celebrate Wales tourism week and to raise awareness of the tourism industry’s vital importance to the Welsh economy.

[Simon Hart]

The Minister will know that catering and hospitality are vital parts of the Welsh tourism industry. With that in mind, will he welcome the creation of the Tenby hotel school and all the good it will bring to the whole of Wales? When he is next in the county, will he pay us a visit?

[Stephen Crabb]

I welcome that question from my hon. Friend. I will next be in the area this weekend—he and I have the pleasure and privilege of representing the most beautiful part of the United Kingdom. I very much welcome the new development he has announced; it will be a major boost to tourism not just in Pembrokeshire but across Wales.

[Mr Speaker]

I call Mrs Helen Goodman. No? Well, everybody is here. We are ready. Let’s get going. Questions to the Prime Minister.

The Prime Minister was asked—

[Richard Drax (South Dorset) (Con)]

Q1. If he will list his official engagements for Wednesday 27 February.

[The Prime Minister (Mr David Cameron)]

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.

[Richard Drax]

Does the Prime Minister agree that it is totally unacceptable for Members or prospective Members of this House to say anything that supports terrorism?

[The Prime Minister]

I absolutely agree with my hon. Friend. Frankly, it is absolutely staggering that someone is standing for public office who has said this:

“In October 1984, when the Brighton bomb went off, I felt a surge of excitement at the nearness of Margaret Thatcher’s demise. And yet disappointment that such a chance had been missed.”

Those are the words of the Labour candidate in the Eastleigh by-election. They are a complete disgrace and I hope that the Leader of the Labour party will get up and condemn them right now.

[Edward Miliband (Doncaster North) (Lab)]

Three years ago, the Prime Minister said that

“the first priority of any government has got to be keeping UK plc’s credit rating. That’s got to come first. It’s the only responsible thing to do.”

How is that going?

[The Prime Minister]

Is it not amazing that the Leader of the Opposition will not condemn someone who apparently speaks up for terrorists? Is that not absolutely disgraceful? He will have a second chance when he gets up again. The decision by the ratings agency is a reminder of the debt and the deficit problem that this country faces and, frankly, it is a warning to anyone who thinks we can walk away from it. It is absolutely vital that we continue with the work of this Government, who have cut the deficit by a quarter, with a million extra private sector jobs and interest rates at record low levels. I note that it is still his policy to address excessive borrowing by borrowing more.

[Edward Miliband]

I was asking about the country’s credit rating. The right hon. Gentleman used to say that our credit rating was

“the mark of trust in our economy”,

and that it was

“right up front and centre”

in

“our new economic model”.

His manifesto that he published at the general election said that safeguarding Britain’s credit rating was the very first of his “Benchmarks for Britain”, against which

“the British people…can judge the economic success or failure of the next government.”

So does the Prime Minister accept that, by the first test he set himself, he has failed?

[The Prime Minister]

If there is a problem of excessive borrowing, why is it the right hon. Gentleman’s policy to borrow more? That is the question that he simply has to answer. If he wants to listen to the credit rating agency, I will tell him that Moody’s said:

“Moody’s could also downgrade the UK’s government debt rating further in the event of…reduced political commitment to fiscal consolidation.”

On this side of the House, we know that that is the vital work we have to do. Will he finally now admit that he is in favour of more borrowing? Admit it!

[Edward Miliband]

You, Mr Speaker, always know when the right hon. Gentleman starts asking me questions that he cannot answer questions about his own record. The part-time Chancellor said that it would be a “humiliation” for Britain to lose its triple A credit rating. I know that the Prime Minister is not big on humility, but his manifesto did promise that he would be “accountable and open”, so let us give him another go. A simple question—yes or no: has not he failed the first economic test that he set out in his manifesto?

[The Prime Minister]

I am not arguing for one moment that the rating agency does not matter—that is the right hon. Gentleman’s argument. His argument is that the rating agency does not matter and that the answer to debt is to borrow more and not to take any responsibility for the mess they left. It is this Government who have cut the deficit by a quarter, who have a million extra private sector jobs and who have low interest rates that are vital for the future of the economy. Economies that maintain their triple A rating are those of countries such as Canada and Germany that fixed the roof when the sun was shining. Let me ask him again: why does he not admit that his answer to extra borrowing is to borrow more? Have another go: admit it!

[Edward Miliband]

Any time the right hon. Gentleman wants to swap places, I will happily answer the questions. He talks about borrowing. I do not know when he last checked, but the deficit is rising, not falling, this year—and, because of his failure to grow the economy, he is borrowing £212 billion more than he planned. Now, let us turn to the reasons for the downgrade. May we take it from his answers so far that he really believes that this loss of the country’s triple A status, which he set as the test, has nothing to do with him?

[The Prime Minister]

I am the one saying that this credit rating does matter. It demonstrates that we have to go further and faster on reducing the deficit. The very fact that the right hon. Gentleman will not answer the question about wanting to borrow more, which the country needs to know, means that he will never sit on this side of the House. If he wants to look at what is happening in our economy, is it not interesting that he does not mention the other economic news from last week, which was 154,000 extra people in work and more people in employment than at any time in our history? Youth unemployment is down since the election; unemployment is down since the election—that is what is happening in our economy, but the right hon. Gentleman cannot recognise it. When is he going to admit that we should never listen to someone who sold the gold, bust the banks, racked up the deficit and cannot say sorry for any of it?

[Edward Miliband]

I think we can take it from that answer that the Prime Minister cannot accept the simple fact that he has failed on the first test he set himself, and it is his fault—it happened on his watch. Borrowing is rising, even after all the pain of the tax rises and all the spending cuts because the part-time Chancellor’s plan is failing. The truth is that they are the last people left who think that their plan is working and that the failure has nothing to do with them. We have 1 million—[Interruption.] The Education Secretary calls out, “That’s not true”, so perhaps he believes it, too, but behind the scenes he is briefing against the Chancellor. Perhaps they should swap places. We have 1 million young people out of work, the deficit is rising not falling and the economy is flatlining. What further evidence does he need that his plan is just not working?

[The Prime Minister]

Let us examine the points the right hon. Gentleman has just made. He says the deficit is up, but it is down by a quarter since the election. He says that we do not have support for our plan, but the CBI—the biggest business organisation in the country—says we have the right plan for growth. He complains about the level of unemployment, but it is down since the election and we have a record number of people in work. Those are the facts. Now let us look at the right hon. Gentleman’s policy. Let us examine the fact that the New Statesman, the in-house magazine of the Labour party, says that his

“critique of the government’s…strategy may never win back public trust”,

his

“proposals for the economy will never convince”,

and his

“credibility problem will only become magnified as the general election approaches”.

That is not Conservative central office saying it, but the New Statesman.

[Edward Miliband]

With the greatest respect to the New Statesman, the Prime Minister is scraping the barrel by quoting that. All we have heard today—[Interruption.]

[Mr Speaker]

Order. Mr Zahawi, you are an excitable fellow; this is not very statesmanlike. Calm yourself; you will get better over time.

[Edward Miliband]

All we have heard today is a Prime Minister who refuses to accept that he has failed on the central test he set himself. He has failed to meet that first test. It is not just our credit rating that has been downgraded. We have a downgraded Government, a downgraded Chancellor and a downgraded Prime Minister.

[The Prime Minister]

The right hon. Gentleman says that the New Statesman is scraping the barrel, but it was the only newspaper that endorsed his leadership. In this Oscar week, perhaps the best we can say is that Daniel Day-Lewis was utterly convincing as Abraham Lincoln, and the right hon. Gentleman is utterly convincing as Gordon Brown: more borrowing, more spending, more debt.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

In the 10 years for which they have run Harrogate borough council, the Conservatives have cleared the £19.6 million of debt left by the Liberal Democrats and, in doing so, have delivered a four-year council tax freeze. Does the Prime Minister agree that that shows the wisdom of tackling debt, and that any urges to borrow more and more like the Labour party constitute the road to ruin?

[The Prime Minister]

My hon. Friend makes an important point. It is worth recognising that when it comes to finding efficiencies and finding value for money, local government has an excellent record. We really should say that in this place. Local government has a good record of paying down debt, dealing with deficits, and being efficient. One of the benefits of that is that it reduces debt interest charges, which is something on which we must focus in this Government and in this country.

[Albert Owen (Ynys Môn) (Lab)]

Q2. Next month, a big event—alongside the Budget—will be the rugby champion, Wales, playing England at the Millennium stadium. Does the Prime Minister have the same confidence in England’s winning the triple crown as his Chancellor had in our retaining the triple A credit rating, and, as team manager, does he intend to change his economic team to avoid further humiliation and a triple-dip recession?

[The Prime Minister]

There is a difficult record of Prime Ministers’ endorsing various rugby or football teams, so I do not plan to do that. All I will say is that I am very proud of the fact that, on St David’s day, the Welsh flag will be flying above Downing street, as it should be—and, when it comes to the rugby, may the best team win.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Has my right hon. Friend noticed that since—in common with the United States and Japan—we lost our triple A status, the cost of our international borrowing has actually fallen?

[The Prime Minister]

My right hon. Friend makes an important point. While I do not deny for one second the importance of the rating agencies, the most important test of credibility—a test that is faced day in, day out in the markets—is the rate of interest at which people borrow, and the rate of interest at which we borrow is still at record lows. It has gone down since the election, whereas it has gone up in many other countries, but if we listened to the Labour party, it would go up again.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

Q3. The Prime Minister will be aware of the increased need for food banks in constituencies such as mine, which has been brought about by his Government’s failed policies. Will he sign my petition calling for action so that no family in the United Kingdom will go hungry as a result of his policies?

[The Prime Minister]

I will certainly look at the hon. Gentleman’s petition, but let me point out first that the use of food banks increased tenfold under the last Labour Government and, secondly, that a very important change that we made—requested by the Trussell Trust, which does so much to promote the work of food banks—was allowing them to be advertised in jobcentres. The last Government did not do that, because they were worried about the PR. Well, we put people ahead of public relations.

[Graham Evans (Weaver Vale) (Con)]

This week, the generation who fought in the Arctic convoys and Bomber Command and who died in the second world war have finally been recognised. Does my right hon. Friend agree that it is right and proper for us to remember the 3,000 sailors and 55,000 members of Bomber Command who gave their lives for this country’s freedom?

[The Prime Minister]

My hon. Friend is absolutely right to raise that issue. I am sure that there will be support throughout the House of Commons for all who took part in the Arctic convoys and all who served in Bomber Command.

It is not enough for us to have the excellent memorial to those who served in Bomber Command, in Green Park. It is right for us to have the medal for those who served in the Arctic convoys, and the clasp for those who served in Bomber Command. I have been stressing to Government colleagues how important it is for us to get on with handing out those medals and clasps as quickly as possible, because, tragically, we are losing more and more of the people who served all those years ago. They deserve their medals and their clasps, and I am proud that, under this Government, they will get them.

[Wayne David (Caerphilly) (Lab)]

Q4. Mr and Mrs Goodwin live in the Caerphilly borough. They are both registered blind, and rely heavily on their guide dogs, family and neighbours. Life is not easy for them, but from 1 April it will become even more difficult, because they will have to pay the Government’s bedroom tax on the home in which they have lived for 26 years. What justification can there be for that?

[The Prime Minister]

I will look at any individual case, and the Department for Work and Pensions will look at any individual case, but may I first make the point that this is not a tax? A tax is when someone earns money, it is their money, and the Government take some of it away. Frankly, the Opposition have got to engage with the fact that housing benefit now accounts for £23 billion of Government spending. That is a 50% increase over the last decade. We also have to address the fact that we have 250,000 families in overcrowded accommodation and we have 1.8 million people waiting for a council house.

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Shameful.

[The Prime Minister]

That is why it is not surprising—

[Ed Balls]

Shameful.

[The Prime Minister]

The right hon. Gentleman is shouting “Shameful”, but let him listen to what Labour’s Housing Minister in the last Government, the hon. Member for Hartlepool (Mr Wright), said:

“We have reiterated time and again in this Committee the need to ensure that houses that are too large for people’s current needs are allocated accordingly.”––[Official Report, Housing and Regeneration Public Bill Committee, 31 January 2008; c. 697.]

That is what Labour said in Government. Now that it is in opposition, all we get is rank opportunism and irresponsibility.

[Julian Smith (Skipton and Ripon) (Con)]

Unemployment in Yorkshire is at its lowest level in two years, businesses in Yorkshire have full order books, and the head of the CBI has said that the Yorkshire economy is “turning a corner”. Will the Prime Minister therefore ignore the poor advice from the Labour party?

[The Prime Minister]

I am grateful to my hon. Friend for what he has said. The British economy has been through difficult times, not least because we are recovering from a massive boom and bust, a massive banking bust and the deepest recession since the 1930s, but if we look at what is happening in terms of employment and new business creation, we see an economy that is rebalancing, and we need to encourage that rebalancing and that business growth.

[Hazel Blears (Salford and Eccles) (Lab)]

Q5. The Prime Minister has stood idly by while hard-pressed families in Salford and Eccles and across the country have faced soaring energy bills, which are now over £1,400 a year. Last October the Prime Minister promised to take action, and I think the whole country wants to know what he is going to do now to keep his promise to those families who are struggling to heat their homes.

[The Prime Minister]

We are legislating to make sure that energy companies put people on the lowest tariffs. When that Bill comes before the House of Commons, I hope that the right hon. Lady will vote for it.

[Mr Adrian Sanders (Torbay) (LD)]

Will the Prime Minister withdraw the National Health Service (Procurement, Patient Choice and Competition) Regulations 2013, which seem to contradict assurances given in the other place that this coalition Government will not privatise our NHS?

[The Prime Minister]

I urge my hon. Friend to look very closely at those regulations, because he will find that they are absolutely in line with the principles that the last Government put in place, and withdrawing them would actually lead to more competition in the NHS, rather than managed competition, managed by Monitor. I therefore think what my hon. Friend wants us to do would achieve the exact opposite of what he seeks.

[Paul Blomfield (Sheffield Central) (Lab)]

Q6. The Energy Secretary, the Deputy Prime Minister, the Committee on Climate Change, the Chair of the Select Committee on Energy and Climate Change and a group of over 35 businesses, non-governmental organisations and faith groups are among those in this country who back the inclusion in the Energy Bill of a target to decarbonise the power sector by 2030. Will the Prime Minister explain why his Government have failed to include such a target in the Bill?

[The Prime Minister]

We do not believe it makes sense to set a target range for 2030 in advance of setting the fifth carbon budget, which covers the period 2028 to 2032. We will be taking a power in the Energy Bill, but setting it in advance would not make sense.

[Charlotte Leslie (Bristol North West) (Con)]

In 2008 Labour commissioned three reports on the state of the NHS, to celebrate the health service’s 60th birthday party. We now know those reports were damning and raised issues such as there being a dangerous target culture, which was also raised by Francis five years later. We also know those reports were suppressed by the Labour Government. Had they not been suppressed, thousands of lives could possibly have been saved. Will the Prime Minister join me in calling for an investigation into who was responsible for suppressing those reports?

[The Prime Minister]

I note what my hon. Friend has said, and I will look carefully at the issue she raises. The whole point about the Francis report is that we should use this as an opportunity to say, “Yes, of course we support the NHS and its founding principles, but not everything in the NHS is right.” Where there is bad practice and where things are going wrong, we need to shine a very bright light on it and make sure not only that we deal with it but that we hold people to account.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Q7. Further to the question asked by the hon. Member for Torbay (Mr Sanders) on the new regulations laid on 13 February, the Government gave categorical assurances that GP commissioners would not be forced to put health services out to competitive tendering, but the regulations go completely against that. What is the Prime Minister’s excuse for this?

[The Prime Minister]

GP commissioners are not forced to put services out to competitive tender. We have GP commissioners, and the point is that it is going to be doctors making the decisions about whether they want to expand choice and diversity in the NHS. What is the hon. Lady worried about? What is the Labour party worried about? Is it not the case that lots of voluntary bodies, charities, the hospice movement, organisations like Mind and Whizz-Kidz in Tower Hamlets, which provides an amazing service for children with wheelchairs, are already involved? What are we frightened of in allowing doctors to say, “Let us have some diversity, let us have some choice and let us make sure we are on the side of patients”?

[Alun Cairns (Vale of Glamorgan) (Con)]

Two and a half years ago, nine-year-old Cerys Potter from the Vale of Glamorgan became the ninth person to die in an incident while on a rafting exercise on the Dalaman river. There appears to have been a blatant disregard of common sense and health and safety standards. Cerys’s parents have campaigned tirelessly for a criminal investigation and improved standards, and have even funded witnesses to travel to the Turkish courts, but their efforts have been frustrated, for what appear to be bureaucratic reasons. Will the Prime Minister work with the Turkish authorities to gain justice and to help to warn people of the risks of white-water rafting in Turkey?

[The Prime Minister]

My hon. Friend is right to raise this tragic case of a nine-year-old constituent of his, Cerys Potter, who died in 2010 in Turkey. I want to send my sincere condolences to the family in these terrible circumstances. I know that he has been speaking to the Minister for Europe about this case, and that our embassy in Turkey is monitoring the case and can again approach the Turkish authorities and ask them to keep the Potter family fully informed of any progress. I am sure that the Foreign Office will have listened very carefully to what my hon. Friend has said today, standing up for this family’s interests.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Q8. A vulnerable constituent of mine is near pension age and has lived in the same house his whole life. His parents have now died and he is willing to be re-housed but cannot find an alternative. He now faces homelessness because he simply cannot afford the Government’s bedroom tax. Can the Prime Minister explain why he has prioritised a tax cut for millionaires while devastating the lives of vulnerable people?

[The Prime Minister]

The point I would make to the hon. Lady is that 250,000 families live in overcrowded accommodation and 386,000 people live in under-occupied homes. There are 1.8 million people who would love to have a council house but cannot get one. Of course we need to build more social homes, and we are doing exactly that, but in the meantime we should do everything we can to make sure those homes are used in the most efficient and fair way. That is what our changes will help to achieve and that is why they deserve our support.

[Greg Mulholland (Leeds North West) (LD)]

We were all hugely inspired by the wonderful Paralympic games in London last year, which were a triumph not only for sport but for perceptions of disability. Will the Prime Minister welcome the “Generation Inspired?” report, which is going to be presented today to No. 10 Downing street by Hannah Cockroft MBE, as a great opportunity to use the games legacy to improve the lives of young disabled people?

[The Prime Minister]

I will certainly welcome the report that my hon. Friend mentions. I thought that the Paralympic games were an absolute triumph for Britain in the way they were put on and in the way the auditoriums and stadiums were full for almost every event. I thought that was a great testament to the generosity of the people of this country and their enthusiasm for Paralympic sport. The most important thing is the change in perception about what disabled people are capable of—that is a real gift and it is something we should encourage.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

Q9. The Prime Minister supports an exemption to the bedroom tax for the families of prisoners but not for people with cancer, for people with disabilities, for foster parents or for armed forces families—why?

[The Prime Minister]

As the hon. Lady knows, as part of this measure there is a £50 million fund to support people directly. We have addressed specifically the point about armed forces families, and when people leave the home they will be more than compensated for any costs under the under-occupancy rules. I come back to the bigger picture: housing benefit is up 50% in real terms and now accounts for £23 billion of public spending. If the Opposition come to the Chamber week after week and say no to the benefit cap, no to a cap on housing benefit, no to restricting the growth of benefits and no to our under-occupancy measures, people will simply not believe that they have any plans whatsoever to deal with our deficit. You know what? They would be right.

[Nadine Dorries (Mid Bedfordshire) (Con)]

The education reforms pursued by the Government have been embraced by schools in Bedfordshire, not least, excitingly, by Tony Withell and his great staff at Wootton upper school in pursuit of a science, technology, engineering and maths academy. This week, however, there has been a blip. Fernwood school in Woburn Sands was offered free school status 14 months ago as part of the Barnfield Federation, but last week that offer was removed without the school knowing why. Will the Prime Minister use his offices to implore the Department for Education to let me know the reason as soon as possible, as there are 110 very agitated parents and I need to help them frame an appeal?

[The Prime Minister]

I would join in that strong support for the free schools movement. It is a remarkable advance, and within just two and a half years we now have 101 free schools open and many more in the pipeline. I know that my right hon. Friend the Education Secretary was listening very carefully to what was said about that specific proposal. It is obviously important that we vet proposals to ensure that they are strong educationally, that they have parental support and that they will raise standards in the local area, but I strongly support the free schools movement and I am sure that my right hon. Friend will be in touch.

[Ian Mearns (Gateshead) (Lab)]

Q10. My local authority has done some pioneering work over the years on improving public health and has recently asked adults to refrain from smoking in children’s play areas. Does the Prime Minister agree with me, with his own Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), and with my hon. Friend the Member for Stockton North (Alex Cunningham), who has a private Member’s Bill on the issue, that we should go a significant step further and introduce a ban on smoking when children are present in vehicles?

[The Prime Minister]

We should look carefully at what the hon. Gentleman and others have said. We are looking across the piece at all the issues, including whether we should follow the Australians with the ban on packaging and what more we can to do to restrict smoking in public places. There has been a real health advance from some of the measures that have been taken. We must consider each one and work out whether there is a real public health benefit, but he makes a good point.

[Mr Stewart Jackson (Peterborough) (Con)]

It is 22 years since the landmark Medical Research Council report made a direct link between folic acid use by childbearing women and the prevention of neural tube defects such as spina bifida. Scores of countries have fortified their basic food stuffs, but the policy in this country is mired in bureaucracy between the Food Standards Agency, the Department of Health and others. Will the Prime Minister reassure the House that he will do everything he can to unblock the logjam to prevent the entirely preventable conditions of hydrocephalus and spina bifida?

[The Prime Minister]

I will look very carefully at what my hon. Friend has said. It is certainly true that the levels of conditions such as spina bifida have come down and that folic acid has an important role to play. I shall look at the specific points he makes and the bureaucratic problem he identifies and perhaps get the Department of Health to write to him about it.

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

Q11. With respect, I make no apology for returning to an issue that my colleagues have raised. A letter from my constituent reads:“I am disabled, wheelchair dependent; suffer from brittle bones, require day and night assistance from Social Services and therefore I need a spare room on health grounds. I feel suicidal about this bedroom tax.” Will the Prime Minister, in consultation with the Secretary of State for Work and Pensions, agree to put the needs of disabled people first and revisit what is turning out to be a disastrous policy for hundreds of thousands of disabled people and their families?

[The Prime Minister]

This Government always put disabled people first; that is why we have protected disabled people’s benefits. On the specific issue the right hon. Gentleman raises, there is a £50 million fund to support people who are affected by the under-occupancy measure. Disabled adults will have access—[Interruption.] The Opposition do not want hear it, but this directly answers the point. Disabled adults will have access to the discretionary housing payment scheme and it will remain for local authorities, including the right hon. Gentleman’s, to assess the individual circumstances. It is worth making the point again that there is a £23 billion budget, which has increased by 50% over the past decade. We have to do something about the growth in the housing benefit bill, but all we hear is irresponsibility from the Opposition.

[Mr Edward Leigh (Gainsborough) (Con)]

Q12. Who would have thought, when some of us voted for just a common market all those years ago, that the EU would now be interfering potentially in what benefits we should pay to Romanians and Bulgarians before they have made any contribution to our society? Is it any wonder that people feel disillusioned and powerless? Is not the good news this: who is more likely to vote to give people a genuine choice in a referendum—a Liberal or a Conservative MP for Eastleigh?

[The Prime Minister]

I am delighted that my hon. Friend managed to slip that point in at the end. I urge any hon. Friends who are not there already to make their way to Eastleigh this afternoon and support Maria Hutchings in the by-election campaign.

My hon. Friend makes an important point. We need to look through every aspect of how we welcome people to our country, because while we must be fair, we must not be a soft touch. I am making sure that we look at our health service, housing, benefits, legal aid and everything else, so that we have proper and tough controls on people who want to come and live here.

[John Woodcock (Barrow and Furness) (Lab/Co-op)]

Q13. The Treasury was required to approve the settlement made with the dismissed former chief executive of my local hospitals trust in February last year. If the Prime Minister believes in openness in the NHS, why have his Government allowed the size of the pay-off to be kept secret?

[The Prime Minister]

I will look very closely at the case the hon. Gentleman raises. I know there have been particular issues around foundation trusts in the area he represents, and I will make sure that the Health Secretary looks into the matter and writes to him about it.

[John Glen (Salisbury) (Con)]

Q14. Recently, large numbers of my constituents have taken a great interest in political campaigning in the neighbouring county. My belief is that it is always best when local people have a strong independent voice, particularly if they are in favour of controlling immigration, making welfare fairer and an in/out referendum. Does the Prime Minister agree with me that the people of Eastleigh would be well advised to vote for Maria Hutchings tomorrow?

[The Prime Minister]

I thank my hon. Friend for his hard work and for the ingenious way he managed to get that question in order—[Interruption.]

[Mr Speaker]

Order. The hon. Member for Rhondda (Chris Bryant) should not keep yelling from a sedentary position “Sarah Palin”. She at least is not a candidate in the Eastleigh by-election.

[The Prime Minister]

If you have any luck in getting the hon. Member for Rhondda to shut up, Mr Speaker, do let us know how it is done.

[Mr Speaker]

The Prime Minister shouldn’t bother phoning me; I’ll phone him in those circumstances.

[The Prime Minister]

Thank you very much for that, Mr Speaker.

Perhaps we should end Prime Minister’s Questions on a similar note to that we began it with, by recognising the appalling views of the Labour candidate in Eastleigh. About the Falklands war—one of the proudest moments in this country’s recent history—he said:

“I settled on the…convoluted position of wanting Great Britain to lose a war for the good of Great Britain”.

This candidate, endorsed by the leader of the Labour party, shows a shocking lack of patriotism and national pride.

[Graham Jones (Hyndburn) (Lab)]

Q15. The Prime Minister has run away from the question whether he will personally benefit from the millionaires’ tax cut. It is a simple question: when the top rate of tax is cut from 50p to 45p, will he personally benefit?

[The Prime Minister]

The top rate of tax under this Government will be higher than in any year under his party’s Government. That is the change that we are bringing about. When they introduced the 50p rate, they lost £7 billion in tax revenue. They are not only socialists but incompetent socialists to boot.

Petition

Wednesday 27th February 2013 Commons Chamber

Mr Jim Cunningham (Coventry South) (Lab)

- Hansard - - Excerpts

I know that there is to be a debate on this subject tomorrow.

The petition, to which there are more than 2,000 signatures, states:

The Petition of residents of Coventry and the United Kingdom,

Declares that the Petitioners believe that the UK Government should encourage the Indian Union to take immediate action to stop human rights abuses facing minorities in India and that India should sign and ratify the Rome Statute of the International Criminal Court and the UN Charter against torture and other cruel, inhumane or degrading treatment or punishment which encompasses the death penalty and thus India should abolish the death penalty as it is a cruel, inhumane or degrading form of punishment; further declares that the UK Government should campaign to stop Balwant Singh Rajoana's death sentence and have him released from jail as he has served 17 years in custody and that the Indian Union should release all political prisoners, prisoners of conscience and prisoners who have been imprisoned without trial.

The Petitioners therefore request that the House of Commons urges the Government to appeal to India for the above actions to be taken, and request that the House holds a debate on these issues and brings them to light in the European Union and United Nations.

And the Petitioners remain, etc.

[P001157]

Point of Order

Wednesday 27th February 2013 Commons Chamber

12:34

[Paul Flynn (Newport West) (Lab)]

On a point of order, Mr Speaker. Following the advice you gave on Monday about the nature of oral questions and oral answers, and the need for us to rebuild public confidence in politicians, will you do what the Leader of the House has refused to do, and arrange a seminar to explain to Ministers the precise meaning of the word “question”, the precise meaning of the word “answer”, and the need for a link between the two?

[Mr Speaker]

The hon. Gentleman makes an ingenious suggestion, but it is not one to be taken forward by the Chair. However, it might constitute an additional paragraph in the next edition of the well-thumbed tome, which he penned, “How to be an MP”, with specific reference to the discharge of Back-Bench duties. I look forward to acquiring in due course my copy of that volume.

Local Authority Devolution and Powers

Wednesday 27th February 2013 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:35

[John Pugh (Southport) (LD)]

I beg to move,

That leave be given to bring in a Bill to require the Government to publish a list of the powers of local councils and a code of conduct defining the degree of autonomy attached to those powers and areas where a council may act autonomously; to create a mechanism to identify and adjudicate on breaches of the code by either central or local government; and for connected purposes.

Given where we are in the parliamentary timetable, one would have to be wholly ignorant or severely optimistic to assume that the Bill I propose stands any chance whatever of becoming law—this year. Although as a Lib Dem I am equipped by necessity with boundless reserves of cheery optimism, I have no expectation of seeing the Bill mature into legislation. So confident am I of seeing it strangled at birth that I did think of calling it the “Local Government and Futile Measures Bill”, only to realise that the additional phrase probably applied to much of the legislation in this place. I am far from disheartened, however, because such events, apart from seeming a piece of typically British, eccentric constitutional indulgence, or useful occupational therapy for Back Benchers, can have an effect, by putting, or keeping, on the agenda important key themes. My last foray in this role was an attempt to introduce a Bill to enhance, or provide, democratic accountability for NHS services. The Government have now actually done that, although I would like to think that my proposals, which involved the creation of no new institutions or structures, offered a more elegant, less expensive and less complex solution than that contrived by the Government in the Health and Social Care Act 2012.

Our system is based on the supremacy of Parliament, and my Bill draws attention to the fraught relationship between local and central Government. Parliament, Brussels notwithstanding, has unfettered power, or what Lord Hailsham referred to as elective dictatorship. Local government also has powers, but they can be increased, decreased, removed or added to, fettered or unfettered, by us in Parliament. Governments often promise—I have heard them do so—to liberate or empower local government, but the liberation of local government by central Government often resembles Stalin’s post-war liberation of eastern Europe, as it simply allows discretion to decide on how to implement unpopular policies, thereby sharing or deflecting the blame.

Largely, and insistently, central Government retain all their rights to interfere in any area, at will, with little or no notice. I am not making a party political point; it is not in the DNA of central Government, irrespective of who is in power, to give away power that matters, and one can understand why. Local government deals with huge areas of national importance—education, social care, transport, the environment, the economic vitality of communities—and Ministers simply cannot be uninterested in what local government does or how it does it, so they keep in reserve, understandably, a range of powers, regulations and incentives to influence how local government performs. Parliament will not have its will crossed—it is, as they say, an elective dictatorship. The Bill aspires not to change any of that, but strives more modestly to stop elective dictatorship becoming or turning into elective tyranny.

There are in this Chamber bold constitutional visionaries, such as the hon. Member for Nottingham North (Mr Allen), who propose a full constitutional settlement reserving to local government a whole set of autonomous powers, safeguarded by commissions, the Lords and a Bill of Rights; a constitutional demarcation between the powers of local and central Government, including revenue-raising powers. The Justice Committee—my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith) is familiar with this—having surveyed all the evidence available scrupulously, has called for a new constitutional settlement, a new code. There is a glimmer in the eye of the hon. Member for Sheffield South East (Mr Betts), who chairs the Communities and Local Government Committee, to produce a report on precisely that subject.

My aim is the more modest one of preventing elective dictatorship from becoming elective tyranny, because tyranny is the arbitrary, whimsical and indulgent use of power. The distinction is rather helpfully illustrated by the exemplary behaviour—[Interruption.] The hon. Member for Easington (Grahame M. Morris) has got there ahead of me. It is illustrated by the exemplary behaviour of our current Secretary of State for Communities and Local Government. Only someone as gifted as him in the art of irony could possibly have introduced a Localism Bill—with over 100 new powers ascribed to himself. Only someone with a feel for the truly comic could wring £250 million out of the Chancellor in hard-pressed times in order that statesmen can interfere with the nation’s bins and council collection times, or could instructively chastise and threaten councils that have set their council tax exactly within the limits he himself laid down. As he himself has said, he takes liberties, but presumably only to demonstrate through a process of reductio ad absurdum how little power local government really has and how it can be removed, changed or denatured by the whim of Whitehall.

Taking liberties is not necessarily a good thing. My Bill seeks to mitigate that, first by requiring every Government to lay down in advance through a defined code their understanding of the respective powers of local and national Government, the areas of genuine autonomy, and specify devolved powers. That could be done, fully taking into account national needs, with or without consensus. However, that having been done, and there having been defined separate spheres of action—the rules of the game—everyone must stick to them, with an appeal to a judicial or quasi-judicial body when that understanding is breached by either party, or ridden over roughshod to suit the mood of whoever holds the reigns of central or local government.

The Bill simply aspires to put in place a guarantee of reasonably predictable behaviour, a self-denying ordinance. The Government could still dictate and legislate for a different relationship, but they would not be able to interfere arbitrarily. In fact, having to make it clear that they are not doing that is wholly to the good. They could not act on the spur of the moment. They would simply be denying themselves the opportunity to create havoc, either financial or administrative. There is fairness in that, because the previous Government insisted that local councils, when making major strategic decisions, give the population ample advance notice and engagement through publication and consultation—a kind of “no big surprises” rule. All that I expect through the Bill is that Whitehall would show similarly helpful self-discipline, particularly because councils, unlike Whitehall, have to balance their budgets annually and cannot cope too easily with handbrake turns in policy.

It seems to me that having to make clear Whitehall’s interest in interfering, as it does, with council’s planning policies, housing targets and borrowing arrangements, which are all contentious areas, and having to make a case and then abide by it, could hopefully throw up a plethora of anomalies and unjustifiable restraints and perhaps expose the dead-weight influence of state bureaucracy accrued over a fair period, which cannot be a bad thing. It might, in the process, rid me of an abiding and disturbing image of the Secretary of State as a languid eastern potentate or sultan governing by mood or arbitrary decree, and it would hopefully put the fraught relationship between local and central Government on a business-like footing. This issue, which has been raised in various parts of the House and in a number of different places, will not go away, unlike my Bill, which I commend to the House.

Question put and agreed to.

Ordered,

That Dr John Pugh, Mr Graham Allen, Sir Alan Beith, Mr Clive Betts, Paul Burstow, Rosie Cooper, Martin Horwood, Stephen Lloyd, Dan Rogerson, John Stevenson and Mr David Ward present the Bill.

Dr John Pugh accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 26 April, and to be printed (Bill 141).

[Mr Speaker]

We come now to the main business, Opposition day, 18th allotted day, which is a debate in the name of the Scottish National party on housing benefit and the under-occupancy penalty. To move the motion—

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

It is a joint motion.

[Mr Speaker]

I apologise to the right hon. Gentleman. The motion is in the name of the Scottish National party, but it is also in the name of Plaid Cymru—[Interruption]—and of the Green party. It is indeed truly a joint motion: not a complete novelty, although relatively unusual, and very welcome. I stand corrected. To move the motion, I call Mr Angus Robertson. [Interruption.] No? Well, that is what I was briefed; I am following what I have been told. The hon. Gentleman is displaying a self-effacing modesty with which he is not always associated, but he is playing second fiddle today. I call Dr Eilidh Whiteford.

Opposition Day

Wednesday 27th February 2013 Commons Chamber

[18th Allotted Day]

Housing Benefit (Under-occupancy Penalty)

Wednesday 27th February 2013 Commons Chamber

12:46

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

I beg to move,

That this House deplores and opposes the Government’s introduction of the housing benefit under-occupancy penalty; believes it to be unjust and unworkable; notes growing public anger at its introduction; believes that the Government is showing a reckless lack of care and attention to the consequences of its introduction for low-income households affected by disability; further believes that it will adversely affect, amongst others, families of service personnel, foster families and those struggling with the effects of family breakdown; notes that some parts of the UK will be disproportionately hit because of the mismatch between the available social housing stock and the needs of tenants; further notes that according to the Department for Work and Pensions’ Equality Impact Assessment, 63 per cent of the 660,000 claimants affected by the under-occupancy penalty or their partners are disabled; believes that the measure unfairly penalises tenants in rural and inner-city areas; further believes the under-occupancy penalty will fail to meet its stated objectives; and calls on the Government to abandon this policy immediately.

In just a few weeks’ time the Government’s notorious under-occupancy penalty, or bedroom tax, is set to come into effect. Across the UK, it is going to cut for tenants by an average of £14 a week, or over £700 a year, the housing benefit of an estimated 660,000 low-income households who are deemed to be living in a home bigger than their needs require. The measure is causing anxiety and anger in equal measure. It follows hard on the heels of punitive cuts to tax credits that have already slashed the budgets of low-income families, and it compounds the real-terms cut to the safety net of social protection for people who are unable to work because of sickness or disability, and for those rendered unemployed or under-employed by economic circumstances well beyond their control. This bedroom tax is a further assault on the precarious finances of the people who are already bearing the brunt of the Government’s austerity measures, which, as we have seen this week, simply are not working. The under-occupancy penalty is inherently unfair and inherently unworkable.

When we discussed this issue in Westminster Hall a few weeks ago in a debate led by the hon. Member for Sedgefield (Phil Wilson), not a single Government Back Bencher rose to defend the policy, and it is deeply disappointing that they are so thin on the ground today. I can only assume that too many MPs have been lured by the charms of Eastleigh, but I am not really surprised that they are reluctant to put their heads over this parapet.

[Sir Tony Baldry (Banbury) (Con)]

Does the hon. Lady see any justification for treating tenants on housing benefit in social housing any differently from tenants on housing benefit in the private rented sector? The previous Government introduced exactly the same changes for tenants on housing benefit in the private rented sector. Did the Scottish National party or Plaid Cymru object or call a debate when those changes were made? If not, why not, and what is their logical justification for opposing these changes today?

[Dr Whiteford]

The hon. Gentleman has exposed at this early stage one of the big red herrings in this debate, namely the argument that the private rented sector is comparable to the social rented sector. We already spend significantly more on supporting people in the private sector than on those in socially rented accommodation, which is significantly cheaper. I hope to return to that point later, but it is very helpful to have been able to nip that argument in the bud at the outset of this debate.

[Hywel Williams (Arfon) (PC)]

I am glad that the hon. Lady has exposed the fundamental flaw in the argument of the hon. Member for Banbury (Sir Tony Baldry). One form of accommodation is based on size and the other on price—it is like comparing apples and pears.

[Dr Whiteford]

The hon. Gentleman makes a very important point. The key thing is that the under-occupancy penalty will hit hundreds or thousands of people in every constituency. We will all meet constituents affected by it, many of them among the most disadvantaged members of the community. Let us make no mistake: the people on the front line of this policy are the disabled and those who care for them.

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

Did the hon. Lady, like me, hear the Prime Minister say during Prime Minister’s questions that he would personally look at cases brought to his attention? Will she join me in urging all those people in this country who are faced by this to write individually to the Prime Minister?

[Dr Whiteford]

The hon. Gentleman makes an excellent point. Just a few minutes ago the Prime Minister said that he would look carefully at individual cases. I feel a little bit sorry for whoever keeps his correspondence in check, because the Department of Work and Pensions equality impact assessment shows that two thirds—66%—of the households affected by the bedroom tax are home to someone with a disability under the terms of the Disability Discrimination Act 1995.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

A higher proportion of those who might write to Dave will be people from rural areas who will simply have nowhere else to go. This iniquitous, unfair, disastrous tax will do for the Conservative party what the poll tax did for it.

[Dr Whiteford]

My hon. Friend makes a very important point on the differential impact between rural and urban areas. I hope I will be able to address that later.

Perhaps it should not surprise us that sick and disabled people are over-represented among those who rely on housing benefit, given that many of them will have been assessed as unfit for work, while others who are in work are more likely to be working part-time or in low-paid and insecure jobs. The numbers are a damning indictment on the Government’s attempts to balance the books on the back of disadvantaged people. In Scotland the picture is even more stark—79% of disadvantaged people in Scotland affected by the bedroom tax are either disabled or living in a house with someone who is disabled.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

Is the hon. Lady aware of Govan Law Centre’s petition to the Scottish Government to amend section 16 of the Housing (Scotland) Act 2001 to ensure that people subjected to the bedroom tax will not be evicted due to those arrears?

[Dr Whiteford]

I am aware of it and I intend to turn later to the specifics of the situation for social landlords and for Scotland.

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

Will the hon. Lady give way?

[Dr Whiteford]

Not just now, but I will in a moment.

Last week the chief executives of seven charities—Carers UK, Disability Rights UK, Contact a Family, the Carers Trust, the Multiple Sclerosis Society, Mencap and Macmillan Cancer Support—wrote to the Chancellor to ask him to exempt carers and disabled people from the bedroom tax in recognition of the contribution that carers already make and in order to protect them from further financial hardship. In response, the Work and Pensions Secretary said that he would look again at the impact of the policy on disabled people, but having considered the wholly disproportionate impact on disabled people and their families, he is ploughing on regardless. It is callous and reckless and will cause untold distress and hardship. The Government really need to think again.

[Mr Rob Wilson]

rose—

[Mr Shailesh Vara (North West Cambridgeshire) (Con)]

rose—

[Dr Whiteford]

I will give way to the hon. Member for North West Cambridgeshire (Mr Vara).

[Mr Vara]

I am grateful to the hon. Lady for giving way. Does she accept that, with 2 million households on social housing waiting lists in England alone and 250,000 families living in overcrowded accommodation, it is simply unfair for people to live in houses larger than their needs?

[Dr Whiteford]

The problem of under-occupation will not be solved by shuffling people around. That will do absolutely nothing to resolve the underlying problems, which I think we all know are related to the supply of affordable housing.

[Katy Clark (North Ayrshire and Arran) (Lab)]

I congratulate the hon. Lady and her colleagues on their choice of subject for this Opposition day debate. Does she agree that one of the problems is the complete mismatch between the stock that housing association and councils have and what people need, and that there are simply not enough properties for people to move to?

[Dr Whiteford]

The hon. Lady is absolutely right—her point is at the core of the debate. Before I turn to that point I want to say more about the issues facing disabled people.

[Mr Rob Wilson]

I thank the hon. Lady for giving way; she is being very generous. I have been listening carefully to her comments on those in social housing, but what does she have to say to the 2,000 people on waiting lists in Reading who hope to get into social housing?

[Dr Whiteford]

I say to the hon. Gentleman that perhaps those people in Reading would like to look north of the border, where building social housing has been the long-term solution to tackling the lack of affordable housing. This problem will not be solved by taking housing away from one needy group and giving it to another. As I have said, there will be a disproportionate impact on disabled people and most of the people affected by this policy are already among the most disadvantaged in our communities.

[Guy Opperman (Hexham) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

No, I want to make some progress. I say to the hon. Member for Reading East (Mr Wilson) that the real challenge for local authorities is how to house people who are likely to be on very low incomes. If people who are older or who suffer from ill health are moved out of their homes, that will create another headache and push people into more expensive private rented accommodation.

[Several hon. Members]

rose—

[Dr Whiteford]

I am keen to make some progress; I will take interventions later.

To return to the point made by the respected charities, one of which I used to work for, they make a compelling case that exposes just how socially destructive and counter-productive the bedroom tax will be for disabled people and their families. The Government’s stated objectives for the under-occupancy penalty include incentivising tenants to move to smaller homes. Moving house is stressful and expensive for everyone, even when it is a welcome move. How much more stressful and difficult must it be for disabled people with very little money?

Pressuring people to relocate will not just move disabled people away from their informal support networks—the friends and neighbours who help them live in the community—but it will potentially move them away from support services provided by their local authority. Moving to a new house in a new area may require a new assessment of needs, delays in providing replacement services or, indeed, changes to the eligibility for services. That all creates unnecessary disruption and expense that could quite easily be avoided.

[John Healey (Wentworth and Dearne) (Lab)]

The hon. Lady is right to call this bedroom tax callous and reckless. It is also heartless. Does she agree that the Prime Minister is wrong to hide behind the fig leaf of the discretionary payments fund, as he did earlier today? The National Housing Federation says that £50 million will help make up the shortfall for only 73,000 disabled people, leaving more than half of those on disability living allowance who are affected without any support at all.

[Dr Whiteford]

I agree with the right hon. Gentleman, who makes a very important point. I have no doubt that, in some cases, the under-occupancy penalty will jeopardise the arrangement that unpaid family carers have made to allow them to continue to care for a loved one in their own home.

[Mr Mike Weir (Angus) (SNP)]

Is my hon. Friend also aware that the homes of people who have had them adapted to meet specific needs may now be deemed too large, so they may be forced to move out and a social landlord might have to pay to adapt another house for them? Is that not a daft way to proceed?

[Dr Whiteford]

It is utterly daft. I have seen cases in my own constituency where relatively minor changes to local authority support services have destabilised the balancing act performed by families who provide care while juggling work and family commitments. I have met far too many family carers who are already at the end of their endurance, compromising their own health and well-being to continue to care. When carers cannot cope any more or their own health breaks down, the human cost is immense and the financial cost of primary health care spending and the need for expensive care packages are incalculable. The bedroom tax undermines the ability of families to continue to care.

[Caroline Lucas (Brighton, Pavilion) (Green)]

Given that this policy will lead to greater homelessness and evictions, which are not only massively painful, but massively costly, does the hon. Lady agree that it is not just cruel, but counter-productive and another attack by this Government on the poor?

[Dr Whiteford]

The policy is not only counter-productive; it is just not thought through.

[David Wright (Telford) (Lab)]

The hon. Lady is making a really good speech and she has support from across the Opposition Benches. In my view, the policy is thought through. However, it is not about fitting people in according to their housing needs or about under-occupation; it is about cutting people’s benefits by ensuring that people pay the difference. The Government know that people will have to pay the difference because they cannot move.

[Dr Whiteford]

The hon. Gentleman is absolutely right.

It is helpful to return to the point made by my hon. Friend the Member for Angus (Mr Weir) about homes that have been adapted. We estimate that at least 16,000 homes in Scotland that are affected by the bedroom tax have been adapted. We are told by the Government repeatedly that an extra £50 million in discretionary housing payment has been allocated to local authorities to plug the shortfall in rent so that those in adapted homes do not have to move.

Let us do the sums. The additional discretionary housing payment amounts to only 6% of the total shortfall across the UK. In Scotland, it amounts to a paltry 4% of the shortfall. That means that even if Scotland’s entire discretionary housing allocation—not just the extra bit, but the entire allocation—was focused solely on those disabled people living in adapted homes, it would not cover the gap in tenants’ incomes left by the bedroom tax. This is a shameless attempt to penalise physically disabled people. They are being asked to carry the can for this dog’s breakfast of a policy.

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

My hon. Friend is making a fantastic speech. Does she not think that it is appalling that the architect of this pernicious tax, this equivalent of the poll tax, the Secretary of State, is not replying to this debate, but is leaving it to his Liberal apparatchik? The Secretary of State should get to his feet in this debate to defend this ridiculous tax. Why is he not doing so?

[Dr Whiteford]

I share my hon. Friend’s disappointment that the Government have not listened to the pleas of disabled people and carers’ organisations. The problem is that the policy has not been properly costed or thought through and will cause chaos, hardship and distress.

[Several hon. Members]

rose—

[Dr Whiteford]

I want to make a little more progress, because time is wearing on.

The disabled people in adapted homes who are forced to move into the private sector will undoubtedly find it hard to find accessible properties. Landlords in the private sector may also be less than happy about adaptations being made to their property, whether they be handrails, ramps, stair-lifts or bathroom alterations. What an unnecessary waste of public money at a time when local authorities are struggling to meet demand.

[Ann McKechin (Glasgow North) (Lab)]

The hon. Lady is making an excellent speech. She made a very good point about the cost of private rentals compared with social rentals. Is it not time that we started to regulate private rentals in Scotland so that we are not subsidising landlords, which is the route to increases in housing benefit?

[Dr Whiteford]

It is clear that rents in Scotland are not out of control as they are in London. Many of the problems with housing benefit have been fuelled by the vast over-inflation of the rental market in London and the south-east.

It is important that we remember that some of the disabled people who are subject to the bedroom tax are the same people who will lose their disability living allowance when it becomes the personal independence payment or whose support will be reduced significantly, and that some may lose their employment and support allowance, particularly if it is time-limited. Nevertheless, all those people will still have to deal with the same impairment or long-term health condition that they had before, and will still face the same physical, economic, attitudinal and communication barriers when they attempt to access the labour market and get on with their daily lives.

The Government have paid no heed to the cumulative impact of their measures on disabled people—a cumulative impact that will have disastrous consequences for thousands of people.

[Guy Opperman]

I am most grateful to the hon. Lady for giving way. May I draw her back to fundamental principles? I am listening to the argument that she is making with interest, but there is one fundamental point that the architects of the motion do not address. Is it accepted that the housing benefit bill, which is rising, needs to come down—yes or no?

[Dr Whiteford]

The reason that the housing benefit bill is so high is that we have had a recession that has pushed people out of employment. One of the trite suggestions that we have heard repeatedly from the Government in trying to defend this indefensible tax is that people should just pick up a few extra hours’ work here or there to meet the bedroom tax. Since the start of the financial crisis, underemployment has soared. Millions of people have seen the prospect of overtime vanish and their working hours cut. According to the TUC, there are 3.3 million people across the UK who are working part time, but who want to be working full time. That is twice the pre-recession level. When we look at the steep rise in housing benefit, we therefore have to look at the inflation in the housing market in some parts of the country and at the underlying economic drivers of unemployment and poor economic performance.

[Stewart Hosie (Dundee East) (SNP)]

My hon. Friend is making an excellent speech. The hon. Member for Hexham (Guy Opperman) spoke about saving money. He appears not to realise, as I am sure does my hon. Friend, that if there was a proper balance of property, with those who are over-housed and those who are under-housed getting an appropriately sized property, the Government would save not one penny. He is therefore wrong. This policy is not about saving money, other than by directly punishing the poor.

[Dr Whiteford]

My hon. Friend is absolutely right. The under-occupancy penalty will apply to people who are in work and people who are out of work. It takes no account of the fact that a large proportion of the people affected are simply not available for work. The people who move into the low-rent homes may or may not be paying the rent, but it will certainly not save any money.

[Mr David Winnick (Walsall North) (Lab)]

Has it occurred to the hon. Lady during her excellent speech that not a single Government Member has criticised the bedroom tax in any way? Does that not reflect the manner in which the Government are conducting themselves towards the most vulnerable people in society?

[Dr Whiteford]

The hon. Gentleman is right. As I said earlier, it is deeply disappointing that there are not more people here to defend the Government’s policy and to debate the issues.

[Mark Durkan (Foyle) (SDLP)]

I applaud the strength with which the hon. Lady is setting out the case for the victims of this drive-by hit on the housing benefit budget throughout the UK. Does she recognise that there is an added complication in Northern Ireland? Given the geo-communal tensions and difficulties in Northern Ireland, a measure that sends out the message, “You shouldn’t be living there, you should move,” is fundamentally unsettling, not just for individual communities, but for community relations.

[Dr Whiteford]

As ever, the hon. Gentleman makes a powerful and important point. The disproportionate impact of the measure on different parts of the UK has not been thought through. The impacts on Northern Ireland clearly deserve a great deal more attention—certainly more attention than I am able to pay them this afternoon.

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate the hon. Lady and her colleagues on bringing forward this timely motion. The divisions referred to by my hon. Friend the Member for Foyle (Mark Durkan) have been deepened because the Minister for Social Development in Northern Ireland handed back £15 million in the last monitoring round, rather than investing it in the provision of new-build social housing. That contrasts with what my party did when it held that portfolio.

[Dr Whiteford]

The hon. Lady makes an important point. It is helpful that the Secretary of State is here to hear it. I hope that he will look again at the implications of the policy for Northern Ireland.

Foster carers are also likely to be adversely impacted by the bedroom tax. Foster carers are not routinely included in housing needs assessments, and the allowance that they are paid to cover the costs of meeting a child’s needs does not include a component for housing costs. The Government expect local authorities to support foster carers out of the heavily over-subscribed discretionary housing payments pot. However, as we have already seen, that money will not even cover the most pressing needs of disabled people in specially adapted homes.

Foster carers do an important and difficult job. Children requiring foster care have, almost by definition, been through traumatic experiences and are likely to require more intensive care and attention than other children. For that reason, many fostering services insist that foster carers do not take on other work outside the home. Moreover, more than half of foster carers do not receive a fee for fostering. The Fostering Network is afraid that the bedroom tax will exacerbate existing difficulties in recruiting foster parents. Given the already extreme shortage of foster carers, the Government need to look again at how the system will work in practice.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

My hon. Friend is making a powerful case. On Monday evening, the House debated the Children and Families Bill, which contains some good measures on speeding up and streamlining adoption. One point raised was that unless the fostering section is reconsidered, the whole thing will collapse. Once again we see that this measure has not been properly thought through.

[Dr Whiteford]

My right hon. Friend makes a timely point given the debate that took place in the House earlier in the week.

[Ian Murray (Edinburgh South) (Lab)]

The hon. Lady is making a wonderful speech on this dreadful bedroom tax. Perhaps she will also consider another group involved in caring for children—parents who have split up. Access agreements made by the court for two people in my constituency are based on the fact that they have an extra bedroom. The Government are essentially saying to them, “Find the money for the extra bedroom or lose access to your children.”

[Dr Whiteford]

The hon. Gentleman makes an excellent point. Families going through a break-up often face some of the most complex and difficult situations for people to resolve, and we know that the cost of children growing up without a parent can be considerable both in social terms and because of the impact on the individual who is separated from a parent. This legislation will make it more difficult for non-resident parents to stay in touch and maintain proper contact with their children, and that is reprehensible.

[Mr David Ward (Bradford East) (LD)]

Does the hon. Lady agree that because of variations in unemployment rates and the composition of the housing stock, and because the characteristics of tenants vary between areas and the other considerations hon. Members have raised, this issue should be one of local discretion based on local conditions and phased in only when matched by a programme of social house building?

[Dr Whiteford]

I am sure the hon. Gentleman will want to make a speech to set out that case later this afternoon. I would like to see decisions on these policies, including the budgets, devolved to the Scottish Parliament, but I look forward to hearing the hon. Gentleman’s contribution about what works well for England.

[Several hon. Members]

rose—

[Dr Whiteford]

I will give way once more and then I really must get on.

[Katy Clark]

Will the hon. Lady use her eloquence and influence with the Scottish Government to ensure that they have a no-evictions policy?

[Dr Whiteford]

Again, I will come to that and consider some of the structural issues in a moment. First, however, I want to mention pensioners who so far have been excluded from the under-occupancy rules. That is important because many older people who are technically under-occupying are extremely anxious about the bedroom tax and frightened that it will force them to move. We must make it clear that they will not have to do so at this stage. Once universal credit is introduced, however, people of pension age who have a younger partner of working age will be subject to the bedroom tax, and again, they will be forced to move into smaller, more expensive, and often less suitable homes. That is a false economy for the Government and will have a great human cost for older couples.

[Several hon. Members]

rose—

[Dr Whiteford]

I will not give way; I am hoping to make some progress and I want to consider the structural issues we face.

Amid all the soundbites about spare bedrooms, there has been a failure to acknowledge the underlying shortage in affordable housing across the UK and the backdrop of changing population demographics. What makes the Government’s under-occupancy rules fundamentally unworkable is the mismatch between available social housing stock and the needs of tenants and prospective tenants. The scale of the problem varies across the UK, but in Scotland, for example, only 26% of homes available for social rent are one-bedroom properties yet 60% of tenants affected by this measure require a one-bedroom home. According to the National Housing Federation, in England there are twice as many people under-occupying two-bedroom homes than the number of one-bedroom properties that became available last year. No matter how we shuffle people around, not enough homes of the right size are available for affordable rent. That mismatch is entirely outside the control of tenants yet they are being punished for a structural problem not of their making.

[Mr Vara]

The hon. Lady is being most generous and I am grateful. Does she accept that it is important in this debate to ensure that the facts are clear? Under the previous Labour Government house building was at its lowest since the 1920s, and in the 10 years before this Government came to power social housing costs doubled. Does she accept that that system simply cannot continue?

[Dr Whiteford]

The hon. Gentleman is having a go at the record of the previous Government but he cannot abdicate all responsibility from previous Tory Governments who made it impossible for local authorities to build houses without them being sold off at below market value to tenants who bought them at knock-down prices. That underpins the whole shortage of supply and Government Members cannot pass off responsibility for having created the problem in the first place.

Housing in the social rented sector is by far the cheapest option for people on low incomes. In my constituency, a three-bedroom council house can be rented more cheaply than most one-bedroom flats. People who live in council houses already have limited choice about where they live and what sort or size of house they are offered. Councils and housing associations already go to great lengths to match tenants with a house of the right size, but they do not have enough one-bedroom properties to go round. Many councils allocate homes on a points-based system, which is the most transparent and fair approach, but they require considerable flexibility from prospective tenants in terms of the size, location and type of property they will accept. Demand exceeds supply. Anyone who knocks back the offer of a house because it has two bedrooms when ideally they need one bedroom may not get another offer. People cannot be picky and must take what is available.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

I absolutely agree with the points that the hon. Lady is putting to the Government. Is she aware that 83% of the Government’s cuts have been passed directly to councils by the Scottish Government and that councils are having to deal with the sharp end of this measure? That amount of money that is being taken out of Scottish councils at this extraordinarily difficult time—[Interruption.]

[Dr Whiteford]

Colleagues from Wales are saying that there the Labour Government have passed on 100% of the cuts. Surely it is better that the Scottish Government have tried to mitigate the impact of those cuts on households, rather than passing them on wholesale. We must remember that most of our social housing was built in an era when people had much larger families and different housing needs. Existing housing simply does not match today’s demographics.

[Mr MacNeil]

Will my hon. Friend give way?

[Dr Whiteford]

I will not at the moment.

The great irony of the bedroom tax is that it will not save any money. As I pointed out early in the debate, it already costs more on average to house people on low incomes in the private sector than to house them in the social rented sector. Last year, the average housing benefit payment in the social rented sector was £80.71 a week, but in the private sector it was £107.35. Rent paid to social landlords tends to be reinvested in social housing, which in my view represents better value for money for us all. All the bedroom tax will do is cause upheaval, distress and expense to people on low incomes, most of whom, as we have heard, are battling health problems.

[Several hon. Members]

rose—

[Dr Whiteford]

I will not give way.

Although the mismatch between the housing stock and tenants’ needs is the glaring flaw in this ill-thought-through and unworkable policy, the under-occupancy penalty will have serious unintended consequences for social landlords who depend on reliable and steady flows of rent to maintain their credit rating, keep rents low, and reinvest in new and existing properties. I have repeatedly raised with Ministers the impact of welfare reform on social landlords, but to date Ministers have repeatedly failed to take seriously the concerns of housing associations and others about the impact that the bedroom tax and the shift to universal credit will have on social landlords’ finances. Last week, in response to a question from the hon. Member for Glasgow North (Ann McKechin), the Under-Secretary of State for Scotland said that he had met social housing providers in Scotland and satisfied the concerns of housing associations and local authorities. However, since then, the Convention of Scottish Local Authorities and the Scottish Federation of Housing Associations have written to him to make it abundantly clear that they are not satisfied, and that their concerns have in no way been assuaged. The president of COSLA has made it absolutely clear to the Government that all local authorities in Scotland continue to have deep concerns about the 14% and 25% penalties associated with under-occupying. Those key stakeholders recognise that the bedroom tax penalises people on low incomes who cannot move to smaller properties. They are concerned that no safeguards are in place to protect the finances should tenants fall into arrears.

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

The hon. Lady is right to point out the mismatch between housing stock and housing need. Many people who are building houses in both the private and social sectors build two-bedroom or larger houses because that makes more sense economically than building one-bedroom properties. What are the Scottish Government doing to encourage house builders in Scotland to build one-bedroom properties to address that mismatch?

[Dr Whiteford]

The hon. Lady makes a good point about the practicalities of building one-bedroom houses as opposed to two-bedroom houses. On the Scottish Government’s record on building houses, 19% of the socially affordable houses built in the UK in the past five years have been built in Scotland. The Scottish Government have built 34,000 affordable homes since they came to power. Given the lack of progress in the past, that is important.

[Stewart Hosie]

My hon. Friend makes a good and extremely important point on the balance between the number of properties and the number of bedrooms. However, the real solution is not changing the number of one, two or three-bedroom properties that are built, but scrapping the measure.

[Dr Whiteford]

My hon. Friend makes the most fundamental point in the debate. I am pleased that so many Scottish MPs are in the Chamber to contribute to the debate, but 82% of Scottish MPs did not vote for the measure, and we should stand in resolute opposition to it.

[Mr Alan Reid (Argyll and Bute) (LD)]

Will the hon. Lady give way?

[Dr Whiteford]

I am delighted to give way to one of the small minority of Scottish MPs who did vote for—

[Mr Reid]

Yes, the hon. Lady is correct. I did vote against the measure. She makes an eloquent speech, but I am puzzled by one thing. Why was she unable to persuade half of Scottish National party Members, including her party leader, to turn up on a Wednesday afternoon to vote against the measure?

[Dr Whiteford]

The hon. Gentleman makes a really spurious point. Given the impact that the measure will have on his constituents, he would be better sticking to the real issue, which is the fact that the measure will not work and will harm people across Scotland.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the hon. Lady give way?

[Dr Whiteford]

I will not give way at the moment.

[Angus Robertson (Moray) (SNP)]

The hon. Member for Argyll and Bute (Mr Reid) voted for the measure.

[Mr Reid]

On a point of order, Mr Speaker.

[Mr Speaker]

Order. I hope this is a point of order and not a point of frustration.

[Mr Reid]

The hon. Member for Moray (Angus Robertson) shouted across the Chamber that I voted for the regulations. Is it in order for me to put the record straight? I voted against the regulations, unlike him—he did not turn up.

[Mr Speaker]

Whether putting the record straight is in order or not, the hon. Gentleman has just done it.

[Dr Whiteford]

Hon. Members can unite on the fundamental opposition to the bedroom tax. I urge hon. Members on both sides of the House to work to address the problems.

We can and should do a number of things to mitigate the impact of the bedroom tax. For example, the Scottish Government have moved to strengthen protections for tenants in Scotland against eviction for rent arrears. The new pre-action measures that came into force in August last year will ensure that eviction is an absolute last resort, and that tenants have access to advice and every opportunity to agree a repayment plan that is affordable for them and reasonable for the landlord.

[Mr Rob Wilson]

Will the hon. Lady give way?

[Dr Whiteford]

I will not give way.

We should also look carefully at the loopholes in the bedroom tax regulations. Apparently, the meaning of “bedroom” is not clearly defined in the legislation. I heard yesterday that one large housing association in England—the Knowsley Housing Trust—has reclassified 600 properties to protect tenants. That obviously comes at a cost to the housing association, but it is nevertheless a brave and socially responsible move. I am sure that social landlords are also seriously considering bricking up windows or taking down walls.

Other housing associations in England—the hon. Member for Aberdeen South (Dame Anne Begg) referred to this—have called for two-bedroom properties to be exempted from the rules. They argue that it makes no sense for them to build inflexible one-bedroom homes, because they want to encourage long-term tenants who are integrated in the community, not transient short-term tenancies.

Another potential mitigation measure that might help in urban areas is for housing associations to co-ordinate most effectively their waiting and transfer lists, as we have seen on Merseyside. Obviously, that will not work so well in more rural and dispersed areas, but it might help in cities. There is a range of options, and it is important that we look closely at all of them.

To return to a question posed earlier, social landlords need to be consistent in how they deal with arrears. I am not sure we can draw a distinction between someone who falls into arrears because of the bedroom tax and someone who is not under-occupying but falls into arrears because their employment and support allowance has been cut, because their tax credits have been reduced, because they lose their job or because they have fallen sick. The danger is that if some people have their arrears written off and others do not, that will quickly cause resentment between tenants, all of whom are likely to be living on tight budgets and in danger of experiencing significant increases in rent across the board if housing associations budgets come under strain.

[Mr Weir]

My hon. Friend makes a good point. The proposal in the petition to amend section 16 could help current tenants to avoid eviction, which is a good thing, but it will not extinguish debt, which can be chased by other means, such as arrestment of wages or money from bank accounts. We know that from the experience of the poll tax. How many years after the poll tax died were people being pursued for arrears?

[Dr Whiteford]

My hon. Friend’s legal expertise helps him to make a compelling point. Social landlords are aware that more people will be at risk of arrears and that they are being proactive in trying to prevent that from happening, but they are clear that their ability to provide affordable homes depends on their ability to collect rents from tenants. The real problem is that the under-occupancy penalty is unfair and unworkable. Instead of trying to mitigate its worst effects, we should concentrate on changing the underlying problems and abandoning the bedroom tax. In Scotland, we clearly have an opportunity to do that by bringing decision-making powers back to the Scottish Parliament.

Housing associations have historically been seen by lenders as relatively stable, and have been able to borrow money at competitive rates. Mary Taylor, chief executive of the SFHA, has pointed out to Ministers that

“already it is proving harder for landlords to borrow from banks, whether to build or to fund major repair and retrofit programmes. And where they can borrow it is invariably at a higher cost than before, even though interest rates generally remain low and stable. According to Housing Associations, lenders are pointing to the lack of security of rental income arising from Welfare Reform as a key factor in these rising costs. Lenders have to assess risk—and they recognise the very real risks, even if the Government is stubbornly refusing to do so. I believe the Council of Mortgage Lenders raised these issues with the Government over a year ago, but we are still to see action.”

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Lady agree that many councils have rightly, historically and naturally built two and three-bedroom homes for families? If councils choose to evict people from that stock as families grow up, they will end up with a massive void. The choice will be between having not quite enough rent and having no rent, which is financially absurd.

[Dr Whiteford]

The hon. Gentleman makes a good point—some housing associations already contend with that problem. If they are to continue to invest in their existing properties and continue to build the new smaller properties that we need to meet our changing demographics, they need to be able to borrow, and to do so cheaply. Any increase to the costs of borrowing will have only an inflationary pressure on rents and service charges. That pressure falls back on the low-income households in the social rented sector, who can ill afford it. There is no doubt in my mind that the problems for social landlords, caused by the shortfalls in housing benefit for people affected by the under-occupancy penalty, will be further compounded by the end of direct payments under universal credit.

[Mr Rob Wilson]

rose—

[Dr Whiteford]

I will not give way to the hon. Gentleman.

The bedroom tax is a nasty, vindictive and unnecessary measure. The under-occupancy penalty is manifestly unfair. It puts disabled people on low incomes right at the front of the austerity agenda, and asks people on the lowest incomes to pay the price for the structural problems affecting the supply of affordable housing. However, the bedroom tax is also unworkable: instead of addressing the underlying problems, it undermines the ability of social landlords to invest in the kind of affordable housing that is so badly needed, and it fails to tackle the excessive private sector rents in London and surrounding areas that have fuelled inflation in the housing benefit bill.

The Secretary of State needs to get a grip. The bedroom tax will not save any money, but it will cause chaos for tenants and social landlords alike. It will cause untold distress for those forced to leave their homes and communities, or for those who find themselves grappling with spiralling debt. It is not too late for the Government to think again. I urge Ministers to reconsider: scrap this crazy measure, or at the very least look again at exempting households affected by disability; look again at the budget for discretionary housing payments; offer local authorities support commensurate with the identified needs of disabled people and foster carers; and look again at whether it is reasonable to consider two-bedroom homes as under-occupied at all. I would have more respect for the Government if the Secretary of State postponed this measure and listened.

[Mr Llwyd]

On a point of order, Mr Speaker. Is it respectful to this House for the Secretary of State to be playing with his telephone rather than listening, even for a second, to what is being said?

[Mr Speaker]

These are matters of judgment for right hon. and hon. Members. Certainly, discretion in the use of such devices is to be encouraged, but I can say only that I had not noticed the matter. Therefore, so far as I was concerned, there was nothing outré about the behaviour of the Secretary of State. However, I note the point. Probably, the Secretary of State has noted it too, and we will leave it there.

[Dr Whiteford]

The 660,000 people affected by this measure will note exactly what the Secretary of State is doing during this debate. I urge him at this late stage to turn back and scrap the policy, or, at the very least, offer the mitigation measures that would make such a difference to disabled people’s lives.

In Scotland, we have a choice ahead of us. With the power to make our own democratic decisions, we could, should and must do things differently. We would never make disabled people the fall guys for Government failure. In the meantime, I hope Members across the House who care about this issue will support our motion today. I call time on this unfair and unworkable bedroom tax.

13:32

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

I welcome the opportunity—

[Pete Wishart]

Will the Minister give way?

[Steve Webb]

I think the hon. Gentleman is after a world record. I will, as they say in the trade, make just a little more progress—to the end of the sentence— and I will then be happy to give way. I am happy to have this opportunity to discuss attempts to end the spare room subsidy.

[Pete Wishart]

I am grateful to the Minister for giving way so early in his speech. It is always very nice to hear him at the Dispatch Box, but we do not want to hear from him; we want to hear from the chief guru and architect of the bedroom tax, the Secretary of State. Even at this late stage, I am sure that the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey) could step aside at the end of the evening, so that the Secretary of State can come to the Dispatch Box and try to defend the indefensible. He should be here, and he should be trying to explain and defend this measure.

[Steve Webb]

I can assure the hon. Gentleman that the Secretary of State and I are of one mind on this issue. I will explain the context and origins of the policy, and the relevant context as to why we are seeking to take approximately £12 billion a year out of spending on social security.

[Jacob Rees-Mogg (North East Somerset) (Con)]

May I tell my hon. Friend that the people of North East Somerset are desperate to hear from him, are looking forward to hearing from him, and are glad that he is leading this debate?

[Steve Webb]

I am very grateful to my hon. Friend.

Before we go into detail about the ending of the spare room subsidy, it is worth providing a little more detail about the fiscal context in which this measure is being taken. In the final year of the Labour Government, borrowing was £150 billion a year. This measure saves £500,000 a year, so if we were trying to fill Labour’s deficit by measures of this sort, we would need 300 such measures to tackle that scale of borrowing. I expected the hon. Member for Banff and Buchan (Dr Whiteford), who opened the debate, to suggest alternative sources of revenue not just for this measure, but for every single welfare spending reduction that she has opposed—all £12 billion of it.

[Andy Sawford (Corby) (Lab/Co-op)]

If the hon. Gentleman’s proposition in setting out the context—on which he and I profoundly disagree—is that those who, in effect, should foot whatever difference there is between us in public finances are the people affected by this bedroom tax, I must say that he is absolutely wrong. May I give him the specific example of my constituent Cheryl Maskens? Cheryl Maskens was homeless and was offered a two-bedroom property. Had she refused that property she would have been told that she had not accepted re-housing. Should she be the person who loses out in this scenario?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

A lot of Members want to speak and we are only up to the Front Bench speeches. Can Members make sure that if there are to be interventions, they are short? Those who want to catch my eye but intervene too much will go down the list, and they will understand why.

[Steve Webb]

I am grateful, Mr Deputy Speaker.

On the analysis that the hon. Gentleman says he profoundly disagrees with, he made two comments and I will address them both. He disagrees with the analysis that there was a deficit of £150 billion, when the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) famously left a note for his successor saying that there is no money left. The hon. Gentleman may not be aware—I do not know—that the previous Labour Chancellor set out spending plans for this Parliament, which involved tens of billions of pounds of spending reductions. The two biggest things on which the Government spend money are paying their employees and paying benefits. We have already squeezed public sector pay. The Opposition initially opposed and now accept that policy. The second biggest item of Government spending is benefits, tax credits and pensions. If the hon. Gentleman can tell us how we can save tens of billions of pounds from public spending without touching benefits, tax credits and pensions, I would like to hear from him. He has not given us that answer.

[Sheila Gilmore]

The Minister has now clearly established that he sees the purpose of this change as saving money in the welfare budget, so will he please spare us all that stuff about making better use of houses? He knows that if everybody did reshuffle into the right size of house, there would be no saving, so will he just cut those pages out of his speech?

[Steve Webb]

The context is the need to save public money, but there are a variety of ways that we can do that. One way has already triggered the better use of social housing stock, but we are still in the overall context stage at the moment.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

The Minister needs to understand that the real solution is growth in the economy: getting businesses to pay more corporation tax because they are making more profit; and getting more people into jobs and paying income tax, not this draconian and horrid tax that the Government are proposing.

[Steve Webb]

The structural deficit, which is the part of the deficit that does not disappear as the economy grows, was estimated to be approximately £80 billion. That is what we have had to tackle, regardless of the ups and downs of the economy. That is the core deficit that the Labour party left us to deal with—these are Labour cuts.

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

Will the Minister take this opportunity to confirm his own impact statement, which makes it clear that if this policy works and encourages people to downsize to smaller accommodation, there will be no savings? Will he explain to the House which of the two objectives he supports: saving money or encouraging downsizing?

[Steve Webb]

No, I am afraid that the hon. Lady is not correct in saying that. There will be a range of responses to this change, which I will run through later in my remarks. Some people will stay where they are and will pay the shortfall; some people will use a spare room for a lodger or for sub-letting; some people will work or work more hours; and some people will move. Our impact assessment has a range of modelling on how people will respond, but it clearly includes people staying where they are and paying the shortfall—that is where the saving comes from.

[Gordon Banks]

On a point of order, Mr Deputy Speaker. A minute ago the Minister said that these were Labour cuts. May I seek your advice and clarification about who is in government?

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

That is not a point of order, but the hon. Gentleman has certainly put his point on the record.

[Ian Murray]

rose—

[Steve Webb]

I give way to the hon. Gentleman.

[Ian Murray]

The Minister is being generous in giving way so early in his contribution. Can this Liberal Democrat Minister honestly say that it is fair to throw disabled people out of their house because of this bedroom tax, while giving millionaires £2,000 extra a week?

[Steve Webb]

On the tax treatment of the wealthy, I understand that Britain’s millionaires are demanding a return to the halcyon days of Labour when they paid a 40% top rate of tax, not 45%, and when they paid 18% capital gains tax, not 28%. I hope he is proud of Labour’s record on not taxing high earners as much as we are doing.

[Mr Vara]

Does my hon. Friend accept that one of the central themes of this reform is to bring fairness into the system? It cannot be right to have 250,000 people living in overcrowded accommodation, while lots of other people have surplus accommodation.

[Steve Webb]

I am grateful that someone has brought a voice to the voiceless in this debate. I have heard nothing about the 250,000 people shamefully left in overcrowded accommodation by the last Government and the nearly 5 million men, women and children on housing waiting lists up and down the land. Their voice deserves to be heard, so I am grateful to my hon. Friend for his intervention.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I was pleased to hear the Minister’s comments about fairness. I notice that the Conservative literature in Eastleigh says that the Liberal Democrats oppose further changes to benefits that would, they claim, make our welfare system fairer. Is he 100% sure that this measure will deliver the savings set out by the Chancellor? Yes or no.

[Steve Webb]

Our impact assessment is our best estimate based on what we expect the impact of the policy to be. That is all any Department ever produces. We believe that it is a robust best estimate.

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

My hon. Friend knows that his Liberal Democrat colleagues expressed concern about this measure when it went through this House and the other House, and that it was changed as a result of some of those concerns, but does he accept that there is still concern that the message about the facts is not getting through and that pensioners in particular are worried? Will he also accept the need to address other categories of people who need separate rooms—for example, those with disabilities or those with teenage, university or service children—but whose needs are not being adequately met at the moment?

[Steve Webb]

My right hon. Friend has some credibility on the issue of welfare reform, because he has been prepared to vote for difficult decisions on public spending. Neither the Labour party nor the nationalist parties have taken any difficult decisions on anything—they simply oppose everything—whereas he has, quite fairly, been willing to take some difficult decisions and support them and, again quite properly, raise concerns about the detail of policy. He is entirely right. The principle of the policy must be seen in the context of deficit reduction. Given that we have to reduce the deficit, we want to do so in a way that potentially has upsides as well as downsides, such as by making better use of the social housing stock, but it has always been our intention to protect the most vulnerable. The additional £30 million on top of the core £20 million for discretionary housing payments is the key way we want to do that, and I will say more later about how we want to ensure that that system works.

[Mr Rob Wilson]

Does my hon. Friend agree that the question that the mover of this motion—she would not allow me to ask it—and the Labour party must answer is: do they support any restrictions on the size of accommodation for social tenants or on the amount of housing benefit?

[Steve Webb]

We know that the housing benefit bill doubled in a decade—up 50% in real terms—and that Labour did nothing to tackle it. With the collapse in house building under the last Government, it is not surprising that private rents, and as a result housing benefit bills, soared.

[Mr Byrne]

I know that the Minister does not want to deliberately mislead the House, so I know that he will stand up now, correct the record and say that Labour introduced the local housing allowance and limits on housing benefit, and acknowledge that our manifesto set out plans for a cap on benefits, including housing benefit.

[Steve Webb]

That is very interesting. The right hon. Gentleman and his party were in office for 13 years and decided in their 2010 manifesto—the manifesto to which he just referred—to do something to control housing benefit. In office, they do not do it, but as they are heading out of government, they promise to do something.

[Gemma Doyle]

Will the Minister explain to the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) that Ministry of Defence Ministers have now admitted that some armed forces families will be affected by the change? Why does he think that families of prisoners should be exempted, but not armed forces families?

[Steve Webb]

Let us address the position of armed forces personnel specifically, because there has been an awful lot of misinformation about that. A married member of the armed forces is unaffected, so if someone is living with a spouse and goes away to fight—[Interruption.] Let me work my way through—they will be unaffected. A young serviceman or woman living in barracks will not be affected either, because they are not social housing tenants. Many young service personnel living with parents not in social accommodation will not be affected, and neither will young people living in social accommodation who are not on housing benefit, so we are narrowing down the number of people we are talking about probably to a very small number. When a young serviceman or woman, leaves social accommodation where the parents are on housing benefit, their housing benefit will go up.

[Gemma Doyle]

I know all this.

[Steve Webb]

If the hon. Lady knows it, I do not know why she asked the question.

The young serviceman or women, who will be on a wage, is deemed to be making a substantial contribution towards the household rent—say £70 a week or so—but when they have been away for more than 13 weeks, that non-dependent deduction does not apply anymore, so the housing benefit goes up substantially. There will be a charge for under-occupancy, which might be, say, £14 a week. Instead of paying £70 to the household housing costs, the young serviceman or woman will not have to pay anything, so if they value the room at £2 a day, they could still pay that £2 to mum and dad and be more than £50 a week better off. Rather than seeing mum and dad’s housing benefit fall, therefore, they will see it increase. So we have dealt with that issue.

[Several hon. Members]

rose—

[Steve Webb]

Perhaps I could make a little more progress.

The hon. Member for Banff and Buchan—[Interruption.] Sorry to disturb her—referred to private sector tenants and the relative position of social housing tenants. We spend more housing benefit on social housing tenants than on private sector tenants and we pay for their rent subsidy, so it is wrong to say that we subsidise private tenants more than we do social housing tenants. That is simply wrong. But if someone is living in private rented accommodation, broadly speaking we do not allow them an extra bedroom. Why, then, is it fair to have two houses next door to each other, one of which is privately rented and the other socially rented, and give a spare bedroom to the person in social accommodation, who also benefits from subsidised rent, but not to the person in the private rented accommodation?

[Mr Byrne]

The Minister is being characteristically generous in giving way. Why does he not tell the House the whole story and admit that the DWP has lost its case in the Court of Appeal and that its policy of discriminating against disabled people and not giving them any kind of special treatment has been struck down by the courts? That is why his Department has applied to the Supreme Court to have it looked at again. Why is he taking that to appeal and why will he not come clean to the House about how his policy is suffering at the hands of the courts because it is wrong?

[Steve Webb]

The case to which the right hon. Gentleman refers is in the courts now—before this policy has been implemented—so it is not specifically about this policy, but about a broader issue concerning the private rented sector. So it is a challenge to the regulations that his party was responsible for.

I will say more in a moment about the specific way in which we are planning to address the position of disabled people, because that is an important issue. Roughly two thirds of all social tenants have a disability as defined by the Disability Discrimination Act 1995, based on the measure used in our impact assessment. That is a similar proportion to those affected by this measure, so it is not disproportionate. If we look at the stock of social tenants, we inevitably find that about two thirds of them are in that category, and that is true of this specific measure.

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

My hon. Friend will know about the lengthy correspondence that I have had with his colleague, Lord Freud, on my concerns regarding remote rural areas, of which there are a considerable number in my constituency. Will he or the Secretary of State agree to meet me to look at the potential for transitional arrangements that could assist those areas with specific needs relating to the change-over to this policy?

[Steve Webb]

We are always happy to meet my hon. Friend. He raises an important issue about rural areas, and that will obviously be germane to some of the concerns that members of the nationalist parties have raised today—

[Mrs Anne McGuire (Stirling) (Lab)]

And others.

[Steve Webb]

And others, yes. As this is a nationalist debate, that seemed to be a relevant remark.

In response to concerns expressed in the House of Lords, we are going to undertake a rolling two-year research programme into the impact of these and other changes, and the impact on rural households will be one of the factors that we will look at specifically. Wales and Scotland are included in the scope of the research. We are happy to look at the allocation of discretionary housing payments, and at whether we have done enough justice to the needs of rural areas, compared with other areas. We will keep that matter under review.

[Mr MacNeil]

Did I hear the Minister correctly? Did he say that he was going to research the impact of this measure regardless of what it is going to do to people in the meantime? What he is suggesting is absolutely obscene, and the suggestion by the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) that we should have some sort of transitional arrangements would mean that we would still end up with this at the end of the blooming day anyway. It is ridiculous. Get rid of it.

[Steve Webb]

Jolly good. That was helpful. We cannot research the impact of a policy that has not happened. We are implementing a change that is designed to save £500 million a year, and we have heard nothing about where others would find that money from. We have said that, as the policy is implemented, we will research and look into its implementation, because there are things that we can change as we go along, one of which is the allocation of discretionary housing payments.

[Mr Reid]

I believe that the policy could be made to work if people were offered smaller alternative accommodation before a penalty was imposed. As my hon. Friend knows, however, the nearest alternative for people living on the islands in my constituency could be on the mainland, and it could be 20 or 30 miles away for people living in the remote villages in Argyll. Will he look at the formula for allocating discretionary housing payments to councils, so that those in the highlands and islands could add in the rural factor and get more funding owing to the problems of the remoteness and the islands?

[Steve Webb]

My hon. Friend is very welcome to join the conversation between my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso) and me, which I am looking forward to. He raises an important point. My hon. Friends have credibility in this argument because they have been willing to take difficult decisions on public spending, whereas Labour has just said no to everything, disowning its responsibility for the deficit and any willingness to say where the money would come from.

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

rose—

[Geraint Davies]

rose—

[Steve Webb]

I want to make some progress, as I have not yet got past page 1 of my speech and I think the House would like to hear from a few other people.

The cost of housing benefit increased in real terms by 50% in the past decade to £23 billion. Given that we said we would ring-fence the state pension, the biggest thing that we spend money on, we simply cannot ignore housing benefit for people of working age if we want to save money.

[Geraint Davies]

Will the Minister give way on that point?

[Steve Webb]

No, I want to make some progress.

For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.

At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.

[Mr Weir]

What would the Minister say to people who wish to downsize from a larger home to a smaller one, but who find that such accommodation simply does not exist in their areas? In mainly rural areas such as mine, such accommodation does not exist. People could be offered another home many miles away from where they have grown up, from where they work or from where their friends are. This is a ridiculous policy.

[Steve Webb]

I want to stress that there will a range of responses to the under-occupation charge. Some people will move. About one in six of the households we are talking about are in work, and there are options for people who are in work. People could take work. It is often said that there are no jobs, but there are more people working in this country now than in the whole of human history. The number of people in work in this country is now approaching 30 million, so, for some, working or working more hours will be an option. It will not be the answer for everybody, but it will be the answer for some.

[Mr Weir]

rose—

[Steve Webb]

Let me just address the hon. Gentleman’s point before he replies to my reply. I have not finished replying to his first point yet.

There has to be better use of the social housing stock. I pay tribute to the housing associations in the Liverpool area, 20 of which have come together with local authorities to pool their housing stock. I take the hon. Gentleman’s point that a small housing association might have limited stock and limited scope for moving people around, but by pooling their stock, those organisations are able to make better use of it so that more options will be available. I entirely accept his point that the answer to this question will be different in a city from in a remote rural area, and that is why we are more than happy to look at whether the allocation of discretionary housing payments to help people in rural areas is the right answer. As it happens, the allocation of DHPs is slightly over-represented in rural areas, compared with city areas, because of the way in which it has been done. We recognise that there is an issue there.

[Mr Weir]

I thank the Minister for that answer, but he said that there would be a range of responses to the policy, including paying the difference. However, people on housing benefit are, by their very nature, on low wages. They are already under intense pressure from rising energy and fuel prices and from freezes on benefits if they are receiving any. It will be difficult for those people to make up the difference in that way. Their choices will be very limited, and many will be forced to move by financial necessity when the change comes in.

[Steve Webb]

We have already seen the impact of our restrictions in the private rented sector, and we know that people make certain choices. It would be wrong of any of us to belittle those choices, given the financial situation, and I do not do so, but we have seen people on relatively modest incomes in the private rented sector saying that paying £2 a day for a spare room is worth more to them than spending that money on something else. Some people in that sector are making that choice, and that is part of where the saving comes from. Some people in the social housing sector will do the same thing.

[Yvonne Fovargue (Makerfield) (Lab)]

In my constituency, the choice is between staying put in two-bedroom properties, of which there is a surplus, or moving to one-bedroom properties in the private rented sector, which cost more in housing benefit. How does that represent a saving?

[Steve Webb]

I am grateful to the hon. Lady for raising that point. It is a common misconception that there is a one-way flow of people in this context. If someone moves from social housing into the private rented sector, as some do, that frees up socially rented accommodation, into which someone who might previously have been living in overcrowded, temporary or bed and breakfast accommodation can move. There will be flows in both directions, and we have taken account of those moves in our estimate of the cost of the changes.

[Mr Raynsford]

Does the Minister not recognise that the largest single driver for the increase in housing benefit in England is rent increases, not only in the private rented sector but in the social and affordable sector, because of the policies of his colleagues in the Department for Communities and Local Government who are pushing rents up higher? If a tenant moves out of a secure council tenancy into a new affordable rent tenancy, that will involve a substantially higher rent. If that person is on housing benefit, the benefit bill will rise. That is entirely counterproductive. Why is the Minister doing this?

[Steve Webb]

The right hon. Gentleman is very knowledgeable about housing, so he will know that the period of the last Labour Government was not a good one for the building of affordable homes. That is part of the reason for the problems we have now.

[David T. C. Davies (Monmouth) (Con)]

Does the Minister agree that nobody on the Government Benches takes any pleasure whatever from these changes, which have been forced on us by the actions of the Opposition who left us with a £1 trillion debt and a £160 billion deficit?

[Steve Webb]

My hon. Friend is quite right. These are Labour cuts because of Labour’s deficit.

[Several hon. Members]

rose—

[Steve Webb]

Let me make a little more progress, and I will give way again later.

We recognise that this is a time of change that will present challenges for tenants and for landlords, and we have to support both. One of the positive things to come out of the change is that landlords are getting to know their local authority tenants and social housing tenants far better than in the past. All too often, housing associations did not know their tenants well enough; we have now seen an important process of getting to know individual tenants and their needs. As a result, some of the more creative housing associations have schemes whereby half a dozen people have moved accommodation so that there is a better fit between the individuals and their housing needs. The 1 million spare bedrooms are a precious resource of our communities and of vulnerable people in them, and I will not have it said that those who stand up for the vulnerable are on the Opposition Benches, as we are standing up for them and we want those bedrooms filled.

[Geraint Davies]

rose—

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

rose—

[Geraint Davies]

Instead of having a policy of evicting people because their children have grown up, would it not be better to offer cash incentives to move to smaller housing? When I was chairman of the housing department and leader of Croydon council we offered people cash benefits rather than by evict them because their children had grown up. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I knew the difference between the two Members who rose, but with both standing I was not sure to whom the Minister was giving way. I do not need any advice from Mr Brown on this occasion.

[Steve Webb]

We got the right one, as it were.

We are all in favour of incentives to encourage people to make better use of the housing stock, and I welcome any measures the hon. Member for Swansea West (Geraint Davies) took to that effect, but they have not worked. We have 1 million spare bedrooms among people on housing benefit. The changes have simply not worked on the necessary scale—

[Mr Byrne]

rose—

[Steve Webb]

I have given way three times to the right hon. Gentleman, and I want to make further progress.

[Dame Anne Begg]

Will the Minister give way?

[Steve Webb]

Before I do, I shall give way to the hon. Lady.

[Dame Anne Begg]

The Minister seems hell-bent on introducing this policy, but he might be able to protect some people. I think he accepts that some people will not be able to move because no suitable property is available. They will not be able to afford the shortfall and will therefore fall into housing rent arrears and could be evicted. At that stage, they become “intentionally homeless” and end up at the bottom of any housing list. Will the Minister look at that further to see whether he can do anything to ensure that someone in that position because of housing debt is not deemed intentionally homeless? Otherwise, such a person stands no chance of getting social housing again.

[Steve Webb]

I am grateful to the hon. Lady. The point of the policy is not for people to be evicted, which would raise costs for the Exchequer and for the individual, but to ensure that existing housing stock is fully occupied.

Let me try directly to address the issue of the shortfall. There were two ways in which we could have approached the matter, one of which was blanket exemptions, which is what we did for pensioners. I am grateful to the hon. Member for Banff and Buchan for making it absolutely clear in opening the debate that pensioners are not covered by this change.

It is clear that we wanted to protect another set of people. Let me deal with the example of foster children, whom my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) mentioned. The position on foster families is, I think, shared across the House. If people need a spare bedroom for a foster child, we want to make sure that they have one, and we want to support fosterers. The question is whether that is done better by some blanket exemption or by what we have done in costing what it would take to meet the shortfall for those families and giving the money to local authorities so that a foster family for which this was an issue—it might not be an issue for all of them—can approach the authority and have the shortfall made up.

My right hon. Friend the Secretary of State and I are entirely open to discussing whether that is the most effective way of delivering that support. Our judgment was that discretionary housing payments gave local authorities the discretion we would want them to have. If for any reason that message is not getting through and is causing anxieties to foster families who do not know about DHPs, for example, or if local authorities have not communicated well enough, we would be happy to look at whether this is the most effective way of supporting families. Where there is a shortfall, discretionary housing payments for this and other measures are available. We want to make sure that people use them when they are in genuine need. Eviction is clearly not something that we are seeking to achieve.

[Simon Hughes]

That was really helpful. I want to pursue the issue raised by the hon. Member for Aberdeen South (Dame Anne Begg). The Minister has said that he is willing to look at whether the discretionary funds will meet certain problems. May I take it that he and the Secretary of State would be willing to look at the categories defining which people need a bedroom, as I think some categories that are not currently counted as falling within the definition should be included in it?

[Steve Webb]

I can see the attraction of that approach, and I think there is a balance to be struck. The attraction of the approach for foster families would be that the size criteria could be defined and then categories of people such as a couple, teenage children and so forth could be added to the list. We could say that a bedroom used for a foster child is a bedroom, so no deduction applies, people do not need to go to the council for the DHPs and the Department for Work and Pensions rather than the local authority would meet the bill. That is one way of doing things.

The challenge for us in that approach is defining in Whitehall all the categories of people who ought to have a room. There could be difficulties even within a category, as there might be foster carers, for example, for whom this is more or less of an issue. It could vary from case to case. We have to make the judgment: where do we need to make a blanket exemption or a blanket entitlement to a room, and where do we say that we will give the local authorities money and discretion? Each side of the argument has its attractions. We have to ensure that the money we have given to local authorities is well spent and that people know it is coming.

I have been interviewed on various television programmes, which have featured case studies of people who were obviously distressed—and I do not doubt that some people are distressed by this change. Obviously, however, if they approached their local authority, they would not be affected by it. That is the issue. They would go to their local authority, which has been given money to help them; the authority would help them, so they would not be affected. My right hon. Friend the Member for Bermondsey and Old Southwark and the hon. Member for Aberdeen South (Dame Anne Begg) are right that we must ensure that people are not unduly alarmed, as in many cases money is available to help the most vulnerable.

[Greg Mulholland (Leeds North West) (LD)]

Does my hon. Friend think that the guidance to local authorities on how they should target the discretionary fund and discretionary housing payments has been sufficient?

[Steve Webb]

My hon. Friend raises an important point. We have allocated funds to local authorities with two particular groups in mind: foster families and those for whom there has been a substantial adaptation to the property. We can all see whether a house has been substantially adapted; moving someone somewhere else and adapting the property again will not be a good use of public funds. That is the basis on which the funding was allocated. We have indicated that to local authorities, but I agree with my hon. Friend that we can probably do more and will do more to make sure that local authorities are aware of the needs of those groups.

[Owen Smith (Pontypridd) (Lab)]

Will the Minister confirm that the total amount of money available in discretionary funds to Wales will be £6.1 million? He will have seen that the Welsh Government last week estimated the total cost to Wales of the bedroom tax at £25 million. Does he concede that there is a significant shortfall, or is he proposing to increase the money available to Wales—and, indeed, to the rest of the country, where a similar shortfall will apply?

[Steve Webb]

I started my remarks by talking about deficit reduction because this measure is intended to save money. The shortfall to which the hon. Gentleman refers is the saving to the Exchequer. If we fill the gap completely, we will not save any money, so we might as well not do the policy. I have to say that if Wales is getting a fifth of the shortfall, it is doing exceptionally well relative to the rest of the country.

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

rose—

[Steve Webb]

If I may, I shall respond to the Chairman of the Select Committee, who made an important point about those who are “intentionally homeless”. Although it is for local authorities to make decisions on homelessness applications as they do now, under current statutory homelessness legislation, if the only reason for the person’s homelessness is a reduction in benefit that is outside their control they should not be considered intentionally homeless by the local authority. I can put that on the record and hope it is helpful.

[Owen Smith]

The Minister is generous in giving way. He says that Wales is doing exceptionally well, but his own impact assessment demonstrates in black and white that 46% of claimants will be affected in Wales versus a UK average of 31%. Wales faces the largest impact—more than anywhere else in the country. Will the Minister therefore reconsider his remark that Wales is doing particularly well out of the bedroom tax?

[Steve Webb]

The impact of ending the spare-room subsidy that we currently pay will be an average loss in Wales that is below the national average—£12 a week, as opposed to £14 a week—and the same is true of Scotland. Both Wales and Scotland will experience below-average losses.

The hon. Gentleman asked about the size of discretionary housing payments. Across the country as a whole, we have allocated £30 million, relative to a saving of about £500 million. That £30 million is on top of the £20 million that local authorities already receive in DHPs, so a total of £50 million will now be available to them. If Wales is receiving a bigger proportion of that, it is receiving a bigger proportion of the DHPs.

[Several hon. Members]

rose—

[Steve Webb]

I am going to make some more progress, but I shall be happy to respond further later.

We have engaged actively with a range of advice organisations, including the Chartered Institute of Housing, to develop guidance for social landlords. We have already encountered many examples of social landlords working with tenants to prepare for this change. However, we recognise that certain individuals will face problems, which is why—on top of the £20 million in DHPs that local authorities already receive—we have allocated an extra £30 million. As I have said, a total of £50 million will be available to them to help people who are affected by this policy. I have already mentioned two groups whom they can help: disabled people living in significantly adapted accommodation, and foster carers, including those who need to retain an extra room when they are between fostering placements. I believe that authorities will be able to help about 5,000 foster carers, and about 35,000 wheelchair users living in adapted housing.

There has been some discussion about the position of disabled people. The definition of disability used in our impact assessment is a self-assessment based on a household survey. It should be borne in mind that fewer than a third of the people affected by the policy are receiving disability living allowance. We have also touched on the position of service personnel, and I think that I have reassured the House about that.

[Helen Goodman (Bishop Auckland) (Lab)]

The Minister has said that he is considering the rural element of discretionary housing benefit. Last week the BBC reported that the Secretary of State had instructed officials to look into the definition of disability, and the way in which the bedroom tax would be applied to disability. Is the Minister saying that the Secretary of State was wrong and that no instruction has been given to officials, or is he countermanding what the Secretary of State said last week?

[Steve Webb]

Not at all. I am not sure whether the hon. Lady was listening, but I said earlier that we kept this and all other policies under constant review, and that, in particular, we were considering whether the use of the DHP to target vulnerable groups—which is what I think the whole House wants us to do—was being effective in protecting the people whom we all want to protect. We are continuing to work on that, to ensure that we are achieving what we want to achieve.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Given what the Minister has just said about disability living allowance, will he agree to exempt people who receive it from the bedroom tax? How can the Prime Minister possibly say that he is putting disabled people first if that is not done?

[Steve Webb]

At the risk of straying into other legislation, let me point out that when we had to make difficult decisions on benefit rates—which, of course, the hon. Lady opposed—we specifically exempted DLA, attendance allowance and the support component of employment and support allowance as a sign of our commitment to disabled people.

The hon. Lady suggests that we should exempt a third of those affected by the policy. As she will understand, this measure is partly about reducing the deficit and partly about making better use of the housing stock. Receiving DLA is not synonymous with needing a spare bedroom: that is the point. Someone who needs a spare bedroom can approach the local authority, and we have given local authorities funds for that purpose, but a blanket exemption of people receiving DLA does not correlate with the need for a spare bedroom.

As my noble Friend Lord Freud announced on 15 October last year, these measures will be monitored and evaluated over a two-year period from April this year. Initial findings will be available in 2014, and the final report will be published late in 2015.

[Andy Sawford]

Will the Minister give way?

[Steve Webb]

I have already given way to the hon. Gentleman.

[Jim Shannon]

May I return the Minister to the subject of disabled people in bungalows or houses to which they will have to consider moving in order to downsize? What criterion will the Government use to enable a person to justify keeping a spare bedroom? Will it be a doctor’s note saying that the person is disabled and needs a bedroom of his or her own?

[Steve Webb]

We have already made one specific exemption. Someone who needs a spare room for a non-resident, overnight carer can have it. That is an absolute right, and people do not have to apply for it. However, someone who is in particular need can approach the local authority, which has discretion—after all, the D in DHP stands for discretion; there is no set of national Whitehall-driven rules—and the authority can then judge whether the household is indeed in particular need of help from the budget that has been allocated to it. We have not set out a rigid blueprint; the whole point is that local authorities will have discretion to meet people and, if they think it a priority, to meet their needs.

[Caroline Lucas]

I thank the Minister for pointing out that the D stands for discretion, but as far as I can see it stands for draconian. The Minister is trying to give the impression that people need not worry, because they can approach their council to get the extra money. Does he not realise that the extra money that he is providing is a pittance in comparison with the amount that is needed? This is essentially an ideological attack on social housing: the Government are simply trying to get rid of it.

[Steve Webb]

It is astonishing that the hon. Lady should suggest that we are trying to get rid of social housing, given that we have built more affordable housing in the last year than was built, on average, over the preceding 10 years under Labour. That is an absurd suggestion. I entirely understand that the hon. Lady opposes everything—it is a kind of nihilism, which is fair enough—but her suggestion is not a credible option for a credible Government.

The research that we will undertake will include small-scale primary research involving a range of local authorities, social landlords and voluntary organisations in England, Scotland and Wales. The researchers will consider supply issues, rural effects—which were raised by my hon. Friend the Member for Argyll and Bute (Mr Reid)—and people who are unable to share rooms. When possible, they will also consider the effects on vulnerable individuals and their financial circumstances, social networks and family life. That was mentioned earlier as well.

[Nia Griffith (Llanelli) (Lab)]

Will the Minister give way?

[Steve Webb]

I hope to end my speech in a moment, but I shall be happy to give way to the hon. Lady.

[Nia Griffith]

If the Minister is so keen for people to receive discretionary payments, can he explain why the Government are taking to court a case in Wiltshire in which a disabled child is unable to share a room with a sibling? Why are they spending money on taking that case to court if they think that money should be given to such families?

[Steve Webb]

There is a limit to what I can say about cases that are currently in the courts. We have been given permission to appeal to the Supreme Court. We are, of course, applying the current Appeal Court ruling, and we have issued local authority guidance on how such cases should be dealt with. That case is very much in flux at present, and I do not want to say too much about it. However, let me make a general point that sums up what we are trying to achieve.

We are trying to tackle a massive structural deficit. The biggest two items of public spending are public sector pay and benefits. We have taken action on public sector pay, with little or no support from the Opposition. We have also had to take action on benefits. We have concentrated on working-age benefits because we have protected the state pension, and no Opposition Member has suggested that we should not have done that. We were trying to find £12 billion from public spending, and housing benefit is one of the biggest working-age benefits. We had tackled private sector housing benefit, and we had to look at the social sector. The most valuable way in which we can look at social sector housing benefit costs is to look at the million spare bedrooms that we currently subsidise, and to ask whether that subsidy is fair to the people who do not receive it.

These are difficult choices, but we have had to make them because of the mess that the Labour party left to us. I hope that the right hon. Member for Birmingham, Hodge Hill will begin with an apology.

14:18

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I think that most Opposition Members will have been pretty disappointed by what the Minister has said. A range of important arguments have been advanced this afternoon, but they have received no answers whatsoever.

Let me begin by congratulating the Green party, Plaid Cymru and the Scottish National party on tabling the motion. We support it, and we will support it in the Division Lobby later today. Since the Welfare Reform Act 2012 first saw the light of day, we have warned of the flaws that have loomed large this afternoon. It was my right hon. Friend the Member for East Ham (Stephen Timms) who first warned that the people who will be hit by the Act have nowhere to hide and that they will just have to pay up, and it was my noble Friend Lord McKenzie who said in the other place that the discretionary housing fund would nowhere near cover the costs and consequences of this policy. I am afraid that everything we have heard this afternoon merely confirms what they have said. That is why through Divisions in the Chamber and in Committee here and in the other place we have tried to put in place safeguards which would have stopped the horror show that will begin in April.

As the weeks have gone by, my colleagues have clearly set out the faults and flaws in glorious 3D Technicolor. First, we learned that someone who is handed a 12-month sentence will be exempt from this policy. I have here a list of offences which attracted a sentence of less than 12 months in 2011. It includes some 43 people who were convicted of threat or conspiracy to murder, who will be exempt. There are also 273 people convicted of sexual offences; they, too, will be exempt. Yet mothers of members of the armed forces who are currently out there serving, like Alison Huggan—the case raised by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop)—will be hit, and the Minister defended this policy this afternoon.

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

I know the right hon. Gentleman would never want to unwittingly mislead the House. He has said that if someone is convicted, they will be exempt. They are not exempt. Only those on remand will be exempt. Would the right hon. Gentleman like to correct the record?

[Mr Byrne]

Well, I am sure the House will draw great comfort from the fact that people on remand for threats to murder, sexual offences, burglary, robbery and public disorder will—

[Mr Duncan Smith]

rose—

[Mr Byrne]

I am very happy to take the Secretary of State’s correction, but—

[Mr Duncan Smith]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Secretary of State, you cannot be standing up at the same time as the Member who has the Floor. I am sure the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) is willing to give way. You should both have a little patience with each other. We do not want to end up bickering across the Dispatch Box, do we? Is Liam Byrne giving way?

[Mr Byrne]

I am very happy to give way, but let me tell the Secretary of State that the House will draw little comfort from the fact that people on remand for these offences will still be exempt from this policy.

[Mr Duncan Smith]

I just want to establish one thing: the right hon. Gentleman is now changing his party’s legal policy. It has been a very good principle in this country down through the ages that people are innocent until proven guilty, not guilty before they are proven innocent. The reality is that we stick within the existing strictures. The right hon. Gentleman has every right to oppose this measure, but he is now saying that as soon as someone is accused of a crime, they should immediately be treated as if they are guilty.

[Mr Byrne]

The Secretary of State cannot defend the fact that families of serving soldiers will be hit by this policy while those on remand and accused of the most serious offences we can imagine will not be hit by it. I do not think that the Secretary of State, of all people, will want to defend that. He should be speaking to his colleagues the Secretary of State for Defence and the Prime Minister, who I understand is the Chair of the Sub-Committee on the Armed Forces Covenant, and he should be bringing to this House safeguards for the families of armed personnel out on service, should he not? As he remains in his place, it is clear that he is not going to bring forward those safeguards for the families of people serving on the front line. The House will be disappointed to have observed that.

Foster parents will also be hurt. Again, we heard nothing from the Minister today about how foster parent families are going to be helped. [Interruption.] I listened very carefully to what the Minister said, and he said nothing today that countermands what he sent out in a recent circular, which says:

“a household that has an extra room for a current or potential foster child will be treated as under-occupying.”

Families in that position will be hit, therefore. [Interruption.] We then hear that under universal credit a couple where someone is a pensioner and someone is not will also be hit. [Interruption.]

Over all this, of course, looms the truth that two-thirds of the people hit by this bedroom tax will be disabled. [Interruption.] The Minister has been pleading from a sedentary position that the discretionary housing payment will somehow help. He will, no doubt, have seen the National Housing Federation research that found that 200,000 people who will be hit by this bedroom tax are on disability living allowance. The NHF estimates that if we spent all the DHP money helping those people, it would help 73,000 people, so there would be 127,000 people in receipt of DLA who would get absolutely no help whatever. Of course, that would leave nothing for foster parents either. I am afraid that the Minister cannot simply plead that the DHP is of some help to foster parents, those who are disabled and people whose houses have been adapted. The truth is very different, and he has been found out this afternoon.

[Andy Sawford]

Much has been said about particular groups who will be hit by this policy and my right hon. Friend is right to talk about the impact on disabled people and foster families. There are also, however, people like my constituent Hayley Duncan, who has two boys aged one and 13 who are now expected to share the same bedroom. I can honestly say I would not ask two children of mine of such different ages to share the same bedroom. Does my right hon. Friend think this is right? Is there hypocrisy here?

[Mr Byrne]

Of course there is. The Minister, unlike his party colleague the right hon. Member for Bermondsey and Old Southwark (Simon Hughes), did not resile from his support for a whopping great tax cut for millionaires at the same time as Hayley Duncan and her children are being hit by this bedroom tax.

This is a policy that is unique in its cruelty. It sets out to tackle the problem of under-occupancy, and the Minister made much of the 1 million spare bedrooms he wants somehow to bring on to the housing market. As he knows, however, the policy will only save the money chalked up in the Treasury scorecard if it fails. That is the reality. About £490 million is earmarked to be saved by this policy over the course of this year, but it will be saved only if 660,000 households are hit for £14 a week for 52 weeks a year. That is how those savings will be delivered. This is not about bringing spare bedrooms on to the market; it is about hurting vulnerable people and asking them to pay extra.

What is particularly troubling to many Opposition Members is the Minister’s refusal to acknowledge that in many parts of the country there will simply not be the smaller houses for people to move into. Again the NHF has been very clear about that. In large parts of the country there is simply not the housing stock for people hit by this tax to move into. The Government have removed any shelter where vulnerable people can take cover before opening fire. This is a policy of unique cruelty, therefore. The Government are not seeking to solve under-occupancy. Instead, they are simply seeking to make the poorest and most vulnerable even poorer. As the Secretary of State once cared about poverty, perhaps he would like to justify that fact?

[Mr Duncan Smith]

Will the right hon. Gentleman explain the following two important points? Under the Labour Government’s local housing allowance changes, the situation for children of the same sex in respect of the size criteria was exactly the same as we are now introducing in the social sector. Why is it good for one but not for the other? Secondly, he is crowing about the number of social houses in existence, but why did the last Labour Government leave the building programme at the lowest level since the 1920s?

[Mr Byrne]

Like me, the Secretary of State will have followed the recent remarks of the Deputy Prime Minister—

[Mr Duncan Smith]

Answer the question.

[Mr Byrne]

I am answering the question. The Deputy Prime Minister said:

“If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the coalition government…But I think we’ve all realised that you actually need, in order to foster a recovery, to try and mobilise as much public and private capital into infrastructure as possible.”

But what has happened in the past couple of years? What has happened even in the past year? For the last year for which records are available, the number of housing starts in this country has fallen by 11%. That is the reality of what this Government have delivered.

This policy is not simply a cruel punishment; it is a cruel and unusual punishment, because it is not normal—it is not usual in a modern, advanced and civilised country—to reward the rich in quite the way this Government are proposing while punishing the poor. It beggars belief that next month—the month in which those on £1 million a year will get a £2,000-a-week tax cut—those with a spare bedroom will face a £14-a-week rent rise. In what world is that fair or normal and usual? It is only in a Tory world, defended by a Liberal Democrat.

[Mr Raynsford]

As some very misleading comments about housing have been made by those on the Government Front Bench, will my right hon. Friend confirm that in 2007, the last year before the recession, the net additions to the housing stock in this country numbered 207,000? The current Government have presided over a collapse, and fewer than 100,000 new homes were started last year. That is their shocking record and they should not pretend otherwise.

[Mr Byrne]

My right hon. Friend is absolutely right about that. Of course, the Labour party is proposing to have a tax on bankers’ bonuses in order to release £1.3 billion for new housing and to spend the 4G licence proceeds on building homes. That is in sharp contrast to the sob story from the Deputy Prime Minister lamenting the fact that the Government cut capital spending too far and too fast.

[Geraint Davies]

Does my right hon. Friend accept that the savings that the Government anticipate and project are gross savings, not net savings? That is because many local authorities will end up with voids without rents and will make losses, so they will not be able to do their repairs, at a time when private sector rents will be pressed up by excess demand, giving returns on buy-to-lets to the private rented sector and increasing housing benefit costs. This does not add up at all.

[Mr Byrne]

My hon. Friend is absolutely right. The Secretary of State may truly believe that this policy will save his Department £490 million a year, but his Minister of State was rather less than forthcoming earlier on swearing that that would be the figure. The Secretary of State may genuinely believe that this policy will save £2 billion over the forecast period. If he does genuinely believe that it will save the money set out by the Treasury in Budgets gone by, he is deluding himself, because the evidence is staring him in the face: this policy will cost more than it saves.

[Mr Duncan Smith]

I stand by our assessments. Will the right hon. Gentleman apologise for what was done in Labour’s 13 years? The current Government have increased the level of social house building by 18% on what we inherited; it had collapsed under Labour. Will he apologise and explain to the nationalists that one reason why we are in this predicament is that house building collapsed under his Government?

[Mr Byrne]

House building did not collapse. In the final years of our Government we brought forward serious new investment for housing, and it is the Labour party that is proposing serious investment in social housing and new housing today. That position seems to be shared by the Deputy Prime Minister, but his Government are presiding over an 11% collapse in the number of houses being built.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

Does my right hon. Friend agree that it is extraordinarily hypocritical for the Secretary of State to be talking about investing in housing when—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure that the hon. Gentleman did not mean to use the word “hypocritical” and that he is now going to withdraw it and carry on with his question.

[Stephen Doughty]

I will withdraw it, and I apologise, Mr Deputy Speaker. It is extraordinary for the Secretary of State to be talking about this measure when he is putting many of our housing associations and registered social landlords at risk. Moody’s downgraded housing associations’ credit ratings this week, which means that they are not going to be able to invest either in the properties they have or in building new ones, as my hon. Friend the Member for Swansea West (Geraint Davies) just said.

[Mr Byrne]

My hon. Friend is right. We have the National Housing Federation to thank for estimates on the amount of arrears, which housing associations now say are going to grow. Some estimates I have seen show that housing associations face up to a quarter of a billion pounds-worth of arrears because of this policy and other changes the Secretary of State is making. At a time when the country’s debt rating has been downgraded, that will make things incredibly difficult for housing associations in delivering on future social housing builds. The bedroom tax will only make the situation worse.

[Jane Ellison (Battersea) (Con)]

The right hon. Gentleman has slightly moved on from the point he was making about the so-called millionaires give-away, but it is a certainty that Opposition Members will come back to it repeatedly. Will he explain, as he is particularly well placed to do so having been in the Treasury, why it was in only the last 37 days of the Labour Government that any measures were taken to increase taxes on the richest people in this country? If he is going to refer to this issue continually, he should, being a former Treasury Minister, be prepared to explain why that was the case.

[Mr Byrne]

I am happy to do so. It will not have escaped the hon. Lady’s notice that today’s fiscal circumstances are somewhat different from those of the 13 years of the previous Labour Government. She supports—[Interruption.] I will answer her question just as soon as the Government Front Benchers simmer down slightly. The truth is that her Government have delivered a double-dip recession and perhaps worse; they have just presided over a downgrade in the nation’s debt rating; and growth has been flatlining for the past couple of years, which has made the deficit position far worse. This Government are going to borrow more in this Parliament than Labour did in 13 years, so the question now has to be: how is the pain of paying down the deficit to be shared? Labour has always said that there has to be a mixture of growth and sensible public spending cuts—that is how to get the deficit down. What we should not be doing is having a £3 billion tax give-away for Britain’s richest citizens while asking 660,000 people to pay an extra £14 a week. How would she justify that to her constituents?

[Jane Ellison]

That is just not good enough from the right hon. Gentleman. The financial crash happened in 2008 and, by independent agreement, there was already a structural deficit at that time. In order not to bequeath an ever-growing structural deficit and rising debt to another incoming Labour Government or, as it turned out, this coalition Government, no action was taken in the immediate aftermath of the financial crash. Surely he cannot justify that fact.

[Mr Byrne]

If we are to go back over the history, I should say that, as the hon. Lady will know, at that time the Conservative party supported Labour’s spending limits—that was the announcement made by the then shadow Chancellor at the party conference. The question that confronts the country now is: how do we bring the deficit down? Once upon a time, we were told that we were “all in it together” but we now know that the truth is quite the opposite. Once upon a time, the Chancellor said that he was not going to balance the books on the backs of the poor, but now we know the truth—he absolutely is balancing the books on the backs of the poor, starting with £14 a week extra from 660,000 people.

The evidence that this policy is going to cost more than it saves is now staring the Secretary of State in the face, just as I can see it clearly, too. He will have read the reports from all over the country—[Interruption.] Perhaps he will confirm this from a sedentary position. Like me, he will have read the reports from all over the country that have gone to cabinet meetings setting out the impact of his changes to communities up and down the country. The reports could not be clearer and they confirm the substance of the letter leaked by the private secretary to the Secretary of State for Communities and Local Government that up to 20,000 people will be made homeless as a result of these changes, and that does not include the impact of the benefit cut.

This policy affects councils like Hull city council, which says that 4,700 tenants will be hit, yet in Hull there are just 73 one-bedroom and two-bedroom properties available to let. There is a shortfall of 4,700 properties for tenants. If they move into the private rented sector or to become homeless, that will cost the taxpayer a fortune. This policy will cost more than it saves, as has been powerfully argued today, and I am not surprised that the Minister of State is no longer prepared to swear by the savings that this policy is supposed to deliver.

Here we have a Department that is at the height of its powers. It has brought us a Work programme that is worse than doing nothing, it has presided over a universal credit system that I understand is on the brink of collapsing into chaos, and now we have a policy that will cost more than it saves. Why? Because the Secretary of State has been rolled over by a downgraded Chancellor and has not had the strength to resist him.

We now have the worst of all worlds. We have a Department bedevilled by an excess of stupidity and an absence of spine. The cost is paid not by the Members on the Government Front Bench but by the 1 million children who will be plunged into poverty by the Secretary of State’s Department and the 3.4 million disabled people who will be hit by his strivers tax. He should instead be bringing to this House proposals that would genuinely bring down the welfare bill by getting more people into work. We now have nearly 1 million young people out of work and nearly 1 million people out of work long term, and that is costing us a fortune. He knows full well that the housing benefit bill is set to rise by £8 billion over the course of this Parliament because of his failure to get people back into jobs.

That is why the Secretary of State should be arguing. He should find some spine and tell the Chancellor that it is about time we had a tax on bankers’ bonuses to build new homes and get people into work. If we said to people in this country that they could not spend more than two years on the dole and that at that stage they had to work, that would be a proper plan for welfare reform and for welfare to work. It would be a real alternative to this policy, which is a cruel and unusual punishment from a cruel and useless Government.

14:41

[Kris Hopkins (Keighley) (Con)]

I am grateful for the opportunity to speak on this important issue. As a former chairman of housing in Bradford and chair of the regional housing board for Yorkshire and Humber, I know the importance of social housing and housing benefit in meeting housing needs. My own extended family have used it and use it now.

In my district alone, tens of thousands of people are on waiting lists trying to gain access to social housing. The previous Government failed to build sufficient social housing and the former Prime Minister raided the regional housing boards’ funding allocation of tens and millions of pounds that could have been spent on addressing this housing shortage. I must say, however, that he gave some of it back, repackaged as new money, in the months leading up to the last general election. The reality is that the previous Labour Government robbed millions of pounds from the regional housing fund allocations that could have been spent on social housing and that was allocated for that purpose, and which could have addressed some of the issues we face today.

Merely sustaining the housing benefit bill of £23 billion costs each individual family £900. That is unsustainable. The Government are attempting to put fairness back into social housing, bringing the sector in line with the private rental sector.

I would like to facilitate the building of more social housing. It is really important, particularly in the current housing market, to get people on to the property ladder, if they have the opportunity, and to get them in stable housing. I encourage the Minister for Housing to make efforts to spend his limited money—some £300 million has been allocated for developing social housing—in areas such as Bradford’s canal corridor and on the excellent community scheme in Spring Bank in Keighley. The Government are delivering social housing where the previous Government failed.

Much has been said in the past hour or so about adapted accommodation for the disabled. I want to put on record what the Government have said they will do, as opposed to the somewhat misleading arguments that have been made by the Opposition. If someone lives in accommodation that has been significantly adapted for a disabled person, they will be entitled to a discretionary housing payment to address some of the shortfall. Some £30 million of the Government’s discretionary payment has been specifically aimed at foster carers and disabled people who have made changes to their homes, and when the disability means that the household needs an extra room, local authorities have been allocated a further £150 million to make discretionary payments.

[Mr Edward Leigh (Gainsborough) (Con)]

We need to publicise that more. A family came to see me recently in my surgery. The husband is profoundly deaf and his wife has an open permanent wound in her intestine, so they need separate bedrooms, but nobody told them the fund was available. They are therefore very worried. We need more education, so that disabled and vulnerable people are better informed about what is going on.

[Kris Hopkins]

What my hon. Friend says is true. We need to ensure that the facts about this legislation are put out there and that vulnerable people are not misled by some of the interesting conversations that are going on.

[Stewart Hosie]

rose—

[Hywel Williams]

rose—

[Kris Hopkins]

I will give way, by all means.

[Hywel Williams]

rose—

[Stewart Hosie]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Which one does the hon. Gentleman want to give way to?

[Kris Hopkins]

I will give way to the one with less hair.

[Hywel Williams]

Recognition, at last!

The change is coming in in April. Is the hon. Gentleman satisfied with how the Government have publicised the very point to which he referred?

[Kris Hopkins]

Today’s debate gives us the opportunity to make that point. The Minister’s speech was excellent and clarified many of the issues, but it is appropriate that we should use all means to put the information into the public domain.

During my time as housing chair, I visited many homes in the district. The majority were in very poor condition and had been for many years. Some were built before the war. Some were sold for as little as £1; people could not live in them as they were in such a poor condition.

[Mr Duncan Smith]

My hon. Friend is right to raise the important matter of communications, as was my hon. Friend the Member for Gainsborough (Mr Leigh). We have been talking to councils for quite some time and we are urging them to talk to their social housing residents. They are doing that, but they are not helped when others go out and say things about the provisions that are completely untrue. There have been many scare stories about pensioners and we made it clear from the word go that pensioners were not involved, but some of the Opposition parties spent their time saying that pensioners would be affected. There is a barrier, but we are doing our level best to get the information across.

[Kris Hopkins]

I thank my right hon. Friend for that point. The truth is that as a Conservative, I care about the disabled. I want to champion the work and efforts of carers and we should not allow the Opposition to brand us as that nasty party. Many of our councillors are working really hard for the vulnerable people in our society, and I know that Government Members care about those people.

[Stewart Hosie]

Will the hon. Gentleman give way?

[Kris Hopkins]

No, I will not. I want to make progress on the point I was making earlier.

We wanted to transfer our housing stock into a not-for-profit trust. We renovated 30,000 of those decrepit houses into decent quality houses. We put forward a £1 billion package to transform them into quality houses and put in a 30-year maintenance scheme to sustain them through that stand-alone trust. It is successful. Our Labour councillors, local Labour leaders and trade unions voted against that package, however, and actively campaigned against it. [Interruption.] I hear the scorn coming from the Opposition, but Labour does not want to take real action. Labour councillors and representatives were prepared to allow people to live in slums, rather than intervene.

[Nia Griffith]

Does the hon. Gentleman accept that some local councils, such as Carmarthenshire county council, kept their whole housing stock in-house and have done an excellent job in renovating section after section of it? He should not be saying that the deciding factor is whether a council decides to keep provision in-house or to give it to another authority to look after. What matters is what is done with that stock.

[Kris Hopkins]

I do not know where the taxpayers of Bradford were to find £1 billion over 30 years to renovate those houses. That was the reality and the reason why the housing was put into a trust, which is delivering. The people of Bradford living in social housing were betrayed by the Labour party.

I want quality homes and I shall work to make sure we get them, but the fact is that the housing benefit budget has doubled in 10 years, on the back of the previous Government’s economic failure and mismanagement. We have to spend within our means. The public rightly expect us to get a grip on the benefits regime—a regime the Labour Government allowed to get out of control. Labour failed to build social housing, failed to manage the economy and therefore clearly failed those who are living in social housing and those who need access to it.

14:50

[Ann McKechin (Glasgow North) (Lab)]

I welcome today’s debate on a serious and deeply worrying issue. I, like many others, spent last week in my constituency, where almost every conversation I had—with constituents, DWP local managers, banks, post offices, housing associations, credit unions and my local citizens advice bureau—was centred on the so-called bedroom tax. Today, I listened carefully to the Minister of State, who took great pleasure in referring to the “spare room subsidy” and the question of equity. It reminded me of the debates on the poll tax in the early 1990s, when it was considered “equitable” that the poor should take a heavier burden. That message resonates today right across the House.

What struck me about those conversations last week was how unprepared we are for perhaps the most dramatic setback in decades for our housing sector and local communities, first, among the tenants. Up to the end of last year, housing providers earnestly hoped they could persuade the Government to change their mind; then they started to write to their tenants, who in turn put the letter in a safe place and hoped the issue would go away too. Only since the start of this year have tenants’ eyes been opened to the true horror, as housing associations have now started physically to knock on their door and find out how they intend to cope.

Let me give the examples of two constituents I met last week. One of the women looks after her father full time—she gave up her work 15 years ago to act as a carer—and he lives nearby in a one-bedroom flat, so she cannot move in with him. Because there are no spare houses, she faces having to move to the opposite side of Glasgow and then trying to commute every day to look after her father. The other woman is 58 years old and single; she has lived where she is now for 17 years. She is a good tenant, who keeps the area stable and looks after her neighbours, but she faces being moved many miles away to an area she does not know and where she does not know the local people—even though she does not have the money to move house in the first place. One question the Government have not asked is how we will manage moving all those people, many of whom have no spare cash.

Most welfare advisers and DWP staff I spoke to last week believe that now, we are seeing only the trickle, and that the flood of inquiries will start when the bills begin to arrive through people’s letterboxes. We know the grim facts about the lack of suitable stock—the hon. Member for Banff and Buchan (Dr Whiteford) described in some detail the extent of the problems right across the country, both in urban and rural areas—but analysis of the impact on individuals and the stability of their families, the detrimental impact on local communities as good long-term residents leave, the destabilising impact on schools and children’s education as many desperately look for properties to move to, and the likely non-payment reaction that will follow, is simply shallow and unco-ordinated.

The impact on our housing associations should not be underestimated. Earlier this month, as the hon. Lady mentioned, I raised with the Under-Secretary of State for Scotland, who is not here to hear the debate—nor is the Secretary of State for Scotland—the impact on housing associations’ credit rating. That is not just a technical point: many experts are talking quietly about the need for wholesale consolidation of local social landlords, so that they can avoid bankruptcy as they try to cope with the ruinous increases in their cost of borrowing at the same time as they face a huge hike in both arrears and administration costs, with many having only very small reserves to buffer the losses. That impact will be worsened by the introduction of universal credit later this year. Even the Chief Secretary to the Treasury is now beginning to voice concerns about the impact of direct rental payments to tenants.

[Geraint Davies]

Does my hon. Friend accept that some of the opportunities available to local authorities consist of, first, taking the hit on arrears; secondly, cutting repairs and maintenance to make ends meet; and thirdly, knocking down walls to convert two bedrooms into one? That is being actively done. As a former housing chair, I can see that is a practical solution.

[Ann McKechin]

My hon. Friend describes the problem. I represent a seat in Glasgow where all the social rented properties are in the hands of housing associations. Many of them are very small and unfortunately do not have the capacity or resources that even a local council has, and some of the smaller local authorities will be very hard pressed to cope.

In reply to my question, the Under-Secretary of State for Scotland assured me that he had met local authorities and housing associations in Scotland and discussed their concerns about credit ratings, and that they were “satisfied”. Funnily enough, the following week the Convention of Scottish Local Authorities, which represents all the local authorities in Scotland, and the Scottish Federation of Housing Associations wrote to the Minister to set out a slightly different view. The SFHA wrote:

“With respect, this does not address the issue of the credit rating of associations. Indeed I am not aware of any government impact assessment of credit rating of associations but if it does, I would welcome access to it.”

Does the Minister have an impact assessment he can share with us? The SFHA continued:

“We remain very concerned about under-occupation issues, not least given the escalation in rhetoric about non-payment of the ‘bedroom tax’, so called purposely to resonate with the Poll Tax, a debacle which left councils with a trail of debts only now being resolved even in your own constituency.”

If that seems harsh, the letter from the president of COSLA reflected utter astonishment at the Minister’s response to my question. He wrote:

“While I do meet the Secretary of State for Scotland from time to time, I can’t recall the last time we had an opportunity to discuss my concerns over welfare reform with any DWP Government Ministers….

There was a hastily arranged meeting on 22nd November…which we understand the Scottish DWP office invited a selected number of council leaders to attend. Few were able to do so, and COSLA was not represented although an officer was present to observe and take notes….

Those notes, and feedback…confirm that David Freud informed the meeting of the steps DWP are taking in response to a variety of concerns that were raised. These were felt to be inadequate, considerable dissatisfaction remained, and David Freud gave an undertaking to return to Scotland to discuss the matters further”,

but, funnily enough,

“This meeting has still not been confirmed.”

Perhaps the Minister who winds up the debate can confirm when his noble colleague Lord Freud intends to meet local authorities in Scotland to discuss with them what they can do to meet the impact of this change, which is to happen in just a matter of weeks.

The hon. Member for Banff and Buchan suggested some changes that could happen in Scotland. Unfortunately, I think her colleagues in the Scottish Government have pressed the standard pause button, saying, “We need to wait until the sun starts to shine and we have independence”, but of course that depends on a referendum and we are still waiting for the date of that. The plain fact, to which the hon. Lady alluded, is that we do not have time on our side and people cannot wait. We need to start a serious debate now on how we can resolve these issues.

The coalition talks about the ever rising cost of housing benefit over the last 10 years. Yes, it is a problem that we are subsidising landlords when rentals are increasing at well above rates of inflation, yet the Government have made not one suggestion or proposal to address that or the systematic failures in the housing market as a whole. I believe there has been a permanent change—a major distortion—in the housing market since the banking crisis in 2007. We will not simply see a bounce-back to the position in 2005-06 at some undetermined point in the calendar, so I have some suggestions on how to deal with housing as a whole, not just the issue of people on housing benefit.

Other Members have commented correctly on the need to build more housing, both in the social rented and private sectors. How much land in Scotland, or the UK, is held by building companies as part of their land banks? It is estimated that perhaps 250,000 houses with planning permission are still to be built. Has there been an audit of where those properties are? Can we levy unused plots of land to provide a stimulus to build, because in many cases builders are just waiting to get more money for the land on which they sit? Can we control private rentals? The hon. Member for Banff and Buchan rightly commented that rental levels in the private sector in Scotland, as in many other parts of the United Kingdom, are in excess of those in the social rented sector. According to Shelter Scotland, the taxpayer would on average pay more than £100 extra in local housing allowance each month if someone in Edinburgh moved from the social rented sector to the private sector, and the same would apply in Glasgow and Inverness; in Aberdeen—one part of the United Kingdom enjoying something of an economic boom—an extra £200 would be paid per month. The hon. Lady was incorrect, however, to state that increases in rentals were a phenomenon only in Greater London. There is a shortage of housing, and people cannot afford to buy a house or provide a deposit, so they are moving into the private rented sector, pushing rentals ever upwards.

In a speech last month, the Leader of the Opposition referred to reform of the law on residential leases, which should also be considered in Scotland, where the law is distinct but not that much different. The law was last altered in the early 1980s, to create short-term assured tenancies, which have become the absolute norm—the default—for all private residential domestic tenancies. Although there is clearly a market for short-term assured tenancies, they are not suitable for an increasing number of people who are looking for security and stability and to put down roots in a local community.

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

Does my hon. Friend recall that many years ago there were rent officers, who regulated rents in the private sector? Is that a possibility that could be pursued?

[Ann McKechin]

My hon. Friend refers to regulated rents. I am afraid that I am not an expert on the law of leases in England, but in Scotland long-term secured rentals are still subject to regulated rents. Very few of those remain in the United Kingdom—the average age of the residents in such cases is probably 85 plus—because frankly they were not attractive to the market at the time when the law was changed. In urban communities—the situation is worst in London, but it is an issue in areas such as Glasgow as well—transience is increasing, as people move house at ever more regular intervals, not through choice or for job reasons but because their landlord thinks he can find another tenant who is prepared to pay a higher rental. The only way to stabilise the market and get rentals back down is to improve regulation, and that is why the law needs to change. The Scottish Government should start an urgent debate about that. There is no reason why Scotland cannot lead the way in the reform of leases.

[Jonathan Edwards]

Will the hon. Lady confirm that should the Labour party find itself in government following the next Westminster election, it will introduce rent caps for England?

[Ann McKechin]

The hon. Gentleman raises a good point. The Leader of the Opposition has stated on the record that we want to reform the law of leases in England to create longer-term leases of five years plus. That would be a good measure to stabilise the market.

Registered social landlords should also be provided with much better assistance. Scotland has many small housing associations. The Scottish Government, working with local authorities and housing associations, should be much more proactive in seeing how they will cope with the additional costs they will undoubtedly incur. The housing association is often not just a landlord but acts as the hub of the local community, providing community resources and arranging contact with local police or local schools. It is very much in the control of local tenants and represents the local community. Should a consolidation of housing associations be necessary, it is vital that that be planned rather than chaotic, and that they be fully supported throughout the process.

In Scotland there is also a need to examine how local authority powers under social work legislation can be used. As Members have commented, the costs of eviction and of housing people under the homelessness legislation are high, and in many cases it is much easier, and cheaper for the public purse, for a person to remain in their house.

We also need to consider increasing council tax bands, to find out whether we can levy the additional £50 million per annum—that is a rough estimate—that the change will cost social landlords and councils. That would provide a buffer zone. I believe that those with the broadest shoulders, not the poorest, should take most of the burden.

Doing nothing is not an option. Dropping the bedroom tax and working with tenants, housing associations, local authorities and the devolved Administrations to reduce housing benefit costs in a sensible and co-ordinated way that does not kill our communities should be the only option on the table. I urge the Government to reconsider.

15:07

[Greg Mulholland (Leeds North West) (LD)]

The policy under discussion has clearly led to much debate and concern, some of which has been based on misunderstanding and misinformation, and some of which has been based on people’s fears about the changes that they will have to face in April.

No one in the House could argue with the idea behind this policy, which is to deal with the fact that there are people in social housing who have more rooms than they need. The Government have said that 1 million spare bedrooms are having to be subsidised by other taxpayers, but the nub of the issue is the disagreement about whether all those bedrooms are really spare rooms.

[Sheila Gilmore]

rose—

[Mr Russell Brown]

rose—

[Greg Mulholland]

I do not think that the Government have got it right, and I ask them to address the issue compassionately and with common sense, not only through the application of discretionary housing payments, which are essential and welcome, but through the provision of further exemptions for certain categories.

[Sheila Gilmore]

I welcome some of the hon. Gentleman’s approach, but he appears to be proceeding on the basis that the measure is about making better use of housing in a planned way. However, the Minister has made it very clear that it is about saving money.

[Greg Mulholland]

It is clearly about both things at the same time. Were it not about both, the Government would not be pursuing it. Were it not for the fact that the measure will save money, it simply would not have been put forward and no Member on the Government side of the House would have been asked to vote for it in any shape or form. That stands in great contrast to the hon. Lady’s Government, who, for over 13 years, dealt with neither point and allowed the problem to be ignored entirely and the welfare budget to get out of control. We have to make difficult decisions. It would be good to hear—

[Sheila Gilmore]

rose—

[Greg Mulholland]

I will not give way to the hon. Lady again, but I will give way to the hon. Member for Dumfries and Galloway (Mr Brown) if he still wishes to intervene.

[Mr Russell Brown]

Will the hon. Gentleman clarify something for me? There is much talk about 1 million empty bedrooms, but there is some confusion about that. Are we talking about 1 million empty bedrooms in households that exclude pensioners, or would pensioner households create 1 million-plus empty bedrooms? Are we talking solely about households excluding pensioners?

[Greg Mulholland]

As the hon. Gentleman has clearly heard, it is the former. I hope that is clear.

The simple reality is that the social housing sector has an exemption in this regard that the private rented sector does not have. It is important to remember that in April 2008, when I sat on the Opposition side of the House, the previous Labour Government introduced the local housing allowance. I was a member of the Work and Pensions Committee at the time and know that it was not an entirely controversial measure, as Opposition Members will remember. We scrutinised it and raised concerns, but the then Labour Government were absolutely clear that local housing allowance would and should depend not only on the maximum rent allowed for properties in the area, but specifically on the number of rooms a tenant needed.

Again, the principle behind bringing this measure into the social housing sector is reasonable, and it would be helpful if the Opposition at least acknowledged that and said that they wish to assist and encourage people who are over-occupying and have more bedrooms than their family need to seek alternative accommodation in order to free up those properties. We all know from our huge case loads that that is needed. We can blame the previous Government and the Government before them for simply not building enough and for the absurdity of allowing the right to buy a council house without then building more to replace them. Those are things that this Government have committed finally to addressing.

[Mr Jim Cunningham]

The previous Labour Government, like Governments before them, always had difficulty with the issue that the hon. Gentleman has just mentioned, but the difference is that what his Front Benchers are proposing is a benefit cut.

[Greg Mulholland]

I am not quite sure what relevance that adds to the point I was making. Again, the hon. Gentleman’s Front Benchers were committed to benefit cuts in their 2010 manifesto, which they seem conveniently to have forgotten.

As I have said, I do not believe that the Government currently have the policy right. I have told the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), and other Ministers and colleagues that I believe that other exemptions should be included. Let us remind ourselves who the current exemptions are for: those of pensionable age; those in local housing shared ownership; those in temporary housing; the recently bereaved, who have protection for 52 weeks; and those who are provided with overnight care by an unpaid carer. I firmly believe that there should be other exemptions, as I said when the Bill was going through the House. We were unsuccessful in achieving any of our proposed amendments, which is why I did not support the Bill at the time. I made it clear that I could not support the policy as it stood then, and I cannot support it as it stands now.

Let me explain the other exemptions that I believe should be included. First, if it is deemed that two partners have to sleep in separate rooms for medical reasons or because of a disability, clearly they should be exempt. Similarly, if a child with a disability is deemed to require a separate room, they, too, should be exempt. Social housing plays a different role in the housing mix and is there, in particular, to support families in that situation who also have a low income. Of course, that would help with the current issue over the Court of Appeal ruling. The easiest thing for the Government to do would be to accept those exemptions.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I am listening to the hon. Gentleman carefully. Obviously, I would prefer that this change was not happening at all. While he is on the subject of possible exemptions, does he agree that foster parents should also be exempt? When I raised that with the Minister at Work and Pensions questions, he talked about a discretionary fund, but foster parents in my constituency have told me that, because of the uncertain future, they might be put off continuing to foster. Would it not be much better if foster parents whose spare rooms are not a luxury but used to care for children who would otherwise probably be cared for at greater cost to the public purse were also exempt?

[Greg Mulholland]

The hon. Gentleman pre-empts what I was about to say, because the next thing on my list is foster carers who are in between children to be cared for. Much of the criticism of the Government has been unfair and party political, which is in the nature of democratic politics, but the principle behind this measure, as I have said, is reasonable. We need to try to address the issue because of the housing crisis we face and to enable families living in seriously overcrowded accommodation to find appropriate housing. However, it is important that the Government do not undermine other key objectives, and clearly one of those is placing more children with foster families and encouraging more people to foster. I am afraid that that is what the measure, without the exemption, threatens to do.

The other category that I believe should be exempted is families who have sadly split up because the parents have separated, which is always difficult for every member of the family. In the majority of cases, the father is the non-resident parent and the parent without care. Whether they have their child for three days a week or two days a month, for example, is in many cases not determined by them; it is often imposed and has to be accepted even though the non-resident parent would like their child to stay with them more often. The parent wants to ensure that when their child stays they feel that it is also their home.

We talk about broken homes, but in reality we are talking about a family with two homes, or in many cases we are talking about two families. It is therefore perfectly reasonable for the non-resident parent to maintain a bedroom and keep it for their child, with their things in it, so that when they come to stay they know they are staying with their other parent, at their other home and in their other bedroom. I think that is very important. Of course, child benefit is paid to the parent with care, so there can be serious financial pressures on the non-resident parent, who still has to feed the child, possibly for up to three nights a week, and indeed they also want to be able to contribute by buying things for them.

My message to my hon. Friend the Minister is please to look at these things again. He is absolutely right that there must be room for discretion, and some of that should rightly be exercised locally.

[Ian Lavery (Wansbeck) (Lab)]

Does the hon. Gentleman think that the outrageous advice given by DWP Ministers to vulnerable and disabled people that they should take in lodgers—people off the streets—simply to remain in their own properties is a good and sound idea that will not cause massive problems?

[Greg Mulholland]

In certain cases people have the choice of taking in a lodger in order to enable someone else from their family to live there. However, my point is that there should be clear exemptions based on a clear medical need for a separate room, and if people have those exemptions, that discussion is no longer necessary.

If the exemptions that should be in place are there, the question of where local discretion should be used becomes discretionary rather than a set of difficult choices. Discretion should be used, for example, in the case of properties that have been adapted on the basis of a certain need.

[Wayne David (Caerphilly) (Lab)]

Will the hon. Gentleman give way?

[Greg Mulholland]

Very quickly, although I want to make progress.

[Wayne David]

The discretionary payment is for disabled people who have properties that are adapted, but many of them do not live in properties that have been adapted, so they are excluded. Does the hon. Gentleman share my concern about that?

[Greg Mulholland]

I have made it clear that the exemption needs to be a straightforward one for people who need a separate bedroom because of their disability. Again, if that is in place, we do not need to have this discussion, and then we have to look at whether the adaption should qualify.

Similarly, there is local discretion if a bedroom is clearly needed for storage of medical equipment for a child with a particularly severe disability, for example. Discretion can also be applied for people with certain mental health conditions—something that can be far better assessed locally than it possibly could be through legislation.

The people who know best about local issues and problems with housing stock are those in the local authorities and housing associations. In some areas, local authorities and housing associations have been keen to place people in accommodation that has been very hard to let. They will often put, say, single people or couples into a two or three-bedroom property in what has been deemed a difficult-to-let area, and so they end up under-occupying. It becomes ironic if someone then has to move away from that area, leaving the property lying empty. The discretion should be intended precisely to deal with that kind of knowledge of each different local housing issue.

[Mrs McGuire]

Given the list of suggestions that the hon. Gentleman has identified, I can do nothing other than agree with the main thrust of his argument. Does he think that the discretionary payment that the Government have allocated is adequate to meet even his list of exemptions, which is not exhaustive?

[Greg Mulholland]

We need to have the further exemptions that I have mentioned so that we are clear that discretion is just that, rather than for dealing with large categories of people whom many of us believe should be exempted in the first place. We can divide up the amount put forward by the Government, which is a significant sum, but it needs to be targeted at the types of matters that I have specified, and it has to be discretionary. That is why it is essential that we have the further exemptions or give councils the choice.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

rose—

[Greg Mulholland]

I am conscious that other hon. Members want to speak, but I will give way.

[Cathy Jamieson]

I thank the hon. Gentleman; he has been very generous. Does he accept that many people are worried because they will not be able to apply for the exemption until the scheme kicks in, so by the time they are assessed they will have potentially built up rent arrears?

[Greg Mulholland]

That is not my understanding. I am encouraging people to contact their councils now, and that is the message that each and every one of us should send out. There is clearly an information problem that needs to be dealt with, because people should be applying for these exemptions now. I am encouraging them to do so, and some in my area already have.

To ensure that this policy succeeds in its twin objectives of bringing down the cost of the welfare budget and freeing up homes, it is important to allow the discretion so that people should be subject to paying the additional sum only if they have turned down reasonable smaller accommodation—because in many areas there are not enough one-bedroom properties around. Members from rural constituencies have expressed concern about people potentially being moved great distances to a house, taking them away from their communities. Again, there needs to be local discretion, and it applies even in urban areas. For example, someone in the north of Leeds, in Yeadon or in Otley in my constituency, might be asked to move right to the other side of the city. There are factors that need reasonably to be considered as part of local discretion: for example, if the person is in work and receiving housing benefit and does not have a car, it can be very difficult for them to get to work, or they may need family support for caring, for child care responsibilities or in relation to schooling.

I hope that I have made it clear that I fully support the Government’s desire to tackle the spiralling cost of welfare benefits and the reasonable and sensible measures that they have proposed that are designed to do that. I fully support their policy thrust of making sure that our welfare system is properly focused on those who most need it. The same should apply to our social housing sector. There are difficult decisions for all parties in making sure that social housing is being used by the most vulnerable and the poorest in our society, because at the moment it is not being used in that way.

On this occasion, I have to say to my hon. Friend the Minister that I will abstain on the motion because, as this policy stands, I still feel that it does not pass all the tests that the Government have rightly set themselves. I urge my hon. Friend, the Secretary of State and colleagues to look at it again. They should look very seriously at what further exemptions could be introduced to deal with the remaining issues. They should also make sure that they bring forward a full and proper programme of review so that as the policy goes forward it can be reviewed to see whether it is doing what it set out to do and is not leading to unfair and unforeseen consequences, in which case they would have to make changes further down the line. I urge them to look at the measure again now, before it is introduced, to see what can be done to show people that it is about improving the system so that it is aimed at bringing down the cost of the welfare budget and positively trying to deal with the problem of overcrowding in which many families find themselves.

15:19

[Jessica Morden (Newport East) (Lab)]

I want to begin by talking about the impact of the bedroom tax on Wales and my local area. I say “bedroom tax”, but I note that the Minister has renamed it during the course of this debate as the “spare room subsidy”. That sounds a lot better, and I am sure that that will be of great comfort to those facing it in April.

The hon. Member for Banff and Buchan (Dr Whiteford) described in her excellent contribution how this provision is just part of an accumulative effect that is hurting the vulnerable. I want to mention the case of a couple I met during the recess when I was knocking on doors in my constituency. They have been hit not only by the bedroom tax, but by other things as well. They had worked all their lives. The husband used to be a driver, but he was hit by rheumatoid arthritis and had his driving licence revoked. He has, therefore, been unable to work, not least because, as he showed me as I sat in his kitchen, he cannot hold a mug for any length of time. He was moved off incapacity benefit on to employment and support allowance, and was then incorrectly put in the work-related activity group on reduced benefit.

The husband’s benefit and that of his wife were reduced as he waited for his appeal, which took eight months to come through. He won it, then two days later he received another letter from Atos telling him to go back for a work capability assessment. In the meantime, because the couple’s income had dropped, they were forced to claim housing benefit and received a letter telling them that they would be liable to pay the bedroom tax in April. Luckily, the husband had won his appeal after an eight-month wait, so he thought that that might help but, on top of everything, his wife, who had worked in a manual job, was diagnosed with myelopathy. She had hoped to retire this year, but will now have to work another three years because of the Government’s changes to women’s pensions. To cap it all, this couple’s experiences with the work capability assessment mean that they are now absolutely terrified of the personal independence payment, particularly the mobility component, which may lead to them losing their mobility vehicle.

I hope that the Minister does not in any way underestimate the palpable fear and anxiety among the disabled community. This couple worked all their lives until illness hit them later in life and they now find themselves hit on all fronts when they need a safety net. The Government’s replies are doing nothing to allay their fears.

Advice services, which are themselves being hit hard and cut, are also experiencing anxiety, as are housing associations and local authorities, which in my experience locally are working extremely hard to try to mitigate the profound effects of the bedroom tax.

Nationally, as we have heard, 31% of housing benefit claimants of working age in the social rented sector will be affected. As the shadow Welsh Secretary, my hon. Friend the Member for Pontypridd (Owen Smith), has said, in Wales that figure is 46%, with the Department for Work and Pensions estimating that 40,000 tenants will be affected. Newport city council in my area has calculated that 2,455 households will be affected. Newport City Homes housing association says that 1,794 of its tenants will be affected and Monmouthshire Housing Association, which covers parts of my constituency, notes that it has 421 such tenants. What choices do those people face? They can move to a smaller social housing property, pay up or move into private rented accommodation.

Turning to smaller social housing—to give an idea of the real impact in my area—there are 4,220 people on the common housing register in Newport and 2,500 in Monmouthshire. There is not enough social housing available. For example, of those affected in Newport, 916 will be looking for one-bedroom houses or flats, and 823 for two-bedroom properties.

In total, Newport City Homes has only 1,264 one-bedroom properties and 2,600 two-bedroom properties. Today on the common housing register website—Newport housing options—only 32 properties are advertised. There are very few smaller properties. The point has been made that whole estates in Wales have very few one or two-bedroom properties. In the past we needed larger properties, so that is what councils built. The scarcity of larger properties may be a problem in big cities in England, but in Wales there is a scarcity of smaller properties. There is simply nowhere to move to. As Community Housing Cymru has said,

“the option of tenants downsizing would prove difficult in almost all cases”.

The other option is to pay more. As the excellent report by the Bron Afon housing association in Torfaen highlights—I hope that the Minister has looked at it—many of those affected consider themselves to be just surviving already. Many are like the man I met on an estate last week, who said that he left the heating off until tea time because the price of food was going up every week and he did not want to go into debt. A family in the Bron Afon study, which surveyed all its tenants, concluded that the only solution was to eat two fewer meals a week.

As the study showed, people want to stay in their own homes, not least because they are the homes in which they brought up their children, where they may have lost a partner and where they have memories and have lived for years. They may have had them adapted and they may also have family ties and help with child care. These are their homes. In Community Housing Cyrmu’s survey of people affected, 13% said that they would consider downsizing, 8% that they might consider a lodger and 79% that neither of those options was suitable and that they would apply for the discretionary housing payments, which is where the problems arise.

[Mr Andy Slaughter (Hammersmith) (Lab)]

My hon. Friend is making the case well that this is a tax on the poorest. It is not about freeing up housing or downsizing. In my local authority, 824 tenants are affected but just 48 may be rehoused. Despite that, the Government describe this decision as morally right. But it is about punishing the poor.

[Jessica Morden]

I agree with my hon. Friend’s excellent and powerful point.

According to the Trussell Trust, the huge increase in the use of food banks is due in no small part to the benefit changes. Some 42% of those who turn up for their three-day supply of food are not able to balance their budgets because of benefit delays, mistakes, sanctions or reviews. Front-line professionals have to give a reason for a referral to a food bank and problems with welfare are increasingly being cited.

With food inflation above 4% and increases in energy and petrol costs, it will be impossible for many people on low incomes to absorb the additional housing costs. Rent arrears will increase and housing associations might struggle to deal with that. The Welsh Tenants Federation estimates that 10% of tenants are already in debt to their social landlord and that a rent increase on top of those rent arrears could result in 4,000 people presenting themselves as homeless. Newport city council in my area estimates that there will be a 5% increase in homelessness next year.

The Government’s answer to those who cannot move is that the discretionary housing payment will deal with all the issues. Newport is getting £343,000 of discretionary housing payment and Monmouthshire £121,000.

[Stephen Mosley (City of Chester) (Con)]

The hon. Lady is portraying a bleak picture, but as we heard from my hon. Friend the Member for Leeds North West (Greg Mulholland), Labour did exactly the same thing in 2008 when it introduced the local housing allowance in the private sector. Any of us could have stood up then and said exactly the same things that Opposition Members are saying now. Why did Labour introduce that policy in 2008?

[Jessica Morden]

It did not work like that. We are debating a policy that will come in in April. As Members have explained, it will be applied retrospectively to people who have been living in their houses for decades. Government Members have forfeited the right to make such interventions because they have given tax cuts to millionaires.

[Julie Hilling (Bolton West) (Lab)]

To respond to the intervention by the hon. Member for City of Chester (Stephen Mosley), when the local housing allowance was introduced, it did not affect people who were in tenancies at the time, but was applied when people moved house. It therefore did not have the punitive effect of the bedroom tax.

[Jessica Morden]

My hon. Friend is right. This is a retrospective hit on people who have lived in their houses for decades.

[Helen Goodman]

The local housing allowance, whether it is for a one-bedroom, two-bedroom or three-bedroom property, is paid at higher rates than housing benefit in the social sector.

[Jessica Morden]

My hon. Friend is right that private rent is higher. I will come to that point later.

Although Monmouthshire Housing Association is getting £121,000 in discretionary housing payments, it forecasts that its rent arrears will be about £225,000. The Government have set a budget without knowing whether it will be sufficient and are hiding behind it when asked difficult questions. That is as callous as the bedroom tax itself.

If there is no social housing and a person cannot afford to stay in their home, renting privately might be the only option. However, it is an expensive one. Given that the stated aim of the policy is to save money, the policy clearly has no logic. Although the Government do not seem to care about the human impact of the policy, they might at least look at this issue. A cursory look at the property in my area illustrates the point. The policy is more expensive, even with a reduced local housing allowance. In the Bron Afon study, every single property in Torfaen is more expensive than housing association properties.

Not only will the policy cost more money; the impact on families cannot be overestimated. It is a profound change that will have profound effects. People will have to move away from family members who provide child care, there will be no help for those who foster and the disabled will be hit yet again.

[Jane Ellison]

Will the hon. Lady give way?

[Jessica Morden]

I will carry on because I believe that the hon. Lady will be speaking later.

This policy will cause family breakdown. That was illustrated graphically to me by two local cases. The first is that of a divorced father in a two-bedroom house who has his kids to stay at the weekend. As he is under 35 he might be expected to share accommodation, with all the child protection issues that that raises. The second case is a mother of four who was rehoused after great turmoil resulting from domestic violence. She now has to uproot herself and her children who are settled in school because one of her children has moved out and the age of the two youngest means that they have to share one room—the definition of a box room, I presume, being a spare room.

There are many issues and no time to do them justice. So far, the Government’s response has been to shrug their shoulders and tell housing associations to be creative. In my experience, housing associations—unlike the Minister—have spoken to their tenants and know the reality. Alongside local authorities and the Welsh Assembly Government housing associations are being creative, but all the creativity in the world cannot alleviate the basic problem that there is no social housing, and payments to local authorities do not even begin to address the issue. If this measure is about saving money it will surely fail.

15:40

[Jane Ellison (Battersea) (Con)]

It is a pleasure to take part in this debate although some of the contributions so far have been characterised by exaggeration, which has not been helpful. Given the previous contribution by the hon. Member for Newport East (Jessica Morden) and the lead from those on the Labour Front Bench who say that they will join the nationalists in the Lobby tonight, I certainly expect the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), when he responds at the end of the debate, to commit the Labour party—[Interruption.] Well, in that case I put the point to Labour Members who wish to speak later in the debate. Will they call on their Front-Bench spokesman to commit that a Labour manifesto would reverse this measure? That is very much what I am hearing from the Labour party and I think all Labour Members who speak in this debate must say where they stand.

We are now closer to the next general election than to the previous one, and it starts to become inadequate for the Labour party to say about everything—[Interruption.] I am addressing my comments to the Labour party because, to be honest and with all due respect, it is easy for the nationalists to say anything they want because they are not likely to form a Government. The Labour party aspires to be the next Government of this country and claims that it is credible on economic matters such as balancing the budget and addressing the deficit. The moment of truth is fast approaching and the Labour party must say what it would do about some of these measures.

[Mr Russell Brown]

rose—

[Jane Ellison]

Let me develop my point a bit further, unless the hon. Gentleman wishes to confirm that he will be calling on those on the Labour Front Bench to make a manifesto commitment on that point.

[Mr Brown]

I appreciate that the hon. Lady came to this House in 2010, but may I tell her something of which she may not be aware? When the Minister who opened for the coalition Government was in opposition, along with the Chief Secretary to the Treasury he condemned the Labour Government time after time when we considered welfare reform and said that we were not doing enough. They have both completely flipped over. They are worse than any of the hon. Lady’s Conservative colleagues because they relish the job they are doing.

[Jane Ellison]

With all due respect, that was not in any sense a response to the challenge I made to Opposition Members.

[Stephen Mosley]

It might help my hon. Friend if I quote something that the shadow Secretary of State for Work and Pensions wrote earlier last year when he said that

“housing benefit alone is costing the UK over £20 billion a year. That is simply too high. Beveridge would have wanted determined action from government to get communities working once again, not least to bring down that benefits bill to help pay down the national debt…He would have wanted reform that was tough-minded, and asked everyone to work hard to find a job.”

Does my hon. Friend agree with the shadow Secretary of State?

[Jane Ellison]

I agree with my hon. Friend and that point underlines the problem of the official Opposition on this issue. To date, the Labour party has voted against something like £83 billion of deficit reduction measures. As we move closer to the next general election, there comes a point where, to be credible, Members must start to say what they would do.

[Several hon. Members]

rose—

[Jane Ellison]

No, I want to develop this point a bit further. The Government have put forward a lot of measures. No one would claim that they are all perfect and thoughtful contributions were made earlier in the debate about areas that the Government need to address. That could be through discretionary housing payment or the rolling review—I welcome the Minister’s reference to that because it is sensible to say that a policy such as this should be kept under review so that the Government can move swiftly to take any action that might be needed. However, that is not the same as blanket opposition to the measures.

As the hon. Member for Dumfries and Galloway (Mr Brown) said, I am a new Member of the House, but it strikes me that, in the past couple of years, the Labour party has relished the opportunity to oppose everything, but that is not credible. My hon. Friend the Member for City of Chester (Stephen Mosley) referred to the speech of the shadow Secretary of State. He tried to re-establish economic credibility, but he comes to the House week after week and month after month to oppose everything.

There will come a point when Back-Bench Labour Members have to make difficult decisions. My strong suspicion is that reality will dawn on Labour Front Benchers as we approach the election, and they will start to make speeches that begin to reflect something like the economic reality that Britain faces. At that point, the Labour Back Benchers who sit in the Chamber week after week relishing the opportunity to oppose everything and say that the Government’s measures are dreadful must make difficult decisions. One Member said in the debate that we are killing communities. Such exaggeration is grotesque.

[Sheila Gilmore]

rose—

[Jane Ellison]

I will give way to my colleague on the Select Committee on Work and Pensions.

[Sheila Gilmore]

The hon. Lady is, I fear, attempting to defend the indefensible, but her problem is that, despite all the cuts being carried out and the hardship, there is no growth, and debt will rise more than the Chancellor predicted. In other words, the cuts and the hurt are not working.

[Jane Ellison]

I am glad the hon. Lady has given me an opportunity to respond on that point. It was always predicted that debt would rise for most of this Parliament. It is true that that period has had to be extended, but that is not a surprise. The structural deficit is being reduced. To return to an intervention I made on the right hon. Member for Birmingham, Hodge Hill, who spoke for Labour, if Labour had begun to address some of the structural deficit problems when the financial crash hit in 2008, the current Government might not have had to take some of the difficult decisions they are taking now. Housing benefit is a classic example.

[Mr Slaughter]

rose—

[Jane Ellison]

I will be delighted to give way to the hon. Gentleman if he can tell the House why the Labour Government did not introduce measures to bring the housing benefit bill down from 2008 onwards.

[Mr Slaughter]

I understand the hon. Lady’s point—she, like the Conservative party, believes that the poor should pay and the rich should get away with it. Like me, she represents an inner-London constituency. More than 2,000 families in my constituency will be unable to pay their rent because of the measure. At the same time, councils such as Wandsworth and Hammersmith are refusing to build social housing and are selling it off. What is that if not destroying communities? How does she defend it?

[Jane Ellison]

I do not know how the hon. Gentleman can begin to criticise Wandsworth council, which has just set the lowest council tax in the country—it has done so for many years in a row. The difference between Wandsworth council’s band E tax and that of many surrounding councils, and particularly that of many high-spending Labour councils, is enormous—it is the equivalent of a family holiday, a new car or a new three-piece suite. That illustrates the benefit of low tax and leaving people with more of their own money to spend on what they will. I am glad the hon. Gentleman gave me the opportunity to pay tribute to Wandsworth council’s low council tax policy.

Some of my constituents will be affected by the measure—[Interruption.] I realise that other hon. Members want to speak, but if Labour Members want to make every general economic point and make endless reference to tax cuts for millionaires and that sort of thing—[Interruption.] Well, I made the point earlier that the Labour Government had several years after the financial crash and after financial reality had dawned to do something about the upper rate of tax, but they did nothing. The higher rate was in effect for, I believe, 37 days before the election. A lot of nonsense is spoken about that.

As I have said, we could look at aspects of the measure. The Minister’s speech was helpful because he clarified concerns and misunderstandings. The measure draws attention to the fact that subsidised social housing is a scant and important public resource. The fact that subsidy is built in to the rent for social housing means that social housing is often not appreciated as a valuable resource, and we should aim to provide access to it for as many taxpayers as possible.

I would like to make a point on behalf of the many people who come to see me who are over-occupying. No one claims that this policy will free up all of the 1 million rooms, but it might well encourage people to look at being in appropriate-sized accommodation. Many housing directors tell me that if they could match people to the correct-sized accommodation, they could resolve much of their waiting lists—that is what I have been told by people with many years’ experience in this field. This is not a panacea, but there are people in wrong-sized accommodation. If this measure starts to get people thinking and encourages them to move into right-sized accommodation where it is available, that is a good thing.

[Heather Wheeler (South Derbyshire) (Con)]

My hon. Friend’s point is very interesting. Many councils, such as the fantastic South Derbyshire district council, encourage, enable and give people money to move. This will all be part of the package. It is not draconian; it brings it to the fore.

[Jane Ellison]

It is right to put on record that many councils are responding sensibly and imaginatively to the many challenges that have been handed to them by the inevitable decisions that the Government have had to take.

Another group of people who often come to see me in my surgeries, and for whom there is no solution in social housing, are young single people, in particular young single men. I always feel my heart sink when they come to talk to me about the possibility of getting any sort of subsidised housing, because, as we all know, they attract absolutely no points. If some people affected by the removal of the subsidy choose to rent out a room, I would welcome that because the group likely to benefit would be those young single people in areas such as mine. They do starter jobs that are much-needed in a 24 hour city such as London. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman) from a sedentary position is questioning whether anyone would do that—people used to do it all the time. To return to the point about exaggeration, earlier in the debate someone implied that the inevitable consequence of deciding to take in a lodger would be some sort of abuse or crime. People used to do this all the time. Raising people’s fears and exaggerating them is not helpful at all.

[Ian Lavery]

rose—

[Jane Ellison]

Let me finish this point. I have checked with my council and it is the case that council tenants, as long as they do not either overcrowd or sub-let the lease, are able to take in a lodger if they so choose. For some people that might be a sensible solution. That might help the young single people who come and see me, and to whom I can give no suggestions about where they might find socially subsidised housing. If they are the winners of this process, that is a good thing, because they are currently the losers.

I am aware that other hon. Members wish to speak, so I will just draw attention to some of the practical measures being done by councils. There is an extra £30 million of discretionary housing allowance, and my council has certainly seen a significant rise in its discretionary amount. It has already put together a co-ordinated action plan between the finance and housing departments. It has contacted all potentially affected recipients and customers, and is beginning to confirm their benefit details. It has set up a helpline to discuss options to downsize. It is in direct contact with some of those households. It is also in direct contact with some of the social landlords to look at where there might be work that they could do. We heard an interesting example earlier about how social landlords in Liverpool had come together to try and pool their resources. There are quite a lot of sensible things that local councils that are planning ahead can do, and, of course, some people will choose to take other options.

I make this plea to Opposition Members. I would like to think that when they are approached by people with specific difficulties, especially associated with disability and so on, their first thought is not, “This would be an ideal case to read out in Prime Minister’s Question Time”—we have heard this in respect of many other welfare changes, particularly from the Labour party—but to say, “You might well be covered by the discretionary payment, and I’m going to make inquiries about that and exercise my influence to say that you should be.”

[Heather Wheeler]

rose—

[Jane Ellison]

I give way to my hon. Friend.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Just before I allow the intervention, I must remind the hon. Lady that she said that a lot of people want to speak, and they do. After the next speaker, I will be introducing a time limit that will be less than the time she has taken so far, so I ask her to show some self-restraint so that we can make progress. Heather Wheeler, you were about to intervene.

[Heather Wheeler]

Very kind, Mr Deputy Speaker.

I find this really interesting. I do wonder about some of our Labour colleagues. We have mentioned the possibility of someone taking in a lodger and bringing in £4,200 a year tax free. Does the Labour party not want this cash flowing in our communities? Is there a problem with people taking control of their lives? Does it have an issue with that? Are we only allowed top-down rules? What is wrong with taking in a lodger? It might be like going back to the ’50s, but actually we had real communities then, and I think it is an excellent idea.

[Jane Ellison]

I thank my hon. Friend for her intervention. I hope that she makes her own contribution and develops that theme later.

I will wind up now. My principal point is that these debates are not well served by exaggeration and shroud-waving, but I am afraid that that is what we have seen. Undoubtedly, there are difficult cases. We all have them—I have some in my inbox, as have other colleagues on both sides of the House—and we must work with Ministers to look at them. We have had a commitment from the Minister to a rolling review of the policy, but let us also look at some of the potential winners and ensure that we bring to the attention of those in overcrowded accommodation and those who have no chance of qualifying for subsidised public housing the opportunity that might be offered to them by some of these changes.

I shall sit down now, Mr Deputy Speaker, so that others can contribute.

[Mr Deputy Speaker]

I am extremely grateful for your assistance. I call Caroline Lucas.

15:56

[Caroline Lucas (Brighton, Pavilion) (Green)]

I pay tribute to the powerful opening speech by the hon. Member for Banff and Buchan (Dr Whiteford).

On the Opposition Benches, it is not a question of shroud-waving, as the hon. Member for Battersea (Jane Ellison) suggested, but a recognition of the people we see in our surgeries week in, week out. The fear of this measure is such that people believe it to be a bedroom tax, a cruel and counter-productive measure from a Government intent on punishing the poor. It is cruel because it is likely to lead to more evictions, homelessness, disruption and despair and because it takes no account of people’s real circumstances—as we have heard many times, more than two thirds of those affected are likely to be people with disabilities—and it is counter-productive because it is highly unlikely to lead to the outcomes that the Government claim to want. Not only are there insufficient smaller properties for families to move to, but the measure is more likely to cost money than save it. Evictions are not only hugely painful, but hugely costly, estimated at about £10,000 a time.

As has been revealed in this debate, the truly cynical nature of the proposal was revealed by the Government’s own impact assessment, which made it clear that the projected savings will be made only if tenants remain in their existing homes and make up the shortfall in benefits themselves. In other words, the money that this measure is supposed to raise will be raised only if the stated policy aim of getting people to move house does not actually work. That is immensely cynical. The truth is that many people are struggling in such desperate circumstances that they simply cannot find the extra money to pay.

The bottom line is that we have a major housing crisis, with nowhere near enough affordable homes. In my own constituency, for example, more than 15,000 households are on Brighton and Hove’s waiting list, but just 750 properties become available every year. It is successive Governments who have caused this housing crisis, not the poor who struggle to cope with it. It is not the fault of people who cannot get a job, of disabled people, of people who share the care of their children or of foster parents. The crucial problem—this is where the fault lies—is the epic failure of both the Tories and new Labour on council housing. The Tories pushed the decimation of the stock with the right to buy, ignoring the right to rent, and new Labour tweaked the enormous discounts but did not grasp the nettle and build council housing. For example, in 2007-08, only 350 new council homes were built. It is deeply unjust to penalise people who are struggling at the bottom of a housing market over which they have little or no control.

Ministers give blasé answers to serious parliamentary questions about this nasty measure. They say, “Get a job, get a lodger or move somewhere else.” They ignore the fact that, for many people, those options are simply not possible. On average, five people are chasing every vacancy—in some places, the figure is much higher—so how are those jobs suddenly going to appear? As other hon. Members have pointed out, the rooms in question are often too small to rent out, or not “spare” at all. Ministers have suggested that social landlords might want to redefine a property as having fewer rooms when the spare room is extremely small, but we know that most social landlords cannot reduce their rents because they need the money for repairs and for servicing the debts they have for building more stock.

What will happen to the person with severe mental health problems who has been settled for years and who is deeply distressed by change but who has a tiny box room? They cannot take a lodger because of their unpredictable episodes, they cannot afford the rent because of the box room and there is no smaller property available locally. What is supposed to happen to them?

I have not yet heard Ministers deny the existence of the acute housing crisis, yet they conveniently attack the people who are facing the worst end of it. They also overlook the cumulative impact of so many cuts. In Brighton and Hove, practically every household affected by the bedroom tax will also be affected by the Government-imposed cut to the council tax benefit budget, and a good proportion of them will also be hit by the changes to disability living allowance. Changes to the scope of what is covered under legal aid from April will mean that benefit issues will not be covered, so there will be less opportunity for people to receive in-depth advice or to challenge decisions in court.

This pernicious policy will not scratch the surface of our overcrowding crisis, as it will simply create new housing emergencies for people who were previously just managing to get by. The local authority in Brighton estimates that the total cost of an eviction process, including temporary accommodation, is around £10,000 per eviction. The Government say that it will not come to that, but they are simply not in touch with reality. Of the 1,000 or so households affected in Brighton and Hove, the majority are already struggling with rent arrears of around £2 a week. Where on earth are they supposed to magic a further £16 a week in bedroom tax from?

A constituent who is desperately worried about the bedroom tax came to my surgery last week. She shares custody of her daughter, so the room that she has for her daughter is seen as spare. She simply does not have the money to pay the tax being levied on her. In order to open Ministers’ eyes to the daily reality that some of my constituents face, I would like to read out a short amount of a testimony written by her. She says:

“I have no more basics to cut back on. I go without meals. I cannot afford the bus, toiletries, a newspaper. I wear trousers most days as I cannot afford to replace my pair of tights should they get laddered. If I had not been able to overcome my pride and seek help I do not know how my family would survive. It was difficult to overcome the sense of shame I felt for needing to turn to charity for support in meeting the family’s most basic needs. I do voluntary work in the community myself. This did not match my own sense of who I am but it is my reality and has to be faced. I now see those others who also depend on the food banks and support from charities like the City Mission in a new light. I see their resilience and humanity. We are the same.”

I was in tears by the end of my meeting with her.

We are talking about real people in real homes who are feeling real desperation, and the criticism that we are somehow exaggerating the situation is an insult to those constituents who come to see us. Ministers are recklessly and deliberately ignoring the harsh reality for the majority of those surviving on benefits. They are deliberately pandering to media stereotypes. How convenient it is to say that it is all the fault of the workshy, swanning about with all that spare space—or so the mean and mistaken narrative goes.

Going back to reality, the homes of a lot of the people affected by this policy are not too big for their needs. Their homes meet their needs, from the padded box room that a single mother uses to keep her autistic son safe when he is having an episode, to the extra room used by a disabled person to store their equipment, and to the room used for half the week by the child whose parents are separated.

There are many reasons why what appears to the Government to be spare space is in fact not spare at all, but essential. It will always be possible to find a small number of examples of people who genuinely have more space than they need, but that does not justify the Government’s crass blanket policy. The experts are saying that if we want to help people into smaller properties, we should give them support, sensitively, to find the right property. We should not force them out with the threat of eviction. We also know that the right kind of properties often do not exist. I asked a parliamentary question to find out whether the Government had carried out an assessment of how many appropriate smaller properties existed. They have not done any such assessment, because they do not care. Then, when we put that argument to them, they will come back and tell us that the discretionary housing payments are supposedly a magic wand that will solve all problems. The pot of discretionary housing payment is tiny compared to the cuts being made. It is obvious that demand will massively outstrip supply.

In Brighton and Hove, for example, the projected housing benefit shortfall has been modelled by the local authority as over £12 million, including shortfall from cuts to local housing allowance, bedroom tax and the benefit cap. The Government have given a DHP pot of just over £1 million to the city. That covers only about 8% of the housing benefit cuts that people will face. The DHP is tiny and nowhere near adequate.

The Government try to justify these cuts on the grounds that they are “making work pay”, but when Ministers use that phrase, it is really a code for punishing people for being poor. Of course work should pay; we need decent living wages pay, not poverty pay. The hon. Member for Battersea (Jane Ellison) talks about the need to cut the housing benefit budget, but one way to do that would be to pay a decent living wage in the first place. It is not the fault of people who cannot get a job or who are unable to work that employers do not pay people properly.

There will be a potential push to move people from social housing to different sized private sector accommodation, which does not have the same security of tenure and could cost more. What the Government should be doing is massively increasing the supply of affordable, sustainable, decent homes and legislating to allow for far greater security of tenure, which would go some way to holding rents down. The bottom line is that the Government must stop relying on the profit motive to supply housing for people who are poor; it will take time, but we absolutely need to fund a real programme of sustainable mass council housing.

This Government, however, are going in the opposite direction. This is a policy that will lead to bad debts and eviction, and will dramatically undermine the financial stability of the social housing model. If we combine that with the Government’s refusal to allow people the choice to pay their housing benefit directly to the landlord under universal credit, we genuinely have a recipe for the end of social housing. As landlords are faced with the lose-lose situation of either accumulating bad debt as people simply cannot pay the tax, or facing the even higher cost of debt collection and eviction, the long-term future of social housing looks bleak. How unjust this will look in the history books when the banks get bailed out and the poor get thrown out.

Before Government Members challenge me by asking how we would pay for this investment, let me say that I am not afraid of saying that it is perfectly legitimate to borrow to invest. The idea that that is somehow irresponsible, coming from this Government who have now led us into the triple-dip recession, is an absolute irony. I do not know what the Labour Front-Bench team will say on this issue, but I have no compunction about saying that it is absolutely right to borrow to invest in affordable housing and in the kind of infrastructure that we need in the 21st century. The idea that, as a Government, as a nation, as a European Union of nations, the best way of addressing the deficit is by everybody cutting spending and draining demand out of the economy has been proved to be wrong over and over again. More and more economists are saying that, too. I hope that, for the sake of us all, this Government wake up and see that very soon.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Members should resume their seats. Caroline Lucas spoke for just about 10 minutes—predicting the 10-minute limit. Well done.

16:07

[Mr John Redwood (Wokingham) (Con)]

This issue is creating a lot of passion, which I can understand. People’s homes are very important to them, and none of us wants to feel that the possession of our home is threatened or is subject to high-handed control from above. The morality of the argument, however, is not all on one side as the Opposition seem to suggest it is. Indeed, I would find their moral outrage more convincing if their Front-Bench team firmly pledged to repeal this measure if they were ever returned to office. I would also find it more convincing if when they were in office they had not taken the steps they did on private sector rented accommodation, probably as a prelude to going further.

On the basis of what the more moderate Opposition Members have said, they accept that there is a problem of under-occupation where free or subsidised accommodation is made available through the public sector. The morality on the Government side of the case is to say that we have obligations to all those people who want that subsidised or free accommodation but who cannot get it on the size and scale they need. There are two different groups here, and we need to look after the interests of both groups as best we can.

Of course there are visionaries on the Opposition side who say that the answer is easy: we just need to build hundreds of thousands of more homes at public expense so that everybody can have the accommodation they want. The issue then becomes why that did not happen when we had a Labour Government who knew how to do those things. The truth is that for anyone who sits on the Government Benches, such housing will always be a scarcer resource than people would like. If we offer something free or subsidised, there will be more demand than provision, even when we are trying to be very generous, so we must have rationing and allocation. All Governments, in good times and bad times, have had to allocate and ration public housing.

[Julie Hilling (Bolton West) (Lab)]

Does the right hon. Gentleman not realise that there was a period—certainly in Wigan—when we could not let council houses and they were knocked down, because people were buying houses? Our biggest problem now is that people who want to buy houses cannot get mortgages. They do not go into social housing because it is subsidised; they go there because they have nowhere else to live.

[Mr Redwood]

It is a bit of both. I entirely agree with the hon. Lady if she is urging the Government to do even more than they are currently doing to make more mortgages available so that more people can afford to buy homes. Members on both sides of the House would welcome that. I happen to know that Ministers are desperate to ensure that more mortgages are available than were available during the last few Labour years, and are working away with the banks to try to make it happen. That is very much part of the solution to the housing problem. [Laughter.] It is all very well for Labour Members to go into fits of hysterics, but they really should try to take a serious interest in the problem. Believe it or not, quite a lot of us Conservatives want better housing solutions for many of our constituents, and for people in other parts of the country.

[Katy Clark]

Does the right hon. Gentleman not accept that there was a very different view of social housing in the past? Council housing used not to be seen as a precious resource. For example, at the time of the 1951 general election the Conservatives pledged to build 300,000 new homes. There was a view across the political divide that we should build council housing to improve social conditions. Is that not the vision that we should have now?

[Mr Redwood]

I seem to remember that the Conservative Government did indeed honour their pledge—and that was many more homes than the Labour Government were building each year—but, even in those days, why did they need to do it? They needed to do it because we were short of homes. It was the post-war period, the Germans had remodelled many of our housing estates, and trying to create the homes that people needed was a big problem.

I think that under-occupation is a problem, and I think that the Government have come up with one part of the answer, but I urge Ministers to listen carefully to all those who are saying that the positive way of proceeding is through incentive, encouragement, persuasion, and giving people a better answer than the one they currently have, which may be a larger property that may not be suitable.

The Government have excluded everyone of pension age from the proposals, and I welcome that. I think that it is smart politics, and very sensitive to the elderly population. However, in my constituency, where most people own their homes—elderly people tend to own them without mortgages, and younger people tend to own them with rather big and difficult mortgages—a good many elderly residents decide to sell the family home because it has become too big and unmanageable, and to buy a smaller property such as a flat or bungalow. Many then sell again when they are becoming more frail, and move to semi-sheltered or supported accommodation.

That is a natural process of trading down in the private sector, but there is sometimes too much of an obstacle for elderly people in social housing to be able to do the same. Perhaps not enough of the right properties are available; perhaps they are not offered in the right way; perhaps there should be some incentive. I think it perfectly acceptable to try to create an atmosphere in which there can be the same sensible mobility in public sector housing as occurs naturally in areas with rather more private sector housing, so that elderly people can have housing more suited to their needs.

I hope that Ministers will consider the question of elderly under-occupation, which I think is very much part of the story, but will do so in a positive way that encourages, promotes and helps, rather than removing benefit or imposing a tax. I wish that the Opposition understood the meaning of the word “tax”. Imposing a tax means taking money from people who are earning it for themselves; it does not mean paying them less benefit. I hope that Ministers will work out an answer to that soundbite. I have heard soundbite arguments before, but I congratulate the Labour party on thinking up a brilliant and misleading one. I am afraid that it is better than the soundbites we have heard so far from this side of the House, and I urge my hon. Friends to come up with a soundbite that represents the truth. This is not a bedroom tax, but a reduction in the amount of benefit paid, which is very different.

[Several hon. Members]

rose—

[Mr Redwood]

I am afraid that I cannot give way again. I am running out of time, and if I give way I will not be given any injury time.

We need to look at the issue of under-occupation among the elderly, and we need then to look at the issue of the disabled. That was why I approached this debate with considerable nervousness. As I think my hon. Friends know, I wish us to be more generous to the disabled, not less generous, and I think we all feel a little nervous about how far we should go. I was somewhat reassured to see that there are different definitions of disability and a rather wider definition is being used than would, perhaps, be normal. I am interested in the people who are seriously disabled, as recognised through the receipt of disability benefit.

I urge my ministerial friends to be as generous as possible. We must not presume that there is an easy solution, however. Again, if there are issues that need to be sorted out, the best way to do that is through support and persuasion and offering people something better. That must be the aim. Why would somebody move if their new home is going to be worse than their current one? If it can be shown that there would be better, more appropriate and better supported accommodation, however, I might be more willing to accept that we should follow the proposed course of action. I urge my ministerial friends to be extremely careful about the definition of the disability category, however.

One Opposition Member argued that this is a cynical policy and there might not be many savings if it works. That is a misunderstanding of the true nature of the policy. It is not primarily a public spending-cut policy; it is a policy designed to try to get more people into public sector housing that is suitable for them. That is the bigger picture.

We have an inadequate amount of housing stock, and some people have more of it than they strictly need, whereas others do not have as much of it as they strictly, technically need on the needs definition. We are arguing here about the balance between those two groups, and whether it would be feasible to solve the overall shortage by producing more housing. Even the Labour party must understand that if we were to go for the big build answer, that would take several years to come through. Ministers are feeling very frustrated at present that they have identified places for building and the means of financing that building, but it is taking a very long time to get the building to come through so we can start to tackle this problem.

My next topic is how to tackle the problems of insufficient housing and excess welfare spending. The issue of eligibility is key. My constituents tell me that they feel much more inclined to pay taxes to make sure that people who have been settled in this country for many years, or who have been born and brought up here, can get access to proper housing than to provide housing for people who have only just arrived and seem to know how to work the system to get access to housing. The Government could productively focus on that. I am sure there will be European Union rules, but we need to negotiate on this with our European partners, and make a stand if necessary, because there is a strong feeling in our country that public housing will be limited—more limited than some would like—and if we are to make choices, the priority must be those who have been here for some time and who have made a contribution and are part of our settled community. That does not always seem to be the case. I hope Ministers will see the issue of eligibility as a proper avenue for addressing both excess benefit expenditure and the shortage of available property.

These are difficult waters. Anyone who looks at the situation rationally will agree that there is under-occupation and we need to tackle it sensitively. They will also agree that we need more housing provision overall, and we need to do what we can to tackle that. I hope we can all agree that the best answer is to find a way to enable more people to enjoy what every MP takes for granted. We take it for granted that we have a well-paid job and that we can afford to buy a house. I think that every MP owns a property. Indeed, some of them own rather more than one property, I believe, and that has sometimes become a matter of comment. It is normal for an MP to own a property—to be an owner-occupier—and to enjoy a good income, and I am sure most MPs own a spare room or two.

I do not think there is anything wrong with people striving, getting a better job, earning more money and having spare rooms. I am personally very much in favour of spare rooms when people can afford to have them. We also need to make sure we have a fair tax system so that we are all making a decent contribution to those who cannot afford spare rooms.

[Jim McGovern (Dundee West) (Lab)]

May I ask the right hon. Gentleman how many spare rooms he has in his house—or has he not got round to counting them yet?

[Mr Redwood]

My spare rooms are a matter for me because I paid for them myself, and I am sure the hon. Gentleman has spare rooms and I dare say he paid for them himself. That is exactly the kind of society we all want to live in, I would have thought. I do not know of any Labour MPs who could stand up and say that they are at the minimum accommodation level—I invite them to do so, but I do not see anyone rushing to stand up.

[Mr Russell Brown]

rose—

[Mr Redwood]

The hon. Gentleman stands up but he has no voice. I think that means he does not want to say that he has the minimum accommodation available or thought specific to certain people.

I want to live in an aspiration society. We want to promote better jobs, better paid jobs and more people owning their own home. Where that is not possible, we need a fair distribution; we need to provide more and to distribute it more fairly. I just hope that Opposition parties, if they have serious aims to be in power one day, will think more carefully before pledging to repeal things, or will come up with better ideas on how we can promote that better use of the housing stock that must make sense.

16:20

[Stewart Hosie (Dundee East) (SNP)]

I have been struck by a number of things said by Government Members today. First, I noted the mechanical usage of the almost robotic mantras of, “1 million spare rooms”, “under-occupancy” and “utilisation” and an almost frighteningly casual disregard of the fact that they were talking about people’s family homes. These are places where people have brought up children and may have lived for decades, and, as a result, have created the stable, safe and supportive communities we all want to see. Those are now to be torn asunder for the sake of a money-saving measure—that is what it is—which will not work. The extraordinary thing is that the bedroom tax works only if the policy fails. If everybody could move to what the Government consider to be a “properly sized property”, the housing benefit costs would probably be identical to what they are today—not one penny would be saved. The tax will work only if people cannot move and they give the Government this extra money, over and above what they already pay to stay in their family home.

[Jacob Rees-Mogg]

That is not necessarily the case. If people who need more rooms and are currently living in the private sector move into the social housing sector, while the people in the social housing sector who need fewer rooms move into the private sector, there will be a substantial saving.

[Stewart Hosie]

Unless, of course, we factor in the fact that rents in the private sector are dearer, and we have heard evidence that would rather contradict the assertion made elegantly by the hon. Gentleman.

Another thing that struck me was the hon. Member for Keighley (Kris Hopkins), who is not in his place, saying that he wanted more facts and less scaremongering. That is very sensible; I am all in favour of evidence-based policy making. What he and others have then done is to say that a discretionary payments system is available to help. That confirms that those who live in specially adapted accessible housing are not exempt and that foster carer families are not automatically exempt. By asking for more facts and less scaremongering, and then talking about discretionary payments, which, by their nature, may not be available, particularly if the pot runs out, these people are confirming the lack of exemptions that make this bedroom tax as nasty as Opposition Members think it is.

[Tom Greatrex]

The hon. Gentleman is making an important point about the discretionary nature of this policy, particularly in relation to foster parents. I have been contacted by a foster parent who was contacted by their housing association to say that rooms where people are cared for are counted as spare rooms, but they did not know anything about the existence of the discretionary payment. Such people are reliant on at least two or three levels of communication to get the discretionary payment, so surely it would be much better if foster parents were completely exempt.

[Stewart Hosie]

I agree entirely with the hon. Gentleman. In the meanwhile—until that happens—communication should of course be better and foster carer families should be encouraged to apply now, in advance, if that is possible. He rightly says that this policy should simply be scrapped because it will not work and, as far as I can see, it is only punitive. That is certainly also the view of the Scottish Government, who feel that it will have an appalling impact on families throughout Scotland and, indeed, the rest of the UK.

That assessment also shows that eight out of 10—the exact figure is 79%—of the households in Scotland set to be hit by this change, as we have heard before, contain an adult with a recognised disability. That is extraordinary. This is about as punitive as it could be—[Interruption.] The Minister of State is muttering, “Do they need a spare bedroom?” He is using the robotic mantra again, suggesting that somehow it is evil to have a spare bedroom. There are very good reasons for having spare bedrooms and I shall come to some of them later.

I know that the Minister for Housing and Welfare in the Scottish Government has warned the UK Government of the impact of this change. The Scottish Government have highlighted to the Government the disproportionate effect on disabled people and have asked them to rethink their policy. We understood before the start of the debate that the Secretary of State had instructed a rethink on part of the policy, and that is to be welcomed. However, we have found out that we will have a rolling review after the policy starts, which might not report until two years after commencement.

The numbers I have show that people with two spare rooms will pay an extra £20 a week, or more than £1,000 a year. They could be £2,000 down before the Government’s review reports back and says that those rooms are not really spare at all, because one of the sons is serving in Afghanistan. Alternatively, he will not be able to come back to the family home because they will have been forced to move. That is the kind of issue the Government are failing to take into consideration—[Interruption.] The Minister is still muttering, but he will not get to his feet to say anything. I am sure that when he was at university, he was more than happy to go home to his family house. Why should working-class children whose houses are part-funded by housing benefit not be able to go back to their family home because of the nature of their tenure? That is ridiculous.

Other groups are affected, of course, such as tenants who are willing to move to smaller properties and are waiting for one to become available, but who will lose out in the meantime; the parents of foster children; and parents who live separately and look after their children. The final category concerns me greatly. I have already been contacted by a constituent—one of many. He is separated from his wife, which is sadly not uncommon, and has two daughters in their late teens. This gentleman is so careful that he does not switch the heating on in his very modest apartment unless there are guests. He counts every penny.

His wife has primary caring responsibility for the two children, but one or both of his daughters stays with him up to four nights a week. That will become impossible without the second bedroom, and even if he could find a smaller property it is highly unlikely—almost impossible, in fact—that he would be able to do so within the community in which he and the rest of his family live. That means that the relationship between him and his children will wither, because contact will become far less possible.

The Government do not understand the appalling impact this tax will have. The fact that eight out of 10 of the households that will be hit include an adult with a disability is compelling evidence that the UK Government must reconsider, and quickly.

As I said earlier, not only disabled people but many others will be forced to pay. I want to raise two specific cases with the Minister. The first is that of a woman—a pensioner who will not herself be affected—who cares for her severely disabled adult son. He lives in his own apartment, which has two bedrooms. That is not his fault; it is the one he was allocated. He has a severe psychological condition and needs to be cared for every day, and his mother carries out those caring responsibilities. If he is forced to move, the trauma will be extraordinary. If he manages to get through that, the fact that his mother has medical conditions of her own means she will be unable to carry out her caring responsibilities if her son is forced to move even a few streets away. The real-life impact on that family in that part of that community will be horrendous. I am deeply disturbed that the Government have not thought this through properly.

[Steve Webb]

May I ask the hon. Gentleman to confirm that he is aware of the provision for a bedroom for a non-resident overnight carer?

[Stewart Hosie]

I am extremely well aware of that. The thing is, the mother who cares is there during the day and perhaps occasionally in the evening, but she is not a permanently present overnight carer. That goes back to this being a matter of discretion, rather than people with a disability being properly exempted.

[Lindsay Roy (Glenrothes) (Lab)]

Does the hon. Gentleman have any idea whether his constituent meets the criteria for a discretionary payment?

[Stewart Hosie]

rose—

[Steve Webb]

It is not discretionary; it is a right.

[Stewart Hosie]

The Minister says it is a right. I believe it may be a matter of discretion. It is not at all clear whether my constituent could meet the criteria for a discretionary payment, and even if he did, getting it would depend on whether any money was left in the pot.

I did not intend to speak in such general terms. In the final three minutes, I will concentrate on what is happening in Dundee. We have figures from the council telling us that 3,387 households will be affected by this tax—and it is a tax. Of those, 583 will lose 25% of their housing benefit. That is a loss that will have the impact of a tax.

[Michael Ellis (Northampton North) (Con)]

Will the hon. Gentleman give way?

[Stewart Hosie]

No, as I have only two and a half minutes left.

The other 2,804 households will lose 14% of their housing benefit. Tenants in two-bedroom council properties could lose benefit entitlement of approximately £9.93 a week, which is £516 a year. Those with two so-called spare rooms will lose an entitlement of £20.07 a week, which is more than £1,000 a year. Does the Minister understand what the loss of £1,000 a year means to families who are already struggling to make ends meet? Does he understand the consequence of that level of indebtedness? Legitimate lending companies will not lend to people in those circumstances, and credit unions can only do so much. This policy will drive people into the hands of loan sharks and illegal moneylenders, and the consequences of that will be picked up by social work departments, health services and the police, at a cost to the public purse for a policy that is unlikely to save this Government any money in the first place.

[Jim McGovern]

A couple of weeks ago, I attended a meeting with officers of Dundee city council who said that discretionary payments would be extremely limited because they have never had the funds for that. I asked whether they had smaller houses for people who were willing to move. They replied, “No.”

[Stewart Hosie]

The hon. Gentleman sums up the situation nicely. The discretionary pot is too small. I do not dislike discretion generally—I think it is quite helpful—but there are too many categories of people who should be fully exempt but who will be subjected to the tender mercies of discretionary decision making, which may go against them when it ought not to.

In short, this remains a very bad policy with too many of the wrong people suffering a very bad impact, and it must be reversed. It risks destabilising communities; it disproportionately hits disabled people; it puts the burden of paying the cost of this Government’s economic failure on the backs of some of the poorest in society. That, I think, tells us everything we need to know about the Tory-Liberal Government, many of whom—most of whom, I suspect, or perhaps even all—have not been poor and, more important, do not understand what it means to be poor in society today.

16:34

[Jacob Rees-Mogg (North East Somerset) (Con)]

It is a great pleasure to follow the hon. Member for Dundee East (Stewart Hosie) and to have listened to this debate. When the nationalists have an Opposition day, it is always a reassurance to those of us who are Unionists, because by their presence in the Chamber they show how much better off we are together than separate. I should like to thank them for their contribution to our parliamentary democracy and hope that they will stay with us for ever.

I am pleased to be able to speak in support of the Government’s position, which is fair, measured and just. My right hon. Friend the Member for Wokingham (Mr Redwood) put it rightly when he said that we have to think about our constituents who want social housing because they have a family and need an extra bedroom, but whom we cannot help because there is a house being lived in by one person, who has too many rooms, and there is no pressure on that person to move. We hear a lot from Opposition Members about fairness for one side of the equation, but nothing about fairness for the other side, which is avoided and cast aside. When housing is controlled by the state, we must be fair to everybody, whichever side of the equation they are on. There are those who have large families, live in small accommodation, or are living in the private rented sector, and cannot get into social housing or council housing because of the problem of under-occupancy, which, we have discovered from the Government, amounts to 1 million bedrooms. Just think how many of our constituents could have better housing if only those bedrooms were freed up.

The Government’s position is also measured, because they have put in discretionary powers to look after people who will be in particularly difficult circumstances. Discretion is very important; the Government have got that spot on. If we were to say that every house that had been adapted in any way for a disabled person were to be exempt, we would find that a property with a little ramp, or one handrail, was suddenly exempt, and the whole policy would be removed. By applying discretion, however, we get the overwhelming majority of the benefit of the policy, without putting a heavy burden on that small number of people who genuinely ought to be exempt and protected. The same applies to the £5 million that has been made available to families who foster. If fostering had a general exemption, everybody in receipt of social housing benefit would suddenly go off to the council and say that they wanted to be on the fostering lists, so that they would not have to give up their extra bedroom, but would then refuse any child who was sent to them. If broad exemptions are used, people will try to fit the categories of exemption provided, whereas using discretion ensures that people must bring forward a reasonable case to encourage those who have the discretion to accept that they ought to be allowed to receive the extra funding to maintain their current position.

The Government’s position is also just, because we must ask ourselves what benefits are for. Are they there to allow people perpetually to remain in dependence on the state—

[Helen Goodman]

The hon. Gentleman displays a total ignorance of this policy area, and I am sorry about that. First, the bedroom tax applies to people who are in work as well as to those who are out of work. Secondly, it applies to people on benefits who cannot work.

[Jacob Rees-Mogg]

I am grateful to the hon. Lady, but even if people cannot work, they can take in a lodger, and can get £20 coming in without any effect on their benefit, so they can be better off, because the average that would be lost for one room is £14. The Government have a policy that makes people who are not in work potentially better off, and those who are in work can also be better off, because they will similarly be able to take in lodgers, but they might be able to move to cheaper housing, which they can afford to pay for themselves, rather than being dependent on the state.

[Michael Ellis]

As usual my hon. Friend makes an excellent series of points. As well as the option for those who cannot work of taking a lodger, does he agree that for those people who can work, and are in some work, in many cases the sums involved would require only two hours of the minimum wage per week to make up the difference?

[Jacob Rees-Mogg]

I am sympathetic to what my hon. Friend says, but I think that people need to be able to take responsibility for themselves and to make choices for themselves. The choice they have is either to maintain the benefit they need for the housing they need, or to stay in housing where they have an extra room and adjust their behaviour accordingly. It is not for the state, putting its expenditure on the backs of hard-pressed taxpayers, to fund indefinitely people’s lifestyle choices, and it is a choice if people decide to have an extra room that they are not actually using; they can choose whether to move to a smaller property or, under this new policy, to find a way of getting the extra income they need.

[Bob Stewart (Beckenham) (Con)]

If someone living in social housing wishes to downsize and move to a smaller house, I take it—I ask my hon. Friend or the Minister to confirm this—that they would not have to find the costs in their own budget and that they would be helped to move.

[Jacob Rees-Mogg]

Owing to pressure on the availability of larger properties, many social landlords provide significant incentives for people to move.

It is important to remember that the housing market is dynamic. It is not a static market, with people staying in the same house their whole lives, and they should not expect that to be the case. I understand that people move house, on average, every seven years. It is perfectly reasonable that that happens, and that it should continue to happen, because it frees up the properties people need. I intervened on the hon. Member for Dundee East to make that important point.

When a three or four-bedroom property in the social rented sector is freed up, it might well be filled by someone who had been living in the private rented sector, which is more expensive, so they will be moving into the cheaper social rented sector. The person who had been living in the three or four-bedroom property might move back into the private rented sector, which has a higher cost, but there would be a bigger saving because the other person had moved into the social rented sector. That is important, because some of the debate has focused on the inflexibility of the housing market. It has been said, for example, that there are not enough one-bedroom properties in the social rented sector for people to move down to, but there are plenty of properties across the country as a whole. People will move more freely between the private and public rented sectors and will continue to have their rents paid for them unless they choose, as they will be free to do, to earn more money by working a few more hours a week or by taking in a lodger and so on in order to get the extra income.

[Jim McGovern]

May I ask the hon. Gentleman—he is making the speech, but this applies to everyone on the Government Benches—whether he can imagine asking his mother, sister, brother, daughter or son to take in a stranger as a lodger?

[Jacob Rees-Mogg]

I would be very happy to take in a lodger myself. Indeed, in my earlier life I had lodgers in my house, which helped to pay the bills.

[Helen Goodman]

Would the hon. Gentleman care to share with the House, and with the nation, how large his house is and how many spare bedrooms he has? We are talking about asking women in their 50s, who are suffering from chronic conditions and living in two-bedroom flats, to take in strange men. Is that realistic?

[Jacob Rees-Mogg]

I am extremely grateful to the hon. Lady. It had not been my intention to tell anecdotes about my personal circumstances, but my house in London has four bedrooms with seven people living in it, three adults and four children, so I think that I meet the requirements for maximum occupancy and would not be expected to give up a single room. I am grateful to her for allowing me to illustrate my relatively straitened circumstances, which I had not expected to be able to do.

It is perfectly reasonable for people to live in a house or flat that is suitable for the number of occupants and to ask for that when paying out benefits. Indeed, it is morally right to do so, because every benefit that is paid is money that has come from a taxpayer this year or, through borrowing, will come from a taxpayer in future years.

People pay taxes on very, very low earnings. Even benefit recipients have to pay value added tax, but people click into national insurance at £107 a week of earnings. Are we really saying to those on low earnings, “You must subsidise for ever people who live in houses that are too big for them as their children grow and go and they find eventually that they are the only person there”? Will that same house be funded for ever on the backs of hard-pressed taxpayers, when in fact there is a perfectly reasonable and sensitive way of dealing with the situation that does not throw them out but gives them choice in the form of the ability to decide for themselves what steps they will take to see whether it is possible for them to live there or whether they are willing to move? Thousands, hundreds of thousands, millions of people in this country move house every year, and they do so because their life circumstances have changed. They do not expect the state to say, “We won’t let you move” or “We will prevent you from moving.”

That flexibility is useful. It allows people to move to where there is employment. It allows our hon. Friends the nationalists to move to London so that they can represent their constituents in this great, illustrious Parliament. It is the essential part of ensuring that our economy has a free flow of labour around the country so that people can, in the words of Norman Tebbit, move to where the jobs are. If we have an entirely static housing market we will find that we reduce employment opportunities, undermine growth in the economy, and, worst of all, create deep unfairness for people in large families who can find no social housing and put a burden on the backs of the poorest taxpayers. We should be proud of this Government—proud of a Lib Dem Minister, of all things—for doing what is right, what is noble and what is just.

16:46

[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to have the opportunity to contribute to what has been a very interesting debate so far. We have heard a number of very powerful speeches from Members concerned about the bedroom tax and they have outlined very fully the implications that it will have for many of the groups who will be adversely affected.

I represent a constituency that will be strongly affected by this policy, and many of my constituents already know that. They are waiting to see how the local council and the Scottish Government react to what the coalition Government have done. We have about 2,700 tenants who are likely to be affected by the new under-occupancy rules on 1 April—over 51% of them are in receipt of housing benefit. That is because of the type of accommodation that we have in North Ayrshire. As in many parts of the country, there are very few one-bedroom properties. The Scottish Federation of Housing Associations recently commissioned a report that says:

“Across all tenants, 62% need one bedroom but only 34% have this.”

This point has been made across the political divide. There is a mismatch between the types of accommodation that are available and the people who are looking for those properties. We are therefore facing a crisis on 1 April. Irrespective of the strength of some of the points that might be made about people possibly living in properties that are too big for them, this mismatch means that on 1 April people will be looking for one-bedroom and two-bedroom properties that simply are not there, and they will pay the price of this Government’s moral and economic policies.

It was only in the past few days that this country lost its triple A rating from Moody’s credit rating agency. The response that we should have seen from the Government is an understanding that we need to invest to get growth. One of the most important things we should do, given this country’s housing crisis, is to put money into housing, particularly social housing and council houses. The nationalists and the Greens were right to choose this as the topic of today’s debate, because it affects so many of our constituents, but it is tragic that we are not having a debate about how to get growth in this country and about how to make sure that we invest so that our people have decent living standards.

Council housing was created in the first place to provide decent housing for those who did not have it. The whole ethos of council housing was to build properties that were of a higher standard than those that were available previously to ordinary working people. It was not about whether someone had a spare bedroom, because the idea of a bigger living room or more space was part of what the whole project was about. As I said in my intervention on the right hon. Member for Wokingham (Mr Redwood), that policy was supported across the political divide before the second world war and immediately after it. It is tragic that we have got ourselves into a position where the social housing needed by ordinary people has not been built in recent decades.

Many people will simply not be in a position to move on 1 April. As my hon. Friend the Member for Dundee West (Jim McGovern) has said, the discretionary funds available to councils are nowhere near big enough to implement the kind of discretion that the hon. Member for North East Somerset (Jacob Rees-Mogg) would like to see. The money simply is not there.

People in adapted properties in all of our constituencies will have money deducted from their housing benefit on 1 April. Foster parents have fluctuating needs, because they take children at short notice. They do not necessarily take one child—they might take a family—so they do not know how many bedrooms they will need. The whole idea is that their household is able to take those children.

We know from all the work that has been done that disabled people will be at the forefront of this policy. The hon. Member for Dundee East (Stewart Hosie) has already highlighted that 79% of those affected in Scotland will be in a household that contains a disabled person. The figure for the rest of the UK is 63% and even though the figure is more extreme in Scotland and other parts of the country, this will become a significant problem in Members’ surgeries in all parts of the country. Even wealthier parts include people who face the predicaments that many of us see on a more regular basis.

The Government’s policy will have a massive impact up and down the country and on local government in particular. If the policy works as the coalition Government expect it to work, it is estimated that it will take £50 million out of the Scottish economy. That will have implications, because it will be taking money out of the pockets of individuals and communities. We all know that there are communities in which significant numbers of people are reliant on the benefits system, whether they work or not. They work and live in areas with low-wage economies, such as North Ayrshire and Arran, which has a glorious industrial past. In the 1970s, 14,000 people were employed at ICI in Ardeer in my constituency. In the 1980s, 10,000 people were employed at the Killoch pit in south Ayrshire.

It is obvious that our communities have a proud industrial past, but those jobs have gone and well-paid jobs have not come in their place, and some communities are disproportionately reliant on the state. We need to do something about that; we do not want to be in that position. That is the challenge that we all face collectively. I say to the Government that taking money out of those communities and out of the pockets of individuals who live in them will simply grind down those communities even further.

We should be talking about economic and welfare policies that put money back into communities, about investing for growth and about putting job creation at the centre of all our policies. Instead, we are faced with a policy that will end in chaos and cause misery for hundreds of thousands of people up and down the country. I believe that it is a policy that the Ministers sitting on the Front Bench will wish they had never been involved in.

16:55

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

Thank you, Mr Deputy Speaker, for calling me to speak in this debate.

The right hon. Member for Wokingham (Mr Redwood) said that the Opposition have many soundbites and that the Government should develop some of their own. Perhaps the Government are not able to develop soundbites because they have nothing good to say about this measure.

I have listened to the many Members who have contributed to this debate. On the face of it, the Government’s proposals sound logical. There are apparently 1 million bedrooms going spare in this country. The argument is that people should not be able to carry on living in homes that have too many bedrooms, but should be moved to smaller homes. That sounds sensible and practical, but it does not reflect the reality on the ground. Few homes fall into the category of a two or three-bedroom house that is lived in by a healthy, fit person but is under-occupied. Most of the so-called spare bedrooms are needed by the people who live in those homes.

I say that not because I am in any party political grouping, but because of what my constituents have said to me in my surgery and in letters. I can honestly say that none of the people who have contacted me fall into the criteria that the Government are presenting. I will share with the Ministers and other Members of the House the experience of the constituents who have spoken to me.

A number of the constituents who have spoken to me are single parents whose children do not live with them for seven days a week, but stay with them for two or three days, depending on the arrangements made by the court. People in that situation who live in a two-bedroom place will be severely affected by these provisions. What will parents who do not have the money to go into private rented accommodation or buy a home with the right number of bedrooms say to their children? They will have to say, “Sorry, you can’t come to stay because I have to go to a one-bedroom flat. I will not be able to spend quality time with you. I will not be able to develop a proper relationship with you as other mothers and fathers can with their children.” That is the kind of situation we are talking about.

The hon. Member for North East Somerset (Jacob Rees-Mogg) said that anybody who has a bar outside their home can be described as disabled. The people who have come to me have been elderly or very unwell and have homes that have been adapted substantially at a cost of thousands of pounds. They are often quite small properties, but may have one tiny room that is counted as a spare bedroom and has just enough space to store their wheelchair, commode, Zimmer frame or other equipment that disabled and unwell people often have.

Such people tend to be in social housing. Everybody who knows about social housing knows that they are small homes. That is certainly the case in my constituency. Even if they are two-bedroom flats, they tend to be very small, but people need a bit of space to be able to manoeuvre. What should I say to the constituents who write to me because they are being told that they will have to find somewhere else to live, but do not have £700 or £800 a year to pay for it? What about parents with two children of the same gender? They may have three bedrooms but they will be tiny rooms and the two children—two girls or two boys—will be in one little room where they cannot do anything except perhaps sleep on camp beds or bunk beds and they cannot have a proper room. Do we tell such people, “No, you’ve got to go; you cannot stay in this house and if you do you must pay £800”? That is the reality on the ground.

Foster parents have been mentioned but what was said about it being easy for someone to register as a foster carer and get an extra room is just not the case. People must go through high-level checks, training and vetting that can take months or even years before they are assessed as suitable to be a foster carer. To suggest that someone would become a foster carer to avoid moving out of their home or to claim an extra bedroom does not fit reality.

Many Members have touched on particular groups of people, and again I ask the Minister to reconsider this measure. The hon. Member for Leeds North West (Greg Mulholland) mentioned a number of concerns that need to be addressed but I do not want to repeat points about discretionary issues and other ways that the bedroom tax will impact on people. At the moment, this is a compulsory scheme and a matter of law so if people have a spare bedroom, they will end up paying money unless they can argue for discretionary help. As has been said, on 1 April people will be faced with a choice of what happens and will end up with bills. They will then have to go to their local housing association or council and see whether they fit the criteria required to get some help. If they do not get that help, what will happen?

What happens when the £30 million set aside for this scheme is gone? Will more money be put into the fund so that people continue to benefit from it? Instead of a statutory scheme, would it not be better to work with councils and housing associations to try first and foremost to work out whether housing need can be reorganised and people placed in the homes that are appropriate for them? At the end of that process there may be some people who wilfully do not want to move, some who live in a massive home or there may be a single person of good mental and physical health living in a two or three-bedroom house and they might not be worried. However, they make up a tiny minority of those who have the so-called 1 million spare bedrooms. The majority of people—98%— fall into different categories.

Of course there is a need to address people who are waiting to be housed appropriately in proper homes or in accommodation that fits and meets their need. I have constituents in a similar situation. People suggest this is an unusual idea, but the way to tackle the problem is to consider a home-building programme. It is all very well hon. Members saying that one Government did not do that, another Government sold council houses and another should have done more, but we are where we are now. Instead of looking back at what could have happened five, 10 or 20 years ago, why not deal with our current problem of acute housing shortage? Doing that will not involve subsidised housing because, as everybody knows, the cost of building a house on a piece of land is not as much as the value of the property once it is put up for sale. Bricks and mortar do not cost as much as a house, the value of which can be over-inflated. When groups of people or associations and voluntary bodies get together and start building homes, they can pay for those houses so that the Government or state do not have to subsidise them. We must encourage local authorities and such groups to invest and allow house-building programmes to provide housing and help to regenerate the economy.

The measure is compulsory, but I urge Ministers to think about encouraging local authorities and housing associations to get together to deal with the people who will be affected. Constituents who are disabled and unwell write to me. One gentleman told me that he has one tiny bedroom, which will be considered spare, but he needs a commode, a Zimmer frame and a wheelchair. He cannot house that equipment in his tiny little—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Time up.

17:04

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

I am grateful to be called to speak in this Plaid Cymru, Scottish National party and Green party debate on the UK Government’s proposals to introduce an under-occupation penalty for recipients of housing benefit in the social rented sector. The policy has already gained infamy—it is dubbed “the bedroom tax”. The Labour party has decided to make it a political dividing line with the UK coalition. Leaving aside the fact that Labour Members abstained on Second Reading of the Welfare Reform Act 2012 and have failed to raise the issue in the House in a motion leading to a vote, I was delighted that the shadow Secretary of State for Wales, the hon. Member for Pontypridd (Owen Smith), confirmed on Twitter this afternoon that Labour Members will join us in the Lobby later.

Before the 2010 general election, I made a keynote speech at the Plaid Cymru spring conference at the home of Welsh cricket, Sophia Gardens in Cardiff—[Interruption.] It was brilliant. In that speech, I said that talking up the severity of the public debt was a deliberate tactic by the Tories that served two political objectives: first, it highlighted the economic mismanagement of the previous Administration; and secondly, it created the backdrop to justify the declaration of war on the public sector, which we have witnessed since the election. The so-called bedroom tax is a prime example of what I foresaw. It is a headline-grabbing, ill-thought-out policy that panders to the prejudices of those opposed to any social protection.

We have heard compelling arguments in the debate on why the motion should be carried, most notably from my hon. Friend the Member for Banff and Buchan (Dr Whiteford), who opened the debate—I will not restate her points. Above all, the bedroom tax is part of the UK Government’s strategy to reduce the housing benefit bill, as the Minister admitted in his opening remarks. The capping of benefits is the major element of the strategy, which is complemented by the under-occupancy policy and the recent Welfare Benefits Up-rating Bill, which pegs annual increases at 1%.

[Mr MacNeil]

We sometimes hear Ministers speak of deficit reduction, but is it not likely that the net effects of the policy will be the opposite, because it will reduce demand in the economy by taking money away from the pockets of people who are most likely to spend it, and who certainly need it? The result will be yet more economic mismanagement, which will probably contribute to a further downgrading of the UK.

[Jonathan Edwards]

My hon. Friend makes a valid point—I will give him some meat to justify it in my next remarks.

The Office for Budget Responsibility radically revised its projections for housing benefit expenditure in the autumn statement. At the time of last year’s Budget in March, the OBR projected that the housing benefit bill would fall by £300 million in 2012-13; and then by £400 million for each financial year between 2013-14 and 2016-17. The OBR now projects an increase of £700 million in 2013-14, and increases of £600 million, £500 million and £400 million in subsequent years.

There is a multitude of reasons for that, but by far, one key factor is the spiralling cost of rent. Housing benefit is an in-work benefit. As rent costs spiral, more and more working people faced with real-terms falls in wages meet the eligibility criteria for housing support. The Financial Times has reported that, in 2012, rent costs increased by an average of 37% compared with 2007, despite the economy being in the midst of the great recession since 2008—gross domestic product is still nearly 4% below the previous peak.

The Financial Times further reported that rent costs are expected to increase by an incredible 35% in the next six years. More and more employed people will become eligible for housing benefit. Indeed, last summer, the housing benefit claimant count surpassed the five million mark for the first time, which means that around 20% of households are claiming the benefit to help them meet their housing costs. Between January 2010 and December 2011, the total number of housing benefit claimants increased by 301,000. In the same period, the number of non-passported claims—those in employment—increased by 279,000. Therefore, households in employment account for 92.8% of the overall increase in housing benefit claimants. Unless we are able to ensure that the pace of rent increases broadly reflects incomes, then Governments of whatever colour will have no chance of controlling their housing benefit costs.

Measures such as the under-occupancy penalty are tinkering around the edges. There are solutions for dealing with the housing benefit bill without resorting to the sort of initiatives preferred by the current UK Government that are having such a detrimental social impact. In 2004, the Government of the Republic of Ireland introduced the Residential Tenancies Act. A private residential tenancy board was set up to deliver reforms. Its aim was to regulate the private rented sector by extending the length of tenancy towards a more European model, clearly defining rights and obligations for both landlords and tenants, providing access to inexpensive dispute resolution, safeguarding bond payments and, crucially, capping rents.

By placing a cap on rents and driving down artificially high rental costs, the Government would have direct control over their housing benefit bill. The UK Government could then reduce their liabilities without penalising some of the most vulnerable people in society. It would also mean that working people would have a better chance of affording rent costs in affluent areas. Rent caps have been a fixture in New York since the 1940s, and New York is the home of global capitalism. Rather than targeting social housing tenants, the UK Government, and devolved Governments if they have the competence, should intervene in the social and private rented sector and cap rents.

As we have heard from other hon. Members, another solution is to address supply and demand issues by building more affordable housing. The recovery in the UK after the great depression was in part the result of a massive house building initiative. This is an ideal time for private investment, because of the guaranteed revenue streams from rental payments. It would create construction jobs and drive demand in the economy. As far as this debate is concerned, it would reduce rent costs in the private rented sector and thus the housing benefit bill.

With specific reference to the under-occupancy penalty, social tenants worried about the technicalities of the new rules have already approached my constituency offices. One of my constituents lives in a two-bedroom bungalow and receives full housing benefit. He has turned one of the bedrooms into a sterile room for his dialysis treatment. He spends three hours a day, seven days a week in this room. He has spent a lot of money turning the bedroom into a sterile room and adapting his home for his dialysis treatment. This saves the health board money, as well as releasing the hospital bed for others. Why should he now be penalised for technically under occupying his home?

Another constituent contacted me to say they had been moved from a two-bedroom property to a three-bedroom property that had been adapted for their needs. They now face the charge, despite the housing officer saying that the third bedroom is too small to be used as a bedroom. They will not, as was advocated by several Government Members, be able to rent that bedroom to a lodger. The answers to the housing benefit bill do not lie in a cap in benefits, a real-terms reduction in annual uprating or the bedroom tax. I urge Ministers to think again and to look at some of the solutions I have offered today.

17:13

[Mr Iain McKenzie (Inverclyde) (Lab)]

I welcome this debate. Unjust, unfair and unnecessary are the words to describe this tax. Households in my constituency will suffer dramatically as a direct result of the introduction of this tax. Indeed, families throughout Scotland and the United Kingdom will suffer the consequences of this tax. In Scotland, we are told that a total of 94,000 tenants living in the social rented sector are considered to be under-occupying their homes. We are told that a total of 75,000-plus tenants are under-occupying by only one bedroom.

With still unacceptable levels of unemployment and soaring energy and fuel prices, this measure brings nothing but further bad news for the struggling households across Scotland and the UK. Specialist bodies, including Citizens Advice and Shelter, have already warned that 40,000 households in Scotland alone are likely to run up arrears, with research suggesting that up to 10,000 households could face homelessness. That is on top of tackling the homeless problem we already have in Scotland. The prospect of homelessness is a reflection of the direction in which the Government are taking the country.

The bedroom tax is neither a cost-cutting exercise by the Government nor about introducing fair reform to the welfare state; it is nothing more than a tax on the poor and the most vulnerable in communities across the country. Of the 94,000-plus Scots who will be affected by the tax, it is estimated that about 23,000 have a disabled household member, with up to 16,000 households already having some form of aid or necessary adaption in place.

Constituents have approached me as they have become aware of how this unfair tax will affect their quality of life. I will give one example, although I could give many others. One lady came to me who previously had shared a home with her daughter. Her daughter has moved on, however, having found employment in another part of the country. The lady has a two-bedroom apartment, but now has one spare room. She has lived in the apartment for more than 20 years. She feels safe there and has good neighbours, but is now scared she will have to move and feels unsettled and frightened at the prospect of being moved across the constituency.

My constituent asked me, “Where can I go?” Down-sizing is not an option for her, because in my constituency there is not much one-bedroom accommodation. It is so limited, in fact, that she would be in her 80s before she would be offered one-bedroom accommodation, if she was lucky. Indeed, there is a lack of family accommodation in my constituency, too, so we really need to address the lack of housing and the building of new housing in and around Inverclyde. She wonders, if she were to move to the private sector, whether she would end up in a house of multiple occupancy, where we see that the private sector’s reference to efficiency involves merely pushing people into rooms with shared facilities.

By introducing this tax, the Government will do nothing more than cement their unfair and unjust attack on those who need our help the most. I support today’s motion, which calls on them to abandon this unfair, unjust and unnecessary tax, and I add my voice to the list of many here and beyond this place calling on the Government urgently to change course before these reforms hit our constituents hard. I also call on the Scottish Government to act to alleviate the burden of the tax on the people of Scotland. Across Scotland, local authorities already suffering as a direct result of severe cuts to their budgets will find it impossible to minimise the impact of the bedroom tax on many of our constituents and communities.

[Mr MacNeil]

Is not one of the most important things that local councils could do perhaps to reclassify bedrooms that could be used for other purposes and are no longer bedrooms?

[Mr McKenzie]

That is an option, but as I have said, the difficulty in my constituency is that we have limited accommodation, and the reclassification of bedrooms is not an option there.

I have been working with many agencies in my constituency that have been offering advice to those who think they will be affected by the tax. We have been holding events and information evenings, and people are frightened that they will fall foul of this tax and lose their homes. The Scottish Government could provide more guidance and help to local authorities about how to cope with the impact we know is coming. The bedroom tax is not a Westminster attack on Scotland alone. As we have heard, it is an attack on many constituencies across the UK, and I join others in calling on the Government to abandon this unjust, unfair and very unnecessary tax.

17:19

[Geraint Davies (Swansea West) (Lab/Co-op)]

I had to leave the Chamber earlier to help to launch a document on the links between speech, language and communication needs and social disadvantage. I mention that because one of the document’s key findings is relevant to the debate. When children in the top 25% of cognitive ability from working class backgrounds are tested at the age of 22 months and compared with children in the bottom 25% of cognitive ability from upper middle class backgrounds, we see that the upper middle class children will have overtaken the working class children by the age of 10. That is a result of speech, language and communication issues. I suggest that the dislocation of working class families and communities that these housing benefit changes will cause, through the eviction of parents because their children have grown up, is another example of the targeting of working class people who could do so much better in life and add so much more in terms of tax revenues and so on. They are the ones who will be hit the hardest.

[Helen Goodman]

Does my hon. Friend agree that, based on the speeches we have heard from the Government Benches today, we do not have a selection of people from the middle classes who have overtaken the working classes?

[Geraint Davies]

That is certainly the case. It is disappointing and illuminating that the Government Benches are almost empty this afternoon. Government Members simply do not care about a group of people who they believe will not vote. They see them as people who have failed in life and who will not vote—only 65% to 70% of people vote—so they think that they can treat them like cattle, and that is what they are doing.

[Mr MacNeil]

Is it not also indicative of the tone of the debate that the people who are encouraged to take in lodgers are usually those on lower incomes? There is no great push by the Government to ask the middle classes, the upper middle classes or indeed the upper classes to take lodgers into their mansions, palaces or castles. This move is aimed at the bottom end of society, and it is shameful.

[Geraint Davies]

I am grateful to the hon. Gentleman for that intervention.

The Government falsely claim that the problem is under-occupancy in the social sector. They say that that is awful, and a terrible waste. I have asked the House of Commons Library for the figures on under-occupancy rates. According to the bedroom standard, the level of under-occupancy in the social rented sector is 10.2%. In the private rented sector, it is 15.7%, and in the owner-occupied sector, it is 49%. So it is all very well for those who own their houses, who have five times the amount of under-occupancy, but people who are poor and who are in the social rented sector because the market has let them down are not allowed to have an empty room. Why should not those people be allowed an empty room? We have heard about people with disabilities and people with chronic problems, but what about normal people who just want their friends or their children to come and visit them? And who would want a one-bedroom house?

Let us look at the evolution of social housing. I was the chair of housing for the biggest local authority in London—Croydon—and chair of housing for the association representing all the boroughs across London. How does social housing work? We build two-bedroom and three-bedroom houses for families in need, who live in them with their children. Their children grow up and perhaps go to university or get married, and we end up with the couple in an under-occupied house. What happens then? They die, and we recycle those houses. It is no surprise that under-occupancy in the social sector is so low, because the sector naturally refreshes itself. Those people do not live for ever.

In Croydon, we also set up incentives involving thousands of pounds. We said to people, “Look, you’re an old lady living in a three-bedroom house. We’ll give you a few thousand pounds if you’ll go and live in a two-bedroom house. You’ll still have room for the grandchildren to come and stay, but times are tough.” And they did—[Interruption.] It is all very well the Minister saying from a sedentary position that it did not work. He has not tried that scheme. Why, instead of piloting his stupid ideas, does he not put the two models side by side and see which one works?

Instead of looking only at the savings and benefits involved, why does the Minister not also look at the costs? He should look at the costs in terms of community breakdown and family breakdown. What will his proposals do for people’s ability to get a job, for example? The Government want people to get some training, get a job and get some stability. Well, that is absolutely ridiculous. The social, economic and practical impacts of the measures are completely unthought out. The reason is that the Government do not care, and they do not care because they think that those people do not vote. Why is it that people over 60 are excluded from the list? It is because they vote. What does that say? It says, “Don’t have any children until you’re 40, because if you have them and they grow up and have to leave home, you will hit 60 at that time and you’ll be all right.” That is great, isn’t it? It is completely cynical and it stinks.

What does this mean for the practical implications of managing the housing revenue account? It is claimed that all this money will be saved, but some of it allegedly saved for the Government is lost by local authorities. As I said earlier, I have run a housing revenue account, so I know what will happen. A number of people will stop paying all their rent by the margin that is being cut. If I am in the local authority with a portfolio of two or three-bedroom houses, but with hardly any one-bedroom ones, I will say to the people that are not paying all their rent, “We will evict you, but we do not have any one-bedroom houses”. They will go to the private rented sector where the rents are higher and are escalated by the pressure on the market, and that will cost me more as a manager. What is more, as more people join the private rented sector, others in that sector will pay higher rents, so it will be difficult for people to build up a deposit and buy a house. That is great as well, isn’t it? It is absolutely hopeless.

[Mr MacNeil]

The hon. Gentleman is kind in giving way. A friend of mine in Fort William tweeted a few minutes ago to say that his parents took five years to downsize their house in Fort William. That is an example of how difficult this is practically. At that time, there was no imperative to do so—it was a matter of choice—but we are in the same boat, and we are talking about five years.

[Geraint Davies]

Yes, and why should someone who has lived in the same street, whose children have grown up with their neighbours and who knows everybody—having been to the local schools, visited the local pubs and worked in the locality—be dislocated and thrown into another community, another town or even another nation? The answer is that these people do not count because they are poor and they live in social housing—and the Tories and the Liberals are going to sort these people out. It is disgusting.

What else is going to happen? If managers or directors of housing have less rent money available, there will be a cut in repairs, leading to more damp and more health problems associated with bad housing. What else can local authorities do? People in Swansea are thinking about knocking down walls. If they have a two-bedroom flat, they can knock a wall down and create a larger living room in order to get round the problem. What does that remind us of? Yes, of course, it reminds us of the window tax. Do we remember when some stupid Tory introduced a tax on windows—and then people blocked off their windows: what a surprise! We are going to see that sort of thing again. It is absolutely ridiculous and farcical. If it were not so sad, we would all be laughing.

Private rents will go up for the mates of the Tories in buy-to-let who will see their incomes grow. It will stop other people buying houses, and we will see empty public sector houses side by side with overcrowded private sector houses. Where there are empty houses, it is costing us much more in lost rent than the shortfall that is being cut in this tax.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Will my hon. Friend give way?

[Geraint Davies]

No, because I will run out of time—perhaps at the end if I have time.

We will see major problems. My hon. Friend the shadow Secretary of State for Wales mentioned the impact of this change on Wales. He said that 46% of households would be affected in Wales as against 31% in England—half as much again. Once again, this is part of the strategy of taking money out of the poorest communities, yet poor people spend more of their money. If we want a growth strategy to get people back into work, we should give money to poor people instead of giving it to the rich who hide it away in savings accounts or offshore accounts. When people have only a little money, they have no choice but to spend it. We are denuding local authorities with poor populations of money power.

What of incentives? A son or daughter of parents might say, “I want to go off and get married and live with this person. I want to go off and live in a different town and get a different job. I haven’t got a job here; I’m unemployed.” The parent would say, “Son, that will cost me”. What if the children want to go off to university? That is going to cost the parents, too. Once again, this is just encouraging people to stay where they are until somebody hits 60. It is preposterous. The savings will not be made.

[Steve Webb]

There are only so many times that the hon. Gentleman can get it wrong. If someone goes away to college and is based at home, the bedroom is kept.

[Geraint Davies]

My point is that if someone goes away to work, that person will lose the bedroom. Moreover, if someone’s children go off to university, they will not be hanging around in the local chip shop—which is good, but obviously their parents will say, “We do not want an educated son and daughter going off and leaving us to pay for the empty bedroom. You can stay here and run the chip shop. That was good enough for us.” That is the sort of new economy that the Minister—who is now dozing off—wants, and it just does not make any sense.

As for the overall savings, the Government are making political choices. They will not save £490 million, because much of that will consist of costs for local authorities. What they are saying is “We will give the money to the voting people. We will increase their tax thresholds. Let’s face it, they are not going to work any harder. We will not harm the older people, because they vote; we will harm the poor people who do not vote. Let us hope that they do not. If they do not register to vote, we have our other plan to carve up the constituencies, so that their size relates not to the population but the number of people who are registered.”

This is a cynical attempt at political manipulation that has no regard for the economic and social impact. It is absolutely disgraceful, and it should be thrown out.

17:30

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

I know that many other Members wish to speak, so I shall try to keep well within the 10-minute limit.

I am particularly concerned about the way in which this measure will affect foster carers. The hon. Member for Leeds North West (Greg Mulholland) made a powerful case for why it makes much more sense for them to be exempted from it. When I have raised the issue with the Minister at Question Time, he has said that they will be all right because there is a discretionary fund, but I think it much more sensible for them to be exempted.

It is clear to me from conversations with more than one set of foster parents in my constituency that there is a lack of communication about discretionary payments, and that people find out about them only by dint of good luck and interventions of other kinds. I am well aware that the constituents who come to me may be just scratching the surface, and that there are likely to be many others in a similar position who do not visit their Members of Parliament. The hon. Member for Battersea (Jane Ellison) seemed to suggest that we should not raise the cases that are brought to us, but I think that they are the tip of the iceberg rather than the exceptions that she sought to suggest.

One of my constituents has been a foster carer for more than 30 years. During that time she has fostered more than 50 children, sometimes on long-term placements—a couple who are with her at present have been there for a number of years—but sometimes on shorter placements. Sometimes there is a gap. She was recently told by her housing association—her social landlord—that she had three spare rooms. She does not. She has three bedrooms in her property, which are used to provide care for children who would probably cost the taxpayer even more otherwise, and would probably be receiving a less constant form of social care. She is providing that care because it is something that society wants and values. Only this week my local authority, South Lanarkshire council, sought to encourage more people to foster, but at the same time constituents of mine are telling me how concerned they are about the impact of this measure.

As for discretionary payments, the clue is in the name: they are discretionary. That means that they may or may not be applied. That means that there is a limit to the money, and once it has gone, it has gone. That means that it is added to a bigger fund to deal with a whole range of different circumstances, and there is no guarantee that it will be sufficient. My constituent lives almost on the border of two local authority areas; she fosters for one local authority and lives in another. She is fortunate in that she contacted me and I was able to join things up, but we do not know that that will happen in many cases. All those points make the case for foster parents and foster carers to be exempt, rather than being caught in the “discretionary” category.

The hon. Member for North East Somerset (Jacob Rees-Mogg), who is no longer in the Chamber, makes some cogent points from time to time, but it was ridiculous of him to suggest this afternoon that people would seek to apply to become foster carers just to avoid this. That is a ridiculous assertion, and it is insulting to those who put time and effort into being foster carers, for the wider good of society. On this specific point, the Government need to think again. The hon. Member for Leeds North West put that to the Minister, and they are both from the same party. I say that, too, as a Member of a different party. If the Government are to pursue this policy, this specific point must be addressed, because it is not fair and it is not equitable, and it has all sorts of potential unintended consequences.

The right hon. Member for Wokingham (Mr Redwood) hinted at some of the potential shortcomings and explained the problems. It is not sensible to continue with badly thought-through policies that have adverse consequences. The Government have an opportunity to think again on this, and to try to get it right. I understand the points being made about occupancy and pressure on housing, but that is not an excuse to bring in a measure that is severely punitive.

A pair of foster parents in my constituency have said that if they were starting out again they would think again about whether to foster. They have been fostering for more than 20 years, providing dozens of children with a higher standard of care and a more stable position in society. If such people are to be put off because of this imposition, and because they will be caught up in a payment that is discretionary, that will send a poor signal to society in general. I implore the Minister to think again on this specific point, as well as on the tax as a whole.

17:36

[Helen Goodman (Bishop Auckland) (Lab)]

I was so shocked when I read what my constituents wrote to me about the implications for them of the bedroom tax, and about how little they would have left to live on, that I decided during the week of the recent recess to see if I could survive on £18 a week, which is what they will be left with to buy their food after 1 April. That figure of £18 is entirely based on the experiences of my constituents, in particular women on employment and support allowance who are about the same age as me, but who had to stop working owing to chronic health conditions, perhaps after 20 years of working life. Out of their £71.70, they have to find £10 for electricity, £20 for heating—gas or coal—£6 for water rates, £4 for bus fares in the case of those who live in villages and have to get to the main town, and £10 for the bedroom tax, which left them with £23 for weekly living expenses.

That £23 has to cover more than food, of course. We did a calculation, and set aside £5 for all the non-food things everyone has to buy—soap, washing powder, washing-up liquid, toothpaste, loo paper—plus a small amount in order to save £50 a year for clothes or a pair of trainers, or in case the iron breaks. That leaves £18.

I therefore took up the challenge of trying to live on £18, and I want to tell Members what it is like. It is extremely unpleasant. I had porridge for breakfast every morning, as I usually do, but I make my porridge with milk; now I was making it with water. I had to eat the same food over and over and over again. Single people are hit particularly hard, because cheap food comes in big packs. I made a stew at the beginning of the week, and I ate the same food four nights a week. I had pasta twice a week. I had baked potatoes. I had eggs on six occasions. It was completely impossible to have meat or fish; that was out of the question. It was also impossible to have five portions of fruit and vegetables a week.

I therefore also have a message for the Under-Secretary of State for Health, the hon. Member for Broxtowe (Anna Soubry), who is responsible for public health. She was criticising people on low incomes for obesity. Of course people on low incomes are more likely to have that problem; they have to fill up on toast and biscuits.

I found myself waking up in the middle of the night absolutely ravenous, having to make cups of tea and eat biscuits. I had a headache for five days in that week, and I was completely lethargic and exhausted by 4 pm. Some people are on jobseeker’s allowance and are looking for a job. Looking for a job is a job in itself; it takes time and energy. The people whom DWP Ministers want to do workfare are being expected to work 30 hours a week, yet they are not going to have enough to eat properly.

Most shocking of all was the fact that come Sunday I ran out of food—there was literally nothing left to eat that night. If Ministers are happy with the notion that 660,000 of our fellow citizens are literally not going to have enough to eat by the end of the week, all I can say is that I pity them because they have no pity and no conception of what they are going to do to the people in our constituencies who will be faced with this bedroom tax.

The Minister has been very free and easy in talking about all these wonderful alternatives, such as the fact that people can move. In my constituency more than 1,000 people will be affected by the bedroom tax, but there are fewer than 100 smaller properties to which they could move. In my constituency, it is not possible for all these people to increase the number of hours they work, as seven people are chasing every job; people are in part-time work because they cannot get full-time work. Government Members have shown their complete ignorance of the benefits system by saying, “You just have to work a couple of hours a week on the minimum wage.” Of course that is not true, because these people would get then into the tapers and the disregards, and their benefits would be cut or they might find themselves paying tax. The numbers simply do not add up.

Of course some individuals or couples have properties that are larger than they need, but the so-called under-occupancy is in one part of the country and the overcrowding is in another. It simply is not credible to suggest that all the large, over-occupying families in London will move up to Durham, particularly given that the unemployment rate there is more than 9%. What would they be moving to? What would they be moving for?

I made a video diary of my week, so I got a lot of feedback from people affected by this policy. Interestingly, they said, “Yes, this is the reality of our lives. We are not able to survive properly now and things are going to get worse to the tune of £10 a week from 1 April.” In 2006, I did the same experiment under the previous Labour Government, living on benefits to see what life was like for young people on the lowest rate of income support. I found that difficult, but there was enough money to get through the whole week. I wish to point out to the Minister that we have reached a new low, because the £21 that people had in 2006 is equivalent to £28 now, and that should be compared with the £18 with which people are going to be expected to feed themselves.

The Minister has made much, too, of the discretionary housing benefits, which many hon. Members have questioned. In County Durham, £5 million of income will be taken out of people’s pockets and out of the local economy. The size of the discretionary fund is half a million pounds, so once again there is a huge gap between actual need and the resources being given to people to deal with it.

Many hon. Members have pointed out the unfairness of the policy for people who are disabled and need to sleep separately, be they adults or children; people who have children in the Army; foster carers; and separated parents. This policy is a fundamental attack on the poorest people in this country. People are going to lose between £500 and £1,000 over the course of next year, through no fault of their own. But the really disgusting thing is that on the same day that the bedroom tax is being introduced millionaires are being given a tax cut that will be worth £1,000—not over the year as a whole, but every single week.

17:45

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to address first the comparisons between the private and the social rented sector. As was said earlier, we are comparing apples and pears. The private rented sector is not where the majority of people intend to spend their lives. Research has shown over and over again that people see it as a transitional part of their life—they use it when they are younger and they hope to move on. It is true that in the past few years it has become more difficult for people to move on—it is difficult to get a mortgage and move into the owner-occupied sector, and there is a shortage of social rented housing. Nevertheless, people do not see the private rented sector as a long-term home.

The social rented sector provides long-term, low-rent homes. The people who live in them might have been out of work at some point in their lives, but they are often in low-paid work and want to be able to afford to do that work. The people who will be affected will often have lived in those houses for many years. Some have compared this situation with the introduction of the local housing allowance, but that was not introduced retrospectively, which is what is happening here—that was made clear in an intervention earlier.

When people live in a council house or housing association house for many years, they put in a lot, using their DIY skills, or decorating the home and making it how they want it. They have invested in that home, so to tell them that they must pay up or leave entirely ignores the investment that they have made.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

My hon. Friend makes an excellent point. I had a visit from a constituent whose daughter is disabled, has just obtained local employment and really needs routine. As my hon. Friend has said, they have made great investments in their home. They have a tiny box room that nobody could fit in, but they have been told to have a lodger—having a lodger in a home with a disabled daughter would, of course, have great risks. Does my hon. Friend agree that displacing such families is totally unfair and affects the development of those children?

[Sheila Gilmore]

That is a good example. We are talking about real people, not just apparently unused and unloved bedrooms—despite the fact that the latter appears to be the view of many people on the Government Benches. Real people will experience real harm, but I suspect that that is part of a wider view of social housing and is not entirely accidental.

[Mark Lazarowicz]

On the question of people having spare bedrooms and houses that are too big for them, will my hon. Friend also bear in mind the fact that on occasion local authorities trying to let houses in hard-to-let areas have encouraged people to take houses that are slightly bigger than their immediate need would suggest in order to ensure that they are not left empty? Is that not the kind of approach that would be undermined if the policy was to go ahead?

[Sheila Gilmore]

I know that that has been the case in many areas. My hon. Friend comes from Edinburgh, as I do, and he will know that the problem is not always about hard-to-let areas. As far back as the 1980s, single people in Edinburgh have been housed in two-bedroom houses in some circumstances. That is partly to do with the nature of the stock, as there are not enough one-bedroom houses to match the number of people, and it also acknowledges the fact that people’s lives are not static.

We have heard a lot from the Government about dynamic benefits, but people’s lives are pretty dynamic and they change. The single person housed in a two-bedroom house might well have a child. If we insist that they can never be in a two-bedroom house, they might have to move later. The same happens in reverse, as people’s families do not stay static. Even grown-up children, as many of us know, do not necessarily simply go and stay gone. They take a job and move away, but the job or relationship might not work out and they come back. Families also want to visit. Part of this change is about saying to the not very well-off, “You cannot have the normal elements of family life; we are not going to let you.”

I was about to make a point on the general view of social housing. I think perhaps this policy is part of a pattern, because we have heard from UK Housing Ministers—those dealing with England—that they do not want social housing to be permanent housing; they want to introduce short-term tenancies of various types so that people can be moved on. This policy may not be as much of an aberration as some of my colleagues think.

[Mrs McGuire]

Does my hon. Friend share my concern that there may be an ideological trend in the Government’s philosophy whereby social housing is seen as welfare housing only, and not as homes for many people in our communities?

[Sheila Gilmore]

I think we can see a large element of that in this policy.

As many hon. Members have said, if people move to the private rented sector, the housing benefit bill may actually increase. In Edinburgh, the local housing allowance, which is not especially generous, is £114 for a one-bedroom house. Some of my constituents have asked me about moving into the private rented sector. If they move from their two-bedroom council house, for which the rent is £91 a week, into a private rented property, it will cost more. Rather than a saving, there will be an increase in spending.

The vision set out by the Government is of a lot of single people rattling around in big houses with three or four bedrooms. We are asked, “Doesn’t that seem unfair? Why shouldn’t they move on?” In fact, the vast majority of my constituents affected by this tax are not living in especially big houses. It is suggested that people take in a lodger. I visited a constituent—a woman in her 50s who is on ESA, although she has always worked previously. Her home has two bedrooms, although the second is pretty small, and the kitchen is off the living room. Having a lodger is not just about having someone in the spare bedroom; it involves sharing all those quite small facilities with somebody else. While my constituent is sitting in the living room, perhaps enjoying watching television or whatever she enjoys doing in the evening, the lodger will come through the room, go into the kitchen, make a cup a tea and come out again. Hon. Members have to understand the kind of houses people actually live in.

Local councils in particular are making real efforts to mitigate the impact, but there is a downside to that, because this is another example of where savings in general public spending will not be achieved. How is money saved if, as my council will do, local authorities find additional funding to put into their DHP fund because they believe that that is the humane and common-sense thing to do, given all the disruption that various categories of people might otherwise suffer? That is additional public spending, so we will be saving with one hand and spending with the other. Crucially, the saving that central Government want to make will result in councils having to pick up the pieces.

[Michael Connarty (Linlithgow and East Falkirk) (Lab)]

Many Members here who do not represent Scottish constituencies will not realise that the rate capping process carried out by the Scottish National party in government has left local government strapped, with 85% of the cuts last year being to local government budgets, so there will be less money available for the very funding my hon. Friend is talking about.

[Sheila Gilmore]

That is an important point. The council tax freeze which has been going on for nearly six years now—people in England will share the joys as well—has resulted in local councils being unable to go to their populations and say that they would like to put up council tax, so that they can perhaps borrow money to build more council houses. Of course, the people who do not benefit in any way from the council tax freeze are those on the lowest incomes, who do not pay council tax directly because they receive council tax benefit, but they are the very people who will be affected by the bedroom tax. For the lowest earners, the council tax freeze is not a blessing; it has reduced the services they received and hamstrung a lot of councils. I hope the Scottish Government will look again at the policy, which might appear populist but does not benefit the lowest paid.

[Dr Whiteford]

Will the hon. Lady give way?

[Sheila Gilmore]

I am not going to give way, because I have done so several times already.

If councils are going to put their money into this policy, by increasing discretionary housing payments, or trying to acquire or build more houses, they must be given support. In Scotland, as in England, sadly, we are seeing a substantial reduction in the building of affordable homes. In Scotland, the number of such homes was boosted briefly, but it has gone down from 7,900 two years ago to only 3,400 this year. Some of those homes are for mid market rent, which has its role but is expensive, so it could lead to higher housing benefit payments. The outcome of more mid market rent housing is similar to what is happening in England. We have heard people on the Government Benches saying that the Government will ensure that more affordable houses are built, but I thought they had made it clear that those so-called affordable houses were going to be at up to 80% of market rent, which is expensive. In Edinburgh, a council one-bedroom property is £275 per month, but a mid market one-bedroom property is currently being advertised at £439 per month. Mid market is no substitute for low-cost affordable housing.

The high housing benefit bill will be reduced not by measures such as the bedroom tax, but by measures that address the supply of housing and the huge cost of the private rented sector. A couple came to see me who, after six years, had got the two-bedroom wheelchair-accessible house that they need. It is no use saying to them, “You can apply for a discretionary housing payment.” In a Westminster Hall debate recently, the Minister said that discretionary housing payments might have to become permanent in such cases, but that couple will still have to apply every year, and will have uncertainty, and that is not fair to them. If such payments have to be permanent, where is the saving? Why not have an exemption?

17:57

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

I was pleased to spend last week’s recess talking about this issue with my constituents, because what we decide in the House has its most crucial impact in the communities we represent. The bedroom tax has achieved in a shorter period the ignominy once reserved in Scottish society only for the hated poll tax. In my constituency, hundreds of people, from Dennistoun to Springburn, continue to sign petitions to stop the measure, which will cost people up to 14% of their weekly housing allowance.

Last week, at an event hosted by NG Homes, I met voluntary groups and housing associations from across Glasgow who warned of the effects of the plans on homelessness, rising levels of evictions and rising debt in north and east Glasgow. The Prime Minister’s ambition is being realised at last—the big society is coming together, not in his support but in complete opposition to the absurdity and unfairness of the housing benefit plans and the chaos and social harm they will cause. In my constituency, nearly 86% of the 16,580 housing benefit recipients are in properties rented from registered social landlords, and 65% are within the age range that is subject to the bedroom tax. The vast majority receive between £25 and £100 a week in local housing allowance to help with rental costs. That is in a constituency where the median wage is under £17,600 a year, and child poverty is the third highest in the UK and the worst in Scotland, at some 43%.

The three areas that will be hurt hardest in Glasgow North East, according to the Glasgow Housing Association, are Milton—with a higher than average number of lone parents, rent payments there will go up by a collective £8,000 a week—Keppochill and Possilpark, but last week I discovered people right across my constituency who will be hit by this cruel tax. Around half the recipients in my constituency are on out-of-work benefits, but three in 10 of those who are in employment earn less than the living wage. It is clear that the decline in real wages—it has accelerated under this Government—which have fallen every month the Government have been in office, has driven the greater reliance on housing benefit to maintain even these basic living standards.

[Geraint Davies]

Will my hon. Friend give way?

[Mr Bain]

Briefly.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I should have reduced the time limit but did not, on the off-chance that there would not be too many interventions. I warn Members that I will now have to reduce it, and if they are upset it is due to the number of interventions.

[Geraint Davies]

In a nutshell, the cost of reducing the tax threshold by £1,000, which gives taxpayers £6 a week, is £5 billion, 10 times what is being saved here. If someone who is very poor looses £7.50 a week through the empty bedroom tax, someone else is being given £6. Does that not illuminate the Government’s priorities: hitting the poor and letting the middle class off?

[Mr Bain]

My hon. Friend is certainly right to draw attention to the absurdity of the Chancellor’s claim that there is a zero tax band for people on low incomes, who of course pay national insurance, higher VAT under this Government and all the things described in this debate. I should also point out that rents are rising in much of Scotland—by 6.3% in Aberdeen and 5.1% in Edinburgh, for example—which is adding to the pressure this policy will cause.

The bedroom tax will hurt the country in many ways that the Government do not presently acknowledge, for example through its impact on families, the economy, employment and housing. First, these plans utterly fail the test of promoting economic growth. Indeed, by diminishing demand among people who will spend the money, the least well-off, they will have a deeply contractionary effect. Keynes’s paradox of thrift will sadly become a death knell for local shops across the country as people are forced to cut back on spending. The University of Strathclyde’s Fraser of Allander Institute estimates the cost to the Scottish economy to be more than 300 jobs, £30 million a year in lost demand and a reduction in wages in Scotland of nearly £8 million a year.

The Minister claims that people should work longer hours, but do I really have to point out to him that under-employment has soared to 3.2 million under this Government and that there is a slump in productivity because demand has been so weakened by their catastrophic fiscal policies? I also remind him that, with the deficit tracking 7% higher this year than last and our credit rating having been downgraded, these are Tory cuts that he is defending because of the Chancellor’s utter and abject failure on growth.

The Office for Budget Responsibility predicted in November 2011 that the economy would grow last year by 2.5%. It has been confirmed today that instead, it grew at less than a tenth of that rate. The impact assessment on these changes also reveals the truth: if people are able to change their behaviour, as the Minister vainly hopes they will, these plans will save little or no money for the Exchequer. His other policies to cut the benefits bill are failing, because unemployment is 340,000 higher than the OBR predicted in 2010 and living standards are falling in a low-growth economy. He can generate the savings he is seeking with this policy only if people cannot move or work longer hours and so are forced to pay the tax. He is making the poorest suffer for the Chancellor’s manifest incompetence in securing less than a tenth of the economic growth we were predicted to have over the past two and a half years.

Secondly, these proposals are a byword for absurdity. The Minister believes that people can simply uproot themselves from homes they have lived in for three decades or more, and from friends, family and jobs, to go and live in parts of the country where there are smaller houses and perhaps fewer opportunities to work. He says that alternatively, people should take in a lodger—a step that is actively discouraged in the registered social housing sector in Scotland, where stock is allocated on the basis of need. The sheer absurdity is further heightened by his refusal to admit until this afternoon that his plans will potentially remove money from up to 96,000 members of the armed forces, nearly 8,000 Army trainees, carers and foster parents in Glasgow, while nearly 1,000 prisoners on remand in Barlinnie jail in my constituency will be exempt.

[Steve Webb]

Will the hon. Gentleman give way?

[Mr Bain]

No, because I am compliant with Mr Speaker’s strictures on those who wish to take part in the debate. The Minister will have an opportunity to deal with this later.

All age groups in society will be affected. People over the age of 61 could be drawn into this tax too if they have a spouse or a partner living with them who is under that age and they apply for universal credit after October.

Thirdly, these plans hit the most vulnerable the hardest. Two thirds of the 660,000 people affected across the UK have a disability. Last week I met disabled people who told me that they will be caught by the tax and asked to pay an extra £14 a week for having a room in which no one sleeps but that is used to provide physiotherapy and medical treatment within their home. I spoke to the friends of a young person with a learning disability who is co-operating with the local housing association and who would move into a small house if he could, but there are simply none available. Through no fault of his own, he will be forced to pay the bedroom tax on income support of £47 a week.

Fourthly, there is a lack of available properties for people to move into. Some 540,000, or 81%, of those losing out will be people who cannot move because there are no one-bedroom properties in their areas. According to Glasgow Housing Association, there is a waiting list of 13,000 in Glasgow for one-bedroom properties because housing associations, and the council before them, responded to local housing demand by building homes with two or more bedrooms. With a social housing shortfall of 156,000 properties for Scotland’s housing needs, there is no way the required properties could be built so that people can avoid destitution through having to pay this tax from April.

Fifthly, these plans will cause enormous uncertainty for our housing associations. They now have no clarity about their future revenue levels or the investment decisions they can make on social housing. They are unsure whether they should be building one-bedroom houses. They are fearful of managing a surge in rent arrears, with the cost being paid by all tenants in the form of lower priorities for refurbishment of existing properties or reduced budgets for repairs.

The wider issue is this Government’s lack of empathy with those who live in social housing. This is a further attack on that very concept from a Government who have cut the social housing budget in half. This is not an issue that divides people in Scotland from those in England and in Wales: it is about a feeling that Ministers are losing their sense of what is morally right or wrong for people across the United Kingdom. What best sums up what ordinary people feel about the injustice of this absurd tax is a conversation that I had with a 69-year-old constituent on the way to my constituency office last week, who stopped me to see whether she would be affected by the bedroom tax. When I explained that she would not, she told me how troubled she was that other people in her community would have to pay it. She said that this has been the worst Government in her lifetime and that the right hon. Member for Tatton (Mr Osborne) is the most arrogant and out-of-touch Chancellor in history, but that of all the cruel things they have done, this is by far the most vicious. She was right.

The voice of ordinary people has been heard in this debate, but it must also be reflected in the votes in the Division Lobby tonight. I particularly urge the party of Lloyd George and Gladstone not to vote for a policy that even the party of Thatcher would have shrunk from in the 1980s. It is the duty of all Members to avoid causing unnecessary suffering to nearly 700,000 people by opposing this cruel tax in a strong, clear vote tonight.

[Several hon. Members]

rose—

[Mr Speaker]

Order. In order to accommodate the five remaining hon. Members who are seeking to catch my eye before the start of the Front-Bench winding-up speeches at 6.40 pm, I am obliged now to reduce the time limit on Back-Bench speeches, with immediate effect, I am afraid, to seven minutes.

18:09

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

I apologise to the House for leaving the Chamber earlier. I had a meeting with a local firefighter who had travelled 300 miles to see me.

According to the four main registered social landlords in my constituency, the bedroom tax will affect 1,770 tenants in my area. That is not an insignificant number and the landlords are working hard with each and every one of them. There is no doubt that some tenants will decide to try to squeeze money out of their budget in order to avoid moving, if moving is an option for them in the first place.

We have already heard—I do not want to go over a lot of the same ground—that this is about some of our most vulnerable people, including the disabled, students and the military. The last thing that those who serve our country in theatre want to see when they return to their barracks and spend time at what they call home is their family, particularly their parents, being punished in any way.

We have also heard about foster carers. Things are not easy for emergency foster carers, who sometimes have to take in more than one child. If there has been a family breakdown, two or three children might have to be taken into emergency foster care. Kinship carers are also common in my part of the country. Mothers and fathers or aunts and uncles sometimes take in children in an emergency, because of the parents’ chaotic lifestyle.

The hon. Member for Beckenham (Bob Stewart) asked whether assistance will be provided if someone manages to downsize. Will the Minister explain clearly what that assistance will be? Will it merely be discretionary support? It is important that we understand what it will be.

As has been said, people will lose, on average, £14 a week. What will it mean to take in a lodger in such circumstances? Yes, people will be able to make up that shortfall, but if the lodger pays £50 or £60 a week for board and lodgings, that could throw the benefits system into turmoil for many claimants, because there might be a reassessment of benefits. Will the Minister provide clarification on that?

I thank my right hon. Friend the Member for Stirling (Mrs McGuire) for encouraging me to hold a welfare reform meeting in my constituency last week. I held it in the town of Dumfries and will hold a similar event in Stranraer, at the other end of my constituency, next week. We brought together charities, churches, registered social landlords, the council, benefits advice organisations and a gentleman from the Department for Work and Pensions, whom I thank. I told the audience, “Do not shoot the messenger. Department for Work and Pensions staff are there to deliver on a policy devised by politicians.” Some horrendous stories were told. The aim of the event was to encourage those working in the community to look for the tell-tale signs of families starting to feel the pressure as a result of the bedroom tax or universal credit.

My hon. Friend the Member for North Ayrshire and Arran (Katy Clark) was right to highlight the amount of money that this will take out of the local economy. When we debated the Welfare Benefits Up-rating Bill, I pointed out that the 1% freeze would take money out of the local economy and away from some of our poorest people. That will also happen as a result of this provision. Taking money out of the local economy does not stimulate it, and does serious damage.

My local authority, Dumfries and Galloway council, has a Conservative and SNP administration. Some months ago, it set up a welfare reform working group. My Labour colleagues, who make up the largest political grouping on the council but are in opposition, did not take part in that group. Instead, they established their own welfare reform working group. The report by the Labour group came before the council’s policy and resources committee yesterday. Lo and behold, the Conservative leader of the council accepted all 21 recommendations the Labour councillors put forward. I will not go through them all, but they include an urgent report on the legal and financial implications of using discretionary housing benefit to cover any shortfall in the first year for those affected by the tax, and a report on the proposal to expand access to credit unions and to explore other banking options for bad debtors.

The Conservative leader of the council accepted the recommendations wholeheartedly, but he took the matter a step further. He decided that it was right for Dumfries and Galloway council to write to Lord Freud to make him aware that the steps he was taking, especially the bedroom tax, were wrong. The leader of the council said on the radio this morning:

“In Dumfries and Galloway we’ve taken the decision in the past that we don’t see one bedroom being the ideal situation. Two bedrooms is what we’ve been basing our housing strategy on in the past and we feel that the minimum should be two bedrooms rather than one bedroom when they are looking at under-occupancy legislation. This is something that we feel that we need to push harder on for our tenants across the region.”

That comes from a Conservative leader of a local authority in Scotland.

18:16

[Julie Hilling (Bolton West) (Lab)]

When I listen to the Government, I wonder what world they live in. It certainly is not the world of the 2,400 tenants of Bolton at Home or the 4,500 tenants of Wigan and Leigh Housing who are facing unaffordable bills because the Government have decided that the poor should pay the price for the wrongs of the rich.

The Government have a fundamental ignorance about social housing and a thoroughly disgraceful attitude towards people who, through choice or circumstance, are living in council or housing association properties. They seem to think that it is a negative choice and that everyone, whatever their circumstances, should aspire to own a home. It is as if they have learned nothing from the sub-prime catastrophe.

[Justin Tomlinson (North Swindon) (Con)]

Will the hon. Lady give way?

[Julie Hilling]

I will not because other Members want to speak.

Social houses are homes: homes that are usually occupied by people who cannot afford to buy a house because they do not earn enough or because they cannot work; homes that people live in for many years; homes that tenants lavish care and attention on; homes that they hope to live in until they choose to downsize to a flat or until they die; homes that their children may move back into when they finish university or when relationships break down; homes that families come to visit and where grandchildren come to stay; homes that are part of a community that benefits from stability and from established residents who make a contribution.

The Government do not seem to think about homes and communities, but merely about spare bedrooms. When they talk about overcrowding, they do not look at where the so-called spare bedrooms are and where the overcrowding is. Unfortunately, the two do not match. They also do not consider who will lose out. What they are doing is like shuffling the deck chairs on the Titanic. They are simply moving the problem, not solving it.

Bolton and Wigan do not have spare one and two-bedroom properties, so tenants will have to starve or freeze to pay the additional rent, move to the private rented sector or be evicted for arrears. The Minister suggests that people should work more hours. If only it were that simple in Tory-Lib Dem Britain to get a job. Even if people can get a job, the Minister ignores the fact that every time people earn more money, they lose benefits. How will that help to cover the gap?

The Minister also says that the measures will drive down housing benefit costs. Wigan and Leigh Housing has done its own modelling. If about a quarter of its tenants moved into the private rented sector, there would be an additional cost to the Department for Work and Pensions of more than half a million pounds. It also estimates that the cost to Wigan and Leigh Housing would be more than £10 million, which would come from a different public purse. That includes £1.4 million for the adaptation of new homes for the disabled and £300,000 for rent collection. This measure will, of course, affect other tenants as well as the ability of housing associations to repair and maintain housing stock, and it will prevent them building new homes. One housing provider has said that it will lose one new build a week because of the cumulative affect of welfare reform.

Government Members like to throw out the accusation that the previous Labour Government introduced the same policy for the private rented sector with the local housing allowance, but they should stop listening to their own spin. The LHA was tested for four years before it was introduced and did not apply to existing tenants but just to new claimants or people moving house. It did not specify how many bedrooms people should have, but allocated a sum of money based on the median rent for properties of the relevant size. Therefore, if a family found a house with more space for a lower rent, they could move in. The size of the housing benefit bill is due to the cost of private rents, not social housing. However, the Government will not do anything about fair rent and instead just reduce the chances of ordinary people to find houses. I also wonder when Government Members last visited a council house and looked at the size of the so-called third bedroom. Often, it is a room that barely fits a bed and would be unbearable for two teenagers with no space to do homework or hang up clothes. It is certainly not the sort of space that a lodger would want to rent.

My hon. Friends have mentioned the difficulties of expecting children with vastly different ages to share a bedroom, and the difficulties experienced by families with a disabled member. Let me lay out the nature of the Government’s policy. A family with two children under 10 in a three-bedroom house will now need to move to a two-bedroom house. When a child turns 10, they will need to go to a three-bedroom house but if one child moves out, they will have to go to a two-bedroom house. If both children move out, they will have to move to a one-bedroom home, but what about if one child wants to come home? What about the cost of this measure? Will children have to move school? What happens to the community? This policy is nonsense.

Others have spoken in detail about the situation of separated couples, but I have one question: will mothers allow their children to stop with their father overnight if the father is in a bedsit and the child has to share a bed with dad or sleep on the couch? The Government just have not thought this through.

I have already spoken in this House about Isabel and her son Carl who has Down’s syndrome, so I will finish by talking briefly about two people who came to see me last week as a result of my asking the Prime Minister whether he had ever met anyone who was losing their home because of the bedroom tax. The Prime Minister replied that he often met service people in his constituency, although he did not tell us whether they were losing their homes. Stephen and Bill came to see me because they are ex-servicemen.

Stephen and his wife told me that for them this policy feels like persecution. Stephen served for 17 years in the Air Force and then continued to work. He became ill and lost his house; he has had two back operations and has irritable bowel syndrome. His wife is suffering from depression. Stephen has been in his council house for 22 years and told me that he feels that he has made a huge contribution to this country and cannot understand why in his hour of need the country is turning its back on him.

I cannot talk about all of the situation of the other person, Bill, who came to see me, but he lives in an adapted house with a carport, ramp, walk-in shower and stair-lift. Bill is disabled, has anxiety and depression, and IBS. He lives close to his family and gets support from them—and he gives them support; his son is serving in Afghanistan. He is anxious about the bedroom tax and is trying to be proactive, but because of his needs, accommodation is limited. Bill says that the only thing he has to live for in his life is his fishing and he is worried to death that he will not have room for his fishing gear in any other accommodation. He is considering suicide.

This is not scaremongering; it is the reality of people’s lives.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am afraid that the time limit must now be cut to six minutes.

18:23

[Nia Griffith (Llanelli) (Lab)]

In Wales, some 40,000 households will be affected by the under-occupancy penalty or bedroom tax, which is 46% of working-age social housing tenants who receive housing benefit. That is one of the highest percentages of any area in the UK, well above the UK average of 31%, and is due to the nature of the housing stock which is mostly three-bedroom houses. In my county of Carmarthenshire the housing department has identified 1,341 households that will be hit, 860 of which are in my constituency. At least the department is being proactive and trying to find people and help them, but it is an impossible task.

We have heard a good deal today about the range of people who should be regarded as exceptional cases, and I endorse the idea that people such as foster carers and those in specially adapted properties should not be penalised. The fact remains, however, that many people of working age in social housing are vulnerable individuals but do not count among those who will receive discretionary treatment. They have often been allocated social housing because they are in need—because they have, for example, mental health problems. Clearly, the discretionary money falls far short of what will be needed to cover the whole of the shortfall for those in need.

Where does that leave us? All hon. Members understand that some households have a spare room. That is simply because the overwhelming majority of council housing and housing association housing is three-bedroomed. In an ideal world, we would free up the three-bedroom properties for families who need them, but that cannot be done overnight. People have sometimes had to accept those homes because they are the only ones available. In recent years, housing associations have built one and two-bedroom properties, and Carmarthenshire county council, my local authority, is building some small bungalows, but they are already in great demand, and there is no way that local authorities can suddenly build enough new properties to accommodate all those who will be affected by the under-occupancy penalty.

Many of those who move to the available one and two-bedroom properties are pensioners, who are mercifully exempted from the bedroom tax. The problem, however, is simply that there are not enough one and two-bedroom properties. My hon. Friend the Member for Swansea West (Geraint Davies) spoke of incentives, but even without incentives, many people want to downsize when their children grow up—downsizing means that properties are easier to look after, and people often recognise the social value of giving up their property to a family and moving into a smaller one. However, they cannot do that if there are no properties to move into.

Let us look at the reality of what will happen. Let us be clear: people on low incomes just do not have extra money to cover the extra rent. As is explained in the House of Commons briefing, the amount of money that people receive in benefits has never been based exactly on need. There has always been a compromise between need and what could attract political support, but the fact remains that people on benefits live on scarcely enough to cover basic needs. There is already a massive squeeze on household budgets, with relentless price rises for essential items such as food, energy bills and bus fares. Those on the lowest incomes suffer the most, because they have no spare cash and have already cut back on anything that is not essential.

Many people will try to stay where they are to avoid disruption to their family and their children’s schooling, or the increased bus fares they would have to pay if they moved away. They will desperately try to pay the additional rent from their meagre budgets. That will mean people turning off heating and cutting back on food, and trying their utmost not to spend anything extra. However, the chances are that, despite their best efforts to keep their secured council house tenancy, because they value that and realise how difficult life is in the private sector, where they are pushed from pillar to post, they are likely to fall into arrears. That will have a negative impact on council housing and housing association budgets and cash flows, and leave less money for maintenance and new build.

Once a family falls into arrears, their problems will spiral. They will be prey to loan sharks as they try to make ends meet. What happens if they are evicted? The council will have to re-house them. They could end up in bed and breakfast or other privately rented property, all of which would be more expensive than the amount saved by imposing a bedroom tax on the extra room in their house. The trouble is that some private accommodation is only temporary—the family will move from pillar to post, with all the educational disruption that that will cause for their children.

The private sector has problems, because there is a lot of pressure from young professional couples who do not have the job security or deposit to buy their own homes. They are pushing up prices and taking the more desirable private properties. Another problem is that, although we have passed legislation to license landlords, it is taking a while for local authorities to do so. There is a lot of backlog in driving up standards and decency in private sector homes, which are often sadly lacking.

Just one aspect of that problem—letting agents—is being covered by my hon. Friend the Member for Rotherham (Sarah Champion) in the debate in Westminster Hall this afternoon. There is so much to tackle in the private sector to bring it up to standard.

If we take into account the cost of administering discretionary payments and the difficulties of trying to share them fairly, when there is clearly not enough money to go around, we realise that it would be far better not to implement the bedroom tax. It would be far better to stimulate growth, get more jobs and more people in work, and therefore increase the tax take. There would then be a chance to get the deficit down. In the meantime, we could use the money from the 4G sell-off to build more homes so we have less of a housing crisis.

18:29

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Member for Banff and Buchan (Dr Whiteford) for bringing the motion before the House. This is a serious issue that is proving to be stressful for a great many vulnerable people—the elderly, single parents and disabled couples—and that stress is affecting their health. That point has been made eloquently at Prime Minister’s questions and throughout this debate. The Minister is greatly respected and well thought of in all parts of the Chamber for the way he responds to a great many points. My questions and comments are meant constructively, and I would like him to respond to them.

In Northern Ireland, we are faced with 2,000 households in social housing—whether housing executive tenants or housing association tenants—facing a major shortfall in their rent of up to 25%. That means a tremendous number of families are unsure of how and where they will live. I am aware that in many parts of Great Britain there are many more smaller social homes with one or two bedrooms, and tenants who want to move have a realistic chance of downsizing to a property the cost of which will be covered by their benefit. That is not the case in Northern Ireland and, while we have started to build smaller apartments and homes, we have nowhere near the necessary number to begin to implement this reform and to move people who cannot afford to pay the difference.

I was a councillor for 26 years before I came to this Chamber. One measure that I pushed for as a councillor 20-odd years ago was for the executive to upgrade its one-bedroom bungalows to two bedrooms. It has taken nearly 20 years for that to happen. Today, we wish we could turn back the clock—the film “Back to the Future” comes to mind. The very thing that we pushed for 20 years ago has to be turned back—a matter of great concern. The Minister for Social Development in Northern Ireland has no option but to implement these reforms, as the Northern Ireland block grant does not allow for a delay. However, his Department is in no way, shape or form ready to follow through on the legislation that has come before this House.

In Northern Ireland, it has been estimated that there will be a housing benefit shortfall of £10 million per year, and I doubt that there are many people on housing benefit who can afford to make up that money themselves. The Minister for Social Development, Nelson McCausland, has said:

“The best way forward is the use of discretionary housing payments. We have increased the money there for those that may be affected.”

Yet again, it must be stressed that the Northern Ireland Executive cannot bear the load of these changes out of the block grant, and that will inevitably lead to severe hardship for many families in Northern Ireland, as it will—I know this from hon. Members who have spoken—on the mainland in Scotland, Wales and England. Elderly widows have been ringing me to ask whether they will be expected, at their time of life, to take in a lodger in their two-bedroom homes. Their fear is palpable, and the state should never be guilty of enforcing that on them.

For some, the new rules will reduce their existing housing benefit by £650 per year. The bottom line will be that if they cannot afford that, they will have to find a new house. The scenario I would like to put to the Minister is this: a divorced mother has two children, a son of nine and a daughter of eight. The new rules say that the children can share a bedroom and the family therefore have to downsize their home. However, that will apply for only a year because the children will no longer have to share when they are 10 and nine, and the rules state that they will then need an extra bedroom. Would it be economical to expect the household to move, or will the housing benefit section have the discretion to waive this tax in those circumstances? How far does this discretion extend? Does it allow for the disabled couple who cannot sleep together and need a carer to sleep in the house at times to help with their care needs? Are they expected to foot the bill because they are disabled and need help?

We recently spoke in this House about needing more foster carers and touched on the effects on them. I do not want to repeat what has been said, but by the same token people on housing benefit will be penalised for trying to offer a home to young people who need some love and care. I have to ask: where is the big society in that?

I could go on, but time is limited. We are not ready to implement this either morally or physically. We lambast absent fathers for not playing an active role in their children’s upbringing. We then tell them that they are not allowed to have a bedroom for their child to stay in when they are trying to build a relationship through their visitation rights. We tell people who are married and working, “We have no houses for you in the housing executive, so you will need to rent privately and we will help you with the payments.” We then say, “Well, your private rented house is one bedroom too large, so we won’t help you with this payment anymore, and we can’t rehouse you so you can find a smaller home close enough for your child to walk to school. As you have no car, there is nothing that can be done for you.” Hon. Members—on both sides of the House, to be fair—have asked, “Is this really what the House advocates?” I would say not. I and many other Members do not advocate it. Single tenants regularly come to me, and like others, I am sure, I have helped hundreds with their housing benefit. Often, we find that, because of their age, they are restricted in how much housing benefit they can get. The discretionary payment fund helps them that wee bit along life’s road, but then we find that this payment, which helps them to develop their quality of life, get a job and so on, is being taken away from them.

We need to make changes to the housing sector, but we cannot enforce changes without the infrastructure in place to implement them. I do not want to be part of a measure that puts 32,000 families in housing stress. Is this something that the Minister is prepared to implement before the foundations have been laid? I hope that he will allow the infrastructure and details to be put in place before this is pushed through.

18:35

[Mr Jamie Reed (Copeland) (Lab)]

It is a genuine pleasure to follow the hon. Member for Strangford (Jim Shannon). It is clear from the testimonies of my hon. Friends that the consequences of this ill-thought-out tax on families will be enormous. I fear that the great number of letters that my hon. Friends and I have received from families up and down the country who are extremely worried about their futures as a result of these changes is just the tip of the iceberg—thousands of people who will be affected by the bedroom tax do not yet know it.

Analysis by the National Housing Federation shows that the bedroom tax will hit 2,000 families in my constituency—each to the tune of more than £500 a year—and every day I hear from constituents worried about how they will cope. The economy of my constituency is based on public spending. It needs to be rebalanced, and I have worked consistently to do that, but this latest blow will undoubtedly hit economic demand in my constituency even further, making that task even harder. The bedroom tax will have an effect on my local high street, businesses and other economic activities, and the same will be the case in constituencies and communities across the country.

We need to speak to housing officers from social housing providers about the bedroom tax. They know who the good and bad tenants are on their patches. I used to be one myself. [Laughter.] A housing officer, not a bad tenant, that is! We need to ask them how the bedroom tax will affect their tenants, and they will say that, for some, it will be crucifying. Not everyone can move to different properties, because they are not available, so instead some will be faced with paying a tax they simply cannot avoid. This tax demonstrates what we all know—that the Government come up with policies that are ill-thought-out, damaging and disproportionately targeted at the least well-off in our society.

Instead of spending their time cobbling together disjointed, contradictory and weak justifications for the shameful bedroom tax, the Government should do the right thing and drop it. I can think of few more embarrassing, cringe-worthy illustrations of a rotten defence of a rotten policy than that provided by the Minister in the Lords, Lord Freud, on BBC Radio 5 Live recently, when he told concerned social housing tenants that they should seek to take in lodgers in order to pay the tax. How delusional, how detached, how dangerous! Here we have a Minister telling people that to pay the Government’s punitive tax, they should break the terms of their tenancy agreements and so risk eviction. I would urge students of bad policy, bad communication, bad government and political incompetence to read a transcript of the noble Lord’s interview.

The Government claim that the bedroom tax will solve the issue of under-occupancy. Has it not occurred to them that the people affected will not be able to avoid it? All the policy will mean is that low-income families will be hit in the pocket. It is a tax on the poor. It means less money available for food, groceries, school trips and school uniforms, heating and transport. It is a policy of the madhouse that will push people closer to the poorhouse. Alongside the Tory NHS Bill, Liberal Democrat support for this marks the point at which they have become a wholly owned subsidiary of the Conservative party.

There simply are not the excess houses available for people to move into. The Secretary of State has offered no solution to the mismatch between families’ needs and the accommodation available. This mismatch is highlighted in his Department’s own policy assessment, so what are the Government going to do about it? What kind of dysfunctional Department is he running, when fundamental issues arising from such massive changes have not even been considered?

Like, I suspect, hon. Members on both sides of the House, I have many constituents who will be hit by the bedroom tax. Oblivious to the impact of his own policies, the Prime Minister said again today that he was happy to look at individual cases, and I will be sure to forward him the many that I have already received. Perhaps he will be able to explain to the divorced father in my constituency who has joint custody of his children where his children will stay when they are with him. Perhaps he will also be able to explain to the many disabled people in my constituency, who have already had their homes adapted to suit their needs, why they are being penalised. And perhaps he can explain to the parents in my constituency whose children are serving our country in our armed forces why their mandated time away from home will either hit their pockets or cost them their homes.

The actions of this Government have left many people with no option but to lower their living standards or lose their homes. It is no wonder that the Secretary of State is known as the quiet man—he has much to be quiet about. This bedroom tax is unacceptable, indefensible and increasingly typical. It will not be forgotten.

18:40

[Hywel Williams (Arfon) (PC)]

I am glad to rise to sum up on behalf of Plaid Cymru, the Scottish National party and the Green party. We have heard 26 speakers in the debate today, including the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which is ample proof that we made the correct choice in putting this subject up for debate. I will try to mention all the speakers briefly, although I am anxious to allow the Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey) ample time to defend her Government’s position. To that end, I might sit down a little early.

The debate was opened by my hon. Friend the Member for Banff and Buchan (Dr Whiteford), who pointed out that the proposed penalty was inherently unfair, that it had structural problems and that it would hit disabled people, foster carers, separated parents and many others. She outlined some mitigation measures that could be taken, but her choice—and that of my right hon. and hon. Friends and me—is that the Government should abandon the penalty.

The Minister of State then gave us a clear explanation, as he always does. I will not go into the details of his speech, but he made some interesting points. He stated clearly that one of the purposes of the penalty was to save money; we would argue that that is its main purpose. He also said, to some surprise, that these were Labour cuts. I thought that it was the Conservative and Liberal parties that were in government, and that Labour was in opposition, but there we are. That is what he said. He also said that there was a spare room subsidy. We have been calling it a bedroom tax. May I suggest that we all call it a penalty? It will be a penalty on ordinary people.

The right hon. Member for Birmingham, Hodge Hill (Mr Byrne) discussed the problems that will arise from the penalty, especially in a time of recession, and the problems that people would face in moving when there was no possibility of their doing so. The hon. Member for Keighley (Kris Hopkins), who is no longer in his place, talked about his constituency. The hon. Member for Glasgow North (Ann McKechin) said that the Government were unprepared, that great disruption would be caused, and that we needed solutions for housing problems as a whole, and not just in terms of the money involved.

The hon. Member for Leeds North West (Greg Mulholland) explained his position with some care and eloquence, and I hope that he might be persuaded to join us in the Lobby this evening, rather than abstaining. The hon. Member for Newport East (Jessica Morden) outlined some heartrending cases and talked about the nature of the Welsh stock. She made a point that many other hon. Members made, which was that many people have no choice. The Government might think that there is a choice, but there ain’t. The hon. Member for Battersea (Jane Ellison) called on Labour to pledge to reverse the measure if it was in government, and that reasonable request is echoed on these Benches as well. However, I do not think that she quite understood the delightful intricacies of devolution, or the fact that the SNP is actually in government in Scotland.

The hon. Member for Brighton, Pavilion (Caroline Lucas), who apologises for being unable to be here this evening, highlighted the Kafkaesque point that if the Government’s intentions are carried out, they will save no money—that is, that people would move and no money would be saved. She also talked at some length about other practical points, and ended by saying that while the banks got bailed out, the poor got thrown out. The right hon. Member for Wokingham (Mr Redwood) recognised the difficulties involved in downsizing, and emphasised the value of incentives rather than penalties. He also talked about eligibility, and I am afraid that he then strayed into the immigration debate.

My hon. Friend the Member for Dundee East (Stewart Hosie) gave the House a riveting explanation of the situation in Scotland. He also pointed out that 79% of the households in Scotland had a disabled person living in them, which is an even higher figure than for England or Wales.

The hon. Member for North East Somerset (Jacob Rees-Mogg) overstated the case. Initially, I thought he was falling into the schoolboy error of overstating people’s case in order to knock it down more easily. Then, however, I realised that he actually believes this stuff.

The hon. Member for North Ayrshire and Arran (Katy Clark) pointed out some problems that will arise and spoke about the misery that will be caused. The hon. Member for Bolton South East (Yasmin Qureshi) said that, in reality, spare rooms are not spare. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) outlined some of the factual background and outlined ways in which these sort of problems are tackled elsewhere—in Ireland and the USA, for example.

The hon. Member for Inverclyde (Mr McKenzie) supported the motion, and the hon. Member for Swansea West (Geraint Davies) spoke in his own inimitable style about the impact on working class people. The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) talked about the problems for foster parents, which are indeed severe and need to be looked at again.

The hon. Member for Bishop Auckland (Helen Goodman) gave us a very interesting account of her attempts to live on benefit. It might well be a salutary lesson for some Conservative Members to repeat the experience she had in that respect. The hon. Member for Edinburgh East (Sheila Gilmore) outlined many of the practical difficulties, while the hon. Member for Glasgow North East (Mr Bain) talked about the macro-economic effects and the blow to local economies.

The hon. Member for Dumfries and Galloway (Mr Brown) spoke about the effects on disabled people and on the poorest, and called for ameliorating measures. The hon. Member for Bolton West (Julie Hilling) talked about the effect on local housing providers and the effect on real families—not the families of the Government’s imagination. The hon. Member for Llanelli (Nia Griffith) talked about the inflexible nature of the housing stock and the consequences from it, while the hon. Member for Strangford (Jim Shannon) gave us a welcome perspective from Northern Ireland and spoke about the problems this penalty will cause there. Last but not least, the hon. Member for Copeland (Mr Reed) said that what we have heard this afternoon is only the tip of the iceberg.

As I said, we have heard 26 speakers. However seductively the Minister will present her arguments, it is clear to the House this afternoon that the Government’s main aim is to cut the housing budget, taking money from the pockets of some of those least able to afford it. As has been said, two thirds of those affected are disabled or have disabled partners, and I point out that half the people affected have been tenants for 10 years or more. Conservative Members are fond of complaining about crime and disorder on estates. These longer-term tenants are the sort of people we want to stay on estates to give leadership to the local communities, but they are the people who will be moved on by this penalty.

As has been mentioned, 46% of housing benefit claimants will be affected in Wales compared with 31% for Great Britain in general, showing that this is a particular problem for Wales. My own local authority of Gwynedd is a case in point as 1,378 families will lose between £8 and £24 a week. If they try to follow the Government’s advice and move within the housing stock, they will encounter difficulties, especially if they try to move into the private sector. People wanting to move within the stock in Gwynedd will face competition from the tourism industry, which has proper needs that should be addressed by the local housing stock. In the city of Bangor, the people wanting to move will be competing with many thousands of students. What are they looking for? They are looking for one-bedroom or two-bedroom properties—for small places. Those will be the local effects stemming from this change.

The Government say, of course, that people could find work. Average incomes in my area are £15,000 a year, and I have no idea how people are going to find the £700 to pay this penalty when they are not able to move. I do not think that the Government have thought that through; and if they have thought it through, they do not care. I can tell the Minister that it is not just a matter of taking up a few hours of extra work serving in a shop or working in a care home. Taking more work is not a possibility when hundreds of people are chasing every job, and when disabled people always come at the end of the queue when the jobs are being handed out.

Perhaps we should be charitable to the Government. They say that they are introducing this change to improve occupancy, and—as the Under-Secretary of State for Wales, the hon. Member for Preseli Pembrokeshire (Stephen Crabb), said this morning—to alleviate homelessness. However, there are currently 19,000 homeless people in Wales, and I think that this measure will merely add to that total. Some people will say, “We will pay.” Some will say, “We will do without, and we will pay.” Some will be forced to say, “There is nothing left to do without, and we will not be able to pay.”

It seems that it is up to me, as a mere Welsh nationalist, to draw the Government’s attention to the English saying “An Englishman’s home is his castle.” They assail that castle at their peril.

18:50

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

I thank Members on both sides of the House for their valuable contributions to this important debate. It is good to have an opportunity to respond to a number of the points that were raised, and also to correct some inaccuracies.

Having listened to the whole debate, I know that there are some issues on which we all agree. Consensus is an important point at which to start, because we are all looking for a solution to a problem that the coalition Government have been handed, so I will begin by listing the facts on which we are agreed.

There is a considerable lack of social homes, because very few have been built in recent years. The Secretary of State has referred to a complete collapse in the building of social housing under the last Government. Housing benefit has doubled in the last 10 years. We all agree that we will have to manage the bill for that, but how are we going to deal with it? How are we going to find a solution to such a large problem? We all probably agree, too, that fairness must be at the heart of that solution: fairness to those who are in overcrowded homes, fairness to those who are under-occupying, and fairness to the taxpayer.

Let me begin, however, with the removal of discrepancies in the rented sector between those who are privately renting and those who are socially renting. An arrangement whereby people living next door to each other are renting under different systems is innately unfair, and must be addressed. I think all Members will be pleased to hear that I shall be taking Labour’s lead in this instance. Labour introduced the local housing allowance for private sector tenants who did not receive housing benefit for a spare bedroom, which seems a good point at which to start. We are doing the same, in that we are introducing equality in the system for everyone who is renting.

The second issue that we must tackle is the problem of people who are living in overcrowded accommodation. As my hon. Friend the Minister of State said, a quarter of a million people are in that position. My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), my right hon. Friend the Member for Wokingham (Mr Redwood) and my hon. Friend the Member for Battersea (Jane Ellison) also mentioned those people, but Opposition Members refused to discuss them.

We also all agree that we are talking about family homes. They are not just houses; people have lived in them. That is why we have exempted those who are above the state pension credit age. We recognise that pensioners would be particularly affected by these changes. My hon. Friend the Member for City of Chester (Stephen Mosley) reminded Labour Members what they had repeated time and again. They must get a grip of the housing benefit bill. They never managed to do that in government, but they must do it if they are to be even a credible Opposition.

My hon. Friend the Member for Battersea made a very important point. When Opposition Members said that they would vote against the measure because they disagreed with it, she challenged them by asking whether they would reverse it and put that in their manifesto. Silence came from the Opposition Benches.

On discretionary housing payments, many Members raised specific issues and complex cases. Specific groups were identified, such as foster carers and people who live in houses with major disability adaptations. Rather than central Government defining exactly what should happen in every case, we have allocated the money we think is needed and given it to local authorities so they can respond on a case-by-case basis. Such local discretion is right. We might think that many different individuals should be exempt, but it would be impossible to write that into regulations and statutory instruments. That is why we have allocated discretionary housing payments of £60 million this year and £155 million next year to local authorities.

In the past, discretionary payments have been seen as a temporary fix for a short-term problem. However, under the new system these new payments can be for the long term, because some situations will not change, and if someone lives in a house that has been substantially adapted, they will need to keep it.

We have debated this subject for over six hours and many inaccurate things were said and many questions were raised and remained unanswered, so I will canter through quite a few of them. The hon. Member for Dundee East (Stewart Hosie) asked about children at university. Children absent at college are covered by the normal rates of absences and will not be affected if they are returning for holidays. My hon. Friend the Member for Leeds North West (Greg Mulholland) asked whether people can apply ahead of their need arising. They can: they can apply for these payments now, although, obviously, they will not be paid until the payment is needed.

The hon. Members for Dundee East and for Strangford (Jim Shannon) asked about people with a disability who need an overnight carer. Obviously, they are exempt, regardless of whether they need an overnight carer all the time or just occasionally. Again, Opposition Members got their facts wrong.

The hon. Member for Dumfries and Galloway (Mr Brown) questioned the number of spare bedrooms. There are 1 million spare bedrooms in properties occupied by working-age people alone, so that does not include pensioners. The hon. Member for Glasgow North (Ann McKechin) asked why Lord Freud could not attend a meeting. He could not do so because he was involved in a debate in the other place. However, I am happy to confirm that he will make that visit very soon. That is being arranged with the Secretary of State.

The hon. Member for Westminster North (Ms Buck) said that if people are moving around, this policy will not save any money. That is incorrect. She is not taking account of the previous circumstances of the people who will be moving into the vacated properties. [Interruption.] They may have been in more expensive private or temporary accommodation, so this dynamic benefit will save money. [Interruption.] Opposition Members are perpetuating inaccurate myths. [Interruption.]

[Mr Speaker]

Order. The hon. Member for Denton and Reddish (Andrew Gwynne) is shouting more loudly at the Minister than I shouted for Arsenal at the Emirates last Saturday. It really will not do.

[Esther McVey]

The hon. Member for Swansea West (Geraint Davies) talked about under-occupancy among homeowners and asked what we are doing about that. The Government support homeowners taking in a lodger if they wish, just as we do for people in social housing. There will be a £4,250 income tax exemption should somebody want to take in a lodger.

The hon. Member for Brighton, Pavilion (Caroline Lucas) talked about borrowing more money. We cannot keep on borrowing. That is what got us into this situation. We need to stop borrowing and start living within our means.

Let me finish dealing with the questions that were raised. Many hon. Members asked about the cost of moving—

[Pete Wishart]

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 Deputy Speaker (Mr Lindsay Hoyle)]

I ask the Serjeant at Arms to investigate the delay in the No Lobby.

18:59

Division 167

Ayes: 224

---

Labour: 213
Scottish National Party: 5
Democratic Unionist Party: 2
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Independent: 1

Noes: 265

---

Conservative: 242
Liberal Democrat: 21
Independent: 1

Business without Debate

Wednesday 27th February 2013 Commons Chamber

Deferred Divisions

Motion made, and Question put forthwith (Standing Order No. 41A(3)),

That, at this day’s sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the Motion in the name of Greg Clark relating to Capital Gains Tax. —(Nicky Morgan.)

Question agreed to.

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Capital Gains Tax

That the draft Building Societies (Core Capital Deferred Shares) Regulations 2013, which were laid before this House on 28 January, be approved. —(Nicky Morgan.)

Question agreed to.

Financial Services and Markets

Wednesday 27th February 2013 Commons Chamber

[Relevant documents: oral evidence taken before the Treasury Committee on macro-prudential tools, HC 546-i and -ii; and written evidence reported to the House by the Treasury Committee on 17 July and 20 November 2012 on macro-prudential tools.]

19:19

[The Financial Secretary to the Treasury (Greg Clark)]

I beg to move,

That the draft Bank of England Act 1998 (Macro-prudential Measures) Order 2013, which was laid before this House on 24 January, be approved.

One of the most significant failings of the previous system for regulating financial services was the lack of clear responsibility for financial stability. It has been all too easy for the identification and management of risks to financial stability to fall in the cracks between what those organisations believed were their respective roles in protecting and promoting stability in the financial sector. That confusion was a key contributing factor to the emergence of the financial crisis in 2007. None of the institutions involved was effectively horizon-scanning to identify macro-prudential risks to stability across the financial system.

In the light of those failings, the Bank of England Act 1998, as amended by the Financial Services Act 2012, gave the Bank of England clear responsibility for financial stability. To support that objective, the Act creates a new committee of the Bank, the Financial Policy Committee, with the role of identifying, monitoring and managing systemic risks to the UK financial system. In order to carry out that role, the FPC will need macro-prudential measures to mitigate the risks to stability it identifies. The FPC will act through the regulators, which work directly with financial institutions.

The FPC will do that in two ways: first, through recommendations, which can be made to the regulators, to industry, to the Treasury, within the Bank and to other persons; and, secondly, through directions that can be given to the Prudential Regulatory Authority and the Financial Conduct Authority. The FPC’s direction power is governed by the measures set out in the order before the House. The regulators must comply with a direction, but they will have discretion over its timing and implementation method.

Before discussing the measures that will be granted to the FPC, it is worth noting that there is an international consensus on the need for macro-prudential regulation. International regulations such as Basel III and the capital requirements directive IV go some way towards establishing minimum standards while retaining room for national discretion, although areas such as the leverage ratio remain under discussion. The UK strongly supports the ability of national supervisors to exercise discretion where appropriate.

In February 2011 the Government and the Bank established an interim FPC to undertake, as far as possible, the work of the statutory FPC ahead of the passing of the relevant legislation. One of the tasks set for the interim FPC was to analyse and recommend macro-prudential measures over which the statutory FPC would have direction-making powers.

[Mr Andrew Tyrie (Chichester) (Con)]

The Minister has just mentioned the leverage ratio. There are two crucial issues: first, the leverage ratio should be firmly in the hands of the FPC, not the Government; and, secondly, the UK should be able to act unilaterally, rather than necessarily having to wait indefinitely for international agreement—we should not move at the speed of the slowest. Indeed, the United States demonstrates how necessary that is. Does the Minister agree with that sentiment and, if so, why is that not reflected in what he is announcing today?

[Greg Clark]

As my hon. Friend knows, that has been a matter of much debate in the Treasury Committee and the Banking Commission, both of which he chairs. It is appropriate to have regard to the international debate on this. There is a difference between the debate on the leverage ratio and the two other tools that we will move on to talk about, the sectoral capital requirements and the counter-cyclical buffer, over which, it has been established internationally, there should be domestic discretion. We are not at that stage with the leverage ratio, as he will know, but I can certainly confirm to the House that the Government’s intention is to provide the FPC with a time-varying leverage ratio by 2018, subject to a review by the European Banking Authority, which is planned for 2017.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

I am intrigued by the Minister’s 2018 commitment, but would it not make good and prudent legislative sense to take the opportunity in the draft Financial Services (Banking Reform) Bill, which will arrive in the House imminently, to insert provisions that would allow the leverage ratio to be triggered sooner if there is a delay in the international discussions?

[Greg Clark]

We do not expect such a delay. The discussions are continuing and are live, as we know, so we do not expect to need that, but of course it is open to the House as it debates the Bill, presumably at some length, to keep that under review as the discussions progress.

The statutory instrument we are debating today relates specifically to the ability to set sectoral capital requirements. I will deal with that tool first before briefly covering the others. The interim FPC recommended that the statutory FPC should have a power of direction to vary financial institutions’ capital requirements against exposures to specific sectors over time. It argued that the over-exuberance that precedes crises often begins in specific sectors before spreading further. The Government agree that this targeted approach would allow these risks to be managed more effectively and proportionately than raising capital requirements more generally. The FPC has stated that it would wish to avoid what it terms an

“overly activist, fine-tuning approach”,

which should limit this risk. However, there may be times when using the tools in a granular way may be necessary, so the Government will keep the use of this tool under review to ensure that it is being used effectively and proportionately. There is also a risk that imposing sector-specific requirements could displace excessive risk into other sectors, so the FPC will need to monitor carefully the impact of any policy interventions using this tool and perhaps consider adjusting more general capital requirements if displacement turns out to be a significant problem.

I should take this opportunity to bring to the House’s attention the one change that the Government have made to the order following the consultation that we undertook on the draft version that was made available for that purpose. The current order excludes investment firms that are not regulated by the PRA from the FPC’s power. This will ensure that systemically important firms are captured while smaller firms that are not systemically important will not be subject to additional requirements.

Let me discuss briefly the other macro-prudential tools that the Government intend to give the FPC: the role of setting the UK’s counter-cyclical capital buffer; and, as we have briefly discussed, the power to intervene to limit leverage ratios. These are not covered by the draft order, but it might be useful if I provide a bit of context to the debate. The counter-cyclical capital buffer is part of the Basel III agreement, and it will be implemented in Europe by the capital requirements directive, commonly known as CRD 4. The directive aims to ensure that banking sector capital requirements take account of the macro-financial environment in which banks operate. It will be deployed by national jurisdictions when excess aggregate credit growth is judged to be associated with a build-up of system-wide risk to ensure that the banking system has a buffer of capital to protect it against future losses. Banks, building societies and larger investment firms will be required to build up capital during upturns. This will help to increase the resilience of the financial system and might also dampen the credit cycle. Unwinding these requirements in the downturn once the threat has passed might help to mitigate contractions in the supply of lending.

It is clear that with its macro-prudential focus, the FPC will be the body best placed to determine the level of the counter-cyclical capital buffer. This was supported by the results of the Government’s consultation. As the counter-cyclical capital buffer is expected to be provided for in CRD 4, on which discussions are continuing, the simplest way to incorporate it into UK law is via regulations made under section 2(2) of the European Communities Act 1972 to transpose into UK law the provisions of CRD 4 which relate to the counter-cyclical capital buffer.

It is vital that the FPC’s decisions in relation to the counter-cyclical capital buffer should be subject to comparable procedural and reporting requirements to the FPC’s other tools. Therefore, in addition to the requirements imposed by the EU legislation, the Government intend to ensure that the counter-cyclical capital buffer will be subject to the same transparency requirements as other FPC decisions, with a summary of the FPC’s discussions when taking decisions on the buffer set out in the FPC’s meeting records, and the FPC’s use of the buffer covered in the biannual financial stability report. The Government will make any necessary changes to achieve this in the regulations that incorporate CRD 4 into UK law.

The interim FPC recommended that the statutory FPC should have a power of direction to set and vary a minimum leverage ratio. The Government think that a leverage ratio could indeed be a useful macro-prudential tool for the FPC. The unweighted nature of the measure would guard against risk weights underestimating the true riskiness of assets and provide a directly comparable figure across firms. Firms’ leverage ratios were a useful indicator of failure during the last crisis, and the period immediately preceding the crisis was characterised by sharp increases in leverage. The Government strongly support the inclusion of a backstop leverage ratio in the EU prudential toolkit and consider it an essential measure to ensure that leverage remains at sustainable levels. It is clear that there is some way to go, but the review in 2017 will address that, and it will not be implemented across the EU until 2018, so we have some time to consider it.

[Mr Tyrie]

Will the Minister explain what possible logic there is to maintaining the leverage ratio at exactly the same level as a back-stop for risk weights of more than 10% as when the risk weights were set at only 8%?

[Greg Clark]

The discussions on those need to proceed separately—I think that the Financial Services (Banking Reform) Bill Committee will have some vigorous discussions—but the order relates solely to the sectoral requirements.

The Government will, of course, be able to add to the suite of macro-prudential tools in the future by further order, subject to the approval of this House and the other place. At the moment, we believe that the measures I have described are appropriate and sufficient starting points for the FPC. The Government expect the tool kit to adapt and evolve as the international debate and academic literature on the subject develops and empirical experience becomes more widely available. We expect the FPC to make recommendations to the Treasury if its macro-prudential measures require amendments or the addition of new measures is required. I hope that my explanation has been helpful.

19:29

[Chris Leslie (Nottingham East) (Lab/Co-op)]

The jargon in this order may deter not just members of the public but—dare I say it?—hon. Members from rolling up their sleeves and getting involved in this debate. I contend, however, that, in layman’s turns, the order involves an incredibly important set of issues. We are talking about giving the regulators of the unelected Bank of England’s Financial Policy Committee incredible powers that will enable them to tell people the level of deposit required for their home loan purchase and, potentially at a moment’s notice, that minimum repayments on their credit cards will need to rise from, for example, 2% to 5%. They will also be able to tell businesses that loans and overdrafts that they may have already arranged with their banks are no longer feasible. We are talking about the significant potential impacts that macro-prudential policy making could have downstream on the economy and consumers. As we have said many times, although prudential regulatory theory is fine—it is difficult to disagree with the concept—the practical reality and serious questions about how it will work merit consideration.

We support the creation of the FPC at the Bank of England. An important lesson from the global financial crisis is that we need better systemic oversight, not just firm-by-firm regulation. We have to see the wood for the trees. However, as was said last year during the passage of the Financial Services Act 2012, questions linger about the FPC’s accountability and the rationale behind the choices it will make. Asking very clever people to gaze into a crystal ball and predict the economic future is a big thing for Parliament to do. We are asking them to improve their foresight when most people find it easier to draw conclusions in hindsight. There is, therefore, a lot of responsibility on the shoulders of the Bank of England and, of course, this provides a perfect vehicle for it to be landed with the blame by politicians if things go wrong. Members of the FPC will no doubt be well aware of those responsibilities.

As the Minister has said, the order is relatively straightforward. It gives the Prudential Regulation Authority, which is an arm of the Bank of England, the power to make banks and investment firms increase their capital holdings—in other words, their additional own funds—in relation to their exposure to residential property, commercial property or the financial sector. It will also give the PRA the power to make those banks and investment firms treat exposures to other financial services companies, residential property or commercial property as riskier ventures than they might otherwise have done—in other words, to raise the risk weightings on those holdings.

It was interesting to hear the Minister say that, after the consultation, the Government changed things so that the PRA-regulated firms would be those that are systemically important. That throws up a question that has just occurred to me. I had assumed that all residential mortgage loans and commercial transactions would be affected by a turn of the dial by the FPC. As it turns out, the Minister is saying that only transactions undertaken by systemically important organisations or the larger banks will be affected. Will he tell the House what proportion of residential and commercial transactions will not be affected if the FPC decides to adjust the availability of finance in those sectors or the capital requirements affecting those sectors? I assume that the vast majority of the firms in those markets are systemically important, but it would be interesting if the Minister gave a breakdown. If he cannot tonight, I would be happy if his team wrote to me on that issue.

There are other macro-prudential tools. The Minister mentioned the counter-cyclical capital buffer. That is part of the Basel III requirements which will be implemented through European directives and so forth. I want to ask him about some of the other macro-prudential tools that were discussed in a long document by the FPC.

I am pretty sure that the Minister is saying that, by and large, the sectoral capital requirements are those that are dealt with in the order, but I am not entirely clear about that. If one wanted to be very theoretical about macro-prudential policy, one could argue that history shows, whether through the South Sea bubble or the tulip boom, what has happened to various sectors that nobody predicted would become overheated. I do not necessarily see all sectors coming under the potential purview of the FPC. I assume that the Government would simply vest the FPC with other sectoral issues if they felt that there were emerging pressures or credit bubbles in other sectors. It does not seem that the Minister is today allowing the FPC to intervene across the whole landscape.

The hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee, rightly asked about the leverage ratio. I am surprised that the Minister wants to wait until 2018 for that. He says that he hopes there will not be slippage, but he has been around the European policy-making circuit for long enough to realise that a commitment to do something in 2018 means that it may well not materialise until 2022 or even later. One just has to look at the solvency II discussions, which seem to be generational. I regret that the Government seem reluctant to take a British approach to regulating on the leverage ratio. I do not think that we should simply wait for Europe to determine such matters for us. It would be better if the Minister gave a commitment that he would at least consider including in the Financial Services (Banking Reform) Bill the recommendations of the Parliamentary Commission on Banking Standards on giving the FPC the right to get into some of the leverage ratio questions.

I have a number of other points that I want to ask the Minister about briefly. On the enforcement of prudential regulation, will he elaborate on the penalties or disciplinary steps that the regulator will have at its disposal if an investment firm or bank contravenes the imposed requirements of the FPC? If we have a body that is making policy, we must ask how it will be enforced. So far, a lot of the penalties in the Financial Services (Banking Reform) Bill seem to involve an individual seeking redress through the civil courts, which seems quite weak. What will happen if a bank steps across a line?

Members will recall the debate that we had during the passage of the Financial Services Act 2012 on the stability rules that the Government originally proposed to give to the Bank of England. They wanted to emphasise stability, which of course is vital, but they left out the importance of getting the economy growing and creating jobs, especially when times are tough or when there is a deflationary environment. Eventually, the Chancellor of the Exchequer was forced to relent and an amendment was inserted in the House of Lords to ensure that the FPC has regard to the economic objectives of Government policy.

Are we in danger of repeating the same lopsidedness in the regulations, or of an asymmetrical approach to attempts to control the heat of the economy? The measures in the order specify that banks must hold “additional” funds if lending to households or businesses, with a view to slowing things down and taking the heat out of the economy. That, of course, is a necessary part of the toolkit, but what happens if things slow down too much and the economy needs more lending to businesses and households, or more inter-bank and financial services mutual investment? The order does not seem to contain corresponding or parallel powers to dial things down, relieve capital requirements or remove “additional own funds” provisions if they prove in retrospect to have gone too far. Is that a problem with the order? Should not the power be symmetrical? I would be grateful if the Minister would consider that point.

On enforcement, are there dangers and risks of gaming in sectoral capital requirements? If we draw up operational targets that focus on the means rather than the ends, will the Minister assure the House that some of the specific requirements on residential or commercial investment cannot be evaded by twisting definitions, deliberate misinterpretation or gaming? I gather that that point came up at the Treasury Committee last year and there are important concerns.

Will the Minister update the House on the latest information about who will make decisions on the loan-to-value and loan-to-income ratios on mortgages? There was a bit of pass the parcel between the FPC Committee and the Treasury last year when it came to mortgage regulation. The Treasury wanted the Bank of England to do the deed, but the Bank said it was a political decision and wanted Ministers to make decisions restricting LTV ratios. Will the Minister say where things currently stand, because such things do matter? As Adrian Coles from the Building Societies Association has rightly said, a change to the loan-to-value ratio may not matter much to those wanting to get a foot on the property ladder who have already got access to deep pockets or the bank of mum and dad, as it is known, but rapid decisions to increase the amount of deposit a home buyer needs will hit the least well off in society. Who will decide those things—the Treasury or the FPC?

My final two points are on geographical regulation and business lending. Will the sectoral powers be available for the Bank of England to use area by area, region by region, and locality by locality? In other words, will the Bank be able, or is it seeking, to take heat out of certain geographical housing markets and not others? I do not advocate this, but if it so wished could the Bank use these powers to make it harder to buy a house in London than in Cornwall, or vice versa? Will the Minister clarify how specific—or area-specific—the Bank can be with these powers?

Lending to small and medium-sized enterprises has fallen off and is still doing so. The funding for lending scheme was supposed to change that but its rules are skewed towards residential lending rather than business lending. Is the order to be seen in parallel with that scheme, and can the scheme be reformed to favour business lending? Will the Chancellor consider those issues in the Budget?

Transparency and the openness of the FPC must be considered and many, including the Council of Mortgage Lenders, have said that we need proper analysis by the FPC about what it is doing and an explanation of why it is using its powers. A narrative requirement on the FPC is a reasonable request, so will the Minister explain why that is not in the order?

The Opposition support these general powers but we hope for refinements and improved accountability in the enactment of some of these tools. We want Parliament to have better scrutiny of these measures and for the Treasury to ensure that when the tools are granted, whether or not that is in the next wave or regulations or legislation, the Treasury Committee and others will have a better opportunity for proper oversight of how the Bank of England is exercising these considerable powers.

19:44

[Mr George Mudie (Leeds East) (Lab)]

I rise to put two points to the House. First, I object to the statutory instrument on a matter of principle, which I will outline. Secondly, I want to ask the Minister why he included residential property among the first prudential tools. Some of the tools make sense—including commercial, and, obviously, investment and financial services—but the residential property one does not.

Specifically, I object to how we are dealing with discussion, debate and decisions on the macro-prudential tools. I have constantly raised the matter in the Treasury Committee and the Independent Commission on Banking, and I have raised it on the Floor of the House with the Chancellor. As my hon. Friend the Member for Nottingham East (Chris Leslie) said, these can be seen as boring matters, but it is accepted that they could lead to decisions that affect the standard of living of many of our constituents; affect the future of industries such as the construction industry; and affect the economy. The decisions will be taken by non-elected individuals and tonight appears to be the House’s only opportunity to debate and challenge the measures.

The matter is being dealt with by statutory instrument. In other words, we have 90 minutes to discuss the measures and cannot amend them. We can only vote against the whole measure if we disagree with it or feel strongly about any part of it. The measures are proposed by the Government. If Opposition Members have strong feelings, they have only one chance to influence the decision, and they must turn down the whole order. That is a nonsensical procedure.

I have raised the matter with the Chancellor of the Exchequer in the Chamber. He indicated that he understood the measure’s sensitivity and importance and that he had an open mind. He accepted that the usual channels would deal with it. I pay tribute to him for placing the order on the Chamber’s agenda rather than dealing with it upstairs in Committee in the normal way. That is a step forward. The FPC is made up of unelected individuals, but they set policy, so the statutory instrument is a pretty disgraceful way to deal with the matter. Statutory instruments and secondary legislation are not supposed to deal with policy or principle—they deal with measures that need to be adjusted as time passes. They are not a way to decide things of such importance.

The Treasury Committee raised the matter with the Minister when they discussed macro-economics. He seemed to accept what we said and I have a quote if he challenges me. However, his approach to the question—sadly, because he is a well regarded Minister—was this: “We’ve appointed these individuals and should not second-guess them.” That is a recipe for disaster.

The Treasury Committee yesterday heard evidence from the Monetary Policy Committee, including officers and non-executives from the Bank of England. It was a hairy meeting, because those individuals take decisions, but there was no sign that the battle of inflation is definitely winning the argument against the battle for growth. If we read the words of the former Chancellor, my right hon. Friend the Member for Edinburgh South West (Mr Darling), and see the present Chancellor, we can see the difficulty they have had in getting so-called independent bodies to accept the sensitivity of some of their decisions. It is an impossible task. The bodies shelter under their independence. Both Chancellors have experienced this, and if they want bodies to do something they feel is necessary, the issue of independence is thrown back in their face: “You gave us independence and therefore you should not interfere”. I am worried about this issue, which is why I am taking the opportunity to put it on the record.

On residential matters, to which my hon. Friend the Member for Nottingham East referred, one of the macro-prudential tools discussed in the Financial Policy Committee and dropped was loan-to-value mortgages. Most of us were pleased when that was dropped, but it was a runner and was being discussed in Financial Services Authority circles for some 18 months. I am certain, from watching the industry, that that had a great effect on the industry’s decisions—it was trying to second-guess the FSA. The business of 90% and 80% mortgages had a devastating effect on individuals and couples who were trying to buy a house and begin family life. They were unable to take that step because the regulator was signalling to the regulated that they should be going in the direction of 90% and 80% at a time when the economy was dying for the construction industry to pick up and start building houses, which would have had a roll-on effect of people buying carpets, furniture, curtains and so on. The regulator was conditioning the decisions and behaviour of the regulated—it is that sensitive.

On a higher level, we are going through this business with the Monetary Policy Committee. As someone said—maybe in a crowded House this might have an effect—when an individual or a couple cannot get a mortgage, they do not blame the building society. When the building societies say it is the Monetary Policy Committee, they come to see us and we say it is the Monetary Policy Committee. The ordinary person in the street will ask, “Who set up the Monetary Policy Committee? Who is it answerable to?” It is answerable to us, but it is not really answerable to us because there is no real opportunity to make things happen. A yearly remit from the Chancellor is hardly a procedure for democratic accountability, and we are prevented from dealing with these matters on the Floor of the House in order to indicate our displeasure and unhappiness. I see the Treasurer of Her Majesty’s Household, the right hon. Member for Uxbridge and South Ruislip (Mr Randall), a very prominent member of the usual channels sitting in the Chamber. I hope he is listening to this debate and gets people to think about it.

I want to ask the Minister why on earth residential property was placed in the initial order. This is 2013. The Minister is as anxious as I am—probably more than I am—to see houses being built and sold and the whole procedure started. There is no question of any systemic risk in the foreseeable future. Even when the problems were at their worst, there was no systemic risk, just an industry with problems. I accept that some banks that had over-extended on their loans had real problems. I accept the point about the commercial side and the likes of RBS and HBOS—it was on a greater scale and of greater concern than on the residential side—and the point about investment and financial houses. However, for the MPC to start worrying—in shades of the FSA—about systemic risk in the construction industry spreads unnecessary alarm.

[Greg Clark]

indicated assent.

[Mr Mudie]

I see the Minister nodding. I am sure that he will explain, but that is the sort of thing I am talking about. If the loan-to-value ratio had been in this statutory instrument—if the interim FPC had stuck at it—I think this place would have been full and the Minister would have had little choice but to allow the thing through. None of us could have tabled an amendment stating how important it was that the rest of it went through; as politicians and constituency MPs, we would have had to vote against the whole thing to prevent it from happening. I hope that the Minister will consider both those issues.

19:56

[Greg Clark]

Let me respond to the points made by the hon. Members for Nottingham East (Chris Leslie) and for Leeds East (Mr Mudie). They made some thoughtful points about the House’s ability to scrutinise the powers that will be available to the FPC, particularly those relating to residential mortgages. Their comments went to the heart of the dilemma behind the setting up of these institutions and powers. The purpose of macro-prudential policy is—to adopt the analogy often used—to take the punch bowl away from the party just when the guests are getting over-exuberant. For the first time, there will be a group of people with the explicit task of monitoring conditions and taking a considered view of what is in the interests of financial stability but which might not be at the forefront of the minds of the people participating, either as practitioners, commercial players or politicians.

The hon. Member for Nottingham East acknowledged the consensus on the need to set up these institutions of macro-prudential policy, but that does not take away from the fact that their establishment is designed deliberately to introduce a necessary tension into the debates. The question arises, then, of whether these powers can be exercised appropriately—for example, whether the House has appropriate scrutiny and discretion over them.

One reason why we have initially given the FPC a minimal—I think he will agree—set of powers through a statutory instrument being debated on the Floor of the House is that these things should be properly scrutinised. We timed this debate so that it could follow the hearing of the Treasury Select Committee, of which the hon. Member for Leeds East is a member and which has considered this matter in recent days. Our intention is that these things should be properly scrutinised and well considered. It is for the Government to bring forward proposals about what the tools should be. Future proposals will be put before the House, and Ministers will be accountable to the Committee and the House. Indeed, the statutory instrument is available for debate. As the hon. Members would acknowledge, we have not loaded it with so many different provisions as to give the House a Hobson’s choice.

[Mr Mudie]

As a member of the Treasury Committee, I hear it said all the time that we have the ability to scrutinise, and that people are accountable to us. That carries little weight with me; it does not impress me. This is ultimately a question of who takes the decisions when a Minister or a Chancellor—such as the last Chancellor—going through a crisis meets an unelected Governor and asks him to do something in the interests of the economy and the future of the country, and the Governor says no. That is what we are talking about.

[Greg Clark]

Let me go on to describe some of the other elements involved. I said that we had committed to bringing to the House particular measures that could be debated. The hon. Gentleman has anticipated one such possibility. He was correct in suggesting that, if we had been proposing a power over the loan-to-value rate, the House would have been substantially more occupied than it is at the moment, that such a matter would engage Members and that there would have been a fuller debate on the matter. However, this is not the only mechanism by which scrutiny can take place.

The secondary objective of the Financial Policy Committee has been mentioned. Through the scrutiny of the House and of the hon. Gentleman’s Committee, that objective has been set up, and it means that the FPC’s duty to support the court of the Bank of England in achieving its financial stability objective is subject to supporting the policy of Her Majesty’s Government, including their objectives for growth and employment. That is significant. That power is there for a reason, and we expect it to be used. It requires the Chancellor of the day to write annually to the FPC to set out what he expects it to have regard to in making its decisions. The House will have the ability through that mechanism to scrutinise and take a view on whether Ministers—in this case, the Chancellor—are giving the right directions to the Committee in terms of what it should understand the Government’s economic objectives to be. I believe that the mention of growth and employment will address one of the concerns that has been raised.

It is worth noting that the measures we are talking about relate to peacetime; they are not for use in a crisis. The Chancellor will retain the ability to give directions to the Bank in a time of financial crisis, for example, when that is in the public interest. The measures before us are for use in the normal course of events.

There will also be a requirement on the FPC to account for its decisions. It will appear before the Treasury Committee after it has held its meetings and published its reports, and it will have to explain the basis of its recommendations and directions. It has made a commitment to setting out in advance the types of indicators that it will bring to bear on those questions, so there will be no arbitrary use of discretionary powers. The committee will seek to be predictable in regard to the types of instrument that it will use.

On the format of statutory instruments, the parliamentary Delegated Powers and Regulatory Reform Committee will take a view on whether the choice of procedure is appropriate. I think that the hon. Gentleman will approve of the fact that the affirmative resolution procedure is to be used in these circumstances.

Let me address the hon. Gentleman’s point about residential property, which is of course a matter of interest to our constituents. It has been pointed out that all these matters have a bearing on our constituents. I think he would acknowledge that any review of the recent financial crisis—and, indeed, of financial crises around the world—would note that housing bubbles are often associated with the kind of over-exuberance and excess that contributes to financial instability, which the arrangements that we have in place are designed to address. It is appropriate for the powers to be there. These sectors have been debated at the European level, and this is one of a limited number of sectors for which it is anticipated that the national regulators should have a sectoral power.

I think it important to note that the power to make recommendations and give directions is available to the FPC, but that there is no requirement that it should get in the business of micro-managing these sectors. It seems to make sense, on the basis of history, for this initial set of sectors to be included. The powers are there, as I say, but there has been some debate about whether they should be more specific in respect of loan-to-value powers, which is not part of the proposals. It is no part of the Government’s purpose, as the hon. Gentleman rightly anticipates, to prevent what we hope will be an increase in home ownership and house building as a result of the order.

Let me deal with some points raised by the hon. Member for Nottingham East. He forcefully made the point that we need an explanation from the Financial Policy Committee of why it is using its powers. This should not take place in a vacuum or in secret. I completely agree, and this is provided for in the Financial Services Act, as the hon. Gentleman, a veteran of the Committee, knows. Section 9S requires the FPC to give an explanation of the reasons for its use of direction powers, and the explanation needs to be published in the financial stability report and it needs to account to Parliament for its use of the powers.

Let me pick up one of the hon. Gentleman’s earlier points, which was not quite right. He mentioned credit card repayments, for example. The powers provided for in the statutory instrument do not go into that level of detail, and the FPC will not have those powers and they are certainly not in this order—and neither are the loan-to-value powers available.

The secondary objective addresses the hon. Gentleman’s point about the necessary symmetry of these arrangements. Macro-prudential regulation is certainly about damping down excessive exuberance when it takes place, but on the other side of the cycle, by retreating from some of the provisions by varying requirements downwards, it also has the power to reverse the dampening of those sectors.

[Chris Leslie]

I am sorry, but as I read the order, I note that it says that UK firms can be required to maintain “additional” funds, but there seems to be no provision to dial it down the other way. Have I misread the order?

[Greg Clark]

What I am referring to is the fact that if the requirements have been dialled up, they can be dialled down. That will be required. The fact that they are time varying precisely reflects the different conditions that will apply from time to time.

The hon. Gentleman mentioned the exemption for small firms, and he was quite right to raise the issue of what proportion of mortgages might be covered. To be clear— when he sees my remarks, he will be clear—the exemption applies to small investment firms. It is still the case that all deposit takers and banks, including building societies, will be within the scope of the power. That contribution will be recognised.

As to whether we should take the power—either through the order or, more likely, through the Banking Reform Bill or previous legislation on the leverage ratio, which is a live issue—it is already possible by order under the Financial Services Act to make provisions to vary the leverage ratio. Such an order would, of course, be subject to prior parliamentary approval. There is no requirement for additional primary legislation; the powers will be there at the time we expect to bring the provisions into force.

The hon. Gentleman asked about the penalties for contravening the views of the Financial Policy Committee. The committee makes recommendations to the regulators, and it is the regulators—the PRA and the FCA—who are responsible for implementing them. The hon. Gentleman will know—again, from the Financial Services Act—that considerable powers are available to the FCA and the PRA, in the form of regulatory sanctions, constrictions on firms’ activities, and unlimited fines. That is why the sector regulators have the powers of direction.

The hon. Gentleman raised a geographical point, asking whether the sectoral powers could be used to specify a particular area. The answer is that they could, if there were evidence of a particular problem in a particular area. However, as he will recall, there is a general requirement for the FPC to act proportionately, and one of the principles that has been agreed is that it should not become involved in the micro-management of these matters or in close detail. I consider it unlikely that it would make recommendations on a narrow geographical basis.

I hope that I have responded adequately to the points that have been made this evening. I gather from the Whips that I may have done so to the satisfaction of the House, and I hope that it will agree to the recommendations.

Question put and agreed to.

Resolved,

That the draft Bank of England Act 1998 (Macro-prudential Measures) Order 2013, which was laid before this House on 24 January, be approved.

Business without Debate

Wednesday 27th February 2013 Commons Chamber

Delegated Legislation

Wednesday 27th February 2013 Commons Chamber

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With the leave of the House, we shall take motions 5 to 11 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Pensions

That the draft National Employment Savings Trust (Amendment) Order 2013, which was laid before this House on 15 January, be approved.

Local Government

That the draft East Hertfordshire and Stevenage (Boundary Change) Order 2013, which was laid before this House on 22 January, be approved.

That the draft Gateshead and Northumberland (Boundary Change) Order 2013, which was laid before this House on 22 January, be approved.

Financial Services and Markets

That the draft Financial Services and Markets Act 2000 (Regulated Activities) (Amendment) Order 2013, which was laid before this House on 28 January, be approved.

That the draft Financial Services Act 2012 (Consequential Amendments) Order 2013, which was laid before this House on 28 January, be approved.

That the draft Financial Services Act 2012 (Misleading Statements and Impressions) Order 2013, which was laid before this House on 28 January, be approved.

Companies

That the draft Uncertificated Securities (Amendment) Regulations 2013, which were laid before this House on 28 January, be approved.—(Greg Hands.)

Question agreed to.

Human Rights in India

Wednesday 27th February 2013 Commons Chamber

20:11

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

I know that there is to be a debate on this subject tomorrow.

The petition, to which there are more than 2,000 signatures, states:

The Petition of residents of Coventry and the United Kingdom,

Declares that the Petitioners believe that the UK Government should encourage the Indian Union to take immediate action to stop human rights abuses facing minorities in India and that India should sign and ratify the Rome Statute of the International Criminal Court and the UN Charter against torture and other cruel, inhumane or degrading treatment or punishment which encompasses the death penalty and thus India should abolish the death penalty as it is a cruel, inhumane or degrading form of punishment; further declares that the UK Government should campaign to stop Balwant Singh Rajoana's death sentence and have him released from jail as he has served 17 years in custody and that the Indian Union should release all political prisoners, prisoners of conscience and prisoners who have been imprisoned without trial.

The Petitioners therefore request that the House of Commons urges the Government to appeal to India for the above actions to be taken, and request that the House holds a debate on these issues and brings them to light in the European Union and United Nations.

And the Petitioners remain, etc.

[P001157]

Country of Origin Marking (Manufactured Goods)

Wednesday 27th February 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

20:11

[Tristram Hunt (Stoke-on-Trent Central) (Lab)]

You can rest easy now, Mr Deputy Speaker. After all that gobbledegook about Basel III and socially dubious uses of money, we can return to the subject of the real economy. It is a great privilege to have secured this important Adjournment debate.

The issue of countries of origin and the right of consumers to know where goods, foods and materials emanate from is particularly important at present, as we battle with the ongoing horsemeat crisis. Indeed, that scandal is a textbook example of the need for clarity of information on sourcing, but what my colleagues and I wish to address this evening is origin marking in the ceramics industry, and especially the issue of what we call bogus back-stamping—the misleading allocation of country of origin details, designed to confuse the consumer.

It is said that we can always recognise a Stokie by their feverish examination of the back-stamp on any cup, saucer, plate or bowl. I am talking about the celebrated “turnover club”, as the plate is whisked over to examine the mark of origin—although I must add that there are some etiquette issues as to when we can do that when eating out.

I am glad to say that we have some excellent Stoke ware here in the Palace of Westminster. We have Wedgwood plates, some fine Dudson cups—from the constituency of my hon. Friend the Member for Stoke-on-Trent North (Joan Walley)—and if you were to join me for a cup of tea in my office, Mr Deputy Speaker, you would find some beautiful Emma Bridgewater mugs and Portmeirion cups and saucers.

It is a source of great pride to our constituents that pottery has been thrown in Stoke-on-Trent since the late-1500s. Out of the blue and yellow North Staffs clay came butter pots and flowerpots. In the sun kilns of Bagnall and Penkhull, local artisans started to glaze their earthenware and develop a reputation for craftsmanship. In their wake came the great houses of Wedgwood, Spode, Royal Doulton and Minton, names celebrated around the world for the excellence of their craftsmanship. Stoke-on-Trent gained the title “The Potteries” as “Made in Staffordshire” became a global hallmark of excellence.

When J. B. Priestley visited Stoke-on-Trent in the mid-1930s, he was taken aback by the beauty of the bottle kilns. He wrote:

“They represent the very heart and soul of the district…unless you are prepared to take a deep and lasting interest in what happens inside those ovens, it would be better for you to take the first train anywhere.”

Today, we make a lot of other stuff in Stoke, but the good news is that, after decades of decline, the pottery industry is roaring back to life: investment is up; orders are coming in; the kilns are alight; jobs are coming back from the far east; and we are all looking forward—as is the entire nation—to a successful royal birth this summer, with attendant ceramic sales. The key to success is the quality of our artists and designers, the new plant and equipment, and the artisan skills of the work force, which means it is more important than ever that consumers are able clearly to know what they are buying.

This is the problem we face: if a mug is made in Indonesia or Thailand, it can be transported into the UK and then have the word “England” stamped on the bottom of it. Similarly, if a mug is made in Vietnam or Turkey and then finished in England, it can have “Made in England” or “Made in Britain” stamped on the bottom. That is what we call bogus back-stamping—the wrongful attribution of country of origin labelling—and it is harming jobs and investment in the UK, and especially in Stoke-on-Trent. More than that, morally, it is trading off the skills, sweat and application of generations of Stoke-on-Trent workers, who turned the “Made in Staffordshire” brand into a world-class mark of excellence.

I have no problem with goods being made abroad and finished in the UK. This is not about protectionism. In a globalised marketplace, the supply chain will often cover many different continents. Many hundreds of jobs in the ceramics industry involve production abroad and finishing in the UK, and the companies concerned are often good firms that do the right thing. However, what I and my colleagues do have a problem with is goods that are made abroad being classed as being made in Staffordshire or Stoke-on-Trent, when they are not.

The rules are very clear. As you know, Mr Deputy Speaker, European Union directive 2025/73 states that it is the so-called ”blank”—where the first firing of the ceramics takes place—that determines the origin of the ware, irrespective of subsequent processes, such as finishing, decorating or glazing. It is about the first firing, and if that takes place in Jakarta, the product is Indonesian-made and should not have “England” stamped on the bottom.

For years, UK Governments of both parties—of all parties now—have opposed the compulsory indication of the country of origin of goods. Lord Mandelson attempted to introduce such a scheme in 2005 when he was the European Union Trade Commissioner, whereby there would be mandatory country of origin marking on certain products imported from third countries.

[Jim Shannon (Strangford) (DUP)]

Will the hon. Gentleman give way?

[Tristram Hunt]

I am happy to give way.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Jim Shannon!

[Jim Shannon]

It is a big surprise. I spoke to the hon. Gentleman before the debate and asked for his permission to intervene, and I thank him for allowing me to do so.

[Mr Deputy Speaker]

Order. This is an intervention so you do not need to worry about that. I was more bothered about the fact that you came into the Chamber after the hon. Member for Stoke-on-Trent Central (Tristram Hunt) had started.

[Jim Shannon]

I appreciate that, and you are very gracious, Mr Deputy Speaker. The hon. Gentleman has spoken eloquently about the issue in Staffordshire and England. This is a devolved matter for Northern Ireland, Scotland and Wales, but does he feel that we need a UK-wide policy and strategy, and legislative change that would include the whole United Kingdom—Great Britain and Northern Ireland—so we could fight this issue together for all these reasons?

[Tristram Hunt]

I am grateful for the hon. Gentleman’s intervention. This issue, be it, famously, about Scottish knitwear made in Morocco or goods unique to Northern Ireland which are made somewhere else and then passed off—

[Jim Shannon]

Giant’s causeway.

[Tristram Hunt]

Giant’s causeway is an excellent example, although it would be hard to make another Giant’s causeway in other parts of the world. As I will set out, this is an issue where we want central Government direction but then for things to be implemented locally. We want the push from the centre but for the approach to be rolled out to the devolved Administrations, and I agree with what the hon. Gentleman said in his intervention.

The attempt to introduce mandatory country of origin marking has not worked. After seven years of trying, it was dropped in the European Commission and I fear we will not have it back again. So I am not making a case this evening for reviving mandatory country of origin marking. Instead, I wish to make the case for focusing on those companies that are misleading consumers on country of origin claims.

[Joan Walley (Stoke-on-Trent North) (Lab)]

It is so important, particularly for the work force in Stoke-on-Trent, that we get some response from the Minister tonight. Does my hon. Friend agree that the real issue is that when people buy ceramics they want to be in a position to make an informed choice? Therefore, labelling is really important, as are the Consumer Protection from Unfair Trading Regulations 2008. If we are not going to go down the route of further legislation, we need proper enforcement, particularly by trading standards officers. We have seen a lack of trading standards officers because of the cuts to local government, so will the Minister therefore assure the House that the Department for Business, Innovation and Skills will give a real lead on requiring trading standards officers to take action on this issue of bogus back-stamping?

[Tristram Hunt]

My hon. Friend has been fighting for the ceramics industry for far longer than I have, and her achievements with Steelite, Middleport and Royal Stafford are known throughout Stoke-on-Trent. She rightly makes the case that this is about consumer rights; it is about consumers knowing that when they buy wares that are “made in Stoke-on-Trent” and “made in Staffordshire”—the finest in the world— those goods have an authenticity about where they are made.

In the last debate the House had on this issue, the hon. Member for South Staffordshire (Gavin Williamson), who is not in his place but who has a history of working in the ceramics industry, asked what country a plate made by his fictitious company “Gavin Williamson English Chinaware” might be made in. What he illustrated was just how ambiguous the current framework is when the history and tradition of English or British manufacturing is integral to the branding of certain products, whether they are actually manufactured here or not.

The potters are proud of their history and consumers want to be sure that they are purchasing the true heirs to 300 years of craftsmanship. Of course, back stamping is not a legal requirement and the absence of a back stamp usually tells us as much about an item’s origins as a stamp does. However, if a back stamp or any product labelling is applied, the Trade Descriptions Act 1968 requires these marks to be accurate indications of the

“place of manufacture, production, processing or reconditioning”

of the goods. That is where bogus back stamping comes in, undermining the “Made in Stoke-on-Trent” brand and misleading consumers. The onus lies with the trading standards authorities to weed out that practice.

Too often, Business Ministers have listened to the big retail chains and superstores as they demand cheap goods at any price and claim that any attempt to inform the consumer is protectionism. Well, it is not. It is about transparency and rebalancing the British economy; it is about honesty for the consumer, and a decent industrial strategy for the UK.

My initial ask of the Minister is for the Department for Business, Innovation and Skills to allocate some funding to secure protection for this nationally important sector, as it has for other sectors under the Trading Standards Institute—most notably and recently the money-lending industry. Secondly, I ask her to write to the Office of Fair Trading to ask it to take a close look at the issue and report to Parliament on how it is seeking to protect the branding and property rights of UK ceramics companies. I also ask her to lead by example. There are mugs in BIS with no back stamp, there are plates in British embassies that are made in Thailand, and I have found in august institutions such as the Royal Society and the Imperial War museum ceramics bedecked in the imagery of Britain but imported from abroad. If Business Ministers are serious about supporting the march of the makers, they could begin with Government procurement policy.

My hon. Friends and I are seeking from this debate a commitment from the Government to take bogus back stamping seriously; to allocate time and attention to the question; to explain to the OFT and trading standards authorities that this is a priority issue and that they have the resources to deal with it; and to support our great ceramics industry through a detailed procurement process. If the Minister does all that, my hon. Friends and I might just think about welcoming her into the “turnover club”.

20:27

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I am delighted to respond to the hon. Member for Stoke-on-Trent Central (Tristram Hunt) and I congratulate him not only on securing a debate on an issue that is very important for his constituency but on the passionate and humorous way in which he managed to convey the issues with a great degree of eloquence. He spoke from the heart about the importance of this fine industry and the role it can play in our nation’s heritage and our nation’s future.

It is not surprising, given that the hon. Gentleman represents the potteries area, that the ceramics industry was uppermost in his speech. Of course, it is a UK sector with a well-deserved worldwide reputation for the design and quality of its products. I can attest to that, as I was delighted to receive some when I got married two years ago. Such china makes a very fine wedding present, I must say.

Like the hon. Gentleman, the coalition Government are rightly proud of British manufacturing. I am delighted to hear the success stories of the potteries industry and, in particular, the recent improvements that mean that things are going very much in the right direction. We are clear that we want to secure and drive through growth, proclaiming what is made in Britain, invented in Britain and designed in Britain. The Department has championed that through the “Britain is Great” campaign and it is important that we champion the merits of our industries, which create so much fine produce in manufacturing.

I know that the hon. Gentleman and the other MPs from the Stoke area have recently had separate meetings with my right hon. Friend the Secretary of State and the Minister for Trade and Investment in the other place, Lord Green, to raise the issue of misleading origin marking. I hope those meetings reassured the hon. Gentleman to some degree that the Government take information for consumers seriously. Both the Secretary of State and Lord Green will write to him soon on this and other issues that he raised with them.

I agree that there is a place for country of origin labelling—that is, for positive country of origin marking, done because UK manufacturers think that is the right thing to do for themselves and for their customers. I would argue that legislation is not needed beyond the existing protections against counterfeiting and false advertisement, but that it can be done voluntarily. Of course many UK producers already do so because the companies rightly perceive a marketing benefit in being able to show that stamp of quality—hence the “turnover club”. The Government have consistently supported the use of voluntary country of origin marking, but we are cautious about adopting a legislative approach to origin labelling of manufactured goods.

The House will be aware of the Government’s concern that poorly designed regulation can be unnecessarily burdensome and complex, and duplicate requirements in other regulations, which can impose excessive and unnecessary costs on business. Introducing the debate, the hon. Gentleman stood up for businesses, so I am sure that he does not want them to face unnecessary costs either. We are trying to eliminate avoidable burdens of regulation and bureaucracy, so we will consider introducing new regulation only as the last resort. Overall, our aim is to reduce the amount of regulation, and that includes a commitment to improving and reducing the burdens imposed by European legislation.

That means we have to explore thoroughly alternatives to legislation, and in this case, I would argue that the alternative is voluntary labelling. The hon. Member for Stoke-on-Trent North (Joan Walley) asked whether, if the legislative route is not to be adopted, voluntary labelling can be properly enforced. She is right to highlight the key importance of enforcement. It is important to make it clear that because of rulings by the European Court of Justice and our single market obligations, the UK cannot unilaterally impose compulsory “Made in Britain” labelling, even if we wanted to; nor can we impose origin marking unilaterally on imports, because that would be contrary to our single market obligations.

Business can of course label if it wants, but that does not mean that such labelling is unregulated. Labelling has to be clear, accurate and not misleading to the consumer. The hon. Member for Stoke-on-Trent Central said he had a problem with claims that goods are made in Staffordshire or Stoke-on-Trent when they are not, and I wholeheartedly agree with him. Under current consumer protection regulations, it is a criminal offence to present false information and deliberately mislead consumers. The key test is whether the information encourages consumers to make a purchasing choice that they would otherwise not have made, and it includes misleading or false information on the origin of goods, however it is provided. That law exists.

The hon. Gentleman mentioned European Union directive 2025/73 and talked about origin being defined by where the initial firing takes place. That directive deals with the tariff treatment of ceramics and is therefore not strictly relevant to the Court’s judgment on consumer issues, where the key test is whether the consumer’s behaviour is affected. If it were deemed not to affect the consumer’s purchasing decisions, the information being wrong would not be deemed to be misleading.

[Joan Walley]

Let us imagine someone going to buy a wedding present of china: does the Minister not accept that if the impression is given that the china was made in this country and it has all the attributes of pottery made in Stoke-on-Trent, but in fact the blank was manufactured abroad, it cannot be accurately described as manufactured in this country? That is the misleading aspect. It is similar to the situation my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt) described involving beefburgers and horsemeat. In the remaining time, will the Minister stress how we can deal with disingenuous attempts to relabel an item as something other than what it actually is?

[Jo Swinson]

I will certainly endeavour to do so, because ensuring that existing provisions in law can be used is key to the question that the hon. Lady raises. The issue has not yet been tested in the courts in relation to origin markings. It is a broad concept, but the basic rule is that if consumers are likely to be misled in their purchasing decision, an offence is likely to have been committed.

Without commenting on specific examples, let me say that it is up to the enforcement authorities to consider whether there is any evidence of possible offences, and then it is for the courts to decide. The protection is not just for consumers—as in the example of gift buying outlined by the hon. Lady—but serves to ensure a level playing field for businesses that are honest and that give accurate information, so that they are not disadvantaged in relation to businesses that engage in deceptive practices. Local authority trading standards officers and the Office of Fair Trading are the relevant enforcement authorities in such a circumstance. The OFT’s role usually relates to matters affecting the general interests of consumers, rather than specific complaints, which are dealt with by trading standards officers. I encourage Members to ensure that any evidence of possible offences is brought to the attention of the relevant local authority, as has been alluded to.

Trading standards officers are, of course, answerable to their local authority and to local councillors. It is not the Government’s role to set local priorities for local enforcement activities, as they rightly depend on the issues arising in each area, and inevitably they will vary from authority to authority. In setting their priorities, however, local authorities must take into account the potential impact of particular behaviour not just on local consumers but on the wider well-being of the community, including the business community. Where local authority powers can be used to address matters that are having an adverse impact on a local economy with a particular concentration of businesses, it is reasonable for those matters to achieve the priority that they merit in that area.

[Tristram Hunt]

The Minister is making an informative speech. Does a case need to come to trading standards officers to encourage them to act, or can Members of Parliament, for example, make a generalised request to them to look into a specific sectoral complaint?

[Jo Swinson]

Clearly, trading standards can look where there is evidence, or where they perceive that there might be evidence of a breach. I am sure that specific cases would greatly assist them in making their inquiries more fruitful more quickly. I encourage hon. Members to speak to their local trading standards teams. I know that the council in Stoke-on-Trent is run by the hon. Gentleman’s Labour colleagues, who, I am sure, will be willing to listen attentively to his representations on the matter. I urge him to take up the matter with them, as they have powers to deal with misleading information that encourages consumers to make a different decision on product purchases. Although part of the problem is that that has not been tested, I wholeheartedly encourage the taking forward of such matters. Given the various ways that Members have of raising matters in the House, I am sure that the hon. Gentleman will not let the matter rest if he does not get satisfaction through that route.

On the issue of the misleading of consumers, it is important to understand what matters to the consumer. In a Eurobarometer survey in autumn 2010, 75% of people questioned said that origin did not affect their purchasing of textiles and clothing; for electronic products, the figure was 68%. I am not sure whether ceramics were included in that study. We need to be clear about how consumers prioritise different pieces of information in their buying behaviour: price, design, brand name and origin. In making any purchasing decision, consumers will consider a variety of such factors. Of course, it is true that some consumers are very concerned to ensure that they support British or locally made products and will want information on their origin.

I will turn briefly to the European Commission’s 2005 proposal for a regulation on compulsory labelling of imported consumer products. The Commission intends to withdraw the proposal, as I am sure the hon. Gentleman will be aware. I know that the UK’s ceramics sector has been a consistent supporter, but the Government have strong reservations, as was outlined in the Adjournment debate secured by my hon. Friend the Member for South Staffordshire (Gavin Williamson) in 2011, which other hon. Members have referred to and, indeed, participated in.

The reason the Commission gave for withdrawing the proposal was the lack of agreement in the Council and developments in the interpretation of World Trade Organisation rules that make it outdated. We expect confirmation on that in April. The proposal received a mixed response from member states. Many saw it primarily as a protectionist measure that discriminated between imported and EU-produced goods. Consumer information is important, but we do not necessarily want to go down a protectionist route.

The Government obviously share the concerns about the need to tackle counterfeit goods and provide accurate information and the genuine concerns about trademark and design breaches and the mislabelling of imported goods from some sources, as the hon. Member for Stoke-on-Trent Central has outlined, but it did not seem that the Commission’s proposal would add anything to the debate except additional administrative and cost burdens, so it is right that it is likely to be withdrawn. There was also a customs issue relating to the cost that would be imposed, particularly in the context of the public expenditure constraints we face. If that is not the best way to achieve the outcome the hon. Gentleman wants, which is to allow companies in his constituency a level playing field and enable consumers to be well informed, alternatives such as the ones I have talked about and better enforcement are a better way forward.

I will turn to the specific questions the hon. Gentleman asked towards the end of his remarks. He asked what funding the Department for Business, Innovation and Skills might be able to bring forward. The Department does not fund individual enforcement actions, but it does fund the National Trading Standards Board. As he might be aware, the trading standards landscape has been changing, because there were concerns that trading standards were too dispersed. The board will have greater power. We can bring the issue to the attention of the Office of Fair Trading, but it is up to it to consider whether an investigation is merited.

With regard to the “turnover club” and the mugs in the Department with no back-stamp, I must say that I brought my own mug to the Department when I arrived. It commemorated the suffragettes and I enjoy drinking my tea from it. I have never turned it upside down to see what stamp is on it, but I will do so, although not when it is full of tea—as the hon. Gentleman rightly said, it is not always an appropriate moment to do that. I was intrigued to hear about the “turnover club” and will endeavour to take up his challenge to see where the goods in the Department come from and pass on his concerns to others.

20:43

House adjourned without Question put (Standing Order No. 9(7)).