Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014
(10 years, 7 months ago)
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14:16 - Division on the Motion. - Ayes: 173 / Noes: 188 - Motion disagreed.
Baroness Sherlock
To move that this House regrets that the Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014 are being introduced without Her Majesty’s Government’s full understanding of the numbers of those affected; regrets that confusion and uncertainty are being added to an already unjust policy; deplores that Her Majesty’s Government’s mishandling has resulted in households being unlawfully charged and further pushed into hardship; and regrets the likely disproportionate impact of the Regulations on the most vulnerable (SI 2014/212).
Baroness Sherlock (Lab)
My Lords, this Motion relates to an order brought forward by the Government to address a loophole that they have belatedly discovered in enacting what they call the social sector size criteria and everybody else calls the bedroom tax. The loophole means that people claiming housing benefit continuously for the same home since 1 January 1996 are exempt from the bedroom tax. It emerged recently, as noble Lords may remember from the discussion on a recent Urgent Question, that the group may be even wider as it may affect some people who have inherited this protection from a former tenant who enjoyed it.
People covered by this exemption have unlawfully had their housing benefit cut. When this matter was discussed in the other place, a number of examples of people affected were given. For example, there was a widower in Staffordshire suffering from mental health problems who had to find an extra £14 a week to stay in his home. There was a 56 year-old women from Rotherham with health-related problems who paid over £700 in additional rent, which we now know was unlawful. In Greater Manchester, a woman who cares for her granddaughter paid £200 extra in rent as a result of the bedroom tax, fell into arrears and was threatened with eviction from the home she has lived in for 26 years. Incidentally, Grandparents Plus notes that kinship carers like her are more likely to be affected by the bedroom tax, because they are older and more likely to have spare rooms, technically, because their children have grown up and moved on.
These people and many others like them are now due a rebate but, rather than apologise for the distress that they have been caused, the Government now want to apply the bedroom tax again to these people and thousands like them. Because local authorities in most cases do not have electronic records which go back to 1996, they are finding themselves having to waste time and money trawling through paper files looking for affected cases. Meanwhile, the Government have brought forward this order to close the loophole, despite having no idea how many people are affected by it.
The Opposition have tried very hard to find out how many people are affected by asking Ministers. On 13 January, the Employment Minister, Esther McVey, gave a Written Answer in the other place. She said simply:
“This information is not available”.—[Official Report, Commons, 13/1/14; col. 449W.]
On the same day, the Secretary of State for Work and Pensions told the other place that,
“the number is likely to be between 3,000 and 5,000”.—[ Official Report, Commons, 13/1/14; col. 577.]
The very next day, the noble Lord, Lord Freud, told this House that,
“the numbers involved in this anomaly are small and the amounts are modest”.—[Official Report, 14/1/14; col. 106.]
However, early reports coming from the ground suggested that the numbers could be rather higher than that. Therefore, under the Freedom of Information Act, the Opposition asked local authorities how many people they believed would be affected. The resulting figures already show that over 23,000 are likely to be affected, even though a third of councils have still to reply and many said that they could not give complete answers because they could not include housing association tenants. Not only is this a mess, but the Government seem to have no idea how many people are caught up in the mess.
We should not be surprised. The bedroom tax was a bad policy in the first place, incompetently executed, with the heaviest price being paid by the poorest and most vulnerable. More than 500,000 households have been hit. Two-thirds of those affected are disabled. Of those affected, 35,000 disabled people have had their homes specially adapted with, for example, wheelchair ramps, wider doors, stair lifts or accessible bathrooms. If they are forced to move, it is estimated that the cost of repeating those adaptations in new properties could reach £234 million.
Some 60,000 of those affected by the bedroom tax are carers. More than 200,000 families with children are affected. On average, people are paying an extra £14 a week—the equivalent of losing all of your child benefit for the second child. Most depressingly, so many of the problems predicted by noble Lords from all Benches during the passage of the Welfare Reform Act have come to pass. According to the National Housing Federation, on average two-thirds of tenants affected by the bedroom tax are currently in arrears; of those, three-quarters have seen their arrears increase since the bedroom tax came in. Of those tenants hit by the bedroom tax who are in arrears because they cannot make up the shortfall, 40% have been issued with a notice seeking possession.
The impact on landlords is also huge. Nearly three in five housing associations say that they have been affected by the bedroom tax either a great deal or a fair amount. That hides huge regional problems, as I know only too well. About 90% of housing associations operating mainly in the north-east and 80% in the north-west report that they have been significantly affected.
What a mess, and for what? What has been achieved by all this chaos and misery? Has the bedroom tax achieved its aims? Ministers have not been able to explain whether the policy is supposed to reduce overcrowding or to save money; it cannot do both. If tenants stay put and accept a cut in their benefits, the state saves money but no houses are freed up. If tenants are forced to move, no money is saved. The costings assumed that people would not move. During the passage of the Welfare Reform Bill, when the matter was voted on in this House on Report on 14 December 2011, the noble Lord, Lord Freud, explained the Government’s position, saying:
“The introduction of size criteria into the social rented sector from April 2013 is essential to reduce housing benefit expenditure”.—[Official Report, 14/12/11; col. 1300.]
So it was indeed about savings. The Minister explained that it would save around £500 million per annum.
I wonder whether those savings really are materialising as Ministers had hoped. Last Friday, Esther McVey was asked on a BBC Radio 5 Live programme how much money the Government had saved through this policy. She began by saying:
“It was never all about saving money”.
The interviewer interrupted just to ask how much it would save. She came back to the question. The interviewer asked her repeatedly whether there would be savings and how much they would be but could not get an answer.
There is now a real risk that the bedroom tax will end up costing more than it saves. Research from the University of York suggests that the policy could save significantly less than the DWP predicted. The National Housing Federation has said that the savings claimed by the Government are “highly questionable”, partly because those forced to move to the private rented sector will end up costing more in housing benefits. Housing associations say that tens of millions of pounds are likely to be lost through the build-up of arrears. I ask the Minister today to tell the House precisely how much of that £500 million savings per annum has been realised in the first year of the bedroom tax. After taking into account the cost of discretionary housing payments, the cost to local authorities and social housing providers and the payment of higher housing benefits to those who had to move, what is the net saving to the public purse? If it was not about saving money, as Esther McVey has said, what was it about?
The Government have since changed tack and claimed that it is about tackling overcrowding or dealing with the waiting lists. They say that people need to be pushed to move out if they have spare rooms so that others can have their houses. At various times, noble Lords from all Benches have pointed out that, in fact, many of these are not spare rooms, and, even if they were, there were nowhere near enough spare smaller properties available in the areas hit by the bedroom tax. Now we know what has happened. A recent BBC investigation showed that, after the first year, just 6% of tenants have moved.
This entire episode should shame this Government. Half a million people have been affected, most of them disabled, losing an average £14 a week from their already meagre incomes. Instead of bringing forward an order to make the bedroom tax apply to up to 40,000 more households, the Government should announce today that they will scrap this unfair, cruel and unpopular tax. I beg to move.
Lord Touhig (Lab)
My Lords, I thank my noble friend Lady Sherlock for securing this debate. Of all the Government’s reforms to welfare, it is hard to find another more cruel, more callous and more mean-spirited than the bedroom tax. The policy was dreamt up by people who have no need for housing benefit themselves and probably do not even know anybody who depends on it. While it may make sense in theory, in practice it is having a devastating effect on the lives of vulnerable people. Additionally, the very ideas and theory behind the policy are, I believe, wicked and wrong. Ministers have stressed that the policy is designed to fix a broken system of housing benefit and encourage behavioural change among recipients of housing benefit. This is sheer nonsense. The system is broken, though not because of the behaviour of those who use it; the cause is the housing stock itself. In England, there are 180,000 tenants underoccupying two-bedroom homes but only 85,000 smaller homes available.
The Catholic charity Caritas Diocese of Salford has been working with Michelle. She has three children and lives in a three-bedroom home. Originally she cared for her brother, who has now moved into supported accommodation. Her 13 year-old daughter now uses the so-called spare room. Michelle is trying for a home swap, looking for a two-bedroom home, but nothing is available. The £12 she loses each week means that she now regularly resorts to food banks. This is the reality of the bedroom tax. The only economy left for families to make is on food. When that cannot be done, they have to resort to food banks. In Merseyside, social landlords have referred 553 tenants to food banks.
The cost of the bedroom tax is horrific, but the attitude that it displays towards social housing is also wrong. No longer can people regard where they live as their homes. Housing benefit and social housing appear to be something that the Government begrudgingly provide. My local newspaper, the South Wales Argus, recently reported the story of Kevin Reeve, who has occupied the family home for 50 years and cared for his mother and father, who have both now sadly passed away. He is now underoccupying, losing between £35 and £45 a month and has been forced into trying to move.
The local housing association, Bron Afon, has catalogued the effects of this tax on the local community. It discovered that one person affected is a former solider suffering from post-traumatic stress disorder and depression. He lives with his daughter, who is hoping to go to university. They already underoccupy by one room. They are already cutting down on heating their home and eating. His daughter is now questioning whether she should go to university. He is resigned to trying to move. His current home is the one in which he raised his children, the home that he shared with his wife, who, sadly, has now died. He is proud of that home, and we should be proud of him, a veteran who has served our country. Is this the way we repay our servicemen?
The bedroom tax is another example of the chaos, confusion and poor implementation of chronically ill conceived policies by the Department for Work and Pensions. It is clear that this policy is unjustly penalising vulnerable people for something beyond their control. It is causing immense hardship and devastating people’s lives. It shows complete callousness towards those who rely on housing benefit. Many good people who rely on housing benefit feel that they live not in prosperity Britain but in poverty Britain, thanks to this Conservative and Liberal Democrat Government. Those responsible for this policy should hang their heads in shame.
Lord Taylor of Goss Moor (LD)
My Lords, I should first declare my interest as chair of the National Housing Federation, which represents the housing associations across England.
I will speak briefly, on a personal basis, to say that I cannot support the Government’s policy on this. I believe it was misjudged in the first place and we are rapidly seeing the proof in the pudding. I cannot support something that deprives people of money that, by any standards, they need—the Government do not give people more in benefit than they need to live on—when they have no option to move somewhere else because of the shortage of smaller homes. That is quite apart from the fact that to describe these rooms as surplus to need is in many cases simply wrong, and even if they are surplus today, they are often not surplus tomorrow. Therefore, for example, a family with young children will have to have those children live in a room together, but after a year they might need to live apart.
This simply does not make sense. I very much regret that the amendments in the name of the noble Lord, Lord Best, on this, were not passed, because that would have secured the Government some of what they wished but given a much fairer deal to individuals; for example by not removing the money if a reasonable alternative has not been offered to them.
However, the most fundamental reason—the proof of the pudding—is that this is not a saving to government any more than it frees up rooms. That is because of the huge cost to housing associations of having to work with individuals to help them, and the cost of the work and the money that the Government have had to put in to support individuals. It has removed capacity from the social housing sector to provide more homes. All of the money lost—and, frankly, the arrears that are being built up—will never be gained back from people who have no ability to pay it. That simply undermines the capacity to solve the very housing problem which the policy was theoretically meant to address but has failed to do.
Although my instincts are those of a team player, and my track record over a substantial period of time shows that to be the case, this is not something on which I can support my noble friends.
Baroness Nye (Lab)
My Lords, I completely share the views so ably put by my noble friend Lady Sherlock and my other noble friends, so I will be brief.
On the anniversary of the introduction of the bedroom tax legislation, the Government are trying to close by statutory instrument a loophole without any understanding of how local authorities can identify the people affected or the numbers involved. Instead of trying to close this loophole the Government should finally do the right thing and scrap the bedroom tax altogether, because as the Budget figures show, it will cost more money than it saves. According to the BBC, due to the lack of smaller accommodation only 6% of those affected have moved.
I know that the Minister will have heard these arguments many times before, but they bear repeating. He will have heard that the bedroom tax discriminates,
“against the most vulnerable in society”,
and that the Government have shown,
“a lack of appreciation of the housing requirements of children and adults with disabilities and care needs”.
Those words are not from this side of the House but from the motion passed by his coalition partners at their annual conference last year. I welcome the words of the noble Lord, Lord Taylor of Goss Moor, and I hope that more of his colleagues will join us in the Lobby this afternoon.
The one thing the Government have managed to do is to unite the noble Lord, Lord Tebbit, and the Liberal Democrats in the view that this bedroom tax will have damaging electoral consequences for both parties of the coalition. However, there are other voices, too. The chief executive of the CAB says:
“The Government’s solution to spiralling Housing Benefit costs is simply creating more problems. Thousands are being pushed into arrears, 96 per cent of people affected have no alternative smaller homes to move into and some housing associations”—
as we have heard—
“say they are being forced to demolish homes whilst 1.8 million languish on waiting lists”.
The United Nations says that the bedroom tax is taking a heavy toll on the most vulnerable and recommends abolition and that there is a,
“danger of retrogression in the right to adequate housing in the United Kingdom”.
The Chief Executive of the National Housing Federation has described the policy as an,
“unfair, ill-planned disaster that is hurting our poorest families”.
This retrospective “move or pay” tax simply is not working. For instance, in Merseyside more than 26,000 families are affected, but only 155 have moved. The Work and Pensions Committee has found that between 60% and 70% of homes affected by the change contained,
“someone with a disability and many of these people will not be able to move home easily due to their disability”.
It asked the Government to exempt anyone whose home had been adapted. Instead they are closing a loophole to bring more people into its remit.
Of the 660,000 people affected, two-thirds of those are disabled. The think tank Demos reports that £28 billion will have been taken out of disabled pockets by 2018 due to the cuts in DLA, ESA and housing benefit. Empty properties are increasing, in some areas by a third. In South Shields there are whole empty streets because people are afraid to move into larger houses.
If people end up in emergency accommodation, it costs the country more. But the human cost is huge, too. Grandparents cannot have their grandchildren to stay, so childcare arrangements are affected, and single parents are losing children’s bedrooms. Informal care arrangements for disabled people have come to a halt. A room is not a spare room when carers sleep in it, when couples cannot share a bed for health reasons, or when it houses vital medical equipment such as dialysis machines.
Now the Government have realised that they have been telling local authorities to take away housing benefit from people who were entitled to it all along, so they want to close that loophole. That will mean that local authorities will now have to spend more money and time trying to find out from their records—which go back to 1996 and which they may not have in electronic format—the identity of those people who qualify. It causes bureaucratic chaos and will lead to even greater chaos. This Conservative-led Government should be listening to what people—including their partners in the coalition—are saying, and scrap the whole sorry mess.
Baroness Lister of Burtersett (Lab)
My Lords, as the Regret Motion makes clear, we have to understand these regulations in the context of the impact of the bedroom tax.
My noble friend Lady Sherlock quoted Esther McVey on Radio 5. I will take us back to her rather wonderful interview on Radio 4, in which the interviewer had to drag out of her that the Government’s estimate is that only 8% of people had moved—a whole two percentage points more than the BBC estimate which she had been contesting. She was asked if she was disappointed. She replied:
“Well no, because it wasn’t that you had to move house”.
How is that consistent with her statement in debate in the other place? She said:
“The reason that we are putting these measures in place is that we want to ensure we make the best use of our social housing”.—[Official Report, Commons, 26/2/14; col. 311.]
In addition, how is it consistent with the constant refrain:
“How can we justify 1 million spare rooms when other people are sometimes crammed together in a room?”.—[Official Report, Commons, 24/3/13; col. 27.]
Can the Minister tell us exactly how many rooms have been freed up by this policy? As the Work and Pensions Committee report observed, it is,
“a blunt instrument for achieving this”
aim, and one that is causing hardship, as we have already heard from other noble Lords.
Why, then, have people not moved? As has already been said, it is partly because there is nowhere to move to. In the Independent, on 3 March, it was reported that,
“a severe shortage of smaller council homes across the country is being exacerbated by the right-to-buy scheme—leaving many victims of the bedroom tax with no choice but to accept reduced benefits”.
Also, many people do not want to move because they do not want to lose social networks that are very important to them—a point I have made over and over again in this House. We are not talking about housing in the abstract, but about people’s homes within communities that matter to them.
As Demos said, in a study it carried out on social ties,
“policies can serve to actively undermine the kind of self-help and mutual support that families engage in”.
One would have thought that that would be approved of by a Conservative-led Administration who believe in the big society. Reforms such as the removal of the underoccupancy penalty—dubbed the bedroom tax—have left people with a choice of either finding more money for rent from already stretched budgets or moving away from support networks that make life liveable for many.
We have heard about rising rent arrears, but they are only the tip of the iceberg. Earlier this week I attended the launch of a report by Community Links on the impact of the first year of so-called welfare reform—although I would call it social security cuts—in the London borough of Newham. The person presenting the findings pointed out that many people prioritise rent for fear of eviction. Therefore, there may not be rent arrears, but what other impact is it having on what people can spend on other essentials, and how many people are turning to payday lenders or, even worse, to loan sharks? That morning we heard tales of utter despair—the result of the cumulative impact of this and other benefit cuts such as council tax benefit.
The suggestion has been made: “Let them take lodgers”. Do we know how many people have taken on lodgers as a result of this policy? Some noble Lords who are following the Immigration Bill will know that later this afternoon we will talk about its residential tenancy provisions. Anyone who takes a lodger as a result of the bedroom tax will be turned into a mini-immigration officer and will have to check the immigration credentials of their lodger. Do we really want people on benefit being turned into mini-immigration officers to prevent illegal immigration?
The Minister, Esther McVey, pleaded that the BBC report showed how complex this is. I can suggest a simple solution: follow the policy of the Opposition—which I hope will very soon be the official policy of the Liberal Democrats—and abolish the bedroom tax.
Lord Beecham (Lab)
My Lords, I think I am the only serving, elected councillor who is likely to speak in this debate, unless the noble Lord, Lord Tope, in his declining days as a councillor—I believe he is standing down shortly—joins in to proclaim the new, belated Lib Dem policy on the bedroom tax. I bring a snapshot from Newcastle, where 5,400 households are affected, at an average cost to each of them of £13.47 a week. If paid, that represents around £3.75 million to be taken out of the local economy, so there is a knock-on effect, quite apart from the housing effect, on that economy. Just under one-quarter of those are working households, one-third have children and, as we have already heard, many have disabled people in them. In my own ward, there are 315 such households.
As has already been pointed out, it is not a simple matter to transfer into a smaller property. In Newcastle, we have 3,558 people seeking one-bedroom accommodation. The average number of available one-bedroom properties per year is 64. It would take a generation or more to accommodate those people. Some 615 are seeking to move down to two-bedroom accommodation. There is, admittedly, a slightly higher availability of this—all of 101 a year. Any effect on the private sector, which in Newcastle is largely taken up with students, will drive up rents. Landlords are increasingly reluctant to take tenants who are on benefits of one kind or another. This policy is not only cruel and inefficient; it is based on a complete misunderstanding—to put it generously—of what happens in the social housing market. It is damaging people’s lives.
I conclude with an anecdote about meeting a couple of people in their fifties—not in my own ward—who benefited from the decision which required the Government to effectively refund the amount paid because of the length of their tenure of the property. I was able to tell them they would be getting the money back but I also had to give the bad news that the Government were seeking to ensure that the money returned to them was spent on paying the bedroom tax. Here were two disabled people, living in a house for just under 30 years, with one of their grandchildren staying with them when I called. This just illustrates the cruelty and incompetence of the measure and I congratulate my noble friend on bringing this Motion of Regret.
Baroness King of Bow (Lab)
My Lords, when I saw that the Government were introducing an amendment to the bedroom tax, I mistakenly assumed they wanted to put right the wrongs visited on tenants by this unjust law. Instead, they want to close loopholes and increase the number of people victimised. As one housing expert said:
“This is a shambles caused by the DWP failing to understand the significance of their own legislation”.
This is an extraordinary failing by the Government that disproportionately burdens the most vulnerable, two-thirds of whom, as we have heard, are disabled. These people will have to wait for a Labour Government to abolish the bedroom tax—unless the Minister would like to tell us something quite unexpected today. One way that Labour will fund the reversal is to abolish the Government’s tax cuts for hedge funds. I have nothing against hedge funds—I want to see the City of London thrive because our economy depends on it. However, I do not want it to do so on the backs of the poorest and the disabled. I have rarely heard anything so perverse.
Austerity demands choices: choices reveal priorities. The Government’s priorities here are absolutely shameful. Why do they not concentrate on closing loopholes to end tax evasion by the richest instead of closing loopholes that hurt vulnerable people so much? I urge the Government to abolish this tax.
Lord Low of Dalston (CB)
My Lords, I realise that time is at a premium so I shall be brief and say just a few words. I remember very clearly, as will other noble Lords, the words of Lord Newton of Braintree who, to the great sadness of all, is no longer with us. In his intervention on Report during debates on what is now the Welfare Reform Act, he warned his colleagues in the Government that this would not last five minutes. Once people started realising what was happening and getting on to their MPs in droves, the Government would be forced to scrap it. It has not worked out quite like that but the bedroom tax is visibly unravelling before one’s eyes. It is not saving any money or freeing up any accommodation. My advice to the Minister would be to recognise when he is beaten. He has not a friend in the House. When you are in a hole the only sensible advice is to stop digging. I advise the Minister to recognise realities and run up the white flag.
Baroness Hollis of Heigham (Lab)
My Lords, in her powerful speech, my noble friend Lady Sherlock has explained our opposition to this statutory instrument. It brings more people into the bedroom tax which should be abolished. She has had support from all around the House today. The tax is disastrous. A previous Tory Government introduced and repealed the poll tax in the same Parliament. As the noble Lord, Lord Low, said, this Government should have the courage and decency to do the same.
You do, of course, need sanctions in social security to ensure, for example, that compliance with JSA work search is not voluntary. However, the bedroom tax—for the first time ever—falls on the innocent, disabled and vulnerable. They are punished when they have done no wrong: they simply occupy the house that the council allocated them. The Government have now said to them: move or pay. Most tenants can do neither. As my noble friend Lord Beecham said, tenants who want to move will be waiting three to four years. Arrears mount; single people or couples on the waiting list who want smaller accommodation will never get it; pensioners wanting to downsize cannot. As for overcrowding, outside London six times more families are underoccupying than overcrowding Just helping pensioners to move would sort it, with grace and consent. The bedroom tax destroys sound housing policy.
Will the Government, nonetheless, make their savings? No, because benefit cuts have been shunted on to tenants to become irrecoverable arrears. In Norwich, which has spent every penny of its DHPs, 60% of tenants affected by the bedroom tax are now in average arrears of £300 and mounting. Nationally, around two-thirds of affected tenants are in arrears. DHPs are utterly insufficient, short-term, and a postcode lottery, yet that is the policy on which the Minister, sadly, relies. Carers UK says that 75% of tenants trying to pay were cutting back on food, heating, medical supplies and mobility. The fragile economy of tenants collapses, as they turn to food banks, payday loans and loan sharks, with debts from which I doubt many will ever recover. The Government’s notional savings become tenants’ irreversible, irrevocable debts and, in the process, we destroy lives.
Fifteen per cent of affected tenants, nearly half of those in arrears, have already received eviction warning notices. What happens then? Do we evict tenants into the private sector—private landlords do not want them and it costs more—or into bed-and-breakfast accommodation which costs even more, or what? Should they be rough sleeping? What about children and disabled people? Through no fault of their own, there are people who cannot pay their rent because the Government have cut their benefit.
Instead, do we allow rent arrears to grow and in the process threaten the very viability of housing associations, as the noble Lord, Lord Taylor, said? We have offered the Minister three possible strategies to help because every defence of the bedroom tax is false. The first option is that the bedroom tax should not apply to disabled people, as the Work and Pensions Committee said only yesterday. Two-thirds of affected tenants are disabled. One may ask why. Adaptions, at a cost of £6,500 a property, become wasted. As regards space, the CAB has said that for disabled people that extra room for carers or equipment is,
“a lifeline as vital as a guide dog or a wheelchair”.
Finally, disabled people need the support of neighbours, as my noble friend Lady Lister said. We talk about social or community care and at the same time the Government seek to pluck disabled people out of the very communities that provide that social care.
The second option is that it should apply only to those who refuse an acceptable alternative offer. Following the remarks made by the noble Lord, Lord Taylor, I should like to know what the position of the Lib Dems is. Will they continue to support the bedroom tax in Parliament while campaigning on the doorstep simultaneously for its repeal? The third option is that the Government could treat social tenants like private tenants and apply the bedroom tax only to new tenancies. Any of those options would help.
We will go further. The Labour Party is pledged to repeal the legislation. It is the most wretched piece of social security legislation that I have known in 25 years in this House. But by then, in the summer of 2015 after the election, we will have seen hundreds of thousands of social tenants—our fellow citizens, most of them disabled and many with children—punished for occupying a house that was allocated to them. They would have been doing no wrong but are unable to pay or to move. They may be deep in debt and fearing, or perhaps experiencing, the loss of their home. How can we do this to them? It is grotesque.
Lord German (LD)
My Lords, I am the first to recognise a political device when it comes my way. Indeed, this is a political device to secure a wider debate on the spare room subsidy on the back of regulations which have already been made and have come into effect. I do not dispute the need for political devices or regret the use of political devices but it is clear that that is what is being used. I think I should start by clearly laying on the line our policy as Liberal Democrats. What was said at our conference and what we have heard today from noble Lords is the preamble. But two things are being called for: the first is a review and the second is to do with housebuilding.
More crucially than anything else, we want to see the effect that this policy is having in this country. As I understand it—my noble friend can tell me—the review of the policy is due to publish its initial findings soon. I always hesitate when the word “soon” is used but I know that my noble friend loves the word, so perhaps he will indicate whether it will be before the end of this Session, before the Summer Recess or whatever. It would be useful to know when we can have that information.
One would expect that a Labour Party that has designed its policy to abolish the whole thing—we could have a debate about that—will want to assert that a huge amount needs to be put right. But we need facts that stand up to such an assertion and to know exactly where we are. We need to know whether things need to be changed as a result of that independent review, which was put in place by the Welfare Reform Act. That is the position of my party.
Perhaps I may dwell on the issue of correcting secondary legislation, which is what the Motion is about. The unexpected consequences of legislation of the past must have affected all Governments. I could assert that an opposition party present today will at some time have had to use corrective secondary legislation for something which has appeared after primary legislation has been put in place. Perhaps my noble friend can tell me whether I am right or wrong.
There are problems with the 1996 legislation. Perhaps my noble friend can tell us whether it was designed for social sector tenants. The impact that we are talking about is with regard to social sector tenants but my understanding is that that original legislation was put in place particularly for private sector housing and as a protection for private sector tenants. Perhaps my noble friend can advise us whether something that was designed for a different purpose is producing unexpected and unintended consequences.
My second point concerns what is happening in local authorities. Although I do not have as many years of experience in local government as the noble Lord, Lord Beecham, I did spend quite a considerable amount of time in local government. I cannot recall whether I spent more or less time than my noble friend Lord Tope. I certainly remember that we had the use of electronic equipment in the mid-1990s when I was a city councillor. How many local authorities are having to resort to paper trails in order to find out the number of people affected by the 1996 legislation? Do some local authorities have up-to-date information? When there are assertions that between 3,000 and 40,000 people are affected, somewhere there must be reasoning behind those assertions. Do we expect to find the correct solutions and answers soon? Will we be able to find out very soon how many people are affected?
Will my noble friend reassure the House that local authorities are being reimbursed for the extra work that they are having to do to trawl through the paper trails where those records have not been kept electronically or have been lost? Now that the loophole is closed, I understand that there is now an issue relating to discretionary housing payments paid to people who were subjected to the extra charge between March 2013 and March 2014. People who were awarded DHP were awarded it on the basis that they needed it at that time. Can my noble friend reassure me that there will be no question of people having to repay it and that that discretionary housing payment remains in place?
Today, the noble Lord, Lord Touhig, gave an example of a case, which has been publicised, in Torfaen, the borough in which I live. I note that the Government made additional money available for discretionary housing payments to all 386 local authorities in this land and that only about 80 applied for money. In Wales, only Cardiff, Caerphilly and Conwy—it is very easy to remember them as the three “C”s—applied for discretionary housing payments and Torfaen did not. One can only assume therefore that local authorities which say that they do not need any more discretionary housing payment have enough to make available to people who have a need. I have a number of questions to ask those who support the case, which I read about in my local newspaper. Did those involved go to the local authority? Did the local authority turn them down for extra support, given that local authorities have enough money as they did not need to apply to the Government for additional money?
The second issue my party is concerned about is that of new homes. One of the problems that might come about as a result of this policy is the distortion as local authorities and housing associations decide to build more single-bedroom units. Can my noble friend give me any indication of what is happening in the housebuilding sector, not just in England but also in Wales? We could have a direct comparison with the record on housebuilding of the Conservative and Liberal Democrat coalition and a Labour Government. On that matter, can my noble friend tell me whether the Government’s target for building 170,000 new homes in England by the end of this Parliament in 2015 is still on track? Is it being matched in Wales by the Labour Government on the number of houses that they will be building as well?
Finally, I would like to ask my noble friend a question about the overall budget for housing benefit. The Labour Party, the Liberal Democrats and the Conservatives have all said that we have to try to contain the overall budget. In fact, in the other place all three parties voted in favour of the retention of that hold on the overall budget. Will the changes that have come about as a result of amendments to the secondary legislation affect the original estimates of expenditure on housing benefit, and how much, if at all, will this put up the bill for housing benefit in this coming year?
I have asked my noble friend a variety of questions. I would be grateful if he could tell us when “soon” means in terms of the first stage of the review of this policy.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)
My Lords, I will not test the patience of the House by going over ground that we have covered many times in recent weeks and months. On the general nature of the policy, one issue that is worth my dealing with is the recent BBC estimate that 6% of those affected by the spare room subsidy, or 30,000 people, moved during the first 11 months of its operation. Noble Lords opposite may see this as a sign of failure, but we do not. It is an example of the behavioural response that this policy is successfully driving. We have seen further evidence of this again today in the announcement by Housing Partners Ltd that in the past year it has increased by a quarter the number of successful mutual exchanges for social tenants. Its experience also shows that there is a steady supply of smaller one and two-bedroom properties available, which is at odds with some of the claims made today from the Benches opposite.
There are another couple of points on our general position that I have not dealt with before. One, raised by the noble Baroness, Lady Sherlock, and amplified by the noble Lords, Lord Taylor and Lord Low, was about money-saving, so let me be precise on that. We know, and have stated in our impact assessment, that some people could downsize, some could move into the private rented sector and others could get discretionary housing payments. However, savings remain estimated at £500 million per annum and this did not change in the Budget, so the party opposite will not be able to argue—unless it can persuade the OBR—that this policy should be got rid of on the basis of cost because that is not what the OBR has calculated.
On the point about kinship carers, they will be treated as foster parents where they do not have a child placed with them or the child is not treated as occupying their home. However, where a carer is responsible for a child and the child is therefore treated as a member of the claimant’s household, they will be treated the same as other claimants under the size criteria.
I shall restrict my remaining comments to the Motion and the amendment to the regulations, explaining first what these regulations do. The instrument amends paragraph 4 of Schedule 3 to the Housing Benefit and Council Tax Benefit (Consequential Provisions) Regulations 2006. These provide transitional protection for certain housing benefit claimants. The amendment removes the transitional protection from social sector tenants. This means that their housing benefit will be determined using Regulation 13 of the Housing Benefit Regulations 2006, which sets out the maximum rent in the social sector.
This transitional protection was provided for private sector tenants when local reference rent rules were introduced in 1996. These restricted the amount of housing benefit that could be awarded through private landlords charging high rents. Currently, fewer than 40,000 private sector claimants, mostly pensioners, are still covered by this protection. In answer to my noble friend Lord German’s question, it was never required by, or intended for, people living in social housing. Transitional support has already been provided for those affected by the removal of the spare room subsidy through discretionary housing payments. Unlike the loophole provision, this is available to those who claimed benefit after 1996.
Let me go through some of the specific issues raised about the loophole. My noble friend Lord German asked about numbers. The cost of the loophole will be so small that it will not impact on our forecast of housing benefit expenditure of £23.9 billion for the year. The claims that our estimates of the size are wrong are based on FoI figures that are at best speculative and at worst misleading. The claimants have 13 months to make their claims.
Regarding who will be expected to meet the costs—a question raised by the noble Baroness, Lady Nye, and my noble friend Lord German—these will be met by the DWP through the normal subsidy arrangements. At the moment, we have £2 million of additional administrative funding to distribute.
My noble friend asked whether those covered by the loophole who received discretionary housing payments would have to repay it. The answer is no; the award was made when there was a need and reimbursing the housing benefit would not change that.
Let me pick up the point on inheritance, which we dealt with at some length during that recent Urgent Question from the noble Baroness, Lady Sherlock. When a claimant dies, anyone living in a household who both takes over the tenancy and is awarded housing benefit within four weeks of the death can inherit the loophole protection. That was a process we already allowed for when we were looking at our costs. As my noble friend inquired, we are working on a major review of this for next year as well as an interim review, and I think I will stick with my “later this year” rather than “soon” at this point.
Turning now to what the Motion itself says, the noble Baroness’s Motion makes a series of unsubstantiated assertions. First, it states that the regulations cannot be amended without the precise number affected by the loophole being known. That simply is not true. It is not about numbers; it is a matter of principle. Parliament never intended that this transitional protection should apply to this group of claimants or to this policy. The regulations have been amended to restore that original policy intention.
Secondly, there is an accusation in the Motion of government confusion and mishandling. There is no confusion. As soon as the loophole was identified, we were clear that we would close it and that is exactly what we have done. Guidance was issued to local authorities. Arrangements were put in place to ensure that central Government met the costs of the loophole—both the benefit costs and the additional administrative costs.
The final claim in the Motion from the noble Baroness is that there is a disproportionate impact from the regulations on the most vulnerable. It is the loophole as it stood that was arbitrary and unfair. This transitional protection was never intended for this policy. As a result, it has protected a random group of claimants without a meaningful test or reason.
The removal of the spare room subsidy has now been operating for a year and it is working. The latest data show that the numbers facing a reduction in their housing benefit dropped by around 50,000 between May and November last year. Discretionary housing payments are funded and working: only £13 million of the £20 million reserve funding that we set aside has been allocated to local authorities. Revised DHP guidance was published yesterday, promoting longer-term awards where appropriate. The Court of Appeal has confirmed that the Government are meeting their human rights obligations and public sector equality duty. This year, we are saving about £490 million a year from the housing benefit bill.
In conclusion, the policy is working. The loophole has been closed. Arrangements are in place to support local authorities and those affected by the loophole. Finally, claimants have up to 13 months to make a claim that the loophole applied to them. For these reasons, this Motion should be withdrawn.
Baroness Sherlock
My Lords, I am in the unusual position of saying that I am not sure whether I agree with a single word that the Minister has just said. It was in fact the second most disappointing speech of the day.
The Minister has put forward three broad arguments. First, that it does not matter how many people are affected. But it matters to me, it matters to them and it matters to the local authorities, which have to deal with the mess that the Government have created.
Secondly, there is the question of savings. I noticed that the Minister failed to answer my question on what the net savings would be. Clearly, these savings are vanishing before us like a will o’ the wisp. The Minister also failed to explain how the savings remain the same, despite the Government having had to increase the money allocated for discretionary housing payments from £20 million to £190 million. The Government seem determined to ignore the costs and problems created for councils and other housing providers. If there is any doubt about that, let us remember that the National Audit Office said that the Government’s costings do not take account of,
“the full scale of potential impacts”,
and do not include the additional costs faced by local authorities. We have heard so much about those costs today from my noble friend Lord Beecham and the noble Lord, Lord Taylor.
There is then the question of overcrowding. As my noble friend Lady Hollis pointed out, this argument is frankly specious. There are not enough smaller homes to move into, a point underscored by my noble friend Lord Beecham, and where they are they are in the wrong places. They are not in the places where people are being asked to move. People have not moved because there is nowhere to move to. During the passage of the Welfare Reform Act, the noble Lord, Lord Best, and my noble friend Lady Hollis put an amendment to this House which said that the bedroom tax should not apply if someone could not be offered somewhere else to move to. The noble Lord, Lord Taylor, had the courage to vote for that amendment at the time and I commend him for his consistency. Other noble Lords did not and the government Benches voted it down. Let us not therefore pretend that what the Government are really worried about is overcrowded houses. They had every opportunity to correct that and they failed it.
We have heard so many powerful speeches today about the misery and desperation caused by this policy. If the noble Lord, Lord Freud, really believes that this policy is a success, I would hate to see what his failures look like. If he feels that he is getting the right behavioural effects, what are they? Are they in the family described by the noble Lord, Lord Touhig, who are not eating? Are they the families who are going without or giving up bedrooms needed by carers or disabled people? No: the handful of people who have moved are doing so out of desperation, not because they were responding to a behavioural stimulus.
I found the speech from the noble Lord, Lord German, very disappointing. I was delighted to read the reports of Tim Farron saying that the Liberal Democrats were going to withdraw their support for the bedroom tax.
Lord German
When I asked my honourable friend in the other House whether that is what he had said, he said that he had not. I have his speech with me and I can also tell the noble Baroness that my honourable friend was interviewed by ITV on this matter but that ITV news decided not to broadcast his comments because they did not substantiate the allegations that the noble Baroness is now making, nor did they substantiate what the Guardian had said. Both of those sources are incorrect; the source is here in front of me and I invite my noble friends to listen to it.
Baroness Sherlock
My Lords, I am very grateful for that clarification. I take from it that the Liberal Democrats are in fact supportive of the bedroom tax and I thank the noble Lord for making that clear. If I have got that wrong again, the noble Lord has a very clear way of demonstrating it. They can join us in the Content Lobby today and the nation will judge them by that. If enough noble Lords were willing to come behind us today to stand up and say that this House does not believe that this is a good policy, or that this cruel, vicious, unfair and inefficient tax should be allowed to stay, a start would be to regret these regulations today. I urge noble Lords to do that and if enough people do, maybe the Government will think again. Maybe this House could start a process that would lead to the bedroom tax being repealed in this Parliament. However, if the Liberal Democrats will not do that and the Minister will not relent, let the country be in no doubt: the Labour Government will repeal this when they come to office. In the mean time, let us send a message today. I beg leave to test the opinion of the House.