Housing: Underoccupancy Charge

Tuesday 22nd July 2014 Lords Chamber

Question

15:00

Asked by

[Baroness Hollis of Heigham]

To ask Her Majesty’s Government whether they have any plans to change their policy following the publication of their report Evaluation of the Removal of the Spare Room Subsidy: Interim Report.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con)]

We inherited a housing benefit system with costs spiralling and took steps to bring expenditure under control. This remains our policy. The interim report establishes an early baseline. Since the field work was completed, the numbers affected by the policy have continued to fall month on month, reported levels of arrears experienced by English housing associations have fallen, and there is emerging evidence that many landlords are adapting their building plans in response to this policy.

[Baroness Hollis of Heigham (Lab)]

My Lords, everything we feared about the bedroom tax has been confirmed by this research—everything. Two-thirds of affected families are disabled. As there are no small homes, only 4% have been able to downsize. They cannot move but as most cannot get discretionary housing payments, they cannot pay and stay either. So 60% are in arrears; one-third face eviction; meals are forgone; debts are mounting; grandparents are cutting back on grandchildren’s visits because they cannot afford to feed them; people cannot stay; people cannot move. Does the Minister agree and accept that the bedroom tax—the coalition bedroom tax—is profoundly wrong?

[Lord Freud]

This report was based on evidence from last autumn and we have had data since then that show that people are adapting. The numbers affected are falling and are now down 70,000 people; arrears have fallen in the past two quarters and rent collection remains for the Homes and Communities Agency for the social sector at 99%; homelessness numbers are reducing and are down 7% on the year. As for DHPs, we had a quarter of a million payments last year to people affected by this policy and we had £20 million returned to us unallocated. Finally, the Court of Appeal has upheld the Government’s position that DHPs are the proportionate remedy for looking after people with problems from this policy.

[Earl Cathcart (Con)]

My Lords, as a landlord I recall that the last Labour Government brought in this very same measure for the private rented sector. So why is Labour making such a fuss now—with the Liberals apparently jumping on the bandwagon—when all this Government are doing is rolling out to the public sector what Labour did in government to the private sector?

[Lord Freud]

My Lords, the private sector had the LHA introduced, as my noble friend pointed out, by the previous Government. We had to take steps to constrain the spending on that. We have taken £2 billion out of that benefit for savings. The results of that also came out last week. The final report was dramatically less in its impact than the predictions that we had. Instead of landlords pulling out of the market, they have increased their supply by 7%. There has been very little evidence of displacement; a very marginal probability of moving home; and again we have had homelessness acceptances coming down. We are on the same trajectory with the spare room changes as with the LHA changes.

[Baroness Sherlock (Lab)]

I am starting to wonder whether the Minister and I have read the same report—

[Lord Best (CB)]

My Lords, I am grateful to the noble Baroness for giving way. I thank the Minister for putting this research in hand, as he promised when the ping-ponging on this measure stopped between us and the other place. I am afraid that one cannot take very much comfort from the figures. The Minister said that the figures are pretty bad; they are, in fact, awful: 60% of people getting into arrears with only 4.5% of people making a move as a result of the measure. He said that there are some more recent figures that are better; I fear that they are not very much so. Five hundred thousand families are affected by the measure and the position remains dire, with a third of landlords—

[Noble Lords]

Question!

[Lord Best]

Will the Minister confirm that when the space standards were introduced in the private sector, the measure was not retrospective and did not apply to all people already occupying the properties? Does he accept that it is quite different in this case, where it was applied to the lettings of existing tenants, which is why it has been so harmful and so hurtful?

[Lord Freud]

My Lords, I have told the House on previous occasions that the difference here is that there is very little changeover or moving within this particular group, so there is no way in which one could introduce this kind of policy on that kind of basis. It therefore has to apply to stock. I remind noble Lords that the impact assessment for this measure envisaged moving or downsizing on the part of about 50,000 people. Nineteen thousand people have moved during the first eight months, which is on the trajectory of our expectations.

[Baroness Sherlock]

My Lords, the Minister has read the report. The House will be aware that he has previously reassured us not to worry about the hundreds of thousands of people affected because of all the things that they can do. This report shows that every one of those has failed: they are not taking in lodgers; they cannot move; they cannot find additional hours; and they cannot downsize because there are no properties out there. This week, Chambers put “bedroom tax” into its dictionary. Is it not time for the Government to accept that they have got it wrong and make that term archaic for ever?

[Lord Freud]

The report was an early look at the policy. As the research says, it provides a baseline. There is evidence of people looking for work—18% of those affected are looking to earn more in work and 50% of the unemployed are doing so. As I told the House last week, the number of people in workless households in social housing is dropping dramatically. People are moving, as I just said. Nineteen thousand people have moved in the early months of the policy, which is in line with our expectation of 50,000. It is clearly stated in the report that, over two years, one might expect to see 20%.