Local Housing Allowance: Supreme Court Ruling

Thursday 13th June 2019 Commons Chamber

11:14

[Marsha De Cordova (Battersea) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions to make a statement on yesterday’s Supreme Court ruling in the case of Samuels v. Birmingham City Council and the impact it will have on the Department’s setting of local housing allowance rates.

[The Parliamentary Under-Secretary of State for Work and Pensions (Will Quince)]

The ruling was not against the Department; it was a case against Birmingham City Council. I will look at the judgment carefully. The Court decided that the local authority had used the wrong test when deciding whether accommodation is affordable. The assessment is needed when deciding whether someone has made themselves intentionally homeless.

The decision is primarily one for local authorities to consider with regard to how they deal with applications for unintentional homelessness. However, I will undertake to consider the implications fully with my Department. LHA rates are not intended to meet full rental costs in all areas. The intention behind the welfare reform programme is that the same considerations and choices faced by people not in receipt of benefits should also face those claiming benefits. The LHA policy is designed to make the system fairer for all to achieve that.

The Government recognise, however, that the impact of freezing LHA rates may have different effects across the country, with rents in some areas increasing at different rates. In view of that, a proportion of the savings from the freeze to LHA rates is used to create targeted affordability funding. That funding is being used to increase those LHA rates that have diverged the most from local rents.

[Marsha De Cordova]

I am grateful to Mr Speaker for granting the urgent question.

Yesterday, the Supreme Court ruled on the case of Samuels v. Birmingham City Council, a case in which a single mother with four children was found “intentionally homeless” for not using her subsistence social security to pay the shortfall between her local housing allowance and her rent. Since 2016, the Government have frozen LHA, while private rents have continued to rise. That has meant that housing benefits no longer cover the cost of renting in the private sector.

Research by Shelter has found that for a two-bedroom home, even for the cheapest third of rents, LHA rates do not cover rental costs in 97% of areas in England. In the case that the Supreme Court ruled on yesterday, Ms Samuels was expected to use her social security to find an additional £150 a month to top up her local housing allowance to cover her rent. That put Ms Samuels in an impossible situation, essentially forcing her to choose between housing her family and feeding them. That is happening in the context of local authorities being forced to spend £1 billion a year on emergency and temporary accommodation, with the costs of preventing homelessness being pushed from national to local government.

The Government cannot continue to expect the poorest people in our society to find a way of paying for what the Government refuse to. The judgment sets a precedent. Will the Minister make a clear statement on the Supreme Court’s judgment and tell the House how the Government intend to respond? When will the Secretary of State reset LHA rates in response to the judgment? Finally, will the Minister tell us what assessment the Government have made of the hardship caused by the freeze in LHA rates?

[Will Quince]

The hon. Lady is right that LHA rates were frozen in the summer Budget in 2015 and have therefore been frozen since 2016. That was about getting our welfare bill under control. It was about ensuring that we provided the support necessary for those who needed it and fairness for those who pay for it, and making sure that our welfare system is sustainable in the long term. I can tell the hon. Lady that the freeze will end in March 2020. In all cases, the targeted affordability fund is available. We also have discretionary housing payments, and £1 billion has been made available since 2011.

Ultimately, it is a supply issue. LHA rates are one thing and supply is another. We need to look at successive Governments that have not built enough affordable—by which I mean council and social—housing. Nevertheless, the hon. Lady will be aware that I did a lot of work in this area before taking up my ministerial post. She would therefore expect me to undertake further work in post, and there will be more to come.

[Alex Chalk (Cheltenham) (Con)]

Rents in Cheltenham are relatively high. Does the Minister agree that bringing more housing on stream is critical to bringing down those rents? Does he join me in welcoming the £3 million that went to Cheltenham via the housing infrastructure fund to make what would otherwise be unviable developments viable, bringing vital housing on stream?

[Will Quince]

My hon. Friend is right that we are taking action to build the homes that our country needs. The LHA rate is an issue in so many cases because of supply and demand. Demand massively outstrips supply in certain areas, so I am pleased by the action that Cheltenham is taking with his support.

[Neil Gray (Airdrie and Shotts) (SNP)]

I pay tribute to Ms Samuels, who brought her case as far as the Supreme Court. Hopefully her struggle will result in change so that others do not have to go through this.

This case should be a wake-up call for many local authorities in how they process homelessness applications, while acknowledging that Scotland has much stronger homelessness legislation. Local authorities have been left in a very difficult situation because of this Government’s policies, which drive cases like that of Ms Samuels. Local housing allowance rates have been frozen at 2015 levels by this Government. Why will that freeze continue into next year? The Minister simply cannot say that this is about not wanting to subsidise the private rented sector, because the Government are actively doing that by not building social housing.

In the four years to 2018, Scotland delivered 50% more affordable housing units per head of population and—this is the important one—five times more social rented properties per head of population, and more in total, than England. The Scottish Government are also spending £12 million on discretionary housing payments to mitigate the Government’s freeze on benefits such as local housing allowance and £50 million to mitigate the bedroom tax.

A perfect storm has led to so many of us having cases like that of Ms Samuels at our surgeries—punitive, arbitrary and punishing cuts to social security, including housing benefit, coupled with rent increases and a devastating under-supply of social housing. When will the Government wake up to the crisis they are causing?

[Will Quince]

Despite the freeze in Scotland, we have seen LHA rates rise. One rate rose in 2017-18, three rates rose in 2018-19 and 16 rates rose in 2019-20. The hon. Gentleman knows me well enough to know that I am looking at various options in this area ahead of potential spending review bids. The freeze comes to an end next year, and I look forward to working with him.

[James Duddridge (Rochford and Southend East) (Con)]

It is a great pleasure to see the Minister in his place, which will give great reassurance to my right hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) that it is possible to leave the Government and rejoin at a more senior level in short order.

My hon. Friend the Member for Cheltenham (Alex Chalk) hit the nail on the head. It is all about the supply of private sector housing. What discussions has the Minister had with the Minister for Housing on increasing the supply of housing and, in particular, building above shops? Whether in Birmingham, Colchester, Cheltenham or Southend, this has to be part of the solution.

[Will Quince]

I thank my hon. Friend for his kind words and his question. He is right that supply is a key element. Raising LHA rates would be one thing, but it will not have the impact we need if we do not build the housing that is desperately needed.

I am working closely with my counterpart at the Ministry of Housing, Communities and Local Government, and we are looking at supply ahead of potential spending review bids. We will be holding regular meetings to discuss these matters further.

[Lilian Greenwood (Nottingham South) (Lab)]

The local housing allowance freeze is causing real hardship not just in Birmingham but across the country, and I will be raising the impact on Nottingham citizens in my Adjournment debate next Monday. Does the Minister not understand that the Government’s commitment to eradicating homelessness will continue to ring very hollow while his Department continues to pursue many of the very policies that created the problem in the first place?

[Will Quince]

I look forward to the Adjournment debate on Monday evening, when we will discuss these matters in more detail. We want everyone to have security in their home and a roof over their head, which is why we have committed over £1.2 billion to tackle homelessness and rough sleeping. We have published a strategy to end rough sleeping by 2027 and to halve it by 2022, backed by £100 million of initial funding, and we have changed the law so that councils can place families in private rented accommodation so that they get a suitable place sooner. Statutory homelessness acceptances fell last year.

[Christine Jardine (Edinburgh West) (LD)]

The Minister says that the Government’s aim is to get support to the people who need it and to make the system sustainable, but surely what this case underlines is that we have a welfare system that is broken and that the Government’s attempts to fix it are failing. We need the welfare system repaired and we need action to tackle cases like this, along with the record numbers using food banks and a welfare system that is not doing what the Minister states is its aim.

[Will Quince]

I am afraid that I do not recognise the picture that the hon. Lady paints. We are spending record amounts on our welfare system—over £95 billion a year for those of working age.

[Richard Burden (Birmingham, Northfield) (Lab)]

Does the Minister agree that this Supreme Court judgment not only highlights the huge gap between local housing allowance rates and the reality of rents in the private sector, but shines a light on the much bigger crisis of homelessness, which today is a massive part of my caseload and, I think, that of other hon. Members? It is a crisis that in Birmingham, the month after the case went to the Supreme Court, saw 12,000 households on the council waiting list including the homeless and 2,500 households in temporary accommodation. Does he accept that this will not be tackled until the Government recognise the need to invest in social housing on the scale required and adopt social security policies that tackle poverty rather than exacerbate it and compound the homelessness problem, and that unfreezing the LHA cap would be a first step in that?

Finally, does he recognise that the message here for Birmingham City Council and other local authorities is that they must always keep focused on the people, not simply on the procedures?

[Will Quince]

The hon. Gentleman should not underestimate my determination—I chaired the all-party group on ending homelessness—to absolutely deliver on our commitments to halve and then end rough sleeping. I recognise what he says about LHA rates, but that is not the case across the country. Rates are an issue in some parts of the country but not in others, which is why I am looking at this very carefully. I have been working with my counterparts in the Ministry of Housing, Communities and Local Government, as he suggests, because supply is also an issue.

[Dr David Drew (Stroud) (Lab/Co-op)]

The local housing allowance causes us real problems in Stroud, because we are in the same area as Gloucester, where rents are much lower. That is nothing to do with this Minister, let alone this Government or previous, successive Governments; it was a Labour Government who grouped those areas together. Will he at least take a look at the impact on those groupings where rents are higher in some areas and lower in others?

[Will Quince]

The hon. Gentleman raises a good point. Those groupings are based on broad rental market areas, and in some parts of the country they pose an issue. A number of Members from across the House have raised this issue with me and I am looking at it.

[Alan Brown (Kilmarnock and Loudoun) (SNP)]

Under this Government we have seen the introduction of the bedroom tax and universal credit, both of which are causing rent arrears, and the Minister has actually admitted that UC delays are leading to an increase in prostitution. He says that the reason for the freeze in LHA rates, which is now making people homeless, is to stop the private rented sector being subsidised, yet another Government policy is leading to increased numbers of properties in the private rented sector. The right to buy has resulted in 75,618 sales and over 21,890 new starts since 2012, leading to a further imbalance between public and private sector housing. When will this Government get a joined-up, just social policy?

[Will Quince]

First, I want to correct the record. I did not make those comments at the Work and Pensions Committee yesterday, and if the hon. Gentleman checks the record he will see that that is the case. Since the freeze, LHA rates have been adjusted through targeted affordability funding, as I mentioned earlier. In addition, over £1 billion has been made available since 2011 in discretionary housing payments. I have made it clear that the freeze ends in March 2020 and, ahead of a spending review bid, I am looking at numerous options.