Housing Benefit (Amendment) Regulations 2012

Baroness Turner of Camden Excerpts

Tuesday 6th November 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, for many people who are out of work, disabled or on low incomes, housing benefit is a crucial safety net and a vital support to help pay the bills at the end of the month. I am moving this Motion of Regret at the measures to introduce size criteria restrictions in the calculation of housing benefit for working-age claimants living in the social rented sector because we see this as a very important issue.

It is but one of the changes to housing support introduced by the coalition which overall will result in around 2 million households receiving lower benefits. The National Audit Office tabulates the range of losses as running on average from £5 a week for those affected by the CPI uprating of local housing allowance to £91 a week for those affected by the overall benefit cap. The size criteria restrictions—called the bedroom tax by the noble Lord, Lord Best—are estimated by the DWP to affect 660,000 claimants with an average weekly loss of £14. Most underoccupy, as defined, by just one bedroom with the average weekly benefit loss being £12. Half of those affected will lose between £10 and £15 per week. Of those affected, 390,000 will be local authority tenants and 270,000 will be housing association tenants. Alarmingly, 420,000 of the households contain a family member with a disability. Noble Lords will recall the extensive and intense debates on this issue and the strong views expressed by your Lordships’ House in opposing these measures. The Minister referred to them a moment ago.

The overriding issue is fairness. The arguments have not changed and will not go away. Hundreds of thousands of tenants have been penalised for the circumstances in which they find themselves, with no ready means, for most of them, to mitigate what is perceived to be their alleged offence. Of course we recognise the need to deal with the deficit, but it is who you choose to bear the burden that is at issue here. In an era when we are producing tax cuts for millionaires, we are asking 660,000 of the poorest people in our country to bear a cut of £14 a week. Most people deemed to underoccupy will not have a smaller alternative property to which they can move. All housing benefit claimants of working age considered to have spare bedrooms will see their benefit cut by 14% for one extra bedroom and 25% for two or more extra bedrooms. The reality is that this is not a serious attempt to address underoccupancy but is about cutting people’s benefit.

Of course underoccupancy must be addressed. We agree with the Minister on that. Many councils have imaginative schemes to do so for the elderly, who are not affected by these regulations, as well as for working-age tenants. The DWP’s own impact assessment is clear that there is a mismatch between household size and the availability of suitable houses in the social sector for underoccupying claimants to downsize to. The NAO’s report reached the same conclusion, noting that there is a mismatch between need and availability. Modelling by the National Housing Federation found that while 180,000 social tenants in England are underoccupying two-bedroom houses, only 85,000 one-bedroom social homes became available for letting in 2011-12. It concludes that the lack of mobility in the sector is not a product of tenants needlessly underoccupying larger homes but rather of the logjam created by a national shortage of affordable homes.

What choices do tenants have if they are to avoid the benefit hit? The Government say that they can make up the shortfall by using their other income or their savings, which is the same argument we heard in relation to the benefit cap. Is this really living in the real world? What level of savings do the Government think these families may have? An alternative is that tenants can move into work or work longer hours. This is notwithstanding that many are not, under the stringent rules that apply to conditionality, required to be available for or seeking work. For those who are, it presupposes that they are not already trying to, that the current claimant obligations are somehow deficient and that the level of support available via the work programme is not helping them. As for taking in a lodger, for many, this will be an unworkable and unreasonable option putting the safety and privacy of the family at risk.

The alternative is to take the hit or move to accommodation that better suits the current size of the household, assuming that it is a stable size. But where? It is not very likely in the social rented sector, where there is not only a shortage of supply but, as has been identified, a dearth of one and two-bedroom properties. A move to the private rented sector would inevitably lead to higher rents and higher benefits. There would be no certainty of that being cancelled out, as I think the Minister suggested, by a move in the opposite direction to a cheaper area, but given the allocation policies of local authorities, that is likely to be only in the private rented sector.

The Housing Futures Network found that 50% of claimants would not be likely to move home when they were faced with a cut. Over one-third considered that they would be likely to run into arrears, so we have a certain recipe for driving the poor into greater poverty and debt. We have seen the now-familiar tactic of the bit extra in the discretionary housing payment fund each year, albeit funded by bumping up the percentage reductions for underoccupancy. While this will undoubtedly give some help where the properties of disabled claimants have been subject to significant adaptations and to foster carers between placements, it should be compared with the annual cut of half a billion pounds that the Treasury is seeking.

A review of the consequences of this is right, but it will not help with the misery that these provisions will cause in the mean time. The discretionary housing payment fund has a fixed budget and is having to cover an increasing range of circumstances, as we discussed on the benefit cap when my noble friend Lady Lister referred to it as “the loaves and fishes” concept. We challenge whether it is an appropriate or sufficient method to deal with disability issues. The DWP’s equality impact assessment shows the disproportionate effect the size criteria measure will have on the 420,000 sick and disabled tenants. An additional £25 million of discretionary housing payment for tenants whose homes have been adapted will undoubtedly be challenged as being insufficient mitigation, and rightly so. It is not a reliable safeguard against rent arrears, evictions and homelessness for chronically sick and disabled tenants.

True to form, the Government seek to offer some justification for this approach by juxtaposition with some other group, in this case, those in the private rented sector. As we have heard, the argument goes that private rented sector claimants receive housing benefit for accommodation based on the reasonable needs of their household, while in the social rented sector, it is based on the accommodation that they occupy. This is not comparing like with like. The nature of the tenancies is different and, in any event, when tenants are first placed in accommodation in the social rented sector, it would typically have regard to the size of the family. The reality is that household composition and need can change over time. The changes may not be permanent. Families grow with children and reduce as children fly the nest. The logic of underoccupation provision is that each change should drive a change of home; what a nonsense. It is a back-door way of undermining security of tenure in the social rented sector.

The National Housing Federation is deeply concerned that no flexibility has been given to social rented sector landlords to define whether a property is underoccupied. For example, if a home has a double bedroom and two box rooms, according to the regulations it would be underoccupied if a couple and two children were living in it, despite the reality being that the home is fully used. If the landlord reclassifies the property as a two-bedroom unit, it would lose money, which simply does not seem right. This is just another anomaly of the system.

This is a grotesque experiment in behavioural economics. The department has no idea how tenants will react, and the Government do not seem to care. Indeed, they hope that tenants will sit tight and take the hit because that way the Treasury maximises its saving. It is a callous piece of public policy that will put people into debt, drive increased homelessness and fracture communities, and we should have none of it. I beg to move.

[Baroness Turner of Camden]

My Lords, I rise to support my noble friend in his amendment. I agree with him fully that the new regulations before us are unfair to vulnerable people. They are being introduced at a time of a housing crisis that is particularly acute in places such as London. The situation in London is that rents are too high and wages are too low. The right to buy was fine for some, but it reduced the number of social homes available for rent. The social homes should have been replaced but, of course, that did not happen. Now local authorities are already looking to acquire premises for alternative social housing, often on sites very many miles away from where the individuals concerned are actually living and where they have some sort of support. This would be particularly difficult for people who are disabled, for disabled people require the support services that are often where they happen to live. It is quite unfair that they should be placed in the position of having to worry about future housing.

As far as London is concerned, my own neighbourhood has a particularly acute situation. When I first moved to West Hampstead, the area in which I now live, it adjoined Kilburn and was never regarded as a very posh area. Unfortunately that is no longer the case. The rents now being charged are absolutely enormous, and I do not understand how ordinary working people can be expected to afford them. It is quite common for large houses to be converted into one-bedroom flats, and the landlords charge as much as £500 a week for a one-bedroom flat. That is the kind of area and range of accommodation that is available in the area, and I do not see how working people on very low incomes can possibly afford it.

As for underoccupancy, quite frankly domestic circumstances for people change. Children move away; sometimes, nowadays, they move back because they cannot find anywhere to live. There are people who require support because they are ill. Sometimes they die. Domestically the whole situation changes for people, and it is unfortunate that they should be placed in the position of worrying, every time there is a domestic change, about what is going to happen to their living accommodation. It really is quite unsatisfactory.

As for general housing, I well remember what the situation was like at the end of the war—I am old enough to remember that. There was an acute social housing crisis because a lot of London had been bombed and there was no accommodation available. So what did the then Labour Government and the subsequent Governments do at that time? They had a very bold policy of social housing that was radically put up; we used to call these houses prefabs, and some of them are still in existence. There was a set of regulations that involved rent tribunals. In those days, if you were overcharged, you could go to a rent tribunal and your rent would be reduced. That meant that you could go on living in your accommodation. If you were concerned about it, the rent tribunal had the final say about what the rent should be. That meant that your rent had some relationship to the general level of wages, and therefore people were able to go on living in their homes because they had legislation to support them.