Welfare Reform Bill

Lord Best Excerpts

Tuesday 14th February 2012 Lords Chamber

Moved by

[Lord Best]

As an amendment to Motion B, at end insert “but do propose Amendments 3B and 26B as amendments in lieu”

3B: Page 5, line 21, at end insert—
“(3A) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the housing cost element of the universal credit to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work related requirements in accordance with the provisions of section 19;
(b) the claimant, or a child or a young person for whom either or both the claimants is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required; or
(c) the claimant is a war widow or widower; or
(d) the claimant routinely provides foster care placements.
(3B) In subsection (3A), “claimant” means a single claimant or joint claimant.””

26B: Page 52, line 36, at end insert—
“( ) In relation to a dwelling of which the landlord is a local housing authority or a registered provider of social housing, and no suitable alternative accommodation (as defined in regulations to be made under this section, and provided by any such provider) is available, regulations under this section shall not permit the AMHB to be less than the actual amount of the liability in a case where a household has no more than one spare bedroom, and—
(a) the claimant is subject to no work-related requirements in accordance with the provisions of section 11D of the Welfare Reform Act 2007;
(b) the claimant, their partner or a child or a young person for whom the claimant (or their partner) is responsible, is in receipt of disability living allowance, or personal independence payment, or attendance allowance or an increase of disablement pension where constant attendance is required;
(c) the claimant is a war widow or widower; or
(d) the claimant or their partner routinely provides foster care placements.”

[Lord Best]

My Lords, this combined amendment seeks to achieve a compromise on the so-called bedroom tax, the underoccupation penalty that reduces the housing benefit entitlement—later the universal credit entitlement—for those of working age in a council or housing association property.

Perhaps I might recap on the position we have reached on this measure. I have argued since Committee that the Government should stay with the current definition of underoccupancy from the Department for Communities and Local Government, which allows a household one spare room, which may actually be a room that is occupied all the time; for example, where children are not sharing because one has a disability or because a teenager wants a separate bedroom to do her homework and so on.

Requiring people settled in their council or housing association homes to move or pay a fine of what will now be £728 per annum on average seems very harsh. The housing benefit of these tenants will be cut by this amount so they will have to find the bedroom tax out of other benefit income. For an unemployed separated father who has a spare room so his children can stay, this represents a cut of nearly 20 per cent in his income from jobseeker’s allowance. Even though £14 a week may not seem a huge sum to most of us in this House, it means a very significant reduction in living standards for all households affected.

Your Lordships will recall that the earlier amendment on this theme was carried in this House with significant support from all parts of the House. It did not go so far as to allow families one spare room, but it changed the position so that the penalty would only become payable if the tenant refused an offer of a smaller, suitable flat. This amendment would still require all 670,000 households—rising to 740,000 households as the pension age rises—to move if they were to avoid paying the tax, but no one would have to pay until they had been offered and had turned down an alternative tenancy. This took away the surely inequitable requirement to pay the penalty for staying put even where there was nowhere else to go.

As your Lordships know, the majority of council homes built from 1920 onwards have three bedrooms. Requiring a move to a two- or one-bedroom flat can mean waiting for vacancies for some time; for example, in rural areas there are places where all the council houses have three bedrooms so if the tenants are to downsize they must leave the village, perhaps after living there all their lives. Some urban councils purposely avoid putting families into tower blocks, so singles and childless couples have been allocated larger flats there. To suddenly impose the underoccupation penalty on all these households before they have any chance to move elsewhere seems most unjust, and your Lordships voted for the amendment that would provide some relief for this problem.

It is important to note that the earlier amendment did not abolish the bedroom tax, and the penalty would still kick in for those who felt that they could not accept the alternative flat offered to them. Their reasons for refusing to downsize might be very compelling, but regardless of those reasons, the amendment—the compromise from the position of permitting a spare room—meant they would still have to pay if they did not accept the offer of the smaller accommodation.

This Lords amendment was rejected in the other place, though with a relatively small majority of 42, and with support from the amendment from all parties, including 12 Liberal Democrats and two Conservatives. This gives me some hope that if an amendment that cost half as much were to be presented to the other place, it might indeed gain acceptance there.

I am therefore bringing forward an even more modest amendment, in the hope of salvaging something here. The new amendment confines the postponement of the imposition of the bedroom tax to certain categories only, rather than to all tenants. I deeply regret abandoning hundreds of thousands of households who, even if this amendment is approved, will still be caught by the penalty charge on the 1 April next year. Even if they are willing to move, they will be trapped where they are because there are no smaller flats available. However, needs must, and the new amendment reduces the cost in the early years from perhaps a maximum of £300 million by around half, a far cry from the billions referred to in earlier debate. In due course, the Government will collect the great majority of the tax if, as gradually some people are offered a smaller home and do not take up the offer, they are then required to pay up. The cost implications are not, I suggest, too frightening.

Therefore, for the categories spelt out in this new amendment, no fine, penalty, tax, or housing benefit cut would apply unless and until they turned down an alternative offer of something smaller that is defined in regulations as “suitable”. The categories given relief in the amendment are: first, claimants who are not required to work for reasons already set out in the Bill in Clause 19, including those with,

“regular and substantial caring responsibilities for a severely disabled person”,

or for,

“a child under the age of 1”.

These are households for whom pressures to take a job—which, as the Minister has explained, is a key policy driver for the Government—are not relevant. For these people, the penalty simply represents a substantial loss of income with no escape. If the household felt that they could not accept an offer of an alternative flat, they would still have to pay, but only after that offer had been made.

Secondly, the amendment covers claimants who have already been exempted from the household benefits cap, mostly because they are disabled, but also including war widows. These are people who the Government recognise as having extra costs. My amendment simply replicates the categories which the Government have acknowledged should not be penalised by the benefits cap. Many of the 70 charities that are urging parliamentarians to accept an amendment on this issue represent people with disabilities, who are particularly badly affected by having to share bedrooms. Again, I fear that these would not be exempt from paying the tax unless they moved out, but the tax would not be payable until they turned down another home, deemed to be suitable, but smaller.

Each household would still have a very tough decision to take. For one it would be, “Could we move and put our disabled child with his special bed into the same room as his sibling, or should we take the cut in our living standards and stay in this house with a separate bedroom?”; or, for an older couple, where one is under pension age—under 61 years and 5 months next April—the choice could be, “Should we move from our two-bedroom flat to a one-bedroom flat, even though we often sleep apart when my husband is ill, and we frequently use the other room when my daughter comes to give me a hand for a few days?”; or, “Must we move, because £14 per week off my husband’s state pension would be just too much?”. I fear that these difficult choices would still have to be faced even if the amendment is carried, since the amendment only postpones the moment of truth until an offer of a suitable alternative flat is made. Thirdly, this concession would apply where the household regularly takes in foster children. Barnardo’s and other children’s charities are keen to see the nonsense of taxing foster parents removed.

What are the arguments against my case for a now extremely modest element of relief from the proposed underoccupation penalty? It cannot be said that granting this relief takes away the pressure on scroungers—people able to work but not working—since the revised amendment does not cover anyone required by the benefits system to seek work. Can it be argued that the Government have already announced a sufficient safety net to cover the most extreme cases? They have made available £30 million against the expected savings of £470 million, which the bedroom tax would yield, for discretionary housing payments which local authorities can use to cover the tax for deserving cases. The Government have mentioned two groups in particular to be helped by local authorities; namely, those living in homes that have been specially adapted and for whom downsizing would require the smaller home also to be adapted, no doubt at considerable cost, and households with foster children where the underoccupying rule is particularly inappropriate.

The funds for this discretionary power to bail out some hostels is confined to these special cases. If something was left over, it would leave local authorities with an invidious task; that is, how to assess the relative hardship of the bedroom tax in each of the other 670,000 cases where the discretionary housing payments are available to help only one in 16 of those affected.

Nevertheless, I confess to having been thankful for this small mercy—until I learnt that the £30 million for these discretionary housing payments is to be paid for not by the Treasury accepting any reduction in the gains achieved through the bedroom tax but by increasing the tax for the other tenants by another £50 per annum from the previous £13 per week to the new £14 per week.

What about the argument that those on very low incomes could find the money to pay the penalty charge from their savings? I fear that it is more likely that such households will be struggling with debts, perhaps depending on payday loans and even resorting to the loan sharks, rather than sitting on a pile of savings. While older tenants may have put aside a bit, few will be able to cope when faced with a new tax of £728 every year on top of the rises in their heating bills and other costs.

One other remedy suggested by the Minister is for these households to take in lodgers. That is certainly to be strongly encouraged, although the current disregard as to the amount that tenants are allowed to keep without losing benefit has not proved a sufficient incentive to date. Obviously, however, taking in lodgers is not appropriate for most of those in the priority categories of the very vulnerable and disabled people now covered by this new amendment. By all means promote lodgers’ schemes among those not helped by this amendment but it seems unrealistic to expect this idea to be of much help for those singled out in my new amendment.

I hope that since the earlier, more expensive amendment gained such a high level of support from all parts of this House, this lesser version will be acceptable. As noble Lords know, there is backing for any such measure. It comes not just from the many charities concerned with children and disabled people but from the social landlords—the councils and the housing associations. These social landlords have expressed grave concerns, not only on behalf of their tenants but because of the administrative and financial problems that the Government’s proposals will create for them.

The landlords will be asked to be the tax collectors of the £14 per week from each liable tenant to make up the weekly deficit on the rent that the penalty will create. They know that they will have a huge job identifying who may be eligible. I am grateful for the reassurance from the Minister that there will not be an army of snoopers to check on whether a young person has left home or is away for just a few weeks. But landlords will have the problems of collecting the £14 per week or £25 per week if there are two rooms. That will not be covered by housing benefit any more.

Even if the housing benefit is paid directly to the landlord because the tenant is classified as vulnerable or has run up arrears, the extra sum—the penalty charge—will still have to be collected directly from the tenant. This will not be easy. A gradual accumulation of rent arrears seems inevitable, meaning in turn evictions in due course and less money for renovations, new homes or regeneration. The gain to the Treasury is likely to mean losses for housing, as well as the misery of loss of income for those unfortunate tenants who have to pay up.

This will be a particularly painful levy on communities in the north-east and the north-west where 45 per cent of the relevant tenants will be hit, and in Northern Ireland, where rather higher standards have justifiably applied, 68 per cent of these tenants will be affected. In this House we are not troubled by postbags full of protests from aggrieved constituents, as I strongly suspect will be the case in the other place, but I know that many of your Lordships feel strongly that we have a role in restraining government where measures seem excessive or unfair. Even though this amended, amended amendment is now providing much less relief than I feel the situation requires, it nevertheless draws a line by mitigating at least some of the hardship for at least some of those on the lowest incomes, and now exclusively for those who are not in a position to go out to work because they act as carers or are disabled themselves, I hope very much that noble Lords’ support for these households will be sustained.

I pay tribute to the Minister who has worked extremely hard and effectively on this important legislation. I congratulate him on the changes he has achieved, but I know that he feels the hot breath of the Treasury on his collar. I therefore ask him to feel emboldened by the strength of feeling in your Lordships’ House to accept this very modest new amendment. I beg to move.

[Baroness Hollis of Heigham]

My Lords, universal credit is about using benefits to encourage behavioural change, and above all to encourage people to seek work by reducing its risk and increasing its reward. Like most people in this Chamber, I am deeply supportive of that, as the Minister knows. The House is extremely grateful to the Minister for the care and attentiveness with which he has introduced the changes made by universal credit through the stages of this Bill.

However, this amendment in the name of the noble Lord, Lord Best, has nothing to do with universal credit, nothing to do with behavioural change and nothing to do with urging people into work. It is simply a means of making savings that will come from cuts which will fall on some of the poorest. The Minister has already said, by referring to Moody’s, that we cannot afford to lose those savings, yet none of them falls on me although they could do so. I would be happy to indicate to the Minister, if he so wishes, where they might. In my view, this is about political and moral choices. Do I pay or should a disabled child suffer?

I want to make three brief points. First, I believe that at the core of the policy on underoccupation is a fundamental dishonesty. I do not accuse the Minister of this, but the position is a dishonest one. That is because it states that people of working age must downsize if they have one spare bedroom but, as the Government acknowledge in their own impact analysis, those smaller flats and houses to which people should move do not exist. The Government acknowledge that 85 per cent of people will therefore have to stay put. If they do not, and instead move into the more expensive private-rented sector, the savings will not be made. Let us think about this. The Government are publicly requiring people to downsize and then, knowing that the stock is not there, they hope and expect that people will ignore what the Government are telling them to do—otherwise they will not make the savings. The Government are calling for one outcome but want people to do the exact opposite. We are asking the House not to collude in that false choice.

Secondly, the Government’s position, as has been well outlined by the noble Lord, Lord Best, is deeply unfair to particular groups of people. I shall take just one: the couple with disability who need a bedroom each on occasion. He may have early prostate cancer and be going to the loo half a dozen times a night; she may have a respiratory problem and cough heavily through much of the night. On most nights, they need a separate bedroom otherwise one is being required to go without sleep or the other to sofa-surf in her own home night after night—a 60 year-old woman is being asked to sleep on a sofa night after night because of the change.

The same problems apply to disabled children being expected to share bedrooms with their siblings. If those disabled children need regular night-time care, their siblings are going to go to school without enough sleep, tired and upset, and almost certainly underperforming. Do we really believe that such families should carry the cuts on behalf of us all? I think not.

The third and last point is the consequences for housing associations such as my own—I declare an interest as chair of Broadland Housing Association, half of whose housing is in rural Norfolk. I cannot currently rehouse pensioners in rural Norfolk who want to downsize because I do not have the stock in the villages in which they want to live, yet it is among pensioners that underoccupation is most common. In future, the disabled family which does not want to move will be required to move, while to the pensioner who wants to move we will have to say, “You’ll have to stay put”. Can your Lordships think of a more foolish as well as—in many ways—more selfish policy, whereby people who do not want to move are made to move, and those who do want to move cannot, even though the costs of the one and the other would balance out? That cannot be right.

What will we do? As the noble Lord, Lord Best, said, families who cannot move, including those with a disabled child, will have to take a hit on their housing benefit through no fault of their own because they cannot move, and they will within weeks fall into arrears. What do we then do in a housing association? Either I evict a family with a disabled child into temporary accommodation or bed and breakfast—how I can do this to them?—or they stay put and arrears mount. I have already trebled the amount in my accounts for increased arrears. As the noble Lord rightly said, the money is not available to pay the debt charges of new building, which alone will solve the problems of getting our stock right in the longer term.

The Minister says that such people may make a contribution out of their benefit, by which he means, frankly, that they must either eat less or heat less. A disabled child and their family are being asked to eat less or heat less in order to bridge the gap between their housing benefit and the home in which they live.

I return to my opening point: we do not have to do this. It is about our political and moral choices. Families with a disabled child will lose £14 a week, while most of us enjoy a tax-free winter fuel allowance or find for the second year running that our council tax has been frozen. Not a penny of these cuts is falling on me or, I suspect, on very many of your Lordships, yet we are asking disabled families and families with disabled children to carry those cuts for us. I hope that your Lordships will put themselves on the side of the very modest amendment moved by the noble Lord, Lord Best, put themselves on the side of disabled children, disabled people, war widows, foster carers and kinship carers, and support the noble Lord’s amendment.

--- Later in debate ---

[Lord Freud]

My Lords, we have to look at these things in the round, as we did with the Bill. The reality is that we had a range and we set the provision at an affordable level within that range. Noble Lords may argue that saving money is a cynical thing to do but, as I say, we had a range and we set the provision within the range. We have found the money to ameliorate the measure through the discretionary housing payments process.

My noble friend Lord Newton made an important point about changing circumstances. We have rules within housing benefit to protect people when their circumstances change. Among those changes are going into hospital, being on remand and the death of a member of a household which would result in a reduction in housing benefit. Those same rules will apply in the social rented sector and provide protection for such claimants. For example, housing benefit currently provides 12 months’ protection from rent restrictions where there is bereavement, so there are ways of dealing with such circumstances.

The noble Baroness, Lady Hollis, referred to couples who have health problems. I re-emphasise the point that they would not be pensioners by definition as they are excluded from this measure, so we are talking about couples of working age. Clearly, if there is real difficulty in that regard and separate bedrooms are required, where discretionary housing payments would be considered, and where the couple required an overnight carer, whether non-resident or otherwise, the size criteria would be increased to provide additional room. However, we should consider what happens to people who are renting in the private sector. These situations are already faced by more than 1 million people—I think it is 1.3 million people—renting in the private housing sector.

This is part of a package of reforms to keep the housing benefit bill under control. I have never tried to disguise that in any way. This is a way of trying to control the housing benefit bill that is moving up towards £26 billion, if we do not take the £2 billion of savings across the piece as we are planning to do. That is the saving that we are trying to make within the social rented sector as opposed to the private sector. We are trying to sort out our budget deficit, and we need to make sure that we spread that load right across society in as fair a way as we possibly can.

We realise, obviously, that we need to support tenants, their advisers and housing providers in preparing properly for what is a very substantial change happening in April 2013. Work is well under way to support social housing providers, local authorities and other government departments. An important point raised by my noble friend Lord Kirkwood is the impression that it is all happening on one day. It might be happening on one day, but in practice there is a year before it culminates in which we are aiming to get a very smooth implementation process. We are working closely with the stock team, which is part of the Chartered Institute of Housing, funded by the GLC. We are putting a tool-kit out for local authorities, which involves working on who will be affected; advice on data sharing; allocations policy; tackling worklessness; taking in lodgers; letting spare rooms; reducing arrears; national home-swap schemes; affordable rents; and alternative housing options. We are working on all those areas.

A behavioural response is required right across the piece on something like this. We are looking to help claimants. Those who can must look for a job. Those who are in work can increase earnings by getting more hours. We have discussed taking in a lodger, moving to a smaller property or moving into the private rented sector. Landlords need to have responses. They need to give permission to accept lodgers, identify those affected, communicate changes, train staff, review their allocation policies, look at where the discretionary housing payments need to be made, and so on. There is a range of things on a substantial scale that need to happen, just as the Government have to do a huge amount of work to ensure that they do happen.

We are not expecting the 670,000 people who are affected to move. As I have tried to describe, there are a number of ways in which claimants can make up any shortfall and stay where they are. So I ask the noble Lord to withdraw his amendment.

[Lord Best]

My Lords, I am extremely grateful to people from all parts of the House who have joined in this debate. My thanks go to the noble Baroness, Lady Hollis, who has been tireless in supporting this amendment and so many others during the course of this Bill; to the noble Lord, Lord Newton, who has been a hero in bringing common sense and good judgment to this Bill at all kinds of stages; to the right reverend Prelate the Bishop of Ripon and Leeds for his support; and to the noble Lord, Lord German, who raised a number of important points. Perhaps I could respond to his point that 1 million bedrooms—I am not sure whether he actually quoted this number—are underoccupied in the social housing sector, and that it would be good if we could get those used. In this country there are, I think, 6.8 million empty bedrooms in houses where there is already one spare room. We have lots and lots of spare rooms, but they are in the owner-occupied sector, and nobody is suggesting that we levy a bedroom tax on the occupiers in the owner-occupied sector—quite rightly; I absolutely would oppose that. However, on council estates now, people who have exercised the right to buy and are homeowners are living next door to tenants in identical circumstances. One of them will be penalised and one of them will not.

I am also grateful to the noble Lord, Lord McKenzie of Luton, for his contribution and indeed to the noble Lord, Lord Wigley. I single out the noble Lord, Lord McKenzie of Luton, because he has brought the expertise of a previous Minister on this key issue to all of our debates and has been more than helpful to me in my formulation of the amendments that we have before us today.

I was greatly encouraged when the Minister said that the cost of this has come down from the earlier amendment, which found favour with your Lordships and did not do so badly in the other place. The cost has come down from some £300 million to about £100 million. I think the Minister said up to £100 million. This, I agree, is serious money, but it is set against the savings in housing benefit that the Minister mentioned again that he is seeking to achieve of over £2 billion. The £100 million is for particularly vulnerable and low-income households. I was not convinced by the argument from our earlier debates in Committee for the increase in the amount that will be charged each week. It will rise from £13 per week to £14 per week, which happens to be the amount required to find a further £30 million of discretionary housing payments. That, I fear, has meant that we are robbing Peter to pay Paul. We are charging another 50 quid to everybody else to pay for the ways in which we can exempt certain people, people in houses that have been expensively adapted, and indeed those who regularly have foster children in the home. That is excellent, but it is being paid for by pushing up the total bedroom tax for everybody else to £728 a year. That is three-and-a-half times the winter fuel payment, for example. That is a serious amount for people on the lowest incomes to find.

I do understand the pressures on the Minister to help the Government achieve deficit reduction, but I see it as incumbent on us in this House to take a stand, even a modest one, to draw a line where deficit reduction is at the expense of many thousands of the very poorest households. We have to say: so far, and no further. Applying the bedroom tax to these vulnerable groups, set out in this amendment, where there is no opportunity for those on very low incomes to avoid the tax, is going too far. I wish to test the opinion of the House.