Welfare Reform and Work Bill

Lord Smith of Leigh Excerpts

Tuesday 17th November 2015 Lords Chamber

[Lord Smith of Leigh (Lab)]

My Lords, this has been a wide-ranging debate on a wide-ranging Bill, but I intend to concentrate on two aspects which I think I know something about from my experience, so I declare my interests as being leader of Wigan Council and a vice-president of the LGA. The two areas that I want to concentrate on are troubled families and social rents.

The House may be surprised to hear that I am a great supporter of the Government’s troubled families programme. If anything, it is too timid, but the principles are the right way forward. Led by the rather formidable Louise Casey, the programme has assisted 120,000 or so families and helped to turn them around. It has worked as a cross-departmental scheme and it has worked well with local government. The investment of just over £400 million has, according to the Prime Minister, produced savings of £1.2 billion—and who am I to question the Prime Minister’s comments? There have been significant savings through the programme, as we know in my own authority. There are a lot of sceptics around who say that local authorities are in the troubled families programme because there is payment by results or because they have fiddled the figures. When we were asked to turn around exactly 755 families, they asked how we could achieve exactly that number. The answer is that we worked with more than 1,000 families to make sure that we had the 755. We did not charge for the others but made sure that we could charge for them.

The programme has worked because there is an emphasis on prevention and getting in there early, working with families to make sure that we can do it. It is a slow process because you need to get families’ confidence. Frankly, some of these people are used to having men in suits come around—people like me, as they told me—to give them advice, but not necessarily the advice that they need or want. I was pleased to see that a phase 2 is going on but perhaps not so pleased that the money is not there. I hope that in the Autumn Statement, a real amount will be invested in this programme because it is about investing in people.

I was surprised to agree with a comment that the noble Lord, Lord Lansley, made about school readiness in his interesting maiden speech. School readiness really is a factor that determines life chances. In my authority about a third of kids come to school when they are not ready, but in deprived areas it can be more than 70%. We need to turn that around. I am hopeful that in the Autumn Statement, the Government will start to reverse some of their changes to Sure Start schemes and early years work because that is where we need to put a lot of attention.

In a parallel universe, today in the Moses Room we have been discussing an education Bill. I am disappointed that that Bill does not recognise—as far as I can see, as I was not able to take part—the really important role that schools play as community assets. We need to use schools to work in our communities. Where we have done that, we have even helped people to get jobs simply because they trust what goes on in schools, they trust head teachers, and so on.

In Clause 3, we are expected to agree a typical Westminster or Whitehall reporting obligation on troubled families. That is pretty weak. I hope that the Minister can assure us it is not just making sure that my officers, who are engaged in this work, have to spend more time reporting in. We want it to be a way that innovation and good practice can be spread around so that we can get this working properly across the country.

Clause 21, as a number of noble Lords have mentioned, implements the Government’s policy on social rents—a reduction of 1%. Again, as my noble friend on the Front Bench said: how can you be seen to be opposing this, opposing a reduction in the rents roll? The answer is that, for councils, it is a reversal of regular practice, it is reneging on a policy the Government agreed to only three-and-a-half years earlier.

Three-and-a-half years earlier, the Government said to local councils, “We need to review housing finance, and we need to localise it”. So we went through it, and a big exercise was done by the Department for Communities and Local Government. It came up with a booklet of which I have only the front page, The Housing Revenue Account Self-financing Determinations. As an integral part of this, some councils had to borrow money. They said that in 30 years’ time the accounts looked as though they needed to borrow money. Some actually got paid money back. The total amount borrowed was £13 billion; £6 billion was paid back. So there is a net benefit to the Treasury there of £7 billion.

My local authority was encouraged to borrow a significant amount: £98 million? Why would we do that? The Government said, “Don’t worry. Under the scheme, you will be allowed for 10 years to have a 1% increase in rents to pay for the additional servicing of the debt borrowed”. Within three-and-a-half years, that deal has been reneged on, as I said, by the Government, so in fact we have a financial deficit in my authority of probably about £35 million. What do we do? How do we cover that? We cannot raise the rents. We cannot subsidise—not that we have any money anyway. The only way to recover that debt is to reduce activity, reduce the repairs, reduce the maintenance on the property or—probably more likely, of course—reduce house building, stop doing that.

So here is a policy that the Prime Minister was announcing at the conference, a crusade to get more houses built, and in one swoop they have cut off the building of council properties. It does not take long, does it, to change minds? Of course, the beneficiaries of this rent, as my noble friend said, are not the tenants; about 70% of tenants are on housing benefits. Actually, the social housing authorities, the LGA reckons, are paying about £2.6 billion a year into the Treasury coffers.

A local authority obviously meets at the front door, as it were, the consequences of some of the welfare changes. Unlike some authorities, I can assure the noble Lord, Lord Low of Dalston, that we have maintained our welfare advice sector. The Minister has been to Wigan and seen this for himself, but it would be instructive for other Members—we are always talking about theories in here—to come to see what we call the crisis desk in Wigan.

Over the past 11 months, to give the most recent figures, we have had more than 4,500 people coming to that crisis desk in Wigan. Seventy percent of them said that they had no money. It is a complicated thing. Most of them were referred to food banks. Most of them were given support. Often, of course, DWP issues have caused them to have no money—benefits not being agreed or refused, sanctions or slowness in dealing with cases. Really, we need to change that.

We have devised a programme—unfunded, but we do it—which we call Living Well. We are trying to understand what we can do to help people. The complexity of issues that people have prevent them from getting work. Really, the DWP does not always help. We have one young man who is homeless. I would have thought that the best thing for that young man would be to try to find him a roof over his head, but the DWP keeps telling me that he has to get 10 job interviews a week. He said that, really, he just wants to get a home.

There is a toxic mix of people who have mental health problems, probably suffering from domestic abuse and other issues. We need to resolve that. If we are going to solve poverty in this country, the DWP needs to become part of the solution, not one of the main causes.

Queen’s Speech

Lord Smith of Leigh Excerpts

Tuesday 14th May 2013 Lords Chamber

[Lord Smith of Leigh]

My Lords, I had intended to speak on welfare or health but on Saturday evening, travelling back north on the M1, I underwent a conversion and decided to speak on culture, specifically sport. I was able to exchange my views on welfare with the Minister during a recent visit to our universal credit pathfinder and my sentiments on health have been adequately expressed by my noble friend Lord Hunt of Kings Heath and others.

The power of sport in our society was clearly demonstrated on the very day of the gracious Speech when the media chose not to be dominated by the Government’s legislative programme but by the retirement of a football manager. Mind you, he was the most famous or, in some people’s eyes, the most infamous football manager at the most famous football club in the world.

As many in your Lordships’ House are aware, I am leader of Wigan council and can give another example of the power of sport. When Wigan got through to the FA Cup Final, we were working with the club on a campaign entitled “Believe in Wigan”. That slogan rang true on Saturday evening when Wigan achieved its historic win in its first ever cup final. I want to place on record my appreciation of the work of the chairman of Wigan Athletic, Dave Whelan, and his fellow directors, and of the manager, Roberto Martinez, and the players for a wonderful victory. We believed and we came through. My only regret was that there were no local elections in Wigan this year as I am sure that, if there had been, we would have won even more convincingly than we normally do.

Sport makes a huge contribution to this country which goes far beyond the obvious benefits of the health and well-being of those participating in it. It has a major economic impact. Recent research in Greater Manchester shows that football alone contributes about £333 million to the Greater Manchester economy. Over four years, that is equivalent to the impact of London 2012 on the country, so we can see the effect it has on GVA. The Manchester brand is recognised throughout the world, largely due to Manchester United. The FA Cup Final has an audience of more than 600 million worldwide. Wigan’s appearance in the FA Cup meant that it had access to that audience and we want to try to exploit that.

Sport can also have a big influence on disaffected young people in our society by attracting members of this difficult group to engage with education, health activities and anti-crime initiatives. All professional clubs, certainly the three in my borough—Wigan Athletic and the two Rugby League clubs: Wigan Warriors and Leigh Centurions—all have extensive community programmes which enable young people to get involved in sport. That works very well in deprived parts of the borough.

I commend the work that is done by the voluntary sports sector which provides not just facilities for young people but also creates community capacity. In many of the most difficult parts of Wigan, probably the only community activity that is going on is the local sporting club. These clubs engage with the community and provide facilities. It is heart-warming to see what they do. They work largely with the council but also on their own. We set up a Wigan sports council and it was terrifically successful at gaining funding to improve facilities. We are now trying to work with those communities and the clubs. As austerity means that there will be a very different form of public provision—whether that is right or wrong, we need to accept that not as much provision will be done by public authorities such as local authorities—we need to make sure that people and communities are strong enough to make their own contributions. We will try to use our sporting clubs to get people more healthy and engaged in that, and to tell people that they can do things for themselves and demonstrate it through their sporting clubs.

Although I am sure it was pleasing for the Government to see the increase in participation in sport following 2012, and some 750,000 more people were engaged in sport, we cannot afford to be too complacent, particularly as one of the key target groups, young people between 16 and 25, was actually unchanged. We need not only to sustain the level of increase but—if we are going to match the best-performing countries in Europe—to grow the level of participation in sport.

If we are going to do that, we obviously need to make sure that there are facilities available, and at a reasonable cost and with easy access for those who need to use them. These will be provided by a variety of partners. We need to make sure that the private sector is working in local areas with the voluntary sector, with schools, colleges and, in some cases, universities, and of course with local authorities, to make sure that the facilities are available and can be accessed by young people in particular. In our case, we are looking to see how we can subsidise access by public transport. Clearly you cannot have facilities all over the place, but if you have good facilities you need to ensure that young people can access them, particularly in the evenings.

In many local authorities, including my own, we have to review the provision of facilities and, sadly, some will inevitably close. However, I want the Government to realise that there is a different way of viewing sport. By investing in sport, and in young and old people becoming more active through sport, we can save lots of money in the provision of health, education and other major services because people will become more engaged.

Finally, I remind those noble Lords who are not aware of it that the next big sporting event in Britain will start in 165 days. It is the Rugby League World Cup. In addition to the programme of matches between the 16 countries that are participating in the games there will be a cultural, social and educational programme so that visitors can engage with people beyond the die-hard rugby league fans such as myself. The Government have given great support to the initiative of the Rugby League World Cup and I thank them for that, and obviously I hope that they will maintain their support during the competition. In the previous World Cup, in Australia, we failed to do well in the competition but we managed to win the wheelchair rugby league games. I hope that this year we can do one better and win the real competition.

Housing Benefit (Amendment) Regulations 2012

Lord Smith of Leigh Excerpts

Tuesday 6th November 2012 Lords Chamber

However, this is a tiny drop in the ocean; very small numbers of people compared with the 660,000 from whom we will need to draw, over a period of time, something like £550 million in savings on the back of the bedroom tax. Remember that that is part of the £2.2 billion total housing benefit savings. All of that money will come from tenants’ pockets, because we are not seeing rents suddenly going down dramatically. The tenants are those who have £2.2 billion to pay. These are very small sums—the loaves and fishes which we wish would miraculously multiply and feed the many thousands—and it does not look possible. I say to the Minister that the small illustrations that I am gathering are just the tiniest drop in the ocean compared with the very many letters that Members of Parliament will receive; all those e-mails that in the end will all come back to the Department for Work and Pensions, asking “What can we do about these circumstances, in which it is very foolish for the community at large, as well as for the residents, to carry on with what is a bedroom tax?”.

[Lord Smith of Leigh]

My Lords, I rise to support my noble friend’s amendments, and express my concern about the impact of this bedroom tax. Before I do so, I declare my interest as leader of Wigan council. I will provide some hard evidence from Wigan about the impact that this would have in Wigan. In terms of council properties in Wigan, some 4,708 properties will be subject to the potential for a bedroom tax: 3,600 of the one-bedroom and over, and just over a thousand of the two-bedroom. In the private sector a further 300 houses will be affected. The financial implications, if the bedroom tax was paid on council properties, would be £2.9 million—an average of between £9 and £29 a week, depending on the property, and a further £250,000 in the private sector.

In introducing the measure, the Minister raised two factors which he said supported this. First, it would help to reduce the cost of the housing benefit budget, and secondly, it would tackle overcrowding. He could have added a third, which he sometimes uses: encouraging return to work. I could not deny those objectives, which many of us would share, but we are saying that this tax will not achieve any of those objectives. Cost reduction will only occur, of course, if tenants do not move, and pay the costs. If they move—and the evidence is that some will do so—different things will happen. I can give the example of a current case in Wigan. A mother aged 51 shares a three-bedroom property with her 26 year-old son. If they choose to move into the private sector, as they have indicated they want to do, they will look for separate properties: the mother for a one-bedroomed flat, and the son probably for a bedsit. In Wigan, the average three-bedroomed council house rent is £74 a week; for a one-bedroomed private sector property it would be £89 a week; and for a bedsit probably a further £75. Rather than saving housing benefit, therefore, the Government would be paying £5,406 more for that particular family, if they choose.

The second issue is about overcrowding. In a letter to one of my local MPs, the Minister said,

“The Government only expect a minority of claimants affected would actually seek to move”.

If that is the case—if very few people move—then how will that help overcrowding? If they are still in the same place, then it will not help overcrowding. The message from my noble friend Lady Turner of Camden was very powerful. She explained the London housing market, but it is not like that in Wigan. The problem is that people will not move because of the lack of suitable properties to move into. An insufficient number of affordable houses has been built in this country by a succession of Governments. We are now beginning to pay the price for that. The current waiting list for a one-bedroom or two-bedroom property in Wigan is five years, so people cannot move into these properties even if they wanted to. We have no shortage of three-bedroom properties in Wigan. You can move into a three-bedroom property more or less straight away. Therefore, there is a geographical imbalance in housing markets and the flat rate bedroom tax will not work. According to the Department for Work and Pensions’ own figures, 42% of families in the north-west of England will be liable for the bedroom tax but only 22% in London and the south-east, so clearly the measure is having a bigger impact on the markets that do not need it.

The third issue is about seeking employment. There are at least four jobseekers for every vacancy in Wigan, and that probably understates the number of people looking for work, so the people we are discussing will be in a very crowded job market. The consequences of this measure are not what the Government think they will be; there will be unintended consequences. Noble Lords have mentioned the impact on rent arrears. I believe the Cambridge study claims that 42% of people may fall into rent arrears. In Wigan that would mean just under 2,000 families getting into arrears. Substantial arrears would lead to a commencement of the legal process. Whether we like it or not, there will be evictions, which cost around £6,000 each. These people will probably largely move out of the public sector into the private rented sector and the cost of housing benefit will rise.

Noble Lords have mentioned the impact that the measure would have on incomes. By definition, people who receive housing benefit are on low incomes. Therefore, if the bedroom tax is introduced on top of all the other things that are to be introduced, poverty will inevitably escalate. As I said when we discussed the Local Government Finance Bill, the likes of Wonga.com and all the other payday lenders will rub their hands at the thought of more and more clients coming their way, seeking to get themselves out of a crisis only to get into a much deeper one. As the right reverend Prelate the Bishop of Norwich indicated, we want families to stay together and fathers to take responsibility for their children, but this tax negates the Government’s claim to be a family-friendly Government.

I am not sure whether people in Wigan would take in lodgers but I certainly remember that when I joined the council some time ago one of the big issues we had to deal with was that of houses in multiple occupation, such as terraced properties that were taken over by a landlord who let every available space to different tenants. Those properties had inadequate kitchen and bathroom facilities and constituted fire and health hazards. They were terrible and the council largely got rid of them. However, I can see these types of properties appearing again in the current situation because people will not be able to afford anything better.

During debates on the Local Government Finance Bill we discussed the single person discount which reduces the amount of council tax payable by individuals living alone. Clearly, that constitutes underoccupation as regards most properties in Britain. It is somewhat ironic that we are keeping the single person discount as a council tax benefit but if you are renting a council house such underoccupation will result in you being charged the bedroom tax. This is an unsafe tax. As I say, I do not disagree with the Government’s objectives but I do not think that this tax will achieve them. I think we will find that it leads to an increase in housing benefit rather than a reduction and increases poverty in this country.