Welfare Reform Bill

Lord Wigley Excerpts

Wednesday 23rd November 2011 Grand Committee

Debate on Amendment 99ZB resumed.

[Lord Wigley]

My Lords, I was truncated once again shortly before we finished on Monday. I wanted to add just a few words to the powerful speeches that were made on this amendment—none more powerful than that of the noble Lord, Lord Kirkwood, who apologises for being unable to be here because he is chairing another committee. The points that he made on entitlement to benefit were central. If one is going to get into a situation where capping prevents people getting what Parliament has passed as being their entitlement, there is something that is fundamentally wrong. I suspect that the Minister will have heard the points that have been made. A colleague whom I shall not name suggested that I give the Government hell; I am not going to do that because I am sure that the Government are in listening mode and will take on board the points that have been made. They are central to arguments about social security and I hope that the Minister will respond in those terms.

[Baroness Hollis of Heigham]

My Lords, we are talking still about benefit caps. We left the debate on Monday, I think, accepting that families hit the cap, as the noble Lord, Lord Best, explained so straightforwardly for us, through the interplay of both high rents and large families, a problem particularly in London and the south-east, with 70 per cent of those affected in social housing. Amendments tabled during our previous day’s debate sought, first, a more appropriate comparator by excluding child benefit in particular from benefit cap calculations—this was an argument by my noble friend Lady Lister—so that we could compare like with like and not apples with oranges. A second group of amendments suggested, wisely, a transitional period of grace before the cap was imposed. This is a theme to which I think we will all want to return, because we need a period of grace for quite a lot of the measures being introduced in order for them to settle down before the whole weight of penalties comes into play. We ran a similar amendment on housing benefit earlier. A third group of amendments sought to exclude subgroups from the caps—for example, those in supported housing, carers and kinship carers.

I want to focus on two aspects of all the debates that we have had so far, plus on the issue of carers, which was raised so effectively by the noble Baroness, Lady Hollins, and issues of housing benefit raised by the noble Lord, Lord Best. I support the thrust of all the amendments. There was one golden rule of public finance that I learnt from my time in the department: amendments abating or removing cuts always cost more than the cuts originally saved, even if the situation is not restored to the pre-existing status quo. That may be the case here again.

I wish to raise some wider questions on Amendment 99A tabled by the noble Baroness, Lady Hollins. She argued powerfully that just as PIP will remain outside of UC and the cap, so, equally, should carer’s benefit not be included in the cap, because they mirror each other, as they do in real life. The financial pressures, the fatigue and exhaustion, the using-up of savings and the social isolation apply just as much to many carers as they do to so many disabled people. We know that the Minister is sympathetic to carers, as is the whole House. So far, however, we do not yet know how many carers face a reduced earnings disregard. We do not know how many carers will lose carers allowance, because of the possible uneven mapping of the existing DLA passported benefit to the new PIP. We also do not know whether CA will come within the cap.

Given that the Bill is going through Committee stage here I feel that we are entitled to require the Minister to give us this information before we start Report stage and that we should not have to wait until we get to the clauses specifically about carers. If a single carer—it could be no carers, or it could be 100,000 carers—loses their entitlement to a passported benefit they will come into the framework of in-work conditionality which we have to deal with before we get to the carers clauses, at which point the Minister tells us he will be able to give us the information we want. We cannot do it that way round. It is not fair to the carers and it is not fair to Committee Members, who have been trying to do our best to get from the Minister—I am sure that he wants to be helpful on this—this information on the situation in which carers will find themselves. We must know everything about this situation before Report; otherwise some of us will be demanding that we go back into Committee, in the middle of Report stage, in order to take on board information that should have been available to inform earlier debates. It is not a proposal I would wish to argue. It is annoying for everybody concerned, but I feel quite strongly that it is not reasonable to ask us to proceed in this way.

The second area is housing benefit. Again, I strongly support the amendments moved so powerfully by the noble Lord, Lord Best. However, perhaps I may widen the point to remind the Minister of where we are so far and what we so far know, and then to ask him what advice he would give to a housing association such as mine—I declare an interest as chair of Broadland Housing Association. First, there is under-occupying. So far we have learnt that many of our poorest tenants would be required to move to smaller accommodation—except that we do not have it; it does not exist and it will not be built in the next few years. So the tenants will stay put and be fined on average about £20 a week. They have no savings, so they will run up arrears. However, we will be asked to avoid evicting them on grounds of decency as well as cost savings. Although such tenants would not be intentionally homeless through arrears generated by benefit cuts—as the Minister has helpfully agreed on the record—we would in any event have to rehouse them, probably in the house next door, if we evicted them. We will get substantial arrears from—although not pensioners—perhaps one-fifth of our tenants. I do not know.

We will perhaps also be faced, as we found from the discussion last week, with some tenants who are up against the housing benefit or UC cap. They too will face arrears, and again we will be expected as social landlords to avoid evicting them for what is not their fault. Again, arrears for us will mount.

We may also face cuts in housing benefit for those with supported housing in its various forms, although obviously this is a much smaller group. Again their arrears may mount, and again those will pass to the housing association.

Finally—an issue which we have not yet debated—we will certainly face substantial arrears in the move to direct payments to tenants rather than to the landlord.

Each of these four changes in housing benefit from DWP will plunge social housing landlords into mounting arrears. What is my housing association to do? We cannot raise rents to compensate for those arrears because we are at our fixed-target rent and DCLG does not allow us to go above it. We cannot get extra revenues from HCA or DCLG—indeed, they have cut our capital revenues by some 60 per cent. Housing associations could well find their accounts qualified, at which point the banks may threaten to reprice their capital loans because of infringement of a covenant, at which point our building programme falls.

I suppose that we could cut staff but the Tenant Services Authority within the HCA requires us to improve services. A 95 per cent satisfaction rate on any of the criteria it produces is required, which means that there must be staff on the ground, and quite rightly so. The driving-up of standards equals staff, which means that you cannot cut in that field either.

Put those four cuts together and they could send many housing associations into the red. Any one or two of these proposed benefit changes would be difficult to manage, but to face all four would be unbelievably difficult. I warn the Minister that he could be jeopardising the financial stability of a swathe of housing associations across the country. How then will the Prime Minister’s newly voiced concern for affordable housing be met? Given that 95 per cent of all housing stock that will exist in 10 years’ time has already been built, we cannot adjust the stock to meet what I believe is very wrong-headed, and in some places downright indecent, changes to HB. Some of us feel very strongly about this and it would seriously jeopardise our support for UC. DWP’s cuts in housing benefit will be offloaded to housing associations as arrears.

Goodness knows that local authorities are strapped for cash with 30 per cent cuts, but at least they have other financial resources. Housing associations do not. I repeat to the Minister that his savings will be our debt. DWP and DCLG have to get their act together. As I suggested at Second Reading, not entirely jocularly, if we could persuade DCLG to give up its batty scheme of localising council tax benefit with all the savings that accompany it and trade it for protecting the housing benefit, which would finance the homes we need and keep people in the homes that they want, UC would be welcomed widely across the country. I warn the Minister to take this issue very seriously. It will be very difficult for those in the field of social housing to cope when his cuts become our arrears with no capacity to meet them.

--- Later in debate ---

[Lord Freud]

My Lords, I thank the noble Lord, Lord Best, for that area of inquiry. We are looking to get early support for families in a number of ways well before the cap comes in. We are looking at a process whereby families on benefit face the same choices that low-income working families face. We are looking to achieve significant behavioural change through this measure. I assure the noble Lord that we are working hard with local authorities and other departments as well as with the devolved Administrations on the implementation of this measure.

[Lord Wigley]

I find it fairly disturbing that the Minister accepts that 200,000 people will be moving to places where low rents are charged—the noble Lord, Lord Best, referred to that—such as Wales. Is this a land clearance from central London to rural Wales?

[Lord Freud]

I wish to make it clear that I absolutely do not accept that figure. I have said that we are introducing a lot of measures in advance to make sure that that figure does not arise.

--- Later in debate ---

[Lord Freud]

There is a combination there. Those are the choices that half of the low income working families need to take, although they are not even low income families—this is pretty high income. I am not specifying any more, but we will look at hard cases. I do not want to be “loaves and fishes” about hard cases either, which I know the noble Baroness would want to accuse me of, but those are the two areas relevant to that case study.

[Lord Wigley]

We seem to be getting into a bigger hole on this. If the idea is that 200,000 people, or whatever the lower figure is—I accept that the Minister has a figure and we would be very glad to know what it is—will move to areas of low rent in order to get work there, does the Minister not realise that the reason the rents are low there is that people do not have work?