Valedictory Debate

Baroness Hodge of Barking Excerpts

Friday 24th May 2024 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

Let me start by thanking you, Madam Deputy Speaker. You have been the fairest, most tolerant, most patient and most wonderful Deputy Speaker—as, indeed, have the others—and I think we should all thank you for the calm and disciplined manner in which you have conducted what have sometimes been very difficult debates.

I also acknowledge the right hon. Member for Wyre and Preston North (Mr Wallace) for being incredibly kind to all hon. Members when he was Security Minister and we faced challenges. I was always astounded by the amount of time that he was willing to spend with us individually to support us through those difficult times. I hope that he carries on being a strong voice, in a different capacity, to ensure that we do the most important thing that we can do as a Government, which is defend the British people.

I acknowledge the right hon. Member for Maidenhead (Mrs May), who is no longer in her place. She and I were both candidates in Barking in 1994. I beat her, but I have a wonderful video of us both, she as Essex girl, me as rather harassed mum. She quickly transformed herself from Essex girl to Maidenhead woman, and then had an incredibly successful career here. I thank her.

I made my maiden speech from this position. I remember it well; I was absolutely petrified that I was going to stutter, but I got through it. My husband and four children were here watching me. I did the usual thing of sitting down and listening to a couple of speeches, then we all went to have a cup of tea and some scones. I came back for the wind-ups and sat up in the corner. Suddenly, I heard the mighty voice of Betty Boothroyd admonishing me for having sat in the wrong place, because I did not have a clue that the protocols of the House meant that we had to sit where we had given our speech when we came back for the wind-ups. I felt really told off, but I realised that that was the role of the Speaker.

Another early experience that I must share with the House reflects the challenges that many hon. Members face in balancing our responsibilities as Members of the House and our roles as parents and carers at home. It happened early in my career, when Tony Blair had just been elected as leader of the Labour party. I knew that if I sat behind him at Prime Minister’s questions, the good burghers of Barking would think that I was really working hard. To do that, I had to bag my place about half an hour before it started, so I sat down feeling pleased with myself and waited for it to start.

In those days—this is so long ago—we did not have phones but pagers, and as PMQs started and Tony made his first contribution, my pager suddenly went off. It was my 15-year-old daughter saying, “Mum, ring home. Emergency.” She was supposed to be revising for her GCSEs, so I thought, “Goodness, has the house caught fire? Is she going to tell me she’s pregnant?” I had no idea what it was. I gave up the seat, rushed outside, picked up the phone and said, “What is it, Anna? What’s happened?” She said, “Oh nothing, Mum. I just wanted to see whether you had your pager on silent.”

That may be enough of the funny reflections, but perhaps I will mention one more—the time that my dental bridge fell out as I was giving an impassioned speech on transparency in British tax havens. I suddenly thought, “What on earth’s happened?” I was rescued by my true friend, my hon. Friend the Member for Oxford East (Anneliese Dodds), to whom I will always be indebted. She immediately intervened, which meant that I could sit down and sort my mouth out before getting up to continue my contribution.

As other hon. Members have, I want to thank everybody. I thank all the staff in Westminster who make our lives easier, safer and more effective. It is only now that I am about to leave this place that I realise how well we have all been looked after by everybody here. From those who keep our rooms tidy and clean, to those who provide endless food and drink, keep us safe, support us in Committees and the Chamber, make sure that we stick by the rules and record the words that we speak, we have the most brilliant team of people, who put up with a lot, on whom we are all very dependent, and to whom I express my heartfelt gratitude and thanks.

I thank, too, all the staff who have served me. I have not managed to hang on to anybody for 30 years, but I have had endlessly wonderful staff supporting me, both here in Westminster and in the constituency—and of course I thank all my constituents in Barking, whom I love deeply, and the party that has supported me down the years.

I also want to thank the very many Members of this House, both in my party and across the Chamber, from all the political tribes, who have shown friendship down the years and displayed willingness to work together across the House to achieve changes that we all believe will make Britian a better country. So often, politics is portrayed as poisoned, polarised, personal and painful, and sometimes it is, but the best work we do in this Chamber, in Select Committees and through all-party parliamentary groups happens when we come together and find consensus, and when a shared ambition and approach bring us to a collective solution that we can all support. When we work together, we achieve much more lasting changes that really will make the world a better place.

As I leave this position, I would like to share one reflection with the House. We are living through a period of increased and increasing mistrust of politics and politicians. When I first became an MP, I was always really proud to tell people I met that I was an MP. For me it was not a job, but a vocation. I am sure that many of us in the Chamber share that feeling. Like most people who seek election, I just wanted to play my little part in making the world a better place, and in equalising life chances in every community, but things have changed in the last few years. I do not know whether others feel the same, but now I often feel that I have to apologise to people for being an MP. We are too often distrusted as a group, and our efforts are ridiculed and mocked.

It is not that people are apathetic about politics. It is that they are angry about politics. They feel that we do not listen, that we exist in our own bubble here in Westminster, that we are in it just for ourselves, that we put party before country, and that we put self-interest before our constituents’ interests. That may not be true, but that is what people feel. We all know here that politics really does matter. It matters a lot. It matters in every family and every community. I know that; we all know that. From my very first campaign as an MP, to change the rules governing the prescribing of a particular painkiller whose side-effects had a life-changing impact on a constituent, to the recent campaigning I have done for smarter regulation to turn the tide on dirty money, politics matters. What we decide here can make a difference. My fear is that the anger that people feel will turn to apathy, and people will not use their democratic right to vote in the general election. A low turnout could well be the main headline from this coming election.

Of course we need to clean up politics and stop the abuse that has become too commonplace in too many ways, from Ministers not abiding by the Nolan principles to money—too often dirty money—buying access, peerages, honours and contracts. We must also go back to our basics: the basics of listening to our constituents, responding to their needs and not ours, and reflecting their priorities in the work that we do here. I hope that the next group of Members of Parliament, when they are elected on 4 July, will take all that really seriously, and see rebuilding trust in politics and democracy as a prime objective that they have to meet during the next Parliament.

Leaving is bittersweet. I have already signed up to piano lessons, and I am hoping to spend a bit more time with my too many grandchildren, who have not seen enough of me, but I also know that this has been the privilege of my life. Being a Member of Parliament, meeting and mixing with so many talented, generous, warm, committed and principled people, has been a pleasure, a joy and a privilege. I will miss it like mad, but I wish everybody really well.

[Mr Deputy Speaker (Mr Nigel Evans)]

Thank you, Margaret. We will miss you like mad, too. We love you.

Autumn Statement Resolutions

Baroness Hodge of Barking Excerpts

Monday 27th November 2023 Commons Chamber

[Dame Margaret Hodge (Barking) (Lab)]

I congratulate my new hon. Friend the Member for Tamworth (Sarah Edwards) and I wish her well, but she arrives in difficult times, because in 30 years as an MP, I have never seen the country’s finances in such a mess. We have the highest taxes since records began, the highest public sector debt since the 1960s and inflation at a 41-year high, and average households will be £1,900 worse off by the end of this Government.

At the same time, public services are on their knees and the OBR predicts a miserable 0.1% growth rate for the fourth quarter. The Government try to pile the blame on others—covid, Ukraine, the middle east and even their own past leaders—but the whole Conservative Government have done this, having voted through 13 years of flawed measures and disastrous policies that have not helped growth and jobs, but have intensified inequality and increased child poverty. We have had enough, the country has had enough and Britain deserves better.

I will focus on three areas that could make a real difference if the Government made different choices. In 2012, the tax gap—the gap between what HMRC receives and what taxpayers pay—was £34 billion. This year, it is up by nearly £2 billion, and if tax campaigners calculated it, they would probably triple or quadruple that figure. Failing to collect £36 billion is massive—that is £3 billion more than we spend on the whole of primary education across the UK.

Those who benefit most from HMRC’s failure to pursue them are the rich. Last year, only 11 wealthy individuals were prosecuted for tax cheating and only eight were pursued for evasion over two years. However, 420,000 people on low incomes, many not earning enough to pay a penny in tax, were taken to court for filing their tax returns too late.

What about the big multinationals who still aggressively avoid tax? TaxWatch’s analysis of just eight tech companies, including Google, Facebook and Apple, shows UK profits of £9.6 billion, but the tax paid amounted to a miserly £297 million. They avoided £1.5 billion in UK tax. Add the estimated £350 billion annual loss through fraud and money laundering, and we are talking about eye-watering sums, yet prosecutions and convictions by HMRC have both fallen by 75% in the last five years. This wretched failure to pursue tax avoiders, evaders, fraudsters, money launderers and multinationals is a scandalous stain on this Government and destroys faith in our system.

Equally awful is the fact that the Government cannot be trusted to spend our money wisely. Government waste is yet another scandalous stain on the Conservative Government’s record: £15 billion lost to fraud and error across all covid schemes, £1 billion overspent on a contract for a new warhead facility, another billion pounds lost on the Astute nuclear-powered submarines and £2.2 billion wasted on the now abandoned HS2 phase 2 project. The bill for the failed asylum support system has gone up fivefold in four years and cost us a shocking £3.6 billion. The staggering costs of meeting the needs of nearly 300,000 homeless families are at least £18 billion a year. With services so stretched, the waste of taxpayers’ money because of sheer incompetence is unforgivable. People are struggling while the Government squander.

I want to turn to the unfairness in the tax system that the Government deliberately promote. Our system is ridiculously complex, opening opportunities for aggressive tax avoidance. Take the 1,180 tax reliefs, of which 339 are non-structural reliefs, supposedly introduced to help a particular group achieve a particular policy outcome. We have no idea how much those tax reliefs cost or whether they are effective, and there is no accountability for the expenditure, because it is all below the line. One hundred reliefs have been costed, at an estimated £195 billion, which is almost double what we spend on local government and double the £46 billion spent on defence. That sum accounts for only a third of the 339 non-structural reliefs. With little data, and scant scrutiny and evaluation, we are sitting on a time bomb.

Take, for example, the cost of the research and development tax credit—up from £2.3 billion to £5.2 billion in five years, yet without an equivalent increase in R&D investment by companies. The patent box relief was introduced to encourage companies to commercialise their inventions, but has now been exploited as a tax loophole. The moment the KPMG partner seconded to the Treasury to write the technical rules for the relief left the Treasury, he produced a brochure entitled “Patent Box: what’s in it for you”. That relief is costing us £1 billion a year. Entrepreneurs’ relief cost £427 million in 2008-09, but that had ballooned to £2.2 billion by 2018-19, the last year for which I could find proper figures. The relief is supposed to encourage investment, but a survey of those who claimed it found that only 8% said the relief had influenced their decision at the point of investment.

Finally, we talk about making work pay, but we have a system in this country whereby the income that people gain from work is taxed at a higher rate than the income they gain from wealth. No such system can ever justify that we are a country that enables work to pay.

[Jim Shannon]

The rise in taxation for working-class people has implications for their childcare costs. Does the right hon. Lady agree that when it comes to childcare costs, it is impossible to make ends meet, and that working-class people and those on the poverty line need more help? Unfortunately, I do not see that help.

[Dame Margaret Hodge]

I agree entirely with what the hon. Member says. I simply point out that if we got the money in that was owed to us, spent it wisely and taxed fairly, we would be able not only to pay for childcare costs but to have the high-quality childcare that is essential to ensure that we equalise life chances.

This Government have failed. They have failed to get the money in, they have wasted billions and they have failed to tax and spend in a fair way. Trust and confidence have been squandered. It is time for them to go.

Universal Credit

Baroness Hodge of Barking Excerpts

Tuesday 25th November 2014 Commons Chamber

[Mr Duncan Smith]

Of course it is legitimate, as it always is, for the Opposition to question this. All I am saying is that we have taken the decisions to ensure the security and safety of the roll-out. We will not take any decision unless it is clear that it is the right thing to do, and we want to deliver this safely and securely. The experience of those who are on universal credit is getting better. We now find that word of mouth from those groups is so good that people are going into jobcentres wanting to claim universal credit rather than be on jobseeker’s allowance.

[Margaret Hodge (Barking) (Lab)]

Having listened very carefully to the Secretary of State’s statement, I wonder whether he is playing a rather worrying political trick by making a statement on the day before the NAO brings out its publication on progress on universal credit. He well knows that there are huge risks with the value for money of the project and substantial potential for waste of taxpayers’ money. For example, if there are further delays in the implementation of the digital programme, taxpayers will have to continue to pay for the expensive, mainly manually operated live service. Why does he not, just for once, give us an open and straightforward account of the state of play?

[Mr Duncan Smith]

I am sorry that the right hon. Lady takes that view. She may not know the genesis of the statement, so perhaps I can explain it to her. Labour Front Benchers asked for an urgent question today, and I gather that it was negotiated between the various authorities that there would be a statement, not a UQ, because there were to be some very important statements today. The Speaker made that decision, which is quite correct. The reason I am here today is that I was originally asked to be here by the Opposition.

In answer to the right hon. Lady’s question, I fully respect the NAO and we listen carefully to what it has to say. She knows that she will have its team before her when she undertakes the inquiry process. I cannot second-guess what is in tomorrow’s report, but my general belief and hope is that it will welcome this as being the right direction, the right process and the right prioritisation of safe delivery that makes sure that we do not waste money. In cost terms, as I said, we will be spending less, at £1.8 billion, than we were originally set to spend.

Universal Credit

Baroness Hodge of Barking Excerpts

Wednesday 9th July 2014 Commons Chamber

[Mr Duncan Smith]

Absolutely. The Labour Government—the Labour party needs to own up to this—used to sign off business cases from day one, only to see the programme crash and burn. Tax credits left 400,000 people without money, and their reforms to the health service benefits system were an absolute disaster. We will take no lessons from Labour on how to manage a programme.

[Margaret Hodge (Barking) (Lab)]

As Chair of the Public Accounts Committee, I support the intent of the policy, but I have repeatedly sought assurances on the status of universal credit. On Monday, I asked Sir Jeremy Heywood, Sir Nick Macpherson and Sir Bob Kerslake four times whether the business case had been signed off by the Treasury. There were a number of unscripted pauses, but Sir Jeremy told us:

“I cannot speak for the Treasury.”

Sir Nick Macpherson told us:

“It is signed up, up to a point”,

before Bob Kerslake finally admitted:

“I think we should not beat about the bush. It has not been signed off.”

I plead with the Secretary of State that he should be open and honest with hon. Members rather than hide behind smoke and mirrors to create a false impression that universal credit is on time, in budget and delivering in full its intended objectives.

[Mr Duncan Smith]

I respect the right hon. Lady enormously for the job she does, but I say to her clearly that it was on the recommendations of her Committee and the NAO that we instigated—by the way, I think this is the way ahead for all future programmes—a programme in which, at every stage and in every separate part of development, we would have approvals from the Treasury and with the Cabinet Office, which is what is going on at the moment. My point is that the answer that Mr Kerslake, the head of the civil service, gave was correct in the sense, as I have said today, that the overall strategic business case for the full lifetime of the programme is in discussion right now for that completion. However, all the elements that are relevant—the strategic business plan for this Parliament, which includes all the roll-out, all the investments, of which the right hon. Lady will be aware, and the roll-out through to the north-west—have been approved. There will be no further need for approvals this Parliament, so the reality is quite clear: universal credit is on track and is rolling against the plan we set out last year. All those approvals are agreed, and we hope that the final element, which would logically come at the end of the process, will be agreed shortly with the Chief Secretary.

Housing Benefit

Baroness Hodge of Barking Excerpts

Wednesday 13th October 2010 Westminster Hall

[Margaret Hodge (Barking) (Lab)]

I am very grateful, Mr Gray, to all the right hon. and hon. Members who have joined me today to take part in a hugely important debate on what I consider to be the Government’s very ill-conceived plans to slash housing benefit for the poorest families in the poorest communities—plans that will inevitably force thousands of people to leave their homes, their families and their friends as they try to find an affordable roof over their heads and the heads of their loved ones. In my view, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), can feel nothing but shame at having to come to Westminster Hall to defend such ill-conceived proposals. With his background and knowledge, he should know better.

When we last debated this issue, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) eloquently outlined the devastating implications of the Government’s plans. In addition, we have all been provided with evidence on the impact of the proposals by my hon. Friend the Member for Westminster North (Ms Buck), whom I congratulate on her well deserved place on the Opposition Front Bench, and by the research carried out by a range of organisations working in housing.

The Government’s proposals on housing benefit have to be considered alongside the other proposals that were announced at the Conservative party conference last week: the capping of all benefits that a family can receive at £500 a week and the ending of the universal child benefit. All of that comes on top of the housing benefit cuts set out in June and the cuts to child tax credit, maternity allowance and the child trust fund.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I am grateful to the right hon. Lady for giving way and I congratulate her on securing this debate. Because I am sure she wants to be part of a responsible Opposition, I think it might help our discussion if, in her remarks, she set out the alternative proposition. Is it her position that rents and housing benefit should simply be uncapped and that people on benefits should be able to choose to live wherever they want to, without any limit being imposed, or does she accept the principle of a cap?

[Margaret Hodge]

As the Minister will know, the Labour Government themselves set the housing allowance. The purpose of this debate is to demonstrate that the intent of the present Government and of the Minister himself will not be achieved by the proposals that he has put before us. That is what I intend to do this morning.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Given that we are talking about intent, does my right hon. Friend agree that it is possible that the Government’s intent is not fairness and that, instead, as we are told a senior Minister has said, this is all about highland clearances?

[Margaret Hodge]

I agree entirely. There are several quotes in the press from senior civil servants demonstrating that they think the proposal will create the greatest dispersal of families that has been witnessed probably since the 19th century. Perhaps that is part of the political intent of the Government.

In my view, the litany of cuts that I have outlined—all of them, not just the housing benefit cuts—represent an historic assault on the poorest families in the poorest communities, which I think even Baroness Thatcher would have considered to be a bridge too far.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I am glad that we have reached that point so early in the debate. Does my right hon. Friend agree that we seem to have moved from a position where the proposals look like ill-thought-out budget cuts to a position where they look like a deliberate policy to socially cleanse the poor from central London, which the Minister is defending? We have already seen that process in Hammersmith, with the demolition of council estates. The proposals will ensure that, for ideological and electoral reasons, it will no longer be possible for the mixed communities of London to continue to exist as they have for centuries.

[Margaret Hodge]

I agree entirely with my hon. Friend. In my view, the process is much more about political engineering than it is about achieving sensible reductions in public expenditure. I shall talk about the impact that the proposals will have in my constituency and the borough of Barking and Dagenham. In doing so, I hope to expose the flaws in the Government’s argument and what I think is the shameful agenda that they are, in fact, pursuing.

The Minister claims that the policy objective of the cap on local housing allowance—setting that cap at 33% of average local rents—linking housing benefit to the lower consumer price index rather than the retail price index and capping the total benefits that workless households receive, is to drive down rents. Let me tell him that he will not achieve his objective. His policies will not drive down rents. What they will do is drive out families—drive them in their droves out of the inner-London constituencies where they live to constituencies such as my own in the London suburbs.

Let us consider the facts—these are the facts from the Department for Work and Pensions, not my facts. In Brent, 9,650 families will lose from £18 a week to £160 a week and the families who will lose the most are those with the most children. In Hackney, 16,440 families will lose from £13 a week to £125 a week, and again the families who will lose the most are those with the most children. We can also take the example of Camden, where 2,940 families will lose from £20 a week to £262 a week, and yet again the families losing most are those with the most children.

It is simply nonsense to believe that the rents in Brent, Hackney or Camden will go down. A survey by London Councils found that 60% of landlords who are renting to tenants in receipt of housing benefit would not be prepared to reduce their rent by even a small amount if their tenants could no longer afford to pay the existing rate because of the reduction in local housing allowances. More than 90% of landlords said that they would try to evict a tenant or refuse to renew their contract if the tenant fell into arrears, if the shortfall in rent was more than £20 a week. Those landlords know that their properties will not lie empty. We all know that there is a massive shortage of housing in the capital and we know that, with the drying up of the mortgage market, more people are being forced into the private rented sector, which in turn increases demand in that sector. We know that the buy-to-let market is booming, because investors can get a good return on their properties. Landlords will not lower their rents, but poor people will be forced out of their houses.

Do not just listen to me on this subject—listen to Boris Johnson, the Conservative Mayor of London, when he says in the briefing that he prepared for today’s debate that the Government’s proposals will lead to

“the loss of the private rented sector as a major safety net for London boroughs”.

He continues:

“We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term”.

Those are Boris Johnson’s words, not mine.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I am grateful to my right hon. Friend for giving way and I congratulate her on securing this debate. I very much want to reinforce the points that she is making. The private rented sector is absolutely vital to meeting housing needs in London. During the past 15 years or so, that sector has begun to recover from very low levels seen in the late 1980s. The real damage that could be caused by these maladroit and ill-considered housing benefit changes could well destroy confidence and take away a large quantity of housing that otherwise would be available to meet the needs of Londoners.

[Margaret Hodge]

I bow to the huge experience and knowledge of my right hon. Friend and I agree entirely with his analysis of the likely impact of the changes that the Government are proposing to make.

In my constituency, all 3,810 households that currently receive local housing allowance will already lose out because of the housing benefit cuts that will come into effect next year, so they will experience additional hardship as a result of those cuts. Because rents in Barking and Dagenham are currently lower than in the inner-London boroughs, private tenants in the borough will not be hit as badly as those in central London, where rents are the highest in London. but as inner-London private tenants are forced to find a home in outer London, rents will inevitably be driven up in the outer-London boroughs. More demand on limited supply will be a double whammy for the people of Barking and Dagenham. Has the Minister commissioned any research to understand better the potential impact of his proposals on rents in outer-London areas such as Barking and Dagenham? If so, will he place that research in the Library?

We know from anonymous quotes in the press that civil servants are telling Ministers that the proposals, as my hon. Friend the Member for Hammersmith (Mr Slaughter) said, will lead to the biggest population movements experienced since the industrial revolution. Even at her worst, Shirley Porter deported only 1,000 people out of Westminster, yet this Liberal Democrat Minister is deliberately forcing tens of thousands of families out of inner London, in a shameful act of social engineering and political gerrymandering that will damage our communities irreparably.

[Bob Russell (Colchester) (LD)]

The right hon. Lady rightly draws attention to the problems. Does she agree that the provision of council housing is one way to address supply and demand, and can she inform us how many council houses were built during the 13 years of Labour Government?

[Margaret Hodge]

I accept the point that insufficient priority was given to the building of council houses under the Labour Government, but we must deal with the situation in which we find ourselves. Making the position worse by deliberately forcing the poorest families out of the only homes that they can find is an outrageous and cruel act of public policy.

Does the Minister accept or even understand that if the reforms proceed, inner London will become a no-go area for the poorest people in our communities? What will be the further impact on my constituency? He knows well that changes in housing tenure over the past 20 years, since the introduction of the right to buy, have created deep social tensions in Barking and Dagenham as new people have moved into the borough and established residents have become unable to secure homes for their sons and daughters. The extreme right and the British National party tried to exploit people’s legitimate frustrations for divisive and evil political ends. We saw them off, but this Government’s housing benefit policies will inevitably reignite those tensions as private tenants from inner-London boroughs compete for homes with established residents of Barking and Dagenham. Has he considered at all the implications for social cohesion of his short-sighted reform proposals?

Has the Minister also considered his policies’ impact on local authority services? If Barking and Dagenham suddenly experiences an influx of literally thousands of families, what will that do to local schools and hospitals, to special educational needs provision and to child protection services in the borough? The proposals will place an unacceptable strain on local authorities in the more deprived outer boroughs—authorities that are already struggling to meet their communities’ needs in areas such as housing and education while planning to meet the 25% to 40% cuts that will be forced on them by the comprehensive spending review announcements next week.

In education, for example, Barking and Dagenham is already facing the huge challenge of keeping up with the pace of demographic change. Demand for primary school places is a particular problem not only for my constituency but across London. As it is, the local authority is having to create hundreds of new reception places every year—337 extra primary school places are needed in 2011 and 247 in 2012—and does not have sufficient funding to meet projected demand. The borough simply cannot cope with further significant levels of inward migration.

Barking and Dagenham council already has a housing waiting list of more than 11,000. That waiting list will only grow longer as more people move into the area and more households seek to be housed by the local authority because they have been priced out of the private sector.

[Mr Slaughter]

As my right hon. Friend may know, that is already happening. Kensington council is urging people to move out before the rush starts. Hammersmith council is urging overcrowded families to give up their secure and assured tenancies and to move into the private sector and rely on housing benefit, without telling them that they will then have to leave the borough next year when that benefit is cut.

[Margaret Hodge]

That is outrageous. I must also tell the Minister that I am absolutely convinced that within a year or two, boroughs and authorities such as Kensington and Chelsea or Hammersmith, from which families move out to areas such as Barking and Dagenham or Tower Hamlets, will cease to take responsibility for providing all the other local authority services that those families will need. They will then be an additional burden on those local authorities.

Who will foot the bill for social services and support for those families? They are already on the edge, and they are bound to make greater demands as they are uprooted from their inner-London homes and lose their links with the local services on which they depend. Has the Minister properly considered the impact of the proposals to cut housing benefit on the demand for other local authority services? Has he received advice on whether the proposals will increase homelessness and child poverty, as I believe they inevitably will?

The reforms will not achieve what the Government claim, but that is only half the story. The truth is that the Government want to drive low-income families out of inner London and other wealthy areas. London Councils estimates that at least 82,000 London households will find themselves in that position, and that is without taking into account the impact of the measures announced at the party conference last week. People will not have the option to move to a cheaper property in the same area because there will be none, unless they are prepared to downsize and move into overcrowded accommodation. They will have no choice but to move to areas where rents are more affordable. That will be a tragedy for families and communities. It is completely wrong of the Government to implement such a policy, with the full knowledge of the demographic upheaval that it will cause, and to leave local authorities to cope with the consequences.

We will also lose the diverse communities and social mix that have been a part of London’s character for generations. Central London will become the home of young professionals and the very well-off who, conveniently, can be relied on to vote Conservative. Those struggling on low incomes will congregate in the outer boroughs, which will become more disadvantaged, overstretched and troubled. The reforms will cause suffering and push more families into poverty by forcing them to contribute more of their income to housing costs. Members of all parties recognise the need to reform housing benefit, but this is not the way to go about it.

The reforms have not been properly thought through. They have the potential to cause hardship of a kind not seen since the creation of the welfare state, and they have been informed by a disgraceful political calculation. How a Liberal Democrat can attempt to defend them is beyond me. What evidence do the Government have to support their claim that the new cap will reduce rents in the private sector? What additional resources will be made available to help local authorities such as Barking and Dagenham cope with any significant increase in inward migration? Finally, how will the Government keep their promise to eradicate child poverty, given the hardship that their policy will inflict on low-income families?

--- Later in debate ---

[Steve Webb]

No. I will give way to the right hon. Member for Barking, who initiated the debate, but in the remaining seven minutes, I want to respond to some of the points made in the debate.

I want to correct a number of the inaccurate impressions that have been given. As the hon. Member for Westminster North said, it is a helpful focus in this debate—as distinct from our July debate, which was on the position of tenants—to ask about the position of the receiving local authorities. That is an entirely valid point. We are in discussions with our colleagues in the DCLG. We are working with the local government associations across the country to work out how best to support local authorities, which will face challenges; I do not dispute that for a second.

The allocation of the discretionary housing payments, which will be trebled from £20 million to £60 million, is part of the picture. As the hon. Member for Edinburgh East (Sheila Gilmore) pointed out, one of the issues for people will be difficulty in securing deposits, and one of the things that discretionary housing payments can be used for is to assist people in paying for deposits. That is part of the purpose of the scheme. We have deliberately trebled that money and, although I cannot say anything definitive about the allocation of that funding, inevitably we shall want the money to go where the need is greatest, and inevitably that means that London will get a significant slice of that money. That is clear, and I think that it will help.

I want to question the description that we have heard of the private rented sector in London. I hesitate to do that in a room full of London MPs, but I shall give it a try. It has been presented as though it is an incredibly static situation, in which people live in communities for generations and it is always the same property, yet surely hon. Members would accept that there is massive turnover in the private rented sector in London. People move in and out of properties all the time.

The idea that there are static communities where any disruption will somehow undermine the community seems to me a parody of what is actually going on. The same applies to the suggestion that in the most expensive parts of London, there are mixed communities, with people at all income levels. The only people who can afford very high rents are the very rich and the very poor; there is nobody in the middle. The suggestion that we are somehow disrupting those terribly cosmopolitan, mixed communities is not true. [Interruption.] Indeed, it is not true. What can we do about the situation?

[Margaret Hodge]

I think that the Minister has demonstrated, as he will have heard from the comments around the room, a lack of understanding of the nature of the population affected. I am referring to the families, about whom we have concern, who will be dislocated by his proposals. Will he give an undertaking to do just a little bit of research that will demonstrate the potential impact on movement across London, which families that will involve and how they will be impacted? If we shared that research and the evidence, we could then have a sensible debate about the impact of the Minister’s proposition. Will he give us that assurance today?

[Steve Webb]

Like the right hon. Lady, I am keen to have a sensible debate on this subject. She mentioned the evidence that the Mayor of London has produced. The Mayor met my right hon. Friend the Secretary of State towards the end of September, and we are in close dialogue with London local authorities and others so that we do understand the implications of the changes.

With regard to turnover in the private rented sector, the local housing allowance scheme only came in just over two years ago, in April 2008, and 75% of private rented sector cases are now within the scope of that scheme. There is huge turnover of people. People are making decisions about new—

Housing Benefit

Baroness Hodge of Barking Excerpts

Tuesday 13th July 2010 Westminster Hall

[Margaret Hodge (Barking) (Lab)]

I want to raise the issue of the impact that this policy will have on my community in the London borough of Barking and Dagenham. Our borough has lower local housing allowance rates than the proposed cap for all but the largest properties, so only five families will be adversely affected by it, although I must add that larger families tend to be the poorer families and that the impact will be felt over time. However, that figure can be compared with the 4,592 families—some 85%—who will be over the cap in Westminster, the 2,345 in Kensington and Chelsea, the 2,360 in Brent and the 1,688 in Hackney.

We do not need to be rocket scientists to work out what will happen in practice: families will move out of the inner London boroughs to places such as Barking and Dagenham, where there will then be greater pressure on housing. Let me set out what the impact of that will be. Our borough does not have enough decent housing for local people at a price that people can afford. We have more than 11,000 people on our waiting list. Everyone in the Chamber knows the impact that a lack of affordable housing can have on people’s anger, and therefore the rise of the extreme right, and we have been grappling with that problem. I ask the Minister to think about the impact of what he is doing by moving people across the capital, and what that will mean for social cohesion, which he must care about.

There is intellectual illiteracy among some Government Members. Rents have gone up in the private sector not because of housing benefit, but because of a lack of affordable housing. Both Labour and Conservative Governments have not built enough social housing. Making housing rents in the private sector less affordable for poor families—if there are no council or housing association homes available—means that people are forced into bed-and-breakfast accommodation or back on to the streets, which will cost the taxpayer very much more than private sector housing.

[Several hon. Members]

rose—

[Margaret Hodge]

I will not give way, because loads of people wish to speak. I am not being discourteous, but do not want to be unfair to Members.

I have two other issues to raise. I am concerned about the changes to the local housing allowance. The current level of 50% of market rates is to go down to 30%, which again will disproportionately affect the largest families, who tend to be the poorest. In Barking and Dagenham, it will mean that the poorest large families will be more than £23 a week worse off. I do not believe in castrating the parents of such families to prevent them from having children. In a civilised society, our prime duty is to be fair and to look after the children of families in greatest need.

The Government also intend that, from 2013, families who have been on jobseeker’s allowance for more than 12 months will find their housing benefit cut. That will have a terrible impact on the poorest families in the community. In my borough, one in five private tenants is a JSA claimant. They tend to be people of working age, but as rents go up, the costs of being in work increase, which forces people into joblessness.

I passionately ask the Minister whether he has considered the impact of his proposed changes on social cohesion in communities across London such as mine. If so, how will he respond to the challenges that he is creating? Will he reconsider the caps to prevent such dislocation across the capital, or is the policy just another bit of political gerrymandering, as we had with the Conservative Government in the 1980s? With his background, how can he justify hitting the poorest people first? How does the cap fit with fairness? Why punish people rather than supporting them out of poverty? The Government’s proposition is ill thought out. We all want to reform housing benefit, but not in this way.

[Several hon. Members]

rose—

--- Later in debate ---

[The Minister of State, Department for Work and Pensions (Steve Webb)]

This is the first time that I have had the pleasure to serve under your chairmanship, Mr Streeter. I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on raising this important issue and on giving a number of hon. Members, particularly but not exclusively from the London area, the chance to air their views, which they have done effectively.

I have been advised not to run through a whole history of housing benefit because we do not have enough time. However, I will set out some of the thinking behind the reforms. The housing benefit bill has been rising inexorably: in the past five years, we have seen a 50% real rise in the bill when the numbers have gone up by less than 20%. With £1 billion added each year, it does not take long before we are talking about serious money. The question is this: do we stand by and watch that or do we allow our constituents, who are on low wages and paying tax out of their low wages, to have a voice in this debate? A number of hon. Members said that the taxpayers’ perspective relates not just to the well-off but to low earners as well. As the hon. Member for Brighton, Pavilion (Caroline Lucas) said, if we consider the whole tax burden, the tax impact on low earners is quite substantial.

What we cannot do is to continue to pay out blank cheques to private landlords—this is a blank cheque not to tenants but to private landlords. Rents have been going up and the state has been a passive observer. The housing market has demanded cash from us and we have simply handed it over. Then it has demanded more and we have handed it over again.

[Margaret Hodge]

Will the hon. Gentleman give way?

[Steve Webb]

Not at the moment. I will take some interventions, but first I want to set the scene.

If we do not have a blank cheque, what do we do? What is a legitimate way to say that someone who takes a low-paid job typically chooses a rent around the 30th percentile? That number has not been plucked from the sky. If someone takes a low-paid job, they do not have an unlimited choice about where they live. They cannot live in as big a house as they would like. They are constrained in where they live. Why should our constituents who take a low-paid job with all the associated uncertainties and who have to restrict their housing choice be in a worse position than those—I do not use the words “scroungers” or “apartheid”, which have come from the Opposition Benches—who are, for example, unemployed? There is an issue about social justice.

--- Later in debate ---

[Steve Webb]

No, I will not give way. I said that I wanted to respond to the debate. [Interruption.] I am trying to respond. If I give way, I will not have time to do that.

The issue of the discretionary housing benefit was raised. We are tripling the budget; it is £20 million now and it will be £60 million in a couple of years’ time. If we spread that thinly across the country, it will not go far, which is why, when we are allocating discretionary housing benefit we will have particular regard for the places in the country and the local housing markets where the changes will have the most impact. I am sure that the constituents of many hon. Members here today will see a bigger share of the money because of the points that have been raised. That is part of the answer to the question that was raised about transitional measures. Local authorities will consider on a case-by-case basis individuals who have been severely affected by our measures and for whom moving would be most disruptive, and, in those extreme cases, provide assistance.

The hon. Member for Hackney South and Shoreditch asked about timing. It is important that I place it on the record that I need to make some corrections. Nothing happens this autumn; nothing will change until next April. We have to put regulations through the Social Security Advisory Committee, so there will be a process of consultation on the regulations. The regulations will be laid before Parliament in October or November. There will then be a further six months before anything changes. As she rightly said, those are the changes that will go through secondary legislation. Some of the longer-term changes will require primary legislation, so there will be a further process of scrutiny and consultation.

I want to address some of the specific issues raised. The hon. Lady raised the issue of the rent levels relevant to the cap in her constituency. I understand that the broad rental market for inner east London is significant. I have looked at the figures for one-bed, two-bed, three-bed and four-bed properties at the 30th percentile in her constituency, and they are all at or below the cap. I am happy to supply her with the figures.

We have had many contributions to the debate. The extraordinary word “apartheid” was used and we heard about vast numbers of people criss-crossing London. There has been an awful lot of overstatement about the actual impact of the changes, particularly given that three out of 10 private rented properties will still be available after the change within the cap.

The issue of pensioners was raised. There was some suggestion that elderly people would be particularly adversely affected. I hope that the Chamber will recall that the local housing allowance that we have been talking about today, which is used in the private rented sector, applies only to 80,000 pensioners the length and breadth of Britain. [Interruption.] There was some implication that millions of pensioners would be affected by our measures. We are talking about only a tiny number of pensioners across Britain, and many of them live in regulated tenancies, which will be protected in any case.

[Margaret Hodge]

Will the hon. Gentleman give way?

[Steve Webb]

No, I will not. Hon. Members have asked about the impact assessment, statistics and parliamentary questions. The impact assessment will be published on 23 July. There was some suggestion that that had something to do with the timing of this debate. We do not control the timing of these debates.