Housing Benefit

Debate between Baroness Hodge of Barking and Andy Slaughter

Wednesday 13th October 2010 Westminster Hall

[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.

--- Later in debate ---

[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?