Welfare Reform Bill

Aidan Burley Excerpts

Monday 13th June 2011 Commons Chamber

We all agree about the importance of the private rented sector in our menu of housing options, but it should be a way of cushioning the impact of unemployment or a drop in wages, and, in parallel, be a means of ensuring that we do not return to the nightmare years of the early 1990s, when the level of homelessness went through the roof. The soaring level of homelessness in those years resulted in the large-scale placement by London local authorities of their homeless households from central London to Birmingham, Coventry and Liverpool, an experience from which many of those households did not recover.

[Mr Aidan Burley (Cannock Chase) (Con)]

I am following the hon. Lady’s arguments closely. I represent a Birmingham constituency where the average salary of a working family in the private sector is £22,450 a year. Even under the Government’s reforms, such a family could still claim £26,000 a year in benefits, which is more than they would receive by going out and working in a proper job. Does she accept that there is a problem that people in low-paid jobs who want to work see other people getting more and having a better quality of life by choosing not to work and to live on benefits?

[Ms Buck]

The hon. Gentleman makes an interesting point but is mixing lots of different arguments, if he does not mind my saying so. The whole point of local housing allowance, as I was obviously explaining imperfectly, is that it is an in-work benefit. If a household’s income dips and they are in the private rented sector, they are entitled to the allowance, so we cannot compare an out-of-work household and an in-work household in the way he is trying to do. It is intended as a cushion for that household. Similarly—I know that you, Mr Deputy Speaker, would not wish me to be diverted—the overall benefit cap needs to be considered, among other things, in terms of an equivalent household size, and we will no doubt return to that debate because it is much less clear whether the Government’s core argument holds any water at all.

The argument about whether the maximum percentile that a household can claim in the private rented sector should be 50% or 30% of the local market has been and gone, so let us not return to it. All the amendment is arguing is that we must have a statutory mechanism for review to make absolutely sure that, as the CPI uprating bites further into the private rented sector, which it will, 30% of all private rented accommodation in a broad market rental area remains available. That is the Government’s commitment, and without such a mechanism that accommodation simply will not remain available.

We have to be very careful about monitoring that. The rate is to come down from 50% to 30%, but even 30% might not be achieved, because the CPI will further undermine what is available in the sector and landlords will withdraw from it because of the insecurity of the income stream; we are already seeing significant warnings of that. Property will not only be unavailable at 30%, but sometimes it will not be available at all. The projections for 2016 show that in parts of London it will go down to 19% or 16%, and in my borough it could go down to almost nothing—but let us not worry too much about that now. The anxiety is that we must ensure that at least that 30% remains available to people in the private rented sector, because if it does not, when they lose their income or their job they will be cast away from the labour market, from the work they were doing and, on top of that, from the networks of family, friends and connections that the Secretary of State, with great passion—I am absolutely convinced of his sincerity—believes is so important.

We simply cannot argue that we believe in stable communities, in family networks and in connecting people with the workplace if we then take away the very mechanisms that make all that possible. The argument has been developed, with convincing statistical underpinning, by academic experts that there is a real danger of that happening unless we have an adequate review mechanism. No proposal for such a mechanism exists at the moment, although there is a willingness to understand that there could be a problem. In Committee, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller) said:

“The Secretary of State will be able to adjust rates to ensure that the housing support available does not become completely out of kilter or out of touch with local rental markets. We will monitor the impact of these measures and make further adjustments if it is right to do so”.––[Official Report, Welfare Reform Public Bill Committee, 3 May 2011; c. 711.]

That willingness to recognise a problem has therefore already been expressed by the Minister.

Also, I think that all three Ministers who are on the Front Bench have told us that the CPI rating will not last for ever, and that the arrangements could be reviewed at the end of the spending review period. However, the wording of the Bill is so wide that CPI or other measures could be used as a basis for setting rents under universal credit, and I think that Ministers are attracted to a permanent shift away from the idea of linking private sector rents to a market-based formula. That would be very dangerous and risky. We want the Government to offer clearer guarantees on how they will prevent an affordability and access crisis, which could in a very short time become even greater than the one that could be created by reducing the maximum percentile for local housing allowance claimants to 30%. We need a statutory assurance that monitoring will take place, and that it will lead to a proper review.

When we discussed child care and other elements of universal credit earlier, my right hon. Friend the Member for East Ham (Stephen Timms) said that the success of universal credit would rest heavily on child care costs. I hope he does not think that I am disagreeing with him when I say that the treatment of child care and passporting costs will not be the only critical test for millions of people; the treatment of housing costs will be, as well. I am genuinely concerned that an underestimate of the real cost of housing is already feeding through into universal credit, which will lead to a lot of people being disappointed when universal credit fails to deliver on its promises in the way that we want it to.

Amendment 32 deals with under-occupation and adapted properties. The Government are planning to reduce housing benefit payments for 670,000 social housing tenants: one third of all working-age housing benefit claimants living in social housing can expect to see their benefits reduced in 2013. Under the new restricted size criteria, any household deemed to be under-occupying its home by one bedroom would lose 13% of its total housing benefit, while those under-occupying by two or more bedrooms would lose 23% of the total. The average cut across all households would be £676 a year.

We know that only a tiny minority of those affected will be able to downsize to avoid the penalty, due to the shortage of smaller properties and the striking regional imbalance between the level of housing need and under-occupation. That is because of the competing pressures that social landlords are under when it comes to meeting their statutory obligations to house homeless households and other people in priority need. Alarmingly, the Government do not want those affected to move, because if they did move, the Government would not be able to meet their savings targets. We have not so much an incentive scheme as a straightforward cut in income for poor households. When we discussed this in Committee, the Minister was unable to give us any assurance on exactly the true purpose of the benefit cut, as explicitly spelled out in the impact assessment.

I want to concentrate for a moment on disability and adapted properties. Of the 670,000 claimants—