Housing Benefit

Andrew Bridgen Excerpts

Tuesday 9th November 2010 Commons Chamber

[Mark Pawsey]

I am referring to the UK as a whole, and I will go on to show how the current system has driven rents up. When councils make their rates available, landlords use them as a benchmark for the rents they charge, knowing that a proportion of tenants will be able to pay and will not contest the level. The recipients of housing benefit are happy to accept whatever a landlord asks for, because they know that the state will pay. That contrasts with the position of private tenants, paying rent out of their earned income, who will be keen to negotiate the best rent they can. These higher rents might be good for landlords, but that does nothing to help people who are not in work to find work. In fact, the reverse can apply, because it can discourage claimants from taking low-paid employment or from working longer hours, because if they do so, their benefit entitlement might be lost, and the mobility introduced by the sector might be reduced.

It is worthwhile remembering—sometimes the Labour party seems to forget—that the benefits paid to recipients come out of the taxes paid by hard-working families. A number of my hon. Friends have drawn attention to that. Often, they are the kind of people who look with envy at the kind of housing enjoyed by some recipients of housing benefit. The new system will make things fairer.

We have heard a great deal today about the effect on people living in London, and some Government Members could be excused for thinking that this is a London-only issue. In my constituency, however, a terraced house costs £550 per month to rent, so some of the sums spoken about, such as the family cap of £26,000—more than many people in my constituency earn in a year—are out of this world to the average resident in my constituency. They fail to understand why such sums should be made available.

Concern has also been expressed about the effect of the new rules on availability of properties for people in receipt of housing benefits. I believe that landlords will have to become more realistic in the rents they accept. They will have to accept a lower return than they enjoy now. My hon. Friend the Member for South Thanet (Laura Sandys) spoke about landlords enjoying a return of 12%. There is no reason residential landlords should receive a disproportionately higher rate of return at the expense of the state. In order to improve returns, those who are committed to this sector for the long term and who continue to acquire properties in the future will not be willing to pay capital prices at the level they have done previously. That will exert downward pressure on the price of housing, making housing more generally more affordable, and, as a side effect, benefiting many people struggling to make a start on the housing ladder.

Increasing the supply of housing more broadly will be another important factor as the coalition deals with the Labour party’s failure to build enough homes. Last year, fewer homes were completed than in any time for a generation, and today’s housing reforms need not be seen in isolation when it comes to providing support for those in need of housing.

[Andrew Bridgen (North West Leicestershire) (Con)]

My hon. Friend should be aware that last year saw the lowest number of houses built since 1924.

[Mark Pawsey]

I thank my hon. Friend for that intervention. I spoke about a generation, but it is clearly two or three generations. Either way, we need to deliver more houses, as I think has been recognised by the Labour party, and the changes that the Government are introducing in the localism Bill will enable more houses to be built. It is that additional supply that will bring down prices for both rental and sale, giving occupiers a better deal. Progressive authorities, such as my local authority in Rugby, recognise the benefits of housing growth both for their local economies, by introducing new consumers into the area, and for the community as a whole, through the new homes bonus, which will enable the local authority to retain more council tax to develop new infrastructure.

I will draw my remarks to a conclusion because I know that other Members wish to speak. In my view, the housing benefit reform that the coalition is introducing is a necessary step in controlling the cost of the system of housing support to taxpayers, a saving that will yield £1.6 billion a year. In addition to that saving, the system being introduced will bring long-term benefits in the operation of the housing market.

--- Later in debate ---

[Caroline Flint]

rose—

[Andrew Bridgen]

rose—

[Andrew Bingham]

I will not give way, as I have nearly finished and many others are waiting to speak. [Interruption.] I can talk as long as anyone wants, but I am conscious that some Members have been in their places a long time and are waiting to speak.

It is wrong that hard-working families in my constituency and others who are living within tight budgets—

--- Later in debate ---

[Andrew Bingham]

Excuse me, but I do not like the word “demonised” any more than I like “punished” or “cleansing”. I do not like the language used by Opposition Members.

[Andrew Bridgen]

Will my hon. Friend give way?

[Andrew Bingham]

Yes, for the last time.

[Andrew Bridgen]

Does my hon. Friend believe that the increase in the housing benefit budget from £14 billion to £20 billion in the past five years is a sign of the success or the failure of the last Government’s policies?

[Andrew Bingham]

I think that “abject failure” is probably a better phrase.

I end by saying that it is wrong for families who work hard to see families on benefit living in houses that are beyond their wildest dreams.