Housing Benefit

Anne Begg Excerpts

Thursday 10th March 2011 Westminster Hall

[Dame Anne Begg (Aberdeen South) (Lab)]

On behalf of the Work and Pensions Committee, it is a pleasure to open the first debate that we have held in Westminster Hall. We have published two full reports up to this point in time. One is “Youth Unemployment and the Future Jobs Fund” and the other is the report that we are discussing today, “Changes to Housing Benefit announced in the June 2010 Budget”.

We had hoped that the Government response would have been with us a bit earlier, but it arrived a bit close to the wire. We were able to agree it in our Committee meeting yesterday morning, just after we had grilled the Minister, who is here today, on his pensions policy and thrown him out. The members of the Committee now have copies of the Government response. Obviously, part of the reason for the debate today is to discuss the report in general and the Government response.

I will give a bit of history about the genesis of the report that we are debating today. We decided that it was important to produce the report after the announcement about housing benefit in the Budget last June. However, as soon as we announced the inquiry and published our terms of reference, the debate about housing benefit and local housing allowance moved on. So this report is quite narrow, in that it looks almost exclusively at the LHA and the situation in the private rented sector. That is because at the time that the report was produced, it had not been recognised that there might be implications for the public rented sector, and particularly for local councils, due to the changes to housing benefit. That became clearer as we carried out our inquiry, but by that time we were already tied in to the terms of reference that we had sought evidence on, and we were not in a position to change those terms of reference. However, I am fairly sure that the debate about housing benefit and the LHA will continue, and hopefully this afternoon we can tease out some of the additional issues that we were unable to cover in the report.

We need to begin with the items in the Government response that we welcome. We made a number of recommendations in our report about the need for robust data and robust independent research. That was because when we took evidence, we found that charities working in the homeless sector often said that the changes to housing benefit would lead to mass homelessness and were unlikely to lead to private landlords reducing their rent, whereas the Government said, “No, they won’t. There might be a bit of homelessness, but not really that much, and yes, the whole point of this policy is to force private landlords to reduce their rent.” Until the policy is in place and has been working, it is impossible to test which of those two diametrically opposed views is the right one. That is why we are pleased that the Government have recognised the need for good, solid, independent research, because that will be the only way in which we can tell whether the policy has had the intended consequences and ensure that it does what it says on the tin.

I do not know whether this was a success for our Select Committee, but many people were delighted that the Government decided to drop the 10% sanction on housing benefit for people who have been on jobseeker’s allowance for more than a year. That proposal caused a huge amount of angst among a large number of the people from whom we took evidence, and the issue was raised on the Floor of the House and in debates in Westminster Hall. It seemed grossly unfair, and it certainly would not have done what the Government alleged it would do, which was to act as a work incentive—if anything, it would have acted as a work disincentive.

That proposal woke up the public rented sector—particularly the housing associations—to the full implications of some of the proposals that the Government were coming up with, because a large number of housing association residents are on JSA. The housing associations faced the prospect of losing 10% of their income at a stroke as their residents were sanctioned. The residents might have done everything that the Government asked them but have been unable to get a job, because the labour market in their area was such that they could not find one, yet they would still lose 10% of their housing benefit. It seemed strange to us that housing benefit would be sanctioned for actions in relation to a completely different benefit. I am pleased that the Government have seen fit to drop that proposal, which is incredibly important.

Much of the debate about housing benefit has focused on the caps or on the situation in London, which has helped to obscure what could happen elsewhere in the country, and some of the knock-on effects for the public rented sector. That was because it was much easier for the tabloid newspapers to latch on to stories about “£1,000-a-week housing benefit claims”, when in fact such claims were a small minority of all claims. It is often the case that it is not good practice to introduce policy based on the few rogue examples rather than on the position that most people find themselves in.

Despite that, and despite the fact that the LHA was increasing and in general covered rents, there were already shortfalls for some residents. Many claimants were already making up the shortfall between what they qualified for with regard to what they could get in the broad rental market area and what their actual rent was. As part of our inquiry, we visited a citizens advice bureau where we met an elderly gentleman who was already having to supplement his housing benefit to the tune of about 10% of his very limited pension. He was a prime example of someone who had found it very difficult to get a tenancy in the private rented sector, because as soon as landlords heard that he was on housing benefit they turned him away. “Lying” might not be quite the right word to use, but he “failed to inform” his landlord that he was actually an LHA recipient when he signed the lease on the accommodation that he was in at that time. He knows that he probably would not have been able to get that lease if he had told his landlord that he was an LHA recipient.

That is one likely problem with the Government’s approach. The assumption is that people will be able to move and that they will be able to find accommodation within the bands that they can claim for, but that is not necessarily the case. Although the Government response says that landlords will reduce rents in many areas, it is definitely the case that in large numbers of areas—my area, for example—demand already outstrips supply, and landlords will quite easily be able to get tenants who are not dependent on housing benefit to live in their properties. Therefore, the choices of those who are dependent on housing benefit will be squeezed and become ever narrower. They do not have the choice to go into the public rented sector, because there is already a shortage of supply there.

The Government’s response is a bit complacent in saying that landlords will reduce their rents. Even if they do so in one or two areas, I suspect that in the majority of the UK they will not, and it will be very difficult for people to find anything to rent. In places where there is very little choice anyway, such as rural areas, choice will be further narrowed, and it might be impossible for people who are on housing benefit or local housing allowance to get anything with a rental price anywhere near what they can claim in benefit.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I have received a briefing from the Residential Landlords Association on that precise point. It says that in relation to a survey it conducted:

“71% of respondents said that they would not decrease their rents. A recent study for the British Property Federation put this figure at 88%. Although the Government’s whole case is based on the assumption that this will happen our survey evidence (along with that carried out by the Local Government Association in London) contradicts this.”

[Dame Anne Begg]

That is why it is important that the research is carried out. In his evidence to the Committee, the Minister, the noble Lord Freud, said:

“They would say that, wouldn’t they?”

It is not until the proposal is market-tested that we will know whether what we are talking about will be the case.

[Kate Green (Stretford and Urmston) (Lab)]

Does my hon. Friend agree that we can already market-test to some degree? In my borough of Trafford, for example, we already know that two-bedroom properties in the private rented sector are heavily oversubscribed. The market is unlikely to reduce rents when it can readily let to people who are not in receipt of local housing allowance.

[Dame Anne Begg]

Indeed, and there is the same situation in my constituency, where there is a housing shortage. Even people who work in the oil industry—a fluid population that comes temporarily to work in the offshore sector—have great difficulty in finding housing. There are jobs in certain areas and people flock to them, but those people often cannot take up the employment, because they cannot find accommodation. Those people are in the private rented sector and can afford fairly high rents, and their situation probably has more to do with rent inflation in Aberdeen than with anything that has happened as a result of local housing allowance. The Government have sometimes given the existence of the local housing allowance as a reason for rent inflation in the private rented sector, but in certain areas it has nothing to do with the allowance, simply because there are not enough LHA claimants to have that kind of market effect.

One aspect of the housing benefit reforms that we congratulated the Government on is the fact that disabled people who need a non-familial person to stay overnight will be able to claim housing benefit to cover the extra room required for that carer, which is, in itself, a good measure. It was a recommendation made by the Select Committee in the previous Parliament, and I have to say that the then Labour Government did not agree to implement it. However—there is often an “however” in all this—as a Committee we realised that even if the person looking after a disabled person is a relative who does not need space in the house, there might, for example, be a need for more space for wheelchairs, or an extra room for dialysis machinery. Disabled people need large houses, for which they would not qualify on the basis of their family size, for all sorts of reasons.

I was disappointed by the Government’s response on that issue:

“Housing Benefit is not designed to meet every individual circumstance and it would be complex to introduce different rules for the situations such as those described by the Committee”.

That is poor, because council tax benefit and the tax itself can take account of people who need extra room. If someone can prove that they are in a bigger house than they would otherwise occupy because they need extra room for a wheelchair, the local authority places the house in a lower council tax band. That is quite simple and straightforward, and it is not particularly difficult. I am disappointed that the Government have not recognised that such extra space might be imperative for disabled people. It is doubly imperative that the Government recognise that, because the proposals also introduce an under-occupancy rule, of which disabled people could fall foul simply because they occupy a house that is bigger than the one that they would need on the basis of the number of people in their family.

The Government also completely miss the point of the Committee’s recommendations regarding the possibility that someone with a disability who has had their house adapted has to move because they do not qualify for a house of that size, or because the house is too expensive. Their house, whether in the private rented or social rented sector, will no longer be covered by housing benefit. The Government’s response is, “Well, we’ve got the nine-month transitional protection,” or “There might be something in the discretionary housing payment that can be used.” The Government’s response suggests that disabled people will be able to move just like everyone else. Well, the answer is, “No they will not.” It is incredibly difficult, as it is, to get accommodation; it is almost impossible to get accommodation that is already adapted; and it is very difficult to get accommodation that can easily be adapted. For someone who has already spent a lot of money—out of their own pocket or through facilities grants—not only on making their home accessible, but on adapting the bathroom and kitchen and doing all the other things that need to be done, the Government are saying that it will somehow be okay, because if housing benefit is changed such people will be able to move and replicate those facilities somewhere else, but only in a smaller house or a cheaper area. That is not possible, and a lot of disabled people will be distressed by what I see as complacency by the Government.

I know that the Government say that all that will be covered by the discretionary housing payment. In fact, their response to our report seems to say that the payment will be a panacea. I came across mentions of the payment so often that I counted them, and it appears 20 times in a relatively short document. The discretionary housing payment will be the solution 20 times—it is mentioned three times on page 11 alone. So, £190 million is going to go an awfully long way and do an awful lot, and I am fairly sure that the Minister himself recognises that it is not elastic and will not cover all that the response says that it will.

[Kate Green]

I, too, noted the many references to the discretionary housing payment as the solution to the hardship and risk of homelessness identified in our report. Does my hon. Friend agree that it is not only about whether that payment can possibly be adequate, which looks unlikely, but about the fact that it is discretionary? That introduces further uncertainty for families and households about the stability of their home.

[Dame Anne Begg]

That is the problem. As well as the discretionary element, council tax benefit will be devolved to local authorities, although only 90% of it, and that as well will be discretionary to the local authority. The discretionary element must cover not only older people but disabled people, young people, large families and multi-generational families, perhaps from ethnic minorities, yet it will be up to the local authority to decide who receives it. I suspect that most local authorities will have a pecking order of groups that they think are worthy of support, leaving the groups that they do not think are worthy of support at the bottom of the heap.

[Glenda Jackson]

There is another dimension to the problem that my local authority has raised with me. This is a period in which local authorities are strapped for cash and reducing staff, yet the changes will place greater burdens on them, which might extend the length of time required to make the discretionary decisions, making the people waiting for those decisions even more anxious and concerned.

[Dame Anne Begg]

Governments and local authorities are often accused of making people suffer a postcode lottery. The fact that yet another matter will be open to the discretion of local authorities with tight budgets could create a strong postcode lottery dependent on area, not just in different parts of the country but in neighbouring areas. That will lead to uncertainty among claimants, who will not know when they sign a lease whether they will receive discretionary housing payment or not. There will be new claimants, and those sitting in houses in the hope of receiving discretionary housing benefit might have months of worry—perhaps will have even started to look for other housing—before knowing whether they will be covered by their council’s discretion and receive the money.

I suspect that in many areas, because the money will not go far enough, the discretionary housing payment might cover some but not all of the gap between people’s rent and their housing benefit and local housing allowance, so the anxiety about whether they will have to move will continue even after they are awarded the discretionary housing payment.

The other panaceas that the Government seem to think will solve a lot are the nine months’ transitional protection, which was mentioned only four times in their response rather than 20, and the independent review, which is mentioned throughout the document, although I did not count how many times. Phrases such as “the independent review will be comprehensive” and “it will cover” crop up throughout the report, as though we will have to wait for the review before some of the questions are answered. That is particularly worrying.

Another issue that we considered was the shared room rate, which the Government say in their response will be renamed the shared accommodation rate. It is meant for younger people, who are expected not necessarily to have single tenancy of a complete property but to share with others. It is proposed to raise the age limit for the shared accommodation rate from 25 to 35.

I am not sure that the Government have thought through the implications. I held a housing summit in Aberdeen to which a lot of people from the public rented sector came along, particularly from housing associations, and they were greatly exercised. Do the Government know how many houses in multiple occupation exist? Is there enough accommodation for that group of people? In my area, there are virtually no HMOs, because it is quite complicated and bureaucratic to register as one. A number of people who fall into the category will not be able to access a room in shared accommodation. Have the Government considered changing the rules to make it easier to share? It is illegal for tenants on housing benefit to sub-let, and there are all sorts of other barriers in the rules that make it difficult for people on housing benefit to share housing.

Have the Government considered the divorced or separated dad who is 34 years old and has access to his children at the weekend? What will it mean to bring children into a house in which other people live? Have the Government considered the child protection issues involved? Will the single room rate apply to the divorced father under 35 who looks after his children one or two nights a week?

What research have the Government done to ensure that accommodation for that group exists at all? In some rural areas, there are no HMOs. Will young people all be expected to flock into cities and more populated areas if the accommodation for which they qualify does not exist in their area?

[Caroline Lucas (Brighton, Pavilion) (Green)]

Does the hon. Lady agree that it is particularly unreasonable to require expectant mothers to share accommodation up until they give birth? The last thing I can imagine wanting to do, having just given birth, is suddenly to find somewhere new to live and move house. That is completely unacceptable.

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[Dame Anne Begg]

Indeed. I know from the homelessness legislation that that problem already exists. Lots of young pregnant women come to my constituency surgery who are living in mum’s spare bedroom or on her couch, but the homeless section will not see or deal with them until the day the baby is born. Usually the homeless section is sympathetic and will try to find them somewhere, but I suspect that that might happen only in Aberdeen, where there is not as much pressure on the social rented sector as in London. Such young women are often in a state of anxiety because they do not know what they will be taking their baby home to. They worry that it might be a damp room in a shared house somewhere.

[Glenda Jackson]

My hon. Friend lays her finger precisely on a constituency case that I had. The mother involved gave birth to her baby in the local hospital, the baby was ill and my constituent’s medical team would not allow her to take the baby back to where she had come from, as it was overcrowded, seriously damp and totally unsuited to a sick child. As a result, additional costs were laid on the national health service due to the complete unacceptability of her living arrangements at the time.

[Dame Anne Begg]

I suspect that most hon. Members will have similar examples in their constituency.

The Government’s response lists the various groups to which the shared accommodation rate—I have got so used to calling it the single room rate that I am finding it difficult to change—will not apply, but it is not clear how all the housing benefit changes will affect those living in supported accommodation, especially those who receive a mixture of Supporting People money and housing benefits, which is often a complex package of benefits, to allow them to live with support in their own home or shared accommodation. Will the Minister say a bit more about that?

Our report also considered work incentives, which were the main rationale for the Government’s changes—well, I suppose that the main rationale was to save on the housing benefit budget, but the second was to improve work incentives to ensure that work always pays.

[Jonathan Lord (Woking) (Con)]

I congratulate the Select Committee on its excellent work, and the hon. Lady on a very good exposition of some of the worries and potential issues with regard to the reforms.

As a non-member of the Select Committee, I would be interested to know where the Opposition parties are coming from on the overall thrust of the reforms. The Labour manifesto in the 2010 election said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

It is my understanding that that is a major thrust in the thinking behind some of the reforms. Does the hon. Lady agree with the manifesto of 2010? I would find that helpful to know, as background to the more detailed debate.

[Dame Anne Begg]

As we are speaking, perhaps the hon. Gentleman could read the report, where he will discover that the Select Committee recognised that housing benefit needed to be changed, and that the costs of housing benefit should be under control and affordable. There is no dissent from that. In terms of the Government’s response, the Government agree with the Committee, even within the ambit of the importance of getting the right amount of money to the right person to ensure that those who are on housing benefit are not experiencing a luxurious lifestyle, though I have to say they are not. That is where much of the problem in the debate came: the often overblown claims in some of the tabloid papers. One must remember that local housing allowance was set at broad rental market area level. Although the overall cap is £400, in a lot of areas it was already not possible to get that level of housing benefit or local housing allowance anyway.

[Kate Green]

If the hon. Member for Woking (Jonathan Lord) has now had the opportunity to consider the Government’s response, I wonder whether he was as struck as I was by the recognition that, after the introduction of local housing allowance, it was found that most low-income working households do pay a rent slightly lower than the local housing allowance rate for the property they occupy. It was only slightly lower—that rent was usually 90% or more of the local housing allowance rate. The differential between those who were in work and those not, in terms of rent paid, was relatively low. The make-up of the two groups often accounted for quite a lot of that difference. Those who were in work and having to pay rent were often young professionals, for whom occupying rented property would be a transitional step through to property ownership.

[Dame Anne Begg]

Very often, partly because of the publicity and the tabloid headlines, the assumption is that people on housing benefit are always out of work, when that is certainly not the case. In fact, in London it is particularly important that if low-paid people are to get work and to have work incentives, housing benefit must be set at the right level. The danger is that the gap between what they can get in housing benefit and what they can afford is too great; they end up not being able to get accommodation in the area in which they are working, which is even more important.

[Jenny Willott (Cardiff Central) (LD)]

Is one of the problems not the fact that local housing allowances have driven up rents for everybody in the private rented sector, including people who are working? That has had a knock-on impact on both those who are receiving the LHA and on those paying all their rent. Even where the difference between those who are not receiving LHA and are paying the rent themselves is 90% of LHA rates, that is higher than it would have been had the rents not been driven up in the first place. It has a much broader knock-on impact across society.

[Dame Anne Begg]

Earlier in my contribution, I said that I do not believe that is the case in Aberdeen. Wherever the housing supply is less than the housing demand, it is the lack of supply and the ability of those in work to pay higher rents that drives up rents, not the level set for the local housing allowance. It is a chicken and egg situation. Why was the local housing allowance set at that level for that broad rental market area? It was because of the average house rental price in that area.

The hon. Member for Cardiff Central (Jenny Willott) will have constituents in the private rented sector who will already, without any changes, be supplementing the local housing allowance out of their other benefits, in order to be able to afford the house. If rents were being driven up to local housing allowance levels, we would have seen a much smoother curve in the cost of all housing. All housing would cost the local housing allowance, but very often it still costs a lot more. That has been the problem that many are facing. It may be true in some areas, but that is what one hopes the research will find: that in the odd area a large number of people in the private rented sector are also on housing benefit. I understand that Blackpool is one of those areas. In such areas it may be the case that private rents have gone up to the LHA.

However, I do not believe that would be the case in more affluent areas. Unfortunately, in areas where that has happened, unless landlords reduce rents, we are still in a cycle of people not being able to afford the housing or to get other housing that they can afford, because of the changes. I have not said anything about the changes from the 50th to the 30th percentile: that also comes into play in a different area.

I was going to say something about the importance of housing benefit to work incentives. Perhaps that is something the Minister could answer. We know that housing benefit is to be in the universal credit, but we do not know the details of how it will be treated. One fear is that if housing benefit comes in as a flat level rather than the actual cost of the housing occupied, there might be a disconnect between what someone has to pay out and the effective withdrawal rates, so universal credit would not operate as it is meant to and ensure that works pays in all cases.

I am coming to the end of my comments, and I appreciate that I have not covered everything in the document. I mentioned that I held a housing summit—predominantly for housing associations but including those in the social rented sector in my constituency. The reason for that was that it became apparent that not only were there knock-on effects from the private rented sector that would result in higher demand for their properties, but there are also Government proposals that would affect them directly.

The biggest one that worried housing associations and the social rented sector is the under-occupancy rule, as it will affect all social rented housing as well as the private rented sector. The fear is that there will not be enough accommodation of the appropriate size for people to move. Consider the case of parents in their late-50s occupying a three-bedroom house, because it was the family home in which the family grew up before leaving. They have fallen out of work, which might be exacerbated by the increase in the state retirement age to 66. In their late 50s or early 60s, for the first time in their lives, they are now dependent on housing benefit in order to pay the rent, but they will only get housing benefit for a one-bedroom property, because that is all they will qualify for. Can the Minister say how the amount they get will be calculated? It could be, in an area such as Aberdeen, that what they pay for their three-bedroom council house is less than they would get in local housing allowance, even after the changes, for a one-bedroom flat in the private rented sector. There is a false economy if they are being forced to move into something more expensive, which they will get because it is in the private rented sector.

I could be flippant and say that there will be plenty of one-bedroom flats available because all the 25 to 35-year-olds will have had to move out of them to go into shared accommodation. However, I do not think that the 60-year-old mum and dad are going to move into the equivalent of a one-bedroom student flat, which a younger person has moved out of. This will cause great anxiety and worry. A lot of people will probably stay where they are, but they will be very short on the rent.

I know that the Minister is particularly concerned about pensioner poverty, but a large group of people who have fallen out of work towards the end of their working lives and who cannot get their state pensions until they are 66 will get caught up in this issue; it will not affect people who are over pension age, but it will affect those who are just below it, whose last years before they get the state pension will be spent living in poverty. They could become the group with the highest levels of poverty. The issue really must be considered. The social rented sector is particularly worried, because a lot of those people are already in the sector, and there is simply not enough stock to allow people to be moved around and housed according to the new occupancy rules.

When Labour was in government, many Opposition Members said it would be unfair for older people to have to sell their houses to pay for their care. They also said that it would be unreasonable for them to have to sell their houses because the council tax was too expensive. However, the Conservative coalition Government are saying that it is perfectly acceptable for those living in the social rented sector to have to move at a time in their lives when they should be settling down and moving towards retirement. The issue is a great concern, and people are very exercised by it. In rural areas, of course, there may not be houses of the appropriate size because they do not exist. People will therefore face an enormous shortfall between their rent and what they can get under the occupancy rules because of where they live.

I could say a lot more, but I am conscious that I have taken up a lot of time.

[Jonathan Lord]

On under-occupancy, my local council has a terrific record on providing social and affordable housing. Like other hon. Members, however, I have many constituents who need larger houses. Sometimes, they are on a waiting list for years to get one. Across the country—I have asked about this on the Floor of the House—hundreds of thousands of people are taking up space that they no longer need. Does it really make sense to have all those people waiting for appropriately sized accommodation, while others are being subsidised in the social and affordable sector and sitting on properties that are far too large for their current needs?

[Dame Anne Begg]

I hazard a guess that the group of constituents the hon. Gentleman is talking about—we all have them—are not sitting in one-bedroom properties, but two-bedroom properties, and they will be looking for three or four-bedroom properties as their families grow. However, the people who are over-occupying will qualify only for a one-bedroom property, and in places such as Glasgow, there are simply not enough one-bedroom properties in the social rented sector to cover the number of people who qualify only for a single-bedroom property.

[Glenda Jackson]

On that very point, I have a briefing from the National Housing Federation, which states:

“There is a very limited supply of one bed properties into which people will be able to move. In 2009, just 38,700 one bed housing association properties were let to people of all ages in England. By contrast, the DWP’s impact assessment identifies 240,000 households who fit the size criteria…Most of these people will see a cut in their benefit with no prospect of being able to move to a smaller social home.”

[Dame Anne Begg]

That gives some of the figures. The problem is the mismatch between what people will now get housing benefit for and the actual housing supply. We also have to remember that housing associations and councils are no longer building houses. In fact, the housing summit that I hosted made it clear that housing associations, in particular, are afraid that they might not be in a position to build any more new houses. At the moment, banks regard them as a fairly low investment risk, because they know that housing associations will be paid housing benefit directly for residents who are on it. Under the move to universal credit, housing benefit will no longer be paid directly to the landlord, which will undermine housing associations’ ability to borrow, because they will no longer be seen as low risk.

Alternatively, housing associations might have a large number of tenants in properties that are over-occupied, so they will see a shortfall in housing benefit. On a number of different fronts, therefore, housing associations could see arrears build up, because people can no longer afford rents as a result of the changes to housing benefit. If housing associations are then seen as no longer being a safe investment bet, they will not be in a position to build the new houses that are required. Some housing associations have gone down the route of shared equity and all sorts of other things, but all that is under threat because of the housing benefit changes. That was outwith the scope of the Committee’s report, but it certainly needs to be considered, and I hope that we will return to it at some time in the future.

I know that I have not covered everything and that I have covered only bits and pieces, but I have talked for a long time, so I hope that hon. Members will have a flavour of some of the issues. Yes, we welcome some of the things the Government have said, but we are generally quite disappointed by their response and by their view that £190 million of discretionary housing benefit will somehow magic away a lot of the problems resulting from the changes. I hope that the Government are listening and that the Minister can answer at least some of our questions—if he cannot do so, I am sure that he can write to us.

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[Alex Cunningham (Stockton North) (Lab)]

I am pleased to have an opportunity to contribute to the debate. I congratulate my hon. Friend the Member for Aberdeen South (Dame Anne Begg) who chairs the Committee. This is the Committee’s first report and she has led us well to some excellent conclusions. I will concentrate my comments on evictions and homelessness, which I believe will affect many people in my Stockton North constituency, as well as across the north-east of England and beyond. The Government’s proposed cuts will, of course, have that result.

It is worth remembering some of the things that we heard while taking evidence. The Committee took extensive evidence from many organisations and interested parties on the subject. We took much evidence from Shelter, which—among other things—told us that 147,000 families with 250,000 children and 20,000 households with people over 60 would be put in serious difficulty by the proposals, and that is not just financially. The Mayor of London estimated that there would be a 50% increase in homelessness in London, costing £78 million for the 5,000 households in the city that could be placed in temporary accommodation.

There is more—much more. Nearly 3,000 people in the small borough of Stockton-on-Tees will lose out by at least £7 a week thanks to the changes. Most of those people are in my Stockton North constituency rather than in Stockton South, which is represented by a Conservative Member. To some people, £7 is not a lot of money. However, that can represent food on the table for a family for two or three days. Large families are particularly vulnerable to the changes proposed by the Government and could face temporary homelessness, especially in central London. There will also potentially be an increase in poverty, including child poverty.

I make no apology for referring time and again to Shelter, which is one of the most credible organisations that I know. It, along with other organisations, has expressed concern that the number of households living in overcrowded properties will increase as a consequence of the reforms. According to Shelter’s written evidence, 1 million children are living in overcrowded conditions across the country, which is not only a problem for large families. Shelter also estimates that 72,000 families with 129,000 children may be forced to move out of their existing homes and that children will be uprooted from schools, which impacts on their education and social development.

It is likely that the reforms will lead to a significant movement of local housing allowance claimants from higher to lower rent areas. Those areas are likely to be relatively deprived and lacking in job or training opportunities, transport links, good schools and so on. The reforms have other wide-reaching effects, which can only add to the considerable burden on already stretched local authorities and on resources such as schools and doctors at a time when local authority spending is being decimated by the Tory-led Government. In the Stockton borough, there is a 28% cut in grant over the next two or three years, most of which is front-loaded.

My hon. Friend the Member for Brighton, Pavilion (Caroline Lucas) mentioned that it is important we do not detach housing benefit from the broader issue of affordable housing provision and the difficulties for first-time buyers, especially in London and the south-east—although it is a problem across the country. The Government say that they will build 150,000 new affordable homes over the next five years, but that is less than a third of what the country actually needs. I recognise that Labour could have done much more in government to secure more adequate provision of social housing, but it is important to recall that, when we came to power in 1997, we were left with a £19 billion maintenance backlog by the previous Tory Government. I often wonder what the picture would be today if we had been able to spend that £19 billion on building new homes.

The Tory failure to fund the upkeep of social housing meant that hundreds of thousands of families were living in substandard and even dangerous conditions. Through our decent homes programme, council-owned homes have been fitted with more than 700,000 new kitchens, more than 500,000 new bathrooms and more than 1 million new central heating systems. More than £33 billion—£21 billion of it from central Government—has been invested in social housing, and we have reduced the number of non-decent social homes by 1.5 million. Yes, that created tens of thousands of jobs, but those jobs have now gone, forcing more people out of work and making them dependent on the kind of allowances we are debating today.

The Committee made a series of recommendations around the issues aimed at getting a balanced approach to change, and the Government responded just over 24 hours ago. Apart from the stark statement that the Government consider the estimates made by witnesses to have been exaggerated and that, in any event, the extra £190 million of funding will meet the challenges, however great, the response offers limited consolation to the people who will be most affected by the changes. Like others, I am not sure that the £190 million will go anywhere near to meeting the transition costs and other challenges. Paragraph 30 of the response states:

“If landlords reduced rents by £10 a week there would be a significant reduction in the number of customers in receipt of Housing Benefit under the Local Housing Allowance Scheme that would face a shortfall.”

There are two problems with that. First, I remain to be convinced that the claimed downward pressure on rents will happen, regardless of the number of people in receipt of that benefit. Secondly, why should families and individuals who have so little to start with have to face cuts in their weekly income for some politically motivated reason that I fail to understand?

Yes, I have heard the arguments, such as those made by the hon. Member for Woking (Jonathan Lord), who has left the Chamber, about it being unfair for people on benefits to live in the same or even better homes as people in employment. However, we surely do not accept the Daily Mail-type rhetoric that suggests the bulk of families on benefits are wasters and scroungers. They are not, and it is time we saw evidence of the care that the Government claim to have for our most needy. The Daily Mail line is disproved best by Shelter’s evidence that 0.01% of the entire local housing allowance caseload is represented by households claiming the maximum rent available.

Apart from the welcome decision to see sense and abandon the punishment of people on jobseeker’s allowance by fining them 10% of their housing benefit for being unable to find a job within 12 months, I am disappointed by the Government’s response to the report, which contains a set of recommendations put forward with the full agreement of the Select Committee. We have had a very thin response, indeed. As the Government’s programme is rolled out and the experts who gave us evidence are proven to have had well founded fears, I hope that the Government will take corrective action quickly and not allow a new underclass to be left deeper in poverty and struggling to find a home.

[Dame Anne Begg]

I wonder whether, with my hon. Friend’s experience as a local councillor, he has been able to quantify how much extra it may cost local councils to deal with the homelessness that will arise as a result of the Government’s proposals, and, indeed, the increase—perhaps return—of the bed and breakfast, which will be the only alternative that many people will have, as a result of being forced out of their homes?

[Alex Cunningham]

I do not currently have the specific details relating to Stockton-on-Tees, but I know that there are anxieties about everything, from how the council will deal with housing benefit in the future, to how it will deal with the people who are going to lose their jobs, as its responsibility is removed. It expects a considerable influx of people into the housing department seeking accommodation and further help. Whether that will be available, I do not know, and that is all the more reason why, as the Government have been proved to have been wrong on this issue, they will need to take quick action and correct it.

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[Dame Anne Begg]

I agree wholeheartedly with what the hon. Lady is saying, but it is actually much harder for those who are dependent on housing benefit to lead the kind of shared life that I think the Government envisage. Students sharing flats are not dependent on housing benefit and are therefore not hidebound by the rules of housing benefit and what can be rented as a result of housing benefit, and neither are groups of young professionals who might be sharing a house or a flat. They are not hidebound by the rules of tenancy agreements and what is legal and what is not illegal. Part of the problem is the lack of houses in multiple occupancy to which people on housing benefit can have access.

[Jenny Willott]

The hon. Lady makes a valid point. In areas of my constituency, a large number of students live in shared accommodation. If they are in a house in multiple occupancy, most students are not going to want to share with somebody who is on housing benefit, partly because it makes it difficult for council tax exemption and things like that. As soon as there are different people with different exemptions and different rules, as the hon. Lady has said, the financial arrangements for a household may become complicated.

Finally, the other issue about which I have some concerns is the move to uprating rents in line with the consumer prices index, rather than with average rents. The issue is a difficult one to resolve, and I completely understand why the Government have decided to propose the change. Increasing the local housing allowance in line with rents has, in large parts of the country, driven up rents significantly. As the hon. Lady has mentioned, if we set the LHA at the median rent, and if all the landlords currently charging less than that bring their rent up to the median, then the median rises. Rents inevitably go on an upward bend, which has happened in significant parts of the country.

I appreciate that the Government are tackling that issue to ensure that it does not happen and that people have a fair crack of the whip. No only are there implications for the vast amount of money that the Government are spending through the LHA, but there is a knock-on impact on those who are not receiving the LHA in a local area and are renting privately. It can make it even more difficult for those on low incomes to afford appropriate accommodation.

I have some concerns, however, about uprating rents in line with the CPI. The index reflects inflationary increases, but it is not designed to reflect changes in the housing market. I am glad that the Government will be reviewing the decision in a couple of years—2014, I think—after seeing the impact. If the LHA is not keeping track with what is happening in the rental market, we could end up with a big gap separating those on the housing allowance and those paying rent. That might have a serious impact on those people’s ability to get into work, as well as all the other positive things the Government are driving forward.

A number of hon. Members have mentioned that the whole situation is driven by our not having enough social housing in the UK. It is crucial that we build more social housing, if we are to tackle any of the issues.

To get in my party political pop for the afternoon, both the previous Labour and Tory Governments sold off more than they built, which is why we are in such a mess in the first place. After the Thatcher-Major Government, by 1997 there were 1.1 million fewer social homes, which is a huge number. Then, after 13 years of Labour in power in this country, there was still a drop of another 250,000 in social housing. By the time Labour left power last year, there were 1.7 million families on housing waiting lists, which is such a vast number that it will take much greater changes than those to the housing benefit rules if we are to do anything about it.

I am glad that the Lib-Dems in government are ensuring that something will happen. The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), announced that more than 150,000 affordable homes will be built over the next four years. That is a start, although clearly not enough when we have such a massive deficit of social housing in this country. At least it is progress in the right direction, rather than going backwards. I hope that, whatever we think about the changes, people will fall in behind the building programme to ensure that it happens, so that we can make some progress and people can afford homes to live in.

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[Steve Webb]

The phrase “lose their homes” is rather evocative and misleading. When people say that they have lost their home, they are usually describing repossession—their home; their loss. What the hon. Lady describes is someone who has presumably managed to sustain a very high rent—if the shortfall is £5,000 in three months, the rent must be enormous.

The suggestion that the taxpayer should keep paying a vast rent while the claimant decides whether to stay in the property brings me back to my fundamental concern about the tone of the debate, which relates to balancing the responsibilities of the individual and of the Government. It was evident to some extent in the remarks made by the hon. Member for Aberdeen South, and particularly in other contributions, that almost every combination of circumstances, every possible need and every possible variation was deemed to be responsibility of the Government.

The hon. Member for Hampstead and Kilburn (Glenda Jackson) mentioned our response to the Committee’s report and some specific needs. For instance, she said that people living in a larger house might need somewhere to put a wheelchair and questioned whether it should be included in statute. The implication of what Committee members were saying is that they did not want it decided on a discretionary basis, but wanted it written into law. The point about our allowing an extra bedroom for carers is that we have legislated for it; after deciding on a category of clearly identified people and clearly specified needs, we wrote it into legislation, and it has become a right. However, there is a dividing line between identifiable, clearly categorised groups with particular needs and the much broader group listed in the Committee’s recommendations that may need a room for a wheelchair or something else.

The question is not, “Do we give a damn?”—I am sorry; I mean, “Do we care?” The hon. Lady implied that the Government do not care and that we are telling people to get lost. No; as my hon. Friend the Member for Cardiff Central (Jenny Willott) said, the Government believe that some needs should be written into statute, which we have done in cases where previous Governments did not act. However, other needs are so diverse that we should have the local flexibility to respond when the need arises. That is better than sitting down in Whitehall, trying to think of all possible circumstances and writing primary legislation to deal with them, which is not a sensible way to proceed.

[Dame Anne Begg]

That is not what I or others were asking for. In other areas, we use proxies or other measures to help passport people into getting greater help. For instance, there is a good chance that someone on the highest rate of the disability living allowance care element will need extra housing. That factor would give them the right to apply for more housing benefit. It works with the council tax system, under which those who need more space as a result of a disability can get the council tax reduced to a lower band. It is straightforward and simple. The problem with discretionary payments is that not everyone gets them, because they can be refused.

[Steve Webb]

The hon. Lady has said that proxies can be used, which means that we can identify categories of people to whom additional concessions should be made. That is what we did with the extra bedroom for the carer. The report specifically mentions people who need an extra room for a wheelchair. People on certain rates of disability benefit will almost certainly have a wheelchair but live in a house that can accommodate it; others will live in houses that need another room for the wheelchair. Rather than trying to categorise everyone in the same way, the flexibility of the discretionary system allows us to cater for those differences.

I was pleased to hear the hon. Member for Westminster North say that we have to work within our resources. That was a heartening comment, because every pound spent on another recipient or on further delays and concessions—on everything that has been asked for today—comes either from someone else covered by the housing benefit system or from our contribution to tackling the deficit, which is one reason for the reforms.

The hon. Member for Stockton North (Alex Cunningham) said that it is a difficult time for local government, implying that the Government just fancied cutting council budgets by 25% because of what he called an evil Tory-led, or Liberal Democrat-Conservative coalition plot. We all knew that this would happen, because substantial cuts in local government were coming down the track anyway. It is important to acknowledge that that is the backdrop against which we are operating. This is not an environment in which there is money kicking around. It is not as if we can resolve all these problems and delay tackling the remorseless rise in the housing benefit budget. Every £1 billion that goes on housing benefit every year is £1 billion that the low-paid, hard-working taxpayers, who are our constituents, will have to find.

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[Steve Webb]

That is where I fundamentally disagree with the hon. Lady. The flaw in her analysis is this static view of the world: housing stock and the private sector is as it is and nothing can ever change. The figures that she quoted from the impact assessment assume that nothing changes. The losses she quoted assume nothing changes. Nobody can find somewhere cheaper to live; they just stay where they are and lose the money. Rents do not go down; they stay exactly as they are. The impact assessment from which she quoted is the worst-case scenario.

However, what actually happens is different. Let me give an example. If we were able to reduce rents by £10, that would wipe out nearly 500,000 people with shortfalls. One of the questions that was asked in the debate was: how will landlords respond? Guess what? When landlords were surveyed, they said, “Oh, we won’t cut our rent.” Well, there is a shock. Of course they would. They do not want these cuts because they are the ones who will be most affected. I was very surprised by the hon. Member for Brighton, Pavilion (Caroline Lucas) for whom I have a lot of respect—sadly, her contribution was 90% polemic and 10% substance—because she seemed to be defending private landlords. They are the people who get this money. They are the people who have got the £21 billion that used to be £11 billion 10 years ago. I did not know that they were her best friends. That is where the money is going.

The question is: if we go to direct payment in cases in which it will secure a tenancy, will landlords bite? We have 1 million private sector tenants on housing benefit. We have all seen adverts that say, “No housing benefit” but there are also 1 million people with private sector landlords getting housing benefit. Therefore, someone out there is renting to people on housing benefit. If a private sector landlord is renting to someone whose housing benefit gets squeezed and they or the council says to them, “You can have a guaranteed rental stream straight into your bank account month after month if you will reduce your rent to a level that will enable the tenancy to carry on” that is hugely attractive. It is turning a tenant into a triple A credit-rated tenant rather than someone who may or may not pass on the rent.

[Dame Anne Begg]

rose—

[Glenda Jackson]

rose—

[Steve Webb]

I will give way in a moment. Landlords are quite clear that that is hugely attractive to them. It is worth shaving the rent for, and that is often all that it would take.

[Dame Anne Begg]

It is actually possible to accept the Minister’s argument. The problem is the Government are about to introduce universal credit, which will make direct payments impossible, unless he has a different idea.

[Steve Webb]

We are focusing specifically on the roll-out of these changes over the next two years. Over that period, before universal credit comes in, this mechanism will be in place. Clearly, there is plenty of time to work out ways of underwriting the rent to the landlords combined with the universal credit. The crucial point is that this is a transitional issue, although there are longer-term aspects as well. It is in this transition—the crucial period in which the housing market adjusts—that the mechanism will be most effective.

[Dame Anne Begg]

May I make a suggestion to the Minister? It is that very point that concerns the housing associations, which already have direct payments. They are terrified that under universal credit, there will be no direct payment, which could undermine their whole ability to get us out of this mess by building more houses because they are not able to borrow the money. That is a serious concern.

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[Steve Webb]

As such a wide range of issues were raised during the debate and a number of hon. Members have contributed to it, I will make a bit more headway and then I will be happy to give way again.

I was about to describe the evaluation and assessments that we will be carrying out, because a lot of the points that were raised during the debate were about particular groups of people. I want to identify the facets of the research that we will be undertaking.

To ensure that we gather the evidence required on key areas of concern, such as the behavioural and market responses of claimants, landlords and external organisations, we will commission primary fieldwork that will cover a number of issues, which I will now take the House through. They are: homelessness and moves; the single shared accommodation rent, which I will come back to later because there were a lot of misconceptions about that during the debate; the impact on Greater London, which is explicitly in the terms of reference for the research; the impact on rural communities, which I think has been mentioned in the debate; the impact on black and minority ethnic households, which has been mentioned; large families, family life and children’s education, and schools, for example, were mentioned in the debate; older people, who were mentioned in the debate; people with disabilities; working claimants; landlords, and housing and labour markets. There will be comprehensive evaluation that will start imminently and that will run over a two-year period. We will be watching—very carefully—what goes on and we will be reforming the system, with measures such as the allocation of discretionary housing payments.

Discretionary housing payments are quite important. Although the allocation of those payments for 2011-12 has been determined, the allocation has not been determined beyond that time. The total budget has been determined and it will treble. This year, it will be £20 million and then it will be £60 million a year for the next three years. We will treble the total budget. However, where the money goes will be informed by the early roll-out and by the research. We will base the policy on the evidence about the impact on the ground. If there are particular areas—hot spots—where there is particular pressure, we will be able to gear the discretionary housing payments money to those areas.

I enjoyed the observations of the hon. Member for Aberdeen South, who is the chair of the Work and Pensions Committee, about how often we refer to discretionary housing payments. I take her point. I read the Government response myself and I noticed the same thing. However, there is a reason for it. It is that the Select Committee’s report quite properly identified specific sets of circumstances that need to be addressed and they will be addressed by a response that is tailored to the local situation. If there are particular geographical areas where there are particular local pressures—we heard about a number of such areas during the debate—the DHP system will be tailored to those areas. It is almost a circular argument. That is the reason why the DHP system is our answer to most of the questions put to us, because it is the best way to respond to different but equally significant local issues of the type that have been raised during the debate.

I now come to the issue of the shared accommodation rate. Technically, I know that the title of the Committee’s report is, “Changes to Housing Benefit announced in the June 2010 Budget”, but as the shared accommodation rate was covered in the report I will address it.

The question is, “Why do we pay a shared accommodation rate to the under-25s only, because many young people are sharing and is it fair”—to come back to the point about fairness made by my hon. Friend the Member for Ealing Central and Acton (Angie Bray)—“that someone in their early 20s on housing benefit can, in principle, get a flat to themselves but someone in their early 20s who is in work and beyond the reach of the housing benefit system has to share, because they cannot afford a flat of their own?” That is the thinking and in fact that was why the shared accommodation rate was introduced. I think that it was introduced about 15 years ago, if I remember correctly. It has certainly been a feature of the system for many years.

When we have looked at the 25 to 35 age group, we have found it striking that a very high proportion of individuals who are not on housing benefit in that age group are also sharing accommodation. The number of people sharing accommodation does not tail off dramatically at the age of 25. More than 40% of non-students—single people—in this age range are sharing accommodation in a range of situations.

Various questions were asked about shared accommodation during the debate. For example, “Is any of this sort of accommodation available?” One of the notable things is that about 50% of those being paid the shared accommodation rate now are over 25. We have to think about that for a moment. The shared accommodation rate is only imposed on the under-25s, but if someone applies for housing benefit from shared accommodation and they are over 25 they receive the shared accommodation rate, even though they could receive housing benefit for a one-bedroom flat. There is a set of people over the age of 25, therefore, who could receive housing benefit for a one-bedroom flat but who are living in shared accommodation. That suggests, first, that some of those people have chosen to do so and, secondly, that the properties of that type exist. That helps to counter the suggestion that those properties simply do not exist.

Of course, there will be local variations. I accept that point and I will come back later to the point about houses in multiple occupation. However, I think that the hon. Member for Aberdeen South, the Chair of the Select Committee, wants to intervene.

[Dame Anne Begg]

Again, I suspect that the group of people that the Minister is talking about were already in that shared accommodation, which illustrates that people do not like to move house because of the upheaval involved. It also illustrates that not everybody is out to milk the system and receive the maximum amount of housing benefit. It does not illustrate at all what the Minister said it illustrated.

[Steve Webb]

I do not think that I have ever said that everybody is out to milk the system. Moreover, the hon. Lady is guessing what the figures tell us. Clearly, the information demonstrates that such properties exist. It was asserted during the debate that, “You just can’t find these properties”.

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[Steve Webb]

I will give way to the hon. Member for Aberdeen South, the Chair of the Committee, and then I will give way to the hon. Member for Hampstead and Kilburn.

[Dame Anne Begg]

I am sorry, but I have now forgotten what my point was.

[Steve Webb]

Okay, I shall give way to the other hon. Lady.

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[Dame Anne Begg]

With the leave of this Chamber, I will make a few closing remarks. We have heard that only one in four housing benefit claimants is unemployed. The proposed changes will therefore affect many people who are working hard to make ends meet, and they could force many of them further into poverty. At the extreme end, we could return to homeless hostels and large numbers of families living in bed and breakfast accommodation. That would be a tragedy after the previous Labour Government’s success in almost eliminating such accommodation and dramatically reducing the number of rough sleepers.

Even if we accept the Government’s intention that people should not be over-housed or living in accommodation that they cannot afford, the proposals will force many people and families to move house. We know that moving house can be very stressful: indeed, it is said to be the most stressful event in a person’s life after the death of a loved one and divorce. Even if we accept the Government’s assurances that people will not be made homeless and will be able to find accommodation of the right size at an affordable rent, all of which is questionable, large numbers of people will be unable to avoid the stress of moving house as a result of the proposals.

I am glad to have had the chance to debate this important issue. I am sure that hon. Members will want to return to it on many occasions in the coming months as the proposals are rolled out and begin to affect all our constituents.

Question put and agreed to.