Bedroom Tax (Scotland)

Baroness Clark of Kilwinning Excerpts

Thursday 8th May 2014 Westminster Hall

[Dr Whiteford]

By no means. I commend the work that has happened in some local authority areas and with some housing associations, but that is perhaps a more feasible option for some than for others. The agreement that has been reached among the parties in Scotland, on a cross-party basis, is that the discretionary housing payment system offers the clearest legal route to do that in a way that can be regular and ongoing. It is a bit of a legal quagmire, as far as I understand it, and it is not as straightforward as it might first appear. It is also not always easy to disentangle what are bedroom tax arrears and what are arrears due to another financial hardship such as losing one’s job, other welfare reforms or other loss of income. It is not entirely straightforward. Nevertheless, it is a very serious issue and I absolutely share the hon. Lady’s concerns.

I am glad that we have a commitment to proceed under section 63 of the Scotland Act. I pay tribute to the Under-Secretary of State for Scotland, who has succeeded where the DWP has failed over the past five months. I hope that the Minister will use this opportunity today to outline a speedy timetable for that process to be enacted. It means that local authorities can plan ahead on the basis that the shortfall will be met in full and that they will have funding to ensure that every single tenant subject to the under-occupancy penalty can receive a discretionary housing payment. Twelve of our local authorities already have a full funding allocation to mitigate the bedroom tax in their areas. The rest have extra funding up to the level of the cap and can now be assured that the rest is coming, just as soon as the relevant orders can be laid in Parliament.

The challenge for all of us is to make sure that tenants apply for their discretionary housing payment. I will certainly be going back to every constituent who has been in touch with me about the bedroom tax, including those who applied unsuccessfully for DHPs in the past, and urging them to reapply. I will also ask my local authority what it will be doing proactively to ensure that everyone who is entitled to discretionary housing payments gets them, now that the policy has been fully funded and there is no excuse for anyone who is subject to the bedroom tax to be left without the support that they need.

[Katy Clark (North Ayrshire and Arran) (Lab)]

The hon. Lady will be aware that different local authorities are taking very different approaches. For example, in Renfrewshire, which is adjacent to my constituency, staff are employed to go around proactively and get people to apply for discretionary payments. In my area of North Ayrshire, that does not happen. Does she think that the resources need to be put in to ensure that that happens, if we are going to follow the path that she is suggesting?

[Dr Whiteford]

The hon. Lady makes a really important point, because there are a range of practices across local authorities. However, this is very much their responsibility, and I hope that they will be putting in place a more proactive approach across the board. I know that some have already done that in dealing with other aspects of welfare reform, but I also know that the Scottish Government have made it very clear to every local authority that that money is to be used for the purpose for which it is intended—to mitigate the effects of the bedroom tax—and they need to ensure that everyone gets it. It is incumbent on us all to ensure that our constituents know that and to encourage them to get their forms in. After all, it is in the interest of local authorities to ensure that people do not fall into arrears, because that just creates further problems for them down the line. I am confident that most local authorities in Scotland will be keen to ensure that that policy is properly implemented.

The mitigation measures mean that no one should fall into arrears or face eviction because of the bedroom tax, but we cannot ignore the fact that it is still on the statute book. The Scottish Parliament does not have the power to abolish it. That means that tenants are still legally responsible for the shortfall in their rent caused by the cut to housing benefit. We should not lose sight of the fact that in order to mitigate the worst impacts of Westminster’s bedroom tax, money has had to be diverted from other devolved spending priorities.

The bedroom tax and the other changes to housing benefit are only one aspect of the UK Government’s assault on people in low-income households. By the end of this financial year, about £4.5 billion will have been taken out of the pockets of people on low and middle incomes in Scotland through welfare reforms and other changes to the tax and benefits system. The figure will rise to £6 billion by 2015-16. Apart from in the bedroom tax itself, that is most evident in the changes to tax credits, which have cost 110,000 households in Scotland an average of £700 each, and of course the uprating of working-age benefits at a level substantially below inflation, which has meant real-term cuts in the value of support. The freezing of child benefit means that, cumulatively, a family with two children will be more than £1,000 worse off by next year. In many cases, the people who have been hit by the bedroom tax are the same people being affected by those other changes. It is those people whom the mitigation measures will help, but we must recognise that we cannot fill a black hole of £6 billion without the powers and the budgets to do so.

The Scottish Government have invested £258 million to temper the worst aspects of welfare reform, but we need to be clear that it is a damage limitation exercise, not a solution. As well as the extra £50 million for the bedroom tax, the Scottish Government have put in place arrangements to ensure that 500,000 people in Scotland still get council tax benefit, and have introduced the Scottish welfare fund, which so far has helped 35,000 people.

However, the Scottish Government do not at the moment have the powers or the budget to plug a £6 billion cut in public spending. People would think, listening to the earlier comments today, that the bedroom tax was dreamt up in Scotland and was being imposed by the Scottish Government. The truth is that the bedroom tax is the brainchild of a callous Tory-Liberal coalition Government whom people in Scotland simply did not elect. Responsibility for the bedroom tax rests right here in Westminster. The fact is that housing benefit is a reserved issue and this House has the power to scrap the bedroom tax.

[Katy Clark]

Will the hon. Lady give way?

[Dr Whiteford]

I will give way one last time.

[Katy Clark]

Does the hon. Lady not believe that the Scottish Parliament should be looking to raise the amount of money that it receives through taxation? Can she explain why her party will not support measures such as raising the higher rate of income tax to ensure that we have more money to spend on welfare?

[Dr Whiteford]

I am very much looking forward to the referendum in September, when people in Scotland will have a say on whether they want control of their own affairs and responsibility for setting income tax levels. I led an Opposition day debate on this issue back in February last year, when I called on the Government to end the policy, but we have had a number of opportunities in the House since then to voice our opposition, which includes opposition on the Government’s own Back Benches. The best chance we had to get rid of the bedroom tax was in November last year, when the Government came tantalisingly close to being defeated in the Commons in a vote following a Labour Opposition day debate. A defeat in the Commons would have forced the Government to rethink their approach, because it would have shown that even their own Back Benchers in the coalition—

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[Katy Clark (North Ayrshire and Arran) (Lab)]

It is a pleasure to have the opportunity to speak in this debate. I congratulate the Scottish Affairs Committee on the work that it has done on this issue and, in particular, some of the recommendations in the report, which I believe will be significant in moving the debate on the issue further forward.

It must be said very clearly that the responsibility for this policy and the impact that it has had on so many millions of people throughout the United Kingdom lies with the coalition Government. In Scotland, the policy has caused misery for many thousands, indeed hundreds of thousands—perhaps millions—of people. According to the UK Government’s own estimates in the Department for Work and Pensions impact assessment, 33% of people of working age who receive housing benefit are affected by the policy. In my constituency, as in most of Scotland, the policy has caused not only huge distress to individuals, but significant problems for those who provide social housing, whether they are local authorities or housing associations. Out of the almost 3,000 tenants affected by the bedroom tax in North Ayrshire, only 139 were able to downsize last year. Of course, that is because of the mismatch between the types of housing that social housing providers have and the Department’s determination of the size of housing that people need.

The proposals in the report are important because they recognise clearly where the problem is. It is quite easy to work out who is affected by the bedroom tax, because the social housing provider calculates who will be impacted by the discount, so I have to disagree with the spokesperson for the Scottish National party, the hon. Member for Banff and Buchan (Dr Whiteford), on this issue.

It is clear, however, that the funding has not been available from the Department for Work and Pensions to mitigate and deal with the problems that its policy has caused. Let me consider my own area, North Ayrshire. The Department provided £309,823 last year. The Scottish Government provided £460,000, and the local authority put in £4,676 to bring the discretionary housing payment funding up to the maximum that was required. Despite that, many of my constituents who have applied for a discretionary housing payment have not received one. On some occasions, they are refused the first time, but when they go back they may receive one. In other cases, they may be granted a discretionary housing payment on the first occasion, but when they go back to reapply, they are refused on that occasion. Quite often, they are refused because they are deemed to have coped adequately and budgeted well, so they have not been able to show the required level of hardship.

The report is absolutely correct to highlight the fact that many who have been impacted—many of whom are among the most needy—have not been helped under the regime that has existed until now. The impact is felt disproportionately by people with disabilities, their carers and those whose personal circumstances genuinely require them to have extra rooms in their properties for medical equipment, carers’ accommodation or other purposes.

The way in which the matter has been dealt with in Scotland is incredibly unfortunate. The majority of parliamentarians in Scotland did not support the policy, and it is very unfortunate that the issue has become so politically contested. However, action to ensure that those affected by the bedroom tax receive the mitigation that they were promised, after the Scottish Parliament voted in favour of providing full mitigation in February, has been far from consistent. Some of the reasons that the hon. Member for Banff and Buchan gave for that—I fully appreciate that she is merely putting forward a position that has been created by other people—were frankly inadequate. Mitigation can be provided in many ways other than through discretionary housing payments, and others have described how some organisations have written off arrears accrued as a result of the bedroom tax, or used other mechanisms to provide help to those who need it.

I want to say clearly that I agree with the approach outlined in the report. We must look at all who have been affected by the bedroom tax since its introduction in April 2013, and we must say clearly that we expect their representatives to take action to ensure that they are not worse off as a result. Members of Parliament have met many individuals who have suffered greatly as a result of the policy. The Scottish Labour party wants housing benefit to be fully devolved to the Scottish Parliament. I have absolutely no doubt that if it was, all parties would work together to ensure that this situation did not occur again. We need to take steps now to put in place the mitigation for which the Scottish Parliament voted in February this year. I therefore call on those in the Scottish Government and Westminster Ministers to do everything they can to ensure that that policy is implemented as soon as possible, so that everybody who has been affected by the bedroom tax in Scotland can get full mitigation.