Housing: Affordability and the Underoccupancy Charge

Baroness Hollis of Heigham Excerpts

Thursday 31st October 2013 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

My Lords, I thank my noble friend Lady Quin for introducing this vital debate. Like her, I will speak about the bedroom tax. I do not blame the Minister, whom we welcome to her brief; the DCLG has sensible underoccupancy standards. I blame Sir George Young. In the 1990s, as Housing Minister, he said that we should subsidise people, not property. Housing benefit, he assured us, would take the strain: too true. Housing benefit soared, social housing collapsed and the bedroom tax is the result.

The Government claim that the housing benefit bill is high because tenants occupy over-large property that should instead go to families who are overcrowded or on the waiting list, thus saving £490 million a year. That is not true—none of it. Let us unpick it. Families are overcrowded because other tenants do not trade down? False. As my noble friend said, outside London that is not a problem. The DCLG’s own statistics show that there are far fewer overcrowded families than underoccupying families by a ratio of about 1:6. The Government do not need to do this. Helping pensioners who want to downsize, but now will not be able to, would sort it.

The next claim is that the bedroom tax will help waiting lists—false. Some 80% of those on waiting lists are single people or young couples without children also requiring one-bedroomed flats. However, they will now, as the Scottish report showed, wait twice as long because underoccupiers will take priority for that accommodation. This applies similarly to the homeless—mostly single vulnerable people—and, as the noble Baroness, Lady Seccombe, rightly mentioned, pensioners. They, too, need and want the smaller properties that will be made artificially scarce because of the bedroom tax, and it will be harder to help them.

We simply do not have single-bedroomed properties, as two-bedroomed homes are far more flexible. Earlier this summer, Wolverhampton had 118 one-bedroomed properties to let but 2,500 tenants underoccupying and nearly 7,000 households on the waiting list for a one-bedroomed property. A similar situation applies in Leicester. Reports from Scotland and Wales show that it will take years for underoccupiers to trade down within the social sector. Three-bedroomed homes are now standing empty, taking 50% longer to let, and some in the north may be boarded up, while families with children or disabled families who want to live in them are forced into scarce smaller property that other people—pensioners, those on the waiting list and the homeless—want and now will not get.

“Well”, says Esther McVey brightly, “Convert three-bedroomed houses into two flats”. Double up kitchens and bathrooms, build external staircases, increase sound insulation, and provide car parking and external storage, and the cost of £70,000 or more, excluding land, outside London actually builds a new home. Further, you cannot adapt mid-terrace houses, you cannot adapt post-1960s houses as their rooms end up too small by DCLG standards, and many built before 1960s have been sold. As a policy it is, frankly, absurd.

Two-thirds of those affected, as my noble friend said, are disabled families. There are people with epilepsy, Huntington’s, Parkinson’s, severe asthma, who as couples need separate bedrooms. Their letters would break your heart. Now their carer partners will be denied an adequate night’s sleep, which will break their health as well. They have committed no offence. They have lived difficult lives, yet we are now punishing some of the poorest and most afflicted families in the land for the sin of occupying a house that their social landlord, years earlier in good faith, allocated to them.

“Oh!”, says the DWP, brightly, “Discretionary housing payments will help them”. False again. The impact analysis shows that only 40,000 of the 660,000 affected by the bedroom tax may end up on DHPs. The extra money found by the department might extend to just 60,000 or 10%. The Government insist that tenants downsize to make way for people who do not want the larger homes they have left. However, at the same time the Government hypocritically expect to make their savings precisely because 90% of underoccupying tenants do not do what the Government state—move—but do what the Government actually want: stay put and take the hit if they can, to make the savings. Make the savings, and you do not deliver the policy; deliver the policy and you do not make the savings.

The recent ALMO survey finds a 24% increase in empty property and that 65% of underoccupying tenants are in arrears, which have doubled. Many have been sent eviction notices and just 8% qualify for DHPs—so now what? I declare an interest as chair of a housing association. If we as social landlords do not evict, arrears soar, and the social landlord goes into the red and into special measures. If we do evict, where do tenants go—into our smaller accommodation? We do not have it. Perhaps into the private rented sector, where the rent of one-bedroomed flats is higher than that of the two-bedroomed flats they have left. That is if a landlord will take them, if they have the money for deposits, and the money for moving costs. With children, they may go into B&B at huge cost and distress, or if single, sofa-surf until they end up on the streets. Some tenants may return as vulnerable into hard-to-let, unwanted—guess what—three-bedroomed properties, perhaps even as squatters because that is the only property available, and the sorry cycle starts all over again.

None the less, the Government insist that the bedroom tax will produce savings of £490 million to outweigh all this misery: false again. Let us do the sums. The Government modelling for savings assume that 90% will stay and take the hit and that just 10% will move. The ALMO survey shows instead that only 60%, not 90% want to stay and pay. Let us assume that 70% stay—between the two figures, I think that that is realistic—and that 30% go, most going into higher-cost private renting. Add in the cost of voids, arrears, B&B and DHPs, and the public purse—I have done the stats—far from making savings, makes a significant loss.

Tenants, far now from enjoying a settled home, will face a “snakes and ladders” of moving up, down and across, from one-bedroomed to two-bedroomed, perhaps to three-bedroomed, properties, all in different places, and then down the snake again according to the age and gender of their children, each move bringing huge moving costs, stress and dislocation, especially to disabled families, their children and the local communities that support them. All this misery, all this cruelty, all this distress to meet housing pressures that will now worsen and to make savings that now will not happen—and we call this a housing policy. It is strong language, but I call it contemptible.

--- Later in debate ---

[Baroness Stowell of Beeston]

I will come on in a moment to transitional arrangements and what is in place to support people affected by the removal of the spare room subsidy.

As my noble friend Lady Seccombe reminded us, pensioners are not affected by this measure, and I am happy to reassure the noble Baroness, Lady Dean, that there is no question of that position changing. The focus is on working-age people who are better able to improve their financial position and make up any shortfalls, and there are a number of other exemptions in addition to pensioners.

[Baroness Hollis of Heigham]

The noble Baroness implied that working-age people are able to work but she will know that two-thirds of those affected are disabled families for whom the option of increasing their income is minimal.

[Baroness Stowell of Beeston]

If I may, I will move on in a moment to how we are helping those who require special support.

Removal of the spare room subsidy is also in part helping us get to grips with the housing benefit bill, which has grown to £24 billion this year and nearly doubled under the previous Government. I promise that I will come back to the remarks of the noble Baronesses, Lady Hollis and Lady Quin, on savings estimates. While it gives me no pleasure to say this, given the spiralling housing benefit bill it cannot be right, as my noble friend Lord Howard of Rising said, that the taxpayer should continue to pay for homes that are too large for the household’s needs. Before we made the change, up to 1 million spare bedrooms in working-age households in England were being paid for by housing benefit.

As I have acknowledged, we are in a transitional period, with both landlords and tenants facing change. The Government are investing heavily in new affordable homes and we have to get that supply coming through. Over time we think that there will be more efficient use of social homes, with the spread of accommodation being more appropriate for the area as a result of the measures we are introducing. However, getting there will take time, which is why we have made available £405 million of discretionary housing payments over this spending review period. The noble Baroness, Lady Blackstone, said that that is not enough, but we have trebled the DHP budget to £190 million this year. I think that it was my noble friend Lord True who talked about how his council is drawing on that fund and how other areas are adjusting to the new situation.

It is early days but I can report in general terms that councils are using the fund to give awards where it is clear that the claimant is unable to make up the shortfall. This includes longer-term awards, including, as the noble Baroness mentioned, to disabled claimants living in significantly adapted homes, and short-term support—for example, to help people who have been off work due to illness but are due to return soon, and people engaging with their landlord in attempting to downsize.

However, many people are of course already managing the change. Among those who are out of work, some are finding work for the first time, some people already in work are able to increase their hours and others are able to move to smaller accommodation. In the two and a half years between the policy being announced and it being implemented, local authorities, landlords and tenants in some areas started to prepare for this change. Because time is limited I shall not go into the detail but Westminster, for example, has used a scheme to ensure that support is available for those who want to downsize. Likewise, the council in Salford is running schemes to help to bring together tenants who may be interested in swapping their homes. My noble friend Lady Seccombe referred to HomeSwap Direct. Through this scheme, for the first time, social tenants who want to swap their homes can now see every available property, thus boosting their chances of moving. More than 10 million searches have been made on that website since it was launched a couple of years ago.

My noble friend Lady Seccombe mentioned some other schemes which support pensioners who, although they are not required to move, might want to downsize. My noble friend Lord Stoneham made an important point when he highlighted the effort made by some responsible local authorities and housing associations to advise tenants on financial management to avoid getting into arrears.

We are taking proper steps to make sure that we understand how the removal of the spare room subsidy is working. We have commissioned extensive research, which will provide evidence of how this and other welfare reforms are working in practice. I can reassure my noble friend Lord Shipley that the interim evidence on the removal of the spare room subsidy is due to be published next spring. In the mean time—I mean this absolutely sincerely—I acknowledge that it is inevitable that we will hear stories, which, albeit anecdotal, will be concerning and upsetting, about whether this is a policy that we support in principle or oppose. However, we believe that it is too early to draw conclusive evidence from the emerging data on how the policy is operating at the moment. We want to make sure that sufficient time is allowed to pass so that we can reach a fully informed view on the impacts on both landlords and claimants. As I have said already, I make it clear that we are committed to giving proper consideration to all that evidence. We will publish it, and be held to account for it, next year.

In conclusion, as I said at the start, this Government are committed to building more new affordable housing and we have made a strong start in putting right the previous decline. We are committed to making the best use of the existing stock of housing and have changed the law so that local authorities and housing associations have more freedom. We are also committed to supporting people who are not yet able to buy or rent on the open market but who, in time and with the kind of support that we are offering across the board, could realise their aspiration to do so.

As always, I have learnt a great deal today. The noble Lord is about to stand up and ask me a question, so before I sit down I shall give way.