Welfare Reform Bill

Baroness Meacher Excerpts

Wednesday 14th December 2011 Lords Chamber

[Baroness Hollis of Heigham]

I have a series of amendments on housing. This amendment calls for periodic reviews of the interconnection between CPI and rent levels. This is an issue that has concerned the whole House at different stages, including on the CSR Statement as well as in Committee.

We know now that the proposed deficit reduction programme, according to the Chief Secretary, will extend for a further two years at least beyond the general election. This amendment now takes on the added urgency that perhaps did not exist at the time when we discussed it in Committee. Local housing allowance, which I will call housing benefit, in the private rented sector is based on the 50th percentile of private rents, which should mean that half of all private rents are affordable on HB and half are not. It is a median. The HB, in other words, covers the average rent. We also know that the Government are reducing that 50th percentile to the 30th percentile, which means that 70 per cent of properties would be unaffordable but 30 per cent should still be so. We have argued that and resisted it, but the Government have insisted on their proposals. That is bad enough and will make it much harder to find a private rented home. But, in addition, HB to cover your rents up to the 30th percentile will rise only by CPI, not by the actual increase in private sector rents. Yet according to Savills rents are rising at the moment by more than 7 per cent a year, and CPI is only half of that—not this year but we expect it to be. Rents are rising on average at double the rate of CPI, mainly because of additional demand for private flats from young people for whom originally the flat would have been a transit tenure but who now stay there while they seek to save their deposit for a home of their own.

The Minister used to argue that capping HB would drive down rents. That is not happening, nor will it, because no longer do landlords have to let to HB tenants. Just as there are eight people after every job, there are eight tenants after most lets. HB tenants will get only what no one else will take: the substandard, the squalid and the downright unsafe. Any complaints and you are evicted after six months. Tenants will be forced into poorer and poorer accommodation. Worse, as I say, rents are rising at double the rate of CPI, so whereas now your HB may theoretically cover 30 per cent of available rents, in three years’ time it may cover only 20 per cent, and in five years only 15 per cent. In more expensive towns such as Winchester, it is estimated that there will be nothing available to rent for anyone on HB within the next few years.

This amendment is very simple. It requires that the Government's original policy intent—that HB in the private sector will allow the tenant the choice of the bottom 30 per cent of properties—continues to be respected and that the widening gap between the CPI uplift in HB and the actual rise in private rents does not invalidate the Government's intentions. In other words, this amendment simply asks the Government to ensure that they do what they say they want to do—no more, no less—and that we keep clear the policy intent, and that it is delivered.

In the past, the Minister has decorously brushed this aside by saying that it is outside the CSR period, but given the Chief Secretary's remarks, it is not any more. He also helpfully said in Committee on 20 October that,

“if local housing allowance rates are clearly out of step with rents, they can be reconsidered”.—[Official Report, 20/10/11; col. GC 146.].

It would be very helpful to know how this would be done, given the vagueness of the draft regulations. The Government should confirm whether reviewing the operating method will occur periodically or, if not, what will trigger it. This amendment seeks to get greater clarity in the regulations in order to protect the Government’s own policy intent: that 30 per cent or so of private lettings should be affordable and available to those on local housing allowance. I beg to move.

[Baroness Meacher]

My Lords, I support Amendment 17, to which I added my name. As always, the noble Baroness, Lady Hollis, has comprehensively covered the issues and I will therefore take only a few moments of your Lordships’ time to express my personal concerns about the issue.

The Government have a policy to reduce over time the percentage of GDP paid out in benefits to those on low incomes and those out of work. Perhaps the main mechanisms by which this will be achieved, though by no means the only ones, are the range of housing allowance controls to which the noble Baroness referred and the linking of housing allowance to the CPI, rather than to the rate of increase of rents themselves. The problem I have with the CPI link in particular, along with all the other controls, is that it is beyond the control of government how this plays out; hence the importance of these monitoring mechanisms that the noble Baroness has spelt out.

For example, if the euro collapses—it seems ever more likely that it may—and we have several years of recession or, indeed, deep depression with falling prices, do the Government have any idea how rents will respond in that situation? Because of the pressures of a growing population with more and more single-person households, as well as the limited stock of properties, particularly in London and the south-east, it is possible that rents may remain static, or even rise in the south-east, while other prices are falling. The Government assume that the downward pressure on housing allowances will ensure that in fact rents fall as well, but I am not at all confident about that. There is a huge private rented sector out there and as fewer young people can afford to buy, more and more of them will indeed move into that rented sector.

A very different scenario will be that once the years of fiscal tightening are over inflation could return with a vengeance, leaving a soaring gap between the RPI and the CPI—the prices claimants will have to pay in the shops on the one hand, and the CPI which will determine their housing allowance levels on the other. Of course, all these uncertainties will be there alongside a benefits cap, which may or may not be inflation-proof, and the need for many vulnerable people to adjust to a move from higher ESA to lower-level JSA. The Minister knows that I fear many vulnerable people will be included within that group, going down the slope towards the cheaper JSA. There is also the loss of disability benefits for children, the loss of tax credits and so forth, and the move to monthly payments if we cannot persuade the Minister that this will be the last thing that people are going to cope with. For all these reasons, I agree with the noble Baroness, Lady Hollis, that the House needs some assurance that there will be systematic and regular monitoring of the consequences of linking rents to CPI and on how the situation will be assessed and in what circumstances a change of policy would be regarded as appropriate.

I would also be grateful if the Minister could inform the House on a particular aspect of this issue. Shelter and the Chartered Institute of Housing estimate that the link between local housing allowances and the CPI will, by 2030, result in 60 per cent of local authority areas being unaffordable for LHA claimants. Undoubtedly, these will be the areas with jobs. Can the Minister say whether the Government accept this estimate and, if not, what the Government’s estimate is? Whether or not he accepts the estimate, has the DWP undertaken an impact assessment of the housing allowances/CPI link on employment in this country? What particular impact on employment will this have?

If households have no option but to move to areas with very few employment opportunities, how much higher will unemployment be year on year than would otherwise be the case and what will be the costs of that higher unemployment for the taxpayer? These sorts of issues need to be incorporated within the ongoing monitoring and assessments of the impact of these policies, year by year. Within the Minister's response to this amendment, I would be most grateful if he could include some reference to the employment impact.

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If I can show the Minister, as I am happy to, that the amendment would be at least cost-neutral and would probably give additional savings—I have worked the permutations on different possibilities—will he please take it away and think about it again? I am happy to share my financial figures with him now, later or in my wind-up. If I can show him that he will not make any losses on the amendment but it will either be cost-neutral or even make some surplus, will he offer to take it away and think about it?

[Baroness Meacher]

My Lords, I support Amendment 19. I have particular concerns. I fully endorse the point made by the noble Baroness, Lady Hollis, that when people lose their job it is unacceptable for them immediately to face not only the shock of being unemployed and the dramatic fall in their incomes but the prospect of having to move their home. Psychologists always say that it is important to avoid changing more than one of our three mainstays of security in any one year: employment, our main relationship and our home. The risks of mental health problems rise significantly if we do so, as the noble Baroness illustrated very well.

There is therefore a strong case for allowing newly unemployed people time to adjust before they have to think of moving home. Of course the hope would be that they would find work within that year and never have to move at all. I want to raise again a particular problem that to some degree would be assisted by the amendment. I raised this issue in my most helpful meeting with the Minister but have reason to believe that his assurances would not work as he thinks they would. The issue is that of people with severe mental health problems who may be absolutely unable to move into shared accommodation, either because they themselves could not handle having someone else around or because the situation would be untenable if not downright dangerous for anyone else trying to live with them. The Minister assured me that discretionary housing payments should deal with this problem. Perhaps in theory this might be the case, but apparently in practice it does not in fact work. Does the Minister regard it as right for sick people to be penalised when for therapeutic reasons they cannot move into a living space with someone else?

I have a couple of examples to illustrate the point. A woman in her early 30s, living alone in private rented accommodation, receives ESA because of her mental health condition. She already has rent arrears as her housing benefit does not cover her rent. She applied for a discretionary housing payment but this has been refused. She has now been told that her housing benefit will be cut further, of course, in January 2012, when she is only entitled to the shared accommodation rate. She finds it difficult to cope with other people, and could not cope with a shared flat, even if she could find one. The adviser who is dealing with her fears that she could become homeless.

The other example is of a woman in her early thirties with HIV and related health difficulties, including depression. She is regarded as being unlikely to receive a discretionary housing payment until she is 35. I do not know why, but that is what I am told. She comes from a traumatic background, needs regular access to her many medications, and to the bathroom. She is not regarded as someone who could cope with shared accommodation: again, a likely homeless person.

If these claimants finish up on the streets, they will no doubt end up on one of our hospital wards at a cost of £261 per day, £95,000 per year to the taxpayer. I realise that this is a cost to the Department of Health, and not to the DWP, but I know the Minister is broad-minded on such matters and will not want to cause a massive increase in Department of Health costs. I am serious about it. There might be a saving to the DWP, but a much bigger cost in the Department of Health. However, the noble Baroness, Lady Hollis, does not accept at all that there would even be a cost saving in the DWP. There would therefore be a double whammy. We already see people moving automatically from benefits, to losing benefits, then on to the streets, and then into hospital. That is the way the system works, and this measure will simply make matters worse.

Apart from the inappropriateness of shared accommodation for some, though not at all every mentally ill person, there is also the practicality of finding such accommodation for this particular group. Someone with a mental health problem is going to be the last person many people want to share with. We know that the stigma involved is considerable. People are frightened, and they assume that people are dangerous when in fact they are not at all. But also, in reality, some people have difficult personal assumptions which would make them quite difficult to live with.

The result is that these people will not find shared accommodation readily, even if they could cope with it, and many absolutely could not. I know many people on our wards whom we could not discharge into shared accommodation. They would simply sit around on the wards, and it would be a problem.

I have focused on a particular claimant group, but an important one, in view of the numbers of these people. I hope the Minister will be sympathetic to the amendment, for all the reasons the noble Baroness, Lady Hollis, pointed out, but also because it would ameliorate the problem of this particular group of people with mental health problems who, with any luck, might over a year settle down rather further and then might be able to be accommodated within the system.

[Baroness Lister of Burtersett]

My Lords, I support the amendment tabled by my noble friend Lady Hollis of Heigham. She has painted a vivid and powerful picture of what this means for the people affected. I have sat through and participated in a couple of debates already about this, partly on the regulations, in Grand Committee. The more I have listened and read the evidence, the more uncomfortable I feel about us allowing this measure to go ahead.

When I was younger, I flat-shared. I answered the ads in Time Out, and it is a very different thing. I am sure that many noble Lords may have been in that position, and think there is nothing wrong in sharing accommodation. But doing it from choice is very different from being pushed into it. As my noble friend has spelt out, we are talking about less salubrious accommodation.

I am concerned about various groups who are particularly vulnerable here, as we have already heard. When the Social Security Advisory Committee considered this, it talked in particular about the way women will be affected. Women are not disproportionately affected as a group, but those who will be affected could be particularly adversely so.

There are two groups in particular. Pregnant single women, the advisory committee said, will be restricted to the shared accommodation rate until they give birth. They face one of three undesirable situations. They can move home twice, at a time when they may be financially, emotionally and physically ill-equipped to do so, into shared accommodation, and then back to self-contained accommodation when the baby is born; they can decide to move into shared accommodation and remain there after the birth of their child; or they can try to make up the shortfall in their rent.

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[Lord Freud]

My Lords, my intention is to reassure the noble Lord, Lord Best, so that he withdraws his amendment. I start by trying to convince the noble Baroness, Lady Howe, and my noble friend Lord Cormack of the reason why we are doing this. It is not an arbitrary thing. We are not doing it because we want to annoy housing associations or local authorities. We are doing it for a very simple reason. If you are a tenant in social housing whose housing benefit goes straight through to the landlord and you take a job, all your arrangements for paying for your housing have to change. It is a major change in your arrangements and a real block on you taking the job. It is a major thing for you to organise, and you have to learn, when you take that first job and your housing benefit goes down within universal credit—because that is the change—that the money no longer goes through automatically to the landlord.

We have to break that link. It has to be the same arrangement whether you are working or not working. We deliberately excluded pension-age people from this because we are not expecting them to work. We do not need to worry about the people who find it difficult to work. It is working-age people who we want to go into work.

[Baroness Meacher]

I listen to the Minister’s passion—“We have to do this, we have to do this”—and I find myself thinking that that would be fine if we were in normal circumstances and the benefits were not changing but were pretty much going on as they always have, and people were not going to be facing major drops in their benefit levels or having to adjust to having to move because of all sorts of rules about underoccupancy or because of the tying of benefits to the consumer prices index and so on. There are so many ways in which people on benefits are going to be losing—that is the context—and this is not the time to be determined to bring all these people into line with people in work. Can we not wait until things are stable and then maybe introduce the rather nice idea of bringing these two groups together?

[Lord Freud]

The answer to that is very simple: the universal credit will, each year, inject an extra £4 billion into the pockets of the poorest people. That is what the universal credit does. It will start coming in in 2013-17, when hopefully the laws of the business cycle will still be working and we can expect an upturn at some stage. As we move into that situation, the concern will be what happens to the universal credit. This measure is for universal credit. It does not stand outside it.

[Baroness Meacher]

I apologise for interrupting again, but £4 billion is surely a tiny amount relative to the losses in projected benefits. This huge budget would normally go up very extensively each year, would it not? I do not have all the numbers in my head, but £4 billion in a tiny fraction of the actual real losses in benefit that people are going to face.

[Lord Freud]

Absolutely not; £4 billion is a very substantial figure. Over the course of this SR, we are looking at a loss of £18 billion spread over the four-year period. The noble Baroness can do the sums. The most important thing about universal credit is that the money goes into the pockets of the lowest two quintiles very efficiently. I contend that the noble Baroness’s argument is not a real argument.