Housing Benefit

Clive Betts Excerpts

Tuesday 9th November 2010 Commons Chamber

[Mr Alexander]

I can assure the hon. Gentleman that I will be characteristically careful in my language. I hope that he will be characteristically careful in aligning his words with his actions. We will be watching carefully this evening to see whether this is another instance of the Liberals either being able to prove that they are willing to match their words with actions or, alas, not.

[Mr Clive Betts (Sheffield South East) (Lab)]

rose—

[Mr Andy Slaughter (Hammersmith) (Lab)]

rose—

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[Mr Betts]

That is precisely the issue that affects cities such as Sheffield as well. The Deputy Prime Minister has objected to the word “cleansing” and other Members have objected to the word “clearance”. In a disparate housing market such as Sheffield, the effect will be to disperse families from the affluent part, the Sheffield, Hallam constituency—the Deputy Prime Minister’s constituency—to the rest of the city. That will lead to a more segregated city, and it is that sort of effect that the Government should address.

[Mr Douglas Alexander]

I shall resist the temptation of suggesting that the one person who should be dispatched from Sheffield is the Deputy Prime Minister. I acknowledge the fact that in communities such as Sheffield, and in cities across the whole of Britain, there is deep anxiety and concern about the impact of these changes. That is why the Local Government Group agreed that the move to the 30th percentile is

“ likely to increase homelessness costs,”

since it will diminish

“the willingness of private rented sector landlords to let to housing benefit customers. This will have hugely variable and disproportionate effects on different parts of the country.”

The Government’s impact assessment of the 30th percentile change goes into great detail to demonstrate that at least 30% of the market is available in every area. However, is it not the case that the inevitable consequence of the LHA cap and the CPI cap is that, over time, the proportion of the available market will shrink below 30%?

Finally, let me come to one measure that has absolutely nothing to do with welfare reform and everything to do with a welfare cut. The Government propose that someone who is doing everything that we would ask of a person on benefits—applying for jobs, going to interviews, and even getting on the Secretary of State’s famous bus from Merthyr Tydfil—will still lose 10% of their housing benefit if they cannot find a job within a year.

Let me unpick the statistics in two communities. Wolverhampton has six claimants for every job. If they were to be sanctioned tomorrow on housing benefit, 1,116 families would lose 10% of their benefit. To take Norfolk, a very different community from Wolverhampton, the figures say that there are 5,000 jobs, mainly casual, and 15,600 claimants—and that under these rules, 1,254 families would be sanctioned tomorrow. How can such an approach be fair when there are five claimants chasing every vacancy in the British labour market?

On Sunday, the Secretary of State’s colleague, the Chief Secretary to the Treasury, stated:

“Sanctions in the welfare system only apply when people don’t take advantage of the help and support that is on offer.”

Such a statement is irreconcilable with the policy that the Treasury has now imposed on the Department for Work and Pensions. I have to say to the Secretary of State, for whom I feel great respect, that he is losing even old and dear friends as he tries to defend the measures that he has signed his Department up to. Indeed, when Bob Holman, the man who brought the right hon. Gentleman to Easterhouse in 2002, was asked why the Secretary of State had changed track, he said:

“It is hard to say. I think he has come very much under the influence of George Osborne, who is very much more aggressive, who is much more anti-working class and I think that Iain probably is looking at it—if I am to get my big reform through, the universal credit system, I’ve got to go along some way with the attitude of Osborne.”

Indeed, how does the right hon. Gentleman want the unemployed to answer the question originally asked by Norman Tebbit? The truth is that homes are cheaper where there are fewer jobs. Should the jobless from Middlesbrough move to London where there may be jobs but fewer homes, or should the homeless from London move to Middlesbrough where there are homes but fewer jobs? I hope that the Secretary of State will take the opportunity to answer that question in the course of his remarks.

The right hon. Gentleman once styled himself as “the quiet man”. I simply cannot believe why, given all the work he has done over recent years, he stayed silent in his conversations with the Chancellor when the latter told him that this was a progressive move to help people into work. It is the very opposite of a progressive move. The party that once said that unemployment was a price worth paying now wants to fine the unemployed if they cannot find a job. We were guaranteeing work for the long-term unemployed, but the Conservative party seems to be threatening them with homelessness.

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[Mr Duncan Smith]

My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say “have to move” because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.

[Mr Clive Betts (Sheffield South East) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

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[Emily Thornberry]

rose—

[Mr Betts]

rose—

[Mr Raynsford]

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[Mr Duncan Smith]

When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.

We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.

[Mr Betts]

rose—

[Mr Duncan Smith]

Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.

Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year—Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.

Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords’ charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.

I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure—I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.

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[Bob Russell (Colchester) (LD)]

The debate so far has made only fleeting reference to child poverty. The previous Government left 3.9 million children living below the official poverty line, so we need to think long and hard about whether this Government’s measures are going to make that figure worse.

According to Shelter, the average loss per family in my constituency will be about £9 a week. For a low-income family, that £9 now has to compete; if the rent is not paid, and a family lose their home, they are, in law, deemed to be intentionally homeless. Whatever faults there are in this country, one thing is for sure: the children of this country are not responsible. They must not be allowed to lose their homes. For that family in my constituency, having to find another £9 a week for rent means £9 a week less on food, clothing, shoes and utility bills. We know that fuel poverty has an adverse impact on low-income families. Others have mentioned pensioners and their points have been well made, but I am going to concentrate on the families.

The loss of £9 from such a family’s disposable income will mean that the local economy will lose out. That could affect what else is going on. Incidentally, I have come up with a novel saving for middle-England households. It is not compulsory to buy the Daily Mail or The Mail on Sunday, and not buying them will produce a saving of about £500 a year to a middle-England household. I recommend it.

The Local Government Association has kindly provided the following suggestion:

“a full and robust new burdens assessment should be made of the extra local authority costs that will be incurred as a result of these changes. This should not just include the expected homelessness costs, but also community safety, physical and mental health, social care, child protection and other services.

The wider impact of these costs should not be underestimated and will result in increased costs for councils.”

The LGA has suggested that local authorities should have more flexible powers, so that they can work with local landlords to negotiate rents downwards. That would fit in with the Secretary of State’s view that the object of the exercise is not to penalise families, but to force rents down. In a spirit of collaboration, coalition and fairness, I think that the Government should take equal measures—put a cap on the rent as well as on the housing benefit.

The problem is that we have had 30 years of successive Government failures to provide sufficient housing for rent. The last Government were as guilty as the previous Conservative Government, building fewer than 7,000 council houses in 13 years; even the dastardly Thatcher Government managed to build more than half a million. Indeed, the last Labour Government sold half a million council dwellings. I intervened earlier on the question of supply and demand because of the simple fact that for 30 years supply has not matched demand.

[Mr Betts]

I welcome the hon. Gentleman’s commitment to increasing the number of social houses built, but does he accept that under the comprehensive spending review the expenditure plans for new social homes have been cut in half? The only such homes that will be built on the current tenures and rents will be those to which the previous Government committed? All new homes built after that will cost 80% of market rents, and that building will be paid for by increasing the rents on re-let tenancies to that level as well, so this Government are committing to no new social housing at all.

[Bob Russell]

I was praying for an Opposition intervention because it gives me an opportunity to pick up and wave these pages containing the more than 50 questions on council housing that I have put in the last decade, including to former Prime Minister Blair, his successor and former Deputy Prime Minister Prescott, all of whom failed the Labour party. We should contrast what the last Labour Government did with what the real Labour Government of 1945 led by Clement Attlee did in the aftermath of the war.

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[Mr Clive Betts (Sheffield South East) (Lab)]

From what the hon. Member for Colchester (Bob Russell) has said, I take it that he will be voting with us in favour of this motion, because it seems that that is where his heart lies, if nothing else.

The issue as presented by the Government is that we have a problem with housing benefit. Two explanations have been given for that. One is that local housing allowance levels are pushing up rents, and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) dealt with that very well. The other is that housing rents and housing benefit levels are rising because there is a shortage of houses in this country. The hon. Member for Colchester said that that was the case, and I have a lot of sympathy with his point about the need for more social housing.

Let us look at Government policies on housing provision to deal with this fundamental problem. The hon. Gentleman mentioned social housing provision, but he ought to understand that this Government’s policy is to withdraw from social housing provision, and that is what they are doing. Under the comprehensive spending review, the budget for new social housing is being cut in half, and the half that is left will simply fund the houses to which the previous Government were committed, which is about half of the 150,000 target. Where will the other 75,000 come from? The answer is that there is an assumption that social housing landlords will raise the rents on new lettings to 80% of market rents and that that increase in rental income will then fund the building of these extra 75,000 so-called social houses. They will not be social houses, however; they will be houses at 80% of market rents—or at intermediate rents, if we prefer that term. Effectively, therefore, the Government are withdrawing from the provision of social housing.

I know some Liberal Democrat Members will not agree that that is what the Government are doing—indeed, the Lib Dem Communities and Local Government Minister, the hon. Member for Hazel Grove (Andrew Stunell), said exactly the opposite in a recent Westminster Hall debate—but that is the policy. If it is not what they intend to do, the Minister who is currently in the Chamber should stand up and say so.

As the Government claim that their key policy is to reduce housing benefit costs, they must also explain how the two bits of their agenda join up. If getting housing benefit costs down is the right thing to do, will there not be an increase in housing benefit costs from these new 80% market rents they are going to introduce, and how much will they increase by? I have asked that question, but no one can answer it. Do the Government not know or have they not done the figures? Is this another consequence of the impact assessment that they have not done? The Minister has done a lot of jumping up and down in the Chamber today, but he is surprisingly silent and sedentary at present.

That is another major question to which we need an answer. Why are the Government intent on pushing up rents in the social housing sector? What will be the housing benefit costs of that, and is the fact that there will be such costs not an inherent and fundamental contradiction in the Government’s policy?

[Mr Heald]

I do not think the hon. Gentleman understands the scope of the ambition of this Government. They want to get people back to work. They do not want there to be 3 million homes where nobody works and everybody is on housing benefit. They want to change that, and that is how the costs of welfare will come down.

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[Mr Betts]

I thank the hon. Gentleman for that helpful intervention. I am not sure how putting 1.6 million people in the dole queue is part of a grand strategy to get people back to work. At some point, somebody will add those bits of the grand strategy up and explain how they connect together.

On the lack of joined-up thinking, we have been taking evidence in the Select Committee on Communities and Local Government about the impact of the Government’s policy of abolishing the regional spatial strategies. Some people have told us that that is a good thing to do, others have been more critical of the inherent aim of Government policy, and some have said that eventually we will get policies in the localism Bill that explain the Government’s long-term strategy. However, almost every witness has said that in the meantime there is a complete vacuum in housing planning policy. The National Housing Federation has commissioned detailed research and it has been estimated that 160,000 planning permissions that would have been given under the previous planning regime have not now been given. That means that fewer houses will be built when eventually the housing market returns.

[Richard Graham (Gloucester) (Con)]

The hon. Gentleman mentioned joined-up thinking. Does he feel it is fair that so many families who are not working and who are not disabled receive more in benefits than families who are working and are on the average national salary or less? What would he say to my constituents about the joined-up thinking of the past 13 years that allowed that situation to continue unchanged for so long?

[Mr Betts]

As Labour Members have clearly said, those on the Government Benches are involved in a complete misthinking about the fact that not everyone on housing benefit is unemployed; many people on housing benefit are on low wages and they will be affected by these changes too. There is a real issue to address about disincentives to work and tapers in the housing benefit system. I would appreciate those tapers being flatter than they have been or are now, but we all have to recognise that if the steepness of housing benefit tapers, or of any other benefit tapers, is reduced, the cost is increased. That is a problem and I look forward to seeing how the Secretary of State will solve it when he introduces his universal credit.

I have alluded to the impact that these changes will have in Sheffield. It is not the cap that affects cities such as Sheffield; it is the 30th percentile change that affects us. That is the fundamental problem and it will cost the average family on housing benefit in Yorkshire and Humber about £7 a week. The total cost of the change for the average family in Sheffield will be more than £30 a month, and it will lead to dispersal. There are considerable differences in the rates that apply in different parts of Sheffield, and not only the unemployed, but those on low wages who are renting in the private sector will be dispersed from richer parts of the city, in the constituency of Sheffield, Hallam, to other parts of the city. I did not use the word “cleanse” or “clear”, because “disperse” is an accurate and proper word to use when describing what will happen. The city will become more segregated and more divided. The situation will get worse, because local housing allowances are linked to the consumer prices index but rents rise at a higher rate. Therefore, over time, people will be dispersed from progressively more parts of the city. That is what the impact will be on cities such as Sheffield—that is the reality.

At the same time, housing departments, such as Sheffield city council’s, will face pressure because unemployment will create more housing problems and more homelessness. The budgets of these departments will have been cut, yet they will have to deal with advising or re-housing people in desperate circumstances. What we have not had a clear answer to is whether people who have to move home because they cannot pay their rent as housing benefit no longer covers it will be considered intentionally homeless. That is a fundamental point, so can we have an answer on it please? Can we also have an answer on whether the Government really are going to change the homeless legislation as Lord Freud indicated in order to see their way out of this problem without local authorities having to have the responsibility of housing people? Those are fundamental issues.

Why is it necessary to punish the couple in their 50s who lose their jobs, whose family have left home and who are living in a three-bedroom council house? Why is their home at risk because they have lost their jobs and housing benefit will not cover their rent as they are deemed to be under-occupying? This is simply not fair. It is a vicious and nasty policy that is aimed at hard-working people who happen to be unemployed and who then need to be re-housed too. These benefit reductions are not part of any grand policy on welfare reform and they are certainly not part of any clear housing strategy. They are part of an unfair agenda driven by the Chancellor, who has simply cut the incomes of some of the poorest people in our communities.