Housing Benefit (Wales)

David T C Davies Excerpts

Thursday 1st May 2014 Westminster Hall

[David T. C. Davies (Monmouth) (Con)]

It is a pleasure to serve under your chairmanship, Sir Roger. We have worked together in another capacity in Europe, but it is good to be here with you this afternoon to discuss two important issues for the Select Committee on Welsh Affairs. The first is the impact of the changes to housing benefit within Wales. I welcome the Department for Work and Pensions Minister my hon. Friend the Member for Thornbury and Yate (Steve Webb), in whose constituency I once lived. I shall listen carefully to what he says at the end.

It will not come as news to hon. Members that I have strong views about this issue. During the last debate in which I spoke, one Opposition Member asked me whether I was speaking in a personal capacity or as the Chairman of the Select Committee. On that occasion, I was speaking in a personal capacity as the MP for Monmouth; on this occasion, I am speaking as the Chairman of the Select Committee, so I will stick closely to my notes, and try not to go off them.

[Chris Ruane (Vale of Clwyd) (Lab)]

It hurts.

[David T. C. Davies]

It does hurt. However, I think the Select Committee worked well. The issue was potentially controversial, yet we managed to get a certain amount of agreement, some of which the Government will have to answer. I welcome the fact that the Select Committee, politically divided as it is, can work so well together, and I am grateful to the Committee members here today.

One thing that I think we can all agree on is that the cost of housing benefit is unsustainable at the moment and that changes must be made, although we may differ about how those changes should be made, what their impact will be and how people affected can be helped.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Gentleman accept that 70% of the growth in housing benefit costs, which have doubled to about £20 billion in the past 10 years, is due to private sector rents and that the strategic response should be house building rather than clubbing the poor?

[David T. C. Davies]

I am trying to stick to the facts as I saw them on the Select Committee. To be fair, the first fact that the hon. Gentleman presented is correct. Personally, I agree with him that house building is one solution. In Wales, that is obviously a devolved responsibility for the Welsh Assembly. Hopefully, the hon. Gentleman and I agree that the Welsh Assembly could and should be doing a lot more to increase house building within Wales. The costs at the moment are about £25 billion a year. About 250,000 people in Wales receive housing benefit—about 8% of the population.

The Committee focused on two areas of Government policy. The first is the changes related to under-occupancy in the social rented sector, sometimes called the spare room subsidy and at other times referred to—incorrectly, in my view—as the bedroom tax. The other is the move towards direct payments, which also raised concerns across political parties. We took a lot of evidence from various witnesses, including the housing associations, representatives of landlords and the TaxPayers Alliance, which made an interesting contribution and which I hope is welcomed back to Select Committees in future.

The policy that we discussed came into force in April 2013, but it is probably worth mentioning that the same rules had been introduced for the private sector in 1989 and re-emphasised by changes made to housing allowances by the last Labour Government in 2008, so it was not as new as people might have thought. As all Members here will know, tenants had their housing benefit reduced by 14%, an average of about £12 a week in Wales, for having one extra bedroom, and by 25% for having two extra bedrooms.

At the time of the report, the Government estimated that 40,000 tenants in Wales lived in households with one or more excess rooms, representing 40% of those eligible to be affected. That was the highest proportion of any region in the United Kingdom, so we would like the Minister to provide us with any updated figures that he has on how many working-age tenants of social housing in Wales continue to live in properties with excess rooms and how many have been successful in downsizing.

[Chris Ruane]

rose—

[Huw Irranca-Davies (Ogmore) (Lab)]

rose—

[David T. C. Davies]

I give way first to the hon. Member for Vale of Clwyd (Chris Ruane).

[Chris Ruane]

The national figure, as I understand it, is that only 6% of people have moved out of their properties and downsized into smaller ones.

[David T. C. Davies]

Right. Did the hon. Member for Ogmore (Huw Irranca-Davies) want to intervene?

[Huw Irranca-Davies]

Lord Freud kindly appeared recently at a meeting of the all-party parliamentary group on housing. When he was asked by a number of south Wales visitors to the group about the singular impact on Wales of this measure, whatever we call it, his answer was interesting. He said that if there were evidence of what he termed in Latin an “in extensis” impact on a region, he would look at it again. I have heard nothing since. Does the hon. Gentleman agree that if there is a singular and extensive impact across Wales compared with other regions, the measure should be looked at again?

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[David T. C. Davies]

My Latin is not quite as good as my Welsh, but if the hon. Gentleman is suggesting that the impact will be greater in Wales than anywhere else, I accept that, because it already was. Yes, I absolutely think that the issue should be looked into. Also, if the figure cited by the hon. Member for Vale of Clwyd is correct and only 6% of those who wanted to downsize have been able to—no doubt we will hear it from the Minister—that is also clearly worrying.

[Chris Ruane]

Across the UK.

[David T. C. Davies]

I had better not get into a conversation across the room about it, but that figure would certainly be worrying. It could be even worse in Wales, anyway.

As I am about to mention, one concern of ours was that Wales’s rurality and the lack of available housing there will make the issue much harder to deal with there than in London. Although personally, I absolutely support what the Government are doing, as I shall say at the end, I recognise that a tailored approach may be needed to the different problems that may arise in different areas.

[Geraint Davies]

The numbers are that some 40,000 people are affected in Wales, against about 400 units that can take just one person. In other words, this is not a strategy to help occupancy levels; it is simply an attack on the poor, who have nowhere to go.

[David T. C. Davies]

I do not accept that it is an attack on the poor.

[Chris Ruane]

They would.

[David T. C. Davies]

I think a lot of people who would consider themselves poor pay taxes and would rather resent the fact that some of their taxes are supporting people with excess bedrooms. However, I suspect that I am getting a little far from my role as Chairman of the Select Committee in reporting the facts. The hon. Member for Swansea West (Geraint Davies) is correct to say that 40,000 people within Wales were affected by the measure. I do not know what the updated figure is; it might be somewhat different now. I hope so. It worries me to hear evidence that some people would have to move 50 miles to find suitable accommodation in order to downsize, and I hope that the Minister will address that.

Due to the shortage of smaller-sized social housing, it is possible that benefits will have to move into the private rented sector. The Committee heard evidence that higher rates in the private rented sector compared with the social rented sector might lead to increased public expenditure, thus defeating one of the key purposes of the policy. As somebody who believes that we must reduce the deficit as much as possible, I would obviously be concerned about any policy that increased spending levels.

[Guto Bebb (Aberconwy) (Con)]

Is it not also the case that we heard evidence as a Committee that the housing market is dynamic in nature? As some people move from social housing into the private sector housing market, others will move from the private sector housing market into social housing freed up by the change.

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[David T. C. Davies]

My hon. Friend has made the point that I was about to come to. That supposition was put to us, very well, by one of the Ministers who gave evidence. I hope that today the Minister will be able to confirm that that is what has been happening.

The hon. Member for Ogmore raised the issue of housing. The Welsh Government estimate that about 14,200 homes need to be built each year until 2026. However, between 2005 and 2012 the average was only 7,200 houses—nowhere near the level that we will need to resolve the housing problem. Although the issue is devolved, I hope the Minister will do everything he can to encourage the Welsh Assembly to make greater efforts to ensure that the housing shortage in Wales is resolved.

Another issue of concern for the Committee was how to define bedroom size. We heard about people who had what were basically large cupboards or boxrooms that could end up being classed as bedrooms even though they were not big enough for anyone to sleep in. We suggested that the Minister might want to issue discretionary guidance to local authorities on what would constitute a room large enough to be counted as a bedroom, and I would be grateful for an update on that.

I turn now to something that was, frankly, an area of concern for me personally as well as for some—although not all—members of the Committee: direct payment of housing benefit under universal credit. I understand the reasons behind the policy, which I think are honourable. The aim is to ensure that people who have been on benefits long term get a sense of money management and responsibility; that was explained to me well by the Secretary of State. However, laudable though that is, I am still not entirely convinced that it is going to work. I have a fear about the policy, and the Committee expressed concerns—I should talk about the Committee’s view—based on evidence from housing associations.

In reality, the policy affects a lot of people who already have issues with money management and do not usually have large amounts of money anyway. If large sums are paid into their bank accounts, at the end of the month the money might not be paid on to the housing provider. In turn, that could have a big impact on housing providers that are dependent on money coming in to build further houses and to improve those that they have.

[Albert Owen (Ynys Môn) (Lab)]

I congratulate the hon. Gentleman and the Welsh Affairs Committee on this detailed report on an important issue. He is making an important point, and I am sure that he and other hon. Members will join me in paying tribute to the advice agencies and local authorities in Wales that help and support individuals in the management of their funds. Direct payment does not in any way help the housing problem, which remains a big issue. As the hon. Gentleman comes to his conclusions, which may be different from those in the report, is he saying that we have to build housing to help people, or is he suggesting that we suspend the bedroom tax until such time as we have adequate housing?

[David T. C. Davies]

I am certainly not suggesting that we suspend the bedroom tax—or spare room subsidy, or under-occupancy charge, or whatever it happens to be called. I am suggesting that there are widespread concerns about direct payments. Pilot studies set up in Torfaen—the right hon. Member for Torfaen (Paul Murphy) is in his place—suggested that debt grew when direct payment was put in place. There is great concern that some housing associations will struggle as a result of the policy. The Committee concluded that the financially sound decision would be to ensure that any tenants who have any problems at all with money management are able to continue under the old system. It may be laudable to encourage people to be given the money themselves to pay it on, but that will be impractical for a lot of people.

[Mrs Madeleine Moon (Bridgend) (Lab)]

I suggest to the Chair of the Select Committee that the Minister should also look at what happened in the 1980s when the self-same policy was introduced under the Thatcher Government. I was a social worker in Bridgend at the time, and can tell him that it caused chaos. We were constantly writing to the benefits agency about people who had direct payment of benefits. The Government should go back and look at the disaster that was caused when they tried it before. Let us not make the same mistake again.

[David T. C. Davies]

I am sure it could not have been that much of a disaster.

[Mrs Moon]

It was.

[David T. C. Davies]

Well, the hon. Lady had 13 years, from 1997 onwards, to put things right.

[Mrs Moon]

It was repealed.

[David T. C. Davies]

In actual fact, in 2008, further changes were made to how housing benefit was paid that kept in place the spare room subsidy rules for the private rented sector, so the principle seems to be widely accepted.

[Mrs Moon]

I am talking about direct payment—

[Geraint Davies]

Will the hon. Gentleman give way?

[David T. C. Davies]

Yes, but one of the hon. Gentleman’s colleagues made the point earlier that everyone wanted to speak in the debate, and another dropped a hint about my concluding in a moment, which I was about to do. I will give way one last time, but then conclude, so that the hon. Gentleman and others can entertain us.

[Geraint Davies]

The point is consistently made, “Well, Labour did it in the private sector so why can’t we do it in the public sector?” The reality is that the market delivers a large number of flats for single people because there is a demand, but the public sector has been focused on units with two or three bedrooms for families with children. It is simply not appropriate to say that the measure should be force fed to the public sector. There is nowhere to move the people to.

[David T. C. Davies]

I am not sure that I would accept that argument, but I am grateful that, in signing the report, the hon. Gentleman accepted the fact that the current situation is completely unsustainable. We cannot afford to go on doing what we have been doing. That was agreed by all members of the Committee in the report. He may have alternatives in mind, which he will want to put forward in a minute.

I thank the hon. Gentleman and all members of the Committee for the way in which we dealt with a potentially controversial issue and for coming up with a unanimous report. I look forward to the Minister furnishing us with answers. I should put on the record that I am not trying to duck any responsibility: speaking in a personal capacity, I support Government policy on this issue absolutely. I take full responsibility for the policy. I always believe that there is room for improvement in anything that any Government do and the points I have made should be seen in that light. But, personally, as Member of Parliament for Monmouth, I support the Government and look forward to the Minister’s response.

[Several hon. Members]

rose—

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[Mr Clive Betts (in the Chair)]

Order. We are constrained for time. We need to get to the end of this debate by 3.30 pm and four Opposition Members want to speak: Paul Murphy, Madeleine Moon, Geraint Davies and Huw Irranca-Davies. The Front-Bench spokesmen need 10 minutes each, so there is 10 minutes for the four of you. That is not very much time, but if you can manage that between you it would help to let everybody in.

[David T. C. Davies]

On a point of order, Mr Betts. Other Members have told me that they would be quite relaxed if the second debate was cut short. I am clearly in the hands of Labour Members, but as Chair of the Select Committee I would be perfectly relaxed if the first debate ran on a bit and the second was cut a bit. I would not want to impose, but I believe that that is the general view of Committee members.

[Mr Clive Betts (in the Chair)]

That is helpful. If that is the general feeling of the Select Committee, I am more than happy to reflect that. If we take another 10 minutes off the other debate, that gives us five minutes for each of the four speakers.

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[David T. C. Davies]

May I say how impressed I was by that speech from the Liberal Democrat Minister? It was enough to make me turn quite yellow listening to it, which might come as a shock to him. He has answered many of my questions. There may be some more, and we may want to return to the issue at a subsequent date.

I am conscious of time, but I want to put it on the record that although I accept that some people will have lost out, I personally strongly support the policy. I think all of us, if we are realistic, are aware that we had to do something to reduce the deficit; I think hon. Members accept that, although they were not so keen to discuss how they would have dealt with the problem.

Any policy that we introduce will affect some people, perhaps a little unfairly. I was brought face to face with people confronting the changes resulting from the policy, some of whom I had a lot of sympathy with, although I had less sympathy with others. I always feel that it is important, where we can, to help those who may have been unfairly affected by any policy we introduce, including this one.