Under-occupancy Penalty

Debbie Abrahams Excerpts

Tuesday 23rd February 2016 Westminster Hall

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

It is a pleasure to serve under your chairmanship today, Ms Dorries. I congratulate my hon. Friend the Member for Cardiff Central (Jo Stevens) and everyone who has participated in today’s debate. The speeches have been exceptional. As has already been mentioned, the lack of participation from the Government side is notable, and is hopefully a sign of embarrassment at a policy that is clearly not working.

The Government’s policy of reducing the amount of housing benefit payment to current social housing tenants who are deemed to have superfluous bedrooms—the bedroom tax as the Opposition call it—is deeply unfair, discriminatory and divisive. The fact that the policy was introduced for existing tenants who took out their tenancies based on the knowledge of how much they could afford, only to be told that their income was to be reduced, is unjust and unfair. Added to that, the Government’s inept handling of the housing market, with the lowest level of house building since the 1920s, means that there are not properties for people to move into. That just adds insult to the injury that people feel.

The latest figures for 2015 show that approximately 443,000 people are affected, with an average weekly income reduction of £15.27; that is more than £61 a month or £800 a year—up about 10% from what the Government originally estimated. As many people today have said, those figures are significant for families on low incomes. The bedroom tax is discriminatory because the Government failed to listen to claims that it would affect many older people, disabled people and their carers. As we have heard, two thirds of those affected are disabled, and more than 60,000 carers are also affected. It is also divisive, as it splits families and hits regions that have historically high levels of social housing. The effect in Wales is significant, as we have heard, but in England the National Federation of ALMOs found a distinct north-south divide in relation to the percentage of tenants affected. One year after the bedroom tax was introduced, 13% of tenants in the north were affected, compared with 7% in the south. I wonder if that is really what we call the northern powerhouse.

The Work and Pensions Committee investigated what was happening with housing benefit and raised concerns about the reduction in the number of households affected. At the time there were few data on what was happening. As the Select Committee said in its report, the reduction

“could be related to changes in household structure, moving house, entering work, or increasing hours”

and

“a result of claimants ceasing to claim because their entitlement was reduced to zero, or to such a low level…or because they were already in the process of moving.”

I must note the fact that that report was produced in 2014 and the Government have still not responded to it.

Professor Steve Wilcox indicated in his analysis that tenant moves prior to the introduction of the policy may have accounted for some of the reduction in the number of claims—in addition to the reclassification of bedrooms by landlords—but urged caution in interpreting the decline in relation to social sector tenants. However, the Government’s own evaluation which, as has been mentioned, was slipped out on the last day before the Christmas recess, gives an insight of the impact on people of the bedroom tax. It revealed that the majority of people originally affected by the bedroom tax were still affected nine months later. Of those still affected, only 5% had found work. Claimants were using savings, borrowing from family or friends or accruing debt to pay rent. The implication of accruing such debt is a downward spiral. It is impossible to overestimate the effect of having debt hanging round family’s necks. Three out of four families are having to cut back on essentials such as heating and food.

We have heard poignant constituency case studies in the debate, and I want to mention an example from a Barnardo’s project. A dad asked the staff for some nappies, and when the project worker attended the house to see how things were going she discovered that there were only biscuits and crisps in the cupboard and that the parents were missing meals to feed the children. They had not asked for help because they were too proud. That family’s example is a window into the reality of life for many people. We could see that situation replicated across the country.

The Government’s evaluation also reported that 55% of tenants were in arrears, contrasting with the National Housing Federation’s figure of 59%. The important thing is that the arrears of two thirds of them were attributed directly to the bedroom tax. It has been mentioned that for some people, in some local authority areas, discretionary housing payments have helped where there has been a shortfall between rent and housing benefit, but the clue is in the name—it is a discretionary payment, not an entitlement. It is certainly seen as something for the short term, within a wider context where local authorities face significant cuts. Seventy-five per cent. have not had support in the form of discretionary housing payments. Their availability is a postcode lottery.

The recent Court of Appeal judgment agreed that the bedroom tax was indeed discriminatory against a domestic violence victim and the family of a disabled teenager. It was ruled that, in the two cases, the Government’s policy amounted to unlawful discrimination. Although other Members have referred to them, I too want to mention Susan and Paul Rutherford, who argued that they needed a specially adapted spare room in their Pembrokeshire home to care for their disabled grandson Warren. Ms A, who is a single mother living in a three-bedroom council house fitted with a secure panic room to protect her from her violent ex-partner, also argued that that room was needed. We await the outcome of the Government’s appeal to the Supreme Court at the end of this month.

The discriminatory, unfair and divisive nature of the bedroom tax is why Labour has consistently called for it to be abolished. I hope the Minister will recognise that and comment on why the Government continue to pursue this policy, which, as we have heard, is not delivering what it is meant to. It is not making the savings that were anticipated and it is certainly not freeing up family accommodation.

The Government have tried to regenerate the economy on the backs of the poor and disabled. Their modus operandi is about division and blame. Instead of denigrating claimants and our social security system, we should be recognising the importance and value of that system. Like the NHS, our social security system is based on principles of inclusion, support and security for all, assuring us of our dignity and the basics of life, should any one of us become ill, disabled or fall on hard times. The Government need to remember that and stop their attacks on the poor and vulnerable.

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I wish to pay tribute to the hon. Member for Cardiff Central (Jo Stevens), who made a passionate, informed and determined speech that was well received by her colleagues supporting her today. Some measured and well thought-out speeches have been made, and cases have been strongly put forward on behalf of each Member’s constituents. I have worked closely with the hon. Member for Swansea East (Carolyn Harris) on a number of measures, and we have been able to find a lot of common ground and ways to move forward in a number of Westminster Hall debates, but I am afraid I am a little way from her arguments on this issue. I will try my best to answer as many of the points made as I can.

Let us first look at the history of this. One of the main thrusts of the opposition to this policy is that it is ideological and was dreamed up by the finest brains of the Conservative-Lib Dem coalition. To be clear, it was the previous Labour Government who introduced this policy in the private sector. When challenged in the House in January 2004 on whether the policy would be introduced more widely than the private sector, the Minister then responsible said:

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

[Debbie Abrahams]

Does the Minister recognise the point I tried to make in my opening remarks about this being a retrospective tax? It applies to tenants already in existence. There was a very different application for private sector tenants. The policy applies to current, existing tenants who had already budgeted for what they could afford.

[Justin Tomlinson]

I will cover in detail some of those points, but I can tell the hon. Lady that a significant difference was that no additional discretionary housing payment was provided when the policy was implemented in the private sector. It was very much a case of, “Cross your fingers and hope for the best. You will not be getting any support.”

The legal case mentioned is ongoing, so I cannot dwell on it too much. The Court of Appeal previously said that discretionary housing payments were appropriate support. Crucially, it was not about the wider policy; it was about just these very specific categories. In that particular case, those people were in receipt of discretionary housing payments, but that is an ongoing legal dispute.

--- Later in debate ---

[Justin Tomlinson]

That was exactly the same thought process and debate that went on when the Labour Government introduced the policy in the private sector. They faced exactly the same challenges, and it was intended, had there been a general election win for Labour in 2010, for this to be done under that Labour Government. We have done it, but the difference is that when the Labour Government introduced the policy in the private sector, they did not give any additional discretionary housing payments. We are providing £870 million over the next five years and entrusting local authorities and local communities to shape and deliver what they feel is the appropriate support. In the hon. Lady’s constituency, it could be that the local authority wishes to support those with fluctuating conditions, or they may wish to target the money on other areas, but £870 million is being provided.

A number of points were raised, and I shall do my best to go through as many of those as I can. The hon. Lady asked about how income from lodgers would have an impact. Income from lodgers is fully disregarded in universal credit, so there is certainly an opportunity there. I accept that that is an easier way to generate additional income in certain parts of the country than in others.

The hon. Member for Cardiff Central raised an important point about payday loans. I am very proud to have served as part of an incredibly important cross-party campaign that delivered significant changes in the regulations protecting vulnerable consumers. In summary, we secured the delivery of financial education and support through parts of the national curriculum. All loans have to be displayed fully in cost rather than with complex annual percentage rates, which I discovered even Treasury Ministers could not calculate. Crucially, there has been the capping of costs, the ending of rip-off rates and relentless roll-overs, the freezing of debt and compulsory credit checking to protect vulnerable consumers who should never be lent the money in the first place, as well as signposting to external and, crucially, independent advice for those consumers. It was something that we all welcomed.

[Debbie Abrahams]

As good as all the initiatives that the Minister has outlined are, is not the point that this Government policy is requiring people to go to payday lenders to keep their heads above water and stay in their family home, regardless of the additional security that may have been introduced?

[Justin Tomlinson]

This is a Government policy continuing the initial good work of the former Labour Government to make sure that the 1.7 million people left on the housing waiting list, which is now down to 1.2 million in England—a significant reduction—

[Debbie Abrahams]

Then build more homes. The lowest building since 1920—

[Justin Tomlinson]

The hon. Lady can shake her head, but we cannot turn a blind eye and ignore the people who are angry that they are unable to access appropriate housing for their families, whereas others who have the benefit of a family home and whose circumstances have changed no longer have the same need as families who are in overcrowded accommodation.

The hon. Member for Wansbeck (Ian Lavery) discussed the impact on people receiving attendance allowance. They would be pensioners, and pensioners are exempt.

The hon. Member for Swansea East raised a point about discretionary housing payments not kicking in until a tenant has downsized. That is not correct: they can kick in from day one if the local authority feels that it wishes to support that individual. It is very much down to the discretion of local authorities.

The hon. Member for Cardiff Central raised a point about Cardiff’s discretionary housing payments being cut. The overall funding will be £870 million over the five years, but that reflects the level of caseload. In Cardiff’s case, as the numbers have fallen, the funding will follow accordingly.

The hon. Member for East Londonderry (Mr Campbell) raised a point about housing associations and their rent collection. The reports we have had back from housing associations are that rent collection is 99% on average, and 92% of housing association providers continue to report that, in terms of current levels of arrears in rent collection and voids, they are within or outperforming their business plans. Of those that are in rent arrears, over 50% already were prior to the introduction of the spare room subsidy, although again we will continue to work with housing association providers and local authorities to look at what further support might help to break that cycle.

A specific point was made about the impact relating to PIP and DLA. To quote the guidance:

“When deciding how to treat income from disability-related benefits such as Disability Living Allowance or the Personal Independence Payment, you should have regard to the decision of the High Court in R v. Sandwell MBC…In particular, you should consider each DHP claim on a case by case basis having regard to the purpose of those benefits and whether the money from those benefits has been committed to other liabilities associated with disability.”

In effect, therefore, that still remains part of the discretion.

In conclusion, the Government have taken action to protect the public purse and bring a spiralling housing benefit bill under control. The removal of the spare room subsidy has already saved over £1 billion since its introduction. We are protecting the most vulnerable by giving them access to direct housing payments if they need extra help to meet housing costs. The policy is encouraging people to enter work and increase their earnings and we are seeing better use of our housing stock. This is a welcome measure for those who are on the housing waiting list or in overcrowded accommodation.