Housing Benefit

Debate between Douglas Alexander and Matt Hancock

Tuesday 9th November 2010 Commons Chamber

[Matthew Hancock (West Suffolk) (Con)]

Will the right hon. Gentleman give way?

[Mr Alexander]

I am keen to make a little progress.

According to a study commissioned by Shelter from the Cambridge Centre for Housing and Planning Research—I wonder if the Government will dispute the integrity of that body—more than four in 10, or 42%, of landlords currently letting to LHA claimants planned to scale back. Shelter estimates that that will equate to 100,000 landlords. Liz Peace, the chief executive of the British Property Federation, said:

“Landlords might decide to abandon the social sector.”

The Conservative Mayor of London—I wonder what the Government will say in relation to this evidence—says that the Government’s proposals will lead to

“the loss of the private rented sector as a major safety net for London boroughs”.

He continued:

“We expect landlords to leave the housing benefit market due to the perceived instability of housing benefit in the short and medium term.”

Those are the words not of the Labour Front Bench, but of Boris Johnson.

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[Mr Alexander]

My right hon. Friend’s expertise is well revealed in his question. I have been told to avoid hysteria and be careful and measured, but any of us who recollect the impact of the community charge, when a number of poor people started with a small but rapidly accumulating debt and ended up owing significant arrears to local authorities—which ultimately had to write off those debts—have reason to be very cautious before endorsing these proposals.

[Matthew Hancock]

Will the right hon. Gentleman give way?

[Mr Alexander]

No. I am keen to make a little progress, by looking at the individual measures that the Government are advancing.

When the Secretary of State speaks, will he explain why the Department for Work and Pensions is not producing an impact assessment on the whole package of changes to housing benefit before the House? An assessment has been made of the introduction of the LHA measures during 2011-12, as the Social Security Advisory Commission requires, but that is partial, and of course does not take account of the effect of the consumer prices index cap on LHA rates from 2013.

We would also expect a separate impact assessment of the jobseeker’s allowance measure and social sector size limits to follow once the secondary legislation is published. At this stage, however, it is unclear whether an assessment will be made of the CPI changes. The fact that no comprehensive impact assessment has been completed before the announcement does nothing to reduce the widespread anxiety about this package of reforms. I therefore hope that the Secretary of State will now accept the concerns of his colleagues and undertake to publish an assessment of the whole package.

--- Later in debate ---

[Mr Alexander]

I will come to the issue of the cap. The hon. Gentleman does a disservice to the importance and seriousness of this debate by simply reading out the questions the Whips have given him. In terms of the cumulative effect, which is what we were talking about, this package involves £1.8 billion-worth of cuts. The measure that he identifies accounts for £65 million of that £1.8 billion. One of the many attributes missing on the Government Benches is a sense of proportion.

Let us look at some of the individual measures. Labour Members do not have any objection in principle to asking younger single adults to live in a shared house or flat—after all, that is what has happened a great deal in the private sector. Yet it is revealing that the Chancellor, in his spending review statement to the House, described this as a chance to limit the ability to live on housing benefit as a lifestyle choice. So why have the Government not produced an impact assessment for these proposals? How can we be reassured that there will be sufficient supply to accommodate additional people and that the specific needs of young people in special circumstances, such as the disabled, will be addressed before this measure is introduced?

On the social sector, even the Government themselves seem to be struggling to understand some of the proposals. The June Budget promised to change housing entitlements for people of working age in the social sector. Can the Secretary of State explain what that means, and whether it will mean forcing people to move out of their council homes when their children turn 18? The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate, who has already contributed to the debate, recently said in an answer to a written question:

“The detailed policy design of this change is still being developed.”—[Official Report, 1 November 2010; Vol. 517, c. 565W.]

In that case, why are the Government so confident that it will save £490 million?

Let us move on to the issue of the CPI. The shadow Chancellor has made it clear that we would support changing the uprating of benefits for a time-limited period, but this is not what the Government propose in relation to housing benefit. Index-linking local housing allowance to the CPI, which does not in any way reflect housing costs, means that the LHA’s value will drop substantially against rising rent levels, and households will increasingly find themselves priced out of all but the poorest-quality accommodation.

The impact is clear if we view the decade from 1997 to 2007 and then project forward. During those 10 years rents increased by 70%, while the CPI—the new inflation index that the Government have chosen—increased by only 20%. On that projection, by 2020 housing benefit based on CPI will have fallen so far behind private rents that it may cover only 10% of the available property. In Manchester it would cover only 5% of available two-bedroom flats, and in parts of Winchester, within 10 to 12 years not a single two-bedroom home would be affordable on housing benefit.

I ask Ministers in all seriousness whether it is coincidental that in evidence to the Select Committee on Work and Pensions last week, Lord Freud suggested that the coalition Government now saw it as

“quite valuable to rewrite the homelessness legislation”

Can the Secretary of State confirm whether that is indeed the case, and can he further assure the House that the Government are not simply seeking to rewrite the rules for those threatened by homelessness as they rewrote the rules for the unemployed in the 1980s and ’90s, parking a generation of people in the unemployment figures?

[Matthew Hancock]

The right hon. Gentleman is being careful not to set out the Labour party’s position on the cap. Does he agree with his leader, the right hon. Member for Doncaster North (Edward Miliband), or does he agree with the shadow Health Secretary, who said nine days ago:

“Those top level benefits do need to be capped”?

[Mr Alexander]

I will answer the hon. Gentleman’s question directly. The former Chancellor of the Exchequer, my right hon. Friend the Member for Edinburgh South West (Mr Darling), introduced an option for dealing with extreme cases in the March budget—excluding a proportion of the highest rents from the calculation of the median. I am sure that given his past employment, the hon. Member for West Suffolk (Matthew Hancock) will be aware of that change. As I have previously stated, I have no objection in principle to a cap, if it is introduced on a staged timetable. I commend to him the speech that I gave at the Institute for Public Policy Research as recently as Friday. However, we have to ask whether a national cap is the most appropriate plan, or whether a regional cap would target the very highest claims in all regions.