Housing Benefit (Under-occupancy Penalty)

Geraint Davies Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

My hon. Friend’s legal expertise helps him to make a compelling point. Social landlords are aware that more people will be at risk of arrears and that they are being proactive in trying to prevent that from happening, but they are clear that their ability to provide affordable homes depends on their ability to collect rents from tenants. The real problem is that the under-occupancy penalty is unfair and unworkable. Instead of trying to mitigate its worst effects, we should concentrate on changing the underlying problems and abandoning the bedroom tax. In Scotland, we clearly have an opportunity to do that by bringing decision-making powers back to the Scottish Parliament.

Housing associations have historically been seen by lenders as relatively stable, and have been able to borrow money at competitive rates. Mary Taylor, chief executive of the SFHA, has pointed out to Ministers that

“already it is proving harder for landlords to borrow from banks, whether to build or to fund major repair and retrofit programmes. And where they can borrow it is invariably at a higher cost than before, even though interest rates generally remain low and stable. According to Housing Associations, lenders are pointing to the lack of security of rental income arising from Welfare Reform as a key factor in these rising costs. Lenders have to assess risk—and they recognise the very real risks, even if the Government is stubbornly refusing to do so. I believe the Council of Mortgage Lenders raised these issues with the Government over a year ago, but we are still to see action.”

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

Does the hon. Lady agree that many councils have rightly, historically and naturally built two and three-bedroom homes for families? If councils choose to evict people from that stock as families grow up, they will end up with a massive void. The choice will be between having not quite enough rent and having no rent, which is financially absurd.

[Dr Whiteford]

The hon. Gentleman makes a good point—some housing associations already contend with that problem. If they are to continue to invest in their existing properties and continue to build the new smaller properties that we need to meet our changing demographics, they need to be able to borrow, and to do so cheaply. Any increase to the costs of borrowing will have only an inflationary pressure on rents and service charges. That pressure falls back on the low-income households in the social rented sector, who can ill afford it. There is no doubt in my mind that the problems for social landlords, caused by the shortfalls in housing benefit for people affected by the under-occupancy penalty, will be further compounded by the end of direct payments under universal credit.

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[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

rose—

[Geraint Davies]

rose—

[Steve Webb]

I want to make some progress, as I have not yet got past page 1 of my speech and I think the House would like to hear from a few other people.

The cost of housing benefit increased in real terms by 50% in the past decade to £23 billion. Given that we said we would ring-fence the state pension, the biggest thing that we spend money on, we simply cannot ignore housing benefit for people of working age if we want to save money.

[Geraint Davies]

Will the Minister give way on that point?

[Steve Webb]

No, I want to make some progress.

For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.

At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.

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[Steve Webb]

Let me make a little more progress, and I will give way again later.

We recognise that this is a time of change that will present challenges for tenants and for landlords, and we have to support both. One of the positive things to come out of the change is that landlords are getting to know their local authority tenants and social housing tenants far better than in the past. All too often, housing associations did not know their tenants well enough; we have now seen an important process of getting to know individual tenants and their needs. As a result, some of the more creative housing associations have schemes whereby half a dozen people have moved accommodation so that there is a better fit between the individuals and their housing needs. The 1 million spare bedrooms are a precious resource of our communities and of vulnerable people in them, and I will not have it said that those who stand up for the vulnerable are on the Opposition Benches, as we are standing up for them and we want those bedrooms filled.

[Geraint Davies]

rose—

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

rose—

[Geraint Davies]

Instead of having a policy of evicting people because their children have grown up, would it not be better to offer cash incentives to move to smaller housing? When I was chairman of the housing department and leader of Croydon council we offered people cash benefits rather than by evict them because their children had grown up. [Interruption.]

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[Mr Byrne]

My right hon. Friend is absolutely right about that. Of course, the Labour party is proposing to have a tax on bankers’ bonuses in order to release £1.3 billion for new housing and to spend the 4G licence proceeds on building homes. That is in sharp contrast to the sob story from the Deputy Prime Minister lamenting the fact that the Government cut capital spending too far and too fast.

[Geraint Davies]

Does my right hon. Friend accept that the savings that the Government anticipate and project are gross savings, not net savings? That is because many local authorities will end up with voids without rents and will make losses, so they will not be able to do their repairs, at a time when private sector rents will be pressed up by excess demand, giving returns on buy-to-lets to the private rented sector and increasing housing benefit costs. This does not add up at all.

[Mr Byrne]

My hon. Friend is absolutely right. The Secretary of State may truly believe that this policy will save his Department £490 million a year, but his Minister of State was rather less than forthcoming earlier on swearing that that would be the figure. The Secretary of State may genuinely believe that this policy will save £2 billion over the forecast period. If he does genuinely believe that it will save the money set out by the Treasury in Budgets gone by, he is deluding himself, because the evidence is staring him in the face: this policy will cost more than it saves.

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[Ann McKechin (Glasgow North) (Lab)]

I welcome today’s debate on a serious and deeply worrying issue. I, like many others, spent last week in my constituency, where almost every conversation I had—with constituents, DWP local managers, banks, post offices, housing associations, credit unions and my local citizens advice bureau—was centred on the so-called bedroom tax. Today, I listened carefully to the Minister of State, who took great pleasure in referring to the “spare room subsidy” and the question of equity. It reminded me of the debates on the poll tax in the early 1990s, when it was considered “equitable” that the poor should take a heavier burden. That message resonates today right across the House.

What struck me about those conversations last week was how unprepared we are for perhaps the most dramatic setback in decades for our housing sector and local communities, first, among the tenants. Up to the end of last year, housing providers earnestly hoped they could persuade the Government to change their mind; then they started to write to their tenants, who in turn put the letter in a safe place and hoped the issue would go away too. Only since the start of this year have tenants’ eyes been opened to the true horror, as housing associations have now started physically to knock on their door and find out how they intend to cope.

Let me give the examples of two constituents I met last week. One of the women looks after her father full time—she gave up her work 15 years ago to act as a carer—and he lives nearby in a one-bedroom flat, so she cannot move in with him. Because there are no spare houses, she faces having to move to the opposite side of Glasgow and then trying to commute every day to look after her father. The other woman is 58 years old and single; she has lived where she is now for 17 years. She is a good tenant, who keeps the area stable and looks after her neighbours, but she faces being moved many miles away to an area she does not know and where she does not know the local people—even though she does not have the money to move house in the first place. One question the Government have not asked is how we will manage moving all those people, many of whom have no spare cash.

Most welfare advisers and DWP staff I spoke to last week believe that now, we are seeing only the trickle, and that the flood of inquiries will start when the bills begin to arrive through people’s letterboxes. We know the grim facts about the lack of suitable stock—the hon. Member for Banff and Buchan (Dr Whiteford) described in some detail the extent of the problems right across the country, both in urban and rural areas—but analysis of the impact on individuals and the stability of their families, the detrimental impact on local communities as good long-term residents leave, the destabilising impact on schools and children’s education as many desperately look for properties to move to, and the likely non-payment reaction that will follow, is simply shallow and unco-ordinated.

The impact on our housing associations should not be underestimated. Earlier this month, as the hon. Lady mentioned, I raised with the Under-Secretary of State for Scotland, who is not here to hear the debate—nor is the Secretary of State for Scotland—the impact on housing associations’ credit rating. That is not just a technical point: many experts are talking quietly about the need for wholesale consolidation of local social landlords, so that they can avoid bankruptcy as they try to cope with the ruinous increases in their cost of borrowing at the same time as they face a huge hike in both arrears and administration costs, with many having only very small reserves to buffer the losses. That impact will be worsened by the introduction of universal credit later this year. Even the Chief Secretary to the Treasury is now beginning to voice concerns about the impact of direct rental payments to tenants.

[Geraint Davies]

Does my hon. Friend accept that some of the opportunities available to local authorities consist of, first, taking the hit on arrears; secondly, cutting repairs and maintenance to make ends meet; and thirdly, knocking down walls to convert two bedrooms into one? That is being actively done. As a former housing chair, I can see that is a practical solution.

[Ann McKechin]

My hon. Friend describes the problem. I represent a seat in Glasgow where all the social rented properties are in the hands of housing associations. Many of them are very small and unfortunately do not have the capacity or resources that even a local council has, and some of the smaller local authorities will be very hard pressed to cope.

In reply to my question, the Under-Secretary of State for Scotland assured me that he had met local authorities and housing associations in Scotland and discussed their concerns about credit ratings, and that they were “satisfied”. Funnily enough, the following week the Convention of Scottish Local Authorities, which represents all the local authorities in Scotland, and the Scottish Federation of Housing Associations wrote to the Minister to set out a slightly different view. The SFHA wrote:

“With respect, this does not address the issue of the credit rating of associations. Indeed I am not aware of any government impact assessment of credit rating of associations but if it does, I would welcome access to it.”

Does the Minister have an impact assessment he can share with us? The SFHA continued:

“We remain very concerned about under-occupation issues, not least given the escalation in rhetoric about non-payment of the ‘bedroom tax’, so called purposely to resonate with the Poll Tax, a debacle which left councils with a trail of debts only now being resolved even in your own constituency.”

If that seems harsh, the letter from the president of COSLA reflected utter astonishment at the Minister’s response to my question. He wrote:

“While I do meet the Secretary of State for Scotland from time to time, I can’t recall the last time we had an opportunity to discuss my concerns over welfare reform with any DWP Government Ministers….

There was a hastily arranged meeting on 22nd November…which we understand the Scottish DWP office invited a selected number of council leaders to attend. Few were able to do so, and COSLA was not represented although an officer was present to observe and take notes….

Those notes, and feedback…confirm that David Freud informed the meeting of the steps DWP are taking in response to a variety of concerns that were raised. These were felt to be inadequate, considerable dissatisfaction remained, and David Freud gave an undertaking to return to Scotland to discuss the matters further”,

but, funnily enough,

“This meeting has still not been confirmed.”

Perhaps the Minister who winds up the debate can confirm when his noble colleague Lord Freud intends to meet local authorities in Scotland to discuss with them what they can do to meet the impact of this change, which is to happen in just a matter of weeks.

The hon. Member for Banff and Buchan suggested some changes that could happen in Scotland. Unfortunately, I think her colleagues in the Scottish Government have pressed the standard pause button, saying, “We need to wait until the sun starts to shine and we have independence”, but of course that depends on a referendum and we are still waiting for the date of that. The plain fact, to which the hon. Lady alluded, is that we do not have time on our side and people cannot wait. We need to start a serious debate now on how we can resolve these issues.

The coalition talks about the ever rising cost of housing benefit over the last 10 years. Yes, it is a problem that we are subsidising landlords when rentals are increasing at well above rates of inflation, yet the Government have made not one suggestion or proposal to address that or the systematic failures in the housing market as a whole. I believe there has been a permanent change—a major distortion—in the housing market since the banking crisis in 2007. We will not simply see a bounce-back to the position in 2005-06 at some undetermined point in the calendar, so I have some suggestions on how to deal with housing as a whole, not just the issue of people on housing benefit.

Other Members have commented correctly on the need to build more housing, both in the social rented and private sectors. How much land in Scotland, or the UK, is held by building companies as part of their land banks? It is estimated that perhaps 250,000 houses with planning permission are still to be built. Has there been an audit of where those properties are? Can we levy unused plots of land to provide a stimulus to build, because in many cases builders are just waiting to get more money for the land on which they sit? Can we control private rentals? The hon. Member for Banff and Buchan rightly commented that rental levels in the private sector in Scotland, as in many other parts of the United Kingdom, are in excess of those in the social rented sector. According to Shelter Scotland, the taxpayer would on average pay more than £100 extra in local housing allowance each month if someone in Edinburgh moved from the social rented sector to the private sector, and the same would apply in Glasgow and Inverness; in Aberdeen—one part of the United Kingdom enjoying something of an economic boom—an extra £200 would be paid per month. The hon. Lady was incorrect, however, to state that increases in rentals were a phenomenon only in Greater London. There is a shortage of housing, and people cannot afford to buy a house or provide a deposit, so they are moving into the private rented sector, pushing rentals ever upwards.

In a speech last month, the Leader of the Opposition referred to reform of the law on residential leases, which should also be considered in Scotland, where the law is distinct but not that much different. The law was last altered in the early 1980s, to create short-term assured tenancies, which have become the absolute norm—the default—for all private residential domestic tenancies. Although there is clearly a market for short-term assured tenancies, they are not suitable for an increasing number of people who are looking for security and stability and to put down roots in a local community.

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

I had to leave the Chamber earlier to help to launch a document on the links between speech, language and communication needs and social disadvantage. I mention that because one of the document’s key findings is relevant to the debate. When children in the top 25% of cognitive ability from working class backgrounds are tested at the age of 22 months and compared with children in the bottom 25% of cognitive ability from upper middle class backgrounds, we see that the upper middle class children will have overtaken the working class children by the age of 10. That is a result of speech, language and communication issues. I suggest that the dislocation of working class families and communities that these housing benefit changes will cause, through the eviction of parents because their children have grown up, is another example of the targeting of working class people who could do so much better in life and add so much more in terms of tax revenues and so on. They are the ones who will be hit the hardest.

[Helen Goodman]

Does my hon. Friend agree that, based on the speeches we have heard from the Government Benches today, we do not have a selection of people from the middle classes who have overtaken the working classes?

[Geraint Davies]

That is certainly the case. It is disappointing and illuminating that the Government Benches are almost empty this afternoon. Government Members simply do not care about a group of people who they believe will not vote. They see them as people who have failed in life and who will not vote—only 65% to 70% of people vote—so they think that they can treat them like cattle, and that is what they are doing.

[Mr MacNeil]

Is it not also indicative of the tone of the debate that the people who are encouraged to take in lodgers are usually those on lower incomes? There is no great push by the Government to ask the middle classes, the upper middle classes or indeed the upper classes to take lodgers into their mansions, palaces or castles. This move is aimed at the bottom end of society, and it is shameful.

[Geraint Davies]

I am grateful to the hon. Gentleman for that intervention.

The Government falsely claim that the problem is under-occupancy in the social sector. They say that that is awful, and a terrible waste. I have asked the House of Commons Library for the figures on under-occupancy rates. According to the bedroom standard, the level of under-occupancy in the social rented sector is 10.2%. In the private rented sector, it is 15.7%, and in the owner-occupied sector, it is 49%. So it is all very well for those who own their houses, who have five times the amount of under-occupancy, but people who are poor and who are in the social rented sector because the market has let them down are not allowed to have an empty room. Why should not those people be allowed an empty room? We have heard about people with disabilities and people with chronic problems, but what about normal people who just want their friends or their children to come and visit them? And who would want a one-bedroom house?

Let us look at the evolution of social housing. I was the chair of housing for the biggest local authority in London—Croydon—and chair of housing for the association representing all the boroughs across London. How does social housing work? We build two-bedroom and three-bedroom houses for families in need, who live in them with their children. Their children grow up and perhaps go to university or get married, and we end up with the couple in an under-occupied house. What happens then? They die, and we recycle those houses. It is no surprise that under-occupancy in the social sector is so low, because the sector naturally refreshes itself. Those people do not live for ever.

In Croydon, we also set up incentives involving thousands of pounds. We said to people, “Look, you’re an old lady living in a three-bedroom house. We’ll give you a few thousand pounds if you’ll go and live in a two-bedroom house. You’ll still have room for the grandchildren to come and stay, but times are tough.” And they did—[Interruption.] It is all very well the Minister saying from a sedentary position that it did not work. He has not tried that scheme. Why, instead of piloting his stupid ideas, does he not put the two models side by side and see which one works?

Instead of looking only at the savings and benefits involved, why does the Minister not also look at the costs? He should look at the costs in terms of community breakdown and family breakdown. What will his proposals do for people’s ability to get a job, for example? The Government want people to get some training, get a job and get some stability. Well, that is absolutely ridiculous. The social, economic and practical impacts of the measures are completely unthought out. The reason is that the Government do not care, and they do not care because they think that those people do not vote. Why is it that people over 60 are excluded from the list? It is because they vote. What does that say? It says, “Don’t have any children until you’re 40, because if you have them and they grow up and have to leave home, you will hit 60 at that time and you’ll be all right.” That is great, isn’t it? It is completely cynical and it stinks.

What does this mean for the practical implications of managing the housing revenue account? It is claimed that all this money will be saved, but some of it allegedly saved for the Government is lost by local authorities. As I said earlier, I have run a housing revenue account, so I know what will happen. A number of people will stop paying all their rent by the margin that is being cut. If I am in the local authority with a portfolio of two or three-bedroom houses, but with hardly any one-bedroom ones, I will say to the people that are not paying all their rent, “We will evict you, but we do not have any one-bedroom houses”. They will go to the private rented sector where the rents are higher and are escalated by the pressure on the market, and that will cost me more as a manager. What is more, as more people join the private rented sector, others in that sector will pay higher rents, so it will be difficult for people to build up a deposit and buy a house. That is great as well, isn’t it? It is absolutely hopeless.

[Mr MacNeil]

The hon. Gentleman is kind in giving way. A friend of mine in Fort William tweeted a few minutes ago to say that his parents took five years to downsize their house in Fort William. That is an example of how difficult this is practically. At that time, there was no imperative to do so—it was a matter of choice—but we are in the same boat, and we are talking about five years.

[Geraint Davies]

Yes, and why should someone who has lived in the same street, whose children have grown up with their neighbours and who knows everybody—having been to the local schools, visited the local pubs and worked in the locality—be dislocated and thrown into another community, another town or even another nation? The answer is that these people do not count because they are poor and they live in social housing—and the Tories and the Liberals are going to sort these people out. It is disgusting.

What else is going to happen? If managers or directors of housing have less rent money available, there will be a cut in repairs, leading to more damp and more health problems associated with bad housing. What else can local authorities do? People in Swansea are thinking about knocking down walls. If they have a two-bedroom flat, they can knock a wall down and create a larger living room in order to get round the problem. What does that remind us of? Yes, of course, it reminds us of the window tax. Do we remember when some stupid Tory introduced a tax on windows—and then people blocked off their windows: what a surprise! We are going to see that sort of thing again. It is absolutely ridiculous and farcical. If it were not so sad, we would all be laughing.

Private rents will go up for the mates of the Tories in buy-to-let who will see their incomes grow. It will stop other people buying houses, and we will see empty public sector houses side by side with overcrowded private sector houses. Where there are empty houses, it is costing us much more in lost rent than the shortfall that is being cut in this tax.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Will my hon. Friend give way?

[Geraint Davies]

No, because I will run out of time—perhaps at the end if I have time.

We will see major problems. My hon. Friend the shadow Secretary of State for Wales mentioned the impact of this change on Wales. He said that 46% of households would be affected in Wales as against 31% in England—half as much again. Once again, this is part of the strategy of taking money out of the poorest communities, yet poor people spend more of their money. If we want a growth strategy to get people back into work, we should give money to poor people instead of giving it to the rich who hide it away in savings accounts or offshore accounts. When people have only a little money, they have no choice but to spend it. We are denuding local authorities with poor populations of money power.

What of incentives? A son or daughter of parents might say, “I want to go off and get married and live with this person. I want to go off and live in a different town and get a different job. I haven’t got a job here; I’m unemployed.” The parent would say, “Son, that will cost me”. What if the children want to go off to university? That is going to cost the parents, too. Once again, this is just encouraging people to stay where they are until somebody hits 60. It is preposterous. The savings will not be made.

[Steve Webb]

There are only so many times that the hon. Gentleman can get it wrong. If someone goes away to college and is based at home, the bedroom is kept.

[Geraint Davies]

My point is that if someone goes away to work, that person will lose the bedroom. Moreover, if someone’s children go off to university, they will not be hanging around in the local chip shop—which is good, but obviously their parents will say, “We do not want an educated son and daughter going off and leaving us to pay for the empty bedroom. You can stay here and run the chip shop. That was good enough for us.” That is the sort of new economy that the Minister—who is now dozing off—wants, and it just does not make any sense.

As for the overall savings, the Government are making political choices. They will not save £490 million, because much of that will consist of costs for local authorities. What they are saying is “We will give the money to the voting people. We will increase their tax thresholds. Let’s face it, they are not going to work any harder. We will not harm the older people, because they vote; we will harm the poor people who do not vote. Let us hope that they do not. If they do not register to vote, we have our other plan to carve up the constituencies, so that their size relates not to the population but the number of people who are registered.”

This is a cynical attempt at political manipulation that has no regard for the economic and social impact. It is absolutely disgraceful, and it should be thrown out.

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[Mr William Bain (Glasgow North East) (Lab)]

I was pleased to spend last week’s recess talking about this issue with my constituents, because what we decide in the House has its most crucial impact in the communities we represent. The bedroom tax has achieved in a shorter period the ignominy once reserved in Scottish society only for the hated poll tax. In my constituency, hundreds of people, from Dennistoun to Springburn, continue to sign petitions to stop the measure, which will cost people up to 14% of their weekly housing allowance.

Last week, at an event hosted by NG Homes, I met voluntary groups and housing associations from across Glasgow who warned of the effects of the plans on homelessness, rising levels of evictions and rising debt in north and east Glasgow. The Prime Minister’s ambition is being realised at last—the big society is coming together, not in his support but in complete opposition to the absurdity and unfairness of the housing benefit plans and the chaos and social harm they will cause. In my constituency, nearly 86% of the 16,580 housing benefit recipients are in properties rented from registered social landlords, and 65% are within the age range that is subject to the bedroom tax. The vast majority receive between £25 and £100 a week in local housing allowance to help with rental costs. That is in a constituency where the median wage is under £17,600 a year, and child poverty is the third highest in the UK and the worst in Scotland, at some 43%.

The three areas that will be hurt hardest in Glasgow North East, according to the Glasgow Housing Association, are Milton—with a higher than average number of lone parents, rent payments there will go up by a collective £8,000 a week—Keppochill and Possilpark, but last week I discovered people right across my constituency who will be hit by this cruel tax. Around half the recipients in my constituency are on out-of-work benefits, but three in 10 of those who are in employment earn less than the living wage. It is clear that the decline in real wages—it has accelerated under this Government—which have fallen every month the Government have been in office, has driven the greater reliance on housing benefit to maintain even these basic living standards.

[Geraint Davies]

Will my hon. Friend give way?

[Mr Bain]

Briefly.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I should have reduced the time limit but did not, on the off-chance that there would not be too many interventions. I warn Members that I will now have to reduce it, and if they are upset it is due to the number of interventions.

[Geraint Davies]

In a nutshell, the cost of reducing the tax threshold by £1,000, which gives taxpayers £6 a week, is £5 billion, 10 times what is being saved here. If someone who is very poor looses £7.50 a week through the empty bedroom tax, someone else is being given £6. Does that not illuminate the Government’s priorities: hitting the poor and letting the middle class off?

[Mr Bain]

My hon. Friend is certainly right to draw attention to the absurdity of the Chancellor’s claim that there is a zero tax band for people on low incomes, who of course pay national insurance, higher VAT under this Government and all the things described in this debate. I should also point out that rents are rising in much of Scotland—by 6.3% in Aberdeen and 5.1% in Edinburgh, for example—which is adding to the pressure this policy will cause.

The bedroom tax will hurt the country in many ways that the Government do not presently acknowledge, for example through its impact on families, the economy, employment and housing. First, these plans utterly fail the test of promoting economic growth. Indeed, by diminishing demand among people who will spend the money, the least well-off, they will have a deeply contractionary effect. Keynes’s paradox of thrift will sadly become a death knell for local shops across the country as people are forced to cut back on spending. The University of Strathclyde’s Fraser of Allander Institute estimates the cost to the Scottish economy to be more than 300 jobs, £30 million a year in lost demand and a reduction in wages in Scotland of nearly £8 million a year.

The Minister claims that people should work longer hours, but do I really have to point out to him that under-employment has soared to 3.2 million under this Government and that there is a slump in productivity because demand has been so weakened by their catastrophic fiscal policies? I also remind him that, with the deficit tracking 7% higher this year than last and our credit rating having been downgraded, these are Tory cuts that he is defending because of the Chancellor’s utter and abject failure on growth.

The Office for Budget Responsibility predicted in November 2011 that the economy would grow last year by 2.5%. It has been confirmed today that instead, it grew at less than a tenth of that rate. The impact assessment on these changes also reveals the truth: if people are able to change their behaviour, as the Minister vainly hopes they will, these plans will save little or no money for the Exchequer. His other policies to cut the benefits bill are failing, because unemployment is 340,000 higher than the OBR predicted in 2010 and living standards are falling in a low-growth economy. He can generate the savings he is seeking with this policy only if people cannot move or work longer hours and so are forced to pay the tax. He is making the poorest suffer for the Chancellor’s manifest incompetence in securing less than a tenth of the economic growth we were predicted to have over the past two and a half years.

Secondly, these proposals are a byword for absurdity. The Minister believes that people can simply uproot themselves from homes they have lived in for three decades or more, and from friends, family and jobs, to go and live in parts of the country where there are smaller houses and perhaps fewer opportunities to work. He says that alternatively, people should take in a lodger—a step that is actively discouraged in the registered social housing sector in Scotland, where stock is allocated on the basis of need. The sheer absurdity is further heightened by his refusal to admit until this afternoon that his plans will potentially remove money from up to 96,000 members of the armed forces, nearly 8,000 Army trainees, carers and foster parents in Glasgow, while nearly 1,000 prisoners on remand in Barlinnie jail in my constituency will be exempt.