Housing Benefit (Under-occupancy Penalty)

Debate between Geraint Davies and Ann McKechin

Wednesday 27th February 2013 Commons Chamber

[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.