Universal Credit

Debate between Glenda Jackson and Anne Begg

Wednesday 6th March 2013 Commons Chamber

[Dame Anne Begg]

We did not specifically consider that, but my hon. Friend has placed it on the record as something that the Government need to address. We do not know, either, to what extent they will allow direct payments into landlords’ hands. I hope that they are still considering that.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Is it not the case that many of the people we discussed when we exercised our inquiries in the Select Committee have no access whatever to bank accounts, so that issue does not arise? Is it not also the case that social landlords are already extremely reluctant to accept housing benefit claimants, and that the idea that they will not be paid directly will reduce even further the already lamentable stock of affordable housing?

[Dame Anne Begg]

I thank my hon. Friend. I was about to come to some of those issues.

In our report we drew attention to the lack of suitable bank accounts. Again, there is not much detail in the Government’s response as to what progress has been made in persuading banks that they need to cater for this part of the market. Perhaps they need to be able to have some kind of direct debit facility. That would deal with the point made by my hon. Friend the Member for Stretford and Urmston (Kate Green) about people being able to manage payments, particularly the bulk of money that needs to come out of their account every month. Also, the payment must come out on the day after the money goes in, not the day before; that is another potential problem. Banks will need to be sensitive to this market. So far they have been very reluctant to provide products that will cater for these people, simply because there is not a lot of money in it for them. I hope that they do have a social conscience and will realise the importance of this, but the Government will need to do a bit of prodding.

The monthly payment regime involving almost the whole of a household’s income makes it imperative that the Government get the delivery right. If something goes wrong with a claim or there is a delay, that could lead to real hardship for anything up to a month, or perhaps even longer. For some families, only child benefit and council tax benefit will sit outside universal credit, and all other payments will depend on the right amount of UC being paid at the right time into the single bank account.

The move away from paying housing benefit directly to landlords and to the claimant instead is causing a great deal of alarm among social housing providers, and it may be acting as a barrier to the social rented sector renting to people who are on UC. This, alongside the introduction of what has become known as the bedroom tax, could mean that many housing providers will have a large shortfall in their rental income.

In its response, the DWP says that it does not intend to define “vulnerability” in case someone with complex needs falls outside the prescribed definitions and so does not get the help they genuinely need. Instead, full guidance will include

“financial vulnerability factors that would trigger a conversation with a claimant about their budgeting needs”.

I do not know how that is going to work in practice. We fear that the person who is struggling will be picked up after they have begun to struggle and are already in debt rather than at the early stages of their claim—or, rather, before the claim is made. There is a good chance that the people who struggle with their monthly payments will be the same people who find it difficult to pay their rent in full and on time, who do not have access to a computer, who are not computer literate, and who need face-to-face help in making a benefit claim because they do not have basic literacy. The DWP is unwilling to provide a definition of who is a vulnerable claimant, yet there is a whole list of things that would act as a pointer to the fact that someone may be vulnerable. I am really concerned about the danger that claimants will get into financial difficulties before any help is provided.

It seems from the Government’s response that the first solution will be budgeting support, rather than an alternative payment method. Perhaps the Minister could clarify that. How long will somebody have to wait before their rent is paid directly to the landlord or their benefit is paid more frequently? For how long will those solutions last? I understand that the DWP is running six direct payment demonstration projects that are due to run until June 2013. How are those demonstration projects going and how will their findings be incorporated into the roll-out of universal credit?

Our report points out that there is a need to decide how passported benefits will be dealt with under UC. I do not think that things have moved on much. Apart from the temporary solution for free school meals, the Government do not seem to have any ideas about how they will deal with that matter. Again, the Minister might be able to shed some light on that today. It is important that passported benefits operate effectively because for many people, they make the difference between a bare income and one on which their family can live.

One of the problems with passported benefits is that the Government have not managed to iron out the cliff edge that might be involved. The whole point of universal credit was to smooth away all the cliff edges. However, once passported benefits are put into the equation, a lot of the cliff edges come back.

It is important for other Departments to know how passported benefits will operate. They have always used the payment of social security benefits as proxies for certain qualifications, which has made it much easier and cheaper for them to administer their benefits. If there is nothing in universal credit that signposts a claimant as someone who should receive other things, such as free prescriptions, it could land the Department of Health, the Department for Education, other Departments and local authorities with a large administrative burden in order to work out who qualifies for other benefits.

[Glenda Jackson]

Free school meals are linked directly to the pupil premium. If there is a reduction in free school meals, it is entirely possible that there will also be a reduction in funding for schools. The implications of universal credit are infinitely greater than just the effects on the actual claimant.

[Dame Anne Begg]

That is why it is important that the Government get it right. I appreciate that it has been very difficult, but before the first claimants go on to UC, which is in just over a month, they need to start answering these questions. They certainly have to have an answer before it is rolled out to other claimant groups in October. They do not have very long.

This morning, when the Select Committee was taking evidence on the Work programme, we heard that universal credit has implications for the Work programme. There are questions about how people will be labelled when they go into the Work programme because the predecessor benefits, such as jobseeker’s allowance and employment and support allowance, will disappear under universal credit as people move on to the single benefit.

There is one benefit change that flies in the face of all of this and undermines what UC was intended to do. The localisation of council tax support will add complexity back into the system and introduce local variations, which could undermine the withdrawal rates that should make work pay. I have already talked about computer programmes. I have said that the customer-facing screens must be right and that, behind that, the programmes must calculate what a claimant should get and pay it into the bank. Those computers will have to speak to the HMRC computers so that the real-time information can be fed in. However, because of the proposals on council tax support, they must also interface with the local government computer system, which apparently is called ATLAS. I do not know whether that just applies to England and Wales. That is another potential IT difficulty that could cause problems for people. On top of that, it will be more difficult for claimants to work out whether they will be better off in work than it would have been if council tax support had been included in universal credit. That will rely on working out the tapers and the disregards.

To come back full circle, the delivery of universal credit will depend on the smooth delivery of the IT—not only the IT controlled by the Department for Work and Pensions, but that controlled by HMRC and local authorities. That is a big ask. My final question to the Minister is: how is that going?

Housing Benefit

Debate between Glenda Jackson and Anne Begg

Thursday 10th March 2011 Westminster Hall

[Dame Anne Begg (Aberdeen South) (Lab)]

On behalf of the Work and Pensions Committee, it is a pleasure to open the first debate that we have held in Westminster Hall. We have published two full reports up to this point in time. One is “Youth Unemployment and the Future Jobs Fund” and the other is the report that we are discussing today, “Changes to Housing Benefit announced in the June 2010 Budget”.

We had hoped that the Government response would have been with us a bit earlier, but it arrived a bit close to the wire. We were able to agree it in our Committee meeting yesterday morning, just after we had grilled the Minister, who is here today, on his pensions policy and thrown him out. The members of the Committee now have copies of the Government response. Obviously, part of the reason for the debate today is to discuss the report in general and the Government response.

I will give a bit of history about the genesis of the report that we are debating today. We decided that it was important to produce the report after the announcement about housing benefit in the Budget last June. However, as soon as we announced the inquiry and published our terms of reference, the debate about housing benefit and local housing allowance moved on. So this report is quite narrow, in that it looks almost exclusively at the LHA and the situation in the private rented sector. That is because at the time that the report was produced, it had not been recognised that there might be implications for the public rented sector, and particularly for local councils, due to the changes to housing benefit. That became clearer as we carried out our inquiry, but by that time we were already tied in to the terms of reference that we had sought evidence on, and we were not in a position to change those terms of reference. However, I am fairly sure that the debate about housing benefit and the LHA will continue, and hopefully this afternoon we can tease out some of the additional issues that we were unable to cover in the report.

We need to begin with the items in the Government response that we welcome. We made a number of recommendations in our report about the need for robust data and robust independent research. That was because when we took evidence, we found that charities working in the homeless sector often said that the changes to housing benefit would lead to mass homelessness and were unlikely to lead to private landlords reducing their rent, whereas the Government said, “No, they won’t. There might be a bit of homelessness, but not really that much, and yes, the whole point of this policy is to force private landlords to reduce their rent.” Until the policy is in place and has been working, it is impossible to test which of those two diametrically opposed views is the right one. That is why we are pleased that the Government have recognised the need for good, solid, independent research, because that will be the only way in which we can tell whether the policy has had the intended consequences and ensure that it does what it says on the tin.

I do not know whether this was a success for our Select Committee, but many people were delighted that the Government decided to drop the 10% sanction on housing benefit for people who have been on jobseeker’s allowance for more than a year. That proposal caused a huge amount of angst among a large number of the people from whom we took evidence, and the issue was raised on the Floor of the House and in debates in Westminster Hall. It seemed grossly unfair, and it certainly would not have done what the Government alleged it would do, which was to act as a work incentive—if anything, it would have acted as a work disincentive.

That proposal woke up the public rented sector—particularly the housing associations—to the full implications of some of the proposals that the Government were coming up with, because a large number of housing association residents are on JSA. The housing associations faced the prospect of losing 10% of their income at a stroke as their residents were sanctioned. The residents might have done everything that the Government asked them but have been unable to get a job, because the labour market in their area was such that they could not find one, yet they would still lose 10% of their housing benefit. It seemed strange to us that housing benefit would be sanctioned for actions in relation to a completely different benefit. I am pleased that the Government have seen fit to drop that proposal, which is incredibly important.

Much of the debate about housing benefit has focused on the caps or on the situation in London, which has helped to obscure what could happen elsewhere in the country, and some of the knock-on effects for the public rented sector. That was because it was much easier for the tabloid newspapers to latch on to stories about “£1,000-a-week housing benefit claims”, when in fact such claims were a small minority of all claims. It is often the case that it is not good practice to introduce policy based on the few rogue examples rather than on the position that most people find themselves in.

Despite that, and despite the fact that the LHA was increasing and in general covered rents, there were already shortfalls for some residents. Many claimants were already making up the shortfall between what they qualified for with regard to what they could get in the broad rental market area and what their actual rent was. As part of our inquiry, we visited a citizens advice bureau where we met an elderly gentleman who was already having to supplement his housing benefit to the tune of about 10% of his very limited pension. He was a prime example of someone who had found it very difficult to get a tenancy in the private rented sector, because as soon as landlords heard that he was on housing benefit they turned him away. “Lying” might not be quite the right word to use, but he “failed to inform” his landlord that he was actually an LHA recipient when he signed the lease on the accommodation that he was in at that time. He knows that he probably would not have been able to get that lease if he had told his landlord that he was an LHA recipient.

That is one likely problem with the Government’s approach. The assumption is that people will be able to move and that they will be able to find accommodation within the bands that they can claim for, but that is not necessarily the case. Although the Government response says that landlords will reduce rents in many areas, it is definitely the case that in large numbers of areas—my area, for example—demand already outstrips supply, and landlords will quite easily be able to get tenants who are not dependent on housing benefit to live in their properties. Therefore, the choices of those who are dependent on housing benefit will be squeezed and become ever narrower. They do not have the choice to go into the public rented sector, because there is already a shortage of supply there.

The Government’s response is a bit complacent in saying that landlords will reduce their rents. Even if they do so in one or two areas, I suspect that in the majority of the UK they will not, and it will be very difficult for people to find anything to rent. In places where there is very little choice anyway, such as rural areas, choice will be further narrowed, and it might be impossible for people who are on housing benefit or local housing allowance to get anything with a rental price anywhere near what they can claim in benefit.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I have received a briefing from the Residential Landlords Association on that precise point. It says that in relation to a survey it conducted:

“71% of respondents said that they would not decrease their rents. A recent study for the British Property Federation put this figure at 88%. Although the Government’s whole case is based on the assumption that this will happen our survey evidence (along with that carried out by the Local Government Association in London) contradicts this.”

[Dame Anne Begg]

That is why it is important that the research is carried out. In his evidence to the Committee, the Minister, the noble Lord Freud, said:

“They would say that, wouldn’t they?”

It is not until the proposal is market-tested that we will know whether what we are talking about will be the case.

--- Later in debate ---

[Dame Anne Begg]

That is the problem. As well as the discretionary element, council tax benefit will be devolved to local authorities, although only 90% of it, and that as well will be discretionary to the local authority. The discretionary element must cover not only older people but disabled people, young people, large families and multi-generational families, perhaps from ethnic minorities, yet it will be up to the local authority to decide who receives it. I suspect that most local authorities will have a pecking order of groups that they think are worthy of support, leaving the groups that they do not think are worthy of support at the bottom of the heap.

[Glenda Jackson]

There is another dimension to the problem that my local authority has raised with me. This is a period in which local authorities are strapped for cash and reducing staff, yet the changes will place greater burdens on them, which might extend the length of time required to make the discretionary decisions, making the people waiting for those decisions even more anxious and concerned.

[Dame Anne Begg]

Governments and local authorities are often accused of making people suffer a postcode lottery. The fact that yet another matter will be open to the discretion of local authorities with tight budgets could create a strong postcode lottery dependent on area, not just in different parts of the country but in neighbouring areas. That will lead to uncertainty among claimants, who will not know when they sign a lease whether they will receive discretionary housing payment or not. There will be new claimants, and those sitting in houses in the hope of receiving discretionary housing benefit might have months of worry—perhaps will have even started to look for other housing—before knowing whether they will be covered by their council’s discretion and receive the money.

I suspect that in many areas, because the money will not go far enough, the discretionary housing payment might cover some but not all of the gap between people’s rent and their housing benefit and local housing allowance, so the anxiety about whether they will have to move will continue even after they are awarded the discretionary housing payment.

The other panaceas that the Government seem to think will solve a lot are the nine months’ transitional protection, which was mentioned only four times in their response rather than 20, and the independent review, which is mentioned throughout the document, although I did not count how many times. Phrases such as “the independent review will be comprehensive” and “it will cover” crop up throughout the report, as though we will have to wait for the review before some of the questions are answered. That is particularly worrying.

Another issue that we considered was the shared room rate, which the Government say in their response will be renamed the shared accommodation rate. It is meant for younger people, who are expected not necessarily to have single tenancy of a complete property but to share with others. It is proposed to raise the age limit for the shared accommodation rate from 25 to 35.

I am not sure that the Government have thought through the implications. I held a housing summit in Aberdeen to which a lot of people from the public rented sector came along, particularly from housing associations, and they were greatly exercised. Do the Government know how many houses in multiple occupation exist? Is there enough accommodation for that group of people? In my area, there are virtually no HMOs, because it is quite complicated and bureaucratic to register as one. A number of people who fall into the category will not be able to access a room in shared accommodation. Have the Government considered changing the rules to make it easier to share? It is illegal for tenants on housing benefit to sub-let, and there are all sorts of other barriers in the rules that make it difficult for people on housing benefit to share housing.

Have the Government considered the divorced or separated dad who is 34 years old and has access to his children at the weekend? What will it mean to bring children into a house in which other people live? Have the Government considered the child protection issues involved? Will the single room rate apply to the divorced father under 35 who looks after his children one or two nights a week?

What research have the Government done to ensure that accommodation for that group exists at all? In some rural areas, there are no HMOs. Will young people all be expected to flock into cities and more populated areas if the accommodation for which they qualify does not exist in their area?

--- Later in debate ---

[Dame Anne Begg]

Indeed. I know from the homelessness legislation that that problem already exists. Lots of young pregnant women come to my constituency surgery who are living in mum’s spare bedroom or on her couch, but the homeless section will not see or deal with them until the day the baby is born. Usually the homeless section is sympathetic and will try to find them somewhere, but I suspect that that might happen only in Aberdeen, where there is not as much pressure on the social rented sector as in London. Such young women are often in a state of anxiety because they do not know what they will be taking their baby home to. They worry that it might be a damp room in a shared house somewhere.

[Glenda Jackson]

My hon. Friend lays her finger precisely on a constituency case that I had. The mother involved gave birth to her baby in the local hospital, the baby was ill and my constituent’s medical team would not allow her to take the baby back to where she had come from, as it was overcrowded, seriously damp and totally unsuited to a sick child. As a result, additional costs were laid on the national health service due to the complete unacceptability of her living arrangements at the time.

[Dame Anne Begg]

I suspect that most hon. Members will have similar examples in their constituency.

The Government’s response lists the various groups to which the shared accommodation rate—I have got so used to calling it the single room rate that I am finding it difficult to change—will not apply, but it is not clear how all the housing benefit changes will affect those living in supported accommodation, especially those who receive a mixture of Supporting People money and housing benefits, which is often a complex package of benefits, to allow them to live with support in their own home or shared accommodation. Will the Minister say a bit more about that?

Our report also considered work incentives, which were the main rationale for the Government’s changes—well, I suppose that the main rationale was to save on the housing benefit budget, but the second was to improve work incentives to ensure that work always pays.

--- Later in debate ---

[Glenda Jackson]

On that very point, I have a briefing from the National Housing Federation, which states:

“There is a very limited supply of one bed properties into which people will be able to move. In 2009, just 38,700 one bed housing association properties were let to people of all ages in England. By contrast, the DWP’s impact assessment identifies 240,000 households who fit the size criteria…Most of these people will see a cut in their benefit with no prospect of being able to move to a smaller social home.”

[Dame Anne Begg]

That gives some of the figures. The problem is the mismatch between what people will now get housing benefit for and the actual housing supply. We also have to remember that housing associations and councils are no longer building houses. In fact, the housing summit that I hosted made it clear that housing associations, in particular, are afraid that they might not be in a position to build any more new houses. At the moment, banks regard them as a fairly low investment risk, because they know that housing associations will be paid housing benefit directly for residents who are on it. Under the move to universal credit, housing benefit will no longer be paid directly to the landlord, which will undermine housing associations’ ability to borrow, because they will no longer be seen as low risk.

Alternatively, housing associations might have a large number of tenants in properties that are over-occupied, so they will see a shortfall in housing benefit. On a number of different fronts, therefore, housing associations could see arrears build up, because people can no longer afford rents as a result of the changes to housing benefit. If housing associations are then seen as no longer being a safe investment bet, they will not be in a position to build the new houses that are required. Some housing associations have gone down the route of shared equity and all sorts of other things, but all that is under threat because of the housing benefit changes. That was outwith the scope of the Committee’s report, but it certainly needs to be considered, and I hope that we will return to it at some time in the future.

I know that I have not covered everything and that I have covered only bits and pieces, but I have talked for a long time, so I hope that hon. Members will have a flavour of some of the issues. Yes, we welcome some of the things the Government have said, but we are generally quite disappointed by their response and by their view that £190 million of discretionary housing benefit will somehow magic away a lot of the problems resulting from the changes. I hope that the Government are listening and that the Minister can answer at least some of our questions—if he cannot do so, I am sure that he can write to us.

--- Later in debate ---

[Dame Anne Begg]

rose—

[Glenda Jackson]

rose—

Welfare Reform Bill

Debate between Glenda Jackson and Anne Begg

Wednesday 9th March 2011 Commons Chamber

[Dame Anne Begg]

I hope that they will be addressed in Committee, but the problem is that there are still too many unknowns about the Bill. That makes it impossible at this stage to give that kind of support to it. That is the danger.

There are reasons for suspicion, particularly among disabled people, about the Bill’s intentions. The Bill was published two days before the consultation on what amounts to the abolition of disability living allowance was announced. Again, we do not know the details. I do not understand why the Government need to change the name of the disability living allowance. Yes, there might be a case for reform, but this is a wholesale replacement. That is what worries people, particularly when the evidence suggests that it is going to be based heavily on the test.

Discussion this afternoon has been about the test for disability living allowance—but our experience is of the work capability assessment. We know that that is discredited and not fit for purpose, and disabled people fear that that is what is going to be imposed. As soon as the Government announce a proposal to change or reform a measure in order to make a 20% budget saving, suspicions enter people’s minds. Given the Government’s proposal to remove the mobility element of disability living allowance from those in residential homes, it is no wonder that some people are now frightened.

I realise that most of the time allotted to me has gone, but I want to say something about the proposal to withdraw contributory employment and support allowance after only one year. I believe that the Government should reconsider. I have always said that it is easy to reduce welfare bills: all that is necessary is to stop giving people any money—and that is what the proposed withdrawal of the allowance would do.

[Glenda Jackson]

My hon. Friend, and other members of the Work and Pensions Committee, will be aware that one of the most shocking pieces of evidence presented to the Committee was that under the present system, in which people are tested by Atos, it is not unusual for an Atos centre to be completely inaccessible to the disabled. Furthermore, we have been hearing for some time that when people appeal against the denial of benefits, whatever those benefits may be, a staggering number of appeals are upheld. What is particularly frightening is the fact that there may be a long gap between refusal of an application and the upholding of an appeal—a problem that will inevitably increase in the absence of the detailed provisions that the Bill so markedly lacks.

[Dame Anne Begg]

Indeed. We heard on Monday, in Burnley, that the appeal process can take anything from a year to 18 months. There are real doubts about the ability of the tribunal system to cope.