Housing Benefit (Scotland)

Gregg McClymont Excerpts

Tuesday 8th February 2011 Westminster Hall

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I am sure that hon. Members on both sides of the Chamber would agree that the provision of decent homes is the mark of a civilised society. Parliament has a role in ensuring that that consensus is reflected in policy. That is why I asked for the debate. I am concerned about the consequences of the Government’s choices on housing benefit and on local housing allowances for my constituents and for the whole of Scotland.

According to the Department’s impact assessment, 55,000 households in Scotland will be worse off this year as a result of the Government’s choices on housing benefit. I have been speaking to community groups, local government, housing associations and charities in my constituency. They are deeply concerned about the impact of the Government’s choices on some of the most vulnerable members of our community. As a result of just some of the changes, £2.2 million will be taken out of the pockets of people claiming housing benefits in north Lanarkshire alone every year, and 75% of social tenants claiming housing benefit will lose out in north Lanarkshire.

Some Ministers have expressed concerns about the impact of the cuts. The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), has said that they mean that

“some people who are on the breadline will be put below the breadline.”

Therefore, I know that this Minister will treat these genuine concerns with the respect that they deserve.

I hope that the Minister will also accept that choices that the Government have made interact in a way that will make life harder for some people. I want to draw his attention to the problems posed by the interactions between some of the changes. For instance, consider a family in which working-age social tenants claiming housing benefit are living with grown-up children. There are many such families in all our constituencies. The Government have announced their intention substantially to increase non-dependant reductions in housing benefit for both social and private tenants.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

My hon. Friend is speaking remarkably well in an excellently chosen debate. Is he aware that, in addition to the vulnerable people whom he has mentioned, many of the organisations of and for people with disabilities are particularly worried about the impact on them? Many of them might be affected out of proportion to their numbers, and they really are the least able to bear it.

[Gregg McClymont]

My right hon. Friend raises a very good point. He is well known in the House for his expertise in that area. He is right to raise the issue of the impact on disabled individuals and families in particular.

One issue that I want to press with the Minister is the Government’s intention to extend the reduced shared-room rate of housing benefit to all single people under the age of 35. That will make it harder for young people on low incomes to move out of their family home, as the rate is frequently too low to cover the costs of accommodation. Outside major cities, there are very few licences for houses in multiple occupation in Scotland. Even in the major cities, those HMOs are likely to be fully occupied already. Also, some young people, particularly those with mental or physical health problems, would find it very difficult to live in shared accommodation, in many cases with strangers.

Even if young people do move out of the family home, another problem looms. If their parents are, like many people in my constituency, working-age social tenants, they will fall foul of the limit on payments for working-age tenants who are deemed to be “under-occupying”.

[Ian Murray (Edinburgh South) (Lab)]

I congratulate my hon. Friend on securing this very important debate. One key issue in my constituency is that there is a major drive—quite rightly, in many instances—to restrict the number of HMO licences due to the concentration in small areas. Would my hon. Friend like to comment on what impact that might have on this policy?

[Gregg McClymont]

My hon. Friend raises a very good point. There clearly is, broadly speaking, a real pressure on HMOs. That is one area in which policies, as I am sure the Minister will agree, can have interactions and unintended consequences that lead to deleterious outcomes for vulnerable individuals.

I was saying that there are parents who are working-age social tenants who will fall foul of the limit on payments for working-age tenants who are deemed to be under-occupying. However, we know that no social landlord deliberately puts people into properties that are too large for them. The Government believe that a negative financial incentive will lead social landlords to manage their properties more efficiently. My concern is that that outcome is not guaranteed. It seems likely that that choice could harm existing tenants whose circumstances have changed: the bereaved, the divorced or those whose children have left home.

A similar negative financial incentive is being introduced for the long-term unemployed to move home to seek work. The Government will penalise the unemployed by cutting their housing benefit entitlement by 10% once they have been unemployed for a year. That cut will apply even to those who are actively seeking work. It could affect almost 300 jobseeker’s allowance claimants in my constituency alone, and I am sure that it will affect many more in some of my hon. Friends’ constituencies.

The problem—again, I am sure that the Minister will agree—is that it is not easy at the moment to find work anywhere in the country, and Scotland has a particular problem. It is a harsh reality that at the end of last year there were four people chasing every job vacancy in Scotland, and there are few signs, so far at least, of that ratio improving.

My local YMCA, which I have spoken with recently, deals every week with cases of young people who are out of work and out of a home. Those are the most vulnerable young people.

[Margaret Curran (Glasgow East) (Lab)]

On the issue of young people leaving home and perhaps not having a home, I appreciate that my hon. Friend is not from the same city as I am, but is he aware of a report by Glasgow city council, which has assessed the impact of the housing benefit reforms and calculated that there could be a loss of £8.5 million to homelessness services? That would have an impact not only on homeless people themselves, but on the regeneration of the city of Glasgow, which we have done much work to improve. Does my hon. Friend agree that whatever the Government do to tackle housing benefit, that should not exacerbate the problem of homelessness, which we have made great strides to deal with?

[Gregg McClymont]

I thank my hon. Friend for her intervention. She raises a very good point about Glasgow in particular, although I should say that I do consider myself a Glaswegian. Cumbernauld is not very far away. However, although I may consider myself a Glaswegian, Glaswegians may have a different view.

Every week, my local YMCA deals with young people who are out of a home and out of a job. Those are the most vulnerable young people. Many are unable even to provide the right documentation to make an initial claim for housing benefit within the narrow window open to them. Those are often young people with psychological and dependency problems, coming from difficult family backgrounds. Things that we find easy are sometimes difficult for people in a vulnerable situation.

The YMCA and other local charities tell me that the cut to housing benefits for JSA claimants will leave the young unemployed at greater risk of falling into rent arrears if they do find a place to live. I know that Ministers say that they want to encourage the unemployed to move to different areas to find work, but the Government underestimate perhaps the social, cultural and psychological challenges that are sometimes involved in that process.

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

Has my hon. Friend considered that the issue is not just that young people find it difficult to move? Very often, the areas where jobs are available are the areas where there is the biggest pressure on housing, so even if young people move and find a job, they might not be able to find somewhere to live.

[Gregg McClymont]

My hon. Friend makes a good point. I was just going to suggest that Ministers will also be aware that there is a relationship between the number of jobs available and the cost of accommodation in an area. That is an extra problem facing those dealing with this aspect of policy.

Cuts to local housing allowances will make the private rented sector less affordable in more prosperous areas where work might be found. As I observed, the extension of the shared-room rate will make it harder for young people to find affordable accommodation once they leave home. Existing claimants in Glasgow will lose £7 a week on average as a result of that single change. That £7 could render a tenancy unaffordable for somebody moving in search of work. Research conducted by the Joseph Rowntree Foundation shows that there is already a shortage of private rented accommodation that meets the shared-room rate criteria.

Meanwhile, restricting payments to the 30th percentile of market rents, rather than the median, as was previously the case, will put many properties in major cities further out of reach. In north Lanarkshire, that single change will reduce the support available for a single room by £5 a week and that available for a one-bedroom flat by £7 a week. Switching uprating to the consumer prices index will, over time, compound the problem.

[Anas Sarwar (Glasgow Central) (Lab)]

I congratulate my hon. Friend on securing the debate. Many people, especially in charity organisations and in the city of Glasgow, are deeply concerned about changing the uprating to CPI. Between 1997 and 2007, CPI increased by 20%, but rents increased by 70%. If we carry on in that way, housing benefit will cover only 10% of available properties by 2020. That will have a massive and devastating impact on Glasgow and other cities across the country.

[Gregg McClymont]

I thank my hon. Friend for that important intervention. It is worth adding that CPI does not include housing costs as it stands.

The Government argue that reducing LHA will lead landlords to put rents down, but market pressure on rents in Scotland is moving them sharply upwards—it is supply and demand—and that is particularly true in the private rented sector. House building is falling. First-time buyers who are unable to secure mortgages are moving into the private rented sector. That is increasing the pressure on rents, and it would be an unusual landlord indeed who reduced his rents out of kindness.

Thanks to the Scottish National party Government slashing the budget for social housing in Scotland, waiting lists are rapidly increasing. In that context, social housing does not offer a credible alternative to the private rented sector. The vacancy rate for social homes in my constituency is less than 1%.

I am concerned that people in Scotland could face a triple whammy over the next few years. Conditions in the housing market are pushing rents upwards. At the same time, cuts to benefits are putting affordable homes out of reach. Meanwhile, the Scottish Government’s cuts to social housing mean that the sector cannot provide a viable alternative.

I therefore ask the Minister for a number of assurances. What is he doing to ensure that the housing benefits system encourages and supports people into work? What is he doing to ensure that the most vulnerable, particularly people with mental and physical health problems, including disabilities, are given the financial support that they need to remain in suitable accommodation? How will his Department support housing associations through the proposed changes and the ultimate switch to universal credit? What is his response to calls from Crisis and other organisations for tenants to be given the right to choose to have housing benefit and local housing allowances paid directly to their landlord? What is he doing to encourage his colleague the Secretary of State for Scotland to meet the head of the Convention of Scottish Local Authorities? I am sure that the Minister will address those concerns, having watched him as he has seriously addressed other concerns raised by Opposition Members.

--- Later in debate ---

[Steve Webb]

I think, technically, that right hon. and hon. Members who intervene are meant to tell me formally that they want to do so; I do not mind at all, but they have made their comments and I think it is fair that I respond to the hon. Gentleman.

There are several Scottish angles to the debate and I want to deal with some of them rather than make more general points. There is an issue about whether people who are covered by LHA are being driven into pockets—very localised areas. One aspect of the Scottish situation is that the 30th percentile tends to be closer to the 50th percentile than perhaps it is in other parts of Great Britain. The cash difference tends to be smaller, as I said earlier, so the impact is not as great as it might be in other areas where the rent distribution is more dispersed. I fully accept the point that the impact of the measures will be different in different places, but the 30th percentile has a smaller impact in Scotland because of the compressed rent distribution.

The hon. Gentleman quite properly raised the issue of unemployment. I would not for a moment suggest that it is ever easy or straightforward to find a job; but, again, headline unemployment is slightly lower in Scotland than for Great Britain as a whole. The majority of Scottish local authorities have lower unemployment rates than the Great Britain average. That is not to belittle the matter, but it is not a purely Scottish dimension. The issue is clearly one to be dealt with nationally.

As to the hon. Gentleman’s constituency and the support that we are giving, an important feature of the new scheme is discretionary housing payments. We recognise that we cannot anticipate every hard case, so we give local authorities discretion. We give them funds so that if there is someone who just does not fit the rules terribly well or who is acutely affected by the changes—the hon. Gentleman gave examples of situations that might be difficult—local authorities have discretionary funding. In 2011-12, Scotland as a whole will be getting an increase of 15% over 2010-11. That is an increase of £360,000 in discretionary housing payments. The hon. Gentleman’s local authority will be getting a 34% increase; more than double the Scottish average increase will be going to North Lanarkshire to provide additional assistance. The figure will go from £77,000 in support this year to £103,000. It is worth saying that the 2011 DHP increase is much smaller than the increases will be in succeeding years; the Great Britain-wide figure will go from £20 million this year to £30 million, and then £60 million a year. Most of the increase in DHP will be in later years, but we have already added 34% to it in the coming year for the broad rental market area of the hon. Gentleman’s constituency. Although, inevitably, that money will have to do a lot of work, it is specifically designed for the sort of hard cases he spoke about.

[Gregg McClymont]

I have been listening closely to the Minister, because I wanted him to develop his argument before I intervened. Is he comfortable with a policy which, as he perfectly fairly described it, tries to put people who get housing benefit and may be working, on a level playing field with people who are, as he described it, low paid, but who do not get housing benefit, in the context of an economy in which there is not much evidence that people can move into better paid jobs? The structure of the economy in a place such as North Lanarkshire does not include many professional—middle-class, if you like—positions for people to move up to, if the Minister’s broader argument is about social mobility. From our point of view there is a danger that instead of focusing on trying to increase opportunities for a broad range of people from near the bottom to the middle of the income distribution, the focus is on people who are already struggling. I think the Minister would agree that we must do something about what happens further up the scale, to open up opportunities for the people who are affected.

[Steve Webb]

I entirely agree with that point. We want to encourage people not simply to move into any job at the bottom of the scale; we also want to encourage career progression and additional hours and training—the things that make people employable and enable them to earn more. That is the philosophy behind the universal credit. One of the problems is that there is an issue about the incentive to take any job; once a person has a job the current system can withdraw 95% in the pound, in extreme cases. That cannot be right and it traps people. Even if jobs are available and there are opportunities to do more work or gain more skills, there is no point, because the money is simply clawed away. With a lower taper rate for most people the universal credit will give people more opportunity to do just the sort of things that the hon. Gentleman describes.

[Gregg McClymont]

We know that the hon. Gentleman is a thoughtful Minister. A larger question looms over the issue, and that is whether, in the economy as it stands—not just in this recession but structurally over the past 30 years—there are opportunities for people to move up the ladder in large enough numbers. Does the Minister agree that such macro-structural political economy issues are related? Unless we have that possibility, what is happening may be seen as an attack on people who are already not exactly living luxurious lives.

[Steve Webb]

I certainly agree that we are not talking about people leading luxurious lives. There are, as the hon. Gentleman says, bigger structural issues affecting the economy. In the past few years under a series of Governments the economy has created millions of new jobs, but some of them are part-time, and they vary in nature. One of the things that the Government are trying to do, whether through apprenticeships or a range of other initiatives, is to upskill the work force. In a global economy we shall not be able to compete with very low wages in the far east, for example.

In the final couple of moments available to me I stress that we are keen to engage with the Scottish perspective, as the hon. Gentleman suggested. COSLA is represented on the Department for Work and Pensions local authority associations steering group, which meets each month, and along with the local authority associations it was formally consulted on the draft regulations for 2011 that I mentioned earlier. Officials from the Scottish Government have attended events and meetings to discuss the impact of LHA reforms, and Members of the Scottish Government have been invited to attend a conference that we are holding in Glasgow on 3 March 2011. We have invited all Scottish benefit managers from local authorities to attend, and we are inviting officials from the Scottish Government to be involved in the LHA reform national implementation group and the evaluation of the reforms.

[Gregg McClymont]

Would the Minister consider publishing evidence that LHA is pushing up rents in Scotland? He referred to that earlier and it would be an interesting piece of information for us, if he would undertake to pass it on.

[Steve Webb]

I was quoting from COSLA’s assertion, but we are happy to give the hon. Gentleman what evidence we have, although trying to prove cause and effect is a challenge.

I congratulate the hon. Gentleman on raising this important debate, and I am grateful to colleagues who contributed.

Question put and agreed to.