Housing Benefit (Wales)

Guto Bebb Excerpts

Thursday 1st May 2014 Westminster Hall

[David T. C. Davies]

I think a lot of people who would consider themselves poor pay taxes and would rather resent the fact that some of their taxes are supporting people with excess bedrooms. However, I suspect that I am getting a little far from my role as Chairman of the Select Committee in reporting the facts. The hon. Member for Swansea West (Geraint Davies) is correct to say that 40,000 people within Wales were affected by the measure. I do not know what the updated figure is; it might be somewhat different now. I hope so. It worries me to hear evidence that some people would have to move 50 miles to find suitable accommodation in order to downsize, and I hope that the Minister will address that.

Due to the shortage of smaller-sized social housing, it is possible that benefits will have to move into the private rented sector. The Committee heard evidence that higher rates in the private rented sector compared with the social rented sector might lead to increased public expenditure, thus defeating one of the key purposes of the policy. As somebody who believes that we must reduce the deficit as much as possible, I would obviously be concerned about any policy that increased spending levels.

[Guto Bebb (Aberconwy) (Con)]

Is it not also the case that we heard evidence as a Committee that the housing market is dynamic in nature? As some people move from social housing into the private sector housing market, others will move from the private sector housing market into social housing freed up by the change.

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[Nia Griffith]

I am sure we can all imagine major adaptations such as changes to bathrooms and additional rooms. The only one that might be considered less significant is a stair lift that could be put in or taken out, but any other form of adaptation should be taken into consideration. Further to that, it should be noted that legislation passed by the Welsh Government has enabled local authorities in Wales to desist from selling off some types of properties. They have largely chosen to keep in their stock properties such as those suitable for old people who downsize precisely because adaptations have been made that suit older people as they become less physically active.

Another point in the Government’s response is that the bedroom tax

“may encourage more claimants to move into work”.

That sounds like forcing people to look for work. People are already looking for work. People who have the capabilities are already looking for work. We must take into account the fact that some of them have significant disabilities and there are not many suitable jobs available.

Transport and child care are problems in rural areas, which are multiplied because of trying to fit in transport to work with picking up children and getting home from work. It is not easy to find jobs with hours that fit in.

I have taken issue with the Minister about the fact that the issue is not just a matter of obtaining a few extra hours. We all know that because of the complex way in which housing benefit is worked out people effectively lose around 60% of the benefit for additional earnings. The equation does not involve simply a few extra hours. The matter is much more complex. On tapering or claw back, I am extremely concerned about the proposals for universal credit because 76p in the pound of each tax credit will be clawed back when people take on more hours of work. The Centre for Social Justice suggested that it should be only 55%. That is another enormous hurdle for people taking on more work or going out to find work.

What progress has there been on collecting information and monitoring rental costs? That was promised in the Government’s response.

I turn to discretionary housing payments. The whole point about them is that they are discretionary, but they are imposing an enormous work load on local authorities because everyone on housing benefit is deemed to have insufficient funds to cover their rent. That was our definition of housing benefit. It was provided for people whose residual money after deducting various items was not sufficient to cover their rent, so it is inevitably massively oversubscribed.

The Government have said that they have provided extra money, but let us look at what that really means. I will use the example of Torfaen, which was given £193,000 of additional money for its discretionary housing payments but the shortfall in housing benefit is approximately £1 million, or five times the discretionary amount allocated. Torfaen was then told that it could spend up to £430,000, but that extra money must come from its own funds. In other words, it must make sweeping cuts elsewhere when it is already facing significant cuts.

The Welsh Government have provided £1.3 million of extra money throughout Wales to help with the additional administrative burden, but what a waste of money. If housing benefit was paid, none of that would be necessary. Having gone through the process once, it will have to be repeated because the whole point of discretionary housing payment is that it is supposed to be a temporary measure, as the Government noted, to tide people over. However, if there is nowhere for them to move to, the process will be repeated.

The officer in charge of housing benefit for Monmouth and Torfaen, Richard Davies, summed up the situation when he said that administering the huge demand for help has dramatically increased council work load and dealing with discretionary housing payment

“applications is like dealing with a totally separate benefit scheme. It’s shifted everything from statutory to discretionary”

so

“it’s a huge burden of administration.”

[Guto Bebb]

I am interested in the hon. Lady’s comments about Torfaen, but she could mention the situation in Denbighshire and Conwy where a report from Eryl Rowlands, who is responsible for the matter in both counties, makes it clear that the anticipated problems associated with the so-called bedroom tax have not come into play.

[Nia Griffith]

There may be differences in different areas because of the availability of different types of property and work. In my county, we are building bungalows in, for example, Seaside and Kidwelly, but we know perfectly well that the rate of building will not keep up with more than 1,000 households in Carmarthenshire that are waiting to be moved or to be given an alternative option to their present situation.

I want to respond to the criticism that the Welsh Government have not had a building programme during the past 15 years. Many properties have been built, especially adapted properties for disabled people and a range of supported housing and housing association housing. However, when we have small communities with a limited housing stock we need it to be as versatile as possible. It is always possible to put a small family unit in a three-bedroom house, but it is not possible to squash a large family unit into a one-bedroom flat. Our tradition in Wales, where land is relatively plentiful, has been to build houses rather than flats. That is the situation we find ourselves in. It is not the fault of tenants that they may have been allocated a two or three-bedroom property when under the bedroom tax theory they should have a one or two-bedroom property.

The Government must rethink their policy, particularly bearing in mind Lord Freud’s comments that there may be issues in particular areas. More than that, we would like them to monitor the situation. Many people are now finding it almost impossible to make ends meet, with arrears running at more than 50% in many areas, often involving people who have never been in debt in their lives.

On a slightly different note, landlords are also affected. One issue that has been raised again and again, and has not been terribly well answered by the Government, is direct payment to landlords. There has to be two months of being in arrears before it is possible to get somebody switched across to having a direct payment. That is causing us real problems, in terms of availability of property. Some whom we might call “amateur” landlords—people who have perhaps become landlords by accident, because they cannot sell a property—are now becoming very reluctant to rent out properties to people who are on housing benefit, whereas before they would have had a guaranteed cheque from the council. That is also affecting bigger landlords—the social housing providers. So will the Government take another look at the response they have made about those direct payments? I am not the only person to mention that; it has been mentioned very vigorously by lobbyists on behalf of landlords. On that note, I shall finish.

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[Mrs Siân C. James (Swansea East) (Lab)]

Thank you, Sir Roger, for the opportunity to speak in the debate. I will be concentrating on the impact of the changes on my constituency of Swansea East and responding to some of the points that we made in the report. I have carefully considered the evidence in the report and tried to cross-reference it with how the changes are affecting people every day in my constituency.

We are clearly suffering in Swansea East. I do not think that it is too strong to talk about the vicious effect, or the pernicious effect, that the legislation is having in my constituency. We have heard the hon. Member for Ceredigion (Mr Williams) speak very eloquently about the effect that it is having on a rural community, but Swansea East is a typical city or urban constituency, with high demand for social housing in both the public and the private sectors. There are increasing levels of hardship in Swansea East. Most of the people affected are approaching the citizens advice bureau, ourselves and the local authority. Wave after wave of people are appearing on our doorsteps as their problems deepen and they become more concerned, and it is becoming increasingly difficult to help them or to point them in the right direction, because they are at the end of their tether, both figuratively and financially. I have spoken to many individuals who are currently struggling to balance the books—to meet their budgets—but the biggest cause of anxiety by far is the changes to housing benefit and the bedroom tax.

The amount of rent that people in the private sector can claim—their local housing allowance—has been cut back to 30% of the rental value that is available on the market. For many people, only the lowest-value properties are open to them within their already stretched budgets. That places a huge question mark over the suitability and quality of the properties that they can now access or afford. On a daily basis, I hear stories about tenants being housed in properties that are well below any acceptable standards, are too small for their needs and/or are lacking in what people would consider acceptable. Unfortunately, there is one key word that all those properties have in common. The Government would call them affordable; I call them cheap, and cheap usually means not a good enough standard.

That is the reality for far too many people in Wales. It is a sad indictment of the policy and doctrines of the current Government. Their short-sightedness is pushing many people ever closer to homelessness and possible destitution. These are not my words; they are the concerns of well regarded, well respected organisations, such as the Chartered Institute of Housing and Citizens Advice.

[Guto Bebb]

Those concerns were also highlighted in north Wales before the changes to the spare room subsidy were implemented, but the three largest social sector housing providers in Conwy and Denbighshire have seen their arrears either fall or remain static, so were the concerns exaggerated by those individuals and organisations?

[Mrs James]

I thank the hon. Gentleman for his intervention. He is very fortunate, because that is not the pattern that we are seeing in the urban areas, the cities, of south Wales. I will come to some figures later and try to demonstrate the effects that the policy is having on the local authority and the ever-increasing problems that the legislation is creating.

Already, 30,640 homes that are part of the available rented housing stock in Wales are beyond the reach of people on housing benefit. I got these figures from the Chartered Institute of Housing. It estimates that already more than 30,000 homes that are part of the available housing stock in Wales are outside the reach of people who are seeking other homes or cheaper homes or wanting to downsize because of the legislation. In fact, 89% of tenants in Wales will see their benefits cut, and the loss will be on average £8 a week or £416 a year—before we even take the bedroom tax into consideration. Significant amounts of money are disappearing from people’s daily budgets. I know that that is popular in some areas and will make many readers of certain tabloid newspapers feel better, but if they had to live with the reality of it all, they might feel differently about it.

The proposals make a complete travesty of the rented housing sector. We are constantly being told that they are justified and that the Government are attempting to encourage mobility in the social rented sector, strengthen work incentives and make better use of social housing. My response is that they are not doing any of the above, and I seriously doubt whether they ever will. The policies do not encourage mobility in the social rented sector; in fact, I believe that they are creating a dependency on the substandard lower end of the market, regardless of the condition of the homes available for rent at an affordable price. The policies certainly have not strengthened work incentives. Many tenants I come across are suffering from housing-related health problems and are so overwhelmed by their housing issues that seeking work is not an option. They are absolutely ground down into depression by the problems that they face.

It is worth pointing out that the social housing sector simply cannot meet the demand for good-quality, up-to-standard housing when there are insufficient numbers of smaller properties to move tenants into. The Government have wrongly assumed that moving tenants to smaller properties is an easy option. The reality in Wales is that a vast percentage of local authority housing stock consists of traditional three-bedroom properties. That is a direct result of the post-war boom in house building, when properties with three or more bedrooms were needed to accommodate families, which were traditionally larger than they are today. In the 21st century, families have changed, housing needs have changed and there is a clear shortage of smaller one or two-bedroom properties for families to move into. Even when smaller properties are available to rent, they may be unsuitable for the needs of those who seek homes.

I hope that the Minister can provide me with some figures on a matter that the city and county of Swansea has come across. For more than 20 years, its policy has been not to house children, disabled people or elderly people in flats on or above the second floor, for the good reason that there have been tragic accidents in the past, which have been frightening for tenants. It is not deemed proper to house those with mobility problems or children on upper floors, where they have to deal with stairs, balconies or windows at a height. Has the Minister looked at the issue, and can he tell us how many other local authorities are in a similar position? I applaud the city and county of Swansea, because the policy is an eminently sensible one. Obviously, however, it reduces the available housing stock.

A Labour party freedom of information request showed that councils will be unable to help 19 out of 20 families who are affected by the bedroom tax. The figures from the 37 local authorities that responded suggest that 96,000 families will be hit by the bedroom tax, but there are only 3,688 one or two-bedroom council properties available for families who wish to move to avoid the tax. The entire exercise is proving similar to moving the deckchairs around on the Titanic; it is not a good idea when many other more pressing issues need to be addressed. I would be happy to work with the Government on those more pressing issues in our communities. We seem to be pursuing the policy just for the sake of making things look better, and it is simply not working.

Benefit claimants are being treated as though they were part of some sort of social experiment that is being undertaken to appease certain sectors of the community. We already know the outcomes. The policies do not work. They punish and condemn those who are dependent on benefits, and they do not remotely encourage improvement or change for the better.

Before I finish, I want to touch quickly on discretionary housing benefit. We have heard about other local authorities that do not seem to be having a problem and that are quite happy with the situation, but we have a small shortfall in Swansea in the money that is coming in. Currently, the shortfall is some £1,200, which sounds great, but I am concerned that the combined funding from the Department for Work and Pensions and the Welsh Assembly Government is not enough. If the situation continues, we will see an ever-increasing burden on the local authority and its finances. In Swansea, there were 3,198 applications for discretionary housing payment in 2013-14. The local authority awarded 1,871 discretionary housing payments, but it refused 1,327. It is pretty clear that there is a funding gap. In addition, the discretionary housing payment is awarded only for a maximum of 52 weeks. I echo the request of the hon. Member for Ceredigion for further clarification on the future of the discretionary housing allowance.

The housing benefit changes have adversely affected almost all claimants in Wales.

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[Glyn Davies]

The hon. Gentleman makes a perfectly fair point, and I do not think that the policy can be freestanding. I wanted to discuss this later, but there must be a responsibility for extra provision, and we must also have policies that deliver that. It seems logical to the people who have raised the issue with me that the problem is that there are not sufficient properties for people to move into.

When my hon. Friend the Member for Aberconwy (Guto Bebb) spoke earlier, I was struck by the fact that it is important for us all to see how the policy works out in practice in our constituencies, because it is now in practice. I decided to write to the county council—the housing authority in my area—and the local housing association to ask how it had worked out. The senior officer in this policy area at Powys county council came to my office and we spent an hour going through it, and I must pay huge tribute to the council for the way in which it managed a difficult situation. But the reality is that it did manage the system. No one has been evicted and the arrears have not gone up. Nearly all the people affected have access to the discretionary fund.

I think that about 600 tenants in the Montgomeryshire local authority were affected, and about 570 or 580 of them had access to a discretionary grant payment. I must say that when I started asking questions about whether the discretionary payment was enough, I was anticipating having to write to the Minister to say, “It is not enough—we want some more.” However, I found that the local authority was advertising, putting out press releases begging people to put in applications because the money was not going to be spent. The discretionary budget dealt with almost all the issues that mattered in the constituency.

Inevitably, a certain proportion of households—I think about 40 or 50—have moved, and because of the housing availability in the authority, quite a number of them have moved to the private sector. That is another issue. The differentiation between the private sector on one side and Government social housing provision on the other is one that we need to soften a little. We need to see people moving to make the best use of the available housing.

[Guto Bebb]

I agree with my hon. Friend that the difference between the private and social sectors should be reduced. Nevertheless, my experience is that housing associations in the social sector seem to have been more willing to work together as a result of the policy than they were previously. Is that the experience in Powys?

[Glyn Davies]

I think that it is. It might not be the same in all local authorities—I can speak only for my own—but I must say that, on this issue, Powys county council has been brilliant. It knew that things would be difficult for some tenants—it is not an easy situation—but it employed three specialist officers to help everyone affected to deal with their situation by giving them the best advice, and they have done that. I pay continuous tribute to the work that Powys county council has done with a policy that it may well not have agreed with. It has delivered coalition Government policy and done a magnificent job.

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[Glyn Davies]

Again, we have a complete separation, as if the private sector is over here and the public sector is over there. The issue is not the funding of the public sector; we must allow the private sector to deliver the housing we want. The private sector will deliver what we want if we create a situation in which it can. For the past few years, all I have seen is local and national Government making it more difficult for people to deliver what the people of Wales want.

[Guto Bebb]

On that point, it is important to state that the provision of social housing in Wales fell dramatically throughout the early part of the noughties—2000 to 2007—under successive Labour Administrations in the Assembly. The problem is not recent; social housing provision in Wales has been an issue of concern over the past decade.

[Glyn Davies]

I have nothing more to do, Sir Roger, other than to thank you.

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[Jonathan Edwards]

I did not read that report, but it makes a point about the unbalanced nature of economic growth across Britain. I am referring to the rising housing benefit bill in the UK context. The statistics I have cited do not refer to Welsh house prices in particular.

The Committee’s report found that Wales is being hit hardest by the lack of single social properties in the social rented sector. Wales is therefore being hit by a policy designed to address the public expenditure implications of the dysfunctional London economy. As I have consistently argued, we need a range of reforms. Before becoming an MP, I was heavily influenced by the reforms in the Republic of Ireland. I used to be a policy officer for the citizens advice movement in Wales, and some of these issues were prevalent then. The 2004 reforms in the Republic of Ireland were welcome. The Residential Tenancies Act 2004 achieved a number of objectives. First, it set up a private residential tenancies board. Secondly, it regulated the private rented sector, with an extension of tenancies to a more European model of longer-term tenancies. Defined rights and obligations were provided for both tenants and landlords, and access was provided to an inexpensive dispute resolution system. The bonds that individuals who rent often have to pay were safeguarded—unfortunately, on too many occasions people lose those bonds—and rents were capped, which is a policy that exists across the world. There are rent caps in New York, the home of global capitalism, so it is difficult to define them as some sort of socialist trap.

[Guto Bebb]

I do think that rent caps are a socialist trap. The fact that they are supported by the Committee’s Labour members, Liberal member and Plaid member is unfortunate because, in Wales, many people who have invested in buy-to-let properties have done so because of the previous Labour Government’s anti-pension policies. For many of those people, their private rented property is their pension provision. I find the attack on those individuals, who are trying to take care of their own situation in retirement, unfortunate to say the least.

[Jonathan Edwards]

The point I am trying to make is that if the Government are serious about bringing down the housing benefit bill, the only way to do it is to cap the cost of rents in the private rented sector. That is what all the OBR projections indicate. It is interesting that the Select Committee Chair referred to the evidence of the TaxPayers Alliance. When I gave the alliance a choice of either reducing the housing benefit bill or preserving free markets, it said that it preferred preserving free markets, which is more important to the TaxPayers Alliance than the Government’s tax liabilities. Perhaps it should change its name to the Free Market Alliance.

[Guto Bebb]

I think it has already been accepted in this debate that there is a link between private sector provision of housing and social sector provision of housing. Would rent controls result in any increase in private sector provision of social housing? If not, how will it help anyone looking for rented housing in Wales?

[Jonathan Edwards]

My point is that the OBR’s figures indicate that the Government will not achieve their objectives with the bedroom tax. If the objective is to bring down the housing benefit bill, the only way to do that is via rent control in the private rented sector. I welcome the fact that the leader of the Labour party made a case overnight for some of the reforms for which I have been making a case for a number of years. Rent caps would drive down artificially high rental costs, and they would also curb boom and bust property speculation, which is a cycle we have seen far too often in the UK economy in recent decades. Rent caps would also help working people to remain in the cities, rather than being forced out, as they are in inner London. They would also stop the current policy’s social cleansing, through which people are forced to move from where they have lived for many years.

[Mr Clive Betts in the Chair]

We also need to consider supply issues, which many Members have highlighted. The recovery of the 1930s following the great depression was largely driven by a massive public housing building programme. Rents paid for public housing provide a steady stream of revenue, so it is an ideal vehicle for drawing down private sector funds to deliver economic growth and address some of the social problems that we face.

I will now quickly return to the local indicators in Carmarthenshire, and I will finish on this point. Applications for discretionary housing payments have rocketed in south-west Wales. Between 2012-13 and 2013-14, the budget increased by 64% in Carmarthenshire, by 106% in Pembrokeshire and by 118% in Swansea. There were only 327 discretionary housing application payments in Carmarthenshire in 2012-13, but between April and May 2013 there were 534 applications. That is a 63% increase in the first two months of that year, compared with the whole of the previous year.

Nearly 2,000 people have had changes to their housing benefit entitlements in Carmarthenshire since this policy was introduced. As I mentioned, this policy only makes savings if people stay and pay.

I finish on a point made by my colleague, the hon. Member for Ceredigion (Mr Williams). He mentioned the work of Paul James, a Plaid Cymru councillor for Llanbadarn Fawr, a veteran of the UK Army and also a servant of the French Foreign Legion, so he is not a man to be messed about with—[Interruption.] He has the Minister’s number! He is upset about the impact of the bedroom tax on veterans and their families, who were under the impression that veterans would be exempt full stop from it. Yet it appears that only people on active service are exempt. If that is the case, obviously, military personnel from Wales in barracks or in training would be outside Wales and not exempt, because our regiments are not held domestically. Our servicemen are not home-based; they go to barracks in England. Yet their families are being hit by the bedroom tax. The Minister must look at that. I should be grateful to hear his remarks at the end of the debate.