Housing Costs (Reformed Welfare System)

Helen Goodman Excerpts

Tuesday 3rd March 2015 Commons Chamber

[John Hemming]

From a sedentary position, the Minister says, “£1 million a day”, which is about the order of magnitude that we were talking about. A policy can have more than one objective. It can be designed to save money and also to deal with overcrowding. This year, I have not had anyone in my office complaining about social services criteria, but I often get people complaining about being overcrowded.

[Helen Goodman (Bishop Auckland) (Lab)]

Is the hon. Gentleman aware that when the bedroom tax was introduced, 19,000 people in his constituency were already on the waiting list, of whom 8,000 wanted one-bedroom flats? There was already a long queue of people before the bedroom tax was introduced,

[John Hemming]

In my constituency, I was aware of a family of four living in a one-bedroom flat who wanted to transfer out of that into better accommodation.

--- Later in debate ---

[Helen Goodman (Bishop Auckland) (Lab)]

I begin by congratulating the Select Committee, in particular the Chair, on an excellent and extremely useful report. It is a thoughtful and well-informed cross-party report, so I hope that the Minister will be able to explain why, after a whole year, the Government have not been able to respond to it.

As the report points out, the Government set themselves three targets for their welfare reform programme and changes to housing benefit: reducing benefit expenditure, improving incentives to work and making the situation fairer. It is quite clear that the first test has been failed. The Office for Budget Responsibility shows that expenditure on housing benefit in 2009-10 was £20 billion. In 2013-14, the last year for which we have full statistics, it was £24 billion; and the OBR is predicting that by 2018-19, the spend will be £27 billion.

I was particularly struck by the table at the beginning of chapter 2 on the local housing allowance, which sets out the maximum amounts payable. For a one-bedroom flat or shared accommodation, the maximum amount payable is £250 a week. Everybody here will know, however, that a £1,000 monthly payment sustains a mortgage of £200,000. In my constituency, that would buy a four-bedroom house. The average cost of a new social housing unit is £120,000. How much better it would be if we could shift the finance from benefits to bricks and spend the money on building new homes.

The problem with this Government’s policy is that it has made life more difficult for many people, while the benefits bill has continued to rise. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, that has happened because the Government have not addressed the underlying issues. The OBR shows that while housing benefit to unemployed people has fallen and is projected to continue to fall, housing benefit to those in work will rise steadily between 2012 and 2019. This is yet another indication of the cost of living crisis that people face, and it demonstrates that the new poverty is in-work poverty.

The Select Committee quotes Lord Freud as saying that the case load in the private rented sector is up

“by around 8% nationally and by around 5% in London”.

That is because rents are going up, even though the quality of housing is going down. I hope the Minister will be able to clarify the position on rents, since the Select Committee reported before the Office for National Statistics admitted that mistakes were made in the assessment of rents in London. In other words, more people are in the private rented sector today, and more of them are on housing benefit.

[John Hemming]

I am aware of the proposal to transfer housing benefit money to local authorities with a view to building more properties. Let me ask this: what pays the rent of the people who are already in tenanted accommodation while the new properties are being built with that money?

[Helen Goodman]

That, of course, is the great conundrum. I hope to come on to demonstrate to the hon. Gentleman how the Government have intensified the housing crisis rather than eased it by bringing about the happy day when we have enough homes. What is happening is that people are renting because they cannot afford to buy, and they cannot afford to buy because house prices are rising faster than they can save. Today, the average house price is eight times the average income.

Under this Government, we have had record lows for house building, which is now down at 1920s levels, as well as record lows for home ownership. No action has been taken to protect people from rip-off rent rises. That is why the Labour Opposition propose to address these problems, give security to renters and build five times as many homes as the Prime Minister promised yesterday. It is equally clear that something needs to be done about raising low incomes. I shall not detain the House with our proposals to strengthen the minimum wage, but it is absolutely clear that that is part of the equation.

The Select Committee made a number of sharp criticisms of the bedroom tax, which was described as “a blunt instrument”. It said that its effect was particularly harsh in rural areas, which is true. If people in rural areas have to move, they have to move a long way out of the community in which their children might be going to school. The Select Committee pointed out that the impact is worst in the north-east, the north-west, Yorkshire and Humberside. It said that people in social housing often have no real choice when it comes to which accommodation they rent. It also said that the Department for Work and Pensions has adopted a much tighter definition of space than the one used by the Department for Communities and Local Government. It would be helpful if the Minister explained that as well.

However, what worries the Committee most is the impact on people with disabilities. We know that two thirds of those affected are disabled themselves or have a disabled family member. The Committee says that people are being pushed out of their homes when public money has already been spent on adapting them, and its Chair, my hon. Friend the Member for Aberdeen South (Dame Anne Begg), made that point today.

The criticism is justified. In answer to a parliamentary question, the Department for Communities and Local Government informed me that in 2013-14, local authorities had adapted 42,000 properties and provided an average grant of £4,227. The Department also said that the Government would spend £1 billion on adapting properties between 2011-12 and 2015-16. That is commendable, but the Government’s investment in disabled people’s living space is being undermined by the bedroom tax, because they are now being pushed out of those homes. The policy is hitting an estimated 100,000 people whose homes in the social sector have been adapted. That is disrupting lives and driving hardship, and it is a prime example of welfare waste. The Committee recommends the abolition of the bedroom tax in cases in which people have adapted their homes or are receiving the higher level of disability living allowance or personal independence payments, and the Opposition wholly support that recommendation.

The Committee also refers to the impact of the bedroom tax on carers, 60,000 of whom who have been very badly hit. It recommends that those who cannot share a room with a disabled partner, or who live in adapted homes, should be exempted from the tax. It also points out that carers are particularly badly affected by the benefit cap. I cannot help thinking that that is extremely unfair, because carers are doing the socially responsible thing. The Committee estimates that the free care that they offer is saving taxpayers £18,000 a year per person. The bedroom tax comprehensively fails the fairness test that the Government set themselves, and hits those who, through no fault of their own and through force of circumstance, cannot go out to work, so it is not meeting the “incentives to work” criterion either. That is why the Opposition are pledged to abolish it.

In most areas, people have not been able to move to smaller accommodation because of a shortage of smaller units and because of pre-existing waiting lists. The Government knew that when they introduced the bedroom tax, which is why they were able to forecast savings. That shows what a deeply cynical measure this has been.

The Committee also points out that the diversion of resources to dealing with the bedroom tax has involved a great deal of time, energy and expenditure on the part of the housing associations. It says that, according to the National Housing Federation, the costs associated with communicating with tenants, supporting them and tackling rent arrears will be equivalent to the amount that could be spent on building 17,500 new properties every year. That is why I say to the hon. Member for Birmingham, Yardley (John Hemming) that this is a perverse policy. It is a perverse diversion of resources from tackling the housing crisis to punishing the most vulnerable members of society. It is in fact another example of Tory welfare waste. This is before we even get on to the fact that if this Government are re-elected the average bill for a family, in terms of the bedroom tax, will be £3,800 over the lifetime of the Parliament, and we know from the Government’s own statistics that a further 1 million people will be caught in the net of the bedroom tax and 6.5 million people are at risk of having to pay it. The fact is that the Select Committee—an all-party Committee—recommended significant changes to the bedroom tax. The Government have failed to respond. People are looking forward to the general election when they can have a Labour Government who will abolish the bedroom tax.

--- Later in debate ---

[Mr Harper]

No, I do not, and I just remind the hon. Gentleman that the Liberal Democrats agreed to this policy and it remains the Government policy. I am sorry they have not stuck to it because I think it is a very sound policy. Let me set out why.

I was not going to spend a lot of time on this because the Committee did not, but I am afraid that the hon. Member for Bishop Auckland (Helen Goodman) made a lot of rather ridiculous assertions about welfare spending and I must take her to task on them. Being accused by the Labour party of wasting money on welfare is extraordinarily rich. The last Government increased spending on the welfare budget by 60%, costing every household an extra £3,000. The increase in welfare spending over this Parliament is going to be the lowest since the creation of the welfare state, and we will have made cumulative welfare reform savings of nearly £50,000 million over this Parliament, benefiting people across the country. In-work spending is stable and forecast to fall next year, even with employment at a record high. The out-of-work benefit bill is back to pre-recession levels, at 2.2% of GDP, and real spending on housing benefit fell between 2012-13 and 2013-14, for the first time in a decade. The overall case load has fallen, and housing benefit reforms have saved more than £6 billion during this Parliament, compared with what would have happened if we had continued with the policies of the Labour party. So I am afraid that the hon. Lady needs to go back and look at the record. If she does so, she will see which party has wasted money on welfare—and it is not the party of which I am a member. She needs to look in the mirror before she makes those kinds of silly accusations.

[Helen Goodman]

I should like to draw the Minister’s attention to the numbers provided by the Office for Budget Responsibility, which show total welfare spending in 2012-13 of £213 billion, and in 2015-16 of £219 billion. All the numbers that I quoted to the Minister were OBR numbers.

[Mr Harper]

I am not resiling from the numbers. Welfare spending has gone up over this Parliament, but it has done so at the lowest rate since the creation of the welfare state. The reforms that we have made to various welfare policies will have saved £50 billion over this Parliament compared with what would have happened if we had not made those reforms, and I think that that is sensible.

We have dealt with some of the issues that we inherited from the Labour party, and our changes are largely supported by the public. One such change is the benefit cap, and public support for that is very clear. The Opposition are not so enthusiastic about it, but 73% of the public support it and 77% of them agree that it is fair that no out-of-work household should get more than the average working household. In terms of fairness, that seems a pretty unremarkable policy, and it is one that we support even if the Labour party is unenthusiastic about it.

Our reforms to housing benefit, including the removal of the spare room subsidy, are dealing with some of the issues relating to using the housing stock more efficiently and dealing with overcrowding. My hon. Friend the Member for Birmingham, Yardley (John Hemming) drew our attention to overcrowding, and to the fact that not all local authorities are good at dealing with situations in which smaller families want to move to a smaller property while other properties are overcrowded. He made a sensible point.

[Mr Harper]

The Opposition clearly do not have a sensible policy. I will comment on this briefly, because I want to move on to address some of the points made by the Chairman of the Committee and others. Labour’s policy to remove the removal of the spare room subsidy would cost about £0.5 billion a year. The Opposition have set out three ways in which they would pay for that, and when we had an Opposition day debate in December, I went through them in some detail to demonstrate that they simply would not work. They say that their proposal to ensure that the building trade paid its fair share of tax would raise £380 million, but we have already dealt with those changes in the 2013 autumn statement, so that policy would raise no money. Their proposed change to the stamp duty reserve tax, which they characterise as a tax cut for hedge funds, would actually fall on pension funds and retail investors—in other words, on people who are saving for their retirement. Their third proposal is to end the employee shareholder scheme, but that would save no money in 2015-16.

The shadow Secretary of State, the hon. Member for Leeds West (Rachel Reeves), has said that the first thing she will do when she walks into the Department for Work and Pensions as Secretary of State will be to change our policy on the removal of the spare room subsidy. If she did so, however, she would have to find £0.5 billion to pay for it and at the moment she has not set out how she is going to do that. The first thing her officials are going to say to her is, “Secretary of State, where are you going to find half a billion pounds?” Labour is unable to answer that question at the moment.

Hon. Members also referred to universal credit, with my hon. Friend the Member for Daventry (Chris Heaton-Harris), an experienced member of the Public Accounts Committee, being very supportive of that. He asked me a specific question, picking up on a point made by the Select Committee Chair; this was about rent arrears, with reference being made to a specific set of pilots. My understanding is that the difference was that for direct payments, where the money was being paid to the landlord directly, 99.1% of rent owed was paid, but the figure fell to 95.5% where people were managing the payments themselves. Over time, however, the impact of direct payments lessened significantly; half the arrears occurred in the first month, and by the 18th payment the figure for tenants who were being given the money and making those rent payments had risen to 99%, which is more or less the same as for direct payments to landlords.

That is important, because a key point of universal credit is about putting households on out-of-work universal credit in the same position as they will be in when they are in work: taking responsibility for paying the rent themselves. I listened carefully to what the hon. Lady said, because she made the comparison with the position in the private sector, where that is already the case, and then referred to the fact that in the social rented sector it was a change. It is a change, but the vast majority of the people who rent properties in the social rented sector are perfectly capable of managing their money, being given responsibility for it and paying their rent, just like everybody else. Some people will need some budgeting support and some support to move from the position they are in now to taking that responsibility, and that support is going to be delivered through our universal credit support delivered locally. A small minority of claimants may be unable to do that, and we have put in place alternative payment arrangements for them. That approach has been developed as we have rolled out universal credit carefully without our “test and learn” approach. She will know that we have also put regulations in place to enable us to share with social housing landlords the fact that someone is in receipt of, or has made a claim for, universal credit, so that they are able to put in place the appropriate support for vulnerable tenants.

A number of Members also referred, in the context of the removal of the spare room subsidy, to the amount of discretionary housing payment. That is one area where we are able to deal with some of the specific issues, for example, on significantly adapted accommodation. A specific amount of the discretionary housing payment, about £25 million, is for local authorities to enable people to stay in adapted accommodation. Of course, where properties have been specifically adapted for tenants with mobility needs, it does not make sense to insist that they move. That is exactly why we have made the money available to enable councils to deal with that, and I trust local authorities to make those sensible decisions. They have the facts at their disposal, will know the circumstances of people locally, will know the facts about the disabled adaptation grant that has been paid and are in the best position to make those decisions locally. I believe in localism and in trusting local authorities to make the decisions. Sometimes they might make decisions that people will characterise as wrong, but I am prepared to trust them to make sensible decisions.

On the availability of properties, it is also worth saying that in the social rented sector there are 1.4 million one-bedroom properties, with more than 130,000 new lets a year. So there is a significant amount of turnover; about 10% of the one-bedroom properties turn over each year. So if social landlords are properly managing and prioritising their housing stock, that should enable them, over a period, to enable people to move into smaller properties. Some 60% of social sector tenants are either single people or childless couples and require only one bedroom. Landlords are starting to respond to that, and we are seeing local authorities and housing associations now properly designing their housing stock to meet the demographic need of their potential tenants.

[Helen Goodman]

On a point of clarification, were those overall numbers that the Minister was quoting to the House inclusive of old age pensioners or not?

[Mr Harper]

Those were 1.4 million one-bedroom properties across the social rented sector, with 130,000 new lets. I think that that is the total number of properties that are available.