Housing Benefit

Iain Duncan Smith Excerpts

Tuesday 9th November 2010 Commons Chamber

[Mr Alexander]

I will give way in a moment or two. Next, it is stated that in the past five years housing benefit has risen by £5 billion and it has been suggested that the cuts are necessary to stop a soaring housing benefit bill. Housing benefit did rise by about 21% during the recession—that is undisputed—but that was driven by a case load that increased by 18%, including a 26% increase in respect of those of working age; it was not driven by a few rents.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Perhaps the right hon. Gentleman would like to explain how the figures show that the real-terms increase over the past five years was 50%, not 18%. That was fuelled hugely by the Labour Government’s reform to local housing allowance. The figures show that today’s rates of LHA are 10% higher than those that they inherited, and that is due to their change. Perhaps he would like to explain that.

[Mr Alexander]

I am happy to come on to deal with exactly those points, which echo some that we have heard.

[Mr Alexander]

I shall seek to let the hon. Gentleman in as soon as I can. Housing benefit bills—

[Mr Duncan Smith]

Explain it.

[Mr Alexander]

I am just about to explain it, if the right hon. Gentleman would just exercise a little patience. If he had done his homework, he would know that his Department’s own statistics show that since 2000 more than half the increase in the housing benefit bill—54%—did not come from the few high claims. It came from poorer private tenants—those in low-paid work, and disabled or elderly people—claiming housing benefit. More than half the increase is coming from more people claiming, not from significantly increased rents. What Ministers seem to fail to understand is the number of households on local housing allowance who are in work. Over the past two years, there have been 250,000 new cases in work claiming LHA. During the recession, as wages and the hours that people were able to work fell, people turned to housing benefit and to LHA to stop themselves being made homeless. In recent years, during the recession, housing benefit has been vital in keeping people in their homes.

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[Mr Alexander]

I have great respect for the hon. Gentleman, but there is a difference between having a duty to act—and we support the case for reform in housing benefit—[Hon. Members: “Ah!”] I know that that might be an uncomfortable truth for those on the Government Benches, but there is a difference between a duty to act and acting in such a precipitate and reckless fashion that it ultimately ends up costing the taxpayer more. I think the hon. Gentleman is just old enough to recollect that under the Conservatives in the ’80s and ’90s the impact of higher homelessness was a greater cost to the taxpayer; it did not lower bills for the taxpayer.

The core of the Government’s policy is their belief that by cutting or capping housing benefit—this has been the substance of a couple of interventions—they will reduce the level of rents in the private sector and thus reduce the deficit. In seeking to find a rationale for the scale and speed of the cuts, the Government seem to be getting themselves in some difficulty. The Daily Telegraph today sets out that LHA rents are rising faster than non-LHA rents in the private sector. The Government’s regulations require that the LHA rates are set at the median of the private rental sector rent, excluding those let to housing benefit claimants, so rent officers collect data on non-housing benefit rents in each broad rental area market and use that data to set the local housing allowance.

In passing, incidentally, if the Secretary of State is so concerned about rent levels in the private sector, will he explain why he decided to scrap our proposals for a national register of landlords or indeed for the regulation of letting and management agents, designed to give more protection to tenants? The sound of silence is deafening. Why did he bin the recommendations of the Rugg review?

[Mr Duncan Smith]

Bureaucratic nonsense.

[Mr Alexander]

I do not think that protecting tenants from bad landlords is bureaucratic nonsense. If the Secretary of State did more than visit Easterhouse, he might share that point of view.

Not only does the Government’s core belief that rents will fall risk failing to reflect how LHA works, at a much deeper level it risks ignoring what is happening in the housing market at the moment. Rents in the sector will probably rise, according to the National Landlords Association, which has published results of a poll showing that 50% of landlords would not reduce their rents at all and that nine out of 10 would not rent to housing benefit recipients—[Interruption.] From a sedentary position, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), says, “They would say that, wouldn’t they?” Would that be the claim that he would make against Shelter, the indisputably well-recognised housing charity? “Yes,” I hear from Conservative Back-Benchers. Well, their interventions are perhaps more telling than they realise.

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[Mr Alexander]

I can understand the embarrassment of those on the Government Front Bench, but whether it is the Deputy Prime Minister attacking the Institute for Fiscal Studies or the Secretary of State for Work and Pensions attacking the Archbishop of Canterbury, they diminish the case that they are trying to make.

[Mr Duncan Smith]

I would like an answer from the right hon. Gentleman now. He was asked an interesting question. Does he agree with Opposition Members, such as the hon. Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who think that our measures will socially cleanse London? Will he please answer that question?

[Mr Alexander]

I have a clear view that if these proposals pass unamended, London will look very different in the years ahead. [Interruption.] I noted that the Secretary of State did not dispute the fact that he had attacked the Archbishop of Canterbury. Perhaps he will choose to do that next time.

[Mr Duncan Smith]

rose—

[Mr Alexander]

I am happy to give way.

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[Mr Duncan Smith]

I just want a straight answer. Does the right hon. Gentleman agree with his right hon. and hon. Friends, including the hon. Member for East Kilbride, Strathaven and Lesmahagow, who for the past two weeks have said that what we are doing will remove every social tenant from London and socially cleanse it? Is that correct?

[Mr Alexander]

I have said that I think London will look very different in the years ahead if the Government’s proposals are passed. We can have a contest across the Floor of the House in which I ask the right hon. Gentleman how he feels about Boris, and he can ask me how I feel about some Labour Back Benchers. I know it is uncomfortable for the Secretary of State, but this is a debate about the Government’s policies, not about my words.

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[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I rise to oppose for a number of reasons the motion moved by the Opposition. I will deal with it quickly, and then move on to the rest of the rationale behind the speech by the right hon. Member for Paisley and Renfrewshire South (Mr Alexander).

In the past two weeks—particularly, in the past two or three days—the right hon. Gentleman has started trying to reset the tone in the motion. None the less, the facts are exaggerated. For example, there is the ridiculous fact that we might have to spend an additional £120 million to provide temporary accommodation. That is ludicrous. There is no policy in this motion at all. Despite the major deficit that we have inherited, and despite the fact that housing benefit is running out of control, he did not say a thing about what he is planning to do. Opposition comes with responsibilities, and one of them is to have some policies before criticising, but the Labour party has none.

The right hon. Gentleman is basically a reasonable man, and I look forward to dealing with him—[Interruption.] That is very kind. Thank you. So we are all reasonable across the Dispatch Box. But what is not reasonable is what has gone on over the past two weeks. I am pleased that in the past few days he has suddenly entered the fray, because he was suspiciously silent when a lot of his colleagues were running up and down the place trying to frighten the public about the changes. In many senses that was quite disreputable. Two weeks ago, the hon. Member for Rhondda (Chris Bryant)—the right hon. Gentleman’s hon. Friend—accused us of deliberately trying to “socially cleanse” London, and that is in Hansard. Furthermore, in the other place, one of the right hon. Gentleman’s great friends, Baroness Hollis, talked of

“Weeping children, desperate mothers, defeated fathers …carnage”.—[Official Report, House of Lords, 4 November 2010; Vol. 721, c. 1743.]

This has gone too far. I should also say that, encouraged by a nod and a wink from his Front-Bench colleagues, one of their great supporters in one of the national papers—a columnist—talked about our “final solution” for the poor. What they have actually managed to do—

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way in a minute, but not right now, because I want the Opposition to chew on this for a little. The way in which they have behaved over the past two weeks has been atrocious and outrageous. They knowingly used terminology used to describe events such as the holocaust, making shrill allegations of bitter intent that they knew would frighten rather than inform. I say “rather than inform”, because until Saturday, when the right hon. Member for Paisley and Renfrewshire South gave his interview to The Guardian, the Opposition’s manic rabble-rousing had failed to tell the public a rather interesting point: that had Labour Members been re-elected, they knew that they would have had to take strong measures. I will read a few quotations that should explain to his Back-Bench colleagues just exactly what Labour was planning to do.

The first quotation that I want to give them is from somebody whom I hope they will identify: their right hon. Friend the Leader of the Opposition. He said:

“Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford.”

In the run-up to the election, the then Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), said that Labour’s LHA—he was describing his own party’s reform—had discouraged employment and was unfair. He made it clear that the policy was set for a major change and that Labour was to blame.

[Mr Lammy]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

Before I do, I want to finish this one off. My predecessor, the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), went even further before the previous election, hinting strongly at a much bigger change. She said that

“it isn’t fair for the taxpayer to fund a very small minority of people to live in expensive houses which hardworking families could never afford.”

I wonder who was in power for those 10 years, but none the less. While acknowledging that Labour’s flagship LHA reform was in an expensive mess, she went on:

“We will publish further plans…to make the system fairer, and to make sure housing benefit encourages people into jobs.”

Of course, as with everything else that Labour Front Benchers did before the last election, they cynically refused explicitly to tell their own Back Benchers or the public—the electorate—what they were actually planning. So now we learn that, according to the hon. Member for Rhondda, all those Back Benchers apparently stood on a secret manifesto to socially cleanse London. Knowing the hon. Gentleman as I do, I am sure that had Labour Members been in government and raised such matters, he would have been the first to jump to their defence, like he always was. The answer to that is: shame on them for scaring all those people in London.

[Mr Douglas Alexander]

Let me invite the right hon. Gentleman to get off his high horse for a moment. He seems to be claiming that there is a conspiracy on the part of the Labour Front-Bench team against the Labour Back Benchers not to tell them what was in the manifesto on which they were elected. If he has established that there is a consistent approach between me and my predecessors in my current role, would he like to share with the House his thinking about the comments that were offered by the Conservative Mayor of London about the proposals, Boris Johnson?

[Mr Duncan Smith]

I agree with Boris Johnson. What he said is that there will be no “Kosovo-style cleansing” of London. Quite right. He was responding to the scare stories and the scaremongering of all those on the Opposition Benches, because that is exactly the phraseology that they were using.

[Emily Thornberry]

Will the right hon. Gentleman help us now? Which Front Bencher has been scaring my constituents by saying that the policy will be worse than the highland clearances? Which shameful Front Bencher has been telling the press that?

[Mr Duncan Smith]

I think that that is the case on the Opposition side. The reality is that they have been scaring the public, and they know it. I detect just a little dog whistle blowing from those on the Labour Benches, freezing and frightening everybody out there in the socially rented sector.

[Toby Perkins (Chesterfield) (Lab)]

rose—

[Mr Duncan Smith]

I want to deal with some of the allegations. Opposition Members made the allegations, so let us get the record straight. The first was that London will somehow end up like Paris—socially cleansed so that people live only on the outer circle.

[Mr Lammy]

It is true.

[Mr Duncan Smith]

Oh, it is true? Okay. Let me remind the House about one simple point. The proposed changes to the local housing allowance concern the private rented sector. London has nearly 800,000 social homes—by the way, the Labour Government built far too few in their time—and the changes do not affect them. London has social housing embedded in its heart, and that will not change. So Labour Members must have known that they were scaring people with a complete pack of lies and nonsense. [Interruption.]

[Mr Speaker]

Order. I apologise to the Secretary of State. I accept that there are strong views on this matter, and that the atmosphere is highly charged, but there are many subscribers to this debate, and for the benefit of Back-Bench Members, the Chair would like to accommodate as many as possible. The more noise there is, the greater the delay, and the more difficult it will be to accommodate them. Perhaps we can calm down a little.

[Mr Duncan Smith]

I am grateful to you, Mr Speaker. In the calmer mood, I will give way to the hon. Member for Hampstead and Kilburn (Glenda Jackson).

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

Is it not also part of the right hon. Gentleman’s housing policy to ensure that rents in the social housing sector will rise to 90% of the median, and that the Government are considering abolishing secure tenancies?

[Mr Duncan Smith]

The answer is no for existing tenants. Our policy will apply to new tenants and new build, so the hon. Lady should check her facts.

Let us not forget that the private rental market is dynamic. That is the point that the Opposition fail to mention.

[Angie Bray (Ealing Central and Acton) (Con)]

Will my right hon. Friend give way?

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[Mr Duncan Smith]

I will give way in a moment.

Around 40% of private rental tenancies are less than a year old, and 70% are less than three years old. What effectively happens in the marketplace is that there is a huge amount of movement. Another nonsense that Opposition Members have peddled over the past two weeks is that the sector is made up of a static group of people who have mostly lived in the same place all their lives and that we are about to uproot people who have a reasonable and rational reason to live where they are. In the past year, more than 100,000 people in the sector moved naturally. The idea that we will go in and raid all those homes is utter nonsense and scaremongering.

[Mr Slaughter]

The report referred to earlier says that independent research shows that 134,000 households will be evicted or forced to move when the cuts come in next year, and those are just the first set of cuts. It is the Government’s policy to get rid of new social tenancies and to raise rents for new tenants to 80%. Over a period, the exact effect of that combination of measures will mean that no one on a low income can live in the inner city. Will the right hon. Gentleman have the courage to admit that that is his Government’s policy?

[Mr Duncan Smith]

The impact assessment does not say that, and it is typical of the Opposition to take a figure for those who will be affected and assume automatically that they will be driven out of their homes. That is shameful.

[Angie Bray]

The scaremongering is a disgrace, and I am sure that many of us have had scared constituents coming to us having been worried unnecessarily by stories that they have heard from Labour Members. I have been looking online at some of the properties on offer in the private rented sector in Ealing and Central Acton. There are some remarkably good offers around that are well within the proposed caps—for example, a four-bedroom house with a garden at under £400 a week, and a flat for about £250 a week with access to a swimming pool. The situation is really not as dire as the Opposition are suggesting.

[Mr Duncan Smith]

My hon. Friend is right. We believe, and our calculations show that one third of all properties are available and will be ready for those who have to move. I say “have to move” because that assumes a static marketplace, and this marketplace is not static. I will return to that point in a second.

[Mr Clive Betts (Sheffield South East) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will give way in a moment.

I want to deal with another point that is being trumpeted by Labour Members, and some others who have risen to the worst extent of some of the figures. Families with children over 10 who must share a bedroom are classed as homeless and that led to the strange suggestion during an exchange in the Select Committee that tens of thousands of people will be homeless. That definition of homelessness is not one that I recognise. In fact, I looked at the report of that Select Committee and I note that my hon. Friend the Member for Bromsgrove (Sajid Javid) asked Roger Harding of Shelter whether he, my hon. Friend, having shared a bedroom as a child, had been homeless according to Shelter’s definition. Shelter’s response was yes, he had been. We are none of us served by this kind of nonsense. By all means let us have a rational debate about the reality of what we are trying to do.

[Mr Douglas Alexander]

rose—

[Mr Duncan Smith]

I will give way to the right hon. Gentleman in a moment. I am quite happy to engage with him on this point, but, in answer to my original question, will he now disown all those who have been running around the houses telling everybody that there will be social cleansing and that all these people will be made homeless? Will he now say that that is not true, and will he apologise for what they were doing?

[Mr Alexander]

I do not think that the best interests of the country are served by the kind of exchange that the right hon. Gentleman is engaging in. I accept his offer of a rational conversation, however, and he has just raised the issue of the definition of homelessness. Only last week, his fellow Minister Lord Freud said that it was desirable that the legislation be changed in relation to the category of homelessness. Will the Secretary of State please clarify the Government’s position on this? Is he supportive of changing homelessness legislation, or is he now going to cut his own Minister adrift?

[Mr Duncan Smith]

We have absolutely no plans to do that. Furthermore, if the right hon. Gentleman wants to engage in a sensible, constructive discussion on how we define homelessness, I am happy to do that. The point I am making about what has been going on is that Opposition Members should know better—he has an ex-housing Minister sitting next to him—and that they know full well that those definitions of “homeless” are simply not true. He should have disowned them early on, before we started this debate.

[Simon Hughes]

The Secretary of State is rightly trying to lower the temperature and to ensure that we deal in facts and not in hyperbole. Will he take this opportunity to deal with one other myth that has become common? Will he confirm that, if anyone in the private rented sector has to move because their property has become too expensive, it is not the Government’s policy that they should move to a far-off community with which they have no links, and that the intention will always be that they should ideally stay in the community or council area where they come from and where they have lived?

[Mr Duncan Smith]

That is exactly what we want and what we intend. That is what we believe, for the most part, will actually happen—and in smaller numbers than people think. In some cases, there will be short moves even within boroughs.

I was asked about impact assessments, and we are going to publish them. We are bound to do so by the legislation. I am not trying to hide from that. We published an impact assessment after the Budget, and we are going to publish them when the legislation is due. I have already said that we will do that.

[Sajid Javid (Bromsgrove) (Con)]

My right hon. Friend was right to point out that I was shocked to learn in the Select Committee that I had been homeless as a child. I believe, however, that the question is not so much one of the definition of homelessness as one of whether people living on housing benefit should be forced to make the same choices that other low-income working families are forced to make. Those low-income working families typically pay rent to the 30th percentile and their children are forced to share bedrooms, as they would be in any ordinary family. It should be no different for anyone on housing benefit.

[Mr Duncan Smith]

My hon. Friend’s exchange was the most interesting one to come out of that Committee sitting, and he is right about this. I do not think that the previous Government intended these consequences; they simply failed to recognise that their change was going to fuel this growth. If they are honest with themselves, they would say that they know that. The ex-Chancellor actually said that he thought that this was out of control. These are the sort of choices that ordinary people have to make when they cut their budgets in accordance with what housing they can afford, and that is what we are trying to do here. It is not about punishing people; it is about trying to get the rents in the social area of private renting back into line with what people are paying who are working and earning marginal incomes and are therefore unable to make ends meet.

[Mr Douglas Alexander]

The right hon. Gentleman has just made a statement saying that this is not about punishing people. Can he reconcile that statement with his policy of cutting 10% of somebody’s housing benefit, when that person has done everything right, turned up for interviews, filled in applications and sought to secure jobs but alas, in a job market where five claimants chase every vacancy, has been unable to secure a job after 12 months?

[Mr Duncan Smith]

The realities of what we are bringing in around that will make the change happen. [Hon. Members: “What?”] Wait a minute—here is the real point. About 90% of all those who are unemployed are back into work within the year. That leaves us with a target of 10%. Remember that we are now bringing in the Work programme, which will work extensively with all the people in that category and return them to work. As I said to the right hon. Gentleman earlier, the changes we are making to the benefit system will make it much easier for those people to go back to work. My point is simply this: they will be achievable; they get rid of a disincentive to go to work, and we believe that they will actually work.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I give way to the hon. Member for Colchester (Bob Russell).

[Bob Russell]

Will my right hon. Friend clarify a point? Is he saying that rents are too high in the private sector? If that is the case—I am sure that is what he said—should there not be, in the interests of fairness, other measures to deal with landlords whose rents are too high?

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[Mr Duncan Smith]

Let me deal with that question. My Department pays for 40% of all rental housing in Britain—we pay 40% of the total bills—and is the biggest purchaser. What we do therefore has a massive effect on the marketplace. This is the point that Labour Members missed out on when they were in government. Any change they made had a direct effect on the marketplace. My simple point to the right hon. Member for Paisley and Renfrewshire South is that the change in local housing allowance, as we can see from the graphs, fuelled an immediate increase—it was not just down to the recession, but down to two particular factors. In getting the calculations wrong about the median line and the capping, they ended up allowing LHA to rocket to provide landlords with excess amounts of money for providing housing that would have cost less. How do we know that? [Interruption.] I am going to answer this really important question.

We know that for two good reasons. First, if we compare those who remained on what was there before—it did not change for them because it was new people who came on to LHA—we find that the differential between where they are now and where the LHA rate is amounts to 10%. LHA growth is thus 10% above where we might have been had the change not been made. That is the first thing. [Interruption.] Hold on a second. That was one factor that fuelled the problem because it allowed landlords to push up to the 50% point, which is exactly what they did.

The second point is that there are many things we can do. We now know that, according to the Office for National Statistics, the private marketplace in housing—Labour Members are completely wrong about this—fell by around 5% last year. At the same time, LHA rates, which the previous Government had set and left to us, had risen by 3%. There is thus a 7% gap with what is going on in the marketplace. What we want to do, by working with councils, is to drive those rents back down. The purpose of these changes is to give a real impetus to getting the rents down to make affordable housing more available in some areas.

[Andrea Leadsom (South Northamptonshire) (Con)]

I have an excellent researcher who earns £22,000 a year. Just before I came to attend this debate, he pointed out that he has to commute into London because he cannot afford a room in central London. He remarked that his best chance of getting a flat in central London was to resign from his job and make himself homeless.

[Several hon. Members]

rose—

[Mr Duncan Smith]

May I answer my hon. Friend’s point first before I give way? My hon. Friend’s real point is that there is no fairness in this particular system when people who have to make decisions about their housing have to commute distances to get to work. That is the reality for them. The idea that people can live exactly where there is work is simply not the case. That is the choice that people have to make.

[Several hon. Members]

rose—

[Mr Duncan Smith]

Many of the colleagues of the right hon. Member for Paisley and Renfrewshire South want me to give way to them. Does he really want to take their place? Okay—

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[Mr Alexander]

I would not wish the Secretary of State, however inadvertently, to leave the House with a misapprehension in relation to the impact of the 10% cut in housing benefit on those receiving jobseeker’s allowance who find themselves unemployed after a year. If I heard him correctly, he came close to saying that people would not lose out because of other changes to the benefits system, such as the introduction of the Work programme. Will he therefore explain why, in the Red Book, it is scored as a saving of £110 million? Either people will lose money and be punished because they find themselves unemployed after 12 months, or they will be better off, in which case there should not be that saving score in the Red Book.

[Mr Duncan Smith]

We do not believe that they will reach that point. If the right hon. Gentleman looks at the figures—

[Mr Alexander]

rose—

[Mr Duncan Smith]

I will come back to the right hon. Gentleman in a second. In the current static state, we will save money through the reforms that we have made.

[Mr Marsden]

The right hon. Gentleman is setting the cap and justifying the 10% cut for the long-term unemployed on the basis that people will be moved from welfare into work. Does he not realise that part of that process involves retraining and reskilling? If he does realise that, why has there been so little discussion between him and Ministers from the Department for Business, Innovation and Skills?

[Mr Duncan Smith]

I do not quite understand why the hon. Gentleman asks that question. I have been talking about the issue endlessly to Ministers from the Department for Business, Innovation and Skills. [Interruption.] The hon. Gentleman can take my word for it that I have spent a great deal of time talking to them, but if he would like to attend the next meeting, I should be more than happy to invite him.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way, but I want to make some progress first.

The fact is that we have heard a lot of this nonsense. We have put aside a large amount of money—some £140 million, and we have been keeping the position under review—so that we can deal with the hardest cases when we believe that it is necessary for anyone to be affected or moved. The Department for Communities and Local Government is assisting us with that.

Among the Opposition’s other charges was the charge that our changes were somehow not fair. The maximum rent following a cap—and the Opposition still have not said whether they agree with it—is £400, the weekly equivalent of more than £20,000 a year. Let me remind the House what someone who was out there earning would have to earn to pay that £20,000. That person would have to earn £80,000. The Government left us an LHA rate of £104,000 a year. Someone would have to earn £250,000 a year to pay that in rent. [Interruption.] I fully accept that we are dealing with the top end of the cases, who constitute by no means the largest number. The point is, however, that the previous Government were so slack with the system that they allowed abuses and excesses. Before the last election, even people on their own side were saying that they would have to change it. That is the reality.

[Toby Perkins]

Will the Secretary of State give way?

[Mr Duncan Smith]

I will, but then I must make some more progress.

[Toby Perkins]

I think that the Secretary of State is focusing excessively on the cap. My right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) has already made it clear that that is not the main focus of our objections to the Government’s proposals. The Secretary of State dealt with myths earlier. Will he now deal with the myth that housing benefit recipients are out of work? Many of them are working, but they are low-paid. More than 350 of them in Chesterfield will be badly affected, when they are trying to work their way towards a better life. Why are they the people whom the Secretary of State is attacking with his policy?

[Mr Duncan Smith]

There are people in work who receive housing benefit, but the worst aspect of the changes with which the previous Government left us is that many of them are now trapped in short working hours. They dare not work for more hours, because they would lose too much of their housing benefit and would lose their homes as a consequence. Setting housing benefit at the levels at which the previous Government set it was no kindness to people who really do want to get on and work longer hours, because they are faced with the invidious choice of whether to move. That is one of the reasons more than 100,000 people moved in the rental market last year. Many people have to move to find a house that is suitable so that they can go and find better work. That is the reality. The hon. Gentleman’s party left us with that situation, and it is his party that he should now blame for the mess and chaos.

[Ms Karen Buck (Westminster North) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

I must make a bit of progress. I will give way in a second.

Although that was not the largest number, the fact is that the top 5,000 of those cases of housing benefit cost the Exchequer £100 million a year. Unless Labour Members think that £100 million a year is not a lot of money, I should like to know why the shadow Secretary of State does not say that he agrees with the capping system that we want to introduce. Will he perhaps tell me whether he agrees with the capping system? No, he will not. Yet again we have heard no policy from the Opposition, but the fact is that we inherited a chaotic housing system.

[Mr Alexander]

I repeat what I said earlier: we want to avoid the arbitrary imposition of an immediate cap resulting in higher costs, not lower costs, for the taxpayer. We are prepared to look at a phased approach, but we also think that a regional cap should be considered. Is that clear enough for the right hon. Gentleman?

[Mr Duncan Smith]

The right hon. Gentleman knows that the vast majority of that £100 million comes from London. So what is he saying? Is he going to impose a cap on London?

[Mr Alexander]

Even the right hon. Gentleman and I would agree that London is contained within one of the regions of the United Kingdom.

[Mr Duncan Smith]

At last, we have an admission from the shadow Secretary of State that Labour is going to cap this. Now we only have to deal with the levels. It is unbelievable. If he wants to say that he is going to cap it, why was that not in the motion? There is not a word. Labour Members have spent the last two weeks scaring everybody out there and then not daring to tell people that they themselves want to cap. What a ridiculous lot of nonsense. The reality is that we inherited the mess that their Government left behind.

[Ms Buck]

On that point, will the right hon. Gentleman confirm that the Mayor of London’s housing adviser has stated that, in London alone, the cost of temporary accommodation for homeless households, arising from the impact of the caps, could exceed the total savings by £13 million in one region alone? Will he also confirm that the figure for working households on local housing allowance is almost half the total case load, including those on JSA with the 90% annual turnover that he has just confirmed?

[Mr Duncan Smith]

The reality is that the adviser said that before he even knew how much we were using for the discretionary allowance. [Interruption.] Hold on a second. He said “could”. The reality is that this is not going to happen. There should be no need, with the discretionary allowance, for people to be made homeless. That is just the nonsense with which Labour Members want to scare everybody.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, no; I am already answering the question. I do not agree and we do not agree with the statement that the adviser made. I have explained the issue to him personally, and he has accepted that.

[Ms Buck]

rose—

[Mr Duncan Smith]

No, I am not going to give way. I also want to say to the hon. Lady that she includes in her figures those who are in work with those on jobseeker’s allowance. She must not confuse two different positions, yet again trying to merge figures that are not right.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I am going to make progress. Labour Members continue to try to accelerate the figures to the worst level and then make ludicrous assumptions. That is what is going on. The fact is that we inherited 5 million people on out-of-work benefits from the Labour Government—the hon. Lady was in the Government—which they did nothing about at all. Two million people of working age are claiming incapacity benefit, of whom 900,000 have been claiming it for an entire decade.

The figures that lie behind this issue are astonishing. Today we spend £1 in £3 on British welfare, which that Government left us, yet youth unemployment is higher, inequality is greater and there are 800,000 more working-age adults in poverty than in 1998-99. That is the great record of the last Government.

[Andrew Griffiths (Burton) (Con)]

rose—

[Mr Duncan Smith]

The housing benefit reforms have to be seen in the context of that terrible bill that we were left. Housing benefit has rocketed from £14 billion in 2005-06 to nearly £22 billion in cash terms in 2010-11. By the way, I say to the right hon. Member for Don Valley (Caroline Flint), who I gather was on TV earlier saying that the benefit was basically in a steady state, that that is a real-terms 50% increase in the housing bill. That does not sound like a steady state to me or anybody else I know.

If left unreformed, the budget is projected to reach £24 billion in 2014-15. That is £1,500 per taxpayer per year. If Labour Members think that reasonable and fair—

[Mr Alexander]

rose—

[Mr Duncan Smith]

No, I am not giving way right now because somebody else wants to intervene. If Labour Members think that that budget is fair, they should say to taxpayers, “We think it’s fair to charge you, who are working hard, more, to give people housing that they could not afford if they were in work.”

[Andrew Griffiths]

I thank the Secretary of State for giving way. He will know that one of the myths put about by the Opposition was that councils in London were already booking bed and breakfasts across the city to cope with the consequences of this policy. I draw the Secretary of State’s attention to a website called FullFact.org, which has made some freedom of information requests to local authorities in London. I shall pick just a few. In Kensington and Chelsea, no such bookings have been made; in Wandsworth, no bookings have been made in bed and breakfasts; Lewisham council confirms that it has not made any bookings—

[Madam Deputy Speaker]

Order. That was supposed to be an intervention, not an opportunity to read statistics on to the record. I am sure the Secretary of State is perfectly capable of doing that himself.

[Mr Duncan Smith]

My hon. Friend the Member for Burton (Andrew Griffiths) is right. That was based on one comment by one person, who backed it up with no evidence. The point here is that, as we are discussing with councils, there is no need for them to worry about having to put people into homeless accommodation because once we get these numbers right, which we believe we are doing, the money we will be allowing will be sufficient to cover the costs, such as for rents and school year changes, of those who may have to move, of whom there will be far fewer than the Opposition claim. That is the real point, so my hon. Friend is right. What did Labour do with the figure in question? They just used it by ramping it up and saying, “This is terrible, all these people are going to be shipped out to Reading or somewhere on the south coast”—another scare story put about by Labour. It is absurd.

[Mr Alexander]

rose—

[Mr Duncan Smith]

If the right hon. Gentleman wants to intervene yet again, he should take the opportunity to say something that he should have made clear in his speech: that he abhors all those who have frightened everybody over homelessness.

[Mr Alexander]

I am very happy to condemn people who frighten on the basis of figures, like those the right hon. Gentleman has just used to suggest the total housing benefit bill at the end of this Parliament, as that is premised on there being absolutely no change in this Parliament, despite the fact that in the first half of his speech he seemed to argue that we had had lots of reform proposals up our sleeve. Please may we have some logic and rationality? Either we were proposing to reform the system, in which case the figure will not be £24 billion, or we were not going to reform it, in which case it was. Which is it?

[Mr Duncan Smith]

There was nothing in the spending plans and Labour Members never had the courage to tell the general public what they were going to do. They fought an election on a false premise. [Interruption.] They pretended—[Interruption.] No, it was they who pretended. They fought an election on the false premise that somehow they were not going to have to make these changes and they were not going to be severe. Perhaps the right hon. Gentleman will now tell me by exactly how much they were planning to cut the housing budget; would he like me to give way so he can tell me that? He does not rise to his feet because he cannot argue that case; he is completely wrong. Labour says one thing to the public and something else in its private discussions.

I want to make one other important point. I recently appeared before the Select Committee and an Opposition Member put it to me that one reason the local housing allowance figures had risen so much was that there was not enough social housing. I agree, but who do we have to blame for that over the past 10 years? That is the point. [Interruption.] Yes, 13 years in total, but the situation was particularly bad during the last 10 of them.

We must remember that the previous Government left us with a house building record that is the lowest since the early 1920s. Affordable housing supply as a whole was down by more than a third under the last Government. On average, 21,800 social rented homes were built each year, even lower than the figure—which they used to argue was too low—achieved by the previous Conservative Government, which was 39,000 a year.

The reality is that Labour Members set a double whammy for themselves. They introduced an LHA which then rose because they did not build enough houses, and they allowed the whole private rented market to balloon, all because of their failure during their period in government. I hope they will apologise for that one day, but I suspect not.

--- Later in debate ---

[Mr Raynsford]

rose—

[Mr Duncan Smith]

I will give way in a minute.

Nine tenths of the rise in housing benefit in the past 10 years is down to increased rents. To put that into context, if that increased spend in rents going to private landlords had instead been used to invest in social housing, we would have had 80,000 social homes being built per year. I therefore wonder who Labour Members think has squandered the money they had flowing into the Exchequer. Political short-termism was the reason for that.

[Mr Raynsford]

rose—

[Mr Duncan Smith]

Okay, I will give way to the right hon. Gentleman as he was one of those responsible.

[Mr Raynsford]

Will the Secretary of State please now put the record straight and say that the increase in housing benefit attributable to rent increase covers both the social and the private sectors, and that the increase in housing association rents contributed to building the homes that were built? Will he now put the record straight and say it is completely wrong to imply that this is entirely going to private landlords when it is not?

[Mr Duncan Smith]

When the right hon. Gentleman is in a hole he should stop digging. The reality is that he was responsible for one of the lowest levels of building social housing. I do not know whether he is proud of that, but I would not be if I were sitting there with him.

We have to ensure that people who pay their way without recourse to benefits will no longer have to subsidise people who live in properties that the former could not afford. As I said, the maximum rate under the cap will be set at a level that is affordable and which some will consider generous. Based on what people spend on average on housing, the figure will be quite high; about £80,000 a year is what you would have to have.

[Mr Betts]

rose—

[Mr Duncan Smith]

Forgive me, but I am going to make some progress, as I have given way a lot. I might give way again later.

Through the emergency Budget and spending review, we proposed a set of housing benefit reforms designed to bring back under control a system that has been out of control. I accept that the responsibility of Government is always to get the balance right as we protect, incentivise, and ensure fairness in the system. Critically, for housing, that means getting the rents down. Landlords have a responsibility, and I am prepared and determined to work with councils, with the Mayor of London and with any other mayor to help get those rents down. We are the biggest purchaser of rents and I believe we will have a real role to play there. As I have pointed out, private rents have, in any case, dropped in the past year—Opposition Members need to recognise that that involves an actual figure, not one that they can conjure up like the rest of their stuff.

Let me remind the House how distorted the private rental market is. As I said, between November 2008 and February 2010 private rents fell by 5% and local housing allowance rates rose by 3%. LHA has now run its unaffordable course and we must turn it around; it fuelled a landlords’ charter to raise rents and has made housing more expensive for the whole population. It has not done any favours for those on low or marginal incomes; it has done them a great disservice. There are parts of central London where people can live only if they are on housing benefit or they are very wealthy. One could argue that Labour has socially cleared parts of London of working people who are trying to earn a living. That is the effect of what Labour has been doing. One would think that as the country grappled with the storm of the recession, these rents would come down, but they did not.

I agree with the right hon. Member for Paisley and Renfrewshire South that we must manage this transition, and I am happy to talk to him about how that works. We have sought to do that because local authorities still have a statutory duty to house people, and we will work with them as well; with my right hon. Friend the Secretary of State for Communities and Local Government, we are working with councils right now on the transition plan. Our figures show that 96% of claimants will face a shortfall of below £20 per week and the vast majority of those will see a shortfall of over that figure—I remind people that this relates to a steady state and does not even begin to recognise what happens when the rents start to fall. If they fall by any small percentage, that changes the picture dramatically.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I have said that I have given way enough, so I am going to complete this. For where problems do arise, we have tripled the discretionary housing payment to £140 million. We will keep that under review; I am prepared, where necessary, even to add to that. We will not shy away from the duty of care to provide housing for those who cannot house themselves. A safety net will not just remain; it will be improved for the most vulnerable. That will be done through an increase in discretionary housing payments and an additional bedroom for non-resident carers—the previous Government should have provided that, but never did. If we are prepared to pay, as we are, some £20,000, there is no reason anyone should be left without a home. Our choices are tough but right, and we are weeks from regulations to fix the broken system.

We are in touching distance of changing things, including through producing, later this week, a welfare Bill that will put all this into context and that could change the whole prospect for the next generation as we improve work incentives, secure fairness, and protect the vulnerable. We will introduce a comprehensive work programme, which will support people going back to work in a way that has never been done before; we will build a universal credit system to ensure work pays; and we will get welfare spending under control to regain economic credibility and stability.

May I remind the House of something that the Opposition did when they were in government? They made changes when they sorted out the pathway back in 2005. At that time, they made an assumption that those who were renting could cope with an £18 increase in their rent, which they duly did. It is not as if it was we who were hammering people in difficulty; the Labour Government were already doing it and then they took their eye off the ball. That is why, over the last week, we have witnessed Labour’s confusion. Some Labour Members, although not the right hon. Member for Paisley and Renfrewshire South, to be fair to him, but a number of his colleagues—he knows this, and I am looking him in the eye—started to blow very faintly and then louder on the dog whistle, just trying to scare people outside, winding things up until they became ludicrous and he finally had to try to draw the tone back down to a reasonable level. I believe that the right hon. Gentleman is a reasonable man and that what we need is constructive dialogue—I am ready for that. He should say to his colleagues that if they want to show what it is really like to be in opposition preparing for government, they need to put the dog whistle away, change what they are doing and behave as though they have a credible plan.

[Several hon. Members]

rose—

--- Later in debate ---

[Caroline Flint]

The hon. Gentleman was not here for the debate, so I will not give way.

Reducing people’s housing benefit when they have been out of work for a year does not help them to get a job. It punishes them for not having one, and we reject that entirely. The Government say that reducing housing benefit will bring rents down. Landlords themselves tell us otherwise, however, with 90% saying that they will be less likely to take on people on housing benefit. That means that there will be more people chasing fewer homes, which will drive rents up, not bring them down.

[Mr Duncan Smith]

They would say that.

[Caroline Flint]

The Secretary of State might say that, but I find it difficult to understand, given the question marks over the impact on rents of the Government’s plans, why they are not doing a more thorough job of getting the evidence to prove that their policies are right. I have heard the Minister for Housing—who is not here tonight; he obviously does not think it worth while—say on a number of occasions that he has evidence to back up his idea that rents will go down, but he has refused to provide that evidence. We have seen no sign of it.

My right hon. Friend the Member for Greenwich and Woolwich and my hon. Friend the Member for Sedgefield made strong points about the rented sector. They said that the Government’s policies on housing benefit reform and their lack of a plan for housing supply would do nothing to tackle the issue of rents. Let us be honest about this: the Government have completely rejected the findings of the Rugg review, which we initiated to tackle some of the problems in the private rented sector.

Much has been said about our record on housing, so let me say something about that. Two million more homes were built, there are now 500,000 more affordable homes and 1 million more homeowners, and 1.5 million homes have been brought up to a decent standard. Homelessness was cut by 75%, and no family spends longer than six weeks in a bed and breakfast. In the face of the global financial crisis, the worst of its kind for 70 years, Labour did not walk by on the other side. We took action and supported families to stay in their homes. We prevented 300,000 families who might otherwise have lost their homes—and who would have lost their homes had the Tories been in power—from doing so. That is the reality. That is our record, and it stands in contrast to the mess the Tories left us.

Many thought that bringing so many homes up to a decent standard in such a short space of time would prove impossible. It did not. However, it did come at the cost of not building as many homes as we would have wanted. I agree with the hon. Member for Colchester and some of my hon. Friends who have referenced that tonight. Let us not forget that the reason why we had to focus on decent homes and bring them up to standard was the desperate situation we inherited from the last Conservative Government in 1997.

--- Later in debate ---

[Caroline Flint]

The hon. Gentleman should look at Hansard. I said quite clearly that we are not against looking at caps, and we are prepared to look at regional variations as well, but that would have to be planned and done properly over time.

Let me tell the Housing Minister that last year, in the teeth of recession, we built more homes in one year than the Government will build in any of the next five years. Since this Government came to power, local councils have ditched plans for new homes at the rate of 1,300 every single day. In the comprehensive spending review, the housing budget was demolished by devastating cuts of more than 50%. As a result, according to the independent National Housing Federation, once the homes Labour started building are completed, no new social homes at all will be built in the next five years.

[Mr Duncan Smith]

In response to the right hon. Lady and the hon. Member for Perth and North Perthshire (Pete Wishart), she has said for the first time in this debate—her right hon. Friend the shadow Secretary of State has also said it—that Labour Members are in favour of a cap. Will they please explain something to us? We have put our proposals forward. What level of cap do they now favour?

[Caroline Flint]

We have said quite clearly—not just today, but in a speech my right hon. Friend the Member for Paisley and Renfrewshire South made last Friday and in an article that I wrote last week—that we will look at the issue of caps. What we have said is that whatever cap is chosen on whatever basis, it must be planned, phased in and must ensure that people are not turfed out of their homes, put into bed-and-breakfast accommodation or made homeless. The Tories have not been able to answer any of those questions.

The fact is that one part of Government is working on one track for housing benefit reform, but there is no joined-up thinking with the Department for Communities and Local Government on housing supply. That is not a plan of action for housing, but a recipe for chaos and it does nothing to help cut the housing benefit bill. It is not only Labour Members who say that; dozens of Tory MPs have been to see the Secretary of State to tell him why these plans will not work. We have heard about the Conservative Mayor of London and we know that Tory council leaders across the south-east have warned that the dispersal of people that these policies will create will place an unbearable burden on services that are already stretched to breaking point.

There is a better way of doing this. We want to reform housing benefit, but in a way that is fair and that does not end up costing us more than it saves. I urge Liberal Democrat Members and perhaps a few on the Tory Benches to join us in the Lobby and speak up for their constituents.