Bedroom Tax (Scotland)

Ian Davidson Excerpts

Thursday 8th May 2014 Westminster Hall

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

In speaking on the report and the Government response, it is appropriate that I indicate at the beginning that unusually, the report was not unanimous. It is the product of a Division in the Committee: four Labour members voted for the report, one Liberal and one Conservative voted against, four other members were absent and I as the Chair was unable to vote except in the event of a tie.

It is clear that the bedroom tax is, as we describe it in the report, cruel and unfair, and we remain in favour of its abolition. We believe that the tax was introduced not so much because of anything to do with housing as because of the Government’s desire to cut public expenditure. It has been levied in a way that has hurt the poorest in our society and has placed burdens on them that many have been unable to bear. It has forced many people into deeper poverty. It has forced many people to move house, or to run up debts.

We recognise that in Scotland, the tax has often been levied in circumstances where there are no other homes for people to move to. People are being taxed for having what are described as spare bedrooms and being urged to move, but no alternative accommodation is available.

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

This report is specifically about Scotland, but the Select Committee on Work and Pensions, in its report on housing costs, said that the victims of the so-called bedroom tax were often not the intended targets—those who could move. Instead, many were people who needed the extra space and who were therefore not over-housed in the first place. Is that the case in Scotland too?

[Mr Davidson]

Absolutely. Substantial numbers of disabled people who require an additional bedroom due to their condition have been hit by the bedroom tax. We heard the absurd proposal that people should mitigate the effects of the tax by taking in lodgers, as well as the suggestion that people should earn more by working longer hours when, as most of us are well aware, that is not a realistic option available to many of those affected.

[Fiona O'Donnell (East Lothian) (Lab)]

My hon. Friend is being generous in giving way. I congratulate him and his Committee on the excellent work they did preparing the report. On the advice about taking a lodger, I visited a family with children aged two, three, four and five. Does he not think that it is not just stupid but highly risky to suggest that such a family should welcome a stranger into their home?

[Mr Davidson]

That is absolutely correct. In our hearings, we had a whole string of witnesses telling us how worried they would be about taking an unknown lodger into their home in circumstances where they would fear that their children might be at risk.

I also want to consider the issue in the context of devolution. I have been a long-time supporter of devolution; I was a member of the campaign for a Scottish Assembly before such things were fashionable. As well as the arguments for devolution because we wanted to move power closer to the people, there was also a strong argument that we wanted a devolved Scottish Parliament as a bulwark and protection against a Tory Government, to mitigate the worst effects of Tory economic and social policy. It is therefore doubly regrettable that right from the beginning, the present Scottish Government failed to use the whole range of their powers to mitigate the impact of the bedroom tax on the people of Scotland.

In our investigations and witness sessions, it became eminently clear to us that discretionary housing payments were inadequate and not an appropriate method of reaching everyone affected by the malignant impacts of the bedroom tax, who included those with mental health issues, learning difficulties and chaotic lives, as well as those too proud to apply for another benefit. It was clear that, despite the best efforts of local authorities of all political persuasions, they were unable to reach all those who were adversely affected by the bedroom tax.

In those circumstances, people who were unable to mitigate the effects themselves or with the assistance of the local authority were left with the alternatives of paying up and suffering, building up arrears and debt, or moving. We discovered that if people were able to move, they were often obliged to move into the private rented sector, which actually cost the public purse more in housing benefit than if they had remained in their existing home.

[Sheila Gilmore (Edinburgh East) (Lab)]

Perhaps my hon. Friend would not be surprised to know that the real problem is the shortage of homes, which is why people end up in the private rented sector. In Edinburgh this week, out of all council and housing association homes, only 22 one-bedroom properties are advertised, and six of them are in sheltered housing, which by definition does not suit people affected by the bedroom tax because it is for retired people. However, it has also not led to any increase in the number of larger houses available: only five three-bedroom houses and one four-bedroom house are available in the city, which is much the same as before the introduction of the bedroom tax, so it has not solved that problem either. Yet, at the same time, the number of new starts of affordable homes in Scotland has fallen dramatically in the last three years.

[Mr Davidson]

That is absolutely correct. I notice that there are numerous other Members here who will undoubtedly want to speak. I did not intend to spend most of my time on the iniquities of the bedroom tax, because that is common ground for the vast majority of us here; I wanted to discuss what is to be done and what should be done. For those reasons, I will turn to the campaigns that have been run and that have sent witnesses to us, which have exerted enormous pressure on public representatives to do something about this.

I regret that from a very early stage, the Scottish Government refused to use the full range of powers available to them to mitigate the effects of the bedroom tax. The Under-Secretary of State for Scotland, who is the appropriate Scotland Office Minister, said that the Scottish Government had powers beyond DHPs; the Chief Secretary to the Treasury said exactly the same thing. We understand from both Ministers that the Scottish Government never made the least effort to contact them to find out what, in their view, might be legally available alternative methods of mitigating the bedroom tax.

[Lindsay Roy (Glenrothes) (Lab)]

I congratulate my hon. Friend on securing this debate. Can he offer an explanation why?

[Mr Davidson]

There is an explanation; it was given to us by John Swinney himself, no less, when he said that he did not want to let Westminster off the hook. Of course, it was not actually Westminster that was hanging on the hook; it was people in Scotland who were finding themselves in tremendous financial difficulty as a result of the introduction of the bedroom tax.

There has been progress. We have to recognise that the Scottish Government were forced by Labour and other parties in the Scottish Parliament, as well as by outside campaigns, to make available in their budget the full amount of money necessary to mitigate the effect of the bedroom tax. They said that they could not spend it because they could address difficulties only through the DHP mechanism, but I believe, and I note that Ministers and campaigning groups also believe, that that is not true.

The Scottish Government said that the only way they could address the bedroom tax is by DHPs, and I think we have to accept that that is not true, but they chose to rest their case on that position. Why? I think it is because they want a clash between the UK Government and the Scottish Government over the question of powers, and they are quite prepared to see some of the people of Scotland become casualties of that conflict in the hope that they will be able to make a political point about the lack of powers held by the Scottish Parliament, rather than seek ways to mitigate the effect of the bedroom tax on the people of Scotland.

[Lindsay Roy]

What other options might be available to the Scottish Government?

[Mr Davidson]

The information that we have from relatively brief discussions is that the Scottish Government may give money to social housing providers to allow them to write off debts. They could do that at any stage, so the debts built up under the bedroom tax could simply be written off.

[Fiona O’Donnell]

East Lothian council has done that.

[Mr Davidson]

I am glad to hear that. That could have been done throughout the whole of Scotland. The Scottish Government could have said to social housing providers, “Any arrears you have, you write them off, and we will refund you the money.” That is perfectly legal and could have been done, but they deliberately chose not to do so.

We had a Scottish Government resolutely seeking to make a political point by refusing to fund mitigation of the difficulties caused by the bedroom tax in any way other than by getting the cap on DHPs lifted, and a Conservative and Liberal Government who were, at that stage, resolute in saying that they would not move because the Scottish Government already had powers to deal with the issue if they so desired, and the people of Scotland were potentially caught between the two. In those circumstances, it is difficult for either side to find a way to change their position without appearing weak, or making it look as though they had the wrong solution in the first place, or suggesting that anything they say at any particular moment may be merely transitory and can be changed.

With the debates we are having at the moment about the referendum, I understand that it is much more difficult for anyone to change their adopted stance on any issue. In those circumstances, I think it is to the credit of the Secretary of State for Scotland and the Under-Secretary of State that they have persuaded their colleagues in the Westminster Government to change the line and to give powers to the Scottish Parliament to extend or to increase the amount of money spent on DHPs. We have to recognise that that has been a change in the Government’s policy, and one that I welcome. However, there are still difficulties with it.

First, there will be a delay in the transfer of powers. I hope that the Minister will tell us that every possible step will be taken to make that transfer as speedy as possible. Secondly, the Scottish Affairs Committee does not believe that DHPs are the best way to address the problem because an application is required, and in the categories of people I described earlier, we found many who were either unable or unwilling to make an application. We therefore want to discuss at some stage—I will recommend to the Committee that we explore these issues further—whether the methodologies that local authorities have at the moment are adequate.

In our view, it is legally possible for local authorities to abandon the system of application and simply ask someone whether they want a DHP. If the principle is that everyone who applies for one gets one, presumably the sort of 95-page forms that some local authorities are using are not needed. If the payment is going to be automatic, the equivalent of the Chinese general baptising his troops with a hose could be adopted and anyone who was simply asked whether they wanted DHP could be given one, but that approach has yet to be tested.

We also want to clarify what the position will be regarding last year. If the bedroom tax is evil, malignant, cruel and unfair this year, and the Scottish Government are prepared to make money available to mitigate its effects this year, what are they prepared to do about last year’s effects? Something that is wrong this year was surely equally wrong last year. There are people with arrears of the bedroom tax as a result of non-payment last year. The Committee’s view is clear: those debts should be written off. We believe that the Scottish Government should take steps to write off the arrears of bedroom tax accumulated by Scots last year. They have the power and they have the money; what they possibly lack is the will, but we will no doubt hear about that later on.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Will the hon. Gentleman give way?

[Mr Davidson]

Oh, I am glad to see that a Member from the Scottish National party is not only here, but prepared to intervene in a debate on the Scottish Affairs Committee’s work.

[Pete Wishart]

I am not going to go into the reasons why we do not participate in the hon. Gentleman’s Committee.

I accept the Labour party’s sincerity about scrapping the bedroom tax—it has said that it will do so at the earliest opportunity—but will the hon. Gentleman direct me to the Labour shadow Minister’s comment that Labour will pay in full any arrears of the bedroom tax built up in the rest of the UK? How much would it cost the rest of the UK? How would the UK Government pay for it?

[Mr Davidson]

Regrettably, we are not in power at the moment. We do not have the power either in Scotland or in the UK to take such decisions. However, the SNP is in power in Scotland, and it could do that tomorrow—well, not tomorrow actually, because the Scottish Parliament is closed tomorrow, but it could do so next week. Indeed, I am particularly glad that the hon. Gentleman asked me that question, because yesterday in the Scottish Parliament, Jackie Baillie asked whether the Scottish Government would support a proposal that they cancel out any bedroom tax for 2013-14, but answer from Nicola Sturgeon came there none.

I understand the point being made. The hon. Gentleman wants to play political games, saying, “We are not going to do this, because what have you said about it?” Let us lay aside these games. The question is—

[Mr Peter Bone (in the Chair)]

Order. I know that the hon. Gentleman is addressing me. Certainly I have no opinion on this matter whatsoever.

[Mr Davidson]

I apologise, Mr Bone. I know that you have opinions on a whole range of matters, some of which I agree with, but this is not one I would want to draw you into.

The Scottish Government have a responsibility to act now, because they have the powers. To do nothing is a choice. The question is whether they will take up the exhortation from the Scottish Affairs Committee and Labour in the Scottish Parliament to pay off arrears now.

A second, related issue—I understand that this point is more difficult, but it is one on which I think we have to agree—is that of moral hazard: that if we write off arrears, we will send out a message that, in many ways, not paying rent is a lifestyle choice or is acceptable. I do not take that view. If we write off bedroom tax arrears, we also have to recognise the position of those who scrimped and scraped, who in many cases used their savings if they have them, or who borrowed from friends and family, in order to pay their bedroom tax. It is simply unfair that some people might have their bedroom tax written off, and others might also have the situation—[Interruption.] The SNP has chosen not to participate in the Committee’s deliberations, and then the hon. Member for Perth and North Perthshire wants to come along and heckle. I am quite prepared to take interventions. He should stand up like a man and give us his view.

[Pete Wishart]

Will the hon. Gentleman either say yes or no to this? I accept that the Labour party will scrap the bedroom tax if it comes to power, but does he believe in principle that a Labour Government should recompense every victim of the bedroom tax? Does he believe that that is what a Labour Government should do?

[Mr Davidson]

I do. That is absolutely and completely my view. I cannot be any clearer than that. I persuaded the Committee of that in our report and I hope in due course to persuade the Labour party of it. That is my view, and it is the view of all the bedroom tax campaigners that I have met and of local authorities. It is also the view of the SNP chair of the Dundee housing committee. He wanted to see the Scottish Government not only writing off the arrears, but refunding the amount of money that had already been paid.

Let me be clear about what the Committee is recommending and what it believes. If the bedroom tax is going to be dealt with this year, however inadequately—we have difficulties with the methodology that the SNP Government insist on using—we hope that in the spirit of unity and harmony that so often characterises political debate in Scotland, there will be an understanding that if the DHP methodology does not work successfully, other routes and channels will be found, so that the objective we share can be achieved, which is to have all the effects of the bedroom tax written off for the current year. However, we have to be absolutely clear that what we want is the arrears written off for last year and full refunds for the years coming, as a prelude to the next Labour Government abolishing the bedroom tax altogether, not in 2016 or at some mythical date after independence in the event of a yes vote in the referendum, but when a Labour Government come to power.

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[Stephen Timms (East Ham) (Lab)]

I am delighted to serve under your chairmanship, Mr Bone. I congratulate the Scottish Affairs Committee on its report and my hon. Friend the Member for Glasgow South West (Mr Davidson) on his introduction of the debate this afternoon.

It is refreshing to see an official document—the two reports from the Scottish Affairs Committee—that finally calls a spade a spade and uses the term “bedroom tax”. My hon. Friend the Member for Livingston (Graeme Morrice) drew attention to that as well. I was disheartened and my heart sank when I started to read the Government’s response to the report. Their very first point states:

“The Government has noted with some dismay the title of the Scottish Affairs Committee’s current inquiry”.

The complaint is about using the term “bedroom tax”, but everybody uses that term. Both parties that have spoken in this debate have used that term. The Minister for Welfare Reform in the other place used the term “bedroom tax” on more than one occasion. It is sometimes claimed that the term was invented by the Labour party, but I can reassure the House that that certainly was not the case. In fact, it is what the people call this hated measure. The Committee is absolutely right to reject specious arguments from Ministers that some other convoluted form of words should be used. I noticed in the Government response to the report that there is a long-winded phrase, which I cannot recall, but it has 10 syllables instead of the three in the phrase “bedroom tax”, and that is what it is absolutely right to call it.

My hon. Friend the Member for Glenrothes (Lindsay Roy) is right to say that the measure reflects straightforward Tory ideology. It is not a surprise that the Government’s housing benefit changes have hit the most vulnerable in our society the hardest. This has been explored to some extent, but it is disappointing to hear that the Scottish Government held back from protecting vulnerable claimants on the grounds that to do so would be to let Westminster off the hook. I welcome the progress that has been made in the past few days in overcoming that constraint.

The bedroom tax is the most hated of all the changes that the Government have introduced. The report is absolutely right to say that it is cruel and unfair, and is making a big contribution to the cost of living crisis faced by families in Scotland. Research by Sheffield university shows that it is the poorest who are picking up the tab, when we have seen tax cuts for the highest paid and a huge increase in bankers’ bonuses since the Government were elected. One of the biggest drivers of the loss in household income for ordinary families in Scotland is the bedroom tax.

The uniquely dreadful feature of this measure is that it cuts the income of people who are already hard up, without giving them any realistic options for making up the loss. We know that only 6% of those affected across the UK have been able to move, so 94% are taking the hit. The smaller social rented homes that would be needed to make the policy work—as we pointed out in the Welfare Reform Bill debates three years ago, and as Ministers must have known when they introduced the policy—are simply not available in many areas. We have heard from my hon. Friend the Member for Edinburgh North and Leith (Mark Lazarowicz) that in Edinburgh 3,300 people are affected by the tax and 22 one-bedroom homes are available—less than 1%—and that is not an uncommon percentage being reported from cities around the UK.

There are also particular difficulties in rural areas. In some of them, there is almost no one-bedroom accommodation available at all. I noticed the submission made by the Orkney Islands council on the Scottish Affairs Committee’s website that made a strong case for a derogation from the bedroom tax for remote and rural island areas. But the truth is, whether we are talking about cities, towns or rural areas, the bedroom tax needs to be scrapped.

Given that there are not smaller homes to move to, many people simply have to take the hit. Many are now in rent arrears, and those who simply cannot afford the extra and cannot find anywhere to move to are going to lose their homes.

[Mr Davidson]

Does my right hon. Friend the Member for East Ham—my party’s spokesman—accept the recommendation of the report that all bedroom tax should be written off and all payments made refunded? Would he, like me, welcome the opportunity to go into a general election with the slogan, “Vote Labour and get your bedroom tax back”?

[Stephen Timms]

That sounds a very good slogan, but, sadly, I cannot give my hon. Friend the assurance that he seeks. I agree with him about the distinction between the Scottish Government currently in power in Scotland and the position that would face a newly elected—hopefully, Labour— Government.

The point has also been made in this debate—absolutely rightly—that across the UK two thirds of the households affected include someone with a disability. My hon. Friend the Member for Airdrie and Shotts (Pamela Nash) indicated that the proportion is even higher than two thirds in Scotland. It seems particularly ridiculous that homes on which public money has been spent specifically to provide adaptations for families living with disabilities should be affected by the bedroom tax, and some people are being forced to leave them, even though public money has been spent to adapt them specifically to their needs.

We had a debate last week about the impact of the bedroom tax in Wales. The Committee’s interim report acknowledged that Wales was the part of the UK worst affected by the tax. The Government’s response to the report by the Welsh Affairs Committee once again rejects the idea of an exemption for adapted homes. That is very disappointing, and it is another aspect of the wastefulness of this measure. It contributes to the likelihood, as pointed out by researchers at York university and elsewhere, that the bedroom tax will end up costing more than it saves. Without smaller homes to move to, the measure is simply a tax on the poor. As my hon. Friends have said, the right thing to do is to scrap it.

I welcome the agreement that will enable the effects of the bedroom tax to be nullified in Scotland. Can the Minister tell us why the same provision cannot be made for Wales? Why are the Welsh Government not allowed to offset the effects of the bedroom tax? And what about the Greater London Assembly, so that my constituents could also be spared this pernicious measure?

Last week, my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) rightly brought to the attention of the House the issue of panic rooms, which are not exempted from the bedroom tax.

We have long argued that the hated bedroom tax was a mistake. Even the Conservative Chair of the Welsh Affairs Committee has recognised that it is a mistake in Wales. Our policy is that it should be scrapped. We will continue to press the Government to scrap it. That was the aim of the private Member’s Bill moved recently by my hon. Friend the Member for Wansbeck (Ian Lavery). If our efforts do not succeed and the bedroom tax is not scrapped by this Government, we have made it absolutely clear that it will be scrapped by the next Labour Government.

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[Mr Davidson]

It is true that much of what we reported on has been overtaken by events. The movement that we sought has to a great extent been achieved. It is fair to place on the record my thanks, and those of the Committee, to those Scotland Office Ministers who pursued and ensured the increase in the discretionary housing payment. It is also fair to recognise that the Scottish Parliament and the Scottish Government have also moved. They told us unequivocally that they could not find the money to increase DHPs, but they have done so. We offered to help them find the money, but they found it themselves.

What happens now? In the Scottish Parliament, Iain Gray asked the Deputy First Minister if she would

“categorically confirm that any tenant affected by the bedroom tax who applies for DHP support will automatically get it”—[Scottish Parliament Official Report, 7 May 2014; c. 30617.]

Many tenants in those circumstances will have difficulty clarifying whether they should be making part-payments at the moment, if it will take some time for the DHP cap to be lifted. I hope that the Scottish Government will agree that anyone who has made or continues to make part-payments should get those refunded. It would be iniquitous if anyone who paid part of the bedroom tax during the current year did not get that money back, while someone who had not paid any of it did not have to pay anything. If the Scottish Government can pay back a certain amount of money paid this year, there is no reason why they cannot pay back the amount paid through the bedroom tax last year. We have to look for the Scottish Government to refund the money that has already been paid, and to write off any accumulated debts.

I look forward to the Scottish Affairs Committee meeting a series of groups—we have already met some—to continue to ask how best we can mitigate the entire effect of the bedroom tax in Scotland, as a prelude to the next Labour Government abolishing it entirely.