Under-occupancy Penalty (Wales)

Jessica Morden Excerpts

Tuesday 22nd January 2013 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

Thank you, Mr Robertson, for the opportunity to have the debate.

Before Christmas, social tenants in my constituency were sent a letter telling them that under Government changes in April they will have to pay more rent or move on, because the Government have deemed that they are under-occupying their home. They are victims of what is now called the bedroom tax. As all hon. Members know, such letters have gone out throughout Wales and the rest of the United Kingdom, and they have caused huge fear in my constituency.

I asked for this debate because I am horrified by some of the stories that constituents are telling me about what this policy will mean to them, their family, their future and their home. For decades, many people in communities in my constituency have cared for and cherished their homes, where they have brought up their children and cared for their grandchildren. Their homes are full of memories of lost loved ones. The fear is palpable, as the reality of what these changes will mean sinks in. One woman said when I knocked her door during the week that she received the letter from Newport City Homes, “Why did I get this? I thought it was about the scroungers, not about me.”

In April, those tenants face the stark choice of paying £40 to £80 a month more for having one or more spare bedrooms, or moving to a smaller property. There is evidence that many cannot pay as the cost of living and benefits cuts hit them. In a Welsh study, one tenant said that they are already “not living, but surviving”. What is more, there is a chronic shortage of smaller houses, particularly in Wales.

[Paul Murphy (Torfaen) (Lab)]

Will my hon. Friend pay tribute, as I do, to Duncan Forbes of Bron Afon who has highlighted some of the nonsense of this tax, particularly people going into one-bedroom houses? In Blaenavon in my constituency, 85 tenants will have to go into one-bedroom houses to avoid the tax. It will take 17 years to rehouse them.

[Jessica Morden]

I thank my right hon. Friend for his intervention. He is right. Will the Minister look carefully at the report from Bron Afon in Torfaen, because it highlights specific examples of why the policy will hit Wales particularly hard?

There will be two levels of reduction. Those who are under-occupying by one bedroom will lose 14% of their housing benefit, which is equivalent to a loss of £12 a week. For those under-occupying by two or more bedrooms, there will be a 25% reduction, equivalent to a loss of £22 per week. In Wales, 46% of all housing benefit claimants of working age in the social rented sector will be hit, compared with a UK average of 31%.

The Department for Work and Pensions says in its own impact assessment that 40,000 tenants in Wales will be affected by the bedroom tax with an average loss of income of £12 per week. Like many of the Government’s benefit changes, this is hitting Wales disproportionately hard. With tax and benefit changes to be implemented by 2014-15, households in Wales can expect to lose 4.1% of their income on average or about £1,110 per year on top of rising food and heating costs.

Some 1,794 Newport City Homes tenants have received letters telling them that they will be affected, and a further 421 who rent from Monmouthshire Housing Association have received letters in communities like Caldicot, which is in my constituency. With 4,220 on the Newport common housing register and 2,536 on the Monmouthshire common housing register, it is not rocket science to realise that there is not enough social housing for people to move to. Of the Newport City Homes tenants who are affected, 359 have two bedrooms too many and 1,435 have one bedroom too many, 916 of them will be looking for one-bedroom houses or flats and 823 will be looking for two-bedroom properties.

Newport City Homes has only 1,264 one-bedroom properties in total and 2,680 two-bedroom properties. This week, just 36 properties are advertised on the Newport housing options website, so people have very few choices. Whole estates in Wales have very few one or two-bedroom houses.

[Mr Mark Williams (Ceredigion) (LD)]

The hon. Lady is making the case clearly for the urban context, but does she agree that in rural areas such as mine, which have faced a housing crisis for years, people face even less choice? I am sure that she will mention the fears that people living in houses with adaptations for disability have raised. Although more money is coming from the Government, it is less than clear how it will reach our constituents.

[Jessica Morden]

I thank the hon. Gentleman for his intervention. I will come on to mention that later in my speech. Other hon. Members have raised the issues of people with disabled children and of rural housing. As he says, there is very little housing stock available for people to rent anyway.

Let me talk about the Underwood estate, on the outskirts of Newport. It has 138 three-bedroom properties, 45 two-bedroom properties and no one-bedroom flats, apart from 12 that are reserved for pensioners and disabled people. In the past, we needed larger properties, so that is what councils built. Wales will be hit hard because of a relative shortage of smaller housing. Newport is clearly not alone, as many housing associations across Wales face the same issue. Scarcity of larger properties is a problem in big cities in England, but in Wales, there is a scarcity of smaller properties.

[Guto Bebb (Aberconwy) (Con)]

I congratulate the hon. Lady on securing what is undoubtedly an important debate in a Welsh context. The point that she makes about the shortage of smaller properties in Wales is one that I fully accept. Does she share my surprise therefore that the Wales and West Housing Association has decided that the coalition Government’s policy will be imposed on all tenants regardless of whether or not they are on housing benefit? Surely, that is a restriction on people who might be willing to pay the going rate for a three-bedroom house.

[Jessica Morden]

I am here to talk about under-occupancy and housing benefit. I appreciate what the hon. Gentleman is saying, but I want to continue to press my point.

Even if someone is able to move from a community such as Underwood, they will often leave behind family who are able to care for their children while they work. I cannot be alone in often meeting people in my surgery who seek houses near their parents precisely so that they can have help in looking after their children. Those with two children of the same sex under 16 could have to move to a two-bedroom property. In somewhere such as Underwood, the likelihood is that the children would have to move schools, with all the disruption that that would cause.

[Chris Evans (Islwyn) (Lab/Co-op)]

My hon. Friend is making a powerful point, and I congratulate her on securing this debate. Does she agree that there is an inflexibility in the system? Children of the same sex but far apart in ages might have to share a bedroom. Single parents are also penalised, because they often do not have rooms for their children to stay in.

[Jessica Morden]

I agree with my hon. Friend and I will come on to make those points. Again, the study by Bron Afon in Torfaen highlights such cases.

Faced with no social housing and the need to stay in a community, it is hardly surprising, but none the less shocking, that one of the findings of a survey of social housing tenants by Bron Afon was that some tenants had concluded that the only possible solution for them was to eat two meals fewer a week to make up the shortfall. They felt that that was the only area on which they could economise.

[Nia Griffith (Llanelli) (Lab)]

Does my hon. Friend not think that realistically many families are going to fall behind with their rent, with the result that they will find themselves moved into smaller properties or, at the end of the day, homeless? What does she think that our local authorities can possibly do with their limited resources to deal with a sea of people who will have nowhere to go?

[Jessica Morden]

I thank my hon. Friend for that point. It is true that housing associations, local authorities and the Welsh Assembly will be under stress because they will not be able to mitigate the effects of this policy.

With a chronic shortage of available housing, many tenants appear to feel that there is no alternative but to be forced into arrears or to resort to desperate measures such as payday loans or loan sharks. Families will be forced into financial difficulty and rent arrears. Steve Clarke, chief executive of the Welsh Tenants Federation, estimates that 10% of tenants who will be affected are already indebted to their landlords who are seeking repossession orders. The double whammy of rent arrears and the increases could mean that 4,000 present themselves as homeless. This is against a backdrop of food banks in Newport giving out hundreds more parcels a month and food crime up 26% over the past two years. We are talking about people stealing washing powder.

The Government appear to think that people will find it easy to get extra hours of work or to find an elusive job. They think that lone parents with small children should go out and seek lodgers. In fact, the findings of the hotline of Community Housing Cymru— “Your benefits are changing”—found that 13% of people who rang would consider downsizing and 8% might consider a lodger. However, 79% said that taking on a lodger or moving were not suitable options and that they would apply for discretionary housing payments.

I believe that £7 million has been allocated to Wales, which faces a potential loss of £25 million. That is the Government’s answer to those who cannot move. There is a limited amount of money from the Government towards those payments, but once it has been used, no other payments can be made. I take the point that was made earlier about the fact that there has been no clarification of how the money will be spent. The deserving might miss out if they happen to be in need when the fund has been exhausted. There has been no compelling analysis of the impact that the changes will have on individuals, and the Government’s response of setting a finite budget without knowing whether it will be sufficient is as callous as the bedroom tax itself.

[Ian Lucas (Wrexham) (Lab)]

Does my hon. Friend agree that one of the most telling aspects of the legislation is the fact that there are no exemptions for severely disabled people? The fund that is available will be quickly used up by, for example, adults with severe learning disabilities who, in all genuineness, cannot take lodgers, because their needs and circumstances are not conducive to sharing accommodation.

[Jessica Morden]

I agree with my hon. Friend’s important point, which we have to bear in mind. Those who have had disabled adaptations to their property would, if forced to move, need another set of disabled adaptations, and it is not clear what will happen with discretionary payments in such circumstances.

[Paul Murphy]

I am grateful to my hon. Friend for giving way for a second time. She has referred to the report by Bron Afon, which states that the total budget for discretionary housing payments in Torfaen is just under £53,000, or £6.62 per housing benefit claimant.

[Jessica Morden]

My right hon. Friend makes a telling point. When that money has gone, it has gone, and it is a small amount of money; it is a drop in the ocean compared with what is needed.

With no money to spare and no chance of social housing, tenants might look to the private rented sector. If the stated aim is to save money, the policy has no logic. In many areas of Wales, the policy encourages tenants to move to more expensive accommodation in the private rented sector, which will increase expenditure, even with a reduced local housing allowance. In Torfaen, for instance, every private rented property is more expensive than the Bron Afon rented properties. The situation is clearly ridiculous, and a cursory look on the websites for private rented accommodation in my constituency tells that tale.

Those arguments are well rehearsed, but they are becoming more pressing as the policy becomes more real for many people in Wales. I visited a constituent before Christmas who lives in a small two-bedroom house in the community in which he grew up and his family still lives. He was made redundant last April from his manufacturing job of 20 years, and he now finds himself on housing benefit. He is a proud man who has lost his job and now faces losing his immaculate home of many years. He currently pays £321 a month, and there is only one one-bedroom property in Newport on the housing options list for which he could possibly be eligible to rent this week, and that would cost him £350 a calendar month. If he is still unemployed, that increased rent would still be covered by housing benefit at a cost to the public purse of an extra £341 a year.

One Bron Afon tenant is a former serviceman with post-traumatic stress disorder, and his benefit has been cut because he is deemed fit to work, even though he has serious depression. His daughter hopes to go to university, but her decision will be heavily influenced by what happens to her father’s benefit. The spare rooms of those in our services are not out of the policy’s scope, which will have a huge impact in south Wales.

I have met a divorced father who has his kids to stay at the weekend. One of the hardest-hit groups will be parents who live in two-bedroom houses and who have access to their children. If they are under 35, they will be expected to share accommodation, which may be the only housing left to them, with all the child protection issues that raises. That is a whole other subject.

In Wales, registered social landlords expect a large loss of revenue, and those running large arrears will be under pressure to make people homeless. That in turn will put pressure on local authorities to house people presenting themselves as homeless. The Welsh Assembly has made money available under the homelessness grant programme to assist financial inclusion work and projects with Shelter, but that will not be able to mitigate the very real impact of the reforms in Wales.

There are so many unintended consequences for individuals such as foster carers, people with disabled adaptations and parents of disabled children. I am sorry that there is not time to do them justice.

A constituent from Alway specifically asked me to say that he considers the Prime Minister to be Dick Turpin without the mask. Many in the Government think that paying an extra £20 a week towards rent will be the difference between going out for dinner and staying at home, but for many on low incomes, it will be a case of heating or eating. People will have to pay up when they cannot afford it and then get into debt or move out and away from their community. This is a policy that in the long run cannot cost less in Wales and will do nothing to help local housing pressures, as the pressure is on the smaller properties already.

Regardless of the rhetoric, the fact is that the people worst affected are parents who share access to their children; grandparents who provide essential child care for their grandchildren, allowing parents to go to work; and even the brave men and women serving in our armed forces. The Government simply do not understand how this policy will affect people, and what is worse, they do not seem to care. We used to talk about the poverty trap; we are now talking about the property trap.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Newport East (Jessica Morden) on securing the debate. It is good to see the number of hon. Members who have taken part. I will try to respond to the points that she has raised. In general, I will take interventions from her but not from other hon. Members, until we get near the end of the time.

Let me set the context. Obviously, we want to focus on the impact of the policy on Wales, and I want to respond to some of the particular points made by the hon. Member for Newport East, but for the record, the Government are seeking to take £18 billion a year of what we spend on social security and tax credits because of the vast amount of borrowing that we had to deal with. It is not that the Government woke up one morning and thought, “Wouldn’t it be nice to cut people’s housing benefit?” We have to stop a situation in which for every £3 the Government were raising in tax, they were spending £4. That is unsustainable. It is not fair to the children whom we are expecting to pay our debts. That is why the Government are looking to save money on social security.

Housing benefit is a vast and rapidly rising bill and inevitably had to be looked at, so within the housing benefit budget, what can be looked at? We have looked at private sector rent. We have looked at shared accommodation for younger people. Within the social sector, there are two reasons why spare bedrooms—where they are spare bedrooms—need to be looked at. The first is the unfairness between social tenants and private tenants. At present, a private tenant cannot have housing benefit for a property with spare bedrooms. They can have housing benefit only for a property of the size that they need. However, a social tenant living next door can have housing benefit for a bigger house. That is an unfairness. At a time when we are trying to take costs out of the system to deal with the deficit, being fairer to private tenants and not giving social tenants an advantage over and above the advantage that they already have through a subsidised rent is an issue of fairness.

There is also an issue of fairness in the system in relation to people who are overcrowded. There was absolutely no mention in the hon. Lady’s speech of people who are living in overcrowded accommodation. If we have a limited social housing stock—frankly, successive Governments have failed to build enough social houses; it is a finite stock and a social house, with a subsidised rent, is a very valuable thing—we owe it to those who are overcrowded to make maximum use of the housing stock.

Getting from here to there is a painful and difficult process. I accept that, but many housing associations and social landlords around Britain have been creative and imaginative—I accept that the position will be different from area to area—about moving people who were in overcrowded accommodation into family homes and finding places for people in under-occupied accommodation to move to. It is not a static case—on the register this week, there are only so many empty properties. Social landlords have to start getting to know their tenants much better than they have in the past. All too often, they have not done that. That process—I accept that it will be a difficult transition—should lead to better use of the social housing stock.

[Jessica Morden]

Will the Minister accept that it is possible to be creative without being cruel? It would be possible to work far more closely with housing associations in relation to asking them to do more about under-occupancy, but the broad-brush approach that will be taken in April will hurt many people.

[Paul Murphy]

It is about saving money.

--- Later in debate ---

[Steve Webb]

I really want to respond to the hon. Member for Newport East, because I have other things to say about the points she made.

We tried not to prescribe in a rigid, central, one-size-fits-all way, but to make substantial extra money available so that people could respond individually.

[Jessica Morden]

Does the Minister accept that the pot of money is very small compared with the number of people we are talking about? If the aim of the policy is to use the housing stock better and to save money, it will fail on both counts. As we have mentioned—it would be helpful if he could address this point—the pressures in Wales are because we have larger properties and few smaller properties, and because people will pay more in private rents.

[Steve Webb]

On whether people pay more in private rents, a lot depends on where the people who occupy the houses that have just been vacated come from. For example, if someone is in overcrowded private rented accommodation, on which they are claiming housing benefit, and they move in to reduced rent social housing property, that saves us money, so a lot depends on the dynamics. It is not a static situation. The hon. Lady said that this is not much money, but take her local authority of Newport: last year, in 2011-12, Newport got £47,000 towards DHPs, and next year, it will get more than a third of £1 million.

[Jessica Morden]

It is not enough.

[Steve Webb]

Of course, it is not enough for everybody who will lose, because the policy is part of trying to reduce the deficit.

The hon. Lady made other points about the lack of suitable housing stock, and that is a long-term issue that needs to be addressed. Housing associations and local authorities, when looking at the future housing stock, need to consider unmet need. Of course, there is a lead time on that, but if we just sit and wait, it will never happen. Yes, this is a trigger to tackle the deficit, but it is also a trigger for a much more rational allocation of the houses we already have, and for a much more rational building policy, so that we build homes that meet the needs of the people we have. All too often in the past, that has not happened, and it is time that it did.

The hon. Lady asked about the impact on Wales, and she is right that we are talking about roughly 40,000 households. The average loss in Great Britain as a whole is about £14 a week. In Wales, because rents tend to be lower, it is about £12 a week.

My hon. Friend the Member for Ceredigion (Mr Williams) mentioned rural communities. We will evaluate the impact of the policy over a two-year period, but with interim reports that we will publish across England, Scotland and Wales, and across rural, urban and suburban constituencies. As a consequence of debates in the House of Lords on the Bill as it went through, we agreed—we were well on the way to doing this anyway—proper evaluation, so if there are particular issues in Wales or in rural areas, we will have the chance to respond, for example, by adjusting the allocation of discretionary housing payments. That allocation has been set for 2013-14 but not beyond, so if we learn things during the year, we can look at whether we need to change the allocation. We could change the rules of the scheme. Obviously, that is a more fundamental change, but we have a fairly flexible lever if we get early signs that there are problems in particular areas.

We are trying to support social landlords, so we have worked with the Chartered Institute of Housing to produce a toolkit for landlords called “Making it Fit”, which provides an overview of how different social landlords are responding. The last thing I want to convey is that the change will be easy for people, that there will not be people who find it difficult, and that it will not be disruptive. However, there is a difference when social landlords engage, get in there early and get to know their tenants—for example, those who sit with their tenants and say, “Are you claiming all the benefits you are entitled to? Could you be getting disability living allowance, for example, which would top up the household income?” There is chance to have a constructive engagement with tenants to find out their needs and what is happening. Many social landlords do not know whether their tenants are even there, or whether they are sub-letting. A lot of beneficial things that need to happen could happen as a result.

[Jessica Morden]

Does the Minister accept that with the report, that is precisely what Bron Afon has done? It has spoken individually to every single person who is affected, and in the report, there are the harrowing personal stories that people have told.

[Steve Webb]

I accept that Bron Afon has been out and talked to its tenants, and if that has triggered the process, it is a good thing. As I said, I have some doubts about at least one of the case studies, and in terms of some of the other case studies, I hope that the housing association has explained what discretionary housing payments are, because I think, from memory, another one had a disabled adaptation, or something like that, and that is what DHPs are for. It certainly was not a criticism of Bron Afon, but there are social landlords who are upping their game, engaging, and trying to generate extra revenue through benefit take-up. They are being creative, looking at the private market, and they are moving people around. They accept that the change is coming and are not simply saying, “Oh, this is terrible”, but doing something constructive. I welcome any housing association or social landlord that does that, and they deserve credit.

I have mentioned the discretionary housing payment money. The particular people we had in mind are those with disabled adaptations and foster carers, but the local authority has discretion to use it in individual cases. I do not belittle the impact that this significant change will have. We need to save money, but we have the potential to make better use of our social housing stock to deal with not only under-occupation, but overcrowding, and to be fair between social and private tenants. At a time when we are trying to take very large sums of money out of the housing benefit bill to deal with the vast, yawning deficit that was not dealt with, we need to look at this area but manage the process, and that is what our research and use of DHPs is designed to achieve.