Housing Benefit (Under-occupancy Penalty)

Jim Cunningham Excerpts

Wednesday 27th February 2013 Commons Chamber

[Ann McKechin]

My hon. Friend describes the problem. I represent a seat in Glasgow where all the social rented properties are in the hands of housing associations. Many of them are very small and unfortunately do not have the capacity or resources that even a local council has, and some of the smaller local authorities will be very hard pressed to cope.

In reply to my question, the Under-Secretary of State for Scotland assured me that he had met local authorities and housing associations in Scotland and discussed their concerns about credit ratings, and that they were “satisfied”. Funnily enough, the following week the Convention of Scottish Local Authorities, which represents all the local authorities in Scotland, and the Scottish Federation of Housing Associations wrote to the Minister to set out a slightly different view. The SFHA wrote:

“With respect, this does not address the issue of the credit rating of associations. Indeed I am not aware of any government impact assessment of credit rating of associations but if it does, I would welcome access to it.”

Does the Minister have an impact assessment he can share with us? The SFHA continued:

“We remain very concerned about under-occupation issues, not least given the escalation in rhetoric about non-payment of the ‘bedroom tax’, so called purposely to resonate with the Poll Tax, a debacle which left councils with a trail of debts only now being resolved even in your own constituency.”

If that seems harsh, the letter from the president of COSLA reflected utter astonishment at the Minister’s response to my question. He wrote:

“While I do meet the Secretary of State for Scotland from time to time, I can’t recall the last time we had an opportunity to discuss my concerns over welfare reform with any DWP Government Ministers….

There was a hastily arranged meeting on 22nd November…which we understand the Scottish DWP office invited a selected number of council leaders to attend. Few were able to do so, and COSLA was not represented although an officer was present to observe and take notes….

Those notes, and feedback…confirm that David Freud informed the meeting of the steps DWP are taking in response to a variety of concerns that were raised. These were felt to be inadequate, considerable dissatisfaction remained, and David Freud gave an undertaking to return to Scotland to discuss the matters further”,

but, funnily enough,

“This meeting has still not been confirmed.”

Perhaps the Minister who winds up the debate can confirm when his noble colleague Lord Freud intends to meet local authorities in Scotland to discuss with them what they can do to meet the impact of this change, which is to happen in just a matter of weeks.

The hon. Member for Banff and Buchan suggested some changes that could happen in Scotland. Unfortunately, I think her colleagues in the Scottish Government have pressed the standard pause button, saying, “We need to wait until the sun starts to shine and we have independence”, but of course that depends on a referendum and we are still waiting for the date of that. The plain fact, to which the hon. Lady alluded, is that we do not have time on our side and people cannot wait. We need to start a serious debate now on how we can resolve these issues.

The coalition talks about the ever rising cost of housing benefit over the last 10 years. Yes, it is a problem that we are subsidising landlords when rentals are increasing at well above rates of inflation, yet the Government have made not one suggestion or proposal to address that or the systematic failures in the housing market as a whole. I believe there has been a permanent change—a major distortion—in the housing market since the banking crisis in 2007. We will not simply see a bounce-back to the position in 2005-06 at some undetermined point in the calendar, so I have some suggestions on how to deal with housing as a whole, not just the issue of people on housing benefit.

Other Members have commented correctly on the need to build more housing, both in the social rented and private sectors. How much land in Scotland, or the UK, is held by building companies as part of their land banks? It is estimated that perhaps 250,000 houses with planning permission are still to be built. Has there been an audit of where those properties are? Can we levy unused plots of land to provide a stimulus to build, because in many cases builders are just waiting to get more money for the land on which they sit? Can we control private rentals? The hon. Member for Banff and Buchan rightly commented that rental levels in the private sector in Scotland, as in many other parts of the United Kingdom, are in excess of those in the social rented sector. According to Shelter Scotland, the taxpayer would on average pay more than £100 extra in local housing allowance each month if someone in Edinburgh moved from the social rented sector to the private sector, and the same would apply in Glasgow and Inverness; in Aberdeen—one part of the United Kingdom enjoying something of an economic boom—an extra £200 would be paid per month. The hon. Lady was incorrect, however, to state that increases in rentals were a phenomenon only in Greater London. There is a shortage of housing, and people cannot afford to buy a house or provide a deposit, so they are moving into the private rented sector, pushing rentals ever upwards.

In a speech last month, the Leader of the Opposition referred to reform of the law on residential leases, which should also be considered in Scotland, where the law is distinct but not that much different. The law was last altered in the early 1980s, to create short-term assured tenancies, which have become the absolute norm—the default—for all private residential domestic tenancies. Although there is clearly a market for short-term assured tenancies, they are not suitable for an increasing number of people who are looking for security and stability and to put down roots in a local community.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend recall that many years ago there were rent officers, who regulated rents in the private sector? Is that a possibility that could be pursued?

[Ann McKechin]

My hon. Friend refers to regulated rents. I am afraid that I am not an expert on the law of leases in England, but in Scotland long-term secured rentals are still subject to regulated rents. Very few of those remain in the United Kingdom—the average age of the residents in such cases is probably 85 plus—because frankly they were not attractive to the market at the time when the law was changed. In urban communities—the situation is worst in London, but it is an issue in areas such as Glasgow as well—transience is increasing, as people move house at ever more regular intervals, not through choice or for job reasons but because their landlord thinks he can find another tenant who is prepared to pay a higher rental. The only way to stabilise the market and get rentals back down is to improve regulation, and that is why the law needs to change. The Scottish Government should start an urgent debate about that. There is no reason why Scotland cannot lead the way in the reform of leases.

--- Later in debate ---

[Greg Mulholland]

As the hon. Gentleman has clearly heard, it is the former. I hope that is clear.

The simple reality is that the social housing sector has an exemption in this regard that the private rented sector does not have. It is important to remember that in April 2008, when I sat on the Opposition side of the House, the previous Labour Government introduced the local housing allowance. I was a member of the Work and Pensions Committee at the time and know that it was not an entirely controversial measure, as Opposition Members will remember. We scrutinised it and raised concerns, but the then Labour Government were absolutely clear that local housing allowance would and should depend not only on the maximum rent allowed for properties in the area, but specifically on the number of rooms a tenant needed.

Again, the principle behind bringing this measure into the social housing sector is reasonable, and it would be helpful if the Opposition at least acknowledged that and said that they wish to assist and encourage people who are over-occupying and have more bedrooms than their family need to seek alternative accommodation in order to free up those properties. We all know from our huge case loads that that is needed. We can blame the previous Government and the Government before them for simply not building enough and for the absurdity of allowing the right to buy a council house without then building more to replace them. Those are things that this Government have committed finally to addressing.

[Mr Jim Cunningham]

The previous Labour Government, like Governments before them, always had difficulty with the issue that the hon. Gentleman has just mentioned, but the difference is that what his Front Benchers are proposing is a benefit cut.

[Greg Mulholland]

I am not quite sure what relevance that adds to the point I was making. Again, the hon. Gentleman’s Front Benchers were committed to benefit cuts in their 2010 manifesto, which they seem conveniently to have forgotten.

As I have said, I do not believe that the Government currently have the policy right. I have told the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), and other Ministers and colleagues that I believe that other exemptions should be included. Let us remind ourselves who the current exemptions are for: those of pensionable age; those in local housing shared ownership; those in temporary housing; the recently bereaved, who have protection for 52 weeks; and those who are provided with overnight care by an unpaid carer. I firmly believe that there should be other exemptions, as I said when the Bill was going through the House. We were unsuccessful in achieving any of our proposed amendments, which is why I did not support the Bill at the time. I made it clear that I could not support the policy as it stood then, and I cannot support it as it stands now.

Let me explain the other exemptions that I believe should be included. First, if it is deemed that two partners have to sleep in separate rooms for medical reasons or because of a disability, clearly they should be exempt. Similarly, if a child with a disability is deemed to require a separate room, they, too, should be exempt. Social housing plays a different role in the housing mix and is there, in particular, to support families in that situation who also have a low income. Of course, that would help with the current issue over the Court of Appeal ruling. The easiest thing for the Government to do would be to accept those exemptions.