Housing Costs (Reformed Welfare System)

John Hemming Excerpts

Tuesday 3rd March 2015 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

I am pleased to follow the hon. Member for Aberdeen South (Dame Anne Begg), the Chair of the Select Committee. She raises a number of interesting points that were debated in the private Member’s Bill introduced by my hon. Friend the Member for St Ives (Andrew George), the Affordable Homes Bill, which proposed a number of changes to the social sector criteria—the bedroom tax, spare room rent or whatever one wants to call it. One of those changes would, under certain circumstances, automatically exempt people with disabilities from being required to pay for a spare room.

In law as it currently stands, under article 14 of the European convention on human rights, there is a legally enforceable right to get hold of discretionary housing payments. I have achieved that in Birmingham in a couple of cases, by using the threat of it rather than making the application to court. My constituency experience is that in the cases in which we should get DHP, in general we have got it. I agree that we should have an automatic exemption from paying for spare rooms for those people who need them because they have a disability, which is obvious, and those whose homes have been adapted. However, we have managed to get DHP in those cases, and we are getting longer DHP awards following the changes that defined the budget for two-year periods, so some progress is being made.

The other change proposed in the Affordable Homes Bill was that people who said that they wanted to move would not have to pay. Of course, that is between 10% and 20% of people. In fact, I think that the figures for Birmingham show that roughly half those who were originally having to pay for spare rooms no longer have to, although obviously people are flowing in and out of the system. I find it rather sad—perhaps the Minister will take note of this point—that although the Department gets monthly statistics from all local authorities on what is going on with awards of DHP and the like, spare room rent and so on, we do not get up-to-date figures on the situation.

One of the changes introduced in April 2013 was to enable people in the social rented sector to benefit in the same way as those who own their own homes if they want to let out a spare room to a lodger or boarder. Not only would they not have to pay for the spare room, but they could keep up to £20 a week of the additional money. Given that the applicable amount for a 25-year-old is currently around £71.70, £20 a week is quite a lot of money. I believe that only a handful of people in Birmingham have taken that up, but I think that is because people do not know that they can benefit.

I had a meeting last night with care leavers, during which we discussed housing, because it is absolutely critical for them. We discussed how tight their budgets are when they have to live on means-tested benefits, because they have to pay water, gas and electricity bills, so there are great merits in people sharing property in certain circumstances. I advise young people to consider sharing, rather than trying to live alone. They raised a concern that even though they got some priority as care leavers, they were still given only one choice of property—take it or leave it. I think that varies from local authority to local authority, but perhaps more could be done in that regard.

In my constituency advice bureau I get people who are very upset. The last person who was in tears was a constituent who was in overcrowded accommodation; they could not live comfortably in the two-bedroom flat they had. I find it sad that we are still not managing to deal with those who are under-occupying and those who are over-occupying in such a way that councils can resolve the issue. I recently had a case in which a pensioner wanted to downsize from a house but the council was being exceedingly difficult about it, saying, “When you took the house, certain adaptations were made, so we want you to reinstate them before we move you.” Obviously he is not paying the spare room rent, but he is still occupying a house that could be occupied by a family. I do not think that there is the urgency that there should be in local authorities to try to deal with overcrowding.

[Dame Anne Begg]

Actually, there is a need to ensure that people are appropriately housed and that they move, but very little of that responsibility lies with local authorities. The wrong way to go about it is just to take money from people who are over-occupying and would love to move but are not in a position to do so.

[John Hemming]

I personally think that it would be harsh to go around evicting everybody who is under-occupying, although that happens when people try to succeed to a tenancy; they are told that they cannot do so because the property is too big. I do not think that overcrowding is taken sufficiently seriously. Malcolm Wicks highlighted in his memoirs how he argued, when a Labour Housing Minister, for the need to bring in something akin to the current situation.

[Sheila Gilmore (Edinburgh East) (Lab)]

The hon. Gentleman should acknowledge that the proposals from the late Malcolm Wicks involved incentives to move, not financial penalties to be applied immediately whether or not houses are available.

[John Hemming]

I thank the hon. Lady for that intervention, but my reading of all the documents, including those memoirs, is different from hers. It was not about an incentive to move, which I do not think anyone would criticise. I think that his proposals were very similar to those that have been adopted by this Government, as seen in the written parliamentary questions.

[Mr Mark Spencer (Sherwood) (Con)]

I am grateful to the hon. Gentleman, who is being generous in giving way. Does he also recognise that it is wrong to distinguish between individuals on the basis of who their landlords are? Whether their landlord happens to be in the private sector or the public sector should make no difference to the level of support they get.

[John Hemming]

The hon. Gentleman makes a valid point. The scheme for working out how much space people need and paying them for it was introduced in the private sector many years ago. The Opposition will make the valid point that they did not make it retrospective, but the Government then say that if we want to deal with overcrowding and the like, this is one of the difficulties. Speaking personally, I would rather not do any of these things, but we do not have the finances for that. If we had chosen to take the Greek approach and said, “Can’t pay, won’t pay”, and then run out of money, we would not have had to do a lot of these things, but sadly we have to try to bring the books into balance over time.

[Sheila Gilmore]

The fundamental problem with this whole policy—I think the hon. Gentleman is taking this position as well—is whether it is about saving money or making better use of houses. The amount being saved even on the Government’s own initial estimates was not enormous, and when we factor in discretionary housing payments and all the other things that have to be taken into account, the savings diminish even further. This is not really something that will save a lot of money. [Interruption.]

[John Hemming]

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

[Helen Goodman (Bishop Auckland) (Lab)]

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

[John Hemming]

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

[Mr Spencer]

I am not familiar with Birmingham, Yardley, but I wonder whether the fact that the lists were so long is a symptom of the legacy of the previous Government’s inability to build single-bedroom accommodation for the hon. Gentleman’s constituents to move into.

[John Hemming]

The hon. Gentleman makes a valid point. Social landlords have had a relatively simplistic approach to designing property to suit the demands of the market. That creates a difficulty, in as much as one should recognise that there are real difficulties in the financial costs of living alone, including paying rent. The hon. Member for Aberdeen South said that the changes to universal credit mean that people have to keep money aside for rent in a social housing property in the same way as they have had to in a private rented property, the logic being that it makes for a seamless move into work and therefore they are not frightened about getting a job.

In my constituency, I have worked with 6 Towns credit union, which is based in West Bromwich, to extend its service to Yardley, as it has done. It allows someone to be a preferred creditor. Basically, the housing element of universal credit or housing benefit is put to one side and made available for the landlord, be that a social housing landlord or a private landlord. It is important to do that, because we need to make sure that people do not end up in a mess. The idea is that budgeting is done through the bank account rather than the housing benefits system. That creates a situation in which people do not find themselves in great difficulty with budgeting as soon as they get into a monthly paid job.

There have been proposals to cash limit housing benefit by giving it all to the local authorities. I think that the Institute for Public Policy Research proposed something along those lines. That would lead to a situation where potentially many more tenants in social housing would have to pay towards the rent for their accommodation. I would be concerned about that, because it would put them in a situation that they could do little about. I favour the current process, which supports people with the housing costs they need to pay so that they can cope on a day-to-day basis.

This is a difficult area, and the Government have done many things that I would have preferred them not to do, one of which is the change to housing benefit, which it would have been nice to do gradually. However, we have to bring the books into balance, because if we do not, the interest rates on sovereign debt will go up and the amount of interest that we would then have to pay means that the cuts or tax rises that are necessary would become a lot greater than would have otherwise been the case.

[Several hon. Members]

rose—

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[Teresa Pearce (Erith and Thamesmead) (Lab)]

I am pleased to have the opportunity to participate in this debate. It was very well opened by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who is a dedicated and inspirational Chair of the Work and Pensions Committee. I want to put on the record my thanks to her for the way in which she has chaired the Committee and for all the things I have learned from her. She is the epitome of the iron fist in a velvet glove, and she manages to be both reasonable and radical at the same time.

I am speaking in this debate because I am a member of the Select Committee, and the Chair has already gone through some of the recommendations in our report. Given the importance of the report, it is disappointing that, a year on, we are still waiting for the Government response. I hope that the Minister will address that matter.

It is indisputable that we are the middle of a housing crisis. House building is down, homelessness and rough sleeping are rising, and houses are unaffordable for many people. The lack of social housing means that those with legitimate claims and in desperate need are deemed ineligible or not in priority need as local authorities try to implement housing strategies to manage demand with a only very few houses to allocate.

The private rented sector has filled the vacuum caused by the lack of affordable and social housing. As a result, the private rented sector in London has grown by 75% in the past 10 years. In my constituency, it is now common for families to live in private rented accommodation, although they previously either owned their own home or lived in social housing. Yet the ever-growing private rented sector is still failing to meet the demands of renters. It is easy to reduce discussions about housing costs to an evaluation of numbers and statistics, but the truth is that covering housing costs is crucial to securing a stable home life and a stable society. Affordable housing costs give families certainty and freedom from the fear of eviction, and help to foster communities.

Costs are spiralling out of control. The cost of renting has soared while wages have dropped. The lack of regulation in the private rented sector and the limited supply of housing in comparison with demand mean that private landlords are currently free to set their own prices. The cost of renting privately has increased consistently since 2009, and rents reportedly increased in London in 2012-13 by nearly 8%.

It is not surprising that so many people, both in and out of work, require help with paying their housing costs and have to resort to housing benefit. The number of in-work housing benefit claimants rose from 439,000 at the end of 2008 to more than 1 million in May 2014. The latest statistics also show that there were just under 4.9 million housing benefit claimants at the end of November 2014—increased from 4.2 million in November 2008—of whom 67% were in the social rented sector, but the rest were in the private rented sector.

The Committee’s report illustrated that the cost of housing benefit is rising, while the most vulnerable are failed when they rent privately. Over the past year, as a constituency MP, I have seen a spike in the number of people contacting my office who have been told that they are ineligible for social housing, but cannot secure private rented accommodation. That is due to a combination of factors, but one that has made things very difficult for people is the change in local housing allowance. Constituents tell me that when they go to the local authority, they are just given a list of private letting agents. The problem is that nearly all those on the list say that they do not take any tenants on benefits. Constituents are spending time and resources searching for suitable properties only to be told that they cannot be helped. That means that a large section of the private rented sector is unavailable to claimants, and that they are often forced to take poor, substandard property that fails to meet their needs.

[John Hemming]

We have found in the west midlands that private landlords are often willing to take people on housing benefit if they have a 6 Towns type of account that reserves the funds. There is a solution in the system as it stands. Perhaps that needs to be investigated. Obviously, 6 Towns does not operate across the country, but perhaps there are solutions that can be found within the current policy.

[Teresa Pearce]

It is true that solutions can be found. Sadly, no one seems to have found them yet in my part of south-east London.

The Work and Pensions Committee looked at the problems that are faced by people on housing benefit. They are discriminated against when looking for private rented accommodation. For families, that makes trying to find a roof over their heads an uphill struggle. Given that tenancies typically last for six to 12 months, private renters often have to move just as they have settled in. Children who live in such places have their life chances restricted and their education disrupted, and are often not registered with a doctor. That cannot be acceptable.

Private landlords may be reluctant to rent accommodation or provide temporary accommodation to claimants for a number of reasons. It might not just be general discrimination, but might be due to constraints that are imposed by mortgage lenders, who say that they are not allowed to provide longer tenancies, or due to fears that local authorities will fail to allocate housing benefit in a timely manner. Giving private renters the option of allowing the housing benefit component of their universal credit payment to go directly to their landlord might allay those fears and enable private renters to control their finances more easily. The Government must work with private sector landlords to address their concerns about universal credit and offer greater support to those who rent property to housing benefit claimants. That work must start now.

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[Chris Heaton-Harris]

She did. I know from Ministry of Justice figures that warrants for evictions for public sector rental tenants were down over the period in question by 6%. An issue in the private rental sector might well need to be addressed, and that is probably in the south-east of the country rather than elsewhere, given the housing pressures that London might have.

My concern was the treatment of carers and those who are disabled. As the hon. Member for Birmingham, Yardley said, it would have been wonderful to exempt everybody from the change, but it was impossible to do so, and therefore discretionary housing payments were introduced. In my experience in my constituency, DHP has been granted for disability and caring in every single case it has been asked for. I pay tribute to Daventry and District Housing, the citizens advice bureau and the local council for the way in which they have dealt with those cases. The patch—I admit that it is a patch, and that I would much rather have seen it done in a much more solid way—seems to work. The extension of the term of DHP seems to have given people a better sense that they will be able to live in their property for a long period.

I conclude with comments on the Public Accounts Committee report on universal credit, which was published only a couple of weeks ago, and which the hon. Member for Aberdeen South mentioned. As she outlined, an interesting part of universal credit and one of the benefits that it will eventually wrap in—for many new claimants, that has started—is housing benefit. Housing associations up and down the country have had concerns about how that might affect them and how they will get their rents from tenants. However, the report shows how a change in the Department for Work and Pensions has been introduced—it has been seen as controversial by many, although a universal credit that aims to get as many people as possible into work and to make work pay better than benefits ever will is in fact policy on both sides of the House—how the programme has improved things and how it is now beginning to deliver what it was meant to deliver, and on scale across the country.

The report was groundbreaking in many ways. The Public Accounts Committee is very critical of all Departments that come before us where money is spent. We raised some issues, as detailed by the hon. Member for Aberdeen South, but if Members read the report they will see for themselves that we are much more comfortable with how the universal credit programme is going—that it is now delivering on scale and will deliver the savings expected. No matter on which side of the House hon. Members sit, they will welcome it in future, because it does exactly what it says on the tin.

The interesting paragraph is paragraph 6. The hon. Lady mentioned the potential problems of paying housing benefit elements of universal credit directly to claimants—the question was whether housing associations and others could maintain their incomes. I know from initial reports that her statistics are correct, but I would like to hear from the Minister, because I am pretty sure that new stats prove that there is not as much of a problem as she says.

[John Hemming]

rose—

[Chris Heaton-Harris]

I had better sit down and shut up, otherwise I will get the stare from Madam Deputy Speaker, which I never want to receive.

Things are improving. We would expect that because when something changes, there is always upset at the beginning. Things are on the right track, but I would like to hear about it from the Minister.

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[Sheila Gilmore]

I thank my hon. Friend for her intervention.

In Scotland, the priority given to people who are homeless—a much wider definition of homelessness has been adopted by the Scottish Government—means that there is real competition for smaller houses. The majority of people who present as homeless are single people, so they too need the small houses that other people are trying to fit into.

[John Hemming]

I refer the hon. Lady to the answer that the then housing Minister, the late Malcolm Wicks, gave to a question from the hon. Member for The Cotswolds (Geoffrey Clifton-Brown):

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

If he said that then, why is it now such a bad idea?

[Sheila Gilmore]

It is interesting that the flat-rate housing allowance for the private rented sector should be raised. What the hon. Gentleman mentions was discussed as a possibility during the Labour Government. I was very much involved in housing, as the convenor of a housing committee in my council, and I remember that being discussed, but it was not implemented and there was a lot of opposition to the idea of doing that for the social rented sector, for all sorts of reasons. However, what the bedroom tax does is immediately say to people, whether they can move or not and whatever their circumstances are: “You may have to pay this extra money.”

To argue that discretionary housing payments are sufficient is not good enough. Even in Scotland, where the Scottish Government eventually agreed that extra money for the discretionary housing pot should kick in, there are still people who either do not know about making a claim or make a claim and do not get it, and who have to keep making claims. What the Select Committee said—I do not think this was unreasonable; we are a cross-party Committee—was that if we take the view that disabled people who have substantially adapted houses will receive long-term discretionary housing payments, which is what is always said, it would be simpler to exempt them. It would be administratively simpler, because there must be administrative costs in taking forms from people, processing them and working out whether they are still eligible. I do not think that was an unreasonable proposition. As the Government have taken so long to read our report—presumably considering it and working out whether it is workable—I hope that the Minister will stand up today and tell us that they have accepted that reasonable proposition. If he did that, we would all be extremely glad.

I want briefly to say something about the housing benefit cap. If a lot of people—this was the evidence to our Committee—are in temporary accommodation, it is utterly unreasonable to stop their benefit suddenly because they find themselves in that position. The Government are fond of saying that, as a result of the cap, people have moved out of temporary accommodation, but I suggest that it is likely that they are moving from temporary accommodation to permanent accommodation. There is a movement of people in and out of the scope of the household benefit cap, but the amount that some people are losing is very significant indeed. Again, I fear that the legislation was more symbolic than something that seriously addressed the underlying issues. If we have a lot of people receiving high amounts of benefits overall—because, for example, they are living in very expensive temporary accommodation—we need to build more affordable houses.

This is an issue north and south of the border. The Scottish Government have not been building sufficient low-cost affordable homes. The number completed in my city last year was the same as it was in 2007, which was the year that the current Scottish Administration took office. They have not been building low-rent affordable homes at an increased rate, even though they may sometimes try to say that they are. Without those homes, people will be paying excessive rents in the private rented sector, and not just in temporary accommodation. That is the issue we need to tackle.

[Helen Goodman (Bishop Auckland) (Lab)]

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

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

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

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

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

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

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

[John Hemming]

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

[Helen Goodman]

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

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

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

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

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

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

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

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

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[John Hemming]

I think the Minister accepts that the Liberal Democrats believe there should be automatic exemptions for some of the people currently receiving discretionary housing payment, and does he not accept that if we automatically exempt people who are currently getting DHP the net effect on the public purse is zero?

[Mr Harper]

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

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

[Mr Harper]

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

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

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

[John Hemming]

I tried to intervene on the hon. Member for Bishop Auckland (Helen Goodman) to ask her whether Labour would reduce under-occupation by adopting a policy that involved evicting people living in under-occupied accommodation. Does the Minister accept that if we do not remove the spare room subsidy, the only alternative open to Labour if it wanted to reduce under-occupation would be to go round evicting people from under-occupied properties, which does happen in certain tenancies?

[Mr Harper]

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

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

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

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

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

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

Affordable Homes Bill

John Hemming Excerpts

Friday 5th September 2014 Commons Chamber

[Chris Bryant]

I would agree with my hon. Friend, except for his use of the word “unforeseen”, as this was completely foreseeable and indeed completely foreseen by every organisation in the land, apart from the Government. I sometimes think to myself that blindness is one thing but wilful blindness in politics is disgraceful beyond measure, and that is what has been shown on this.

[John Hemming (Birmingham, Yardley) (LD)]

rose—

[Chris Bryant]

I want to make a bit more progress, because I know that lots of people want to speak. I hope the hon. Gentleman does not mind.

The Government will no doubt argue that they have made allowances for such instances of hardship as have been mentioned in the debate through the discretionary housing payments, but those have been fraught with problems. I gently suggest that the clue is in the word “discretionary”; one local authority may hold back, either at the beginning of the year or throughout the year, because they do not know what demand there will be, whereas another authority, possibly a neighbouring one, will open its hands far more swiftly. So two families divided by a local authority boundary will have had completely different results when they made claims, and that is for those who know about the right to make a claim. The situation has not been helped by the completely uneven allocation of cash. Redcar and Cleveland’s authority received £400,000 for 2,313 applications, which works out at £181 each, whereas Tory Wandsworth council—surprise, surprise—received £1.83 million to divvy up between fewer applications, just 1,629, which works out at £1,129 each. When the Government are being incompetent, they could at least be incompetent in a fair way.

Another element of discretion is involved in all this. The total funding made available for 2014-15 under the discretionary housing payments was £165 million, and the original allocation for 2013-14 was £155 million, which was then increased to £180 million. But local authorities are permitted to contribute two and a half times the Government contribution to this, so in 2013-14, 85 English local authorities, 15 Welsh local authorities and 27 Scottish local authorities felt that the problem was so severe in their area that they had to spend more than the contribution provided by the Department for Work and Pensions. That works out as a third of all local authorities across the United Kingdom, 55% of authorities in Wales and 84% of those in Scotland. So, yet again, the poorest local authorities in the land are forced to rob Peter to allow Paul to pay Iain. Local authorities have therefore had to close libraries and swimming pools, and cut services—those have all been slashed to pay for a Conservative ideology-driven policy.

The Government’s evaluation highlighted a range of other problems. It said:

“local authorities struggle to make long-term plans for this resource”.

It made criticisms, saying:

“There was some variation in who was assisted, even within a local authority”.

It also talked about:

“Uncertainties around both future demand and the size/availability of the fund”.

That did not help, not least because

“the 2014-15 allocation was only announced in January 2014”.

In addition, many have pointed out that disabled people in adapted homes have not always been awarded discretionary housing payments because disability benefits, which are intended to help with some of the extra costs of having a long-term disability or health condition, can cause them to fail means tests based on their income.

[Chris Bryant]

The right hon. Lady makes a very fair point, and I suspect that many Labour Members, if not Members around the House, can cite distressing cases where people, particularly those with mental health problems—they are expressly referred to in the Government’s evaluation—have not known how to make an original claim for discretionary housing payment, do not understand the rules and have been very much left out in the cold. Her constituent is not the only one who has taken their own life because of this.

[John Hemming]

Does the shadow Minister agree that because substantially what the Bill does is formalise what is currently mainly paid through discretionary housing payments, there will not be any substantial additional cost as a result of it?

[Chris Bryant]

Those are the kinds of issues we need to discuss in Committee. However, as I said earlier, I am profoundly distrustful about this, as one thing I have learnt in my time in the House is that when a Minister stands at the Dispatch Box when the debate is already going on and says that something is going to cost £1 billion, the figure has normally been invented the night before when someone was desperate to come up with something. The figure is suspiciously round.

--- Later in debate ---

[Mr Nuttall]

My hon. Friend is absolutely right, and we have not heard much this morning about the second part of the Bill. One or two Members have touched on it, but we have heard little about the part that deals with the review of affordable housing. I shall certainly be touching on it, after I have dealt with the first part of the Bill, which contains the proposed changes to housing benefit.

I accept, as does anyone who has looked at the issue, that the changes to housing benefit resulting from the removal of the spare room subsidy have been controversial. There is no doubt about that. We have to ask ourselves why the Government had to take tough, difficult decisions to try to control the level of public spending. The answer is quite simple. We as a country simply could not continue spending money that we did not have. The coalition Government inherited a situation in which £1 in every £4 had to be borrowed. In other words, the books were not being balanced. The scale of the problem is demonstrated by the fact that, even now, after four years of a Government who have been doing all they can to try to rein in public spending, we as a country are still years from having completely dealt with the deficit and being in a position to balance the books. That position required the Government to look at areas of expenditure like the welfare budget.

[John Hemming]

On the question whether this is about extra money being spent, there was a court case this year, number EWCA Civ 13, in which the Secretary of State, when challenged on the lawfulness of the discriminatory elements in the regulations relating to disabled people, said that he would continue to closely monitor and adjust the implementation of the policy

“to ensure that the needs of these groups are effectively addressed in the longer term”.

The Bill is, in essence, about moving from discretionary housing payments to exemptions. It is not about additional cost to the public purse.

[Mr Nuttall]

My hon. Friend might think that, but I think it is better for the discretionary housing payment to be looked at on a case-by-case basis, as at present.

[Mr Nuttall]

I am grateful to my hon. Friend for reminding the House that we now know from the Minister’s comments that we are talking about a figure of £1 billion a year, whichever way we look at it.

[John Hemming]

The Minister made it very clear that this is not about the elements relating to spare rooms but an argument that is contested in respect of non-dependant deductions.

[Mr Nuttall]

I am grateful for that point, which I will deal with in more detail later. We do not want to get bogged down in arguments about this, that or the other. The fundamental point is that the coalition Government had to make savings in the welfare budget, and this policy has reduced the welfare budget, as I will explain. I think that deals with my hon. Friend’s point.

The widespread view before the last election was that the previous Labour Government had allowed the welfare budget to spiral out of control. The housing benefit budget typified this, as its cost had increased from £11.2 billion in 1997-98 to £20 billion in 2009-10. This meant that every household in my constituency, where hard-working taxpayers were themselves struggling to make ends meet, were paying £900 a year towards a benefit that, in some cases, was enabling others to live in accommodation that they could not afford to live in. That is the key point.

--- Later in debate ---

[John Hemming]

Does my hon. Friend not accept that the debate today is not about the principle of the spare room subsidy, spare room rent subsidy, bedroom tax or whatever we wish to call it, but about whether the exceptions set out in guidance—in effect, there are legitimate expectations about those exceptions, subject to judicial review—should be transferred into legislation to give people greater certainty?

[Mr Nuttall]

That is indeed what clause 2 proposes. I take the view that what one might call cases outside the normal set of exemptions, which I will come on to, are best dealt with through the current system of discretionary housing payments.

The present size criteria allow one bedroom for each person or couple living as part of a household, with children under 16 of the same gender expected to share and all children under 10 expected to share. Tenants’ housing benefit is reduced by 14% for those with one bedroom more than that formula allows, and by 25% for those with two or more spare bedrooms.

With estimates putting the total number of spare bedrooms at approaching 1 million, it is absolutely no wonder that Ministers should look at that matter. Considering that, according to the Office for National Statistics, 360,000 households live in crowded accommodation in the social rented sector in England, all of whom would I am sure dearly love to move into bigger accommodation, Ministers had to take action. With nearly 2 million families on social housing waiting lists in England, it makes absolute sense for the nation’s social housing stock to be utilised as efficiently as possible.

Pension Schemes Bill

John Hemming Excerpts

Tuesday 2nd September 2014 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

I start with an apology to the House because I had to attend two Committees earlier so could not attend most of this debate. I refer Members to my declaration in the Register of Members’ Financial Interests. My company, John Hemming & Company Systems, provides software to financial services organisations, including those running pension schemes.

Essentially, we are discussing how we can give people security with the tax advantage of payments into pensions from employers over the years, so that they can retire in reasonable comfort and expect a good outcome. The difficulty with anything is always who underwrites the outcomes, and we have obviously had difficulties with defined-benefits schemes. Those have been difficult to maintain because of the swing that can occur with the finances; hence employers have lost enthusiasm globally for that. With technological changes and the fact that the employment market has been different, it has been possible to attract employees without necessarily offering them defined-benefits pensions. That is why it has tended to happen across the world; it is not necessarily because of the different political structures of different countries. The idea that this is an ideological solution is not true; it is a technological solution, and many of the economic shifts we have seen are technological rather than ideological. That has driven a lot of things in the employment market, which has gone on to drive issues in the pension market.

The right hon. Member for Neath (Mr Hain) said that had the industry got wind of such shifts, it would have lobbied like billy-oh to stop them happening. I would have thought that that was because the industry did not think that such things were in its interests, and not because they were not in the interests of pensioners. I find it rather strange that the argument that the annuities industry hates such measures is also an argument that they are bad for people who are now no longer trapped having to buy annuities. We have actuarial problems and the difficulty of managing risk. As somebody who buys and sells shares and bonds and so on, I deal with such things from time to time on my account or those of other people. It is a complex area, and there are issues of how cost-efficiently it can be managed for small schemes. Larger schemes generally get a better result because the people managing them are able to do so more effectively. There is a inherent difficulty, however, which are that these areas are complex and will need guidance.

What I look for from the Financial Conduct Authority and such bodies is that they hunt out on a day-to-day basis the people who are offering bad advice. There are obviously boiler shop operations that have gone on for years, with people saying, “Here is a Canadian share. It is a $5 dollar share, but to you $4.75”. As soon as we hear that we know it is a boiler shop operation. That is not proper share trading; it is just trying to con people into buying something that is basically useless on the assumption that there is a lot of money to be made. Even wealthy people can be trapped by that, as Bernie Madoff showed when he made off with lots of people’s money.

Unquestionably, there are those difficulties, and I worry sometimes that the regulatory process adds a lot of complication, rather than hunting out people who are basically committing fraud on a day-to-day basis. There are a few people whose business model is to con people, and there are good examples of Ponzi schemes throughout the world. These schemes will never go away because some people will always be persuaded to misuse their finances; the challenge for the regulatory authorities is to look for them, stop them operating on a large scale and offer sufficient guidance so that people understand that if it seems too good to be true, it probably is—that is always a good lesson.

There are things the Government can do that are already being done in some areas—for example, websites saying, “Slot in these figures, see what happens, work it all out and see the long-term consequences.” That could be done on an objective, trusted basis, giving people the information to make their own decisions. People retire in different circumstances: some will have a mortgage they want to get rid of, which would give them greater stability and make it much easier for them to manage things on a day-to-day basis. Having the flexibility to draw a large sum of money out of their pension fund at the start to pay down certain things would be a great advantage compared with being trapped in a particular scheme. I have encountered retired people who are in a financial mess, with debts in one place and assets in another, and they cannot handle it. We cannot design a system for people who are all the same because people are not all the same—they and their circumstances vary greatly in many different ways—so introducing a flexible system is a positive way forward. For that reason, I was pleased to hear this announcement.

There will always be priorities, and unquestionably we need to keep an eye on charges. Members like the right hon. Member for Neath believe the industry really does not want this flexibility because of the impact on its bottom line, but, at the end of the day, the money has to come from somewhere. The money invested comes out in dividends, charges, payments to pensions and that sort of stuff—no magic money can be created in the process—and if less money goes in charges to the industry, more money goes to people getting pensions, which has to be a positive thing.

I am pleased to support the Government’s proposals to introduce flexibility and move forward on what people accept is a damaged annuity market. Obviously, there is market risk, and interest rates have fallen so low that annuity rates are much lower too, which is depressing for people locked into a situation where they are forced to accept something that everyone says in the long term is of low value. I think, therefore, that the Government have got this right, and the Opposition, in criticising them, are getting it wrong, and I will support the Government on Second Reading.

Universal Credit

John Hemming Excerpts

Wednesday 9th July 2014 Commons Chamber

[Mr Duncan Smith]

The head of the home civil service has expressed no reservations, and I do not believe that he has any reservations about these plans. As agreed, the plans will be signed off with the Chief Secretary to the Treasury, and when they are signed off, I hope that the hon. Member for Rhondda will write me a letter to say, “Thank you very much, indeed.”

[John Hemming (Birmingham, Yardley) (LD)]

Does the Secretary of State agree that the Opposition would do a better job if, rather than asking picky bureaucratic questions, they focused on whether universal credit will improve pay for low-paid people and ensure that work pays?

[Mr Duncan Smith]

My hon. Friend is absolutely right. The problem for the hon. Member for Rhondda is that his Government left behind a shambles in welfare—people unemployed, long-term unemployment rising, and youth unemployment rising dramatically—and there has never been an apology about that, or about crashing the economy.

DWP: Performance

John Hemming Excerpts

Monday 30th June 2014 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

I apologise to the House for having been in a Statutory Instrument Committee—in fact, on DWP issues—listening to the hon. Member for Rhondda (Chris Bryant) padding out his speech while saying very little. That is essentially where we are: we are not quite sure what the Labour party’s alternative is to what we are doing. However, Labour has a motion. In it, Labour complains that

“projected spending on Employment and Support Allowance has risen by £800 million”.

That tells us that Labour would prefer that perhaps another 160,000 people who currently get ESA not get it.

I am concerned about some areas. I have taken over as chair of the Lib Dems Back Bench parliamentary policy committee, and one issue I have expressed concern about is sanctions. There is no question but that people are sanctioned who should not be sanctioned. I thought that we should find out about more such cases, so I asked my local jobcentre to put on the wall a letter saying, “I am worried about people being wrongfully sanctioned. Can you please contact me if you have been wrongfully sanctioned?” The jobcentre said no—that it would not put a letter on the wall—which caused me concern, so I have written to Ministers to ask them to consider that issue. I take the view that jobcentres should make people aware of alternative advice services, be they the local Member of Parliament or the CAB.

[Ian Paisley (North Antrim) (DUP)]

Will the hon. Gentleman give way?

[John Hemming]

I am sorry, but I will not take an intervention from the hon. Gentleman because it will knock somebody else out.

The Chair of the Work and Pensions Committee, the hon. Member for Aberdeen South (Dame Anne Begg), was quite right to say that welfare reform is a very complex area. However, there is no question about it: we have to make it so that people are better off in work than out of work. I was very pleased when I heard universal credit proposed, because I have supported its principle for a long time. I thought that it might be a bit too radical for the Government, but we are in fact managing to make progress down that route, even though there are difficulties in our way.

Things such as the welfare cap are right, because it sends this message: “You should be in work.” The local Labour party in my constituency of Birmingham, Yardley opposed all the Government’s welfare changes during the local elections, but it got 27%, while we got 46%. My local constituents in Birmingham, Yardley agree with the welfare cap. Many of them do not earn that much money, and they think the cap is reasonable.

We should concentrate money on low-paid workers. Universal credit, which will top up their pay, will be good. I want an increase in the minimum wage above what is proposed. I would go for a figure of about £7 an hour as a way of starting to make progress on that.

The welfare benefits system is a complex area. Now that we are one year out from a general election, I really think that the Labour party has a responsibility to put forward some alternatives. We have heard noises from Opposition Members complaining about the cost of housing benefit going up, but if we freeze housing benefit payments, the people who will suffer are those on low incomes, whether in work or out of work, who have difficulty paying their rent. There has been talk of the Labour party adopting the Institute for Public Policy Research’s proposal about the transfer or localisation of housing benefit, but that would cause great difficulties, and I do not think that local authorities want it. Less than a year from a general election, with the Government doing a good job in improving the employment situation—getting young people into work and making it worth while to work—the Opposition have got to offer an alternative.

Jobs and Work

John Hemming Excerpts

Wednesday 11th June 2014 Commons Chamber

[Mr Umunna]

I will just make a bit more progress.

Part of that involves ensuring the right environment across the country in all regions for our businesses to grow, and part of it involves a sector-led approach, looking at where we have a competitive edge and comparative advantage relative to our international competitors. I am very supportive of the sectoral approach. It was of course the Labour Government who led the way in that by setting up the Automotive Council.

When it comes to creating the right environment, ensuring that people have the skills our businesses need is crucial. Increasing the quantity and quality of apprenticeships is a must. We have a record to be proud of. In government, we rescued apprenticeships from the scrap heap. We more than quadrupled starts—[Interruption.] Government Members do not want to hear it, but let me give them the facts. We more than quadrupled apprenticeship starts, from a woeful 65,000 under the Major Government to 280,000 in our final year in office.

[John Hemming (Birmingham, Yardley) (LD)]

Is it still the Opposition’s policy to get rid of the intermediate apprenticeship?

[Mr Umunna]

No, it is not, and I should say that the Deputy Prime Minister’s intervention on this subject while standing in for the Prime Minister at PMQs was deeply embarrassing, given that he was attacking an independent report that was produced by a group of experts for us which said exactly the same as his own Secretary of State’s report for his Department on the same subject.

[Mr Umunna]

I am very grateful to my hon. Friend for drawing attention to his excellent Bill, which I and many of my hon. Friends were here to support, but which was disappointingly ignored by the Government.

What is happening to apprenticeships now? This issue, frequently raised here by my hon. Friend the Member for Blackpool South (Mr Marsden) and my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne), is worrying.

[John Hemming]

Will the hon. Gentleman give way?

[Mr Umunna]

No, I want to make some more progress—[Interruption.] I have been quite generous in giving way.

Countless other colleagues have talked about opportunities for young people. My hon. Friend the Member for Rotherham (Sarah Champion) has drawn attention to the lack of apprenticeship opportunities for people in her constituency. Under-19 apprenticeship starts have fallen by 17,000 over the last academic year, and there are now 2,000 fewer under-19s starting apprenticeships than in 2009-10, and less than 2% of apprenticeship starts last year were at level 4 or above. Where was the Bill in this Queen’s Speech to require all large companies taking on large Government contracts to provide apprenticeships, as we called for? It was not there. Where was the requirement for all apprenticeships to last at least two years and to be at level 3 or above to ensure we maintain their quality? It was not there. We need to see more done on that.

It is important to help those who want to get into work through jobs and training, but it is also important to help those who want to create their own jobs, and they will not be able to do that without the finance. We are told that the small business Bill will make it easier for small businesses to access finance. I really hope so, because in the last year, net lending to small and medium-sized businesses fell by £3.2 billion. Scheme after scheme after scheme—from Project Merlin to funding for lending—has simply failed to resolve these problems. In the last quarter, net lending to businesses by funding for lending participants actually fell by £700 million—an issue on which I know my hon. Friends the Members for Rochdale (Simon Danczuk) and for Feltham and Heston (Seema Malhotra) have been campaigning.

--- Later in debate ---

[John Hemming (Birmingham, Yardley) (LD)]

One always wonders whether the Opposition have actually learned anything while in opposition, and listening to the shadow Secretary of State gave some indication of whether they have or not. I have had some useful conversations recently with Lord Turnbull, who, as Cabinet Secretary, was the senior civil servant and, I would argue, has some understanding of how national fiscal policy operates. He kindly pointed out table 4.1 of the “Public Expenditure Statistical Analyses” to me, which shows that when Labour was in office, while there was an upswing, public expenditure increased as a proportion of GDP. If anyone is interested, I have put the figures on my web log, linked to a Google Docs analysis that demonstrates how Labour started over- spending.

Much though people on the continent, such as the President of France, may have taken the view that one can spend one’s way out of bankruptcy, after a period in office I think President Hollande concluded that actually one cannot spend one’s way out of bankruptcy—that the additional GDP from the spending does not give an adequate tax take.

That leaves us in a situation where we cannot change things rapidly. A very big deficit cannot be reduced to zero overnight, because of the economic disruption that that causes. The shadow Secretary of State complains that we have borrowed a lot of money, but we have done so because there was a big deficit. Every year, one borrows the amount of the deficit, which adds to the debt, and one cannot change that rapidly, either by putting up taxes or by cutting spending to bring the accounts back into balance, because the disruption from that causes additional problems. The fact that he complains about something that is obviously there on a simple, basic mathematical point shows that Labour has learned nothing.

The hon. Gentleman’s refusals to clarify for me Labour’s plan to get rid of the intermediate apprenticeship is also symptomatic of a substantial problem. Scrutinising the Deregulation Bill, Opposition Members happily stood up and said, “Let’s get rid of the intermediate apprenticeship,” of which there are about half a million in this country; they did not think about the consequences for the people affected. Earlier, the hon. Gentleman gave a one-word answer on that subject and would not clarify, so one has to assume that the Opposition’s detailed policy remains the same: they do not want intermediate apprenticeships. Well, I do want intermediate apprenticeships; they are a good route into work.

There we have two basic examples in which it appears that the Opposition have learned nothing. In government, we are making progress and dealing with matters that require a long-term plan—we cannot do it based on a short-term plan—but there are issues to be worried about.

I worry about the statistical basis of poverty analysis. I see individual cases of people who are really struggling. I see people who have been wrongly sanctioned and, happily, at times I have been able to resolve the sanctions. There are problems with the system—it can have a knock-on effect on housing, which it should not have. I know that the Government are trying, through the universal credit system, to introduce a more supportive system, which is more about encouraging compliance than punishing people, but we are still operating the older system, which is causing problems.

Everyone who is on tax credits and at the bottom end of the market is included, but we have to remember that people who are not officially in poverty in other countries migrate here to enter our work and tax credits system. Should they be lumped in with the people who are having to attend food banks because they were wrongfully sanctioned? I do not think they should. When the statistics conflate those different circumstances—people who are coming to this country to participate on that basis and people who are really suffering—they make a mistake. We need to work as a Government to reduce the suffering that comes from, say, wrongful sanctions and to help people who are having great difficulty making ends meet, but we should not conflate the different circumstances. If we get the statistical analysis wrong, it is meaningless.

Sanctioning of Benefit Recipients

John Hemming Excerpts

Thursday 3rd April 2014 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

I am pleased that the right hon. Member for Oldham West and Royton (Mr Meacher) has managed to secure the debate, although sadly it was scheduled at short notice, so I do not think that all hon. Members who might wish to be present are in the Chamber.

I support the Government’s general financial strategy, so I disagree with the right hon. Gentleman about austerity. Clearly we have to bring the deficit under control, so we have to be aware of the costs of the welfare system. I support a number of the changes to the system that the Government have introduced, but some have caused complications. I am worried about the impact of the changes to council tax benefit, which need to be reviewed because they have created odd results. My Labour opponent has taken to encouraging people to move from West Bromwich to Birmingham because that allows them to get more benefits from the council tax payer. I think that that is wrong, because it puts pressure on our local taxpayers, but it arises because Sandwell, which is where West Bromwich is, has a different rule from Birmingham on qualifying for council tax benefit.

Like all hon. Members, I have an office that deals with casework, and we learn a lot from the people who come to see us. I worry, however, that people who are sanctioned do not come to see me because only four sanctions cases have come through. We are a reference agency for the local food bank. We have made four references to it, although, oddly enough, they did not involve the people who were sanctioned, because we have generally found that we can deal with such cases. I worry about what is happening that we do not see because, although we can read the statistics, we do not see the people affected, and I like to understand individual cases so that I can find out what is going on. I have been involved in welfare rights casework for coming up to 25 years, so I have seen the system’s various changes and got used to concepts such as non-dependent deductions. Those things are complicated and difficult for people to understand.

My hon. Friend the Member for Brent Central (Sarah Teather) would love to be able to participate in the debate, but she has to be at another meeting, so she has asked me to quote her comments about a case from her constituency. She says:

“I have had many constituents who have been sanctioned completely inappropriately over the last 18 months. In all cases the removal of benefits has caused intense distress and suffering to people who are very vulnerable. This is a typical case—I shall call her Jenny. Jenny has profound mental health problems, learning difficulties and physical health problems. Her health problems and disabilities make it very difficult for her to organise herself and her own life. This is the reason that she finds it so difficult to hold down a job and the reason why she is on benefits. Jenny needs a great deal of support to function. Instead of which, when she missed appointments, her benefits were sanctioned, leaving her without any money whatsoever for more than 4 months. During this period Jenny was destitute and reliant on the food bank. The safety net of the welfare state that should support a woman who is too vulnerable to support herself entirely let her down.”

Those comments highlight the sort of cases that we should be especially worried about: those involving people who get confused by everything and are not quite sure what is going on, and all they find is that they do not have any money. Such people have visited my advice bureau. They know that they do not have any money but they do not know why. However, we have been able to deal with such situations.

Although the Opposition might think that the Government are out to get people, I do not think that that is true. The Government are trying to encourage people into work and to give support to those who need it, but we need to consider how we can review the sanctions process so that we do not trap people in destitution. If someone has no money, it is difficult to get a bus fare. A day’s bus fare in Birmingham is £3.60, which does not sound much to someone in work who is earning a lot of money, but it creates a bit of problem for someone who is on £71.70 a week and suddenly finds that they have no money at all.

That has a knock-on effect for housing benefit. We have marvellous computer systems that minimise the amount of paperwork that people need to do because benefits can be passported. If somebody gets JSA or some form of means-tested benefit, they automatically qualify for housing benefit as well. The problem is that when they come off JSA because they are sanctioned, the computer says no and suddenly they are taken off housing benefit as well. In fact, because they have got money, they qualify for housing benefit, but they have to put in another claim. This is the problem for people who have difficulty understanding how the system works. They know they have no money, but they do not understand why the council is asking them to pay rent. The danger with that is that they come for advice too late, and we end up trying to backdate housing benefit some months in a situation where people always qualified for it but had not claimed it.

The Government say that targets for sanctioning have been stopped, but there needs to be a review of how some of the agencies are operating. They seem to be referring too many people for sanctions, which creates problems. Then there is the question of delays on appeals. Obviously, a reconsideration is far better than an appeal, and there are mechanisms for that. We need to make sure that the advice agencies such as Citizens Advice get good co-operation from agencies such as Jobcentre Plus so that the process does not end up being over-bureaucratic.

I happened to ask a question about cases on appeal being stayed, because I discovered that the Department has had a tendency to stay cases. A thousand cases were stayed for more then six months. If there is a massive commercial dispute between two wealthy companies about an issue of copyright or patent, the fact that the court has not yet made up its mind does not affect either of them, but if somebody is destitute and depends on a food bank, it is a big issue if their case is stayed.

The Department needs to look at the cost-effectiveness of fighting some of these cases, and consider whether it might be better to cave in if a reasonable case is being made by the appellant. The amount of money being provided is not that great and the administrative cost of dealing with the case is quite high. One of the reasons that the Department does not turn up at tribunals from time to time is the administrative cost of doing that. I understand that the Department cannot give in all the time—there is no question about that—but there needs to be a cost-effectiveness calculation of fighting claims too hard, accepting that at the other end is not a large company that can wait, but somebody who is destitute and desperate for cash. Even though they may have family support and the like, I see people with very serious problems.

A further question that should be considered is whether the sanctioning system is designed the wrong way. I agree with the right hon. Member for Oldham West and Royton—we need a system to support compliance—but we should look at the way the universal credit sanctioning system has been designed, rather than the way the JSA sanctioning scheme works. The JSA sanctioning scheme is to a great extent punitive. It gives people a kick for doing something that the system deems to be wrong, whereas the universal credit system is designed to enforce compliance, so as soon as compliance starts, money starts again. That is what the system should be doing. We are waiting for the rest of universal credit and want to see that as soon as possible, but if the Government could bring in at an earlier stage the universal credit sanctioning system, we would have a system that is seen to be doing what it says on the tin and encouraging people to work with the system.

If, under that system, the easiest way of getting paid is for people to do what they are asked to do, rather than to fight it through an appeal process that can potentially take years to be settled, there would be a far better result for people. These are people without any other source of revenue, apart perhaps from support from families. Some people do not even have family support. We need to think about how the system is seen from those people’s point of view.

I congratulate the right hon. Member for Oldham West and Royton on asking for this debate, and on his persistence and his willingness to stand in at the last minute. Many hon. Members are concerned about the issue as they see it in their constituency surgeries, and the Government need to review some aspects of the process.

[Several hon. Members]

rose—

Housing Benefit

John Hemming Excerpts

Wednesday 26th February 2014 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That an humble Address be presented to Her Majesty, praying that the Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014 (S.I., 2014, No. 212), dated 4 February 2014, a copy of which was laid before this House on 5 February, be annulled.

The motion also stands in the names of my right hon. Friend the Member for Doncaster North (Edward Miliband), the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Carmarthen East and Dinefwr (Jonathan Edwards) and others.

Let me set out our reasons for calling this debate and forcing this vote today, and the circumstances that have brought us to this position. The matter before us takes us to the heart of this Government’s shabby and shameful record. By statutory instrument, the Government are trying to close a loophole in the bedroom tax legislation without even understanding how many people are affected by these changes. Instead of trying to close this loophole, the Government should finally try to do the right thing and scrap the bedroom tax altogether. This Government promised that they would not balance the books on the backs of the poorest and most vulnerable, but that is exactly what they are doing, and in such a careless, clumsy and cack-handed way that we see chaos, confusion and uncounted costs piling up around us as they compound the injustice of their policies with utter incompetence in their delivery.

This Government’s bedroom tax has been a fiasco from the very beginning. More than half a million households have been hit by this mean-minded measure. Two thirds of those affected are disabled and 60,000 are carers. More than 200,000 families with children are affected, many of whom are already below the poverty line and forced, as a result of this tax, to find an average £728 a year extra in rent—equivalent to losing all the child benefit for a second child. So much for the Prime Minister’s moral crusade.

[John Hemming (Birmingham, Yardley) (LD)]

In January, the hon. Lady said that she would place a cap on structural social security spending, so what other cuts in welfare would she make to cover this exemption?

[Rachel Reeves]

Specifically on the bedroom tax, we have said that we would cancel it by closing the loophole in the shares-for-rights scheme, the bogus self-employment in the construction sector, and the tax credit that the Chancellor gave to hedge funds in the Budget earlier this year. We have been very clear about how we would pay for this. In the hon. Gentleman’s local authority of Birmingham, 2,100 households are being affected; I wonder whether he might speak for them and their concerns.

The implementation of the bedroom tax has been a shambles. Ministers have been unable to explain whether the policy is supposed to reduce overcrowding or whether, as their costings assume, people are expected to remain in their properties. There has been uncertainty and inconsistency, with mixed messages about who is exempt, whether it be parents with children serving in the armed forces, disabled people or carers. The truth is that none of them is exempt. Courts and tribunals have had to devote days to debating the definition of a bedroom, and as the unintended consequences become clear, the uncalculated costs are mounting.

--- Later in debate ---

[John Hemming (Birmingham, Yardley) (LD)]

This morning, I received an e-mail that says:

“Hi can you help me, I am in a council flat 1 bed room, I have 2 kids and a partner so that is 4 of us in a 1 bed room flat”.

I actually received two e-mails, but I have left the other one in my office. We must not forget the people who are in overcrowded accommodation.

The shadow Secretary of State said a couple of weeks ago that Labour would cap the structural social security budget. She used the word “structural” on the basis that, as unemployment goes up and down, it does not affect the structural deficit, and Labour has said that it will cut the deficit. We have to find the money from somewhere.

This policy encourages people to make better use of rooms. To give an example from my constituency, a lady who is in a three-bedroom house has arranged for her relatives to join her and give up their private rented accommodation, which was costing the taxpayer £5,000 a year through the welfare budget. Therefore, there is a saving of £5,000 a year and better use is being made of the property. They now have only one TV licence, one water bill, one gas bill and one electricity bill. Financially, it is a far better situation for everyone. We are not having to attack or cut any other benefits. We are able to maintain the value of benefits.

The shadow Secretary of State said—not in this debate but at the Institute for Public Policy Research—that the Opposition would cap the welfare budget. The difficulty with their position is that they would give an exemption just to those who have been out of work since 1996 and not to people with disabilities. There is no question but that there are people with disabilities who need a spare room. I have managed to get discretionary housing payments for such people. I am pleased that, due to the announcement on DHP for the next two financial years, we should be able to provide it for a longer period. Furthermore, I want the rules to be changed to provide an automatic exemption. I accept that it is difficult to do that. That is why the Department won the case in the Court of Appeal. The Department is working on the detailed regulations.

This policy encourages better use to be made of accommodation, saves money for the public purse and reduces overcrowding. It also means that we do not have to cut other parts of the welfare budget. The real challenge is how we manage the overall budget.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

In Oldham, 2,048 households are affected by the bedroom tax, with 500 properties suitable for them to move into. Where does the hon. Gentleman suggest they go?

[John Hemming]

I can talk about Birmingham better than I can about Oldham. In Birmingham, by mid-January roughly a quarter of people in council properties had ceased paying extra rent for a spare room due to changed circumstances—they might have found family members to join them or have downsized. Some 521 households wanted to transfer, but sadly, 380 had arrears, and for some reason the council was blocking them from transferring. I think that that is appalling. Let us suppose somebody is happy to downsize to a flat such as the one I mentioned a moment ago. There may be a four-person family in a one-bedroom flat, and 380 people who want to downsize because of having to pay for the spare room, but the council is blocking that because of arrears. I am told that it is sorting that out, but I still see loads of people in overcrowded situations. I am sure that the situation is similar in Oldham, although I obviously do not have the same figures. I do, however, have figures for discretionary housing payments.

[Mrs Anne McGuire (Stirling) (Lab)]

Following the advice of the right hon. Member for Hitchin and Harpenden (Mr Lilley), I have checked HomeSwapper in the Birmingham area. I have got to page 20 and I found only five one-bedroom houses. Where are the places for people to downsize to in the hon. Gentleman’s constituency?

[John Hemming]

I got another one today. They may not be on that website, but they do exist—[Interruption.] They do exist; I have them in my casework files. I have three people living in a council bedsit, and quite a few cases of four people living in a one-bedroom flat. I have written about those cases to the council. I accept that they may not be on a website—I do not deny that—but they do exist. People really do have problems. They have shown me photographs of how they live in overcrowded situations.

[Ian Lavery (Wansbeck) (Lab)]

There is not enough smaller, one-bedroom accommodation for people to move into—that is a fact. The bedroom tax will increase housing benefit—that is a fact. Why does the hon. Gentleman not just admit that this is a merciless attack on the vulnerable, the disabled and those least able to speak up for themselves?

[John Hemming]

Because none of those things is a fact. Lots of people are living in overcrowded situations. I see them at my Saturday advice bureau, and two people wrote to me today. Those people are looking for accommodation.

The Opposition have said that they want to cap the structural welfare budget, but if they are going to spend more money on providing free rooms for people who do not need them, where will they get the money from? Will they cut disability benefits? Today, the Opposition propose to give a special exemption to people who have been on housing benefit since 1996. If they proposed a special exemption, with valid rules, for people with disabilities who needed a spare room and to transfer that money out of the DHP, that would be worth looking at. They are picking the wrong analysis for this.

I have always managed to succeed for my constituents who needed DHP because they have disabilities and need a spare room. I have never had a problem getting DHP. As of last week, having got extra money from the Government, Birmingham’s DHP budget still contained just over £600,000. Birmingham is managing to spend that money, look after people and protect those with disabilities, and not to exhaust the budget.

[Sheila Gilmore]

Did the hon. Gentleman—he may have done—support an amendment tabled in the House of Lords and in this place that would have meant at the very least that no one should have their housing benefit cut unless they had refused a reasonable offer of a house?

[John Hemming]

With the charges for a spare room, it has taken some time to identify those people who are willing to transfer. Discretionary housing payments have been made available to people. I have seen payments for DHP go through. People come and talk to me about their personal problems, and I work to get them resolved. I do not think I voted for that amendment, but I have not checked the records so I do not know. It is important to remember that the quantum of DHP is critical. The Government have recently announced DHP for the next two financial years, and that is how we protect people with disabilities who need a spare room for one reason or another. However, it is not possible to achieve that and give this exemption or that exemption.

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

The hon. Gentleman makes great play of saving money, but if it were a perfect world and there were properties to move into, according to the Government’s impact assessment that would not save any money. If people cannot move and they get DHP, that does not save money either. How will all the money be saved unless it is taken from those who have no choice?

[John Hemming]

I did explain that point, looking at examples of those who take in family members. Cases in Redcar have been cited where, because of the interplay between the non-dependent deduction in housing benefit and the spare room rent, it is now in parents’ financial interests to keep their adult children in the property, which it was not previously. That is a way to reduce the overall cost to the housing benefit budget without reducing quality of life.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

I do not know quite how to follow the hon. Member for Birmingham, Yardley (John Hemming), but I will do my best. I will try to be brief because others wish to speak.

Apparently the bedroom tax is officially known as the social sector size criterion. That says it all about this Government’s attitude to tenants in socially rented housing: they do not have the same right to a stable home environment as everyone else. I do not know whether the hon. Gentleman has, or has ever had, a spare room in his home, or stayed in one place for a length of time, regarded it as home, and then felt that he was being forced to move. It is not a pleasant feeling.

[John Hemming]

I have had spare rooms, and I have taken in refugees from Croatia and a refugee from Jersey.

[Sandra Osborne]

I am sure that is very kind. However, I am a mother and a grandmother. I love my family dearly, but I do not want them to live with me all the time.

As if by magic, the plan was that thousands of tenants throughout the land would move to mythical smaller properties—they do not exist—freeing up larger properties for overcrowded families, or find an average of £720 a year, which they do not possess. Not a cunning plan, but a cruel, uncaring and illusory plan that has seen more than 4,500 of my constituents suffer. Within months of the bedroom tax being introduced, 62% of my constituents in East Ayrshire council were in arrears, and the figures continue to rise.

Welfare Reforms and Poverty

John Hemming Excerpts

Monday 13th January 2014 Commons Chamber

[John Hemming (Birmingham, Yardley) (LD)]

These debates are important in highlighting matters of detail. I am pleased to have signed the motion for this one, which calls for an inquiry into the effects of the benefit system. The biggest detail involved in all this is of course the deficit. When this Government took over, the country was borrowing £150 billion a year, which was added on to the debt each year. If we reduce that too quickly, however, it will cause economic dislocation, so it will have to be reduced relatively gradually. That is why it is surprising that the Opposition are criticising the Government for not reducing it to zero straight away. Obviously, we cannot do that sort of thing.

Another important detail is universal credit. I am very supportive of universal credit because it goes down the route of creating an environment in which people can benefit by being in work. There are people who abuse the benefit system, but the majority of people who receive benefits need support from the state in order to live. It is important, when we are dealing with the people who are abusing the system, that we do not throw out the baby with the bathwater.

I have been doing some work with the 6 Towns credit union. One issue with universal credit is that people will receive a sum of money each month then have to pay their costs out of it. The reason for doing that is to ensure that people who go back into work and are paid monthly do not suddenly find themselves unable to cope financially. There is no doubt that that prospect often makes people frightened of taking a job. The motivation of paying universal credit on a cash-flow basis is a good one, because it is designed to create an environment in which it is easier for people to get into work.

To achieve that, however, there must be ways for them to manage their cash flow, because not everybody is good at that. That is why I am pleased that the 6 Towns credit union has expanded its modus operandi and its common bond to include a lot of Birmingham, including my constituency. When universal credit comes in, my constituents will now have a service towards which the Government have put some money, because they have put money towards credit unions generally.

Specific issues need to be looked at. I always worry about the debate on food banks, for example. If we do not look at individual cases and work out why people are depending on food banks for three days, we cannot identify the problems in the system. The Trussell Trust was created in 2000, so in 1999 there was no Trussell Trust and no food banks. There were schemes then—people would go to supermarkets and get stuff that was out of date; there were all sorts of ways in which people found emergency food support. The fact that we have good organisations with good volunteers offering a good service does not mean that suddenly everybody who is using that service is doing so as a result of changes in Government policy. We have to review this in detail and look at the individual cases.

One of the general sorts of cases I am concerned about involves people transferring off employment and support allowance and then not being informed enough to claim jobseeker’s allowance. I believe that the Government are working on dealing with that. A number of constituents have come to me with those cases when they are destitute. My top priority is to ensure that people are not destitute. We see that happening from time to time and we need to identify those cases. Sometimes when I tell people that we can give them a voucher for the food bank they tell me, “I cannot afford to cook the food, so there is no sense in me having anything from the food bank.” It is important to prevent people from being destitute, and I have raised this issue directly with the Minister and in a ten-minute rule Bill.

[Jeremy Lefroy]

I wonder whether the hon. Gentleman agrees with me about one problem with the transfer from ESA to JSA. A lady in my constituency says, “I am simply not fit for work, but by signing on for JSA I have to say that I am available and fit for work.” She does not want to tell a lie.

[John Hemming]

This is where the difficulties lie. I do not think that those are the details of the situation, but people misunderstand the situation and end up suffering as a result. I have never liked any of the cuts, but we have to make cuts because of the deficit. The one I would be most uncomfortable about is restraining the inflation increase to 1%, and if things get better I would at least like to examine the situation of the people right at the bottom of the pile—those on £71.70 a week or some £52.35 if they are under 25. They may only be losing out by £1.40 a week, but that is a lot for someone in that situation. I would like the Government to consider that issue.

I am also worried about the interrelationship between the welfare cap and victims of domestic violence, and whether there are situations that need more attention. I believe that people can get discretionary housing payment to leave a violent home, but it is important that we ensure that there is a route out of domestic violence for women. I am worried about that issue, just as I am about some wrongful sanctioning that I have seen. That does not help at all, because it undermines the whole process.

I would also like to see a substantial increase in the minimum wage, because as the economy is improving the Government should look at that, rather than maintain things as they are. I might be the first person to mention that. As colleagues are aware, I am not so uncomfortable about the spare room rent. On Saturday, a constituent came to see me because they were living in a one-bedroom council flat with a family of four. If that is happening, clearly there is space for people to downsize; I know that Bromford Housing Group has difficulty renting out single-bedroom properties, as it has said that to me. The details matter on this, and I am trying to get those details from my local authority in order to look at these things.

I am unhappy with my local authority cutting the amount of money it is putting into council tax benefit and therefore increasing the amount of council tax paid by people on JSA. We also have to examine the issue of habitual residency for in-work benefits, because a situation where people are encouraged to come here to be self-employed so that they can get a large amount of benefits even if they are not earning any money being self-employed—this is The Big Issue case—is not a good way of doing things. Debt issues are critical, and I am pleased that the Government are making some moves on payday loans, because when people get into a mess it is difficult to get out of it.

[Dame Angela Watkinson (Hornchurch and Upminster) (Con)]

Does my hon. Friend agree that fiscal education in schools is playing a vital role in helping the next generation of adults to be able to manage their personal finances, however modest, and to understand how to stay out of debt?

[John Hemming]

That is very important. The essence of what we are trying to do with the universal credit is get people to be able to manage their accounts. Again, people such as those at 6 Towns credit union offer services that facilitate that. That is definitely the way to go, but we need government action—regulatory action—on payday loans because people are not necessarily that numerate and they see these things as a short-term solution without being aware that they create a long-term problem. That is clearly part of the issue.

As I said at the start, the details are crucial. The motion calls for an inquiry to be set up that is independent of Parliament. I would prefer a parliamentary inquiry, but I am pleased to have my name down in support of a motion asking for these issues to be examined. The details are critical and they need to be kept under continuous review.

Housing Benefit

John Hemming Excerpts

Tuesday 12th November 2013 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend. It is a shame that of instead of just shouting that he is wrong, no Conservative or Liberal Democrat MPs came to visit today’s lobby of Parliament by people who are affected by these policies. It is also a shame that the Secretary of State is in Paris rather than listening to these stories and hearing about the impact of his policy.

[John Hemming (Birmingham, Yardley) (LD)]

Obviously it was the Labour party in government that introduced the bedroom tax—in the private sector. On 19 January 2004, Labour Ministers said:

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector”.—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

The question for the shadow Secretary of State is, “When did you change your policy?”

[Rachel Reeves]

It will be interesting to see which way the hon. Gentleman votes this evening given that his own party conference has said that this is an unfair tax. Will he vote with the Conservatives or with his own party? Let me be very clear: if I am Secretary of State in 2015, the first thing I will do is reverse this unfair and pernicious tax. It is a shame that his party and his Minister will not do likewise.

There is a contradiction at the heart of this policy that shows how disingenuous the Government’s justifications are for it. On the one hand, they say that it is necessary to deal with under-occupation and overcrowding, yet on the other that the benefit savings they are claiming assume that nobody moves. So which is it to be, because it cannot be both? Is this a policy to cut costs by getting social housing tenants to pay more, or is it a policy to move people out of their housing to avoid paying the tax, in which case it does not raise any money? It just does not add up.

--- Later in debate ---

[Steve Webb]

I will give way in a moment. In an intervention on the hon. Member for Leeds West, my hon. Friend the Member for Birmingham, Yardley (John Hemming) pointed out something that has not hitherto been flagged up—Labour’s intention to extend the principle of the local housing allowance to social tenants. Let me quote Hansard from January 2004 when the late Malcolm Wicks stated:

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector…We aim to extend our reforms to the social rented sector as soon as rent restructuring and increased choice have created an improved market.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

Interestingly, the Labour party planned to do that, yet when this Government do it, suddenly it is somebody else’s problem.

[John Hemming]

From what the Minister has said, the Labour party was quite happy to have a bedroom tax, not just in the private sector but also in the social rented sector as soon as rents had gone up.

[Steve Webb]

I congratulate my hon. Friend on drawing the House’s attention to the Labour party’s plans. Not only did the Labour party invent the principle of paying for an extra bedroom, it intended to extend it.

--- Later in debate ---

[John Hemming (Birmingham, Yardley) (LD)]

I feel slightly unhappy about being told that I am out of touch. Yes, I was a millionaire by the age of 27, but I was on benefits in 1981 and both of my parents were born in Birmingham council houses, so I understand the importance of social housing and that there is a value in security of tenure. I find it rather sad when, as has happened in Birmingham, people are evicted from their family houses for under-occupying, perhaps because their parents have died. That is sad. However, we find ourselves in a society with problems. A lot of families live in overcrowded conditions. Those people come to see me and I cannot just ignore them. It is not a bedroom tax; it is a bedroom rent. People are paying rent for the spare bedroom. If somebody buys a house and it has an extra bedroom, they pay for it. If somebody rents a property, they pay the rent for the property. If they have a property in the private sector and they are on housing benefit, the local housing allowance sets limits based on the number of bedrooms.

On 19 January 2004, a Labour Minister said:

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide. We aim to extend our reforms to the social rented sector as soon as rent restructuring and increased choice have created an improved market.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

That is in Hansard; anyone can get hold of it.

[Several hon. Members]

rose—

[John Hemming]

When I am down to two minutes, I will take interventions.

The Labour party in government recognised that there was a problem with pressure on housing. We cannot suddenly magic up 1 million more rooms overnight. The reason there was not a lot of pain when the local housing allowance was introduced is that it did not affect anyone who was already on housing benefit; it only affected new claims. The hon. Member for Westminster North (Ms Buck) was very good on that point. To be fair, if we applied the same approach now, or had done so back in April, so that this did not affect anyone until they got a new tenancy, nobody would really bother about it. The problem with that is that we have a deficit. [Interruption.] Labour Members seem to forget the deficit, but we need to deal with these issues. However, we have found £180 million of the £500 million savings, so for over a third of people this need have no effect. To get my support, the Government will have to deliver more on discretionary housing payments, because that is the area I am concerned about.

[Mrs McGuire]

Let me deal with the consultation document. I shall quote from Hansard:

“Yes, it was in the consultation document, but we listened to the consultation responses and recognised that it would be inappropriate to roll it into the social housing sector.”––[Official Report, Welfare Reform Public Bill Committee, 2 November 2006; c. 453.]

That was the response of the Minister in the debates on the Welfare Reform Bill to which the hon. Gentleman is referring. The reason I know it was said and can confirm it is that I said it.

--- Later in debate ---

[John Hemming]

It was an idea that the Opposition produced when in government because they recognised there was a problem. [Interruption.] I quoted precisely; I do not know what else was said in the debate.

Because of the situation with the bedroom rent, three tenants in my constituency have found a way in which they can all three exchange properties so that no bedroom rent is paid, an overcrowded family has found somewhere comfortable to live, and everybody is happy. The problem is that the council is saying that one of the doors in one of the properties is a bit distorted, so the transfer cannot happen. That is complete nonsense. It is like the nonsense of saying that someone cannot move if there are housing arrears. We had a case like that in Birmingham before the bedroom rent was introduced. People knew beforehand that it was coming in, so they planned for it and arranged transfers to avoid it. We had a case when someone was told they could not move because they were in arrears, and we managed to sort that out.

The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) asked about people with children in the house accepting lodgers. I have had children for many years, and we have had lodgers. We even had four refugees from Croatia as lodgers. There was a slight problem one day when one lodger used the milk and found that it had been expressed for the baby the previous night—that was a bit of a surprise for the lodger—but we got on with it.

Lodgers are not necessarily strangers. There are four options. The fact is that the Government have changed the rules so that people keep the first £20. If a single man who lives in a three-bedroom flat takes in two lodgers—I deal with such real cases—they can end up £40 a week better off and without any bedroom rent. That would be far better for them financially than their current position. Those arguments need to be put to people so that they can best decide whether they should move in order to get the discretionary housing payment. I emphasise again that I want to maintain the discretionary housing payment, which deals with the issues.