Welfare Reform Bill
John McDonnell Excerpts(13 years, 2 months ago)
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Mr Byrne
I do not think I should veer into a debate about immigration this afternoon, because you, Mr Deputy Speaker, would quickly call me to order. I would, however, make the point that, after consistent economic growth, employment went up, the number of people on out-of-work benefits came down and the number of people lifted out of poverty, including pensioners and children, was at a record high. The Government can learn something from that record.
Of course, that has to be put alongside the right legislation to encourage people back to work, which is where I fear the Bill will fall short, for a very simple reason. It fails the basic tests of whether it fosters ambition and whether it reinforces and consolidates our obligations to each other. Fostering ambition and nurturing compassion are the basic tests of welfare reform, and I am afraid the Bill fails both.
John McDonnell (Hayes and Harlington) (Lab)
I oppose the Bill, and given any opportunity I will vote against it.
As my hon. Friend the Member for Hammersmith (Mr Slaughter) said, the Government’s response to every representation that has been made by external organisations or today in the House has been, “These matters will be dealt with in regulations”. Attached to the Bill is a quantity of regulations that we have not seen before with a Bill of such stature. May I suggest that my right hon. Friend link up with the Secretary of State to discuss the procedure to be followed after Committee and before Report, so that the bulk of the regulations are published in time for us and others to consider them before our final debates on the Bill?
Mr Byrne
That is an extremely sensible proposal, and perhaps the Minister of State, the right hon. Member for Epsom and Ewell (Chris Grayling), will reflect on it in his winding-up speech. It is important for the other place to be involved in discussions, too, to ensure that the Bill leaves this House in better shape.
John McDonnell (Hayes and Harlington) (Lab)
I have sat through the debate and listened to the contributions and I will try to address some of the points raised. First, let me say that no one in the House doubts the integrity of the Secretary of State. I commend him for the work he did in opposition in setting up various working parties, touring around and meeting various agencies. He met a particularly influential person in Scotland, Bob Holman—a comrade of ours who knows a lot about poverty and who has expressed his disquiet about the proposals. Also, a number of us have been campaigners for the citizen’s income, which I think the universal credit is a step towards, so I do not doubt the Secretary of State’s good intentions.
However, as we have debated at length over the years, if the universal credit is to work, three conditions need to be met. First, it needs to be set at a level that will lift people out of poverty; otherwise it will inflict universal misery. Secondly, there have to be jobs to go into. Thirdly, those jobs must have decent pay. The problem with the Bill is that it does not ensure that any of those conditions will be met. In that respect, it discredits the whole concept of the universal credit, which I find worrying.
On the first condition, I am worried about the amount being taken out of the social security system. In the comprehensive spending review in October, and before that in the emergency Budget, the Chancellor identified £18 billion that was being taken out of the system. When the Prime Minister was challenged about that, he said:
“We face a choice—make cuts in welfare or cuts elsewhere”.
I believe that is happening—that we are witnessing cuts in welfare. When the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), was asked specifically about the disability living allowance cuts, we were told that the figure of £1 billion of cuts—or savings, depending on how one wants to describe them—had been set before any policy description had been laid out as to how they would be achieved. I think the Prime Minister and the Government did make that choice, because at the same time as the Government were taking £18 billion out of welfare they were reducing corporation taxes by £24 billion. Businesses are now taxed at the lowest level in 40 years, at the expense of the poor.
The debate then starts to degenerate, as it has in the House today, into attacking unemployed claimants as a justification for cuts. I remember the Deputy Prime Minister’s statements about alarm clock Britain, and today we have heard references to shirkers and so on. I have come to the view, and all the Government research under past Governments has demonstrated, that people are desperate to get back to work. Sanctions do exist already, and are implemented if people fail to comply.
Reference has been made to fraud. Let us get it on the record again: £1.5 billion of fraud, £16 billion of benefits unclaimed. Who is ripping off the system? It is not the poor. As was said earlier, £120 billion of tax has not been paid as a result of tax evasion and avoidance.
On the second condition—the existence of jobs to go to—with 2.5 million unemployed, including 1 million youngsters, even if we filled all the 500,000 vacancies, there would still be one in four chasing every vacancy, and it is going to be made worse, as was also said earlier. Another 1.2 million will be put on the dole queue as a result of the cuts.
On decent pay, I have asked others what is happening in their constituencies, but the jobs offered at the moment in my constituency are increasingly casual and increasingly low-paid, and large numbers of my constituents are now working on zero hours contracts, in which they are simply paid for the hours that they are brought in to do, on an irregular basis. According to the most recent survey, published only a month ago and based on Government figures, 1.7 million people are now in involuntary part-time and temporary work, and wages are so low that half the children living in poverty are in families that are in work. Even in the boom period, wages actually fell as a percentage of GDP. Last month, RPI was at 5.1% and wages were at 2.3%, and many in my constituency and elsewhere, especially in the public sector, are facing a pay freeze over the next two years. The reasons for the low pay are fairly straightforward. We now have less than a third of workers in this country covered by collective bargaining agreements, as a result of the weakening of trade union rights.
My fear is that, under these proposals, universal credit will fail, because none of the elements are in place to make it a success—a decent level of universal credit, the existence of jobs, or decent pay in those jobs. I think we will be left with the harsh residue of all the complaints and problems that have been described today: the sanctions—the loss of benefit for up to three years if a person refuses to co-operate in seeking work; cuts in housing benefit; the linkage of the housing allowance to CPI, which will inevitably result in cuts; the housing benefit caps; and the room unoccupied scheme, which I think is scandalous. All those factors will discredit a decent proposal, and that is why the Bill is not supportable today.
I want to use my last few seconds to say how appalled I am by the brutalisation of claimants by the privatised companies that have taken over the assessments and the administration of benefits. The brutal treatment of my constituents is a harshness that denigrates the entirety of the work of the House and the Government.
Social Security
John McDonnell Excerpts(13 years, 2 months ago)
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Stephen Timms
In opening the debate the Minister accepted that in 15 years out of 20, CPI uprating is less than RPI uprating. My point is that those serving in Afghanistan have been contributing to their pensions on the understanding that their pensions, when in payment, would be uprated in line with RPI. Now the Government are saying, “No, they won’t; they’ll be uprated by a smaller amount,” and that is a very worrying development. In view of the sympathy that the Minister has expressed for people in that position, the Government must give further thought to this matter—why war widows, who have had the person most special to them taken away, deserve to have the support that they would otherwise have been able to depend on cut as well.
John McDonnell (Hayes and Harlington) (Lab)
May I, through my right hon. Friend, give the Minister an opportunity to respond to a question? Is it not clear that as we identify anomalies like this—and they are bound to arise—it is important for the Government to introduce corrective measures fairly quickly?
Stephen Timms
Yes, there are some serious problems here, and I hope we will hear responses to them. I pay tribute to my hon. Friend for the work that he has done on this subject, and I hope that the Government will think again.
The Welfare Reform Bill, which was published this morning, touches on a number of the points that the Social Security Benefits Up-rating Order also touches on. One of the Government’s original proposals, which Opposition Members strongly opposed, was to cut housing benefit by 10% for people in receipt of jobseeker’s allowance for one year. We were all absolutely delighted this morning to hear the Secretary of State say that the Government have reconsidered their position and will not implement that draconian cut. We understand from newspaper reports that the change was brought about as a result of pressure from the leader of the Pensions Minister’s party. The Minister himself may well have had a hand in bringing about that change. If so, I—and many of us—would want to join in congratulating him on his success against the views of the members of the other coalition party, particularly, perhaps, the views of those serving in the Treasury.
As the Minister is on a bit of roll, may I suggest that he go further in changing the Government’s proposals? Under the existing system, most out-of-work benefits are subject to savings limits—currently £16,000, but the Government intend to extend that threshold to in-work benefits as part of the universal credit, and I notice that that threshold is not uprated in the order before us. Under the proposed limit, in future anyone in work who would be entitled to tax credits but has savings of more than £6,000 will have their payment reduced. Those who have savings of more than £16,000 will lose their entitlement to tax credits altogether.
According to calculations by the Social Market Foundation, 400,000 families with children, who are now in receipt of tax credits, would be punished for having £16,000 in the bank by losing all their tax credits. For example, anyone saving up for a deposit to buy a home would suddenly find that they had lost all their tax credits as a punishment for having £16,000 in the bank. Such families would have been doing the right thing, working and saving their money, perhaps to put down a deposit on a house. For many such families, putting down a deposit will be made not only difficult but impossible. The Opposition cannot possibly support the proposed change, and I cannot imagine that many Government Members would want to see such an extraordinary assault on family savings either. I hope that we shall see another initiative by Liberal Democrat Ministers—we saw the benefits of such an initiative this morning—to persuade the Government to abandon that policy as well.
I hope the Government will also scrap the proposal to remove eligibility for the mobility component of disability living allowance for those in residential care. The order does uprate disability living allowance, and my hon. Friend the Member for Glasgow East (Margaret Curran), who is on the Front Bench today, has been making powerful arguments to the Government about the iniquity of removing that benefit from people simply because they are in residential care. I hope the Government will think again about that, and I am delighted that the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), who is responsible for that part of the policy, is on the Government Front Bench today.
The Government are signalling today that they intend a permanent shift from RPI to CPI as the inflation measure for uprating benefits and pensions. The Opposition do not support that. It is not right to continue to reduce the incomes of pensioners, widows and those on low incomes long after the deficit has gone. [Interruption.] From a sedentary position, the Minister says that we will not vote against the order, but that is because it uprates the basic state pension next year by RPI. Therefore, it does not do what the Government have told us they want to do in perpetuity. The order overrides the policy that he set out today, and no Labour Member would object to uprating the basic state pension by RPI, as that was always the practice under the previous Government—and quite right, too. As the Minister rightly pointed out, pension credit, which has done an enormous amount to reduce pensioner poverty in the UK since its introduction, will also be uprated accordingly, and we support that as well.
John McDonnell (Hayes and Harlington) (Lab)
I will not apologise for breaking the consensus—although I was about to apologise to the hon. Member for Cardiff Central (Jenny Willott), who welcomed the consensus across the House. I oppose the order, and will seek to vote against it. I do not accept that the installation of CPI will be of benefit in either the long term or the short term. I am grateful that the Government have not introduced it for the basic state pension at least for this year, but its installation across all the other benefits will result in detriment. To take £6 billion out of the payments to the poorest in our society is unacceptable. My hon. Friend the Member for Aberdeen South (Dame Anne Begg) said that the order is indivisible, so by not voting for it we would prevent other overall increases from going ahead. However, it is not beyond the wit of any Government to introduce another order within hours—or at least days—that could amend what is in this order to enable us to get some justice for pensioners.
I am reticent about criticising the Minister. I think that I have moved a Budget amendment on restoring the link with earnings every year for the past 13 years, and I think that we walked through the Lobby together on an annual basis in that endeavour. I am grateful, therefore, for the restoration of the link with earnings. I know that it was in the Labour party’s most recent manifesto to restore the link in due course. I just wish that we had done it earlier, because that would have demonstrated our overall commitment to tackling pensioner poverty. However, I know how much the previous Government did to tackle pensioner poverty. Many people, particularly pensioners and many on benefits, are now living lives so much better than they would have been had it not been for the previous Government’s policies.
I was a critic of the extension of the means-testing system. I thought that it was a disincentive to saving and costly to administer. Nevertheless, I welcome what the previous Government did. I still think, however, that in a civilised society it is a mark of shame that reflects on all of us that there are still 2 million pensioners living in poverty, given that we are the fifth richest country in the world. It behoves all parties to tackle this issue. The question has been asked time and time again: how should we do it? For me the answer is straightforward, and expresses an argument that we have been putting forward since the foundation of the Labour party—fairer taxation and redistribution of wealth.
I have listened to the debate on moving from RPI to CPI. We can all marshal different battalions on the field of this debate—quotes from the Institute for Fiscal Studies, the Office for National Statistics, and so on. Most Members will have received through the post this week an assessment of the Government’s welfare reform policies by the Social Policy Association. I concur with the chapter in the report by Alan Walker of the University of Sheffield, who states:
“The Government claims that the CPI represents low income groups’ expenditure better than RPI but there is no convincing evidence to support this claim and according to IFS (2010) it is the RPI that provides a ‘superior’ coverage of goods and services.”
To some extent, we can dance angels on the head of a pin on this subject. As someone who has studied some statistics in the past, I have gone into the debates on the difference between the geometric mean and the arithmetic mean. From that, I conclude that CPI is 0.5% minimum off the calculation compared with RPI. However, there are concerns that the use of CPI will result in a reduction. As my right hon. Friend the Member for East Ham (Stephen Timms) asked, if that was not the case, why would the Government need to try to protect pensions this year? As my hon. Friend the Member for Aberdeen South said, the reduction from 4.6% to 3.1% is nearly one third of people’s overall increase. That is significant, so I am pleased that the Government are protecting the increase for this year, but the pensioners in my constituency will be worried about the introduction of CPI for future years.
I remain unconvinced about housing costs, partly because of some of the arguments that have been presented about the 7% of people—that still represents a sizeable number not to be taken into account—who will be affected, who do have housing costs. As my right hon. Friend said, there is an ageing profile of people who are taking on mortgages later in life, so housing costs will become a more significant factor.
In addition, one of the burdens that many pensioners feel in particular is increased council tax. I do not believe that that element is covered by the CPI calculation as it was with RPI.
The hon. Member for Sittingbourne—
John McDonnell
I would not want to miss out Sheppey. Let us take the common-sense approach of the hon. Member for Sittingbourne and Sheppey (Gordon Henderson) and ask, “What do pensioners feel like at the moment?” I think that they feel that they are under significant pressure as a result of inflation. The researchers’ evidence shows that inflationary pressures hit pensioners harder than the average household.
I am concerned about the shift, which I oppose. It is a momentous shift: it represents one third off an increase. I say to the Minister that this should have been properly debated before the election if it was to be a long-term shift. I can understand, though I do not believe, the argument that when the Government came to power they opened the books and found that they had to introduce emergency measures. However, that is not being argued. It is being argued that this proposal, per se, is the beneficial or right thing to do. If that were the case, it should have been outlined before the election with examples of the implications for pensions and benefits overall. To make this change at this time casts doubt on the motivation for the change from RPI to CPI. We should have been more honest in the debate before the election.
As for the knock-on effects on occupational pensions, I chair the PCS trade union parliamentary group, and we have circulated fairly detailed evidence of the implications for public sector workers. It looks as though, on average, there will be a loss of between £500 and £700 a year. The cumulative effect of that in the long term is significant, and I am grateful that other Members have read its implications into the record.
My right hon. Friend quoted the Hutton report. I take those concerns seriously—a 15% cut, and possibly a consequential cut of up to 25% in the long term. I firmly believe that those are accrued rights—we have had that debate on the civil service compensation scheme—and that people have planned their lives on the basis of what they thought they could expect as a pension in the long term. To undermine those accrued rights is not only wrong and immoral but legally dubious, and there may be challenges to that effect.
The effects spread far beyond that. The right hon. Member for Uxbridge and South Ruislip (Mr Randall) and I have constituents who work at Heathrow airport for British Airways and are members of the British Airways pension scheme. They work for a former nationalised industry, so their pensions shadow what happens in the public sector. We have had letters demonstrating the potential consequences in terms of cuts in their pensions in the long term. Again, the problem came upon them relatively suddenly, and should have been properly explained and discussed before the general election.
My concern now is that the change will have an immediate detrimental effect over the next few years. Like most London Members, and many others, I deal in my constituency surgery with people living in poverty and on the margins of dignity. Any cut, in the short or long term, in their pensions or benefits will push some of them over the edge into virtual destitution. That is why I am anxious about anything that will decrease their incomes. On that basis, I cannot support this order. I understand why some of my hon. Friends do not wish to participate in a vote, but I want to put my opposition on record, because the change will have an impact on my constituents. It will also add to poverty and deprivation in our society—something that any Government should tackle.
We should, collectively, be ashamed of the way in which we have treated pensioners over decades. Our pension is now 16% of average earnings, whereas in France it is 60% and in the Netherlands 82%. Over time and incrementally, we have allowed our pensioners to lose their right to a decent pension, and therefore to a decent quality of life. This order will add to that incremental undermining of the quality of life of my constituents, and on that basis I will seek a Division on it.
Steve Webb
We are doing it this year for pretty much every benefit in the entire uprating order, which runs to many pages. The ones we are not doing it for are the basic pension and the pension credit. We are not doing it for the basic pension because the budget we inherited provided for a larger increase and we did not want to pay a smaller increase than was planned. If the right hon. Gentleman thinks we should have done so, I will take that advice, but he probably welcomes the fact that we did not follow it.
The Chair of the Select Committee, the hon. Member for Aberdeen South (Dame Anne Begg), indicated that unfortunately she could not be in the Chamber for the wind-ups. She asked why we had chosen a different figure for the pension credit. As I think I explained in my opening remarks, as we were putting the basic state pension up by about £4.50 a week, we did not want the increase in pension credit to be less than that, because the poorest pensioners would not have the full benefit of the pension rise. That was the basis for the increase in pension credit.
The right hon. Member for East Ham asked about the impact assessment on occupational pensions, and I am happy to say a few words about that. In December, we published an impact assessment suggesting a £76 billion impact from the reduction in revaluation and indexation. To respond to a point made by my hon. Friend the Member for Finchley and Golders Green (Mike Freer), one way of looking at that is to see £76 billion less in pensions, but another way is to see a £76 billion boost for British business. We are trying to reduce the regulatory burden on British business, so an advantage of the change—albeit not the purpose—is that major British firms will make a saving, and they and their pension funds will be in a stronger position as a result. Many pension schemes and companies have welcomed the change for that reason.
We discovered an error. We made a mistake, for which I apologise. As soon as we found it, we decided to give the House a revised estimate. In addition, we were asked by the Regulatory Policy Committee to revise the way we calculate net present values; I know that the right hon. Gentleman takes a close interest in such matters, and if he is not careful I shall tell him what it was. To draw the threads together, we reissued the figures last week, ahead of this debate, with an £83 billion estimate. That is a further interim estimate. We then undertook field research, as I mentioned, to ask companies how they will respond to CPI/RPI. We have early results; it would be premature to say what the impact will be, but early indications are that fewer pension funds will take advantage of CPI than we had thought. Such things are complex and there could be factors that move them in the other direction, but my sense is that the final version of the figures is more likely to be lower than the one we have already published, but we thought we should give the latest estimate as soon as we had it.
The right hon. Gentleman raised the important issue of accrued rights. It is a fundamental point and it relates to my pre-election remarks about a pension promise made being a pension promise kept. What is the accrued right of someone in a public sector pension scheme, or any pension scheme? The first point is that everything accrued to date—all the revaluations to date, based on RPI—stand; we are not going back and saying that all the revaluations to date have to be reworked according to CPI. The provision is prospective, not retrospective.
The question then is what future expectation people legitimately have. If they are in a company scheme that has RPI in the rules, we actively chose not to override that. If that was their expectation, because it was in the rules, that is what they will get. However, people in the public sector are members of a scheme whose rules are tied by statute to what we do to SERPS. That is the accrued right they have always had, and we are not changing it. We shall go on indexing their pensions in line with what we do to SERPS each year. That was the pension promise they were made; that is the pension promise we are keeping. We are indexing SERPS by CPI. I accept that, and I also accept that on average that will be lower than RPI, typically by about 0.8% a year. I do not dispute that. The accrued right is the one we are honouring.
The right hon. Gentleman said in parenthesis that pensioner inflation is typically higher than general inflation. I do not know whether he actually believes that; it was never something his Government took into account when setting pensions. They never uprated pensions differently because of pensioner inflation. There are certainly periods when pensioner inflation is higher when, as the right hon. Gentleman said, the costs of fuel and food are rising faster than the norm, but there are other periods when it is lower. I have asked officials to look at the matter and there is no evidence over a 20-year run that pensioners buy goods that have that inflation time bomb ticking away inside them. There are times when inflation is higher, which may include recently, and times when it is lower, but over the long run there is no evidence for that proposition.
My hon. Friend the Member for Cardiff Central (Jenny Willott) welcomed the restoration of the earnings link, and the triple lock. I am grateful for her support. She quite properly put me on the spot about the future of the pension system. I accept her analysis; we need a pension system fit for the future. If we are to auto-enrol 10 million of our fellow citizens, we need to be confident that it pays to save, and that they will be better off. I assure her that that is absolutely central to our thinking about long-term pension reform. We are making good progress on that project.
The Chair of the Select Committee asked a number of questions. I will respond to one or two on the record, although she has explained why she is not here to hear the response. She kept making the point that the basic state pension is not the only part of a pensioner’s income. Of course it is not.
I thought that the hon. Member for North Ayrshire and Arran (Katy Clark) made some sincere comments. She raised the issue of people with relatively modest occupational pensions who will get less under CPI. The state pension is bigger than all of those figures. Every one of the figures she quoted is less than the basic state pension. The package of Government policy on pension indexation is for an earnings link on the basic and a CPI link on the additional. The basic pension of every person she is concerned about is bigger than their additional pension, the earnings link in the long run is worth 2% more than prices and CPI is 0.8% less than RPI. The people she is most concerned about will overwhelmingly benefit from our package of policies. Therefore, I can assure her on that point. Taking the package as a whole, they will be better off, not worse off.
My hon. Friend the Member for Gillingham and Rainham (Rehman Chishti) made an important contribution and pointed out that Age UK, which is very much an independent organisation, was delighted by the triple lock, because it is a historic move to give pensioners the best of earnings, prices, plus 2.5%. I wish only that we were able to do this in a normal year—in 16 of the past 20 years, earnings were greater than prices. People would then start to see the benefit of the earnings link and the triple lock, and in time they will.
The hon. Member for Arfon (Hywel Williams) quoted some civil service pension figures. I make the same point to him. All the figures he quoted, based on average civil service pensions, prove my point. If we take them in isolation, CPI is lower than RPI, but people do not just get their civil service pension—they also get their state pension. We are putting more in through the state pension than we are taking away typically through the additional pension because of the relative sizes and the difference between the various indices. Our constituents write to us and raise the bit they see, but overall the state pension will more than make up for that for the vast majority of people, although not for people with very large pensions.
On the ratchet, I simply accept the hon. Gentleman’s rebuke for fiscal irresponsibility. I will take it on the chin and pass it on to the Chancellor for him.
I enjoyed the contribution of my hon. Friend the Member for Sittingbourne and Sheppey (Gordon Henderson) and his account of his conversation with Jack Jones. I am delighted to say that both coalition partners supported that. We needed the Chancellor on board for that one. I regard it as being to the credit of both coalition partners that we have been able finally to restore the earnings link. I am grateful to my hon. Friend for raising the case of his constituent. As he was describing it, I was thinking that I was sure I signed a letter on that the other day, and I gather he has now received it. I apologise to his constituent for the mistake that was made and I hope that that has now been resolved.
The hon. Member for Hayes and Harlington (John McDonnell) perfectly properly says that he will not support the order and that he is against mass means-testing and so am I. A pension system that allows too many people to retire poor and means that they have to be swept up by a leaky safety net is not a good, sustainable long-term pension system. I have set it as my goal to do something about that. We may not agree about these orders but we have common cause on that principle.
John McDonnell
Did the Minister ever consider a quadruple lock so that, earnings or inflation, CPI or RPI, whichever was the higher, would be used?
Steve Webb
We did look at that. Either one could say that what one is trying to do with pensions and benefits is protect pensioners’ spending power—that would be a price measure—or one could protect people’s position relative to the rest of society, which is an earnings measure. One wants to avoid silly small figures such as 75p, which is where the 2.5% comes from. To say, “But we will measure inflation according to different measures and we will pick the biggest” conceptually does not work for me. We could have done that, but in our judgment the point of revaluation is to maintain spending power fairly for the group in question. Our judgment is that CPI is the answer to that question.
There is a separate question about whether pensions should be higher or lower. In a way, the hon. Gentleman and the hon. Member for North Ayrshire and Arran are saying that we should be paying bigger pensions. It seems to me that that is an entirely separate debate from how we should correct for inflation. That is where CPI comes in.
John McDonnell
There is a point of principle that the Minister and I have argued over the past 13 years at least, which is that, whatever measure is introduced, there should not be a loss. Having that quadruple lock would convince people that this is at least a way forward, because people would be protected against years such as those five out of the past 20 where CPI was higher than RPI.
Steve Webb
I come back to my point that as the basic state pension is a big part of pensioners’ income, particularly for the most vulnerable, we are protecting their living standards overall—they will get bigger increases under this package of indexation than they would have on the basis of a straightforward RPI level alone. I believe we are doing the right thing.
I am grateful to my hon. Friend the Member for Finchley and Golders Green (Mike Freer) for his kind comments and I appreciate the expertise he brings to the debate. He was absolutely right that the idea that large numbers of pensioners will have large mortgages is quite implausible. It is true that 7% have some mortgage interest at the moment, but even those who face mortgage interest will typically have lower average amounts because they will be towards the end of their mortgage terms. Basing an inflation measure on an index that includes mortgage interest seems to me to be quite inappropriate for pensioners. As my hon. Friend pointed out, one consequence of CPI schemes such as the local government pension scheme is that it will help to put pensioners on a more even keel. As he also rightly said, this money has to come from somewhere—somebody has to find it—and this order will have the consequence of getting the systems on to a more sustainable basis. My hon. Friend tempts me on public sector pension reform, but I obviously must not pre-empt what Lord Hutton will say. He will be saying what he is going to say within the next few weeks, so we do not have much longer to wait.
Drawing the threads together, this debate has provided a worthwhile exploration of the issues. Our fundamental point is that the principal order will cost the Government £4.3 billion to protect and enhance the benefits for the people who need them the most. I am proud to commend these provisions to the House.
Question put,
Housing Benefit
John McDonnell Excerpts(13 years, 6 months ago)
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John McDonnell (Hayes and Harlington) (Lab)
This debate has been enlightening in many respects thanks to Members on both sides of the House. I shall not be repetitious; I shall just concentrate on putting on the record the plight of my constituents and the implications of the policy for them. It will at least give me some peace of mind that someone has spoken up for them.
Like every other Member, I have a weekly advice surgery—about twice a week at the moment. We have an open-door policy at the office, and we are swamped with casework, as many Members are. Half my casework is housing-related, and my surgery is the most distressing part of my week, as I am sure the surgery is for many Members are. It is heart-rending.
Families, who come with their children, are living in appalling housing conditions: overcrowded, sleeping three or four to a room and often, as the hon. Member for Wells (Tessa Munt) said, using their living rooms and other parts of the accommodation as bedrooms. They live in unsanitary conditions, lacking heat and hot water, and often their premises are damp. They live a nomadic life in my constituency, with 12 to 18-month accommodation licences, and their children move from school to school, disrupting their education.
We have not seen a housing crisis on this scale since the second world war. In the borough, I have 1,500 to 2,000 families and more who are homeless at any point in time. The reason for that has been mentioned—the hon. Member for Colchester (Bob Russell) referred to it—and it is that the bulk of our council housing stock has been sold off. Little council housing has been built in 30 years, under both Governments, and the buy-to-let landlords have moved in to provide the accommodation. They fail in many instances to maintain the properties, and we also have Rachmanite landlords who abuse their tenants. They are profiteering from the housing shortage with high rents and, of course, through housing benefit, but I find it ironic that in this debate Members on one side of the House seem to be blaming the tenants and housing benefit for high rents, not the landlords themselves, who charge those high rents and exploit the benefits system.
Many families in my area already struggle to pay the rent, and many already make up the gap between benefits and rents. They receive some discretionary payments from the council, but they are few and far between, and the families get into debt and fall back on loan sharks. As a result, they often fall into rent arrears, get evicted and then become classified as intentionally homeless. We can see how people can get caught in a cycle of deprivation.
The new proposals will exacerbate the nightmare that many of my constituents already face. Some 3,000 families will lose out on anything between £6 and £27 a week. The London Councils survey, which has been quoted extensively, demonstrates that a large number of landlords have stated that they will evict families if the gap in rent is more than £20. Many families in my constituency will be evicted, and they are already rushed through eviction as it is. That means that there will be an increase in homelessness in my area and it will be extremely difficult to find accommodation. I already have families moving out of the area on different schemes who find it very difficult to find work elsewhere and then desperately seek to come back to be close to their family members.
The results of these proposals—I want to put this on record for my constituents—will be an increase in poverty, immense stress, and immense distress for many people, particularly at a time when unemployment is rising in my constituency, as it is across the country. I do not believe that cuts in benefits are the answer, or that people are incentivised to find work by poverty or by homelessness—in fact, it pushes them back into further depths of despair.
There is an alternative proposal for which many in this House have argued for a number of years. First, it is about building council homes again, and getting back to investing on a scale that meets the needs of our population. That means an element of redistribution of wealth and ensuring that people pay their taxes, particularly the corporations, so we must tackle tax avoidance and evasion. I believe that we need an emergency programme of house building to tackle the homelessness that we now have, particularly in London and the south-east.
Secondly, there should be rent controls. If benefits are high because rents are high, there is a simple solution that applies in many parts of Europe, where people have controlled the rents and thereby stopped the exploitation by landlords.
Thirdly, in areas such as mine we need a more radical solution to the level of homelessness. We should allow councils compulsorily to purchase empty properties so that we can put families into them. I find it a disgrace that a house will stand empty for a long period. Some 300,000 properties are empty for more than six months, while people are on the streets or living in housing deprivation. We have a housing crisis on our hands, and we need an emergency programme to tackle it.
I certainly do not believe that cuts in benefits will go any way towards tackling this problem—in fact, that approach will cause more homelessness, put more people into deprivation, and cause immense human suffering in our society. That is why I support the motion, and why I will do everything I possibly can in this House, in demonstrations, and in direct action on the streets to oppose these housing benefit proposals.