Vulnerable People (CSR)

Julian Smith Excerpts

Tuesday 9th November 2010 Westminster Hall

[Andrew George]

Other than with people who live in uncertain accommodation—winter lets during the winter and very uncertain accommodation in the summer—I am not aware of any circumstance in which people have variations in their rents, with a landlord varying the rate of rent on the basis of the tenant’s income. My hon. Friend makes a very good point. I am afraid that the system does not allow or cater at all for seasonality in working families’ employment and income.

A further incongruous circumstance is the potential conflict between this policy and what the Minister’s colleagues in the Department for Communities and Local Government appear to be doing regarding the registered social landlord sector. The intention is to allow, and even encourage, registered social landlords to increase the rent on their properties up to a notional 80% of the market rate for a particular location. The net effect of that—it will apply, I understand, to future new dwellings and to re-lets—is to create a rather strange circumstance: on the one hand the Government appearing to want to get the housing benefit bill down, but on the other hand one of their Departments appearing to ratchet it up. Of course, a large proportion of people in social rented accommodation—60% of those living in the accommodation of one of my RSLs—are in receipt of housing benefit, and ratcheting up the benefit in those properties would result in an increase in the housing benefit bill.

There will be other strange circumstances. People who seek to downsize their properties—for example, an older person living alone who wants to move into a single-person bungalow to release a family house for a local family—will be discouraged from doing so because the re-letting situation will mean that their rent could go up significantly if they were to pursue that otherwise relatively selfless act. By pursuing a re-let—a transfer—their rental might go up and their housing benefit might not cover it.

Because of the time, I shall quickly canter through a few other issues. First, on the wider issues of welfare reform, many of us will have read in the newspapers and heard in the media over the weekend the comments of the Archbishop of Canterbury, the Chartered Institute of Housing, the National Housing Federation, the Child Poverty Action Group and Action for Children, all warning about the unintended consequences. I certainly exonerate the Minister and her colleagues from wishing to pursue an intentional policy of impoverishing vulnerable people; I think that it is entirely unintended.

[Julian Smith (Skipton and Ripon) (Con)]

I am sure that the hon. Gentleman is coming to this point, but will he talk a little about the impact on vulnerable people now and in the future of not dealing with the deficit? Will he also refer to the positive measures in the Budget for businesses in his constituency? There is the scrapping of the jobs tax, the national insurance holiday, tens of thousands taken out of tax altogether, the pupil premium and other initiatives. Surely, in any speech on this subject, all those factors have to be taken into account.

[Andrew George]

I am grateful for that intervention; I am sorry that the hon. Gentleman arrived late and therefore missed the part of my speech when I congratulated the Government on precisely those measures.

Clearly, we need to deal with the deficit, but the question of the speed and the extent is a debating point. I am not necessarily saying that the current speed and extent are wrong, but that judgment needs to be kept under review. Also, where do we find the money from? The hon. Member for Skipton and Ripon (Julian Smith) talked about the point that I am coming to; I will certainly come to a conclusion, which is that we need to question whether we have the balance right, so that those with the broadest shoulders bear the greatest burden. I am not certain we do have it right, which is why we should be taking a measured judgment on the impact of the proposals across all income ranges.

All the groups I mentioned, and many others, have been warning about the unintended consequences of some of the welfare reforms. The Chartered Institute of Housing anticipates that by 2025 most two-bedroom properties in the south will be unaffordable to those claiming housing benefit, whether or not they are working. That will force people into areas with less employment—in other words, an unintended consequence, not making work pay by forcing people into areas where they will find it much more difficult to get a job. It will also steepen the tapers, for example, by increasing the rents on social rented accommodation. As we all know, if someone takes a job or accepts higher pay, housing benefit is often withdrawn at a rate of sometimes 80p in the pound earned, and that is on top of other benefits that may be lost, such as council tax benefit. That places people in a poverty trap that discourages them from taking the very work they are keen to take up. All those factors will lead to social impacts on stability, family security, children’s education and other matters.

Other sanctions are proposed that have been mooted in the press over the weekend and will no doubt be part of the Secretary of State’s statement on Thursday. We have been presented with the prospect of unemployed people wearing tabards, picking up litter from our streets as a result of some kind of compulsion. Having worked in the voluntary sector, among others, for a while before coming to Parliament, I know that the one thing we do not need is to apply compulsion or humiliation to this matter.

It is clear that the many people I speak to in my constituency who are seeking a job are extremely keen to secure not only a job but work experience. The Government’s proposal to set up voluntary arrangements that enable people to undertake worthwhile voluntary work in their communities can only be a good thing. Unemployed people want well organised work and voluntary opportunities, and the voluntary sector want the willing, not the unwilling. At the weekend, the Disability Alliance argued that many people will be pushed into poverty by the changes to the employment and support allowance, previously called incapacity benefit. We await the outcome of that proposed change on Thursday.

Within the care sector, pressure on local authority budgets—26% cuts over three years—means that councils are routinely removing the discretion to give care support to those in moderate need. As costs, and no doubt charges, go up, the definition of “higher” and “severe” need could become more stringent. Budget pressures are likely to reduce early intervention for children, as Action for Children identified over the weekend, and the services available to the most vulnerable. There is a 20% cut in the bus operators’ grant and local authorities are already looking at cutting some services. The young and the old will be most affected by that—those without a car, and, therefore, the most vulnerable. Other cuts, such as in the education maintenance allowance, will also affect young people.

The questions remain: will those with the broadest shoulders bear the greatest burden, and will the vulnerable be protected? It is important not to forget that the gambling of the rich busted the banks, which did most to drop us in this situation. We must not allow them to get away with that while the poorest and public servants are made to pay the price; that is hardly justice. On the question of measures to get the balance right between cuts in services and benefits, and of where to obtain resources to maintain services, the banking levy, although welcome, is a relatively infinitesimal gnat bite on the banking sector, given the rate at which it is set.

[Julian Smith]

I am glad my hon. Friend has spoken about the banking levy, because the previous Government did not do that, and I presume he will give credit to the coalition for taking aggressive action on the banks, and for the three reviews on banking reform taking place over the coming year.

[Andrew George]

I again remind the hon. Gentleman that, had he been here earlier, he would have heard me mention that. I welcome the banking levy and have congratulated the coalition on it; it is a move in the right direction. However, I fear that some of the most vulnerable in society may be pushed further to the margins, and we need to keep that situation under review. Equally, we need to keep under review the question of whether the banking levy has been set at a level that retrieves from the banks the resources that we believe they should be putting back into the economy, having dropped us “in it” in the first place.

The Minister is an excellent Minister and I know she is listening to these concerns. I fear that the reforms, although well intentioned, may well miss the target: they may not necessarily push rents down in the way anticipated or protect the vulnerable, and they may fail to meet the Chancellor’s stated objective as given in his 20 October statement. A strong and self-confident Government can listen, reconsider, gracefully accept the situation, adjust and move on when things are not going quite according to their plan. In her winding-up speech, I hope the Minister will address those issues and reassure me that the Government are listening to these concerns.

--- Later in debate ---

[Chris Leslie]

As I said, the hon. Gentleman is being more than fair—perhaps a little too fair—in his analysis of the Government’s intentions. I hope that I am wrong in saying that a measure of deliberate choice is involved. However, the weekends at Chequers during which the Deputy Prime Minister and the Prime Minister pored over the political stratagems that they could devise, having linked some of the measures in the spending review together, suggest that a balancing act was going on in the Government to think about who they could hit and get away with it, rather than the human consequences. That is a difference of opinion that we will have to accept.

[Julian Smith]

rose—

[Chris Leslie]

I would like to make progress on the issue of housing benefit, but I happily give way to the hon. Gentleman.

[Julian Smith]

The comments that the hon. Gentleman made just now and at the beginning of his speech are insulting to Ministers and, certainly, to Back-Bench coalition Members.

[Chris Leslie]

I am sorry if I have hurt the hon. Gentleman’s feelings; that would be a dreadful thing to do. However, it is far worse to hit the poorest and most vulnerable people in society through the measures that he will support by walking through the Lobby. The warm words that he espouses are all very well, although so far he has not said much about vulnerability and the impact of the reforms. He is doing his job and wants to progress through his party—I wish him luck with that—but the measures that he will be supporting will be harmful, and I am sorry if he feels that that is insulting.

Let us look at some of the changes to housing benefit. As I said, housing benefit needs to be reformed, but not necessarily at the pace and with the harshness espoused by the Minister. Some of the combined, compounding changes will come in quickly, with some starting on 1 October next year. According to the Government’s own figures, the reduction from the median 50th percentile to the 30th percentile for housing benefit will affect 642,000 people. Many hon. Members, including the Minister, will be getting letters from their constituents about that. Those reforms will leave some people £39 worse off per calendar month. Some landlords might be happy to say, “That’s all right; we will bear the loss”, but others will say, “Sorry, that is unacceptable. Out you go.” What will be the consequences for homelessness? What will the pressures be on the indebtedness of individuals who are already stretched with credit card debts and so on? Will we see even greater pain at that level?

The National Housing Federation said in the newspapers today that the reforms were “brutal cutbacks.” Those are not my words, so if the hon. Member for Skipton and Ripon (Julian Smith) feels that such words are insulting, he should speak to the National Housing Federation. It said that the reforms risk the prospect of people

“falling into debt or hardship or being forced to move out of their home and away from their local community.”

That sudden drop in income and the rushed nature of reform are what the Labour party fundamentally disagrees with. Of course we accept that the deficit needs to be tackled, but we take a different view of how to do that.