Under-occupancy Penalty

Justin Tomlinson Excerpts

Tuesday 23rd February 2016 Westminster Hall

[The Parliamentary Under-Secretary of State for Disabled People (Justin Tomlinson)]

It is a pleasure to serve under your chairmanship, Ms Dorries. I wish to pay tribute to the hon. Member for Cardiff Central (Jo Stevens), who made a passionate, informed and determined speech that was well received by her colleagues supporting her today. Some measured and well thought-out speeches have been made, and cases have been strongly put forward on behalf of each Member’s constituents. I have worked closely with the hon. Member for Swansea East (Carolyn Harris) on a number of measures, and we have been able to find a lot of common ground and ways to move forward in a number of Westminster Hall debates, but I am afraid I am a little way from her arguments on this issue. I will try my best to answer as many of the points made as I can.

Let us first look at the history of this. One of the main thrusts of the opposition to this policy is that it is ideological and was dreamed up by the finest brains of the Conservative-Lib Dem coalition. To be clear, it was the previous Labour Government who introduced this policy in the private sector. When challenged in the House in January 2004 on whether the policy would be introduced more widely than the private sector, the Minister then responsible 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.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

[Debbie Abrahams]

Does the Minister recognise the point I tried to make in my opening remarks about this being a retrospective tax? It applies to tenants already in existence. There was a very different application for private sector tenants. The policy applies to current, existing tenants who had already budgeted for what they could afford.

[Justin Tomlinson]

I will cover in detail some of those points, but I can tell the hon. Lady that a significant difference was that no additional discretionary housing payment was provided when the policy was implemented in the private sector. It was very much a case of, “Cross your fingers and hope for the best. You will not be getting any support.”

The legal case mentioned is ongoing, so I cannot dwell on it too much. The Court of Appeal previously said that discretionary housing payments were appropriate support. Crucially, it was not about the wider policy; it was about just these very specific categories. In that particular case, those people were in receipt of discretionary housing payments, but that is an ongoing legal dispute.

[Jo Stevens]

In relation to the receipt of discretionary housing payments, is it not the case that the Rutherfords had been denied DHP in the first instance?

[Justin Tomlinson]

My understanding is that that is right, but they then got the money on appeal. This comes down to whether we should have discretion in the powers of local authorities or an exhaustive list of those who should be exempted. My view is that if we try to set strict categories, we will not be able to ensure with 100% certainty that everyone will be covered, because people—particularly those with unique issues—do not neatly conform to tidy boxes. If an individual falls just below the line, they will miss out; that is a crucial point. If it is black and white, there will be winners and losers.

Discretionary housing payments allow for everybody’s individual circumstances to be considered and for a flexible multi-agency approach. For example, that approach could involve working with the police, social services and medical professionals. Underlying all those decisions is the public sector equality duty to ensure that the vulnerable in society are protected.

A number of speakers talked about support for the disabled, victims and those who are homeless. I will reel off some of the measures we have introduced to provide support in those areas: £400 million to deliver 8,000 specialist homes for the vulnerable, elderly and those with disabilities; a 79% increase, from £220 million to £394 million, in the disabled facilities grant, which helps about 40,000 people; £40 million for victims of domestic abuse, which triples the support previously in place, so that no one is turned away; £500 million to tackle homelessness since 2010; and £25 million a year to support disabled people living in significantly adapted accommodation.

[Ian Blackford]

I am grateful to the Minister for giving way; he is being generous with his time. What he is outlining is what the Government are having to put into place because the policy is quite simply wrong. How does he respond to the Court of Appeal saying that this policy is discriminatory and unlawful? Those are the words he must reflect on, and that is why he must do the right thing and scrap the policy.

[Justin Tomlinson]

I gently remind the hon. Gentleman that I have not yet finished my remarks, in which I will set out why I think trusting local authorities with discretion is far better than having an exhaustive list of exemptions. The people who would come up with that list may have the finest minds, but I am sure they would never cover all the people who should be covered. I do not wish to see people who should be protected being missed because of some sort of arbitrary winners and losers line. I will cover more of those points as I progress.

We must remember that it was the former Labour Government who first dreamed up this policy. The pretext for our introduction of this policy is that we had a quarter of a million households living in overcrowded accommodation and 1.7 million people on waiting lists in England alone. Members have talked about the casework they deal with as constituency MPs. I, too, have dealt with a number of similar cases, but I have also been into the properties of families in overcrowded accommodation who are every bit as angry as those whom Opposition Members have mentioned. Those people are in overcrowded accommodation while their neighbours have spare rooms in their family houses because their children have grown up and gone.

[Ian Blackford]

rose—

[Justin Tomlinson]

I will make some progress and then take more interventions.

Members ask whether this is a popular policy. I can tell them that it is a very popular policy with the people on waiting lists. Some 820,000 bedrooms in social housing were sitting empty while being paid for by the taxpayer. Those rooms were being looked at enviously by families in overcrowded accommodation.

[Meg Hillier]

rose—

[Justin Tomlinson]

I promise I will take more interventions, but let me make some other points first.

A small issue that will not generally have to trouble Opposition parties—that is the advantage of not being in government—is the financial aspect. Members asked whether this policy is saving money. It has saved about half a billion pounds a year, which is a significant amount of money.

Research has shown that social landlords are altering their allocation policies and are no longer putting single people into family-sized homes. In the first six months of the policy, around one third of developing landlords altered their build plans, and that figure is now up to 51%. There has been a reduction of more than 100,000 in the number of households seeing a reduction in their housing benefit award due to the policy since May 2013. There are a number of possible reasons for that. Landlords are not wrongly allocating single people to family homes. There are more one-bedroom properties—I will come on to the numbers on that—and there are people who have downsized. There are also more people either increasing their hours of work or finding work, and we are seeing around 200 people a week come off housing benefit as they are able to do that.

The evaluation report published last December showed that 20% of people affected by the policy had, as a result, looked to earn more through work. Some 63% of unemployed people affected said they were looking for work as a result of the policy, and 20% of people no longer affected said that that was because someone in their household had found work or increased their earnings. As I said, 200 people a week are coming off housing benefit completely.

We believe—I say this as someone who was a local councillor for 10 years—that local authorities remain best placed to ensure that discretionary housing payments are targeted at those most in need, based on local circumstances and working with a number of other agencies, so that there is a multi-pronged approach to providing support.

Since 2011, we have provided £560 million to local authorities and have already committed a further £870 million for the next five years. Since 2013-14, we have also allocated £5 million each year to help the 21 least densely populated areas across Great Britain, which addresses a point made by the hon. Member for Upper Bann (David Simpson). This additional funding aims to avoid any disproportionate impact on those affected by the removal of the spare room subsidy in remote and isolated communities.

Of the £150 million of discretionary housing payment funding that is being allocated to local authorities for 2016-17, £60 million is allocated by reference to the removal of the spare room subsidy. Local authorities are able to top up the Government’s contribution by an additional 150% in England and Wales, and there is no limit in Scotland.

The title of the debate on the Order Paper refers to regional effects, and there is clear evidence that regional areas are now adjusting to the removal of the spare room subsidy. Across all regions of England and Wales, the number of households subject to a reduction has fallen by between 14% and 26% since May 2013. In both the north-west and London, where the biggest change can be seen, there has been a 26% fall in the number of households subject to a reduction since May 2013. However, in Scotland, where discretionary housing payments have been used to buy out the policy, only an 8% reduction has been seen over the same period, and over the past year it has been the only region to see an increase in caseloads.

[Ian Blackford]

The Minister talks about Opposition Members opposing the measure. Actually, the Scottish National party is in government in Scotland and we are committed to getting rid of it, but at the same time, we are building more houses, because that is exactly what is required. The rate of social house building in Scotland is far in excess of what is happening in this country. This Government have a housing crisis, and that is what they should be addressing. What they should not be doing is punishing the poor. Why do they not do what Scotland is doing, and abolish this measure and make sure that enough social houses are built?

[Justin Tomlinson]

I thank the hon. Gentleman for that point, because it links nicely to the next part of my speech, which is about housing numbers. However, I gently remind him that Scotland is the only region that has seen an increase in caseloads this year. That is hardly a record of success. I urge him to think very carefully about that, because those are the people who are on the waiting list looking to get appropriate family homes, and the ones who support this policy.

On the supply of housing numbers, 700,000 new homes have been built in the past five years, including 270,000 affordable homes. Housing starts are at their highest annual level since 2007. More council housing has been built since 2010 than in the previous 13 years. The number of empty homes across England is at its lowest since records began and, crucially, we are broadening opportunities for people to access housing through schemes such as Help to Buy and the right to buy, along with a number of other measures.

[Meg Hillier]

The Minister made a point earlier about people being allocated oversized properties to start with. He has also talked about under-occupying by people whose children have left home. However, they are different from people whose life circumstances are fluctuating—their income has fluctuated; their children’s ages are changing. They are living in the home that they will want to continue to live in, and yet they have to go cap in hand to the council for these discretionary housing payments, which in my area are severely squeezed. Does the Minister not acknowledge that this policy really hits people at a point in their lives when they are trying to move out of that situation and get stability?

[Justin Tomlinson]

That was exactly the same thought process and debate that went on when the Labour Government introduced the policy in the private sector. They faced exactly the same challenges, and it was intended, had there been a general election win for Labour in 2010, for this to be done under that Labour Government. We have done it, but the difference is that when the Labour Government introduced the policy in the private sector, they did not give any additional discretionary housing payments. We are providing £870 million over the next five years and entrusting local authorities and local communities to shape and deliver what they feel is the appropriate support. In the hon. Lady’s constituency, it could be that the local authority wishes to support those with fluctuating conditions, or they may wish to target the money on other areas, but £870 million is being provided.

A number of points were raised, and I shall do my best to go through as many of those as I can. The hon. Lady asked about how income from lodgers would have an impact. Income from lodgers is fully disregarded in universal credit, so there is certainly an opportunity there. I accept that that is an easier way to generate additional income in certain parts of the country than in others.

The hon. Member for Cardiff Central raised an important point about payday loans. I am very proud to have served as part of an incredibly important cross-party campaign that delivered significant changes in the regulations protecting vulnerable consumers. In summary, we secured the delivery of financial education and support through parts of the national curriculum. All loans have to be displayed fully in cost rather than with complex annual percentage rates, which I discovered even Treasury Ministers could not calculate. Crucially, there has been the capping of costs, the ending of rip-off rates and relentless roll-overs, the freezing of debt and compulsory credit checking to protect vulnerable consumers who should never be lent the money in the first place, as well as signposting to external and, crucially, independent advice for those consumers. It was something that we all welcomed.

[Debbie Abrahams]

As good as all the initiatives that the Minister has outlined are, is not the point that this Government policy is requiring people to go to payday lenders to keep their heads above water and stay in their family home, regardless of the additional security that may have been introduced?

[Justin Tomlinson]

This is a Government policy continuing the initial good work of the former Labour Government to make sure that the 1.7 million people left on the housing waiting list, which is now down to 1.2 million in England—a significant reduction—

[Debbie Abrahams]

Then build more homes. The lowest building since 1920—

[Justin Tomlinson]

The hon. Lady can shake her head, but we cannot turn a blind eye and ignore the people who are angry that they are unable to access appropriate housing for their families, whereas others who have the benefit of a family home and whose circumstances have changed no longer have the same need as families who are in overcrowded accommodation.

The hon. Member for Wansbeck (Ian Lavery) discussed the impact on people receiving attendance allowance. They would be pensioners, and pensioners are exempt.

The hon. Member for Swansea East raised a point about discretionary housing payments not kicking in until a tenant has downsized. That is not correct: they can kick in from day one if the local authority feels that it wishes to support that individual. It is very much down to the discretion of local authorities.

The hon. Member for Cardiff Central raised a point about Cardiff’s discretionary housing payments being cut. The overall funding will be £870 million over the five years, but that reflects the level of caseload. In Cardiff’s case, as the numbers have fallen, the funding will follow accordingly.

The hon. Member for East Londonderry (Mr Campbell) raised a point about housing associations and their rent collection. The reports we have had back from housing associations are that rent collection is 99% on average, and 92% of housing association providers continue to report that, in terms of current levels of arrears in rent collection and voids, they are within or outperforming their business plans. Of those that are in rent arrears, over 50% already were prior to the introduction of the spare room subsidy, although again we will continue to work with housing association providers and local authorities to look at what further support might help to break that cycle.

A specific point was made about the impact relating to PIP and DLA. To quote the guidance:

“When deciding how to treat income from disability-related benefits such as Disability Living Allowance or the Personal Independence Payment, you should have regard to the decision of the High Court in R v. Sandwell MBC…In particular, you should consider each DHP claim on a case by case basis having regard to the purpose of those benefits and whether the money from those benefits has been committed to other liabilities associated with disability.”

In effect, therefore, that still remains part of the discretion.

In conclusion, the Government have taken action to protect the public purse and bring a spiralling housing benefit bill under control. The removal of the spare room subsidy has already saved over £1 billion since its introduction. We are protecting the most vulnerable by giving them access to direct housing payments if they need extra help to meet housing costs. The policy is encouraging people to enter work and increase their earnings and we are seeing better use of our housing stock. This is a welcome measure for those who are on the housing waiting list or in overcrowded accommodation.