Under-occupancy Penalty (Nottingham)

Lilian Greenwood Excerpts

Monday 18th March 2013 Commons Chamber

[Lilian Greenwood (Nottingham South) (Lab)]

“Nowhere to go”—that is how today’s Nottingham Post describes the crisis facing thousands of social tenants in our city. Why? Because two weeks today the Government are set to play the cruellest joke on more than 6,000 of our city’s poorest households. On the same day as they deliver a huge tax cut to the UK’s highest earners, they plan to take £4.23 million from the pockets of those people in our city who are least able to afford it. Whether we call it the bedroom tax, the under-occupancy penalty or the spare-room subsidy, it is a heartless policy that, the Cambridge Centre for Housing and Planning Research concluded, will create “severe hardship” for affected households.

Let us look at the households affected. Two thirds of them include someone who is disabled, one third are families with children, more than a fifth are working households on low wages, and many of them do not have a spare room at all. They include families whose children have their own rooms. Let us face it, some bedrooms are so small that they are barely big enough for one child, let alone two. Many families do not think it is fair to expect their teenage son or daughter to share with a toddler, even if they are the same sex, and children’s education can suffer if they do not have somewhere quiet to study.

So-called spare bedrooms are also needed where couples sleep separately, especially where a husband or wife cares for their disabled partner and desperately needs a decent night’s sleep. Some are used to store disability-related equipment. Where parents are separated, these bedrooms are needed for when their children visit at weekends. Are the Government really saying that people who live in a council or housing association home cannot have a spare room for their children or grandchildren to sleep in when they come to visit? It seems so. People who have lived in the same house for decades and spent time and money making it their home all face the same impossible situation: move out or find the extra money.

For people in Nottingham, that means on average an extra £11 a week if they have one room more than they are allowed, or £22 a week if they have two rooms. That may not sound like very much to the Minister, but for someone on jobseeker’s allowance of £71 a week, it is the difference between eating or going hungry, turning on the heating or sitting in the cold, borrowing money to pay your rent or going into arrears. This morning on Radio Nottingham, a local Tory Member of Parliament did not know what the fuss was about. She had explained to her constituent that she should simply move house. But of course, it is not that easy.

[Jim Shannon (Strangford) (DUP)]

The bedroom tax and the under-occupancy terminology will affect people throughout the United Kingdom. In Northern Ireland, we will be £10 million shy in the money available, and 32,000 households will be affected. Is not one of the greatest discrepancies of the whole process that there are not the smaller occupancy houses to move to, so all these people will have to find the extra money?

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[Lilian Greenwood]

The hon. Gentleman is absolutely right, and I shall come to that point.

In Nottingham, 6,103 people face the bedroom tax in two weeks’ time. The key website is Homelink, which advertises properties for the arm’s length management organisation, Nottingham City Homes, and most of the local housing associations. This week, 21 one-bedroom properties and 14 two-bedroom properties are available. So even if they were all allocated to households that are currently under-occupying, that would help only 35 households—fewer than 1% of those affected. That is before one considers the 2,269 families in Nottingham waiting for a two-bedroom property, or the 7,333 individuals or couples waiting for a one-bedroom property.

In my constituency, 1,423 households are affected by the bedroom tax. In the whole of the last 12 months only 175 of Nottingham City Homes’ one or two-bedroom properties became available to let in Nottingham South, and on average people had waited 78 weeks on the list. Worse still, evidence from the local homelessness charity, Framework, reveals particular problems for tenants who are in arrears. They have been told that even if they have repayment plans in place, they cannot be considered for a move. As Jon Leighton, who helps co-ordinate the crisis team for Framework, says:

“Essentially they are stuck. Pay the additional charge or get into more arrears. And given this is the choice, the likely outcome is eviction proceedings.”

The Minister may argue that social tenants should move into the private sector. How will that cut the housing benefit bill when, according to figures produced by the National Housing Federation, the average social rent for a two-bedroom property in Nottingham is £64.02, but the average private rent for a one-bedroom property, into which a household occupying a two-bedroom social home might be expected to downsize, is £88.85? There is also a question about whether landlords in the private sector will be willing to take on tenants on housing benefit, given their significant concerns about the risks posed by the introduction of direct payments under universal credit.

The truth is that most people cannot avoid paying the bedroom tax, and the Government know it. Their 2012 impact assessment is clear:

“Estimates of Housing Benefit savings are based on the current profile of tenants in the social rented sector, with little tenant mobility assumed. If a significant number of tenants wished to move, this would reduce direct savings and place extra demands on social landlords”.

It is clear that the burden of cutting public spending on housing benefit relies specifically on the inability of tenants to move; balancing the books on the backs of poor and vulnerable people.

Of course, the Minister might claim that this is not about saving money, but about making better use of our social housing stock. Action to tackle overcrowding is important, which is why the Labour Government published good practice guidance on managing under-occupation and, in 2007, allocated funding to 38 pathfinder areas to devise solutions to address overcrowding and focus on under-occupation.

Last year Nottingham city council received a grant of £75,000 to help tackle overcrowding and under-occupation through its “Right Size” project, a modest amount that it used to good effect. It worked with people to look at their options, provided intensive support to help them overcome the hurdles to moving home and effectively held tenants’ hands through the process, in some cases covering removal costs. The project was effective, and between 1 April 2012 and 28 April 2013, 81 properties were freed up for families. However, last Friday, after a prolonged period of uncertainty, the council finally received an e-mail from the Department for Communities and Local Government confirming that:

“Ministers have now decided not to make any further special grants to councils specifically to tackle under-occupation”

Now we know that this is not about addressing under-occupation or overcrowding; it is about cutting public spending, taking money from the very households that are least able to bear the burden. It is not just unfair; it is immoral.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

My hon. Friend is making her case exceptionally well. In my constituency, which neighbours hers, the cases that really pull at the heart strings bring the issue most to life, particularly when they involve a disabled person in the household. The majority of cases seem to be like that. I think of the young man who had serious problems with schizophrenia. He was just getting into independent living and needed an extra bedroom so that his father could occasionally stay overnight in order to reassure him when things got particularly difficult. Now, because of the bedroom tax, his whole quest for independent living has been thwarted, and he will have to move back in with his parents. It is the individual cases that illustrate just how heartless and callous the policy is.

[Lilian Greenwood]

My hon. Friend is exactly right. I wonder how Government Members sleep at night after what they have done.

The Minister might claim that the Government are protecting the most vulnerable, such as the individual my hon. Friend has just mentioned. Ministers have been saying that for months. It was only continued pressure from the Opposition Benches that forced them to concede that the Prime Minister’s assurances about protection for disabled children, foster parents and members of the armed forces were completely hollow and that exemptions needed to be put in place.

Unfortunately, to suggest that discretionary housing payment will provide the answer is disingenuous. Nationally, the DHP allocated for 2014-15 makes up less than 6% of the £2.2 billion in planned housing benefit cuts for the same year, and the Government have failed to provide any assurances on the level of DHP funding as part of the next spending review. The National Audit Office is critical of how the level of DHP funding has been determined, stating that

“it is not clear how the overall level of funding has been determined or whether it is likely to be sufficient to tackle the effects of reforms.”

[Sheila Gilmore (Edinburgh East) (Lab)]

My hon. Friend is making a powerful case. Has her council, like mine, considered trying to top up the DHP fund so that it can help people? Is this not simply a central Government cut being imposed on the shoulders of local government, because topping up the fund means a cut for councils? Also, the administration involved in the whole process is huge, and that is another cost for local government.

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[Lilian Greenwood]

My hon. Friend is exactly right. Of course, this comes on top of huge cuts to local government.

Nottingham city council was allocated £696,000 to support tenants affected by the bedroom tax in the coming year. That amount will be reduced to take account of the U-turn on foster carers and armed forces personnel, and tenants in Nottingham face a shortfall of £4.23 million. I do not know whether it will be enough to protect the disabled tenants whose homes have had significant adaptations, but it certainly will not be enough to help all those with disabilities, for whom the prospect of finding an extra £11 or £22 a week is simply terrifying. Of course, when local authorities target DHP they will have to make impossible choices on whether to protect disabled people or the tenants most at risk of homelessness. The Government do not know how many people will be left short, either. When I asked the Minister how many households in Nottingham would be affected, including households with children, the answer was stark: he did not hold the information. So how can he possibly come to this House and offer assurances that the vulnerable will be protected?

As a responsible landlord, Nottingham City Homes is taking action to help its tenants to cope with benefit changes. It has a welfare reform action plan and has undertaken a range of activities to support tenants, but as chief executive Nick Murphy acknowledges,

“The combined effect of the bedroom tax, reductions in council tax benefit, changes to disability benefits and direct payment under Universal Credit are creating confusion and uncertainty. At Nottingham City Homes we are doing what we can to help with information, advice and support but many of the poorest people in Nottingham are going to get poorer as a result of these changes.”

Of course, we should never forget that behind the statistics and the numbers are real people: people whose voices and stories deserve to be heard; people such as my constituent Paulette Williams, who lives in Radford. She has rented her three-bedroom house from Nottingham Community Housing Association for the past 21 years. She had offered to downsize some years ago when her youngest daughter left home but was told that she did not qualify for a transfer. Last year, Paulette had to take ill-health retirement. She has not been offered a suitable small property and does not know how she is going to make up the shortfall from her benefits. I am interested to know how the Minister thinks a 57-year-old woman with serious health problems, including a permanent incapacity, should try to do so.

According to the Government, pensioners are not affected by these changes. Try telling that to my constituent Pat Lister and her husband, who live in Wilford. Pat’s son has serious mental health problems and has battled heroin addiction and homelessness. He has achieved some stability since he got a two-bedroom council flat. He has been in the same flat since 1996. Now all that is at risk. Pat and her husband want to support their son but cannot afford to pay the bedroom tax from their pension. Pat told me:

“We have reached the end of the line. We are retired and support him wherever we can, but this additional burden will place his social housing home out of reach and he must leave…And the wretched cycle of homelessness will begin again. For our vulnerable son, and nameless others like him.”

I called for this debate after I had sat in my surgery facing Paulette, Pat, and many others whom this Government are abandoning to a life below the breadline.

I have focused on the impact of the bedroom tax, but the situation is even bleaker. On the same day that tenants face a shortfall in their housing benefit, they, along with low-income households in the private rented sector, face a cut in the help that they get with their council tax. According to Nottingham city council, the shortfall for the scheme is £6.2 million in 2013-14—a reduction of nearly 18% in funding as a result of central Government cuts. This year 19,000 people in Nottingham will have to pay at least 8.5% of their council tax bill. In 2014-15, when transitional protection expires, that could rise to 20% or more. The situation is set to get worse, not better. Rents and prices are currently rising by more than 2.5%. With benefits capped at 1%, the poorest households will find their incomes squeezed even further over the coming months.

This chaotic policy is wreaking havoc on the lives of many of my constituents. I hope that I have convinced the Minister of the disastrous effect that it is having in Nottingham, as it is in cities across the country. He should take this opportunity to do the right thing and scrap this wretched bedroom tax.

[The Minister of State, Department for Work and Pensions (Steve Webb)]

I congratulate the hon. Member for Nottingham South (Lilian Greenwood) on securing this debate. She made no reference whatsoever to the context in 2010 in which an incoming Government had to make decisions or to the fact that the previous Government spent £150 billion more in their final year in office than they had coming in. She knows perfectly well—she did not mention this, but she knows it—that any incoming Government, including an incoming Labour Government, would have sought to take tens of billions of pounds out of public spending. She also knows that out of public spending there are two big things on which Governments spend money. The first is public sector pay, on which the Opposition were very slow to agree with us—they have now finally agreed—that restraint was required. The second is what is loosely called welfare—benefits, tax credits and pensions. It is completely implausible that an incoming Labour Government would not have cut social security spending. This is not a debate about whether social security spending has to be cut back; it is about how.

[Lilian Greenwood]

Will the Minister explain why his Government will deliver a tax cut at the beginning of April for the highest earners in the UK? Individual millionaires will get more than £100,000 each. Why is he choosing to balance the books on the backs of poor people in my city?

[Steve Webb]

I would be happy to respond to the hon. Lady’s question, although I was trying to keep to the subject of her debate. The higher rate of income tax in April will be 45%. For 13 years under the previous Labour Government the highest rate of income tax was not 45% but 40%. If she thinks that a 45% rate of income tax is immoral, why was a 40% rate acceptable for 13 years under the previous Labour Government? In addition, higher earners will pay a bigger share of tax as a result of a combination of measures. The hon. Lady has chosen to mention one, but if she takes the capital gains tax increases and the cuts in pension tax relief into consideration, she will see that overall we are taking more from higher earners than the previous Government did.

Let me focus on the specific issues that the hon. Lady raised. A number of voices were silent in her remarks. She used the word “fairness” and seemed to think that the suggestion that benefits should, broadly speaking, support a household size that a family needs rather than spare rooms was immoral, but that had been the case for private sector tenants for a long time under Labour party policy. The local housing allowance scheme introduced by the previous Government was, broadly speaking, for benefits to cover the household size needed. Why is it immoral to ask social tenants to pay the cost of a spare room, but not private sector tenants?

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[Steve Webb]

I hope that the House will forgive me, but I want to respond to the points raised by the hon. Member for Nottingham South and have limited time to do so.

There is an issue of fairness as between private sector tenants on a low income and social tenants on a low income, but there is also a second issue of fairness. Our estimates for Nottingham are ballpark figures—the hon. Lady is right to say that we do not have exact figures for her constituency, but we do have regional figures and we can estimate overcrowding—but we estimate that of the order of 2,000 or so households there are overcrowded.

[Lilian Greenwood]

I thank the Minister for giving way. I specifically asked Nottingham to provide me with the figure for the number of people who face overcrowding and it is just short of 630 households, compared with 6,103 households that face the bedroom tax.

[Steve Webb]

One figure over which there is no dispute is the number of people on the housing waiting list in Nottingham, which is 12,000. They are desperate for a family home or for family accommodation, whereas 6,000 households have spare bedrooms.

[Steve Webb]

No. There is an issue about fairness between social and private tenants and between those who face overcrowding and are desperate for a home and those who have spare rooms, and about fairness for those on the waiting list.

The hon. Member for Nottingham South raised a number of specific issues to which I want to respond. She asked whether people who will find themselves in the private sector will be able to rent if they are on housing benefit. The number of people in the private sector on local housing allowance recently passed the million mark, so more than a million people in the private sector are getting housing benefit. The suggestion that landlords will not rent to people on housing benefit is therefore demonstrably false.

[Lilian Greenwood]

I would be interested to hear whether the Minister ever speaks to anybody in Nottingham, because the experience of social tenants who are finding it difficult to move into the private sector was provided to me by the local homelessness charity, Framework, which has a pretty good idea of what is happening in our city.

[Steve Webb]

All I can say to the hon. Lady is that there are more than 1 million people on housing benefit in the private rented sector. There is not a little island called Nottingham where those people do not exist. Across the United Kingdom, private sector landlords are renting to people on housing benefit.

The hon. Lady mentioned Nottingham City Homes. I welcome some of the measures that it is taking to assist people who are affected by this measure. For example, it has produced a lodger guide so that any tenant who wishes to take in a lodger has information about how to do so. That will not be the answer for everyone, but it will be the answer for some. It will mean that there is better use of the scarce resource that is the empty or unused bedroom in social housing.

The hon. Lady mentioned HomeSwapper, a mutual exchange website that Nottingham City Homes is encouraging people to refer to. That is very welcome because it tries to make better use of the valuable social housing that we have. Nottingham City Homes ran what I think it called a speed-dating event to help match people who want to move to smaller properties with those who want to move to larger homes. It is true that this measure saves money, but it also leads us to make better use of the very underutilised resource of our social housing stock. As these initiatives demonstrate, there are some people living in overcrowded accommodation, whose voice was silent in the hon. Lady’s speech, and some people who are living in accommodation with spare rooms.

There is an issue with what one might loosely call “hard cases”. Those include people for whom a spare bedroom is not spare, but is very important. The hon. Lady dismissed in a very new Labour sort of way the £700,000 that is being given to Nottingham next year in discretionary housing payments, as if it is a drop in the ocean or a trivial sum of money. That money is being given to local authorities so that they can assist people on a case-by-case basis who approach them and say that there is a particular reason why the measure would be unfair or adverse in their case.

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[Steve Webb]

No.

We are asking private renters in Nottingham and elsewhere to pay just under £2 a day for a spare room. Obviously, if somebody is on benefit, that it not easy. However, for those who want to retain their spare room, that is the contribution that we are asking. Many people on a low income who are renting in the private sector pay that money.

There were scare stories about mass evictions and homelessness before the limits came in for the private rented sector, but those things have not happened. Just the sort of alarmist language that the hon. Lady used about mass evictions and the rest of it was used before the caps came in for the private rented sector. In some cases, people have traded down. In other cases, people have made a contribution towards retaining the spare room.

The hon. Lady mentioned the Department for Communities and Local Government and ring-fenced funding for under-occupation. She will know that the strategy of the DCLG has been to let local authorities decide their own priorities and not to have ring-fenced funding.

The hon. Lady mentioned the combination of this measure and other measures. She mentioned the reduction in support for council tax benefit. Nottingham city council has taken the decision to charge some of its working-age benefit recipients a contribution to the council tax. Not all local authorities have done that.

[Lilian Greenwood]

It did not have any choice.

[Steve Webb]

Well, other local authorities have avoided doing that. It is noticeable that many Labour-led local authorities have decided to pass the cost on to their tenants. For example, my local authority of South Gloucestershire has not passed on the cut to tenants, so they will receive full council tax benefit. Nottingham city council, however, has decided to expect its low-income tenants to make a contribution. The hon. Lady said that Governments have to make choices, but so do local authorities. Nottingham council has decided to charge low-income working age households a contribution towards their council tax. That was its decision.

Looking forward to the changes we have made, foster families were mentioned and the Government have been clear throughout that we want to protect such families. Our original strategy was to put the £5 million that we think it will cost to protect those families into local government budgets through discretionary payments, but, partly because of the alarmist scaremongering about foster families, we decided it was far better to avoid any anxiety on that point and simply to entitle foster families to an extra bedroom at the same cost. We have not had to find extra money for that measure because it was there already. We always said that we would protect those families, and we will. However, we will do so directly because when we relied on discretionary payments, Opposition Members claimed that we were not going to support foster families, which caused concern among those families. Giving foster families a right to a room seemed a more direct way of providing that support. Likewise, we have made it clear, as the Prime Minister did—