Benefit Cap (Housing Benefit and Universal Credit) (Amendment) Regulations 2016

Lord Best Excerpts

Tuesday 8th November 2016 Lords Chamber

[Baroness Lister of Burtersett (Lab)]

My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, who is in practice my noble friend on these issues, for praying against the benefit cap regulations. The first-year review of the cap unsurprisingly found that caring responsibilities, especially for young children, represented one of the main barriers facing capped families looking for work. According to the equality analysis, 16% of existing capped households—more than 3,000—contain a child aged under one. Of these, more than 2,000 are headed by a lone parent and the great majority of those are women. Yet even under the current punitive regime this group is not expected to seek work when their youngest child is so young, so what is the justification for including them in the cap? Surely, on the logic of the High Court judgment that led to the welcome exclusion of carers in these regulations, as we have heard, those caring for infants should also be excluded. The equality analysis indicates that the number of households containing a child aged under one is now of course likely to increase. Can the Minister give an estimate of how great this increase is likely to be?

The new cap will affect a much wider group of families over a wider geographical area. In my own region of the east Midlands, the number of households affected is expected to increase from 800 to 5,000—a rise from 4% to 11% of those affected nationally. In order to avoid the risk of the arbitrary effects to which the noble Lord, Lord Kirkwood, referred, the IFS suggests:

“It would be sensible for the government to set out a clear vision of which families it thinks receive excessive amounts of benefits and why”.

I look forward to the Minister enlightening us.

It still beats me how, as the Government claim, it can be in the best interests of these children for them to be driven further into poverty in the name of some theoretical future life chances, especially when the earlier IFS evaluation showed that only a tiny fraction of those affected had moved into paid work. Its more recent analysis suggests that it is not likely to be that different now. Moreover, there is evidence to indicate that cutting benefits can be counterproductive because impoverishment reduces job-seeking capacities. If all one’s energy has to go into getting by, that does not leave much over for presenting oneself as a suitable job applicant to employers.

As I cited during the passage of the Bill, according to last year’s Supreme Court judgment the department is misinterpreting the best interests requirement when it argues on the basis of the theoretical best interests of the generality of children rather than the actual best interests of children whose parents’ income is driven below what Parliament has deemed necessary to meet their needs. I very much concur with what the noble Lord, Lord Kirkwood, said about the basic principle of this cap, which I am opposed to.

Both the UN Committee on Economic, Social and Cultural Rights and the UN Committee on the Rights of the Child have recently expressed deep concern about the impact of the reductions in the cap. This is also referred to in the report just published by the Committee on the Rights of Persons with Disabilities. The fears of these UN committees are likely to be borne out given the recent warnings of, for example, the Chartered Institute of Housing. It is quite clear from the revised impact assessment that children are still disproportionately affected. In his Statement on the recent UNCRC concluding observations, the Minister for Vulnerable Children and Families called on government colleagues to reflect on the committee’s recommendations,

“for example, by reflecting the voice of the child fully in the design and implementation of policy”.—[Official Report, Commons, 17/10/16; col. 23WS.]

There is no evidence of the voice of the child here.

Despite being pressed a number of times during the passage of the Bill, there is also still no mention in the revised impact assessment of the application of the famous family test. The best that we got during the Bill was a letter from the Minister, which turned up in my junk email folder, assuring us:

“The Government has fully considered the family test criteria as an integral part of the policy development process”.

This is not how the DWP advises other government departments to present the outcome of the application of the family test. It simply is not good enough. Perhaps the Minister prefers not to spell out the impact on families of a policy that the impact assessment shows will disproportionately hit children and lone mothers.

Returning specifically to the impact on children’s rights, I draw attention here to the Equality and Human Rights Commission’s note on priority issues for implementing the concluding observations of the UNCRC. It would,

“highlight, for an urgent response, the recommendation of the UN CRC for the UK to ‘[c]onduct a comprehensive assessment of the cumulative impact of the full range of social security and tax credit reforms introduced between 2010 and 2016 on children’, and to revise the reforms where necessary to ensure the best interests of the child are”—

I stress are—“a primary consideration”. I would welcome the Minister’s response.

[Lord Best (CB)]

My Lords, on the face of it withdrawing help from very poor people, which is the effect of lowering the overall benefit cap, seems extremely harsh. It has two justifications, as I understand it, in addition to the obvious aim of saving money and reducing the national deficit. First, it is hoped that it will fiercely encourage those affected to seek out a job, since that would exempt them from the constraints of the cap. Secondly, the effect of the cap reducing support in housing benefit could be to persuade landlords to reduce rents. It seems that neither of these hoped-for outcomes will be very successful.

On the jobs front, the previous imposition of a benefits cap seems to have pushed less than a quarter of those affected into a job, leaving the great majority to take the hit in a straightforward reduction of their standard of living. The noble Lord, Lord Kirkwood, and the noble Baroness, Lady Lister, have spelled out the obstacles to the new measure getting people into work.

On the housing side, could the lowering of the cap achieve savings to the Government without hardship to those whose benefit is cut by coercing private landlords to trim their rents? Landlords who concentrate on tenants who need housing benefit would, it is argued, have to settle for a lower rent if tenants cannot pay, otherwise they would be faced with an empty property.

Of course I understand that the Department for Work and Pensions, propelled by the pressure of the Treasury, wants to reduce the housing benefit bill which, frustratingly, keeps rising as rents rise, but such is the scarcity of inexpensive homes to rent in London, and increasingly throughout the country, that private landlords do not cut rents when housing benefit tenants are given less to spend on rent. Instead, landlords simply stop letting their properties to people in receipt of housing benefit. More than three-quarters of private landlords will not consider housing anyone in receipt of HB, and those who are already letting to such tenants are increasingly unlikely to renew assured shorthold tenancies when they conclude after six months or a year.

The new cap is estimated by the Chartered Institute of Housing to hit 116,000 families containing 319,000 children. It comes on top of the local housing allowance caps and freezes, which are biting already. Although the impact of the new measure is greatest in London, despite the higher level of the cap there, all areas are affected. IFS figures show that families with three children face the most severe cuts. Half of them are facing a gap between their housing benefit and their rent of more than £100 per week. No private landlord is going to reduce rents by anything approaching that level.

So, in housing terms, the most likely impact of the new measure is the gradual elimination of privately rented accommodation for households which, for a host of reasons, are not in employment. Although tenants may try to make up the shortfall between their housing benefit and their rent by drawing on loans, help from friends and using up resources provided for food, heating et cetera, this is untenable for a sustained period. Debts and arrears are highly likely, and private landlords can see this coming. It is safer and more profitable to let to tenants who need no HB support.

What follows is likely to be an increase in homelessness. Housing associations and councils cannot take in all those rejected by the private rented sector. I know the Minister has done sterling work in extracting funding from the Treasury for discretionary housing payments to offset the impact of earlier benefit cuts. His efforts have reduced the deficit-cutting savings for the Government, but they are not a stable way to fend off homelessness in the face of continuing benefit cuts.

I will soon have the honour of piloting the Homelessness Reduction Bill through your Lordships’ House if and when it completes its stages in the other place. It will be a really helpful measure to prevent homelessness and provide more relief for those who face homelessness, and I am delighted that the Government are supporting it. However, this legislation, if it completes its stages in the other place and meets with approval in your Lordships’ House, cannot swiftly turn the tide and conjure up more rented homes within the reach of those who receive housing benefit. Market forces dictate that, if housing benefit does not cover the rent, private landlords will simply not let to these households.

I agree with the noble Lord, Lord Kirkwood of Kirkhope, that additional support to help those hit by the latest cap get a job is definitely needed before inflicting upon them a very significant cut in their income. Locating and assisting those affected in the private rented sector may not be easy, but several thousand council and housing association tenants are also affected. Councils which focus on these tenants are to be commended. Housing associations trying to help tenants with skills training need to be informed by their local councils of which tenants will be affected by the new benefit cap. They can then target support with financial advice and training on those people. The National Housing Federation points out that not all councils are sharing these data with their local housing associations. Support from the Minister in making sure this data-sharing happens would be very valuable.