Property: Under-occupancy Charge

Lord Freud Excerpts

Tuesday 2nd July 2013 Lords Chamber

[Lord Greaves]

To ask Her Majesty’s Government what is their latest assessment of the impact of the under-occupancy charge on properties with spare bedrooms.

[The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)]

My Lords, both an impact assessment and an equality impact assessment have already been published. It remains too early to say how people are reacting to this change. The DWP is conducting a formal two-year evaluation of this policy, running from April this year to March 2015. In the short term, an outreach exercise is being undertaken with approximately 78 local authorities to monitor implementation and to ensure that the support provided to local authorities and claimants has been sufficient.

[Lord Greaves]

My Lords, two years is too long for many people, and the evidence is already coming in. Is it not true that, in many cases, the discretionary housing payments available for people with special needs, especially disabled people who need an extra bedroom, are being provided by local authorities on a short-term, temporary basis, and therefore that these people will still be trapped with rents that they cannot afford in the longer term? Is it not also the case that many councils and housing associations are already reporting that, in order to relocate and rehouse people who wish to move to smaller accommodation, the demand, compared with the supply, is such that it will take several years, and these people, too, will be trapped with higher rents than they can afford?

[Lord Freud]

My Lords, the purpose of DHPs specifically for the disabled in heavily adapted houses and homes is to make sure that they can stay there indefinitely. Clearly, it would not make sense for people to move when there would be a high cost of adapting a new premise. As I have said, it is too early to know what is happening in different local authorities. The information I have up to now from our intensive interrelationship with local authorities on this matter is that there is a great deal of variation in outcomes.

[Baroness Hollis of Heigham]

My Lords, the Minister assumes that the Government will make £490-odd million of savings from the bedroom tax on the assumption that most tenants will stay put and take the hit. That is where the saving is coming from. However, all the evidence from housing associations, including my own, and local authorities shows that something like 30% of tenants will move, largely into the private rented sector, where rents, and therefore housing benefit, will be higher. Does the Minister accept that to send 660,000 families into misery for the sake of something like £50 million of net savings in the public sector is not only cruel but profoundly indecent?

--- Later in debate ---

[Lord Freud]

My Lords, the estimate of the annual savings is about £500 million a year. As to the circumstances in which people move into the private sector, clearly it is more expensive generally in the private sector than in the social sector. However, one has to look at the whole of the transaction. Such a move will free up a large apartment or home in the social sector, which will then be made available for a large family on the waiting list. There are 1.8 million families on the waiting list, a group that we can now start to fit into appropriately sized houses.

[Lord Naseby]

Is my noble friend aware that, as a former chairman of the housing committee in the London Borough of Islington, I wish that there had been a Minister in 1968 who had taken such care and trouble over the changes that were implemented in that year? Should the House not reflect a little on the care that my noble friend has taken and give the procedure time to settle down, in the confidence that if there are quirks to it they will be dealt with?

[Lord Freud]

My Lords, I am grateful for my noble friend’s support. It is important that we see how people respond. We are expecting a behavioural response and people to change their behaviour. We are watching what is happening very closely. I will make appropriate responses when I know what is happening, but it is too early to do so now.

[Lord Martin of Springburn]

The Minister talks about freeing up property. He will know that, unfortunately, throughout the United Kingdom, there are estates where property is considered hard to let. By these proposals, will he not force couples out of properties and run the risk of those houses lying vacant? That will not help improve the environment for the people who live on such estates and are trying to make a better life for themselves.

[Lord Freud]

My Lords, as I have said, the early indications are that there is quite a lot of variation around the country. There are clearly some estates with genuine difficulties and we need to watch the situation very closely.

[Baroness Hussein-Ece]

My Lords, are there not still anomalies with children with disabilities being exempt and yet, when a child with a long-term condition reaches 18, suddenly the rules change and the family becomes liable for this tax?

[Lord Freud]

My Lords, we rely very heavily on discretionary housing payments to ensure that we have a way of dealing with the difficulties and challenges faced by particular groups and families. That is the way we have chosen. Local authorities can look at the particular circumstances and apply those funds as appropriate.

[Lord McKenzie of Luton]

My Lords, the bedroom tax does not take account of the size of a bedroom. Two children under the age of 16 of the same gender are expected to share, whether or not the room is a single, and indeed even if only a single bed will fit in it. Can the Minister tell us what behavioural response is expected from families in those circumstances, other than to buy bunk beds?

[Lord Freud]

My Lords, clearly there has been slight exaggeration about some apartments and homes. Local authorities will look very carefully at particular homes to make sure that they are in the right category, but it is up to a family that is in such circumstances to look for a more appropriate place to switch into. I must make the point that the turnover of people in the private sector is enormous by comparison to the very low turnover in social housing. This is not healthy for anyone, and certainly not for the economy.