Housing: Spare Room Subsidy

Lord Freud Excerpts

Tuesday 22nd December 2015 Lords Chamber

[Baroness Lister of Burtersett]

To ask Her Majesty’s Government how they propose to respond to the results of the Evaluation of Removal of the Spare Room Subsidy: Final Report.

[The Minister of State, Department for Work and Pensions (Lord Freud)]

I am pleased that the final report on the removal of the spare room subsidy has now been published. As it shows, the policy is promoting more effective use of housing stock and encouraging people to enter work and increase their earnings. We will therefore be maintaining the policy and will continue to protect vulnerable claimants who require additional support through discretionary housing payments.

[Baroness Lister of Burtersett (Lab)]

I thank the Minister. I think we read different reports. Conveniently published amid the flood of end-of-term statements, the report also shows that many tenants affected face significant barriers to downsizing, including the shortage of smaller homes. They are now paying the price as they cut back on essentials, frequently run out of money and accrue debts as they struggle to pay the rent. Will the Minister finally accept that the hated bedroom tax was misconceived and give these tenants who are suffering as a result the perfect Christmas present by announcing its abolition?

[Lord Freud]

We have seen a reduction in the numbers affected by the removal of the spare room subsidy. They are down by nearly 100,000—by 18% or 98,000. Half of those have downsized—45,000 within the social sector and 12,000 moving into the private sector. We have seen 20% of people looking to increase their earnings. That figure goes up to 63% for those affected who are unemployed. So, no, we will not be changing this policy.

[The Lord Bishop of St Albans]

My Lords, I welcome the final report’s findings that local authorities are becoming more efficient in the allocation of direct housing payments. However, it has also revealed that there is a postcode lottery. Some local authorities are making payments to all claimants while others have imposed quite strict criteria. Does the Minister agree with me that it is important that this should be placed on an equal footing so that in whatever part of the country people live, they receive exactly the same treatment, irrespective of the locality?

[Lord Freud]

We have approached helping people who are hard cases through the discretionary housing payment route, which has been found sound in the courts. The reason for that is that local areas are best placed to determine how best to help people in their own areas. They are doing it in a variety of ways, but that reflects their views on how best to do it in their areas.

[Lord Shipley (LD)]

My Lords, I wonder whether the Minister would be prepared to admit that the policy has not worked well. The evaluation by his own department has confirmed that it is creating hardship for many and has failed to get enough smaller housing units built for those who want to downsize. In the evaluation, three-quarters of those affected are now spending less on food and half are spending less on heating. Will the Minister agree that it would have been better not to apply the policy to existing tenants?

[Lord Freud]

This policy is about making sure that people who are living in oversized accommodation take the decision either to downsize or find the funds to run the extra rooms. That is how this policy works, and we can see in this study that people are now making adjustments. There are substantial moves in various areas in terms of downsizing and finding work between the interim report and this final report.

[Lord Young of Cookham (Con)]

My Lords, is it not in everyone’s interests that there should be a better match between household size on the one hand and the size of houses and flats on the other, to avoid overcrowding and underoccupation? Does the survey not show a fivefold increase in the number of working-age tenants seeking to downsize? Does this not show that the policy is working?

[Lord Freud]

Yes, we have seen a substantial number of people downsizing—45,000 people have downsized within the social rented sector and another 12,000 have moved into the private rented sector. The number of people who have registered for downsizing is now running at 16%. Noble Lords may remember that when this policy started it was estimated from the surveys that about 20% of people would want to do so. We are well on the way to people making this adjustment. Other people, however, are looking to earn more money and to work. That is one of the factors, but not a major one, in some of the record employment levels we are now seeing.

[Baroness Hollis of Heigham (Lab)]

My Lords, nearly 500,000 families are affected. Two-thirds of them are disabled, just 8% have been able to downsize and just 10% have received a discretionary housing payment to help them, so, as my noble friend said, 76% have cut back on food. Does the Minister consider this a success and, if so, what would he consider a failure?

--- Later in debate ---

[Lord Freud]

As noble Lords will remember, this was a key savings measure for people who had larger accommodation than they needed. We have now saved £1 billion. As we have discussed, the number of disabled people on the highest rates of DLA who are affected is running at 17%. As I said, we are seeing real signs of people adjusting to the process, not least landlords managing the process more effectively.