Welfare Benefits Up-rating Bill

Lord Whitty Excerpts

Monday 11th February 2013 Lords Chamber

[Lord Whitty]

My Lords, the noble Lord, Lord Sheikh, said it and, to a large extent, the noble Lord, Lord Wigley, demonstrated it as regards Wales; namely, that this Bill has wider social implications, but they are not welcome implications. They are to put a big burden of the sorting-out of our economic situation on low- paid working people. I follow the noble Lord, Lord Kirkwood, in saying that it is quite a dangerous move, after 20 years of virtual cross-party consensus, that we should virtually automatically uprate our benefits system, to break that system in this way in a Bill which is legislatively unnecessary. The noble Lord also said that we needed some clearer long-term thinking. My main points will be about that because, as many others have said, this Bill is surrounded by hugely misleading propaganda.

It is supposed to be part of a strategy on the part of the Government to reduce benefit costs, simplify the benefits system and increase employment, but any such strategy is put in jeopardy by a government believing their own propaganda and that of their press allies. That propaganda seems to be all about the distinction between the deserving and the undeserving poor—those who work and those who do not—but the burden of the Bill falls on those who do work, who are already squeezed by a cut in real wages, particularly at the lower ends of income, and who will therefore be twice hit by a cut in the real value of their benefits.

The propaganda also suggests that benefit recipients’ real living standards have risen dramatically faster than those who are in work. As the figures that have been provided to us by the CPAG show, the real value of unemployment pay and other social benefits has steadily fallen over several decades. The reason why there has been a slight reversal in the past couple of years is the dramatic fall in real wages at the bottom end. That is not a reason to aggravate that unfairness and retrogression by the means proposed under the Bill.

If the Government were really telling the public that we need to differentiate between those who work and those who do not, they would have provided for a benefit system that differentiated between levels paid to those in work and those out of work. The Bill does not do that. The Government have, rightly, stuck with focusing on need rather than on whether you are in or out of work. Of course, the downside of that is that they have hit both equally. For those who are in work, the Government claim that they have offset that by raising the tax threshold at the same time, but the tax threshold hike has been offset by the cut in housing benefit, the abolition for many and the cut for others in council tax benefit and other benefits. The net effect on the working poor of the Government’s measures has not been positive compared to those who are on benefit and who are out of work. The supposed strategy is as much at odds with the propaganda as the propaganda is at odds with reality.

I hope that the Government will find my second point slightly more constructive, but it is equally critical, not only of this Government but of previous Governments. Elements of the Daily Mail propaganda, as I would call it—to save Ministers’ blushes—are correct. That relates to the soaring cost of housing benefit and, within that context, to occasional, admittedly much exaggerated, stories of ludicrously high levels of housing benefit for particular families in particular situations, especially in London. Those families are obviously chosen to highlight a point. For obvious reasons, they tend to be families who fit the Daily Mail image of benefit recipients by being large in the number of children, probably out of work and almost certainly foreign.

There are thousands of other less dramatic cases in which, inevitably, housing benefit has risen above the rate of inflation. The Government, and all of us, have to ask ourselves why. It is because of the failure of the housing market, compounded, in some cases by the failure of local authority placement policies. It is not, by and large, due to the failure of the benefit system.

I have been banging on about the failures of the housing market for at least 10 years, for the past two years as chair of Housing Voice—as I should have declared—but so have many other people for far longer. The reality is that all parts of the housing market—out-of-reach mortgages, soaring private rents, unaffordable leasehold charges, the inadequate quantity of new social housing, and increasingly expensive social housing at that—reflect a failure to build, a failure to refurbish and a failure to provide housing choice fit for our society at various levels.

Hence, in all forms of tenure, housing costs are rising. Inevitably, that leads to a rise in housing benefit payments. I repeat that that is a failure of housing policy; it is not a failure of social security policy. I predict that the pressure on housing benefit, or what is intended will become the housing component of universal credit, will seriously sabotage and possibly completely undermine what I think is universally regarded as the commendable aim of introducing universal credit, unless housing benefit and the pressures on it are dealt with first in the wider context of housing policy.

Looking back, the roots of this problem go to a serious mistake, made, probably unconsciously, decades ago. Until the 1960s, the vast bulk of government intervention in the housing market was on the capital side: help to local authorities to build social housing; and help to homeowners and landlords to improve their stock. A much lesser proportion was on the revenue side in subsidies to people, and much of that was through tax relief on mortgage payments. We now have a completely switched system, so that more than 90% of state support in the housing market is revenue based and very little is capital based. In the next five years, £90 billion will be spent on housing benefit; £5 billion, at best, on new and improved housing. Within government, the two aspects are dealt with by entirely separate policies and entirely different departments. CLG designs housing policy; DWP decides housing benefit. If the two sides were brought together in one pot with one policy in one department, we could perhaps, over a period of years, develop a sensible housing strategy: building more houses, improving those we have, and providing selective support to tenants and householders who are faced with unaffordable costs.

Unless we do that, unless we take housing benefit out of the plans for universal credit strategy and put it back into housing policy, we will not solve the housing crisis, the pressure on housing benefit and therefore the pressure on the social security budget in total. Unlike other benefits, housing benefit—and, I guess, council tax benefit—depends not on your income or your family circumstances but on the home and the area in which it is situated and on the state of all the housing markets in that area. As long as the housing crisis persists, the total benefit bill will inexorably rise faster than inflation. Then the Treasury will again insist on real-terms cuts to the income of many of the poorest in our society, such as the proposals before us tonight.

I appreciate that in calling for a single approach to housing policy, I am parting company with some of my usual colleagues who are housing and policy campaigners, but I say to the Government and the Opposition that unless they start looking at this in a more strategic way and put both sides of the housing issue together, they will solve neither the housing crisis nor the pressures on the social security budget. Unless we do that, we will be back here in a few years’ time with a Government of one complexion or another unfortunately forced to put the cost of our failure on those who are least able to afford it.