Housing Benefit

Mark Field Excerpts

Tuesday 13th July 2010 Westminster Hall

[Mr Mark Field (Cities of London and Westminster) (Con)]

I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate. We have worked together on a problem in our communities concerning the Crown Estate, along with the right hon. Member for Holborn and St Pancras (Frank Dobson), and will continue to do so. I have significant sympathy with some of her concerns, particularly those that relate to London. I fear that elements of the proposals are similar to those adopted by previous Governments, of all colours, and that there is a lack of understanding on specific issues that affect the capital and that an entirely nationwide approach cannot necessarily focus on. Many people will argue that if we remove the opportunity of central London life for the unemployed or the poor, we risk losing the fundamental character of the inner city and perhaps ghettoising the outer capital where families would inevitably be placed.

A housing benefit cap is not about driving people out of London; it is about bringing rents back into the real world, and saying that a system that pays for accommodation that is well out of the reach of ordinary taxpayers is wrong. That system is largely absurd. It has been broken, and become more absurd as time goes by. I am not focusing on Daily Mail articles that appear day by day, because we all know that those exceptions do not prove the rule. None the less, they reflect some of the reality as well as the anger felt by many people who take responsibility for their lives and do not have a lot of children and then throw themselves on the mercy of the state through housing benefit or subsidised housing. There must be fairness.

London will continue to have vibrant estates, and its housing association properties and relatively cheap private sector offering will probably come within the reach of many ordinary workers when the artificially raised rents that have in part been caused by the housing benefit system fall. The issue is not just about the regulated rents of recent years, but goes back some years. There is no doubt that some rents have been artificially raised over the last few years because private landlords have known what they can get away with. That has led to some of the current absurdities.

[Ms Buck]

On that specific point, is the hon. Gentleman aware of the proportion of private sector tenancies in London where a claimant is on housing benefit? He is making the point that the market is distorted by housing benefit, yet housing benefit claimants make up only a small proportion of total private sector leasing, so why should that be the case?

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[Mr Field]

It distorts the overall price level that landlords—often absentee landlords, of which there are far more—reckon they can get away with. That has a distorting effect on the rest of the free market in this area.

Westminster city council—my local authority and the hon. Lady’s—supports the cap even though the announced changes are estimated in the worst case scenario to cost local authorities some £8.1 million this year. That reflects another element of the absurdity: the expense of long-term temporary accommodation contracts that the council was encouraged to enter into under the previous cap regime.

[Ms Buck]

Does the hon. Gentleman agree that two years ago, when the Labour Government proposed changes to the broad market rental area that would have impacted on Westminster, the council not only opposed that and asked us to lobby against it, but said that it would seek judicial review?

[Mr Field]

I do. The hon. Lady and I have done work and spoken in debates here over many years, but it is absurd that there is a massive incentive for local authorities to work within that system, and that they will lose a significant amount because of the cap system.

The local connection guidelines must change because, again, there is a phenomenal incentive for people to come to London, particularly central London. It is understandable that people from established communities abroad would want to be in central London, and I share some of the concerns of Opposition Members about tampering with ideas about local connections. However, in relation to the requirement on a local authority to provide housing, it has been suggested that we consider a three-year period instead of the existing six months out of 12. There is no doubt that central London remains an extremely attractive place in which to live, and it is important to ensure that only families most in need of temporary accommodation are here.

I understand the knock-on effects—I see the hon. Member for West Ham (Lyn Brown) shaking her head. I understand that part of the difficulty is that wherever the boundary is drawn the knock-on effect will mean that in Barking, Dagenham, Newham and so on there will be many more people, and that is equally a wrong way forward to a large extent. I hope that we will implement the caps for new claimants with immediate effect, because nothing would be worse than having too long a gap, such that there would be an incentive for people to enter into long-term contracts before the cap comes into effect.

I appreciate that many hon. Members want to speak, but I want to provide a bit of balance. I am broadly supportive of what the Government are trying to do, but they must consider seriously the specific problems in London, which I am sure will be articulated elsewhere.

It is only right to put another side of the story. A housing provider in my constituency—St Mungo’s—is dedicated to providing a recovery solution for homeless people, and I have worked closely with it during my time as an MP. We know that finding employment must be part of homeless people’s recovery. St Mungo’s welcomes the Government’s promise of further support for those who live a long way from the labour market. The people it works with have many problems, which have contributed to their joblessness and homelessness. It is worried about the announcement that jobseeker’s allowance claimants will have their housing allowance cut by 10% if they have not found jobs within a year.

Many Conservative Members welcome the review of the housing benefit system, because its flaws have become glaringly obvious to those of us who frequently deal with housing cases. I probably speak for all London Members when I say that housing and immigration are the two biggest elements of our work load. Given the great financial straits facing our country, the case for reform is more compelling, but I share the concern of the hon. Member for Hackney South and Shoreditch, and I hope that the Minister will respond to it. Urgent as the need for reform is, there must be proper consultation and an emphasis on the issues particular to the capital. I fear that if we do not change the system, we risk undermining the most compelling aspect of the case for reform, which is that the measures must be primarily about fairness, with hard work rewarded and the truly vulnerable protected.

[Several hon. Members]

rose—

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[Emily Thornberry]

Much more than I could possibly have hoped for, although I have to say that most of my speech will appear on my website.

[Mr Gary Streeter in the Chair]

In some areas of the country—my constituency is an obvious example—there is a serious mismatch between earnings and housing costs. The average worker in my constituency earns £20,000 a year and pays tax on that. The average rent for a two-bedroom flat in inner north London, which is not the most expensive part of my constituency, is more than £17,000 a year. That leaves an average working parent with less than £60 a week for food, clothes, travel and council tax. It is clear, therefore, that there has to be some form of intervention in areas where the rent is so high. Either we build more affordable housing—I am sure that everyone here knows and agrees that that is exactly what we should do with the money—or we intervene to subsidise rents and put people in the private market.

[Mr Mark Field]

This lack of building has been a problem not only over the past 13 years. Does the hon. Lady not recognise, however, that there has to be some sharing of the blame? During the past 13 years of the Labour Government, there was no substantial building, and that is the nub of the problem, particularly in central London.

[Emily Thornberry]

Many of us in the Chamber have been major campaigners on that issue, and I know that the hon. Gentleman is, too. I was completely outraged that the Lib Dem council in my area, which was in power for 10 years, built only one flat for social rented housing for every seven new flats that were built, which is completely inappropriate in a constituency such as mine, given the needs that it has.

Of the 850 Islington families in flats with two or more bedrooms who are claiming LHA, or housing benefit in the case of private landlords, more than half—more than 500 families—will lose benefits under the new capping rules, and some will lose more than £100 a week. Where will they go? Is there room for them in Thornbury and Yate? Will they move into cars? Where do the Government expect them to go when they lose all that money? They certainly will not be able to keep their flats.

To make an obvious point, expecting housing benefit claimants to live in the cheapest 30% of private rented flats will cause real hardship in areas such as London, where housing is already in short supply. The differential between the median and the 30th percentile might be small in some areas. For example, in central Lancashire—perhaps in Thornbury and Yate—there is less than £6 difference between a two-bedroom flat on the median and one on the 30th percentile, and people can get a family home for less than £120 a week. However, in my constituency, in Islington, the difference between the median and the 30th percentile for a two-bedroom flat is £40 a week—the difference between £330 and £290 a week. Where will people get that money? What will happen? It is fundamentally unfair to expect claimants in my constituency to make up a housing benefit gap of £40 a week when claimants elsewhere will be expected to find only £6 a week.

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[Steve Webb]

Clearly, there is a differential impact in different parts of London; I do not dispute that for a second. Taking London as a whole, just a little under a third of properties will be available within the caps. Obviously, the figure will vary from area to area, and there are particular issues that affect central inner London.

[Mr Mark Field]

Will the Minister briefly give way?

[Steve Webb]

I will carry on just for now, because I want to respond to as much of the debate as I can.

The question is, how can we appropriately look at this matter? Some of the figures that have been quoted for losers assume that nothing changes and that people will go on living exactly where they are living and making the same choices, but the whole point of the reform is to have an influence on the housing market, and to try to do something about escalating rents.