Welfare Reform Bill

Mark Lazarowicz Excerpts

Wednesday 9th March 2011 Commons Chamber

[Mrs Anne McGuire (Stirling) (Lab)]

I am delighted to follow the hon. Member for West Worcestershire (Harriett Baldwin). In June last year, I made a contribution to a debate in the House on welfare reform, in which I congratulated the Secretary of State, then new to his post, on the sentiments that he had expressed on reforming the welfare system in this country. At that time, I said that he had used a broad brush, and that we had not yet seen any details. Frankly, we still find ourselves in that situation today.

Like other Labour Members, I welcome some aspects of the Bill. The introduction of the universal credit and the moves towards simplification are certainly proposals that we can endorse. Most of us, and most of the organisations that we communicate with, welcome those developments, but there is still serious concern about significant aspects of the Bill. In the time available to me, I want to concentrate on just a couple of those aspects.

First, the Bill is skeletal in the extreme. The clauses have definitely been drafted with a broad brush, declaring an intent rather than giving details of what will happen. For example, what exactly does

“benefit rates for people not in work will generally be the same as under the current system”

mean? How will “generally” impact on the specific? How will individuals know, when deciding whether to support the Bill, what is actually going to happen if work is not a realistic option for them? I have rarely seen a Bill in which so much depends on regulations that “may” happen—[Interruption.] I do not know which hon. Gentleman is chuntering over there, but I can give the House an example from clause 4 on entitlement. Subsection (2) contains the words “Regulations may provide”, and subsection (3) states that “regulations may specify”. Subsection (7) states that “regulations may specify circumstances”. And so it goes on.

We are not being asked to deal with a major piece of welfare reform here; we are being asked to buy a pig in a poke. We do not know the details. The Secretary of State made great play of the fact that this will form a contract. Well, in all contracts, the devil is in the detail. I welcome the comment of my right hon. Friend the Member for Birmingham, Hodge Hill (Mr Byrne) today that he is not prepared to sign up to the Second Reading of the Bill until we have seen the details. We have so many unanswered questions. What will happen when council tax benefit is abolished? Is it going to be replaced by a grant? How will that be assessed? How is it going to be managed?

I must point out to Conservative Members that it is not only in Labour constituencies that the Bill will have an impact. It will do so in the constituencies of Members across the Floor of the House, and individuals in those constituencies are now worrying about whether they will be able to maintain themselves in their own homes. What will happen to those who fall off the edge when their employment and support allowance runs out? Surely it is the right of any disabled individual in a civilised society to be supported if they are unable to work. Frankly, the Secretary of State’s comment about reviewing people whose impairment will not change throughout their lifetime was absolutely astonishing, and I think it did him no great credit. I would not like to explain to the parent of a deaf-blind child that they needed to bring their child for a review every so often—just to make sure that the child was still deaf and still blind.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like my right hon. Friend, I have received representations from many constituents who have a similar concern. Does she agree that, regrettably, those parents who have heard the Secretary of State today are likely to be even more worried than they were at the start of the debate by his very refusal to rule out the type of continued reassessment about which we are so concerned?

[Mrs McGuire]

I agree wholeheartedly with my hon. Friend. I believe that this is one of the issues causing the greatest concern among individuals and families.

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[Mr Leech]

I was just coming to that. Yes, I do think it is unfair.

The Bill proposes that from April 2013 the local housing allowance should be uprated in line with the consumer prices index rather than real rent increases. I shall avoid the temptation to reopen the debate about whether RPI or CPI is a better measure to use. I merely point out that the Government do themselves no favours by picking and choosing which measure to use. If CPI is a better measure of inflation, we should not allow train operating companies to increase train fares in line with RPI, but that is a debate for another time. I recognise that the current arrangements do little to keep rents low, but there is a real danger that rents will increase at a much faster rate than CPI. The Government must be prepared to keep a watching brief on increases in rent and to take further action if the changes fail to keep housing benefit in line with rent increases.

I do not think that any Member has raised the issue of under-occupation so far. The decision to restrict housing benefit in social rented homes when tenants are under-occupying properties is ill thought out, and will cause significant hardship to many families who are existing tenants. I recognise that this is designed to bring housing benefit for social-rented property into line with the private-rented sector, but it does not take into consideration local circumstances. In Manchester, for example, under existing rules a family with one child is entitled to queue for a two or three-bedroom property. That is intended to allow for the possible growth of young families and reduce the need for future moves caused by overcrowding. Similarly, in low or no-demand areas where there are a lot of two-bedroom flats, property has been provided to single people or childless couples either to allow children who live elsewhere to visit, or simply to fill the vacancies in hard-to-let properties. As a result, a significant number of families on housing benefit could face a reduction in benefit through no fault of their own. We need to look at this again and recognise that a one-size-fits-all approach will not work. I suggest at the very least applying a gross under-occupation test whereby restrictions to housing benefit could be applied if more than two rooms were unoccupied.

[Mark Lazarowicz]

Another possible circumstance could arise where people who have been in work all their lives and have never had to claim any benefit suddenly find that after 20 or 30 years they have to apply for housing benefit and face the prospect of having to leave the house that they have lived in for decades. Would that not be extremely inhumane as well?

[Mr Leech]

Yes, that is true, and it might lead to people being forced to go into private rented accommodation and not having a protected tenancy.

I want to comment on the proposals to cap benefit at £500 a week for families and £350 for a single person with no children. I recognise that a cap on benefit is justifiable to make work pay, but the cap should exclude housing benefit costs, which can vary dramatically in different parts of the country. Given that the cap on housing benefit for four-bedroom houses will be £400 a week, large families might be expected to survive on as little as £100 per week if total benefit is capped at £500 a week. Under other proposed changes, homeless families will receive only one reasonable offer, which might be of a private rented property that could swallow up the vast majority of their total benefit entitlement. The answer to this problem is to calculate a maximum benefit excluding housing benefit to ensure that families in receipt of benefit have enough to live on, regardless of the cost of housing locally. That is the only way to guarantee that they will have enough to live on.

Finally, although this point is not directly related to the Bill’s contents, I suggest to Ministers that the best way to tackle escalating housing benefit would be to invest properly in affordable social housing and bring more empty homes back into use. That would not only massively boost the construction industry but help reduce rents in the private sector, which is holding tenants to ransom. There would be a short-term cost, but it would give a major boost to the economy and there would be a long-term reduction in housing benefit costs.

--- Later in debate ---

[Andrew Bridgen (North West Leicestershire) (Con)]

I welcome not only the Bill but the fact that the coalition Government have recognised the importance of dealing with the huge financial and social failures of the current welfare system. Within 10 months of being in government, we are introducing a Bill that Labour Members and the previous Government shirked for 13 years. Because of the Opposition’s lack of will, we have the lamentable situation whereby welfare spending, which was £64 billion in 1997, is projected to be £109 billion this year, and 1.5 million people have spent most of the past decade on out-of-work benefits.

I have to say that I agree with the former Prime Minister, Tony Blair, who stated in 1997:

“We have reached the limits of the public’s willingness simply to fund an unreformed welfare system through ever higher taxes”.

If that was true in 1997, with the golden economic legacy that the previous Labour Government were bequeathed but went on to squander, one can only surmise that, 13 years later, we are well over the limit of the public’s acceptance of welfare spending. We all know what, or rather who, were the roadblocks to reform: the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), together with his protégés, the current leader of the Labour party and the current shadow Chancellor. How do we know this? Again, Mr Blair provides the answer in his memoirs when he states, with regard to welfare reform:

“I kept saying to Gordon, quite apart from the fact that both sets of proposals are manifestly right in themselves, if we don't do them, a future Tory government will”.

So here we are, as a Conservative-led coalition Government announcing the biggest and most overdue shake-up of the welfare system since the 1940s. We are replacing the previous Prime Minister’s micro-managed, command, dirigiste benefits system, which has created a benefits culture that is expensive, inefficient and bureaucratic—and, perversely, provides a major disincentive to work—with a system that will ensure that work pays and no one is better off remaining on benefits when offered a job. The universal credit will provide a more logical, efficient, secure and fair benefits system that will demonstrate and reinforce the value of being in work. All Members, and our constituents, should be aware that because of the transitional arrangements no one on benefits will be worse off as a result of the introduction of the universal credit.

Having supported the aims of the Bill, let me move on to the some of the specifics. I have been contacted by a number of constituents regarding the replacement of the mobility aspect of the disability living allowance with the personal independence payment. I am reassured by the Secretary of State’s remarks on this part of the Bill, when he said that DLA and its mobility component will continue and will be reviewed at a future time. However, the Government need to do as much as possible to reassure those who are severely disabled and unable to work that they will be protected and not lose their entitlement. I have had constituents saying that they fear they will lose their social interaction and effectively become prisoners in their own home. Those genuinely disabled people must be informed that these changes will be to their advantage.

[Mark Lazarowicz]

The fact that such an obviously ultra-loyal Government Member has been getting such messages from his constituents suggests that things are not all right on the Government Benches. Does he agree that that is another reason why a bit more consultation and time to consider the proposals would be better than the rushed way in which they are being brought forward?

[Andrew Bridgen]

The Labour party had 13 years to do something. Thirteen years ago, the right hon. Member for Birkenhead (Mr Field) was asked to think the unthinkable; he did so, and then was promptly removed from office. That shows Labour’s commitment to welfare reform. There will be plenty of time for consultation, and I can promise that plenty of Government Members will be fighting for the rights of these vulnerable constituents.

The detection of fraudulent claimants is key to the success of this Bill. It is inexcusable that the current system is costing the taxpayer in excess of £5.2 billion a year because of welfare error and welfare fraud. There could be a role for credit rating firms in helping to identify households where there is reasonable evidence that a fraudulent claim is perhaps being made. This can be achieved with greater data sharing across Government Departments, and with the credit rating agencies, to ensure that the widest possible range of data are available. We also need to ensure that fraud is indentified at the earliest point of the process; again, the credit rating agencies can play a role. I welcome the development of the single investigation service and the three-strike rule in the Bill. We will see a reduction in fraud only if false claimants have a serious fear of being caught, and of facing a penalty if they are caught.

In conclusion, the Bill gives our country the chance to reverse a benefits culture that has become a huge black hole sucking in large numbers of people and huge amounts of taxpayers’ money. The Bill will release millions of people from the misery of welfare dependency and break the intergenerational cycle of worklessness, which costs this country so much not only financially but socially. The Secretary of State deserves great credit for his relentless work over many years on this issue. The successful passage of the Bill will make welfare a floor on which people can build, rather than a ceiling that it is impossible for them to break through.

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[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Like many hon. Members on both sides of the House, many of my constituents and many organisations have contacted me about their concerns about the Bill. Given that many other hon. Members want to speak, I shall highlight only a few of those.

The changes in housing benefit will in due course feed into the housing element of the universal credit. Without going into all the details, there is no doubt that many people in my constituency will be seriously disadvantaged by those proposals. People will be driven into poverty, and in some cases, driven out of their current housing. The fact is that for all the press stories we read—they are sometimes repeated by Government Members—about people living in luxury housing benefit accommodation, any such cases are few and far between, if the ones we read about are genuine, which is doubtful. We should not allow the debate to be distorted by a few extreme examples that, if genuine, need to be tackled.

Hon. Members will recall that in his Budget statement last year, the Chancellor of the Exchequer referred to

“families receiving £104,000 a year in housing benefit.”—[Official Report, 22 June 2010; Vol. 512, c. 174.]

I pursued that with a number of written questions. I have still not had the exact figure from the DWP, which I suspect is because only a handful of families are in that situation. If we are to have a serious debate, we should talk about the realities on the ground, not fake figures that are designed to scare people and distort the real debate that we need to have.

There are precious few areas in which forcing down housing benefit costs will affect market rent. In most cases, the market rent will become further diverged from housing benefit. As I said, as a result, people will be driven out of their housing, and perhaps forced to leave their communities or forced to go to areas where they do not get support from family and friends either in or out of work.

It may be the case, as the hon. Member for Bromsgrove (Sajid Javid) said, that the Government’s changes will affect the market in cases where housing benefit tenants form a large proportion of the rented market. However, in constituencies such as mine, there are lots of student properties, holiday lets and those whom one might describe as young professionals. They are a major element in the rented housing sector, and they are certainly not going to go away, meaning that those on housing benefit will no longer be able to afford their existing housing. That is certainly a concern that has been expressed to me by housing associations in my constituency.

[Stephen Lloyd]

Does the hon. Gentleman see nothing untoward about more than 5,000 families in the UK receiving more than £25,000 a year in housing benefit, which is equivalent to earning a salary of £80,000 to £90,000 a year?

[Mark Lazarowicz]

In each case, we have to look at the circumstances of the individuals concerned. However, the idea put forward by the Government that at the top end of the scale there are large numbers of people receiving £104,000 a year illustrates the distortions that some people want to introduce into this debate.

Another concern that housing associations in my constituency have raised with me is about the over-accommodation rules, which were mentioned by the hon. Member for Manchester, Withington (Mr Leech). Those rules will have many consequences that will be detrimental to both housing providers and individual tenants. One of the housing associations in my area has made the point that it may have a perfectly reasonable policy of providing people with an extra room, so as to allow access visits by children from a relationship, but those people would then no longer be entitled to housing benefit to reflect that extra room.

Parents and carers for adults with autism have also raised concerns with me, although other hon. Members have also discussed those concerns today, so I shall not repeat them. There have also been concerns about child maintenance charges being imposed on those still required to use the child maintenance system.

I want briefly to refer to concerns about the changes to DLA. When I intervened on my right hon. Friend the Member for Stirling (Mrs McGuire), I mentioned the concerns raised with me by a number of parents of children with disabilities in my constituency. Of course I recognise that the children concerned will not be subject to regular reassessments while they remain children. However, those parents have raised with me their concerns that in years to come their children may no longer have their support and assistance in submitting applications for DLA or its successor. Those children will find themselves in a vulnerable position if they are forced to undergo regular reassessments for conditions that will quite patently not change.

Those parents are right to be concerned—indeed, it is not surprising that they are—given that the backdrop to the Government’s policies is a 20% cut in the DLA budget. The Government may say that some of the fears that have been expressed are unfounded. However, if that is the case, they have brought it on themselves by rushing the consultation on DLA, which closed only nine days before the Bill was published, and because so many of today’s measures depend on further regulations being introduced at a later stage. Unsurprisingly, that has led to suspicions on the part of those who are likely to be affected by the changes.

Perhaps the underlying reason for those concerns is that we know that today’s changes are being driven in two ways: by a wish to reform the system—I accept the Government’s good intentions in that—but also by a wish to cut spending. The fact is that the Government’s prime concern is cutting the budget as soon as possible—that is the driver for today’s proposals—not, I am afraid, reforming the welfare system, which is something on which we should all able to agree across the House, if we had the time to discuss and debate it, and if we had the time to consider the views of outside organisations that have real concerns about it.

[Several hon. Members]

rose—