Housing Benefit

Debate between Meg Hillier and Hywel Williams

Tuesday 13th July 2010 Westminster Hall

[Meg Hillier]

There is an interesting divide in the Chamber—not on party lines, but on London and rest of the country lines. Those of us who represent London see the reality of the situation. Yes, the housing benefit bill has increased, but tinkering in such a way is not the solution. The subsidy needs reform, but it is flexible, and that flexibility is useful. In the current climate, with job losses looming, we tinker with such flexibility at our peril. If wholesale reform was being proposed, we might want to look at that, but at the moment we are talking about tinkering with the system in a way that damages London.

[Hywel Williams (Arfon) (PC)]

We have a history of using market forces to force down rents, which clearly has not worked, as the riposte by the hon. Member for North East Hertfordshire (Mr Heald) showed.

[Meg Hillier]

One reason why that has not worked is housing shortages. However, the self-denying ordinance that I set out at the beginning of my speech means that I cannot talk about wider issues.

Flexibility is important, but it is being abused by the Government, who are proposing changes overnight that might be in place from this autumn—I look to the Minister to give me guidance about that. People who have signed a six-month tenancy or a tenancy with a six-month break clause, for example, will have little option but to fund that shortfall somehow, as I shall address in more detail in a moment.

There is also a proposal to link housing benefit to consumer price index inflation, which will have a big impact on tenants and landlords. Research by Shelter has shown that CPI increased by 15% between 1999 and 2007, while there was a 44% increase in average rents. Had the local housing allowance been set to increase in line with CPI in 1999, it would now be 20% below the level needed to rent the average property. Whichever way the cut is made, people on low incomes—those people are often working—or on benefits are expected to fund the shortfall from their income to stay living in their own homes.

The impact on children and families is pertinent in my constituency, because some 22% of residents are under 16 and a lot of families need homes. People often come to my surgery because they are unable to access social housing. They are advised that they should look at what can be provided in the private rented sector, and I am sure that colleagues are in a similar position. More than one million children—a third of them in London—are living in overcrowded conditions. The cap will only exacerbate that problem because families will be forced to move into smaller, cheaper properties, and perhaps to push out their teenage children as they get older so that they can afford the rent.

I need to touch on a problem in the north of Hackney—not in my constituency, but in that of my hon. Friend the Member for Hackney North and Stoke Newington—where orthodox Jewish families will be severely hit. Such families typically have more than four children, and many of them live in the private rented sector, so the limit on benefit will have a devastating impact. The council and social landlords in Hackney will be unable to take the strain, so I need answers from the Minister on how councils will be supported in dealing with that.

Of the nearly 40,000 people in Hackney currently in receipt of housing benefit, just over 9,000 live in the private rented sector. Two thirds are in receipt of benefit, but one third are working tenants, many of whom would like to continue to work but, as a result of the proposals, will find a serious shortfall between their rent and the benefit provided for it, and will have very little income to make up the difference. In the three bands for the broad rental market areas that operate in my constituency—inner east, inner north and London central—all properties with more than two bedrooms are above the Government’s proposed cap. That is ludicrous. It means that those in Hackney living in a two, three or four-bedroom property—or a larger property—will have nowhere to go. They could go out of Hackney, but there are not many boroughs they could go to. I am not entirely clear how the Government propose to ensure that people can stay living in London—and, crucially, working in London and supporting its economy—because many people need that benefit to subsidise their rent so that they are able to live locally to their jobs.