Housing Benefit

Mike Hancock Excerpts

Tuesday 13th July 2010 Westminster Hall

[Meg Hillier]

Does my hon. Friend wish to make an intervention?

[Mr Mike Hancock (in the Chair)]

Order. Do not look for them.

[Meg Hillier]

There was some agitation behind me, Mr Hancock, and I thought that my hon. Friend wanted to intervene.

We must also consider the annual reductions in housing benefit payments. I can see why the Government see that as appealing from the point of view of money, but the impact on those affected is enormous—1,642 claimants will be affected by the bedroom size proposals in my borough alone, which is devastating. Shelter has kindly done some research that shows that the average three-bedroom household in inner-east London, which is a band in my constituency, will need to find an additional £35 a week to keep a roof over their heads. I do not know how people on the minimum wage or benefits can do that. For example, how will a pensioner surviving on £98 a week find that additional £35? Perhaps they would not be in a three-bedroom property, but they would still have to find some extra money. How will someone on the minimum wage—£218 a week—find that additional money?

Almost half of local housing allowance claimants already have shortfalls of almost £100 a month. Shelter is concerned, as am I, that the cuts could push many households over the edge. I have great faith in the Minister, because he is an expert in the area, and he has a great opportunity to do something positive for housing benefit. I hope that he is not a fig leaf for the coalition’s proposals, that he will genuinely look at the problems that the proposals throw up, and that he will come back with solutions that will, at best, ameliorate those problems, or delay them while better work is done to lessen the impact.

It is rare to have a Minister who is an expert. Governments often seem to conspire to put people in office who do not know much about their subject, but in this case we have a Minister who knows what he is talking about and can make a difference. I urge him to look into the matter with all vigour. I would also like him to answer some specific questions. What is the timetable for the welfare reform Bill, and are there any plans for the implementation of its measures, should the House pass it? Were it to go through the House in the autumn at a fast pace, when would the measures be brought in?

Will the Minister look at the following matters, which would not require primary legislation through that Bill: the reduction from the median to the 30th percentile for claimants of local housing allowance; the cap for each property size; the increase in discretionary housing payment, which I will touch on in a moment; and the change to non-dependent deductions? The Government can change the rules with a stroke of the pen, as we saw in the Budget, but that stroke of the pen devastates my constituents and many others. Is the Minister planning to consult on that, because we have seen very little consultation? We have not even seen an impact assessment. Rather than having evidence-based policy, for which the Government parties pressed when they were in opposition, it seems that policy is being made before information is provided to back it up. That is not the right way to go about things, and I hope that an impact assessment will soon be forthcoming.

I must mention the discretionary housing payment in the short time I have left. The Chartered Institute of Housing has conducted an analysis that shows that the suggested additional £40 million, which to the average man or woman might sound like a lot of money, does not go very far. If it is spent solely on making up the shortfall in rents due to the proposed drop, it would support only 4% of claimants facing the drop from the 50th to the 30th percentile for one year. It is just not enough. I do not know what will happen in my borough when people turn up to the housing office looking for alternatives, having been kicked out of their private rented properties. The borough will find it difficult to deal with the private landlords with whom it already has relationships, because they will not be keen to take people on and there will not be enough social housing. I hope that the Minister will address that point.

I am confused about some of the proposals and hope that the Minister can clarify them for me. I have already mentioned the welfare reform Bill, but what is the timetable for the more general changes and for the publication of an impact assessment, and what will that impact assessment cover? What is the rationale behind the proposals? We see a Government who are joined up in their coalition, and we have talked a lot about joined-up government over the past 13 years. As a former Minister, I am aware of the challenges that that presents, but to see such a disjoint in one Department is quite extraordinary. On one hand the Secretary of State is telling social housing tenants, “Move for the work and travel around,” and on the other hand private rental tenants are being forced to move, not necessarily to where the work is, but to poorer, cheaper places. It would therefore be helpful to hear the rationale behind the proposals. Will the Minister be candid and explain what discussion he, as an expert on the matter, has had with the Secretary of State?

What transitional arrangements will be in place for affected families? Will the change be sudden, because at the moment it seems that there will be no such arrangements? What support will councils be given, particularly with regard to discretionary housing payments? What will be the impact more generally on housing needs teams, which are already stretched? What conversations has the Minister held with the Department for Communities and Local Government?

If the Government’s apparent theory is backed by action and we see an influx of tenants seeking cheaper properties, certain boroughs will be particularly badly affected, so what support will there be for those boroughs? My colleagues, undoubtedly, will want to refer to that concern. Will the Minister share with us any analysis of an impact assessment on the private rented sector? I am not sure whether that will come in the impact assessment that has been proposed, but I have already heard landlords say that they will not rent to people on benefits. Will he tell us candidly what the chances are that we will make any difference by banging the drum about that in the debate? Have the Government made up their mind? Is that the style of the new Government, or is the Minister genuinely listening?

The Conservative Mayor of London and the Labour chair of London Councils have joined together—in the spirit of coalition government, I suppose—and have written to the Government to point out the error that they have made. In seeking to grab a headline and make a saving, the Government will have a huge impact on our capital. I do not claim that housing benefit is perfect, but to change it in such a way is just not the way to proceed. Where is the voice for London in the Government? I hope that the Minister will hear what we are saying today, as many London Members are present to hammer home our points. On this occasion, I agree with Boris, which is not something that I expect to say regularly. At least we have some voice for London through him and through Mayor Jules Pipe, who chairs London Councils.

In the past, Westminster council sold homes to discourage poor people from living in the area. Now we see a Secretary of State colluding in that by depriving lower-income households of the opportunity to live in whole swathes of London, unless they qualify for social housing. We can draw our own conclusions about what is happening, and you, Mr Hancock, are experienced enough for me not to have to lay it out. The quiet man is roaring in his own way, and it is our constituents and London’s economy that will suffer.

[Mr Mike Hancock (in the Chair)]

Thank you for being short and to the point. Hon. Members will have to be fair to each other, because some will be squeezed out of the debate if others talk for too long.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Mike Hancock (in the Chair)]

Order. If hon. Members who wish to speak do so for four minutes, I will be able to call nearly everyone.

--- Later in debate ---

[Mr Heald]

Of course.

[Mr Mike Hancock (in the Chair)]

Order. I urge hon. Members to consider that at least six more people have indicated that they wish to speak. If we have such a rate of interventions, they will not all get in. Please can we be fair to each other?

[Lyn Brown]

I am grateful, Mr Hancock. Other people would like to contribute to the debate but will probably find it impossible.

I want to make it absolutely clear that the hon. Member for North East Hertfordshire (Mr Heald) is talking about one case that has been cited in the Daily Mail, The Mail on Sunday or wherever. In Newham, in London, the rent for a five-bedroom house is £350 a week, not the ludicrous amounts that the hon. Gentleman is talking about. Perhaps he will focus his remarks on the real world, rather than the world of Notting Hill.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Mike Hancock (in the Chair)]

Order. I intend to call Damian Hinds next, and then Karen Buck and Caroline Lucas. The winding-up speeches will start at 12.10 pm. Both the Minister and the Opposition spokesperson have agreed to speak for 10 minutes each, which I hope that we can respect. We can still get five more speakers in if we play the game.

--- Later in debate ---

[Several hon. Members]

rose—

[Mr Mike Hancock (in the Chair)]

Order. There are three more Back Benchers who wish to speak. If they take five minutes each, we will be laughing.

[Ms Karen Buck (Westminster North) (Lab)]

William Beveridge deferred any strategy for dealing with housing costs on the ground that that could not be done while there were still significant regional variations. To paraphrase Lloyd Bentsen’s famous comment to Dan Quayle when Dan Quayle compared himself to Kennedy, “George Osborne, you are no William Beveridge.”

Our problem is that we have had a 30-year policy of shifting expenditure from the construction of affordable housing to the housing benefit budget. That includes, I have to say, decisions made by the Labour Government, which I did not agree with at the time. We are dealing with that now in the worst possible way.

Four categories of people are involved. There is a very small number of very extreme cases, which the Labour Government were planning to deal with through taking out the most expensive properties at the top of the market in the local housing allowance calculation, which was a reasonable one. We will not support such cases, but we have to have a sensible strategy for dealing with those extremes. I do not think that any Labour Member would disagree that pumping billions of pounds of taxpayers’ money into the pockets of private landlords is an insane way to go about a housing policy, but what is proposed is more insane.

I say that because of the other three categories. One is pensioners who never expected to be on housing benefit but who, many years into their private tenancy, as the rents have gone up, have found themselves caught. The second is people in the private rented sector who were working but who have lost their jobs or whose incomes have gone down and who now find that they have to claim housing benefit, possibly for a transitional period. The third category is people—families in many cases—in priority need, who either could not access social housing or were deliberately placed in the accommodation that we are talking about by local authorities. All three categories but certainly categories one and three are made up of very vulnerable people.

I have a few questions for the Minister and I would be grateful if he confirmed that he will write to all hon. Members with replies to these questions and those asked in the excellent opening speech by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). Can he confirm that placing homeless households in private rented accommodation was a deliberate policy of local authorities and Government, and remains so? Is he aware of how many households have been either directed to or maintained in private lettings over the past five years as a deliberate housing policy?

What proportion of households making applications and accepted by local authorities as homeless had as the main reason for their homelessness acceptance the end of an assured shorthold tenancy? I believe that it is the majority of cases; it is the main driver of homelessness.

If a household is in priority need and faces a reduction in housing benefit below the rent payable, will the local authority continue to have a homelessness duty to it? How many private tenants on housing benefit currently face a shortfall between local housing allowance and the rent charged, and what is the average amount? Hon. Friends have cited some figures. Shelter has come up with the figure of 50% of all housing benefit claimants and cited the figure of £100.

What assessment has the Department made of the numbers overall and broken down by different categories—pensioners, families with children and those of working age—and by local authority area for additional homelessness applications that are expected as a result of the policy? What assessment is being undertaken of the implications for local authorities of the movement of substantial numbers of families with children, pensioner households and others, referred to by my right hon. Friend the Member for Barking (Margaret Hodge)? I am thinking in particular of the capacity to provide school places and the implications for children’s services and adult services of dealing with large numbers of people with additional needs in a very short time scale.

Is it the Government’s intention to introduce new legislation to change the homelessness duty? What discussions are being held with local authorities about changes to the homelessness duty and the local connection criterion? Is the Minister confident that local authorities that will be the recipients of large numbers of people moved as a consequence of housing benefit changes are content to receive additional large numbers of low-income and, often, vulnerable households? What discussions have been held between the Department for Work and Pensions and the Department for Communities and Local Government about the introduction of new homelessness legislation to accommodate that difference? Will the forthcoming impact assessment indicate the Government’s confidence as to the availability of additional private rented sector housing at the reduced local housing allowance levels in all areas? What assessment has been made of the market capacity and ability to reduce rent levels?

I have a number of other questions, but I shall write to the Minister because other hon. Members want to speak. I am absolutely confident that the Department does not realise the full gravity of what is proposed.

[Mr Mike Hancock (in the Chair)]

I call Caroline Lucas. Please remember the time.

[Caroline Lucas (Brighton, Pavilion) (Green)]

I congratulate the hon. Member for Hackney South and Shoreditch (Meg Hillier) on securing the debate.

The Government’s housing benefit proposals demonstrate beyond doubt that they are intent on pursuing plans that overwhelmingly penalise the poor—forget any nice words about our being in this together. As many housing charities predict, the proposals will make thousands of people homeless, as cuts to housing benefit combine with increased repossessions and higher unemployment. It is an absolute scandal that that should happen in one of the richest countries in the world in the 21st century—what a damning judgment on what was supposed to be a new politics.

I am deeply concerned about the impact in my constituency. We have heard a lot about London, and understandably so, but I reiterate that many areas, particularly beyond London’s periphery, are also suffering a huge amount. In Brighton, Pavilion, for example, someone would have to earn more than £50,000 a year to buy an average-priced house. No wonder that nearly 10,000 households are on the waiting list for affordable housing in the Brighton and Hove area. At current rates, that list will take more than eight years to clear.

The increase in housing benefit bills over recent years is not, as the Government would have us believe, the result of some epidemic of scroungers, but, as others have said, of the considerable growth in the number of people who are being forced into the private rented sector, where rents are almost double those in social housing. Again in my own constituency, the private rented sector makes up about 21% of the housing sector, which is much higher than average. My surgeries are full of people who are already struggling to pay rent and to find alternatives to cramped, overcrowded and overpriced accommodation, and the Government’s plans can only make that worse.

If we are to reduce the housing benefit bill in the long term, we should be building more affordable housing, which should, of course, be green, decent and fuel-efficient housing. We need a reduction in VAT on repairs to encourage people to put older properties to better use and we need to support people in bringing empty properties into use. We also need to support housing co-ops and other forms of affordable housing.

In the meantime, however, the Government’s proposals will simply make the situation worse. Particularly pernicious are the proposals to reduce the percentile of local market rents used to calculate LHA from the median to the 30th percentile and to cap the maximum LHA payable for each property size. Those reforms will lead to a significant reduction in the amount of LHA received by every claimant, exacerbating widespread problems with rent shortfalls and increasing barriers to accessing accommodation. As a result, swathes of London and the south-east will simply become unaffordable for people on LHA, which is likely to push them into debt, eviction and homelessness. Behind the statistics, it is important to remember the individual families many of us see in our surgeries, whose hopes and aspirations are being wrecked every day. The Government’s proposals will simply make things worse.

We are short of time, so I will make one final point. The hon. Member for East Hampshire (Damian Hinds) talked about increasing discretionary housing payments, or the DHP budget, as an additional safety net to support the thousands of claimants who will face shortfalls once the cuts to LHA are introduced. Let us remember, however, that the Chartered Institute of Housing has undertaken analysis showing that if the additional £40 million is spent solely on making up the shortfall in rents due to the proposed drop, it will support just 4% of the claimants facing the drop from the 50th to the 30th percentile for a year.

If that were not enough, from April 2013, receipt of full housing benefit for claimants who can be expected to look for work will be time limited to 12 months and then reduced by 10%. Attaching sanctions to housing benefit is an extremely unfair way of trying to help into work claimants who could work. Indeed, after the Budget, I have to ask where the jobs are that we expect these people to find. In the context of rising unemployment, it is hugely unjust to penalise people who cannot find work, and the Government’s proposals will simply lead to an even greater increase in poverty.

Let me finish with some questions. What kind of transitional protection measures will be in place for the people affected by the Government’s proposals? Have the Government considered the knock-on costs for local authorities and the knock-on effects on the private rented sector? Finally, to reiterate an earlier point, what is the point of an impact assessment that is produced after the proposals?

[Mr Mike Hancock (in the Chair)]

Thank you very much. Before I call the last Back-Bench speaker, I apologise to everyone who wanted to speak but whom I could not get in. The last speaker is Emily Thornberry. It would be helpful, Emily, if you could remember that we have given an undertaking to start the winding-up speeches at 12.10 pm.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Well, six minutes.

[Mr Mike Hancock (in the Chair)]

More than you could have hoped for, I think.

[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.