Housing Benefit (Under-occupancy Penalty)

Mike Weir Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

I agree with the right hon. Gentleman, who makes a very important point. I have no doubt that, in some cases, the under-occupancy penalty will jeopardise the arrangement that unpaid family carers have made to allow them to continue to care for a loved one in their own home.

[Mr Mike Weir (Angus) (SNP)]

Is my hon. Friend also aware that the homes of people who have had them adapted to meet specific needs may now be deemed too large, so they may be forced to move out and a social landlord might have to pay to adapt another house for them? Is that not a daft way to proceed?

[Dr Whiteford]

It is utterly daft. I have seen cases in my own constituency where relatively minor changes to local authority support services have destabilised the balancing act performed by families who provide care while juggling work and family commitments. I have met far too many family carers who are already at the end of their endurance, compromising their own health and well-being to continue to care. When carers cannot cope any more or their own health breaks down, the human cost is immense and the financial cost of primary health care spending and the need for expensive care packages are incalculable. The bedroom tax undermines the ability of families to continue to care.

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[Dr Whiteford]

I will not give way.

We should also look carefully at the loopholes in the bedroom tax regulations. Apparently, the meaning of “bedroom” is not clearly defined in the legislation. I heard yesterday that one large housing association in England—the Knowsley Housing Trust—has reclassified 600 properties to protect tenants. That obviously comes at a cost to the housing association, but it is nevertheless a brave and socially responsible move. I am sure that social landlords are also seriously considering bricking up windows or taking down walls.

Other housing associations in England—the hon. Member for Aberdeen South (Dame Anne Begg) referred to this—have called for two-bedroom properties to be exempted from the rules. They argue that it makes no sense for them to build inflexible one-bedroom homes, because they want to encourage long-term tenants who are integrated in the community, not transient short-term tenancies.

Another potential mitigation measure that might help in urban areas is for housing associations to co-ordinate most effectively their waiting and transfer lists, as we have seen on Merseyside. Obviously, that will not work so well in more rural and dispersed areas, but it might help in cities. There is a range of options, and it is important that we look closely at all of them.

To return to a question posed earlier, social landlords need to be consistent in how they deal with arrears. I am not sure we can draw a distinction between someone who falls into arrears because of the bedroom tax and someone who is not under-occupying but falls into arrears because their employment and support allowance has been cut, because their tax credits have been reduced, because they lose their job or because they have fallen sick. The danger is that if some people have their arrears written off and others do not, that will quickly cause resentment between tenants, all of whom are likely to be living on tight budgets and in danger of experiencing significant increases in rent across the board if housing associations budgets come under strain.

[Mr Weir]

My hon. Friend makes a good point. The proposal in the petition to amend section 16 could help current tenants to avoid eviction, which is a good thing, but it will not extinguish debt, which can be chased by other means, such as arrestment of wages or money from bank accounts. We know that from the experience of the poll tax. How many years after the poll tax died were people being pursued for arrears?

[Dr Whiteford]

My hon. Friend’s legal expertise helps him to make a compelling point. Social landlords are aware that more people will be at risk of arrears and that they are being proactive in trying to prevent that from happening, but they are clear that their ability to provide affordable homes depends on their ability to collect rents from tenants. The real problem is that the under-occupancy penalty is unfair and unworkable. Instead of trying to mitigate its worst effects, we should concentrate on changing the underlying problems and abandoning the bedroom tax. In Scotland, we clearly have an opportunity to do that by bringing decision-making powers back to the Scottish Parliament.

Housing associations have historically been seen by lenders as relatively stable, and have been able to borrow money at competitive rates. Mary Taylor, chief executive of the SFHA, has pointed out to Ministers that

“already it is proving harder for landlords to borrow from banks, whether to build or to fund major repair and retrofit programmes. And where they can borrow it is invariably at a higher cost than before, even though interest rates generally remain low and stable. According to Housing Associations, lenders are pointing to the lack of security of rental income arising from Welfare Reform as a key factor in these rising costs. Lenders have to assess risk—and they recognise the very real risks, even if the Government is stubbornly refusing to do so. I believe the Council of Mortgage Lenders raised these issues with the Government over a year ago, but we are still to see action.”

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[Steve Webb]

No, I want to make some progress.

For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.

At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.

[Mr Weir]

What would the Minister say to people who wish to downsize from a larger home to a smaller one, but who find that such accommodation simply does not exist in their areas? In mainly rural areas such as mine, such accommodation does not exist. People could be offered another home many miles away from where they have grown up, from where they work or from where their friends are. This is a ridiculous policy.

[Steve Webb]

I want to stress that there will a range of responses to the under-occupation charge. Some people will move. About one in six of the households we are talking about are in work, and there are options for people who are in work. People could take work. It is often said that there are no jobs, but there are more people working in this country now than in the whole of human history. The number of people in work in this country is now approaching 30 million, so, for some, working or working more hours will be an option. It will not be the answer for everybody, but it will be the answer for some.

[Mr Weir]

rose—

[Steve Webb]

Let me just address the hon. Gentleman’s point before he replies to my reply. I have not finished replying to his first point yet.

There has to be better use of the social housing stock. I pay tribute to the housing associations in the Liverpool area, 20 of which have come together with local authorities to pool their housing stock. I take the hon. Gentleman’s point that a small housing association might have limited stock and limited scope for moving people around, but by pooling their stock, those organisations are able to make better use of it so that more options will be available. I entirely accept his point that the answer to this question will be different in a city from in a remote rural area, and that is why we are more than happy to look at whether the allocation of discretionary housing payments to help people in rural areas is the right answer. As it happens, the allocation of DHPs is slightly over-represented in rural areas, compared with city areas, because of the way in which it has been done. We recognise that there is an issue there.

[Mr Weir]

I thank the Minister for that answer, but he said that there would be a range of responses to the policy, including paying the difference. However, people on housing benefit are, by their very nature, on low wages. They are already under intense pressure from rising energy and fuel prices and from freezes on benefits if they are receiving any. It will be difficult for those people to make up the difference in that way. Their choices will be very limited, and many will be forced to move by financial necessity when the change comes in.

[Steve Webb]

We have already seen the impact of our restrictions in the private rented sector, and we know that people make certain choices. It would be wrong of any of us to belittle those choices, given the financial situation, and I do not do so, but we have seen people on relatively modest incomes in the private rented sector saying that paying £2 a day for a spare room is worth more to them than spending that money on something else. Some people in that sector are making that choice, and that is part of where the saving comes from. Some people in the social housing sector will do the same thing.