Welfare Reform and Work Bill (Third sitting) Debate
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Neil Coyle
Main Page: Neil Coyle (Labour - Bermondsey and Old Southwark)Department Debates - View all Neil Coyle's debates with the Ministry of Justice
Welfare Reform and Work Bill (Third sitting)
Neil Coyle Excerpts(9 years, 3 months ago)
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The Chair
Shall we hear from the others—Mr Graham and Mr Donaldson?
Alastair Graham: The exemption needs to be couched in the widest terms possible to ensure that people with learning disabilities and other vulnerable groups are properly protected from the impact of the legislation. It is fairly widely recognised that legitimate extra costs are involved in housing people with learning disabilities and other vulnerable groups. However the exemption is phrased, we need to make absolutely sure that we protect those vulnerable groups in the years going forward.
Mike Donaldson: We support the exemption of supported housing or specialised housing, because it operates completely differently from general needs housing. If it is not exempt, it will put very vulnerable people at risk. Given that the objective here is to reduce the housing benefit bill, we also think that housing which has been provided to people who are not in receipt of benefits should be exempt too, particularly intermediate market rent. We credit-check these people to make sure that they can afford the rent from their own means and do not need to be supported by the state. We think that that should be exempt as well. There is a technicality around affordable rent. Affordable rent, which was introduced by the coalition Government, is a gross rent and it includes a large slice of service charge. The Bill talks about rent, not about rent and service charges. That is a confusion, and it needs to be looked at. It is a technicality, but it does need to be sorted out.
David Orr: I think the Bill identifies, broadly speaking, the right areas for considering exemption. The supported housing exemption as presently defined in the Bill is too narrow, and we would argue that it should be what is called specified housing. This is housing which is not covered by the universal credit arrangement. DWP has already accepted that this kind of housing should be exempt from those normal arrangements because of the amount of care and support that is provided.
A separate area that is not mentioned at all in the Bill is relatively recent new large-scale voluntary transfer organisations. Their business plans are very much under pressure, because they entered into 30-year contracts based on a series of assumptions about rent that were formally approved by the Government. They are not going to be able to meet their promises—or, in some cases, meet their contractual obligations—and they are under very, very severe pressure. We think that there should be exemptions there.
Neil Coyle (Bermondsey and Old Southwark) (Lab)
Q 148 Thank you all for coming, and for the GSCE economics refresher for the Minister, which was really useful. My question comes straight back to that issue of supported housing. The point was made that in the previous changes of universal credit and the benefit cap, there were specific exemptions for supported housing. Why do you think that the Government have failed to make the same exemptions applicable to this change? Were discussions held with any of you before the Government announced their plans? What impact do you think it would have on the services in the longer term if the full specified accommodation exemptions were not made?
Alastair Graham: No discussions were held with ourselves, and I think that that is the case across the sector more broadly as well. The impact, as I said earlier, will be felt by people who are some of the most vulnerable in our society. Most of them do not work. Only 7% of people with a learning disability currently work, and most of them would still fall within housing benefit. In relation to the answer to a previous question, they will not actually feel any benefit from the reduction of only 1% that would apply to them. Because there is no explicit exemption in the Bill, this is causing a lot of anxiety among individuals with learning disabilities and their families, because they simply do not know what is going to happen.
I understand that the Bill makes provision for the Secretary of State to make further exemptions down the road, but until we know what those exemptions are going to be and how they will be couched, there is an awful lot of uncertainty. This is causing anxiety which I think is largely unnecessary, because I do not really believe that the intention behind the Bill is to embrace supported housing. I urge clarification on this as soon as possible, so that people are not placed in that position. We are here in September, and we are only talking about April. It is not very far away. We will need to send out rent letters in the near future. We need to be able to give some reassurance, both to our existing tenants and their families and to potential investors if we want to carry on trying to get private investment at scale. As I said earlier, that is going to end up saving money for the public purse, not costing money.
David Orr: It feels to us as though there is little clear explanation as to why this more limited category is in the Bill. If the Government have already accepted that specified accommodation is different, then they ought to accept that across all of the arrangements that affect it. I think you would have to ask the Chancellor why this decision has been made, but there is a very strong case for ensuring that all specified accommodation is exempt from this measure.
Neil Coyle
Q 149 We are primarily talking about accommodation for people fleeing domestic violence, people with learning disabilities and mental health problems, and homeless accommodation. They are exempt elsewhere. You are suggesting that this would cause complexity rather than simplification, which is something that the Government are striving for. Do you think that this has come about by design or by accident? Do you think it was a drafting problem? I notice that the Minister was shaking her head, but I hope that there will be clarity that this was an accident rather than a deliberate omission.
Neil Coyle
Well, I am asking it. Do you think it was design or accident?
David Orr: I am not prepared to opine on the thinking of others, but it will not aid simplicity in a very complex rental environment. It is just another level of complexity. The long-term implication is that there will be less housing of this kind if this measure goes through. I think that will be problematic.
Jess Phillips (Birmingham, Yardley) (Lab)
Q 150 I am terrible at parliamentary protocol, but I feel that I have to declare now. If you look in the Register of Members’ Financial Interests, you will see that I worked for Women’s Aid within the past six months; there it is, on the record.
I want to get some further answers on supported accommodation. It is my experience that, with the reduction of funding for Supporting People and other local authority supported housing schemes, housing benefit-plus, as we would call it in supported accommodation terms, has picked up the slack for keeping those places open. There are lots of refuges and lots of places like those you are describing for people with learning difficulties where funding for Supporting People was reduced. Organisations acted well to keep opening new beds for vulnerable people through housing benefit regulation. Will this have an effect on the supply of accommodation for, for example, victims of domestic violence, where there has already been a reduction due to the cuts in Supporting People? I ask you, Mr Graham.
Alastair Graham: I do think that the implication is that it will be more difficult to provide full supported housing and new supported housing for many types of vulnerable groups because—firstly, from a private investment point of view—it is difficult to lever in private investment on its own or in combination with capital grant, if you have to show a business model in which your rental income is reducing year on year for the next four years but there is profound uncertainty beyond year four.
As David mentioned earlier, we thought, in the sector, that we had some certainty on this for 10 years and it was much easier to have those conversations with private lenders on that basis. Any kind of new housing or new proposition that we want to make will be a lot more difficult if we have to have a business model that shows that reducing rental income.
Hannah Bardell (Livingston) (SNP)
Q 172 I thank the panel for joining us. I would like to pick up on the removal of the targets. It seems to me that the targets are being removed because the Government had no chance of meeting them. That in itself is a very dangerous move. I also want to pick up on some of the observations that have been made about the rise in the national wage, which as we all know is not a living wage, because the living wage has been set independently at £7.85 outside London and £9.20 within London. Even the Institute for Fiscal Studies said that the welfare cuts, coupled with the moderate increase, will lead to only a 13% benefit, and the vast majority will have their income reduced significantly. The Scottish National party believes that we should not remove the targets. Do you agree with that? At the very least, should we delay any removal so we can properly consider and review what impact it will have?
Alison Garnham: Yes, I would support that. I have said that I am in favour of keeping the targets. It is worth pointing out the kind of change that was driven while child poverty was falling. We know that as people’s income was improving and child poverty was falling there was more spending on fruit, vegetables and children’s books, and less spending on tobacco and alcohol. We saw improvements in child wellbeing in 36 out of 48 OECD indicators. It was not just about people simply getting more money; there were big impacts on what was happening to families, too. That is one of the reasons why we need to continue to track it. One of the important things about the indicators we have is that we have an income series that goes back to 1961, so we can compare historically. We can also compare internationally, because these are the measures used in the EU, the OECD and the International Monetary Fund, so we are able to see how we are doing in relation to other countries.
Dr Callan: May I point out some other drawbacks? It has already been mentioned that in the recession it looks like child poverty is falling, which does not make sense. There are other reasons why the targets were unhelpful. There is no sense of how families’ circumstances change when they move in and out of poverty across a certain line, and there is no distinguishing between those a long way from the line and those just below it. Obviously it is nuanced—you do very careful analysis, I appreciate that—but we get into this poverty-plus-a-pound issue, where somebody is just over the line but their life circumstances may not have changed one bit. It is misleading, really—
Neil Coyle
Q 189 Alison, you mentioned your disappointment at the abandonment of the consensus on tackling child poverty. What does the panel think is behind the Government’s poverty of ambition on measuring in-work poverty? Is it about the costs of measuring, or is it about a lack of faith in the living wage to tackle in-work poverty? Is it perhaps that the impact of changes to tax credits or other benefits will undermine the national living wage? In the context of the discussion about tackling the symptoms and the cause, what are the costs of getting this measurement wrong?
Matt Padley: We have already heard that the estimated cost to the country of child poverty is between £25 billion and £29 billion a year. If you are not tackling and addressing child poverty, there is a significant cost to the country. There are also costs to those children who grow up in households without access to lots of the things that the rest of society see as providing a minimum standard of living, so there are individual costs as well as national costs. Is there a poverty of ambition? Given the broader economic context and, as I said earlier, the perverse results you get from a relative income measure, it has become easier over the past few years to dismiss that measure as not telling you anything particularly useful. However, I think that in combination with all the other measures that are currently in the Child Poverty Act 2010, it does tell us something useful and it does enable us to track low income. We know that money matters.
Professor Gordon: On the subject of costs, I emphasise that we know from good evidence that growing up in poverty has long-term health consequences in terms of type 2 diabetes and coronary heart disease, which are then expensive to treat. Poor children tend to have worse educational outcomes and get worse jobs, and therefore pay less tax. So the economic costs of child poverty are quite high, particularly in the long term. Getting it wrong means that you have a worse society and less money to spend.
Alison Garnham: I agree with that. It leads to a health divide. Children who are far behind are more likely to have lifelong limiting illnesses, to die younger or even to die on the road, to be nine months behind in education and to have low self-esteem. In terms of poverty of ambition, one of the problems is that many of the current policies fall most heavily on low-income working families. For example, 60% of the cuts to benefits and tax credits have affected low-income working families. So that is definitely something that needs to be tracked to see what its impact is.
Rather than get rid of the targets, another approach would have been to say, “Well, let’s lengthen the target. We have gone through a recession and it has been particularly difficult to reach the target, so let’s lengthen the period of time that we have to actually achieve it”. As David said earlier, child poverty is very expensive. Donald Hirsch modelled this for us. The impact of high child poverty in terms of the cost of services and the cost of benefits is now about £29 billion. If child poverty rises by nearly another million, as predicted, that cost rises to about £35 billion a year.
Dr Callan: I am not convinced that there was a great political consensus about this issue before 2010. In the debates on the Child Poverty Bill, serious people— Lord Freud in the House of Lords and Andrew Selous in the Commons—raised issues such as the £170 billion that we poured into tax credits over a six-year period.
Neil Coyle
Q 190 So what was the parliamentary vote? There might have been individual voices, but what was the parliamentary vote?
Dr Callan: It was very difficult. There was no developed alternative strategy, and I think that there is now a life-chance strategy.