Welfare Reform and Work Bill (Tenth sitting)

Peter Dowd Excerpts

Thursday 15th October 2015 Public Bill Committees

[Debbie Abrahams]

Absolutely. The language used is sometimes unfortunate; it leads to a misconception that is commonly put out to the public arena. We all have an obligation to not mislead the public.

Extending the right to buy, which was mooted in the Tory party manifesto and set out this week in the Housing and Planning Bill, may increase homeownership —we all want to encourage homeownership—but without building more social housing, the extension will just reduce the supply of affordable homes for people on low income to rent. What will happen then? The average house price in the UK is more than £180,000. In London, it is more than £460,000. It has been estimated that it would take 22 years for people on low and middle incomes to save for a deposit.

I remind the Government of all the warm words from last week’s Tory party conference about helping people in poverty and with low incomes. There is a practical measure that the Government can take to do something about that, and I challenge them to do so. Housing is one of the biggest costs families face, and the Government’s plan will make the situation worse. Many young people, but not exclusively young people, are living with their parents or renting—the so-called “generation rent”. Inequalities are unfortunately increasing, not only in income but in wealth and assets, such as housing and land. Those inequalities, including the cost and availability of land, are key to addressing the housing crisis.

In addition to the effects of the plans on the building of affordable homes, there will undoubtedly be an impact on housing repair and regeneration programmes. The Local Government Association estimates that the loss in income from rent is equivalent to 60% of all local authorities’ total housing maintenance budget. That is significant. Ultimately, there will be an impact on both the integrity and the condition of the stock, and on maintaining decent home standards.

[Peter Dowd (Bootle) (Lab)]

Is my hon. Friend aware of any Government assessment of the medium to longer-term impact of the policy? If they denude associations of cash now, it saves the Government their £250 million or £300 million, but in the longer term, trying to claw back the lack of investment and denuding of the infrastructure might cost double or triple that.

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[Debbie Abrahams]

My hon. Friend makes a valid point. People whom we should be supporting after their service to our country are unfortunately finding themselves without a roof over their head. I say “unfortunately”; there are means to prevent it. The measure will stop the roll-out of the affordable homes programme and have an impact on armed forces personnel and people leaving care, who are more likely to need affordable homes. A whole host of people will be impacted.

What assessment has been undertaken of the viability of registered social landlords? I know that we will debate that when we come to a later clause, but given the risks that people already face, for example from the introduction of universal credit and the lowering of the benefit cap, housing associations have a genuine concern about how they will measure it in practice. I refer to one of my own local housing associations. I mentioned the £15 million reduction in income from rent; it will have to deal with that, including through redundancies and by rowing back on some of the programmes by which it hoped to upgrade accommodation. What assessment has been made of the risks being shifted to housing associations?

Amendment 21 would compel the Secretary of State to produce a plan within 12 months of the provision coming into force to offset the impact of the reduction in rent, so that the building of affordable homes is not affected. We are asking the Government to say within 12 months how they will stop the building of affordable homes being pared back, as the LGA and the NHF anticipate.

[Peter Dowd]

I am sure that my hon. Friend is not aware of this; I do not know whether the Minister is aware, but it would be interesting if my hon. Friend could check it out in due course. Riverside Housing Association, which is one of my local housing associations, estimates that the rent reductions will require an additional internal subsidy of £12,000 per home built for rent, and an additional internal subsidy of £12 million for the current programme—a 50% increase. Are the Government aware of the implications for building when they take that much money out of the system in one fell swoop? Do they seriously believe that that will not have an impact on housing in the medium term?

[The Chair]

Order. Before I ask the hon. Member for Oldham East and Saddleworth to continue her speech, may I say that the Minister will be on his feet later, so if Back-Bench Members wish to ask him aw question they will be able to do so directly?

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[Mr Vara]

I am grateful to the hon. Lady for her contribution, but I suggest she takes up the issue with the Office for National Statistics, rather than with me, as it is a highly regarded independent body. I am minded to say that the vast majority of the public will agree with the ONS, rather than with her.

[Peter Dowd]

May I ask for clarity? The whole point about the public sector is that it reinvests the money into new houses, new stock, decent homes and so on. The corporate group of the public sector tends to do that—it is part of its raison d’être—but the private sector is not doing it. Will the Minister give his view on that?

[Mr Vara]

I thank the hon. Gentleman for that contribution. I am mindful of the fact that he was a council leader before entering Parliament, and he brings added value to the Committee, and indeed the House, as a result. I will address the issue he has referred to and the argument that there will be a reduction in housing, so if he will please bear with me for a while longer, I will tell him why I believe that these measures will not have the impact that Opposition Members seem to think they will.

The Government have taken the decision to reduce rent increases within the social sector, which is good news for tenants. Just as I did on Tuesday, I pay tribute to the right hon. Member for East Ham (Stephen Timms), who acknowledged on Second Reading that the 1% reduction was a good thing and that he supported it. He is a distinguished Member of Parliament, and I am sorry that the Opposition Front Bench team has been deprived of the benefits he brought to it. He is a former Chief Secretary to the Treasury and a former Department for Work and Pensions Minister, and commands respect on both sides of the House. Given his ministerial experience, he knows the real position, and he said that he felt the 1% reduction was necessary. To be fair to him, he said he had concerns about the housing stock; I will address those concerns shortly, as I said to the hon. Member for Bootle. However, he recognised that the 1% reduction is necessary.

Rents paid by social housing tenants in England will reduce by 1% a year for four years from 2016. That means that by 2020 they will be paying roughly £12 per week less than they would have had to pay under the current policy of increases at a rate of the consumer prices index plus 1%. The policy will also help taxpayers, who are subsidising rents through the rising housing benefit bill. It is interesting that we have heard a lot of comments regarding housing associations, but no one seems to be acknowledging the financial benefit of £12 a week to the people living in those houses.

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We talked about the issues that the modelling shows housing associations face due to the reduction in income. Supported housing providers are vulnerable. They provide supported housing on a scheme-by-scheme basis.

[Peter Dowd]

Does my hon. Friend agree that Government policy on parity of esteem for people with mental health problems, which is trumpeted in relation to health, is not only about health, but about a range of social services, including housing? The Government proposal potentially directly affects parity of esteem for people with mental health problems.

[Debbie Abrahams]

Absolutely. My hon. Friend makes a powerful point. Those housing providers provide housing and support to a very vulnerable group, including people with mental health conditions. The measure will affect their opportunity and ability to live independently and well.

The impact on accommodation for homeless people with support needs demonstrates how damaging the change would be for supported housing as a whole. Over 90% of residential homelessness services rely on housing benefit as a key funding stream. One homeless organisation in the north-east of England has modelled the impact of the change on the 300 beds of supported accommodation that it provides, which accommodate 1,400 disadvantaged people a year. The impact of the 1% rent reduction, assuming that other costs increase by 2% or 3% a year, is that 50% of its accommodation projects will be financially unviable in 2016-17. It is absolutely imminent. That is key. The pace of the clause’s implementation means that we will be facing problems in the next few months and I hope the Minister responds appropriately. It gets worse, I am afraid: the organisation has mentioned 100% financial unviability by 2017-18. What will happen to that vulnerable group of people?

A second organisation, St Mungo’s Broadway, provides accommodation support to 3,800 people each year across London and the south-east of England. I have visited the project here and in the midlands. St Mungo’s estimates that the 1% annual rent reduction requirement will result in it losing £1.25 million in rental income by year 4—between £250,000 and £300,000 each year. Taking into account the rental income that the organisation anticipates over that period, the overall impact on its finances over the four-year period is a loss of £4 million. That loss of income will force some projects to close, resulting in the loss of accommodation for homeless and disadvantaged people.

Mr Owen, I expect that you have experienced an increase in rough sleeping in your constituency. I was shocked recently, in the last month or so, when I arrived back in Manchester from Parliament late one night. Every 50 metres there was somebody sleeping rough. The fact that the measures will affect organisations such as St Mungo’s is serious. I have mentioned the groups of people supported by those housing providers. The providers have estimated who will be affected in percentage terms. They expect that people with learning disabilities and physical health problems, people who have slept rough and people with a history of offending, and people with alcohol, drug and mental health problems who have been accessing their services for support needs, will be affected.

As has been mentioned, the measures will have an enormous impact on services working with other disadvantaged people. A large national provider of supported housing has estimated that the change will lead to the loss of 104 schemes, removing 1,969 support spaces for clients, including 228 spaces for people experiencing domestic violence. A small specialist learning disability provider will have its operating margins reduced to 0.2% and will be forced to cancel all proposed development of learning difficulty schemes. A large national organisation will be forced to reduce planned development of extra care by 400 units, including units specifically to help people home from hospital. Such organisations reduce the pressures that our beleaguered NHS is experiencing—the measures will have a direct impact on the NHS.

There is a precedent. The principle of treating supported housing separately from other social housing for welfare reform purposes was recognised in the previous Government’s proactive decision to keep housing costs for specified accommodation out of universal credit and the benefit cap calculations.

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[Mr Vara]

May I initially address the hon. Gentleman’s points, although I will of course write to him? As a caveat, I must say that we have lots of meetings with lots of organisations, and many have asked whether we could look at something differently. Policy is not reached purely on the basis of asking, “Do you agree with this, or don’t you?”. Instead, we make it clear that we propose to do something and that we have a Government mandate to do so, and we ask how we can do that so that we best accommodate others’ views. Matters are not clearcut, but I will certainly write to the hon. Gentleman.

The hon. Gentleman referred to the evidence review that the Government have commissioned on the specified accommodation and supported housing sectors to understand better the scale, shape and cost of the sector in England, Scotland and Wales. We hope that the findings will be available sometime next year.

I welcome the contributions to the debate, all of which have been heartfelt. I commend the hon. Member for Oldham East and Saddleworth for the measured way in which she put forward her arguments, and I have taken her points on board. I am very grateful that the amendment was selected, because it gives me the opportunity to set out what is in the Bill, and to explain why we cannot support the amendment. However, I hope that the hon. Lady will take comfort from my remarks.

We recognise that the rent reduction measures introduce a significant change to existing rent policy. We have listened to comments and concerns about the housing of vulnerable groups, and I can offer the hon. Lady a number of assurances that mean that her amendment is unnecessary. First, in the light of this new policy, we will look to align as far as possible exceptions under the new policy with those that apply under the existing rent policy for social housing. That means that we intend to except from the rent reduction requirement the types of housing that are excepted from the rent standard. Those include specialised supported accommodation, which provides support for the most vulnerable people and which is developed in partnership with councils or the health service. Also excepted will be residential care homes and nursing homes. Clause 20(2) gives the Secretary of State for Communities and Local Government a power to set further exceptions should they be needed, to except that accommodation from rent reductions.

Clause 20(3) further clarifies the cases and circumstances that regulations may provide for, which include groups of tenants and types of accommodation.

[Peter Dowd]

I acknowledge what the Minister is saying, but I would ask him to cast the net more widely. For example, does he recognise that, under section 117 of the Mental Health Act 1983, if accommodation cannot be continued, provision becomes much more expensive because of a statutory requirement, notwithstanding the forthcoming amendments? That provision would be much more expensive if organisations could no longer provide it. The Government are taking money from Peter to pay Paul, but Paul is much more expensive.

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It should not be forgotten that the disability living allowance arose from a report commissioned by a Conservative Prime Minister, Margaret Thatcher, and was introduced by a Conservative Minister after she left office. So disability living allowance was a Conservative Government achievement. We have an opportunity to improve and enhance it, so I hope the Government will accept the amendment.

[Peter Dowd]

I support my hon. Friend and new clause 4. The Under-Secretary of State for Work and Pensions, the hon. Member for North West Cambridgeshire, talked earlier about a wider context, and I want to talk in a wider context now. Not many weeks ago we debated the Assisted Dying Bill—many people in this room were there. I suspect many Members, like me, voted against that Bill. We said it was a question of giving people dignity in death and as much support as possible in the weeks and months leading up to their death. The new clause would go a long way to helping with that concept, because we can have the abstract idea of supporting people who do not think people should be assisted when they are dying, but the new clause is a practical step to help those who voted against the Assisted Dying Bill to put that into effect.

We recently had a discussion about the hospice moment. I wrote an article about the movement in which I said it was part of the wider context and the wider support that we give in society to people who are on the doorstep of death—let us not beat about the bush, that is exactly what it is. The new clause is a practical proposal to help such people.

For those of us who have had a relative or a friend with a terminal illness, or for those who have worked in the sector and had to deal with people with a terminal illness, the new clause would provide reassurance. It would reassure me that I could be part of the process of saying, “Yes, we have helped you. It might be minor in some regards, but we have been able to help you in your last days and weeks.” That would take some of the stress from the family, and it might take some of the stress from the dying person as well. It is important that we play a part, even if we in this room can play only a small part.

There is another aspect. Some people with a terminal illness might have co-morbidity. They may have Parkinson’s disease; indeed, they may have Alzheimer’s. In those circumstances, it is incumbent on us to make sure that we link the abstract with the practical. This is a genuine opportunity to link our abstract principles and philosophy— on assisted dying, for example—with the practical implications.

[Neil Coyle]

I also attended the debate on the Assisted Dying Bill, and there was a strong consensus that there was insufficient support for those who are dying or contemplating suicide. It is unfortunate that, even where there is an indication that some cuts in support have contributed towards tragic consequences for individuals, the Government are reluctant to analyse that properly and to prevent that from happening—not for any other purpose, but to ensure support to prevent people from taking their own lives and to support people at the end of their lives.

[Peter Dowd]

That is a well-made point. The more we get into this debate, the more we have to move from the philosophical and the abstract to the practical. This is a practical example of where we can say to people, “You’ve got so many pressures on your life at the moment, the least we can do is try to take away just a little of the pressure on you and your family.” If we can just do that, it would be a small step, but a great achievement.

[Priti Patel]

Let me start by thanking the hon. Members for Bermondsey and Old Southwark and for Bootle for their contributions, and particularly the hon. Member for Bermondsey and Old Southwark, who has experience in this area from his professional background. For the record, I also thank the third party organisations that have submitted written statements to the Committee and its members. The hon. Gentleman gave some examples—not attributable ones—but I repeat my offer to the Committee: if there are cases that he or any other member would like me to look at, I would be happy to do that and to meet them to give support and assurance.

New clause 18 seeks to create a duty to increase the rates of disability living allowance and PIP by the highest of the CPI, the rise in average earnings or 2.5%. DLA and PIP are benefits that offer support, as we have heard, for those needing care or supervision as a result of their disability. New clause 18 would require the Secretary of State to review those rates every tax year, considering the effect on them if they were increased by earnings, prices or 2.5%, and, within three months of concluding that review, to lay an order increasing them by the highest of earnings, prices or 2.5%.

Making this change to the Welfare Reform Act 2012, rather than to the Social Security Administration Act 1992, would create a second review process of DLA and PIP rates, which would overlap with the general review of benefits conducted by the Secretary of State every tax year. That would create uncertainty for benefit recipients, who may find their benefit rates reviewed and announced at different times. Furthermore, the change would remove the alignment between the rates of the care components of DLA and the daily living components of PIP, and those of the attendance allowance, causing further confusion for recipients between working and pensioner age.

This discussion has been highly relevant, however, because we all understand and share the desire of hon. Members who have contributed to the debate to protect and to support those in receipt of DLA and PIP. That is why we have in place many protections, which I would like to set out. We already continue to uprate DLA and PIP by price inflation; specifically, we have exempted certain benefits relating to the additional costs of disability and care from the benefits freeze. Those include DLA and PIP, as well as carer’s allowance, attendance allowance and the support group component of ESA. We have also exempted recipients of DLA and PIP from the benefits cap. The welfare system continues to provide support and to protect those recipients. As we have heard, there are families who cannot work and require the support of DLA and PIP, which is why we have these exemptions. We have also ensured that both DLA and PIP remain universally accessible benefits and have committed not to means-test either. We have also committed to keep them non-taxable. We have built extra protections into the system for claimants who may need extra support.

That brings me on to new clause 4. During the course of our welfare reform programme, the Government have always made it clear that, in our steps to achieve a higher-wage, low-tax and low-welfare society, we will always provide support for those with the greatest needs. In particular, PIP recognises the unique challenges of claimants who are terminally ill. Special rules and criteria for the terminally ill have been introduced to ensure that the PIP system handles such cases both efficiently and sensitively to reduce burdens on individuals and their families at what is inevitably a difficult time. PIP has a fast-track system to allow us to process special rules claims more quickly, with claims, on average, being cleared within six working days. Some 99% of those who apply under the special rules are awarded the benefit, and we have ensured that each of those individuals is guaranteed the enhanced rate of the daily living component.

Evidence for special rules cases is reviewed on a paper basis, and we do not expect individuals applying in such circumstances to undertake any face-to-face assessments. We have worked closely with stakeholder organisations to design a system that allows us to make the correct decisions in such instances without the need for a face-to-face assessment, thereby reducing intrusion and stress for claimants and families. It also helps us to deliver vital support for claimants in the most practical way as soon as possible.

In many cases where an individual may not be aware of their prognosis, or where that might be a particularly distressing subject to discuss, we have worked to design the system to support family members, or representative third party organisations, through the claims process to ensure that individuals can still access the support to which they are rightly entitled in a way that is sensitive to their needs. Through those steps, we have a clear focus on delivery for the individual. It is also important that case managers still have sufficient time in which to consider an individual’s case to ensure that they are being awarded the correct level of support and benefits. Reducing that time, as suggested, would potentially increase the risk of an incorrect payment being made. In such cases, the claimant would either be left with less support or little support. Obviously, we want to ensure that we are not creating any arduous or difficult processes. We are focused on supporting individuals.