Housing Benefit

Rachel Reeves Excerpts

Wednesday 26th February 2014 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That an humble Address be presented to Her Majesty, praying that the Housing Benefit (Transitional Provisions) (Amendment) Regulations 2014 (S.I., 2014, No. 212), dated 4 February 2014, a copy of which was laid before this House on 5 February, be annulled.

The motion also stands in the names of my right hon. Friend the Member for Doncaster North (Edward Miliband), the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Carmarthen East and Dinefwr (Jonathan Edwards) and others.

Let me set out our reasons for calling this debate and forcing this vote today, and the circumstances that have brought us to this position. The matter before us takes us to the heart of this Government’s shabby and shameful record. By statutory instrument, the Government are trying to close a loophole in the bedroom tax legislation without even understanding how many people are affected by these changes. Instead of trying to close this loophole, the Government should finally try to do the right thing and scrap the bedroom tax altogether. This Government promised that they would not balance the books on the backs of the poorest and most vulnerable, but that is exactly what they are doing, and in such a careless, clumsy and cack-handed way that we see chaos, confusion and uncounted costs piling up around us as they compound the injustice of their policies with utter incompetence in their delivery.

This Government’s bedroom tax has been a fiasco from the very beginning. More than half a million households have been hit by this mean-minded measure. Two thirds of those affected are disabled and 60,000 are carers. More than 200,000 families with children are affected, many of whom are already below the poverty line and forced, as a result of this tax, to find an average £728 a year extra in rent—equivalent to losing all the child benefit for a second child. So much for the Prime Minister’s moral crusade.

[John Hemming (Birmingham, Yardley) (LD)]

In January, the hon. Lady said that she would place a cap on structural social security spending, so what other cuts in welfare would she make to cover this exemption?

[Rachel Reeves]

Specifically on the bedroom tax, we have said that we would cancel it by closing the loophole in the shares-for-rights scheme, the bogus self-employment in the construction sector, and the tax credit that the Chancellor gave to hedge funds in the Budget earlier this year. We have been very clear about how we would pay for this. In the hon. Gentleman’s local authority of Birmingham, 2,100 households are being affected; I wonder whether he might speak for them and their concerns.

The implementation of the bedroom tax has been a shambles. Ministers have been unable to explain whether the policy is supposed to reduce overcrowding or whether, as their costings assume, people are expected to remain in their properties. There has been uncertainty and inconsistency, with mixed messages about who is exempt, whether it be parents with children serving in the armed forces, disabled people or carers. The truth is that none of them is exempt. Courts and tribunals have had to devote days to debating the definition of a bedroom, and as the unintended consequences become clear, the uncalculated costs are mounting.

[Philip Davies (Shipley) (Con)]

If this is causing so many problems—the Labour party in Bradford seems to think it is, too—perhaps the hon. Lady could explain why the Labour-dominated social housing provider has continued to build three-bedroom house after three-bedroom house despite claiming that it is not able to rent them out, and why Bradford council, which received £1.2 million in discretionary housing payments, has spent only £350,000 of it in the first six months and has not even bid for any of the extra funding the Government made available. If this is causing so many problems, why has the Labour council abandoned all these people?

[Rachel Reeves]

Let us see where Bradford is by the end of the financial year, not just six months into it.

Many of those who are moving because of the bedroom tax are ending up in private rented accommodation which, though smaller, is more expensive. Analysis by the university of York suggests that this could mean the Government paying out £160 million more in housing benefit than had been budgeted for.

Ministers have also been forced to admit that 35,000 of the disabled people affected have had their homes specially adapted for them with, for example, wheelchair ramps, wider doors, stair lifts and accessible bathrooms. If they are forced to move, it has been estimated that the costs of repeating those adaptations in new properties could be as much as £234 million.

According to the latest numbers from the National Housing Federation, two thirds of the households hit by the bedroom tax have already fallen into arrears, hitting the finances of the very housing providers we need to be building more homes to deal with overcrowding, and a staggering one in seven of the tenants affected have already received eviction warning letters.

[Lilian Greenwood (Nottingham South) (Lab)]

Does my hon. Friend share my concern that in Nottingham more than 2,000 City Homes tenants are falling into arrears totalling more than £286,000—money that should be spent on refurbishing existing homes and building new ones? The fact that they are in arrears means that even if there were somewhere for them to downsize to, tenancy restrictions would prevent them from doing so.

[Rachel Reeves]

In my hon. Friend’s local authority area—Nottingham city council—200 people have been wrongly paying the bedroom tax because of this Government’s mistakes. She is absolutely right to mention the number of people in her area who are in arrears and the difficulties they will have in moving.

The eviction warning letters that have gone to so many people raise the threat of millions more being wasted in eviction proceedings and the emergency accommodation that will be needed for those who are made homeless. What a shambles.

[Andrea Leadsom (South Northamptonshire) (Con)]

I have great regard for the hon. Lady, but as somebody who used to work at the Bank of England, she will know that this is not a bedroom tax. How does she calculate that saying in effect that people who have a spare bedroom should no longer have it paid for by taxpayers is somehow a tax?

[Rachel Reeves]

But as the hon. Lady well knows, the reality is that for many of these people it is not a spare bedroom. It is the bedroom that their sons and daughters who serve in the armed forces stay in when they come home; it is the bedroom that their sons and daughters stay in when they are home from university; it is the bedroom that is used to store the dialysis equipment; and it is the bedroom that the carer comes to stay in. These are not spare bedrooms; these are rooms that are needed by many people with disabilities or with children. We can debate whether it is a spare room subsidy or a bedroom tax, but what we do not have to debate is the impact it is having on people. In the hon. Lady’s constituency and mine, and in places across the country, people are suffering because of the decisions this Government are making. The Government should instead do the right thing and cancel the bedroom tax.

[Mr Clive Betts (Sheffield South East) (Lab)]

I was talking the other day to Tony Stacey, the chief executive of South Yorkshire housing association, which is a very well run local association in Sheffield and the surrounding areas. He pointed out not only that its arrears are going up, but that it is spending £200,000 more on helping to advise its tenants and on collection. The National Housing Federation says that when those extra costs of arrears and collection are added up nationally, £1.5 billion of development opportunities will be lost as a result of this Government’s welfare reforms.

[Rachel Reeves]

All that money could have been spent on building the houses we need to deal with the overcrowding crisis and other crises of which the Government speak; instead, house building is at its lowest level since the 1920s.

Let me turn to the loophole. Just when we thought that things could not get any worse, the latest shocking turn in this sad and sorry story was the revelation last month that because the Government could not even draft their own legislation and regulations correctly, many of the households that they had told local authorities should be made to pay the bedroom tax—those who had been in continual receipt of housing benefit for the same residence since 1996—were in fact not covered by the legislation.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

The hon. Lady referred to the National Housing Federation report and claimed that it said there was cause and effect with regard to the implementation of this policy and arrears. May I quote something to her and then hear what she has to say about it? The report actually said that it is

“difficult…to attribute any observed rise in outstanding arrears since 31st March 2013 to the introduction”

of the spare room subsidy “alone” and that the situation needs to be monitored. Secondly, it said that the vast majority of housing associations reported no rise in evictions. Would the hon. Lady like to withdraw her previous comments?

[Rachel Reeves]

The facts speak for themselves: two thirds of the households hit by the bedroom tax have fallen into arrears and councils up and down the country are trying hard not to evict people, because they know it is the wrong thing to do. They are trying to help people and we should welcome that and applaud them for doing the right thing, unlike this Government, who are failing to do the right thing.

[Mr John Redwood (Wokingham) (Con)]

Could the hon. Lady explain why Labour in office supported a scheme just like this for private rented sector tenants?

[Rachel Reeves]

The right hon. Gentleman knows full well that this scheme is retrospective in a way that the scheme for the private sector was not. The people affected by this loophole have been living in their properties since 1996. They thought they had a secure and permanent tenancy, but it turns out that they do not, because they cannot afford to live in the home they have lived in for, in some cases, their whole lives.

[Mr Duncan Smith]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. You are both up at the same time. Is the hon. Lady giving way?

[Rachel Reeves]

I have already given way to the Secretary of State.

[Mr Duncan Smith]

On a point of clarification.

[Mr Deputy Speaker]

Order. There can be only one person on their feet at a time. It is up to Rachel Reeves whether she wants to give way to the Secretary of State. She has given way to him once already and it is for her to judge whether she will do so again.

[Rachel Reeves]

I shall not give way to the Secretary of State, because he will have a chance to respond in a few minutes and I look forward to hearing what he has to say.

Let us take a moment to reflect on what this means. The Government have been telling local authorities to take housing benefit away from people who were in fact legally entitled to it all along. Most of these people were already in vulnerable positions and will have been pushed even further into severe hardship as a result of this Government’s errors.

Let us look at a few examples. A widower in Staffordshire suffering from mental health problems told of the sacrifices he had to make to find the extra £14 a week he needed to stay in his home. A 56-year-old woman from Rotherham, who receives support for health-related problems, has had to pay more than £700 in extra rent, which we now know was unlawful. In Greater Manchester, a grandmother who looks after her granddaughter, has been diagnosed with depression and anxiety and who paid £200 in additional rent as a result of the bedroom tax fell into arrears and was threatened with eviction from the home she has lived in for 26 years. These people and many like them are now due a rebate, but nothing will compensate for the distress they have been caused or the time and money that the council will have to spend sorting out the mess this Government have caused. And now the Government want to apply the bedroom tax again to these people and thousands of others like them.

[Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)]

How does my hon. Friend think people will feel when they have the relief of finding out that they are exempt from the bedroom tax, only to then be told that the Government are breaking their necks to close the loophole?

[Rachel Reeves]

Today is our only opportunity to stop the Government closing the loophole, and to urge them to cancel the bedroom tax altogether. We have a chance this afternoon to walk through the Lobbies and either to stand up for our constituents or to stand against them, as this Government have done repeatedly.

Many of the people who have wrongly paid the bedroom tax have already been forced to move and have fallen into arrears with their rent. Because many local authorities do not have electronic records back to 1996 to allow them easily to identify cases that meet the relevant criteria, they have been forced to spend time and money on manual trawls through paper files to begin to sort out this huge mess. What a waste of time and money, and what a mess caused by this Government’s incompetence. Councils up and down this country have been put in an impossible position, and people in need have been put through needless anxiety and uncertainty. As I have said, money that could have been spent on building houses has been spent on having to sort out this mess. It beggars belief that like universal credit—another of the Government’s flagship welfare reforms—this policy has become mired in chaos, confusion and spiralling costs.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

My hon. Friend is making a magnificent opening speech. Does she agree that we will find that the bedroom tax is costing rather than saving the Exchequer money?

[Rachel Reeves]

Closing the loophole will indeed cost a huge amount of money—borne by local authorities that will have to do the work to sort out this mess.

Even as they seek to close this loophole, the Government do not have any understanding of the number of people affected by it. We asked Ministers on the Floor of the House to tell us how many people have been unlawfully charged the bedroom tax as a result of the loophole. On 13 January, the Minister of State, Department for Work and Pensions, the hon. Member for Wirral West (Esther McVey), who has responsibility for employment, told us in a written answer:

“This information is not available.”—[Official Report, 13 January 2014; Vol. 573, c. 449W.]

On the very same day, the Secretary of State told us in this House that

“the number is likely to be between 3,000 and 5,000”.—[Official Report, 13 January 2014; Vol. 573, c. 577.]

The next day, Lord Freud, the Minister for welfare reform, said in another place that

“the numbers involved in this anomaly are small and the amounts are modest.”—[Official Report, House of Lords, 14 January 2014; Vol. 751, c. 106.]

At oral questions this week, the Secretary of State told me that

“some 5,000 people may be affected.”—[Official Report, 24 February 2014; Vol. 576, c. 19.]

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

If 5,000 people were affected across the UK, I would expect about 50 people to be affected in Edinburgh. So far, the council has identified at least 113, and others in housing associations may be affected as well. I am sure that the situation is even worse in other places. Does my hon. Friend accept that as well as the extra cost and waste of money caused by the bureaucratic chaos, many people will apply for and get discretionary housing payments, so the savings to the Government, if there are any, are ultimately likely to be minimal? Why do they not just drop the entire tax completely?

[Rachel Reeves]

That is what we are calling on the Government to do today—to scrap the bedroom tax altogether.

We had no idea of the numbers affected and the Government clearly did not have a clue, so we asked the question that they should have asked: we asked local authorities how many people have been affected. Of 378 local authorities, 197 have now responded, including Birmingham city council, where 2,100 households are affected, Cardiff with 220 and Glasgow with 913, as well as Tory local authorities, such as Cheshire West and Chester council, where 275 households are affected, Tory Peterborough with 200 and Tory Wandsworth with 234—the list goes on. In total, our replies so far suggest that 21,655 households have been affected. That is on the basis of responses from barely half the councils, while many of them have said that they cannot give complete answers that include housing association tenants. It is therefore already clear that not only have this Government made a complete mess of their own policy, but they do not even have a clue how many people are affected by the loophole.

The Government have responded to this fiasco by scrambling to cover up their own mistake. They introduced a statutory instrument to close a loophole in their own legislation, without even giving this House an opportunity to scrutinise and debate it; it is only through this Opposition day that we can have a vote, which is why we called this debate today.

The bedroom tax was misconceived from the start, and it has been incompetently executed every step of the way. The chaos, confusion and extra costs are mounting, with the heaviest price being paid by the poorest and most vulnerable. The Government should scrap the bedroom tax today, but instead they are making it apply to an extra 40,000 households. If this Government will not scrap the bedroom tax, the next Labour Government will do so.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I call Mr Peter Lilley to make a six-minute speech.