Housing Benefit (Abolition of Social Sector Size Criteria)

Rachel Reeves Excerpts

Wednesday 17th December 2014 Commons Chamber

[Rachel Reeves (Leeds West) (Lab)]

I beg to move,

That this House believes that the housing benefit social sector size criteria, otherwise known as the bedroom tax, should be abolished with immediate effect.

Today, Members of this House have a chance and a choice: a chance to put right one of the worst injustices we have seen under this unfair, out-of-touch Government; and a choice to make about where they stand on the question of how we treat some of the most vulnerable and disadvantaged members of our society. In just a few hours, we could vote to abolish and repeal the bedroom tax, an extraordinarily cruel and unfair policy that has hit half a million low-income households, two thirds of them including a disabled member and two fifths of them including children, with a charge of more than £14 a week, on average, which most cannot afford to pay, simply because they have been allocated by a council or a housing association a home that the Government now decide has too many rooms.

One week before Christmas we have a chance to bring hope and relief to hundreds of thousands of people who are struggling to stay in their home, pay the bills and put food on the table by scrapping this cruel and punitive tax on bedrooms, which is yet another example of Tory welfare waste.

[Sir Tony Baldry (Banbury) (Con)]

There is a slight groundhog day quality to this debate. I am sure that we have had an identical debate before. Indeed, I was thinking of making the same speech that I made last time in this debate, and wondering whether anyone would be interested. There is something that I do not understand, and have never understood. The previous Government introduced exactly the same policy for tenants in the private rented sector on housing benefit, so why is it thought appropriate to have that policy for tenants on housing benefit in the private rented sector, but not appropriate for tenants in social housing on housing benefit?

[Rachel Reeves]

If the right hon. Gentleman participated in previous debates on this matter, he would know that the rule for private housing was not retrospective, so it did not affect people who were already living in their accommodation. In addition, in the private sector there is no security of tenure, which has hitherto existed in the social rented sector.

The numbers affected by this indefensible policy are shocking, but it is individuals and families whom we must keep in mind. I want to tell the House about a young man I visited at his home in west Wales a few weeks ago. Warren Todd is 15 years old. He has a rare chromosomal disorder called Potocki Shaffer syndrome, which affects the development of his bones, brain and other organs, and means that he suffers from epilepsy, autism, skeletal problems and learning disabilities. For most of his life, Warren has been cared for by his grandparents, Sue and Paul Rutherford. They have dedicated their lives to giving him a decent childhood and, by enabling him to live at home instead of residential care, they are saving us, the taxpayer, thousands of pounds every week.

We should celebrate and applaud the incredible contribution that these people are making to Warren’s life and to our country, but instead this Government have deducted £60 a month from their housing benefit, because they live in a bungalow with three bedrooms, one of which is deemed a spare bedroom, chargeable under the bedroom tax. They asked the Prime Minister to visit them in their home and see why they needed that room. Warren’s grandfather said:

“If he”—

the Prime Minister—

“saw how we were living he would end the tax straight away. But of course he hasn’t been to see us”.

I have seen this “spare bedroom”, which is crammed with special equipment for Warren and a sofa bed for respite carers to use. There is nothing remotely “spare” about it. Without it, the Rutherfords could not possibly do the incredible job they do of looking after Warren at home.

The bungalow has been fitted with a track system and hoist to help Warren into the bath, his bed, and on to the sofa. It would cost a fortune to replace and reinstall it if they had to move to another property. There are countless other cases like that of people whose lives have been turned upside down by this punitive and indefensible tax on bedrooms.

[The Minister for Disabled People (Mr Mark Harper)]

I am listening very carefully to the hon. Lady, and I think she would want the House to have all the facts. I read the details of her visit, but is it not the case that that family receive a discretionary housing payment, for exactly the reasons that we put this policy in place? They have not suffered any financial penalty from this policy at all, so perhaps she should fill the House in and give a full picture of the case, rather than tell a partial story?

[Rachel Reeves]

I was going to come to the discretionary housing payment, but I shall discuss it now. Leeds, where I am a Member of Parliament, received £1.9 million in discretionary housing payment in 2013-14, but it spent £2.27 million, and the Government made up the shortfall. In 2014-15, Leeds city council has been given just £2.05 million, and has been told that there is no option to apply for more. The council has put in £0.35 million of its own money, but spending to date is forecast to exceed what it has set aside, including that extra money. The point about discretionary housing payment is that there is not enough money to cover all the cases, and city councils and councils across the country have had to use their own money to make up the Government shortfall.

By its very nature, discretionary housing payment is just that—discretionary—and people only find out on a year-by-year basis whether they will receive the money. People who receive it have no certainty that they will be able to stay in their house next year or the year after that. If the hon. Gentleman can give certainty to the Rutherfords and the thousands of families across the country who receive discretionary housing payment that they will receive it next year and the year after that, that would be extremely welcome, but I do not think that he can do so.

[Mr Harper]

The discretionary housing payment guidance specifically makes provision for councils to make longer-term awards in cases in which it takes longer for people to adjust to the policy. My right hon. Friend the Chancellor of the Exchequer set out the extra money for DHP for the next financial year to give councils that financial certainty. We have indeed done what the hon. Lady said.

[Rachel Reeves]

Well, my own council has received less money from the Government this year compared with last year, so some people who received DHP last year will not receive it this year. Leeds city council says that there have been more applications for DHP this year. My understanding is that the overspend last year was £3 million, so people are applying for DHP but are just not getting it.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

One of the most ridiculous things about the tax is the fact that local authorities and local housing authorities were told that they had to build houses with two bedrooms. There are no one-bedroom houses in my constituency for rent, so how can people move in those circumstances?

[Rachel Reeves]

I have similar issues in my constituency, where there are 26 blocks of high-rise flats that are almost all two-bedroom flats. The council tries not to house families in that accommodation, and tries to put single people in there, because there is a feeling that a high-rise flat is not always the most appropriate place for a family to live. Many single people who have been put in two-bedroom flats in high-rise buildings have been forced to pay the bedroom tax through no fault of their own.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

My hon. Friend has rightly raised the issues for carers such as the Rutherfords. Is it not the case that 60,000 carers should be exempt from the bedroom tax? If anyone should be exempt, it is unpaid family carers. All kinds of things have been said to suggest that they are, but they are not, and it is causing them hardship. If the Minister really believes that the Government want to fund people such as carers through the discretionary payment, they could do that now: they could exempt carers by regulation.

[Rachel Reeves]

My hon. Friend tabled a motion to exempt the 60,000 carers affected by the bedroom tax, but the Government blocked it, which was an unwise and disappointing decision.

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

The hon. Lady is making a powerful case. Does she agree that as well as being cruel and unfair the policy is simply not working on its own terms, because the properties are not there? In Brighton, 88% of those affected have not been able to move because there is nowhere for them to move to. Four hundred households are in arrears, and in over half of those homes there are people with disabilities.

[Rachel Reeves]

I shall come on to statistics for one local authority to make exactly the same point.

[Several hon. Members]

rose—

[Rachel Reeves]

I shall make a little progress before taking interventions.

We have discussed the needs of carers, but we must also consider people who need safe or sanctuary rooms to protect themselves against the threat of domestic violence. There is the woman whose case is now being heard by the High Court, and whose situation my hon. Friend the Member for Plymouth, Moor View (Alison Seabeck) tried to address with her ten-minute rule Bill. Others have kept a room for sons and daughters serving in the armed forces when they are home on leave. In The Daily Mirror this morning we read about the shocking case of Maureen Bland who was forced to move out of her home to avoid the bedroom tax after her son lost his life serving our country in Afghanistan. Quite frankly, people like that should not be forced to pay the bedroom tax because of such grief and tragedy.

The bedroom tax has been cited by the Trussell Trust and others as a key driver behind the shocking growth in food bank use under this Government. A recent in-depth study published by the Trussell Trust, along with Oxfam, the Church of England and the Child Poverty Action Group, found that at one food bank, 19% of users had been hit by the bedroom tax, many of them having applied unsuccessfully for DHP. We will have an opportunity to vote on a motion on food banks later this afternoon, but Members can make a start in this debate by voting to repeal the cruel bedroom tax, which is one of the key causes of the food poverty crisis we see in our country today.

[Mark Tami (Alyn and Deeside) (Lab)]

My hon. Friend is making a powerful case. Perhaps the cruellest element of the bedroom tax is the fact that the stress and anguish it causes is making ill people even more ill.

[Rachel Reeves]

People affected by the bedroom tax are facing impossible decisions that, frankly, no one should have to make: whether to pay the bills or put food on the table; or whether to pay the rent, at the risk of getting into debt, or risk losing their home. We have seen the evidence from the Trussell Trust and the Child Poverty Action Group, but we do not have to turn to that report to see the devastating impact of this vicious policy; we need only look at the evaluation commissioned by the Government themselves. It was conducted by the centre for housing and planning research at Cambridge university and slipped out this summer, when the Government no doubt hoped no one would notice. Its findings are clear and damning.

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

London is not the area worst affected by the bedroom tax. In fact, regional variation is one of the striking things about it, because there is more overcrowding in the south and more under-occupation in the north. Despite that, we have 860 households currently affected by it. Does my hon. Friend share my astonishment that in recent years councils and housing associations, such as Westminster city council, have sold 240 one-bedroom properties, thus removing the very opportunities people need to downsize in order to avoid the bedroom tax?

[Rachel Reeves]

That is a really important point. Six months after the restrictions on housing benefit had been applied, only 4.5% of those affected had moved into smaller homes within the social sector, despite that being, as the report put it,

“a key aim of the policy”.

The vast majority of claimants said that they were unable to move because of their need to remain close to work, services or support networks, or simply because, like the Rutherfords, they needed the room that the Government had decided was surplus to their requirements.

The Government’s evaluation also found that a shocking 60% of those affected were in arrears. Social landlords were beginning eviction proceedings in some cases, even though they knew that their tenants could simply not afford the rent increases. Most devastating of all are the official findings on how tenants have struggled to pay the shortfall. The evaluation reported

“widespread concern that those who were paying were making cuts to other household essentials or incurring other debts in order to pay their rent”.

It reported that 57% of claimants had said that they had cut back on household essentials.

There are not many of them here, but let me say a few words about the Liberal Democrats, who took the publication of the independent evaluation as an opportunity to try to wash their hands of this notorious policy. The Deputy Prime Minister said he had changed his mind after seeing the evidence in the report that most people were unable to move in order to avoid the tax, but what did he expect? Did he expect that half a million households would find new, smaller, affordable homes and that everyone would live happily ever after?

The reality is that it was always obvious that that was not going to happen. The Government’s own impact assessment, published in June 2012, assumed that no one would move and warned that if they tried there would

“be a mismatch between available accommodation and the needs of tenants”

meaning that

“in many areas...there are insufficient properties to enable tenants to move to accommodation of an appropriate size”.

Indeed, the very report that the Deputy Prime Minister cited as the “trigger” for his attempted U-turn points out that the smaller number of moves that had taken place were actually

“higher than some had expected”

in the Department for Work and Pensions. The utter disingenuousness of the Deputy Prime Minister’s attempts to excuse his collaboration with the Tories on this issue once again confirms that we simply cannot trust a single word he says.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Given the predictability of this and the absence of small houses to move to, is it not obvious that the objective was simply to tax the poor for being poor? It has nothing to do with moving to smaller houses; it is about punishing people who are poor because of the bankers’ errors. There is no other rationale.

[Rachel Reeves]

I thank my hon. Friend for that intervention.

This afternoon the amendment signed by the Deputy Prime Minister aims to remove our call on the Government to abolish the bedroom tax immediately, and instead merely “notes” that the Liberal Democrats have come up with some “proposals” to change the way the bedroom tax is implemented. We would not be supporting the amendment, because “noting” the latest Liberal Democrat “proposals” is not going to pay anyone’s rent or keep anyone in their home. What matters in this House is how Members vote, how they use the power entrusted to them by their constituents. What we on the Opposition side and people watching the debate will “note” is where Members took their stand when they had an opportunity to make a difference.

[Mr David Anderson (Blaydon) (Lab)]

Will my hon. Friend also note that the reason we are having this debate is exactly the one just given by my hon. Friend the Member for Swansea West (Geraint Davies)? This is about taxing the poor, because the Liberal Democrats supported not only the bedroom tax, but the cut in the rate of tax for millionaires, giving their friends a £100,000 hand-back last year.

[Rachel Reeves]

Yes, and it tells us all we need to know about the priorities of this Government when people earning more than £150,000 got a tax cut while another group of people, two thirds of whom are disabled, got a £14 increase in their rent that they simply cannot afford. What we will note is that there would be no bedroom tax without the Liberal Democrats. They joined the Tories in the Lobby time and again to vote it through, and they combined with the Tories again and again to block Labour’s attempts to repeal it.

In conclusion, the bedroom tax is a cruel and unfair tax that is hitting around half a million low-income households. It has left vulnerable people feeling insecure in their own homes through no fault of their own.

[Andrew George (St Ives) (LD)]

The hon. Lady says that ours are mere proposals, but in fact they are encapsulated pretty much word for word in my Affordable Homes Bill, which of course has the support of the House. Surely that is the route to take. What we need to do is find a consensus. If she is really as concerned about this issue as she claims to be, she should apply today’s motion to the private rented sector in the same way as it would apply to the social rented sector.

[Rachel Reeves]

If the hon. Gentleman is so serious about doing the right thing, I hope that he will join us in the Lobby this evening, because “noting proposals” will not pay the rent or keep people in their homes. Only by voting with Labour this afternoon can Members do the right thing and repeal this unfair and cruel tax.

The bedroom tax has pushed many into debt and to resort to food banks, and it has brought others to the point of eviction and homelessness. It is wreaking havoc with local housing policies and with the finances of social housing providers, creating extra costs and perverse consequences on all sides. It is yet another example of Tory welfare waste—wasting time and energy even as it fails to deliver the savings that were promised.

The bedroom tax will be remembered for years to come as a signature policy of this unfair, out-of-touch Government. Today we have given Members on both sides of the House an opportunity to come together and consign this cruel policy to the history books. However, if Government Members do not do the right thing and join us to abolish it this afternoon, I pledge that the first thing I will do if I am Secretary of State next May is cancel the bedroom tax, removing that symbol of the injustice we have seen under this Government. That is a fully funded commitment that we will pay for without extra borrowing by closing tax loopholes and reversing the tax breaks with which this Government have favoured the wealthy.

That will be a signal of how different things will be under a Labour Government: dealing with the deficit in a fairer way and treating those who work hard to care for the most disadvantaged and vulnerable members of our society with the decency and dignity they deserve—so different from what Government Members have done. For hundreds of thousands of families across the country, that change cannot come soon enough.

[Several hon. Members]

rose—[Interruption.]

--- Later in debate ---

[Mr Harper]

Let me make a little more progress and then I will give way again.

Labour’s motion says nothing about the costs of its proposal. That is not really a surprise. It is, of course, a fact that the removal of the spare room subsidy is saving money: £490 million in 2013-14; £525 million in 2014-15; and £830 million to date, with savings increasing in future years. Abolishing this reform would cost over £500 million a year. The shadow Work and Pensions Secretary has made an “absolute pledge” to do so, but she has no idea of how she is going to fund it.

[Rachel Reeves]

We did say, in 2013, how we would pay for that. There are three different measures. First, we would reverse the Chancellor’s tax cut for hedge funds announced in the 2013 Budget, which it is estimated will save £150 million. Secondly, we would reverse the Chancellor’s shares-for-rights scheme, which has opened up a tax loophole and will lead to £1 billion being lost to the Exchequer, according to the Office for Budget Responsibility. Thirdly, we would tackle disguised self-employment in the construction industry, which—again, these are Treasury estimates—will save £380 million. That would happen in every single year and more than pay for the cost of cancelling the bedroom tax.

[Mr Harper]

First, it is interesting that the shadow Secretary of State did not bother to share any of that detail with the House in her speech. She was trying to avoid doing so, but I am very pleased that she has put those points on the record. Let us look at the three measures.

The first proposal is to ensure that the building trade pays its fair share of tax, which the hon. Lady said would raise £380 million. In fact, the Government are already cracking down on the use of intermediaries and contrived contracts, including in construction. The changes announced in the autumn statement in 2013 are already saving more than that amount, so the revenue that Labour says it could raise no longer exists.

The second proposal, to reinstate the stamp duty reserve tax charge, would place a £160 million charge on pensions; the Chancellor did not provide a tax cut for hedge funds. That means that the impact of Labour’s tax rise would fall on pension savers and retail investors. That is the same old Labour—balancing the books on the backs of pensioners.

The last proposal, to end the employee shareholder scheme, is even better, and Members will want to listen. Labour has pledged to reverse the removal of the spare room subsidy immediately, but in 2015-16, ending the employee shareholder scheme will raise no revenue for the Exchequer.

The House can see that the three measures are not going to pay for the Labour policy. If the country were unfortunate enough to have the hon. Lady in the position so ably occupied by my right hon. Friend the Secretary of State, I am afraid that when she walked in on day one she would already have a £500 million hole in her funding, and would have to find some other way of funding the payments. The Government have capped welfare, restored fiscal discipline and seen the first real fall in welfare spending for 16 years, in contrast to more unfunded spending commitments and going back to more borrowing, more spending and more taxing once again.