Under-Occupancy Penalty

Sheila Gilmore Excerpts

Tuesday 5th November 2013 Westminster Hall

[Mrs Lewell-Buck]

The hon. Gentleman is correct. I will come on to the point that he raises.

I have never met anyone who is selfishly holding on to an extra bedroom just because they want to. It is no wonder that the local authority covering my constituency has seen a rise of more than 50% in homelessness under this Government and, between April and July of this year, has seen more than 500 tenants hand back their keys. The total financial impact of that handback is £600,000. That money could have been spent on bringing 60 of the homes in our area up to a decent standard or on building eight new homes. My local authority is not alone. Many other local authorities are having to use their housing revenue account moneys to pay for the tax. Those are moneys that they would have otherwise used to build and improve their homes.

Not only local authorities are struggling because of the tax; 26 leading housing associations have seen their credit ratings downgraded as investors become anxious about the impact of the bedroom tax. That leaves housing associations unable to plan for the future or for current housing demand and to build homes to meet that demand. That compounds what is already a dire situation for house building under this Government, who slashed the affordable homes budget in their first year in office and are planning a further round of cuts for 2015-16. Meanwhile, property developers sit on land that could be used for new builds.

The bedroom tax not only stifles construction; it also wastes many of the homes that we already have. Larger properties are now lying empty across the country, ignored by tenants who fear that they will not be able to afford them if their circumstances change. We are already seeing streets with scores of empty properties. The number of such properties is likely to rise and rise, while the former residents are becoming homeless or moving to the expensive private sector—moves that will increase the housing benefit bill further, and further stretch public finances.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the light of that comment—I have to say that that is not a problem that we experience in Edinburgh—was my hon. Friend surprised that the response from the Minister of State, Department for Work and Pensions, the hon. Member for Wirral West (Esther McVey), to the question of three-bedroom houses perhaps being hard to let was that they should be subdivided in some way? That betrays a complete misunderstanding of the nature of those houses, because the cost of turning them into, say, two houses would far exceed the savings.

[Mrs Lewell-Buck]

I was not aware of that response. I thank my hon. Friend for letting me know that information. I am very surprised by that.

The National Housing Federation estimates that a family under-occupying a two-bedroom home who move into a one-bedroom flat in the private rented sector will claim an average of £1,500 in housing benefit, despite living in a smaller property. Just last month, the Deputy Prime Minister acknowledged that the bedroom tax is leaving some families facing

“dilemmas which need to be addressed”.

This is not a dilemma—it is a crisis happening on his Government’s watch.

I visited Ms Ashley Pollard, one of my constituents, at home. She faces one of the Deputy Prime Minister’s so-called dilemmas. She lives alone in a two-bedroom flat. She has mobility difficulties and, as a result, needs to be in a wheelchair almost every moment of the day. Her mother is her carer and stays in her extra bedroom most week nights. Her mother is also in employment, so she is not entitled to carer’s allowance.

Ashley is unable to avoid paying the bedroom tax and has requested a move to a one-bedroom ground-floor property, but there is none for her to go to. She wants to move but cannot; wants to pay her bills but is struggling to do so; and needs to have the continued care from her mother. Sadly, Ashley is not alone. It is estimated that more than 400,000 disabled people are expected to suffer what the Deputy Prime Minister calls a dilemma. Can the Minister, in his response, suggest what Ms Pollard should do?

At a time when the disabled are already being hit hard by cuts to public services and reduced benefits, they now have to worry about losing their homes as well—homes that, once they have been forced out, will lie empty. Those homes have been adapted to fit tenants’ needs in line with their disability. If they move, their new home will need to be adapted, while their own home will remain empty.

Another disabled constituent of mine lives in an adapted property that cost the local authority in excess of £10,000 to adapt. The property has two bedrooms, so she is subject to the bedroom tax. Unsurprisingly, there are no alternative, one-bedroom properties in our area to meet her needs. She is therefore stuck paying the tax, unable to obtain discretionary housing payment, and she is struggling.

What do the Government suggest is an efficient use of housing in that situation? Should my local authority adapt a new property for my constituent at the cost of a further £10,000 and leave her current home empty? Far from encouraging the better use of social housing, in that case, the bedroom tax leads to a nonsensical outcome.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

It is a great pleasure to follow my hon. Friend the Member for South Shields (Mrs Lewell-Buck), who secured this important debate. The bedroom tax was primarily a savings measure. It was then dressed up, in some debates, as a way of tackling affordable housing shortages by making better use of property. However, as my hon. Friend clearly demonstrated in her opening speech, we warned from the outset—those of us who served on the Welfare Reform Bill Committee back in 2011 pointed this out at the time—that the savings would be less than estimated.

If the policy were genuinely about supply, it would have been sensible to start by understanding local housing markets and developing policies appropriate to local areas. As colleagues, including my hon. Friend the Member for South Shields, have described, in some cases, the bedroom tax is making larger houses unlettable. I must say that that is not a problem in my city, where more than 900 households have been given the second-highest priority banding because they need two extra bedrooms, and about 350 households have the same priority level because they are homeless and need three-bedroom housing. More than 1,200 families in the area need large homes, and there simply are not many. They do not exist. It is not that single people or couples in my constituency are rattling around in big homes that they do not need; the properties just do not exist.

As for those who might want to downsize, this week, 22 one-bedroom properties are available to let across all the housing associations and councils in the whole city of Edinburgh. That is not just in my constituency; it is across the whole city, which comprises five constituencies. Of those properties, three are sheltered—they are for older people, who are by definition not affected by the bedroom tax—so they would not be available to those affected by the bedroom tax. This is not an unusually dry week for housing supply; it is typical of all weeks. I check the availability regularly.

[Dame Anne Begg (Aberdeen South) (Lab)]

Has my hon. Friend analysed what types of houses the available one-bedroom properties are? If Edinburgh is anything like my constituency, I suspect that they will not be in areas to which people looking to downsize would move in any case. Very often they are for the young homeless, or those prepared to live at the top of a tower block.

[Sheila Gilmore]

Indeed, because of the nature of building at the time, a lot of smaller properties in the city, when we have them, are to be found in high-rises.

[Pat Glass]

I am grateful to my hon. Friend for allowing the intervention. Does she agree that many current housing allocation policies came out of the recommendations in the Scarman report, and that a move back to pre-Scarman policies not only makes no financial sense, but is potentially dangerous?

[Sheila Gilmore]

That is helpful. It reminds us of the many ways in which we are going backwards.

In an intervention on my hon. Friend the Member for South Shields, I mentioned a DWP Minister’s suggestion that if councils were struggling with three-bedroom houses that they could not let, they should have anticipated the problem and taken steps to divide those houses. I was fantasising slightly about how that would work. Let us take a typical three up, two down property in England; in Scotland, we are more likely to be talking about a tenement flat. What exactly would be involved in dividing it? First, either the tenants would somehow have to use the same door and stairs, or the council would have to create a separate entrance, which would cost money. One of the upstairs rooms would have to be converted into some form of kitchen, which would cost money. That leaves the downstairs, which would have a kitchen, but not a bathroom. Where would the bathroom go, or at least a toilet? A bathroom extension? Remember there are only two rooms and a kitchen downstairs, so building a bathroom would not be easy, unless it were built outside, and an extension costs money. Then I thought, “I know what the Minister must have had in mind: a portaloo in the back garden.” That would take us right back to the days when people had outside toilets, but it might help get the house divided up. It would involve not only huge additional cost but a style of living that I hope most of us would think inappropriate. That shows how little thought was given in practical reality.

It is the same with the idea that everybody could take in lodgers. That does not take into consideration the nature of many of the properties in which people live, and the difficulties involved.

[Kate Green]

Does my hon. Friend not also accept that that would be a particularly unwelcome suggestion to women fleeing domestic abuse and violence, for example? The idea that they might have to take in a stranger as a lodger after experiences that may have absolutely traumatised them is particularly inimical. That is exactly the situation faced by one of my constituents.

[Sheila Gilmore]

I thank my hon. Friend for that intervention. Many people would find the concept of taking in a lodger extremely difficult, particularly given the nature of many properties. I visited a constituent whose kitchen was off the living room, and whose bedrooms were not particularly big. When someone has a lodger, they are sharing a house. They are not taking in a lodger who has a self-contained annexe of the house; they are taking someone into the bosom of their household. The 60-year-old woman in question felt that that was not somewhere she needed to be in her life.

[Ian Lavery]

I am totally perplexed by the Government’s advice to take in a lodger, which was given from day one of the bedroom tax. Some 400,000 of the 600,000 people affected by the bedroom tax are disabled. Would disabled people want to bring in a stranger, just so they could afford to pay the rent?

[Sheila Gilmore]

The reality is that people are not taking on lodgers. The rhetoric on lodgers has quietened down, presumably because the impracticality of that idea has revealed itself. If the measure was about making better use of property, it was not the best way of going about that. It would be far better to encourage people to move in some circumstances, but that is neither a quick nor an easy process. It has to be planned for, and that comes back to looking at the nature of the local housing market and how those moves can be dealt with.

Older tenants in larger homes might want to downsize—if they are over retirement age, they will not be affected by the bedroom tax—but the bedroom tax will not whip them into wanting to move. Over the years, I have had many constituents say to me, “Yes, I would move. The stairs are getting too much for me. The garden is getting too much for me”, but they want control over where they go, and want to keep some of the things they like about their present home. Often that means the area, and that does not necessarily only go for those who live in what is perceived as a “good area”. Their area is where they have their social circle, and their family might not be too far away. There will be many reciprocal family arrangements, whether that is daughters helping mothers, or mothers helping their grown-up children with child care and picking kids up from school. All those sorts of things cannot be done if they are moved to the other end of town. Okay, they are fussy, but they are fussy because they want the move to be one that will last them the rest of their lives. They do not want to rush into something that is unsuitable.

All authorities might want to build new build housing that is geared to older people. If authorities do their homework properly, they will know in advance that that will release larger houses. The homework, however, has to be done, and investment is needed. If the investment is not there, it becomes very difficult. New build numbers are dropping, not only in England and Wales, which the Minister is concerned with, but in Scotland, too. In the whole of Scotland, new starts have dropped from the high point in 2007-08 of 6,214 to just 2,781 in 2012-13. That is a substantial drop. We want to have new build available to help people move around, but it is just not there.

There are many things that we should be looking at. We should be considering building new homes. Councils might want to consider—I have suggested this to my local council—buying some properties at comparable prices. They should not pay more for a property than it would cost to build, but that would help deal with some of the biggest chronic housing shortages. When homeless families, even those with children, are waiting in temporary accommodation for up to a year to get anything, we have a crisis, not just a slight shortage.

There is a further win-win in all this, which perhaps brings us back to the stated purpose of the bedroom tax. If more affordable housing is built, we can reduce the total housing benefit spend. It is true that the spend has gone up in recent years—the Government are not wrong to point that out—but their predictions and forecasts for the next few years are that the spend will continue to rise until at least 2016-17, when it will reach £23.38 billion.

[Julie Hilling (Bolton West) (Lab)]

Does my hon. Friend agree that the major increase in housing benefit has come from the increase in benefit paid to people in private accommodation, not to those in social housing?

[Sheila Gilmore]

Indeed. I have some figures, although they take us only to 2010-11. In 2000-01, the spend on private rented sector housing benefit was £3.6 billion. By 2010-11, that had risen to £8.9 billion, and it has risen again since then. The number of recipients of housing benefit rose under this Government by 326,597 people or households between May 2010 and February 2013. More than twice as many of those—some 218,209—were in the private rented sector than were in council and housing association housing. All the time that the Government have been in power, wringing their hands about the rising housing benefit bill and saying that measures such as the bedroom tax are the way to tackle it, the number of recipients has gone up, and the amount of money we are spending has gone up.

We are not tackling the issue from the right end. If we had a proper housing investment programme for affordable housing, that would bring down the housing benefit bill. That is what we should be aiming to do. It would give many individuals a real incentive and help in getting back to work, because having people in expensive private sector rented accommodation, whether it is temporary, permanent or semi-permanent, is a disincentive to employment.

I have a constituent who has been living in a private sector property that was provided to him when he was homeless, because we do not have enough council and housing association homes. His rent payments are £815 a month, which probably does not sound much in London terms, although it is high in Edinburgh terms. When he was working, he still had to pay half of that rent from his earnings. In the end, he gave up his job, partly because of the financial pressures that he was then under. If he had a council or housing association rented property, he could have afforded much more easily to get back into work. There are all sorts of reasons why housing investment is a win-win-win. It is a win because we would get the houses; because we would begin to reduce the total housing benefit bill; and because we would be doing something serious—not just haranguing people about getting back to work, but putting in place practical measures—to help people get back to work.

We need to look at the fact that the bedroom tax has done the opposite of that. It has created a situation where both councils and housing associations are anxious about the loss of income. It matters to all tenants, because all tenants are being impacted on, not just those affected by the bedroom tax. I made that point to a Government Minister recently, and pointed out that even pensioners and tenants who are not on housing benefit are being affected by the bedroom tax. The response I got—they had half-heard the question—was, “But pensioners are not affected.” That was not my point. My point was that if the landlord, be it the council or the housing association, has less income coming in, that will affect all the other tenants, because that organisation will have only a few choices. It could cut back on its modernisation programme, and that would affect pensioners who have been waiting for many years, as many of my constituents have, for their kitchens and bathrooms to be modernised. They would have to wait even more years.

[Lilian Greenwood]

Does my hon. Friend agree that our social landlords are not only facing extra arrears, but having to put in extra resources to deal with having to chase people for arrears? Nottingham City Homes told me that it has already had to spend an extra £300,000 on staff and resources to deal with the extra demands on the rent arrears team. Is it not a concern that the extra spending on such things is not going on other tenants and their homes?

[Sheila Gilmore]

Yes, indeed. Landlords will have quite limited choices. If they are not going to do anything about their modernisation programme, they will certainly be looking at their new build programme or at raising rents, which, again, affects all tenants. It is not true to say therefore that these issues affect only those who are directly affected by the bedroom tax.

If the bedroom tax means that less income is coming in and that there is less ability to start and fund new build programmes, it will not increase supply; it will do precisely the opposite of what Ministers have tried to claim that they want it to do. We really need to move away from this approach and to realise that it is not working. We have not only the arrears, but a whole administrative apparatus to help people who have run into arrears and to process discretionary housing payments and appeals for discretionary housing payments, which may have to be reprocessed every year or six months. That involves a cost that people did not have to meet before.

The glib answer is that discretionary housing payments are the solution, but they reduce savings, which is yet another reason for thinking this whole thing has been a bit pointless. Furthermore, people who have, by definition, been means-tested are now being given a further means test—that is what this comes down to—on their already low income to see whether they qualify for discretionary housing payments. The forms ask them about their expenditure and about whether they have Sky television or whether they smoke.

Things such as disability living allowance, which is specifically given to meet the costs of disability and illness are being taken into account in declaring that people can afford to pay the bedroom tax. People were never given DLA to pay their rent, and if they are using it to do so because they have been deemed to have enough income to meet the gap between their rent and the housing benefit that they receive, they are not spending their DLA on their disability. Having a second tier of means tests is quite unacceptable. I talked about outside toilets, and we are back in the 1930s again with this issue; we are back with the means-test officer telling people that they really did not need the sideboard or the record player they had had for some years, because they were too poor.

[Stephen Doughty]

Or we have the Minister, Lord Freud, telling split-up families that the kids should share a sofa bed—that is the type of perversity being suggested by Ministers, and that is the means-testing culture that we are getting into. That is a sad message for a Minister to send out.

[Sheila Gilmore]

I thank my hon. Friend.

We must never forget the personal picture and the difficulties involved. One constituent is a cancer patient, although he is, fortunately, recovering. He has a two-bedroom house—nothing terribly big—and his three children come to him every weekend. One suffers from autism, which creates difficulties if the children have to share a room. My constituent wrote to the Prime Minister asking what he should do, and the Prime Minister said, “Apply for a discretionary housing payment.” Well, my constituent has, of course, applied for a discretionary housing payment, and he has been refused. He appealed, and he has been refused. I am not quite sure what he is expected to do next, other than to fall into rent arrears, which is what is happening. He is worrying about that, which probably is not helping his recovery. Alternatively, he could move, which will make it virtually impossible for him to have his boys to stay, which cannot be right.

I hope that we all agree that we want to increase the housing supply and particularly the affordable housing supply, so we have to agree that the bedroom tax is simply the wrong way to do that. It starts at the wrong end, and it is not resolving the problem, for all the reasons that have been given. If we really want to improve housing supply, we have to do two big things. One, obviously, is to invest in it, and the other is to allow local areas to decide on the appropriate way to address their problems. There will be differences; I have described how different my city is from some places in the north-east of England, which face quite different issues. We therefore need to allow local knowledge and local planning to come into play, but that is not happening with the policy that is being imposed.

[Several hon. Members]

rose—

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[Kris Hopkins]

Let me say that Labour presided over a period of massive boom, yet it still managed to secure fewer affordable houses by the end of that period—420,000 houses. I appreciate the aspiration, but now I want to make some further comments and respond to the Members who have spoken.

The hon. Members for Edinburgh East (Sheila Gilmore), for Inverclyde (Mr McKenzie) and for Wolverhampton North East (Emma Reynolds) talked about arrears. That is a matter that we are watching and we are keen to understand the consequences of the new system. A review will be published next spring that will help us in that regard.

The hon. Members for Edinburgh East jested about portaloos and outside toilets. In the lead-up to the 2010 general election, I visited a house with an outside toilet. They are not a fantasy, or even an issue to jest about; they exist. Some of the housing stock out there is appalling, which leads me to the meat of my speech.

[Sheila Gilmore]

Will the Minister clarify whether some of the worst housing is in the private rented sector? As far as I am aware, in my city and throughout Scotland, no homes in the housing association and council sector have outside toilets.