Housing Costs (Reformed Welfare System)

Sheila Gilmore Excerpts

Tuesday 3rd March 2015 Commons Chamber

[Sheila Gilmore (Edinburgh East) (Lab)]

The hon. Gentleman should acknowledge that the proposals from the late Malcolm Wicks involved incentives to move, not financial penalties to be applied immediately whether or not houses are available.

[John Hemming]

I thank the hon. Lady for that intervention, but my reading of all the documents, including those memoirs, is different from hers. It was not about an incentive to move, which I do not think anyone would criticise. I think that his proposals were very similar to those that have been adopted by this Government, as seen in the written parliamentary questions.

[John Hemming]

The hon. Gentleman makes a valid point. The scheme for working out how much space people need and paying them for it was introduced in the private sector many years ago. The Opposition will make the valid point that they did not make it retrospective, but the Government then say that if we want to deal with overcrowding and the like, this is one of the difficulties. Speaking personally, I would rather not do any of these things, but we do not have the finances for that. If we had chosen to take the Greek approach and said, “Can’t pay, won’t pay”, and then run out of money, we would not have had to do a lot of these things, but sadly we have to try to bring the books into balance over time.

[Sheila Gilmore]

The fundamental problem with this whole policy—I think the hon. Gentleman is taking this position as well—is whether it is about saving money or making better use of houses. The amount being saved even on the Government’s own initial estimates was not enormous, and when we factor in discretionary housing payments and all the other things that have to be taken into account, the savings diminish even further. This is not really something that will save a lot of money. [Interruption.]

[John Hemming]

From a sedentary position, the Minister says, “£1 million a day”, which is about the order of magnitude that we were talking about. A policy can have more than one objective. It can be designed to save money and also to deal with overcrowding. This year, I have not had anyone in my office complaining about social services criteria, but I often get people complaining about being overcrowded.

--- Later in debate ---

[Sheila Gilmore (Edinburgh East) (Lab)]

Hon. Members agree that there are serious problems when payments of housing benefit rise so high. We disagree on our analysis of how it came about and what we should do about it. Unless we tackle the underlying issues, we will simply trim the edges, to the detriment of many households and families. As the Office for Budget Responsibility says in its review of spending on benefits and pensions, the main drivers for the increase in housing benefit are increases in rents and the number of people on low wages who have to claim housing benefit to make ends meet. The OBR was concerned that those two things would continue to be drivers in the coming decade unless action was taken. There is very little—I would say virtually nothing—in the steps that the Government have taken since 2010 to tackle those problems. Indeed, they may have made them worse.

We were told by Ministers during the passage of the Welfare Reform Bill that the private rented sector had become so intrinsically dependent on the housing benefit market that rents would fall as a result of the changes. Rents have not fallen. In many places, they have risen considerably above inflation. That is certainly true in my city, in the city represented by the Chair of the Select Committee and in London. The DWP accepts that this is the case. For the private rented sector, it has introduced additional payments in some areas to top up the local housing allowance—after it previously made reductions—because it accepts there is a growing gap between the actual rents available to people who want to rent and need housing benefit, and the payments they would otherwise receive. The promises that rent would fall as a result of the policy have not come about. I hope that in looking to see what savings are supposed to have been made, those additional payments will be factored in.

We are repeatedly told that this policy is about saving money. I think the Minister from a sedentary position said, “Oh, it’s about £1 million a day,” but that was based on the Government’s original statement that the policy would save about £500 million a year. Other experts said, at a very early date, that it would be lucky to be somewhere nearer £350 million, and that does not take into account the very high cost of discretionary housing payments, which are a cost to Government and so detract from any savings made. It is therefore not correct for the Government to say what they say.

For individuals, households and families, the impact is extremely serious. This is not the same, as is often said, as what happened previously in the private rented sector, dating back to about 1998 when size was taken into account. This is an impost on people now, whether they can move or not and whether there is anywhere for them to move to or not. One of the amendments tabled during the course of the Welfare Reform Bill by the Opposition—it was followed up through the House of Lords and incorporated into a private Member’s Bill that was not allowed to progress in this House recently—proposed that if people were offered a suitable alternative house and did not take it, then the cut in their benefit could apply. For many people, however, that just is not practical. I have just checked yet again, as I do constantly, the number of houses available for social rent in my city. This week, there were 54 in the whole city. Of those, 31 were one-bedroom, but eight were sheltered. The people affected by the bedroom tax are by definition under pension and retirement age, and so would not qualify for those eight.

[Debbie Abrahams]

That is not just the case in my hon. Friend’s city. In Oldham in my constituency, 2,048 people are affected by the bedroom tax and there are only 50 properties for them to move into.

[Sheila Gilmore]

I thank my hon. Friend for her intervention.

In Scotland, the priority given to people who are homeless—a much wider definition of homelessness has been adopted by the Scottish Government—means that there is real competition for smaller houses. The majority of people who present as homeless are single people, so they too need the small houses that other people are trying to fit into.

[John Hemming]

I refer the hon. Lady to the answer that the then housing Minister, the late Malcolm Wicks, gave to a question from the hon. Member for The Cotswolds (Geoffrey Clifton-Brown):

“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]

If he said that then, why is it now such a bad idea?

[Sheila Gilmore]

It is interesting that the flat-rate housing allowance for the private rented sector should be raised. What the hon. Gentleman mentions was discussed as a possibility during the Labour Government. I was very much involved in housing, as the convenor of a housing committee in my council, and I remember that being discussed, but it was not implemented and there was a lot of opposition to the idea of doing that for the social rented sector, for all sorts of reasons. However, what the bedroom tax does is immediately say to people, whether they can move or not and whatever their circumstances are: “You may have to pay this extra money.”

To argue that discretionary housing payments are sufficient is not good enough. Even in Scotland, where the Scottish Government eventually agreed that extra money for the discretionary housing pot should kick in, there are still people who either do not know about making a claim or make a claim and do not get it, and who have to keep making claims. What the Select Committee said—I do not think this was unreasonable; we are a cross-party Committee—was that if we take the view that disabled people who have substantially adapted houses will receive long-term discretionary housing payments, which is what is always said, it would be simpler to exempt them. It would be administratively simpler, because there must be administrative costs in taking forms from people, processing them and working out whether they are still eligible. I do not think that was an unreasonable proposition. As the Government have taken so long to read our report—presumably considering it and working out whether it is workable—I hope that the Minister will stand up today and tell us that they have accepted that reasonable proposition. If he did that, we would all be extremely glad.

I want briefly to say something about the housing benefit cap. If a lot of people—this was the evidence to our Committee—are in temporary accommodation, it is utterly unreasonable to stop their benefit suddenly because they find themselves in that position. The Government are fond of saying that, as a result of the cap, people have moved out of temporary accommodation, but I suggest that it is likely that they are moving from temporary accommodation to permanent accommodation. There is a movement of people in and out of the scope of the household benefit cap, but the amount that some people are losing is very significant indeed. Again, I fear that the legislation was more symbolic than something that seriously addressed the underlying issues. If we have a lot of people receiving high amounts of benefits overall—because, for example, they are living in very expensive temporary accommodation—we need to build more affordable houses.

This is an issue north and south of the border. The Scottish Government have not been building sufficient low-cost affordable homes. The number completed in my city last year was the same as it was in 2007, which was the year that the current Scottish Administration took office. They have not been building low-rent affordable homes at an increased rate, even though they may sometimes try to say that they are. Without those homes, people will be paying excessive rents in the private rented sector, and not just in temporary accommodation. That is the issue we need to tackle.