Housing Benefit

Debate between Steve Webb and Andy Slaughter

Tuesday 9th November 2010 Commons Chamber

[Steve Webb]

I am not sure what the hon. Lady is questioning. Some 40% of private rented sector tenancies have housing benefit. That is a fact.

As my right hon. Friend the Secretary of State pointed out earlier, people have said in this debate that rents will not fall. There is an assumption that rents have to go up. I have news for those people: since November 2008 private sector rents have fallen by 5%, while LHA rents have risen by 3%. So there is a void. That is further evidence. Opposition Members have asked for evidence, and here is clear evidence that LHA is driving up rents.

[Mr Slaughter]

Will the Minister give way?

[Steve Webb]

Will the hon. Gentleman allow me? I want to respond to 35 different contributions; I hope that he will forgive me for responding to the debate.

My hon. Friend the Member for North East Hertfordshire (Mr Heald) pointed out how LHA is inflating the market. LHA rents are on average 10% higher than the housing benefit rents that have carried on from the previous system—more and more evidence that we, through our taxes, including taxes on hard-working families, are inflating rents. That is not benefiting tenants. During the debate it has been suggested that we are against the tenants, but we are actually against our taxes being spent on inflated rents, because that is not what the money should be for.

We have established that if we can get a grip on the rents, that will benefit tenants and help people in lower-paid work to pay those rents. There have been exaggerated stories about the impact, an assumption that rents will not fall, although we believe that our changes will have an impact, and thirdly—

[Mr Slaughter]

When the local housing allowance was introduced, the hon. Gentleman wrote on his website:

“Proposals of this sort risk creating ‘ghettos’ where low-income tenants are forced to move to accommodation in lower rent parts of town, whilst those who are better off continue to rent the best properties.”

When did he change his mind and stop worrying about that problem?

[Steve Webb]

That is interesting. I wonder whether the hon. Gentleman still supports the housing benefit cut taking away the £15 excess that the Labour party was going to introduce before the general election. If I remember rightly, Labour delayed that cut by one year—until after the election. Does the hon. Gentleman still support that Labour cut in housing benefit? I suspect not.

It is important that we have a discussion about fairness. My hon. Friend the Member for Colchester (Bob Russell) raised the situation of vulnerable people, particularly families with children. We are clear, first, that the impact of the changes as a whole is much narrower than has been assumed; secondly, that they will have an impact on rents, which will reduce the shortfalls and the number of people who will have to move; and thirdly, that there will be individual vulnerable cases. My hon. Friend is right to say that the position of families with children is very important. That is why we have trebled the money available to local authorities for discretionary housing payments specifically to help the most vulnerable. I recently had a conversation about a London authority that estimated that it would need to double its discretionary housing payments to cover these costs. We are trebling them, which we believe will enable local authorities to address the situation of the vulnerable households about which my hon. Friend is rightly concerned. I am grateful to him for raising that point.

The issue of fairness was raised by other Members too. My hon. Friends the Members for Hastings and Rye (Amber Rudd) and for South Thanet (Laura Sandys) rightly pointed out that many low-paid workers cannot begin to afford the sorts of rents we are paying for housing benefit recipients. The Labour party used to agree with us on that. Since they became the Opposition, however, they have stopped agreeing with themselves. There is a fairness issue therefore, and as we bring down rents we will improve the fairness of the system.

One of the key issues is housing supply, which my hon. Friend the Member for Colchester and others also raised. The shadow Communities and Local Government Secretary, the right hon. Member for Don Valley (Caroline Flint), rightly raised that issue as well. However, the housing shortage was caused by the Labour party, which failed to build sufficient numbers of houses when in office. Many Labour Members said that they wished the situation was different. Well, they had 13 years to make it different. It is no good their wishing in opposition that houses had been built. As they held the levers of power and they did not pull them, they have to accept and live with the consequences. That is why I welcome what my ministerial colleagues at the Department for Communities and Local Government are doing to generate new social house building so that there will be diversity in the social housing sector, with the most subsidised rents and also near-market rents—80% of market rents—which will provide the resources needed for the significant increase of 150,000 new social homes. We desperately need that increase during the course of this Parliament.

Many Members raised issues about the disincentive effects of the housing benefit system, and I want to draw attention in particular to the remarks of my hon. Friend the Member for Enfield North (Nick de Bois). He made some powerful points about the fact that once people are in work and on housing benefit—I do accept that there are people in work and on housing benefit—the benefits systems then traps them, because if they want to do extra work they face very high marginal withdrawal rates. My hon. Friend highlighted the situation of people who are in work and do not want to do more hours because they will just find that their housing benefit is withdrawn. That is a crazy system: we, the taxpayers, pay £21 billion a year to subsidise rents, and put inflation into rents, and then we expect people to do low-paid work, and as soon as they do more work we claw the money back.

That is going to change. This Government are doing to do something about it. On Thursday my right hon. Friend the Secretary of State will announce plans to take forward the proposition of a universal credit, whereby for the first time people will be guaranteed to be better off in work.