Housing Benefit (Scotland)

Tom Clarke Excerpts

Tuesday 8th February 2011 Westminster Hall

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

I am sure that hon. Members on both sides of the Chamber would agree that the provision of decent homes is the mark of a civilised society. Parliament has a role in ensuring that that consensus is reflected in policy. That is why I asked for the debate. I am concerned about the consequences of the Government’s choices on housing benefit and on local housing allowances for my constituents and for the whole of Scotland.

According to the Department’s impact assessment, 55,000 households in Scotland will be worse off this year as a result of the Government’s choices on housing benefit. I have been speaking to community groups, local government, housing associations and charities in my constituency. They are deeply concerned about the impact of the Government’s choices on some of the most vulnerable members of our community. As a result of just some of the changes, £2.2 million will be taken out of the pockets of people claiming housing benefits in north Lanarkshire alone every year, and 75% of social tenants claiming housing benefit will lose out in north Lanarkshire.

Some Ministers have expressed concerns about the impact of the cuts. The Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Kingston and Surbiton (Mr Davey), has said that they mean that

“some people who are on the breadline will be put below the breadline.”

Therefore, I know that this Minister will treat these genuine concerns with the respect that they deserve.

I hope that the Minister will also accept that choices that the Government have made interact in a way that will make life harder for some people. I want to draw his attention to the problems posed by the interactions between some of the changes. For instance, consider a family in which working-age social tenants claiming housing benefit are living with grown-up children. There are many such families in all our constituencies. The Government have announced their intention substantially to increase non-dependant reductions in housing benefit for both social and private tenants.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

My hon. Friend is speaking remarkably well in an excellently chosen debate. Is he aware that, in addition to the vulnerable people whom he has mentioned, many of the organisations of and for people with disabilities are particularly worried about the impact on them? Many of them might be affected out of proportion to their numbers, and they really are the least able to bear it.

[Gregg McClymont]

My right hon. Friend raises a very good point. He is well known in the House for his expertise in that area. He is right to raise the issue of the impact on disabled individuals and families in particular.

One issue that I want to press with the Minister is the Government’s intention to extend the reduced shared-room rate of housing benefit to all single people under the age of 35. That will make it harder for young people on low incomes to move out of their family home, as the rate is frequently too low to cover the costs of accommodation. Outside major cities, there are very few licences for houses in multiple occupation in Scotland. Even in the major cities, those HMOs are likely to be fully occupied already. Also, some young people, particularly those with mental or physical health problems, would find it very difficult to live in shared accommodation, in many cases with strangers.

Even if young people do move out of the family home, another problem looms. If their parents are, like many people in my constituency, working-age social tenants, they will fall foul of the limit on payments for working-age tenants who are deemed to be “under-occupying”.

--- Later in debate ---

[Steve Webb]

Let me say for the benefit of hon. Members that although I should very much welcome their contributions, this debate was initiated by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East, and I will give way to him at any point. It is only fair to him to respond to his points.

The Scottish perspective from COSLA is that the convention expected LHA to drive up rents, and that is what seems to have happened. The question now is what will happen when we try to stop that escalation, which is where the CPI point comes in. In that respect, I should say that the CPI excludes only owner-occupiers’ housing costs, not all housing costs. That, however, is where we are trying to put a cap on the process. As far as I am aware, the national cap does not affect Scotland at all.

The question is what landlords will do in response. The hon. Gentleman’s hypothesis was that there is plenty of demand out there, so they will do nothing. However, a landlord with a potential tenant who is on LHA has a choice between not going with that tenant or telling the local authority, “What would clinch it for me would be direct payment.” We have said that we will extend the scope of direct payment, which the hon. Gentleman asked about at the end of his speech, so that a local authority will be able to agree with a landlord and a tenant to make payments direct to the landlord in return for securing a tenancy that would not otherwise have happened and for getting rents down.

Plenty of landlords rent to people on housing benefit; it is not that landlords will not do so, although I accept that some will not. A large number of landlords will rent to people on housing benefit, who are the people we are talking about. It is not that these things do not happen. A landlord looking at a potential housing benefit or LHA tenant, or thinking about renewing a tenancy, can have uncertainty about whether the tenant will pay or they can have direct payments. Direct payments are like a triple A bond; they are like guaranteed money. That is worth something to the landlord. For an investor, certainty is worth something. If a landlord just shaves a bit off the rent in return for the direct payment, which is the deal we shall try to strike, the shortfalls that the hon. Gentleman mentioned, which look a bit scary when they are multiplied, will be reduced.

The debate is about the impact on Scotland, and the hon. Gentleman will know that the average shortfall in the United Kingdom is £12, while the average figure for Scotland, if I remember correctly, is £10. It does not take much, therefore: let us take the example of a rent of £200. A landlord who reduces that by 2.5%, which is £5, or by 5%, which is £10, has suddenly wiped out the shortfall. Clearly we must ensure that that happens. We cannot just sit back and hope that landlords will cut their rent. I fully accept that. That is why we have made the change. That is important.

The regulations have been improved by the consultation and by the changes that we have made, specifically with respect to transition. We said that from April new tenancies will go straight on to the new rules, because the whole philosophy of the reforms is that the choices made by people on housing benefit—who, I fully accept, may be in work—should mirror the choice that someone would make if they had no subsidy but were just doing a low-paid job. That is the parallel. We are not trying to take a penal approach or to be harsh towards people who happen to be on LHA; we are simply trying to level the playing field. The idea is that they will make the choices in a constrained way, just as people in a low-paid job would have to do. That would, again, mean that they focused on a reduced section of the market; but properties would still be affordable. To take the broad rental market area that serves the hon. Gentleman’s constituency, which I assume is the North Lanarkshire BRMA, we estimate that after the reforms 37% of properties will be affordable. Clearly we are telling people on a relatively low income or benefit, “You have a more constrained choice than you did”; but 37% is still, by definition, more than a third of the market.

The hon. Gentleman asked questions on some more detailed points, including the single room rent. We will publish an impact assessment on that change. He also raised the important issue of people with mental health problems and what would happen if, through a reduction in subsidy, someone were to be coerced inappropriately into shared accommodation. There are already exemptions for vulnerable groups. For example, certain disabled people are not affected by the single room rent regulations; but, clearly, we will always consider the issue of vulnerable people and the impact of changes on them.

[Mr Tom Clarke]

Will the Minister give way?

[Steve Webb]

Because this is the debate of the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East it is only fair if I respond to him and the questions he has raised.

[Mr Clarke]

It is not the Minister’s debate either.

[Annette Brooke (in the Chair)]

Order.