Affordable Homes Bill Debate
Full Debate: Read Full DebateDepartment: Department for Work and Pensions
Tony Baldry
Main Page: Tony Baldry (Conservative - Banbury)Department Debates - View all Tony Baldry's debates with the Department for Work and Pensions
(10 years, 3 months ago)
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Sir Tony Baldry (Banbury) (Con)
It is always a genuine pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford). We have both been Housing Ministers in our time, and I concede that he was always a genuine expert on housing and local government policy.
I will start by focusing on the cost of today’s Bill. Listening to the right hon. Gentleman’s speech and some of the interventions from Labour Members, I reminded myself—I thought I might have forgotten—that there was an agreement earlier this year to introduce a welfare cap. Such are the wonders of modern technology, that even I can now google “welfare cap” on my BlackBerry, and I am reminded by the BBC that on 26 March this year—
Sir Tony Baldry
I am. I am quoting from the BBC. I can read. It states:
“MPs approve annual welfare cap in Commons vote.”
[Interruption.] Perhaps the hon. Gentleman would rather I did not read this and remind the House of the reality, but I think we ought to share it:
“MPs have overwhelmingly backed plans to introduce an overall cap on the amount the UK spends on welfare each year. Welfare spending, excluding the state pension and some unemployment benefits, will be capped next year at £119.5 billion. The idea, put forward by Chancellor George Osborne in last week’s Budget, would in future see limits set at the beginning of each Parliament. With Labour supporting the idea, the measure was approved in the House of Commons by 520 to 22 votes…The cap will include spending on the vast majority of benefits, including pension credits, severe disablement allowance, incapacity benefits, child benefit, both maternity and paternity pay, universal credit and housing benefit…Under the proposed system, if a government wanted to spend more on one area of the welfare state it would have to compensate by making cuts elsewhere, to stay within the overall cap.”
Sir Tony Baldry
Let me finish this point and then I will gladly give way to the hon. Lady.
My hon. Friend the Minister intervened on my hon. Friend the Member for St Ives (Andrew George) to say that the Government and Department have costed this Bill at £1 billion. Could that calculation and the arithmetic that supports it be put in a written answer in Hansard, and the figures placed in the Library so that we can all see them? This is important because it follows a decision the whole House took overwhelmingly earlier this year that if this Bill for example, costs £1 billion, then £1 billion of cuts must be made elsewhere in the welfare budget.
Chris Bryant (Rhondda) (Lab)
Perhaps the right hon. Gentleman can help us. The Government’s original estimate of the saving to the taxpayer of introducing the bedroom tax was £490 million. Today apparently, with a suspiciously round figure, the cost of getting rid of the bedroom tax would be £1 billion. How can that be possible?
Sir Tony Baldry
My hon. Friend the Member for St Ives sought to lull us all into a sense of reasonableness by asserting that this was just a Bill to tidy up and amend the spare room subsidy. It is clear, however, from the comments of the right hon. Member for Greenwich and Woolwich, that the real intention of those who support this Bill is to remove the spare room subsidy completely, so the purpose of the Bill is not what my hon. Friend the Member for St Ives said; it has a completely different purpose.
My fundamental point is still valid. If this Bill costs £1 billion, then given the welfare cap—which the hon. Member for Rhondda (Chris Bryant) and pretty much all Labour Members voted for earlier this year—the consequences of enacting it will mean that £1 billion must be saved from somewhere else in the welfare budget.
Mr Harper
I had not intended to intervene, but perhaps I can help to clear up the point. The cost of reversing the removal of the spare room subsidy is around £0.5 billion, as the hon. Member for Rhondda (Chris Bryant) confirmed. I spoke about the cost of the Bill because, whether the hon. Gentleman knows this or not, the Bill as drafted goes much wider than the removal of the spare room subsidy and fundamentally changes the way housing benefit is calculated—for example, it removes deductions for other people living in the household. That adds a further £500 million to the cost of the Bill. Members need to know that when they decide whether they will vote for it.
Sir Tony Baldry
May I invite my hon. Friend to intervene on me one more time to clarify and confirm this important point? Am I right in thinking that as a consequence of the welfare cap, whatever this Bill costs, whether it be £0.5 billion or £1 billion, that money must be saved and found somewhere else in the welfare budget?
Sir Tony Baldry
I am grateful to my hon. Friend. The whole House must recognise that when we debate issues of welfare, we cannot pretend that we did not collectively, and by a very large majority, vote for the welfare cap.
Sheila Gilmore
I heard one of the right hon. Gentleman’s colleagues on the radio this morning saying that there is no problem for disabled people and others affected by this because discretionary housing payments would cover it. Leaving aside the fact that I know full well that such payments do not cover everyone, if they did, it would balance out anyway. Why incur the additional administrative costs, as well as putting people through the anxiety of applying for discretionary housing benefits, if his colleagues think that the money is there anyway? Why not simply exempt those people and make it much simpler?
Sir Tony Baldry
If I recall correctly the hon. Lady was one of those who voted for the welfare cap. Discretionary allowances have been working. Indeed, the constituency of the right hon. Member for Greenwich and Woolwich still has discretionary grant to spare.
Mr Dave Watts (St Helens North) (Lab)
The right hon. Gentleman should not let the Minister escape the question he was asked: will he put those figures in the Library so that we can see how that calculation of £1 billion has been made? We will then see whether those figures are real. Labour did agree to a cap on the welfare bill, but there are many other ways of bringing that down, such as getting employers to pay proper wages, bringing down unemployment, and many other things.
Sir Tony Baldry
Having been in the House for nearly a third of a century, I implicitly trust what those on the Treasury Bench say. If the Minister says that the cost of the Bill will be £1 billion, I am sure that it will be and that he will be able to demonstrate to the House how he has come to that figure. The fundamental point, which I think we are all agreed on, is that whatever the Bill costs, whether £0.5 billion or £1 billion, that sum must be found somewhere else in the welfare budget. We cannot simply come to the House and seek to spend taxpayers’ money without that having consequences. Given that everyone has pretty much signed up to the welfare cap, one consequence is having to make savings elsewhere in the welfare budget.
When I first saw the Bill, one of the policy conundrums for me was why the previous Labour Government introduced almost identical proposals for tenants in the private rented sector—[Interruption.] I will come on to this in some detail, don’t you worry! Why did they think that it was appropriate to treat tenants on housing benefit in social housing differently from tenants on housing benefit in the private rented sector? [Interruption.] The hon. Member for Rhondda, who is probably one of the greatest chunterers in the House, says that it was not introduced retrospectively. Given the length of the average private rented tenancy, if his best point is that there is somehow a distinction because shorthold assured tenancies usually run for six months it is not a very good point.
Chris Bryant
I am sorry, but the right hon. Gentleman is talking utter Baldrydash. First, the truth of the matter is that the first measures on size criteria were introduced by a Conservative Government in 1989. Secondly, the Labour Government never introduced any retrospective measure. Thirdly, but far more important, the key point about social housing is that it is allocated on the basis of need. Our measure was completely different.
Sir Tony Baldry
One thing I will miss when I eventually leave the House is the hon. Gentleman’s charm. I suspect I will not miss it for long, but I will miss it.
I looked back in detail at the local housing allowance legislation, which was introduced for new claimants living in the deregulated private sector from 7 April 2008. Following the Social Security Act 1986, the housing benefit scheme was introduced in April 1988. As the House knows, housing benefit is a means-tested benefit administered by local authorities. It is paid to eligible tenants who live in the social and private rented sectors. Entitlement to housing benefit is calculated by comparing the needs and resources of the household, taking the liability for rent payments into account in calculating household net income. Before local housing allowance was introduced, private sector tenants also claimed housing benefit.
On 17 October 2002, the right hon. Member for Oxford East (Mr Smith), my county colleague, who was then Chief Secretary to the Treasury, announced plans for a new form of housing benefit that could no longer be directly linked to rent. He described the plans as
“the biggest reform in Housing Benefit since the benefit began.”
One characteristic of housing benefit reforms is that Ministers always say that their reform is the biggest since the benefit began, but he did seek to make significant savings.
The new approach was introduced in nine pathfinder areas from November 2003 and was extended to a further nine areas from April 2005. At the time, this is how the Department for Work and Pensions described the aims and objectives of the local housing allowance:
“Local Housing Allowance…is the cornerstone of the Government’s Housing Benefit reform programme which aims to simplify Housing Benefit and ensure it supports the wider objectives for welfare reform.”
Most hon. Members are sufficiently savvy to recognise the phrase
“ensure it supports the wider objectives for welfare reform”
as Treasury-speak for making public sector savings. That is exactly what the Labour Government sought to do. The Department for Work and Pensions website at the time said:
“The fundamental aims of the LHA scheme are to promote…Fairness…LHA bases the maximum amount paid to tenants on the size, composition and location of the household. Benefit will no longer be based on actual rents but on median levels of rent within localities.”
Sir Tony Baldry
I will give way in a second.
The current Government have extended the same principle to social housing tenants of paying the benefit on the size and composition of household.
Dame Anne Begg (Aberdeen South) (Lab)
Will the right hon. Gentleman give way?
Sir Tony Baldry
I will certainly give way to the Chair of the Work and Pensions Committee.
Dame Anne Begg
I assume the right hon. Gentleman wants savings in the housing benefit bill. Rents are much higher in the private rented sector, yet that sector is growing, partly as a result of the bedroom tax. Does he accept that the bedroom tax pushes people who are in cheaper social housing into more expensive private housing, which results in a greater call on the housing benefit bill?
Sir Tony Baldry
The hon. Lady is missing the point I seek to make, which is that the Labour Government, whom she supported, introduced almost identical provisions for tenants in the private rented sector, and there seems to be no reason why tenants in the private rented sector should be treated differently from social housing tenants.
Mr Nuttall
My right hon. Friend makes a compelling case. Does he agree that the measures the Government are taking to stimulate housing supply, and the increase in the housing supply, will help to keep private rented sector rents in check, notwithstanding the fact that more people might seek smaller accommodation within the private rented sector?
Sir Tony Baldry
My hon. Friend makes a good point. I suspect other hon. Members will enlarge upon the fact that, under Governments of both parties, new social housing has tended to be a planning windfall gain from new house building. Under the Labour Government, very little new housing was built. In Banbury and Bicester and throughout my constituency, more new housing is going up—as a consequence, new social housing is going up—than for a very long time. He is correct that that leads to new social tenancies.
Mr Raynsford
The right hon. Gentleman should bear in mind the fact that the average number of homes built per year during the lifetime of the Labour Government was 145,000. The lowest number in any one year was 124,000. The current Government have not completed 124,000 homes in any single year they have been in office, so it is simply not true that more housing is being built than was built under the previous Government.
Sir Tony Baldry
The right hon. Gentleman is a little selective in his use of figures. The previous Government were in office for 13 years, and had they not built houses in all those years, we would have been in serious difficulty. As a consequence of the economic mess they got the country into, during their final years in office and during the early part of the recession—the hangover of the recession overlapped with our being elected—the construction industry was in dire straits. I am glad to say that, wherever I go in my patch, I see signs saying “Bricklayers wanted” outside building sites. The construction industry tells me that it finds it very difficult to get the people with the skills it needs because the building boom, with new housing going up, is running apace, thanks largely to the policies pursued by my right hon. Friend the Chancellor of the Exchequer in turning the economy around.
I should get back to the central point to which I wish to draw the House’s attention. The experience of the pathfinder areas of the local housing allowance led to the previous Government legislating for a national roll-out from 7 April 2008. The local housing allowance measure was contained in the Welfare Reform Act 2007 and associated regulations.
Sir Tony Baldry
I am sure the hon. Lady will have the opportunity to make her own speech in her own time.
Local housing allowance was rolled out nationally for new claimants in the deregulated private sector from 7 April 2008. The Library note makes it clear that local housing allowance
“is paid at the standard rate to the tenant based on the size of the accommodation they are deemed to need, e.g. a couple with no children would receive the LHA based on a one-bedroom property.”
I suspect that that is exactly the same provision as now applies to tenants in social housing.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Does my right hon. Friend agree that the other side of the coin of the spare room subsidy is that it addresses not only under-occupancy, but over-occupancy? It allows families previously overcrowded in unsuitable accommodation to move into larger properties vacated by families previously over-provided for.
Sir Tony Baldry
My hon. Friend makes an extremely good point.
So much did the Labour Government think their policy would work that they were going to allow tenants to retain up to £15 a week in surplus benefit, if they could make sufficient savings on their rent. We might not remember it now, however, but as part of the 2009 Budget, they announced that the local housing allowance would be amended from April 2010 to remove that provision:
“The Local Housing Allowance…was introduced in April 2008, and costs have exceeded the planned expenditure for this policy. To bring the cost into line with what is affordable, whilst still ensuring all recipients can afford their rent, the Budget announces that from April 2010 there will no longer be scope for anyone to receive more LHA than they have to pay in rent. Existing claimants will move onto the new arrangements on the anniversary of their claim.”
That makes it absolutely clear that the last Labour Government introduced these changes in housing benefit for tenants in the private rented sector entirely, solely and totally to save money and reduce the housing benefit bill.
The effect of the proposal was summarised thus:
“All new customers claiming Housing Benefit in the deregulated private sector on or after 5 April 2010 would not be entitled to any excess benefit over their contractual rent…Existing customers, including those in the former LHA Pathfinder areas, who are currently entitled to an excess payment of up to £15, would see a reduction in their benefit when their claims are reviewed, usually on the anniversary date of their claim.”
Contrary to the blandishments of the hon. Member for Rhondda, that change was retrospective. A lot of people who thought they would be better off by £15 a week suddenly discovered, as a consequence of that Budget, that that money had been taken away from them.
Yvonne Fovargue
The right hon. Gentleman described this system as almost identical to the local housing allowance, but as he himself pointed out, the LHA is a median figure. In Wigan, therefore, somebody moving out of a three-bedroom local authority property can find a three-bedroom, non-social housing, private rented property at the median rent, while still being paid £10 a week more and receiving housing benefit. They could move out of and leave vacant a three-bedroom social housing property, but still have a three-bedroom property even though they only have one child.
Sir Tony Baldry
The hon. Lady and other Labour Members are refusing to acknowledge some fundamental points about the Bill. She voted for the welfare cap and the Minister has said that the Bill would cost the Treasury £1 billion. If it were passed, therefore, and if, by any mischance, a Labour Government were to be elected next spring, they would have to find £1 billion of savings elsewhere in the welfare budget. If Labour votes in support of the Bill, it will behove Labour Front-Bench team, given that the Labour party is governed by collective responsibility just as much as the Government are, to tell the House and the country exactly where they would find £1 billion of savings elsewhere in the welfare budget to compensate for the cost of the Bill.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
For clarification, all the figures were adjudicated by the independent Office for Budget Responsibility, not the Government. The Opposition and the hon. Member for St Ives (Andrew George), who is promoting the Bill, have said they want the figures checked, but the OBR is an independent body and therefore the figures stand and include all the costs and savings.
Sir Tony Baldry
I am sure the whole House is grateful to my right hon. Friend for that clarification and confirmation.
I thought it would be interesting to go back and read the Committee proceedings of the Welfare Reform Bill in 2006. Hon. Members might not recall, but, interestingly, when the proposal for limiting housing benefit for those in the private rented sector was first mooted, the original consultation paper also consulted on a proposal to limit housing benefit for those in social housing on exactly the same basis. Nowhere on Second Reading or in Committee did the right hon. Member for Stirling (Mrs McGuire), the then Minister, ever explain to the House or the Committee why the then Labour Government decided only to focus the housing benefit changes on the private rented sector and not to include social housing.
In Committee, various hon. Members sought to make exactly the same proposals and changes as are being proposed today. For example, Members were keen to know whether alterations could be made for under-25s in the private rented sector, and the Minister said that the changes were
“part of a package that is intended to make housing benefit more transparent and more understandable to people….I hark back to our short debate on Tuesday evening: the new local housing allowance applies only to those in the private rented sector.”—[Official Report, Standing Committee A, 2 November 2006; c. 424-45.]
In other words, the changes were being introduced entirely because the last Government thought it necessary to save money.
Mr Harper
Perhaps I can help my right hon. Friend. In 2004, my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown) asked the then Minister, the late Malcolm Wicks,
“for what reasons the local housing allowance applies only to the de-regulated private sector.”
The then Minister replied:
“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector…We aim to extend our reforms to the social rented sector as soon as rent restructuring and increased choice have created an improved market.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]
It is clear, despite all we hear from the Opposition, that the last Labour Government intended to do exactly the same thing.
Sir Tony Baldry
It is clear they had exactly the same intentions.
In the final debate in Committee on the revisions of the local housing allowance, when asked to make amendments similar to those being invited in the Bill, the Minister said:
“I reassure the Committee that we already have powers to make different provisions for different classes of people…However… adding the qualification suggested by the amendment to the local housing allowance would undermine its main advantages of simplicity, transparency and fairness….As I said during a debate on a previous amendment, the discretionary housing payment scheme is also in place. That flexible system will enable the local authority to target help to those who most need it.”—[Official Report, Standing Committee A, 2 November 2006; c. 434-5.]
May I suggest that this Government’s discretionary payment scheme for tenants in the social housing sector is exactly the same? Indeed, those comments could have been made by a Minister in this Government in exactly the same way as suggested by the amendments and reforms proposed for changing housing benefit for tenants in the social housing sector.
I conclude by saying that this Parliament has to be grown up about the issues. If the House introduces a cap by an overwhelming majority, we cannot gaily come along, turn up on a Friday in September and seek to spend £1 billion of public money without making it clear to the House and to the country where the consequential savings are to be made elsewhere in the welfare budget. This will happen whether it be under this Government or any other Government. It behoves the Labour party, Labour Front-Bench Members and the shadow Minister when he gets to the Dispatch Box to tell us in terms where he intends those savings to be made. If he cannot do that, it would be irresponsible to support the Bill in the Lobby today. There is no justification for a Labour party and a Labour Government who introduced reforms and changes to housing benefit for those in the private rented sector to think that tenants in the social housing sector should be treated any differently.