Under-Occupancy Penalty (Wigan)

Tuesday 23rd April 2013 Westminster Hall

11:00

[Yvonne Fovargue (Makerfield) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I am pleased to have secured this debate on the under-occupancy penalty and its effects in my borough of Wigan. The importance of the policy has been demonstrated not just by the number of constituents who have raised the issue but by the unprecedented comments by the very non-political chief executive of Wigan and Leigh housing trust, who in a recent article for the Wigan Evening Post slated the policy and its effect on the trust and its tenants, calling it “a wicked policy” that will not save any money on the housing benefit bill but will bring misery and hardship, forcing thousands of people in Wigan to pay up from already overstretched incomes or move to smaller properties, which are already in short supply in the area.

The stock of one and two-bedroom properties in Wigan stands at 12,266, of which 1,496 became vacant in 2011-12. Demand for those properties before the implementation of the bedroom tax was 3,177. There are 10,110 three-bedroom properties, of which 553 became vacant, but only 353 applications were made for those vacancies. As can be seen, families are not tightly packed into overcrowded dwellings waiting for selfish people with acres of vacant space to move and release a home. In fact, contrary to Government rhetoric, the reverse is true.

We have heard many times from the Minister and others that this is about fairness, and that people in the private rented sector claiming local housing allowance are not allowed a spare room. I challenge that. I have worked on an LHA pilot and I am familiar with the rules. I recently tabled a parliamentary question asking how many people were under-occupying while claiming local housing allowance. The answer was, as I knew, that local housing allowance is based on the characteristics of the household and is not affected by the number of bedrooms in the property occupied. Two-bedroom properties in Wigan are readily available at the local housing allowance rate of £80.77 per couple. One-bedroom properties are much scarcer, so people in the private rented sector can have a spare bedroom without paying for the privilege.

The potential for social housing tenants to move to the private sector discredits another purported reason for introducing the policy: saving money. According to Government figures, £2.9 million could be saved annually in Wigan if nobody moved and everybody paid the penalty or if everyone downsized within the social rented sector. However, the harsh reality of the housing market in Wigan is that the shortfall of one and two-bedroom properties in the social rented sector is causing people to shift to the private sector, which could result in an additional housing benefit cost of £229,000 in 2014-15.

As of 15 April, 38 of the 4,200 households affected have terminated their tenancies. Each household that moves to the private rented sector increases the housing benefit bill by £700 to £1,200 a year. The move from one sector to the other is likely to go only one way. Of the 1,100 people on the waiting list from the private rented sector, 80% require one or two bedrooms, which, we already know and I have demonstrated, are over-subscribed and in short supply.

It is worth reminding the Minister that we are dealing with people who have families, communities, roots and memories bound up in their homes, not with chess pieces that can be moved across the country at will. Many of them have disabilities, live in adapted properties and have a medical need for a spare room. They are people like my constituents Mr and Mrs Pimblett and their 12-year-old son, who live in a three-bedroom Wigan and Leigh housing trust property.

Mr Pimblett is severely disabled and suffers from gigantism and osteoporosis. He has recently been assessed by his occupational therapist as requiring a further bedroom for his medical needs. If he follows that medical advice, he will pay a penalty of £25 a week. Mr Pimblett, who is virtually housebound, enjoys fishing with a friend who takes him. It is his only hobby, but the current penalty of £14.60 a week for his “spare” bedroom means that he now cannot afford the £120-a-year membership fee at the local angling club. It has caused him to become severely depressed, exacerbating the pressure on him, his family and the NHS, which is now treating him.

Another constituent arrived at my surgery in tears. She and her partner, who is also her live-in carer, had received a letter saying they were subject to the under-occupation penalty. She was injured at work but, due to financial pressure, carried on working until the pain became too intense, leading to severe arthritis of the spine, a degenerative condition. She must now use a walking frame, when she can walk at all. Their home is a two-bedroom adapted flat, and she and her partner cannot share a bedroom because she has a specially adapted bed and medical equipment, and must often get up during the night due to severe pain. Were my constituent to move, the adaptations budget would have to be used to adapt her new dwelling.

In Wigan and Leigh housing trust, 550 households include a disabled person and live in an adapted property. Some, like my constituent, feel forced to move. The additional expenditure on the already committed adaptations budget could be as high as an extra £1.9 million over the next 18 months. The only other funds available are from reductions in the capital programme, of which new house building is the most vulnerable area, so we cannot even build our way out of the problem. The policy is affecting people who might want to move to the social rented sector in future.

The stability of the social rented sector’s financial model is threatened. Rent arrears in Wigan and Leigh housing trust alone are predicted to increase by at least £1.4 million for 2013-14, solely due to the bedroom tax. The first two weeks’ collection report shows a large non-payment, and collection staff have been diverted from their normal recovery duties to deal with large numbers of angry tenants who are affected by the policy, do not understand why they are being hit and cannot afford to pay.

I repeat the question that I asked the Minister during an earlier debate on this topic. If a person subject to the charge cannot pay and is registered for a smaller property that is not available—I have figures showing that, given current vacancy rates, it will take several years in the Wigan borough if just a quarter of those affected wish to downsize—will they be considered intentionally homeless? If not, who will fund them? Will it be the already overstretched Wigan and Leigh housing trust? Are all those people and many others—the grandparents who look after their grandchildren two nights a week so their daughter can work, or Mr Smith, who shares the care of his son—expected to apply for discretionary housing payments, and how far will that budget stretch?

As I have time, I will mention another case. Mrs B is 55 and lives alone in a three-bedroom house. As it is her family home, she believed that she could live there for the rest of her life, but the cost implications of the under-occupancy charge have brought her a lot of stress and worry. She feels that it is designed to evict her from her home. She cannot afford the £20.75 that she must pay weekly. Before April, her rent was covered in full by housing benefit. She is a full-time carer for an elderly relative and her parents, and her income is minimal. She is just about getting by on what she has at the moment. She does not have any personal transport—she cannot drive—so her elderly aunt has moved close by, and Mrs B can help care for her as well. All the family members live close by to provide support, they all look after each other and they are all within easy walking distance.

Through no fault of her own, Mrs B lives in the property alone. She has lived there for decades: her son was born and died at this property, and her memories and life are bound up with it. Time and money have been invested to make it safe and secure; the family have created a memorial garden in the back to the memory of her son, because thieves stole the memorials from his grave. As a result of his death, she suffers constantly from anxiety, stress and depression but, despite that, manages to fulfil her caring responsibilities. The under-occupation charge has exacerbated her problems with the worry of losing her home and of wondering where she will be forced to live or whether she can look after her auntie and parents. Her children have grown up and left the property, and she is left there alone.

Wigan and Leigh housing trust has completed a discretionary housing payment application on Mrs B’s behalf, but how far will that budget stretch? Some analysis has been done by the housing trust. The additional money in Wigan can assist fewer than 100 households of the 4,162 affected, which is less than one fifth of the number of households that contain a disabled person in an adapted property affected by the bedroom tax, let alone the households of people such as Mrs B. Wigan has worked hard over the years to build stability and community spirit. Forcing people to pay for staying in their home or to move away from their network of support—friends, family—from their jobs in many cases, because we should not forget that the majority of housing benefit claimants are working for a low wage, from their schools, from the area they grew up in and from all their memories is, in many cases, completely heartless.

For Wigan and most of the north of England, this policy will not deliver the predicted savings or decrease overcrowding, but it will have a detrimental impact on other areas covered by the public purse. It will aggravate the housing supply problems and the demand mismatch in the north, increase financial hardship in our most deprived communities, leading to increased rent arrears, evictions and homelessness, and bring increased stress and misery to thousands of people. We have all heard horrendous and heart-wrenching tales from our constituents, and all for no good reason. I have to agree with the chief executive of the Wigan and Leigh housing trust: “wicked” is the only way to describe the policy and its effect in Wigan.

11:13

[The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)]

It is a pleasure to be serving under your chairmanship today, Mr Hollobone. I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing the debate on behalf of her constituents.

I am under no illusion about the strength of feeling of many about the removal of the spare room subsidy, but we are not introducing the change lightly. A number of important principles lie behind the reform, and it is only right to describe the main ones, because they provide the context for the changes, which of course have a financial imperative and other compelling reasons. Furthermore, no one has offered a serious alternative to achieve the savings of £500 million a year, especially since housing benefit doubled in cash terms to £23 billion under the previous Government, so we have had to look at the financial implications.

[Yvonne Fovargue]

In the Budget, the Chancellor cut the beer duty and cancelled a planned future rise at the cost of £200 million, which equates to 40% of the anticipated savings from the bedroom tax. Is the Government priority beer or bedrooms?

[Esther McVey]

That example is taken completely out of context; one measure is about a business and ensuring that it remains, as well as about how people spend their money, but the measure we are discussing is about one set of finances that doubled in cash terms under the hon. Lady’s Government to £23 billion and about what we should do about it. We cannot pick and mix and move the finances around; we have to get housing benefit under control, and I will say how we are doing that, although I do not underestimate in any way the complexity and difficulty of doing so. She said clearly that this is about people, and I fully understand that it is about people, which is why we have to get things right, not only for now but for future generations—their children and their children’s children—so it is always about people and getting the system right. Another reason for the reform is that it will result in the effective use of housing stock over time, because we also have to look at the people in overcrowded accommodation, and in Wigan alone more than 3,500 families are on the housing waiting list.

[Yvonne Fovargue]

rose—

[Esther McVey]

I will proceed a little further, so that I can answer the hon. Lady’s questions.

We need to improve use of the housing stock, and doing nothing is not an option, because we have 1 million spare rooms but 250,000 people living in overcrowded accommodation. The situation will not be easy to change overnight, but we have to start on the process of getting things right. It is about fairness. The hon. Lady said that I would talk about fairness, and of course it is about fairness, but from different angles and not only for those renting from private landlords or those in the social rented sector. It is about fairness between all those different people who are living under different systems. In Wigan, 27,000 people receive housing benefit, 18,500 of them in the social rented sector and 8,500 in the private rented sector, so 31% of people are already under the rules that we are introducing. May I clarify with the hon. Lady that today she is asking not only to oppose the measures that are progressing but to repeal the previous Government’s measures, brought in gradually from 2008? People are already living under the same rules and criteria. Is that what she would like to see—the reversal of her own Government’s 2008 rules?

[Yvonne Fovargue]

The Minister fundamentally misunderstands local housing allowance, which, as stated in the answer to my parliamentary question, is based on the characteristics of the family and not of the property. In Wigan, therefore, a couple can quite easily rent a two-bedroom private property—with a spare bedroom—for £80.77 a week. Fairness does not come into it.

[Esther McVey]

I can correct the hon. Lady. The size criteria applied to the social rented sector are exactly the same. If a private landlord is charging below the median market 30th percentile, a couple can do that. Equally, should local housing associations want to regroup or make a change from a three-bedroom to a two-bedroom property, they are entitled to do so. People can do such things, and that is what is happening.

I did not, however, get an answer to my question: would a Labour Government reverse what they introduced in 2008? We are drawing a parity between two unfair systems—one for private, one for social—within the housing benefit market. I see the hon. Lady shaking her head, so Labour would not reverse that and we seem to be having a fake argument today; the Opposition are opposing for the sake of opposing, with hypothetical arguments about something that they clearly introduced without the catastrophes and calamities that she is talking about. The number of people involved is not small, but 31% of those in rented accommodation in Wigan.

Wigan and Leigh housing trust manages Wigan’s council homes, provides tenants with comprehensive advice, and has dedicated financial support teams that focus on “claim, manage, pay”: managing and maximising income, and paying rent. In conjunction with Citizens Advice, Wigan council has set up Wigan Housing Solutions, a not-for-profit organisation that acts as a social letting agency and as a bridge between the private and rented sectors, helping to relieve pressure on the waiting list.

We welcome all such initiatives for managing welfare reform. It is only too easy to speculate about the potential impact of the change, and to come up with alarmist examples of people suffering and losing their homes. We have not seen that yet, but we are alert to such situations. We want people to work in partnership, which is why we have trebled the discretionary payment fund. We are offering different opportunities and outlets of what can be done. There is no one-fits-all solution. We understand that people live in different houses with different set-ups, and that we must think about how the change will work for them. That is why we welcome partnership initiatives.

I have talked about how changes were implemented in 2008. Some of the things that the hon. Lady is talking about and that she fears will happen in 2013 did not happen. Before implementation of the current changes, my right hon. Friend the Secretary of State made announcements concerning foster carers and parents of armed forces personnel when they are away from home on operational duty, and on what the discretionary fund could be used for. We have talked about disabled children who cannot share a room with a sibling and who are exempt, as are pensioners. Various people will be exempt and there will be significant discretionary payments, which will be constantly monitored to see whether the amount of money is right and whether the right people are being supported.

We have seen best practice with people pooling resources and coming together because at the end of the day—I am convinced that there will be agreement on this—we want the best result for people in social housing. We want the best result for those on waiting lists for social housing. We want the best result for those who may be overcrowded. We want that not just for 2013. We looked at what has happened over the last 10 years when payment costs doubled, and we want what is right now and what will be right in the future. It invariably takes a Conservative Government—in this case a coalition Government—to get the accounting right and to build and convert the right number of properties. A Conservative party always has to pick up the pieces of a failed Labour Government.

[Yvonne Fovargue]

The Minister has twice referred to the number of people on the waiting list for properties. In Wigan, 80% of those in private rented accommodation and on the waiting list are waiting for one and two-bedroom properties, but there is an over-supply of three-bedroom properties. She also talked about people moving to the private rented sector, where rents are higher. For every person who is displaced there will be a cost, and the policy is likely to lose money for Wigan because of the over-supply of three-bedroom properties and the under-supply of one and two-bedroom properties. Families are not getting larger; they are getting smaller. One and two-bedroom properties are in most demand.

[Esther McVey]

The hon. Lady is right to talk about housing stock and how so many councils got their housing stock wrong for so many years. Why was it not reallocated? Why were conversions not carried out? Why did they not use the money? If they realised that so many people were in three-bedroom properties when they should have been in two-bedroom properties, why did they not do something about that work? They are beginning to do it now, which is why there are so many spare rooms. That work should have been done, but it was not. No attention was paid to needs, what should have been built, and changing family demographics. It is right that housing associations could have reallocated housing by changing three-bedroom houses to two-bedroom houses. All those offers were on the table and are still on the table. We are trying to work through that, and the hon. Lady was right to mention it. We have provided a list of solutions to solve those problems.

I return to the number of people on Wigan’s housing list, which is 3,591families. Some people are overcrowded and still on the waiting list, and even if they are not overcrowded they may still be on a waiting list. That problem also needs to be solved. There also needs to be re-allocation of rooms. I understand the business pretty well because it is my family business and I know about conversion of stock and having the right people in houses. I understand what the Government are doing.

I resent people, even chief executives, talking about a wicked initiative. It is not wicked. It is solving a tremendous problem. We have been given a terrible problem and we take no pleasure in having to solve it, but we must do that. We must look at costs, people, the use of stock and how we support those people. Instead of people lobbying and scaremongering, I would prefer that we work together to solve the problem. Trading words is an ineffectual use of time and energy, but I believe that we can solve the problem, which is why we are monitoring it to ensure that the trebling of the discretionary payment goes to the right people.

[Yvonne Fovargue]

The chief executive of Wigan and Leigh housing trust said that the effects on people in Wigan are wicked, and that in the north of England and Wigan the effect of the policy on the people he sees daily—tenants—on the housing stock he manages and on his business planning for the future is completely the opposite of what the Government intend. No one is saying that the Government’s intentions are wicked, but their policy is not working and the effect on people in my borough and those I represent is absolutely wicked.

[Esther McVey]

We must get it right, and we are getting it right. I do not believe the hon. Lady’s description to be the case. We are working together to ensure that we support people now and in future. We never get a reply from Labour on spending commitments, but will the party—it introduced its policy in 2008—in addition to opposing what we are doing today, put on the record the fact that they will oppose, revoke or withdraw everything they put in place in 2008? There is silence from Labour Members because they will not go backwards on that commitment.

In our final few moments, I will say what we are doing. Our imperative is to sort out our housing stock, to put people who need houses into the bedrooms that exist. For the first time ever, we are ensuring that Britain is building. Under the previous Labour Government, where most of the problem comes from, there was a near collapse in the building of social housing, which fell to an all-time record low. In every which way of the argument, there was a pinch effect from lack of building, wrong allocation of resources, massive overspending, and not caring about those on waiting lists and those in overcrowded housing. We must deal with that in its entirety, but there are differences in different regions. I understand that, and the Government understand that, and that is why we will constantly monitor what we are doing. There has been a trebling of the discretionary fund, and Wigan is entitled to its fair share of that. We need to work in partnership with best practices in Wigan for pooling resources and helping everyone—not one section, but everyone who needs social housing.

11:30

Sitting suspended.