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Yvonne Fovargue (Makerfield) (Lab)
Thank you, Ms Dorries, for calling me to speak. It is a pleasure to serve under your chairmanship.
We are fast approaching the first anniversary of the bedroom tax, as I prefer to call it. Anniversaries are usually pleasant occasions, a time to celebrate and congratulate, but not this one. The legacy of the new tax is not benign; it is cruel and unfair. The tax has heaped hardship and misery on families already struggling with the rising cost of living and the increased personal indebtedness that have characterised the past few years. This is not the building-up of debt to pay for luxury items, as some would have it. Instead, increasing numbers of people are getting into arrears on basic household essentials such as food, rent and fuel.
Clearly, many of those people are turning to payday loans to get themselves through the week—borrowing to pay borrowing. The situation is all the more worrying because people are not only struggling to pay their everyday bills, which are increased by this cruel and unfair tax, but using high-cost credit to make ends meet. That results only in a downward spiral into further and further debt, with potentially catastrophic results. As Stepchange said in its response to the Work and Pensions Committee inquiry:
“Households struggling to meet rental payments are far more likely to have high-cost credit—33 percent of tenants with rent arrears have payday loans, a two-thirds increase on those without rent arrears…Because of the urgent and regular nature of rental payments, we are particularly concerned about people facing payment difficulties turning to payday loans. Analysis of our clients shows that those with rent arrears are far more likely to have at least one payday loan.”
The bedroom tax simply adds another layer to the problems that people face.
Many social housing landlords work to help their tenants to improve their income, but they are faced with an impossible situation. Many housing associations have invested millions of pounds to mitigate the effects of the bedroom tax, or spare room subsidy. Housing associations with tenants who have been affected spent on average £73,250, including on welfare and financial advice services, before April 2013 to help their residents to prepare and cope. Wigan and Leigh Housing, in my constituency, manages 22,500 properties on behalf of Wigan council. Recently, it had to deal with a tenant in arrears who also had more than 15 concurrent payday loans and no visible income other than benefits.
The fact is that the extra charge has tipped many households who were struggling but just coping into an unmanageable situation. Now many of those people are at risk of being evicted because they simply cannot find the extra money to pay their rent. Why has that happened? It has happened because people in social housing have been given a false choice, or rather no choice at all. They are told to move to a smaller property, or else pay the difference. Well, they cannot do so. There simply are not enough smaller homes to go around.
In Wigan in my constituency, we have a shortage of one and two-bedroom properties, so people who have had their housing benefit slashed have nowhere to go to. That is true of much of the north-west and indeed the north-east. It is not often that I agree with Lord Tebbit, but he said that spare rooms are “vital”. He said on the tax:
“I think we introduced that rather without thinking it through very well”.
Many social landlords in the north-west would agree with that .
In my constituency, 3,300 tenants are affected, with the reductions in housing benefit ranging from £517 a year to £1,273 a year. If those sums are to be found from somewhere, it is most likely they will be found by cutting down on essentials such as heating and food, because after all people must have a roof over their head. Often, the sums cannot be found, so arrears are rising.
Last month, a survey of the English housing associations carried out for the National Housing Federation by Ipsos MORI found that more than two thirds of their residents who have been hit by the bedroom tax are in rent arrears. That is the national average; the figure is higher in the north-west. In fact, the north-west has been the hardest hit part of the country, with 83,000 people seeing a cut in their housing benefit last year, according to the Department for Work and Pensions’ own figures. In fact, that could be a serious underestimate; the figure could be as high as 110,000 people.
The DWP’s figures also show that Manchester is the hardest hit city, with more than 11,300 households affected and an average shortfall of a whopping £724 per year. Other cities such as Liverpool are not far behind. More than 10,700 families in Liverpool are coping with a housing benefit reduction. Data collected from 15 social landlords operating in Merseyside, including the Halton Housing Trust, Liverpool Mutual Homes and Riverside, found that arrears rose from £21.2 million at the end of December 2012 to £22.9 million at the end of December 2013, a rise of £1.7 million.
I will now cite some findings from the excellent Real Life Reform report. Statistics are often used to prove and disprove policies, but it is worth remembering that this change and all the other welfare policy changes impact on people’s homes and their lives. These reports give social housing tenants the chance to be heard and I am grateful for this opportunity to share tenants’ views and experiences.
Perhaps it is worth noting a comment from the facilitator of the report. She is a communications officer, not a front-line housing officer, and she was profoundly moved by the stories. She says that the people who contribute to such reports do not match the stereotypes of social housing tenants on benefits. They do not drink or smoke. They all work. They run voluntary groups. They have children doing well at school or university, or children bringing up their own families. They are dignified and private people who want to make meaningful contributions to their families and communities. However, they are desperately worried about how they will pay their basic bills. They are concerned about how their families are being affected. They are choosing between eating or heating and, most tellingly of all, they have given up hope of being happy. In total, 76% of the people surveyed in the report said that they were rarely optimistic and 55% said that they were never optimistic.
What of discretionary housing payments, a limited emergency fund provided for the most vulnerable households? Yes, they have helped some households to manage their situation better. However, there is simply not enough money going round and the stress of continually applying for a fund that is discretionary cannot be underestimated. It is no wonder that 83% of participants in the Real Life Reform report felt that their health, particularly their mental health, was being negatively affected.
Wigan and Leigh Housing has used discretionary housing payments to help to reduce the number of people facing debt from the bedroom tax, but it has only managed a reduction from 73% to 63%. During the past year, applications for such payments have risen by 302% on average in the north-west, but the overall arrears keep rising and with them the threat of eviction.
Housing associations and councils are doing all they can to avoid evicting residents, but they cannot simply write off unpaid rent. Many of them have to spend huge sums in legal fees to recover unpaid rents. There are other costs, too. What is not fully appreciated is the increase in tenancies ending through a notice or people simply abandoning their properties and walking away. Each vacant property costs an average of £3,000 to repair prior to re-letting. In my area, many are being left empty because we simply cannot let the four-bedroom properties. People do not want to take four-bedroom properties, particularly those in the one block of maisonettes that we have.
Sheila Gilmore (Edinburgh East) (Lab)
In talking about her own region, my hon. Friend is surely illustrating exactly why this tax was poorly planned and poorly thought out. There was talk about 1 million spare bedrooms, but the mix of housing and the size of housing are distributed so differently across the country. In my area, we have a shortage of large houses as well as a shortage of small houses. We cannot have a one-size-fits-all policy in this way.
Yvonne Fovargue
I agree. People are not chess pieces. They have lives, families and communities and simply will not move from Wigan to London or London to Wigan; it is not as easy as that. For example, some people, including a constituent of mine, have family support networks, but she is being asked to move, although her mother lives down the road and looks after her daughter daily, sometimes overnight while she works. If she has to move away because she cannot afford the spare room subsidy, she will be penalised and may have to give up her job.
There are lots of other costs as well. Many people live in adapted properties with a spare room. My constituent, Clare, is paraplegic and blind. She has two carers, 24 hours a day, but under the rules was only allowed a bedroom for one of them. Her property had significant adaptations and, should she move to a smaller property, the cost to adapt it would run into tens of thousands. She is depending on discretionary payments to stay in her current property and has to reapply every 13 weeks, with the stress that that brings. This penalty affects the sick and disabled and it makes no moral or financial sense.
I just want to make a quick aside about fairness. It is often said that the policy brings parity with the private rented sector. However, the penalty was introduced retrospectively, when local housing allowance was introduced for new tenancies. People could then make a choice when choosing a home. This tax affects people who have lived among friends and family for years, have built their lives in a community and are forced to pay to stay there or look elsewhere—in my constituency, that is often in the more expensive private sector, due to the shortage of one and two-bedroom properties.
We in the Opposition have been clear that we will scrap the bedroom tax because it is cruel and unfair. The chief executive of the National Housing Federation described the policy as
“an unfair, ill-planned disaster that is hurting our poorest families.”
I agree, but we will not scrap it just because of that. It does not work on any level. There is now a risk that the bedroom tax will cost more money than it saves. The National Housing Federation has said that the savings claimed by the Government are “highly questionable”, partly because those forced to move to the private rented sector will end up costing more in housing benefit. Nor does the policy deal with the problem of under-occupation. In fact, the Government’s costings on the yield raised from the under-occupation subsidy explicitly assume that people do not move into smaller properties. The DWP’s own impact assessment states:
“In many areas”—
as my hon. Friend the hon. Member for Edinburgh East (Sheila Gilmore) said—
“this mismatch could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement.”
In Wigan, it would take more than seven years, at current vacancy levels, to re-house even the 30% of people affected who might wish to downsize.
It is clear that this policy, and any savings predicated on it, depend on people choosing to pay to stay in their communities, near friends and families. It affects those with disabilities, those struggling to get by and it is having a negative impact on their mental health. It is putting additional costs and pressures on social housing providers and, perversely, it is likely to increase the housing benefit bill by forcing people into the more expensive private sector. One year on, it is time to think again and repeal this unfair and unworkable policy.
Sheila Gilmore (Edinburgh East) (Lab)
It is a pleasure to serve under your chairmanship, Ms Dorries, and to have the opportunity to say a few words. Self-evidently, my constituency is not in the north-west of England. It is not in the north-west of Scotland, either, but in the east of Scotland, but it is important to see how the experience in one area of the country compares with another.
As I said in my intervention, part of the problem with making this policy work, even if it is thought to be a good idea, is that the housing situation in each local area is different. It is impossible simply to assume, as it has been assumed, that there are more than 1 million spare bedrooms, as has frequently been repeated, as if those were somehow easily accessible by people wherever they are.
We have to think about realities. It is galling and frustrating for me, as someone who was the chair of housing in a local authority and retains a strong interest in housing, to hear that there are empty large houses in some areas. If it were possible, I would dearly like to do that American thing of putting them on wheels and wheeling them up to Scotland.
It is not feasible for people simply to up sticks and go somewhere else. A few may be able to, and a few may welcome the opportunity to do so, but for many their attachment to their home area is not just an emotional one, although it can be that; there are practical issues for them to consider. Often, the areas where there is a surplus of certain kinds of housing are also likely to be those where there are poor job opportunities. My city, where unemployment is well below the Scottish average, is a net importer of people. People come to the city from other parts of Scotland, and from England, because the jobs are there. For a low-paid worker in Edinburgh in receipt of housing benefit, for example, to move to the north-west of England just because there are houses there, even if it would mean their being less overcrowded, is counterproductive for them and for our spending on social security, because if they could not get a job they would be drawing more in benefits than previously and their opportunity to move on from that situation would have decreased.
Even people who do not have a job issue in relation to moving have other ties. Despite commentators and sociologists sometimes suggesting that we have become a society without ties and that we live completely separate lives from one another, far away from our families, I am always struck by the degree to which that is not necessarily so. And help is often reciprocal; it is not just one way and not just about older people getting help from younger people. Obviously, grandparents will often give important help to members of their family. I met a constituent recently who said that, having retired, he and his wife have virtually full-time jobs, because each day of the week they look after a different group of grandchildren, although they do not look after any of them full time. That is not uncommon. People cannot always move huge distances, and even moving across a city can be difficult for those who pick children up after school, for example, to help their family. We have to be realistic about what people can do. I do not think that people are being awkward in any sense.
The other mismatch, throughout the country, is that houses of different sizes are often of different types. I know a number of older people—although pensioners are exempt from this measure—and even people approaching retirement who might want to move to a smaller house, but they are not going to move to a flat that is up four flights of stairs at that time in their life, because even if they are fit at the moment, they would say, “Why am I going to move to a tenement building where I would be climbing up and down stairs, when in a few years’ time I might not be able to do that?” Having looked in depth at the housing supply in my area—I am sure my hon. Friend the Member for Makerfield (Yvonne Fovargue) has done so, too—there is such a mismatch. Not a lot of housing becomes available, but what does will not necessarily suit the needs of the people we might be trying to move.
Realistically, this measure was invented as a savings measure, and a lot of the justifications are trying to make it sound better than it is. There is a case for helping people to move, for example, and I know people who would want to move. Older people particularly might want to move from a family house and might be pleased to see it going to a family, but they have certain needs that also have to be met. I have been pressing my local authority and housing associations to look in depth at an area and say, “Actually, maybe we should build houses for older people who could move into them and thereby release family houses, rather than building family houses.” People will not move out into just anything, and for good reason. They are looking to their future.
If this measure is about people moving, which I do not believe it is, it does not work, and it certainly does not work on an all-country level. It is about saving money, which is why it was in the Budget. The cost is not trivial for people. I have described other housing benefit changes as slow burn because they have had an effect over several years and it will take time for them to play through.
A constituent of mine is on jobseeker’s allowance of £71 a week. She was approaching retirement age, but unfortunately retirement age is receding from her, so she feels as if she is running to catch up. Of her £71 a week income, she now has to pay £12 a week towards her rent, which is on top of all her other bills. Scotland has not yet had the council tax changes, but she has to pay water rates, energy bills and bus fares to get to the jobcentre or training centre. She is trying to get another job after being made redundant in her late 50s, which is never easy, and £12 a week is a substantial sum of money; it is not something that people can easily make up. She does not fall into any of the priority groups that we are told discretionary housing payments will cover because she is not disabled and does not have a particularly adapted house, or anything else. All she happens to have is a rather small second bedroom in a house that she and her husband lived in for 18 years until he sadly died. They put a lot of effort into the house.
If we want to address the housing benefit bill in any area of the country, we need to build more homes and consider the cost of housing benefit in the private rented sector, which is far greater per person than in the social rented sector. We are attacking the wrong part of the problem, and it is therefore no surprise that housing benefit spending is predicted to continue rising in real terms throughout the entire five-year period, despite such changes. Not only do the costs outweigh the savings for individual housing associations and authorities; the policy does not make sense on a macro level because it will not achieve what it is supposed to achieve. We will still end up having a large spend on housing benefit, which the Government have much criticised, but if we want to change that, we have to look at where the real problem lies, and it does not lie in the social rented sector. I contend that the policy is ill conceived.
As my hon. Friend the Member for Makerfield said, there is a constant reiteration of “Well, Labour did it in the private rented sector.” I was a member of the Welfare Reform Bill Committee, and I do not remember Labour’s changes being mentioned at any point in Committee as a primary driver. Someone obviously thought, “We are not doing very well with our publicity on this one, and we are losing a bit of public support. Let’s find another argument.” The argument that was chosen is, “Labour did it in the private rented sector, which is why it is fair.”
People in the private rented sector did not suddenly find themselves presented with a Bill one April: “Here’s the Bill, which means that you now have to pay extra money, whether you can move or not.” Any changes introduced in 2008—there were rules prior to 2008 on the size of homes and the amount of housing benefit that people could claim, so it is not entirely true to say that the Welfare Reform Act 2012 was entirely a response to the changes in 2008—applied only when people moved into a new tenancy, which is very different from saying, “Regardless of whether you can move, you have to pay.” That is why we have called it a tax, and although many people get agitated and say that it is not, it certainly feels like a tax rather than a benefit.
Wherever we live, there are problems with the policy. Many of our constituents have problems with it, and if the Government are really serious about addressing housing benefit—I hope they are, because we certainly are—they should be seriously looking at the private rented sector. If they do that, the graph, instead of going up over the next four years, might start to go down.
Chris Bryant (Rhondda) (Lab)
It is a delight to serve under your chairmanship, Ms Dorries. I note that I am the only man taking part in this debate, which must be a first for the House of Commons. I hope there are many more debates in which men are in the minority. It is a shame that, all too often, debates involve men talking to men—probably with nobody listening.
I warmly congratulate my hon. Friend the Member for Makerfield (Yvonne Fovargue) on securing this debate, not least because all too often in Westminster politics we think that, once we have pulled a lever, everything will suddenly change out in the rest of the country. Actually, the vast majority of policies advanced by any Government, of left or right, end up having to be implemented by local authorities, and this policy is a classic instance. In many cases, not just local authorities but a series of social landlords are involved.
The direct relationship between Government and those implementing the policy is not as clear as people might assume, which is one of the reasons why the Government have got some areas of the policy profoundly wrong. They did not do the groundwork to establish what the real situation is out in the wider country before enacting the policy.
This is the kind of policy that someone might dream up just before they go to bed or when they are in the shower. They suddenly think it is a brilliant idea because there is no official there to say, “Ah, but Minister.” By the time they have got into the office, they think it is the best idea ever. Unfortunately, they then meet other Ministers who are also desperate for a good idea, and they think, “That sounds like a good old wheeze. Let’s do that.”
The policy, as a whole, was advanced too rapidly. However shiny and new it might have seemed to the Government, I know a large number of Conservative Back Benchers who wish it had not been implemented and look forward to the day when the whole thing can go. All that glisters is not gold, and this has been a meretricious policy.
My first problem is that, as my hon. Friends the Members for Makerfield and for Edinburgh East (Sheila Gilmore) have said, the policy’s implementation has been fundamentally unfair. Both my hon. Friends have said that the significant difference between the Government’s policy and our policy, which addressed commercial landlords, is that the Government’s policy has been implemented retrospectively. In other words, it affects people who are already living in a property.
In recent months, we have discovered that people who live in social housing, particularly council housing or housing association properties, are more likely to live for long periods in the same property than anyone else in the housing market. Some may see that as a problem, but it also presents a significant challenge because the policy is radically changing people’s understanding of their home.
What I have just said does not apply to me because I moved so frequently as a child that I have always thought of wherever I lay my hat as my home. However, the vast majority of people live in the same house for 10, 15 or 20 years, and sometimes for much longer. In some constituencies in the north-west, there will be people who not only live in the house they moved into when they were first married, but live in the same street or estate in which the rest of their family have lived since the estate was first built. In some cases, they will have taken over the tenancy from their parents and have effectively lived in the same house all their lives.
The policy, of course, drives a coach and horses through that understanding of a home. Ultimately, it is profoundly—I want to say un-English, but I am Welsh and my hon. Friend the Member for Edinburgh East is Scottish—un-British not to think of the home of an Englishman or Englishwoman as their castle.
Yvonne Fovargue
Does my hon. Friend agree that it is not only family lives that are being destroyed? The aim was to build stable communities in which people support and help each other and run voluntary groups. The policy destroys communities, as well as lives.
Chris Bryant
Absolutely, not least because one of the key things that all parts of the House agree about is that we need to get more people into work. Particular families and communities have historically found it much more difficult to get into work. The issue is not only about whether work pays—although that is key and is why we originally supported the national minimum wage, facing down the howls of those who said it would lead to mass unemployment—but the support mechanisms that someone has when they first go into work. Otherwise, benefits are seen as more reliable, and if someone thinks that, they will stick with them.
If someone has child care responsibilities or care responsibilities for an adult relative, they need other family members close by. All too often since the bedroom tax was introduced, we have seen people forced to move to areas where they have no support, which makes it more difficult for them to get into work. Perhaps we Opposition Members too often rant and rave at Conservatives for being cruel, out of touch and not having any interest in the working poor—that has not always been true of them, historically—but some of the policies advanced, particularly those of the Department for Work and Pensions, have effectively cut off a nose to spite a face. They have seemed like savings and cuts, but in practice they have just added costs to the social welfare budget, which is why the Chancellor had to announce last week that he was increasing the estimate for welfare spending for this year by £1 billion and for next year by another £1 billion.
People are living myriad different lives, with different congregations of families and different community set-ups, social understandings and cultural mores, and it is incumbent on Ministers, particularly DWP Ministers, to work with the grain of human nature, rather than against it. The policy fundamentally works against the grain of human nature and the housing market.
All too often the Government have presumed that, because they said in theory that the policy is all about dealing with the mismatch of some properties being under-occupied and many properties being over-occupied, they have to get the families that are overcrowded to move into undercrowded properties. If everyone could step on to the pavement on one day, immediately swap and move into the next property, that might be true, and if there was an exact match of overcrowded and underused in each area—whether geographical, local authority or housing association—that presumption might work.
The facts on the ground, however, as we know from all the different surveys that have been done over the past year, are that there is a total mismatch. People have no choice about moving, downsizing or going to smaller properties, particularly in the short term. It might take them two, three, four, five, six, or, as my hon. Friend the Member for Makerfield said, seven years to move, and that is why the measure is a tax. In the end, people have no choice and have to surrender that extra bit of money.
The £16 might seem like nothing to Ministers in a Department that thinks that pensioners might spend their pot on a Lamborghini, but that is a significant amount of money to my and my hon. Friends’ constituents, particularly when real wages have been depressed and the number of hours and amount of overtime that people are allowed to work have fallen. Many more people have been put on zero-hours contracts. In that environment, £16—or £25, if it is two rooms—extra cost a week is a significant amount of money, and that is why the policy is unfair. It might seem fair to put all the overcrowded people into the underused accommodation, but if no one has checked whether there is enough accommodation to do that, it ends up being unfair.
The evidence of the unfairness is that the Government have had to provide discretionary housing payment schemes for local authorities. With discretionary housing payments, the word I dislike most is “discretionary”, because it means that someone living in one local authority on one side of the road in the north-west might be granted a DHP, while someone on the other side of the road will not get that payment, for the single reason that they live in a different local authority.
There is an added problem with discretionary payments, which is that the local authority knows—let us say it is getting £1 million over a year—not to spend any in April, May or June. That happens every time the Government introduce such a system. The authority will start spending a little only in July, August and September, because it knows that the big numbers will come knocking on the door in December, January and February. That means that there is no consistency across the year.
The Minister revealed that fact—I do not think she intended to—when she was attacking one of my hon. Friends from Manchester about the discretionary housing payment system there. She said that it was outrageous that we were complaining about the amount available to Manchester last July and September, because the city had not spent that part of the year’s money. Of course the city had not spent it, because no local authority does. Local authorities are prudent and save money for when they will have to spend more, which is in winter, at Christmas and towards the end of the year. They have to save against what might be a particular rainy day. The Minister, by her own admission, has laid out that the policy is unfair.
As my hon. Friends said, the Government never expected everyone to move. They said:
“In many areas this mismatch could mean that there are insufficient properties to enable tenants to move to accommodation of an appropriate size even if tenants wished to move and landlords were able to facilitate this movement.”
If there was ever an ownership of the fact that the measure is a tax, that was it. It made clear that the Government know that many people will simply have to pay more money.
I disagree with the policy’s fundamental principles and also with how it was introduced. The Prime Minister more than once boldly stated at Prime Minister’s Question Time that no disabled people would be affected by the bedroom tax. He said that on countless occasions, but we know that two thirds of those affected, according to every survey that has been done in local authorities up and down the land, are disabled. The Prime Minister is closing his eyes to the truth, he does not know the truth or someone is not putting the truth in front of him. I do not know what it is, but the point is that the Prime Minister is completely and utterly misled. I am not saying that he has misled people; I am simply saying that he must be misled.
The other incompetence in how the Government have advanced the policy—we know the legislative incompetence: they brought forward the legislation quickly and then discovered a loophole some nine months into the process, or perhaps a little earlier—is that they are still going through this ludicrously bizarre process of denial about how many people are affected by the loophole. On one day earlier this year, the Minister for Welfare Reform, Lord Freud, said in the House of Lords that an insignificant number of people were affected, the Minister here replied to a written question saying that she did not have any idea how many people were affected, and the Secretary of State said that between 3,000 and 5,000 people were affected.
Yesterday, after the urgent question in the Chamber, the Minister let it be known that the Department will provide £2.1 million for local authorities to do the trawling. That is just for the process of trawling, and not for the payments that will have to be made to those who were illegally charged. She says, and said again yesterday, that the £2.1 million applies to 5,000 people. Sometimes she says it quite angrily and sometimes she says it more emolliently; we will see which version we get today, although it looks like it will be the angry one, given the furrowed brow I am getting. I presume that the Minister can calculate for me how much that is per person. Is a trawl really going to cost £420 per person? By her own admission, the Minister has yet again suggested that the 5,000 figure is not right. I do not know whether it will be 40,000 in total, but it certainly will not be just 5,000.
The Minister has regularly pooh-poohed the statistics that the Opposition provide, but we are only going by the freedom of information requests that we have made to local authorities. Let us look at how some authorities in the north-west replied when we asked them how many households had been affected. Burnley borough council said 60, Bury metropolitan borough council said 83 and Chorley borough council said 32. Eden district council said 30, while Fylde borough council said 80. For Lancaster city council, the figure was 35. Preston city council said 124. South Ribble borough council said 22, and Stockport metropolitan borough council said 126.
It is true that I do not have figures for all local authorities, because, despite our being long past the date by which they should have replied to the FOI request, only 15 out of 39 local authorities in the north-west have replied. Even so, there are 2,609 cases in the north-west alone thus far.
The Minister has criticised me several times, saying that the figure of 480 that I provided for St Helens is incorrect, but we have never provided that figure. We said that there were 178 confirmed cases in St Helens—178 cases where people have already been paid back. Not included in the figure for the north-west, however, is what Liverpool city council states it has already paid back, which is 1,300 households. It is absolutely clear that the 5,000 figure that the Minister cites for the whole country will probably be exceeded in the north-west alone.
It could be said that this is all neither here nor there and that it is dancing on the head of a pin and just about statistics, but what it suggests to me is that the Department for Work and Pensions simply has not done its homework and does not know. I would be quite happy were the Minister to stand up and say, “You know what? I really don’t know what the numbers are. They may be 40,000 or 5,000. Let us see what they are.” However, I object to the Minister’s simply going into denial and saying that nothing is happening because it implies a degree of callous disregard for what is going on in people’s lives. Incidentally, the total number of cases that we have received from local authorities is, with no spin from us, 23,309. That figure is based on the responses of fewer than half the local authorities asked, so it is likely that the final figure will be much higher than the Minister has suggested.
The danger is that if the Department has got this wrong, what else has it got wrong? I am absolutely certain that the Government’s predicted savings will nowhere near be met. Indeed, I suspect that the total effect, including people claiming other benefits, such as out-of-work benefits, will end up costing the taxpayer more. I hope that the Government will one day provide the full details.
So many areas of the policy have been incompetently laid out, not least what counts as a bedroom. Last year, the Minister tried to say that people should take a sledgehammer to walls and knock them down and that that would change the rules. According to the Department for Work and Pensions guidance, however, it does not. Liverpool city council was sent an e-mail by the Department that flatly contradicted what the Minister said in the House yesterday afternoon about who qualifies to inherit a tenancy. According to the e-mail, those qualified include any child or relative of a “polygamous marriage”. I thought that polygamous marriages were illegal in this country, but that is the advice that the DWP has provided to the council. Perhaps the Minister can respond to that specific issue.
Some people who have been illegally forced to pay the bedroom tax will now, because of the loophole, have been given discretionary housing payments. What is the Minister’s advice to local authorities? To how many people does she think that it will apply? How much is it costing? Is the Department paying it or do local councils have to pay it? Will individuals have to pay that money back or are the Government writing it off? If so, how much will that be?
We have already heard about some of the problems caused by the faulty policy. Thousands more people are in arrears, which is a real problem for local authorities and for social landlords around the country. Thousands more have been evicted—not only a tragedy for the families and individuals concerned, but also a problem for social landlords.
The policy fails to address some big, long-term issues and has made them worse. When I come up to Westminster from south Wales, it often feels that there is something of an economic recovery going on and I can see house prices rising magnificently, but my experience elsewhere in the country is completely and utterly different. My anxiety is that an economy that is already heavily overloaded towards London and the south-east will become more so. It is a problem for the people of London and the south-east as house prices get further and further out of reach for ordinary people in ordinary jobs. I worry that the Government’s policies will make that worse.
In the 1980s, contrary to my party’s policy at the time, I completely supported the idea of people being able to buy their own council house or social housing. It was actually first piloted by a Labour authority in Newport. [Interruption.] That is not in the north-west, as I think you are about to warn me, Ms Dorries.
Chris Bryant
I can read your mind.
What was a mistake at that time in the north-west and everywhere else in the country, however, was that local authorities were not allowed to build more social housing, and we are paying the cost of that now. The previous Labour Government did not get it right either, but unless we build more houses and provide more supply at a time when demand is increasing every year, partly because more households are breaking down into smaller units and partly because there are simply more people, we will fail in the future.
I end with two remarks. First, the Government should repeal the bedroom tax for the people of the north-west and the whole of the country. If they do not, we will, and we have costed that commitment. Secondly, we need to do something to tackle the root problem in housing benefit, which is that antisocial landlords, who often provide substandard housing, are effectively being subsidised by the taxpayer. That must be wrong and that we will change.
The Minister of State, Department for Work and Pensions (Esther McVey)
It is a pleasure to serve under your chairmanship, Ms Dorries. I think it is the first time, so I am delighted to be here. I congratulate the hon. Member for Makerfield (Yvonne Fovargue) on securing the debate.
Having listened to everything that has been said, there is one thing on which we can agree: this is about homes and people’s lives. This is about people and their local communities and what we can do best to support them. It is frequently forgotten, however, that it is also about the people who are not fortunate enough to be in a house of the size they need, whether because they are on a waiting list or because they live in an overcrowded home. At the same time, we must think about the people who are paying the bill. Taxpayers are funding the homes of people who may have extra bedrooms when they themselves may not.
We have thought about the matter in every which way and from everybody’s viewpoint and have asked ourselves how we best solve the situation. More than 300,000 people are in overcrowded homes and 1.7 million people are on waiting lists, yet there are 1 million spare rooms in people’s accommodation. We have to think about that. In Wigan, there are 3,500 families or more on the waiting list and 1,500 in overcrowded accommodation. I believe that the hon. Member for Makerfield said that 3,300 were affected by the removal of the spare room subsidy. Which group should be given more consideration? We cannot say that; they must all be considered when we decide what we shall do.
There is a conundrum, as we all agree, but how are we to deal with it? We cannot brush it under the carpet—it would have to be a huge carpet—and continue as if there is not an issue. We must deal with it, and we are confronting it. Of course, we know that there has been less house building, and we know the issues associated with that. God ain’t making no more land, and getting planning permission is very difficult. Yet Labour, during its reign, let more than 2 million people into a crowded island. We must cover all the angles and dimensions. We have said that we are putting £4.5 billion into the building of social housing. We are building another 177,000 by 2015. All those things are positive, although there is always more that can be done.
When houses with spare rooms were let, people were making to the tune of £500 million a year. Rent on that was being collected from taxpayers, who were paying that bill. It was unfortunate that those social landlords were getting £500 million a year extra for bedrooms that were not deemed to be occupied under the criteria brought in by Labour in 2008.
Sheila Gilmore
The Minister mentioned the building of affordable homes. A problem with the policy that the Government are currently implementing is the fact that they plan to charge 80% of market rent for them. There will be a substantial increase to the overall housing benefit bill. When the Work and Pensions Committee visited Luton in Bedfordshire, the housing association explained not only that it was obliged to set the rents at 80% of market rent to get a grant to build; it was also obliged as part of that arrangement to turn over some of its existing stock to such higher rents, as it became available. Government policies are likely to put up the housing benefit bill faster than the policy we are debating is likely to reduce it.
Esther McVey
I have heard various things—I will say that they are scare stories, because we have heard them before—about what would happen, and they have not happened. In fact—although at the moment this is just anecdotal—in the private sector house prices and rents are coming down, despite much of what the Opposition say; that is actually happening in Wales, which I visited last week.
What are the local authorities and housing associations doing? Some are redesignating homes with respect to their size. Knowsley is doing that. Salford is bringing empty houses into use and converting commercial property units into affordable homes. People are starting to build one-bedroom homes for the first time in a long time. Who would have believed it? Some people and areas are still building three-bedroom homes, despite knowing that they are not needed. One-bedroom homes are needed; they should constitute 60% of new builds. It is incredible that people who do not understand the stock still feel incentivised to build the wrong homes, because they will be paid for the bedrooms, whether they are used or not. That must all change.
We should all recognise the inequality in allowing social sector tenants full housing benefit for a spare bedroom while denying it to private sector tenants. The Opposition’s position seems to be that the policy is pernicious and evil when it affects social tenants, but acceptable when it affects private tenants; Labour introduced that policy in 2008. As has been pointed out many times before, there are two coherent positions: one is the Government’s, which asks anyone on benefits to contribute towards the cost of an extra bedroom; the other is to give anyone on benefits full housing benefit regardless of the size of the house that they need or whether or not they are under-occupying their property. The Opposition’s position is incoherent. It states that social tenants should not have to pay towards an extra bedroom, but private tenants should. We cannot have that.
Yvonne Fovargue
Does the Minister know about the housing position in Wigan, where, because of the shortage of one-bedroom properties, it is possible to rent a two-bedroom private property for less than the median housing allowance? That leads to the ludicrous situation in which someone moves out of a two-bedroom social rented property, because they must pay £14.65 a week to live there, into a two-bedroom private property, where the full rent is paid by housing benefit.
Esther McVey
We have had this discussion before with the Opposition. What the hon. Lady does not understand is that a full cycle is under way in that situation. When someone moves out of a home in one sector, someone else moves in. The 3,500 on the waiting list or the 1,500 who are living in overcrowded homes are moving, in this instance, from the private to the social rented sector. We cannot take only half the equation; we must think about who is moving where, and what the needs are. What might be an overpayment in one area is an underpayment in another, so there is a full circle that continues.
Sheila Gilmore
The Minister is being very generous in giving way. She has raised issues about spare rooms—it is an emotive phrase. However, some organisations have argued that, if a room is not genuinely spare—for example, if a couple must sleep apart for health reasons, have medical equipment to store, or have a specially adapted house, so that it would be ludicrous to expect them to leave—they should simply be exempted. Those rooms are surely not really spare.
Also, even if the original intention of the policy was to bring parity with the private rented sector—I do not think it was, because it was never mentioned—an amendment was tabled in the other place, and probably also in this House, to the effect that the rule would be applied only if someone refused a reasonable offer of alternative housing. So it would not be retrospective. Is the Minister willing to consider either of those issues?
Esther McVey
We have put forward a full array of discretionary housing payments and exemptions, which I shall come to. However, I want to point out what Labour intended, when it was in power. Despite today’s claims about how it would have dealt with things, we know what is on the record:
“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.]
Esther McVey
I have given way a lot, and have answers to provide. Despite the bluster and fluster and cries of “We cannot do it,” that policy would have been implemented by the Opposition.
We have provided for the most vulnerable, including disabled children who cannot share because of their disability; foster children; overnight non-resident carers for claimants and their partners; and live-in carers. We have also ensured that tenants can retain a bedroom for an adult child who is in the armed forces and deployed on operations. We have established support, and in addition the courts have confirmed that we have satisfied our equality duties by making additional discretionary housing payment funding available. In total we have provided discretionary housing payment funding of £180 million in this financial year. The Government have given local authorities the money to help people in need. In fact, we have gone further, and within the year we have allocated an extra £20 million for which the 380 local authorities in Great Britain could bid.
What happened with that extra money? Not all the local authorities bid for the extra £20 million that we put in place because they did not feel the need to, and only £13 million was taken, meaning that £7 million was not. Yet again, there were screams of protest from the Opposition about what was needed, but the money had been put in place and yet not all of it was utilised. In my local area, for example, Wirral council still had £180,000 to spend on discretionary housing payments by the end of the month. That was made up of £30,000 left over and an extra £150,000 that had been granted.
We are getting all that information back from people and finding out what they need, so I take great exception to the accusation that this policy was developed on the back of a fag packet—I think that is what the hon. Member for Rhondda (Chris Bryant) said.
Nadine Dorries (in the Chair)
Order. Mr Bryant, please do not interject from a sedentary position. Mr Bryant may not have said “on the back of a fag packet”, so perhaps the Minister will quote the words he did say to make the point. Mr Bryant, if you want to make an intervention, please do so, but do not interject in that way.
Esther McVey
Whether, in colloquial terms, the hon. Gentleman said that it was developed on the back of a fag packet, a cigarette packet or an envelope, it was discourteous, given the hundreds of hours of work that have been put in. I think he used the phrase “on an envelope in the shower”, but that was not the case, because many hours went into developing the policy. That might be how the Opposition make their benefits policy, because so far it seems they do not know what they are doing—what are they agreeing with, or not, and how are they helping the guarantee scheme, or not?
What the Government have done has had a profound effect on what is happening in the country: there are record rates of employment; youth unemployment has fallen for the past six consecutive months; there are record rates of women in work; and, as in the news today, the number of workless households is falling considerably. Far from our policy being made on the back of an envelope or cigarette packet, it is having significant effect. For a moment, I want to think about those people who have now got a job and are fulfilling their potential, supporting their families, getting their foot on the career ladder and working their way up. I meet such people every day, and they say how their lives have been transformed, so it is important that we listen to them as well.
As I said, 86 local authorities applied for extra money, although not all of them spent the extra £20 million, and not all councils felt that they needed it. Many of the Opposition scare stories did not happen at all and, despite the dire warnings, nor did the arrears. The report from the National Housing Federation stated that it is difficult to observe a rise in outstanding arrears. In fact, more than half of all working-age tenants in receipt of housing benefit were already in arrears before the new policy came into effect. While we are talking about people and their lives, moreover, there are lots of examples of people moving and downsizing. Among such people is Suzanne, from south Yorkshire, who had four children who are now grown up and have left home. She did not want to move, but she said that now that she has and has downsized, things are totally different. She has less of a heating bill—less in the way of bills altogether—can manage her cost of living and live within her means. It is key that we look at everyone’s requirements.
On the loophole that has been mentioned, we have been through this on various occasions. The person in question has to have been in the same house and continuously on housing benefit since 1996 to be part of the loophole. The Opposition were right: we did not know the entirety of the numbers. What we deemed to be roughly right, however, was the figure of £5,000, and we said that we would cover those costs, so we agreed with the local authorities—£2 million to do the extra work necessary. We agreed the amount of money to do the administrative work to support those people. Far from screaming and yelling, we have gone into the issue in our discussions. Indeed, we debated it yesterday, so I think it has been covered.
What is key is that we have to think about the policy into the future, and to support people who are in overcrowded accommodation, whether they are on waiting lists or already in social rented housing. It is about how we best go forward and provide support. We are dealing with the issue, which Labour did not want to do when in office—they were happy to see the housing bill double over 10 years and the waiting lists and overcrowding increase.
Chris Bryant
The Minister has not answered any of my questions, so I will ask them again. She has a moment or two to find the piece of paper bearing the inspiration. My first question is, how many people have already been given back their money because they were illegally charged under the bedroom tax, but who in the meantime have also been given discretionary housing payments? Will they have to pay that back?
Esther McVey
No one will pay anything back. The people who have got discretionary payments will keep them—they will have been paid to the social rented sector—and should they wish to use them going forward, they can.
Chris Bryant
I am grateful to the Minister for allowing my continued interventions. How much, therefore, are the Government writing down in that regard?
Esther McVey
We have said that we will take that into consideration. We are working on a set of numbers, and we presume the figure to be in the area of £5,000. We will take that cost on board, as we said—both the administrative cost, which we have agreed, and the extra costs that would have been used by the discretionary payments.
Nadine Dorries (in the Chair)
Order. Will this intervention relate to the north-west, Mr Bryant?
Chris Bryant
How much will the total amount of money be throughout the UK and, in particular, how much will it be in the north-west? We need to know the amounts of money the Minister is talking about for writing down purposes.
Esther McVey
The Labour party have never cared so much about money—hence we are in the debt we are in. We do not know how to sort out all of Labour’s problems.
I have said that that is a cost we will be covering and dealing with. We have put discretionary housing payments aside, although of even the most recent £20 million that we have offered, only £13 million was used, leaving £7 million. We have said that of course we will deal with the situation, and that is what we will be doing. At the end of the day, however, we are talking about what is happening in Wigan and the north-west. We have to look at everyone, whether in the social rented sector, in overcrowded homes or on a waiting list, and at how best to deal with the situation. I fully applaud what the Government are doing and the way we are dealing with what we inherited—[Interruption.] I am sorry that the hon. Member for Rhondda is laughing at the situation, because we are picking up many of the problems left behind by him and his party.