Housing Costs (Reformed Welfare System)
(9 years, 2 months ago)
Commons ChamberRead Hansard Text Read Debate Ministerial Extracts
Dame Anne Begg (Aberdeen South) (Lab)
I shall continue the theme of housing: we have had a statement and a ten-minute rule Bill on housing, and this debate is about the Work and Pensions Select Committee’s report on support for housing costs in the reformed welfare system. There are two important debates scheduled for this afternoon, but given that we have had two urgent questions and two statements, our deliberations might have to be somewhat curtailed.
Our report dealt with the series of reforms to housing benefit and other support to meet housing costs that the Government have introduced since 2010. The report was published in April last year, and strangely we have been granted a debate on the Floor of the House today without having received the Government’s response to it. Normally, we would expect a Government response to a Select Committee report to be published before any such debate is granted. We have been waiting for almost a year to receive the Government response.
As I have said, our report was published in April 2014. We have still not received the Government response almost a year later, but that is not for want of trying. In September last year, the Minister for Welfare Reform, Lord Freud, wrote to me to apologise for the delay, saying that although the response had been prepared, the Department for Work and Pensions was still in the process of seeking “cross-government clearance” for it. I do not know whether that means there is a major split in the coalition over the report; perhaps the Minister could fill us in on why the Government’s response has still not made it out of the DWP and into the light of day.
As we still had not received a response by December, I wrote, with the Committee’s agreement, to the same Minister to ask that a response be submitted as a matter of urgency, but I have still not received a reply to that letter. As you know, Madam Deputy Speaker, effective Select Committee scrutiny is hampered if the Government fail to abide by the agreed process. I appreciate that today’s Minister is not the one I have been writing to, but I hope he will engage fully with the detailed and specific recommendations in our report—the Government have failed to do that for nearly a year. The recommendations are important and we hope the Government are taking them seriously.
The report covered a wide range of issues relating to housing costs and the welfare system, but perhaps the most controversial was “social sector size criteria”. We called it that to try to make it sound more neutral; any other form of words can be emotive, because it is called the bedroom tax, the removal of the spare room subsidy or the under-occupancy penalty, depending on one’s political view. However, it is the charge that has meant that social tenants deemed to have more bedrooms than they need have had their housing benefit reduced. The Government said that the aims of the reform were to reduce benefit expenditure, make use of the social housing stock and incentivise people to enter work. We actually agreed that using housing stock more effectively and reducing overcrowding were understandable goals. The question was: were the Government achieving them?
Although it is true that some reduction in housing benefit has resulted, it is not because people have moved house and are now more appropriately housed; it is because many people caught by the bedroom tax—the social sector size criteria—have merely had to subsidise their housing costs from other benefit or other income, and so of course it has saved the Government some money. However, we found that many people whom we genuinely believe the Government did not want to be caught by the bedroom tax were being affected by it, and many of them are vulnerable people. As many as 60% to 70% of households in England affected by the bedroom tax contain somebody with a disability.
The whole idea was that tenants would move to smaller houses, but we found that not enough smaller houses were available across the country. Some people might have been able to move into the private rented sector, which might have been more expensive for them, but even in that sector not enough suitable accommodation was available. Others of the vulnerable group were not able to respond by finding work, because of their illness and their disabilities. We also found that a significant number of people caught by the bedroom tax had specifically adapted homes, which means that it is difficult and expensive for them to move to smaller accommodation. Whoever came up with the idea that they could do so clearly has not been through the process, as I have, of trying to find a home that is easily adapted or has been adapted.
The only option for many people was to remain in their homes and so have their housing benefit reduced. All they could do was make up the shortfall. DWP research has shown that that often meant cutting down on household essentials or borrowing money from family and friends. The reduction in housing benefit was not insignificant for those who had no choice but to pay up—a 14% cut where the tenant was deemed to be under-occupying by one bedroom and a 25% cut where under-occupation was deemed to be by two or more bedrooms. In addition, the deduction is made on the basis of the total rent paid, without regard to the level of housing benefit actually received. Therefore, those in partial receipt of housing benefit would have to pay more proportionately.
The Government’s statistics show that by the end of November 2014 the reduction had been applied to nearly half a million claimants and that the average reduction was nearly £15 per week. We found that this reform was having a particular impact on people with disabilities, including those I have mentioned already: those who have adapted homes; and people who need a room to hold medical equipment or to accommodate a carer—often a family carer. We recommended that anybody living in a home that has been significantly adapted for them should be exempt from having their benefit reduced. We also called on the Government to exempt all households that contain a person in receipt of higher level disability benefits—disability living allowance or the new personal independence payment.
Hon. Members should note our use of the word “exempt”; we wanted those groups of people to be exempt. The Government’s response is to say, “Oh, but they don’t have to pay in any case because they have access to discretionary housing payments.” Given the number of people who are reliant on DHPs, there must be something wrong with the original policy if so many people have to rely on some kind of “transitional” arrangement. But it is not transitional, simply because there are not the houses for these people to move to or they cannot move because of the kind of accommodation they require which does not fit the criteria set down by the Government.
The Government say, as they have been saying for the whole year we have been waiting on their response, that the protection is available through the DHPs. It is true that the Government have substantially increased the funding for DHPs, but those payments are awarded by local authorities to people facing hardship in paying their rent, including tenants affected by the bedroom tax and by the benefit cap, and they are still discretionary. Of course, they are also not meant to be long term, as this is a transitional protection. The other problem is that DHPs are awarded on the basis of eligibility criteria, which each local authority can set itself. That can create a postcode lottery, and we felt it was important that the granting of a DHP should be based on access to the help needed, rather than being dependent on where a claimant lived. As we often say, any benefit or award should be based on need, not on somebody’s postcode.
We were also concerned that some local authorities are taking income from disability benefits into account in the means tests they apply for determining eligibility for DHPs. It may be that individual households would qualify normally for a DHP based on just the raw criteria, but when the means test is taken into account they do not get it. Members in this House have said that it did not matter whether an individual or a family was subject to the bedroom tax because they would always get the money reimbursed or they would be helped out by a DHP, but for a large number of families that did not happen because of the application of this second means test. The benefits that were being taken into account were things such as disability living allowance and personal independence payments, but they are paid to people who are long-term sick and to disabled people to help them meet the extra costs of their disability. They are not meant to subsidise their housing costs. Those extra costs do not go away just because someone has to contribute something towards their rent because their housing benefit no longer covers the full amount.
We recommended that the Government should issue revised guidance to local authorities, making it clear that disability benefits should be disregarded in any means tests for DHPs. As yet, we do not know whether that has happened, and I hope that the Minister can tell us whether that sensible and modest request by my Select Committee has been put in place.
There is also the problem that DHPs were meant to be temporary and transitional. They were never intended to provide a long-term solution, which is why we hoped that certain categories of claimants would be exempt. That makes far more sense than having claimants apply every six months, or every year, for a DHP, or for help towards their housing costs. We are talking about long-term problems. If a claimant cannot move house or find work, why is it that they still have to apply for a DHP?
Local authorities seem unwilling to make longer term awards, so claimants often end up having to re-apply every six or 12 months. Each time a family has to apply for a DHP, they go through anxiety and uncertainty, and they never know whether they will get the award this time round.
We concluded that if DHPs are to continue to be used as the main way of mitigating the hardship that the reforms are causing, substantial levels of funding will be needed for the foreseeable future. Claimants need to be given certainty that long-term awards are available. During our inquiry, we visited some people who were caught in that particular Catch-22 situation and they really were worried about the future.
There is also the question whether there is sufficient funding for DHPs. Although central funding was increased to £165 million in 2014-15, it will go down again to £125 million in the next financial year—a drop of £40 million. During our inquiry, the Government argued that DHPs were sufficient because local authorities had not bid for the full amount of funding that was available, but we believed—this has been borne out by later evidence—that that was because the reforms were at an early stage. Local authorities were still trying to adjust to the changes, and claimants were often not aware that DHPs were available. The DWP’s own research found that 56% of people who had not applied for DHPs were not aware that they existed, but they were as likely as other claimants to report difficulty in paying the rent or being in arrears.
We recommended that the Government should review the whole DHP provision when more detail was available, which it must be by now, and increase the funding, but we now know that that will be reduced. Obviously, there has not been a proper review and, as a result, it will be harder and harder for local authorities to continue to meet the costs of the DHPs that their own criteria say they should be paying out.
I would be interested to hear from the Minister what the evidential basis is for reducing DHP funding next year. Does the funding level take account of actual assessed levels of hardship arising from reduced housing benefit, or is it based only on the amount of DHP that local authorities have been able to distribute so far? What steps are the Government and local authorities taking to inform vulnerable claimants that they can apply for DHPs to help them make up their rent shortfalls?
Another aspect that has arisen as a result of the changes to housing benefit is the introduction of a cap on the total amount of benefits that a household can receive. The current limit is £26,000 a year. It is relevant to housing costs because it is the claimant’s housing benefit that is reduced when they hit the cap.
It is worth noting that almost everybody affected by the cap either lives in an area of the country with expensive rented accommodation, such as London, or are being placed in temporary accommodation because they are homeless. Local authorities often have no option other than to put homeless people in temporary accommodation because of the lack of other rented housing in the area. That problem is getting more and more acute in a number of areas, but temporary housing is normally more expensive than permanent accommodation and claimants can then fall within the scope of the benefit cap.
Local authorities often end up paying the shortfall between rent levels and housing benefit for those affected by the cap through DHPs, so there is in fact no overall saving to public funds. We recommended that the Government should exempt all households in temporary accommodation from the benefit cap, because it seems particularly unjust for those claimants to be affected when they had no choice over where they were housed. We also found that the benefit cap was having an adverse impact on disabled persons and their carers, and that is a particular problem when the carer lives with the disabled person—usually as the parent of a child, but it could be as the adult child of a disabled parent—but they are not considered, for benefit reasons, to be part of the same household. We recommended that the Government should exempt from the benefit cap all recipients of carers allowance in that situation. The Government said that the benefit cap was not intended to push carers into work, but that may well be the effect unless the recipients of carer’s allowance are exempted from the cap. I do not think that the Government anticipated that carers would be caught by the bedroom tax.
We also looked at the local housing allowance, which is the former housing benefit for tenants in the private rented sector. The Government announced reforms to the LHA in the June 2010 Budget, and the Committee published a report that year highlighting our concerns about the implication of the changes. Our 2014 report assessed the impact of the reforms. We concluded that there was a growing discrepancy between average rents and the amount of local housing allowance that households can claim. We found that, as a result, private sector landlords are increasingly reluctant to rent to LHA recipients. Evictions and non-renewals of tenancies are increasing, and the properties that do remain available to claimants are increasingly of poor quality and there are fewer and fewer of them.
We also looked at the impact on homelessness. We noted that, despite homeless statistics being down overall, rises are occurring in areas where demand for housing is high, and that homelessness among those not deemed to be “in priority need” had increased by 9% between 2012 and 2013. In order to qualify as priority need, households need to be vulnerable in some way. We are talking about single mothers or victims of special circumstances, such as a fire or flood, so many homeless people are excluded from the definition. It is therefore not surprising that many people who are homeless are not necessarily showing up in the figures.
We were also concerned about younger people affected by the changes to the shared accommodation rate, which is the housing benefit paid to claimants without dependants who live in private rented accommodation. Basically, it means that they cannot rent a complete flat or house of their own; they can afford to rent only a room. The benefit had previously applied to claimants under 25, but from April 2012, as part of the LHA reforms, the Government extended the SAR to any single claimant under the age of 35 without dependent children. We found that in many areas insufficient accommodation at this level of rent was available. We heard evidence of possible adverse impacts on people with mental health problems and on parents with non-resident children, who would no longer have room to accommodate their children when they came to stay.
We concluded that the extension of the shared accommodation rate to single claimants up to the age of 35 might well have reduced the availability of safe, appropriate accommodation for younger people, some of whom may be vulnerable. We recommended that the Government should assess the impact of this change to the shared accommodation rate. If there was evidence that the change was resulting in some vulnerable young people having to live in situations which were inappropriate or put them at risk, we thought that the Government should consider introducing exemptions for vulnerable people and doing more to increase the provision of appropriate accommodation.
On the face of it, the introduction of universal credit may seem unlikely to affect housing costs, but housing benefit is one of the six benefits that will form part of universal credit. The biggest change in respect of housing benefit is that it will be administered by the DWP directly as part of universal credit, rather than by local authorities, as is the case at present. Universal credit, including the housing costs element, will generally be paid direct to claimants once a month, although exceptions can be made.
For some time now most claimants in the private rented sector have received their housing benefit direct and paid rent to their landlords. However, for social housing tenants, this represents a huge change, as their housing benefit has always previously been paid to their landlords and they have not been faced with handling the significant sums that housing benefit sometimes involves, especially when it is paid once a month.
In a report that we published in 2012 we looked at how universal credit would affect vulnerable claimants. One of the key issues that we considered was the challenge that some vulnerable people would face in coping with direct monthly payments of UC which included their housing costs. To test the impact of direct payment of housing costs on social sector tenants, the Government set up direct payment demonstration projects in six local authority areas in 2012. The findings from the research showed a distinct and significant drop in rent payment rates when tenants first migrated to direct payment. As a result, rent arrears increased, as did the number of tenants falling into arrears. Although tenants adjusted to the new system over time, much of the arrears that had built up in the early stages were not repaid, so total arrears continued to rise. Overall, tenants who went on to direct payment paid 95.5% of all the rent owed, compared with 99.1% who were not on direct payment.
The Public Accounts Committee last week published a report on universal credit that concluded that these findings show that the DWP needs to reflect on how it will tackle the potential problems of paying the housing benefit element of universal credit directly to claimants. As we said about universal credit in 2012, it may work well for the majority of claimants, but it is the vulnerable minority who need special attention and extra support. This is particularly the case when it comes to housing costs because they often represent the largest proportion of a household’s benefit payments. If people fall into arrears and lose their homes, there can be all sorts of dire consequences, particularly for children.
What I have said so far applies predominantly to England and Wales. Since we published our report there has been a referendum in Scotland and the setting up of the Smith commission to look into further devolved powers. My Select Committee has not had time to look at the implications of the Smith agreement and how that might impact on the way in which housing benefit is administered and paid in Scotland. Nevertheless, our report was wide ranging. I have not touched on all the important issues that it covered, but colleagues from the Committee are in the Chamber and they may do so.
In conclusion, we continue to be disappointed that the Government have not been able to provide a response to the very important matters that we raised nearly a year ago. Many of the issues that we identified in April 2014 still exist in the system and some have been exacerbated with the passage of time. I look forward to the Minister’s update on the progress that has been made in addressing some of the concerns that I have raised.
John Hemming (Birmingham, Yardley) (LD)
I am pleased to follow the hon. Member for Aberdeen South (Dame Anne Begg), the Chair of the Select Committee. She raises a number of interesting points that were debated in the private Member’s Bill introduced by my hon. Friend the Member for St Ives (Andrew George), the Affordable Homes Bill, which proposed a number of changes to the social sector criteria—the bedroom tax, spare room rent or whatever one wants to call it. One of those changes would, under certain circumstances, automatically exempt people with disabilities from being required to pay for a spare room.
In law as it currently stands, under article 14 of the European convention on human rights, there is a legally enforceable right to get hold of discretionary housing payments. I have achieved that in Birmingham in a couple of cases, by using the threat of it rather than making the application to court. My constituency experience is that in the cases in which we should get DHP, in general we have got it. I agree that we should have an automatic exemption from paying for spare rooms for those people who need them because they have a disability, which is obvious, and those whose homes have been adapted. However, we have managed to get DHP in those cases, and we are getting longer DHP awards following the changes that defined the budget for two-year periods, so some progress is being made.
The other change proposed in the Affordable Homes Bill was that people who said that they wanted to move would not have to pay. Of course, that is between 10% and 20% of people. In fact, I think that the figures for Birmingham show that roughly half those who were originally having to pay for spare rooms no longer have to, although obviously people are flowing in and out of the system. I find it rather sad—perhaps the Minister will take note of this point—that although the Department gets monthly statistics from all local authorities on what is going on with awards of DHP and the like, spare room rent and so on, we do not get up-to-date figures on the situation.
One of the changes introduced in April 2013 was to enable people in the social rented sector to benefit in the same way as those who own their own homes if they want to let out a spare room to a lodger or boarder. Not only would they not have to pay for the spare room, but they could keep up to £20 a week of the additional money. Given that the applicable amount for a 25-year-old is currently around £71.70, £20 a week is quite a lot of money. I believe that only a handful of people in Birmingham have taken that up, but I think that is because people do not know that they can benefit.
I had a meeting last night with care leavers, during which we discussed housing, because it is absolutely critical for them. We discussed how tight their budgets are when they have to live on means-tested benefits, because they have to pay water, gas and electricity bills, so there are great merits in people sharing property in certain circumstances. I advise young people to consider sharing, rather than trying to live alone. They raised a concern that even though they got some priority as care leavers, they were still given only one choice of property—take it or leave it. I think that varies from local authority to local authority, but perhaps more could be done in that regard.
In my constituency advice bureau I get people who are very upset. The last person who was in tears was a constituent who was in overcrowded accommodation; they could not live comfortably in the two-bedroom flat they had. I find it sad that we are still not managing to deal with those who are under-occupying and those who are over-occupying in such a way that councils can resolve the issue. I recently had a case in which a pensioner wanted to downsize from a house but the council was being exceedingly difficult about it, saying, “When you took the house, certain adaptations were made, so we want you to reinstate them before we move you.” Obviously he is not paying the spare room rent, but he is still occupying a house that could be occupied by a family. I do not think that there is the urgency that there should be in local authorities to try to deal with overcrowding.
Dame Anne Begg
Actually, there is a need to ensure that people are appropriately housed and that they move, but very little of that responsibility lies with local authorities. The wrong way to go about it is just to take money from people who are over-occupying and would love to move but are not in a position to do so.
John Hemming
I personally think that it would be harsh to go around evicting everybody who is under-occupying, although that happens when people try to succeed to a tenancy; they are told that they cannot do so because the property is too big. I do not think that overcrowding is taken sufficiently seriously. Malcolm Wicks highlighted in his memoirs how he argued, when a Labour Housing Minister, for the need to bring in something akin to the current situation.
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman should acknowledge that the proposals from the late Malcolm Wicks involved incentives to move, not financial penalties to be applied immediately whether or not houses are available.
John Hemming
I thank the hon. Lady for that intervention, but my reading of all the documents, including those memoirs, is different from hers. It was not about an incentive to move, which I do not think anyone would criticise. I think that his proposals were very similar to those that have been adopted by this Government, as seen in the written parliamentary questions.
Mr Mark Spencer (Sherwood) (Con)
I am grateful to the hon. Gentleman, who is being generous in giving way. Does he also recognise that it is wrong to distinguish between individuals on the basis of who their landlords are? Whether their landlord happens to be in the private sector or the public sector should make no difference to the level of support they get.
John Hemming
The hon. Gentleman makes a valid point. The scheme for working out how much space people need and paying them for it was introduced in the private sector many years ago. The Opposition will make the valid point that they did not make it retrospective, but the Government then say that if we want to deal with overcrowding and the like, this is one of the difficulties. Speaking personally, I would rather not do any of these things, but we do not have the finances for that. If we had chosen to take the Greek approach and said, “Can’t pay, won’t pay”, and then run out of money, we would not have had to do a lot of these things, but sadly we have to try to bring the books into balance over time.
Sheila Gilmore
The fundamental problem with this whole policy—I think the hon. Gentleman is taking this position as well—is whether it is about saving money or making better use of houses. The amount being saved even on the Government’s own initial estimates was not enormous, and when we factor in discretionary housing payments and all the other things that have to be taken into account, the savings diminish even further. This is not really something that will save a lot of money. [Interruption.]
John Hemming
From a sedentary position, the Minister says, “£1 million a day”, which is about the order of magnitude that we were talking about. A policy can have more than one objective. It can be designed to save money and also to deal with overcrowding. This year, I have not had anyone in my office complaining about social services criteria, but I often get people complaining about being overcrowded.
Helen Goodman (Bishop Auckland) (Lab)
Is the hon. Gentleman aware that when the bedroom tax was introduced, 19,000 people in his constituency were already on the waiting list, of whom 8,000 wanted one-bedroom flats? There was already a long queue of people before the bedroom tax was introduced,
John Hemming
In my constituency, I was aware of a family of four living in a one-bedroom flat who wanted to transfer out of that into better accommodation.
Mr Spencer
I am not familiar with Birmingham, Yardley, but I wonder whether the fact that the lists were so long is a symptom of the legacy of the previous Government’s inability to build single-bedroom accommodation for the hon. Gentleman’s constituents to move into.
John Hemming
The hon. Gentleman makes a valid point. Social landlords have had a relatively simplistic approach to designing property to suit the demands of the market. That creates a difficulty, in as much as one should recognise that there are real difficulties in the financial costs of living alone, including paying rent. The hon. Member for Aberdeen South said that the changes to universal credit mean that people have to keep money aside for rent in a social housing property in the same way as they have had to in a private rented property, the logic being that it makes for a seamless move into work and therefore they are not frightened about getting a job.
In my constituency, I have worked with 6 Towns credit union, which is based in West Bromwich, to extend its service to Yardley, as it has done. It allows someone to be a preferred creditor. Basically, the housing element of universal credit or housing benefit is put to one side and made available for the landlord, be that a social housing landlord or a private landlord. It is important to do that, because we need to make sure that people do not end up in a mess. The idea is that budgeting is done through the bank account rather than the housing benefits system. That creates a situation in which people do not find themselves in great difficulty with budgeting as soon as they get into a monthly paid job.
There have been proposals to cash limit housing benefit by giving it all to the local authorities. I think that the Institute for Public Policy Research proposed something along those lines. That would lead to a situation where potentially many more tenants in social housing would have to pay towards the rent for their accommodation. I would be concerned about that, because it would put them in a situation that they could do little about. I favour the current process, which supports people with the housing costs they need to pay so that they can cope on a day-to-day basis.
This is a difficult area, and the Government have done many things that I would have preferred them not to do, one of which is the change to housing benefit, which it would have been nice to do gradually. However, we have to bring the books into balance, because if we do not, the interest rates on sovereign debt will go up and the amount of interest that we would then have to pay means that the cuts or tax rises that are necessary would become a lot greater than would have otherwise been the case.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I appreciate that there is a feeling the House is not very busy and that the whole afternoon and evening stretches before us, but another debate is scheduled to take place after this one. If everyone follows the example of the hon. Member for Birmingham, Yardley (John Hemming) and speaks for approximately 10 minutes, all Members who have indicated that they wish to speak will have the opportunity to do so. I will not impose a time limit at the moment. The hon. Gentleman has set a good example, and I hope that everyone will follow it.
Teresa Pearce (Erith and Thamesmead) (Lab)
I am pleased to have the opportunity to participate in this debate. It was very well opened by my hon. Friend the Member for Aberdeen South (Dame Anne Begg), who is a dedicated and inspirational Chair of the Work and Pensions Committee. I want to put on the record my thanks to her for the way in which she has chaired the Committee and for all the things I have learned from her. She is the epitome of the iron fist in a velvet glove, and she manages to be both reasonable and radical at the same time.
I am speaking in this debate because I am a member of the Select Committee, and the Chair has already gone through some of the recommendations in our report. Given the importance of the report, it is disappointing that, a year on, we are still waiting for the Government response. I hope that the Minister will address that matter.
It is indisputable that we are the middle of a housing crisis. House building is down, homelessness and rough sleeping are rising, and houses are unaffordable for many people. The lack of social housing means that those with legitimate claims and in desperate need are deemed ineligible or not in priority need as local authorities try to implement housing strategies to manage demand with a only very few houses to allocate.
The private rented sector has filled the vacuum caused by the lack of affordable and social housing. As a result, the private rented sector in London has grown by 75% in the past 10 years. In my constituency, it is now common for families to live in private rented accommodation, although they previously either owned their own home or lived in social housing. Yet the ever-growing private rented sector is still failing to meet the demands of renters. It is easy to reduce discussions about housing costs to an evaluation of numbers and statistics, but the truth is that covering housing costs is crucial to securing a stable home life and a stable society. Affordable housing costs give families certainty and freedom from the fear of eviction, and help to foster communities.
Costs are spiralling out of control. The cost of renting has soared while wages have dropped. The lack of regulation in the private rented sector and the limited supply of housing in comparison with demand mean that private landlords are currently free to set their own prices. The cost of renting privately has increased consistently since 2009, and rents reportedly increased in London in 2012-13 by nearly 8%.
It is not surprising that so many people, both in and out of work, require help with paying their housing costs and have to resort to housing benefit. The number of in-work housing benefit claimants rose from 439,000 at the end of 2008 to more than 1 million in May 2014. The latest statistics also show that there were just under 4.9 million housing benefit claimants at the end of November 2014—increased from 4.2 million in November 2008—of whom 67% were in the social rented sector, but the rest were in the private rented sector.
The Committee’s report illustrated that the cost of housing benefit is rising, while the most vulnerable are failed when they rent privately. Over the past year, as a constituency MP, I have seen a spike in the number of people contacting my office who have been told that they are ineligible for social housing, but cannot secure private rented accommodation. That is due to a combination of factors, but one that has made things very difficult for people is the change in local housing allowance. Constituents tell me that when they go to the local authority, they are just given a list of private letting agents. The problem is that nearly all those on the list say that they do not take any tenants on benefits. Constituents are spending time and resources searching for suitable properties only to be told that they cannot be helped. That means that a large section of the private rented sector is unavailable to claimants, and that they are often forced to take poor, substandard property that fails to meet their needs.
John Hemming
We have found in the west midlands that private landlords are often willing to take people on housing benefit if they have a 6 Towns type of account that reserves the funds. There is a solution in the system as it stands. Perhaps that needs to be investigated. Obviously, 6 Towns does not operate across the country, but perhaps there are solutions that can be found within the current policy.
Teresa Pearce
It is true that solutions can be found. Sadly, no one seems to have found them yet in my part of south-east London.
The Work and Pensions Committee looked at the problems that are faced by people on housing benefit. They are discriminated against when looking for private rented accommodation. For families, that makes trying to find a roof over their heads an uphill struggle. Given that tenancies typically last for six to 12 months, private renters often have to move just as they have settled in. Children who live in such places have their life chances restricted and their education disrupted, and are often not registered with a doctor. That cannot be acceptable.
Private landlords may be reluctant to rent accommodation or provide temporary accommodation to claimants for a number of reasons. It might not just be general discrimination, but might be due to constraints that are imposed by mortgage lenders, who say that they are not allowed to provide longer tenancies, or due to fears that local authorities will fail to allocate housing benefit in a timely manner. Giving private renters the option of allowing the housing benefit component of their universal credit payment to go directly to their landlord might allay those fears and enable private renters to control their finances more easily. The Government must work with private sector landlords to address their concerns about universal credit and offer greater support to those who rent property to housing benefit claimants. That work must start now.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
I grateful to my colleague on the Work and Pensions Committee for giving way. I met my key local social housing provider on Friday. It said that there was a 15% gap in rent collection between those on universal credit and those not on universal credit. That is manageable over a year or so, but over the longer term it will create huge problems. I wonder whether my hon. Friend wants to comment on that point.
Teresa Pearce
That is a valid point. It is something that we all encounter locally when we talk to housing providers. It needs to be addressed, so I thank my hon. Friend for her intervention.
Another problem for private renters is that the change to local housing allowance is further restricting their access to the widest selection of available properties. Local housing allowance rates match only the 30th per- centile of homes within a broad rental market area. The Government reduced that from the 50th percentile. I believe that that needs to be re-evaluated urgently, especially in London. Rents have risen, but the local housing allowance was frozen in 2012-13 and uprated by 1% in 2014. There has been a reduction in the number of homes that can be rented out at that rate.
An analysis by Crisis shows that across Britain, one in 10 local housing allowance rates for 2015-16 is 5% or more lower than the estimated 30th percentile of local rents. Those include 77 rates that have already benefited from an additional increase due to the targeted affordability fund. As was outlined in the Select Committee’s report, analysis by the Institute for Fiscal Studies shows that rent levels did not decline as a result of the cap. In fact, the most recent rental figures show a 1.8% rise across the stock in England and a rise of 2.4% in London. That is well above the recent 1% cap and means that additional properties will fall out of the reach of those on benefit.
Private renters should not have to choose between having a roof over their heads and eating, but increasingly that is becoming a daily choice for many people in my constituency. The Government should consider increasing LHA rates by more than 1% annually in more pressured areas. Although the Committee welcomed the introduction of the targeted affordability fund as a means of increasing LHA levels in areas of higher rents, some areas may see rents rising by more than the maximum of 4% a year. The Government should amend the targeted affordability fund so that it can be paid at higher levels in areas where rent increases are greater than 4%. It should also use available rents rather than stock rents as a measure for the rental increase.
Rents are currently unaffordable across the private sector. In 2012, the Money Advice Trust stated that rent arrears were the fastest growing debt problem it had encountered and that the number of calls it received on the issue had risen by 37% on the previous year. At the end of 2014, the National Landlords Association reported that almost a third of private landlords had seen arrears that year. There were a record number of evictions of renters across the social and private sector in 2014 as a result of a combination of factors, including the bedroom tax, benefit sanctions, increased numbers renting with the reduced LHA rate, and rising private sector rents.
Recent figures from Crisis have also shown that the No. 1 leading cause of homelessness now is eviction from a private tenancy. The figures highlight not just the lack of affordability for renters when having to manage competing living costs, but how unsustainable rising rents will be for the private rented sector without Government intervention.
The Government must continue to monitor homelessness levels and take action to mitigate the impact on households and local authorities. The Department for Communities and Local Government reported that rough sleeping increased by 14% in autumn 2014. I am regularly contacted by constituents who tell me that they cannot be housed by their local council because they are not in priority need and that they have no option but to live in overcrowded accommodation with family members or to couch-surf, which is code for sleeping on the floor of a friend’s house. If they can be housed, they have been told that their only option is temporary accommodation. In my local area of Bexley, people are often temporarily accommodated in Manchester and Bolton, which means having to uproot their children from school and leave their support networks behind.
It always worries me greatly that, while a number of landlords are reputable, a number of others are not. There are private landlords in my constituency who line their pockets while renters struggle to pay their rent. I wrote to Her Majesty’s Revenue and Customs and the Treasury in November to ask about the Let Property campaign, which was launched in September 2013 to target the residential property letting market. Specifically, I wanted to know whether it had been successful in closing the tax gap on let properties, but the responses I received were not encouraging. They said it was too early to tell, but one of the figures they did give me was an estimate that the tax gap on letting income was just over £500 million. It is absolutely disgraceful that public money is going to landlords who do not then pay their way or their tax. We need to address that urgently.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Before the hon. Lady addresses any further points. She may have been able to count, but she has now spoken for 12 minutes. I trusted her to speak for 10 minutes, so I trust that she is going to wind up very soon.
Teresa Pearce
I will finish by saying that I think this is a most urgent issue. I do not usually quote from Conservative manifestos, but the 1951 Conservative manifesto said:
“Housing is the first of the social services. It is also one of the keys to increased productivity. Work, family life, health and education are all undermined by overcrowded homes.”
That was true then, and it is true now.
Chris Heaton-Harris (Daventry) (Con)
It is a pleasure to take part in this debate. I am sorry that I missed the first couple of minutes of the speech by the hon. Member for Aberdeen South (Dame Anne Begg), because she speaks very sensibly on this issue and many Government Members listen to what she has to say about it. I will pick up on a couple of points she made.
The hon. Lady has spoken in the past about the amount that we spend on housing benefit. It was a matter of concern to us all that the housing benefit budget seemed to be getting out of control in the run-up to the last general election. In fact, the housing benefit bill was forecast to rise over the current Parliament from £21 billion to more than £26 billion. This Government’s reforms have only pegged back that increase by about £2 billion a year, which, given the potential growth in the budget, is not very much at all.
The hon. Lady spoke about how the spare room subsidy has been working in practice. Like the hon. Member for Birmingham, Yardley (John Hemming), my constituency surgeries were visited by many people when the policy was first mooted, perhaps because they were scared by stories that were being circulated at the time about how it would affect them. There was a general lack of knowledge about discretionary housing payments and who can receive them for. I am pleased that we were able to help every person who came through the door of my constituency surgery advice centre seeking help in that area, and all received discretionary housing payments.
Interestingly, Daventry and District Housing, which serves a huge area of my constituency, saw the policy change coming down the line. It is a good housing association in many ways because it talks to its tenants on a regular basis and gets to know them, and it therefore made sure that they were ready for the change. Most tenants in Daventry and District Housing accommodation knew that the change was coming, and knew that discretionary housing payments were available and how to access them.
I sit on the Public Accounts Committee, which discusses these matters—I will mention the report that the hon. Member for Aberdeen South spoke about in moment—and it is fairly obvious that different parts of the country, different housing associations, and different councils have acted in completely different ways over this change. They have probably acted in their best local interests, which is fine, but it has led to different outcomes in various parts of the country that all have remarkably significant and different pressures on them.
In one of my first years on the Committee, its Chair, the right hon. Member for Barking (Margaret Hodge), took us to see a primary school and surrounding housing estate in her constituency. We had been talking about health and housing inequalities, and the trip was to see how primary education was working. I acknowledge that the pressures on housing in Erith and Thamesmead, or in Barking and Dagenham, are completely different from those in my constituency, and that is why local experts and housing associations in that area know their tenants well.
The interesting background to this debate concerns an area of spending that was constantly growing and needed to be brought under control—however we paint the picture, the Government’s moneybags were not particularly full when they came to office in May 2010, and although they are a bit better now, there are still tough decisions to be made. Such decisions must be based on fairness—I know that some Opposition Members do not consider this measure to be fair at all—and we must consider how we change a policy that is already enacted for those in the private rental housing sector but not for those in the public rental sector.
At this point I should say that I rent out a house. My private property in Lincoln is noted in the Register of Members’ Financial Interests and I rent it to a private sector tenant who to my knowledge is not on any type of benefit. There is a proper debate to be had about this issue, which was started in no uncertain terms by the previous Government.
This Government brought forward their proposals with the safety net of discretionary housing payments. I do not want to disagree with the hon. Member for Erith and Thamesmead (Teresa Pearce) because she will know her local area much better than I will, but perhaps I misheard her. She was talking about warrants for evictions, and perhaps she meant from the private rental sector.
Chris Heaton-Harris
She did. I know from Ministry of Justice figures that warrants for evictions for public sector rental tenants were down over the period in question by 6%. An issue in the private rental sector might well need to be addressed, and that is probably in the south-east of the country rather than elsewhere, given the housing pressures that London might have.
My concern was the treatment of carers and those who are disabled. As the hon. Member for Birmingham, Yardley said, it would have been wonderful to exempt everybody from the change, but it was impossible to do so, and therefore discretionary housing payments were introduced. In my experience in my constituency, DHP has been granted for disability and caring in every single case it has been asked for. I pay tribute to Daventry and District Housing, the citizens advice bureau and the local council for the way in which they have dealt with those cases. The patch—I admit that it is a patch, and that I would much rather have seen it done in a much more solid way—seems to work. The extension of the term of DHP seems to have given people a better sense that they will be able to live in their property for a long period.
I conclude with comments on the Public Accounts Committee report on universal credit, which was published only a couple of weeks ago, and which the hon. Member for Aberdeen South mentioned. As she outlined, an interesting part of universal credit and one of the benefits that it will eventually wrap in—for many new claimants, that has started—is housing benefit. Housing associations up and down the country have had concerns about how that might affect them and how they will get their rents from tenants. However, the report shows how a change in the Department for Work and Pensions has been introduced—it has been seen as controversial by many, although a universal credit that aims to get as many people as possible into work and to make work pay better than benefits ever will is in fact policy on both sides of the House—how the programme has improved things and how it is now beginning to deliver what it was meant to deliver, and on scale across the country.
The report was groundbreaking in many ways. The Public Accounts Committee is very critical of all Departments that come before us where money is spent. We raised some issues, as detailed by the hon. Member for Aberdeen South, but if Members read the report they will see for themselves that we are much more comfortable with how the universal credit programme is going—that it is now delivering on scale and will deliver the savings expected. No matter on which side of the House hon. Members sit, they will welcome it in future, because it does exactly what it says on the tin.
The interesting paragraph is paragraph 6. The hon. Lady mentioned the potential problems of paying housing benefit elements of universal credit directly to claimants—the question was whether housing associations and others could maintain their incomes. I know from initial reports that her statistics are correct, but I would like to hear from the Minister, because I am pretty sure that new stats prove that there is not as much of a problem as she says.
Chris Heaton-Harris
I had better sit down and shut up, otherwise I will get the stare from Madam Deputy Speaker, which I never want to receive.
Things are improving. We would expect that because when something changes, there is always upset at the beginning. Things are on the right track, but I would like to hear about it from the Minister.
Sheila Gilmore (Edinburgh East) (Lab)
Hon. Members agree that there are serious problems when payments of housing benefit rise so high. We disagree on our analysis of how it came about and what we should do about it. Unless we tackle the underlying issues, we will simply trim the edges, to the detriment of many households and families. As the Office for Budget Responsibility says in its review of spending on benefits and pensions, the main drivers for the increase in housing benefit are increases in rents and the number of people on low wages who have to claim housing benefit to make ends meet. The OBR was concerned that those two things would continue to be drivers in the coming decade unless action was taken. There is very little—I would say virtually nothing—in the steps that the Government have taken since 2010 to tackle those problems. Indeed, they may have made them worse.
We were told by Ministers during the passage of the Welfare Reform Bill that the private rented sector had become so intrinsically dependent on the housing benefit market that rents would fall as a result of the changes. Rents have not fallen. In many places, they have risen considerably above inflation. That is certainly true in my city, in the city represented by the Chair of the Select Committee and in London. The DWP accepts that this is the case. For the private rented sector, it has introduced additional payments in some areas to top up the local housing allowance—after it previously made reductions—because it accepts there is a growing gap between the actual rents available to people who want to rent and need housing benefit, and the payments they would otherwise receive. The promises that rent would fall as a result of the policy have not come about. I hope that in looking to see what savings are supposed to have been made, those additional payments will be factored in.
We are repeatedly told that this policy is about saving money. I think the Minister from a sedentary position said, “Oh, it’s about £1 million a day,” but that was based on the Government’s original statement that the policy would save about £500 million a year. Other experts said, at a very early date, that it would be lucky to be somewhere nearer £350 million, and that does not take into account the very high cost of discretionary housing payments, which are a cost to Government and so detract from any savings made. It is therefore not correct for the Government to say what they say.
For individuals, households and families, the impact is extremely serious. This is not the same, as is often said, as what happened previously in the private rented sector, dating back to about 1998 when size was taken into account. This is an impost on people now, whether they can move or not and whether there is anywhere for them to move to or not. One of the amendments tabled during the course of the Welfare Reform Bill by the Opposition—it was followed up through the House of Lords and incorporated into a private Member’s Bill that was not allowed to progress in this House recently—proposed that if people were offered a suitable alternative house and did not take it, then the cut in their benefit could apply. For many people, however, that just is not practical. I have just checked yet again, as I do constantly, the number of houses available for social rent in my city. This week, there were 54 in the whole city. Of those, 31 were one-bedroom, but eight were sheltered. The people affected by the bedroom tax are by definition under pension and retirement age, and so would not qualify for those eight.
Debbie Abrahams
That is not just the case in my hon. Friend’s city. In Oldham in my constituency, 2,048 people are affected by the bedroom tax and there are only 50 properties for them to move into.
Sheila Gilmore
I thank my hon. Friend for her intervention.
In Scotland, the priority given to people who are homeless—a much wider definition of homelessness has been adopted by the Scottish Government—means that there is real competition for smaller houses. The majority of people who present as homeless are single people, so they too need the small houses that other people are trying to fit into.
John Hemming
I refer the hon. Lady to the answer that the then housing Minister, the late Malcolm Wicks, gave to a question from the hon. Member for The Cotswolds (Geoffrey Clifton-Brown):
“We hope to implement a flat rate housing benefit system in the social sector, similar to that anticipated in the private rented sector to enable people in that sector to benefit from the choice and flexibility that the reforms can provide.”—[Official Report, 19 January 2004; Vol. 416, c. 1075W.]
If he said that then, why is it now such a bad idea?
Sheila Gilmore
It is interesting that the flat-rate housing allowance for the private rented sector should be raised. What the hon. Gentleman mentions was discussed as a possibility during the Labour Government. I was very much involved in housing, as the convenor of a housing committee in my council, and I remember that being discussed, but it was not implemented and there was a lot of opposition to the idea of doing that for the social rented sector, for all sorts of reasons. However, what the bedroom tax does is immediately say to people, whether they can move or not and whatever their circumstances are: “You may have to pay this extra money.”
To argue that discretionary housing payments are sufficient is not good enough. Even in Scotland, where the Scottish Government eventually agreed that extra money for the discretionary housing pot should kick in, there are still people who either do not know about making a claim or make a claim and do not get it, and who have to keep making claims. What the Select Committee said—I do not think this was unreasonable; we are a cross-party Committee—was that if we take the view that disabled people who have substantially adapted houses will receive long-term discretionary housing payments, which is what is always said, it would be simpler to exempt them. It would be administratively simpler, because there must be administrative costs in taking forms from people, processing them and working out whether they are still eligible. I do not think that was an unreasonable proposition. As the Government have taken so long to read our report—presumably considering it and working out whether it is workable—I hope that the Minister will stand up today and tell us that they have accepted that reasonable proposition. If he did that, we would all be extremely glad.
I want briefly to say something about the housing benefit cap. If a lot of people—this was the evidence to our Committee—are in temporary accommodation, it is utterly unreasonable to stop their benefit suddenly because they find themselves in that position. The Government are fond of saying that, as a result of the cap, people have moved out of temporary accommodation, but I suggest that it is likely that they are moving from temporary accommodation to permanent accommodation. There is a movement of people in and out of the scope of the household benefit cap, but the amount that some people are losing is very significant indeed. Again, I fear that the legislation was more symbolic than something that seriously addressed the underlying issues. If we have a lot of people receiving high amounts of benefits overall—because, for example, they are living in very expensive temporary accommodation—we need to build more affordable houses.
This is an issue north and south of the border. The Scottish Government have not been building sufficient low-cost affordable homes. The number completed in my city last year was the same as it was in 2007, which was the year that the current Scottish Administration took office. They have not been building low-rent affordable homes at an increased rate, even though they may sometimes try to say that they are. Without those homes, people will be paying excessive rents in the private rented sector, and not just in temporary accommodation. That is the issue we need to tackle.
Helen Goodman (Bishop Auckland) (Lab)
I begin by congratulating the Select Committee, in particular the Chair, on an excellent and extremely useful report. It is a thoughtful and well-informed cross-party report, so I hope that the Minister will be able to explain why, after a whole year, the Government have not been able to respond to it.
As the report points out, the Government set themselves three targets for their welfare reform programme and changes to housing benefit: reducing benefit expenditure, improving incentives to work and making the situation fairer. It is quite clear that the first test has been failed. The Office for Budget Responsibility shows that expenditure on housing benefit in 2009-10 was £20 billion. In 2013-14, the last year for which we have full statistics, it was £24 billion; and the OBR is predicting that by 2018-19, the spend will be £27 billion.
I was particularly struck by the table at the beginning of chapter 2 on the local housing allowance, which sets out the maximum amounts payable. For a one-bedroom flat or shared accommodation, the maximum amount payable is £250 a week. Everybody here will know, however, that a £1,000 monthly payment sustains a mortgage of £200,000. In my constituency, that would buy a four-bedroom house. The average cost of a new social housing unit is £120,000. How much better it would be if we could shift the finance from benefits to bricks and spend the money on building new homes.
The problem with this Government’s policy is that it has made life more difficult for many people, while the benefits bill has continued to rise. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said, that has happened because the Government have not addressed the underlying issues. The OBR shows that while housing benefit to unemployed people has fallen and is projected to continue to fall, housing benefit to those in work will rise steadily between 2012 and 2019. This is yet another indication of the cost of living crisis that people face, and it demonstrates that the new poverty is in-work poverty.
The Select Committee quotes Lord Freud as saying that the case load in the private rented sector is up
“by around 8% nationally and by around 5% in London”.
That is because rents are going up, even though the quality of housing is going down. I hope the Minister will be able to clarify the position on rents, since the Select Committee reported before the Office for National Statistics admitted that mistakes were made in the assessment of rents in London. In other words, more people are in the private rented sector today, and more of them are on housing benefit.
John Hemming
I am aware of the proposal to transfer housing benefit money to local authorities with a view to building more properties. Let me ask this: what pays the rent of the people who are already in tenanted accommodation while the new properties are being built with that money?
Helen Goodman
That, of course, is the great conundrum. I hope to come on to demonstrate to the hon. Gentleman how the Government have intensified the housing crisis rather than eased it by bringing about the happy day when we have enough homes. What is happening is that people are renting because they cannot afford to buy, and they cannot afford to buy because house prices are rising faster than they can save. Today, the average house price is eight times the average income.
Under this Government, we have had record lows for house building, which is now down at 1920s levels, as well as record lows for home ownership. No action has been taken to protect people from rip-off rent rises. That is why the Labour Opposition propose to address these problems, give security to renters and build five times as many homes as the Prime Minister promised yesterday. It is equally clear that something needs to be done about raising low incomes. I shall not detain the House with our proposals to strengthen the minimum wage, but it is absolutely clear that that is part of the equation.
The Select Committee made a number of sharp criticisms of the bedroom tax, which was described as “a blunt instrument”. It said that its effect was particularly harsh in rural areas, which is true. If people in rural areas have to move, they have to move a long way out of the community in which their children might be going to school. The Select Committee pointed out that the impact is worst in the north-east, the north-west, Yorkshire and Humberside. It said that people in social housing often have no real choice when it comes to which accommodation they rent. It also said that the Department for Work and Pensions has adopted a much tighter definition of space than the one used by the Department for Communities and Local Government. It would be helpful if the Minister explained that as well.
However, what worries the Committee most is the impact on people with disabilities. We know that two thirds of those affected are disabled themselves or have a disabled family member. The Committee says that people are being pushed out of their homes when public money has already been spent on adapting them, and its Chair, my hon. Friend the Member for Aberdeen South (Dame Anne Begg), made that point today.
The criticism is justified. In answer to a parliamentary question, the Department for Communities and Local Government informed me that in 2013-14, local authorities had adapted 42,000 properties and provided an average grant of £4,227. The Department also said that the Government would spend £1 billion on adapting properties between 2011-12 and 2015-16. That is commendable, but the Government’s investment in disabled people’s living space is being undermined by the bedroom tax, because they are now being pushed out of those homes. The policy is hitting an estimated 100,000 people whose homes in the social sector have been adapted. That is disrupting lives and driving hardship, and it is a prime example of welfare waste. The Committee recommends the abolition of the bedroom tax in cases in which people have adapted their homes or are receiving the higher level of disability living allowance or personal independence payments, and the Opposition wholly support that recommendation.
The Committee also refers to the impact of the bedroom tax on carers, 60,000 of whom who have been very badly hit. It recommends that those who cannot share a room with a disabled partner, or who live in adapted homes, should be exempted from the tax. It also points out that carers are particularly badly affected by the benefit cap. I cannot help thinking that that is extremely unfair, because carers are doing the socially responsible thing. The Committee estimates that the free care that they offer is saving taxpayers £18,000 a year per person. The bedroom tax comprehensively fails the fairness test that the Government set themselves, and hits those who, through no fault of their own and through force of circumstance, cannot go out to work, so it is not meeting the “incentives to work” criterion either. That is why the Opposition are pledged to abolish it.
In most areas, people have not been able to move to smaller accommodation because of a shortage of smaller units and because of pre-existing waiting lists. The Government knew that when they introduced the bedroom tax, which is why they were able to forecast savings. That shows what a deeply cynical measure this has been.
The Committee also points out that the diversion of resources to dealing with the bedroom tax has involved a great deal of time, energy and expenditure on the part of the housing associations. It says that, according to the National Housing Federation, the costs associated with communicating with tenants, supporting them and tackling rent arrears will be equivalent to the amount that could be spent on building 17,500 new properties every year. That is why I say to the hon. Member for Birmingham, Yardley (John Hemming) that this is a perverse policy. It is a perverse diversion of resources from tackling the housing crisis to punishing the most vulnerable members of society. It is in fact another example of Tory welfare waste. This is before we even get on to the fact that if this Government are re-elected the average bill for a family, in terms of the bedroom tax, will be £3,800 over the lifetime of the Parliament, and we know from the Government’s own statistics that a further 1 million people will be caught in the net of the bedroom tax and 6.5 million people are at risk of having to pay it. The fact is that the Select Committee—an all-party Committee—recommended significant changes to the bedroom tax. The Government have failed to respond. People are looking forward to the general election when they can have a Labour Government who will abolish the bedroom tax.
The Minister for Disabled People (Mr Mark Harper)
I will try to respond to the points raised in the debate but I will also endeavour to observe your strictures, Madam Deputy Speaker, to keep my remarks relatively brief so that the House also has time for the second important debate today. I will do my best to balance the two competing tensions.
First, I will respond to the point made by the Committee Chairman, the hon. Member for Aberdeen South (Dame Anne Begg), about the lack of a response. The Government have the greatest respect for the parliamentary process and engage with the Select Committee. She will know that, with the exception of this report, no response by my Department has taken longer than six months, but I fear that there is a very simple and straightforward answer as to the reason for the delay and I am afraid it will not mean an early response. The Committee report spends quite a bit of time talking about the removal of the spare room subsidy—as we have done today—and the Government response responds to the various points made. As the hon. Lady will know, we have a coalition Government—something I hope will not be necessary after the election—and that, despite our coalition partners having agreed on this policy all the way through the Parliament, they now towards the end of it do not agree. Unfortunately therefore, despite the fact that the response is broadly ready to go, we have not been able to secure agreement across the Government. I am afraid harmony has not broken out and, until it does, the Government will not be able to respond to the Committee. I am probably just as disappointed about that as the hon. Member for Erith and Thamesmead (Teresa Pearce).
Dame Anne Begg
While I can appreciate there may be problems on the bedroom tax, would it be possible for the Government to publish a partial response to our proposals, addressing all the other points on which there presumably is agreement across Government? Our Committee had a lot of very interesting things to say on a whole range of other issues.
Mr Harper
That is an interesting point. Let me take it away and see whether it is possible to do that in the time remaining. I have explained the reason for the lack of response to the Committee and, as I have said, it is the only report from the Select Committee that the Department has not responded to within six months. I am sorry about that, but the blame does not lie with the Conservatives in the Government; it lies elsewhere. [Laughter.] I am just being honest here at the Dispatch Box.
John Hemming
I think the Minister accepts that the Liberal Democrats believe there should be automatic exemptions for some of the people currently receiving discretionary housing payment, and does he not accept that if we automatically exempt people who are currently getting DHP the net effect on the public purse is zero?
Mr Harper
No, I do not, and I just remind the hon. Gentleman that the Liberal Democrats agreed to this policy and it remains the Government policy. I am sorry they have not stuck to it because I think it is a very sound policy. Let me set out why.
I was not going to spend a lot of time on this because the Committee did not, but I am afraid that the hon. Member for Bishop Auckland (Helen Goodman) made a lot of rather ridiculous assertions about welfare spending and I must take her to task on them. Being accused by the Labour party of wasting money on welfare is extraordinarily rich. The last Government increased spending on the welfare budget by 60%, costing every household an extra £3,000. The increase in welfare spending over this Parliament is going to be the lowest since the creation of the welfare state, and we will have made cumulative welfare reform savings of nearly £50,000 million over this Parliament, benefiting people across the country. In-work spending is stable and forecast to fall next year, even with employment at a record high. The out-of-work benefit bill is back to pre-recession levels, at 2.2% of GDP, and real spending on housing benefit fell between 2012-13 and 2013-14, for the first time in a decade. The overall case load has fallen, and housing benefit reforms have saved more than £6 billion during this Parliament, compared with what would have happened if we had continued with the policies of the Labour party. So I am afraid that the hon. Lady needs to go back and look at the record. If she does so, she will see which party has wasted money on welfare—and it is not the party of which I am a member. She needs to look in the mirror before she makes those kinds of silly accusations.
Helen Goodman
I should like to draw the Minister’s attention to the numbers provided by the Office for Budget Responsibility, which show total welfare spending in 2012-13 of £213 billion, and in 2015-16 of £219 billion. All the numbers that I quoted to the Minister were OBR numbers.
Mr Harper
I am not resiling from the numbers. Welfare spending has gone up over this Parliament, but it has done so at the lowest rate since the creation of the welfare state. The reforms that we have made to various welfare policies will have saved £50 billion over this Parliament compared with what would have happened if we had not made those reforms, and I think that that is sensible.
We have dealt with some of the issues that we inherited from the Labour party, and our changes are largely supported by the public. One such change is the benefit cap, and public support for that is very clear. The Opposition are not so enthusiastic about it, but 73% of the public support it and 77% of them agree that it is fair that no out-of-work household should get more than the average working household. In terms of fairness, that seems a pretty unremarkable policy, and it is one that we support even if the Labour party is unenthusiastic about it.
Our reforms to housing benefit, including the removal of the spare room subsidy, are dealing with some of the issues relating to using the housing stock more efficiently and dealing with overcrowding. My hon. Friend the Member for Birmingham, Yardley (John Hemming) drew our attention to overcrowding, and to the fact that not all local authorities are good at dealing with situations in which smaller families want to move to a smaller property while other properties are overcrowded. He made a sensible point.
John Hemming
I tried to intervene on the hon. Member for Bishop Auckland (Helen Goodman) to ask her whether Labour would reduce under-occupation by adopting a policy that involved evicting people living in under-occupied accommodation. Does the Minister accept that if we do not remove the spare room subsidy, the only alternative open to Labour if it wanted to reduce under-occupation would be to go round evicting people from under-occupied properties, which does happen in certain tenancies?
Mr Harper
The Opposition clearly do not have a sensible policy. I will comment on this briefly, because I want to move on to address some of the points made by the Chairman of the Committee and others. Labour’s policy to remove the removal of the spare room subsidy would cost about £0.5 billion a year. The Opposition have set out three ways in which they would pay for that, and when we had an Opposition day debate in December, I went through them in some detail to demonstrate that they simply would not work. They say that their proposal to ensure that the building trade paid its fair share of tax would raise £380 million, but we have already dealt with those changes in the 2013 autumn statement, so that policy would raise no money. Their proposed change to the stamp duty reserve tax, which they characterise as a tax cut for hedge funds, would actually fall on pension funds and retail investors—in other words, on people who are saving for their retirement. Their third proposal is to end the employee shareholder scheme, but that would save no money in 2015-16.
The shadow Secretary of State, the hon. Member for Leeds West (Rachel Reeves), has said that the first thing she will do when she walks into the Department for Work and Pensions as Secretary of State will be to change our policy on the removal of the spare room subsidy. If she did so, however, she would have to find £0.5 billion to pay for it and at the moment she has not set out how she is going to do that. The first thing her officials are going to say to her is, “Secretary of State, where are you going to find half a billion pounds?” Labour is unable to answer that question at the moment.
Hon. Members also referred to universal credit, with my hon. Friend the Member for Daventry (Chris Heaton-Harris), an experienced member of the Public Accounts Committee, being very supportive of that. He asked me a specific question, picking up on a point made by the Select Committee Chair; this was about rent arrears, with reference being made to a specific set of pilots. My understanding is that the difference was that for direct payments, where the money was being paid to the landlord directly, 99.1% of rent owed was paid, but the figure fell to 95.5% where people were managing the payments themselves. Over time, however, the impact of direct payments lessened significantly; half the arrears occurred in the first month, and by the 18th payment the figure for tenants who were being given the money and making those rent payments had risen to 99%, which is more or less the same as for direct payments to landlords.
That is important, because a key point of universal credit is about putting households on out-of-work universal credit in the same position as they will be in when they are in work: taking responsibility for paying the rent themselves. I listened carefully to what the hon. Lady said, because she made the comparison with the position in the private sector, where that is already the case, and then referred to the fact that in the social rented sector it was a change. It is a change, but the vast majority of the people who rent properties in the social rented sector are perfectly capable of managing their money, being given responsibility for it and paying their rent, just like everybody else. Some people will need some budgeting support and some support to move from the position they are in now to taking that responsibility, and that support is going to be delivered through our universal credit support delivered locally. A small minority of claimants may be unable to do that, and we have put in place alternative payment arrangements for them. That approach has been developed as we have rolled out universal credit carefully without our “test and learn” approach. She will know that we have also put regulations in place to enable us to share with social housing landlords the fact that someone is in receipt of, or has made a claim for, universal credit, so that they are able to put in place the appropriate support for vulnerable tenants.
A number of Members also referred, in the context of the removal of the spare room subsidy, to the amount of discretionary housing payment. That is one area where we are able to deal with some of the specific issues, for example, on significantly adapted accommodation. A specific amount of the discretionary housing payment, about £25 million, is for local authorities to enable people to stay in adapted accommodation. Of course, where properties have been specifically adapted for tenants with mobility needs, it does not make sense to insist that they move. That is exactly why we have made the money available to enable councils to deal with that, and I trust local authorities to make those sensible decisions. They have the facts at their disposal, will know the circumstances of people locally, will know the facts about the disabled adaptation grant that has been paid and are in the best position to make those decisions locally. I believe in localism and in trusting local authorities to make the decisions. Sometimes they might make decisions that people will characterise as wrong, but I am prepared to trust them to make sensible decisions.
On the availability of properties, it is also worth saying that in the social rented sector there are 1.4 million one-bedroom properties, with more than 130,000 new lets a year. So there is a significant amount of turnover; about 10% of the one-bedroom properties turn over each year. So if social landlords are properly managing and prioritising their housing stock, that should enable them, over a period, to enable people to move into smaller properties. Some 60% of social sector tenants are either single people or childless couples and require only one bedroom. Landlords are starting to respond to that, and we are seeing local authorities and housing associations now properly designing their housing stock to meet the demographic need of their potential tenants.
Helen Goodman
On a point of clarification, were those overall numbers that the Minister was quoting to the House inclusive of old age pensioners or not?
Mr Spencer
I know that the Minister is very busy in his Department and in the Forest of Dean, but I was wondering whether he would join me on Friday when I will be cutting the ribbon on some new properties built by Newark and Sherwood Homes in the village of Bilsthorpe. If he were able to come, I would be more than happy to let him take the scissors off me. If not, perhaps he could praise Newark and Sherwood Homes for the work it is doing in developing new homes in Sherwood and Newark.
Mr Harper
I will have to stick to praising Newark and Sherwood Homes, and to allow my hon. Friend to retain control of the scissors, which he is more than capable of doing, so that he can open that new development on Friday. I am afraid that, at this point in the parliamentary cycle, one’s diary is quite full.
If we look at the affordable homes programme, 77% of approved homes are one and two-bedroom properties, which is up from 68% in the last round. New house building is now following that approach.
Finally, let me turn to the point about local housing allowance raised by the hon. Member for Erith and Thamesmead and others. The allowance was intended to exert a downward pressure on rents. That means not necessarily that rents will go down but that the pressure on rents will be less than it otherwise would have been. In other words, it might mean that rents do not rise as much as they would otherwise have done. The hon. Lady specifically asked about parts of the country where the pressure is higher. As she said, there is something called targeted affordability funding, which means that where rents are significantly diverging from benefit rates, we have increased LHA rates by up to 4%, which is, I think, the right approach.
I will conclude now as I am conscious of the time. I have set out for the Chair of the Committee the reasons why we have not responded to the report, and I have addressed a number of concerns, which was a challenge given the amount of time that I had. Our policies are working. They have driven the lowest rise in the welfare bill since the creation of the welfare state, and they are also helping to get people back into work, which is why we are seeing a record number of men and women across the country in work, and that demonstrates the success of our long-term economic plan.
Question deferred (Standing Order No. 54).
Department of Health