Welfare Reform Bill

Baroness Falkner of Margravine Excerpts

Tuesday 13th September 2011 Lords Chamber

[Baroness Falkner of Margravine]

My Lords, I declare an interest as a non-executive director of Hyde Housing Association, as described in my entry in the register. I am also a trustee of Hyde Plus, the social regeneration charity established to provide practical assistance to some of the most vulnerable of our residents. We are a large housing association. Nevertheless, my comments tonight will be my own: I will not be speaking for either of those bodies.

Before I begin on the substantive parts of the debate, I pay tribute to the maiden speech of the noble Lord, Lord Feldman. As an immigrant who arrived on these shores some 75 years after his grandparents did, I recognise the values he spoke of extremely clearly. They are the values that many immigrants who come to these shores identify with. They will be affected by some of the provisions of the Bill. It was a fabulous maiden speech and I hope that we will retain the values articulated in it throughout our deliberations on the Bill.

This is a radical reforming Bill, designed to leave Britain's welfare state in a better state than we found it. However, its success will be measured ultimately both through its emphasis on an increase in the efficiency of the system—and surely, when one looks at the figures of what we spend, we can come to a consensus, as I think we have today in the House, that there is an element of waste in the system—and on its foundation in fairness. In his book Them and Us, Will Hutton defines fairness in Britain as a belief that one should receive one’s due deserts in proportion to whatever good or bad one has contributed. However, the emphasis must be on proportionality, and that is what on the whole the Bill does, although I have some reservations.

You cannot have fairness without accepting that life deals with us through lady luck. Those who have had the luck of a healthy life, good educational opportunities, and the good fortune to have had economic independence to make the right employment choices, are there to a great extent through their personal capabilities—I am a liberal, so you would expect me to say that—but also because of who they are and where they were born. Recognition of the element of luck in framing our lives demands that we contribute to the ill luck of those who have not enjoyed the things that we have. It was this recognition that led Beveridge—yes, I am from the party of Beveridge—to design a welfare state safety net. In the intervening years, the safety net has turned into a web of increasingly intricate, incomprehensible and untransparent rules that absorb huge amounts of the time of benefits officers, legal advice centres and other bureaucrats, while the people who need the safety net are turned into mere recipients of what are known as “entitlements”.

We know also that capitalism needs to have a relationship with concepts of justice. Just as personal worth and effort cannot be the whole story of success, so, too, we know that injustice is not a given. Much of it can arise from the lottery of life, and it is our duty to act on it and to reduce it. This is why the Bill is so important. We know that it will impact on vast numbers of people, some of whom will undoubtedly be disadvantaged in the short term by its changes. However, moving to a universal credit will be fairer and simpler, thus freeing funds in the longer term to spend more wisely. It will also work to reduce disincentives. I also welcome the change to make payments monthly, which will assist households in budgeting and prepare them for the monthly payment regime of those in employment.

My particular area of interest in the Bill is housing in general, and social housing in particular. In her opening remarks, the noble Baroness, Lady Hayter of Kentish Town, referred to the dearth of small household units. Other noble Lords referred to the overall shortage of social housing. We also know that, because of demographic changes in the composition of households, such as rising population and rising longevity, the pressure for additional social housing located in the right parts of the country will continue. We also need to acknowledge the wasted opportunity under Labour in times of plenty of not addressing the chronic overall undersupply of housing in this country. Housebuilding fell in 2009-10 to its lowest level since World War I —137,000 units. The required supply is around 200,000 units per year, according to the IPPR, leaving a gap of some 63,000 units.

The social housing sector has seen similar underinvestment, with years of diminishing investment by taxpayers in the affordable housing that is an essential element of the safety net. It is against this backdrop of tighter government grants, alongside a tightening of credit in the capital markets, that housing associations are asked to provide more affordable housing. One change—the withdrawal of the payment of housing benefit directly to landlords—will impact significantly on the social housing sector. Arrears are bound to increase with direct payments to residents. The level of risk that housing associations incur will rise. If predicted income is not guaranteed or readily quantifiable, the price of money borrowed by RSLs will also increase. Credit agencies will downgrade our status and borrowing for building in certain parts of the country might rise by as much as 100 basis points. The Government's stated desire to increase the supply of housing—in particular social housing—will not therefore be met.

I understand that the Minister is contemplating reducing the risks to housing associations by stepping in after four weeks of arrears to revert to direct payments to social landlords. This would be welcome, but would entail greater bureaucracy for both RSLs and the DWP. Its impact would have little effect on the capital markets’ or financial institutions’ assessment of risk, and therefore on borrowing costs. Several questions also arise from the proposals concerning choice, efficiency and value for money. I look forward to debating this point with the Minister in Committee.

A further issue concerns the household benefits cap. My noble friend Lord German today set out the relevant figures for households both with and without children. While I understand that the Government arrived at a cap of £26,000 per year on the basis of median income, this is far too blunt an instrument to do credit to what is in many respects a good Bill. We cannot find it fair to use a straitjacket to measure household costs, irrespective of where the household is, how large or small it is or what alternatives its members have to substitute income through employment and related means. I hope that factors such as actual housing and transport costs will also be taken into account to allow for regional if not local variation in the setting of the cap.

This bold Bill, with its radical restructuring of welfare, is very welcome. However, it is in the conviction that the scrutiny of this House will improve it further that I look forward to debating it in Committee.