Under-Occupancy Penalty

Emma Lewell-Buck Excerpts

Tuesday 5th November 2013 Westminster Hall

[Mrs Emma Lewell-Buck (South Shields) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Riordan. I am pleased to have secured the debate, and I look forward to contributions from my hon. Friends, as well as some answers from the Minister, whom I congratulate on his new position.

The bedroom tax was introduced on 1 April this year. The policy was designed to make more efficient use of our country’s social housing stock by identifying people who were under-occupying their homes. Social sector tenants with one spare room face a deduction of 14% in their housing benefit. Those who are under-occupying by two rooms face a 25% deduction.

The Government told us that this measure would tackle overcrowding, encourage efficient use of social housing and save the taxpayer, by 2015, £930 million, but the reality is that this tax penalises some of the poorest and most vulnerable groups in our society, while failing to achieve any of its aims. Instead, we are seeing rising poverty, soaring rent arrears, streets filled with vacant properties, rising homelessness and worrying trends in our housing supply.

Local authorities face ever-increasing numbers of tenants who are unable to keep up with their rent payments, with that number set to rise even further in the future. That is the money that local authorities rely on to be able to build new homes and maintain their housing stock. The irony, of course, is that new homes are exactly what is needed to tackle overcrowding and create a working housing market; but under this Government, we have seen the lowest number of housing completions since the 1920s. That situation will not change as long as the bedroom tax is in place, rent arrears continue to pile up and local authorities are constrained in building new homes.

The scale of the injustice resulting from the bedroom tax is appalling. The tax affects an estimated 600,000 people, 96% of whom have no smaller home to go to, and as a result the average family is losing £720 a year. In my constituency of South Shields, 1,440 households are affected, with only 387 properties becoming available for them to move into between April and September this year. Some of those properties are only for people qualifying for sheltered accommodation, so the reality is that many households have fewer homes to bid for. The average amount that will be charged is just under £9 a week for a household deemed to be under-occupying by one bedroom and just under £15 a week for those under-occupying by two, yet South Tyneside Homes estimates that the true value of a spare room is just under £5, as reflected in the differences in the rents that tenants would pay. The bedroom tax, then, grossly overvalues the price of a spare room and is overcharging tenants. This is at the same time as we have a cost-of-living crisis, with food, energy and water prices surging.

The chief executive of Citizens Advice said:

“As long as this dire lack of housing options exists then the Government can’t reasonably tell people they have a choice about downsizing to a smaller home.”

But they do keep saying that, and she is correct: the numbers simply do not add up. Some 180,000 households were deemed to be under-occupying two-bedroom homes, yet only 85,000 one-bedroom homes became available during the whole of 2012.

What makes matters worse is that the constituents I have spoken to do not actually have a spare room. What they have is a room for their carers, their elderly or disabled relatives, their children, foster children or potential adopted children. Others find it difficult to downsize their home when their circumstances change—for example, following a bereavement or when their children leave home.

[David Simpson (Upper Bann) (DUP)]

I appreciate that housing per se is a devolved matter for Northern Ireland and the Executive have yet to agree the Welfare Reform Bill, but there is an issue, which the hon. Lady has mentioned, as regards downsizing. I am sure that the situation is the same across all regions. There is a massive shortage of one-bedroom houses. In Northern Ireland, it would take at least a 10-year building programme to achieve the one-bedroom housing that is required. That puts the Executive in Northern Ireland in a great dilemma, and I am sure that the situation is much the same in all regions.

[Mrs Lewell-Buck]

The hon. Gentleman is correct. I will come on to the point that he raises.

I have never met anyone who is selfishly holding on to an extra bedroom just because they want to. It is no wonder that the local authority covering my constituency has seen a rise of more than 50% in homelessness under this Government and, between April and July of this year, has seen more than 500 tenants hand back their keys. The total financial impact of that handback is £600,000. That money could have been spent on bringing 60 of the homes in our area up to a decent standard or on building eight new homes. My local authority is not alone. Many other local authorities are having to use their housing revenue account moneys to pay for the tax. Those are moneys that they would have otherwise used to build and improve their homes.

Not only local authorities are struggling because of the tax; 26 leading housing associations have seen their credit ratings downgraded as investors become anxious about the impact of the bedroom tax. That leaves housing associations unable to plan for the future or for current housing demand and to build homes to meet that demand. That compounds what is already a dire situation for house building under this Government, who slashed the affordable homes budget in their first year in office and are planning a further round of cuts for 2015-16. Meanwhile, property developers sit on land that could be used for new builds.

The bedroom tax not only stifles construction; it also wastes many of the homes that we already have. Larger properties are now lying empty across the country, ignored by tenants who fear that they will not be able to afford them if their circumstances change. We are already seeing streets with scores of empty properties. The number of such properties is likely to rise and rise, while the former residents are becoming homeless or moving to the expensive private sector—moves that will increase the housing benefit bill further, and further stretch public finances.

[Sheila Gilmore (Edinburgh East) (Lab)]

In the light of that comment—I have to say that that is not a problem that we experience in Edinburgh—was my hon. Friend surprised that the response from the Minister of State, Department for Work and Pensions, the hon. Member for Wirral West (Esther McVey), to the question of three-bedroom houses perhaps being hard to let was that they should be subdivided in some way? That betrays a complete misunderstanding of the nature of those houses, because the cost of turning them into, say, two houses would far exceed the savings.

[Mrs Lewell-Buck]

I was not aware of that response. I thank my hon. Friend for letting me know that information. I am very surprised by that.

The National Housing Federation estimates that a family under-occupying a two-bedroom home who move into a one-bedroom flat in the private rented sector will claim an average of £1,500 in housing benefit, despite living in a smaller property. Just last month, the Deputy Prime Minister acknowledged that the bedroom tax is leaving some families facing

“dilemmas which need to be addressed”.

This is not a dilemma—it is a crisis happening on his Government’s watch.

I visited Ms Ashley Pollard, one of my constituents, at home. She faces one of the Deputy Prime Minister’s so-called dilemmas. She lives alone in a two-bedroom flat. She has mobility difficulties and, as a result, needs to be in a wheelchair almost every moment of the day. Her mother is her carer and stays in her extra bedroom most week nights. Her mother is also in employment, so she is not entitled to carer’s allowance.

Ashley is unable to avoid paying the bedroom tax and has requested a move to a one-bedroom ground-floor property, but there is none for her to go to. She wants to move but cannot; wants to pay her bills but is struggling to do so; and needs to have the continued care from her mother. Sadly, Ashley is not alone. It is estimated that more than 400,000 disabled people are expected to suffer what the Deputy Prime Minister calls a dilemma. Can the Minister, in his response, suggest what Ms Pollard should do?

At a time when the disabled are already being hit hard by cuts to public services and reduced benefits, they now have to worry about losing their homes as well—homes that, once they have been forced out, will lie empty. Those homes have been adapted to fit tenants’ needs in line with their disability. If they move, their new home will need to be adapted, while their own home will remain empty.

Another disabled constituent of mine lives in an adapted property that cost the local authority in excess of £10,000 to adapt. The property has two bedrooms, so she is subject to the bedroom tax. Unsurprisingly, there are no alternative, one-bedroom properties in our area to meet her needs. She is therefore stuck paying the tax, unable to obtain discretionary housing payment, and she is struggling.

What do the Government suggest is an efficient use of housing in that situation? Should my local authority adapt a new property for my constituent at the cost of a further £10,000 and leave her current home empty? Far from encouraging the better use of social housing, in that case, the bedroom tax leads to a nonsensical outcome.

[Kate Green (Stretford and Urmston) (Lab)]

My hon. Friend will be interested to hear about a constituent of mine, whose home also has had adaptations to account for the equipment needed for their disability. That accommodation can be offered only to older people over the age of 40. If my constituent is to vacate the accommodation, there is no way that a family with young children can move into it. It is a further waste of public money.

[Mrs Lewell-Buck]

My hon. Friend is of course correct. It will be far easier to leave people in the homes that have been adapted to meet their needs.

In a survey of the 51 largest of its associations, the National Housing Federation, which represents housing associations, found that more than half of those who were affected by the tax could not pay their rent in April or June. For many of those people, that was the first time that they had ever fallen behind with their rent.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My hon. Friend is making an extremely strong speech. There are also concerns in Wales. Community Housing Cymru, which represents social housing providers, has made a similar point: 87% of their members have seen an increase in arrears, which has not been seen elsewhere. That is matched by the experience of my council, which has seen a £200,000 increase in arrears on the same period last year. The issue is affecting councils and housing providers across the country.

[Mrs Lewell-Buck]

My hon. Friend makes a valid point. It is decent, law-abiding people who have always paid their rent who are being targeted by the tax.

[Lilian Greenwood (Nottingham South) (Lab)]

I want to add to the point made by my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty). Nottingham City Homes, our arm’s-length management organisation, has seen an increase in arrears directly as a result of the bedroom tax of £260,000 since April. We expect the amount to be about £500,000 this year—money that could and should have been spent on refurbishing homes or building new homes.

[Mrs Lewell-Buck]

I will address that issue in my next point. My local citizens advice bureau is receiving more than 33 inquiries every week related to the bedroom tax.

One case study identified a young lady who had never been in rent arrears. As a result of the bedroom tax, she has only 84p per day to live on—to buy food, clothes and toiletries. That is an absolute scandal. Her story resonates with what food banks and homelessness charities in my constituency have told me. They feel that the increase in demand for their services is directly linked to the bedroom tax.

At the same time as the crisis was looming, the Secretary of State for Work and Pensions was quoted in our local newspaper, the Shields Gazette, saying:

“When 13,101 households are stuck on a waiting list for social housing in south Tyneside, there’s a big problem that needs addressing… it can’t be right that many households across the north-east are living in an overcrowded home. There’s nothing fair about making families wait and wait for a house that is big enough, while other households on benefits are allowed to live in homes that are too big for their needs, at no extra cost.”

The Secretary of State helpfully advised that my constituents may

“decide to take up work, or work a few more hours to cover the difference”

or

“move to more appropriately-sized accommodation or take in a lodger.”

I would like to take this opportunity to invite him to South Shields to deliver that advice personally to my constituents.

[Pat Glass (North West Durham) (Lab)]

A number of pensioners have told me in my surgery that they are living in three or four-bedroom houses and are subject to the bedroom tax, but cannot downsize. The shift that we want to see is three and four-bedroom houses becoming available, but in my constituency they are now hard to let.

[Mrs Lewell-Buck]

My hon. Friend is correct. Elderly people in my constituency have come to my surgery to say, in their words, that they are rattling around in three-bedroom homes. They would like to move, but they cannot.

[Hywel Williams (Arfon) (PC)]

Just out of curiosity, has the hon. Lady received any reply from the Secretary of State to her invitation to visit South Shields? In my own constituency in north-west Wales, we have seen no sign at all of Ministers or of anyone conducting research before the change came into force. I will certainly refer to that in my speech, if I am lucky enough to be called.

[Mrs Lewell-Buck]

This is the first time I have invited the Secretary of State to South Shields, so we will see—watch this space.

Many of my constituents who are desperate for employment or are stuck on zero-hour contracts sincerely want to move to a smaller property, but they simply have no homes to go to. The Government’s policy is hindering the ability of councils and housing associations to build homes for them to move to, so they will not be able to act on the Secretary of State’s advice.

As with so many things this Government do, the disdain with which they treat people in social housing shows how far removed they are from the reality of what is happening in towns such as mine. Opposition Members have put a raft of questions to the Prime Minister, the Deputy Prime Minister, Secretaries of State and the previous Housing Minister regarding the unfairness of this cruel tax and the implications for our housing supply. It is becoming depressingly clear that, from this Government’s point of view, my right hon. and hon. Friends do not need an answer and that the effects of the tax on struggling households and housing supply are not their concern. Their only interest is in appearing tough on those they call scroungers.

Thankfully, the Labour party has an answer. We are committed to repealing this awful tax. We are committed to building 1 million new homes over the next Parliament—200,000 homes a year and a raft of employment opportunities in construction. We are committed to stopping landowners holding on to undeveloped land, so that the housing market will suit the needs of the many, not the few.

The bedroom tax has been a complete failure. It has not reduced overcrowding.

[Mr Nigel Dodds (Belfast North) (DUP)]

I congratulate the hon. Lady on raising this important issue. If the situation is as bad as she paints it on the mainland, it is even worse in Northern Ireland, because we have the highest proportion of individuals under-occupying compared with other regions of the United Kingdom. We are the worst hit.

Does the hon. Lady not agree that, until the measure is repealed—I hope it will be repealed soon—it would at least be preferable to build in greater flexibility to the current exemptions, so that people would not be forced to pay the tax if there was no suitable alternative accommodation? Something should be done in the meantime, until we get rid of this wretched measure.

[Mrs Lewell-Buck]

The right hon. Gentleman is correct. More safeguards need to be built into the tax, but a Labour Government would overturn the tax completely.

[Hywel Williams]

The hon. Lady referred to building 200,000 houses every year. Housing is a devolved issue. Has she signed up her colleagues in Cardiff to a total for Wales, which I think would be about 11,000 houses a year? Scotland’s Scottish National party Government will probably build 17,000 new houses a year. Will she be able to deliver?

[Mrs Lewell-Buck]

I will leave that question for the shadow Minister, my hon. Friend the Member for Wolverhampton North East (Emma Reynolds), to answer.

The bedroom tax has not encouraged efficient use of social housing. It has certainly not saved the taxpayer the projected £470 million this year. It has increased homelessness and poverty, led to streets being filled with vacant social housing and cost more than it saved. Taking that and the human cost of the policy into account, the tax is one of the cruellest and most ineffective policies ever to come from any Government.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

My hon. Friend is making a powerful speech highlighting the appalling human consequences of the policy. She has just put her finger on the truth at the centre of it. It is not about encouraging people to downsize; it is purely about saving money. That £470 million saving will not arise if people act as the Government say they want them to act. It is because people do not have the opportunity to downsize that the Government are making savings. This is a cruel policy based on a fraudulent premise.

--- Later in debate ---

[Mrs Lewell-Buck]

I could not agree more.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on making a fantastic speech on this important issue. The Government admitted last week that they had wildly exaggerated the cost savings involved in the bedroom tax. Does that not show us what is really behind the policy? It is not about saving money; it is about a vicious attack on vulnerable people—400,000 out of 600,000 of them are disabled—who cannot speak up for themselves.

[Mrs Lewell-Buck]

I completely agree with my hon. Friend, who has stolen some of my closing comments.

I was interested to hear that the Department for Work and Pensions has commissioned an independent review of the bedroom tax to analyse the impact on vulnerable individuals, foster carers and those caring for disabled children. However, why was the impact assessment not completed before the introduction of the tax? That is yet another example of ideology affecting policy and of this Government’s “let’s do away with facts and research” approach.

I also question why the policy’s impact on the housing market was not foreseen. The National Audit Office reported that the Government’s headline savings figure did not take into account the full range of impacts that the bedroom tax would have. Now that we have had time to assess the policy’s impact on rent arrears, we know that the NAO was correct. I hope that the Minister will say what discussions his Department has had with the Department for Work and Pensions about the effect of the policy on housing supply and why he believes the impact assessment falls so far short of reality.

Whatever the Government’s excuses, for my constituents in South Shields and thousands of others across the country, they will be scant consolation. Although an average of £12 a week may not seem like much to this Government, it is a lot of money to the rest of us who are paying the price. My constituents need a Government who listen to their concerns and who commit to overturning this cruel tax and addressing our housing shortage. What they need is a Labour Government.