Universal Basic Income

Geraint Davies Excerpts

Wednesday 14th September 2016 Westminster Hall

[Ronnie Cowan]

I am not here to speak on behalf of either the Irish Government or the Swiss Government, but there is absolutely no indication that providing somebody with a basic income removes the incentive to work. Instead, what it does is to put life choices in front of people, so that if they want to study part time, work part time or work on a farm voluntarily they will not be penalised for doing those things, and therefore it is more likely that people will be prepared to take on work at a level that suits them.

If policy makers regard the basic income idea as simply an academic or abstract economic concept, we will never see it being used to break down the worrying levels of poverty and inequality that we have in the UK. The United States, Canada, Namibia and India have all piloted basic income schemes, while Finland and the Netherlands plan on trialling limited local schemes.

Many Members will be aware that Switzerland has already held a referendum on the implementation of a basic income. Although the proposal was rejected, that shows that other nations already have a more developed understanding of the concept. The charity GiveDirectly has announced that it will launch a full basic income trial. The project will involve at least $30 million and academic support from leading researchers. The trial will fully adopt the basic income model by making regular cash payments to every resident in several villages in Kenya.

I secured this debate with the humble notion that I do not have all the answers to the questions. I hope to facilitate discussion, to debate with my parliamentary colleagues and to consult the relevant organisations about the benefits and feasibility of the basic income concept. I believe it was first proposed by Thomas Paine in his 1797 pamphlet “Agrarian Justice” as a system in which at the “age of majority” everyone would receive an equal capital grant—a “basic income” handed over by the state to each and all, no questions asked, to do what they wanted with. Could this be an idea whose time has finally come?

On 25 May 1961, President John F. Kennedy announced before a special joint session of Congress the dramatic and ambitious goal of sending an American to the moon before the end of the decade and returning him safely. Not for one minute did he intend to design the rockets himself, and he had no ambition that I know of to be on the flight. His not unrealistic and ultimately correct proclamation was built on the premise that he knew America had the time, the money, the brain power and the will to achieve the goal. He challenged the American people to succeed and they rose to that challenge. I stand here in front of the Chamber today and I challenge all of us to work together to create a fairer welfare system—one that does not trap people in poverty, but instead acts as a platform from which the citizens of the United Kingdom can build better lives for themselves.

[Geraint Davies (in the Chair)]

If Members want to take off their jackets, as I already have, they are obviously free to do so.

--- Later in debate ---

[Damian Hinds]

According to this morning’s figures, we still have good wage growth in this country, and at a time when we have low levels of inflation, so real wage growth is also close to 2%. The hon. Lady mentioned universal credit, which is a massive reform to the welfare and social security system, with the smooth taper rate taking away the cliff-edge points at 16, 24 and 30 hours a week. Those are important developments in supporting people into work and up the hour scale.

Some of the extra things we are doing include childcare, with the 30 hours for three and four-year-olds, the tax-free childcare and the increase under universal credit relative to tax credits from 70% to 85% of eligible childcare costs. Those are all critical things that the Government have been doing to reform welfare, and to help people into work and to develop in work.

Our high employment rate shows that an active welfare system that helps people into work, rather than only handing out money to everyone in the same way, is the right approach. Compare that to a system of universal basic income. I have already mentioned the report from Compass and the JRF, which shows that UBI would be prohibitively expensive. The report also shows that UBI would create too many losers among the poorest families and dramatically increase the number of children living in poverty—a point confirmed through modelling even by the Citizen’s Income Trust. UBI would dramatically increase inequality, because it does not account for individual needs and circumstances.

Some, such as the RSA, in what was a reasonable line to develop, suggest introducing adjustments—some such points have been made in the debate—and maintaining additional means-tested benefits alongside a UBI to fix that inherent flaw. The problem, however, is that the more we adjust to counteract the inequalities inherent in a UBI system, the closer we come to something that begins to resemble universal credit.

Universal credit is far more than simply a system of giving out money. It incentivises claimants to move off benefits and it provides tailored support to help people find work and increase their earnings. In contrast to UC, a UBI allows for no work-based conditions on payment to encourage that or to increase incentivisation, and for no complementing support to help people make the most of their potential.

Even the most modest of UBI systems would necessitate higher taxes, as I was discussing just now with the hon. Member for Brighton, Pavilion. Those increased taxes would be combined with the erosion of the tax-free allowance. At the same time, it would cause a significant decrease in the motivation to work among citizens, with unforeseen consequences for the national economy.

Trials of UBI have been mentioned in the report and in the debate today, such as those in the 1970s in the USA and Canada. The results showed that 5% of primary earners moved out of work, and an even greater number among secondary earners. The recent report that we have been discussing highlighted those results, but called that a small drop. From the perspective of a Government who have had to work hard with business—to have the entire economy working hard—to increase the employment rate by 4.3% over the past six years, that does not sound like a small drop to me.

Whereas at first sight a UBI seems attractive, as more scrutiny is given to the idea, the less attractive it becomes. As recently as June of this year, the concept of a universal income was formally rejected by Switzerland, as hon. Members know, with nearly 77% of people opposing the plan in a referendum.

I will briefly address some of the particular points made by hon. Members during the course of the debate. The hon. Member for Inverclyde suggested that our existing system has been driving up inequality, but 300,000 fewer households than in 2010 are now in relative low income. The evidence is clear about the role of work in helping families, and children living in those families, out of poverty. The evidence is strongest about where it is possible to move into work—[Interruption.]

[Geraint Davies (in the Chair)]

Order. There has been some sedentary commentary, but we have until 17.38, so if people want to ask to make an intervention, please do—obviously, it is for the Minister to allow.

[Debbie Abrahams]

Will the Minister give way?

--- Later in debate ---

[Damian Hinds]

Will the hon. Gentleman forgive me if I press on? The extremely important point of technological change was raised, and that needs to be debated in the House and elsewhere. Some proponents of a universal basic income cite the inevitable changes in the world of work, driven by technological advance and artificial intelligence, which they believe will make many jobs obsolete and increase unemployment. That argument has a long pedigree, which goes back beyond the spinning jenny, and I do not at all belittle the importance of that discussion or the implications of structural change. We must of course be sensitive to such possibilities, but time and again over the decades, as technological change has removed the need for one type of work, it has created another.

In conclusion, although a universal basic income may appear to be desirable at first glance, any practical implementation would, I am afraid, be unaffordable. Because UBI does not properly take into account individual needs, it would markedly increase inequality. Universal credit is the right system for the United Kingdom. This responsible Government are implementing a system that encourages work, supports the most vulnerable and is affordable.

[Geraint Davies (in the Chair)]

I invite Ronnie Cowan to wind up the debate, for a couple of minutes.

[Ronnie Cowan]

Thank you very much—and it is pronounced Cow-an, as in cow, as in “moo”.

[Geraint Davies (in the Chair)]

Cowan—sorry.

[Ronnie Cowan]

I thank the Minister, the hon. Members for Oldham East and Saddleworth (Debbie Abrahams) and for Brighton, Pavilion (Caroline Lucas), and my hon. Friend the Member for Banff and Buchan (Dr Whiteford) for their contributions. I also thank the Members who interceded and kept the debate going, which is an important part of the process: the hon. Member for Stretford and Urmston (Kate Green), my hon. Friend the Member for Caithness, Sutherland and Easter Ross (Dr Monaghan) and the hon. Member for Solihull (Julian Knight), who is no longer in his chair—he adopted the seagull strategy of fly in, make a lot of noise and leave.

I am disappointed that the Minister seems so intransigent in his support for the current system. It concerns me slightly that he is so happy with the status quo. I end with a quote from Noam Chomsky, who said:

“Optimism is a strategy for making a better future. Because unless you believe that the future can be better, you are unlikely to step up and take responsibility for making it so.”

I ask the Government to take responsibility.

Welfare Reform and Work Bill

Geraint Davies Excerpts

Monday 20th July 2015 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

The Secretary of State knows that the number of those earning over £25,000 now is 800,000 fewer than it was in 2010. The real crisis in Britain today is not the number of people not in work, but in-work poverty. Given that child and family tax credits basically subsidise and incentivise work, will he look at this again and accept that the real crisis is not the number of people without jobs, which is what he has been talking about, but the fact that people in work do not earn enough to put food on the table, and they are getting more and more poor?

[Mr Duncan Smith]

I do not agree. If the hon. Gentleman looks at our record over the past five years, he will see that we have increased the number of jobs and that wages are now rising much faster than inflation. The last set of jobs statistics showed that every single one of those jobs was full time. All this nonsense about them being low-earning, part-time jobs is just complete and utter fabricated idiocy.

Budget Resolutions and Economic Situation

Geraint Davies Excerpts

Thursday 9th July 2015 Commons Chamber

[Chris Leslie]

I have not read the comments by the former Chancellor, although I keep hearing about them from Members. I will have a good look at them, but it is important that we scrutinise the Government’s record on productivity. Unless we improve productivity in our economy, we will not generate the revenues to deal with the deficit and raise living standards. In 2012 and 2013, our productivity growth was negative, and last year it was just 0.2%. That compares with an average of 2.2% under the Labour Government from 1997 until the global financial crisis hit. It is, therefore, almost beyond belief that on the OBR’s analysis the Budget could lead to lower productivity growth, now estimated to be 0.4% lower than the forecast for next year, 0.2% lower in 2017, 0.1% lower in 2018 and 0.2% lower in 2019—productivity down next year, the year after, the year after that and the year after that.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Is not one of the reasons for that the fact that the Government are creating lots and lots of low-paid jobs and substituting them for high-paid jobs? In particular, there are 800,000 fewer people earning over £20,000 now than there were in 2010. Is that not a catastrophic record of falling productivity? We want to stand up for the middle earners rising, not just the lowest earners.

--- Later in debate ---

[Mr Duncan Smith]

No, no. Honestly, I am not that kind.

Despite the doomsday predictions that the hon. Lady and many of her colleagues made, this is the actual result: 2 million more people in work; 2 million more apprentices; the proportion of workless households at an all-time low; and, perhaps most importantly, the proportion of workless households in the social rented sector at a record all-time low. That is a real record of success on which we will build. That is what we are going to do with the Budget.

[Geraint Davies]

Research from Oxford university predicts that the number of people going to food banks, as a result of the Budget’s changes to welfare, will increase by 1 million to 2 million. Does the right hon. Gentleman agree with that assessment? If not, how much does he think it is going to increase by?

[Mr Duncan Smith]

I must say that that would have to be pretty quick work. If they have done that much work in a matter of hours, I want to employ them in my Department. No, I do not agree with that, and here is why. I fully support food banks. What people do to help with food banks is a very good idea. However, the figures on usage put out by food banks have all been proven to be incorrect. In Germany, 1.5 million people a week use food banks and its benefit system is meant to be more generous than ours. In Canada, more than 800,000 a month use food banks. This country has a very low number compared with other countries. Those figures speak for themselves.

As we build on this, we must meet our commitments to protect the elderly and the most vulnerable, protecting those benefits that provide for additional costs arising from disability or caring, and protecting pensioner benefits. My right hon. Friend the Chancellor and I make no apology for that, with good reason. When we took office, pensioners were some of the most vulnerable people suffering from a very, very low income. We have begun to put that right, and we intend to be proud of it.

It is right that we provide extra support for those who face the biggest challenges in changing their income levels. Spending on the main disability benefits—disability living allowance, personal independence payment and attendance allowance—will be higher in every single year to 2020 compared with 2010. Our commitment to protecting the most vulnerable is why we have protections in place on policies such as the benefit cap, so that people are exempt if someone in a household is claiming DLA, PIP or working tax credits. Wherever possible, we are introducing measures on a flow basis to give people the time and knowledge to prepare for the changes.

We are also ensuring that people on benefits face the same choices as those in work and not on benefits. Our measures will mean people making decisions and choices about their lives, which is why we are introducing the two-children element on a flow basis, and why we are lowering the benefits cap to £23,000 in London and £20,000 elsewhere, emphasising that it is not fair for someone on benefits to receive more than many people in work. I think that that principle is well accepted and popular around the country. In London, about four in 10 households earn less than £23,000, and outside London the same proportion earn less than £20,000.

--- Later in debate ---

[Mr Duncan Smith]

As I said earlier, and as my hon. Friend says, in all these areas, we inherited a country riven by deep unemployment, debt and a massive deficit and unable to pay its way. In many senses, it was in a worse state than Greece. Look at the difference five years later. I believe that the next five years will see a renaissance in Britain, as we become an economic powerhouse, both in the north and the south, and more people get back to work earning a decent wage—in fact, a living wage.

In conclusion—

[Geraint Davies]

Hooray!

[Hon. Members]

More. More.

--- Later in debate ---

[Mr Duncan Smith]

In that case, to clarify, the 30 hours of free childcare for working parents with three and four-year-olds has not been delayed; it will start to be introduced in September 2016. Thank you very much; now let’s move on.

If someone needs support to improve their skills or talk to their employer about increasing their hours, universal credit comes in again. For the first time, it will stick with them and help them to increase their hours, which is why it will complete the process of supporting people back into work. Even with the changes we are making, the welfare system will remain generous.

[Geraint Davies]

rose—

[Mr Duncan Smith]

No, no; the hon. Gentleman had his chance.

About five in 10 families with children will still be eligible for tax credits as a result of these reforms. These figures show that we are taking a balanced approach to welfare—an approach that expects people to stand on their own two feet whenever possible but which provides them with the support to do that, by reducing their taxes, providing childcare, skills and back-to-work support, introducing universal credit to make work pay and asking employers to play their part by increasing wages at a time when our economy is growing.

In conclusion, ours is an approach that continues to provide a generous safety net and support for those who need it and expects people to face the same choices as those in work and not on benefits. At its heart, it is about moving from a low-wage, high-tax, high-welfare country, to a high-wage, lower-tax, lower-welfare country. It is a positive vision for Britain under a one nation Conservative Government delivered by a great Chancellor and a great Prime Minister.

Housing Benefit (Abolition of Social Sector Size Criteria)

Geraint Davies Excerpts

Wednesday 17th December 2014 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

Given the predictability of this and the absence of small houses to move to, is it not obvious that the objective was simply to tax the poor for being poor? It has nothing to do with moving to smaller houses; it is about punishing people who are poor because of the bankers’ errors. There is no other rationale.

[Rachel Reeves]

I thank my hon. Friend for that intervention.

This afternoon the amendment signed by the Deputy Prime Minister aims to remove our call on the Government to abolish the bedroom tax immediately, and instead merely “notes” that the Liberal Democrats have come up with some “proposals” to change the way the bedroom tax is implemented. We would not be supporting the amendment, because “noting” the latest Liberal Democrat “proposals” is not going to pay anyone’s rent or keep anyone in their home. What matters in this House is how Members vote, how they use the power entrusted to them by their constituents. What we on the Opposition side and people watching the debate will “note” is where Members took their stand when they had an opportunity to make a difference.

--- Later in debate ---

[Mr Harper]

My right hon. Friend, who is very familiar with this policy area, is absolutely right. We have put in place clear policies for disabled children. As in the case highlighted by the shadow Secretary of State, discretionary housing payments have been put in place specifically for cases that are complex and cannot be dealt with under the rules. Ample protection is in place for the families who need it.

There is no clearer illustration of Labour’s reckless lack of control than housing benefit. Under the previous Government, housing benefit spending increased by nearly 50% in real terms, from £16 billion to £23 billion. If we had not reformed it, spending would have risen to more than £26 billion this year. We have brought that figure down by £2 billion, and last year saw the first real-terms fall in housing benefit for a decade.

[Geraint Davies]

rose—

[Mr Harper]

That is something to welcome, and I am sure the hon. Gentleman will do so.

[Geraint Davies]

I will respond to that point. Does the Minister accept that 70% of the doubling of housing benefit in the past 10 years has been due to rent rises? The strategic solution should not be to inflate rents and housing costs, but to build more houses, which is the opposite of what he is doing. He will end up with housing benefit costs that are higher, not lower, because of his incompetence.

[Mr Harper]

With the greatest respect, the period during which the housing benefit bill rose so fast, as the hon. Gentleman has just said, was of course when his party was in government. He is quite right about the need to build more houses, but housing starts fell to a historical low under Labour. We have actually increased the building of new homes. Nearly 500,000 homes have been built since 2010, and a further 275,000 affordable homes will be built from 2015 to 2020. More affordable homes are planned over the next Parliament than in any equivalent period in the past 20 years. The point he makes is right, but this Government have absolutely dealt with it. Overall, the changes we have made to housing benefit will save £6 billion during this Parliament.

The removal of the spare room subsidy is a key part of the reforms. Despite some outlandish claims about its effect, it is working. In the interim evaluation, half of those affected and unemployed had looked for a job, and one in five of them intended to plan to earn more. It was alleged that the change would move people into poverty. In fact, the figures show that thousands of those affected have moved into work.

Despite the Opposition’s scaremongering about evictions and arrears, the evidence has been to the contrary. The latest statistics show—[Interruption.] If we are to have a sensible debate about such matters, it would help if people did not make outlandish claims. I listened very carefully to the intervention by the hon. Member for Westminster North (Ms Buck). It is worth remembering that, when we discussed the benefit cap, she said that huge damage would be done to the 400,000-plus working households in private rented accommodation. However, we know from work that we published this week that 41% of people affected by the benefit cap are more likely to go into work. People are doing more to find work, and the policy has actually been very successful. In London, where the highest number of people are subject to the benefit cap, very few people have actually moved, and those who have moved have not moved great distances.

--- Later in debate ---

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is a great pleasure to follow my hon. Friend the Member for Blaydon (Mr Anderson). He is completely right: our party stands for a strong economy and a fair society, while the Conservatives have overseen a complete economic catastrophe, with the amount of debt escalating to 80% of the economy now.

[David Morris (Morecambe and Lunesdale) (Con)]

Does the hon. Gentleman agree that he and his colleagues have collective amnesia about what happened during 13 years of Labour Governments?

[Geraint Davies]

Share of debt has gone to 80% from 55%, the Conservative-led Government have now borrowed more in four years than we did in 13 years, and the economy is flatlining when it had grown by 40%. Their economic incompetence and the bankers’ errors are being borne on the shoulders of the most vulnerable, the most needy and, in the views of the Tories, the people least likely to vote. This is completely cynical and disastrous, in particular in poorer areas such as Wales.

In Wales, 46% of tenants are affected, versus 31% in the rest of the UK. Some 60% of people who have been inspected since a year last April are now driven into arrears, so the council has got less money still for repair and renewal. We have a situation where money has been spent on disability changes for flats and houses and those need to be decommissioned. The whole thing is horrendous.

The reason, allegedly, is twofold. One reason is housing benefit escalation, which has doubled in 10 years, but 70% of that is because of private rents going up. We need more homes. We do not need the Government, as they are doing, to use the funding for lending scheme through the Bank of England to spend more and more money on mortgages, to inflate the price of existing houses rather than building new ones. The money to small business is cut by 40% so wages, productivity and innovation do not grow. This is an horrendous, cynical and incompetent business and social experiment that is going disastrously wrong.

According to the House of Commons Library, the level of under-occupancy in the social sector is 10.2% versus 15.7% in the private rented sector and 49% in the owner-occupied sector. It is being said that people in social housing should not have homes. The reason why that rate is so low, of course, is that we build two-bedroom or three-bedroom houses and then the kids grow up and there is a part-empty home for them to be able to come back and see mum and dad or whoever. Then people die and those houses are recirculated. That is why that housing is efficiently used. In the owner-occupied sector that does not happen, of course, but the Conservatives do not care about these people on estates who need stable communities to build stable futures and jobs, and security for all of us. The whole thing is a complete disgrace.

We know that two thirds of the people affected are disabled. The Government are pretending that everything they are doing is right, but in fact they are hitting people in many different ways. For example, a couple with two children in which the woman is earning £10,000 and the man is earning £25,000 will now be losing £9,417 unless they separate. The Government have set in train incentives for families to break up as well as stripping them bare of their money.

The bedroom tax is one of the most horrendous examples of the Tories ripping the food out of the mouths of the poorest to the extent that, at Christmas time, they have to go to food banks. In Swansea, we are really being hit. The amount of money going to public servants has been frozen and the amount going into the public sector is going down. The amount of money in the local economy has been massively reduced. On the benefits side, tax credits for people on low wages are being cut, as is housing benefit. We are seeing desperate people being driven into the hands of loan sharks and having to use food banks.

This new Dickensian society that the Tories have created must be ended, and I hope that we will soon see the advent of a new, stronger Labour Government who will deliver a strong, united Britain in place of the weak, divided future that the Tories are heralding.

Jobs and Work

Geraint Davies Excerpts

Wednesday 11th June 2014 Commons Chamber

[Mr Umunna]

I absolutely agree with the hon. Gentleman that we need to diversify our economy and grow our manufacturing base, but, as I have just said, these structural issues have grown up over a number of decades under Governments of different persuasions.

At the same time as we are dealing with these structural issues, we face more competition from emerging markets and others than we have ever experienced before, with technological advance and automation creating new jobs but destroying old ones too. That has left our economy failing to meet the material needs of too many families. The problems of these imbalances have resulted in our country having one of the highest incidences of low-paid work in the OECD.

I, of course, accept that any job is better than no job. I note that the Chancellor gave a speech earlier this year committing his party to full employment. They say imitation is the sincerest form of flattery. The only problem with what the Chancellor said is that it is almost 70 years late. It was, of course, the great reforming Attlee Government who first committed to full employment, in our manifesto “Let us Face the Future” in 1945. Unlike the Chancellor, however, we have long sought to build on that commitment. What we want is for everyone in this country to be able to access good work that affords them a level of dignity and respect, and, importantly, that is secure and pays a wage that they can live off. That is simply not the reality for far too many people in Britain in 2014.

[Geraint Davies (Swansea West) (Lab/Co-op)]

There are now 1 million people on zero-hours contracts. Does my hon. Friend accept that their lives consist of moving in and out of benefits? When there is discontinuity in benefits, people have to go to food banks. That is not the way to build a strong economy. Surely, we need infrastructure in city regions and to move forward with export-driven growth, rather than having people living in poverty on zero-hours contracts.

[Mr Umunna]

I completely agree with my hon. Friend.

--- Later in debate ---

[Vince Cable]

I was going to talk about zero-hours contracts later, but since the right hon. Gentleman has asked me the question, I will try to explain. There are very different estimates of zero-hours contracts. The ONS gives very different figures from other surveys. They range from roughly 2% to 4% of all jobs. It is worth mentioning this in passing. The shadow Secretary of State has been quite modest about his own contribution. He has been in correspondence with the statistical authority, which rebuked him for being misleading in terms of the trend in zero-hours contracts. It is a significant problem, and in a few moments, I will come to how we want to address it.

Let me move on to the underlying question in relation to zero-hours contracts and to what the Opposition are trying to say about living standards. What has always surprised me in these debates is that people are surprised that living standards fell in the wake of the financial crisis. Let me rehearse some basic facts. In the 2008-09 crisis, the British economy contracted by over 7%—more than any other major economy. It was the worst shock to our country—worse than in the 1930s. It was only after the first world war that we had a comparable hit to our economy. It was an enormous disruption, with massive implications for people’s jobs and living standards. It did happen under the last Government. It was not entirely their mistake, but it was on their watch and they had a substantial responsibility for it.

That contraction of output inevitably translated into people’s living standards, and median wages in real terms contracted by about 7% as a result of the crisis. That has been the impact on living standards. It is clear. What is different from previous recessions is that the people at the bottom end of the scale have been protected by two things: first, the minimum wage—there is cross-party consensus on that, which I welcome—and, secondly, tax policies that led us to lift large numbers of low earners out of tax altogether.

Let us look at what the combination of those factors has meant and the work of the Institute for Fiscal Studies. It makes the point that the contraction in real take-home pay for people in the bottom 10% was 2.5%. For the people in the middle, it was 6% and for the people in the top 10%, it was 8.7%. That was an essentially progressive response to a major economic crisis. Of course there are still major inequalities of income and wealth. We acknowledge that, but that relates to the top 1%, rather than the top 10%.

How do we strengthen the minimum wage system, which my colleagues and I fully buy into? We decided earlier this year to increase the minimum wage faster than inflation—a 3% increase, the biggest cash increase since before the recession. The Low Pay Commission has issued guidance to secure improvements to the real minimum wage. We accept that one of the main challenges—which the last Government did absolutely nothing about—was enforcement. We inherited a system in which the maximum fine per company was £5,000. Under this legislation, we will strengthen it to £20,000 per worker—a big step up in taking seriously sanctions in respect of the minimum wage. We now have a naming and shaming regime in place, and 30 companies have been named since it was initiated a few months ago, and as a result of much more active intervention by Her Majesty’s Revenue and Customs, we have increased by a factor of 38% the amount of arrears identified and paid to employees. All the things that the shadow Secretary of State is calling for are now being done.

Let me address the specific issue of zero-hours contacts. It is a problem, but let us get it into perspective. Although there are wide variations in the estimated number of zero-hours contracts, we are talking probably about between 2% and 4% of jobs. Of course we do not want people in that type of employment to be disadvantaged, but many take up such employment voluntarily, and particularly for students and older workers, it is an attractive system. For some, however, it is exploitative and as a result of our consultation—one of the biggest that the Government have undertaken, with over 36,000 people responding—it was very clear that there were some points on which action needed to be taken, and we are going to take action on exclusivity.

[Geraint Davies]

Does the Secretary of State accept in principle that if the Government converted a £20,000 a year job into two £10,000 a year jobs, with the higher tax threshold, he would be moving from tax payment to zero tax payment, and that this inflexibility and zero-hours and part-time work are contributing massively towards the increasing debt we face under his Government?

[Vince Cable]

That is attributing a slightly sinister train of argument to employers, which is not the case. There are many industries that have flexible working arrangements—and zero-hours contracts are only one form of flexible working—which the work force accept. The shadow Secretary of State talked proudly about his membership of Unite. I engage with the car trade unions, which accept that zero-hours contracts have quite an important part to play in the flexible working in the automobile industry.

Housing Benefit (Wales)

Geraint Davies Excerpts

Thursday 1st May 2014 Westminster Hall

[David T. C. Davies]

It does hurt. However, I think the Select Committee worked well. The issue was potentially controversial, yet we managed to get a certain amount of agreement, some of which the Government will have to answer. I welcome the fact that the Select Committee, politically divided as it is, can work so well together, and I am grateful to the Committee members here today.

One thing that I think we can all agree on is that the cost of housing benefit is unsustainable at the moment and that changes must be made, although we may differ about how those changes should be made, what their impact will be and how people affected can be helped.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Gentleman accept that 70% of the growth in housing benefit costs, which have doubled to about £20 billion in the past 10 years, is due to private sector rents and that the strategic response should be house building rather than clubbing the poor?

[David T. C. Davies]

I am trying to stick to the facts as I saw them on the Select Committee. To be fair, the first fact that the hon. Gentleman presented is correct. Personally, I agree with him that house building is one solution. In Wales, that is obviously a devolved responsibility for the Welsh Assembly. Hopefully, the hon. Gentleman and I agree that the Welsh Assembly could and should be doing a lot more to increase house building within Wales. The costs at the moment are about £25 billion a year. About 250,000 people in Wales receive housing benefit—about 8% of the population.

The Committee focused on two areas of Government policy. The first is the changes related to under-occupancy in the social rented sector, sometimes called the spare room subsidy and at other times referred to—incorrectly, in my view—as the bedroom tax. The other is the move towards direct payments, which also raised concerns across political parties. We took a lot of evidence from various witnesses, including the housing associations, representatives of landlords and the TaxPayers Alliance, which made an interesting contribution and which I hope is welcomed back to Select Committees in future.

The policy that we discussed came into force in April 2013, but it is probably worth mentioning that the same rules had been introduced for the private sector in 1989 and re-emphasised by changes made to housing allowances by the last Labour Government in 2008, so it was not as new as people might have thought. As all Members here will know, tenants had their housing benefit reduced by 14%, an average of about £12 a week in Wales, for having one extra bedroom, and by 25% for having two extra bedrooms.

At the time of the report, the Government estimated that 40,000 tenants in Wales lived in households with one or more excess rooms, representing 40% of those eligible to be affected. That was the highest proportion of any region in the United Kingdom, so we would like the Minister to provide us with any updated figures that he has on how many working-age tenants of social housing in Wales continue to live in properties with excess rooms and how many have been successful in downsizing.

--- Later in debate ---

[David T. C. Davies]

I had better not get into a conversation across the room about it, but that figure would certainly be worrying. It could be even worse in Wales, anyway.

As I am about to mention, one concern of ours was that Wales’s rurality and the lack of available housing there will make the issue much harder to deal with there than in London. Although personally, I absolutely support what the Government are doing, as I shall say at the end, I recognise that a tailored approach may be needed to the different problems that may arise in different areas.

[Geraint Davies]

The numbers are that some 40,000 people are affected in Wales, against about 400 units that can take just one person. In other words, this is not a strategy to help occupancy levels; it is simply an attack on the poor, who have nowhere to go.

[David T. C. Davies]

I do not accept that it is an attack on the poor.

--- Later in debate ---

[Sir Roger Gale (in the Chair)]

Order.

[Geraint Davies]

Will the hon. Gentleman give way?

[David T. C. Davies]

Yes, but one of the hon. Gentleman’s colleagues made the point earlier that everyone wanted to speak in the debate, and another dropped a hint about my concluding in a moment, which I was about to do. I will give way one last time, but then conclude, so that the hon. Gentleman and others can entertain us.

[Geraint Davies]

The point is consistently made, “Well, Labour did it in the private sector so why can’t we do it in the public sector?” The reality is that the market delivers a large number of flats for single people because there is a demand, but the public sector has been focused on units with two or three bedrooms for families with children. It is simply not appropriate to say that the measure should be force fed to the public sector. There is nowhere to move the people to.

[David T. C. Davies]

I am not sure that I would accept that argument, but I am grateful that, in signing the report, the hon. Gentleman accepted the fact that the current situation is completely unsustainable. We cannot afford to go on doing what we have been doing. That was agreed by all members of the Committee in the report. He may have alternatives in mind, which he will want to put forward in a minute.

I thank the hon. Gentleman and all members of the Committee for the way in which we dealt with a potentially controversial issue and for coming up with a unanimous report. I look forward to the Minister furnishing us with answers. I should put on the record that I am not trying to duck any responsibility: speaking in a personal capacity, I support Government policy on this issue absolutely. I take full responsibility for the policy. I always believe that there is room for improvement in anything that any Government do and the points I have made should be seen in that light. But, personally, as Member of Parliament for Monmouth, I support the Government and look forward to the Minister’s response.

--- Later in debate ---

[Mrs James]

I thank the hon. Gentleman for his intervention. He is very fortunate, because that is not the pattern that we are seeing in the urban areas, the cities, of south Wales. I will come to some figures later and try to demonstrate the effects that the policy is having on the local authority and the ever-increasing problems that the legislation is creating.

Already, 30,640 homes that are part of the available rented housing stock in Wales are beyond the reach of people on housing benefit. I got these figures from the Chartered Institute of Housing. It estimates that already more than 30,000 homes that are part of the available housing stock in Wales are outside the reach of people who are seeking other homes or cheaper homes or wanting to downsize because of the legislation. In fact, 89% of tenants in Wales will see their benefits cut, and the loss will be on average £8 a week or £416 a year—before we even take the bedroom tax into consideration. Significant amounts of money are disappearing from people’s daily budgets. I know that that is popular in some areas and will make many readers of certain tabloid newspapers feel better, but if they had to live with the reality of it all, they might feel differently about it.

The proposals make a complete travesty of the rented housing sector. We are constantly being told that they are justified and that the Government are attempting to encourage mobility in the social rented sector, strengthen work incentives and make better use of social housing. My response is that they are not doing any of the above, and I seriously doubt whether they ever will. The policies do not encourage mobility in the social rented sector; in fact, I believe that they are creating a dependency on the substandard lower end of the market, regardless of the condition of the homes available for rent at an affordable price. The policies certainly have not strengthened work incentives. Many tenants I come across are suffering from housing-related health problems and are so overwhelmed by their housing issues that seeking work is not an option. They are absolutely ground down into depression by the problems that they face.

It is worth pointing out that the social housing sector simply cannot meet the demand for good-quality, up-to-standard housing when there are insufficient numbers of smaller properties to move tenants into. The Government have wrongly assumed that moving tenants to smaller properties is an easy option. The reality in Wales is that a vast percentage of local authority housing stock consists of traditional three-bedroom properties. That is a direct result of the post-war boom in house building, when properties with three or more bedrooms were needed to accommodate families, which were traditionally larger than they are today. In the 21st century, families have changed, housing needs have changed and there is a clear shortage of smaller one or two-bedroom properties for families to move into. Even when smaller properties are available to rent, they may be unsuitable for the needs of those who seek homes.

I hope that the Minister can provide me with some figures on a matter that the city and county of Swansea has come across. For more than 20 years, its policy has been not to house children, disabled people or elderly people in flats on or above the second floor, for the good reason that there have been tragic accidents in the past, which have been frightening for tenants. It is not deemed proper to house those with mobility problems or children on upper floors, where they have to deal with stairs, balconies or windows at a height. Has the Minister looked at the issue, and can he tell us how many other local authorities are in a similar position? I applaud the city and county of Swansea, because the policy is an eminently sensible one. Obviously, however, it reduces the available housing stock.

A Labour party freedom of information request showed that councils will be unable to help 19 out of 20 families who are affected by the bedroom tax. The figures from the 37 local authorities that responded suggest that 96,000 families will be hit by the bedroom tax, but there are only 3,688 one or two-bedroom council properties available for families who wish to move to avoid the tax. The entire exercise is proving similar to moving the deckchairs around on the Titanic; it is not a good idea when many other more pressing issues need to be addressed. I would be happy to work with the Government on those more pressing issues in our communities. We seem to be pursuing the policy just for the sake of making things look better, and it is simply not working.

Benefit claimants are being treated as though they were part of some sort of social experiment that is being undertaken to appease certain sectors of the community. We already know the outcomes. The policies do not work. They punish and condemn those who are dependent on benefits, and they do not remotely encourage improvement or change for the better.

Before I finish, I want to touch quickly on discretionary housing benefit. We have heard about other local authorities that do not seem to be having a problem and that are quite happy with the situation, but we have a small shortfall in Swansea in the money that is coming in. Currently, the shortfall is some £1,200, which sounds great, but I am concerned that the combined funding from the Department for Work and Pensions and the Welsh Assembly Government is not enough. If the situation continues, we will see an ever-increasing burden on the local authority and its finances. In Swansea, there were 3,198 applications for discretionary housing payment in 2013-14. The local authority awarded 1,871 discretionary housing payments, but it refused 1,327. It is pretty clear that there is a funding gap. In addition, the discretionary housing payment is awarded only for a maximum of 52 weeks. I echo the request of the hon. Member for Ceredigion for further clarification on the future of the discretionary housing allowance.

The housing benefit changes have adversely affected almost all claimants in Wales.

[Geraint Davies]

My understanding of the overall figures—I do not know whether the Minister is interested in this—is that 40% of tenants in Swansea, or 1,949 people, will now have to pay the bedroom tax. I understand that 1,230, or 63%, of those people have gone into arrears since April.

[Mrs James]

I thank my hon. Friend and colleague in the city and county of Swansea for that contribution. We are in a horrendous situation, which has left those in our communities who are least able to defend themselves reeling. I have a horrible feeling that it is only the tip of the iceberg, and that other nasty policies will soon come along to make those people’s lives even more difficult than they are now.

--- Later in debate ---

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

It is a pleasure to serve under your chairmanship, Sir Roger, as it is to speak in this debate. Indeed, it is a pleasure that the No. 1 conclusion in the report makes the case for rent controls in the private rented sector. That was an amendment that I suggested when we were deliberating over the report, and it received the support of the majority of the Select Committee, for which I am extremely grateful.

The under-occupation penalty for recipients of housing benefit in the social rented sector is the signature regressive social security policy of the current UK Government. Labelled the bedroom tax, in Welsh it is called the treth llofftydd—when there is a hashtag in Welsh on Twitter, we know we are in trouble.

The bedroom tax, as the Select Committee Chair, the hon. Member for Monmouth (David T. C. Davies), said, is part of the UK Government’s efforts to reduce the housing benefit bill. I, too, pay tribute to his chairmanship. It is a pleasure to be a member of the Committee and to work with him. He is extremely fair to me as the single Plaid Cymru member of the Committee. Despite his persona in the Chamber as a ferocious, right-wing beast, he is a very kind Chairman.

The UK Government, of course, have a three-prong strategy for reducing the housing benefit bill. First, there is a cap on benefits, which the official Opposition now support, with additional regional elements, should they form the next Government. Secondly, the annual uprating of welfare payments is pegged at 1%, which means that there are real-terms cuts to social security support every year. Thirdly, there is the bedroom tax, or under-occupancy penalty.

Despite all that, in its response to the 2014 Budget the OBR projected that housing benefit expenditure will increase by £1 billion by 2018-19. If they have time, I ask Members to read that report on their way back on the train this evening. Page 146 states:

“The largest driver of the rise in spending on housing benefit has been caseload growth in the private rented sector.”

The report goes on to say that the trend towards renting is driven primarily by the huge increase in house prices, which means that young people are unable to afford to purchase their own home. Only those who are supported by their parents are able to afford a deposit. The last bit of page 146 states:

“The rising proportion of the renting population claiming housing benefit may be related to the weakness of average wage growth relative to rent inflation. This explanation is supported by DWP data, which suggest that almost all the recent rise in the private-rented sector housing benefit caseload has been accounted for by people in employment.”

That makes my case for me. The key reason for the increase in the housing benefit bill, which we will see despite the regressive policies introduced by the UK Government, is spiralling rents in the private rented sector.

The Financial Times reported in 2012 that rents had increased by 37% since 2007, and it projected a 35% increase in rents over the following five years. That was before the housing bubble that we are now experiencing, with the OBR projecting that house prices will increase by 9.2% in the third quarter of 2014 alone. The OBR envisages a 30% increase in house prices over the next five years. When we couple those statistics with stagnant wages, it is unsurprising that more and more people in employment are falling into the trap of requiring housing benefit. Often when we discuss this issue, people miss that housing benefit is an in-work benefit; it is not for people who are unable to work but for people who are working now.

House prices are projected to reach 2008 pre-crash levels by 2019, which means we are in a greater boom and bust cycle than we were in 2008. As wages are stagnant, the bubble is being fuelled by increased debt. We are living in worrying times.

[Geraint Davies]

Will the hon. Gentleman acknowledge that bank lending to businesses is 30% down since 2008 but that bank lending for mortgages is beyond 2008 levels? House prices are going up, rent is going up but real wages are going down. When interest rates go up, we will have a sub-prime debt disaster on our hands.

[Jonathan Edwards]

The hon. Gentleman and I are singing from the same hymn sheet. We were promised a rebalancing of the economy and a move towards business investment and exports, but we are seeing the same old boom and bust policies that have been the hallmark of the UK economy for many decades. The danger is that the boom and bust on this occasion might be even more serious than that built up in 2008.

--- Later in debate ---

[Geraint Davies (Swansea West) (Lab/Co-op)]

I thank the hon. Member for Monmouth (David T. C. Davies), the Select Committee Chair, and I feel that it is a great shame that the Minister, who is a Liberal Democrat, supports a pernicious and wicked policy.

The two grounds on which that policy has been proposed are under-occupancy and housing benefit. As for under-occupancy, only 10% of housing in the social sector is under-occupied. In the private rented sector the figure is 15%, and in the owner-occupied sector it is 49%. There is no case. The reason why occupancy levels in the public sector are so efficient is that, after tenants die, the housing is recycled. The tax is punishment for families whose children have grown up and left the house. Two and three-bedroom houses are rightly provided for families in need with children, not for single people. When the children grow up and leave for college or wherever, the family is then punished and asked to move—but where? Nowhere. We know the figures. There are 40,000 affected households in Wales and 400 units to move to, so those people have no choices. The rule is just a tax on the very poorest who are already on housing benefit.

The average cost is £728 per household. The Labour party goes on and on about the average household in Britain losing £1,600 under the Tories, but we do not make much mention of the fact that it is the poorest who have been clubbed the hardest, because that £728 is being taken from the very poorest. It is no surprise that, as I mentioned with reference to Swansea, 40% of people are being hit by the rule, and 60% of those are already in arrears. People are being moved from poverty to destitution, and that is a disgrace. The occupancy case does not stand up: there is not a problem and there is nowhere to move to.

The housing benefit case does not stand up either. Housing benefit has doubled from £10 billion to £20 billion in the past 10 years, and 70% of that increase is simply due to private sector rents, because not enough housing is being built. If we move people—I am referring to Swansea figures again—from a three-bedroom home to a two-bedroom one and from the public to the private sector, the rent goes up 50%, so the housing benefit goes up: it is counterproductive. The rule is a mean, wicked attempt to recover from the poorest some of the deficit that was caused by the failure of the bankers. It is a nasty, unpleasant Tory tax, and the accomplices, including the Minister, are the Liberals. It is disgraceful.

People are being pushed into the hands of payday loan sharks. Wonga has given £800,000 to the Tories. It absolutely stinks. I know that people are being kind and saying, “This is not working properly; don’t you realise what is happening here?” My view—it is clear from the evidence—is that all the rule was about, all along, was hitting the poorest hardest, to be able to afford making the rich better off.

The other evidence is the fact that pensioners have been let off the hook. Why? Because they vote, and it would be politically unacceptable to do otherwise, although the under-occupancy rate is obviously higher among the very old. I am not promoting the idea that the bedroom tax should be applied to pensioners, because the whole thing is pernicious and awful; but why was it choreographed in that way? The answer is obvious.

As for universal credit, there are three huge computer systems—for HMRC, the Department for Work and Pensions with Jobcentre Plus, and local authorities—being crushed together. As for the idea that that will not generate the inevitable catastrophe that always happens in public sector IT, the cost will be picked up by the most vulnerable people, at greatest risk, who rely on meagre benefits and will then have to go to food banks. This is a disaster waiting to happen. Do the Tories and Lib Dems care? No, they do not. It is a complete disaster and disgrace, and I look forward to the day when we can vote it down for ever.

Work Programme (Wales)

Geraint Davies Excerpts

Thursday 1st May 2014 Westminster Hall

[Geraint Davies (Swansea West) (Lab/Co-op)]

The Work programme in Wales does not, as has been mentioned, do as well as elsewhere, but my primary point is that it is costing between £3 billion and £5 billion and that there is a programme that works six times as well—Jobs Growth Wales. According to the latest updated report, the Work programme’s success rate has moved from 11% to 15%. At the 11% point, Jobs Growth Wales is getting 40% of people into permanent jobs, 19% into apprenticeships and 3% into other education, which is a 62% success rate. Will the Minister say why, even if it costs more—if not six times more—we do not adopt it if it works, instead of being prejudiced?

I want to ask about sanctions. In Swansea, 65% of people on jobseeker’s allowance have been sanctioned and their jobseeker’s money taken away for four weeks, 13 weeks or 15 weeks because they failed to turn up to some sort of Work programme appointment—often because the letter arrived after the appointment. In other words, there was an administrative error. Bearing in mind that someone on jobseeker’s allowance is on just £71.80 a week, they have £10 a day to live on. If they do not get to an appointment they did not know about, they lose all their money for four weeks and as they can go to the food bank only three times, they are thrust into the hands of loan sharks. People’s desperation is appalling.

What is also happening—I do not want to mix up things—is that extremely vulnerable people are going to Atos. A person called Michael Rainey met me recently; he has a condition called pericarditis, which is the lining of the heart expanding and contracting due to anxiety, and he also has rheumatoid arthritis. He went to Atos and got zero points for his chronic conditions, and because he was forced into work, he was rushed into hospital and nearly died. He has since been sanctioned, so he has no money either.

We have a situation in which people on sanctions are not counted in the job figures, so suddenly they are not unemployed any more. We are also saving money because we are taking away their meagre benefits. Rather than messing around with statistics and claiming that something like half a million people on zero-hours contracts really do have jobs, we should ensure that if, for example, Jobs Growth Wales works, it applies more broadly across Britain and gives people the jobs they need. People want to work, but they are being starved into desperation by this strange system of sanctions and by being made to turn up to jobs that do not really exist.

Finally, I have been involved in this issue, so I know that the number of people going to counsellors and psychotherapists, often because of anxiety due to austerity and these draconian measures, has gone up from about 300,000 in 2010 to 1 million people a year. People are having mental health problems and going for advice—again, that is a knock-on cost to the health service. We really want to deliver proper jobs and proper work schemes. There is best practice at hand, in particular in Wales, and we should notice and take a lead from that.

[Several hon. Members]

rose—

Ford and Visteon UK Ltd

Geraint Davies Excerpts

Thursday 12th December 2013 Commons Chamber

[Dr Hywel Francis (Aberavon) (Lab)]

I am pleased to take part in this critical debate, because the Visteon plant in south Wales is located in my constituency, and I do so on behalf of many of my constituents, many of whom have travelled to London today from Wales. I begin by paying tribute to the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) for securing this debate. As the chair of our all-party parliamentary group on Visteon pensioners, he is leading in Parliament the campaign to get justice for Ford and Visteon UK pensioners. I also pay tribute to my neighbouring MPs, my hon. Friends the Members for Swansea East (Mrs James) and for Swansea West (Geraint Davies), who have done sterling work over many years on behalf of their constituents employed in the local Visteon plant. My hon. Friend the Member for Swansea East sends her good wishes for today’s debate. She is at home, convalescing after an operation, and I am sure everyone here will join me in sending our best wishes for a speedy recovery.

I want to place on record our thanks to the Visteon pensioners action group and the trade unions for their diligent campaigning over many years. I particularly thank Rob Williams of Unite, who was originally from the village of Glyncorrwg in my constituency. His grandfather, the late Glyn Williams, a distinguished president of the South Wales miners union, would have been very proud of him and the campaigning he is undertaking on behalf of his colleagues.

The case for justice for Visteon/Ford pensioners has already been made—and comprehensively so—by the hon. Member for South Basildon and East Thurrock, so I shall not repeat the unanswerable case that he made, other than fully to endorse what he said. What I would like to do today is to emphasise, as he did, the duty of care in the context of corporate social responsibility that Ford motor company needs to discharge to its former employees and their families.

I received this simple, yet poignant message yesterday from one of my constituents, Carl Kirby of Cwmafan:

“We hold meetings once a month and over the last year we have held a minute’s silence at nearly all for workmates that have passed on. This leaves their widows with a lower income, and I know a few have had to seek work to make ends meet. These men are not here to support their families now and their voices should still be heard.”

That is why we are here today—to articulate these concerns on their behalf.

Ford came to our locality in 1964—on to the site on the edge of Swansea that was previously occupied by the Prestcold refrigeration plant and that covered an area of 2 million square feet. It spent £20 million developing and expanding the plant to make it one of the largest and most modern car component factories in the whole of Europe. It grew rapidly from 2,000 employees in 1968 to 6,500 just over a decade later in 1980. Ford was therefore a major contributor to the Welsh economy, drawing its work force not just from Swansea, but from a wide area, encompassing neighbouring towns and villages across the whole of south-west Wales, often taking on the highly skilled labour that was leaving the declining coal mining industry.

Ford’s growth paralleled that of its neighbour, BP, in the petrochemical industry, with its nearby plants at Llandarcy and Baglan Bay. Their parallel growth in the same period was followed by a parallel decline of both companies in the region. There, sadly, the similarity ends. While the closure of BP’s local plants was undertaken in an orderly way, the opposite was the case with Ford. BP followed a clear exit strategy, engaging local stakeholders, developing a range of local legacies and ensuring proper pension rights. It developed a widely admired “Aiming for a College Education” strategy with local schools, helped to sustain and improve local sports and leisure facilities, helped to develop Coed Darcy, a new village in my constituency, and, most striking of all, contributed to the establishment of an impressive science and innovation campus at Swansea university that is to be opened in 2015 on the sea front—ironically, directly opposite the old Ford/Visteon plant.

We are speaking here of two world-class global companies: the one discharging its duty of care in an ethical way to its local employees and local communities, a model of corporate social responsibility over a long period; the other, sadly, retreating almost under cover of darkness, leaving employees, their families and their communities, desolate and in despair. It is not too late, however; Ford can redeem itself.

[Geraint Davies (Swansea West) (Lab/Co-op)]

In the light of what my hon. Friend has said about the contrast between Ford and BP, does he think that viewers of this debate and those who read about it in the United States will be surprised, given what they are likely to think about BP after the oil spillage? In this case, it appears that BP does its best to do its best for its workers, whereas Ford clearly has not.

[Dr Francis]

My hon. Friend has made a powerful point, and I agree with him.

On behalf of all my constituents—those who are directly affected and those who are not—I urge Ford, at this late hour, to discharge its duty of care to all Ford and Visteon pensioners throughout the United Kingdom by giving them their full pension rights before any more retired employees depart this world without receiving what is theirs as of right.

--- Later in debate ---

[Geraint Davies (Swansea West) (Lab/Co-op)]

I come to this debate with mixed feelings. I feel grateful to you, Madam Deputy Speaker, and to Mr Speaker for allowing us to have this great debate in the mother of all Parliaments, from where it will be transmitted across the pond to the United States, where Ford’s ears will be pricking up, as will the ears of Ford’s consumers, who will be thinking twice about whether the Ford brand is whiter than white when they choose their next car.

I am grateful to the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) and others for the work they have done with me to keep this show on the road and to keep up the pressure on Ford. Ford might have thought that, after the early rumbles of protest, the noise would die down to a whisper. Instead, we are turning up the volume, and the lion’s roar from Britain will be heard in the United States today and in the future.

I am also grateful to the Visteon workers who are with us today, up in the Gallery, and to the many others who have come here on coaches at other times and who continue their fight in London, Cardiff, Essex, Liverpool and Northern Ireland. They continue to demand justice in all corners of the United Kingdom, and that demand is echoed today in all corners of this great Chamber by all the parties.

I come here with sadness as well. My hon. Friend the Member for Aberavon (Dr Francis) mentioned the fact that Ford came to south Wales in 1964. At the time, my father was heading up economic development in the Welsh Office, and he was critical in bringing Ford to south Wales. He is no longer with us, but I remember his story about the chairman of Ford turning up at the Welsh Office in Cardiff in a green Rolls-Royce—believe it or not—to talk about the arrangements and inducements to get Ford to the area. That was more than 30 years ago, and perhaps Ford had a different outlook and a focus on wider communitarian values in those days.

So I come to the debate with thanks and with sadness, and also with a degree of frustration and anger that we find ourselves here. We have been engaging with Ford UK, and it has been forthcoming in engaging in dialogue, but its hard-nosed American bosses, sitting in their directors’ boardroom, seem to think that this issue will just go away and that the workers of the UK can be treated as some kind of offshore group of people that they can forget about. It has been mentioned that many of the people who have suffered are now dead, and I believe that Ford is hoping that the issue will go away. I and other Members from all parties say this: “Ford, you can run but you can’t hide from your responsibilities. We will continue to fight for our constituents, year after year, until this matter is resolved.” Madam Deputy Speaker, you mentioned that this matter was before the courts and that decisions have yet to be made, but we are talking not about the legalities of the case but about moral responsibility and the duty of care that should be shown by this multinational towards its employees, in respect of pensions in particular.

Members will know that I introduced the Multinational Motor Manufacturing Companies (Duty of Care to Former Employees) Bill, which covers this ground, but the Minister might also wish to comment on the big conversation that is taking place between the global multinationals, sovereign states, workers and consumers. There have been debates in this House about the responsibility of multinationals, be it Amazon, Google or Vodafone, to pay their fair share of tax. Vodafone had the biggest share transaction in history, or at least this century, involving £53 billion, but not a penny was paid in corporation tax. How are we going to re-orchestrate things with other countries to ensure that global corporations are not globe-trotting away from their responsibility?

That is a bigger conversation, and I know that people are engaged on the tax side of it, but its other side is the fair treatment of workers. We have heard reports, for instance on “Panorama”, of what Amazon is doing, and I am following through on that, as it is a local company in my constituency, too. As with Ford, we are talking about big companies that provide big employment and are crucial to all our towns and cities, but that does not mean they can run away from their responsibilities on fair tax, fair play and the fair treatment of consumers and workers, be they current, previous or future.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe) on bringing the matter to the House for consideration. I have been told by one Belfast worker that the workers

“rights were guaranteed not for the lifetime of the Belfast plant, but for the working lifetime of the individual workers. Therefore, their redundancy rights were guaranteed for as long as the workers remained employed, and their pension rights were guaranteed until they reached retirement age”

and beyond. We can understand the anger of those workers and their disbelief and dismay at what took place. Is it not time that the big company in America stepped up to the mark and paid out?

[Geraint Davies]

The hon. Gentleman makes his point with typical focus and strength. The Belfast workers will be looking at today’s debate and asking how Ford will respond. The Ford directors cannot sit around with their hands covering their eyes, ears and mouths, pretending that this will go away. They may think it can be kicked into the long grass of the lawyers, where there is an army supported by a huge ammunition dump of money to keep it there, but their business ultimately depends on the good will of consumers.

This is not just about Ford manufacturing innovative, efficient and modern cars; it is about the brand being one that people can be proud of. It is about not hiding behind the brand name a predisposition towards running away from responsibilities to people who have spent a working lifetime, in good faith, making quality cars for people to buy, for a business that is viable. It is simply not acceptable for the people to whom those workers have expressed such loyalty to walk away and leave them near destitute. We will not accept it in our House, our community or across our shores. I believe that the ethics of American consumers and American workers, both in Ford and beyond, mean that they will share our sentiments that we are in it together, to use those immortal words, in terms of our future and how this works. People may increasingly make consumer choices for ethical reasons—various brands have ethical dimensions and do the right thing—and this could be one of those instances.

I am not going to dwell on the details of the case. I simply say that it appears, on the face of things, that various undertakings were given to Ford workers which, as has been pointed out, any lay person would interpret as cast-iron guarantees, whatever the legal beagles might construe, with massive expense, could conceivably have been meant. Almost everybody took those assurances as being cast-iron guarantees.

The Ford pension fund was initially set up £49 million light and by the end of the period of Visteon’s existence—the nine or 10 years in which it continued, when, as has been said, it lost nearly $1 billion and did not turn a profit—that pension fund had become underfunded by some £350 million. The knock-on effect for the more than 3,000 workers who have been affected is a savage cut in the future incomes they can expect into their retirement and their capability to sustain a future of dignity and enjoyment in older age that they deserve.

It has been pointed out that Ford was, in essence, manipulating the profit and loss account of Visteon. On the input side, it was able to demand a certain input of raw materials at specific prices that may have been above the market price, so the input cost was up. On the output side, 90% of Visteon’s sales were set by Ford, which consistently reduced the prices that it was given to squeeze the profit of Visteon, so it was no surprise that it was making a loss and that that loss was manifested in the pension fund.

Interestingly and coincidentally, if we look at figures for 2005-06, Visteon Europe lost £700 million and Ford Europe made £700 million in profit. The point I am trying to make is that their accountancy animal was woven together—that £700 million could have gone either way. In essence, Ford chose the loss to fall on Visteon and on the workers who had nobly and loyally served it for so many years.

I know that a number of Members want to speak so I will not go on. In the evidence we took in the all-party group, and before that, we heard stories of representatives from Ford who, after sitting on the board of Visteon pension fund trustees and then having a vested interest in the closure of the plant, transferred their own pension out of the Visteon pension fund into a specially created fund—another Visteon pension fund, the engineering scheme. Clearly, they had a different and conflicting interest. We asked Phil Woodward, who was a director of the trustees, to give evidence to the all-party group, but what do Members think happened? He did not turn up. What does that say about this whole saga? The more we scratch the surface of this story, the worse it gets.

[James Duddridge (Rochford and Southend East) (Con)]

I find it fascinating that people did not turn up to give evidence. If there were a Select Committee inquiry, could we not ultimately bring in those whom we want to give evidence from wherever they are, including the current Ford executives? Could they not be forced to come here in the same way that Rupert Murdoch was?

[Geraint Davies]

Yes, with pie on their faces! On a serious note, I completely agree with the hon. Gentleman. That point has been made in the all-party group, and we have been trying to get a Select Committee to take on this matter. Possible options included the Welsh Affairs Committee and the Business, Innovation and Skills Committee. When we took it to the Welsh Affairs Committee, there were concerns that the matter was sub judice. However, Mr Speaker has now ruled that the matter has been trundling on for far too long. We are four years into the campaign and there will be another year at least before there is a court hearing. Clearly, we cannot wait for ever, and there is a role for this Parliament to express itself and to ask questions about what has gone on and the duty of care.

What I say in response to the hon. Gentleman’s excellent question is that we have thought about that, but as the momentum has been building and we have now reached this point—we have had questions, discussions, early-day motions, a Westminster Hall debate and now this major debate in the Chamber—we should be aiming, given that we have the implicit sanction of Mr Speaker, to take the matter back to the Select Committees and demand that those executives give evidence. If they do not want to come, they can be dragged here screaming and shouting.

Ford needs to think carefully about doing the right thing for the workers and for the brand as this rolls on and as reporters in America say, “Hold on. Why are all parties in Britain uniting to say things about the glorious Ford? What about Henry Ford? What a great bloke he was. Wouldn’t he turn in his grave if he knew what was happening?”

Other people might talk about more of the detail, but there are some difficult questions that the brand managers and marketing managers for Ford need to think carefully about. What does Ford mean now in a qualitative and quantitative group? What will it look like in a month’s time, or a year’s time? What will it look like against emerging competitors, whether they are Nissan, General Motors or whatever? How is this playing and what are people saying about it?

My hon. Friend the Member for Aberavon (Dr Francis) mentioned BP, which, of course, took an enormous financial hit after its environmental issues and also took a hit to its brand values and to perceptions of what it cares about. Those are enormous things for global players. If we, in an advanced western democracy—the seventh largest economy in the world—do not stand up for people and cannot get a global company such as Ford to come to here and do the right thing, we are setting an example for less developed countries where global players might go in and out and cause social, economic and environmental harm.

It is time to say enough is enough. We are one global community, so let us work together and play together for the good of all countries. We should bring something to the table and remember that democracies here and elsewhere will work together to ensure fair play for pensioners, for consumers and for workers, as well as good jobs and good cars. Let us work together for a better world. Come on Ford, do the right thing. Stop hiding and put your money on the table.

--- Later in debate ---

[Nick de Bois (Enfield North) (Con)]

I, too, pay tribute to my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) for securing this debate and the spirit in which it is being held. We have all been at pains to stress our understanding and support for Ford as a major employer in this country, and I echo those sentiments. It has a proud history and plays a very significant role in our industrial base. Notwithstanding that, I do not believe that this House has ever been prevented from doing or saying the right thing when it matters, and I think we do so in that spirit today.

I do not wish to repeat the points that have already been made, but that does not mean I do not agree with them. I will highlight one or two specific areas, but before doing so I would like to say that I, like many Members here, am conscious of Visteon’s national reach, because it has reached into many constituencies. I compliment all of them on the conduct of their campaign, which at all times has been impassioned and powerful, but also courteous and respectful. I pay particular tribute to my neighbours and constituents in Enfield, whom I admire for their tenacity, of which I have had first-hand experience. I am delighted to be here to speak for them on the matter.

Ford, we are told, even on its website today, is a family of global vehicles and global employees. I think that they probably believe that, but today we have seen the evidence that that is not quite true.

[Geraint Davies]

I need to leave the Chamber for 10 minutes to give an interview to discuss whether or not Ford is a happy family across the pond, and how important it is for us to act to make it so for the future so that everybody has their fair share. I apologise to the hon. Gentleman and to you, Madam Deputy Speaker, for having to leave, but I want to air that on the media.

[Nick de Bois]

I am grateful to the hon. Gentleman for his intervention and understand that he has to attend to pressing priorities, and rightly so.

I would like to highlight two points. We have talked about the possible lack of understanding at Ford in the US about the consequences of the decisions that were taken here in the UK. I have considerable experience—some might say that I have the scars on my back—of working in America, having worked with American businesses and set up my own business there. It is an extremely different culture, particularly when it comes to employee relations. I can speak only about my area, and of course the company was not a substantive corporation like Ford, but I know that the work force protection schemes in America are nothing like those in this country, and many say that we have some of the least onerous schemes, compared with the rest of Europe. In America, an employer can hire and fire almost at will without recompense. There are a limited set of protections for redundancy or sacking with or without cause, but it is a very different culture. We may speak the same language, but we are not necessarily united by it in our practices.

It may well be that people in the boardrooms in America do not understand the implications or the potential harm to their reputation of pressing ahead and distancing themselves from the issues facing the pensioners of Visteon. I urge them to listen carefully and to imagine themselves not in the boardrooms of America looking over here, but over here looking at it through the eyes of their UK allies and partners. They might then understand what has driven us to the Chamber today and what has driven the unrelenting cause of Visteon pensioners.

Housing Benefit (Under-occupancy Penalty)

Geraint Davies Excerpts

Wednesday 27th February 2013 Commons Chamber

[Dr Whiteford]

My hon. Friend’s legal expertise helps him to make a compelling point. Social landlords are aware that more people will be at risk of arrears and that they are being proactive in trying to prevent that from happening, but they are clear that their ability to provide affordable homes depends on their ability to collect rents from tenants. The real problem is that the under-occupancy penalty is unfair and unworkable. Instead of trying to mitigate its worst effects, we should concentrate on changing the underlying problems and abandoning the bedroom tax. In Scotland, we clearly have an opportunity to do that by bringing decision-making powers back to the Scottish Parliament.

Housing associations have historically been seen by lenders as relatively stable, and have been able to borrow money at competitive rates. Mary Taylor, chief executive of the SFHA, has pointed out to Ministers that

“already it is proving harder for landlords to borrow from banks, whether to build or to fund major repair and retrofit programmes. And where they can borrow it is invariably at a higher cost than before, even though interest rates generally remain low and stable. According to Housing Associations, lenders are pointing to the lack of security of rental income arising from Welfare Reform as a key factor in these rising costs. Lenders have to assess risk—and they recognise the very real risks, even if the Government is stubbornly refusing to do so. I believe the Council of Mortgage Lenders raised these issues with the Government over a year ago, but we are still to see action.”

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Lady agree that many councils have rightly, historically and naturally built two and three-bedroom homes for families? If councils choose to evict people from that stock as families grow up, they will end up with a massive void. The choice will be between having not quite enough rent and having no rent, which is financially absurd.

[Dr Whiteford]

The hon. Gentleman makes a good point—some housing associations already contend with that problem. If they are to continue to invest in their existing properties and continue to build the new smaller properties that we need to meet our changing demographics, they need to be able to borrow, and to do so cheaply. Any increase to the costs of borrowing will have only an inflationary pressure on rents and service charges. That pressure falls back on the low-income households in the social rented sector, who can ill afford it. There is no doubt in my mind that the problems for social landlords, caused by the shortfalls in housing benefit for people affected by the under-occupancy penalty, will be further compounded by the end of direct payments under universal credit.

--- Later in debate ---

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

rose—

[Geraint Davies]

rose—

[Steve Webb]

I want to make some progress, as I have not yet got past page 1 of my speech and I think the House would like to hear from a few other people.

The cost of housing benefit increased in real terms by 50% in the past decade to £23 billion. Given that we said we would ring-fence the state pension, the biggest thing that we spend money on, we simply cannot ignore housing benefit for people of working age if we want to save money.

[Geraint Davies]

Will the Minister give way on that point?

[Steve Webb]

No, I want to make some progress.

For social sector tenants alone, the bill totalled £14 billion. That is why we have had to look at this area of spending. The system for tenants renting in the private sector has already been tightened in a number of respects, and there is a fundamental fairness issue involved here. Is it right to squeeze private sector tenants’ housing benefit while making no change in the social sector, where rents are already subsidised and where people already have an advantage? That is what we are trying to address.

At the moment, there is a spare bedroom subsidy. We subsidise a million spare bedrooms in the social rented sector through housing benefit. We have a situation in which two households next to each other can be treated inequitably. We heard the hon. Member for Banff and Buchan talk about fairness. We have to be fair to the different sorts of tenancies. Those living in the social sector already benefit from a subsidised rent. Should they also benefit from a subsidised spare room? When we have a million spare bedrooms, and over a quarter of a million households living in overcrowded accommodation, we must do better. We have to regard the spare bedrooms in the social housing stock as a precious resource that we can make better use of.

--- Later in debate ---

[Steve Webb]

Let me make a little more progress, and I will give way again later.

We recognise that this is a time of change that will present challenges for tenants and for landlords, and we have to support both. One of the positive things to come out of the change is that landlords are getting to know their local authority tenants and social housing tenants far better than in the past. All too often, housing associations did not know their tenants well enough; we have now seen an important process of getting to know individual tenants and their needs. As a result, some of the more creative housing associations have schemes whereby half a dozen people have moved accommodation so that there is a better fit between the individuals and their housing needs. The 1 million spare bedrooms are a precious resource of our communities and of vulnerable people in them, and I will not have it said that those who stand up for the vulnerable are on the Opposition Benches, as we are standing up for them and we want those bedrooms filled.

[Geraint Davies]

rose—

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

rose—

[Geraint Davies]

Instead of having a policy of evicting people because their children have grown up, would it not be better to offer cash incentives to move to smaller housing? When I was chairman of the housing department and leader of Croydon council we offered people cash benefits rather than by evict them because their children had grown up. [Interruption.]

--- Later in debate ---

[Mr Byrne]

My right hon. Friend is absolutely right about that. Of course, the Labour party is proposing to have a tax on bankers’ bonuses in order to release £1.3 billion for new housing and to spend the 4G licence proceeds on building homes. That is in sharp contrast to the sob story from the Deputy Prime Minister lamenting the fact that the Government cut capital spending too far and too fast.

[Geraint Davies]

Does my right hon. Friend accept that the savings that the Government anticipate and project are gross savings, not net savings? That is because many local authorities will end up with voids without rents and will make losses, so they will not be able to do their repairs, at a time when private sector rents will be pressed up by excess demand, giving returns on buy-to-lets to the private rented sector and increasing housing benefit costs. This does not add up at all.

[Mr Byrne]

My hon. Friend is absolutely right. The Secretary of State may truly believe that this policy will save his Department £490 million a year, but his Minister of State was rather less than forthcoming earlier on swearing that that would be the figure. The Secretary of State may genuinely believe that this policy will save £2 billion over the forecast period. If he does genuinely believe that it will save the money set out by the Treasury in Budgets gone by, he is deluding himself, because the evidence is staring him in the face: this policy will cost more than it saves.

--- Later in debate ---

[Ann McKechin (Glasgow North) (Lab)]

I welcome today’s debate on a serious and deeply worrying issue. I, like many others, spent last week in my constituency, where almost every conversation I had—with constituents, DWP local managers, banks, post offices, housing associations, credit unions and my local citizens advice bureau—was centred on the so-called bedroom tax. Today, I listened carefully to the Minister of State, who took great pleasure in referring to the “spare room subsidy” and the question of equity. It reminded me of the debates on the poll tax in the early 1990s, when it was considered “equitable” that the poor should take a heavier burden. That message resonates today right across the House.

What struck me about those conversations last week was how unprepared we are for perhaps the most dramatic setback in decades for our housing sector and local communities, first, among the tenants. Up to the end of last year, housing providers earnestly hoped they could persuade the Government to change their mind; then they started to write to their tenants, who in turn put the letter in a safe place and hoped the issue would go away too. Only since the start of this year have tenants’ eyes been opened to the true horror, as housing associations have now started physically to knock on their door and find out how they intend to cope.

Let me give the examples of two constituents I met last week. One of the women looks after her father full time—she gave up her work 15 years ago to act as a carer—and he lives nearby in a one-bedroom flat, so she cannot move in with him. Because there are no spare houses, she faces having to move to the opposite side of Glasgow and then trying to commute every day to look after her father. The other woman is 58 years old and single; she has lived where she is now for 17 years. She is a good tenant, who keeps the area stable and looks after her neighbours, but she faces being moved many miles away to an area she does not know and where she does not know the local people—even though she does not have the money to move house in the first place. One question the Government have not asked is how we will manage moving all those people, many of whom have no spare cash.

Most welfare advisers and DWP staff I spoke to last week believe that now, we are seeing only the trickle, and that the flood of inquiries will start when the bills begin to arrive through people’s letterboxes. We know the grim facts about the lack of suitable stock—the hon. Member for Banff and Buchan (Dr Whiteford) described in some detail the extent of the problems right across the country, both in urban and rural areas—but analysis of the impact on individuals and the stability of their families, the detrimental impact on local communities as good long-term residents leave, the destabilising impact on schools and children’s education as many desperately look for properties to move to, and the likely non-payment reaction that will follow, is simply shallow and unco-ordinated.

The impact on our housing associations should not be underestimated. Earlier this month, as the hon. Lady mentioned, I raised with the Under-Secretary of State for Scotland, who is not here to hear the debate—nor is the Secretary of State for Scotland—the impact on housing associations’ credit rating. That is not just a technical point: many experts are talking quietly about the need for wholesale consolidation of local social landlords, so that they can avoid bankruptcy as they try to cope with the ruinous increases in their cost of borrowing at the same time as they face a huge hike in both arrears and administration costs, with many having only very small reserves to buffer the losses. That impact will be worsened by the introduction of universal credit later this year. Even the Chief Secretary to the Treasury is now beginning to voice concerns about the impact of direct rental payments to tenants.

[Geraint Davies]

Does my hon. Friend accept that some of the opportunities available to local authorities consist of, first, taking the hit on arrears; secondly, cutting repairs and maintenance to make ends meet; and thirdly, knocking down walls to convert two bedrooms into one? That is being actively done. As a former housing chair, I can see that is a practical solution.

[Ann McKechin]

My hon. Friend describes the problem. I represent a seat in Glasgow where all the social rented properties are in the hands of housing associations. Many of them are very small and unfortunately do not have the capacity or resources that even a local council has, and some of the smaller local authorities will be very hard pressed to cope.

In reply to my question, the Under-Secretary of State for Scotland assured me that he had met local authorities and housing associations in Scotland and discussed their concerns about credit ratings, and that they were “satisfied”. Funnily enough, the following week the Convention of Scottish Local Authorities, which represents all the local authorities in Scotland, and the Scottish Federation of Housing Associations wrote to the Minister to set out a slightly different view. The SFHA wrote:

“With respect, this does not address the issue of the credit rating of associations. Indeed I am not aware of any government impact assessment of credit rating of associations but if it does, I would welcome access to it.”

Does the Minister have an impact assessment he can share with us? The SFHA continued:

“We remain very concerned about under-occupation issues, not least given the escalation in rhetoric about non-payment of the ‘bedroom tax’, so called purposely to resonate with the Poll Tax, a debacle which left councils with a trail of debts only now being resolved even in your own constituency.”

If that seems harsh, the letter from the president of COSLA reflected utter astonishment at the Minister’s response to my question. He wrote:

“While I do meet the Secretary of State for Scotland from time to time, I can’t recall the last time we had an opportunity to discuss my concerns over welfare reform with any DWP Government Ministers….

There was a hastily arranged meeting on 22nd November…which we understand the Scottish DWP office invited a selected number of council leaders to attend. Few were able to do so, and COSLA was not represented although an officer was present to observe and take notes….

Those notes, and feedback…confirm that David Freud informed the meeting of the steps DWP are taking in response to a variety of concerns that were raised. These were felt to be inadequate, considerable dissatisfaction remained, and David Freud gave an undertaking to return to Scotland to discuss the matters further”,

but, funnily enough,

“This meeting has still not been confirmed.”

Perhaps the Minister who winds up the debate can confirm when his noble colleague Lord Freud intends to meet local authorities in Scotland to discuss with them what they can do to meet the impact of this change, which is to happen in just a matter of weeks.

The hon. Member for Banff and Buchan suggested some changes that could happen in Scotland. Unfortunately, I think her colleagues in the Scottish Government have pressed the standard pause button, saying, “We need to wait until the sun starts to shine and we have independence”, but of course that depends on a referendum and we are still waiting for the date of that. The plain fact, to which the hon. Lady alluded, is that we do not have time on our side and people cannot wait. We need to start a serious debate now on how we can resolve these issues.

The coalition talks about the ever rising cost of housing benefit over the last 10 years. Yes, it is a problem that we are subsidising landlords when rentals are increasing at well above rates of inflation, yet the Government have made not one suggestion or proposal to address that or the systematic failures in the housing market as a whole. I believe there has been a permanent change—a major distortion—in the housing market since the banking crisis in 2007. We will not simply see a bounce-back to the position in 2005-06 at some undetermined point in the calendar, so I have some suggestions on how to deal with housing as a whole, not just the issue of people on housing benefit.

Other Members have commented correctly on the need to build more housing, both in the social rented and private sectors. How much land in Scotland, or the UK, is held by building companies as part of their land banks? It is estimated that perhaps 250,000 houses with planning permission are still to be built. Has there been an audit of where those properties are? Can we levy unused plots of land to provide a stimulus to build, because in many cases builders are just waiting to get more money for the land on which they sit? Can we control private rentals? The hon. Member for Banff and Buchan rightly commented that rental levels in the private sector in Scotland, as in many other parts of the United Kingdom, are in excess of those in the social rented sector. According to Shelter Scotland, the taxpayer would on average pay more than £100 extra in local housing allowance each month if someone in Edinburgh moved from the social rented sector to the private sector, and the same would apply in Glasgow and Inverness; in Aberdeen—one part of the United Kingdom enjoying something of an economic boom—an extra £200 would be paid per month. The hon. Lady was incorrect, however, to state that increases in rentals were a phenomenon only in Greater London. There is a shortage of housing, and people cannot afford to buy a house or provide a deposit, so they are moving into the private rented sector, pushing rentals ever upwards.

In a speech last month, the Leader of the Opposition referred to reform of the law on residential leases, which should also be considered in Scotland, where the law is distinct but not that much different. The law was last altered in the early 1980s, to create short-term assured tenancies, which have become the absolute norm—the default—for all private residential domestic tenancies. Although there is clearly a market for short-term assured tenancies, they are not suitable for an increasing number of people who are looking for security and stability and to put down roots in a local community.

--- Later in debate ---

[Geraint Davies (Swansea West) (Lab/Co-op)]

I had to leave the Chamber earlier to help to launch a document on the links between speech, language and communication needs and social disadvantage. I mention that because one of the document’s key findings is relevant to the debate. When children in the top 25% of cognitive ability from working class backgrounds are tested at the age of 22 months and compared with children in the bottom 25% of cognitive ability from upper middle class backgrounds, we see that the upper middle class children will have overtaken the working class children by the age of 10. That is a result of speech, language and communication issues. I suggest that the dislocation of working class families and communities that these housing benefit changes will cause, through the eviction of parents because their children have grown up, is another example of the targeting of working class people who could do so much better in life and add so much more in terms of tax revenues and so on. They are the ones who will be hit the hardest.

[Helen Goodman]

Does my hon. Friend agree that, based on the speeches we have heard from the Government Benches today, we do not have a selection of people from the middle classes who have overtaken the working classes?

[Geraint Davies]

That is certainly the case. It is disappointing and illuminating that the Government Benches are almost empty this afternoon. Government Members simply do not care about a group of people who they believe will not vote. They see them as people who have failed in life and who will not vote—only 65% to 70% of people vote—so they think that they can treat them like cattle, and that is what they are doing.

[Mr MacNeil]

Is it not also indicative of the tone of the debate that the people who are encouraged to take in lodgers are usually those on lower incomes? There is no great push by the Government to ask the middle classes, the upper middle classes or indeed the upper classes to take lodgers into their mansions, palaces or castles. This move is aimed at the bottom end of society, and it is shameful.

[Geraint Davies]

I am grateful to the hon. Gentleman for that intervention.

The Government falsely claim that the problem is under-occupancy in the social sector. They say that that is awful, and a terrible waste. I have asked the House of Commons Library for the figures on under-occupancy rates. According to the bedroom standard, the level of under-occupancy in the social rented sector is 10.2%. In the private rented sector, it is 15.7%, and in the owner-occupied sector, it is 49%. So it is all very well for those who own their houses, who have five times the amount of under-occupancy, but people who are poor and who are in the social rented sector because the market has let them down are not allowed to have an empty room. Why should not those people be allowed an empty room? We have heard about people with disabilities and people with chronic problems, but what about normal people who just want their friends or their children to come and visit them? And who would want a one-bedroom house?

Let us look at the evolution of social housing. I was the chair of housing for the biggest local authority in London—Croydon—and chair of housing for the association representing all the boroughs across London. How does social housing work? We build two-bedroom and three-bedroom houses for families in need, who live in them with their children. Their children grow up and perhaps go to university or get married, and we end up with the couple in an under-occupied house. What happens then? They die, and we recycle those houses. It is no surprise that under-occupancy in the social sector is so low, because the sector naturally refreshes itself. Those people do not live for ever.

In Croydon, we also set up incentives involving thousands of pounds. We said to people, “Look, you’re an old lady living in a three-bedroom house. We’ll give you a few thousand pounds if you’ll go and live in a two-bedroom house. You’ll still have room for the grandchildren to come and stay, but times are tough.” And they did—[Interruption.] It is all very well the Minister saying from a sedentary position that it did not work. He has not tried that scheme. Why, instead of piloting his stupid ideas, does he not put the two models side by side and see which one works?

Instead of looking only at the savings and benefits involved, why does the Minister not also look at the costs? He should look at the costs in terms of community breakdown and family breakdown. What will his proposals do for people’s ability to get a job, for example? The Government want people to get some training, get a job and get some stability. Well, that is absolutely ridiculous. The social, economic and practical impacts of the measures are completely unthought out. The reason is that the Government do not care, and they do not care because they think that those people do not vote. Why is it that people over 60 are excluded from the list? It is because they vote. What does that say? It says, “Don’t have any children until you’re 40, because if you have them and they grow up and have to leave home, you will hit 60 at that time and you’ll be all right.” That is great, isn’t it? It is completely cynical and it stinks.

What does this mean for the practical implications of managing the housing revenue account? It is claimed that all this money will be saved, but some of it allegedly saved for the Government is lost by local authorities. As I said earlier, I have run a housing revenue account, so I know what will happen. A number of people will stop paying all their rent by the margin that is being cut. If I am in the local authority with a portfolio of two or three-bedroom houses, but with hardly any one-bedroom ones, I will say to the people that are not paying all their rent, “We will evict you, but we do not have any one-bedroom houses”. They will go to the private rented sector where the rents are higher and are escalated by the pressure on the market, and that will cost me more as a manager. What is more, as more people join the private rented sector, others in that sector will pay higher rents, so it will be difficult for people to build up a deposit and buy a house. That is great as well, isn’t it? It is absolutely hopeless.

[Mr MacNeil]

The hon. Gentleman is kind in giving way. A friend of mine in Fort William tweeted a few minutes ago to say that his parents took five years to downsize their house in Fort William. That is an example of how difficult this is practically. At that time, there was no imperative to do so—it was a matter of choice—but we are in the same boat, and we are talking about five years.

[Geraint Davies]

Yes, and why should someone who has lived in the same street, whose children have grown up with their neighbours and who knows everybody—having been to the local schools, visited the local pubs and worked in the locality—be dislocated and thrown into another community, another town or even another nation? The answer is that these people do not count because they are poor and they live in social housing—and the Tories and the Liberals are going to sort these people out. It is disgusting.

What else is going to happen? If managers or directors of housing have less rent money available, there will be a cut in repairs, leading to more damp and more health problems associated with bad housing. What else can local authorities do? People in Swansea are thinking about knocking down walls. If they have a two-bedroom flat, they can knock a wall down and create a larger living room in order to get round the problem. What does that remind us of? Yes, of course, it reminds us of the window tax. Do we remember when some stupid Tory introduced a tax on windows—and then people blocked off their windows: what a surprise! We are going to see that sort of thing again. It is absolutely ridiculous and farcical. If it were not so sad, we would all be laughing.

Private rents will go up for the mates of the Tories in buy-to-let who will see their incomes grow. It will stop other people buying houses, and we will see empty public sector houses side by side with overcrowded private sector houses. Where there are empty houses, it is costing us much more in lost rent than the shortfall that is being cut in this tax.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Will my hon. Friend give way?

[Geraint Davies]

No, because I will run out of time—perhaps at the end if I have time.

We will see major problems. My hon. Friend the shadow Secretary of State for Wales mentioned the impact of this change on Wales. He said that 46% of households would be affected in Wales as against 31% in England—half as much again. Once again, this is part of the strategy of taking money out of the poorest communities, yet poor people spend more of their money. If we want a growth strategy to get people back into work, we should give money to poor people instead of giving it to the rich who hide it away in savings accounts or offshore accounts. When people have only a little money, they have no choice but to spend it. We are denuding local authorities with poor populations of money power.

What of incentives? A son or daughter of parents might say, “I want to go off and get married and live with this person. I want to go off and live in a different town and get a different job. I haven’t got a job here; I’m unemployed.” The parent would say, “Son, that will cost me”. What if the children want to go off to university? That is going to cost the parents, too. Once again, this is just encouraging people to stay where they are until somebody hits 60. It is preposterous. The savings will not be made.

[Steve Webb]

There are only so many times that the hon. Gentleman can get it wrong. If someone goes away to college and is based at home, the bedroom is kept.

[Geraint Davies]

My point is that if someone goes away to work, that person will lose the bedroom. Moreover, if someone’s children go off to university, they will not be hanging around in the local chip shop—which is good, but obviously their parents will say, “We do not want an educated son and daughter going off and leaving us to pay for the empty bedroom. You can stay here and run the chip shop. That was good enough for us.” That is the sort of new economy that the Minister—who is now dozing off—wants, and it just does not make any sense.

As for the overall savings, the Government are making political choices. They will not save £490 million, because much of that will consist of costs for local authorities. What they are saying is “We will give the money to the voting people. We will increase their tax thresholds. Let’s face it, they are not going to work any harder. We will not harm the older people, because they vote; we will harm the poor people who do not vote. Let us hope that they do not. If they do not register to vote, we have our other plan to carve up the constituencies, so that their size relates not to the population but the number of people who are registered.”

This is a cynical attempt at political manipulation that has no regard for the economic and social impact. It is absolutely disgraceful, and it should be thrown out.

--- Later in debate ---

[Mr William Bain (Glasgow North East) (Lab)]

I was pleased to spend last week’s recess talking about this issue with my constituents, because what we decide in the House has its most crucial impact in the communities we represent. The bedroom tax has achieved in a shorter period the ignominy once reserved in Scottish society only for the hated poll tax. In my constituency, hundreds of people, from Dennistoun to Springburn, continue to sign petitions to stop the measure, which will cost people up to 14% of their weekly housing allowance.

Last week, at an event hosted by NG Homes, I met voluntary groups and housing associations from across Glasgow who warned of the effects of the plans on homelessness, rising levels of evictions and rising debt in north and east Glasgow. The Prime Minister’s ambition is being realised at last—the big society is coming together, not in his support but in complete opposition to the absurdity and unfairness of the housing benefit plans and the chaos and social harm they will cause. In my constituency, nearly 86% of the 16,580 housing benefit recipients are in properties rented from registered social landlords, and 65% are within the age range that is subject to the bedroom tax. The vast majority receive between £25 and £100 a week in local housing allowance to help with rental costs. That is in a constituency where the median wage is under £17,600 a year, and child poverty is the third highest in the UK and the worst in Scotland, at some 43%.

The three areas that will be hurt hardest in Glasgow North East, according to the Glasgow Housing Association, are Milton—with a higher than average number of lone parents, rent payments there will go up by a collective £8,000 a week—Keppochill and Possilpark, but last week I discovered people right across my constituency who will be hit by this cruel tax. Around half the recipients in my constituency are on out-of-work benefits, but three in 10 of those who are in employment earn less than the living wage. It is clear that the decline in real wages—it has accelerated under this Government—which have fallen every month the Government have been in office, has driven the greater reliance on housing benefit to maintain even these basic living standards.

[Geraint Davies]

Will my hon. Friend give way?

[Mr Bain]

Briefly.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I should have reduced the time limit but did not, on the off-chance that there would not be too many interventions. I warn Members that I will now have to reduce it, and if they are upset it is due to the number of interventions.

[Geraint Davies]

In a nutshell, the cost of reducing the tax threshold by £1,000, which gives taxpayers £6 a week, is £5 billion, 10 times what is being saved here. If someone who is very poor looses £7.50 a week through the empty bedroom tax, someone else is being given £6. Does that not illuminate the Government’s priorities: hitting the poor and letting the middle class off?

[Mr Bain]

My hon. Friend is certainly right to draw attention to the absurdity of the Chancellor’s claim that there is a zero tax band for people on low incomes, who of course pay national insurance, higher VAT under this Government and all the things described in this debate. I should also point out that rents are rising in much of Scotland—by 6.3% in Aberdeen and 5.1% in Edinburgh, for example—which is adding to the pressure this policy will cause.

The bedroom tax will hurt the country in many ways that the Government do not presently acknowledge, for example through its impact on families, the economy, employment and housing. First, these plans utterly fail the test of promoting economic growth. Indeed, by diminishing demand among people who will spend the money, the least well-off, they will have a deeply contractionary effect. Keynes’s paradox of thrift will sadly become a death knell for local shops across the country as people are forced to cut back on spending. The University of Strathclyde’s Fraser of Allander Institute estimates the cost to the Scottish economy to be more than 300 jobs, £30 million a year in lost demand and a reduction in wages in Scotland of nearly £8 million a year.

The Minister claims that people should work longer hours, but do I really have to point out to him that under-employment has soared to 3.2 million under this Government and that there is a slump in productivity because demand has been so weakened by their catastrophic fiscal policies? I also remind him that, with the deficit tracking 7% higher this year than last and our credit rating having been downgraded, these are Tory cuts that he is defending because of the Chancellor’s utter and abject failure on growth.

The Office for Budget Responsibility predicted in November 2011 that the economy would grow last year by 2.5%. It has been confirmed today that instead, it grew at less than a tenth of that rate. The impact assessment on these changes also reveals the truth: if people are able to change their behaviour, as the Minister vainly hopes they will, these plans will save little or no money for the Exchequer. His other policies to cut the benefits bill are failing, because unemployment is 340,000 higher than the OBR predicted in 2010 and living standards are falling in a low-growth economy. He can generate the savings he is seeking with this policy only if people cannot move or work longer hours and so are forced to pay the tax. He is making the poorest suffer for the Chancellor’s manifest incompetence in securing less than a tenth of the economic growth we were predicted to have over the past two and a half years.

Secondly, these proposals are a byword for absurdity. The Minister believes that people can simply uproot themselves from homes they have lived in for three decades or more, and from friends, family and jobs, to go and live in parts of the country where there are smaller houses and perhaps fewer opportunities to work. He says that alternatively, people should take in a lodger—a step that is actively discouraged in the registered social housing sector in Scotland, where stock is allocated on the basis of need. The sheer absurdity is further heightened by his refusal to admit until this afternoon that his plans will potentially remove money from up to 96,000 members of the armed forces, nearly 8,000 Army trainees, carers and foster parents in Glasgow, while nearly 1,000 prisoners on remand in Barlinnie jail in my constituency will be exempt.

Welfare Benefits Up-rating Bill

Geraint Davies Excerpts

Tuesday 8th January 2013 Commons Chamber

[Mr Ward]

Yes; as a nation, our payments on benefits are, without a doubt, far too high. However, what we face in this Bill seems to be a huge lack of confidence by the coalition in its own policies and programmes to deal with that situation.

None of us is going to support scroungers, skivers or people who are fraudulently claiming disability benefits. None of us is going to say that we should not support people into work, but we on the Government Benches say, “We are doing all of that.” We on this side of the House say that we are dealing with the situation so that we can reduce the colossal welfare bill to the nation. It shows a huge lack of confidence for us then to say that we now need to go to the least well-off in the country and say, “You’ve got to make a contribution to deficit reduction,” because if our measures work—we say they are going to work; we tell people how successful they will be—what are we left with? We are left with those who want a job and cannot get one, even when they have been through the Work programme. We are talking about those who are disabled—and who have been assessed as disabled—who are not able to work. We are talking about those in work but on low incomes. Despite the confidence in our strategy, these are the people to whom we are now saying, “We’re not really sure, because we’re going to have to come to you, for you to make a contribution as well.”

I have identified three arguments for this move. The first relates to incentives, and states that work should always pay, but I thought we were going to ensure that that happened anyway. Is that not what universal credit was supposed to be about? The second argument is that we cannot afford to do otherwise, but I did not see much cutting back on the Olympics. I have heard various suggestions, and yes, there are tough decisions to be made. It has been suggested that we limit the tax relief on pensions. We are seen as being able to afford to give tax reductions to millionaires, and of course we can afford to give rich pensioners winter fuel payments. These are examples of the decisions that need to be made, and there are many more, but we need to look at all of them before we turn to the people on the lowest incomes and those with no income who are surviving on benefits.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Does the hon. Gentleman agree that the fiscal cliff deal made last week in America, which took the most money from the top 2%, gave money to those on lower incomes and is projected to increase growth by 1%, is a much better way of squaring the circle than the measures in the autumn statement, which will take money from the bottom 30% to 50% and give it to those further up the ladder, which is reducing overall consumer demand?

[Mr Ward]

We all know that. We know about the multiplier effect on consumer demand. It is not a secret; it is well researched and we all understand it.

The third reason for the proposals that I have identified relates to fairness. A national debate about fairness is taking place at the moment. I am about to get really technical: there is a difference between somebody who is unemployed and somebody who is employed. The person who is unemployed does not have a job. The person who is employed has a job. They are not the same; we cannot compare them when we are talking about fairness and a 1% increase. I will give the House another really technical fact: those people who are on low incomes and receiving tax credits are receiving those tax credits because they are on low incomes. It is very technical, this. How on earth can we compare those on low incomes or on benefits with people who are in a job? We cannot say that it is unfair—or bizarre, according to the Prime Minister—to give someone who is in a job 1%, but then give 2% to those on benefits. We cannot compare the two. There is a difference between somebody who is on benefits and somebody who has a job. The evidence for that is clear.

Of course, people who are in employment do not like the pay freezes or the 1% increase, but is anyone seriously suggesting that they would give up their job to be unemployed? Don’t be ridiculous! Let us not forget that we are eliminating the scroungers and all the rest of it. In my experience, most people in work look at those who are unemployed and say, “Thank God it’s not me!” They do not say that it is unfair that their benefits are being increased; they say, “There but for the grace of God go I.”

I have mentioned the massive lack of confidence in our proposals, but there could be another reason for these measures, although I hope that it is not true. It relates to a sense that the public at large are in favour of these welfare reforms, egged on by opinion polls, and that some people on the Government Benches see that as an opportunity to attack the unemployed. I fear that that is being driven by a deep-rooted conviction that unemployed people are unemployed by choice. This is what worries me. I hope that the explanation is in fact the lack of confidence, but I suspect, deep down, that far too many people on this side of the House believe that unemployed people are the undeserving poor, that they need to sort themselves out, and that we cannot possibly reward them with an increase. Let us remember, too, that this is not an increase. When inflation is taken into account, the measure will simply freeze the level of benefits that we have already decided will provide people with a minimum standard of living. The measure is not fair, and I will not support it.