Under-occupancy Penalty (Wales)

Lord Murphy of Torfaen Excerpts

Tuesday 22nd January 2013 Westminster Hall

[Jessica Morden (Newport East) (Lab)]

Thank you, Mr Robertson, for the opportunity to have the debate.

Before Christmas, social tenants in my constituency were sent a letter telling them that under Government changes in April they will have to pay more rent or move on, because the Government have deemed that they are under-occupying their home. They are victims of what is now called the bedroom tax. As all hon. Members know, such letters have gone out throughout Wales and the rest of the United Kingdom, and they have caused huge fear in my constituency.

I asked for this debate because I am horrified by some of the stories that constituents are telling me about what this policy will mean to them, their family, their future and their home. For decades, many people in communities in my constituency have cared for and cherished their homes, where they have brought up their children and cared for their grandchildren. Their homes are full of memories of lost loved ones. The fear is palpable, as the reality of what these changes will mean sinks in. One woman said when I knocked her door during the week that she received the letter from Newport City Homes, “Why did I get this? I thought it was about the scroungers, not about me.”

In April, those tenants face the stark choice of paying £40 to £80 a month more for having one or more spare bedrooms, or moving to a smaller property. There is evidence that many cannot pay as the cost of living and benefits cuts hit them. In a Welsh study, one tenant said that they are already “not living, but surviving”. What is more, there is a chronic shortage of smaller houses, particularly in Wales.

[Paul Murphy (Torfaen) (Lab)]

Will my hon. Friend pay tribute, as I do, to Duncan Forbes of Bron Afon who has highlighted some of the nonsense of this tax, particularly people going into one-bedroom houses? In Blaenavon in my constituency, 85 tenants will have to go into one-bedroom houses to avoid the tax. It will take 17 years to rehouse them.

[Jessica Morden]

I thank my right hon. Friend for his intervention. He is right. Will the Minister look carefully at the report from Bron Afon in Torfaen, because it highlights specific examples of why the policy will hit Wales particularly hard?

There will be two levels of reduction. Those who are under-occupying by one bedroom will lose 14% of their housing benefit, which is equivalent to a loss of £12 a week. For those under-occupying by two or more bedrooms, there will be a 25% reduction, equivalent to a loss of £22 per week. In Wales, 46% of all housing benefit claimants of working age in the social rented sector will be hit, compared with a UK average of 31%.

The Department for Work and Pensions says in its own impact assessment that 40,000 tenants in Wales will be affected by the bedroom tax with an average loss of income of £12 per week. Like many of the Government’s benefit changes, this is hitting Wales disproportionately hard. With tax and benefit changes to be implemented by 2014-15, households in Wales can expect to lose 4.1% of their income on average or about £1,110 per year on top of rising food and heating costs.

Some 1,794 Newport City Homes tenants have received letters telling them that they will be affected, and a further 421 who rent from Monmouthshire Housing Association have received letters in communities like Caldicot, which is in my constituency. With 4,220 on the Newport common housing register and 2,536 on the Monmouthshire common housing register, it is not rocket science to realise that there is not enough social housing for people to move to. Of the Newport City Homes tenants who are affected, 359 have two bedrooms too many and 1,435 have one bedroom too many, 916 of them will be looking for one-bedroom houses or flats and 823 will be looking for two-bedroom properties.

Newport City Homes has only 1,264 one-bedroom properties in total and 2,680 two-bedroom properties. This week, just 36 properties are advertised on the Newport housing options website, so people have very few choices. Whole estates in Wales have very few one or two-bedroom houses.

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[Jessica Morden]

I agree with my hon. Friend’s important point, which we have to bear in mind. Those who have had disabled adaptations to their property would, if forced to move, need another set of disabled adaptations, and it is not clear what will happen with discretionary payments in such circumstances.

[Paul Murphy]

I am grateful to my hon. Friend for giving way for a second time. She has referred to the report by Bron Afon, which states that the total budget for discretionary housing payments in Torfaen is just under £53,000, or £6.62 per housing benefit claimant.

[Jessica Morden]

My right hon. Friend makes a telling point. When that money has gone, it has gone, and it is a small amount of money; it is a drop in the ocean compared with what is needed.

With no money to spare and no chance of social housing, tenants might look to the private rented sector. If the stated aim is to save money, the policy has no logic. In many areas of Wales, the policy encourages tenants to move to more expensive accommodation in the private rented sector, which will increase expenditure, even with a reduced local housing allowance. In Torfaen, for instance, every private rented property is more expensive than the Bron Afon rented properties. The situation is clearly ridiculous, and a cursory look on the websites for private rented accommodation in my constituency tells that tale.

Those arguments are well rehearsed, but they are becoming more pressing as the policy becomes more real for many people in Wales. I visited a constituent before Christmas who lives in a small two-bedroom house in the community in which he grew up and his family still lives. He was made redundant last April from his manufacturing job of 20 years, and he now finds himself on housing benefit. He is a proud man who has lost his job and now faces losing his immaculate home of many years. He currently pays £321 a month, and there is only one one-bedroom property in Newport on the housing options list for which he could possibly be eligible to rent this week, and that would cost him £350 a calendar month. If he is still unemployed, that increased rent would still be covered by housing benefit at a cost to the public purse of an extra £341 a year.

One Bron Afon tenant is a former serviceman with post-traumatic stress disorder, and his benefit has been cut because he is deemed fit to work, even though he has serious depression. His daughter hopes to go to university, but her decision will be heavily influenced by what happens to her father’s benefit. The spare rooms of those in our services are not out of the policy’s scope, which will have a huge impact in south Wales.

I have met a divorced father who has his kids to stay at the weekend. One of the hardest-hit groups will be parents who live in two-bedroom houses and who have access to their children. If they are under 35, they will be expected to share accommodation, which may be the only housing left to them, with all the child protection issues that raises. That is a whole other subject.

In Wales, registered social landlords expect a large loss of revenue, and those running large arrears will be under pressure to make people homeless. That in turn will put pressure on local authorities to house people presenting themselves as homeless. The Welsh Assembly has made money available under the homelessness grant programme to assist financial inclusion work and projects with Shelter, but that will not be able to mitigate the very real impact of the reforms in Wales.

There are so many unintended consequences for individuals such as foster carers, people with disabled adaptations and parents of disabled children. I am sorry that there is not time to do them justice.

A constituent from Alway specifically asked me to say that he considers the Prime Minister to be Dick Turpin without the mask. Many in the Government think that paying an extra £20 a week towards rent will be the difference between going out for dinner and staying at home, but for many on low incomes, it will be a case of heating or eating. People will have to pay up when they cannot afford it and then get into debt or move out and away from their community. This is a policy that in the long run cannot cost less in Wales and will do nothing to help local housing pressures, as the pressure is on the smaller properties already.

Regardless of the rhetoric, the fact is that the people worst affected are parents who share access to their children; grandparents who provide essential child care for their grandchildren, allowing parents to go to work; and even the brave men and women serving in our armed forces. The Government simply do not understand how this policy will affect people, and what is worse, they do not seem to care. We used to talk about the poverty trap; we are now talking about the property trap.

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[Jessica Morden]

Will the Minister accept that it is possible to be creative without being cruel? It would be possible to work far more closely with housing associations in relation to asking them to do more about under-occupancy, but the broad-brush approach that will be taken in April will hurt many people.

[Paul Murphy]

It is about saving money.

[Steve Webb]

The right hon. Gentleman says that it is about saving money. I do not apologise for the fact that we have had to save money, because otherwise we would just pile up debts for our children, and that is not progressive, wherever someone is on the political spectrum.

On the hon. Lady’s specific point, yes of course, in theory, successive Governments have tried to work with housing associations and social landlords, and it has not worked, because we have the best part of 1 million empty bedrooms paid for by housing benefit at the same time as we have thousands of people in overcrowded accommodation. The challenge is therefore to use the need to save money to create fairness between private and social tenants and to create fairness between people who are living in overcrowded accommodation and those who have spare bedrooms.