The Budget tackled the ballooning cost of housing benefit. In real terms, the cost of working-age housing benefit has increased from £10.6 billion to £15.4 billion in 2010-11. If the system was left unreformed, it is projected that the housing benefit bill would reach £21 billion in 2014-15. It is out of control and what is more, housing benefit is often unfair for working families. Today, a tenant in a five-bedroom house in an expensive area such as Westminster could feasibly get more than £100,000 a year. Although that example applies to a small number of people, some 750,000 get more than £10,000 a year. Those cases are still in the minority, but they happen far too often. It is unacceptable and unaffordable that people on benefits are living in homes that our hard-working families cannot afford, so we have capped local housing allowance levels at the rate for four-bedroom properties.
Sheila Gilmore (Edinburgh East) (Lab): Is the right hon. Gentleman aware that the biggest reason behind the increase in housing benefit is the lack of affordable rented housing in this country? Most of my constituents would rather live in an affordable rented house than a private rented home.
Mr Duncan Smith: Oh dear me; there is no stopping Labour Members sometimes. I must say to the hon. Lady: whose fault is that? The Labour Government slashed the building programme, so Labour Members have only themselves to blame. Everyone warned them about the problem for years. As far as we possibly can, we need to ensure that the houses that people occupy are of the size that they need. We should not have elderly people trapped in houses that are far too large for them and that they cannot look after. Only the most expensive areas will be affected by the cap.
We have also introduced size restrictions to the social rented sector to make better use of existing housing stock, changed the percentile of market rents for local housing allowance rates to 30% to keep rents under control, time-limited the housing benefit award for jobseekers to reinforce back-to-work incentives and changed the current system of mortgage interest support, in which 92% of customers get more help than they need.
Of course I am listening to the concerns about the potential impact of housing benefit reform, and we will keep it under review. That is why we are tripling the discretionary housing payment to £60 million and we will provide for an additional bedroom for non-resident carers, who may need to stay overnight-something, by the way, that the other Government could have done and never did.
Mary Creagh (Wakefield) (Lab): I can tell the right hon. Gentleman that there are no fat ducks in Wakefield. What we do have is a large number of poor families who will be hit by his cut to the Sure Start grant. I can tell him that if someone has a child who is two, they cannot expect a baby to travel in the same pushchair. I can tell him that if someone has a child of six of seven, they have already given away the pushchair by the time the next baby comes along, because that is how families organise themselves. He argues that people should reuse and recycle goods for babies, but people cannot fit two babies in the same cot-is that what he is now suggesting families in this country should do?
Mr Duncan Smith: I must say to the hon. Lady that that is a pretty poor intervention. The grant of over £500 for every child was far more than most poor, working families would ever achieve from any other source. As I told Labour Members earlier, we have to make tough choices. This is an area where people can share. Having had children myself, I know, as will many others in the House, that people share clothing and pushchairs. They do what they can to get by. There was a ludicrous idea that every child required the same amount of money, and I am afraid that in these difficult times we have had to take a difficult decision. I say to the hon. Lady that we are not going down the road she suggests.
Mr Clive Betts (Sheffield South East) (Lab): Does the right hon. Gentleman accept that the Institute for Fiscal Studies, in its report on the Budget, said that the new measures were largely regressive, and that was before housing benefit cuts were taken into account? A survey at the weekend by Tim Horton and Howard Reed said that if the housing benefit cuts and spending cuts were taken into account, the poorest 10% were likely to face a six times greater reduction in their spending power than the richest 10%. Does that make it a fair Budget, in the right hon. Gentleman's opinion?
Mr Duncan Smith: The IFS talked about it being debatable whether the Budget was regressive or progressive. I say honestly to Labour Members that if they do not like these measures and if they really want to be taken seriously, they need to tell me what they would have done. Had they won the election-heaven help us-they would have been on this side of the House justifying reductions in spending, not playing games on the other side. If the hon. Gentleman wants to say that this is unfair, he should tell us what would have been a fair way of getting that £45 billion reduction.
I am committed to ensuring that disabled people and carers receive the support that they deserve. I have therefore asked the Under-Secretary of State for Work and Pensions, my hon. Friend the Member for Basingstoke (Maria Miller), who has responsibility for disabled people, to undertake a strategic review, taking a principled look at the support provided for disabled people across the piece, to ensure that the effect of all the measures is appropriate and that they work.
Over the last decade, spending on disability living allowance-this is the issue-has spiralled out of control, and the system has been vulnerable to error, abuse and, in some cases, outright fraud. In just eight years the numbers claiming DLA have risen by around 700,000.
In 2010-11, spending is on track to reach just over £12.1 billion, twice the level of the 1995-96 spending in real terms. That is a significant sum, and we need to make sure, for the taxpayer, that the money is paid to those who desperately need it. That is why we need a proper medical assessment. It is not about cutting support for people who live with serious disability or health problems; it is simply about making sure that we target support at those who need it, and the system remains fair and affordable.
Mr Russell Brown (Dumfries and Galloway) (Lab): I welcome the right hon. Gentleman to his new post. He will recollect that towards the end of the last Parliament the entire House agreed to an increase in disability living allowance for blind people. Will he give the House a guarantee that he will not go back on that decision?
Chris Bryant: I am very grateful to the Secretary of State. My constituency has one of the highest levels of those on sickness benefits of various kinds. There are historical reasons for that. He asks what I would like to see. I would like to see fewer of my constituents on unemployment benefits and fewer people on sickness benefits because they were in jobs. The difficulty is how one achieves that without cruelty to those who desperately need support and want to be able to go to work. The vast majority of my constituents are not looking for handouts; they want to be able to get into work.
The right hon. Gentleman talks about people moving house. My concern is that that does not apply in constituencies such as Rhondda because we have a very high level of home ownership. For those people, unless he really is talking about just upping sticks and moving to another part of the country, what he is saying poses the very real danger of increased poverty. How will he make sure that those people have a chance in future?
Mr Duncan Smith: That is a very reasonable question. As I said earlier, we did not want to be here in the first place. We have inherited a major deficit, and we have to eradicate it. Whoever was to be in government-the hon. Gentleman should know this, having been a Minister-was going to face tough choices. There is no easy choice. Of course I recognise that he has a problem. We have said that we will increase the discretionary allowance. We also want to make sure that more money is spent on areas such as his that can, in turn, develop more jobs. That is a priority, and we will be making announcements about that.
These decisions are not about taking money away from people who need it; they are about making sure that those who need money get the money that they need. Nobody, after these checks, will have money taken away from them who can genuinely demonstrate
that they should be receiving DLA. The key point is to make sure that those who do not need it are seeking work.
I started with a clear argument that the first coalition Government faced some unavoidable choices. I know that the Opposition, having been in government a couple of months ago- [Interruption.] The Opposition say that the choices are not unavoidable, but I would love to know what they would reduce if they were in government. What would be their choices? We have heard nothing about that except their talk about the £45 billion-not a single word about a penny piece being cut from any budget. We have to make spending cuts to repair a record deficit, reform the tax and welfare systems while protecting the vulnerable, and set the foundations for long-term, sustainable recovery.
Mr Lammy: The right hon. Gentleman has confirmed that he believes that there will be an exodus from central to outer London, and he has said that there is housing to accommodate those people. What is his assessment of that housing in Chingford? Can he confirm that he will be doing a race impact assessment?
We believe that there is enough housing in London. Of course, I did not say that this was going to be easy. The point is that far too many people in houses in central London are paid significant sums-over £100,000 in some cases. That is unsustainable. As much as I like the right hon. Gentleman-he is a fellow Tottenham supporter-I have to say to him that he knows as well as I do that these are tough choices, but they are ones that we believe that we can manage. We have tripled the discretionary fund to allow for difficult cases, and I suspect that a significant amount of that will be used in London because the nature of London means that there will be issues. We will get through this, and I guarantee that we will keep the situation under review. My offer to the right hon. Gentleman still stands.
"laid the foundations for a more prosperous future. The richest paying the most and the vulnerable protected: that is our approach."-[ Official Report, 22 June 2010; Vol. 512, c. 180.]
Mr Duncan Smith:
My hon. Friend has to recognise that one needs to see the Budget in the round, over the lifetime of this Parliament and in terms of reform. What I want to do is introduce reforms that focus benefit money-the money that we spend-hugely on the poorest in society. That must be our priority. Right
now, the benefit system that we inherited is out of kilter, and has sucked in too many people on higher incomes, and has left too many people on low incomes desperately looking for work, but unable to find it. The answer to my hon. Friend's question is that we are absolutely-and I am, too-determined to reform the system, so that the poorest benefit the most, and we make sure that they receive assistance to change their lives and become more profitable in all that they do.
We have to seize the long-term prospectus for reform, and I shall introduce radical, long overdue changes to the welfare system, reforming the working-age benefit and tax credit system with measures consistent with our core principles: protecting the most vulnerable; improving incentives to work and providing the best route out of poverty; and tackling the pathways into poverty, welfare dependency, family breakdown and debt. That is crucial if we are to tackle income inequality, which is at its highest since records began in this country.
As my hon. Friend knows, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), fully supports all of this, and has made an announcement. [ Interruption. ] We are a coalition, and we are together. He has announced some radical proposals on pensions, and I am enormously proud to be the first Secretary of State for Work and Pensions to say that we have relinked pensions and earnings. Moreover, even in these difficult times, we will triple-lock that pension, so that it will rise in line with earnings or prices, whichever is highest, or by 2.5%. [ Interruption. ] I heard the hon. Member for Wallasey (Ms Eagle) chuntering about the consumer prices index, but earnings will rise in due course well above that, so she does not know what she is talking about. [ Interruption. ] Okay: she had 13 years to do that, but she did not do it. She should go and look pensioners in the eye, and tell them why the previous Government did not do so, when they had the opportunity.
The coalition is proud to make sure that we will reform the system that we have inherited. We will reduce the deficit, and we will improve the lot of the poorest in society. We will look back on this and say, "What a shameful 13 years the other side had."
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab): The Secretary of State told us in May in his first speech that he would work to improve the quality of life of the worst-off in Britain. He said that
"we are here to help the poorest and most vulnerable in our society."
He has just spent 40 minutes defending a Budget that kicks the poorest and the most vulnerable in the teeth.
How does that sit on his conscience? Was it his idea, or was it the Treasury's, to tell a woman in her fifties, who has given up work to look after her elderly parents that, in fact, what they wanted to do was cut housing benefit and make her pay VAT-hundreds of pounds a year-and that even her carer's allowance over the next five years would be cut in value by about £90 a year? Was it his idea, or was it the Treasury's, to tell someone who is severely disabled-
Yvette Cooper: Perhaps the right hon. Gentleman can answer this point as well if he is going to respond. Was it his idea, or was it the Treasury's, to tell someone who is severely disabled and really cannot work, "We're going to cut the value of support over the next five years by £300 a year"? If he could answer those points, that would be very welcome.
Mr Duncan Smith: I should be grateful if the right hon. Lady answered the original question. She was in government not two months ago. [ Interruption. ] No-the Opposition have to recognise that they have only just left government, so we have a legitimate right to ask the question. They left the deficit behind, which will lead to real problems for Britain-we have had to resolve it. If she does not like what we have done, what would she have done instead? Will she answer that question?
Yvette Cooper: The right hon. Gentleman has not answered the question. He has not explained why he claims to help the poorest and most vulnerable, yet is cutting the benefits of those who are poorest and most vulnerable in society. Government Members like to claim that this is inevitable. This is an ideological choice that they are making. They have chosen to cut an extra £40 billion from the economy. They have chosen to cut an extra £11 billion from the value of benefits and tax credits. They have chosen to cut an extra £17 billion a year from Government Departments, and they have chosen to increase VAT. They have chosen to cut the deficit at a pace that is not only unfair and destructive to our public services but damaging to our economy.
Elizabeth Truss (South West Norfolk) (Con): Will the right hon. Lady tell us exactly what the maximum level of housing benefit should be? Does she think it right that we are paying people more than £100,000 a year?
Yvette Cooper: No, I do not, which is why we introduced cuts in support for the highest rents as a result of the previous Budget, and set out a series of further reforms. I want to return to the point about housing benefit in a moment, because it is important.
Clive Efford (Eltham) (Lab): On page 33 of the Red Book, paragraph 1.102 makes it quite clear that the Government intend to reduce housing benefit to people of working age if they under-occupy council housing. In his response to an intervention, the Secretary of State referred to pensioners under-occupying social housing. Does that not give the lie to what is in the Red Book, and show the real intention of housing benefit changes, which are an attack on pensioners?