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"You cannot make a choice in that way."--[ Official Report, Savings Accounts and Health in Pregnancy Grant Public Bill Committee, 4 November 2010; c. 95, Q244.]
In essence, that is the Labour party's argument. The Opposition are basically saying, "We don't make choices. There's no need to make choices. We can have this and this and this, and we can keep on going until the interest rates go sky high, we lose lots more jobs and we have a sovereign debt crisis."
On Report, the hon. Member for Edinburgh East (Sheila Gilmore) talked about paying down the deficit. We do not pay down a deficit; we pay down debt. The deficit is the amount of money added each year to our debt, and the danger we face is that if we are not careful the interest rates on the debt will rise as well as the debt itself, and that would mean more cuts. If Opposition Members are going to argue this point of view, therefore, they have to explain where the cuts would come from, but they have not answered that. Are they going to close down hospitals to pay for these things? Are they going to sack more police officers? We face a very difficult time, but if the Opposition say they would keep these three particular projects, they have to explain where they would get the money from to pay for them. Would they put VAT up again?
Pete Wishart: If I had closed my eyes, I would have thought this was the hardest right-wing Thatcherite speech I had ever heard, yet it is being made by a Liberal, for goodness' sake. Why are the Government taking this out on women and children? If cuts have to be made, why is it women and children who are in the firing line?
John Hemming: What we are talking about is putting some money in a fund and leaving it there for 18 years. That is not going to affect any woman or child for 18 years. What we should be doing is looking after people now. Our priorities have to be the vulnerable people now. We have to give priority to protecting the poorer, the less well off, the vulnerable and those with learning difficulties now, rather than putting some money away for 18 years.
Well- [Interruption.] Sorry? [Interruption.] Yes, that is a good one. The tax threshold is a good example. One area we are focusing on is low-paid people in work, so there is the first stage of gradually increasing the tax thresholds up to £10,000 a
year, and the universal credit itself should be particularly helpful to those on benefits and low pay, such as many people who come to my advice bureau. On Saturday, I did some calculations with somebody who had worked out that when we took into account all the rules the Labour party had produced over the years, it was not worth his while to work. Interestingly, in that instance that was because of a Child Support Agency deduction. We need to focus on the low-paid and make sure that people get into work and through that route get themselves out of poverty. That is a good example of our putting money into the hands of low-paid families.
There is no evidence that the child trust fund produced extra saving, there is no evidence that the saving gateway produced extra savings-and there is only some evidence that, perhaps, it reduced spending on food outside the home-and there is no evidence that the health in pregnancy grant did any good for health in pregnancy. On that basis, if we are not going to cut these measures, what are we going to cut?
Sheila Gilmore: There are, indeed, choices to be made: there is a choice about the kind of society we want to live in, and there is a choice about how we resolve economic problems. Members on the coalition Benches want the public to believe that there is only one show in town, which is that we have the worst deficit in peacetime and that we have a situation that was entirely caused by the last Government spending too much over too many years. That is the only argument they want people to believe, but let us just unwind a couple of years.-
I recall that three years ago, at the beginning of the recession, people were predicting how high unemployment would rise, how difficult things would get and how high our deficit might be. Unemployment did not rise nearly as high as predicted under the Labour Government, and I will tell hon. Members why: because we were putting in money as part of an economic stimulus. Yes, we borrowed to do that but we did so because it was the right thing to do. We were told that it was the right thing to do by the junior partner in this coalition throughout that period. I remember those debates before the election-
Sheila Gilmore: I was thinking about the public debates on television involving the Chancellor and the would-be Chancellors. I recall what the Liberal Democrat spokesman on finance said, and he put forward a completely different perspective from the current Chancellor. There was no agreement.
Members on the Government Benches may disagree with what I am saying, and I am happy for them to do so because that is legitimate in politics. We have a different view of how to do things, but that does not mean that our view is so unreasonable that we are not
even allowed to put it. We are hearing that we are not allowed to argue any of these points and that we are not supposed to say that we would make different choices. The Minister gave this one away when he said that these measures would not really harm people; he said that the saving gateway had not even started and so nobody was being harmed, which is why it is an easy cut.
Paul Maynard: How does the hon. Lady respond to the point that there were no willing providers of the saving gateway? No matter how successful her party's pilots were, no building societies were willing to make that provision. It is all very well her saying all this, but the gateway was not going to take place in reality; it was just going to take place in her own private make-believe world.
Sheila Gilmore: If the hon. Gentleman looks at all the evidence and the research, he will find that it is clear that this was going to take place -[Interruption.] It was going to take place because there were providers who were going to do it -[Interruption.] I do not know why he is waving his hands in the air-we could do that too. There were credit unions that wanted to get involved, as did two banks. The complaint made in Committee was that because only two banks wanted to get involved, there might not be enough access points. I have suggested other access points and I described the debate that took place when the housing association movement, with which I was involved, wanted to be one of the ones that would help people to make payments into a saving gateway scheme. That argument does not hold up.
We have heard a number of distortions of the evidence. We were told that the NCT thought that the money should go on women buying food, rather than saving, but we should recall that Belinda Phipps, the NCT's chief executive, has written a foreword to the book that I mentioned earlier entitled "Asset Building for Children-Creating a new civic savings platform for young people". It was written by two people, one of whom is Phillip Blond, who believes very strongly in the child trust fund; he believes that saving is very important and he suggests that we should have stuck with this arrangement. He does not say that it was without its faults-this is not a case of saying that it did not have faults-but he devotes a paragraph to saying that although it could be improved, that does not mean we should throw it out completely.
Some of the debate, particularly in Committee, was interesting and covered a lot of important material. If we want to do the best by people, we would not simply reach a point where, without looking at the wider context, we say, "Right. We have to make some savings now. Let's just chop this, this and this." It may be that we could have improved some of these schemes and they could have been differently focused. However, that is not the debate before us, but the stuff that has been thrown up in the course of it; the debate before us deals with the fact that either we have these schemes or we do not.
Labour Members believe that we could run our economy differently and that we do not need to cut so far and so fast. On that basis, we would be able to decide which things we wish to keep in place and which things we might want to save. I could talk about all sorts of savings that I might want to make, but I would
also want to talk about the balance between savings and taxation. There are legitimate debates to be had about that.
We do not need to accept proposals that harm some of the most vulnerable in our society and the long-term view. It is astonishing that the Conservatives, in particular, whom I always understood to believe in saving, should not want to go ahead with the saving gateway. In 2003, it seems, the present Chancellor said:
"We think that having savings...gives people a stake in society, gives them independence, encourages self-reliance and bolsters the freedom of the individual against the overbearing state."-[ Official Report, 15 December 2003; Vol. 415, c. 1345.]
Sarah Newton: Thank you, Mr Deputy Speaker, for calling me to speak in the last moments of the debate. It was an enormous privilege to serve on the Public Bill Committee and to listen to my colleagues on the Opposition and Government Benches, as well as to the many organisations that gave evidence.
Listening for all that time brought home to me why I am so pleased to be sitting on the Government Benches and not on the other side. I believe absolutely that Government Members will form the most reforming Government that I have seen in my lifetime-a Government who are prepared to make the tough decisions that will provide the solutions to the problems, as the Bill seeks to do.
There is no doubt in my mind about the good intentions of the Opposition when they introduced these three measures some years ago. There is also no doubt in my mind from reading Hansard from that time and from re-examining the evidence that we have been given over the course of the past few weeks that there is no evidence base to show that the measures will tackle the vital issues of alleviating poverty and helping the most disadvantaged people in our society.
Dr Poulter: On that note, does my hon. Friend agree that it is a great pity that it has taken the advent of the deficit for us to examine properly some of the previous Government's policies? We all want to look after the most vulnerable, but the only way to do that is to target our resources properly. At the moment, in difficult economic times, there are fewer resources than there once were, and the only way to do it is to base that targeting on the evidence and to ensure that the resources go to the most vulnerable. That is what the Government are about. We are getting rid of universal policies that do not work.
I am delighted to agree with my hon. Friend. It is essential that we use the evidence base, and I find it frustrating that the evidence was available when the legislation was introduced a couple of years ago. Let us consider the debate on maternal health-I know that my hon. Friend has great expertise in this area. It was very difficult for my colleagues who were in the House at the time to get evidence on maternal health from the then Government, but it was demonstrated that the data set that could reasonably be used to measure the impacts of any additional nutrition on maternal health did not exist. When hon. Members are pouring out their crocodile
tears, as we have seen for weeks, saying how poor the affected people will be and how we must take more time and evaluate these measures, they know full well that the data set does not exist to measure the impacts.
We should listen to my hon. Friends, and to midwives and clinicians up and down the country as they give their practical experience of working with women of child-bearing age to improve maternal health. We have heard about policies and projects that deliver. For example, we know that not enough women understand how to cook nutritious meals on a low income. Much more needs to be done about cooking in schools and in the community so that people on low incomes can cook nutritious food, and plenty of evidence supports the idea that that is an effective thing to do.
As my hon. Friend said earlier, we know that the single most important thing that we can give to a mum in her early stages of pregnancy is folic acid. All the support that the Government are putting in place through their reforms to the NHS will target help at women of child-bearing age and at those who are the most vulnerable in our society and who need such effective services from the NHS.
This Government are all about giving people a hand up, not a handout. Week after week we sit here and Opposition Members' answer to every problem is to throw some money at it. We in the Government will ensure that hard-earned taxpayers' money is spent where the evidence shows it will be most effective.
Ms Margaret Ritchie (South Down) (SDLP): Representing, as I do, a constituency in Northern Ireland where there is considerable dependency on benefit and high levels of deprivation in urban areas, I am particularly opposed, as are my colleagues in the Social Democratic and Labour party, to the abolition of the child trust fund, the saving gateway account and the health in pregnancy grant. We are therefore opposed to the Bill. The current Government seem to think, as the Minister has shown, that the child trust fund, the saving gateway account and the health in pregnancy grant would contribute to deepening the deficit and are therefore unaffordable. It is extremely unfair that the disadvantaged and vulnerable should be penalised when efforts should be made to help to support them, and I find it shameful and unacceptable.
As a former Minister in Northern Ireland, I, like my right hon. Friend the Member for Delyn (Mr Hanson), have been responsible for the Department for Social Development and, therefore, for social security benefits, community development and housing. I note, with some alarm, that Ministers in the Northern Ireland Executive have not been consulted or asked for their opinion of the Bill's content or its possible impact on the most disadvantaged and their communities. It is worth noting that 36 neighbourhood renewal areas in Northern Ireland are defined statistically by the Noble statistics on deprivation as having acute levels of poverty.
The withdrawal of these funds, combined with the coming changes to the benefit system, will simply deepen poverty levels and plunge people into further depths of despair. The measures might push people who are already suffering undue financial burdens into the arms of loan sharks and, in certain parts of Northern Ireland, they
could enable those with paramilitary control to have a tighter grip on people. But no cognisance has been taken of any of that and there has been no consultation. The Government should step back from the brink and avoid implementing the measures. They should think of Northern Ireland as a place that is coming out of the legacy of conflict. We are trying to mitigate the influence of poverty and conflict and we are trying to underpin devolutionary arrangements. I ask the Government to please abandon the Bill tonight; we will be voting against it.
Stephen Williams: I shall try to be brief so that the hon. Member for Stretford and Urmston (Kate Green) can get in. The right hon. Member for Delyn (Mr Hanson), who leads for the Labour party, said that there had been more than 20 Divisions during deliberations on the Bill, but I think that only two principles have been at stake. The first is deficit reduction, and that has been dealt with comprehensively by my hon. Friend the Member for Birmingham, Yardley (John Hemming) and the Minister. The second is a matter of dogma, to use the right hon. Gentleman's word, and that is what I want to talk about.
What is the role of the state in ensuring that people can make a journey out of the poverty into which they were born into more successful adult lives? The Opposition say that it is to give out dollops of free money, which will somehow transform people's life circumstances even if that free money will not be available until they are 18, which might be a decade away for some. It has been the contention of my party since the run-up to the election, and it is now the contention of the coalition Government, that the role of the state is to enable people, for themselves, to achieve while they are at school and then have successful careers in their adult lives, thereby generating surplus funds. That will contribute to the culture of saving far more effectively than any Government incentive. The biggest barrier to someone saving is having an income that enables them to save. The biggest barrier to someone having an income that enables them to save is lack of educational achievement and inability to find a job that transforms their long-term work prospects.
The comprehensive spending review is a package of measures, the main concentration of which is the reduction of expenditure over four years, but that is a net reduction and there are increases within it as well. One of those increases is one of the four main pledges that my party made during the election: the funding of the pupil premium. It is to be funded, as we laid out in the run-up to the election, specifically by the abolition of the child trust fund, which we opposed when the previous Government introduced it and opposed during the general election. That pledge has been carried forward into the coalition agreement.
Anas Sarwar (Glasgow Central) (Lab): It is amazing to listen to the hon. Gentleman: the people of Bristol West voted for a Liberal and ended up with a Tory. Does he not recognise that there is no extra money in the pupil premium, that the Budget was about choices and that the choice that the Liberal Democrats and the Conservatives made is to hammer families, children and parents right across the country?
Stephen Williams: I thank the hon. Gentleman for his intervention, but let me tell him that the people of Bristol West voted for my No. 1 pledge, which I talked about continuously during the general election and which is something I have stood for all my political life: rescuing people from poverty, particularly children from poorer backgrounds. The introduction of the pupil premium will make a significant long-term difference to the life chances of young people in our country. It will be far more effective and make a far greater difference than telling everyone, whatever their circumstances, that when they are 18 they will get some money to spend on their birthday party or some other initiative.
The dogmatic difference between the two sides is that we believe that enabling people to make choices about their lives is far more important than the state saying, "Here is some money to spend at some point in the future."
Kate Green: In the short time remaining I will address one or two of the points that were raised in the last part of the debate. Is it right to give people cash? Absolutely. There is much evidence of the fundamental difference that an adequate family income makes to a range of good outcomes. Do people squander that cash? Absolutely not. There is a wealth of evidence to show that when low-income families, particularly mothers, are given more money, they spend it on their families and they spend it on their kids. Is it right that we cannot afford that? Only if we look narrowly at the short term. Government Members have rightly challenged us on the long-term savings to be made by addressing inequalities, but savings achieved tomorrow by investing in families today must be taken account of, and that is something to which Government Members have given no thought.
The child trust fund, in offering the poorest young people the opportunity to start their adult lives with an asset behind them, makes a significant difference to those young people, and I am distressed that that is to be taken from them as a result of the Bill. We have offered the Government so many ways in these difficult circumstances to manage those policies through. We have offered them the opportunity to set a target for a time or to cease paying into those funds for a time. We have pleaded with the Government not to scrap them entirely, not least because they have nothing better to put in their place.
The Government are taking £18 billion out of the incomes of low-income households and half a million jobs out of the public sector, many of them for the lowest-paid workers, and then they have the temerity to say that, in addition, they will remove the £190 health in pregnancy grant because, they claim, there are other things to support pregnant women. That is indecent and ungenerous, and I am distressed that so many Government Members consider it acceptable, necessary or even desirable. I very much hope that when the Bill moves to another place, there will be an opportunity to amend the clauses in a way that we have regrettably not been able to do. I regret that the Bill is going forward in its current form, despite the best efforts of my right hon. and hon. Friends.
That Mr Jim Cunningham be discharged from the Committee on Standards and Privileges and Tom Blenkinsop be added.- (Sir George Young.)
That Mr Tom Harris and Mrs Siân C. James be discharged from the Administration Committee and Mr John Spellar and Mr Dave Watts be added.- (Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)
That Nia Griffith be discharged from the Welsh Affairs Committee and Mrs Siân C. James be added.- (Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)
That this House, at its rising on Tuesday 21 December 2010, do adjourn till Monday 10 January 2011; at its rising on Thursday 17 February 2011, do adjourn till Monday 28 February 2011; at its rising on Tuesday 5 April 2011, do adjourn till Tuesday 26 April 2011; and at its rising on Thursday 28 April 2011, do adjourn till Tuesday 3 May 2011.- (Sir George Young.)
Lyn Brown (West Ham) (Lab): I am grateful to have secured this debate, which seems particularly timely given today's announcement by the Minister for Housing and Local Government. Time and again, we have been told that the aim of the Government's welfare reform package, including the reform of housing benefit, is to make work pay. Today, we have found out that if people living in social housing get a new job, or a promotion or pay rise, they may lose their home. So much for making work pay. However, that is a debate for another day.
I have a strong feeling of déjà vu about this debate. Housing benefit, and the difficulties that it poses to my constituents, has been a theme to which I have returned over past years, campaigning with a number of colleagues on the Labour Benches to identify an approach that makes work pay, and, by doing so, protects the public purse. I hope that despite the fact that the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), and I do not sit on the same side of the House, we too might work together to find some common ground and work towards common aims.
For the record, I do understand why housing benefit is seen as such a prize when the Government want public spending reduced. If I have my maths about right, housing benefit, combined with council tax benefit, is almost equal to all the other means-tested benefits added together. There are some rather easy, even cheap, political points to be scored by citing examples of abnormally high housing benefit for highly untypical large houses in high-rent areas. However, I do not believe that the changes proposed by the Government will solve the real difficulties faced by many of my constituents. They will, I believe, compound social and housing problems and become a greater cost to the taxpayer. Incidentally, a point worth noting and often forgotten is that many of those worst affected by the changes will be taxpayers too.
I represent a London borough-Newham-which has the fourth highest level of child poverty and the sixth highest level of deprivation in the country. The gross earnings figure for the bottom quarter of employees in Newham last year was 23% lower than the figure for London, and the average wage for those living in the borough is just £455 per week. As I am sure the Minister will acknowledge, that does not go far in an area where the costs of day-to-day essentials, including child care and housing, are so very high. The average house price in Newham is £221,801, which is 9.4 times the average income.
The implementation of the Government's proposals will result in many private renters having their housing benefit, and therefore their income, driven down by a harsh reduction in local housing allowance rates. It is not as though private tenants claiming housing benefit have had it easy up to now. Even at the current rates, nearly half of local housing allowance claimants in Newham currently face shortfalls of almost £100 a month in meeting their rent obligations. Estimates by the London borough of Newham suggest that, as a
result of the change in local housing allowance alone, more than 6,300 people in Newham-three quarters of the LHA claimants in the borough-will face shortfalls between the LHA that they receive and the rent they have to pay.
Some 40% of local housing allowance claimants work, and Newham council's housing benefit team tells me that their average net annual earnings are just over £8,000 a year. I am sure the Minister will acknowledge that that is not a fortune, and makes it genuinely difficult to make ends meet in an expensive capital city. The cuts will push many already struggling families to breaking point.
Community Links is a fabulous local charity that, among its many activities, provides debt and benefit advice. As I am sure the Minister will appreciate, it is particularly concerned, given last week's announcement on legal aid, that it will not be able to provide advice services for some of the most vulnerable in our community, and I expect that that will be the subject of much further, more anxious debate in this Chamber. In addition, Community Links reports that the numbers seeking debt advice have doubled in the past two years.
"For those households already struggling to balance very tight budgets, a reduction in LHA will only push more of them over the edge, triggering a spiral of debt, eviction and homelessness."
Things can only get worse, as the LHA allowance will effectively be cut year by year for ever. I must admit that even the ingrained cynic in me was a little staggered to learn that the measure of inflation to be used in calculating increases in LHA is the one that deliberately excludes housing costs. Over the past decade alone, it has risen at a third of the rate of private sector rents. How cynical is that?
Citizens Advice believes that many will face eviction in a matter of weeks after the cuts are imposed. The non-regional, one-size-fits-all LHA cap will make it almost impossible for low-income households to rent in the private sector in inner London. That will have an impact on outer London areas such as my own. In east London, low-income households will be priced out of areas such as Hackney and Tower Hamlets, forcing people to look for accommodation where rents are lower. Rents in Newham are lower than in neighbouring Whitechapel, in Tower Hamlets, and far lower than in Islington and Westminster. According to information sourced from the Greater London authority, the cost of a two-bedroom property in Whitechapel ranges from £271 to £369 per week. In Stratford, which is just a few short miles away, it ranges from £204 to £250.
I believe we will see evictees from Tower Hamlets crossing the border to stay with families in Newham and declaring themselves homeless once there. The impact on homelessness rates could be catastrophic. The Minister will be aware that Newham is already home to high proportions and concentrations of low-income households. The private rented sector is large and expanding. In my borough, 30,000-plus people are on the council waiting list. Newham already has more people on waiting lists for social housing and living in temporary accommodation than any other London borough. As well as housing, other services will be badly hit as a consequence of the
cap in other areas. Newham will be left dealing with more pressure on school places, doctors' surgeries, jobcentres and social services. Our schools are already over-subscribed.
Those problems will emerge as the council and other providers are forced to retract services due to the swingeing cuts in their budgets, and-I assure the Minister that this is not rhetoric-the cuts to Newham council's budget are, by any definition, swingeing. Just to heap coals on the heads of our people, it is also clear that the employed residents of Newham are very reliant on public sector jobs; indeed, they are in the highest category in that respect according to the latest survey. That is what is called a double whammy.
I want to touch on the suggestion that the changes will give us an opportunity to renegotiate rents and place more power in the hands of the citizen. Westminster council's cabinet member for housing writes of the need to
"support the reduction of the housing benefit bill...which was distorting private sector rents."
"Once the lower rate is in place, we believe rents will fall, as landlords will not be able to charge such high sums."
I gently suggest, first, that the distortion of private sector rents was brought about by the deregulation of rents. I would also suggest that Councillor Roe is sadly over-optimistic about the direction of private sector rents, certainly in London. A survey of London landlords finds that when the shortfall in rent rises to more than £20 a week, more than 90% of landlords renting properties to LHA recipients in London would look to evict tenants who fall into arrears or not to renew the tenancy at the end of the rental period. Controls to limit evictions for families with manageable arrears are completely absent from the system. Using Department for Work and Pensions figures and results from the survey, it can be estimated that 82,000 households across London will be at risk of losing their home as a result of the changes.
"We appreciate that outer London boroughs could be faced with an increased number of new Housing Benefit customers needing access to additional services such as schools and health care. We will look at the wider impacts on local authority housing departments, and other local services particularly with regard to social mobility, homelessness and overcrowding...We will ensure that the full range of options for customers facing a shortfall in their rent, from renegotiating their rent levels through to applying to their local authority for assistance in obtaining alternative accommodation, is publicised, and that people are encouraged to consider those options in good time".
Stephen Pound (Ealing North) (Lab): I am reluctant to interrupt my hon. Friend because she is making an extremely powerful case, but is she as nauseated as I am by the use of the word "customer" in that context? A "customer" is a person who makes a decision on alternatives in a market economy, so are recipients of housing benefit-those human beings-to be denigrated as "customers"?
I am happy to agree with my hon. Friend. A customer has choice, but I am sad to say that the people of Newham will have very little choice. What options are open to those facing a shortfall in rent?
What alternative accommodation and what options to renegotiate will they have? There are 35,000 households in private rented accommodation in Newham, almost a third of which are on housing benefit. Given that the rents in my area are relatively low compared with the boroughs immediately adjacent and to the west, it is absurd to suggest that the changes will force down rents in the area, or that residents will have the option to renegotiate their rents downwards. The private sector in Newham can and will soak up the properties left by those who, owing to the changes, have to leave their homes. The changes will mean that those dependent on housing benefit will be unable to afford to live in Newham.
The Minister will also know that, despite the Housing Act 2004, there is a dark side to a small proportion of the private rented market. Anecdotal evidence from head teachers in my local schools suggests that a new breed of slum landlords who rent out houses to families by the room is emerging. I am also told that some landlords will rent only to migrants, because they are less likely to know their rights. As we know, landlords should turn down families who have too many children for the rooms available. Instead, vulnerable tenants are claiming for space that they are not allowed to use as other families are squeezed alongside them. That is a benefit fraud, and it is perpetrated at the behest of landlords.
There are currently not enough resources to police the growth in multiple occupation, which will increase exponentially as the single-room rent is extended up to the age of 35. However, regardless of those extreme cases, it is clear that the cuts in housing benefit will force many more households into overcrowded and substandard accommodation.
My hon. Friends and I have spoken many times before of the knock-on effects on families of being shunted around from house to house and living in poor conditions; of the profound impact that that can have on health, education, inclusion in the community and mental well-being; and of the dreadful impact on children and their ability to achieve their potential. There will be more stress and conflict as unemployed family members are unable to pay their non-dependant deductions, which are set to increase disproportionately. As Crisis has pointed out, there will be more single homelessness and, yes, more NEETS-people not in education, employment or training-in this big society.
I believe that the situation will now get worse. Last week's announcements by the Secretary of State for Work and Pensions compounded all the problems that I have outlined. The universal benefit and its cap, set at £500 per week per family, will effectively mean pricing low-income families out of the capital. Citizens Advice has stated that
"we are very concerned that the Government appears to be rushing into benefits policies that have not been thought through, or tested for their impact on individuals...The fact that the cap applies regardless of household size means that it will inevitably fall hardest on families with children.
Coming as it does on top of the cuts to housing benefit announced in June's emergency budget, a cap of £500 a week on household benefits will price many low income families out of living in London and the south-east of England altogether, and if it goes ahead will inevitably lead to widespread hardship, debt and homelessness...For example, a couple with four children
currently receiving £350 a week in jobseekers allowance...child tax credit...and child benefit...and £25 in council tax benefit would be left with a maximum of £125 per week for rent."
The Government's impact assessment had little to say about the impact on children and poverty, yet London Councils calculates that nearly 80% of the households affected by the cap in London will be households with children.
Let us also recognise that there will be many thousands of families whose breadwinners may lose their jobs, but be horrified at the thought of claiming benefits. It is insulting to suggest that those people will have made a lifestyle choice to claim jobseeker's allowance. In Newham, it is currently estimated that 1,900 families will be affected by the absolute cap. There will be many more after the cuts to the public sector have impacted and unemployment in my constituency has risen. The 10% sanction on housing benefit for people who have been unemployed for 12 months will hit my constituents especially hard. There are 1,910 JSA claimants who have been out of work for a year or more in Newham, and 10,196 people claiming JSA in the borough. Nine JSA claimants are competing for each unfilled job vacancy in Newham, compared with a national average of 5:1. I genuinely believe that the 10% cut presupposes that living on £65 a week jobseeker's allowance is a lifestyle choice.
The Budget and the comprehensive spending review proposals are unjust, and they appear to have been thrown together with a disregard for the consequences. This attempt to save money will, I believe, store up problems for the future. The problems of homelessness, debt, unstable homes and constant moves impact on children and families, preventing children from belonging to a community and fulfilling their potential, and storing up social problems that all the Sure Start facilities in the world will not be able to solve. It is truly difficult to see how that fits with the Government's commitment to end child poverty. This is not the big society. Quite the reverse: it is the sound of doors clanging shut and communities breaking apart. There appears to be a poverty of compassion in the coalition.
I hope that I have begun to outline some of the difficulties that I believe my community will face, given the changing benefit scene. I hope that the Minister will be able to address those concerns and offer some understanding both of the circumstances of Londoners and my constituents on low incomes, and of their challenges ahead. I and many anxious residents of Newham will listen eagerly to what he has to offer.
The Minister of State, Department for Work and Pensions (Steve Webb): I congratulate the hon. Member for West Ham (Lyn Brown) on securing this important debate and on her track record of raising such issues in the House-as she said, from the Government Benches, which are indeed still here. I agree with a good deal of what she has said in the past about the issue. Two years ago she told the House:
"My message is that the housing benefit system is in desperate need of reform."
"trapped in benefits, prevented from returning to work-all my wages would just go to pay the rent and I would be worse off."-[ Official Report, 5 November 2008; Vol. 482, c. 293-94.]
I suppose I was hoping that today she would come up with some suggestions for how housing benefit should be reformed to address those problems. In anticipation of her speech, I checked what the Labour manifesto said on the subject. Surprisingly, I found that I entirely agreed with that as well. It said:
"Housing Benefit will be reformed to ensure that we do not subsidise people to live in the private sector on rents that other ordinary working families could not afford."
The basis for one of the key reforms to which the hon. Lady referred and which has most impact in Newham is the switch to paying rent based not on the 50th percentile, which is the current regime, but on the 30th percentile, which is more or less the typical rent for a low-income working household. That seems to be, almost verbatim, the policy on which she stood at the last election and which we are now implementing. Yet she is saying that the impact of that will have the single biggest impact on her constituency because the cap overall has relatively little impact, and that she now opposes that policy. I am not entirely sure that that is consistent.
The hon. Lady was critical of the universal credit, which my right hon. Friend the Secretary of State has proposed and which is designed to address just the sort of barriers to work that she is worried about by reducing withdrawal rates, albeit relatively modestly, and reducing barriers to work so that when people such as her constituents take jobs they will know that they are better off. I hope that on reflection she will be more charitably disposed to those reforms.
I will not dwell at length on the reasons for the reform, because time is limited, but it is true that cost is one. Housing benefit costs have risen by £1 billion a year in each of the past five years, partly due to the recession, but also to rising rent levels, so there is a need for action. But the issue is not just about cost; it is about fairness. The hon. Lady did not address why it is fair that someone on benefit, albeit not through any fault of their own, should have a wider choice of properties than someone in a low-paid job, and that is how the current system works. That is the current regime.
Lyn Brown: My basic tenet is that it is not possible to exist with the universal cap level and pay the rent of a London property, whether it is a two-bedroom flat over a fish and chip shop in Green street, or somewhere a little more palatial, perhaps further out. The taper in the benefit system, which the Minister rightly said I spoke about previously, is a disincentive for people who are trying to work, but we now have a cap and there will be no opportunity for them to negotiate their rent downwards. I cannot see how the reform that the Minister talks about will improve matters at all.
With respect, the hon. Lady is conflating about three different changes. The universal credit is nothing to do with the cap. It is a separate proposition, and the details are yet to be announced. We have already announced exemptions, and people in work who receive working tax credit will not face the cap at
all. That is part of the response to her point. No one in work and receiving working tax credit will be affected by the overall benefit cap, nor will anyone on disability living allowance, but the details have yet to be worked out. The universal credit-not the universal cap-is a separate reform designed precisely to address the points that she raises.
I shall try to respond to some of the more specific issues that the hon. Lady raised about her constituency. Our estimate is that in her borough of Newham, 32% of properties in the private rented sector will be available to people on local housing allowance.
I have explained our broad estimate. A good proportion of rental properties will be available throughout the borough, but I agree that we do not want constant moves. No one wants that. The challenge is to ensure that when people enter a tenancy agreement they do so sustainably. All we are trying to do is to ensure that the choices made by people on benefit at the start of a tenancy, when they choose a property and a rent, involve the same constraints as for someone in low-paid work. The change is not designed to be penal; it is designed to be fair and equal. That is the idea.
The hon. Lady cited a figure of 82,000 people being at risk of losing their home, but that was based on London Councils research and not that of the Department for Work and Pensions, and it was based on a fairly low response rate from landlords. Moreover, landlords are bound to say that they do not want any reform that is going to cap what they get. Landlords have been the principal beneficiaries of the local housing allowance system. We have already seen private sector rents falling in the past 18 months, yet the rents paid to people on LHA have been going up. Through housing benefit and LHA, we are putting more than £21 billion a year into that market, and it would be implausible to suggest that we are not having an effect on it.
We believe in trying to restrain the growth in rents, although in four years' time, we will still be spending more in cash terms on housing benefits than we are this year. I think that the hon. Lady used the term "swingeing cuts" about something else, but these are not swingeing cuts. This is about restraining the rate of growth of housing benefit, so it is a far more modest reform than she suggests.
The hon. Lady raised the issue of slum landlords, for whom we have no time, and one of the things we want to do is to change landlord behaviour, which is crucial. We are considering whether, by paying housing benefit directly to landlords, we could use that leverage to try to get rents down. Yes, some people might face shortfalls-I accept that point, although I think that the figures might sometimes be exaggerated-but we are not in a static situation. The question is: what happens next? If landlords, particularly those renting to housing benefit and LHA tenants, see that we are not simply going to follow the market up, that could change rent-setting behaviour.
The hon. Lady made a point about the consumer prices index, and about the way in which we are going to index LHA in the future. Her view seemed to be that we should simply follow the market, but we think that that has been the biggest problem with LHA over the years. We have actually stoked up the market, and then increased LHA to keep pace with the market, so that rents keep rising. We are not getting good quality accommodation, however; we are simply driving up rents, and that is not what we want to spend public money on.
I want to come back to the hon. Lady's point about constant moves and people being constantly moved around an area. Clearly, there is an issue about the transition to the new regime, and we are trebling the discretionary housing payment system. More of that money will go to boroughs such as her own and to other inner London boroughs that are most affected, because we want the particularly hard cases, where people are particularly affected by the changes, to have extra resources to deal with that. However, the long-term goal has to be to try to get rent levels under control, rather than to keep stoking them up.
"My constituents are virtually imprisoned by the excessively high rents charged for temporary accommodation ".-[Official Report, 5 November 2008; Vol. 482, c. 293.]
She was absolutely right, and in April 2010, a cap was introduced on the rents in temporary accommodation. Since then, the early evidence has shown that the rents in those properties have started to fall, so we have a precedent for what we are doing now. This is not nationwide, systematic evidence, but the early evidence suggests that what we are saying will happen in the wider market is already happening in the temporary accommodation
market. That is what we as taxpayers, and as people who are concerned about our constituents, want to see. We want to see more of our money providing accommodation for people, and less of it simply stoking up the private rented sector.
The hon. Lady also raised the issue of the changes to non-dependant deductions. They have been frozen for a number of years instead of being indexed, which would have been a more natural policy, and all we are doing is returning them to the level at which they would have been, had they been indexed. So, yes, there is an increase, but we are simply taking them back to their real value of a few years ago. She mentioned the consumer prices index being applied for ever, but that is not the intention. It will come into the LHA rates in 2013 for two years, and we will then look at the market and the impact of the changes that have been made. So we are trying to introduce a cap and to restrain the rate of growth of rents, but we are trying to do that with some flexibility. We will look at the broad rental market areas when we do that and try to ensure that they fit the local housing market situation.
I want to try to draw some of those threads together. First, it is vital that we do not overstate the impact of the changes. There will be an impact, but some of the numbers that get thrown around, such as 82,000, are an exaggeration. We will see what impact they have, and there is the possibility of different rent levels as a result of the changes. There are also discretionary housing payments. The idea is to get good value for the taxpayer, but not to cause misery for the hon. Lady's constituents. That is not our intention, and I do not believe that we will do that.