My hon. Friend the Member for Cardiff Central raised the issue of broad rental market areas, which is relevant in the CPI context. If LHA rates are to be subject to CPI, ideally the broad rental market areas should not move around because the base figure subject to CPI would not be clear. The broad rental market areas must be frozen at the point at which one goes to CPI, and the question is what they would be at that point. My hon. Friends the Members for Cardiff Central and for Cambridge (Dr Huppert) have properly highlighted the problems with the city of Cambridge and the wider area of Cambridgeshire, and although there have been changes to the BRMAs around that area, the idea is that they will be fixed in 2013. My hon. Friend the Member for Cardiff Central mentioned coterminosity with local authorities, in relation to Wales, and that is one of the options being considered. It is an option that has a number of attractions. In London, it would mean
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that the BRMAs were smaller, and the affordability figures would therefore be within a tighter geographic area. We would be unlikely to make significant changes this side of 2013, partly because every time the rules are redrawn, another set of gainers and another set of losers are created. So, we would rather do that at the point of moving to CPI in 2013.
Local authority boundaries are not without their own problems. Many of my Liberal Democrat colleagues represent seats in Cornwall. Cornwall is now a unitary authority and the whole of Cornwall would be one BRMA—I think that BRMAs can be smaller than that. My colleague who represents Land’s End, my hon. Friend the Member for St Ives (Andrew George), and my hon. Friend the Member for North Cornwall (Dan Rogerson) might have views about the interchangability of their two areas. There is no simple solution, but we are certainly looking at local authority boundaries in response to the points that my hon. Friend the Member for Cardiff Central has raised.
Universal credit has been mentioned, and it was asked whether housing benefit would go in at a flat rate. The details of that will be discussed more in the Welfare Reform Bill Committee, but my certain understanding is that the intention is not simply to have a “so much for housing” number in the universal credit. I think that the approach will be much more tailored, but I am sure it will be discussed much more fully in the Committee.
On the under-occupation rules, it was asked whether people would be moving from three-bedroom houses to one-bedroom flats. The data show that about three quarters of the under-occupation in the social rented sector is by only one bedroom, so the move from three bedrooms to one bedroom would represent perhaps a quarter of the change. The impact might not be quite as great as I think the hon. Member for Westminster North suggested, but we have just published some more data on that.
Ms Buck: I am grateful to the Minister for giving way again; he is being generous. We will be addressing this issue in the Committee on the Welfare Reform Bill, so we must think about it.
In my contribution, I mentioned that the total number of transfers in social housing stock in one year was only one fifth of the total number of people who will need to move to avoid the under-occupation penalty after its introduction. Has the Minister thought about that and discussed it with the Department for Communities and Local Government? Surely any penalty applying to people in the social security system must be avoidable. The question is whether the capacity in housing stock makes the under-occupation penalty avoidable.
Steve Webb:
It is important to remember that we are discussing a change that will not be introduced for more than two years. The fact that local authorities and housing associations know that the change is coming two years down the track will affect tenancy decisions and allocations now, so it will be part of the mix. Putting someone into a property that they are under-occupying, knowing that in a few years’ time they will not be covered by housing benefit, would raise issues. The situation will be ameliorated partly by forward
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planning. However, these are issues in the Welfare Reform Bill rather than the report. I fully accept that they are important issues and will need to be managed.
I propose to allow the Chair of the Select Committee to respond at the end of the debate, if she would like to do so, so I will leave some time for that, but first I will consider some of the main themes that have emerged during the course of this debate. The dropping of the 10% cut after a year was an important theme of the report, and we have heard several hon. Members discuss their quite proper concerns about that. We took the view that the measure was not necessary after 12 months on benefit, given the introduction of the Work programme, which will support people, and the universal credit. We took account, obviously, of what the Select Committee and others who made representations had to say. Naturally, I was pleased that the proposal was withdrawn. It is another example of how we have responded to the proper concerns raised by the Select Committee.
Since the proposals were first published, they have been considerably improved. On the nine-month transition, the changes will start to have an impact from April, but rather than a cluster of people chasing after the same properties, we will see the rental market start to adjust. Landlords will adjust their rent-setting behaviour; we will see whether the mechanism that we have implemented—direct payment, where that enables a tenancy to happen—is working; and we will be able to refine it over the next nine months before almost nobody with an existing claim starts to be affected. I stress that people will not be affected until the anniversary of their claim. For some people, that will be 18 months or more. The process will be gradual, giving us a chance to monitor what is going on and to consider the allocation of discretionary housing payments as we go, which improves the proposition considerably.
To draw the threads together, one thing that strikes me about this debate is that it is clear that whoever was running the country at this point would have done a number of the things that we have done and are now being criticised for. We have heard figures quoted on the losers: 500,000 people will lose an average of more than a tenner a week from the abolition of the £15 excess. The previous Government decided to delay that change by a year, because there was an election coming, but we are going to do it, yet the figures for losses have all included that. It would be unfortunate if anyone gained the impression that we are making new policy and new decisions. This would have happened anyway and was part of what was planned.
As my hon. Friend the Member for Cardiff Central said, the previous Government applied bedroom caps. They drew the line at five, and we draw the line at four, but the principle is identical. The outgoing Administration stood on a platform of restricting housing benefit to what somebody in work could afford. What does that imply? The 30th percentile. Using the 30th percentile, getting rid of the excess and applying bedroom caps is virtually there. I hesitate to say this, but almost everything that we are doing is Labour party policy, yet the Opposition suggest that this is some sort of evil right-wing plot to attack the poor.
The idea is that the housing market is not static. It is influenced by what the Government do. We cannot spend £21 billion a year subsidising rents without influencing the housing market. Does anyone think that if we
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abolished housing benefit tomorrow, it would not have a massive effect on the rental market? It would have a huge effect. We are players in the market, and we have a huge effect.
Our challenge is to ensure that the system is fair. In most rental market areas, 30% of properties will be affordable. There will be a transition to the new system of at least nine months for existing tenants and up to a year after that to ensure that in difficult local situations treble the amount of discretionary housing payment will be forthcoming. The fact that the budget is £20 million this year and will be £60 million in two years’ time, repeated over a three-year period, indicates that we accept that there will be difficult individual cases in which adjustments must be made, which is why we have provided the money.
I do not apologise for tackling something that has gone untackled for too long. The budget was growing remorselessly by billions year after year. We must ensure that taxpayers’ hard-earned money is well spent, and we believe that the housing benefit changes will make that difference.
5.15 pm
Dame Anne Begg:
With the leave of this Chamber, I will make a few closing remarks. We have heard that only one in four housing benefit claimants is unemployed. The proposed changes will therefore affect many people who are working hard to make ends meet, and they
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could force many of them further into poverty. At the extreme end, we could return to homeless hostels and large numbers of families living in bed and breakfast accommodation. That would be a tragedy after the previous Labour Government’s success in almost eliminating such accommodation and dramatically reducing the number of rough sleepers.
Even if we accept the Government’s intention that people should not be over-housed or living in accommodation that they cannot afford, the proposals will force many people and families to move house. We know that moving house can be very stressful: indeed, it is said to be the most stressful event in a person’s life after the death of a loved one and divorce. Even if we accept the Government’s assurances that people will not be made homeless and will be able to find accommodation of the right size at an affordable rent, all of which is questionable, large numbers of people will be unable to avoid the stress of moving house as a result of the proposals.
I am glad to have had the chance to debate this important issue. I am sure that hon. Members will want to return to it on many occasions in the coming months as the proposals are rolled out and begin to affect all our constituents.