Draft Benefit Cap (Housing Benefit) Regulations 2012
The Committee consisted of the following Members:
Simon Patrick, Committee Clerk
† attended the Committee
The following also attended ( Standing Order No. 118(2) ) :
Draft Benefit Cap (Housing Benefit) Regulations 2012
The regulations were laid before the House in July this year. I remind the Committee that the benefit system we inherited from the Labour party was failing not only those out of work who required its support but those in work whose taxes were required to pay for it. Many households on out-of-work benefits found themselves trapped in a system that provided them with little or no financial incentive to move off benefits and into work. For far too long, we have all seen stories of households in which no one has worked for years, living lifestyles that are way beyond the reach of those in employment. I do not believe that can be fair, and that view meets with widespread support among the public.
It is simply not right that households on out-of-work benefits can receive a greater income from benefits than many households are able to earn from working. It is unfair to those working households that find themselves at a financial disadvantage to those on benefit when making decisions on housing and other lifestyle choices, and it creates a disincentive for people to move off benefit and into work. The Government believe that it is neither reasonable nor fair that households should receive a greater income from benefits than the average weekly wage for working households. That is why, as part of the Welfare Reform Act 2012, the House agreed to introduce a benefit cap, which will mean that families on benefits will not receive more than an average family’s working wage.
From October 2013, the benefit cap will form a key part of our plans for universal credit, and we will shortly bring forward regulations to support its introduction. However, we do not believe it is right to wait until all existing claimants have migrated to universal credit
The regulations set out the detail of the cap: the level at which it will be set; how we will calculate a household’s overall entitlement to welfare benefits for the purpose of applying the cap; what benefits will or will not be taken into account; how any reduction will be applied; exemptions from the cap; the relationship between the cap and benefit sanctions and other deductions; and the rules on decision making and appeals. The level of the benefit cap will be set with reference to average earnings for working families. On its introduction in 2013, the cap will be set at £500 per week for couple and single-parent households, and £350 per week for single-adult households. By not taking into account in-work benefits in our calculations—exempting those entitled to working tax credit and setting the level on that basis—we incentivise work even further.
From the outset, we have said that there are certain groups to whom it would not be appropriate to apply the cap. We are exempting households that are in receipt of disability living allowance, personal independence payment, attendance allowance and the support component of employment and support allowance, as well as households entitled to working tax credit, war widows and war widowers. Since the debate on the Welfare Reform Bill, the Government have announced some additional easements: those relating to industrial injuries benefits and war disablement pensions and their equivalents.
We do not want to penalise those who have recently become out of work and are doing the right thing to find new employment. We have, therefore, put in place a nine-month grace period for those who have been in work for the previous 12 months and lose their job. That will allow people time to find alternative employment or consider alternative options to avoid the cap. It will also help people who must leave work for short periods: for example, when someone has been bereaved; or when a child who cannot be cared for by their parents goes to live with a relative or family friend. We have consulted stakeholders and the Social Security Advisory Committee, which considered the regulations at its meeting in June. It had one concern about the grace period, which we have addressed. It has subsequently consulted on the impact of the cap for vulnerable groups and local authorities’ services, and what mitigations should be considered. That has informed our plans for evaluation. We have also announced that we will publish a review after the first year of operation, which will also contain an assessment of the impact and effectiveness of the delivery of the cap.
It was inevitable that our proposal for a cap would raise concerns about how it would be delivered and its impacts. Many of those concerns are based on an assumption that people will not change their circumstances. We do not believe that is right, although sometimes people will need help and encouragement to make changes. In the run-up to April 2013, we will work with claimants who may be affected by the cap to do exactly
We are already receiving examples from Jobcentre Plus about the positive impact of the cap in helping people to make the first step in returning to work. One example is Louisa, a lone parent with five children under the age of 14 who had not worked since 2003. Louisa took up the offer of support from her Jobcentre Plus adviser who discussed the in-work incentives available to her and supported her job search. In August, Louisa started work as a receptionist. We are also engaging across Government, with local authorities, and with teams such as the troubled families unit, to ensure that households are given the assistance they need to avoid the cap or mitigate its impact.
We have also considered the scope for transitional support to help to manage families into more appropriate accommodation. That will include additional money to enable local authorities to make discretionary housing payments in hard cases, mirroring the steps we took last year to provide safeguards following the introduction of the local housing allowance cap. We will provide up to an additional £75 million for this purpose in 2013-14 and a further £45 million in 2014-15. That will be used by local authorities to support those claimants affected by the benefit cap who, as a result of a number of complex challenges, cannot immediately move into work or more affordable accommodation. The money will be divided among local areas based on who has the greatest need.
The Government firmly believe that those in the local area are in the best position to make decisions that impact on people in their locality. By providing support through discretionary housing payments, we are enabling local authorities to provide support to those who need it most, such as those fleeing domestic violence, to prevent homelessness or a move into temporary accommodation.
Let me be clear. If we are to have a welfare system that is fair, affordable and puts work at its heart, we need to act now. The Government firmly believe that there must be a limit on the overall levels of benefit that it is appropriate for the state to provide to those who are not working. The benefit cap aims to encourage long-term, positive behavioural change, through changed attitudes to welfare, responsible life choices and strong work incentives. I commend the regulations to the Committee.
I thank the Minister for his explanation of the regulations, but there remain many unanswered questions and serious concerns, which are even more critical given that we are within 20 weeks of the measure’s implementation. Some Members—perhaps on both sides of the Committee—and many more people in local authorities and other organisations, are deeply concerned that that might result in another shambles in which individuals and their families are the victims.
We believe in the principle of the cap, but not the design that is proposed. [Interruption.] The Minister may laugh, but the devil is in the detail and, frankly, the detail is sadly lacking in the regulations.
Our position was well explained and ventilated during the passage of the Bill, so let me ask the Minister some questions. First, in terms of the implementation plan, will he confirm that universal credit is still on timetable for delivery by October 2013? There is considerable concern that one wheel is falling off this wagon, but it might amount to more than that. Until universal credit is fully implemented, for those not on universal credit the cap will operate through housing benefit deductions only—I think that is correct—and for those who are on universal credit the system will be operated by the Department for Work and Pensions, so initially there is a twin-track approach. I also understand that local authorities do not need to apply the cap until notified by the DWP. That prompts questions that I hope the Minister is able to answer.
What are the systems by which the DWP will gather the details of the various benefits that will go into the benefit equation? How will it keep those up to date and how will it notify local authorities of any changes? Will that be done monthly or quarterly, and how will that transfer of information take place? What happens if there is some clawback of a welfare benefit that either reduces or eliminates the operation of the cap? Is it then the responsibility of the local authority to reimburse the claimant with additional housing benefit? What happens if a local authority has not been notified of the application of the cap by the DWP, and has information that might indicate that the cap should be implemented, but fails to take any action until formally notified by the DWP? What happens to the benefits of the individual claimant who, through no fault of their own, has continued to receive money to which, under the cap regulations we are discussing, they would not be entitled? If the claimant is subject to a benefit sanction, will the net amount go into the calculation—the benefit to which they are entitled minus the sanction—or the original benefit entitlement?
What happens when backdating or successful appeal leads to a potential application of the cap? Will there be a clawback on the basis of the benefit paid and what will happen if the housing benefit is being paid directly to a landlord? The mirror image of that question is: what would happen if the cap was applied to claimants during the assessment phase of ESA who are then put into the support group?
What is local government’s state of readiness in respect of implementing the policy? Does the Minister have enough information to reassure the Committee that the basic ground work has been done? Has he received confirmation from all local authorities and local Jobcentre Plus offices, particularly those identified as having the most households affected by the cap, that they are ready
What discussions has the Minister had with local authority organisations about their capacity to deal with all the changes effectively, albeit with a declining housing benefit case load, when local authorities are suffering severe budget cuts and also having to deal with the implementation of localised council tax?
Let me turn to discretionary housing payments, about which the Minister and his predecessor have made great play, not just in Committee but in other forums. In its report, published this month, on the impact of housing benefit changes, the National Audit Office said that
“it is not clear how the current level of funding for Discretionary Housing Payments has been determined or whether it is likely to be sufficient for local authorities in tackling the impacts of reform.”
Exactly how much money will be available for the discretionary housing payments and how will it be distributed to local authorities? What happens if a local authority has greater demand than estimated and runs out of funds? Will discretionary payments to local authorities be cash limited?
Will the Minister also advise the Committee of the effect of the cap on those living in homeless accommodation? Short-term accommodation has proved over many years to be a vital part of the safety net for those who find themselves homeless. As the Minister knows, however, it is also more expensive to procure and manage. Will families living in temporary accommodation be protected from the cap? I understand that many housing associations that have worked in partnership with local authorities to provide accommodation for homeless families might have to withdraw from such provision if there is not an exemption.
The Government have said that, under universal credit, they will fund the management costs, if not the housing costs, of temporary accommodation outside the benefits system, helping some families to avoid the cap. As I understand it, however, that will not protect claimants before they transfer to universal credit. Will the Minister comment on any transitional arrangements that he might be thinking of?
I understand that the Government and, I am sure, the Minister recognise the importance of supported housing as an essential ingredient in the range of preventive measures available to support vulnerable people. I also appreciate that the Government recognise that additional costs are associated with such housing support. However, the regulations do not exempt supported housing from the benefit cap, despite the higher costs, so many could be hit. A housing association that provides supported accommodation for victims of domestic abuse might find that it would have to meet the shortfall, or a woman, for example, might have to meet the additional costs, when she would rarely be in a position to do so.
Incapacity benefit and severe disablement allowance claimants will have their benefit capped and—potentially —will be transferred to ESA by April 2014. DWP statistics show that 29% of claimants will potentially be
The 39-week exemption was a sensible and welcome concession made during the passage of the Bill after consideration of concerns raised by parliamentarians in both Houses that claimants should have a reasonable amount of time to find work or to move accommodation following a change in circumstances. We welcome the exemption. Given the Government position’s on promoting self-employment, however, I find it interesting that the grace period does not apply equally to those in self-employment. Is it the policy intention for self-employed people to be given less favourable treatment than those who work for an employer? If so, why?
The policy intention of the benefit cap, as given in the explanatory memorandum and the equality impact assessment, is to act as an incentive to work, to promote greater fairness relative to those on average wages and to help reduce the deficit. The Minister explained that in his opening remarks. On the situation of carers, what behavioural changes are Ministers seeking? Do they want carers to stop caring and to take up work, which could worsen the deficit by requiring the state to provide personal care? Should they move to cheaper accommodation, if that is even an option?
The Minister might tell me that the exemption for households that contain a disability living allowance claimant will protect families affected by disability, but that will not protect all carers currently receiving carer’s allowance. The Minister mentioned DLA and personal independence payment claimants, but I do not think PIP is specifically mentioned in the regulations. Will he clarify that position?
For the purposes of universal credit, the definition of “household” includes children under 18 and partners, but it does not include adult children or other adult relatives. Although carers looking after disabled partners and disabled children under 18 will be exempt from the cap, families caring for adult disabled children will not because the DLA claimant, as an adult, will no longer be considered to be living in the same benefits unit, even if they are all living in the same house.
Carers supporting other disabled people of working age, such as siblings, cousins or friends, will also be subject to the cap. Whether the carer lives with the person they care for or not, they will not be considered as falling within the same universal credit unit or household, so the disabled person’s DLA will not deliver exemption for the carer. That will also apply to carers who look after elderly parents, even if they live with them. An estimated 5,600 carers will be caught by the cap, and I have to ask why because Ministers are forever applauding the work undertaken by carers.
Analysis by the Children’s Society suggests that some 200,000 children will be affected by the benefit cap, with children being around nine times more likely than adults to be affected. What role will the Social Mobility and Child Poverty Commission have in monitoring the impact? Will that monitoring allow the Minister to intervene
Why does the cap apply to households with children under five when such households are otherwise exempt from work search requirements? If the reason is to bring about behavioural change to encourage people to go out to work, why propose a cap when there is no conditionality on the parent? Will the Minister guarantee that affordable child care will always be available to such households so that it always pays to go to work? In the case study cited by the Minister, did the single parent with four children have direct access to child care? That is certainly not the case in many areas. I would be interested to hear the Minister’s comments on that.
In London, there is increasing evidence that housing benefit caps have directly contributed to the rise in homelessness and the surge in the use of bed-and-breakfast accommodation, which the benefits cap will intensify. Westminster city council has recently said:
“The current reports on reasons for (homelessness) application during September support this showing at least 59% of applications coming from households in the private rented sector, with 35% being specifically because of a shortfall with housing benefit. We continue to work to secure additional rented accommodation both in and outside of Westminster. The difficulties remain in procuring sufficient numbers to meet increased demand and as a result emergency accommodation numbers remain high”.
Only yesterday, an article in The Guardian—I am sorry to use such an offensive term before the Minister, but I hope even he recognises that the article is well sourced—highlighted that London councils are preparing to send thousands of homeless families to live in temporary accommodation outside the capital.
Nick de Bois (Enfield North) (Con): As a London MP, I can assure the right hon. Lady that, as far back as 15 or 20 years ago, Westminster was finding properties in other parts of London and elsewhere. In the past 10 years, Enfield has been finding properties elsewhere, and Peterborough has been sending families to Enfield, so the phenomenon is not entirely new.
Mrs McGuire: Most of us accept that there are often exchanges between local authorities over homeless accommodation where there is pressure. We are talking about relocation on a massive scale, not the odd family that might have difficulty in being relocated within the community from which they come. We are talking about a significant number of people who may not be able to be housed in their own area. Although the hon. Gentleman’s example is legitimate, inasmuch as it identifies a practice that we all know happens, I do not think he has identified the scale of the problem that is now facing the London boroughs. I will be interested if he can still make that comment of support in a few months’ time when this all starts to kick in.
Mrs McGuire: My right hon. Friend makes a valid point. It is almost counter-intuitive, because the Government say they want to help families who find themselves in trouble, but they are in danger of creating even more troubled families by splitting them up.
The reality in London is that councils are preparing to send not the odd one or two people to another area but thousands of homeless families to live in temporary accommodation outside the capital. They are confirming that they are currently acquiring properties—not an exchange between one council and another on a reciprocal basis—under their jurisdiction. Councils have estimated that up to a third of families affected by the various changes will lose about £100 a week. There is a view that some families will have few if any options but to become homeless. I know that the Minister said that a transitional fund will be available to London, but most observers state that it is woefully inadequate.
“It is neither acceptable, fair nor necessary for local authorities to place families far away from their area. The law is already clear that local authorities must secure accommodation within their own borough so far as reasonably practicable, and new rules will reinforce this.”
I wonder whether the Minister will tell us exactly how the London boroughs will deal with the scale of the problem facing us, given that a Government spokesperson said that they must find accommodation within their own borough.
I have a series of questions for the Minister on this issue. If a household loses its ability to maintain its tenancy, will the Minister confirm that the local authority will in each case retain the legal duty to house such a family as homeless? Will he confirm that the family will not be declared intentionally homeless because they cannot meet their rent commitments? If the local authority assumes a legal duty to house a household that has lost income because of the benefit cap and must find cheaper accommodation under the cap, does that not conflict with the commitment made by the Department for Communities and Local Government’s Housing Minister not to see households moved hundreds of miles away?
If a family lose all or most of their housing benefit from April, which might not be unusual in London, and they still have some time on their lease, should they pay their rent or use the money to survive? If they do not pay their rent and the lease is unexpired, who is responsible for the arrears? Is it the tenants, leaving them in even greater debt and potentially with a negative reference affecting their ability to get another tenancy, or the landlord?
I understand that Westminster council—and it is well documented—is already placing people in Maidstone, Southend and so on. Even outer boroughs such as Ealing, as the hon. Member for Enfield North mentioned, are placing people in Slough and Reading. Does the Minister think that is within the spirit of the Housing
To reassure the Committee, and certainly Opposition Members, will the Minister tell us where a family with four children requiring three-bedroom accommodation can secure that without their income being reduced below the applicable amount? [ Interruption. ] Well, the Minister may smirk—
Mr Hoban: There is a straightforward answer to the problem and this is exactly what Jobcentre Plus is doing. As these people get into work, get a job and qualify for working tax credits, the cap does not apply to them. We are encouraging people to move off benefit into work through this measure. This is exactly how to tackle those problems.
Mrs McGuire: The Minister floated across the idea that Jobcentre Plus is working every hour of the day and night—I have great respect for Jobcentre Plus staff and their dedication to their work—but was light on how many people have managed to get into jobs. Given the rate of unemployment in some areas, particularly some areas of London, I wonder where exactly the jobs are coming from and how many have got into work as a result—
Mr Hoban: As London MPs will know, half a million jobs have been created in London since May 2010. The hon. Lady is in danger of being highly critical of Jobcentre Plus. I have been to a Jobcentre Plus in Tower Hamlets where they are working very closely with the people affected and are trying to find work for them. There is a very straightforward answer: rather than scaremongering, let us get them into jobs so that the cap does not apply.
Mrs McGuire: I am sorry that the Minister only heard the bits of my contribution that he wanted to hear. I complimented Jobcentre Plus staff on the work that they do and the commitment that they bring, often in extreme circumstances. But the Minister is still floating across the top of this argument because he has given us no concrete evidence on how many people in the last few months, as part of his Government’s initiative, have moved into employment to avoid being subject to the benefits cap. The Minister’s excitability is clear evidence that he perhaps does not have the statistics to hand. I look forward to hearing him respond.
The DWP’s own impact assessment concludes that even taking account of the last-minute concessions announced earlier this year to ease the transition for families recently in work, which we welcomed, 56,000 households will be affected by the cap. About half those households will be in London and half are lone parents. The average loss per household is £91 a week, almost £5,000 a year. In total those include
Sometimes, as my right hon. Friend the Member for Wythenshawe and Sale East identified, families may have to split. The Government have consistently tried to close their eyes to the implication of a one-size-fits-all benefit cap, which takes little account of the regional differences and diversity—
Nick de Bois: The right hon. Lady is very gracious and I thank her for giving way. She is talking about one-size-fits-all, but in her constituency, for example, the average earned income is £21,000 and yet we are applying a benefit cap of £26,000, so I do not think it is a one-size-fits-all that is to the disadvantage of everyone.
Mrs McGuire: If the hon. Gentleman has done his homework, as he obviously has—I am impressed by the fact that he has taken a great interest in my constituency—he will be aware that some of my constituents will be affected by the cap. The one-size-fits-all approach will not deliver for the whole of the United Kingdom. In some parts of the country, £26,000 might well be a realistic amount, but in other parts, it will not. That was our position during the passage of the Welfare Reform Act 2012, and it continues to be so.
Mrs McGuire: I thank the hon. Gentleman, but we are here to discuss how the benefit cap is operating under a Conservative Government. I remember some of his comments during the passage of the 2012 Act: as a Member who represents a rural constituency, he was certainly very worried about the impact that some of the changes would have on people in his communities where no alternative accommodation was available. I am willing to talk about a Labour Government with the hon. Gentleman, but this morning he should concentrate his fire or his analysis on his coalition partners and how they are implementing the benefit cap.
The benefit cap takes little account of regional differences; it takes little account of the diversity of housing provision that is needed; and, frankly, it takes little account of the purpose behind some of the benefits that are being
Dan Rogerson (North Cornwall) (LD): I have listened carefully to the Minister’s introductory remarks as well as the right hon. Lady’s comments . They both set out the argument for a cap on benefits. I am not necessarily an automatic supporter of some of those arguments, but there are two principal challenges.
First, we all have constituents who say to us, “Look, I’m working very hard. I have a job, but I’m struggling to make ends make, yet next door there’s someone who is in receipt of benefits but whose income is higher than mine. How is it right that other benefits and support measures accrue to them, but I can’t access them?” Often, that view does not take into account the particular circumstances of certain individuals, but sometimes it does. All Governments must consider how a benefits system that has been constructed over time in a piecemeal fashion can be integrated as a whole. That is why I welcome the Government’s action with universal credit, their willingness to look at the whole system to come up with something that is flexible and offers a real incentive for people to go into work, along with support to do so, and, of course, the setting of a firm economic footing that will create the jobs for people to go into.
The other argument is about deficit reduction and the challenges left to this Government by the previous Government—the many millions of pounds going every day into debt interest and the need to get the deficit under control. The present Government are doing that, but it is not an easy process and there are difficult choices to be made. The Opposition often say that there are difficult decisions to be made, but as we heard again today in the reply to my hon. Friend the Member for Argyll and Bute (Mr Reid), they are not often keen to set out how they would make those choices in a different way. However, the right hon. Lady said that we are here to discuss a measure proposed by the Government, so let us do that.
I want to ask the Minister a few questions, some of which have been touched on by the right hon. Lady. One is about kinship carers, who are of concern to me, having studied children and family issues over several years. The Government are doing many things to help: early intervention is a priority for us and we have increased the offer of affordable places in child care for two-year-olds, in addition to the previous offer for three and four-year-olds. We are doing a number of things in that area, but there is a particular set of issues affecting kinship carers.
I suspect that the Minister will, quite rightly, point to the discretionary payments available to local authorities in certain circumstances, but I urge him to keep under review the amounts and the circumstances where local authorities face particular challenges, and to deal closely with his colleagues in the Department for Communities and Local Government to ensure that monitoring takes place, so that if at any point it seems that, in some parts
Families in temporary accommodation are a particular issue in some parts of London and the south-east. Children in vulnerable circumstances such as these already face the upheaval of having to leave a home, whatever the reason may be, and we must take care not to add to the problems but ensure that they can continue to have access to the schooling that they currently enjoy. We are putting the pupil premium into schools to help young people in that situation, and head teachers in many parts of the country are already using that money effectively. We need to make sure that young people can stay on in the schools where they have support networks. That is another group that we must be careful about.
I welcome what the Minister said about job creation, particularly in London and the south-east, where these measures are of particular interest and perhaps have the greatest impact. He is absolutely right to point to that. However, I urge him to continue discussions with his former colleagues in the Treasury and his colleagues in the Department for Communities and Local Government about investing in social rented housing. Sadly, the previous Government presided over a decline in such housing, and the present Government have stated their determination to increase it.
We recently had greater investment in up-front money and guarantees to unlock borrowing for housing associations, and potentially councils can invest more in social rented housing. The best way of tackling the housing benefit issue is by creating a significant number of social rented properties at below market rent, as that would help to take the pressure off the private sector market, which has led to inflated rental costs and pushed up the cost of housing benefit in recent decades. The Government have stated their determination to deal with that, and I am sure that through joint working, the Minister’s Department will keep up the pressure on the Department for Communities and Local Government to do all it can, and deal with the Treasury to look at benefits for the wider economy in having as big a programme as possible of building social rented accommodation in the coming years.
I have four questions for the Minister, but I will start with a general point about the use of the word “welfare” in relation to the legislation before us. Regulation 75A makes it clear that the benefit cap applies where the total amount of welfare benefit exceeds the relevant amount. Regulation 75G lists what are defined as welfare benefits in the legislation. It has become fashionable to talk about “welfare”, and I am not pinning the blame entirely on the Minister and his party: all parties and politicians have been prone to using the word in an unhelpful way, perhaps mimicking debates in the United States, where there is an entirely different system of welfare. Perhaps I am too old-fashioned, but I prefer to think of social security.
Interestingly, our late and very dear friend Malcolm Wicks, in a lecture he gave in April—some members of the Committee were privileged to hear it—made the
That is important because in the Minister’s list of welfare benefits is child benefit, which is a non-contributory and non-income-related benefit, as well as jobseeker’s allowance and employment and support allowance, which can be contributory as well as non-contributory benefits. I caution the Minister—I am interested to hear his observations on this matter—about using the pejorative term “welfare”. He is talking about a minority of benefit claimants, and yet he is using it in relation to all recipients of benefits. At the Conservative party conference, the Chancellor referred to benefit recipients as
while others go out to work. It is a pejorative term and I caution the Minister at this relatively early stage of his responsibilities in his new Department to be very careful about how he applies it. The way in which he applies it in this legislation is woefully inaccurate.
As I said, I have four questions. The first one relates to women’s refuges and the problems facing people fleeing domestic violence. The Minister made a reference to that in his opening remarks and I hope that he will say a little bit more about it, because he gave the clear impression that he and his colleagues have been thinking hard about it and about how to ensure that those who are fleeing domestic violence are not disadvantaged either by universal credit or by the regulations before us today.In a written answer to a question about supported housing, which includes refuges for women who are fleeing domestic violence, the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb) said that
“we have announced that we shall provide help towards supported housing costs outside universal credit. This will ensure that we continue to provide a flexible system to help meet the higher costs often associated with providing this type of accommodation. We are exploring the feasibility of a localised funding system with the Department of Communities and Local Government and the devolved Administrations.—[Official Report, 29 October 2012; Vol. 552, c. 65W.]
That work is not finished and not yet settled. How does that commitment from his colleague relate to this legislation, which is, of course, an arrangement made in advance of universal credit coming into place? The Committee wants the Minister’s assurance that no woman fleeing domestic violence and going into temporary accommodation in a refuge will be disadvantaged by the regulations. Will he further confirm that housing benefit payments made in relation to the accommodation in a refuge will continue to be paid, at least for the period ahead, direct to the refuge itself and not to the individual claimant? That is important because sometimes a woman might be in the refuge for only a few days. If
My second question concerns large families. I know that the Minister is a decent man and cares about vulnerable children, and he will, I think, be exercised by this matter. There is a lot of rhetoric around at the moment about large families—indeed the Secretary of State for Work and Pensions last week referred to people who
That seems a rather curious expression in relation to people who are receiving means-tested benefits, which is a small amount of money on which to bring up a child. The Minister will know that large families will be affected by the benefit cap, and we have already had some discussion about its impact. Families will have to move, thereby disrupting education, health care and the normal development of relationships with friends and so on. He must be concerned about that. I know that the Minister will review these provisions over the course of time. If it becomes apparent that families are suffering as a result of the imposition of this cap, that families are being moved and split up and that distress is being caused, will he will immediately increase discretionary housing payments to local authorities so that they can support families in a way that every decent member of this Committee would want to see? The Minister’s assurance on that matter would be gratefully received.
My third question concerns temporary accommodation, which is not exempt from the regulations. Will the Minister advise us on what families in temporary accommodation should do? If they are hit by the cap, should they stay in that temporary accommodation, building up arrears and facing the possibility of eviction or being regarded as intentionally homeless, or should they leave it and lose their chance of reasonable preference on the housing waiting list? That is a Hobson’s choice for any family in temporary accommodation, but the Minister knows that such families may well be affected by the benefit cap. He estimates that imposing the cap on families in temporary accommodation will save £30 million. I plead with him to go away and reconsider, because that is a modest amount of money in the context of his Department’s expenditure and he could save vulnerable, distressed families a whole lot of heartache by simply saying that the Government have changed their mind and will exempt families in temporary accommodation from the benefit cap.
My fourth question concerns Manchester, where two thirds of my constituency is located. The Department for Work and Pensions has estimated that the benefit cap will affect 600 families in the city, 300 of which may expect to lose upwards of £50 a week. Will the Minister tell me how much additional money is going into the discretionary housing payment for Manchester to meet the increased need that will undoubtedly result from the imposition of the cap? What correspondence have he or his colleagues in Government had with the city? Is it ready to administer the cap in the way in which he envisages?
I say again that I know that the Minister is a decent man. The numbers of families may be small in the context of a large city such as Manchester, but those families and children may be some of the most vulnerable in my city. I want his reassurance that those vulnerable families and children will be protected.
The Chair: I thank hon. Members for the way they have behaved in making general political points but addressing the regulations. Five Members want to speak, and I would like to bring the Minister in at 10.15 so that he can answer the questions that you will continue piling up for him, so about four minutes each would be appreciated.
Mr John Baron (Basildon and Billericay) (Con): I suggest that the Committee needs to reflect on the state of the country’s finances. The previous Labour Government more than doubled the national debt. In other words, they took on more debt than all previous Governments in the 300-year history of the national debt, and they left the country’s finances in a very poor state indeed.
We have seen on the continent that if markets lose confidence in a country’s ability to pay its debts, interest rates rise and hit an awful lot of people. In this country, 11 million households have mortgages. If the markets were to lose faith in this country’s ability to bring its finances under control, interest rates would rise and those households would suffer. Many of those households have floating-rate mortgages—they are not all fixed rate by any stretch of the imagination; in fact, fixed rate is a small percentage of the overall market—and they would be hurt when times are tough in the economy generally. I suggest that we must give that some thought and some balance in our considerations. I would like the Government to do more to save money and I think there are other areas in which they might do so. I would certainly like them to cut back on the ridiculous contributions they are making to the EU budget, for example. Overall, however, I support the Government in measures that are aimed at saving money.
Having said that, the mark of a civilised society is of course helping the vulnerable and those who genuinely cannot help themselves. It is important that a safety net is provided for those who genuinely have trouble making ends meet and providing for themselves, but the challenge of government, as ever, is to get the right balance between encouraging people to help themselves to come off benefits and to find work and helping those who genuinely need help. There is also a balance regarding those who are in work and work for a living. It is important to try to be fair to them. The £26,000 housing cap is certainly well in excess of what many families in my constituency earn. They would question whether it is right that people stay at home and enjoy housing benefit of an amount that exceeds what they bring home as a household when jobs are on offer. The coalition Government have done well in creating job opportunities and that should also be considered when we look at the regulations.
Finally, I accept the genuine concern of the right hon. Member for Stirling and other Opposition Members, but she stated that she is supportive of the housing cap in principle and then listed a long line of objections and complications. I would like to know how the housing benefit cap, which she supports in principle, actually operate in practice was Labour to be in government, because it is fine to criticise, but the right hon. Lady is trying to have it both ways. If she and the Labour party support the idea in principle, can we at least have a few details as to how it would work in practice?
I am disappointed that the Minister and Government Members have once again relied so heavily on the tired old argument that housing benefit is somehow supporting the lavish lifestyles of the workshy, rather than exploring the detail of the policy and the impact that it will have on people. The big myth is that people get this money in their hand. They do not. Most people who receive housing benefit never see the money. It would be much more accurate to say that housing benefit is actually supporting the lifestyles of landlords in the private sector. The underlying problem that we all face with housing benefit is the chronic lack of affordable housing and the mismatch between our housing stock and people’s needs. We absolutely need to deal with those issues rather than try to blame people who live on low incomes. In Aberdeenshire, there are over 7,000 people on the waiting list for council houses. That is just unsustainable and is a problem that goes back more than 20 years.
Mr Richard Bacon (South Norfolk) (Con): I am interested in the hon. Lady’s comment that the problem is fundamentally one of housing shortage and also that there is, in effect, a conspiracy between people who are in receipt of housing benefit and landlords, who are benefiting hugely from the current arrangements. She is quite right about that. I have heard the Secretary of State for Work and Pensions complain about private landlords doing so well out of the current arrangements. Does the hon. Lady not accept that the answer to her important point about the lack of housing is to increase the total quantity of housing? That is something that her party had 13 years to do, but singularly failed to do.
Dr Whiteford: The hon. Gentleman mistakes me for someone else, because the Scottish Government have certainly been building houses. I just wish that the Chancellor would fast-track some money for building houses here as well and get the economy moving again. The real problem is that a lot of our housing stock was sold off. That has caused massive problems. However, I want to get back to my point, because I am conscious that time is extremely short.
The other myth is that housing benefit is received by people who are not in work. That is simply not true. The single biggest group of people who receive housing benefit are pensioners. Last week, we were discussing the reasons why so many people end up impoverished in old age, but today is not the day to get back into that discussion. Sick and disabled people and people in low-paid work constitute a huge number of those who receive housing benefit. Let us not pretend and blame poor people for their own poverty. Let us acknowledge that this policy affects predominately urban areas and is really designed to solve a problem that affects London more than anywhere else. More than half the people affected will be in London.
The regulations will affect a small number of large families across the UK. They will affect 190,000 children. Whatever anyone thinks of their parents, we all know that the long-term impact of poverty on children has ramifications for the decades to follow. That is why it is
Some 5,000 unpaid carers, most likely looking after a disabled adult child, will lose about £105 a week. I used to work for a carers’ organisation. Those people are already working 35 hours a week providing care. I do not know what the cost will be if those carers decide to go out to work instead of providing care. If those severely disabled adults end up in residential care, the cost to us all will be significantly greater than that of the free care that they are currently receiving.
The equality impact assessment highlighted the fact that half the households affected will include a disabled person. Let us not pretend that this is about people who are workshy. It is about people with disabilities who are struggling to have a decent life. I do not know what assessment the Minister has made of the impact of that aspect of the policy on the local authorities that will have to pick up the care, but I am keen to hear what detailed discussions he has had with local authorities.
My last point relates to homelessness and temporary accommodation. I do not want to repeat points made by other Members, but I say to the Minister that the homelessness legislation in Scotland is significantly different from that in other parts of the UK. What detailed discussions has he had with the Scottish Government and the Convention of Scottish Local Authorities on the impact of the changes on homeless people in Scotland, particularly those in temporary accommodation? Again, the long-term impact on people who live in temporary accommodation at an early ages is known and quantified. There is a good evidence base. We know that it costs more in the longer term. Will he look again at that issue?
I say to the Minister that the regulations that we are debating are based in large degree on false premises and an inadequate analysis. That is the brunt of the criticism. The false premise is that somehow, the regulations will only affect the workshy. The reality is much more complex.
The Government’s overall prospectus for their housing benefit change is based on the entirely false premise that somehow they are helping those in work and ensuring that they have a better standard of living than those not in work. The reality is that one of the largest single groups of people receiving housing benefit are the working poor. That is a consequence of higher rents and the deliberate policies of this Government. The Department for Communities and Local Government, not the Minister’s Department, is deliberately pursuing a policy that will increase rents and people’s obligation to pay higher rents, whether they are in the private rented sector—recipients of homelessness responsibilities who might have expected to go into social housing are increasingly being placed in high-rent private-sector accommodation—or people in supported housing, who are likely to be particularly badly hit by the measures. I will return to supported housing.
There is a straightforward contradiction between Government policy, which is driving up rents and therefore dependence on housing benefit, and Department for Work and Pensions policy, which seeks to curtail and cut such benefits. Where the two conflicting policies collide, there are serious personal consequences in terms of the hardship and human misery that will result from this statutory instrument.
The Government’s response is to say that these measures will drive down rents. I think they genuinely believe that; I have heard the noble Lord Freud say so repeatedly. The reality is that in London, where the impact is particularly severe, that is simply not happening. The latest figures show that average private sector rents rose last year by 7% more than inflation, inevitably adding to the problem of higher housing benefit costs for those deliberately placed in private rented accommodation as a result of Government policy.
There is another malign consequence, of which the Minister will be aware because it is revealed in research that his Department commissioned. Various academics have produced a report on the impact of changes to local housing allowance. The Minister will know from that research that when, in the context of the changing environment, landlords were asked their likely response would be or what they had already done, the largest single category said that they would not be renewing tenancies for housing benefit recipients. That is the consequence, and that consequence is the result of a thriving private rental market, which is driving rents up because of the shortage of homes for owner-occupation; landlords therefore have the choice to rent privately without offering those homes to housing benefit recipients, thereby cutting the supply. People who depend on housing benefit to obtain accommodation are being denied the option in two different ways. The first is the cap; the second is the withdrawal of housing stock from that market. That is a failure of the Government’s policy to try to drive down rents.
There will inevitably be particularly harsh impacts on certain groups of people. First, there are the homeless, to whom I have already referred. Homeless people have increasingly been placed in high-rent accommodation, whether privately rented or temporary accommodation. They are most likely to be vulnerable to the changes introduced by the statutory instrument. At a time when homelessness is rising, the increase is very significant, and the forecast is that it will go on rising, so more households will be exposed to that problem.
Secondly, there are those families who as a result of cuts in and caps on housing benefit are forced to move to other areas, disrupting their children’s education and breaking their social ties. What the long-term consequences will be, the Government simply do not know; they are turning a blind eye to that problem, but it is a growing problem. In London we can see the evidence that people are increasingly feeling obliged to migrate and authorities are placing homeless families in accommodation some distance away from the authority’s own area. The hon. Member for Enfield North, who is no longer in his
Nick de Bois: I find the way that the right hon. Gentleman has tried to rephrase my remarks slightly distasteful, but I accept that it was in, hopefully, a constructive frame of mind. Does he feel the same about the Labour council in Enfield, and its propensity to send people as far away as Luton, and so forth? Does he not accept the reality that these councils are under great pressure, given that they have no housing stock as a result of the legacy of the Government in which he served?
Mr Raynsford: I accept the hon. Gentleman’s comment that many, many councils are under pressure at the moment. I was simply drawing a distinction between the current situation and the policy that was adopted by the leadership of Westminster city council some time ago, which was a deliberate policy of seeking to change the ethnic and social composition of the borough. I will not go into the motives behind that policy, but it was disreputable.
Another group I want to draw attention to are people in supported housing. Here again we have people who are in need of accommodation that is more expensive than might otherwise be the case. They could be women who have suffered domestic violence, or vulnerable individuals who need support and care to re-establish themselves in society. Those people, too, are not exempt from the impact of this statutory instrument. Has the Minister made an estimate of how many vulnerable households will be unable to stay in supported housing as a result of these changes, and, if not, why has he not done so?
The statutory instrument will, in my view, have very harsh impacts on large numbers of people whom the Government do not say they are targeting. That is the biggest charge against them: there will be unforeseen consequences affecting vulnerable people who are in difficulty through no fault of their own and who will find it impossible to continue to live in the area they have lived in for many years. That is harsh and unfair, and I believe it is a legacy that will come back to haunt the Government.
Ann McKechin (Glasgow North) (Lab): I associate myself with the comments made by my right hon. Friend the Member for Greenwich and Woolwich regarding the overall condition of the housing market in this country. He has hit on the point of why the reform is so unfair.
In his detailed comments this morning, the Minister made no mention of rental levels. There has been a failure to reform the private-rented sector on both sides
Continuously moving people around short-term lets or placing them in areas geographically distant from their communities has been proven to be particularly damaging for those with families. It affects health outcomes and their ability to hold down a job or find alternative employment.
Mr Baron: Will the hon. Lady explain her logic and the logic her hon. Friends? They say that cutting the housing benefit cap will force rents up in the private sector. I do not see the connection. If less money is available to rent—[ Interruption. ] Rents may be going up anyway, but hon. Members have drawn a direct correlation between cutting the housing benefit cap and rents going up. What is the logic behind—
Ann McKechin: That is not the point I made. The hon. Gentleman should listen with more care. Rents are going up due to the pressure in the market generally. If houses are not built, people have nowhere else to go. If people cannot buy houses, they will go into the private rented market, which is fragmented and for which the legislation is out of date. In that scenario, we have a recipe for utter chaos, and that is what will inevitably happen.
Communities across the country, including my constituency, already have an increasingly transient population. The result is a lack of community cohesion, more isolation, increased social problems and very low maintenance standards of the property stock. The repercussions go well beyond the people who receive housing benefit. As my right hon. Friend the Member for Greenwich and Woolwich pointed out, many of those on housing benefit work in low-income jobs vital to communities across the country, particularly in urban areas. To move those people out of the areas in which they work is self-defeating to the health of the general economy.
Hon. Members raised genuine concerns about temporary accommodation. In June this year, Shelter estimated that 690 families with children were in bed and breakfasts for more than the statutory six-week period. Does the Minister believe that figure will increase after the regulations come into force? He mentioned that he will review the regulations in a year, which is welcome. Will he commit today to take it into account in reviewing the impact on temporary accommodation, if there is a significant increase in the number of families staying in bed-and-breakfast accommodation?
The hon. Member for Banff and Buchan asked the Minister what consideration had been given to the legislation in Scotland that applies to homelessness. I would be grateful to know what discussions he has had with COSLA and local authorities in Scotland. The
The market in Scotland, in particular, means that people are likely to be transferred to urban areas from other parts of Scotland, such as Banff and Buchan, rather than the other way round. If we compound that with the under-occupancy rules that come into effect next year, which by conservative estimates will impact 13% of the registered social landlord stock in Glasgow alone, in a very short time, a huge number of people will be seeking alternative rented accommodation. The impact on social landlords and on local councils trying to cope with the change will be enormous. I hope that the Minister will reassure me that the compound nature of all the changes happening at one time will be taken into account when he assesses the cap. I would also be grateful if he would confirm how the discretionary housing grant will operate in Scotland for local authorities. Does he consider that local authorities will have sufficient funds to cope with the level of demand they are likely to face?
Finally, the issue of carers and kinship carers has been mentioned. In Scotland, the position is fragmented because, at present, local authorities provide different amounts of money to kinship families. The definition of kinship carers is distinct in Scotland, and far fewer are formally registered through local authorities’ social work departments. Has the Minister given any thought to the issue? Has he spoken to the Scottish Government or local authorities about this group of people? Will he commit to ensuring that they will be part of his review in the next 12 months, and that the impact on them will be specifically considered by his Department?
John McDonnell (Hayes and Harlington) (Lab): I am not a member of the Committee, but it is open to Members to appear at Committees when they have a particular interest. I gave a commitment to my constituents that I would raise this issue at every possible opportunity— I met a group of them last week and more yesterday. I want to point out some anomalies that are now occurring.
I represent Hayes and Harlington, which is an outer London borough. We are now seeing the movement of population from central London to outer London. Although I share the Government’s objective of trying to force down rental levels, that population movement is now forcing rents up rather than down. I have constituents who, even before the cap is introduced, must make up the difference between their benefits and rental levels. They are now falling significantly into debt. I spoke to a constituent yesterday who went for a £200 pay-day loan, which has suddenly become a £2,000 debt. We are seeing an increase in the number of bailiffs turning up, and I know of very few discretionary grants that have been given out by the local authority, so people are not able to meet their debts.
Increasingly, I am finding anecdotal reports—others may also say this—that when people turn up as a result of their problems, they are threatened with their children being taken into care, which I thought we had eradicated a number of years ago. I believe that needs to be monitored. The irony is that my local authority is advising people to move out of the area to other areas such as the midlands and elsewhere—Southampton has been mentioned—where there are low rents but no jobs. We are in a dire situation: contrary to the objectives of the policy, rent levels are going up. People are falling into debt and are not able to afford their rents. Some estate agents are now turning people away because landlords will not accept people with housing benefits because they are prone to fall behind with their rents.
A cocktail of policies are going through that are completely contrary to the Government’s objectives. I would urge very close monitoring, particularly in the outer London boroughs, of the impacts on families. The social problems are emerging already as families are being split up internally and children are being farmed out to others to sleep on sofas and floors. That is what is happening in my constituency.
Mr Hoban: This has been a wide-ranging debate. The right hon. Member for Stirling said that she supported the principle of a cap but not the design. My hon. Friend the Member for Argyll and Bute holed her below the water line by asking her what her plans were, and the answer was none. That demonstrates the challenge the Opposition face. They say they are in favour of the cap, but they have no substantive plans. Occasionally they talk about regionalised caps, but they do not talk about the regionalised benefit system to match that. There is an inconsistency in their position.
Some important principles underlie this measure. As several of my hon. Friends commented, we need to tackle the deficit, but we also need to ensure that we get work incentives right. We need to encourage people back into the labour market and enable them to make choices that are in the interests of themselves and their families. The reform is part of a suite of reforms that we are making to help do just that. People in work must make difficult choices about housing. They must think about affordability and location, and no one should be exempt from considering such choices. We need to ensure that the benefit cap is applied in a way that helps people face up to their circumstances and get the right support to enable them to think through its consequences.
As I said in my interventions on the right hon. Lady, there is an important role to play in encouraging people into work. That is why Jobcentre Plus is working closely with local authorities and others to identify opportunities for people to work, so that they can qualify for the working tax credit and therefore be exempt from the benefit cap. We should be placing a lot more emphasis on that. The right hon. Member for Wythenshawe and Sale East mentioned large families, and I return to the example that I gave of a lone parent with five children under the age of 14. Because we were able to help her into work, the cap no longer applies to her. We should be working with people in challenging circumstances to get them into the best possible place. Work is the best option for many of those families.
A range of questions have been asked during the debate. First, supported exempt accommodation came up a number of times, and let me be clear: our analysis demonstrates that only 4% of people affected by the cap are in supported exempt accommodation.
Mr Hoban: It is 4% of the total—if I look at the proportion of people, it is 4% of that entire population. That is one reason why we have introduced the discretionary housing payments of £75 million next year and £45 million the following year. Our guidance, which was developed in conjunction with local authorities, aims to ensure that the money is used to help people living in supported exempt accommodation, so that the 5,000 people in that situation get the support they need. We should get those problems in perspective and recognise the different groups that are affected, and where they are.
The right hon. Member for Wythenshawe and Sale East asked about refuges. I can assure him that direct payments to refuges will continue, which is an important assurance, both for those who live there and for those who operate them. As the written answer from the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate indicated, we are considering further reforms to ensure that the support is there at local level.
Questions were asked, not only by my hon. Friend the Member for North Cornwall, but by others too, about children being required to move schools. We have announced that discretionary housing payments may be used by local authorities to support families where moving immediately could have a large impact on a child’s education. We are alive to that risk and, picking up on the point about out-of-borough placements, new regulations come into force on 9 November that strengthen the requirements on local authorities to consider whether a location is suitable for a household’s individual circumstances. That includes considering the significance of any disruption to employment, education and caring responsibilities. Although the question is a valid one to ask, we think that the discretionary housing payments and the new regulations that we are imposing on local authorities are mitigations in the system.
A number of questions were asked about the ability of local authorities to deliver the scheme. Local authorities know which households will be impacted by the cap, and it is important that they act on that. The DWP and local authorities are working in partnership either to encourage those potentially impacted by the cap to move into work or to provide the required support and opportunities to move them closer to employment or into more affordable accommodation. That project is supported by local engagement between local authorities and Jobcentre Plus districts, and by undertaking a programme of assurance visits. The aim of those visits is to determine the level of engagement and strategy for dealing with capped cases—particularly the most difficult cases—and to ensure that there is good practice and that lessons are learned. The programme will continue until April 2013.
In the time that is available, let me deal with some of the detailed questions asked by the right hon. Member for Stirling. She asked whether universal credit remains on timetable. It remains on track to start taking on
The right hon. Lady asked a question that I should have dealt with earlier in relation to discretionary housing payments. We have recently updated the discretionary housing payments good practice guidance manual to include a steer on how we expect local authorities to use their additional funding to provide support to those affected by the benefit cap. The guidance was created following consultation with local authorities and it will be published in the new year. We will clearly set out that we expect the payments to be used to support those claimants who are affected by the benefit cap but, as a result of a number of complex challenges, cannot immediately move into work or more affordable accommodation. We specify key groups, such as those fleeing domestic violence, clearly setting out those whom we think that local authorities should prioritise for discretionary housing payments.
I was asked whether there would be enough discretionary housing payments, and what would happen if funding runs out. We have announced up to £120 million of additional funding for these payments over the next two years. That money should be used to support only those claimants who cannot move immediately into work or more affordable accommodation; it should not be used to meet every shortfall. In addition to the discretionary housing payments, we will also provide employment support and fund local authorities to provide housing and financial support. Claimants should act now and not wait until April; that has been the essence of the work we have done with claimants.
The right hon. Lady asked about notification to local authorities of benefit payments. The benefit cap application system will draw data from across all legacy systems, including the DWP and HMRC. Data will be transferred via a file transfer gateway, and local authorities will be notified by the ATLAS—automated transfer local authority system. Updates will be made every 24 hours to ensure that changes in the circumstances of claimants are captured. I hope that that addresses her concern about the sources and timeliness of the information provided.
The right hon. Lady asked what will happen if local authorities are not notified of a cap application by the DWP when the authority knows that it should be applied. Local authorities will have processes in place to notify the DWP when they believe that a cap should apply. The DWP will conduct a 100% check on all relevant IT systems and, if a cap should apply, it will take appropriate action to notify the local authority.
Questions were asked about how different benefits fit in the cap. As I said, there are benefits that, as a result of their being claimed, will exclude people from the cap, such as the support component of the employment support allowance. A question was asked about PIP. When consequential legislation is brought in to implement PIP, that matter will be covered.
On carers, a question was asked about why those in receipt of disability living allowance were excluded but not those receiving carer’s allowance. The benefit system is designed to provide financial support for carers when their caring responsibilities prevent them from working full time. As such, for the purpose of the cap, the carer’s allowance should be treated the same way as other income maintenance benefits. If the carer is in the same
The debate has been long and a lot of detailed questions have been asked. We have tried to design the system to ensure that its implementation will be as fair as possible, but underlying that is the need to get work incentives right and to provide the right support to families. That is the purpose of the regulations before us today, and I ask the Committee to support them.
The Chair: I am sure that the Minister, as he said, will write to Members with any details or answers to questions that he could not manage to accommodate this morning. It is now my duty to put the question.