Housing Benefits

Part of the debate – in the House of Commons at 5:13 pm on 19th July 1984.

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Photo of Michael Meacher Michael Meacher Shadow Secretary of State, Member, Labour Party National Executive Committee 5:13 pm, 19th July 1984

The tables issued by the Treasury at Budget time show that the total tax take from all families, except those on incomes of over £30,000 a year, who have made a killing, has increased substantially. That applies not only to those on average earnings, but to those on well below average earnings and those on two or three times average earnings. I am sure that the hon. Member for Stockport (Mr. Favell) is anxious to score a political point, but the facts go against him. Even worse than the losses due to the taper is the Government's continuing vendetta—I use that word advisedly—against young workers on low wages living in council houses. How else can one explain why the Government have picked upon 115,000 such families to take a cut of £3·30 a week as a result of the introduction of non-dependant deductions for 16 to 17-year-olds in work? One third of those families live on supplementary benefit.

That will undoubtedly increase the tension between young people and their families. It will also increase the pressure on young people to leave home to avoid that deduction. There is some evidence of that pressure, but we do not have all the evidence that we need.

The Government's argument is that steep increases in contributions towards housing costs can reasonably be expected from relatives over the age of 16 because, in the words of the Secretary of State, the non-dependant should make a contribution rather than the taxpayer. If that is the logic, why does that logic not apply to non-dependants living in households receiving tax relief on their mortgages? There are about 1·25 million such households and SHAC has calculated that such a move would produce savings of about £269 million—a vastly greater sum than that being saved by all the cuts that we are debating.

Why do the Government not follow that course? Is it because non-dependants in rent rebate families are likely to be working class, living in council houses and voting Labour, while non-dependants in tax relief households are likely to be middle class and voting Conservative? It is difficult to think of any other explanation. That is why we say that the cuts are so blatantly politically motivated. That is what we find so objectionable about them.

There is another reason why we reject the proposals. Housing benefit continues to be the biggest administrative fiasco that we have seen in this country since the war. Despite soaring organisational costs, there is little or no sign that bungling is being brought under control.

The Minister's figures suggest that administrative costs this year will total £56 million, compared with last year's estimate of only £17 million. What will be shown for the extra £40 million of taxpayers' money, which is being squandered on what is supposed to be a streamlining operation?

I have a few examples from citizens' advice bureaux in various parts of the country. They have all arisen in the past two or three months. A CAB in Lancashire reported: We have had several inquiries relating to the changes in Housing Benefit effected in April 1984, most of which have been concerned with a reduction of benefit due to non-dependants. Often there has been no explanation as to why benefit has gone down and in many cases a higher deduction than is correct has been made. There have also been cases where the DHSS have not informed the local authority regarding changes in non-dependant status. A national survey carried out by the CAB found that miscalculations of housing benefit were made in a staggering one in four cases. In more than three quarters of those cases, there were underpayments. Overpayments were made in less than a quarter. That is after the scheme has been in operation for 15 months. Surely that is an unprecedentedly bad record. It is farcical in a scheme that is supposed to be a streamlining operation.

People are still being forced into financial crisis by the bungling that occurs. I know that local authorities try hard and I do not wish to say anything against their sincere efforts to improve the administration of an incredibly complex scheme. The structuring of the scheme makes it difficult to operate.

The CAB in Norwich gives an example. It says of a woman claimant: She used to get £18·76 rent rebate and was told it was reduced to £18·34 from 1.4.84. When she went to her bank she found none had been paid in since 2.4.84. She rang the District Council and was told that a mysterious £64 had appeared on figures from DHSS so they were withholding rebate. No one told her about this or why it had arisen. She pays £25 rent, earns £23·50 and has £24 maintenance. She has an unemployed girl of 17 and is down to her last £14 with an electricity bill of £70 outstanding. I am not quoting cases that have been carefully chosen to demonstrate the difficulties. There are dozens of such cases in CAB files. The hon. Member for Kemptown forcefully makes the point in the House that similar things happen to pensioners who are perhaps least able to look after their own interests.

My third and last case comes from the Hatfield CAB. It states: An elderly pensioner claimed supplementary benefit and certificated housing benefit for the first time. Her daughter asked the DHSS whether her mother would have to pay rates. She was told her mother didn't have to pay anything. The pensioner now has £100 of arrears, a court summons has been taken out and bailiffs have been to the house. The local authority refuses to accept anything less than £10 per week in repayment, even accepting the DHSS's response.

The Opposition intend to vote against these instruments because we believe that they are wrong on five separate counts. They are wrong because they pre-empt the review that the Government have set up. The Government should perhaps have listened to their friends on The Times, who on 14 February said that until the housing benefit review had reported, the Government should forgo their savings from the scheme.

The instruments are wrong because they are, yet again, hitting hundreds of thousands of poor pensioners and poor families, who have already suffered financial hardship from earlier cuts. They are wrong because they penalise the poor while letting the rich off scot free. In a parliamentary answer on 7 March 1983 the Minister, referring to executives who earned more than £30,000 a year, said that they got more than £30 a week in mortgage interest relief. It seems that that will be increased to about £35 a week. It is wrong that the rich have not been required to give up a penny. How can the Government justify the rich retaining that money at the expense of the poor who have already suffered from cuts?

The instruments are wrong because administrative costs continue to soar while organisational bungling continues unabated. I hope that Conservative Members will agree that if a saving must be made it would be much more just to make it by limiting mortgage interest relief to the standard rate. That would save £160 million a year, which is three times and more than the savings that will be made from these niggardly, mean and nasty cuts. For those five reasons we reject the instruments. They are ill-advised, unjust and spiteful and the Government should withdraw them.