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As time is running out, I want to focus a few brief comments on the housing implications of the Bill. That is the area in which the expenditure cuts are most heavily targeted and it illustrates most perfectly the truth of the point, put very ably by the hon. Member for Brighton, Kemptown (Mr. Bowden) at the beginning of the debate, that the Government's attempt to reform the scheme has been doomed by the inadequate resources that they have allocated for the task.
The truth was voiced by Professor David Donnison a decade ago when he was chairman of the Supplementary Benefits Commission. He warned that the reform that was needed of the method for giving assistance with housing costs could be achieved only with some modest increase in expenditure. The Government ignored that warning in their first reform of housing benefit in 1982–83, to their cost. We all know the sad consequences of that botched and failed reform. The sad thing is that, having failed to learn the lesson last time, they are doing exactly the same again, cutting £450 million from a scheme which is already known to be inadequately funded.
I wish to highlight the areas in which the cuts will bite most severely. We have focused on a number of occasions in the past two days on the implications of the Bill for mortgage assistance. I say only that it is clearly inappropriate, at a time of increasing mortgage default, when building societies are reporting record numbers of people in arrears with their mortgages, for the safety net provided by supplementary benefit to be cut away in any respect.
I want to highlight the extraordinary disincentive effect that the Government's proposal will have. If, during the first six months, a claimant will not qualify for full assistance, how many who, after they have gone through that six months and are thinking about returning to work, will be deterred if there is no prospect of that job being secure, for fear that if they were to lose the job they would once again have to try to cope without proper assistance from the DHSS? That would be a disincentive to work.
There will be difficulties for single parents who often, in the period after a marriage breakdown, need immediate assistance to ensure a remortgage which will keep them in the matrimonial home and avoid foreclosure, homeless-ness, and all the traumas that go with that. If the assistance which has been available in the past is no longer there, we shall undoubtedly see more insecurity, more homelessness, and more families forced out of the matrimonial home after a marriage breakdown. That is sad, but it is the direct consequence of the Government's proposals.
There is no basis in logic for the proposal that people should pay 20 per cent. of their rates. It is founded solely in ideology. It was rejected by the Government's own review team that looked at the scheme. It is riddled with anomalies, not least of which is that, in many areas, the cost of collecting 20 per cent. of rates will be greater than the amount yielded. It will also lead to a great deal of hardship for people who cannot afford to meet that extra amount and it raises the hideous prospect of people being imprisoned for debt if they are unable to cope.
The third area where the cuts will bite is the assessment of housing benefit. This will cause enormous hardship to a large number of tenants. The rate at which the benefit is withdrawn as incomes rise above the income support level has been increased by remarkable proportions. There has been a progressive increase in the rate of withdrawal in the last three years. The proposal in the White Paper of a 60 per cent. rate of withdrawal of benefit was not even considered by the review. It is 10 per cent. above the rate of withdrawal considered at the time. That in itself was far higher than the rate of withdrawal that applied earlier, and very much higher than that which applied in 1973 when the rent rebate allowance scheme was introduced for the first time by the Secretary of State for Energy who represented possibly a form of Toryism which is remarkably absent from the thinking that prompted the current social security review.
The proposals intensify the poverty trap. People should be aware of that. We are talking about 87 per cent. withdrawal of benefit for people paying tax and national insurance and receiving rent and rate assistance — far higher than for the highest paid person in Britain. It is grossly unfair and will have tragic consequences; it will intensify debt and contribute towards homelesness.
How can that be justified? The Government talk about the increased cost of housing benefit. I should like to give two sets of comparative figures. Housing benefit expenditure has increased from £1·2 billion in 1979–80 to £4·6 billion in 1985–86. It is significant that in that same period expenditure on mortgage interest tax relief has gone up by an identical amount — from £1·45 billion in 1979–80 to £4·75 billion now. Mortgage tax relief is enjoyed by people who are substantially wealthier than those who receive housing benefit. Are the Government proposing that that should be cut? They are not. They are talking about cutting benefit to poorer people. That shows the Government's values in seeking to cut money for poorer people while leaving unaffected benefits for richer people. That is the comment on this social security review and this Bill, which will be swept away by the next Labour Government.