Budget Resolutions and Economic Situation

Part of the debate – in the House of Commons at 4:58 pm on 28 November 1996.

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Photo of Peter Lilley Peter Lilley Secretary of State for Social Security 4:58, 28 November 1996

He said: I personally don't agree with them doing that. If that is not a condemnation, how does the right hon. Gentleman go about praising people?

Apart from expenditure on lone parents, the other area of expenditure that is increasing significantly is expenditure on housing benefit and council tax benefit. That is set to rise by 7 per cent. ahead of inflation over the next three years.

It would be irresponsible to allow that growth to continue unchecked. Obviously it is in part a reflection of the rising number of new households, which is growing faster than the population—so much so that it is projected that there could be 4.4 million more households in 2016 than there were in 1991. Nearly 80 per cent. of that growth will represent one-person households.

It cannot be right to allow the benefits system to exacerbate that process. So I propose to restrict housing benefit for single people under 60 to the average rent for single non-self-contained rooms in each location. I also intend to limit further the sums that can be paid to tenants in the private deregulated sector.

Since January that group has received a maximum housing benefit that pays up to half the difference between the local average and the actual rent. The change will mean that from next October, claimants who choose to live in properties whose rents are above the average for that type of property in that area will have to meet the excess themselves, or negotiate a better rent with their landlords.

I also propose to align the treatment of council tax benefit for higher-band properties with the benefit treatment of mortgages. Currently, someone living in a band H property, which in England will be one valued at more than £320,000, can still have the entire council tax paid if he or she is on income support. That cannot be right.

I shall therefore bring the council tax benefit rules into line with those on mortgage interest. Benefit does not pay the full interest on loans of more than £100,000, and neither should benefit pay the full council tax for those whose properties are above the top of band E. In England that means properties worth about £120,000. I intend to implement this change in April 1998. It will affect about 65,000 people and save about £15 million in the first year.

In a press release put out on Tuesday by the hon. Member for Peckham, the Leader of the Opposition[Interruption.] Sorry. I am promoting her—but only prematurely, I am sure. The hon. Lady, the Opposition spokesman on social security, claimed that Tories failed on welfare because they have failed on work. Quite frankly, she has ceased to engage with reality, and she simply ignores the huge falls in unemployment and the huge growth in the number of people in work in this country.

Let us compare Britain with France. The populations and economies of our two countries are roughly similar in size, but unemployment in France is more than 3 million and rising, whereas in this country it is 2 million and falling. If that is not due to the social chapter and the minimum wage, can the hon. Member for Peckham—or any Opposition Front Bencher—tell us which factors cause unemployment to be higher in France than in the United Kingdom? I shall be happy to give way to her. [Interruption.] Ah—she will deal with it when she has thought of the answer.